A little-known federal program has turned dozens of Gulf of Mexico fishermen into the lords of the sea -- able to earn millions annually without even going fishing -- and transformed dozens more into modern-day serfs who must pay the lords for the right to harvest red snapper.
A four-month probe by AL.com has found that roughly $60 million has been earned since 2007 by this small number of fishermen whose boats never left port. That money was collected from the labor of fishermen who have no choice but to hand over more than half of the price that their catch brings at the dock.
As it stands today, the right to catch 77 percent of the annual red snapper harvest is controlled by just 55 people, according to an AL.com analysis of hundreds of pages of federal documents, reports and websites.
The lion's share of the commercial harvest was concentrated in the hands of a very few in 2007 when a federal program known as the Individual Fishing Quota system, or IFQ, was established. The National Marine Fisheries Service divided up the Gulf's snapper harvest like a pie, with the largest pieces going to the fishermen who landed the most fish in the preceding years. A handful of snapper fishermen got shares as large as 5 or 6 percent of the Gulf's total harvest, while others received shares as small as a ten thousandth of a percent, which granted the right to catch about a dozen fish a year.
"I sold my first snapper when I was 16 or 17," said Ricky Wilson, a welder who lives in a small cottage on Mobile Bay. Commercial snapper fishing provided part of his income for 20 years.
When the IFQ portions were handed out, his share amounted to about 430 pounds, which would have taken him one or two days to catch and brought less than $1,000 at the dock.
Ricky Wilson's boat, the Gulf Rambler, hasn't been to sea since 2007, the year the IFQ program began and Wilson's share of the harvest was cut to 400 pounds.
"My percentage was 0.000187 percent of the total allowable quota. There just wasn't any point in fishing it," Wilson said, standing in front of his snapper boat, the Gulf Rambler, which sits on a trailer in his yard, covered in mildew and leaves. It hasn't been in the water since 2007, the year that the IFQ program started. "I've never made more than $30,000 in my life. I couldn't afford to lease (the right to catch) snapper from somebody."
Almost immediately, in the new system's first year, the fishermen who had received the largest shares realized that fishermen like Wilson were in a desperate fix. They were no longer allowed to pursue their livelihood, unless they could come up with a share of the harvest.
Taking advantage of the situation, an average of 86 fishermen who receive a share of the federal bonanza each year have turned to renting or selling their entire allotment to the highest bidder instead of fishing it, according to federal records. They have become the kingpins of the Gulf, trading the right to harvest red snapper for cash. Called "Sea Lords" by federal officials, these kingpins control a significant portion of the fishery and make a living off of the fish without ever untying their boats.
Meanwhile, the fishermen who missed out have been turned into sharecroppers of the sea.
"These guys are making tremendous amounts of money not working. All they are doing is taking advantage of the fact that they were gifted this public resource," said Bob Shipp, the retired chairman of the Gulf of Mexico Fishery Management Council.
The council, along with the National Marine Fisheries Service, approved and established the IFQ program. The program came into being during Shipp's tenure as chairman.
The IFQ program succeeded in its goals of making the snapper fleet smaller and safer, keeping the harvest within the annual quota, and providing the public a year-round source of red snapper, Shipp said.
"But the system has also evolved in ways the council never anticipated, and created a wildly unfair situation," he said.
"This business of leasing shares, I don't think that's something that ever occurred to any of the council members or the (fishery service) people either. It just evolved," Shipp said. "There are people making lots and lots of money from a gifted public resource. We are talking millions each year. These people who are no longer fishing, no longer lifting a finger, just making money off their peers, that really needs to be corrected."
This government distribution of a public commodity to private individuals who are then legally allowed to sell it for a profit is unprecedented in the modern age. The fish swimming in the nation's oceans are a publicly owned resource, just like the oil beneath the seafloor, the trees in our national forests, or the minerals buried beneath federally owned land. For all those resources, the federal government holds auctions and sells the right to harvest the publicly owned commodities to the highest bidder.
But that is not what happened with red snapper.
IFQs and dashed dreams
The IFQ system went into effect on Jan. 1, 2007 after a vote by commercial fishermen. By all accounts, the effort was well-intentioned. The idea was to correct the problems with the traditional management of the fishery, which pitted the fishermen against each other in a race to land as many snapper as possible before federal officials decided the annual quota had been reached and closed the fishery. Some years, that took as little as 52 days. Over time, a system evolved that opened the fishery for the first 10 days of every month.
Everyone agrees the old way of doing things meant all the snapper hit the market at the same time, driving down prices. It also meant that fresh red snapper was only available for a week or so each month, and fishermen were forced to go to sea even in dangerous conditions, lest they miss out on the harvest.
Jim Clements, a commercial fisherman from Carrabelle, Fla., received about a 10th of a percent of the Gulf's annual snapper harvest, roughly 4,500 pounds, worth about $24,000 at the dock.
"For people who are jealous of the fishermen who have quota that the government gave them, well, they don't understand what our fishery was like before the IFQ. It solves the problem of the tragedy of the commons," Clements said, explaining that he has since purchased a larger share, and sits on the board of directors of the Gulf Fishermen's Association, which lobbies in support of the IFQ program.
"The old system, if the weather was good, everyone would run out, catch the fish, dump it on the dock and the price would fall out. Then the fishermen had to run right out and do it again because you only had 10 days," Clements said. "The restaurants could never put a permanent red snapper item on the menu. We had to fish in terrible weather. And there were too many boats catching too many fish."
David Walker, a commercial fisherman from Alabama who is one of 18 voting members of the Gulf Council, agrees. He said the IFQ program has rescued the snapper fishery from chaos and overfishing. Walker receives about 2.5 percent of the Gulf snapper harvest each year, one of the 20 largest shares, worth $600,000 at the dock. He said he fishes almost all of his portion each year.
"It's been great. I don't know any fishermen who want to go back to the way it was," Walker said. "It has been hitting all the goals of the National Marine Fisheries Service, and all the goals of the Magnuson-Stevens Act. It's been very agreeable for everyone involved."
Based on that success, the IFQ program was expanded to the multimillion-dollar grouper and tilefish fisheries in 2010. But it has also created this new class of millionaire fishermen who essentially own large shares of the harvest.
Pete Barber, President of the Alabama Seafood Association
"The IFQ created a system of haves and have-nots. And a lot of the people who got to vote are the same people who are getting rich without working today," said Pete Barber, president of the Alabama Seafood Association.
The vote that Barber mentions has become a point of contention for some. While federal websites report that the IFQ passed with 81 percent support from commercial fishermen, it was not a typical, one-man/one-vote poll. Instead, only the top 167 fishermen -- those who had caught at least 5,000 pounds of snapper the previous year -- were allowed to vote, and their votes were weighted according to how many fish they caught. For instance, a vote by a captain who caught 5 percent of the harvest counted as 5 percent of the total vote.
Meanwhile, about 350 of their fellow fishermen were not allowed to vote. In the end, the top fishermen who voted for the IFQ were the very fishermen who stood to benefit the most under the new system. In effect, they were allowed to vote for a system that has granted them the rights to the lion's share of the Gulf's snapper harvest each year since 2007. And the people who stood to lose the most could not vote at all.
"I thought it was a good idea initially, but the devil is in the details," Barber said. "And the details are that a lot of hardworking fishermen are supporting a lot of people who have been able to quit working."
Stock market of the sea
Perhaps the strangest aspect of the IFQ program was the emergence of a private market at which you can buy the right to go fishing. There are even traders using this market who have never fished and don't own boats. They just buy and sell the right to fish like brokers buying stock on Wall Street, buying when prices are low and selling when prices are high.
"Leasing red snapper allocations, $2.75/pound! Call..." reads an ad on the Boatsandquota.com website, which is part of the private market. Another offers "1,135 pounds Red Snapper for lease, $3.05/lb."
Thirty-five such ads selling the right to fish have been posted on the Boatsandquota.com Twitter account in the last two weeks.
This week, you can lease the right to catch 500 pounds of red snapper for about $1,500. But those fish are worth only about $2,500 back at the dock. That means a fisherman who missed out on the federal windfall ends up paying $3 per pound for the right to catch a fish that sells for a little less than $5 a pound wholesale.
Walker, who was appointed to the Gulf Council as a commercial fishing representative, said the leasing system works well.
"I fish most of my quota. Sometimes I lease a few fish. Mostly, I'll trade snapper for grouper with another fisherman. I'll lease some grouper from a few folks. We try to keep it all in the system, trade fish back and forth," Walker said. "Every fisherman I talk to loves it. They are happy to lease fish from others. It's capitalism. People are only going to pay what the fish are worth to lease them."
Meanwhile, say the critics, the sea lords sitting at the dock make more money off of each fish than the men who actually do the work of pulling the snapper from the sea.
AL.com has obtained the fishery records that detail how much of the quota each snapper captain gets every year. However, federal officials have refused to identify the captains who sell their right to go fishing, arguing they are required to protect such business information by the Magnuson-Stevens Act, which regulates the nation's fisheries. That protection makes it difficult to pin down who the sea lords are.
But an examination of federal transaction records -- which do not contain the names of the fishermen -- proves conclusively that many one-time fishermen are indeed selling all of their shares instead of fishing.
The Sea Lords
Federal fishery managers said the term "Sea Lords" was a reference to those making a living primarily by renting the Gulf to other fishermen, like landlords with tenant farmers.
Federal officials say they are only beginning to understand the scope of the issue because of the complex web of seafood dealers, captains, boat owners, and brokers who trade in the right to fish.
For instance, federal records indicate that perhaps 10 percent of the trades made in the private markets may be between people who are actually business partners or relatives, and though the transactions appear to be sales, they are really not. Likewise, some seafood dealers buy shares in the market so they can provide them at a favorable rate to the fishermen who bring snapper to them. Others barter for goods or services with their share of the harvest, so those transactions don't show up as sales in the federal records. Reporting the sale price for a trade is also voluntary, further confounding the data.
But no one disputes that most trades are "necessarily for monetary gain," as a chart in a 2015 fishery service document described the majority of such transactions.
Meanwhile, the amount of snapper sold on the market has increased steadily since the program's inception. In 2007, the first year, the right to catch just over 300,000 pounds was sold this way. By 2013, that number had jumped to 2 million pounds.
An AL.com analysis of federal records suggests that, collectively, the sea lords may have reaped upward of $60 million since 2007 without fishing, either by renting their shares or permanently selling them. Exact figures are difficult to obtain because federal officials consider most of the details regarding the IFQ system to be business secrets. As such, they are classified as "confidential" and exempt from Freedom of Information Act requests.
But, in 2013 and 2014, the most recent years for which figures are available, at least 76 of the fishermen receiving a share of the federal harvest did not fish at all. Instead, they traded all of their portions on the private market. Those 76 people together would have earned $17 million without ever leaving the dock, according to average price estimates for such trades in the fisheries service documents. That's an average of $223,000 per person, though some of the fishermen would have earned less, and some a great deal more.
The money involved in the transactions is impressive, whether a sea lord goes fishing or not. For instance, a captain with a 4 percent share of the harvest who actually went fishing would earn about $1 million this year, minus the cost of fuel, crew and bait. Meanwhile, if that same captain elected to lease his share to another fisherman at the market price of $3 per pound, he would earn $606,000 without venturing onto the water.
Finally, if the captain elected to permanently sell his 4 percent portion on the market -- where shares sell for $40 per pound -- he could walk away from the fishing industry with around $8 million in his bank account.
In response to AL.com questions, federal officials noted that some captains choose to lease or sell their share because "greater profit could be earned from selling allocation than harvesting allocation."
The strangely lucrative arrangement was born out of an attempt to save the Gulf's red snapper population from extinction and help the fishermen at the same time. While federal officials say they never intended for some folks to end up making so much money by taking advantage of this unforeseen loophole, the Gulf Council has done nothing to change the way it works, even after eight years.
Plantation owners and sharecroppers
"You've got shareholders who think it is wonderful and I don't blame them. We've made them millionaires," said Glen Bryant, owner of Bryant Products Inc., a seafood distributor in Bayou La Batre, talking about the snapper kingpins. "Everyone told me how wonderful it was going to be. I don't see it. What I see is that we've turned our fishermen into sharecroppers. They go work for these people who actually own the fish."
And that group of people who "own" most of the fish turns out to be a very small group indeed.
An AL.com analysis of federal records reveals that just 28 people hold the right to catch 58 percent of all the red snapper harvested from the Gulf each year. That's about 3 million pounds of fish, worth $14 million at the dock.
Only one of those 28 people fished his entire portion of the harvest in 2014. The other 27 -- who were each given between 1 and 5 percent of the total harvest -- leased some or all of their shares. Two out of every three pounds given to the 28 largest shareholders was leased for profit.
