Former owner of Arctic Alaska and F/V Aleutian Enterprise accused again of dumping fish waste illegally

7/10/06

Seattle, Washington

Francis Miller, the embattled owner of Hoquiam's fish meal plant has a reputation for building successful businesses, but he's also had his share of trouble with government regulators.

Miller, who started Ocean Gold Seafood of Westport and its sister company Ocean Protein of Hoquiam, is under the microscope of government regulators again, for odors coming from the fish meal plant and for dumping fish waste in the ocean.

The Coast Guard's annual authorization act, which sets the allocations, is finally complete, nine months after the beginning of the fiscal year to which it applies. The delay was in recent months due to controversy over the Alaska delegation's effort, ultimately unsuccessful, to add language that would stop a major wind farm off the coast of Massachusetts.

In the 1990s, Miller's Seattle-based Arctic Alaska Fisheries came under even sharper scrutiny. In early 1993, Arctic Alaska Fisheries was accused of contaminating ocean waters off Lost Harbor, Alaska. The company settled out of court with the Environmental Protection Agency for $725,000.

All told, Miller and his companies have had to pay more than $1.5 million to government agencies ranging from the EPA to the Olympic Region Clean Air Agencies.

And at one time he faced criminal charges for involuntary manslaughter after nine men died in the sinking of one of the company's fishing boats in 1990. He was acquitted, but the company was fined $500,000 and six other company officials pleaded guilty to charges that included lying to government officials and negligence, according to news reports at the time.

Federal prosecutors say the trawler didn't meet stability standards and blamed Miller, as chief executive officer.

When Tyson Foods Inc., known more for chicken than fish, ventured into the seafood market and purchased the Arctic Alaska Fisheries Corp. in June 1992 for $212 million, Miller likely walked away a millionaire.

He says he could have retired, but in 1994, partnering up with the Pacific Seafood Group of Seattle and other investors, he purchased Merino's Seafoods of Westport and renamed it Ocean Gold Seafood.

Today the company employs more than 450.

Ocean Gold processes and flash freezes Pacific whiting, also called hake. But the seafood company has been known to export pollock and sardines and even crab. Their fish goes to grocery stores throughout the Midwest, South and East but not much to the West Coast, where whiting is not a big commodity.

EPA investigators are now looking into whether fish waste from Ocean Gold was dumped into the Chehalis River and several miles off Westport in the Pacific Ocean.

Last year, the owners of Ocean Gold founded a sister company, Ocean Protein, and took over the old Rayonier vanillin plant in Hoquiam, converting the facility into a fish meal plant. After more than 700 odor–related complaints, the Olympic Region Clean Air Agency fined Miller and his company $610,000. An out–of–court settlement earlier this year dropped the fine to $250,000, plus the company was forced to invest more money into its odor control systems.

This year, after receiving even more complaints about the plant's odors, Ocean Protein is expected to be fined at least $60,000 – and, perhaps, even more if the odors continue through the summer. A hearing is set in Superior Court at Montesano Monday and state lawyers are prepared to ask a judge to close the plant.

'This is all I've ever done'

Miller was born in Aberdeen but was raised in the Grayland area. He says he was practically born in a fishing boat.

"This is all I've ever done," Miller says. "I started fishing out in Westport when I was, like, 19 years old."

After a successful career as a commercial fisherman, he earned enough money to start his own business.

From Westport, he moved to Alaska where he founded the Arctic Alaska Fisheries Corp. in 1983. Though he incorporated in Seattle, the company mainly worked the dangerous stretches of the Bering Sea in Alaska going after crab, cod and anything a net could catch.

"Yeah, I've seen that 'Deadliest Catch' show on the Discovery Channel," Miller says, naming the reality show that focuses on Alaska crab fishermen. "But I've lived that. I lived all of that for 20 years or more. In fact, I lost my only son on a crab boat. He never came back."

Miller doesn't like to talk about his personal life, but says he considers himself a "people person." When he took his company public, many of his employees were stockholders, he says. He points out that his companies have provided a living for thousands of people.

"I'm like the Weyerhaeuser of the fish industry," Miller said. "I'm trying to do good and make sure people are employed."

By the time Miller sold Arctic Alaska in 1992, the company had grown into one of the largest seafood companies in the country - 30 crab boats, trawlers and hook–and–line boats.

And the employees who had stayed with him and still had stock benefited. According to news reports at the time, when Tyson announced it was purchasing the company, Arctic Alaska's stock shot up 69 percent.

But all that money came at a price, which was made clear following the sinking of the company's fish processing boat, the Aleutian Enterprise in 1990.

The ship carried about 100,000 pounds of fish in excess of the tonnage capacity of the vessel. And when that tonnage shifted all at once to the port side of the ship, the ship started to take on water and sink, according to the book "Northwest Sea Disasters: Beyond Acceptable Risk." The ship carried 31 people and 22 were rescued.

In their book, authors Leif Terdal and John Keiter write that the crew didn't know how to handle the sudden shift in weight. Plus, life jackets were not immediately available and most of the crew wasn't trained in evacuating the vessel. The result was nine dead - and later the indictment of the Arctic Alaska management team.

A National Transportation Safety Board report said the master of the vessel was under pressure to produce, and management emphasized production over safety.

Today, Miller says he was unfairly targeted by the Department of Justice.

"It was a ridiculous charge to start with," Miller said. "Those government people had a bone to pick or something and I didn't do anything wrong. – And I proved it."

EPA investigates Arctic Alaska

Miller says one of the ways he was successful in Alaska is through his floating fish meal facilities. Trawlers would take their fish guts to a fish meal boat anchored not far offshore.

The Alaska fishing industry produces an incredible volume of waste and federal rules do not allow companies to dump fish guts and fish scraps into the ocean. To do so would destroy the delicate marine environment, according to John Malek, the EPA's Region 10 ocean dumping coordinator.

Such waste must be disposed of properly, Malek said. At the time, Arctic Alaska, much like Miller's Ocean Gold does today, used a fish meal facility to handle its waste.

Fish meal is a pure protein that is used as feed in the aquaculture, dairy and poultry industries.

By turning the fish scraps into fish meal, the company turns a potential waste product into a viable resource that can be sold. But, for some reason, according to EPA and state of Alaska investigators, Arctic Alaska was dumping fish waste over the side of the ship in addition to making fish meal.

Miller told The Daily World that he didn't do anything wrong. During the '80s, most of the companies dumped some fish waste overboard, he said.

According to U.S. Justice Department records and EPA documents made available to The Daily World through a Freedom of Information Act request, government divers discovered that the ocean bottom beneath the Arctic Enterprise, an anchored floating fish meal processor, was a wasteland. All of the plant life and marine life was dead.

"It was a big floating processing ship, if the boat would have been moving around it wouldn't have been a problem, but because we were anchored in one spot, all that waste piled up underneath the ship," Miller said. "But we didn't do anything wrong. We were still following the rules."

On Dec. 7, 1989, the state of Alaska conducted a random inspection on the Arctic Enterprise, anchored off the waters of Lost Harbor, Alaska.

Inspectors discovered that the vessel was "discharging fish wastes directly into receiving waters without routing them through the waste handling system, discharging floating solids into receiving waters in violation of Alaska state water quality standards and discharging plastics, including garbage," according to statements by investigators found in court records. "This inspection also revealed that fish wastes from the M/V Arctic Enterprise were being allowed to accumulate on the shoreline of Akun Island in the vicinity of Lost Harbor."

A second inspection on Feb. 15, 1990, discovered identical behavior, court records show. EPA investigators also say they witnessed the company dumping dead fish and fish remains on May 23, 1989, and investigators believe that kind of activity had been ongoing without the proper permitting.

A later report by the Environmental Protection Agency discovered that Arctic Alaska hadn't kept up on its documentation on what exactly it was dumping for at least four years – from 1987 to 1990 – violating the conditions of its National Pollutant Discharge Elimination System Permit.

In the company's permit application, the company had agreed that "all process wastes from the Arctic Enterprise were to be collected, without loss through facility floor drains or other direct discharge and conveyed to a grinder or grinders. All discharges were to be below the water surface."

The EPA alleged that Arctic Alaska did none of that and was in violation of the federal Clean Water Act.

After several years of delays, Arctic Alaska and federal prosecutors settled on a consent decree. Arctic Alaska agreed to pay a $750,000 fine and pledged to keep better records and to follow federal rules.

That amount was later reduced by the Justice Department to $725,000.

On to Westport

When Miller had moved on to Ocean Gold, he was no longer using floating processing ships. Everything was land-based.

Because Ocean Gold didn't own its own fish meal facility, it had to truck waste up to a facility in Vancouver, B.C. But there were times the trucks would get stopped at the border, delaying their return back to Westport and other times when there were simply no trucks available to send scraps to Canada.

Miller and the other owners of Ocean Gold settled on coming up with their own fish meal plant somewhere on the Twin Harbors. They called their new sister company Ocean Protein.

