Subcommittee Hearing on “Review of Fiscal Year 2025 Maritime Transportation Budget Requests…”
e
for
for for
sub committee on Coast Guard and near
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ask n’s consent that the chair be
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without objection show that ordered I
ask for unanimous consent that the
members on the subcommittee not on the
subcommittee be permitted to sit in the
subcommittee at today’s hearing and ask
questions without objection so that
ordered as a reminder if MERS insert a
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okay now recognize myself for the
purpose of an opening statement for five
minutes we meet today to review the
fiscal year 2025 budget request for the
federal Maritime Transportation programs
uh administered by the maritime
Administration and the federal Maritime
commission welcome to all our guests we
Admiral an Phillips administrator of the
maritime Administration and The
Honorable Dan
mayy
May chairman of the federal Maritime
commission first I’d like to thank both
of your agencies for their efforts and
coordination with other Rel agencies to
ensure the continued operation of
Maritime Commerce in the aftermath of
the Francis Kaki bridge collapse in
Baltimore while recovering efforts
continue it is important that we also
maintain stable trade uh trade flows so
we thank you for your assistance in the
maritime industry thank you both for
doing
that merid is a uh promotional agency
within the Department of Transportation
responsible for um fostering promoting
and developing Maritime industry of the
United States the president’s fiscal
year 2025 budget request for merid
includes
8 59
m700 uh 59.7 million for the
administration of the programs that
strengthen our national security and
economy train our future um
um Marin or Workforce and build a more
efficient Maritime transportation
system among these programs is the port
infrastructure development program known
as pip DP a uh discretionary grant
program to fund
infrastructure projects that that
improve the safety efficiency and
reliability of the movement of goods at
Coastal sea ports in 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 the advanced Appropriations
the program receives annually through
the fiscal year 2026 in the
infrastructure investment and jobs
act
pidp has grown exponentially since it
first appropriated funds in fiscal year
2019 unfortunately this growth comes
with administrative challenges that
severely impact the effectiveness of the
program these includes long delays for
Grant recipients and getting Grant
contracts signed which slows the
obligation of funds and leaves projects
Scopes vulnerable to inflationary
pressures these uh delays harm the
program’s ability to improve our port
I look forward to discussing ways we can
streamline this process to ensure that
the program is carried out as
efficiently as possible
merid also oversees a deep waterer Port
licensing program which provides permits
for the construction of ports in waters
off the shore of the United States while
prolonged timeline for processing these
per permits is an ongoing ISS issue I’m
encouraged at meed’s recent approval of
an application for construction of the
deep water Port off the coast of Texas
however I remain concerned that there
are several other applications waiting
for the disc uh decision that are far
beyond the 356 days statutory timeline
for review I hope to work on mirids to
ensure all applications are processed in
a timely fashion as required by law and
I continue to uh 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
uh National Maritime strategy I hope to
hear how merid is working with the
federal friendly funded research and
development center conducting the study
to ensure it Services as a helpful tool
in the needed revital
revitalization of our Maritime industry
additionally we have the chairman of the
maritime Federal Maritime commission or
FMC uh with us today to discuss the
state of the O ocean shipping industry
and their ongoing work implementing the
ocean shipping Reform Act of
2022 known as OS
asra FMC is an independent agency
responsible for the regulation and
oceanborn 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 the
ocean shipping cost while congesting
ports and impairing Maritime trade flow
in response Congress enacted the task
force task and tasked FMC with
implementing OS to help uh address many
of the challenges experienced by the
United States exporters FMC has worked
diligently since the enactment of osra
to implement its enhanced authorities I
look forward to hearing from
chairman
MAF today at the status of the fmc’s
efforts thank you both for appearing
here I recognize the ranking member Mr
Garra for an opening statement for five
minutes thank you Mr chair uh I’ll yield
uh to our ranking member of our TNI
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 over there in the corner to be
in the future I wanted to recognize them
before I turn it over to our our ranking
member Larson thank you Mr
chair thank you chair for scheduling
today’s hearing to review the fiscal
year 25 budget request of the maritime
Administration and the FMC together
these agencies promote the US M it must
have been something caral said together
these agencies promote the US Maritime
industry and protect consumers against
unfair shipping practices ocean shipping
is dominated by Foreign shipping
companies who transport over 98% of
imports and exports between pandemic
related supply chain issues and ongoing
International conflicts we’ve learned
the importance of a vibrant us Maritime
industry and now is time to strengthen
and support that industry the
president’s fiscal year 25 budget
requests includes though an 11% decrease
in discretionary funds for the martime
administration and a 21% increase for
the federal Maritime commission while
the funding request with the FMC will
ensure fairness for American shippers
and consumers I’m concerned merad will
not have the resources it needs to uh
support a robust supply chain investment
in the US Maritime industry is long
overdue and for years we faced a mariner
shortage as workers retire in the
industry struggles to appeal to younger
