[00:00:06] Speaker 01:
Appellate versus Wilbur Ross and his official capacity as Secretary of the United States Department of Commerce and Elm.

[00:00:13] Speaker 02:
Mr. Paternal for the Appellate, Mr. Carpenter for the Apparels.

[00:01:29] Speaker 00:
May it please the court, my name is Lai Paterno and I represent appellant Oceana.

[00:01:33] Speaker 00:
Oceana raises four issues in this appeal, but with the court's permission, I'd like to focus on the first during the few minutes I have this morning.

[00:01:40] Speaker 00:
This is a fairly narrow and straightforward issue in light of what this court has already decided.

[00:01:46] Speaker 00:
In 2011, when considering a challenge to a prior version of the same rule, this court made clear that, as a matter of law, an agency violates a statutory command to establish a methodology when the rule permits the agency to, quote, free itself at will from the methodology it purportedly established.

[00:02:06] Speaker 00:
That was the problem with the prior rule, which allowed the agency to depart from its prescribed methodology for allocating bycatch observers whenever the agency faced the funding constraint.

[00:02:16] Speaker 04:
Well, you've truncated the second half of the whole thing, which is, and fails to commit itself to any intelligible standard once the exception is triggered.

[00:02:28] Speaker 00:
That's right, Your Honor.

[00:02:29] Speaker 00:
In 2011, this court discussed the cement kiln case.

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And as you mentioned, there were two prongs to that test.

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The first is that the agency must identify the circumstances adequately.

[00:02:41] Speaker 04:
And they clearly fixed the second problem.

[00:02:45] Speaker 00:
Yes, Your Honor.

[00:02:46] Speaker 04:
So they have one set of rules that applies in the world where they have full funding.

[00:02:55] Speaker 04:
And then they have essentially, as I understand it, an algorithm for paring down the inspection program to the extent they're strapped for resources and operating

[00:03:10] Speaker 04:
under the anti-deficiency act, which would make it a criminal offense to spend more money than they have.

[00:03:16] Speaker 00:
Well, you're right, Your Honor.

[00:03:18] Speaker 00:
Oceana does not challenge the second prong of the two-pronged cement cone test.

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We're focusing on the first.

[00:03:24] Speaker 00:
And you're absolutely right that the agency has put in place this algorithm to

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depart from the methodology it establishes whenever funding is insufficient.

[00:03:35] Speaker 00:
But we submit that there are really three problems with that.

[00:03:38] Speaker 00:
The first, as you mentioned, Your Honor, that this departure is triggered whenever funding is insufficient.

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The problem is that, as this Court noted in 2011,

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Other provisions of the same Fisheries Act specifically direct the agency to carry out the provision to the extent practical.

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Here, that qualifier is conspicuously absent, and as this court stated in 2011 at 1243 of the Oceana IV opinion,

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When a statute commands an agency without qualification to carry out a particular program in a particular way, the agency's duty is clear.

[00:04:15] Speaker 03:
But doesn't the rule also command the agency to expend resources basically at the same level that it's historically done so?

[00:04:27] Speaker 00:
No, Your Honor, it actually doesn't.

[00:04:30] Speaker 00:
It provides there that that's a guide, that historical spending is a guide, but that's not a requirement.

[00:04:36] Speaker 00:
And in fact, the rule actually notes that historically funding has been inadequate, and going forward, it notes that funding levels are likely to vary.

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It's important to note that these four internal funding lines that the agency has identified are totally internal.

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buckets, for lack of other words, buckets in the agency's own budget.

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So the agency has total control over how much funding goes into these four funding lines, how much funding from these four funding lines.

[00:05:07] Speaker 03:
Well, do you think that the statute requires the agency to prioritize this over whatever the other priorities are that the agency has?

[00:05:17] Speaker 03:
I mean, no agency has enough money to do everything that they would like to do.

[00:05:21] Speaker 00:
That's right, Your Honor, and this court in 2011 said that.

[00:05:24] Speaker 00:
It said that the only constant is that agencies never have enough money to do as much as they'd like.

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But with that said, the court in 2011 did say that here there is no qualifier to carry out this methodology to the extent, or excuse me, to establish this methodology to the extent practicable.

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And so, also to put this in context, the total cost in 2015 when this rule was promulgated to fully implement the methodology is about $16 to $17 million.

[00:05:54] Speaker 00:
That's about 2 percent of the agency's overall

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appropriation for that year.

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So we're not talking about a ton of money.

[00:06:03] Speaker 00:
The agency has tried to make this case about funding, but it's really only about funding because the agency has elected, we submit against what this court said in 2011, has elected to put this funding trigger in place.

[00:06:16] Speaker 00:
there could be a funding trigger, Your Honor, if the agency did not have discretion over the funding itself, but this Court, in that prior decision, made clear that when the agency controls both the amount of funds required for the methodology and the level of funding that's available, the agency simply reserves to itself too much discretion.

[00:06:37] Speaker 04:
How specific are the relevant appropriations?

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Is there one targeted to

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all inspections under this statute and the agency discretion is just to allocate among regions, or is it broader than that, narrower than that?

[00:06:53] Speaker 00:
My understanding, Your Honor, is that it's fairly broad.

[00:06:55] Speaker 00:
I think there's a lot of appropriation.

[00:06:56] Speaker 00:
The agency submits a justification to Congress when it seeks the appropriation, and it has an amount for the Fisheries Service as part of NOAA.

[00:07:08] Speaker 00:
But then within that, the agency, and I'm sure my colleague can correct me if I'm wrong, but the agency then decides how much funds to allocate to Bycatch, and then within that, how much of these four funding lines to allocate to this specific... So when they talk about four funding lines, your understanding is that's purely...

[00:07:26] Speaker 04:
a constructive agency discretion rather than congressionally imposed limits on the relevant agreement.

[00:07:33] Speaker 02:
Absolutely, Your Honor, absolutely.

[00:07:34] Speaker 02:
But isn't that determined by the methodology the agency put in place?

[00:07:39] Speaker 00:
Well, Your Honor, certainly the agency has taken the position that this is part of the methodology.

[00:07:44] Speaker 02:
Right, that's their argument.

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Their argument is that once they've

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I think their argument is that the only discretion they've left for themselves is distributing the congressional appropriation among all of their funding lines.

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But the methodology that they've put in place in response to our earlier decision controls

[00:08:05] Speaker 02:
Which of the funding lines get money for bycatch evaluation?

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And what happens if there's a shortfall?

[00:08:16] Speaker 00:
Is that not accurate?

[00:08:17] Speaker 00:
I don't think that's accurate, Your Honor.

[00:08:19] Speaker 00:
I think the agency reserves complete discretion for how much funding goes into these four funding lines and how much comes out.

[00:08:25] Speaker 02:
But the methodology, they can always change the methodology, but the methodology they put in place controls that, doesn't it?

[00:08:32] Speaker 02:
Doesn't that determine which of the four funding lines get the money?

[00:08:36] Speaker 00:
No, Your Honor, I think that's not true.

[00:08:39] Speaker 00:
I think the methodology simply says we identify these four internal funding lines and whenever funds in these four internal funding lines are insufficient, then we trigger this process.

[00:08:50] Speaker 00:
And as Judge Katz says, then we're in the cement kiln second prong, which says,

[00:08:55] Speaker 00:
You know, they have to have an identifiable standard to depart from the methodology.

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Oceana does not challenge that.

[00:09:01] Speaker 00:
We think that the agency does have a certain standard to follow when they're departing, but they still impermissibly reserve discretion on the front end to decide when, at their liberty, when they want to depart from the methodology.

[00:09:14] Speaker 00:
And to be clear, it is a departure.

[00:09:17] Speaker 00:
The methodology they've established is this 30% coefficient of variation.

[00:09:22] Speaker 00:
And the whole reason they have this is because the agency has said that if the CD goes higher than 30%, then the data is simply unreliable.

[00:09:32] Speaker 00:
It's not usable.

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And the whole purpose of the Fisheries Act, of this provision of the Fisheries Act, is to yield reliable information so as to set catch limits and prevent over-catching in subsequent years.

[00:09:44] Speaker 00:
So this really, it matters and it is a departure from the methodology when the agency decides that this 30% CD they've established as the methodology no longer applies to species at the agency's will.

[00:10:00] Speaker 03:
But that's for

[00:10:07] Speaker 03:
But you're talking about the non-federally protected species, right?

[00:10:12] Speaker 03:
The federally protected species, are you saying that the methodology also allows the CV to exceed 30% for those?

[00:10:22] Speaker 00:
Yes, Your Honor.

[00:10:24] Speaker 00:
To be clear, on our second issue, certainly Oceana challenges the fact that the agency does not even apply the methodology to non-federally managed species.

[00:10:33] Speaker 00:
is a concern that Oceana has, but that's a separate issue.

