Opinion ID: 2520439
Heading Depth: 1
Heading Rank: 4

Heading: The Co-op Regulation Fundamentally Contradicts the Intended Purposes of the Limited Entry Act.

Text: Assuming the cooperative fishery and the open fishery use different gear, we must still consider Grunert's argument that the regulation conflicts with the purpose and policy behind the Limited Entry Act. A regulation may be invalid if it is fundamentally inconsistent with the legislative intent underlying the controlling statute. [29] To determine whether the cooperative regulation is consistent with the Limited Entry Act, we look to the act's history and legislative purposes. 1. History of the Limited Entry Act Before statehood, commercial salmon fishing in Alaska was dominated by large operators of fleets and fish traps, so much so that the drafters of the Alaska Constitution submitted an ordinance banning commercial fish traps to an Alaska-wide vote. [30] Doing so reflected the drafters' belief that Alaska's salmon should belong to all Alaskans. [31] The drafters consequently also proposed the common use provisions of the Alaska Constitution. [32] These common use provisions caused early attempts to limit participation in fisheries to be deemed unconstitutional. The legislature made one such attempt in 1961 when it enacted a statute authorizing the Board of Fish and Game to promulgate regulations temporarily closing salmon fishing areas to nonresidents when yearly runs proved to be inadequate to sustain Alaska resident commercial fishers. [33] A law enacted in 1968 attempted to limit the issuance of salmon net gear licenses for particular salmon registration areas to persons previously holding either a salmon gear license or a commercial license during three years of active engagement in commercial fishing. [34] Both of these acts ultimately faced legal challenges based on equal protection and other constitutional grounds. [35] In 1971 the Alaska Superior Court held that the 1968 law violated article VIII, section 15, of the Alaska Constitution, which provides that [n]o exclusive right or special privilege of fishery shall be created or authorized in the natural waters of the State. [36] To address the constitutional concerns identified by the superior court in 1971 in Bozanich v. Norenberg, the Alaska Legislature in 1972 proposed a constitutional amendment to add this language to article VIII, section 15: This section does not restrict the power of the State to limit entry into any fishery for purposes of resource conservation, to prevent economic distress among fishermen and those dependent on them for a livelihood and to promote the efficient development of aquaculture in the State.[ [37] ] The voters approved the amendment in 1972. [38] The legislature then enacted the Limited Entry Act, effective as of 1974. [39] The stated purposes of the Act included promoting the conservation and the sustained yield management of Alaska's fishery resource and the economic health and stability of commercial fishing in Alaska by regulating and controlling entry of participants and vessels into the commercial fisheries in the public interest and without unjust discrimination. [40] One method the legislature used to limit entry into the commercial fisheries was restricting eligibility for permits under the new system. Under the Limited Entry Act, the Commercial Fisheries Entry Commission determines who is eligible to take fish. [41] The CFEC is authorized by statute to accept applications from only those persons who have harvested fishery resources commercially while participating in the fishery as holders of gear licenses. [42] When the legislature enacted the Limited Entry Act, a gear license was a personal license and gear could only be fished in the presence of the named licensee. [43] A gear license could be transferred only in cases of hardship if the original licensee became unable to fish. [44] Only individuals who had held gear licenses, as opposed to their partners, could apply for limited entry permits. [45] Hence even commercial fishers who were crew members and who fished with gear license holders but who did not themselves hold licenses were ineligible to receive entry permits under the new limited system. [46] These features of the limited entry system reflect an intention that permit holders be, at minimum, individuals who were actively fishing. The Limited Entry Act also commands the CFEC to establish a standard for the initial issuance of limited entry permits. [47] To prevent unjust discrimination, the CFEC is to adopt regulations that take into account the hardship imposed on the applicant upon exclusion from the limited entry fishery and assign priority classifications for similarly situated applicants based on the following factors: [48] (1) degree of economic dependence upon the fishery, including, when reasonable for the fishery, the percentage of income derived from the fishery, reliance on alternative occupations, availability of alternative occupations, investment in vessels and gear; (2) extent of past participation in the fishery, including, when reasonable for the fishery, the number of years of participation in the fishery, and the consistency of participation during each year.