MARSHA J. PECHMAN, District Judge.
THIS MATTER comes before the Court on the Parties' Cross-Motions for Summary Judgment, (Dkt. Nos. 13, 18). Having reviewed the Motions, the response briefs, (Dkt. Nos. 21, 23), and the related record, the Court hereby GRANTS Defendants' Motion and DENIES Plaintiffs' Motion.
Congress enacted the Magnuson-Stevens Fishery Conservation and Management Act ("MSA") to, among other things, "conserve and manage the fishery resources found off the coasts of the United States . . ." 16 U.S.C.§1801(b)(1).
To accomplish this goal, Congress made it unlawful to violate any provision of the MSA or any regulation issued pursuant to the MSA. 16 U.S.C.§ 1857(1)(A). The MSA provides for a maximum civil penalty of $140,000 per violation. 16 U.S.C. § 1858(a). Before imposing a penalty under the MSA, the National Oceanic and Atmospheric Administration ("NOAA") is required to consider the following factors: (a) the nature, circumstances, extent, and gravity of the violations, (b) the degree of the violator's culpability, and (c) such other matters as justice may require. 16 U.S.C. § 1858(a); 15 C.F.R. § 904.108(a). NOAA may also, but is not required to, consider the ability of the violator to pay a given penalty.
This case involves the Alaska-based fishery regulations found at 50 C.F.R. Part 679. (Dkt. No. 18 at 9.) These regulations govern commercial fishing for groundfish by fishing vessels in the Exclusive Economic Zone ("EEZ") off the coast of Alaska. (
The MSA provides that any person who has been assessed a civil penalty may obtain judicial review by filing a complaint against the Secretary of the United States Department of Commerce in the appropriate United States District Court within 30 days of the date of the final penalty assessment. 16 U.S.C. § 1858(b). Upon review, "[t]he findings and order of the Secretary shall be set aside by such court if they are not found to be supported by substantial evidence" as provided in the Administrative Procedure Act ("APA"), 5 U.S.C. § 706(2).
The events leading to this dispute began in early 2001 with a fishing trawler named the Amber Dawn. (AR 672.) The owner of the Amber Dawn, Mr. Burton Charles Parker, owned a groundfish license, LLG 2608, authorizing the Amber Dawn to fish in the Western Gulf of Alaska. (
On March 5, 2001, the Amber Dawn sank, resulting in the loss of its captain and a crew member. (
Mr. Parker discussed this prospect with Mr. Christopher Daniel Peterson, the owner of a vessel named the Pacific Challenger. (
NOAA's Restricted Access Management ("RAM") division oversees the issuance of permits and licenses. (AR 670.) On December 8, 2004, RAM issued a letter to Mr. Parker and and Pacific Dawn, LLC verifying that ownership of Mr. Parker's LLG 2608 was transferred to Pacific Dawn, LLC, and both licenses (LLG 1239 and LLG 2608) authorized the Pacific Challenger to fish in the Western Gulf of Alaska and other areas. (AR 672, 1472.) However, the licenses differed in one respect: LLG 2608 carried a maximum overall length of 124 feet (the length of the sunken Amber Dawn), while LLG 1239 carried a maximum overall length of 104 feet. (AR 672.)
In 2005, Pacific Dawn, LLC notified RAM that it had changed its contact information for all correspondence related to the Pacific Challenger. (AR 1643.)
In 2008, Pacific Dawn, LLC spent $1.2 million to lengthen the Pacific Challenger from 104 feet to 116 feet. (AR 1149.) The firm responsible for the design of the renovations sent a letter to RAM in December 2008 confirming the new overall length of the Pacific Challenger as part of the renewal application for the Pacific Challenger's permit. (AR 1221.)
In 2009, the National Marine Fisheries Services—a division of NOAA—promulgated a regulation called the Latent LLP Rule. 74 Fed. Reg. 41,080. The rule authorized NOAA to remove certain "latent trawl regulatory area endorsements on LLP licenses" if the endorsement "ha[d] not made a minimum of two landings using trawl gear in a specific regulatory area during the period 2000 through 2006."
In response to the Latent LLP Rule, RAM reviewed the groundfish licenses in Alaska fisheries. (AR 1702-05.) In conjunction with that review, on September 22, 2009, RAM notified Pacific Dawn, LLC of a Preliminary Determination that RAM would remove the Western Gulf endorsement of LLG2608. (AR 525.) RAM reached this conclusion based on the fact that the Amber Dawn had only made one landing, rather than the required two, and took the position that the number of landings made by the Pacific Challenger did not merge onto the Amber Dawn LLP. (AR 1289.)
