NOAA Enforcement Hearing Leaves Fishermen Wary

by Laurie Schreiber

A United States Senate subcommittee recently reviewed progress on improvements to law enforcement and fund management by the National Oceanic and Atmospheric Administration (NOAA) and its Office of Law Enforcement (OLE).

The Subcommittee on Federal Financial Management, Govern- ment Information, Federal Services, and International Security—and subcommittee of the Senate’s Committee on Homeland Security and Govern- mental Affairs—held a field hearing entitled “How Is NOAA Managing Funds to Protect the Domestic Fishing Industry?” on June 20 at Faneuil Hall.

Under scrutiny was the management of the OLE’s Asset Forfeiture Fund (AFF) and what has been deemed overzealous enforcement actions on the part of agents with the OLE. The hearing was convened by the subcommittee’s chairman, Senator Thomas Carper.

“This fund was a mess,” Carper said of OLE’s Asset Forfeiture Fund. “It helped undercut whatever trust might have existed.” Witnesses at the hearing included a lifelong fisherman and the proprietor of a fish auction, both of whose lives, they said, have been profoundly impacted by NOAA enforcement operations.

Lawrence Yacubian is a scallop fisherman from New Bedford, Mass., who lost his business due to $430,000 in fines imposed by OLE and $250,000 in legal fees to fight charges. Yacubian said that, in 2004, his family sold his wife’s family farm in Massa- chusetts to pay a settlement with NOAA.

“It is still hard for me to accept that unsupervised federal employees, working in a rogue agency could be allowed to run amok in this nation that I love,” Yacubian said. “The system violated even the most basic conflict-of-interest standards. Judges and prosecutors were allowed to maintain eerily close in-house relationships, with little or no oversight during the prosecution of my case. It’s difficult to feel you’re having ‘your day in court,’ when the prosecution and the judge hearing your case are literally allowed to go to lunch together while the court is in recess. It’s difficult to feel you’re getting justice when the judge has been appointed by the prosecuting agency—and will eventually be paid by the fines out of your conviction.”

Larry Ciulla is the co-owner of Gloucester (Mass.) Seafood Display Auction, which he and his sister started in 1997. “Our family has been in a battle with NOAA law enforcement for close to 10 years now,” said Ciulla. “And what did I do wrong? Nothing. We would ask for help from NOAA and we would be ridiculed. We were abused. This isn’t—you get pushed around by a bully—we’re talking about the United States government. NOAA. People who carry guns.” Ciulla said his family is fighting to keep its business open.

“Our family didn’t want to come to work,” he said. “My mother would sit in the car, wondering if she would get through the day.”

Massachusetts Sen. Scott Brown requested the subcommittee hearing.

In his opening statement, Brown said, “NOAA’s history of overzealous enforcement in the New England fishery has come at the cost of fishermen’s trust and their livelihood. Many tell me that NOAA regards them as criminals instead of a legitimate and valued regulated industry. While I again want to emphasize that our fishing regulations must be enforced, we must not forget that fishing is about catching fish, where 96 percent of violations are civil matters. The tone and tenor of enforcement must reflect this. Yet NOAA agents carry guns and 90 percent are criminal investigators. So we have a situation where armed criminal investigators are primarily enforcing non-criminal regulations – essentially issuing tickets.”

By contrast, Brown said, “The Federal Aviation Administration (FAA), which regulates an industry where an error can lead to large-scale disaster, has zero criminal investigators.”

Brown said the AFF was “treated like a ‘piggy bank’ by NOAA’s Office of Law Enforcement and Office of General Counsel for Enforcement and Litigation, which had accounting practices that would have made Enron execs blush.”

The AFF was authorized by the Magnuson-Stevens Fishery Con- servation and Management Act (MSA) to pay for investigation or enforcement activities related to the fishing industry. NOAA’s Office for Law Enforcement and the General Counsel for Enforcement and Litigation are responsible for enforcing fishing regulations.

According to the Commerce Department’s Inspector General (IG), Todd Zinser, “The MSA gives NOAA the authority to retain and use proceeds from the civil and criminal penalties imposed and collected as part of its enforcement actions. Most violations of the act, such as exceeding catch limits, result in civil fines and penalties alone. NOAA is also permitted to use proceeds from assets (such as fish or vessels) that have been forfeited for violations of the MSA. These fines and other proceeds are deposited into the AFF. The MSA provides that the agency may use these monies for, among other things, ‘any expenses directly related to investigations and civil or criminal enforcement proceedings, including any necessary expenses for equipment, training, travel, witnesses, and contracting services directly related to such investigations or proceedings.’”

