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ANCHORAGE - Federal regulators on Monday fined Icicle Seafoods and two other companies $3.44 million, saying the companies worked as one to corner the Adak crab market, processing millions of pounds above their limit over the past two years.
The fine is one of the largest civil penalties ever handed down by the Commerce Department's National Oceanic and Atmospheric Administration, according to administration officials.
NOAA's Office for Law Enforcement investigators say Adak Fisheries and Adak Fisheries Development operated as one company under the administration of Icicle Seafoods in processing and marketing the brown king crabs caught between January 2002 and February 2004 in the remote island in the Aleutian chain.
The Notice of Violation and Assessment says Seattle-based Icicle Seafoods was a partner in Adak Fisheries, the only fish processor on Adak. Adak Fisheries leased space in its plant to Adak Fisheries Development, the island's sole crab processor. Adak Fisheries Development is separately incorporated but owned by Adak Fisheries, according to NOAA. Both companies used the same employees and management, investigators said.
Adak Fisheries bought and marketed approximately 90 percent of the crabs that Adak Fisheries Development processed, with Icicle Seafoods having direct and indirect control over both companies, according to NOAA investigators.
Under the American Fisheries Act, if once company controls more than 10 percent of another, they are considered the same company and are capped as one company.
Icicle Seafood's cap was just under 222,000 pounds for the two years, but the combined companies processed 3.8 million pounds above that limit, according to NOAA.
"Basically, they're having multiple crab caps," said NOAA law enforcement spokesman Mark Oswell. "Icicle controlled 90 percent of all the crab processing, due to the fact that it employed the same personnel, the same facilities, the same administrative, the whole bit."
The three companies have been charged together and are jointly responsible for paying the fine, according to NOAA.
Icicle Seafoods president and chief executive Don Giles said the company had cooperated with the investigation throughout but disagreed with the findings.
"We believe Icicle acted completely in accordance with the AFA and its regulations," Giles said.
An employee at Adak Fisheries Development referred questions to Seattle-based Aleutian Spray Fisheries, which did not return a call on Monday.
The American Fisheries Act, passed in 1998, is meant to encourage diversity and competition among fish harvesters and processors. Fish processing in Alaska has been consolidating over the years, and it is not known whether any competing processors would step in to meet demand if the companies processed just 222,000 pounds of crabs.
That doesn't matter, Oswell said.
"Regardless of whether anybody is out there to fill the void, they still violated the AFA," he said.