The folks at the annual Water Festival in Coupeville on Whidbey Island were having a good time Saturday, but the talk of the town was the sunken crab boat and the potential environmental damage it could cause to the prized Penn Cove mussel farm nearby.

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COUPEVILLE, Whidbey Island — The Front Street Grill rolled out a new menu two weeks ago that offers — count them — 11 ways to prepare Penn Cove mussels.

Those include the signature Front Street Grill coconut green-curry mussels, saffron mussels, barbecue mussels, and something called “Angry Mussels” with chorizo and chili oil.

“People come to Coupeville and we have Penn Cove, they want to taste Penn Cove mussels,” said Sean Anter, the manager of the waterfront restaurant on Coupeville’s main drag.

This Whidbey Island town perched on a wharf above the Salish Sea is home to the world’s largest mussel farm, but Penn Cove mussels were unavailable at its annual Water Festival this weekend.

Harvest of Coupeville’s famous shellfish was halted last week after a derelict crabber caught fire and sank just beyond the Penn Cove mussel farm, where mussels grow on 36,000 ropes attached to two dozen rafts.

News of the sinking and the fuel that began leaking into the bay swept through Coupeville’s population of 2,000. Lisa Haas immediately started making phone calls to see if she should cancel the Water Festival this weekend.

“It’s like, ‘Oh no, not right before the festival,’ ” she said.

The festival celebrates the community’s longstanding close relationship with Penn Cove. Tribal-canoe races launch on one end of the town’s main drag and travel up and back the shoreline, alongside a craft fair and tribal storytelling and music.

Earlier in the week, some said, a sheen of diesel fuel could be seen on the surface of the water in Penn Cove. A Coast Guard ship and the cleanup could be seen less than a mile from the festival Saturday. But skies were clear and state environmental officials had cleared the water for canoeing and even for swimming.

In Coupeville, everyone cares about the water, say those who live here.

“It’s a big industry for a little community here, so to see the mussel farm shut down… ,” said Tom Rusnak. He and his wife, Debbie, have a favorite recipe that includes frying bacon, steaming mussels in sambuca, and adding a half-cup of heavy cream at the end.

Rumors were flying among the locals about the boat’s owner and whether his account of the fire was truthful.

“Nobody’s happy about it,” said Gerri Izzo, who works at a waterfront women’s clothing and jewelry store. “It is the buzz around town. Everybody’s upset because the brothers that own the mussel farm are just great guys.”

The whole town depends on mussels, she said. The restaurants serve them, the stores sell them, the mussel farm trucks them daily to Seattle.

After the Penn Cove mussel farm shut down, restaurants and stores began offering mussels from the Penn Cove company’s farm at Quilcene Bay.

“People love coming here. It appears to be pristine,” said Barbara Bennett, who was at the fair helping with Washington State University’s Beachwatchers program. “This is certainly a warning about the potential for things like this and the effect these things can have.”

Emily Heffter: 206-464-8246 or eheffter@seattletimes.com. On Twitter @EmilyHeffter.