Maritime Security Program Will be Renewed in 2006

Published Dec 14, 2004 12:01 AM by The Maritime Executive

President Bush signed into law legislation that will renew the Maritime Security Program for 10 years when it expires at the end of fiscal year 2005, expand the fleet of vessels enrolled in the program, and increase the amount of money allotted for each vessel in the Maritime Security Fleet.

A congressional conference committee completed work last month on the National Defense Authorization Act for Fiscal Year 2004 and the House, Senate and President approved it. Among other things, the legislation will renew the Maritime Security Program (MSP), which will help secure funding for the Title XI shipbuilding loan guarantee program and provide substantial incentives for the construction of five double-hulled commercial tankers in U.S. shipyards.

Currently, the Maritime Security Program, which was established by the Maritime Security Act of 1996, provides $2.1 million annually to each of the 47 U.S.-flag commercial vessels to offset the cost of meeting higher U.S. shipping standards while operating in international trades. In turn, the vessels and transportation systems of the contracted companies are made available to the U.S. government in times of war, conflict, or national crisis.

"Out of the 47 ships that we have (in the MSP), 36 were used for Operation Iraqi Freedom," Maritime Administrator William Schubert said during a speech October 30, 2004. "At the same time, the other ships that weren't carrying in-theater cargoes were carrying other peacetime cargoes to meet our military and commerce needs."

Under the MSP renewal provision of the National Defense Authorization Act for Fiscal Year 2004, the number of vessels allowed to participate will increase from 47 to 60 beginning in fiscal year 2006. The allotments for each vessel will also increase over the life of the program as follows:

? $2.6 million per vessel per year during fiscal years 2006-2008
? $2.9 million per vessel per year during fiscal years 2009- 2011
? $3.1 million per vessel per year during fiscal years 2012-2015

The renewed MSP will have a 10-year lifespan, expiring at the end of fiscal year 2015. Like the current program, the money for the per-vessel allotments must be appropriated annually. If the annual appropriation is not approved by the 60th day of any fiscal year covered by the program, the MSP contracts between vessel operators and the Department of Transportation (DOT) will not be renewed for that year.

Under the new MSP, each vessel enrolled in the program will be covered by an emergency preparedness agreement with the DOT. As part of these agreements, signatory companies will make available their enrolled vessel(s), intermodal transportation systems, terminal facilities and services to the Department of Defense (DOD) during times of war, national emergency, or when deemed necessary for national security.

If an MSP ship is diverted by the DOD for sealift service or other contingency operations, the operating company will be allowed to use a foreign-flagged ship to temporarily service the commercial routes of the diverted vessel. Under this provision, such foreign-flagged ships would be eligible to carry U.S. government preference cargo.

Regular MSP payments may be reduced or withheld for vessels carrying military and civilian preference cargoes of certain types and quantities while they are enrolled in the program.

Privately owned U.S.-flagged vessels that qualify for enrollment in the MSP include:
? Roll-on/roll-off vessels of 15 years of age or less upon enrollment with carrying capacities of at least 80,000 square feet or 500 20-foot equivalent units
? Tank vessels of 10 years of age or less upon enrollment
? Lighter aboard ship vessels of 25 years of age or less upon enrollment
? Any other type of vessel of 15 years of age or less upon enrollment that is deemed to be militarily useful by the DOD

An additional provision allows the enrollment of product tankers that are "constructed in the United States after the date of the enactment of this chapter." This language ties in with the National Defense Tank Vessel Construction Program, which has been established by the same law that renews the MSP.

Under the tanker construction program, the federal government will subsidize the construction of five double-hulled commercial product tankers in U.S. shipyards. Up to $50 million will be provided for the construction of each vessel. These ships will, in turn, be eligible to participate in the MSP, but will not be eligible to compete in the U.S. domestic coastwise trades under the Jones Act.

The MSP legislation also encourages construction of tankers in U.S. shipyards. A clause in the MSP renewal legislation offers special consideration to companies applying to enroll an existing tanker in the MSP fleet if they have a binding contract with a U.S. shipyard to be executed within nine months for the construction of a new tanker, provided that the new tanker will replace the vessel being enrolled. Under these circumstances, a product tanker that is eligible for enrollment will be considered to be a new vessel "constructed in the United States after the date of the effective date of this chapter." While not directly stated in the legislation, the implication is that the enrollment of new U.S. built product tankers in the MSP fleet will be a priority.