Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-15-35103/USCOURTS-ca9-15-35103-0/pdf.json

Parties Involved:
Glacier Fish Company LLC
Appellant
National Marine Fisheries Service
Appellee
National Oceanic and Atmospheric Administration
Appellee
Penny Pritzker
Appellee

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

GLACIER FISH COMPANY LLC, a

Washington limited liability

company,

Plaintiff-Appellant,

v.

PENNY PRITZKER, in her official

capacity as Secretary of U.S.

Department of Commerce;

NATIONAL OCEANIC AND

ATMOSPHERIC ADMINISTRATION;

NATIONAL MARINE FISHERIES

SERVICE,

Defendants-Appellees.

No. 15-35103

D.C. No.

2:14-cv-00040-MJP

OPINION

Appeal from the United States District Court

for the Western District of Washington

Marsha J. Pechman, Senior District Judge, Presiding

Argued and Submitted May 10, 2016

San Francisco, California

Filed August 10, 2016

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2 GLACIER FISH CO. V. PRITZKER

Before: Sandra S. Ikuta, and Paul J. Watford, Circuit

Judges, and Derrick Kahala Watson,* District Judge.

Opinion by Judge Ikuta;

Partial Concurrence by Judge Watson

SUMMARY**

Magnuson-Stevens Fishery Conservation and

Management Act

The panel affirmed in part and reversed in part the district

court’s grant of summary judgment to the National Marine

Fisheries Service (“NMFS”) in an action by the Glacier Fish

Co. challenging the fee imposed on it pursuant to NMFS’s

cost recovery program developed under the MagnusonStevens Fishery Conservation and Management Act for a

fishery management plan.

In December 2013, NMFS published a final rule and final

regulations that required members of a catcher-processor

coop to pay a percentage of the revenue earned by each vessel

as a fee to NMFS. Glacier is a coop member, and challenged

NMFS’s requirement that Glacier pay a fee of 1.1 percent of

its 2014 revenue.

 

* The Honorable Derrick Kahala Watson, United States District Judge

for the District of Hawaii, sitting by designation.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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GLACIER FISH CO. V. PRITZKER 3

The panel held that the agency had the authority to require

Glacier to pay a cost recovery fee but that the agency’s

calculation of the amount of the 2014 cost recovery fee was

inconsistent with its own regulations. Addressing Glacier’s

three claims, first, the panel held that NMFS had the authority

to collect a fee from the individual members of the coop,

including Glacier, because the catcher-processor coop permit

was a limited access privilege, and Glacier could reasonably

be said to be a “holder’ of that permit. Second, the panel held

that NMFS applied the appropriate cost accounting

methodology and complied with16 U.S.C. § 1853a(e). Third,

the panel held that NMFS’s calculation of the 2014 cost

recovery fee of the catcher-processor fee sector was

inconsistent with NMFS’s own regulations, and reversed the

summary judgment to the extent it upheld NMFS’s fee

calculation. The panel remanded to the agency to

redetermine that fee in accordance with its regulations.

District Judge Watson concurred in part and concurred in

the judgment. While he joined in the majority’s evaluation of

the merits of Glacier’s three claims, Judge Watson would not

have considered much of the issue of NMFS’s authorization

to collect a cost recovery fee because Glacier waived the

claim.

COUNSEL

Andrew Richards (argued), Sullivan &Richards LLP, Seattle,

Washington, for Plaintiff-Appellant.

Evelyn S. Ying (argued), J. David Gunter, II and John H.

Martin; John C. Cruden, Assistant Attorney General;

Environment and Natural Resources Division; United States

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4 GLACIER FISH CO. V. PRITZKER

Department of Justice, Washington, D.C.; Ryan Couch,

Office of the General Counsel National Oceanic &

Atmospheric Administration, Seattle, Washington; for

Defendants-Appellees.

OPINION

IKUTA, Circuit Judge:

Glacier Fish Co. challenges the fee imposed on it by the

National Marine Fisheries Service (NMFS) pursuant to the

agency’s cost recovery program developed under the

Magnuson-Stevens Fishery Conservation and Management

Act (Magnuson-Stevens Act, or MSA). We conclude that the

agency had the authority to require Glacier to pay a cost

recovery fee but that the agency’s calculation of the amount

of the 2014 cost recovery fee was inconsistent with its own

regulations. We therefore reverse the district court’s grant of

summary judgment in part and remand to the agency.

I

The Magnuson-Stevens Act created eight Regional

Fishery Management Councils.1 Each council creates a

fishery management plan, which must contain conservation

and management measures and an assessment of the

maximum sustainable yield from each fishery. 16 U.S.C.

§ 1853(a). Beginning in 1990, the councils were given the

discretion to use “a limited access system for the fishery in

1 The background of this case overlaps with our recent decision in

Pacific Dawn v. Pritzker, No. 14-15224, — F.3d — (9th Cir. 2016). We

repeat that background here to the extent it is relevant.

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GLACIER FISH CO. V. PRITZKER 5

order to achieve optimum yield.” Id. § 1853(b)(6). A limited

access system allows only those entities that satisfy certain

eligibility criteria or requirements contained in a fishery

management plan to participate in a fishery. Id. § 1802(27).

In 2007, Congress reauthorized the Magnuson-Stevens

Act with amendmentsthat, among other things, were intended

to encourage market-based fishery management through

“limited access privilege programs” (referred to by NMFS as

a LAPP). The term “limited access privilege” is defined as “a

Federal permit, issued as part of a limited access system

under section 1853a of this title to harvest a quantity of fish

. . . representing a portion of the total allowable catch of the

fishery that may be received or held for exclusive use by a

person.” 16 U.S.C. § 1802(26). Thus, a limited access

privilege program (which must be part of a limited access

system) is a program in which fishery participants obtain a

Federal permit “to harvest a certain portion of the total catch

allowed for a particular species.” Pac. Coast Fed’n of

Fishermen’s Ass’ns v. Blank, 693 F.3d 1084, 1088 (9th Cir.