Expand that group just a little more to include fishermen and brokers with at least half a percent of the harvest and you will find that just 55 people own the right to catch fully 77 percent of all the snapper in the Gulf, a haul worth $18 million annually.
With so much of the harvest concentrated in the hands of a mere 55 people, the remaining 25 percent of the harvest, a little over 1 million pounds, is split among about 500 people, which means there are a lot of very small shares. And a lot of fishermen who must buy the right to fish.
Bryant said many of the captains who brought their fish to his processing house in years past lost out when the IFQ program came in. Mostly smaller family operations, their annual harvest totals were simply not big enough to qualify for a share of the IFQ pie when the fishery was divided up.
"I've got fishermen who have fished all their lives, and they didn't get any quota. Now they are having to lease it from these people who get to own the resource," Bryant said. "The real question is how do you own a resource? I don't understand it. How can it be that these people get to sell the resource to fishermen who are actually working for a living?"
Bryant's question gets at the most contentious issue with the IFQ system: Why should people who have quit fishing be allowed to reap profit from those willing to go out and work for a living?
"There are some people who are trying to make it a big issue. They call them 'arm chair fishermen' because they just lease it out," said Clements, the Carrabelle fisherman. "Well, we need those guys in the armchairs, otherwise there wouldn't be any allocation to lease out. Nobody new would be able to enter the fishery. If I'm catching too many snapper, I can buy some (snapper) allocation and keep them. And if I'm catching less grouper, I can sell some of that. So you need those guys who don't fish it to help the system work."
Likewise, Walker said the trading was a good thing. Fishermen haven't complained to him.
"I haven't heard this talk of the sea lords," Walker said. "I think most of this talk is coming from outside opponents. Every fisherman I talk to is happy."
David "Pumpkin" Simms, with his boat, the Miss Sharron. Simms spent $150,000 in 2015 on the right to catch snapper.
David "Punkin'" Simms was born 10 minutes after midnight on Halloween. He is a third generation fisherman and owns three snapper boats. He voted for the IFQ in 2006. He received 12,000 pounds when the IFQ system came in and was surprised. Other fishermen he knew who harvested about the same amount of snapper he did every year, received over 100,000 pounds worth of the quota.
"I own three boats. Split three ways, I didn't see where I could make a profit off 12,000 pounds," Simms said. He decided to sell his share in 2009 and concentrate on the other species he fished, including Spanish mackerel, king mackerel, vermillion snapper (a smaller relative of the red snapper, better known as beeliners), grouper and amberjack.
But then something unexpected happened. The red snapper population exploded.
"You never used to see red snapper out past 300 feet of water. Now I see them in 450 feet. You can't fish without catching them," Simms said. "It got to where I was catching 2,000 pounds of snapper a trip, along with 3,000 pounds of the other fish. Rather than throw them back, float 'em off and feed them to the sharks, I said we might as well be able to keep them. So therefore we lease them."
In 2015, Simms estimated that he leased the right to catch 50,000 pounds worth of red snapper, for more than $150,000. He leased about 15,000 pounds worth from an Alabama charter boat captain who decided not to fish it this year, and the rest from a broker. Preparing for a six-day trip recently, Simms put in a call to an IFQ broker in Dunlin, Fla.
"Can you find me about 1,000 pounds? OK, I'll head to the bank and wire you the money. There's a check on the way for what you got me last time," Simms said during a phone call that lasted about three minutes. Talking to a reporter, he said it burned him that his money was going to guys "sitting on their butts while we do all the work. I'm totally against it."
Back at the dock Thursday after a three-day trip, Simms had about 1,000 pounds of snapper. After paying $3.25 a pound to lease the right to catch them, Simms earned $1,750, while the person he got the quota from reaped $3,250.
"If it was up to me, I'd go back to the way things were before the IFQ in a minute," Simms said. "You earned the money you made by catching fish, not by trading while you sat at home."
Chris Nelson, owner of Bon Secour Fisheries in coastal Alabama, who serves on the Gulf States Marine Fisheries Commission, said adopting the system seemed like a good idea at the time, but problems were quickly exposed.