On November 6, 2009, RAM issued an Initial Administrative Determination ("IAD") adopting its Preliminary Determination to revoke the Western Gulf endorsement. (AR 1280-90.) On December 18, 2009, Pacific Dawn, LLC filed an appeal of that decision. (
On December 8, 2010, Judge McKeen denied the motions for reconsideration, and once again affirmed the IAD. (
Under the governing regulations, "[a]n appellate officer's decision is subject to review by the Regional Administrator," who has 30 days to "affirm, reverse, modify, or remand the appellate officer's decision" or "issu[e] a stay of the decision." 50 C.F.R. § 679.43(o). "The Regional Administrator's decision to affirm, reverse, or modify an appellate officer's decision is final agency action for purposes of judicial review."
On January 12, 2011, NOAA addressed a letter to Mr. Parker and Pacific Dawn titled "FINAL AGENCY ACTION," which informed Mr. Parker and Pacific Dawn that the decision "has become the Final Agency Application, effective January 7, 2011." (AR 1276.) Enclosed with the letter was the "revised permanent LLP groundfish license reflecting the endorsements for which it was determined you qualify"—excluding the Western Gulf endorsement. (
NOAA did not send this letter to the address Pacific Dawn, LLC provided in 2005; nor did it send the letter to the attorney to whom it had sent Judge McKeen's decision. (
Between January 21, 2011 and January 31, 2011, the Pacific Challenger fished three times in the Western Gulf for groundfish. (
On August 27, 2012, NOAA issued a Notice of Violation and Assessment of Administrative Penalty ("NOVA") to Plaintiffs. (AR 1351-57.) The NOVA stated that the three fishing trips the Pacific Challenger took between January 21, 2011 and January 31, 2011 violated two federal regulations. (
Plaintiffs appealed the NOVA by requesting a hearing in accordance with 15 C.F.R. Part 904. (AR 668.) NOAA assigned the hearing to Administrative Law Judge Susan L. Biro, the Chief ALJ of the Environmental Protection Agency. (Dkt. No. 13 at 14.)
Pacific Dawn, LLC made the following three arguments in the proceeding: (1) NOAA's failure to properly notify Pacific Dawn, LLC that it had revoked the Western Gulf endorsement barred NOAA from assessing any penalty; (2) Pacific Dawn, LLC was justified in relying on NOAA's confirmation that the Pacific Challenger LLP remained valid even after it had lengthened the vessel; and (3) even if federal regulations permitted NOAA to assess a civil penalty, the circumstances of this case merited either the assessment of a significantly lower penalty or no penalty at all. (AR 599-627.)
Judge Biro rejected Plaintiffs' arguments, (AR 677-718), and found that Plaintiffs did not possess an endorsement for groundfish in the Western Gulf for the Pacific Challenger. However, Judge Biro did not agree with NOAA's assessed penalty and instead imposed a penalty of $223,905 for the violations, using a base penalty of $15,000 per count, combined with an economic benefit based on the net proceeds from each fishing trip. (
NOAA petitioned Judge Biro for reconsideration of the assessed penalty. (AR 726.) That petition was denied. (AR 768.) NOAA and Plaintiffs appealed Judge Biro's decision to the NOAA Administrator. (AR 783, 910.) The NOAA Administrator denied both petitions. (AR 1131.)
Plaintiffs commenced this suit on October 7, 2015. (Dkt. No 1.) In this suit, Plaintiffs ask the Court to vacate the findings of liability and the penalty assessed against Pacific Dawn, LLC, arguing: (1) they did not receive proper notice; (2) the penalty assessed is excessive; and (3) Judge Biro's decision is unconstitutional under the Appointments Clause. (Dkt. No. 1.) The Parties have filed Cross-Motions for Summary Judgment addressing these issues. (Dkt. Nos. 13, 18.)
Summary judgment is proper where "the movant shows that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The moving party bears the initial burden of demonstrating the absence of a genuine issue of fact.
Claims seeking review of administrative action are resolved on cross-motions for summary judgment based on the Administrative Record.
Fisheries permits are property interests to which the Due Process Clause applies.
