Little Bay Lobster v. Secretary of Comm

United States Court of Appeals
For the First Circuit

No. 02-1864

LITTLE BAY LOBSTER COMPANY, INC., ET AL.,

Plaintiffs, Appellants,

v.

DONALD L. EVANS, SECRETARY OF COMMERCE,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW HAMPSHIRE

[Hon. Steven J. McAuliffe, U.S. District Judge]

Before

Boudin, Chief Judge,
Selya, Circuit Judge,
and Siler,* Senior Circuit Judge.

Mark A. McSally with whom Kelly, Kelleher, Reilly & Simpson
was on brief for appellants.
John A. Bryson with whom Kristen L. Gustafson, Department of
Justice, Kelly Johnson, Acting Assistant Attorney General,
Environment and Natural Resources Division, and Charles N. Lynch,
Jr., Department of Commerce, National Oceanic and Atmospheric
Administration, were on brief for appellee.

December 19, 2003

*
Of the Sixth Circuit, sitting by designation.
 BOUDIN, Chief Judge. This is an appeal by a lobster

dealer (Little Bay Lobster Company) and several lobster boat

operators based in New Hampshire from a decision of the district

court sustaining new federal regulations affecting the plaintiffs.

For convenience, we refer to the appellants collectively as "Little

Bay" in describing the claims presented on appeal and assume

familiarity with earlier decisions cited below setting forth the

legal and factual background in great detail.

The federal regulations in question govern lobster

catches in the so-called exclusive economic zone ("the EEZ")--an

area of federal jurisdiction extending from 3 to 200 nautical miles

seaward of the U.S. coastline. Ace Lobster Co., Inc. v. Evans, 165

F. Supp. 2d. 148, 152 n.3 (D.R.I. 2001). State governments

regulate the first three miles seaward of their coastline and the

federal government regulates beyond that limit to the outer

boundary of the zone. Id. The legal framework and regulatory

history are peculiarly complicated, but only a nutshell description

is needed to set the scene.

In 1976, the Magnuson-Stevens Fishery Conservation Act

("the Magnuson-Stevens Act"), 16 U.S.C. §§ 1801-1883 (2000), was

adopted to conserve and manage fishery resources. 16 U.S.C. §

1801(b)(1) (2000); Campanale & Sons, Inc. v. Evans, 311 F.3d 120

(1st Cir. 2002). Regional fishery management councils, including

federal and state officials and others, were authorized to adopt

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for each fishery requiring conservation a fishery management plan,

16 U.S.C. § 1801(b)(4),(5) (2000); Campanale, 311 F.3d at 111; and

the statute provided for the Secretary of Commerce ("the

Secretary") to adopt implementing regulations based on notice and

comment rule-making if the plan was consistent with a set of

"national standards" set forth in the statute. 16 U.S.C. §§

1851(a), 1854(a)(1)(A) (2000).

East coast lobsters are such an endangered fishery, and

in 1978 a group of east coast states proposed a plan for both state

and federal waters. In 1983, the pertinent regional council under

the Magnuson-Stevens Act--the New England Fishery Management

Council ("the Council")--adopted a fishery management plan for

lobsters that was later implemented by the federal National Marine

Fisheries Service. Nevertheless, 10 years later a study revealed

that Northeast lobsters were dangerously overfished. In December

1993 the Council circulated a draft amendment proposing that four

areas be designated in the EEZ and subjecting each to different

restrictions (e.g., trap limits) aimed at rebuilding stocks.

Counterpart regulations were adopted by the Secretary in

the spring of 1994. 59 Fed. Reg. 26,454 (May 20, 1994) (codified

at 50 C.F.R. § 649.20 (1995), subsequently repealed effective Jan.

5, 2000); 59 Fed. Reg. 31,938 (June 21, 1994) (codified at 50

C.F.R. § 649.42(b) (1995), subsequently repealed effective Jan. 5,

2000). The four new management areas included two areas in the

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federal waters of the gulf of Maine: area 1 starting three miles

offshore and area 3 adjacent to area 1 but lying seaward of it. 59

Fed. Reg. at 31,950-51. The line separating the two areas,

sometimes called the Dick Allen line, lay about 30 miles off the

coast. The restrictions on lobster traps in area 1 have been more

stringent than those applying in area 3.

