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Posted: January 9, 2020

Voluntary Political Action Fund: solid, steady return on investment

By Paul Doell
National President

AMO members ask me occasionally whether our union's Voluntary Political Action Fund favors conservatives, liberals or centrists on Capitol Hill, and my answer is always the same: the money is put to the greatest practical use - disbursements from the fund are based exclusively on legislative support for the U.S. merchant fleet and the jobs this fleet provides for AMO members in international trade, in military support services worldwide, and in all domestic deep-sea, Great Lakes and inland waters markets. There are no other considerations when VPAF checks are cut for Congressional campaigns.

An equally reassuring point is that individual contributions drawn from the AMO Voluntary Political Action Fund generate substantial and consistent return on investment, as was the clear case in 2019. The first session of the 116th Congress - which ended at the Christmas-New Year break - produced much in the way of job and benefit security for the seagoing AMO membership.

MSP extended ...

For example, Congress and the President in mid-December signed off on the Further Consolidated Appropriations Act, which includes a fiscal 2020 National Defense Authorization Act provision extending the Maritime Security Program for 10 years through 2035. Our union has a significant stake in the MSP, which provides what the government itself cannot - a fleet of 60 roll-on/roll-off, container and heavy-lift ships available on demand to the Department of Defense for long-term sealift service in national security emergencies.

The MSP provides participating U.S.-flag shipping companies with stipends of $5 million per ship per year, a sum that will increase to $5.3 million in fiscal 2022 and from there gradually to $6.8 million per ship per year - a taxpayer bargain, given what it would cost DOD to build or buy its own fleet for sustained sealift in a prolonged conflict.

The fiscal 2020 NDAA also authorized a first-ever cable ship security program modeled after the MSP. The cable security program is authorized to commence in fiscal year 2021 and will consist of two qualified cable ships. The ships will receive an annual stipend, similar to the MSP - and like the MSP, annual approval of the funding will be required. Under this initiative, U.S.-flagged cable ships will install, repair and maintain Defense Department communications cable systems.

Ex-Im Bank, PL-480

Congress and the President also agreed to reauthorize the Export-Import Bank for seven years, with a full administrative quorum and authority to finance projects valued at a total of $135 billion.

The Export-Import Bank generates two-way cargoes for heavy-lift ships and other vessels operated by companies employing AMO engine and deck officers, and the bank's transactions are bound by the Cargo Preference Act of 1954 - at least half of all Ex-Im cargoes must be carried aboard privately owned and operated U.S. ships.

In addition, the PL-480 food aid export program is funded in fiscal 2020 at $1.7 billion. PL-480, which is also subject to a 50-percent U.S.-flag cargo preference requirement, represents steady jobs for AMO members in U.S.-flag dry bulk and container fleets. That the program exists at all is remarkable, given the determined effort by the previous administration to replace food aid exports with "local and regional purchase" of farm products or with cash in lieu of cargo. AMO was prominent in the eight-year battle to sustain PL-480 exports.

The 50-percent U.S.-flag cargo preference mandate tied to the Export-Import Bank and to food aid exports is always under challenge. Some federal agencies are adept at evading the U.S.-flag requirement, and this is made easier by the lack of a firm and specific cargo preference enforcement mechanism.

A fiscal 2008 appropriations bill included a provision referred to generally as the "Inouye amendment," which was named for its sponsor, Sen. Daniel Inouye of Hawaii. This amendment designated the Department of Transportation as the exclusive arbiter of inter-agency cargo preference disputes, but the required conforming regulations were never adopted.

Legislation approved earlier in 2019 provides for a study of cargo preference law compliance and recommendations for tighter application of the existing statutes within one year. AMO will track this closely.

A new Soo Lock ...

The fiscal 2020 appropriations bill agreed to in December includes $75 million for the design and initial construction of a second "thousand footer" lock at the Soo Locks in Sault Ste. Marie, Michigan - a long-sought national security project that will keep the largest U.S.-flag, AMO-contracted Great Lakes bulk carriers and their industrial raw materials moving if the existing large lock fails or is damaged or destroyed in a terrorist attack.

This will also enhance the efficiency of the Great Lakes bulk fleet and the job security of AMO engineers and mates.

This second large lock was proposed meaningfully for the first time in the Water Resources Development Act of 1986, but it stalled over whether the eight states bordering the Great Lakes should share the cost with the federal government.

The Jones Act endures ...

In 2019, the venerable Jones Act endured, despite relentless pressure for specific waivers or exemptions or for outright repeal - including a November 3 editorial in The Wall Street Journal, which cited the Puerto Rico controversies and long discredited criticisms by the Cato Institute as reason enough to kill the law.

A Jones Act repeal bill sponsored by Utah Republican Sen. Mike Lee languished in the hopper for much of the 2019 Congressional session, and a subsequent measure from Sen. Lee to ease the Jones Act waiver procedure to a dangerous extent also stalled.

A bid to exempt Puerto Rico from Jones Act jurisdiction permanently was beaten back in a convincing way, thanks to Transportation Secretary Elaine Chao and a delegation of six Republican Senators and one Republican House member who persuaded the President to stand fast in support of the law as a national security, homeland security and economic asset. AMO works well with the lawmakers who participated in the White House session.

Late in December, Customs and Border Protection in the Department of Homeland Security completed its review of Jones Act interpretations applied to offshore energy and heavy-lift services. CBP clarified aspects of the decades-long dispute over whether goods carried on offshore service and supply vessels are "merchandise" or resources "integral to the function of the vessel" - if these goods are "merchandise," they are Jones Act cargoes. CBP did settle this in the Jones Act's favor to an extent, but its conclusions remain subject to debate.

In this, the Jones Act's centennial year, AMO and other U.S. maritime interests will have to fend off a United Kingdom request to allow UK-owned ships - regardless of flag state or officer and crew nationality - to operate directly between and among U.S. coastal ports.

And, on December 19, Hawaii Democratic Rep. Ed Case filed three bills targeting the Jones Act. One bill would exempt Hawaii, Alaska, Guam and Puerto Rico from the law, a second would limit what Jones Act carriers can charge for two-way service between Hawaii and the mainland, and the third measure would bar Jones Act application in domestic markets served by less than three carrier companies owned separately from each other.

The good news here is that comparable legislation filed from diverse sources over several years to exempt the remote U.S. states and territories from the Jones Act gained no traction. Indeed, Rep. Case pushed for a Jones Act exemption for Hawaii during his previous term in the House of Representatives in 2003.

The better news is that the Jones Act stands on conspicuous merit and has a broad, diverse and bipartisan support base in both the House and the Senate - a principled if informal coalition nurtured significantly through direct contact from AMO. The law also enjoys the sustained support of Sec. Chao, one of the President's closest advisers.

For AMO specifically, the Jones Act sustains ships operating between the mainland East Coast and Puerto Rico, between the U.S. West Coast and Hawaii and Alaska, tankers running between and among U.S. ports, the entire U.S. Great Lakes fleet and tugs and tug-barge operations in ports and along the inland waterways.

My thanks at the New Year to all deep-sea, Great Lakes and inland waters AMO members who support the AMO Voluntary Political Action Fund routinely. To you who do not contribute to this all-important fund, I ask that you do so in 2020 at levels you can be comfortable with. This is a non-partisan fund that keeps faith with no ideology and considers no divisive social issues. The focus is on job and benefit security for all AMO members and their families, and the money is used only to support lawmakers who support our industry.

Best wishes to all for a healthy and happy New Year.