Privatization of fisheries hurts family fishermen

By Carina Barnett-Loro, Fair Fish Campaign Seattle, and Tom Hanlon, Ballard Resident, former commercial fishermen, LLM marine resource law

There are few places where the term “family fisherman” has more meaning than here in Ballard.

Our Fishermen’s Terminal houses one of the largest commercial fleets on the West Coast and affords locals the opportunity to purchase fish right off a boat or near the docks at the Wild Seafood Exchange.

Unfortunately, there are also few places where the fight between anonymous, large-scale corporate ownership and small-scale family fishermen is more apparent.

Driving over the Ballard Bridge, you can witness this clear division in the industry: factory trawlers bearing the logos of large, transnational seafood companies dwarf the family fishing boats boats tied to the Terminal docks.

This physical juxtaposition of small versus large embodies the struggle currently playing out on the national stage over the privatization of our fisheries.

Fisheries privatization is not a new concept, especially in Washington, where the halibut and black cod fisheries have been privatized since 1995, and the King and Sea Snow crab fisheries have been privatized since 2004.

Although referred to by myriad of different and often confusing names (IFQs, rationalization, catch shares, etc.), at its core privatization takes our federal fisheries (a public trust resource) and gives away the right to fish them, for free, to the entities that caught the most fish in the past.

Some of the time this system rewards talented and experienced fishermen; more of the time it rewards the big boats who fished the hardest, the fastest and often the least-sustainably – the same big boats that are anchored in the well-traveled channel between Lake Union and Puget Sound.

Ultimately, privatization leads to consolidation of fishing fleets and the effects are felt throughout the fishing industry.

In 2002, the Fishermen’s Terminal was opened to pleasure boats because there were not enough commercial vessels to fill the spaces. Nearby ports like Edmonds and Everett underwent a more drastic transformation, and their traditional commercial fleet has essentially vanished.

When the Alaska King and Sea Snow crab fisheries were privatized, the biggest winners were industry giants Trident Seafoods and Peter Pan Seafoods, who received a combined 40 percent of the total quota.

And the biggest losers? The nearly 1,000 fishermen whose jobs were eliminated in course of a year as ownership of the crab industry was consolidated in the hands of a powerful few.

This past summer, another stronghold of Washington’s fishing industry, the Pacific Groundfish fishery, was also privatized.

The proposed changes are expected to reduce the commercial fleet from 150 boats to around 50. They will eliminate an estimated 500 jobs, reducing the fleet to only the largest, most “efficient” trawlers.

At the heart of this conflict between Washington’s traditional fishing communities and the large corporations that have come to dominate the industry, are both the values we hold as a community and the more pragmatic question of keeping local fishermen – and the communities that depend on them – economically vital.

Independent fishermen have relied on generations of accumulated experience and local knowledge to bring fresh, high-quality and locally caught seafood to our dinner tables.

Their work also supports many other community businesses, such as Ballard Oil, Captain’s Nautical Supplies and Ballard Brothers Burgers and Seafood.

In contrast, the larger vessels – along with their job opportunities and profits – often serve foreign interests and therefore invest less in the local economy.

For these corporations, fishing is not about a way of life but rather, in the words of Greenpeace, about "making a good rate of return on their global investment capital."

The good news is that the way we manage our fisheries is not set in stone, and that we, as concerned citizens, have the opportunity to demand accountability and reform.

Volunteers with the Fair Fish Campaign, a national effort to support family fishermen and protect our oceans, have gathered more than 700 public comment cards urging Maria Cantwell, the chairwoman of the Senate Subcommittee on Oceans, Atmosphere, Fisheries and the Coast Guard, to call for hearings on catch shares.

On Nov. 24, we will deliver those postcards to Cantwell’s federal office in downtown Seattle, setting in motion a mandate for reform that will embody both our traditional ideals and vision for a sustainable future.

Please join us and take advantage of this opportunity to have your voice heard.

We encourage our readers to comment. No registration is required. We ask that you keep your comments free of profanity and keep them civil. They are moderated and objectionable comments will be removed.

Comments

Saying that catch share

Saying that catch share fishery management equals privatization is one of the most bogus claims about it out there. It's false, plain and simple. The fact that Food and Water Watch continues to repeat it is a testament to their credibility.