Americans to attract new workers uh 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 the
president’s budget includes a 35 % 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 in the
intent of Congress for that funding to
supplant regular Appropriations
infrastructure investments in SE ports
provide opportunities to bolster our
economy strengthen the supply chain
create and sustain jobs and enhance our
International
competitiveness my own District the
swinish Port Authority a small port and
and one of a few tribal Run Port
Authorities recently received an $ 11
million uh Grant to fund a master plan
for the port and to begin 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 to the P
IDP I’m pleased that President’s budget
requests includes $20 million for the
small Shipyard grant program of have
several small shipyards in my district
and I’ve seen how these grants can be
used to create jobs and bolster the
local and National economy I’d be remiss
if I did not bring up Admiral Phillips
ongoing work to address the sexual
assault and sexual harassment at the US
Merchant Marine Academy the state
Maritime emies 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
the marad for their work in awarding the
bipartisan infrastructural law funding
as well I look for and I look forward to
seeing what projects are selected this
fall and finally in last Congress this
committee passed the ocean shipping
Reform Act 2022 and under chairman maf’s
leadership good to see you again
chairman mfay the federal Maritime
commission has been quick to implement
new requirements for ocean carriers and
investigate unfair shipping practices
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 the
president understands this and included
in his budget request a 21% increase for
the
FMC since passage of the ocean shipping
re Act of
2022 uh since the passage container
prices have fallen vessel backlogs have
eased and the FMC has revamped the
reporting process making it easier for
shippers to file complaints and
currently the FMC is monitoring the
shipping fees and search charges
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 look forward to
engaging our Witnesses in on Mead on
both marads and fmc’s ongoing work to
strengthen our supply chain and to grow
the US commercial Maritime Fleet with
that thank you and I Y
back Mr corbal
thank you chair Webster for scheduling
today’s hearing on the review of the
fiscal year 2025 budget request for the
maritime Administration Merit and the
federal Maritime commission FMC I look
forward to hearing from chair maay and
administrator Phillips and the
president’s budget request and their
agency’s priorities for the upcoming
year stability in the 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 the
ensuring fairness and international
shipping the FMC has key authorities
which allows 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 strengthen the fmc’s
authority to investigate unfair ocean
shipping carrier fees and facilitate the
efficient movement of cargo through US
ports in the two 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 Dem
marage 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
requests for the
FMC Beyond Fair shipping process the US
economy depends upon a robust Maritime
industry I fear that without continued
support for our us Flag fleet Fair
shipping practices will only get us so
far the US Merchant Marine is shrinking
and availability of American Merchant
Mariners is dwindling this puts our sea
lift capabilities National Defense and
economy in Jeopardy more and more we
rely on foreign ocean carriers to
transport our Goods it is Mer’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 Merit discretionary programs
meant to support the industry I worry
about the president this has created as
the fiscal year 25 funding request
follows this downward viral or Trend
Meritt 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 budget requests includes $6
million for meta which is a $1.5 million
decrease over the last year’s budget
this is disappointing to say the least
decreases over two years are not the TR
Trend we want to see this program
supports the research development and
deployment of new technology in in the
maritime industry particularly low or
zeroc 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 thec carbonization
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 FY 24 funding
and the fiscal year 25 budget request
follow suit I am heartened to see an
increase in funding for the US Merchant
Marine Academy administrator Phillips
has done an excellent job continuing to
pursue systematic change to the culture
that has resulted in sexual violence and
harassment at the US 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 to make the
maritime industry a safe and desirable
Place workplace for all thank you to our
Witnesses and attendees for their for
your participation today I look forward
to a robust discussion about how the
2025 budget request can support
investments in improving the US Marine
transportation system Mr chair I y’ll
back I know both our Witnesses are are
fully aware of the light lighting system
we have
uh green means go yellow means slow down
and red means time to wrap it up so with
that um ask unanimous consent that the
witness full statements be included in
the record without objection show that
order I ask unanimous consent that the
record be of
today’s hearing remain open for such
time as the witness have to provide
answers to questions that may be
submitted to them in writing without
objection show that ordered I ask
foran’s consent that the record remain
open for 15 days for any additional
comments or information submitted by its
members or the witnesses to be excuse me
to be included in the record of today’s
hearing without objection show that
ordered so as the uh written testimony
has been made a part of the record the
committee asked that you limit your
remarks to five minutes and with that um
Admiral Phillips you are recognized for
five minutes for your
testimony thank you Mr chair good
afternoon chairman Graves ranking member
Larson chairman Webster and ranking
member carbajal members of the
subcommittee thank you for your
tremendous support for the maritime
Administration the US Merchant Marine
Academy and the US Maritime industry I’m
