SCA Weekly Round-Up
June 25-28, 2012
*SCA's Weekly Round-Up will be on hiatus next Friday and will resume on Friday July 13.
House Rule Announced for FY13 Defense Appropriation Bill
On Thursday the House Rules Committee met to set the rule for the floor consideration of H.R. 5856 — Department of Defense Appropriations Act, 2013. The committee adopted an open rule, which permits amendment of the bill from the floor of the House. The defense funding bill is expected to be taken up in the full House when Congress returns from recess in July.
White House Issues Veto Threat on Defense Approps Bill
Having already threatened to veto the House Armed Services Committee’s defense authorization bill in May, the White House has now threatened to veto the House Appropriations Committee’s defense bill. The Statement of Administration Policy (SAP) issued on Thursday by the Office of Management and Budget said the approps bill not only breaks the spirit of last year’s deficit reduction agreement, it also would rob funds from other important accounts and leave DOD less ready to carry on its missions. The bill, which the committee passed last month, would set DOD's base budget at $519 billion - about $3 billion above what the Pentagon requested. Of interest, the Administration opposes the use of incremental funding for the deactivation of the USS ENTERPRISE and the elimination of funding for AFSB, saying “AFSB is critical to the health of the shipbuilding industrial base as it is the only auxiliary ship in the Navy’s shipbuilding plan until FY 2016.” The SAP can be read HERE.
DOD to Submit Omnibus Reprogramming Request
DOD plans to seek Congressional approval to alter its spending plan to handle billions of dollars in unanticipated costs, including an additional $100 million a month to supply troops in Afghanistan. The proposed changes, called an omnibus reprogramming request, requires the approval of the chairmen and ranking members of the House and Senate Armed Services and Appropriations committees and funds DOD's unbudgeted costs, including nearly $3 billion in additional fuel costs because of unexpected price increases, along with $100 million per month in additional costs of shipping supplies to Afghanistan through Russia and several central Asian countries, rather than through Pakistan.
Sequestration Threatens Small Businesses Long Before January 2013
An article published by the Daily Press in Hampton Roads, VA highlighted the uncertainty small defense contractors face with sequestration looming and the potential effects on the surrounding community. Ashley Godwin, SCA Senior Defense Advisor, spoke to the issue of sequestration saying, “The burden falls heavier on small- and medium-sized businesses that don’t have the financial flexibility or lengthy project lists of larger corporations.” To read the full article, click HERE.
Ryan Marks Sequestration Bill
On Wednesday the House Budget Committee marked up the Sequestration Transparency Act of 2012 (HERE). The bill requires the Office of Management and Budget to provide information on how it will implement across-the-board cuts that are scheduled to take effect on January 2, 2013. Specifically, the bill requires, within 30 days of enactment, a detailed report from OMB on the accounts identified as subject to the sequestration cuts at the program, project and activity level and the percentage reductions the agencies will face. It also requires the Administration to identify those programs that will be exempt from the sequester cuts. The bill is meant to be the companion bill to the Murray/McCain amendment that that the Senate included in its version of the farm bill last week.
LEGISLATIVE AND POLICY UPDATE
Today, Congress was in the final stages of approving the Highway Transportation Bill, known as “MAP-21.” While there was no maritime title as earlier promised by Congressional leaders, the bill report language included a "sense of Congress" encouraging the Administration to spend all money collected through the Harbor Maintenance Tax on port and dredging projects. It also directed the administration to give an annual estimate of the maintenance needs of U.S. ports, and also estimate how much funding would be needed to make 95 percent of U.S. ports and waterways operational within three years. The conference report as agreed to by both the House and Senate can be read HERE.
House Debates THUD Appropriations Bill
We expect that the House of Representatives will pass the fiscal year 2013 Transportation, Housing and Urban Development funding bill today, which includes funding for the Maritime Administration (MARAD) today. The House bill did not include funding for either the Title XI Loan Guarantee Program or the Small Shipyard Assistance Program (SSAP). The Senate version includes $9.8 million for SSAP and $35 million for Title XI, and SCA was instrumental in SAC's decision to increase funding for both programs when none was requested by the Administration. Though it is uncertain when the full Senate will take up the measure, SCA will continue to support the SAC mark on the Hill when the two funding bills go to conference later this year.
House THUD Bill Zero's Out 2013 TIGER Grant Program
The 2013 Transportation, Housing and Urban Development appropriations bill, expected to be approved today by the House, denied the Administration's request of $500 million for the TIGER Grant Program, which supports transportation related projects. Over the past years, TIGER funds have been allocated for ferry construction and other port and maritime related projects. The Senate includes $500 million for the program in their version of the FY13 bill. In response to the House decision, Representative Waters (D-CA) introduced the TIGER Grants for Job Creation Act (H.R. 5976) making supplemental appropriations for fiscal year 2012 for the TIGER Grant program. Representative Waters issued a press release explaining the measure.
