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Alaska's Mafia-style fisheries management

Craig Medred
Aaron Jansen illustration

This is a story about one of the most powerful families doing business in the 49th state, though most Alaskans do not think of the North Pacific Fishery Management Council as a family. The members are not related by blood, and a goodly number of them to do not even live in Alaska. Theoretically at least, they aren't even supposed to be a family, let alone engaged in business.

By law, "the council family," as University of Alaska Anchorage economist and long-time observer Gunnar Knapp describes the NPFMC, is supposed to be the watchdog for the marine resources of the North Pacific Ocean and the Bering Sea. This, it can be argued, the family has done well.

But that is not all the council family does.

The council family also doles out the rights to harvest more than $2 billion in U.S. fisheries resources. The council family has significant power to manipulate where this money goes. That power has become an issue this summer because the council family wants to take about 1.4 million pounds of halibut away from small, often mom-and-pop-owned charter fishing businesses in Southcentral Alaska and give the halibut to commercial fishermen.

The charter businesses are not part of the council family. The charter businesses say the council family plan would bankrupt them. The commercial fishermen poised to get the extra halibut are part of the family, and they say that what is happening is only fair.

Their argument goes like this: The biomass of halibut in the waters off Alaska is declining. This has forced the International Pacific Halibut Commission -- a treaty group that oversees management of halibut for Alaska, Canada and Russia -- to steadily lower the allowable catch. Since the commercial catch is tied to biomass reductions, it has been going down. The charter halibut catch, meanwhile, has stayed steady below a fixed guideline harvest level. As a result, a halibut charter catch that once took about 15 percent of the biomass in Cook Inlet and the northeast Gulf is now pushing toward a 20 percent allocation.

MORE: Halibut charter fishermen sue Feds

Ignored in this discussion of fairness is the fact that since commercial fishermen were given an ownership interest in halibut in 1995 with the creation of what are called "individual fishing quotas," the value of commercially caught halibut has risen dramatically. Halibut worth $1.50 to $2 per pound dockside in 1995 now bring $6 to $7 per pound at dockside. The 2010 halibut catch of slightly more than 40 million pounds was valued at almost $200 million to commercial fishermen. That is more than double the value of a similar size catch in 1995 and significantly above the value of peak catches of more than 60 million pounds per year in the early 2000s.

Simply put, commercial fishermen are now working less, catching fewer fish, and making a lot more money. The same is not true of the charter businesses, which have struggled along with other Alaska tourism businesses in the wake of a softening U.S. economy. The value of halibut to these businesses has increased little, but they struggle on as key components of the economies of many small, rural Alaska communities like Homer, Seward, Ninilchik and Kodiak.

Homer bills itself as "The Halibut Capital of the World." The city that stretches out onto a spit in Kachemak Bay near the south end of the Kenai Peninsula is home to commercial halibut processors and a number of commercial halibut fishermen, but the town title is tied to the charter fishing businesses that help fill the community with tourists every summer.

The owners of those businesses say the hammer the National Marine Fisheries Service is preparing to bring down on them at the behest of the council family will prove economically deadly.

Mafia-style halibut fisheries management

Capt. Greg Sutter of Homer and dozens like him admit they don't understand exactly why this is happening. But then they have spent little time watching the political intrigue of the council family. They have lived with faith in the strangely American expectation that the government will treat them fairly and equitably. They have little sense of the Mafia-style operation running this show.

Ed Rasmuson does. He is a former member of the council family. A lifelong Alaskan and heir to the banking family that helped finance the transition of Alaska from a territory to state, Rasmuson was in the early 2000s named to the council to help keep an eye on the interests of the charter businesses and the tens of thousands of anglers -- Alaskans and tourists -- that fish for halibut near small Alaska coastal communities. Rasmuson quickly discovered how difficult the task.

"The problem, of course, is this: The commercial fishermen feel they have the God-given right to the fish," he said.

Nothing would make commercial fishermen happier than to eliminate any competition for halibut. Nothing would better serve their purposes than for all of the charter businesses to go under. That would leave only the recreational fishery to deal with, and sport fishermen in Alaska are notoriously disorganized. If the council family can sink the sport-fishing businesses that have a financial interest in preserving a recreational fishery for halibut, long time observers of Alaska fish politics said, it will be a lot easier to cut back the catch of individual, recreational anglers who lack a financial interest in what is going on and thus usually don't pay attention to fishery regulations until it is announced their bag limits have been cut to a single fish.

The single-fish bag limit -- possibly a single-fish with a maximum-size limit -- is what is now being proposed for the charter fishery. Charter operators say the council family might as well as just slit their throats. The size limit would kill the famed Homer Jackpot Halibut Derby, the oldest fishing competition in the state. And any one-fish bag would kill who knows how many charters, many of which say they already struggle to sell people on charters with a current two-fish limit.

Largely because of sky-high fuel costs, a day-long charter out of Homer today costs on average about $250. That's $125 per fish if an angler catches the limit. With the average charter-caught halibut running 15 pounds or less, this translates to a cost of about $8.30 per pound for whole fish. A tourist, or Alaska resident, who drives to Homer could shop around on the docks and buy fish for less from commercial halibut longliners, who are now getting $6.50 to $7.25 per pound for their catch from processors.

Given that the anglers who venture to sea on halibut charters are interested more in fish than in fishing -- as opposed to elitist fly fishermen willing to spend thousands on fancy Alaska lodges just for the experience -- doubling the effective price per pound for a halibut to $16.60 per fish could prove an economic death sentence for many businesses. Whole halibut can often be bought for less than this at the Pike Place Market in Seattle.

