Fish farming in Down East: Pay the fine, take the cannolis …

Map shows where salmon pens are proposed in Frenchman Bay (green boxes) just north of the Porcupine Islands

SOMESVILLE, Jan. 1, 2021 – Fire, ready, aim.

It’s the prevailing business model, some cynics say, for companies wishing to operate fish farms in Maine waters: Pollution? Whoops. I’ll just pay the fine.

It was a little over a year ago Cooke Aguaculture was fined $156,213 for 11 violations of its state permit. Cooke is the only sea-based salmon aquaculture firm in Maine, with pen farms in Washington and Hancock counties, as well as a hatchery on Gardner Lake in East Machias and a fish processing facility in Machiasport. It’s also a multi-billion-dollar company. A $156,213 fine is like a large tip at one of its company events.

“Clearly these miniscule fines are having precious little effect on Cooke’s illegal behavior, which is precisely why I have so little faith in fines administered by the Maine DEP,” said Lawrence Reichard, a Belfast journalist and environmentalist.

“In that same year, 2018, Cooke Aquaculture posted revenues of $2.8 billion, meaning the $156,123 fine assessed against Cooke Aquaculture by DEP amounted to a mere .006 percent of Cooke Aquaculture’s revenue for that year,” Reichard said.

Such benefit analysis is a reprise of the famous “Pinto memo” of 1968 when Ford Motor Company concluded it was cheaper to settle lawsuits over deaths from its exploding Pintos than to recall all the cars and fix the problem. “For companies with environmental issues, fines are simply a cost of doing business,” Reichard said.

Donald Eley, president of the Friends of Blue Hill Bay, said the fish farming industry is banking on weak state and local governments, enticing bureaucrats with the promise of jobs and property tax revenue.

The state of Maine is addicted to the promises of aqua farms “whether they come true or not,” said Eley. “They all claim they can meet the state guidelines … but who’s monitoring it?”

“It becomes a self-monitoring, self-regulated industry,” Eley said.

Since the slap on the wrist against Cooke, two huge salmon farming proposals are being debated here in Down East – one a land-based operation in Belfast and another in Frenchman Bay. In Jonesport, Kingfish Maine, which is owned by a Dutch aquaculture firm, announced plans last fall for a $110 million land-based farm where it hopes to produce 13 million or more pounds of yellowtail each year on a 94-acre site overlooking Chandler Bay.

“In Belfast, Nordic Aquafarms (see rendering) will pump 1,600 pounds of nitrogen a day into Belfast Bay, where pollution has already closed 4,093 acres to shellfishing,” Reichard said. “That’s 16 times the amount currently discharged on average by Belfast, a city of about 7,000. And that effluent will create algae blooms, and attract and feed sea lice, to the detriment of wild fish populations.”

Nordic said it is almost impossible for fish to escape from land-based fish farms, but 20,000 fish escaped from a land-based fish farm in Vagan, Norway, as recently as July 28, 2018. Escaped fish compete with wild fish for spawning grounds, destroy wild-fish spawn, and breed with and weaken wild fish stock, Reichard wrote in a letter to the Bangor Daily News.

“Their entire premise is based on no mistakes happening,” Reichard said. “And that’s extremely unrealistic.”

In late December, two groups – Upstream Watch and Friends of Harriet L. Hartley Conservation Area – began legal action to overturn decisions by the town of Belfast and the state granting Nordic the necessary permits. An excellent overview of that case appeared in the Penobscot Bay Pilot.

Closer to MDI, the in-water fish farm proposed for the middle of Frenchman Bay by another Norwegian company has many locals alarmed. These are the modern-day Vikings, true to their tradition of seeking opportunities outside of resource-constrained Scandinavia. And what a prize Mount Desert Island must be! It even comes with its own fiord.

“I am terrified,” said Sarah Redmond (see photo), who runs an organic seaweed farm on Stave Island off Gouldsboro only about a mile northeast of the salmon farm proposed by American Aquaculture. She worried that her certification for organic products would be jeopardized if the water is polluted.

“It’s an absurd proposal,” Redmond said. “It’s a permit to pollute. It’s not possible to capture all the fish waste” as proposed by American Aquaculture. “Most of the waste is dissolved in the water.”

The Norwegian company proposed to deploy 30 pens, each 150 feet wide, in lease sites in the bay. The pens would support a projected annual production of 30,000 metric tons, or about 66 million pounds of the fish.

