STATEMENT OF
ANN C. PHILLIPS
MARITIME ADMINISTRATOR
MARITIME ADMINISTRATION
U.S. DEPARTMENT OF TRANSPORTATION
BEFORE THE
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION
U.S. HOUSE OF REPRESENTATIVES
HEARING ON “REVIEW OF FISCAL YEAR 2025 MARITIME TRANSPORTATION BUDGET REQUESTS,
PT. 1: MARITIME ADMINISTRATION AND FEDERAL MARITIME COMMISSION”
April 30, 2024
Good afternoon, Chairman Webster, Ranking Member Carbajal, and Members of the Subcommittee. Thank you for your tremendous support for the Maritime Administration (MARAD), the U.S. Merchant Marine Academy (USMMA), and the U.S. maritime industry. We greatly appreciate the opportunity to testify today on the President’s Fiscal Year (FY) 2025 budget, and how this request will enable MARAD to continue to advance key priorities in support of our economic and national security.
Before I go further, allow me to express on behalf of the Department of Transportation (DOT) our condolences to the families of those who lost their lives when the Francis Scott Key Bridge collapsed. I also want to express thanks to the United States Coast Guard for spearheading the Federal response at the Port of Baltimore, and to all of our Federal partners –especially my DOT colleagues at MARAD and the Federal Highway Administration, as well as Maryland state and local officials for their ongoing response to the Baltimore bridge collapse.
This event highlights how important our maritime transportation system is to the Nation’s economic and national security. The collapse of the Key Bridge, COVID, attacks in the Red Sea, and recent weather disasters serve as notable reminders of the need for flexibility and redundancy to support the transportation segments of our supply chain. As we overcome this tragedy, we demonstrate once again our great resolve and ability to respond as a Nation.
FY 2025 BUDGET REQUEST
MARAD’s mission is to foster, promote, and develop the maritime industry of the United States to meet the nation’s economic and security needs. The President’s FY 2025 Budget request of $859.7 million for MARAD will enable the agency to continue to strengthen our sealift enterprise by advancing recapitalization of the Ready Reserve Force (RRF) and the vital commercial sealift programs that support U.S.-flagged vessels operating in the foreign trade.
The President’s request will also support investments in our ports and waterways to improve supply chain resiliency, expand our efforts to address climate change, and advance environmental justice for port communities. In FY 2025, $450 million provided by the Bipartisan Infrastructure Law (BIL) to support the Port Infrastructure Development Program (PIDP) will be invested in new grants. The President’s budget requests an additional $80 million to support PIDP, which would bring the total amount of funding available in FY 2025 to $530 million and enable us to continue modernizing our ports to help reduce the cost of moving goods from ships to shelves and from American farmers and factories to end-users at home and abroad.
In addition, the President’s request will enable MARAD to continue critical investments to address the urgent and long-standing challenges at the USMMA. Further, it will enable us to implement the many new authorities and responsibilities provided in the National Defense Authorization Act for Fiscal Year 2024 (FY 2024 NDAA).
ECONOMIC AND CLIMATE SUSTAINABILITY INVESTMENTS
Last year, MARAD awarded more than $653 million in PIDP grants. This total included the third tranche of $450 million in funding provided by the BIL, approximately $212 million in FY 2023 appropriations, and unexpended funding from a prior PIDP round. The 2023 PIDP awards funded 41 projects in 25 states and one territory. More than $100 million in the funding awarded last year focuses on port electrification to improve air quality, while nearly $202 million of the awarded funding supports projects that will advance offshore wind farm developments. These efforts are helping to advance the important objectives of the BIL, and the vital goal of President Biden’s Justice40 Initiative—that 40 percent of the overall benefits of certain covered Federal investments flow to disadvantaged communities that are marginalized by underinvestment and overburdened by pollution.
This year thanks again to the BIL and the funding provided in the FY 2024 appropriations measure, $500 million in funding is available for PIDP grants. An additional $72 million in FY2024 appropriations has already been congressionally directed to 22 projects. The Notice of Funding Opportunity (NOFO) for this program is open and applications are due by May 10, 2024.
The FY 2025 Budget also requests $10 million for the United States Marine Highway Program. Marine highways support our maritime supply chains and enable more cost-effective transportation options for U.S. shippers and manufacturers. In 2023, MARAD awarded nearly $12 million in marine highway projects. The funding awarded last year will support 8 projects across the nation—and nearly all the funding is supporting projects in disadvantaged communities or Federally designated community development zones. In FY 2024, $5 million in funding is available, and MARAD will begin accepting applications soon.
The FY 2025 Budget also requests $20 million for MARAD’s Small Shipyards grants to support infrastructure improvements at qualified small U.S. shipyards to help improve their efficiency and ability to compete for domestic and international commercial ship construction and maintenance opportunities. Investing in shipbuilding supports job creation in a vital domestic industrial base. These grants can also be used to support the acquisition of equipment that reduces negative climate impacts and adapts technologies that reduce shipyard power consumption.
Within MARAD’s FY 2025 Budget request, $6 million will support the Maritime Environmental and Technical Assistance (META) program. The META program fulfills a niche in the Federal government by being specifically designed to assist stakeholders with innovation that supports a safe and efficient U.S. maritime transportation sector. Approximately 75 percent of the FY 2025 funding will be focused on efforts related to decarbonization of the maritime transportation sector.
The FY 2025 Budget request for MARAD includes $3.7 million for the Federal Ship Financing Program (Title XI) to provide the salaries and overhead support to manage the loan portfolio, currently at $1.3 billion in outstanding loan guarantees. This program is designed to manage loans that help promote the U.S. shipyard industry by providing additional opportunities for vessel construction and modernization, including repowering, that may otherwise be unavailable to ship owners.
The President’s FY 2025 Budget requests $6 million for MARAD’s Ship Disposal Program for support staff and overhead costs to continue to put primary emphasis on the disposal of the worst conditioned, non-retention vessels to mitigate environmental risks.
U.S. MERCHANT MARINE EDUCATION AND TRAINING
MARAD supports mariner training programs to produce highly skilled, USCG credentialed officers for the U.S. merchant marine. Specifically, MARAD supports mariner education and training at USMMA, and it facilitates mariner education through the extensive support we provide to the six state maritime academies (SMA).
Graduates of USMMA are required to maintain their licenses for 6 years and to sail on commercial vessels or serve in other capacities—such as on active duty in U.S. uniformed services—for 5 years. USMMA is also the principal source of new officers for the U.S. Navy’s Strategic Sealift Officer (SSO) Program, which maintains a cadre of approximately 2,000 U.S. Naval Reserve Officers with the training and credentials to operate strategic sealift resources at times of national need.
The President’s FY 2025 Budget requests $191 million to support academic operating expenses for approximately 975 cadets and 293 faculty and support staff, including expanded support for the extensive facility maintenance and repair needs of the Academy’s aging physical plant. It includes 21 new positions to support National Academy of Public Administration (NAPA) recommendations and address various efficiency and effectiveness initiatives. The budget also seeks funding for the Every Mariner Builds a Respectful Culture (EMBARC) program implementation. MARAD established the EMBARC program in December 2021 to help prevent sexual assault and sexual harassment during the Sea Year program, to support survivors, strengthen a culture of accountability, and improve safety for all mariners.
Today, there are 21 commercial operators enrolled in EMBARC; together, they operate more than 180 vessels. All vessel operators that are required to carry USMMA cadets under 46 U.S.C. § 51307(b)—i.e., operators with vessels enrolled in the MSP, TSP, and the CSP—have enrolled in EMBARC, and MARAD is conducting both scheduled and unscheduled vessel assessments, at a rate greater than the 10 percent required under 46 U.S.C. § 51322, to ensure compliance with EMBARC standards.
In addition, USMMA’s Sexual Assault Prevention and Response Office (SAPR) is working to build midshipman awareness and eliminate obstacles to reporting sexual assault and violence. MARAD is working as quickly as possible to develop an EMBARC rule pursuant to the authority provided by the FY 2023 NDAA. Additionally, the USMMA has established an Advisory Council, as required by 46 U.S.C § 51323, tasked with providing actionable recommendations on improving the Academy. Importantly, the Council includes experts in sexual assault and sexual harassment prevention and response.
The Biden-Harris Administration has long recognized the urgent need to rehabilitate and replace existing infrastructure and to significantly strengthen the ability of MARAD and USMMA to plan and manage capital investments and major maintenance efforts. Working closely with leaders and experts from the DOT, MARAD has implemented numerous measures to improve our ability to manage capital projects. Consistent with a recommendation from the National Academy of Public Administration, MARAD/USMMA created a new director position that is staffed with a Senior Executive to oversee all capital and maintenance projects at USMMA. MARAD and the DOT have also created new oversight bodies to ensure that investments of taxpayer funds are properly managed, and yield completed projects that address the Academy’s most urgent needs.
In early March, MARAD provided the Committees on Appropriations and made public USMMA’s FY 2023 Capital Improvement Plan (CIP). The FY 2023 CIP explains significant changes made to active and out-year projects since USMMA’s last CIP report, which was provided in late 2022. These changes are based on demonstrated need, as well as the principles that guide our prioritization of capital and maintenance projects. Specifically, our highest priorities for capital and maintenance investments are supporting the safety, health, and well-being of cadets and supporting the Academy’s academic mission.
The USMMA is in the process of developing a deferred maintenance plan that will focus on high impact maintenance actions that are both wide-spread and that most-directly impact the safety and quality of life of cadets and staff. The priorities include campus HVAC systems, plumbing, roofing and repair of building facades. In November 2023, the Academy started work on developing a Facilities Master Plan which will identify its priorities under its Capital Improvement Program. This plan, which will cover the next several years and will affect the entire campus, is expected to be in effect by the end of the year.
Eighty-six million dollars in capital improvement funds are requested in FY 2025 that would enable us to initiate a barracks renovation program as well as renovations of Wiley and Delano Halls. Funding would also enable us to rehabilitate roads, sidewalks, and parking lots.
The FY 2025 Budget request also includes $87 million to provide support to the six SMAs. This request includes funding for school ship maintenance and repair, the Student Incentive Program (SIP), direct SMA support, fuel assistance, and National Security Multi-Mission Vessel (NSMV) pre-delivery and post-delivery support. MARAD has cooperative agreements in place with three SMAs, with Maine Maritime Academy being the latest as of January 31, 2024. The amount of $58.3 million has been obligated for eligible pier upgrades necessary to enable heavy weather mooring of the NSMVs.
Funding would also meet maintenance and repair costs to maintain the legacy school ships and continue our direct support to the SMAs.
There are currently four NSMVs under construction with one ship — the EMPIRE STATE — delivered last fall. The second ship—the PATRIOT STATE—has an anticipated delivery to Massachusetts Maritime Academy in July of this year.
The FY 2024 NDAA also increases the authorized amount of SIP payments from $32,000 to $64,000, providing additional financial support to cadets who enroll in the Strategic Sealift Midshipman program.
NATIONAL SECURITY
Providing sealift to meet the nation’s needs is a critical part of MARAD’s mission, and we have proudly met the challenges of managing the National Defense Reserve Fleet (NDRF) for 78 years. America’s strategic sealift provides the nation with the capability to rapidly project power globally by deploying Department of Defense (DOD) forces and moving cargoes worldwide during peacetime and wartime—including through contested environments—whenever activated by the U.S. Transportation Command (USTRANSCOM).
Our Government-owned sealift fleet is supported and leveraged by a fleet of privately owned, commercially operated U.S.-flag vessels in the Maritime Security Program (MSP) and the Tanker Security Program (TSP).
The FY 2025 Budget requests the full authorization level of $318 million for the MSP, which is the heart of sustainment sealift. In return for a stipend, MSP operators provide the DOD with assured access to their ships and their global networks of critical capabilities, including intermodal facilities at home and abroad used to unload and transport military cargoes to final destinations.
There are 60 commercially-viable, militarily-useful vessels enrolled in MSP. These vessels are active in international trade and are on-call to meet the nation’s need for sustained military sealift capacity. The MSP supports and sustains the merchant mariner base by providing employment for 2,400 highly-trained, skilled U.S. merchant mariners who may also crew the U.S. Government-owned surge sealift fleet when activated. The MSP also supports more than 5,000 additional shore-side jobs in the maritime industry.
MARAD has fully implemented the TSP program, awarding ten operating agreements to four different U.S. companies between April 20, 2023, and December 17, 2023. One of the program participants voluntarily withdrew one of their vessels from the program after accepting a long-term-charter to the U.S. Government, making the vessel ineligible to participate in the TSP. MARAD is in the process of filling that vacancy and anticipates filling the slot this summer. The FY 2025 Budget request for the TSP program is $60 million, for up to 10 enrolled tanker vessels. The TSP will strengthen the U.S supply chain and improve the movement of liquid fuel products while creating good paying jobs. Moreover, these ships will ensure DOD has assured access to critically needed product tankers capable of loading, transporting, and storing on-station bulk petroleum refined products to support national economic security. We are preparing to deliver the requested report on Opportunities and Challenges to Grow the U.S.-Flag Tanker Fleet in International Trade to Congress soon.
MARAD is partnering with our stakeholders, both Federal and non-Federal, to work to identify strategies to help address the mariner shortage and ensure their readiness. As part of MARAD’s effort to meet a FY 2024 NDAA requirement to establish a Maritime Workforce Working Group, MARAD held its first meeting on March 20, 2024. Consistent with the FY2024 NDAA the group will help identify the number of licensed and unlicensed mariners, make recommendations to improve United States merchant mariner recruitment and retention, and evaluate potential gaps or surpluses of credentialed merchant mariners required to maintain and operate the RRF. In addition, on April 16, 2024, MARAD hosted a Mariner Work-Life Balance Symposium which brought together stakeholders from across the maritime industry to discuss issues related to work-life balance and recommendations for improvement that will boost mariner recruitment and retention.
We also note that the existing U.S. Coast Guard (USCG) licensing system (Merchant Mariner Licensing and Documentation system) relies on dated 1980s technology with relatively no querying capability on the number and availability of mariners with various credentials essential to meet our economic and national security needs. We fully support the USCG’s ongoing efforts to modernize the system to enable efficient issuance of mariner credentials and provide enhanced querying capabilities.
MARAD is also focused on supporting our U.S.-flagged fleet through opportunities to carry cargo. As I said in 2022 testimony before the Coast Guard and Maritime Transportation Subcommittee, put simply, without cargoes, ships will leave the U.S. flag and our modest fleet will continue to dwindle to the point that the number of American vessels is simply too small to meet government shipper agency requirements whether military or civilian. We are working with the Biden-Harris Administration’s Made In America Office to help agencies understand cargo preference requirements. In addition, we have again written to all Federal departments and agencies explaining how MARAD can help them ensure they meet their obligations under cargo preference laws and regulations. To date, 60 percent of these Federal agencies have responded, with some providing outstanding bills of lading. MARAD is currently preparing the annual report.
MARAD is also working diligently on revisions to cargo preference regulations as required by the FY 2023 NDAA.
One of the current challenges with meeting cargo preference requirements is ensuring we have both enough vessels and the wide mix of vessel types to carry the many types of cargoes that the government impels. To help attract additional vessels to our flag, last year, the Biden-Harris Administration proposed that Congress eliminate the 3-year period that vessels entering the U.S. flag must currently wait before they are eligible to carry civilian agency preference cargoes. This would ensure that vessels that choose to sail under the U.S.-flag can carry preference cargoes as soon as they enter the flag and provide opportunity to diversify the types of vessels available to civilian agencies to carry cargoes. In return the vessels would be required to remain under U.S. flag for 3 years. This proposal became law as part of the FY 2024 NDAA but will only become effective January 1, 2030.
The President’s FY 2025 Budget requests $974 million from DOD budgetary authority for MARAD to acquire, upgrade, and maintain vessels in the NDRF and RRF. These funds enable MARAD to maintain the fleet in a ready, reliable, and responsive condition, using a contracted workforce of commercial ship managers and a small cadre of shipboard caretaker crewmembers. Sustaining sufficient resources for maintenance and recapitalization will ensure MARAD’s ability to meet strategic sealift for the U.S. Armed Forces, and humanitarian support when called upon during national emergencies, as well as maintain MARAD’s NDRF fleet mooring sites.
MARAD’s RRF consists of sealift ships providing a mix of capabilities. MARAD is now the sole surge sealift provider. Our RRF ships provide sealift surge capability to deliver DOD equipment and supplies where needed during the initial stages of a response to a major contingency. Today, the RRF is a fleet of 48 vessels, with an average age of more than 45 years, maintained in a reduced operating status—ready to sail within five days of activation. The fleet will grow to 51 vessels after the planned transfer of additional surge sealift and prepositioning vessels from the Military Sealift Command is complete by the end of FY 2025.
I note that four RRF vessels are currently berthed at the Port of Baltimore. While the restriction of movement for these vessels is affected by the Key Bridge collapse, crew on two of the vessels are currently conducting regulatory or casualty repairs and neither of the remaining ships has been activated. One ship normally berthed in Baltimore will remain in Hampton Roads, VA, while crew is conducting required regulatory repairs until harbor clearance operations are completed.
As part of the Navy’s overall plan for sealift recapitalization, MARAD is responsible for maintaining the existing RRF ships through the recapitalization period, including dozens of ships that are now nearly 50 years old or even older. Continued focus on safety, material condition, and regulatory compliance has been difficult to sustain, and challenges have been compounded by equipment and parts delays, and the increased scope of the repairs we have had to undertake, including steelwork.
MARAD is working to advance the urgent recapitalization of the RRF with the limited authorities provided. MARAD is making use of the authority Congress provided to purchase vessels for RRF through a contracted Vessel Acquisition Manager (VAM). This innovative process allowed MARAD to efficiently purchase the first two ships in FY 2022. In Q2 FY 2023, the VAM completed purchase of three more extremely capable ships including one that is 10 and two that are 11 years old. These ships were purchased for approximately $90 million per ship.
The reflagging process for these vessels is continuing along the stringent Alternate Compliance Program regulatory framework and the ships will be ready-for-tasking in Q3 2024.
MARAD continues to work with our VAM and has identified several potential ships for purchase and engaging owners of the best four additional ships for purchase to reach the Congressionally limited number of 9 used ships.
In the FY 2023 NDAA, MARAD was directed to develop a Roll-On/Roll-Off ship design for the construction of 10 new vessels for the NDRF. MARAD thanks Congress for appropriating $12 million in FY 2024 funds to initiate the vessel designs.
CONCLUSION
These programs represent MARAD’s priorities. We will continue to keep you apprised of the progress of our program activities and initiatives in these areas in the coming year.
Thank you for the opportunity to present and discuss the President’s Budget for MARAD. I appreciate the Subcommittee’s continuing support for maritime programs, and I look forward to any questions you and the members of the Subcommittee may have.
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STATEMENT OF WILLIAM K. PAAPE
ASSOCIATE ADMINISTRATOR
OFFICE OF PORTS & WATERWAYS
MARITIME ADMINISTRATION
U.S. DEPARTMENT OF TRANSPORTATION
BEFORE THE
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION
AND
COMMITTEE ON HOMELAND SECURITY
SUBCOMMITTEE ON TRANSPORTATION & MARITIME SECURITY
U.S. HOUSE OF REPRESENTATIVES
HEARING ON
“PORT SAFETY, SECURITY, AND INFRASTRUCTURE INVESTMENT”
April 5, 2024
Good morning, Chairman Webster, Chairman Gimenez, Ranking Member Carbajal, Ranking Member Thanedar and Members of the Subcommittees. Thank you for your tremendous support for the Maritime Administration (MARAD) and thank you for the opportunity to testify today regarding the Port Infrastructure Development Program (PIDP), a discretionary grant program, and its role in bolstering the safety and security of our nation's ports.
Before I go further, allow me to express on behalf of the Department of Transportation our condolences to the families of those who lost their lives last week when the Francis Scott Key Bridge collapsed. I also want to express thanks to the United States Coast Guard for spearheading the Federal response at the Port of Baltimore, and to all of our Federal Partners – especially my DOT colleagues at MARAD and FHWA – as well as Maryland state and local officials for their ongoing response to the Baltimore bridge collapse.
Times like this highlight how important our maritime transportation system (MTS) is to our economic and national security. Our MTS, and for that matter, our entire national surface transportation system, is the best in the world. We have the greatest inherent flexibility and redundancy to support the transportation segments of our supply chain.
The collapse of Key Bridge, the COVID surge, the attacks in the Red Sea, and Hurricanes Maria, Sandy, and Irene, to name a few, serve as notable reminders of how vital ports are to our Nation’s economic vitality. Equally, our responses to these tragedies have demonstrated our great resolve and ability to respond as a Nation.
Several agencies play key roles in overseeing port security in the United States. These agencies work collaboratively to ensure the safety and security of U.S. ports and the maritime transportation system.
MARAD promotes the development and maintenance of a resilient maritime transportation system, including ports, by providing grants for infrastructure projects, technical assistance, and support for port security initiatives. MARAD’s cooperative efforts include chairing the National Port Readiness Network (NPRN) to ensure readiness of Commercial Strategic Seaports to support the deployment of military forces and national contingencies. Together with eight other Federal agencies and military commands, this network supports the maintenance of Port Readiness Committees. MARAD further facilitates the collaborative development of Port Readiness Plans, voluntary planning documents focused on port facility readiness at Commercial Strategic Seaports.
The primary statutory objective of the PIDP is to enhance the safety, efficiency, or reliability of the movement of goods into, out of, around, or within a port. Each project funded through the PIDP must address or advance at least one of these critical objectives. PIDP grants support efforts by ports and industry stakeholders to improve port and related freight infrastructure to meet the nation’s freight transportation needs and ensure our port infrastructure can meet anticipated growth in freight volumes. The PIDP provides funding to ports in both urban and rural areas for planning and capital projects. It also includes a statutory set-aside for small ports to continue to improve and expand their capacity to move freight reliably and efficiently and support local and regional economies.
In fiscal year (FY) 2023, MARAD received 153 eligible applications for the PIDP from projects across 37 states and 4 U.S. territories, with a combined funding request exceeding $2.8 billion with only $662 million available funding for FY 2023. Similarly, in FY 2023, the United States Marine Highway Program, received 16 eligible applications from projects in 12 states and 2 territories, requesting a total of approximately $46.4 million in funding with only $12.123 million available funding for FY 2023. These numbers highlight the continued need for strengthening of the nation's supply chains.
In FY 2023, MARAD awarded grants to fund 41 port improvement projects across the nation, including several notable PIDP projects that focused on safety improvements across various ports:
- Cold Bay, AK: Construction of a new dock with significant operational and safety benefits compared to the old dock.
- Kawaihae, HI: Access and lighting enhancements to improve safety.
- Astoria, OR: Major infrastructure upgrades, including fire protection measures.
- Freeport, TX: Site improvements facilitating safer cargo movement and dedicated truck lanes.
- San Diego, CA: Lighting enhancements to enhance safety.
- Red Wing, MN: Mooring improvements aimed at enhancing safety during barge operations.
Another noteworthy FY 2023 PIDP project incorporating security enhancements is underway at the North Carolina State Port Authority in Wilmington, NC. This comprehensive project involves reconfiguring port access, relocating security checkpoints, installing a gate operating system, enhancing railroad crossings, constructing a truck queuing area, implementing new cybersecurity tools, and constructing guard and badging facilities.
Addressing cybersecurity and technology concerns, the FY 2024 PIDP Notice of Funding Opportunity (NOFO) included two critical provisions:
- LOGINK Prohibition: In compliance with Section 825 of the FY 2024 National Defense Authorization Act (NDAA), the FY 2024 PIDP NOFO prohibits the utilization or provision of certain Chinese transportation logistics platforms. This measure aims to safeguard against potential security risks associated with these platforms.
- Each applicant selected for federal funding must demonstrate consideration and mitigation of physical and cyber security risks relevant to their project. Projects failing to adequately address these risks will be required to do so before receiving funds. MARAD and the Office of the Secretary's Chief Information Officer will conduct risk assessments on all grant projects, with additional cyber risk mitigation activities mandated for moderate or higher risk projects.
Section 3529 of the FY23 NDAA directed MARAD, in consultation with the Secretary of Homeland Security, the Secretary of Defense, and the Director of the Cybersecurity and Infrastructure Security Agency, to conduct a study to assess whether there are cybersecurity or National security threats posed by foreign manufactured cranes at United States ports. Our report will be delivered to Congress soon.
In conclusion, PIDP plays a vital role in enhancing the safety, efficiency, reliability, and resilience of our nation's ports. The projects highlighted underscore our commitment to enhancing and modernizing the Maritime Transportation System which is vital to our national and economic security missions.
I appreciate the opportunity to appear before this Subcommittee and thank you for the support that you have shown the Maritime Administration. I welcome any questions you may have.
MARITIME ADMINISTRATOR
MARITIME ADMINISTRATION
U.S. DEPARTMENT OF TRANSPORTATION
BEFORE THE
COMMITTEE ON ARMED SERVICES
SUBCOMMITTEE ON READINESS & SUBCOMMITTEE ON SEAPOWER AND PROJECTION FORCES
U.S. HOUSE OF REPRESENTATIVES
HEARING ON “POSTURE AND READINESS OF THE MOBILITY ENTERPRISE”
April 11, 2024
Good morning, Chairman Waltz, Chairman Kelly, Ranking Member Garamendi, Ranking Member Courtney, and Members of the Subcommittees. Thank you for your tremendous support for the Maritime Administration (MARAD), the U.S. Merchant Marine Academy (USMMA), and the U.S. maritime industry. We greatly appreciate the opportunity to testify today on the President’s Fiscal Year (FY) 2025 Budget, and how this request will enable MARAD to continue to advance key priorities in support of our economic and national security.
Before I go further, allow me to express on behalf of the Department of Transportation (DOT) our condolences to the families of those who lost their lives when the Francis Scott Key Bridge collapsed. I also want to express thanks to the United States Coast Guard for spearheading the Federal response at the Port of Baltimore, and to all of our Federal partners –especially my DOT colleagues at MARAD and the Federal Highway Administration – as well as Maryland state and local officials for their ongoing response to the Baltimore bridge collapse.
Times like this highlight how important our maritime transportation system is to the Nation’s economic and national security. Events such as the collapse of the Key Bridge, COVID, attacks in the Red Sea, and recent weather disasters serve as notable reminders of the need for flexibility and redundancy to support the transportation segments of our supply chain. This latest tragedy will demonstrate once again our great resolve and ability to respond as a Nation.
FY 2025 BUDGET REQUEST
MARAD’s mission is to foster, promote, and develop the maritime industry of the United States to meet the nation’s economic and security needs. The President’s FY 2025 Budget request of $859.7 million for MARAD will enable the agency to continue to strengthen our sealift enterprise by advancing recapitalization of the Ready Reserve Force (RRF) and the vital commercial sealift programs that support U.S.-flagged vessels operating in the foreign trade.
The President’s request will also support investments in our ports and waterways to improve supply chain resiliency, expand our efforts to address climate change, and advance environmental justice for port communities. In FY 2025, $450 million provided by the Bipartisan Infrastructure Law (BIL) to support the Port Infrastructure Development Program (PIDP) will be invested in new grants. The President’s budget requests an additional $80 million to support PIDP, which would bring the total amount of funding available in FY 2025 to $530 million and enable us to continue modernizing our ports to help reduce the costs of moving goods from ships to shelves and from American farmers and factories to destinations overseas.
In addition, the President’s request will enable MARAD to continue critical investments to address the urgent and long-standing challenges at the USMMA. Further, it will enable us to implement the many new authorities and responsibilities provided in the National Defense Authorization Act (NDAA) for Fiscal Year 2024 (FY 2024 NDAA).
NATIONAL SECURITY
Providing sealift to meet the nation’s needs is a critical part of MARAD’s mission, and we have proudly met the challenges of managing the National Defense Reserve Fleet (NDRF) for 78 years. America’s strategic sealift provides the nation with the capability to rapidly project power globally by deploying Department of Defense (DOD) forces and moving cargoes worldwide during peacetime and wartime—including through contested environments—whenever activated by the U.S. Transportation Command (USTRANSCOM).
Ready Reserve Force (RRF)
The President’s FY 2025 Budget requests $974 million from DOD budgetary authority for MARAD to acquire, upgrade, and maintain vessels in the NDRF and RRF. These funds enable MARAD to maintain the fleet in a ready, reliable, and responsive condition, using a contracted workforce of commercial ship managers and a small cadre of shipboard caretaker crewmembers. Sustaining sufficient resources for maintenance and recapitalization will ensure MARAD’s ability to meet strategic sealift for the U.S. Armed Forces, and humanitarian support when called upon during national emergencies, as well as maintain MARAD’s NDRF fleet mooring sites.
MARAD’s RRF consists of sealift ships providing a mix of capabilities. RRF ships, along with a smaller number of Military Sealift Command vessels, provide sealift surge capability to deliver DOD equipment and supplies where needed during the initial stages of a response to a major contingency. Today, the RRF is a fleet of 48 vessels, with an average age of more than 45 years, maintained in a reduced operating status—ready to sail within five days of activation. The fleet will grow to 51 vessels after the planned transfer of additional surge sealift and prepositioning vessels from the Military Sealift Command is complete by the end of FY 2025.
I note that four RRF vessels are currently berthed at the Port of Baltimore. While the restriction of movement for these vessels is affected by the Key Bridge collapse, crew on two of the vessels are currently conducting regulatory or casualty repairs and neither of the remaining ships have been activated. One ship normally berthed in Baltimore will remain in Hampton Roads, VA, while crew is conducting required regulatory repairs until harbor clearance operations are completed.
As part of the Navy’s overall plan for sealift recapitalization, MARAD is responsible for maintaining the existing RRF ships through the recapitalization period, including dozens of ships that are now nearly 50 years old or even older. Continued focus on safety, material condition, and regulatory compliance has been difficult to sustain, and challenges have been compounded by equipment and parts delays, and the increased scope of the repairs we have had to undertake, including steelwork.
MARAD is working to advance the urgent recapitalization of the RRF with the limited authorities provided. MARAD is making use of the authority Congress provided to purchase vessels for RRF through a contracted Vessel Acquisition Manager (VAM). This innovative process allowed MARAD to efficiently purchase the first two ships in FY 2022. In Q2 FY 2023, the VAM completed purchase of three more extremely capable ships including one that is 10 and two that are 11 years old. These ships were purchased for approximately $90 million per ship. The reflagging process for these vessels is continuing along the stringent Alternate Compliance Program regulatory framework and the ships will be ready-for-tasking in Q3 2024.
MARAD continues to work with our VAM and has identified several potential ships for purchase and engaging owners of the best four additional ships for purchase to reach the Congressionally limited number of 9 used ships.
In the FY 2023 NDAA, MARAD was directed to develop a Roll-On/Roll-Off ship design for the construction of 10 new vessels for the NDRF. MARAD thanks Congress for appropriating $12 million in FY 2024 funds to complete the vessel designs.
Commercial Sealift
Our Government-owned sealift fleet is supported and leveraged by a fleet of privately owned, commercially operated U.S.-flag vessels in the Maritime Security Program (MSP) and the Tanker Security Program (TSP).
The FY 2025 Budget requests the full authorization level of $318 million for the MSP, which is the heart of sustainment sealift. In return for a stipend, MSP operators provide the DOD with assured access to their ships and their global networks of critical capabilities, including intermodal facilities at home and abroad used to unload and transport military cargoes to final destinations.
There are 60 commercially viable, militarily useful vessels enrolled in MSP. These vessels are active in international trade and are on-call to meet the nation’s need for sustained military sealift capacity. The MSP supports and sustains the merchant mariner base by providing employment for 2,400 highly trained, skilled U.S. merchant mariners who may also crew the U.S. Government-owned surge sealift fleet when activated. The MSP also supports more than 5,000 additional shore-side jobs in the maritime industry.
MARAD has fully implemented the TSP program, awarding ten operating agreements to four different U.S. companies between April 20, 2023, and December 17, 2023. One of the program participants voluntarily withdrew one of their vessels from the program after accepting a long-term-charter to the U.S. Government, making the vessel ineligible to participate in the TSP. MARAD is in the process of filling that vacancy and anticipates filling the slot this summer. The FY 2025 Budget request for the TSP program is $60 million, for up to 10 enrolled tanker vessels. The TSP will strengthen the U.S supply chain and improve the movement of liquid fuel products while creating good paying jobs. Moreover, these ships will ensure DOD has assured access to critically needed product tankers capable of loading, transporting, and storing on-station bulk petroleum refined products to support national economic security. We are preparing to deliver the requested report on Opportunities and Challenges to Grow the U.S.-Flag Tanker Fleet in International Trade to Congress soon.
MARAD is partnering with our stakeholders, both Federal and non-Federal, to work to identify strategies to help address the mariner shortage and ensure their readiness. As part of MARAD’s effort to meet a FY 2024 NDAA requirement to establish a Maritime Workforce Working Group, MARAD sent out a Request of Participation in our Maritime Workforce Working Group. This group kicked off on March 20, 2024, to help identify the number of licensed and unlicensed mariners, make recommendations to improve United States merchant mariner recruitment and retention, and evaluate potential gaps or surpluses of credentialed merchant mariners required to maintain and operate the RRF.
We also note that the existing U.S. Coast Guard (USCG) licensing system (Merchant Mariner Licensing and Documentation system) relies on dated 1980s technology with relatively no querying capability on the number and availability of mariners with various credentials essential to meet our economic and national security needs. We fully support the USCG’s ongoing efforts to modernize the system to enable efficient issuance of mariner credentials and provide enhanced querying capabilities.
Further, we must ensure that mariners’ working environments are safe—and that the maritime industry is a place where every mariner can succeed on the basis of their professionalism and skill. MARAD’s work to implement the Every Mariner Builds a Respectful Culture (EMBARC) program, which is discussed in more detail below, is helping advance long overdue culture change across the maritime industry to promote accountability for sexual harassment and sexual assault, and foster a culture of prevention, especially at sea.
MARAD is also focused on supporting our U.S.-flagged fleet through opportunities to carry cargo. As I said last year in testimony before the Coast Guard and Maritime Transportation Subcommittee, put simply, without cargoes, ships will leave the U.S. flag and our modest fleet will continue to dwindle to the point that the number of American vessels is simply too small to meet government shipper agency requirements whether military or civilian. We are working with the Biden-Harris Administration’s Made In America Office to help agencies understand cargo preference requirements. In addition, I have written to all Federal departments and agencies explaining how MARAD can help them ensure they meet their obligations under cargo preference laws and regulations. To date, 60 percent of these Federal agencies have responded, with some providing outstanding bills of lading. MARAD is currently preparing the annual report as required by the FY 2022 NDAA.
MARAD is also working diligently on revisions to cargo preference regulations as required by the FY 2023 NDAA.
One of the current challenges with meeting cargo preference requirements is ensuring we have both enough vessels and the wide mix of vessel types to carry the many types of cargoes that the government impels. To help attract additional vessels to our flag, last year, the Biden-Harris Administration proposed that Congress eliminate the 3-year period that vessels entering the U.S. flag must currently wait before they are eligible to carry civilian agency preference cargoes. This would ensure that vessels that choose to sail under the U.S.-flag can carry preference cargoes as soon as they enter the flag and provide opportunity to diversify the types of vessels available to civilian agencies to carry cargoes. In return the vessels would be required to remain under U.S. flag for 3 years. This proposal became law as part of the FY 2024 NDAA but will only become effective January 1, 2030.
U.S. MERCHANT MARINE EDUCATION AND TRAINING
MARAD supports mariner training programs to produce highly skilled USCG credentialed officers for the U.S. merchant marine. Specifically, MARAD supports mariner education and training at USMMA, and it facilitates mariner education through the extensive support we provide to the six state maritime academies (SMA).
Graduates of USMMA are required to maintain their licenses for 6 years and to sail on commercial vessels or serve in other capacities—such as on active duty in U.S. uniformed services—for 5 years. USMMA is also the principal source of new officers for the U.S. Navy’s Strategic Sealift Officer (SSO) Program, which maintains a cadre of approximately 2,000 U.S. Naval Reserve Officers with the training and credentials to operate strategic sealift resources at times of national need.
Funding in the President’s FY 2025 Budget request will support academic operating expenses for approximately 975 cadets and 292 faculty and support staff, including expanded support for the extensive facility maintenance and repair needs of the Academy’s aging physical plant and for our work implementing the EMBARC program. The budget request also includes 21 new positions to support National Academy of Public Administration (NAPA) recommendations and address various efficiency and effectiveness initiatives.
MARAD established the EMBARC program in December 2021 to help prevent sexual assault and sexual harassment during the Sea Year program, to support survivors, strengthen a culture of accountability, and improve safety for all mariners. Vessel operators must enroll in the EMBARC program before USMMA cadets can train on that operator’s vessels.
Now, thanks to the FY 2023 NDAA, commercially operated vessels must comply with standards set by MARAD regarding the prevention of, and response to, sexual assault and harassment before they can train USMMA cadets. Further, the FY 2023 NDAA gave MARAD the authority to withhold payments from companies participating in the MSP and TSP (as well as the Cable ship Security Program (CSP)) if they do not comply with the policies and requirements established by MARAD for the protection of cadets from sexual assault and sexual harassment. In addition, USMMA’s Sexual Assault Prevention and Response Office (SAPR) is working to build midshipman awareness and eliminate obstacles to reporting sexual assault and violence. MARAD is working as quickly as possible to develop a proposed EMBARC rule pursuant to the authority provided by the FY 2023 NDAA. Additionally, the USMMA has established an Advisory Council, as required by 46 U.S.C. § 51323, tasked with providing actionable recommendations on improving the Academy. Importantly, the Council includes experts in sexual assault and sexual harassment prevention and response.
In addition, the FY 2023 NDAA required that ocean-going vessels include sexual assault and sexual harassment response policies in their Safety Management Systems (SMS)—which has been a central tenet of EMBARC. In short, the FY 2023 NDAA reinforced a long overdue change in shipboard culture that will promote fair and equitable treatment of all mariners, reinforce the serious nature of sexual harassment and sexual assault and its detriment to mission readiness, and contribute to a safer working environment. MARAD is conducting vessel both scheduled and unscheduled assessments at a rate greater than the 10 percent required under 46 U.S.C. § 51322, to ensure compliance with EMBARC standards.
Today, there are 21 commercial operators enrolled in EMBARC; together, they operate more than 180 vessels. All vessel operators that are required to carry USMMA cadets under 46 U.S.C. § 51307(b)—i.e., operators with vessels enrolled in the MSP, TSP, and the CSP—have enrolled in EMBARC.
The Biden-Harris Administration has long recognized the urgent need to rehabilitate and replace existing infrastructure and to significantly strengthen the ability of MARAD and USMMA to plan and manage capital investments and major maintenance efforts. Working closely with leaders and experts from the Department of Transportation (DOT), MARAD has implemented numerous measures to improve our ability to manage capital projects. Consistent with a recommendation from the National Academy of Public Administration, MARAD/USMMA created a new director position that is staffed with a Senior Executive to oversee all capital and maintenance projects at USMMA. MARAD and the DOT have also created new oversight bodies to ensure that investments of taxpayer funds are properly managed, and yield completed projects that address the Academy’s most urgent needs.
In early March, MARAD provided to the Committees on Appropriations and made public USMMA’s FY 2023 Capital Improvement Plan (CIP). The FY 2023 CIP explains significant changes made to active and out-year projects since USMMA’s last CIP report, which was provided in late 2022. These changes are based on demonstrated need, as well as the principles that guide our prioritization of capital and maintenance projects. Specifically, our highest priorities for capital and maintenance investments are supporting the safety, health, and well-being of cadets and supporting the Academy’s academic mission.
In addition to the USMMA awarding the campus-wide maintenance contract in December 2022, the USMMA is in the process of developing a deferred maintenance plan that will focus on high impact maintenance actions that are both wide-spread and that most-directly impact the safety and quality of life of cadets and staff. The priorities include campus HVAC systems, plumbing, roofing and repair of building facades. In November 2023, the Academy started work on developing a Facilities Master Plan which will identify its priorities under its Capital Improvement Program. This plan, which will cover the next several years and will affect the entire campus, is expected to be in effect by the end of the year.
Capital improvement funds requested in FY 2025 would enable us to initiate a barracks renovation program as well as renovations of Wiley and Delano Halls. Funding would also enable us to rehabilitate roads, sidewalks and parking lots.
The FY 2025 Budget request also includes $87 million to provide support to the six SMAs. This request includes funding for school ship maintenance and repair, Student Incentive Program (SIP), direct SMA support, fuel assistance, and NSMV pre-delivery and post-delivery support. MARAD has cooperative agreements in place with three SMAs, with Maine Maritime Academy being the latest as of January 31, 2024. The amount of $58.3 million has been obligated for eligible pier upgrades necessary to enable heavy weather mooring of the NSMVs.
Funding would also meet maintenance and repair costs to maintain the legacy school ships and continue our direct support to the SMAs.
There are currently four NSMVs under construction with one ship — the EMPIRE STATE — delivered last fall. The second ship—the PATRIOT STATE—has an anticipated delivery to Massachusetts Maritime Academy in July of this year.
The FY 2024 NDAA also increases the amount of Student Incentive Payments Program (SIP) from $32,000 to $64,000, providing additional financial support to cadets who enroll in the Strategic Sealift Midshipman program.
ECONOMIC, CLIMATE SUSTAINABILITY, AND ENVIRONMENTAL JUSTICE INVESTMENTS
The President’s FY 2025 budget requests $80 million for the PIDP program to provide grants to improve port infrastructure and facilities and to stimulate economic growth in and around ports while also improving safety, addressing climate change and environmental justice, and strengthening our supply chains. In addition to the funding requested in the budget, the BIL provides in advance appropriations for this program in FY 2025.
Last year, MARAD awarded $653 million in PIDP grants. This total included the second tranche of $450 million in funding provided by the BIL, approximately $212 million in FY 2023 appropriations, and funding returned from a prior PIDP round. The 2023 PIDP awards will fund 41 projects in 25 states and one territory. More than $100 million if the PIDP awards include port electrification components that improve air quality, while more than $202 million of the projects will advance offshore wind farm development. These efforts are helping to advance the important objectives of the Bipartisan Infrastructure Law, and the vital goal of President Biden’s Justice40 Initiative, that 40 percent of the overall benefits of certain covered Federal investments flow to disadvantaged communities that are marginalized by underinvestment and overburdened by pollution.
This year thanks again to the BIL and the funding provided in the FY 2024 appropriations measure, more than $570 million in funding is available for PIDP grants. The Notice of Funding Opportunity (NOFO) for this program is open and applications are due on May 10, 2024.
The FY 2025 Budget also requests $10 million for the United States Marine Highway Program. Marine highways support our maritime supply chains and enable more cost-effective transportation options for U.S. shippers and manufacturers. There is $5 million in FY 2024 funding available, and MARAD will begin accepting applications soon. Importantly, thanks to another change made in the FY 2023 NDAA, any eligible project along any of the 31 designated Marine Highway Routes—which encompass 41 states—is eligible to apply for funding.
The FY 2024 NDAA requires MARAD to complete a study that identifies opportunities for, and barriers to, increasing the effectiveness of marine highways and implement a pilot program from the results. The report should be finalized shortly.
In 2023, MARAD awarded nearly $12 million in marine highway projects. The funding awarded last year will support 8 projects across the nation—and nearly all the funding is supporting projects in disadvantaged communities or Federally designated community development zones.
The FY 2025 Budget also requests $20 million for MARAD’s Small Shipyards grants to support infrastructure improvements at qualified small U.S. shipyards to help improve their efficiency and ability to compete for domestic and international commercial ship construction and maintenance opportunities. Investing in shipbuilding supports job creation in a vital domestic industrial base. These grants can also be used to support the acquisition of equipment that reduces negative climate impacts and adapts technologies that reduce shipyard power consumption.
Within MARAD’s FY 2025 Budget request, $6 million will support the Maritime Environmental and Technical Assistance (META) program. The META program fulfills a niche in the Federal government by being specifically designed to assist stakeholders with innovation that supports a safe and efficient U.S. maritime transportation sector. Approximately 75 percent of the FY 2025 funding will be focused on efforts related to decarbonization of the maritime transportation sector.
The FY 2025 Budget request for MARAD includes $3.7 million for the Federal Ship Financing Program (Title XI) to provide the salaries and overhead support to manage the loan portfolio, currently at $1.3 billion in outstanding loan guarantees. This program is designed to manage loans that help to promote the U.S. shipyard industry by providing additional opportunities for vessel construction and modernization, including repowering, that may otherwise be unavailable to ship owners.
In June 2022, MARAD designated vessels constructed or reconstructed for use to support offshore wind facilities as Vessels of National Interest. Since this designation, there has been a significant increase in interest in the Title XI Program to support offshore wind vessels. The program has applications for six projects under credit worthiness review, including four projects for Jones Act-qualified windfarm vessels.
The President’s FY 2025 Budget requests $6 million for MARAD’s Ship Disposal Program for support staff and overhead costs to continue to put primary emphasis on the disposal of the worst conditioned, non-retention vessels to mitigate environmental risks.
CONCLUSION
These programs represent MARAD’s priorities that are supported by the President’s Budget. We will continue to keep you apprised of the progress of our program activities and initiatives in these areas in the coming year.
Thank you for the opportunity to present and discuss the President’s Budget for MARAD. I appreciate the Subcommittee’s continuing support for maritime programs, and I look forward to any questions you and the members of the Subcommittee may have.
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STATEMENT OF ANN C. PHILLIPS
MARITIME ADMINISTRATOR MARITIME ADMINISTRATION
U.S. DEPARTMENT OF TRANSPORTATION
BEFORE THE COMMITTEE ON ARMED SERVICES
SUBCOMMITTEE ON READINESS & SUBCOMMITTEE ON SEAPOWER AND PROJECTION FORCES
U.S. HOUSE OF REPRESENTATIVES
HEARING ON “POSTURE AND READINESS OF THE MOBILITY ENTERPRISE”
March 28, 2023
Good afternoon, Chairman Waltz, Chairman Kelly, Ranking Member Garamendi, Ranking Member Courtney, and Members of the Subcommittees. Thank you for your tremendous support for the Maritime Administration (MARAD), the U.S. Merchant Marine Academy (USMMA), and the U.S. maritime industry. We greatly appreciate the opportunity to testify today on the President’s Fiscal Year (FY) 2024 budget, and how this request will enable MARAD to continue to advance key priorities in support of our economic and national security.
FY 2024 BUDGET REQUEST
MARAD’s mission is to foster, promote, and develop the maritime industry of the United States to meet the nation’s economic and security needs. The President’s FY 2024 Budget request of $980.2 million for MARAD will enable the agency to continue to strengthen our sealift enterprise by advancing recapitalization of the Ready Reserve Force (RRF) and the vital commercial sealift programs that support U.S.-flagged vessels operating in the foreign trade.
The President’s request will also support investments in our ports and waterways to improve supply chain resiliency, expand our efforts to address climate change, and advance environmental justice for port communities. In FY 2024, the third tranche of funding—$450 million—provided by the Bipartisan Infrastructure Law (BIL) to support the Port Infrastructure Development Program (PIDP) will be invested in new grants. The President’s budget requests an additional $230 million to support PIDP, which would bring the total amount of funding available in FY 2024 to $680 million and enable us to continue modernizing our ports to help reduce the costs of moving goods from ships to shelves and from American farmers and factories to destinations overseas.
In addition, the President’s request will enable MARAD to continue critical investments to address the urgent and long-standing challenges at the USMMA. Further, it will enable us to implement the many new authorities and responsibilities provided in the James M. Inhofe National Defense Authorization Act (NDAA) for Fiscal Year 2023 (FY 2023 NDAA).
NATIONAL SECURITY
Providing sealift to meet the nation’s needs is a critical part of MARAD’s mission, and we have proudly met the challenges of managing the National Defense Reserve Fleet (NDRF) for 77 years. America’s strategic sealift provides the nation with the capability to rapidly project power globally by deploying Department of Defense (DOD) forces and moving cargoes worldwide during peacetime and wartime—including through contested environments—whenever activated by the U.S. Transportation Command (USTRANSCOM).
Ready Reserve Force (RRF)
The President’s FY 2024 Budget requests $809.6 million from DOD budgetary authority for MARAD to acquire, upgrade, and maintain vessels in the NDRF and RRF. These funds enable MARAD to maintain the fleet in a ready, reliable, and responsive condition, using a contracted workforce of commercial ship managers and a small cadre of shipboard caretaker crewmembers. Sustaining sufficient resources for maintenance and recapitalization will ensure MARAD’s ability to maintain the fleet in a ready, reliable, and responsive condition to meet strategic sealift for the U.S. Armed Forces, and humanitarian support when called upon during national emergencies, as well as maintain MARAD’s NDRF fleet mooring sites.
MARAD’s RRF consists of sealift ships providing a mix of capabilities. RRF ships, along with a smaller number of Military Sealift Command vessels, provide sealift surge capability to deliver DOD equipment and supplies where needed during the initial stages of a response to a major contingency. Today, the RRF is a fleet of 45 vessels, with an average age of more than 45 years, maintained in a reduced operating status to be ready to sail within five days of activation. The fleet will grow to 51 vessels after the planned transfer of additional surge sealift and prepositioning vessels from the Military Sealift Command is complete by the end of FY 2025.
As part of the Navy’s overall plan for sealift recapitalization, MARAD is responsible for maintaining the existing RRF ships through the recapitalization period, including dozens of ships that are now nearly 50 years old or even older. Continued focus on safety, material condition, and regulatory compliance has been difficult to sustain, and challenges have been compounded by equipment and parts delays, and the increased scope of the repairs we have had to undertake, including steelwork. The COVID-19 pandemic has exacerbated difficulties in maintaining ship and mariner readiness.
MARAD is working to advance the urgent recapitalization of the RRF with the limited authorities provided. In March 2022—and for the first time in nearly 30 years—we announced the purchase of two vessels. These two ships, the former HONOR and FREEDOM, joined the RRF as the CAPE ARUNDEL and CAPE CORTES, adding more than 432,000 square feet of total sealift capacity and 316,000 square feet of military cargo capacity. Both of these U.S.-flag vessels participated in the MSP which gave them priority for acquisition based on statutory language, and while differences in marine safety regimens have slowed progress towards certification, the ships will be upgraded in U.S. shipyards to add additional capabilities in the summer of 2023 as planned.
On January 27, 2023, the DOD transmitted the next proposed ship purchase decision to Congress for the required 30-day notification period. With no noted concerns, these three ships will be purchased and placed under U.S. government ownership starting in April 2023 and continuing into summer 2023.
In the FY 2023 NDAA, MARAD was directed to develop a Roll-On/Roll-Off ship design for the construction of 10 new vessels for the NDRF to begin construction in 2024. In response to this directive, the RRF program is documenting the actions necessary to implement a limited shipbuilding program. Modeled after the NSMV program, this shipbuilding effort would leverage commercial practices and utilize the Vessel Construction Manager approach to establish price and delivery schedules. At this time, MARAD activity is limited to developing the implementation plan and the requirements for a concept design for new construction.
Commercial Sealift
Our Government-owned sealift fleet is supported and leveraged by a fleet of privately owned, commercially operated U.S.-flag vessels in the Maritime Security Program (MSP), the Cable Ship Security Program (CSP), and the new Tanker Security Program (TSP).
The FY 2024 Budget requests the full authorization level of $318 million for the MSP, which is the heart of sustainment sealift. In return for a stipend, MSP operators provide the DOD with assured access to their ships and their global networks of critical capabilities, including intermodal facilities at home and abroad used to unload and transport military cargoes to final destinations.
There are 60 commercially viable, militarily useful vessels enrolled in MSP. These vessels are active in international trade and are on-call to meet the nation’s need for sustained military sealift capacity. The MSP supports and sustains the merchant mariner base by providing employment for 2,400 highly trained, skilled U.S. merchant mariners who may also crew the U.S. Government-owned surge sealift fleet when activated. The MSP also supports more than 5,000 additional shore-side jobs in the maritime industry.
In addition, the Biden-Harris Administration is working to support the growth of our U.S.- flagged foreign-trading fleet. The President’s budget requests $60 million at the authorized level for the TSP. As you know, a study required by the FY 2020 NDAA found a substantial risk to the nation associated with heavy reliance on foreign-flagged tankers, particularly in a contested environment. The TSP will be comprised of active, commercially viable, militarily useful, privately owned product tank vessels. I am pleased to report that at the end of last year, MARAD issued the updated Voluntary Tanker Agreement and an Interim Final Rule. The application period closed on February 17, 2023, and we anticipate announcing the first 10 ships selected for enrollment in the near term.
The 10-ship TSP initiative will create new employment for approximately 500 U.S. mariners. In a 2017 study, MARAD estimated that we are approximately 1,800 mariners short of the number of licensed and unlicensed mariners needed to operate the commercial fleet and the RRF in the event of a full mobilization exceeding 4-6 months. Based on MARAD’s meetings with the industry and maritime labor unions, it appears that the shortage may have worsened in the post- COVID work environment.
MARAD is partnering with our stakeholders, both Federal and non-Federal, to work to identify strategies to help address the mariner shortage and ensure their readiness. Last fall, I hosted a summit with industry and federal stakeholders to discuss the mariner shortfall. Participants identified the need to address barriers to entry in the merchant marine as well as the need to ensure quality of life aboard ships such as ensuring internet connectivity for crew members.
We also note that the existing Coast Guard licensing system (Merchant Mariner Licensing and Documentation system) relies on labor-intensive paper copies and manual entries and is not set up to provide critical data regarding the number of and availability mariners with various credentials. We fully support the Coast Guard’s ongoing efforts to modernize the system to enable efficient issuance of mariner credentials and provide enhanced querying capabilities.
Further, we must ensure that mariners’ working environments are safe—and that the maritime industry is a place where every mariner can succeed on the basis of their professionalism and skill. MARAD’s work on the Every Mariner Builds a Respectful Culture (EMBARC) program, which is discussed in more detail below, is helping advance long overdue culture change across the maritime industry, especially at sea.
MARAD is also focused on supporting our U.S.-flagged fleet through opportunities to carry cargo. As I said last year in testimony before the Coast Guard and Maritime Transportation Subcommittee, put simply, without cargoes, ships will leave the U.S. flag, our modest fleet will continue to dwindle to the point that the number of American vessels is simply too small to meet government shipper agency requirements whether military or civilian. We are working with the Biden-Harris Administration’s Made In America Office to help agencies understand cargo preference requirements. In addition, I have written to all federal departments and agencies explaining how MARAD can help them ensure they meet their obligations under cargo preference laws and regulations.
MARAD is also working diligently on revisions to cargo preference regulations as required by the Fiscal Year 2023 NDAA.
One of the current challenges with meeting cargo preference requirements is ensuring we have both enough vessels and the wide mix of vessel types to carry the many types of cargoes that the government impels. To help attract additional vessels to our flag, last year, the Biden-Harris Administration proposed that Congress eliminate the 3-year period that vessels entering the U.S. flag must currently wait before they are eligible to carry civilian agency preference cargoes.
This would ensure that vessels that choose to sail under the U.S.-flag can carry preference cargoes as soon as they enter the flag and provide opportunity to diversify the types of vessels available to civilian agencies to carry cargoes. In return the vessels would be required to remain under U.S. flag for 3 years. Unfortunately, this proposal was not adopted by the prior Congress and no new vessels have been added to the fleet capable of meeting civilian agency cargo needs since 2019.
U.S. MERCHANT MARINE EDUCATION AND TRAINING
MARAD supports mariner training programs to produce highly skilled U.S. Coast Guard (USCG) credentialed officers for the U.S. merchant marine. Specifically, MARAD supports mariner education and training at USMMA, and it facilitates mariner education through the extensive support we provide to the six state maritime academies (SMA).
Graduates of USMMA are required to maintain their licenses for 6 years and to sail on commercial vessels or serve in other capacities—such as on active duty in U.S. uniformed services—for 5 years. USMMA is also the principal source of new officers for the U.S. Navy’s Strategic Sealift Officer (SSO) Program, which maintains a cadre of approximately 2,000 U.S. Naval Reserve Officers with the training and credentials to operate strategic sealift resources at times of national need.
Funding will support academic operating expenses for approximately 975 midshipmen and 292 faculty and support staff, including expanded support for the extensive facility maintenance and repair needs of the Academy’s aging physical plant and for our work implementing the EMBARC program.
MARAD established the EMBARC program in December 2021 to help prevent sexual assault and sexual harassment during the Sea Year program, to support survivors, strengthen a culture of accountability, and improve safety for all mariners. Vessel operators enroll in the EMBARC program before USMMA cadets can train on an operator’s vessels.
Now, thanks to the FY 2023 NDAA, commercially operated vessels must comply with standards set by MARAD regarding the prevention of, and response to, sexual assault and harassment before they can train USMMA cadets. In addition, the FY 2023 NDAA authorized the Secretary of Transportation to establish a Sexual Assault Advisory Council to review existing policies and make recommendations for improvements to build on our efforts to strengthen prevention of sexual assault and sexual harassment on campus and during Sea Year and ensure appropriate responses when such incidents occur.
Further, the FY 2023 NDAA gave MARAD the authority to withhold payments from companies participating in the MSP, CSP, and TSP if they do not comply with the policies and requirements established by MARAD for the protection of cadets from sexual assault and sexual harassment. MARAD is working as quickly as possible to develop a proposed EMBARC rule pursuant to the authority provided by the FY 2023 NDAA.
In addition, the FY 2023 NDAA requires that ocean-going vessels include sexual assault and sexual harassment response policies in their Safety Management Systems (SMS)—which has been a central tenet of EMBARC. In short, the FY 2023 NDAA reinforces a long overdue change in shipboard culture that will promote fair and equitable treatment of all mariners and contribute to a safer working environment.
Today, there are 16 commercial operators enrolled in EMBARC; together, they operate more than 140 vessels. All vessel operators that are required to carry USMMA cadets under 46 U.S.C.
§ 51307(b)—i.e., operators with vessels enrolled in the MSP and the CSP—have enrolled in EMBARC. Companies that enroll vessels in the new TSP will be required to have completed enrollment in EMBARC as a condition of enrolling in the program.
Thanks to the incredible support provided by the Military Sealift Command, the Navy, and the USCG, the Midshipmen in the USMMA Class of 2023 have accrued the sea time needed to qualify to take their licensing exams on time and to graduate on time.
Of the funding requested in the FY 2024 budget for USMMA, $92 million would support emergency and recurring maintenance and repair activities on campus as well as major investments in aging facilities and infrastructure at USMMA.
The Biden-Harris Administration has long recognized the urgent need to rehabilitate and replace existing infrastructure and to significantly strengthen the ability of MARAD and USMMA to plan and manage capital investments and major maintenance efforts. Working closely with leaders and experts from the Department of Transportation (DOT), MARAD has implemented numerous measures to improve our ability to manage capital projects. Consistent with a recommendation from the National Academy of Public Administration, MARAD/USMMA created a new director position that is staffed with a Senior Executive to oversee all capital and maintenance projects at USMMA. MARAD and the DOT have also created new oversight bodies to ensure that investments of taxpayer funds are properly managed, and yield completed projects that address the Academy’s most urgent needs.
Late last year, MARAD provided to the Committees on Appropriations and made public USMMA’s Fiscal Year 2022 Capital Improvement Plan (CIP). The Fiscal Year 2022 CIP explains significant changes made to active and out-year projects since USMMA’s last CIP report, which was provided in FY 2019. These changes are based on demonstrated need, as well as the principles that guide our prioritization of capital and maintenance projects. Specifically, our highest priorities for capital and maintenance investments are supporting the safety, health, and well-being of Midshipmen and supporting the Academy’s academic mission.
In December 2022, the USMMA awarded a campuswide maintenance contract, which fulfills another key recommendation from the National Academy of Public Administration. The contract has a $42 million ceiling over the next 5 years and will help address the significant maintenance backlog. Part of the funding requested for FY 2024 will enable us to implement task orders under the campuswide maintenance contract to address routine maintenance on a scheduled basis and help reduce the incidence of emergency repairs.
Capital improvement funds requested in FY 2024 would enable us to replace USMMA’s existing storm water management systems, which date back to the 1940s and are broken beyond repair.
Funding would also enable us to replace the seawall, which can no longer meet projected storm surges and anticipated rises in sea level.
The FY 2024 Budget request also includes $53.4 million to provide support to the six SMAs. This request includes funding for vessel management, logistics, and maintenance oversight to prepare the schools to receive and operate the National Security Multi-Mission Vessels (NSMV).
Funding would also be available to address unanticipated increases in steel costs for the NSMVs, and support pier improvements at SMAs necessary to enable heavy weather mooring of the NSMVs. MARAD has concluded a cooperative agreement with the State University of New York Maritime College under which MARAD will cover 80% of the costs of their eligible pier upgrades up to just over $18 million.
Funding would also meet maintenance and repair costs to maintain the legacy school ships and continue our direct support to the SMAs.
There are now four NSMVs under construction. The first ship—the EMPIRE STATE—is already launched and we anticipate taking delivery of the ship in June of this year.
ECONOMIC, CLIMATE SUSTAINABILITY, AND ENVIRONMENTAL JUSTICE INVESTMENTS
The President’s FY 2024 budget requests $230 million for the PIDP program to provide grants to improve port infrastructure and facilities and to stimulate economic growth in and around ports while also improving safety, addressing climate change and environmental justice, and strengthening our supply chains. In addition to the funding requested in the budget, the BIL provides $450 million in advance appropriations for this program in FY 2024. Together, this funding would provide a $680 million investment for port infrastructure projects.
Last year, MARAD awarded more than $703 million in PIDP grants. This total included the first tranche of $450 million in funding provided by the BIL, approximately $234 million in FY 2022 appropriations, and unexpended funding from a prior PIDP round. The 2022 PIDP awards will fund 41 projects in 22 states and one territory. More than 60 percent of the PIDP awards made in 2022 benefit ports in historically disadvantaged communities. More than $150 million in the funding awarded last year focuses on port electrification to improve air quality, while nearly $100 million of the awarded funding supports projects that will advance offshore wind farm development. These efforts are helping to advance the important objectives of the Bipartisan Infrastructure Law, and the vital goal of President Biden’s Justice40 Initiative.
This year, thanks again to the BIL and the funding provided in the FY 2023 appropriations measure, more than $662 million in funding is available for PIDP grants. The Notice of Funding Opportunity (NOFO) for this program is open and applications are due on April 28, 2023.
The FY 2024 Budget also requests $11 million for the United States Marine Highway Program. Marine highways support our maritime supply chains and enable more cost-effective transportation options for U.S. shippers and manufacturers.
The FY 2023 NDAA made significant changes to this program, including renaming it from the “America’s Marine Highway Program” to the new “United States Marine Highway Program” and expanding the types of cargo that projects receiving funding under the program can support. The changes made by the NDAA are incorporated into this year’s NOFO for the United States Marine Highway Program, which is now open. There is $12.4 million in funding available, and applications are due on April 28, 2023. Importantly, thanks to another change made in the FY 2023 NDAA, any eligible project along any of the 29 designated Marine Highway Routes— which encompass 41 states—is eligible to apply for funding.
In 2022, MARAD awarded nearly $39 million in marine highway projects. This unprecedented level of funding was made possible by the BIL, which provided a one-time infusion of $25 million to support the expansion of marine highways. The funding awarded last year will support 12 projects across the nation—and nearly all the funding is supporting projects in Historically Disadvantaged Communities or Federally designated community development zones.
The FY 2024 Budget also requests $20 million for MARAD’s Small Shipyards grants to support infrastructure improvements at qualified small U.S. shipyards to help improve their efficiency and ability to compete for domestic and international commercial ship construction and maintenance opportunities. Investing in shipbuilding supports job creation in a vital domestic industrial base. These grants can also be used to support the acquisition of equipment that reduces negative climate impacts and adapts technologies that reduce shipyard power consumption.
Within MARAD’s FY 2024 Budget request, $8.5 million will support the Maritime Environmental and Technical Assistance (META) program. The META program fulfills a niche in the Federal government by being specifically designed to assist stakeholders with innovation that supports a safe and efficient U.S. maritime transportation sector. Approximately 75 percent of the FY 2024 funding will be focused on efforts related to decarbonization of the maritime transportation sector.
The FY 2024 Budget request for MARAD includes $3 million for the Maritime Guaranteed Loan Program (Title XI) to provide the salaries and overhead support to manage the loan portfolio, currently at $1.5 billion in outstanding loan guarantees. This program is designed to manage loans that help to promote the U.S. shipyard industry by providing additional opportunities for vessel construction and modernization, including repowering, that may otherwise be unavailable to ship owners.
In June 2022, MARAD designated vessels constructed or reconstructed for use to support offshore wind facilities as Vessels of National Interest. This is the first time that this authority has been used since it was added to Title XI statute in 2019. With this designation, applications for projects qualifying as Vessels of National Interest have priority for review and funding.
Since this designation, there has been a significant increase in interest in the Title XI Program to support offshore wind vessels. The program has applications for seven projects under credit worthiness review, including five projects for Jones Act-qualified windfarm vessels.
The President’s FY 2024 Budget requests $6 million for MARAD’s Ship Disposal Program for support staff and overhead costs to continue to put primary emphasis on the disposal of the worst conditioned, non-retention vessels to mitigate environmental risks.
CONCLUSION
These programs represent MARAD’s priorities that are supported by the President’s Budget. We will continue to keep you apprised of the progress of our program activities and initiatives in these areas in the coming year.
Thank you for the opportunity to present and discuss the President’s Budget for MARAD. I appreciate the Subcommittee’s continuing support for maritime programs, and I look forward to any questions you and the members of the Subcommittee may have.
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STATEMENT OF ANN C. PHILLIPS
MARITIME ADMINISTRATOR MARITIME ADMINISTRATION
U.S. DEPARTMENT OF TRANSPORTATION
BEFORE THE
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION
U.S. HOUSE OF REPRESENTATIVES
HEARING ON “FISCAL YEAR 2024 BUDGET AND IMPLEMENTATION OF THE OCEAN SHIPPING REFORM ACT”
March 23, 2023
Good afternoon, Chairman Webster, Ranking Member Carbajal, and Members of the Subcommittee. Thank you for your tremendous support for the Maritime Administration (MARAD), the U.S. Merchant Marine Academy (USMMA), and the U.S. maritime industry. We greatly appreciate the opportunity to testify today on the President’s Fiscal Year (FY) 2024 budget, and how this request will enable MARAD to continue to advance key priorities in support of our economic and national security.
FY 2024 BUDGET REQUEST
MARAD’s mission is to foster, promote, and develop the maritime industry of the United States to meet the nation’s economic and security needs. The President’s FY 2024 Budget request of $980.2 million for MARAD will enable the agency to continue to strengthen our sealift enterprise by advancing recapitalization of the Ready Reserve Force (RRF) and the vital commercial sealift programs that support U.S.-flagged vessels operating in the foreign trade.
The President’s request will also support investments in our ports and waterways to improve supply chain resiliency and expand our efforts to address climate change. In FY 2024, the third tranche of funding—$450 million—provided by the Bipartisan Infrastructure Law (BIL) to support the Port Infrastructure Development Program (PIDP) will be invested in new grants. The President’s budget requests an additional $230 million to support PIDP, which would bring the total amount of funding available in FY 2024 to $680 million and enable us to continue modernizing our ports to help reduce the costs of moving goods from ships to shelves and from American farmers and factories to destinations overseas.
In addition, the President’s request will enable MARAD to continue critical investments to address the urgent and long-standing challenges at the USMMA. Further, it will enable us to implement the many new authorities and responsibilities provided in the James M. Inhofe National Defense Authorization Act for Fiscal Year (FY 2023 NDAA).
ECONOMIC AND CLIMATE SUSTAINABILITY INVESTMENTS
The President’s FY 2024 budget requests $230 million for the PIDP to provide grants to improve port infrastructure and facilities and to stimulate economic growth in and around ports while also improving safety, addressing climate change and equity, and strengthening our supply chains. In addition to the funding requested in the budget, the BIL provides $450 million in advance appropriations for this program in FY 2024. Together, this funding would provide a $680 million investment for port infrastructure projects.
Last year, MARAD awarded more than $703 million in PIDP grants. This total included the first tranche of $450 million in funding provided by the BIL, approximately $234 million in FY 2022 appropriations, and unexpended funding from a prior PIDP round. The 2022 PIDP awards will fund 41 projects in 22 states and one territory. More than 60 percent of the PIDP awards made in 2022 benefit ports in historically disadvantaged communities. More than $150 million in the funding awarded last year focuses on port electrification to improve air quality, while nearly
$100 million of the awarded funding supports projects that will advance offshore wind farm developments.
This year, thanks again to the BIL and the funding provided in the FY 2023 appropriations measure, more than $662 million in funding is available for PIDP grants. The Notice of Funding Opportunity (NOFO) for this program is open and applications are due on April 28, 2023.
The FY 2024 Budget also requests $11 million for the United States Marine Highway Program. Marine highways support our maritime supply chains and enable more cost-effective transportation options for U.S. shippers and manufacturers.
The FY 2023 NDAA made significant changes to this program, including renaming it from the “America’s Marine Highway Program” to the new “United States Marine Highway Program” and expanding the types of cargo that projects receiving funding under the program can support. The changes made by the FY 2023 NDAA are incorporated into this year’s NOFO for the United States Marine Highway Program, which is now open. There is $12.4 million in funding available and applications are due on April 28, 2023. Importantly, thanks to another change made in the FY 2023 NDAA, any eligible project along any of the 29 designated Marine Highway Routes—which encompass 41 states—is eligible to apply for funding.
In 2022, MARAD awarded nearly $39 million in marine highway projects. This unprecedented level of funding was made possible by the BIL, which provided a one-time infusion of $25 million to support the expansion of marine highways. The funding awarded last year will support 12 projects across the nation—and nearly all the funding is supporting projects in Historically Disadvantaged Communities or Federally designated community development zones.
The FY 2024 Budget also requests $20 million for MARAD’s Small Shipyards grants to support infrastructure improvements at qualified small U.S. shipyards to help improve their efficiency and ability to compete for domestic and international commercial ship construction and maintenance opportunities. Investing in shipbuilding supports job creation in a vital domestic industrial base. These grants can also be used to support the acquisition of equipment that reduces climate impacts and adapts technologies that reduce shipyard power consumption.
Within MARAD’s FY 2024 Budget request, $8.5 million will support the Maritime Environmental and Technical Assistance (META) program. The META program fulfills a niche in the Federal government by being specifically designed to assist stakeholders with innovation that supports a safe and efficient U.S. maritime transportation sector. Approximately 75 percent of the FY 2024 funding will be focused on efforts related to decarbonization of the maritime transportation sector.
The FY 2024 Budget request for MARAD includes $3 million for the Maritime Guaranteed Loan Program (Title XI) to provide the salaries and overhead support to manage the loan portfolio, currently at $1.5 billion in outstanding loan guarantees. This program is designed to manage loans that help to promote the U.S. shipyard industry by providing additional opportunities for vessel construction and modernization, including repowering, that may otherwise be unavailable to ship owners.
In June 2022, MARAD designated vessels constructed or reconstructed for use to support offshore wind facilities as Vessels of National Interest. This is the first time that this authority has been used since it was added to Title XI statute in 2019. With this designation, applications for projects qualifying as Vessels of National Interest have priority for review and funding.
Since this designation, there has been a significant increase in interest in the Title XI Program to support offshore wind vessels. The program has applications for seven projects under credit trustworthiness review, including five projects for Jones Act-qualified windfarm vessels.
The President’s FY 2024 Budget requests $6 million for MARAD’s Ship Disposal Program for support staff and overhead costs to continue to put primary emphasis on the disposal of the worst conditioned, non-retention vessels to mitigate environmental risks.
U.S. MERCHANT MARINE EDUCATION AND TRAINING
MARAD supports mariner training programs to produce highly skilled U.S. Coast Guard (USCG) credentialed officers for the U.S. merchant marine. Specifically, MARAD supports mariner education and training at USMMA, and it facilitates mariner education through the extensive support we provide to the six state maritime academies (SMA).
Graduates of USMMA are required to maintain their licenses for 6 years and to sail on commercial vessels or serve in other capacities—such as on active duty in U.S. uniformed services—for 5 years. USMMA is also the principal source of new officers for the U.S. Navy’s Strategic Sealift Officer (SSO) Program, which maintains a cadre of approximately 2,000 U.S. Naval Reserve Officers with the training and credentials to operate strategic sealift resources at times of national need.
Funding will support academic operating expenses for approximately 975 midshipmen and 292 faculty and support staff, including expanded support for the extensive facility maintenance and repair needs of the Academy’s aging physical plant and for our work implementing the Every Mariner Builds A Respectful Culture (EMBARC) program.
MARAD established the EMBARC program in December 2021 to help prevent sexual assault and sexual harassment during the Sea Year program, to support survivors, strengthen a culture of accountability, and improve safety for all mariners. Vessel operators enroll in the EMBARC program before USMMA cadets can train on an operator’s vessels.
Now, thanks to the FY 2023 NDAA, commercially operated vessels must comply with standards set by MARAD regarding the prevention of, and response to, sexual assault and harassment before they can train USMMA cadets. In addition, the FY 2023 NDAA authorized the Secretary of Transportation to establish a Sexual Assault Advisory Council to review existing policies and make recommendations for improvements to build on our efforts to strengthen prevention of sexual assault and sexual harassment on campus and during Sea Year and ensure appropriate responses when such incidents occur.
Further, the FY 2023 NDAA gave MARAD the authority to withhold payments from companies participating in the Maritime Security Program (MSP), Cable Ship Security Program (CSP), and Tanker Security Program (TSP) if they do not comply with the policies and requirements established by MARAD for the protection of cadets from sexual assault and sexual harassment. MARAD is working as quickly as possible to develop a proposed EMBARC rule pursuant to the authority provided by the FY 2023 NDAA.
In addition, the FY 2023 NDAA requires that ocean-going vessels include sexual assault and sexual harassment response policies in their Safety Management Systems (SMS)—which has been a central tenet of EMBARC. In short, the FY 2023 NDAA reinforces a long overdue change in shipboard culture that will promote fair and equitable treatment of all mariners and contribute to a safer working environment.
Today, there are 16 commercial operators enrolled in EMBARC; together, they operate more than 140 vessels. All vessel operators that are required to carry USMMA cadets under section 46 U.S.C. § 51307(b)—i.e., operators with vessels enrolled in the MSP and the CSP—have enrolled in EMBARC. Companies that enroll vessels in the new Tanker Security Fleet will be required to have completed enrollment in EMBARC as a condition of enrolling in the TSP.
Thanks to the incredible support provided by the Military Sealift Command, the Navy, and the USCG, the Midshipmen in the USMMA Class of 2023 have accrued the sea time needed to qualify to take their licensing exams on time and to graduate on time.
Of the funding requested in the FY 2024 Budget for USMMA, $92 million would support emergency and recurring maintenance and repair activities on campus as well as major investments in aging facilities and infrastructure at USMMA.
The Biden-Harris Administration has long recognized the urgent need to rehabilitate and replace existing infrastructure and to significantly strengthen the ability of MARAD and USMMA to plan and manage capital investments and major maintenance efforts. Working closely with leaders and experts from the Department of Transportation (DOT), MARAD has implemented numerous measures to improve our ability to manage capital projects. Consistent with a recommendation from the National Academy of Public Administration, MARAD/USMMA created a new director position that is staffed with a Senior Executive to oversee all capital and maintenance projects at USMMA. MARAD and the DOT have also created new oversight bodies to ensure that investments of taxpayer funds are properly managed and yield completed projects that address the Academy’s most urgent needs.
Late last year, MARAD provided to the Committees on Appropriations and made public USMMA’s Fiscal Year 2022 Capital Improvement Plan (CIP). The Fiscal Year 2022 CIP explains significant changes made to active and out-year projects since USMMA’s last CIP report, which was provided in FY 2019. These changes are based on demonstrated need as well as the principles that guide our prioritization of capital and maintenance projects. Specifically, our highest priorities for capital and maintenance investments are supporting the safety, health, and well-being of Midshipmen and supporting the Academy’s academic mission.
In December 2022, the USMMA awarded a campuswide maintenance contract, which fulfills another key recommendation from the National Academy of Public Administration. The contract has a $42 million ceiling over the next 5 years and will help address the significant maintenance backlog. Part of the funding requested for FY 2024 will enable us to implement task orders under the campuswide maintenance contract to address routine maintenance on a scheduled basis and help reduce the incidence of emergency repairs.
Capital improvement funds requested in FY 2024 would enable us to replace USMMA’s existing storm water management systems, which date back to the 1940s and are broken beyond repair.
Funding would also enable us to replace the seawall, which can no longer meet projected storm surges and anticipated rises in sea level.
The FY 2024 Budget request also includes $53.4 million to provide support to the six SMAs. This request includes funding for vessel management, logistics, and maintenance oversight to prepare the schools to receive and operate the National Security Multi-Mission Vessels (NSMV).
Funding would also be available to address unanticipated increases in steel costs for the NSMVs, and support pier improvements at SMAs necessary to enable heavy weather mooring of the NSMVs. MARAD has concluded a cooperative agreement with the State University of New York Maritime College under which MARAD will cover 80 percent of the costs of their eligible pier upgrades up to just over $18 million.
Funding would also meet maintenance and repair costs to maintain the legacy school ships and continue our direct support to the SMAs.
There are now four NSMVs under construction. The first ship—the EMPIRE STATE—is already launched and we anticipate taking delivery of the ship in June of this year.
NATIONAL SECURITY
Providing sealift to meet the nation’s needs is a critical part of MARAD’s mission, and we have proudly met the challenges of managing the National Defense Reserve Fleet (NDRF) for 77 years. America’s strategic sealift provides the Nation with the capability to rapidly project power globally by deploying Department of Defense (DOD) forces and moving cargoes worldwide during peacetime and wartime—including through contested environments— whenever activated by the U.S. Transportation Command (USTRANSCOM).
Our Government-owned sealift fleet is supported and leveraged by a fleet of privately owned, commercially operated U.S.-flag vessels in the MSP, CSP, and the new TSP.
The FY 2024 Budget requests the full authorization level of $318 million for the MSP, which is the heart of sustainment sealift. In return for a stipend, MSP operators provide the DOD with assured access to their ships and their global networks of critical capabilities, including intermodal facilities used to unload and transport military cargoes to final destinations.
There are 60 commercially viable, militarily useful vessels enrolled in MSP. These vessels are active in international trade and are on-call to meet the nation’s need for sustained military sealift capacity. The MSP supports and sustains the merchant mariner base by providing employment for 2,400 highly trained, skilled U.S. merchant mariners who may also crew the U.S. Government-owned surge sealift fleet when activated. The MSP also supports more than 5,000 additional shore-side maritime industry jobs.
In addition, the President’s budget requests $60 million for the TSP. A study required by the FY 2020 NDAA found a substantial risk to the nation associated with heavy reliance on foreign- flagged tankers, particularly in a contested environment. The TSP will be comprised of active, commercially viable, militarily useful, privately owned product tank vessels. I am pleased to report that at the end of last year, MARAD issued the updated Voluntary Tanker Agreement and an Interim Final Rule. The application period closed on February 17, 2023, and we anticipate announcing the first 10 ships selected for enrollment in the near term.
As you know, last year, I testified before this Subcommittee regarding our cargo preference programs. As I said then, put simply, without cargoes, ships will leave the U.S. flag, our modest fleet will continue to dwindle to the point that the number of American vessels is simply too small to meet government shipper agency requirements whether military or civilian. We are working with the Biden-Harris Administration’s Made In America Office to help agencies understand cargo preference requirements. In addition, consistent with my testimony, I have written to all Federal departments and agencies explaining how MARAD can help them ensure they meet their obligations under cargo preference laws and regulations.
MARAD is working diligently on revisions to the cargo preference regulations as required by the Fiscal Year 2023 NDAA.
One of the current challenges with meeting cargo preference requirements is ensuring we have both enough vessels and the wide mix of vessel types to carry the many types of cargoes that the government impels. To help attract additional vessels to our flag, the Biden-Harris Administration proposed that Congress eliminate the 3-year period that vessels entering the U.S. flag must currently wait before they are eligible to carry civilian agency preference cargoes.
This would ensure that vessels that choose to sail under the U.S.-flag can carry preference cargoes as soon as they enter the flag, as well as provide the opportunity to diversify the types of vessels available to civilian agencies to carry cargoes. In return, once under the U.S. flag, the vessels would be restricted from flagging out for 3 years. This proposal, however, was not adopted by the prior Congress.
The President’s FY 2024 Budget requests $809.6 million from DOD budgetary authority for MARAD to acquire, upgrade, and maintain vessels in the NDRF and RRF. Funds will ensure MARAD’s ability to maintain the fleet in a ready, reliable, and responsive condition to meet strategic sealift for the U.S. Armed Forces, and humanitarian support when called upon during national emergencies, as well as maintain MARAD’s NDRF fleet mooring sites.
MARAD’s RRF consists of sealift ships providing a mix of capabilities. RRF ships, along with a smaller number of Military Sealift Command vessels, provide sealift surge capability to deliver DOD equipment and supplies where needed during the initial stages of a response to a major contingency. Today, the RRF is a fleet of 45 vessels, with an average age of more than 45 years, maintained in a reduced operating status to be ready to sail within five days of activation. The fleet will grow to 51 vessels after the transfer of additional surge sealift and prepositioning vessels from the Military Sealift Command is complete by the end of FY 2025.
The COVID-19 pandemic has exacerbated difficulties in maintaining ship and even mariner readiness. As part of the Navy’s overall plan for sealift recapitalization, MARAD is responsible for maintaining the existing RRF ships through the recapitalization period, including dozens of ships that are nearly 50 years old or even older. Continued focus on safety, material condition, and regulatory compliance have been difficult to sustain, and challenges have been compounded by equipment and parts delays, and the increased scope of the repairs we have had to undertake, including steelwork.
MARAD is working to advance the urgent recapitalization of the RRF. In March 2022—and for the first time in nearly 30 years—we announced the purchase of two vessels. These two ships, the former HONOR and FREEDOM, joined the RRF as the CAPE ARUNDEL and CAPE CORTES, adding more than 432,000 square feet of total sealift capacity and 316,000 square feet of military cargo capacity. Both of these vessels participated in the MSP, and while differences in marine safety regimens have slowed progress towards certification, the ships will be upgraded in U.S. shipyards to add additional capabilities in summer 2023 as planned.
On January 27, 2023, the DOD transmitted the next proposed ship purchase decision to Congress for the required 30-day notification period. Without any noted concerns, the three ships will be purchased and placed under U.S. government ownership starting in April 2023 and continuing into summer 2023.
In the FY 2023 NDAA, MARAD was directed to develop a Roll-On/Roll-Off ship design for the construction of 10 new vessels for the NDRF to begin construction in 2024. In response to this directive, the RRF program is documenting the necessary actions to rapidly implement a limited shipbuilding program. Modeled after the NSMV program, this shipbuilding effort would leverage commercial practices and utilize a Vessel Construction Manager to speed deliveries. At this time, MARAD activity is limited to developing the implementation plan and the requirements for a concept design for new construction.
CONCLUSION
These programs represent MARAD’s priorities that are supported by the President’s Budget. We will continue to keep you apprised of the progress of our program activities and initiatives in these areas in the coming year.
Thank you for the opportunity to present and discuss the President’s Budget for MARAD. I appreciate the Subcommittee’s continuing support for maritime programs, and I look forward to any questions you and the members of the Subcommittee may have.
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STATEMENT OF ANN C. PHILLIPS MARITIME ADMINISTRATOR MARITIME ADMINISTRATION U.S. DEPARTMENT OF TRANSPORTATION
BEFORE THE COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION
U.S. HOUSE OF REPRESENTATIVES
HEARING ON “SHORTAGE OF U.S. MARINERS AND RECRUITMENT AND RETENTION IN THE UNITED STATES COAST GUARD”
May 11, 2023
Good morning, Chairman Webster, Ranking Member Carbajal, and Members of the Subcommittee. Thank you for your tremendous support for the Maritime Administration (MARAD) and thank you for the opportunity to testify today regarding the availability of U.S. mariners needed to meet our Nation’s sealift requirements.
MARINER READINESS
MARAD’s mission is to foster, promote, and develop the maritime industry of the United States to meet the nation’s economic and security needs. MARAD administers the Federal programs that support commercial sealift vessels, and we own and maintain the nearly 50 vessels comprising the Ready Reserve Force (RRF). We also have an extensive role supporting mariner education in the U.S.—and particularly the education and training of individuals working to earn unlimited tonnage licenses.
A study prepared by the Maritime Workforce Working Group and released by MARAD in 2017 found that the U.S. did not have enough mariners with unlimited tonnage credentials to sustain a full activation of the RRF and our commercially operated vessels to meet sealift needs.
Specifically, the 2017 analysis determined that, at that time, concurrent operations of the commercially operated U.S.-flagged fleet and sustained military sealift operations would require 13,607 U.S. mariners with unlimited credentials. In 2017, the estimated pool of actively sailing mariners was comprised of 11,768 sealift qualified mariners—documenting a deficit of 1,839 mariners. This optimistic scenario assumed that all qualified mariners would be both available and willing to sail as needed.
During the six years since the 2017 study was released, globally standardized credentialing requirements have had an impact on the U.S. Merchant Marine. And of course, the maritime industry—like many other industries—has also been profoundly affected by the COVID-19 pandemic. Both of these developments have negatively impacted mariner retention.
Mariner credentials are issued by the U.S. Coast Guard (USCG), but USCG information technology systems are not currently structured to provide granular details regarding the pool of sealift qualified U.S. mariners. That said, ascertaining the true size of the U.S. mariner pool that could be activated in an emergency would require knowing not only the number of U.S. mariners with valid unlimited tonnage credentials but also the number from among that pool who would be available and willing to serve, particularly in a contested environment.
STATUS OF THE U.S.-FLAGGED FLEET
Requirements for sealift qualified mariners are a function of the size of the U.S.-flagged fleet, which also determines the number and type of job opportunities available to mariners.
Pursuant to 46 U.S.C. § 50101, the United States is to have a merchant marine that is “sufficient to carry the waterborne domestic commerce and a substantial part of the waterborne export and import foreign commerce of the United States and to provide shipping service essential for maintaining the flow of the waterborne domestic and foreign commerce at all times.”
The domestic commerce of the United States—that is, commerce between two points in the U.S.—is carried on U.S.-flagged, coastwise qualified vessels, typically known as “Jones Act qualified” vessels. Data from the U.S. Army Corps of Engineers for the 2021 calendar year show that there were nearly 45,000 vessels of all types in the Jones Act trade at that time. A study completed in 2019 by PriceWaterhouse Coopers for the Transportation Institute concluded that the Jones Act supported nearly 650,000 jobs and contributed more than $72 billion to our nation’s Gross Domestic Product. U.S.-flag vessels provide well-paying, high-quality jobs for
U.S. mariners.
Presently, MARAD estimates that we carry less than 2% of our import/export waterborne foreign commerce on U.S.-flagged vessels. The U.S.-flagged fleet moving import/export waterborne commerce in the foreign trade is comprised of just 85 vessels. Sixty of these vessels participate in the Maritime Security Program (MSP) and two participate in the Cable Security Fleet Program (CSP), which provide payments to vessel operators in return for vessel availability to meet government needs. Ten vessels will eventually be enrolled in the new Tanker Security Program (TSP) that MARAD is implementing pursuant to Congressional authorization and appropriations.
Full activation of the sealift fleet would involve our U.S.-flagged commercially operated fleet sailing internationally, larger oceangoing Jones Act vessels requiring mariners with unlimited tonnage credentials, vessels operated by the Military Sealift Command, and the nearly 50 vessels comprising MARAD’s RRF. All of these vessels draw crewmembers from the same constrained pool of sealift qualified mariners.
MARAD INITIATIVES TO SUPPORT MARINER EDUCATION & TRAINING
In September 2022, I convened a forum attended by more than 75 industry stakeholders to discuss mariner workforce challenges. Among many issues, we discussed the fact that providing better work/life balance to today’s merchant mariners—comparable to the quality of work life in other sectors of the economy—is essential.
We also discussed how critical it is to growing our mariner workforce and to recruiting and retaining the next generation of mariners to ensure that all mariners are treated with respect and dignity and are guaranteed safe workplaces. Every mariner must have the opportunity to succeed and advance on the basis of their skills and professionalism, and we must ensure that our U.S. Merchant Marine reflects the values and diversity of the nation it serves. I thank this Committee and the entire Congress for supporting ongoing efforts to strengthen safety in the maritime industry.
In recent months, I have had the opportunity to discuss many proposals developed by all corners of the maritime industry to help expand recruitment and to support the retention of mariners, and I appreciate industry’s many efforts in this regard. Fundamentally, addressing our nation’s mariner needs requires a whole-of-government effort paired with multi-faceted industry initiatives. As part of that collaboration, MARAD is implementing numerous programs and policies to strengthen the mariner workforce.
U.S. Merchant Marine Academy
MARAD operates the U.S. Merchant Marine Academy (USMMA), located at Kings Point, New York. The Academy graduates just over 200 students annually who have earned their Bachelor of Science degrees, USCG merchant mariner licenses with officer endorsements, and commissions in the U.S. Armed Forces reserves. The USMMA is the primary source of licensed mariners with service obligations.
Recognizing the urgent need to address the many long-standing and systemic challenges at the Academy, under the Biden-Harris Administration, MARAD and USMMA have been working to combat sexual assault and sexual harassment and to advance culture change to improve safety for USMMA Midshipmen and indeed for all mariners. In November 2021, MARAD/USMMA briefly paused USMMA’s Sea Year training so that the U.S. Department of Transportation (DOT), MARAD, and USMMA could strengthen policies and procedures to help prevent sexual assault and harassment, improve the support provided to survivors, and support a culture of accountability at sea. In December 2021, MARAD introduced the “Every Mariner Builds a Respectful Culture” (EMBARC) program, which enumerates sexual assault and sexual harassment prevention and response procedures that commercial carriers agree to before MARAD permits them to carry USMMA cadets on their ships.
To strengthen MARAD’s oversight of the EMBARC program, MARAD established and is staffing the MARAD Office of Cadet Training At-Sea Safety within the office of the Deputy Associate Administrator for Maritime Education and Training. The new Director of the office joined MARAD in August 2022, and three other staff have subsequently joined the office. This office manages EMBARC enrollments and compliance reviews. Training of the initial audit team has been completed and fourteen enrolled vessels have already been assessed by the team to ensure their compliance with the EMBARC standards.
At the USMMA, additional efforts are underway to combat sexual assault and sexual harassment and to improve safety both at sea and on the campus. For example, to strengthen the Sexual Assault Prevention and Response office, the Academy has added a new GS-15 Director position in the office. Using direct hire authority provided in the Fiscal Year (FY) 2022 National Defense Authorization Act (NDAA) (Pub. L. 117-81), USMMA has filled the position with a new employee who reported to the Academy in September 2022.
Thanks to the FY 2023 NDAA, commercially operated vessels must comply with standards set by MARAD regarding the prevention of, and response to, sexual assault and harassment before they can train USMMA cadets. Further, the FY 2023 NDAA gave MARAD the authority to withhold payments from companies participating in the MSP, CSP, and TSP if they are not enrolled in—and operating in compliance with—EMBARC. MARAD is working as quickly as possible to implement an EMBARC rule pursuant to the authority provided by the FY 2023 NDAA.
In addition, the FY 2023 NDAA requires that certain ocean-going vessels include sexual assault and sexual harassment response policies in their Safety Management Systems—which has been a central tenet of EMBARC. In short, the FY 2023 NDAA reinforces a long overdue change in shipboard culture that will promote fair and equitable treatment of all mariners and contribute to a safer working environment.
At the same time, we recognize that there is more we must do to eliminate sexual assault and sexual harassment at the USMMA, and in the merchant marine generally. Last year, the Department of Transportation proposed the creation of an Independent Review Commission on the Prevention of, and Response to, Sexual Assault, Sexual Harassment and Related Offenses, modeled on a recent DOD advisory body that made recommendations related to accountability, prevention, climate and culture, and victim care and support. While Congress did not take up that proposal, we intend to ask the USMMA Advisory Council required by the FY22 NDAA to make recommendations on sexual assault and sexual harassment prevention and response one of its core mandates.
MARAD has also been working to rehabilitate and replace existing infrastructure at USMMA’s campus and to strengthen significantly USMMA’s ability to plan and manage capital investments and major maintenance efforts. Consistent with recommendations from the National Academy of Public Administration (NAPA), MARAD created and staffed a new Senior Executive Service position to lead facilities investments at the Academy and is reorganizing the infrastructure and maintenance management organization at the Academy. MARAD and the DOT have also created new oversight bodies to ensure that investments of taxpayer funds are properly managed, and yield completed projects that address the Academy’s most urgent needs. In late 2022, MARAD/USMMA released a Capital Improvement Program that prioritizes planned capital investments to address the immediate health and safety needs of the Academy’s midshipmen and to support re-accreditation of the Academy.
Support to State Maritime Academies
The six State Maritime Academies (SMAs) are located in California, Michigan, Maine, Massachusetts, New York, and Texas. MARAD administers extensive Federal programs that support the SMAs, including providing a MARAD-owned and maintained training vessel to each school, as well as limited direct funding and some additional financial assistance to partially offset the cost of fuel used by the training vessels.
Since FY 2018, Congress has appropriated a total of $1.61 billion towards the re-capitalization of the MARAD training ship fleet. With this funding, MARAD is building five National Security Multi-mission Vessels (NSMV), which will provide state-of-the-art training platforms that ensure the U.S. continues to set the world standard in maritime training.
The ships—which the Secretary of Transportation has designated as the State class—are designed with dedicated training spaces, including classrooms, a training bridge, lab spaces, and an auditorium. Each NSMV has space to embark up to 600 cadets, maximizing the capability of the ship and its mission to provide students with a world-class education. Delivery of the first NSMV—the EMPIRE STATE—will occur this summer, and by 2026, one NSMV will be provided to each SMA except the Great Lakes Maritime Academy.
I thank the SMAs for their ongoing support of initiatives to strengthen safety at sea. I note that all SMAs have confirmed they will not place their students on any vessels operated by companies that are eligible to enroll in EMBARC unless the companies are enrolled. I also appreciate the SMAs’ ongoing work to develop policies and procedures modeled on EMBARC to combat sexual assault and sexual harassment on small, regional commercial vessel operators on which they rely to train SMA students. Such vessel operators are not able to comply with all elements of EMBARC, which is designed to apply to operators of large, ocean-going vessels.
Finally, I note that prior to the placement of an NSMV at an SMA, each SMA will be required to enter into a new Memorandum of Agreement with MARAD that enumerates the terms and conditions governing the operation of the MARAD-owned vessels, including a set of policies that adapt EMBARC for application on board training ships.
Centers of Excellence
The FY 2018 NDAA authorized the Secretary of Transportation to designate Centers of Excellence for Domestic Maritime Workforce Training and Education (CoE). Pursuant to this authority, MARAD developed, and the Secretary approved, a voluntary program, which includes an application process, to identify and recommend qualified and eligible entities for CoE designation. A CoE designation is the first step in strengthening a nationwide partnership of academic centers focused on advancing the goals and efforts of the maritime industry
Twenty-seven facilities were designated as CoEs in May 2021. Designees included accredited community colleges, technical colleges, a shipyard apprenticeship program, and maritime training centers under State supervision. The CoEs help provide outreach to diverse communities around the Nation and expand awareness of the maritime industry, including the U.S. Merchant Marine.
Growing the U.S.-Flagged Fleet
Under the Biden-Harris Administration, MARAD is administering statutorily authorized initiatives that are growing the U.S.-flagged fleet and creating new job opportunities for American mariners with unlimited tonnage credentials. In 2021, MARAD stood up the Cable Security Fleet Program, which brought two cable laying vessels under the U.S. flag. In December 2022, MARAD issued the updated Voluntary Tanker Agreement and an Interim Final Rule to create the new TSP. The application period closed on February 17, 2023, and we anticipate announcing the first 10 ships selected for enrollment in the near term. The TSP initiative will create new employment opportunities for approximately 500 U.S. mariners.
MARAD is also continuing our work to support effective implementation of cargo preference requirements. We are working with the Biden-Harris Administration’s Made In America Office to help agencies understand and meet cargo preference requirements. In addition, consistent with my prior testimony before this Subcommittee, I have written to all federal departments and agencies explaining how MARAD can help them ensure they meet their obligations under cargo preference laws and regulations.
MARAD is working diligently on revisions to the cargo preference regulations as required by the FY 2023 NDAA. As part of that effort, and also consistent with my testimony before the Subcommittee last year, on March 1, MARAD published a Request for Information in the Federal Register asking members of the public to provide information on their experiences with cargo preference. We will use the input we receive to inform our work on the rule revisions as well as our continued interagency dialogue.
One of the current challenges with meeting cargo preference requirements is ensuring we have both enough vessels and the wide mix of vessel types to carry the many types of cargoes that the government impels. To help attract additional vessels to our flag, in 2022, the Biden-Harris Administration proposed that the prior Congress eliminate the 3-year period that vessels entering the U.S. flag must currently wait before they are eligible to carry civilian agency preference cargoes. Although implementation of this proposal would have no cost to the government, it was not adopted.
CONCLUSION
Ensuring that we have a robust pool of mariners with unlimited tonnage credentials to provide the sealift capacity to meet the military’s needs and to support our economic success is a critical priority for MARAD—particularly given the evolving threats in what the National Security Strategy has identified as a “decisive decade.” Thank you for the opportunity to discuss this issue today and I look forward to answering your questions.
####
STATEMENT OF
MARK H. BUZBY
ADMINISTRATOR MARITIME ADMINISTRATION
U.S. DEPARTMENT OF TRANSPORTATION
BEFORE THE
COMMITTEE ON ARMED SERVICES
SUBCOMMITTEE ON SEAPOWER AND PROJECTION FORCES
AND SUBCOMMITTEE ON READINESS
U.S. HOUSE OF REPRESENTATIVES
HEARING ON SEALIFT AND MOBILITY REQUIREMENTS IN SUPPORT OF THE NATIONAL DEFENSE STRATEGY
March 11, 2020
Good afternoon, Chairman Courtney, Chairman Garamendi, Ranking Members Wittman and Lamborn, and members of the Subcommittees. Thank you for the opportunity to discuss the Maritime Administration’s (MARAD) role in supporting the Department of Defense’s (DOD) strategic sealift capabilities.
America’s strategic sealift includes both Government-owned ships and assured access to a fleet of privately-owned, commercially operated, U.S.-flag vessels and intermodal systems, and the civilian U.S.-citizen Merchant Mariners who crew them. Together, these vessels, mariners, and networks share the mission of transporting equipment and supplies to deploy and sustain U.S. forces anytime and anywhere in support of national policy. While U.S. strategic sealift continues to be an efficient and effective force for moving cargoes worldwide during peacetime, concerns remain about the ability of our Nation to adequately project and sustain power globally while operating in a contested environment against a major adversary.
The U.S. Government-owned Ready Reserve Force (RRF) and Military Sealift Command (MSC) surge sealift fleets are aging and in need of recapitalization. The U.S. shipbuilding industry has largely lost the capacity to build, repair, and replace the large, commercial-type ships needed for sealift at a pace adequate to meet U.S. wartime needs. As of February 15, 2020, there are 87 large, privately-owned self-propelled U.S.-flag vessels operating exclusively in the U.S. international trades. The Department of Transportation recently released a report to Congress outlining goals and objectives to support military sealift, U.S.-flag vessels operating in domestic and international trade, the U.S. maritime workforce, port infrastructure, and U.S. shipbuilding capacity. In addition, MARAD is working in partnership with USTRANSCOM, the Navy, and MSC to begin recapitalizing the RRF. MARAD alone cannot solve the maritime challenges facing the Nation, but we will continue to be a strong advocate to help inform the public and promote strengthening our maritime capabilities.
Ready Reserve Force
The RRF is a fleet of Government-owned vessels used to transport DOD cargo during major contingencies. The 46 RRF vessels, along with 15 MSC vessels, provide sealift surge capability to deliver the initial movement of DOD equipment and supplies where needed during major contingencies. These vessels are then joined by commercial U.S.-flag vessels, which provide the bulk of follow-up sustainment sealift to support ongoing U.S. operations.
Vessels in the RRF have an average age of more than 45 years, and the fleet has struggled to maintain an adequate readiness level. To address these readiness challenges, MARAD is working closely with the Navy to implement its surge sealift recapitalization strategy. This strategy includes a combination of targeted service life extensions, acquiring and converting used vessels, and eventually building new vessels in U.S. shipyards.
These efforts require key industrial capabilities. A sustainable ship construction industrial base and sufficient marine repair facilities are necessary ingredients if we are to preserve our surge sealift capacity. However, even as China, a formidable potential threat, has become the world’s leading shipbuilder, our domestic capacity to build and repair large commercial ships has dwindled. For example, Avondale Shipyard, which only a few years back was actively producing naval and commercial ships and employing thousands of Louisianans, is now being operated as a shipping terminal. Of the seven large shipyards involved in the last major effort to convert or construct large, commercial-type ships for sealift several decades ago, three are now closed, one no longer does large commercial work, and two do conversion work. Only one shipyard, General Dynamics NASSCO, retains its expertise to build large commercial type ships.
As authorized in the Fiscal Year (FY) 2018 National Defense Authorization Act (NDAA), MARAD is taking steps toward the acquisition and modification of second-hand ships from the open market for service in the RRF. MARAD released a Request for Proposal for Vessel Acquisition Manager (VAM) services on February 24, 2020. The selected VAM will identify, modernize, and after purchase, may operate these vessels. MARAD intends to select a VAM experienced in recapitalizing commercial fleets. The VAM will identify suitable Ro/Ro vessels that can be modified to meet DOD’s needs for the organic sealift fleet. MARAD will continue to work closely with Navy, DOD, and USTRANSCOM to identify and procure vessels to meet sealift needs.
U.S.-Flag Commercial Fleet
The Government-owned strategic sealift fleet is augmented by U.S.-flag vessels that provide much of the sustainment sealift following surge operations. The MSP is the heart of sustainment sealift, maintaining a fleet of 60 commercially-viable, militarily-useful vessels, active in international trade, but available on-call to meet DOD contingency requirements. In return for a stipend, MSP operators provide DOD with assured access to not only ships, but also the multibillion-dollar global intermodal networks maintained by participating carriers. MSP operators also provide employment on their vessels for 2,400 of the trained, skilled U.S. Merchant Mariners our country depends on to crew the RRF and MSC surge vessels if activated during a surge. Additionally, the MSP program supports more than 5,000 shore side maritime industry jobs each year.
I appreciate the work of the members of the Committee to reauthorize the MSP through FY 2035 in the recently enacted FY 2020 NDAA. The reauthorization of the Maritime Security Program (MSP) through FY 2035 ensures access to U.S.-flag commercial vessels to augment the U.S. Government fleet capability. The MSP fleet is at the highest capacity in the program’s history. Recent MSP vessel replacements have added approximately 80,000 square feet of new roll-on/roll-off (RO/RO) capacity, and the President has requested full funding of the program for FY 2021.
This program will help keep vessels operating under the U.S.-flag. In addition, MARAD is committed to ensuring compliance with cargo preference requirements and that cargo preference requirements are met. We are expanding our outreach to Federal Government agencies and industry to cooperatively assist them in meeting these requirements and using U.S.-flag vessels to improve the Nation’s overall sealift readiness of ships and mariners. These cargos help enable U.S.-flag vessel operators to remain operating under the U.S.-flag and employ U.S. citizen mariners.
MARAD is also committed to supporting our U.S.-flag fleet operating domestically. U.S. coastwise trade laws, commonly referred to as the Jones Act, contribute to sealift capability and capacity and help sustain the U.S-flag domestic trading fleet. Jones Act requirements support U.S. shipyards and repair facilities, and sustain supply chains that produce and repair American-built ships (including Navy and Coast Guard vessels). In addition, Jones Act vessels employ U.S. citizen mariners able to crew our surge fleets and ensure that vessels navigating within and between U.S. coastal ports and inland waterways operate with U.S. documentation and a majority citizen-crew, rather than under a foreign flag with foreign crew. Several U.S. flag self-propelled ocean-going vessels are also operating in Jones Act trade.
U.S. Mariner Workforce and Training
Access to a pool of qualified mariners from a robust, commercial maritime fleet is essential to maintaining enough sealift readiness capacity for contingencies. Due to the number of ships in the U.S.-flag, oceangoing fleet, I am concerned about our ability to quickly assemble an adequate number of qualified mariners to operate large ships (unlimited horsepower and unlimited tonnage) needed for surge and sustainment sealift operations during an extended mobilization. MARAD is working to better track licensed mariners who may no longer be sailing, but could serve if needed, and to develop tools to understand and analyze changes in the numbers of fully qualified mariners trained to meet the Nation’s commercial and sealift requirements.
MARAD continues to support mariner education and training through the U.S. Merchant Marine Academy (USMMA), and facilitates mariner education through the support we provide to the six state maritime academies, which produce highly skilled licensed officers for the U.S. Merchant Marine. As this committee is aware, aging vessels at the state maritime academies are used to train cadets who will become the fully-qualified mariners needed to crew Government and U.S.-flag commercial ships. Congress has recognized the need to replace these ships and has appropriated funding for National Security Multi-Mission Vessels (NSMV), $300 million in each of FYs 2018 through 2020. Additionally, the President’s FY 2021 Budget requests an additional $300 million to continue to address critical recapitalization of the training school ships. Since first receiving funding in March 2018, MARAD has implemented the approved acquisition strategy, selected a Vessel Construction Manager, and is preparing to finalize the selection of a shipyard to construct the new ships. The first NSMV is expected to be delivered to DOT/MARAD in FY 2023.
Conclusion
Thank you for the opportunity to address this Committee on the state of American sealift. MARAD stands ready to support DOD sealift requirements against any challenge. However, we continue to work to mitigate any readiness and capacity risks that could limit our ability to move and sustain the force at an optimal level in a crisis. This risk mitigation requires careful planning and action now. MARAD remains committed to working with our Navy and USTRANSCOM partners to provide the sealift capabilities needed to meet our national security requirements.
Thank you for your support of the U.S. Merchant Marine. I look forward to your questions.
STATEMENT OFRICHARD A. BALZANO
DEPUTY ADMINISTRATOR
MARITIME ADMINISTRATION
U.S. DEPARTMENT OF TRANSPORTATION
BEFORE THE
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION
U.S. HOUSE OF REPRESENTATIVES
HEARING ON “COMMERCIAL AND PASSENGER VESSEL SAFETY: CHALLENGES AND OPPORTUNITIES”
November 14, 2019
Good afternoon, Chairman Maloney, Ranking Member Gibbs, and members of the Subcommittee. Thank you for the opportunity to testify today on the Maritime Administration’s (MARAD) role in promoting the safety and security of U.S.-flag commercial vessels. Secretary Chao’s number one priority is safety, and that focus extends to MARAD’s programs. Safe operation of MARAD’s National Defense Reserve Fleet (NDRF) and Ready Reserve Force (RRF), the privately-owned commercial Maritime Security Program (MSP) and Voluntary Intermodal Sealift Agreement (VISA) fleets, and all other U.S.-flag vessels is critically important to our maritime industry. MARAD is actively engaged with U.S.-flag commercial vessel operators to alert them to security threats and collaborate with them on emerging technologies and best practices to improve safety at sea. MARAD also plays an important role in educating and training U.S. mariners to ensure they are ready to face the challenges of living and working at sea, which includes encountering sometimes hazardous environments.
Mariner Training
The marine environment can be dangerous by its very nature, so a well-trained workforce is critical to safe vessel operations. MARAD educates and trains U.S. merchant mariners at the U.S. Merchant Marine Academy (USMMA) and facilitates mariner education through the support we provide to the State Maritime Academies (SMAs). The U.S. Coast Guard (USCG) establishes training requirements that maritime academies must meet, and the USMMA and the SMAs modify their curricula accordingly. In addition, MARAD encourages the academies to incorporate lessons learned from real world incidents.
At the academies, deck and engineering cadets must complete training and assessments required to obtain USCG Unlimited Licenses as 3rd Mate and 3rd Assistant Engineer and the corresponding international Standards of Training, Certification and Watchkeeping endorsements as well. These training courses and assessments take place during the academies’ four-year curricula. In addition to classroom and practical training ashore, cadets and midshipmen receive hands-on shipboard training on commercial vessels, the academies’ training vessels, or a combination of both.
For example, cadets at the USMMA receive formalized safety training throughout the curriculum. They learn everything from first aid and the proper use of personal safety equipment to aquatic survival and firefighting. As part of their education and training, USMMA cadets spend one year working and learning at sea on commercial U.S.-flag vessels, most of which are either MSP vessels or ships operated by the Military Sealift Command and crewed by civilian mariners. The cadets are integrated into the crews aboard these ships, which are actively engaged in commerce around the globe. Building on knowledge from the classroom, this first-hand experience solidifies the best working practices onboard the vessels, including safe vessel operations.
Cadets at the SMAs receive most of their at-sea training aboard vessels MARAD provides. One of the ways MARAD supports quality training for these cadets is providing them with safe and modern training vessels. Congress has appropriated funds the past two years to replace the oldest vessels in the aging training vessel fleet. The new training ships will provide state-of-the-art platforms to allow for future mariners to keep up with the ever-evolving global maritime industry. The new vessels have been designed specifically to provide a robust training environment including a second bridge, multiple simulators, and laboratories and classrooms designed to provide focus on specific curricula. While these vessels will primarily be used by SMA cadets, we anticipate that USMMA cadets will also gain required sea time aboard them.
Maritime Security
In addition to supporting U.S. mariner training, MARAD supports DOD strategic sealift requirements through our Government-owned vessels in the NDRF and RRF, as well as through assured access to commercial vessels in the MSP and VISA program. Security is a major concern for mariners who operate our ships and those who operate the broader commercial fleet. While we stay abreast of maritime security threats to our own assets, which include piracy, terrorism, criminal activity, or cyber-attack, MARAD also provides U.S.-flag vessels with timely information on those threats through interagency coordinated Maritime Alerts and Advisories. MARAD cooperates with the Departments of State, Defense, Justice, and Homeland Security, as well as the Intelligence Community, in providing those advisories. MARAD is also DOT’s principal coordinator for maritime domain awareness functions and serves as a key facilitator between maritime industry and government agencies providing expert maritime security advice and assistance on issues involving the global maritime transportation system.
Moreover, the Cruise Vessel Security and Safety Act of 2010 (CVSSA) directed DOT to ensure proper and accurate reporting of incidents occurring on cruise vessels. This information is collected from the FBI and made publicly available on the Department’s website on a quarterly basis. The CVSSA also permitted MARAD to create a Training Provider Certification Program to help certify companies that provide commercial CVSSA training to cruise vessel members. Since its creation in 2015, this voluntary program has certified that training provided by these companies adheres to the training standards and curricula jointly developed by the U.S. Coast Guard, the Federal Bureau of Investigation, and MARAD. These training standards are enforced by the Coast Guard and include ensuring proper maintenance of video surveillance systems, displaying U.S. Embassy and Consulate information, and adhering to fire safety and emergency requirements for passengers.
Technology and Innovation to Improve Maritime Safety
Safety regulations do not always keep pace with new technologies and practices. As a result, national and international industry-developed consensus standards often fill the gap. MARAD collaborates with the USCG, maritime industry, and scientific and technological innovators to develop voluntary consensus standards that guide equipment requirements and usage. For example, in response to the surge in interest to use liquefied natural gas (LNG) as a marine fuel, MARAD led the development of standards for LNG transfer hoses and associated equipment. MARAD also uses its RRF and training vessels as platforms to demonstrate innovations in safety technology, including anti-snapback mooring lines and marine evacuation systems, where existing equipment poses risks to mariner safety.
MARAD is currently working with the U.S. Army Corps of Engineers and the National Oceanic and Atmospheric Administration (NOAA) on a project to automate weather reporting from vessels. After prototype testing on MARAD vessels, automated weather stations are being installed on U.S.-flag ships for further demonstration and validation. These systems report weather data at three minute intervals through the ship’s automated identification system (AIS). Additional weather data obtained from ships much more frequently should improve weather forecasting and warnings, and hence improve vessel operational safety. Pairing this system with other on-board Global Positioning Systems (GPS) applications may also assist in detecting GPS spoofing (e.g., altering vessel location information), which is a growing cyber security threat.
The U.S. maritime workforce is a critical component to our Nation’s economic and national security. Recognizing this, MARAD is looking at advances in remote operations that help to reduce hazards to mariners. MARAD recently partnered with industry to demonstrate remote operation of a spill response vessel that can help minimize mariner exposure to toxic chemicals. Similar remote technologies could be used in other areas where mariner risks are high, such as emergency response or vessel inspections. Remote systems also have a role to play in preventing intrusion and monitoring risks during maritime operations. MARAD is exploring additional applications of data driven systems particularly in enhancing engineering and navigation systems.
Conclusion
MARAD looks forward to continued collaboration with our Federal partners and the maritime industry to improve vessel safety and security. I appreciate this subcommittee’s interest and support for the U.S. merchant marine and am happy to answer any questions you may have.
STATEMENT OF MARK BUZBY
ADMINISTRATOR
MARITIME ADMINISTRATION
U.S. DEPARTMENT OF TRANSPORTATION
BEFORE THE
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION
U.S. HOUSE OF REPRESENTATIVES
HEARING ON “SHORT SEA SHIPPING: REBUILDING AMERICA’S MARITIME INDUSTRY”
June 19, 2019
Good afternoon, Chairman Maloney, Ranking Member Gibbs and members of the Subcommittee. I appreciate the opportunity to testify today on the Maritime Administration’s (MARAD) efforts to foster, promote and develop short sea shipping in the United States through the America’s Marine Highway Program (AMHP).
The Marine Highway System consists of our Nation’s navigable waterways including rivers, bays, channels, the Great Lakes, the Saint Lawrence Seaway System, coastal, and certain open-ocean routes. These navigable waterways touch 38 states plus the District of Columbia and Puerto Rico. The purpose of the AMHP is to further incorporate these waterways into the overall U.S. transportation system, especially where marine transportation services are the most efficient, effective, and sustainable transportation option.
Congress established the AMHP through the Energy Independence and Security Act of 2007, P.L. 110-140. Recognizing the potential in the program, in following years Congress expanded and modified the program. The Coast Guard and Maritime Transportation Act of 2012, P.L. 112-213, expanded the program to include efforts to increase the utilization and efficiency of domestic freight and passenger transportation on Marine Highway Routes between U.S. ports. The National Defense Authorization Act of Fiscal Year 2016, P.L. 114-92, broadened the definition of short sea shipping to include more kinds of cargo and cargo or freight vehicles carried aboard commuter ferry boats.
Purposes of the America’s Marine Highway Program
The AMHP is intended to, among other things, reduce travel delays caused by congestion, cut greenhouse gas emissions, conserve energy, improve safety, and reduce landside infrastructure costs. Marine transport of goods offers a safe and efficient option for shippers as reflected in the tables below:[1]
emissionsEmissions |
|---|
Mode | Tons of GHG/ Million Ton-Miles |
Barge | 15.6 |
Railroads | 21.2 |
Truck | 154.1 |
safetySafety |
|---|
Mode | Ratio of Fatalities/ Million Ton-Miles |
Barge | 1 |
Railroads | 21.9 |
Truck | 79.3 |
fuel efficiencyFuel Efficiency |
|---|
Mode | Ton-Miles/ Gallon |
Barge | 647 |
Railroads | 477 |
Truck | 145 |
Congestion on our surface transportation system significantly impacts our economic prosperity and quality of life. One study estimates that in 2014 congestion cost America’s urban commuters an estimated $160 billion in wasted time and fuel; trucks account for $28 billion of this cost. [1] Overall, the volume of imports and exports transported by our freight system is expected to more than double over the next 30 years. This will have implications for ports, which handle approximately 70 percent of America’s international trade by volume.[2] Most of this additional cargo will ultimately move along our surface transportation corridors, many of which are currently at or beyond capacity. Expanding existing or establishing new marine highway services on commercially navigable waterways is a cost-effective way to meet our freight transportation needs and relieve landside congestion.
The AMHP consists of three elements: Route designation, project designation, and grants.
Marine Highway Routes
Marine Highway Routes are commercially navigable coastal, inland, and intracoastal waters of the United States as designated by the Secretary. This includes connections between U.S. ports and Canadian ports on the Great Lakes-Saint Lawrence Seaway System, and non-contiguous U.S. ports. Marine Highway Routes are a component of the Nation’s surface transportation system. Public entities may apply to MARAD at any time to request that the Secretary of Transportation designate (i.e., establish) a Marine Highway Route. To be eligible for designation, at a minimum a route must relieve landside congestion along coastal corridors or promote short sea transportation, as well as meet AMHP objectives described in regulations.[3] As of this month, DOT has designated 25 Marine Highway Routes comprising a significant portion of our navigable waterways.[4] The Marine Highway Routes are numbered akin to the interstate highways that they generally parallel. The latest route to be designated, the M-H1, are the waters in and around Hawaii.
Marine Highway Projects
Marine Highway Projects are planned or contemplated new services, or expansions of existing services, on designated Marine Highway Routes, that seek to provide new modal choices to shippers, reduce transportation costs, and/or provide public benefits, which include reduced air emissions, reduced road maintenance costs, and improved safety and resiliency impacts. These projects represent concepts for new, or expansion of existing, marine highway services that have the potential to offer public benefits and long-term sustainability without long-term Federal support. The desired outcome is that designated projects will help start new businesses or expand existing ones to move more freight or passengers along America’s navigable coastal, inland, and intra-coastal waters. The AMHP publicizes a semi-annual “Call for Projects.” In response, applicants propose projects and the Secretary of Transportation may designate qualified projects as “Marine Highway Projects.”
Marine Highway Grants
Competitive grants form the third component of the AMHP. Only Marine Highway Projects designated by the Secretary are eligible to apply for Marine Highway Grants. Grantees may use the funds to develop and expand the availability of documented vesselsand port and landside infrastructure. Only projects the Secretary designates are eligible to apply for Marine Highway Grants. Either the grant applicant, or private entities with endorsement by the applicant, are eligible to apply for grant funding. There are currently 25 designated projects.[5]
To date, DOT has awarded $24 million in Marine Highway Grants supporting six new and two existing marine highway services. In two instances, we funded vessel construction. In another case, interest from users on the inland waterways spurred Taylor Manufacturing of Louisville, MS, to engineer a “negative drop” reach-stacker used to load containers into river hopper barges; that equipment had previously only been available from foreign sources.
The AMHP is clearly having an impact. Metrics we gather to measure that impact include the number of truck road miles that have been eliminated. Using Federal Highway Administration formulas, MARAD estimates the public benefits of funded projects in dollars. In FY 2016 AMHP grant-funded services moved 35,215 twenty-foot equivalent units (TEUs) by water saving approximately $1.5 million in road maintenance and congestion costs. These savings were from the M-64 Express Marine Highway Service, running between Hampton Roads and Richmond, Virginia, the only grant funded marine highway service operating in the United States at that time. That number has continued to increase. In FY 2017 savings calculations were an estimated $3.6 million and increased to more than $4.9 million in FY 2018. This positive momentum is a result of additional new services being added: the Baton Rouge to New Orleans Service and the New York Cross Harbor Service. While the numbers may be small relative to the initial grant, the equipment will operate for decades in most cases, and the reductions in infrastructure damage, emissions, and fatalities will be felt for years.
Actions that could expand the America’s Marine Highway Program’s reach
We manage the AMHP with an eye toward innovation and constant improvement. To that end, we are considering specific ways MARAD can maximize the program’s effects. First, we are exploring opportunities with other Federal entities to transport federally-owned or generated cargo using a short sea transportation project when practical or available. We are also exploring partnerships with the EPA’s Ports Initiative and Smart Way Programs, and other such programs, to tout the efficiencies and environmental benefits of utilizing the Marine Highway System. Finally, MARAD has been proactive in engaging with local and regional officials, and private entrepreneurs, in analyzing specific logistical challenges where a waterborne solution may offer the best and most sustainable approach.
CONCLUSION
We are proud of the effect that the AMHP has had and are excited about the momentum it is building in the interest of national security, economic success, and the lives of the American people, but we are not done. We will continue to support innovation through the AMHP.
Mr. Chairman, thank you for the opportunity to discuss the AMHP and MARAD’s efforts to expand short sea shipping opportunities. I appreciate the Subcommittee’s continuing support for maritime programs and I look forward to working with you on advancing maritime transportation in the United States. I will be happy to respond to any questions you and the members of the Subcommittee may have.
ATTACHMENT 1
ATTACHMENT 2
List of Designated Marine Highway Projects
List of Designated Marine Highway ProjectsProject Name | Date Established | Marine Highway |
New England Marine Highway Expansion Project | 2010 | M-95 |
James River Container Expansion Project | 2010 | M-64 |
Trans-Hudson Freight Connector Project | 2010 | M-95 |
Tenn-Tom Freight Project | 2010 | M-65 |
Detroit/Wayne County Ferry Project | 2010 | M-75 |
Gulf Atlantic Marine Highway Project | 2010 | M-95 & M-10 |
Cross Gulf Container Expansion Project | 2010 | M-10 |
Cross Sound Enhancement Project | 2010 | M-95 |
M-55/M-35 Container on Barge Project | 2015 | M-55 & M-35 |
Potomac River Commuter Ferry Project | 2015 | M-495 |
New York Harbor Container and Trailer-on-Barge Service | 2015 | M-95 |
Baton Rouge-New Orleans Shuttle | 2016 | M-55 |
Paducah/McCracken County Container on Barge Marine Highway Project. | 2016 | M-70 |
Illinois Intrastate Shuttle | 2016 | M-55 |
Lake Erie Shuttle Service on the M-90 | 2016 | M-90 |
Great Lakes Shuttle Service | 2017 | M-90 |
Mid-Atlantic Barge Service | 2017 | M-95 |
Container on Barge & Heavy-Lift Corridor Service at Freeport TX | 2017 | M-69 |
Philadelphia-Canaveral Direct Service | 2017 | M-95 |
Port of Davisville/Brooklyn/Newark Container on Barge Service | 2018 | M-95 |
Harbor Harvest Long Island Sound Project | 2018 | M-95 |
Container on Barge Service on the M-70 and M-35 | 2018 | M-70 & M-35 |
South Carolina Ports Authority Container on Barge Service | 2018 | M-95 |
Port of Everett Container on Barge Service | 2018 | M-84 |
Chambers County Container on Barge Expansion Service | 2018 | M-69 |
STATEMENT OF MARK BUZBY
ADMINISTRATOR MARITIME ADMINISTRATION
U.S. DEPARTMENT OF TRANSPORTATION
BEFORE THE
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION
U.S. HOUSE OF REPRESENTATIVES
HEARING ON “REVIEW OF FISCAL YEAR 2020 BUDGET FOR THE COAST GUARD AND MARITIME TRANSPORTATION PROGRAMS”
May 21, 2019
Good morning, Chairman Maloney, Ranking Member Gibbs and members of the Subcommittee. I appreciate the opportunity to testify this morning on the President’s Fiscal Year (FY) 2020 budget priorities for the Maritime Administration (MARAD). MARAD’s statutory mission is to foster, promote, and develop the United States merchant marine and maritime transportation industry to meet the economic and security needs of the Nation. This budget request furthers that mission by investing in U.S. mariner training, supporting programs that help U.S.-flag commercial vessels compete globally, and maintaining sealift readiness to meet national security requirements.
FY 2020 BUDGET REQUEST
The United States is – and must remain – a maritime nation. A strong, resilient, reliable and efficient marine transportation system is required to keep the United States competitive in the global economy and to maintain our military strength. MARAD’s programs strengthen and promote the U.S. merchant marine industry to ensure sealift capacity is available to support our defense and economic security needs.
The number of U.S.-flag vessels operating in international trade has been at historic lows over the past several years. Of approximately 50,000 large, oceangoing commercial vessels operating around the world today, only 181 fly the U.S. flag. Of those, 81 vessels operate exclusively in international trade. The remaining 100 operate almost exclusively in domestic (“Jones Act”) trade. These U.S.-flag vessels are critical to the employment base for mariners with the unrestricted credentials and training required to crew Government ships used to deploy and sustain our armed forces around the world. As the fleet dwindles, so does the employment base for U.S. merchant mariners and the U.S. shipbuilding and repair industry, which are all essential components of national security. In addition, ensuring our capability to participate as a nation in international maritime commerce is a critical component to remaining globally and economically competitive. Without U.S.-flag vessels operating in international trade, the U.S. would become completely reliant on foreign-flag shipping services.
The Budget requests a total of $682.5 million to support MARAD’s programs in FY 2020. These resources will focus on maintaining the competitiveness of the U.S.-flag internationally trading commercial fleet and training the next generation of well-qualified merchant mariners. MARAD remains committed to marine transportation policies that improve security, address our Nation’s critical maritime infrastructure gaps, and leverage technology to meet the needs and challenges of the marine transportation industry. MARAD works in a variety of areas involving shipyards, ports, waterways, ships and shipping, vessel operations, national security and strategic mobility, ship disposal, and maritime education. A summary of the FY 2020 request is provided below.
NATIONAL SECURITY
The U.S. merchant marine is a fundamental component of our national defense strategy. Our strategic sealift relies on a Government-owned fleet and assured access to commercially operated U.S.-flag vessels, as well as the intermodal networks maintained by these vessel operators, to transport equipment and supplies to deploy and sustain our military forces anywhere in the world. Critical to the operation of both Government-owned and commercial U.S.-flag vessels is an adequate supply of qualified U.S. mariners to crew them. Currently, we face significant readiness challenges due to aging Government-owned vessels, historically low numbers of U.S.-flag vessels operating in international trade, and ensuring we have a sufficient number of qualified U.S. mariners that would be needed in the event of a long-term national emergency. I am concerned that the current fleet size could impact our ability to quickly assemble an adequate number of qualified mariners with the proficiency to operate large ships (unlimited horsepower and unlimited tonnage) needed for surge and sustainment sealift operations during a mobilization that lasts more than six months. We may be short of the number of mariners needed to meet crewing requirements beyond those first six months.
Maritime Security Program (MSP)
For FY 2020, $300 million is requested for the MSP, providing the full authorized stipend level of $5 million for each of the 60 ships enrolled in the program. The Maritime Security Act of 1996 established the MSP, which ensures access to 60 active, commercially viable, militarily useful, privately owned U.S.-flag vessels and crews operating in the international trade, and the necessary global intermodal logistics networks to move military equipment and supplies during armed conflict or national emergency. This program also facilitates critical employment for up to 2,400 U.S. merchant mariners qualified to sail on oceangoing vessels, some of whom would be called upon to crew the Government-owned fleet when those vessels are activated, and approximately 5,000 shore side maritime professionals each year. Participating MSP operators commit to making their ships and multibillion-dollar global networks of intermodal facilities and commercial transportation resources for service to the Department of Defense (DOD) during times of war or national emergency.
Overall, the MSP fleet’s military capacity is at the highest level in the program’s history. Being at full capacity bolsters the ability of MARAD and the U.S. merchant marine to meet DOD mission requirements. The ships and crews receiving MSP stipends have supported every U.S. conflict since its inception in 1996, including Operations Enduring Freedom and Iraqi Freedom, by providing cargo preference-contracted DOD transportation services. These vessels stand ready to play a vital role in support of U.S. military operations worldwide.
National Defense Reserve Fleet (NDRF) and Ready Reserve Force (RRF)
MARAD maintains a fleet of Government-owned vessels in the NDRF, which include training ships on loan to the six state maritime academies (SMAs) and the U.S. Merchant Marine Academy (USMMA or Academy). The fleet includes 46 RRF vessels that are maintained and ready for operation within five or ten days for transport of military cargo to critical areas of operation. In addition to providing strategic sealift support for DOD, these RRF vessels are relied upon to provide support services to emergency response personnel, such as meals and berthing, and deliver relief supplies, equipment, vehicles and emergency personnel to impacted disaster areas during national emergencies, including severe weather events. Our Nation has called upon RRF and NDRF vessels to respond to several recent disasters providing support for thousands of emergency responders.
The FY 2020 Budget for the DOD requests $352 million for MARAD to maintain the RRF. Funds will allow MARAD to continue to provide ready surge sealift support and special mission vessels from the RRF fleet, and also maintain MARAD’s NDRF fleet mooring sites. This request includes an increase from FY 2019 that is necessary for maintaining the aging RRF fleet of ships, which have an average age of more than 44 years and significantly increased maintenance, repair, and regulatory compliance costs due to more stringent vessel inspections.
For the past year, we have struggled to maintain readiness levels across the fleet. Older, increasingly obsolete equipment and systems require more time and money to repair or replace, if replacement parts, equipment and systems are even available. Thus, the escalating cost of service life extensions is an ongoing concern. Requested funding is needed to complete necessary repairs to comply with new regulatory requirements, such as upgrading and installing enclosed lifeboats, addressing exhaust emissions, and treating ballast water. MARAD is working with the U.S. Transportation Command (USTRANSCOM) and the U.S. Navy to address the urgent need for recapitalization of the RRF to ensure the readiness of these 46 ships. Long-term, MARAD supports the Navy’s surge sealift recapitalization strategy, which includes a combination of targeted service life extensions, acquiring and converting used vessels, and building new sealift vessels in U.S. shipyards.
MARITIME EDUCATION AND TRAINING
MARAD provides funding and oversight for mariner training programs to produce highly skilled U.S. Coast Guard (USCG) credentialed officers for the U.S. merchant marine. It takes many years of training to develop the necessary mariner competencies for deck and engineering officer positions on large vessels in international trade. An adequate pool of U.S. merchant mariners is vital to both the peacetime commercial success of the U.S.-flag fleet and to crew Government-owned surge sealift vessels to deploy and sustain U.S. forces overseas in times of national emergency.
The USMMA and SMAs support our Nation with well-educated and trained merchant mariners entering the maritime industry who can serve in support of military operations, national emergencies, and humanitarian missions. The USMMA graduates an average of 225 USCG-credentialed merchant marine officers annually who hold an unlimited license available to crew U.S.-flag ocean-going ships. Additionally, the combined six State Maritime Academies (SMAs) graduate approximately 900 USCG-credentialed merchant marine officers annually.
United States Merchant Marine Academy
The President’s FY 2020 Budget requests $82 million for the USMMA. Of this amount, $78 million will support Academy operations, and $4 million will fund priority maintenance and repairs to the Academy’s facilities, grounds, and equipment. These resources will enable the Academy to effectively achieve its core responsibility to educate and train the next generation of outstanding leaders as shipboard officers at sea and commissioned officers in our active and reserve armed forces. This funding will also support an approximately seven percent increase in the size of the regiment as the Academy gets back to the full student capacity following the completion of renovation of the barracks.
The USMMA is an accredited institution of higher education operating under the DOT and managed by MARAD. The USMMA offers a four-year maritime-focused program, centered on rigorous academic and practical STEM-based technical training that leads to a Bachelor of Science degree, a USCG merchant mariner credential (MCC) with an unlimited tonnage or horsepower officer endorsement, and a commission (if offered) as an officer in the reserve or active Armed Forces. Distinctly, USMMA graduates incur an obligation to serve five years as a merchant marine officer aboard U.S. documented vessels or on active duty with the U.S. Armed Forces or uniformed services. If serving in the reserves, they must remain as a commissioned officer for eight years.
The Academy, MARAD, and DOT are committed to ensuring the safety of Midshipmen both on campus and during their sea year. We have significantly improved Academy programs and procedures related to sexual harassment and sexual assault, and are making progress to instill a culture that does not tolerate such behavior. I am pleased with the direction and momentum of change at the Academy, but am also cognizant that eliminating sexual assault and sexual harassment is an issue that requires consistent attention. As such, addressing sexual harassment and sexual assault at the Academy and during sea year training remains a top priority for myself, our new Superintendent, RADM Jack Buono, and DOT leadership. MARAD will work with USMMA and DOT leadership to not only continue to establish effective procedural safeguards to respond to sexual assault and harassment, but to also ensure USMMA adopts a proactive mindset to respond immediately to conduct that enables assault and harassment. Proactive prevention measures are also critical to creating a learning environment that will enable the Academy to support MARAD’s strategic goal of a maritime workforce that draws from all communities across the Nation.
State Maritime Academies
In addition to providing oversight of the USMMA, MARAD provides funding assistance to six SMAs[1], which collectively graduate more than three-fourths of the entry-level merchant marine officers annually. The President’s FY 2020 Budget includes $242.3 million for SMA program support. This request includes $205 million for the construction of a third training ship. Unlike the USMMA, SMA cadets receive most of their sea time while sailing on board MARAD-provided training ships under instruction by their academy, with some training on commercial or military vessels. The current SMA training ships are very old and must be replaced. We appreciate the support Congress has provided for the School Ship recapitalization program, by appropriating funding for one vessel each in FY 2018 and FY 2019. Since that first appropriation in March 2018, MARAD has developed and implemented an acquisition strategy, incorporated industry feedback into the ship design, and is well along in evaluating proposals to select a Vessel Construction Manager who will contract for the construction of the vessels.
Additionally, the request provides $30.1 million to maintain the six existing SMA training ships in accordance with the USCG and American Bureau of Shipping requirements, and training ship capacity-sharing measures to allow uninterrupted availability of mandatory at-sea training opportunities for SMA cadets. Ensuring the continued availability of SMA training vessels is a critical need and high priority for MARAD. Training ship maintenance work is increasingly critical and costly as the ships age and approach or exceed their designed service life. MARAD will use the funds to sequence and address priority maintenance needs across all the training vessels, and to ensure that cost effective viable alternatives are available for SMAs that require additional training capacity.
Additionally, the request provides $2.4 million to fund the Student Incentive Program (SIP), which provides educational financial assistance to 75 new cadets each year (across all SMAs) who participate in this service obligation program. SIP students must maintain an unlimited USCG credential for six years, fulfill a three-year service obligation to serve as a merchant marine officer aboard U.S. documented vessels, and serve in a reserve unit of an Armed Forces or uniformed service for eight years if a commission is offered. The Budget also includes $3 million for direct payments to provide for operational support to each of the six SMAs, and $1.8 million for training ship fuel payments. The SMAs regard the SIP program and support for their training ships as among the most important recruiting tools to encourage potential cadets to pursue a merchant marine career. These programs and resources will also help ensure MARAD can fulfill its commitments to National security and supporting the growth of the Nation’s maritime workforce, by creating opportunities for individuals from all backgrounds to serve as mariners.
OTHER MARITIME PROGRAMS
Ship Disposal Program
The President’s FY 2020 Budget requests $5 million for the ship disposal program, including $3 million to maintain the Nuclear Ship SAVANNAH (NSS) in protective storage, according to Nuclear Regulatory Commission (NRC) requirements, while decommissioning of the vessel's defueled nuclear reactor, components, and equipment is in progress. The ship disposal funding request also includes $2 million for staff and administrative program costs.
MARAD is the ship disposal agent for Federal government-owned merchant-type vessels of 1,500 gross tons or greater and has custody of non-retention ships in the NDRF. When ships are determined to be no longer of sufficient value to merit the cost of further preservation, MARAD arranges for their responsible disposal, with priority emphasis on the disposal of vessels in the worst condition. Currently, MARAD has seven obsolete NDRF vessels not yet under contract for disposal, which is a historic low.
As a Federal licensee, MARAD is responsible for continuing the required protective storage activities for the NSS until decommissioning and license termination are complete. Protective storage activities include radiological protection, vessel maintenance, lay berthing, and custodial care. The program received funding for decommissioning in FY 2017 to initiate and complete Phase I, and additional funding in FY 2018 for Phase II and Phase III, fully funding the three-phased and seven-year decommissioning project. Phase I is comprised of administrative and industrial activities that complete the prerequisites for commencement of the heavy engineering and industrial activities in Phase II. Phase III is the final license termination period before release of the vessel to MARAD for final disposition. All decommissioning and license termination activities are on track for completion ahead of the December 2031 required NRC deadline.
CONCLUSION
These programs represent MARAD’s priorities supported by the President’s Budget. We will continue to keep this Subcommittee apprised of the progress of our program activities and initiatives in these areas in the coming year.
Mr. Chairman, thank you for the opportunity to present and discuss the President’s Budget for MARAD. I appreciate the Subcommittee’s continuing support for maritime programs and I look forward to working with you on advancing maritime transportation in the United States. I will be happy to respond to any questions you and the members of the Subcommittee may have.
[1] The six SMAs are: California Maritime Academy; Great Lakes Maritime Academy; Texas A&M Maritime Academy; Maine Maritime Academy; Massachusetts Maritime Academy; and State University of New York Maritime College.
