Maritime Administration

Report to Congress

Maritime Administration

Annual Report

To Congress

Fiscal Year 2006

U. S. Department of Transportation

Mary Peters

Secretary 

Maritime Administration

Sean T. Connaughton

Administrator 

Headquarters

1200 New Jersey Avenue, SE

Washington, DC 20590

Table Of Contents

INTRODUCTION 1

EXECUTIVE SUMMARY 3

INDUSTRY OVERVIEW 4

REDUCED CONGESTION 11

GLOBAL CONNECTIVITY 17

SECURITY, PREPAREDNESS AND RESPONSE 22

ENVIRONMENTAL STEWARDSHIP 36

ORGANIZATIONAL EXCELLENCE 40

Appendix: FINANCIAL STATEMENTS 43

Appendix: ORGANIZATIONAL CHART 52

Appendix: PRESIDENTIAL PROCLAMATION 53

i



Introduction

A Message from the Administrator

Sean T. Connaughton

Maritime Administrator

THE BEGINNING OF A SEA CHANGE

A sea change is a profound transformation. It can start small and become pervasive and powerful. As 

you read this Annual Report for fiscal year 2006, you will see the beginning of a sea change for the 

Maritime Administration, the maritime industry, and the United States transportation system.

The Maritime Administration is taking a leading role in relieving congestion in our ports, which will help 

ease the congestion throughout the national transportation system. Greater use of our marine highway— 

our coastal and inland waterways — will relieve stress on the overall transportation system so that it can 

carry the increased traffic we expect in the coming decades. In this Annual Report you will see how the 

Maritime Administration is laying the groundwork for this important change.

This agency is also enhancing the role it plays in national security. Even as the Nation was recognizing 

that recovery from natural disaster is an important part of national security, the Maritime Administration 

was already playing a vital role in the recovery of the Gulf Coast region. This unprecedented and 

imaginative use of our vessels and other resources has stimulated important thinking about how 

waterborne transportation assets can fill vital transportation gaps and be used as recovery assets. This 

enhances our important role in supporting sealift, which in turn is critical to supporting the American 

military overseas.

We continue to promote a strong American maritime industry, whether carriers, ports and port services, 

shipyards, shippers, or investors. Our programs to maintain and increase American presence in the 

marine transportation industry are crucial to the United States economy.


Our work in protecting the environment is growing. The Maritime Administration is developing 

practical ways of treating ballast water and cleaning hulls, which will in turn prevent the spread 

of invasive species. The ship disposal program removes obsolete ships from the environment in a 

responsible way. This agency is also developing new methods to reduce air pollution from the main 

and auxiliary engines of vessels. 

Our efforts in supporting the marine workforce continues to expand as do opportunities for skilled 

American mariners worldwide. In this report you will read about our initiatives to increase job 

opportunities and prepare men and women to work in the maritime industry both ashore and afloat. 

Last year was a busy year for the Maritime Administration and we expect this year will be even 

busier as we work to bring a sea change to this agency, the maritime industry, and the overall 

transportation system. 


EXECUTIVE SUMMARY

This Annual Report for fiscal year 2006 serves to document how the Maritime Administration supports 

the U.S. Department of Transportation’s goals of Reduced Congestion; Security, Preparedness and 

Response; Global Connectivity; and Environmental Stewardship; as well as the President’s Management 

Agenda goals for Organizational Excellence. 

This Annual Report fulfills the reporting requirements under Section 208 of the Merchant Marine Act 

of 1936, as amended. It also fulfills requirements of reporting to Congress on Cargo Preference 

activities, plus the requirements for reporting on Maritime Guaranteed Loan (Title XI) activities, as 

mandated in 2003.

The Industry Overview section puts the work of the Maritime Administration in context, with a 

statistical snapshot of the U.S. maritime industry.

The Reduced Congestion section outlines the work of the Maritime Administration in strategic planning 

for the Marine Transportation System (MTS) and the agency’s work with U.S. ports. It also shows the 

success of the Maritime Administration’s work with various public and private entities in making the 

Nation’s waterborne transportation more efficient and effective. 

The Global Connectivity section briefly outlines the Maritime Administration’s role in agreements with 

Russia, Brazil, Vietnam, and China. It also provides a short summary of the agency’s work in the licensing 

of deepwater ports for the transfer of liquefied natural gas (LNG), and provides the required summary of 

cargo preference activities. 

The Environmental Stewardship section outlines the work of the ship disposal program; a high-profile 

program that exceeded its targets in fiscal year 2005 for the numbers of ships disposed, and kept the cost 

of such work well under the target figure. This section also outlines the leadership role the Maritime 

Administration has taken in ballast water technology to combat the spread of invasive species, as well as 

the agency’s work on mitigating port and vessel emissions.

The Organizational Excellence section outlines the work of the agency in “getting to green,” that is, 

getting the highest possible score in the areas emphasized by the President’s Management Agenda: 

Budget and Performance Integration, Improved Financial Performance, Competitive Sourcing, 

Strategic Management of Human Capital, Real Property Asset Management, and Expanded Electronic 

Government. It also contains the required reporting on lawsuits and actions under Admiralty Law.


industry overview

“Such therefore are the advantages of water carriage, it is natural that the first improvements 

of art and industry should be made where this convenience opens the whole world for a 

market to the produce of every sort of labor.”

– Adam Smith

‘Enquiry Into the Wealth of Nations’ 1776

Table 1. Waterborne Trades, 2001-2005

(Thousand Metric Tons)

 % Ch.

Trade 2001 2002 2003 2004 2005 2001-05

Total 2,103.2 2,057.6 2,131.5 2,255.6 2,282.2 8.5

Foreign 1,157.5 1,131.3 1,209.6 1,305.7 1,348.8 16.5

 Imports 830.1 813.9 879.9 954.6 995.2 19.9

 Tanker 572.8 568.9 604.5 630.1 643.2 12.3

 Container 80.7 91.9 98.1 112.9 123.6 53.2

 Exports 327.4 317.4 329.7 351.1 353.6 8.0

 Tanker 55.3 51.8 52.9 57.2 55.5 0.4

 Container 63.8 62.3 68.0 74.4 81.7 28.1

Domestic 945.7 926.3 921.9 949.9 933.4 -1.3

 Coastwise 202.8 196.3 202.8 200.1 193.8 -4.4

 Tanker 85.1 80.3 81.3 78.8 73.1 -14.1

 Inland 562.3 551.6 553.0 568.1 566.1 0.7

 Lakes 90.7 92.1 81.5 93.9 87.3 -3.7

 Other 89.9 86.3 84.6 87.8 86.2 -4.1

Sources: U.S. Bureau of Census for foreign trade; PIERS for container trades; and U.S. 

Army Corps for domestic trades.

Table 2. Containership Calls at U.S. Ports, 2001-2005

% Ch

Type 2001 2002 2003 2004 2005 2001-06

Calls 17,076 17138 17,287 18,279 18,542 8.6

TEU’s/Call 2,801 3,020 3,144 3,241 3,321 18.6

Million. 

TEU’s 48 52 54 59 62 29.2

Source: Maritime Administration, Vessel Calls at U.S. Ports, 2005

It is the mission of the Maritime Administration 

to strengthen the U.S. maritime transportation 

system, including infrastructure, industry, and 

labor, to meet the economic and security needs of 

the Nation. The U.S. water transportation industry 

serves the needs of both foreign and domestic 

commerce. It comprises companies that carry 

freight or passengers on the open seas or inland 

waterways, offer towing services, charter vessels, 

and operate canals and terminals. 

Freight

In 2005, U.S. waterborne commerce amounted to 

2.3 billion metric tons. International commerce 

accounted for 59 percent of the total, up from 

55 percent 5 years earlier (Table 1). The change in 

composition was due largely to a 12 percent rise in 

tanker imports and a 14 percent decline in coastal 

(domestic) tanker trades—import substitution in 

U.S. tanker trades.

Container trades accounted for 15 percent of U.S. 

foreign trade (metric tons), up from 12 percent 

5 years before. Container imports increased by 

52 percent and exports rose by 25 percent over the 

last 5 years.

As container trades increased, there has been a 

significant increase in the size of containerships 

calling at U.S. ports (Table 2). Over the last 5 years, 

containership calls at U.S. ports increased by 9 

percent, but the average size of containerships per 

call increased by 19 percent. 


Also, in 2005, the average size of containerships calling at U.S. ports was 17 percent larger than for those 

calling at world ports. The difference was due largely to a scarcity of U.S. feeder and short-sea services. 

These services, which use smaller vessels than linehaul services, are common in intra-European and 

intra-Asian trades.

Working a container ship at the Port of New Orleans. (Photo by Donn Young)


As of year-end 2005, there were about 39,000 U.S. 

privately-owned cargo-carrying vessels available 

for operation in U.S. foreign and domestic trades 

(Table 3). Over the last 5 years, the largest growth 

has been in the offshore supply vessel (serving 

offshore oil exploration), gas, ferry and double-hull 

tank vessel fleets.

As of year-end 2005, 70 percent of U.S. owned 

tankers were equipped with double-hulls, up from 

46 percent 5 years earlier.

Of the U.S.-owned ocean vessels, 443 were under 

foreign registries, up from 415 five years earlier.

The Jones Act (cabotage) segment of the fleets are 

those that are constructed in the United States, 

owned by U.S. citizens, and registered under the 

U.S. flag; or those wrecked in U.S. waters and 

rebuilt in the U.S. and re-flagged U.S.; or those 

forfeited for violation of U.S. law and reflagged 

U.S. As of year-end 2005, the Jones Act segments 

included all the coastal and waterways vessels, 435 

offshore supply vessels, 48 lakers and 106 ocean 

vessels (56 tankers, 29 containerships, 15 rollon/roll-off vessels, four dry bulk carriers and two 

general cargo vessels).

North American Cruise Passengers

The cruise industry continues to boom in U.S. 

and other North American ports, with capacity 

continuing to grow, and with the cruise traffic 

spreading to more ports. 

In 2005, 63.7 million passenger nights were booked 

on North American cruises, up 19 percent from 2 

years earlier. About 9.8 million passengers were 

carried on 4,435 cruises by the 17 largest cruise 

lines (Table 4). 

Table 3. U.S. Privately-Owned Fleets, 2001-2005

(Vessels)

 % Ch.

Trade 2001 2002 2003 2004 2005 2001-05

Ocean & Lakes 687 634 651 665 688 -0.5

 Tanker 286 271 287 290 275 -3.8

 Double-Hull 131 138 173 187 193 47.3

 Dry Bulk 198 174 163 175 201 1.5

 Lakers 52 51 50 49 48 -7.7

 Container 84 80 82 85 86 2.4

 Ro-Ro 54 53 54 53 58 7.4

 Gas 16 17 17 17 18 12.5

 Combination 13 13 15 11 12 -7.7

 General Cargo 37 26 33 34 38 2.7

Offshore Supply 465 479 490 518 532 14.4

Coastal & 

Waterways 38,769 38,094 37,082 37,209 37.936 -2.1

Tugs 5,180 5,150 5,172 5,314 5,290 2.1

Dry Cargo barges 28,888 28,281 27,272 27,197 27,876 -3.5

Tank Barges 4,122 4,068 4,031 4,069 4,151 0.7

 Double-Hull 2,717 2,820 2,809 2,895 3,014 10.9

Ferries 579 595 607 629 619 6.9

Total 39,892 39,237 38,223 38,392 39,156 -1.8

Sources: Clarksons Ship Register for ocean and offshore; U.S. Army Corps Transportation 

Lines of the United States for coastal and waterways.

