[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]

REVIEW OF FISCAL YEAR 2024 BUDGET REQUEST
FOR FEDERAL MARITIME TRANSPORTATION PROGRAMS,
AND IMPLEMENTATION OF THE
OCEAN SHIPPING REFORM ACT OF 2022

=======================================================================

(118-7)

HEARING

BEFORE THE

SUBCOMMITTEE ON
COAST GUARD AND MARITIME TRANSPORTATION

OF THE

COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTEENTH CONGRESS

FIRST SESSION

__________

MARCH 23, 2023

__________

Printed for the use of the
Committee on Transportation and Infrastructure

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Available online at: https://www.govinfo.gov/committee/house-
transportation?path=/browsecommittee/chamber/house/committee/
transportation
__________

U.S. GOVERNMENT PUBLISHING OFFICE
53-162 PDF WASHINGTON : 2023

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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

Sam Graves, Missouri, Chairman
Rick Larsen, Washington, Eric A. ``Rick'' Crawford,
Ranking Member Arkansas
Eleanor Holmes Norton, Daniel Webster, Florida
District of Columbia Thomas Massie, Kentucky
Grace F. Napolitano, California Scott Perry, Pennsylvania
Steve Cohen, Tennessee Brian Babin, Texas
John Garamendi, California Garret Graves, Louisiana
Henry C. ``Hank'' Johnson, Jr., Georgiavid Rouzer, North Carolina
Andre Carson, Indiana Mike Bost, Illinois
Dina Titus, Nevada Doug LaMalfa, California
Jared Huffman, California Bruce Westerman, Arkansas
Julia Brownley, California Brian J. Mast, Florida
Frederica S. Wilson, Florida Jenniffer Gonzalez-Colon,
Donald M. Payne, Jr., New Jersey Puerto Rico
Mark DeSaulnier, California Pete Stauber, Minnesota
Salud O. Carbajal, California Tim Burchett, Tennessee
Greg Stanton, Arizona, Dusty Johnson, South Dakota
Vice Ranking Member Jefferson Van Drew, New Jersey,
Colin Z. Allred, Texas Vice Chairman
Sharice Davids, Kansas Troy E. Nehls, Texas
Jesus G. ``Chuy'' Garcia, Illinois Lance Gooden, Texas
Chris Pappas, New Hampshire Tracey Mann, Kansas
Seth Moulton, Massachusetts Burgess Owens, Utah
Jake Auchincloss, Massachusetts Rudy Yakym III, Indiana
Marilyn Strickland, Washington Lori Chavez-DeRemer, Oregon
Troy A. Carter, Louisiana Chuck Edwards, North Carolina
Patrick Ryan, New York Thomas H. Kean, Jr., New Jersey
Mary Sattler Peltola, Alaska Anthony D'Esposito, New York
Robert Menendez, New Jersey Eric Burlison, Missouri
Val T. Hoyle, Oregon John James, Michigan
Emilia Strong Sykes, Ohio Derrick Van Orden, Wisconsin
Hillary J. Scholten, Michigan Brandon Williams, New York
Valerie P. Foushee, North Carolina Marcus J. Molinaro, New York
Mike Collins, Georgia
Mike Ezell, Mississippi
John S. Duarte, California
Aaron Bean, Florida
------ 7

Subcommittee on Coast Guard and Maritime Transportation

Daniel Webster, Florida, Chairman
Brian Babin, Texas Salud O. Carbajal, California,
Brian J. Mast, Florida Ranking Member
Jenniffer Gonzalez-Colon, John Garamendi, California
Puerto Rico Chris Pappas, New Hampshire
Jefferson Van Drew, New Jersey Jake Auchincloss, Massachusetts
Mike Ezell, Mississippi, Vice Mary Sattler Peltola, Alaska
Chairman Hillary J. Scholten, Michigan,
Aaron Bean, Florida Vice Ranking Member
Sam Graves, Missouri (Ex Officio) Rick Larsen, Washington (Ex
Officio)

CONTENTS

Page

Summary of Subject Matter........................................ v

STATEMENTS OF MEMBERS OF THE COMMITTEE

Hon. Daniel Webster, a Representative in Congress from the State
of Florida, and Chairman, Subcommittee on Coast Guard and
Maritime Transportation, opening statement..................... 1
Prepared statement........................................... 3
Hon. Rick Larsen, a Representative in Congress from the State of
Washington, and Ranking Member, Committee on Transportation and
Infrastructure, opening statement.............................. 4
Prepared statement........................................... 5
Hon. Salud O. Carbajal, a Representative in Congress from the
State of California, and Ranking Member, Subcommittee on Coast
Guard and Maritime Transportation, opening statement........... 7
Prepared statement........................................... 9

WITNESSES

Ann C. Phillips, Rear Admiral, U.S. Navy (Ret.), and
Administrator, Maritime Administration, oral statement......... 10
Prepared statement........................................... 12
Hon. Daniel B. Maffei, Chairman, Federal Maritime Commission,
oral statement................................................. 16
Prepared statement........................................... 18

WRITTEN TESTIMONY SUBMITTED IN LIEU OF APPEARANCE

Nancy Wallace, Director of the Marine Debris Program, Office of
Response and Restoration, National Ocean Service, National
Oceanic and Atmospheric Administration......................... 22

SUBMISSIONS FOR THE RECORD

Statement of Richard W. Murray, President, National Association
of Waterfront Employers, Submitted for the Record by Hon.
Jenniffer Gonzalez-Colon....................................... 34

APPENDIX

Questions to Ann C. Phillips, Rear Admiral, U.S. Navy (Ret.), and
Administrator, Maritime Administration, from:
Hon. Daniel Webster.......................................... 51
Hon. Mike Ezell.............................................. 51
Hon. Aaron Bean.............................................. 52
Hon. Chris Pappas............................................ 53
Questions from Hon. Mike Ezell to Richard W. Spinrad, Ph.D.,
Under Secretary of Commerce for Oceans and Atmosphere, and
Administrator, National Oceanic and Atmospheric Administration. 54

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

March 20, 2023

SUMMARY OF SUBJECT MATTER

TO: LMembers, Subcommittee on Coast Guard and Maritime
Transportation
FROM: LStaff, Subcommittee on Coast Guard and Maritime
Transportation
RE: LCoast Guard and Maritime Transportation
Subcommittee Hearing on ``Review of Fiscal Year 2024 Budget
Request for Federal Maritime Transportation Programs, and
Implementation of the Ocean Shipping Reform Act of 2022''
_______________________________________________________________________

I. PURPOSE

The Subcommittee on Coast Guard and Maritime Transportation
will hold a hearing on Thursday, March 23, 2023, at 2:00 p.m.
ET in Room 2253 of the Rayburn House Office Building to receive
testimony on the ``Review of Fiscal Year 2024 Budget Request
for Federal Maritime Transportation Programs, and
Implementation of the Ocean Shipping Reform Act of 2022.'' The
Subcommittee will examine the President's fiscal year (FY) 2024
budget request for Federal maritime transportation programs and
progress on the implementation of the Ocean Shipping Reform Act
of 2022 in preparation for consideration of annual authorizing
legislation for the Maritime Administration (MARAD) and other
maritime matters, including amendments to the Ocean Shipping
Reform Act of 2022 (P.L. 117-146). The Subcommittee will hear
testimony from MARAD and the Federal Maritime Commission
(Commission or FMC) and receive written testimony from the
National Oceanic and Atmospheric Administration (NOAA).

II. BACKGROUND

MARAD

MARAD was established in 1950 and is responsible for
promoting and developing the maritime industry of the United
States to meet the Nation's economic and security needs.\1\
MARAD administers financial assistance programs to build,
promote, and operate the United States flag fleet; manages the
disposal of Federal Government-owned vessels; regulates the
transfer of United States documented vessels to foreign
registries; maintains a reserve fleet of Federal Government-
owned vessels essential for national defense; operates the
United States Merchant Marine Academy; and administers a grant-
in-aid program for state operated maritime academies and other
financial assistance programs to support the United States
maritime and shipbuilding industries.\2\ Rear Admiral Ann C.
Phillips, United States Navy (Ret.), has served as the
Administrator of MARAD since being sworn in on May 16, 2022.\3\
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\1\ U.S. Dept. of Transp. (DOT), A Short History of the Maritime
Administration, available at https://www.maritime.dot.gov/outreach/
history/short-history-maritime-administration (last updated Oct. 26,
2018).
\2\ DOT, Budget Estimates Fiscal Year 2024: Maritime Administration
(2023), available at https://www.transportation.gov/sites/dot.gov/
files/2023-03/MARAD_FY_2024_President_
Budget_508.pdf [hereinafter MARAD 2024 Budget Estimates].
\3\ DOT, Rear Admiral, Ann C. Phillips, US Navy (Ret.), available
at https://www.maritime.dot.gov/office-administrator/key-personnel/
rear-admiral-ann-c-phillips-us-navy-ret (last updated May 16, 2022).
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FMC

FMC was established in 1961 as an independent agency that
regulates ocean-borne transportation in the foreign commerce of
the United States.\4\ FMC protects shippers and carriers from
restrictive or unfair practices of ocean carriers, including
foreign-flagged carrier alliances.\5\ FMC also enforces laws
related to cruise vessel financial responsibility to ensure
cruise vessel operators have sufficient resources to pay
judgements to passengers for personal injury or death or for
nonperformance of a voyage.\6\
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\4\ 46 U.S.C. Sec. 46101.
\5\ FMC, About the FMC, available at https://www.fmc.gov/about-the-
fmc/.
\6\ FMC, Federal Maritime Commission FY 2024 Budget Justification
(2023), available at https://www.fmc.gov/wp-content/uploads/2023/03/
FMCFY2024CongressionalBudget
Justification.pdf [hereinafter FMC FY24 Budget Justification].
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FMC is composed of five commissioners appointed for five-
year terms by the President with the advice and consent of the
Senate. The Honorable Daniel B. Maffei was designated Chairman
of the Commission by President Biden in March 2021.\7\
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\7\ FMC, Daniel B. Maffei, available at https://www.fmc.gov/
commissioners/daniel-b-maffei/.
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NOAA

NOAA was established in 1970 as an agency within the
Department of Commerce.\8\ NOAA's mission is to understand and
predict changes in climate, weather, oceans, and coasts, to
share that knowledge and information with others, and to
conserve and manage coastal and marine ecosystems and
resources.\9\ This mission includes responsibility for
scientific coordination and support coordination to oil spill
response and marine debris prevention, removal, research,
response coordination, monitoring, and detection. Dr. Richard
W. Spinrad was sworn in as the Under Secretary of Commerce for
Oceans and Atmosphere and the Administrator of NOAA on June 22,
2021.\10\
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\8\ NOAA, Our History, available at https://www.noaa.gov/heritage/
our-history (last updated Jan. 6, 2023).
\9\ NOAA, About our agency, available at https://www.noaa.gov/
about-our-agency (last updated Mar. 2, 2023).
\10\ NOAA, Richard W. Spinrad, Ph.D., available at https://
www.noaa.gov/our-people/leadership/richard-w-spinrad-phd (Sept. 9,
2022).
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III. MARAD BUDGET

The President's FY 2024 budget request for MARAD \11\ as
compared to the FY 2023 enacted funding level \12\ is shown
here:
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\11\ MARAD 2024 Budget Estimates, supra note 2.
\12\ Consolidated Appropriations Act, 2023, Pub. L. No. 117-328,
available at https://www.congress.gov/117/bills/hr2617/BILLS-
117hr2617enr.pdf [hereinafter 2023 CAA].

MARAD FY 2023 Enacted to FY 2024 President's Budget Request Comparison
(Dollars in Thousands)
----------------------------------------------------------------------------------------------------------------
President's FY FY 2023 to FY FY 2023 to
Account FY 2023 2024 Budget 2024 Change FY 2024
Enacted Request ($) Change (%)
----------------------------------------------------------------------------------------------------------------
Operations and Training............................ $ 213,181.00 $ 289,773.00 $ 76,592.00 36%
Maritime Environmental and Technical Assistance $ 6,000.00 $ 8,500.00 $ 2,500.00 42%
Program.........................................
United States Marine Highway Program............. $ 10,000.00 $ 11,000.00 $ 1,000.00 10%
Assistance to Small Shipyards...................... $ 20,000.00 $ 20,000.00 $ -- 0%
Ship Disposal Program.............................. $ 6,000.00 $ 6,021.00 $ 21.00 0%
Maritime Security Program.......................... $ 318,000.00 $ 318,000.00 $ -- 0%
Title XI--Administrative Expenses.................. $ 3,000.00 $ 3,020.00 $ 20.00 1%
Title XI--Loan Guarantees.......................... $ -- $-- $ -- 0%
State Maritime Academy Operations.................. $ 120,700.00 $ 53,400.00 $ (67,300.00) -56%
Cable Security Fleet Program....................... $ 10,000.00 $ -- $ (10,000.00) -100%
Tanker Security Program............................ $ 60,000.00 $ 60,000.00 $ -- 0%
Port Infrastructure Development Program............ $ 212,203.51 $ 230,000.00 $ 17,796.49 8%
------------------------------------------------------------
Total............................................ $ 963,084.51 $ 980,214.00 $ 17,129.49 2%
----------------------------------------------------------------------------------------------------------------
Funding levels for the Operations and Training Account and the Port Infrastructure Development Program do not
include supplemental appropriations provided by the Infrastructure Investment and Jobs Act (P.L. 117-58).

The President requests $980.2 million in FY 2024 for the
activities of MARAD.\13\ This is a $17.1 million increase (2
percent) from the FY 2023 enacted level.\14\
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\13\ MARAD 2024 Budget Estimates, supra note 2.
\14\ 2023 CAA, supra note 12.
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MARAD's FY 2024 budget request does not include funding for
the:
LMaritime Transportation System Emergency Relief
Authority;
LCable Security Fleet Program; or
LTitle XI Loan Guarantees.

OPERATIONS AND TRAINING

The President's FY 2024 budget requests $289.8 million for
Operations and Training, an increase of $76.6 million (36
percent) beyond the FY 2023 enacted level.\15\ Included in this
request is $195.5 million for academic operating expenses and
the Capital Asset Management Program of the United States
Merchant Marine Academy (USMMA); $8.5 million for the Maritime
Environmental and Technical Assistance (META) program, which
promotes the research, development, and demonstration of
emerging technologies, practices, and processes that improve
maritime industrial environmental sustainability; and $11
million for the United States Marine Highway Program to support
the development, expansion, and modernization of America's
navigable waterways to reduce landside congestion and increase
movement of freight by water.\16\ The authorization levels for
these programs in the FY 2023 National Defense Authorization
Act (NDAA) include $112.8 million for USMMA operations; $15
million for the META program; and $15 million for the United
States Marine Highway Program.\17\ Much of the $76.6 million
funding increase in the President's request can be attributed
to the Capital Asset Management Program of USMMA. The FY 2024
funding request included for the United States Marine Highway
Program is in addition to the $25 million provided in the
Infrastructure Investment and Jobs Act (P.L.117-58) that will
remain available through the end of FY 2032.\18\ The Notice of
Funding Opportunity for the FY 2023 round of the United States
Marine Highway Program is currently available, and applications
will be accepted through April 28, 2023.\19\
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\15\ See MARAD 2024 Budget Estimates, supra note 2.
\16\ Id.
\17\ National Defense Authorization Act for Fiscal Year 2023, Pub.
L. No. 117-263, available at https://www.congress.gov/117/bills/hr7776/
BILLS-117hr7776enr.pdf [hereinafter NDAA FY23].
\18\ Infrastructure Investment and Jobs Act, Pub. L. No. 117-58,
135 Stat. 429, available at https://www.congress.gov/117/plaws/publ58/
PLAW-117publ58.pdf [hereinafter IIJA].
\19\ MARAD, 2023 Notice of Funding Opportunity for the U.S. Marine
Highway Program, available at https://cms.marad.dot.gov/grants/marine-
highways/notice-funding-opportunity-america%E2%80%99s-marine-highway-
projects.
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ASSISTANCE TO SMALL SHIPYARDS

The Assistance to Small Shipyards grant program provides
capital assistance to privately-owned shipyards to expand and
modernize shipbuilding capacity, efficiency, and
competitiveness.\20\ The program received $20 million in FY
2023, and the President's FY 2024 budget request includes $20
million.\21\ The program's authorized funding level was $30
million in the FY 2023 NDAA.\22\ The application window for the
FY 2023 round of the Small Shipyard Grant Program closed on
February 27, 2023.\23\
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\20\ See MARAD 2024 Budget Estimates, supra note 2.
\21\ Id.
\22\ NDAA FY23, supra note 17.
\23\ MARAD, Small Shipyard Grant, available at https://
www.maritime.dot.gov/grants-finances/small-shipyard-grants.
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SHIP DISPOSAL

The President's budget requests $6.02 million for the Ship
Disposal Program, which is $20,000 above the FY 2023 enacted
level.\24\ The program's authorized funding level was $6
million in the FY 2023 NDAA.\25\ This program provides for the
proper disposal of outdated government-owned merchant ships
maintained by MARAD in the National Defense Reserve Fleet. This
request includes $3 million to maintain the Nuclear Ship
SAVANNAH in protective storage according to Nuclear Regulatory
Commission license requirements, while decommissioning of the
vessel's defueled nuclear reactor, components, and equipment is
in progress.\26\ This funding also includes $3 million for Ship
Disposal Program support, including salaries and overhead.\27\
The National Defense Reserve Fleet is under the jurisdiction of
the House Committee on Armed Services.
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\24\ See MARAD 2024 Budget Estimates, supra note 2.
\25\ NDAA FY23, supra note 17.
\26\ See MARAD 2024 Budget Estimates, supra note 2.
\27\ Id.
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MARITIME SECURITY PROGRAM

The President requests $318 million for the Maritime
Security Program (MSP), which is equal to the FY 2023 enacted
level, to maintain a viable commercial fleet that can support a
United States presence in foreign commerce.\28\ The program's
authorized funding level was $318 million in the FY 2023
NDAA.\29\ Under this program, $318 million in direct payments
are allocated among up to 60 United States flagged vessel
operators engaged in foreign trade. MSP vessel operators must
keep their vessels in active commercial service and provide
intermodal sealift support to the Department of Defense in
times of war or national emergency. This budget request enables
vessel operators to remain active and available for service,
and results in $5.3 million per stipend payment for each of the
60 ships in the program.\30\ Allocating less than $318 million
annually for the program allows United States vessels to exit
without penalty, and would likely also lead to vessels exiting
the United States flag registry. MSP is under the jurisdiction
of the House Committee on Armed Services.
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\28\ Id.
\29\ NDAA FY23, supra note 17.
\30\ See MARAD 2024 Budget Estimates, supra note 2.
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TITLE XI_ADMINISTRATIVE EXPENSES

The President requests $3.02 million for administrative
expenses to carry out the guaranteed loan program, which is
$20,000 above the FY 2023 enacted level.\31\ $3 million was
authorized for Title XI administrative expenses in the FY 2023
NDAA.\32\ The Title XI Loan Guarantee Program helps to promote
the growth and modernization of the United States shipyard
industry by providing additional opportunities for vessel
construction and modernization, including repowering that may
otherwise be unavailable to ship owners.\33\ The program is
under the jurisdiction of the House Committee on Armed
Services.
---------------------------------------------------------------------------
\31\ Id.
\32\ NDAA FY23, supra note 17.
\33\ See MARAD 2024 Budget Estimates, supra note 2.
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STATE MARITIME ACADEMIES

The President requests $53.4 million for the six State
Maritime Academies (SMA), which is a decrease of $67.3 million
(56 percent) compared to the FY 2023 enacted level.\34\ This
request includes $19.2 million for vessel management,
logistics, and maintenance oversight to support integration of
National Security Multi-Mission Vessels (NSMV) into the fleet
of SMA training vessels; $22 million to maintain the six legacy
SMA training vessels; $6 million in direct payments to the
schools; $2.4 million for the Student Incentive Payment
Program; and $3.8 million for training ship fuel
assistance.\35\ SMA programs were authorized funding levels of
$53.8 million while the NSMV program was authorized $75 million
in the FY 2023 NDAA.\36\ Much of the $67.3 million funding
decrease can be attributed to decreases in funding needed for
the NSMV program. SMA Operations provide Federal assistance to
the six SMAs, to help educate and train mariners and future
leaders to support the United States marine transportation
system. These graduates promote commerce in the United States
and aid in the national defense by serving in the merchant
marine. SMAs are under the jurisdiction of the House Committee
on Armed Services.
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\34\ Id.
\35\ Id.
\36\ NDAA FY23, supra note 17.
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TANKER SECURITY PROGRAM

The FY 2024 request for the Tanker Security Program (TSP)
is $60 million, an amount equal to the FY 2023 enacted
level.\37\ TSP provides direct payments to United States
flagged product tankers capable of supporting national economic
and Department of Defense contingency requirements. The program
was authorized $60 million per year through FY 2035 in the FY
2021 NDAA.\38\ The purpose of this program is to provide
retainer payments to carriers to support a fleet of militarily
useful, commercially viable product tankers sailing in
international trade, as well as assure access to a global
network of intermodal facilities.\39\ The program will also
sustain a base of United States Merchant Mariners to support
national security requirements during times of urgent need. TSP
is under the jurisdiction of the House Committee on Armed
Services.
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\37\ See MARAD 2024 Budget Estimates, supra note 2.
\38\ NDAA FY23, supra note 17.
\39\ See MARAD 2024 Budget Estimates, supra note 2.
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PORT INFRASTRUCTURE DEVELOPMENT PROGRAM

The President requests $230 million for the Port
Infrastructure Development Program (PIDP), which is $17.7
million above the FY 2023 enacted level.\40\ This request is in
addition to the $450 million investment in advanced
appropriations provided in FY 2024 under the Infrastructure
Investment and Jobs Act (P.L. 117-58).\41\ PIDP was authorized
at a funding level of $750 million in the FY 2023 NDAA.\42\
PIDP provides grants for coastal seaports, inland river ports,
and Great Lakes ports infrastructure to improve the safety,
efficiency, or reliability of the movement of goods, and to
reduce environmental impacts in and around ports.\43\ The NOFO
for the FY23 round of PIDP is currently available, and
applications will be accepted through April 28, 2023.\44\
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\40\ Id.
\41\ IIJA, supra note 18.
\42\ NDAA FY23, supra note 17.
\43\ 46 U.S.C. Sec. 54301.
\44\ MARAD, 2023 Port Infrastructure Development Program (PIDP)--
Notice of Funding Opportunity, available at https://
www.maritime.dot.gov/office-port-infrastructure-development/port-and-
terminal-infrastructure-development/2019-port-1 (last updated Feb. 9,
2023).
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IV. BUDGET FOR FMC

The President's FY 2024 budget request for FMC \45\ as
compared to the FY 2023 enacted funding level \46\ is shown in
the following table:
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\45\ See FMC FY24 Budget Justification, supra note 6.
\46\ CAA 2023, supra note 12.

