Participation by Processor-Owned Catcher Vessels in Inshore
Cooperatives Under the American Fisheries Act of 1998
Section 21 0 (b ) o f the A m erican Fisheries A ct o f 1998 perm its catcher vessels ow ned by shoreside
pro cesso rs to participate in A FA -authorized fishery cooperatives.
December 10, 1999
M e m o r a n d u m O p in io n f o r t h e G e n e r a l C o u n s e l
Depa rtm en t o f C om m erce
You have requested our advice as to the appropriate construction of section
210(b) of the American Fisheries Act, Pub. L. No. 105-277, 112 Stat. 2681-616,
2681-629 (1998) (“ AFA” ). Specifically, you have asked whether catcher vessels
owned by shoreside processors may participate in fishery cooperatives in the
inshore sector of the Alaska pollock fishery, which are authorized under section
210(b) o f the AFA, or whether participation in such cooperatives is limited to
independently owned catcher vessels. See Letter for Randolph Moss, Acting
Assistant Attorney General, Office of Legal Counsel, from Andrew J. Pincus, Gen
eral Counsel, Department of Commerce (Aug. 10, 1999) (“ Commerce Letter” ).
As explained more fully below, we conclude that section 210(b) does permit proc-
essor-owned catcher vessels to join AFA-authorized fishery cooperatives.
I. BACKGROUND
A. The BSAI Fishery
The Bering Sea and Aleutian Islands (“ BSAI” ) fishery, located in the Bering
Sea off the coast of Alaska, is the largest single-species groundfish fishery in
the world. In recent years, growing market demand for the Alaskan pollock —
a fish used in the United States primarily as an ingredient in breaded fish products
and used worldwide for processing into the protein paste surimi — has spurred
tremendous growth in the BSAI fishery, with increasing numbers of vessels
entering the fishery each year to compete for a share of the annual catch.
The pollock harvested in the BSAI fishery are processed by two competing
sectors, inshore (including shoreside) and offshore processors. Inshore processors
operate traditional land-based processing plants and floating processors that are
moored in a single location for the entire year. They obtain fish either from catcher
vessels that are independently owned (“ independent catcher vessels” ) or from
vessels in which they or other processors have an ownership interest (“ processor-
owned catcher vessels” ). Offshore processing takes place on factory trawlers (also
known as “ catcher-processors” ) or motherships. Catcher-processors are large ves
sels that harvest pollock and process their own catch. They also purchase fish
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harvested by catcher vessels and process that catch. Mothership processors are
vessels engaged solely in processing; they operate at sea by taking deliveries of
fish harvested by catcher vessels and processing them.
The BSAI fishery is managed by the Secretary of Commerce (“ Secretary” )
through the National Marine Fisheries Service ( “ NMFS” ) and the North Pacific
Fishery Management Council (“ Council” ). The Council acts as an advisory board
and recommends fishery management actions to the Secretary. See generally 16
U.S.C. § 1852 (1994). Among the Council’s responsibilities is to recommend to
the NMFS a “ total allowable catch” (“ TAC” ) for each species of fish in the
BSAI fishery. See 50 C.F.R. §679.20 (1998). The TAC represents the maximum
amount of fish that can be harvested in any given fishing season.
Before 1998, the Council was responsible for recommending to the Secretary
how the annual TAC for Alaskan pollock should be allocated between the offshore
and inshore components of the BSAI fishing industry. In 1992, the Council rec
ommended an allocation that permitted the offshore sector to harvest sixty-five
percent of the pollock TAC, and the inshore sector to harvest thirty-five percent.
See General Accounting Office, Fishery Management: Market Impacts o f the
American Fisheries A ct on the Production o f Pollock Fillets 3 (June 1999). Not
surprisingly, that percentage allocation was the subject of bitter dispute each year
between the offshore and inshore sectors. Moreover, although the Council’s alloca
tion formula limited the amount of pollock each sector could harvest, it did not
regulate the amount of pollock that individual catcher vessels or catcher-processors
could catch. As a result, a “ race for fish” ensued within this open access system:
each fishing season, vessels within each sector raced to catch as much pollock
as possible until their allocation was reached and the season closed. Those vessels
that caught the most fish made the most money. Over the years, as more and
more vessels joined the race in response to increased market demand for pollock,
the fishery suffered increasingly from overcapitalization and inefficiency.
B. The American Fisheries Act o f 1998
In 1998, Congress enacted the AFA to address some of these problems. Senator
Breaux, one of the AFA sponsors, described the legislation as “ another major
milestone in our long efforts to reserve U.S. fishery resources for bona fide U.S.
citizens as well as take steps to substantially improve the conservation and
management of our Nation’s fishery resources through a reduction in the overcapi
talization of our fishing fleets.” 143 Cong. Rec. S10,299 (daily ed. Oct. 1, 1997)
(statement of Sen. Breaux). The sponsors of the AFA thus sought to accomplish
three goals — “ Americanization, decapitalization, and rationalization” of the
BSAI fishery. See 144 Cong. Rec. S 12,801 (daily ed. Oct. 21, 1998) (statement
of Sen. Gorton); see also id. at S 12,777 (statement of Sen. Stevens).
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Subtitle I of the AFA attempts to achieve “ Americanization” by imposing new
ownership requirements on U.S. flag vessels. See AFA §202, 112 Stat. at 2681-
617 to 2681-618. Subtitle I also partly addresses the problem of overcapitalization
of the fishery by placing limits on the size of new vessels in U.S. waters. See
id.
