Posted:
April 12, 2013
By Tom Bethel
National President
I can't imagine the Commander-in-Chief of the U.S. Armed Forces presiding willfully over the end of the privately owned and operated U.S.-flagged merchant marine and the irretrievable loss of the civilian American seagoing workforce - which together provide the only reliable, safe and efficient supply lines to U.S. military personnel deployed overseas. But several unsettling maritime policy developments since President Obama took office in January 2009 have caused many in our industry to question this administration's intent - it seems no one in the White House has connected the dots between U.S. merchant fleet promotion and effective strategic sealift service in defense emergencies.
The Jones Act ...
On one front, the administration appears indifferent to - or unaware of - the lasting positive impact of the Jones Act, which restricts all domestic waterborne trade to merchant vessels owned, built, flagged and crewed in the United States.
Our first hint of this was during the BP spill crisis in the Gulf of Mexico in 2010.
At the height of the long, faltering struggle to contain the oil and salvage the Gulf coastline, the Jones Act was subject to harsh, inaccurate and relentless criticism. The bizarre central claim - fueled by business and political interests abetted by national news media - was that the Jones Act had slowed the cleanup significantly by keeping foreign-flagged skimmers and other emergency response vessels from Gulf waters. This triggered a nationwide uproar and inspired House and Senate bills to repeal this increasingly important law.
Now-retired Adm. Thad Allen, commandant of the U.S. Coast Guard at the time and commander of the response operation, said emphatically at several points that the Jones Act was no impediment to the effort. U.S. maritime interests, Jones Act supporters in the House and Senate and national security experts pointed out repeatedly that Jones Act jurisdiction extends no further than three miles from the U.S. coastline, that the rig blowout was some 50 miles out and that foreign-flagged skimmers, dredges and other vessels were moving freely near the site - many of them turned away from service not by the Jones Act, but by BP, which the administration had left responsible for response vessel and service procurement.
The Department of Transportation's Maritime Administration echoed Adm. Allen's comments on the controversy but passed on the opportunity to make a broader public case for the Jones Act as neither a factor in the spill nor an impediment to the response. With batteries of news crews in every Gulf Coast community, MARAD could have reported in detail on the Jones Act's value to the U.S. economy, to defense strategy and to homeland security. This would have quelled much of the undue, misguided public anger that had surrounded the Jones Act.
A year later, we learned that the administration has an itchy trigger finger on the Jones Act waiver mechanism intended only in the legitimate interest of national security. This was especially clear in domestic energy trades.
In June 2011, Customs and Border Protection in the Department of Homeland Security - acting on a request from the Department of Energy - issued a blanket Jones Act waiver to allow foreign-flagged tankers to carry oil drawn down from the Strategic Petroleum Reserve directly between domestic points.
This waiver - said officially to be a response to turmoil in Libya and its impact on oil supply and cost - was withdrawn a day later, but CBP later approved some 48 unwarranted individual Jones Act waivers for the coastal carriage of SPR oil. DOE took harmful advantage of these waivers by setting picayune rules governing these SPR shipments - rules crafted clearly to deny available, qualified Jones Act vessels their lawful first access to these cargoes. DOT and MARAD had little if anything to say publicly about this calculated assault on the domestic shipping law.
In a separate but no less indicative turn in 2011, DOE's Energy Information Agency released a report claiming a shortage of Jones Act vessels to move petroleum products between U.S. ports in the Northeast if a refinery in Pennsylvania were to close. The EIA later conceded that it had undercounted the Jones Act tanker and barge fleet by more than half. The EIA refused to correct its report in the interest of an honest, accurate public record, and neither DOT nor MARAD made an issue of it.
The refinery in question remained in service, so the issue of Jones Act tanker and barge availability became moot - but the EIA's official flawed findings about the size and state of the Jones Act fleet in this sector stand in a report distinguished as an unreliable public resource.
Today, the Jones Act is held responsible almost daily for spiking gasoline prices, despite clear evidence to the contrary. U.S. maritime interests respond fully on this issue at every opportunity, but we hear little from the administration in the Jones Act's defense.
Meanwhile, local business and political interests in Puerto Rico, Hawaii and Guam are stepping up calls for pointless, counterintuitive Jones Act amendment or repeal, but the administration has made no public comment on these efforts.
In addition, we are braced for the possibility that the Jones Act and other statutes intended to sustain the privately owned and operated U.S. merchant fleet will be on the agenda in forthcoming trade negotiations between the U.S. and the European Union and in separate World Trade Organization "plurilateral" service trade talks among the U.S. and 21 other countries. The U.S. has never agreed to include maritime services in trade negotiations.
... and cargo preference
The administration is considerably less subtle in its approach to cargo preference for U.S.-flagged merchant vessels - as you know, federal laws set aside specific shares of government-financed imports and exports for American ships.
In one early case, the administration let public debate about the applicability of cargo preference to wind turbines purchased overseas with DOE loan guarantees under the President's 2009 economic stimulus measure drag on for more than a year. By the time DOT and DOE agreed - reluctantly - that U.S. vessels were entitled to at least 50 percent of these cargoes, the program had lapsed and the funding had dried up.
More recently, the administration worked quietly but unsuccessfully with major U.S. exporters to undermine cargo preference applied to goods financed through the Export-Import Bank of the United States.
We also know that the administration went along gladly with last year's PL-480 food aid cargo preference reduction from a minimum 75-percent U.S.-flag share to 50 percent. This one-third cut was accomplished through a last-minute add-on to a two-year highway and surface transportation budget bill. The pared U.S.-flag share was accompanied by elimination of the Ocean Freight Differential account through which MARAD had reimbursed the Department of Agriculture's Commodities Credit Corp. each year for the U.S.-flagged cost above 50 percent.
Now, in his fiscal 2014 budget blueprint, the President proposes to replace the direct shipment of U.S. crops to hungry people worldwide with cash grants for local and regional purchase of wheat, soybeans and other commodities under PL-480. This would force U.S. merchant ships out of the PL-480 food aid equation completely and permanently.
The encouraging news here is that the U.S. merchant fleet and civilian American merchant mariners have considerable, strong, bipartisan support in the U.S. House of Representatives and in the U.S. Senate. Congress has already made Jones Act waivers more difficult to obtain, and the Jones Act repeal bills filed in haste in 2010 failed to advance and were withdrawn. There are several strategies in play to restore the 75-percent U.S.-flag PL-480 cargo preference allotment. The administration's proposal to replace in-kind PL-480 food aid with cash payments faces a rough ride in both Congressional chambers, and several of our legislative allies want to tighten enforcement of existing cargo preference laws.
Each of us in American Maritime Officers can sustain this support by contributing to the AMO Voluntary Political Action Fund to the greatest possible extent each year. This fund has helped many of our industry's longtime supporters remain in office, and it is helping our union's legislative staff make the merchant fleet's case to newer lawmakers likely to rise to key leadership positions.
As always, I welcome your comments and questions. Please feel free to call me on my cell at (202) 251-0349.
The President and the U.S.-flagged merchant marine
By Tom Bethel
National President
I can't imagine the Commander-in-Chief of the U.S. Armed Forces presiding willfully over the end of the privately owned and operated U.S.-flagged merchant marine and the irretrievable loss of the civilian American seagoing workforce - which together provide the only reliable, safe and efficient supply lines to U.S. military personnel deployed overseas. But several unsettling maritime policy developments since President Obama took office in January 2009 have caused many in our industry to question this administration's intent - it seems no one in the White House has connected the dots between U.S. merchant fleet promotion and effective strategic sealift service in defense emergencies.
The Jones Act ...
On one front, the administration appears indifferent to - or unaware of - the lasting positive impact of the Jones Act, which restricts all domestic waterborne trade to merchant vessels owned, built, flagged and crewed in the United States.
Our first hint of this was during the BP spill crisis in the Gulf of Mexico in 2010.
At the height of the long, faltering struggle to contain the oil and salvage the Gulf coastline, the Jones Act was subject to harsh, inaccurate and relentless criticism. The bizarre central claim - fueled by business and political interests abetted by national news media - was that the Jones Act had slowed the cleanup significantly by keeping foreign-flagged skimmers and other emergency response vessels from Gulf waters. This triggered a nationwide uproar and inspired House and Senate bills to repeal this increasingly important law.
Now-retired Adm. Thad Allen, commandant of the U.S. Coast Guard at the time and commander of the response operation, said emphatically at several points that the Jones Act was no impediment to the effort. U.S. maritime interests, Jones Act supporters in the House and Senate and national security experts pointed out repeatedly that Jones Act jurisdiction extends no further than three miles from the U.S. coastline, that the rig blowout was some 50 miles out and that foreign-flagged skimmers, dredges and other vessels were moving freely near the site - many of them turned away from service not by the Jones Act, but by BP, which the administration had left responsible for response vessel and service procurement.
The Department of Transportation's Maritime Administration echoed Adm. Allen's comments on the controversy but passed on the opportunity to make a broader public case for the Jones Act as neither a factor in the spill nor an impediment to the response. With batteries of news crews in every Gulf Coast community, MARAD could have reported in detail on the Jones Act's value to the U.S. economy, to defense strategy and to homeland security. This would have quelled much of the undue, misguided public anger that had surrounded the Jones Act.
A year later, we learned that the administration has an itchy trigger finger on the Jones Act waiver mechanism intended only in the legitimate interest of national security. This was especially clear in domestic energy trades.
In June 2011, Customs and Border Protection in the Department of Homeland Security - acting on a request from the Department of Energy - issued a blanket Jones Act waiver to allow foreign-flagged tankers to carry oil drawn down from the Strategic Petroleum Reserve directly between domestic points.
This waiver - said officially to be a response to turmoil in Libya and its impact on oil supply and cost - was withdrawn a day later, but CBP later approved some 48 unwarranted individual Jones Act waivers for the coastal carriage of SPR oil. DOE took harmful advantage of these waivers by setting picayune rules governing these SPR shipments - rules crafted clearly to deny available, qualified Jones Act vessels their lawful first access to these cargoes. DOT and MARAD had little if anything to say publicly about this calculated assault on the domestic shipping law.
In a separate but no less indicative turn in 2011, DOE's Energy Information Agency released a report claiming a shortage of Jones Act vessels to move petroleum products between U.S. ports in the Northeast if a refinery in Pennsylvania were to close. The EIA later conceded that it had undercounted the Jones Act tanker and barge fleet by more than half. The EIA refused to correct its report in the interest of an honest, accurate public record, and neither DOT nor MARAD made an issue of it.
The refinery in question remained in service, so the issue of Jones Act tanker and barge availability became moot - but the EIA's official flawed findings about the size and state of the Jones Act fleet in this sector stand in a report distinguished as an unreliable public resource.
Today, the Jones Act is held responsible almost daily for spiking gasoline prices, despite clear evidence to the contrary. U.S. maritime interests respond fully on this issue at every opportunity, but we hear little from the administration in the Jones Act's defense.
Meanwhile, local business and political interests in Puerto Rico, Hawaii and Guam are stepping up calls for pointless, counterintuitive Jones Act amendment or repeal, but the administration has made no public comment on these efforts.
In addition, we are braced for the possibility that the Jones Act and other statutes intended to sustain the privately owned and operated U.S. merchant fleet will be on the agenda in forthcoming trade negotiations between the U.S. and the European Union and in separate World Trade Organization "plurilateral" service trade talks among the U.S. and 21 other countries. The U.S. has never agreed to include maritime services in trade negotiations.
... and cargo preference
The administration is considerably less subtle in its approach to cargo preference for U.S.-flagged merchant vessels - as you know, federal laws set aside specific shares of government-financed imports and exports for American ships.
In one early case, the administration let public debate about the applicability of cargo preference to wind turbines purchased overseas with DOE loan guarantees under the President's 2009 economic stimulus measure drag on for more than a year. By the time DOT and DOE agreed - reluctantly - that U.S. vessels were entitled to at least 50 percent of these cargoes, the program had lapsed and the funding had dried up.
More recently, the administration worked quietly but unsuccessfully with major U.S. exporters to undermine cargo preference applied to goods financed through the Export-Import Bank of the United States.
We also know that the administration went along gladly with last year's PL-480 food aid cargo preference reduction from a minimum 75-percent U.S.-flag share to 50 percent. This one-third cut was accomplished through a last-minute add-on to a two-year highway and surface transportation budget bill. The pared U.S.-flag share was accompanied by elimination of the Ocean Freight Differential account through which MARAD had reimbursed the Department of Agriculture's Commodities Credit Corp. each year for the U.S.-flagged cost above 50 percent.
Now, in his fiscal 2014 budget blueprint, the President proposes to replace the direct shipment of U.S. crops to hungry people worldwide with cash grants for local and regional purchase of wheat, soybeans and other commodities under PL-480. This would force U.S. merchant ships out of the PL-480 food aid equation completely and permanently.
The encouraging news here is that the U.S. merchant fleet and civilian American merchant mariners have considerable, strong, bipartisan support in the U.S. House of Representatives and in the U.S. Senate. Congress has already made Jones Act waivers more difficult to obtain, and the Jones Act repeal bills filed in haste in 2010 failed to advance and were withdrawn. There are several strategies in play to restore the 75-percent U.S.-flag PL-480 cargo preference allotment. The administration's proposal to replace in-kind PL-480 food aid with cash payments faces a rough ride in both Congressional chambers, and several of our legislative allies want to tighten enforcement of existing cargo preference laws.
Each of us in American Maritime Officers can sustain this support by contributing to the AMO Voluntary Political Action Fund to the greatest possible extent each year. This fund has helped many of our industry's longtime supporters remain in office, and it is helping our union's legislative staff make the merchant fleet's case to newer lawmakers likely to rise to key leadership positions.
As always, I welcome your comments and questions. Please feel free to call me on my cell at (202) 251-0349.