honored to testify before you today and
being joined by federal Maritime
commission chair Dan maay before I go
further allow me to express our
condolences on behalf of the department
transportation to the families of those
who lost their lives in March when the
Francis Scot Key Bridge collapsed
mared’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 FY 2025 requests
8597 million for marad it includes the
port infrastructure development program
requesting 80 million for PP to enhance
Port infrastructure stimulate economic
growth improve safety address climate
change and environment Al 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 PP grants and awards to
41 projects in 25 States in one
territory this year thanks again to the
B and funding provided in the 2024
Appropriations measure 500 million in
funding is available for PP grants an
additional 72 million in FY 2024
Appropriations has already been
Congressional directed to 22 projects
applications for this program close May
10th 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 us 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 alsoo request
20 million for marad small Shipyard
grants to improve infrastructure at
small us shipyards enhancing their
efficiency and competitiveness for
commercial ship construction and
maintenance 8.5 million is available in
2024 applications close May 8th within
marads FY 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 11 when combined
with the FY 24 appropriation for Title
11 of 53 million this will support 1.3
billion in outstanding loan guarantees
the president’s FY 25 budget also
requests 191 million to support the US
Merchant Marine Academy and enable marad
to continue to address the Urgent and
long-standing challenges at the Academy
this includes support for 975 midshipman
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 Embark program mared
continues to expand Embark participation
today there are 21 commercial operators
enrolled which operate over 180 vessels
we are working to develop a propos
proposed Embark rule pursuant to the FY
23
ndaa also included in the 25 budget for
the Merchant Marine Academy is 86
million for Capital Improvements
including Barracks Renovations Wy Hall
Renovations for classrooms and offices
and Delano Hall the dining hall and
Galley Renovations in addition to
Rehabilitation of Road sidewalk and
parking lots and addressing
long-standing deferred maintenance 2025
budget also requests 87 million to
support the six State Maritime cies
covering schoolship maintenance and
repair student incentive program Direct
SMA support fuel assistance and nsmv pre
and post delivery support four NS smvs
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 month our
government-owned sea lift Fleet is
supported by privately-owned
commercially operated US flag vessels in
the maritime security and tanker
Security Programs the FY 2025 budget
requests the full authorization of 318
million for MSP which is the heart of
sustainment seift mared has also fully
implemented the 10 vessel tanker
security program and is requesting 60
million for that program the budget in
20125 requests 974 million from DOD for
marad to acquire upgrade M and Main
maintain vessels in the ndrf and rrf
these funds ensure the fleet remains
ready reliable and responsive using
commercial ship managers and crude by us
Mariners in addition marad continues to
collaborate with stakeholders to address
the Mariners shortage and recently
convened on March 20th the first ndaa
directed Maritime Workforce working
group our next meeting is May 8th these
programs reflect Mead’s priorities
supported by the president’s budget
thank you for the opportunity to testify
today I look forward to your
questions thank you I appreciate that
and now we have chairman MAF you
recognize are five minutes for your
testimony thank you very much chairman
Webster ranking member carbahal full
committee ranking member Larson
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 Lu Sola and Max veage 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
ozra 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 2400 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 FY 2020 and FY
2021 to assessing $2 million in
penalties in fiscal year 2022 and nearly
2.9 Million in FY 23 so far in FY 24 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
azra’s mandates this includes building
on the incentive principle interpretive
rule this rule authored by commissioner
Rebecca Dy and put into effect in 2020
established that A detention or demerged
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 Dem marage
practices this rule sets requirements
for how common carriers and Marine
Terminal operators must build these
charges and provides Clarity on who can
be build within what time frame and the
process for disputing bills the rule
slated to take effect on May 28th 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 o
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 and
A5 million dollar in charges and fees
have been waved or refunded by Common
carriers the FMC has largely delivered
on the investment started when was
signed almost two 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 FY 2025
is the same amount approximately that
ozra 2022 authorized the FMC has
established priorities and built plans
based on ozra 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 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
ocean board 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 test along with
Admiral Phillips and I look forward to
addressing your
questions thank you so much so
now thank you for both of you for your
testimony now turn to questions I’ll
recognize myself for five minutes for
questions uh Admiral Phillips the port
infrastructure development program has
grown
exponentially uh in size and scope over
the last several years unfortunately the
effectiveness of the program has 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 project cost
what is merid doing to address these
inefficiencies in the grant award
process sir thank you for that question
uh as you are aware uh we have quite a
number of Grants underway right now and
we’re excited about them because of the
generational change they offer we’re
