United States District Court, N.D. California
ORDER DENYING PLAINTIFFS' MOTION FOR SUMMARY
JUDGMENT AND GRANTING DEFENDANTS' MOTION FOR SUMMARY
JUDGMENT RE: DKT. NOS. 70, 78
HAYWOOD S. GILLIAM, JR. UNITED STATES DISTRICT JUDGE.
before the Court are Plaintiffs' and Defendants'
cross motions for summary judgment. Dkt. Nos. 70, 78. In this
action, Plaintiffs Pacific Choice Seafood Company, Sea
Princess, LLC, and Pacific Fishing, LLC challenge certain
provisions of a federal fisheries management program that
establishes an individual fishing quota program (the
“IFQ Program”). For the reasons detailed below,
the Court DENIES Plaintiffs' motion and
GRANTS Defendants' motion for summary
case concerns the manner in which the Secretary of Commerce
and the National Marine Fisheries Service
(“NMFS”) regulate the fishing of Pacific
non-whiting fish species off the coasts of Washington,
Oregon, and California.
enacted the Magnuson-Stevens Fishery Conservation Act
(“Magnuson Act” or the “Act”) to
“conserve and manage the fishery resources found off
the coasts of the United States” and “to promote
domestic commercial and recreational fishing under sound
conservation and management principles.” 16 U.S.C.
§ 1801(b)(1), (3). The Act established eight regional
fishery management councils, tasked with developing fishery
management plans (“FMP”) and any necessary
amendments and implementing regulations to “achieve and
maintain, on a continuing basis, the optimum yield from each
fishery.” 16 U.S.C. §§ 1801(b)(4)-(5),
1852(a)(1)(F), (h)(1), 1853(c). NMFS, acting on behalf of the
Secretary, reviews these FMPs to ensure compliance with
national standards for fishery conservation and management,
the Magnuson Act, and any other applicable law. See Id.
§§ 1851(a), 1854.
of a region's FMP, the councils may limit access to the
fishery through limited access privilege programs
(“LAPPs”) such as quotas. See 16 U.S.C.
§§ 1802(26), 1853a. In creating such a program,
councils must take into account several factors:
participation in the fishery; historical fishing practices;
economics; capability of vessels to engage in other
fisheries; cultural and social framework and affected fishing
communities; fair and equitable distribution of access
privileges; and other relevant considerations. Id.
§§ 1853(b)(6), 1853a(c). The councils must also
ensure that no privilege holders “acquire an excessive
share” of the total limited access privileges. See
Id. § 1853a(c)(5)(D). Moreover, any privilege
created under a LAPP “may be revoked, limited, or
modified at any time.” See Id. §
Pacific Groundfish Fishery
issue in this case are amendments to the Pacific Coast
Groundfish Fishery Management Plan, the FMP for the Pacific
Groundfish Fishery that covers the United States'
territorial waters off the coast of Washington, Oregon, and
California (the “Fishery”). Cf. 42 Fed.
Reg. 12, 937-98 (Mar. 7, 1977). The Fishery is overseen by
the Pacific Fishery Management Council (the
“Council”). See 16 U.S.C. §
1852(a)(1)(F). Every two years, the Council establishes catch
limits, which “represent an annual quantity of fish
that the groundfish fishery as a whole may catch.”
See Pac. Coast Fed'n of Fishermen's Ass'ns v.
Blank, 693 F.3d 1084, 1089 (9th Cir. 2012). Prior to the
amendments at issue in this case, the Council regulated the
Fishery's catch limits through trip, gear, and season
restrictions. See id.; see also 75 Fed.
Reg. 32, 994, 32, 995-96 (June 10, 2010). Beginning in 2003,
however, the Council began developing a new LAPP to manage
the Fishery instead. Pac. Coast, 693 F.3d at 1089.
20 and 21 to the Fishery's FMP created a new LAPP - the
IFQ Program - through which participants receive permits to
harvest a specific portion or quota share (“QS”)
of the Fishery's total allowable catch. The Council
presented the amendments to NMFS on May 7, 2010. See
Dkt. No. 72-4 (letter from Council to NMFS). NMFS approved
the amendments in August 2010, and issued two sets of
regulations codifying the amendments. See 75 Fed.
Reg. 60, 868 (Oct. 1, 2010); 75 Fed. Reg. 78, 344 (Dec. 15,
2010). The IFQ Program became effective on January 1, 2011,
and established the following provisions relevant to this
action: (1) a 2.7% aggregate limit on the amount of total QS
of all non-whiting species fished in the Pacific Fishery that
a person or entity may own or control, see 50 C.F.R.