FMC FY 2023 Enacted to FY 2024 President's Budget Request Comparison
(Dollars in Thousands)
----------------------------------------------------------------------------------------------------------------
President's FY FY 2023 to FY FY 2023 to FY
Account FY 2023 2024 Budget 2024 Change 2024 Change
Enacted Request ($) (%)
----------------------------------------------------------------------------------------------------------------
Operations and Administrative Program............ $ 38,260.00 $ 43,720.00 $ 5,460.00 14%
----------------------------------------------------------------------------------------------------------------

The President requests $43.7 million in FY 2024 for the
activities of the FMC, a $5.5 million (14 percent) increase
from the FY 2023 enacted level, and equal to the FY 2024
authorized level.\47\ The request would permit the funding of
salaries and benefits for 163 full-time equivalents, a 5.29
percent projected pay raise for personnel, rent and building
security needs, and information technology system
improvements.\48\
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\47\ Ocean Shipping Reform Act of 2022, Pub. L. No. 117-146, 136
Stat. 1272 available at https://www.congress.gov/117/plaws/publ146/
PLAW-117publ146.pdf [hereinafter OSRA 2022].
\48\ See FMC FY24 Budget Justification, supra note 6.
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IMPLEMENTATION OF THE OCEAN SHIPPING REFORM ACT OF 2022

The Ocean Shipping Reform Act of 2022 (P.L. 117-146)
strengthened FMC authorities to promote the growth and
development of United States exports through an ocean
transportation system that is competitive, efficient, and
economical.\49\ This legislation authorizes appropriations for
FMC through FY 2025; sets standards for detention and demurrage
charges and sets penalties for charges deemed inaccurate;
allows FMC to set minimum contract standards for ocean shipping
service contracts to protect United States shippers from
actions which leave export cargoes stranded at United States
ports; and increases protections for domestic shippers from
retaliation by foreign ocean carriers.\50\
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\49\ OSRA 2022, supra note 47.
\50\ Id.
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The Commission is currently taking actions to enact the
requirements of this law. Since the Act's enactment on June 16,
2022, FMC has:
LProvided industry guidance on filing charge
complaints with respect to charges assessed by a common carrier
that the complainant believes may not comply with statute.\51\
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\51\ FMC, Industry Advisory--Interim Procedures for Submitting
``Charge Complaints'' Under 46 U.S.C. 41310, (July 14, 2022), available
at https://www.fmc.gov/industry-advisory-interim-procedures-for-
submitting-charge-complaints/.
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LProvided industry guidance on the applicability
of self-executing provisions of the law to common carriers,
including compliance with demurrage and detention billing
practices.\52\
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\52\ FMC, Industry Advisory--Applicability of Provision Contained
in PL 117-146, (June 24, 2022), available at https://www.fmc.gov/
industry-advisory-applicability-of-provisions-contained-in-pl-117-146/.
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LSolicited public comments on a new data
collection system for containerized vessel imports and exports
to and from the United States.\53\
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\53\ Agency Information Collection Activities: 30-Day Public
Comment Request, 87 Fed. Reg. 75629, (Jan. 9, 2023), available at
https://www.govinfo.gov/content/pkg/FR-2022-12-09/pdf/2022-26804.pdf.
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LSolicited public comments on a proposed rule
requiring inclusion of specific information on demurrage and
detention invoices.\54\
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\54\ FMC, Proposing New Demurrage & Detention Billing Requirements,
(Oct. 7, 2022), available at https://www.fmc.gov/fmc-proposing-new-
demurrage-detention-billing-requirements/.
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LSolicited public comments on a proposed rule that
would define unreasonable refusal to deal or negotiate with
respect to vessel space accommodation provided by an ocean
common carrier.\55\
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\55\ FMC, FMC Seeking Public Comment on Unreasonable Refusal to
Deal Proposed Rule (Sept. 13, 2022), available at https://www.fmc.gov/
fmc-seeking-public-comment-on-unreasonable-refusal-to-deal-proposed-
rule/.
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LEstablished the Bureau of Enforcement,
Investigations, and Compliance for improved effectiveness of
the Commission's enforcement and compliance activities.\56\
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\56\ FMC, New FMC Enforcement Structure, (July 29, 2022), available
at https://www.fmc.gov/new-fmc-enforcement-structure/.
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LEntered into an agreement with the National
Academies of Sciences, Engineering, and Medicine to carry out a
study and develop best practices for the efficient supply of
chassis for transporting intermodal containers.\57\
---------------------------------------------------------------------------
\57\ National Academies of Sciences, Engineering, and Medicine.
Best Practices for the Efficient Supply of Chassis for Transporting
Intermodal Containers, available at https://www.nationalacademies.org/
our-work/best-practices-for-the-efficient-supply-of-chassis-for-
transporting-intermodal-containers#sectionContact.
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LPublished on their website the ``Fact Finding
Investigation 29 Final Report on the Effects of the COVID-19
Pandemic on the U.S. International Ocean Supply Chain:
Stakeholder Engagement and Possible Violations of 46 U.S.C.
41102(c)''.\58\
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\58\ FMC, Fact Finding Investigation 29 Final Report, available at
https://www2.fmc.gov/readingroom/docs/FFno29/
Fact%20Finding%2029%20Final%20Report.pdf/.
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V. BUDGET FOR NOAA'S MARINE DEBRIS PROGRAM

NOAA's marine debris and oil spill response operations are
funded out of the Agency's Coastal Science, Assessment,
Response, and Restoration Account. NOAA's FY 2024 Congressional
Budget Justification documents and FY 2023 spending plans are
pending release and unavailable at this time. More broadly, the
President's FY 2024 budget request includes $6.8 billion for
NOAA, an increase of $450.5 million above the FY 2023 enacted
level.\59\
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\59\ NOAA, NOAA's FY 2024 budget: Building a climate-ready nation,
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building-climate-ready-nation.
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VI. WITNESSES

LRear Admiral Ann C. Phillips (Ret.),
Administrator, Maritime Administration
LThe Honorable Daniel B. Maffei, Chairman, Federal
Maritime Commission
LWritten testimony provided by: Dr. Richard W.
Spinrad, Under Secretary of Commerce for Oceans and Atmosphere,
and Administrator, National Oceanic and Atmospheric
Administration

REVIEW OF FISCAL YEAR 2024 BUDGET REQUEST FOR FEDERAL MARITIME
TRANSPORTATION PROGRAMS, AND IMPLEMENTATION OF THE OCEAN SHIPPING
REFORM ACT OF 2022

----------

THURSDAY, MARCH 23, 2023

House of Representatives,
Subcommittee on Coast Guard and
Maritime Transportation,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to call, at 2:27 p.m. in
room 2253 Rayburn House Office Building, Hon. Daniel Webster
(Chairman of the subcommittee) presiding.
Mr. Webster of Florida. The Subcommittee on Coast Guard and
Maritime Transportation will come to order.
I ask unanimous consent that the chairman be authorized to
declare a recess at any time during today's hearing.
Without objection, so ordered.
As a reminder, if Members submit a document, they need to
email it to us at DocumentsTI@mail.house.gov.
I now recognize myself for the purpose of an opening
statement for 5 minutes.

OPENING STATEMENT OF HON. DANIEL WEBSTER OF FLORIDA, CHAIRMAN,
SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION

Mr. Webster of Florida. Today, we convene to review the
fiscal year 2024 budget request for Federal maritime
transportation programs administered by the Maritime
Administration, the Federal Maritime Commission, and NOAA.
I would like to welcome our guests, Rear Admiral Ann
Phillips, Administrator of the Maritime Administration, and the
Honorable Dan Maffei, Chairman of the Federal Maritime
Commission.
MARAD serves as the agency within the Department of
Transportation responsible for promoting the U.S. merchant
marine and the domestic maritime industry. In this pursuit,
they are responsible for the administration of programs that
serve to strengthen national security and ensure a more
efficient maritime transportation system.
This subcommittee shares jurisdiction of MARAD with the
House Armed Services Committee, with us overseeing the
nonnational security aspects of the merchant marine. This
includes the Port Infrastructure Development Program known as
PIDP that provides grants for coastal seaports, inland river
ports, and Great Lakes ports infrastructure to improve the
safety, efficiency, and reliability of the movement of goods.
The President's budget request for fiscal year 2024
includes $230 million for this program, which is in addition to
the $450 million in advanced appropriations the program
received through the Infrastructure Investment and Jobs Act.
Though this program is intended to help optimize and
improve port operations, I am concerned with the program's
ability to fully realize this goal, due to language Congress
has routinely included in the program's authorization that
prohibits the use of funds for automated cargo handling
equipment. I am also concerned that MARAD has included this
policy in the notice of funding opportunity for the United
States Marine Highway Grant program, which has no legislative
requirement specifying this prohibition.
It is unfortunate that we have drastically limited the
impact these programs can have due to this policy, and I look
forward to hearing from MARAD on the role automation plays in
improving port operations for our Nation's supply chains.
Additionally, MARAD oversees the permitting process for
deepwater ports, its sole permitting program. Current
applicants have experienced very long delays in the processing
of their applications, and in fact, all five pending
applications are stalled due to MARAD's convoluted process. I
hope we can work with MARAD to ensure that these applications
are processed in a timely fashion as is directed under law.
We also have FMC with us today to discuss the work being
done to implement provisions of the Ocean Shipping Reform Act
of 2022, known as OSRA. FMC is an independent agency
responsible for the regulation of oceanborne transportation in
the foreign commerce of the United States.
The supply chain crisis that emerged following the onset of
the COVID-19 pandemic led to massive increases in ocean
shipping costs, long cargo wait times at ports, and an
imbalance in maritime trade flows leading to the frequent
export of empty containers from the U.S. rather than moving
inland to be filled with domestically produced goods. Congress,
in response, passed the Ocean Shipping Reform Act of 2022 to
help address many of these challenges facing U.S. exporters.
I applaud FMC for working expeditiously to implement the
many provisions included in this law, unlike the United States
Coast Guard that often fails to carry out the legislative
directives of this subcommittee. I look forward to hearing from
Chairman Maffei today on FMC's progress in implementing OSRA.
Lastly, I would like to note that although they are not
here in person, we also received written testimony from NOAA
regarding their Marine Debris Programs. NOAA is responsible for
providing support to oilspill response and marine debris
prevention, removal, research, response coordination,
monitoring, and detection.
I thank NOAA for providing us with their written testimony,
and I thank our witnesses for being here today. I look forward
to hearing their testimony.
[Mr. Webster of Florida's prepared statement follows:]

Prepared Statement of Hon. Daniel Webster of Florida, Chairman,
Subcommittee on Coast Guard and Maritime Transportation
Today, we convene to review the fiscal year 2024 budget requests
for federal maritime transportation programs administered by the
Maritime Administration, the Federal Maritime Commission, and the
National Oceanic and Atmospheric Administration. I'd like to welcome
our witnesses--Rear Admiral Ann Phillips, Administrator of the Maritime
Administration, and the Honorable Dan Maffei, Chairman of the Federal
Maritime Commission.
MARAD serves as the agency within the Department of Transportation
responsible for promoting the U.S. Merchant Marine and the domestic
maritime industry. In this pursuit, they are responsible for the
administration of programs that serve to strengthen national security
and ensure a more efficient maritime transportation system.
This subcommittee shares jurisdiction of MARAD with the House Armed
Services Committee, with us overseeing the non-national security
aspects of the merchant marine. This includes the Port Infrastructure
Development Program, also known as PIDP, that provides grants for
coastal seaports, inland river ports, and Great Lakes ports
infrastructure to improve the safety, efficiency, and reliability of
the movement of goods.
The President's budget request for FY24 includes $230 million for
this program, which is in addition to the $450 million in advanced
appropriations the program received through the Infrastructure
Investment and Jobs Act.
Though this program is intended to help optimize and improve port
operations, I am concerned with the program's ability to fully realize
this goal due to language Congress has routinely included in the
program's authorization that prohibits the use of funds for automated
cargo handling equipment. I am also concerned that MARAD has included
this policy in the notice of funding opportunity for the United States
Marine Highway Grant Program, which has no legislative requirement
specifying this prohibition.
It is unfortunate that we have drastically limited the impact these
programs can have due to this policy, and I look forward to hearing
from MARAD on the role automation plays in improving port operations
and our Nation's supply chains.
Additionally, MARAD oversees the permitting process for deep water
ports, its sole permitting program. Current applicants have experienced
very long delays in the processing of their applications and in fact,
all five pending applications are stalled due to MARAD's convoluted
process. I hope that we can work with MARAD to ensure that these
applications are processed in a timely fashion as is directed under
law.
We also have FMC here with us today to discuss the work being done
to implement provisions from the Ocean Shipping Reform Act of 2022,
also known as OSRA. FMC is an independent agency responsible for the
regulation of ocean-borne transportation in the foreign commerce of the
U.S.
The supply chain crisis that emerged following the onset of the
COVID-19 pandemic led to massive increases in ocean shipping costs,
long cargo wait times at ports, and an imbalance in maritime trade
flows leading to the frequent export of empty containers from the U.S.
rather than moving inland to be filled with domestically produced
goods. Congress in response passed the Ocean Shipping Reform Act of
2022 to help address many of these challenges facing U.S. exporters.
I applaud FMC for working expeditiously to implement the many
provisions included in this law, unlike the United States Coast Guard
that often fails to carry out the legislative directives of this
Subcommittee. I look forward to hearing from Chairman Maffei today on
FMC's progress in implementing OSRA.
Lastly, I would like to note that though they are not here in
person to testify, we also received written testimony from the National
Oceanic and Atmospheric Administration regarding their marine debris
programs. NOAA is responsible for providing support to oil spill
response and marine debris prevention, removal, research, response
coordination, monitoring, and detection.
I thank NOAA for providing us their written testimony and I thank
our witnesses for being here today. I look forward to hearing their
testimony.

Mr. Webster of Florida. I ask unanimous consent that
Members not on the subcommittee be allowed to participate in
the hearing.
Without objection, that is adopted.
I now recognize Ranking Member Carbajal for 5 minutes for
an opening statement.
Mr. Carbajal. Thank you, Mr. Chair. I am going to yield to
Ranking Member Larsen. He has somewhere to go, and he is the
ranking member, if that is OK.
Mr. Webster of Florida. OK. That recognition is accepted.
And Mr. Larsen, you are recognized.

OPENING STATEMENT OF HON. RICK LARSEN OF WASHINGTON, RANKING
MEMBER, COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

Mr. Larsen of Washington. Thanks. Thanks, Mr. Chair, and I
want to thank the ranking member for indulging me. I want to
thank you for scheduling this hearing for the fiscal year 2024
budget requests of MARAD and the FMC, the first in a series
that this committee will hold to inform us on maritime issues.
MARAD's purpose is to promote the U.S. maritime industry,
while the FMC protects consumers and monitors shipping company
practices. Ocean shipping is dominated by foreign shipping
companies, with U.S.-flagged operations comprising less than 2
percent of imports and exports. Supply chain crises and ongoing
international conflicts demonstrate the need for a robust U.S.
maritime presence.
The President's fiscal year 2024 budget request for MARAD
includes a 2-percent increase and a 14-percent increase for
FMC, both welcomed increases. Under MARAD, this year's budget
request includes an increase for the United States Merchant
Marine Academy to address long-term infrastructure needs and
culture changes around sexual assault and sexual harassment.
Investment in the U.S. maritime industry is long overdue,
and for years, we faced a mariner shortage as the incumbent
workforce ages out and industry struggles to appeal to younger
Americans. Admiral Phillips, I do expect to hear how MARAD is
promoting the industry and getting ahead of this particular
growing issue.
I would be remiss if I did not bring up the work Admiral
Phillips and Deputy Administrator Lessley have done to address
sexual assault and harassment, both at the U.S. Merchant Marine
Academy and across the commercial industry. Sexual assault and
harassment have no place in our society, and every mariner
deserves respect and deserves to feel safe at sea. The industry
will not grow if workers do not feel safe and welcome.
The President's budget includes increases for MARAD's
Marine Highway Program and the Port Infrastructure Development
Program as well. Infrastructure investments in U.S. seaports
and their intermodal connections, both on the land and in the
water, provide opportunities to bolster our economy, create and
sustain jobs, and enhance our international competitiveness. A
strong and sustainable Federal investment in seaport-related
infrastructure is critical to the economic and environmental
health of the United States.
Small shipyards are vital to maintaining an industrial
shipbuilding base and a U.S. maritime presence while providing
rewarding jobs to local communities. As technology evolves and
industry invests in the development of alternative fuels,
programs like the Small Shipyard Grant program will be
essential in ensuring our shipyards can bring these new fuels
and technology online. And despite an increase in authorized
amounts, I am very disappointed the President's budget includes
only $20 million for this program, which is the same as last
year's budget request.
Last Congress, we passed the Bipartisan Infrastructure Law,
which included $2.25 billion over 5 years for the Port
Infrastructure Development Program, the largest investment
since the launch of that important initiative. These grants
will bring U.S. ports into the 21st century and provide needed
funds to reduce emissions and strengthen the supply chain.
Since 2019, over $6 billion has been requested by applicants
for these grants, demonstrating the demand for them.
Between 2010 and 2019, China invested billions in domestic
and foreign ports to broaden its global maritime influence.
Economic and national security relies on maritime power. The
Government of China understands this, and it is time that we
do, too.
Small ports are part of the lifelines to our local
communities and are a critical part of the supply chain that
can ease congestion at our large ports. That is why it is so
important that we get robust funding in the PIDP.
I want to commend Admiral Phillips and MARAD for their work
on the BIL funding and look forward to seeing what projects are
selected this fall.
Last Congress, this committee passed the Ocean Shipping
Reform Act of 2022, and under Chairman Maffei's leadership, the
FMC has been quick to implement new requirements for ocean
carriers and investigate unfair shipping practices. The FMC
will require more funding and personnel to fully address the
new investigative and prosecutorial authorities that we
provided it under law. I am heartened to see the President
understands this and included in the budget request a 14-
percent increase for FMC.
Since the passage of OSRA in 2022, container prices have
fallen, ships lingering offshore have dropped 30 percent, and
FMC has improved the reporting process, leading to an increase
in charge complaints from American businesses, one of which
resulted in a $2 million settlement over findings that the
shipping company knowingly and willfully violated the Shipping
Act. These actions are important.
Finally, I will just say the committee has jurisdiction
over the Marine Debris Program at NOAA. Through this program,
NOAA determines the sources of, reduces, prevents, and removes
marine debris from our oceans to mitigate its impact on the
marine environment and navigation safety. This is a critical
program for the Pacific Northwest, for the Puget Sound, and the
Salish Sea. I look forward to reauthorizing that, as well.
[Mr. Larsen of Washington's prepared statement follows:]

Prepared Statement of Hon. Rick Larsen of Washington, Ranking Member,
Committee on Transportation and Infrastructure
Mr. Chairman, thank you for scheduling this afternoon's hearing to
review the Fiscal Year 2024 budget requests of the Maritime
Administration and the Federal Maritime Commission--the first in a
series of hearings to inform the Committee ahead of this year's Coast
Guard Authorization Act.
The Maritime Administration's purpose is to promote the United
States maritime industry while the Federal Maritime Commission protects
consumers and monitors shipping company practices.
Ocean shipping is dominated by foreign shipping companies with
U.S.-flagged operations comprising less than 2 percent of imports and
exports. The supply chain crisis and ongoing international conflicts
demonstrate the need for a robust U.S. maritime presence.
The President's fiscal year 2024 budget request for the Maritime
Administration includes a 2 percent increase and a 14 percent increase
for the Federal Maritime Commission--both welcomed increases.
Under MARAD, this year's budget request includes an increase for
the United States Merchant Marine Academy to address long-term
infrastructure needs and culture changes around sexual assault and
sexual harassment.
Investment in the U.S. maritime industry is long overdue. For
years, we have faced a mariner shortage as the incumbent workforce ages
out and the industry struggles to appeal to younger Americans.
Admiral Phillips, I expect to hear how MARAD is promoting the
industry and getting ahead of this growing issue.
I would be remiss if I did not bring up the work Admiral Phillips
and Deputy Administrator Lessley have done to address sexual assault
and sexual harassment both at the United States Merchant Marine Academy
and across the commercial industry. Sexual assault and harassment have
no place in our society. Every mariner deserves to be respected and
feel safe out at sea. The industry will not grow if its workers do not
feel safe and welcome.
The President's budget includes increases for MARAD's Marine
Highway Program and the Port Infrastructure Development Program.
Infrastructure investments in U.S. seaports and their intermodal
connections--both on the land and in the water--provide opportunities
to bolster our economy, create and sustain jobs and enhance our
international competitiveness.
Strong and sustainable federal investment in seaport-related
infrastructure is critical to the economic and environmental health of
the nation.
Small shipyards are vital to maintaining an industrial shipbuilding
base and U.S. maritime presence while providing rewarding jobs to local
communities.
As technology evolves and the industry invests in the development
of alternative fuels, programs like the Small Shipyard Grant Program
will be essential in ensuring our shipyards can bring these new fuels
and technology online. Despite an increase in authorized amounts, I'm
disappointed the President's budget includes only $20 million for this
program, which is the same as last year's budget request.
Last Congress, we passed the Bipartisan Infrastructure Law which
included $2.25 billion over 5 years for the Port Infrastructure
Development Program--the largest investment since the launch of that
important initiative. These grants will bring U.S. ports into the 21st
century, providing needed funds to reduce emissions and strengthen the
supply chain.
Since 2019, over $6 billion has been requested by applicants for
Port Infrastructure Development grants, demonstrating the demand for
port infrastructure investments and the importance of the funding in
the Bipartisan Infrastructure Law.
Between 2010 and 2019, China invested billions in domestic and
foreign ports to broaden their global maritime influence. Economic and
national security relies on maritime power. China understands this and
it is time we do too.
Small ports are lifelines to local communities and are a critical
part of the supply chain that can ease congestion at larger ports. That
is why it is so important robust funding is allocated for small ports
in the Port Infrastructure Development Program.
In my district, the Swinomish Port Authority--a small port and one
of the few Tribal-run port authorities--received $11 million to fund a
master plan for the port and begin the design and engineering of a new
commercial pier. The local impact of this project is immeasurable.
I commend Admiral Phillips and the Maritime Administration for
their work in awarding the Bipartisan Infrastructure Law funding, and I
look forward to seeing what projects are selected this fall.
Last Congress, this committee passed the Ocean Shipping Reform Act
of 2022. Under Chairman Maffei's leadership, the Federal Maritime
Commission has been quick to implement new requirements for ocean
carriers and to investigate unfair shipping practices.
The Federal Maritime Commission will require more funding and
personnel to fully address the new investigative and prosecutorial
authorities provided under the law. I am heartened to see that the
President understands this and included in his budget request a 14
percent increase for the Federal Maritime Commission.
Since passage of the Ocean Shipping Reform Act of 2022, container
prices have fallen, ships lingering offshore have dropped 30 percent
and the FMC has improved the reporting process leading to an increase
in charge complaints from American businesses. One of which resulted in
a $2 million settlement over findings that the shipping company
knowingly and willfully violated the Shipping Act. This means lower
costs for consumers thanks to quick action by Congress and the
President.
The Committee also has jurisdiction over the Marine Debris Program
at the National Oceanic and Atmospheric Administration (NOAA). Through
this program, NOAA determines the sources of, reduces, prevents and
removes marine debris from our oceans to mitigate its impact on the
marine environment and navigation safety. I'm interested in bolstering
the work of the Marine Debris Program as part of the Coast Guard
Authorization.
I look forward to engaging our witnesses on the administration's
ongoing work to strengthen our supply chain and grow the United States
commercial maritime fleet.

Mr. Larsen of Washington. And with that, I thank the chair
and the ranking member for the indulgence. I will be back for
questions. I don't yield any time back, because I have none to
yield back. Thank you.
Mr. Webster of Florida. OK. Well, Mr. Carbajal, do you want
to go ahead with your statement?
Mr. Carbajal. I am glad to go, but I want to yield to your
Republican that is on your side as the next Member. I don't
want to take advantage. So, since you let my ranking member go,
I am OK with the next Republican.
Voice. We only do an opening statement for the chairman.
Mr. Carbajal. So, I can go next? OK, great. Thank you. I
just want to do what is right.