[00:10:36] Speaker 00:
The first issue is really about whether the agency has established a methodology, and even for the federally managed species that the agency purportedly applies this methodology to, the agency departs from that 30 percent CV whenever the agency decides to allocate insufficient funds to these internal, these four internal funding lines.

[00:10:57] Speaker 04:
There's nothing in this statute tells the agency how to allocate priorities as between this program and all the other programs they have to administer, right?

[00:11:14] Speaker 04:
And indeed, there's a background rule that

[00:11:17] Speaker 04:
Unless there's a specific instruction from Congress, agencies not only have discretion to make those judgments, but perhaps unreviewable discretion.

[00:11:28] Speaker 04:
So why shouldn't we just take that as a given?

[00:11:33] Speaker 04:
And the agency has eliminated all other questions, and the only element of discretion left in this system is their choice among competing priorities.

[00:11:48] Speaker 04:
And, you know, it sounds bad in this case if you imagine the hypothetical where

[00:11:53] Speaker 04:
They're directing money elsewhere, but they're directing money towards the program that your client is interested in.

[00:12:01] Speaker 04:
Somebody else will be here complaining that funds aren't being spent on their program.

[00:12:08] Speaker 00:
Well, so you're right, Your Honor, that the statute does not specifically prioritize funding allocations.

[00:12:15] Speaker 00:
But really, Oceana is not asking this Court to do anything that the Court didn't already decide in 2011, which is that when the qualifier, to the extent practicable or some sort of prioritization provision or something like that, when that's lacking from

[00:12:29] Speaker 00:
a specific statutory command, then the agency is required to follow that command.

[00:12:34] Speaker 00:
And to be clear, the agency has tried to make this about funding, but there are many other ways the agency could establish a methodology.

[00:12:42] Speaker 00:
For example, Oceana and other commenters urged the agency to consider other sources of funding, such as industry funding.

[00:12:49] Speaker 00:
There are certain fisheries, like the scallops fishery, where industry funding is used as a supplement.

[00:12:54] Speaker 02:
How can a court like this

[00:12:56] Speaker 02:
second guess, those kinds of decisions.

[00:12:59] Speaker 02:
What's the basis for doing that?

[00:13:01] Speaker 00:
Your Honor, we're certainly not asking the court to second guess the agency's funding discretion, how it's using those funds.

[00:13:08] Speaker 00:
All that Oceana is asking is that when Congress directs an agency to establish a certain methodology, the agency, as this court held in 2011, must establish it.

[00:13:21] Speaker 02:
So get specific for me, if you would.

[00:13:23] Speaker 02:
Looking at the current

[00:13:26] Speaker 02:
methodology and comparing it to the last one.

[00:13:29] Speaker 02:
Is it with respect to the allocation of funds to the four funding lines that you think there needs to be less discretion?

[00:13:42] Speaker 02:
And so what needs to happen there?

[00:13:44] Speaker 02:
What specifically do you want the agency to do to satisfy our earlier decision?

[00:13:50] Speaker 00:
Well, so the earlier decision, the agency said that it could depart from the methodology whenever there was a, quote, external operation constraint.

[00:13:59] Speaker 00:
We certainly can see there are more words here.

[00:14:01] Speaker 00:
The agency has given a more detailed explanation of what this operational condition is.

[00:14:06] Speaker 02:
Well, are you not satisfied with what the methodology does for situations where there's a funding shortfall?

[00:14:12] Speaker 00:
Well, again, Your Honor, we don't have a problem with the second prong of cement kiln, and that prong says that when the agency does depart, it has to follow an identifiable standard.

[00:14:22] Speaker 00:
We don't have a problem with that here, and that is a difference from the earlier 2011 decision.

[00:14:25] Speaker 00:
They've solved that problem.

[00:14:27] Speaker 00:
They've solved that problem, but they have not solved the problem, the antecedent problem of

[00:14:31] Speaker 00:
the fact that they still have complete discretion, Your Honor, over when to trigger the departure.

[00:14:36] Speaker 00:
They decide how much funds go into these four funding lines.

[00:14:40] Speaker 00:
They decide, of those funds, how much to allocate to this region.

[00:14:44] Speaker 00:
They decide how much to pull out for administrative or overhead costs, whether to disregard other sources of funding, such as industry funding.

[00:14:52] Speaker 00:
And also, to be clear, Oceana and others urged the agency to take steps that we thought were more cost effective, such as

[00:15:00] Speaker 00:
supplementing onboard observers with electronic monitoring, and the agency completely disregarded that.

[00:15:07] Speaker 00:
They didn't even consider it.

[00:15:08] Speaker 00:
The agency said that because it was rejected in the 2008 rule, the agency didn't even need to consider it again.

