Establishment of National Minimum Insurance Standard for National Marine Fisheries Service Programs That Permit or Approve Observer Providers
Final rule.
CFR Part: "50 CFR Parts 600, 648, 660, and 679"
RIN Number: "RIN 0648-BJ33"
Citation: "87 FR 54902"
Document Number: "Docket No. 220805-0170"
Page Number: "54902"
"Rules and Regulations"
Agency: "National Marine Fisheries Service (NMFS),
SUMMARY: NMFS issues this final rule to establish a uniform, nationally consistent minimum insurance standard that would apply in regional regulatory programs that authorize an observer provider to deploy a person in any mandatory or voluntary observer program and that specify responsibilities of authorized providers. NMFS has concluded that this action is necessary to clarify the types of insurance that are appropriate to address the financial risks that observer coverage presents in any federally managed fishery that is subject to observer coverage. This rule also revises regional observer program regulations to reference the national minimum insurance standard. The rule does not modify existing regional observer program regulatory procedures that specify how an observer provider demonstrates compliance with insurance requirements.
DATES:
Effective date: This final rule is effective
Compliance date: Compliance is not required until or during the next insurance certification or
FOR FURTHER INFORMATION CONTACT: Requests for additional information should be directed to
SUPPLEMENTARY INFORMATION: The insurance standard established in this final rule provides a nationally consistent suite of insurance coverages that an observer provider seeking authorization, or that has been authorized, must have to mitigate the financial risks associated with providing observer services; specifically observer deployments to fishing vessels or shoreside locations such as processing facilities, and those that arise with training personnel for these deployments. Through compliance with this minimum standard, observer providers would be properly insured, thereby mitigating the financial risks that fishing vessels, first receivers, and shoreside processors have when complying with observer coverage requirements.
Background
The Magnuson-Stevens Fishery Conservation and Management Act (MSA), 16 U.S.C.
Collection of information on fishing and fish processing, such as type and quantity of fishing gear used, catch in numbers of fish or weight thereof, fishing locations, and biological information, are critical to effective fishery management. See id. 1853(a)(5). To obtain this information, the MSA authorizes, among other things, that an FMP may "[r]equire that one or more observers be carried on board a vessel of
At present, all at-sea and shoreside observer deployments for NMFS observer programs are staffed by observer providers. These companies provide observer staffing support under two distinct models: (1) direct service, where the NMFS observer program contracts with an observer provider and oversees the provider's services based on the terms of the contract; and (2) industry-funded service, where the observer provider provides services directly to a vessel or a fleet of vessels, and a NMFS regional observer program oversees the provision of those services based on requirements set forth in NMFS regulations.
In the North Pacific and most
In the Northeast/Mid-Atlantic region an observer provider must be approved to provide services in the at-sea sampler/observer coverage program or at-sea monitoring services in the Northeast Multispecies sector program. The Northeast at-sea sampler/observer coverage program insurance requirements are included as elements of an approved program provider application. In other words, an observer provider must demonstrate evidence that it holds the insurance specified in the regulation as part of its application to become an approved provider. Likewise, as part of an application to be an approved services provider in the Northeast Multispecies sector at-sea monitoring program, a company must demonstrate that it holds insurance that NMFS deems adequate.
The Southeast, Southwest, and Pacific Islands programs use only the direct contract model, and do not have regulations to authorize a company to deploy observers in their programs through an approval or permit process. Nor do these programs have regulations that specify observer provider responsibilities. Further information about NMFS' regional observer programs is available at https://www.fisheries.noaa.gov/topic/fishery-observers.
In 2014, NMFS initiated an evaluation of observer provider insurance requirements in North Pacific observer program regulations. This effort was prompted by a letter from
Responses to Public Comments
NMFS received comments on the proposed rule in three letters received from the
Comment 1.
Response. NMFS agrees that a high Fatal Occupational Injuries ranking does not necessarily mean a high level of Occupation Injury overall for commercial fishing. NMFS also agrees that the risk of observer occupational injury may not always be equivalent to such risks for commercial fishermen. However, NMFS maintains its view that occupational injury risks faced by commercial fishermen are relevant to assessing, as a general matter, the risks for observers and the minimum level of insurance observer providers should have to insure against those risks.