OPENING STATEMENT OF HON. SALUD O. CARBAJAL OF CALIFORNIA,
RANKING MEMBER, SUBCOMMITTEE ON COAST GUARD AND MARITIME
TRANSPORTATION

Mr. Carbajal. Thank you, Mr. Chairman, for scheduling
today's hearing, ``Review of Fiscal Year 2024 Budget Request
for Federal Maritime Transportation Programs, and
Implementation of the Ocean Shipping Reform Act of 2022.''
Well, that was a mouthful.
And I want to congratulate you, Mr. Chairman, on being
appointed chairman of this subcommittee. I look forward to
working with you and finding as much common ground on a
bipartisan basis as possible.
I look forward to hearing from Chair Maffei of the Federal
Maritime Commission, or FMC, and Administrator Phillips of the
Maritime Administration, or MARAD, as we call it, on the
President's budget request and their agencies' priorities for
the upcoming year.
I am particularly eager to hear from the FMC about its
implementation of the Ocean Shipping Reform Act, which passed
out of this subcommittee last Congress before becoming law, and
how its new authorities will help maintain a resilient and
efficient supply chain. I want to remind us it passed in a
bipartisan fashion.
As the Federal agency tasked with ensuring fairness in
international shipping, the FMC has key authorities which allow
it to safeguard transparent and equitable maritime commerce. As
the recent supply chain issues have demonstrated, stability in
international shipping is integral to a strong economy.
During the COVID-19 pandemic, weaknesses in our supply
chain system were amplified as landside port congestion and
unfair shipping practices by foreign ocean carriers led to
backlogs and price increases, which certainly contributed to
inflation.
The reforms in our bill strengthened the FMC's authority to
investigate unfair ocean shipping carrier fees and facilitate
the efficient movement of cargo through U.S. ports. I am proud
to say that since the passage of the Ocean Shipping Reform Act,
vessel congestion at ports has decreased dramatically, and the
FMC has refunded over $700,000 in undue charges by carriers--
or, should I say, unfair charges.
Further, the FMC is currently undertaking a rulemaking
aimed at ensuring that exporters are giving fair access to
cargo space. It is important that the FMC is sufficiently
funded so that it can properly carry out these reforms, which
will greatly benefit American businesses and the American
consumer.
I look also forward to learning about MARAD's plans to
revitalize the American maritime industry, from ports and
infrastructure, to our shrinking U.S.-flagged fleet, to the
dwindling of available American merchant mariners.
Administrator Phillips and her team have done an excellent
job continuing to pursue systemic change to the toxic culture
that has resulted in sexual violence at the U.S. Merchant
Marine Academy and in the commercial maritime industry. Some of
that congratulations is also extended to Lucinda Lessley for
her work before the Administrator came on. This issue is of the
utmost importance, and while our work is not done, I commend
both of your leaderships on efforts to make the maritime
industry a safe and desirable workplace for all.
MARAD oversees vital grant programs that fund projects to
modernize our infrastructure, including the Maritime
Environmental and Technical Assistance program, META, and the
Port Infrastructure Development Program. The President's budget
request includes $8.5 million for META, which is a $2.5 million
increase over last year's budget. This supports the research,
development, installation, and use of low- or zero-carbon
technologies. These technologies are crucial for reducing
harmful emissions that protect the environment, especially for
port communities where air pollution is statistically worse.
Included in this request for META is $1.5 million for the
research and reduction of underwater noise from vessels.
Underwater noise disproportionately affects marine mammals such
as whales. Last Congress, I worked with my colleagues across
the aisle to include an increased authorization for META and
language to address vessel sound. While this request is small,
I am happy to see that MARAD is prioritizing protecting whales
from the impacts of vessels.
The Port Infrastructure Development Program also supports
decarbonization projects, which help reduce our carbon
footprint and build a more resilient, reliable Marine
Transportation System. When we invest in renewable energy like
electrification at ports, it creates jobs and adds resilience
to disruptions that can occur with traditional fossil fuels,
not to mention protecting the public's health.
I am particularly interested in how the Port Infrastructure
Development Program could support the Morro Bay offshore wind
project in my district. Building out potential port
infrastructure to receive and transmit this energy, as well as
creating laydown space for shoreside wind turbine staging and
operations is of critical importance and will require a
significant investment.
Thank you to our witnesses and attendees for their
participation today. I look forward to a robust discussion
about how the 2024 budget request can support investments in a
stronger maritime industry.
[Mr. Carbajal's prepared statement follows:]

Prepared Statement of Hon. Salud O. Carbajal of California, Ranking
Member, Subcommittee on Coast Guard and Maritime Transportation
Thank you, Chair Webster, for scheduling today's hearing on the
``Review of Fiscal Year 2024 Administration Budget Request for Federal
Maritime Transportation Programs and Implementation of the Ocean
Shipping Reform Act of 2022''.
I look forward to hearing from Chair Maffei of the Federal Maritime
Commission, or FMC, and Administrator Phillips of the Maritime
Administration, or MARAD, on the President's budget request and their
agency priorities for the upcoming year.
I am particularly eager to hear from the FMC about its
implementation of the Ocean Shipping Reform Act, which passed out of
this subcommittee last Congress before becoming law, and how its new
authorities will help maintain a resilient and efficient supply chain.
As the federal agency tasked with ensuring fairness in
international shipping, the FMC has key authorities which allow it to
safeguard transparent and equitable maritime commerce. As the recent
supply chain issues have demonstrated, stability in international
shipping is integral to a strong economy.
During the COVID-19 pandemic, weaknesses in our supply chain system
were amplified as landside port congestion and unfair shipping
practices by foreign ocean carriers led to backlogs and price
increases, which have contributed to inflation.
The reforms in our bill strengthened the FMC's authority to
investigate unfair ocean shipping carrier fees and facilitate the
efficient movement of cargo through U.S. ports. I am proud to say that
since the passage of the Ocean Shipping Reform Act, vessel congestion
at ports has decreased and the FMC has refunded over $700,000 in undue
charges by carriers.
Further, the FMC is currently undertaking a rulemaking aimed at
ensuring that exporters are given fair access to cargo space. It is
important that the FMC is sufficiently funded so that it can properly
carry out these reforms, which will greatly benefit American businesses
and the American consumer.
I look also forward to learning about MARAD's plans to revitalize
the American maritime industry, from ports and infrastructure to our
shrinking U.S. flagged fleet and the dwindling availability of American
merchant mariners.
Administrator Phillips has done an excellent job continuing to
pursue systemic change to the toxic culture that has resulted in sexual
violence at the U.S. Merchant Marine Academy and in the commercial
maritime industry. This issue is of the utmost importance and, while
our work is not done, I commend her leadership on efforts to make the
maritime industry a safe and desirable workplace for all.
MARAD oversees vital grant programs that fund projects to modernize
our infrastructure, including the Maritime Environmental and Technical
Assistance program, or META, and the Port Infrastructure Development
Program.
The President's budget request includes $8.5 million for META,
which is a $2.5 million increase over last year's budget. This supports
the research, development, installation and use of low or zero-carbon
technologies. These technologies are crucial for reducing harmful
emissions and protecting the environment, especially for port
communities, where air pollution is statistically worse.
Included in this request for META is $1.5 million for the research
and reduction of underwater noise from vessels. Underwater noise
disproportionately affects marine mammals, such as whales. Last
Congress I worked with my colleagues across the aisle to include an
increased authorization for META and language to address vessel sound.
While this request is small, I am happy to see MARAD prioritize
protecting our whales from the impacts of vessels.
The Port Infrastructure Development Program also supports
decarbonization projects, which help reduce our carbon footprint and
build a more resilient, reliable marine transportation system. When we
invest in renewable energy, like electrification at ports, it creates
jobs and adds resilience to disruptions that can occur with traditional
fossil fuels.
I'm particularly interested in how the Port Infrastructure
Development Program could support the Morro Bay offshore wind project
in my district. Building out the port infrastructure to receive and
transmit this energy, as well as creating laydown space for shoreside
wind turbine staging, is of critical importance and requires a
significant investment.
Thank you to our witnesses and attendees for their participation
today. I look forward to a robust discussion about how the 2024 budget
request can support investments in a stronger maritime industry.

Mr. Carbajal. Mr. Chair, I yield back.
Mr. Webster of Florida. I would like to welcome our
witnesses and thank them for being here today. I appreciate
your attendance.
I ask unanimous consent that the witnesses' full statements
be included in the record.
Without objection, so ordered.
As your written testimony has been made part of the record,
the committee also asks you to limit your oral remarks to 5
minutes.
With that, Admiral Phillips, you are recognized for 5
minutes for your testimony.

TESTIMONY OF ANN C. PHILLIPS, REAR ADMIRAL, U.S. NAVY (RET.),
AND ADMINISTRATOR, MARITIME ADMINISTRATION; AND HON. DANIEL B.
MAFFEI, CHAIRMAN, FEDERAL MARITIME COMMISSION

TESTIMONY OF ANN C. PHILLIPS, REAR ADMIRAL, U.S. NAVY (RET.),
AND ADMINISTRATOR, MARITIME ADMINISTRATION

Admiral Phillips. Thank you, Chairman Webster.
Good afternoon, everyone. Good afternoon, Mr. Chairman,
Ranking Member Carbajal, members of the subcommittee. Thank you
for your tremendous support for the Maritime Administration,
the U.S. Merchant Marine Academy, and the U.S. maritime
industry. And thank you for the opportunity to testify before
you today.
As a retired U.S. Navy rear admiral with more than 30 years
of military service, I knew before becoming the Maritime
Administrator how critical our merchant marine and our entire
maritime industry are to our national defense, as well as our
economy.
Now, having led the great MARAD team for just under a year,
I can tell you this agency is meeting many historic moments as
we work to promote the merchant marine and strengthen all
facets of the maritime industry. We are administering once-in-
a-generation investments in ports and waterways made possible
by the President's Bipartisan Infrastructure Law. We are also
working to advance culture change throughout the merchant
marine to help ensure every mariner is treated with respect and
has the opportunity to advance on the basis of their skills and
professionalism. We are advancing long overdue recapitalization
of our aging Ready Reserve Force.
The President's fiscal year 2024 budget request of $980.2
million for MARAD is critical to enabling MARAD to carry out
this vital work on every front. For example, the request would
expand our historic investments in ports. In fiscal year 2024,
the third tranche of funding, $450 million, provided by the
Bipartisan Infrastructure Law to support the Port
Infrastructure Development Program, will be invested in new
grants. The President's budget requests an additional $230
million to support PIDP, which would bring the total amount of
funding available in 2024 to $680 million.
Last year, MARAD awarded more than $703 million in PIDP
grants to 41 projects in 22 States and 1 Territory. More than
60 percent of these awards benefit ports in historically
disadvantaged communities, and more than $150 million in
awarded funding focuses on port electrification to improve air
quality.
In addition, the President's fiscal year 2024 request will
enable MARAD to continue to address the urgent and longstanding
challenges at the Merchant Marine Academy, including
implementing the many new authorities and responsibilities
provided in the fiscal year 2023 NDAA.
Specifically, funding will support approximately 975
midshipmen and 292 faculty and staff. It will enable us to
continue our work implementing the Every Mariner Builds a
Respectful Culture program, EMBARC, and help meet the Academy's
extensive facility, maintenance, and repair needs.
As you know, MARAD established the EMBARC program in
December of 2021 to help prevent sexual assault and harassment
during the Sea Year program to support survivors, strengthen a
culture of accountability, and improve safety for all mariners.
Now, thanks to the fiscal year 2023 NDAA, commercially operated
vessels must, by law, comply with sexual assault and harassment
prevention and response standards set by MARAD before they can
train Merchant Marine Academy cadets.
Further, the fiscal year 2023 NDAA gave MARAD the authority
to withhold payments from companies that receive Federal
subsidies if they do not comply with MARAD's policies and
requirements. MARAD is working as quickly as possible to
develop a proposed EMBARC rule pursuant to the authority
provided by the NDAA. I note that today there are 16 commercial
operators enrolled in EMBARC, and together they operate more
than 140 vessels.
The 2024 budget request also includes $92 million for
capital and maintenance funding improvements for the Academy to
help us advance capital projects and address the maintenance
backlog.
We have also implemented numerous measures to improve our
ability to manage capital projects at the Academy, including
creating a new position staffed by a senior executive to
oversee all projects. Late last year, we provided the Academy's
Fiscal Year 2022 Capital Improvement Plan, which details
project needs to support safety, health, and well-being of
midshipmen. In December 2022, we awarded a campuswide
maintenance contract at USMMA, which has a $42 million ceiling
over the next 5 years, and additional maintenance work,
including the replacement of boilers, will continue outside
that contract.
Looking at our sealift programs, the fiscal year 2024
budget requests the full authorization of $318 million for the
Maritime Security Program, and the budget requests $60 million
for the Tanker Security Program. I am pleased to report that at
the end of last year, MARAD issued an interim final rule to
implement the Tanker Security Program. The TSP application
period closed February 17th, and we anticipate announcing the
first 10 ships selected for enrollment in the near term.
Thank you for the opportunity to present and discuss the
President's budget for MARAD, and I look forward to any
questions you and the members of the subcommittee may have.
[Admiral Phillips' prepared statement follows:]

Prepared Statement of Ann C. Phillips, Rear Admiral, U.S. Navy (Ret.),
and Administrator, Maritime Administration
Good afternoon, Chairman Webster, Ranking Member Carbajal, and
Members of the Subcommittee. Thank you for your tremendous support for
the Maritime Administration (MARAD), the U.S. Merchant Marine Academy
(USMMA), and the U.S. maritime industry. We greatly appreciate the
opportunity to testify today on the President's Fiscal Year (FY) 2024
budget, and how this request will enable MARAD to continue to advance
key priorities in support of our economic and national security.
FY 2024 Budget Request
MARAD's mission is to foster, promote, and develop the maritime
industry of the United States to meet the nation's economic and
security needs. The President's FY 2024 Budget request of $980.2
million for MARAD will enable the agency to continue to strengthen our
sealift enterprise by advancing recapitalization of the Ready Reserve
Force (RRF) and the vital commercial sealift programs that support
U.S.-flagged vessels operating in the foreign trade.
The President's request will also support investments in our ports
and waterways to improve supply chain resiliency and expand our efforts
to address climate change. In FY 2024, the third tranche of funding--
$450 million--provided by the Bipartisan Infrastructure Law (BIL) to
support the Port Infrastructure Development Program (PIDP) will be
invested in new grants. The President's budget requests an additional
$230 million to support PIDP, which would bring the total amount of
funding available in FY 2024 to $680 million and enable us to continue
modernizing our ports to help reduce the costs of moving goods from
ships to shelves and from American farmers and factories to
destinations overseas.
In addition, the President's request will enable MARAD to continue
critical investments to address the urgent and long-standing challenges
at the USMMA. Further, it will enable us to implement the many new
authorities and responsibilities provided in the James M. Inhofe
National Defense Authorization Act for Fiscal Year (FY 2023 NDAA).
Economic and Climate Sustainability Investments
The President's FY 2024 budget requests $230 million for the PIDP
to provide grants to improve port infrastructure and facilities and to
stimulate economic growth in and around ports while also improving
safety, addressing climate change and equity, and strengthening our
supply chains. In addition to the funding requested in the budget, the
BIL provides $450 million in advance appropriations for this program in
FY 2024. Together, this funding would provide a $680 million investment
for port infrastructure projects.
Last year, MARAD awarded more than $703 million in PIDP grants.
This total included the first tranche of $450 million in funding
provided by the BIL, approximately $234 million in FY 2022
appropriations, and unexpended funding from a prior PIDP round. The
2022 PIDP awards will fund 41 projects in 22 states and one territory.
More than 60 percent of the PIDP awards made in 2022 benefit ports in
historically disadvantaged communities. More than $150 million in the
funding awarded last year focuses on port electrification to improve
air quality, while nearly $100 million of the awarded funding supports
projects that will advance offshore wind farm developments.
This year, thanks again to the BIL and the funding provided in the
FY 2023 appropriations measure, more than $662 million in funding is
available for PIDP grants. The Notice of Funding Opportunity (NOFO) for
this program is open and applications are due on April 28, 2023.
The FY 2024 Budget also requests $11 million for the United States
Marine Highway Program. Marine highways support our maritime supply
chains and enable more cost-effective transportation options for U.S.
shippers and manufacturers.
The FY 2023 NDAA made significant changes to this program,
including renaming it from the ``America's Marine Highway Program'' to
the new ``United States Marine Highway Program'' and expanding the
types of cargo that projects receiving funding under the program can
support. The changes made by the FY 2023 NDAA are incorporated into
this year's NOFO for the United States Marine Highway Program, which is
now open. There is $12.4 million in funding available and applications
are due on April 28, 2023. Importantly, thanks to another change made
in the FY 2023 NDAA, any eligible project along any of the 29
designated Marine Highway Routes--which encompass 41 states--is
eligible to apply for funding.
In 2022, MARAD awarded nearly $39 million in marine highway
projects. This unprecedented level of funding was made possible by the
BIL, which provided a one-time infusion of $25 million to support the
expansion of marine highways. The funding awarded last year will
support 12 projects across the nation--and nearly all the funding is
supporting projects in Historically Disadvantaged Communities or
Federally designated community development zones.
The FY 2024 Budget also requests $20 million for MARAD's Small
Shipyards grants to support infrastructure improvements at qualified
small U.S. shipyards to help improve their efficiency and ability to
compete for domestic and international commercial ship construction and
maintenance opportunities. Investing in shipbuilding supports job
creation in a vital domestic industrial base. These grants can also be
used to support the acquisition of equipment that reduces climate
impacts and adapts technologies that reduce shipyard power consumption.
Within MARAD's FY 2024 Budget request, $8.5 million will support
the Maritime Environmental and Technical Assistance (META) program. The
META program fulfills a niche in the Federal government by being
specifically designed to assist stakeholders with innovation that
supports a safe and efficient U.S. maritime transportation sector.
Approximately 75 percent of the FY 2024 funding will be focused on
efforts related to decarbonization of the maritime transportation
sector.
The FY 2024 Budget request for MARAD includes $3 million for the
Maritime Guaranteed Loan Program (Title XI) to provide the salaries and
overhead support to manage the loan portfolio, currently at $1.5
billion in outstanding loan guarantees. This program is designed to
manage loans that help to promote the U.S. shipyard industry by
providing additional opportunities for vessel construction and
modernization, including repowering, that may otherwise be unavailable
to ship owners.
In June 2022, MARAD designated vessels constructed or reconstructed
for use to support offshore wind facilities as Vessels of National
Interest. This is the first time that this authority has been used
since it was added to Title XI statute in 2019. With this designation,
applications for projects qualifying as Vessels of National Interest
have priority for review and funding. Since this designation, there has
been a significant increase in interest in the Title XI Program to
support offshore wind vessels. The program has applications for seven
projects under credit trustworthiness review, including five projects
for Jones Act-qualified windfarm vessels.
The President's FY 2024 Budget requests $6 million for MARAD's Ship
Disposal Program for support staff and overhead costs to continue to
put primary emphasis on the disposal of the worst conditioned, non-
retention vessels to mitigate environmental risks.
U.S. Merchant Marine Education and Training
MARAD supports mariner training programs to produce highly skilled
U.S. Coast Guard (USCG) credentialed officers for the U.S. merchant
marine. Specifically, MARAD supports mariner education and training at
USMMA, and it facilitates mariner education through the extensive
support we provide to the six state maritime academies (SMA).
Graduates of USMMA are required to maintain their licenses for 6
years and to sail on commercial vessels or serve in other capacities--
such as on active duty in U.S. uniformed services--for 5 years. USMMA
is also the principal source of new officers for the U.S. Navy's
Strategic Sealift Officer (SSO) Program, which maintains a cadre of
approximately 2,000 U.S. Naval Reserve Officers with the training and
credentials to operate strategic sealift resources at times of national
need.
Funding will support academic operating expenses for approximately
975 midshipmen and 292 faculty and support staff, including expanded
support for the extensive facility maintenance and repair needs of the
Academy's aging physical plant and for our work implementing the Every
Mariner Builds A Respectful Culture (EMBARC) program.
MARAD established the EMBARC program in December 2021 to help
prevent sexual assault and sexual harassment during the Sea Year
program, to support survivors, strengthen a culture of accountability,
and improve safety for all mariners. Vessel operators enroll in the
EMBARC program before USMMA cadets can train on an operator's vessels.
Now, thanks to the FY 2023 NDAA, commercially operated vessels must
comply with standards set by MARAD regarding the prevention of, and
response to, sexual assault and harassment before they can train USMMA
cadets. In addition, the FY 2023 NDAA authorized the Secretary of
Transportation to establish a Sexual Assault Advisory Council to review
existing policies and make recommendations for improvements to build on
our efforts to strengthen prevention of sexual assault and sexual
harassment on campus and during Sea Year and ensure appropriate
responses when such incidents occur.
Further, the FY 2023 NDAA gave MARAD the authority to withhold
payments from companies participating in the Maritime Security Program
(MSP), Cable Ship Security Program (CSP), and Tanker Security Program
(TSP) if they do not comply with the policies and requirements
established by MARAD for the protection of cadets from sexual assault
and sexual harassment. MARAD is working as quickly as possible to
develop a proposed EMBARC rule pursuant to the authority provided by
the FY 2023 NDAA.
In addition, the FY 2023 NDAA requires that ocean-going vessels
include sexual assault and sexual harassment response policies in their
Safety Management Systems (SMS)--which has been a central tenet of
EMBARC. In short, the FY 2023 NDAA reinforces a long overdue change in
shipboard culture that will promote fair and equitable treatment of all
mariners and contribute to a safer working environment.
Today, there are 16 commercial operators enrolled in EMBARC;
together, they operate more than 140 vessels. All vessel operators that
are required to carry USMMA cadets under section 46 U.S.C. Sec.
51307(b)--i.e., operators with vessels enrolled in the MSP and the
CSP--have enrolled in EMBARC. Companies that enroll vessels in the new
Tanker Security Fleet will be required to have completed enrollment in
EMBARC as a condition of enrolling in the TSP.
Thanks to the incredible support provided by the Military Sealift
Command, the Navy, and the USCG, the Midshipmen in the USMMA Class of
2023 have accrued the sea time needed to qualify to take their
licensing exams on time and to graduate on time.
Of the funding requested in the FY 2024 Budget for USMMA, $92
million would support emergency and recurring maintenance and repair
activities on campus as well as major investments in aging facilities
and infrastructure at USMMA.
The Biden-Harris Administration has long recognized the urgent need
to rehabilitate and replace existing infrastructure and to
significantly strengthen the ability of MARAD and USMMA to plan and
manage capital investments and major maintenance efforts. Working
closely with leaders and experts from the Department of Transportation
(DOT), MARAD has implemented numerous measures to improve our ability
to manage capital projects. Consistent with a recommendation from the
National Academy of Public Administration, MARAD/USMMA created a new
director position that is staffed with a Senior Executive to oversee
all capital and maintenance projects at USMMA. MARAD and the DOT have
also created new oversight bodies to ensure that investments of
taxpayer funds are properly managed and yield completed projects that
address the Academy's most urgent needs.
Late last year, MARAD provided to the Committees on Appropriations
and made public USMMA's Fiscal Year 2022 Capital Improvement Plan
(CIP). The Fiscal Year 2022 CIP explains significant changes made to
active and out-year projects since USMMA's last CIP report, which was
provided in FY 2019. These changes are based on demonstrated need as
well as the principles that guide our prioritization of capital and
maintenance projects. Specifically, our highest priorities for capital
and maintenance investments are supporting the safety, health, and
well-being of Midshipmen and supporting the Academy's academic mission.
In December 2022, the USMMA awarded a campuswide maintenance
contract, which fulfills another key recommendation from the National
Academy of Public Administration. The contract has a $42 million
ceiling over the next 5 years and will help address the significant
maintenance backlog. Part of the funding requested for FY 2024 will
enable us to implement task orders under the campuswide maintenance
contract to address routine maintenance on a scheduled basis and help
reduce the incidence of emergency repairs.
Capital improvement funds requested in FY 2024 would enable us to
replace USMMA's existing storm water management systems, which date
back to the 1940s and are broken beyond repair. Funding would also
enable us to replace the seawall, which can no longer meet projected
storm surges and anticipated rises in sea level.
The FY 2024 Budget request also includes $53.4 million to provide
support to the six SMAs. This request includes funding for vessel
management, logistics, and maintenance oversight to prepare the schools
to receive and operate the National Security Multi-Mission Vessels
(NSMV).
Funding would also be available to address unanticipated increases
in steel costs for the NSMVs, and support pier improvements at SMAs
necessary to enable heavy weather mooring of the NSMVs. MARAD has
concluded a cooperative agreement with the State University of New York
Maritime College under which MARAD will cover 80 percent of the costs
of their eligible pier upgrades up to just over $18 million.
Funding would also meet maintenance and repair costs to maintain
the legacy school ships and continue our direct support to the SMAs.
There are now four NSMVs under construction. The first ship--the
EMPIRE STATE--is already launched and we anticipate taking delivery of
the ship in June of this year.
National Security
Providing sealift to meet the nation's needs is a critical part of
MARAD's mission, and we have proudly met the challenges of managing the
National Defense Reserve Fleet (NDRF) for 77 years. America's strategic
sealift provides the Nation with the capability to rapidly project
power globally by deploying Department of Defense (DOD) forces and
moving cargoes worldwide during peacetime and wartime--including
through contested environments--whenever activated by the U.S.
Transportation Command (USTRANSCOM).
Our Government-owned sealift fleet is supported and leveraged by a
fleet of privately owned, commercially operated U.S.-flag vessels in
the MSP, CSP, and the new TSP.
The FY 2024 Budget requests the full authorization level of $318
million for the MSP, which is the heart of sustainment sealift. In
return for a stipend, MSP operators provide the DOD with assured access
to their ships and their global networks of critical capabilities,
including intermodal facilities used to unload and transport military
cargoes to final destinations.
There are 60 commercially viable, militarily useful vessels
enrolled in MSP. These vessels are active in international trade and
are on-call to meet the nation's need for sustained military sealift
capacity. The MSP supports and sustains the merchant mariner base by
providing employment for 2,400 highly trained, skilled U.S. merchant
mariners who may also crew the U.S. Government-owned surge sealift
fleet when activated. The MSP also supports more than 5,000 additional
shore-side maritime industry jobs.
In addition, the President's budget requests $60 million for the
TSP. A study required by the FY 2020 NDAA found a substantial risk to
the nation associated with heavy reliance on foreign-flagged tankers,
particularly in a contested environment. The TSP will be comprised of
active, commercially viable, militarily useful, privately owned product
tank vessels. I am pleased to report that at the end of last year,
MARAD issued the updated Voluntary Tanker Agreement and an Interim
Final Rule. The application period closed on February 17, 2023, and we
anticipate announcing the first 10 ships selected for enrollment in the
near term.
As you know, last year, I testified before this Subcommittee
regarding our cargo preference programs. As I said then, put simply,
without cargoes, ships will leave the U.S. flag, our modest fleet will
continue to dwindle to the point that the number of American vessels is
simply too small to meet government shipper agency requirements whether
military or civilian. We are working with the Biden-Harris
Administration's Made In America Office to help agencies understand
cargo preference requirements. In addition, consistent with my
testimony, I have written to all Federal departments and agencies
explaining how MARAD can help them ensure they meet their obligations
under cargo preference laws and regulations.
MARAD is working diligently on revisions to the cargo preference
regulations as required by the Fiscal Year 2023 NDAA.
One of the current challenges with meeting cargo preference
requirements is ensuring we have both enough vessels and the wide mix
of vessel types to carry the many types of cargoes that the government
impels. To help attract additional vessels to our flag, the Biden-
Harris Administration proposed that Congress eliminate the 3-year
period that vessels entering the U.S. flag must currently wait before
they are eligible to carry civilian agency preference cargoes. This
would ensure that vessels that choose to sail under the U.S.-flag can
carry preference cargoes as soon as they enter the flag, as well as
provide the opportunity to diversify the types of vessels available to
civilian agencies to carry cargoes. In return, once under the U.S.
flag, the vessels would be restricted from flagging out for 3 years.
This proposal, however, was not adopted by the prior Congress.
The President's FY 2024 Budget requests $809.6 million from DOD
budgetary authority for MARAD to acquire, upgrade, and maintain vessels
in the NDRF and RRF. Funds will ensure MARAD's ability to maintain the
fleet in a ready, reliable, and responsive condition to meet strategic
sealift for the U.S. Armed Forces, and humanitarian support when called
upon during national emergencies, as well as maintain MARAD's NDRF
fleet mooring sites.
MARAD's RRF consists of sealift ships providing a mix of
capabilities. RRF ships, along with a smaller number of Military
Sealift Command vessels, provide sealift surge capability to deliver
DOD equipment and supplies where needed during the initial stages of a
response to a major contingency. Today, the RRF is a fleet of 45
vessels, with an average age of more than 45 years, maintained in a
reduced operating status to be ready to sail within five days of
activation. The fleet will grow to 51 vessels after the transfer of
additional surge sealift and prepositioning vessels from the Military
Sealift Command is complete by the end of FY 2025.
The COVID-19 pandemic has exacerbated difficulties in maintaining
ship and even mariner readiness. As part of the Navy's overall plan for
sealift recapitalization, MARAD is responsible for maintaining the
existing RRF ships through the recapitalization period, including
dozens of ships that are nearly 50 years old or even older. Continued
focus on safety, material condition, and regulatory compliance have
been difficult to sustain, and challenges have been compounded by
equipment and parts delays, and the increased scope of the repairs we
have had to undertake, including steelwork.
MARAD is working to advance the urgent recapitalization of the RRF.
In March 2022--and for the first time in nearly 30 years--we announced
the purchase of two vessels. These two ships, the former HONOR and
FREEDOM, joined the RRF as the CAPE ARUNDEL and CAPE CORTES, adding
more than 432,000 square feet of total sealift capacity and 316,000
square feet of military cargo capacity. Both of these vessels
participated in the MSP, and while differences in marine safety
regimens have slowed progress towards certification, the ships will be
upgraded in U.S. shipyards to add additional capabilities in summer
2023 as planned.
On January 27, 2023, the DOD transmitted the next proposed ship
purchase decision to Congress for the required 30-day notification
period. Without any noted concerns, the three ships will be purchased
and placed under U.S. government ownership starting in April 2023 and
continuing into summer 2023.
In the FY 2023 NDAA, MARAD was directed to develop a Roll-On/Roll-
Off ship design for the construction of 10 new vessels for the NDRF to
begin construction in 2024. In response to this directive, the RRF
program is documenting the necessary actions to rapidly implement a
limited shipbuilding program. Modeled after the NSMV program, this
shipbuilding effort would leverage commercial practices and utilize a
Vessel Construction Manager to speed deliveries. At this time, MARAD
activity is limited to developing the implementation plan and the
requirements for a concept design for new construction.
Conclusion
These programs represent MARAD's priorities that are supported by
the President's Budget. We will continue to keep you apprised of the
progress of our program activities and initiatives in these areas in
the coming year.
Thank you for the opportunity to present and discuss the
President's Budget for MARAD. I appreciate the Subcommittee's
continuing support for maritime programs, and I look forward to any
questions you and the members of the Subcommittee may have.

