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UNITED STATES DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration


NATIONAL MARINE FISHERIES SERVICE
GREATER ATLANTIC REGIONAL FISHERIES OFFICE
55 Great Republic Drive
Gloucester, MA 01930- 2276

NOV 2 0 2017
Virginia Martins, President
Northeast Fishery Sector IX
350 South Front Street
New Bedford, MA 02740

Dear Ms. Martins,


After reviewing information publicly available from the criminal case involving Carlos Rafael,
United States v. Carlos Rafael (No. 16-CR10124-WGY), and a review of the Northeast Fishery
Sector IX (NEFS 9) operations, I have determined that NEFS 9 and its members are not in
compliance with the NEFS 9 operations plan. In addition, the continuation of the operations plan
will undermine achieving fishing mortality objectives of the Northeast Multispecies Fishery
Management Plan (FMP). Based on these determinations, and under my authority at 50 CFR
648.87(c)(3), effective immediately, I am withdrawing approval of the NEFS 9 operations plan.
The final rule for this action filed with the Office of the Federal Register this morning, and will
publish on Wednesday, November 22.

Without an approved operations plan, NEFS 9 is prohibited from transferring annual catch
entitlement (ACE) to or from other sectors. However, sector ACE remains allocated to NEFS 9,
and is not reallocated to other sectors or to the common pool in 2017 as a result of this
disapproval. Vessels that are enrolled in NEFS 9 for the 2017 fishing year are prohibited from
participating in the groundfish fishery for the remainder of the fishing year. Vessels cannot fish
on a groundfish trip, use a groundfish day-at-sea, or harvest groundfish stocks. Additionally,
vessels are not allowed to change sector enrollment mid-year, and cannot join a different sector
or fish in the common pool during the 2017 fishing year.

Any NEFS 9 vessels that are currently at-sea on a groundfish trip must return to port
immediately, where they will be permitted to offload and sell their catch. Vessels that are
eligible to fish under other permits, without declaring a sector trip or using a multispecies day-at-
sea, can continue to do so during the 2017 fishing year.

As you know, on April 28, 2017, we published an interim final rule approving 19 sectors and
their operations plans, including NEFS 9, for fishing years 2017 and 2018 (82 FR 19618). At the
time, your sector member Carlos Rafael had pleaded guilty to all counts in his criminal case, but
the criminal case was not complete and sentencing had not occurred. Therefore, I provisionally
approved the NEFS 9 operations plan for fishing years 2017 and 2018, and the allocation of ACE
to the sector for 2017, pending Mr. Rafael's sentencing to allow for our consideration of any
additional information regarding NEFS 9 operations. I emphasized in that rule that I intended to
take additional action following sentencing, including consideration of the continued approval of
the sector and further management or monitoring requirements.
I have determined that NEFS 9 has failed to uphold its sector operation plan requirements to a
degree and extent that undermines foundational principles necessary for successful sector
operations. Accurate reporting, internal accountability, and organizational integrity are core
principles of the sector system. NEFS 9 has failed its primary responsibility of accurately
reporting and tracking its catch and has taken only minimal, insufficient steps to ensure accurate
reporting and compliance with its operations plan. The systematic sector and vessel misreporting
over a long period of time was facilitated by an internal structure and control by a single,
dominant participant combined with a lack of oversight. The weakness and vulnerability of this
sector's structure was underscored by NEFS 9's lack of an adequate response once the scope and
nature of these violations were revealed. To date, there appears to be persistent non-compliance
with fundamental operations plan requirements along with a significantly compromised structure
and lack ofNEFS 9 oversight. Additionally, NEFS 9's failure to manage its operations
effectively appear to have led to repeated ACE overages, some of which may be extensive.
These overages may be continuing this fishing year, which threatens to continue undermining the
sector system and its fishing mortality and conservation controls.

In your May 30, 2017, letter to me, you laid out several changes that the sector had made,
including removing Mr. Rafael as President ofNEFS 9, electing a new Board of Directors, and
prohibiting NEFS 9 vessels from using Carlos Seafood, Inc. as a primary buyer and reporting
dealer. You also stated in the letter that the NEFS 9 Enforcement Committee would be meeting
to further discuss issues made apparent in the criminal case against Mr. Rafael. Sentencing for
Mr. Rafael's criminal case occurred on September 25, 2017. On October 26, 2017, the NEFS 9
Board of Directors, representatives of the Northeast Seafood Coalition and the Northeast Sectors
Services Network, and my staff, met to discuss NEFS 9 operations. During this meeting, it was
clear that the NEFS 9 Enforcement Committee has not completed an investigation of the sector's
operations issues or determined the full extent and nature of Mr. Rafael's and vessel operators'
non-compliance, and the sector has made no additional changes to its operations or structure
since May.

During the October 26 meeting, you and the other participants discussed a number of actions the
sector could pursue. These actions include convening the Enforcement Committee, as previously
indicated, to investigate how and to what degree Mr. Rafael's criminal violations and vessel
operator participation in those violations affect your sector's ongoing operations or have
prevented the sector from taking appropriate action in response to these violations once known.
The sector could also begin to compile updated catch reports to determine how Mr. Rafael's
misreported catch may have affected NEFS 9's ACE. These are only a couple of examples, and
I encourage NEFS 9 to take a hard look at other steps necessary to correct issues that fostered a
culture of misreporting within the sector. The sector should consider a wide variety of measures
to address the internal governance of the sector and the sector's ability to monitor and accurately
report the operations and catch of its member vessels.

My staff will continue to work with you so that NEFS 9 can fully address the serious
management issues that arose from Mr. Rafael's criminal violations. Your sector may develop
and propose a new operations plan to us for approval. A new operations plan must ensure that
NEFS 9 is able to fulfill its fundamental responsibility of accurately tracking and reporting catch
of its member vessels. The operations plans must include elements that ensure your sector will

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operate within its properly allocated or acquired ACE, how that ACE may be assigned to each
vessel, and detailed information about overage penalties or other actions that will be taken when
ACE is exceeded. This includes addressing the fraudulent catch within your sector over multiple
years for multiple stocks to ensure your sector has proper ACE allocations. This may require
deducting ACE overages that the sector has incurred. Once the sector submits a proposed plan,
we will review the draft operations plan and complete a rulemaking, per standard sector
practices. We will attempt to do this as expeditiously as practicable.

If you have any questions, please contact Sarah Heil, Groundfish Team Supervisor, at (978) 281-
9257.
Sincerely,

John K. Bullard
Regional Administrator

cc: Northeast Fishery Sector IX Board of Directors


Stephanie Rafael-DeMello, Sector Manager
Members of Northeast Fishery Sector IX
New England Fishery Management Council