Alaska Crab Captains & Crews: Contracts Not Legally Binding?

North Pacific Fishery Management Council
206th Plenary Session – December 5-13, 2011
Anchorage Hilton Hotel

Public Comment (12/10/2011) by Stephen Taufen, Kodiak AK
C-4 BSAI Crab Stakeholder reports (5-year review issues)
(a) Crew compensation/active participation/excessive lease rates.

Mr. Secretary, Governor, Mr. Chair and Council members:
 I am Stephen Taufen of the Groundswell Fisheries Movement, a public advocacy in North Pacific fisheries. For the record, I am not an attorney. We note the Advisory Panel’s minority report on this issue.

The question before us today is, “Are you the Sentinels of the Oligarchy, being led by the Wizard of CDQ -Oz? Or are you the protectorate of the Public’s interests ready to do those duties?”

It was interesting to hear Senator Mark Begich’s concern, last evening, for jobs and his comments about IUU (illegal, unreported and unregulated fishing on the high seas) “Pi-Ratz” – but this program is about an intraborder “Pie-Ratz” — (a public larceny) with the largest slice of the crab resource wealth going to IFQ sealords, instead of those who actually harvest it.

There is a misleading chart in the 2nd floor hallway about crew pay per day, but were the sealords’ high rents per day to be charted, that bar would reach up to the 14th floor executive suites!
 Lay Share Contracts – Captains & Crew :
 The leases — taken right off the top before trip settlements, yet not disclosed on the contracts — are a material aspect of contracts with captains and crew. That is, they are central to the values exchanged, a fundamental part of the bargain and the negotiation process. Absent this information and lay share compliant contracts, the crew has never reached a final coherent consensus, and we believe that the Courts should not and will not try to concoct that a valid contract existed for them.

Resource Curse:
 This program (CR ) has been a case of unjust enrichment, largely through leases — high resource rent extractions that has been imposed on the crew by a combination of Council failures and the acts of QSH sealords. The law on contracts, especially under Admiralty protected Lay Shares (46 U.S.C. §10601), arguably requires incorporating certain lease information and other elements in order to conclude that what was bargained for constitutes consideration calculable between assenting parties of willing and sound mindedness in their approach to these contracts.

A looming question for the Courts is, “Was there a genuine meeting of the minds?”

Another looming question concerns the making of legally lacking crewshare agreements in the face of both the conditions of economic duress in many cases, and in more than a few cases, outright coercion and threat of job loss.

And a question for the USCG Admiral and you is, “Who is ‘the Admiralty’ that protects crew economic rights of lay share contracts, today?” [This question is in serious need of a federal-level legal response.]

What we are talking about is ending a “biopiracy” by artificial persons – cooperatives, consolidators, non-industry quota traders, and CDQ “banks”.

It has been said by the ITQ holders that the Council has ‘the hammer.’ But I’d suggest that the crew does – especially when you add in the legal requirements of the National Standards (under the Magnuson-Stevens Fisheries Act, or MSA) of what is “fair and equitable” and what constitutes “excessive shares.”

Participant requirements deserve strong measures to preserve crewmember jobs and the ability to have new entrants as CR’s future. This is a dynamic topic, so I will leave it at that today.

The real price of these quotas was the toil and trouble (of efforts) over decades that captains and crew put into acquiring it.

Adam Smith reminded us that:
“Labor alone, never varying in its own value, is alone the ultimate and real standard by which the value of all commodities can at all times and places be estimated and compared. [Labor] is their real price; money is their nominal price only.”

In Iceland, the ITQ system shut out new entrants and eventually helped lead to the financial collapse of that nation, who has now dismantled the quota privatization system. But several years ago, those locked out of entry went to the United Nations Human Rights Commission, with a case concerning the UN guaranteed Human and Civil Rights, through an agreement that the United States also ratified in 1992. That program, as structured — similar to our crab ITQs — was ruled “internationally illegal.” And that same standard should be applied here in the North Pacific.

The importance of this is the message that that the crew have a right to have rights. Yet the Council took that historical participation right to between 35% and 42% of the commodity away in June of 2002.

The provisions of the ITQ sealords to put a meager share over a very long time, if ever, into the hands of a few crewmen who must finance entry, talk of “qualifying” requirements. That’s ludicrous.

The crew is already qualified! — by their long toils at sea hauling the crab aboard — unlike many of the sealords. [Furthermore, the vessel owners were not the only ones with ‘a business plan’ – as the testimony about the normal historical progression from deckhand to the wheelhouse to ownership confirms.]

Crab Ratz is just another misconstrued application of the wrong theory of the Tragedy of the Commons. The USA does not own these resources, it has stewardship rights that justify its control for the purposes of conservation and management. You cannot give away, privatize, what you don’t even own.

Furthermore, as the internationally recognized visionary of Food and Development Policy, Raj Patel, points out :
“If one is looking to affix the word ‘tragedy’ of the commons, the nightmare did not begin with the creation of the commons, but with the process of their destruction, the process under which it was taken under private ownership.”

The Crab Rationalization (privatization) program is just another Ponzi-like scheme little different than the real estate bubble. The non-profit [Community Development Quota] CDQ banks — funded off the top of the resource by the 10.7% allocation before TACs are set, generating hundreds of millions of dollars in profits annually — don’t care if they buy into a bubble (of overpriced quota shares) now, instead of giving their monies to their communities to alleviate poverty in their communities today.

In addition, their 10.7% will not be bound to the voluntary compliance measures suggested by “the industry” (i.e., ICE – the Inter-Cooperative Exchange, the largest group of ITQ QHS in the CR regime).

Groundswell does not believe the USA has a right to privatize any of these federal water fisheries, even if it can ‘propertize’ them by limited license permit mechanisms. But addressing the flawed matter before us in this agenda, I’d suggest that:

The Council should not endorse nor embrace the so-called “industry work group” as legitimate, in any way. Instead, it should address the key concerns of historical Lay Share rights, the role of excessive leases (high rents), and reconciled trip settlements, and at the least should force leases below the trip settlement “adjusted gross earnings.”

Absent meeting many of the material facts and other requirements for a valid set of crew contracts (in many cases), if the ITQ holders want to have “private contractual agreements” — and not include crew in the negotiation of those leases, nor of ex-vessel ticket prices: by granting them a role in binding arbitrations — then those Sealord excessive rents (50% to 75%) should come off after captains and crews have already received their rightful lay shares.

Thank you.

Stephen Taufen, founder
Groundswell Fisheries Movement (website:
c/o F/V Stormbird; P.O. Box 714; Kodiak, AK 99615.

Submitted December 12, 2011 – approximates actual public comment.

About Stephen
Founder of Groundswell Fisheries Movement

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