A lot abalone.

THE MIDDLE of August, 1984. The roar from the beat-up orange International Harvester forklift drowns out other sounds of new construction on Monterey's Cannery Row. Sitting straight up at the controls of the forklift, his curly white hair contrasting with a deep tan, George Lockwood, 49, shouts orders as he loads abalone tanks aboard a two-section flatbed tractor-trailer. His sweating crew watches the boss intently, quickly responding to each command to align the grey fiber-glass tanks piled one on top of the other in the wood-framed shipping crates. At each movement, the old forklift belches another blue cloud into the air.

The truck Lockwood is loading will haul the 24 tanks in this shipment north to Oakland. There another giant forklift will transfer the entire platform onto a sea-going barge. Lockwood is leaving Monterey. A decade before he had set out to create a new industry. He would raise abalone, one of the world's most expensive shellfish, on a mass scale "like chickens and turkeys." It was a risky proposition, but he succeeded, at least with abalone. But the state of California and the 55 different government agencies that claimed the right to interfere in some critical way in Lockwood's business proved too much of a challenge. So today he is heading for the Kona coast of Hawaii, where he has been promised a more hospitable reception.

An abalone is a mollusk, similar to a clam but with only half a shell, that thrives in the waters off California. It takes eight years to grow to maturity, then measures about eight inches across the length of its oval shell and weighs about four pounds. Abalone meat rates as a delicacy, particularly appreciated by the Japanese, and only the fanciest restaurants in California serve it. It is customarily deep-fried in bread crumbs, like Wiener schnitzel, and in fact tastes a bit like veal. The abalone catch today, however, is only 10 per cent of what it was twenty years ago. The meat can cost more than $25 per pound, and restaurant patrons rarely pay less than $20 for a very thin slice.

In the early Seventies, the continuing decline in the abalone harvest inspired Lockwood to consult with a poultry geneticist about the possibility of breeding the things and raising them commercially. They speculated about a process of highly controlled nutritional, environmental, and genetic conditions. With $250,000 in seed money from a handful of investors, Monterey Abalone Farms was born.

LOCKWOOD assumed that his time would be spent on research and business development. By 1975, he had perfected novel techniques for spawning and raising abalone in his lab, and he now stood ready to enter the production stage. After raising an additional $1 million, he remodeled an old sardine cannery on Monterey's Cannery Row. Then, "as soon as it became obvious that we were a business," the government got involved.

First, Lockwood had to get a business license from the city of Monterey, then a kelp harvester's license, a wholesale fish dealer and preserver's license, and an oyster grower's permit. But the California Coastal Commission (CCC) wouldn't approve the necessary land-use permits without the consent of the California Regional Water Quality Control Board (WQCB). The WQCB wouldn't consent.

Since its start in 1974, Monterey Abalone Farms had discharged sea water containing the abalone's natural eliminations into the ocean. Because of the multi-stage filtering and treatment process used by Lockwood, the discharged water was cleaner than when drawn from the bay. That didn't matter. The WQCB's position was that the abalone could not do on land what they did in the ocean without a waste-discharge permit. The WQCB dealt with Monterey Abalone Farms as if it were a sewage-treatment facility and required Lockwood to fill out the same thirty-page form as the city of Los Angeles.

Next came the Monterey County Health Department, which is charged with enforcing regulations on the taking of oysters, mussels, clams, and scallops--but not abalone. Those other shellfish take bacteria out of the water and store it in their guts. The abalone doesn't. Moreover, you don't eat the abalone gut. Health Department officials overlooked these points and decided to investigate Lockwood's operation. He spent the better part of a month proving to them that abalone was biologically different from the other shellfish and convincing them that the omission of abalone from their mandate was not merely an oversight. "When you do something new," says Lockwood, "bureaucracies don't know how to handle you."

Lockwood's system required a supply of undenatured alcohol, as well as some drugs and antibiotics for testing and treating the abalone. To get them he had to apply for permits and face inspections from the U.S. Treasury Department, the Food and Drug Administration, the Justice Department's Drug Enforcement Administration, and California's Board of Pharmacy.

In the spring of 1975, the National Marine Fisheries Service, a federal agency, advised Lockwood that the most effective way to sterilize water is to bubble ozone through it at a low-concentration level. At the concentration involved, ozone is harmless to people, though it can make them light-headed, in which case they should leave the area. The feeling quickly disappears. Monterey Abalone Farms bought a small ozone generator, and though neither Lockwood nor anyone else had ever felt any effects from the ozone, he allowed only two employees into the room in which it was used.

Early one morning a few months later, inspectors from the California Division of Industrial Safety (CAL-OSHA) showed up at the abalone farm and said they had been tipped off to a severe ozone hazard inside. Once the CAL-OSHA men had gotten in, Lockwood realized they didn't have any ozone-monitoring equipment. The chief inspector revealed that they intended to conduct a wall-to-wall safety inspection of all aspects of his business. Lockwood replied that since that was neither the expressed purpose of their visit nor the reason he'd allowed them in, they would have to leave. They refused and quickly cited Lockwood for 13 violations. Lockwood appealed all thirteen.