[ [49] ] In recognizing actual dependence on the fisheries and actual participation, these ranking factors protect those who actually take fish. [50] Actual participation also matters when it comes to the issuance of subsequent limited entry permits. Under AS 16.43.330(a), when the number of permits issued for a fishery drops below the optimum number established by the CFEC, it issues new entry permits to applicants presently able to engage actively in the fishery. Alaska Statute 16.43.225(e) requires that applicants for interim-use permits for a fishery under a moratorium establish the present ability and intent to participate actively in the fishery. During the period of time between the establishment of the maximum number of entry permits and the initial issuance of permits, interim-use permit applicants similarly must establish their present ability to participate actively in the fishery. [51] Other provisions in the Limited Entry Act also emphasize economic dependence and participation. The Act authorizes the CFEC, not the board, to establish the optimum number of entry permits for each fishery based on what will result in a reasonable average rate of economic return to the fishermen participating in that fishery, considering time fished and necessary investments in vessels and gear. [52] Another factor to be considered in determining the optimum number is the number of entry permits sufficient to avoid serious economic hardship to those currently engaged in the fishery, considering other economic opportunities reasonably available to them. [53] Again, these provisions in the Act contemplate economically dependent individuals who invest time and money in actually fishing. The repeated references to participation and dependence throughout the Limited Entry Act demonstrate that a central premise of the statutory scheme is that the permit holder is an individual who will fish. Accordingly, the act prohibits permit holders from leasing their permits. [54] It also requires crew members to fish only in the presence of a permit holder who is actively engaged in the operation of the gear. [55] Moreover, the Act limits operation of gear to persons with valid entry permits, [56] while defining person as a natural person, excluding corporations, companies, partnerships, firms, associations, organizations, joint ventures, trusts, societies, or any other legal entity other than a natural person. [57] These provisions reinforce the point we explained in Johns v. Commercial Fisheries Entry Commission: [T]he legislature intended the number of permits initially issued to reflect actual use.... `The Act was designed to protect the reliance interests of all individuals using the fishery as well as aiding the dependent fishermen.' [58] 2. The cooperative fishery The board argues that nothing in the Limited Entry Act explicitly requires active participation in the fishery by Chignik co-op fishers. For example, it contends that although AS 16.43.140(a) requires gear operators to be permit holders, the statute does not require permit holders themselves to operate gear. With respect to statutes requiring transferees and interim use applicants to demonstrate a present ability to participate actively in the fishery, the board argues that the ability to participate differs from actual participation. [59] To read these provisions so restrictively, however, is to read permit requirements as though they are completely divorced from the permits themselves. Participation by the individual is inherent in the limited entry permit system. The Chignik cooperative fishery scheme is fundamentally at odds with this premise because it allows people who are not actually fishing to benefit from the fishery resource. That the statutes frequently refer to only the ability to participate actively in the fishery rather than actual participation is not unexpected because transferees and interim use permit applicants cannot actually participate in the fishery until permits are in fact issued. The board's argument that the Chignik co-op regulation itself does not prevent co-op fishers from participating actively is also unpersuasive. If every co-op fisher decided to fish, the stated goals of the regulation  reducing overhead costs and improving fish quality through controlled harvesting  would be defeated, and it would be as if no cooperative existed. Integral to the co-op regulation is an assumption that in practice not every individual co-op member will fish, as demonstrated in 2002 when only eighteen vessels fished on behalf of the seventy-seven members of the cooperative. Because the regulation allows co-op members to benefit and receive remuneration from the fishery without actual participation, it actually discourages active participation. The co-op system makes it possible for permit holders without gear or vessels to have someone else fish on their behalf, leaving them free to pursue other occupations. A member of the co-op, for example, theoretically can indirectly fish while holding down an office job or sitting at home because the regulation allows another co-op member to fish the absentee member's entire quota for him or her. The co-op fisher in this scenario sharply diverges from the model of the economically dependent fisher whom the Limited Entry Act was intended to protect. [60] In fact, many economically dependent fishers may suffer greater economic distress as a result of the cooperative fishery. Crew members, who depend on permit holders for employment, would also lose income because the cooperative fishery requires fewer vessels and fewer crew to take fish. [61] The working assumption since Alaska became a state has been that individuals operate Alaska's commercial salmon fisheries. The co-op regulation in contrast transforms the limited entry permit from what used to be a personal gear license into a mere ownership share in a cooperative organization. As the parties conceded at oral argument, if the Board of Fisheries can create this regulatory scheme for the Chignik fishery, it can do the same thing for every salmon fishery in Alaska. Before this regulatory scheme accomplishes such radical departure from the historical model of limited entry fisheries in Alaska and the spirit of the Limited Entry Act, however, we conclude that the legislature must first authorize the board to approve cooperative salmon fisheries. [62] The legislature might well conclude that it is necessary to amend the Limited Entry Act to allow the creation of cooperative fisheries, perhaps by the board if not by the CFEC, to advance the same purposes relied upon by the board in promulgating 5 AAC 15.359. But because it has not yet done so, we must hold that the regulation is invalid.
Because 5 AAC 15.359 conflicts with both the Limited Entry Act's definition of fishery and stated purposes, we need not reach Grunert's constitutional claims. We REVERSE the superior court's grant of summary judgment to the board and REMAND for further proceedings consistent with this opinion.