[00:15:15] Speaker 02:
Didn't they say in response to the comments that I thought they had responded and said that these electronic technologies just weren't sufficiently precise yet?

[00:15:26] Speaker 00:
Well, you're right, Your Honor, but in saying that, the agency relied completely on pre-2008 data, so the agency did not consider any information that post-stated the prior rule, not that the agency did cite to the studies.

[00:15:41] Speaker 02:
Did you comment or submit more recent data?

[00:15:44] Speaker 00:
Yes, Your Honor.

[00:15:45] Speaker 00:
Well, so to be clear, the agency at the very beginning of this process said that we're deeming every issue apart from the prioritization process issue that we've been discussing, we're deeming all of those to be considered and rejected.

[00:15:58] Speaker 00:
Oceana and others urged the agency to consider electronic monitoring in part because Oceana submits that it could be more cost effective than only using observer.

[00:16:08] Speaker 02:
But did you submit data showing that it was now far more precise than it was the last time around?

[00:16:14] Speaker 00:
Excuse me, Your Honor?

[00:16:15] Speaker 02:
Did you submit data in support of that, that electronic monitoring was now far more precise than it was at the earlier regulatory?

[00:16:25] Speaker 00:
Oceana, as well as the Environmental Defense Fund and the Nature Conservancy did point to at least two sets of data regarding electronic monitoring.

[00:16:34] Speaker 00:
One is at JA 370 to 371, and that's related to the implementation of electronic monitoring

[00:16:40] Speaker 00:
in the Atlantic highly migratory species fishery.

[00:16:43] Speaker 00:
And the second was, excuse me, the second is JA 351 to 353.

[00:16:48] Speaker 00:
That's a letter from the Environmental Defense Fund discussing a three-year study.

[00:16:52] Speaker 00:
So these commenters did urge the agency to consider this data, and the agency, as you said, kind of put the cart before the horse and said, well, because we've already concluded that electronic monitoring is both technological and not cost-effective, we're not even going to consider these studies that you're urging us to consider.

[00:17:10] Speaker 04:
Well, I thought the record was updated, right?

[00:17:15] Speaker 04:
The commenters did in fact submit updated evidence, right?

[00:17:19] Speaker 04:
Yes, Your Honor.

[00:17:20] Speaker 04:
And the agency explanation, which is the technology

[00:17:27] Speaker 04:
Didn't they say in 2015 we continue to adhere to our view that the technology isn't sufficiently good for these fine judgments about what kind of species we're talking about and is costly?

[00:17:47] Speaker 04:
You're right, Your Honor.

[00:17:48] Speaker 04:
That seems like it's a perfectly good explanation for APA purposes and then the question is simply whether there's substantial evidence in the record to support that judgment.

[00:18:01] Speaker 00:
Well, you're right, Your Honor.

[00:18:02] Speaker 00:
I think it would be a sufficient explanation if the agency had in fact consulted the correct data and had looked at timely data under the district

[00:18:11] Speaker 00:
Partners case and under the City of New Orleans case, the agency has a requirement under the APA to consider timely data, to continue to analyze the studies that it has relied on, and we submit it hasn't done so.

[00:18:26] Speaker 00:
Moreover, there's an additional stronger standard here that the district court called it a stronger standard under the Fisheries Act.

[00:18:33] Speaker 00:
which requires the agency to base its plan on the best scientific information available.

[00:18:40] Speaker 00:
So even if under APA standards the agency gave a sufficient explanation, we submit that the explanation is inconsistent with the requirement to consider the best scientific information available when here the agency said both at the very beginning of the process and in the final rule,

[00:18:57] Speaker 00:
we deem all policy alternatives to be considered and rejected.

[00:19:01] Speaker 00:
The agency was blatant about the fact that it did not even consider any data post-2008.

[00:19:08] Speaker 00:
It did cite those two studies that Judge Tatel and I were discussing, but it in no way analyzed them, in no way discussed the data.

[00:19:15] Speaker 00:
It simply cited them as studies that commenters had raised and simply said, because we've already decided that electronic monitoring is both

[00:19:26] Speaker 00:
has both insufficient capacity and is not cost effective.

[00:19:31] Speaker 03:
What was implicit in that was that the new studies didn't add anything new to their prior reason for rejecting electronic monitoring, which is that electronic monitoring can't give you the breadth of data and can't make the judgments that's required in order to

[00:19:55] Speaker 03:
to effectively monitor the bycatch as far as keeping track of all the various species, et cetera.

