Huffman Celebrates Overdue Fix for West Coast Fishery Loan
Today, Representative Jared Huffman (D-San Rafael) celebrated the announcement by National Oceanic and Atmospheric Agency (NOAA) Fisheries that it has reduced the outstanding principal balance on the Pacific Coast Groundfish Fishing Capacity Reduction Buyback Loan by $5.9 million, with an effective date of January 14, 2020.
The loan reduction resolves an economic hardship suffered by the west coast groundfish fishing fleet due to longstanding accounting failures by the executive branch. The recalculation is a result of Congressional action led by Representative Huffman and his Pacific Northwest congressional colleagues, including recent legislative direction requiring NOAA to forgive the interest accrued on the loan that was directly attributable to NOAA’s delay in implementing a repayment system. The congressional letters sent to Appropriations Committee Chairwoman Nita Lowey can be viewed here and here. When NOAA failed to act on the Congressional direction, Rep. Huffman also put pressure on NOAA Fisheries and the White House Office of Management and Budget.
“The success of our local fishermen is essential to a healthy North Coast economy and community, but the unwarranted interest from this loan, coupled with the damage from the coronavirus pandemic, has left everyone who relies on the fishery struggling to make ends meet,” said Rep. Huffman. “Removing these unfair costs will go a long way toward helping these fishermen stay afloat so they can continue to benefit communities across the Pacific Northwest.”
“The West Coast groundfish trawl industry is grateful for Congressman Huffman’s unyielding support over the years. His leadership and the strong efforts of his staff led to a fix which relieves trawl fishermen of a multi-million dollar burden which was unjustly thrust upon us. This action will ultimately save the trawl industry approximately $11 million dollars — money which will now stay in California fishing communities where it has belonged all along -supporting jobs and livelihoods,” said Heather Mann from the Midwater Trawlers Cooperative.
After the Secretary of Commerce declared the West Coast groundfish fishery an economic disaster in 2000, NOAA Fisheries provided a $36 million buyout loan to retire one-third of the fishing fleet to reduce overcapacity. After providing the loan, however, the agency inexplicably failed for nearly two years to implement a repayment mechanism and refused to allow the owners of the remaining vessels to start paying off the loan. As a result, $4 million in interest accrued before repayment was even permitted to start. Over time, that failure resulted in the fishery participants owing at least $10 million more than they would have if repayment had started immediately as Congress intended. Over the years, Rep. Huffman has worked to fix this mistake and mitigate its significant economic impacts, dating back to his first term in Congress.
Information on the interest forgiveness and loan reduction:
This principal reduction was made in accordance with provisions of the Further Consolidated Appropriations Act 2020, P.L. 116–94 (Act). The Act directed NOAA Fisheries to forgive the interest accrued from December 4, 2003 through September 8, 2005, and the portion of additional interest accrued in the Groundfish Trawl fishery sub-loan since September 8, 2005 directly attributable to the delay in implementing a repayment system.
NOAA Fisheries analyzed almost 5,000 payments totaling $39 million received between September 8, 2005 and January 14, 2020. On January 14, 2020, the outstanding interest and principal balance was $0 and $19.2 million, respectively. NOAA Fisheries analyzed the payments and recalculated the principal and interest allocations as if the loan began on September 8, 2005. NOAA Fisheries determined that a principal reduction of $5.9 million, with the January 14, 2020 effective date, would equal the amount of interest forgiveness pursuant to the Act. The $5.9 million amount was independently verified. NOAA Fisheries shared the analysis and methodology with representatives of the Pacific Coast Groundfish Fishery.
With the Act’s interest forgiveness, which equals the $5.9 million in principal reduction, the outstanding interest and loan balance, as of January 14, 2020, is now $0 and $13.3 million, respectively.