House Passes Maritime Subsidies Bill Overwhelmingly
$1.2 Billion Earmarked For Maritime Security Fleet; Series Transition Payments To Come For Yards
The House voted in favor of new
subsidies to help U.S. shipping lines
and shipyards to compete interna-
tionally.
The bill (H.R. 2151) is perhaps
the most significant piece of mari-
time legislation since Congress au-
thorized the first maritime subsi-
dies in 1936, and is driven by a fear
that U.S.-flag ships will disappear
unless Congress takes steps now.
The legislation, which is intended
to put the U.S. industry on strong,
internationally-competitive footing,
was a major, bipartisan effort which
was passed by a vote of 347 to 65.
Sponsored by Gerry E. Studds
(D-MA), chairman, and JackFields
(R-TX), ranking republican mem-
ber of the Merchant Marine and
Fisheries Committee, the bill would
ensure that commercial ships fly
the U.S. flag and are built in U.S.
shipyards.
A 10-year, $1.2 billion Maritime
Security fleet (MSF) program is
authorized for militarily useful, U.S.-
flag merchant ships, and a new Se-
ries Transition Payments (STP) pro-
gram is created to help U.S. ship-
yards build vessels that are price
competitive on the world market.
"Our votes today will determine a
new course for the national defense
and the economic security of the
U.S.," Mr. Studds said.
He continued by emphasizing that
a strong U.S. merchant marine fleet
is needed in time of war and peace.
"We need one today, and we will
need tomorrow, to keep the Ameri-
can market free and independent."
The bipartisan leaders of the Com-
mittee also successfully turned back
two killer amendments: one by Rep.
Gene Taylor (D-Miss.), which
would have limited the eligible ves-
sels for the MSF program (defeated
64 to 362); another by Rep. Tim
Penny (D-MN), which would have
limited cargo preference (defeated
109 to 309).
"This is our best, if not last, hope
of saving the U.S. maritime indus-
try. Without this bipartisan legisla-
tion, the U.S. maritime industry
will largely disappear, and the most
powerful nation on earth...will be-
come totally dependent upon for-
eign shipping interests," said Mr.
Fields.
The Clinton Administration
agreed to support the bill after its
sponsors limited the subsidies for
shipping lines to $ 1.2 billion over 10
years, starting in fiscal year 1995.
That sum will support as many as
70 of the 72 oceangoing vessels now
receiving subsidies.
While the bill has passed—with
the next action due from the Senate
Commerce Subcommittee on Mer-
chant Marine—there are still ques-
tions as to how the measure will be
funded, as there was no money in
President Clinton's five year bud-
get plan for the new subsidy pro-
gram.
Different From Current Plan
The proposed subsidy plan em-
bodied in H.R. 2151 differs from the
current operating differential sub-
sidy in two ways. The current plan
is based on the difference in labor
costs between U.S. vessels and in-
ternational competitors, where the
new MSF program will have fixed
payments: $2.3 million per vessel
for the first year; $2.1 million per
vessel, per year thereafter. Also,
the new plan allows ships built out-
side the U.S. to receive subsidies if
a U.S. yard could not match the
foreign yard's price.
Unrelenting Support
During the House debate of the
bill, not one lawmaker spoke against
the basics of the bill, as both parties
stressed the importance of the mari-
time industry to the national de-
fense, trade and jobs.
Without congressional action, the
U.S. will soon become dependent on
ships of other nations," said Lynn
Schenk (D-San Diego), who co-
sponsored the legislation. She said
the measure would "assist the U.S.
shipbuilding industry to re-enter
the commercial market and build
vessels for the U.S. and the interna-
tional markets at competitive prices,
and assist the U.S. shipping indus-
try to retain American crews," to
enable the domestic shipping in-
dustry to compete internationally.
The number of private U.S. flag
vessels sailing international waters
over the past 28 years has decreased
from 620 to 151 ships. During the
same period, the number of jobs on
large ocean-going U.S.-flag vessels
has dropped from about 51,000 to
under 10,000. As of September 1,
only one privately-owned vessel of
more than 1,000-gt was under con-
struction in the U.S.
Coast Guard Amends
Lightering Requirements
Effective October 15, 1993, the
U.S. Coast Guard (USCG) amended
the applicability sections of its safety
and pollution prevention regulations
to make it clear that regulations
issued under section 31lQ) of the
Federal Water Pollution Control Act
(FWPC A) apply to offshore lightering
operations. This rulemaking also
establishes what constitutes accept-
able evidence of compliance with
these requirements. This rule will
clarify the applicability of USCG
pollution prevention regulations to
offshore lightering. In 1984, the
USCG promulgated a lightering rule
which required both the delivering
and receiving vessels engaged in an
offshore lightering operation, where
the lightering cargo was destined
for a port or place subject to the
jurisdiction of the U.S., to have a
valid Certificate of Inspection (COI)
or alternatively, either a Certificate
of Compliance or a Tank Vessel Ex-
amination Letter (TVEL). The in-
tended effect of this rule was to
impose the same regulatory require-
ments on offshore lightering as those
imposed on vessels and facilities
engaged in similar operations in the
navigable waters of the U.S.
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