In the meantime, Congress in 1993 had adopted the

Atlantic Coastal Fisheries Cooperative Management Act ("Atlantic

Coastal Act"). 16 U.S.C. §§ 5101-5108 (2000). This statute

chartered an Atlantic States Marine Fisheries Commission ("the

Commission") comprising representatives of states from Maine to

Florida. 16 U.S.C. § 5102(3), (13) (2000). The Commission's

direct concern is with mobile Atlantic coast fisheries within state

waters, but in the absence of regulations under the Magnuson-

Stevens Act, the Secretary can adopt for EEZ waters a plan

compatible with one adopted by the Commission for state waters. 16

U.S.C. § 5103(b)(1) (2000).

This case involves such a plan under the new statute.

The new plan began life as a proposed amendment to the existing

plan; but, along the way, prompted by further pessimistic studies

in 1996, the federal National Marine Fisheries Service proposed

that the Magnuson-Stevens Act regulations be withdrawn and that new

regulations be adopted under the authority of the new statute if

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and when a suitable state-waters plan was adopted by the

Commission. Ace Lobster, 165 F. Supp. 2d. at 157.

During the summer of 1997, the Commission sought comments

on its so-called amendment 3. This plan included among other

things more stringent limits on the number of lobster traps in

areas 1 and 3. In September 1997, after further public hearings,

the Commission's lobster management board voted to alter amendment

3 to move the boundary line between area 1 and area 3 from 30 to 50

miles offshore. The alteration enlarged area 1, the area subject

to most stringent limits, thereby disadvantaging anyone who had

sought lobsters within the area lying between the old line and the

one now proposed.

The Commission approved amendment 3 with the revised

boundary line between areas 1 and 3 in December 1997. In March

1998, National Marine Fisheries Service issued a draft

environmental impact statement ("EIS"), pursuant to the National

Environmental Policy Act, 42 U.S.C. §§ 4321-4370d (2000),

evaluating new alternatives for lobster regulation in federal

waters; one of the alternatives was amendment 3. A number of

hearings on the draft EIS were held including one in Portsmouth,

New Hampshire, in May 1998, and written comments were received

including one from Little Bay itself attacking the shift from the

Dick Allen line.

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 In January 1999, a proposed federal rule was published

implementing amendment 3 for federal waters, 64 Fed. Reg. 2,708

(proposed January 15, 1999), and public comments were received

including several pertaining to the new line. A final EIS was

issued in May 1999, noting that amendment 3 had the most support of

all the alternatives under consideration. The final EIS included

a final regulatory flexibility analysis, as required by the

Regulatory Flexibility Act, 5 U.S.C. §§ 601-612 (2000), concluding

that those using lobster traps would be impacted in the short-run

but that the benefits of rebuilding stocks outweighed the harm.

In December 1999, the National Marine Fisheries Service

issued final regulations, 64 Fed. Reg. 68,228 (Dec. 6, 1999)

(codified at 50 C.F.R. Part 697) which were adopted by the

Secretary pursuant to the Atlantic Coastal Act, 16 U.S.C. § 5103(b)

(2000). These regulations implemented amendment 3 for federal

waters including the new stricter trap limits and the shift of the

Dick Allen line. In early January 2000, Little Bay and a number of

Portsmouth, New Hampshire, lobster boat operators brought suit in

the federal district court against the Secretary to challenge the

new regulations.

An action of this kind, framed as a declaratory judgment

proceeding, is in effect a suit for review of agency action

ordinarily based on the administrative record. See Campanale, 311

F.3d at 115; Massachusetts ex rel. Div. of Marine Fisheries v.

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Daley, 170 F.3d 23, 28 (1st Cir. 1999). After extensive

proceedings, the district court on May 16, 2002, granted summary

judgment in favor of the Secretary, and this appeal followed. Our

review of the district court decision is de novo, Massachusetts ex

rel. Div. of Marine Fisheries, 170 F.3d at 28. What standard we

and the district court both apply to the agency's own decisions

varies with the issue. Id.

