Omega Protein Exceeds ASMFC Catch Limit of Menhaden

Photo credit: Stephan Lowy

by Don Rippert

What, me worry? Omega Protein has admitted exceeding its menhaden catch limit for 2019 in the Chesapeake Bay. Omega Protein, a Houston-based company and wholly owned subsidiary of Cooke, Inc, a Canadian firm, operates a fishing fleet based in Reedville, Va. Employing about 300 Virginians, Omega Protein has been mired in controversy over the years regarding its heavy catch of menhaden.  Since this topic has been repeatedly covered on Bacon’s Rebellion, I won’t provide detailed background. However, the environmental group Menhaden Defenders operates an informative website describing the situation.

Menhaden Defenders writes, “The commercial menhaden fishery is made up of two sectors, a reduction fishery, which grinds billions of bunker up for fish meal and oil, and the bait fishery which supplies menhaden for lobster and crab traps. Reduction fishing is an antiquated practice that has been banned in every east coast state, except Virginia.” Virginia is the only east coast state that allows reduction fishing and is also the only east coast state that allows unlimited contributions to state politicians. Over the last 26 years Omega Protein has donated just under $600,000 to Virginia politicians, political committees and PACs with the majority going to Republicans.

Twin regulators. Menhaden is the only fish regulated by the General Assembly. The General Assembly does not regulate striped bass, bluefish, redfish, catfish, batfish or ratfish. Only menhaden. All marine fish other than menhaden are regulated by the Virginia Marine Fisheries Commission (VMRC). Freshwater fish are regulated by the Virginia Department of Game and Inland Fisheries. The VMRC is a member of the Atlantic States Marine Fisheries Commission (ASMFC), which was charted by Congress in 1942 and has as its mission … “To promote the better utilization of the fisheries, marine, shell, and diadromous, of the Atlantic seaboard by the development of a joint program for the promotion and protection of such fisheries, and by the prevention of physical waste of the fisheries from any cause.”

In 2017, ASMFC lowered the allowable catch of menhaden inside the Chesapeake Bay (as opposed to in the Atlantic Ocean) from 87,000 metric tones to 51,000 metric tons. That catch reduction became HB 1610 of 2018 General Assembly session. In typical fashion the bill was left in the Agriculture, Chesapeake and Natural Resources Committee where it died without a publicly reported vote. Omega Protein recently admitted that it had harvested 67,000 metric tons of the fish, 31% over the annual limit set by ASMFC but under the old limit left in place by the non-vote of the General Assembly.

Now what?  Menhaden are crucial prey food for a wide variety of marine species including striped bass, aka rockfish. Earlier this year Virginia canceled the annual Spring trophy rockfish season. You can read about that here and here. The official reason cited for the ban was “overfishing.” However, it seems clear that rockfish in Virginia are in jeopardy. and allowing Omega Protein to exceed the ASMFC limit won’t help. Last Thursday the ASMFC voted to find Virginia out of compliance with fishing regulations. The commission will ask the US Secretary of Commerce to intervene. That intervention could include shutting down Omega Protein’s menhaden fishing operation in the Chesapeake Bay. However, help for the environment from the Trump Administration is unlikely. The Secretary of Commerce has 30 days to review the commission’s ruling on Virginia.

Bottom line. Unlimited campaign contributions are the reason that the General Assembly regulates only the menhaden. Unlimited campaign contributions are the reason Virginia is the only east coast state to allow reduction fishing. Unlimited campaign contributions are the reason the ASMFC proposed Chesapeake Bay reduction bill was left in committee in 2018. Our General Assembly is bought and paid for by special interests. Let’s hope that now the Democrats have taken over they will make campaign finance reform a major initiative starting with the 2020 session.

In other news, Omega Protein paid a $400,000 fine to the Securities and Exchange Commission in August to settle a charge that it was out of compliance on federal loans which have been a significant source of Omega’s external financing (can you say “rent seeker”?). In 2017 the company paid $1 milloin to settle criminal counts of pollution in Louisiana. This followed a plea of guilty to 2013 criminal pollution charges in Reedville which cost the company $5.5 million.

