OMEGA PROTEIN ARROGANCE LEADS TO ASMFC NON-COMPLIANCE VOTE

Some people—and some companies—just don’t know where to draw the line.

As a result of one such failure to recognize acceptable boundaries, the Atlantic States Marine Fisheries Commission found Virginia out of compliance with a provision of its menhaden management plan, and will soon forward that finding to the Secretary of Commerce, who is empowered to shut down the state’s menhaden fishery.

In November 2017, the Atlantic States Marine Fisheries Commission’s Atlantic Menhaden Management Board adopted Amendment 3 to the Interstate Fishery Management Plan for Atlantic Menhaden.  Included among that Amendment’s provisions was a 51,000 metric ton cap on the amount of menhaden that the industrial “reduction” fleet might take from the Chesapeake Bay each year.

The so-called “Bay Cap” was adopted as a precautionary measure, both to assure the health of the species in Chesapeake Bay, which is an important menhaden nursery area, and to better assure that there are enough menhaden in the Bay to provide forage for the many fish in the Bay and elsewhere on the coast that depend on the species for much of their diets. 

One of the goals of the Bay Cap was to prevent a situation in which menhaden were depleted in any section of the Bay, to the detriment of the fish and other predators that fed on them.  The possibility that such localized depletion could actually occur was actively debated, and the available science on the issue was inconclusive.  However, John McMurray, Legislative Proxy from New York, expressed many Management Board members feelings when he said

“Setting a cap at 51,000 metric tons is essentially the status quo; as that’s what they’re catching now.  Industry has consistently underperformed the cap.  I would also note that if the entire cap were landed where its set now that is about 100 million additional pounds, taken out of what I consider to be a very small area.  That would most certainly have an impact on menhaden in that region and certainly the predators that eat them.”

Public support for the Bay Cap was overwhelming, and the only real opposition on the Management Board came from Virginia, which wasn’t too surprising, as Reedsville, Virginia is the home of the Omega Protein Corporation, which operates the only menhaden reduction fleet on the Atlantic Coast, and is also responsible for the great majority of the menhaden harvest in East Coast waters—including Chesapeake Bay.

The Virginia state legislature, which has the sole responsibility for menhaden management in that state, refused to amend the relevant state statute to reflect the new 51,000 metric ton cap.  As a result, at its May 2018 meeting, the Management Board considered a motion to find Virginia out of compliance with the menhaden management plan, an action that could ultimately shut down all menhaden fishing in Virginia’s waters.

But the motion presented problems.  Shutting down Virginia’s menhaden fishery, as a consequence of its noncompliance, would ultimately require action by the Secretary of Commerce, Wilbur Ross.  And less than a year earlier, Ross had failed to uphold a noncompliance finding with respect to New Jersey’s recreational summer flounder fishery, which arguably presented a more compelling case than did Virginia’s failure to comply, for as a practical matter, Virginia’s menhaden landings had remained below 51,000 metric tons for a number of years.

As a result, the Management Board decided to postpone action on the noncompliance motion until its August 2018 meeting, in order to give Virginia some time to put its own house in order.  In voicing support for the motion to postpone, Richard White, the Governor’s Appointee from New Hampshire, noted that

“I think [the motion] also allows Omega Protein to show good faith with this Commission; and not pursue catching the Bay cap.  I think it gives them a chance to show they want to work with the Commission to allow proper regulations to come into effect.”

Three months passed.  The time for the August meeting came around, but the Virginia Legislature refused to act.  That failure was something of an embarrassment for the newly-elected Virginia governor, Ralph S. Northram, who wrote a letter to ASMFC that read, in part,

“As you know, the General Assembly remains the authority to set catch limits for Atlantic menhaden in the Commonwealth, despite having delegated this authority to our Marine Resources Commission for all other fish species.  My staff and I worked diligently with the General Assembly last session to develop and pass legislation that would achieve our goal of compliance with Amendment 3 while at the same time offering a path to further discussion with the Commission about some of these management measures.  Unfortunately, we were not successful.

“I remain hopeful that we can come to an agreement on legislation that honors our commitment to responsible management of shared fishery resources.  Until that time, it is my view that the prospect of formal noncompliance action by the Commission should be taken as an instruction not to exceed the harvest limits set under Amendment 3.”