In 2009, the Zinser undertook an investigation, at the request of Dr. Jane Lubchenco, Under Secretary of Commerce for Oceans, and prompted by concerns raised by members of Congress and the fishing industry, “that in some cases NOAA was imposing excessive fines on members of the fishing industry—to such an extent that the fines seemed to constitute a form of bounty—because of the agency’s ability to levy fines and penalties and then keep the proceeds to augment its budgets.” The IG investigation uncovered “a significant lack of accountability and transparency,” Zinser said.

Zinser said his office hired an independent contractor to perform a forensic review of the AFF. He said the contractor’s findings included:

• No single unit or individual within NOAA had a detailed understanding of the AFF and how it functioned.

• Decentralized operations resulting in inconsistent practices; 62 percent of 604 transactions selected for further analysis did not have required supporting documentation, and 27 percent did not have required approvals.

• Serious deficiencies in the fund’s management processes and internal controls. For example, at that time nearly every OLE special agent and enforcement officer was issued a purchase card regardless of the individual’s need for one. This practice was inconsistent with federal policies for managing purchase cards.

Zinser said his office focused on several “high-risk” AFF expenditure areas:

• OLE’s acquisition and use of vehicles and vessels. For example, according to OLE, 200 vehicles were purchased—at a cost of about $4.6 million—predominantly with AFF monies. The number of vehicles exceeded the number of OLE enforcement personnel on staff at the time by about 30.

• International travel practices by OLE and GCEL employees;vneither office had policy guidance for using the AFF for travel not directly related to investigations or enforcement proceedings. Between January 2005 and June 2009, OLE and GCEL charged over $580,000 to the AFF for international travel. Only about 17 percent of this travel was directly related to specific investigations or enforcement proceedings; the remaining 83 percent went for training or attending meetings and workshops.

• OLE’s Special Operations Fund, which pays for the office’s covert and undercover activities and operations. It was determined that the SOF had similar problems that were identified with the AFF.

Maritime attorney Stephen Ouellette said that, during the course of his practice, he has come across many instances of heavy-handed practices by the OLE. “At the same time as the fleet has declined, and in turn serious fisheries violations have all but disappeared, fines and penalties have increased on remaining fishermen, creating an over-enforcement problem – too many enforcers chasing too few fishermen.”

“There is no question that adequate enforcement is crucial to the success of fishery management plans, however, as the number of participants in the fishery declines, and as opportunities for ‘cheating’ have been eliminated through such means as mandatory vessel tracking, onboard observers, daily reporting, and regulations are adopted which avoid discard issues, one would expect enforcement to be similarly reduced,” Ouellette said. “Part of the problem in the Northeast has been that as serious violations, like closed area incursions and illegal landings schemes of the 1980s have all but disappeared, law enforcement had elevated simple misunderstandings of complicated regulations into cases with hundreds of thousands of dollars in fines.”

The number of enforcement agents has remained steady even though the number of fishermen has declined, Ouellette added. He cited the following as an example of outsized enforcement presence:

“One of my clients reported over thirty dockside boardings in a 45-day period by Massachusetts Environmental Police. Shortly thereafter, I met with one of the Environmental Police Officers (EPO) and inquired as to the frequent boardings. The answer was that under the Joint Enforcement Agreement between the EPOs and NOAA, funded with monies from the Asset Forfeiture Fund, the Massachusetts EPOs were required to board federal boats every day. The EPO was very polite and very forthright, apologizing for the frequency of the boardings, but stating my client’s boat was the only federal vessel fishing in his region, and the daily requirement could only be met by frequent boardings. One has to question whether the need for enforcement should be reduced as the fleet diminishes and electronic monitoring and government observers have become so pervasive.”

Increasing regulatory complexity makes compliance more difficult, yet fishermen find it difficult to get help without fear of reprisal, Ouellette said.

“While regulatory complexity has increased, the number of fisherman and the time available for fishing has decreased. NMFS continues to restrict access to fisheries, despite huge leaps in rebuilding, so cost of compliance rises in the face of declining profits, with little hope fishermen will ever be able to harvest the fruits of their sacrifices,” Ouellette said. “Yet NOAA continues to escalate fines and penalties for innocent violations, to the point that most fishermen are terrified that they, or their crew, will make a mistake that costs them tens of thousand of dollars and result in loss of their business and their home.

“While, in my experience, NOAA agents have generally been cordial to me… the fishermen’s complaints that they are treated like criminals is consistent with the agents’ demeanor and positions as criminal investigators. I was surprised to see this designation appearing on the agents’ business cards a number of years ago…. Fishermen are approached in the same fashion as criminal suspects, and in a few cases, agents have tried to use criminal laws to enforce Magnuson provision.

“Guns are often displayed and I have had frequent complaints from fishermen that agents deride them for not showing agents enough respect. There is a general adversarial nature that seems to occur when criminal investigators get involved, and not surprisingly, fishermen find it disconcerting.”