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24 responses to “Omega Protein Exceeds ASMFC Catch Limit of Menhaden

  1. I’ve followed the Omega Menhaden issue and I’m struck by the idea that either you let them overfish or it’s not “economical” and they will shut down.

    Do I expect the Dems to fix the money influence problem ? I’m hopeful but recognize that we see ample abuses of it on both sides of the aisle and it could well be that Omega will just switch who receives the money and he/she will be a willing recipient.

    Finally, we’ve been taking about “Libertarianism” and how market-based approaches are better than evil and corrupt left/right governance.

    What would those noble Libertarians do about this?

    • The menhaden are public property like the Chesapeake Bay itself. Passing laws to protect the public’s property from from the privations of a single irresponsible company is a legitimate function of government in my Libertarian mind. For one thing, decimating the menhaden harms other legitimate businesses like charter boat operators, bait and tackle shops, hotels, restaurants, etc.

      As far as the “let it become uneconomical and they will stop theory” – menhaden are a critical prey fish. Kill them off and you threaten bluefish, striped bass, ospreys, etc. Just about every marine creature bigger than a menhaden eats menhaden. When overfishing wreaked the striped bass fishery in the Chesapeake Bay it took a 5 year year fishing moratorium to bring it back. Will it really take an ecosystem wide meltdown to get Omega to adhere to the regulations? They’re allowed to practice reduction fishing in Virginia waters in the Chesapeake Bay. But they have a quota. All they have to do is respect the quota. If the weather was too bad in the Atlantic Ocean to fish for menhaden then they are going to have an off year. That’s fishing. If I found that I was not catching my expected number of bluefish in the bay I can’t start exceeding the limit on rockfish. That’s fishing.

      • re: ” The menhaden are public property like the Chesapeake Bay itself. Passing laws to protect the public’s property from from the privations of a single irresponsible company is a legitimate function of government in my Libertarian mind. For one thing, decimating the menhaden harms other legitimate businesses like charter boat operators, bait and tackle shops, hotels, restaurants, etc.”

        So I am confused about Libertarianism… I thought they believed that markets not government should govern the economy and that when the government gets involved, it distorts market forces.

        See this is the problem with Libertarianism. They fall back to a non-libertarian philosophy – basically to legitimate the very thing that Libertarians claim is wrong!

        So it’s FAUX Libertarianism.. pick and choose what you want to be “libertarian” and then fall back to conventional government for the things that Libertarianism won’t protect.

        In a libertarian world – it’s those “markets” that decide what competitors “own” the Chesapeake Bay. A government that “allocates” ownership to various constituencies distorts that pure market where winners and losers are decided by competition.

        no?

        • @LarrytheG I’m not sure I have clarification at hand, but I would say that unfettered capitalism, with no adjustment, does not equal libertarianism. With all political constructs, there is a difference between concept and practice. In order to preserve certain freedoms, the government must act to limit other freedoms.

          Menhaden are not only food for fish up the chain, they are good water filters, like oysters. For the Bay’s recovery, there are a linchpin. Omega Protein just builds in these fines and these lobbying gifts
          as a cost of doing business. I agree with @DJRippert that too much rides on a healthy menhaden stock to let the interests of a handful jeopardize the health of the bay and the far more broad economic interests.

    • “Do I expect the Dems to fix the money influence problem ?”

      That’s the million (or billion) dollar question. One the one hand it was Democrat Chap Petersen who put forth a bill to make donations from state regulated monopolies illegal. On the other hand Democrat Dick Saslaw is a walking advertisement for the misuse of special interest money.

      I tend to think in probabilities. I believe the odds of sensible campaign financing and political donation reform increased when the Democrats won on Tuesday.

      • You can bet if the Dems try to do something about Omega that Omega’s defenders will claim that the Dems are a bunch of socialists who want the government to control “production”. They’ll claim that the Dems are acting like 3rd world countries that take over companies that won’t cooperate!

        • All they have to do is turn over regulation of menhaden to the Virginia Marine Fisheries Commission, like every other saltwater fish in the sea.