[00:20:03] Speaker 03:
And, you know, it's not like the camera can do all that work.

[00:20:09] Speaker 03:
There would still need to be human beings interpreting what the camera found.

[00:20:15] Speaker 03:
So what do the studies, the new studies say that contradict those findings?

[00:20:24] Speaker 00:
Well, that's right, Your Honor.

[00:20:25] Speaker 00:
Two responses to that.

[00:20:26] Speaker 00:
First is that Oceana and other commenters weren't asking for electronic monitoring to replace onboard observers, simply to supplement onboard observers.

[00:20:35] Speaker 00:
And secondly, you're right that that is the explanation the agency gave, but that's the same explanation, verbatim, copy and paste, that the agency gave in 2008.

[00:20:45] Speaker 00:
And the agency didn't consider any of these new studies to see that there was a lot of advancement both in the capacity for electronic monitoring to record this data and in the cost between 2008 and 2015.

[00:20:59] Speaker 00:
The technology has improved greatly, and the agency simply never considered that because, as you noted, they relied on that explanation from 2008 to foreclose any further consideration.

[00:21:10] Speaker 00:
So, Your Honor, I see my time is up if I can reserve some for rebuttal.

[00:21:13] Speaker 02:
Well, we'll see.

[00:21:30] Speaker 01:
The morning, Avi Kupfer for the federal appellee is with me at council's table is Jean Martin with the NOAA general counsel's office.

[00:21:38] Speaker 02:
Can I just ask you right up front, is there any, does the methodology impose any limitations at all on how much, on to which of the funding lines the agency allocates money for bycatch?

[00:21:57] Speaker 01:
So, Your Honor, let me take the question in parts.

[00:22:01] Speaker 01:
There are four funding lines that have to be used.

[00:22:04] Speaker 01:
They have to be used, that's okay.

[00:22:06] Speaker 01:
That have to be used for executing this reporting methodology.

[00:22:10] Speaker 02:
And that wasn't true under the prior case.

[00:22:13] Speaker 02:
That's correct.

[00:22:14] Speaker 02:
Under the prior case, the agency could pick.

[00:22:17] Speaker 02:
One, nine, or ten, correct?

[00:22:19] Speaker 02:
Exactly.

[00:22:20] Speaker 02:
Now, under the methodology, it has to pick four.

[00:22:23] Speaker 01:
It has to use these specific four funding points.

[00:22:25] Speaker 01:
These specific four.

[00:22:27] Speaker 01:
For implementing this methodology.

[00:22:28] Speaker 04:
That's in the methodology.

[00:22:29] Speaker 01:
Yes.

[00:22:30] Speaker 01:
It's in the methodology.

[00:22:31] Speaker 01:
That's part of the 2015 amendment, which is the methodology.

[00:22:35] Speaker 02:
So what's your response to what counsel said, that that's not true, that the agency has complete discretion on it, still has total discretion over that?

[00:22:45] Speaker 01:
That's incorrect.

[00:22:47] Speaker 01:
The 2015 amendment removed any discretion for the agency in how this program is implemented.

[00:22:55] Speaker 02:
The problem identified... So just so I understand, so as I understand it, then your position is that only discretion left

[00:23:05] Speaker 02:
after the new methodology is how the agency allocates the appropriation to all of its funding lines, right?

[00:23:11] Speaker 02:
Once that occurs, the methodology takes over, it picks the four, and it determines what you do if there's a shortfall.

[00:23:18] Speaker 02:
Is that right?

[00:23:18] Speaker 01:
That's right.

[00:23:19] Speaker 01:
No matter the level of funding, there's a formula that applies that determines how these observers are allocated.

[00:23:25] Speaker 02:
Could the agency allocate no funding to those four

[00:23:30] Speaker 01:
Technically, the agency could, or Congress could, allocate no funding.

[00:23:35] Speaker 02:
No, but Congress has just given the agency a big block grant, right?

[00:23:39] Speaker 01:
Congress gives agency, traditionally Congress has allocated a single line.

[00:23:44] Speaker 02:
So with that single line, even though the methodology picks the four funding lines, could the agency still not fund any of those?

[00:23:53] Speaker 01:
Yes, that hypothetical is conceivable.

[00:23:57] Speaker 01:
But that hasn't happened.

[00:23:58] Speaker 01:
No, not only has that not happened, but in the last three years, the agency has had all the funding it needs to send observers on the target number of trips.

[00:24:08] Speaker 01:
That's 11,000 to 15,000 trips a year in this region.

