North Carolina Fisheries Ass'n, Inc. v. Daley

• Decision Date: 28 September 1998
• Docket Number: Civil Action No. 2:97cv339.
• Citation: 27 F.Supp.2d 650
• Parties: NORTH CAROLINA FISHERIES ASSOCIATION, INC. and Georges Seafood, Inc., Plaintiffs, State of North Carolina, ex rel. James B. Hunt, Jr., Governor, and North Carolina Department of Environment, Health and Natural Resources, Plaintiffs-Intervenors, v. William M. DALEY, Secretary of Commerce, Defendant.
• Court: U.S. District Court — Eastern District of Virginia

Page 650

27 F.Supp.2d 650

NORTH CAROLINA FISHERIES ASSOCIATION, INC. and Georges Seafood, Inc., Plaintiffs State of North Carolina, ex rel. James B. Hunt, Jr., Governor, and North Carolina Department of Environment, Health and Natural Resources, Plaintiffs-Intervenors, v. William M. DALEY, Secretary of Commerce, Defendant.

Civil Action No. 2:97cv339.

United States District Court, E.D. Virginia, Norfolk Division.

September 28, 1998.

George M. Kelley, III, United States Attorney's Office, Norfolk, VA, Joel G. MacDonald, U.S. Department of Commerce, National Oceanic and Atmospheric Admin., Office of General Counsel, Gloucester, MA, Lois J. Schiffer, U.S. Department of Justice, Environmental Enforcement Section, Washington, DC, Eileen Sobeck, Office of the Attorney General, Environment & Natural Resources Division, Wildlife & Marine Resources Section, Washington, DC, Warigia Bowman, Wildlife and Marine Resources Section, United States Dept of Justice, Washington, DC, Charles R. Shockey, U.S. Department of Justice, Environmental & Natural Resources Div., Washington, DC, for William M. Daley.

Richard Ernest John Slaney, Wolcott, Rivers, Wheary, Basnight & Kelly, P.C., Virginia Beach, VA, for Natural Resources Defense Council.

Waverley Lee Berkley, III, Mark Steven Davis, McGuire, Woods, Battle & Boothe, Norfolk, VA, for North Carolina Fisheries Association, Inc., Georges Seafood, Inc.

Michael Vincent Hernandez, Professor, Regent University, School of Law, Virginia Beach, VA, Amy R. Gillespie, North Carolina Department of Justice, Raleigh, NC, Daniel F. McLawhorn, North Carolina Dept. of Environment & Natural Resources, Raleigh, NC, for The State of North Carolina.

Michael Vincent Hernandez, Professor, Regent University, School of Law, Virginia Beach, VA, Daniel F. McLawhorn, North Carolina Dept. of Environment & Natural Resources, Raleigh, NC, for North Carolina Department of Environment and Natural Resources.

ORDER & OPINION

DOUMAR, District Judge.

For the last year and a half, commercial fishermen in North Carolina have remained steadfast in the face of the Secretary of Commerce's recalcitrant stance concerning regulations setting a summer flounder fishery quota for the 1997 year. The Secretary contends that his quota poses no significant economic impacts on the small fishing communities along the coastline of North Carolina. The North Carolina fishermen have petitioned this Court to set aside the quota or to increase the amount of summer flounder that they are authorized to land for the 1997 year. In so petitioning, the North Carolina fishermen have argued that the Secretary's regulatory actions are arbitrary and capricious as well as inconsistent with the Regulatory Flexibility Act, as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. §§ 601, et seq. (the "RFA"), and inconsistent with National Standard 8 of the Magnuson-Stevens Fishery Conservation and Management Act, as recently amended by the Sustainable Fisheries Act of 1996, 16 U.S.C. §§ 1801, et seq. (the "Magnuson Act"). Under both Acts, the Secretary must satisfy procedural safeguards that balances his obligation to conserve fishery resources with the potential adverse impacts his actions may have on fishing communities. See Northwest Mining Ass'n. v. Babbitt, 5 F.Supp.2d 9, 16 (D.D.C.1998); Southern Offshore Fishing Ass'n. v. Daley, 995 F.Supp. 1411, 1416-17 (M.D.Fla.1998).

After initial review of the administrative record, this Court felt that the Secretary of Commerce had not fulfilled his responsibility under the law. On October 10, 1997, this Court remanded the 1997 summer flounder fishery quota and ordered the Secretary of Commerce to conduct a level of Economic Analysis consistent with the RFA and National Standard 8 of the Magnuson Act. See North Carolina Fisheries Ass'n., Inc. v. Daley, 16 F.Supp.2d 647 (E.D.Va.1997). On December 1, 1997, the Secretary filed with the Court a report entitled "Analysis of Economic Impacts Associated with the 1997 Summer Flounder Quota" that purportedly addressed the economic interests affected by his regulatory actions. The Court, pursuant to Rule 706 of the Federal Rules of Evidence, requested that the Plaintiffs¹ and the Secretary each name experts which the court on its motion sought to appoint. Each side recommended several possible experts; however, there was one common to each list, Dr. Charles Adams. The Plaintiffs and the Secretary each propounded written interrogatories to the expert. On July 8, 1998, Dr. Adams filed his report. Each side was allowed to brief the matter and present oral argument, and both parties agreed that all pleadings, motions and filings in this matter would be incorporated into the Administrative Record. The matter is ripe for decision.

