WASHINGTON, May 29 -- Rep. Peter DeFazio, D-Ore. (4th CD), issued the following news release:
Today, the House Natural Resources Committee Peter DeFazio (D-OR) passed bipartisan legislation that would save West Coast fishermen millions by refinancing unfair, expensive, high-interest federal loans. H.R. 2646, the REFI Act, is sponsored by Representatives Jaime Herrera Beutler (R-WA) and Jared Huffman (D-CA). Ranking Member of the House Natural Resources Committee Peter DeFazio (D-OR) is an original co-sponsor of the legislation and helped draft the bipartisan bill. DeFazio was able to add the provisions of the Refi Act to H.R. 4742, the Strengthening Fishing Communities and Increasing Flexibility in Fisheries Management Act that was passed by the House Natural Resources Committee today.
"The West Coast buyback loan has been an albatross around fishermen's necks. Fishermen have been charged an extortionate interest rate and the tabs skyrocketed after their repayment plan was delayed. The original terms of the loan were bad and implementation was worse. This 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. I am glad we are moving forward in the legislative process and will continue fight for passage out of the full House," said DeFazio.
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. Under this legislation, the repayment rate would not exceed three percent ex-vessel value of all fish harvested, the repayment period would extend to 45-years, and the interest rate would be the treasury rate.
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.
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