Law

January 29, 2013 — Former Massachusetts Attorney General Scott Harshbarger, Senior Counsel at Proskauer Rose LLP, conducted an independent four-month review of allegations made against the Gloucester Fishing Community Preservation Fund.  The report found no credible basis to support the allegations, and deemed them to be without merit. The fund hired Proskauer to conduct an independent assessment of its governance, policies and operations after receiving a letter from state Senator Bruce Tarr and state Representative Ann Margaret Ferrante concerning alleged complaints, including conflicts of interest, nepotism, insider trading and improper kickbacks.

The following was released by Proskauer Rose LLP:

January 29, 2013 (Boston) – An independent review of serious allegations made against a Gloucester nonprofit fund that has been serving the region’s fishing community for five years found no credible proof of accusations of misconduct made against the fund or its leadership.

The 45-page report is the result of an exhaustive, four-month investigation by Proskauer Senior Counsel Scott Harshbarger. The inquiry found no convincing evidence in support of allegations that board members of the Gloucester Fishing Community Preservation Fund violated their fiduciary duty to the fishermen of Gloucester, failed to adhere to charitable governance rules or engaged in alleged unfair, deceptive and untoward business practices.

“Our investigation found that there is simply no credible basis to support the allegations. To the contrary, they are without merit,” said Mr. Harshbarger, who is a former Massachusetts Attorney General.

Since its founding in 2007, the mission of this nonprofit fund has been to safeguard and enhance the economic engine of Gloucester and Cape Ann. In August 2012, the organization hired Proskauer to conduct an independent assessment of its governance, policies and operations after the fund received a letter from state Senator Bruce Tarr and state Representative Ann Margaret Ferrante concerning alleged complaints, including conflicts of interest, nepotism, insider trading and improper kickbacks.

Based on the investigation of the facts, the report found:

– No violations of the fiduciary duties of care, loyalty and independence by any board member

– No failure on the part of the board to adhere to accepted charitable governance and operational policies and procedures

– No reasonable or credible factual basis on which to conclude that any members of the board obtained an unfair business advantage, took kickbacks, engaged in collusion or in any way engaged in conduct constituting a conflict of interest.

Despite the findings, the report recommended a package of governance improvements to help it avoid similar future allegations. Among the improvements are expanding the fund’s board members, publishing details of how fishing permits are allocated and reviewing its process for qualifying fishermen.

“These changes, which follow best practices for nonprofits of the fund’s size, scope and history, will help it continue to serve the Gloucester fishing industry,” Mr. Harshbarger said.

Mr. Harshbarger has briefed Massachusetts Attorney General Martha Coakley’s office, community leaders and many in the fishing industry on the investigation and the report’s finding.

EXECUTIVE SUMMARY

The Gloucester Fishing Community Preservation Fund (the “Fund”) was established as a non-profit organization in 2007 to distribute fishing rights to individuals who participate in the Gloucester fishing industry. The Fund’s board of directors (the “Board”) consists of prominent members of the Gloucester community, most of whom have longstanding involvement in the Gloucester fishing industry. The Board and Fund have been targets for regular criticism from the outset, including publicly in articles and blogs published in The Gloucester Daily Times. The Board decided in August 2012 to retain Proskauer Rose LLP (“Proskauer,” “we,” or “us”) to conduct an independent investigation of all of these allegations in light of the governance and operational conduct of the Fund.

In particular, the Board asked Proskauer to investigate allegations of wrongdoing including conflicts of interest, nepotism, “insider trading,” improper kickbacks and other monetary improprieties and unfair business advantages. After an extensive review, including legal and factual research, board member interviews and interviews of members of the Gloucester fishing industry and general community, we have completed our investigation and have prepared this report for such action as the Board deems appropriate.

As detailed in our report, we have made three key findings in connection with our investigation:

First, we found that the Fund has played a vital role in the Gloucester fishing community. Its mission and leadership are industry lifelines and its existence is a critical force in preserving the local business community. It is this very success, as well as the prominent roles in Gloucester of members of the Board, that seems to have triggered the allegations directed at the Fund and its alleged governance flaws, or the appearance thereof.

Second, we quickly found that all allegations emanate from a handful of individuals in the community who asserted allegations and engaged in an unfounded negative media blitz against the Fund and its members, particularly Executive Director Vito Giacalone.