Subtitle II of the AFA advances the goals of “ decapitalization” and “ rational
ization” through various provisions that reduce excess capacity in the fishery and
substitute a comprehensive management scheme for the pre-existing open access
system. Section 206 deals with the question of the appropriate allocation of the
pollock TAC by establishing statutory allocations for the offshore and inshore
sectors. After setting aside ten percent of the TAC as a directed fishing allowance
for the western Alaska community development quota program, section 206
divides the remainder of the TAC equally between the inshore and offshore proc
essing sectors. See § 206(a)-(b)(l). The offshore sector allocation is split further,
with catcher-processors and the catcher vessels supplying them receiving forty
percent of the TAC and the catcher vessels harvesting pollock for motherships
receiving ten percent. See § 206(b)(2)-(b)(3).
Sections 207 through 209 aim to streamline and restructure the BSAI industry.
Sections 207 and 209 provide for a buyout of nine predominantly foreign-owned
catcher-processors that will henceforth be ineligible to participate in the BSAI
fishery. Section 208 limits participation in the fishery by establishing strict eligi
bility requirements for vessels and processors in both the offshore and inshore
sectors. See § 208(a) (eligibility requirements for catcher vessels delivering to
shoreside processors); § 208(b) (listing eligible catcher vessels delivering to
catcher-processors and eligibility criteria for other catcher vessels delivering to
catcher-processors); § 208(c) (listing eligible catcher vessels delivering to
motherships and eligibility criteria for other catcher vessels delivering to
motherships); § 208(d) (listing eligible motherships); § 208(e) (listing eligible
catcher-processors); § 208(f) (eligibility criteria for shoreside processors).
Section 210 of the AFA, the provision at issue here, seeks to eliminate the
race for fish by providing a framework for the formation of fishery cooperatives
in each of the BSAI processing sectors. See § 210(b) (cooperatives of catcher ves
sels delivering fish to shoreside processors), § 210(c) (cooperatives of catcher ves
sels delivering fish to catcher-processors), § 210(d) (cooperatives of catcher vessels
delivering fish to motherships). Although certain types of fishery cooperatives
were already authorized under the Fisherman’s Collective Marketing Act of 1934,
15 U.S.C. §521 (1994) (“ FCMA” ), section 210 provides a powerful incentive
for the creation of fishery cooperatives: It reserves a certain percentage of the
TAC for the members of each cooperative, thereby guaranteeing them a share
of the fish that they can harvest at their own pace.
The precise criteria for the establishment of AFA fishery cooperatives in the
inshore processing sector are set out in subsection 210(b). Under those criteria,
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if eighty percent or more of the “ qualified catcher vessels” that delivered pollock
to a particular shoreside processor the previous year sign “ a contract imple
menting a fishery cooperative under subsection (a)” — i.e., a contract under sec
tion 1 of the FCMA — and if these vessels further agree to deliver pollock only
to that particular shoreside processor (and the processor agrees to process the pol
lock), then the Secretary of Commerce may establish a separate allocation for
the cooperative. § 210(b)(1). That allocation would be equal to the average
percentage of the TAC that the vessels in the cooperative caught during 1995,
1996 and 1997. See id. If a fishery cooperative is formed, section 210(b)(2)
requires the cooperative to permit other catcher vessels that delivered most of
their catch to that shoreside processor to join the cooperative under the same terms
and conditions as member vessels. See § 210(b)(2).
Catcher vessels that participate in a fishery cooperative under section 210(b)
may harvest only the pollock that is allocated to them by the Secretary; they are
not allowed to harvest any of the pollock that remains in the “ open access” por
tion of the inshore allocation under section 206(b)(1). See § 210(b)(5). The open
access allocation is equivalent to that portion of the inshore allocation that has
not been reserved by the Secretary for fishery cooperatives. See id.
n . DISCUSSION
The question before us is whether catcher vessels that are owned by shoreside
processors may participate in fishery cooperatives under section 210(b) of the
AFA. Section 210(b)(1), which creates the entitlement of fishery cooperatives to
a portion of the TAC, provides:
(b) C atcher Vessels O nshore —
(1) C atcher vessel cooperatives. — Effective January 1, 2000,
upon the filing of a contract implementing a fishery cooperative
under subsection (a) which —
(A) is signed by the owners of 80 percent or more of the quali
fied catcher vessels that delivered pollock for processing by a
shoreside processor in the directed pollock fishery in the year prior
to the year in which the fishery cooperative will be in effect; and
(B) specifies, except as provided in paragraph (6), that such
catcher vessels will deliver pollock in the directed pollock fishery
only to such shoreside processor during the year in which the
fishery cooperative will be in effect and that such shoreside proc
essor has agreed to process such pollock,
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the Secretary shall [set aside a fishing allowance from the inshore
allocation of the TAC for that fishery cooperative].
Section 210(b)(1) points to two possible statutory bases for limiting eligibility
to independently owned vessels. First, the AFA by its own terms might impose
the limitation. Second, the reference in section 210(b)(1) to “ a contract imple
menting a fishery cooperative under subsection (a)” might effectively incorporate
limits from the FCMA, since subsection (a) refers to “ a contract implementing
a fishery cooperative” under the FCMA.
A. Language and Legislative History o f AFA
Taken by itself, the AFA does not restrict eligibility to independently owned
catcher vessels. Section 210(b)(3) defines “ qualified catcher vessel” as follows:
Qualified catcher vessel. — For the purposes of this subsection, a
catcher vessel shall be considered a “ qualified catcher vessel” if,
during the year prior to the year in which the fishery cooperative
will be in effect, it delivered more pollock to the shoreside proc
essor to which it will deliver pollock under the fishery cooperative
in paragraph (1) than to any other shoreside processor.
