ADMINISTRATIVE LAW--The Seafood Import Monitoring Program Upheld to Combat Nefarious Seafood Importers--Alfa Int'l Seafood v. Ross, 264 F. Supp. 3d 23 (D.D.C. 2017).
The Administrative Procedure Act (APA) controls the manner in which administrative agencies may recommend and initiate federal regulations, while also providing the judiciary supervision over all agency actions. (1) The Seafood Import Monitoring Program (SIM Program) regulates certain seafood products entering the United States from a foreign country with the goal of preventing seafood products derived from "illegal, unreported and unregulated (IUU) fishing" and seafood fraud from piercing into the U.S. commerce stream. (2) In Alfa Int'l Seafood v. Ross, (3) the United States District Court for the District of Columbia reviewed a challenge to the SIM Program to address, among other contentions, whether the Department of Commerce (DOC) violated the APA's "notice-and-comment" requirements and acted "arbitrarily and capriciously" in promulgating the SIM Program. (4) The Court rejected these as sertions, finding that the DOC withholding data did not violate the "notice-and-comment" requirement and were not "arbitrary and capricious" in the decisions they made because the DOC relied on sufficient data. (5)
The United States consumes "billions of pounds of seafood every year" with approximately 90% of it being imported, and historically, the United States has struggled to sufficiently regulate all this seafood breaching its borders. (6) On June 17, 2014, the "Presidential Task Force on Combating Illegal, Unreported, and Unregulated Fishing and Seafood Fraud" (Task Force) was initiated to design a plan to obstruct IUU fishing and seafood fraud through "implementing existing programs, and, if appropriate, developing new ... programs for seafood tracking and traceability." (7) Seafood obtained through IUU fishing has an international effect on public health, the economy, and the environment, and the SIM Program aims to prevent this conduct. (8) The other illicit act the SIM Program targets is seafood fraud, which involves substitution of species and mislabeling, each of which are methods used to deceive consumers of the seafood's type or origin in order to increase profits. (9)
The Task Force made fifteen recommendations, relevant to this case was the formation of a traceability program, an aspect of the SIM Program that requires seafood importers to document each step of the supply chain for the products they import into the United States. (10) The Task Force announced their strategy (Action Plan) by identifying the general requirements of their recommendations to execute their goal, which was published in the Federal Register prior to issuing the final version of the SIM Program. (11) The initial publication of the Action Plan requested the public to submit comments on what principles should be used to identify the "priority species" the SIM Program would apply to. (12) In the next publication, the DOC requested the public's input on what information the traceability program should target for documentation. (13) After receiving comments from the public, the final notice was publicized and included the compliance cost, implementation timeline, and principles used to classify the species the SIM Program would apply to, while also delivering a first draft of the "priority species" list those principles were used to pinpoint. (14) The final version of the SIM Program was published on December 9, 2016 and provided the final "priority species" list, along with a large increase in the cost estimates for compliance with the SIM Program. (15)
Three days prior to the SIM Program going into effect, numerous seafood harvesters, importers, processors, and purchasers based in the United States (Alfa) filed suit against the DOC, seeking to invalidate the SIM Program. (16) Alfa argued that the DOC violated the APA because the SIM Program was created through undisclosed data and founded on insufficient evidence, and therefore should be invalidated. (17) A motion for summary judgment was filed on behalf of Alfa on April 25, 2017, which was soon met with a cross-motion for summary judgment filed by their counterparts, the DOC. (18) The Court rejected each of Alfa's arguments, specifically finding that the DOC did not violate the "notice-and-comment" requirements of the APA and did not act in an "arbitrary and capricious" manner in formulating the SIM Program. (19)
