January 10, 2017 — SEAFOOD NEWS — The National Fisheries Institute, six major seafood companies, and two West Coast Associations sued the Obama Administration over the final US Rule regarding seafood import regulations in federal district court on Friday, Jan 6th.

The six company plaintiffs are Alfa International, Fortune Fish & Gourmet, Handy Seafood, Pacific Seafood Group, Trident Seafoods, and Libby Hill Seafood Restaurants.  Also the Pacific Seafood Processors Association and the West Coast Seafood Processors Association joined the lawsuit.

The Final rule was announced on December 9, 2016, and was the culmination of the regulations that were developed at the urging of the Presidential Task Force on Seafood Fraud.

The suit is unusual in that NFI was the leading advocate for action against seafood fraud over the past decade. However, NFI claims that the new rule is not based on a risk assessment with data about seafood fraud, but without evidence will impose enormous and unjustified costs on the American public and the seafood industry.

In a statement, John Connelly, President of NFI, said “The National Fisheries Institute (NFI) and our members have led industry efforts to combat both Illegal, Unregulated and Unreported (IUU) fishing and seafood fraud for the last decade.  NFI has supported most U.S. government efforts to eliminate illegal fishing and urged the government to do more to ensure accurate labeling.”

NFI began publicizing and working against seafood fraud more than a decade ago, focusing on the lack of any enforcement over seafood labeling regarding net weights and product integrity.  At the time, US buyers were being flooded with offers for seafood with glaze (protective ice coatings) of 20% to 40% of the total weight of the product, leading to a hugely misleading price per lb.

Also NFI worked with the FDA and NOAA on better enforcement of seafood labeling, including attacking mislabeling of species in commerce.  As a result of this pressure a number of states increased their enforcement of state labeling requirements on seafood.

Finally, NFI aggressively supported NOAA action against IUU fishing, including traceability requirements on species like toothfish, the signing of the UN Port State Measures Agreement, and the authority of NOAA to blacklist products from IUU vessels from entering the United States.

So why, after a decade of work, would NFI feel compelled to sue over the implementation of the Presidential Task Force rule, through NOAA, to combat seafood fraud.

The simple answer is that the Task Force refused to recognize the major ways in which fraud was already reduced, and would not accept a data driven approach to defining risk.

Instead, the Task force defined 13 species ‘at risk’ that were the target of enforcement under the act, without any verifiable documentation that seafood fraud was a significant problem with these species.

Connelly says in the rush to publish the rule, NOAA and the Obama administration refused to disclose the data used to craft it, and grossly miscalculated compliance costs.  The Office of Management and Budget made a back of the envelope calculation under the Paperwork Reduction Act that the cost to the industry would be $6.475 million, based on about 30 minutes additional work on each container.

The industry thinks costs could exceed $100 million per year, with a total economic impact on the seafood sector of as much as $1 billion.

The reason is that there is a total mismatch between the requirements in the rule and the way in which seafood is actually harvested, collected, processed and imported.

Connelly says NOAA “grossly underestimates the cost and impact of the regulation on those companies doing the right thing, and will not solve the problem. NOAA’s fundamental shift from targeted investigation of the suspected guilty to arbitrary and massive data collection from the innocent creates an enormous economic burden on American companies.”

One of the most glaring examples of the overreach is that in the Task Force, there was wide praise for the EU rule on traceability that requires exporters to the EU to certify the vessels from which the products originated.  But at the same time, the EU provides a wide exemption to countries that have sufficient internal fisheries management controls.  So for example, neither Norway, Iceland, the US, or New Zealand, for example, are subject to this requirement.

But NOAA’s rule makes no exemptions for the lower risk of fraud from countries where enforcement and management is at the highest standard.

The rule would apply to ten species of fish and the five species of tuna, or 15 commodities altogether.  The agency has deferred rule-making on shrimp and abalone.

The ten species are:  Atlantic Cod, Pacific Cod, Blue Crab, Red King Crab, Mahi Mahi, Grouper, Red Snapper, Sea Cucumber, Shark, and Swordfish.

In addition, Albacore, Bigeye, Skipjack, Yellowfin and Bluefin tuna are included.

The complaint filed by NFI says:

“According to the Government’s own studies, most mislabeling occurs after seafood has entered the United States and even though many U.S. importers subject imported seafood to DNA testing to preclude fraud at the border. The Rule would accomplish its goals by requiring that fish imported into the United States be traceable to the boat or to a single collection point, time, and place that the fish was caught, and that this information be entered into a master computer program operated by the Government.

“The Rule, were it to go into effect, would remake the way in which seafood is caught, processed and imported around the World. These changes to food processing practices in every nation would reduce exports into the United States and would dramatically increase the cost of catching, processing and importing seafood. Fishermen, many of whom are subsistence workers operating in Third World Nations, would have to keep track of each fish harvested, as would the brokers who purchase the seafood from the fisherman, and processors who handle catches from hundreds of fishermen would have to be able to trace each piece of fish to a specific vessel and specific fishing events or to a single collection point. This would require significant changes in the way fish are processed overseas. It would also affect the way in which fish are processed in the United States, because these requirements would also apply to all domestically caught or farmed seafood covered by the Rule that are shipped outside the U.S. for processing and re-imported back into the United States.”

If implemented the rule will drive up seafood prices and reduce consumption, the exact opposite of the advice to consumers from government health agencies.

Alfa Seafood says “The Rule would require processors in Ecuador and Peru, where most of Alfa’s seafood originates, to change the way in which fishermen or brokers document their catches and the way in which processors actually process these catches, so that fish imported into the United States can be traced to a particular fishing event or to a single collection point. This will add hundreds of thousands of dollars to Alfa Seafood’s cost of importing fish, assuming that the processors abroad are willing to modify the way in which they process fish.

Handy says they already use DNA testing for all their imports to ensure accuracy.  “If Handy’s processors modified their processing methods to segregate product by Aggregate Harvest Report and gathered the information required by the Rule, both the price of Blue Crab to Handy, as well as at retail, would increase by approximately 28%. The price of Grouper would increase by about 8% with a similar impact at retail.

Libby Hill restaurants says  “The Department’s Rule would force Libby Hill to charge more for many popular seafood menu items, thus hurting its business and driving customers to less healthy fast-food options. Further, because of the very real possibility that certain species under the Rule may become less available in the U.S. market, Libby Hill may have to contend with supply interruption that will make it more difficult to attract return customers expecting to be able to rely on the same menu from visit to visit. Because return customers are essential in the fast-casual category of the restaurant industry, such uncertainty could have a debilitating impact on Libby Hill’s business.”

The rule would require the following to be entered for each seafood entry subject to the regulations: