Federated States of Micronesia v Katzutoku Maru [2008] FMSC 20; 15 FSM Intrm. 503 (Pon. 2008) (6 February 2008)

FSM SUPREME COURT TRIAL DIVISION
CIVIL ACTION. NO. 2004-053

FEDERATED STATES OF MICRONESIA,
Plaintiff,

vs.

KATZUTOKU MARU, a fishing vessel,
and HAGIWARA KENJI,
Defendants.
__________________________________________

ORDER ASSESSING CIVIL PENALTIES AND DIRECTING CLERK TO ENTER JUDGMENT

Andon L. Amaraich
Chief Justice

Hearing: December 12, 2007
Decided: February 6, 2008

APPEARANCES:

For the Plaintiff: Pole Atanraoi, Esq.
FSM Assistant Attorney General
P.O. Box PS-105
Palikir, Pohnpei FM 96941

For the Defendants: Joseph S. Phillip, Esq.
P.O. Box 464
Kolonia, Pohnpei FM 96941

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HEADNOTES

Marine Resources

Before NORMA issues a fishing permit, it performs a review of various items, including, among other things, the country of registration of the vessel, insurance status, and court cases against the vessel. FSM v. Katzutoku Maru, [2008] FMSC 20; 15 FSM Intrm. 503, 505 (Pon. 2008).

Marine Resources

The Marine Resources Act of 2002, requires the court to take into account several factors when assessing civil penalties for illegal fishing. These factors include the degree of culpability, any history of prior offenses, whether there are multiple violations which together constitute a serious disregard of conservation and management measures and such other matters as justice may require. 24 F.S.M.C. 901(2) sets a minimum civil penalty of $100,000 per violation and a maximum civil penalty of $1,000,000 per violation. FSM v. Katzutoku Maru, [2008] FMSC 20; 15 FSM Intrm. 503, 506, 507 (Pon. 2008).

Marine Resources

When, although NORMA informed defendant's local agent that it would not issue a permit on August 17th, there is no evidence defendant's local agent communicated that information to defendant before defendant commenced fishing on August 18th, the defendant's degree of culpability does not warrant imposition of a civil penalty in the amount of $500,000, but the defendant should not have been fishing under the false and uninformed presumption that NORMA would issue the permit on August 17th so the defendant should be required to pay more than the minimum civil penalty. And when the defendant has no history of prior offenses and when the defendant did commit three separate violations by fishing without a permit for three consecutive days, but it appears that the defendant may simply have commenced fishing under the false and uninformed belief that NORMA, as in the past, would issue the permit on the requested preferred effective date, August 17th, and that defendant stopped fishing on August 20th when he found out the permit had not issued, the court determines that $400,000 is the appropriate civil penalty to apply. FSM v. Katzutoku Maru, [2008] FMSC 20; 15 FSM Intrm. 503, 507 (Pon. 2008).

Marine Resources

The FSM is entitled to the proceeds of the sale of fish caught during defendant's illegal fishing activities. FSM v. Katzutoku Maru, [2008] FMSC 20; 15 FSM Intrm. 503, 507 (Pon. 2008).

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COURT'S OPINION

ANDON L. AMARAICH, Chief Justice:

I. Introduction

By its order dated October 23, 2007, the Court granted summary judgment in favor of plaintiff and determined that, pursuant to 24 F.S.M.C. 901(2), defendant Kenji committed a separate violation of section 907(1) for each day he engaged in commercial fishing without a valid fishing permit, for three violations in total. In that order, the Court refrained from determining the amount of civil penalties because the parties had not addressed the factors the Court was required under the Marine Resources Act of 2002 to consider in determining the amount of civil penalties. [FSM v. Katzutoku Maru, [2007] FMSC 65; 15 FSM Intrm. 400, 405 (Pon. 2007).] This matter then came on for hearing on December 19, 2007 at 9:00 a.m., during which the Court heard the parties' arguments regarding the amount of civil penalties for defendant's violations of the Marine Resources Act of 2002. For the reasons that follow, the Court assesses civil penalties against defendant Kenji in the amount of $400,000. The Court also determines that plaintiff is entitled to any proceeds that resulted from the sale of the fish caught during defendant's illegal fishing on the dates at issue in this matter.

