Glacier Fish Company LLC, a Washington limited liability company, Plaintiff-Appellant,
Penny Pritzker, in her official capacity as Secretary of U.S. Department of Commerce; National Oceanic and Atmospheric Administration; National Marine Fisheries Service, Defendants-Appellees.
and Submitted May 10, 2016 San Francisco, California
from the United States District Court No. 2:14-cv-00040-MJP
for the Western District of Washington Marsha J. Pechman,
Senior District Judge, Presiding.
Richards (argued), Sullivan & Richards LLP, Seattle,
Washington, for Plaintiff-Appellant.
S. Ying (argued), J. David Gunter, II and John H. Martin;
John C. Cruden, Assistant Attorney General; Environment and
Natural Resources Division; United States Department of
Justice, Washington, D.C.; Ryan Couch, Office of the General
Counsel National Oceanic & Atmospheric Administration,
Seattle, Washington; for Defendants-Appellees.
Before: Sandra S. Ikuta, and Paul J. Watford, Circuit Judges,
and Derrick Kahala Watson, [*] District Judge.
Fishery Conservation and Management Act
panel affirmed in part and reversed in part the district
court's grant of summary judgment to the National Marine
Fisheries Service ("NMFS") in an action by the
Glacier Fish Co. challenging the fee imposed on it pursuant
to NMFS's cost recovery program developed under the
Magnuson-Stevens Fishery Conservation and Management Act for
a fishery management plan.
December 2013, NMFS published a final rule and final
regulations that required members of a catcher-processor coop
to pay a percentage of the revenue earned by each vessel as a
fee to NMFS. Glacier is a coop member, and challenged
NMFS's requirement that Glacier pay a fee of 1.1 percent
of its 2014 revenue.
panel held that the agency had the authority to require
Glacier to pay a cost recovery fee but that the agency's
calculation of the amount of the 2014 cost recovery fee was
inconsistent with its own regulations. Addressing
Glacier's three claims, first, the panel held that NMFS
had the authority to collect a fee from the individual
members of the coop, including Glacier, because the
catcher-processor coop permit was a limited access privilege,
and Glacier could reasonably be said to be a
"holder' of that permit. Second, the panel held that
NMFS applied the appropriate cost accounting methodology and
complied with16 U.S.C. § 1853a(e). Third, the panel held
that NMFS's calculation of the 2014 cost recovery fee of
the catcher-processor fee sector was inconsistent with
NMFS's own regulations, and reversed the summary judgment
to the extent it upheld NMFS's fee calculation. The panel
remanded to the agency to redetermine that fee in accordance
with its regulations.
Judge Watson concurred in part and concurred in the judgment.
While he joined in the majority's evaluation of the
merits of Glacier's three claims, Judge Watson would not
have considered much of the issue of NMFS's authorization
to collect a cost recovery fee because Glacier waived the
Fish Co. challenges the fee imposed on it by the National
Marine Fisheries Service (NMFS) pursuant to the agency's
cost recovery program developed under the Magnuson-Stevens
Fishery Conservation and Management Act (Magnuson-Stevens
Act, or MSA). We conclude that the agency had the authority
to require Glacier to pay a cost recovery fee but that the
agency's calculation of the amount of the 2014 cost
recovery fee was inconsistent with its own regulations. We
therefore reverse the district court's grant of summary
judgment in part and remand to the agency.
Magnuson-Stevens Act created eight Regional Fishery
Management Councils. Each council creates a fishery management
plan, which must contain conservation and management measures
and an assessment of the maximum sustainable yield from each
fishery. 16 U.S.C. § 1853(a). Beginning in 1990, the
councils were given the discretion to use "a limited
access system for the fishery in order to achieve optimum
yield." Id. § 1853(b)(6). A limited access
system allows only those entities that satisfy certain
eligibility criteria or requirements contained in a fishery
management plan to participate in a fishery. Id.
2007, Congress reauthorized the Magnuson-Stevens Act with
amendments that, among other things, were intended to
encourage market-based fishery management through
"limited access privilege programs" (referred to by
NMFS as a LAPP). The term "limited access
privilege" is defined as "a Federal permit, issued
as part of a limited access system under section 1853a of
this title to harvest a quantity of fish . . . representing a
portion of the total allowable catch of the fishery that may
be received or held for exclusive use by a person." 16
U.S.C. § 1802(26). Thus, a limited access privilege
program (which must be part of a limited access system) is a
program in which fishery participants obtain a Federal permit
"to harvest a certain portion of the total catch allowed
for a particular species." Pac. Coast Fed'n of
Fishermen's Ass'ns v. Blank, 693 F.3d 1084, 1088
(9th Cir. 2012). One way to implement such a program is to
distribute the allocated portion through "individual
fishing quota" (IFQ), or quota shares (i.e., a specified
percentage of the total catch). 16 U.S.C. § 1802(23).