[00:24:10] Speaker 04:
But the government's position is that when the agency chooses whether to take the lump sum allocation

[00:24:22] Speaker 04:
and put it into those four funding lines or somewhere else, the agency has unfettered and indeed unreviewable discretion.

[00:24:33] Speaker 01:
Right, that's the lesson from Lincoln versus Vigil.

[00:24:35] Speaker 01:
The allocation of a lump sum appropriation isn't reviewable under the APA, but that doesn't impact the question of whether the reporting methodology is established or not established.

[00:24:47] Speaker 04:
Well, it suggests that you have not solved one of the two problems that we identified the last time around, which is that the trigger be defined.

[00:24:59] Speaker 04:
the trigger for creating the exceptions?

[00:25:03] Speaker 01:
Respectfully, Your Honor, I disagree with that.

[00:25:05] Speaker 01:
The problem identified by this court in 2011 was that there was discretion to depart from the methodology on a case-by-case basis.

[00:25:16] Speaker 01:
If funding was insufficient, the agency could assign observers to trips ad hoc, at will.

[00:25:23] Speaker 01:
this methodology completely removed any discretion.

[00:25:26] Speaker 04:
Sure.

[00:25:28] Speaker 04:
No doubt you've solved the second problem that we identified.

[00:25:32] Speaker 01:
Well, so our contention is that the cement kiln two-part test only comes into play if there is discretion to depart from the rule on a case-by-case basis.

[00:25:43] Speaker 01:
The problem with the 2008 amendment was that in cases where there was a funding shortfall,

[00:25:49] Speaker 01:
The agency had discretion to depart from the rule and assign observers at will.

[00:25:53] Speaker 04:
Does it establish a methodology if the agency has

[00:26:00] Speaker 04:
two different sets of rules, clear rules, and then they say, but we reserve unfettered discretion to pick which set of rules we want to apply in any given year.

[00:26:12] Speaker 01:
The 2008 amendment did not.

[00:26:14] Speaker 01:
The 2008 amendment says if there's a file... No, ma'am, this is a hypothetical.

[00:26:18] Speaker 04:
I'm sorry, I'm not sure I... You've got... Agency is setting up the methodology and they say here's...

[00:26:25] Speaker 04:
Here's one set of rules that's going to be very intensive.

[00:26:32] Speaker 04:
Lots and lots of inspections.

[00:26:34] Speaker 04:
And then they establish a second set of rules, which is the paired back version of the inspections.

[00:26:42] Speaker 04:
And then they say, we're reserving discretion to pick one or the other for any particular year.

[00:26:48] Speaker 04:
Does that establish a methodology?

[00:26:51] Speaker 04:
It seems to me that's this case.

[00:26:54] Speaker 01:
Our contention is that would establish a methodology.

[00:26:58] Speaker 01:
Here you have a single formula that's used to decide which trips observers are going to go on, and it accounts for all sorts of funding scenarios.

[00:27:07] Speaker 01:
The optimal funding scenario, which has occurred in recent years, and a suboptimal funding scenario when there's insufficient funding to send observers off.

[00:27:16] Speaker 04:
When you choose not to spend money on this particular program,

[00:27:21] Speaker 01:
And regardless of the amount of money spent on this particular program, it wouldn't affect whether the reporting methodology is established or not established, is what the district court found, and that's our contention on appeal.

[00:27:36] Speaker 02:
Can I take you back to the floor?

[00:27:38] Speaker 02:
I just want to be sure I understand this.

[00:27:42] Speaker 02:
When the agency gets its check for its appropriation, it allocates it to all of its funding lines.

[00:27:51] Speaker 02:
Now, this methodology picks the four that are two widgets to allocate money for bycatch research, right?

[00:28:01] Speaker 01:
In the greater Atlantic region, yeah.

[00:28:02] Speaker 01:
Sorry?

[00:28:03] Speaker 01:
Yeah, in this greater Atlantic region, yes.

[00:28:05] Speaker 01:
Yeah, no, I understand that.

[00:28:06] Speaker 02:
Yeah, in the greater Atlantic region.

[00:28:08] Speaker 02:
So that did not exist in the OA regulation.

[00:28:13] Speaker 02:
That's correct.

[00:28:16] Speaker 02:
OK.

[00:28:18] Speaker 02:
four lines is still completely discretionary, correct?

[00:28:22] Speaker 01:
That's correct.

[00:28:23] Speaker 02:
And your position is that discretion comes from the case law which says that agencies have discretion to allocate block appropriations, correct?

[00:28:34] Speaker 01:
Yes.

