## Facts

- Federal regulators set a 1997 commercial summer flounder quota affecting North Carolina fishermen and related businesses.
- Fishing-industry plaintiffs and North Carolina state entities challenged the quota as unlawfully minimizing economic harm to small coastal fishing communities.
- The court previously remanded the quota (Oct. 10, 1997), directing the Secretary of Commerce to conduct an economic analysis consistent with the Regulatory Flexibility Act (RFA) and Magnuson–Stevens National Standard 8 (NS-8).
- The Secretary submitted a post-remand report (Dec. 1, 1997) concluding the quota posed no significant threat to sustained participation by North Carolina fishing communities.
- The Secretary’s analysis treated North Carolina as a single “fishing community,” relied on aggregated statewide data, and reasoned that losses would be dispersed across many vessels and ports.
- The court appointed an economist under Federal Rule of Evidence 706 to assist in evaluating whether the Secretary’s analysis satisfied the RFA and NS-8.
- Plaintiffs argued that statewide aggregation obscured severe localized impacts on small towns and small fishing businesses dependent on summer flounder landings.

## Issues

1. Whether the Secretary’s post-remand economic analysis complied with the Regulatory Flexibility Act’s requirements to assess impacts on small entities.
2. Whether the Secretary satisfied Magnuson–Stevens National Standard 8 by accounting for the importance of fishery resources to fishing communities and minimizing adverse economic impacts consistent with conservation.
3. Whether maintaining the 1997 quota on the basis of the post-remand analysis was arbitrary and capricious under the Administrative Procedure Act.

## Decision

- The court held the Secretary’s post-remand analysis still failed to comply with the RFA and NS-8.
- The court rejected the Secretary’s approach of treating the entire State of North Carolina as a single “fishing community,” finding it inadequate to address discrete community-level harms.
- The court concluded the agency failed to meaningfully evaluate localized economic impacts on small coastal communities and small entities.
- The court determined the quota action, as supported by the deficient analysis, did not survive APA review and was set aside or remanded for lawful analysis consistent with the statutes.

## Legal Principles

- The RFA requires a meaningful analysis of a rule’s economic impact on “small entities,” not merely statewide averages that can mask concentrated burdens.
- Magnuson–Stevens NS-8 requires consideration of the importance of fishery resources to “fishing communities” and requires efforts to minimize adverse economic impacts consistent with conservation.
- An agency acts arbitrarily and capriciously when it fails to consider an important aspect of the problem or relies on an analytical framing that evades statutory factors.
- Treating an entire state as a single fishing community, and relying on highly aggregated data to dismiss localized harms, is an inadequate method for satisfying NS-8 and related economic-impact obligations.

## Conclusion

The court ruled that the Secretary’s post-remand justification for the 1997 summer flounder quota unlawfully relied on statewide aggregation that obscured localized harms, violating the RFA and Magnuson–Stevens NS-8 and rendering the quota action arbitrary and capricious under the APA.


N.C. Fisheries Ass'n, Inc. v. Daley, 27 F. Supp. 2d 650 (E.D. Va. 1998)