01 Aug 1988 The American Fisheries Act: Special Interest Politics at Its Worst, by John Carlisle

Congress is currently considering whether to approve a controversial piece of legislation known as “The American Fisheries Act.” Introduced in the U.S. Senate by Senator Ted Stevens (R-AK) as S. 1221 and in the House of Representatives by Congressman Jim Saxton (R-NJ) as H.R. 4180, the bill is ostensibly designed to rectify a “loophole” in a 1987 federal law that permits foreign-rebuilt ships to operate in the North Pacific fishery. Many of these are larger vessels, known as factory trawlers, that can both catch and process fish. The law in question, “The Anti-Reflagging Act of 1987,” was meant to Americanize U.S. fisheries by prohibiting foreign-built ships from reflagging as U.S. ships, thereby circumventing the Americanization policy. In addition, proponents of S. 1221 also claim that their bill is a conservation measure designed to halt the overharvesting of fish in the North Pacific fishery. Joining the environmental activist group Greenpeace in an unusual alliance in support of the bill, Senator Stevens has argued that factory trawlers are catching an excessive amount of fish and must be expelled to insure the long-term health of America’s most productive fishery.

Although S. 1221 proponents are doing their best to convince the public otherwise, the legislation has absolutely nothing to do with expelling illegal foreign ships from American waters or saving a rich fishing ground. It has everything to do with petty politics and regional parochialism.

This analysis will examine the key environmental and maritime arguments advanced by S. 1221 proponents. Specifically, this paper will show that, in asserting that foreign-rebuilt U.S. vessels should never have been permitted in the fishery, S. 1221’s proponents conveniently ignore the fact that the Anti-Reflagging Act explicitly allowed these very vessels to enter U.S. fisheries. It will also show that many in Congress, including S. 1221 proponents, were fully aware of this fact at the time. A close examination of the evidence also reveals that the claimed conservation issue does not exist. The North Pacific fishery is the best managed fishery in the United States and the factory trawlers, far from being a menace to the fishery, are among the most environmentally-responsible vessels.

The real motivation behind S. 1221 appears to be the crass desire of Alaskan political interests to destroy Washington State-based businesses for the benefit of commercial competitors, including Alaskan onshore fish processors which, ironically, are foreign-owned. If passed, the American Fisheries Act will destroy 1,500 jobs in Washington State and cost the local economy tens of millions of dollars. The 18 fishing vessels that would be expelled from the fishery would become useless, costing the companies that operate them roughly $500 million. Besides the significant economic harm that would be inflicted, the American Fisheries Act is also flatly unconstitutional. It takes the private property of fishing companies without providing compensation – a clear violation of the U.S. Constitution’s Fifth Amendment.

 

Of the many myths propounded by S. 1221 proponents, the most baseless is the claim North Pacific is overfished. They claim the factory trawlers bear responsibility for this situation, and should therefore be expelled to reduce overharvesting. Although they are not traditionally allies, Senator Stevens has teamed up with the environmental group Greenpeace to make the case that these 18 factory trawlers are harming the North Pacific fishery habitat.

Greenpeace asserts that factory ships, which can be nearly 400 feet long and measure more than 4000 gross tons, are too big and catch too many fish. The group contends that North Pacific factory trawlers have an excessive amount of bycatch – non-target fish species that are unintentionally caught and discarded.

Greenpeace also asserts that the trawlers are harming certain species, the Steller Sea Lion in particular. The group says that the sea lion population has dropped precipitously in areas near Alaskan waters where the factory ships operate. By harvesting so many fish, namely the pollock, the Steller’s primary food source is dropping. This has left the mammals with insufficient food, says Greenpeace.

Such arguments have been cited by other supporters of S. 1221 and H.R. 4180. Speaking at a June 4 hearing of the House of Representatives Subcommittee on Fisheries Conservation, Wildlife and Oceans of the House Resources Committee, Committee Chairman Don Young (R-AK) asserted that the bill is not about saving jobs in Washington State but about preserving the North Pacific fishery. Yet, arguments that the North Pacific is dangerously overfished are completely unsubstantiated.

The National Marine Fisheries Service (NMFS), the federal agency responsible for the conservation and management of federal fishery resources, has emphatically stated that no overfishing is occurring in the North Pacific. In a September 1996 report, NMFS flatly rebutted Greenpeace’s contention that overfishing is occurring, saying that Greenpeace “draws erroneous conclusions about how the North Pacific fishery is managed.” NMFS says that the existing fishery management program has been so successful over the last 20 years that it has actually led to a growth in the area’s fish population. University scientists corroborate the NMFS position.

David Fluharty, a professor at the University of Washington School of Marine Affairs and a member of the North Pacific Fishery Management Council, states: “By any objective standard, the claim that the region is overfished is demonstrably false. Concomitantly, there is no basis for believing that at-sea processors or any other sector of the fleet is engaged in overfishing… Based on the best available scientific data… it is clear that the fishery for Walleye Pollock is one of the largest fisheries in the world and among the cleanest in terms of bycatch.”

The North Pacific fishery is also the healthiest fishery in the United States.

Of the seven major fisheries around the United States, the North Pacific Fishery is the only one with no overfished species. All 63 species that are harvested are harvested within limits. This compares favorably to New England, where there are 12 overfished species, the Mid-Atlantic with 5, the South Atlantic with 14, the Gulf of Mexico with 4, the Pacific Coast with 13 and Hawaii with 26.

There are several reasons for the North Pacific’s healthy fish stocks. To begin with, government and university scientists carefully calibrate the amount of fish that can be safely harvested each year. In establishing the catch limit, the food needs of marine mammals, like the Steller Sea Lion, are taken into account and the catch level is reduced by a corresponding amount. Furthermore, current harvest levels are set at only two-thirds of the allowable catch limit. Thus, in 1996, the overall harvest quota for Alaska groundfish totaled about 2.2 million tons even though fishery scientists determined that 3.3 million tons could have been safely harvested.

Contrary to Greenpeace’s claims, NMFS also says that the marine mammal populations are not adversely affected by fishing. As already stated, the food needs of these mammals are considered in establishing catch limits; the population levels of the pollock, the Steller Sea Lion’s main food source, are at comfortably high levels. Fishery regulations also prohibit factory trawlers from fishing near crab, sea lion and walrus habitats. NMFS reports there is little interaction between marine mammals and trawl fishing ships, and that entanglement in trawl gear is not a factor in mammal mortality.

Greenpeace frequently asserts that factory trawlers waste a large number of fish in comparison to other American fisheries. What Greenpeace fails to take into account is that, because the North Pacific fishery is so healthy and abundant, total discard levels will necessarily be large when compared to other fisheries like New England’s. It is important to bear in mind that the North Pacific fishery accounts for 45% of the total U.S. fish harvest. As for Greenpeace’s claim that the trawlers waste or discard an excessive amount of unwanted fish, the facts say otherwise. In reality, the discard rate of North Pacific fishers is 15%, well below the worldwide average of 25%. Most significant of all, the discard rate of the large factory trawlers is the lowest of any North Pacific fishing vessel – three percent.

Upon careful investigation, the factory trawlers are found to be the most environmentally safe of all fishing vessels. Federal fishery observers are on board all factory trawlers, including the 18 factory trawlers targeted by S. 1221, to enforce catch limits and collect scientific data. At-sea processors are in full compliance with the law and report their catch on a weekly or even daily basis. There is certainly no incentive for factory ships to catch more fish than they need as any fish discarded counts against the quota limit. NMFS observes, “It is our understanding that vessel size is not a key factor in explaining why boats overfish the resources. Nor are large boats disproportionately responsible for bycatch problems.” The rebuilt factory trawlers are large because they contain processing facilities and living quarters for the crew. Their actual fish harvest is often less than that of smaller vessels that only catch fish.

Ironically, banning some factory trawlers as S. 1221/H.R. 4180 seeks to do would make it significantly more difficult for the government to monitor and enforce catch limits because many smaller vessels are not required to carry federal fishery observers. Government inspectors cannot be placed on each of these vessels.

This brings up one of the most glaring flaws in S. 1221/H.R. 4180’s supposedly pro-conservation goals. Even if the 18 factory trawlers were banned, the number of fish harvested would remain exactly the same because other boats and processors would simply replace the rebuilt factory ships. That is also the official view of NMFS: “In the North Pacific, we would expect the fishing capacity of the remaining vessels to increase relatively quickly (within one or two years) to replace fishing capacity that is removed by S. 1221.”

This is the unspoken little secret behind the American Fisheries Act. The bill is not about saving fish – overwhelming evidence proves otherwise. It is about reallocating business from certain Washington-based seafood companies to their competition, including Alaskan on-shore processors. Said Frank Bohannon, a proponent of S. 1221: “United Catcher Boats would like to go on record stating that the fish freed up by the removal of foreign vessels be allocated to the U.S. fishing fleet.”