          As you’d expect, Virginia appoints commissioners to the Virginia Marine Fisheries Commission. Steve Bowman is the Virginia Commissioner on the Atlantic States Marine Fisheries Commission. Here’s what he had to say ….

          “First and foremost on behalf of the Commonwealth of Virginia, I’d like to apologize for being in this situation,” he said. “Governor [Ralph] Northam and Secretary [for Natural Resources Matt] Strickler have demonstrated a desire to improve not only water quality, but the environment in general. It’s been one of the hallmarks of their administration and team. So to be found out of compliance on such an important matter is very, very disturbing.”

      • All campaign contributions from out-of-state donors and PACs should be banned. It should be a felony for any attempt to disguise an illegal donation as a qualified one.

  2. Why is going after campaign contributions better than going after the problem directly i.e. outlawing or regulating reduction fishing.

    • My opinion is that the campaign contributions that Omega Protein makes keeps our lawmakers from enacting such laws. The money is why the menhaden is the only fish regulated by the General Assembly. It’s the only fish taken by a single big company that can hand out cash like party favors. As long as General Assembly members stuff their pockets with unlimited campaign contributions there will be no laws against reduction fishing. Or laws making Dominion rebate the billion dollars of overcharges. Or providing localities the freedom to tax Altria’s cigarettes as much as they want.

      Our General Assembly has been for sale for decades. Cut down the flow from the special interests’ money spigot (like almost every other state has done) and a lot of things will get a lot better.

  3. I agree with Don that the only reason Omega Protein gets away with murder (of fish) is that it gives so much money to legislators. Without the money, there would be zero sympathy for the company (with the possible exception of the district that employs its 300 workers). So, that makes me sick to my stomach.

    I still worry, though, that the only thing worse than unlimited campaign contributions is… a cap on campaign contributions. Don, have you taken a careful look at states that have capped contributions? Do you seriously contend that special interests hold any less sway in other states? My suspicion is that influence money is just redirected into activities that aren’t regulated and are largely invisible. Again, that’s just a hunch — I haven’t studied the matter closely, so I don’t know. But it would defy human nature to be otherwise.

  4. Does anyone else see the irony here of the almost tacit acceptance of Omega’s behavior, i.e. ” oh they’ll find a way to do the money influence thing” and the earlier angst over Mr. Bills and Clean Va and other activist players – playing the very same game?

    Can’t have it both ways. Can’t say it’s “okay” for Dominion and Omega because we can’t stop the money influence anyhow but all heck will break lose if we allow the activist folks to do the same?

    How about ONE non-contradictory position about the issue that applies equally to Dominion/Omega/other corporates – and any/all other activists and individual donors for “causes” that don’t profit them individually?

    How can we advocate for changes when we ourselves have double standards depending on who the players themselves involved are?

    How about it?

    For me – I, like Don, do not accept the status quo as “free speech” but heck if it is – it really is – FOR EVERYONE! Otherwise, we need to acknowledge that the “free speech” idea is basically legalizing corruption.

    Like I said – if citizens themselves cannot advocate a cogent view – then that just lets the legislators and their corporate funders continue the status quo. Or perhaps if the activists finally catch up on playing this game – the folks “okay” with it with change their minds!

  5. I’ve sort of watched the menhaden fight over the years. Sometimes I happen to be in the right committee room to “catch” those bills while awaiting something else. One of the lobbyists involved is a W&M grad I’ve considered a friend for 25 years. There are other ways to win bills besides giving money, other paths to lobbying victory.

    Yes, Jim, I do now think the special interests hold less sway when the campaign contributions are capped. It also means to build political power they need to build blocs of actual voters rather than just write checks, and make cogent arguments, and both of those are healthy steps. Dominion will remain a powerhouse, but because it has thousands of workers, thousands of stockholders, hundreds of business partners, etc. It pulls those levers now, to its credit, but the money should be limited.

  6. There is a difference between regulating campaign donations, which can largely be done, and prohibiting a person or entity from spending its money to advance or stop a candidate or proposal. That cannot be done.

    Remember Citizens United was about an attempt to stop the distribution of a negative film about Hillary Clinton. Substitute Donald Trump and see whether the left’s answer changes.