[00:28:35] Speaker 02:
But didn't our earlier decision say that that decision about how much to allocate to those four counts had to be subject to a standardized methodology?

[00:28:48] Speaker 01:
So the way that I read this court's 2011 opinion is that if there is discretion to depart from the rule, if there is discretion to assign observers ad hoc, you have to have an adequate, you have to adequately define the trigger for that ad hoc discretion.

[00:29:10] Speaker 01:
In this methodology, there is no discretion to assign observers ad hoc.

[00:29:15] Speaker 01:
No matter the level of funding,

[00:29:17] Speaker 01:
The formula established in the 2015 amendment is how observers are assigned.

[00:29:22] Speaker 01:
Alternatively, we argue that even if this court were to find that the two-part cement kiln test does apply, and there is discretion to assign observers ad hoc, the trigger for that discretion is adequately defined.

[00:29:37] Speaker 01:
And as this court said in cement kiln, the purpose of a trigger is to guide regulated parties and the agency on when that discretion will be used.

[00:29:46] Speaker 01:
The problem with the prior amendment is the regulated community didn't know when that trigger would occur.

[00:29:55] Speaker 01:
Here, they had the level of target observer coverage they knew from past years with the cost of implementing it.

[00:30:02] Speaker 02:
So you don't think that our prior decision even required the agency to limit its discretion as to which of the four funding, to limit its discretion as to which of the funding lines got bycatch money, right?

[00:30:17] Speaker 02:
You could have left that out.

[00:30:18] Speaker 02:
So your point is under, you read our decision as saying,

[00:30:22] Speaker 02:
It applies only to the last decision the agency may be forced to make, which is what happens when there's a shortfall.

[00:30:33] Speaker 01:
It applies if there is discretion to depart from the rule, which there was in the 2008 amendment.

[00:30:40] Speaker 01:
In a funding shortfall, the agency said, we reserve

[00:30:44] Speaker 01:
the right to assign observers ad hoc among these vision modes.

[00:30:51] Speaker 01:
They solved that problem in the 2015 amendment by taking away any discretion for how observers are assigned.

[00:30:56] Speaker 01:
No matter the level of funding, there is a formula written into the rule for how observers have to be assigned.

[00:31:04] Speaker 01:
They're automatically assigned to this formula, and they can't depart from that formula in any funding circumstance.

[00:31:12] Speaker 01:
So the problem at issue in Locke doesn't even arise in this case.

[00:31:18] Speaker 01:
The two-part cement kiln test only arises if there is case-by-case discretion to depart from the rule, and that discretion was removed with the 2015 amendment.

[00:31:30] Speaker 01:
I'd like to turn quickly to the question of video cameras and whether the agency explained its reasoning for not including video cameras in the reporting methodology.

[00:31:45] Speaker 04:
Before you get to the explanation, did the

[00:31:47] Speaker 04:
I think the best argument on the other side is that the agency prejudged this when it said on the front end of the rulemaking on remand, which we're not even going to look at this, if this was addressed in 2008 on other issues other than the remand issue,

[00:32:09] Speaker 04:
we're not going to consider anything.

[00:32:12] Speaker 04:
Is that an unfair characterization?

[00:32:14] Speaker 01:
That is an unfair characterization, Your Honor.

[00:32:16] Speaker 01:
What OCEAN is referring to is a paragraph in a response to a comment about NEPA alternatives analysis.

[00:32:24] Speaker 01:
As you know, alternative is a term apart under NEPA.

[00:32:27] Speaker 04:
And what the agency was explaining was that... So it's in the federal register preamble?

[00:32:34] Speaker 01:
That's right.

[00:32:34] Speaker 04:
Sorry, could you just give me the JA page?

[00:32:37] Speaker 04:
Yes.

[00:32:42] Speaker 01:
It's at 37185 to 37186 is the response to that comment.

[00:32:53] Speaker 01:
The comment was that Oceana argues that the action does not contain a sufficient range of reasonable alternatives, including a net no action alternative under NEPA, and the agency did say that

[00:33:05] Speaker 01:
They hadn't reanalyzed any of the NEBA alternatives, but that was a completely separate question from whether the agency looked at developments in electronic technology and video cameras.

[00:33:18] Speaker 04:
Separate question, but if they said in that context across the board that any ground not within the scope of the remand order is deemed

[00:33:30] Speaker 04:
off the table that would seem to apply to this video camera issue equally?

[00:33:36] Speaker 01:
So two responses.