DREDGE Act would Deepen Mississippi to 50 Feet
On Thursday, Congressman Cedric Richmond (D, LA-2) introduced the DREDGE Act of 2012, Dredging for Restoration and Economic Development for Global Exports. The bill would authorize the Army Corps of Engineers to dredge the Mississippi River and the Port of New Orleans to 50 feet- allowing for post-Panamax ships to enter the harbor. The Port of New Orleans is normally 47 feet deep and 450 feet wide, but the accumulation of sediment can constrict its size and depth. The DREDGE Act would also require greater accountability concerning sediment disposal from dredging.
2012 TIGER Grants Provide Port Funding
The U.S. Department of Transportation announced this week that 47 projects in 34 states and the District of Columbia will receive a total of $485.3 million in its fourth round of TIGER (Transportation Investment Generating Economic Recovery) infrastructure grant awards (list: HERE). Of the 47 capital project funding requests selected for awards, eight go directly to America’s port-related infrastructure. These eight project grants total more than $79 million, or about 16 percent of the capital grant funds available. The decision on the grants, which have sometimes been cast as political, signals DOT's attempts to promote its maritime involvement. And for ports, this marks long-awaited acknowledgement.
Private Sector Testifies on Law of the Sea Treaty
The Senate Foreign Relations Committee this week continued its hearings on the Law of the Sea Treaty. Members of various business lobbies, including the American Petroleum Institute, U.S. Chamber of Commerce and National Association of Manufacturers, told lawmakers they believe U.S. endorsement of the Law of the Sea Convention would encourage their companies to increase investment and thus generate new jobs, a potent political argument in this election season. The witnesses argued that companies in the United States are unlikely to invest heavily in deep seabed activities because of the risk of legal challenges to their activities. Treaty ratification requires a two-thirds vote of approval in the Senate, which means Democrats need at least 14 Republicans to join them and more if any Democrats oppose it. The Treaty won’t likely be brought up for a vote until after the November elections.
JONES ACT UPDATE
Coast Guard Subcommittee Holds Review of Vessels Used in SPR Drawdown
On Wednesday, the House Transportation and Infrastructure’s Subcommittee on Coast Guard and Maritime Transportation held a hearing to examine the vessels used in the 2011 Strategic Petroleum Reserve (SPR) Drawdown and whether priority had been given to foreign-flagged vessels. John Porcari, Assistant Secretary at the Department of Transportation defended MARAD and the Jones Act Waiver processes during the drawdown in his testimony, indicating that they did everything in their power to prioritize the U.S.-flagged fleet. Tom Allegretti, President of the American Waterways Operators (AWO) testified on behalf of the American Maritime Partnership (AMP). Mr. Allegretti contended that MARAD and the U.S. Transportation Department effectively ignored the Jones Act during the process.
A video of the hearing can be found HERE. Testimony from John Porcari can be found HERE. Testimony from Tom Allegretti can be found HERE.
STUDIES AND REPORTS
USACE Report on Post-Panamax Preparation
The U.S. Army Corps of Engineers (USACE) has submitted to Congress the "U.S. Port and Inland Waterways Modernization: Preparing for Post-Panamax Vessels" report, an examination of options for future modernization of U.S. ports and inland waterways. The report can be read HERE. The report provides an analysis of the challenges and opportunities presented by the post-Panamax vessels and outlines options on how the nation might address the port and inland waterway infrastructure needs required to accommodate these new vessels. The report also identifies capacity maintenance and expansion issues associated with the deployment of post-Panamax vessels to trade routes serving U.S. ports. "Post-Panamax vessels today make up 16 percent of the world's container fleet, but account for 45 percent of the fleet's capacity," said Maj. Gen. Michael J. Walsh, USACE deputy commanding general for Civil Works and Emergency Operations. "Those numbers are projected to grow significantly over the next 20 years." The report found that Southeastern and Gulf ports need up to $5 billion to deepen channels before the upcoming Panama Canal expansion.
OFFSHORE OIL AND GAS UPDATE
Department of Interior to Move Forward on “Targeted” Arctic Leases
On Tuesday, the Obama administration moved to finalize a plan to offer new leases in the Arctic Ocean but will limit the size and location of the leases according to resource potential, subsistence use and environmental conditions. Secretary Ken Salazar said the agency’s leasing plan will include potential lease sales in the Chukchi Sea in 2016 and the Beaufort Sea in 2017. The Secretary also indicated that the final permits for Royal Dutch Shell PLC would be issued shortly- leaving the potential that drilling could commence as early as mid-July.