But councils need not adopt IFQ programs; they retain
discretion to implement limited access privilege programs in
different ways. See id. §§ 1853a,
council that elects to implement a limited access privilege
program must also implement a cost-recovery program.
Id. § 1853a(e). The Magnuson-Stevens Act
requires councils to "develop a methodology and the
means to identify and assess the management, data collection
and analysis, and enforcement programs that are directly
related to and in support of the program, " id.
§ 1853a(e)(1), and then provide "for a program of
fees paid by limited access privilege holders that will cover
the costs of management, data collection and analysis, and
enforcement activities, " id. §
1853a(e)(2). The Secretary of Commerce is authorized to
"collect a fee to recover the actual costs directly
related to the management, data collection, and enforcement
of any limited access privilege program." Id.
§ 1854(d)(2)(A)(i). The fee "shall not exceed 3
percent of the ex-vessel value of fish harvested under any such
program, and shall be collected at either the time of the
landing, filing of a landing report, or sale of such fish
during a fishing season or in the last quarter of the
calendar year in which the fish is harvested."
Id. § 1854(d)(2)(B).
regional council has prepared a fishery management plan for
each fishery within its jurisdiction that requires such a
plan, it submits the plan and any proposed regulations to the
Secretary of Commerce. Id. § 1852(h)(1). The
Secretary must review the plan to determine whether it is
consistent with statutory requirements, id. §
1854(a)(1)(A), and publish a notice of proposed rulemaking in
the Federal Register, id. § 1854(a)(1)(B). This
publication starts a public notice and comment period.
Id. If the Secretary approves the plan, the
Secretary must review the council's proposed regulations
for consistency with its fishery management plan and other
law. 16 U.S.C. § 1854(b). The Secretary must publish
these regulations as well for public comment. Id.
The Secretary has delegated her responsibilities under the
Act to NMFS, which is housed in the National Oceanic and
Atmospheric Administration in the Department of Commerce.
the eight regional councils established by the
Magnuson-Stevens Act is the Pacific Fishery Management
Council (Pacific Council), which consists of representatives
from California, Oregon, Washington, and Idaho and covers the
fisheries seaward of those states. 16 U.S.C.§
1852(a)(1)(F). One of those fisheries is the Pacific
groundfish fishery, which "extends 200 miles into the
Pacific Ocean, along the coasts of California, Oregon, and
Washington, and includes more than 90 species of fish that
dwell near the sea floor." Pac. Coast Fed'n of
Fishermen's Ass'ns, 693 F.3d at 1088. The
Pacific groundfish fishery is comprised of three sectors: the
catcher-processor (C/P) sector, which consists of trawl
fishing vessels that catch and process whiting on board; the
shoreside sector, which consists of vessels that catch
whiting and deliver the catch to processors on land; and the
mothership sector, which consists of vessels that catch
whiting and deliver the catch to processors at sea. The
Pacific Council first developed the Pacific Coast Groundfish
Fishery Management Plan (Groundfish Management Plan) in 1982.
The plan covers the Pacific whiting, the species of fish at
issue here, among other groundfish.
1994, Amendment 6 to the Groundfish Management Plan limited
participation in the Pacific groundfish catcher-processor
sector by requiring each vessel to obtain one of a small
number of limited entry permits. The Council also provided
certain allocations of whiting to each sector of the fishery;
for instance, in 1997, the Council allocated 34 percent of
the allowable catch to the catcher-processor sector, 42
percent to the shoreside sector, and 24 percent to the
mothership sector. Whiting Allocation Among Nontribal
Sectors, 62 Fed. Reg. 27519-01, 27520 (May 20, 1997). In
addition, the Council established a short season for whiting
and allowed permitted vessels to harvest whiting only from
the time the season opened until the time the catch limit was
reached. This management structure led to a so-called
"race for fish." A vessel with a limited entry
permit had an incentive to make an intense, concentrated
effort at the beginning of the season to harvest the largest
possible portion of the catcher-processor allocation of
whiting before the window closed.
attempt to eliminate this "race for fish, "
catcher-processors formed a private cooperative, the Pacific
Whiting Conservation Cooperative (PWCC), in 1997. Through
private agreements, each member of the PWCC agreed to limit
its own whiting harvest to a certain percentage of the
catcher-processor sector whiting allocation. By agreeing to
apportion shares of the whiting allocation in advance, the
members no longer needed to race to catch their portion of
the catcher-processor sector's allocation. This private
solution was effective, and NMFS acknowledged that the
catcher-processor sector no longer raised the "race for
because other sectors had not successfully ended the race for
fish, in 2003, the Pacific Council and NMFS began developing
a limited access privilege program for the groundfish fishery
as a whole (including the catcher-processor sector). The
program's primary goal was to implement an IFQ program
(or quota share system) for the shoreside sector. In January
2004, NMFS published a notice of proposed rulemaking, which
stated that the Pacific Council was considering implementing
a limited access privilege program in the form of a
"trawl rationalization program" for the Pacific
groundfish fishery. 69 Fed. Reg. 1563-01 (Jan. 9, 2004). The
Pacific Council then engaged in a lengthy process to develop
an amendment to the Groundfish Management Plan that would
implement the trawl rationalization program. Finally, in
2009, the Pacific Council submitted its proposal for a trawl
rationalization program to the Secretary as Amendment 20 to
the Groundfish Management Plan. NMFS published the proposed
amendment for comment in May 2010, see Amendments 20
and 21, Trawl Rationalization Program, 75 Fed. Reg. 26,
702-01 (May 12, 2010), and the proposed regulations for
implementing Amendment 20 in June 2010, see
Amendments 20 and 21, Trawl Rationalization Program, 75 Fed.