As will be discussed later, those “foreign” vessels are actually U.S.-flag vessels operated by American companies and manned by American crews. However, what these facts show is that proponents of S. 1221 and H.R. 4180 must resort to distortions about the factory trawlers’ environmental record to drive out of the North Pacific fishery the more effective fishing companies. Says Ron Sims, county executive of Washington’s King County, “[S. 1221’s] main effect would be to exclude about one-half of the boats that currently fish in these waters to the benefit of the other half.” The environmentalists definitely don’t believe S. 1221 will accomplish any significant conservation benefit by itself. Their agenda is simply to start picking off fishing interests one at a time since they are categorically opposed to fishing by anybody – whether by factory trawlers or small boats. Apparently, environmentalists hope that S. 1221 would set a useful precedent for expelling other fishing vessels.

Commenting on the boats that would take over from the factory trawlers, one environmental witness said at a hearing: “The Alaska-based catcher boats, and others active in the fisheries, do contribute to many of the environmental problems facing the North Pacific, including overfishing, bycatch, localized depletions and damage to habitat… [and] remain targets of our long-term campaign, despite the fact that some of them support S. 1221.”

 

When Senator Stevens introduced the American Fisheries Act on September 25, 1997, he argued that the bill was necessary to reduce an overcapitalization of the North Pacific fishery. Overcapitalization essentially means that there are too many companies competing in the fishery. Leaving aside for the moment why it is even the business of Congress to dictate the capitalization level in any industry, S. 1221 proponents claim that this excessive competition resulted from a misinterpretation of the Anti-Reflagging Act of 1987 that allowed several U.S. factory ships that had been rebuilt overseas into American fisheries.

The Anti-Reflagging Act, passed by Congress in 1987 and signed into law soon after by President Ronald Reagan, was designed to Americanize U.S. fisheries by prohibiting foreign-built ships from reflagging as U.S. ships – thus skirting the Americanization policy. It represented the culmination of a series of legislative proposals, beginning with the Magnuson-Stevens Act in 1976, to gradually eliminate foreign-flag fishing for the benefit of American fishermen. In 1987, foreign-flag vessels were processing nearly 90% of the fish in the North Pacific fishery. Because of the Magnuson-Stevens Act, the Anti-Reflagging Act and other legislation, foreign-flag harvesting and processing vessels had been virtually eliminated and replaced by U.S.-flag vessels by the early 1990s. By all measures, these laws achieved their objectives. U.S.-flag vessels dominate the North Pacific fishery and investment in U.S. fishing boats and processors (that is, factory trawlers) has dramatically increased.

One point, however, needs to be emphasized. When Congress passed these laws, “Americanization” meant U.S.-flag vessels, employing American crews, owned by American companies, paying taxes to the U.S. Treasury and complying with all U.S. labor, immigration and environmental laws. Americanization did not mean that stockholders in these companies had to be U.S. citizens. Nor did it mean that U.S.-built ships that underwent rebuilding in foreign shipyards could not enter American fisheries as U.S.-flag vessels.

However, S. 1221 proponents claim that the 18 U.S.-built factory trawlers that were rebuilt in foreign shipyards and entered the North Pacific fishery in the years immediately following the passage of the Anti-Reflagging Act should not have been allowed because they were, in fact, foreign ships. Senator Stevens asserts that the U.S. Coast Guard misinterpreted the intent of the Act by allowing foreign-rebuilt boats to be designated as U.S.-flag vessels. Stevens went so far as to accuse the Coast Guard of unethical conduct in the manner in which it evaluated the ships in question.

To rectify this supposed deceit, S. 1221 expels most foreign-rebuilt U.S.-flag ships from the North Pacific fishery. This is accomplished by retroactively repealing the grandfather clauses of the Anti-Reflagging Act by which the foreign-rebuilt ships were admitted into the American fishery. One grandfather clause specifically allowed a foreign-rebuilt U.S. ship to enter the North Pacific fishery if the ship had been purchased by July 28, 1987, entered a foreign shipyard contract within six months of the passage of the legislation (January 11, 1988) and was redelivered to the owner by July 28, 1990. Ultimately, 22 foreign-rebuilt ships were allowed into the U.S. fishery under the grandfather clause. If S. 1221 is approved, to continue fishing in the North Pacific, corporations operating the formerly grandfathered boats would have to meet a new standard of 75% American ownership instead of the previous standard of 50%. Boats failing to meet the ownership standard within 18 months of the bill’s enactment would be expelled.