  7. I have zero problems with money paid for lobbying – but I do distinguish that money from money that goes to legislators.

    You can call the former “free speech” but the latter is basically a type of bribe IMHO.

    Anyone should be able to bring any information to a legislator on an issue that he/she is considering. In fact, lobbyists perform a vital “education” issue including unintended consequences, etc. It’s just good common sense to have as much information as is available for prospective legislation.

    Campaign donations are not that.

    But we have such a complex and convoluted swiss cheese of regulations that basically they fool voters into thinking there is real rules while the inside players know all the paths that are available that most of the public is clueless about.

    Only when an issue like Omega gets direct focus, do we realize that what Omega does is also available to others, but they benefit from being not in the “open”.

    So “caps” and “limits” are basically just another form of swiss cheese in reality.

    Money IS fungible and as long as it is not outright banned – it WILL find a way from the donor to the recipient unless we have laws that say if you’re caught with it – you’re going to be jailed -period.

    • Another point from DJ’s post that needs to be made: $600K over 26 years is not really what I’d call “buying the legislature.” Less than $50K per election cycle? Any reasonable limit would probably not prohibit that amount. Clearly it does focus on the local legislators or key committee members, but still – that’s not that much over that much time.

  8. First of all, thank you, Don, for continuing to highlight this issue. I have been following the controversy over Omega Protein flouting the fishing limit. In case there is any doubt of my position, I think the company should be smacked down for its violations and regulation of menhaden moved out of the Virginia Code and put under the VMRC.

    Some of the national commentary has been interesting; railing about all these profits going to a Canadian company. Omega may be a subsidiary of a big Canadian conglomerate (Cooke), but it is a homegrown Virginia company. For many years, it was the Reedville Oil and Guano Co. It still operates out of Reedville and employs about 300 people. (That fact alone gives it clout, particularly in this era of concern about diversifying Virginia’s economy and jobs in rural areas.) I can remember the time in the early 1980’s when H.R. Humphries, president of Standard Products on the Northern Neck, and affiliated with the menhaden industry, wielded political clout.

    On the issue of campaign contributions, I don’t subscribe to Don’s lament that GA members are bought and paid for and that unlimited contribution limits are what gives menhaden its special place in Virginia law. The legislative process is a lot more complicated than who gives the most money.

    During this campaign season, Omega spread its money around among a large number of legislators. The largest was about $8,000 to Richard Stuart of Westmoreland County. Then there were some $2,500 contributions, followed by a bunch of $1,000 and $500 contributions. I don’t think any politician is going to condition his vote of having gotten $8,000 or $2,500 from a private interest.

    The money buys two important things: 1. it helps to elect politicians that sympathize with the organization’s interests, be they business, fishing, coal mining, environmental protection, abortion restrictions, higher pay for school teachers, etc. and 2. perhaps more importantly, it gets access. Legislators have a limited amount of time and they are more likely to give some of that time to interests that have supported them or have lobbyists they know or represent interests that are important to their constituents. And with access, lobbyists have a change to “educate” and persuade the legislators. Many issues are complicated and the lobbyist who has a chance to present the side of of his/her employer stands the best chance of getting that legislator’s vote. And the successful lobbyists can be very persuasive.

    In addition to the lobbying by special interests, and just as, if not more, important are the relationships among legislators. To use the Omega Protein issue as an example, menhaden fishing is no interest to Senators and Delegates from other areas of the state, such as Southwest or Southside or the Valley and they probably know nothing about it. But, if they like or otherwise are on good terms with legislators to whom menhaden fishing is important, they will likely be willing to support whatever positions those legislators ask them to support. In turn, the “menhaden” legislators will be amenable to supporting issues especially important to those other regions. Some may call this “logrolling” or “corrupt”, but it is the way a part-time legislative body has to work if it is to work at all civilly and smoothly.

  9. Call me naïve. It seems to me you meet more resistance when you try to expand the problem to all campaign contributions, though I appreciate some of Larry’s arguments about lobbying contributions versus individual contributions. Focusing on specific issues avoids this problem. I’m not seeing an argument that overwhelming amounts of money have been contributed to avoid reform of the menhaddin industry. Isn’t it easier to focus on an issue that other states have apparently successfully regulated. I don’t know how many states there are but they can’t be all blue northeastern states.

