1991: How NPFMC watches over its own self-interests while “managing” AK fisheries
This article appeared in the Seattle Times in 1991 —
A Fishy Situation — Critics Say Members Of Panel Set Up To Manage Rich Fisheries Zone Off Alaska Are Watching Over Their Own Self- Interests At The Same Time
Nov 10, 1991 by Ross Anderson, Duff Wilson
The United States’ richest fishery is controlled by a federal council so riddled with conflicts of interest that its actions result in millions of dollars in benefits to some council members or their companies.
Critics say self-serving votes by council members are also leading to lost jobs here and artificial higher consumer prices for fish.
The group, called the North Pacific Fishery Management Council, was set up 15 years ago to manage the $1 billion-a-year Alaska fishery in the federal zone between three and 200 miles offshore.
But it wasn’t until recent years, when American fishermen began fighting American fishermen, rather than the Japanese, for shares of the resource, that the council emerged in public view as a sort of Tammany Hall of the Pacific.
“The politics are so blatant it forces you as a protective measure to become part of the problem,” says Walter Pereyra, a Seattle businessman and member of the council. “It’s a corrupting process.”
Four of the 11 council members own fishing businesses. Two are industry-group employees. One is a consultant who makes no secret of the fact he hopes to make money off his inside expertise.
Pereyra, perhaps more candid than most, admitted that he performs government business with an eye on his own trawler companies’ bottom lines.
Pereyra, for instance, loses millions of dollars in potential revenue because of council-imposed limits on fishing for a type of bottom fish called pollock. Pereyra, citing scientific studies on optimum yield, is trying to get the council to loosen the limits.
Under current practice, most of the council members are appointed precisely because of their industry experience. They are required to file financial-disclosure statements and take an oath to vote in the national interest.
But some council members say the national interest is often equivalent to their own business interest.
— After he took a $1,250-a-week job from crab fishermen, council member Larry Cotter changed his vote and tabled a far-reaching rule he’d previously favored and the crabbers opposed. own business interest.
— Council member Oscar Dyson voted to allow Japanese fishing companies to take 10 million pounds of cod from the U.S. fishing zone after he struck a private deal for his company to sell them a million pounds of cod fillets.
— Council member Ron Hegge’s three freezer boats kept their current fishing rights while competing trawlers were slashed in a plan approved by Hegge and a council majority in June. Some council observers said Hegge also stands to gain from a fishing-quota plan now under study. Hegge says he could be hurt, not helped, by the plan.
These council members all deny they were considering their private business while they performed their public service. But business people and other observers point to the web of self-interests on the council every time it decides who gets how much of the fish.
“It’s a very serious problem, and we’re getting situations here that are very, very close to the edge,” said Rudy Petersen, a council member from 1982 to 1988 and owner of a Seattle-based factory trawler.
Steve Davis, longtime deputy director of the council staff until he quit in July, said council members take pains to mask their self-interest in scientific rationales.
“When you sit through a council meeting, you’ll know there’s an underlying motive that’s probably the main reason they’re doing what they’re doing, or a particular council member is pushing a regulation down a particular path,” Davis said.
Conflict-of-interest charges were raised last summer in a plan to shift at least $250 million of annual fish product from a Seattle-based floating factory fleet to a largely Japanese-owned processing industry on the Alaska shore.
Washington, as a result of the plan, could lose more than 1,000 jobs. Critics say the decision will also mean higher prices for fish by curbing the free market economy.
Seven of the 11 council members live in Alaska, and four of them stood to gain or lose personally from the decision. But they all voted.
The fishery council is exempt from federal conflict-of-interest laws because it is supposed to be an advisory body, with the secretary of commerce making the final decision. The secretary, however, almost never overrules a council decision and is not expected to do so in this case.
That leaves a handful of special interests in charge of a federal resource affecting thousands of jobs and millions of consumers.
The council has no rules on abstaining from votes because of personal interests, no rules against seeking outside work from special interest groups, and no requirements for lobbyists to report their activities or spending.Seattle Times, 1991
The council was set up under fishing-industry control because of a distrust of scientists who might set fishing limits too low, according to Bud Walsh, former chief counsel to the Senate Commerce Committee. Walsh worked with Sen. Warren Magnuson of Washington to draft the Fishery Conservation and Management Act in 1976.
Council members are nominated by the governors of Alaska and Washington and appointed to three-year terms by the secretary of commerce. They meet six times a year, usually in Anchorage. Four council members represent government agencies; seven represent fishing interests.
Donald Bevan, former director of the University of Washington School of Fisheries, said the law he helped to draft is not working because of the personal conflicts of fishing-industry members.