§§ 660.11, 660.140(d)(4)(i)(C); (2) a regulation
that defines “control” as, inter alia,
“the ability through any means whatsoever to control or
have a controlling influence” over QS, 50 C.F.R. §
660.11; (3) a divestiture rule that required any participant
whose ownership or control of QS exceeded the 2.7% limit to
divest its excess shares by November 30, 2015, 50 C.F.R.
§ 660.140(d)(4)(v); and (4) a revocation provision
providing that NMFS would automatically revoke any excess QS
not divested by the November 30, 2015, deadline, 50 C.F.R.
November 9, 2015, NMFS issued a final rule detailing the
specific process for revocation of QS, added an option for
the abandonment of QS, established that excess QS would be
proportionally revoked across fish species and permits, and
reaffirmed that revoked QS would be proportionally
distributed among the Pacific Fishery participants (the
“2015 Rule”). See 80 Fed. Reg. 69, 138
(Nov. 9, 2015).
Plaintiffs' Quota Share
Fishing is a limited liability company (“LLC”)
that owns, inter alia, six other LLCs, including
Plaintiff Sea Princess, which in turn own vessels that
participate in the Fishery. See Dkt. No. 71 ¶
2. Plaintiff Pacific Choice Seafood Company operates a
seafood processing facility year-round in Eureka, California.
See Dkt. No. 70 at 8. According to Plaintiffs, more
than half of the groundfish it receives comes from four
fishing vessels, all owned by LLCs that are, in turn, owned
by Plaintiff Pacific Fishing. See id.
28, 2015, Plaintiff Pacific Fishing received a letter from
NMFS informing the company that it owned QS in excess of the
aggregate limit and would have to divest by November 30,
2015, or NMFS would revoke the excess QS. Dkt. No. 71, Ex. A.
Pacific Fishing divested its shares by the November 30
deadline. See Id. ¶ 6.
Court's review in this action is governed by the
Administrative Procedure Act (“APA”). Vt.
Yankee Nuclear Power Corp. v. Natural Res. Def. Council,
Inc., 433 U.S. 519, 558 (1978); 16 U.S.C. §
1855(f)(1); 5 U.S.C. § 706(2)(A)-(D). The Court must set
aside regulations if they are “arbitrary, capricious,
an abuse of discretion or otherwise not in accordance with
law . . . .” 5 U.S.C. § 706(2)(A). Summary
judgment is an appropriate procedural mechanism “for
deciding the legal question of whether the agency could
reasonably have found the facts as it did.”
Occidental Eng'g Co. v. INS, 753 F.2d 766, 770
(9th Cir. 1985). Under the arbitrary and capricious standard,
the Court must “determine whether the Secretary has
considered the relevant factors and articulated a rational
connection between the facts found and the choices
made.” Midwater Trawlers Coop v. Dep't of
Comm., 282 F.3d 710, 716 (9th Cir. 2002). This standard
is deferential, presuming the agency action to be valid and
affirming if there is a reasonable basis for the decision.
Ranchers Cattlemen Action Fund v. U.S. Dep't of
Agric., 499 F.3d 1108, 1115 (9th Cir. 2007). The Court
reviews the administrative record as a whole, and decides
whether the action is acceptable. See Citizens to Pres.
Overton Park v. Volpe, 401 U.S. 402, 420 (1971); see
also Ranchers Cattlemen Action Fund, 499 F.3d at 1115.
challenge the IFQ Program, contending that NMFS acted
ultra vires in defining the scope of ownership and
control over QS and set an arbitrary and capricious aggregate
limit on QS. Plaintiffs allege that as a result of these
illegal rules, they had to divest valuable QS. The Court
first addresses the ownership and control limitations and
then turns to the aggregate limit.
Ownership and Control
Program limits how much QS a person may own or control,
either individually or collectively. See 50 C.F.R.
§ 650.140(d)(4). Under the program, “[n]o person
may own or control, or have a controlling influence over, by
any means whatsoever an amount of QS . . . that exceeds [the
aggregate limit].” Id. §
660.140(d)(4)(i)(A). “[O]wnership” of QS includes
the QS owned by a person as well as the portion of QS
“owned by an entity in which that person has an
economic or financial interest, where the person's share
of interest in that entity will determine the portion”
it deems “owned” by the person. Id.
§ 660.140(d)(4)(ii). “Control” includes
“the ability through any means whatsoever to control or
have a controlling influence over [an] entity to which QS . .
. is registered.” Id. §
660.140(d)(4)(iii)(H). The IFQ Program based its initial
allocation of QS on prior fishing history before the
implementation of the Program. See Id. §
challenge the definitions of “ownership” and
“control” as overly expansive and charge that as
a consequence, “permit holders are left with an
extraordinarily low Aggregate Limit and no certainty about
how to conduct business in a way that does not run afoul of
the Ownership and Control Rules.” Dkt. No. 70 at 10.