Federal Register Vol. 81, No.35,

Pursuant to the Commodity Promotion, Research and Information Act of 1996 (7 U.S.C. 7411-7425) (Act), it is hereby directed that a referendum be conducted to ascertain whether continuance of the Order (7 CFR part 1218) is favored by eligible producers and importers of highbush blueberries. The Order is authorized under the Act.

The representative period for establishing voter eligibility for the referendum shall be the period from January 1 through December 31, 2015. Persons who produced or imported 2,000 pounds or more of highbush blueberries during the representative period, paid assessments during that period, and are currently highbush blueberry producers or importers subject to assessment under the Order are eligible to vote. Persons who received an exemption from assessments for the entire representative period are ineligible to vote. The referendum will be conducted by mail ballot from July 5 through July 28, 2016.

Section 518 of the Act authorizes continuance referenda. Under § 1218.71(b) of the Order, the U.S. Department of Agriculture (USDA) must conduct a referendum every 5 years to determine whether persons subject to assessment favor continuance of the Order. The last referendum was held in 2011. USDA would continue the Order if continuance is favored by a majority of the producers and importers voting in the referendum, who also represent a majority of the volume of blueberries represented in the referendum.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the referendum ballot has been approved by the Office of Management and Budget (OMB) and assigned OMB No. 0581-0093. It has been estimated that there are approximately 1,860 producers and 180 importers who will be eligible to vote in the referendum. It will take an average of 15 minutes for each voter to read the voting instructions and complete the referendum ballot.

Maureen Pello, Marketing Specialist, and Heather Pichelman, Director, PED, SC, AMS, USDA, Stop 0244, Room 1406-S, 1400 Independence Avenue SW., Washington, DC 20250-0244, are designated as the referendum agents to conduct this referendum. The referendum procedures at 7 CFR 1218.100 through 1218.107, which were issued pursuant to the Act, shall be used to conduct the referendum.

The referendum agent will mail the ballots to be cast in the referendum and voting instructions to all known, eligible highbush blueberry producers and importers prior to the first day of the voting period. Persons who produced or imported 2,000 more pounds of highbush blueberries during the representative period, paid assessments during that period, and are currently highbush blueberry producer or importers subject to assessment under the Order are eligible to vote. Persons who received an exemption from assessments during the entire representative period are ineligible to vote. Any eligible producer or importer who does not receive a ballot should contact the referendum agent no later than one week before the end of the voting period. Ballots must be received by the referendum agent by 4:30 p.m. Eastern time, July 28, 2016, in order to be counted.

I. Objective

The purpose of this proposed rule is to replace references to credit rating agencies in existing Farmer Mac investment regulations with other appropriate standards to determine the creditworthiness of investments and to revise exposure limits for investments involving one obligor. Section 939A of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act or DFA) requires agencies to remove references to, and requirements relating to, credit ratings. This proposal would substitute other appropriate standards of creditworthiness. The proposed rule would also replace the table in existing regulations that sets forth criteria for non-program investment eligibility with standards that place a greater emphasis on management's due diligence responsibility in ascertaining credit quality of non-program investments so that only high quality investments are purchased and held. The proposed rule would also clarify how other non-program investments are treated and revise exposure limits for investments involving one obligor. We are also proposing a delayed compliance date for the rule.

Farmer Mac is an institution of the Farm Credit System, regulated by FCA through the FCA Office of Secondary Market Oversight (OSMO). Farmer Mac was established and chartered by Congress to create a secondary market for agricultural real estate mortgage loans, rural housing mortgage loans, and rural utilities loans, and it is a stockholder-owned instrumentality of the United States. Title VIII of the Farm Credit Act of 1971, as amended, (Act) governs Farmer Mac.1

On July 21, 2010, the Dodd-Frank Act was enacted, and section 939A of the Dodd-Frank Act requires Federal agencies to review all regulatory references to nationally recognized statistical ratings organizations (NRSRO or credit rating agency) and replace those references with other appropriate standards for determining creditworthiness.2 The Dodd-Frank Act further provides that, to the extent feasible, agencies should adopt a uniform standard of creditworthiness for use in regulations, taking into account the entities regulated and the purposes for which such regulated entities would rely on the creditworthiness standard.

The existing rules on non-program investments for Farmer Mac are contained in 12 CFR part 652, subpart A, and rely, in part, on NRSRO credit ratings to characterize relative credit quality of various instruments. On June 16, 2011, we issued an Advance Notice of Proposed Rulemaking (ANPRM) soliciting comments on suitable alternatives to NRSRO credit ratings.3 On November 18, 2011, as part of another rulemaking, we again requested comment on potential sources of market-derived information that could be used to replace NRSRO credit ratings in part 652 of our rules.4 In developing this proposed rule, we considered all suggestions from comments received and incorporated those we believed best addressed the objective of this rulemaking. In addition to these comments, we also considered the creditworthiness standards we proposed in a separate rulemaking for Farm Credit banks and associations 5 in compliance with provisions in the Dodd-Frank Act directing agencies, to the extent feasible, to adopt a uniform standard of creditworthiness among regulated entities.

The proposed rule would revise portfolio diversification requirements and revise the credit quality standards for eligible non-program investments that Farmer Mac may hold by replacing the reliance on NRSRO credit ratings and clarifying terminology.

In § 652.5, we propose removing existing terminology, adding new terms, and revising existing definitions. We propose removing as obsolete several terms from the list of definitions in § 652.5. We also propose removing terms from § 652.5 because they do not require a separate definition. The specific terms we propose removing are:

• “Contingency Funding Plan (CFP)”,

• “Eurodollar time deposit”,

• “Final maturity”,

• “General obligations”,

• “Liability Maturity Management Plan (LMMP)”,

• “Liquid investments”,

• “Liquidity reserve”,

• “Nationally Recognized Statistical Rating Organization (NRSRO)”,

• “Revenue bond”, and

• “Weighted average life (WAL).”

We propose making conforming changes to § 652.20 to remove these terms where they appear.

We next propose adding two new terms to the list of definitions to address other proposed changes in this rulemaking: “Diversified investment fund” and “Obligor.” We propose to define a “diversified investment fund” (DIF) as an investment company registered under section 8 of the Investment Company Act of 1940, 15 U.S.C. 80a-8. We selected this definition based on our current use of it in § 615.5140(a)(8) of our investment rules for Farm Credit banks and associations. We propose to define the term “obligor” because our current regulations use this term but do not define it. We propose defining “obligor” as an issuer, guarantor, or other person or entity who has an obligation to pay a debt, including interest due, by a specified date or when payment is demanded. This definition would include the debtor or immediate party that is obligated to pay a debt, as well as a guarantor of the debt. The proposed definition would also clarify that both a DIF and the entity or entities obligated to pay the underlying debt are treated as a single obligor. This clarification is intended to ensure DIF investments do not become an excessively concentrated part of the investment portfolio.

Lastly, we propose changing three existing terms and their definitions to improve clarity: “Government agency”, “Government-sponsored agency”, and “mortgage securities.” We propose replacing the existing term “Government-sponsored agency” with “Government-sponsored enterprise (GSE)” and defining a GSE as an entity established or chartered by the U.S. Government to serve public purposes specified by the U.S. Congress but whose debt obligations are not explicitly guaranteed by the full faith and credit of the U.S. Government. We also propose replacing “Government agency” with “U.S. Government agency.” The proposed definition for U.S. Government agency would explain that it means an instrumentality of the United States Government whose obligations are fully guaranteed as to the timely payment of principal and interest by the full faith and credit of the U.S. Government. Finally, we propose replacing the term “mortgage securities” with “mortgage-backed securities (MBS)” as this term is more widely used in the financial sector. We propose applying the existing definition for “mortgage securities” to the new MBS term. We propose a conforming change to the definition of “asset-backed securities”, which uses “mortgage securities” in its definition.

We propose revising existing § 652.10 to address concentration risk through portfolio diversification and obligor limits in new paragraph (c)(5). Portfolio diversification is crucial to safe and sound investment management and is achieved by the appropriate distribution of risk exposures across reasonably uncorrelated industries and obligors. When a portfolio is properly diversified, a crisis within one industry sector or the sudden weakening or default of one obligor should not significantly destabilize the financial condition of the investor. In new § 652.10(c)(5), we propose specifying that Farmer Mac's investment policies address concentration risk by setting diversification standards. We propose that the diversification calculation used when setting these standards be based on the carrying value of the investment on Farmer Mac's balance sheet. By carrying value, we mean the amount an investment contributes to the asset section of Farmer Mac's balance sheet under GAAP, net of any impairment estimate or valuation allowance. We believe the carrying value would, when applied for this purpose, appropriately capture the value of capital at risk for an investment at any given time. We also propose the following parameters for Farmer Mac's establishment of these standards:

• Basing calculation of an investment's compliance with diversification requirements on the investment's carrying value;

• Limiting investments in one obligor to no more than 10 percent of regulatory capital, unless the investments are obligations backed by U.S. Government agencies or GSEs; and

• Limiting the percentage of GSE-issued mortgage-backed securities that may comprise Farmer Mac's entire investment portfolio to 50 percent.

We believe these parameters will not require changes in the current investment portfolio held by Farmer Mac and discuss them more fully below.

We believe by placing specific diversification limits within the section that generally requires Farmer Mac to set diversification limits will improve the organization of the rule.

We also propose removing the reference to geographic areas in existing § 652.10(c)(1)(i). Farmer Mac should consider diversification by geographic location of issuer as appropriate based on the nature of its investment portfolio. For example, in the case of investments in municipal securities, geographic location might be an important consideration. However, we propose removing this specific category in the regulation to avoid misinterpretation. For example, we do not see the need to restrict obligors solely on the basis of where they happen to be headquartered or the location of an issuer's operations. The proposed change in the level of the single obligor limit is discussed below in section III.B.1.

We propose to move the obligor limit from § 652.20(d)(1) and reduce the current limit to 10 percent of regulatory capital. The proposed 10-percent obligor limit in new § 652.10(c)(5)(i) would enhance Farmer Mac's long-term safety and soundness by ensuring that if an obligor were to default, only a modest portion of capital would be at risk. Currently, the proposed 10-percent obligor limit equates to an amount that is less than Farmer Mac's capital surplus and well within its risk-bearing capacity based on its current level of regulatory capital. Whereas, the current 25-percent obligor limit could expose Farmer Mac to financial challenges if it experienced an event of multiple defaults in its liquidity portfolio during a short time period (e.g., such as during the 2008 financial crisis), given the historical relationship between Farmer Mac's capital surplus over the minimum requirement and the dollar value of the 25-percent limit. Thus, we expect that the proposed 10-percent maximum will provide reasonable assurance that a single default will not significantly increase the risk of Farmer Mac's being unable to comply with the minimum capital requirement.

This proposed obligor limit would recognize that the credit performance of a single obligor (unlike, for example, a single industry sector) is binary in nature, (i.e., the investment is either performing or it is in default) with potentially very low recovery rates. For that reason, we believe a cautious approach is warranted regarding the management of exposure concentrations in an individual obligor. We also believe the proposed obligor limit retains sufficient flexibility for Farmer Mac to manage its investment portfolio and still maintain adequate diversification. While the proposed obligor limit would be a regulatory maximum, Farmer Mac should consider establishing lower obligor limits to fit its overall risk profile and risk-bearing capacity, including earnings capacity, as well as the risks in individual types and classes of investments.

We seek specific comments and suggestions on how FCA might modify or adjust the obligor limit to make it more risk sensitive while achieving the overarching objectives of the limit for example, by scaling or risk-weighting assets based on internal or standardized models or other criteria such as the magnitude of Farmer Mac's surplus over the minimum capital requirement.

The proposed § 652.10(c)(5) would retain the existing exemption from the obligor limit, currently located in § 652.20(d)(1), for investments that are backed by a U.S. Government agency or GSEs.

Existing § 652.20(a) contains a table identifying nine asset classes with different investment portfolio limits. These nine asset classes are:

• Obligations of the United States,

• Obligations of GSEs,

• Municipal Securities,

• International and Multilateral Development Bank Obligations,

• Money Market Instruments,

• Mortgage Securities,

• Asset-Backed Securities,

• Corporate Debt Securities, and

• DIFs.

We propose moving to new § 652.10(c)(5)(ii) the current § 652.20(a)(6) 50-percent limit on the volume of GSE-issued mortgage-backed securities that may be held in Farmer Mac's investment portfolio. We believe the risk posed by GSE-backed MBS is significantly lower than other asset classes both in terms of default risk and liquidity risk, which supports retaining this relatively high limit. We also believe this limit is better situated within our rules with other risk tolerance provisions.

In section III.C.1 of this preamble, we discuss the proposed removal of the investment table at § 652.20(a), while retaining some of its requirements. We have not proposed retaining any of the asset class portfolio limits contained in the table except the previously discussed 50-percent portfolio limit for GSE-issued securities. This is because existing § 652.10(c)(1)(i) already requires Farmer Mac to establish within its investment policy concentration limits for “asset classes or obligations with similar characteristics.” We expect that Farmer Mac will review their investment policy limits at least annually and make adjustments based on their current risk profile and risk-bearing capacity, which may suggest lower limits than the current regulatory parameters. Nonetheless, we recognize there may be value in maintaining regulatory limits and, therefore, invite specific comment on whether the following existing asset class limitations should be retained in full or part:

• Municipal Securities: Revenue bonds limit of 15 percent,

• Money Market Instruments: Non-callable term Federal funds and Eurodollar time deposits limit of 20 percent,

• Money Market Instruments: Master notes limit of 20 percent,

• Mortgage Securities: Non-Government agency or Government-sponsored agency securities that comply with 15 U.S.C. 77d(5) or 15 U.S.C. 78c(a)(41) and Commercial mortgage-backed securities combined 15-percent limit,

• Asset-Backed Securities limit of 25 percent, and

• Corporate Debt Securities limit of 25 percent.

We propose replacing the existing § 652.20, including removing the “Non-Program Investment Eligibility Criteria Table,” with investment eligibility requirements that place greater responsibility on Farmer Mac management. The replacement of this section will result in removal of all references to NRSRO credit ratings from § 652.20.

Our existing regulation at § 652.20(a) contains a detailed listing of eligible investment asset classes and types of investments within each asset class. The existing regulation imposes final maturity limits, investment portfolio limits, and other requirements for many of these investments, including credit rating requirements that are based on NRSRO credit ratings. To replace this provision, we propose general categories of eligible non-program investments that Farmer Mac may purchase and hold. The proposed general categories are:

• Non-convertible senior debt securities,

• Certain money market instruments,

• Certain ABS/MBS backed by a U.S. Government-agency or GSE guarantee,

• Certain senior position mortgage related securities,

• Obligations of development banks where the United States is a voting member of the bank, and

• Certain diversified investment funds.

In proposed new paragraph (a)(3) and (a)(4), fully government-guaranteed ABS or MBS that are guaranteed as to the payment of principal and interest by a U.S. Government agency or GSE would be eligible securities because of their high credit quality. Farmer Mac would have to verify that securities labeled “government guaranteed” are fully guaranteed as to the payment of principal and interest. Similarly, a GSE “wrap” (guarantee) would not make a security eligible under this proposed provision unless it is a guarantee of all principal and interest of the security. While partial guarantees would not satisfy this proposed requirement, they could be eligible under other criteria.

We propose in new paragraph (a)(5) permitting investments in ABS and MBS that are not fully guaranteed, but only the senior-most position of such instruments. By senior-most position, we mean the tranche of a structured instrument that is last to experience losses in the event of default and that such losses be shared on a pro rata basis by investors in that tranche. In addition, we propose that for a position in an MBS to be eligible, the MBS must satisfy the securities law definition of “mortgage related security”.6 Collateralized debt obligations (CDOs), which are re-securitizations that have evolved for the MBS market, would be eligible under this criterion if their underlying collateral is comprised only of the senior-most positions of other securitizations. The underlying collateral of most CDOs consists of lower-rated tranches from other securitizations, and these CDOs would not be eligible under this criterion. Further, private placements may be eligible under this proposed criterion, as long as they satisfy all of the proposed investment eligibility requirements.7 We note, however, that private placements are generally not liquid and would therefore need to be acquired for an authorized purpose unrelated to liquidity.

We also propose in new paragraph (a)(7) that shares of a DIF would be eligible if the DIF's portfolio consists solely of securities that are eligible under these eligibility criteria. While the proposal for DIF eligibility is unchanged from the existing regulation, we are proposing more restrictive portfolio diversification limits on DIF investments than currently exist.

We want to retain high creditworthiness standards for Farmer Mac eligible non-program investments.8 Accordingly, we propose in § 652.20(b)(1) requiring that obligors (whether debtor or guarantor) have strong capacity to meet the financial commitment for the expected life of the investment. This standard would apply to all investments, including those that are currently not subject to a NRSRO credit rating requirement. In general, we would view an investment as having met this standard if the expected average cumulative default rate of issuers of similar credit quality is low based on historical default data.9 We would expect Farmer Mac to document the source of its historical data and basis for investment criteria.

In addition to imposing standards on obligors, we also propose in § 652.20(b)(2) requiring an eligible investment to exhibit low credit risk and other risk characteristics consistent with the purposes for which it is held. We are not proposing to require that other risks in the investment be low in all cases. Instead, the risk characteristics in the investment must be consistent with the purposes for which the investment is held. For instance, if an investment is held for the purpose of liquidity, it would have to be readily marketable 10 and would generally have to have low price volatility. On the other hand, an investment that is high quality but has high price volatility and questionable marketability may not be appropriate for a liquidity investment. Instead, it might be used effectively to manage interest rate risk. Finally, we propose moving to paragraph (b)(3) the existing requirement that the denomination of all investments must be in U.S. dollars.

