July 2012

Port Bureau News July 2012

www.txgulf.org

Point/Counterpoint: The United Nations Convention on the Law of the Sea

Busiest Ports in the US Where Does Houston Rank?

What Does the Panama Canal Expansion Mean?

Spotlight on the Bayport Deepening & Widening Project

A Bow Wave Batters a Vessel at the Sea Buoy—Photo Credit: Capt Lou Vest, Houston Pilots Association

Port Bureau Staff Bill Diehl Jeannie Angeli David Cooley Al Cusick Cristina Gomez Janette Molina Christine Schlenker Patrick Seeba Josh Whitehead

Board of Directors *Dennis Hansell—Chairman *Steve Stewart—1st Vice Chair *Capt. Bill Hennessey—2nd Vice Chair *John Taylor—Sec./Treas. *Tom Marian—Immediate Past Chair *David Ellis *Charles H. Flournoy *Capt. John G. Peterlin III *Vinny Pilegge *Nolan Richardson *Capt. Richard Russell *Captain Robert Thompson *Len Waterworth *Nathan Wesely April Bailey Jim Black Robert Blades Ken Burnett Mike Drieu Robert Garcia Celeste Harris Jason Hayley Mehdi Hejazi Kevin Hickey Guy W. Hitt Charlie Jenkins Brad Maxcey Jerry Nagel Bernt Netland Lloyd Schwing Colin Scott Capt. Christos Sotirelis Tim Studdert *Denotes Executive Committee Members

Cover: Container Ships Lined up at Barbour’s Cut Terminal in Houston. Photo Credit: Capt Lou Vest, Houston Pilots

Captain’s Corner 00

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Great Expectations

In fall 2009, the first students began attending classes in the pilot programs undertaken by the Houston Independent School District (HISD) at Jack Yates and Stephen F. Austin High Schools to teach students about the maritime industry. Working with the Port of Houston Authority and industry partners like the Houston Pilots and Bay Houston Towing, the programs were designed to address what thenActing Port Director Wade Battles called “a general lack of knowledge of the maritime industry in Houston as far as employment opportunities.” To help industry train and develop the workforce of the future “it had become very apparent that we had to start earlier and develop this knowledge at the high school level.”

Three years later, the program has grown to over 500 students and has expanded across the region to Pasadena and La Porte High Schools. Next year though, we’ll have the program’s first real test: the first class will graduate from the HISD maritime programs and enter the work force, or better yet, some of the graduates will continue their studies at our maritime programs at local community colleges and universities.

What will employers get when they take on a student from a maritime high school? Principal Jorge Arredondo from Stephen F. Austin describes a curriculum that has focused on hands-on project and class labs. “Each successful student will graduate with five industry certifications,” he told a Houston community indicators symposium earlier this year. · Occupational Health and Safety · Certified Logistics Associate · Certified Logistics Tech · CPR · Advanced Life Saving “We’re trying to help prepare the students for the workforce” says Port of Houston Authority Maritime Academy Manager Robert Morgan. “These students will have worked with shop and warehouse tools such as pallet jacks, two-wheel hand trucks, saws, drills, hammers sanders and grinders, but at the same time, they will have completed projects using Microsoft Word, Powerpoint and Excel, so they can work in an office environment as well.” Mr. Morgan emphasized that many students will have completed basic water safety training and will have a basic familiarity with warehousing, storage and materials handling. “Now, we’re looking for companies to step up and help get these students into the workplace where they can start getting hands on training—it’s a win-win for both the companies, who get a willing worker who has some basic training, and the students who are getting jobs that desperately need to be filled.”

More importantly, in the Spring 2013 semester these high schools will be encouraging their students to gain more experience with internships in the maritime community. If your company is interested in supporting the internship program, please give Robert Morgan a call at 713-670-2579 (see inset to the right).

We have great expectations of these students who have stepped forward to be a part of the inaugural maritime high school class. If you are in need of entry level workers, please consider this talent pool that has been learning about the industry these past few years.

National Vessel Traffic Patterns Deep-Draft Arrivals to the United States

From labor to management, carriers to shippers and every conceivable user of the Houston Ship Channel, few in our local industry are surprised when told that we’re one of the busiest ports in the nation. But how busy are we? Statistics compiled by the Maritime Administration (MARAD) show that the Port of Houston alone (even without adding movements along the Houston Ship Channel contributed by regional ports Galveston and Texas City) accounts for 11% of all national deep -draft vessel traffic.

In 2010, ports of the United States saw 7,579 vessels make over 62,000 calls at US ports—a 13% increase over 2009, and a 3% increase over 2005. At a time when economists are looking for reasons for optimism about US markets, the trade statistics show that traffic has picked up to pre-recession levels even if consumer confidence and consumption may still be lagging. US ports accounted for nearly 8% of all global vessel calls, ranking second overall to China, and with over 21,000 tanker calls (including chemical tankers) and 12% of the worldwide total, the United States led the globe for liquid bulk traffic—Houston alone accounted for 2.5% of global tanker traffic. At the Port Bureau, we’ve seen the number of ship arrivals grow as more and more companies take advantage of cheap natural gas and the chemical manufacturing capabilities of our region. Though the cargo hasn’t shown a dramatic increase in throughput, the number of vessel calls sustains secondary and tertiary services along the channel, providing jobs and economic benefits as cargo tries to keep pace with traffic.

Digging into the Numbers—What Moved in the United States?

In 2010, US flagged ships accounted for only 11% of calls at US ports—down from 13% as recently as 2005, and of those vessels, the great majority (70%) were part of Jones Act fleet. Jones Act ships include over 1,800 large commercial vessels American vessels, the great majority of which were built during the shipbuilding boom of the late 1970’s, have gotten newer in recent years, from an average age of nearly 20 years in 2005 to 16.7 years in 2010. However, though newer, these ves-

sels are still 9 years older than their foreign counterparts who 4 were built on average in 2000-2004. The average age of all vessels calling US ports has been declining in recent years as 30-40 year old ships leave the global markets in greater numbers.

The variety of vessels coming into and out of the United States shows the diversity of cargo and customers; with everything from consumer goods buried in containers to export grain to petrochemical products used for manufacturing and energy, nationwide vessel traffic showed all facets of the American industrial system. In Houston, the types of vessel movements were an even more direct reflection of our regional economic engines. Dominated by petrochemicals, over 55% of regional movements are some type of crude oil or chemical product. Containers, growing to a 12% market share up from 4% in 2005, are reflective of the area’s growing population and desire for consumer goods.

Factors for Growth So what do we have to look forward to in Houston?

Though the newer locks of the Panama Canal will allow for deeper ships to travel, port capacity depends on more than just draft: channel widths, turning basin size, sufficient bridge heights, and port support structures such as dock and crane capacity to offload and onload goods have an impact on what vessels can call on our ports. The deepest channel requirements are likely to be driven by “weight trade” services where vessels are filled to their weight capacity and sit deeper in the water as they approach their maximum design draft. For volume trade routes however, channel width and turning basin size may be of greater importance than additional channel depth at some ports, as vessels loaded to their volume capacity often sail at significantly less than their design draft.

When addressing container movements, the Asian export trade is considered a “cube trade” (i.e. volume trade). Careful consideration is needed when determining channel depth requirements at U.S. ports for this trade route. Addressing both concerns, the Port of Houston Authority is looking to deepen and widen the Bayport Channel and the details of that project are included later in this publication.

To remain competitive in a changing global trade market, the U.S. will need to continue making the justified investments necessary to maintain and improve its navigation transportation infrastructure where it is appropriate and efficient to do so. Understanding the current funding challenges and making long-term plans for operations and maintenance and justified investments are critical to developing an effective vision for a competitive navigation system. This is one reason why the Port Bureau has been a vocal proponent of the Realize America’s Maritime Promise (RAMP) legislation which has seen its cosponsor rolls in the House and Senate grow with bipartisan support to 196 and 37 respectively.

The Army Corps Civil Works appropriations to address waterside infrastructure have averaged about $1.5 to $2 billion per year for the last decade. These expenditures have been used to maintain, construct and improve the most highly justified inland and coastal navigation infrastructure projects, and reflect the nation’s most efficient navigation investment strategy. Though the Corps generally receives between $600-800 million in funding for operations and maintenance, the FY 2013 Energy & Water Appropriations bill passed the House on 6 June by a measure of 255-165 funding Army Corps’ Operations & Maintenance account at approximately $1 Billion. The record-high funding still falls short of monies collected under the Harbor Maintenance Tax, so $650 million will still be diverted to the Harbor Maintenance Trust Fund and/or accounts unrelated to U.S. Army Corps of Engineers Operations & Maintenance.

To accommodate expected increase in agricultural exports through the Gulf, the current inland waterways also must be adequately maintained through maintenance dredging and justified major rehabilitation.

The Houston Ship Channel viewed from the Wheelhouse

The Army Corps has 17 active studies investigating possible port improvements, most associated with the desire to be ready to accommodate Post-Panamax traffic. In addition to the Bayport deepening and widening project, one such study at the Port of Savannah is nearing completion and indicates an economically justified project that will cost about $652 million. It is likely that other studies will also show economically justified projects, either to become “post-Panamax ready” or “cascade ready.” The preliminary estimate to expand some ports along these two coasts was about $3-$5 billion. Specific investments in ports must be individually evaluated for their timing and economic and environmental merits.

What Impact will the Panama Canal Have on Nationwide Vessel Traffic?

The Panama Canal is being touted as a game changer for waterborne trade. PHA VP of Trade Development & Marketing Ricky Kunz gave a more pragmatic view when speaking in February to the New York Times: “I’ve talked a lot about the expansion of the Panama Canal in the last couple of years… but the one thing I’ve learned is that nobody really knows what’s going to happen.” Past vulnerabilities and adverse impacts have contributed to a selection of national indicators of potential impact that the Panama Canal expansion may have to the waterborne transportation system, which has been regionally assessed by various governmental bodies.

