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Court Ruling Upholds Coast Guard Enforcement of Reflagging Law

November 28, 1992

SEATTLE (AP) _ A court ruling blamed for millions of dollars in losses by foreign-owned fishing corporations that operate off the West Coast has been overturned.

The case centered on a 5-year-old law that generally required majority U.S. ownership for corporations to operate fishing boats within the 200-mile U.S. coastal economic zone. In addition, the ships had to be built or rebuilt in U.S. shipyards.

A third provision allowed continued licensing of vessels that had been allowed in U.S. waters or were being built or were under contract for rebuilding before July 28, 1987.

The purpose was to restrict U.S. waters to ships made and owned by U.S. interests, but enforcement was challenged by U.S. shipyard owners and others who said the Coast Guard failed to enforce it properly.

Under an initial Coast Guard interpretation, vessels covered by the ″grandfather clause″ could remain in U.S. waters following ownership changes, even if they came under foreign control.

In May 1991, U.S. District Judge John Garrett Penn in Washington, D.C., ruled that the Coast Guard’s interpretation ″effectively obliterates the primary purpose of the Anti-Reflagging Act.″

As a result, many foreign-controlled factory trawlers and other vessels based in Seattle were barred from lucrative Alaskan fisheries.

Penn’s ruling was overturned this week by a three-judge panel for the U.S. Court of Appeals for the District of Columbia, which held that the anti- reflagging law had been interpreted correctly by the Coast Guard.

″It was very significant,″ said Bill Myhre, who represents a group of companies that own 12 factory trawlers. ″People in many cases had to sell an interest in the vessel or quit fishing.″

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