Comment 2. In response to NMFS' specific request for comments on the issue, PSVOA expressed strong support for enhancing the proposed Marine General Liability (MGL) policy requirement with an endorsement that extends protection to vessel or shoreside processor owners from legal actions filed by an observer. Such an endorsement should be added, because vessel owners face significant exposure to liability from incidents that arise involving compliance with federal observer coverage requirements. The endorsement should name a vessel owner as a party that will be indemnified against a lawsuit or other legal action that seeks redress of an observer injury or death.
Response. NMFS recognizes PSVOA's concern that vessel owners have some risk of legal actions filed against them by observers, whether specifically or as part of an action brought against the employer. However, NMFS has decided not to add an endorsement to the MGL policy requirement in the rule. The proposed rule noted that the incidence or risk of observer-initiated legal actions against parties other than their employer are likely to be low, and NMFS did not receive public comments that would affect that conclusion. Such risks should be addressed through the Marine Employer's Liability (MEL) policy element of the minimum insurance standard. In addition, the minimum insurance standard is intended to protect vessel and shoreside processor owners against employer-based claims. Based on available information about risks and costs, NMFS believes that requiring observer providers to have an enhanced MGL policy that protects vessel and shoreside processor owners against any legal action brought by an observer, not just those that are employer-based, is too broad and overly burdensome. For that same reason, NMFS also declines PSVOA's request that the minimum insurance standard be modified to require that the MGL have an endorsement that names a vessel or shoreside processor as a party that that will be indemnified against a lawsuit or other legal action that seeks redress of an observer injury or death.
Comment 3.
Response. NMFS agrees that an MEL policy covers claims under the Jones Act and GML. In the preamble to the proposed rule, NMFS used the same terminology reflected in existing regional observer program regulations. North Pacific and
Comment 4.
According to
Response. NMFS agrees that the details of whether and how the LHWCA, Jones Act, and GML apply to observers are unclear in some cases. Regardless of these uncertainties, NMFS agrees that a minimum suite of insurance for observer provider operations must include coverage for claims under those authorities, and thus made no change to the final rule as a result of this comment. NMFS notes that the minimum insurance standard is designed to be narrowly tailored to cover the reasonable risks, but not every possible risk, that may arise with observer provider operations. As explained in the proposed rule, based on independent research and extensive outreach efforts to insurance experts, observer providers, and other government agencies, NMFS determined that the LHWCA applies only to shoreside incidents. While deployed on a vessel under the MSA or the Marine Mammal Protection Act, observers have status as Federal employees for purposes of compensation under the Federal Employee Compensation Act. See 16 U.S.C. 1881b(c). Accordingly, because observers can seek FECA benefits for injuries sustained while deployed on a vessel, NMFS concluded that, for purposes of the minimum insurance standard, observer providers need only obtain LHWCA coverage for observers when they perform duties shoreside. Nonetheless, the minimum insurance standard establishes a floor, not a ceiling, for the appropriate insurance policy types and levels of associated insurance policy coverage amounts. Thus, this rule would not prevent an observer provider from having broader insurance or higher coverage amounts than what is required under the minimum standard.
NMFS agrees that observers do not have the requisite status for Jones Act and GML claims, but also agrees that the minimum standard should include an MEL policy to address legal costs should observers pursue Jones Act or GML claims. Moreover, as NMFS explained in the proposed rule, an MEL policy is appropriate to cover certain GML benefits that do apply to incidents at-sea involving observers, specifically potential remedies related to claims based on Unseaworthiness, Wrongful Death, Transportation, Wages, Maintenance and Cure, and the Death on the High Seas Act.
Comment 5. LIG Marine Managers commented as follows on
Response. NMFS agrees that
Comment 6. LIG Marine Managers commented that commercial general liability coverage, which generally does not apply to any vessel-based operations, should be a component of MGL with a minimum of
Table 1-LIG Marine Managers' Recommendations
State worker's LHWCA Employers Marine Marine Excess or umbrella
compensation (longshore) liability employer's liability (MEL) general coverage
coverage (EL) covering liability over MGL,
(WC) Jones Act/GML, (MGL) EL and MEL
seamen's claims
coverage
Must meet requirements within Monoline or As part of the WC $ 1 million per occurrence $ 1 million per occurrence $ 2 million minimum.
all state(s) of operation: endorsed to the WC policy coverage
Statutory Limit Statutory Limit $ 1 million
Any combination of primary and excess policies can be provided for the EL, MEL and MGL in order to achieve the total limits required above.