The most prominent issue on appeal concerns one of the

requirements the Secretary had to meet before adopting the

regulations. The Atlantic Coastal Act requires inter alia that

federal regulations adapting the Commission plan for use in the

federal EEZ (1) follow "consultation with the appropriate

[Regional] Councils," and (2) be consistent with the national

standards of the Magnuson-Stevens Act. 16 U.S.C. §5103(b)(1)

(2000). Here, Little Bay claims, the failure to consult is

established by our intervening decision in Campanale & Sons, Inc.

v. Evans.

That case, like this one, involved amendment 3 and the

December 1999 regulations implementing the plan for the EEZ, but

the plaintiffs were Rhode Island fishermen concerned with the

numerical limits on traps. Campanale, 311 F.3d at 115. The

district court rebuffed the attacks but a divided panel of this

court held that the Secretary had violated his obligation to

consult with the Council. Id. at 121. The court declined to say

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that the error had been harmless, ruling that this inquiry was "a

factual one . . . best undertaken initially by the district court."

Id. at 120 n. 13.

Campanale was decided after the district court in our own

case had sustained summary judgment for the Secretary. In

Campanale, the court acknowledged that the Secretary had advised

the Council of the proposed trap limits through the draft EIS's

alternatives and had gotten comments back from the council. The

Campanale panel held this to be inadequate at least where the

Secretary did not tell the Council that this was its statutory

consultation opportunity. Campanale, 311 F.3d at 117-21.

Conceivably, the Secretary might have "consulted" with

the Council on one issue (the line) but not another (the trap

limits); but in our case, the Secretary has not sought to

distinguish Campanale by arguing that consultation met the letter

of the statute. Rather, he argues that the Council knew what was

being proposed and that--at least as to the line shift--the

surrounding circumstances show that a more formal process of

consultation would not have altered the result. This is a standard

harmless error argument, fully available in administrative matters.

Save Our Heritage, Inc. v. FAA, 269 F.3d 49, 61-62 (1st Cir. 2001);

accord Campanale, 311 F.3d at 120 n. 13.

In Campanale the court chose to leave this harmless error

issue to the district court on remand but there is no need for us

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to do so. Although the harmless error inquiry is in one sense a

"factual" one, it is ordinarily resolved not with new evidence but

by reasoned conjecture as to what would have happened "if" a

particular error had not occurred. Here, forewarned by Campanale,

Little Bay and the government have briefed the prejudice issue

relying upon materials in the administrative record before us.

The principal question is whether the Secretary's

decision to shift the boundary line would have been altered if he

had engaged in the more formal consultation with the Council called

for by Campanale. Little Bay argues that the Council had devised

the line and had expert knowledge; that such consultation would

have provided Little Bay with an opportunity to appear before the

Council and argue against the shift; and that the shift prejudices

it by imposing more stringent regulation on a large area in which

Little Bay operates.

The Secretary says that there is no proof that Little Bay

will be disadvantaged by the new line, but we will assume arguendo

the contrary. There is apparently no dispute that the appellant

fishermen have operated in the EEZ in areas 1 and 3 and that the

shift in the area 1 boundary line seaward by a substantial amount

will restrict more severely operations in the very large area

transferred from area 3 to area 1. That this will adversely impact

the appellants appears a natural inference.

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 But this, of course, does not show prejudice of the kind

that concerns us. The Secretary knew full well that the new

restrictions would cause short-term harm to fishermen--harm that

would be counterbalanced in the Secretary's view by the long-term

benefits to everyone of rebuilding lobster fisheries for the

future. 64 Fed. Reg. 2,708, 2,712 (proposed January 15, 1999).

The question is whether anything that formal consultation with the

Council would have brought about would have been likely to change

the Secretary's position. And on this issue, based on the

arguments presented, everything points the Secretary's way.