Anglers might, of course, do better on a $105, half-day charter where the effective price per pound for a single, 15-pound fish would be $7 per pound -- but that's only if they catch a fish that big. The half-day trips are quick runs out and back from the Homer harbor, and the fish are usually small.

"One 9-pound halibut is not going to sell halibut charter trips," said former halibut skipper Ed Dersham. Dersham took Rasmuson's place as the council family's representative for charters, anglers and the public in 2008. He was at the time a charter boat skipper from Anchor Point on the outskirts of Homer. Shortly after joining the council, he lost his license to operate a boat after flunking his annual Coast Guard medical exam. A doctor discovered Dersham was in the late stages of kidney failure. He went on dialysis. He might well be dead now had not a former fishing client donated a kidney. Dersham had a transplant and continues to recover, but the federal government took his license to fish halibut and killed his business.

Earlier this year, the U.S. Department of Commerce, acting on directions from the council family, imposed a form of limited entry on the halibut charter business. The plan immediately sank about 30 percent of the active charters and eliminated many of those that were inactive. Dersham was among the latter.

Because he did not fish in 2009, Dersham failed to qualify for one of the new limited-entry permits even though he had run a charter business in Cook Inlet for 28 years.

A one-time employee of the Alaska Department of Fish and Game now unemployed, Dersham's life these days centers around his involvement with the council family. It makes him somewhat reluctant to speak unkindly. "I have a good relationship with the other council members," he said. "Ninety percent of what we do has nothing to do with halibut charters, and they defer to me more now" on recreational issues.

Were the council family today considering a plan to control the charter business in Alaska -- the council calls it a "catch sharing plan" -- Dersham believes he could influence a reasonable deal for the charters. But he admits to failure in 2008, adding "I did everything in my power to get the other council members to understand."

It didn't matter.

"I lost by a 10-to-1 vote," Dersham said. Some in the council family, sensing a storm brewing around the reallocation of halibut just out the back door from Alaska's largest city, now "wish they could do that all over again," Dersham added. He is confident he has three votes within the council family to reopen the issue. The problem is he needs six.

Getting the most bang for the halibut

Dersham is holding out some hope the U.S. Secretary of Commerce, who has authority over the final rule-making of NMFS, will kill the council family halibut plan scheduled for implementation this winter or, if that fails, the charters business will be able to reverse the rule in court.

"In my opinion, it was not fair and equitable in 2008," Dersham said, and it is even less so today.

But that's the least of it, according to Ricky Gease, the executive director of the Kenai River Sportfishing Association. Gease attended a meeting in Homer in August at which officials from the National Marine Fisheries Service briefed Homer charter operators on what is supposed to happen next year. At the meeting, Gease asked to see the service's plan for "economic optimization" of Alaska halibut.

Economic optimization -- the concept of getting the maximum value of out of each dead American fish -- is a stated goal of the federal government. Gease knew well that a number of state studies have shown the way to get the most money out of a fish is to sell it to a tourist who pays to fly to Alaska, pays to stay in Alaska, spends a good chunk of change while here, and then pays to fly home.

Gease's face got so red he looked about to burst blood vessels when Glenn Merrill, the assistant regional administrator for the National Marine Fisheries Service, repeatedly dodged the discussion of economic optimization. Merrill did a dance around the topic that was a smooth as his shaved head.

"This does not optimize halibut as a resource in America," an angry Gease finally blurted out. "That's the crux of this."

"I can't speak to the specific analysis," Merrill answered. There was an economic analysis done, he said, and obviously the council family has its own view of the meaning of economic optimization. Whether that view is sensible, let alone fair and equitable, Merrill said, "I'm not here to speak with the legal authority of the National Marine Fisheries Service."

He was merely in Homer to to show the halibut charter operators that NMFS was aware of their existence. "We came here because we care," Merrill said. "We came here knowing it was going to be hot."

Sidekick Rachel Baker added that there had been an economic study completed on the proposed new rule, but she couldn't offer a guess as to what a one-fish limit might do to the charter business in Alaska. The NMFS in-house authority on charter halibut regulation, Baker claims to be clueless as to the repercussions of the new regulations. Merrill said NMFS lacks the sort of economic data necessary to draw any conclusions. Gease and others in Homer questioned why the NMFS doesn't go get the data before imposing onerous new regulations. Merrill said there is no budget.

NPFMC member Dan Hull said days later that the council really doesn't want to spend any more time studying the charter issue anyway because the council family is tired of the whole issue.

"The council's been through this for 15 years or more," he said. "The charter sector has resisted any kind of management measures. That's made it difficult. There might be some imperfections here that need to be dealt with, but nobody's ever going to be happy with allocations.''

Hull is a commercial longliner who holds IFQ shares now worth about $900,000. The way the council family runs things has been good to him and about 2,000 other commercial halibut fishermen, of whom about 1,200 are Alaskans. Individually, commercial fishermen are today well paid to mine the sea, but their product is minimally processed after landing and a good chunk of the profits on halibut come after the fish start getting handled stateside. The fish for which the commercial fishermen gets $6 to $7 per pound in Alaska sells Outside for upwards of $13 per pound for whole fish or upwards of $20 per pound for fillets.

Part two of this series will explore who it is that regulates Alaska's fisheries and what they stand to win or lose in that regulation.

Contact Craig Medred at craig(at)alaskadispatch.com