April 3, 2014 — The following was released by the office of Oregon Congressman Peter DeFazio:
Today, Ranking Member of the House Natural Resources Committee Peter DeFazio (D-OR), pushed for bipartisan legislation that would save West Coast fishermen millions by refinancing unfair, expensive federal loans. H.R. 2646, the REFI Pacific Act, is sponsored by Representatives Jaime Herrera Beutler (R-WA) and Jared Huffman (D-CA). DeFazio is an original co-sponsor of the legislation and helped draft the bipartisan bill.
“The West Coast buyback loan has been an albatross around fishermen’s necks. The federal government has basically acted as a payday lender—they charged fishermen an extortionate interest rate and then delayed a repayment plan to run up the tab. The original terms of the loan were bad and implementation was worse. The REFI Act is a common sense bill that would refinance the loan, save fishermen and their families’ money, and keep the fishery competitive. And it still makes sure that American taxpayers get a fair shake. This is a bipartisan, bicameral bill, and it is supported by members of Congress representing the West Coast, from California to Alaska,” said DeFazio.
BACKGROUND
Back in 2000, the West Coast Groundfish Fishery was declared a federal fishery disaster due to low stock abundance, overfishing, and an overcapitalized fleet. In 2003, Congress authorized a $36 million loan to finance a capacity reduction program to buyout 91 vessels and 239 fishing permits. The program was key to making the fishery sustainable.
The fishermen who remained in the fishery are tasked with repaying the debt of buying out these vessels and permits. The original loan was set up with a repayment rate of five percent ex-vessel value of all fish harvested, a 30-year repayment period, and a 6.97 percent interest rate – which was two points over the prime rate at the time.
To add insult to injury, the National Marine Fisheries Service (NMFS) Financial Services department did not establish a mechanism to collect loan payments until 2005 – 18 months after the loan was authorized. Over $4 million of interest accrued before the fleet was able to begin paying down the loan. That was unacceptable and put the loan in trouble from the very beginning. The federal government makes a $700,000 profit each year on West Coast fishermen and, under current loan conditions, is expected to collect $93 million on a $36 million loan.
The REFI Act would require NMFS to refinance the buyback loan at today’s lower interest rates. It would also cap the collection fee at three percent of ex-vessel value – giving West Coast fishermen a fighting chance to stay in business. Today, H.R. 2646 was considered before the House Natural Resources Subcommittee on Fisheries, Wildlife, Oceans & Insular Affairs.
Watch DeFazio’s opening statement here
Watch DeFazio’s questions here