Tyson Foods now wants to claim one of the biggest shares of the Alaska fishery. The harvest rights it seeks from the federal government would be worth tens of millions of dollars each year. And unless federal law is amended, the government may hand over the fishery without Tyson--or anyone else--paying a dime in royalties.
Tyson has developed strong ties with President Bill Clinton, and those ties could help the company as it makes its case. The Alaska governor's office says Tyson representatives "definitely" led them to believe they have influence in Washington.
The privatization of the Alaska fishery could be the country's last great resource handout. The prairies were homesteaded in the past century; the railroads have claimed their vast land grants; many of the rich mining deposits on public lands have long since been staked out. The Alaska fishery is one of the richest in the world, with a treasure trove of pollock, cod, crab, and other species. It's a resource many Americans don't even know they own.
Tyson ventured into the fishing industry in June 1992, just about the time that Bill Clinton consolidated his hold on the Democratic presidential nomination. The corporation sought a seafood entree for its corporate dinner plate, and so spent $212 million to buy Arctic Alaska Fisheries Corp., the largest fishing company in the country.
Some industry observers questioned Tyson's purchase because Seattle-based Arctic Alaska had an aging fleet and a formidable array of legal problems. The worst of these problems were detailed last April, when a federal grand jury hit Arctic Alaska with a 44-count indictment. It charged the company with sending unsafe ships to sea, falsifying documents, and lying about crew qualifications, among other crimes. The grand jury said these acts were part of a conspiracy that had put profits ahead of people and led to the 1990 sinking of an Arctic Alaska fishing vessel, an accident that killed nine people.
But Arctic Alaska's single-minded pursuit of fish helped it to become one of the biggest seafood harvesters in the Bering Sea. And the quantity of fish Arctic Alaska caught, irrespective of how many laws it may have broken to catch them, has put the company--and its new owner Tyson--in a position to win a big share of the fishery.
Tyson Foods is wealthy and well-connected, but it isn't the only major player in the high-stakes fish lotto. Another is Christiania Bank of Norway, which bankrolled a big chunk of the Bering Sea fleet with more than $300 million in loans. Most of those loans are now in default, and the bank hopes to take the fishing shares of the boats that can't pay up. Other players include largely Japanese-owned shore processors; the catcher-boat fleet and hook-and-line fishermen who deliver to the processors; and native Eskimo and Aleut fishermen.
They all recognize that big changes are coming to the Bering Sea fishery. Too many fishermen, wielding awesome fishing technology, are going after too few fish. When the fleet shrinks there will be winners and losers. All the players are trying to make sure that whatever reform takes place will put them in the winners' circle.
Alaska's trawlers threw away 763 million pounds of fish last year. Under the reform backed by Tyson, some of the most wasteful companies would get the biggest shares of the fishery.
So far, the federal government has tried to manage the catch by limiting the seasons for different species of fish. Seasons that once stretched out for most of the year have shrunk to a few months. This turns the harvests into frantic derbies in which boats grab as much as they can as fast as they can. The result is incredible waste, unsafe fishing practices, and economic chaos for the industry.
Scientists are also increasingly concerned about the effects of this intensive fishing on the broader Bering Sea ecosystem. The Steller sea lion, for instance, is now listed as a threatened species. Scientists have also tracked sharp population declines in fur seals and some sea birds. And while the stocks of pollock still appear relatively healthy, their total biomass has declined.
Meanwhile, the fishermen slug it out in ever-shorter seasons. Under the derby system, they lack the time and financial incentives to try to avoid catching fish that aren't worth processing or are not legally in season. Last year, the Alaska fleet caught 4.2 billion pounds of fish, then dumped a staggering 763 million pounds--seven times more fish than is retained by the entire New England fleet. As the competition intensifies, so do the pressures to keep fishing through the worst winter storms, increasing the risks in an occupation that has already killed more than 165 fishermen off Alaska in the past six years.