Table 4. North America Cruise Statistics, 2003-2005

 % Ch.

2003 2004 2005 2003-05

Cruises 4,094 4,465 4,435 9.0

Ships 101 112 114 12.9

Capacity (Mil.)

 Passengers 7.88 8.72 8.89 12.8

 Pass. Nights 51.31 58.00 59.04 15.1

Traffic (Mil.)

 Passengers 8.35 9.42 9.75 16.8

 Pass. Nights 53.53 61.63 63.73 19.1

Occupancy (%)

 Passengers 106 108 110

 Pass. Nights 104 106 108

Source: Maritime Administration, North American Cruise Statistics.


Over the same period, the occupancy rate for 

North American cruises rose from 106 to 110 

percent (Note: A double stateroom with two 

passengers is considered 100 percent occupied. 

Since many double staterooms can accommodate 

three or four people, occupancy can be more than 

100 percent.).

The North American cruise market is highly 

concentrated, with Carnival, Royal Caribbean and 

Star accounting for 95 percent of the passenger 

nights (Table 5).

By itself, Carnival accounted for 51 percent of the 

passenger nights. Star’s affiliate, Norwegian Cruise 

Lines America operates three foreign-built, U.S.-

flag cruise ships in the Hawaiian Islands. 

The top five departure ports for passengers 

accounted for 55 percent of the North American 

departures during 2005, down from 62 percent 

2 years earlier (Table 6). 

The cruise lines have been expanding the number 

of home ports for their fleets, reducing the cost 

of cruising by eliminating air fares to major 

cruise ports. Cape Liberty, Mobile, Houston and 

Jacksonville have emerged as significant cruise 

ports in recent years. Furthermore, to ensure 

future growth and reduce congestion, cruise lines 

are increasingly building and managing their 

own port facilities. For example, Carnival built 

its own terminal at Long Beach (2003) and Royal 

Caribbean built its own cruise port at Bayonne, NJ 

(Cape Liberty) (2004) contributing to significant 

growth in departures from these ports over the 

last 3 years. 

 

Table 5. North America Cruise Passenger Nights by 

Cruise Line 2003-2005 (Millions)

 % Ch.

2003 2004 2005 2003-05

Carnival Corp. 26.92 31.64 32.7 21.5

Royal Caribbean Int. 18.3 20.79 20.63 12.7

Star Group 5.61 6.09 7.19 28.2

 NCL America 0 0.36 1.15

Other 2.7 3.08 3.2 18.5

Total 53.53 61.62 63.73 19.1

Source: Maritime Administration, North American Cruise Statistics.

Table 6. North America Cruise Passengers by 

Departure Port 2003-2005 (Thousands)

 % Ch.

2003 2004 2005 2003-05

Miami 1,867 1,683 1,771 -5.1

Port Canaveral 1,114 1,230 1,233 10.7

Fort Lauderdale 1,100 1,237 1,200 9.1

Los Angeles 517 435 615 19.0

San Juan 579 678 580 0.2

Galveston 377 433 530 40.6

Vancouver, CA 465 436 435 -6.5

Tampa 419 399 408 -2.6

New York 431 548 369 -14.4

Long Beach 171 401 363 112.3

Seattle 165 291 336 103.6

New Orleans 296 396 309 4.4

Honolulu 172 170 236 37.2

San Diego 92 172 235 155.4

Cape Liberty 0 0 147

Jacksonville 6 113 137 2,183.3

Houston 13 91 99 661.5

Whittier 0 88 96

San Francisco 53 85 89 67.9

Mobile 0 29 88

Boston 69 73 80 15.9

Seward 151 75 68 -55.0

Baltimore 57 104 67 17.5

Philadelphia 24 30 50 108.3

Norfolk 15 47 45 200.0

Charleston 31 39 41 32.3

St. Thomas 8 8 4 -50.0

Gulfport 58 3 0 -100.0

Other Ports 95 122 115 21.1

All Ports 8,349 9,418 9,746 16.7

Source: Maritime Administration, North American Cruise Statistics


The cruise industry has rebounded strongly in Hawaii. Here the Pride of America cruises in the waters of Hawaii. 

Industry Growth

The U.S. water transportation industry is in a period of renewal and expansion, with a 22 percent increase 

in value added (gross output less intermediate inputs), a 125 percent increase in annual investment, a 35 

percent increase in industry assets and over 6,000 jobs added over the last 5 years (Tables 7 and 8).

Of the more than 60,000 water transportation workers 35.8 thousand are mariners and nearly eight 

thousand of these are qualified to crew deep sea vessels and Ready Reserve Force (RRF) and DOD 

sealift ships.

Table 7. Water Transportation Investment, Fixed Assets 

and Labor, 2001-2005

% Ch

Type 2001 2002 2003 2004 2005 2001-05

Investment ($Bil) 3.6 4.9 4.8 7.4 8.1 125.0

Communications 1.7 2.3 2.2 3.6 4.0 135.3

Vessels 1.1 1.8 1.8 2.4 2.5 127.3

Other 0.8 0.8 0.8 1.4 1.6 200.0

Fixed Assets ($Bil.) 35.6 37.6 39.7 43.7 48.0 34.8

Communications 9.4 10.2 10.9 12.8 14.9 58.5

Vessels 22.2 23.4 24.6 26.1 27.8 25.2

Other 4.0 4.1 4.2 4.8 5.4 35.0

Labor (000 Jobs) 148.5 147.8 148.3 147.9 154.5 4.0

Transportation 54.0 52.6 54.5 56.4 60.6 12.2

 Passenger 15.1 15.3 15.8 17.1 18.9 25.2

Port Services 94.5 95.2 93.8 91.5 93.9 -0.6

Sources: Bureau of Economic Analysis for fixed assets; Bureau of Labor Statistics

Table 8. Water Transportation Gross Output, 2001-2005 

(Billion Dollars)

% Ch.

Segment 2001 2002 2003 2004 2005 2001-05

Gross Output 28.8 28.1 31.3 34.2 35.8 24.3

Value Added 7.4 7.0 8.7 9.0 9.0 21.6

 Labor 3.6 3.8 3.8 4.2 4.5 25.0

Intermediate Inputs 21.4 21.1 22.6 25.2 26.7 24.8

 Energy 0.9 1.1 1.5 2.2 3.0 233.3

 Other 20.5 20.0 21.1 23.0 23.7 15.6

Energy/Gross Output 

(%) 3.1 3.9 4.8 6.4 8.4 171.0

Source: Bureau of Economic Analysis, KLEMS NAICS accounts. 


Despite a tripling of energy costs, the industry’s value 

added continued to rise. In 2005, water ranked second 

among transportation modes in terms of energy 

efficiency (energy costs per dollar of gross output, 

Figure 1.) 

 

Over the last 5 years, U.S. carriers have significantly 

upgraded their fleets with 119 new ocean vessels, 183 

new tugs, 3,942 barges, 80 new offshore supply vessels 

and 69 new ferries. The investments in new vessels 

have contributed to a 25 percent increase in the value 

of the industry’s vessel assets, the highest 5-year growth 

in 25 years.

U.S. carriers have ordered a significant number of new 

vessels from U.S. and foreign shipyards. These include: 

61 double-hull tankers, 16 gas carriers, 11 bulkers, 

76 large double-hull tank barges units (ATB’s) which 

will replace aging product tankers in U.S. coastal trades, 

and 102 offshore supply vessels.

Based on existing orders, U.S. shipyard deliveries of new 

double-hull tankers and coastal tank barges (10,000+ 

DWT will be up significantly from those of the previous 

five years, and additional orders are likely for 2008-2010 

(Table 9). 

The investments in new vessels are being driven by customer needs and many are tied to long-term 

customer commitments. Such arrangements integrate marine transportation into the production and 

distribution processes, improve service to customers; and contribute to stable growth in industry output, 

employment and earnings.

Table 9. U.S. Shipyard Deliveries and Orders, 2001-2010 

Vessel Type 2001-2005 Deliveries 2006-2010 Orders

Ocean 13 23

 Tankers 7 19

Coastal Tank 

Barges 38 76

Sources: Clarkson Resaerch Studies for Ocean Vessels and Colton and 

Company for Coastal Tank Barges.

6.3

19.8 12.3

9.8

14.8

Rail Water Air Truck Transit Pipeline

8.4

30

20

10

0

Figure 1. Energy Inputs as a Percent of Gross

Output by Mode, 2005

Percent
10

The Alaskan Legend floats out at NASSCO shipyard in San Diego, August, 2006. This was the fourth in a series of doublehull tankers built for British Petroleum. As of year end, 70 percent of U.S.-owned tankers were equipped with double-hulls.

(Photo courtesy of NASSCO-General Dynamics.)
11

Reduced congestion

The Maritime Administration promotes and facilitates a United States maritime transportation system 

that improves the safe and efficient movement of goods and people. Its activities in this area during 

fiscal year 2006 were concentrated in strategic planning for the Marine Transportation System (MTS), 

supporting shipbuilding through the Title XI program, and in managing the licensing of deepwater ports 

for the safe and effective transportation of liquefied natural gas.

The Port of Long Beach is the second-busiest port in the United States, and the 12th busiest container port in the world. 

(Maritime Administration photo)

Freight Gateways

Current trade patterns are producing complex congestion challenges at freight gateways: ports, land 

border crossings, and intermodal connectors. The U.S. Department of Transportation (DOT) has made 

congestion relief a top priority. The Maritime Administration is working extensively with other DOT 

modes on efforts to reduce transportation system congestion, and is the lead mode for the Department’s 

congestion mitigation efforts in the Southern California National Freight Gateway Area. By working to 

create a cooperative alliance with other Federal, State and local governments as well as private interests 

and the public, the Maritime Administration seeks to attain the transportation solutions needed to 

improve freight transportation throughput in Southern California while also attaining healthful air 

quality and reducing the impact of freight transport on the community. 
12

Transportation Efficiency

The Maritime Administration continued its efforts to strengthen the MTS by sponsoring the Marine 

Transportation System National Advisory Council (MTSNAC). The MTSNAC was established in 2000 

to provide a structured approach for non-Federal stakeholders to provide input on MTS national-level 

issues. The Council advises the Secretary of Transportation on issues. 

It is comprised of leaders from 30 commercial transportation stakeholders, trade associations, State and 

local public entities, academics, and environmental groups.

During fiscal year 2006, the Council developed and presented the Secretary with an Intermodal 

Report containing 10 specific private/public sector system improvement recommendations. These 10 

recommendations address − among other things − freight system congestion; recruitment and retention 

of personnel; more timely, consistent, and accurate measurement of capacity and productivity throughout 

the system; and the need to support regional freight solutions.

In response to this report, the South Atlantic Marine Transportation System Organization (SAMTSO), 

one of MTSNAC’s regional councils, has spearheaded a program in the Hampton Roads area of Virginia 

to provide training to prospective truck drivers. The recruitment and retention of skilled harbor truck 

drivers has been identified as a serious issue in many port areas. The SAMTSO has also helped create a 

truck chassis pool in the Hampton Roads area. This chassis pool has increased equipment quality and 

reliability and reduced the number of chassis required on the participating maritime terminals, thereby 

producing savings to both the vessel operators and maritime terminal truckers.

Marine Highways

The Maritime Administration continues to actively investigate and promote the potential commercial 

viability of marine highways. To encourage public dialogue on the issue of increased waterborne freight 

movements, the Maritime Administration and Transport Canada jointly sponsored the North American 

Short Sea Shipping Conference in Vancouver in the spring of 2006. The Vancouver conference 

culminated in the signing of the “Trilateral Declaration” with Canada and Mexico. This Declaration 

committed the three nations to encourage expanding marine highways operations in North America by 

establishing a steering committee focused on the creation of a trilateral marine highways strategy. 