Nothing in this definition suggests an ownership limitation. Pursuant to section
210(b)(3), whether or not a catcher vessel is “ qualified” under the AFA to partici
pate in a fishery cooperative linked to a particular shoreside processor depends
upon whether the vessel delivered the majority of its catch to that processor, not
upon its ownership structure.
Nor does the definition of the underlying term “ catcher vessel” contain any
ownership-based restriction. “ Catcher vessel” is defined in section 205(3) of the
AFA as ‘ ‘a vessel that is used for harvesting fish and that does not process pollock
onboard.” What this definition excludes are boats that process fish onboard —
catcher/processors (see § 205(2)) and motherships (see § 205(8)) — but it does not,
by its own terms, exclude vessels on the basis of ownership.
Further clarification of the scope of the term “ catcher vessel” appears in sub
sections 208(a) and (c). Section 208 generally sets forth eligibility criteria for
catcher vessels participating in the inshore and offshore sectors of the BSAI
fishery. Under section 208(a), eligibility to harvest pollock for the inshore sector
is limited to those catcher vessels that: (1) either have delivered at least 250 metric
tons o f pollock to a shoreside processor in 1996, 1997 or 1998, or are less than
sixty feet long and have delivered at least forty metric tons of pollock to a shore
side processor in any of those years; (2) have an approved license to harvest pol
lock; and (3) are not listed in subsection 208(b) (which lists catcher vessels
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eligible to deliver pollock to catcher/processors). See § 208(a)(1). None of these
eligibility criteria relates in any way to ownership of the catcher vessel.
Subsection 208(c), which defines the eligibility of catcher vessels delivering
pollock to motherships, also offers textual support for an interpretation of “ catcher
vessel’ ’ that makes no distinction based on ownership. Section 208(c) lists specifi
cally named “ catcher vessels” that remain eligible to harvest the portion of the
TAC allocated to motherships. While some of the catcher vessels identified in
section 208(c) are independently owned, many of those listed are owned wholly
or in part by a mothership. See Robert Halvorsen et al., “ Discussion Paper on
Inshore Sector Catcher Vessel Cooperatives in the Bering Sea/Aleutian Islands
Pollock Fisheries” at Appendix C (Sept. 13, 1999) (“ University of Washington
Discussion Paper” ) (listing vessels participating in BSAI fishery and their owner
ship structure). By including both independently owned vessels and mothership-
owned vessels within the list of eligible “ catcher vessels,” section 208(c) extends
the scope of that term to vessels owned by an entity within one of the processing
sectors. Although none of the vessels listed in section 208(c) is owned by a shore
side processor,1 section 208(c) makes clear that the term “ catcher vessel” is not
limited to non-processor-owned boats. Since there is nothing in the definition of
“ catcher vessel” to distinguish between different types of processor owners, it
follows that the term “ catcher vessel” includes boats owned by shoreside proc
essors as well.
The overall purpose animating section 210(b), as revealed in the language and
history of the provision, supports this inclusive definition. Rather than placing
any ownership limitation on vessel participation in cooperatives, section 210(b)
expressly encourages broad participation in inshore cooperatives by all vessels.
Section 210(b)(2) provides that “ [a]ny contract implementing a fishery coopera
tive under paragraph (1) must allow the owners of other qualified catcher vessels
to enter into such contract after it is filed . . . under the same terms and conditions
as the owners of the qualified catcher vessels who entered into such contract upon
filing.” The conference report to the AFA explains that this provision extends
the authority to join cooperatives to all qualified catcher vessels “ on a class-wide
basis” :
If a fishery cooperative is formed, other catcher vessels that deliv
ered most of their catch to that shoreside processor would be
required to be allowed to join the fishery cooperative under the
same terms and conditions as other participants at any time before
the calendar year in which fishing under the cooperative will
begin. . . . The vessels eligible to harvest pollock allocated for
processing by shoreside processors would continue to have the
1 This comes as no surprise, since a catcher vessel owned by a shoreside processor would likely be delivering
the majority o f its catch to that shoreside processor, not to a mothership
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authority to form a fishery cooperative on a class-wide basis as
well.
144 Cong. Rec. S12.780 (daily ed. Oct. 21, 1998).
Moreover, the manner in which Congress chose to structure fishery cooperatives
for the inshore sector requires the participation of shoreside processor-owned
catcher vessels in order to achieve the goal for which AFA cooperatives were
being established: to end the race for fish. In order for a fishery cooperative to
be formed under section 210(b), the owners of eighty percent or more of the
qualified catcher vessels that delivered pollock to a particular shoreside processor
in the previous year must agree to join the cooperative. See § 210(b)(1). In 1998,
however, processor-owned vessels apparently made up over twenty percent of the
total number of vessels delivering pollock to six out of seven shoreside processors.
See University of Washington Discussion Paper at 46. Thus, if processor-owned
vessels were excluded from participating in AFA cooperatives, six out of seven
o f the potential cooperatives that might be formed under the AFA could not reach
the eighty percent threshold for vessel participation. In other words, if participation
in AFA cooperatives was limited to independently owned vessels, only one
cooperative could be formed pursuant to the requirements of section 210(b). See
Commerce Letter at 1-2.