Third, we found that the regulatory structure overseeing the fishing industry is complex to the point that many people in Gloucester, in addition to individuals in the fishing community, do not understand how it works. Similarly, many of the individuals with whom we spoke do not understand how the Fund was created, how it operates, how the Board makes decisions, how it ensures that the proper checks and balances are in place and that its transactions are transparent and fair. Lacking a real understanding of both the regulatory structure and the Fund, some are willing to accept allegations of conflict and collusion among the Fund, the Board and others as fact, innocently or otherwise.

Based on our investigation, we conclude that there is no credible basis to support the allegations of wrongdoing. To the contrary, they are without merit. Accordingly, we found:

    a)  No violations of the fiduciary duties of care, loyalty, and independence by any board member;
    b)  No failure on the part of the Board to adhere to accepted charitable governance and operational policies and procedures; and
    c)  No reasonable or credible factual basis on which to conclude that any members of the Board obtained an unfair business advantage, took kickbacks, engaged in collusion, or in any other way engaged in conduct constituting a conflict of interest.
    
Nevertheless, we propose a handful of simple and common sense governance improvements to serve as a road map for the Board so that it may avoid similar baseless allegations or misperceptions in the future. These changes, following best practices for non-profits of the Fund’s size, scope and history, will help it continue to serve the Gloucester fishing industry.

 

Read the complete report here

 

NEW BEDFORD, Mass. — January 25, 2013 —  There is more bad news for New England fishermen in the lead-up to next week's highly anticipated meeting of the New England Fishery Management Council.

NOAA Fisheries Northeast director John K. Bullard informed the council in a letter that there is no room left under the law to allow anything but a total stop to overfishing for Gulf of Maine cod and haddock.

"The bad news is there are no fish," Bullard, a former New Bedford mayor, told The Standard-Times. "That's the bad news that we've got to face."

"We reviewed our previous determination that the use of interim measures under …. the Magnuson Stevens Act is limited to one year and that overfishing must be ended for fishing year 2013," which starts May 1, Bullard wrote.

Bullard said the National Oceanic and Atmospheric Administration has shown it tries to be flexible but last year's delay in imposing heavy cuts produced no results.

"There's just bad news everywhere you look," Bullard said.

"There's a temptation to say 'Well, if we took an interim measure this will turn something into good news.' That's just an illusion. The interim measures we took last year didn't turn bad news into good news."

Seafood consultant James Kendall said Thursday night that Bullard "makes a lot of good points but the problem is the guys are in such deep straits that they're looking for what little relief they can get.

"He is just stating the letter of the law and trying to find ways to work within it."

Added Kendall: "I think there's going to be a lot of disappointed fishermen."

Recent reviews of stock assessments released last week propose that a cut in catch limits of from 61 percent to over 80 percent might be required to protect dwindling stocks of Gulf of Maine cod and Georges Bank cod.

 

Read the full story in the New Bedford Standard Times 

 

 

 

 

NOAA’s top regional administrator says he will “consider” applying a legal precedent presented by the Northeast Seafood Coalition that would allow for comparatively minor cuts in Gulf of Maine cod and haddock landings next year rather than the draconian cuts that would otherwise go into effect based on discouraging stock assessments.

Gloucester-based NOAA Regional Administrator John Bullard, whose offices in Blackburn Industrial Park regulate fisheries from Maine through the Carolinas, told the Times that “we will certainly consider the action the council recommended.”

Bullard spoke at length at the council meeting, describing the agonizing problems the industry faces as it seeks to survive while waiting for the stocks to revive. The council also reduced the minimum size of many stocks based on the theory that the move would reduce the waste of sending undersized fish back to die.

Allowing the interim actions would effectively give the council a year for sharpened science and perhaps a less pessimistic picture of the state of the stocks until a reckoning in 2014.

Read the complete story from The Gloucester Times.

 

 

 

 

GLOUCESTER — November 29, 2012 — Finding the catch share trading system for groundfishermen working in voluntary cooperatives to be legal and proper, the U.S. First Circuit Court of Appeals in Boston has rejected “all” the challenges to the arrangement brought by a large group of industry plaintiffs led by Gloucester and New Bedford, New England’s major fishing ports.