Federal law, specifically the Magnusun Stevens Fishery Conservation Act does not grant property rights. When it last amended the MSA in 2006, Congress added a provision allowing fishing privileges to be granted to certain eligible persons under certain programs. Yet Congress also included a section that clearly and emphatically states that the holder of such privileges does not have a property right in them.

The MSA provides that any fishing privileges granted—
- “may be revoked, limited or modified at any time”
- “shall not confer any right of compensation to the holder”
- “shall not create, or be construed to create, any right, title, or interest in or to any fish”
- “shall be considered a grant of permission to the holder…to engage in [permitted] activities”1

U.S. courts have consistently determined that fishing privileges do not give rise to a property interest subject to the Takings Clause of the Constitution.
American Pelagic Fishing Co. v. U.S. (2004). “Pursuant to the Magnuson Act, the “conservation and management of the [Exclusive Economic Zone]” belongs to the sovereign, and this necessarily includes the right to fish in the zone. Moreover, there is no language in the statute to the effect that any fishing privileges that are granted pursuant to the Magnuson Act vest in their owners a property right protected by the Fifth Amendment.”

Conti v. U.S. (2002). “Mr. Conti’s swordfishing permit…falls short of conferring a congnizable property interest [protected by the Fifth Amendment].”

Foss v. National Marine Fisheries Service (1998). “[T]he language of the Magnuson Act does not confer any claim of entitlement or property rights.”

Parravano v. Babbit (1994). “Thus, the Magnuson Act…does not confer on commercial fishermen any right or title in the fishery resources under the Department of Commerce’s authority.”

Fishing privileges are valuable, but that does not make them property of the holder. Fishing privileges constitute valuable assets that may be collateralized or subject to disposition in bankruptcy or divorce proceedings. But that does not make the fishing privileges the “property” of the holder subject to the Takings Clause when the government takes action that could adversely affect those privileges.

Schmitz (2001). Although the court found fishing privileges were not part of the debtor’s bankruptcy estate, it did so only because the fishing privileges were granted after the debtor filed for bankruptcy. The court’s holding suggests the outcome would have been different had the privileges been issued before the debtor filed.

Johns v. Johns (Alaska 1997). “[The husband’s fishing privileges] are marital assets that he may transfer at any time…the trial court did not err in finding that [his fishing privileges] are marital property.”

Foss v. National Marine Fisheries Service (1998). The court stated that “[t]here can be no doubt that the [fishing] permit is property [for purposes of due process]. It is subject to sale, transfer, lease, inheritance, and division as marital property in a dissolution.” Yet the court also stated, as noted above, the MSA “does not confer any claim of entitlement or property rights [under the Takings Clause].”

Ferguson v. Ferguson (Alaska 1996). “[T]he fact that an interest in [a fishing privilege] does not constitute “property” for Fifth Amendment purposes is not determinative of whether such an interest is “property” for the purpose of a marital property division.”

Courts routinely find that permits and licenses do not give rise to protected property interests. Fishing privileges, like other types of permits or licenses, are created and granted by the government and can be cancelled by the government. As such, they typically do not give rise to a property interest protected by the Taking Clause.

United States v. Fuller. The Supreme Court ruled that permits granting exclusive grazing rights did not give rise to a property interest protected by the Fifth Amendment where the permits were revocable and issued under a statute stating that the permit “shall not create any right, title, interest, or estate in or to the lands” upon which the grazing occurred.

Like the grazing rights at issue in Fuller, the MSA similarly grants exclusive but revocable privileges under a statute that clearly expresses Congress’s intent that such privileges are not to create a property interested protected by the Takings Clause.

The government’s authority to manage fisheries is not infringed. The mere fact that fishing privileges may be assets that are valuable to their holder has no bearing whatsoever on the government’s authority to revoke or modify those fishing privileges.

Even the Canadian Supreme Court rejected concerns that its decision would “fetter the Minister’s [of Fisheries] discretion” in managing fisheries.

Moreover, the U.S., unlike Canada, has strict legislative commands that fishing privileges are not to be considered property under the Takings Clause.
U.S. case law has consistently held that, although fishing privileges may constitute assets subject to bankruptcy or divorce proceedings, they do not give rise to a property interest protected by the Takings Clause.

In fact, U.S. and Canadian law are similar. Both recognize that fishing privileges are not property, but their value can be recognized in other legal contexts without interfering in fisheries management decisions.

"Privatization" = "Corporatization"

Sounds to me like the author is referring to corporatized fishing similar to the way that farming has been taken over by large agribusiness thus forcing out the small family farmer.

