U.S. DEPARTMENT OF TRANSPORTATION
MARITIME ADMINISTRATION
STATEMENT OF
SEAN T. CONNAUGHTON
MARITIME ADMINISTRATOR
BEFORE THE
COMMITTEE ON TRANSPORTATION AND
INFRASTRUCTURE
SUBCOMMITTEE ON COAST GUARD
AND MARINE TRANSPORTATION
U.S. HOUSE OF REPRESENTATIVES
ON THE
MARITIME ADMINISTRATIONŐS BUDGET
REQUEST
FOR
FISCAL YEAR 2009
FEBRUARY 26, 2008
Mr. Chairman and Members of the
Committee:
I welcome the opportunity
to appear before you today to discuss the Maritime AdministrationŐs budget request
for Fiscal Year 2009.
We are seeing important and exciting changes in the U.S.
maritime industry, and at the Maritime Administration. The marine transportation industry is a
highly sophisticated, global, intermodal transportation network that is
absolutely vital to AmericaŐs economy and continued prosperity. The industry is in a period of renewal
and expansion. The Class of 2007
graduates from the NationŐs maritime academies found many more opportunities
for employment in the maritime industry than they have found in years
past. Private industry is pointing
the way toward greater use of our waterways to relieve congestion on the
landside transportation system.
A half-century ago, the maritime industry pioneered the use
of the container, now the standard instrument of trade all over the world. That paved the way for double-stacked
trains and the development of door-to-door logistical operations, software and
tracking systems. This evolution transformed the way we think about the
business of moving freight and people, and has completely altered the
transportation landscape and the role of transportation in our lives. Marine transportation is now a system
of systems—an integrated network, not just within the United States, but
around the world. It must operate seamlessly.
The Maritime Administration is developing a framework to
help guide decisions on federal, state, local, and private involvement and
investment in the overall Marine Transportation System. To that end, the Maritime
Administration has realigned its headquarters offices, and established presence
at the major U.S. gateway ports.
These offices, which will eventually be located at 10 of the largest
American ports, will identify bottlenecks and ways to improve freight
movement. They will work with all
stakeholders, promoting collaboration, and focusing particularly on planning
and environmental issues.
The Maritime AdministrationŐs efforts this year have focused
on issues with great possibilities for transforming the maritime industry and
the transportation system: greater use of the nationŐs waterways, or the Marine
Highway; initiatives that provide more opportunities for training and
employment of American mariners; and facilitating the upgrading of port
infrastructure.
In order to help ensure continued
competitiveness, we must continue to tailor our maritime policy to the
challenges of the 21st century. At
this time, I would like to address the Maritime AdministrationŐs operations and
training budget, summarize other provisions contained in the PresidentŐs
budget, and mention some of the Maritime AdministrationŐs accomplishments
during the past year.
Operations and Training
The total budget request for the Maritime Administration for
FY 2009 is $313,379,000, $117,848,000 of which is for the agencyŐs operations
and training. Operations and
training activities include the costs incurred by headquarters and region
staffs in the administration and direction of the various Maritime
Administration programs such as the Maritime Security Program; port, intermodal
and environmental activities; maritime labor, training and safety activities;
monitoring compliance with cargo reservation statutes; administration of
capital construction funds; and negotiation of agreements, understandings and
arrangements to reduce barriers that restrict American access to foreign ports
and markets.
The operations and training funds requested also
include $61,358,000 for the operation of the United States Merchant Marine
Academy (USMMA, Academy) at Kings Point, New York, and $10,987,000 for
continuing assistance to the six state maritime academies. In FY2009, funding of $26,794,000 is
requested for salary and benefits at the Academy, an increase of $1.1 million. The funding request for Academy
operations is an increase of $3.5 million, spread over several different
operational areas. Some of the
areas funded under this budget activity include: the Academy food service contract; uniforms; medical
requirements; IT hardware replacements and improvements; equipment for accreditation;
janitorial services; transportation leases; environmental and occupational
safety; and maintenance and repair needs.