Another provision expels grandfathered boats greater than 165 feet in length that measure more than 750 tons and are equipped with a 3000-horsepower engine. The only way a company can keep a vessel of this size after the same 18-month period is if it scraps a comparable-sized U.S.-built fishing vessel. Thus, in addition to forcing owners to sell anywhere from a 25% to 75% stake in their companies to U.S. citizens, S. 1221 places owners in the economically-impossible position of having to permanently discard one-half of their fleet, assuming their fleet contains comparable vessels, in order to continue fishing. If a vessel of comparable size does not exist, the fishery endorsement of the foreign-rebuilt ship is revoked immediately. An endorsement, which will be discussed in more detail later, is the legal principle that qualifies a vessel to perform its intended function.

The bill’s real purpose is made starkly clear, however, by the classic catch-22 dilemma it forces on affected companies. Although S. 1221 appears to give owners 18 months to comply with the new citizen ownership provision, the bill states that any ship that has a significant change in ownership after September 25, 1997 automatically loses its fishing endorsements. In other words, S. 1221 requires factory trawlers to be 75% American-owned, but when a company meets the new ownership requirement the vessel may no longer be used in the U.S. fisheries anyway. As a Seattle Times editorial stated, “The goal is to drive boats out of business… Stevens is simply and crudely trying to ferret out the most efficient elements of the market in favor of regional, parochial interests.”

This crude assault on a flourishing industry certainly marks another low in the politics of regional parochialism and special interest scheming. What really distinguishes S. 1221 for its brazenness, though, is that proponents, namely Senator Stevens, have falsely claimed that they were deceived when foreign-rebuilt ships were admitted into the fishery. In fact, they knew from the beginning that the “Anti-Reflagging Act of 1987” – a bill Stevens helped write – was designed to allow certain U.S.-built, foreign-rebuilt ships into the fishery.

When the Anti-Reflagging Act was being crafted, it was widely known among Members of Congress and the Senate and their staffs that dozens of ships were being rebuilt in foreign shipyards. Between July and November 1987, shipyard interests circulated several lists to House and Senate staff identifying 36 to 100 vessels that were the subject of overseas conversion plans. These lists were quite detailed. Members involved in developing the legislation were made aware of the number of the vessels being rebuilt, the identity of the vessels, the country in which the work was taking place, the type of rebuilding, the extent of rebuilding and the estimated cost of the conversion. In several instances, the ships were described as having 80% to 90% of their original structures rebuilt. For example, a list distributed in August 1987 described 15 vessels in foreign shipyards. One of the vessels, the Snow King, was listed as being in Norway and having a “complete rebuild of superstructure, repower and conversion to trawler processor” at a cost of $14 million. Another vessel, the Northern Hawk, a 340-foot boat, was having 90% of its structure rebuilt in a Norwegian shipyard. The Northern Hawk is one of the grandfathered vessels targeted by S. 1221. Yet, Congress was made aware of its foreign conversion in Senate hearings eight months before Congress approved the Anti-Reflagging Act. Clearly, Congress knew when it was debating the Anti-Reflagging Act that small fishing vessels were being rebuilt in foreign shipyards, and that many of these foreign conversions involved dramatic overhauls of the ships. It is important to note that the legislative history does not reflect any attempt to either halt or to limit the size of the foreign rebuilding projects.

These details are important because now S. 1221 proponents have made much out of the fact that the ships allegedly were rebuilt larger than Congress contemplated. At a June 1998 House hearing, Senator Stevens displayed large photos showing that some boats were dramatically transformed into significantly larger ships – as if this were a surprise. Yet, such projects were well known in 1987 when the original bill was pending.

Congress did not want to limit foreign conversions for a reason that Senator Stevens and other S. 1221 proponents are almost certainly aware. In 1987, our national policy was to encourage foreign investment in the U.S. fishing industry as a way to increase domestic fish processing capacity in the North Pacific. Thus, it is not surprising that Congress chose to legislate a window of opportunity for foreign-rebuilt vessels to enter American fisheries and allow stockholders in the owning companies to be foreign.

