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

REVIEW OF FISCAL YEAR 2025 MARITIME TRANSPORTATION BUDGET REQUESTS, PT.
1: MARITIME ADMINISTRATION AND FEDERAL MARITIME COMMISSION

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

(118-55)

HEARING

BEFORE THE

SUBCOMMITTEE ON
COAST GUARD AND MARITIME TRANSPORTATION

OF THE

COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTEENTH CONGRESS

SECOND SESSION

__________

APRIL 30, 2024

__________

Printed for the use of the
Committee on Transportation and Infrastructure

[GRAPHIC(S) 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
56-506 WASHINGTON : 2024

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

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

Subcommittee on Coast Guard and Maritime Transportation

Daniel Webster, Florida, Chairman
Salud O. Carbajal, California, Ranking Member
Brian Babin, Texas John Garamendi, California
Brian J. Mast, Florida Chris Pappas, New Hampshire
Jenniffer Gonzalez-Colon, Jake Auchincloss, Massachusetts
Puerto Rico Mary Sattler Peltola, Alaska
Jefferson Van Drew, New Jersey Hillary J. Scholten, Michigan,
Mike Ezell, Mississippi, Vice Vice Ranking Member
Chairman Rick Larsen, Washington (Ex
Aaron Bean, Florida Officio)
Sam Graves, Missouri (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........................................... 8

WITNESSES

Ann C. Phillips, Rear Admiral, U.S. Navy (Ret.), and
Administrator, Maritime Administration, oral statement......... 10
Prepared statement........................................... 11
Hon. Daniel B. Maffei, Chairman, Federal Maritime Commission,
oral statement................................................. 16
Prepared statement........................................... 18

APPENDIX

Questions to Ann C. Phillips, Rear Admiral, U.S. Navy (Ret.), and
Administrator, Maritime Administration, from Hon. Jenniffer
Gonzalez-Colon................................................. 35

April 26, 2024

SUMMARY OF SUBJECT MATTER

TO: LMembers, Subcommittee on Coast Guard and Maritime
Transportation
FROM: LStaff, Subcommittee on Coast Guard and Maritime
Transportation
RE: LSubcommittee Hearing on ``Review of Fiscal Year
2025 Maritime Transportation Budget Requests, Pt. 1: Maritime
Administration and Federal Maritime Commission''
_______________________________________________________________________

I. PURPOSE

The Subcommittee on Coast Guard and Maritime Transportation
of the Committee on Transportation and Infrastructure will hold
a hearing on Tuesday, April 30, 2024, at 2:00 p.m. ET in 2167
Rayburn House Office Building to receive testimony on the
``Review of Fiscal Year 2025 Maritime Transportation Budget
Requests, Pt. 1: Maritime Administration and Federal Maritime
Commission.'' The Subcommittee will receive testimony from the
Maritime Administrator and the Chairman of the Federal Maritime
Commission (FMC).

II. BACKGROUND

MARITIME ADMINISTRATION

The Maritime Administration (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
(USMMA), 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\ The Committee on Armed Services
has jurisdiction over the Merchant Marine Academy, Federal
assistance to state maritime academies, and the National
defense aspects of the Merchant Marine.\4\ The Committee on
Transportation and Infrastructure has jurisdiction over the
non-National defense aspects of the Merchant Marine.\5\
---------------------------------------------------------------------------
\1\ U.S. Dep't of Transp., A Short History of the Maritime
Administration, available at https://www.maritime.dot.gov/outreach/
history/short-history-maritime-administration.
\2\ U.S. Dep't of Transp., Budget Estimates Fiscal Year 2025:
Maritime Admin., available at https://www.transportation.gov/mission/
budget/marad-cj-fy-2025-estimates [hereinafter DOT FY 2025 Budget
Estimate].
\3\ U.S. Dep't of Transp., Key personnel, available at https://
www.maritime.dot.gov/office-administrator/key-personnel/rear-admiral-
ann-c-phillips-us-navy-ret.
\4\ Rules of the House of Representatives, 118th Cong., Rule X,
clause (1)(c).
\5\ Rules of the House of Representatives, 118th Cong., Rule X,
clause (1)(r).
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FEDERAL MARITIME COMMISSION

FMC was established in 1961 as an independent agency that
regulates ocean-borne transportation in the foreign commerce of
the United States through the administration of the limited
anti-trust exemption provided to ocean carriers.\6\ FMC
protects shippers and carriers from restrictive or unfair
practices of ocean carriers, including foreign-flagged carrier
alliances. FMC also enforces laws related to cruise vessel
financial responsibility to ensure cruise vessel operators have
sufficient resources to pay judgments to passengers for
personal injury or death or for nonperformance of a voyage.\7\
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\6\ 46 U.S.C. Sec. 46101.
\7\ Federal Maritime Commission, Federal Maritime Commission FY
2025 Budget Justification, available at https://www.fmc.gov/wp-content/
uploads/2024/03/FY2025Congressional
BudgetJustification2024.pdf [hereinafter FMC FY 2025 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 the President in March 2021.\8\
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\8\ Federal Maritime Commission, Daniel B. Maffei, available at
https://www.fmc.gov/commissioners/daniel-b-maffei/.
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III. BUDGET FOR THE MARITIME ADMINISTRATION

The President's fiscal year (FY) 2025 budget request for
MARAD compares to the FY 2024 enacted funding levels as shown
here: \9\
---------------------------------------------------------------------------
\9\ See DOT FY 2025 Budget Estimate, supra note 2; Consolidated
Appropriations Act, 2024, Pub. L. No. 118-42, 137 Stat. 112
[hereinafter Consolidated Appropriations Act, 2024].

MARAD FY 2024 Enacted to FY 2025 President's Budget Request Comparison
(Dollars in Thousands)
----------------------------------------------------------------------------------------------------------------
President's FY FY 2024 to
Account FY 2024 2025 Budget FY 2024 to FY FY 2025
Enacted Request 2025 Change ($) Change (%)
----------------------------------------------------------------------------------------------------------------
Operations and Training......................... $ 267,775 $ 285,000 $ 17,225 6.43%
Maritime Environmental and Technical $ 7,500 $ 6,000 $ (1,500) -20%
Assistance Program...........................
United States Marine Highway Program.......... $ 5,000 $ 10,000 $ 5,000 100%
Assistance to Small Shipyards................... $ 8,750 $ 20,000 $ 11,250 128.57%
Ship Disposal Program........................... $ 6,000 $ 6,000 $ -- 0%
Maritime Security Program....................... $ 318,000 $ 318,000 $ -- 0%
Title XI--Administrative Expenses............... $ 3,000 $ 3,700 $ 700 23.33%
Title XI--Loan Guarantees....................... $ 50,586 $ -- $ (50,586) -100%
State Maritime Academy Operations............... $ 125,788 $ 87,000 $ (38,788) -30.84%
Cable Security Fleet Program.................... $ 10,000 $ -- $ (10,000) -100%
Tanker Security Program......................... $ 60,000 $ 60,000 $ -- 0%
Port Infrastructure Development Program......... $ 120,460.124 $ 80,000 $ (40,460.124) -33.59%
---------------------------------------------------------------
Total......................................... $ 970,359.124 $ 859,700 $ (110,659.124) -11.4%
----------------------------------------------------------------------------------------------------------------
Funding levels for the Operations and Training Account and the Port Infrastructure Development Program Account
do not include supplemental appropriations provided by the Infrastructure Investment and Jobs Act (P.L. 117-
58).

The President requests $859.7 million in FY 2025 for the
activities of MARAD, a $110.66 million decrease (11.4 percent)
from the FY 2024 enacted level.\10\
---------------------------------------------------------------------------
\10\ See DOT FY 2025 Budget Estimate, supra note 2; Consolidated
Appropriations Act, 2024, supra note 8.
---------------------------------------------------------------------------
MARAD's FY 2025 budget request does not include funding
for:
LThe Maritime Transportation System Emergency
Relief Program;
LThe Cable Security Fleet Program; or
LTitle XI Loan Guarantees.

OPERATIONS AND TRAINING

The President's FY 2025 budget requests $285 million for
Operations and Training, an increase of $17.225 million (6.43
percent) above the FY 2024 enacted level. Included in this
request is: $191 million for academic operating expenses,
capital improvements, and facility maintenance and repair of
the USMMA; $6 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 $10 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.\11\ The authorization levels for
these programs in the National Defense Authorization Act (NDAA)
for FY 2024 include: $198.5 million for USMMA operations,
capital improvements, and facility maintenance and repair; $15
million for the META program; and $15 million for the United
States Marine Highway Program.\12\ USMMA is under the
jurisdiction of the House Committee on Armed Services. The FY
2025 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 (IIJA) (P.L. 117-58)
that will remain available through the end of FY 2032.\13\
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\11\ DOT FY 2025 Budget Estimate, supra note 2.
\12\ National Defense Authorization Act for Fiscal Year 2024, Pub.
L. No. 118-31, 137 Stat. 136 [hereinafter NDAA FY 2024].
\13\ Infrastructure Investment and Jobs Act, Pub. L. No. 117-58,
135 Stat. 429 [hereinafter IIJA].
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ASSISTANCE TO SMALL SHIPYARDS

The President's FY 2025 budget requests $20 million for the
Assistance to Small Shipyards grant program, an increase of
$11.25 million (128.57 percent) above the FY 2024 enacted
level. The Assistance to Small Shipyards grant program provides
capital assistance to privately-owned shipyards to expand and
modernize shipbuilding capacity, efficiency, and
competitiveness. The program's authorized funding level was $30
million in the FY 2024 NDAA.\14\ The application window for the
FY 2024 round of the Small Shipyard Grant Program closes on May
8, 2024.\15\ Past grant awards can be found here: https://
www.maritime.dot.gov//grants-finances/historical-small-
shipyard-grant-information.
---------------------------------------------------------------------------
\14\ NDAA FY 2024, supra note 12.
\15\ U.S. Dep't of Transp., Maritime Admin., Small Shipyard Grants,
available at https://www.maritime.dot.gov/grants-finances/small-
shipyard-grants#::text=Grant%20applications
%20must%20be%20received,424%20must%20accompany%20all%20applications.
---------------------------------------------------------------------------

SHIP DISPOSAL

The President's FY 2025 budget requests $6 million for the
Ship Disposal Program, which is equal to the FY 2024 enacted
level. The program's authorized funding level was $6.021
million in the FY 2024 NDAA.\16\ 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 unfueled nuclear reactor, components, and equipment is
in progress.\17\ This funding also includes $3 million for Ship
Disposal Program support, including salaries and overhead.\18\
The National Defense Reserve Fleet is under the jurisdiction of
the House Committee on Armed Services.
---------------------------------------------------------------------------
\16\ NDAA FY 2024, supra note 12.
\17\ DOT FY 2025 Budget Estimate, supra note 2.
\18\ Id.
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MARITIME SECURITY PROGRAM

The President's FY 2025 budget requests $318 million for
the Maritime Security Program (MSP), which is equal to the FY
2024 enacted level, to maintain a viable commercial fleet that
can support a United States presence in foreign commerce. The
program's authorized funding level was $318 million in the FY
2024 NDAA.\19\ Under this program, $318 million in direct
payments are allocated among a maximum of 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 it results in $5.3 million per stipend payment
for each of the 60 ships in the program.\20\ 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.\21\ MSP is
under the jurisdiction of the House Committee on Armed
Services.
---------------------------------------------------------------------------
\19\ NDAA FY 2024, supra note 12.
\20\ DOT FY 2025 Budget Estimate, supra note 2.
\21\ 46 U.S.C. Sec. 53104.
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TITLE XI_ADMINISTRATIVE EXPENSES

The President's FY 2025 budget requests $3.7 million for
administrative expenses to carry out the guaranteed loan
program, which is $700,000 above the FY 2024 enacted level.
$3.02 million was authorized for Title XI administrative
expenses in the FY 2024 NDAA.\22\ 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.\23\
---------------------------------------------------------------------------
\22\ NDAA FY 2024, supra note 12.
\23\ DOT FY 2025 Budget Estimate, supra note 2.
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STATE MARITIME ACADEMY OPERATIONS

The President's FY 2025 budget requests $87 million for the
six State Maritime Academies (SMA), which is a decrease of
$38.788 million (30.84 percent) compared to the FY 2024 enacted
level. This request includes: $57.7 million for vessel
management, logistics, and maintenance oversight to support the
integration of National Security Multi-Mission Vessels (NSMV)
into the fleet of SMA training vessels; $17.1 million to
maintain the legacy SMA training vessels; $6 million in direct
payments to the SMAs; $2.4 million for the Student Incentive
Payment Program; and $3.8 million for training ship fuel
assistance. SMA programs were authorized funding levels of
$66.58 million while the NSMV program was authorized $75
million in the FY 2024 NDAA.\24\ Much of the $38.788 million
funding decrease can be attributed to decreases in funding
needed for the NSMV program and legacy SMA training vessel
maintenance. The SMA Operations account provides Federal
assistance to the six SMAs to help educate and train mariners
to support the United States marine transportation system.\25\
These graduates promote commerce in the United States and aid
in the National defense by serving in the Merchant Marine.\26\
SMAs are under the jurisdiction of the House Committee on Armed
Services.
---------------------------------------------------------------------------
\24\ NDAA FY 2024, supra note 12.
\25\ DOT FY 2025 Budget Estimate, supra note 2.
\26\ Id.
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TANKER SECURITY PROGRAM

The President's FY 2025 budget requests $60 million for the
Tanker Security Program (TSP), an amount equal to the FY 2024
enacted level. 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.\27\ 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.\28\ The program will also
sustain a base of United States merchant mariners to support
National security requirements during times of urgent need.\29\
TSP is under the jurisdiction of the House Committee on Armed
Services.
---------------------------------------------------------------------------
\27\ William M. (Mac) Thornberry National Defense Authorization Act
for Fiscal Year 2021, Pub. L. No. 116-283, 134 Stat. 3388.
\28\ DOT FY 2025 Budget Estimate, supra note 2.
\29\ Id.
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PORT INFRASTRUCTURE DEVELOPMENT PROGRAM

The President requests $80 million for the Port
Infrastructure Development Program (PIDP), which is a decrease
of $40.46 million (33.59 percent) below the FY 2024 enacted
level. This request is in addition to the $450 million in
advanced appropriations that will be provided in FY 2025 under
IIJA.\30\ PIDP was authorized at a funding level of $500
million in the FY 2024 NDAA.\31\ 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.\32\ The Notice of
Funding Opportunity (NOFO) for the FY 2024 round of PIDP grants
is currently available, and applications will be accepted
through May 10, 2024. The NOFO can be found here: https://
www.maritime.dot.gov/ports/port-infrastructure-development-
program/pidp-nofo-fy2024. Past grant awards can be found here:
https://www.maritime.dot.gov/PIDPgrants.
---------------------------------------------------------------------------
\30\ IIJA, supra note 13.
\31\ NDAA FY 2024, supra note 12.
\32\ U.S. Dep't of Transp., Maritime Admin., Port Infrastructure
Development Program, available at https://www.maritime.dot.gov/
PIDPgrants#::text=The%20Port%20Infrastructure
%20Development%20Program,around%2C%20or%20within%20a%20port.
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IV. BUDGET FOR FMC

The President's FY 2025 budget request for FMC compares to
the FY 2024 enacted funding level as shown here: \33\
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\33\ See FMC FY 2025 Budget Justification supra note 5;
Consolidated Appropriations Act, 2024 supra note 8.

FMC FY 2024 Enacted to FY 2025 President's Budget Request Comparison
(Dollars in Thousands)
----------------------------------------------------------------------------------------------------------------
President's FY FY 2024 to FY FY 2024 to FY
Account FY 2024 2025 Budget 2025 Change 2025 Change
Enacted Request ($) (%)
----------------------------------------------------------------------------------------------------------------
Operations and Administrative Program............ $ 40,000 $ 48,452 $ 8,452 21.13%
----------------------------------------------------------------------------------------------------------------

The President requests $48.452 million in FY 2025 for the
activities of the FMC, an increase of $8.452 million (21.13
percent) above the FY 2024 enacted level, and a decrease of
$748 thousand (1.52 percent) below the FY 2025 authorized
level.\34\ The request would permit the funding of salaries and
benefits for 167 full-time positions, a two percent projected
pay raise for personnel, rent and building security needs, and
information technology system improvements.\35\ This increase
is to pay for implementation of the significant new
responsibilities imposed on the Commission by Congress in the
Ocean Shipping Reform Act of 2022 (P.L. 117-146).
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\34\ Ocean Shipping Reform Act of 2022, Pub. L. 117-146, 136 Stat.
1272.
\35\ FMC FY 2025 Budget Justification, supra note 5.
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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. This legislation authorizes appropriations for FMC
through FY 2025; sets standards that detention and demurrage
charges must comply with and penalties for charges deemed
inaccurate; allows FMC to set minimum contract standards for
ocean shipping service contracts to protect United States
shippers from actions that leave export cargoes stranded at
United States ports; and increases protections for United
States shippers from retaliation by foreign ocean carriers.\36\
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\36\ Ocean Shipping Reform Act of 2022, Pub. L. No. 117-146, 136
Stat. 1272.
---------------------------------------------------------------------------
The Commission has signaled that all statutorily mandated
requirements are well underway and projected to be complete
before FY 2025.\37\ Since the Act's enactment on June 16, 2022,
FMC has:
---------------------------------------------------------------------------
\37\ FMC FY 2025 Budget Justification, supra note 5.
---------------------------------------------------------------------------
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.\38\
---------------------------------------------------------------------------
\38\ Federal Maritime Commission, Industry Advisory--Interim
Procedures for Submitting ``Charge Complaints'' Under 46 U.S.C. Sec.
41310, (July 14, 2022), available at https://www.fmc.gov/industry-
advisory-interim-procedures-for-submitting-charge-complaints/.
---------------------------------------------------------------------------
LProvided industry guidance on the applicability
of self-executing provisions of the law to common carriers,
including compliance with demurrage and detention billing
practices.\39\
---------------------------------------------------------------------------
\39\ Federal Maritime Commission, 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/.
---------------------------------------------------------------------------
LReviewed public comments and submitted to the
Office of Management and Budget (OMB) materials detailing a new
data collection system for containerized vessel imports and
exports to and from the United States.\40\ FMC has also updated
existing Information Technology to ease the submission and
processing of required data and anticipates OMB approval of the
new system in FY 2024 with data collection beginning soon
after.\41\
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\40\ FMC FY 2025 Budget Justification, supra note 5.
\41\ Id.
---------------------------------------------------------------------------
LReviewed public comments on a proposed rule
requiring inclusion of specific information on demurrage and
detention invoices and is working to finalize the rule in FY
2024.\42\
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\42\ Id.
---------------------------------------------------------------------------
LIssued a supplemental proposed rule that would
define unreasonable refusal to deal or negotiate with respect
to vessel space accommodations provided by an ocean common
carrier.\43\
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\43\ Id.
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LEstablished the Bureau of Enforcement,
Investigations, and Compliance for improved effectiveness of
the Commission's enforcement and compliance activities.\44\
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\44\ Federal Maritime Commission, New FMC Enforcement Structure,
(July 29, 2022) available at https://www.fmc.gov/new-fmc-enforcement-
structure/.
---------------------------------------------------------------------------
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.\45\
---------------------------------------------------------------------------
\45\ Nat'l 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.
---------------------------------------------------------------------------
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)''.\46\
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\46\ Federal Maritime Commission Fact Finding Investigation 29
Final Report, Effects of the COVID-19 Pandemic on the U.S. Internat'l
Ocean Supply Chain: Stakeholder Engagement and Possible Violations of
46 U.S.C. Sec. 41102(c), (2022), available at https://www2.fmc.gov/
readingroom/docs/FFno29/Fact%20Finding%2029%20Final%20Report.pdf/.
---------------------------------------------------------------------------

V. WITNESSES

Rear Admiral Ann C. Phillips, Administrator,
Maritime Administration
The Honorable Daniel B. Maffei, Chairman, Federal
Maritime Commission

REVIEW OF FISCAL YEAR 2025 MARITIME TRANSPORTATION BUDGET REQUESTS, PT.
1: MARITIME ADMINISTRATION AND FEDERAL MARITIME COMMISSION

----------

TUESDAY, APRIL 30, 2024

House of Representatives,
Subcommittee on Coast Guard and
Maritime Transportation,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to call, at 2:10 p.m. in
room 2167 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 the committee hearing.
Without objection, show that ordered.
I ask for unanimous consent that the Members not on the
subcommittee be permitted to sit in the subcommittee at today's
hearing and ask questions.
Without objection, show that ordered.
As a reminder, Members, to insert a document into the
record, here is where you send it: email it to
DocumentsTI@mail.house.gov.
OK. 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. We meet today to review the fiscal
year 2025 budget requests for the Federal maritime
transportation programs administered by the Maritime
Administration and the Federal Maritime Commission.
Welcome to our guests, Rear Admiral Ann Phillips,
Administrator of the Maritime Administration, and the Honorable
Dan Maffei, Chairman of the Federal Maritime Commission.
First, I would like to thank both of your agencies for
their efforts and coordination with other relevant agencies to
ensure the continued operation of maritime commerce in the
aftermath of the Francis Scott Key Bridge collapse in
Baltimore. While recovery efforts continue, it is important
that we also maintain stable trade flows. So, we thank you for
your assistance to the maritime industry. Thank you both for
doing that.
MARAD is the promotional agency within the Department of
Transportation responsible for fostering, promoting, and
developing the maritime industry of the United States. The
President's fiscal year 2025 budget request for MARAD includes
$859.7 million for the administration of programs that
strengthen our national security and economy, train our future
mariner workforce, and build a more efficient maritime
transportation system.
Among these programs is the Port Infrastructure Development
Program, known as PIDP, a discretionary grant program to fund
infrastructure projects that improve the safety, efficiency,
and reliability of the movement of goods at coastal seaports,
inland river ports, and Great Lakes ports. The President's
budget request includes $80 million for this program, which is
in addition to the $450 million in advanced appropriations the
program receives annually through fiscal year 2026 in the
Infrastructure Investment and Jobs Act.
PIDP has grown exponentially since it was first
appropriated funds in fiscal year 2019. Unfortunately, this
growth comes with administrative challenges that severely
impact the effectiveness of the program. These include long
delays for grant recipients in getting grant contracts signed,
which slows the obligation of funds and leaves project scopes
vulnerable to inflationary pressures. These delays harm the
program's ability to improve our ports. I look forward to
discussing ways we can streamline this process to ensure that
the program is carried out as efficiently as possible.
MARAD also oversees the Deepwater Port Licensing Program,
which provides permits for the construction of ports in waters
off the shore of the United States. While the prolonged
timeline for processing these permits is an ongoing issue, I am
encouraged by MARAD's recent approval of an application for
construction of a deepwater port off the coast of Texas.
However, I remain concerned that there are several other
applications waiting for a decision that are far beyond the
356-day statutory timeline for review. I hope to work with
MARAD to ensure all applications are processed in a timely
fashion as required by law, and I continue to work with my
colleagues to correct the long-term administration of this
important program.
Lastly, the subcommittee remains interested in the study
currently underway that will inform the national maritime
strategy. I hope to hear how MARAD is working with the
federally funded research and development center conducting the
study to ensure its serves as a helpful tool in the needed
revitalization of our maritime industry.
Additionally, we have the Chairman of the Federal Maritime
Commission, or FMC, with us today to discuss the state of the
ocean shipping industry and their ongoing work implementing 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 President's fiscal year 2025 budget request includes $48.5
million to fund the salaries and capital needs of FMC.
The supply chain crisis caused by COVID-19 dramatically
increased ocean shipping costs while congesting ports and
impairing maritime trade flows. In response, Congress enacted
and tasked FMC with implementing OSRA to help address many of
the challenges experienced by United States exporters. FMC has
worked diligently since the enactment of OSRA to implement its
enhanced authorities. I look forward to hearing from Chairman
Maffei today on the status of FMC's efforts.
Thank you both for appearing here.
[Mr. Webster of Florida's prepared statement follows:]

Prepared Statement of Hon. Daniel Webster of Florida, Chairman,
Subcommittee on Coast Guard and Maritime Transportation
We meet today to review the fiscal year 2025 budget requests for
federal maritime transportation programs administered by the Maritime
Administration and the Federal Maritime Commission. Welcome to our
witnesses--Rear Admiral Ann Phillips, Administrator of the Maritime
Administration, and the Honorable Dan Maffei, Chairman of the Federal
Maritime Commission.
First, I'd like to thank both of your agencies for your efforts and
coordination with other relevant agencies to ensure the continued
operation of maritime commerce in the aftermath of the Francis Scott
Key Bridge collapse in Baltimore. While recovery efforts continue, it
is important that we also maintain stable trade flows, so thank you for
your assistance to the maritime industry.
MARAD is the promotional agency within the Department of
Transportation responsible for fostering, promoting, and developing the
maritime industry of the United States. The President's fiscal year
2025 budget request for MARAD includes $859.7 million for the
administration of programs that strengthen our national security and
economy, train our future mariner workforce, and build a more efficient
marine transportation system.
Among these programs is the Port Infrastructure Development Program
(PIDP), a discretionary grant program to fund infrastructure projects
that improve the safety, efficiency, and reliability of the movement of
goods at coastal seaports, inland river ports, and Great Lakes ports.
The President's budget request includes $80 million for this program,
which is in addition to the $450 million in advanced appropriations the
program receives annually through fiscal year 2026 in the
Infrastructure Investment and Jobs Act.
PIDP has grown exponentially since it was first appropriated funds
in fiscal year 2019. Unfortunately, this growth comes with
administrative challenges that severely impact the effectiveness of the
program. This includes long delays for grant recipients in getting
grant contracts signed, which slows the obligation of funds and leaves
project scopes vulnerable to inflationary pressures. These delays harm
the program's ability to improve our ports. I look forward to
discussing ways we can streamline this process to ensure the program is
carried out as efficiently as possible.
MARAD also oversees the Deepwater Port Licensing Program, which
provides permits for the construction of ports in waters off the coast
of the United States. While the prolonged timeline for processing these
permits is an ongoing issue, I am encouraged by MARAD's recent approval
of an application for construction of a deepwater port off the coast of
Texas.
However, I remain concerned that there are several other
applications waiting for a decision that are far beyond the 356-day
statutory timeline for review. I hope to work with MARAD to ensure all
applications are processed in a timely fashion as required by law, and
I will continue to work with my colleagues to correct the long-term
administration of this important program.
Lastly, the Subcommittee remains interested in the study currently
underway that will inform the National Maritime Strategy. I hope to
hear how MARAD is working with the Federally Funded Research and
Development Center conducting the study to ensure it serves as a
helpful tool in the needed revitalization of our maritime industry.
Additionally, we have the Chairman of the Federal Maritime
Commission (FMC) with us today to discuss the state of the ocean
shipping industry and their ongoing work implementing the Ocean
Shipping Reform Act of 2022 (OSRA). FMC is an independent agency
responsible for the regulation of ocean-borne transportation in the
foreign commerce of the United States. The President's fiscal year 2025
budget request includes $48.5 million to fund the salaries and capital
needs of FMC.
The supply chain crisis caused by COVID-19 dramatically increased
ocean shipping costs while congesting ports and impairing maritime
trade flows. In response, Congress enacted and tasked FMC with
implementing OSRA to help address many of the challenges experienced by
United States exporters. FMC has worked diligently since the enactment
of OSRA to implement its enhanced authorities, and I look forward to
hearing from Chairman Maffei today on the status of FMC's efforts.

