Home » Case Summaries » 2016 » Glacier Fish Co. v. Pritzker, 832 F.3d 1113 (9th Cir. 2016)

 
 

Glacier Fish Co. v. Pritzker, 832 F.3d 1113 (9th Cir. 2016)

 

 

The National Marine Fisheries Service (NMFS)[1] created a cost recovery program pursuant to the Magnuson-Stevens Fishery Conservation and Management Act[2] (MSA) and imposed a fee upon a member of a catcher-processor fishing cooperative under this program. The member, Glacier Fish Company LLC (Glacier),[3] brought an action in the United States District Court for the Western District of Washington challenging the fee on multiple grounds. The parties filed cross-motions for summary judgment, and the district court entered summary judgment for NMFS.[4] Glacier timely appealed. The Ninth Circuit reviewed the district court’s grant of summary judgment for NMFS de novo, and held that 1) NMFS reasonably determined that the co-op permit was a limited access privilege authorizing the collection of fees, and that the member was therefore a limited access privilege holder; 2) NMFS correctly applied the statutory cost accounting methodology in imposing the fee; and 3) NMFS’s cost recovery fee calculation was inconsistent with its own regulations.

The Ninth Circuit first reviewed NMFS’s interpretation of the MSA under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc.[5] Here, Congress directed NMFS to promulgate a fishery management plan and implement regulations with the force of law.[6] Therefore, the court was required to defer to NMFS’s reasonable interpretations of any ambiguous statutory provisions. Upon review of the MSA, the court concluded that Congress had not spoken directly to the issues of whether a limited access privilege could include a co-op permit, but found that NMFS’s determination was a plausible construction of the MSA.

The MSA created eight Regional Fishery Management Councils, each of which created a fishery management plan containing conservation and management measures, as well as assessments of each fishery’s maximum sustainable yield.[7] In 2007, Congress re-authorized the MSA with amendments intended to encourage market-based fishery management through “limited access privilege programs” (LAPPs) under which fishery participants obtain a federal permit to harvest certain amounts of the total catch within particular species.[8] Fishery participants could implement this program through quotas, though participants retained the discretion to implement differently. The MSA further required any council electing to implement a LAPP to implement a cost recovery program to cover the costs of management, data collection, and enforcement.[9] The program fee could not exceed 3% of the value of fish harvested by a particular vessel under any such program.[10]

The Pacific Fishery Management Council (Pacific Council) covers, among others, the Pacific groundfish fishery, which is comprised of three sections: the shoreside sector, the mothership sector, and the catcher-processor (C/P) sector. The Pacific Council developed the Pacific Coast Groundfish Fishery Management Plan (Groundfish Management Plan) in 1982.[11] In 1994, an Amendment to the Groundfish Management Plan limited participation in the Pacific groundfish C/P sector in a number of ways, which led to a “race for fish.”[12] In an attempt to curb this race, C/Ps formed a private cooperative in 1997, called the Pacific Whiting Conservation Cooperative (PWCC), and agreed to apportion shares of the whiting allocation in advance. In 2003, the Pacific Council and NMFS initiated a LAPP for the whole groundfish fishery to implement a quota system for the shoreside sector. In 2004, NMFS published a notice of proposed rulemaking stating that the Pacific Council was considering implementing a “trawl rationalization program,” a type of LAPP, for the Pacific groundfish fishery, which was eventually adopted in 2010.[13]

During this process, NMFS reportedly determined that the C/P co-op program was a LAPP, as it required a federal permit for exclusive co-op use to harvest a portion of the total allowed.[14] As the C/P sector had been successfully operating as a cooperative under the PWCC, the MSA allowed the co-op members to obtain a single “co-op permit,” which formally registered the co-op and its associated members. After the adoption of this amendment and trawl rationalization program, the Pacific Council developed a cost recovery program as required by statute,[15] which was published in 2013.[16] The final regulations required members of a C/P co-op to pay fees to NMFS calculated by a percentage of revenue earned by each vessel.[17] In 2013, PWCC obtained a permit for its C/P sector, made up of American Seafoods, Trident Seafoods, and Glacier Fish, to harvest 100% of the Pacific Whiting and non-whiting allocated to the sector, or 34% of the total allowable catch. NMFS calculated the cost recovery program fees owed by each C/P co-op program participant to be 1.1% of its 2014 revenue.