Congress created the APA in response to federal agencies' rise in numbers under the New Deal, and their concern that these agencies can act with immense, unchecked authority affecting the publie. (20) An agency's rulemaking authority is subject to procedural and substantive requirements under the APA, which also allocates review of final agency actions to the courts. (21) Under the APA, the reviewing court must determine whether the administrative record corroborates the challenged agency action, "and due account shall be taken of the rule of prejudicial error." (22) The rule of prejudicial error (RPE) under the APA applies to both "the process as well as the result" of an agency's action, and requires the challenging party to demonstrate prejudice from the error. (23) Agency errors can be procedural, substantive, or a mixture of both, and courts have applied different standards to different types of agency errors, and no concrete guidelines exist, which leaves challenging parties unsure of how to establish their burden. (24) Procedural errors require courts to inspect the administrative record, substantive errors compel courts to analyze the final decision, and the combination of the two drive courts to evaluate whether the error had any influence on the process used or conclusion reached. (25)
A court may hold an agency rule unlawful after concluding it is "arbitrary and capricious," and the Supreme Court most clearly pronounced this standard in Motor Vehicle Mfrs.' Ass'n v. State Farm, (26) which requires courts to discover whether the challenged action was founded on "reasoned analysis." (27) Furthermore, the Supreme Court continued to explain that an "agency must examine the relevant data" and supply a "satisfactory explanation" for the rule; this explanation must illustrate a "rational connection between the facts found and the choice made." (28) This "reasoned analysis" and "satisfactory explanation" must come from the agency itself, and not supplied or replaced by the court reviewing the action; however, this requirement is not especially demanding. (29) The Supreme Court stated that an agency action will be unlawful under the "arbitrary and capricious" standard when the agency: (1) relied on factors that Congress had never anticipated it to contemplate; (2) failed to review a key feature of the problem; (3) produced a justification for the action that is contrary to the evidence they studied; or (4) offered an explanation that "is so implausible" that it could not be founded on their own expertise. (30)
In Alfa Int'l Seafood v. Ross, (31) Alfa pushed a "multifaceted attack," first arguing that the DOC deprived the public of "meaningful" comment on their rationale for creating the "priority species" list because they failed to disclose important data collected on each of the species the list incorporated. (32) Several D.C. Circuit cases state that unless exempt, an agency must disclose data to the public for comment if they rely on that data during the process of making a rule. (33) The DOC asserted that the "brief summaries" published in the Federal Register included the undisclosed data and also that the law enforcement privilege exempted it from being divulged, but the Court refused to adhere to either justification for withholding it from the public. (34) Although the Court found the DOC was obligated to disclose the data, the Court did not overturn the SIM Program because the APA incorporates the "rule of prejudicial error," and Alfa were unable to demonstrate prejudice resulting from the DOC's act. (35)
Next, the Court turned to Alfa's second argument to determine whether the DOC acted "arbitrarily and capriciously" in issuing the SIM Program because they relied on insufficient data and assumptions. (36) First, the Court concluded that the DOC provided plenty of evidence, including many academic and industry studies, to show that the SIM Program would facilitate in preventing IUU fishing and seafood fraud. (37) Then, the Court looked to the data the DOC reviewed to identify each species placed on the "priority species'" list, ultimately finding that the data was sufficient. (38) Next, contrary to Alfa's allegations, the Court found the DOC's compliance cost conclusions and assumptions were consistent with the study (Blomquist Study) they significantly rested their findings on. (39) Finally, the Court dismissed Alfa's last claim that the compliance date was "overly burdensome" because the DOC addressed this concern and provided a "rational explanation" for setting the date. (40) The DOC weathered Alfa's objections to the promulgation of the SIM Program, and the SIM Program was ultimately upheld after surviving all of the procedural and substantive challenges under the APA. (41)
In Alfa Int'l Seafood v. Ross, (42) the Court correctly upheld the SIM Program over Alfa's APA challenges to invalidate the SIM Program. (43) Additionally, during their analysis the Court briefly mentioned a troubling aspect of reviewing agency actions under the APA: the rule of prejudicial error (RPE). (44) Before the Court began its analysis of the case, they properly pointed out the different summary judgment standard under the APA when reviewing agency actions. (45) Determining the DOC had not acted "arbitrarily and capriciously," the Court accurately followed the clearest articulation of that standard provided in Motor Vehicle Mfrs.' Ass'n v. State Farm, (46) by only considering whether the SIM Program...