Posted:
August 10, 2012
By Tom Bethel
National President
It happened quickly and quietly, and when it was over early in the morning on June 29, the privately owned and operated U.S.-flag merchant fleet had lost one-third of its statutory PL-480 food aid export share. At least 16 ships, 640 seagoing jobs and 2,000 jobs in related sectors were put at immediate risk.
The rollback of the U.S.-flag PL-480 cargo preference mandate from 75 percent to 50 percent was accomplished through a last minute, unnoticed rider to a House-Senate conference report on H.R. 4348, the Moving Ahead for Progress in the 21st Century Act of 2012, or MAP-21. This was a massive surface transportation bill that authorized $105 billion in highway, railroad, mass transit and infrastructure projects nationwide over two years.
The offensive cargo preference provision was one example of how MAP-21 veered freely into matters unrelated to surface transportation. Among other things, the bill steered funding to local schools and to Gulf of Mexico coastal restoration in response to the BP oil spill crisis of 2010. MAP-21 also raised premiums paid to the Pension Benefit Guaranty Corporation and set new rules for pension plan interest rate calculations.
If there is any good news to be salvaged from all this, it is that the PL-480 cargo preference requirement itself was not the target.
The issue here was money - specifically, finding enough of it in these tight times to underwrite a politically popular election year bill touted by the administration and by many Democrats and Republicans in the House of Representatives and in the Senate as a jobs bill.
As 47 Democrats and Republicans serving on the House Transportation and Infrastructure Committee and the Senate Environment and Public Works Committee wrapped up their conference report on H.R. 4348 under what one media report described as "hurried" conditions, money that had been used for 27 years to cover U.S.-flag shipping rates on PL-480 cargo volumes above 50 percent - the Ocean Freight Differential account, or OFD - was diverted to help pay for the highway bill.
This was done with the obvious consent of the administration and leaders of both political parties in both Congressional chambers - and the Department of Transportation made no known attempt to block the spending shift. DOT is known to have opposed the cargo preference requirement tied to shipments supported by the Export-Import Bank of the United States, and DOT's Maritime Administration - the only federal agency charged exclusively with promoting the privately owned and operated U.S. merchant fleet - responded to the disturbing developments of June 29 with a limp statement essentially pledging to make the PL-480 cargo preference transition from 75 percent to 50 percent as easy as possible for the U.S. shipping industry and American merchant mariners.
We now know for certain that the diversion of the OFD account to other purposes had been discussed as a budget option for at least 18 months during deficit and debt reduction and debt ceiling negotiations between the White House - the President and the Vice President - and Democrat and Republican Congressional leaders. H.R. 4348 apparently provided the first real opportunity to do it.
The House-Senate conference report on H.R. 4348 - which was not open to debate or amendment in the House or in the Senate - was approved unanimously by the 47 Democrat and Republican conferees, approved by wide bipartisan margins in the whole House and in the whole Senate and sent to the White House, where the President signed it into law during the 4th of July Congressional recess.
The practical effect was repeal of the historic 1985 legislative compromise that ended chronic political and legal squabbling between maritime and agricultural interests over when the Cargo Preference Act of 1954 applied to exports financed entirely or in part by the U.S. Department of Agriculture.
Under the compromise, the U.S.-flag PL-480 allocation was increased from 50 percent as provided for in the 1954 law to 75 percent. In exchange for the higher PL-480 share, maritime interests relinquished all cargo preference right to all other USDA cargoes.
The compromise also established the OFD account to pay for the greater U.S.-flag PL-480 cargo share - the OFD applied not to the entire cost of using U.S.-flag vessels in PL-480 transactions, but only to U.S.-flag food aid shipments at levels greater than 50 percent.
One irony here is that one of the few things the administration and Congress were able to compromise on in the current legislative session was the overturn of a compromise. Another is that the budget maneuver seen by some in the administration and in Congress as sound spending strategy could result instead in far greater unforeseen federal expense in the interest of national security.
The U.S.-flag PL-480 cost at the 50 percent-75 percent level is about $15 million - a small sum in any contemporary federal budget context. This modest amount is sure to decline in direct proportion to steep overall budget cuts looming over the PL-480 program.
Money invested in significant U.S.-flag merchant ship participation in PL-480 service helps keep private sector U.S. vessels operating and available to the Department of Defense for strategic sealift in distant crises. This money also keeps civilian American merchant mariners working so that they, too, are available to crew government-owned and chartered ships as needed for military support services worldwide.
The simple truth is that it would cost DOD a lot more than $15 million to build or buy the sealift capacity represented by the U.S. merchant fleet - including vessels delivering PL-480 food aid safely and efficiently to its destinations. It would cost DOD a lot more than $15 million - and many years - to recruit, train and employ a merchant mariner workforce to replace that found today in the private sector.
As bad as this setback was for the U.S. maritime community, it could have been much worse in today's dire budget climate - instead of a one-third cut, statutory U.S.-flag access to PL-480 cargoes could have been eliminated completely. Moreover, the disturbing developments of June 29 did not signal a wider war on cargo preference, and there is known to be broad bipartisan Congressional support for U.S.-flag cargo preference in principle and in practice - a truth reaffirmed recently when cargo preference was left intact in legislation reauthorizing Ex-Im Bank.
Our union can claim credit for much of this. American Maritime Officers has spent many years cultivating support for cargo preference in general and in connection with PL-480 specifically, and we are now working independently and with other maritime interests to find a bipartisan remedy for the bipartisan bashing we endured on the PL-480 cargo preference front. AMO is working every available angle on every available avenue.
As seagoing members of AMO, you can make this job easier by participating to the greatest possible extent in the American Maritime Officers Voluntary Political Action Fund, which is used exclusively to support the re-election campaigns of federal lawmakers known to support the U.S. merchant fleet and American merchant mariners as valued national assets.
As always, I encourage your comments and questions. Feel free to reach me on my cell at (202) 251-0349. If you have a specific question about this issue or others or about the AMO Voluntary Political Action Fund, you can reach AMO Legislative Director Paul Doell at his cell at (954) 882-4297.
A footnote: we will report here and on Currents, the online AMO newsletter, on the pension provisions in H.R. 4348 and their possible impact on our union's retirement benefit funds.
The quick, quiet assault on PL-480 U.S.-flag cargo preference
By Tom Bethel
National President
It happened quickly and quietly, and when it was over early in the morning on June 29, the privately owned and operated U.S.-flag merchant fleet had lost one-third of its statutory PL-480 food aid export share. At least 16 ships, 640 seagoing jobs and 2,000 jobs in related sectors were put at immediate risk.
The rollback of the U.S.-flag PL-480 cargo preference mandate from 75 percent to 50 percent was accomplished through a last minute, unnoticed rider to a House-Senate conference report on H.R. 4348, the Moving Ahead for Progress in the 21st Century Act of 2012, or MAP-21. This was a massive surface transportation bill that authorized $105 billion in highway, railroad, mass transit and infrastructure projects nationwide over two years.
The offensive cargo preference provision was one example of how MAP-21 veered freely into matters unrelated to surface transportation. Among other things, the bill steered funding to local schools and to Gulf of Mexico coastal restoration in response to the BP oil spill crisis of 2010. MAP-21 also raised premiums paid to the Pension Benefit Guaranty Corporation and set new rules for pension plan interest rate calculations.
If there is any good news to be salvaged from all this, it is that the PL-480 cargo preference requirement itself was not the target.
The issue here was money - specifically, finding enough of it in these tight times to underwrite a politically popular election year bill touted by the administration and by many Democrats and Republicans in the House of Representatives and in the Senate as a jobs bill.
As 47 Democrats and Republicans serving on the House Transportation and Infrastructure Committee and the Senate Environment and Public Works Committee wrapped up their conference report on H.R. 4348 under what one media report described as "hurried" conditions, money that had been used for 27 years to cover U.S.-flag shipping rates on PL-480 cargo volumes above 50 percent - the Ocean Freight Differential account, or OFD - was diverted to help pay for the highway bill.
This was done with the obvious consent of the administration and leaders of both political parties in both Congressional chambers - and the Department of Transportation made no known attempt to block the spending shift. DOT is known to have opposed the cargo preference requirement tied to shipments supported by the Export-Import Bank of the United States, and DOT's Maritime Administration - the only federal agency charged exclusively with promoting the privately owned and operated U.S. merchant fleet - responded to the disturbing developments of June 29 with a limp statement essentially pledging to make the PL-480 cargo preference transition from 75 percent to 50 percent as easy as possible for the U.S. shipping industry and American merchant mariners.
We now know for certain that the diversion of the OFD account to other purposes had been discussed as a budget option for at least 18 months during deficit and debt reduction and debt ceiling negotiations between the White House - the President and the Vice President - and Democrat and Republican Congressional leaders. H.R. 4348 apparently provided the first real opportunity to do it.
The House-Senate conference report on H.R. 4348 - which was not open to debate or amendment in the House or in the Senate - was approved unanimously by the 47 Democrat and Republican conferees, approved by wide bipartisan margins in the whole House and in the whole Senate and sent to the White House, where the President signed it into law during the 4th of July Congressional recess.
The practical effect was repeal of the historic 1985 legislative compromise that ended chronic political and legal squabbling between maritime and agricultural interests over when the Cargo Preference Act of 1954 applied to exports financed entirely or in part by the U.S. Department of Agriculture.
Under the compromise, the U.S.-flag PL-480 allocation was increased from 50 percent as provided for in the 1954 law to 75 percent. In exchange for the higher PL-480 share, maritime interests relinquished all cargo preference right to all other USDA cargoes.
The compromise also established the OFD account to pay for the greater U.S.-flag PL-480 cargo share - the OFD applied not to the entire cost of using U.S.-flag vessels in PL-480 transactions, but only to U.S.-flag food aid shipments at levels greater than 50 percent.
One irony here is that one of the few things the administration and Congress were able to compromise on in the current legislative session was the overturn of a compromise. Another is that the budget maneuver seen by some in the administration and in Congress as sound spending strategy could result instead in far greater unforeseen federal expense in the interest of national security.
The U.S.-flag PL-480 cost at the 50 percent-75 percent level is about $15 million - a small sum in any contemporary federal budget context. This modest amount is sure to decline in direct proportion to steep overall budget cuts looming over the PL-480 program.
Money invested in significant U.S.-flag merchant ship participation in PL-480 service helps keep private sector U.S. vessels operating and available to the Department of Defense for strategic sealift in distant crises. This money also keeps civilian American merchant mariners working so that they, too, are available to crew government-owned and chartered ships as needed for military support services worldwide.
The simple truth is that it would cost DOD a lot more than $15 million to build or buy the sealift capacity represented by the U.S. merchant fleet - including vessels delivering PL-480 food aid safely and efficiently to its destinations. It would cost DOD a lot more than $15 million - and many years - to recruit, train and employ a merchant mariner workforce to replace that found today in the private sector.
As bad as this setback was for the U.S. maritime community, it could have been much worse in today's dire budget climate - instead of a one-third cut, statutory U.S.-flag access to PL-480 cargoes could have been eliminated completely. Moreover, the disturbing developments of June 29 did not signal a wider war on cargo preference, and there is known to be broad bipartisan Congressional support for U.S.-flag cargo preference in principle and in practice - a truth reaffirmed recently when cargo preference was left intact in legislation reauthorizing Ex-Im Bank.
Our union can claim credit for much of this. American Maritime Officers has spent many years cultivating support for cargo preference in general and in connection with PL-480 specifically, and we are now working independently and with other maritime interests to find a bipartisan remedy for the bipartisan bashing we endured on the PL-480 cargo preference front. AMO is working every available angle on every available avenue.
As seagoing members of AMO, you can make this job easier by participating to the greatest possible extent in the American Maritime Officers Voluntary Political Action Fund, which is used exclusively to support the re-election campaigns of federal lawmakers known to support the U.S. merchant fleet and American merchant mariners as valued national assets.
As always, I encourage your comments and questions. Feel free to reach me on my cell at (202) 251-0349. If you have a specific question about this issue or others or about the AMO Voluntary Political Action Fund, you can reach AMO Legislative Director Paul Doell at his cell at (954) 882-4297.
A footnote: we will report here and on Currents, the online AMO newsletter, on the pension provisions in H.R. 4348 and their possible impact on our union's retirement benefit funds.