Response. NMFS agrees that some insurance carriers may craft policy coverage amounts differently than the market standard. Those variations do not weaken coverage so long as the total coverage of each policy is equal to or greater than the sum of what is required for each policy. Accordingly, this final rule amends the regulatory text of the proposed rule at 50 CFR 600.748 by adding a new paragraph (d) to include flexibility in satisfying the coverage amounts required for MGL and MEL policies.
With regard to the comment on an EL policy sublimit for
Changes From the Proposed Rule
As described above in the Responses to Public Comments section, in response to public comments and after further agency consideration, in this final rule NMFS has added a new paragraph (d) to section 600.748 to allow policy coverage amounts for Marine General Liability and Marine Employers' Liability under paragraph (b)(1) and (2) respectively to be higher or lower than the specified amounts so long as the total is equal to or greater than the combined specified amounts (i.e., so long as the combined coverage for these policies is
Table 2-Final Minimum Insurance Standard
LHWCA State workers' compensation coverage Marine general liability Marine Excess or
(WC) (MGL) employer's liability umbrella
(MEL) coverage
Required $ 1 million coverage Must meet requirements within state of Required $ 1 million per occurrence Required $ 1 million per occurrence Required $ 2 million per occurrence.
operation
Coverage amounts specified for MGL and MEL may be higher or lower for each respective policy so long as the combined coverage for these policies is $ 2 million .
In addition, NMFS has clarified the preface of paragraph 600.748(c) by replacing the phrase "policy coverages" with the phrase "scope of coverages," which is a more accurate description of that paragraph.
Classification
NMFS issues this final rule pursuant to Magnuson-Stevens Act (MSA) section 305(d), which provides the Secretary of Commerce with general responsibility to carry out any FMP or FMP amendment, and to promulgate regulations as may be necessary to discharge such responsibility (16 U.S.C. 1855(d)). The NMFS Assistant Administrator has determined that this final rule is consistent with the MSA and other applicable laws.
NEPA Determination
Executive Order 12866
This final rule has been determined to be not significant for purposes of Executive Order 12866.
Regional regulatory programs that authorize an observer provider to deploy a person in any mandatory or voluntary observer program and that specify responsibilities of authorized providers already include insurance requirements. Thus, to operate in these programs, observer providers already must demonstrate that they have the insurance specified in the applicable regulations.
Due to the nuances of maritime law and the unique nature of observer deployments, regions have adopted differing insurance requirements that are in some cases overly burdensome and inefficient. This action would provide a national standard that clarifies the types and amounts of insurance and associated coverage amounts that best address the financial risks of observer provider operations regardless of the fishery or region in which an observer provider operates. In some cases, compliance with the final national insurance standard would require observer providers to have insurance that is different from what they are required to have under current regulations. While this final action could change the suite of insurance that observer providers are required to have, it does not make substantive increases to the insurance that is required in current regional programs.
For these reasons, we do not expect this action to result in a significant increase in the premiums that observer providers currently pay. In fact, the action could result in lower premiums due to the increased efficiency of having a national standard and the fact that the standard does not include certain coverages that are required under current regulations. Additionally, section 600.748(d) of the final rule has modified how the coverage amounts for MGL and MEL may be met, which provides greater flexibility to observer providers.
Paperwork Reduction Act
This action does not contain a change to a collection-of-information requirement for purposes of the Paperwork Reduction Act. NMFS' regional observer program regulations that authorize observer providers or that specify authorized provider responsibilities already include procedures for demonstrating compliance with program insurance requirements, and this proposed rule would not change those procedures. The following existing collection of information requirements would continue to apply, under the following control numbers: (1) 0648-0318, Alaska Observer Program (applies to the North Pacific Observer Program); (2) 0648-0500,
Final Regulatory Flexibility Analysis
In compliance with section 604 of the Regulatory Flexibility Act, NMFS prepared a final regulatory flexibility analysis (FRFA), which is included below.
In the Response to Comments section above, NMFS clarified that insurance policies for
No economic issues were raised by public comment, and, therefore, no changes to this final rule were made in response to public comments of an economic nature. NMFS received no comments on the initial regulatory flexibility analysis (IRFA), nor any comments from the
Description of the Reasons Why Action Is Being Considered
The policy reasons for issuing this final rule are discussed in the preamble above and in the proposed rule and are not repeated here.
