March 06, 2019

Chairs DeFazio, Maloney Statements from Hearing on, “U.S. Maritime and Shipbuilding Industries: Strategies to Improve Regulation, Economic Opportunities, and Competitiveness”

Washington, D.C. — The following are opening remarks, as prepared for delivery, from Chair of the House Committee on Transportation and Infrastructure Peter DeFazio (D-OR), and Chair of the Subcommittee on Coast Guard and Maritime Transportation Sean Patrick Maloney (D-NY) during today’s hearing titled: “U.S. Maritime and Shipbuilding Industries: Strategies to Improve Regulation, Economic Opportunities, and Competitiveness.”

Chair DeFazio:

Thank you, Chairman Maloney and Ranking Member Gibbs, I cannot think of a better way for this subcommittee to start off the 116th Congress than to convene this morning’s oversight hearing on strategies to improve the U.S. maritime and shipbuilding industries.

We begin the new Congress with a clean slate and I am eager to hear from our witnesses today how we can make these critical industries stronger.

The maritime industry will continue to face challenges –such as increased shipping demand, larger vessels, and attacks on the Jones Act.

Regarding the Jones Act, recent discussions to waive the Act to allow the movement of LNG to either Puerto Rico or other U.S. locations are exactly the kind of pernicious and thoughtless proposals that accomplish little but to fill the coffers of the oil and gas industry at the expense of developing new markets for our coastwise traders.

Let me be clear: under current law, the only way the Jones Act can be waived is when such a waiver is determined to be “in the interest of national defense,” period. Moreover, even in those instances, waivers are pursued as a last recourse, not the first option.

I applaud the President for signing an executive order on Monday to support the transition of active duty service members and military veterans to careers in the U.S. Merchant Marine.  That was the right thing to do.  It would be a cruel irony, however, if the next action taken by this administration were to waive the Jones Act and simultaneously eliminate future job opportunities for those very same veterans and separating active duty service members.

We are left with no other option other than to confront these challenges because the annual economic contribution of the maritime industry is simply too significant for us to remain indifferent. Remember, over ninety percent of U.S. imports and exports arrive or depart by ship.

The Coast Guard’s 2018 Maritime Commerce Strategic Outlook provides a succinct summation of what we risk to lose if we fail to act to rebuild and revitalize our maritime economy.

Nationally, maritime commerce generates more than 23 million jobs and over $4.6 trillion in economic activity annually. More specifically, the U.S. maritime industry generates over $100 billion in annual economic output and sustains more than 500,000 good paying jobs in the U.S. industrial base.

Not surprising, the maritime industry is an important engine in many state and local economies. For example, according to data compiled by the American Maritime Partnership, the maritime industry in Oregon alone contributes $1.2 billion annually to the Oregon economy and provides close to 7,000 jobs, including $367.2 million in worker income.

We all have a stake in maintaining and growing a vibrant, diverse, and globally competitive U.S. maritime industry. The founders of our Republic recognized this fact in the late 18th Century, and it remains as true and relevant today.

The United States is a great maritime nation. However, to remain a great maritime nation in the future, we must renew our commitment, maintain our vigilance, embrace a new vision to support the U.S. maritime industry and unleash the great potential of our Nation’s Blue Economy.

Speaking of commitments, the government failed to uphold our commitment to members of the Coast Guard during the recent lapse in appropriations. It is unacceptable that the men and women of the Coast Guard had to worry about when they would receive their paychecks. I have introduced H.R. 367, the Pay Our Coast Guard Parity Act, to ensure that something like this never happens again.

Not paying the Coast Guard during the shutdown was one of the most monumentally dumb things I have witnessed during my thirty-two years in Congress.

For just a minute, think about it.  These are the people we ask to go out selflessly into the jaws of violent storms to rescue people lost at sea. These are the people who are so proficient at combating illegal drug running that they interdict more contraband at sea than all other Federal, State and local agencies combined.  Moreover, these are the people we turn to as first responders after natural and man-made disasters, even though their own families and communities might be affected, too.  Not paying the Coast Guard makes no sense.

The Coast Guard provides vital service to the Nation around the world and around the clock. As members of the Armed Forces, they are uniquely responsible to continue to perform regardless of the political winds. I hope Rear Admiral Nadeau can share with us some of the impacts of the shutdown on the men and women of the Coast Guard.

To that end, Mr. Chairman, I welcome the opportunity to renew our commitment this morning, and I look forward to hearing from our witnesses on how we might strengthen this often over- looked, but indispensable, sector of the U.S. economy.

Thank you.

Chair Maloney:

Good morning, and welcome to our first hearing in the 116th Congress looking at strategies to improve the U.S. maritime and shipbuilding industries.

It is an honor to chair the Subcommittee on Coast Guard and Maritime Transportation. This crucial subcommittee has existed in one form or another since the earliest days of the Republic itself, and has always stood in support of our maritime nation. 

