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Friday, November 17, 2017

FY 2005 Coast Guard Authorization Bill Approved

July 26, 2004

The House-Senate Conference Committee on the Fiscal Year (FY) 2005 Coast Guard Authorization Act completed negotiations and approved a conference report on July 14. The measure was fast-tracked to the House and Senate floors for consideration and won quick passage before the chambers adjourned for an extended summer recess. The final bill accomplishes two top-priority AWO objectives. First, it contains language that closes the lease financing loophole of the Jones Act. Second, it contains language to bring towing vessels under Coast Guard inspection. Both of these items are on AWO’s 2004 list of Major Issue Priorities. Their enactment by the Congress is very meaningful to the long-term health and viability of the industry. In addition to these two critical provisions, the final measure also includes language supported by AWO that makes regulations on Tank Level/Pressure Monitoring (TLPM) devices for tank vessels discretionary.

Lease Financing Loophole Closed

The lease financing loophole has, for several years, undermined the U.S.-ownership provisions of the Jones Act, threatened the multi-billion-dollar investment that AWO members have made in Jones Act vessels, and called into question U.S. control of the domestic vessel fleet. Resolving this issue has been a top priority for AWO and the entire domestic maritime industry. The opening for abuse was created by a 1996 statutory change meant to expand opportunities for lease financing of Jones Act vessels. At the time, Congress made clear that the purpose of the law was to help the domestic maritime industry by expanding vessel financing sources, and explicitly stated that it did not intend “to undermine the basic principle of U.S. maritime law that vessels operated in domestic trades must be built in shipyards in the United States and be operated and controlled by U.S. citizens, which is vital to U.S. military and economic security.” Despite this clear statement of congressional intent, a loophole in the law allowed foreign vessel owners to gain a foothold in the domestic maritime industry, to the detriment of bona fide U.S.-citizen companies and U.S. homeland security interests.

Leaders on the Senate Commerce Committee and House Transportation and Infrastructure Committee decided to take action and stop this abuse of the law in the FY 2005 Coast Guard Authorization Act. In accordance with the original intent of Congress, the final FY 2005 authorization measure permanently closes the lease financing loophole. Foreign interests will no longer be able to manipulate the lease financing law to enter and compete in the U.S. domestic trade.

Towing Vessels Brought Under Coast Guard Inspection

Earlier this year, the U.S. Coast Guard requested the authority from Congress to establish an inspection program for towing vessels, thereby altering a policy that has existed for over 80 years. The proposal for the towing vessel inspection program was contained in a package of recommended legislative changes for FY 2005 transmitted to the House and Senate by Department of Homeland Security (DHS) Secretary Tom Ridge. AWO voiced its support for this proposal as the next logical step in improving safety, security and environmental protection in the industry. Using the modern, 21st century mechanism of a safety management system, the new program will accomplish these objectives while recognizing the limitations on Coast Guard and industry resources and leveraging them in efficient, creative ways.

The DHS package of recommended legislative changes was approved by the House Transportation and Infrastructure Committee in early May and was determined to fall within the scope of the conference on the FY 2005 Coast Guard Authorization Act. As the Conference Committee completed its work, the proposed legislative changes, including the Coast Guard/DHS-language to bring towing vessels under Coast Guard inspection, were wrapped into the final FY 2005 authorization measure. While this new inspection program is an historic change, it is at the same time an outgrowth of the work that the Coast Guard-AWO Safety Partnership has accomplished to address the common goal of improving maritime safety. The operational details of the new towing vessel inspection program will be determined through the forthcoming Coast Guard regulatory process.

TLPM Requirements Deemed Discretionary

In September 2002, the Coast Guard published a final rule that would require TLPM devices to be installed on singlehull tank vessels by October 2007. The agency acknowledged that such devices do not exist and would have at best a minimal impact on oil pollution if they could be developed. However, the Coast Guard interpreted a 2000 court decision as requiring the agency to establish a TLPM installation and use requirement. AWO subsequently organized a coalition of domestic and international tank vessel owners that worked with the Coast Guard, the Department of Transportation and the Office of Management and Budget to secure Administration support for legislative change that would pave the way for the Coast Guard to review and withdraw the September 2002 final rule. In spring 2003, the Administration proposed legislation to Congress to explicitly make the TLPM requirement discretionary.

The Administration-drafted language, strongly supported by AWO, is included in the FY 2005 Coast Guard Authorization Act. The provision provides clear legal authority for the Coast Guard to rescind the TLPM regulations. The complete text of the FY 2005 Coast Guard Authorization Act is available on the AWO Web site at Contact Boyd Hollingsworth or Megan Tucker at (703) 841-9300 or via email at or, respectively.

(Source: AWO Letter, July 23, 2004)

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