Political Gridlock – Not Totally: A Review of Regulatory and Legislative Activities in the Maritime Sector
Given the partisanship and dysfunction that is now so prevalent in the nation’s capital, predicting the actions of the US Congress or the Executive Branch can be difficult at best. But the wheels of democracy continue to turn, with the regulatory agencies and Congress continuing to work on matters affecting the maritime industry. In fact, despite the public perception that nothing is happening in Washington, DC, there is a great deal of activity that could have significant impacts on the maritime sector (both good and bad).
Water Resources Development – Building and Maintaining Maritime Infrastructure
One of the most notable recent legislative debates is about a water resources bill, legislation that authorizes the US Army Corps of Engineers to develop, maintain, and support US port and waterways infrastructure development, and support flood protection and environmental restoration needs. You might be surprised to hear that there has been significant bipartisan support in both the House and Senate for a reauthorization of the Water Resources Development Act (WRDA). The WRDA bill has historically received broad support, with a bill passed every two years to provide direction to the Executive Branch on water resources development projects. But amid opposition to earmarks and federal spending from some quarters in Congress and the Administration, a WRDA bill has not been signed into law since 2007 (although there have been extensions of current authority in the intervening time).
The Senate took up the mantle first, with Senator Barbara Boxer (D-CA), chair of the Senate’s Environment and Public Works Committee, working with the committee’s Ranking Member, David Vitter (R-LA), to unanimously pass out of committee on May 15, 2013 a WRDA bill (S. 601) that, according to the Committee, “provides critical flood protection for communities across the country, maintains navigation routes and the flow of commerce, restores vital ecosystems, and sustains up to 500,000 new jobs.” Committee action was swiftly followed by passage on the Senate floor with strong bipartisan support by a vote of 83 to 14 on May 17. The legislation received broad industry support (http://aapa.files.cms-plus.com/130429_Multi-Industry_WRDA_Senate_Signatories_Final.pdf).
The Senate bill would streamline Army Corps projects, authorize the deepening of harbors to prepare for bigger ships in the international trades, replace earmarks by giving the US Army Corps of Engineers more discretion on choosing projects, better utilizes the Harbor Maintenance Trust Fund, and deauthorizes projects previously authorized that have not been started.
House Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA) took longer to develop his bill, but also passed H.R. 3080, the Water Resources Reform and Development Act (WRRDA), out of Committee on September 19, 2013. According to the Committee, the bill “cuts federal red tape and bureaucracy, streamlines the infrastructure project delivery process, promotes fiscal responsibility, and strengthens our water transportation networks, improves America’s competitiveness, and creates jobs.” While different in many respects to the Senate bill, it too received broad, bipartisan support and broad industry support.
Unfortunately, as of the time of this writing, with the ongoing government shutdown, the full House has not yet taken up the bill; however, it is expected to be one of the first items brought up following resolution of funding for government operations and the debt ceiling.
A major difference between the House and Senate bill is the House bill would require congressional approval for water-related projects while the Senate bill would leave approvals to the Executive Branch. Both Chairwoman Boxer and Chairman Shuster have said publicly they are eager to move quickly to a conference committee to work out their differences and pass the first water resources bill since 2007.
In addition to authorizing water resources development, Washington State Senators Murray (D) and Cantwell (D) have introduced the Maritime Goods Movement Act for the 21st Century (S. 1590) that would, among others, “repeal the Harbor maintenance tax and replace it with the Maritime Goods Movement User Fee, the proceeds of which would be fully available to Congress to provide for port operation and maintenance.” Changes to the Harbor maintenance tax structure would be a significant effort, but it is possible that the issue could be considered as part of a broader tax reform effort.
Information on these bills can be found at the Library of Congress website, thomas.loc.gov.
Regulatory Agencies Continue to Implement Agendas
Rear Admiral Joseph Servidio of the Coast Guard testified before the House Committee on Transportation and Infrastructure Subcommittee on Coast Guard and Maritime Transportation on September 10, 2013 on the Coast Guard’s Regulatory Program. The Coast Guard and the Department of Homeland Security have both been continually criticized for not getting regulations passed in a timely manner. In his testimony, Servidio stated that the Coast Guard is continuing to build on their Regulatory Development Program, which includes investing in the workforce, improving transparency, streamlining processes, soliciting input from the public, and scrutinizing all regulatory actions to ensure they are achieving the desired outcome.
The Coast Guard earlier this year issued an aggressive unified regulatory agenda, identifying five completed actions and 42 rules in various stages of consideration. (http://www.regulations.gov/#!documentDetail;D=DHS-2013-0053-0001) Many of the rules are routine and frequent such as the establishment of security zones, safety zones, or anchorage areas. But others have potentially significant and costly impacts on the maritime sector.
Updates to Maritime Security. Classified as an economically significant rulemaking – meaning the rule would have an annual impact on the economy of at least $100 million – this rulemaking would propose additions, changes, and amendments to maritime transportation security requirements for the maritime sector. The Coast Guard has indicated that it intends to issue an advance notice of proposed rulemaking in December 2013.
Commercial Fishing Vessels. As a result of legislation enacted as part of the Coast Guard Authorization Acts of 2010 and 2012, the Coast Guard is developing economically significant regulations to add new requirements for “safety training, equipment, vessel examinations, vessel safety standards, the documentation of maintenance, and the termination of unsafe operations” for commercial fishing vessels. The Coast Guard indicated its intent to issue a final rule by September 2013; however, no regulations have been issued.
Transportation Worker Identification Credential: Card Reader Requirements. The Coast Guard anticipates issuing a final rule that would address the types of vessels and facilities that will use TWIC readers, locations of secure and restricted areas, and recordkeeping and requirements for data exchanges between TSA and vessel or facility owners/operators. A proposed rule was issued on March 22, 2013 (78 FedReg 17781).
A long-term regulatory action for the Coast Guard is the long-over due requirements for the inspection of towing vessels, “a program of inspection for the certification of towing vessels, which were previously uninspected.” The regulations would prescribe the various standards for the safe construction, operation, and management of towing vessels.
These are but a few of the many regulations being pursued by the Coast Guard. And while it is expected that the government shutdown that occurred in October will slow consideration of many of these rules and regulations, the Coast Guard continues to move forward on many of them.
Policy Debates and Budget Pressures Put the Squeeze on Key Sectors of US-Flag Shipping
Two foundational promotional programs for the US-flag shipping sector have been put under pressure as a result of proposed changes by the Administration and lack of funding. Those programs are the Maritime Security Program (MSP), which was established in 1996 to ensure a fleet of active, commercially viable, military useful, privately owned vessels to meet national defense needs, and the PL 480 Food for Peace program, in which U.S.-flag ships carrying government-impelled cargoes support global food aid programs.
The Maritime Security Program has seen its budget cut over the past two years and sequestration is also taking a significant toll on the budget for the program. The 60-ship program is in jeopardy of losing vital military sealift assets – vessels and manpower – as a result of Congress’ inability to pass appropriations bills funding this critical program.
The Maritime Administration posted a statement on the Department of Transportation’s blog highlighting the importance of MSP in executing the mission of American forces overseas, stating, “The US is the only nation capable of deploying major forces anywhere in the world at a moment’s notice in support of our national security objectives. Part of that capability comes from our ability to sustain those forces.” The question remains – will they have the ability to sustain those forces?
On the PL 480 Food for Peace front, policy changes are being proposed that would divert funding from the purchase of US grown commodities shipped on US-flag ships to cash-based foreign assistance. Such changes will result in the further loss of US-flag vessels. Moreover, because of changes to the cargo preference requirements in last year’s transportation reauthorization bill, which reduced the US-flag requirement for food aid cargoes from 75 percent to 50 percent, the industry saw losses of both mariner jobs and US-flagged ships.
The pressure on these two core US-flag promotional programs undermine US military sealift capabilities by reducing the number of vessels and seafarers available to support the nation in times of war or national emergency.
Environmental Requirements – Changing the Landscape for Vessel Operations
The United States has implemented strict Emissions Control Areas (ECAs) through the Environmental Protection Agency (EPA) in order to protect US coastal waters from emissions from large ships. According to the EPA, these new standards will reduce air pollution from ships and deliver substantial air quality and public health benefits that will extend hundreds of miles inland. Some of these new regulations went into effect in 2012, while others are slated to come online in 2015 and 2016.
Some shipping companies, including most recently Carnival Corporation, have applied for and received waivers to the new ECA standards in return for commitments to implement new technologies to meet or exceed the ECA requirements. As a result, companies like TOTE have committed to major investments in ships to meet the new ECA requirements. TOTE announced, this year, a contract with NASSCO Shipyard for “the design and construction of two 3,100-TEU LNG-powered containerships… expected to be the largest ships of any type in the world primarily powered by liquefied natural gas (LNG).” Construction of the first containership is scheduled to begin in early 2014. Interlake Steamship Company, a Great Lakes shipping company, has also announced plans to convert its ships to LNG power.
Other companies operating in the US have also publicly indicated plans to build new ships or convert vessels to meet these strict environmental requirements. As a result, the face of the US industry is dramatically changing.
In addition to ECAs, other environmental policies such as new restrictions on power plants and vessel discharges will have impacts on the maritime sector as well. This Administration has made such environmental policies a priority and is moving forward administratively to implement many of them without Congressional action.
In conclusion, the wheels of the regulatory agencies and Congress continue to move. Not only is Congress currently considering legislative matters – funding and policy – that will have an impact on the maritime sector, but they are also in the early stages of developing Coast Guard reauthorization and Maritime Administration reauthorization bills, with the goal of passing them some time next year. The Administration is developing its fiscal year 2015 budget requirements. The Coast Guard continues to process numerous regulations to govern the maritime sector.
While it is a tumultuous time in Washington, DC, and the major focus is on the recurring fiscal debates, there is still a great deal of activity affecting the maritime sector. Do not be swayed by constant headlines about a gridlocked political environment in Washington.
It may be true that gridlock exists but as you can see, it has not brought everything to a halt.
Darrell Conner, Government Affairs Counselor, is the co-chair of the Public Policy & Law Practice Group at the law and lobbying firm of K&L Gates, which for 40 years has represented maritime clients on legal, legislative, regulatory, and policy matters. Darrell can be reached at email@example.com.