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 the NEPA process the environmental
assessment process and the grant
agreement process which is basically
scope scheduled performance uh is 20
months we’d like to get that down to 12
we continue to work very closely with
applicants to help provide them
additional capacity uh in advance of uh
application the application a noo
process each year we offer a series of
online events for applicants to be able
to spend time with us and understand
what’s coming and then once we receive
and award applicants uh 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’d also like to acknowledge
that uh we have opportunities within the
pp program under new Authority from 2022
to do what we call a 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% 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 uh six months
in getting to Grant agreement signing
and NEPA completion um and we’ve had a
number of applicants be able to complete
it within one year so is possible to do
it and we continue to work with
applicants to help work them through the
process thank you
sir thank you and please keep me
informed as you work through the award
process and
uh also Admiral Phillips the Deep uh
deep water portal licensing program
continues to have several applications
that are far beyond the statutory
timeline for review 536 days 56 days
uh as the president’s budget requested
for fiscal years
2025 include four new full-time
positions for deep water Port program
office will this be sufficient to help
merid process the uh backlog of
applications or are there other
challenges that we need to check
into sir thank you for that question uh
and thank you for uh considering the
request for four additional positions my
staff of four uh are actually here with
me today uh 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 uh
particularly in the initial application
process we work closely with the Coast
Guard under the environmental review
requirements uh which they manage uh
predominantly until we get to the record
of decision which is marads
responsibility uh so there it it is
quite a coordination e effort and uh 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 the spot license
was issued this year I would note that’s
the first license issued uh for a new
application um since the early 80s uh
other than the loop application which
shifted from an import to an export
facility in 2012 so this uh there’s
quite a bit of additional interest in
this program now and uh we appreciate
your interest in it and uh and your
willingness to consider our 2025
request uh thank you and I hope to work
with you uh as more decisions are issued
this
year uh chairman
mfay uh
stakeholders have expressed concern with
the FMC extending its jurisdiction
Beyond regulated entitle enti entities
such as ocean common carriers or
Maritime ter terminal operators to other
groups that are regulated entities have
contracts with do you do you believe
your jurisdiction extends to the uh
assets and operations of these uh either
groups and
uh or whenever a a regulated entity
enters into a contract with him do you
think uh thank you for the question Mr
chairman um our uh statute makes it
clear that the three types of regulated
entities are uh common carriers that own
vessels non-vessel operating common
carriers and um and uh uh Marine
Terminal operators that said though our
jurisdiction goes along with the box
from the water so if it it it provides
if 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 make may make their
deals and what is presented to the the
ocean shipper so no our our jurisdiction
is very circumscribed but it does
include anything that involves what
those three categories of folks do while
they’re doing ocean
shipping thank you so much I Y back my
time’s gone U Mr
Corall thank you Mr chair Admiral
Phillips like to command you on your
ongoing commitment to ensuring a safe
environment for all Mariners on board
ships the culture of industry is
changing we’ve seen measurable
improvements on board vessels and the
Coast Guard has taken action to remove
and prosecute
offenders however new requirements
resulting from Embark and the safe for
Seas Act only apply to US flag vessels
could you detail how safety standards
including those related to sexual
assault and sexual harassment does not
apply to foreign Mariners on board flag
of convenience
vessels Congressman thank you for that
question of course mared’s focus is US
flag vessels and and we are most
concerned with the safety arm of armored
shipment sailing as cadets at se and the
safety of us Mariners uh and in that
context we work very closely with the
Coast Guard uh from the context of uh
how foreign flag vessels are managed uh
that that is outside of my purview and
outside of the law um and I commend
Congress for considering that and
thinking of it and I would also add that
uh many other foreign Nations have
considered such circumstances with
regard to vessels that call their ports
uh that may not be flagged in their
country and have uh
implemented opportunities to ensure that
those Mariners are treated fairly and
paid fairly and uh are also subject to a
safe environment so there are some
perhaps some foreign models that could
be followed if that is an item of
congress’s Interest
does the IMO have a role here and has
anybody engaged the IMO on this issue
yes sir the IMO does have a role uh and
of course state is lead for IMO with
Coast Guard as the uh lead agency in
involved in most of the in fact all of
the Committees involving Mariner safety
Mariner welfare uh uh and including um
decarbonization and other requirements
for uh vessels at Sea and so certainly
there is a great interest in the IMO and
Mariner safety and I would defer to the
coast guard for the specific details
there we do know they had a a session
just this summer where they looked at
Mariner safely broad broadly across the
industry and also looked at uh sexual
assault prevention and response and
other kinds of harassment and challenges
that Mariners are experien at sea at sea
in an international context thank you
Admiral Phillips as you say in your
testimony without cargo ships will leave
the US Fleet well I appreciate Mer’s UC
ation efforts the law is very clear