Mr. Webster of Florida. Thank you so much.
Now, Chairman Maffei, you are recognized.

TESTIMONY OF HON. DANIEL B. MAFFEI, CHAIRMAN, FEDERAL MARITIME
COMMISSION

Mr. Maffei. Thank you very much, Chairman Webster, Ranking
Member Carbajal, and members of this committee. I appreciate
the opportunity to testify today.
The last time I appeared before this subcommittee, the
international ocean freight transportation system in this
country was in crisis. Chairman Webster already pointed out to
you the sky-high rates and the fact that ag exporters were
being crowded out. And many of you were rightfully looking to
the Federal Maritime Commission to take a leading role in
untying the knots and mitigating the unfairness that seemed to
be plaguing the supply chain.
I am pleased to report to you today that the situation has
dramatically improved. The ship queues and congestion that
overwhelmed the supply chain for approximately 2 years are now
gone. Cargo is flowing more fluidly, shippers are having an
easier time securing vital equipment, and exports are better
able to make their connections to outgoing ships. The cost of
ocean shipping has fallen substantially, and for transpacific
service is now near pre-pandemic levels. And this rate drop
occurred far more rapidly than forecasted. If anything, ocean
shipping is now exerting downward pressure on price inflation.
Now, no doubt, much of this is a natural result of market
forces occurring as the world emerged from COVID. But the
Federal Maritime Commission has also played a vital role in
promoting fairness to America's importers and exporters, and
restoring confidence to our ocean supply chains. The intense
engagement of the FMC has helped U.S. companies by providing
fair arbitration or adjudication of their disputes with ocean
containership companies and terminal operators.
Word gets around fast in the freight transportation
industry. When America's importers and exporters realized that
the FMC could help, there was a huge jump in cases. Our
consumer affairs office now handles an average of more than 100
requests for help every month. The FMC is now handling vastly
more formal complaints than in past years. The annual number of
dockets filed with our Secretary has tripled since 2019. We
currently have more than two dozen active cases, and there has
been such a vast increase in cases filed with the Commission's
administrative law judges that we now must hire a third judge
when just one ALJ was sufficient in early 2020.
Now, the FMC's increased potency in assisting American
cargo shippers is largely due to the enactment by this
subcommittee and then consequently by the whole Congress of the
Ocean Shipping Reform Act of 2022. This was the first
substantial overhaul of America's international ocean shipping
laws in 24 years, and in my view is a counterexample to the
cynical view that Congress cannot address problems in a broadly
bipartisan way, and do so expediently.
And I have to note that the two House sponsors of the bill,
Mr. Garamendi and Mr. Johnson of South Dakota, are here today.
As you and Congress did your job, we at the FMC must now do
our jobs by implementing the new law to the best of our ability
and in the spirit intended by Congress. We have, in fact, made
substantial progress in meeting our obligations under the law
since the President signed it. The FMC has already two landmark
OSRA rulemakings underway. We have created a new fast-track
process for importer and exporter charge complaints, and we
have implemented seven other OSRA provisions.
Now, the Commission is cognizant that it is implementing
these important changes at a time when international trade
itself is changing. At an ocean freight conference a few weeks
ago, General David Petraeus warned that we are in an era of
``slowbalization,'' where geopolitics very much define what is
possible in terms of economics, trade, and investment. Managing
risk is becoming much more challenging for American importers
and exporters when any event or economic issue taking place
anywhere in the world has the potential to disrupt America's
supply chains.
America's international ocean freight transportation system
moves more than $1.3 trillion in goods annually and is
indirectly responsible for trillions more in economic activity.
But make no mistake, this system remains vulnerable. The FMC
has learned much from the last several years and is working
diligently within our statutory authority to apply these
lessons, both in our implementation of OSRA and in our other
activities. The budget that the President has submitted permits
us to do this in large part by hiring the professional staff
needed to enhance enforcement, sharpen antitrust monitoring,
assist more U.S. importers and exporters, and work with public-
and private-sector stakeholders to find solutions to America's
supply chain challenges.
This has been and continues to be the most intense period
of activity in our agency's over 50-year history. We are proud
of what we have accomplished, and at the same time, we
understand that there is still so much to be done. Thank you.
And I, too, am happy to take questions from the committee.
[Mr. Maffei's prepared statement follows:]

Prepared Statement of Hon. Daniel B. Maffei, Chairman, Federal Maritime
Commission
Chairman Webster, Ranking Member Carbajal, Members of the
Subcommittee, thank you for this opportunity to appear before you today
to discuss the Federal Maritime Commission's Fiscal Year 2024 budget
request of $43,720,000 to fund its operations in the coming fiscal
year.
The last time I appeared before this subcommittee, the supply
chains that service this country were still very much in crisis. The
media was still showing long lines of ships held up outside our major
ports, ports were clogged with containers, ship schedules were woefully
unreliable making it extremely challenging for exporters, and freight
rates and fees were sky-high adding to the inflationary pressures on
imported goods and inputs.
The Nation's freight transportation systems were largely
overwhelmed by the unprecedented high demand that resulted from COVID-
related consumer spending patterns. However, there were also widespread
reports from importers and exporters that the large multinational ocean
container ship operators were taking advantage of a situation already
economically favorable to them. The most cited example was additional
freight charges called detention and demurrage being improperly
assessed for laden containers that were not picked up on schedule or
empty containers and other equipment that was not returned on time. The
assertion was that many of these charges--amounting to millions and
millions of dollars for even a medium-sized shipper--did not comply
with FMC rules such as the May 2020 interpretive rule on detention and
demurrage authored by Commissioner Rebecca Dye and approved unanimously
by the Commission.
Sorting all of this out and promulgating solutions to stakeholders
to help us unravel the knots in the Nation's supply chains was largely
the job of the Federal Maritime Commission. It has been and continues
to be the most intense period of activity in our agency's over 50-year
history.
I am pleased to report to you that now the ocean freight
transportation system is much improved in virtually every way. The ship
queues and congestion that overwhelmed the supply chain for
approximately two years have drastically dissipated. Cargo is flowing
more fluidly, shippers are having an easier time securing intermodal
equipment, and exports are making their connections to the outgoing
ships. The cost of ocean shipping has dropped dramatically to levels
more typical of pre-pandemic prices--and this rate drop occurred far
more rapidly than forecast. If anything, ocean shipping is now exerting
downward pressure on price inflation.
Of course, much of this is a natural result of market-forces.
Nonetheless, the FMC played a vital role in promoting fairness to
America's importers and exporters and restoring confidence to America's
ocean supply chains. Many stakeholders and their representatives in
Congress turned to the Federal Maritime Commission to do more during
the crisis. In rapid response, the FMC substantially stepped up its
activity, and made a difference.
As shippers realized the FMC was eager to help them where
appropriate and provide fair arbitration or adjudication of their
disputes, there was a huge jump in cases.
We are handling exponentially more complaints now than before the
Ocean Shipping Reform Act of 2022 (OSRA) was enacted. Our Office of the
Secretary reports that the number of dockets it manages increased by
88% in Fiscal Year 2022 from Fiscal Year 2021, and there are three
times as many docket filings when compared to Fiscal Year 2019. This is
a useful barometer of Commission activity as docketed proceedings
include formal complaints, informal complaints, petitions, fact
findings, special permission applications, and rulemakings.
A second indicator of the new demand for Commission services is the
marked increase of both small claims and formal cases that have been
filed with the Commission's Office of the Administrative Law Judges
(ALJ) beginning in 2020. The ALJ's caseload tripled in Fiscal Year 2022
when compared to a pre-pandemic year. Comparing statistics within the
pandemic period, the OALJ's output in FY 2022 doubled from FY 2021.
Many of the cases heard by our ALJs are complicated and involve
substantive matters of the law that do not lend themselves to immediate
rulings. The Commission hired a second Administrative Law Judge to help
manage this caseload and are we are in the process of recruiting for a
third now. These hirings ensure that legal proceedings do not become
delayed because of caseloads and the judicial process at the Federal
Maritime Commission continues to function effectively.
The demand for Commission services from all our bureaus and offices
remains high and we believe this workload will remain at elevated
levels. This increase is largely a positive development because it
means that importers, exporters, and other industry stakeholders have
seen others benefit from using the FMC. We are closely tracking
requests for service to determine if present volumes are indicative of
the tail end of a trend or a new baseline for how often the public
turns to the FMC for assistance.
OSRA 2022 Implementation
Of course, the capacity of the FMC to assist American importers and
exporters and promote fairness and efficiency in America's cargo
transportation systems was significantly aided by the enactment of the
bipartisan Ocean Shipping Reform Act of 2022 (OSRA). Whether you
ultimately supported the legislation, thought it went too far, or
thought it did not go far enough, I want to thank each and every member
of this subcommittee for your constructive contribution to America's
ocean freight transportation system.
I maintain that the additional resources and authority in OSRA and
the Congress' willingness to act so expeditiously were crucial to
putting the system back on course.
That is why I am committed to implementing OSRA in the spirit
intended by Congress. We have made substantial progress in meeting our
obligations under the law since its enactment by President Biden on
June 16, 2022. To date, we have already:
Updated our civil penalties regulations to include
refunds of a charge (Section 8);
Established a process for accepting, investigating, and
adjudicating charge complaints (Section 10);
Posted to the Commission's website the Fact Finding 29
Final Report (Section 11);
Updated the Annual Report to include any concerning
practices by ocean common carriers (Section 14);
Continued to maintain an Office of Consumer Assistance
and Dispute Resolution Services (CADRS) (Section 17(b));
Hired no fewer than seven positions to support
investigations and oversight functions (Section 17(c));
Determined if congestion of carriage of goods has created
an emergency situation such that the Commission needs to order
information sharing (Section 18);
Entered into an agreement with the Transportation
Research Board to conduct a study and develop best practices for on-
terminal and near-terminal chassis pools (Section 19); and,
Been in contact with relevant agencies responsible for
sections of OSRA dealing with Review of Potential Discrimination
Against Transportation of Qualified Hazardous Materials (Section 22),
Use of Inland Ports for Storage and Transfer of Containers (Section
24), Report on Adoption of Technology at United States Ports (Section
25).

Significant work has been completed on other requirements of OSRA
and we have made substantial progress in:
Issuing a proposed final rule on detention and demurrage
invoicing and billing (Section 7); and,
Issuing a Supplemental Notice of Proposed Rulemaking on
Unreasonable Refusal to Deal or Negotiate with Respect to Vessel Space
(Section 7).

Notwithstanding my commitment to timely implementation, it is even
more important we get these rules right. I want to assure you that
Commission staff is working diligently on both these matters, giving
all comments received the careful consideration they warrant. The
Commission is committed to ultimately issuing rules that address and
reconcile the important issues raised by the comments. I anticipate we
will be taking next steps on both the Unreasonable Refusal to Deal and
the Detention and Demurrage Billing Requirements proposed rules soon.
Implementation of OSRA involves the efforts of all staff at the
Commission working in policy and program offices. All sections of OSRA
are being worked on simultaneously. We have had to make decisions
regarding prioritization. As staff achieves progress on first
implementation priorities, they turn their efforts to other sections of
the legislation. No section of OSRA is being left unaddressed and work
has begun on all sections of the legislation the Commission is
responsible for implementing. We will be announcing further
implementation steps and achievements as the year goes on.
While OSRA implementation has provided the Commission with a ``to
do'' list, these are responsibilities that are in addition to the
ongoing work of the organization.
Charge complaints, created by OSRA, is generating a considerable
amount of work for our investigators and enforcement attorneys. The
public has responded favorably to the option of submitting billing
complaints under a streamlined process allowing for more rapid review
of claims than the other pre-existing options that were available at
the Commission. Between June 16, 2022, and March 14, 2023, 260 charge
complaints have been filed, 97 of which were perfected and assigned for
investigation. Except for one case where the Commission's Bureau of
Enforcement, Investigations, and Compliance issued a ``Show Cause''
order (that is still pending) all other cases have been voluntarily
settled by the ocean carriers once the disputed charge has been brought
to their attention. Approximately $800,000 in charges have been waived
or refunded. Processing charge complaints requires the work of staff
from our Office of the Secretary, the Bureau of Investigations, and the
Bureau of Enforcement. We are assessing the requirements for accepting,
investigating, and adjudicating charge complaints to make certain we
have sufficient resources devoted to this effort.
The charge complaint statistics referenced above do not reflect
charge mitigation that is taking place directly between carriers and
shippers. We are collecting information from the top nine ocean
carriers calling the United States on demurrage and detention billing
through our Vessel-Operating Common Carrier (VOCC) Audit Program.
Beginning in Quarter One Calendar Year 2022, the indices for collected
and billed detention and demurrage began declining and in Quarter Two
2022, the rate of waived charges was rising. We believe that data will
continue to show reductions in billed and collected charges.
Nonetheless, continued progress must be made in changing what I believe
has become a practice of using demurrage and detention as a revenue
center as opposed to strictly an incentive to pick-up cargo and return
equipment. We will be carefully monitoring information we gather on
fees as one way to measure compliance with our rule on demurrage and
detention.
Enforcement, Compliance, Oversight & Consumer Assistance
In April 2022, I directed the VOCC Audit Program to determine how
ocean carriers are serving U.S. exporters and what proposals these
companies had for doing more to help American shippers reach overseas
markets. Last December, the VOCC Audit Program began assessing how
ocean carriers will comply with anti-retaliation provisions of OSRA
with particular attention paid to instituted training programs and if
they result in bottom-to-top awareness of the new prohibitions. We have
found the VOCC Audit Program to be a productive tool for raising and
resolving issues with ocean carriers.
The FMC protects competition in U.S. ocean transportation, ensuring
that there is both efficiency and reliability in the supply chain for
U.S. exporters and importers. The FMC's competition program consists of
careful analysis of agreements. Oversight of agreements and the
marketplace continues through the important work done by our Bureau of
Trade Analysis (BTA). As I have testified before, ocean carrier
alliance agreements are subject to the most frequent and close
monitoring of any class of filed agreement. BTA's monitoring program
provides the Commission with unequalled insight into the behavior and
business decisions of ocean carriers participating in agreements.
Unlike reviews of mergers and acquisitions, alliance agreement
monitoring is continuous, and we receive detailed information on
operational data, minutes from meetings among agreement principals, and
minutes from regularly scheduled alliance meetings. In effect, we have
insight into the alliances' commercial and operational decisions that
goes straight to the companies' top leadership. We also have the
ability to change alliance agreement reporting requirements as
warranted. We did so twice during the past two years, most
significantly in 2022 by requiring enhanced pricing and capacity
information be filed as part of the monitoring process. I should add
that it is not just ocean carriers who are subject to monitoring
requirements. Monitoring requirements for marine terminal operator
agreements on file at the Commission that have rate discussion
authority (something that the carrier alliance agreements do not have)
were changed over the past year to give BTA more insight into how these
companies operate when they utilize an agreement.
We continue with efforts initiated last year to reorganize our
investigative, enforcement, and compliance activities into a more
capable and holistic enforcement function. Following Congressional
approval, we established the Bureau of Enforcement, Investigations, and
Compliance, bringing all those activities under one organization that
will be led by a new director. Area Representatives were reclassified
as Investigators and their public outreach responsibilities were
reassigned to other parts of the Commission. This change removed any
question as to the role of these field personnel and conveys the
emphasis on enforcement I have brought during my tenure as Chairman.
Further toward that effort, we are increasing the number of
Investigators we have in total while simultaneously strategically
expanding the size of BEIC by adding needed attorneys, investigative
analysts, compliance analysts, and supervisors across all three
programs.
Our reorganization efforts are showing results that include:
As of March 1, 2023, there were 39 active cases on
actions and practices of VOCCs and non-vessel-operating common carriers
(NVOCCs);
Preliminary actions have been taken against three large
VOCCs and one NVOCC;
One of the Commission's Administrative Law Judges
recently issued a decision to accept a proposed $950,000 settlement
agreement reached between container company Wan Hai and BEIC; and,
Compromise discussions are on-going with a NVOCC for
providing service to unlicensed Ocean Transportation Intermediaries
(OTI).

Though separate from BEIC, our Bureau of Certification and
Licensing provides an important compliance function. Their continued
administration of thousands of license applications, renewals, and
revocations/suspensions of OTIs each year protects individuals who want
to ship goods. When BCL learns of an OTI operating without a license,
they work to bring that party into compliance, but if a company
continues to refuse to meet their obligations under the law and
regulations, then the case is turned over to BEIC for enforcement.
Beyond OTI licensing, BCL is also responsible for the Passenger Vessel
program which importantly provides protections to passengers embarking
a cruise at a U.S. port.
Inquiries continue to come into CADRS at more than 1,500
communications annually. Requests for CADRS' aid cover almost any
imaginable circumstance involved in international commerce and
cruising. As part of our efforts to bolster the effectiveness of CADRS,
we have added staff to this office including an export expert whose
primary responsibility is aiding shippers who want to reach overseas
markets. The volume of contacts CADRS fields has remained fairly
consistent year-to-year and we have every reason to believe that these
statistics will remain steady if not grow.
The Commission cannot conduct its work without the important
support it receives from many other parts of the agency. We are working
to identify which parts of our information technology infrastructure
are in need of upgrading and working on a plan to prioritize the order
of work that must be completed. Many of the Commission's systems are
built on legacy technology and need to be improved or replaced. We have
retained an outside technology consulting company to assist us with
this effort and to help guide us to making the most beneficial
acquisitions. This will be a longer-term effort likely taking several
years to complete.
Looking Forward
We continue to invest in the capabilities necessary to have a
workforce that is fully telework ready. The Commission was fortunate to
have adopted this goal in the pre-pandemic era and when COVID forced
staff to stop coming to the office, we were well prepared to work
successfully from locations other than our offices. We are looking to
identify any lessons learned from the past two years and incorporate
them into future contingency plans.
Beyond investing in improving our existing IT infrastructure, we
will acquire capabilities that will serve us into the future and
benefit the public. We have invested in an updated rulemaking docketing
system and are in the process of purchasing a court docket system to
allow us to better manage not just cases our ALJs are working on, but
also all other docketed proceedings of the Commission. We will build a
data lake that will streamline data submission from regulated entities
as well as data review, processing, and analysis by FMC staff. We have
initiated a series of construction projects to meet that goal. We are
also undertaking a refresh of our Hearing Room to make it more
accessible to the public, of more utility to the Commission, and to
undertake technology upgrades that will better serve the public who
watch our proceedings via webcasts.
The Federal Maritime Commission is changing. Not only in response
to congestion, legislation, and the priorities I set when I became
Chairman, but also because international trade is changing. General
David H. Petraeus warned recently at a large gathering of ocean
shipping stakeholders that the era of ``benign globalization'' is over,
and that geopolitical risk will have an even greater impact of trade
flows than it has in the past. Clearly, we have entered an era where
international trade patterns are less stable and more fraught with
risk. Any event or economic issue taking place anywhere in the world
has the potential to dramatically alter everyone's supply chains. The
U.S. freight delivery system will face another disruption, the only
question is when. My goal as Chairman is that the Commission will be
nimble and capable enough to respond when the inevitable occurs.
The budget we are submitting makes important Investments in our
monitoring, enforcement, and consumer assistance functions. It permits
us to hire the staff needed to do more enforcement, assist more
exporters, and provide consumer assistance. This is an important
juncture. Shippers and other parties turned to the Federal Maritime
Commission in record numbers throughout the pandemic. Now is the time
to invest in building the capabilities of the Commission so that it is
prepared to continue to provide competition oversight and address
violations of the law.

