The “federal waters” hotspot beyond three miles offshore in Alaska’s Cook Inlet/NOAA

The great takeover of federal waters

Oh if only the facts were as a trio of Alaska House legislators would like their colleagues to believe.

They’ve drafted a resolution calling on Congress to extend state waters to 15 miles off the coast of Alaska because this would serve the state’s interest in supporting a “seafood industry generat(ing) over $163,000,000 in revenue for state and local governments.”

All those zeros make that look like a great deal of money, but in terms of state revenue, $163 million is chicken feed. The state’s now fading oil industry is forecast to produce $3 billion in fiscal year 2024 or almost 20 times more, according to state projections.

Worse though, the claim to $163 million in state revenue from the fishing industry comes from a report compiled for the Alaska Seafood Marketing Institute (ASMI) that is badly outdated, and the resolution now based on that report lacks the context which even the seafood sales promotion organization felt compelled to add.

“Alaska commercial seafood industry revenues collected in the form of taxes, fees and self-assessments totaled more than $163 million in fiscal year 2019,” ASMI reported. “Of that amount, the industry returned $81 million to state government (49 percent), $45 million to local governments (27 percent), $27 million to salmon enhancement operations (17 percent), and $11 million to the federal government (7 percent).”

Or, in other words, the $163 million wasn’t “revenue for state and local governments;” it was revenue for federal, state and local governments, and commercial fishing interests.

The state and local governments saw none of the $38 million sent to the hatcheries and the federal government so the “over $163 million in revenue for state and local governments” in 2019 was more like $125 million. But the state and local governments don’t share that $125 million, either, because of state agreements to help fund ASMI and regional seafood development associations.

Those organizations got a cut of close to $10 million off the top of the revenue, and the state and local governments were left to divvy up about $115 million.

But what is most misleading here is that all of this was happening “then,” when the Alaska commercial fishing industry was enjoying the good times.

And this is now: The state’s Revenue Sources Book, Fall 2023 projects a total of about $55 million in commercial fisheries revenue for fiscal year 2024.

Of that sum, according to the book, the state is expected to collect $19.8 million, down from $29.5 million in fiscal year 2023 due to plummeting salmon values. The other nearly $35 million will be split between a comparative handful of local communities as revenue sharing ($21.4 million) and the fishing industry with $7 million going for salmon marketing, $3.5 million for hatcheries, and $2.8 million for the regional seafood development associations.

Subsidized fishing

The less than $20 million the state gets to keep amounts to about a third of the more than $57 million the Commercial Fisheries Division of the Alaska Department of Fish and Game has budgeted as necessary to manage the commercial fisheries in 2024.

So, to fully correct the resolution, “the seafood industry generates $21.4 million for a select group of Alaska communities that qualify for fisheries tax revenue sharing, $7 million for ASMI, $3.5 million for hatcheries and $2.8 million for regional seafood development associations while the state loses about $40 million on the cost of managing the fishery.”

The state loss is actually a little bigger than this because there are policing costs involved in prosecuting commercial fisheries as well as management costs, but never mind that. A $40 million loss is enough for this discussion.

It is what would be considered a taxpayer subsidy if Alaskans paid taxes, but they don’t. Given a budget mainly fueled by oil revenues and profits from the Permanent Fund, the subsidy instead comes out of reductions in revenue that would flow to other state agencies – public safety, education, health and social services or others.

One would hope that the state could at least break even on taxes for providing the support that keeps alive an industry that the resolution claims “directly employs over 62,000 workers, with more than 27,000 being state residents, surpassing any other private sector industry in the state.”

But that’s another reporting error.

Those numbers, again, come from the ASMI report using five-year-old information, and they were inflated even before the wheels fell off the commercial fishing business in Alaska. According to the Alaska Department of Labor, employment was down to 46,000 people – not 62,000 – in 2019, the year before the pandemic began, and employment dropped dramatically after that disaster.

It was down 23,428 in 2020, according to Labor, and is unlikely to ever return to pre-pandemic numbers given the efforts of processors to automate their operations, mainly to cut down on the number of needed employees and thus reduce their problems in finding people willing to work in fish processing plants.

“Alaska seafood companies looking to hire thousands of processing workers for the approaching summer salmon season are facing a labor crisis of unprecedented proportions: workers are hard to find, and wages for those that do show up this summer will be higher than ever before,” the trade website IntraFish reported in 2022.

“‘There’s clearly a lack of domestic workers that want to work in seafood processing in Alaska,’ Jon Hickman, vice president of operations for Peter Pan Seafoods, told IntraFish. “All seafood processors are facing the same situation and are finding it nearly impossible to fill plants with folks.”

This has been a problem for a long time with the Alaska Congressional delegation regularly involved in trying to solve it, with some success, by lobbying the federal government to issue more “H-2B nonagricultural worker visas” to allow more foreign workers into the state.

As KDLG, “public radio for Bristol Bay” reported last summer, “workers from the Central American countries of Guatemala, Honduras and El Salvador make up another important group of processors. Roughly 20,000 visas are available for people from those three countries under a diplomatic agreement.

