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NOAA Issues $3.44 Million Penalty for Violations of the
American Fisheries Act


December 01, 2004

Icicle Seafoods, Inc. and two associated seafood-processing companies in Adak, Alaska have been assessed a $3.44-million penalty for allegedly violating the American Fisheries Act for exceeding the company's crab-processing cap. The Notice of Violation and Assessment (NOVA) was issued Monday by NOAA, the Commerce Department's National Oceanic and Atmospheric Administration.

Icicle Seafoods and Adak Fisheries, LLC and Adak Fisheries Development, LLC have been issued this penalty as the culmination of a year-long investigation by NOAA's National Marine Fisheries Service Office for Law Enforcement - Alaska Division.

NOAA is charging that for over two years, from Jan. 2002 until Feb. 2004, Icicle Seafoods controlled Adak Fisheries Development, through the actions of Icicle's officers and through Icicle's subsidiary fish-processing operation.

Under the AFA, if one company controls more than 10 percent of another company, they are considered the same company for applying crab cap limits. Because of the direct and indirect control Icicle Seafood exercised over both companies, the companies are considered one.

As an "AFA entity" Icicle Seafoods is authorized to participate in the lucrative Bering Sea and Aleutian Islands (BSAI) limited entry pollock fishery. Because of the economic benefits which accrue from participation in the BSAI pollock fishery, AFA entities are statutorily capped as to the amount of harvesting and processing they may do in specified non-pollock fisheries.

The American Fisheries Act, passed in 1998, is meant to encourage diversity and competition among fish harvesters and processors, and conservation of the resource. Certain processors, Icicle Seafoods among them, are authorized to participate in the lucrative pollock fishery in the Bering Sea and Aleutian Islands, but are strictly limited in how much non-pollock fishing and processing they are authorized. Adak is a remote island located near the end of the Aleutian chain, which stretches over 1,300 miles southwest of Anchorage towards the coast of Siberia.

Seattle-based Icicle Seafoods, one of the largest seafood processing operations in Alaska, was a co-partner in Adak Fisheries, the sole fish processor on Adak. Adak Fisheries leased space in its plant to Adak Development, the sole crab processor which is owned by Icicle Seafoods co-partner in Adak Fisheries. According to the notice of violation, although Adak Fisheries and Adak Fisheries Development were separately incorporated, they both used the same facility, the same employees, the same management team and were both supplied with virtually all administrative support from Icicle Seafoods.

During the time period charged, Adak Fisheries purchased and marketed approximately 90 percent of all crab that Adak Fisheries Development processed. As a result of the control exercised by Icicle Seafoods, all crab processed by Adak Fisheries Development should be allocated against Icicle Seafoods crab cap limit. When this is done, Adak Fisheries Development processed over 3.8 million pounds of brown king crab in excess of Icicle Seafoods' AFA crab cap for western Aleutian brown king crab during the same time period.

NOAA officials say as a result of Icicle Seafoods' actions, non-AFA crab processors lost the market opportunity to conduct the processing of over 3.8 million pounds of brown king crab. The purchase price of the crab paid to the vessel for this crab was over $13 million. NOAA investigators said that the value of the processed crab would be greater than purchase price.

The three companies are all being charged together and will be jointly responsible for paying the fine. Officials say any or all of them can request a hearing before a Federal Administrative Law Judge to the review the charges and their case.


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