WRITTEN TESTIMONY SUBMITTED IN LIEU OF APPEARANCE OF NANCY
WALLACE, DIRECTOR OF THE MARINE DEBRIS PROGRAM, OFFICE OF
RESPONSE AND RESTORATION, NATIONAL OCEAN SERVICE, NATIONAL
OCEANIC AND ATMOSPHERIC ADMINISTRATION

Introduction
Good morning, Chairman Webster, Ranking Member Carbajal, and
members of the Subcommittee, thank you for this opportunity to provide
a Statement for the Record about marine debris and oil spill
preparedness, response, and restoration. My name is Nancy Wallace, and
I am the Director of the Marine Debris Program, within the National
Ocean Service Office of Response and Restoration, at the National
Oceanic and Atmospheric Administration (NOAA) within the Department of
Commerce.
Marine Debris, as defined by the Marine Debris Act, is ``any
persistent solid material that is manufactured or processed and
directly or indirectly, intentionally, or unintentionally, disposed of
or abandoned into the marine environment or the Great Lakes (33 U.S.C.
Sec. 1956(3)).'' Marine debris ranges from lost or abandoned fishing
gear and vessels, to plastics, glass, metal, and rubber of any size,
and is an on-going international problem that impacts our natural
resources. The NOAA Marine Debris Program (MDP) leads national efforts
to research, prevent, and reduce the impacts of marine debris.
Authorized by the Marine Debris Act, as amended (33 U.S.C. Sec. 1951
et seq., ``Marine Debris Act''), the program supports marine debris
projects in partnership with state and local agencies, tribes, non-
governmental organizations, academia, and industry. NOAA spearheads
national research efforts, engages with the Department of State and
international organizations on global marine debris efforts, and works
to change behavior through outreach and education initiatives.
NOAA recognizes that marine debris is a global problem and that
there is no `one size fits all' solution to addressing this issue on
national and international scales. A recent study estimated that in
2016, as much as 23 million metric tons of plastic waste entered
aquatic ecosystems from land around the world (Borelle et al., 2020).
This number may seem huge, but it does not include marine debris items
not made of plastic, or ocean-based marine debris, such as lost fishing
gear and vessels. That number has also likely increased with time. If
current practices continue, the amount of plastic discharged into the
ocean could reach up to 53 million metric tons per year by 2030
(Borrelle et al. 2020, Jambeck and Johnsen 2015, Pauly and Zeller
2016). The United States alone, despite a well-developed formal waste
management system, contributed approximately 1 million to 2 million
metric tons of plastic waste to the environment at home and abroad in
2016 (Law et al. 2020). It is clear that there is still much work to be
done to find solutions to marine debris on both the national and
international levels.
Today, I will focus my testimony on the Marine Debris Act, the
impacts of marine debris in the ocean and Great Lakes, the program
pillars of NOAA's MDP, implementation of the Save Our Seas 2.0 Act, and
H.R. 886, Save Our Seas 2.0 Amendments Act and NOAA's oil spill
preparedness, response, and damage assessment.
Marine Debris Impacts
Marine debris causes significant threats not only to ocean and
coastal environments and wildlife, but also to human health, safety,
and navigation. Each year, countless marine animals, sea turtles, and
seabirds are injured or die because of entanglement in or ingestion of
marine debris. Additionally, debris can scour, break, smother, or
otherwise damage important marine habitat, such as coral reefs and
tidal wetlands, that serve as the basis of marine ecosystems and are
critical to the survival of many important species. Derelict fishing
gear, such as nets and crab pots, can continue to capture fish--
something we refer to as ``ghost fishing''--for years after they are
lost. Not only does this affect the species that end up as bycatch in
the lost gear by reducing the abundance and reproductive capacity of
the population, but it also causes fishermen economic losses. Marine
debris can facilitate the introduction and range expansion of invasive
species.
Marine debris also creates navigation hazards. Ropes, plastics,
derelict fishing gear, and other objects can become entangled in vessel
propellers or clog water intakes, causing operational problems. Larger
items, such as lost shipping containers, can become collision dangers.
Such interactions with marine debris involve costly engine repairs and
disablement. Abandoned vessels are another navigational threat in our
coastal waterways that have become a serious marine debris problem in
many states. The dangerous and costly impacts of these different types
of marine debris affect both the recreational boating and commercial
shipping communities.
Marine Debris Act
The MDP is authorized by Congress as the federal lead to work on
marine debris through the Marine Debris Act. The Act authorizes the
NOAA Administrator, through the MDP, to ``identify, determine sources
of, assess, prevent, reduce, and remove marine debris and address the
adverse impacts of marine debris on the economy of the United States,
marine environment, and navigation safety.'' (33 U.S.C. Sec. 1952).
The Act further directs the Administrator, through the MDP, to
``provide national and regional coordination to assist States, Indian
tribes, and regional organizations,'' ``undertake efforts to reduce the
adverse impacts of lost and discarded fishing gear on living marine
resources and navigation safety,'' ``undertake outreach and education
activities for the public and other stakeholders'' on marine debris
issues, develop ``interagency plans for the timely response to
events,'' and ``enter into cooperative agreements and contracts and
provide financial assistance in the form of grants for projects to
accomplish the purpose'' of the Act. 33 U.S.C. Sec. 1952(b)-(d). The
2012 amendments (P.L. 112-213) directed NOAA to address and determine
severe marine debris events. The Save Our Seas Act of 2018 (P.L. 115-
265), which reauthorized and amended the Marine Debris Act, directed
NOAA to ``promote international action, as appropriate, to reduce the
incidence of marine debris'' and, in the case of a severe marine debris
event, to ``assist in the cleanup and response required by the severe
marine debris event'' or conduct such other activity as NOAA deems
appropriate.
The NOAA Marine Debris Program
The MDP, guided by the Marine Debris Act, is focused around six
program pillars: prevention, removal, research, monitoring and
detection, response, and coordination.
Prevention
One of the most effective ways to reduce marine debris is through
prevention, which requires that boaters, fishermen, industry, and the
general public have the knowledge and training to change the behaviors
that create marine debris. NOAA's robust outreach and education
activities focus on improving awareness and changing behavior through
developing and disseminating public information, and by partnering with
and providing funding support to external groups including academic
partners and nonprofit groups.
Removal
While prevention is essential to stemming the input of new debris
into the ocean, removal is necessary to diminish the impacts of debris
already introduced into the ocean and Great Lakes. The MDP provides
funding through its removal grants competitive funding opportunity. The
program also provides support to the annual International Coastal
Cleanup.
Research
A key tenet of the MDP is research. Congress recognized the need
for research that determines the sources and helps us understand the
adverse impacts of debris on the marine environment and navigation
safety (33 U.S.C. Sec. 1952(b)(1)). Since its establishment, the MDP
has funded research projects that help expand our understanding of
debris by investigating where debris comes from, how it moves through
the environment, and how it impacts wildlife and our ocean, waterways,
and Great Lakes.
Monitoring and Detection
The MDP supports projects that generate monitoring and detection
data, involve the public, incorporate innovative technologies, and
provide guidance to the marine debris community. Monitoring and
detection efforts improve our understanding of the scope, scale, and
distribution of marine debris in the environment, as well as provides
critical data on the types and amount of debris, which can inform
management practices and prevention. In particular, the MDP maintains
the NOAA Marine Debris Monitoring and Assessment Project, an initiative
that helps answer fundamental questions about the types of marine
debris found on shorelines.
Response
Coastal storms and natural disasters are another source of marine
debris that create hazards in our inland and coastal waters. NOAA has
responded to emergency events including Hurricanes Florence, Michael,
Harvey, Irma, and Maria, and Typhoon Yutu. The MDP also works before
disasters strike to help communities prepare to respond to marine
debris. As part of this work, the MDP partners with coastal states and
U.S. territories to develop state/territory-specific marine debris
emergency response guides. These guides outline the processes and roles
of each partner for responding to and recovering from a severe marine
debris event, such as a hurricane.
Regional Coordination
The MDP works with local communities to address region-specific
marine debris issues. The MDP has 11 Regional Coordinators working in
Alaska, the Pacific Northwest, California, the Pacific Islands, the
Gulf of Mexico, Florida, the Caribbean, the Southeast, the Mid-
Atlantic, the Northeast, and the Great Lakes to support projects and
partnerships with state and local agencies, tribes, nongovernmental
organizations, academia, and industry that addresses marine debris
locally.
The MDP Regional Coordinators also work with partners to develop
and implement regional marine debris action plans. These action plans
focus on long-term solutions to the causes and impacts of marine debris
in the regions, as well as outline operational best practices and data
collection protocols. The purpose of these action plans is to aid
states in preventing and reducing debris and mitigating coastal
impacts.
National Coordination
As authorized in the Marine Debris Act, 33 U.S.C. Sec. 1954, NOAA
is the chair of the Interagency Marine Debris Coordinating Committee
(IMDCC), a multi-agency body that is responsible for streamlining the
federal government's efforts to address marine debris. Representative
agencies coordinate a comprehensive program of marine debris activities
and report to Congress every two years on research priorities,
monitoring techniques, educational programs, and regulatory action.
Members include: the Departments of Energy, Interior, Justice, and
State; the U.S. Environmental Protection Agency; the U.S. Coast Guard;
the U.S. Navy; the Marine Mammal Commission; the National Aeronautics
and Space Administration; the National Science Foundation; and the U.S.
Agency for International Development.
In addition to the IMDCC, the program also partners with other
agencies on funded projects. For example, the MDP provides support for
missions to remove marine debris from Papahanaumokuakea Marine National
Monument. Project partners for these missions have included the
National Fish and Wildlife Foundation, Papahanaumokuakea Marine Debris
Project, U.S. Fish and Wildlife Service, State of Hawaii, and other
NOAA programs. In Fiscal Year 2021, the mission removed 118,400 pounds
of derelict fishing nets and nearly 5,300 pounds of plastic and other
debris.
International Engagement
There are many ongoing international, multilateral, and bilateral
initiatives to understand and combat the issue of marine debris across
the world. The MDP works closely with the Department of State and other
U.S. national agencies to provide input and leadership on the issue,
and also collaborates with other countries to research, prevent, and
remove marine debris.
Implementation of the Save Our Seas 2.0 Act
The Save Our Seas (``SOS'') 2.0 Act (P.L. 116-224) was signed into
law on December 18, 2020. The Act contains three titles that address:
(1) the United States' domestic programs to combat marine debris, (2)
international engagement to combat marine debris, and (3) domestic
infrastructure to prevent marine debris. The lead agencies with
responsibilities under the Titles of the Act are NOAA, the Department
of State, and the Environmental Protection Agency, respectively.
Significant components of the SOS 2.0 Act within NOAA's
jurisdiction include:
Clarifying the scope of the Marine Debris Act to include
waters in the jurisdiction of the United States, the high seas, and
waters in the jurisdiction of other countries (Sec. 101);
Establishing a Marine Debris Foundation (Subtitle B);
Establishing a Genius Prize for Save Our Seas Innovation
(Subtitle C); and
Requiring several new reports and studies on different
aspects of marine debris (Subtitle D), including the sources and
impacts of derelict fishing gear, innovative uses of plastic waste,
microfiber pollution, vessel recycling, and the United States'
contribution to global plastic pollution, as well as a pilot program
for providing incentives to fishermen to collect and dispose of plastic
found at sea.
Marine Debris Foundation
The SOS 2.0 Act (33 U.S.C. Sec. 4211 et. seq.) also established
the Marine Debris Foundation as a charitable and nonprofit organization
(33 U.S.C. Sec. 4211). The Marine Debris Foundation is charged with
augmenting the efforts of NOAA to assess, prevent, reduce, and remove
marine debris, and with taking actions to support other Federal
agencies, and other entities, to address marine debris (33 U.S.C. Sec.
4211(b)). The SOS 2.0 Act specifies that the Under Secretary of
Commerce for Oceans and Atmosphere (NOAA Administrator) is responsible
for appointing, and serves on, the Board of Directors of the Marine
Debris Foundation (33 U.S.C. Sec. 4212(a)).
On April 6, 2022, NOAA announced the inaugural Board of Directors
for the new Marine Debris Foundation. The appointment of the inaugural
Board of Directors was approved by the Secretary of Commerce,
consistent with the Presidential signing statement for the Save Our
Seas 2.0 Act. The 12 new Board members bring a diverse range of
expertise, experience, and perspectives. The Foundation will be an
important partner to NOAA and other entities in the United States who
are tackling the immense challenges that marine debris poses to nature,
human health, and the U.S. economy.
Studies and Reports
The SOS 2.0 Act requires the MDP to undertake several studies and
reports as described below. The MDP has completed or is in the process
of completing the studies and reports using several avenues, including
existing grant-funded projects, new grant awards, new contracts, and
collaboration with other federal agencies.
Section 131 requires the IMDCC to submit a report to Congress on
innovative uses of plastic waste in consumer products. As vice-chair of
the IMDCC, the Environmental Protection Agency (EPA) has taken the lead
on implementation of this report.
Section 132 requires the IMDCC to submit a report to Congress on
microfiber pollution. The MDP is working closely with the EPA on this
report. The draft report, and the five-year federal action plan
contained within it, went out for a 30-day public comment period on
September 15, 2022. The report is undergoing interagency review.
Section 133 requires NOAA to fund the National Academies of
Sciences, Engineering and Medicine to conduct a study on the
contributions of the United States to global ocean plastic waste. This
study was released in December 2021, and the MDP is working under our
current authorities on implementation of actions and activities that
address the report recommendations.
Section 135 requires NOAA to submit a report to Congress on the
sources and impacts of derelict fishing gear. This report is under
development.
Section 136 requires NOAA to conduct a study to determine the
feasibility of a nationwide vessel recycling program, using a pilot
project in Rhode Island as a model. On February 8, 2023, the MDP
published a report, Recycling Opportunities for Abandoned, Derelict,
and End-of-Life Recreational Vessels, that summarizes the completed
study. The report, created by the Rhode Island Marine Trades
Association Foundation in partnership with the MDP and National Marine
Sanctuary Foundation, identifies challenges associated with recycling
fiberglass vessels and outlines the steps necessary to build a viable
nationwide recycling program.
Section 137 requires NOAA to establish a pilot program to assess
the feasibility and advisability of providing incentives to fishermen
to collect and dispose of plastic found at sea. Through the MDP's FY22
competitive grant funding opportunity, we awarded funding to
Mississippi Commercial Fisheries United, Inc. to develop and implement
a pilot program. The project will conclude in August 2025, and we will
work with the grantee to document lessons learned on the project's
feasibility and advisability.
Section 307 requires the EPA and the IMDCC to conduct a study on
minimizing the creation of new plastic waste. The EPA has taken the
lead on implementation of this report.
Genius Prize
The SOS 2.0 Act also establishes a Genius Prize for Save Our Seas
Innovation and authorizes the Secretary of Commerce to offer to enter
into an agreement with the Marine Debris Foundation to administer the
prize competition. The FY 24 Budget includes funding to support a
Genius Prize for marine debris.
H.R. 886, Save Our Seas 2.0 Amendments Act
If enacted, H.R. 886, Save Our Seas 2.0 Amendments Act, would amend
the SOS 2.0 Act by:
Providing technical and administrative corrections to the
operation of the Marine Debris Foundation. For example, it would change
the title of the ``first officer or employee appointed by the Board''
from ``chief operating officer'' to ``chief executive officer'' to
align with common terminology used in the non-profit sector.
Adding the U.S. Agency for International Development as a
named agency for consultation before removal of a Director, and would
clarify that the Board shall submit recommendations on new Directors to
the Under Secretary.
Adding clarification on the location of the Marine Debris
Foundation's principal office and a new directive on development and
implementation of ``best practices for conducting outreach to Indian
Tribes.''
Aligning the Marine Debris Foundation's operation into
alignment with other Congressionally chartered non-profits and remove
restrictions that inhibited the Marine Debris Foundation from
effectively beginning operations.
Authorizing up to twelve percent of federal funds
appropriated to the Department of Commerce to carry out SOS 2.0 to be
used to offset administrative expenses of the Marine Debris Foundation.
Specifying that the 24-month window for use of federal
funds for salaries of the Marine Debris Foundation begins at the
enactment of the Amendments Act; and would expand the list of non-
federal entities whose contributions to the Marine Debris Foundation
may be matched using federal funds.

H.R. 886 would also amend the Marine Debris Act by:
Providing more flexibility to enter into different types
of agreements and to work with non-profits and individuals;
Enabling third parties to provide funding to NOAA for
projects without having to reimburse actual costs; and
Implementing a technical fix to allow discretionary cost-
share waiver for grants to address severe marine debris events.

We appreciate the close coordination with the Committees and
sponsor offices and the opportunity to provide important clarifications
to help guide NOAA's work with the Marine Debris Foundation and other
partners.
H.R. 886 also contains language in the new section on receipt and
expenditure of funds that would make available funds--``only to the
extent provided in advance in appropriations acts''.
Oil Spill Preparedness, Response, and Damage Assessment
NOAA's Office of Response and Restoration (OR&R) is a center of
expertise in preparing for, evaluating, and responding to threats to
coastal environments, including oil and chemical spills, releases from
hazardous waste sites, natural disasters, and marine debris. OR&R staff
are located around the country to work with local and regional partners
to address the impacts of environmental threats to our coastal
communities.
Under laws such as the Oil Pollution Act of 1990 (OPA); Clean Water
Act; Comprehensive Environmental Response, Compensation, and Liability
Act (known as CERCLA or Superfund); and National Marine Sanctuaries
Act, NOAA is a trustee for the public's natural resources, charged with
protecting and restoring them when impacted by oil and chemical spills,
hazardous waste sites, and vessel groundings. In addition to these
authorizations, OR&R also has a role supporting the Federal Emergency
Management Agency and other federal agencies under Presidential Policy
Directives 8 and 44 for natural disasters and other incidents. OR&R
strives to fulfill our mission of protecting and restoring NOAA trust
resources by providing scientific and technical support to prevent and
prepare for, respond to, and recover from marine pollution.
Preparedness
Following the devastating 2017 hurricane season, and to address the
realities of increased natural and human-caused coastal threats, NOAA
created the Disaster Preparedness Program within OR&R. This program is
focused on strengthening existing operational capabilities to ensure
that NOAA's National Ocean Service and its partners have the tools
necessary to help plan for and respond to disasters so commerce,
communities, and natural resources can recover as quickly as possible.
OR&R supports disaster preparedness for NOAA and our partners through
planning, training, exercises, disaster coordination, continuous
improvement, and long-term recovery for an optimal preparedness
posture.
Response
Thousands of incidents occur each year in which oil or chemicals
are released into the environment as a result of accidents or natural
disasters. Spills into our coastal waters and inland waterways, whether
accidental or intentional, can harm people and the environment and
cause substantial disruption of marine transportation with potential
widespread economic impacts.
Every year, OR&R responds to approximately 150 oil and chemical
spills in U.S. waters. Under the National Response Framework and the
National Contingency Plan, NOAA has responsibility for providing
scientific support to the federal on-scene coordinator and other
federal partners for oil and hazardous material spills. To support this
work, we provide response to incidents 24 hours a day, seven days a
week. When an incident occurs, OR&R's scientific support coordinators
compile scientific inputs and deliver this critical information to the
federal on-scene coordinator and other federal partners. Through the
use of our customized tools, models, and products, information is
available to provide responders with the science they depend on to
protect our coastal communities.
Damage Assessment
OPA authorized NOAA and other natural resource trustees to recover
damages from parties responsible for oil pollution to cover the costs
of damage assessment and restoration planning and restoration
implementation. Based on this authority and comparable damage
assessment authority for hazardous substances under CERCLA, NOAA
established a program for such assessment and restoration. Under this
program, OR&R is responsible for evaluating and restoring coastal and
estuarine habitats impacted by hazardous waste releases, oil spills,
and vessel groundings. Our team assesses ecological risk and
environmental and economic injury from contamination and ship
groundings.
To fully accomplish this mission, OR&R works with NOAA's General
Counsel for Natural Resources and the NOAA Office of Habitat
Conservation to administer the Damage Assessment, Remediation, and
Restoration Program (DARRP). This program holds polluters accountable
for restoration of natural resources and human uses lost or injured by
oil or hazardous substances, saving the taxpayer the direct cost of
restoration. On average, even after setting aside Exxon Valdez and
Deepwater Horizon settlements, the program has delivered four dollars
of restoration for every one dollar invested in DARRP support. To date,
the partnership has recovered over $10.6 billion dollars to restore a
wide variety of critical habitats and resources nationwide.
Recent Accomplishments
In fiscal year 2022, OR&R:
helped to recover $114 million from pollution settlements
for restoration in five states: New Jersey, Texas, Louisiana, Hawaii,
and Pennsylvania;
partnered with NOAA's National Sea Grant office to
establish a new funding opportunity to improve disaster preparedness
within coastal communities;
supported response efforts to 151 oil spills, chemical
releases, and other incident responses;
worked with the U.S. Coast Guard to conduct important
research on characterizing oil on water in ice environments at three
locations in the Arctic;
and trained over 2,500 responders in disaster
preparedness, oil and chemical spill response, and planning.

These accomplishments demonstrate our dedication to science-based
solutions for protecting and restoring natural resources from coastal
hazards thus benefiting the environment, public, and economy.
Conclusion
The efforts of NOAA's Office of Response and Restoration span the
emergency management cycle from preparedness to response and
restoration with particular emphasis on applying NOAA scientific and
operational capabilities to coastal disasters including pollution from
oil, chemical, and marine debris. We will continue this critical work
to protect and restore the nation's oceans, coasts, and communities
from increasing environmental threats. With our allocated resources,
OR&R will remain agile as these needs evolve during a time of changing
climate.
While the problem of marine debris has existed for decades and has
received considerable attention from NOAA and other partners, there is
still much to learn as we work to address the impacts of marine debris
on the environment, marine species, and human health and safety. NOAA
is committed to investigating and preventing the adverse impacts of
marine debris and looks forward to working with the Committee.
Thank you very much for the opportunity to provide a Statement for
the Record. I would be happy to answer any questions you may have.
References

Borrelle, S. B., J. Ringma, K. L. Law, C. C. Monnahan, L. Lebreton, A.
McGivern, E. Murphy, J. Jambeck, G. H. Leonard, M. A. Hilleary, M.
Eriksen, H. P. Possingham, H. De Frond, L. R. Gerber, B. Polidoro,
A. Tahir, M. Bernard, N. Mallos, M. Barnes, and C. M. Rochman
(2020). Predicted growth in plastic waste exceeds efforts to
mitigate plastic pollution. Science. 369(6510).

Jambeck, J. and K.J. Johnsen (2015). Citizen-Based Litter and Marine
Debris Data Collection and Mapping. Computing in Science and
Engineering. 17(4).

Law, K. L., Starr, N., Siegler, T. R., Jambeck, J. R., Mallos, N. J.,
Leonard, G. H. (2020). The United States' contribution of plastic
waste to land and ocean. Science Advances. 6(44).