But in its ruling the three-judge panel presumed the completion of a regulatory action, now in a formative stage, that would control excess consolidation of the fishery, which was a core concern of many of the plaintiffs, fishermen and businesses from Maine to North Carolina.

The plaintiffs included U.S. Congressmen John Tierney, whose district includes Gloucester, and Barney Frank, who represents New Bedford.

The Conservation Law Foundation was allowed to intervene, allied with the government.

The 68-page ruling effectively ends the legal assault on Amendment 16, which instituted a radical change to the Northeast fishing industry, based on an allocation of the allowable catch to a limited number of participants who, if members of a cooperative or sector, can trade from their portfolio with other sectors to increase the value and efficiency of their effort.

A core complaint by the plaintiffs, rejected by the court, was the adoption of the catch share system without putting the regimen to a binding referendum.

“Not allowing a referendum on such a measure effectively leaves the fishery up for grabs to the highest bidder,” said Tierney in an email. “This isn’t in the best interest of fishermen.”

One attorney on the team that brought the suit, speaking anonymously, said the plaintiffs had exhausted their resources, so an appeal to the U.S. Supreme Court was unlikely.

The court affirmed a lower ruling made in 2011 by U.S. District Court Judge Rya Zobel, who found that the National Oceanic and Atmospheric Administration had followed the dictates of Congress embedded in the re-authorization of the Magnuson-Stevens Fishery Conservation and Management Act. Both Zobel and the Court of Appeals found that NOAA’s interpretations of the act warranted legal deference as defined in the Administrative Practices Act.

 

Read the full story in the Gloucester Times 

 

 

 

 

GLOUCESTER, Mass. — November 29, 2012 — The fishing ports of Gloucester and New Bedford, New England’s largest, have lost a bid to have federal regulations they claimed were wiping out the local fleets thrown out.

The U.S. First Court of Appeals has found the assembly of the catch share system for groundfishermen working in voluntary cooperatives to be legal and proper, and has rejected “all” the challenges to the system in a major court case brought by a large group of industry plaintiffs led by Gloucester and New Bedford.

The court’s 68-page ruling effectively brings to an end the legal assault on Amendment 16, which instituted a radical change to the Northeast fishing industry. The amendment is based on an allocation of the allowable catch to a limited number of participants who, if members of a cooperative or sector, can trade from their portfolio with other sectors to increase the value and efficiency of their effort.

One attorney on the team that brought the suit, speaking anonymously, said the plaintiffs had exhausted their resources, so an appeal to the U.S. Supreme Court was unlikely.

The system was voted by the 18-member New England Fishery Management Council in 2009, and went into effect in 2010. The system was not popular for many reasons, but central was the tendency of catch share trading to fuel consolidation, leaving participants with lesser allocations vulnerable.

Extreme cutbacks in the allocation of the groundfishing fleet beginning in 2010 brought the industry economic disaster, a condition affirmed legally and in writing by the acting secretary of commerce in September. The declaration did not come with any aid.

 

Read the full story at the Gloucester Times

 

 

NEW BEDFORD, Mass. — November 29, 2012 — A federal appeals court Wednesday swept aside a lawsuit by this city and Gloucester challenging the new system of regulating the Northeast fishery.

The 1st U.S. Circuit Court of Appeals struck down every one of a number of arguments the cities and their co-plaintiffs in the industry made in their appeal.

The court upheld a 2011 lower court decision in the suit brought by the two ports as well as fishermen and fishing groups. Broadly speaking, the court ruled that the government stayed within the letter and spirit of the 1976 Magnuson-Stevens Act, which was designed to end overfishing in the Northeast.

Mayor Jon Mitchell said late Wednesday that he had not seen the ruling but was disappointed. "We'll take our time now to go through the opinion and see what our next steps are," he said.

"The point of pursuing the lawsuit was to help ensure that regulations that NOAA comes down with are fair and consider the very real ramifications that they might have on the fishing industry," Mitchell said.

"We will continue to make that point in other venues, including Congress," he said.

Former mayor Scott Lang said Wednesday night that he believes the city's arguments were valid and well presented. But he acknowledged that overturning government regulators' decisions is hard to do.

"It's extremely difficult to flip it in the courts," Lang said.

He added that he was pleased that the court at least took time in its more than 60-page ruling to sift through the arguments thoughtfully, if narrowly.

 

Read the full story at the New Bedford Standard Times

 

 

WASHINGTON (Saving Seafood) Nov. 29, 2012 – New Bedford City Solicitor John A. Markey, Jr. has written to supporters and plaintiffs in the wake of  yesterday's ruling by United States Court of Appeals for the First Circuit against the cities of New Bedford and Gloucester and industry plaintiffs in their challenge to Amendment 16, the framework for the federal government's fisheries catch share system.

The text of his letter follows:

Friends of New Bedford:

I write today to thank you for your donation of time, talent and treasure to support the City of New Bedford and the hardworking people engaged in the City’s fishing industry.  Attached hereto is the sixty eight page decision issued late today by the First Circuit Court of Appeals denying the City's challenge of NMFS 2010 decision to implement a sector system which damaged many of the ground fishermen.

Although we did not prevail before the First Circuit, the lengthy decision evidences the seriousness with which the Court was forced to consider the issues ably raised in the legal briefs written by Attorneys Mikaela McDermott, Julie Peterson and Pamela Lafreniere and capably argued by Attorney Jim Kavanaugh.  In this process, the Agency has been forced to expend significant time and energy to defend its dubious positions and tortured interpretations of the law.  By standing up to NMFS and by highlighting the manner in which the agency is frustrating congressional intent and endangering the well-being of America's Number One Fishing Port, this City's legal team and that team's supporters (you) have served a great purpose.

As Theodore Roosevelt once said:

It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.

You are the person in the arena.  And there is no greater devotion than our mission to advocate for our hometown, our people, and our way of life.  It is with this in mind that I write to thank you for your support as we march forth remaining steadfast in our commitment to fight for our City and its people.

Sincerely –

John A. Markey, Jr.
New Bedford City Solicitor

 

 

BOSTON — November 28, 2012 — A federal appeals court on Wednesday rejected claims by New England’s two largest fishing ports that federal regulators improperly enacted fishing rules that they say are wiping out local fleets.

The 1st U.S. Circuit Court of Appeals decision upheld a 2011 lower court ruling on a suit brought by the ports of New Bedford and Gloucester, as well as fishermen and fishing groups.

The plaintiffs argued the new rules were installed in 2010 without required safeguards, including a two-thirds referendum by fishermen that could have killed the changes before they were enacted. They asked the appeals court to order the lower court to implement the safeguards, alleging that without them, the industry’s smaller fishing businesses would be squeezed out.

But the three judge panel noted that, rather than destroying smaller business, many believe the new rules provide better protection. And it said federal regulators installed the law properly. ‘‘The Secretary (of Commerce's) judgments here were derived from the record, rational, and not based on any error of law,’’ the court wrote.

The old fishing management system tried to prevent overfishing mainly by limiting the number of days fishermen could go to sea. The new system allots portions of the catch for each species, such as cod and flounder, to individual fishermen. The fishermen then combine and manage those allotments in groups called sectors.

The ports — with support from U.S. Reps. Barney Frank and John Tierney — alleged that, under federal law, the change should have been subjected to a vote that never occurred. They said that because individual catch shares can be transferred among fishermen, the new system fosters broad industry consolidation, as larger fishing interests buy out fishermen whose catch shares are too paltry to support their business.

New Bedford Mayor Jonathan Mitchell expressed disappointment and said the city will consider whether to appeal.

‘‘The general points we were trying to establish through the lawsuit will continue to be a goal for us here in New Bedford. That goal was to ensure that fisheries’ regulations are fair and take into consideration the interests of the fishing families and the communities they live in,’’ Mitchell said.

 

Read the full Associated Press story by Jay Lindsay in the Boston Globe

 

 

November 28, 2012 — The United States Court of Appeals for the First Circuit has ruled against the cities of New Bedford and Gloucester and industry clients in their challenge to Amendment 16, the framework for the federal government’s fisheries catch share system.

This case involves legal challenges to recent federal management actions taken in New England's sensitive Multispecies Groundfish Fishery. We reject the many challenges and affirm entry of summary judgment for the federal defendants.

