North Carolina Fisheries Ass'n v. Daley, 27 F.Supp.2d 650 (E.D. Va. 1998).

Southern Offshore Fishing Ass'n v. Daley, 995 F.Supp. 1411 (M.D. Fl. 1998).

Kristen M. Fletcher, J.D., LL.M.

and Elizabeth B. Speaker, 3L
 

Under two federal statutes, the Secretary of Commerce must now satisfy procedural safeguards that balance his obligation to conserve fishery resources with the potential adverse impacts his actions may have on fishing communities. The two statutes, the Magnuson-Stevens Fishery Conservation and Management Act1 (Magnuson Act) and the Regulatory Flexibility Act2 (RFA), were amended in 1996 to include Economic Analysis safeguards. Recent lawsuits have brought these statutes to the attention of courts and have resulted in the clarification of the Secretary's fisheries management duties and, in some cases, the setting aside of fishing quotas in order to balance the needs of coastal communities.

The premiere case reviewing the Secretary's compliance with each statute resulted from a successful challenge by North Carolina commercial fishermen to the Secretary's 1997 summer flounder fishery quota. Since the adoption of a Fishery Management Plan for commercial summer flounder in 1988, numerous amendments were passed creating rebuilding schedules and season quotas. After 1995 when the National Marine Fisheries Service (NMFS) reported that North Carolina fishermen had overfished by close to 600,000 pounds, the quota underwent a series of calculations and changes culminating in the 1997 quota challenged by the fishermen for not considering effects on the coastal communities.

The commercial fishers sued and in North Carolina Fisheries Association v. Daley, the U.S. District Court for the Eastern District of Virginia found that the Secretary had not fulfilled his responsibility and ordered him to conduct a level of Economic Analysis consistent with both the RFA and the Magnuson Act.³ Upon producing the economic analysis, the North Carolina Fisheries Association challenged it as insufficient and a violation of both the Magnuson Act and the RFA. The court determined that the "Secretary has produced a so-called economic report that obviously is designed to justify a prior determination and sanctioned the Secretary under both the Magnuson Act and the RFA."⁴
 

Economic Analysis under the Magnuson Act

With the passage of the Sustainable Fisheries Act in 1996, Congress added National Standard 8 to the Magnuson Act, mandating the Secretary of Commerce to consider and minimize the economic impacts of conservation and management measures on fishing communities.⁵ The Secretary must "take into account the importance of fishery resources to fishing communities in order to (A) provide for the sustained participation of such communities and (B) to the extent practicable, minimize adverse economic impacts on such communities."⁶

The Secretary claimed that the Economic Analysis completed for the 1997 summer flounder quota fulfilled the responsibility under National Standard 8 and that the quota regulations posed no threat to the sustained participation of North Carolina's fishing communities. The court, however, issued a strong rebuke finding that the Secretary "completely abdicated his responsibilities under the Magnuson Act."⁷

The court's reasoning was threefold. First, it faulted the narrow methodology of the Secretary's Economic Analysis finding that the lack of detailed analysis foreclosed any meaningful examination of economic impacts and reasonable compliance with National Standard 8. Specifically, the Analysis failed to consider the population size of communities, the significance of the fishing industry on local economies, or what constitutes a North Carolina fishing community. The court dismissed the Secretary's argument that such detail would place an undue burden on agency resources by citing the Internet as a method to collect data in an efficient manner.⁸

Second, the court noted that the Secretary departs from the empirical findings and "then justifies that departure with remarks that are an affront to one's native intelligence."⁹ It found that the Secretary could not justify why it had ignored the mounting statistical evidence that over half of North Carolina's vessels are impacted by 5% or more, that 43% of the vessels would suffer revenue reductions of more than 25%, and that at least one-third of North Carolina vessels were projected to suffer a loss of revenue of 50% or more.¹⁰ Third, the court faults the Secretary for claiming that his own regulations that conform to the goals of the Magnuson Act to rebuild overfished fisheries override his statutory duty under National Standard 8 to minimize adverse economic impacts on communities because "the purposes of National Standard 8 do not concern fishery conservation in isolation."¹¹

Economic Analysis under the RFA

The court also found the Economic Analysis lacking in light of the RFA provisions. Amended in 1996, the RFA requires a level of economic analysis to consider whether a regulation has a "significant impact" on small entities in North Carolina.The Secretary may comply by completing a Final Regulatory Flexibility Analysis to state the objectives of a final rule, a description and estimate of the number of small entities to which the rule will apply, the projected workload for small entities, and the steps taken to minimize the significant economic impact on small entities.¹² In the alternative, the Secretary may provide a certification that the final rule will not have a significant impact on small entities.¹³