The overall reason for the shift of the line, needless to

say, was to protect more lobsters; but this was underpinned by a

fairly technical judgment by the Commission and its Lobster

Management Board. The record indicates that the new line was

deemed to have a series of advantages:

!to make the boundary lines compatible
with stock assessment boundaries and produce
more accurate stock assessments and evaluation
of each area's management measures;

!to extend the existing area 1 size
limits aimed at protecting the larger, more
fruitful lobsters from area 1 to area 1
lobsters that tended to breed in the nearby
reaches of area 3;

!to simplify compliance by fishermen
because the boundary lines would now be more
consistent with the boundary lines in other
fisheries.

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 Little Bay's brief says virtually nothing about what it

might have said to the Council to counter this reasoning. Nor does

it suggest anything that the Council would have been likely to say

to the Secretary that would likely have led the Secretary to alter

his reliance on the Commission's judgment that the line should be

moved. Absent such specifics, there is no reason to think that

consultation would have produced a different result.

This conclusion is reinforced by the fact that the

Council was informally involved in the new plan and commented on it

to the Secretary.1 Further, the Secretary held public hearings,

including one in Portsmouth, New Hampshire, on the draft EIS

containing the boundary shift as one option. Little Bay itself

submitted comments to the Secretary on the issue. And there is no

reason why Little Bay could not have sought to enlist the support

of the Council if it thought it could gain such support.

Although the burden of proof as to prejudice lies with

Little Bay, First Am. Disc. Corp. v. CFTC, 222 F.3d 1008, 1015

(D.C. Cir. 2000), the substantive standard for harmless error tends

to favor the objecting party. See, e.g., Moulton v. Rival Co., 116

1
In addition to interchange of written communications, there
was also a significant number of opportunities for Council members
to express their views in person. National Marine Fisheries
Service representatives attend all New England Council meetings and
a member of the National Marine Fisheries Service sits on the
Council as a voting member. 16 § U.S.C. 1852(b)(1)(B) (2000). New
England Council members have also commonly held seats on the
Atlantic Commission.

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F.3d 22, 26 (1st Cir. 1997) ("highly probable that the error did

not affect the outcome of the case"). Here, however, nothing

suggests that the result was affected.

Little Bay's next set of arguments are directed to its

claim that the Secretary failed to meet a second condition for

adopting regulations under the Atlantic Coastal Act, namely, that

the regulations conform to the national standards set forth in the

Magnuson-Stevens Act. 16 U.S.C. § 5103(b)(1)(B) (2000). Little

Bay says that the adoption of the new boundary line violates

national standards 2, 4, and 8.

National standard 2 provides that a fishery management

plan and regulations to implement it must, in respect of

conservation and management measures, be "based upon the best

scientific information available." 16 U.S.C. § 1851(a)(2) (2000).

A regulation broadly defines the phrase "scientific information" to

include scientific, economic and social information. 50 C.F.R. §

600.315(b)(1) (2002). Little Bay says that the Secretary failed to

present "any scientific analysis or reasoning" to support the shift

in the boundary line.

Little Bay concedes that there is ample support for the

conclusion that lobster stocks off the Atlantic coast are in peril

and that new measures are urgently needed. And it does not

directly dispute that moving the line seaward will restrict lobster

catches by imposing the more restrictive area 1 regime over a wider

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area (indeed, its claim of prejudice rests on the inference that

catches will be restricted). Nor does it say, or at least argue in

any detail, that the inference is not "scientific" enough.

Rather, Little Bay argues tersely that it is the net

effect that matters and the Secretary failed to consider that the

expansion of area 1 would mean more lobsters caught in area 1. At

first this appears to be a specious objection: expanding area 1

seaward means that trapping in what was previously part of area 3

is now occurring with more severe restrictions in the same

territory now renamed area 1. But Little Bay then refers summarily

to "requirements recently adopted which require a showing of

historic participation in order to fish in area 3." Little Bay is

referring, we take it, to 68 Fed. Reg. 14,902 (Mar. 27, 2003),

limiting fishing in areas 3, 4, and 5 to those permit holders that

can establish historical participation.

Conceivably the interaction of two changes could produce

a net negative effect on conservation, but Little Bay offers no

developed argument of such a threat here. If the implication is

that the recent regulation may force some fishermen from area 3 to

the richer (albeit more restricted) area 1, this sounds like an

attack simply upon the "recently adopted" historical participation

requirements. At best, it is an undeveloped claim that a new step-

-taken after the challenged regulation was adopted--undermines its

rationale.