“We might do better with 11 real-estate salesmen who had no conflicts of interest,” Bevan said. “It just isn’t good public policy having people with a direct financial interest making decisions on those financial interests. We wouldn’t stand still for a minute with a city council run by contractors making decisions on city contracts.”
The American Factory Trawler Association recently approached the Department of Justice and the Department of Commerce inspector general to try to have conflict-of-interest charges investigated.
They weren’t the first. Lee Alverson, a Seattle consultant and former top federal fishery official, tried without success years ago to interest federal agencies in investigating the council’s activities.
Alverson and a Seattle-based fishing organization, said in their complaint to the Commerce Department that council members should not “be the recipient of considerable amounts of money from clients who have a great deal at stake in council decisions.”
A department attorney responded that the Magnuson Act provided an implied exception to conflict-of-interest laws for council members.
“We’re talking about billions of dollars that people can shift around between industry groups,” Alverson said, “and they’re going to vote for themselves.”
Alverson and the Seattle fishing group were especially critical of Cotter, a consultant from Juneau.
Cotter was appointed to the council in 1986, thanks partly to a last-minute lobbying blitz by the Pacific Seafood Processors Association, a group representing shoreside processing plants. He was upfront about his plans to honor the debt.
“I don’t think you will need to spend a lot of time trying to determine how I’m going to vote,” Cotter wrote the head of the group.
President of a longshoreman’s union at the time he was appointed to the council, Cotter soon quit that position and went into business as a freelance consultant.
Cotter’s role in a committee studying ways to address the issue of “by-catch,” a perennial problem where boats fishing for one species inadvertently scoop up others, is another illustration of how conflicts develop on the council. The committee’s job was to decide whether fishermen should be required to toss the fish back or not. The decision was worth big money to the industry.
After months of work, the committee agreed on a consensus plan. Then one member, representing the Alaska Crab Coalition, had second thoughts.
Cotter, the committee chairman, had led the 1988 council discussion on the by-catch plan. But instead of urging a vote to approve, Cotter said he, too, had an 11th-hour change-of-mind.
Cotter’s vote to delay the plan made the difference in the 6-5 vote. It was later killed.
A few months before that meeting, Cotter had been paid to take a week-long trip to the Soviet Union to represent the Alaska Crab Coalition in negotiations with Soviet business. Cotter said he planned to manage a joint venture for the crab boaters if it succeeded.
Shortly after the vote, Cotter disclosed he was being paid $1,250 a week by a group of crab operators for consulting services. Cotter quit that job about two months later, saying he was nervous about what his employers really expected of him.
“I wasn’t, in my opinion, doing enough work for the amount of money I was receiving,” Cotter said in a sworn deposition in a recent lawsuit that touched on council conflicts.
In an interview, Cotter insisted his private business had nothing to do with his change of vote. He noted that he disclosed the consulting agreement even though he was not required to do so at the time. Cotter said he voted against the by-catch plan to try to save it, not to kill it, because the National Marine Fisheries Service was going to refuse to enforce the plan.
The timing of his private deal indicated he was either negotiating or had already signed on with the crab-boat group at the time of the council meeting.
Cotter hears the talk. He grew angry at the allegations that his vote was bought. “If I’m going to be bought off – and I’m sure as hell not – it’s not going to be for a couple thousand bucks,” he said. “I mean, give me a break.”
Cotter said he solicits consulting work from people who attend council meetings and plans to do even more work after he leaves the council next year. Cotter said he turns down some potential work because of council conflicts, adding that he would welcome a federal investigation.
“What I say is, come on and have a major investigation of me. Start with my bank account. Look at my check register.”
In Cotter’s view, his opponents in the Seattle-based trawler group, the big losers in the vote on fish allocation, are trying to destroy the council process with allegations of conflicts. “There is smoke, no fire,” he said.
Council member Dyson, a career fisherman from Kodiak, has also found himself accused of putting business interests first.
Shortly after Dyson was appointed to the council in 1986, a company representing 18 Japanese fishing companies signed a contract with Dyson’s company to purchase one million pounds of cod products in return for the council and the state of Alaska allowing the Japanese to take about 10 million pounds of cod from the Bering Sea.
It was apparently the first and last such purchase agreement.
Jay Hastings, Seattle attorney for the Japan Fisheries Association, said the purchase agreement was offered to several other companies in addition to Dyson’s. Hastings said U.S. authorities required the Japanese to buy some product if they wanted to fish off Alaska.
“I know the problem at that council now, but at that time I don’t think it was even viewed as a problem in conflict of interest,” Hastings said.
More recently, Dyson has been a solid vote in favor of giving on-shore processing plants a guaranteed amount of fish to buy and sell. And he is one of nine stockholders in a big Kodiak processing plant.
