October 20, 2017 — SEAFOOD NEWS — What happens next with Carlos Rafael’s fishing permits for all 13 vessels, including those that were not forfeited under the courts order, will be determined in a civil proceeding by NOAA with an administrative law judge.

The criminal proceeding led to forfeit of 34 permits.  NOAA will have to address what will be done with these.  But the remaining nine vessels owned by Rafael have dozens, perhaps over 100 individual fishing permits.  If NOAA revokes these permits in an administrative proceeding, the value of the vessels themselves will fall substantially.

Prior precedent, and a full review of NOAA enforcement actions in 2012 by a Special Master, Charles Swartwood, suggests that NOAA is fully entitled to permanently revoke all fishing permits associated with the 13 vessels where Carlos Rafael has pled guilty to deliberately falsifying catch records.

Prior to Rafael, the largest fisheries fraud case in New England involved James and Peter Spalt.

In 1995 NOAA charged that the two brothers directed the illegal fishing on the five vessels they owned, purchased the illegally harvested fish and scallops through their fish dealership, and then continued to hide the illegal activity by routinely falsifying the mandatory reports they submitted to federal fisheries authorities.

Altogether six companies, five vessels and 12 individual vessel captains were involved in the scheme.

NOAA sought more than $5 million in civil penalties, and the complete revocation of all fish permits.  This was a civil case, without a criminal component.

The administrative law judge upheld a combined civil penalty of $4,325,000. and revoked the dealer permit of Cape Spray Fisheries, and ALL federal fishing permits of the five vessels involved in the scheme.

The Spalt brothers appealed the case to the NOAA administrator, who upheld the decision.

They then appealed to the US District Court, and his lawyers filed complaints that NOAA enforcement violated the Fourth, Fifth, and Ninth Amendments of the United States Constitution of Liberty Food Corporation, Cape Spray Fisheries, and James, Kristen, and Peter Spalt.

The case was finally settled prior to a final judgement by the US district attorney’s office in 1998.  The settlements stipulated first, that Atlantic Spray Corporation and Hudson Corporation would surrender all of their federal vessel permits and sell the vessels involved to pay a settlement.  A second settlement involving seizure of scallops stipulated that they also agreed to cease all federal and state fishing permits on all their corporations and vessels, including the latent permits owned by Albatross Corporation and Dutchman Corporation. The Spalts also relinquished their federal operator permits and must cease commercial fishing entirely in state and federal waters

The settlement did lead to a substantial reduction in the administrative fine, from NOAA’s final offer of $2.5 million to about $1.5 million, but NOAA’s proceeds from the sale of seized scallops were retained as well.

Thirty months after signing the Settlement Agreement, the Spalts requested to re-enter the federal fisheries. However, NOAA declined to grant the Spalts a federal operator’s permit. The Spalts later sought relief in the United States District Court concerning the above provision. In the end, the Court held that NOAA’s denial of the Spalt’s fishing permit applications did not violate the terms of the Settlement Agreement.

The validity of this enforcement action was reviewed as part of a thorough investigation into NOAA fisheries enforcement in the Northeast by the Dept. of Commerce in 2012.  The investigation involved the appointment of a special master, who reviewed all of NOAA’s enforcement actions in the Northeast.

In the review, the special master found a number of cases where NOAA unfairly pursued aggressive sanctions for fisheries violations, and also found that the enforcement branch operated what amounted to a slush fund with some of the fines and penalties assessed.

Yet in regards to the case against the Spaltz brothers, and in particular the full seizure of fishing permits and the denial of the right to get a federal fishing permit in the future, the special master found NOAA had acted appropriately.

He said “Based on an evaluation of the totality of the circumstances and evidence in this case, I cannot find by clear and convincing evidence that NOAA exercised broad and powerful enforcement authority that prejudiced the outcome, in any respect, or unfairly forced a settlement.“

The arguments by NOAA in this case were very similar to the arguments used against Rafael’s violations, in that the complete disregard for reporting and illegally taking species against a quota undermined the operations of the entire New England fishery.

The major difference between the 1990’s case and the case against Carlos Rafael is that a new management scheme is in place that allocates quota to specific coops and vessels.  This has resulted in a premium value on certain choke species so that when Rafael illegally misreported his take of these ‘choke’ species, he gained an economic advantage over other fishermen who were forced to cease fishing.

In the 1990’s, the damage was to the regulation of the entire fishery, but without reference to the economic harm the Spaltz’s illegal activity did to other harvesters.

On review, the full revocation of the permits in that case was upheld through various US court proceedings, NOAA administrative proceedings, and a review by a special master who investigated possible overreach by NOAA enforcement.  At no time did a competent authority assert that the full revocation of the fishing permits was excessive, undeserved, or without merit.

On balance, NOAA has a stronger case this time for a complete revocation of permits.  Once again, failure to do so under its administrative powers will cripple NOAA’s ability to enforce fishery management rules in New England.

This story original appeared on Seafood News, a subscription site. It is reprinted with permission.