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House Defense Appropriations Bill Funds Nine Ships
The House passed the FY 2008 Defense Appropriations Bill (HR 3222) on August 3rd, providing $16 billion for the procurement of 9 ships. This is $3.5 billion and five ships above the Administration’s amended budget request. The additional ships include one amphibious transport dock ship, three combat force logistics ships, and funding to begin construction on a second attack class submarine. The House bill fulfills a commitment by House Defense Appropriations Subcommittee Chairman Jack Murtha (D-PA), who vowed earlier this year to add five ships to the Navy’s budget.
The House, in both the Defense Authorization and Appropriations Bills, has gone beyond the Administration’s budget request in order to accelerate rebuilding the fleet and mitigate shortfalls that will occur in the next several years in virtually every ship class. The increase in ship procurement will help to stabilize the U.S. shipbuilding industrial base that has endured over a decade of anemic procurement rates. In the accompanying bill report, House Appropriators stressed that the U.S. shipbuilding industry is “desperately in need of stability,” and that the only way to attain such stability is by increasing production throughput.
The Senate is expected to begin work on its version of the Defense Appropriations Bill in September. Support in the Senate to add ships to the budget is crucial to achieving a final bill that provides for the procurement of additional ships, making recapitalization of the fleet a priority.
House Acts to End De Facto Purchases of Foreign-Built Ships
Representatives David Hobson (R-OH), Marcy Kaptur (D-OH), and Peter Visclosky (D-IN) led the effort in the House Defense Appropriations Subcommittee to end the outsourcing of America’s military sealift missions to foreign countries. Working closely with Subcommittee Chairman Jack Murtha (D-PA), House Appropriators included report language accompanying the FY 2008 Defense Appropriations Bill that requires the Navy to submit a report to Congress by March 31, 2008, with a plan to end its practice of leasing foreign-built ships to satisfy dedicated military sealift missions within the next four years. The House noted that leasing foreign-built ships, rather than buying American-built ships is “harming the nation’s shipyards and major ship component industrial base by denying our shipbuilders the opportunity for additional ship construction.”
Earlier this year, the House Armed Services Committee included legislation sponsored by Representatives Gene Taylor (D-MS) and Jo Ann Davis (R-VA) in the FY 2008 National Defense Authorization Act (HR 1585) prohibiting the Department of Defense from leasing foreign-built ships for longer than two years. However, this legislation faces opposition by Members of the Senate Armed Services Committee, making adoption of the legislation during conference on the Defense Authorization Bill a challenge.
Senate Appropriates $10 Million for Title XI
The Senate included $10 million for new Title XI ship loan guarantees in its FY 2008 Transportation Appropriations Bill. No funds for new loan guarantees were included in the House version of the legislation. An appropriation for new loan guarantees is urgently needed to reconstitute the Title XI program, which has not received an appropriation for new loan guarantees since 2003.
Created by Congress to encourage commercial shipbuilding in the United States, Title XI provides small and medium sized companies access to affordable financing to replace aging vessels and meet this country’s domestic transportation needs. The construction made possible by Title XI loan guarantees helps to strengthen the entire U.S. shipbuilding industrial base. As the majority of the Jones Act fleet approaches retirement age, the demand for new construction and affordable financing will increase. An FY 2008 appropriation is required to begin addressing the construction demand.
Senate Commerce Committee Seeks to Repair Title XI Application Process
Senator David Vitter (R-LA), working with his colleagues on the Senate Commerce, Science, and Transportation Committee, was instrumental in having legislation added to the Maritime Administration Authorization Act of 2007 (S 1778) to expedite the review and approval of Title XI ship loan guarantee applications.
The Administration, which opposes the Title XI program, established a credit council in the Department of Transportation to review all Title XI applications. Although the Maritime Administration has the historic authority and technical expertise to review and approve loan guarantee applications for commercial ships, each application is now subject to review by a panel that has no specialized skills or background in financing the construction of commercial ships. Since its creation in 2004, the credit council has approved only one loan guarantee application. Rather than operating as a constructive third party review, the credit council is acting to bar applicants and hinder approval of finance applications for commercial ship construction in the U.S.
The amendment sponsored by Senator Vitter would limit the review and approval or disapproval process of loan guarantee applications to 90 days. Work to further streamline the Title XI application review process will continue during conference with the House.