Mr. Webster of Florida. I recognize the ranking member, Mr.
Carbajal, for an opening statement for 5 minutes.
Mr. Carbajal. Thank you, Mr. Chair.
I will yield to our ranking member of our T&I Committee.
But before I do that, I see some young people that have come to
our hearing. I see a lot of ``Members of Congress to be'' in
the future over there in the corner. I wanted to recognize them
before I turn it over to our Ranking Member Larsen.
Thank you, Mr. Chair.

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

Mr. Larsen of Washington. Thank you, Chair, for scheduling
today's hearing to review the fiscal year 2025 budget request
of the Maritime Administration and the FMC.
Together, these agencies promote the U.S. maritime industry
and protect consumers against unfair shipping practices.
Ocean shipping is dominated by foreign shipping companies
who transport over 98 percent of imports and exports. Between
pandemic-related supply chain issues and ongoing international
conflicts, we have learned the importance of a vibrant U.S.
maritime industry, and now is the time to strengthen and
support that industry.
The President's fiscal year 2025 budget request includes,
though, an 11-percent decrease in discretionary funds for the
Maritime Administration and a 21-percent increase for the
Federal Maritime Commission.
While the funding request for the FMC will ensure fairness
for American shippers and consumers, I am concerned MARAD will
not have the resources it needs to support a robust supply
chain.
Investment in the U.S. maritime industry is long overdue.
For years, we have faced a mariner shortage as workers retire
and the industry struggles to appeal to younger Americans. To
attract new workers, we must strengthen education and training,
as well as ensure good wages and a robust job market for those
entering the industry.
I am disappointed that the President's budget includes a
35-percent cut in funding for the Port Infrastructure
Development Program. While there remains robust funding for the
program as a result of advanced appropriations included in the
Bipartisan Infrastructure Law, it was never the intent of
Congress for that funding to supplant regular appropriations.
Infrastructure investments in seaports provide
opportunities to bolster our economy, strengthen the supply
chain, create and sustain jobs, and enhance our international
competitiveness.
In my own district, the Swinomish Port Authority--a small
port and one of the few Tribal-run port authorities--recently
received an $11 million grant to fund a master plan for the
port and to begin the design and engineering of a new
commercial pier. So, we can see the local and regional impacts
of this funding is immeasurable.
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 robust funding must be provided for
small ports through the PIDP.
I am pleased that the President's budget request includes
$20 million for the Small Shipyard Grant Program. I have
several small shipyards in my district, and I have seen how
these grants can be used to create jobs and bolster the local
and national economy.
I would be remiss if I did not bring up Admiral Phillips'
ongoing work to address the sexual assault and sexual
harassment at the U.S. Merchant Marine Academy, the State
maritime academies, and across the commercial industry. Sexual
assault and harassment have no place in society, and every
mariner deserves respect and deserves to feel safe at sea.
I want to commend Admiral Phillips and MARAD for their work
in awarding the Bipartisan Infrastructure Law funding as well,
and I look forward to seeing what projects are selected this
fall.
And, finally, in the last Congress, this committee passed
the Ocean Shipping Reform Act of 2022. And under Chairman
Maffei's leadership--good to see you again, Chairman Maffei--
the Federal Maritime Commission has been quick to implement new
requirements for ocean carriers and 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, and I am
heartened to see that the President understands this and
included in his budget request a 21-percent increase for the
FMC.
Since passage of the Ocean Shipping Reform Act of 2022,
container prices have fallen, vessel backlogs have eased, and
the FMC has revamped the reporting process, making it easier
for shippers to file complaints.
Currently, the FMC is monitoring the shipping fees and
surcharges associated with shipping disruptions in the Red Sea
and drought conditions in the Panama Canal.
Congress has asked a lot of the FMC, and the President's
budget request recognizes the need for increased funding.
I look forward to engaging our witnesses on both MARAD's
and FMC's ongoing work to strengthen our supply chain and to
grow the U.S. commercial maritime fleet.
And with that, thank you, and I yield back.
[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 today's hearing to review
the Fiscal Year 2025 budget requests of the Maritime Administration and
the Federal Maritime Commission.
Together, these agencies promote the United States maritime
industry and protect consumers against unfair shipping practices.
Ocean shipping is dominated by foreign shipping companies who
transport over 98 percent of imports and exports. Between pandemic
related supply chain issues and ongoing international conflicts, we
have learned the importance of a vibrant U.S. maritime industry. Now is
the time to strengthen and support that industry.
The President's fiscal year 2025 budget request includes an 11
percent decrease in discretionary funds for the Maritime Administration
and a 21 percent increase for the Federal Maritime Commission.
While the funding request for the FMC will ensure fairness for
American shippers and consumers, I'm concerned that MARAD will not have
the resources it needs to ensure a robust supply chain.
Investment in the U.S. maritime industry is long overdue. For
years, we have faced a mariner shortage as workers retire and the
industry struggles to appeal to younger Americans. To attract new
workers, we must strengthen education and training as well as ensure
good wages and a robust job market for those entering the industry.
I am disappointed that the President's budget includes a 35 percent
cut in funding for the Port Infrastructure Development Program. While
there remains robust funding for the program as the result of advanced
appropriations included in the Bipartisan Infrastructure Law, it was
never the intent of Congress for that funding to supplant regular
appropriations.
Infrastructure investments in seaports provide opportunities to
bolster our economy, strengthen the supply chain, create and sustain
jobs and enhance our international competitiveness.
In my own district, the Swinomish Port Authority--a small port and
one of the few Tribal-run port authorities--received an $11 million
grant to fund a master plan for the port and begin the design and
engineering of a new commercial pier. The local and regional impact of
this project is immeasurable.
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 robust funding must be provided for small ports through the Port
Infrastructure Development Program.
I am pleased that the President's budget request includes $20
million for the Small Shipyard Grant Program. I have several small
shipyards in my district, and I have seen how these grants can be used
to create jobs and bolster both the local and national economy.
I would be remiss if I did not bring up Admiral Phillips' ongoing
work to address sexual assault and sexual harassment at the United
States Merchant Marine Academy, the State Maritime Academies and across
the commercial industry. Sexual assault and harassment have no place in
society. Every mariner deserves to be respected and deserves to feel
safe out at sea.
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.
Finally, 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 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 21
percent increase for the Federal Maritime Commission.
Since passage of the Ocean Shipping Reform Act of 2022, container
prices have fallen, vessel backlogs have eased, and the FMC has
revamped the reporting process making it easier for shippers to file
complaints.
Currently, the FMC is monitoring shipping fees and surcharges
associated with the shipping disruptions in the Red Sea and drought
conditions in the Panama Canal.
Congress has asked a lot of the FMC and the President's budget
request recognizes the need for increased funding.
I look forward to engaging our witnesses on MARAD and FMC's ongoing
work to strengthen our supply chain and grow the United States
commercial maritime fleet.
Thank you, and I yield back.
Mr. Webster of Florida. Mr. Carbajal.

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

Mr. Carbajal. Thank you, Chair Webster, for scheduling
today's hearing on the review of the fiscal year 2025 budget
request for the Maritime Administration, MARAD, and the Federal
Maritime Commission, FMC.
I look forward to hearing from Chair Maffei and
Administrator Phillips on the President's budget request and
their agencies' priorities for the upcoming year.
Stability in international shipping is integral to a strong
economy. During the COVID-19 pandemic, weaknesses in our supply
chain were amplified as landside port congestion and unfair
shipping practices by foreign ocean carriers led to backlogs
and price increases. This, in turn, contributed, no doubt, to
inflation.
Tasked with ensuring fairness in international shipping,
the FMC has key authorities which allow it to safeguard
transparent and equitable maritime commerce.
The reforms in the bipartisan Ocean Shipping Reform Act,
which passed out of this subcommittee last Congress before
becoming law, strengthened the FMC's authority to investigate
unfair ocean shipping carrier fees and facilitate the efficient
movement of cargo through U.S. ports.
In the 2 years since passage of the Ocean Shipping Reform
Act, the FMC has worked expeditiously to utilize their new
authorities, establish new regulations around detention and
demurrage billing practices, and as a result, has made
international shipping more fair for American shippers.
It is important that the FMC is sufficiently funded so that
it can properly continue to carry out these reforms which
benefit American businesses and consumers alike. That is why I
am happy to see an $8 million increase in the President's
budget request for the FMC.
Beyond a fairer shipping process, the U.S. economy depends
upon a robust maritime industry. I fear that without continued
support for our U.S.-flag fleet, fair shipping practices will
only get us so far. The U.S. merchant marine is shrinking, and
availability of American merchant mariners is dwindling. This
puts our sealift capabilities, national defense, and economy in
jeopardy.
More and more we rely on foreign ocean carriers to
transport our goods. It is MARAD's responsibility to promote a
vibrant maritime industry. I expect to hear today how we can
revitalize the American maritime industry.
Unfortunately, the fiscal year 2024 appropriations resulted
in a substantial cut to MARAD discretionary programs meant to
support the industry. I worry about the precedent this has
created as the fiscal year 2025 funding request follows this
downward spiral or trend.
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 $6 million for
META, which is a $1.5 million decrease over last year's budget.
This is disappointing, to say the least.
Decreases over 2 years are not the trend we want to see.
This program supports the research, development, and deployment
of new technology in the maritime industry, particularly low-
or zero-carbon technologies.
These technologies are crucial for reducing harmful
emissions and protecting our public health and the environment,
especially for port communities, where air pollution is
statistically worse. We must continue to invest in these
programs that foster innovation not only to address climate
change but also to make the United States a leader in this new
technology.
The Port Infrastructure Development Program, referred to as
PIDP, also supports decarbonization projects, which help reduce
emissions and build a more resilient, reliable transportation
system. Yet, despite the importance of this program, we saw a
substantial decrease in fiscal year 2024 funding, and the
fiscal year 2025 budget request follows suit.
I am heartened to see an increase in funding for the U.S.
Merchant Marine Academy. Administrator Phillips has done an
excellent job continuing to pursue systemic change to the
culture that has resulted in sexual violence and harassment 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 your leadership efforts to make the
maritime industry a safe and desirable workplace for all.
Thank you to our witnesses and attendees for your
participation today. I look forward to a robust discussion
about how the 2025 budget request can support investments in
improving the U.S. Marine Transportation System.
Mr. Chair, I yield back.
[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, Chairman Webster, for scheduling today's hearing on the
review of the Fiscal Year 2025 Budget Request for the Maritime
Administration and the Federal Maritime Commission.
I look forward to hearing from Chairman Maffei and Administrator
Phillips on the President's budget request and their agency priorities
for the upcoming year.
Stability in international shipping is integral to a strong
economy.
During the COVID-19 pandemic, weaknesses in our supply chain were
amplified as landside port congestion and unfair shipping practices by
foreign ocean carriers led to backlogs and price increases. This, in
turn, contributed to inflation.
Tasked with ensuring fairness in international shipping, the FMC
has key authorities which allow it to safeguard transparent and
equitable maritime commerce.
The reforms in the bipartisan Ocean Shipping Reform Act, which
passed out of this Subcommittee last Congress before becoming law,
strengthened the FMC's authority to investigate unfair ocean shipping
carrier fees and facilitate the efficient movement of cargo through
U.S. ports.
In the two years since passage of the Ocean Shipping Reform Act,
the FMC has worked expeditiously to utilize their new authorities,
established new regulations around detention and demurrage billing
practices, and as a result, have made international shipping more fair
for American shippers.
It is important that the FMC is sufficiently funded so that it can
properly continue to carry out these reforms which benefit American
businesses and consumers alike. That is why I am happy to see an $8
million increase in the President's budget request for the FMC.
Beyond a fair shipping process, the U.S. economy depends upon a
robust maritime industry. I fear that without continued support for our
U.S. flag fleet, fair shipping practices will only get us so far. The
U.S. merchant marine is shrinking, and availability of American
merchant mariners is dwindling. This puts our sealift capabilities,
national defense, and economy in jeopardy.
More and more we rely on foreign ocean carriers to transport our
goods. It is MARAD's responsibility to promote a vibrant maritime
industry. I expect to hear today how we can revitalize the American
maritime industry.
Unfortunately, the fiscal year 2024 appropriations resulted in a
substantial cut to MARAD discretionary programs meant to support the
industry. I worry about the precedent this has created as the FY25
funding request follows this downward trend.
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 $6 million for META, which
is a $1.5 million decrease over last year's budget. This is
disappointing.
Decreases over two years are not the trend we want to see. This
program supports the research, development, and deployment of new
technology in the maritime industry, particularly low or zero-carbon
technologies.
These technologies are crucial for reducing harmful emissions and
protecting our public health and the environment, especially for port
communities, where air pollution is statistically worse. We must
continue to invest in programs that foster innovation not only to
address climate change but also to make the United States a leader in
this new technology.
The Port Infrastructure Development Program, referred to as PIDP,
also supports decarbonization projects, which help reduce emissions and
build a more resilient, reliable marine transportation system. Yet,
despite the importance of this program, we saw a substantial decrease
in FY24 funding and the FY25 budget request follows suit.
I am heartened to see an increase in funding for the U.S. Merchant
Marine Academy. Administrator Phillips has done an excellent job
continuing to pursue systemic change to the culture that has resulted
in sexual violence and harassment 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 your leadership
efforts to make the maritime industry a safe and desirable workplace
for all.
Thank you to our witnesses and attendees for their participation
today. I look forward to a robust discussion about how the 2025 budget
request can support investments in improving the U.S. marine
transportation system.