2012). One way to implement such a program is to distribute

the allocated portion through “individual fishing quota”

(IFQ), or quota shares (i.e., a specified percentage of the total

catch). 16 U.S.C. § 1802(23). But councils need not adopt

IFQ programs; they retain discretion to implement limited

access privilege programs in different ways. See id.

§§ 1853a, 1802(26).

Any council that elects to implement a limited access

privilege program must also implement a cost-recovery

program. Id. § 1853a(e). The Magnuson-Stevens Act

requires councils to “develop a methodology and the means

to identify and assess the management, data collection and

analysis, and enforcement programs that are directly related

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6 GLACIER FISH CO. V. PRITZKER

to and in support of the program,” id. § 1853a(e)(1), and then

provide “for a program of fees paid by limited access

privilege holders that will cover the costs of management,

data collection and analysis, and enforcement activities,” id.

§ 1853a(e)(2). The Secretary of Commerce is authorized to

“collect a fee to recover the actual costs directly related to the

management, data collection, and enforcement of any limited

access privilege program.” Id. § 1854(d)(2)(A)(i). The fee

“shall not exceed 3 percent of the ex-vessel value2

of fish

harvested under any such program, and shall be collected at

either the time of the landing, filing of a landing report, or

sale of such fish during a fishing season or in the last quarter

of the calendar year in which the fish is harvested.” Id.

§ 1854(d)(2)(B).

Once a regional council has prepared a fishery

management plan for each fishery within its jurisdiction that

requires such a plan, it submits the plan and any proposed

regulations to the Secretary of Commerce. Id. § 1852(h)(1). 

The Secretary must review the plan to determine whether it

is consistent with statutory requirements, id. § 1854(a)(1)(A),

and publish a notice of proposed rulemaking in the Federal

Register, id. § 1854(a)(1)(B). This publication starts a public

notice and comment period. Id. If the Secretary approves the

plan, the Secretary must review the council’s proposed

regulations for consistency with its fishery management plan

and other law. 16 U.S.C. § 1854(b). The Secretary must

publish these regulations as well for public comment. Id.

The Secretaryhas delegated her responsibilities under the Act

2 Ex-vessel value is essentially the revenue earned by a particular vessel:

“Ex-vessel value means . . . all compensation (based on an arm’s length

transaction between a buyer and seller) that a fish buyer pays to a fish

seller in exchange for groundfish species.” 50 C.F.R. § 660.111.

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GLACIER FISH CO. V. PRITZKER 7

to NMFS, which is housed in the National Oceanic and

Atmospheric Administration in the Department of

Commerce.

One of the eight regional councils established by the

Magnuson-Stevens Act is the Pacific Fishery Management

Council (Pacific Council), which consists of representatives

from California, Oregon, Washington, and Idaho and covers

the fisheries seaward of those states. 16 U.S.C.

§ 1852(a)(1)(F). One of those fisheries is the Pacific

groundfish fishery, which “extends 200 miles into the Pacific

Ocean, along the coasts of California, Oregon, and

Washington, and includes more than 90 species of fish that

dwell near the sea floor.” Pac. Coast Fed’n of Fishermen’s

Ass’ns, 693 F.3d at 1088. The Pacific groundfish fishery is

comprised of three sectors: the catcher-processor (C/P)

sector, which consists of trawl fishing vessels that catch and

process whiting on board; the shoreside sector, which consists

of vessels that catch whiting and deliver the catch to

processors on land; and the mothership sector, which consists

of vessels that catch whiting and deliver the catch to

processors at sea. The Pacific Council first developed the

Pacific Coast Groundfish Fishery Management Plan

(Groundfish Management Plan) in 1982. The plan covers the

Pacific whiting, the species of fish at issue here, among other

groundfish.

In 1994, Amendment 6 to the Groundfish Management

Plan limited participation in the Pacific groundfish catcherprocessor sector by requiring each vessel to obtain one of a

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small number of limited entry permits.

3 The Council also

provided certain allocations of whiting to each sector of the

fishery; for instance, in 1997, the Council allocated 34

percent of the allowable catch to the catcher-processor sector,

42 percent to the shoreside sector, and 24 percent to the

mothership sector. Whiting Allocation Among Nontribal

Sectors, 62 Fed. Reg. 27519-01, 27520 (May 20, 1997). In

addition, the Council established a short season for whiting

and allowed permitted vessels to harvest whiting only from

the time the season opened until the time the catch limit was

reached. This management structure led to a so-called “race

for fish.” A vessel with a limited entry permit had an

incentive to make an intense, concentrated effort at the

beginning of the season to harvest the largest possible portion

of the catcher-processor allocation of whiting before the

window closed.

In an attempt to eliminate this “race for fish,” catcherprocessors formed a private cooperative, the Pacific Whiting

Conservation Cooperative (PWCC), in 1997. Through

private agreements, each member of the PWCC agreed to

limit its own whiting harvest to a certain percentage of the

catcher-processor sector whiting allocation. By agreeing to

apportion shares of the whiting allocation in advance, the

members no longer needed to race to catch their portion of

the catcher-processor sector’s allocation. This private

solution was effective, and NMFS acknowledged that the

catcher-processor sector no longer raised the “race for fish”

problem.

3 A limited entry permit limits the number of fishing vessels, the number

of vessels using each of three specified types of gear, and the vessel

length. 50 C.F.R. § 660.11.

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GLACIER FISH CO. V. PRITZKER 9

But because other sectors had not successfully ended the

race for fish, in 2003, the Pacific Council and NMFS began

developing a limited access privilege program for the

groundfish fishery as a whole (including the catcherprocessor sector). The program’s primary goal was to

implement an IFQ program (or quota share system) for the

shoreside sector. In January 2004, NMFS published a notice

of proposed rulemaking, which stated that the Pacific Council

was considering implementing a limited access privilege

program in the form of a “trawl rationalization program” for

the Pacific groundfish fishery. 69 Fed. Reg. 1563-01 (Jan. 9,

2004). The Pacific Council then engaged in a lengthy process

to develop an amendment to the Groundfish Management

Plan that would implement the trawl rationalization program. 