Merit is the final Authority in ensuring
compliance with cargo preference it is
unacceptable that 40% of agencies have
failed to provide you with bills of
lading cargo preference is the shipping
version of by America when should
Congress expect to see the final rule on
cargo preference that ures merits
oversight and enforcement
authorities so thank you for that
question we continue to work on the f
final Rule and understand congress’s
intent and interest there and certainly
acknowledge that we are behind the due
date of 270 days from the 2023 ndaa um I
would add in the context of marad being
able to receive bills of lading uh it
would be helpful to receive them in
advance and uh 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% cargo
preference notwithstanding that there
are agencies who find challenges in that
which we certainly understand uh and in
that context I would add we thank
Congress for waving the three-year
weight requirement to flag in and have
access to preference cargos uh and would
say that uh implementing that sooner
than 2030 um 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
um when they have to ship things in an
emergent manner like usaid and USDA
thank you sir thank you chairman MAF in
your statement you mentioned the FMC
worked 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 uh thank you for the question Mr
carbajal um what we have is is called an
audit program it essentially is a way to
have a continuing dialogue with ocean
carriers um and and continue to ask them
that they do have to volunteer for the
program but all of them have uh 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 uh a lot of the the the
charges it wasn’t so much that the
shipper said well there’s 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’ve
been encouraging to 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 uh
bargaining power that they can just
demand those answers but the smaller
shipper really does not so that is what
we’re doing it has uh been somewhat
successful though um I do think that it
is a a matter still for discussion about
whether uh these are these charges are
are completely uh Kosher for lack of a
better term and we certainly will
investigate any any allegations that
they’re not being used for their uh
Express purpose that is involving that
particular Maritime uh contingency thank
you Mr CH out of time I yield back thank
you representative Parson you’re
recognized for five
minutes well yeah
Iselle you’re the chair okay Mr Iselle
you recognize thank you Mr
chairman Admiral Phillips and thank you
for being here today and both of you
appreciate your commitment um Admiral
Phillips as you know uh my Gul Coast
colleague and I Congressman Troy Carter
and I introduced legislation to expand
marads Capital Construction fund program
uh this expansion would give Marine
Terminal operators except
access to deposit funds into the tax
deferred CCF account for purchases of
cargo handling equipment when secretary
Buddha testified before the full TNI
committee last year he said if Congress
authorized our CCF expansion Bill he’d
fully implemented I was very pleased to
hear the Department’s
support can you explain how programs
such as CCF complement programs such as
is
pidp and work to leverage private
investment into our us Maritime
transportation
system yes sir thank you for that
question uh the Capital Construction
fund program as you point out is uh is a
fund into which uh vessel owners uh or
operators May deposit uh profits based
on the profits was uh generated by that
vessel and then uh after a period of
time remove those profits from that fund
which actually is an IR uh 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 Etc so it’s been a very
successful program and with the changes
in the 2023 ndaa it’s become even more
successful because it now includes a
much wider range of vessels that are
make participate and there are no
Geographic restriction so we have seen a
tremendous uptick in that particular
program’s functionality uh it it is it
serves really to support the maritime
industry and the ship building industry
broadly in the country um it’s its
connection to Port infrastructure
development would be uh really Loosely
tied to increased capacity in our ship
building industry to support moving the
goods that come and go from Port
infrastructure there’s not a direct tie
there uh that said I’m I’m aware of your
legislation and uh of course and
understand your intent in trying to find
ways for terminal operators to purchase
equipment and and take advantage of such
tax deferred fund U it would be
interesting to try to implement it in
exactly the same way as uh the the fund
is currently administered however we uh
we’re happy to work with your staff to
try to better understand the objectives
and find a way forward thank you sir
thank you the state of Mississippi is
home to tailor Machine Works United
States largest manufacturer of wheeled
cargo handling equipment I believe
securing America’s supply chain is a
matter of National Security uh can you
explain to us why it is important uh to
support efforts to rebuild manufacturing
industry especially as it relates to
supply chains in the US Maritime
industry you Admiral I’m sorry yes sir
thank you so U as you’re as you’re well
aware in the context of Port
infrastructure development we are very
interested in and the small shapard
grant program we’re very interested in
uh Port cargo handling equipment that is
built in this country uh there there are
manufacturers and and we are happy to uh
understand where they are and who they
are and uh and grateful for the kinds of
things that they do and I would add in
that context we’re working now with the
American Association of Port Authorities
on a survey that’s 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 uh
and excited to get on with a study with
APA so that we can help uh continue to
build industry opport industry
opportunities in this country for the
port infrastructure thank you thank you
uh also adal as we work towards fiscal
year 2025 Appropriations I want to
discuss a small Shipyard grant program
which received a large funding cut in FY
24 Appropriations Bill considering the
current state of US ship building can
you discuss the need to fund this
