SUPPLEMENTARY INFORMATION:

The Gulf reef fish fishery, which includes red grouper, is managed under the FMP. The FMP was prepared by the Council and NMFS, approved by the U.S. Secretary of Commerce, and is implemented by NMFS through regulations at 50 CFR part 622 under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act).

Unless otherwise noted, all weights in this proposed rule are in pounds (lb) gutted weight.

Background

The Magnuson-Stevens Act requires NMFS and the regional fishery management councils to prevent overfishing and achieve, on a continuing basis, the optimum yield from federally managed fish stocks. These mandates are intended to ensure fishery resources are managed for the greatest overall benefit to the nation, particularly with respect to food production and providing recreational opportunities, and to protect marine ecosystems.

This action is taken under the statutory authority of Magnuson-Stevens Act section 303(b)(14) to prescribe measures determined to be necessary and appropriate for the conservation and management of the fishery.

The most recent stock assessment for Gulf red grouper (Southeast Data, Assessment, and Review (SEDAR) 88) was completed in 2025. The stock assessment results indicated an increase in the red grouper stock size relative to the previous assessment (SEDAR 61, 2019). Based on its review of that assessment, the Council's Standing Scientific and Statistical Committee determined that the stock was not overfished or undergoing overfishing and recommended increases to the overfishing limit and acceptable biological catch relative to the current harvest limits. In January 2026, the Council approved for NMFS review and implementation substantial increases to the red grouper catch limits in Amendment 62 to the FMP (Amendment 62). The notice of availability for Amendment 62 published in the Federal Register on April 2, 2026 (91 FR 16623) and the proposed rule for Amendment 62 published in the Federal Register on July 7, 2026 (91 FR 41611). An electronic copy of Amendment 62 is available from the Southeast Regional Office website at: www.fisheries.noaa.gov/​action/​amendment-62-gulf-red-grouper-management-measures. If implemented, NMFS intends that Amendment 62 will be effective later in 2026. Among other measures, for the 2027 fishing year, Amendment 62 would set the commercial quota at 4.83 million lb (2.19 million kilograms (kg)).

In anticipation of the substantial red grouper commercial quota increase authorized in Amendment 62 and the desire to improve opportunity for participants to enter the GT-IFQ program and reduce bycatch, Amendment 63 would establish a pilot program for setting aside a portion of the increase in red grouper commercial quota for a quota pool. Amendment 63 considers the amount of quota in the quota pool, the eligibility criteria for participation in the quota pool, and the percentages of quota to be distributed to shareholders and non-shareholders, along with the method through which distribution would occur. Amendment 63 is intended to establish a 3-year pilot program for the 2027, 2028, and 2029 fishing years, using the substantial increase in red grouper quota as an opportunity to test a new mechanism to distribute allocation with the intention to improve opportunities for participation in the GT-IFQ program and reduce bycatch and discards of IFQ species. The quota pool would not change the total commercial quota established in Amendment 62 but would distribute a portion of the quota based on the criteria selected in Amendment 63.

The Council approved Amendment 63 at its June 2026 meeting for submission and subsequent implementation by NMFS. Among other measures, Amendment 63 defines the red grouper commercial quota thresholds that must be met for there to be a red grouper quota pool. In Amendment 63, for there to be a quota pool, the commercial quota must be greater than 4.28 million lb (1.94 million kg) and, if so, then the quota pool allocation is equal to 50 percent of the commercial quota that is greater than 4.28 million lb (1.94 million kg). For fishing year 2027, since Amendment 62 would set the commercial quota at 4.83 million lb (2.19 million kg), the available commercial quota for the quota pool that would be established in Amendment 63 would be 50 percent of the difference between 4.83 million lb (2.19 million kg) and 4.28 million lb (1.94 million kg). This difference is 550,000 lb (249,476 kg), 50 percent of which is 275,000 lb (124,738 kg). Therefore, for fishing year 2027, 275,000 lb (124,738 kg) would be the available commercial quota for the quota pool. An electronic copy of Amendment 63 is available from the Southeast Regional Office website at: www.fisheries.noaa.gov/​action/​gulf-amendment-63-red-grouper-commercial-quota-pool-under-grouper-tilefish-individual.

If approved, this framework action would take effect after Amendment 62 becomes effective but would still take effect before the end of 2026. The anticipated timeline for approval and implementation of Amendment 63 would not allow NMFS to implement the proposed quota pool until after the annual distribution of allocation to the red grouper IFQ shareholders on January 1, 2027. In the GT-IFQ program, NMFS is not able to reduce commercial quota (allocation) once it has already been distributed for a fishing year. This proposed rule would provide the Southeast Regional Administrator the authority to withhold a portion of the red grouper 2027 commercial quota in anticipation of the implementation of Amendment 63 in 2027.

Management Measure Contained in This Proposed Rule

If implemented, this proposed rule would withhold 275,000 lb (124,738 kg) of the 2027 IFQ distribution of the red grouper commercial quota on January 1, 2027. If a final rule to implement Amendment 63 is not effective by May 1, 2027, NMFS would distribute withheld 2027 IFQ allocation of red grouper to the current shareholders based on their current shares held as of the date of distribution.

Classification

Pursuant to section 304(b)(1)(A) of the Magnuson-Stevens Act, the NMFS Assistant Administrator has determined that this proposed rule is consistent with the framework action, the FMP, other provisions of the Magnuson-Stevens Act, and other applicable law, subject to further consideration after public comment.

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

The Magnuson-Stevens Act provides the legal basis for this proposed rule. No duplicative, overlapping, or conflicting Federal rules have been identified. In ( printed page 57534) addition, no new reporting, record-keeping, or other compliance requirements are introduced by this proposed rule. This proposed rule contains no information collection requirements under the Paperwork Reduction Act of 1995.

The Senior Lead Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration that this proposed rule, if adopted, would not have a significant economic impact on a substantial number of small entities. The factual basis for this certification follows. All monetary estimates in the following analysis are in 2024 dollars.

A description of this proposed rule, why it is being considered, and the objectives of this proposed rule are contained in the SUMMARY and SUPPLEMENTARY INFORMATION sections of this proposed rule.

This proposed rule would provide the Southeast Regional Administrator the authority to withhold a portion of the red grouper 2027 commercial quota in anticipation of the implementation of Amendment 63 to the FMP.

The proposed changes to the distribution of the red grouper commercial quota would apply to red grouper IFQ shareholders, as well as commercial fishing businesses that fish for red grouper in Federal waters of the Gulf. None of the proposed changes would directly apply to federally permitted dealers. Any change in the supply of Gulf red grouper available for purchase by dealers as a result of this proposed rule, and associated economic effects, would be an indirect effect of the proposed rule and would therefore fall outside the scope of the RFA.

The RFA requires NMFS to describe the impact of the proposed rule on small entities (5 U.S.C. 603). Small entities include small businesses, small organizations, and small governmental jurisdictions (5 U.S.C. 601(3)-(6)).