Senator Snowe Urges National Commitment to Commercial Shipbuilding
Included in the Maritime Administration Authorization Act of 2007 (S 1778) is a provision championed by Senator Olympia Snowe (R-ME) requiring that vessels leased or bought by the Transportation Department be built in the United States. The Senate Commerce, Science, and Transportation Committee had originally proposed granting the Maritime Administration the authority to lease or acquire any vessel - - regardless of country of origin. Senator Snowe’s leadership ensures that this authority would be limited to U.S.-built ships.
During the Committee’s mark on July 19th, Senator Snowe reminded her colleagues of the importance of maintaining a strong commercial shipbuilding industrial base and a fleet of U.S.-built ships to ensure America’s maritime transportation independence. Following is an excerpt of her remarks.
Mr. Chairman, I would like to commend you for adding to this Committee’s longstanding commitment to enhancing MARAD’s [Maritime Administration] positive efforts to revitalize the U.S. shipbuilding industry, so vital to the movement of freight and a crucial element of our nation’s economic expansion.
I am particularly gratified that the Committee chose to adopt a simple amendment I proposed to the underlying bill. Under the Committee’s draft bill, the Secretary of Transportation is given unlimited authority to purchase, charter, or procure any vessel it deems necessary. This would have been a dramatic expansion of the Department’s authority, one that has the possibility of serious abuse. Thanks to the consideration of the Committee, we were able to develop language limiting the authority of the Secretary to the lease and purchase of vessels built here in the United States. I believe this language represents a continuation of our pledge to domestic shipbuilding, and I applaud the Committee’s willingness to work with me on this issue that is of great concern to Maine.
The Maritime Administration is an oft-overlooked element of our armed forces, predominately because they are pressed into service only in times of dire need…That being said, I do harbor some concern with the low level of funding for the Title XI loan guarantee program. This spring, I joined with a number of my colleagues, including seven members of this Committee, in authoring a letter urging a $60 million funding level for the loan guarantee program...
Congressional Shipbuilding Caucus Meets With Industry Representatives
U.S. ship component manufacturers met with the Congressional Shipbuilding Caucus on July 19th to discuss how more than a decade of low rates of naval shipbuilding has impacted their companies, and the challenges that the U.S. shipbuilding industrial base continues to face.
Representatives of the shipbuilding industry included: Craig Hansen of BWXT/Babcock and Wilcox in Lynchburg, VA, Barberton, OH, and Mount Vernon, IN, which manufactures nuclear propulsion systems; Walter Herr of Fairbanks Morse in Beloit, WI, a manufacturer of diesel engines; Roy Arnold of IMECO, Inc. located in Iron Mountain, MI, which produces ship heating and cooling systems; Michael Stobbart of Lister Chain and Forge in Blaine, WA, a manufacturer of ship anchor and mooring chains; and Terry Sterling of Nelson Stud Welding in Elyria and LaGrange, OH, which manufactures welding systems. These companies represent a cross section of the shipbuilding industry, and their representatives reminded Members of Congress that shipbuilding extends beyond coastal states with shipyards. The component manufacturers highlighted the challenges in training and maintaining a skilled workforce, the cost of day to day business operations amid a climate of low and unstable ship production, and the need for increased production to facilitate facility improvements and cost reduction.
Caucus Co-Chair Rep. Gene Taylor (D-MS), in addition to Reps. Elijah Cummings (D-MD), Brad Ellsworth (D-IN), Randy Forbes (R-VA), Stephanie Tubbs Jones (D-OH), Steve Kagen (D-WI), Michael Michaud (D-ME), Bobby Scott (D-VA), and Bart Stupak (D-MI) agreed that the nation must maintain a strong Navy and Coast Guard to meet America’s national security requirements. The Members echoed the importance of a vibrant shipbuilding industrial base to satisfy our shipbuilding needs, and they pointed to the House versions of the FY 2008 Defense Authorization and Appropriation Bills as recent examples of how Congress is promoting and achieving such objectives. Both of these bills provide for the procurement of additional ships above the Administration’s budget request.
You Can Make A Difference
Today’s Navy of 278 ships is the smallest naval fleet this country has possessed in 90 years. Congress is aggressively leading the effort to halt further decline in the size of the nation’s fleet. Keep informed of their progress and take the opportunity to let your elected officials know that recapitalization of the Navy must be a national priority. Sign up to be a Sea Power Ambassador. www.seapowerambassador.org
Well Said!
“The question that needs to be laid on the table is this -- Do we want to build ships in America or do we want to buy them from China? We need shipbuilding in the U.S.”
Representative Steve Kagen (D-WI)
Congressional Shipbuilding Caucus Meeting
July 19, 2007
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