American Shipbuilding Association

Build A 300-Ship Navy

Navy regional Commanders-In-Chief have stated time and again that a 300-ship Navy is the rock bottom number — a number below which the Nation cannot fall and meet the Sea Power requirements of America and the Free World. To sustain a 300-ship naval fleet requires an average build rate of 10 to 12 ships per year according to analysis presented by military experts in the 1998 forums on American Sea Power. Despite this requirement, it is anticipated that the President’s fiscal year 2000 budget request for Navy shipbuilding will — for the seventh year in a row — call for the procurement of only six ships — three DDG-51 class destroyers, two LPD-17 class amphibious ships, and one TADC(X), a new class of auxiliary dry cargo ships.

Congressman Duncan Hunter (R-CA), Chairman of the House Armed Services Subcommittee on Military Procurement stated: "We need some money if the country is to make an effort toward getting some of these ships built. There are lots of ways to be clever and creative, but at this point there’s no substitute for a higher top line." Congressman Herbert Bateman (R-VA), Chairman of the House Armed Services Subcommittee on Military Readiness, added to the call for additional funding and noted that "we need to find a smarter way to get where we want to go." He endorsed charter and build as a means to create a predictability for what the Navy can fund and build for auxiliary ships. Congressman Neil Abercrombie (D-HI), Ranking member of the House Armed Services Subcommittee on Personnel, stressed the importance of an adequate Navy fleet and said that within 60 days a bipartisan bill would be thrown in the hopper financing defense, and in particular shipbuilding, in terms of capital investment budgeting.

Navy Assistant Secretary of Research, Development and Acquisition, Lee Buchanan, noted that presently there are only 327 aging Navy ships, the lowest level since 1917, and that procurement of ships has sunk to 1932 levels.

Ms. Nancy Mattson, Managing Director of the Argent Group, Ltd., explained the benefits to the government of Charter and Build financing of auxiliary ships and Mr. Jerry St. Pe’, President, Ingalls Shipbuilding, served as Master of Ceremonies.

Coast Guard Should Enforce Phase-Out
Schedule for Double Hulls

Congress could not have imagined when the Oil Pollution Act of 1990 (OPA 90) was enacted to phase-out single hulled tankers from the world fleet that it would continually have to fight regulatory attempts to scuttle the law. Yet nine years later, Senator Robert G. Torricelli (D-NJ) and Congressmen Rodney P. Frelinghuysen (R-NJ) and Frank A. LoBiondo (R-NJ) are fighting just such attempts.

After the catastrophic Exxon Valdez oil spill off the coast of Alaska, and in an effort to further protect the environment from additional oil spills, Congress passed the Oil Pollution Act of 1990 requiring all tanker vessels operating in U.S. waters to be double hulled by the year 2015. Congress established an explicit phase-out schedule for all single hull tankers to ensure that safe double hulls were introduced into the fleet in an orderly fashion to protect the marine environment. However, to the potential detriment of the marine environment and those responsible tanker vessel owners who are complying with the letter of OPA 90, a few tanker vessel owners have and continue to seek Coast Guard approval of "remeasuring" and "reconfiguring" workaround exceptions that would extend the operational life of old, single hull tankers for at least five years longer than originally mandated by Congress. Such exceptions place the marine environment at a greater risk of oil spills.

The most recent "workaround" request seeks Coast Guard permission to extend the operational life of an older single hull tanker vessel that no longer could carry oil because its age and configuration exceeded the limits of the OPA 90 phase-out schedule. The basis of the workaround exception is that the vessel would qualify as a "double-sided" vessel, which has a longer operational life under the phase-out schedule, if its side tanks were converted to non-oil carrying ballast tanks. This "workaround" scheme is flawed for at least six reasons.

First, it would result in an old vessel being returned to service, even though it had already been phased out of service in accordance with the OPA 90 phase-out schedule, and was no longer permitted to carry oil. Second, it could be cited as a precedent and result in other single hull tanker vessels, that statistically represent the highest risk for oil spills, being permitted to operate as tanker vessels for at least five years longer than permitted under the Congressionally mandated phase-out schedule. Third, many of the potentially affected vessels are older than the average age of tanker vessels that are scrapped in the international market. Fourth, it would result in more fossil fuel pollution being put into the air because older ships are less fuel efficient, and because they will have to make multiple trips with their reduced cargo carrying capacity to deliver the same amount of oil. Fifth, by delaying the phase-out of older tanker vessels, it will create the very same type of shipyard capacity backlog "crunch" issue that these same owners used to justify the need to have a phase-out period spread over 25 years rather than a few years. Finally, it would put the responsible tanker vessel owners, who are complying with the letter, spirit and intent of the OPA 90 phase-out schedule, at a competitive and economic disadvantage because they are investing in new, environmentally safe double-hulled ships.