 In view of Virginia’s historical failure to harvest anything near 51,000 metric tons of menhaden in the recent past, and in view of the Virginia governor’s efforts to come into compliance, Maryland fishery manager David Blazer moved to substitute a motion that would not recommend a noncompliance finding, unless Virginia harvested more than 51,000 metric tons of menhaden from the Chesapeake Bay.  It would allow Virginia a little more time to solve its own problem, and seemed to create no conservation issues, given Virginia’s recent low Bay landings.

The motion to substitute received a mixed response from Management Board members, with some seeing it as a dangerous precedent, and others seeing it as a reasonable measure to facilitate Virginia’s efforts to comply.  Although it largely went unsaid, the fear that lurked behind many Management Board members’ words was the fear that Wilbur Ross, Commerce Secretary in an administration that had exhibited chronic contempt for conservation considerations while constantly promoting short-term economic concerns, would again overturn any noncompliance finding that ASMFC might forward to him, and further undercut the ASMFC’s authority.

Those fears were justified when NOAA counsel rose to address the Management Board, saying

“I can’t speak to the propriety of this particular motion.  I won’t; this is up to you.

“If you vote it down or vote for a noncompliance, the Federal Government will take it and we will analyze it according to our process set forth in the Atlantic Coastal Act.  But I want to underscore the issue that we need to look at it through the lens of conservation.  That’s what Congress has dictated.

“…under your own Commission ISFMP Charter says that you need to find that before sending any noncompliance over you need to discuss and make a finding that the measure in question is not being followed, jeopardizes the conservation of the fishery in question.

“It is not my place to interpret your internal guidelines and your internal regulations…But I know from General Counsel’s point of view, I am interested in hearing you develop the record as to how this particular—the Bay Cap—failure to implement the Bay Cap will jeopardize the conservation of the resource.

“…The idea that a noncompliance situation would occur, or has occurred because of an inability of a Legislature to implement a regulation is absolutely not unique.  What is unique in the approximately 20 or 24 noncompliance referrals we’ve had, it depends on how your group them, sometimes two states do it together.  What is unique is that this would be the first time ever in the history of the Atlantic Coastal Act and the Striped Bass Act, which is really the genesis of this noncompliance provision in the Atlantic Coastal Act.  It would be the first time ever that the Federal Government would receive a noncompliance referral for a fishery that is not overfished, overfishing is not occurring and there is record evidence from the leadership of the Commission that the measure is not related to conservation.  That is unique.”

It was a pretty clear statement that Commerce was not buying the local depletion argument, and a pretty clear sign that any noncompliance finding forwarded to the Secretary at that time would be overturned.

The Management Board heard that statement loud and clear.  While Mr. Blazer’s motion was defeated with 6 votes in favor and 10 against, the motion to find Virginia out of compliance was postponed once again, this time to the February 2019 Management Board meeting.  

But when February rolled around, the situation remained unchanged.  Virginia was still out of compliance, but most Management Board members still believed that if they supported a noncompliance finding, Ross would simply overturn it once that finding was forwarded to Commerce for final action.

As a result, the noncompliance motion was indefinitely postponed, and would only be revisited if Virginia’s Chesapeake Bay landings exceeded 51,000 metric tons.

The ball was now in Omega Protein’s court.  It had a perfect opportunity to, in Mr. White’s words, “show good faith with [the] Commission and not pursue catching the Bay cap” and by doing so “show they want to work with the Commission to allow proper regulations to come into effect.”

Of course, anyone who has spent any time in the corporate world knows what happened next.  Apparently feeling that they had a strategic advantage in the situation, and had conservation advocates overwhelmed, they increased their landings in Chesapeake Bay. 

Omega could have increased its recent level of landings substantially and still remained within the 51,000 metric ton Bay Cap, but it chose not to do so.  Instead, on September 12, 2019, it issued a statement announcing its intention to exceed the Bay Cap.  The announcement began

“Omega Protein strictly complies with Virginia law and strives to comply abide by all recommendations of the Atlantic States Marine Fisheries Commission (ASMFC).  However, the abundance of menhaden in the Chesapeake Bay this year combined with adverse fishing conditions outside Bay waters, particularly late in the season, means the Company will exceed the ASMFC’s arbitrarily low and unscientific cap recommendation on harvest in the Bay for the 2019 season.  The Company will comply with the existing Bay cap codified in Virginia law.  [emphasis added]”

The announcement was a clear shot across the ASMFC’s bow.  By twice referring to the ASMFC management plan as a mere “recommendation,” as opposed to a binding statute, Omega belittled the ASMFC’s role in fisheries management and ignored the authority granted to the ASMFC by Congress in the atlantic Coastal Fisheries Cooperative Management Act.  It suggested that the Virginia statute was somehow superior to the management plan, even though such statute, may have been maintained in defiance of federal law.

