Kirkland, Wash.-based Fishermen’s Finest has lost an appeal challenging fishing limits contained in a Jones Act waiver it received for its newly-built America’s Finest vessel.
The ruling, delivered Feb. 8 by the U.S. Court of Appeals for the Federal Circuit, found against Fishermen’s Finest’s contestation that its rights under the Fifth Amendment of the U.S. Constitution were violated by the limits, or sideboards, contained in the Frank LoBiondo Coast Guard Authorization Act of 2018, which was signed into law in 2018. The law gave Fishermen’s Finest a waiver to the Jones Act, which would have prohibited its newly-built vessel, the $75 million America’s Finest, from operating in U.S. waters due to the fact that it was constructed with 10 percent foreign steel.
However, the waiver also placed some limitations on the number of fish the three vessels in Fishermen’s Finest’s fleet could catch through a six-year period following the law’s passage. That was done after Alaska state officials raised concerns the ship could impact processors at the state’s Dutch Harbor port, the nation’s largest fishing port.
Two of Fishermen’s Finest’s Seattle-based competitors, Trident Seafoods and United States Seafoods, hired lobbyists to push for the limits, which were ultimately negotiated between U.S. Senator Maria Cantwell (D-Wash.) and U.S. Senator Dan Sullivan (R-Alaska), according to the Skagit Valley Herald.
As a result, through 2024, Fishermen’s Finest faces 53 separate limitations on the Amendment 80 allocations and unallocated catches, including of yellowfin sole, flathead sole, rock sole, Atka mackerel, and Pacific ocean perch, according to the Herald.
Fishermen’s Finest sued the U.S. government in 2021 to seek the removal of the limitation, citing the Fifth Amendment, which provides that private property “shall not be taken for public use without just compensation.”
But the Court of Appeals ruled fishing permits and licenses granted by the U.S. government are revocable privileges, rather than compensable property.
“[Fishermen’s Finest’s] licenses and permits did not have the essential characteristics of compensable property – transferability and the right to exclude others,” it said in its decision. “[Fishermen’s Finest] do[es] not have a cognizable property interest in the right to conduct commercial fishing activities in any part of the [U.S. exclusive economic zone].”
While previous precedent had already decided this issue, Fishermen’s Finest had argued amendments made by the U.S. Congress to the Magnuson-Stevens Act in 2007 “altered the nature of fishing endorsements, licenses, and permits such that they now bear the traditional hallmarks of compensable property transferability, exclusivity, and irrevocability.”
But the appeals court disagreed.
“Simply put, there is no express language or other indication of congressional intent to limit Congress's legislative power to revoke, modify, or limit privileges granted under the Magnuson-Stevens Act,” it said. “As such, the Coast Guard Act's limitation on [Fishermen’s Finest’s] aggregate catch totals did not amount to any taking of compensable property.”
According to Undercurrent, Fishermen’s Finest has contracted with Seattle-based Cascadia Capital on representing it in a possible sale process. Cascadia has circulated a valuing of the company at $200 million, based on a 10x multiple of its projected $20 million in earnings in 2022. Possible bidders include American Seafoods, Glacier Fish Company’s North Star Fishing Company, and United States Seafoods.
The sale process has been initiated as Fishermen’s Finest CEO Helena Park is considering retirement, according to Intrafish.
Fishermen's Finest President Dennis Moran declined to address either the sale process or Park's potential retirement, but said in an email to SeafoodSource he was disappointed in the court decision.
"The sideboards limitations are almost over, but while in place, they took away roughly $80 million which would have gone into building a new boat, created 300 Washington state skilled shipbuilding jobs over four years, including about $10 million going to Washington state trade union jobs, and would have made the fishery safer by replacing and retiring two older ships," Moran said. "While other countries are incentivizing shipbuilding investment in new fishing vessels by protecting private investment in those projects, this outcome shows that U.S. government policy is exactly the opposite."
Representatives of Trident Seafoods and United States Seafoods did not respond to requests for comment from SeafoodSource on Tuesday.
International Maritime Group founder and principal attorney Isaak Hurst told SeafoodSource the decision may have broader implications for the seafood industry, as the fishing permits are usually in lending deals.
“It’s hard to see what the impacts this legal decision will have on vessel owners, but it might have implications for their ability to get financing,” he said. “Fishing permits issued to a particular vessel, although they may be transferrable to other vessels, are generally seen by marine lenders as a critical part of the loan package because of their importance on the vessel’s navigation, operation, or mission.”