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 So viewed, the claim still fails. Presumptively an

agency decision is reviewed on the record, Fla. Power & Light Co.

v. Lorion, 470 U.S. 729, 743 (1985); Citizens to Preserve Overton

Park, Inc. v. Volpe, 401 U.S. 402, 420 (1971); and while rare

circumstances might encourage a reviewing court to look at later

developments (e.g., if both proposals were developed in tandem),

nothing of the kind is alleged in this case. Further, even if the

"historic participation" requirement were part of the very

regulations at issue, Little Bay says nothing beyond one

speculative sentence to suggest a likelihood of its undermining the

benefits of the new line, and that alone is fatal.

Little Bay next invokes national standard 4 which

requires that any action that "allocate[s] or assign[s] fishing

privileges among the various U.S. fishermen" shall meet various

tests, including a requirement that it be "fair and equitable to

all such fishermen." 16 U.S.C. § 1851(a)(4) (2000). The

regulations say that an allocation means a "direct and deliberate

distribution" of fishing privileges and not management measures

that have "incidental allocative effects." 50 C.F.R. §

600.325(c)(1) (2002).

We agree with the Secretary, and the district court, that

the boundary line shift is not such a direct allocation. Nothing

in the shift, or the other concurrent changes, prevents fisherman

from operating in areas 1 or 3 or both. To the extent that Little

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Bay thinks that the "historic participation" limitations later

adopted for area 3 do effect such an allocation--a matter on which

we express no view--it is challenging the wrong regulation.

Little Bay's last attack is based on national standard 8

which, so far as pertinent, requires the Secretary in adopting

restrictions to take account of the interests of local fishing

communities and, "to the extent practicable" and consistent with

conservation goals, to minimize the adverse economic impact. 16

U.S.C. § 1851(a)(8) (2000). Little Bay does not deny the draft EIS

discussed various alternative conservation measures and the impacts

on local communities; but it says that there was no separate

assessment of the effects on its local community of moving the

boundary line. This appears to be true.

Nevertheless, the required analysis of alternatives and

impacts is subject to a rule of reason, for study could go on

forever. See Associated Fisheries of Me., Inc. v. Daley, 127 F.3d

104, 110-111 (1st Cir. 1997); cf. Roosevelt Campobello Int'l Park

Com'n v. EPA, 684 F.2d 1041, 1047 (1st Cir. 1982). This is

especially so where, as here, a plan comprises a set of new or

changed restrictions designed to work as a whole; a rule that every

element in such a plan be assessed separately to determine its own

individual impact would be unworkable for most complex plans could

be subdivided almost without end.

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 In this instance, the shifting of the boundary--although

quite likely to have some economic impact on some fishermen--was

peculiarly hard to quantify: the impact depends both on the

interaction of the boundary shift with other regulatory measures

(e.g., changes in trap limits) and on the differing fishing

strategies (choice of area, number of traps) that different

fishermen may choose to adopt in response to the new changes--

strategies that may alter over time and are not within the

Secretary's control. See 64 Fed. Reg. 68,228, 68,235-36 (Dec. 6,

1999).

There is no mechanical way to say when enough is enough.

About the best a court can do is to ask whether the Secretary has

examined the impacts of, and alternatives to, the plan he

ultimately adopts and whether a challenged failure to carry the

analysis further is clearly unreasonable, taking account of the

usual considerations (e.g., whether information is available and

whether the further analysis is likely to be determinative). In

this gray area, some burden lies on the contestant to show why a

particular gap or omission is unreasonable.

Here the basic obligation to assess the impacts of, and

alternatives to, the adopted plan as a whole was achieved. The

feasibility of fruitfully analyzing the boundary shift in isolation

is unclear; and given the independent technical reasons for the

shift, it appears to follow naturally from the decision to adopt

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the new management area scheme--a choice that was the subject of

full scale study. Accordingly, there was no failure to meet

national standard 8.