I think supporting local businesses is a very good idea all around.

Catch shares are not private

Catch shares are not private property. I encourage Food and Water Watch to read the Magnuson Stevens Act. If you want to preserve the small-boat characteristic of a fishery, catch shares can be designed to do so. If you want to set a limit on the number of shares any one entity can hold, you can design a catch share to do that too. Well-designed catch shares can meet whatever social, conservation or economic goals a community has. FWW has a seemingly shallow understanding of catch shares and a misleading campaign, which does a service to neither ocean ecosystems or fishermen.

de jure definition of property rights misses the point

Nice job pointing out the technicalities of the law and rehearsing the pertinent case law, Mr. Lalley.

Of course, that's all pretty irrelevant in a world where transferable catch shares are assigned to individuals in perpetuity or time periods long enough to make them effective collateral in capital markets. In other words, they act as de facto property rights, and the idea that the government could revoke them at any time is nice on paper, but how many cases in the U.S. can you point to that this has happened? That's what I thought.

So Food and Water Watch is correct in pointing out the likely consequences of the West Coast trawl ITQ program on small, family fishing businesses, since the detrimental effects of catch shares as currently conceived stem not from their de jure property rights form, but their de facto capacity to lock people out of the fishery, enshrine ineffective and environmentally damaging fishing practices, and undermine the economic viability of fishing communities.

design matters

Well done pointing out that design matters. But unless you walk the halls of the fishery management councils like the good people at FWW do, you are sadly ignorant about the policy arena in which design actually happens.

If you look at the history of decision-making, self-dealing, and blatant disregard for scientific advice at the Pacific Fishery Management Council, it is no surprise that the trawl ITQ program currently being developed there does not exhibit all those design features you correctly point out a catch share system could have. Instead, what's coming down the pipe has all the makings to be as community-destroying, unsustainable-practices-perpetuating, and socially inequitable as the Fair Fish campaign is warning. Kudos to them, and the service they are providing to help the public understand what's being done to our fisheries!

Privatazation discussion

Mr Lalley,

With all due repect, I believe that the central point of the article is about how the establishment of ifq's did not really serve the greater good of most hard working mom and pop fishing operations, nor the greater good of our extended community. If the primary criteria for ones credibility and qualifications in recieving teh right to fish lies in their past performance, where do make room for the new and younger generation to go out and harvest on their own? If they are lucky enough to have a qualifying father who got ifq's, great.
What you be missing is that when all the "right to fish permits" are in use ( gone) as in ;handed out, passed on , purchased, transferred , that's PRIVATAZATION ! Yes sure , lot of people had good reason to continue fishing as a right , but privatizing quotas , made it more than a right , it made it a club of people that just happened to already be there, so they got the pieces of the pie. Talk about entitlement!!! It seems that maybe you may be so close to this issue that you can't see the forest thru the trees... I don't think anyone at the core really cares about all those legal cases that talk about this and that , and defining whether it is property or not. This is not a case of defining what is property or not , or privaledge , or rights it's about a group a people awarded the privaledge to go ahead and fish. The method in which they choose to establish that is in question and the fall-out , well unless you sit in the office at Trident or Peter Pan, then you may know what I mean.
On another subject ....As for trawling, I believe any type of benthic trawling is the road to hell for our oceans. It has systematically wiped out countless areas with it's inherit nature. I am all for pelagic trawling. If you look back in New England at the effects of groundfish trawling for cod/ haddock and flounder , you will see a total collapse of a fishery. Gee, do you think we harvested to much? See what bottom trawling did to the straights of Juan de Fuca? There is so much senseless bycatch in a bottom trawl , it's like the flounder fishery in AK, that just tossees over one dead halibut after another. Before too long , all this blind greed will leave us all fighting for the last fish. There may be many a men with big bank accounts , but they won't be able to eat it when all the healthy fish are gone, nor will their children...it's just more blindness....

It is troubling to see F&WW

It is troubling to see F&WW continue to advocate for the "fair fish" policy and to speak out against the PFMC's recent IFQ developments before doing their homework. What F&WW seem to be implying is that status quo is a better option than the IFQ program the PFMC recently voted to implement. What they fail to realize is that status quo means a slow decline in the existing west coast groundfish trawl fishery and an associated decline in communities where they are based. For instance, just 2 years ago, the PFMC had to close off vast areas of the Washington coast to trawling, eliminating a groundfish fishing culture based in Neah Bay, Port Angeles, and Port Townsend that had survived for almost 100 years. This action had to be taken because of the existing top-down management approach used by the PFMC and the limited tools they have to protect and rebuild depressed stocks. If fishermen were held individually accountable, and able to prove that they could avoid these weak stocks with the right incentives, that action would not have been necessary and those fishermen - and their history and culture - would probably still exist. Other examples like this exist from Canada all the way to Mexico.