Senator Torricelli wrote to Admiral James M. Loy, Commandant of the Coast Guard, "The phase-out schedule was the subject of extensive discussion, thought and deliberation…. it is clear that the overriding reason [for the phase-out schedule] was the desire to protect the environment from increased risk of oil spills that were statistically linked to older single hulled ships. Congress was not silent on this riveting issue, and ‘silence’ as to the applicability of creative ‘legal fictions’ should never be used as a justification for extending the operational life of single hull tanker vessels that were intended by Congress to be phased out of operation in accordance with an explicit phase-out schedule." Furthermore, Senator Torricelli wrote, "I am opposed to any proposals that would diminish the double hull requirement of the Oil Pollution Act of 1990 or extend the phase-out schedule for single hull ships."

In the House, Representatives Frelinghuysen and LoBiondo have written to Admiral Loy, "To put our concerns in perspective, as you well know, the average age of the fleet of single hull tanker vessels is over 23 years old. Many of those vessels are over 30, 40 and even over 50 years old. Consequently, it would make more sense to place greater emphasis on encouraging the replacement of the aging tanker fleet with newer, safer and environmentally friendly double hulled ships rather than supporting efforts that will extend the average age of the fleet of single hulled ships."

The Coast Guard should send a long overdue signal to owners of single hull tankers vessels that the time is now to aggressively begin to replace their old vessels with safe double hull ships and that no further latitude will be given to "workaround," "remeasuring," or "reconfiguring" techniques that circumvent OPA 90.

House and Senate Leadership Announce Committee Assignments

The U.S. House of Representatives and the U.S. Senate have recently finished filling their committee rosters for the 106th Congress. Several members with shipbuilding interests have joined the ranks of the Appropriations and Armed Services Committees.

In the Senate, John Warner (R-VA) has ascended to chairman of the Armed Services Committee and Olympia Snowe (R-ME) will chair the Seapower Subcommittee. Joining the Armed Services Committee are Senators Mary Landrieu (D-LA) and Jeff Sessions (R-AL). On the Senate Appropriations Committee, Dianne Feinstein (D-CA) swapped places with her California counterpart, Barbara Boxer (D-CA), who took Feinstein's place on the Foreign Relations Committee.

The House leadership has changed the name of the National Security Committee back to its original name of Armed Services, which was changed after the Republicans took control of the House in 1995. Floyd Spence (R-SC) and Ike Skelton (D-MO) remain chairman and ranking member of the Armed Services Committee, respectively. C.W. Bill Young (R-FL) is moving up to chair the House Appropriations Committee and Jerry Lewis (R-CA) will take his seat as chair of the Defense Subcommittee, which also reverts back to its traditional name. 

Industry News

Newport News Shipbuilding and Avondale Industries Merge

Newport News Shipbuilding, Newport News, VA and Avondale Industries, Inc., Avondale, LA have announced they will merge their shipbuilding companies in a $470 million transaction. The new company will be called Newport News Avondale Industries.

NNS Wins Contracts for Carrier Work

Newport News Shipbuilding (NNS), Newport News, VA has recently been awarded two aircraft carrier contracts by the Navy worth up to $67.5 million. The first contract, worth $22 million, is for planning and procuring materials for overhaul work on the USS ENTERPRISE. The actual overhaul contract will be awarded later this year. The second contract worth $8.8 million is for general engineering support and could be worth up to $45.5 million if the Navy exercises all options by 2003.

Navy Awards Ingalls Contracts for Two Ships

Ingalls Shipbuilding, Pascagoula, MS has recently been awarded a $620 million contract to build two additional DDG 51 Class Aegis guided missile destroyers for the U.S. Navy. This contract represents the exercise of an option by the Navy included in a multi-year, multi-ship contract awarded to Ingalls in 1997.

Navy Exercises Option for Carrier Work at NNS

Newport News Shipbuilding (NNS) has recently been awarded a $60 million contract option for engineering work on CVN-77, the next Nimitz-class carrier.

Ingalls Launches Two Offshore Supply Vessels

Ingalls Shipbuilding recently launched and delivered two offshore supply vessels to Edison Chouest Offshore, Inc., including the first 190-foot OSV C-ADMIRAL and the eighth 240-foot OSV, the C-RANGER. It was only the second time in shipyard history two ships were launched at the same time.

MSC Charters Tanker Built by NNS

The Navy’s Military Sealift Command has chartered the MV HMI Diamond Shoals, the 600-foot double-hull tanker, built by Newport News Shipbuilding for Hvide Marine, Inc.