Under the Magnuson-Stevens Fishery Conservation and Management Act, 16 U.S.C. §§ 1801-1884, the New England Fishery Management Council ("N.E. Council") regulates fishery resources within the federal waters off New England's coast. It does so primarily through Fishery Management Plans ("FMPs"), which it reevaluates biennially in light of the latest scientific information and congressionally imposed mandates and deadlines to prevent overfishing. Those mandates and deadlines were recently altered by the Magnuson-Stevens Fishery Conservation and Management Reauthorization Act of 2006, Pub. L. No. 109-479, 120 Stat. 3575 (2007), which introduced a suite of stringent protections for depleted fisheries.

This litigation centers on the N.E. Council's adjustments to the FMP governing the Northeast Multispecies Groundfish Fishery ("Fishery"). The N.E. Council was required by law to implement changes to the Fishery's 2004 FMP by the 2010 fishing year, taking into account both the Reauthorization Act's new protections and the results of a study conducted in 2008 on the health of the Fishery's stocks of fish. The study results showed that the situation was worse than previously believed. A number of groundfish stocks were overfished and subject to overfishing; only two stocks had improved since the 2004 FMP's implementation. This trend has continued to the present.1

The N.E. Council adopted a new proposed groundfish FMP, Amendment 16, after 3 years' work, which included several publications in the Federal Register, eight public hearings, and receipt of numerous comments. The federal environmental impact statement prepared for Amendment 16 acknowledged the severe economic hardships facing New England's fishing communities.

On January 21, 2010, Amendment 16 was upheld on administrative review by the National Marine Fisheries Service ("NMFS") of the National Oceanic and Atmospheric Administration ("NOAA") within the U.S. Department of Commerce. The NMFS promulgated Amendment 16 through three related sets of regulations that, inter alia, altered and expanded the Fishery's preexisting "sector allocation program" and established new restrictions on fishing activities to end and prevent overfishing. These regulations took effect on May 1, 2010.

Plaintiffs then filed suit in federal court alleging that Amendment 16 conflicts with the Reauthorization Act's provisions governing "limited access privilege programs," 16 U.S.C. § 1853a, with the ten "national standards" applicable to all FMPs, id. § 1851(a)(1)-(10), and with the requirements of the National Environmental Policy Act, 42 U.S.C. § 4321 et seq. They unsuccessfully sought to enjoin implementation of Amendment 16. The district court granted summary judgment for defendants as to all claims. City of New Bedford v. Locke, No. 10-10789-RWZ, 2011 WL 2636863 (D. Mass. June 30, 2011). We affirm.

 

Read the official ruling here  

 
Read the background on the case and appeal here

 

 

 

 

 

 

ROCKLAND, Maine — November 26, 2012 — The city has filed a lawsuit against a Massachusetts man for failing to pay for use of the municipal fish pier and claims that he operated the business as a sham to avoid personal responsibility for debts.

Rockland filed the lawsuit Monday in Knox County Superior Court against Rockland Lobster Co. LLC and its sole principal, Antonio Bussone of Chelsea, Mass.

The city is asking the court to order Bussone to pay the city $31,173 plus interest, and attorney and court costs.

Rockland Lobster and its predecessor Live Lobster Co. Inc., which the city said also was owned by Bussone, sold bait and bought lobsters at the city-owned fish pier from 2005 through 2012.

The companies had paid the necessary fees and other charges before 2012, according to the lawsuit.

The city said Rockland Lobster applied and was granted permits to conduct business at the fish pier in 2012 as a bait dealer and to buy lobsters.

The company operated at the pier in early 2012, selling bait, buying lobsters, using floats and storing equipment, such as bait coolers and pallets, at the pier. The company also used electricity and fuel from the pier.

Many of Live Lobster’s operations in Maine, including a lobster processing facility in Prospect Harbor, ceased functioning earlier this year after the company’s primary lender, TD Bank, froze the company’s accounts. In April, TD Bank filed suit against the lobster distributor, claiming the firm violated terms of a 2008 loan agreement for $4 million from the bank. That suit later was dropped, but the bank arranged a foreclosure auction that saw assets sold off in September.

Rockland Lobster ceased doing business at the Rockland pier on or about April 20.

 

Read the full article at the Bangor Daily News