We propose moving the existing § 652.20(e) provisions on seeking FCA approval for non-program investments that are not already identified in the regulation as an “eligible non-program investment” to new § 652.23. The proposed new § 652.23 explains the minimum considerations we give to such requests and reiterates our authority to impose in writing and enforce conditions of approval. We also add clarifying language that these investments, once approved, will be considered “eligible non-program investments” for purposes of applying the provisions in subpart A of part 652. We believe moving this aspect of the rule to its own section will make the provision easier to find and, along with the proposed clarifications, will facilitate the process by which such requests are submitted and reviewed.

We are proposing revisions to existing § 652.25 to conform with other proposed changes in this rulemaking and to add clarity. We propose adding language to clarify that this section applies to both those eligible non-program investments identified in the rule and to individual non-program investments that we approved on request. We also propose clarifying that those investments that were ineligible when purchased may not be used for liquidity purposes, but must still be included as part of the investment portfolio limit until their divestiture. We further propose removing the quarterly reporting requirements for investments that lose their eligibility after purchase.

We propose moving the existing § 652.25(d) provisions addressing FCA-required divestiture of an investment to new § 652.27. We believe moving this aspect of the rule to its own section will make the provision easier to find and reduce confusion on its applicability. In addition, we propose to make explicit our authority, on a case-by-case basis, to determine that a particular investment imposes inappropriate risk, notwithstanding that it satisfies the investment eligibility criteria. The proposal also provides that FCA will notify Farmer Mac as to the proper treatment of any such investment. We also propose conforming changes due to other proposed changes in this rulemaking to clarify that FCA-required divestiture may be based on a failure to comply with applicable regulations or written conditions of approval issued in connection with individual non-program investments that we approved on request.

We propose to make conforming changes in the Table to § 652.40(c). These changes would incorporate the proposed terminology changes of § 652.5. In addition, we propose changes to clarify that MBS must be fully guaranteed by a U.S. Government agency to qualify for Level 2 liquidity and fully guaranteed by a GSE to qualify for Level 3 liquidity.

In order to provide Farmer Mac with sufficient time to bring itself into compliance with these new requirements, we are proposing a 6-month compliance transition period. We invite your specific comments on this compliance timeframe.

Pursuant to section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), FCA hereby certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities. Farmer Mac has assets and annual income in excess of the amounts that would qualify it as a small entity. Therefore, Farmer Mac is not a “small entity” as defined in the Regulatory Flexibility Act.

For the reasons stated in the preamble, part 652 of chapter VI, title 12 of the Code of Federal Regulations is proposed to be amended as follows:

The Commission has requested comment in its Advance Notice of Proposed Rulemaking, Concept Release and Request for Comment (“Release”) with respect to transfer agent regulations.1 The Release identifies and seeks comment in various areas, including registration and reporting requirements, safeguarding of funds and securities, standards for restrictive legends, and cybersecurity. Additionally, the Release generally seeks comment on a broad range of topics in the transfer agent space, including the processing of book entry securities, recordkeeping for beneficial owners, administration of issuer plans, and the role of transfer agents to mutual funds and crowdfunding. The Release originally provided that comments must be received by February 29, 2016. The Commission has received requests to extend the comment period.2 The Commission believes that extending the comment period would be appropriate in order to provide the public additional time to consider and comment on the issues addressed in the Release. Therefore, the Commission is extending the public comment period for 45 days, until April 14, 2016.

In the Federal Register of January 4, 2016 (81 FR 42), we published a notice of filing of a food additive petition (FAP 5A4810) submitted by the Center for Science in the Public Interest, Natural Resources Defense Council, Center for Food Safety, Consumers Union, Improving Kids' Environment, Center for Environmental Health, Environmental Working Group, Environmental Defense Fund, and James Huff, c/o Mr. Thomas Neltner, 1875 Connecticut Ave. NW., Suite 600, Washington, DC 20009. The notice also invited comments on the petition. The petition proposes to amend 21 CFR 172.515, Synthetic flavoring substances and adjuvants, to no longer provide for the use of seven listed synthetic flavoring food additives and to establish zero tolerances for these additives. Specifically, the petitioners contend that new data establish that these substances are carcinogenic and are, therefore, not safe for use in food pursuant to the Delaney Clause (section 409(c)(3)(A) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 348(c)(3)(A))), which provides that no food additive shall be deemed to be safe if it is found to induce cancer when ingested by man or animal, or if it is found, after tests which are appropriate for the evaluation of the safety of food additives, to induce cancer in man or animal.

The seven food additives which are the subject of the petition are:

• Benzophenone (also known as diphenylketone) (CAS No. 119-61-9);

• Ethyl acrylate (CAS No. 140-88-5);

• Eugenyl methyl ether (also known as 4-allylveratrole or methyl eugenol) (CAS No. 93-15-2);

• Myrcene (also known as 7-methyl-3-methylene-1,6-octadiene) (CAS No. 123-35-3);

• Pulegone (also known as p-menth-4(8)-en-3-one) (CAS No. 89-82-7);

• Pyridine (CAS No. 110-86-1); and

• Styrene (CAS No. 100-42-5).

We have received a request for a 60-day extension of the comment period for the petition. The request conveyed concern that the current 60-day comment period does not allow sufficient time to collect and provide data and information and develop a meaningful and thoughtful response to the assertions set forth in the petition.

We have considered the request and are extending the comment period for the petition for an additional 60 days, until May 3, 2016. We believe that a 60-day extension allows adequate time for interested persons to submit comments without significantly delaying rulemaking on these important issues.

The proposed rule would establish requirements concerning “gluten-free” labeling for foods that are fermented or hydrolyzed or that contain fermented or hydrolyzed ingredients. These additional requirements for the “gluten-free” labeling rule are needed to help ensure that individuals with celiac disease are not misled and receive truthful and accurate information with respect to fermented or hydrolyzed foods labeled as “gluten-free.” We provided a 90-day comment period for the proposed rule.

We received multiple requests for a 60-day extension of the comment period and one request for a 90-day extension of the comment period for the proposed rule. Each request conveyed concern that the original 90-day comment period does not allow sufficient time to develop a meaningful or thoughtful response to the proposed rule. We have considered the requests and are reopening the comment period for the proposed rule until April 25, 2016. We believe that an additional 60-day period allows adequate time for interested persons to submit comments without significantly delaying rulemaking on these important issues. The period for comments regarding information collection issues under the Paperwork Reduction Act of 1995 remains unchanged, where comments were to be submitted until February 22, 2016 (see 81 FR 3751, January 22, 2016).

This document contains proposed amendments to 26 CFR part 1 under section 103 of the Internal Revenue Code (Code). Section 103 generally provides that, with certain exceptions, gross income does not include interest on any obligation of a State or political subdivision thereof. Section 1.103-1 of the Income Tax Regulations (the Existing Regulations) defines political subdivision as “any division of any State or local governmental unit which is a municipal corporation or which has been delegated the right to exercise part of the sovereign power of the unit.”

On a few occasions, Federal courts have ruled on whether an entity qualifies as a political subdivision. E.g., Philadelphia Nat'l Bank v. United States, 666 F.2d 834 (3d Cir. 1981); Comm'r of Internal Revenue v. White's Estate, 144 F.2d 1019 (2d Cir. 1944). The IRS has also addressed this issue in revenue rulings, most recently in 1983. E.g., Rev. Rul. 83-131 (1983-2 CB 184); Rev. Rul. 78-138 (1978-1 CB 314). Because the results in these revenue rulings generally turn on the unique facts and circumstances of the individual cases, numerous entities have sought and received letter rulings on whether they are political subdivisions. Letter rulings, however, are limited to their particular facts, may not be relied upon by taxpayers other than the taxpayer that received the ruling, and are not a substitute for published guidance. See 26 U.S.C. 6110(k)(3) (2015) (providing generally that a ruling, determination letter, or technical advice memorandum may not be used or cited as precedent).

Commenters have requested additional published guidance, to be applied prospectively, on which facts and circumstances are germane to an entity's status as a political subdivision. The Treasury Department and IRS recognize the need to clarify the definition of political subdivision to provide greater certainty to prospective issuers and to promote greater consistency in how the definition is applied across a wide range of factual situations. These proposed regulations (the Proposed Regulations) would provide a new definition of political subdivision for purposes of tax-exempt bonds and would update and streamline other portions of the Existing Regulations. The definition of political subdivision in the Proposed Regulations does not apply in determining whether an entity is treated as a political subdivision of a State for purposes of section 414(d) of the Code.

The Proposed Regulations clarify and further develop the eligibility requirements for a political subdivision. To qualify as a political subdivision under the Proposed Regulations, an entity must meet three requirements, taking into account all of the facts and circumstances: sovereign powers, governmental purpose, and governmental control. The Proposed Regulations also authorize the Commissioner to set forth in future guidance to be published in the Internal Revenue Bulletin additional circumstances in which an entity qualifies as a political subdivision.

The Proposed Regulations continue, without substantive change, the longstanding requirement that a political subdivision be empowered to exercise at least one of the generally recognized sovereign powers. The three sovereign powers recognized for this purpose are eminent domain, police power, and taxing power. See Comm'r of Internal Revenue v. Shamberg's Estate, 144 F.2d 998 (2d Cir. 1944). The entity must be able to exercise a substantial amount of at least one of these powers. See, e.g., Rev. Rul. 77-164 (1977-1 CB 20); Rev. Rul. 77-165 (1977-1 CB 21).

In determining whether an entity is a political subdivision, the case law and administrative guidance interpreting the definition of political subdivision in the Existing Regulations commonly consider whether the entity serves a public purpose. Historically, the determination of whether an entity serves a public purpose has focused on the purpose for which the entity was created, usually as set forth in the legislation authorizing creation of the entity, rather than on the entity's conduct after its creation. See, e.g., Shamberg's Estate, 144 F.2d at 1004. The Proposed Regulations require that a political subdivision serve a governmental purpose. A governmental purpose requires, among other things, that the purpose for which the entity was created, as set out in its enabling legislation, be a public purpose and that the entity actually serve that purpose. It also requires that the entity operate in a manner that provides a significant public benefit with no more than incidental benefit to private persons. Cf., Rev. Rul. 90-74 (1990-2 CB 34) (applying an “incidental private benefit” standard for purposes of determining whether income is included in gross income under section 115(1)).

The Proposed Regulations provide that a political subdivision must be governmentally controlled. The Proposed Regulations provide rules for determining both what constitutes control and which parties must possess that control.

The Proposed Regulations define control to mean ongoing rights or powers to direct significant actions of the entity. Rights or powers to direct the entity's actions only at a particular point in time are not ongoing and, therefore, do not constitute control. For example, the right to approve an entity's plan of operation as a condition of the entity's formation is not an ongoing right. To constitute control, a collection of rights and powers must enable its holder to direct the significant actions of the entity.

The Proposed Regulations provide three non-exclusive benchmarks of rights or powers that constitute control: (1) The right or power both to approve and to remove a majority of an entity's governing body; (2) the right or power to elect a majority of the governing body of the entity in periodic elections of reasonable frequency; or (3) the right or power to approve or direct the significant uses of funds or assets of the entity in advance of that use. Aside from these three arrangements, the determination of whether a collection of rights and powers constitutes control will depend on the facts and circumstances. Neither the right to dissolve an entity nor procedures designed to ensure the integrity of the entity but not to direct significant actions of the entity are control. Cf., Rev. Rul. 69-453 (1969-2 CB 182) (addressing procedures that do not constitute control in the context of instrumentalities).

Control by a small faction of private individuals, business corporations, trusts, partnerships, or other persons is fundamentally not governmental control. Therefore, the Proposed Regulations generally require that control be vested in either a general purpose State or local governmental unit or in an electorate established under an applicable State or local law of general application. If, however, a small faction of private persons controls an electorate, that electorate's control of the entity does not constitute governmental control of the entity. Accordingly, the Proposed Regulations provide that an entity controlled by an electorate is not governmentally controlled when the outcome of the exercise of control is determined solely by the votes of an unreasonably small number of private persons.

The determination of whether the number of private persons controlling an electorate is unreasonably small generally depends on all of the facts and circumstances. To provide certainty, the Proposed Regulations limit application of this facts and circumstances test to situations that fall between two quantitative measures of concentration in voting power. The number of private persons controlling an electorate is always unreasonably small if the combined votes of the three voters with the largest shares of votes in the electorate will determine the outcome of the relevant election, regardless of how the other voters vote. The number of private persons controlling an electorate is never unreasonably small if determining the outcome of the relevant election requires the combined votes of more voters than the 10 voters with the largest shares of votes in the electorate. For example, control can always be vested in any electorate comprised of 20 or more voters that each have the right to cast one vote in the relevant election without giving rise to a private faction. For purposes of applying these measures of concentration in voting power, related parties are treated as a single voter and the votes of the related parties are aggregated.

Some observers have suggested that, despite private control, development districts should be political subdivisions during an initial development period in which one or two private developers elect the district's governing body and no other governmental control exists. The Treasury Department and IRS recognize that the governmental control requirement may present challenges for such development districts. In these circumstances, the Treasury Department and IRS are concerned about the potential for excessive private control by individual developers, the attendant impact of excessive issuance of tax-exempt bonds, and inappropriate private benefits from this Federal subsidy. The Treasury Department and IRS seek public comment on whether it is necessary or appropriate to permit such districts to be political subdivisions during an initial development period; how such relief might be structured; what specific safeguards might be included in the recommended relief to protect against potential abuse; and whether the proposed prospective effective dates and transition periods in § 1.103-1(d) of the Proposed Regulations provide sufficient relief.

In addition to amending the definition of political subdivision, paragraphs (a) and (b) of the Proposed Regulations update the references in the general provisions of the Existing Regulations to reflect changes to the Code made in the Tax Reform Act of 1986, Public Law 99-514, 100 Stat. 2085, and other laws and regulations since the promulgation of the longstanding Existing Regulations. The Proposed Regulations also streamline these provisions. In general, the Treasury Department and the IRS intend that these proposed amendments not change the meaning of the Existing Regulations. The last sentence of § 1.103-1(a) of the Proposed Regulations, however, clarifies that the continued tax-exemption of an issue of bonds depends on its issuer's continued status as a qualifying issuer of tax-exempt bonds. The Treasury Department and IRS seek comments on the need for remedial action provisions in the event the entity ceases to qualify as a political subdivision and on the substance of any such provisions.

Subject to certain transition rules, the Proposed Regulations generally would apply to all entities for all purposes of the tax-exempt bond provisions of sections 103 and 141 to 150 beginning 90 days after the Proposed Regulations are finalized. In order to ease hardship that may arise from the new definition of political subdivision, under proposed transition rules, that definition would not apply for purposes of determining whether outstanding bonds and refunding bonds in which the weighted average maturity is not extended continue to be obligations of a political subdivision. While these transition rules for outstanding bonds and refunding bonds would apply for the purpose of determining whether these bonds continue to be obligations of a political subdivision, the new proposed definition of political subdivision would apply for other purposes under sections 103 and 141 to 150, such as whether a new entity that subsequently became a user of a project financed with such bonds qualified as a State or local governmental unit for purposes of section 141. Furthermore, under another proposed transition rule that would apply to entities in existence prior to 30 days after the Proposed Regulations are published, the proposed definition of political subdivision would not apply for any purpose until three years and ninety days after the Proposed Regulations are finalized. This three-year transition period provides existing entities an opportunity to restructure as necessary to satisfy the new definition of political subdivision and allows existing entities to continue to issue new bonds during the transition period. To enhance certainty, an issuer also may choose to apply the definition of political subdivision in § 1.103-1(c) in the final regulations in circumstances in which that definition otherwise would not apply under the transition rules.

In addition, prior to the applicability date of the final regulations, issuers may elect to apply the definition of political subdivision in § 1.103-1(c) of the Proposed Regulations in whole, but not in part, for any purpose of sections 103 and 141 through 150, provided such use is applied consistently for all purposes of sections 103 and 141 through 150 to any given entity.

Certain IRS regulations, including this one, are exempt from the requirements of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory impact assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and because these regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Code, this notice of proposed rulemaking has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small entities.

Before these Proposed Regulations are adopted as final regulations, consideration will be given to any comments that are submitted timely to the IRS as prescribed in this preamble under the “Addresses” heading. The Treasury Department and the IRS request comments on all aspects of the proposed rules. All comments will be available at www.regulations.gov or upon request.

A public hearing has been scheduled for June 6, 2016, at 10:00 a.m., in the Auditorium of the Internal Revenue Building, 1111 Constitution Avenue NW., Washington, DC. Due to building security procedures, visitors must enter at the Constitution Avenue entrance. In addition, all visitors must present photo identification to enter the building. Because of access restrictions, visitors will not be admitted beyond the immediate entrance area more than 30 minutes before the hearing starts. For more information about having your name placed on the building access list to attend the hearing, see the FOR FURTHER INFORMATION CONTACT section of this preamble.

The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who wish to present oral comments at the hearing must submit an outline of the topics to be discussed and the time to be devoted to each topic by May 23, 2016. Submit a signed paper or electronic copy of the outline as prescribed in this preamble under the “Addresses” heading. A period of 10 minutes will be allotted to each person for making comments. An agenda showing the scheduling of the speakers will be prepared after the deadline for receiving outlines has passed. Copies of the agenda will be available free of charge at the hearing.

The principal authors of these regulations are Spence Hanemann and Timothy Jones, Office of Associate Chief Counsel (Financial Institutions and Products), IRS. However, other personnel from the IRS and the Treasury Department participated in their development.

IRS revenue rulings cited in this notice of proposed rulemaking are made available by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402.