In essence, Dyson is allocating large amounts of money to himself, says Gary Brown, an economist who worked on the onshore preference issue for the factory trawler group. The decision could be worth millions of dollars to Dyson’s company, Brown said.
Dyson said he did not vote just for Dyson, but for all fishermen who may be helped by the on-shore preference. He said his main interest is in seeing the fish resource managed well.
The council does get high marks for conservation. The panel routinely votes for a lower cap on fishing than scientists say they need to preserve the stock in the Gulf of Alaska and Bering Sea. Other councils, notably in New England, have allowed overfishing to the point of depletion.
Yet council members who are proud of their conservation work, when it comes time to divide up the available fish, are being accused of at least the appearance of voting their financial self-interest.
Hegge, a council member from Anchorage, owns three freezer boats that fish with lines and hooks. Those boats might have lost income if their fishing rights had been cut back as the council proposes to do with similar offshore freezer boats that fish with nets.
Hegge’s boats were exempted. Hook-and-line freezer vessels of less than 125 feet in length were classified as part of the in-shore fleet, which suffered no cutbacks. Hegge and his family own a 78-footer, a 56-footer and half of another 78-footer.
Economist Brown said Hegge did not take a final position on the onshore preference issue until after the amendment passed. “In fact, that definition was tailored for Hegge,” Brown said.
Hegge denied that, saying he did not benefit from the amendment and would not have been hurt by being classified with the offshore fleet. He said he was voting to keep the huge, mobile offshore trawl fleet from scooping up too many fish at the expense of the shore-based industry.
Some council insiders also said Hegge stands to gain from a plan for fishing quotas that the council is crafting. The quotas on black cod would replace a limited season on the cod, and they would give some fishermen a guaranteed future harvest right, a right that could be sold to other operators.
“Someone like Ron Hegge stands to do real well,” said former council deputy director Davis.
But Hegge said this, too, is an incorrect assumption. He said he has cut back his black-cod fishing in recent years so he would receive a smaller quota than most other black-cod fishermen. “I would be better off personally if we never went to it,” Hegge said.
Hegge said he makes his council decisions based on testimony and the national-interest standards of federal law.
“I’m going to vote for the best interests of the resource, not the best interests of Ron Hegge,” he said. “I think of my own situation in this sense: I think if it is good for me as a fisherman, I guess it would be good for the fisheries.”
Three other council members are accused of conflicts of interest because they are paid to represent a certain viewpoint.
Richard Lauber, council chairman, is a full-time lobbyist for the Pacific Seafood Processors Association, which represents shore plants, the big winners in the billion-dollar onshore-offshore battle.
Henry Mitchell works for western Alaska interests as director of the Bering Sea Fisherman’s Association. Bob Alverson manages the Fishing Vessel Owners’ Association in Seattle.
They say they vote independently of their associations.
“As soon as council week comes along, I don’t feel that I represent anybody but the resource,” Alverson said.
Some former council staff members are also being accused of conflicts.
Richard Tremaine, an economist, and Davis, a biologist, were hired this year by LGL Associates, a consulting firm. LGL was paid about $15,000 by the shore processors’ group to analyze the council proposals on onshore processing preference.
Tremaine worked on the analysis but said he used no inside information. Tremaine denied a charge by Brown that he was asked by council staff members to comment on council submittals before they were made public.
Davis, in charge of council staff on the onshore preference issue, said he had no conflict because he did not join LGL until after the council made its decision. Davis did not work on the LGL report financed by shore processors.
Davis accepted the LGL job in April but stayed at the council three more months to finish work on the onshore preference plan. Davis passed out his new business cards at the June council meeting where the onshore decision was being made. He left federal employment July 10 and has recently been seeking industry clients.
Davis has now begun speaking out about how the council decision on onshore preference was made by politics, not merit. He had to junk a $25,000 computer model because of lack of time to do a proper analysis. Davis said that is one big reason why, after 11 years, he quit.
“As analysts, we were kind of being squeezed down a certain path,” Davis said. “We felt if we’d had more time we would have come out stronger against” the onshore preference plan.
Economist Brown said he has worked with some of the seven similar councils in other parts of the country, but nowhere are the dollars so big or the conflicts so blatant.
More than half of all edible fish in the U.S. is caught off Alaska. The annual value to fishermen is nearly $1 billion per year, but because the council is allocating the fish in future years, too, the amount that is really at stake is $5 billion to $10 billion, Brown said.
“The stakes have gotten so high that I don’t see how any process here can continue to work,” Brown said. “There’s never been a situation where you put billions of dollars in front of the industry and ask them to police themselves.”