David Borden Archives - Saving Seafood

URGENT: Payroll Protection Plan update for vessel owners

June 26, 2020 — We at Saving Seafood have been working with the Commerce Department and the White House to address a problem with the Payroll Protection Plan (PPP) that prevented vessel owners from applying, because under the IRS code they pay crew-members via 1099. We worked closely with David Frulla of Kelley Drye, David Borden of the Offshore Lobstermen’s Association, and Pamela Lafreniere of the Port of New Bedford, who all provided a great deal of technical assistance.

The issue is discussed at length on our Saving Seafood Coronavirus information portal, https://www.savingseafood.org/coronavirus/ .

The link to go directly to the PPP section is here.

Because the initial guidance for the PPP program stated that businesses could not use payments to independent contractors in their calculations of payroll for purposes of determining the eligible PPP loan amount, vessel owners were not eligible. Accordingly, we requested an amendment to the interim final rule:

that would allow a commercial fishing vessel owner to include 1099 payments to crew in 2019 as “payroll” in applying for a PPP loan and determining maximum loan amount;
that a fishing vessel owner’s payments to crew from PPP loan proceeds likewise be treated as “payroll” under the PPP for purposes of determining the fishing vessel owner’s appropriate use of PPP loan proceeds, PPP loan forgiveness, and documentation to the lender for PPP loan forgiveness

This morning, the Small Business Administration granted this request and published such an amendment. It is available here.

We want to specifically thank Joseph Russo, Special Assistant to the President and Director of Business Outreach at the White House Office of Public Liaison, and Patrick Wilson, Director of the Office of Business Liaison at the U.S. Department of Commerce for their assistance in bringing these concerns to the SBA and the Treasury Department.

IMPORTANT: This Tuesday, June 30 is the deadline for small businesses to apply for forgivable PPP loans. If you want to apply, you should contact your banker and accountant immediately and assemble the application over the weekend.

The relevant section of the amendment is included below:

This interim final rule addresses payroll costs that may be included on a PPP loan application submitted by certain boat owners or operators that are engaged in catching fish or other forms of aquatic animal life (fishing boat owners) and that have hired one or more crewmembers who are regarded as independent contractors or otherwise self-employed for certain federal tax purposes under 26 U.S.C. § 3121(b)(20) of the Internal Revenue Code (the Code). A crewmember may be described in Section 3121(b)(20) of the Code if the fishing boat on which he or she works has an operating crew that is normally made up of fewer than 10 individuals and the crewmember receives as compensation for his or her work a share of the boat’s catch or of the proceeds from the sale of the catch, in an amount that depends on the amount of the catch. Such a crewmember generally may not receive additional cash remuneration or other compensation for his or her services with respect to the fishing boat. A fishing boat owner must report compensation paid to such a crewmember on Box 5 of IRS Form 1099-MISC. The First Interim Final Rule, posted on April 2, 2020, provided that because independent contractors have the ability to apply for a PPP loan on their own, they do not count for purposes of another applicant’s PPP loan calculation. 85 FR 20811, 20813 (April 15, 2020). Because crewmembers described in Section 3121(b)(20) of the Code are treated as independent contractors or otherwise self-employed for certain federal tax purposes, fishing boat owners have faced uncertainty about whether to report payments to such crewmembers as a payroll cost on their PPP loan applications.

On April 14, 2020, SBA, in consultation with Treasury, posted an interim final rule explaining that the self-employment income of the general active partners of a partnership could be reported as a payroll cost, up to $100,000 annualized, on a PPP loan application filed by or on behalf of the partnership. 85 FR 21747, 21748 (April 20, 2020). The Administrator, in in consultation with the Secretary, has determined that the relationship of a fishing boat owner and a crewmember described in Section 3121(b)(20) of the Code is analogous to a joint venture or partnership. For example, the fishing boat owner and crewmembers each contribute labor or resources to a common commercial enterprise, and the owner and crewmembers share in the enterprise’s profits. In order to harmonize SBA’s interim final rule regarding partnerships with SBA’s interim final rule described above regarding independent contractors the Administrator, in consultation with the Secretary, has determined that in the event of a conflict (i.e., a case where one or more partners in a partnership are treated as independent contractors for tax purposes), the rules regarding partnership will govern. Accordingly, as described below, this interim final rule (1) provides that a fishing boat owner may include compensation reported on Box 5 of Form 1099-MISC and paid to a crewmember described in Section 3121(b)(20) as a payroll cost in its PPP loan application, and (2) addresses a fishing boat owner’s eligibility to obtain loan forgiveness of payroll costs paid to a crewmember who has obtained his or her own PPP loan.

