|  September 17, 2014  |  
Light Rain   53.0F  |  Forecast »

Seashares

An Alaska rural development program flourishes, though not without controversy

Coastal Villages Region Fund operates commercial boats such as the North Sea in the lucrative Bering Sea crab fisheries. From left to right, crewmen Thomas John, of Newtok, and Norman John and Jerry Tulik, both of Toksook Bay.

Coastal Villages Region Fund operates commercial boats such as the North Sea in the lucrative Bering Sea crab fisheries. From left to right, crewmen Thomas John, of Newtok, and Norman John and Jerry Tulik, both of Toksook Bay.

Photo courtesy of Coastal Villages Region Fund

For more than twenty years now, an obscure federal program has been generating extraordinary wealth for Western Alaska, a remote and sparsely populated region not known for economic prosperity.

The program draws its power not from the land, but the sea. It’s based on commercial fishing quotas, or catch shares, reserved for coastal communities. Nonprofit companies harvest the quotas on behalf of sixty-five villages from the Bering Strait to the central Aleutians.

The companies have amassed combined assets approaching $1 billion, investing heavily in fishing vessels, processing plants, and additional fishing rights. They say they’ve created scores of jobs and showered the villages with hundreds of millions of dollars in direct wages, scholarships and training, payments to resident fishermen, and grants for local projects.

Within the state’s enormous seafood industry, the Western Alaska Community Development Quota Program (CDQ) has become a big fish. To a significant degree, the program is actually shifting control of the industry to Alaska from its historic base in Seattle.

In that regard, the state’s elected officials view the CDQ program as a winner and have passed legislation over the years to strengthen it.

The program is not without problems, however, perhaps reflecting its relative youth. The group of six CDQ companies is prone to infighting. Critics question whether the companies are doing enough to help the villages and say the size of some executive paychecks is scandalous. Further, many villagers are appalled the CDQ companies own trawl vessels that, in pursuing other species, kill thousands of cherished king salmon.

Supporters stress the program is making a real difference in villages long plagued with unemployment, alcohol abuse, and youth suicide.

“When I was young, I was always against company towns. Now I’m building one,” says Larry Cotter, chief executive of one CDQ company spending $15 million to expand a fish processing plant at False Pass.

 

How it Started

Implemented in 1992, the CDQ program grew out of work at the North Pacific Fishery Management Council. The Anchorage-based council helps regulate the federal fisheries off Alaska and has members from Alaska, Washington, and Oregon.

For the most part, the industrial fisheries in the Bering Sea had developed without the involvement of Western Alaska villagers. It was difficult for them to watch the lucrative harvests off their shores with no means of getting involved.

Under the new program, a percentage share of the fish available for harvest each year would be reserved as community development quota.

Six nonprofits formed to manage the CDQ harvest and administer the proceeds. Each represents villages within specific regions: the Nome area, the Yukon River delta, the Kuskokwim River delta, Bristol Bay, St. Paul Island, and the Aleutians.

The CDQ program is not a Native program per se. But Native faces dominate the boards and even the executive ranks of the CDQ companies.

Much of the CDQ revenue comes from pollock, the largest fishery in the Bering Sea and one of the largest in the world. Ten percent of the annual pollock catch limit is allotted to the CDQ program, along with shares of other species such as cod, sole, halibut, sablefish, and king crab.

To supporters of the CDQ program, designating a portion of the Bering Sea fisheries exclusively for coastal communities is right and just. Why should fishing and processing companies with corporate headquarters in Seattle or Tokyo reap all the profits?

People who championed development of the CDQ program were recognized last year at a 20-year anniversary celebration in Anchorage. Among them: the late U.S. Sen. Ted Stevens, the late Harvey Samuelsen of Dillingham, former state senator and “fisheries tsar” Clem Tillion of Halibut Cove, and former Anchorage banker Ed Rasmuson.

Not everyone welcomed the CDQ program. Some fishermen resented the establishment of community quotas, as this would shrink the pool of fish and crab available for regular commercial harvest.

Today, some believe the CDQ program is transforming the fishing industry unfairly. In 2011, a group of people prominent in Seattle commercial fishing circles wrote a fifteen-page “appeal” to Washington and Oregon political leaders warning that an industry rooted in those states was being hijacked to Alaska. The group cited Alaska’s voting majority on the North Pacific Council, and the “huge financial war chests” the CDQ companies had built.

“With the advantage of their tax-exempt status, CDQ organizations have become predatory in acquiring fishing opportunities and segments of the industry,” the group wrote.

Maybe so, but it’s also evident the CDQ companies have found plenty of willing sellers and business partners. They’ve bought into top fishing and processing companies such as Alaskan Leader Fisheries, Glacier Fish Company and Ocean Beauty Seafoods.

In fact, revenue from such investments now far exceeds the royalties collected on the harvest of the community development quotas.

 

‘Work, Fish, Hope’

The CDQ companies vary in size. The biggest and most aggressive is Coastal Villages Region Fund, which claims to be “the largest Alaskan-owned seafood company in history.”

Headquartered in a downtown Anchorage office building, Coastal has twenty member villages in the Kuskokwim region including Chevak, Hooper Bay, Kipnuk and Quinhagak.

Morgen Crow, a lanky former school administrator from Bethel, leads the company. His top lieutenant is Trevor McCabe, a former fisheries aide to Stevens.

In 1997, before Crow’s arrival, Coastal nearly went bust after a bad investment.

Now the picture is very different. The company reported 2012 revenue of $115.4 million and owns a fleet of fishing vessels including the 341-foot pollock factory trawler Northern Hawk, which Coastal took from its former stake in Seattle-based American Seafoods.

Coastal says the communities it represents are some of the poorest of the villages covered under the CDQ program.

The company is fond of coining slogans.

People Propel.

Pollock Provides.

Work, Fish, Hope.

As with the other CDQ organizations, Coastal is injecting cash into its communities in a variety of ways.

The company subsidizes money-losing local herring, salmon, and halibut fisheries with its Bering Sea pollock, cod, and crab revenue. In 2009, Coastal opened its new $35 million Goodnews Bay regional seafood processing plant and this year paid workers $10 an hour to start, which the company says is best in the industry.

Coastal is pursuing a plan to further “Alaskanize” the industry by homeporting the company’s fishing fleet in Seward rather than Seattle. This would require major improvements to Seward’s harbor. State legislators have contributed preliminary funding, including $10 million last session.

Another Coastal initiative is causing conflict. Although it already holds the largest share of pollock community quota, Coastal is demanding a bigger cut of this and other species. The company complains that, based on regional population size, other CDQ organizations enjoy disproportionately large shares.

“We serve the most economically challenged people in the CDQ program, and we are not even close to catching up with what the other CDQ groups have as a result of their excessive CDQ allocations,” Coastal board member Harry Tulik, of Toksook Bay, said in a May press release.

Coastal villagers have been wearing T-shirts with yet another company slogan: Just Fix CDQ.

The other CDQ companies, calling themselves the “united five,” haven’t taken kindly to Coastal’s quota rebalancing campaign.

Congress set the current split of community development quota in 2006, settling what had been years of squabbling among the six companies.

In June, Alaska’s bipartisan congressional delegation signed a letter saying any CDQ program adjustments would need the unanimous support of the groups.

Wesley Loy is a journalist living in Anchorage.

This first appeared in the September 2013 print edition of Alaska Business Monthly magazine.

Add your comment:
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement