Council motion for cooperative measures and report

Bering Sea and Aleutian Islands crab fisheries – C-4(a)-(c)
Council motion – February 2013
North Pacific Fishery Management Council

C-4(a) – Modification of community provisions
Actions 1 through 5
The Council took final action, selecting a preferred alternative for five actions. The Council adopted the
following purpose and need statement for these actions:
The Bering Sea/Aleutian Islands crab rationalization program recognizes the unique relationship
between specific crab-dependent communities and their shore-based processors, and has
addressed that codependence by establishing community “right of first refusal” agreements as a
significant feature of the program. These right of first refusal agreements apply to the Processor
Quota Shares initially issued within each community, and are entered into and held by Eligible
Crab Community Organizations on behalf of each respective community.
To date, there have been several significant Processor Quota Share transactions, resulting in
Eligible Crab Community Organizations now owning holding substantial portions of the PQS in
each rationalized fishery. However, the ability of the right of first refusal to lapse may diminish
the intent to protect community interests. Also, limiting the time period to exercise the right may
conflict with the ability to exercise and perform under the right of first refusal. In addition, some
communities, when exercising the right of first refusal may have no interest in purchasing assets
located in another community and feel the right of first refusal contract should exclude any such
requirement. Lastly, under the current structure, right holders and NOAA Fisheries have limited
information concerning the transfer and use of PQS and IPQ subject to the right. Additional
notices from PQS holders to right holders and NOAA Fisheries concerning the use of IPQ and
transfer of PQS and IPQ would allow community entities to more effectively protect their
interests through the rights of first refusal.
The Council selects as its preferred alternative the following:
Action 1: Increase a right holding entity’s time to exercise the right and perform as required.
Alternative 2: Increase an entity’s time to exercise the right and perform.
1) Require parties to rights of first refusal contracts to extend the period for exercising the right of
first refusal from 60 days from receipt of the contract to 90 days from receipt of the contract.
2) Require parties to rights of first refusal contracts to extend the period for performing under the
contract after exercising the right from 120 days from receipt of the contract to 150 days from
receipt of the contract.
Action 2: Increase community protections by removing or modifying the (two) ROFR lapse
provisions.
Provision 1
Alternative 2 – Remove provision under which ROFR lapses if IPQ are used outside the community.

1
Council motion – February 2013
C-4(a)-(c) Bering Sea and Aleutian Islands crab management

Require parties to rights of first refusal contracts to remove the provision that rights lapse, if the
IPQ are used outside the community for a period of three consecutive years
Provision 2
Alternative 3 – Allow PQS holder to identify the right holder, if a community entity fails to exercise the
right on a transfer of PQS
If the right is triggered by a sale subject to the right, a new ROFR contract would be signed at the
time of transfer, in which the PQS buyer names the community that gets the ROFR (either the
original right holder or receiving right holder). The right holder must be an existing entity that
was eligible to hold a ROFR at the time of the implementation of the program in the region in
which the IPQ must be landed.
Action 3: Apply the right to only PQS or PQS and assets in the subject community.
Alternative 1 – status quo
The right of first refusal applies to all assets included in a sale of PQS subject to the right, with the
price determined by the sale contract.
Action 4: Require community approval for IPQ subject to the right to be processed outside the
subject community.
Alternative 1 – Status quo
Intra-company transfers of PQS and IPQ outside the subject community are permitted without requiring
the PQS holder to notify the community entity that holds the right.
Action 5: Require additional notices to right holders and NMFS
Require the following notices from PQS holders:
1) To the right holder, a prior notice of all transfers of IPQ or PQS that are subject to the right
(regardless of whether the PQS holder believes the right applies to the transfer) (as a required
contract provision);
2) To NMFS as a part of any application to transfer PQS subject to the right to any party other than
the right holder, either:
a. A certification of the transferor of the PQS that the right holder was provided with 90
days notice of the right and did not exercise the right during that period (in which case
the PQS may transfer and the right will no longer apply); or
b. A certification of the new PQS holder and the right holder that a contract has been
entered establishing the right with respect to the new PQS holder or that the right holder
has elected to waive the right with respect to the new holder.
3) To the right holder annually, the location of use of IPQ that are subject to a right and whether the
IPQ were used by the PQS holder (as a required contract provision).
4) To NMFS, as part of the annual application for IPQ, certification of a current ROFR agreement in
place with the community entity.
Action 6
The Council took no action on the sixth action at this meeting. The Council has adopted the following
purpose and need statement for this action:
At least one PQS transfer is believed to have occurred without the right holder (Aleutia
Corporation) being informed of the transaction, denying that right holder of the ability to
2
Council motion – February 2013
C-4(a)-(c) Bering Sea and Aleutian Islands crab management

exercise its right of first refusal to acquire PQS as intended by the program. This lack of notice
allowed the transfer of PQS to a party other than the right holder and the movement of the
processing to another community. Providing that right holder with a direct allocation of PQS
could mitigate the negative impacts arising from that transaction. In addition, providing for
notice of the location of use of IPQ and transfers of PQS to right holders could prevent similar
circumstances from arising in the future and make the right more effective in protecting
communities’ historical interests in processing and ensure that community entities are better able
to assert their interests as provided for by the right.
Action 6: Issuance of newly created PQS to Aleutia Corporation
Alternative 1 – Status quo
No further of issuance of PQS
Alternative 2 – Issuance of PQS to Aleutia
Bristol Bay red king crab PQS shall be allocated to Aleutia Corporation in an amount that would result in
that corporation receiving up to 0.55 percent of the PQS in that fishery. This allocation would be made
exclusively from newly issued PQS.

C-4(b) – Active participation requirements
The Council intends to take no further action on this amendment package.

C-4(c) – Discussion paper on cooperative provisions for crew
The Council requests that each of the BSAI crab rationalization cooperatives voluntarily provide an
annual report detailing measures the cooperative is taking to facilitate the transfer of quota share to active
participants ,including crew members and vessel owners, and available measures which affect high lease
rates and crew compensation. The annual reports should convey to the Council the effectiveness of the
measures implemented through the cooperatives and the estimated level of member participation in any
voluntary measures and include supporting information and data. These reports are requested to be
delivered for the October meeting each year.

3
Council motion – February 2013
C-4(a)-(c) Bering Sea and Aleutian Islands crab management