West Coast fishermen score a big win with federal buyback loan relief
Crew on F/V Pioneer. ©David Hills
January 24, 2020
The recovery of West Coast groundfish species is an environmental success story of how fishermen, government agencies and environmental groups can work together for positive results. But, the environmental recovery hasn’t led to a robust economic recovery for fishermen who still face low market prices and high costs of business.
Yet, some relief to high costs was tucked into the $1.4 trillion federal spending bill passed by congress in December. The bill included language that could lead to more than $10 million in loan forgiveness for the West Coast groundfish trawl fishery, easing one of the most frustrating financial burdens faced by fishermen. The buyback relief was introduced by Senator Jeff Merkley (D-OR) and was endorsed by a bipartisan group of West Coast legislators.
“The buyback relief could potentially help out a lot,” says Giuseppe “Joe” Pennisi, who owns the F/V Pioneer and trawls for groundfish out of San Francisco. “The cost savings could be the difference between fishing and staying tied up at the end of the year.”
Three years after the West Coast groundfish fishery was declared a federal economic disaster in 2000, the National Marine Fisheries Service (NMFS) financed a $28.4 million buyout of one-third of the fishing fleet to reduce fishing capacity of the Pacific Coast trawl fleet. Fishermen who remained would pay the federal government back through a 3.5 to 5 percent fee levied on their landings.
For reasons that remain unexplained, the NMFS took nearly two years to implement a repayment plan after the initial loan. Over that time $4 million in interest accrued on the balance. Since then compounded interest on that sum led the total cost to fishermen from the federal agency’s delay to reach an estimated $9 to $13 million.
Along with other significant management costs, like 100% observer coverage, which costs more than $500 a day per vessel, the delayed loan repayment plan has been one of the key grievances West Coast groundfish fishermen have had with the high costs of business. In the months preceding the buyback loan relief, West Coast fishermen had paid more than $38 million since 2005 while still owing nearly $20 million.
Crew on F/V Pioneer. ©David Hills
The original 30-year loan with a nearly 7 percent interest rate remains intact, but the bill requires NMFS to calculate the exact accrued and compounded interest due to their delay and deduct that total from the balance, likely cutting the remaining bill by half. Fishermen have hired outside consultants to do their own calculations to insure they are aligned with those of the federal government, says Heather Mann, Executive Director of the Oregon-based Midwater Trawlers Cooperative (MTC). The MTC represents 29 midwater whiting and shorebased trawl vessels that make up a good portion of the remaining groundfish fleet.
Moving forward, Mann says the fee levied on West Coast trawlers’ landings could drop to 1 percent, potentially saving some fishermen $50,000 annually. This is part of the profit they had hoped would improve after the buyout.
For more than a decade, fishermen and fishery advocates have called for a restructuring of the loan to remove the burden of interest accrued during the administrative delay. While the MTC led the charge in lobbying federal representatives to take action for buyback relief, the Monterey Bay Fisheries Trust along with many West Coast fishing organizations also reached out to their senators and representatives pushing for action in Washington D.C.
“While the environmental success of the West Coast groundfish trawl fishery is cause for celebration, it’s been hard to get too excited when the fishermen who participate are struggling to stay in business because of all the expenses,” says Sherry Flumerfelt, executive director of the Monterey Bay Fisheries Trust. “This spending bill will provide much needed relief for fishermen, which will bring us closer to a true success story in which the fish stocks and the fishing communities have rebounded.”
While Senator Merkley (D-OR) led the charge in getting buyback relief included in the vast $1.4 trillion spending bill, other legislators who endorsed the relief for fishermen include Senators Patty Murray (D-WA), Dianne Feinstein (D-CA), Ron Wyden (D-OR), Maria Cantwell (D-WA), and Kamala Harris (D-CA), and U.S. Representatives Peter DeFazio (D-OR), Greg Walden (R-OR), Jaime Herrera Beutler (R-WA), Kurt Schrader (D-OR), Suzanne Bonamici (D-OR) and Jared Huffman (D-CA).
“I’m glad this issue for West Coast fishermen will finally be resolved. Groundfish fishermen shouldn’t be held responsible for interest accrued on a disaster loan before the federal government had a repayment plan in place,” Feinstein said in a prepared statement. “Removing the unfair interest charges will go a long way toward helping these fishermen rebuild and flourish.”