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 “THE MARITIME ADMINISTRATION’S
FISCAL YEAR 2019 BUDGET REQUEST”
March 14, 2018
Good morning, Chairman Hunter, Ranking Member Garamendi and members of the Subcommittee. I appreciate the opportunity to discuss the President’s Fiscal Year (FY) 2019 budget priorities for the Maritime Administration (MARAD). MARAD’s statutory mission to foster, promote, and develop the merchant maritime industry of the United States. 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 2019 BUDGET REQUEST
The United States is a maritime Nation, with our country’s economy highly dependent on viable coastal and ocean resources, and inland waterways. In 2014, U.S. maritime freight activity helped to support $4.6 trillion of economic activity among the many non-maritime industries that depend on it for access to world markets and within the maritime industry itself, equivalent to 26 percent of our GDP. MARAD’s programs seek to support both the maritime industry’s commercial health and national security objectives.
The U.S.-flag fleet operating in international trade currently carries less than 2 percent of our annual foreign trade by tonnage. The U.S. commercial presence in the international maritime domain has been at historic lows over the past several years with only 81 ships remaining in those trades. As our national economy relies on foreign trade, we need to increase our capability to participate as a nation in maritime commerce to ensure we remain economically competitive. Without this capability, the U.S. economy would become reliant on foreign-flag shipping services. During Operation Desert Shield in 1991, DOD found it necessary to employ 177 foreign vessels to meet sealift needs in addition to approximately 170 U.S.-flagged vessels. However, 13 of the foreign vessels carrying essential supplies hesitated or refused to enter the area of operations, resulting in a loss of 34 transit days for ships carrying cargo for U.S. troops. Additionally, Commander, United States Transportation Command, recently testified regarding the critical importance of the availability of U.S.-flag vessels using this example stating, “foreign-flagged vessels declined to enter the area of operations, while U.S.-flagged vessels provided steadfast support, delivering the bulk of the Joint Force to the Middle East.”.As the fleet dwindles, so does the base of U.S. Merchant Mariners and the shipbuilding and repair industry, which are all essential components of national security.
To ensure a strong domestic maritime industry and U.S. Merchant Marine into the future, the President’s FY 2019 Budget Request for MARAD of $696.4 million is focused on increasing the competitiveness of the U.S.-flag fleet, and investing in the education and training of the next generation of 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. This request supports a variety of MARAD initiatives involving ships and shipping, vessel operations, national security and strategic mobility, ship disposal, and maritime education. A summary of the FY 2019 request is provided below.
NATIONAL SECURITY
By law, and pursuant to Presidential National Security Directive 28, DOD must rely on U.S.-flag ships crewed by volunteer, civilian U.S. mariners, to provide the sealift capacity to support military deployments and respond to national emergencies. MARAD is charged with ensuring that U.S.-flag ships and merchant mariners are available to meet DOD sealift requirements. The U.S.-flag fleet of privately owned, commercially operated vessels, along with government-owned vessels, provide a critical public-private sealift surge and sustainment capacity to move equipment and materials for the Armed Forces and Federal agencies as needed, during times of conflict, humanitarian crises, and natural disasters such as those we witnessed last summer in the wake of Hurricanes Harvey, Irma, and Maria.
Maritime Security Program (MSP)
For FY 2019, $214 million is requested for the MSP, providing for $3.6 million for each of the 60 ships enrolled in the program. The Maritime Security Act of 1996 established the MSP, which ensures access to U.S.-flag ships in ocean-borne foreign commerce and the necessary intermodal logistics networks to move military equipment and supplies during armed conflict or national emergency. This program also provides critical employment for up to 2,400 highly qualified U.S. merchant mariners and approximately 5,000 shore side maritime professionals each year. The MSP provides direct annual stipends for 60 active, commercially viable, militarily useful, privately owned U.S.-flag vessels and crews operating in the international trade. Participating operators commit their ships, crews, and global network of intermodal facilities and commercial transportation resources upon request by the Secretary of Defense during times of war or national emergency.
During FY 2018, MARAD restored the MSP fleet to the full, authorized level of 60 ships. Being at full capacity bolsters the ability of the U.S. merchant marine to meet DOD deployment and sustainment requirements. MARAD brought two new roll-on roll-off (RO/RO) vessels into the MSP fleet, which added more than 320,000 square feet in militarily useful cargo capacity, significantly improving DOD’s ability to move and sustain the heaviest U.S. armored units. Entry of the new ships raised the overall fleet's militarily useful capacity to the highest level in the program's history. The MSP has supported every U.S. conflict since its inception in 1996, including Operations Enduring Freedom and Iraqi Freedom. 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 merchant ships in the NDRF. This 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. Our Nation has called upon RRF and NDRF vessels, which include training ships on loan to the six state maritime academies (SMAs) and the U.S. Merchant Marine Academy (USMMA), to respond to several disasters. RRF and NDRF ships were activated to provide support to other government agencies for recent relief efforts following Hurricanes Harvey, Irma, and Maria. During these deployments, these vessels supplied first responders with housing, meals, logistical support, and relief supplies, including critical replacement of Federal Aviation Administration air navigation equipment that was delivered by one of the activated vessels to the Virgin Islands. Additionally, these vessels were previously activated for disaster relief following Hurricanes Katrina, Rita, and Sandy and the 2010 earthquake relief effort in Haiti.
In addition to hurricane response, this past year MARAD supported DOD with the largest round of ammunition cargo sealifts in decades, as well as a 57-day mission for an Army unit movement to Kuwait where five vessels were utilized to accomplish six distinct sealift missions. Along with cargo sealift activities, two MARAD vessels were utilized by the DOD’s Missile Defense Agency for tracking multiple missile test launches.
Funding provided from DOD will allow MARAD to continue to provide ready surge sealift support in FY 2019 and special mission vessels from the RRF fleet, while maintaining MARAD’s NDRF fleet mooring sites. This request includes an additional increase in funding that will support readiness related maintenance and repair initiatives for service life extension work supporting the special mission vessels. 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, the average age of which is 43 years.
MARITIME 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. Therefore, maintaining an adequate pool of U.S. merchant mariners is vital to both the peacetime commercial success of the U.S.-flag fleet and to maintain the capacity needed to man Government-owned surge sealift forces to deploy and sustain US forces overseas in times of national emergency. The USMMA and SMAs graduate most of the USCG-credentialed officers who hold an unlimited tonnage or horsepower endorsement available to crew these U.S.-flag ocean-going ships. These graduates support our Nation with a cadre of well-educated and trained merchant mariners capable of serving in support of military operations, national emergencies, and humanitarian missions.
United States Merchant Marine Academy
The President’s FY 2019 Budget Request includes $74.6 million for USMMA. Of this, $70.6 million will support Academy operations, and $4 million will fund priority capital repairs and improvements to the Academy’s buildings and infrastructure. This request 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. 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 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 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. In June 2019, 196 midshipmen are expected to graduate from the Academy.
DOT, MARAD, and the USMMA take sexual assault and sexual harassment at the Academy and at sea very seriously, and have worked collaboratively with industry stakeholders to facilitate a cultural change by disseminating a strong message against sexual assault and sexual harassment in the maritime sector. The Academy is implementing provisions included in both the Fiscal Year 2017 and Fiscal Year 2018 National Defense Authorization Act aimed at improving the Academy’s sexual assault and sexual harassment prevention and response efforts. Actions include enhancing prevention training, increasing campus security, initiating a Midshipman-driven on-campus culture change program, and expanding the Sexual Assault Prevention and Response Office. The FY 2019 funding will also provide for satellite communication devices that will be issued to midshipmen during Sea Year training and upgrading the 24/7 sexual assault hotline.
State Maritime Academies
In addition to providing oversight of the USMMA, MARAD provides funding assistance to six SMAs, which collectively graduate more than three-fourths of the entry-level merchant marine officers annually. The President’s FY 2019 Budget Request includes $24.4 million for the SMA program. This request includes $22 million to fund maintenance and repair costs for Federally owned school ships on loan from MARAD to the SMAs. Ensuring the continued availability of SMA training vessels is a critical need and high MARAD priority. 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 address priority maintenance needs across all the training vessels.
Additionally, the request provides $2.4 million to fund the Student Incentive Program (SIP), which provides financial assistance to 75 new cadets each year (across all SMAs) that participate in the program for a period of four years. The SIP program provides cadets with funds for uniforms, tuition, books, and subsistence. Upon graduation, SIP students must maintain an unlimited USCG credential for six years, fulfill a three-year service obligation in the maritime industry, and serve in a reserve unit of an Armed Forces or uniformed service for eight years. 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 careers as merchant marine officers. Approximately 991 Cadets are expected to graduate from the SMAs in May 2019.
School Ship Replacement
The President’s FY 2019 Budget Request includes $300 million to support the procurement and conversion of two used ships to replace aging and outdated training ships on loan from MARAD to the SMAs. Specifically, this funding will be prioritized for replacing the Training Ship (TS) EMPIRE STATE, currently assigned to the State University of New York (SUNY) Maritime College, and TS KENNEDY, currently assigned to the Massachusetts Maritime Academy. These two vessels are each more than 50 years old, and are now serving beyond their designed service lives. Both ships combined provide nearly 68 percent of the state maritime training capacity.
Investment in school ship replacement is essential to foster the growth of the Nation’s maritime transportation workforce needs, while addressing emerging workforce challenges facing a critical shortage of U.S. merchant mariners needed to crew the commercial and government-owned sealift ships to meet national security needs. The Department is working to update its 2019 Budget materials to reflect the $300 million school ship request and will submit that revised information to Congress soon.
OTHER MARITIME TRANSPORATION PROGRAMS
Ship Disposal Program
The President’s FY 2019 Budget requests $30 million for the ship disposal program, of which $25 million is to continue, under Phase II, the radiological decontamination, dismantlement, and disposal of the defueled nuclear power plant on board the Nuclear Ship SAVANNAH (NSS). Funding also includes $3 million to maintain the NSS in protective storage, which supports and manages the Nuclear Regulatory Commission (NRC) required licensed activities on board the ship, including radiological protection, vessel maintenance, lay berthing, and custodial care. The ship disposal funding request also includes $2 million for salaries and administrative program costs.
As a Federal licensee, MARAD is responsible for continuing the required protective storage activities for the NSS until decommissioning and license termination are complete. The program received funding for decommissioning in FY 2017 to initiate and complete Phase I of a three-phased 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. This FY 2019 request allows for a seamless decommissioning project transition, without shutdown interruption, into Phase II, which will be largely confined to activities involved with removing the reactor and major components. The NRC allows a maximum of 60 years from permanent nuclear power plant shutdown to license termination. All decommissioning and license termination activities must be completed by December 2031.
MARAD is also the ship disposal agent for Federal government-owned merchant-type vessels of 1,500 gross tons or greater and has custody of a fleet of non-retention ships. 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 non-retention vessels in the worst condition. Currently, MARAD has 13 obsolete NDRF vessels not yet under contract for disposal, which is a historic low. In July 2017, MARAD completed the final removal of the remaining two non-retention vessels from the Suisun Bay Reserve Fleet, in compliance with an April 2010 U.S. District Court consent decree requiring the removal of all 57 vessels from the fleet site by September 2017.
CONCLUSION
These programs represent MARAD priorities supported by the President’s FY 2019 Budget request. 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 FY 2019 Budget Request 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.