    A focus on campaign contributions invites challenges based on free speech and presumably dissuades legislators from acting. There is already a hell of a lot of stasis in the Virginia legislative system; just as an example, it has taken us years to get reform of criminal discovery procedures that are common in every other state. We have been positively medieval in this respect, and many citizens have suffered from incorrect convictions as a result.

    What are the arguments for keeping reduction fishing? What are the arguments against? Who has the better argument? Supposedly legislators are to act in the public interest. What is the public interest in regulating reduction fishing in Virginia compared, for example, to the regulation of foie gras farming in upstate New York. (Today’s WSJ) Regulating or prohibiting each of these activities necessarily causes economic harm to the individuals who participate in the activities. But what is the public interest? Unless I’m reading the posts here incorrectly, there is more of a public interest in eliminating reduction fishing than there is in eliminating foie gras farming, (much as I personally abhor harming animals, if that’s what happens. The WSJ article tries to make a case that the ducks do not suffer; I’m not sure I buy it totally, but the argument is made. The devil is always in the details)

    Isn’t this the way these issues should be attacked. When you try to expand issues to create a whole new system, you naturally meet more resistance because of the fear of unintended consequences. Change a few words here and there in a statute, and you probably can get something done. I wonder if Steve, a long time observer of our GA, would agree with this analysis.

    • I agree with you in the abstract. In an ideal world, the argument would be held on the merits of the arguments with regard to public interest. But, in a world i which decisions are made in committees, or, in the House, in subcommittees of 5-7 members, it is usually a case of the membership of the subcommittee and which interests have the most access to those members.

      Your reference to the rules of criminal discovery is fascinating. That is one of those arcane issues that do not get much public exposure and relatively few people understand, but which have enormous impact on public policy. If you have any extended comments on that area or some other area of criminal law, you could talk to Jim Bacon about submitting a post.

  10. I am always surprised by how proximity to Richmond influences thinking about Virginia’s political process. People with close ties to the state government generally find reasons why Virginia’s unlimited campaign contributions are acceptable. Outside of Richmond attitudes are generally much more opposed to the campaign donation free for all we have in Virginia. All of which affects the menhaden.

    There are some points to remember:

    1. 22 US states prohibit donations of any amount by corporations to state politicians. Zero, zilch, nada.

    2. 19 of the 22 states which ban corporate donations also ban union donations.

    3. 45 states have some limits on contributions.

    4. Virginia is the only east coast state that permits reduction fishing. No other east coast state permits unlimited campaign contributions.

    5. Virginia is the only east coast state that regulates menhaden through its legislature rather than its fisheries commission.

    6. The company that would become Omega Protein was founded in 1873 in Reedville, Va as the Haney, Snow Company. It would change name to
    Reedville Oil and Guano Company in 1913. Spotter planes were added to the fishing fleet in 1947. Hydraulic power winches were used to haul seine nets and steel ships replaced wooden ships in 1955. This allowed set times to be cut in half. Government monitoring of the menhaden fishery began in 1955. refrigerated fish holds were added to ships in 1957. Omega Protein was incorporated in Nevada in 1998. Omega Protein went public on the NYSE in 1998. Omega moved its headquarters to Houston and was purchased in 2017 by a Canadien concern.

    7. Omega Protein has 1,150 employees with 300 in Virginia. A 2010 study by the economist James Kirkley at the Virginia Institute of Marine Resources found that the reduction industry has an $88 million economic impact on the Chesapeake Bay region, supplying 300 jobs at Omega Protein during the peak fishing season and 219 jobs in ancillary industries supported by the fishery. Recreational fishing, by comparison, has a $332 million economic impact in Virginia and Maryland, supporting 3,500 jobs, from bait and tackle shops to manufacturers of fishing equipment to charter-boat owners and captains—all of whom have an indirect stake in the health of the menhaden population.8. In 2009 the Atlantic Marine Fisheries Commission discovered several faulty lines of computer code which had mistakenly led the commission to believe that the menhaden fishery was sustainable. AMFC came to believer what watermen and sport fishermen had been telling it for decades – the menhaden have been disappearing.