Economic Modeling

During fiscal year 2006, the Maritime Administration updated some economic modeling tools and 

developed others to assess the economic value of the MTS, and to make this economic data available 

in user-friendly forms to ports and other entities involved in MTS. The MTS includes all of America’s 

coastal and inland waters, more than 300 public and private ports, a network of navigable channels, 

pipelines, vessels, marine terminals, intermodal connections, and associated management and safety 

information systems. Because the MTS affects a broad range of transportation sectors, and thus has 

an important impact on the Nation’s economy, modeling tools are vital to effective planning. The 
13

multifaceted, multiphase approach to the project involves updating the Port Economic Impact Model to 

include improved software, capital expenditure input screens, maritime sector databases, State economic 

databases, and U.S. input-output relationship databases, as well as to the model handbook to include 

trade disruptions and trade diversions.

The modeling capabilities make it possible to undertake initial quantitative assessment for three coastal 

regions (West Coast, East Coast and Gulf Coast) using publicly available and survey data sources. 

The model will be enhanced to allow assessment of port capital expenditures and ongoing marine 

activities. It will also include tools that capture the economic value of port-dependent sectors, as well as 

an expanded section on scenario development and applications (e.g., how to model the closure of a port 

or shifts in the use of ports or inland modes). 

This groundbreaking effort will allow the Maritime Administration to close information gaps dealing 

with the economic value of the maritime industry in the United States, and help all concerned parties 

deal with difficult situations such as work disruptions and environmental challenges.

A cooperative effort was begun in fiscal year 2006 with Transport Canada to measure the economic value 

of the Great Lakes and St. Lawrence Seaway to Canada and the United States.

Port Infrastructure 

The Maritime Administration is the lead Federal agency in a public-private partnership with the Port 

of Anchorage for redevelopment of the port complex. As the major gateway for the State of Alaska, the 

Port of Anchorage has seen steady growth in the past decade, and is expected to continue to grow in 

the future. The Maritime Administration is assisting the port with implementing major infrastructure 

improvements to accommodate larger ships with deeper drafts, newer advanced container cranes, and 

an on-site railroad trailer and container yard to improve efficiency and reduce truck traffic pollution and 

energy use in the area. 

The Maritime Administration has also entered into agreements with the Harbors Division of the Hawaii 

Department of Transportation, and the Hawaii Harbors Users Group, to initiate the beginning phases 

of a large and comprehensive port improvement and expansion program for the multiple ports in the 

State of Hawaii. The program will allow for the necessary expansion and separation of the facilities 

while allowing greater efficiency and growth. The expansion program will involve demolition of old and 

obsolete structures, reorganizing the layout of the port facilities, and improving commerce flow and 

security. Planning phases began in fiscal year 2006 and construction is expected to begin in the summer 

of 2007. Other important infrastructure projects with which the Maritime Administration is involved 

include improvements at the Port of Port Arthur, TX and the Philadelphia Regional Port Authority.
14

The North Backlands Expansion at the Port of Anchorage: The land in the foreground is 21.5 acres of land 

constructed for the project. The plans are to extend this surface out approximately 400 feet west from the face 

of the existing pile support dock, running north to south approximately 9,000 feet for a total of 128.7 acres.

(Photo courtesy of Port of Anchorage)

Port Conveyance

The Maritime Administration conveys surplus Federal property to eligible applicants, at no cost, to 

support the Department of Defense’s Base Realignment and Closure program for the purposes of 

port development, economic development and port expansion. During fiscal year 2006, the Maritime 

Administration received one port conveyance application, processed 10 port conveyance inquiries, and 

conveyed 64 acres of Federal land to port entities.

In November of 2005, the Defense Base Closure and Realignment Commission (BRAC) finalized a list 

of bases to be realigned and closed. As a result, numerous military facilities will become available in 

the near future for port development purposes. These facilities, when ultimately conveyed to local port 

authorities, will expand the capacity of the Nation’s Marine Transportation System (MTS) and help to 

build the Nation’s maritime and economic infrastructure. The Maritime Administration is creating a Web 

site to educate the public about the program.
15

TITLE XI

Maritime Guaranteed Loan (Title XI) Program

The primary purpose of the Title XI Program is to promote the growth and modernization of the U.S. 

merchant marine and U.S. shipyards. Title XI authorizes the Government to guarantee the repayment of 

debt obligations, including unpaid interest, obtained in the private sector by: 

(1) U.S. or foreign shipowners for the purpose of financing or refinancing either U.S.-flagged vessels 

or eligible export vessels constructed, reconstructed, or reconditioned in U.S. shipyards, and

(2) U.S. shipyards for the purpose of financing advanced and modern shipbuilding technology of a 

privately owned general shipyard facility located in the United States.

The Title XI Program permits guarantees in an amount not to exceed 87.5 percent of the actual cost 

of projects eligible for financing. Some eligible projects are limited to 75 percent of actual cost. The 

maximum guarantee period is 25 years.

Title XI Activities, FY 2006

During fiscal year 2006, the Maritime Administration did not issue any new commitments for Title XI 

loan guarantees.

Nevertheless, the Maritime Administration did complete one previous commitment to guarantee 

obligations with respect to two ferries owned by Hawaii Superferry, Inc. The Title XI guaranteed amount 

was $139,731,000. The 105-meter, high-speed roll-on/roll-off (Ro/Ro) passenger ferries are being 

constructed at Austal USA L.L.C., in Mobile, AL. The two Ro/Ro vessels will provide passenger, cargo, 

and vehicle ferry among the four major Hawaiian Islands. The first vessel is projected to be delivered 

in April 2007 with the second being delivered in early 2009. Later in fiscal year 2006, the Maritime 

Administration converted the project’s financing from floating rate to fixed rate obligations.

Towed by two tugs, Hawaii Superferry’s first vessel returns to the Mobile, AL shipyard of its builder, Austal USA. The company 

plans to begin service in Hawaii in July 2007. (Photo courtesy of Austal USA)
16

In addition, the Maritime Administration closed on the sale of one vessel and the assumption of the 

related Title XI obligations, and the sale of a promissory note relating to another vessel, which the 

Maritime Administration had acquired through foreclosure then subsequently sold. The Maritime 

Administration also assumed the obligations of one shipowner. The Maritime Administration litigated 

issues in two earlier bankruptcies related to two Title XI companies and one consolidated bankruptcy 

related to four Title XI companies, and litigated issues in U.S. District Court, U.S. Court of Appeals, and 

U.S. Court of Federal Claims to defend its sales of property. 

As of September 30, 2006, the Title XI loan guarantee portfolio consists of $2.94 billion in loan 

guarantees outstanding. Currently, all Title XI commitments have been funded. The portfolio consists 

of 77 projects, which include drill rigs, tankers, barges, containerships, Ro/Ro vessels, fast ferries, 

passenger vessels, supply vessels, tugs, and shipyard modernization projects. There currently are nine 

pending applications for over $600 million in Title XI loan guarantees, and $7.35 million in subsidy 

appropriations remain available to issue new guarantee commitments. Additional information on the 

Title XI program can be reviewed online at the program’s Web site http://www.marad.dot.gov/TitleXI.

All companies in the Maritime Administration’s Title XI portfolio undergo periodic financial reviews; 

however, companies with a higher potential for default receive additional monitoring. This activity 

involves the preparation of detailed financial reports for senior management review. Summaries of 

these reports are presented to the DOT Credit Council. The Credit Council is an oversight and financial 

guidance body that objectively reviews all discretionary loans made by DOT. A total of $183 million in 

guaranteed projects, or 6 percent of the Title XI portfolio, has been identified as experiencing financial 

difficulties and, as such, is receiving the 18 highest level of monitoring. For the fourth straight year, the 

Title XI loan guarantee program did not experience any defaults.

During fiscal year 2006, the Maritime Administration continued to implement the recommendations 

contained in program audits conducted by the DOT’s Inspector General and the Government 

Accountability Office. Included among these activities was selecting a developer for the creation of a 

computer based credit program portfolio management system that will be used by all of the DOT’s credit 

programs beginning in fiscal year 2007.
17

GLOBAL CONNECTIVITY

INTERNATIONAL MARITIME ACTIVITIES

U.S.-Brazil Maritime Agreement

The Maritime Administration concluded the renegotiation of a maritime agreement with Brazil in fiscal 

year 2005, and the U.S. Secretary of Transportation and Brazil’s ambassador to the United States signed 

the agreement Sept. 30, 2006. The objectives of the agreement are promoting trade between the United 

States and Brazil and strengthening the important political and economic relations between the two 

countries. The impact of U.S.-Brazil trade is significant to the Nation’s economy. In 2005, American 

exports to Brazil topped $15 billion, while the United States imported more than $24 billion in Brazilian 

goods. The agreement is consistent with United States maritime policy, which seeks to preserve and 

expand opportunities in the international marketplace by reaffirming the mutual commitment of both 

the United States and Brazil to open access for each nation’s carriers. Through this agreement, U.S.-

flagged vessels are assured access to international trade cargoes to Brazilian and to cross-trades with 

other countries, which benefits both countries and trade in general in the region.

Vietnam

Negotiation of a bilateral maritime agreement with Vietnam was successfully completed after several 

meetings were held with Vietnamese officials over a period of 18 months. The Maritime Administration 

led the interagency delegation that included representatives from the State Department and Department 

of Homeland Security. The agreement is expected to be signed in March 2007 and is expected to benefit 

U.S. carriers’ operations in Vietnam, and facilitate the flow of cargo in the bilateral trade. 

Russia

The Maritime Administrator traveled to St. Petersburg, Russia, to meet with Russian maritime officials 

for annual consultations that are provided for under the bilateral maritime agreement signed in 2001. 

The 2006 meeting took place September 20-21 and provided the opportunity for the exchange of 

information on developments in maritime transport, both bilateral and international in scope. 

The list of topics was wide ranging and highlighted the growing importance of maritime transport to 

U.S. bilateral trade. As an example, the role of tanker and gas carrier transport to move Russian oil and 

gas from the Sakhalin Island region to the United States was a particularly relevant topic in view of U.S. 

energy needs and the Maritime Administration’s role in LNG terminal permitting.
18

Maritime Administrator Sean T. Connaughton and Alexey Y. Klyavin, Russia’s Director of the Department 

of State Policy for Maritime and River Transport in the Ministry of Transport sign the agreed minutes 

on sea transport. (Department of Transportation photo)

The delegations discussed Russia’s overall development priorities in the maritime sector, which, in order 

of importance, are to: build infrastructure; make maritime transportation services widely available; 

promote competitiveness; develop public/private partnerships; and adopt effective security measures. 

The United States Merchant Marine Academy (USMMA) is working with the Admiral Makarov 

Academy, its Russian equivalent, to develop an academic exchange program. 

International Collaboration in Maritime Education

The United States Merchant Marine Academy reached an agreement with the Korean Maritime 

University that led to three Korean students coming to USMMA for one year. The same agreement 

will also provide an opportunity for midshipmen from the Academy to sail on the Korean university’s 

training ship. During fiscal year 2006, USMMA also hosted delegations from China, Thailand, Malaysia, 

and Panama. Under the terms of an ongoing agreement with Panama, there are several Panamanian 

students in each class at the Academy.

The Global Maritime and Transportation School (GMATS) conducts annual research projects examining 

maritime industry issues and operations worldwide. The GMATS teams traveled to China and Turkey. 