Obama designates the first-ever marine monument off the East Coast, in New England

September 15, 2016 — President Obama declared the first fully protected area in the U.S. Atlantic Ocean on Thursday, designating 4,913 square miles off the New England coastline as a new marine national monument.

Obama’s previous marine conservation declarations have focused on some of the most remote waters under U.S. jurisdiction, including last month’s expansion of a massive protected area in Hawaii. But the Northeast Canyons and Seamounts Marine National Monument is more accessible, lying 130 miles off the southeast coast of Cape Cod.

Several regional fishing associations lobbied against the creation of a new monument, on the grounds that the federal government could reconcile environmental protections and ongoing fishing operations by regulating activities there under an existing fisheries management law.

Trawlers as well as offshore lobster and crab boat operators currently catch a range of species near the underwater canyons, including squid, mackerel, butterfish, lobster and Atlantic red crab. According to industry estimates, these fisheries are worth more than $50 million in total.

In an effort to lessen the economic impact, the administration will give lobster and red crab operators seven years to exit the area. Recreational fishing can continue around the three deep-sea canyons and four seamounts that are now protected, but seabed mining and any other extractive activities are banned.

Administration officials estimated there were six lobster boats operating in the area that will be protected, along with 20 other fishing vessels that move in and out of the area.

“The only user group that’s going to be negatively affected by this proposal is the fishing industry, period,” said David Borden, executive director of the Atlantic Offshore Lobstermen’s Association, noting that the new protections will not affect oil tankers moving through the area or telecommunications cables lying on the seabed.

Read the full story at the Washington Post

NPR Rhode Island: Interstate Fisheries Group Opposes Marine National Monument Proposal

May 13, 2016 — More than 160,000 people have signed a petition asking President Obama to declare a marine national monument in New England waters. It’s an effort spearheaded by a coalition of environmental groups and scientists. But the Atlantic States Marine Fisheries Commission is asking the president to reject this proposal.

“Under the Antiquities Act, the president can act without any public comment, any public input. I think that’s the big issue right now,” said Mark Gibson, chief of the fisheries division at the state Department of Environmental Management. He represents Rhode Island in fisheries groups. He said the New England Fisheries Management Council is already working to protect important habitats for corals, using the nation’s primary fishing law, the Magnuson-Stevens Act.

“So it will take some time,” said Gibson. “We are going through the full process of committee recommendations for areas that need to be protected, and the council will have to consider those, move them to public hearings, move them to the next council meeting, so it’s a long process that goes on.”

It’s a long process, but it works, adds David Borden, a member of the Atlantic States Marine Fisheries Commission and a lobsterman. He said this proposal is missing the comprehensive review that happens among regulators, fishermen and environmental advocates.

“I think it’s important for the public to realize that there is no formal proposal that’s available for either the fishing industry or the public to look at and so we’ve requested that the public be afforded that opportunity,” said Borden.

Read and listen to the full story at Rhode Island Public Radio

ASMFC Urges President to Minimize Potential Economic Harm from Atlantic Marine Monument Designation

ALEXANDRIA, Va. (Saving Seafood) – May 4, 2016 – The Atlantic States Marine Fisheries Commission (ASMFC) has taken a formal position on the possibility of a Presidential proclamation of an Atlantic Marine Monument.

The Obama administration, at the urging of major environmental groups, is considering creating a National Monument in the New England Canyons and Seamounts region via the Antiquities Act. Few specifics have been released about what the monument would look like, but it could have significant negative impacts on fishermen in the affected areas.