Of the four bills introduced in 1987 addressing reflagging, not one contained a provision requiring that rebuilding take place in U.S. shipyards. This included S. 377, a bill introduced by Senator Stevens. In a hearing on that bill, a significant majority of the witnesses stated their opposition to imposing any citizen ownership requirements on U.S.-flag vessels.

Senator Stevens and his Commerce Committee colleagues were informed in the 1987 hearings that there was a major need for foreign capital investment in the North Pacific fishery. At the time, U.S. processors had the ability to process only 10% to 15% of the North Pacific groundfish, with the rest processed by foreign-built, foreign-owned and foreign-flag vessels. Witnesses told the Committee that the domestic fish industry was not making the necessary investments. Fish processors likewise told the House Merchant Marine and Fisheries Committee that “reliance upon foreign capital investment in the fishing industry is necessary for the foreseeable future.” One industry official provided Congressman Young with 21 examples of American fishermen and processors who were unable to obtain domestic financing for their conversion projects.

This history is important because Senator Stevens, Congressman Young and other S. 1221 proponents have attacked the Coast Guard for allegedly flagrantly misinterpreting congressional intent. During hearings on the Anti-Reflagging Act, Congressman Young directly asked Coast Guard officials about the legality of the foreign rebuilding that was then occurring in European and Asian shipyards. The Coast Guard responded that such foreign conversions were perfectly legal – a view strongly seconded by the Reagan Administration. Speaking for the Department of Commerce, James Douglas stated: “We do not believe foreign investment has presented any problems in conservation or management of our fishery resources… good and positive developments include foreign investment in fish harvesting, tendering and processing vessels by both foreign and domestic entrepreneurs. We welcome that investment.”

Under the plain language of the rebuilding grandfather clause of the Anti-Reflagging Act, the Coast Guard ruled that the foreign-rebuilt vessels were “old” U.S. vessels, not “new” foreign vessels. Following 200-year-old maritime precedent, the Coast Guard held that a vessel is only new if: 1) Its hull and superstructure are constructed entirely of new materials or 2) It is remade from material of an existing vessel so extensively refabricated as to be unidentifiable as vessel parts. Essentially, a rebuilt vessel will not be considered “new” if it retains only a relatively small portion of the original hull or superstructure. The reason for this tough standard is to protect crewmembers, contractors and lenders, all of whom rely on the vessel as their collateral. Without this tough standard, a modest amount of shipyard work could change the identity of a vessel, thus allowing an owner to escape his obligations to pay crewmen and marine suppliers who worked on the original vessel. This strict interpretation also prevents foreign vessels from circumventing the Magnuson-Stevens Act – the chief concern of S. 1221 proponents. It is ironic that Senator Stevens and Congressman Young have publicly castigated the Coast Guard for adhering to this long-standing position. Were it not for the Coast Guard’s interpretation, a foreign trawler could undergo a modest amount of work in a U.S. shipyard, which would make it American-built and thereby allow it to enter domestic fisheries.

Despite current protestations that Congress somehow was unaware of this long-standing precedent, the record shows that the Coast Guard’s foreign-rebuilding policy was fully explained to Senate Commerce Committee staff in 1987. Moreover, Senator Stevens himself seemed to understand the precedent when he stated on the floor of the Senate shortly before the Anti-Reflagging Act passed, “current vessel documentation laws allow a U.S.-built vessel to be almost entirely rebuilt in a foreign shipyard while still retaining the primary processing preference.”

That is why it is perplexing that Senator Stevens reversed his position in 1998 and asked the General Accounting Office (GAO) to conduct an investigation of the Coast Guard, claiming it had misinterpreted the Anti-Reflagging Act by permitting the entry of foreign-rebuilt U.S. ships. On July 16, the GAO released a report validating the Coast Guard’s interpretation. Why Senator Stevens needed a GAO investigation to tell him what he already knew is simply mystifying.

Of equal significance, Congressman Young explicitly recognized the need to protect the property rights of ship owners engaged in foreign conversions. After making reference to the Senate’s desire for an earlier cutoff date for allowing foreign-rebuilt U.S. ships to enter the North Pacific fishery, Young stated that the House chose “July 28, 1987 as a cutoff in order to avoid any semblance of a taking of a vessel owner’s privileges under law.” This is surprising because at the June 1998 House hearing on these issues, Congressman Young emphatically dismissed concerns voiced by fellow Members that the bill violated property rights.

