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Bill tries anew to require US-flag ships for some petroleum exports

Jun 1, 2017 10:30 AM

With U.S. petroleum exports growing, a bipartisan bill introduced in Congress in late February would mandate that up to 30 percent of “strategic energy assets” be carried on U.S.-flagged ships.

The Energizing American Maritime Act (H.R.1240), introduced by Rep. John Garamendi, D-Calif., follows similar efforts made last year by Garamendi, who is a ranking member of the House Subcommittee on Coast Guard and Maritime Transportation. The bill is co-sponsored by Rep. Duncan Hunter, R-Calif., another ranking member on the subcommittee, and by Rep. John Duncan, R-Tenn.

Congress ended a ban on crude oil exports in late 2015 as U.S. petroleum shipments grew with a surge in hydraulic fracturing, or fracking, across the nation. Currently, foreign-flagged ships are allowed to carry domestically derived crude oil, liquefied natural gas (LNG) and other petroleum products overseas. The Jones Act of 1920, which requires that vessels engaged in U.S. coastwise trade be American-built, American-owned and operated by Jones Act-qualified U.S. citizens, doesn’t apply to oil exports.

Garamendi worries that moving strategic U.S. materials on foreign-flagged vessels raises national security risks. Other countries have cut into the nation’s maritime presence, with the U.S.-flag oceangoing fleet dropping from 1,200 ships just after World War II to less than 80 today, he said.

“We’re the most powerful nation in the world, but 99 percent of our trade travels on foreign-flagged ships,” Garamendi said, referring to all types of U.S. exports. “Requiring even a minority of strategic energy-asset exports to be carried on U.S.-flagged ships will compel us to rebuild the technical skill to man these vessels, and with that comes good high-paying maritime jobs.”

The bill has been referred to the House Committee on Energy and Commerce and to the Committee on Foreign Affairs, but it hasn’t come up for a hearing yet, Garamendi spokesman Dante Atkins said in early April.

“Every time Mr. Garamendi speaks about this bill, he says how advantageous it would be to our national security to have a larger merchant marine to provide sealift capacity in case of an emergency, such as a possible military conflict or a natural disaster,” Atkins said. “The United States Transportation Command, or TRANSCOM, commander and the U.S. Maritime Administration acting administrator have testified in the past few weeks about the security impact of our dwindling U.S.-flag fleet.”

Garamendi introduced two pieces of similar legislation in December 2016 as he looked to build bipartisan support in the next Congress, Atkins said. H.R. 6455, also called the Energizing American Maritime Act, would require that up to 30 percent of energy exports be carried on U.S.-flagged vessels. H.R. 6454, the Energizing American Shipbuilding and Maritime Act, would mandate that a percentage of energy exports be carried on U.S.-flagged vessels built in American shipyards.

The current environment may be favorable for Garamendi’s February bill. “Creating jobs in America, as opposed to outsourcing them overseas, is a flashpoint in American politics at this time, and we hope that will give this legislation momentum,” Atkins said.

The nation’s maritime industry supports Garamendi’s effort. “This bill offers an excellent opportunity to create American jobs while strengthening U.S. national, economic and homeland security,” said Brian Schoeneman, political and legislative director at the Seafarers International Union in Camp Springs, Md. “Our military leaders, as well as government officials, have expressed concern about declines in U.S.-flag tonnage and in the number of U.S. mariners. This is a chance to start reversing those losses.”

The Maryland-based Transportation Institute said in a prepared statement that Garamendi’s legislation, if enacted, would ensure that dangerous cargo is carried on more U.S.-flagged vessels by skilled American mariners and the nation’s merchant marine would be bolstered by job growth.

The Consolidated Appropriations Act of 2016 ended a 40-year ban on U.S. crude oil exports. During the Arab oil embargo in 1975, Congress had banned crude exports. The 2016 act states “no official of the federal government shall impose or enforce any restrictions on the export of crude oil.” The act, however, preserves the president’s ability to restrict crude oil exports in response to a national emergency or to enforce trade sanctions.

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