To top it all off, the harvests, despite their gargantuan scale, are too small to sustain the overcapitalized fleet. Some vessel owners have already filed for bankruptcy, and more filings are expected later this year.
As a solution to these problems, Tyson and some other players are politicking for a kind of 20th-century homestead act. The plan would divide the annual harvest into shares, which would be given to fishing companies in proportion to some part of their historic catch. The more fish and crab an operator caught in the past, the bigger its share. Companies could then leisurely fish their shares (called "individual transferable quotas," or ITQs), lease them to other operators, or sell them to the highest bidder. The total market value of all the shares could easily exceed $1 billion according to several industry officials.
By ending the race for fish, factory trawler operators say they could curtail the waste. Boats would target the species they want and would take the time to process whatever fish they caught. Skippers would avoid practices that endangered the lives of their crew members. And the fleet would shrink as marginal operators sold out their shares. "We are convinced that the future of the fishery up there is dependent on getting toward some sort of ITQ system," said Archie Schaffer, an Arkansas-based spokesperson for Tyson.
But not everyone agrees that privately held quotas are the best way to reform the harvest. Even if the government does turn to private quotas, critics say, the public should scrutinize the deals and gain fair payment. They fear quotas would prevent future generations of small boat fishermen from breaking into the harvest. And they question a system that would reward those companies with the biggest historic catches, since those companies may have been the ones that flooded the harvest grounds with too many boats, or broke safety and environmental regulations, or wasted the most fish.
"The people who overcapitalized the most, who showed very often the least business sense, are the ones who stand to gain the most," says Bob Storrs, a fisherman who helped organize the Alaska Marine Conservation Council. "No matter how they treated this resource, regardless of their attitude toward this publicly owned thing, we're going to give it to them forever. This is absolutely ridiculous."
The hub of the Bering Sea fishery is the remote island community of Unalaska, located some 800 miles southwest of Anchorage on the Aleutian chain. Unalaska moves to the rhythms of the fisheries, with great spasms of activity each winter as the factory trawler and crab fleets move north from Seattle to prepare for season openings. Hundreds of boisterous--sometimes brawling--fishermen and processing crews descend on the island bars as the vessels take on fuel, food, and other supplies. Then they take to the sea to work in mind-numbing shifts of six hours on, six hours off, for what may be weeks on end.
More than half of the Alaska bottom fish is taken by an at-sea factory fleet that harvests with trawl nets and lines dangling thousands of baited hooks. Tyson has a considerable stake in this fleet, but many of the biggest vessels are financed by Christiania and other foreign banks, and some are actually owned by foreign investors.
In addition to the factory ships, there are boats that deliver fish to shore plants for processing. One of the smallest of these is the 85-foot Lone Star, skippered by Chuck Burrece.
In the early days of the fishery, Burrece could find plenty of cod without venturing far from port. But this year, the season was short and the old fishing spot near town was closed to protect Steller sea lions. To find cod, Burrece had to push the Lone Star to its limits, journeying 60 to 70 miles out to the dangerous strait known as Unimak Pass.
He worked the fishing ground for three days with a trawl net that scooped up about 200,000 pounds of edible fish. But Burrece and his two crewmen dumped some 70,000 pounds of dead and dying pollock, sole, and halibut. They got rid of the halibut because federal regulations retain them for the hook-and-line fleet. The rest went over because the plant Burrece delivers to was only prepared to handle cod.
Burrece recognizes that such waste is a miserable way to do business. But so long as the processor doesn't want those fish, there's no sense bringing them ashore. "We're not wasteful people," Burrece said. "I think it's bullshit to just shovel it all over the side. It's stupid because there's only so much out there."
The shore processors (most of which are owned by Japanese conglomerates) are another group concerned with how the fishery is reformed. They have managed to win special federal protection that guarantees them 35 percent of the pollock harvest through 1995. After that date, they fear they will lose out altogether in a reform program that simply doles out catching rights. They have argued for a second tier of "processing rights" that would mandate that they handle a portion of the catch. "If there's some benefit that's going to be handed out, we want to belly up to the bar like everyone else," says Dennis Phelan, a vice president of the Pacific Seafood Processors Association.