Finally, in 2009, the Pacific Council submitted its proposal

for a trawl rationalization program to the Secretary as

Amendment 20 to the Groundfish Management Plan. NMFS

published the proposed amendment for comment in May

2010, see Amendments 20 and 21, Trawl Rationalization

Program, 75 Fed. Reg. 26,702-01 (May 12, 2010), and the

proposed regulations for implementing Amendment 20 in

June 2010, see Amendments 20 and 21,TrawlRationalization

Program, 75 Fed. Reg. 32,994-01 (June 10, 2010). After a

round of notice and comment,NMFS adopted Amendment 20

to the Groundfish Management Plan and promulgated

implementing regulations. See Amendments 20 and 21,

Trawl Rationalization Program, 75 Fed. Reg. 60,868-01 (Oct.

1, 2010).

The final trawl rationalization program (Amendment 20)

established an IFQ program for the shoreside sector. An IFQ

program is “a quota system where each quota share could be

harvested at any time during an open season.” Advance

Notice of Proposed Rulemaking Regarding a Trawl

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10 GLACIER FISH CO. V. PRITZKER

Individual Quota Program and to Establish a Control Date,

69 Fed. Reg. 1563-01, 1563 (Jan. 9, 2004). “Participants in

the fishery (i.e., those who already had a limited entry permit

allowing them to fish) would need to obtain a quota share

permit as well in order to receive a share of the allowable

catch.” Pacific Dawn, No. 14-15224, draft at 8 (citing

16 U.S.C. §§ 1853a, 1802(26)).

But because the catcher-processor sector had been

operating successfully as a cooperative, Amendment 20

adopted a different approach for the catcher-processor sector. 

Rather than requiring each catcher-processor to obtain an IFQ

or quota share permit in order to receive its share of the catch,

Amendment 20 allowed the members of the coop (i.e., all the

participants in the catcher-processor sector) to obtain a single

“coop permit” in order to receive the catcher-processor

sector’s entire allocation of catch. The members of the coop

would then continue to distribute that allocation amongst

themselves through their private agreements. Amendment 20

termed this a “coop program.” The participants in the

catcher-processor sector would be required to obtain

individual IFQs or quota share permits only if the coop

dissolved. 50 C.F.R. § 660.160(h)(4)(ii).

The final regulations defined the “coop program” as “a

limited access program that applies to vessels in the C/P

sector of the Pacific whiting at-sea trawl fishery” that had

formed a voluntary coop. Id. § 660.160(a). A

“catcher/processor coop” is defined as “a harvester group that

includes all eligible catcher/processor at-sea Pacific whiting

endorsed permit owners who voluntarily form a coop and

who manage the catcher/processor-specified allocations

through private agreements and contracts.” Id. § 660.111. 

Under the program, a coop must obtain a “coop permit,”

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GLACIER FISH CO. V. PRITZKER 11

renewable annually. A coop permit “conveys a conditional

privilege to an eligible coop entity to receive and manage a

coop’s allocation of designated species and species groups.” 

Id. § 660.25(e)(2). According to NMFS, the coop permit

“formally register[s] the coop and its associated members to

harvest and process in the sector.” 75 Fed. Reg. 53380-01,

53392. The permit allows members to engage in fishing of

the catcher-processor sector’s allocation during the season. 

50 C.F.R. § 660.160(d)(1)(iv). The coop program also

required the coop to submit an annual report to NMFS, while

the members of the coop are required to submit economic

data. Id. §§ 660.160(b)(1)(ii), (b)(2)(ii). In sum, Amendment

20 made only a few changes to the catcher-processor sector;

it continued to operate as a coop through which members

divided their allocation according to their private agreements.

After implementing Amendment 20 and the trawl

rationalization program, the Pacific Council began to develop

a cost recovery program as required by 16 U.S.C.

§ 1853a(e)(1). It submitted a proposed program to NMFS in

December 2012. On February 1, 2013, NMFS proposed

regulations establishing a cost recoveryprogram and solicited

public comments. See Cost Recovery, 78 Fed. Reg. 7371-01

(Feb. 1, 2013). On December 11, 2013, NMFS published its

final rule, which established the requirements for cost

recovery from each of the sectors. See Cost Recovery,

78 Fed. Reg. 75,268-01 (Dec. 11, 2013); 50 C.F.R.

§ 660.160(e)(5).

The final regulations required members of a catcherprocessor coop to pay a percentage of the revenue earned by

each vessel (i.e., its ex-vessel value) as a fee to NMFS. 

NMFS calculated the fee percentage based on DPC, or direct

program costs, defined as “the actual incremental costs for

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12 GLACIER FISH CO. V. PRITZKER

the previous fiscal year directly related to the management,

data collection, and enforcement” of the catcher-processor

sector, 50 C.F.R. § 660.115(b)(1)(i), divided by V, “the total

ex-vessel value, as defined at § 660.111, from the previous

calendar year attributable to that sector of the trawl

rationalization program,” id. § 660.115(b)(1)(ii).4

Comment 5 to the proposed regulations asked NMFS to

“provide the legal basis for defining the C/P Coop Program

as a LAPP [limited access privilege program].” 78 Fed. Reg.

75,268-01, 75,272. NMFS responded that it “decided that the

C/P Coop Program was a LAPP during implementation of

Amendment 20.” Id. It further explained that “[c]onsistent

with the definition of a ‘limited access privilege’ in the MSA

(16 U.S.C. § 1802 (26)), the C/P Coop Program is a LAPP

under the MSA (16 U.S.C. § 1853a) because it requires a

Federal permit for exclusive use by the coop to harvest a

portion of the total allowable catch.” Id. NMFS also

acknowledged “that generally the C/P Coop Program

management costs are less than those of the other sectors.” 

Id.

