303. Fisheries financing and capacity reduction.

[Merchant Marine Act sections 1111 and 1112]


Summary:

Section 303 adds section 1111 to the Merchant Marine Act, providing authority to guarantee debt obligations that have been approved by the Secretary for implementing fishing capacity reduction programs established under section 312 of the Magnuson Act. The program is funded from various sources including the Saltonstall-Kennedy Act, dollars appropriated for the program, and industry fees or funds provided from any State, public, or private sources or non-profit organizations. Under Section 1111, the unpaid principal amount outstanding at any one time for a program cannot exceed $100 million, nor can the maturity date for the loans exceed 20 years. All amounts authorized for the program, including fishing fees, shall be placed in a separate U.S. Treasury account, known as the "fishing capacity reduction fund," and said amounts shall be available, without appropriation or fiscal year limitation, to the Secretary to pay program costs and guaranteed debt obligations. Section 303 also adds section 1112 to the Merchant Marine Act. This provides that, despite whatever else is stated in Title XI, all obligations involving IFQ loans, fishery capacity reduction, fishing vessels and fishery facilities must be direct loans, not guarantees. The interest rate on the direct loan obligations for fishing vessels and fishery facilities is fixed at 2 percent of the principal amount of the obligations outstanding, plus the interest cost to the Secretary of borrowing from the U.S. Treasury funds to make the direct loans.

Legislative history:

The Senate Report contemplated that loans for IFQ purchases, fishery capacity reduction, fishing vessels, and fishery facilities would be guaranteed loans placed through the Federal Financing Bank. Section 1112(a) was developed in response to suggestions from OMB that all Title XI guaranteed lending should switch to direct loans. The language in section 1112(a) was adapted from a proposal by NOAA and states clearly that all Title XI loans must be direct.

Issues:

The amendments made to Title XI by the Fisheries Financing Act (Title III of the Sustainable Fisheries Act) call for all Title XI loans or obligations to be made as direct loans or obligations. The IFQ and the fishery capacity reduction financing programs have funds appropriated for program loans. However, the Fisheries Obligation Guarantee Program's appropriation language for fishing vessels and fishery facilities refers expressly to guaranteed loans. The DOC Office of General Counsel has stated that funds appropriated for guaranteed loans may be used for the direct loan program.
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