Accordingly, 26 CFR part 1 is proposed to be amended as follows:

Background

On November 10, 2015, we received a petition from Defenders of Wildlife to list the giant manta ray (M. birostris), reef manta ray (M. alfredi) and Caribbean manta ray (M. c.f. birostris) as threatened or endangered under the ESA throughout their respective ranges, or, as an alternative, to list any identified DPSs as threatened or endangered. The petition also states that if the Caribbean manta ray is determined to be a subspecies of the giant manta ray and not a distinct species, then we should consider listing the subspecies under the ESA. However, if we determine that the Caribbean manta ray is neither a species nor a subspecies, then the petition requests that we list the giant manta ray, including all specimens in the Caribbean, Gulf of Mexico and southeastern United States, under the ESA. The petition requests that critical habitat be designated concurrently with listing under the ESA. Copies of the petition are available upon request (see ADDRESSES).

Section 4(b)(3)(A) of the ESA of 1973, as amended (16 U.S.C. 1531 et seq.), requires, to the maximum extent practicable, that within 90 days of receipt of a petition to list a species as threatened or endangered, the Secretary of Commerce make a finding on whether that petition presents substantial scientific or commercial information indicating that the petitioned action may be warranted, and to promptly publish such finding in the Federal Register (16 U.S.C. 1533(b)(3)(A)). When it is found that substantial scientific or commercial information in a petition indicates the petitioned action may be warranted (a “positive 90-day finding”), we are required to promptly commence a review of the status of the species concerned during which we will conduct a comprehensive review of the best available scientific and commercial information. In such cases, we conclude the review with a finding as to whether, in fact, the petitioned action is warranted within 12 months of receipt of the petition. Because the finding at the 12-month stage is based on a more thorough review of the available information, as compared to the narrow scope of review at the 90-day stage, a “may be warranted” finding does not prejudge the outcome of the status review.

Under the ESA, a listing determination may address a species, which is defined to also include subspecies and, for any vertebrate species, any DPS that interbreeds when mature (16 U.S.C. 1532(16)). A joint NMFS-U.S. Fish and Wildlife Service (USFWS) (jointly, “the Services”) policy clarifies the agencies' interpretation of the phrase “distinct population segment” for the purposes of listing, delisting, and reclassifying a species under the ESA (61 FR 4722; February 7, 1996). A species, subspecies, or DPS is “endangered” if it is in danger of extinction throughout all or a significant portion of its range, and “threatened” if it is likely to become endangered within the foreseeable future throughout all or a significant portion of its range (ESA sections 3(6) and 3(20), respectively, 16 U.S.C. 1532(6) and (20)). Pursuant to the ESA and our implementing regulations, we determine whether species are threatened or endangered based on any one or a combination of the following five section 4(a)(1) factors: The present or threatened destruction, modification, or curtailment of habitat or range; overutilization for commercial, recreational, scientific, or educational purposes; disease or predation; inadequacy of existing regulatory mechanisms; and any other natural or manmade factors affecting the species' existence (16 U.S.C. 1533(a)(1), 50 CFR 424.11(c)).

ESA-implementing regulations issued jointly by NMFS and USFWS (50 CFR 424.14(b)) define “substantial information” in the context of reviewing a petition to list, delist, or reclassify a species as the amount of information that would lead a reasonable person to believe that the measure proposed in the petition may be warranted. In evaluating whether substantial information is contained in a petition, the Secretary must consider whether the petition: (1) Clearly indicates the administrative measure recommended and gives the scientific and any common name of the species involved; (2) contains detailed narrative justification for the recommended measure, describing, based on available information, past and present numbers and distribution of the species involved and any threats faced by the species; (3) provides information regarding the status of the species over all or a significant portion of its range; and (4) is accompanied by the appropriate supporting documentation in the form of bibliographic references, reprints of pertinent publications, copies of reports or letters from authorities, and maps (50 CFR 424.14(b)(2)).

At the 90-day finding stage, we evaluate the petitioners' request based upon the information in the petition including its references and the information readily available in our files. We do not conduct additional research, and we do not solicit information from parties outside the agency to help us in evaluating the petition. We will accept the petitioners' sources and characterizations of the information presented if they appear to be based on accepted scientific principles, unless we have specific information in our files that indicates the petition's information is incorrect, unreliable, obsolete, or otherwise irrelevant to the requested action. Information that is susceptible to more than one interpretation or that is contradicted by other available information will not be dismissed at the 90-day finding stage, so long as it is reliable and a reasonable person would conclude it supports the petitioners' assertions. In other words, conclusive information indicating the species may meet the ESA's requirements for listing is not required to make a positive 90-day finding. We will not conclude that a lack of specific information alone negates a positive 90-day finding if a reasonable person would conclude that the unknown information itself suggests an extinction risk of concern for the species at issue.

To make a 90-day finding on a petition to list a species, we evaluate whether the petition presents substantial scientific or commercial information indicating the subject species may be either threatened or endangered, as defined by the ESA. First, we evaluate whether the information presented in the petition, along with the information readily available in our files, indicates that the petitioned entity constitutes a “species” eligible for listing under the ESA. Next, we evaluate whether the information indicates that the species faces an extinction risk that is cause for concern; this may be indicated in information expressly discussing the species' status and trends, or in information describing impacts and threats to the species. We evaluate any information on specific demographic factors pertinent to evaluating extinction risk for the species (e.g., population abundance and trends, productivity, spatial structure, age structure, sex ratio, diversity, current and historical range, habitat integrity or fragmentation), and the potential contribution of identified demographic risks to extinction risk for the species. We then evaluate the potential links between these demographic risks and the causative impacts and threats identified in section 4(a)(1).

Information presented on impacts or threats should be specific to the species and should reasonably suggest that one or more of these factors may be operative threats that act or have acted on the species to the point that it may warrant protection under the ESA. Broad statements about generalized threats to the species, or identification of factors that could negatively impact a species, do not constitute substantial information indicating that listing may be warranted. We look for information indicating that not only is the particular species exposed to a factor, but that the species may be responding in a negative fashion; then we assess the potential significance of that negative response.

Many petitions identify risk classifications made by nongovernmental organizations, such as the International Union on the Conservation of Nature (IUCN), the American Fisheries Society, or NatureServe, as evidence of extinction risk for a species. Risk classifications by other organizations or made under other Federal or state statutes may be informative, but such classification alone may not provide the rationale for a positive 90-day finding under the ESA. For example, as explained by NatureServe, their assessments of a species' conservation status do “not constitute a recommendation by NatureServe for listing under the U.S. Endangered Species Act” because NatureServe assessments “have different criteria, evidence requirements, purposes and taxonomic coverage than government lists of endangered and threatened species, and therefore these two types of lists should not be expected to coincide” (http://www.natureserve.org/prodServices/pdf/NatureServeStatusAssessmentsListing-Dec%202008.pdf). Additionally, species classifications under IUCN and the ESA are not equivalent; data standards, criteria used to evaluate species, and treatment of uncertainty are also not necessarily the same. Thus, when a petition cites such classifications, we will evaluate the source of information that the classification is based upon in light of the standards on extinction risk and impacts or threats discussed above.

The petition identifies three manta ray “species” as eligible for listing under the ESA: The giant manta ray (M. birostris), reef manta ray (M. alfredi), and Caribbean manta ray (M. c.f. birostris). Manta is one of two genera under the family Mobulidae, the second being Mobula (commonly referred to as “devil rays”). Collectively, manta and devil rays are referred to as mobulid rays and are often confused with one another. Until recently, all manta rays were considered to be a single species known as Manta birostris (Walbaum 1792). However, in 2009, Marshall et al. (2009) provided substantial evidence to support splitting the monospecific Manta genus into two distinct species. Based on new morphological and meristic data, the authors confirmed the presence of two visually distinct species: Manta birostris and Manta alfredi (Krefft 1868). Manta birostris is the more widely distributed and oceanic of the two species, found in tropical to temperate waters worldwide and common along productive coastlines, particularly off seamounts and pinnacles (Marshall et al. 2009; CITES 2013). Manta alfredi is more commonly observed inshore in tropical waters, found near coral and rocky reefs and also along productive coastlines. It primarily occurs throughout the Indian Ocean and in the eastern and south Pacific, with only a few reports of the species in Atlantic waters (off the Canary Islands, Cape Verde Islands and Senegal).While both species are wide-ranging, and are even sympatric in some locations, Marshall et al. (2009) provides a visual key to differentiate these two species based on coloration, dentition, denticle and spine morphology, size at maturity, and maximum disc width. For example, in terms of coloration, M. birostris can be distinguished by its large, white, triangular shoulder patches that run down the middle of its dorsal surface, in a straight line parallel to the edge of the upper jaw. The species also has dark (black to charcoal grey) mouth coloration, medium to large black spots that occur below its fifth gill slits, and a grey V-shaped colored margin along the posterior edges of its pectoral fins (Marshall et al. 2009). In contrast, M. alfredi has pale to white shoulder patches where the anterior margin spreads posteriorly from the spiracle before curving medially, a white to light grey mouth, small dark spots that are typically located in the middle of the abdomen, in between the five gill slits, and dark colored bands on the posterior edges of the pectoral fins that only stretch mid-way down to the fin tip (Marshall et al. 2009). The separation of these two manta species appears to be widely accepted by both taxonomists (with Marshall et al. (2009) published in the international animal taxonomist journal, Zootaxa) and international scientific bodies (Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) and Food and Agriculture Organization of the United Nations (FAO); see CITES (2013) and FAO (2013)), and, as such, we consider both M. birostris and M. alfredi to be taxonomically distinct species eligible for listing under the ESA.

The petitioners identify a third manta ray species, which they refer to as M. cf. birostris, or the “Caribbean manta ray,” based on their interpretation of data from Clark (2001). Clark (2001) is a Master's thesis that examined the population structure of M. birostris from the Pacific and Atlantic Oceans. This study was conducted prior to the splitting of the monospecific Manta genus, and, as such, all of the manta rays identified in the study are referred to as M. birostris. However, the petitioners argue that the genetic differences between populations discussed in Clark (2001) provide support for the differentiation of the Caribbean manta ray from M. birostris. Clark (2001) examined sequences of mitochondrial DNA (mtDNA) from 18 manta ray individuals and calculated the genetic divergence among haplotypes. Based on these estimates, Clark (2001) divided the 18 individuals into three operational taxonomic units: A Western Pacific unit (which included samples from Hawaii, French Frigate Shoals, Yap, and Fiji; n=5), a Baja unit (which included samples from two individuals from the Gulf of Mexico; n=10), and a Gulf of Mexico unit (n=3). The results showed low genetic divergence among samples from the Western Pacific (0.038-0.076 percent sequence divergence), hence their taxonomic grouping. Based on findings and distribution maps from Marshall et al. (2009), these samples were all likely taken from M. alfredi individuals. Similarly, the Baja samples were likely all from M. birostris individuals. Clark (2001) notes that the mtDNA haplotypes from the five individuals collected in the Gulf of Mexico formed two groups with percent sequence divergence values that were similar in magnitude to estimates obtained from geographically distinct samples. In other words, the mtDNA haplotypes from three of the Gulf of Mexico individuals were as distant genetically from the other two Gulf of Mexico individuals (0.724-0.80 percent sequence divergence) as samples from the Western Pacific unit were compared to the Baja unit (0.609-0.762 percent). Furthermore, the two Gulf of Mexico samples, which had identical sequences, were similar genetically to haplotype samples from Baja (0.076-0.228 percent sequence divergence), with phylogenetic analysis strongly supporting the pooling of these samples with the Baja taxonomic unit. The other Gulf of Mexico group (n=3) showed percent sequence divergence values ranging from 0.647-0.838 percent when compared to the Baja taxonomic unit and to the Western Pacific unit. The most parsimonious tree representing the phylogenic relationship among the mtDNA haplotypes had three well-supported clades that differed from one another by at least 14 nucleotide substitutions: A clade consisting of clustered western Pacific samples, the three Gulf of Mexico samples as another clade, and the third clade represented by the samples from Baja and the two genetically similar Gulf of Mexico samples.

The petitioners argue that the Gulf of Mexico clade, noted above, represents a third, distinct species of manta ray, which they identify as Manta c.f. birostris. While the genetic divergence between the Gulf of Mexico population and the Baja population (assumed to be M. birostris) was high relative to the intrapopulation values, this analysis was based on an extremely low sample size, with only three samples from the Gulf of Mexico, and thus cannot be reasonably relied upon to support the identification of a new species of manta ray. It is also important to note that this study analyzed only mtDNA. At best, this mtDNA evidence suggests that M. birostris females in the Gulf of Mexico may be philopatric (i.e., returning or remaining near its home area); however, mtDNA does not alone describe population structure. Because mtDNA is maternally inherited, differences in mtDNA haplotypes between populations do not necessarily mean that the populations are substantially reproductively isolated from each other because they do not provide any information on males. As demonstrated in previous findings, in species where female and male movement patterns differ (such as philopatric females but wide-ranging males), analysis of mtDNA may indicate discrete populations, but analysis of nuclear (or bi-parentally inherited) DNA could show homogenous populations as a result of male-mediated gene flow (see e.g., loggerhead sea turtle, 68 FR 53947, September 15, 2003, and sperm whale, 78 FR 68032, November 13, 2013). Although very little is known about the reproductive behavior of the species, the available information suggests that M. birostris is highly migratory, with males potentially capable of reproducing with females in different populations. Manta birostris is a cosmopolitan species, and in the western Atlantic has been documented as far north as Rhode Island and as far south as Uruguay. Marshall et al. (2009) note that the available information indicates that M. birostris is more oceanic than M. alfredi, and undergoes significant seasonal migrations. In a tracking study of six M. birostris individuals from off Mexico's Yucatan peninsula, Graham et al. (2012) calculated a maximum distance travelled of 1,151 km (based on cumulative straight line distance between locations), further confirming that the species is capable of fairly long-distance migrations. As such, it does not seem unreasonable to suggest that males from one M. birostris population may breed with females from other populations. We highlight the fact that all of the Gulf of Mexico samples from the Clark (2001) study were taken from the same area, the Flower Garden Banks National Marine Sanctuary, indicating significant overlap and potential for interchange of individuals between M. birostris populations, at least in the western Atlantic. In other words, without nuclear DNA analyses, or additional information on the mating and reproductive behavior of the species, we cannot confidently make conclusions regarding the genetic discreteness or reproductive isolation of the M. birostris populations in the western Atlantic. Therefore, at this time, we do not find that the petition's interpretation of the Clark (2001) results is substantial scientific or commercial information to indicate that M. c.f. birostris is a distinct species under the ESA. Furthermore, based on the conclusions from the widely accepted recent manta ray taxonomy publication (Marshall et al. 2009), to which we defer as the authority and best available scientific information on this topic, there is not enough information at this time to conclude that M. c.f. birostris is a distinct manta ray species. While Marshall et al. (2009) noted the possibility of this third, putative species, the authors were similarly limited by sample size. The authors examined only one physical specimen (an immature male killed in 1949) and concluded that “further examination of specimens is necessary to clarify the taxonomic status of this variant manta ray.” The authors proceed to state:

The giant manta ray is a circumglobal species found in temperate to tropical waters (Marshall et al. 2009). In the Atlantic, it ranges from Rhode Island to Uruguay in the west and from the Azores Islands to Angola in the east. The species is also found throughout the Indian Ocean, including off South Africa, within the Red Sea, around India and Indonesia, and off western Australia. In the Pacific, the species is found as far north as Mutsu Bay, Aomori, Japan, south to the eastern coast of Australia and the North Island of New Zealand (Marshall et al. 2011a; Couturier et al. 2015). It has also been documented off French Polynesia and Hawaii, and in the eastern Pacific, its range extends from southern California south to Peru (Marshall et al. 2009; Mourier 2012; CITES 2013).

The species is thought to spend the majority of its time in deep water, but migrates seasonally to productive coastal areas, oceanic island groups, pinnacles and seamounts (Marshall et al. 2009; CITES 2013). Giant manta rays have been observed visiting cleaning stations on shallow reefs (i.e., locations where manta rays will solicit cleaner fish, such as wrasses, shrimp, and gobies, to remove parasitic copepods and other unwanted materials from their body) and are occasionally observed in sandy bottom areas and seagrass beds (Marshall et al. 2011a). While generally known as a solitary species, the giant manta ray has been sighted in large aggregations for feeding, mating, or cleaning purposes (Marshall et al. 2011a). In parts of the Atlantic and Caribbean, there is evidence that some M. birostris populations may exhibit differences in fine-scale and seasonal habitat use (Marshall et al. 2009).

The general life history characteristics of the giant manta ray are that of a long-lived and slow-growing species, with extremely low reproductive output (Marshall et al. 2011a; CITES 2013). The giant manta ray can grow to over 7 meters (measured by wingspan, or disc width (DW)) with anecdotal reports of the species reaching sizes of up to 9 m DW, and longevity estimated to be at least 40 years old (Marshall et al. 2009; Marshall et al. 2011a). Size at maturity for M. birostris varies slightly throughout its range, with males estimated to mature around 3.8-4 m DW and females at around 4.1-4.7 m DW (White et al. 2006; Marshall et al. 2009). Generally, maturity appears to occur at around 8-10 years (Marshall et al. 2011a; CITES 2013). The giant manta ray is viviparous (i.e., gives birth to live young), with a gestation period of 10-14 months. Manta rays have among the lowest fecundity of all elasmobranchs, typically giving birth to only one pup on average every 2-3 years, which translates to around 5-15 pups total over the course of a female manta ray's lifetime (Couturier et al. 2012; CITES 2013).