During fiscal year 2006, 24 foreign students from 13 different countries received training at GMATS. 
19

China

A delegation from China met with Maritime Administration officials on March 23, 2006, to review the 

operation and implementation of the Bilateral Maritime Agreement and other matters in the maritime 

transport sector. 

The discussion covered such issues as China’s progress toward implementation of Regulations on 

Maritime Transport, maritime security, treatment of Chinese seafarers in U.S. ports, and efforts to ease 

congestion in the transportation system. 

To combat port congestion and improve port efficiency both delegations agreed to seek opportunities for 

exchange activities and cooperation in relevant areas in the future.

Forest products from Brazil are offloaded at the Port of Beaumont, TX. (Photo courtesy of 

the Port of Beaumont)

International Labor Organization

The Maritime Administration led the U.S. Delegation to the 94th (Maritime) International Labor 

Conference at the International Labor Organization (ILO) in Geneva. The conference adopted an 

unprecedented Maritime Labor Convention that updated, modernized and consolidated nearly 70 

existing ILO maritime labor conventions and recommendations dating as far back as 1919. The new 

convention establishes a comprehensive set of minimum requirements governing working conditions 

for the world’s seafaring labor force including hours of work and rest, recreation, food, health protection, 

medical care, and conditions of employment. The Maritime Administration delegate served as chair of 

the “Conference Committee of the Whole.”
20

Deepwater Ports

Deepwater ports are offshore facilities providing a safe and efficient means for the delivery of liquefied 

natural gas (LNG). Importation of LNG through deepwater ports will help to ensure an adequate supply 

for the United States, as well as address safety concerns and relieve port congestion. The Maritime 

Administration’s Deepwater Ports Program processes applications submitted by private energy companies 

to construct, own, and operate deepwater ports. During fiscal year 2006, the Maritime Administration 

received five applications, participated in seven public license comment hearings, attended three 

Department of Energy public outreach forums, and issued one Record of Decision on a single license.

Conceptual drawing of Northeast Gateway Deepwater Port Facility proposed for operation in the Massachusetts Bay area. 

The deepwater port application for this facility is currently under review. (Graphic courtesy Energy Bridge LLC.)
21

Legal Challenge 

The licensing process involves coordination with 15 Federal agencies as well as State and local 

governments. To date, 15 applications have been filed and four licenses have been issued. All of the 

licensed projects are located in the Gulf of Mexico region. Ten projects are currently under review, 

including projects in California, Massachusetts, New York, Florida, and on the Gulf Coast; as many as 

six more applications may be filed within the next year. Legal issues arising out of the licensing process 

are often complex and novel such as State and Federal jurisdictional disputes, environmental impact 

and siting concerns; endangered and protected species; navigation and national security concerns; 

citizenship; Constitutional issues; and license condition negotiation. 

This year, the Maritime Administration successfully defended a legal challenge to the issuance of a 

license to Gulf Landing, LLC, a subsidiary of Shell Oil Company, for a deepwater port facility in the 

Gulf of Mexico. In an opinion dated June 8, 2006, the Fifth Circuit Court of Appeals held that the 

Maritime Administration properly interpreted and applied the Best Available Technology standard of 

the Deepwater Port Act in issuing a license to Gulf Landing for a facility that will use seawater as the 

heat source for regasifying cryogenic LNG. The court also upheld the scope of the cumulative impacts 

analysis in the Environmental Impact Statement for the project. 

Cargo Preference 

The Maritime Administration uses economic incentives to encourage operation of vessels under U.S. 

registry, which are essential to the military and economic security of our Nation. Although the U.S. 

Government provides limited direct assistance through the Maritime Security Program, the primary 

form of assistance to 118 U.S.-flagged vessels is provided through the cargo preference laws. In fiscal year 

2006, these vessels supported more than 5,500 merchant mariner jobs and a larger number of maritime 

and transportation-related jobs shoreside. The cargo preference laws generated over 10 million revenue 

tons of cargo and $1.3 billion of ocean freight revenue in fiscal year 2006. Varying by corporate size, these 

cargoes represent from 7 percent to more than 50 percent of a carrier’s annual revenues and are vital to 

retaining vessels operating under the U.S. flag.

The Cargo Preference office provides assistance to shippers seeking to utilize U.S.-flag vessels, and 

extensive statistical information on military, civilian agency, and humanitarian cargo on the Web site 

http://www.marad.dot.gov/offices/cargo/. 
22

Security, preparedness and response

“There’s only one reason why the port was able to come back, and that was the Maritime 

Administration.”

Gary LaGrange, President and CEO of the Port of New Orleans

A NEW DIMENSION TO NATIONAL SECURITY

On October 1, 2005, when fiscal year 2006 began, the Gulf Coast still reeled from the destruction 

wrought by hurricanes Katrina and Rita. Eleven ships from the Maritime Administration’s National 

Defense Reserve Fleet (NDRF) had begun an unprecedented mission, one that would last for another five 

months. The mission would also change the way many people thought about national security and the 

role of the merchant marine in time of a national disaster. Other ships, all from the Ready Reserve Force 

component of NDRF, were going about their accustomed business, supporting the U.S. Armed Forces. 

Two were taking cargo to and from the Middle East and three others were performing pre-position 

support duties in the Indian Ocean.

Maritime Administration ships working in the stricken areas of Louisiana and Texas provided shelter, 

meals, electrical power, and dozens of other services large and small for harbor pilots, longshore workers, 

students, firefighters, police, refinery workers, and workers from more than a dozen government 

agencies. The ships stayed in the area for as long as 6 months; the last ship to leave, the Training Ship 

Empire State, departed New Orleans on March 3, 2006. During their 6-month mission, Maritime 

Administration ships served more than 169,000 meals and provided more than 83,000 beds for the night. 

The response to the hurricanes in the Gulf Coast area marked the first time ships of NDRF had been 

activated for a domestic emergency. Because the performance of the ships, their officers and crews in this 

mission was so successful, NDRF became more widely recognized as an important asset in the following 

emergency responses:

•	 Hurricane Relief Story: Port of New Orleans

The Ready Reserve Force ship Cape Kennedy is homeported in New Orleans, and weathered Hurricane 

Katrina at the Poland Street wharf. It quickly became the de facto headquarters for the Port of New 

Orleans, providing meals, electrical power, telephone service, and shelter for the people who were 

working to get the port back in operation.

The Port of New Orleans is vital not only for the people of Louisiana, but for the immense cargo traffic 

traveling on the Mississippi River. A 2005 economic impact report determined that more than 380,000 

American jobs were related to cargo activity at the Port of New Orleans. 
23

By December 2005, the port was nearly back to full operations, and in the first five months of 2006 cargo 

levels were up more than 4 percent compared to the same period’s average over the prior four years.

Gary LaGrange, president and CEO of the Port of New Orleans, grateful for the support from the Cape 

Kennedy and other Maritime Administration ships, said, “There’s only one reason why the port was able 

to come back, and that was the Maritime Administration.”

 The Port of New Orleans: busy again in April 2006. (Photo by Donn Young)

•	 Port Recovery Monitoring

The Maritime Administration also assisted in the recovery efforts of the transportation sector, playing a 

leadership role by developing reviews on hurricane recovery efforts. Accurate information was essential 

to the recovery effort, but was often difficult to obtain. The Maritime Administration monitored more 

than two dozen Gulf Coast ports during September and October 2005, and issued detailed reports each 

day on conditions. After the initial crisis period, the Maritime Administration continued to monitor 

six ports: Mobile, AL; New Orleans; Port Fourchon, AL; and Gulfport, Pascagoula, and Port Bienville, 

MS, issuing detailed monthly reports. The Maritime Administration has stayed integrally involved with 

recovery and restoration of the port system in the Gulf Coast Region.
24

•	 Medals Awarded for Hurricane Recovery Work

On National Maritime Day, May 22, 2006, Secretary of Transportation Norman Y. Mineta and Acting 

Deputy Maritime Administrator Julie Nelson awarded the Merchant Marine Medal for Outstanding 

Achievement to 28 individuals, representing five ship management companies and 

14 Maritime Administration ships, for their work in hurricane recovery in the Gulf Coast Region. 

The Merchant Marine Medal for Outstanding Achievement is awarded to mariners whose expertise and 

service bring honor and distinction to the United States merchant marine. At the ceremony, held at the 

DOT headquarters in Washington, DC Secretary Mineta said, “The Ready Reserve Force ships brought 

in emergency cargo, generated electricity, helped restore port activities and provided shelter and meals to 

relief workers. Their hard work was nothing short of extraordinary.”

Barbara Shipley (center), who served as bosun on the Cape Florida, received a Merchant Marine Medal for 

Outstanding Achievement from Secretary of Transportation Norman Y. Mineta and Deputy Maritime Administrator 

Julie Nelson. (Department of Transportation photo)
25

•	 Port Preparedness

The Maritime Administration is part of DOT efforts to ensure that the Nation’s transportation network 

is able to quickly recovery after natural disasters or other incidents. As a result of the 2005 hurricane 

season, the Maritime Administration and its regional offices are part of teams that provided multimodal 

solutions to emergency transportation preparedness. The Maritime Administration is developing an 

internal review of its owned assets and those of commercial maritime entities that can be allocated and 

used for future response and recovery efforts on a regional basis. Special attention will be given to the 

Louisiana region. 

Additionally, the Maritime Administration is providing detailed input to help define, develop, and 

prepare requirements for emergency transportation services nationwide. Maritime Administration 

efforts assist DOT in defining what resources are needed to support critical emergency operations, 

commercial services to rapidly reopen marine transportation systems, and transport options for 

commodities and passengers through vessel services to support emergencies commercial freight 

movement. These activities are expected to lead to a departmental contract to have ready the needed 

transportation platforms to provide national disaster relief assistance. 

Sealift Programs: Maritime Security Program, Voluntary Intermodal 

Sealift Agreement, Ready Reserve Force

The Maritime Administration is charged with maintaining a merchant marine capable of service as a 

military auxiliary in time of war or national emergency. Two interlocking sealift programs, the Maritime 

Security Program (MSP) and the Voluntary Intermodal Sealift Agreement (VISA), are a joint effort 

with the U.S.-flagged commercial fleet. The Ready Reserve Force fleet is comprised of ships owned 

and operated by the Maritime Administration, using the services of commercial ship management 

companies.

•	 Sixty-ship Maritime Security Program Fleet

The The MSP and VISA programs make commercial ships and intermodal sealift capacity available to the 

U.S. military. The programs are designed primarily for sustainment sealift, which is maintaining sealift 

capacity when the initial surge period has passed. VISA is sponsored jointly by Maritime Administration 

and the Department of Defense (DOD), and includes nearly all of the U.S.-flagged oceangoing cargo fleet. 

VISA participants commit specific vessel capacity, intermodal equipment, and management services 

to DOD. The VISA program is the means used by DOD to pre-plan the availability of militarily-useful 

commercial vessels for DOD in times of emergency. In return for their capacity commitments, VISA 

participants receive priority consideration for the award of DOD peacetime cargoes.

The MSP-generated capacity is a significant component of VISA; MSP participants are required to enroll 

100 percent of their MSP ships and a corresponding level of intermodal resources and services in the 

VISA program. These two interlocking programs serve to maintain a U.S.-flagged fleet in oceangoing 

commerce, both in peace and war. During 2006, the Maritime Administration maintained the 
26

enrollment of 60 ships in the MSP and an overall enrollment of 118 ships in the VISA program. Since 

January 2003, a total of 79 VISA ships have been used to support Operation Iraqi Freedom/Operation 

Enduring Freedom (OIF/OEF), including 57 MSP ships. One additional VISA ship supported the 

rebuilding of Iraq.

On October 1, 2005, MSP operators began operations in U.S. international trade under the reauthorized 

MSP. Subject to the availability of funds, MSP companies will receive $2.6 million per ship per year for 

fiscal years 2006 through 2008, $2.9 million per ship per year for fiscal years 2009 through 2011, and 

$3.1 million per ship per year for fiscal years 2012 through 2015. The current MSP fleet includes 35 

containerships, five geared containerships, 14 roll-on/roll-off vessels, two heavy-lift ships, one lighter 

aboard ship, and three product tankers. A chart illustrating the 60 ships, their types, and their operating 

companies, is available for review online at www.marad.dot.gov/Offices/MSP_Fleet.xls.

Maritime Security

The Maritime Administration is significantly involved in the interagency process for the development of 

the National Strategy for Maritime Security and its eight supporting plans. Although the implementation 

plans address different aspects of maritime security, they are mutually linked and reinforce each other. 

Together, the National Strategy for Maritime Security and its supporting plans represent the beginning 

of a comprehensive national effort to promote global economic stability and protect legitimate activities, 

while preventing hostile or illegal acts within the maritime domain. The Maritime Administration 

provided public and private sector insight to ensure that these plans reflected maritime industry concerns 

and knowledge.

Strategic Ports 

The Maritime Administration administers the Strategic Ports Program, under which 15 U.S. ports are 

designated by DOD for possible use during a military contingency or other national emergency. The 

commercial ports must handle military cargo securely, efficiently, and in a way that minimizes disruption 

of commercial cargo. In addition, the Maritime Administration chairs the National Port Readiness 

Network (NPRN) which promotes the readiness of the Strategic Ports. The NPRN is based on the NPRN 

Memorandum of Understanding on Port Readiness–Revision 6 and is made up of nine Federal agencies: 

the Maritime Administration, U.S. Coast Guard, U.S. Army Corps of Engineers, Transportation Security 

Administration, Military Surface Deployment and Distribution Command, U.S. Army Forces Command, 

U.S. Northern Command, U.S. Transportation Command, and Maritime Defense Zone (MARDEZ). All 

have deployment-related missions. The NPRN organization is composed of a steering group, working 

group, and local Port Readiness Committees.

The DOD, in conjunction with the Maritime Administration, negotiates a Port Planning Order with each 

strategic port, specifying which facilities will be needed to conduct a military deployment. Each port is 

expected to be able to make these facilities available to the military within 48 hours of notification.

Performance Summary: The target for availability of strategic port facilities within 48 hours 

was 93 percent; performance was 100 percent. Target was exceeded. 
27

The target was exceeded despite the continued commercial cargo growth. The Maritime Administration 

is working with DOD’s Surface Deployment and Distribution Command on restructuring plans to 

accommodate anticipated growth to ensure that military cargoes are not delayed in the future. 

Port Security Grants

The Maritime Administration continued its assistance to 

the Department of Homeland Security through a number of 

initiatives. In 2006, the Maritime Administration provided 

expertise in port infrastructure development by assisting in 

the awarding of $168 million in port security grants. The 2006 

program provided funds to create sustainable, risk-based efforts 

to protect critical port infrastructure from terrorism. The U.S. 

Coast Guard developed a list of critical ports for the submission 

of proposals. The ports were grouped into four tiers, with Tier 1 

representing the highest risk and Tier 4 representing the lowest 

risk. Funding was awarded for specific projects within each port 

area based on that port’s relative risk and the relationship of each 

project to identified port security priorities. Since 2002, more 

than $876 million has been awarded to enhance security at the 

Nation’s ports and maritime facilities. 

The Maritime Administration also assisted Homeland Security 

in the continued evaluation of the Transportation Worker 

Identification Credential (TWIC). The TWIC will assist in 

providing uniform identification requirements for transportation 

workers. 

A seafarer raises the U.S. flag on the RRF ship Alliance in New York, 

October, 2005. The ship is part of the MSP. (Photo by Jordan Biscardo)

National Defense Reserve Fleet

The Maritime Administration maintains militarily-useful vessels in the National Defense Reserve Fleet 

(NDRF). The Ready Reserve Force is the active reserve component, and other vessels may be activated 

to support cargo movement requirements during national emergencies. Some NDRF ships may be 

operated infrequently, being in long-term storage in a preserved condition. Others may be scheduled for 

sale, donation, or disposal. The NDRF program was started after World War II when the Merchant Ship 

Sales Act of 1946 was enacted. As ships used for the war were retired, the program grew to a high point 

of 2,277 ships in 1950. When ships are no longer militarily useful, the Maritime Administration arranges 

for their responsible disposition. Ship sales, donations, and disposal efforts have reduced the inventory 

while other initiatives have added newer ships to the program. 
28

As of September 30, 2006, there were 231 vessels in the NDRF of which 44 were in the RRF, 35 were 

in long-term storage (retention), and 152 were ready for disposal or being prepared for disposal (nonretention). An additional 20 vessels, owned by other Federal agencies, were also maintained at NDRF 

facilities on a cost reimbursable basis. The total number of vessels in custody associated with the NDRF 

program at the end of fiscal year 2006 was 251.

There are three main NDRF anchorages. As of September 30, 2006, 56 ships were in the James River 

Reserve Fleet at Fort Eustis, VA; 45 in the Beaumont Reserve Fleet at Beaumont, TX; and 76 ships were 

in the Suisun Bay Reserve Fleet at Benicia, CA. In addition, there are 74 vessels assigned to port facility 

locations. A current inventory of the NDRF may be reviewed online at http://www.marad.dot.gov/

Offices/Ship/Current_Inventory.pdf.

•	 Ready Reserve Force

The ships of the RRF not only provided hurricane recovery support in fiscal year 2006, but also continued 

operations to the Middle East in support of U.S. Armed Forces. Five RRF ships were activated to provide 

sustainment sealift to Kuwait.

Numbers and types of RRF vessels held in reserve are determined by the U.S. Transportation Command 

(USTRANSCOM). As of October 1, 2005, there were 58 ships in the RRF. However, USTRANSCOM 

ordered a reduction in the number of RRF vessels effective at the end of the fiscal year, reducing the 

number of active ships to 44.

Merchant Mariner Availability

An essential component of assuring sufficient sealift is confirming that enough qualified mariners are 

available to sail the required number of ships. The Maritime Administration monitors the availability of 

qualified mariners to facilitate swift and efficient crewing. 

On June 1, 2006, the Maritime Administration launched the Internet-based Mariner Outreach System 

(MOS). This allows mariners who agree to participate to review their qualifications and sea service, 

and to provide updated and more detailed contact information. The MOS provides a systematic way to 

monitor the adequacy of our Nation’s merchant mariner workforce. Should normal crewing practices 

ever prove to be inadequate, MOS could be used to assist those in need of mariners. 

As of October 1, 2006, there were 107,846 mariners holding a U.S. Merchant Mariner’s Document, and 25 

percent of those mariners had consented to participate in the MOS—an encouraging set of numbers for 

the new system’s first four months of operation. 

In fiscal year 2006, no ships activated for DOD missions were delayed or failed to sail because of crewing 

issues. The estimated number of willing and available mariners in the merchant mariner labor pool was 
29

approximately 115 percent of the number required to fully crew the commercial and government fleets. 

This increase over the previous year was partly due to the training of additional mariners, and partly to a 

reduction in the number of active RRF vessels late in the year. 

A screen shot of the Mariner Outreach System portal, which was launched in June 2006.

Merchant Marine Officers 

The Maritime Administration operates the U.S. Merchant Marine Academy at Kings Point, NY, and 

provides assistance to six State academies. 

U.S. Merchant Marine Academy

The U.S. Merchant Marine Academy educates young men and women for service in the American 

merchant marine, in the U.S. Armed Forces, and in the Nation’s intermodal transportation system.

Graduates receive a bachelor of science degree and U.S. Coast Guard-issued licenses as deck or 

engineering officers, and commissions in the U.S. Navy Reserve or another uniformed service. The 

Maritime Administration owns and operates USMMA’s primary training vessel, Kings Pointer, which is 

used to supplement midshipman training aboard commercial vessels.
30

The Training Ship Kings Pointer is anchored at the U.S. Merchant Marine Academy, Kings Point, NY. 

(Photo courtesy of the USMMA)

As a key component of our national security effort, Academy graduates incur an 8-year U.S. Navy 

Reserve commitment (unless they are accepted in another uniformed service) that obligates them to 

serve in time of war or national emergency. The critical maritime and logistical skills developed with 

their military training significantly increases our Nation’s homeland security and defense readiness.

Academy graduates are required to obtain a merchant marine officer’s license in order to graduate from 

the Academy, and to maintain the license for at least six years. Graduates are also committed to a 5-year 

maritime employment service obligation, which may be satisfied in the merchant marine as an officer 

aboard U.S. merchant ships, or in shoreside maritime transportation or logistics industry positions if 

afloat employment is not available, and with the permission of the Maritime Administrator. 

Active duty in the U.S. Armed Forces or service with the National Oceanic and Atmospheric 

Administration also satisfies the service obligation.
31

President George W. Bush addresses the student body at the USMMA during graduation ceremonies June 19, 2006. “America 

has invested in you, and she has high expectations,” said President Bush. “My call to you is this: Trust your instincts, and use 

the skills you were taught here to give back to your nation. Do not be afraid of mistakes; learn from them. Show leadership 

and character in whatever you do. The world lies before you. I ask you to go forth with faith in America, and confidence in 

the eternal promise of liberty.” (Photo courtesy of the USMMA)

President George W. Bush’s visit to the Academy as the keynote commencement speaker on June 19, 

2006–the first visit to USMMA by a sitting U.S. President–was the highlight of the 2006 academic 

year and resulted in USMMA receiving the DOT Outstanding Unit Award. The Class of 2006, which 

represented 34 States and the U.S. Virgin Islands, was comprised of 116 third mates and 86 third assistant 

engineers. The 28 women graduates in 2006 brought to 552 the total number of female graduates since 

the first coeducational graduating class in 1978. Within 6 months after graduation, nearly 100 percent 

of the 202 graduates had obtained employment in the maritime and transportation industry, afloat and 

ashore, or were serving on active military duty.

In July 2006, 275 men and women comprising the Class of 2010 reported to the Academy. The plebe 

class included eight international students from the Republic of Panama. Since 1982, USMMA has 

trained 130 Panamanians on a reimbursable basis to provide skilled personnel for the operation of the 

Panama Canal. Joining the Class of 2007 were three South Korean exchange students who will remain at 

USMMA through June 2007.

The USMMA’s academic programs were reviewed and reaccredited in 2006 by both the Middle States 

Committee on Higher Education and the Accreditation Board for Engineering and Technology. These 

two initiatives involved comprehensive, multi-year self-study efforts, followed by external peer reviews. 

The Academy continued to perform satisfactorily against its program goals established through the Office 

of Management and Budget’s Program Assessment Rating Tool (PART) process.
32

The USMMA has continued to aggressively pursue its Alternative Energy Program. In June 2006, the 

Solar-Hydrogen Home, jointly developed with New York Institute of Technology, went into service. 

This structure had been an entry in DOE’s 2005 Solar Decathlon, where it was hailed for its innovative 

engineering design. The home now serves as a test-bed for alternative energy concepts for both maritime 

and domestic use.

The Academy installed two new state-of-the-art navigation simulators in Bowditch Hall, including a 

16-station RADAR/Advanced Radar Plotting Aid lab and a 16-station Electronic Chart Display and 

Information System lab. Upgrades were performed to the full-mission Computer-Aided Operations 

Research Facility bridge simulator. 

These high-technology facilities are used to train midshipmen, NOAA Corps officers and Navy reservists 

in safe bridge and watchstanding practices, and in environmentally sound vessel operations.

The USMMA initiated discussions with the Office of the Secretary of the Army resulting in the 

assignment of two Army National Guard personnel to the Academy. The strategic goal of this developing 

plan is to commission Academy graduates into the National Guard of their respective home States. These 

individuals would form the core of a professional transportation and logistics response team in natural 

disaster or homeland security crises.

The Maritime Administration’s Global Maritime and Transportation School (GMATS), headquartered 

on the Kings Point campus, established an ongoing cooperative agreement with American Military 

University and continued as a world leader in professional maritime and intermodal transportation 

continuing education. GMATS is an official training site for the U.S. Army, U.S. Navy and the National 

Oceanic and Atmospheric Administration. 

Some 2,400 participants attended GMATS courses in fiscal year 2006. 

In 2006, USMMA received authorization from the Secretary of Defense for its midshipmen to participate 

in future state funerals.

State Maritime Academies

Each of the six State academies is funded primarily by its own State government. The Maritime 

Administration also provides assistance to the State maritime academies, which are located in California, 

Maine, Massachusetts, Michigan, New York, and Texas. Support includes providing a training ship for 

each academy. Three of those training vessels served in the recovery efforts on the Gulf Coast in fiscal 

year 2006. 

The State maritime academies’ primary purpose is the education of licensed officers to meet the 

manpower requirements of the U.S. merchant marine. 
33

State maritime academy programs contribute more than half the entry-level officers trained annually. 

There were 492 graduates of State academies in 2006: 122 from the State University of New York 

Maritime College, 101 from the Maine Maritime Academy, 96 from the Massachusetts Maritime 

Academy, 131 from the California Maritime Academy, 29 from the Texas Maritime Academy, and 12 

from the Great Lakes Maritime Academy. These mariners are needed to safely operate vessels in the deep 

sea, coastwise, Great Lakes and other U.S. maritime sectors. 

In addition to its core licensed officer programs, the State academies offer numerous additional programs 

that support the Maritime Administration’s strategic objectives of national security, commercial mobility 

and environmental protection. Graduates who pursue degrees in other disciplines make significant 

contributions to the American maritime infrastructure. 

The State maritime academy programs have provided specialized, geographically focused maritime 

education and training in other maritime-related fields. The six State academies represent a unique 

Federal/State partnership that is successful because of its ability to collaborate with related programs to 

achieve their goal of preparing through education and training highly sought licensed officers for the U.S. 

Merchant Marine.

Training Voyages

The Maritime Administration provides training ships, also called schoolships, for each of the academies. 

The Training Ship State of Maine, in addition to serving for several months providing meals, shelter and 

other assistance in New Orleans, took students on a training voyage to Spain, Poland, and Ireland. 

The TS Empire State served in Belle Chasse, LA and in New Orleans before taking New York Maritime 

students to Greece, Turkey, Romania, Croatia, and Ireland. 

The TS Enterprise voyage took Massachusetts Maritime students to Spain, Italy, the Madeira Islands, and 

Norfolk, VA. 

Sirius, the new training ship for Texas students, served in New Orleans, and then went into the shipyard 

for refitting. 

Texas students doubled up with California Maritime students on the TS Golden Bear, which went to 

Mexico, Peru, Chile, and Costa Rica. The TS State of Michigan visited Michigan ports Sault Ste. Marie, 

Houghton, Marquette and Port Huron. They also visited Duluth, MN.
34

Scenes from the 2006 training voyage of the TS Golden Bear. 

Berthing at the Costa Rica port of Golfito: Cadets 

man the lines and winches, supervised by California 

Maritime Academy faculty. This maneuver was 

completed without the use of tugs or shipboard 

thrusters.

Cadets get training in shipboard fire fighting, 

teamwork and communication in a crisis.

California Maritime Academy cadets receive 

instruction in lifeboat operations, maintenance 

and safety.

(Photos courtesy of California Maritime Academy)
35

Maritime Recruitment/Careers Outreach

The Maritime Administration staff in partnership with the Ship Operations Cooperative Program, 

Mariner Recruitment and Retention Working Group, and other industry partners have worked to 

develop and promote a positive image and increase the awareness of the maritime industry for the 

general public, particularly youth, about career opportunities in the maritime industry. This outreach 

plays an important role in ensuring that our Nation has adequately trained reliable crews for sealift 

support in times of peace and national emergency. The partnership has been very resourceful and 

effective in its outreach initiatives accomplishments, which include co-sponsoring career fairs and 

trade show booth exhibitions; continued enhancement of the career information Webpage; delivering 

presentations to various public school career day activities; providing documentary resources such as 

“Merchant Marine Seal and Flag” and “Serving America in Peace and War” to other Federal Government 

agencies to utilize at various conferences; and providing assistance to a maritime educational institution 

in its efforts to host the Summer 2006 Maritime Transportation Teacher Institute program. This program 

provides a foundation in maritime transportation, its history, current operations and future challenges 

and facilitation of the development of standards-based lessons in science, mathematics and social studies. 
36

ENVIRONMENTAL STEWARDSHIP

SHIP DISPOSAL

When the ships of the National Defense Reserve Fleet are no longer militarily useful, the Maritime 

Administration ensures their responsible disposition. Fiscal year 2006 was the fourth year the 

Maritime Administration received direct appropriations for the Ship Disposal Program. The Maritime 

Administration used four annual performance measures and goals during the fiscal year for the Ship 

Disposal Program, and the program was more than successful in each of those measures. 

• Number of obsolete vessels from the National Defense Reserve Fleet (NDRF) sites covered 

by disposal contract awards for subsequent disposal: The target was 13; the actual number of 

contracts awarded for obsolete, non-retention ships was 22, exceeding the fiscal year 2006 target 

by nine.

• Number of obsolete vessels removed from the National Defense Reserve Fleet (NDRF) sites 

for subsequent disposal: The target was 13 vessels; the actual number of vessels removed in fiscal 

year 2006 was 25, exceeding the fiscal year 2006 target by 12.

• Number of obsolete vessels disposed of from the National Defense Reserve Fleet (NDRF) 

sites: The target was 15 ships; the actual number of vessels disposed in fiscal year 2006 was 20, 

exceeding the fiscal year 2006 target by five.

• Cost-per-ton for obsolete vessel disposal actions from the National Defense Reserve Fleet 

(NDRF): The target cost was $200 per ton; the actual cost-per-ton figure for fiscal year 2006 

was $83. 

The Maritime Administration continues to follow its Ship Disposal Comprehensive Management Plan 

(CMP) that implements disposition of all existing obsolete ships and future transfers in a timely manner, 

maximizing the use of all available disposal methods. Sound management of disposal contracts under 

the CMP also contributed to significant savings as shown in the cost-per-ton performance measure. 

Taken together, the fiscal year 2006 results from these measures have resulted in the reduced likelihood 

of environmental damage from the obsolete ship inventory now and into the near future, which is a 

Maritime Administration objective. 

In 2006, the Maritime Administration also exceeded the targets for its two long-term ship disposal 

measures by maintaining the number of high-priority ships available for disposal at no more than 5 

percent of the total number of obsolete ships in the NDRF with an actual result of 2.4 percent. The 

Maritime Administration also exceeded the second long-term measure by removing more vessels in 2006 

than the average number of ships designated as obsolete on an annual basis.

The Maritime Administration continues to communicate its disposal plan and impediments to the 

Congress on a semi-annual basis and continues to address legal, legislative, and regulatory inter-agency 

issues to ensure the efficient disposal of ships with due regard for the environment and worker safety.
37

Since January 2005, the Maritime Administration has been using the Federal Acquisition Regulation 

(FAR) Test Program for Certain Commercial Items for announcing and awarding ship recycling 

contracts. The Maritime Administration implemented the use of standing quotations (SQ) in fiscal 

year 2005 and continues to use the SQ process as the primary procurement method for soliciting ship 

disposal services. The use of SQ is a simplified acquisition procedure for the competitive procurement of 

commercial services. The result in fiscal year 2006 has been greater efficiency in the award process and 

more competition in the market place. 

The remains of the Mormacmoon, which was dismantled at Sparrows Point, MD as part of the Ship Disposal Program. 

(Photo by David Condino)
38

Aquatic Nuisance Species / Ballast Water Initiative

The Maritime Administration’s ballast water initiative continues to grow with projects throughout the United 

States. Water is frequently taken onto vessels as ballast, to provide stability. When the water is released into 

another environment, invasive species in the water may also be released. The Maritime Administration 

is assisting the Northeast Midwest Institute (NEMWI) in developing a facility in the Great Lakes to test 

promising technologies that will inhibit the introduction of aquatic invasive species through ballast water. The 

testing facility project was launched in Madison, WI in June 2006 as the part of the “Great Ships Initiative,” 

in partnership with the National Oceanic and Atmospheric Administration, the University of Wisconsin, 

NEMWI, and other State agencies. 

The Maritime Administration is modifying two of its Ready Reserve Force vessels to accommodate “plug 

and play” ballast water treatment systems. Ballast water technology efforts have been expanded through 

the schoolship program and cooperation with the State maritime academies. The Maritime Administration 

partnered with the California Maritime Academy to design modifications to the Training Ship Golden Bear to 

allow for the use of the ship in ballast water-related technology testing. 

Port & Vessel Air Emissions

Air emissions economic incentives research has continued through a cooperative agreement with 

the University of Delaware, College of Marine Studies. In August, the Maritime Administration 

completed the initial phase of the incentives project, which consists of a report entitled “Overview 

of Policy Instruments for Reducing Ship Emissions.” The final project will be completed in spring of 

2007. Because of the significance of this project for the maritime industry, additional funding was 

provided in mid-summer 2006 to support an industry-based survey to elicit the most valuable incentive 

opportunities. 

Environmental Management System

In 2006, the Maritime Administration implemented an Environmental Management System (EMS) in the 

James River Reserve Fleet (JRRF). Using the JRRF as a pilot, the Maritime Administration is now expanding 

EMS implementation to its other four facilities, (i.e., the U.S. Merchant Marine Academy (USMMA), the 

Suisan Bay Reserve Fleet, the Beaumont Reserve Fleet, and the Fire Training Center.) The EMS effort is 

designed to improve environmental stewardship at agency facilities. 

Decommissioning The N.S. Savannah

The Maritime Administration owns the only nuclear-powered merchant ship ever built in the United 

States, the NS Savannah. All nuclear fuel was removed from the ship more than 30 years ago, but in fiscal 

year 2006 the Maritime Administration took major steps toward completing the decommissioning of the 

nuclear facilities housed on the ship.

In fiscal year 2006, the Maritime Administration completed organizational changes necessary to 

undertake an increased level of license activities in accordance with contemporary nuclear practices. 

External activities ensured transparency of this process. Three communities are being considered for the 

decommissioning work at this time: Wilmington, NC; Charleston, SC; and Norfolk, VA. Public meetings 

were held in each of these communities, and members of the local news media attended each meeting. 
39

NS Savannah is towed through Norfolk, VA, enroute to the first stage of work on its nuclear decommissioning. 