program at or above the level included
in the president’s budget
request yes sir certainly so there’s 20
million in the president’s budget
request for
2025 uh but as you State this is a very
uh significant program it is always
oversubscribed uh typically for 20
million in grants available will receive
more than 80 million in requests funding
requests and I would expect this year we
will easily exceed uh the funds
available and probably by a factor of
three or four so there’s certainly a
need a consistent need over time and 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 thank you for that and thank you
both again and Mr chairman I yield
back thank you now the ranking member Mr
Larson you’re recking thanks Mr chair
first question is for chair maay but I
apologize for not recognizing the third
greatest export out of Aberdine
Washington uh commissioner Max beckage
of course number one and number two
happen to be two-thirds of the members
of Nirvana so you’ll always be number
three in our hearts Max good to see
you um chairman Fay a couple weeks ago
had the opportunity to go up to
Baltimore see the bridge collapse and
the ongoing recovery Salvage efforts
it’s really hard to Fathom the magnitude
of the incident without seeing it in
person and I know chairman went as well
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 what well just
generally the importance of a redundant
supply chain yeah thank you Mr lson I
just just quickly I for join Admiral
Phillips and expressing my condolences
to those families and it’s a big
reminder that any transportation work is
extremely is is is dangerous and risky
um in terms of the effect on the supply
chain I think the effect uh of knocking
out the Port of Baltimore for a fairly
limited amount of time and our it has
been incredible what the US Navy and U
the Army Corps of engineer and and
supporting agencies has been able to do
to bring that channel and I think soon
the entire Channel back um but I will
say I think it’s been a little bit
overstated what that would be in the
short run because we have alternatives
to the Port of Baltimore now this is uh
so in that sense um 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
deep water port in terms of container
shipping it is the probably the fastest
growing on the East Coast there’s
currently one Container Terminal but
there’s going to be two open there um
and if something were to happen to uh
New York New Jersey I see Mr vandrew
here or Savannah Georgia or Norfolk
Virginia and we didn’t have balore as a
working maintained Port that could be a
real problem for the United States of
supply chain so uh you know 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 thanks uh the ranking member
of the committee wanted to remind
everyone he also has gone to Baltimore
um so as well uh Admiral Phillips
already been noted about the um about
the small Shipyard Grant but could you
just reiterate the number uh the the the
dollar amount of requests that you’ve
received in the last
[Music]
year yes sir for the $20 million on
offer last year we received more than 80
million in Appropriations and we’re
happy to take that for the record we
could give you historically what we
typically receive there but it’s it’s
very much oversubscribed as are all of
our grant programs
yeah so when you when you do those
assessments of say the 80 million in
request um
just just so that the number is accurate
is it 80 million of all really great
super great projects and only get 20
million or some um not some clearly
aren’t ready to
[Music]
go uh 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
yeah as you you are well aware from your
District sir people come back again and
again and again and with success over
time yeah we’ve got quite a number of U
projects and pass rounds doing great
work uh I was disappointed about the
administration’s request for the pp
which is $80 million is just not enough
and as I noted that when we did the B
the idea was B Money wouldn’t supplant
this money and where the danger is if we
don’t do something like Advanced
Appropriations in the future then we’re
going to end end up with a new standard
of something well below what it was
before we did uh the B and so um 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 are you guess
what are you what information are you
collecting for the future so in the
future mayat can go to the
administration and say okay if Advanced
Appropriations are no longer going to be
here you need to understand the Baseline
isn’t what we had last time it’s it’s
120 or 160 or some other number that was
larger before before this
year so sir thank you for that question
I think across the uh Department of
Transportation we are working
collectively to develop a significant
amount of data collection which we
already have within PP and other modes
do as well to understand what we’re what
we see over time and what we see as the
needs now the other modes are different
some have formula funds and and other
things to go with their grants but uh in
our case as a full discretionary grant
program awarder uh we are certainly
keeping track of the need the requests
over time and uh and I can say that
again we see three or four times the
dollar value uh in requests uh versus
funding available thank you thank you Mr
chair yeld
back Mr vandrew you recognize for five
minutes
thank you Mr
chairman you know offshore wind projects
you knew this is what I was going to
talk about a little bit um offshore wind
projects are
failing and you know that the oread one
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 marit has
been giving subsidies to fund these
projects which many of them seem to be
going towards the
graveyard my opinion no more funds
should be allocated to these
hemorrhaging money pits just last year
22 million almost $22 million were
awarded to funding Mara’s budget
supports of these
Ventures if this money can be better
utilized to further fund accounts such
as op 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 we Admiral Phillips
thank you for being here
today how is the $222 million that was
spent how has that been
implemented so sir thank you for that
question uh it is uh correct that we
have wed over 200 million in Grants to
projects for Port infrastructure
