MARAD Runs Maritime Security Program "In Secret"

In a letter dated November 7, 2012 to Franklin Parker, Chief Counsel, U.S. Maritime Administration (MARAD) from Constantine “Charlie” Papavizas, Partner, Winston Strawn and Counsel to Liberty Global Logistics, the Administration has been put on notice that it is in violation of U.S. law regarding its management of the Maritime Security Program (MSP). The letter also claims MARAD is operating MSP “in secret” and has “undermined the 2006 Congressional amendment and permitted non-citizens to operate MSP ships in disregard of the law and Congressional intent.”

The letter also states that MARAD has approved the transfer of a number of MSP contracts to questionable operators and non-citizen companies. He cites a number of cases which MARAD has used the wrong section 2 U.S. citizen statue to approve a contract transfer, which would ultimately invalidate the contract. In particular, he cites two cases—American International Shipping in 2007 and Argent Marine Operations in 2009—in which contract transfers raised clear “red flags’ regarding whether these companies were genuine vessel operators and genuine section 2 citizens.

Papavizas informs MARAD that on numerous occasions he has tried to bring these non-citizen violations to the agency’s attention, but it continues to operate in secrecy and, if it persists, Liberty intends to proceed with judicial action.

Recently, Congress passed the U.S. Coast Guard Bill, which guarantees 60 ships and various ship owners MSP contracts worth $2.82 billion till 2025. U. S. owners, like Liberty, have been left outside the program which is dominated by U.S. companies owned by foreigners.

Read the full letter HERE.

Photo (thumb) Caption: Geared Containership Maersk Alabama, Waterman Steamship Corporation, part of the Maritime Security Program Fleet (MSP). [http://www.marad.dot.gov/documents/MSP_Fleet_12-1-11_(2).pdf]