Reg. 32, 994-01 (June 10, 2010). After a round of notice and
comment, NMFS adopted Amendment 20 to the Groundfish
Management Plan and promulgated implementing regulations.
See Amendments 20 and 21, Trawl Rationalization
Program, 75 Fed. Reg. 60, 868-01 (Oct. 1, 2010).
final trawl rationalization program (Amendment 20)
established an IFQ program for the shoreside sector. An IFQ
program is "a quota system where each quota share could
be harvested at any time during an open season." Advance
Notice of Proposed Rulemaking Regarding a Trawl Individual
Quota Program and to Establish a Control Date, 69 Fed. Reg.
1563-01, 1563 (Jan. 9, 2004). "Participants in the
fishery (i.e., those who already had a limited entry permit
allowing them to fish) would need to obtain a quota share
permit as well in order to receive a share of the allowable
catch." Pacific Dawn, No. 14-15224, draft at 8
(citing 16 U.S.C. §§ 1853a, 1802(26)).
because the catcher-processor sector had been operating
successfully as a cooperative, Amendment 20 adopted a
different approach for the catcher-processor sector. Rather
than requiring each catcher-processor to obtain an IFQ or
quota share permit in order to receive its share of the
catch, Amendment 20 allowed the members of the coop (i.e.,
all the participants in the catcher-processor sector) to
obtain a single "coop permit" in order to receive
the catcher-processor sector's entire allocation of
catch. The members of the coop would then continue to
distribute that allocation amongst themselves through their
private agreements. Amendment 20 termed this a "coop
program." The participants in the catcher-processor
sector would be required to obtain individual IFQs or quota
share permits only if the coop dissolved. 50 C.F.R. §
final regulations defined the "coop program" as
"a limited access program that applies to vessels in the
C/P sector of the Pacific whiting at-sea trawl fishery"
that had formed a voluntary coop. Id. §
660.160(a). A "catcher/processor coop" is defined
as "a harvester group that includes all eligible
catcher/processor at-sea Pacific whiting endorsed permit
owners who voluntarily form a coop and who manage the
catcher/processor-specified allocations through private
agreements and contracts." Id. § 660.111.
Under the program, a coop must obtain a "coop permit,
" renewable annually. A coop permit "conveys a
conditional privilege to an eligible coop entity to receive
and manage a coop's allocation of designated species and
species groups." Id. § 660.25(e)(2).
According to NMFS, the coop permit "formally register[s]
the coop and its associated members to harvest and process in
the sector." 75 Fed. Reg. 53380-01, 53392. The permit
allows members to engage in fishing of the catcher-processor
sector's allocation during the season. 50 C.F.R. §
660.160(d)(1)(iv). The coop program also required the coop to
submit an annual report to NMFS, while the members of the
coop are required to submit economic data. Id.
§§ 660.160(b)(1)(ii), (b)(2)(ii). In sum, Amendment
20 made only a few changes to the catcher-processor sector;
it continued to operate as a coop through which members
divided their allocation according to their private
implementing Amendment 20 and the trawl rationalization
program, the Pacific Council began to develop a cost recovery
program as required by 16 U.S.C. § 1853a(e)(1). It
submitted a proposed program to NMFS in December 2012. On
February 1, 2013, NMFS proposed regulations establishing a
cost recovery program and solicited public comments.
See Cost Recovery, 78 Fed. Reg. 7371-01 (Feb. 1,
2013). On December 11, 2013, NMFS published its final rule,
which established the requirements for cost recovery from
each of the sectors. See Cost Recovery, 78 Fed. Reg.
75, 268-01 (Dec. 11, 2013); 50 C.F.R. § 660.160(e)(5).
final regulations required members of a catcher-processor
coop to pay a percentage of the revenue earned by each vessel
(i.e., its ex-vessel value) as a fee to NMFS. NMFS calculated
the fee percentage based on DPC, or direct program costs,
defined as "the actual incremental costs for the
previous fiscal year directly related to the management, data
collection, and enforcement" of the catcher-processor
sector, 50 C.F.R. § 660.115(b)(1)(i), divided by V,
"the total ex-vessel value, as defined at §
660.111, from ...