NORTHEASTERN GROUNDFISH VICIMIZED BY MISREPORTING

The fishing world was somewhat mesmerized a few years ago, when federal investigators reveled the extent of the long-running scam perpetrated by Carlos Rafael, the so-called “Codfather” of New Bedford, Massachusetts, who illegally harvested between $1.4 million and $3.7 million (depending on how the valuation was done) of northeastern groundfish, and then falsified landings records to make it appear that the overfished species landed were actually more abundant, less strictly-regulated species.

Rafael is now serving a 46-month federal prison sentence.  Apart from the criminal penalties assessed against him, he will be required to pay a $3 million civil penalty, and will have to sever all connections with the commercial fishing industry by March 31 of next year.  Commenting on the civil settlement, John Bullard, the former regional director of the National Marine Fisheries Service’s Greater Atlantic Region Fisheries Office, said

“It’s an honorable profession, and Carlos Rafael is the biggest crook that’s ever been in the fishing industry.  And with every fish he mislabeled and every dollar he stole, he brought dishonor to the fishing industry.”

Maybe Mr. Bullard was right about Rafael being “the biggest crook that’s ever been in the fishing industry.” But maybe Rafael was only the biggest crook to get caught, in an industry has long been characterized by “creative” business practices practiced by fishermen eager to frustrate regulations in order to reap larger rewards.

But whatever the truth about Rafael, a recent Coast Guard study demonstrated that, even with the Codfather gone, there are still plenty of minor-grade crooks sailing northeastern seas.

A recent article in the Gloucester Daily Times reported that

“The Northeast multispecies groundfishery may have been victimized by several misreporting schemes through a five-year period and ‘potentially up to 2.5 million pounds of regulated species were misreported by vessels from multiple sectors’ in the fishery, according to a Coast Guard investigation of misreporting.

“…In its 21-page report, the Coast Guard said the analysis by its Boston-based First District enforcement staff identified more than 350 vessel trips during the period of 2011 to 2015 in the Northeast multispecies groundfishery ‘where there appears to be evidence of misreporting.’

“The analysis placed a particular emphasis on misreporting by vessels fishing in seasonal fisheries or fishing the same stock in more than one stock area.  The goal of the misreporting, according to the report, is to keep fishing without exceeding catch limits and annual catch entitlements.”

The Northeast multispecies fishery management plan seeks to regulate the harvest of 13 different species of fish, which are then often broken down further into regional stocks, which are biologically or geographically distinguishable from other stocks of the same species.  Thus, winter flounder are broken down into separate Gulf of Maine, Georges Bank and Southern New England/Mid-Atlantic stocks, all of which are assessed and managed separately; the status of each stock is determined apart from the status of all other stocks of the same species.

Similarly, cod are broken down into Georges Bank and Gulf of Maine stocks, yellowtail flounder are broken down into Cape Cod-Gulf of Maine and Southern New England-Mid-Atlantic stocks, etc.

There is a separate annual catch limit for each stock.

In addition, the New England groundfishery operates under a hybrid catch share program, which allocates the annual catch limit for each stock among 19 separate “sectors” (three of which have no active members) which were voluntarily created by fishermen who share common gear types, home ports or other characteristics.  Once such sectors receive their annual allocation of managed species, they generally further allocate such fish among all sector species, typically based on each fisherman’s catch history.  The remaining portion of each species’ annual catch limit, which is not allocated to a sector, is placed in a so-called “common pool” that is set aside for fishermen who do not belong in a sector.

Thus, each fisherman is governed by a series of decreasing limits placed on each stock.  They begin with the annual catch limit, which is then allocated by NMFS among the sectors and common pool, and finally (except for the common pool fishermen), allocated by the sectors to each individual vessel.

While the sectors and individual fishermen within the sectors are allowed to purchase and/or trade allocation from others in order to match available allocation to the fishermen’s needs, there comes a time when all of the allocation available to a fisherman is caught.  At that point, the fisherman’s groundfishing season is over.

Of course, not all species are equally abundant.  And, because allocations are typically based on catch history, not all vessels receive the same proportional allocation of each species.  As a result, groundfishermen can easily find themselves in a situation where they have caught all of their allocation of a scarce or overfished stock—or even a healthy stock which they hadn’t caught in the past, and so received a very small allocation—and thus are no longer allowed to fish for other healthier stocks, or stocks for which they still have an unused allocation.

Such low-allocation stocks have come to be called “choke stocks,” because they effectively choke off fishermen’s ability to continue their harvest of more abundant and more liberally allocated species.

Faced with such a situation, fishermen have three basic choices.  They can stop fishing for the year, and accept the economic consequences that such a decision brings.  They can try to purchase more allocation of the relevant “choke stock,” although if the choke stock in question presents a widespread problem, there will probably be few fishermen willing to sell their allocations, and those who do sell will be seeking a premium price.

Or, they can continue to fish, and simply misreport their landings.  Some, like Carlos Rafael, might try to report landings of choke stock species as landings of something else entirely, but doing that usually involves the willing assistance of fish houses and buyers, and entails substantial risk.  The easier course, provided allocation is available, is to accurately report the species, but fudge about where they were caught.

Thus, fishermen that exceed their allocation of badly overfished Southern New England/Mid-Atlantic winter flounder might report their flounder landings as more abundant Georges Bank stock fish; in the same way, fishermen might report landings of Southern New England/Mid-Atlantic yellowtail flounder as landings from the Cape Cod-Gulf of Maine stock, which has an allocation more than ten times that of the SNE/MA stock.

According to the Coast Guard report, such misreporting has happened.  The report notes that

“it is suspected that during fishing years 2013-2015, up to 780,000 pounds of winter flounder were potentially harvested from the Southern New England/Mid-Atlantic stock area and misreported as coming from the Georges Bank stock area.”

Given that, in 2018, the entire SNE/MA winter flounder allocation, for all sectors in the fishery, was only about 1 million pounds, catching and misreporting an average of 260,000 pounds per year—about one-quarter of such allocation—is significant.  It is easy to see how such misreporting could bias the stock assessment for SNE/MA winter flounder, and make it very difficult to adopt management measures that might finally begin to rebuild the stock.

Similar misreporting occurred in the case of yellowtail flounder, haddock and cod.

While the Coast Guard report looks at past misreporting, none occurring more recently than 2015, there is no reason to believe that at least some of the same sort of malign behavior doesn’t still happen today.

Fishermen still seek the same species, are part of the same sectors, and have the same problems with choke stocks impairing their access to more abundant species.  Misreporting still offers an attractively simple and cost-effective way to evade such problems and continue to fish, while reporting accurately would, at best, cost money and at worst keep their boats tied up to the dock.

Regulations requiring that vessel monitoring systems be carried on vessels seeking groundfish should help to constrain misreporting schemes.

But fishermen are nothing if not creative, particularly when it comes to skirting regulations, while detecting misreported catch requires a that a lot of vessel trip reports, vessel monitoring tracks, and landings information be cross-referenced and compared.

The Coast Guard report shows that it can be done, but it takes work and time, two very scarce commodities in today’s overtaxed enforcement environment.

Yet until misreporting scams can be quickly detected, and penalties stiff enough to deter them are imposed, such offences will continue, and will continue to hamper efforts to properly manage New England groundfish stocks.