If it wasn’t right, in Congressman Young’s opinion, to take a company’s vessels in 1987, what makes it right to take those same vessels in 1998?

 

While S. 1221 proponents may believe they can be cavalier with property rights, the Constitution says otherwise. The Fifth Amendment states “nor shall private property be taken for public use, without just compensation.” The Fifth Amendment’s guarantee of just compensation prohibits government from forcing some individuals to bear disproportionate public burdens which should be borne by the public as a whole.

In the case of S. 1221 and H.R. 4180, a few private companies would be forced to bear a devastating economic burden for something that does not even further a legitimate public purpose. The provisions of these bills will render the ships operated by the affected shipping companies useless and valueless.

In addressing the property rights issues raised, it is important to understand that ships have a unique legal identity. They enjoy rights, privileges and entitlements that other types of property, such as automobiles, do not. Once a vessel gains its qualification – or endorsement – to engage in a trade like fishing, that endorsement follows the vessel no matter who owns it. A vessel’s endorsement is an inherent characteristic of the vessel itself, describing what it can and cannot be used for. Furthermore, the endorsement is not like a permit, which applies only to the individual permittee.

In applying the Anti-Reflagging Act, the Coast Guard has consistently held that foreign-rebuilt ships kept their original fisheries endorsements through changes of ownership. In addition, vessel documentation laws focus only on the citizenship of the owning entity, be it an individual or corporation. The citizenship of the investors in a U.S. corporation is not relevant in determining the documentation of the vessel. When Congress passed the Magnuson-Stevens Act and the Anti-Reflagging Act, there was never any question that U.S. corporations that were majority-owned by non-citizens should be treated differently from any other U.S. company in providing access to fisheries.

The courts have upheld the Coast Guard’s long-standing interpretation of fishery endorsements running with a vessel. In 1990, the Southeast Shipyard Association filed a lawsuit in federal court claiming that, under the provisions of the Anti-Reflagging Act, the foreign-rebuilt ships should have lost their fishing endorsements when they changed ownership. In 1992, the Court of Appeals for the District of Columbia rejected the claim and unanimously ruled for the Coast Guard.

Denying the 18 factory processors their endorsements would destroy $500 million worth of shipping assets. Contrary to the claims of S. 1221 proponents, it is not a simple matter of the companies transferring the ships to other locations or selling them at market value. Several factors prevent these vessels from fishing elsewhere in the world. To begin with, the affected ships are U.S.-flag vessels, which automatically prohibits them from fishing in the territorial waters of many nations. Second, the non-U.S. fisheries where the ships could operate simply lack the type and volume of fish that would make fishing economically feasible for these types of ships. These 18 vessels were custom-rebuilt for fishing in the North Pacific fishery and for processing certain fish products like surimi, a fish paste used in making artificial crab legs and other seafood products. Highly specialized and designed for use in the North Pacific pollock fishery, there is no other use for these vessels. Without the fishery endorsement, the vessels have no value. Hence, there is no merit to the claims of S. 1221 proponents that the companies can just sell the ships. There would be no buyers because a potential owner would not regain the fishery endorsement with the purchase. About the only thing the ships could be sold for is for scrap metal.

Depriving fishing companies the use of their ships without compensation is clearly a taking under the Fifth Amendment. A number of legal experts concur. Former U.S. Attorney General Dick Thornburgh stated: “…the endorsements represent a valuable property right that in no wise can be construed as property of the government. The endorsements run with the vessel; they are not personal to the vessel’s owner in the nature of a revocable license. Once endorsements are issued they become a part of the bundle of rights that run with the vessel… By revoking the endorsement Congress will deprive the vessel owners of these property interests.”

Stephen Saltzburg, a professor at The George Washington University Law School, observes that S. 1221 does not serve a legitimate public health or safety issue, but rather is directed at protecting a narrow economic interest. Saltzburg states: “The fact that 1221 would eliminate the right of a corporate owner to continue to operate certain fishing vessels, unless extremely onerous conditions are met, particularly when a previous Congress thought it was guaranteeing such right (emphasis added), seems to meet the prong of the regulatory takings character of the government action.”

In addition to the blatant nature of the takings, Professor Saltzburg observed that Congress was sensitive to property rights violations when crafting the Anti-Reflagging Act. He found it noteworthy that Congressman Young supported the July 28, 1987 cutoff date for entering into foreign conversion contracts for American ships “to avoid any semblance of a taking of a vessel owner’s privilege under law.”