Tyson's outpost in Unalaska is in a small two-story office building squeezed between the mountains and a long dock frequented by its fleet. A sign posted on the wall warns crew members that "fighting, public intoxication, and reporting to the vessels under the influence of alcohol" are cause for firing. Don Tyson's son, John, who helped to arrange the Arctic Alaska buyout, has tried several times to visit the company's Unalaska outpost, but each time his aircraft was unable to land due to foul weather. The senior Tyson has yet to make the journey.
From a single chicken processing plant in the 1950s, Tyson has grown into the world's largest poultry producer. During the past 25 years, the company, through more than 20 acquisitions, sought to dominate a major share of the American food industry by expanding its "center-of-the-plate" protein offerings to include pork, beef, and now fish.
So far that strategy has paid off for both Tyson and its investors. The company's stock ranked third in total returns during the 20-year period that ended in 1992, according to one financial analysis. Last year, Tyson reported sales of $4.7 billion.
Tyson has also cultivated political ties, most notably with Bill Clinton after he was elected Arkansas' governor. Tyson offered Clinton rides in the company's corporate jet and became an important fund-raiser during his presidential bid. Tyson Food executives and their families gave $20,750 to Clinton's campaign and another $22,000 to Democratic Party organizations. The company's chief legal counsel, James Blair, is a close personal friend of the Clintons and advised Hillary on her well-publicized cattle futures trading.
The week before Tyson announced its 1992 purchase of Arctic Alaska, word of the buyout apparently leaked, triggering a surge of Arkansas investment in the fishing company. The federal Securities and Exchange Commission is now investigating a group of Arkansas investors, including a firm then headed by White House Administration Director Patsy Thomasson, for possible insider trading. For those investors, short-term profits were spectacular. When Tyson announced the buyout price, Arctic Alaska's stock shot up 69 percent.
But Tyson's stock dipped at the news, foreshadowing later trouble. Tyson took over a company that would ultimately be saddled with a criminal indictment.
Arctic Alaska was founded in 1983 by fisherman Francis Miller. At the time of Tyson's buyout, the company owned more than 30 trawlers, hook-and-line boats, and crab vessels.
Many of the vessels had been converted from other uses and shipped north without meeting stability standards required by the Coast Guard. One of those vessels, the Aleutian Enterprise, sank in a 1990 accident that claimed nine lives and triggered April's grand jury indictment against the company, Miller, and other Arctic officials of that era.
Schaffer, the Tyson spokesperson, said the indictment makes no suggestion that anyone in current management was involved, and adds, "[Tyson] deeply regrets the loss of life. The only other thing that I can say is that the company will vigorously defend the case."
The indictment painted a chilling picture of unqualified officers leading green--sometimes teenage--crews out to sea in unsafe ships. Officers must submit sea time to gain certification, and an affidavit unsealed after the indictment charged that Arctic Alaska officials had falsified that sea time.
In addition, Tyson has found that Miller was lax in pollution controls. Last year, Arctic Alaska was hit with a $750,000 fine by the Environmental Protection Agency for failing to grind and properly dispose of fish wastes under the Miller regime. The company also faces a criminal lawsuit filed by the state of Alaska charging that the fleet repeatedly fished with illegal bottom gear in sensitive coastal waters. Tyson has hired Alaska Gov. Walter Hickel's personal attorney, Hal Horton, to help settle the still-pending charges against Arctic Alaska. According to state officials, Tyson also flew legal counsel and Clinton friend James Blair up from Little Rock to plead Arctic Alaska's case.
Some fishing industry insiders wondered why Tyson would invest in a North Pacific company when it was apparent that too many boats were already chasing the fish. In an interview a few months after the acquisition, John Tyson told a trade journal that the company took its cue, in part, from industry proposals to create the share system. Tyson hopes that Arctic Alaska's long catch history will ensure a large slice of the fish pie. As it lobbies for the new system, Tyson is positioning itself as an "all-American" company that has a more legitimate claim to the resource than the foreign investors and banks that stand behind many other fishery players.
When the world fished only with small nets, hooks, and lines, instead of trawls the size of small shopping malls, the ocean could make fish as fast as we killed and ate them. From 1988 to 1990, Americans ate a record 47 pounds of seafood each, much of it imported; the Japanese, 160 pounds; and Icelanders, 203 pounds. The Maldivians on the Indian Ocean were the champions at 293 pounds.
For decades foreign fleets controlled many of the trawler harvests in U.S. coastal waters. The 1976 Magnuson Act, which put a 200-mile zone under U.S. control, was in large part an attempt to claim the harvest for Americans. That vision was reaffirmed in 1987 by legislation that banned most foreign vessels from reflagging as U.S. ships, and also restricted foreign ownership of U.S. fishing vessels.
But some in Congress had doubts about squeezing off foreign investment that might help finance the American fleet, and the legislation had plenty of loopholes. During the next five years, some boats came under the direct control of foreign investors, while others were beholden to foreign banks.
The single biggest financier was Christiania Bank of Norway, which loaned at least $315 million to factory trawlers and other vessels. These vessels stampeded into the Bering Sea in the late 1980s and early 1990s. Now, with the short seasons and low prices, many ship operators can't make their payments. Christiania has foreclosed on at least four factory trawlers.
Along with the vessels, Christiania hopes to gain control of any fishing rights awarded to these companies. According to a Christiania loan document, the bank has asked its borrowers to sign covenants that pledge these rights as collateral. That means if the bank calls a loan, it will end up with both the vessel and a piece of the U.S. fishery.
Christiania officials say they don't plan to use the fishing rights. Instead, they want to sell them to recoup loan losses. But Tyson challenges Christiania's claim to the resource. "The whole idea of the Magnuson Act is to Americanize the fishery, and that just hasn't happened," says Tyson spokesperson Schaffer. "We believe that American ownership is important and that the companies that are American need to be rewarded."
The politics of fish in America have clearly promoted development over sustainability. Modern industrial fishing is run by insiders, many of whose fortunes depend on the decisions they make. Foxes and henhouses come to mind.
The power to determine the fate of the Alaska fishery rests with the North Pacific Fishery Management Council, an 11-member group dominated by fishing industry representatives. They pass their plans on to the National Marine Fisheries Service, an agency in the Commerce Department, for final approval.
Most of the council members are from Alaska, and they have frequently aligned themselves with the shore plant operators out of concern that a share plan would give most of the harvest to out-of-state factory trawlers.
Nonetheless, the council has already approved a share plan for the $100 million-a-year hook-and-line harvest of halibut and black cod, and is now considering a share plan for the rest of the harvest. The hook-and-line plan set aside a small percentage of the catch for regional natives, and the new plan might do the same.
The council has been slow in developing the new share plan. In April, it voted to consider a two-step process that would first limit the size of the fleet, then eventually award rights. In a nod to conservation concerns, the plan also called for incentives that would give extra quotas to fishermen who reduced waste.
Tyson and other factory trawler owners have been lobbying to get the program on a faster track. For Tyson, that's also meant trying to improve the company's image in Alaska. Last March, Don Tyson flew to Alaska to meet with Gov. Hickel and other state officials. Tyson talked of investing in shore plants and using the corporation's power to push more fish into the American diet.
Alaska state officials claim that one Tyson representative said the company could talk to the White House about lifting a ban on the foreign export of Alaska oil, a congressional embargo that costs the state hundreds of millions of dollars in lost revenue. "They definitely left us with the impression that they had influence with the Clinton administration," says John Manly, Gov. Hickel's spokesperson. What Tyson wanted was fishery council members who would support a quota system.