Rather than do their homework, F&WW makes outlandish statements indicating that "catch shares" will unequivicolly destroy communities and eliminate fishing jobs. Again, if they took the time to do their homework, F&WW might see that a catch share system on the west coast is actually expected to halt the existing decline of the west coast fishery and associated communities. Fishermen will become profitable again. Crew members will see their annual income increase (though, yes, there will be fewer of them). Shoreside fishing related jobs are actually expected to increase.

Rather than do their homework, F&WW state that catch shares do not do anything for conservation. This flies in the face of several recent pieces of published and peer reviewed literature indicating the exact opposite. Catch shares are a superior fishery management tool which keeps the fishery within allowable catch levels, thus preventing overfishing. In addition to this, the PFMC implemented a gear switching provision allowing trawlers to use gears which are less harmful to the benthic habitat (such as hook and line and traps). Existing regulations do not allow for this type of switching on the west coast. The PFMC program will actually reduce habitat impacts - a clear conservation benefit.

As an alternative to the PFMC's catch share efforts, F&WW are proposing the "fair fish" concept. I encourage folks supporting F&WW to read this proposal. While it is sprinkled with claims about how it will lead to greater conservation benefits, greater community benefits, greater benefits to new entrants, etc., those claims come with little supporting evidence or rationale. Ironically the "fair fish" idea is simply a different way of implementing a catch share. The main difference is that the way in which it is implemented auctions off the IFQ rather than allocating that IFQ out to existing participants in the fishery based on their historic participation. While auctions certainly have a place in the consideration of catch shares, how an auction helps small independent fishermen, fishing communities, and new entrants is beyond me. Aside from vague statements about using the auction money to help communities, new entrants, small scale fishermen, etc., the proponents of this fair fish plan do not seem clear about how that works either.

Finally, F&WW and the authors of this letter indicate that catch shares will lead to corporations and foreign interests controlling the fishery. Certainly F&WW and the authors of this letter know a thing or two about US law? and certainly they have heard of limits on the accumulation of quota? The PFMC voted to implement relatively small limits on the amount of quota one can own in the traditional groundfish trawl fishery and these levels would make it difficult for anyone to own enough quota to operate more than 2 full time vessels. This is hardly enough to create a large foreign corporate ownership of the US west coast fishery.

I invite anyone interested in this topic to discuss these policies with those that are more familiar with the issues and the implications. I suggest starting with the Council offices.

Privatization or piracy

Privatization is simply the transfer of a public asset to the private sector.

Simplistically stated, an asset is a thing of value that can be readily converted into cash (sold) - or that will contribute directly or indirectly to future net cash flows.

Assets can be tangible or intangible. Tangible assets are things like boats and buildings. Intangible assets are things like 'rights' that have a value such as copyrights, trademarks, patents and you guessed it... privileges.

Privatization thus occurs if privileges to access a fishery (catch shares) - a valuable intangible asset - are conveyed to the private sector through gift or sale.

The west coast groundfish IFQ will privatize access to the most valuable fishery on the west coast of continental USA (rough $60 Million plus a year of landed product).

The initial allocation - the gifting of exclusive, tradable, and essentially permanent privileges for free to the private sector to prosecute this fishery - is the ACT OF PRIVATIZATION.

This amounts to the free giveaway of an intangible public asset worth around 250-600 million dollars (noting that no-one on the fishery management council has estimated the value of the asset they are looking to giveaway).

Importantly, privatization is done at the same time as commoditization - the establishment of a commodity market on catches shares. When these two steps have taken place financialization has occurred - meaning the privilege to access public fish stocks has been reduced to an exchangeable financial instrument.

It is this process that is understood and pursued by the architects and proponents of privatized catch share systems (EDF, the Reason Foundation, the Property and Environment Research Center), and it is this process of hocus pocus (looting the common wealth) that gets EDF a podium to talk to speculators at the Milken Institute (YES the same Michael Milken that is a convicted felon and brought the world junk bonds) about their wonderful achievement.