Plaintiffs argue NOAA cannot assess any penalty the agency's notice was not reasonably calculated to notify Pacific Dawn, LLC that NOAA had taken a final step to revoke the Western Gulf endorsement. (Dkt. No. 13 at 16-20.) Specifically, Plaintiffs contend: (1) the letter sent by NOAA on January 12, 2011 was the Regional Administrator affirming the appellate officer's decision and was sent to the wrong address; and (2) that in order for a revocation decision to become final under the relevant regulations, the Regional Administrator must act in some capacity, or notify the parties that he or she will not act on the appellate officer's decision. (
Defendants argue Plaintiffs' position is based both on a misreading of the relevant regulations, and on a misunderstanding of the January 12, 2011 letter. (Dkt. No. 18 at 16-20.) For reasons stated below, the Court agrees with Defendants.
50 C.F.R. § 679.43, the regulation that is at the center of the Parties' dispute, provides in relevant part:
50 C.F.R. § 679(k) & (o) (emphasis added).
Plaintiffs first argue that the January 12, 2011 letter—which was mailed to the wrong address—was the Regional Administrator's decision affirming the appellate officer's decision under the above-cited regulations. (Dkt. No. 13 at 17-20.) Plaintiffs point to the fact that the letter is titled "FINAL AGENCY ACTION." (
Plaintiffs' first argument is unavailing. The text of the letter sent on January 12, 2011 does not support Plaintiffs' position that the Regional Administrator affirmed the appellate officer's decision. (AR 1276.) Rather, the letter states the appellate officer's decision became final on January 7, 2011, thereby supporting Defendants' position that the Regional Administrator did not act within the 30-day effectiveness time frame. (
Plaintiffs then argue that in order for a revocation decision to become final, the Regional Administrator must act in some capacity, or notify the parties that he or she will not act on the appellate officer's decision. (Dkt. No. 13 at 19.) They contend that without any such notification, "the permit holder [is] unaware of when he or she is free to challenge that final decision." (
This argument is also unavailing, because the above-cited regulations state that if the Regional Administrator does not act within the 30-day effectiveness period, the appellate officer's decision becomes effective and is final for purposes of judicial review.
Here, Plaintiffs were provided notice of the appellate officer's decision on December 8, 2010. (AR 1297.) The decision states "[t]his Decision takes effect January 7, 2011, unless by that date the Regional Administrator orders review of the Decision." (AR 1291.) Under 50 C.F.R. § 679.43, the appellate officer's decision became effective on January 7, 2011. Viewing these facts in the light most favorable to Plaintiffs, the Court finds Plaintiffs received notice of the appellate officer's decision prior to their January 2011 fishing efforts and, therefore, the penalty assessed does not violate due process.
The Court may vacate an excessive penalty under two standards. First, the Court may reverse any penalty if it "is unwarranted in law or unjustified in fact."
Plaintiffs argue that even if due process permitted a penalty, the penalty assessed in this case, $223,905, was excessive and grossly disproportional to Pacific Dawn, LLC's offense. (Dkt. No. 13 at 20-22.) Plaintiffs ask the Court to vacate the penalty imposed for two reasons: (1) Judge Biro based her analysis of the penalty factors on the false premise that Pacific Dawn, LLC imperiled the interests of the fishery because NOAA had authorized Pacific Dawn, LLC to fish in the Western Gulf under the Pacific Challenger LLP; and (2) Judge Biro's emphasis on deterrence was misplaced because it is unbelievable that anyone would repeat Pacific Dawn, LLC's actions. (
Defendants argue Judge Biro's analysis demonstrates the penalty assessed in this case was well within the permissible statutory range, justified in fact, and, therefore, not grossly disproportionate. (Dkt. No. 18 at 20-22.) Defendants point to the fact that Plaintiffs fail to identify any required factor Judge Biro failed to consider, or to demonstrate Judge Biro's consideration of the required factors was arbitrary or capricious. (
The Court agrees with Defendants. The record before the Court demonstrates that Judge Biro considered the requisite statutory factors when determining the penalty, including: the nature, circumstances, extent, and gravity of the prohibited acts; the degree of culpability and any history of prior offenses; and such other matters as justice may require. (AR 708-17.) Based on these factors, Judge Biro rejected NOAA's calculated penalty, $325,441.76, in favor of a lower penalty. (AR 717) ("The undersigned finds that the Agency's proposed penalties are too high with respect to economic benefit, but too low with respect to a base penalty.")