In 2013, the PWCC received a catcher-processor coop

permit that stated: “This permit authorizes the entity named

above [PWCC] to harvest 100% of the Pacific Whiting and

non-whiting allocated to the C/P sector,” which was 34

percent of the total allowable catch. The three coop

members, American Seafoods, Trident Seafoods, and Glacier

4 Because each year’s fee is determined based on the previous year’s

costs, NMFS calculates the actual costs at the end of each year and adjusts

each participant’s fee for the following year accordingly. 50 C.F.R.

§ 660.115(b)(1).

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GLACIER FISH CO. V. PRITZKER 13

Fish, then apportioned the allocation among themselves

according to their agreements.

To calculate the 2014 fee percentage for purposes of its

cost recovery program, NMFS determined its 2013 direct

program costs for the catcher-processor sector to be

$176,460. NMFS divided the 2013 direct program costs by

the total catcher-processor sector ex-vessel value of $16.76

million, which resulted in a fee percentage of 1.1 percent. 

Thus, each participant in the catcher-processor coop program

was required to pay a fee of 1.1 percent of its 2014 revenue.5

On January 9, 2014, Glacier filed this action in district

court. The parties filed cross-motions for summary

judgment. The district court rejected each of Glacier’s

arguments and granted summary judgment to NMFS. Glacier

timely appealed.

On appeal, Glacier makes three arguments. First, Glacier

argues that because NMFS may collect a fee only from

“limited access privilege holders,” 16 U.S.C. § 1853a(e)(2),

it is not authorized to collect a cost recovery fee from Glacier

for two reasons: (1) a “coop permit” is not a limited access

privilege because it does not authorize PWCC to harvest a

quantity of fish and it lacks one of the statutory

characteristics of a limited access privilege; and (2) it is not

the holder of the coop permit. Second, Glacier argues that

NMFS failed to implement the cost accounting methodology

recommended by the Council in violation of 16 U.S.C.

5 NMFS’s calculation of $176,460.05 turned out to be well in excess of

its actual 2014 direct program costs, which resulted in a significant

overpayment by Glacier. NMFS applied the amount of overpayment to

Glacier’s 2015 and 2016 fees.

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14 GLACIER FISH CO. V. PRITZKER

§ 1853a(e). Third, Glacier argues that NMFS’s calculation of

the 2014 fee was inconsistent with NMFS’s own regulations. 

We address each of Glacier’s arguments in turn.6

II

The district court had jurisdiction under 28 U.S.C. § 1331,

and we have jurisdiction under 28 U.S.C. § 1291. We review

the district court’s grant of summary judgment de novo. 

Fishermen’s Finest, Inc. v. Locke, 593 F.3d 886, 894 (9th Cir.

2010).

We review NMFS’s interpretation of the MagnusonStevens Act under the two-step framework of Chevron,

U.S.A., Inc. v. Natural Resources Defense Council, Inc.,

467 U.S. 837, 842–43 (1984). See Pacific Coast Fed’n of

Fishermen’s Ass’ns, 693 F.3d at 1091; Or. Trollers Ass’n v.

Gutierrez, 452 F.3d 1104, 1119 (9th Cir. 2006).

At step one, we consider whether “the intent of Congress

is clear.” Chevron, U.S.A., Inc., 467 U.S. at 842. If

“Congress has directly spoken to the precise question at

6 NMFS argues that Glacier waived the first two arguments by failing to

raise them in its comments on the proposed cost recovery rules. We

disagree. We generally do not invoke the waiver rule so long as an issue

was raised “with sufficient clarity to allow the decision maker to

understand and rule on the issue raised,” Nat’l Parks & Conservation

Ass’n v. Bureau of Land Mgmt., 606 F.3d 1058, 1065 (9th Cir. 2009),

whether the issue “was considered sua sponte by the agency or was raised

by someone other than the petitioning party.” Portland Gen. Elec. Co. v.

Bonneville Power Admin., 501 F.3d 1009, 1024 (9thCir. 2007). Based on

our review of the record, Glacier’s arguments were raised with sufficient

clarity in the comments or addressed sua sponte by NMFS, so they were

not waived.

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GLACIER FISH CO. V. PRITZKER 15

issue,” we “must give effect to the unambiguously expressed

intent of Congress.” Id. at 842–43. We will uphold the

agency’s interpretation if it is consistent with that

congressional intent. See Or. Trollers Ass’n, 452 F.3d at

1119.

If the statute is “silent or ambiguous” on the precise issue,

or susceptible to multiple interpretations, we consider

whether Congress delegated authority to the agency “to speak

with the force of law when it addresses ambiguity in the

statute or fills a space in the enacted law.” United States v.

Mead Corp., 533 U.S. 218, 229 (2001); see also Nat’l Cable

&Telecomms. Ass’n v. Brand X Internet Servs., 545 U.S. 967,

980 (2005) (“[A]mbiguities in statutes within an agency’s

jurisdiction to administer are delegations of authority to the

agency to fill the statutory gap in reasonable fashion.”). 

Congress has delegated such authority “when it provides for

a relativelyformal administrative procedure,” like notice-andcomment rulemaking. Mead, 533 U.S. at 230. And where

the agency interprets the statute through an exercise of that

authority, we must “accept the agency’s construction of the

statute” so long as “the implementing agency’s construction

is reasonable, . . . even if the agency’s reading differs from

what the court believes is the best statutory interpretation.” 

Brand X, 545 U.S. at 980. An interpretation is reasonable so

long as it “reflects a plausible construction of the plain

language of the statute and does not otherwise conflict with

Congress’ expressed intent.” Rust v. Sullivan, 500 U.S. 173,

184 (1991).

Here, Congress directed NMFS to promulgate a fishery

management plan and implementing regulations that have the

force of law through notice-and-comment rulemaking. See

16 U.S.C. § 1854. Accordingly, we must defer to NMFS’s

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16 GLACIER FISH CO. V. PRITZKER

construction of ambiguous statutory provisions authorizing

such plans so long as its interpretation is reasonable.

