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United States of America v. Thomas Reeves Todd Reeves

July 3, 2012

UNITED STATES OF AMERICA
v.
THOMAS REEVES TODD REEVES RENEE REEVES SHELLROCK, LLC KENNETH W. BAILEY MARK BRYAN PAMELA MELONEY HARBOR HOUSE, INC., DEFENDANTS.



The opinion of the court was delivered by: Simandle, Chief Judge:

OPINION

I. INTRODUCTION

Under the Lacey Act, 16 U.S.C. §§ 3371-3378, Congress has provided for federal criminal penalties premised upon the violation of various state, tribal, foreign and federal fish and wildlife protection laws. It is, for example, a federal crime to knowingly sell or purchase, in interstate commerce, fish or wildlife that has been taken "in violation of any law or regulation of any State," 16 U.S.C. § 3372(a)(2)(A). The indictment herein charges, among other things, that several defendants violated § 3372(a)(2)(A) by buying or selling or transporting oysters in interstate commerce that had been taken, possessed or transported in violation of the laws and regulations of New Jersey because "the oysters were not reported as required, and were in excess of the amount authorized to be harvested and landed" under New Jersey law and regulations. See Indictment, Counts III, V, XII and XIV.

This matter, presently on trial upon a 15-count indictment, is before the Court on the government's request for a determination of law. [Docket Item 198.] The government asks the court to conclude as a matter of law that the oyster harvest conditions set annually by the New Jersey Department of Environmental Protection ("DEP") during the years 2004-2007 constituted a state "law or regulation" under 16 U.S.C. § 3372(a)(2)(A) of the Lacey Act. The government argues that violations of these harvest conditions requiring oyster harvesters to comply with the oyster quota, make daily call-ins and maintain a weekly Harvest Log are sufficient to serve as a basis for Counts III, V, XII and XIV which charge the Defendants with trafficking violations under the Lacey Act.

Defendant Thomas Reeves, joined by the other Defendants charged in those Lacey Act trafficking counts, filed opposition to this motion and argues that the oyster permit Terms and Conditions set by the DEP in the years at issue, 2004 to 2007, did not constitute a state "law or regulation" for purposes of the Lacey Act. [Docket Item 202.] Specifically, Defendant Reeves argues that, contrary to New Jersey law, these conditions were not passed in accordance with New Jersey's Administrative Procedure Act, N.J.S.A. 52:14B-2(e) and therefore are not considered valid rules or regulations, and the violation of an oyster permit Term and Condition that is not in a New Jersey law or regulation cannot serve as a predicate for a Lacey Act trafficking crime.

For the reasons discussed herein, the court determines that the oyster license harvesting conditions for seed bed quotas, daily call-in and weekly vessel logs set annually by the DEP from 2004 to 2007 and attached as "Terms and Conditions" of the oyster license agreements of 2004-2007 should have been, but were not, adopted as laws or regulations of the State of New Jersey*fn1 and therefore their violation cannot serve as a basis for the Lacey Act trafficking crimes charged in Counts III, V, XII and XIV.

II. BACKGROUND

The instant criminal action involves charges of conspiracy and substantive violations of the Lacey Act trafficking and record keeping requirements, as well as obstruction of justice, concerning commercial oystering in New Jersey's Delaware Bay and the interstate sale and transportation of such oysters. These charges are largely based on the alleged over-harvesting of oysters and falsification of records regarding oysters sales by harvesters and dealers. Multiple Defendants are charged including Thomas Reeves, Todd Reeves, Renee Reeves, Shellrock, LLC, Kenneth W. Bailey, Mark Bryan, Pamela Meloney and Harbor House, Inc., except that Bailey is not charged with conspiracy.

As relevant to the present motion, Count III charges Defendants Thomas Reeves, Todd Reeves, Shellrock, LLC, Mark Bryan and Harbor House, Inc. with violating 16 U.S.C. § 3372(a)(2)(A) and 3373(d)(1)(B) of the Lacey Act from August 2, 2006 through on or about October 9, 2006 in the District of New Jersey, and aiding and abetting this crime under 18 U.S.C. § 2. The charging language specifically states that these defendants trafficked fish or wildlife "in a manner unlawful under the laws and regulations of New Jersey." The Indictment incorporates the following New Jersey statutes: N.J.S.A. §§ 50:1-5; 50:3-8; 50:3-16.13; 50:3-16-14 and 50:3-16-21; 8:13-1.1. The Indictment also incorporates the following administrative code provisions: N.J. Admin. Code §§ 7:25A-1.9; 7:25A-4.4 and 7:25A-4.5.