Food and Water Watch is to be applauded for challenging this scam against taxpayers, and proposing the Fair Fish alternative that actually acknowledges the need for fiscal responsibility and a future for fishing communities and working fishermen. I for one am not a fan of felons like Milken and co., green wash groups such as EDF, and thugs like those that run Pacific Choice Seafood running off with my share of this public asset. If anyone in Congress had a backbone they would crush this scam and start the reform process over.

To Tom Lalley: If it is not privatization - give it to all to me - then we can talk....

I might want some real conservation benefits, some coastal jobs, and a financial return before I 'lend' the asset to you. Funny... this sounds like what Food and Water Watch are asking the government to do - act like the manager of our public trust asset!

Confusion btwn TAC and catch shares

Catch shares are an economic allocation tool. It is NOT a conservation tool. The conservation tool is the Total Allowable Catch (TAC). Whether or not those TACs are set appropriately is another question.

Swept away

This giveaway is like a massive tidal wave rolling in from the ocean to crush coastal communities, and dare I say the American spirit. What happened to the USA? When did we decide that making a few crooks rich is more important than a sensible economy that values hard work and entrepreneurship? Didn't we just find out that these same financial sector crooks screwed us all over in a super size way?

Thank you to food and water

Thank you to food and water watch for standing up for the majority!! ITQ's benefit few fishermen. 80% lose jobs & 20% own the fish. Devastation is huge to the fishing communiites.

The hidden costs in an ITQ systemare high. The costs will be passed down to the consumer. There will be huge debt to the fishermen trying to stay in business.

I think the comments for catch shares come from the few winners & also the potential winners. EDF/Pew which is corporate fronts (oil) want control of our resources & wish to get rid of fishermen. Don't be fooled into giving away our resources.

I fear your characterization

I fear your characterization of TAC as the conservation tool is incorrect. Conservation in this case comes in two parts. One is the appropriate specification of the TAC. The second is the management tool which keeps you within the TAC. Without a successful management tool it doesn't matter where a TAC is set. Catch shares have proven to be superior to other tools in staying within a TAC.

Catch shares use many economic foundations. However, they are used to achieve various management objectives, not just economic ones.

Regards

Privatization discussion is distracting

Looks like there are some knowledgeable folks on this thread and probably some folks that know a thing or two more than I do on this subject. With that being said I feel the need to throw in my two cents.

I find the discussion about whether or not implementing catch shares is being akin to "privatization" to be distracting and somewhat misleading. We are dealing with a public resource here, but unfettered access to that resource simply doesn't work. History has shown time and again that a purely open access fishery that is available to any member of the public is simply not sustainable. Thus, it is necessary to limit the universe of folks that are allowed to participate in the fishery. Catch shares do that. A basic limited entry program does that. Thus, any program that limits the universe of participants can be said to be "privatization". For whatever reason, IFQs, coops, and other forms of catch shares have been branded with the privatization label while other programs have not.

I found the above post on privatization leading to financialization to be quite interesting. However, the logic in that post makes several assumptions in arriving at that conclusion that I feel the need to address. At the core, a catch share program holds an individual accountable for a portion of the TAC. Anything else beyond that is a design issue. For instance, allowing for transferability in an IFQ program is a design issue. Allowing for fleet consolidation in a catch share program is a design issue. Giving quota to existing fishermen in a fishery versus auctioning quota is a design issue. All of these options can be appropriate in certain circumstances and need to be considered carefully.

This leads to my last thought. The auction issue versus the allocation based on participation issue is obviously somewhat controversial. Both ideas have merit and (I would argue) both should be considered in any IFQ program. Each method has certain economic implications and social implications. I don't care to advocate for one way or the other, but one thought that resonates with me is that many times one purpose of these catch share programs is to improve the economics of an existing fishery and in doing so, that necessitates some fleet consolidation. In my experience, fleet consolidation means that the value of boats in the fishery will decline, and the value of the investments that fishermen have made will decline. Granting those fishermen quota gives them an asset of sorts that off-sets the decline in the value of their other fishing assets, thereby keeping them financialy whole. The post above describing "financialization" makes an interesting point in estimating the value of that quota. If quota is indeed that valuable, then it strikes me that allocating all of the quota to existing fishermen may not be necessary to offset the decline in value of other fishery investments. Perhaps a hybrid of auctioning quota and allocating quota to existing participants deserves consideration.