Manta rays are filter-feeders that feed almost entirely on plankton. In a tracking study of M. birostris, Graham et al. (2012) noted that the species exhibited plasticity in its diet, with the ability to switch between habitat and prey types, and fed on three major prey types: Copepods (occurring in eutrophic waters), chaetognaths (predatory marine worms that feed on copepods), and fish eggs (occurring in oligotrophic waters). Because manta rays are large filter-feeders that feed low in the food chain, they can potentially be used as indicator species that reflect the overall health of the ecosystem (CITES 2013).

The reef manta ray is primarily observed in tropical and subtropical waters. It is widespread throughout the Indian Ocean, from South Africa to the Red Sea, and off Thailand and Indonesia to Western Australia. In the western Pacific, its range extends from the Yaeyama Islands, Japan in the north to the Solitary Islands, Australia in the south, and as far east as French Polynesia and the Hawaiian Islands (Marshall et al. 2009; Mourier 2012). Reef manta rays have not been found in the eastern Pacific, and are rarely observed in the Atlantic, with only a few historical reports or photographs of M. alfredi from off the Canary Islands, Cape Verde Islands, and Senegal (Marshall et al. 2009).

In contrast to the giant manta ray, M. alfredi is thought to be more of a resident species, commonly observed inshore, around coral and rocky reefs, productive coastlines, tropical island groups, atolls, and bays (Marshall et al. 2009). According to Marshall et al. (2009), the species tends to exhibit smaller home ranges, philopatry, and shorter seasonal migrations compared to M. birostris. However, recent tracking studies, while showing evidence of site fidelity (Couturier et al. 2011; Deakos et al. 2011), also indicate that M. alfredi travels greater distances than previously thought (e.g., >700 km), with distances similar to those exhibited by M. birostris (Convention on Migratory Species (CMS) 2014). Braun et al. (2014) also observed diel behavior in M. alfredi whereby the manta rays occupy shallower waters (such as reef cleaning stations and feeding grounds; <10 m depths) during daylight hours and move toward deeper, offshore pelagic habitats throughout the night. It is thought that this behavior, which has also been reported for M. birostris (CMS 2014), is associated with feeding, with mantas exploiting emergent reef and pelagic plankton that move into the photic zone at night (Braun et al. 2014). The authors also confirmed the capability of M. alfredi to conduct deep-water dives (up to 432 m), the purpose of which has not yet been understood.

The reef manta ray has a similar life history to that of the giant manta ray; however, M. alfredi grows to a smaller size than M. birostris. Based on observations from southern Mozambique, reef manta rays can grow to slightly over 5 m DW (Marshall et al. 2009). Maturity estimates range from around 2.5-3.0 m DW for males, and 3.0-3.9 m DW for females, which corresponds to around 8-10 years of age (Marshall et al. 2009; Deakos 2010; Marshall and Bennett 2010; Marshall et al. 2011b). Longevity is unknown but is thought to be at least 40 years (Marshall et al. 2011b). The reef manta ray is also viviparous, with a gestation period of around 12 months, and typically gives birth to only one pup on average every 2 years; however, there are reports of individuals reproducing annually in both the wild and captivity (Marshall and Bennett 2010).

Using estimates of known life history parameters for both giant and reef manta rays, and plausible range estimates for the unknown life history parameters, Dulvy et al. (2014) calculated a maximum population growth rate of Manta spp. and found it to be one of the lowest values when compared to 106 other shark and ray species. Specifically, the median maximum population growth rate (Rmax) was estimated to be 0.116, which is among the lowest calculated for chondrichthyan species and is actually more similar to those estimates calculated for marine mammal species (Croll et al. 2015). Productivity (r) was calculated to be 0.029 (Dulvy et al. 2014). When compared to the productivity parameters and criteria in Musick (1999), manta rays can be characterized as having “very low” productivity (<0.05). Overall, given their life history traits and productivity estimates, manta ray populations (discussed in more detail below) are extremely susceptible to depletion and vulnerable to extirpations (CITES 2013).

The petition contains information on the two manta ray species, including their taxonomy, description, geographic distribution, habitat, population status and trends, and factors contributing to the species' declines. According to the petition, all five causal factors in section 4(a)(1) of the ESA are adversely affecting the continued existence of both the giant and reef manta ray: (A) The present or threatened destruction, modification, or curtailment of its habitat or range; (B) overutilization for commercial, recreational, scientific, or educational purposes; (C) disease or predation; (D) inadequacy of existing regulatory mechanisms; and (E) other natural or manmade factors.

In the following sections, we summarize and evaluate the information presented in the petition and in our files on the status of M. birostris and M. alfredi and the ESA section 4(a)(1) factors that may be affecting these species' risks of global extinction. Based on this evaluation, we determine whether a reasonable person would conclude that an endangered or threatened listing may be warranted for these two manta ray species.

The global abundance of either manta species is unknown, with no available historical baseline population data. Worldwide, only 10 subpopulations of M. birostris and 14 subpopulations of M. alfredi have been identified and studied, and in most cases are comprised of fewer than 1,000 individuals (see Annex V; CITES 2013). An additional 25 more subpopulations are known to exist, and although species-level information is unavailable, these subpopulations are also assumed to consist of very small aggregations. Given this information, it can be inferred that global population numbers of both M. birostris and M. alfredi are likely to be small (CITES 2013).

For M. birostris, the small subpopulations are thought to be sparsely distributed. In the 10 studied subpopulations mentioned above, the number of recorded individuals ranges from 60 to around 650 (Annex V; CITES 2013). The only subpopulation estimate available is from the aggregation site off southern Mozambique, where 5 years of mark and recapture data (2003-2008) were used to estimate a local subpopulation of 600 individuals (CITES 2013 citing Marshall 2009).

Reef manta ray subpopulations are also thought to be small and geographically fragmented. The number of individuals recorded from the monitored aggregation sites mentioned above range from 35 to 2,410 (Annex V; CITES 2013). Estimates of subpopulations are available from five aggregation sites, ranging from around 100 individuals in Yap, Micronesia to 5,000 in the Republic of Maldives, which, presently, is the largest known aggregation of manta rays (CITES 2013). Based on mark-recapture data, subpopulations in southern Mozambique and western Australia are estimated to be on the order of around 890 and 1,200-1,500 individuals, respectively, and the subpopulation found off Maui, Hawaii is estimated to comprise around 350 individuals (Annex V; CITES 2013).

Given the small, sparsely distributed, and highly fragmented nature of these subpopulations, even a small number of mortalities could potentially have significant negative population-level effects that may lead to regional extirpations (CITES 2013; CMS 2014), increasing these species' risks of global extinction. In fact, information from known aggregation sites suggests global abundance may already be declining, with significant subpopulation reductions (as high as 56-86 percent) for both Manta species observed in a number of regions (see Annex VI; CITES 2013). [Note: As the Manta genus was split in 2009, information prior to this year is lumped for both species. Where possible (i.e., in locations where the two species are allopatric or where species is described or assumed), we identify the likely species to which the dataset applies.] For example, based on annual landings data from Lamakera, Indonesia, Manta spp. landings fell from 1,500 individuals in 2001 to only 648 in 2010, a decline of 57 percent in 9 years. Fishing effort was also noted to have increased over those years, from 30 boats in 2001 to 40 boats in 2011, with no other change to gear or fishing practices (CITES 2013), indicating that the observed decline in Manta spp. could likely be attributed to a decrease in abundance of the subpopulation. Similarly, a 57 percent decline in Manta spp. landings in Lombok, Indonesia over the course of 6-7 years was also observed, based on market surveys and fishermen and dealer interviews conducted between 2001-2005 and 2007-2011. In the Philippines, artisanal fishermen indicate declines of up to 50 percent in Manta spp. landings over the course of 30 years.

Anecdotal reports and professional diver observational data also suggest substantial declines from historical numbers, with significantly fewer diver sightings and overall sporadic observations of manta rays in areas where they were once common (CITES 2013). For example, off southern Mozambique, scuba divers reported an average of 6.8 mantas (likely M. alfredi) per dive, but by 2011, this figure had dropped to less than 1, a decline of 86 percent (CITES 2013 citing Rohner et al. in press). Off the Similan-Surin Islands in Thailand, sightings of manta rays (likely M. birostris) fell from 59 in 2006-2007 to only 14 in 2011-2012, a decline of 76 percent in only 5 years (CITES 2013). Declines were also observed off Japan, with manta ray numbers (likely M. alfredi) sighted by divers dropping from 50 in 1980 to 30 in 1990 (CITES 2013 citing Homma et al. 1999). In Cocos Island National Park, a Marine Protected Area (MPA), White et al. (2015) used diver sighting data to estimate a decline of 89 percent in M. birostris relative abundance, although the authors noted that giant manta rays were observed “only occasionally” in the area over the course of the study. Additionally, in the Sea of Cortez, the subpopulation (of likely M. birostris) is thought to have completely collapsed, with manta rays rarely seen despite being present on every major reef and frequently observed during dives back in the early 1980s (CITES 2013). Anecdotal reports from Madagascar, India, and the Philippines reflect similar situations, with scuba divers and fishermen noting the large declines in the manta ray populations over the past decade and present rarity of the species (CITES 2013).

Not all subpopulations are declining, though, with information to suggest that those manta ray aggregations not subject to fishing or located within protected areas are presently stable. These include the manta ray aggregations found off Micronesia, Palau, Hawaii, and currently the largest known aggregation off the Maldives (CITES 2013). However, given these species' sensitive life history traits and demographic risks, including small, sparsely distributed, and highly fragmented subpopulations (which inhibit recruitment and recovery following declines), we find that the declining and unknown statuses of the remaining 43 subpopulations to be a concern, especially as it relates to the global extinction risk of these two manta ray species, and thus, further investigation is warranted.

While the petition presents information on each of the ESA Section 4(a)(1) factors, we find that the information presented, including information within our files, regarding the overutilization of these two species for commercial purposes is substantial enough to make a determination that a reasonable person would conclude that these species may warrant listing as endangered or threatened based on this factor alone. As such, we focus our below discussion on the evidence of overutilization for commercial purposes and present our evaluation of the information regarding this factor and its impact on the extinction risk of the two manta ray species.

Information from the petition and in our files suggests that the primary threat to both M. birostris and M. alfredi is overutilization by fisheries. Because both species exhibit affinities for coastal habitats and aggregate in predictable locations, they are especially vulnerable to being caught in numerous types of fishing gear and are both targeted and taken as bycatch in various commercial and artisanal fisheries (CITES 2013; Croll et al. 2015). They have historically been a component of subsistence fishing for decades, primarily fished with simple fishing gear (CITES 2013); however, international demand for manta ray gill rakers (sometimes referred to as “gill plates”—thin, cartilage filaments used to filter plankton out of the water) has led to a significant increase in fishing pressure on both species. The gill rakers are used in Asian medicine and are thought to have healing properties, from curing chicken pox to cancer, with claims that they also boost the immune system, purify the body, enhance blood circulation, remedy throat and skin ailments, cure male kidney issues, and help with fertility problems (Heinrichs et al. 2011). The use of gill rakers as a remedy, which was widespread in Southern China many years ago, has recently gained renewed popularity over the past decade as traders have increased efforts to market its healing and immune boosting properties directly to consumers (Heinrichs et al. 2011). As a result, demand has significantly increased, incentivizing fishermen who once avoided capture of manta rays to directly target these species (Heinrichs et al. 2011; CITES 2013). According to Heinrichs et al. (2011), it is primarily the older population in Southern China as well as Macau, Singapore, and Hong Kong, that ascribe to the belief of the healing properties of the gill rakers; however, the gill rakers are not considered “traditional” or “prestigious” items (i.e., shark fins) and many consumers and sellers are not even aware that gill rakers come from manta or mobula rays (devil rays). Meat, cartilage, and skin of manta rays are also utilized, but valued at significantly less than the gill rakers, and usually enter local trade or are kept for domestic consumption (Heinrichs et al. 2011; CITES 2013).

In terms of the market and trade of gill rakers, Guangzhou, Guangdong Province in Southern China is considered to be the “epicenter” for trade and consumption, comprising as much as 99 percent of the global gill raker market (Heinrichs et al. 2011). Gill rakers specifically from giant manta rays comprise a large proportion of this trade. Based on market investigations (see Annex VIII; CITES 2013), around 30 percent of the gill raker stock in stores consisted of “large” gill rakers attributed to M. birostris, and had an average sale price in Guangzhou of $251/kg (with some selling for up to $500/kg). Small gill rakers attributed to Manta spp. (including juvenile M. birostris) comprised 4 percent of the stock but sold for the fairly high average price of $177/kg. In total, about 61,000 kg of gill rakers (from both mobula and manta rays) are traded annually. While Manta spp. made up about a third of this total, in terms of total market value, they comprised almost half (45 percent; around $5 million) of the total value of the trade. This indicates the higher value placed on manta ray gill rakers compared to mobula ray gill rakers (Annex VIII; CITES 2013). While this trade does not significantly contribute to the Chinese dried seafood or Traditional Chinese Medicine industries (and amounting to less than 3 percent of the value of the shark fin trade), the numbers of manta rays traded annually, estimated at 4,653 individuals (average), are around three times higher than the vast majority of known subpopulation and aggregation estimates for these two species (CITES 2013). In other words, the amount of manta rays killed every year for the gill raker trade is equivalent to removing multiple subpopulations of these species, and given their demographic risks of extremely low productivity, evidence of declining population abundances, and low spatial structure and connectivity, we conclude that this level of utilization for the gill raker trade is a threat that may be significantly contributing to the extinction risk of M. birostris and M. alfredi and requires further investigation.

The three countries presently responsible for the largest documented fishing and exporting of Manta spp. are Indonesia, Sri Lanka, and India. These countries account for an estimated 90 percent of the world's Manta spp. catch, yet, prior to 2013, when the species complex was added to Appendix II of CITES, lacked any sort of landings restrictions or regulations pertaining to manta rays (CITES 2013). Furthermore, the fact that there is no documented domestic use of gill rakers within these countries, with reports that income from directed fisheries for Manta spp. is unlikely to even cover the cost of fuel without the gill raker trade, further points to the significant and lucrative incentives of the gill raker trade as the primary driver of directed manta ray fisheries (CITES 2013). In fact, prior to the rapid growth of the gill raker trade, fishermen in Sri Lanka would avoid setting nets in known Manta spp. aggregation areas, and release any incidentally caught manta rays alive (Heinrichs et al. 2011). However, with the increase in the international demand and high value for gill rakers, fishermen are now landing all Manta spp. and CITES (2013) warns that directed and opportunistic fisheries may develop elsewhere.

In the Pacific, directed fisheries for manta rays already exist (or existed) in many areas, including China, Tonga, Peru, and Mexico. In Zhejiang, China, Heinrichs et al. (2011) (citing Hilton 2011) estimate that fisheries currently targeting manta rays land around 100 individuals per year (species not identified). While subpopulation estimates in this area are unknown, it is likely that this level of fishing mortality is contributing to local population declines as evidenced by the fact that sightings of manta rays (likely M. alfredi) at nearby Okinawa Island, Japan, have fallen by over 70 percent since the 1980s (CITES 2013). Directed fisheries in the eastern Pacific may also likely be contributing to the overexploitation of manta ray subpopulations. Heinrichs et al. (2011), citing to a rapid assessment of the mobulid fisheries in the Tumbes and Piura regions of Peru, reported estimated annual landings of M. birostris on the order of 100-220 rays. The petition asserts that this estimate is based on limited data and interviews and, as such, should be viewed as an absolute minimum for the region. Of concern, in terms of risk of extirpations and extinction of M. birostris, is the fact that this assumed minimum level of take is equivalent to about one third of the estimate of the closest known, largest, but also protected aggregation of giant manta rays off the Isla de la Plata, Ecuador. While the manta rays targeted by the Peruvian fishermen may comprise a separate subpopulation, given the seasonal migratory behavior of M. birostris, it is also possible that the take consists of animals from the protected aggregation as they migrate south (Heinrichs et al. 2011). Regardless, given the very small estimated sizes of M. birostris aggregations (range 60-650 individuals) coupled with the species' sensitive life history traits, even low levels of fishing mortality can quickly lead to depletion of subpopulations and drive overall population levels down to functional extinction. In fact, evidence of the rapid decline of M. birostris from directed fishing efforts in the eastern Pacific is most apparent in the Sea of Cortez, Mexico. Prior to the start of targeted fishing (which began in the 1980s), the giant manta ray was reportedly common on every major reef in the area. In 1981, a filmmaker reported seeing three to four manta rays during every dive while filming; however, in a follow-up project, conducted only 10 years later, not a single giant manta ray was observed (CITES 2013). Within a decade of the start of directed manta ray fishing, the M. birostris population in the Sea of Cortez had collapsed, and reportedly still has not recovered (CITES 2013), despite a 2007 regulation prohibiting the capture and retention of the species in Mexican waters (NOM-029-PESC-2006).