Similarly, Count V charges the same defendants with the identical Lacey Act trafficking violation from April 19, 2007 through on or about October 4, 2007. Counts XII and XIV charge Defendant Kenneth Bailey with violating the Lacey Act by trafficking fish or wildlife "in a manner unlawful under the laws and regulations of New Jersey" from August 2, 2006 through November 2, 2006 and April 24, 2007 through October 24, 2007 respectively. These counts also incorporate the same New Jersey statutes and provisions of the administrative code as articulated above.

III. DISCUSSION

Section 3372(a)(2)(A) of the Lacey Act provides:

(a) Offenses other than marking offenses. It is unlawful for any person-- ...

(2) to import, export, transport, sell, receive, acquire, or purchase in interstate or foreign commerce--

(A) any fish or wildlife taken, possessed, transported, or sold in violation of any law or regulation of any State or in violation of any foreign law;

The narrow issue presented for determination is whether a violation of the Terms and Conditions of a defendant's seasonal oystering permit, issued by the DEP during the years 2004 through 2007, is a "violation of any law or regulation" of New Jersey, as defined in 16 U.S.C. § 3372(a)(2)(A). The three specific Terms and Conditions at issue are: the annual quota imposed upon each licensee for harvesting seed bed oysters (i.e., the "quota" term); the requirement to call in to the local DEP office to report the daily seed bed catch for that vessel (the "call-in" requirement); and the requirement to maintain a weekly vessel log of seed bed oysters harvested by that vessel (the "weekly vessel log" requirement).

A. The New Jersey Program Managing the State's Oyster Seed

Beds, 2004-2007

A brief word about the context of these Terms and Conditions is necessary. As discussed further below, the State of New Jersey empowers the Commissioner of the Department of Environmental Protection ("DEP") to control and direct the shellfish industry and protect the shellfish resource throughout the state. N.J.S.A. 50:1-5. The Commissioner is empowered to make such rules and regulations as may be necessary for the preservation of the shellfish industry and resources after consultation with the Shell Fisheries Council. Id. The Legislature has set forth that it is only lawful to catch and take oysters in certain portions of the Delaware Bay upon compliance with Title 50 "and any rules and regulations issued pursuant thereto. " N.J.S.A. 50:3-16.3. By statute, no person may catch oysters from the natural shellfish beds unless the Shellfish Council has issued an annual license for taking shellfish for each vessel so employed, for a term of not more than one year and containing an agreement by the license holder to abide by three statutorily enumerated terms, namely permitting inspections of the vessel and shellfish, delivering a portion of oyster shells to the Shellfish Council, and payment of a fee to the state representing the value of oyster shells sold to persons not required to be licensed, N.J.S.A. 50:3-16.14(a),(b),(c); none of these statutory conditions upon the annual license agreement is at issue here.

During the years in question in this case, 2004 to 2007, the DEP operated under rather detailed regulations for oyster management promulgated at N.J.A.C. § 7:25A-1.1 through 1.10 (2005), and in particular N.J.A.C. § 7:25A-1.9 pertaining to harvesting oysters from the state's oyster seed beds. The oyster seed bed regulations at 7:25A-1.9(a) state:

(a) The Division [of Fish and Wildlife of the DEP] with the advice of the Delaware Bay Section of the Shellfisheries Council and the Haskin Shellfish Research Laboratory of Rutgers University, shall determine the season for the taking of seed oysters from the natural seed beds above the southwest line in Delaware Bay and shall determine which of the natural seed beds above the southwest line shall be opened. Reasonable notice shall be given by the Division to all oyster dredge boat license holders of the dates of the beds to be opened and the conditions attendant on the opening. Oyster seed beds shall be closed as determined in accordance with 9(i) below [based on weekly testing of seed bed areas]. Daily harvest shall be from 7:00 AM to 3:30 PM Monday through Friday.

Although none of the applicable statutes or regulations establish a quota on seed bed harvests, the DEP relies on the Delaware Bay section of the Shell Fisheries Council, in consultation with the Haskin Shellfish Research Laboratory, to make annual recommendations of the total quota for harvesting oysters from the state seed beds. The Delaware Bay Section is comprised of five commissioners who are members of the shellfish industry and who meet approximately eight times each year in public meetings with Division of Fish and Wildlife officials. The DEP sets the annual quota, though not by regulation nor with general notice or publication, and that quota figure is divided by the number of licensed oyster dredge vessels which intend to participate in the open season of seed bed oyster harvesting. The resulting quota is the same for each vessel, determined each year and subject to change as conditions warrant.