"Originally, we wanted to build it in Raymond because Raymond was centrally located between our two primary raw material areas which are Westport and Astoria," Ocean Gold Vice President Richard Carroll told The Daily World in 2005.

But because of a problem with fecal coliform bacteria in Willapa Bay, it would have taken two and a half years to get a plant up and running, Carroll said.

The next site the company was looking at was on Firecracker Point in Westport.

The company had gone so far as to receive permission from the Port of Grays Harbor to use the property in June 2004, but learned it would take 18 months for a national pollution discharge elimination system permit.

Coming to Hoquiam

An acquaintance of Miller's, Randy Rust, had purchased the old Rayonier vanillin plant in Hoquiam. Rust, a former co-owner of Westport Shipyard, had been trying to find someone to take over the facility for some time. And so had the City of Hoquiam.

With the city Planning Commission's backing, and City Council support, Ocean Protein took over the vanillin plant. Miller had never owned a fish meal plant on land before. Out at sea, the smells coming from the Arctic Enterprise floating fish meal ship had never been a problem - because there was no one to smell it.

The Olympic Region Clean Air Agency, responsible for Hoquiam's clean air, had also never dealt with a fish meal facility nor had any other clean air agency in Washington state.

Neither the company nor the state agency knew what kind of equipment was needed to make sure no odor would come from the fish meal plant. The result?

The plant opened in May 2005 and almost right away the start of what would be more than 700 odor-related complaints were filed against Ocean Protein. By August, the agency took the matter to Grays Harbor Superior Court. But before the judge could take any action, Ocean Protein settled the matter out of court and agreed to voluntarily shut down should the smells continue.

Yet when the plant continued to give off putrid odors, the company refused to shut down. The plant would continue running until October when the fishing season ended.

Ultimately, a fine of $610,000 was levied against Ocean Protein. The company appealed that fine, saying that $20,000 was a sufficient amount to pay. A settlement deal signed earlier this year ended with the company agreeing to pay $250,000 in installments as well as a promise to invest more money into a better odor scrubbing technology.

This summer, the smell is back. More than 200 complaints have been filed against Ocean Protein, amounting to new fines that will likely total about $60,000.

"Ocean Protein's contention is that the smell is less than it was last year because if affected the whole city last year and this time it just affects the neighborhood," said Richard Stedman, the executive director of the Clean Air Agency. "I say one person is too many."

Another EPA investigation

The establishment of the fish meal plant led to more problems than just odor. After The Daily World contacted the EPA concerning Ocean Protein's wastewater dumping practices last August, the federal agency launched a full-fledged investigation.

That investigation is still ongoing, according to Jeff Philip, a spokesman for the EPA.

The fish meal plant had started up without ever receiving the necessary Department of Ecology permits needed to dump its wastewater into the Hoquiam sewer system.

As a result, the water needed to go somewhere.

Barges took the industrial wastewater about 12 miles out where it was disposed of, company officials said.

"We're shipping it onto a boat and hauling it offshore outside territorial waters to dump it," Miller had told The Daily World in June 2005.

"What we're dumping is almost like pure water and you'd think it just came out of the water tap," he added at the time.

The EPA's John Malek said his agency was unware of the company's dumping practices. He said Ocean Protein had been "illegally dumping wastewater offshore without a permit."

Court documents filed last summer reveal that though the EPA was unaware of it, the U.S. Coast Guard had been conducting its own investigation into Ocean Protein's activities since May 2005.

On one trip in June, a Coast Guard vessel was tracking one of Ocean Protein's boats as it was dumping wastewater into the ocean.

The affidavit was included in documents seeking a search warrant that was served at the fish meal plant last August. It documents portions of a two-month investigation by the U.S. Coast Guard and the EPA into the company's dumping practices.

The warrant also states that Coast Guard personnel videotaped the wastewater dumping during the daytime and in the middle of the night, inside and outside territorial waters. Sometimes the water was "tan colored" and the wind would carry the smell several miles inland, all the way to the Coast Guard tower at Westport, the report says.

Miller said again this week that no one in his company did anything wrong.

"There is no law against dumping fish waste in the ocean," Miller said. "It was exempt but the EPA is making a big case out of dumping water and are trying to classify it as industrial water.

"We weren't doing anything different that several other companies are doing. It wasn't illegal. This is just like what happened in Alaska. We were dumping ground-up fish and it wasn't illegal."

Malek contends that dumping too much waste is illegal. That's why there are permits, otherwise the wastewater sucks the oxygen out of the water as the waste decays and that harms the marine environment.

"There's really no excuse for what's happening," Malek said.

By Steven Friederich - The Daily World