NOAA Fisheries will be applying $5.9 million (allocated by the Office of Management and Budget) to reduce the outstanding principal to the Pacific Coast trawl groundfish buyback loan as of January 14, 2020.
This action comes after tireless effort on the part of West Coast groundfish fishery representatives, particularly Heather Mann of the Midwater Trawlers Cooperative. The funds effectively remove the interest charged during the 2003-2005 time period.
After the Secretary of Commerce declared the West Coast groundfish fishery an economic disaster in 2000, Congress authorized a $46 million buyout to retire one-third of the fishing fleet to reduce overcapacity. Ninety-one groundfish trawl vessels and permits, and 121 state permits for Dungeness crab and pink shrimp, were removed through this program. Approximately $36 million was provided in the form of a Federal loan that the remaining fishing vessels agreed to repay with a five percent fee on exvessel revenue over a 30-year term. Of this, the trawl groundfish fishery was expected to pay $28.4 million.
Due to delays by National Marine Fisheries Service in developing repayment regulations, over $4 million in interest accrued before repayment even started. That interest has grown over time, untli the industry owed approximately $6 million more than it would if repayment had started immediately.
As of June 2020, the groundfish trawl fleet had paid back $39.6 million towards its portion of the loan – $11 million more than that sector’s initial responsibility. Despite this, they still owed more than $22 million. This has been a considerable and unjust hardship for the members of the Pacific groundfish trawl fishery.
The REFI Act, which would have refinanced the loan and lowered the burden on the trawl fleet, was signed into law in 2014, but was never implemented. It is likely that some groundfish fishery participants went out of business due to the unintended burden of the buyback loan and failure to enact REFI. The immediate relief is $5.9 million to reduce the outstanding balance to approximately $13.5 million. The loan is now expected to be paid off by 2028 and the current actions will save an additional $5 million, bringing the total benefit to the trawl industry to approximately $11 million in savings.