[Congressional Record Volume 142, Number 130 (Thursday, September 19, 1996)]
[Senate]
[Pages S10950-S10953]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         MARITIME SECURITY ACT

  Mr. STEVENS. Mr. President, I ask unanimous consent that the Senate 
temporarily set aside Senate bill 1505 and that the Senate now proceed 
to the consideration of Calendar No. 262, House bill 1350, the maritime 
security bill.
  I further ask unanimous consent that no amendment relative to the 
tuna-dolphin issue on the Panama declaration issue be in order.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  The clerk will report.
  The assistant legislative clerk read as follows:

       A bill (H.R. 1350) to amend the Merchant Marine Act, 1936 
     to revitalize the United States-flag merchant marine, and for 
     other purposes.

  The PRESIDING OFFICER. Is there objection to the immediate 
consideration of the bill?
  There being no objection, the Senate proceeded to consider the bill.
  Mr. STEVENS. Mr. President, the Senate will soon consider House bill 
1350, the Maritime Security Act of 1995. This is the companion 
legislation to Senate bill 1139, the maritime reform legislation 
approved by the Senate Committee on Commerce, Science, and 
Transportation earlier this year.
  This historic legislation is the culmination of over two decades of 
work by the Senate Commerce Committee. I said two decades.
  For most of the 1980's the senior Senator from Hawaii and myself 
spent hundreds of hours in congressional hearings, consultation with 
administration officials, and discussions with affected industry in 
seeking to find a way to stabilize and reform the Federal maritime 
programs.
  We became involved in this debate in large part because of our 
responsibility to the Senate and the Nation to find methods of 
improving our military support capabilities for the Department of 
Defense.
  The Navy and the Marines deploy the Maritime Prepositioning Force, 
which is our core capability to respond in an emergency to hostile 
actions worldwide which threaten the security interests of the United 
States.
  We have known for many years that advance military capability must be 
combined with the ability to provide both surge sealift capability and 
sustainment sealift capability.
  Without both surge and sustainment, we expose our fighting men and 
women to the dangers inherent in any military involvement far from our 
shores.
  The Congress has appropriated billions of dollars over the last 15 
years to improve our surge sealift transportation capability.
  We have procured Fast Sealift Ships, Large Roll-On, Roll-Off ships, 
Ready Reserve Force vessels, and strategic lift aircraft to support our 
military forces in the initial days and months of battle.
  We now have the most technologically advanced surge sealift 
capability in the history of the world, and are approaching a maximum 
state of initial readiness.
  Military capability and surge sealift capability are, however, only 
two legs of the three legged stool for our advance deployed military 
force.
  The third leg is the ability to sustain these forces over extended 
periods of time, after we place them in foreign territory, far from 
home. The maritime security program in H.R. 1350 provides that third 
leg.
  Why is it necessary for the Federal Government to provide 
supplemental payments to U.S. companies to keep their ships under U.S.-
flag?
  The answer is simple. We hold our U.S.-flag carriers to operating, 
safety, and labor standards far superior and far more costly than those 
imposed on foreign-flag carriers by their governments.
  Operators of U.S.-flag vessels must meet payroll taxes, including 
social security, unemployment insurance, Medicare, and Medicaid. U.S. 
carriers pay income taxes and a 50 percent penalty for repairing their 
ships overseas.
  These ships must be in compliance with more restrictive Coast Guard 
and OSHA safety regulations. In short, our Federal laws build in 
economic disincentives for U.S. companies to keep their vessels under 
the national flag.
  What is the national interest in keeping these ships under U.S.-flag? 
Opponents of the bill have pointed to Desert Shield/Desert Storm as 
evidence that commercial sealift can be procured in times of emergency.
  My questions to the Senate are two-fold: At what price, and in what 
state of readiness? Let me reemphasize to my colleagues in the Senate 
that there are no free meals in the real world.
  There will always be a price for an immediately available sustainment 
sealift capability in a trained and effective state of readiness.
  As chairman of the Senate Defense Appropriations Subcommittee 
responsible for managing the long-term costs of the Defense Department, 
I have come away with a much different lesson learned from Desert 
Storm.
  The costs of contracting with the private sector in an emergency come 
at a high premium and the state of readiness is inadequate.
  Logistical support is like an athlete's muscle--you must exercise 
these muscles early and often if you are going to compete and win in 
the field.
  The first lesson we learned from Desert Shield/Desert Storm is that 
foreign shipping companies can easily gauge the needs of the U.S. 
military and the availability of tonnage to meet these needs.
  The average cost to the United States for procuring U.S.-flag ships 
for sustainment sealift during Desert Shield was $122 per ton. Foreign-
flag shipping, in contrast, charged rates averaging $174 per ton of 
cargo.
  Norwegian and Italian shipping companies, for example, extracted 
premiums in excess of 50 percent higher than their normal charter price 
and, in some cases, doubled their charter price.
  The second lesson from Desert Shield/Desert Storm is that the callup 
and coordination of civilian private sector operations to meet military 
surge requirements takes time.
  At the height of Desert Shield, we had over 120 U.S.-flag vessels 
called up and in service in the supply line to the Persian Gulf.
  Fifty-one of these ships were immediately available to the Department 
of Defense pursuant to their subsidy contracts with the Department of 
Transportation, and sixty ships were called up from the Ready Reserve 
Force [RRF] to supplement the commercial fleet.
  We also chartered over a dozen large roll-on, roll-off vessels from 
foreign shipping companies to carry heavy equipment and inventories.
  The RRF callup was painful in its early stages. The ships were being 
operated in a reduced state of readiness, and many were required to 
undergo extensive repair work in our shipyards before they could accept 
cargo.

[[Page S10951]]

  We experienced serious short-term manning problems as our maritime 
labor force scrambled to bring people out of retirement or other 
sectors of the economy to fill the berths in a national emergency.
  We had to wipe the cobwebs off the RRF and scrape for anybody who had 
ever sailed the high seas with a mariner's license.
  At the end, we had an active force of U.S. Flag ships with 3000 
civilian, volunteer merchant mariners crewing the RRF ships and 100 
U.S.-flag private sector ships time chartered to the Military Sealift 
Command.
  It was the U.S.-flag fleet which stepped into the gap and provided 
the sustainment sealift during the initial months of Desert Storm.
  These ships were fully crewed and ready to serve because they were 
operating in regular commercial service in the foreign waterborne 
commerce. These companies and mariners were ready when our Nation 
called, and they honored their contractual commitments to the Federal 
Government.
  The United States was not treated the same way by the foreign 
shipping community.
  We had foreign ships refuse to enter the war zone and saw foreign 
crews desert their ships rather than carry cargo to the Persian Gulf.
  In many instances the promise of double pay was not sufficient to 
keep these crews recruited and in active service during the Desert 
Shield/Desert Storm period.
  When we were able to get the foreign ships under contract, we paid 
the premium.
  It is my message to the Senate that we must not repeat the mistakes 
of the past. The Congress owes an obligation to this Nation to properly 
sustain our fighting men and women when the U.S. asks them to risk 
their lives in protecting America's security interests abroad.
  I do not stand before the Senate today to defend an old and obsolete 
subsidy program.
  With my good friend from Hawaii, I know the current system is 
dysfunctional and in need of a comprehensive overhaul.
  The task that began in the 1970's and ends today is simple: How do we 
ensure an adequate U.S.-flag, U.S.-crewed private sector fleet to 
provide sustained sealift in a cost-effective and logistically 
efficient manner?
  This Bill, H.R. 1350, is the answer to that question.
  There are two cornerstones of this proposed revision of our 
sustainment strategy: reform of the maritime program itself and 
inclusion of a new, state-of-the-art commercial fleet into the 
Emergency Preparedness Program.
  The first removes the inefficiencies that have crept into the old 
maritime programs over the last 50 years.
  The second acts as our Nation's insurance policy on the costs of 
sealift and provides the link between those water-borne assets and the 
Department of Defense mobility structure.
  When I served as chairman of the Senate Merchant Marine Subcommittee 
in the 1980's, the existing operating differential subsidy--the ODS 
program--was costing the Federal Government well over $350 million per 
year. U.S. companies were receiving differential payments for crew 
costs, insurance, vessel maintenance, and other associated ship costs.
  The per ship costs ranged between $4 and $5 million annually. We had 
no effective fiscal controls over this program because ODS was a 
contract entitlement.
  Today, the administration has the authority to enter into new subsidy 
contracts without the approval of the Congress or any prior 
appropriation of funds.
  We first started the discussion about substitution for the system of 
contract entitlement with a system of annual appropriations in 1986. 
This bill, H.R. 1350, would finally accomplish this objective, which is 
what the Senator from Hawaii and I started out to achieve.
  This bill would authorize only $100 million annually for the new 
sustainment sealift program, $250 million less than the funded levels 
in the 1980's and $150 million less than the costs of the existing 
program as it stands today.
  We are proposing a firm fixed price system rather than a differential 
cost program. Participating companies are to receive roughly $2 million 
per ship per year, half the amount these companies receive under the 
current entitlement program.
  U.S. companies will be forced to continue their improvements in 
productivity, capital and labor cost reductions, and intermodal 
transportation capability in order to remain competitive in the foreign 
water-borne commerce.
  In order to assist them in this goal, this bill would eliminate 
unnecessary trade route regulation and allow them to better adjust to 
the changing trends in international cargo movements.
  We would also be procuring participation in the Emergency 
Preparedness Program.
  There has been surprisingly little discussion about one of the more 
important features of the proposed reform effort in this bill.
  A major requirement of the new Maritime Security Program is 
enrollment in the Emergency Preparedness Program. This program is 
currently being tested as a pilot called the Voluntary Intermodal 
Sealift Agreement, or the VISA program. The United States 
Transportation Company, in consultation with the Maritime 
Administration, developed VISA in response to lessons learned in the 
Persian Gulf war.
  The objective of VISA is to tie U.S. carrier sustainment commercial 
sealift and their worldwide intermodal transportation and management 
networks into the DOD sealift program.
  Mr. President, worldwide water-borne transportation is no longer just 
a port-to-port movement of goods. It now involves multibillion-dollar 
intermodal transportation networks, including ships, the rail industry, 
the trucking industry, and aviation links.
  The industry's capital base includes sophisticated marine terminal 
and port facilities, worldwide computerization of cargo movements, and 
new age management systems.
  The VISA program accesses this multibillion-dollar shipping network. 
The objective of VISA is to promote and facilitate Department of 
Defense use of these existing systems.

  It would literally break the bank if Congress were forced to 
replicate, operate, and maintain a similar system.
  The Government costs for such a transportation system ranges from 
$800 million per year and up, we are told, and we simply cannot afford 
those costs in this time of budget control.
  An essential feature of the Maritime Security Program envisioned by 
this bill, H.R. 1350, is advance rate-setting through the Emergency 
Preparedness Program.
  As a precondition for a fixed price MSP contract, the participating 
company must agree to rates established in advance for the chartering 
of its ships to DOD in the event of a call-up.
  The MSP contract price paid to the carriers is, in its essential 
form, an insurance premium being paid for access to the multibillion 
dollar intermodal transportation network. This is clearly, in my 
judgment, the most cost-effective method yet proposed to allow for DOD 
access to sophisticated sustainment capability.
  Finally, the Emergency Preparedness Program will also require 
periodic training exercises with the commercial fleet.
  The United States Transportation Command is already conducting 
training exercises with select carriers on a voluntary basis as part of 
the VISA pilot program.
  As part of the Maritime Security Program, training exercises through 
simulated call-ups will become an integral part of the Department of 
Defense's Sealift Readiness Program.
  We will begin to exercise our sustained commercial sealift muscles on 
a regular basis. The next time an international incident, such as the 
Persian Gulf, arises, God forbid, the United States should be and will 
be ready under this bill.
  As we debate this bill today, I ask my colleagues in the Senate to 
look at the large picture now and avoid getting caught up in issues and 
subissues that are being raised as reasons to block the passage of the 
House bill, H.R. 1350, today.
  I believe that if we do not act on this bill today, there will be no 
U.S. flag sustainment fleet in the immediate future. The loss of our 
private commercial sealift will, in turn, result in huge defense costs 
and a gaping hole in our national sealift strategy.

[[Page S10952]]

  Mr. President, the Senate has the opportunity to close the book on an 
issue that has been ongoing for decades and, I believe, may and should 
act in a manner which strengthens our national security.
  I commend this bill to the Senate on the basis of the many hours I 
have spent with my colleague from Hawaii in trying to find a solution 
to the problems which beset our sealift capability.
  Mr. INOUYE addressed the Chair.
  The PRESIDING OFFICER. The Senator from Hawaii is recognized.
  Mr. INOUYE. Mr. President, I wish to congratulate Senator Lott, the 
distinguished former chairman of the Subcommittee on Surface 
Transportation and Merchant Marine, for his commitment to the cause of 
reformulating our maritime policies, and also welcome Senator 
Hutchison, who was recently appointed chairman of the subcommittee.
  I also wish to commend my colleague from Alaska for once again coming 
to the front and distinguishing himself in managing this bill before 
us.
  Mr. President, the measure before us truly represents a bipartisan 
effort, and I urge all of the Members of this body to support this 
bill.
  In recent years, we have spent a great deal of time and effort in 
evaluating and discussing maritime policy. Unfortunately, to date, this 
evaluation and discussion has not resulted in action. It is time to 
step forward and to ensure the continuing presence of U.S.-flag 
vessels.
  This country, the sole remaining superpower, cannot be put in a 
position of relying on the goodwill of foreign nations to transport 
vital military cargo. And, we cannot rely on the goodwill of foreign 
nations to achieve the transportation of cargoes vital to our economic 
interests. It is not an acceptable or prudent national policy.
  One of the issues that the Department of Defense [DOD] was forced to 
confront in the aftermath of the Persian Gulf conflict was the 
inadequacy of U.S. sealift assets.
  While the logistical efforts put forth by the military in the gulf 
war were truly astounding, including the sealift of more than 10 
million tons of surge and sustainment materiel by sea, it was evident 
that U.S. forces could not have accomplished this sealift alone without 
the support of foreign nations.
  While the Persian Gulf conflict unified international opposition to 
the actions of the Iraqi government, and allowed for the international 
coordination of sealift, we cannot expect international support for 
every conflict.
  We must be able to ensure that U.S.-flag shipping is available to 
bring materiel and ammunition to soldiers who are defending our 
interests on foreign soil.
  One only has to look as far as the recent developments in Iraq. Our 
allies were less than forthcoming in efforts to provide assistance. If 
we need to proceed on a unilateral basis we must have the requisite 
sealift.
  We must also remember that the United States is a maritime nation.
  As a Senator from the only island State in the United States, I 
appreciate the importance of ocean shipping. The continued 
disintegration of the U.S.-flag transportation fleet greatly concerns 
me. I fear the possibility of being completely reliant on foreign 
corporations and foreign nations for transportation service.
  A study of history will reveal the cyclical patterns of U.S. maritime 
development. Historically, the U.S.-flag fleet has suffered through 
long periods of neglect and disregard, only to reemerge. Reemergence 
usually occurs in times of national emergency, and usually only after 
the Government has spent considerable sums in reestablishing our 
fleet. Today we cannot afford to repeat this cycle again. Once more we 
are approaching a precipice. But this time it is one from which we may 
not be able to turn back. We are facing the total elimination of the 
international presence of U.S.-flag carriage.

  After the end of the Civil War, interest in maritime activities 
waned, leaving waterborne commerce and shipbuilding mainly in the hands 
of foreign countries. In 1914, with the onset of World War I, ocean 
shipping rates rose 300 to 400 percent. In 1916, the U.S. Government 
realized the need for a strong U.S.-flag merchant fleet and began a 
massive shipbuilding campaign.
  However, most of these ships were not complete by the end of the war 
and throughout the war, the United States depended largely on foreign 
shipping to support American soldiers. Unfortunately, little was 
learned from this, and most of these ships were allowed to fall into 
disuse within only a few years.
  In 1936, Congress passed the Merchant Marine Act which would 
revolutionize American shipping. It provided a workable basis for 
building and maintaining a strong U.S.-flag merchant marine. This act 
came at precisely the right time--with the onset of World War II just a 
few years later.
  In this war, once again, one of the most critical shortages was 
merchant shipping, but the United States was prepared and able to 
construct many vessels. By the end of the war, the United States had 
used over 4,000 war-built merchant ships. The U.S.-flag merchant marine 
was vital to war efforts and suffered great casualties.
  At the end of the war more than 700 U.S.-flag vessels had been sunk 
and more than 6,000 civilian merchant mariners had lost their lives. 
Their casualty rate was second only to the U.S. Marine Corps.
  In 1950, the private U.S.-flag merchant marine was comprised of 1,170 
ships totaling 14.1 million deadweight tonnage. With this surplus of 
ships, once again, the merchant marine was allowed to become stagnant 
and shipbuilding was greatly reduced.
  In 1970, the U.S.-flag merchant marine comprised 793 ships totaling 
14.4 million deadweight tons. The number of ships had been greatly 
reduced, but, because of new, larger vessels, tonnage was increased by 
300,000 tons. The United States was then ranked No. 8 in the world in 
deadweight tonnage. As we all know, in 1945, at the end of the Great 
War, we were No. 1. It may interest you to know we are at this moment 
No. 14. The superpower of this planet is No. 14 when it comes to 
shipping.
  Today our merchant fleet has fewer than 350 vessels, although our 
tonnage capacity is over 20 million deadweight tons as U.S. operators 
use larger, more efficient vessels.
  Although the United States has many of the most innovative ships in 
the world in its fleet, it still is increasingly difficult for American 
vessels to compete in the international trades against foreign 
subsidies, state-owned fleets, and the tax advantages and lack of 
meaningful foreign regulation of foreign vessels.
  In addition, we have seen the promulgation of the operation of 
vessels under flags of convenience. Flag-of-convenience vessels have 
nominal connection to the country whose flag it flies. They sail under 
the Liberian flag, Panamanian flag and, believe it or not, under the 
Swiss flag. There are no harbors in Switzerland, but they have a fleet 
which, incidentally is larger than ours. They do not pay taxes, nor do 
their workers pay tax to the nation whose law they operate under. In 
fact, they do not even employ citizens from the host nation, and they 
may never even visit that nation.
  In the last decade many U.S. shipping companies have begun placing 
their vessels under flag-of-convenience registries. The high cost of 
doing business under the American flag--paying full U.S. taxes, abiding 
by all U.S. laws and the numerous rules and regulations imposed by the 
Federal Government--have contributed greatly to this movement.
  The simple fact is that today, if these trends continue, the U.S.-
flag fleet will disappear from the sealanes of the world in less than 
10 years. We cannot allow this to happen. This is why we must act now.
  In the early 1990's, the Persian Gulf war once again proved the 
importance of a strong, vital U.S.-flag merchant marine. This conflict 
proved that the only reliable choice is to use American vessels with 
American crews. Too often during the Persian Gulf war, foreign-flag 
ships with foreign crews refused to enter the war zone.
  We did not see this on our front pages, but on 16 different occasions 
foreign-flag vessels with our cargo declined to provide transportation 
service into the Persian Gulf. But we were fortunate in the Persian 
Gulf war. Saddam Hussein did not attack Saudi Arabia. Why he hesitated 
we have no idea. We had the time to get the job done with a unified 
coalition. We may not be so lucky in the future.
  We must, therefore, have in place a modern, capable, and reliable 
U.S.-flag

[[Page S10953]]

fleet with the same loyal Americans to crew them whose predecessors 
have never let us down in the more than 200 years of our Nation's 
history.
  The Maritime Security Act of 1995 is essential to the military 
security of our Nation.
  Specifically, this legislation will do the following: It will 
guarantee a pool of American citizen crews and a 50-ship fleet of 
militarily useful U.S.-flag commercial sealift vessels for our national 
security; it will also provide that the companies' entire intermodal 
logistical support systems--containers, rail cars, computer tracking, 
port operations, and management--will be available to the DOD when 
needed; it will guarantee the availability of American mariners to crew 
the DOD's sealift fleet of fast sealift ships, prepositioned ships and 
Ready Reserve Force vessels; and it will ensure that military supplies 
are on reliable U.S.-flag ships with patriotic, dependable American 
citizen crews. Many people are unaware that even our DOD reserve fleet 
vessels are operated by civilian merchant marines, because they cost 
less to operate than vessels directly controlled by the Navy.
  This Maritime Security Act will cut costs by more than 50 percent 
compared to today's program. It will reduce burdensome Government 
regulations that hamstring U.S.-flag operators which give competitive 
advantage to foreign-flag companies.
  And it will save the Defense Department billions of dollars--because 
the DOD will be able to use modern, state-of-the-art commercial assets 
rather than buying and maintaining this capability on their own. It is 
eight times cheaper to have the private sector perform this vital 
national security task--and this point alone makes the Maritime 
Security Act a commonsense bargain for America.
  My fellow colleagues, in the past we have often taken for granted the 
role of the merchant marine in the economy and security of the United 
States. We cannot afford to do so today--nor can we suddenly rebuild a 
maritime capability in the future if we need it urgently.
  It is simply not economically feasible or realistic to repeat the 
mistakes--the ups and downs of maritime support--we have made in the 
past.
  We need a merchant marine in place that is strong and reliable in 
both peacetime and wartime. The new maritime security program will help 
our Nation reach this goal in a cost-effective, more efficient and more 
competitive manner. So I urge all my colleagues to support this 
program, and to enact it into law.

  I thank the Chair.
  The PRESIDING OFFICER. The Senator from Alaska.
  Mr. STEVENS. Mr. President, I think the Senate will note my partner 
across the aisle and I have been involved in a lot of issues together, 
particularly defense issues. With regard to these issues, at times the 
Senator from Hawaii has been chairman of the subcommittee. At other 
times, I have, depending upon the political winds of our country. But 
the Senator from Hawaii and I, as I have said in my opening statement, 
spent many hours over the last two decades trying to find a way to 
solve this problem.
  At one time when I was both chairman of the subcommittee of 
Appropriations and the subcommittee of Commerce, I secured the approval 
of the Senate, not once but twice, of a special program, the Eisenhower 
Build and Lease program. We tried to put it back into effect. We 
actually had the Congress appropriate more than $1 billion in a reserve 
to start that program. It was not possible to get it started because of 
the various conflicts within our merchant marine industry.
  We are now in a position of, really, suggesting to the Senate what 
amounts to a proposal like the Civil Air Reserve Fleet that we use in 
the event of emergency, where we have preexisting contracts with 
airlines that enable us to, really, commandeer our civilian airline 
fleet in order to meet our emergency needs. That is what we are talking 
about.
  We have now switched over to a concept of relying upon the private 
sector to build and we will lease. The Eisenhower program was building 
and then leasing. That went on for a period of time, but it just did 
not work because of the problem within the industry of subsidizing one 
line and not subsidizing another. It led to, really, problems within 
the merchant marine fleet.
  This answer that has come to us from the House, I think, is the most 
worthwhile approach that I have seen. It has taken a long time to work 
out. I am hopeful we will see approval of it today.
  Does the Senator from Iowa seek the floor at this time?
  Mr. GRASSLEY. Shortly.
  Mr. STEVENS. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. FORD. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Thompson). Without objection, it is so 
ordered.
  Mr. FORD. Mr. President, I have checked with the participants in this 
piece of legislation. It may be some time before they will be able to 
start their deliberation. Therefore, I ask unanimous consent that I 
might proceed for up to 10 minutes, as in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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