The oyster vessel owners then must sign a Statement of Understanding and Agreement to Terms for the annual direct market harvest season, containing terms and conditions upon the vessel's participation. For example, Defendant Todd Reeves signed his Statement of Understanding and Agreement to Terms for the 2007 season with the Division of Fish and Wildlife (Exhibit G-17)(the "Agreement"), prior to the start of the 2007 oystering season. This Agreement acknowledges that the Division set a total season quota of 79,026 bushels of oysters and that the quota per licensed vessel was 1,040 bushels. Id. at ¶ 1.5. This oystering quota is one of the terms and conditions Reeves is accused of violating by exceeding the quota for the season.

Another disputed requirement is the term in ¶ 1.13 of the Agreement, requiring the oyster harvester to place two calls to the Division's office when harvesting seed bed oysters. The first call is prior to the workday reporting the name of the vessel and the seed bed area where the vessel intends to harvest oysters. The second call is at the end of the harvest day, to report the vessel's name, harvest location, quantity of oysters harvested, landing area and approximate time the oysters are to be landed. Agreement ¶ 1.13. Reeves is accused of violating the call-in term by underreporting the actual quantity of seed bed oysters harvested.

A third disputed term refers to the filing of weekly harvester reports. The Agreement provides in ¶ 1.13, in relevant part: "Pursuant to the oyster management regulations (N.J.A.C. 7:25A-4.5), harvest reports must be submitted on forms required by the Bureau." Agreement ¶ 1.13. The cross-reference to N.J.A.C. 7:25A-4.5, however, is a regulation mandating dealers, not harvesters, to supply to the Bureau of Shellfisheries weekly oyster landing reports. N.J.A.C. 7:25A-4.5(a). Thus the dealer must keep a log of all oysters received that were harvested from the Delaware Bay, noting the date, time, vessel license number and quantity of bushels received, according to N.J.A.C. 7:25A-4.5(b).*fn2 The dealer sends the completed form to the Bureau of Shellfisheries at the end of each week. Id. at 4.5(c). It is not apparent that the terms and conditions of the Agreement require an oyster harvester to submit weekly harvest reports, but the dealer who receives that harvest must submit weekly reports covering all Delaware Bay oysters received. In any event, the government concedes that the Agreement's cross-reference to N.J.A.C. 7:25A-4.5(b) is inapt, but it urges nonetheless that the above-quoted statement in Agreement ¶ 1.13 has the force of a regulation requiring each oystering vessel's weekly catch to be reported on a weekly vessel log on a form furnished by the Bureau. The government alleges that several defendants trafficked in oysters that were harvested in violation of the weekly vessel report requirement because the reports submitted to the state with regard to these oysters were allegedly false.

Against this background, the court will examine the meaning of the Lacey Act's phrase "in violation of any law or regulation of any State" (Part III.B), and then analyze the law of New Jersey with respect to the authority of the DEP to promulgate regulations (Part III.C). The court will then determine whether the terms and conditions in dispute were required to be promulgated pursuant to the New Jersey Administrative Procedure Act (Part III.C.1), and whether these terms and conditions can be inferred from existing state regulations (Part III.C.2), and whether their adoption was in substantial compliance with the New Jersey APA (Parts III.C.3 and III.C.4). Then the Court will determine whether the Defendants' challenge to these terms and conditions is barred by the New jersey APA's one-year statute of limitations. (Part III.C.5).

B. Necessity for a valid predicate offense under state law

The United States Supreme Court in United States v. Howard, 352 U.S. 212 (1957), provided a framework for a court to analyze what constitutes a "law or regulation" for purposes of the Black Bass Act, the predecessor to the Lacey Act. As briefed by the parties, Howard remains relevant to analyze the meaning of "law or regulation" under the Lacey Act and will serve as a basis for this court's discussion.