These indicators reveal the potential for somewhat greater impact in the Southeast Atlantic Region and, to less extent, in the Pacific Region. Freight transport is expected to grow most rapidly in those regions because of high regional population growth rate. In the Southeast, more harbor expansion is needed to accommodate the largest vessel sizes. In addition, in the Southeast Atlantic Region environmental impact mitigation may be more costly because of greater wetland and endangered species vulnerability. In the Pacific Region mitigation may be more costly due to greater vulnerability of economically important water resource use and low income and minority communities. The Northeast Atlantic Region was ranked lowest because it has the slowest population growth, the greatest amount of unused port capacity, and the least vulnerability to loss of wetlands, parks and other preserves, and threatened and endangered species. The Gulf Region was a middle rank because of its high regional population growth rate, coupled with unused port capacity and some vulnerability to wetland losses.

The effects of the Panama Canal expansion have the potential to redistribute freight transport growth from Pacific Coast ports to Southeastern ports, raising their impact level as increased impact at Pacific ports fall somewhat.

The Domestic Picture As 2012 reaches the half-way mark, there are serious concerns echoing through the corridors of transportation companies across the nation. The Baltic Dry Index—an assessment of the price of

moving major raw materials by sea—has dropped nearly 40% in 6 Welcome Aboard 2012 as commodity prices have tanked across the board. AddiIn late June 2012, the Port Bureau welcomed tional pressures on shipowners such as low sulfur fuel standards aboard Christine Schlenker to perform economic analysis and increased compliance costs are adding to an uncertain pic- and member projects. Christine has Bachelor of Science ture where an extraordinary new-build figure of over 800 ships degrees in Economics and Communiwill enter service this year in an already crowded marketplace. cations as well as a Master of Arts The United States is a nation of consumers bolstered by degree in Economics. She has previseveral regional manufacturing bases. Because of this, global ously worked in the Office of Counciltrade is central to our way of life and responsible for 1/3rd of our man/Mayor Pro-tem Michael Berry economy. Since over 95% of that trade moves by ship, an overresearching policy issues, and came to view of the issues and impacts of shipping is critical to taking the the Port Bureau after several years as temperature of our local, regional and national prospects. More a patent analyst where her duties inimportantly, by ensuring that waterborne transportation issues cluded drafting patent specifications are addressed, we are able to sustain a vibrant future full of posas well as conducting analysis of techsibilities for investment, development, and innovation for years nical documents and legal research. to come.—P. Seeba, GHPB

Severe Weather Safety Planning for All Vessels and Facilities: A Message from USCG Sector Houston-Galveston The 2012 Hurricane Season has officially started. All facilities and vessels in the Houston-Galveston Captain of the Port (COTP) zone are encouraged to review their severe weather plans and begin preparations for the hurricane season.

1. It is recommended that all deep draft vessels depart port for sea well in advance of an approaching storm. Requests to remain in port from deep draft vessels will only be approved if they have a greater risk going to sea than remaining in port. Those vessels intending to remain in port during a storm’s passage should submit a completed Declaration of Intent to Remain in Port within 12 hours after setting Port Condition Whiskey -normally set when gale force winds from a storm are expected to arrive in port within 72 hours.

2. Commercial vessels, including tug and barge tows that normally transit the Gulf Intracoastal Waterway, should depart the area when threatened by a storm. If unable, they should seek alternative refuge by moving as far inland as possible and take shelter on the bayous and fleeting areas within the Houston Ship Channel. Special precautions should be taken and are expected for tows with CDC cargoes. The COTP recommends keeping a live watch onboard to tend lines and control power as the risk of groundings or allisions becomes an even greater concern.

3. Commercial fishing vessels should leave port or find shelter inland to avoid damage during a storm’s passage but should avoid transiting near or anchoring in Security Zones.

4. In order to safeguard Coast Guard waterway reconstitution capabilities and maintain continuity of operations, Sector Houston-Galveston, Sector Field Office Galveston, and MSU Texas City personnel and equipment may be relocated to a secure area prior to the arrival of a storm. Depending on the severity of the storm, a remote command post may also be established in a secure area. Should this be necessary, means to contact the remote command post will be disseminated via MSIB and Port Coordination Team teleconferences. VTS Houston-Galveston will remain active at a minimum until 12 hours before the arrival of hurricane force winds.

5. Facilities with storage tanks, missile hazards, dangerous cargo, and container or pallet stacks are requested to take positive action to secure or remove these entities to prevent further issues due to severe winds and storm surge. Pressed up tanks will sustain less wind damage than those left empty or partially full. All containers stored near flood-prone areas should be moved prior to Port Condition Yankee.

6. The responsibility to survey berths at a facility's docks rests with each facility. Therefore, waterfront facilities are encouraged to conduct an annual survey prior to hurricane season. Facilities should also be prepared to have an emergency survey conducted at their docks as soon as practical after a hurricane passes if there is reason to believe that bottom conditions have changed. The surveys can determine whether water depths have been reduced and whether ship traffic is able to safely proceed. Following arrival of a hurricane all regulated waterfront facilities will be required to fill out the Facility Self-Assessment Checklist prior to Coast Guard inspectors verifying facility readiness to resume operations.

7. This notice will be posted on Sector Houston-Galveston’s HOMEPORT website http:// homeport.uscg.mil. If you have any questions or concerns, please contact Sector Houston-Galveston at (713) 678-9001.

Two-Year Delay Announced in 100% Scanning Requirement for Ocean Containers After a conference report that accompanied the DHS FY 2010 appropriations bill noted that “it has become increasingly clear that, at least for now, a 100 percent scanning goal is not feasible, and even if it were, would come at an unacceptably high cost monetarily and in the displacement of other efforts�, Department of Homeland Security Secretary Janet Neapolitano announced that DHS will delay the requirement to have 100% of all containers arriving from overseas scanned before arrival.

In a statement to Representative Peter King, Chairman of the House Committee on Homeland Security, the Secretary noted that: [The] Use of systems that are available to scan containers will have a significant and negative impact on trade capacity and the flow of cargo.

DHS has provided seven reports to Congress that detail the significant diplomatic, financial, technological and operational barriers encountered throughout the deployment of integrated scanning systems to six foreign ports between 2007-2010.

Based on our own operational experiences and substantial input from many industry partners and foreign government stakeholders, we conclude that utilization of current available, state of the art, integrated radiation detection systems and imaging equipment would be cost prohibitive and significantly impact trade capacity and the flow of cargo at this time.

Systems to scan containers cannot be purchased, deployed or operated at ports overseas because ports do not have the physical characteristics to install such a system.

The space within the confines of most ports is exceedingly scarce and expensive, complicating the installation of scanning technologies. Additionally, integrated systems to scan transshipped cargo efficiently have yet to be developed. No integrated solution exists that can be seamlessly incorporated into the precise operations of moving cargo from barges-to-ships, from ships-to-ships, and from railto-ships without adversely impacting port operations and creating delays. While scanning systems for outbound cargo can be and have been integrated into busy port environments on a case-by-case basis, this has to-date, proven to be the exception rather than the rule and is often the result of complex and protracted negotiations.

So what’s the bottom line? The Secretary argued for a risk-based approach to enhance and expand current security efforts, but stopped short of calling for halting progress towards 100% implementation. The current decision does not halt ongoing risk assessment and additional security measures, so shippers and terminal operators should expect to see piecemeal efforts towards the stated goal of 100% scanning in the coming years. - P. Seeba, GHPB

TSA: Optional Three Year Extended Expiration Date for TWIC Card Holders

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The Transportation Worker Identification Credential (TWIC) Program provides a tamperresistant biometric credential to eligible maritime workers requiring unescorted access to secure areas of port facilities and vessels regulated under the Maritime Transportation Security Act of 2002 (MTSA). To date, the Transportation Security Administration (TSA) has enrolled more than 2.1 million individuals into the TWIC program and approximately 1.9 million TWIC cards have been activated— including over 300,000 in the Houston area.

Beginning in August 2012, TSA will offer eligible TWIC holders the opportunity to replace their expiring TWICs with a three-year extended expiration date (EED) TWIC for a reduced fee of $60. U.S. Coast Guard considers the EED TWIC equivalent to a standard TWIC and will allow port and vessel operators to accept EED TWIC as they accept TWICs issued through the standard enrollment process.

TSA is offering the EED TWIC option to make the re-enrollment process more cost-effective for those individuals who are U.S. citizens or U.S. nationals and whose TWICs will expire on or before December 31, 2014. Those TWIC holders who are not U.S. citizens or U.S. nationals or who are eligible but do not wish to use the EED TWIC option may renew their expiring TWICs by completing the standard enrollment process for a five-year TWIC, which includes an enrollment fee of $129.75. The EED TWIC is a one-time temporary extension of the current TWIC; upon the expiration of this three-year EED TWIC, all TWIC holders will be required to enroll for a standard five-year TWIC. To obtain an EED TWIC, eligible individuals will need to call the TWIC Help Desk at 1-866-347-8942 and make one trip to an enrollment center of their choosing to pickup and activate the card. The expiration date on the EED TWIC will be three years from the expiration date of the previous TWIC.

Port Watch

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Tom Marian—Buffalo Marine Service

April’s Dours Offset by May’s Power

April’s lackluster arrival numbers for ports statewide may have been nothing more than a “breather” given the upsurge in vessel movements throughout May – 7% to be more precise. Thus, May served up a nice set of gains that were nearly comparable to March’s robust performance. Specifically, as compared to April, May was a month of opposites since every port registered positive numbers, save Texas City. Not that Texas City’s 2.5% monthly decrease was of great concern given that it remains in the second spot in the year-over-year performance with 10% more arrivals; Brownsville claims the top spot with a 46.9% increase. The only other Texas port that can claim gains over 2011’s arrival numbers is Houston with a paltry 1.7% year-to-date rise; a statistic that was no doubt buoyed by Houston’s month-to-month gain of nearly 6%.

The remainder of the monthly gainers were led by Corpus Christi with an arrival increase of 13% (down 2% for the year); the port of Sabine with an uptick of 11% (over 5% below last year’s running total); the port of Galveston yielded 11.5% more arrivals from April to May (off by a substantial 20.3% for the year); and even the port of Freeport saw arrival gains of 3.5%. Granted, this was of little consolation as Freeport remains over 14% below last year’s arrival figures. Brownwater movements on the Houston Ship Channel saw nearly identical gains compared to the Port of Houston’s monthly increases with a 5.5% positive monthly change. That’s where the similarity ends as the year-to-date performance for tows continues to be more consistent, as evidenced by 4.6% more barge movements in the region’s busiest waterway.

Within the Port of Houston, the picture remains a bit murkier. Once again, chemical tanker movements were the darling category of the port as it cranked out another 8% monthly increase - tallying a year-to-date rise of 92%! While bulk ship arrivals were flat for the month and remain down 12% for the year, general cargo has been quite strong across the board – up 9% for the year and nearly 19% higher in the last month. Container and car carrier arrivals were flat over the last month. In fact, container movements have been struggling to keep pace with last year’s performance as arrivals are a tad down (.7%) but car carriers are up an impressive 23%. RoRo arrivals doubled from 3 in April to 6 in May but that vessel category is still off 12% for the year. Finally, on the energy front, LPG arrivals and tank vessels crossed “statistical paths” as the former dropped 7% for the month yet remains nearly 9% above last year’s arrival numbers and the latter posted a modest 3% monthly gain but trails last year’s numbers by almost 18%.

As nearly two quarters of commercial activity has crossed docks and flowed through terminals the maritime trade picture seems to be quite positive for Texas ports. After all, the waterfront is bustling with activity, laydown yards are stacked with cargo, and exports of refined products and a variety of manufacturing components is hardy to say the least. No doubt, there is a level of economic robustness that has prompted companies to commit to the expansion and recapitalization of the port infrastructure. This certainly bodes well for Gulf Coast commerce in the long haul. Nonetheless, the specter of below-modest growth nationally and guarded projections by economists does not make for the most positive

The Law of the Sea Treaty will Sink America’s Economy Steven Groves’ Testimony to the United States Senate Committee on Foreign Relations

Point/CounterPoint UNCLOS, like any complex treaty or piece of legislation, should be thoroughly examined to determine its costs as well as its benefits. At bottom, the disagreement between those who favor US accession to the convention and those who oppose boils down to a disagreement regarding whether the benefits of membership are outweighed by the costs.

There are often provisions of a treaty that are uncontroversial and attractive in themselves. Likewise, there are other provisions that are controversial and divisive. This rule generally holds true for all treaties and this is no exception. However, unlike most other treaties, the terms of UNCLOS prevent the US from exempting itself from its more controversial provisions.

If the US accedes to UNCLOS, it will be required to transfer royalties generated from hydrocarbon production of the US “extended continental shelf” (ECS) to the International Seabed Authority for redistribution to developing and landlocked countries. Since the value of the hydrocarbon resources lying beneath the US ECS may be worth trillions of dollars, the amount of royalties that the US Treasury would be required to transfer to the Authority would be substantial. In any event, US accession would amount to an open-ended commitment to forgo an incalculable amount of royalty revenue for no appreciable benefit.

US accession to UNCLOS is not necessary to develop or secure title to the hydrocarbon resources of the ECS. Under international law and long-standing US policy and practice, the US has established full jurisdiction and control over its ECS. The successful delimitation of areas of US ECS and subsequent leasing of those areas in the Gulf of Mexico to US and foreign oil exploration companies demonstrate that the US does not need to achieve universal international recognition of its ECS to provide “certainty” to oil exploration companies.

Proponents of US accession to UNCLOS contend that by failing to join the convention the US is forbidden from mining the deep seabed—the ocean floor lying beyond the ECS. However, no legal barriers prevent US access, exploration, and exploitation of the resources of the deep seabed. The US has long held that American corporations and citizens have the right to develop the resources of the deep seabed and may do so whether or not the US accedes to UNCLOS. US accession to UNCLOS would expose the US to lawsuits regarding virtually any maritime activity, such as alleged pollution of the marine environment from a land-based source or through the atmosphere. Regardless of the lack of merits of such a case, the US would be forced to defend itself against every such lawsuit at great expense to US taxpayers. Any adverse judgment rendered by an UNCLOS tribunal would be final, could not be appealed, and would be enforceable in US territory.