development that have a connection to
Offshore wind however all of those Grant
projects are in those ports support work
that those ports would need anyway they
improve Wares they improve
transportation in and out of the port
they improve Utilities in fact in New
Jersey alone uh a grant was awarded last
year that particular Port is in part
connected to Offshore wind uh 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 uh along the Waterfront
so uh I would submit that while uh 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 thank you um if if I’m correct
and offshore wind turns out to be
nonviable let’s just pretend that it
doesn’t go anywhere um those
improvements are still well spent you
believe they will be utilized even
without these offshore wind
projects I do believe they will be used
irrespective of the ongoing work in
offshore wind or not
do you believe the benefits of the
funding outweigh the needs of other
parts of marriage’s accounts such as the
ship disposal program and the tanker
security
program so those programs are funded in
in separate lines uh and certainly the
discretionary grant program is meant for
a specific outcome which is improving
the movement of goods and it supports
that I understand they’re in separate
lines but money as they always taught me
is fungible and you know that is dollars
that could be used for other functions
and that’s 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 um even
though the funds have already allocated
to these projects
previously so sir amit’s contributions
to Offshore wind support include Port
infrastructure development as as you
have discussed and also support through
our Title 11 ship building program uh
those are the two are areas where we are
most engaged in offshore wind
opportunities okay so I know you can’t
answer this question in your position
but I was going to ask you do you
believe offure wind is still a worthy
investment and I know you’re going to
give me a a really good answer that
that’s not your job to determine
something along those lines but um 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’d like to see in other areas
that are very much needed and are
pending uh that we perhaps could uh
spend our money better appreciate your
answers uh to me the offshore wind
developments are a waste of taxpayers
money and marit’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 um actually
pose a threat to Maritime safety to
navigation to fishing to the whales to
the environment to um 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’m hopeful that um we don’t go
forward with them thanks for your
answers and chairman I yield
back thank you Mr aen glass you’re
recognized for five minutes
thank you chairman uh chairman maay
welcome appreciate your time last year
my colleague Mr Iselle 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
organization 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 that America’s ports and
Marine
terminals uh do you support the
establishment of a national Port
advisory committee and if so how can
Congress help you to implement
this um thank you Mr aen Claus I 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 um I would say on on a specific uh
I won’t comment on a specific
legislation but I do think in the long
run certainly it’s very important here’s
my concern uh and that is that we have
one um statuto uh provided for committee
uh that is a shippers committee half
exporters half importers um it is a good
thing to have to have and I certainly
support the principle as I support the
principle of what you’re talking about
the danger though is that the Assumption
was that it would cost no money um and
it does end up costing some money I’m
not saying it’s a huge amount of money
but the the group has decided that it it
has um I think quite a few meetings not
in Washington um we have to make sure
that uh they follow open meeting laws
and have it support and therefore we’re
often faced with either having to send
uh staffer or two per across the country
we’re not a big agency like Admiral
Phillips agency so it’s it’s even the
small doll I’m kidding about that I
she’s we both we both come from very
modest uh agencies but um we can’t uh we
can’t necessarily uh do that without a
specific line item so I guess what I
would say is to make it easier if you if
if you do propose this uh then
definitely include the funding for it
the last thing I’ll say though is that
if we want to do it ideally maybe they
all should be one advisory committee I’m
not sure whether having three or four
advisory committees is the right way of
going about it it’s certainly better
than not hearing from these groups at
all uh but one of the advantages of
these sort of committees is that it
facilitates not only communication with
us which is very important came in handy
by the way to have the shippers
committee when to find out what each one
of them experience was with Baltimore
but it’s very important to have an
exchange among the various stakeholders
so um I certainly support the principle
not sure if I support the specifics I I
appreciate the financial constraints and
uh would support dedicated funding for
those advisory committees and also open
to suggestions as you’ve put forward
about how we might synthesize them and I
would encourage you as I know you do
with uh uh with your background in in as
a member in constituent Services is to
continue to um work through that Sho
leather and getting input from the
terminal operators and the ports um as
as really as your
constituents uh rear Admiral Phillips uh
thank you for your testimony today I’m a
member of the select committee on China
uh and an area of significant con
concern for me is China’s rapidly
expanding ship building capacity recent
estimates indicate that China’s current
capacity is about 200 times the United
States capacity for ship building uh and
its Military and Commercial fats are
rapidly expanding there have been
arguments that their quality is uh below
ours that’s debatable and what is not
debatable is that quantity has a quality
all of its own when they’re building
that many ships it it matters uh you
mentioned in your testimony the
importance of recapitalizing the ready
Reserve force and the commercial sea
lift programs can you speak to the