The Omega Protein statement reflected the arrogance of a corporation that seemed to believe that it held all the cards.  And it represented one final step too far for the members of the Management Board, who had previously angered many members of the angling and conservation communities with their continued efforts to reach a nonconfrontational accord with Virginia over the noncompliance issue, and now found Omega Protein treating the Management Board’s actions with seeming contempt.

Even the Governor of Virginia had run out of patience with Omega Protein’s behavior.  The day after Omega announced its intention to ignore the Bay Cap, he wrote a letter to Robert Beal, ASMFC’s Executive Director, notifying him of Omega’s actions.  The letter began

“I wish to express my extreme disappointment with Omega Protein for recently exceeding the Atlantic States Marine Fisheries Commission’s (ASMFC) ‘Bay’ cap of 51,000 metric tons on reduction harvest of Atlantic menhaden from the Chesapeake Bay.”

Jim Gilmore, Chairman of the Atlantic States Marine Fisheries Commission issued a memo to all ASMFC commissioners and their proxies, which read, in part,

“Omega Protein notified the Commission on September 3, 2019 of their intent to exceed the 51,000 ‘Bay Cap’ which was adopted under Amendment 3 of the Fishery Management Plan…Commission leadership communicated with Omega on September 3^rd emphasizing the importance of complying with the cap reminding them ASMFC has attempted to work cooperatively with the company over the last two years to find middle ground during this transition from single-species management to the implementation of Ecosystem Based Reference Points (ERP’s).  Complying with the Cap was centric to those “good faith” efforts.  Commission leadership has also reminded the Commonwealth and Omega of the plan provision that requires “payback” of ‘Bay Cap’ overages.

“Unfortunately, Omega has decided to not comply and exceeded the cap on September 6^th despite multiple communications to dissuade them.  Additionally, Omega issued a press release on September 12^th to justify their actions.  I will not address the details of the release, since it contains inaccuracies and biased statements, other than their statement that they abide by all “recommendations” of ASMFC.  As you are aware, adopted ASMFC Management Plan measures are legally binding requirements, not arbitrary recommendations.

“…We will be adding a short amount of time to the October 28^th Atlantic Menhaden Board meeting for discussion and possible action on this issue.  I request that each of you spend some extra time to review all the background, so we are all prepared for the most appropriate actions moving forward.”

The gloves were now off.  The ASMFC had offered an olive branch to Omega Protein, and an opportunity to work cooperatively to manage the menhaden resource.  Omega tossed that olive branch away with contempt.

Omega’s arrogant rejection of ASMFC’s offer didn’t go over too well.

When the Management Board meeting began on October 28, John McMurray from New York was quick, almost eager, to put a motion on the table to find Virginia out of compliance.  

He argued that the Bay Cap was necessary for conservation, that localized depletion was a real issue (remember that research on the issue was inconclusive; it did not find that such depletion didn’t exist), and that there was scientific research that found that low numbers of menhaden were bad for the Bay’s stiped bass.  He noted that the Management Board shouldn’t worry about the Secretary of Commerce overturning the noncompliance finding and undermining the ASMFC’s authority, because as a result of Omega Protein’s actions, the ASMFC’s authority is impacted regardless of what action it takes. 

Rep. Sara Peake, Legislative Appointee for Massachusetts, seconded the motion.

At that point, the debate was to begin, but the Management Board Chairman was faced with a minor problem.  Normally, the Chairman structures the debate by alternating speakers between those who support and oppose the motion.  But this time, there was no one in opposition.

Richard White of New Hampshire said that the motion presented a difficult decision, but that it was time for the ASMFC to take a stand.  He observed that

“the company could have been good stewards”

and chosen not to exceed the Bay Cap, but that they ichose otherwise.

Robert Ballou, a Rhode Island fisheries manager, noted that he was

“deeply disappointed in Omega’s actions,”

and wanted to be sure that payback for the overage would be deducted from the Bay Cap next year.