INTERNATIONAL NEWS OF INTEREST
Chinese Shipyards Bankrupted by Sluggish Demand
Small-sized shipyards in China, lacking orders, face bankruptcy as a result of the sluggish world economy, a glut of vessels and soaring fuel prices. According to 'China Daily,' Zhejiang Jingang Shipbuilding Co Ltd recently filed a bankruptcy petition due to its significant loans and lack of new orders. The company filed for bankruptcy in mid-June as it is unable to meet its debt obligations of over 300 million yuan ($47.1 million). Most banks regard the export-led shipbuilding industry as "high risk", refusing to underwrite or extend loans to related companies. The Jingang shipyard is only one among many similar Zhejiang-based shipyards that have suspended business and dismissed employees due to the difficult market conditions. In June, Ningbo Hengfu Shipping Trade (Group) Co Ltd and Ningbo Beilun Sky Shipbuilding Co Ltd both filed motions to sell off assets. Industry losses are widespread, as the volume of new orders in 2011 fell 52 percent, according to the China Association of the National Shipbuilding Industry. New orders totaled 9.45 million deadweight tons, a drop of 47.3 percent from a year earlier. Combined outstanding orders were 134.4 million deadweight tons, down 10.4 percent from the end of 2011.
Navy Personnel Assignments Announced
Brian Antonio, Executive Assistant to Secretary Stackley, ASN(RD&A), was selected for rear admiral and now has orders to relieve RADM(sel) Rick Berkey as Pacific Fleet Maintenance Officer. RADM(sel) Berkey is relieving RDML(sel) Larry Creevy as Atlantic Fleet Maintenance Officer. CAPT Brian Eckerle has left 400F to relieve Brian Antonio as ASN(RD&A)'s EA.
New USMMA Superintendent Announced
U.S. Transportation Secretary Ray LaHood named Colonel (ret.) James Helis, Ph.D., as the new superintendent for the U.S. Merchant Marine Academy. Helis, a 30-year Army veteran, will begin work at the Academy next month after spending the past eight years as a department chair at the United States War College. During his 30 years in the U.S. Army, Colonel Helis served as an Army Ranger and master parachutist and was a veteran of the war in Afghanistan, where he served as Chief of Plans for the NATO International Security Assistance Force. Helis received his Doctorate of Philosophy in International Relations from Tufts University’s Fletcher School of Law and Diplomacy. He holds masters degrees from both the U.S. Army Command and General Staff College and the University of Pennsylvania, and he earned his Bachelor of Science from the U.S. Military Academy in West Point, New York.
SHIPYARD PHOTOS NEEDED FOR NEW SCA WEBSITE
SCA would like to feature pictures of member shipyards on our new website. Photos of shipyard workers and ships during all phases of construction, repair and maintenance are requested. Additionally we’d like to feature aerial and panoramic photos of yards and facilities.
Please send all photos to firstname.lastname@example.org. To send copies of photos on a CD, please mail to our address:
Shipbuilders Council of America
ATTN: Paula Reever
655 Fifteenth Street, NW
Washington, DC 20001
UPDATE FROM THE U.S. COMMERCIAL SERVICE
Upcoming Canadian Shipbuilding Program Opportunity, September 5-7, Halifax, Nova Scotia
Canada has recently committed $35 billion under the National Shipbuilding Procurement Strategy (NSPS) to build large combat and non-combat vessels for the Royal Canadian Navy and the Canadian Coast Guard over the next 30 years. The U.S. Embassy in Canada is organizing a U.S. delegation to visit Halifax to assist U.S. companies to position themselves for the growing shipbuilding opportunities in Canada.
Full details are HERE and follow up questions can be sent to CS Canada’s Luz Betancur at email@example.com
Adjustments in U.S. Export Control
Regulations that control U.S. exports are shifting certain marine and ship technologies from the U.S. Department of State ITAR to U.S. Department of Commerce Bureau of Industry Security. The U.S. Trade Department is coordinating with regulatory colleagues to provide a client outreach webinar in October/November. You can see the proposed rule HERE.
U.S. Department of Commerce Trade Lead
Cameroon is seeking a Passenger Ferry Vessel, age 10-15 years and with 300-350 person vessel capacity. You can read the specifications HERE. Please note that these opportunities are fully vetted through the U.S. Embassy and the Department of Commerce.
SAVE THE DATE
SCA’s Fall General Membership Meeting will be held October 15-17th, 2012. Mark your Calendars!