A

We first consider Glacier’s argument that it is not subject

to cost recovery because NMFS is authorized to collect a fee

only from “limited access privilege holders,” 16 U.S.C.

§ 1853a(e)(2). Glacier claims that it is not such a holder for

two reasons: first, because a catcher-processor coop permit is

not a limited access privilege, and second, because even if a

coop permit is a limited access privilege, PWCC holds the

permit, not Glacier.

1

Under the Chevron framework, we begin with the

question whether Congress has addressed the precise question

before us, that is, whether a “limited access privilege” may

include a permit such as the catcher-process coop permit, as

set forth in Amendment 20 and the implementing regulations.

The Magnuson-Stevens Act defines a “limited access

privilege” as “a Federal permit, issued as part of a limited

access system under section 1853a of this title to harvest a

quantity of fish . . . representing a portion of the total

allowable catch of the fishery that may be received or held for

exclusive use by a person,” 16 U.S.C. § 1802(26)(A), and

“includes an individual fishing quota,” id. § 1802(26)(B). 

Thus, the definition of a “limited access privilege” makes

clear that the IFQ permits used for participants in the

shoreside sector are limited access privileges. But the

definition does not resolve whether a coop permit, which is

not issued directly to harvesters, but to a coop to receive and

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GLACIER FISH CO. V. PRITZKER 17

manage a catch allocation on behalf of its members, is a

“permit . . . to harvest a quantity of fish.” Nor does any other

part of the statute answer this question. Although the Act has

delineated the contours of “limited access privilege

programs” in a detailed statutory framework, id. § 1853a,

including the requirements for a limited access privilege, id.

§ 1853a(c), and the characteristics of such a privilege, id.

§ 1853a(f), we have not found, and the parties have not

identified, any provisions in the Magnuson-Stevens Act that

specifically address whether a limited access privilege could

include a permit issued to a coop along the lines set forth in

NMFS’s regulations. We therefore conclude that Congress

has not directly spoken to this issue.

Accordingly, we move to the second step of the Chevron

analysis and ask whether NMFS’s construction of “limited

access privilege” as including the coop permit defined in

NMFS’s regulations was reasonable. According to the

regulations, the “coop program” is “a limited access program

that applies to vessels in the C/P sector of the Pacific whiting

at-sea trawl fishery and is a single voluntary coop.” 

50 C.F.R. § 660.160(a). The “coop permit” is defined as a

permit that “conveys a conditional privilege to an eligible

coop entity to receive and manage a coop’s allocation of

designated species and species groups.” Id. § 660.25(e)(2). 

A coop is a group of participants that acts both as a group and

individually: the regulations define a coop as “a harvester

group” that includes participants in the catcher-processor

sector with limited entry permits who “voluntarily form a

coop and who manage the catcher/processor-specified

allocations through private agreements and contracts,” id.

§ 660.111, and the harvester group and its members are

jointly and severally responsible for compliance with the

coop permit and coop program, id. § 660.160(b)(2)(iii). In

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18 GLACIER FISH CO. V. PRITZKER

order to harvest fish, participants in the catcher-processor

sector must be members of the coop, and the coop must have

a coop permit. Id. § 660.160(a), (b)(2)(i)(A). Once the coop

permit has been obtained, coop members may engage in

catching the catcher-processor sector’s allocation during the

season. Id. § 660.160(d)(1)(iv). In sum, as NMFS explained

in proposing the regulations, the “coop permit” registers “the

coop and its associated members to harvest and process in the

sector.” 75 Fed. Reg. 53,380-01, 53,392.

We conclude that NMFS could reasonably interpret a

“federal permit . . . to harvest a quantity of fish” as including

the coop permit. Taking the regulations as a whole, a coop

permit is a federal permit issued to a harvester group,

50 C.F.R. § 660.111, which is necessary (but not sufficient)

for the group members to harvest the fish allocated to the

catcher-processor sector, id. § 660.160(b)(2)(i)(A), and which

allows the group members to apportion the harvest of fish

amongst themselves through private agreement, id.

§ 660.111. Because the coop permit allows the group to

catch the portion of the fish allocated to the catcher-processor

sector, it can reasonably be called a “federal permit . . . to

harvest a quantity of fish,” 16 U.S.C. § 1802(26). That

participants in the fishery obtain their right to catch fish by

means of a coop permit rather than an individual permit does

not change the underlying nature of the permit. Because

NMFS’s determination was a plausible construction of the

statute, we defer to the agency’s interpretation.

Glacier argues that because the coop permit is defined as

“a conditional privilege to an eligible coop entity to receive

and manage a coop’s allocation of designated species and

species groups,” 50 C.F.R. § 660.25(e)(2), rather than

expressly stating that it is a permit to “harvest” fish, the coop

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GLACIER FISH CO. V. PRITZKER 19

permit is not a “limited access privilege.” And, Glacier adds,

a coop itself cannot “harvest” fish in the ordinary sense of the

word because it does not have the physical or legal means to

catch fish, so the coop permit cannot be a permit to “harvest”

fish. We do not dispute that “harvest” should be given its

ordinarymeaning and in this context generallymeans to catch

fish. But we reject Glacier’s argument because it fails to

consider the nature of a coop and a coop permit in the context

of the regulation as a whole, which establishes a coop permit

as an authorization allowing the members of a harvester

group to catch a certain quantity of fish.7 Congress gave

NMFS authority to develop a limited access privilege

program, and “agencies are better equipped to make” the

policy choices for doing so than are the courts. Brand X,

545 U.S. at 980. We therefore defer to NMFS’s

determination that a coop permit is a permit allowing a

harvesting group to harvest fish.

Glacier also argues that that NMFS cannot deem a coop

permit to be a “limited access privilege” because the catcherprocessor coop permit lacks one of the characteristics of a

limited access privilege set forth in § 1853a(f). The missing

characteristic, according to Glacier, is that a limited access

privilege is “issued for a period of not more than 10 years

that—(1) will be renewed before the end of that period,

unless it has been revoked, limited, or modified as provided

in this subsection.” 16 U.S.C. § 1853a(f). Under NMFS’s

regulations, an application for a coop permit must be

submitted to NMFS between February 1 and March 31 of

7

Indeed, the “permit” issued to PWCC expressly provides the right to

harvest fish, stating “This permit authorizes the entity named above

[PWCC] to harvest 100% of the Pacific Whiting and non-whiting

allocated to the C/P sector.”