“Those 66 million fish would be raised in a plastic polymer bag sitting in the ocean just north of Bar Harbor,” wrote Kathleen Rybarz, president of Friends of Frenchman Bay, in a letter to the Portland Press Herald. “Raising may be too generous a word, rather, the fish will be swimming in circles in containers in the water. The cold clean waters of Maine get pumped in and water gets pumped out as the fish swim in circles. And that methodology leads to so many questions about the potential damage to the environment.

“What will the water pumped back into the bay be like? Will it affect our local marine animals and plants?,” wrote Rybarz, who also is chair of the selectmen in Lamoine. “Will the state have effective regulations in place to do no harm to the environment? How will the container be kept clean? How many jobs for locals will it really create?”

One of the problems cited by scientists on dumping any disruptive matter in Frenchman and Blue Hill bays, which are conjoined by the Union River, is that the two bodies of water flush very poorly. The Friends of Blue Hill Bay have been working for the past 20 years to understand the ecology of Blue Hill Bay, and its twin on the eastern side of MDI.

“The effluents from net-pen aquaculture would have little negative impact on the marine environment if the aquaculture sites were located in the open, well flushed, and vigorously mixing waters of the Gulf of Maine,” wrote Neal R. Pettigrew, oceanographer at the University of Maine. “However, the bays and estuaries of the Gulf of Maine are generally much more sensitive to aquaculture activities and caution needs to be exercised when instituting these activities in our sheltered waters.

“The addition of any fish pens would pose a great threat that dissolved oxygen in the lower water level would be overly depleted and algal blooms would occur in the upper water level, potentially introducing Red Tide to the Bay for the first time,” Pettigrew wrote.

“The extremely slow currents in Upper Blue Hill Bay would result in significant waste build up and the development of anaerobic bacterial mats under the fish pens and damage to the bottom dwelling community. The existing conditions and attendant risks appear to be so high that they should not be ignored.”

“Why is it in this area of Maine – an area that attracts millions of visitors a year? Whose interests are really being served?” Rybarz asked.

Threats to existing fisheries and water-based businesses may be a better launching pad to fight the fish farms because the state is sensitive to grievances from incumbent constituents. It’s folks like Sarah Redmond and Zach Piper of Hancock, a young lobsterman who now makes a living in Frenchman Bay.

“The areas this Norwegian-backed company is proposing to turn into industrial aquaculture with two 50-plus acre leases for large fish pens, is heavily fished by lobstermen and has been for years,” he wrote in a letter to Bangor Daily News. “I am not a fan of foreign corporations making their money at the expense of Maine people.”

American Aquaculture’s audacious proposal to site an industrial farm in the middle of one of Maine’s most prized bodies of water is like asking for trouble. But trouble is not foreign to its CEO, Mikael Roenes, who volunteered during an interview with Bill Trotter of the Bangor Daily News that he has a white-collar criminal past in Norway, and that he has spent time incarcerated because of it.

Roenes told Trotter he got into legal trouble more than a decade ago in Norway when he was working as a stockbroker and “made some promises I could not keep” to investors he had lined up in an attempt to acquire a Norwegian company.

He lost all his money, repaid his investors in full and eventually was convicted on charges he did not specify and spent two and a half years at a minimum-security prison, he said.

“I am very open about my past,” he said. “I accept full responsibility for my actions and have paid my debt to society.”

But did he take the cannolis?

Recycling coming back to a town near you soon – maybe

SOMESVILLE, Jan 1, 2021 – It will be a full year for the 115 towns which share waste disposal operations to be without recycling – from May 2020, when the “single-stream” Fiberight plant in Hampden closed, to May 2021.

Stakeholders are hopeful a contract will be executed in the first quarter with a new buyer whose name has been kept secret by the 115-town consortium managing agency, Municipal Review Committee, the same folks who were accomplices in the massive and embarrassing collapse of the $90 million plant in May.

MRC was never a conduit for transparency. Nor many of the towns in the consortium. I went to recycle my waste at the Northeast Harbor dump in the spring until suddenly I couldn’t. I was told to dump my waste in Southwest Harbor and it didn’t matter whether I sorted the waste. That’s when I found out that recycling was inoperative on MDI. So I posted it on QSJ.

On Dec. 29, the MRC board voted unanimously to approve a memorandum of understanding with a buyer of the defunct plant, but refused to disclose its name, nor investors.

