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Oral Testimony: Maritime Administrator Hearing before the Subcommittee on Coast Guard & Maritime Transportation “Cargo Preference: Compliance with and Enforcement  of Maritime’s Buy American Laws”

Wednesday, September 14, 2022

Oral Testimony
Rear Admiral Ann C. Phillips (USN, Ret.)
Maritime Administrator

Hearing before the Subcommittee on Coast Guard & Maritime Transportation
“Cargo Preference: Compliance with and Enforcement 
of Maritime’s Buy American Laws”
September 14, 2022

Thank you, Chairman Carbajal and Ranking Member Gibbs, and of course Chairman DeFazio and Ranking Member Graves.  

I am honored to appear today to discuss cargo preference programs. 

As a retired U.S. Navy Rear Admiral with more than 30 years of service, I know the American merchant marine is critical to our national defense as well as to our economy.  

In June, General Jacqueline Van Ovost, Commander of the U.S. Transportation Command, spoke at the graduation of the U.S. Merchant Marine Academy.  Addressing our graduates, General Van Ovost made this same critical point, saying that, “as a maritime nation, our national security depends on the Merchant Marine.”

However, she also warned the graduates that they, “are about to face challenges our country has not encountered since WWII.”  Further, she said, “Contested waters will stress our logistics lines all the way from home port.” 

Cargoes paid for by American taxpayers belong on American ships.  Cargo preference requirements are not just “Buy America” requirements, they are requirements that also help to strengthen America.

In 2012, there were 106 ships in the foreign trade flying the U.S. flag.  Four years later, there were just 77 vessels. Today, from that low point, we have grown back to 87 foreign trading ships under the U.S. flag.

However, without cargoes, ships will leave the U.S. flag.  Without cargoes, our modest fleet will continue to dwindle.  

Without cargoes, we risk our ability to move military cargoes on American vessels wherever and whenever needed.

Given the critical importance of compliance with cargo preference requirements, MARAD continuously and directly engages with federal acquisition officials and contractors over project lifecycles to advise them on the practical application of cargo preference, including how to organize supply chains to maximize the use of U.S.-flagged vessels.

I am also in the process of writing to all federal departments and agencies reminding them of their obligations and requesting that they each identify a Senior Accountable Official—consistent with OMB’s implementing guidance on Executive Order 14005—who can be a single point of contact with whom MARAD can work to implement cargo preference requirements.

MARAD also works to ensure that agencies make up for cargoes transported on foreign vessels by employing U.S.-flag vessels to carry equal or greater volumes.  Facilitating make-up cargoes produces revenue opportunities for the U.S.-flagged fleet.  

MARAD has been evaluating options to advance a cargo preference rulemaking.  We recognize that this effort will be a complex undertaking.  

Success will entail addressing multiple priorities, including the critical importance of supporting our U.S.-flagged fleet while also ensuring that urgent aid is transported with expediency, consistent with America’s commitment to those in need and our many foreign policy objectives.

To lay the foundation for a rulemaking effort that navigates this intersection, MARAD plans to issue a Request for Information (RFI) shortly to seek input from all stakeholders.  

Under the Biden-Harris Administration, MARAD is also committed to growing our U.S.-flagged fleet.  

The Administration has proposed that Congress eliminate the 3-year period that vessels entering the U.S. flag must currently wait before they are eligible to carry preference cargoes.  

Moreover, in the 2023 Presidential Budget Proposal, the Administration requested that Congress fully fund the new Tanker Security Program (TSP) at $60 million, which would support up to 10 U.S. flagged vessels.  

Growing our fleet is also critical to ensuring we have enough mariners with current unlimited tonnage licenses and ratings to meet our sealift needs in a worst-case scenario.   

Vessel operators report that mariner availability is still a challenging issue and, on September 23, I am convening a summit with industry and labor to discuss recruitment and retention challenges.

In closing, I would highlight that these remain challenging times.  COVID has made hard jobs harder and has created new stresses that are clearly affecting mariners’ well-being and willingness to continue sailing.  

I appreciate this Committee’s commitment to our U.S.-flagged fleet and your leadership in support of our cargo preference programs.  I am pleased to answer your questions today.