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.

Federal Relief Package Includes $350 Billion for Small Business – Here are the Details

March 26, 2020 — The following analysis was produced by David Frulla, David Hickey, and Timothy Lavender of Kelley Drye & Warren LLP:

The United States Senate passed H.R. 748, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) late in the evening of Wednesday, March 25. The House of Representatives is expected to consider and pass the bill on Friday, and, President Trump to sign it shortly thereafter.

Title I of Division A of the CARES Act is entitled the Keeping American Workers Paid and Employed Act.  Title I provides over $350 billion in, in part, short-term economic relief for small businesses, non-profit organizations, veterans organizations, and Tribal business concerns  facing business disruption from the novel coronavirus COVID-19. For its part, Title I creates what is known as the “Paycheck Protection Program” (“PPP”).

In summary, the PPP provides $349 billion for expedited, low-interest business interruption loans to small entities. The loans will be backed with a 100% federal guarantee and funding, through the Small Business Administration’s traditional Section 7(a) lending authority. The Section 7(a) program is the SBA’s primary program for providing financial assistance to small businesses that would not otherwise have access to credit for the same uses or on the same terms. There are nearly 2,000 SBA-approved lenders nationwide.  The PPP broadens and increases the flexibility of the Section 7(a) lending program in significant ways.

Principally, under the PPP, funding can be used for a wide range of daily operating expenses. Under the PPP, the loan’s term can be up to ten years. Fees for these loans are waived. Significantly, no collateral or personal loan guarantee is required.  These loans are also non-recourse to a borrower’s principals, if the loan is used for permissible purposes (described below). No pre-payment penalty is allowed. The interest rate is capped at 4%. The maximum loan amount calculation is largely made using monthly payroll costs and capped at $10 million. For eligible “impacted” borrowers (basically, any borrower that qualifies for a loan), loan repayment deferral is available for no less than six months and up to one year. Flexible terms are also available for loan modifications. PPP lending authority will extend “during the covered period” of February 15, 2020, through June 30, 2020.

Further, and with some qualifications, the PPP provides tax-free forgiveness of that portion of these PPP small entity loans used for paying workers, mortgage interest and rent expenses, and utilities during the 8-week period beginning on the date the loan was originated. In addition to current Section 7(a)-approved SBA lenders, the PPP authorizes the SBA and Treasury Department quickly to approve the participation of other lenders (insured depository institutions, credit unions, farm credit system lenders, and other lenders) in originating and servicing these loans.

Because the PPP is utilizing an existing lending program, lending should be able to begin over the near term. The CARES Act sets a 15-day deadline for the SBA to issue regulations needed to carry out the PPP.  Once SBA-approved lenders can proceed to make loans under the program, under standard SBA timelines, an SBA loan can be made available in as little as 36 hours, but generally within 5 to 10 business days.  These loans can be made by the lender without seeking specific SBA approval for any loan.

PPP Qualification
An entity qualifies as a eligible borrower under the PPP if it meets the following: (1) the borrower can make a “good faith” certification of COVID-19-related business injury (quoted below); (2) the borrower meets applicable SBA size standards for number of employees and independence; (3) the borrower was in business on February 15, 2020;  (4) the borrower will use the funds to retain workers and maintain payroll or make mortgage payments, lease payments, and utility payments; and (5) the employer is not double-dipping, that is, seeking or having already obtained the same type of PPP loan from another lender.

Read the full analysis here

Jones Act changes would ‘jeopardise countless US jobs’ in offshore wind

December 3, 2019 — US fisheries advocacy body the Fisheries Survival Fund (FSF) has claimed proposed changes to the Jones Act – requiring that cargo, including wind turbines, shipped between US ports be transported on American-flagged vessels – could cost ‘countless of job opportunities’ to local companies in the rapidly emerging Northeast Atlantic offshore wind sector.

Writing to US Customs and Border Protection (CBP) to voice it opposition to the “new interpretations” of the law – which would flex the legislation to allow offshore wind developers to shuttle components to a project site on non-US-owned vessels, FSF said such a move would “allow foreign developers to use foreign vessels for the rapid build-out of offshore wind farms [and would] jeopardise” the economic development potential to local contractors.

“These proposed modifications would place foreign-owned offshore wind energy companies at a unique advantage not afforded to the thousands of US-owned maritime industries, including commercial fisheries,” said FSF counsel David Frulla.

“FSF is not submitting this letter to oppose offshore wind energy development in its entirety. If there is a need for some form of modification to these requirements, those modifications should be narrowly tailored to meet those needs … and they should consider the impacts on our domestic maritime industries and coastal communities in so doing.”

Read the full story at Recharge News

Fishermen face uphill battle in lawsuit over New York wind site

July 1, 2019 — Fishermen and the city of New Bedford are facing an uphill battle in their fight against a New York offshore wind location after losing a lawsuit in September.

Attorney David Frulla, who represents the Fisheries Survival Fund and other plaintiffs in the case, said he was disappointed at the court decision but has not given up.

“I just don’t think the judge understood that these leases aren’t theoretical, that they actually confer rights,” he said.

The Fisheries Survival Fund is leading a dozen plaintiffs. They sued the Bureau of Ocean Energy Management in 2016, saying the agency had not done enough to seek alternatives to important fishing grounds.

United States District Judge Tanya S. Chutkan in September granted the federal government’s motion for summary judgment, meaning she believed they made their case as a matter of law, without a trial.

The plaintiffs filed a motion to amend the decision, which is still pending.

Mayor Jon Mitchell said Friday that the city shares the disappointment of the other plaintiffs but believes there are strong grounds for the judge to reconsider.

“The decisions made by federal agencies about what happens in New York waters have major implications for New Bedford fishermen, so we have no choice but to fight when we believe our interests are not being taken into account,” he said.

Read the full story at the New Bedford Standard-Times

Blockchain could open markets

May 11, 2018 — Consumers are demanding transparency regarding their food. One survey of 1,522 consumers found that as they have become accustomed to getting more information via their phones, their demand for transparency as to all types of products — from medicine to sports to food — has increased. Consumers are not alone. Changes to laws governing supply chain transparency and documentation have imposed considerable obligations on companies to not only know their supplier, but to know their supplier’s supplier, and so forth.

The Obama-era Action Plan for combatting IUU fishing and seafood fraud requires the development of a program to track fishery products along the supply chain. Beginning January 1, 2018, NOAA rolled out its Seafood Import Monitoring Program, which establishes reporting and recordkeeping requirements for fish importers. For 10 groups of species — including cod, red snapper, and tunas — it requires importers provide and report certain records along the entire chain of custody, from harvest to entry into the United States. Information will be entered into the confidential International Trade Data System — not reported to the public or on a label. NOAA has also proposed a voluntary Commerce Trusted Trader Program, which would qualify importers to achieve streamlined entry requirements under the monitoring program. These programs are expected to be expanded to cover all imported fish products in coming years.

Read the full story at National Fisherman

 

Federal, state and local agencies express serious concerns over impact of offshore wind on Northeast fishermen

May 4, 2018 — WASHINGTON — In three letters submitted to the Bureau of Ocean Energy Management (BOEM), agencies representing New Bedford, Massachusetts, the state of Massachusetts, and the federal government outlined serious concerns over a proposed wind farm off Massachusetts. The Greater Atlantic Regional Fisheries Office of NOAA Fisheries, the Massachusetts Division of Marine Fisheries (DMF), and the New Bedford Port Authority (NBPA) Fisheries Advisory Committee on Offshore Wind submitted their comments as BOEM begins drafting an environmental impact statement for a plan submitted by Vineyard Wind LLC.

Michael Pentony, the Northeast Regional Administrator for NOAA Fisheries wrote in his comments to BOEM that “commercial and recreational fishing are essential components of the existing landscape that must be preserved in the development of the project.” Mr. Pentony recommended that the Vineyard Wind project include analyses of the environmental impact, economic consequences, and long-term effects of wind energy development on the region’s fisheries.

This includes measuring the impact of wind turbine construction on the area’s essential fish habitats, the effects it will have on local fish populations, and how construction will affect commercial and recreational fishing operations. Mr. Pentony similarly called on Vineyard Wind to study any adverse economic impacts the project may have on regional fishing communities. He also urged developers to consider construction in alternative locations, and to not construct in areas where objections have already been raised.