“So,” Brian Gannon, who works for a Beltway travel company that recruits these workers told the radio station, “the US government is using a diplomatic approach to help with the issues at the southern border by requiring some H2-B using companies to source workers from Central America.”

Unlike tourists who come north to Alaska to spend money, H2-B workers try to save as much of their money as possible to take home, and they comprise the bulk of the non-resident processing workforce.

“In manufacturing, which is mostly seafood processing, 68 percent of workers were not residents, making it the only sector with a nonresident majority,” according to a 2022 report on Nonresidents Working in Alaska compiled by the state Labor Department. The report put the percentage of nonresidents working the so-called “slime line” in fish processing plants at nearly 81 percent.

Residents associated with processing who hold the nicer jobs helped improve the overall percentage, and the numbers are better for those actually catching the fish.

“In 2022, nonresidents were an estimated 48 percent of the harvesting workforce, which includes permit holders and their crew, and nonresidents took in 55 percent of gross
harvesting earnings,” the report added. Much of the money these nonresidents earn fishing also flows out of the state.

Alaskans got 52 percent of the fishing jobs and only 45 percent of the money. But don’t tell Reps. Sarah Vance, R-Homer;  Kevin McCabe, R-Wasilla and George Rausher, R-Wasilla,  that the reality here is that the commercial fishing industry has been on a path to becoming a worse and worse deal for Alaska for years.

A shrinking employer

“When Covid precautions were in place, vessels slightly reduced their crew numbers, but that level has returned to normal,” Labor reported in November. “However, some vessels stopped fishing during the pandemic and haven’t returned. In 2019, nearly 4,600 boats fished for salmon, Alaska’s most labor-intensive harvest. In 2022, it was just under 4,100.”

“Seafood harvesting still represents a significant share of Alaska’s employment, although its weak performance relative to other sectors pulled the July share from 7.3 percent of statewide jobs down to 5.7 percent.”

July is the peak month for seafood employment in the 49th state. Jobs numbers start falling fast at the end of that month, and the annual picture is wholly different.

On an annual job basis, Labor ranked fish harvesting and processing combined as providing slightly fewer jobs in Alaska than construction, another largely seasonal industry, and noted the future for the fishing industry does not look rosy.

That might be an understatement.

There is talk of prices for pink salmon, which comprise the bulk of the Alaska salmon harvest, falling to as low as 10 cents per pound this summer. Statewide, pink prices paid fishermen last year were already down to an average of 24 cents per pound, according to the Alaska Department of Fish and Game, meaning the average  “humpy,” as Alaskans call the smallest and most common salmon caught in the state, was worth less than 75 cents.

Better but still horribly low prices for bigger, tastier sockeye salmon led to the 2023 harvest of 230.2 million salmon –  the fourth highest on record – being valued at $398.6 million or less than $1.75 per fish. Despite the massive catch, the 2023 harvest ranked 26th in value in state history, coming in just ahead of a 1981 catch of 136.8 million fish that was at the time valued at $395.6 million. 

When adjusted for inflation to September of last year, that 1981 catch would be worth $1.3 billion today despite being only about 60 percent the size of the 2023 harvest. The general, long-term situation in Alaska is this:

Since the state went all in on a massive hatchery program to farm the ocean in the late 1970s, the number of salmon caught in Alaska has gone up, up, up while the value of the salmon caught in Alaska has steadily trended downward. Given the history, some have accused Alaska of economically mismanaging its salmon fisheries.

But it would be unfair to put all of the blame on state officials. Since Statehood in 1960, their management decisions have largely just followed the advice of salmon processors, nearly all of them based somewhere other than Alaska,  and commercial fishermen, who Alaska voters agreed to turn into a huge and vested special interest group with the creation of what is called “limited entry” in 1973. 

It would be a wonderful thing for the state if the condition of the seafood industry today looked even half as rosy as the picture painted by the resolution, but it doesn’t. So why the misportrayal and why a 15-mile limit?

Well, what this is really about is a Vance-led effort to get other Alaska lawmakers behind a request to the federal government for a change that would make life easier for Cook Inlet commercial fishermen, though the resolution never mentions them.

The resolution instead claims that “the present three nautical mile limit for fisheries management jurisdiction limits the state’s ability to adequately protect and manage seafood resources as outlined in the (state) constitution.”

That claim runs counter to reality. On a purely production basis, the growth in state salmon harvests from an average of 49 million per year in the 1970s to an average of 122.4 million per year in the ’80s, 157.5 million per year in the ’90s, 167.4 million per year in the 2000s, and 180 million per year in the 2010s would indicate the state has not been handicapped by the three-mile limit in terms of protecting and managing its resource.

But protection and management aren’t the real issues behind this resolution.

What is really going on is this: Cook Inlet commercial salmon fishermen who helped Vance get elected don’t like proposed federal regulations for the management of Inlet salmon coming in the wake of those same fishermen suing the state to force a federal takeover of waters beyond three miles from shore.