    9. In 1876 there were 99 menhaden reduction factories on the US East coast. By 1997 there were 2. By 2005 Omega Protein operated the only menhaden reduction factory on the East Coast. In backwards Virginia. Where else?

    10. Every east coast state has banned reduction fisheries except Virginia and North Carolina. North Carolina hasn’t had an operating reduction factory since 2005. It banned the purse seine netting approach in 2012 effectively ending large scale menhaden fishing.

    11. The AMFC undertook the regulation of menhaden in 1981 adding bunker to the list of other species it was already regulating. For 20 years representatives from menhaden fishing companies were allowed to sit and vote on the menhaden management board. It was the only fish with stakeholders on the management board. That practice was ended in 2001.;

    12. In January 2006, Bob McDonnell, in his first month as Virginia’s newly elected attorney general, wrote a legal brief explaining that Virginia was not mandated to comply with the ASMFC’s decision. Documents obtained by reporters show that this brief was based on a paper written by Shaun Gehan, then of Collier Shannon Scott, a law firm representing Omega Protein at the time.

    13. More than half of Omega Protein’s sales come from exports abroad, with Asia and Europe representing the largest markets in a growing international aquaculture industry.

    14. Throughout the 2000s, marine biologists continued to report diseased, scrawny striped bass in the Chesapeake Bay, the spawning ground for 75 percent of the Atlantic migratory population. In 2006, official ASMFC science showed depleted stocks of weakfish as well. The reason: low numbers of menhaden.

    15 .Virginia nearly left the AMFC 1996, objecting to the constitutionality of a congressional mandate that states comply with regulations put in place by the ASMFC. That secession bill passed both the Virginia House and Senate and was even signed into law by then Governor George Allen before ultimately being scrapped when the legislature took it up again the following year.

    16. In 2011as AMFC voted for reduced menhaden quotasAs reductions Virginia State Senator Richard Stuart introduced a bill that would withdraw Virginia from the ASMFC entirely, a move that would have affected not only menhaden, but every other marine species, fishermen, and maritime industry in the Old Dominion State, the nation’s fourth-largest seafood provider. It seems Omega Protein was getting what it was paying for.

    • Don, you make an excellent case for putting menhaden under VMRC regulation. Now you need to make it to the folks who matter–the legislators–and your chances would be good this year. NoVa is well represented on the House Agriculture, Chesapeake, and Natural Resources Committee. Of course, this committee is not one of the most sought after and some of the current Democratic members may move to more desirable committees now that they are in the majority. Nevertheless, here is the current Democratic lineup–Ken Plum is in line to become chairman. (He also is in line to be chairman of Science and Technology; presumably he would have his choice.) Others are: Bulova, Keam, Lopez, Sullivan, Goditis, and Herring. Only Bulova, Keam, and Goditis received campaign contributions from Omega Protein–$500 apiece. On the Senate Agriculture, Conservation, and Natural Resources Committee, Chap Petersen is in line to be chairman and Dave Marsden is second. Petersen received $500 from Omega Protein.

  11. Good point. Do I need to make campaign contributions to all of them to buy some access? Lol. Maybe just write some emails?

    • Actual visiting them before they get to Richmond would get the best results. Another tactic would be to get all your fishing buddies to call in support for the bill that you get someone to introduce. Or, maybe even better: Get Steve Haner to lobby for you.

  12. Island Girl Sport Fishing

    To comment above statements about what do I do to change this continued abuse.

    Join coalitions or organizations that have been actively pursuing proper management before the vast majority of the public even knew what a Menhaden even was, such as
    The Virginia Menhaden Alliance
    https://www.facebook.com/VirginiaMenhadenAlliance/
    Or the
    Virginia Saltwater Sportfishing Association VSSA
    http://joinvssa.org/

    Not to take credit from other sensible organizations such as Teddy Roosevelt Foundation who have voice disagreement.

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