(Photo by Erhard Koehler)

The Maritime Administration facilitated media coverage on August 15, 2006, when the Savannah was 

towed from its long-time mooring at the James River Reserve Fleet to a shipyard in preparation for 

decommissioning. With flags flying, the Savannah departed the fleet anchorage, and passed through the 

heart of the historic seaport of Norfolk, VA enroute to its shipyard berth.

The Maritime Administration submitted the first of several required license amendments to the Nuclear 

Regulatory Commission to prepare for decommissioning. The agency plans to eventually select a U.S. 

East Coast port complex for the decommissioning, and, after drydocking, will move the Savannah to that 

port. 
40

ORGANIZATIONAL EXCELLENCE

The President’s Management Agenda (PMA) for reform of government operations has six governmentwide initiatives to improve Federal performance and deliver results that matter to the American people. 

The Maritime Administration’s pursuit of organizational excellence has therefore focused on budget and 

performance integration, improved financial performance, competitive sourcing, strategic management 

of human capital, Federal real property asset management, and expanded electronic government.

Budget And Performance Integration 

The Maritime Administration continued to earn a green status rating in this area. Green is the highest 

rating available; yellow is lower, and red is the lowest. 

The agency produced an integrated performance budget request during fiscal year 2006 for the fiscal year 

2008 budget year. This budget request was organized in a manner that continues to tie the budget to 

specific agency needs and to DOT strategic and performance goals. This budget request also improved 

the readability of the document, and increased the reader’s understanding of the funding request. 

The Maritime Administration conducted three Program Assessment Rating Tool (PART) reviews during 

fiscal year 2006 in support of the fiscal year 2008 budget process. PART is a diagnostic tool used to assess 

program performance and drive improvements. The top score is 100. PART results are reported in the 

annual budget request submitted to Congress. Two programs received a final rating of ‘effective’ with 

scores of 89 and 88. One program was rated ‘moderately effective’ with a score of 75. These scores are 

well above the government-wide average.

Improved Financial Performance

The Maritime Administration continued to make significant progress during fiscal year 2006 in 

improving financial management. The agency has achieved green status in six areas: Fund Balance with 

Treasury; Delinquent Accounts Receivable from Public; Interest Penalties Paid; Electronic Payment; 

Travel Card Delinquency Centrally Billed Account; and Purchase Card Delinquency Rate. 

The Maritime Administration is expected to be yellow in one area and red in two areas. Those needing 

continued improvement are: Electronic Payments; Suspense Clearing; Percent Non-Credit Card Invoices 

Paid on Time.

Competitive Sourcing

The Maritime Administration continued to advance the PMA agenda by, among other things, 

satisfactorily completing an OMB Circular A-76 competition. The competition resulted in the agency’s 

continued green status for competitive sourcing. 
41

Strategic Management Of Human Capital

The Maritime Administration Human Capital Council was established three years ago to prescribe and 

implement best practices for human resources management in accordance with the PMA. During fiscal 

year 2006, the Maritime Administration’s Human Capital Council focused on numerous PMA items, 

including workforce planning, closing information technology skill gaps, mission critical occupations, 

and leadership gaps. 

In addition, the Maritime Administration has aggressively pursued updating its Performance 

Management Program through revising policies and conducting formal training sessions for all 

employees, managers and supervisors. The agency also participated in a DOT initiative to provide an 

Internal Control Action Plan for Human Resources Management activities in accordance with the Office 

of Management and Budget’s Circular A-123 Internal Control Assessment Review Program.

The Maritime Administration remains committed to supporting the DOT in accomplishing the Human 

Capital initiatives of the Department, which continues to earn a green status from the Office of Personnel 

Management.

The Maritime Administration’s employment totaled 790 at the end of fiscal year 2006. During the fiscal 

year the agency hired a total of 58 permanent employees; 45 percent of the hires were female, 32 percent 

were minority employees.

Real Property Asset Management

As required by the President’s Management Agenda, the Maritime Administration updated its Asset 

Management Plan as a part of the Department of Transportation’s Asset Management Plan and updated 

the departmental electronic system for real property asset management (REMS) as it pertains to the 

Maritime Administration. Given its geographic location, it is no surprise that the United States Merchant 

Marine Academy is one of DOT’s top five real property investment areas. Investment priorities were 

established using three parameters: mission criticality, facility condition index, and utilization rate. All 

assets were reviewed and performance measures were validated during fiscal year 2006.

Expanded Electronic Government

In fiscal year 2006 the Maritime Administration implemented the Federal Personnel and Payroll System 

(FPPS) for human resource management. The agency also implemented QuickHire to automate human 

resource recruitment, and made progress in transitioning to DOT’s financial management solution, 

Delphi. The Maritime Administration plans to sunset its legacy system in fiscal year 2007. 

The Maritime Administration automated its mariner workforce projection capabilities using data from 

the U.S. Coast Guard and deployed an online portal to allow mariners to easily register to crew RRF ships 

during emergencies, thus strengthening national security.
42

Legal Services

The Maritime Administration is required to report on certain activities under the Suits in Admiralty Act.

•	 Admiralty Actions

The United States prevailed in two lawsuits in which a total of $1.7 million in damages was awarded 

based on damage to Maritime Administration vessels.

•	 Admiralty Claims

An Admiralty Extension Act claim has been filed by various insurance companies seeking $5 million in 

compensation for pollution damage to new automobiles in Belgium. 

•	 Admiralty Personal Injury Matters

The United States is currently the named defendant in 11 personal injury cases filed in Federal district 

courts as of September 30, 2006. Although liability for each case cannot be determined with precision, it 

is estimated that probable contingent liability for the current cases may be up to $1.2 million.

Freedom Of Information Act

The Maritime Administration began fiscal year 2006 with 111 carryover Freedom of Information Act 

(FOIA) requests for access to records, and received 120 new requests. One hundred twenty-four requests 

were processed during fiscal year 2006, and 107 were pending at year’s end. There were three FOIA 

administrative appeals; one was partially upheld and the Department concurred with the other two initial 

responses.

Civil Rights

The Office of Civil Rights partnered with the Office of Human Resources to develop an educational 

initiative on Alternative Dispute Conflict resolution skills for the agency’s executive leaders and managers 

during the fiscal year. 

This major initiative aligns with DOT’s focus on developing and strengthening the organization’s 

leadership and management skills. In addition, the Maritime Administration’s positive approach in using 

ongoing education of executives and managers on conflict management has resulted in increased use 

of mediation and facilitation to resolve disputes. Strategic facilitations also were productive in globally 

addressing issues, conflicts, and complaints.

In fiscal year 2006, the Maritime Administration made preparations to hire two recruiters at the 

U.S. Merchant Marine Academy to assist in increasing the diversity of applicants and midshipmen. 

The agency also partnered with the Hispanic Association of Colleges and Universities, and Patriots 

Technology Institute, in Springdale, MD to educate potential future transportation leaders on the 

challenges and opportunities available in the maritime industry.
43

Financial Statements

As of September 30, 2006 and 2005

The Financial Statements include:

Balance Sheet (Pages 44 and 45)

Statement of Net Cost (Page 45)

Statement of Changes in Net Position – Cumulative Result of Operations (Page 46)

Statement of Changes in Net Position – Unexpended Appropriations (Page 47)

Statement of Budgetary Resources (Pages 48 and 49)

Statement of Financing (Pages 50 and 51)

There are 23 Notes to the Financial Statement, and 4 Supplemental Financial Information documents. 

They are available online for review at www.marad.dot.gov.
44

Maritime Administration Financial Statements 

Balance Sheet As of September 30, 2006 and 2005

(Dollars in Thousands)

FY 2006 FY 2005

Assets (Note 2)

 Intragovernmental:

 Fund Balance with Treasury (Note 3) 639,732 690,876 

 Investments (Note 4) 151,766 64,800 

 Accounts Receivable, Net (Note 5) 45,949 39,592 

 Loans Receivable 0 0 

 Other Assets (Note 6) 507 405 

 Total Intragovernmental Assets 837,954 795,673 

 Cash and Other Monetary Assets 10 10

 Investments (Note 4) 0 0

 Accounts Receivable, Net (Note 5) 0 2,836

 Loans Receivable and Related Foreclosed Property, Net (Note 7) 28,357 65,890

 Inventory and Related Property, Net (Note 8) 257,798 287,286

 General Property, Plant and Equipment, Net (Note 9) 641,254 718,547

 Other Assets (Note 6) 0 0

Total Assets 1,765,373 1,870,242

 Stewardship PP&E (Note 10)

Liabilities (Note 11)

 Intragovernmental:

 Accounts Payable 277 205

 Debt (Note 12) 271,307 254,525

 Other Intragovernmental Liabilities (Note 13) 229,292 367,918

 Total Intragovernmental Liabilities 500,876 622,648

 Accounts Payable 36,165 40,108

 Loan Guarantee Liability (Note 7) 345,342 392,870

 Federal Employee and Veterans’ Benefits (Note 11) 20,730 20,133

 Environmental Cleanup and Disposal Liabilities (Note 15) 380,371 407,049

 Grant Accrual (Note 14) 0 0

 Other Liabilities (Notes 13, and 17) 124,863 39,091

Total Liabilities 1,408,347 1,521,899

Commitments and Contingencies (Note 17)

 
45

Maritime Administration Financial Statements 

Balance Sheet As of September 30, 2006 and 2005

Continued

(Dollars in Thousands) 

FY 2006 FY 2005

Net Position 

 Unexpended Appropriations - Earmarked funds (Note 18) 0 0

 Unexpended Appropriations - Other funds 197,812 203,255

 Cumulative Results of Operations - Earmarked funds (Note 18) 53,792 53,054

 Cumulative Results of Operations - Other funds 105,422 92,034

Total Net Position 357,026 348,343

Total Liabilities and Net Position 1,765,373 1,870,242

Maritime Administration Financial Statements 

Statement of Net Cost for Periods Ended September 30, 2006 and September 30, 2005

(Dollars in Thousands) 

FY 2006 FY 2005

Program Costs (Notes 19 and 20): 

Gross Costs 851,955 753,071

Less: Earned Revenues 394,430 474,157

Net Cost of Operations 457,525 278,914

	 	
46

Maritime Administration Financial Statements 

Statement of Changes in Net Position - Cumulative Results of Operations for Periods Ended 

September 30, 2006 and September 30, 2005

(Dollars in Thousands) 

FY 2006 FY 2005

Beginning Balances 145,088 -299,066

Adjustments (+/-) 0

 Changes in Accounting Principle 0 0

 Corrections of Errors -200 -36,519

Beginning Balances, Adjusted 144,888 -335,585

Budgetary Financing Sources:

 Other Adjustments (Rescissions, etc.) (+/-) 0 0

 Appropriations Used 564,778 784,150

 Non-Exchange Revenue 0 0

 Donations and Forfeitures of Cash and Cash Equivalents 2,151 2,504

 Transfers-In/Out Without Reimbursement (+/-) 10,700 0

 Other Budgetary Financing Sources (+/-) -263 -131

Other Financing Sources:

 Donations and Forfeitures of Property 0 0

 Transfers-In/Out Without Reimbursement (+/-) -104,943 -42,819

 Imputed Financing From Costs Absorbed by Others 7,308 7,765

 Other (+/-) -7,880 8,118

Total Financing Sources 471,851 759,587

Net Cost of Operations 457,525 278,914

Net Change 14,326 480,673

Cumulative Results of Operations 159,214 145,088

 
47

Maritime Administration Financial Statements 

Statement of Changes in Net Position - Unexpended Appropriations for Periods Ended

September 30, 2006 and September 30, 2005

(Dollars in Thousands) 

FY 2006 FY 2005

Beginning Balances 203,255 124,564

Adjustments (+/-)