In the midst of the Inlet’s long-running fish wars – which have seen commercial fishermen battling for decades with sport, personal-use and subsistence fishermen over who gets to harvest what and how much – commercial fishermen thought they could get a better deal from federal managers than from state managers, who have been aggressively protective of Chinook salmon – the largest of the species Alaskans call “kings” – returning to the fabled Kenai River – and increasingly protective of sockeye and coho salmon that must run a gauntlet of commercial nets to reach the Susitna River drainage north of Anchorage.

The commercial fishermen did manage to convince a federal judge to give them the federal management they wanted. And now they’re finding out what such management is like when run under the auspices of a red-tape heavy U.S. government.

As proposed in October, the federal regulations for the Inlet would limit drift gillnet fishing to two days per week, order fishermen to obtain federal permits, require them to maintain logs of the fish they catch, and force them to install vessel monitoring systems on their boats, meaning the feds could keep an eye on what they are doing all of the time.

The new federal permit holders would also be banned from participating  “in the federal fishery at the same time as participating in the state water fishery,” which could complicate day-to-day fishing activities. But the vessel monitoring systems (VMS) appear to be the big issue.

The state proposed a similar idea for fishermen in state waters this year only to run into massive opposition.

“All comments – both verbal and written –  expressed opposition to the bill as it is currently written,” Petersburg public radio KFSK reported after the first hearing on the legislation. “Most were concerned with the potential cost of the program to fishermen. Some cited concerns with government overreach and surveillance.”

Commercial fishermen, who punch way above their weight in Alaska politics, likely have the pull to stall if not kill the state’s VMS monitoring legislation. Sen. Forrest Dunbar, D – Anchorage, is protesting that VMS is way too costly for Alaska fishermen, but the feds don’t care.

They have for years been moving toward monitoring all commercial fisheries with either onboard observers or VMS, a significantly cheaper alternative to an onboard observer. The feds are doing this because they don’t trust commercial fishermen.

There are reasons for their mistrust as best documented by former commercial fisherman Arne Fuglvog, a one-time aide to Sen. Lisa Murkowski, R-Alaska and a former member of the North Pacific Fisheries Management Council, which oversees commercial fishing in the Gulf of Alaska. The Petersburg fisherman, who long positioned himself as a public advocate for conservation, was discovered to have spent his time at sea overfishing his permits and illegally reporting his harvests.

He was caught and convicted more than a decade ago, but that didn’t discourage Alaska fishermen from trying to stop the federal implementation of VMS in fisheries conducted in federal waters off Alaska’s coast. At that, they failed, but they have – to date – managed to avoid monitoring in Alaska state waters. A 15-mile state waters limit would help them keep the monitors at bay.

The resolution calling for a 15-mile state limit for some reason mentions none of this part what is going on.

Instead, it claims “a 15 nautical mile limit would enhance management, enforcement, and jurisdiction control, ensuring the protection of resources and the maximization of returns for the state’s commercially harvested seafood.”

The claim to enhanced enforcement comes despite the Alaska Board of Fisheries just last year telling the Department of Public Safety it lacks the necessary number of Alaska Wildlife Troopers and needs to hire more to enforce state regulations within the existing three-mile limit.

The Board noted that it had asked for more troopers in 1983 when there were 121. Instead of the state adding more, the number fell to 93 by 1998 when the Board again asked for more enforcement.

It didn’t get it. The number had dropped to 89 by 2017 when the Board again put in a request for more enforcement. The number of wildlife troopers has since grown by two, reaching 91 by 2023, but the Board has said more are needed.

“In the 40 years since the first Joint Board resolution (asked for more enforcement), the population of the state has grown immensely as have Alaskan fisheries but the enforcement of our prized and precious resources has not,” then Board member McKenzie Mitchell wrote. “We must do better.”

But now instead of adding officers to enforce existing regulations in a limited area within three miles of the coast, Vance and her gang want the Legislature to endorse the idea of vastly expanding the amount of water to be covered by state enforcement as if the National Oceanic and Atmospheric Administration (NOAA) would grant this request anyway.

Since President Joe Biden’s election, his administration has been devoted to restricting the state’s right to administer resources in Alaska rather than expanding its authority to do so. The most notable action was the Environmental Protection Agency’s decision to prohibit the possible development of the controversial Pebble Mine on state lands in Southwest Alaska. 

The argument was that those who want to mine the land aren’t responsible enough to find a way to do so in an environmentally safe manner, and there’s no reason to believe the people who mine the seas off Alaska’s coast are much more environmentally responsible.

First, there are the Fuglvog’s of the business, and then there are the commercial fishermen who control the state’s salmon hatcheries now fighting the Alaska Department of Environmental Conservation over rules that would make hatchery managers monitor and, if necessary, clean up the waste that is accumulating beneath the net pens in which they raise young salmon before sending them to sea.

This, the hatcheries argue, would be unduly costly, and thus they shouldn’t have to do it. This is the way businessmen think, and despite year of the Alaska commercial fishery trying to sell itself as a “lifestyle” to play to the hearts of Alaskans, it is at the end of the day a business.