Washington and Oregon individuals with stakes in the Bering Sea crab fishery are taking aim at the Alaska majority on the North Pacific Fishery Management Council and the Community Development Quota program.
Citing concerns about potential council actions that could restructure the Bering Sea crab fishery to improve crew compensation, a letter sent to the Congressional delegations, governors and state legislatures of Washington and Oregon alleges discrimination by the six-member Alaska majority and blasts the CDQ program for enjoying unfair competitive advantages that are crowding out private businesses.
The undate letter sent sometime in late August was signed by former North Pacific council member David Fluharty, marine biologist Dayton Alverson, Puget Sound Ports Council President Vince O’Halloran, former North Pacific Fishing Vessel Owners Association President Dennis Peterson and Bering Sea crab pioneer Kris Poulsen.
Alverson is also a former chairman of the North Pacific council Scientific and Statistical Committee. Poulsen’s son, Ed Poulsen, is the executive director of Alaska Bering Sea Crabbers and a member of the North Pacific council Advisory Panel.
Ed Poulsen has also been the lead representing vessel owners and quota shareholders in discussions on ways to improve crew compensation for Bering Sea crab crewmen. A planned report on the effort originally scheduled for the upcoming council meeting in Dutch Harbor has been delayed until December.
The letter from Kris Poulsen, et al, describing the CDQ groups as “predatory” was presented to the city of Newport, Ore., in support of a Sept. 13 resolution seeking an additional two seats for Oregon on the North Pacific council.
While the Newport resolution supports two additional seats for Oregon on the North Pacific council, the Poulsen letter asks for two additional seats for Washington and another for Oregon.
The current 11 voting members of the council include six members from Alaska, including Department of Fish and Game Commissioner Cora Campbell, three from Washington, one from Oregon and National Marine Fisheries Service Alaska Region Administrator Jim Balsiger.
The Poulsen letter suggests Balsiger should be considered a member of the Alaska delegation, and it would create a 14-member body with seven members from Washington and Oregon.
Alternatively, it suggests, the council should be required to have 8 votes of 11 to institute any further quota share programs.
Alaska Sen. Mark Begich said the idea is going nowhere.
“As chairman of the Senate Oceans Subcommittee, I will work to make sure this proposal never sees the light of day,” Begich said in a statement provided by his office.
The CDQ program was passed by Congress in 1992 to aid 65 economically depressed Western Alaska communities that are divided into six non-profit corporations that with tax exempt status.
The six CDQ groups receive rights to harvest 10.7 percent of the total harvest of 36 species in the Bering Sea Aleutian Islands fisheries, with the greatest revenue produced by pollock, crab and halibut. According to the most recent annual reports and tax filings, net assets at the six groups now top $600 million.
Larry Cotter, executive director of CDQ group Aleutians Pribilof Islands Community Development Association, said the Poulsen letter was “full of factual errors and revisionist history.”
“The gentlemen who wrote this and signed this have enough experience to not be associated with as poorly done a work product as this,” Cotter said. “This is a group of individuals who are upset that the days when Alaska was a colony are gone, and are incredibly asking their delegations to do whatever they can do to make Alaska a colony once again.”
The letter also mentions the potential for CDQ group Coastal Villages Region Fund to move its 24-boat fleet to Seward as soon as 2014, which may cost the Seattle area $25 million in annual moorage fees and maintenance.
Ironically, if CVRF does move its fleet to Seward, three boats formerly owned by Kris Poulsen will go with it. Poulsen sold three crab vessels to Coastal Villages in 2007 for somewhere between $8 million and $12 million according to CVRF annual reports and tax filings.
Poulsen also was paid $445,000 in 2007 to manage the boats and quota for CVRF, also according to the company tax filings.
“What hypocrisy is this?” Cotter said. “Are these guys complaining because they voluntarily sold their assets to Alaskans? This is pathetic.”
Because the North Pacific council cannot reallocate harvest quota set aside for CDQ groups, any change in the structure of the crab fishery to benefit crew members would come out of private industry holdings either through lost harvest shares or some kind of cap on lease rates.
The Poulsen letter refers to a December 2010 council motion for the crab vessel owners and quota shareholders to find solutions that would advantage crew members who now receive 15 percent to 20 percent of the harvest value compared to about 35 percent before the fishery was rationalized in 2005.
In the Bristol Bay red king crab fishery, the crew who harvest the most crab are actually paid less than fellow crew who harvest as much as 155,000 pounds less, according to the five-year review of the program.
High lease rates charged by quota shareholders are roundly blamed for the crew loss in share, and the letter alleges CDQ groups are charging some of the highest rates.
“The council voted to take steps so that private holders of crab quota would readjust their quota lease fees, so crews would get more revenue,” the letter states. “A similar approach to CDQs was not made, yet they charge as much as 70 percent to catch their red king crab harvest quotas. This will leave CDQ groups with a larger profit margin than that of the private family holders, most of whom are in the South, further enabling a shift of economic benefits to the North.”
U.S. Rep. Don Young, who was instrumental in crafting the CDQ program, declined comment on the letter.
Aggie Blandford, executive director of the Western Alaska Community Development Association (made up of all six CDQ groups), said a formal response to the letter will be made after the WACDA meeting Sept. 23.