Fishermen who have sought to bring themselves into compliance have been, in the process, punished for non-compliance, said Ouellette. As one example, he cited, “Action to bring an unintentional overage to the attention of enforcement through self-reporting often results in seizure of catch and hefty fines.” In another example, Ouellette said, “a fisherman appears to have been charged for trying to release an entangled whale from his gear.”

Brown said that mismanagement of the AFF and the enforcement issues surrounding it are “symptomatic of a larger problem at NOAA.” Brown continued: “This culture of criminalizing our New England fishermen and this adversarial relationship has gone on too long, and it must change.”

Brown accused NOAA of “making documents disappear….In November 2009, while facing litigation and an Inspector General review, NOAA’s chief law enforcement official Dale Jones directed the shredding of 75-80 percent of files in his office, in violation of several rules and all common sense.”

Brown asked Zinser if the shredding hindered the IG investigation. Zinser said that, although his office was able to reconstruct the file list, “We will never know what was in those documents.” Zinser also said his office found that there was no intent on the part of the OLE director, Dale Jones, to obstruct the IG investigation. Schwaab told the subcommittee that he could not comment on the personnel matter, but said Jones was removed from the position. Jones was moved to another position at NOAA.

Senator Brown asked Schwaab, “What does it take to get fired at NOAA? Schwaab responded with references to NOAA administrative procedures.

Carper said the AFF came to the attention of his subcommittee as a financial matter. “Poor financial management is an unfortunate theme that runs throughout our federal government,” Carper said. The hearing was not meant to review fisheries management, he said, but financial management.

“The money in NOAA’s asset forfeiture fund is supposed to be used to protect our valuable natural resources and to support the fishing communities that are vital to this region and, frankly, to our nation,” Carper said. “Our subcommittee wants to help make sure that’s what happens.”

Poor financial management of the AFF goes back 15 years or more, Carper said. “And up until this past year, very little was done to set things right.”

Eric Schwaab, NOAA’s Assistant Administrator for Fisheries and Director of the National Marine Fisheries Service, outlined improvments made to NOAA’s enforcement program as a result of the investigation:

• New enforcement leadership at headquarters and in the New England regional office.

• Transfer of authority to issue charges and settle cases from the field staff to supervisors in headquarters.

• A new, “more transparent penalty policy that ensures consistency in charging decisions nationwide and provides greater clarity for fishermen and businesses.”

• Revised regulations that now place the burden on NOAA, rather than a fishermen or business, to justify its proposed penalty and permit sanctions in hearings before Administrative Law Judges.

• A new Asset Forfeiture Fund Use Policy that “greatly restricts the fund’s uses to ensure that there is no conflict of interest, real or perceived, with its use.”

“In addition, after requests from fishermen and elected officials, the Department of Commerce hired a Special Master to review past cases. On May 17, 2011, the Secretary of Commerce announced the remittance of $650,000 in penalties to 11 fishermen and businesses in cases reviewed by the Special Master,” said Schwaab. “The Special Master currently is reviewing additional cases to address any other past issues.”

NOAA is reshaping its enforcement workforce by increasing the number of enforcement officers to emphasize compliance, problem solving, and communication, Schwaab said, adding the agency held a national enforcement summit to hear from constituents—the fishing industry, environmental community, federal agencies, and other stakeholders—on needed improvements.

“Compliance through better communication was a theme at the summit and we are acting on it,” Schwaab said. “We are stressing compliance assistance as a balance to our deterrence efforts – we must work better with our stakeholders to ensure everyone understands how to comply with our regulations.”

Since the issuance of the IG’s July 2010 report, “NOAA has made significant improvements in the AFF’s financial management,” Schwaab said. In an independent financial audit of the AFF financial statements, the AFF received an unqualified (“clean”) opinion on its financial statements as of March 31, 2011. In issuing their clean opinion on the financial statements, the auditors confirmed the AFF overall balance at $7.5 million as of March 31, 2011.

“The auditors are further providing reasonable assurance that the statements are free from material misstatement, and present fairly the assets, liabilities, net position, and balance of the AFF,” Schwaab said.

Zinser said his office will continue to examine the AFF based on NOAA’s action plan.
For fishermen like Yacubian, the struggle and pain also continue.

“My career disappeared and my family’s heritage and my children’s inheritance disappeared as well,” Yacubian said. “My wife’s family farm in Massachusetts, that was in her family for 350 years, is gone. We had to sell it. For those of us who were wronged, we’ve lost careers and years, and the legal fees and other costs we incurred at the hands of corrupt federal employees are still unreimbursed.

More comment and the entire hearing video webcast can be viewed at: http://hsgac.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_id=0047e7b3-934d-4d51-ba43-21c5907f8c60