[00:33:37] Speaker 01:
First, the agency was saying that they didn't conduct NEBA alternatives analysis, which would be analyzing alternative reporting methodologies and the effects of those alternatives on the quality of the human environment.

[00:33:51] Speaker 01:
The 2015 amendment contained significant discussion of development in electronic monitoring and video camera technology, responded to Oceana's and others' comments about advances in that technology.

[00:34:06] Speaker 01:
Each of the studies cited by Oceana was discussed in the amendment itself and in the preamble to the rule, explaining why, for example, the Atlantic highly migratory species study

[00:34:21] Speaker 01:
did show some promise for electronic monitoring in the case of quota management for one by one looking at tuna as they come up.

[00:34:32] Speaker 01:
But this is a completely different scenario.

[00:34:35] Speaker 01:
A lot of the types of monitoring here involves a trawl net just dumping hundreds of fish on a deck.

[00:34:47] Speaker 01:
As the agency explained, video cameras just aren't capable of doing the complex work if iCatch observers do.

[00:34:55] Speaker 02:
I suppose the agency could have taken the position, which is the normal position when we find a defect in a regulation and remand it, that the only thing

[00:35:06] Speaker 02:
that defect, right?

[00:35:09] Speaker 02:
That's what we normally do.

[00:35:11] Speaker 02:
A remand, because of a single defect in a regulation, doesn't reopen the whole regulation, but I think their argument is that the agency on its own took another look at these issues.

[00:35:23] Speaker 01:
Well, this wasn't just a simple remand.

[00:35:26] Speaker 01:
The 2008 amendment was vacated.

[00:35:28] Speaker 01:
So we do have a completely new 2015 decision.

[00:35:30] Speaker 01:
That's true.

[00:35:31] Speaker 01:
That's a good point.

[00:35:32] Speaker 01:
That does allow to bring that challenge.

[00:35:34] Speaker 01:
I would also note that the agency releases regular reports on the implementation of its 2013 electronic technologies policy and continues to monitoring ongoing developments.

[00:35:49] Speaker 01:
and has modeled various scenarios of how it can incorporate video cameras into this reporting technology.

[00:35:57] Speaker 01:
Into the reporting methodology, rather.

[00:36:03] Speaker 02:
Thank you.

[00:36:04] Speaker 02:
Mr. Paterno, you were out of time, but you can have two minutes.

[00:36:13] Speaker 00:
Thank you, Your Honor.

[00:36:15] Speaker 00:
Briefly, Your Honor, in 2011, this court held, this is at 1242 of the Oceana IV case, quote, because the agency determines both the amount of funding required for bycatch observation and the funding it will allocate for that purpose, it can determine the stringency of the supposedly external constraint and thus free itself at will from the methodology it purportedly established.

[00:36:38] Speaker 00:
This will not do.

[00:36:39] Speaker 03:
But that's because they could control both.

[00:36:43] Speaker 03:
That didn't mean that they have to eliminate discretion as to both.

[00:36:49] Speaker 00:
As to both, Your Honor?

[00:36:49] Speaker 03:
I'm not sure I understand.

[00:36:51] Speaker 03:
You mean as to the amount of funding required in the funding that it will allocate for that purpose?

[00:37:03] Speaker 00:
Well, we submit here, Your Honor, that the agency continues to have discretion over both of those.

[00:37:07] Speaker 00:
The agency decides how much funding is required in the methodology, and then also, as the government said, has total discretion over how much funding goes into these four funding lines that establish the supposed constraint.

[00:37:20] Speaker 00:
In response to your questions, Your Honors, the government conceded that the agency could allocate zero dollars to the four funding lines, in which case it would be an absolute departure from the methodology.

[00:37:32] Speaker 03:
But how is this new methodology, how does it, I mean it cabins the discretion of the agency to determine the amount of funding that's needed because the methodology isn't dependent completely upon the amount of funds, the methodology sets forth

[00:37:52] Speaker 03:
These are how many observers are needed, and then if you don't have the funds to reach all of the 30% CV levels, then there are adjustments that are made, but it's not like it's all dependent upon the amount of funding in the first place.

[00:38:13] Speaker 00:
Well, whether the agency reaches that 30% CEV for all the federally managed species is completely dependent, Your Honor, on the amount of funds the agency decides to allocate.

[00:38:23] Speaker 00:
And we would just point this Court to its 2011 decision, which we think forecloses the rule that the agency has promulgated here.

[00:38:33] Speaker 02:
Thank you.

[00:38:33] Speaker 02:
Thank you, Your Honor.

[00:38:34] Speaker 02:
The case is submitted.