Fisheries Finance Program; Program Notice and Announcement of Federal Financial Assistance Availability

AGENCY:

National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration, Commerce.

ACTION:

Notice of Federal financial assistance availability.

SUMMARY:

NMFS announces the availability of $28.7 million in Fisheries Finance Program (FFP) loans during fiscal year (FY) 2000. This notice establishes FY 2000 loan application priorities.

DATES:

Effective March 27, 2000.

ADDRESSES:

(1) Applicants in the Alaska, Northwest, and Southwest Regions. Kimberly Ott, Northwest Financial Services Branch (F/SF23), 7600 Sand Point Way, NE (BIN C15700), Building 1, Seattle, WA 98115;

(2) Applicants in the Northeast Region. Leo Erwin, Northeast Financial Services Branch (F/SF21), One Blackburn Drive, Gloucester, MA 01930; and

(3) Applicants in the Southeast Region. Kell Freeman, Southeast Financial Services Branch (F/SF22), 9721 Executive Center Drive North., St. Petersburg, FL 33702.

FOR FURTHER INFORMATION CONTACT:

Michael L. Grable, 301-713-2390, fax 301-713-1306, E-mail Michael.Grable@noaa.gov.

SUPPLEMENTARY INFORMATION:

I. Introduction

(1) Notice purpose. The notice's purpose is to:

(a) Announce that the FFP has a $28.7 loan ceiling for FY 2000;

(b) Establish loan application priorities for the $23.7 million loan ceiling not dedicated to any specific loan purpose; and

(c) Establish an application selection basis for the $5 million loan ceiling dedicated to purchasing halibut and sablefish individual fishing quota (IFQ).

(2) FFP description. The FFP is a direct loan program under Title XI of the Merchant Marine Act, 1936, as amended. Debt maturities can be up to 25 years, but not longer than financed property's economically useful life. Interest rates, which are fixed, are the U.S. Treasury's borrowing cost plus 2 percent. There are no prepayment penalties. Loans may equal 80 percent of financed property's depreciated cost, and may generally be either original financing or refinancing of existing loans.

FFP loans generally require experienced fisheries borrowers with strong primary and secondary means of repayment, including personal guarantees.

FFP loans generally have longer maturities and lower interest rates than private fisheries credit. This stretches the service of lower-cost FFP debt over a longer repayment period more consistent with cyclical fisheries economics.

For further FFP details, see the FFP's operating rules at 50 CFR part 253, subpart B.

(3) FFP lending purposes. These are the FFP's statutory lending purposes:

(a) Fishing vessel construction, reconstruction, reconditioning, and acquisition. The FFP rules, however, prohibit loans that increase existing harvesting capacity, as does the FY 2000 appropriations act. FFP loans may not, consequently, originally finance either vessel construction or reconstruction that increases vessel harvesting capacity. Nevertheless, FFP loans remain available for refinancing existing vessel loans for all eligible purposes because this does not increase harvesting capacity. Additionally, FFP loans remain available for originally financing vessel purchase and/or reconditioning;

(b) Fisheries shoreside facilities construction, reconstruction, reconditioning, and acquisition;

(c) Aquacultural facilities construction, reconstruction, reconditioning, and acquisition;

(d) IFQ acquisition. So far, only entry level or small boat fishermen in the halibut and sablefish fisheries are eligible for these loans. Eligibility in additional fisheries depends on Fishery Management Council requests;

(e) Fishing capacity reduction under section 312(b)-(e) of the Magnuson-Stevens Fishery Conservation and Management Act. Fishery Management Councils must also request these loans; and

(f) Acquiring pollock fishing vessels or shoreside facilities. This dedicated use of FFP loan ceilings was available in FY 1999 only to communities eligible to participate in the Western Alaska Community Development Program.

(4) Federal Credit Reform Act (FCRA) cost effect on loan ceilings. Congress annually authorizes FFP loan ceilings. Since 1972, Congress has done this by appropriating FCRA costs at rates projected in the President's annual budgets.

FCRA cost is the loan loss that the Office of Management and Budget (OMB) projects for different Federal loan categories. A loan ceiling is the amount that a stated FCRA cost appropriation produces at a stated FCRA cost rate. The following table shows, for example, the loan ceiling effect of different FCRA cost rates for a $0.1 million FCRA cost appropriation:

The FFP uses FCRA cost appropriations as lending capital, borrowing the balance from the U.S. Treasury. If, for example, the FFP had a $0.1 million FCRA cost appropriation at a 1 percent FCRA cost rate, the FFP's lending capital would be the $0.1 million FCRA cost appropriation plus $9.9 million borrowed from the U.S. Treasury. The FFP would then make loans worth $10 million, using their repayment proceeds to repay (with interest) the FFP's own loan from the Treasury.

(5) FFP's FY 2000 loan ceiling. The President's FY 2000 budget established a 1 percent FCRA cost rate for the FFP loan ceiling that the budget requested (which did not include IFQ loans).

Congress enacted a FY 2000 FCRA cost appropriation of $0.338 million and dedicated $0.1 million of it to IFQ loans, leaving the undedicated $0.238 million balance available for the FFP's other lending purposes. OMB reduced the apportioned FCRA cost to $0.337 million.

The President's budgets have not, through FY 2000, requested IFQ loan ceilings. OMB, however, established a 2- percent FCRA cost rate for the first FCRA cost appropriation that Congress dedicated to IFQ loans. This FCRA cost rate has since applied to all FCRA cost appropriations that Congress dedicated to IFQ loans (fiscal years 1998 and 1999).

