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States with scallop fisheries and conservation programs that do not jeopardize biomass and fishing mortality and effort limit objectives of the Scallop Fishery Management Plan may be eligible for an exemption to the Plan in State waters. This action would revise the State Waters Exemption Program to allow vessels that hold both a Massachusetts State scallop permit, and either a Limited Access General Category Individual Fishing Quota or Limited Access General Category Northern Gulf of Maine Federal scallop permit, to fish entirely within State waters--once full harvest of the Federal Total Allowable Catch closes the Northern Gulf of Maine Management Area for the remainder of the fishing year. This action would also modify the State Waters Exemption for the State of Maine to include vessels that have both a State scallop permit and a Limited Access General Category Individual Fishing Quota permit. Currently, only Limited Access General Category Northern Gulf of Maine permit holders are part of the exemption in Maine. Vessels would not be exempt from any other Federal restrictions. Because the Northern Gulf of Maine Federal Total Allowable Catch is set based only on the Federal portion of the resource, and both Maine and Massachusetts have a scallop management program in State waters, we do not expect this exemption to compromise the Fishery Management Plan's limits on catch and mortality.