The main issue before the court is whether the Secretary of Commerce has discharged his responsibilities under the RFA and under National Standard 8 of the Magnuson Act with regards to the requirements for undertaking an Economic Analysis. The Plaintiffs and the Secretary have renewed their cross-motions for summary judgment. For the reasons stated below, the Court GRANTS Plaintiffs' renewed motion for summary judgment and DENIES Defendant Secretary of Commerce's renewed motion for summary judgment. After review of the Secretary's so-called Economic Analysis and the independent expert's comments, the Court finds that the Secretary of Commerce acted arbitrarily and capriciously in failing to give any meaningful consideration to the economic impact of the 1997 quota regulations on North Carolina fishing communities. Instead, the Secretary has produced a so-called economic report that obviously is designed to justify a prior determination.

The Plaintiffs have also moved for the Secretary of Commerce to be held in contempt of the Court's October 10, 1997 Order that the Secretary "fix each year's fishing quota including adjustments, within a reasonable period of time." See North Carolina Fisheries Ass'n., 16 F.Supp.2d at 656. The Secretary of Commerce has failed to submit an Economic Analysis demonstrating the economic impacts of his quota regulations on small entities and on the sustained participation of North Carolina's fishing communities. Moreover, the Administrative Record in this matter clearly reveals that the Secretary utterly failed to make quota adjustments based on 1997 overages within a reasonable time period. In both respects, the Secretary and his agency have wholly neglected to follow the order of this Court and are in violation of the Magnuson Act and the RFA. Because the Secretary and his agency have not upheld their responsibilities to the Court and to Congress, the 1997 summer flounder quota must be set aside.

I. Background

A. Fishery Management

Congress granted the Secretary of Commerce "broad authority to manage and conserve coastal fisheries" by enactment of the Magnuson-Stevens Fishery Conservation and Management Act in 1976. See Kramer v. Mosbacher, 878 F.2d 134, 135 (4th Cir. 1989). The Magnuson Act established independent Regional Fishery Management Councils to promulgate fishery management plans ("FMPs") to regulate fishing within their regions. In the case of commercial summer flounder, the Mid-Atlantic Fishery Management Council ("MAFMC") considered the development of an FMP in the late 1970's. The National Marine Fisheries Service (the "Fisheries Service") first adopted an FMP in 1988 and, since that time, numerous amendments to the summer flounder FMP have been adopted.

Among these amendments, two are worth mentioning in more detail. In 1992, the Fisheries Service promulgated regulations to implement Amendment 2 to the FMP. 57 Fed.Reg. 57358 (Dec. 4, 1992). Amendment 2 created a rebuilding schedule for the flounder stock by requiring decreases in fishing mortality (F) each year until a maximum reduction in fishing mortality is achieved. Administrative Record ("A.R.") at 4. In 1995, MAFMC passed Amendment 7 to the FMP. Amendment 7 modifies the fishing mortality reduction schedule for Amendment 2 by calling for a fishing mortality rate of F= .23 in 1997 and thereafter. 50 C.F.R. § 648.100(a).

In furtherance of these goals, the Secretary has established an annual quota for commercial summer flounder. Through the Fisheries Service, the Secretary has established a two-step procedure for setting the annual quota in the flounder fishery. According to that procedure, the Fisheries Service sets an initial quota and a final quota for a particular year. 50 C.F.R. § 648.100(d). The quota is apportioned by percentage shares among the states of the eastern seaboard.² North Carolina is allocated slightly less than 27.5% of the coastwide commercial quota. 50 C.F.R. § 648.100(d)(1). In calculating the quota, the Fisheries Service utilizes a stock assessment to determine the number of summer flounder in the entire fishery. In part, the assessment is established by, among other things, relying on all reported landings for a fishing year. Significantly, current figures may not be available when the Fisheries Service begins its calculations. In that event, the Fisheries Service relies in a major way on a prior year's reported landings to determine a quota. In addition, in arriving at a quota, the Fisheries Service has generally assumed that the landings will be under-reported by approximately 30%.³ Thus, whatever the source of the fishery landings figures, the Fisheries Service assumes that these figures are at best only 80% of the reported landing figures and at most only 50% of the actual landings.

The Fisheries Service is required by federal regulation to announce the proposed commercial quota for summer flounder by October 15th of the previous year. 50 C.F.R. § 648.100(c). If a state overfishes in any given year, federal regulations require that "overages"⁴ from that year be deducted from that state's annual quota for the following year. 50 C.F.R. § 648.100(d)(2). Thus an "overage" in...