US House Armed Services Committee
For Immediate Release:
July 26, 2001

Contact:

Ryan Vaart
Meghan Wedd
(202) 225-2539

OPENING STATEMENT OF DUNCAN HUNTER
Merchant Marine Panel Markup

As members of the panel know, we have been presented with two major proposals in the Administration's Maritime Administration's budget request for fiscal year 2002. Before I get to these proposals, let me describe several other provisions in the mark. First, I am proposing that we provide $89 million for operations and training. This $89 million funds the U.S. Merchant Marine Academy at Kings Point, New York as well as scholarship and school ship maintenance expenses at the state maritime schools. This is the amount requested by the President. I have also proposed $10 million for obsolete ship disposal. This amount was also requested by the Administration. 

Finally, I have included two administrative type provisions. The first would allow the Maritime Administrator to expand the definition of "war risk" insurance coverage that the United States can provide to operators when commercial insurance is not available at a reasonable cost. The new definition will be expanded to include confiscation, expropriation, nationalization, and deprivation of the vessel. The second provision would amend Title XI to allow the Maritime Administration to hold and invest cash collateral derived from Title XI proceeds in the U.S. Treasury. It will further relieve obligors and the Maritime Administration from spending substantial time and money associated with negotiating depository agreements and preparing legal opinions in Title XI transactions.

With respect to Title XI, you each know that the Administration had proposed terminating the program and thus had not requested any new funding. I simply cannot accept that proposal. 

By all accounts this is one of those government programs that have worked. There have been defaults over the years - as there have been whether the money was loaned by a private bank or by the government. But those defaults have been covered by the fees collected from the applicants - just as the program was designed to do. With strict adherence to the statutory loan approval guidelines, defaults can and should be kept to a minimum. Literally, hundreds of millions of dollars worth of ships, tugs and barges have been built in U.S. shipyards as a direct result of this program. In my opinion, it is critical to the maintenance of our industrial base. I am therefore proposing in my mark that we fund Title XI at $100 million for this upcoming fiscal year plus an additional $3.9 million to cover administrative expenses. 

Finally, on the proposal to transfer the Maritime Security Program from the Department of Transportation to the Department of Defense, I am recommending that we not accept the Administration's proposal. The committee has not received sufficient justification to transfer a program that by all accounts has been managed effectively and efficiently, nor has the committee received any information that would suggest that DOD operational requirements dictate a transfer. In addition, the committee has not been presented with any evidence that such a transfer would result in cost savings. 

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House Armed Services Committee
2120 Rayburn House Office Building
Washington, D.C. 20515