Consequently, the FFP's apportioned loan ceiling for FY 2000 is as follows:

(6) Catalog of Federal Domestic Assistance. The FFP is listed in the “Catalog of Federal Domestic Assistance” under number 11.415: Fisheries Finance Program.

II. $5 Million Ceiling For IFQ Loans During FY 2000

Backlogged IFQ applications from FY 1999 far exceed this $5 million loan ceiling. NMFS will not, consequently, accept new IFQ loan applications during FY 2000. Instead, NMFS will select $5 million worth of backlogged applications for processing. This accords with NMFS' previous Federal Register notice (64 FR 25289, May 11, 1999). NMFS will use for FY 2000 selection the same random process it used for FY 1999 selection. NMFS' previous Federal Register notice requested, but did not receive, public comment about this.

III. $23.7 Million Ceiling For Other Loan Purposes During FY 2000 (1) Priority lending purposes. These are the priority lending purposes for this $23.7 million loan ceiling:

(a) Fishing Capacity Reduction. This is the highest priority because harvesting overcapitalization is a major national fisheries problem.

(b) Supporting the existing FFP credit portfolio. This includes: refinancing loans, assuming loans, and other loan servicing actions that protect the Government's interest in the existing FFP portfolio and limit loan loss exposure;

(c) Backlogged FY 1999 loan applications. This includes about $10 million in FFP loan applications backlogged from FY 1999; and

(d) Marine and closed system aquaculture. This excludes land-based aquaculture not occurring in closed systems.

(2) Non-priority lending purposes. These are the non-priority lending purposes for this $23.7 million loan ceiling:

(a) Land based aquaculture in open systems;

(b) Fisheries shoreside facilities; and

(c) Fishing vessels.

(3) Reserving FY 2000 loan ceiling. (a) Before April 17, 2000. Before this date, NMFS will reserve the entire $23.7 million loan ceiling for applications that involve the priority lending purposes.

(b) After April 17, 2000. If any of the $23.7 million loan ceiling remains unreserved after this date, the unreserved amount will then be available to reserve for applications involving any FFP lending purpose.

(c) Fishing Capacity Reduction Exclusion. Because this is the highest FFP lending priority, NMFS may at any time during FY 2000 consider reserving for this purpose any or all of the $23.7 FFP loan ceiling not previously reserved for another purpose. NMFS will do so only for accepted fishing capacity reduction requests whose further processing requires FY 2000 loan approval.

(4) Application fee. NMFS will reserve loan ceiling for an application only upon the applicant's payment of an application fee. Fifty percent of this fee is non-refundable (NMFS earns the remainder upon loan approval).

(5) Losing loan ceiling reservations. NMFS intends to ensure that it obligates this entire $23.7 million loan ceiling before October 1, 2000. If an applicant with a loan ceiling reservation does not comply with NMFS' loan processing requirements promptly enough for NMFS to prospectively achieve this intention, NMFS may transfer the loan ceiling reservation to another applicant who can and will comply.

(6) Applications and waiting list. All potential applicants must first discuss their loan projects with the appropriate NMFS Regional Financial Services Branch.

If a potential applicant appears to be ineligible for an FFP loan or unable to meet the FFP's loan risk criteria, NMFS will take no further action.

If, however, a potential applicant prospectively appears to be both eligible and able to meet the loan risk criteria, NMFS will either then advise the applicant that it may submit an application and application fee or add the applicant to a FFP waiting list for submitting future applications when lending priorities and/or unreserved loan ceilings permit.

NMFS will reserve sufficient loan ceiling for every applicant that submits an application and application fee after NMFS advises the applicant that it may do so.

Although NMFS advises a potential applicant that it may submit a loan application and application fee, only subsequent loan investigation and analysis will determine whether, and under what conditions, NMFS will approve a loan.

Subject to FY 2001 loan priorities and loan ceilings, NMFS will consider as FY 2001 application candidates all parties on the FY 2000 waiting list for whom NMFS did not reserve FY 2000 loan ceiling. NMFS will do so in the chronological order in which parties were added to the waiting list.

All FFP loans are subject to the FFP operating rules. Potential applicants should see these rules for further eligibility and qualification details.

IV. Administrative Requirements

The Debt Collection Improvement Act of 1996 bars additional Federal loans (other than disaster loans) to delinquent Federal borrowers (excluding debt under the Internal Revenue Code of 1986).

Loan applicants are subject to name-check reviews intended to reveal whether applicant principals have been convicted of, or are facing, criminal charges for fraud, theft, perjury, or other matters affecting the applicant's honesty, integrity, or creditworthiness.

False application statements can result in loan denial, loan termination, and possible punishment by fines or imprisonment as provided in 18 U.S.C. 1001.

Applicants must complete a Form CD-511 because they are subject to 15 CFR part 26 (Federal assistance debarment) and the lobbying provisions of 31 U.S.C. 1352 (using appropriated funds to influence Federal financial transactions). NMFS will furnish this form when it advises potential applicants to submit their applications.

Classification

Neither the Administrative Procedure Act nor any other law requires prior notice and opportunity for public comment about this loan notice. Consequently, the Regulatory Flexibility Act does not require a regulatory flexibility analysis.

This notice is not significant for purposes of Executive Order 12866.

FFP applications are not subject to Executive Order 12372, “Intergovernmental Review of Federal Programs.”

This notice contains a collection-of-information requirement subject to the Paperwork Reduction Act. OMB approved the required collection of information under control number 0648-0012.

Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a currently valid OMB control number.