"It created this huge plantation owner and sharecropper situation. I don't think anyone thought it would become nearly so lucrative for some of these guys," Nelson said. "The downside for us, we had a boat that fished for us for years and it didn't get any quota, so they couldn't fish for snapper anymore. That meant we lost our traditional source of red snapper. If I wanted a boat to bring snapper in here I'd have to buy shares to give them."
Pushback and fixes
As the private market developed, fishermen left with no choice but to buy quota began complaining, especially as it became apparent that the sea lords were living off their labor. Complaints from those left out in the cold became a regular feature at public meetings of the Gulf of Mexico Fishery Management Council, which has been hard pressed to agree on a fix.
"The increase in the number of shareholders not landing any fish has led to perceptions that many are profiting from the program at the expense of hard-working fishermen," reads a fisheries service report from February 2015.
Another report stated that sea lords and brokers buying up ever larger chunks of the fishery, coupled with an increase in the number of shareholders not landing any fish, "have led to the perception that many people are profiting simply by transferring ("leasing") allocation and not fishing."
Despite the recognition that there is a problem, nothing has changed. For the last eight years, federal officials have doled out the shares based on catch records that are a decade old. The same handful of fishermen receive the greatest part of the quota each year, whether they go fishing or not.
However, nothing in the federal rules guarantees fishermen will receive the same size portion of the quota from year to year. The Gulf of Mexico Fishery Management Council, made up of state officials and members who represent recreational and commercial fishermen, could change the system, including who gets the right to catch the fish, at any time that it wishes. So far, the council has declined to change anything.
Shipp, who was chairman of the Gulf Council when the IFQ program began, said that no one realized the extent of the problem for years. And then, there was little interest in opposing the commercial interests that were defending the program.
"The commercial guys who had shares, they showed up at every meeting. They were pretty much intimidating," Shipp said.
He said that the commercial captains who were benefitting the most moved to shut down any talk of redistribution by talking about how much safer the fleet was under the new system. "But nobody on the council realized the scale of what was going on. I had no idea it was as bad as it is," Shipp said.
Today, Shipp advocates an immediate redistribution of the harvest based on current catch records. He would take shares away from the sea lords and give them to the fishermen who have been stuck renting the right to fish, like Simms.
"That would be fantastic, but I don't see it happening. There's too much money and too much politics," said Simms, who spends about $150,000 a year to lease snapper quota. "I would love somebody to look at the paperwork and say, 'My God, what's going on here?'"
Both Shipp and Sims were quick to draw a distinction between fishermen who received a large share of the quota and still go fishing and catch those fish themselves every year, versus the fishermen who simply lease their quota to others.
"I don't mind guys having a lot of quota based on their historical catch if they fish it. But if they are just leasing their quota, that's not right. There are a lot of guys making a really good living who don't ever lift a finger," Shipp said. "These guys making money as if they own the resource. That's absurd. Selling the right to fish for $40 a pound, that's abusive! It's not theirs. It belongs to the nation. ... If they are not going to fish it, they should lose it, not be able to sell it."
But so far, the council has refused to endorse a so-called "use-it or lose-it" provision.
A federal report states that the council, "evaluated alternatives for use-it or lose-it provisions that would have revoked and redistributed shares from accounts using less than 30%, or 50%, of the allotted RS-IFQ shares, over a 3-year, or 5-year, moving average period. Ultimately, the Council selected no action and did not adopt this use-it or lose-it provision."
Federal officials said the Gulf Council is again weighing this issue, including at a meeting this week, and have begun work on an amendment that might include both a "use-it or lose-it provision" and a redistribution of the quota. Walker said he did not think the council would adopt such a provision, because "there is no need."
Fishery officials said that in any case, the council will probably wait to take action on snapper once a five-year review of the grouper and tilefish IFQ has been completed. That process will take about a year.
In the meantime, Gulf snapper fishermen are busy leasing and buying the right to catch the 2016 harvest.
The most recent trade listed on the Boatsandquota.com website was a permanent sale of the right to catch 7,048 pounds of red snapper a year for $267,000.
"We don't have a choice," said Simms. "If we want to go fishing, we've got to pay up."
Updated Jan. 26 to correct that Chris Nelson served on the Gulf States Marine Fisheries Commission.
This is the first in an ongoing series.
Follow Ben Raines as he explores Alabama's natural wonders. Shoot him an email with questions or story ideas at braines@al.com.