112 S. Ct. 1046, 1060 (1992). Rather, to reverse the decision, the Court must conclude that an alternative finding is compelled by the evidence. See INS v. Elias-Zacarias, 117 L. Ed. 2d 38, 112 S. Ct. 812, 815 & n.1 (1992).
Plaintiff sets forth six causes of action in his complaint,
but in substance they reduce to two issues: whether he violated the Act by interfering with an investigation, and whether the $ 10,000 penalty is justified. The Court addresses these issues in turn.
B. Interfering With Inspection
Plaintiff argues (1) that his conduct did not amount to interference, and (2) that, even if it did, there was no interference with an investigation in the process of enforcing the federal regulations pertaining to summer flounder (50 C.F.R. part 625).
Addressing the second argument first, the Court finds that it is without merit. Essentially, plaintiff claims that the USCG initially boarded the F/V MISS JEAN pursuant to authority deriving from a general inspection statute, 14 U.S.C. § 89(a), and that the subsequent investigation therefore was not in the process of enforcing part 625. However, he overlooks the fact that aboard the F/V MISS JEAN he had 250 pounds of summer flounder--a species regulated by 50 C.F.R. part 625--and that Eisenhuth, although a state inspector, also was deputized to ensure compliance with federal regulations. Plaintiff relies on testimony to the effect that Eisenhuth was only measuring the fish for compliance with state standards. See Tr. 8/30/90, at 46, 59 (Norton testifying that Eisenhuth was called to do the inspection because it was thought plaintiff had been fishing in state waters); id. at 144 (Eisenhuth testifying, "I proceeded to measure the fish for compliance with New Jersey law."); id. at 194 (plaintiff testifying that Eisenhuth was measuring for compliance with state standards); see also id. at 145 (Eisenhuth testifying that in May 1989 he did not believe summer flounder were subject to federal regulation). But Eisenhuth also testified, "When I do inspections, I look for state and federal violations." Id. 147. Also, as of October 1988, summer flounder were subject to federal regulation. See 53 Fed. Reg. 39477 (1988) (adopting regulations now appearing at 50 C.F.R. part 625). Moreover, plaintiff himself testified that someone, if not Eisenhuth, measured the flounder for compliance with federal regulations. Id. 194. Therefore, there is substantial evidence in the record, taken as a whole, to support the conclusion that at least one purpose of the investigation was to enforce federal part 625, the regulations pertaining to summer flounder.
Plaintiff also suggests that he cannot be liable for interfering with the investigation unless his outburst occurred while the object of the investigation was enforcement of the federal regulations. In plaintiff's view, the investigation should be broken down into discrete stages, e.g., investigation for compliance with safety regulations, investigation for compliance with federal size limits, and investigation for compliance with state size limits. There is no merit to this position, for the investigation must be considered as a totality. The USCG members testified that a boarding is not considered completed until a signed boarding report is given to the vessel master and the vessel is released. See Tr. 8/30/90, at 28-29, 123, 130-31, 133, 137, 138. Plaintiff did not receive the boarding report until after his outburst. Eisenhuth testified that at the time of the outburst he "was still in the process of measuring the fish and also [he] still wanted to talk with the Coast Guard personnel as to their earlier observations to complete [his] investigation." Id. 145.
The real issue, then, is whether there is substantial evidence to support the ALJ's conclusion that plaintiff's conduct amounted to interference with the investigation. The Court finds that there is. As stated in a leading case, affirmed by the Third Circuit,
The policeman's lot may not be a happy one, but it may not be made more miserable by hysterical and threatening outbursts, particularly when reasonable and legitimate inquiries are made.
