Corps of Engineers and MARAD Funded For 2016

The final version of the 2016 Omnibus Appropriations bill includes substantial increases in funding for the U.S. Army Corps of Engineer's marine navigation programs and nearly meets the Maritime Administration’s requested funding level of $407 million. The bill has passed the U.S. House of Representatives and is expected to pass a final Senate vote on Friday.

In a measure sure to please port operators, the Corps of Engineers Civil Works program has been provided with funding of nearly $6 billion, fully one quarter more than requested by the president. The program’s budget includes $3 billion for waterways operation and maintenance and $1.25 billion for harbor maintenance.

MARAD's funding includes $210 million allocated for the Maritime Security Program (MSP), which will provide $3.5 million to each of 60 enrolled U.S.-flagged merchant ships for 2016. The bill also includes funds for the maritime academies and for support to small shipyards.

In its rationale for increased MSP funding, Congress stated that “dedicated and enhanced support is necessary to stabilize and preserve [the program] . . . [it] assures a United States-flag presence in international commerce, supports a pool of qualified United States merchant mariners needed to crew United States-flag vessels during times of war or national emergency, and serves as a critical component of our national security infrastructure.”

MSP funding came up in an earlier legislative effort to lift the American crude oil export ban. In October, opponents of the ban attached an MSP funding amendment to a House bill to permit oil exports. The controversial amendment would have raised MSP subsidies to $5 million per vessel in 2017, and was viewed by some analysts as a way to garner additional support for the oil export effort.

The revised appropriations bill, expected to be approved by the House this week and signed into law by President Obama, does contain language removing the 40-year oil export ban, although there have been no reports that the provisions are linked.

Once the ban is lifted, oil exports are expected to have some impact on American shipping interests, especially on the Gulf Coast, where analysts suggest it may become cheaper to ship crude on foreign-flagged vessels to buyers in Latin America than to continue shipping on U.S.-flagged tankers to U.S. ports.