Mr. Webster of Florida. I know both of our witnesses are
fully aware of the lighting system we have. Green means go,
yellow means slow down, and red means time to wrap it up.
So, with that, I ask unanimous consent that the witnesses'
full statements be included in the record.
Without objection, show that ordered.
I ask unanimous consent that the record of today's hearing
remain open for such time as the witnesses have provided
answers to questions that may be submitted to them in writing.
Without objection, show that ordered.
I ask unanimous consent that the record remain open for 15
days for any additional comments or information submitted by
its Members or the witnesses to be included in the record of
today's hearing.
Without objection, show that ordered.
So, as the written testimony has been made a part of the
record, the committee asks that you limit your remarks to 5
minutes.
And 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, Mr. Chair.
Good afternoon, Chairman Graves, Ranking Member Larsen,
Chairman Webster, and 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. I am honored to testify before you
today and being joined by Federal Maritime Commission Chair Dan
Maffei.
Before I go further, allow me to express our condolences on
behalf of the Department of Transportation to the families of
those who lost their lives in March when the Francis Scott Key
Bridge collapsed.
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 budget for fiscal
year 2025 requests $859.7 million for MARAD.
It includes the Port Infrastructure Development Program,
requesting $80 million for PIDP, to enhance port
infrastructure, stimulate economic growth, improve safety,
address climate change and environmental justice, and
strengthen supply chains. The Bipartisan Infrastructure Law
also provides advanced appropriations for this program in 2025.
Last year, MARAD awarded more than $653 million in PIDP
grants and awards to 41 projects in 25 States and 1 Territory.
This year, thanks again to the BIL and funding provided in
the 2024 appropriations measure, $500 million in funding is
available for PIDP grants. An additional $72 million in fiscal
year 2024 appropriations has already been congressionally
directed to 22 projects. Applications for this program close
May 10 this year.
The 2025 budget requests $10 million for the United States
Marine Highway Program to support marine supply chains and
offer cost-effective transportation for U.S. shippers and
manufacturers. MARAD awarded nearly $12 million in marine
highway projects in 2023. In 2024, $5 million in funding is
available.
The 2025 budget also requests $20 million for MARAD's Small
Shipyard Grants to improve infrastructure at small U.S.
shipyards, enhancing their efficiency and competitiveness for
commercial ship construction and maintenance; $8.5 million is
available in 2024. Applications close May 8.
Within MARAD's fiscal year 2025 budget request, $6 million
will support the Maritime Environmental and Technical
Assistance Program, and $3.7 million supports the Federal Ship
Financing Program, Title XI. When combined with the fiscal year
2024 appropriation for Title XI of $53 million, this will
support $1.3 billion in outstanding loan guarantees.
The President's fiscal year 2025 budget also requests $191
million to support the U.S. Merchant Marine Academy and enable
MARAD to continue to address the urgent and longstanding
challenges at the Academy.
This includes support for 975 midshipmen, 293 faculty and
staff, funding for facility maintenance and for 21 new
positions to implement congressionally directed NAPA
recommendations, as well as address facility maintenance and
repair needs and academic needs and aid in implementing the
EMBARC program.
MARAD continues to expand EMBARC participation. Today,
there are 21 commercial operators enrolled which operate over
180 vessels. We are working to develop a proposed EMBARC rule
pursuant to the fiscal year 2023 NDAA.
Also included in the 2025 budget for the Merchant Marine
Academy is $86 million for capital improvements, including
barracks renovations, Wiley Hall renovations for classrooms and
offices, and Delano Hall, the dining hall and galley
renovations, in addition to rehabilitation of roads, sidewalks,
and parking lots, and addressing longstanding deferred
maintenance.
The 2025 budget also requests $87 million to support the
six State maritime academies covering school ship maintenance
and repair, Student Incentive Program, direct SMA support, fuel
assistance, and NSMV pre- and post-delivery support.
Four NSMVs remain under construction. The Empire State was
delivered last fall. The second ship, Patriot State, will be
delivered this summer to Massachusetts Maritime Academy. The
State of Maine was launched earlier this month.
Our Government-owned sealift fleet is supported by
privately owned, commercially operated U.S.-flag vessels in the
Maritime Security and Tanker Security Programs.
The fiscal year 2025 budget requests the full authorization
of $318 million for MSP, which is the heart of sustainment
sealift.
MARAD has also fully implemented the 10-vessel Tanker
Security Program and is requesting $60 million for that
program.
The budget in 2025 requests $974 million from DoD for MARAD
to acquire, upgrade, and maintain vessels in the NDRF and RRF.
These funds ensure the fleet remains ready, reliable, and
responsive, using commercial ship managers and crewed by U.S.
mariners.
In addition, MARAD continues to collaborate with
stakeholders to address the mariner shortage and recently
convened, on March 20, the first NDAA-directed Maritime
Workforce Working Group. Our next meeting is May 8.
These programs reflect MARAD's priorities supported by the
President's budget.
Thank you for the opportunity to testify today. I look
forward to your questions.
[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) 2025
budget, and how this request will enable MARAD to continue to advance
key priorities in support of our economic and national security.
Before I go further, allow me to express on behalf of the
Department of Transportation (DOT) our condolences to the families of
those who lost their lives when the Francis Scott Key Bridge collapsed.
I also want to express thanks to the United States Coast Guard for
spearheading the Federal response at the Port of Baltimore, and to all
of our Federal partners--especially my DOT colleagues at MARAD and the
Federal Highway Administration, as well as Maryland state and local
officials for their ongoing response to the Baltimore bridge collapse.
This event highlights how important our maritime transportation
system is to the Nation's economic and national security. The collapse
of the Key Bridge, COVID, attacks in the Red Sea, and recent weather
disasters serve as notable reminders of the need for flexibility and
redundancy to support the transportation segments of our supply chain.
As we overcome this tragedy, we demonstrate once again our great
resolve and ability to respond as a Nation.
FY 2025 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 2025 Budget request of $859.7
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, expand our efforts to
address climate change, and advance environmental justice for port
communities. In FY 2025, $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 $80 million to support PIDP, which would bring
the total amount of funding available in FY 2025 to $530 million and
enable us to continue modernizing our ports to help reduce the cost of
moving goods from ships to shelves and from American farmers and
factories to end-users at home and abroad.
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 National Defense
Authorization Act for Fiscal Year 2024 (FY 2024 NDAA).
Economic and Climate Sustainability Investments
Last year, MARAD awarded more than $653 million in PIDP grants.
This total included the third tranche of $450 million in funding
provided by the BIL, approximately $212 million in FY 2023
appropriations, and unexpended funding from a prior PIDP round. The
2023 PIDP awards funded 41 projects in 25 states and one territory.
More than $100 million in the funding awarded last year focuses on port
electrification to improve air quality, while nearly $202 million of
the awarded funding supports projects that will advance offshore wind
farm developments. These efforts are helping to advance the important
objectives of the BIL, and the vital goal of President Biden's
Justice40 Initiative--that 40 percent of the overall benefits of
certain covered Federal investments flow to disadvantaged communities
that are marginalized by underinvestment and overburdened by pollution.
This year thanks again to the BIL and the funding provided in the
FY 2024 appropriations measure, $500 million in funding is available
for PIDP grants. An additional $72 million in FY2024 appropriations has
already been congressionally directed to 22 projects. The Notice of
Funding Opportunity (NOFO) for this program is open and applications
are due by May 10, 2024.
The FY 2025 Budget also requests $10 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. In 2023, MARAD awarded nearly $12 million
in marine highway projects. The funding awarded last year will support
8 projects across the nation--and nearly all the funding is supporting
projects in disadvantaged communities or Federally designated community
development zones. In FY 2024, $5 million in funding is available, and
MARAD will begin accepting applications soon.
The FY 2025 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 negative
climate impacts and adapts technologies that reduce shipyard power
consumption.
Within MARAD's FY 2025 Budget request, $6 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 2025 funding will be focused on
efforts related to decarbonization of the maritime transportation
sector.
The FY 2025 Budget request for MARAD includes $3.7 million for the
Federal Ship Financing Program (Title XI) to provide the salaries and
overhead support to manage the loan portfolio, currently at $1.3
billion in outstanding loan guarantees. This program is designed to
manage loans that help 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.
The President's FY 2025 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,
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.
The President's FY 2025 Budget requests $191 million to support
academic operating expenses for approximately 975 cadets and 293
faculty and support staff, including expanded support for the extensive
facility maintenance and repair needs of the Academy's aging physical
plant. It includes 21 new positions to support National Academy of
Public Administration (NAPA) recommendations and address various
efficiency and effectiveness initiatives. The budget also seeks funding
for the Every Mariner Builds a Respectful Culture (EMBARC) program
implementation. 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.
Today, there are 21 commercial operators enrolled in EMBARC;
together, they operate more than 180 vessels. All vessel operators that
are required to carry USMMA cadets under 46 U.S.C. Sec. 51307(b)--
i.e., operators with vessels enrolled in the MSP, TSP, and the CSP--
have enrolled in EMBARC, and MARAD is conducting both scheduled and
unscheduled vessel assessments, at a rate greater than the 10 percent
required under 46 U.S.C. Sec. 51322, to ensure compliance with EMBARC
standards.
In addition, USMMA's Sexual Assault Prevention and Response Office
(SAPR) is working to build midshipman awareness and eliminate obstacles
to reporting sexual assault and violence. MARAD is working as quickly
as possible to develop an EMBARC rule pursuant to the authority
provided by the FY 2023 NDAA. Additionally, the USMMA has established
an Advisory Council, as required by 46 U.S.C. Sec. 51323, tasked with
providing actionable recommendations on improving the Academy.
Importantly, the Council includes experts in sexual assault and sexual
harassment prevention and response.
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 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.
In early March, MARAD provided the Committees on Appropriations and
made public USMMA's FY 2023 Capital Improvement Plan (CIP). The FY 2023
CIP explains significant changes made to active and out-year projects
since USMMA's last CIP report, which was provided in late 2022. 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 cadets
and supporting the Academy's academic mission.
The USMMA is in the process of developing a deferred maintenance
plan that will focus on high impact maintenance actions that are both
wide-spread and that most-directly impact the safety and quality of
life of cadets and staff. The priorities include campus HVAC systems,
plumbing, roofing and repair of building facades. In November 2023, the
Academy started work on developing a Facilities Master Plan which will
identify its priorities under its Capital Improvement Program. This
plan, which will cover the next several years and will affect the
entire campus, is expected to be in effect by the end of the year.
Eighty-six million dollars in capital improvement funds are
requested in FY 2025 that would enable us to initiate a barracks
renovation program as well as renovations of Wiley and Delano Halls.
Funding would also enable us to rehabilitate roads, sidewalks, and
parking lots.
The FY 2025 Budget request also includes $87 million to provide
support to the six SMAs. This request includes funding for school ship
maintenance and repair, the Student Incentive Program (SIP), direct SMA
support, fuel assistance, and National Security Multi-Mission Vessel
(NSMV) pre-delivery and post-delivery support. MARAD has cooperative
agreements in place with three SMAs, with Maine Maritime Academy being
the latest as of January 31, 2024. The amount of $58.3 million has been
obligated for eligible pier upgrades necessary to enable heavy weather
mooring of the NSMVs.
Funding would also meet maintenance and repair costs to maintain
the legacy school ships and continue our direct support to the SMAs.
There are currently four NSMVs under construction with one ship--
the EMPIRE STATE--delivered last fall. The second ship--the PATRIOT
STATE--has an anticipated delivery to Massachusetts Maritime Academy in
July of this year.
The FY 2024 NDAA also increases the authorized amount of SIP
payments from $32,000 to $64,000, providing additional financial
support to cadets who enroll in the Strategic Sealift Midshipman
program.
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 78 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 Maritime Security Program (MSP) and the Tanker Security Program
(TSP).
The FY 2025 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 at home and abroad 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 jobs in the maritime industry.
MARAD has fully implemented the TSP program, awarding ten operating
agreements to four different U.S. companies between April 20, 2023, and
December 17, 2023. One of the program participants voluntarily withdrew
one of their vessels from the program after accepting a long-term-
charter to the U.S. Government, making the vessel ineligible to
participate in the TSP. MARAD is in the process of filling that vacancy
and anticipates filling the slot this summer. The FY 2025 Budget
request for the TSP program is $60 million, for up to 10 enrolled
tanker vessels. The TSP will strengthen the U.S. supply chain and
improve the movement of liquid fuel products while creating good paying
jobs. Moreover, these ships will ensure DOD has assured access to
critically needed product tankers capable of loading, transporting, and
storing on-station bulk petroleum refined products to support national
economic security. We are preparing to deliver the requested report on
Opportunities and Challenges to Grow the U.S.-Flag Tanker Fleet in
International Trade to Congress soon.
MARAD is partnering with our stakeholders, both Federal and non-
Federal, to work to identify strategies to help address the mariner
shortage and ensure their readiness. As part of MARAD's effort to meet
a FY 2024 NDAA requirement to establish a Maritime Workforce Working
Group, MARAD held its first meeting on March 20, 2024. Consistent with
the FY2024 NDAA the group will help identify the number of licensed and
unlicensed mariners, make recommendations to improve United States
merchant mariner recruitment and retention, and evaluate potential gaps
or surpluses of credentialed merchant mariners required to maintain and
operate the RRF. In addition, on April 16, 2024, MARAD hosted a Mariner
Work-Life Balance Symposium which brought together stakeholders from
across the maritime industry to discuss issues related to work-life
balance and recommendations for improvement that will boost mariner
recruitment and retention.
We also note that the existing U.S. Coast Guard (USCG) licensing
system (Merchant Mariner Licensing and Documentation system) relies on
dated 1980s technology with relatively no querying capability on the
number and availability of mariners with various credentials essential
to meet our economic and national security needs. We fully support the
USCG's ongoing efforts to modernize the system to enable efficient
issuance of mariner credentials and provide enhanced querying
capabilities.
MARAD is also focused on supporting our U.S.-flagged fleet through
opportunities to carry cargo. As I said in 2022 testimony before the
Coast Guard and Maritime Transportation Subcommittee, put simply,
without cargoes, ships will leave the U.S. flag and 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, we have again
written to all Federal departments and agencies explaining how MARAD
can help them ensure they meet their obligations under cargo preference
laws and regulations. To date, 60 percent of these Federal agencies
have responded, with some providing outstanding bills of lading. MARAD
is currently preparing the annual report.
MARAD is also working diligently on revisions to cargo preference
regulations as required by the FY 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, last year, 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 and provide
opportunity to diversify the types of vessels available to civilian
agencies to carry cargoes. In return the vessels would be required to
remain under U.S. flag for 3 years. This proposal became law as part of
the FY 2024 NDAA but will only become effective January 1, 2030.
The President's FY 2025 Budget requests $974 million from DOD
budgetary authority for MARAD to acquire, upgrade, and maintain vessels
in the NDRF and RRF. These funds enable MARAD to maintain the fleet in
a ready, reliable, and responsive condition, using a contracted
workforce of commercial ship managers and a small cadre of shipboard
caretaker crewmembers. Sustaining sufficient resources for maintenance
and recapitalization will ensure MARAD's ability 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. MARAD is now the sole surge sealift provider. Our RRF
ships 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 48 vessels, with an
average age of more than 45 years, maintained in a reduced operating
status--ready to sail within five days of activation. The fleet will
grow to 51 vessels after the planned transfer of additional surge
sealift and prepositioning vessels from the Military Sealift Command is
complete by the end of FY 2025.
I note that four RRF vessels are currently berthed at the Port of
Baltimore. While the restriction of movement for these vessels is
affected by the Key Bridge collapse, crew on two of the vessels are
currently conducting regulatory or casualty repairs and neither of the
remaining ships has been activated. One ship normally berthed in
Baltimore will remain in Hampton Roads, VA, while crew is conducting
required regulatory repairs until harbor clearance operations are
completed.
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 now nearly
50 years old or even older. Continued focus on safety, material
condition, and regulatory compliance has 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
with the limited authorities provided. MARAD is making use of the
authority Congress provided to purchase vessels for RRF through a
contracted Vessel Acquisition Manager (VAM). This innovative process
allowed MARAD to efficiently purchase the first two ships in FY 2022.
In Q2 FY 2023, the VAM completed purchase of three more extremely
capable ships including one that is 10 and two that are 11 years old.
These ships were purchased for approximately $90 million per ship.
The reflagging process for these vessels is continuing along the
stringent Alternate Compliance Program regulatory framework and the
ships will be ready-for-tasking in Q3 2024. MARAD continues to work
with our VAM and has identified several potential ships for purchase
and engaging owners of the best four additional ships for purchase to
reach the Congressionally limited number of 9 used ships.
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.
MARAD thanks Congress for appropriating $12 million in FY 2024 funds to
initiate the vessel designs.
Conclusion
These programs represent MARAD's priorities. 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. I appreciate that.
And now we have Chairman Maffei. You are recognized for 5
minutes for your testimony.

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

Mr. Maffei. Thank you very much, Chairman Webster, Ranking
Member Carbajal, full committee Ranking Member Larsen,
distinguished members of the subcommittee.
America's importers and exporters must adapt to rapidly
changing circumstances around the world. They deserve a Federal
Maritime Commission that also adapts to the challenges
affecting cost, availability, reliability, and competitiveness
in ocean shipping.
While I am Chair of the FMC, I am fortunate to share
decisionmaking with four other very devoted Commissioners,
including Lou Sola and Max Vekich, who are here today sitting
behind me.
I want to thank all of my colleagues on the Commission,
along with the dedicated professional staff, and the clear
message from both the President and both parties in Congress.
Because of these, the FMC has rapidly changed course to meet
pressing ocean shipping policy challenges.
Informed by our experience during the COVID pandemic and
empowered by the Ocean Shipping Reform Act of 2022, or OSRA as
the chairman mentioned, the Commission is more active than ever
and increasingly serving as a venue that shippers turn to for
assistance.
Since June 2022, our consumer affairs office has responded
to roughly 2,400 requests for assistance and continues to serve
dozens of callers every week. The number of complaints filed
with the FMC already this year is on pace to exceed last year,
and matters brought before an FMC administrative law judge are
triple what they were in 2019.
Even 2 years after the end of the COVID-linked supply chain
problems, the demand for FMC services remains high among
American importers and exporters, a sign that they value the
FMC's ability to resolve their concerns and have a positive
impact on their businesses.
When it comes to enforcing rules on cargo carriers, the FMC
has gone from slow steaming to full speed ahead. In a short
time, the FMC has built a robust enforcement capability,
pursuing cases against even the most well-resourced potential
violators.
Our enforcement program has gone from assessing virtually
no penalties in fiscal year 2020 and fiscal year 2021 to
assessing $2 million in penalties in fiscal year 2022 and
nearly $2.9 million in fiscal year 2023. So far in fiscal year
2024, we are on pace to either meet or exceed last year's
total. Foreign-based ocean vessel operators are paying the bulk
of these penalties.
In addition to enhanced enforcement, the FMC has
implemented or made significant progress with all of OSRA's
mandates. This includes building on the Incentive Principle
interpretative rule.
This rule, authored by Commissioner Rebecca Dye and put
into effect in 2020, established that a detention or a
demurrage charge must help promote the efficient movement of
cargo and/or equipment, and it can't be for any other purpose.
In February, the FMC unanimously approved a final bill on
detention and demurrage practices. This rule sets requirements
for how common carriers and marine terminal operators must bill
these charges and provides clarity on who can be billed, within
what timeframe, and the process for disputing bills. The rule
is slated to take effect on May 28.
Now, I would note here that the World Shipping Council, the
group that represents the largest foreign-based shipping
carriers, has appealed this new rule, contending that it
exceeds the FMC's authority. I maintain this tough but fair
rule is fully in line with the letter of the law as well as the
intent of Congress in OSRA.
The FMC is working hard to complete the three other
required rulemakings. I anticipate there will be an
announcement on Unreasonable Refusal to Deal within the next
few months and one on Shipping Exchange Registries by the fall.
The OSRA Charge Complaints process continues to be a
popular avenue for shippers to seek expedited relief from
improper bills and invoices. Since June 2022, almost $2.5
million in charges and fees have been waived or refunded by
common carriers.
The FMC has largely delivered on the investment started
when OSRA was signed almost 2 years ago. That said, we still
have much to do in order to complete the changes and to ensure
American importers and exporters have ongoing access to
reliable, efficient, and affordable ocean transportation.
The Commission's budget request for fiscal year 2025 is
just less than the same amount that OSRA 2022 authorized. The
FMC has established priorities and built plans based on OSRA.
Funding at less than that will hamper our capacity to meet
existing expectations.
Recent events, such as those in the Suez Canal, the Panama
Canal, and the Port of Baltimore are illustrative of the type
of uncertainties that hit global shipping on an ongoing basis.
Geopolitical events, shifting carrier alliances, new
international regulations, and changes in trade policy and
supply chain sourcing will continue to affect oceanborne
commerce in unpredictable ways.
A strong and engaged Federal Maritime Commission is vital
for ensuring some stability for American businesses and
consumers in a world filled with uncertainty.
Thank you again for allowing me to testify along with
Admiral Phillips, and I look forward to addressing your
questions.
[Mr. Maffei's prepared statement follows:]

Prepared Statement of Hon. Daniel B. Maffei, Chairman, Federal Maritime
Commission
Good afternoon, Chairman Webster and Ranking Member Carbajal. I
appreciate having this opportunity to appear before you today to
discuss the Fiscal Year 2025 budget request of the Federal Maritime
Commission.
America's importers and exporters are having to adapt to rapidly
changing circumstances around the world that impact ocean shipping.
They deserve a Federal Maritime Commission that is also able to adapt
as rapidly as possible to the varying challenges that can affect the
cost, availability, reliability, and competitiveness of ocean shipping
available at container ports throughout the United States.
As many of you know and some have probably experienced, changing
the capacity, priorities, and culture of a government agency is not
always as simple or as quick as we would like. Nonetheless, thanks to
five devoted Commissioners, a professional staff truly dedicated to
helping American shippers, and a clear message from Congress and from
the President, the Federal Maritime Commission in just a few years has
changed course to actively address many of the pressing issues in ocean
shipping that became so evident during the COVID-related supply chain
crisis.
Informed by our experiences during the pandemic and empowered by
the Ocean Shipping Reform Act of 2022 (OSRA 2022), the Commission is
more active than ever, leaning into unfolding events, and increasingly
serving as a venue that shippers turn to for assistance.
Our consumer affairs team remains busy, averaging more than 100
contacts monthly from individuals seeking help. Since June 2022, our
Office of Consumer Affairs and Dispute Resolution Services (CADRS) has
responded to approximately 2,400 requests for assistance, the great
majority related to issues with commercial cargo shipments. CADRS is
often successful in resolving matters quickly and amicably, and in a
way that helps the parties avoid costly formal legal proceedings.
Matters before the Office of the Administrative Law Judges are
triple what they were in 2019, the last full year prior to the global
spread of COVID-19. Almost 100 cases have been filed at the Commission
since June 2022, which is an unmatched level of litigation in the
agency's recent history. Nor is there any indication that the pace of
work is lessening. In assessing year-to-date statistics, the Commission
is on pace to meet or exceed the number of complaints it received last
year. That even two years after the end of the COVID-linked supply
chain disruption, the Commission remains a venue for shippers to bring
matters for assistance and adjudication demonstrates that the need for,
and value of, FMC services is strong. This suggests that one legacy of
COVID is that the public and the industry are more aware of the FMC,
and that American shippers view the FMC as the agency that can resolve
their concerns and have a positive impact on their businesses.
The Commission continues to build a robust enforcement capability
with the wherewithal to conduct complex investigations, encourage
compliance for regulated entities, and prosecute cases against even the
most well-resourced potential violators. Effective enforcement creates
meaningful deterrence to illegal behavior and assures the compliant
businesses that we will not allow their competition to get ahead by
breaking the rules.
Our Bureau of Enforcement, Investigations, and Compliance (BEIC) is
already rigorously reviewing the conduct of, and holding accountable,
regulated entities. We have gone from assessing virtually no penalties
in 2020 and 2021 to assessing $2.0 million in penalties in fiscal year
2022, which followed on with $2.8 million in penalties assessed in
fiscal year 2023. Our enforcement program continues to investigate many
cases against foreign-based ocean carriers and other large companies
that are accused of violating the law, and BEIC now is seeking
penalties in the millions, and sometimes tens of millions of dollars.
We expect to see to see at least a similar level of penalties assessed
before the end of fiscal year 2024.
The Bureau of Trade Analysis and the Bureau of Certification and
Licensing (BCL) do critical work in ensuring marketplace integrity
through oversight, analysis, and compliance of regulated entities. The
efforts of these two bureaus are invaluable to protecting the public
from unfair and deceptive practices, as well as guaranteeing a
competitive and reliable international ocean transportation supply
system that supports the U.S. economy. BCL also does important work to
ensure cruise companies operate with the appropriate consumer
protections in the event they fail to provide the service they promise.
The Commission's ability to better serve American importers,
exporters, and consumers was greatly enhanced by the additional
authorities and resources contained in the Ocean Shipping Reform Act of
2022. As we approach the second anniversary of the legislation's
enactment, I can report that the Commission has implemented, or made
significant progress toward completing nearly all the mandates
contained in the statute.
We continue to elaborate on the Incentive Principle interpretive
rule in the manner prescribed by Congress. The Incentive Principle
rule--authored by Commissioner Rebecca Dye and approved unanimously by
the FMC in Spring 2020--established that for a detention or demurrage
charge to be reasonable, it must help promote the efficient movement of
cargo and/or equipment and not be for some other purpose.
In February, a Final Rule on Demurrage and Detention Billing
Practices was published following a unanimous vote of the five
commissioners. The rule establishes requirements for how common
carriers and marine terminal operators must bill for demurrage and
detention charges and provides clarity on who can be billed, within
what timeframe, and specifies the process for disputing bills. The rule
is scheduled to take effect on May 28, 2024.
As you know, OSRA 2022 mandates three other rulemakings:
Unreasonable Refusal to Deal with Respect to Vessel Space
Accommodations; Shipping Exchange Registries; and Unfair or Unjustly
Discriminatory Methods. The Commission's staff is working hard on
completing these remaining rulemaking requirements. I anticipate there
will be an announcement on Unreasonable Refusal to Deal within the next
few months and one on Shipping Exchange Registries by the end of the
calendar year. Parts of the rulemaking on Unfair and Unjustly
Discriminatory Methods--specifically the provision prohibiting carriers
from unreasonably denying space accommodations to U.S. exports--will be
incorporated into the rulemaking on Unreasonable Refusal to Deal. The
remaining areas not included in that rule will be addressed in a
separate rulemaking.
The OSRA 2022 Charge Complaints process continues to be a popular
avenue for shippers to seek relief from inappropriate bills and
invoices. Since June 2022, almost $2.5 million in charges or fees have
been waived or refunded by common carriers. This total only reflects
results from Charge Complaints filed at the Federal Maritime
Commission. It does not include any fees or charges waived or refunded
by either direct shipper to common carrier communications or through
the efforts of an independent third party, such as an attorney outside
of those filed with the FMC. In short, this provision of OSRA 2022 is
having a consequential impact by giving shippers an expedited, simple
process to address an erroneous invoice.
In recent months, the Commission has repeatedly demonstrated an
ability to be dynamic in responding to events impacting shipping and
supply chains. The Commission held a hearing on February 7, 2024,
examining how events in the Red Sea and Gulf of Aden are affecting
maritime trade and U.S.-based companies. The Commission issued two
industry advisories putting regulated entities on notice that
notwithstanding disruptions to regular vessel deployments in the Middle
East or the inability to call Baltimore, all statutes and regulations
administered by the FMC remain in effect. Common carriers and marine
terminal operators were specifically reminded about the Commission's
reasonableness standard for assessing demurrage and detention bills.
Further, the Commission is using its Audit Program to engage the
nine largest-by-volume ocean carriers calling the Port of Baltimore to
remind them of their responsibilities and obligations in adjusting
their operations. We are scrupulously examining fees and surcharges
implemented following the disruptions that have taken place resulting
from the events in Baltimore, Panama, and the Gulf of Aden and Red Sea
region to ensure they comport with the law. Our Office of Consumer
Affairs and Dispute Resolution Services is prepared to help informally
resolve issues shippers are having resulting from these disruptions.
Our Bureau of Enforcement, Investigations, and Compliance will pursue
any substantive allegations of misconduct, and the Bureau of Trade
Analysis continues with its review of carrier conduct and marketplace
conditions.
Global trade on our oceans continues to grow. Nonetheless, shifting
ocean carrier alliances, international emissions regulations, changes
in the geography of supply chain sourcing, and geo-political
developments all will affect oceanborne commerce. A capable, well-
resourced Federal Maritime Commission is necessary to guarantee U.S.
companies and consumers have access to reliable, efficient, and
affordable ocean transportation services for both import and export
trades.
That said, there is no desire--at least not on my part--to put the
Commission on a path where it seeks continuous growth and additional
jurisdiction. The Commission has had to grow to meet the vision of
Congress and be a potent regulator of international ocean
transportation. That growth was reflected in OSRA 2022, and the FMC's
budget requests have followed the budget and staff trajectories
included in that legislation. If the Congress does decide to give us
additional qualitative responsibilities, I only ask that you give us
the additional resources to fulfill those new demands or understand
when implementation is delayed or when other vital capabilities are
cut.
The Commission is requesting $48,452,000 to fund its Fiscal Year
2025 operations. This is just less than the sum authorized by the Ocean
Shipping Reform Act of 2022. This is $4,732,000 more than the
$43,720,000 we requested--and was authorized by OSRA 2022--to fund our
Fiscal Year 2024 operations. It is $8,452,000 more than what was
provided by the Consolidated Appropriations Act 2024.
As is usual with an FMC budget request, the great majority of our
funds will pay for two categories of costs--personnel and rent. These
two expenses combined will cost the Commission $40 million in FY 2025.
As also is typical, costs in both categories continue to rise each
fiscal year. The Commission has budgeted $35,871,000 for salary and
benefits, which is a $5 million increase from FY 2024. Similarly, the
rent and building security costs are rising by $1,341,000 to a total of
$4,076,000 for the coming fiscal year.
The Commission has also budgeted $5,877,000 for information
technology operations and for modernization projects. Substantial
upgrades to the Commission systems and networks are necessary to defend
against malicious cyber activities and enable the Commission's systems
to serve the public in the way that business is conducted today.
The Commission has established priorities and built plans based on
authorizations contained in OSRA 2022. The Commission will carry out
its duties to the best of its ability with whatever sum it is
appropriated, but not being funded at authorized levels means that
difficult decisions about resource allocation must be made. The
Commission had planned programs and activities based on authorizations
contained in OSRA 2022. Appropriations at less than these levels will
necessitate changing objectives and goals. Progress in expanding the
capabilities of our offices most involved in protecting the public and
overseeing regulated entities will be threatened.
The Federal Maritime Commission has delivered on the investment
made in it two years ago. That said, we still have much to do to fully
execute on the changes we started and successfully position the agency
to continue its mission in the long run. Now is the time to continue
laying the foundation for the inevitable future needs of Americans who
rely on ocean-linked supply chains. As events in Baltimore, Panama, and
the Red Sea have shown, the world of ocean shipping can change in an
instant in disruptive ways. A strong and engaged FMC is a vital
component of ensuring some stability for American importers and
exporters in a world filled with uncertainty.
Thank you again for this opportunity to appear before you, for your
attention, and for any questions you might have about my testimony or
the work of the Federal Maritime Commission.

