A controversial management plan that allocates the bulk of the multi-million dollar crab fishery to vessel owners, skippers, processors and coastal communities but none for the crew is heading for further scrutiny that could prove as stormy as the Bering Sea.

North Pacific Fishery Management Council staff members in a June meeting in Anchorage were scheduled to present a document considering the prospect of eliminating processor shares, and the likely ripple effect of that move through the fishing industry economy.

The initial crab rationalization program, which went into effect in August 2005, allocated rights to catch and process crab to vessel owners, skippers, coastal communities and processors based on their proven history in the fishery.

Anchorage economist Marcus Hartley of Northern Economics said it's difficult to compare earnings per person before and after crab rationalization began because of fluctuating total harvests and prices paid for crab.

Even as total harvests and numbers of participants in the fisheries fluctuate, "if you have fewer slices of the pie, the pieces of the pie are bigger," so that all participants, including vessel owners, skippers and crew, are collectively earning more, said Hartley, who recently completed an updated study on the overall affect of the seafood industry on Alaska's economy.

Advocates of the crab rationalization plan, known in the industry as crab ratz, liken the program to a solid three-legged stool, supporting vessel owners, processors and communities.

"I think it is maturing and I think people are working together to make it successful," said Edward Poulsen, who manages one of the crab cooperatives that participate in the fishery. "Relationships were strained, but they are getting a lot better."

Critics say millions of dollars in crew shares that would have gone into communities where they live are gone, and they want them back.

While vessel captains were allocated a small percentage of quota shares, the crew got none. Crewmembers also question the wisdom of linking most of the individual quota shares to specific processors, thereby forcing harvesters to deliver 90 percent of the harvest to them.

Critics have support from the federal Justice Department, which told the U.S. Senate Committee on Commerce, Science and Transportation in February 2004 that processor quotas would impose new regulatory requirements that produce anticompetitive results in the processing market.

"Any quota system distorts the operation of a free market," said J. Bruce McDonald, deputy assistant attorney general for the Justice Department's Antitrust Division. "Although a harvest quota of some sort is necessary for stock management, IFQ is better than the current system because it directly improves safety as well as eliminating incentives to over-invest in harvesting and processing capacity. Adding IPQ further distorts the market's operation, and introduces competitive harm, without offering similar kinds of competitive benefits."

The Antitrust Division also recommended that the National Oceanic and Atmospheric Administration, which oversees America's fisheries, oppose the arbitration proposal contained in the crab rationalization program as a poor substitute for competitive pricing.

Even Sen. John McCain, R-Ariz., spoke out in 2003 against processor shares, saying they "throw an enormous wrench in the free market machinery."

Crew shares

Many crewmen, who said they were left out of the initial council process on crab rationalization, want the council to allocate them shares because of their history in the fishery.

They point to national standards for fishery management plans set out in the 1996 Sustainable Fishery Act, which amended the Magnuson Fishery Conservation and Management Act.

SFA amendments and changes to the Magnuson Act, which was later renamed the Magnuson-Stevens Fishery Conservation and Management Act, included numerous provisions requiring science, management and conservation action by the National Marine Fisheries Service.

Those national standards specify that if it becomes necessary to allocate or assign fishing privileges among various U.S. fishermen, such allocations "shall be fair and equitable to all such fishermen, and shall be carried out in such manner that no particular individual, corporation or other entity acquires an excessive share of such privileges."

The 1996 legislation notwithstanding, in August 2005, crab fishing in the Bering Sea and Aleutian Islands fell into the new share-based management program, which included processor shares, vessel owner shares and skipper shares.

The lengthy, often contentious process that led to that plan began with a congressional directive to the North Pacific Fishery Management Council to come up with a safer, equitable way to manage the derby-style fishery, a fast-paced race for fish that put many lives in danger and led to a number of deaths at sea.

Under the old rules, vessels competed in a relatively short fishery, which ended when fishery managers estimated that the total allowable catch had been taken.

When word got out that the crab rationalization program was coming and vessels would have to have harvest history in the fishery to get quota share, the race got more intense, with a growing number of competing vessels and millions of dollars spent on vessels.