In re Gosta (Swede) Lovgren, 3 Ocean Resources and Wildlife Reptr. (hereafter "ORW") 431, -- (NOAA 1984) (1984 NOAA LEXIS 87, *15), pet'n for rev. denied, 3 O.R.W. 564 (NOAA App. 1984), aff'd, Civ. No. 84-2436 (MTB) (D.N.J. Jan. 24, 1985), aff'd, 787 F.2d 857 (3d Cir. 1986); see also In re Hedger, 5 O.R.W. 478, -- (NOAA 1989) (1989 NOAA LEXIS 10, *16) ("It is not appropriate for citizens to harass, threaten, or intimidate those who enforce the law."); see, e.g., In re Goldman, 6 O.R.W. 413 (NOAA 1991) (1991 NOAA LEXIS 23); In re Silva, 6 O.R.W. 404 (NOAA 1991) (1991 NOAA LEXIS 22); In re Hedger, 5 O.R.W. 478 (NOAA 1989) (1989 NOAA LEXIS 10); In re Picciandra, 4 O.R.W. 456 (NOAA 1985) (1985 NOAA LEXIS 5), pet'n for review denied, 4 O.R.W. 514 (NOAA App. 1985). The question whether Diehl's conduct interfered with, obstructed, or delayed the investigation is one of fact. There was ample testimony, summarized above at pages 3 and 5, about the nature and effect of plaintiff's conduct, e.g., that it was rude, belligerent, threatening, and distracting. The USCG and fisheries personnel have important, often difficult, and sometimes dangerous duties to perfom in the national interest. Masters of vessels cannot be allowed to interfere with inspections with threats and intimidation. Plaintiff's statements and actions caused stress and apprehension of violence and interfered with a lawful inspection. Thus, the Court will affirm the ALJ's finding that plaintiff violated the law and was subject to penalty.
C. The $ 10,000 Penalty
In reviewing the penalty imposed on plaintiff, the Court applies an abuse of discretion standard. Lovgren, 787 F.2d at 867. Under this standard, the amount of the penalty "will not be disturbed unless there is a definite and firm conviction that the [ALJ] committed a clear error of judgment in the conclusion [he] reached upon a weighing of the relevant factors." Ferrero U.S.A., Inc. v. Ozak Trading, Inc., 952 F.2d 44, 48 (3d Cir. 1991) (internal punctuation and citations omitted). Congress has authorized fines of up to $ 100,000 for each violation of the Act.
The Act provides that in determining the amount of a penalty, the decisionmaker "shall take into account the nature, circumstances, extent, gravity of the prohibited acts committed and, with respect to the violator, the degree of culpability, any history of prior offenses, ability to pay, and such other matters as justice may require." 16 U.S.C. § 1858(a) (emphases added).
Plaintiff argues that the ALJ erred by not considering plaintiff's ability to pay a $ 10,000 fine. Plaintiff asserts that he reserved the issue in his PPIP and that the A should have taken further evidence after the finding of liability, or at least have given notice before the hearing that he would not consider evidence submitted after the hearing on liability. The agency argues that plaintiff had the burden of establishing financial inability to pay the fine, and if he intended to have this factor considered he was required to submit the financial information in the PPIP.
The regulations support the agency's position.
However, the regulations may not be contrary to the Act, and to the extent that they place on plaintiff the burden of going forward with evidence of inability to pay, as set forth below the Court finds that they are contrary to Congress's unmistakable command that the agency bears the burden. See 5 U.S.C. § 556(d). Moreover, to the extent that the ALJ had before him no evidence on plaintiff's financial ability to pay the penalty, his determination of the penalty could not have complied with the Act, which directs that he "shall take into account" that factor. 16 U.S.C. § 1858(a).
The Act states that hearings on charges of civil violations must comply with section five of the Administrative Procedure Act ("APA"), 5 U.S.C. § 554. Section 554 applies, with a few minor exceptions not applicable here, "in every case of adjudication required by statute to be determined on the record after opportunity for an agency hearing . . . ." 5 U.S.C. § 554(a).