Supporting materials for the Newport resolution included an email from Hyder, the lone voting member from Oregon on the council.
In the July 19 email to crab fisherman Gary Painter, Hyder said the council process has come to be dominated by Alaska politics.
“The permanent Alaska majority on the Council consistently controls the outcome of Council actions and usually favor Alaskan interests,” Hyder wrote to Painter.
“There seems to be an attitude that fish and fishing activity in the North Pacific Region EEZ belong to Alaskans. I am concerned that continual allocation pressure on Oregon participants will destabilize the industry and eventually may result in fleet consolidation that would not otherwise be necessary.”
Hyder said he didn’t know if two more Oregon votes would make a difference, but said it would be a “healthy change.”
“The NPFMC would have the ability to actually function as a council rather than as an extension of Alaska politics,” he wrote.
Bill Tweit, a designated member of the council as the representative for the Washington Department of Fish and Wildlife, said politics at both ends of the North Pacific influence council actions.
“When I look at the vast suite of issues in front of the council, the council is motivated by basic stewardship concerns and meeting the national standards of the Magnuson Act,” Tweit said. “Certainly we have allocation battles that end up winding up different ways. I completely agree with Roy that the political climate in Alaska influences how the delegation votes. The political climate down here influences how this delegation votes. Overall I think we do a good job addressing basic stewardship of the resource.”
Tweit also noted that the CDQ program was created by Congress and any ability for the council to alter it is “pretty limited.”
Since foreign fishing in the 200-mile exclusive economic zone off Alaska’s coast ended in 1988 (the original intent of the Magnuson-Stevens Act), the letter alleges Alaska representatives on the council, as well as state and national politicians have “methodically employed the federal fishery management system to effect massive wealth transfers from Washington and Oregon.”
“When (the late former Washington Sen. Warren Magnuson) agreed to the Alaskan majority on the North Pacific Council, he certainly did not anticipate a strategic campaign to deprive his State of the very industry he sought to promote,” the letter states. “Indeed, all the coastal states including Alaska agreed to a national standard of non-discrimination of fishermen from different states. This has been ignored by the North Pacific Fishery Management Council.”
The Poulsen letter pegs the value of quota shares under Alaska rationalized fisheries at $10.3 billion — $1.5 billion for halibut, $6 billion for pollock, $1.4 billion for cod and flounder, and $1.4 billion for crab.
For a fishery to be rationalized, Washington and Oregon fishermen had to pay a price to CDQs, the Poulsen letter states. By asking for an 8-vote majority to approve new quota share programs, Poulsen et al are now saying the price is too high.
“The cost to them of receiving individual quotas and coops was a perpetual 10 percent allocation to all Bering Sea species to coastal Alaska,” the letter states.
That’s how Earl Comstock remembered it at a Honolulu meeting of the Marine Fisheries Advisory Council, or MAFAC, in February 2010 to discuss the federal draft catch share policy. (MAFAC is a federal body that offers advice to the Secretary of Commerce.)
According to transcripts, Comstock, a former legislative director for the late Sen. Ted Stevens, said CDQs were created in exchange for rationalizing the halibut fishery in 1992.
“And so each time, and the same thing with crab and the same thing with pollock, you want the AFA [pollock rationalization], you are going to get CDQ,” Comstock said. “So I mean it was always done as a political exchange as the price that the industry paid for getting this improvement they were receiving.”
The letter states that CDQ groups have leveraged their 10 percent annual allocation to now control 40 percent to 45 percent of the pollock trawl fleet in the Bering Sea, “much of the Pacific cod freezer longliner fleet, and increasing amounts of Bering Sea crab quota.”
It also cites Bristol Bay Economic Development Corp., another CDQ, for having a 50 percent ownership of Ocean Beauty Seafoods, which it claims has $500 million in sales per year.
“With the advantage of their tax exempt status,” the letter states, “CDQ organizations have become predatory in acquiring fishing opportunities and segments of the industry.”
Heather McCarty, a lobbyist for St. Paul CDQ group Central Bering Sea Fishermen’s Association and a member of MAFAC, addressed the success of CDQs at the Honolulu meeting.
She said, “there is one CDQ group, for example, has I think $8 million in the bank just sort of in the bank and they have already bought fish companies and all kinds of stuff, all from the money that comes mostly from pollock fishery and now more and more from the crab fishery.”
McCarty continued: “Frankly I can’t think of very much that is wrong with it. The main thing that is wrong with it is that people envy it. And there is a lot of hostility in the rest of the fisheries toward the CDQ program. And some people consider it social engineering, which indeed it is, and it is hugely successful for these communities and people resent the program.
“And it comes out in testimony at the council. It comes out on radios at the fishing grounds. ‘Oh, you are a CDQ group, you can buy anything you want. You can pay your crew anything you want. We can’t compete with you because you are so successful,’ and that is really what the net effect has been of the CDQ program because it has been so successful.”
McCarty said vessel owners have also benefited from crab rationalization and the attendant rise in the value of harvest shares.
“Now the tide has turned to the point where skippers and the owners of the crab vessels are ecstatic because they are all millionaires,” she said. “They are doing extremely well.”
Apparently not as well as some would like.
Andrew Jensen can be reached at [email protected]