This is same agency which essentially allowed Fiberight to control the public spin for years. As recently as April the plant was operating as if all were normal, even announcing that it was taking on waste from more municipalities. At its April 20, 2020 board meeting – one month before the plant closed – board members appeared to have no clue as to the dire situation of the plant owners. One board member, Bob Butler of Waldoboro, was effusive in his praise of Fiberight executives. “I am very encouraged, very relieved and impressed,” he said after a Fiberight vice president signaled that a $14.5 million bridge loan from bondholders could close that week. Clearly, the bondholders had deep concerns about the enterprise. It sent shock waves when it turned down the bridge loan, forcing the plant closing.

MRC voiced no such skepticism. It had loaned the plant operator $1.5 million as a bridge in February. What was the due diligence performed? What did the bondholders know that MRC didn’t?

Since then questions abound. But answers are few.

Binary partnerships are complicated enough beasts. But the level of complexity goes up in a multi-player deal.

There is the 115-town agency, MRC, which owns the land the plant sits on and holds the contract for the towns that have signed on to do business with the plant. So MRC is both landowner and customer. There is the Fiberight Corp., parent of Coastal Resources of Maine, the plant operator which closed in May. In the summer a court-appointed receiver acting on behalf of the bondholders was appointed to oversee the plant. Then there are the bondholders, a trustee of the bondholders and a private equity firm.

In watching the replay of the board’s April board meeting (see attached) it will be apparent that this board does not have the management wherewithal to handle such difficult negotiations and ongoing challenges. After the Fiberight VP presented, not a single board member had any questions.

They were put on the board with the best of intentions. Many had hard public works experience which was invaluable when the plant was coming online.

But this is now a different set of challenges. What if this single-stream recycling plant is simply not economically viable? What contingencies must be negotiated if that is the case? What losses are the investors willing to take? What losses are we willing to insist upon? Does the state possess any power to help the towns seize the plant for the great good of the public?

What is the status of the various encumbrances, including a $1.2 million lawsuit from the company CRM hired to operate and staff the plant, NAES Corp., over unpaid expenses?

Mount Desert Islander reported that CRM has been in violation of its contract with the MRC since June 26.

“Even though the facility’s shuttering constituted an unacceptable breach under the terms of the supply agreement, committee legal counsel Jon Pottle said last month, the contracts in place make reopening the facility a worthwhile endeavor,” the Islander reported.

“We don’t believe [terminating the agreement] makes sense while we’re undertaking these efforts and while there’s a reasonable prospect to reopen the facility,” Pottle said. “We’re going to continuously monitor those and evaluate and re-evaluate that, but that is the current posture.” 

How much overhead cost is there in paying for the incinerator and keeping the CRM plant in mothball? How much legal and consulting fees has the MRC wracked up?

Calls Thursday morning to Michael Carroll, executive director of MRC, and to Tony Smith, Mount Desert representative to the MRC, were not returned. Carroll in an earlier conversation blamed the travails at CRM on “poor management.”

It’s reasonable that MRC would not want negotiations with the new buyer to be conducted publicly. But why not disclose the buyer and investors? No doubt the acquiring party of a failed plant is going to seek multiple concessions from MRC to take over a failed enterprise.

A future QSJ article may explore how a charismatic founder and CEO of Fiberight Craig Stuart-Paul managed to sweet talk local Maine folks into building the $90 million plant.

In June the Bangor Daily News ran a comprehensive history of the plant’s troubles.

When the plant closed, the consortium of 115 towns returned to the incineration plant in Orrington which it used for 30 years. Some towns hauled their garbage to a landfill in Norridgewock, a town half way between Bangor and Augusta. The consortium pays $60 a ton for the 400 tons of garbage it produces a day. The incineration plant was happy to take that windfall.

Where does it leave us?

The Hampden plant never reached 100 percent of its capacity nor capability. A question remains on whether it ever will.

The decision of the MRC board to conduct business in secret is a mistake. The public’s business ought to be conducted in public, reasonably of course. This board has been given multiple chances. It’s time to invite public scrutiny and help. The MRC is simply over its head.

Bangor Daily News asked MRC Executive Director Michael Carroll whether there was an exemption in Maine’s Freedom of Access Act that prevented the memorandum of Understanding from becoming public. He did not answer.

QSJ has requested guidance on FOI disclosure of imminent buyers. QSJ figures it can’t do worse than the status quo.