One violation cited was a standard conveyor belt hauling crates from the first to the second floor. It didn't have enough protective covering. An employee might catch a finger in the pulleys or the belt drives. The conveyor belt wasn't worth the cost of rebuilding it, so Lockwood removed it. A month later, an employee developed a hernia from lugging a heavy carton upstairs.

Eventually, two inspectors showed up with ozone-monitoring equipment. They found lower levels of ozone than in the air of Los Angeles. Lockwood won ten of the 13 appeals.

Next Lockwood found that the same government that was regulating him planned to become his biggest competitor. The California Department of Fish and Game wanted to cultivate shellfish. In 1976, it hired away Monterey Abalone's chief biologist, who had been privy to Lockwood's proprietary secrets about growing abalone. Should the state--with its great resources--exploit those secrets, Monterey Abalone Farms would be finished.

Lockwood sought from Fish and Game a promise that its new employee would not be involved in raising abalone. Fish and Game refused. Lockwood filed suit. Fish and Game backed down.

But the government still wanted to compete with Monterey Abalone Farms. The California Sea Grant Program, administered by the National Oceanic and Atmospheric Administration, started out as a good idea--a congressionally funded bridge between academia and industry for the practical application of oceanographic knowledge. Toward the end of 1976, however, Lockwood got wind of Sea Grant-funded abalone research being done at the University of California at Santa Barbara. The purpose of Sea Grant, he'd been assured by the director, was not to duplicate or compete with private-sector work but to open new areas.

Nevertheless, when the university refused to reveal the nature of its Sea Grant research, Lockwood got suspicious. He filed a formal demand under the California Freedom of Information Act for the relevant papers on the Santa Barbara project. He had been right. The Sea Grant people had in fact targeted taxpayers' dollars to create competition with Monterey Abalone Farms. The people running Sea Grant maintained that abalone was too valuable a resource for its cultivation to be left in the hands of private individuals.

Lockwood protested to Louisiana Congressman John Breaux, who had sponsored the Sea Grant legislation. Early in 1978, more than a year after Lockwood had first heard about the Santa Barbara project, Breaux called a meeting in his

Washington office with Lockwood and the national director of Sea Grant. After several hours of questioning, Breaux pointed his finger at the national Sea Grant boss and fulminated, "We're not giving you money to compete with private enterprise." Sea Grant backed down.

DESPITE spending 60 per cent of his time throughout the last half of the 1970s dealing with the regulators, by 1980 Lockwood actually had his business running. Among his best customers were French restaurants that preferred tender, young two-inch abalone. But as soon as he started shipping the two-inchers in quantity, the Fish and Game Department pounced. By selling undersized abalone Lockwood was violating wildlife protection laws. But they aren't wildlife, he protested, they're farm-grown stock.

Doesn't matter, said the Fish and Game folks, we can't tell cultivated from wild ones, and if we permitted you to sell two-inchers other people would slip wild ones by us. They claimed "administrative convenience"--judicious enforcement is more trouble than a blanket prohibition. So Lockwood headed to Sacramento. There the staff attorneys for the state legislature declared that they never intended for the Fish and Game Department to regulate farmed marine stock. Lockwood later negotiated this point into the 1982 Aquaculture Development Act.

As excessive regulation eroded economic growth in California, demands for relief shook Sacramento. In 1979, the legislature enacted a bill creating the Office of Administrative Law (OAL) charged with screening every regulation for compliance with seven criteria. The seven points stipulated in part that the regulation be consistent with the agency's authority, that it be necessary, that it be written in clear English, that it not adversely affect small business. With prospects for an improved regulatory environment, Lockwood believed his problems were behind him. In 1980 he went searching for coastal property to grow kelp to feed his creatures.

He found some down the coast, south of Monterey. Since the California Coastal Commission had zoned this piece of land for agriculture, he assumed his project would qualify. The Coastal Commission, however, maintained that aquaculture was an industrial use and rejected his petition. A few months later, the state legislature passed the Aquaculture Development Act of 1982, which defined aquaculture as agriculture. It didn't help. Sure, said the CC, Lockwood could go ahead with his abalone farming. But he couldn't put up any buildings to house his breeding tanks or production facilities because that would constitute a "commercial" use of the land zoned only for agriculture.

Lockwood could have fought and won. But he felt that, given the CCC's attitude, it would have been a Pyrrhic victory. "We could beat them here and there," he says now, "but they have the final word. When the system says 'No,' you go elsewhere."

In July 1984, Hawaiian Abalone Farms, George Lockwood president, broke ground at its new Kona coast facility, featuring newly perfected technology. Governor George Ariyoshi was there to welcome Hawaii's newest industry.