Manta rays may also be at risk of extinction in the Indo-Pacific region, where the number of fisheries directly targeting manta species has substantially increased over the past decade, concurrent with the rise in the gill raker trade. This targeted fishing has already led to substantial declines in the numbers and size of Manta populations, particularly off Indonesia. Many shark fishermen have also turned to manta ray targeted fishing following the collapse of shark populations throughout the region (CITES 2013 citing Donnelly et al. 2003). As recently as 2012, Manta spp. fisheries were noted in Lamalera, Tanjung Luar (Lombok), Cilacap (Central Java), Kedonganan (Bali), and the Wayag and Sayan Islands in Raja Ampat, Indonesia (Heinrichs et al. 2011; CITES 2013). In Lamakera, as technology improved and fishermen replaced their traditional dugout canoes with motorized boats, catch rates of Manta spp. increased by an order of magnitude above historical levels (CITES 2013 citing Dewar 2002). This intense fishing pressure on a species that is biologically sensitive to depletion subsequently led to noticeable declines in populations. In Lombok, for example, a survey of fishermen and local processing facilities indicated that manta ray catches have declined in recent years (around 57 percent), with the average size of a manta ray now less than half of what it was historically, a strong indication of overutilization of the species (Heinrichs et al. 2011). Based on data from 2001-2012, Indonesian landings were estimated to be around 1,026 per year, the largest for any country, and attributed to M. birostris, although M. alfredi are also present in this region (Annex VII; CITES 2013). Given the observed declines in both size and catch of manta rays throughout the region, in relatively short periods of time (over 9 years in Lamakera; 6-7 years in Tanjung Luar, Lombok) that are notably less than one generation (~25 years) for either species, we find that the available information indicates that overutilization of manta rays in this region may be a significant threat to both species and is cause for concern.

Similarly, in the Philippines, recent exploitation of manta rays through targeted fishing efforts has also contributed to significant and concerning declines. Artisanal fishermen note that directed fishing on Manta species (likely M. birostris) in the Bohol Sea started in the 1960s, but really ramped up in the early 1990s and consequently led to population declines of up to 50 percent by the mid-1990s (CITES 2013 citing Alava et al. 2002). Similar declines were observed for the local population of manta rays (species not identified; although petition refers to them as M. alfredi) in the Sulu Sea off Palawan Island, with estimates of between 50 and 67 percent over the course of 7 years (from the 1980s to 1996) (CITES 2013). Although there is presently a ban on catching and selling manta rays in the Philippines, Heinrichs et al. (2011) reports that enforcement varies, with locals continuing to eat manta ray meat in line with their cultural practices. Furthermore, in 2011, Hong Kong traders identified the Philippines as a supplier of dried gill rakers, indicating that fishermen may still be actively targeting the species for trade (Heinrichs et al. 2011). Manta rays are now considered rare throughout the Philippines (CITES 2013), and, as such, any additional mortality on these species, either through incidental fishing or illegally directed fishing, may have significant negative effects on the viability of giant and reef manta ray populations.

In the Indian Ocean, directed fisheries for manta rays exist in Sri Lanka, India, Thailand, and are known from several areas in Africa, including Tanzania and Mozambique. As mentioned previously, Sri Lanka is one of the top three nations in terms of manta ray landings, with estimates totaling around 1,055 M. birostris individuals per year (Heinrichs et al. 2011; CITES 2013), the second highest amount behind Indonesia. Historically, fishermen in Sri Lanka would catch manta rays primarily as bycatch or avoid them altogether; however, as the gill raker market took shape and demand increased (with reports of gill rakers selling for as much as 250 times the price of meat), fishermen gained incentive to actively target mobulids (both manta and devil rays) (Heinrichs et al. 2011). As direct targeting of manta rays increased, a corresponding decrease in catches was reported by fishermen, particularly over the past 3-5 years (Heinrichs et al. 2011). Of concern, as it relates to the extinction risk of particularly the giant manta ray, is the fact that a large proportion of the identified M. birostris landings are reportedly immature. Based on available data from Negombo and Mirissa fish market surveys, at least 87 percent (possibly up to 95 percent; CITES 2013) of the M. birostris sold in the markets are juveniles and sub-adults (Heinrichs et al. 2011). Although the proportion of these fish markets to total Sri Lankan manta ray landings is not provided, the direct targeting and removal of immature manta rays can have negative impacts on the recruitment of individuals to the populations, and may likely explain the decrease in catches observed by Sri Lankan fishermen in recent years. Furthermore, these data also suggest that fishermen in Sri Lanka are potentially exploiting a “nursery” ground for manta rays, which, if found to be true, would be the first identified juvenile aggregation site in the world (Heinrichs et al. 2011). In fact, aggregations consisting of primarily immature individuals are extremely rare, with only one other subpopulation identified (off Egypt's Sinai Peninsula) where observations of immature manta rays outnumber adults (CITES 2013). Given the predominance of immature manta rays and recent decreases in catches, we find that present utilization levels and the impacts of this potential nursery ground exploitation, particularly on the manta ray populations in this area (especially M. birostris populations, although M. alfredi is also noted in this region but not identified in the available information), are threats contributing to a risk of extinction that is cause for concern.

In India, which has the second largest elasmobranch fishery in the world, Heinrichs et al. (2011) report manta ray landings of around 690 individuals per year (based on data from 2003-2004). However, the authors also caution that these landings data from the Indian trawl and gillnet fleets targeting sharks, skates, and rays, are likely largely underreported given the limited oversight of these fisheries. Although the exact extent of utilization of manta ray species in Indian waters is unknown, decreases in overall mobulid catches have been observed in several regions, including Kerala, along the Chennai and Tuticorin coasts, and Mumbai (CITES 2013). These declines are despite increases in fishing effort, suggesting that abundance of mobulids has likely decreased in these areas as a result of heavy fishing pressure and associated levels of fishery-related mortality (CITES 2013).

Harpoon fisheries that target Manta spp. also exist on both coasts of India, but landings data are largely unavailable. Despite the lack of data, anecdotal reports suggest that the level of utilization by these fisheries may also be contributing to the decline of these species within the region. For example, prior to 1998, landings of manta rays (thought to be M. alfredi) were reportedly abundant in a directed harpoon fishery operating at Kalpeni, off Lakshadweep Islands; however, based on personal communication from a local dive operator, this harpoon fishery no longer operates because manta ray sightings around the Lakshadweep Islands are now a rare occurrence. Similarly, dive operators in Thailand have observed increased fishing for Manta spp. off the Similan Islands, including within Thai National Marine Parks, with corresponding significant declines in sightings (Heinrichs et al. 2011). Specifically, during the 2006-2007 season, professional dive operators sighted 59 Manta individuals; however, 5 years later, sightings had fallen by 76 percent, with only 14 Manta individuals spotted during the 2011-2012 season (CITES 2013).

Across the Indian Ocean, manta rays are also likely at risk of overutilization; however, data are severely lacking. Off Mozambique, Marshall et al. (2011b) estimate that subsistence fishermen, alone, catch around 20-50 M. alfredi annually in a 100 km area/length of coast. This area corresponds to less than five percent of the coastline; however, fisheries in this region are widespread and, therefore, the actual landings of manta rays are likely significantly more (Marshall et al. 2011b). In fact, based on a study on the abundance of manta rays in southern Mozambique, Rohner et al. (2013) (cited by Croll et al. (2015)) provides evidence of the impact of the current level of utilization on manta ray species. From their findings, the authors report declines of up to 88 percent in the abundance of the heavily fished M. alfredi over the past 8 years (Heinrichs et al. 2011; CITES 2013; Croll et al. 2015), but a relatively stable abundance trend in the un-targeted M. birostris. These data further confirm the extreme vulnerability of the manta ray species to depletion from fisheries-related mortality in relatively short periods of time, and raise significant cause for concern for the species' viability in areas where they are being directly targeted or landed as bycatch.

In the Atlantic, the only known directed fishing of Manta spp. occurs seasonally off Dixcove, Ghana, where the meat is consumed locally, but manta rays have also been reported as targets of the mesh drift gillnet fishery that operates year-round in this area (Heinrichs et al. 2011; CITES 2013). Manta spp. are also reportedly illegally caught off Mexico's Yucatan peninsula (Graham et al. 2012; CITES 2013), but without additional information, the extent of utilization of the species in this region is unknown.

In addition to the threat from directed fisheries, manta rays are susceptible to being caught as bycatch in many of the international fisheries operating throughout the world, with present utilization levels contributing to their extinction risk that may be cause for concern. According to Croll et al. (2015), mobulids (manta and devil rays) have been reported as bycatch in 21 small-scale fisheries in 15 countries and 9 large-scale fisheries in 11 countries. In terms of the estimated impact of bycatch rates on extinction risk, the commercial tuna purse seine fisheries are thought to pose one of the most significant threats to mobulids, given the high spatial distribution overlap of tunas and mobulids coupled with the global distribution and significant fishing effort by the tuna purse seine fisheries (Williams and Terawasi 2011; Croll et al. 2015). Based on extrapolations of observer data, Croll et al. (2015) estimated an average annual capture of 2,774 mobulids in the Eastern Pacific, 7,817 in the Western and Central Pacific, 1,936 mobulids in the Indian Ocean, and 558 in the Atlantic Ocean.

While the above data are lumped for all mobulids, specific observer data on manta rays suggest that present bycatch levels may have potentially serious negative population-level impacts on both manta ray species. In the Atlantic Ocean, for example, observer data from 2003-2007 showed manta rays (presumably M. birostris) represented 17.8 percent of the total ray bycatch in the European purse seine tuna fishery operating between 10° S. and 15° N. latitude off the African coast (Amandè et al. 2010). While only 11 total giant manta rays were observed caught over the study period, observer coverage averaged a mere 2.9 percent (Amandè et al. 2010), suggesting the true extent of M. birostris catch may be significantly greater. In fact, within the Mauritanian exclusive economic zone (EEZ) alone, Zeeberg et al. (2006) estimated an annual removal rate of between 120 and 620 mature manta rays by large foreign trawlers operating off the western coast of Africa, which the authors deemed likely to be an unsustainable rate. This removal rate is especially troubling in terms of its impact on the extinction risk of both species, given that the only known populations of M. alfredi in the Atlantic Ocean occur within this region (off Senegal, Cape Verde and Canary Islands), and that this level of take is equivalent to the subpopulation sizes of M. birostris (estimates of 100-1000) and M. alfredi (100-1500, with the exception of 5,000 in Maldives) found throughout the world. As such, utilization of manta ray species at this level may likely be contributing to population declines in this region for giant manta rays and could easily lead to the extirpation of reef manta rays from the Atlantic Ocean, if this has not already occurred. (Based on information in the petition and in our files, we could not verify the year of the most recent observations of M. alfredi off Cape Verde or the Canary Islands. The evidence of M. alfredi off Senegal is based on historical reports and photos from 1958; (Marshall et al. (2009) citing Cadenat (1958))).

In the Indian Ocean, manta rays are reportedly taken in large numbers as bycatch in the Pakistani, Indian, and Sri Lankan gillnet fisheries where their meat is used for shark bait or human consumption and their gill rakers are sold in the Asian market. Manta rays have also been identified in U.S. bycatch data from fisheries operating primarily in the Central and Western Pacific Ocean, including the U.S. tuna purse seine fisheries (likely M. birostris; estimates of 1.14 mt in 1999) (Marshall et al. 2011a citing Coan et al. 2000) and the Hawaii-based deep-set and shallow-set longline fisheries for tuna (with 2010 bycatch estimates of 8,510 lbs (3,860 kg) of M. birostris and 2,601 lbs (1,180 kg) of unidentified Mobulidae) (NMFS 2013). While manta rays may have a fairly high survival rate after release (based on 1.4 percent hooking mortality rate in longline gear (Coelho et al. 2012) and 33.7 percent mortality rate in protective shark nets (Marshall et al. (2011a) citing Young 2001)), significant debilitating injuries from entanglements in fishing gear (e.g., gillnets and longlines) have been noted (Heinrichs et al. 2011). The likelihood of bycatch mortality significantly increases when fishing pressure is concentrated in known manta ray aggregation areas. For example, in a major M. birostris aggregation site off Ecuador, researchers have observed large numbers of manta rays with life-threatening injuries as a result of incidental capture in illegal wahoo (Acanthocybium solandri) trawl fisheries operating within Machalillia National Park (Heinrichs et al. 2011; Marshall et al. 2011a). Similarly, off Thailand, a significantly higher proportion of manta rays show net and line injuries compared to anywhere else in the world, with the aforementioned exception off Ecuador (Heinrichs et al. 2011). Off Papua New Guinea, manta rays (presumably M. alfredi) are reported as bycatch in purse seines, and from 1994 to 2006 comprised an estimated 1.8 percent of the annual purse seine bycatch. While the condition of the manta rays in these purse seines was not described, by 2005/2006, a sharp decline in the catches of manta rays was observed in these waters, suggesting the population may have been unable to withstand the prior bycatch mortality rates (Marshall et al. 2011b). For the most part, though, manta rays are almost never recorded down to species in bycatch reports, and more often than not tend to be lumped into broader categories such as “Other,” “Rays,” and “Batoids.” As such, the true extent of global manta ray bycatch and associated mortality remains largely unknown.

Although there are a number of both national and international regulations aimed at protecting manta rays from the above threat of overutilization by fisheries, the petition asserts that these existing regulatory measures, both species-specific and otherwise, do not adequately protect the manta rays. In fact, as of 2013, neither India nor Sri Lanka, two of the top manta ray fishing countries, had implemented any landings restrictions or population monitoring programs for manta ray species (CITES 2013). In terms of national protections, the petition states that due to the recent splitting of the genus, many of the pre-2009 national laws define “manta ray” as a single species, M. birostris, and, therefore, those associated protections fail to protect the newly identified reef manta ray. Furthermore, even where protections exist, there are noted enforcement difficulties in many areas, with the lucrative trade in manta gill rakers driving the illegal fishing of the species. For example, although Indonesia prohibited fishing for manta rays throughout its entire EEZ in 2014, only 2 years prior, it was ranked as likely the most aggressive fishing nation for manta rays (based on landing estimates; see CITES 2013). Based on evidence of enforcement difficulties of prior regulations (particularly relating to manta rays), and citing to examples of illegal fishing in Indonesian waters, the petitioners note that the financial incentive of targeting manta rays will continue to drive their exploitation. In a study on the movement of manta rays between manta ray sanctuaries in Indonesia, Germanov and Marshall (2014) also recognized the inadequacy of existing regulatory measures, noting that although the prohibition was implemented in 2014, “[I]n reality, however, it may be a long time before all manta ray fisheries in Indonesia are completely shut down.” Illegal fishing, landings and trade of manta rays have also been reported from the Philippines, Ecuador, Mexico, and Thailand (Heinrichs et al. 2011; Graham et al. 2012; CITES 2013); however, the true extent of the global illegal trade in manta species is not known (CITES 2013).

In terms of regulations pertaining to the legal international trade in the species, all manta ray species (Manta spp.) were listed in Appendix II of CITES (with listing effective on September 14, 2014). CITES is an international agreement between governments that regulates international trade in wild animals and plants. It encourages governments to take a proactive approach and the species covered by CITES are listed in appendices according to the degree of endangerment and the level of protection provided. For example, Appendix I includes species threatened with extinction; trade in specimens of these species is permitted only in exceptional circumstances. Appendix II includes species not necessarily threatened with extinction, but for which trade must be controlled to avoid exploitation rates incompatible with species survival. Appendix III contains species that are protected in at least one country that has asked other CITES Parties (i.e., those countries that have “joined” CITES) for assistance in controlling the trade.

The listing of manta rays on Appendix II of CITES provides increased protection for both species, but still allows legal and sustainable trade. Export of any part of a manta ray requires permits that ensure the products were legally acquired and that the CITES Scientific Authority of the State of export has advised that such export will not be detrimental to the survival of that species. This is achieved through the issuing of a “Non-Detriment Finding” or “NDF.” The petition argues, however, that there are no clear standards for making this CITES NDF. Furthermore, the petition states that given the limited population information for the manta ray species, it will be difficult to even determine sustainable harvest, and coupled with the lack of adequate scientific capacity in many CITES member countries, the determinations with respect to manta ray exports will be inconsistent and unreliable. Ward-Paige et al. (2013) remark that despite these efforts by CITES, no international management plans have been put in place to “ensure the future of mobulid populations,” and with manta ray species only recently subject to the management of only one Regional Fishery Management Organization (RFMO) (the Inter-American Tropical Tuna Commission; Resolution C-15-04), as Mundy-Taylor and Crook (2013) state, “it is expected that it will be particularly challenging for countries and/or territories that harvest M. birostris [and potentially also M. alfredi] on the high seas to carry out NDFs for such specimens.” Based on the information provided in the petition and in our files, we are presently unable to speak to the current effectiveness of the CITES Appendix II listing in protecting manta ray species from levels of trade that may contribute to the overutilization of both species. Overall, we find that further evaluation of existing regulatory measures is needed to determine if these regulations are inadequate to protect the giant and reef manta ray from threats that are significantly contributing to their extinction risks.

While the petition identifies numerous other threats to the two species, including habitat destruction and modification from coral reef loss, climate change, and plastic marine debris, recreational overutilization by the manta ray tourism industry, and predation from shark and orca attacks, we find that the petition and information in our files suggests that overutilization for commercial purposes, in and of itself, may be a threat impacting the giant and reef manta ray to such a degree that raises concern that these two species may be at risk of extinction throughout all or a significant portion of their respective ranges. We note that the information in our files and provided by the petitioner does indicate that a few identified subpopulations of reef manta rays appear to be stable, particularly those which receive at least some protection from fisheries, including: Subpopulations in Hawaii (Maui subpopulation estimate = 350; CITES 2013 citing personal communication), where harvest and trade of manta rays are prohibited (H.B. 366); the Maldives (subpopulation estimate = 5,000; CITES 2013 citing personal communication), where export of all ray species has been banned since 1995, where most types of net fishing are prohibited, and where two MPAs have been created to protect critical habitat for the Maldives populations (Anderson et al. 2011; CMS 2014); Yap (subpopulation estimate = ~100), with a designated Manta Ray Sanctuary that covers 8,234 square miles (21,326 square km) (CMS 2014); and Palau (estimate = 170 recorded individuals). With the passage of Micronesia's Public Law 18-108 in early 2015 (which created a shark sanctuary in the Federated States of Micronesia EEZ, encompassing nearly 3 million square kilometers in the western Pacific Ocean), a Micronesia Regional Shark Sanctuary now exists that prohibits the commercial fishing and trade of sharks and rays and their parts within the waters of the Republic of Marshall Islands, Republic of Palau, Guam, Commonwealth of the Northern Mariana Islands, and the Federated States of Micronesia and its four member states, Yap, Chuuk, Pohnpei, and Kosrae. However, these protections cover only a small portion of the migratory giant and reef manta ray ranges. Additionally, manta rays are not confined by national boundaries and, for example, may lose certain protections as they conduct seasonal migrations (or even as they move around to feed; Graham et al. (2012)) if they cross particular national jurisdictional boundaries (e.g., between the Maldives and Sri Lanka or India), move outside of established MPAs, or enter into high seas.