One prominent proponent of US accession to UNCLOS recently stated that opposition to the convention was not based on “facts” or “evidence” but rather on “ideology and mythology.” The facts and evidence, however, are as follows:

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The US already has full jurisdiction and control over its entire continental shelf—including its “extended” continental shelf. Through presidential proclamations, acts of Congress, and bilateral treaties with neighboring countries, the United States has successfully demarcated the limits of its maritime boundaries and key areas of its ECS;

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The US has clear title to all hydrocarbon resources lying under the ECS and currently enjoys the rights to any and all royalty revenue generated from the exploitation of such resources; The US has demonstrably exercised jurisdiction and control over its ECS, as evidenced by the fact that it has been leasing blocks for development to US and foreign oil exploration companies since August 2001;

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The “western gap” in the Gulf of Mexico is the only area of ECS that has been offered for development by the United States, and 20 percent of that area is currently under lease;

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No comprehensive study has been conducted to determine the value of the hydrocarbon resources that lie beneath the vast US ECS that is likely twice the size of California;

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The US Extended Continental Shelf Task Force estimates that the US ECS resources “may be worth many billions if not trillions of dollars”;

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If the US accedes to UNCLOS it will be making an open-ended commitment to transfer an incalculable sum of royalty revenue from the US Treasury to the International Seabed Authority for redistribution to developing and landlocked nations;

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The policy and law of the United States, both domestically (i.e. the Deep Seabed Hard Mineral Resources Act) and internationally, is that US citizens and corporations have the right to explore and exploit the deep seabed regardless of whether or not the United States is a party to UNCLOS;

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Acceding to UNCLOS would expose the United States to international lawsuits, including baseless environmental cases and suits based on alleged US contributions to global climate change;

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Certain UNCLOS states parties, environmental activists, and international legal academics are actively exploring using in-

ternational litigation against the United States in an UNCLOS tribunal to advance their climate change agenda;

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An adverse judgment in a climate change lawsuit initiated under UNCLOS would be final, not subject to appeal, and enforceable in the United States. Such a judgment would impose massive regulatory burdens on US companies, which would pass the costs on to American consumers;

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For more than 200 years before UNCLOS was adopted in 1982 and for 30 years since then, the US Navy has successfully protected US maritime interests regardless of the fact that the US has not joined the convention;

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The US Navy has never been successfully denied access to any international strait or archipelagic water and regularly exercises its freedom of navigation and overflight rights on the high seas and “innocent passage” through territorial waters;

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The United States is a member of the International Maritime Organization and a founding member of the Arctic Council— organizations in which it actually means something to have a “seat at the table.”

All of these facts collectively represent compelling evidence that the United States need not accede to UNCLOS in order to advance its maritime and national security interests. Indeed, the evidence suggests that there are real costs involved in accession that outweigh the supposed benefits, which are dubious and insubstantial.

UNCLOS is a controversial and fatally flawed treaty. Accession to the convention would result in a dangerous loss of American sovereignty. It would require the US Treasury to transfer billions of dollars to an unaccountable international organization in Jamaica, which in turn is empowered to redistribute those American dollars to countries with interests that are inimical to the United States. The convention’s mandatory dispute mechanisms will result ultimately in troublesome and costly lawsuits and adverse judgments if the United States is deemed to have “violated” the convention—most likely when the United States has acted in its own best interests.

The US Navy’s support for the navigational rights enshrined in UNCLOS is far outweighed by the convention’s non-navigational provisions. The Navy’s insistence that a failure to join UNCLOS will hinder its ability to conduct its global mission successfully is belied by the facts and demonstrably disproved by history.—Steven Groves, The Heritage Foundation

The Law of the Sea Needs Ratification The Coast Guard Stands with Presidents Bush, Clinton, Bush and Obama in Endorsing the UNCLOS

Point/Counterpoint The Law of the Sea Convention The 1982 Law of the Sea Convention sets forth a comprehensive legal regime governing activities on, over and under the world’s oceans. The European Community and well over 155 other countries, including most other major nations, are now party to the Convention.

In 2007, President Bush emphasized, “Joining [the Convention] will serve the national security interests of the United States, including the maritime mobility of our armed forces worldwide.” Secretary of State Clinton and other key administration officials and Senate leaders have called for early U.S. accession to the Convention. The Convention also has strong support from the national security community and a wide spectrum of the maritime and mining industries, environmental groups and ocean policy experts. The Senate Foreign Relations Committee held hearings on the Convention in 2003 and 2007. Following each of these sets of hearings, the Committee strongly recommended approval by the full Senate, but no floor vote was taken. The Coast Guard has long taken a lead role in advocating for the United States to join the Law of the Sea Convention as soon as possible.

Why Does the Coast Guard Support the Law of the Sea Convention?

The Coast Guard is the nation’s primary maritime safety, maritime security, marine environmental protection and maritime law enforcement agency. Joining the Convention would significantly enhance the Coast Guard’s ability to protect the American public and its efforts to manage ocean resources and protect the marine environment by providing clear, internationally agreed-upon principles for operating in and governing ocean space.

The challenges the United States faces in securing, preserving and protecting the world’s oceans most often demand international solutions through the International Maritime Organization (IMO), the recognized international body for developing global standards for maritime safety, security and environmental protection. The Coast Guard plays a lead role in developing international standards at the IMO. Being an “outsider” to the Convention hampers U.S. negotiating positions at the IMO, making it more difficult to achieve U.S. policy objectives.