I am privileged to assume that mantle of responsibility, and I look forward to working in a genuine bipartisan manner with Ranking Member Gibbs to write a new productive chapter in this subcommittee’s illustrative history.

Before we begin, I want to take a moment to recognize and thank the members of the Coast Guard for their actions during the recent government shutdown. For the first time in our Nation’s history, members of an Armed Force were not paid due to a lapse in appropriations. That is unacceptable and simply cannot happen again. To the men and women of the Coast Guard: thank you for the service you provide to this Nation every day.

I also want to remember Chief Warrant Officer Michael Kozloski, a Coast Guard member who died in a tragic on duty accident in January. Chief Warrant Officer Kozloski dedicated his entire adult life to protecting our country as a member of the Coast Guard, and his service will not be forgotten. Our thoughts go out to his family and shipmates.

One cannot overstate the importance of our nation’s maritime industry. Every year, over $4.6 trillion worth of commerce flows through a maritime transportation system that is rapidly becoming more complex. Increases in the amount of cargo being shipped and the size of the vessels carrying that cargo challenge the industry and agencies responsible for its oversight.

Similarly, new technologies are moving the industry forward while simultaneously creating new vulnerabilities and challenges that must be addressed. I hope this hearing will begin a dialogue to identify constructive and pragmatic strategies to protect, enhance and expand the U.S. maritime and shipbuilding industries.

Since 1789, Congress has passed laws to help keep the U.S. merchant marine competitive in the global economy and to maintain a military sealift and shipyard industrial capacity necessary to ensure our national security. Durable maritime statutes such as the Jones Act, Cargo Preference, and the Maritime Loan Guarantee Program, have been supplemented by new program authorities such as the Maritime Security Program, Small Shipyard Grant Program and the Military-to-Mariner Initiative.

The Jones Act first came into effect as part of the Merchant Marine Act of 1920 to encourage the development of a strong merchant marine for both national defense and economic security. The Jones Act requires that merchandise and passengers being transported by water between two points in the United States must travel on vessels that are built in the U.S., owned and manned by U.S. citizens, and registered or “flagged” in the United States with an endorsement by the Coast Guard to participate in the coastwise trade.

Ninety-one United Nations member states have laws similar to the Jones Act, which are called “cabotage laws”. Some maritime nations are expanding the scope of their cabotage laws despite the proliferation of global free trade agreements.

For example, last year Russia enacted a law requiring that all domestic and international shipments of oil, natural gas, gas condensate, and coal extracted from Russian territory and loaded on vessels along the Northern Sea Route must be carried by Russian-flagged ships.

Despite other countries’ cabotage laws, some free trade critics continue to attack the Jones Act as unnecessary or unhelpful to the U.S. economy. But we cannot become complacent in our defense of the Jones Act, which remains a critical component of U.S. maritime strategy.

Another critical component of that strategy is the U.S. merchant marine – the fleet of U.S. flagged commercial vessels and civilian mariners that carry goods to and from, as well as within, the United States. These vessels are operated by U.S. licensed deck and engineering officers and unlicensed seafarers.

A significant proportion of U.S. mariners are nearing retirement age, revealing a potential future shortage of available and experienced maritime professionals that could impact military sealift and weaken U.S. maritime commerce — a point I expect Admrial Buzby will make today. Maritime stakeholders are aware of this looming workforce attrition and have expressed concern that more should be done now to expand this highly-trained, dedicated, and proficient labor pool by any means necessary.

It is imperative that we examine every opportunity to grow and diversify the U.S. mariner workforce, including making it easier for separating military members to enter the maritime workforce and identifying ways we might better leverage the capabilities of State maritime academies.

In addition to facilitating commerce in times of peace and war, the U.S. Merchant Marine acts as a naval auxiliary to deliver troops and war material to military operations abroad. Throughout our history, the Army has relied on U.S. flagged commercial vessels to carry weapons and supplies and ferry troops to the battlefield. During Operations Enduring Freedom and Iraqi Freedom, U.S. flagged commercial vessels transported 90 percent of sustainment cargoes moved to Afghanistan and Iraq.

But the U.S. flag fleet in the foreign trade has shrunk to the point that it is a remnant of what it was just ten years ago. We must do more today to address the competitive imbalance that exists between vessels operating under the U.S. flag with vessels operating under foreign flags of convenience.

Additionally, we must do more to generate new cargo. Cargo is the lifeblood of the maritime industry. Without more cargo, there is no need to build more ships, and without new ships, there is little need to hire more mariners.

I would like to learn more about what options or strategies we might consider to address these two fundamental challenges to the security and success of the U.S. maritime industry.

We are joined here today by experts from the U.S. Coast Guard and the Maritime Administration, as well esteemed professionals from many sectors of the maritime industry. Welcome to one and all.  I look forward to hearing from you on how we might strengthen this indispensable sector of the U.S. economy.

Thank you.