Pauly, D., and D. Zeller (2016). Catch reconstructions reveal that
global marine fisheries catches are higher than reported and
declining. Nature Communications. 7(10244).
Mr. Webster of Florida. Thank you so much. I appreciate it.
Well, we will start with our questioning. I will be first.
And Admiral Phillips, planned deepwater ports in the Gulf
of Mexico are experiencing very long delays in their
application process to receive construction permits from MARAD.
I am not really sure why that is happening, it's just not
going.
The permitting process outlined in the Deepwater Port Act
of 1974 specifies that the process from application to issuance
of a decision by the Secretary of Transportation should take no
longer than 1 year, 365 days. However, several current pending
applications were initially submitted several years ago and
have been delayed by excessive requests from MARAD for
supplemental technical and environmental information,
suspending the statutory process timeline. Applicants also
report a lack of communication and transparency from MARAD on
where the process stands and what they can do to provide the
needed information.
First of all, why is MARAD failing to process these
applications in a timely manner as outlined by law?
And when is the decision expected for the Texas GulfLink
permit, which has now been languishing for nearly 1,200 days?
And anyway, maybe I will continue on, and then you can come
back and answer those two questions. OK?
I would like to shift now to discuss the Port
Infrastructure Development Program. Current law provides funds
from this program to be used for fully automated cargo handling
equipment. As greater amounts of cargo enter the ports, many
port and terminal operators are working to optimize and improve
operations, including technology and automated systems that
have the potential to improve container throughput. At the same
time, longshore unions have resisted a transition to these new
technologies.
What role does automation play in improving and optimizing
the capacity to move cargo through the ports?
Additionally, why did MARAD include the prohibition on
using funds to procure fully automated cargo handling equipment
in the notice of funding opportunity for the United States
Marine Highway Grant program, when it was not directed by
legislation?
And then lastly, I would like to address a topic that has
been the subject of recent news reports. A recent Washington
Post article highlighted the potential cybersecurity threat
that Chinese-manufactured cranes pose to our national security,
serving as intelligence-gathering devices capable of tracking
the movement of goods at the ports. Section 3529 of the most
recent NDAA directed MARAD to lead a report on this topic.
Are there any early findings from the study or general
highlights on the topic that you would like to share? If you
could talk about those, that would be great.
Admiral Phillips. Thank you, Mr. Chairman. I will start
with the cranes first.
First of all, as you point out, we are tasked within the
2023 NDAA to do a report, an unclassified report on the topic
of cyber threat, potential cyber threat related to cranes,
particularly those that are manufactured in China. We are to do
that report in concert with a number of interagency partners:
CISA, Coast Guard, DHS, and others, and we are doing so. We
have just begun meeting with all of them.
And I would comment that much of the existing reporting and
information on this particular problem is classified, and so,
those reports and those meetings are taking place in a
classified environment. So, we will continue to produce and
work towards producing this report as directed by the NDAA.
I think at present our findings are that much more work
needs to be done. And consistent with that, certainly, you are
aware of the broader challenges with anything that is connected
to the internet and that is cyber.
Sir, if I may move to U.S. Marine Highways and automation,
we are under law by the 2023 NDAA required under the PIDP
program to report to Congress any aspect of a PIDP application
grant that results in a net loss of jobs. And we added that
notification, which is included in the PIDP NOFO to the U.S.
Marine Highways NOFO, as well, to make them consistent with
what we believe to be Congress' intent there.
If I may continue, sir, on deepwater ports--I realize I
have used up my time--we anticipate we will be able to move
forward with a Record of Decision on the GulfLink project later
this year.
On the topic of the length of time it takes to implement
and execute a deepwater port process to get to a legally
defensible Record of Decision, we find that these are extremely
complicated circumstances, and as under the law we have the
authority to put a stop clock on the process if we find that
there is missing information from either the applicant or a
special request by agencies--and we work with more than 20
Federal agencies in completing this process--we do that, we put
a stop clock in place to allow applicants to respond.
I would take issue with the inference that we do not
communicate with applicants. We communicate routinely with
applicants, and I would reference in particular the completion
of the SPOT Record of Decision last November. Prior to
completing that Record of Decision for that particular
application, we were meeting weekly with that applicant. So, we
do interact with applicants on a continued basis.
I would also point out that the longest pending application
is on hold more than 1,000 days, at the request of the
applicant. So, in my opinion, it is to the applicant's benefit
that we have this opportunity to stop the clock to allow them
to refine their application so that we can move forward,
scrupulously following the law and with the obligation and
intent of a legally defensible Record of Decision, so that we
can move forward.
Mr. Webster of Florida. OK. Well, my time has expired. So,
I will go to Mr. Carbajal.
You have questions? You are recognized.
Mr. Carbajal. Mr. Chairman, your time is never expired.
[Laughter.]
Mr. Carbajal. Yes. Thank you, Mr. Chairman.
Admiral Phillips, I am proud to have played a role in the
passage of the sweeping legislation included in the NDAA last
year addressing sexual assault and sexual harassment in the
commercial maritime industry, as well as the Merchant Marine
Academy.
But I recognize that your work, and likely our work, is not
done. I have heard repeated concerns about trouble recruiting
and retaining commercial mariners. While we examine other ways
to attract more individuals to the industry, how important is
it that the industry becomes safer and more inclusive? And are
you facing difficulty recruiting students to the Academy?
Admiral Phillips. Thank you for that question, Ranking
Member Carbajal.
I would say, in the context of recruiting, we are finding
the same challenges that many other institutions are finding.
Applications dipped last year, they are some better this year,
and we are finding that we are indeed able to recruit students,
and yet still are facing challenges, as are other academic
institutions. I wouldn't draw any particular conclusions there.
However, moving forward to the issue of safety and security
within the maritime industry, it is absolutely paramount that,
as you point out, we continue this journey. We are at the
beginning of a journey, not the end. And we thank the committee
for its support by putting EMBARC into law, and have continued
to take and have taken significant steps at the Academy to
strengthen both their sexual assault prevention and response
programs to ensure that midshipmen understand what their rights
and requirements are at sea. We have issued them satellite cell
phones, as you know. They are voice activated. They can contact
anyone at any time if they feel they must for any reason. We
have ensured that there is an amnesty policy, so, people may
come forward without fear of any other application being held
against them in particular.
And I can also say that we have taken the time to explain
the legislation with the Coast Guard and others at the Academy
in a session we held January 23rd with midshipmen, and later
that afternoon with the entire EMBARC-certified community.
So, as you suggest, this is the beginning of a journey, it
is not the end. There is much more to be done, and we continue
to move forward, and we will continue to move forward, and
thank the committee.
Mr. Carbajal. Are companies complying with the new program?
Are they still signing up? Is there still momentum there?
Admiral Phillips. As I stated in my opening testimony,
sir--thank you again for that question--the 16 operators and
companies who are required by law to be in the EMBARC program
are in the EMBARC program.
Mr. Carbajal. Thank you.
Admiral Phillips. That includes more than 140 vessels.
Mr. Carbajal. Thank you very much. Admiral Phillips, we
know the impact that the Port Infrastructure Development
Program will have in reducing emissions in and around the
ports, as well as providing low- and no-emission fuels to
vessels.
There needs to be new development and infrastructure of
landside facilities like the Morro Bay project in my district
if we are to meet President Biden's 2030 decarbonization goals.
What is the potential impact of PIDP-funded projects on
offshore wind deployment?
Admiral Phillips. Thank you for that question, Ranking
Member Carbajal.
Sir, as you may be aware, in last year's PIDP grant awards,
there were at least four projects that were related to offshore
wind deployment, totaling almost $100 million in grant
responses. We expect more applicants this year will be tied to
offshore wind development, and we look forward to reviewing
those applications and helping to move them forward.
There is certainly considerable potential within PIDP to
facilitate additional capacity in supporting offshore wind.
Mr. Carbajal. Thank you.
Chairman Maffei, among other things, the Ocean Shipping
Reform Act tasked you with several difficult rulemakings. Can
you report on the progress of those rulemakings, including the
``unreasonable refusal to deal or negotiate'' rulemaking?
Are you confident that they are going to result in a more
equitable and transparent maritime supply chain?
In response to heightened Federal attention, as well as the
passage of OSRA, have carriers taken action to ensure a level
playing ground for U.S. exporters?
Mr. Maffei. Yes. So, just in general, we have done a number
of rulemakings in line with OSRA, but the two major ones that I
call landmark rulemakings are the one to refine our detention
and demurrage billing rules, to take the precedent already set
by the Commissioner Rebecca Dye-authored interpretive rule, and
apply that in a--basically put more leaves on that tree. We are
working now on the final rule for that.
Where it has gone a little slower than I wanted was in this
refusal to deal rulemaking. The reason for that, though, is not
a bad reason. It is because we have gotten so many comments
from 27 entities, lots of whom had very, very good points. The
issue here is we are trying to maximize the benefits for U.S.
exporters, while minimizing any unintended consequences that
then might harm them.
So, I would say that that is about the trickiest rulemaking
we have ever done, but I think we are making very good
progress. I will say that it is not going to be as narrow as
just looking at the so-called refusal to deal provision,
because I believe the intent of Congress was to look at also
the provision that does not allow carriers to unreasonably
refuse to take exports, which is in a slightly different part
of the bill, but I view just as important. So----
Mr. Carbajal [interrupting]. Thank you, Mr. Chairman. I am
out of time. I yield back.
Mr. Maffei. I think I answered. So, thank you.
Mr. Webster of Florida. Thank you very much.
Representative Gonzalez-Colon, you are recognized for 5
minutes.
Mrs. Gonzalez-Colon [microphone was off at the beginning of
remarks]. . . . back in the ports in Puerto Rico [inaudible].
So, I just wanted to take the opportunity to make a point that
MARAD and the U.S.-flagged fleet have been important partners
for Puerto Rico. And in support of Puerto Rico for the regular
service of our Jones Act carriers, provide stability and
reliability to Puerto Rico's supply chain, both for consumers
and for industry. And the U.S. domestic shipping fleet is a
vital asset for our Nation, but is our main source of goods on
the island. So, I am proud that I say that I support this
industry, and I will continue to do so.
I've got a question for Admiral Phillips, and it is an
issue we saw during the last weeks in Puerto Rico. And I want
to bring up the issue of security within our maritime
transportation system.
Last week, U.S. Customs and the Coast Guard at the Port of
San Juan detained 18 illegal migrants who had stowed away
aboard a container barge arriving from Jacksonville, Florida.
As the vessel approached San Juan, 16 of those people jumped
and attempted to swim ashore, and they were rescued by the
Coast Guard at the time. Then, when customs agents searched the
barge, they found the remaining two migrants, 25 pounds of
cocaine, and a firearm.
Customs officials told the press that they suspect the
migrants scrambled aboard as the vessel passed waters of the
Dominican Republic on its way to Puerto Rico. While the
investigation is ongoing to determine exactly what happened, it
raised questions about vulnerabilities and security risks if 18
people were able to jump on board a barge traveling between 2
U.S. ports supposedly undetected.
So, my question would be how the U.S. Maritime
Administration works to coordinate with law enforcement
partners and private-sector stakeholders to address or mediate
security issues within our maritime transportation system and
how this fiscal year budget request may help support those
efforts.
Admiral Phillips. So, thank you, Congresswoman Gonzalez-
Colon. It is very nice to meet you, ma'am.
I am not aware of the situation you are describing, and I
find it alarming. What MARAD would do in such a circumstance,
knowing that the Coast Guard has been involved and Customs has
already been involved, is ascertain the details and more than
likely put out--which we do routinely--a notice to our fleet,
to our U.S.-flag fleet, through our very modest security
department, to ensure that our carriers are aware of the
circumstance and the events surrounding it as a warning to them
that they should be prepared for such things, and going through
with them how they could report it, and the kinds of things
they should do to prepare to prevent such an action.
Mrs. Gonzalez-Colon. What happened in San Juan is not the
first time that happened in Puerto Rico. I don't know if we do
have more cases like those in the rest of the Nation, whether
you are aware. Do we have more cases like that?
Admiral Phillips. Well, I am certainly aware that we have
had cases long term, based on my Navy experience, with such
activities. But I would take that question for the record,
ma'am, if I may, and certainly we will investigate and do what
is within our authorities to make our U.S.-flag fleet aware,
and make sure they are very vigilant in response.
Mrs. Gonzalez-Colon. Thank you, Admiral, and thank you,
Chairman.
Mr. Chairman, I just want to introduce for the record a
statement from the president of the National Association of
Waterfront Employers for this fiscal year budget request, just
to be on the record, if you would allow that.
Mr. Webster of Florida. Without objection.
[The information follows:]

Statement of Richard W. Murray, President, National Association of
Waterfront Employers, Submitted for the Record by Hon. Jenniffer
Gonzalez-Colon
Chairman Webster, Ranking Member Carbajal, and the Members of the
Subcommittee on Coast Guard and Maritime Transportation, the National
Association of Waterfront Employers (``NAWE'') appreciates the
opportunity to submit its views on the requested Fiscal Year (``FY'')
2024 budgets for maritime transportation programs as well as the
implementation of the Ocean Shipping Reform Act of 2022 (``OSRA''). As
the voice for U.S. stevedores and marine terminal operators (``MTOs'')
in Washington, DC, NAWE is uniquely aware of the tremendous impact that
federal funding allocated through maritime programs can have upon U.S.
marine terminal operations. Moreover, NAWE has been consistently
engaged with the Federal Maritime Commission (``FMC'') on OSRA's
implementation and is grateful for this Subcommittee's oversight,
ensuring that OSRA is implemented consistent with the intent of
Congress.
Marine Terminal Infrastructure Funding
The proposed FY 2024 budget includes $230 million for the Port
Infrastructure Development Program (``PIDP'') administered by the U.S.
Department of Transportation, Maritime Administration (``MARAD'').
Notably, if adopted in its proposed form, MARAD would be directed to
``prioritize projects that also lower emissions'' in an effort to
reduce the environmental impact of America's ports. This funding
prioritization is consistent with the requirement to meet
decarbonization goals under the Inflation Reduction Act's Clean Ports
program, enacted during the prior Congress.
The key to achieving these environmental goals is the purchase of
zero- or near-zero emissions port equipment to replace existing cargo
handling equipment. Support from this Subcommittee for funding
opportunities for private MTOs, including through the PIDP, will be
crucial to support these costly next-generation equipment upgrades. For
example, a single diesel tractor used at a marine terminal today can
cost around $150,000, while an electric tractor and its charging
infrastructure could cost close to $600,000. Moreover, the utility
infrastructure at ports will need to be adapted to allow MTOs to charge
their cargo handling equipment and draw more electricity from the grid.
In aggregate, the purchase of zero- or near-zero emissions port
equipment and the related infrastructure throughout American ports will
cost private MTOs tens or even hundreds of billions of dollars.
Accordingly, significant support from this Subcommittee through
maritime programs such as PIDP, will be necessary to achieve the
Government's port decarbonization goals.
In addition to the overwhelming costs, there are significant
challenges in sourcing American-made zero- or near-zero emissions port
equipment. Domestic manufacturers are currently partnering with battery
suppliers to build specialized electric port equipment, however, there
are still many types of cargo handling equipment that are not available
in the United States. Accordingly, NAWE encourages this Subcommittee to
adopt a measure of flexibility to allow the use of PIDP funding to
purchase domestically unavailable next generation cargo handling
equipment.
OSRA Implementation
This Subcommittee should commend the FMC for its efforts to
implement OSRA in a timely manner and, more importantly, consistent
with the public engagement principles of the Administrative Procedure
Act. As result of these efforts, it may prove impossible for the FMC to
meet Congressionally-mandated timelines, however, it is critical that
the Commission take the necessary time to engage with maritime
stakeholders to ensure that OSRA is implemented in a considered fashion
and consistent with the intent of Congress. Moreover, it is critical
for this Subcommittee to allow the regulatory process to fully develop.
Taking additional legislative action to further amend or build upon
OSRA's directives before the full regulatory process is complete--and
the resulting impacts evaluated--will add uncertainty to the maritime
supply chain, potentially causing delays and adding unnecessary
transportation costs. Accordingly, we urge this Subcommittee's members
to oppose further amendments to OSRA at the present time and, instead,
to provide appropriate oversight to ensure that the FMC is successfully
implementing the current law consistent with the intent of Congress.
Substantively, NAWE's members are concerned about the manner in
which the FMC is proposing to implement OSRA as well as the manner in
which it is currently applying the ``Incentive Principle'' under the
Shipping Act. Specifically, NAWE is concerned that (a) the Commission's
Notice of Proposed Rulemaking (``NPRM'') regarding demurrage and
detention billing requirements is deviating from the clear
Congressional intent, and (b) that the FMC is applying the Incentive
Principle in a manner that may actually disincentivize the flow of
cargo.
(1) The Proposed Rule is Inconsistent with Supply Chain Relationships
The FMC's October 2022 NPRM unfortunately chose to ignore the
express Congressional intent by broadly sweeping MTOs into OSRA's
substantive demurrage billing requirements. By doing so, the FMC is
setting up its regulations for failure. Of primary concern is the fact
that the NPRM requires MTOs to have a contractual relationship with
cargo owners, which is at odds with the longstanding contractual
relationships in the maritime supply chain. This part of the NPRM is,
quite simply, incorrect and would force unnatural business
relationships within the supply chain. Under longstanding industry
practices, MTOs lack any sort of direct contractual relationship with
shippers or beneficial cargo owners. The MTOs' only customers are the
ocean carriers. Accordingly, because there is no direct relationship
between the MTOs and shippers, MTOs lack direct information as to why a
shipper's container remains on terminal property past free time. All
that is known to the MTO is that the container has stayed at the
terminal past its designated free time, taking up valuable terminal
space that cannot be occupied by other import or export containers.
Congress recognized these challenges in choosing to exclude MTOs from
OSRA's demurrage billing requirements, and the FMC must follow this
intent in its regulatory implementation.
In addition, implementing the FMC's proposed regulations would
require MTOs to abandon existing, efficient practices in which terminal
demurrage is charged and paid via electronic appointment booking
systems, simultaneously when a container retrieval appointment is made
by the shipper's agent. This system has been effective in incentivizing
the flow of cargo, and the payment of properly-imposed demurrage
charges, to ensure that containers are moved off of marine terminals in
a timely fashion. Accordingly, not only would the Commission's proposed
regulations be impossible because MTOs lack the contractual
relationships necessary to obtain the relevant information, they would
also slow the flow of cargo, undermining the recent successful efforts
to mitigate supply chain congestion. NAWE therefore asks that this
Subcommittee direct the FMC to take these concerns into consideration
when issuing its detention and demurrage billing practices final rule.
(2) Demurrage and the Incentive Principle
In addition to the detention and demurrage NPRM, NAWE's members are
concerned about the FMC's recent interpretation of the ``Incentive
Principle'', which the Commission uses to determine whether a detention
or demurrage charge is ``reasonable'' under the Shipping Act. Notably,
in a recent decision, the FMC determined that the imposition of
equipment detention (essentially a fee charged by ocean carriers for
use of their equipment beyond ``free time'') on a holiday weekend was
at odds with the ``Incentive Principle'' and therefore unreasonable
under the Shipping Act. Notably, the shippers in the case had advanced
notice that the marine terminal would be closed on the holiday weekend,
but nonetheless chose to continue to hold the ocean carrier's
equipment. Despite this clear notice, and the fact that the shipper's
agent had every opportunity to return the equipment before the holiday
weekend, the Commission deemed the detention charges unreasonable.
If this logic is extended to terminal demurrage, the result would
actually ``disincentivize'' the timely removal of containers from
marine terminals and would impede cargo fluidity at U.S. ports. The
fundamental issue that appears to be misunderstood by many shippers is
that a marine terminal is not a warehouse. MTOs pay for the use of some
of the most expensive waterfront real estate in the country and,
therefore, must be compensated when a shipper fails to remove its
container in a timely fashion and improperly uses the marine terminal
as a warehouse. Moreover, it is clear that the imposition of weekend
and holiday terminal demurrage promotes cargo fluidity, consistent with
the Incentive Principle. Such charges incentivize shippers to remove
their containers before the weekend or holiday, if free time has
expired, to avoid paying for such additional storage costs. In
addition, if the shipper is given free storage on the weekend (at the
MTO's cost and to the detriment of other containers that may enter the
terminal from ships over the weekend) it will actually disincentivize
the flow of cargo, as shippers will want to take advantage of this
government-imposed free service. The aggregate result therefore would
be an increase in supply chain congestion at U.S. ports. Accordingly,
we urge this Subcommittee to ensure that the Commission does not extend
its recent policy decision to terminal demurrage.

* * *

NAWE appreciates this Subcommittee's leadership in supporting
funding opportunities for U.S. marine terminal operators, in a manner
that considers the realistic costs and availability of zero- or near-
zero emissions cargo handling equipment. We are also thankful for this
Subcommittee's oversight in ensuring that OSRA is implemented
consistent with the intent of Congress. We look forward to continuing
to work with this Subcommittee on these issues and ensuring the
continued resiliency of the U.S. maritime supply chain.

Mrs. Gonzalez-Colon. Thank you. I don't have any further
questions. Thank you, and I yield back.
Mr. Webster of Florida. Mr. Garamendi.
Mr. Garamendi. Thank you, Mr. Chairman and Ranking Member
Salud. I want to thank you and the committee for the success we
had last year in this committee with the passage of the Ocean
Shipping Reform Act. I noticed you waived on my colleague in
that process, Mr. Dusty Johnson, and I thank you for doing so.
Chairman Maffei, you gave credit for the significant
decline to many things. Dusty and I think it is only due to the
Ocean Shipping Reform Act.
[Laughter.]
Mr. Garamendi. So, you all understand that.
But like every piece of legislation, there is always more
to be done. The actual legislation that passed this House was
modified in the Senate, leaving out some very important
elements that Mr. Johnson and I intend to try to add into the
legislative process this year.
And so, one of those, Chairman Maffei, has to do with your
authority to actually carry out the orders that your
administrative law judges are working on. Your agency seems to
be the only independent agency in the entire Federal Government
that does not have the authority to implement its decisions
about unfair practices. Certainly, we can go down through the
Federal Trade Commission, the Securities and Exchange
Commission, on and on. Every one of these independent
Commissions has the authority to do so.
However, when your team decides that somebody is acting
unlawfully or contrary to the law, you have got to go to court
to get an order, rather than the other way around, giving an
order and then, if the party doesn't like it, they can go to
court and try to overturn your order. We have received a letter
from two of your Commissioners, Max Vekich and Carl Bentzel,
asking Congress to right this wrong, and to modify the Ocean
Shipping Reform Act so that you actually have the authority to
implement the decisions that you have.
So, my question to you is, do you support your other two
Commissioners and this effort to try to modify, improve last
year's law?
Mr. Maffei. Yes, Congressman Garamendi, I do support it.
And I would say that even if the two Commissioners in question
weren't sitting imposingly behind me.
[Laughter.]
Mr. Garamendi. Well, they are big men, but whatever the
motivation, we appreciate your answer.
Also, I note that this bill is supported. Mr. Johnson and I
will carry this bill through, hopefully, success and to the
President.
And I also note that Mr. Johnson has some additional
reforms that follow along on, I would say, some errors that the
Senate made that he hopes to correct. And I look forward to the
opportunity to work with him on that.
I wanted also to go to the issue of the sexual assault.
Admiral, that has been covered extensively by my colleagues.
And I want to, therefore, just bring to your attention the
ongoing issue that MARAD has to keep its ancient ships
floating. If you would like to comment on that and spend the
next minute and 30 seconds commenting on how you intend to keep
those ships and/or replace them, I would appreciate that.
Admiral Phillips. Yes, sir, Congressman Garamendi, thank
you for that question. And I am happy to talk about EMBARC, and
I am certainly happy to talk about ships.
As you are aware, we are working a Ready Reserve Force
Recapitalization Program, which involves purchasing new vessels
or used vessels--in particular, used vessels. We have purchased
two, and are in the process of concluding a purchase, which we
have notified Congress of, to bring in three more. These
vessels will be coming on board later this year, and we will be
working on flagging them in.
As you are aware, during the 2023 NDAA, we were authorized
a new build program. However, that program was not
appropriated. I would offer that, in the context of
recapitalizing the Ready Reserve Force, it is an all-hands-on-
deck evolution. The ships are aging, as you point out.
Maintaining them is more costly, and buying used is very
expensive, as well. So, every opportunity that is possible I
think we should take.
Mr. Garamendi. Thank you. In my remaining 25 seconds, we
will be bringing to this committee what we call the national
Maritime Security Program, which is a program that is built
upon some of the policies we already have in place, so that the
Jones Act fleet--some of those ships could be militarily useful
if they were modified or built in the future to be militarily
useful. In that way, we might be able to provide the necessary
logistical support that the Navy or the military would need,
should anything occur in the Pacific. So, we will get more of
that to the committee in the days ahead.
Thank you very much.
Mr. Johnson, what a pleasure to see you.
Mr. Webster of Florida. Thank you.
Mr. Van Drew, you are recognized.
Dr. Van Drew. Well, welcome to the House Subcommittee on
Coast Guard and Maritime Transportation. Today, my remarks and
questions will focus on this administration's--what I believe
is a dangerous rush to industrialize our oceans with offshore
wind.
To paint the picture for my colleagues, the proposed
offshore wind projects are over 2 million acres in size and
include over 3,000 wind turbines, each over 1,000 feet in
height.
We--oh, I am sorry [adjusting microphone]. There we go. Do
I have it now? Thank you.
To paint a picture for my colleagues, the proposed offshore
wind project leases are over 2 million acres in size, and
include over 3,000 wind turbines, each over 1,000 feet tall.
The straight words are: We have never seen anything like this
before.
Of concern to this subcommittee should be the effect of the
maritime supply chain. The Bureau of Ocean Energy Management
has determined that the impacts of wind turbines on navigation
and vessel traffic will be ``major,'' and could result ``in
personal injury or loss of life.'' It is obvious why these
projects are dangerous.
First, offshore wind leases will obstruct major maritime
traffic lanes. Thousands of vessels would be forced into tight
bottlenecks.
Second, offshore wind structures interfere with
navigational radar. This interference affects both commercial
and military vessels, as well as search and rescue helicopters.
The fact is that maritime transit and offshore wind
complexes will be difficult, and it will be dangerous, and our
supply chain will become even more fragile. Congress must shine
a light on the true costs of offshore wind industrialization,
and hold this Government accountable.
I direct my questions to Rear Admiral Ann Phillips,
Administrator for the United States Maritime Administration,
and I thank you for your service to the United States Navy.
Since 1958, the Maritime Administration has regularly
published the official instruction manual on collision
avoidance radar, most recently in 2005. This matter is under
your purview. Has the Maritime Administration conducted any
assessments of the effect of offshore wind structures on
collision avoidance radar? And if not, would you commit to
investigating this phenomenon?
Admiral Phillips. Thank you, Congressman Van Drew. To my
knowledge, we have not conducted a specific investigation into
the impacts on collision avoidance radar. I would certainly
think that, if there were issues related to this, that the
maritime industry would have contacted me.
However, I appreciate your interest in such a strong safety
measure, and we will work with our fellow interagency to see
what----
Dr. Van Drew [interrupting]. And I will just remind you
that it is a little tough sometimes on the maritime industry,
and they have mentioned it numerous times.
You have been a vocal advocate of the offshore wind
industry in your official capacity as Maritime Administrator.
Before this job--and I don't mean to be tough, just questions--
you worked for Burdeshaw Associates, a consulting firm with
connections to the wind industry going back a decade. Is that
correct?
Admiral Phillips. I did work for Burdeshaw probably more
than a decade ago. Yes, sir.
Dr. Van Drew. OK. You then served as a member of the
Advisory Board for the Center for Climate and Security, which
has received substantial funding from left-leaning political
action groups and undisclosed donors. Is that correct?
Admiral Phillips. It is correct that I served on the board
of the Center for Climate and Security.
Dr. Van Drew. OK. In your time as a civilian, did you
receive compensation to consult or advise on any matters
related to wind energy?
Admiral Phillips. I did not.
Dr. Van Drew. Development onshore or offshore?
Admiral Phillips. I did not.
Dr. Van Drew. OK. So, let me just say to the people that
are here--and I know I don't have a lot of time left, either--I
live on the east coast, obviously. I live--it is what is called
the Jersey Shore. We now have along the east coast 25 dead
whales. We have dozens of dead dolphins. We have never seen
anything like it.
We have thousands upon tens of thousands of people now
who--on the coast, whether it be Florida, whether it be New
Jersey, whether it be New York--do not want these wind
turbines. There has been much proof that they are actually
going to cost a great deal of money, that people's utility
rates are going to go up, it is going to cost them more, that
it is dangerous to the environment, it is dangerous to the Cold
Pool, which is a very environmentally sensitive area, it is
dangerous to all this wildlife. The fishermen are against it.
It is dangerous to the fishermen. And I would maintain that it
is also dangerous for the maritime industry.
We are fully involved with this. We just had a hearing
actually in-district--I guess it was about 10 days ago now, I
would have to check, but it was recently. We had so many people
there, so many folks concerned, we couldn't even get them all
in the convention center.
So, I would tell you that, quite frankly, you are going to
hear more from me, and you are going to hear more from people
like Andy Biggs, and a whole bunch of other folks who are real
concerned about this issue. Many other Congressmen have
concern, and I wouldn't want this committee, which I sit on, to
be in a vacuum and not realize the serious, serious concerns
that there are out there. And this must be investigated. Thank
you.
[Pause.]
Dr. Van Drew. I kind of knew that would make everybody
quiet.
Mr. Webster of Florida. Thank you for that question.
Ranking Member Larsen, you are recognized for your
questions.
Mr. Larsen of Washington. Thank you.
Just to start, Admiral, is it the Biden policy position to
develop offshore wind, generally?
Admiral Phillips. Yes, sir, it is.
Mr. Larsen of Washington. Yes. Should we expect someone who
is an appointed person in the Biden administration to do
anything but support the Biden administration policy? And if
you didn't, you would leave? Isn't that usually how it works?
Admiral Phillips. That is an interesting question, sir, but
I----
Mr. Larsen of Washington. All my questions are.
Admiral Phillips. Yes, sir. Thank you very much.
[Laughter.]
Mr. Larsen of Washington. Yes, yes.
Admiral Phillips. I look forward to them. Thank you, sir.
Mr. Larsen of Washington. All right, great, sure. And I
think everyone should expect to hear a lot of support for
offshore wind, as well. And so, I look forward to doing that.
However, this is about your budget, and about FMC's budget,
and the debris program. And I do have a complaint about the
administration's $20 million request for the Small Shipyard
Grant program. If the administration put the fully authorized
amount in the budget, based on your past experience and MARAD's
past experience, would there be $30 million worth, at least $30
million worth of awards in the Small Shipyard Grant program?
In other words, is it oversubscribed?
Admiral Phillips. Congressman Larsen, all of our grants are
oversubscribed.
Mr. Larsen of Washington. I care about the Small Shipyard
Grant program.
Admiral Phillips. It is oversubscribed.
Mr. Larsen of Washington. It is oversubscribed?
Admiral Phillips. Yes.
Mr. Larsen of Washington. Yes. So, the fact that they have
put in $20 million in the budget, and we authorized $30
million, is telling me that we have an opportunity here in
Congress to fix the mistake that the Biden administration made
with the budget, in my view. I want to make that point clear to
the folks listening in TV-land, because this is a program that
helps a lot of small shipyards in my district and my State, and
throughout the country. So, I look forward to moving forward on
that.
But I want to turn to Chair Maffei about your agency's
budget--about the Commission's budget, that is. We are getting
a lot of new opportunities and responsibilities with OSRA 2022.
How much of that budget is going to be put into implementation
of that, versus your basic budget that maybe--you had a backlog
in technology investments, or you had a backlog in X, Y, or Z.
How is that split up, generally?
Mr. Maffei. That is a good question, and I will want to
submit a written----
Mr. Larsen of Washington [interposing]. Yes, that would be
great.
Mr. Maffei [continuing]. Answer to you.
But I will say, just generally speaking, almost all of it
goes to professional personnel. And all of our professional
personnel are involved in implementing OSRA. There are so many
different provisions. You know, we are learning how to walk and
chew gum at the same time. We are not putting off anything
while we figure out one thing. Everything is being done
simultaneously.
There are a couple of things that we do need to address in
order to implement OSRA, but also to do other things. For
instance, a lot of our IT equipment--and software, frankly--is
outdated. We need to freshen our website. We need to freshen a
number of those technological intersections and also make sure
that we are not vulnerable to any sort of cyber attacks, et
cetera. So, there are some.
But by far, most of the budget goes into personnel, mostly
economists and lawyers, who know a lot more about the maritime
industry than I want to know, but do a great job, and will help
us to implement OSRA and also to do our other activities.
Mr. Larsen of Washington. That is great. I just will put a
note in for the Marine Debris Program since that is on the
agenda. But we have the written statement and, again, I will
just underscore how important that is, how important a program
that is to the Pacific Northwest, to the Puget Sound, to the
Salish Sea, and having a funded Marine Debris Program is
important for us there.
And so, I know that other folks have gone over time, and
so, I will yield back a full minute in making up my
contribution to this committee. Thank you.
Mr. Webster of Florida. Representative Babin, you are
recognized.
Dr. Babin. Thank you, Mr. Chairman. I want to say thank you
to our witnesses. It was good to talk to you, Admiral, on our
call yesterday, as well. Thank you both for being here.
The U.S. maritime industry keeps our Nation's economy
running, without question. If you doubt that for a minute, just
come down to southeast Texas, the Greater Houston region, look
in my district alone. We have some great ports there, including
the number-one port, by tonnage, in the country, the Port of
Houston. The Houston Ship Channel is busy day and night, a
conduit for shippers to send and receive goods and services all
around the world. Despite that importance, many folks--in fact,
I think most of our country--did not understand just how big an
impact this movement of goods was.
However, COVID brought new attention to this space, putting
shipping issues and supply chain challenges right smack in the
limelight. And even as we have heard so much about supply chain
issues and the need to improve the status quo, I have heard
horror stories about dealing with redtape in the maritime
industry. This hurts Texas more than any other State,
especially when it deals with energy export projects that are
being held up.
So, Rear Admiral Phillips, this question is for you.
Piggybacking off what Chairman Webster had alluded earlier, the
Deepwater Port Act provides a statutory timeline of about a
year for MARAD to process and approve or deny a deepwater port
application. I understand that these projects can be complex,
but MARAD is taking much longer, more than 3 years to process
many of these applications. And since 2015, MARAD has issued
only 1 Record of Decision and zero licenses for deepwater
ports, despite the filing of 8 deepwater port applications
since that time.
I find that extremely disturbing, given the project
proponents are spending millions of their dollars to develop
these projects, only to have them stalled in your agency. For
example, as Chairman Webster brought up, Texas GulfLink is in
year 4 of supposedly our 1-year application process, because
every time MARAD is supposed to give them an answer, they start
asking duplicative questions and pushing the timelines. Even
worse, this is costing Texas GulfLink big time. They are paying
millions for MARAD to just do their job.
Your response to this issue is just that MARAD is
scrupulously following the law. Well, asking the same types of
question over and over again because it resets the clock isn't
MARAD's statutory responsibility. MARAD needs to be
transparent, honest, and straightforward with private-sector
partners.
Who at MARAD is ultimately responsible for these
applications moving along in a timely fashion, and what steps
are they taking to ensure applications are being processed in a
transparent, efficient, timely manner, and that applicants are
being kept informed of what is going on with their projects? I
would like to hear that.
Admiral Phillips. Thank you, Congressman Babin, for that
question.
I sign the Records of Decision. That is delegated to me by
the Secretary. So, I am the person at MARAD who is responsible
for moving these programs along, and I accept that
responsibility.
I would point out that the Record of Decision for the
Delfin project was approved in 2017.
The project did not move to a license because the company
was not ready to do so. We have signed the SPOT ROD, as you
know, last fall, and we anticipate moving forward with a
license for that later this year.
The GulfLink project is moving forward, as well, and we
anticipate we can move to a Record of Decision with them later
this year.
As discussed, these are extremely complicated projects. We
work very hard, and I will state again: We are transparent, and
we do work with the companies on what the requirements are that
we need from them to move forward, and that the stop clock
actually helps them provide what they need so that this process
can continue, and we can reach a legally defensible Record of
Decision.
Dr. Babin. Well, I am not sure they are very appreciative
of the stop clock.
And why would you have duplicative questions, asking the
same questions over and over again, and then the clock starts
all over?
Admiral Phillips. I would----
Dr. Babin [interrupting]. I don't have examples of the
duplicative questioning, but this is something that I have
heard from several of these companies.
Admiral Phillips. Yes, sir. I would take that for the
record. I don't know of duplicative questions, and we rely on
the applicant to respond to us once questions have been asked
for them and a specific issue has been provided to them.
Dr. Babin. OK. How much time do I have left?
Voice. Five seconds.
Dr. Babin. Five seconds? Well. Sorry, Mr. Maffei, I am not
going to be able to get that in in 5 seconds.
[Laughter.]
Dr. Babin. I yield back.
Mr. Maffei. I appreciate the Congressman not asking the
question, and then having the time expire.
Mr. Webster of Florida. Representative Peltola.
Mrs. Peltola. Thank you, Mr. Chairman. Oh, good afternoon.
So, I am very pleased to be on this subcommittee. Coast
Guard is critical in Alaska, and so are the maritime trades and
maritime transportation. We mostly fly in and out, but most of
our cargo comes in by barge. So, thank you for the work that
you do.
As the Arctic warms, and as our Bering Sea, Chukchi Sea,
Beaufort Sea are ice free, so often we have seen a real
dramatic increase in vessels traveling in the Arctic. And this
is going to provide a lot of opportunity, but it is also
providing challenges to communities and stressors that we
haven't seen before. And I was just wondering if the Commission
and the Administration could speak to some of the things that
you are looking at in this regard. Thank you.
Mr. Maffei. Yes, as far as the Commission is, we monitor
anything like the trade lanes, if trade lanes are opening up
through the Arctic. But we don't have any jurisdiction over
that particular area.
Admiral Phillips. Yes, ma'am, Congresswoman, thank you for
your question.
We work with the Committee on the Maritime Transportation
System, who does look at Arctic issues. We are a member of
that. We host them, actually, at MARAD. They have done work in
the Arctic, and continue to do work on the matters surrounding
Arctic matters, as well as the Coast Guard, who is definitely,
as you point out, a critical player in Alaska, and very much
involved in safety with regard to maritime operations in the
Arctic.
[Pause.]
Mrs. Peltola. Maybe I could yield my time to the gentleman
from Texas to ask his question.
[Audio malfunction.]
Dr. Babin. Could you hear me?
Mr. Maffei. Yes.
Dr. Babin. From last year at the same time, and certainly
since the height of the COVID-19 pandemic, do you foresee
supply chain congestion returning to U.S. ports in 2023, or in
the next 5 to 10 years?
I know you don't have a crystal ball, but----
Mr. Maffei [interrupting]. Yes.
Dr. Babin [continuing]. Without further amendments to the
Shipping Act?
Mr. Maffei. I think that the cargo flows are
extraordinarily difficult to predict. I wish I could give you a
better answer to this question.
But what I will say is that what we have learned, both with
COVID--initially, by the way, a lot of people in the industry
thought COVID would mean exactly that, very little shipping,
right? And then it was this boom of everybody staying at home,
and having nothing to do but shopping and whatever that created
this extreme opposite situation. Now we have a situation where
things have fallen far faster than anybody in the industry
predicted.
So, whether it could return in 2023, I am not sure. I would
say that the odds are against it, because of the economy and
other things like that. But I would not underestimate the
possibility that American consumers could yet decide that all
this stuff in warehouses, the extra stuff that you have read
has gotten stuck in warehouses, and that sort of thing, they
won't want that, they want the latest thing. And so, I think we
need to be ready for another boom.
Now, will it be the kind of boom in demand that we saw
under COVID? No, I doubt it would be that high. But we need to
be ready.
So, for instance, the reason why we need to get the export
rule in place, the reason why we need to get the detention and
demurrage rules in place are not necessarily for this moment,
but they are for the next crisis. We are in the calm after the
storm, but also the calm before the storm, in my view.
Dr. Babin. Thank you. And I appreciate the gentlewoman's
yielding.
Am I completely out of time? How much time do I have left?
A minute and 30 seconds? I've got one more, then, OK.
[Laughter.]
Dr. Babin. As FMC Commissioner, you are no doubt familiar
with the incentive principle, which essentially states that
demurrage and detention practices are reasonable under the
Shipping Act only if they incentivize cargo flow. In applying
the incentive principle, do you agree that the FMC must avoid
actions that would disincentivize the flow of cargo and, for
example, by allowing shippers to further delay container
retrieval past free time?
Mr. Maffei. Yes, the incentive principle--Rebecca Dye came
up with after a lot of consultations within the industry, and
she was in the middle of a fact finding. And it is difficult,
because the particulars do matter here. But yes, the idea is to
make sure that detention and demurrage does exist, right?
We were asked, well, why don't you just suspend it, et
cetera, when there is so much unfairness going on? And the
truth is, if we suspended it, it would all be worse. There
would be even more.
Legitimate detention and demurrage is very, very important
to keep cargo flowing. But it must follow that incentive
principle, meaning that if a shipper can't pick up their cargo,
an importer or exporter can't pick up their cargo because the
terminal is closed, there is a blizzard, or maybe even they are
just closed on the weekend, and they can't pick it up that day,
they shouldn't be charged for that particular day. And if they
can, then they should be.
So, there is a lot packed in that, and I would like to
maybe have a further conversation with you. But yes, I do
believe in the incentive principle. It is absolutely essential.
And it is what OSRA is all about, is adding the leaves on that
tree.
Dr. Babin. Good. Thank you. And I see that my time is out,
so, I yield back.
Mr. Webster of Florida. OK. So, where were we? Yes, Mr.
Ezell.
Mr. Ezell. Ezell.
It looks like we are all having a little trouble with this
button today. Thank you, Mr. Chairman, and it is Ezell, one
word.
[Laughter.]
Mr. Webster of Florida. I will never miss it again.
Mr. Ezell. I have been working on that. So, thank you all
for this afternoon, and being a part of this committee.
Mr. Maffei, when I am talking to the ports in my district,
I hear how port property used for marine terminal operations is
pretty limited across the country. And I think this, of course,
contributes to port congestion.
Can you expand on the importance of picking up shipping
containers in a timely manner?
Mr. Maffei. Yes, it is absolutely essential to keep cargo
moving.
The presumption of your question is absolutely correct.
Most of the ports in this country are near or in urban areas,
of course. Right? That is where the business is. And because of
that, it is very difficult to get new property, as we saw
particularly in the L.A.-Long Beach area during COVID. So, it
is very, very important that people pick up their containers on
time, that they drop them off.
One of the things that was upsetting is these reports of
large, huge customers like the big box stores or whatever,
getting 3 or 4 weeks of free time. There is some evidence of
that. Mostly that is not the case. But if you have excessive
free time, it does create those bottlenecks. So, all of that is
very important.
It is also important to make sure that empties can be
picked up. And one of the things that we are being careful
about in terms of our ``refusal to deal'' rule is to make sure
that we don't create the unintended consequence of all these
empties being left. So, you are totally onto something.
I will say, though, that it does also exemplify how much
the ocean supply chain is dependent on the rest of the supply
chain. If we had more warehouse space, if we had better roads,
better highways--if you build a bridge in Middle America, it
helps me. So, we can't just look at the ports. But it is a very
good point, sir.
Mr. Ezell. Thank you. Recent reports have shown the
container volumes at most U.S. ports have fallen, as we have
talked about, in the last year, and certainly has lowered since
the height of COVID and related consumer spending, which you
mentioned in your testimony.
When considering these facts, do you think more amendments
to the Shipping Act are needed to prevent supply chain
congestion in the U.S. ports? Or should we let markets adjust?
And can we talk about what FMC is doing to provide
certainty to exporters during the implementation of the act?
Mr. Maffei. I will answer the second part of that question
first, certainty to exporters. I mean, we are just trying to
make everything we do completely transparent. We are in close
touch with a number of the exporter groups, particularly the
largest ag groups.
There are some disadvantages to being a five-appointee
Commission; there are a lot of advantages. And one of those
advantages is all of us, one way or another, have hit the road
and gone out and spoken to a lot of these groups in various--
and if it is groups meeting in your district, we are happy to
come there too, because it is very important. It is a huge
industry, it affects everything, but it is actually, in some
ways, a very small industry. So, we have been trying to do that
as much as we can.
In terms of additional amendments, I mean, I feel a little
bit like my daughter does. I have an 8-year-old daughter, and
she eats a bowl of Cheerios every night before bed. But I am
trying to get her to bed, right? So, she is halfway through the
bowl of Cheerios. I am like, well, what else do you want? What
other snack do you want? We are still eating the Cheerios in
the first act. It doesn't mean that we might not need something
further. There is a lot of stuff. There are certain court
decisions that might come down, there are certain other kinds
of things. But it does make it such that I think my biggest
focus is to implement what you have already passed, sir.
Mr. Ezell. Very good. So, it is fair to say that you agree
the FMC must avoid actions that would disincentivize the flow
of cargo?
Mr. Maffei. Absolutely. That's the trick, right?
Mr. Ezell. Yes.
Mr. Maffei. Figuring out what those actions are.
Mr. Ezell. Well, I will tell you, in Mississippi and the
Port of Gulfport, we have real good roads that go right to I-
10. So, if the Port of Houston gets too backed up, we have got
plenty of room over there.
Mr. Maffei. I was at the Port of Gulfport just before----
Mr. Ezell [interposing]. Yes.
Mr. Maffei [continuing]. The pandemic, and you are quite
right.
Our gulf ports, by the way, a lot more traffic is coming to
them. There is speculation, oh, it is the labor issues on the
west coast. I think that may be a small part of it. But a lot
of that traffic is going to stay because of improvements that
the gulf ports have made, improvements in the Panama Canal,
and, frankly, the change in where the cargo is coming from,
more cargo coming from Southeast Asia and India.
Mr. Ezell. Thank you.
Mr. Chairman, I yield back. Thank you.
Mr. Webster of Florida. Thank you. OK, Representative
Scholten.
Ms. Scholten. Thank you so much. Thank you, Chairman
Webster. Thank you, Rear Admiral Phillips. And thank you, Mr.
Maffei, for your incredible testimony today and answering our
questions.
This question is for Rear Admiral Phillips. If we can turn
back to EMBARC briefly for a moment--and I want to thank you
for your extensive testimony on this already, and answering all
of our questions. But there is a specific portion that I wanted
to ask about.
EMBARC included both near- and long-term requirements on
shipping companies. And we have some information about some of
the near-term requirements, the short-term requirements. But
how are those companies complying with some of the longer term
requirements like video surveillance and master key controls
and the like?
Admiral Phillips. Congresswoman Scholten, thank you for
that question. As you have pointed out, there are things that
it will take companies some time to move forward with. The
specific items that you mentioned, key control cameras and
other security matters, are now also in the Coast Guard
Authorization Act from 2023. And Coast Guard will be developing
processes for them, and there is a timeframe under which those
actions must be implemented so that companies do have some time
to implement these. They were a part of EMBARC, and we are
seeing companies take action on their own now, which I find
heartening.
I should also note that we have a rulemaking required under
the NDAA for EMBARC, which we are proceeding with
expeditiously. That will not impact things under the Coast
Guard Act, but it will help us put our processes in place for
EMBARC more thoroughly, so that companies can follow those as
we move forward, in particular with regard to any actions we
might take to withhold payments should companies not be in
compliance.
Ms. Scholten. Just as a followup, in terms of the time
requirements for complying, do you think they are sufficient to
give the companies enough time to fully comply, but also timely
enough to ensure that they are taking appropriate and prompt
action?
Admiral Phillips. Thank you, ma'am. I think they are
appropriate to the circumstances. And again, we are seeing
companies move out in advance of that. So, with optimism, they
won't need the full amount of time to move forward.
And we thank them, I would say, for their actions in
response to this.
Ms. Scholten. That is wonderful. That is heartening to
hear. Thank you so much.
I yield back the remainder of my time.
Mr. Webster of Florida. Representative Johnson, you are
recognized for 5 minutes.
Mr. Johnson of South Dakota. Thank you very much, Mr.
Chairman, and it has been gratifying to hear so many good words
said about the Ocean Shipping Reform Act.
And one of the surprising things that happens to all of us
when we get to Congress is that we realize that there are
actually good Members here, that not everybody is sort of a
cartoonish villain. And I discovered one such good person in
John Garamendi, who has just been an incredible partner.
The House works a lot harder than the Senate, and nobody
doubts that, of course. But we passed the Ocean Shipping Reform
Act out not once, not twice, not three times, but four times.
And as John mentioned, we don't think we are quite done yet.
And I appreciate that Chairman Maffei--by the way, I have
heard five different pronunciations of your last name today.
Mr. Maffei. When I was in this body, the Congress, I used
to say it rhymes with buffet.
Mr. Johnson of South Dakota. Yes. Well, that is actually
helpful.
Mr. Maffei. Everything for $9.95.
[Laughter.]
Mr. Johnson of South Dakota. And I understand that you are,
as you are saying, busy eating Cheerios. But Mr. Garamendi and
I think you could probably use another bowl on deck for when
you get done eating the first bowl. And so, next week, we will
be introducing the Ocean Shipping Reform Act 2.0, I think, as
John mentioned, to undo some of the damage the Senate did with
their revisions. And I think we will do a better job of hitting
the center of the target.
But getting to OSRA 1.0, Mr. Chairman, one of the things we
did is provide you the power to promulgate rules around this
refusal to deal. You have talked a bit about that. And I know
we had 120 Members of Congress weigh in, and then you had an
additional notice of proposed rulemaking, and solicited
comments.
Do we have a timeline? Do we have a sense of when you are
going to be done?
Mr. Maffei. Yes. Because of so many valuable comments when
we did the first notice of proposed rulemaking, we are making
significant enough changes that we want to do a supplemental.
It just wouldn't be right to just go to final rule without
having a comment period so the public could comment on what we
are coming up with.
I expect that supplemental to be out very soon--let's see,
I am trying to think. I don't want to promise next week, but I
will say in the next month. We are working very hard on that.
Mr. Johnson of South Dakota. So, I heard next week, just--
everybody heard next week.
[Laughter.]
Mr. Maffei. So, yes, we are working on that. It is very
important.
I will say this. The good thing about the current
environment is that we aren't experiencing these problems to
the same degree that we were in the midst of COVID. So, when
you wrote, ``Do this really, really fast,'' every hour,
practically, was of the essence. It is less that now. And it is
so important that we do get it right, because, as many of your
colleagues have pointed out, there could be unintended
consequences on these very exporters that we are trying to help
if we don't get this right.
Mr. Johnson of South Dakota. Well, and I would note that I
have had a number of these foreign-flagged ocean carriers admit
to me in my office that, because they know the cop on the beat
has new tools available at their disposal--maybe not perfectly
well defined yet, but getting close--they have, of course,
changed the way they do business, and that is to the benefit of
American exporters, for sure.
So, I want to shift to the vessel operating--the common
carrier audit system that you all have. And for those of you
who don't know, this collects detention and demurrage billing
information for the nine large foreign-flagged ocean carriers.
And you had mentioned in your testimony, sir, that this is
really valuable information. Clearly, I know that you are not
going to have company-specific audit findings released to
Congress. There would be all kinds of business information, why
that might not be appropriate. But do you think summaries of
your findings could be beneficial for lawmakers?
Mr. Maffei. I think potentially.
First of all, we are happy, of course, to give any lawmaker
a detailed briefing on various things. There are some
requirements of OSRA, for instance, that we haven't implemented
yet. We haven't gotten to that deadline yet. But in terms of
reporting overall import and export volumes, that we certainly
will do.
There are probably other areas that could be useful, both
to Congress and the public, and I am happy to look into that. I
think these audits, which actually, I established when I became
Chairman because it was so important that we--I mean, these are
foreign carriers, but we do want to communicate to them what
the best practices are. We want to give them some opportunity
to follow our detention and demurrage rules, to make sure they
have measures in place to avoid unfair retaliation against an
exporter or importer who maybe brings a case against them, to
make sure that they do have a vibrant export program. So, that
is what it is for.
But yes, I am happy to get together with you----
Mr. Johnson of South Dakota [interrupting]. Mr. Chairman, I
am out of time. I will close by noting that the bowl of
Cheerios Congress gave your team to devour was enormous. And I
want to thank every single employee of the Federal Maritime
Commission for the incredible work you all are doing.
Mr. Maffei. That is very kind of you, Congressman,
particularly because, as you know so well, it is really the
staff that the biggest burden lands on. So, thank you for
thanking them.
Mr. Johnson of South Dakota. I yield back.
Mr. Webster of Florida. Representative Auchincloss.
Mr. Auchincloss. Thank you, Chairman.
Rear Admiral, I appreciate you being here again with us. I
would like to ask you about offshore wind. Over 25 different
types of vessels will be needed to build each offshore wind
farm. To help build these vessels, on June 21, 2022, MARAD
designated offshore wind vessels under the Federal Ship
Financing Program, also known as title XI, as vessels of
national interest. Since that designation, has MARAD seen an
increase in title XI applications? And do you know how many
more than previously?
Admiral Phillips. We have seen an increase in title XI
applications. We have seven applications pending now, we
anticipate more, and five of those seven are for offshore wind
vessels.
Mr. Auchincloss. Do you know what kind of vessels?
Admiral Phillips. All kinds. Small to large.
Mr. Auchincloss. Yes.
Admiral Phillips. Everything, including Rock Fall vessels
and other things.
Mr. Auchincloss. Do you agree that we need further
investment in U.S. offshore wind vessels to meet President
Biden's goal of deploying 30 gigawatts of offshore wind by
2030?
And would you be willing to work with my office on that
effort?
Admiral Phillips. Thank you for that question, sir. We
certainly agree that we would absolutely be willing to work
with your office, and additional investment is always welcome
in the maritime industry to grow the industry and grow jobs,
and certainly jobs in the maritime workforce.
Mr. Auchincloss. Yes, and I will note that the title XI
program has not received appropriations since fiscal year 2018,
and has only been funded by Congress twice in the last decade.
I believe it should receive increased appropriations to help
build the hundreds of vessels needed for the new American
offshore wind industry.
And I will move on, but continue questioning you, Rear
Admiral, about the mariner shortage. When you testified before
the committee on September 14, 2022, you stated that vessel
operators report that mariner availability is still a
challenging issue, and that you were hosting a summit on
September 23rd to discuss recruitment and retention challenges
for mariners.
As you know, one of the issues impeding mariner retention
is the antiquated merchant mariner credentialing system.
Section 11511 of the fiscal year 2023 NDAA requested a report
by the USCG Commandant, in consultation with the Maritime
Administration, on modernizing the merchant mariner
credentialing system. It was due 2 years after the passage of
that law. How is MARAD helping modernize the merchant mariner
credentialing process, and have you started to work on this
study?
Admiral Phillips. So, thank you for that question, sir. The
credentialing system belongs entirely to the Coast Guard. We
work closely with them on this particular matter. And the
challenge for them, of course, is the system was built to
manage credentials and not to be searchable.
So, what would be helpful to us, and for the Coast Guard,
as well, is a database where we could search to understand how
many qualified mariners we have, and what qualifications they
actually hold. It is not possible to ascertain that querying
their database right now. Much of it is on paper.
Mr. Auchincloss. Well, this is why we asked the USCG to
consult with you, as they were doing. Have they been
consultative?
Admiral Phillips. We are working with them on this issue.
It is a very common topic of discussion with the Coast Guard.
And I would add that they are working very hard to solve
this issue and come to a resolution.
Mr. Auchincloss. So, you have confidence that they will be
able to issue this report on time?
Admiral Phillips. Congressman Auchincloss, I can't speak to
the report. I know that they understand the need.
Mr. Auchincloss. I will actually yield back the rest of my
time, Chairman.
Mr. Webster of Florida. Thank you very much. So, we have
maybe another round here with Representative Garamendi.
You don't want it? OK. Are there any--well, everybody has
left.
[Laughter.]
Mr. Webster of Florida. Nobody can ask questions, so, that
is it.
Seeing none, that concludes our hearing today, and I would
like to thank the witnesses for their testimony. It is really
appreciated. Thanks for listening.
I ask unanimous consent for the record of today's hearing
to remain open until such time as witnesses have time to
provide answers to questions that may be submitted to them in
writing.
Without objection, so ordered.
I also wanted to ask unanimous consent that the record
remain open for 15 days for any additional comments or
information submitted by the Members or witnesses to be
included in today's hearing.
Without objection, so ordered.
The subcommittee stands adjourned.
[Whereupon, at 3:59 p.m., the subcommittee was adjourned.]