Glacier made three arguments when challenging NMFS’s fee decision. First, Glacier argued that NMFS can only collect cost recovery fees from “limited access privilege holders,” which Glacier did not consider itself to be.[18] Glacier argued that not only was the co-op permit not a limited access privilege as defined by the MSA, it was held by the cooperative, PWCC, not by Glacier itself. Second, Glacier argued that NMFS did not correctly implement the cost accounting methodology laid out in the MSA.

NMFS argued both that Glacier waived these arguments by failing to raise them in its comments to the proposed cost recovery rules, and that NMFS reasonably determined that the C/P co-op program was a LAPP. The court disagreed that Glacier had waived the arguments, stating that Glacier’s arguments were either raised with sufficient clarity in the comments or were raised by NMFS itself. However, the court then held that NMFS reasonably determined that the co-op permit was a limited access privilege authorizing the collection of fees, and that each member was, as a result, a limited access privilege holder. The court also held that NMFS correctly applied the statutory cost accounting methodology in imposing the fee.

Third, Glacier argued that NMFS’s calculation of the fee at issue was inconsistent with NMFS’s regulations. Based on a review of the record, the Ninth Circuit determined that NMFS did not develop or apply reasonable methods for determining: 1) the actual additional costs of the trawl rationalization program; 2) which of the additional costs were directly attributable to each of the three sectors; or 3) if costs had been reduced as a result of implementing the co-op permit program. While the court generally defers to an agency’s interpretation of its own regulations, the Ninth Circuit in this instance held that NMFS did not properly determine the “actual incremental costs . . . directly related to the management, data collection, and enforcement of each sector” for assessment on the sector members.[19] As a result, NMFS’s cost recovery fee calculation was inconsistent with its own regulations.

In sum, the Ninth Circuit affirmed the district court’s grant of summary judgment for NMFS on the first two issues and reversed and remanded for consideration on the final issue. The court found that NMFS reasonably determined: 1) the co-op permit was an LAPP; 2) Glacier was a “limited access privilege holder”; and 3) the agency correctly applied the statutory cost accounting methodology in imposing the fee. But the court held that NMFS’s fee calculations were inconsistent with its own cost recovery fee regulations.

 

Footnotes    (↵ returns to text)

  1. Defendant-appellees included Penny Pritzker, in her official capacity as Secretary of United States Department of Commerce, National Oceanic and Atmospheric Administration, and the National Marine Fisheries Service.
  2. 16 U.S.C. §§ 1801–1891d (2012).
  3. Glacier Fish Company LLC, the plaintiff-appellant, is a Washington limited liability company.
  4. Glacier Fish Co. v. Pritzker, No. C14-40 MJP, 2015 WL 71084, at *1 (W.D. Wash. Jan. 6, 2015).
  5. 467 U.S. 837, 838 (1984).
  6. 16 U.S.C. § 1854.
  7. Id. §§ 1852(a), 1853(a).
  8. Id. § 1802(26).
  9. Id. § 1853a(e).
  10. Id. § 1854(d)(2)(B).
  11. Pacific Coast Groundfish Fishery and Foreign Fishing; Fishery Management Plan, 47 Fed. Reg. 6043 (Feb. 10, 1982) (to be codified at 50 C.F.R. pts. 611, 663).
  12. Pacific Coast Groundfish Fishery, 57 Fed. Reg. 54,001, 54,006 (Nov. 16, 1992) (to be codified at 50 C.F.R. pt. 663); Glacier Fish Co. v. Pritzker, 832 F.3d 1113, 1117 (9th Cir. 2016).
  13. Fisheries off West Coast States; Pacific Coast Groundfish Fishery Management Plan; Amendments 20 and 21; Trawl Rationalization Program, 75 Fed. Reg. 60,868, 60,868 (Oct. 1, 2010) (to be codified at 15 C.F.R. pt. 902 and 50 C.F.R. pt. 660).
  14. 50 C.F.R. § 660.160 (2016).
  15. 16 U.S.C. § 1853a(e)(1).
  16. Fisheries Off West Coast States; Pacific Groundfish Fishery; Trawl Rationalization Program; Cost Recovery, 78 Fed. Reg. 75,268, 75,268 (Dec. 11, 2013) (to be codified at 15 C.F.R. pt. 660).
  17. 50 C.F.R. § 660.115.
  18. 16 U.S.C. § 1853a(e)(2).
  19. Glacier Fish Co. v. Pritzker, 832 F.3d 1113, 1127 (9th Cir. 2016) (citing 50 C.F.R. § 660.115(b)(1)(I)).
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