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20 GLACIER FISH CO. V. PRITZKER

each year and it expires on December 31 of the year in which

it was issued. 50 C.F.R. § 660.160(d)(1)(ii).8 Glacier claims

that because the coop permit lacks the characteristic of

renewability, it is not a limited access privilege.

This argument misses the point. Rather than raise a

question as to whether it was unreasonable for NMFS to

construe a “limited access privilege” as including the type of

“coop permit” defined in NMFS’s regulations, this argument

raises a different question: whether the regulation setting

forth the coop permit’s renewal requirements is a reasonable

interpretation of the statutory renewal requirements in

§ 1853(a)(f). The answer to this question sheds no light on

whether a coop permit is a “limited access privilege.” Here,

for instance, if NMFS fails to renew the coop permit before

the end of the one-year period, Glacier could raise the

argument that NMFS’s actions are inconsistent with

§ 1853a(f), which requires renewal of a permit “unless it has

been revoked, limited or modified” pursuant to § 1853a(f)(1). 

If Glacier prevailed on this claim, NMFS could have the

obligation to revise or interpret the limited access privilege to

meet statutory requirements. But regardless of Glacier’s

success on this claim, the coop permit would still be “a

Federal permit, issued as part of a limited access system

 

8

 50 C.F.R. § 660.160(d)(1)(ii) states:

Annual registration and deadline. Each year, the coop

entity must submit a complete application to NMFS for

a C/P coop permit. The application must be submitted

to NMFS by between February 1 and March 31 of the

year in which it intends to participate. NMFS will not

consider any applications received after March 31. A

C/P coop permit expires on December 31 of the year in

which it was issued.

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GLACIER FISH CO. V. PRITZKER 21

under section 1853a of this title to harvest a quantity of fish

. . . representing a portion of the total allowable catch of the

fishery that may be received or held for exclusive use by a

person,” 16 U.S.C. § 1802(26), and therefore would

constitute a limited access privilege. Thus, Glacier’s

renewability argument does not change our conclusion that

NMFS could reasonably determine the coop permit to be a

limited access privilege.

2

We turn next to Glacier’s argument that, even if the

catcher-processor coop permit is a limited access privilege,

NMFS is authorized to collect a fee only from “limited access

privilege holders,” 16 U.S.C. § 1853a(e)(2) (emphasis

added), and Glacier is not a “holder” of that permit because

it was issued only to PWCC.

We again begin by determining whether Congress has

addressed the precise question before us, which is whether

each individual member of a coop, defined as a “harvester

group,” 50 C.F.R. § 660.111, can be deemed a “holder” of the

Federal permit issued to that group. The word “holder” is not

defined in the statute. Nor is there “an unambiguous common

sense meaning of the word” that answers the question here. 

See Arizona Health Care Cost Containment Sys. v.

McClellan, 508 F.3d 1243, 1249 (9th Cir. 2007). Although

the term “holder” as it is used here means “possessor,”

Webster’s Third New International Dictionary 1079 (2002),

this definition does not resolve our issue; rather, it merely

raises the same question: whether a member of a group may

be deemed to be a “possessor” of a group permit. We

therefore conclude that Congress has not directly answered

the precise question at issue.

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22 GLACIER FISH CO. V. PRITZKER

Turning to the second step of Chevron, we ask whether

NMFS’s determination that each member of the harvester

group that received the coop permit can be treated as a

“limited access privilege holder” is a reasonable construction

of § 1853a(e)(2). We conclude that it is. As we have

explained, the regulations define the coop as a “harvester

group,” which is treated for regulatory purposes as both the

group and the individual members. Because each member of

the group exercises the group’s rights under the coop permit

to harvest fish, see 50 C.F.R. § 660.160(b), (d)(1)(iv), and

each member is jointly and severally responsible for

compliance with the permit, see id. § 660.160(b)(2)(iii), it is

both fair and sensible to regard each member of the group as

a joint holder of the privilege. Accordingly, we defer to

NMFS’s reasonable construction of “holder” in § 1853a(e)(2)

as being applicable to each member of a coop that has been

issued a limited access privilege. Id. § 660.115(d)(2).

Because the catcher-processor coop permit is a limited

access privilege, and Glacier can reasonably be said to be a

“holder” of that permit, NMFS had the authority to collect a

fee from the individual members of the coop, including

Glacier. The district court therefore did not err in granting

summary judgment to NMFS on this issue.

B

We turn next to Glacier’s argument that NMFS did not

apply the Council’s cost accounting methodology, which

Glacier argues violated 16 U.S.C. §§ 1853a(e), 1854(d)(2).

The Magnuson-Stevens Act requires a council that elects

to establish a limited access privilege program to “(1) develop

a methodology and the means to identify and assess the

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GLACIER FISH CO. V. PRITZKER 23

management, data collection and analysis, and enforcement

programs that are directly related to and in support of the

program,” and “(2) provide . . . for a program of fees paid by

limited access privilege holders that will cover the costs of

management, data collection and analysis, and enforcement

activities.” Id. § 1853a(e). After the council develops the

methodology and provides the program, NMFS may accept

or reject the program proposed by the council, id. § 1854(b),

but it does not have the authority to develop a methodology

itself.

The Pacific Council developed a methodology for

collecting costs “directly related to and in support of the

program,” id. § 1853a(e)(1), and prepared a report with its

recommendation. In its report, the Council recommended

recovering only “incremental costs, i.e. those costs that would

not have been incurred but for” the trawl rationalization

program. It defined “[a]ctual incremental costs” to mean

“those net costs that would not have been incurred but for the

implementation of the trawl rationalization programincluding

additional costs for new requirements of the program and

reduced trawl sector related costs resulting from efficiencies

as a result of the program.” “Net costs” were to be

interpreted pursuant to Appendix B, which provided some

guidance and examples for determining how the cost of an

employee’s time changes with and without a trawl

rationalization program.