Similarly, if processor-owned vessels were excluded from AFA cooperatives,
none o f the fishery cooperatives that Congress intended to create within the
mothership sector pursuant to section 210(d) could be formed. Like section 210(b),
section 210(d) permits “ the filing of a contract implementing a fishery cooperative
under [section 1 of the FCMA].” § 210(d)(1). These contracts must be entered
into “ by the owners of 80 percent or more of the catcher vessels eligible under
208(c).” Id. The latter provision lists 19 named vessels, 13 of which are processor-
owned. Section 208(c) includes a provision allowing additional vessels to be added
to this list, but only if the Secretary of Commerce makes certain factual findings
and the new vessel is eligible to harvest pollock under a license limitation program
recommended by the North Pacific Council. See § 208(c)(20)(A), (B). Unless an
additional 46 independently owned boats were added to this list by January 1,
2000, there would be no possibility that 80 percent of the catcher vessels eligible
under section 208(c) could b e independently owned. Because one of the central
aims of the AFA was to reduce excess capacity in the fishery, it is obvious that
Congress did not intend to authorize the creation of FCMA cooperatives within
the mothership sector only if the number of catcher vessels within that sector
more than tripled, from 19 to 65. Section 210(d), therefore, confirms that Congress
expected processor-owned vessels to enter into contracts “ implementing a fishery
cooperative under’’ the FCMA.
Thus, interpreting the AFA to exclude processor-owned vessels would essen
tially defeat the primary purpose of the Act, which was to encourage the formation
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of fishery cooperatives in order to end the annual race for fish. As noted above,
see supra p. 253, under section 210(b)(5), catcher vessels that do not participate
in a fishery cooperative may harvest pollock from that portion of the inshore
allocation that is reserved for open access. If only a small number of catcher
vessels join cooperatives, the percentage of the TAC set aside for cooperatives
will also be small, leaving a correspondingly greater percentage of the TAC avail
able for open access, with a large number of non-cooperative vessels competing
for a portion of that catch. The race for fish would continue.
The legislative history of the AFA likewise confirms that Congress intended
fishery cooperatives to play a critical role in ending the race for fish. As Senator
Murray explained during the Senate debate on the AFA,
This bill relies in great measure on the ability and willingness of
the North Pacific pollock fishery sectors to form fishery coopera
tives. Fishery cooperatives, authorized under current law, are a pri
vately negotiated allocation on a company-by-company or vessel-
by-vessel basis of a portion of the total allowable catch. Similar
to an individual fishing quota program, cooperatives provide fishery
participants with the certainty they need to stop the race for fish,
and harvest and process the fish on a more flexible schedule with
greater attention to bycatch, efficiency, and safety. The existing
fishery cooperative in the offshore sector of the Pacific Whiting
fishery has shown tremendous benefits in these regards and has
helped rationalize the fishery. It is hoped that cooperatives can do
the same in the pollock fishery.
144 Cong. Rec. S12.708 (daily ed. Oct. 20, 1998) (statement of Sen. Murray).
It can reasonably be assumed that, in crafting cooperatives as a solution to the
open access problem, Congress was familiar with the BSAI fishing industry and
its various components. Cf. Rodriguez v. P eters , 63 F.3d 546, 567 (7th Cir. 1995).
More particularly, it is clear that Congress was aware of the extent to which the
shoreside processing sector was vertically integrated and that Congress did not
intend to omit processor-owned boats from the fishery cooperatives whose forma
tion was essential to the purposes of section 210. The clear language of the AFA
and its legislative history and purpose thus demonstrate a congressional intent
to include processor-owned vessels in fishery cooperatives under section 210(b).2
2 To be sure, the purpose o f section 210(b) could also be achieved if processors sold their catcher vessels to
independent operators The legislative history, however, makes no reference to such divestiture, and it seems unlikely
that Congress, without even referring to divestiture, would make the entire success of section 210(b) rest on this
contingency.
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B. Section 210(b) Reference to FCMA Cooperatives
We now turn to the question whether the reference in subsection 210(b) to
“ fishery cooperatively] under subsection (a),” which refers to the fishery coopera
tive provision o f the FCMA, 15 U.S.C. § 521, places any limitations on the forma
tion of cooperatives under the AFA. The National Oceanographic and Atmospheric
Administration ( “ NOAA” ) does not dispute the conclusion that the text and legis
lative history of the AFA indicate a congressional intent to include processor-
owned vessels in cooperatives under section 210(b). However, NOAA argues that,
by referring to FCMA fishery cooperatives under section 210(b), Congress nec
essarily incorporated into the AFA cooperatives those eligibility restrictions that
apply to FCMA cooperatives. See Letter for Randolph Moss, Acting Assistant
Attorney General, Office of Legal Counsel, from Monica P. Medina, General
Counsel, National Oceanographic and Atmospheric Administration (June 7, 1999)
(“ NOAA Letter” ). And because NOAA interprets the FCMA to preclude the
participation of processor-owned vessels, it concludes that, likewise, processor-
owned vessels are ineligible to participate in cooperatives under § 210(b) of the
AFA. See id. at 5.
Because the question of the interplay between the FCMA and the AFA is rel
evant to a proper interpretation o f section 210(b), we will briefly discuss the anti
trust exemption under the FCMA and the statute upon which it is modeled, the
Capper-Volstead Act, 7 U.S.C. § 291 (1994), before returning to the AFA.
1. Integrated Processors under the FCMA and the Capper-Volstead Act
The FCMA grants an exemption from antitrust liability for certain collective
activities in the fishing industry. Specifically, it provides:
Persons engaged in the fishery industry, as fishermen, catching, col
lecting, or cultivating aquatic products, . . . may act together in
associations, corporate or otherwise, with or without capital stock,
in collectively catching, producing, preparing for market, proc
essing, handling, and marketing in interstate and foreign commerce,
such products of said persons so engaged. . . . Such associations
may have marketing agencies in common, and such associations
and their members may make the necessary contracts and agree
ments to effect such purposes.