In Howard, the Supreme Court held that rules included in the Florida Game and Fresh Water Fish Commission was sufficient to constitute the "laws of Florida" under the Black Bass Act and serve as a basis for criminal prosecution. Id. at 214. In reaching its conclusion, the Supreme Court looked to the procedural requirements of Florida to determine whether the rules of the Game Commission were part of the laws, regulations or rules of the State. In particular, the Supreme Court found that the rules of the Gaming Commission complied with the procedural requirements dictated under the relevant Florida rulemaking statute. These requirements provided that no regulation was effective until 30 days after the filing of a certified copy of the provisions with the secretary of state, the regulation be published in each county in a newspaper of general circulation, and the Commission compile its rules in a code book which was circulated without cost to all county judges and principal sporting goods and license dealers. Id. at 217. Public hearings were also conducted to give interested parties an opportunity to discuss their views on proposed changes in the rules. Id. at 217-18. Also, the court noted that these rules were enforceable as a misdemeanor under another pertinent Florida statute. Id. at 215. Therefore, the Supreme Court found that rules of the Gaming Commission, passed in compliance with the procedures set forth in the Florida statute for promulgating such rules and enforceable by Florida statute as a misdemeanor, were part of the "laws of Florida" as encompassed in the Black Bass Act.

The government's central argument is that the Terms and Conditions to the annual New Jersey oystering license agreement can serve as a predicate for a Lacey Act violation even if these Terms and Conditions are not promulgated as laws or regulations under New Jersey state law.*fn3 In support of this argument, the government cites a multitude of cases which actually undermine its central legal theory. First, the government relies on one case which interpreted the statutory language of the Lacey Act at issue in this case, specifically the phrase "in violation of any law or regulation of any State." United States v. Borden, 10 F.3d 1058 (4th Cir. 1993). In Borden, the Fourth Circuit determined that the applicable statute of limitations for a Lacey Act charge predicated on a violation of a state statute is the federal "catchall" statute of limitations in 18 U.S.C. § 3282 rather than the statute of limitations which would apply under state law. Id. at 1060. In particular, the Fourth Circuit noted that the Lacey Act "incorporates the substantive elements of state law in describing a distinct federal offense, but it is not designed to incorporate state procedural law." Id. at 1062. The Fourth Circuit reasoned that statutes of limitations are procedural in nature and that the Lacey Act does not state "that a viable or prosecutable state law violation is necessary to support federal charges." Id. Importantly, the Fourth Circuit reasoned that "[b]ecause the running of the statute of limitations does not change the fact that [the defendant] violated state law by acquiring, possessing, transporting and selling mussel shells, it cannot relieve [the defendant] of criminal liability under the Lacey Act." Id.

Contrary to the government's argument, Borden does not stand for the proposition that an invalid state law can serve as a predicate for a Lacey Act violation. In Borden, there was no dispute that the statute at issue was valid and enforceable. The only issue was whether the state's one-year statute of limitations applied or whether the federal five-year statute of limitations applied to the Lacey Act prosecution. While the Fourth Circuit emphasized that the procedural requirements attendant to a state statute, such as the statute of limitations, are not incorporated into the Lacey Act, this reasoning cannot be stretched to support the government's argument that an invalid regulation that was not passed in accordance with the laws of the state can serve as a Lacey Act predicate.

Importantly, the statute of limitations in Borden did not change the fact that the defendant violated the state law when he engaged in the alleged conduct. Indeed, the Fourth Circuit in Borden emphasized that the substantive elements of the state law are incorporated into the Lacey Act. It necessarily follows that without a valid substantive state law, there would be no basis for a Lacey Act charge.

Next, the government relies on numerous cases which deal with foreign law as a predicate for a Lacey Act violation. In each of these cases, it was not disputed that the predicate for the Lacey Act violation was in fact a law or regulation and the deciding court looked to the foreign forum to interpret the substantive elements and scope of the foreign law or regulation at issue. See United States v. 594,464 Pounds of Salmon, more or less, 871 F.2d 824 (9th Cir. 1989)(holding a Taiwanese regulation constitutes "foreign law" under the Lacey Act and can serve as a predicate for a forfeiture action under the Lacey Act); United States v. Lee, 937 F.2d 1388 (9th Cir. 1998)(finding a Taiwanese regulation constitutes "foreign law" under the Lacey Act and can serve as a predicate for a criminal prosecution under the Lacey Act); United States v. Molt, 599 F.2d 1217 (3d Cir. 1979)(looking to legal experts from Fiji and Papa New Guinea to determine whether the foreign law related to the protection of wildlife). The court first notes that the Ninth Circuit cases relied on by the government are ...


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