NMFS followed the Council’s recommendation in its

regulations. The final regulations required each participant

in the fishery to pay as an annual fee a percentage “of the exvessel value of fish harvested by sector under the trawl

rationalization program,” but no more than 3 percent under

16 U.S.C. § 1854(d)(2)(B). 50 C.F.R. § 660.115(a). The

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24 GLACIER FISH CO. V. PRITZKER

regulations required NMFS to calculate the fee percentage

each year using the formula, (DPC/V) x 100. Id.

§ 660.115(b)(1). It defined DPC, or direct program costs, as

“the actual incremental costs for the previous fiscal year

directly related to the management, data collection, and

enforcement of each sector (Shorebased IFQ Program, MS

Coop Program, and C/P Coop Program).” Id.

§ 660.115(b)(1)(i). The regulations adopted the council’s

definition of “actual incremental costs”: the “net costs that

would not have been incurred but for the implementation of

the trawl rationalization program, including additional costs

for new requirements of the program and reduced trawl sector

related costs resulting from efficiencies as a result of the

program.” Id. NMFS therefore sought to collect only the

“incremental costs” as the Council defined them, the costs

that would not have been incurred but for the implementation

of the rationalization program.9 Because NMFS’s regulations

implemented the Council’s recommendations, the regulations

are consistent with the statutory requirement.

Glacier argues that the cost recovery regulations violated

§ 1853a(e) because NMFS did not use the “with and without”

approach in Appendix B. But Appendix B’s “with and

without” approach is merely an example of how to calculate

“net costs that would not have been incurred but for the

implementation of the trawl rationalization program.” In

other words, Appendix B demonstrated that the net costs in

this context are equal to costs “with” the implementation of

9 NMFS defined V as “the total ex-vessel value, as defined at § 660.111,

from the previous calendar year attributable to that sector of the trawl

rationalization program.” § 660.115(b)(1)(ii). Thus, the fee percentage for

each sector is the lesser of three percent or the net costs of the program

attributable to each sector as a percentage of the sector’s revenue.

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GLACIER FISH CO. V. PRITZKER 25

the trawl rationalization program less costs “without” that

program. Because NMFS’s regulations include the Council’s

definition of incremental costs as net costs with and without

the trawl rationalization program, NMFS complied with

§ 1853a(e), and we reject Glacier’s argument to the contrary.

C

Finally, we address Glacier’s argument that NMFS’s

calculation of the 2014 cost recovery fee was inconsistent

with NMFS’s own cost recovery regulations because NMFS

did not determine the “actual” costs “directly related to” the

program and failed to account for any efficiencies gained as

a result of the program. We generally defer to the agency’s

interpretation of its own regulations unless “plainlyerroneous

or inconsistent with the regulation.” Bassiri v. Xerox Corp.,

463 F.3d 927, 930 (9th Cir. 2006) (citing Auer v. Robbins,

519 U.S. 452, 461(1997)); see also Chase Bank USA, N.A. v.

McCoy, 562 U.S. 195, 207–08 (2011).

The regulations require NMFS to begin by determining

the “additional costs” of the trawl rationalization program

attributable to each sector. 50 C.F.R. § 660.115(b)(1)(i).10

Accordingly, NMFS was obliged to develop a reasonable

method for determining the actual additional costs of the

trawl rationalization program (over and above existing costs

related to groundfish fishery management) as well as a

10 The final regulations stated that NMFS would determine “the actual

incremental costs . . . directly related to the management, data collection,

and enforcement of each sector,” meaning the “net costs that would not

have been incurred but for the implementation of the trawl rationalization

program, including additional costs for new requirements of the program

and reduced trawl sector related costs resulting from efficiencies as a

result of the program.” 50 C.F.R. § 660.115(b)(1)(i).

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26 GLACIER FISH CO. V. PRITZKER

reasonable method for determining which of these additional

costs was directly attributable to each of the three sectors. 

Moreover, the regulations required NMFS to develop a

method to evaluate whether it has gained any “efficiencies”

and reduced costs as a result of implementing the coop permit

program. Id.

A review of the record discloses that NMFS did not

develop or apply such reasonable methods. First, NMFS did

not have a systematic method for determining the number of

employee hours that were spent on the trawl rationalization

program over and above the amount that had previously been

spent on the groundfish fishery. Instead, NMFS made rough

approximations. It began with the presumption that all

employee time should be treated as the incremental cost of

the trawl rationalization program because it had hired many

new employees solely for work on the trawl rationalization

program. NMFS acknowledged that this presumption was

not wholly justified, because NMFS had retained some

employees who had been working on the same tasks before

and after the implementation of the program. To address this

problem, NMFS contended that time spent by existing

employees was offset by NMFS’s decision not to obtain cost

recovery for certain overhead costs. This approach of using

roughly estimated offsets is not consistent with NMFS’s

regulatory obligation to determine “the actual incremental

costs” of developing the coop program. 50 C.F.R.

§ 660.115(b)(1)(i) (emphasis added).

Nor did NMFS develop a reasonable system for

separating time spent on the trawl rationalization program

from time spent on other projects. NMFS asked employees

to track the hours they spent working on trawl rationalization

matters related to each of the groundfish fishery sectors

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GLACIER FISH CO. V. PRITZKER 27

(using a code assigned to each of these sectors), plus any

hours they spent working on general matters not specifically

attributable to any sector (using a code for “general work”). 

The record shows that managers used rough estimates and

deducted hours on an ad hoc basis. For instance, over two

thousand hours were deleted because they “seem[ed] high.” 