United Nations Convention on the Law of the Sea (UNCLOS) defines the different maritime zones and regulates 14 Our outsider The marine sovereignty rights and rights of use, among others. According to Article 76 coastal states can - under certain status is also an obsta- geological conditions - extend their juridical continental shelf and thus gain marine sovereignty rights beyond the 200cle that we must over- nautical-mile Exclusive Economic Zone. Submissions must be backed up by detailed marine geoscientific data delineating come in developing vir- the outer limits of the continental shelf and need to be filed directly with the Commission on the Limits of the Continental tually any international Shelf of the United Nations. For many developing countries, the extension of their juridical continental shelf bears a high economic potential. In the extended zones states are exclusively entitled to explore and exploit non-living-resources of maritime agreement. the seabed and subsoil as well as sedentary species. Furthermore, they are enabled to conduct and coordinate research For example, several activities in these areas or the installation of marine-technical systems (such as pipelines). Beyond that, states can also nations that we want to impose environmental restraints and supervise their fulfillment according to UNCLOS. join the Proliferation Security Initiative and counterdrug initiatives have expressed their reluctance to cooperate until we join the Convention.

Ninety-five percent of U.S. imports and exports are carried by water at some point. Foreign-flagged ships carry the vast majority of these products. The Convention provides a solid foundation for the effective enforcement of U.S. laws and international standards on these foreign vessels plying our waters. Joining the Convention would benefit the Coast Guard’s robust port-state control efforts and further ensure that foreign ships operating in our waters are safe and secure and that they do not harm our fragile marine ecosystem.

The Convention strongly advances U.S. national security interests. It secures for military and commercial vessels, including Coast Guard ships and aircraft, navigational rights and freedoms throughout the world’s oceans. These include the critical right of transit passage on, over and under international straits.

Joining the Convention would put the United States’ exercise of these vital rights on the firmest possible legal footing, providing far greater certainty and stability than customary international law affords.

As a party, the United States would have a “seat at the table” and be in a far stronger position to refute excessive maritime claims and advance U.S. interests concerning the application of the Convention’s provisions.

By joining the Convention, the United States would be able to take advantage of the process set up in the Convention to obtain legal certainty and international recognition over the continental shelf and its vast resources beyond 200 nautical miles from the U.S. coastline in the Arctic, Bering Sea, Gulf of Mexico and elsewhere.

PROVISIONS OF THE CONVENTION: Relevant provisions of the Convention preserve the right of the U.S. military, including Coast Guard units, to use the world’s oceans to meet national security requirements. Among other things, the Convention:  Stabilizes the outer limit of the territorial sea at a maximum of 12 nautical

miles.  Sets objective standards for drawing the normal baselines, straight baselines and bay and river closing lines from which to measure each of the maritime zones.  Provides a comprehensive list of objective activities to determine whether vessels, both commercial and military, are not engaged in “innocent passage” while underway through the territorial sea.  Assumes that, if a vessel is not engaged in any such activity, its “passage is innocent.”  Provides the legal framework guaranteeing high-seas freedom of navigation and operations in, under and over international waters, including the 200-nautical mile exclusive economic zone (EEZ).  Codifies the critical rights of transit passage through, over and under international straits and archipelagic sea lanes passage through, over and under such sea lanes in the “normal mode” of operations.

The contiguous zone provisions authorize the coastal State to take necessary action to prevent infringement of its customs, fiscal, immigration or sanitation laws within its territory or territorial sea out to 24 nautical miles.

The Convention provides an effective process for resolution of most maritime disputes. During the Convention’s negotiations, the United States had strongly advocated for just such a process, and achieved its goals. The Convention provides flexibility in terms of the forum (the United States will probably choose special arbitration) and certain sensitive issues, such as those disputes involving military activities (the United States will no doubt opt out).

The provisions of the Convention do not inhibit U.S. military or law-enforcement operations. Among other things, it does not constrain military training exercises, intelligence gathering, counter-drug operations, illegal migrant interdiction, the inherent right of self-defense, or rights of belligerents during military conflicts at sea.

The provisions on the EEZ guarantee sovereign rights by the coastal State over all the living and non-living resources and other economic activities as far out as 200 nautical miles from shore or properly drawn baselines.

The Convention’s provisions permit coastal nations to secure sovereign rights over the potentially vast living and nonliving resources on and under the continental shelf well beyond 200 nautical miles. These provisions would guarantee the United States its legal rights to explore and develop oil, gas and other mineral resources, as well as sedentary species, on its extended continental shelf, including large areas off Alaska and the Gulf Coast.

Specific articles of the Convention ensure that commercial enterprises and governments enjoy the legal right to lay and maintain submarine cables and pipelines in the EEZ and on the continental shelf all over the world.

The deep-seabed-mining provisions, as modified in the 1994 Implementing Agreement, allow mining companies to pursue free-market-oriented approaches to seabed mining. Moreover, this agreement addressed all of the concerns that the Reagan administration had raised, including eliminating any obligation to transfer technology and granting the United States a powerful and permanent decision-making role.

The environmental provisions are consistent with U.S. marine environmental protection programs, in particular Coast Guard efforts to keep substandard and polluting vessels out of our ports and to prosecute violators.

