In 2011, the regional council overseeing marine fisheries on the Pacific Coast instituted a kind of cap-and-trade program for the Pacific whiting fishery and the groundfish fishery, which includes fish such as Dover sole and petrale sole.
The council, which oversees marine fisheries off the coast of California, Oregon and Washington, decreed the government would no longer tell fishermen when to fish or what kind of gear to use. Instead, they'd tell fishermen how many fish each could catch by assigning them shares, or a percentage of the fishery.
These shares can be bought, sold, leased or traded like any commodity.
The idea behind the change is that if a fisherman "owns" a piece of the resource, he or she will be a better steward of it.
In order to figure out each fisherman's - or corporation's - share, the Pacific Fishery Management Council reviewed catch level history from 1994 to 2003. Those who caught the most fish during those years got the biggest shares.
But a group of small-boat operators said they thought the way the council had divvied up those shares was unfair. So they sued the government, and last week, the judge ruled in their favor.
"The original allocation was illegal," said James Walsh, lead counsel for the plaintiffs, the operators of the Pacific Dawn and Chellissa, James and Sandra Schones, the Da Yang Seafood company and Jessie's Ilwaco Fish Co.
It "did not include the more recent history of harvesting and processing," he said, "thereby short-changing" those who have been consistently fishing the resource, "in favor of those who left the fishery prior to 2003."
He said the allocation favored fishermen who gamed the system by leaving in 2004 to build shares in an Alaska fishery that was structuring a similar management plan, as well as "certain environmental groups that bought permits but haven't used them for fishing."
Although The Nature Conservancy owns the largest share of shares in the groundfish trawl fishery, it does not own Pacific whiting shares, which is the fishery involved in this case.
And although a brief in the court case mentions that the Environmental Defense Fund owns permits, no evidence could be found to support that statement, and a spokesman for the organization denied any ownership.
"This allegation - that EDF owns permits - is flat-out wrong," said Tom Lalley, a spokesman for the Washington D.C.-based organization. "EDF does not, and has never, owned permits. Permit ownership is public record, and there are no records showing that EDF has owned quota or permits."
The federal government and fishery council now will have to reconvene to figure out how to re-allocate the shares.
The National Oceanic and Atmospheric Administration "takes the findings and conclusions of the court in the Pacific Dawn case seriously," said William Stelle Jr., northwest regional administrator for the agency's fisheries. "We appreciate the court's decision to accept our recommendations on referring the issues back to us, to embrace a workable schedule and to leave the overall program in place this year while we reconsider the limited scope of issues he found wanting in his ruling."
As the government moves forward, Walsh had this to say: "Do not reward game players, investors who did not work the fishery or environmental groups that are not committed to keeping this well-managed fishery competitive in world markets."
The Pacific Fishery Management Council will convene [PDF] in Sacramento from Feb. 29 to March 7 to discuss this issue and others.
Read more California investigative reports at CaliforniaWatch.com.