Overall, when we consider the number of manta ray subpopulations throughout the world where, based on the available information in the petition and in our files, their statuses are either unknown or in rapid decline, and yet both species appear to continue to face heavy fishing pressure (due to the high value of gill rakers in trade) and have significant biological vulnerabilities and demographic risks (i.e., extremely low productivity; declining abundance; small, fragmented, and isolated subpopulations), we find that the information in the petition and in our files would lead a reasonable person to conclude that both M. birostris and M. alfredi may warrant listing as threatened or endangered species throughout all or a significant portion of their ranges.

After reviewing the information contained in the petition, as well as information readily available in our files, and based on the above analysis, we conclude the petition presents substantial scientific information indicating the petitioned action of listing the giant manta ray and the reef manta ray as threatened or endangered species may be warranted. Therefore, in accordance with section 4(b)(3)(B) of the ESA and NMFS' implementing regulations (50 CFR 424.14(b)(3)), we will commence a status review of these two species. We also find that the petition did not present substantial scientific information to indicate that the Caribbean manta ray (identified as Manta c.f. birostris) is a taxonomically valid species eligible for listing under the ESA. However, if during the course of the status review of the giant and reef manta ray we find new information to suggest otherwise, we will self-initiate a status review of the Caribbean manta ray, announcing our intention in the Federal Register.

During the status review, we will determine whether the particular manta ray species is in danger of extinction (endangered) or likely to become so (threatened) throughout all or a significant portion of its range. We now initiate this review, and thus, both M. birostris and M. alfredi are considered to be candidate species (69 FR 19975; April 15, 2004). Within 12 months of the receipt of the petition (November 10, 2016), we will make a finding as to whether listing the giant manta ray and the reef manta ray as endangered or threatened species is warranted as required by section 4(b)(3)(B) of the ESA. If listing is found to be warranted, we will publish a proposed rule and solicit public comments before developing and publishing a final rule.

To ensure that the status review is based on the best available scientific and commercial data, we are soliciting information on whether the giant manta ray and reef manta ray are endangered or threatened. Specifically, we are soliciting information in the following areas: (1) Historical and current distribution and abundance of these species throughout their respective ranges; (2) historical and current population trends; (3) life history in marine environments, including identified nursery grounds; (4) historical and current data on manta ray catch, bycatch and retention in industrial, commercial, artisanal, and recreational fisheries worldwide; (5) historical and current data on manta ray discards in global fisheries; (6) data on the trade of manta ray products, including gill rakers, meat, and skin; (7) any current or planned activities that may adversely impact either of these species; (8) any impacts of the manta ray tourism industry on manta ray behavior; (9) ongoing or planned efforts to protect and restore these species and their habitats; (10) population structure information, such as genetics data; and (11) management, regulatory, and enforcement information. We request that all information be accompanied by: (1) Supporting documentation such as maps, bibliographic references, or reprints of pertinent publications; and (2) the submitter's name, address, and any association, institution, or business that the person represents.

A complete list of references is available upon request to the Office of Protected Resources (see ADDRESSES).

The authority for this action is the Endangered Species Act of 1973, as amended (16 U.S.C. 1531 et seq.).

The bottomfish fishery in Federal waters around Hawaii is managed under the Fishery Ecosystem Plan for the Hawaiian Archipelago (Hawaii FEP), developed by the Western Pacific Fishery Management Council (Council) and implemented by NMFS under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act). The regulations at Title 50, Code of Federal Regulations, Part 665 (50 CFR 665.4) require NMFS to specify an ACL for MHI Deep 7 bottomfish each fishing year, based on a recommendation from the Council. The Deep 7 bottomfish are onaga (Etelis coruscans), ehu (E. carbunculus), gindai (Pristipomoides zonatus), kalekale (P. sieboldii), opakapaka (P. filamentosus), lehi (Aphareus rutilans), and hapuupuu (Hyporthodus quernus).

NMFS proposes to specify an ACL of 326,000 lb of Deep 7 bottomfish in the MHI for the 2015-16 fishing year. The Council recommended the ACL at its 163rd meeting held in June 2015. The proposed specification is 20,000 lb less than the ACL that NMFS specified for the past four consecutive fishing years (i.e., 2011-12, 2012-13, 2013-14, and 2014-15). NMFS monitors Deep 7 bottomfish catches based on data provided by commercial fishermen to the State of Hawaii. If NMFS projects the fishery will reach this limit, NMFS would close the commercial and non-commercial fisheries for MHI Deep 7 bottomfish for the remainder of the fishing year, as an accountability measure (AM). In addition, if NMFS and the Council determine that the final 2015-16 Deep 7 bottomfish catch exceeds the ACL, NMFS would reduce the Deep 7 bottomfish ACL for the 2015-16 fishing year by the amount of the overage. The fishery did not attain the specified ACL in fishing years from September 2011 to August 2015, and NMFS does not anticipate the fishery will attain the limit in the current fishing year, which began on September 1, 2015, and ends on August 31, 2016.

The Council recommended the ACL and AMs based on a 2011 NMFS bottomfish stock assessment updated with three additional years of data, and in consideration of the risk of overfishing, past fishery performance, the acceptable biological catch (ABC) recommendation from its Scientific and Statistical Committee (SSC), and input from the public. The 2011 NMFS bottomfish stock assessment updated with three additional years of data estimates the overfishing limit (OFL) for the MHI Deep 7 bottomfish stock complex to be 352,000 lb. The proposed ACL of 326,000 lb is equal to the SSC's ABC recommendation, and is associated with a 44-percent probability of overfishing. This risk level is more conservative than the 50-percent risk threshold allowed under NMFS guidelines for National Standard 1 of the Magnuson-Stevens Act.

NMFS does not expect the proposed ACL and AM specifications for 2015-16 to result in a change in fishing operations or other changes to the conduct of the fishery that would result in significant environmental impacts. After considering public comments on the proposed ACL and AMs, NMFS will publish the final specifications.

To be considered, NMFS must receive any comments on these proposed specifications by March 9, 2016, not postmarked or otherwise transmitted by that date.

Pursuant to section 304(b)(1)(A) of the Magnuson-Stevens Act, the NMFS Assistant Administrator for Fisheries has determined that this proposed specification is consistent with the Hawaii FEP, other provisions of the Magnuson-Stevens Act, and other applicable laws, subject to further consideration after public comment.

This action is exempt from review under Executive Order 12866.

The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration that these proposed specifications, if adopted, would not have a significant economic impact on a substantial number of small entities. A description of the action, why it is being considered, and the legal basis for it are contained in the preamble to these proposed specifications.

NMFS proposes to specify an annual catch limit (ACL) of 326,000 lb for Main Hawaiian Islands (MHI) Deep 7 bottomfish for the 2015-16 fishing year, as recommended by the Western Pacific Fishery Management Council (Council). NMFS monitors MHI Deep 7 bottomfish catches based on data provided by commercial fishermen to the State of Hawaii. If and when the fishery is projected to reach this limit, NMFS, as an accountability measure (AM), would close the commercial and non-commercial fisheries for MHI Deep 7 bottomfish for the remainder of the fishing year. The proposed ACL is 20,000 lb less than those that NMFS implemented for the previous four fishing years, while the AM will remain the same. Over the past four fishing seasons, the highest reported annual landings, 309,485 lb, occurred during the 2013-2014 fishing year. NMFS does not expect the fishery to reach the proposed ACL in the 2015-16 fishing year, which began on September 1, 2015, and will end on August 31, 2016.

This rule would affect participants in the commercial and non-commercial fisheries for MHI Deep 7 bottomfish. During the 2014-15 fishing year, 405 fishermen reported landing 303,738 lb of Deep 7 bottomfish (http://www.wpcouncil.org/wp-content/uploads/2013/04/MHI201500904_1415_Sum.pdf, accessed September 11, 2015). Based on available information, NMFS has determined that all vessels in the commercial and non-commercial fisheries for MHI Deep 7 bottomfish are small entities under the Small Business Administration's definition of a small entity. That is, they are engaged in the business of fish harvesting, independently owned or operated, not dominant in their field of operation, and have annual gross receipts not in excess of $20.5 million, the small business size standard for finfish fishing (NAICS Code: 114111). Therefore, there would be no disproportionate economic impacts between large and small entities. Furthermore, there are would be no disproportionate economic impacts among the universe of vessels based on gear, home port, or vessel length.

As for revenues earned by fishermen from Deep 7 bottomfish, State of Hawaii records report 341 of the 405 fishermen sold their Deep 7 bottomfish catch. These 341 individuals sold a combined total of 267,997 lb (88.2% of reported catch) at a value of $1,815,332. Based on these revenues, the average price for MHI Deep 7 bottomfish in 2014-15 was approximately $6.77/lb. NMFS assumes the remaining 64 commercial fishermen either sold no Deep 7 bottomfish or that the State of Hawaii reporting program did not capture their sales.

Assuming the fishery attains the ACL of 326,000 in 2015-16, using the 2014-15 average price of $6.77/lb, the potential fleet wide revenue during 2015-16 is expected to be $2,207,020 ($1,946,592 under the assumption that 88.2% of catch is sold). If the same number of fishermen sell MHI Deep 7 bottomfish in 2015-16 as in 2014-15, each of these 341 commercial fishermen could potentially sell an average of 956 lb of Deep 7 bottomfish valued at $6,472, if all Deep 7 bottomfish caught were sold. If 88.2% of all Deep 7 bottomfish that had been caught had been sold, then these 341 commercial fishermen could potentially sell an average of 843 lb of Deep 7 bottomfish valued at $5,708.

In general, the relative importance of MHI bottomfish to commercial participants as a percentage of overall fishing or household income is unknown, as the total suite of fishing and other income-generating activities by individual operations across the year has not been examined.

In terms of scenarios immediately beyond the 2015-16 fishing year, three possible outcomes may occur. First, in the event that 2015-16 catch does not reach 326,000 lb, the ACL will decrease by 8,000 lb for the 2016-2017 fishing year, as set by the multi-year specification. Second, if the fishery exceeds the ACL for the 2015-16 fishing year, NMFS would reduce the Deep 7 bottomfish ACL for the 2016-17 fishing year by the amount of the overage, in addition to the 8,000 lb reduction for the 2016-17 fishing year. The last possible scenario is one where NMFS would prepare a new stock assessment or update that NMFS and the Council would use to set a new 2016-2017 ACL (without inclusion of any overage, even if catch exceeds ACL for the 2015-16 fishing year), although this is unlikely, because NMFS plans to undertake the next stock assessment in 2018.

Even though this proposed specification would apply to a substantial number of vessels, i.e., 100 percent of the bottomfish fleet, NMFS does not expect the rule will have a significantly adverse economic impact to individual vessels. Landings information from the past four fishing years, suggest that Deep 7 bottomfish landings are not likely to exceed the ACL proposed for 2015-16.

Therefore, pursuant to the Regulatory Flexibility Act, this proposed action would not have a significant economic impact on a substantial number of small entities. As a result, an initial regulatory flexibility analysis is not required and none has been prepared.

Authority for Action

The king and Tanner crab fisheries in the exclusive economic zone of the Bering Sea and Aleutian Islands (BSAI) are managed under the Fishery Management Plan for Bering Sea/Aleutian Islands King and Tanner Crabs (Crab FMP). The Crab FMP was prepared by the North Pacific Fishery Management Council (Council) under the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) as amended by the Consolidated Appropriations Act of 2004 (Pub. L. 108-199, section 801). Regulations implementing most provisions of the Crab FMP, including the CR Program, are located at 50 CFR part 680. Regulations implementing specific provisions of the Crab FMP that pertain to the LLP Program are located at 50 CFR part 679.

The Crab FMP was approved by the Secretary of Commerce on June 2, 1989. The Crab FMP establishes a State/Federal cooperative management regime that defers crab management to the State of Alaska with Federal oversight. State regulations are subject to the provisions of the FMP, including its goals and objectives, the Magnuson-Stevens Act national standards, and other applicable Federal laws. The Crab FMP has been amended several times since its implementation.

NMFS published the final rule to implement the CR Program on March 2, 2005 (70 FR 10174). Fishing under the CR Program started with the 2005/2006 crab fishing year. The CR Program is a catch share program for nine BSAI crab fisheries that allocates those resources among harvesters, processors, and coastal communities. Under the CR Program, NMFS originally issued QS to eligible harvesters as determined by eligibility criteria and participation in the CR Program fisheries during qualifying years. A harvester's allocation of QS for a fishery was based on the landings made by his or her vessel in that fishery. Specifically, each allocation was the harvester's average annual portion of the total qualified catch in a crab fishery during a specific qualifying period. NMFS issued four types of QS: Catcher vessel owner (CVO) QS was assigned to holders of LLP licenses who delivered their catch onshore or to stationary floating crab processors; catcher/processor vessel owner (CPO) QS was assigned to LLP holders that harvested and processed their catch at sea; captains and crew onboard catcher/processor vessels were issued catcher/processor crew (CPC) QS; and captains and crew onboard catcher vessels were issued catcher vessel crew (CVC) QS. CVC and CPC QS are also known as “crew shares” or “C shares.” Each year, a person who holds QS may receive IFQ, which is an exclusive harvest privilege for a portion of the annual total allowable catch (TAC). Under the CR Program, QS holders can form cooperatives to pool the harvest of the IFQ on fewer vessels to minimize operational costs and to provide additional flexibility in harvesting operations.

NMFS also issued processor quota share (PQS) under the CR Program. Each year, PQS yields an exclusive privilege to receive (for processing) a portion of the IFQ in each of the nine CR Program crab fisheries. This annual exclusive processing privilege is called IPQ. IFQ derived from CVO QS is subject to annual designation as either Class A IFQ or Class B IFQ. Ninety percent of the IFQ derived from CVO QS for a fishery is designated as Class A IFQ, and the remaining 10 percent of the IFQ is designated as Class B IFQ. Class A IFQ must be matched and delivered to a processor with IPQ. Each year there is a one-to-one match of the total pounds of Class A IFQ with the total pounds of IPQ issued in each crab fishery and region. Class B IFQ is not required to be delivered to a processor with IPQ.

This proposed rule includes three actions: The first action would exempt the WAG fishery from the CR Program prohibition against a vessel resuming fishing before the vessel has offloaded all CR Program crab from the vessel; the second action would amend CR Program regulations to clarify document submission requirements for individuals submitting an application to receive C shares by transfer; and the third action would amend LLP regulations to remove four BSAI crab species that are no longer managed under the LLP.

The WAG fishery is a relatively small but lengthy fishery prosecuted in extremely remote waters in the western Aleutian Islands. Historically, the community of Adak has been an active processing port for the WAG fishery. To recognize this history and to ensure that Adak continues to receive socioeconomic benefits from crab deliveries, the CR Program allocates 10 percent of the WAG fishery TAC to the community of Adak as the Adak Community Allocation (§ 680.40(a)(1)). The CR Program also imposes a regional delivery requirement for the WAG fishery to support processing facilities operating in the remote western Aleutian Islands region. In addition to processor share landing requirements, Class A IFQ (along with IPQ) are subject to regional landing requirements, under which harvests from those shares must be landed in specified geographic regions.

For the WAG fishery, § 680.40(c)(4) specifies that 50 percent of the Class A IFQ and a corresponding amount of IPQ in the WAG fishery are designated for delivery to any processor in the West region, which includes all locations west of 174° W. longitude. The West region includes the communities of Adak and Atka. The other 50 percent of the Class A IFQ and IPQ are not subject to a regional designation and can be delivered to any processor with corresponding IPQ. Class B, CVC, CPO, CPC IFQ, and the Adak Community Allocation are also not subject to the regional delivery requirements. Crab harvested with West designated Class A IFQ must be delivered to a processor located in the West region with West designated IPQ (§ 680.42(b)(5)). Class A IFQ and IPQ crab without a West region designation is considered undesignated and may be delivered anywhere within the State of Alaska (§ 680.40(b)(2)(ii)(B)).

Regional designations were applied to harvester QS during the initial allocation, based on landings histories, but adjustments were necessary as substantially less than 50 percent of the historical landings were made in the West region. The West designation was intended primarily to aid the development of processing in the community of Adak. Adak had little historical processing prior to the end of the qualifying period, as the community was occupied exclusively by the U.S. military during the development of the AI commercial fisheries. With the departure of the military in the late 1980s, the community has worked to develop civilian industries, including fish processing. Atka is recognized as a second potential beneficiary of the region designation. That community has also begun to develop fish processing capacity in recent years, but has yet to develop significant crab processing capability.

Since implementation of the Program, the only shore-based processing plant in the West region has been located in the community of Adak. However, the crab processing capacity in Adak has been inconsistent or absent in some years since implementation of the CR Program due to a variety of operational challenges (see Section 3.5.5 of the Analysis). If processing capacity is not available in the West region, the West regional delivery requirement is not viable and would result in unutilized TAC in the WAG fishery.