Other Management Board members also commented, but perhaps the most surprising commentary came from Steven Bowman, Virginia’s fisheries manager.  He noted that the stigma of being found to be in noncompliance was

“not a good position”

for his state to be in.  He noted that the Virginia governor and his administration had tried to do the right thing but that they

“can’t impose what we believe is the right thing to do”

on the Virginia Legislature.  He said that the only option is to move forward with the noncompliance motion, and observed that

“This company [Omega Protein] had an opportunity to be a good partner and ride the boat with us a little longer,”

until the ecosystem based reference points were rolled out next year, but instead chose a more confrontational course.

It was probably the first time in the history of the ASMFC that a state fisheries manager asked a Management Board to bring a noncompliance finding against his own jurisdiction.

The noncompliance motion passed unanimously, with only the two federal agencies, the National Marine Fisheries Service and the Fish and Wildlife Service, abstaining.

At that point, the motion went to the Interstate Fishery Management Plan Policy Board.  Again, there was no opposition.  Jason McNamee, the Rhode Island fisheries manager, countered Omega Protein’s argument that there was no science supporting the Bay Cap, noting that studies have connected natural mortality in striped bass with the size of the menhaden biomass. 

Another Rhode Islander, Eric Reid, the Legislative Proxy, disputed Omega’s contention that they had to fish in the Bay and exceed the Bay Cap or else keep their boats tied to the dock and not pay their workers.  Mr. Reid also owns commercial fishing boats, and noted that

“I have boats sitting at the dock, too”

when quotas are reached, and that Omega’s argument

“kind of rubs my nose in it a little bit, and I didn’t care for it.”

Now, the finding will be sent to the Secretary of Commerce, who will have to decide whether to shut down Virginia’s menhaden fishery until it adopts the 51,000 metric ton cap, or let Omega Protein get away with its flagrant overharvest.

Omega seems to believe that it will prevail, because immediately after the last noncompliance vote, it issued another defiant statement that flatly denies that there has been found out of compliance.  It begins

“As expected, the Atlantic States Marine Fisheries Commission (Commission) moved forward today with a non-compliance referral for the Commonwealth of Virginia as a result of its menhaden reduction fishery surpassing a cap on harvest in the Chesapeake Bay.  To be clear, this does not mean the Virginia has been found out of compliance.  Now concerns of stakeholders and Virginia officials over the Bay cap will be heard by the U.S. Secretary of Commerce, with advice and counsel from NOAA and NOAA Fisheries, who will make a final ruling on non-compliance.  Whatever that ruling is, Omega Protein will adhere to it.  [emphasis added]”

Given that the Atlantic Coastal Fisheries Cooperative Management Act itself describes the ASMFC state as making a “determination” that a state is out of compliance, and providing a “notification,” and not a “referral” as Omega would have everyone believe, is probably sufficient comment on the veracity of Omega Protein’s response.

So when Omega goes on to say that it tried to resolve the Bay Cap issue in good faith, that there is no scientific basis for the Cap, and that it exceeded the cap in order to keep paying its fishermen (rather than its parent company), there’s more than enough reason to question the accuracy of those statements, too.

In the short term, that may not matter.

Omega Protein’s seeming confidence that it will be exonerated by Wilbur Ross may well be justified. It’s about as hard to visualize Ross, and the rest of this Administration, elevating conservation concerns above short-term profits as it is to imagine menhaden eating striped bass, instead of the other way around.

But in the long term, this action could cost Omega Protein badly, because there are issues larger than the Bay Cap on the horizon.

When the ecological reference points come out, they will undoubtedly lead to discussions over new annual catch limits.  We don’t know what those possible catch limits might be—it’s conceivable that they could even be higher than those in force now—but there is little doubt that Omega Protein will again be arguing for the biggest possible kill.  

Given its behavior in the case of the Bay Cap, those arguments aren’t likely to fall on very receptive ears.

And yet another issue looms. 

As Atlantic herring numbers decline, fishermen in the lobster and other industries are looking for new sources of bait. 

Menhaden is an obvious choice, but right now, most of the menhaden landings go to Virginia, and the lion’s share of Virginia’s landings go to the reduction industry.

It’s not hard to imagine new allocation talks, in which the bait industry seeks to enjoy a bigger piece of the menhaden pie.  

Given how Omega Protein has responded to the Bay Cap issue, it’s not hard to believe that many Management Board members will have considerable sympathy for the bait fishermen—and no sympathy at all for the reduction fleet—when that conversation begins.

Omega has now lost one small battle at the ASMFC, and it may negate the impacts of that at the Department of Commerce.  But other fights are coming, and even if Omega ultimately prevails in this one, it may find that its arrogance will cost it far more in the future than it currently believes.