15 U.S.C. §521. The FCMA exemption was patterned after a similar antitrust
exemption for agricultural activities, set forth in section 1 of the Capper-Volstead
Act, 7 U.S.C. §291. In fact, the only court that has considered the scope of the
FCMA exemption concluded that “ though there are some differences between
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Participation by Processor-Owned Catcher Vessels in Inshore Cooperatives
Capper-Volstead and the Fisherman’s Act, the two Acts provide exemptions from
antitrust liability for essentially the same activities.” United States v. Hinote, 823
F. Supp. 1350, 1354 n.7 (S.D. Miss. 1993).
The Supreme Court considered the scope of the Capper-Volstead exemption
in National Broiler Mktg. A ss’n v. United States , 436 U.S. 816 (1978) (“ NBMA ” ).
In NBMA, the United States brought a civil action against a nonprofit cooperative
association of producers of broiler chickens — the NBMA — alleging a conspiracy
in violation of section 1 of the Sherman Act. The question before the Court was
whether a producer of broiler chickens, which did not own a breeder flock or
hatchery, could nevertheless qualify as a “ farmer” within the meaning of the
Capper-Volstead Act. See id. at 817. After reviewing the legislative history of
the Capper-Volstead Act, the Court concluded that it could not:
We, therefore, conclude that any member of NBMA that owns nei
ther a breeder flock nor a hatchery, and that maintains no grow-
out facility at which the flocks to which it holds title are raised,
is not among those Congress intended to protect by the Capper-
Volstead Act. The economic role of such a member in the produc
tion of broiler chickens is indistinguishable from that of the proc
essor that enters into a preplanting contract with its supplier, or
from that of a packer that assists its supplier in the financing of
his crops. . . . We hold that such members are not “ farmers,” as
that term is used in the Act, and that a cooperative organization
that includes them — or even one of them — as members is not enti
tled to the limited protection of the Capper-Volstead Act.
Id. at 827-29 (footnotes omitted).
In coming to this conclusion, the Court specifically reserved the question of
the status of the integrated producer:
[W]e need not consider here the status under the Act of the fully
integrated producer that not only maintains its own breeder flock,
hatchery, and grow-out facility, but also runs its own processing
plant. Neither do we consider the status of the less fully integrated
producer that, although maintaining a grow-out facility, also con
tracts with independent growers for a large portion of the broilers
processed at its facility.
Id. at 829 n.21. In a concurring opinion, Justice Brennan did address these ques
tions reserved by the Court. He reviewed the legislative history of the Capper-
Volstead Act, and asserted that “ Congress’ manifest purpose to protect the small,
individual economic units engaged in fanning,” id. at 835 (Brennan, J., concur
ring), precluded automatic extension of the exemption to the integrated producer:
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I seriously question the validity of any definition of “ farmer” in
§ 1 which does not limit that term to exempt only persons engaged
in agricultural production who are in a position to use cooperative
associations for collective handling and processing — the very
activities for which the exemption was created. At some point along
the path of downstream integration, the function of the exemption
for its intended purpose is lost, and I seriously doubt that a person
engaged in agricultural production beyond that point can be consid
ered to be a farmer . . . . Thus, in my view, the nature of the
association’s activities, the degree of integration of its members,
and the functions historically performed by farmers in the industry
are relevant considerations in deciding whether an association is
exempt.
Id. at 835-36.
Only one court has actually ruled on the question whether an integrated producer
is entitled to Capper-Volstead or FCMA exemption. In United States v. Hinote,
823 F. Supp. 1350, 1359 (S.D. Miss. 1993), the district court, relying largely upon
Justice Brennan’s concurrence, concluded that catfish processors could not take
advantage of the antitrust exemption under the FCMA solely by purchasing or
leasing some interest in a catfish farming operation. The court reasoned that if
it were to come to the opposite conclusion,
large integrated agribusinesses organized to market and sell agricul
tural products could exempt themselves from the antitrust laws by
the simple expedient of purchasing and/or leasing some interest in
a farming operation, no matter how de minimis the interest. Such
a result, however, would undermine Congress’ express purpose in
enacting both the Sherman and Capper-Volstead Acts.
Id. There is certainly support in the legislative history of the Capper-Volstead
Act for this conclusion, much o f which is catalogued by Justice Brennan in his
NBMA concurrence. However, as Justice White recognized in his dissent in
NBMA, there is also conflicting evidence in the history and language of the statute
that might lead to the opposite conclusion. 436 U.S. at 844—49.
While we understand that it is generally assumed that integrated producers and
processors may not participate in exempted cooperatives, the sparse case law inter
preting the scope of the FCMA and Capper-Volstead exemptions cannot be said
to have dispositively resolved the question. However, as we discuss in the next
section, we need not decide that question in order to determine whether processor-
owned vessels may participate in the cooperatives authorized under section 210(b).
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2. Reconciling the FCMA with the AFA
It is a well-established principle of statutory interpretation that the law favors
rational and sensible construction. See, e.g., 2 A Norman J. Singer, Sutherland
Statutory Construction §45.12 (5th ed. 1992). Thus, if there exists some reason
able interpretation that reconciles two otherwise allegedly inconsistent statutes in
a manner that does not destroy or hinder the intent or meaning of either one,
that interpretation is favored. See id. Moreover, if a statute is capable of more
than one interpretation, it should be construed to effectuate its underlying purpose.
See Norwest Bank o f North Dakota, N.A. v. Doth, 159 F.3d 328, 333 (8th Cir.
1998); cf. United States N a t’l Bank o f Oregon v. Independent Ins. Agents o f Am.,
Inc., 508 U.S. 439, 455 (1993) (stressing that, “ [i]n expounding a statute, we
must not be guided by a single sentence or member of a sentence, but look to
the provisions of the whole law, and to its object and policy” ) (quoting United
States v. Heirs o f Boisdore, 49 U.S. (How.) 113, 122 (1849)). Applying these
principles to the case before us, we must, if possible, construe the cross-reference
to FCMA cooperatives in section 210(b) in. a reasonable manner that is both con
sistent with the purposes of the AFA and compatible with section 1 of the FCMA.
Congress’s primary purpose in enacting section 210 was to encourage the forma
tion of as many fishery cooperatives as possible in order to rationalize the BSAI
fishery and end the race for fish. See supra pp. 256-57. Congress chose to effec
tuate this purpose for the inshore sector of the BSAI fishery by creating “ catcher
vessel cooperatives” under section 210(b). Congress chose also to define section
210(b) cooperatives by cross-referencing the FCMA. Because the participation of
processor-owned vessels in section 210(b) cooperatives was critical to achieving
Congress’s purpose, Congress must have intended that such vessels would be
included in cooperatives under the FCMA.3 In interpreting section 2 10(b)’s cross-
reference to the FCMA, therefore, we are presented with three possibilities: (1)
Congress was mistaken about the scope of the FCMA, which excludes such
integrated processors, and processor-owned vessels may not participate in coopera
tives under section 210(b); (2) Congress correctly understood the FCMA to
include integrated processors, and processor-owned vessels may participate in
cooperatives under section 210(b); or (3) Congress has in the AFA effectively
declared that, regardless of the actual scope of the FCMA in other contexts, proc
essor-owned vessels may participate in FCMA fishery cooperatives in the BSAI
fishery. Of these three possible interpretations, we must reject the first because
it so plainly frustrates the purpose of the AFA. We need not decide between the
second and third possible interpretations, however, because, under either, it is clear
3 O f course, it might be argued that Congress deliberately referred to the FCMA cooperatives in section 210(b)
in order to exclude processor-owned boats from AFA cooperatives However, there is nothing in the legislative
history of the statute to support such an assertion, and there is significant evidence to the contrary. See supra pp
253-57 Thus, we do not think this interpretation o f the reference to the FCMA merits consideration
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that catcher vessels owned by shoreside processors may participate in the fishery
cooperatives authorized by section 210(b) of the AFA.
The first of these interpretations assumes the conclusion reached by NOAA,
namely that the FCMA does not perm it integrated processors to participate in
cooperatives under 15 U.S.C. §521. To argue further, as NOAA does, that this
cross-reference necessarily incorporates the limitations of FCMA cooperatives into
the AFA scheme requires us to conclude that Congress mistakenly assumed that
FCMA cooperatives could include integrated processors and, as a result, enacted
a provision that cannot operate as Congress intended. Moreover, as we have
already observed, if processor-owned vessels are excluded from participating in
cooperatives under section 210(b), only one fishery cooperative could be formed
under section 210(b), thereby thwarting the primary purpose of section 210.
Thus if we accept this first interpretation, we render section 210(b) practically
ineffective.4
W e are reluctant to adopt a construction of a statute that presumes congressional
error and that renders its provisions either ineffective or contrary to stated legisla
tive objectives. The ‘ ‘unreasonableness of the result produced by one among alter
native possible interpretations of a statute is reason for rejecting that interpretation
in favor of another which would produce a reasonable result.” 2A Singer, Suther
land Statutory Construction §45.12; see also American Tobacco Co. v. Patterson,
456 U.S. 63, 71 (1982) ( “ Statutes should be interpreted to avoid . . . unreason
able results whenever possible.” ).
W e therefore look to the two other proposed interpretations to see if they offer
a more reasonable result that achieves the AFA’s underlying purposes. The second
interpretation accomplishes these goals because it would allow processor-owned
catcher vessels to join cooperatives under both the FCMA and the AFA. Of
course, this interpretation would require us to determine that integrated processors
may participate in fishery cooperatives under the FCMA, a conclusion that cannot
be said to be settled under the case law and that we understand may have profound
implications for both the fishing and other industries. We are therefore reluctant
to rely upon this conclusion, and need not do so because, even if the FCMA
exemption does not cover integrated processors, we believe Congress’s intent to
permit the formation of cooperatives under section 210(b) that include processor-
owned vessels can still be given effect under the third interpretation.
The third interpretation posits that Congress declined to express or assume a
view concerning the scope o f the FCMA generally and instead decided that,
regardless of whether processor-owned vessels are permitted to participate in all
cooperatives under the FCMA, they should participate in the FCMA cooperatives
4 It might be argued that the fact lhat o n e cooperative o f independently owned catcher vessels could be formed
under the provisions o f section 210(b) is sufficient to render this interpretation viable. However, in light of Congress’s
clear intent in section 210(b) to encourage the formation o f cooperatives on a “ class-wide basis,” we think such
an interpretation would in fact “ thwart th e obvious purpose o f the statute.” In Re Trans Alaska Pipeline Rate Cases,
436 U S 631, 643 (1978). Moreover, as noted above, see supra pp 256-57, this interpretation would completely
nullify section 210(d)
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authorized by the AFA. By referring to the FCMA in a statute that intended to
include integrated processors in its fishery cooperatives, Congress effectively
determined that, at least for the purpose of BSAI directed pollock fisheries, proc
essor-owned vessels are entitled to participate in cooperatives that enjoy FCMA
antitrust immunity.