In response to the potential lack of processing capacity in the West region in some years, the Council recommended, and NMFS implemented, Amendment 37 to the Crab FMP on June 20, 2011 (76 FR 35781). Amendment 37 created an annual application process for eligible contract signatories to request that NMFS exempt holders of West-designated IFQ and IPQ in the WAG fishery from the West regional delivery requirement (§ 680.4(o)). The eligible contract signatories are WAG fishery QS holders, PQS holders, and the cities of Adak and Atka.

Upon approval of a completed application, NMFS exempts all West-designated Class A IFQ and IPQ from the West regional delivery requirement for the remainder of the crab fishing year. This exemption allows all West-designated Class A IFQ and IPQ holders to deliver and receive WAG crab at processing facilities outside the West region (§ 680.7(a)(2) and (a)(4)). The eligible contract signatories have applied for, and NMFS has granted, an exemption for all crab fishing years from 2011/2012 through 2015/2016 (http://alaskafisheries.noaa.gov/fisheries-data-reports?tid=289).

The WAG fishery has a relatively small annual total allowable catch compared to other BSAI crab fisheries, such as the Bristol Bay red king crab or snow crab fisheries. The TAC for the 2015/2016 crab fishing year in the WAG fishery is 2.98 million pounds. The WAG QS holders have formed a harvest cooperative to ensure the efficient harvest of this remote fishery. In recent years the fleet has been comprised of only two to three catcher vessels and a single catcher/processor. Section 3.5.1 of the Analysis provides additional detail on historical and recent participation in the WAG fishery.

Currently, the WAG fishing season starts on August 1 and ends on April 30. Since implementation of the CR program, harvesters have extended their fishing time over most of the crab season; the first deliveries typically occur in September and the last deliveries generally occur during March of the following calendar year. A trip for a vessel in the WAG fishery generally lasts one to four weeks, with an average trip lasting 2.5 weeks. There are relatively few fishing trips in the WAG fisheries compared to other BSAI crab fisheries. In the two most recent crab fishing years (2012/2013 and 2014/2015), vessels made a total of 9 landings of West region IFQ and 10 to 11 landings of undesignated IFQ.

Crab harvesting vessels have several tanks to hold live crab until it is processed. The average tank capacity of the catcher vessels that participate in the WAG fishery is between 120,000 and 150,000 pounds (see Section 3.5.3 of the Analysis). Any crab that arrives at the processor dead are weighed by the processor, reported as deadloss, and debited from the QS holder's IFQ account. Therefore, vessels have an incentive to keep crab alive, regardless of the market opportunities they are pursuing.

The CR Program regulations prohibit a vessel from resuming fishing for CR Program crab or taking CR Program crab on board a vessel once a landing (offload) has commenced and until all CR Program crab are offloaded (see § 680.7(b)(3)). Under the CR Program regulations, a catcher vessel may offload portions of CR Program crab on the vessel at multiple processors, but the vessel is prohibited from fishing for CR Program crab between the offloads.

NMFS implemented the prohibition against resuming fishing after a CR Program landing has commenced (hereafter called the full offload requirement) to facilitate enforcement of CR Program requirements for catch monitoring and full catch accounting. Under the CR Program, harvesting and processing activity is monitored to provide accurate and reliable accounting of the total catch and landings to manage quota share accounts, prevent overages of IFQ and IPQ, and ensure compliance with regional delivery requirements. Total fishery removals are estimated by monitoring measures that include collection of data on landed catch weight and crab species composition, bycatch, and deadloss.

Under current CR Program regulations, vessels may offload portions of CR Program crab at multiple processors but are prohibited from resuming fishing or taking CR Program crab on board the vessel once a landing has commenced and until all CR crab are landed. Under § 680.7(b)(3), NOAA fisheries intended that this prohibition would prevent persons from, for example, discarding barnacled or deadloss CR crab at sea prior to debiting this crab from the QS holder's IFQ account and subsequently high grading with CR crab harvested after the partial offload. The prohibition was intended to ensure that all fishery removals are monitored and reported in the CR Program catch accounting system. See the final rule to implement the CR Program for a description of the monitoring and catch accounting provisions in the BSAI crab fisheries (70 FR 10174, March 2, 2005).

The CR Program delegates a significant portion of monitoring in the BSAI crab fishery to the State of Alaska. Under the Crab FMP, the Council and Secretary deferred to the Alaska Department of Fish and Game (ADF&G) the authority and responsibility for deploying observers on board any vessel participating in the BSAI crab fisheries under State of Alaska regulations (5 AAC 39.645). ADF&G has implemented specific monitoring requirements in the WAG fishery.

ADF&G requires catcher/processors in the WAG fishery to carry an observer onboard the vessel for 100 percent of the vessel's trips. Catcher vessels in the WAG fishery are required to carry an observer on board for the harvest of at least 50 percent of their total harvest weight for each 3-month period of the overall 9-month season. The portion of actual observed harvest for catcher vessels in the WAG fishery has ranged from 57 percent to 70 percent annually. See Section 3.6.2 of the Analysis for additional information on the ADF&G catch monitoring and observer requirements for the WAG fishery.

ADF&G also utilizes dockside samplers to sample and monitor deliveries of crab from unobserved vessels to shoreside processors in the WAG fishery. At the time of landing, either the observer or dockside sampler collects the average weight of retained crab, conducts biological samples, and summarizes fishing effort data and landing data. The observer or dockside sampling data are used to debit the appropriate IFQ account under which the crab was harvested and the IPQ account under which the crab was received for processing in the CR Program online catch accounting system.

ADF&G observer sampling protocol specifies that a trip commences when an observer boards the vessel and ends when there is a complete offload of all crab from the vessel. If a vessel makes a partial landing, the trip is not considered to have ended until the final landing is made and all crab is offloaded from the vessel. If an observer is not deployed on a vessel in the CR Program crab fisheries, dockside samplers sample and monitor the landing of crab to a shoreside processor.

ADF&G also requires operators of vessels in the BSAI crab fisheries to complete a daily fishing log, which is issued by NMFS. Data from the daily fishing log are used to verify landings and to ensure accurate accounting for all fishery removals. Section 3.6.2 of the Analysis provides additional information on ADF&G's catch sampling and monitoring protocols for the CR Program crab fisheries.

In 2014, the processing facility in Adak began taking deliveries of WAG crab from catcher vessels to supply the live crab market. The crab are offloaded from the vessel and held at the processing facility until packed for transport on a commercial airline flight from Adak for delivery to domestic and international markets. The amount of crab offloaded at Adak and delivered to the live market is limited by the amount of aircraft hold space that is available to ship crab on bi-weekly flights from Adak. Aircraft capacity is approximately 8,000 to 14,000 pounds of crab per flight, depending on the type of aircraft. Vessels operating in the WAG fishery make crab deliveries opportunistically to the processing facility when live markets are available. Harvesters receive a higher price per pound for the live market than for crab delivered and processed to supply the traditional market for cooked and frozen crab sections (see Sections 3.5.4 and 3.5.5.1 of the Analysis for more information about deliveries to the live crab market from Adak).

The processing facility in Adak is currently able to receive only limited amounts of deliveries of crab for the live market, approximately 400,000 pounds for the 2015/2016 crab fishing year. As described in Section 3.5.5 of the Analysis, the processing facility in Adak has encountered a number of operational challenges since it was established in 1999 and is not currently able to receive and process a full offload of crab, which can be up to 150,000 pounds in the WAG fishery. Since the 2014/2015 crab fishing year, catcher vessels delivering crab for the live market have made partial landings at the Adak processing facility and transited several hundred miles from the fishing grounds to Dutch Harbor and Akutan to deliver the remaining crab onboard the vessel to a processor that can accept a larger vessel load of crab from the vessels.

In February 2015, the Council received requests from representatives for WAG fishery participants and representatives of the community of Adak to exempt the WAG fishery from the CR Program prohibition against a person's resuming fishing before all crab have been offloaded from a vessel. At its October 2015 meeting, the Council reviewed an analysis of the WAG fishery and the potential effects of the proposed exemption. After reviewing the Analysis and receiving public testimony, the Council recommended a regulatory amendment to exempt participants in the WAG fishery from the prohibition at § 680.7(b)(3) against a person's resuming fishing before all CR Program crab have been offloaded from the vessel.

The Council recommended this proposed regulatory amendment to reduce inefficiencies and costs associated with requiring crab harvesting vessels to travel significant distances to land a partial load of WAG. This proposed rule would allow vessels harvesting WAG to make partial landings for delivery to the live market and continue harvesting crab before fully offloading at a processor that can receive a larger vessel load of crab.

Under Action 1, this proposed rule would create an exemption for the WAG fishery from the prohibition at § 680.7(b)(3) that precludes a person from resuming fishing before all crab has been offloaded from a vessel. This proposed rule would not alter current landing, reporting, and enforcement requirements in CR Program regulations.

This proposed rule would relieve a restriction on fishing activity in the WAG fishery and could increase operational efficiencies and revenues for participants in the WAG fishery. The Council determined that this proposed rule is necessary for the WAG fishery due to the remote and economically challenging characteristic of the fishery as well as the possibility of mutual benefits to harvesters, processors located in the western Aleutians, and any communities that develop a live market opportunity. As described below, the Council determined, and NMFS agrees, that this proposed rule is not likely to have negative impacts on the management of the WAG fishery or on the catch monitoring and accounting requirements established by the CR Program.

The Council considered whether this proposed rule could increase the amount of unreported discards of crab. After reviewing the Analysis, the Council and NMFS determined that crab discards are appropriately monitored and accounted for under the CR Program and this proposed rule would not likely create additional incentive for participants in the WAG fishery to discard crab. Section 3.6.1 of the Analysis describes that experience with the CR Program has shown that unreported discards of crab are unlikely due to a number of practices that occur at sea and when crab are delivered to a processor.

First, it is common practice in the crab fisheries for vessel crews to sort catches at sea and to discard crab that are less than the legal size or that are damaged or diseased before placing the crab in the vessel's holding tank. The CR Program does not require full retention of legal-sized crab on the fishing grounds because it would require a vessel to keep damaged and diseased crab in a holding tank with healthy crab. Because crab can be discarded prior to being placed in the vessel tank, crew have an incentive to retain only healthy crab of legal size and to discard all dead, damaged, or diseased crab during sorting rather than retaining the crab onboard and discarding it prior to or after arrival at a processor. The impact of crab that are discarded during sorting on crab stocks is accounted for because observers collect information on at-sea discards in all crab fisheries, and this information is used to estimate discard mortality for all vessels in the fishery and is incorporated into crab stock assessments (see Section 3.6.2 of the Analysis).

Second, vessels are unlikely to discard unreported crab at sea due to quota overages because the CR Program cooperative structure, online quota transfers, and post-delivery quota transfers give fishery participants several options to coordinate harvests and obtain additional IFQ to cover any overages. In addition, the CR Program regulations specify that crab cooperative members are jointly and severally liable for violations, which provides a strong incentive for vessel operators to comply with CR Program regulations.

Third, attempts by vessels to illegally discard crab at sea rather than weighing and deducting them from quota after delivering to a processor would likely be noticed by the vessel observer, port samplers, plant personnel, or local enforcement agents. If a vessel operator were to depart the processor with crab onboard, the crab that was not delivered and accounted for would likely be noticed by one or more of the above personnel who would likely notify an enforcement agent.

Finally, Section 3.6.1 of the Analysis describes that while catcher vessels in the WAG fishery are required to carry an observer on board for 50 percent of their harvest, in practice, between 57 and 70 percent of the WAG fishery harvest had observer coverage in recent years (see Section 3.6.2.1 of the Analysis). The presence of an observer on board further reduces the likelihood of unreported discards.

The Council considered the impacts of this proposed rule on Federal management of the WAG fishery. Section 3.7.4 of the Analysis describes that this proposed rule would not change the current CR Program landing and reporting requirements, or catch accounting system. Under this proposed rule, all retained crab catch must be weighed, reported, and debited from the appropriate IFQ account under which the crab was harvested, and from the IPQ account under which the catch was processed.

Section 3.7.5 of the Analysis describes the impacts of this proposed rule on the State of Alaska management of the WAG fishery. The Crab FMP delegates much of the management of the BSAI crab fisheries to the State of Alaska using the following three categories of management measures: (1) Those that are fixed in the FMP and require an FMP amendment to change; (2) those that are framework-type measures that the State can change following criteria set out in the FMP; and (3) those measures that are neither rigidly specified nor require a framework adjustment in the FMP. State observer and observer sampling requirements are category three management measures under the Crab FMP and may be adopted under State laws subject to the appeals process provided for in the Crab FMP.

NMFS expects that if the proposed rule is approved and implemented, ADF&G would make minor modifications to its sampling and observer coverage protocols for WAG fishery vessels that deliver crab to Adak for supply to the live market. ADF&G will likely request that vessel operators participating in the WAG fishery and intending to make a partial offload before resuming fishing in the WAG fishery do the following: (1) Keep those crab intended for delivery to the live market in a separate tank from crab intended for delivery to the traditional processing market, and (2) record the fishing activity (pot strings) for harvest of these crabs separately in the daily fishing log. This would ensure that ADF&G can continue to collect biological information for all crab harvested prior to and after the partial offload. Under these protocols, ADF&G would be able to link logbook and offload data to ensure that status quo sampling and accurate accounting of effort can occur under this proposed rule. If the proposed rule is implemented, NMFS anticipates ADF&G would continue to coordinate with vessels in the WAG fishery to ensure that accurate biological data and catch accounting needs are met with minimal impacts on State of Alaska management of the WAG fishery consistent with requirements of the Magnuson-Stevens Act, the Crab FMP, and ADF&G regulations.

NMFS does not expect that the anticipated revisions to the ADF&G observer protocols will negatively impact participants in the WAG fishery for reasons described in Section 3.7.5 of the Analysis. First, vessels delivering crab for supply to the live market already keep those crab in separate tanks from crab delivered for supply to the traditional market. This practice facilitates the offload process for live crab and reduces the likelihood of deadloss. Vessel operators have an incentive to continue this practice under the status quo and under this proposed rule. If all crab were kept in one tank and sorted by market at the time of offload, the vessel operator would have to remove water from the tank in order to offload the crab to supply the live market, refill the tank with water for the remaining crab to supply the traditional market, and transit back to the fishing grounds with these crab onboard before delivery for traditional processing. This process could increase the likelihood of deadloss among the crab remaining on the vessel. Second, the request for vessel operators to record pot strings pulled prior to the partial offload separately from pot strings pulled after the offload does not significantly increase the reporting burden for vessel operators or significantly change data processing or analytical protocols for ADF&G.

Section 3.7.2 of the Analysis describes that this action could result in a reduction in quality for crab destined for the traditional crab market. Crab destined for the live crab market are chosen for survivability, and vessels carefully select large, clean, undamaged crab for delivery to the live market. If the proposed rule results in an increased portion of WAG crab delivered for supply to the live market, processors that do not participate in the live crab market may receive a relatively larger portion of lower quality crab (e.g., smaller or with barnacles) that were not selected for the live market. That Analysis notes that vessels in the WAG fishery currently land crab in Adak destined for the live crab market, and so it is likely that a slight reduction in quality for WAG crab destined for the traditional crab market is occurring under the current CR Program regulations.

If vessels make more deliveries of WAG crab for the live market, there could be an additional reduction in the quality of crab delivered to processors that supply the traditional markets as a larger portion of the WAG fishery TAC is supplied to the live market. However, NMFS determined that the amount of high quality WAG crab supplied to the live market is unlikely to increase significantly in the future. The Adak processing facility is limited by its ability to ship approximately 14,000 pounds of crab out by air freight bi-weekly, and this capacity limitation is unlikely to change under this proposed rule (see the Appendix to the Analysis). Therefore, NMFS does not expect this action to affect the current quality of WAG crab landings to processors that supply the traditional market.

Section 3.7.2 of the Analysis describes the impacts of this proposed rule on processors and communities that participate in the WAG fishery. This action could have a positive impact on western Aleutian Islands processors because it would allow for increased fishery activity. Increased fishery activity would benefit communities in the western Aleutian Islands by providing benefits through fuel sales and secondary services from vessels landing in a community. Additionally, increased fishery activity would promote increased local labor opportunities. This action, if approved, could also benefit communities in the western Aleutian Islands by providing increased revenue from raw fish taxes and State of Alaska fisheries business tax revenue, which is shared by the State of Alaska with the cities or boroughs where fish are landed (see Section 3.7.2 of the Analysis).

This action may adversely impact processors located in Dutch Harbor and Akutan by redistributing some WAG fishery landings to the western Aleutian Islands to supply the live market. NMFS does not expect these impacts to be significant because partial offloads of WAG crab are currently occurring at the processing facility in Adak to supply the live market. This proposed rule would likely facilitate a small increase in the amount of the WAG fishery TAC delivered for the live crab market relative to the much larger amount of crab that would continue to be delivered and processed to supply the traditional markets.

Sections 3.7.1 and 3.7.2 of the Analysis describe that this action would support the WAG fishery harvesters, processors, and communities that seek to diversify into the live crab market. The vessels currently participating in the WAG fishery could receive additional WAG fishery revenues under this proposed rule due to the increased price they receive for crab in the live market. In addition, these WAG fishery harvesters could potentially reduce operating costs and efficiency by making small offloads of WAG crab to the western Aleutian Islands and resuming fishing to harvest a full vessel load of crab before transiting to offload the crab at a processor that can process all the vessel's crab. This may result in reduced fuel costs and time spent returning to the fishing grounds.

