On January 5, 2011, the Members of the 112th Conress were sworn in. The Republicans gained control of the House and all its Committees; the Senate continued in Democratic control, but with a smaller majority. While the practical effect of these changes remains to be seen, some policy ones are evident: the new emphasis on shrinking the Federal deficit and the number of new Committee Chairs in the House are likely to change the landscape and the outlook for maritime legislation and budgets.
We begin with a review of the new House Committee leadership, starting with the Transportation and Infrastructure Committee, where Congressman Jim Oberstar (D-MN) lost his seat, and Congressman John Mica (R-FL) takes over as Committee Chair. The full Committee Ranking Member is Rep. Nick Rahall (D-WV). The key Subcommittee on Coast Guard and Maritime Transportation is chaired by Rep. Frank LoBiondo (R-NJ) and Rep. Rick Larsen (D-WA) is the Ranking Member. Chairman LoBiondo, a strong supporter of the maritime industry, just announced his goals for the 112th Congress.
They include:
- enacting legislation to provide the necessary authorities and resources for the Coast Guard to carry out its broad responsibilities;
- the development of a national strategic transportation plan that includes a strong maritime transportation component and greater use of coastwise trade, including the encouragement of short-sea shipping; and
- ensuring that future deepwater drilling permits are not rubberstamped and that adequate technologies, more thorough inspections, and better oversight and planning are required for future exploration and drilling activities.
The 111th Congress just enacted a comprehensive Coast Guard Modernization Act (P.L. 111-281) while leaving on the table several items of unfinished business. Therefore, the possibility of taking up another Coast Guard bill provides new opportunities for the maritime industry.
Other changes affecting the maritime industry in the House are in the Armed Services Committee, which is now chaired by Congressman Howard P. ("Buck") McKeon (R-CA). The Ranking Member is Rep. Adam Smith (D-WA). The Seapower and Projection Forces Subcommittee is chaired by Rep. Todd Akin (R-MO), and the Ranking Member is Rep. Mike McIntyre (D-NC). This Subcommittee has jurisdiction over the Maritime Security Program ("MSP"). The Committee is beginning to examine the President's proposals to reduce the Defense budget and has held its first hearing on this subject. Republicans are also divided over the question of reducing the Defense budget. To date, we have not seen any proposed changes in the MSP budget.
There are fewer changes on the Senate side. Senator John D. ("Jay") Rockefeller (D-WV) continues to lead the Senate Committee on Commerce, Science, and Transportation, and Senator Kay Bailey Hutchison (R-TX) remains the Ranking Member. Chairman Rockefeller has announced his legislative agenda, which includes:
- bolstering our infrastructure through improving transportation in the highway, rail, pipeline, and maritime sectors;
- promoting exports;
- protecting coastal economies and jobs through continued oversight of the Gulf spill recovery efforts and long term restoration;
- improving cargo security and securing our ports and the transportation of chemicals; and
- increasing the Coast Guard's response capabilities.
Senator Rockefeller has already introduced legislation, the "Deepwater Horizon Survivors' Fairness Act" (S.183). The bill amends the Shipowners' Liability Act of 1851, the Death on the High Seas Act, and the Jones Act to provide the same level of compensation to victims' families of the Gulf oil spill as that available to families of those killed or maimed on land.
A critical question facing the 112th Congress is what to do with the budget. No final appropriations have been enacted even for last year, FY 2011, and it looks increasingly likely that the Continuing Resolution ("CR"), which expires on March 18, 2011, will simply be extended for the rest of the year. The question is: what level of funding will be provided in a yearlong CR—will it be at 2010 levels or go back further to 2008 levels? In either event, agencies will be limited in their spending to prior year levels with the possible exception of the Department of Defense. Unless Congress carves out exceptions in a year-long CR, new starts or new programs are in jeopardy. For agencies such as the Maritime Administration, this is likely to mean no new small shipyard grant program and a barely functioning Title XI loan guarantee program. Unless the Department of Homeland Security gets more funds, agencies such as the Coast Guard will face even further delays in replacing its aging maritime and air fleet.
As of this writing, the President has just sent Congress his FY 2012 budget calling for his own priorities for cutting programs. The President's State of the Union Address called for investment in renewable energy, education, and infrastructure while proposing a 5-year freeze on domestic discretionary spending. The President also set a policy goal to have 80% of our electricity come from renewable energy sources by 2035, including from solar, wind, natural gas, and nuclear power, paid for by eliminating tax credits paid to the oil and gas industry. The proposed spending freeze was met by a distinct lack of enthusiasm from Democrats and cries from Republicans that it didn't go far enough to address the looming deficit. We expect this conflict among goals and priorities for the future to continue for the rest of this year and probably set the stage for the 2012 presidential election. Of key importance will be who will bear the mantle of fiscal responsibility.
Another key question for the 112th Congress is what type of legislation, if any, to enact following the Deepwater Horizon ("DWH") oil spill. The Presidential Commission on the DWH oil spill, chaired by former Florida Senator Bob Graham and former EPA Administrator William Reilly, issued its report in January, and hearings have begun in the respective House and Senate committees. The Commission called for an extensive reorganization of the Department of the Interior ("DOI") with a focus on a new independent Safety Agency, new user fees on offshore oil and gas lessees, lifting the $75 million liability cap on oil spills (but not recommending to what amount), and increased compensation for DOI inspectors, among other recommendations. The recommendations were met with very different responses. Chairman Doc Hastings (R-WA) of the House Natural Resources Committee has taken a wait-and-see approach, but Chairman Jeff Bingaman (D-NM) of the Senate Energy and Natural Resources Committee has applauded the work of the Commission and announced plans to introduce new oil spill response legislation this Congress. It remains to be seen whether he gets the support of the new Republicans on his Committee. House Democratic Members, led by Congress man Ed Markey (D-MA), introduced new legislation entitled "Implementing the Recommendations of the BP Oil Spill Commission Act of 2011" (H.R. 501), which pretty much does what the title states—it implements the recommendations of the Presidential Commission. So far, there has been little enthusiasm for the bill from their Republican colleagues. And, a number of bills have been introduced for the purpose of lifting the liability cap including a bill from Congressman Holt (D-NJ) and Senator Menendez (D-NJ).
Last year, the House passed a comprehensive energy bill, called the CLEAR Act, but the Senate did not take it up. We are more likely to see a much more modest energy bill this year.
Finally, we are keeping a close eye on transportation spending and whether the focus will be on a new Infrastructure Bank (to include maritime projects), as the President has proposed, or new public-private partnerships as Chairman Mica has proposed. Either way, maritime companies should make sure that maritime has a seat at the table and whether it's dredging or port expansion or shipbuilding, maritime interests are well-represented.
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