Upon order by the court, the Secretary proceeded with the Economic Analysis under the RFA and, like the analysis under the Magnuson Act, found that there would be no significant impact on a substantial number of small businesses arising from the 1997 summer flounder quota. The court disagreed and faulted the Secretary's methodology reproaching the agency for omitting known information, considering the entire state of North Carolina as a single fishing community, and claiming that present economic losses are alleviated by past revenues earned by overfishing. Finally, the court admonished the Secretary that there would be "no economic effect when every commercial fisherman in the state is in bankruptcy."¹⁴ Ultimately, the court set aside the 1997 summer flounder quota by over 399,000 pounds and forbid the Secretary to consider these as overfishing in setting a quota for subsequent years.

The U.S. District Court for the Middle District of Florida conducted a similar analysis for commercial harvest quotas set for Atlantic sharks in Southern Offshore Fishing Association v. Daley. The National Marine Fisheries Service certified that the 1997 Atlantic shark quota reduction would not affect small entities because "shark fishermen are nimble and adaptive in their fishing operations. . . and that the shark fishing season was historically too brief to permit a prudent fisherman to rely exclusively on annual revenue from shark fishing."¹⁵ Finding that the Fisheries Service "inconsistently characterizes the universe of shark fishermen in the record" and fails to contain adequate explanation of gross revenue figures, the court found the Economic Analysis inadequate stating that "one can no more readily change a bass boat to a flats boat than change directed shark fishing paraphernalia to equipment for profitable tuna fishing."¹⁶ The court remanded the agency's determinations with instructions to undertake a rational consideration of the economic effects and potential alternatives to the 1997 quotas.

Interestingly, these cases focused more on the impacts on fishing communities than impacts on the fisheries. In the 1997 case Associated Fisheries of Maine v. Daley,¹⁷ the First Circuit Court of Appeals noted that the intent of the RFA is not to limit regulations having adverse economic impacts on small entities but to have the agency focus special attention on possible impacts. In this case, the Court was confronted with challenges to amendments that sought to eliminate overfishing of cod, haddock, and yellowtail flounder stocks by reducing permissible fishing over a 5 -7 year period. At the time of the amendments, haddock and yellowtail stocks had collapsed and cod stocks were near collapse.¹⁸ In finding that the Secretary had fulfilled the RFA obligation, the court recognized the Secretary's consideration of other alternatives and their impacts on small entities, response to comments submitted by affected fishermen, and elimination of a provision to ease concerns of smaller vessels.^.19 The court upheld the balance struck by the Secretary through the amendments and noted that "it is evident that rapidly deteriorating conditions required the Secretary to fish in troubled waters."²⁰
 

The Future of Economic Analysis

As a result of these rulings, the bar for economic analyses has risen. This reveals a renewed tension between those actions that strike a balance between competing conservation and economic concerns and those that are "a buzzsaw to mow down whole fishing communities in order to save some fish."²¹
 

ENDNOTES

1. 16 U.S.C. §§ 1801 - 1882 (1999).

2. 5 U.S.C. §§ 601 - 612 (1999).

3. North Carolina Fisheries Ass'n., Inc. v. Daley, 16 F. Supp. 2d 647 (E.D. Va. 1997).

4. North Carolina Fisheries Ass'n, Inc. v. Daley, 27 F. Supp. 2d 650, 652 (E.D. Va. 1998).

5. 16 U.S.C. § 1851(a)(8) (1999).

6. Id.

7. 27 F. Supp. 2d at 662.

8. Id. at 664.

9. Id. at 662.

10. Id. at 665.

11. Id. at 666.

12. As amended by the Small Business Regulatory Enforcement Fairness Act of 1996, 104 Pub. L. 121 (1996).

13. 5 U.S.C. § 605(b) (1999).

14. 27 F. Supp. 2d at 661.

15. Southern Offshore Fishing Ass'n, Inc. v. Daley, 995 F Supp. 1411 (M.D. Fla. 1998)

16. Id. at 1436.

17. 127 F.3d 104 (1st Cir. 1997).

18. Id. at 108.

19. Id. at 116. It is important to note that the Court analyzed the Secretary's compliance with the RFA prior to the passage of the 1996 amendments which altered some requirements to the RFA analysis of § 604(a).

20. Id. at 118.

21. 27 F. Supp. 2d at 667.
 

University of Mississippi