Mr. Webster of Florida. Thank you so much.
Thank you to both of you for your testimony.
We will now turn to questions. I recognize myself for 5
minutes for questions.
Admiral Phillips, the Port Infrastructure Development
Program has grown exponentially in size and scope over the last
several years. Unfortunately, the effectiveness of the program
is being restricted by long delays to get contracts in place,
which means funds can't be obligated, construction can't begin,
and inflation impacts the project cost.
What is MARAD doing to address these inefficiencies in the
grant award process?
Admiral Phillips. Sir, thank you for that question.
As you are aware, we have quite a number of grants underway
right now, and we are excited about them because of the
generational change they offer.
We are working very diligently within our system to bring
our timeline down so that we can ensure grant applicants get
their money as soon as possible.
Our current average time to work through both a NEPA
process, the environmental assessment process, and the grant
agreement process, which is basically scope, schedule,
performance, is 20 months. We would like to get that down to
12.
We continue to work very closely with applicants to help
provide them additional capacity. In advance of the application
and NOFO process each year, we offer a series of online events
for applicants to be able to spend time with us and understand
what is coming.
And then, once we receive and award applicants, we meet
with each applicant individually to begin the process to
understand where they are in their process and how they can
move forward.
I would also like to acknowledge that we have opportunities
within the PIDP program under new authority from 2022 to do
what we call pre-award authority, which allows applicants to
draw down from their matching funds to begin to start pre-award
processes. They can use this money for planning, for hiring
additional staff, for doing engineering and design work.
We have found that of the applicants that take advantage of
this, and about 58 percent of the grants since 2022 have been
able to do that, that we have much more success in moving them
quickly through the program.
I would add, finally, that the record is 6 months in
getting to grant agreement signing and NEPA completion, and we
have had a number of applicants be able to complete it within 1
year. So, it is possible to do it, and we continue to work with
applicants to help work them through the process.
Thank you, sir.
Mr. Webster of Florida. Thank you.
And please keep me informed as you work through the award
process.
And also, Admiral Phillips, the Deepwater Port Licensing
Program continues to have several applications that are far
beyond the statutory timeline for review of 356 days.
As the President's budget request for fiscal year 2025
includes four new full-time positions for the deepwater port
program office, will this be sufficient to help MARAD process
the backlog of applications, or are there other challenges that
we need to check into?
Admiral Phillips. Sir, thank you for that question. And
thank you for considering the request for four additional
positions. My staff of four are actually here with me here
today. And so, certainly those four additional billets will
help move along the applications that we have right now.
But to remind, we work with over 20 different Federal and
State departments and agencies to complete this process,
particularly in the initial application process. We work
closely with the Coast Guard under the environmental review
requirements, which they manage predominantly, until we get to
the record of decision, which is MARAD's responsibility.
So, it is quite a coordination effort, and we certainly
appreciate and understand the law and the timeline and want to
be able to follow the law, as we have said we will do, and move
these projects forward.
So, as you commented, sir, this SPOT license was issued
this year. I would note that is the first license issued for a
new application since the early 1980s, other than the LOOP
application which shifted from an import to an export facility
in 2012.
So, there is quite a bit of additional interest in this
program now, and we appreciate your interest in it and your
willingness to consider our 2025 request.
Mr. Webster of Florida. Thank you. And I would like to work
with you as more decisions are issued this year.
Chairman Maffei, stakeholders have expressed concern with
the FMC extending its jurisdiction beyond regulated entities,
such as ocean common carriers or maritime terminal operators,
to other groups that regulated entities have contracts with.
Do you believe your jurisdiction extends to the assets and
operations of these other groups whenever a regulated entity
enters into a contract with them, do you think?
Mr. Maffei. Thank you for the question, Mr. Chairman.
Our statute makes it clear that the three types of
regulated entities are common carriers that own vessels,
nonvessel operating common carriers, and marine terminal
operators.
That said, though, our jurisdiction goes along with the box
from the water. So, as services are provided that involve that
box and the shipper's ability, the American shipper's ability
to interact with that box, then we have jurisdiction over those
three kinds of companies and the way that they may make their
deals and what is presented to the ocean shipper.
So, no, our jurisdiction is very circumscribed, but it does
include anything that involves what those three categories of
folks do while they are doing ocean shipping.
Mr. Webster of Florida. Thank you so much.
I yield back. My time is gone.
Mr. Carbajal.
Mr. Carbajal. Thank you, Mr. Chair.
Admiral Phillips, I would like to commend you on your
ongoing commitment to ensuring a safe environment for all
mariners on board ships.
The culture of industry is changing. We have seen
measurable improvements on board vessels, and the Coast Guard
has taken action to remove and prosecute offenders. However,
new requirements resulting from EMBARC and the Safer Seas Act
only apply to U.S.-flag vessels.
Could you detail how safety standards, including those
related to sexual assault and sexual harassment, do not apply
to foreign mariners on board flag-of-convenience vessels?
Admiral Phillips. Congressman, thank you for that question.
Of course, MARAD's focus is U.S.-flag vessels, and we are
most concerned with the safety of our midshipmen sailing as
cadets at sea and the safety of U.S. mariners, and in that
context, we work very closely with the Coast Guard.
From the context of how foreign-flag vessels are managed,
that is outside of my purview and outside of the law, and I
commend Congress for considering that and thinking of it.
And I would also add that many other foreign nations have
considered such circumstances with regard to vessels that call
their ports that may or not be flagged in their country and
have implemented opportunities to ensure that those mariners
are treated fairly and paid fairly and are also subject to a
safe environment.
So, there are perhaps some foreign models that could be
followed if that is an item of Congress' interest.
Mr. Carbajal. Does the IMO have a role here and has anybody
engaged the IMO on this issue?
Admiral Phillips. Yes, sir. The IMO does have a role. And,
of course, State is lead for IMO with Coast Guard as the agency
involved in most of the--in fact, all of the committees
involving mariner safety, mariner welfare, and including
decarbonization and other requirements for vessels at sea.
And so, certainly there is a great interest in the IMO in
mariner safety, and I would defer to the Coast Guard for the
specific details there.
We do know they had a session just this summer where they
looked at mariner safety broadly across the industry and also
looked at sexual assault prevention and response and other
kinds of harassment and challenges that mariners are
experiencing at sea in an international context.
Mr. Carbajal. Thank you.
Admiral Phillips, as you say in your testimony, without
cargo, ships will leave the U.S. fleet. While I appreciate
MARAD's education efforts, the law is very clear: MARAD is the
final authority in ensuring compliance with cargo preference.
It is unacceptable that 40 percent of agencies have failed to
provide you with bills of lading. Cargo preference is the
shipping version of Buy America.
When should Congress expect to see the final rule on cargo
preference that ensures MARAD's oversight and enforcement
authorities?
Admiral Phillips. Sir, thank you for that question.
We continue to work on a final rule and understand
Congress' intent and interest there and certainly acknowledge
that we are behind the due date of 270 days from the 2023 NDAA.
I would add in the context of MARAD being able to receive
bills of lading, it would be helpful to receive them in
advance, and we only receive them after the fact and have to
chase them down. As you well know, that is a challenge.
And, of course, an easy way to make cargo preference more
direct to implement would be to go to 100 percent cargo
preference, notwithstanding that there are agencies who find
challenges in that, which we certainly understand.
And in that context I would add, we thank Congress for
waiving the 3-year wait requirement to flag in and have access
to preference cargoes and would say that implementing that
sooner than 2030 would be helpful as well in this regard.
It would give more access to preferred cargo vessel-
carrying capacity for those agencies which are challenged when
they have to ship things in an emergent manner, like USAID and
USDA.
Thank you, sir.
Mr. Carbajal. Thank you.
Chairman Maffei, in your statement you mentioned the FMC's
work to proactively contact carriers during shipping
disruptions like those associated with the Red Sea, the Port of
Baltimore, and the Panama Canal.
How is that work important for shippers, particularly small
shippers who may find it more burdensome to negotiate contracts
and challenge fees?
Mr. Maffei. Thank you for the question, Mr. Carbajal.
What we have is called an audit program. It essentially is
a way to have a continuing dialogue with ocean carriers and to
continue to ask them. Now, they do have to volunteer for the
program, but all of them have.
It is important that we question them on a number of
things. The particular issue--and we found this out in having a
hearing of our own--with these charges was the lack of
transparency.
A lot of the charges, it wasn't so much that the shipper
said, well, there is no cost here. They understood there was an
additional cost, for instance, if you couldn't go through the
Suez Canal, but what they didn't understand is what this new
fund was going for.
And so, we have been encouraging them to have a better
relationship, better transparency. This is particularly
important for the small shipper, as you mentioned. The larger
shippers, they have that bargaining power that they can just
demand those answers, but the smaller shipper really does not.
So, that is what we are doing. It has been somewhat
successful, though I do think that it is a matter still for
discussion about whether all of these charges are completely
kosher, for lack of a better term, and we certainly will
investigate any allegations that they are not being used for
their express purpose; that is, involving that particular
maritime contingency.
Mr. Carbajal. Thank you, Mr. Chair. I am out of time. I
yield back.
Mr. Webster of Florida. Thank you.
Representative Larsen, you are recognized for 5 minutes--
well, yes, Ezell.
Mr. Larsen of Washington. All right. You are the chair.
Mr. Webster of Florida. OK. Mr. Ezell, you are recognized.
Mr. Ezell. Thank you, Mr. Chair.
Admiral Phillips, thank you for being here today, and both
of you, appreciate your commitment.
Admiral Phillips, as you know, my gulf coast colleague and
I, Congressman Troy Carter and I, introduced legislation to
expand MARAD's Capital Construction Fund Program. This
expansion would give marine terminal operators access to
deposit funds into the tax-deferred CCF account for purchases
of cargo-handling equipment.
When Secretary Buttigieg testified before the full T&I
Committee last year, he said if Congress authorized our CCF
expansion bill, he would fully implement it. I was very pleased
to hear the Department's support.
Can you explain how programs such as CCF complement
programs such as PIDP and work to leverage private investment
into our U.S. maritime transportation system?
Admiral Phillips. Yes, sir. Thank you for that question.
The Capital Construction Fund Program, as you point out, is
a fund into which vessel owners or operators may deposit
profits based on the profits generated by that vessel, and
then, after a period of time, remove those profits from that
fund, which actually is an IRS-operated program. We just manage
it, and then we pass the information to the IRS.
They can take that money back out and they can use it to
either build a new vessel or improve a vessel, improve
maintenance, et cetera.
So, it has been a very successful program, and with the
changes in the 2023 NDAA, it has become even more successful
because it now includes a much wider range of vessels that may
participate and there are no geographic restrictions. So, we
have seen a tremendous uptick in that particular program's
functionality.
It serves really to support the maritime industry and the
shipbuilding industry broadly in the country. Its connection to
port infrastructure development would be really loosely tied to
increased capacity in our shipbuilding industry to support
moving the goods that come and go from port infrastructure.
There is not a direct tie there.
That said, I am aware of your legislation, of course, and
understand your intent in trying to find ways for terminal
operators to purchase equipment and take advantage of such a
tax-deferred fund.
It would be interesting to try to implement it in exactly
the same way as the fund is currently administered. However, we
are happy to work with your staff to try to better understand
the objectives and find a way forward.
Thank you, sir.
Mr. Ezell. Thank you.
The State of Mississippi is home to Taylor Machine Works,
the United States largest manufacturer of wheeled cargo
handling equipment.
I believe securing America's supply chain is a matter of
national security. Can you explain to us why it is important to
support efforts to rebuild the manufacturing industry,
especially as it relates to supply chains in the U.S. maritime
industry?
Admiral, I am sorry.
Admiral Phillips. Yes, sir. Thank you.
So, as you are well aware, in the context of port
infrastructure development and the Small Shipyard Grant
Program, we are very interested in port cargo handling
equipment that is built in this country.
There are manufacturers, and we are happy to understand
where they are and who they are and grateful for the kinds of
things that they do.
And I would add in that context, we are working now with
the American Association of Port Authorities on a survey that
is surveying terminal operators around the country to
understand what kinds of port equipment they need, and then
surveying equipment manufacturers to understand what kinds of
equipment they make to try to understand where we can build
capacity and increase manufacturing and good-paying jobs in
this country.
So, we thank you for your interest there, sir, and are
excited to get on with the study with AAPA so that we can help
continue to build industry opportunities in this country for
port infrastructure.
Thank you.
Mr. Ezell. Thank you.
Also, Admiral, as we work towards fiscal year 2025
appropriations, I want to discuss the Small Shipyard Grant
Program, which received a large funding cut in the fiscal year
2024 appropriations bill.
Considering the current state of U.S. shipbuilding, can you
discuss the need to fund this program at or above the level
included in the President's budget request?
Admiral Phillips. Yes, sir, certainly.
So, there is $20 million in the President's budget request
for 2025, but as you state, this is a very significant program.
It is always oversubscribed. Typically for $20 million in
grants available, we will receive more than $80 million in
requests, funding requests. And I would expect this year we
will easily exceed the funds available and probably by a factor
of three or four.
So, there is certainly a need, a consistent need over time,
and we see tremendous benefit from this program. Not only does
it provide additional capacity for small shipyards, but it
generally improves their employment as well.
Mr. Ezell. Thank you for that.
And thank you both again.
And, Mr. Chairman, I yield back.
Mr. Webster of Florida. Thank you.
Now the ranking member, Mr. Larsen, you are recognized.
Mr. Larsen of Washington. Thanks, Mr. Chair.
The first question is for Chairman Maffei, but I apologize
for not recognizing the third greatest export out of Aberdeen,
Washington: Commissioner Max Vekich.
Of course, number one and number two happen to be two-
thirds of the members of Nirvana, so, you will always be number
three in our hearts, Max. Good to see you.
Chairman Maffei, a couple weeks ago, I had the opportunity
to go up to Baltimore to see the bridge collapse and the
ongoing recovery and salvage efforts. It is really hard to
fathom the magnitude of the incident without seeing it in
person, and I know the chairman went as well. A few others have
gone up there to see it.
Can you talk about the effect this incident is having on
supply chains and the importance of--well, just generally the
importance of a redundant supply chain?
Mr. Maffei. Yes. Thank you, Mr. Larsen.
And just quickly, I, of course, join Admiral Phillips in
expressing my condolences to those families, and it is a big
reminder that any transportation work is extremely--is
dangerous and risky.
In terms of the effect on the supply chain, I think the
effect of knocking out the Port of Baltimore for a fairly
limited amount of time in our--it has been incredible what the
U.S. Navy and the Army Corps of Engineers and supporting
agencies have been able to do to bring that channel and I think
soon the entire channel back.
But I will say, I think it has been a little bit overstated
what that would be in the short run because we have
alternatives to the Port of Baltimore. So, in that sense, I
can't imagine it affecting overall inflation in the United
States, for instance, those sort of things.
That said, my concern is that in the long run, the Port of
Baltimore is an extremely important strategic port when it
comes to our supply chain. This is a deepwater port. In terms
of container shipping, it is probably the fastest growing on
the east coast. There is currently one container terminal, but
there is going to be two open there.
And if something were to happen to New York, New Jersey--I
see Mr. Van Drew here--or Savannah, Georgia, or Norfolk,
Virginia, and we didn't have Baltimore as a working maintained
port, that could be a real problem for the United States supply
chain.
So, it's funny, these ports compete. But when it comes to a