“ [WJhere . . . Congress adopts a new law incorporating sections of a prior
law, Congress normally can be presumed to have had knowledge of the interpreta
tion given to the incorporated law, at least insofar as it affects the new statute.”
Lorillard v. Pons, 434 U.S. 575, 581 (1978). Here, however, as noted above, there
was no dispositive judicial interpretation of the scope of either the FCMA or the
Capper-Volstead Act to guide Congress when it enacted the AFA in 1998. More
over, because it was not actually amending the FCMA, Congress had no reason
in the AFA to settle this far-reaching issue. Cf. Pierce v. Underwood, 487 U.S.
552, 567 (1988) (stating that “ it is the function of the courts and not the Legisla
ture, much less a Committee of one House of the Legislature, to say what an
enacted statute means” ); Patsy v. Board o f Regents o f the State o f Florida, 457
U.S. 496, 508-09 (1982) (according interpretive weight to views of a subsequent
Congress where that Congress acted in light of settled rule that exhaustion is not
required in section 1983 actions and imposed an exhaustion requirement for a
discrete class of 1983 claims). Rather, all that was required was for Congress
to determine that processor-owned vessels should be allowed to participate in AFA
cooperatives that enjoy FCMA immunity.
The language of section 210 offers textual support for the view that Congress
legislated in this limited manner. Notably, while it authorized the execution of
contracts “ implementing a fishery cooperative under” the FCMA, Congress did
not describe the signatories to such contracts by cross-reference to the FCMA.
Thus, it did not authorize “ fishermen, within the meaning of the FCMA, who
own qualified catcher vessels” to enter into contracts under section 210. Nor did
it authorize ‘ ‘owners of qualified catcher vessels otherwise eligible to form FCMA
cooperatives” to do so. Indeed, Congress did not use any of the FCMA’s operative
terms — “ persons,” “ fishermen,” “ planters” — in specifying who could partici
pate in section 210(b) cooperatives entitled to antitrust immunity. Instead, Con
gress provided that FCMA contracts under section 210(b)(1) be signed by
“ owners” of “ qualified catcher vessels,” and nothing in the statutory definition
of “ qualified catcher vessels” suggests any limitation based on ownership or
vertical integration. The text of the statute is thus entirely consistent with a
congressional intent to permit integrated processors to participate in FCMA
cooperatives for purposes of the AFA, whether or not such entities could partici
pate in FCMA cooperatives generally. C f Lorillard, 434 U.S. at 582 (construing
one statute in light of congressional “ selectivity . . . in incorporating provisions
and modifying certain . . . practices” under an earlier statute that Congress incor
porated by reference in the subsequent statute).
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Unlike the first interpretation we outlined above, the third interpretation effec
tuates Congress’s underlying purpose in the AFA while simultaneously reconciling
the AFA with the FCMA. It best gives effect to Congress’s express intent: that
all catcher vessels, both independently-owned and processor-owned, participate
in FCMA fishery cooperatives under the AFA so that the race for fish in the
BSAI fishery can be ended. Particularly in light of the fact that there is no clearly
settled law on the question whether, and if so, under what circumstances,
integrated processors can participate in FCMA cooperatives, that congressional
intent should control here.5
This interpretation does not require us to accept or reject Justice Brennan’s
interpretation of the Capper-Volstead Act or the Hinote court’s view concerning
the scope of the FCMA. As we read section 210, Congress did not take any posi
tion on the scope of the FCMA — a statute it left entirely undisturbed — and
instead effectively declared that, whatever the scope of that statute generally, proc-
essor-owned vessels could participate in pollock fishery cooperatives entitled to
FCMA immunity.
In any event, Justice Brennan’s analysis in NBMA is simply inapplicable here.
In his concurring opinion, Justice Brennan concluded that the Capper-Volstead
exemption should not extend to those who are not “ in a position to use coopera
tive associations for collective handling and processing,” 436 U.S. at 835-36,
presumably those who already have their own processing capacity. The purpose
of cooperatives under the AFA, however, is not to facilitate collective proc
essing— in fact, each cooperative that might be formed under section 210(b) is
expressly tied to an existing shoreside processor that is responsible for processing
the catch of the cooperative. Rather, cooperatives under the AFA are formed for
the purpose of receiving a guaranteed allocation of the pollock TAC, thereby
permitting members of the cooperative to fish more efficiently and safely. It thus
makes no sense to evaluate the eligibility of participants in AFA cooperatives
on the basis of their ability to use the cooperative only for purposes of collective
processing.
We do not share NOAA’s concern that this third interpretation is inconsistent
with section 210(d), which expressly extends the antitrust exemption under the
FCMA to processing activities by motherships. NOAA argues that, because, Con
gress expressly extended the reach of the FCMA to include one type of processor
in section 210(d), we should not read such an extension into § 210(b) on an
implied basis. See NOAA Letter at 4 n.4. However, the principle expressio unius
5 In fact, as noted above, under this interpretation, the scope of the FCMA in other contexts is irrelevant to the
result. If the FCMA permits integrated processors to participate in cooperatives in other contexts, then the AFA
simply makes clear that this authority applies to all catcher vessels in the BSAI fishery, including those owned
by processors, and encourages them to tak e advantage o f the existing authority by offering catcher vessel cooperatives
a guaranteed allocation o f the TAC If th e FCMA does not permit integrated processors to participate in cooperatives
in other contexts. Congress’s intent that they be permitted to participate in FCM A cooperatives for the purpose
of harvesting pollock in the BSAI fishery is a decision to extend FCMA immunity to a limited group of processor-
ow ned vessels operating in a single fishery.