A manager deleted one employee’s time entirely because it

turned out she had not spent any time on the trawl

rationalization program. NMFS also had problems with the

“general” category. A manager deleted one employee’s time

in the general category because that employee had not spent

any time on general work, and reduced another’s time by 75

percent because the manager learned, based on personal

communications with the employee, that the employee had

coded the time he spent on projects other than the trawl

rationalization program as “general” work. Again, such a

haphazard approach to estimating the number of employee

hours actually spent on the trawl rationalization program is

inconsistent with NMFS’s regulatory obligation to calculate

the actual incremental costs directly related to the program.

Moreover, NMFS did not allocate time in the general

category according to the sector that required the most

employee time; rather, NMFS divided the cost of the general

time (including employee leave time) evenly among the three

sectors even though employee costs of the catcher-processor

sector amounted to only 1.4% of the sector-specific employee

costs.11 The record shows that the vast majority of the costs

 

11 Recall that Amendment 20’s changes to the catcher-processor sector

were limited to: (1) requiring a catcher-processor endorsement on the

limited entry permits; (2) requiring the catcher-processor coop permit;

(3) requiring reports fromthe coop and its members; and (4) implementing

an IFQ program only if the coop dissolves. Because there were few

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28 GLACIER FISH CO. V. PRITZKER

assigned to the catcher-processor sector is from the “general”

category: of the $176,460 in costs allocated to the catcherprocessor sector, only $25,807 was for time spent on the

catcher-processorsector,while the other $150,653 constituted

one-third of the “general” time spent on the trawl

rationalization program as a whole. Distributing general

costs like employee leave time evenly across the three sectors

is again inconsistent with calculating the “actual incremental

costs . . . directly related to . . . each sector.” 50 C.F.R.

§ 660.115(b)(1)(i).

Finally, NMFS apparently made no attempt to calculate

the “reduced trawl sector related costs resulting from

efficiencies” in the program as it was required to do under

50 C.F.R. § 660.115(b)(1)(i).

Based on our review of the record, NMFS did not

properly determine the “actual incremental costs” that were

“directly related to the management, data collection, and

enforcement of each sector” for assessment on the members

of the catcher-processor sector. 50 C.F.R. § 660.115(b)(1)(i). 

We therefore conclude that NMFS’s calculation of the 2014

cost recovery fee of the catcher-processor sector was

inconsistent with NMFS’s own regulations. We reverse the

district court’s grant of summary judgment to the extent it

upheld NMFS’s fee calculation and remand to the agency to

re-determine that fee in accordance with its regulations.

changes to the status quo, NMFS acknowledged that it would incur less

costs in this sector than other sectors. See 78 Fed. Reg. 75,268-01,

75,272.

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GLACIER FISH CO. V. PRITZKER 29

Each party shall bear its own costs on appeal.

AFFIRMED in part, REVERSED AND REMANDED

in part.

WATSON, District Judge, concurring in part and concurring

in the judgment:

On appeal, Glacier makes three claims: (1) that NMFS is

not authorized to collect a cost recovery fee from Glacier

because (a) the coop permit does not qualify as a limited

access privilege and (b) even if it did, Glacier does not hold

the permit; (2) that NMFS failed to implement the cost

accounting methodology recommended by the Council; and

(3) that NMFS’s calculation of the 2014 fee was inconsistent

with its own regulations. While I join in the majority’s

evaluation of the merits of all three issues, in my view, we

need not have considered much of the first because Glacier

waived it.

“[A] party’s failure to make an argument before the

administrative agency in comments on a proposed rule bar[s]

it from raising that argument on judicial review.” Universal

Health Servs., Inc. v. Thompson, 363 F.3d 1013, 1019, 1021

(9th Cir. 2004) (citing Exxon Mobil Corp. v. EPA, 217 F.3d

1246 (9th Cir. 2000)). “Although ‘claimants who bring

administrative appeals may try to resolve their difficulties by

alerting the decision maker to the problem in general terms,

rather than using precise legal formulations,’ claimants are

still obligated to raise their problem ‘with sufficient clarity to

allow the decision maker to understand and rule on the issue

raised.’” Buckingham v. Sec’y of U.S. Dep’t of Agr., 603 F.3d

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30 GLACIER FISH CO. V. PRITZKER

1073, 1080 (9th Cir. 2010) (citation omitted); see also Great

Basin Mine Watch v. Hankins, 456 F.3d 955, 967 (9th Cir.

2006) (concluding that a claimant had failed to exhaust where

the general concerns raised below were insufficiently closely

connected to the legal claim at issue). While “there is no

bright-line standard as to when this requirement has been

met,” Idaho Sporting Cong., Inc. v. Rittenhouse, 305 F.3d

957, 965 (9th Cir. 2002), in my view, it was not met here.

Glacier relies on a single comment letter from the PWCC

for having preserved its first claim that a coop permit does

not qualify the permittee as a “limited access privilege

holder.” In fact, Glacier primarily relies on the following

sentence within that letter that reads as follows: “The PWCC

requests from NMFS a clear and detailed account of the legal

basis for defining the CP cooperative as a LAPP, including

why other U.S. sector-based, cooperative management

programs are not defined as LAPPs.” That level of generality

is simply too attenuated to have put NMFS on notice of much

of what Glacier asserts now. For instance, Glacier spends

multiple pages discussing what “harvest” means under

16 U.S.C. § 1802(26) and spends multiple additional pages

discussing the permit “renewal” requirement in 16 U.S.C.

§ 1853a(f)(1). Yet the PWCC letter it cites never even

mentions the nuanced “harvest” that Glacier now interprets,

and the letter gives equally short shrift (i.e. none) to

“renewal.” How this could possibly satisfy its exhaustion

obligation is beyond me,1and it is no surprise, then, that

NMFS did not address these specific issues during the

administrative process.

1

In addition, I agree with the district court’s conclusion that Glacier

waived the argument that it is not the holder of the coop permit.

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GLACIER FISH CO. V. PRITZKER 31

Accordingly, while I concur in the judgment, including

the majority’s analysis of the merits of each of Glacier’s

claims, I cannot join in Footnote 6 of Part I.

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