The FY 2009 budget request for the Academy proposes
funding for the Capital Improvements Master Plan (CIP) in the amount of $8.2 million
to support high-priority maintenance and repair projects such as Americans with
Disabilities Act renovations; new roofs for Academy buildings; and other
priority maintenance and repair projects.
Major capital improvements have been postponed while we reexamine
priorities in the CIP and complete resolution of financial management issues
with Academy administration.
The USMMA and the six State maritime schools are the
only educational institutions that produce merchant marine officer graduates
with a four-year bachelors degree.
These graduates have completed coursework in marine engineering and
navigation; obtained a U.S. Coast Guard merchant marine officerŐs license; and
practical shipboard training. They
have first-hand experience in the marinerŐs environment, thus enabling them to
enter this professional workforce with confidence and self-reliance. In peacetime, they create and operate
efficient, cost-effective marine transportation systems. In times of conflict, they crew the
ships that support our troops.
Since we are on the topic of the Academy and State schools, I
cannot miss the opportunity to stress the importance of maritime education and
training. In todayŐs global
economy, the maritime transportation system is becoming an even more vital part
of our NationŐs prosperity than it has ever been before. In 2006, foreign trade accounted for
nearly 22 percent of our gross domestic product (GDP). Estimates project that by 2020, foreign
trade will account for almost 35 percent of our national GDP. This will continue to place an emphasis
on the marine transportation system as 95 percent of all foreign trade is moved
by ship.
With an expanded reliance on foreign trade to the American
economy, it is critically important to encourage and sustain American
involvement and investment in the marine transportation system. This is important for the economy
during times of peace and a matter of survival during times of war or national
emergency.
Without trained and qualified people, the marine
transportation industry cannot perform its essential role in the U.S.
economy. Such a workforce must
include licensed and unlicensed seamen, shore side and shipyard workers and
managers and operators of ships and facilities. This need is especially acute given the global shortage of
skilled seafarers.
An assessment of the current pool of licensed seafarers
shows an adequate supply of officers for the current manning of the U.S. Jones
Act fleet as well as the strategic sealift needs of our military. However, the ability to meet these
needs is quickly reaching a critical juncture. Today, nearly 7,000 licensed American officers exist to crew
our Jones Act and strategic sealift fleets with only 3,000 having sailed in the
past two years. The average age of
a licensed officer is over 42 years old and the average has gotten older over
the past few years. The average
Master and Chief Engineer is 51 years old, while the average Third Mate or
Third Assistant Engineer (entry-level positions) is 33 and 35 years old,
respectively.
All of these factors lead to one conclusion; the United
States must increase its pool of qualified licensed officers in the next ten
years or face drastic repercussions for both national and economic
security. Those repercussions
include an inability to move the military in time of war or emergency and the loss
of an American presence in the international maritime sector. The FY 2009 request indicates the
AdministrationŐs support for both the USMMA and the State Maritime Schools, and
specifically addresses this concern by proposing to enhance the Student
Incentive Payments (SIP) program at the State Maritime Schools with an
administrative provision that amends the program to increase the annual SIP
payment to students from $4,000 to $8,000 per academic year.
Maritime Security Program
Recently, MSP ships have contributed
greatly to Operation Enduring Freedom and Operation Iraqi Freedom. A total of 79 U.S.-flag commercial
ships (including 63 current or former MSP ships) have either been employed by
the Military Sealift Command (MSC) or the Military Surface Deployment and
Distribution Command (SDDC) to transport military cargo. SDDC reports that since September 11,
2001, U.S.-flag commercial ships have delivered over 360,000 twenty foot
equivalent units (TEUs) of containerized equipment and supplies to support U.S.
troops in Iraq and Afghanistan. In
addition, 34 of the 63 MSP ships utilized by MSC and SDDC also supported the
rebuilding of Iraq.
MSP participants signed operating
agreements with the Maritime Administration that provide for escalation of MSP
payments to $2.9 million per ship per year in FY 2009. Escalating payments were designed to
offset the impact of inflation and to provide incentive for MSP operators to
reinvest and upgrade their MSP fleet with newer, more modern and efficient
vessels. Since October 1, 2005, ten
MSP ships have been replaced with newer ships and an additional 19 ships
currently in the program will be replaced with newer vessels before the MSP authorization
expires in 2015.
Ship Disposal
By law, the Maritime
Administration serves as the U.S. GovernmentŐs disposal agent for merchant-type
vessels of 1,500 gross tons or more, and has custody of approximately 120
obsolete ships owned by the Federal government that are available for
disposal. These obsolete vessels
are located at the James River Reserve Fleet site in Virginia, the Suisun Bay
Reserve Fleet site in California and the Beaumont Reserve Fleet site in Texas
These vessels pose a risk to the local environment due
to the presence of residual fuel, asbestos and solid polychlorinated biphenyls
(PCBs); therefore, the disposal of these obsolete vessels continues to be one of the Maritime AdministrationŐs
highest priorities. Our budget
contains a request for $18,000,000 in FY 2009 for ship disposal. Specifically, funding of $15 million
would enable the Maritime Administration to dispose of 14 vessels from our
inventory and defray costs to develop and implement a risk mitigation plan for
compliance with the National Invasive Species Act, and for testing and
containment requirements related to the Clean Water Act.
Funding
of $3 million would allow the agency to continue activities required to bring
the Nuclear Ship Savannah (NSS) nuclear facilities into conformance with
Nuclear Regulatory Commission SAFSTOR standards. SAFSTOR is the pre-decommissioning condition in which a
non-operating nuclear power plant is safely husbanded for the period of time
between cessation of operations and dismantlement, disposal and license
termination. The NSS was
originally laid-up and placed in retention long before the industry gained any
substantial SAFSTOR experience. As
a consequence, it is now known that the NSS requires additional work before it
can be considered satisfactory for an additional period of extended
retention. Such work includes the
reduction of transient combustibles, reduction of radiological inventory,
maintenance of the facility containment structure, and continued routine
radiological surveillance and monitoring.
The Maritime Administration will
continue to investigate all alternatives to expedite the disposal of its
obsolete vessels at the least cost, and where possible on a cost-recovery
basis, while giving consideration to worker safety and the environment. We intend to continue to utilize
domestic recycling as the primary ship disposal method and will dispose of high
and moderate priority ships that are available for disposal during FY 2009
through domestic recycling.
Disposals through artificial reefing, deep sinking of ships with the
U.S. Navy and donation to not-for-profit groups will also be used to the
maximum extent possible. As
opportunities arise, we will also continue to work with domestic and
international organizations to accomplish vessel condition assessments,
hazardous materials identification, waste stream minimization, and applied technology
testing on our obsolete vessels.
We anticipate that in the future these activities could result in
improved overseas hazardous materials remediation and ship recycling and lead
to additional opportunities for environmentally safe and cost-effective vessel
disposal internationally.
Currently, there are no foreign facilities qualified to compete for
future ship recycling contracts.
Recently,
Congress again stressed the importance of ship recycling in the National
Defense Authorization Act of 2008, which requires that within 30 days of
enactment, the Secretary of Transportation convene a working group to review
and make recommendations on best practices for the storage and disposal of
obsolete vessels owned or operated by the Federal Government. This authority has been delegated to
the Maritime Administrator, who will convene the working group. I have already issued invitations to
participate in the first meeting of the working group, which will take place in
early March. Participants will
include senior representatives from the Coast Guard, the Environmental
Protection Agency, the National Oceanic and Atmospheric Administration, the
United States Navy, and other Federal departments, and agencies. Concerned State environmental agencies
may also be requested to participate. Among the vessels to be
considered by the working group are federally owned or operated vessels that
are to be disposed of or recycled; to be used as artificial reefs;
or to be used for the Navy's Ship Sinking Exercise Program (SINKEX).
The
working group will examine current storage and disposal policies, procedures,
and practices for obsolete vessels owned or operated by Federal
agencies; examine Federal and State laws and regulations governing such
policies, procedures, and practices and any applicable environmental laws;
and within 90 days after the date of enactment of the Act, submit a plan
to Congress to improve and harmonize practices for storage and disposal of such
vessels, including the interim transportation of such vessels. The plan will include a description of
existing measures for the storage, disposal, and interim transportation of
obsolete vessels owned or operated by Federal agencies in compliance with
Federal and State environmental laws in a manner that protects the
environment; a description of Federal and State laws and regulations
governing the current policies, procedures, and practices for the storage,
disposal, and interim transportation of such vessels; recommendations for
environmental best practices that meet or exceed, and harmonize, the
requirements of Federal environmental laws and regulations applicable to the
storage, disposal, and interim transportation of such
vessels; recommendations for environmental best practices that meet or
exceed the requirements of State laws and regulations applicable to the
storage, disposal, and interim transportation of such vessels; procedures
for the identification and remediation of any environmental impacts caused by
the storage, disposal, and interim transportation of such vessels;
and recommendations for necessary steps, including regulations if
appropriate, to ensure that best environmental practices apply to all such
vessels.
As
soon as practicable after the date of enactment of the Act, the head of each
Federal department or agency participating in the working group, in
consultation with the other Federal departments and agencies participating in
the working group, shall take such action as may be necessary, including the
promulgation of regulations, under existing authorities to ensure that the
implementation of the plan provides for compliance with all Federal and State
laws and for the protection of the environment in the storage, interim
transportation, and disposal of obsolete vessels owned or operated by Federal
agencies.
The
Act requires the Secretary of Transportation and the Secretary of Defense, in
consultation with the Administrator of the Environmental Protection Agency,
ensure that environmental best practices are observed with respect to the
storage, disposal, and interim transportation of obsolete vessels owned or
operated by the Department of Defense and that requirements
of environmental law are to be complied with in the implementation of Section
3503.
To
facilitate taskings of the working group, the Maritime Administration also has
undertaken substantial environmental management actions to upgrade its ship
disposal program. For example, the
Environmental Excellence Initiative, inaugurated one year ago, includes an
interdisciplinary and comprehensive study to recommend best management
practices for the fleet for incorporation into our action plan and the
Environmental Assessment of fleet management and disposal. These efforts, as well as closer coordination
with other interested agencies, also will facilitate the working group and the
adoption of a unified Federal position before various state interests and
assist in the resolution of the current lawsuit brought by the Natural
Resources Defense Council.
As you can see, Mr. Chairman and
Members of the Panel, we have put a great deal of thought and effort into
determining the best options for disposing of the backlog of obsolete NDRF
vessels. We are making
progress. Since October 1, 2007, seven
vessels have departed the fleet sites – six of those since January 1,
2008. I appreciate your continued
interest and request your support in this matter, and assure you that ship
disposal is of utmost importance to the Department.
The
National Defense Reserve Fleet and the Ready Reserve Force
The National Defense Reserve Fleet
(NDRF) was established in 1946 to meet reserve sealift requirements for emergencies
and national defense purposes.
NDRF vessels are primarily located at three anchorages: James River, Virginia; Beaumont, Texas;
and Suisun Bay, California. There
are currently 236 ships in the NDRF, 44 of which comprise the Ready Reserve
Force (RRF). RRF ships are
maintained in various states of readiness by commercial ship managers and can
sail in either 5 or 10 days. The Maritime Administration also assumed management of
8 Fast Sealift Ships from the Military Sealift Command in FY08. These vessels will become permanently
assigned to the RRF commencing FY09.
The majority of RRF ships are
located at port facilities along the East, West and Gulf coasts of the country
in proximity to likely loadout ports established by the DOD. When activated, RRF ships are fully
crewed by civilian merchant mariners working to support DOD missions. Our RRF ships are called upon to play a
critical role delivering supplies to support our troops and to provide
assistance during other crises. In
the Gulf War, Somalia, Haiti, Bosnia, and hurricane-ravaged Central America,
the RRF carried out DOD support missions.
Ten NDRF vessels participated in relief and recovery efforts during
Hurricanes Katrina and Rita, where NDRF vessels served over 260,000 meals and
provided 83,165 bed rotations over a six month period.
Readiness and reliability of ships
in the RRF are carefully measured.
Readiness is demonstrated by conducting maintenance sea trials during
the year, and tested by conducting ŇNo-NoticeÓ turbo activations at the order
of DOD. The Maritime
AdministrationŐs goal is to successfully activate the RRF ships under no-notice
conditions 100% of the time. In FY
2007, there were 8 such tests with all of them meeting or exceeding their
activation timelines. Consistent,
high operational reliability is also essential for effective support of DOD,
and the goal is to maintain 98% operational reliability. During FY 2007, the RRF achieved a
reliability of 99.5% with 17 ships being called and operated for 1,711 days
with only 8 days of unscheduled downtime.
AmericaŐs Marine Highways
Over two billion tons of goods
produced or consumed in the United States move through our nationŐs ports and
waterways each year. This volume
is expected to more than double over the next 20 years. The number of waterway recreational
users is also expected to grow by over 65 percent to more than 130 million
annually in the next 20 years, and high-speed ferry transportation is
experiencing rapid growth in response to land-transport congestion.
An important
element of our Marine Transportation System (MTS) is Ňshort sea
transportation.Ó The recently-enacted
Energy Independence and Security Act of 2007 (Energy Bill) directs the
Secretary of Transportation to Ňestablish a short sea transportation
program.Ó This law represents
significant progress for AmericaŐs Marine Highway, and provides another
valuable tool for the DepartmentŐs initiative to reduce congestion.
The primary focus of the Energy
Bill is to expand the production of renewable fuels, reduce dependence on oil,
and address global climate change, along with increasing energy security and
expanding the production of renewable fuels. When establishing the program, the Secretary of
Transportation is directed to designate short sea transportation projects to
mitigate landside congestion. Eight
actions will be necessary to implement the bill:
-
Designation of short sea transportation routes as
extensions of the surface transportation system;
-
Designation of projects if they offer waterborne
alternatives that reduce congestion;
-
Memorandums of agreement between the Secretary and other
Federal entities to transport federal cargoes via designated project services;
-
Consultation with Federal, state and local governments to
develop strategies to encourage the use of short sea transportation for
passengers and cargo;
-
Consultation with
shippers and transportation logistics entities to develop proposals for
short term incentives;
-
Establishment of a board of Federal, state and local
governmental entities to identify and seek solutions to impediments hindering
use of short sea transportation;
-
Conducting research regarding environmental and
transportation benefits, technology, vessel design and other improvements to
reduce emissions, increase fuel economy and lower costs, and identify solutions
to impediments to specific designated projects, and;
-
Making Short Sea Transportation vessels qualified for
Capital Construction Fund benefits.
The Maritime Administration has
already begun work on this important initiative. We are working with the Department to implement interim
regulations by March 16, 2008, as required by the Energy Bill, with final
regulations due by October 1, 2008.
A report to Congress is also required by December 19, 2008. Successful implementation of this program will require both
commitment and resources. I have
directed my staff to identify the personnel and funding requirements for
submission in future budget proposals.
The PresidentŐs 2009 budget includes new funding of $311,000 to further
initiatives to relieve congestion at the nationŐs ports and to promote short
sea shipping. Examples of specific
activities intended to increase use of AmericaŐs Marine Highway include helping
to identify adequate terminal facilities for proposed operations; bringing
shippers and carriers tog ether to generate cargo commitments; identifying
appropriate Federal cargoes; and removing other disincentives to the Marine
Highway.
As you know, the Maritime
Administration administers a Government guaranteed loan program, commonly
referred to as the Title XI program.
Title XI loan guarantees enable shipowners and shipyards to borrow
private sector funds on more favorable terms than might otherwise be
available. The Budget requests $3.5
million for administration of this program and to manage the existing loan
portfolio.
Recent years have presented
MARAD with significant challenges, which I expect to continue in FY 2009. I believe that the Maritime
Administration is up for these challenges, and welcome the opportunity to
continue our role in preserving both economic and national security. Your continued support will help us to
do our part in our mission. This
concludes my prepared statement. I
would be happy to address any questions you may have at this time.
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