As of July 8, 2021, there were 825 limited access valid or renewable Federal commercial Gulf reef fish permits. In order to commercially harvest Gulf red grouper, a vessel permit must also be linked to an IFQ account and possess sufficient allocation for this species. IFQ accounts can be opened, and valid permits can be linked to IFQ accounts, at any time during the year. Eligible vessels can receive red grouper allocation from other IFQ participants. On average from 2020 through 2024, there were 671 IFQ accounts that held red grouper allocation and 68 percent of those held red grouper shares. During the same period, there were 324 federally permitted commercial reef fish vessels with reported landings of red grouper in the Gulf on average each year. Their average annual vessel-level gross revenue from all species for 2020 through 2024 was approximately $137,779 and Gulf red grouper landings accounted for approximately 34 percent of this revenue. From 2020 through 2024, the maximum annual revenue from all species reported by a single one of the commercial vessels that landed Gulf red grouper was approximately $1.24 million in 2022. Economic profits for these commercial vessels are estimated to be 28.1 percent of their annual gross revenue ($38,716 per vessel) during this period. Although many fishing businesses own only one permitted vessel, some hold or own multiple permits and vessels. Since comprehensive ownership data are currently unavailable for vessels harvesting Gulf red grouper, this analysis assumes that each of the 324 vessels is independently owned by a single business. This assumption is expected to result in an overestimate of the actual number of businesses directly regulated by this proposed rule. Additionally, 150 IFQ shareholder accounts, on average from 2020 through 2024, possessed red grouper shares but did not report any landings of red grouper. The account holders either transferred red grouper allocation only or were inactive. It is assumed that each of these accounts is independently owned by a single business as well. Revenue and cost data are not collected directly from IFQ shareholders; therefore, estimates of economic profits for the Gulf red grouper IFQ commercial fishing businesses that did not report landings are unavailable.

For RFA purposes only, NMFS has established a small business size standard for businesses, including their affiliates, whose primary industry is commercial fishing (see 50 CFR 200.2). A business primarily engaged in commercial fishing (North American Industry Classification System code 11411) is classified as a small business if it is independently owned and operated, is not dominant in its field of operation (including its affiliates), and has combined annual receipts not in excess of $11 million for all its affiliated operations worldwide. All the commercial fishing businesses directly regulated by this proposed rule are believed to be small entities based on the NMFS size standard.

The proposed rule would specifically authorize the Southeast Regional Administrator to withhold 275,000 lb (124,738 kg) of the 2027 IFQ distribution of the red grouper commercial quota on January 1, 2027. If a final rule to implement Amendment 63 is not effective by May 1, 2027, NMFS would distribute this withheld 2027 IFQ allocation of red grouper to the current shareholders based on their current shares held as of the date of distribution. From 2020 through 2024, the average annual red grouper quota utilization rate was approximately 89 percent, indicating that 11 percent of the red grouper quota remains unharvested at the end of each year, and a much larger percentage remains available at the 4-month mark during the fishing year. Furthermore, if implemented, Amendment 62 to the FMP will increase the commercial red grouper quota by 2.04 million lb (0.93 million kg) in 2027 when compared to the current quota of 2.79 million lb (1.27 million kg). In 2016, a 2.06 million lb (0.93 million kg) increase in the commercial red grouper quota resulted in a 17 percent decline in the quota utilization rate in 2017. As such, implementation of Amendment 62 is expected to cause a comparable decline in the current quota utilization rate. Thus, it is likely that withholding a portion of the quota for 4 months in 2027 would not result in adverse economic effects from delayed red grouper harvest for the vast majority of participants. For the limited number of shareholders who plan to harvest or sell their allocation immediately upon receipt on January 1, 2027, the temporary withholding of IFQ allocation would result in minor adverse economic effects due to the expected short delay at the beginning of the 2027 fishing year until Amendment 63 is expected to be implemented. Although neither the economic benefits of implementing the red grouper commercial quota pool in 2027 rather than 2028, nor the economic costs of delaying the distribution of a portion of the commercial red grouper quota by 4 months can be quantified at this time, economic losses due to delays in quota distribution are expected to be minor. Further, all withheld quota pounds would either be distributed through the quota pool upon the implementation of Amendment 63 or returned directly to shareholders by May 1, 2027.

Based on the above analysis, this proposed rule, if implemented, 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.

For the reasons set out in the preamble, NMFS proposes to amend 50 CFR part 622 as follows:

1. The authority citation for part 622 continues to read as follows:

Authority: 16 U.S.C. 1801 et seq.

2. In § 622.39, revise paragraph (a)(1)(iii)(C)( 2) to read as follows:

91 FR 57532