These and other legal experts conclude that under S. 1221 or H.R. 4180, the government would be taking property without just compensation under the Fifth Amendment, thereby setting the stage for a barrage of costly lawsuits by aggrieved property owners. Whatever may be the outcome of litigation resulting from S. 1221, one thing is certain: It would mean the destruction of thousands of jobs and a thriving industry in the Pacific Northwest.

The bill would cost the companies that own these vessels hundreds of millions of dollars and eliminate at least 1,500 jobs. Senator Patty Murray (D-WA) wrote in a letter to Senate Commerce Committee members that “7,500 family wage jobs in the Pacific Northwest and Alaska” would be negatively affected by the American Fisheries Act. The typical at-sea processor earns an average of $24,000 to $30,000 for six to eight months of work. By comparison, the average salary of an onshore processor is less than $9,000 a year.

The business that the factory trawlers generate for the Seattle-area economy is considerable. M.R. Dinsmore, executive director of the Port of Seattle, says that the processors spent $15 to $20 million in Puget Sound shipyards in 1997. In addition, Dinsmore says hundreds of other local businesses such as electronics manufacturers, fuel suppliers, airlines and packaging manufacturers derive a substantial portion of their revenue from the factory trawler fleet.

The Ports of Puget Sound have invested millions of dollars in developing the infrastructure to support the processor boats. The Port of Seattle, for instance, is investing more than $40 million to build new piers to support large fishing vessels. Dinsmore points out that “with the downturn in many Asian economies on which our region relies heavily, jeopardizing the sizable economic benefit of at-sea processors” would only further hurt the local economy.

Contractors and subcontractors who have developed profitable business ties with the at-sea processing companies have written several letters to Congress detailing how S. 1221 will seriously harm or even ruin their businesses. Said one official with Unitor, a ship supply company, “During certain months of the year, the business that is generated from these trawlers comprises more than 60% of our monthly sales. We depend so heavily upon their business that some of the current staff would have to be let go should there no longer be a business base that the fleet supports.” A marine insurance company official wrote that if S. 1221 passes “the U.S. government would be pulling the rug out from under people who have built and operated their businesses totally in compliance with the laws of the United States.” The AFL-CIO has also stated its opposition to the bill, noting that “many of the shipyard jobs are union family wage jobs” and that it “would be a shame to hurt these workers based solely on the fact that someone dislikes fishing vessels over 165 [feet] in length.”

 

The AFL-CIO statement sums up the merits of the American Fisheries Act. Designed to correct non-existent problems, the legislation manufactures trivial criteria that the targeted fishing companies cannot possibly meet – the sole purpose of which is to run them out of business. The fishery isn’t being overfished, as proponents claim; the very federal agency charged with managing the fishery, the National Marine Fisheries Service, reports that the fish population has remained healthy over the last 20 years. Neither is the North Pacific fishery overharvested; in fact, it is deliberately underharvested and is the only American fishery without a single overfished species. Likewise, there is no basis for the claim that the factory trawlers are foreign vessels that were wrongfully admitted into domestic fisheries. Senator Stevens and his colleagues and staff knew in 1987 that foreign-rebuilt ships were being admitted into the fishery. Far from being deceived by the Coast Guard, as they now indignantly assert, they were well aware of the policy and its legality back in 1987. The legislative record indicates that Senator Stevens even agreed that there was nothing illegal about admitting foreign-rebuilt ships. Arguments by S. 1221 proponents that they were deceived about the size of the rebuilt ships are also belied by the facts. Again, members of Congress were well aware of the number, identity and the extent of the overhaul for vessels that were being rebuilt or could be rebuilt under the grandfather provisions of the Anti-Reflagging Act.

All along, Senator Stevens has asserted that his purpose in expelling the factory trawlers is to Americanize the fishery. Although the companies that own the trawlers are American, many of the stockholders are Norwegian. Yet Stevens’s claim is hard to take seriously. A considerable amount of the business created by the trawlers’ expulsion would go to Alaska’s on-shore processors. The processors are 75% owned by Japanese companies. In the final analysis, that is what the American Fisheries Act is really all about: Creating business for Alaska by destroying jobs in Washington. The only conclusion that can be drawn is that the American Fisheries Act is special interest politics of the narrowest and crassest sort.

 

John Carlisle is director of the Environmental Policy Task Force of The National Center for Public Policy Research. Comments may be sent to John [email protected].