II. Factual Background

Neither of the parties offered any new evidence, either by filing with the Court or by calling any witnesses to testify during the December 19, 2007 hearing, after the Court granted summary judgment on October 23, 2007. Thus, the Court relies on the findings of fact contained in its October 23, 2007 order granting summary judgment. These findings of fact, in turn, were based on the facts set forth in the parties' June 19, 2007 stipulation. For convenience, these findings of fact are set forth again as follows:

The National Oceanic Resources Management Authority ("NORMA") is responsible for issuing fishing permits allowing vessels to engage in fishing operations in the FSM Exclusive Economic Zone. Before NORMA issues a permit, it performs a review of various items, including, among other things, the country of registration of the vessel, insurance status, and court cases against the vessel. At all relevant times, there was in place between NORMA and the Japan Fisheries Association a fishing agreement which established, among other things, the number of permits NORMA would grant to members of the Japan Fisheries Association. Another fishing agreement was in place between NORMA and Pacific Fisheries Service a/k/a Pacific Foods & Services during the period September 3, 2003 to September 3, 2004. That agreement allowed Pacific Fisheries Service to be the local agent for up to nine fishing vessels having permits issued by NORMA.

On October 21, 2003, NORMA issued a fishing permit in the name of "Kenji Hagiwara" for the vessel Katzutoku 1 for the period October 21, 2003 through January 20, 2004. Defendants' local agent during that period was Pacific Fisheries Service. After the expiration of that permit, defendants changed their local agent to the FSM National Fisheries Corporation. On May 12, 2004, NORMA issued another fishing permit in the name of "Hagiwara, Kenji" for the vessel Katzutoku 1 for the period May 12, 2004 through August 11, 2004.

Defendants subsequently changed their local agent back to Pacific Fisheries Service. On August 16, 2004, defendants, acting through Pacific Fisheries Service, submitted to NORMA an application for a third fishing permit. NORMA received the application on August 16, 2004. Defendants' application requested that the permit have a "preferred effective date" of August 17, 2004.

On August 17, 2004  one day after it received defendants' application  NORMA orally informed defendants' local agent that the fishing permit would not immediately issue due to the objection of Kinkatsukyo a/k/a National Offshore Tuna Fisheries Association, a member of the Japan Fisheries Association. The reason Kinkatsukyo objected to issuance of the permit was that the Katzutoku 1 was already listed on Kinkatsukyo's longline registration list for August 10, 2004 through August 9, 2005. NORMA, therefore, held off on issuing the permit to defendants out of concern that doing so would breach its agreement with the Japan Fisheries Association, of which Kinkatsukyo was a member.

Defendant Kenji  without an effective fishing permit  engaged in fishing operations, using the Katzutoku 1, within the FSM Exclusive Economic Zone on August 18th, 19th, and 20th, 2004. By letter dated August 24, 2004, NORMA informed defendants' local agent that the Katzutoku 1 was registered under the Japan Fisheries Associations and that NORMA would need to confer with the Japan Fisheries Association to determine whether issuing a permit to defendants would violate the agreement between NORMA and the Japan Fisheries Association. On August 25, 2004, Kinkatsukyo, informed NORMA that it no longer objected to issuance of the permit to defendants. NORMA issued the fishing permit in the name of "Hagiwara, Kenji" for the vessel Katzutoku 1 on August 27, 2004.

Plaintiff filed the present action against defendants on September 8, 2004.

III. The Marine Resources Act of 2002

The Marine Resources Act of 2002, at 24 F.S.M.C. 901(3), requires the Court to take into account several factors when assessing civil penalties for illegal fishing. These factors include "the degree of culpability, any history of prior offenses, whether there are multiple violations which together constitute a serious disregard of conservation and management measures and such other matters as justice may require." 24 F.S.M.C. 901(2) sets a minimum civil penalty of $100,000 per violation and a maximum civil penalty of $1,000,000 per violation.

IV. The Parties' Arguments

A. Plaintiff's Argument

Plaintiff's brief for civil penalties asks the Court to at least "impose the minimum fine of $100,000 for each violation, totaling up to $300,000." Pl.'s Br. at 2. During the December 19th hearing, plaintiff asked the Court to impose civil penalties totaling $500,000. Plaintiff offered various arguments in support of that amount. Plaintiff argued that the marine resources of the FSM are very important to the nation and that assessing civil penalties in an amount greater than the minimum required by law will deter future violations by all companies who fish in FSM waters. Plaintiff also referenced, but did not provide any admissible evidence of, past settlements of cases involving alleged violations of the Marine Resources Actone case in 2001 purportedly settled for $650,000 and another in 2002 purportedly settled for $100,000. Plaintiff further argued that defendant knowingly conducted illegal fishing activities, but plaintiff did not explain how it arrived at that conclusion. Plaintiff also argued that the continuous nature of the violationdefendant fished for three days without a permitwarrants the imposition of a higher fine than the minimum amount. Finally, counsel for plaintiff argued that the Court should impose a civil penalty greater than $300,000 because she has spent a lot of time working on this case.