"There was a rush to put boats into the fishery in the late 1980s to qualify for a period to fish, and that period just kept getting extended," said Keith Colburn, one of the crab boat captains featured in the Discovery Channel series "The Deadliest Catch." "From 1999 to 2002, the same thing happened. A number of vessels continued to fish for qualifying history to qualify for IFQ and some vessels weren't grossing enough money to meet their fixed costs."

With the onset of crab rationalization, the number of competing vessels dropped quickly from well over 200 to about 80 vessels, but they were making more deliveries.

"The race for fish is still there, but now it's a race for deliveries," said Colburn. "We have a very strict delivery schedule. The problem is you can't afford to miss the delivery date."

Colburn would like to see changes that would allow vessels options in where to deliver their crab in the event of dangerous conditions at certain ports.

He supports allowing crew to buy into the fishery, but not a program to simply allocate them shares.

"If you had a direct allocation to crew right now, I would guarantee 80 percent of it would be for sale immediately, so they could buy into the smaller boat fisheries," he said.

Savings with quotas?

Steve Minor, executive director of the North Pacific Crab Association, which represents processor quota shareholders, said the processing sector quota is a success story, benefiting coastal communities and processors alike.

"Depending on the (crab) fishery, Alaskan communities own 20 to 50 percent of the processing quota," he said. "I don't think any public policy could have been designed to have so much of the processing sector transferred to Alaska ownership."

Buying quota shares, when available, runs to thousands of dollars and the federal council has discussed options for a low interest loan program that would make the purchase of quota shares affordable for crew.

Minor said that the crab rationalization plan established a federal crew loan program, but the Commerce Department has not yet implemented it.

"We think this is a major promise of this program that has not been kept," he said. "It is based on the halibut and sablefish crew loan program that is 10 years old. It makes money for the federal government. They (crew) get a really low interest rate, but they do have to pay it back. It doesn't cost the government anything. We think the crab program for crewmen will be equally successful."

Costs of ratz

Crewmen also are concerned that those still working on crab boats are making substantially less money than before crab rationalization.

Before crab rationalization, most boat owners deducted costs of fuel, bait, food and associated taxes, and then paid crew about 6 percent of the value of the harvest, said Kodiak fisherman Shawn Dochtermann, an officer in the Crewmen's Association.

After crab rationalization, boat owners also were deducting taxes assessed for a crab boat buyback plan, and for binding arbitration services established under the legislation, plus huge fees paid for leased quota shares.

A vessel harvesting leased red king crab quota shares may be charged by owners of that quota up to 75 percent of the quota's value, while snow crab quota shares are assessed an average of 50 percent of their value by owners.

Dochtermann said a lot of that quota share is owned by people who sold their boats but kept their quota shares, people he refers to as "mail box fishermen/investors."

A post-rationalization draft report prepared by researchers with NOAA's Alaska Fisheries Science Center in Seattle found that lease fees are taken off the top, followed by those other expenses, and then crew were paid.

"Thus the job security of a longer season based on guaranteed quota does not necessarily make a position on a crab boat more desirable," the researchers wrote.

Crewmen interviewed by the researchers said they were earning considerably less.

While some boats continue to fish only their allocated quota, many have acquired additional quota through leases or purchases, the researchers noted.

Lease rates are quoted at approximately 70 percent for king crab and 50 percent to 60 percent for snow crab.

"Quota acquisition and consolidation is an outcome of rationalization that facilitates vessel consolidation and thus lowers the total fleet costs of landing the year's total allowable catch," the report notes. "However, the benefits of lower overall costs do not come free, as vessels acquiring quota from idle vessels pay royalties for the right to land their fish."

The researchers also found that safety fears pervade, in spite of the intention of the crab rationalization program to improve safety for boat captains and crew.

"Based on the range of perceptions of safety, our interview data suggest that rationalization was a necessary, but not in itself sufficient means to improve safety at sea for all vessels," the report said. "Ultimately the captain's philosophy and business strategies dictate the working conditions impacting safety aboard a vessel."

On the web:

www.nmfs.noaa.gov/sfa

http://www.nmfs.noaa.gov/msa2005/docs/MSA_amended

http://fakr.noaa.gov/sustainablefisheries/crab/rat/progfaq.htm#changes