NOAA Seeks Comments on New Replacement Fishing Vessels Construction Program

Targeted News Service

WASHINGTON, June 30 -- The U.S. National Oceanic & Atmospheric Administration published the following proposed rule in the Federal Register:

Fisheries Financing Program; Construction of New Replacement Fishing Vessels

A Proposed Rule by the National Oceanic and Atmospheric Administration on 06/30/2014

Publication Date: Monday, June 30, 2014

Agencies: Department of Commerce

National Oceanic and Atmospheric Administration

Dates: Written comments regarding the issues in this ANPR must be received on or before July 30, 2014.

Comments Close: 07/30/2014

Entry Type: Proposed Rule

Action: Advance notice of proposed rulemaking; request for comments.

Document Citation: 79 FR 36699

Page: 36699 -36702 (4 pages)

CFR: 50 CFR 253

Agency/Docket Number: Docket No. 140401299-4443-01

RIN: 0648-BE15

Document Number: 2014-15173

Shorter URL: https://federalregister.gov/a/2014-15173

Action

Advance Notice Of Proposed Rulemaking; Request For Comments.

Summary

NMFS issues this advance notice of proposed rulemaking (ANPR) to provide background information and request public comment on potential amendments to the regulations governing the Fisheries Financing Program (FFP) that address several specific issues currently affecting fishers and fishing companies, and to identify specific measures that might address these issues. NMFS is requesting public comment regarding the potential implementation of changes to the current prohibitions against using the FFP to finance the cost of new vessel construction and a vessel refurbishing project that materially increases an existing vessel's harvesting capacity.

DATES:

Written comments regarding the issues in this ANPR must be received on or before July 30, 2014.

ADDRESSES:

You may submit comments, identified by NOAA-NMFS-2014-0062, by any one of the following methods:

Electronic submission: Submit all electronic public comments via the Federal e-Rulemaking Portal: Go to www.regulations.gov#!docketDetail;D=NOAA-NMFS-2014-0062, click the "Comment Now!" icon, complete the required fields, and enter or attach your comments.

Mail: Submit written comments to NMFS MB5, 1315 East-West Highway, Silver Spring, MD 20910.

Instructions: Comments sent by any other method, to any other address or individual, or received after the end of the comment period, may not be considered by NMFS. All comments received are a part of the public record and will generally be posted for public viewing on www.regulations.gov without change. All personal identifying information (for example, name, address, etc.) voluntarily submitted by the commenter may be publicly accessible. Do not submit confidential business information or otherwise sensitive or protected information.

NMFS will accept anonymous comments (enter "N/A" in the required fields if you wish to remain anonymous). Attachments to electronic comments will be accepted in Microsoft Word, Excel, or Adobe PDF file formats only. Related documents, including the FFP regulations, are available upon request at the mailing address noted above or on the Financial Services Division's Web page at: http://www.nmfs.noaa.gov/MB/financial_services/.

FOR FURTHER INFORMATION CONTACT:

Paul Marx or Earl Bennett at 301-427-8724.

SUPPLEMENTARY INFORMATION:

The FFP was originally created as the Fishing Vessel Mortgage and Loan Insurance program in 1971. It was renamed the Fishing Vessel Obligation Guarantee in 1973. In 1998 it became the FFP. While originally created as a Federal Guarantee program that guaranteed loans made by the private sector, the program ultimately became a direct lending program. The FFP does not require appropriated funds because it has a negative subsidy under the Federal Credit Reform Act (FCRA) of 1991. It operates on the basis of credit authority, provided by the Congress in annual appropriations, which authorizes the program to borrow from the U.S. Treasury. Unused lending authority cannot be obligated after the end of each fiscal year, so the lending authority must be authorized each year. The FFP regulations do not allow financing the cost of new vessel construction or a vessel refurbishing project that materially increases an existing vessel's harvesting capacity. Additionally, for several years, prior to FY14 (see comments below), appropriations language has prohibited the use of FFP loan authority for any project that increases the capacity in any U.S. fisheries.

I. Background

The FFP is a direct government loan program that receives annual loan authority from Congress to provide long-term loans to the aquaculture, mariculture, and commercial fisheries industries. These loans involve a wide variety of fisheries activities, including fishing, fish processing, purchases of fishing quota, and aquaculture facilities. Borrowers may be single proprietors, private corporations and limited partnerships, or public corporations. The program can finance up to 80 percent of the cost of an eligible project.

General Program Requirements

In order to be eligible for this program:

1. Borrower must be a U.S. citizen, or an entity who is a citizen for the purpose of documenting a vessel in the coastwise trade under 46 U.S.C. 50501,

2. Borrower must have a good credit and earnings record, net worth, and liquidity in support of the project,

3. Lending must be fully secured with borrower's assets, which may include personal guarantees and additional collateral not directly associated with the project,

4. Borrower must generally have the ability, experience, resources, character, reputation, and other qualifications necessary for successfully operating, utilizing, or carrying out the project. Loan Terms

The FFP makes long term, fixed rate loans with interest rates of two percent over the U.S. Department of the Treasury's cost of funds. Loan maturities may be up to 25 years, but may not exceed the economic useful life of a project. Loans have no prepayment penalties. All loans are secured by a promissory note, capital assets, and security agreement.

Applicants must pay a fee of 0.5% of the amount applied for with the application for a new loan. Half of this is the filing fee, which is nonrefundable. Need for Action

The FFP has operated under regulations stating that loans will not be made for the cost of new vessel construction or vessel refurbishing that materially increases an existing vessel's harvesting capacity. Vessel owners have indicated that a significant portion of the existing fleet of U.S. fishing vessels consists of older vessels which are not optimal in terms of safety, efficiency, and environmental and fuel-efficient operation. The country needs to maintain the economic benefits of having a commercial fishing industry. This industry is a large employer, produces significant exports, and feeds people. The economic benefits trickle down to many segments of the national economy, including but not limited to the insurance, fuel, and vessel supply and equipment sectors. In many communities, the fishing industry is an essential element in their survival. This action will also generate employment by supporting projects in U.S. shipyards. Renewal of our aging fishing fleet would improve both safety and fuel efficiency and assist in maintaining the economic benefits derived from the commercial fishing industry.

Fiscal Year 2014 Appropriations increased FFP's traditional loan authority from $59 million to $100 million and removed the language prohibiting its use for new vessel projects that increase capacity. Meeting this new program initiative will require changes to the existing FFP regulations at 50 CFR part 253. Specifically, the regulations will need to be changed to allow the direct loan program to finance the construction of new fishing vessels and projects that increase an existing vessel's capacity under specific circumstances. The regulations would also specify the manner in which these types of loans will be managed, including project review, qualification and collateral requirements, and related provisions.

In this ANPR, NMFS requests comments and input on the proposed program changes, and the provisions that need to be in place to implement those changes. Specifically, NMFS seeks to answer the following programmatic questions. Can fishing fleets be replaced or modernized without causing overfishing? Does it require that recapitalization occur only in limited access or quota share fisheries? If, implemented, are the suggested lending standards and requirements adequate?

[*Federal RegisterVJ 2014-06-30]

For more information about Targeted News Service products and services, please contact: Myron Struck, editor, Targeted News Service LLC, Springfield, Va., 703/304-1897; editor@targetednews.com; http://targetednews.com.

TNS 22VistaJ-140630 gv-1166971