This discussion of national standard 8 also disposes, in

substance, of the final objection offered by Little Bay based on a

quite different statute: the Regulatory Flexibility Act, 5 U.S.C.

§§ 601-612 (2000). This statute does not alter the substantive

mission of the agencies under their own statutes; rather, the Act

creates procedural obligations to assure that the special concerns

of small entities are given attention in the comment and analysis

process when the agency undertakes rule-makings that affect small

entities. Associated Fisheries of Me., 127 F.3d at 116.

The regime at issue in this case unquestionably affects

a substantial number of small businesses; most, if not all, of the

affected fishing is done by such entities. Therefore, as required

by the statute, 5 U.S.C. § 603(a) (2000), the Service prepared an

initial regulatory flexibility analysis as to the impact on small

entities in conjunction with the proposal for rule-making; and,

when it adopted the final regime, it included a final statement

addressed to the subject. 5 U.S.C. § 604(a) (2000). This much is

common ground.

The statute also specifies what the final statement must

cover, and in compliance with its terms the final statement in this

case described the range of small businesses affected and the

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estimated magnitude of the effects, summarized comments on the

proposed rule and the response of the agency to the comments,

addressed record-keeping burdens incident to the new regime, and

discussed the reasons for the regime adopted and the reasons for

preferring it to other alternatives. 5 U.S.C. § 604(a) (2000); see

Associated Fisheries of Me., 127 F.3d at 116.

In a short final section of its brief, Little Bay

offers several different criticisms of the agency's compliance, but

the core of the main argument is this: that the agency gave very

little separate attention to comments regarding the change in the

boundary line and, above all, "[n]o analysis was conducted to

determine whether an alternative boundary line would have minimized

the economic impact upon the [a]ppellants or others similarly

situated."

Admittedly the final statement did little more than

acknowledge that "several commentators" had objected to the change

in the boundary line and responded by referring to the "current

consensus" in support of the new regime as a whole, 64 Fed. Reg. at

68,235; and the agency certainly did not separately analyze the new

regime by comparing as two separate alternatives the new regime

with the boundary shift and without it. The question is whether

the Regulatory Flexibility Act required more and we conclude, in

the context of this case, that it did not.

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 The agency's final statement adopting the new regime,

together with materials cross-referenced in it, set forth in detail

the reasons for adopting the new regime as a whole and the reasons

for preferring it to a series of alternatives. This is what the

statute requires where it applies. But, just as was true with

national standard 8, there is no requirement as to the amount of

detail with which specific comments need to be discussed and

certainly no obligation to treat every element of a plan as a

separate alternative.

Here, as with national standard 8, a rule of reason

applies. See Associated Fisheries of Me., 127 F.3d at 116.2 The

agency's obligation is simply to make a reasonable good faith

effort to address comments and alternatives. Id.; accord Alenco

Communications, Inc. v. FCC, 201 F.3d 608, 625 (5th Cir. 2000).

And, where the agency has addressed a range of comments and

considered a set of alternatives to the proposal adopted, the

burden is upon the critic to show why a brief response on one set

of comments or the failure to analyze one element as a separate

alternative condemns the effort.

In this case, we have assumed for the purpose of

standing, if nothing else, that the boundary shift probably has

2
Although our discussion in Associated Fisheries of Maine,
Inc., focused on the Regulatory Flexibility Act as it stood before
several amendments regarding judicial review under the Act, nothing
in those amendments has changed our approach here.

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some impact on the appellants; but Little Bay has not pointed to

any facts as to show a dramatic impact of the boundary line shift

or any facts that undermine the original reasons proffered for the

shift or any other reason why the response was inadequate or the

boundary line shift required consideration as a separate

alternative. Absent some discussion of such considerations, we can

hardly hold the agency acted unreasonably or in bad faith by

proceeding as it did.

In the same section of the brief, Little Bay says that

the district judge was mistaken in expressing doubts whether the

Regulatory Flexibility statute applied at all in this case. The

district court did say that because small businesses are the main

subject of the new regime, there was little chance that the agency

analysis would overlook small businesses. But as neither he nor we

have rested on such a theory to avoid application of the statute,

it is beside the point on this appeal.

Affirmed.

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