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est exclusio alterius is a canon of statutory construction, not a rule of law, and
can be overcome by a showing of contrary legislative intent or policy: “ [W]hether
the specification of one matter means the exclusion of another is a matter of legis
lative intent for which one must look to the statute as a whole.” 2A Singer,
Sutherland Statutory Construction §47.25 n .l (citing Massachusetts Trustees o f
E. Gas & Fuel Assocs. v. United States, 312 F.2d 214 (9th Cir. 1963)); see also
United States v. Barnes, 222 U.S. 513, 519 (1912) (“ The maxim invoked
[expressio unius] expresses a rule of construction, not of substantive law, and
serves only as an aid in discovering the legislative intent when that is not other
wise manifest. In such instances it is of deciding importance; in others, not.” ).
Given the strong evidence in the AFA that Congress intended integrated proc
essors to participate in all fishery cooperatives in the BSAI fishery, we do not
find the maxim persuasive here.
A narrower reading of section 210(b) might also be urged based upon the rule
that “ [r]epeals of the antitrust laws by implication from a regulatory statute are
strongly disfavored,” United States v. Philadelphia N a t’l Bank, 374 U.S. 321,
350 (1963). This rule comes into play, however, only if the FCMA does not extend
to processor-owned vessels, a question we need not decide. Morever, even if we
assume that the FCMA does not include such vessels, we believe that this is one
of those unusual situations that presents a case of “ plain repugnancy between
the antitrust and regulatory provisions,” id. at 351, a rare exception to the general
rule. Where, as here, “ Congress has made a judgment that [certain] restrictions
on competition might be necessitated by the unique problems o f ’ a particular
industry, “ the antitrust laws must give way if the regulatory scheme established”
by that statute is to work. United States v. National Ass ’n o f Securities Dealers,
Inc., 422 U.S. 694, 729-30 (1975). Congress’s purpose in enacting the AFA was
to increase efficiency by decreasing excess capitalization and ending the race for
fish, and its mechanism for achieving that purpose was the creation of fishery
cooperatives that are necessarily exempt from antitrust liability.
Indeed, in the context of the BSAI fishery, where there is a fixed quota of
fish in a highly regulated industry, the creation of fishery cooperatives does not
undermine the goals of the antitrust laws. In the related context of the Pacific
Whiting fishery, the Antitrust Division recognized that “ reliance on an Olympic
race system to gather a fixed quota of fish ‘is both inefficient and wasteful,’ ”
and concluded that “ eliminating the race will increase processing efficiency and
concomitantly the output of [fish].” Letter for Joseph M. Sullivan, Esq., Mundt,
MacGregor, Happel, Falconer, Zulauf & Hall, from Joel L. Klein, Acting Assistant
Attorney General, Antitrust Division at 3 (May 20, 1997). The Antitrust Division
further determined that, in such a fixed quota setting, elimination of the race for
fish was unlikely to have an anticompetitive effect: “ [Elim ination of the race
to gather an input whose output is fixed by regulation seems unlikely to reduce
output or increase price under any likely scenario.” Id. Thus, from the perspective
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o f antitrust principles, there is no reason to read section 210(b) narrowly; on the
contrary, reading section 210(b) broadly to facilitate the formation of as many
fishery cooperatives as possible would ultimately allow for greater efficiency in
processing and might have procompetitive effects.6 Cf. id. at 3-4 (“ To the extent
that the proposed agreement allows for more efficient processing that increases
the usable yield (output) of the processed Pacific Whiting and/or reduces the inad
vertent catching of other fish species whose preservation is also a matter of regu
latory concern, it could have procompetitive effects.” ).
In short, there exists at least one interpretation of section 210(b) that is con
sistent with its text and effectuates the purposes of the AFA. Because a statute
should be interpreted whenever possible to effectuate Congress’s purposes, and
because it is possible to do so here, we conclude that processor-owned vessels
may participate in section 210(b) cooperatives. In light of this conclusion, we
need not resolve the further question whether the FCMA generally permits such
vessels to participate in cooperatives that enjoy antitrust immunity.
CONCLUSION
The language and the legislative history of the AFA indicate that Congress
intended processor-owned catcher vessels to participate in inshore cooperatives
under the AFA. Because section 210(b) can be read in a manner consistent with
that intention, we conclude that processor-owned catcher vessels may join fishery
cooperatives under the AFA.
RANDOLPH D. MOSS
Acting Assistant Attorney General
Office o f Legal Counsel
6 O ur conclusion that processor-owned vessels may participate in FCMA cooperatives under the AFA is therefore
unlikely to lead to anticompetitive results Nevertheless, to minimize the possibility of negative effects on the fishing
industry. Congress included within the A FA several provisions designed to eliminate potentially adverse economic
consequences. See, e.g., § 213(c)(1) (granting the North Pacific Council the authority to recommend conservation
and management measures “ that supersede the provisions o f this title . . to mitigate adverse effects in fisheries
or on owners o f fewer than three vessels in the directed pollock fishery caused by . . fishery cooperatives in
the directed pollock fishery” ); see also 144 Cong Rec. S12.708 (daily ed. Oct. 20, 1998) (statement of Sen. Murray)
( “ In the interest o f ensuring that small, independent fishermen are the true beneficiaries of fishery cooperatives,
the bill includes a number o f requirements for fishery cooperatives in all three sectors which are designed to provide
these small, independent fishermen with sufficient leverage in the negotiations to protect their interests.” ) Thus,
should shoreside processors in the BSAI fishery affiliate with catcher vessels for no purpose other than to engage
in anticompetitive conduct under the um brella o f antitrust exemption, the AFA would appear to give the Council
the authority to check such abuses
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