Where the parties are unable to settle a controversy by consent, all interested parties are entitled to a hearing and decision in accordance with APA sections 556 and 557. Id. § 554(c)(2). Section 556 provides in part, "Except as otherwise provided by statute, the proponent of a rule or order has the burden of proof." Id. § 556(d). Because the Act does not create an exception to this scheme, it was the agency, not plaintiff, who had to come forward with evidence of plaintiff's ability to pay a fine. See Merritt v. United States, 960 F.2d 15, 18 (2d Cir. 1992); Bosma v. United States Dep't of Agric., 754 F.2d 804, 810 (9th Cir. 1984). The agency failed to meet its burden, as the ALJ recognized in his initial decision, where he noted, "The record contains no substantive information respecting the Respondent's ability to pay." Ex. 32, at 6.
In light of the ALJ's own assessment of the record before him, the Court concludes that he could not have considered plaintiff's ability to pay the penalty, notwithstanding the ALJ's recitation that he did consider this necessary factor. See id., at 6-7 ("Having taken into account . . . [plaintiff's] ability to pay . . ., I conclude that a civil penalty of $ 10,000 is appropriate."). Because the Act states that a person's ability to pay "shall" be considered in fixing the penalty, the Court finds that the $ 10,000 penalty amount is arbitrary and capricious and must be set aside.
See Frisby v. United States Dep't of Hous. & Urban Dev., 755 F.2d 1052, 1055 (3d Cir. 1985); see also Shane Meat Co. v. United States Dep't of Defense, 800 F.2d 334, 339 (3d Cir. 1986).
The Court does not approve of plaintiff's counsel's attempt to bifurcate the administrative proceeding. Counsel was well aware of the ordinary conduct of NOAA hearings; his November 2, 1989, PPIP refers to 15 C.F.R. § 904.108. Nonetheless, these tactics do not relieve the agency of its burden of proof. As the Second Circuit recently stated, "[The statute] makes clear that the [agency] must consider ability to pay before it imposes a fine. It makes no exception for defendants who refuse to cooperate with the [agency]." Merritt, 960 F.2d at 18." In addition, both the agency and the ALJ have means to prevent this kind of problem. If a respondent refuses to provide financial information, the agency may seek to compel its production, and the ALJ may, in addition to ordering the respondent to produce the information, issue an order to show cause why the respondent should not be barred from asserting financial hardship. See 15 C.F.R. §§ 904.212(i); 904.212, 904.240(a), 904.244(a). Such steps are preferable to those taken here, i.e., not to acknowledge plaintiff's reservation of the financial inability issue and then to rule, after the close of the record, that such reservation would not be allowed.
To be sure, a respondent should not be permitted to dictate when the agency record will close. See Merritt, 960 F.2d at 18 (citing ICC v. Jersey City, 322 U.S. 503, 514-15, 88 L. Ed. 1420, 64 S. Ct. 1129 (1944)). Thus, the Second Circuit found in Merritt that the respondent--who refused to cooperate with the agency, attempted to delay the administrative proceedings, and waited until after the close of the record before requesting a hearing on ability to pay--was not, on remand, entitled to a hearing on the issue. Here, where plaintiff attempted to reserve his right to a hearing on ability to pay and cooperated in all other respects with the agency during the hearing process, it is no injustice to the agency to require a hearing on the ability to pay question. Therefore, the Court will remand the matter for redetermination of the penalty.
For the foregoing reasons, It is this 15th day of July, 1993,
ORDERED that plaintiff's motion to dismiss the counterclaim for payment of the $ 10,000 penalty be and is hereby GRANTED; and it is
FURTHER ORDERED that defendant's motion for summary judgment be and is hereby DENIED with respect to defendant's counterclaim, DENIED with respect to counts one (insofar as it concerns the amount of the penalty), two, three, and six of plaintiff's complaint, and GRANTED with respect to counts one (insofar as it concerns the finding of liability) and five of plaintiff's complaint; and it is
FURTHER ORDERED pursuant to 16 U.S.C. § 1858(b) that the finding that plaintiff interfered with a lawful investigation under the Magnuson Act be and is hereby AFFIRMED but the assessment of the $ 10,000 civil penalty be and is hereby VACATED AND REMANDED for a hearing and reassessment not inconsistent with this Memorandum and Order.
GARRETT E. BROWN, JR., U.S.D.J.