Statement of the Objectives of, and Legal Basis for, the Proposed Rule; Identification of All Relevant Federal Rules Which May Duplicate, Overlap, or Conflict With the Final Rule
The objective of this final rule is to promote effective operation of regional observer programs by ensuring that observer providers have a nationally consistent suite of insurance coverages that properly addresses the financial risks of their operations, regardless of the fishery observed or the region in which the provider operates. The legal basis for this rule is 16 U.S.C. 1855(d). No other Federal rules duplicate, overlap, or conflict with this proposed rule.
Number and Description of Small Entities Regulated by the Final Action
Currently, there are six companies that provide observer services in a NMFS mandatory or voluntary observer program. These entities, which would be directly regulated by this rule include:
Additionally, firms interested in obtaining approval or a permit to provide observer services under a NMFS regional observer program in the future would be regulated under this rule. Observer provider services are specialized services, and NMFS does not know how many other firms might want to become providers in the future. In any event, NMFS anticipates that any new providers would be considered small entities. For purposes of the RFA, NMFS established a small business size standard (NAICS 11411) for all businesses in the commercial fishing industry including their affiliates, whose primary industry is commercial fishing. (See 80 FR 81194; 50 CFR 200.2). A business primarily engaged in commercial fishing (NAICS 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
Even though this rule would apply to a substantial number of the relevant businesses, the implementation of this action would not result in a significant adverse economic impact on individual companies. As described below, this rule could result in possible changes in insurance costs for these companies, ranging from an increase of approximately
Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements of the Final Rule
This final rule does not include new reporting, recordkeeping, or other compliance requirements. As noted under the Paperwork Reduction Act header above, NMFS' regional observer program regulations that authorize observer providers or that specify authorized provider responsibilities, already include procedures for demonstrating compliance with program insurance requirements, and this proposed rule would not change those procedures.
Description of Any Significant Alternatives to the Final Rule That Accomplish the Stated Objectives of Applicable Statutes and That Minimize Any Significant Economic Impact of the Final Rule on Small Entities
As required by 5 U.S.C. 604(a), NMFS' analysis considered whether there are any significant alternatives to the proposed rule that would accomplish its stated objectives while minimizing any significant economic impact on small entities. To identify alternatives, NMFS took several information gathering actions. In 2016, NMFS held an
Whether this final rule would have a significant economic impact depends upon whether carrying the required policies under the minimum national standard would result in increased premiums compared to the premiums that observer providers currently pay to comply with existing regional requirements. However, for both the proposed and final rules, NMFS lacked the precise baseline information on existing premium costs that is necessary to determine, with any specificity, the economic impact that may result from the rule. During development of the proposed rule, NMFS attempted to obtain baseline information on current observer provider insurance premium costs through outreach to the six companies that provide observer services in a NMFS mandatory or voluntary observer program. However, these companies viewed insurance cost information as proprietary, and, therefore, declined to provide details of their insurance costs or estimates of what premium costs would be to comply with the proposed national minimum standard. Nonetheless, based on the limited information that these companies did provide, NMFS estimated that current observer provider insurance premiums cost less than
To form an accurate assessment of the economic impact that may result from the rule, in the proposed rule, NMFS specifically requested public comment on whether the magnitude of the ranges described below accurately captures the likely premium changes that may result from the rule and which of these ranges is most likely to apply upon implementation of this final rule.
Table 3-Estimated Ranges of Observer Provider Premium Changes Insurance premium increases Insurance premium decreases$ 0 to$ 2,500 per employee$ 0 to$ 2,500 per employee.$ 2,500 to$ 5,000 per employee$ 2,500 to$ 5,000 per employee.$ 5,000 to$ 7,500 per employee$ 5,000 to$ 7,500 per employee.$ 7,500 to$ 10,000 per employee$ 7,500 to$ 10,000 per employee.
NMFS received no comments on the premium ranges in the table, the table in general, or other aspects of the Initial Regulatory Flexibility Act analysis. NMFS also did not receive comments on or related to baseline information on observer provider insurance premium costs, and thus the agency's estimates of such costs remains unchanged from the IRFA.
Small Business Compliance Guide
Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996 states that, for each rule or group of related rules for which an agency is required to prepare a FRFA, the agency shall publish one or more guides to assist small entities in complying with the rule, and shall designate such publications as small entity compliance guides. As part of the rulemaking process, NMFS prepared a small entity compliance guide, which will be sent to all interested parties.
List of Subjects
50 CFR Part 600
Administrative practice and procedure, Confidential business information, Fish, Fisheries, Fishing, Fishing vessels, Foreign relations, Intergovernmental relations, Penalties, Reporting and recordkeeping requirements, Statistics.
50 CFR Part 648
Fisheries, Fishing, Reporting and recordkeeping requirements.
50 CFR Part 660
Fisheries, Fishing, Indians, Recreation and recreation areas, Reporting and recordkeeping requirements, Treaties.
50 CFR Part 679
Dated:
Deputy Assistant Administrator for Regulatory Programs, National Marine Fisheries Service.
For the reasons set out in the preamble, 50 CFR parts 600, 648, 660, and 679, are amended as follows:
PART 600--MAGNUSON-STEVENS ACT PROVISIONS
1. The authority citation for 50 CFR part 600 continues to read as follows:
Authority: 5 U.S.C. 561 and 16 U.S.C.
2. Add
(a) Applicability. As part of regulations for observer provider companies to obtain approval or a permit to deploy a person in any mandatory or voluntary observer program, or regulations that specify approved or permitted observer provider responsibilities, NMFS must reference and ensure compliance with the following national minimum insurance standard.
(b) Policies and Coverage Amounts. (1) Marine General Liability (
(2) Marine Employers Liability (
(3) State workers' compensation as required by each state in which the observer provider is authorized, or has applied to be authorized, to deploy observers or monitors at-sea or shoreside.
(4)
(5) Excess or umbrella coverage (
(c) Scope of coverages. Coverage must extend to injury, liability, and accidental death during the period of employment, including training, of observers or monitors at-sea or shoreside.
(d) Combined coverage amounts. Coverage amounts specified for Marine General Liability and Marine Employers Liability may be higher or lower for each respective policy so long as the combined coverage for these policies is
PART 648--FISHERIES OF THE
3. The authority citation for 50 CFR part 648 continues to read as follows:
Authority: 16 U.S.C.
4. In
*****
(h) * * *
(3) * * *
(vii) Evidence of holding insurance specified at
*****
5. In
*****
(b) * * *
(4) * * *
(i) * * *
(G) Evidence of holding insurance specified at
*****
PART 660--FISHERIES OFF WEST COAST STATES
6. The authority citation for 50 CFR part 660 continues to read as follows:
Authority: 16 U.S.C.
7. In
*****
(f) * * *
(1) * * *
(vii) * * *
(B) The observer provider must submit copies of "certificates of insurance," that names the Catch Monitor Program Coordinator as the "certificate holder" to the Catch Monitor Program Office by
*****
8. In
*****
(h) * * *
(5) * * *
(xi) * * *
(C) Certificates of insurance. The observer provider must submit copies of "certificates of insurance" that name the Northwest Fisheries Science Center Observer Program manager as the "certificate holder" to the Observer Program Office by
*****
9. In
*****
(j) * * *
(4) * * *
(xi) * * *
(A) * * *
(6) Certificates of insurance. The observer service provider must submit copies of "certificates of insurance" that name the Northwest Fisheries Science Center Observer Program manager as the "certificate holder" to the Observer Program Office by
(B) * * *
(3) Certificates of insurance. The observer provider must submit copies of "certificates of insurance" that name the Northwest Fisheries Science Center Observer Program manager as the "certificate holder" to the Observer Program Office by
*****
10. In
*****
(g) * * *
(1) * * *
(v) Certificates of insurance. The observer provider must submit copies of "certificates of insurance" that name the Northwest Fisheries Science Center Observer Program manager as the "certificate holder" to the Observer Program Office by
*****
PART 679--FISHERIES OF THE EXCLUSIVE ECONOMIC ZONE OFF
11. The authority citation for 50 CFR part 679 continues to read as follows:
Authority:16 U.S.C. 773 et seq.;
12. In
*****
(b) * * *
(11) * * *
(vi) Certificates of insurance. Copies of "certificates of insurance" that name the NMFS Observer Program leader as the "certificate holder" must be submitted to the Observer Program by
*****
[FR Doc. 2022-19146 Filed 9-7-22;
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