The ASMFC’s Interstate Fisheries Management Program (ISFMP) Policy Board unanimously (with three abstentions) approved a resolution today drawing a line in the ocean (see map), in close proximity to the Atlantic canyons and seamounts off of Georges Banks, and urging that the creation of a monument only take place in a region seaward of that line. The ASMFC resolution urges that management of waters under Federal control from the coastline to that line be managed under the Magnuson-Stevens Act.

The resolution states:

That it is the preference of ASMFC that the current New England Fishery Management Council coral management process continue without a Presidential proclamation on the issue;
That should the President decide to designate a deep-water marine monument off the New England coast prior to the end of his Presidency, it should be limited to the smallest area compatible with the proper care and management of the objects to be protected, as required by the Antiquities Act;
That the area be limited to depths greater than approximately 900 meters and encompass any or all of the region seaward of the line (see map) out to the outer limit of the EEZ;
That only bottom tending fishing effort be prohibited in the area and that all other mid-water/surface fishing methods (recreational and commercial) be allowed to continue to use the area;
That the public and affected user groups be allowed to review and comment on any specific proposal prior to its implementation.

The motion was initially crafted by members of the ASMFC Rhode Island Delegation, in consultation with other regional fisheries organizations. ASMFC’s Lobster Board, where the resolution originated, gave its unanimous approval to the proposal at its meeting on Monday.

In a letter this week to the ASMFC American Lobster Management Board requesting guidance on the monument issue, Board Chairman David Borden wrote about the potential consequences a monument would have for commercial and recreational fisheries in the area.

“The economic impacts of a potential Monument designation would undoubtedly be significant depending on where the boundaries are set. These economic impacts would be felt coast wide as the fishing fleets working in and around the canyons hail from ports across New England and the Mid-Atlantic.”

Specifically highlighted are the potential impacts on the offshore lobster and crab fisheries, which would be hurt by the prohibition on fishing in the monument area, or by being displaced into nearby fishing grounds. Lobster and Jonah crab revenue from Southern New England are estimated at $38 million per year. A monument designation could also hurt the lobster stock by pushing fishermen from areas where lobster is abundant into areas where lobster is more depleted. Concerns were also voiced about potential negative impacts of the proposal on whales and protected species.

Additionally, many of the States represented on ASMFC have major interests in finfish, pelagic longline, squid, and red crab fisheries, or have large recreational fisheries. “All of these fisheries could be directly affected by a closure or indirectly affected by a redirection of effort.”

According to ASMFC Chairman Doug Grout the ASMFC leadership plans to meet with representatives of CEQ next week to discuss ways to mitigate impacts on commercial and recreational fisheries.

About the ASMFC
In the early 1940s, recognizing that they could accomplish far more through cooperation rather than individual effort, the Atlantic coast states came together to form the Atlantic States Marine Fisheries Commission. An Interstate Compact, ratified by the states and approved by the U.S. Congress in 1942, acknowledged the necessity of the states joining forces to manage their shared migratory fishery resources and affirmed the states’ commitment to cooperative stewardship in promoting and protecting Atlantic coastal fishery resources.

Read a letter from ASMFC Lobster Board Chairman David Borden to the ASMFC Lobster Board

Read a letter from Blue Water Fishermen’s Association Executive Director Terri Lei Beideman to the White House

Lobster fishing to be restricted in bid to save population

PORTLAND, Maine — May 3, 2016 — Southern New England’s fading lobster fishery will be the subject of a battery of new regulations to try to save the crustacean’s population locally.

The number of adult lobsters in New England south of Cape Cod was estimated in 2013 to be about 10 million, which is one-fifth the total from the late 1990s. Scientists issued a report last year that said the historic and economically important species is shifting northward in large part due to the warming of the ocean.

The Atlantic States Marine Fisheries Commission’s lobster management board voted on Monday to use new measures to address the lobster decline, which has dramatically reduced lobster catches off Rhode Island and Connecticut.

The new regulations could include a combination of things like closed seasons, closed fishing areas, trapping cutbacks and stricter standards about the minimum and maximum size of harvestable lobsters.

“We’ve clearly got an overfished stock. We’ve got multiple problems that we actually need to fix,” said David Borden, chair of the lobster board. “The climate’s changing. When you do this, there is a cost to the industry.”

Read the full story from the Associated Press at CBS Boston