disaster like this, they all work together, and it's extremely
important that we remember that with Baltimore.
Mr. Larsen of Washington. Thanks.
The ranking member of the subcommittee wanted to remind
everyone he also has gone up to Baltimore as well.
Admiral Phillips, it has already been noted about the Small
Shipyard Grant, but could you just reiterate the number, the
dollar amount of requests that you have received in the last
year?
Admiral Phillips. Yes, sir. For the $20 million on offer
last year, we received more than $80 million in appropriations.
And we are happy to take that for the record. We could give you
historically what we typically receive there. But it is very
much oversubscribed, as are all of our grant programs.
Mr. Larsen of Washington. Yes. So, when you do those
assessments of, say, the $80 million in requests, just so that
the number is accurate, is it $80 million of all really great,
super great projects only get $20 million or some not--some
clearly aren't ready to go?
Admiral Phillips. Sir, anecdotally, I would say that the
Small Shipyard Grant in particular, that program, people are
either qualified or they are not, and most applicants are
qualified. Many are repeat applicants, as you are well aware
from your district.
Mr. Larsen of Washington. Yes.
Admiral Phillips. So, people come back again and again and
again, and with success, over time.
Mr. Larsen of Washington. Yes. We have got quite a number
of projects from past rounds doing great work.
I was disappointed about the administration's request for
the PIDP, which is $80 million. This is not enough. And as I
noted when we did BIL, the idea was BIL money wouldn't supplant
this money.
And what the danger is if we don't do something like
advanced appropriations in the future, then we are going to end
up with a new standard of something well below what it was
before we did the BIL.
And so, on that point, you mentioned, I think in response
to a question, the process that you can use to kind of get
these projects moving.
But what do you--I guess what do you--what information are
you collecting for the future so in the future MARAD can go to
the administration and say, if advanced appropriations are no
longer going to be here, you need to understand the baseline
isn't what we had last time, it is 120 or 160 or some other
number that was larger before this year?
Admiral Phillips. So, sir, thank you for that question.
I think across the Department of Transportation, we are
working collectively to develop a significant amount of data
collections, which we already have within PIDP and other modes
do as well, to understand what we see over time and what we see
as the needs.
Now, other modes are different. Some have formula funds and
other things to go with their grants. But in our case, as a
full discretionary grant program order, we are certainly
keeping track of the need, the requests over time. And I can
say that, again, we see three or four times the dollar value in
requests versus funding available.
Mr. Larsen of Washington. All right. Thank you.
Thank you, Mr. Chair. I yield back.
Mr. Webster of Florida. Mr. Van Drew, you are recognized
for 5 minutes.
Dr. Van Drew. Thank you, Mr. Chairman.
Offshore wind projects--you knew this was what I was going
to talk about a little bit--offshore wind projects are failing.
And you know that the Orsted 1 project failed off the coast of
my district in South Jersey, proposed projects now have failed
in New York, and up and down the coast, many of them are in
trouble.
Yet for years at this point, the Maritime Administration,
MARAD, has been giving subsidies to fund these projects, which
many of them seem to be going towards the graveyard.
In my opinion, no more funds should be allocated to these
hemorrhaging money pits. Just last year, $202 million--almost
$202 million were awarded to funding MARAD's budget support of
these ventures.
If this money can be better utilized to further fund
accounts, such as operations and training or assistance to
small shipyards, should we really be investing in something
that is so obviously now becoming visibly nonviable and only
drains our budget for very important work that you need to do?
I believe the answer should be no, that we shouldn't be.
Rear Admiral Phillips, thank you for being here today.
How is the $202 million that was spent, how has that been
implemented?
Admiral Phillips. Sir, thank you for that question.
It is correct that we have awarded over $200 million in
grants to projects for port infrastructure development that
have a connection to offshore wind. However, all of those grant
projects that are in those ports support work that those ports
would need anyway. They improve wharves. They improve
transportation in and out of the port. They improve utilities.
In fact, in New Jersey alone, a grant was awarded last
year. That particular port is in part connected to offshore
wind ostensibly, but all of the obligations and requirements in
the application are related to utilities development. So,
improving lighting, improving sewage, improving water,
improving the infrastructure along the waterfront.
So, I would submit that while these ultimate grant
opportunities are in support of offshore wind, the work that is
being done to strengthen these ports provides opportunities for
those ports irrespective of what their ultimate cargo becomes.
Dr. Van Drew. Thank you.
If I am correct and offshore wind turns out to be
nonviable--let's just pretend that it doesn't go anywhere--
those improvements are still well spent? You believe they will
be utilized even without these offshore wind projects?
Admiral Phillips. I do believe they will be used
irrespective of the ongoing work in offshore wind or not.
Dr. Van Drew. Do you believe the benefits of the funding
outweigh the needs of other parts of MARAD's accounts, such as
the Ship Disposal Program and the Tanker Security Program?
Admiral Phillips. Sir, those programs are funded in
separate lines, and certainly the discretionary grant program
is meant for a specific outcome, which is improving the
movement of goods, and it supports that.
Dr. Van Drew. I understand they are in separate lines, but
money, as they always taught me, is fungible, and that's
dollars that could be used for other functions. And that is why
I think we have to look at this carefully.
Do you know if there are plans to ask for more money to
fund offshore wind one way or another, even though the funds
have already allocated to these projects previously?
Admiral Phillips. Sir, MARAD's contributions to offshore
wind support include port infrastructure development, as you
have discussed, and also support through our Title XI
shipbuilding program. Those are the two areas where we are most
engaged in offshore wind opportunities.
Dr. Van Drew. So, I know you can't answer this question in
your position, but I was going to ask if you believe offshore
wind is still a worthy investment. And I know you are going to
give me a really good answer that that is not your job to
determine, something along those lines.
But I would think it's not, and I think that in these
really frugal times, as you hear this committee talk about
investments that they would like to see in other areas that are
very much needed and are pending, that we perhaps could spend
our money better.
Appreciate your answers. To me, the offshore wind
developments are a waste of taxpayers' money and MARAD's money
when it is exclusively for them.
I would urge the administration to stop spending money on
those projects. And for some of these other good projects we
have, in my mind and many others', they still actually pose a
threat to maritime safety, to navigation, to fishing, to the
whales, to the environment, to tourism, and to our utility
rates, which I know is something you don't deal with.
But our utility rates are going to increase significantly,
drastically because of them. So, I am hopeful that we don't go
forward with them.
Thanks for your answers.
And, Chairman, I yield back.
Mr. Webster of Florida. Thank you.
Mr. Auchincloss, you are recognized for 5 minutes.
Mr. Auchincloss. Thank you, Chairman.
Chairman Maffei, welcome. Appreciate your time.
Last year, my colleague Mr. Ezell and I sent a letter to
the Commission advocating for FMC to use its existing authority
to establish a National Port Advisory Committee that would be
comprised of public port authorities, marine terminal
operators, and maritime labor organizations.
This establishment of this committee would provide the
maritime industry with the opportunity to share their concerns
to the Commission regarding potential regulatory impacts on
operations at America's ports and marine terminals.
Do you support the establishment of a National Port
Advisory Committee? And, if so, how can Congress help you to
implement this?
Mr. Maffei. Thank you, Mr. Auchincloss.
I certainly support that we need to hear from all of those
groups of people, and we need to hear from them often. And
myself and all of the four Commissioners spend a lot of time
communicating with those.
I would say on a specific--I won't comment on specific
legislation, but I do think in the long run, certainly it is
very important.
Here is my concern, and that is that we have one
statutorily provided for committee that is a shippers
committee, half exporters, half importers. It is a good thing
to have. And I certainly support the principle, as I support
the principle of what you are talking about.
The danger, though, is that the assumption was that it
would cost no money. And it does end up costing some money. I
am not saying it is a huge amount of money. But the group has
decided that it has, I think, quite a few meetings, not in
Washington. We have to make sure that they follow open meeting
laws and have IT support. And, therefore, we are often faced
with either having to send a staffer or two across the country.
We are not a big agency like Admiral Phillips' agency. So,
even if small--I am kidding about that. We both come from very
modest agencies. But we can't necessarily do that without a
specific line item.
So, I guess what I would say, to make it easier, if you do
propose this, then definitely include the funding for it.
The last thing I will say, though, is that if we want to do
it, ideally, maybe they should all be one advisory committee. I
am not sure whether having three or four advisory committees is
the right way of going about it. It is certainly better than
not hearing from these groups at all.
But one of the advantages of these sort of committees is
that it facilitates not only communication with us--which is
very important. It came in handy, by the way, to have the
shippers committee to find out what each one of them's
experience was with Baltimore. But it is very important to have
an exchange among the various stakeholders.
So, I certainly support the principle. Not sure if I
support the specifics.
Mr. Auchincloss. All right. I appreciate the financial
constraints and would support dedicated funding for those
advisory committees, and also open to suggestions, as you put
forward, about how we might synthesize them.
And I would encourage you, as I know you do with your
background as a Member in constituent services, is to continue
to work through that shoe leather in getting input from the
terminal operators in the ports as really as your constituents.
Rear Admiral Phillips, thank you for your testimony today.
I am a member of the Select Committee on China, and an area of
significant concern for me is China's rapidly expanding
shipbuilding capacity. Recent estimates indicate that China's
current capacity is about 200 times the United States' capacity
for shipbuilding, and its military and commercial fleets are
rapidly expanding.
There have been arguments that their quality is below ours.
That is debatable. And what is not debatable is that quantity
has a quality all of its own. When they are building that many
ships, it matters.
You mention in your testimony the important of
recapitalizing the Ready Reserve Force and the commercial
sealift programs. Can you speak to the importance of the
President's budget request and what modifications or expansions
of Title XI you might advocate for so that we can help you
build more ships?
Admiral Phillips. So, sir, thank you for that question.
As you are aware, Title XI is a loan program that allows us
to support industry in the capacity of being able to build
vessels in this country. We have designated offshore wind
vessels as Vessels of National Interest and have eight
applications underway right now, many of which are related to
offshore wind but not all. And, in fact, we are also allowed to
loan money to ports for improvements, and we have one port loan
in progress.
So, the challenge with Title XI is that it takes some time,
but the good news is that we pay or are allowed to loan to
borrowers who may find themselves dealing with higher interest
rates if they were to go into another program on the open
market.
So, our opportunity there is to expand capacity to continue
to provide opportunities for builders to gain access to funds,
to be able to build vessels. And that, of course, improves and
expands our U.S.-flag fleet, particularly Jones Act fleet, as
well.
Mr. Auchincloss. As I indicated to you earlier, I would
like to work with your office on legislation around Title XI to
see how we can give you as many tools as possible to widen our
shipbuilding pipeline in this country in the most cost-
effective way possible. So, I look forward to working with you
on that.
Admiral Phillips. Thank you, sir.
Mr. Auchincloss. I yield back.
Mr. Webster of Florida. Representative Scholten, you are
recognized for 5 minutes.
Ms. Scholten. Thank you so much, sir, and thanks for having
this important hearing.
This year's budget request, obviously, is noticeably
smaller. We are going to be hitting on some of the same themes.
But I think it is important to distill this.
Obviously, the fiscal year 2025 request is about $110.66
million lower, 11.4 percent.
To both of you, can you give us a distillation of the
impact on maritime performance as a country? And what should
Congress keep in mind as we continue to look to be good
partners?
Admiral Phillips. Thank you, ma'am, for that question.
I think what the industry broadly needs to see from
Congress, budget request notwithstanding--we support the
President's budget--is a clear signal that shipbuilding, that
cargo--and, of course, we have, within MARAD, we are very
focused on meeting DoD requirements.
So, we have the fleet that our current requirements and our
authorizations and our appropriations provide, and that is
largely based on DoD requirements.
So, signals to the industry that there is interest in
sustaining long-term growth in the shipbuilding industry, long-
term cargo access for U.S.-flag vessels, in particular. And
that then generates long-term job opportunities for mariners
that keep people in industry.
So, that is my primary focus, is U.S.-flag vessels, cargo
for them to carry to meet our Nation's needs, and a sustained
opportunity for U.S. mariners which will help us bring more
mariners in, not only bring them in but retain them, keep them
in the industry, ensuring their safety, ensuring the best
quality of life possible for them.
So, that is broadly the kind of signal that we need to see
from Congress so that the industry knows they can move forward.
Tying into that is an opportunity build those ships here, which
then gives us an opportunity to build and sustain shipbuilding
capacity, which not only supports the broader industry, the
Jones Act fleet, but also our military capacity in
shipbuilding, as well.
So, it all ties together, but what industry wants to see is
a clear signal from Congress that sustained interest and growth
beyond the TSP program and things that we have managed to
accomplish that have grown the fleet are there and will
continue to be there for the future of the industry.
Ms. Scholten. OK. Thank you.
Mr. Maffei. As a regulatory agency, of course, our direct
jurisdiction doesn't cover most of this. But since you asked--
--
Ms. Scholten [interposing]. Yes.
Mr. Maffei [continuing]. What I will say is the bipartisan
infrastructure bill was very important, but it was like a down
payment. If we really want to take full advantage of the ocean
carriage in this country, we are probably going to need a lot
more investment.
The issue is that of supply chain resiliency. And I
mentioned it a bit with Baltimore, our ports, but also a lot of
the issues that happened during COVID, though there were issues
at the ports, actually happened inland. I think I was quoted as
saying if you build a bridge in Indiana, you are still helping
me as Federal Maritime Commission Chair. And that is true.
The biggest issue probably facing the Baltimore port, as we
move forward and reopen the channel, is the fact that that
bridge is down. Wait a minute? What does the bridge have to do
with maritime? It has everything to do with maritime. A port is
where water meets the land.
So, I would just say, to the extent that you and your
colleagues can work on it in a bipartisan way, we could use
more investment, particularly in our ports, but, frankly, in
our infrastructure all across America.
Ms. Scholten. Thank you, sir. Very helpful.
One more question.
Rear Admiral Phillips, your testimony touches on the U.S.
Marine Highway Program, and you mentioned how funding awarded
this last year will support eight projects across the Nation.
I am particularly excited to hear that nearly all the
funding is supporting projects in disadvantaged communities or
federally designated community development zones.
Can you share where these projects are, and specifically if
any of them are in the Great Lakes region?
Admiral Phillips. So, ma'am, I will take that for the
record because I don't think I can spout them out by memory
here.
But what I will say about the U.S. Marine Highway Program
generally is this is a program with tremendous capacity to do
more for our Nation. And it is chronically short of resources,
and there is always an excess in applications for need.
The one $25 million infusion we got under BIL, there was a
significant increase in the amount of applications that year,
and there is certainly a need.
And particularly from an inland perspective of, I hear,
when I talk to inland ports and port operators continually: We
could use more money here. This is another opportunity for us
to expand capacity.
And it works well with PIDP. It can support things in a
slightly different way.
But there certainly is an opportunity there and an
opportunity to move more goods on water, and there is plenty of
capacity there. So, tremendous opportunity with that program.
Ms. Scholten. Yes, I agree and will look forward to your
response for the record.
Thank you. I yield.
Mr. Webster of Florida. OK. Well, first of all, I don't see
any other questions.
I thank the witnesses for being here. Thank you for your
testimony. Really appreciate that.
And with that, the meeting is adjourned.
[Whereupon, at 3:37 p.m., the subcommittee was adjourned.]