The second action under this proposed rule would correct regulations governing the approval criteria for an application to receive C Shares (CPC and CVC QS) by transfer. Under the CR Program, individuals must meet specific eligibility requirements to receive C shares by transfer. Amendment 31 to the Crab FMP modified several regulations governing the acquisition, use, and retention of C share QS under the CR Program (80 FR 15891, March 26, 2015).

The eligibility requirements to receive C shares by transfer are located at § 680.41(c)(1)(vii). An applicant must meet initial eligibility criteria, which include having U.S. citizenship, at least 150 days of sea time in a U.S. commercial fishery, and recent participation as crew in at least one delivery of crab in the past year. In addition, § 680.41(c)(1)(vii) specifies that until May 1, 2019, in lieu of participation as crew in one of the CR Program fisheries in the 365 days prior to application submission, an individual may meet the crew participation requirement to receive C share QS by transfer if that person 1) received an initial allocation of CVC or CPC QS, or 2) demonstrates participation as crew in at least one delivery of crab in a CR crab fishery in any 3 of the 5 crab fishing years starting on July 1, 2000, through June 30, 2005.

The approval criteria for NMFS to approve an application to receive C shares by transfer are located at § 680.41(i). The regulations state that NMFS will not approve a transfer application unless it has determined that the applicant has met all approval criteria.

The approval criteria regulations previously included criteria for an individual to demonstrate to NMFS that he or she meets the eligibility requirements at § 680.41(c)(1)(vii) at the time of transfer. These approval criteria were removed in error by incorrect amendatory language in the final rule that implemented regulations to provide harvesting cooperatives, crab processing quota shareholders, and Western Alaska Community Development Quota groups with the option to make Web-based transfers (74 FR 51515, October 7, 2009). These approval criteria are necessary to clarify for applicants that they must meet the eligibility requirements at § 680.41(c)(1)(vii) at the time of transfer, specifically that they must meet the participation within the prior 365 days for their application for transfer to be approved. This proposed rule would add these approval criteria at § 680.41(i)(11) to correct the error, and to ensure that the regulations are consistent with the original intent of the CR Program.

An applicant must submit the following two applications to NMFS to demonstrate that he or she meets the eligibility requirements at § 680.41(c)(1)(vii) at the time of transfer: (1) An Application for BSAI Crab Eligibility to Receive QS/PQS by Transfer; and (2) Application for Transfer of Crab QS or PQS. The applicant may submit the Application for BSAI Crab Eligibility to Receive QS/PQS by Transfer in advance of, or concurrently with, the Application for Transfer of Crab QS or PQS.

This proposed rule would add § 680.41(i)(11) to correct the regulations and clarify that NMFS will not approve an application to receive C share QS by transfer unless the applicant submits evidence demonstrating required participation criteria specified at § 680.41(c)(1)(vii). Acceptable evidence for demonstrating required participation criteria specified at § 680.41(c)(1)(vii) is limited to an ADF&G fish ticket signed by the applicant or an affidavit from the vessel owner attesting to the applicant's fishery participation.

This proposed change would make minor clarifications to regulations governing NMFS' approval criteria for an application to receive C shares by transfer. This change would clarify document submission requirements for applicants to receive C shares by transfer. The impacts of this proposed changed are limited to a minor increase in recordkeeping and reporting requirements for applicants. The impacts are consistent with those analyzed for the final rule to provide harvesting cooperatives, crab processing quota share holders, and Western Alaska Community Development Quota groups with the option to make Web-based transfers (74 FR 51515, October 7, 2009) and for regulations implementing Amendment 31 to the Crab FMP (80 FR 15891, March 26, 2015).

The third action under this proposed rule would amend LLP regulations for consistency with the Crab FMP to avoid public confusion about the regulatory requirements that apply to certain crab stocks. This proposed rule would modify the LLP regulations at § 679.4(k)(1)(ii) to eliminate the following four crab species: Eastern Aleutian Islands red king crab; scarlet or deep sea king crab; grooved Tanner crab; and triangle Tanner crab. These stocks were removed from the Crab FMP in 2008 and are no longer subject to Federal management.

The LLP limits access to the directed groundfish, crab, and scallop fisheries in the BSAI and the Gulf of Alaska. The LLP requires each vessel to have an LLP license on board the vessel at all times while directed fishing for license limitation species, with limited exemptions. The LLP limits the number, size, and specific operation of vessels deployed in BSAI crab fisheries managed under the Crab FMP and established several area/species endorsements for crab LLP licenses. The LLP licenses for these fisheries were initially issued in 2000 and are not reissued unless the LLP license is transferred to another person. The preamble to the final rule implementing the LLP provides a detailed explanation of the rationale for specific provisions in the LLP (63 FR 52642, October 1, 1998).

The CR Program was implemented in 2005 and removed BSAI crab fisheries that are managed under the CR Program from the LLP. With the allocation of QS and PQS, management under the LLP was no longer needed to limit fishing effort. The fisheries not included in the CR Program remained under the Crab FMP and under the governance of the LLP. Fishermen participating in those fisheries are required to have a crab LLP license with the appropriate area/species endorsement on the vessel. Although the Crab FMP establishes a State/Federal cooperative management regime that delegates crab management to the State of Alaska with Federal oversight, NMFS manages Crab FMP stocks subject to LLP requirements.

Amendment 24 to the Crab FMP was approved in 2008. Amendment 24 removed 12 BSAI crab stocks not in the CR Program from the Crab FMP and deferred management to the State of Alaska for these fisheries (73 FR 33925, June 16, 2008). These stocks were removed from the Crab FMP because the majority of catch in these fisheries occurs in State of Alaska waters or the State of Alaska had closed the directed fishery or managed only a limited incidental or exploratory fishery. Among the twelve stocks removed from the Crab FMP were Eastern Aleutian Islands red king crab, scarlet or deep sea king crab, grooved Tanner crab, and triangle Tanner crab that had been managed by NMFS under the LLP. Upon removal of these species from the Crab FMP, NMFS no longer had authority to manage those species under the LLP program. The State of Alaska currently manages these fisheries under State regulations.

Amendment 24 to the Crab FMP did not require implementing regulations. As a result, Eastern Aleutian Islands red king crab, scarlet or deep sea king crab, grooved Tanner crab, and triangle Tanner crab were not removed from LLP regulations when Amendment 24 was implemented. In order to align LLP regulations with the Crab FMP and avoid confusion about regulatory requirements, NMFS proposes to modify the LLP regulations at § 679.4(k)(1)(ii) to eliminate these species from the LLP regulations. The proposed rule would not change current management of these crab fisheries.

Currently, the LLP regulations specify that crab LLP licenses may have four area/species endorsements:

• Aleutian Islands opilio/bairdi crab;

• Eastern Aleutian Islands red king crab;

• Bering Sea Minor Species (includes Bering Sea golden king crab, scarlet or deep sea king crab, grooved Tanner crab, and triangle Tanner crab); and

• Norton Sound red and blue king crab.

Three of these four LLP license endorsements specify one fishery for which the endorsement authorizes participation when the fishery is included in the Crab FMP (i.e., Aleutian Islands opilio/bairdi, Eastern Aleutian Islands red king, and Norton Sound red and blue king). The Bering Sea Minor Species endorsement is an umbrella endorsement that applies to specific area/species endorsements defined in the LLP regulations: The Bering Sea golden king crab, scarlet or deep sea king crab, grooved Tanner crab, and triangle Tanner crab fisheries. Amendment 24 removed the scarlet or deep sea king crab, grooved Tanner crab, and triangle Tanner crab fisheries from the Crab FMP, but the Bering Sea golden king crab fishery remained in the Crab FMP and subject to Federal management under the LLP.

To implement this proposed rule, NMFS would modify LLP licenses to remove the Eastern Aleutian Islands red king endorsement from LLP licenses because that fishery was removed from the Crab FMP under Amendment 24 and is no longer subject to Federal management. Current LLP license records indicate there are 30 LLP licenses with this endorsement.

NMFS does not need to reissue LLP licenses with a Bering Sea Minor Species endorsement for the removal of the scarlet or deep sea king crab, grooved Tanner crab, and triangle Tanner crab fisheries from the Crab FMP. Even though scarlet or deep sea king crab, grooved Tanner crab, and triangle Tanner crab fisheries are no longer subject to Federal management, the Bering Sea golden king crab fishery is still included in the FMP and is subject to Federal management under the LLP. Therefore an LLP license with a Bering Sea Minor Species endorsement is still required for participation in this fishery. Because of this, NMFS does not need to remove the endorsement as a whole. The LLP regulations determine the specific area/species endorsements to which the Bering Sea Minor Species endorsement applies, so NMFS has determined that it can implement this proposed change by amending the LLP regulations, rather than reissuing the licenses carrying this endorsement. Current LLP license records indicate there are 287 LLP licenses with this endorsement.

NMFS would incur minor administrative costs to reissue LLP licenses to remove the Eastern Aleutian Islands red king endorsement. As described above, this proposed action would not change current management of the Eastern Aleutian Islands red king, Bering Sea golden king crab, scarlet or deep sea king crab, grooved Tanner crab, and triangle Tanner crab fisheries. This proposed action would not have impacts on crab stocks or on fishery participants beyond those analyzed in the analysis for Amendment 24 to the Crab FMP (73 FR 33925, June 16, 2008).

Pursuant to section 305(d) of the Magnuson-Stevens Act, the NMFS Assistant Administrator has determined that this proposed rule is consistent with the Crab FMP, other provisions of the Magnuson-Stevens Act, and other applicable law, subject to further consideration of comments received during the public comment period.

This proposed rule has been determined to be not significant for the purposes of Executive Order 12866.

An IRFA was prepared, as required by section 603 of the Regulatory Flexibility Act. The IRFA describes the economic impact this proposed rule, if adopted, would have on small entities. Copies of the IRFA are available from NMFS (see ADDRESSES).

The IRFA describes this proposed rule, why this rule is being proposed, the objectives and legal basis for this proposed rule, the type and number of small entities to which this proposed rule would apply, and the projected reporting, recordkeeping, and other compliance requirements of this proposed rule. It also identifies any overlapping, duplicative, or conflicting Federal rules and describes any significant alternatives to this proposed rule that would accomplish the stated objectives of the Magnuson-Stevens Act and other applicable statues and that would minimize any significant adverse economic impact of this proposed rule on small entities. The description of this proposed rule, its purpose, and its legal basis are described in the preamble and are not repeated here.

The Small Business Administration defines a small commercial shellfish fishing entity as one that has annual gross receipts, from all activities of all affiliates, of less than $5.5 million (79 FR 33647, June 12, 2014).

Under Action 1, the entities directly regulated by this proposed rule are those entities that participate in the WAG fishery: Vessel operators, QS holders, and IFQ holders. This proposed rule would not directly affect PQS holders, IPQ holders, or communities. Three vessels were active in the 2013/2014 WAG fishery. These vessels received the majority of their revenue from shellfish from 2012 through 2014. The entities directly regulated by this proposed rule are members of a cooperative that exceeds the $5.5 million revenue threshold for a shellfish entity and are not considered small entities (see Section 4.3 of the Analysis). The number of WAG fishery QS holders is listed in Table 3-3 in Section 3.5.2 of the Analysis. Gross revenue information is not available for these QS holders. Of the QS holders listed, at least 3 of the entities holding CVO QS are known to be large entities as defined by the Small Business Administration. The remaining 11 CVO QS holders and 8 CVC QS holders are assumed to be small entities. This proposed rule, if approved, would exempt these directly regulated small entities from the prohibition against resuming fishing before all CR Program crab have been offloaded. This exemption is intended to provide an opportunity for these entities to benefit from increased economic efficiencies and increased revenues in the WAG fishery. Therefore, no directly regulated small entities are expected to be adversely impacted by this proposed rule.

Under Action 2, this proposed rule would correct an error to add regulatory text that was inadvertently removed. The effect of Action 2 on directly regulated small entities is described in the IRFA prepared for a final rule implementing regulations to provide harvesting cooperatives, crab processing quota share holders, and Western Alaska Community Development Quota groups with the option to make web-based transfers (74 FR 51515, October 7, 2009) and for regulations implementing Amendment 31 to the Crab FMP (80 FR 15891, March 26, 2015). This proposed rule would not change the impacts on small entities from the impacts considered in the IFRAs prepared for these actions.

Under Action 3, this proposed rule would remove regulatory requirements for LLP licenses that are no longer applicable under the Crab FMP as described in the analysis for Amendment 24 to the Crab FMP (73 FR 33925, June 16, 2008). Action 3 would not have any impact on directly regulated entities because no entities are currently participating in these crab fisheries, and this proposed rule would not preclude them from doing so under the appropriate State of Alaska regulations. Action 3 would require the reissuance of LLP licenses to the 30 license holders with the Eastern Aleutian Islands red king crab endorsement, however, this would not require any action taken on the part of any small entities.

Action 1 of this proposed rule would not require any modifications to the current Federal recordkeeping and reporting requirements for the CR Program. Action 2 of this proposed rule references the collection-of-information requirement for the Application for Transfer of Crab QS or PQS (OMB control number 0648-0514), however, this proposed rule would not require modifications to the application and would not increase the public reporting burden associated with it. Action 3 of this proposed rule, if approved, would not require LLP license holders to take any action relative to their LLP licenses and would not impact any public reporting burden. There was a collection-of-information requirement for the initial issuance of LLPs, OMB Control Number 0648-0334, however after initial issuance, LLPs do not expire.

This proposed rule references collection-of-information requirements subject to review and approval by the Office of Management and Budget (OMB) under the Paperwork Reduction Act (PRA). These requirements have been approved by OMB and are listed below by OMB Control Number.

The crab LLP is mentioned in this rule, but there would be no change in burden or cost results. NMFS would modify LLP licenses to remove the Eastern Aleutian Islands Red King Crab endorsement. NMFS does not expect that removal of the Eastern Aleutian Islands Red King Crab endorsement area/species endorsement would impact LLP license holders.

The Application for Crab Rationalization (CR) Program Eligibility to Receive QS/PQS or IFQ/IPQ by Transfer and the Application for Transfer of Crab QS/PQS are mentioned in this rule, but there would be no change in burden or cost results. The fishery participation approval criteria for an individual to receive C share QS by transfer were incorrectly deleted from the regulations with a final rule published on October 7, 2009 (74 FR 51515) and would be replaced by this action.

These estimates include the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.

Public comment is sought regarding: Whether these proposed collections of information are necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; the accuracy of the burden statement; ways to enhance quality, utility, and clarity of the information to be collected; and ways to minimize the burden of the collection of information, including through the use of automated collection techniques or other forms of information technology. Send comments on these or any other aspects of the collection of information, to NMFS (see ADDRESSES), and by email to [email protected] or fax to 202-395-5806.

Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to penalty for failure to comply with, a collection of information subject to the requirement of the PRA, unless that collection of information displays a currently valid OMB control number. All currently approved NOAA collections of information may be viewed at: http://www.cio.noaa.gov/services_programs/prasubs.html.

The Analysis did not reveal any Federal rules that duplicate, overlap, or conflict with this proposed rule.

An IRFA also requires a description of any significant alternatives to this proposed rule that would accomplish the stated objectives, are consistent with applicable statutes, and that would minimize any significant economic impact of this proposed rule on small entities. Under all actions, NMFS considered two alternatives—the no action alternative and the action alternative. During the Council's initial discussion of the problem, it also considered extending the exemption from the prohibition against resuming fishing before all CR Program crab have been landed to all CR Program fisheries. However, the Council rejected this approach because it was too broad for the stated objectives, which were specific to the WAG fishery.

Under Action 1, the no action alternative is not expected to minimize adverse economic impacts for the small entities directed regulated by this proposed rule. These entities are currently required to make partial landings at the Adak processing facility and transit several hundred miles from the fishing grounds to deliver the remaining crab on board the vessel to a processor that can accept a full offload of crab from the vessels. The no action alternative results in operating inefficiencies and additional costs from requiring vessels to travel significant distances to land a partial load of WAG. The action alternative is expected to provide positive economic impacts for small entities compared to the no action alternative because it would lift a restriction on WAG fishery participants. The action alternative could improve operating efficiencies and increase fishery revenues for WAG fishery participants by supporting the opportunity to supply crab to the live market for a premium price compared to crab delivered to traditional markets.

Under Action 2, the no action alternative would not correct an error in regulation. The action alternative corrects that error by reinstating the regulation that was incorrectly removed. This proposed rule would not change the impacts on small entities from the impacts considered in the FRFA prepared for the final rule implementing regulations to provide harvesting cooperatives, crab processing quota share holders, and Western Alaska Community Development Quota groups with the option to make Web-based transfers (74 FR 51515, October 7, 2009) and for Amendment 31 to the Crab FMP (80 FR 15891, March 26, 2015). The FRFA for the Web-based transfers rule described the impacts of the rule as beneficial to small entities because the rule would simplify the process for completing transfers. The FRFA for Amendment 31 described that under Amendment 31, the submission of documentation demonstrating active participation for C share QS holders was necessary to implement the active participation requirements, but was not expected to have a significant impact on small entities due to the need to submit the information only upon the request to receive C shares by transfer.

Under Action 3, the no action alternative would retain regulations for LLP license requirements that are no longer applicable under the Crab FMP. The action alternative would make LLP license requirements consistent with the Crab FMP and reduce potential confusion for small entities. Action 3 would require the reissuance of LLP licenses to the 30 license holders with the Eastern Aleutian Islands red king crab endorsement, however, this would require no action taken on the part of any small entities. Action 3 would not have any impact on directly regulated entities because no entities are currently participating in these crab fisheries, and this proposed rule would not preclude them from doing so under the appropriate State of Alaska regulations.

For the reasons set out in the preamble, NMFS proposes to amend 50 CFR part 679 and part 680 as follows:

The revisions read as follows: