Administration Seeks Full Funding Of MSP

Administration Seeks Full Funding Of MSP

FY 2001 Budget Request For Title XI Account Is Called Inadequate To Meet Demand

      The President Feb. 7 requested $185 million in budget authority for the Department of Transportation's Maritime Administration in fiscal 2001.
     The request included $99 million for the Maritime Security Program in the fiscal year, which begins next Oct. 1. The amount is sufficient to meet all MSP commitments.
     MSP was authorized for 10 years in the Maritime Security Act of 1996, which capped the total cost at $1 billion by 2005.
     Under MSP, a qualified U.S.-flag merchant ship can draw up to $2.1 million a year in operating aid while in commercial foreign trade. In exchange, the ship, its crew, and all intermodal or logistics support systems belonging to the ship's owner must be made available to the Department of Defense for strategic sealift and other services in a crisis overseas.
     MSP now covers 47 container, roll-on/roll-off, and lighter-aboard ships, the maximum under the authorizing law. AMO represents the licensed officers on seven ships enrolled in MSP--the containerships Maersk Texas, Maersk Tennessee, Maersk California and Maersk Colorado, all operated by Maersk Line Ltd, of Norfolk, and the car carriers Faust, Fidelio, and Tanabata, all operated by American V Ships Marine LLC Inc., of Mineola, N.Y.
     "The Maritime Security Program provides resources to maintain a U.S.-flag merchant fleet crewed by U.S. citizens to serve both the commercial and national security needs of the U.S.," the budget request explained. "This program provides direct payments to U.S.-flag ship operators engaged in U.S. foreign trade--participating operators are required to keep the vessels in active commercial service and are required to provide intermodal sealift support to DOD in times of war or national emergency."
     Not faring as well in the budget blueprint was the U.S. merchant ship construction loan and mortgage guarantee program authorized in Title XI of the Merchant Marine Act of 1936. The President requested only $6 million for the program in 2001.
     In a Feb. 28 letter transmitting the MARAD budget proposal as a draft authorization bill to House Speaker Dennis Hastert, Transportation Secretary Rodney E. Slater explained that Title XI "allows the government to guarantee private sector debt financing for the construction or reconstruction in U.S. shipyards of U.S.-flag vessels and export vessels, as well as U.S. shipyard modernization and improvement projects--as a result, a small investment by the federal government can leverage a much larger investment by the private sector."
     DOT's analysis of the MARAD spending plan noted that Title XI enables shipowners and yards to "borrow private sector funds on more favorable terms than might otherwise be available."
     But U.S.-flag interests speaking through a new coalition have said that $6 million--the same amount actually appropriated for Title XI in fiscal 2000--is insufficient to meet current need. Without a minimum of $50 million in fiscal 2001, an estimated $1.4 billion in shipyard contracts dependent upon Title XI could be canceled, the coalition warned. On March 1, the coalition included the Maritime Trades Department of the AFL-CIO, the Shipbuilders Council of America, and American Classic Voyages Inc.
     The President also requested:

$262 million for the Ready Reserve Force, a unit of the National Defense Reserve Fleet. RRF ships--half of which are manned in all licensed positions by AMO--are managed in varied states of readiness for wartime use by the Navy's Military Sealift Command, and DOD reimburses MARAD for RRF acquisition, activation, berthing, capital improvements, and other RRF costs. $257 million was appropriated for the RRF in fiscal 2000.

$398 million for U.S.-flag cargo preference programs administered by the Departments of Defense, Transportation, State, and Agriculture, and by the Agency for International Development and the Export-Import Bank of the U.S. Under cargo preference laws enacted in 1904, 1954, and 1985, U.S.-flag ships are guaranteed specific shares of government imports and exports--100 percent of defense cargoes, 50 percent of non-defense goods, and 75 percent of USDA's donated food exports.

$26 million for the ocean freight differential, which covers the difference between a 50-percent U.S.-flag share and the 75-percent U..S.-flag requirement on USDA's concessionary exports.

$37.2 million for the U.S. Merchant Marine Academy in Kings Point, N.Y., and $9.4 million for state-operated maritime academies in Maine, Massachusetts, New York, Texas, California, and Michigan.

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