importance of the president’s budget
request and what modifications or
expansions of Title 11 you might
advocate for for so that we can help you
uh build more
ships so sir thank you for that question
uh as you’re aware Title 11 is uh a loan
program that allows us to support uh
industry in the capacity of being able
to build vessels in this country uh we
have designated offshore wind vessels
vessels of national interest and uh have
eight applications underway right now
many of which are related to Offshore
wind but not all uh and in fact we are
also allowed to loan money to Ports for
improvements and we have one port loan
uh in progress so uh the challenge with
Title 11 is that it takes some time uh
but the good news is that we pay uh or
allow 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 uh our opportunity there is to expand
capacity to Pro continue to provide
opportunities for Builders to to gain
access to funds to be able to build
vessels and that of course improves and
expands our us Flag fleet
um in particularly a drones act Fleet as
well well as I indicated to you earlier
I’d like to work with your office on on
legislation around Title 11 to see how
we can um give you as many tools as
possible to uh widen uh our ship
building pipeline in this country um in
the most cost-effective way possible so
I look forward to working with you on
that thank you sir y
back represent Colton you were
recognized for five minutes thank you so
much sir and thanks for having this
important
hearing um this year’s budget request
obviously is is noticeably smaller we’re
going to be hitting on uh some of the
same themes but I think it’s important
to to distill this um obviously the the
FY 2025 request is about
$0.66
million uh lower
11.4% uh to both of you can you give us
a a distillation of the the impact on
Maritime performance as a country and
what should Congress keep in mind as we
continue to look to be good
partners you first no you first thank
you ma’am for that question uh 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 ship building uh that cargo to that
and of course we have within marad we
are very focused on meeting DOD
requirements so we have the fleet that
that our current requirements and our
authorizations and our Appropriations
provide um and and that is largely based
on DOD requirements so uh signals to the
industry that there is interest in
sustaining long-term growth in the ship
building industry uh long-term cargo
access for US flag vessels uh in
particular and that then generates
long-term job opportunities for Mariners
that keep people in Industry so that’s
my primary focus is US flag vessels
cargo for them to carry to meet our
nation’s needs and and a sustained
opportunity for us 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’s 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 to build those ships here
which then gives us an opportunity to
sustain build and sustain ship building
capacity which not only supports the
broader industry the Jones act Fleet but
also our military capacity in ship
building 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’ve
managed to accomplish that have grown
the fleet are there and will continue to
be there for the future of the industry
that’s great um as a regulatory agency
of course our direct jurisdiction
doesn’t cover most of this but since you
asked yes um uh what I will say is the
the bipartisan infrastructure bill was
very important but it was like a down
payment um if we we really want to take
full advantage of uh of the ocean
carriage in in in this country um we’re
probably going to need a lot more
investment the issue is that of supply
chain resiliency and I mentioned it a
bit with Baltimore but um our ports but
also a lot of the issues that happened
during covid though there were issues at
the ports actually happened Inland um I
think I was quoted as saying if you
build a bridge in Indiana you’re still
helping me as Federal Maritime
commission chair and that’s true uh 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 do
what does a bridge have to do with
Maritime it has everything to do with
Maritime a port is where water meets the
land um so uh I would just say to the
extent that you and your colleagues can
work on it in a bipartison way we we
could use more investment particularly
in our port s but frankly in our
infrastructure all across America thank
you sir very helpful uh one more
question re rear Admiral Phillips your
testimony touches on the US Marine
Highway program and you mentioned how
funding awarded uh this last year will
support eight projects Across the Nation
um I’m particularly excited to hear that
nearly all the funding is supporting
projects in disadvantaged communities or
feder federally designated Community
Development zones can you share where
these project s are and specifically if
any of them are in the Great Lakes
region so ma’am I will check that for
the record because I don’t think I can
spout them out um by memory here um but
what I say about the US Marine Highway
program generally is this is a program
with tremendous capacity to do more for
our nation and and um it it is um
chronically short of resources and there
was always an excess in applications for
need the $125 million infusion we got
under IL uh was there was a significant
increase in the amount of applications
that year and and there’s certainly a
need and particularly from an inland
perspective uh I hear when I talk to
Inland ports and Port operators
continually we wish we we could use more
money here this is another opportunity
for us to expand capacity and it works
well with PP it can support things in a
slightly different way but uh but there
certainly is an opportunity there and an
opportunity to move more Goods on water
and there’s plenty of capacity there so
tremendous opportunity with that program
yeah agree and we’ll look forward to
your response for the record thank you I
yield
okay well first of all I don’t see any
other questions
uh thank the witnesses for being here
thank you for your testimony really
appreciate that and with that meeting’s
Jed
for for
Subcommittee Hearing on “Review of Fiscal Year 2025 Maritime Transportation Budget Requests, Pt. 1: Maritime Administration and Federal Maritime Commission”