“It is encouraging that NOAA is making clear the need to use the same type, level, and quality of information to locate, build, and operate offshore wind farms as the Councils and NMFS use in fisheries management decisions,” said David Frulla, an attorney representing the Fisheries Survival Fund. “NOAA emphasizes in great detail these wind energy installations will be ocean-altering, both individually and cumulatively.  These projects raise valid concerns regarding historic livelihoods, essential fish habitat, and fish populations, not to mention endangered and threatened species.”

Dr. David Pierce, director of the Massachusetts DMF, noted in his comments that commercial and recreational fishing in Nantucket Sound “provides tens of millions of dollars in revenue to the local economy, and is an integral, indeed historic, part of life in many Cape Cod and Island towns.” Dr. Pierce wrote that DMF remains concerned that the assumption that the wind energy area will be open to fishing is an “oversimplification.”

He also noted that Vineyard Wind’s plan does not adequately characterize all species potentially affected by the project, nor does it describe effects of oceanographic changes or the resulting impact on larval patterns and settlement of scallops or food patch dynamics for marine mammals. Additionally, for some species in the wind development area, impacts of electromagnetic fields are poorly studied, Dr. Pierce wrote.

The NBPA advisory committee, comprised of fishing interests from Maine to North Carolina, noted in its letter that commercial fishermen have approval from NOAA to fish in Vineyard Wind’s lease area, and that, as part of the lease agreement, the project cannot unreasonably interfere with their fishing activities. The committee wrote that Vineyard Wind’s plan struggled to identify all fisheries that would be impacted, and that there has been little coordination with fishing interests on cable routes or transit lanes. They also expressed concern over the size and scale of the project and lack of a detailed mitigation plan for fisheries financially impacted by the installation of wind turbines. They called for more independent study to measure impacts on individual fisheries, the impact of the diversion of fishing effort outside the lease area, the impact on right whales, and the impact on navigation.

 

New York: How fishermen could thwart Cuomo’s offshore wind master plan

April 16, 2018 — Earlier this month, hundreds of developers, many from the well-developed wind energy industry in Europe, attended the United States’ largest technical wind power conference, which was held in Princeton, New Jersey. Dozens of public officials, including Zinke, New Jersey Gov. Phil Murphy and NYSERDA President and CEO Alicia Barton, expounded on how to best seize the offshore opportunities.

Under Cuomo, New York has played a leading role in selecting the offshore areas for wind development, overseeing 20 research studies, working closely with BOEM and conducting “unprecedented outreach” to stakeholders, Doreen Harris, NYSERDA’s director of large-scale renewables, told City & State. “Obviously, this becomes a federal process at this point,” Harris said. “But we believe New York’s work provides the solid foundation for areas that are the most favorable.”

Indeed, after NYSERDA requested that BOEM open vast tracts of seafloor for leasing, Zinke told attendees at the April wind power conference that BOEM was opening an additional 2,711 square miles for potential wind farm development, more than 20 times larger than the Empire Wind lease area in the New York Bight, a broad expanse of ocean south of Long Island and east of New Jersey. It seemed to be everything NYSERDA asked for and more. The decision opens the possibility of rows and rows of wind turbines the height of skyscrapers plotted out in an area twice the size of Long Island.

There’s just one scallop-sized problem standing in the way.

The combined 2,836 square miles where BOEM is either leasing or seeking information and nominations for commercial wind leases is worth hundreds of millions – if not billions – of dollars in revenue to the scallop industry over the life of a 25-year wind lease, the scallopers’ lawyers say. The impact on the scallop fisheries would be far worse than they first feared, if those areas are developed.

“It puts an exclamation mark on all our concerns,” said David Frulla, the lead lawyer on the scallopers’ lawsuit. “We’re not trying to stop offshore wind. It is just that this is right at the heart of where the fishing is.”

The Fisheries Survival Fund, an advocacy group that represents the scallopers’ interests in their lawsuit against BOEM, is arguing that the federal offshore wind leasing procedure gave away some of the most productive scallop beds in the world and failed to evaluate alternative options appropriately.

In particular, they are rebelling against the Empire Wind project. The envisioned 194 towers whirling above the waves would make it impossible to safely fish there, they say.

Read the full story at City & State New York   

 

Cape Cod Times: A landmark fisheries plan

January 15, 2018 — For seafood lovers, there’s nothing better than a lightly battered scallop, freshly harvested from the North Atlantic, and dipped in simmering butter. And now that federal regulators have agreed to open an area east of Nantucket, closed since the 1990s, fishermen could catch as much as $218 million worth of scallops this year, and $313 million over three years. Expect those fried scallop plates to cost less this summer.

The reopening of the sea bed is just one of the many beneficial outcomes of a new fisheries management plan that was nearly 15 years in the making. The landmark set of regulations opens a large swath of the region’s waters to fishing while maintaining other closures to protect vulnerable species. The plan uses science and the latest technology to decide which ocean areas are important for the critical life stages of fish and shellfish species and how to protect them.

Two decades ago, habitat closures were decided based on drawing a line around areas where fish were congregating. Now, with a model that compares the sea bed with the impact of fishing, regulators can make decisions that will help restore and protect fish stocks. The new plan also sets aside research areas to investigate the link between habitat and fish productivity.

“We think these are groundbreaking regulations,” said John Bullard, NOAA’s outgoing regional administrator, who issued the regulations as one of his last acts on the job. “It puts the focus on the quality of the habitat protected — not the quantity, or how many square miles were protected.”

Cape fishermen are pleased with at least two elements of the plan. They cheered the closing of a large part of the Great South Channel that runs between the Cape and Georges Bank because it is essential habitat for spawning cod and other fish species. State and federal surveys have found that the region’s cod population has plummeted by about 80 percent over the past decade. Closing this area will now help ensure the continued survival of species like Atlantic cod, haddock, and flounder for years to come.

Read the full opinion piece at the Cape Cod Times

 

‘Groundbreaking’ fish protection plan in place in Northeast

January 5, 2018 — The following is excerpted from an article by Doug Fraser of the Cape Cod Times:

After 14 years of research, negotiations, hearings and two additional years of review, New England has a plan that uses science and the latest technology to decide which areas are important for the critical life stages of fish and shellfish species and how to protect them.

John Bullard, the regional director of NOAA’s Greater Atlantic Regional Fisheries Office, informed New England Fishery Management Council Chairman John Quinn in a letter Wednesday that his agency had approved most of their fish habitat protection plan.

“It was a massive undertaking and your staff, especially Michelle Bachman, should be proud of their groundbreaking work that went into supporting this amendment,” Bullard wrote in the letter. The council staff, along with researchers from the National Marine Fisheries Service, state fisheries agencies, and universities, especially the University of Massachusetts Dartmouth’s School for Marine Science and Technology, put together models that incorporated photographic and other surveys of the ocean bottom with known areas of fish concentration and other research on spawning and other life stages, that helped the council evaluate what should be protected and how.

“The fact that it dragged on so long, people miss how groundbreaking this really is,” said Tom Nies, the New England council’s executive director. Two decades ago, habitat closures were decided based on drawing a line around areas where fish were congregating, Nies said. Now, with a model that compares the sea bed with the impact of fishing, they can make decisions he feels will have greater significance to restoring and protecting fish stocks. Plus, the habitat plan also set aside research areas to investigate the link between habitat and fish productivity, a piece of the puzzle that has seen relatively little conclusive research.

“If you compare where we are with this amendment in terms of how they were developed and analyzed versus the original habitat areas in 2002 and 2003, we are light years ahead of where we were then,” Nies said.

Scallopers from both the big boat and small boat fleets, which are often at odds, traveled to Washington in October to lobby [U.S. Rep. William] Keating and other congressmen on getting NMFS to finish its review of the habitat plan and open the area up to scalloping before that population died off. Their message was that allowing them into scallop-rich, nonessential fish habitat meant they spent far less time towing their heavy dredges through areas fish do use.

“From our perspective, it’s really heartening that they heard our concerns,” said Seth Rolbein, director of the Cape Cod Fisheries Trust, speaking for the Cape Cod Commercial Fishermen’s Alliance.

David Frulla, an attorney and lobbyist representing limited access scallop vessels, and Fisheries Survival Fund attorney Andrew Minkiewicz agreed the council and NOAA made the right decision in closing the Great South Channel and opening the scallop grounds in what is known as Closed Area I. But they felt that there was just as much evidence to open up a portion of a second closed area on Georges Bank over 100 miles east of the Cape that had historically produced as much as 50 million pounds of harvested scallops. Bullard said more information would be needed for his agency to do that right now.

“There are only so many highly productive scallop beds, and this is one of them,” Minkiewicz said. Frulla admitted that the bottom there is more complex and may be harder to determine its value to fish, but Minkiewicz said adding another prime scallop area keeps scallopers away from the bottom where fish do congregate.

Assistant Regional Administrator Michael Pentony told Quinn in an email that his agency expected to publish the final rule containing the regulations to implement the plan this spring.

Read the full story at the Cape Cod Times

 

Fishing Groups and Communities Move Forward with Suit Against NY Wind Farm

WASHINGTON — September 19, 2017 — The following was released by the Fisheries Survival Fund:

A group of fishing organizations, businesses, and communities, led by the Fisheries Survival Fund (FSF), has moved forward with its lawsuit to halt the leasing of a planned wind farm off the coast of New York. The suit, filed against the Department of the Interior’s Bureau of Ocean Energy Management (BOEM), is seeking summary judgment and requesting the court to invalidate the lease, which was awarded to the Norwegian firm Statoil to develop the New York Wind Energy Area (NY WEA).

BOEM’s process for awarding the lease failed to properly consider the planned wind farm’s impact on area fish populations and habitats, shoreside communities, safety, and navigation. This violates the National Environmental Policy Act (NEPA), which requires an assessment of these impacts before issuing the lease, in conjunction with a full Environmental Impact Statement and an evaluation of alternative locations for any proposal.

BOEM’s failure to consider the impacts to fisheries, safety, navigation and other natural resources in the NY WEA prior to moving forward with the leasing process also violates the Outer Continental Shelf Lands Act (OCSLA), which charges BOEM with considering and providing for existing ocean users. And BOEM’s actions violate the Administrative Procedure Act, which prohibits agencies from acting in ways that are arbitrary, capricious, and contrary to law.

The site for the proposed wind farm includes key scallop, squid, and other Atlantic fishing grounds, as well as ocean habitats that are crucial for species such as loggerhead sea turtles, right whales, black sea bass and summer flounder. Because of how BOEM’s leasing process unfolds, the wind farm’s expected impacts on natural resources and those who rely on them will not be examined until the project is nearing completion.

“The plaintiffs in this case believe sensible wind energy development and fishing can co-exist,” said David Frulla, who is representing FSF and the other plaintiffs in the case. “But any offshore energy project must first meaningfully consider the impact on the habitats, marine species, and economic interests that may be harmed before selecting a wind farm site and issuing a lease to a private developer.”

FSF and the other plaintiffs sought a preliminary injunction against the $42.5 million lease before it was awarded in December 2016. While the judge presiding over the case stated that “the proper time for the agency to consider these environmental impacts may be at the present stage,” the request for a preliminary injunction was denied, as the judge did not believe it met the high standard of causing immediate harm that could not later be undone by a subsequent decision on the lease.

Following the plaintiffs’ filing last week, the federal government and Statoil are due to file their own cross-motions for summary judgment, and responses to the plaintiffs’ brief, in the coming months. The U.S. District Court for the District of Columbia will then make a decision on the merits.

The Fisheries Survival Fund is the lead plaintiff in the case. The organizations and businesses that have joined the suit are the Garden State Seafood Association and the Fishermen’s Dock Co-Operative in New Jersey; the Long Island Commercial Fishing Association in New York; and the Narragansett Chamber of Commerce, Rhode Island Fishermen’s Alliance, SeaFreeze Shoreside, Sea Fresh USA, and The Town Dock in Rhode Island.

Municipalities that have joined the suit are the City of New Bedford, Mass.; the Borough of Barnegat Light, N.J.; and the Town of Narragansett, R.I.