WASHINGTON, D.C. — Bipartisan language was added to the 2020 spending bill Dec. 16 that will forgive more than $10 million in accrued loan interest that was forced on the Pacific Coast groundfishing fleet.
The language included in the 2020 spending bill was presented by Oregon’s Democratic Reps. Peter DeFazio and Kurt Schrader and Sens. Jeff Merkley and Ron Wyden.
The language effectively cancels a massive loan interest burden owed by the Pacific Coast groundfish fishery to the federal government — interest that, through no fault of the industry, was added to their vessel buyback loan debt due to “bureaucratic incompetence,” said DeFazio.
“For years, Oregon’s groundfish vessels have been subject to a heavy financial loan burden, caused solely by government ineptitude,” DeFazio said. “Groundfish fisheries are a vital part of Oregon’s coastal economy that need support, not red tape, from Washington. I’m proud to have helped right this ridiculous wrong and ease the financial burden on our region’s fishermen. I will be vigilant to ensure the National Marine Fisheries Service follows through with Congress’s decision and does not short-change Oregonians.”
Merkley, a a member of the Senate committee that negotiated the spending bills, said, “Today’s news is a huge victory for our coastal communities in Oregon and up and down the West Coast. It was outrageous that the federal government forced family fishermen to foot the bill because of bureaucratic incompetence. This win will lift a huge burden off our trawlers’ backs, helping them keep their small businesses afloat and keep our coastal economies humming.”
Wyden also issued a statement: “Oregonians working on trawlers along the coast can now enter the new year without this senseless burden on the bottom line of their fishing operations.” the senator said. “Fishing on the Oregon Coast for a living is a key piece of our state’s economy that never should have been a victim of this bureaucratic bungling, and I am glad to have teamed up with fishermen and my congressional colleagues to get this problem fixed.”
In 2000, a federal fishery disaster was declared for the West Coast groundfish fishery. The Pacific Fishery Management Council identified “overcapacity” as a prime contributor to the disaster. With DeFazio’s help, Oregon fisheries sought a federal buyback loan. Under a buyback program, excess capacity is “bought out” by the government and the remaining participants in the fishery pay back the loan. Congress passed the buyback loan in 2003 and about one-third of the trawl fleet, or 91 West Coast trawl vessels were bought out and removed from the fishery.
National Marine Fisheries Service waited 18 months to come up with the repayment regulations instead of allowing remaining participants to start paying simultaneously with the loan execution. This delay resulted in an additional $4 million in interest being added to the loan at the outset. In 2018, that $4 million had ballooned to over $10 million in additional interest over the life of the loan.
In 2014, Congress passed legislation that DeFazio originally co-sponsored, the REFI Pacific Act, to refinance the loan to take advantage of better interest rates and adjust the loan terms. President Obama signed the legislation into law in late 2014. However, the legislation was never implemented because the Office of Management and Budget determined that over $10 million in appropriations funding was necessary to make up for the income the government would lose by refinancing the loan — even though the interest was the federal government’s mistake.