B. Defendant's Argument

Defendant contends plaintiff waived its right to seek civil penalties against defendant Kenji because the government did not detain the vessel that was used for the illegal fishing activities. When asked by the Court, counsel for defendant indicated that he was not aware of any legal authority that supported defendant's waiver argument. Defendant also pointed to the lack of prior violations by defendant. Counsel for defendant further argued that defendant did not knowingly fish without a permit as he did not commence fishing until the day after he expected the permit to be issuedAugust 18 2004. (August 17, 2004 was the preferred effective date requested in the application.) Counsel for defendant also stated, but did not offer any admissible evidence, that defendant Kenji has suffered a stroke, is now a paraplegic, and is no longer in the FSM. Finally, defendant argued that any payments to plaintiff should be limited to the proceeds from the sale of the tuna caught during the dates at issue.

V. Discussion

The Court, in its October 23, 2007 order, determined that defendant Kenji committed a separate violation of section 907(1) for each day he engaged in commercial fishing without a valid fishing permit, for three violations in total. The Marine Resources Act of 2002, at 24 F.S.M.C. 901(2), sets a minimum civil penalty of $100,000 per violation and a maximum civil penalty of $1,000,000 per violation. The Marine Resources Act of 2002, at 24 F.S.M.C. 901(3), also requires the Court to take into account several factors in determining the amount of civil penalties to assess, including "the degree of culpability, any history of prior offenses, whether there are multiple violations which together constitute a serious disregard of conservation and management measures and such other matters as justice may require."

In terms of the degree of culpability, there is not any direct testimony from defendant regarding whether he knew he was fishing without a permit. For purposes of assessing civil penalties, the Court will resolve ambiguities in defendant's favor. The Court is unwilling to conclude defendant Kenji knew he was fishing without a permit. Indeed, defendant's application to NORMA had a preferred effective date of August 17, 2004 and on prior occasions NORMA had issued the permit on the requested preferred effective date. While NORMA informed defendant's local agent that it would not issue the permit on August 17th, there is no evidence defendant's local agent communicated that information to defendant before defendant commenced fishing on August 18th. Defendant's degree of culpability does not warrant imposition of a civil penalty in the amount of $500,000, as requested by plaintiff. On the other hand, defendant Kenji should not have been fishing under the false and uninformed presumption that NORMA would issue the permit on August 17th. Therefore, based on defendant's degree of culpability, defendant should be required to pay more than the minimum civil penalty.

The Court next turns to any history of prior offenses. Both parties agree that defendant has no history of prior offenses. This factor, then, favors imposition of the minimum civil penalty.

With respect to the multiple-violation factor, defendant did commit three separate violations by fishing without a permit for three consecutive days. However, the Court does not believe that defendant's three days of fishing constitutes the type of serious disregard of conservation and management measures that would warrant imposition of the civil penalty plaintiff proposes. Rather, it appears defendant Kenji may simply have commenced fishing under the false and uninformed belief that NORMA, as in the past, would issue the permit on the requested preferred effective date, August 17th, and that defendant stopped fishing on August 20th when he found out the permit had not issued.

Based on these factors, the Court determines that $400,000 is the appropriate civil penalty that should apply in this matter.

The Court rejects defendant's argument that plaintiff waived its ability to seek civil penalties by not detaining the Katzutoku Maru. Defendant did not cite any authority in support of that argument and the Court concludes that the argument is without merit. The Court likewise is not persuaded by plaintiff's arguments regarding prior settlements in other cases, the amount of time plaintiff's counsel has spent on this case (which did not even go to trial), or any of plaintiff's other arguments in favor of a higher civil penalty.

Finally, the Court concludes that plaintiff is entitled to the proceeds of the sale of fish caught during defendant's fishing activities on August 18-20, 2004.

VI. Conclusion

For the foregoing reasons, the Court assesses civil penalties against defendant Kenji in the amount of $400,000. The Court further determines that plaintiff is entitled to the proceeds of the sale of fish caught during defendant's fishing activities on August 18-20, 2004. The Clerk shall enter judgment consistent herewith.

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