Tyson spokesperson Schaffer says the Alaska officials were the ones who asked whether there was a way Tyson could influence Washington on the state's behalf. "What I told them is that I don't know whether there is or not but that I would look into it," says Schaffer. "That's about as far as it's gone." (If Tyson wanted to join forces with Alaska in fighting the oil embargo, they need look no further than the firm of Hal Horton, the lawyer they hired to defend Arctic Alaska--it is representing the state in a suit to overturn the federal government ban.)
Thus far, Tyson's success in shaping the council has been limited. For each vacant seat, the governor proposes three candidates, one of whom is selected to fill the post by U.S. Commerce Secretary Ron Brown. One of the nominees Tyson favored was pressured to withdraw by Alaska officials who feared a council tilt toward the Arkansas company. Another Tyson-backed candidate, Clem Tillion, is a controversial figure in Alaska, and the state Senate has asked Brown to pick someone else.
But Tyson is not ruling out further efforts. "We have not lobbied or talked to anyone in Washington about any candidate," Schaffer says, "but I think that Clem [Tillion] is someone who, if we decided to get involved in the process, we would be supportive of. . . . Fish regulation and fish politics are very different from what we'd been accustomed to, and we're still trying to find our way around the whole council system."
If the council fails to deliver on the quota plan, Tyson or other factory trawler operators could go over their heads by lobbying the Clinton administration and Congress. Some factory trawler representatives have already proposed an amendment to the Magnuson Act--now up for reauthorization--that would give the Commerce Department power to develop a plan on its own.
But Rollie Schmitten, the director of the National Marine Fisheries Service, says the regional council should decide whether to introduce share plans. Schmitten also proposes a new fishing industry fee to finance $82 million of his agency's $280 million annual budget, a cost currently picked up by taxpayers. And he thinks those fortunate enough to claim harvest shares bear a special burden to pay. "If you are going to bestow a public resource to certain individuals, then there ought to be some sort of equity to the public," Schmitten says.
The Magnuson Act generally prohibits the government from levying fees on the use of national fisheries, but many members of Congress are joining Schmitten in pushing for amendments to the act that would allow for fees to help pay the cost of managing the resource and enforcing regulations.
However, any move to make the industry pay substantial fees or royalties will probably face a chilly reception. "We're open to discussing [fees and royalties]," says Schaffer. "But we've not taken a formal position on it."
The battle over the future of this fishery is likely to play out over the next few years both in Washington, D.C., and at Alaska council meetings. And while fishermen fight over who gets to profit from the resource, it will be up to the council and fishery managers to keep the fishery healthy.
Many fishermen are convinced that Alaska fisheries will remain strong, avoiding the fate of New England, Newfoundland, and other great fisheries that have been fished out. But conservationists fear these harvests could be the last buffalo hunts of a dwindling resource.
Everyone from Tyson officials to small boat fishermen like Chuck Burrece now speaks the gospel of conservation. But there are no saints in the fishing industry, especially when jobs are at stake.
Burrece, for example, feels squeezed between factory trawlers who are hogging the resource and regulators who might make him pay royalties for fishing rights. "We put our lives on the line, that's how we're paying," Burrece says angrily. "I got a lot of friends laying out there dead from catching fish. That's how we pay. That's enough."
Burrece knows he risks the same fate if he keeps defying the weather to go cod fishing. But in the race for fish, he figures he can't afford to be idle too long. On a dank evening last March, Burrece fidgeted at the dock. The forecast for the next day was bad: northeast winds gusting more than 60 miles per hour. But Burrece kept thinking about those factory trawlers that would be sure to haul in cod right through the storm.
Late in the evening, Burrece made up his mind. He told his crewmen to untie the lines, and the Lone Star motored out into the blackness of the Bering Sea.
Hal Bernton is an Alaska-based journalist who has written extensively on fisheries.
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