Appendix

----------

Questions to Ann C. Phillips, Rear Admiral, U.S. Navy (Ret.), and
Administrator, Maritime Administration, from Hon. Jenniffer Gonzalez-
Colon

Question 1. Puerto Rico has benefited from the Port Infrastructure
Development Program. Projects financed under these grants include the
$10 million for the Pier 15 RO/RO Terminal that serves inter-island
commerce. In recent years, our port operators have submitted
applications every time they have been eligible, and I expect this to
continue to be so. I will be supporting the continued funding of this
program as well as of others in the budget request. What does MARAD see
as the highest priorities in the upcoming years for this sort of grant?
As in, what is the most urgent area of port infrastructure focus in the
short and medium term?
Answer. MARAD's priorities for the PIDP are derived directly from
the legislation authorizing the program (46 U.S.C. Sec. 54301). MARAD
continues to see overwhelming demand for port projects throughout the
Nation that meet the statutory purpose of ``improving the safety,
efficiency, or reliability of the movement of goods through ports and
intermodal connections to ports.'' MARAD will continue to assess PIDP
applications on the basis of statutory criteria and award grants to
those projects that best address those statutory criteria.

Question 2. Just last week my District Office had its Open House
for students interested in the Service Academies including the Merchant
Marine. One of the key selling points of the Academies is the notion
that prospective attendees are headed for an environment that is
strictly meritocratic and where they can feel safe. What can you advise
us on progress of the Academy's Sexual Assault Prevention and Response
Office and the Advisory Council recommendation process, and on the
implementation of the recommendations to reduce incidents of harassment
and violence?
Answer. I'm pleased to report that the U.S. Merchant Marine Academy
(USMMA) has significantly increased Sexual Assault and Sexual
Harassment (SASH) Prevention and Response-focused resources and
programming and, in so doing, has made gains in campus culture--while
increasing awareness of, and building trust in, the SASH-incident-
reporting and investigation process. This effort continues to be driven
by the Academy's Sexual Assault Prevention and Response Office (SAPRO),
the mission of which is to prevent and respond to relationship and
sexual misconduct against Midshipmen, including sexual assault, sexual
and gender-based harassment, stalking, relationship violence, and
retaliation. The office is currently staffed by a Director, a Sexual
Assault Response Coordinator, and two Victim Advocate/Prevention
Educators, one of whom focuses on misconduct at sea, and is an alum and
a U.S. Navy Strategic Sealift Officer. SAPRO is dedicated to supporting
USMMA's students, faculty, and staff by providing effective prevention
training and robust victim advocacy. Each year, USMMA publishes a Plan
of Action in its Annual Report on Sexual Assault and Sexual Harassment
[https://www.usmma.edu/sites/
usmma.dot.gov/files/2024-06/Final%202022-2023%20Sexual%20Assault%20and
%20Sexual%20Harassment%20Report%20to%20Congress.pdf], recently released
to Congress. This academic year's (AY 2022-2023) Plan of Action can be
found on page 13 of the report.
Based on its data collection, the contractor provided
recommendations, which USMMA is incorporating into updates of its
policies and practices. In revising its policy, USMMA will also
consider the revised Title IX rule issued by the U.S. Department of
Education in April 2024, and the experience of USMMA's Sexual Assault
Review Board with administration of the current policies and
procedures.
On July 13, 2023, MARAD announced the 13 members of the USMMA
Advisory Council. The Appointees to the Advisory Council are drawn from
academia, the maritime industry and maritime labor, the senior ranks of
the U.S. military, and five federal agencies: the Coast Guard, the
Military Sealift Command, the Naval War College, the Department of
Health and Human Services, and the Naval Facilities Engineering Systems
Command. The Council members include experts in higher education
administration and sexual assault and sexual harassment prevention and
response.
On August 7 and November 16, 2023, the Advisory Council met to
discuss and formulate independent advice and recommendations on
improving the Academy, including in the areas of curriculum development
and training programs; diversity, equity, and inclusion; sexual assault
prevention and response; infrastructure maintenance and redevelopment;
Midshipmen health and welfare; governance and administrative policies;
and other matters. As part of this work, the Council will develop
strategies and recommendations to address the issues identified in the
2021 National Academy of Public Administration's (NAPA) Comprehensive
Assessment of the U.S. Merchant Marine Academy report. The first set of
recommendations are due in Summer 2024.

Question 3. Security in our maritime transportation industry is
highly important. Puerto Nuevo Terminals, the private consortium that
operates part of the container facilities in San Juan, was subjected
last April 20 to a ransomware cyber-attack that, although it failed to
stop operations, created serious delays in cargo movement and truck
dispatch for a number of days. The FBI office in Puerto Rico is
investigating the situation. On the maritime operations side, how is
MARAD working with its partners to identify and address vulnerabilities
of the fleet and its shoreside support, to this sort of trade
disruption?
Answer. MARAD works with the U.S. Coast Guard (USCG), Cybersecurity
& Infrastructure Security Agency (CISA), and other U.S. government
agencies on the continuing development of maritime cybersecurity policy
and the dissemination of maritime threat (including cybersecurity)
information to U.S.-flag maritime industry stakeholders, but maritime
cybersecurity regulation and incident response is outside of the
authorities and capabilities of MARAD; they reside with the USCG, CISA,
and the Department of Justice's Federal Bureau of Investigation.
The U.S. Maritime Alert and Advisory System, which is described in
detail at http://www.maritime.dot.gov/msci, is a communication tool
used by MARAD, the U.S. Coast Guard, and others to share information
with maritime industry stakeholders on cybersecurity policy
developments and threats, in addition to other maritime threat and
resource information.