Appendix

----------

Question from Hon. Daniel Webster to Ann C. Phillips, Rear Admiral,
U.S. Navy (Ret.), and Administrator, Maritime Administration

Question 1. The Port Infrastructure Development Program (PIDP)
includes a specific legislative requirement prohibiting award
recipients from using funding received through the program for the
procurement of fully automated cargo handling equipment if the
Secretary of Transportation determines that such equipment would result
in a net loss of jobs within a port or port terminal. While the United
States Marine Highway Program (USMHP) has no such legislative
requirement, the Maritime Administration has decided to apply this PIDP
requirement to USMHP funding opportunities.
Please provide the rationale for why your Agency included this
limitation on award uses in USMHP when there is no legislative
requirement to do so.
Answer. The USMHP promotes the use, efficiency, and public benefits
of our marine highway services, including the creation and sustainment
of jobs in U.S. vessels, ports, and shipyards. MARAD supports the Biden
Administration policies which maintain good-paying jobs across the
United States maritime workforce, including port workers, who are an
essential part of the supply chain.

Questions from Hon. Mike Ezell to Ann C. Phillips, Rear Admiral, U.S.
Navy (Ret.), and Administrator, Maritime Administration

Support for Expansion of Capital Construction Fund Eligibility
Question 1. As you know, last year in Section 3544 of the National
Defense Authorization Act for Fiscal Year 2023, Congress enacted
important amendments to the Capital Construction Fund authority to
expand eligibility to all U.S. built vessels which are engaged in the
domestic or foreign commerce of the United States. This expansion did
away with limitations on the availability of the CCF program to certain
geographic trades that had been in effect for decades. It also opened
substantial new opportunities for vessel owners, carriers, and
shipbuilders to amass the private capital necessary to address the
needs of the U.S. maritime industry.
Looking at the pent up demand and unmet needs for upgrading and
modernizing infrastructure at our ports and marine terminals, expanding
eligibility of Capital Construction Funds to apply to zero or near-zero
emission cargo handling equipment, micro-grid and transmissions
technologies, and other expensive unmet needs could attract and provide
substantial private sector capital and multiply the reach and
effectiveness of federal grants awarded through MARAD's Port
Infrastructure Development Program, Small Shipyards Grant Program and
United State Marine Highway Program.
Question 1.a. Would the Biden administration look favorably on this
type of eligibility expansion for the use of CCFs? Is this idea
something the administration is considering?
Answer. An expansion of CCF eligibility would not be of use for
publicly owned ports, which do not pay Federal taxes, and the
availability of U.S.-built zero or near-zero emission cargo handling
equipment that could be acquired with CCF funds is limited. Therefore,
MARAD is not currently considering such an expansion.

Question 1.b. Do you agree with the premise that opening up CCFs to
be used for cargo handling equipment would have a multiplier effect on
the value of the federal investments being made under the Bipartisan
Infrastructure Law and Inflation Reduction Act?
Answer. For many decades acquisition of cargo handling equipment
that is used primarily on a vessel has been an eligible use of CCF
funds. MARAD has not studied whether there would be a multiplier effect
on the value of the federal investments being made under the Bipartisan
Infrastructure Law and Inflation Reduction Act.

Questions from Hon. Aaron Bean to Ann C. Phillips, Rear Admiral, U.S.
Navy (Ret.), and Administrator, Maritime Administration

Question 1. Considering the global pandemic, supply chain
disruptions, historic inflation, and overall costs increases in
material pricing from steel to the hiring and retaining a skilled
workforce, it appears the Vessel Construction Manager (VCM) contracting
model implemented commercial best practices that helped to reduce risk
for the construction and delivery of the first, and follow-on, National
Security Multi-Mission Vessels (NSMV). This appears to be a tremendous
success for MARAD in managing the VCM. I welcome your thoughts on the
success of this ship acquisition program and if MARAD could implement
such a contracting structure for other programs such as the
recapitalization of the Ready Reserve Fleet or other auxiliary logistic
ships?
Answer. It is only recently that the sealift and auxiliary type
vessels were completely integrated into the Department of the Navy's
Long Term Shipbuilding Plan (the 30-year shipbuilding plan). Using a
VCM approach to construct new ships aligns with both MARAD and the
Navy's strategic objectives, to have sufficient ship construction and
repair in the nation for any conflict.
Because these are non-combatant vessels and are frequently crewed
by civilian merchant mariners--both Federal employees and government
contractors--commercial standard construction is an ideal way to build,
operate, and maintain ships with robust marine inspection and
classification society oversight. In fact, the Navy's survivability
instruction specifically states that these vessels are constructed to
commercial marine design standards.
For specific Department of Defense (DoD) stakeholder concerns about
survivability, reliability, and military utility, there is a long
history of including National Defense Features (NDF), resourced through
the National Defense Sealift Fund (NDSF), and other ways, included as
integral capabilities installed during ship construction. This could
include redundant power systems, speed advantage, and communications
equipment, or more modern constructs such as environmental compliance
measures, underwater ambient noise attenuation measures, and resilient
positioning, navigation, and timing arrangements, as well as enhanced
cybersecurity.
The VCM approach worked well because it considered stakeholder
requirements in-depth, achieved consensus on the vessel's required
capabilities, and the planned effort could meet the necessary schedule
within a reasonable program cost model. This approach leveraged
commercial ship operator's expertise to help select a shipyard and
lock-in the firm fixed price for each ship.

Question 2. Recent studies have suggested that the U.S. will need a
tanker security fleet of 100 tankers and cable lay vessels for the Navy
in a contingency. Considering the affordable nature of MARAD managing a
VCM contract structure that implements commercial best practices and
firmed-fixed-price contracts, wouldn't these shipbuilding programs be a
strong fit for this type of acquisition program?
Answer. MARAD works with the U.S. Transportation Command
(USTRANSCOM) which has the responsibility for global bulk fuel
management for the DoD. MARAD is aware of the studies which project a
need for a large number of tank vessels to meet DoD's requirements.
MARAD will continue to support USTRANSCOM's efforts to find reasonable
contingency planning solutions. MARAD is not aware of the Navy's
specific requirements for cable laying vessels. If the DoD has
requirements to build vessels to meet their requirements, MARAD can
certainly share its acquisition approach of using a commercial vessel
construction manager as an effective approach with the Navy.

Question 3. The fiscal year 2023 National Defense Authorization Act
(NDAA) authorized MARAD to utilize a similar contracting structure to
support the acquisition of ten ships for the National Defense Reserve
Fleet (NDRF). How do you envision the Administration may utilize the
VCM contracting structure in the future to support such acquisitions?
Answer. The VCM contract to construct a new ship type was always
limited in scope to the necessary vessels to replace the aging fleet of
training ships. MARAD supported our stakeholders and worked closely
with those stakeholders on a common design, desired capabilities, and
reasonable considerations to keep the ship type affordable. The most
critical consideration was the ability of the ship production line to
achieve the planned schedule.
The use of a VCM in this context would enable the Department and
MARAD to recapitalize about one-fifth of the expected Ready Reserve
Force (RRF) fleet, with newer, more sustainable platforms. With
continued transfer of aging ships from Department of the Navy, the RRF
component of the NDRF will number around 50 vessels by the end of FY25.
Structuring the VCM contract requires that we consider our
strategic interests in shipbuilding capability. For any protracted
conflict with a peer competitor, shipbuilding capacity is essential to
replacement of ships that are lost to combat, wear out from material
failures due to the greater frequency of use for sealift missions, or
require renewal for new technology integration.
Shipbuilding programs work best when the industrial base can
anticipate and plan for shipbuilding lines that avoid the boom-and-bust
cycles or winner-takes-all awards. Any VCM contract would benefit from
an indefinite delivery/indefinite quantity (IDIQ), and multiple award
construct, meaning more than one shipyard could be awarded a contract,
with options for more vessels. During World War II, the United States
had dozens more shipyards which reduced ship production times
dramatically. The VCM approach enables the VCM to work with domestic
shipbuilders and develop proposals for consideration by MARAD.
At the same time, we must invest in and re-establish support
mechanisms that create more opportunity for ship construction
employers, skilled laborers, apprenticeship programs, and ways that
operating companies can afford to construct their vessels in the United
States. Like the Navy's Shipyard Infrastructure Optimization Program
(SIOP), we need the ability to modernize our shipbuilding
infrastructure, without relying solely on an accompanying ship
construction line to fund that cost.

Questions from Hon. Chris Pappas to Ann C. Phillips, Rear Admiral, U.S.
Navy (Ret.), and Administrator, Maritime Administration

Real-time Emissions Monitoring and Decarbonization Efforts
Question 1. MARAD's Fiscal Year 2024 budget request includes $6.5
million to support decarbonization and energy efficiency efforts
through the Maritime Environmental and Technical Assistance (META)
Program. While the request highlights several META projects that the
agency is hoping to focus on, there is no mention of real-time
emissions monitoring technology as a potential solution to decarbonize
the maritime industry.
Real-time emissions monitoring produces actionable data that can be
used to pinpoint the exact return on investment and environmental
impact of operations. The current industry standard of using calculated
estimates is neither accurate nor timely.
How can MARAD support further exploration of the benefits of using
real-time emissions monitoring through META projects?
Answer. We agree that real-time emissions monitoring is helpful to
identify areas for vessel and port operation emissions improvement.
The META program has supported in-situ emissions testing aboard
vessels in the past to verify modeled data for various fuels and
technology applications and continues to do so for current and future
demonstration projects.
META is also engaged in discussion with private sector companies
that offer real-time emissions monitoring software/hardware solutions
to industry; however, MARAD does not promote one company over another.
In addition, a select number of large ports regularly monitor emissions
and have maintained emissions inventories over the years.
Finally, the META program has supported multimodal emissions
modeling tools in the past and is currently working on a greenhouse gas
emissions calculator for vessels that will help the industry baseline
emissions for their operations so they may better understand how to
improve overall fleet performance.

Cable Ship Security Fleet Program and Undersea Communication Cables
Question 2. In the Fiscal Year 2018 National Defense Authorization
Act, Congress took a bold step in creating a new program under the
DOT's Maritime Administration (MARAD) called the Cable Ship Security
Fleet (``CSF'') program. This program is a vital component of the
United States' national security infrastructure and is responsible for
maintaining the security and integrity of undersea communication cables
that are critical for U.S. interests in global communication, economic
stability, and national defense. These cables transmit over 99% of
international data on a 24/7/365 basis, including financial
transactions that the Federal Reserve estimate at $10 trillion per day,
government communications, and military intelligence. A disruption to
these cables would have significant implications, from economic
instability to military vulnerability. The CSF program plays a critical
role in preventing and restoring such disruptions by ensuring the
security and integrity of these cables.
The contractor of this program that installs undersea cables
connecting the world, which is based in my district in Newington, New
Hampshire. They operate American flagged ships with American sailors
and mariners around the world that, when called upon should there be a
declaration of war or state of emergency, would immediately be directed
by the Department of Defense to guard, repair, and replace damaged
undersea cables anywhere in the world.
In 2017, when Congress authorized this program, it modeled the
program after other successful programs, such as MARAD's Maritime
Security Program (MSP). Congress authorized the CSF program at $5
million per year per vessel. Because the number of U.S. mariners and
other personnel needed to run a cable ship, which is actually a
construction vessel, is three times the number of personnel to run a
typical transport ship--as well as due to inflationary factors,
actuaries have analyzed that the stipend for each vessel per year
should be increased from $5 million to $12 million. These numbers have
been reviewed and concurred by MARAD and the U.S. Navy's Military
Sealift Command.
While we understand that MARAD cannot advocate for funding that was
not in the President's Budget request, due to these concerns, as well
as the imperative that the CSF program operators bring to U.S. national
and economic security, it is essential that the CSF program's stipend
is increased.
Though the program is vital to our national security and China
should be nowhere near our undersea communication cables, the CSF
program is overseen by MARAD, and your leadership in supporting our
country's submarine cables is essential for our economic and national
security interests. If Congress were to provide an increase in funding,
can you confirm your support to increasing the cost of $12M per year
per vessel of the Cable Ship Security Fleet program?
Answer. The President's FY24 Budget request does not include
funding for the Cable Ship Security Fleet Program as, unlike similar
US-flag ship stipend programs included in the President's Budget, it
does not meet a DoD need. However, MARAD will implement any changes in
the program in accordance with the law.

Questions from Hon. Mike Ezell to Richard W. Spinrad, Ph.D., Under
Secretary of Commerce for Oceans and Atmosphere, and Administrator,
National Oceanic and Atmospheric Administration

Status of Right Whale Rulemaking and Vessel Speed Restrictions
Question 1. NOAA's National Marine Fisheries Service (NMFS) manages
commercial fisheries and protects threatened and endangered marine
mammal populations, none more so than the North Atlantic right whale
population. Despite NMFS's development and initiation of a take
reduction plan in 1999 and modified subsequently by NMFS, population
survey data from 2020 and 2021 suggests the right whale population has
continued to decline and may now total fewer than 350 individuals.
NMFS initiated a rulemaking process in 2021 to revise its Atlantic
Large Whale Take Reduction Plan and regulations to mitigate mortality
associated with commercial fisheries to stem this ongoing decline.
Furthermore, NMFS proposed changes to its North Atlantic right whale
vessel speed regulations to broaden the spatial boundaries and timing
of seasonal management areas along the U.S. East Coast, and to expand
mandatory speed restrictions of 10 knots or less to include most
vessels 35-65 feet in length. Not surprising, these proposed actions
drew intense opposition from the commercial fishing industry,
recreational boaters, commercial carriers, vessel pilots, and port and
marine terminal operators, especially because of negative impacts to
navigation safety.
Question 1.a. What is the status of NMFS's rulemaking to revise its
regulations to reduce accidental and incidental mortality in the North
Atlantic Right Whale population? Does NMFS have a new timeline for
publishing a final rule?
Answer. NOAA Fisheries anticipates taking final action on the
proposed vessel speed rule in 2023.

Question 1.b. NMFS denied in January of this year a petition filed
by several ocean conservation groups seeking NMFS to utilize its
emergency authority to impose the new vessel speed restrictions. Is
NMFS reevaluating the entire proposed rule or limited parts of it?
Answer. NOAA Fisheries received approximately 90,000 comments on
the proposed action. The agency is in the process of reviewing the
public input received.

Question 1.c. Congress enacted a couple of provisions regarding
North Atlantic Right Whale in Division JJ of the Consolidated
Appropriations Act, 2023 (Pub.L. 117-328), and additional provisions
were enacted in the James M. Inhofe National Defense Authorization Act
for Fiscal Year 2023 (Pub.L. 117-263). What is the status of NMFS
implementation of these new statutory directives? What are the
spillover effects on NMFS ongoing right whale rulemaking?
Answer. Division JJ, Title II, Section 201 of the Consolidated
Appropriations Act of 2023 authorized appropriations to NMFS of up to
$50M (and no less than $40M for innovative fishing gear) in grants for
projects ``designed to reduce the lethal and sub-lethal effects of
human activities on North Atlantic right whales.'' Under Division N of
the bill, $20M was appropriated as `no-year' supplemental funding, and
this $20M can only be used to support the adoption of innovative
fishing gear deployment and fishing techniques to reduce entanglement
risk. As allowed by the Consolidated Appropriations Act of 2023, we
have announced a cooperative agreement with the National Fish and
Wildlife Foundation (NFWF) to implement the grant program and hope to
move these efforts along quickly.
Title CXIII of the National Defense Authorization Act of 2023
(NDAA) directed NOAA to develop a new Vessel Strike Reduction Grant
Program and authorized up to $10M annually from 2023-2028. No new
funding was appropriated for this new authority. To comply with the
requirement to develop the grant program, NOAA is planning to develop
an Assistance Listing Number (ALN), while making it clear that it does
not have any funds available at this time.
Title CXIII of the NDAA also requires NOAA to design and deploy a
near real-time monitoring and mitigation program for threatened or
endangered large cetaceans (Mysticeti, Physeter, or Orcinus). The bill
calls for a pilot program for North Atlantic right whales to be
deployed within 3 years, and a plan for a full program must be
developed within 6 years. The bill authorized appropriations of up to
$5M annually on this program from 2023-2027, but no funds were
appropriated. NMFS already conducts near-real time monitoring of many
marine mammal stocks, including North Atlantic right whales, as
outlined in the pilot study. To comply with this requirement, NMFS will
collate existing near-real time monitoring efforts for North Atlantic
right whales to form a cohesive pilot program.
These new statutory requirements have not affected NMFS' ongoing
North Atlantic right whale vessel strike reduction rulemaking. However,
The Consolidated Appropriations Act of 2023 found that the
implementation of the 2021 Atlantic Large Whale Take Reduction Plan
rule was sufficient under the Endangered Species Act and Marine Mammal
Protection Act to authorize the lobster and Jonah crab fisheries until
2028. NMFS will continue the next round of Plan modifications prior to
2028 for fisheries other than lobster and Jonah crab.

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