Plaintiffs' first argument is unavailing, because, as Judge Biro pointed out in her opinion, Plaintiffs "lacked a license for the vessel they did use." (AR 710.) The fact that Plaintiffs possessed a license for a different vessel is irrelevant. Plaintiffs' second argument regarding deterrence is also unavailing, because it is based on a misreading of the Judge Biro's opinion. Judge Biro found the penalty imposed would deter both Plaintiffs and others from "fishing without a clear understanding of which license they are authorized to fish under." (AR 714.) As Defendants point out in their Motion, this is especially important in a tightly regulated fishery where failure to comply with the relevant regulations might result in "excessive fishing or other adverse impacts to the resource." (Dkt. No. 18 at 22.)
Viewing the relevant facts, including Judge Biro's findings, in the light most favorable to the Plaintiffs, the Court finds the penalty imposed by Judge Biro was justified in fact and not grossly disproportional.
The Appointments Clause sets forth two categories of executive officers. First, there are "[p]rincipal officers . . . selected by the President with the advice and consent of the Senate."
Plaintiffs argue the Court should vacate the penalty because Judge Biro did not have the Constitutional authority to serve as inferior officer within NOAA or the Department of Commerce. (Dkt. No. 13 at 22-26.) Specifically, Plaintiffs contend that although Judge Biro served as an "inferior officer" within NOAA, Judge Biro was not appointed by the head of the department for which she acted and was, therefore, not a properly appointed officer. (
Defendants argue Plaintiffs' challenge to Judge Biro's appointment is not properly before the Court and lacks merit. (Dkt. No. 18 at 23-33.) They contend the Court should not reach Plaintiffs' Appointments Clause argument, because Plaintiffs failed to raise this argument before Judge Biro or before the Administrator. (
Viewing the underlying facts in the light most favorable to Plaintiffs, the Court finds Judge Biro was a properly appointed officer, and, therefore, declines to reach Defendants' argument regarding waiver. Judge Biro was appointed by the Administrator of the Environmental Protection Agency, one of the heads of departments whom Congress may authorize to appoint inferior officers. (Dkt. No. 14-5 at 2.) No separate appointment was required for Judge Biro to preside over NOAA administrative proceedings pursuant to an interagency agreement under the ALJ loan program.
Plaintiffs argue this statute cannot support Judge Biro's arrangement with NOAA, because "NOAA has used ALJ Biro and judges of the EPA for almost five years." (Dkt. No. 21 at 22.) This argument is without merit because Section 3344 does not impose a limit on how long an agency can use an ALJ from another agency. 5 U.S.C. § 3344. Finally, as Defendants point out in their Motion, "Congress's intent that ALJ's core duties and responsibilities be similar across agencies, and its creation of a statutory loan program, reflect its judgment that the role of an ALJ at one agency may appropriately be performed by an ALJ from another agency." (Dkt. No. 18 at 25.) In light of this statutory scheme and Judge Biro's appointment by the Administrator of the EPA, the Court declines to rule in Plaintiffs' favor on their Appointments Clause challenge.
31 U.S.C. § 3717(a) provides "[t]he head of an executive, judicial, or legislative agency shall charge a minimum annual rate of interest on an outstanding debt on a United States Government claim owed by a person . . ." Interest accrues from the date the notice was mailed. 31 U.S.C. § 3717(b). "The rate of interest charged under subsection (a) of this section is the rate in effect on the date from which interest begins to accrue; and remains fixed at that rate for the duration of the indebtedness." 31 U.S.C. §3717(c).
Defendants ask the Court to assess interest against Plaintiffs. (Dkt. No. 18 at 33-34.) They point to the fact that the Notice of Violation became final on September 8, 2015. (AR 1134.) Defendants contend interest should be assessed against Plaintiffs from September 8, 2015 until the date the penalty is paid. (Dkt. No. 18 at 33-34.) Plaintiffs do no address this argument in the briefing they have submitted to the Court. (Dkt. Nos. 18, 21.)
Because Plaintiffs do no address Defendants' argument regarding interest and because the Court has found the penalty was proper, the Court will assess interest on the penalty imposed from September 8, 2015 through the date of payment.
The Court GRANTS Defendants' Motion for Summary Judgment, (Dkt. No. 18), and DENIES Plaintiffs' Motion for Summary Judgment, (Dkt. No. 13).
The clerk is ordered to provide copies of this order to all counsel.