 Changes in Accounting Principle -114 0

 Corrections of Errors 0 0

Beginning Balances, Adjusted 203,141 124,564

Budgetary Financing Sources:

 Appropriations Received 560,653 870,440

 Appropriations Transferred-In/Out (+/-) 5,342 0

 Other Adjustments (Rescissions, etc.) (+/-) -6,546 -7,599

 Appropriations Used -564,778 -784,150

Total Budgetary Financing Sources -5,329 78,691

Total Unexpended Appropriations 197,812 203,255

 
48

Maritime Administration Financial Statements 

Statement of Budgetary Resources for Periods Ended September 30, 2006 and September 30, 2005

(Dollars in Thousands) 

 

FY 2006 FY 2005

Budgetary Resources:

Unobligated Balance, Brought forward, October 1 (+/-) 553,165 439,385

Recoveries of Prior Year Unpaid Obligations 32,008 3,374

Budget Authority:

 Appropriations Received 560,653 870,440

 Borrowing Authority 269,300 282,260

 Contract Authority 0 0

 Spending Authority From Offsetting Collections:

 Earned 0 0

 Collected 469,736 523,288

 Change in receivables from Federal Sources 6,820 -927

 Change in Unfilled Customer Orders 0 0

 Advance Received -3,106 16,124

 Without Advance from Federal Sources -51,980 37,050

 Expenditure transfers from trust funds 10,700 0

 Anticipated for Rest of Year, Without Advances 0 0

 Previously unavailable 0 0

 Subtotal 1,262,123 96,417

Non Expenditure transfers, Net, Anticipated and Actual 5,342 0

Temporarily Not Available Pursuant to Public Law 0 0

Permanently Not Available -261,573 -578,112

Total Budgetary Resources 1,591,065 1,592,882

 
49

Maritime Administration Financial Statements 

Statement of Budgetary Resources for Periods Ended September 30, 2006 and September 30, 2005 

Continued

(Dollars in Thousands) 

FY 2006 FY 2005

Status of Budgetary Resources:

Obligations Incurred:

 Direct: 692,894 585,977

 Reimbursable: 381,289 453,741

 Subtotal 1,074,183 1,039,718

Unobligated Balance:

 Apportioned 0 0

 Exempt from apportionment 6,378 6,367

 Subtotal 6,378 6,367

Unobligated Balance Not Available: 510,504 546,797

Total Status of Budgetary Resources 1,591,065 1,592,882

Change in Obligated Balance:

Obligated Balance, Net,

 Unpaid obligations, brought forward, Oct 1st (+) 344,414 149,690

Uncollected customer payments from Fed sources, brought 

forward, Oct 1(-) -168,301 0

Total, unpaid obligated balance, brought forward, net 176,113 149,690

Obligations Incurred (+): 1,074,184 1,039,718

Gross Outlays (-) -1,088,723 -973,797

Obligated Balance Transfers, Net: 0 0

 Actual transfers, unpaid obligations (+ or -) 0 0

Actual transfers, uncollected customer payments from Federal 

sources (+ or -) 0 0

Total, unpaid obligated balance transferred, net 0 0

Recoveries of prior-year unpaid obligations, actual (-) -32,008 -3,255

Change in uncollected customer payments from Federal sources 

(+/-) 45,159 1,777

Obligated Balances, Net, End of Period: 0 0

 Unpaid Obligations (+) 297,866 343,731

 Uncollected Customer Payments from Federal Sources (-) -123,141 -129,819

Total, unpaid obligated balance, net, end of period 174,725 213,912

NET OUTLAYS

Gross Outlays (+) 1,088,723 973,797

Less: Offsetting Collections (-) 477,330 539,412

Less: Distributed offsetting receipts -13,616 0

Net Outlays 625,009 434,385
50

Maritime Administration Financial Statements 

Statement of Financing for Periods Ended September 30, 2006 and September 30, 2005 

(Dollars in Thousands) 

FY 2006 FY 2005

Resources Used to Finance Activities:

Budgetary Resources Obligated

Obligations Incurred 1,074,184 1,039,718

Less: Spending Authority From Offsetting Collections & 

Recoveries 464,178 578,909

Obligations Net of Offsetting Collections and Recoveries 610,006 460,809

Less: Offsetting Receipts -13,616 0

Net Obligations 623,622 460,809

Other Resources:

Donations and Forfeitures of Property -104,943 0

Transfers In/Out Without Reimbursement (+/-) 7,308 -42,819

Imputed Financing from Costs Absorbed by Others 0 7,765

Other -7,880 8,118

Net Other Resources Used to Finance Activities -105,515 -26,936

Total Resources Used to Finance Activities 518,107 433,873

Resources Used to Finance Items Not Part of the Net Cost of 

Operations:

Change in Budgetary Resources Obligated for Goods, Services 

and Benefits Ordered But Not Yet Provided 12,887 2,526

Resources that Fund Expenses Recognized in Prior Periods 118,384 232,809

Budgetary Offsetting Collections and Receipts That Do Not 

Affect Net Cost of Operations

Credit Program Collections Which Increase Liabilities for Loan 

Guarantees or Allowances for Subsidy -96,363 -58,517

Other 11,465 -2,504

Resources That Finance the Acquisition of Assets (+/-) 84,417 28,270

Other Resources or Adjustments to Net Obligated Resources 

That Do Not Affect Net Cost of Operations (+/-) 94,557 80,140

Total Resources Used to Finance Items Not Part of the Net Cost 

of Operations 225,347 282,724

 
51

Maritime Administration Financial Statements

Statement of Financing for Periods Ended September 30, 2006 and September 30, 2005 

Continued

(Dollars in Thousands) 

FY 2006 FY 2005

Components of the Net Cost of Operations That Will Not 

Require or Generate Resources in the Current Period:

Components Requiring/Generating Resources in Future 

Periods:

Increase in Annual Leave Liability 0 455

Increase in Environmental and Disposal Liability 0 0

Upward/Downward Reestimates of Credit Subsidy Expense (+/-) 111,943 19,287

Increase in Exchange Revenue Receivable from the Public 0 0

Other -22,694 27,438

Total Components of Net Cost of Operations That Will 

Require or Generate Resources in Future Periods 89,249 47,180 

Components Not Requiring or Generating Resources:

Depreciation and Amortization 75,516 80,585

Revaluation of Assets or Liabilities (+/-) 0 0

Other 0 0

Total Components of Net Cost of Operations That Will Not 

Require or Generate Resources 75,516 80,585 

Total Components of Net Cost of Operations That Will Not 

Require or Generate Resources in the Current Period: 164,765 127,765

Net Cost of Operations 457,525 278,914

 
52

DIRECTOR OF CIVIL 

RIGHTS

MARITIME SUBSIDY 

BOARD

OFFICE OF CONGRESSIONAL 

AND PUBLIC AFFAIRS

OFFICE OF THE 

CHIEF COUNSEL

MARITIME ADMINISTRATOR

DEPUTY MARITIME ADMINISTRATOR

ASSOCIATE 

ADMINISTRATOR FOR 

POLICY AND 

INTERNATIONAL TRADE

ASSOCIATE 

ADMINISTRATOR FOR 

ADMINISTRATION

ASSOCIATE 

ADMINISTRATOR FOR 

NATIONAL SECURITY

ASSOCIATE 

ADMINISTRATOR FOR 

MARINE ASSET 

DEVELOPMENT

OFFICE OF

BUDGET

OFFICE OF

ACCOUNTING

OFFICE OF THE 

CHIEF INFORMATION 

OFFICER

OFFICE OF

ACQUISITION

OFFICE OF

HUMAN RESOURCES

OFFICE OF

MANAGEMENT

SERVICES

OFFICE OF

INTERNATIONAL 

ACTIVITIES

OFFICE OF PLANS 

AND POLICY

OFFICE OF CARGO 

PREFERENCE

OFFICE OF

FINANCIAL AND RATE 

APPROVALS

OFFICE OF NATIONAL 

SECURITY PLANS

OFFICE OF SHIP 

OPERATIONS

OFFICE OF SEALIFT 

SUPPORT

OFFICE OF MARINE

FINANCING

OFFICE OF MARINE 

ASSET CONSTRUCTION 

AND TECHNOLOGY

OFFICE OF

INSURANCE AND 

SHIPPING ANALYSIS

OFFICE OF DATA 

AND ECONOMIC 

ANALYSIS

OFFICE OF

ENVIRONMENTAL

ACTIVITIES

OFFICE OF

INTERMODAL 

DEVELOPMENT

OFFICE OF PORTS 

AND DOMESTIC

SHIPPING

WESTERN

REGION

GREAT LAKES

REGION

SOUTH ATLANTIC

REGION

U.S. MERCHANT 

MARINE ACADEMY

ASSOCIATE ADMINISTRATOR 

FOR FINANCIAL 

APPROVALS AND CARGO 

PREFERENCE

ASSOCIATE ADMINISTRATOR

FOR PORT, INTERMODAL,

AND ENVIRONMENTAL 

ACTIVITIES

NORTH ATLANTIC

REGION

CENTRAL

REGION

MARITIME ADMINISTRATION
53

For Immediate Release

Office of the Press Secretary

May 19, 2006 

National Maritime Day, 2006 

A Proclamation by the President of the United States of America 

The United States Merchant Marine plays an important role in ensuring our national security and 

strengthening our economy. As we celebrate National Maritime Day and the 70th anniversary of the 

Merchant Marine Act, we pay tribute to merchant mariners and their faithful service to our Nation. 

Since 1775, merchant mariners have bravely served our country, and in 1936, the Merchant Marine 

Act officially established their role in our military as a wartime naval auxiliary. During World War 

II, merchant mariners were critical to the delivery of troops and supplies overseas, and they helped 

keep vital ocean supply lines operating. President Franklin D. Roosevelt praised these brave merchant 

mariners for persevering “despite the perils of the submarine, the dive bomber, and the surface raider.” 

Today’s merchant mariners follow those who courageously served before them as they continue 

to provide crucial support for our Nation’s service men and women. America is grateful for their 

commitment to excellence and devotion to duty. 

In addition to helping defend our country, merchant mariners facilitate commerce by importing and 

exporting goods throughout the world. They work with our Nation’s transportation industry to share 

their valuable skills and experience in ship maintenance, navigation, and cargo transportation. This past 

year, the good work and compassion of merchant mariners also played an important role in hurricane 

relief efforts. Ships brought urgently needed supplies to the devastated areas, provided assistance for oil 

spill cleanup, generated electricity, and provided meals and lodging for recovery workers and evacuees. 

In recognition of the importance of the U.S. Merchant Marine, the Congress, by joint resolution approved 

on May 20, 1933, as amended, has designated May 22 of each year as “National Maritime Day,” and has 

authorized and requested that the President issue an annual proclamation calling for its appropriate 

observance. 

NOW, THEREFORE, I, GEORGE W. BUSH, President of the United States of America, do hereby 

proclaim May 22, 2006, as National Maritime Day. I call upon all the people of the United States to mark 

this observance by honoring the service of merchant mariners and by displaying the flag of the United 

States at their homes and in their communities. I also request that all ships sailing under the American 

flag dress ship on that day. 

IN WITNESS WHEREOF, I have hereunto set my hand this nineteenth day of May, in the year of our 

Lord two thousand six, and of the Independence of the United States of America the two hundred and 

thirtieth. 

GEORGE W. BUSH 
U.S. Department of Transportation

Maritime Administration

1200 NEW JERSEY AVENUE, SE

Washington, DC 20590

1-800-99-MARAD

http://www.marad.dot.gov