The Convention’s provisions greatly enhance U.S. and allied efforts to protect the security of ports used for international shipping; to combat maritime traffic in illicit drugs, weapons and undocumented immigrants; to deal with the problem of illegal, unregulated and unreported fishing; and to fight the scourge of piracy.

Who Else Supports the Law of the Sea Convention?

Virtually all of the national security, ocean policy, shipping, mining, fishing, legal, and environmental experts knowledgeable about the Convention, including the Joint Chiefs of Staff and the authors of the report of the U.S. Commission on Ocean Policy, overwhelmingly support the United States joining the Convention.

The Convention provides the appropriate legal framework to govern maritime activities in the rapidly changing environment of the Arctic Ocean. All Arctic nations, except the United States, are now party to the Convention.—USCG

Spotlight on the Bayport Deepening & Widening Project

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The Port of Houston Authority Talks About the Bayport Deepening & Widening Project Last month, you read in the Port Bureau News that the wider Panama Canal will have a potentially game-changing impact on the movement of container vessels through the Port of Houston. The Texas State House of Representatives sent a delegation to Houston to ask about what Houston is doing to get ready, and one program that the Port of Houston Authority discussed was their current efforts to deepen and widen the Bayport Channel.

About the Port of Houston Authority’s Bayport Container Terminal The Bayport Container Terminal, operated by the Port of Houston Authority, includes land and infrastructure designed to handle 2.3 million TEUs on 376 acres with an additional 123 acres dedicated to intermodal operations. Currently at just-over 50% buildout, the terminal features state-of-the-art electronic data interchange capabilities, a computerized inventory control system, and is advertised as the most modern and environmentally sensitive container terminal on the Gulf of Mexico. As part of the construction process, the terminal is responsible for funding the preservation of 956 acres of coastal habitat, 200 acres of marshlands, 173 acres of new wetlands and a 128 acre buffer zone for environmental protection. The facility hosts MSC, and CMA-CGM which feature all-water services to/from Northern Europe, the Mediterranean, the North and East Coasts of South America, East Asia as well as a multitude of ports along the Gulf of Mexico. With these services, containers can arrive and depart Houston from virtually any port in the world via transshipment and the Port of Houston Authority is aggressively pursing additional lines, telling them about the Gulf Coast Advantage.

So What’s the Problem?

In April 2011, the Bayport Container Terminal welcomed a new class of vessel when the 8,000+ TEU MSC Maeva pulled in to Bayport Dock 3 as part of a regular service by the container line.

The 90,000 horsepower vessel stacks containers 17 across and can draw up to forty-seven feet and six inches—almost seven feet deeper than the current Bayport Channel. To service Houston, these ships have to come in light-loaded, and though that may be feasible as a short-term solution, the Port of Houston Authority knows that to stay competitive, the channel has to be dredged deeper.

To ensure that the channel is ready to expand with the growth of cargo demand, the Port of Houston Authority is proposing to dredge the channel starting in late 2013 using a hydraulic pipeline dredge to take tons of sediment and material from the floor of the Bay. The project will widen the Bayport Channel by 100 feet in Galveston Bay and by 50 feet in the Bayport Cut while deepening the passage to 45 feet: the same depth as the Houston Ship Channel leading into the container facilities. The material excavated will be placed in either existing dredged material placement areas or used to construct a new beneficial use site (marsh) in Galveston Bay. How Does This Process Work?

In December, 2011, the Port of Houston Authority submitted a permit application to the US Army Corps of Engineers for the project; currently the Army Corps is soliciting public comment and has received comments from members of the community, industry partners and governmental agencies. Currently, the project proposes to dredge 4 million cubic yards of material at a cost of $79.4 million, and the Army Corps is looking to have public comments in by 5 July 2012. The Port of Houston Authority held an open house in early June at the Bayport Administration Building and has had several appearances by members of the public at community gatherings and port commission meetings. Anecdotally, though many community activists have concerns about the location where sediment will be placed and which beneficial use sites will be used for dredge material, even the most ardent conversations against one of

the marsh options has included widespread support for the deepening and widening project.

Options for Maintenance Materials Once materials are excavated from the bay floor, they must be put to beneficial use around the channel. The Port Authority initially presented the Army Corps with two options for dredge materials.

Option One: Construct a New Marsh Generated through work performed with the Beneficial Users Group (BUG) which includes representatives from the National Marine Fisheries Service, National Resource Conservation Service, Texas General Land Office, Texas Parks and Wildlife Department, the EPA and others, one beneficial use option is to build an up-to 411 acre marsh north of the Bayport Channel and west of the Houston Ship Channel. Clay dredged from the channel would be placed underwater to create a bowl which would grow to an emergent height of 6-8 feet over several years as the marsh levee receives silt and holds in maintenance material. Once the marsh cell grows to the proper elevation, grass would be planted on top and if necessary, the levees would be flattened and reduced.

Option Two: Deepen and Extend Placement Areas East of the Houston Ship Channel Under option two, levees of existing placement areas (14-15) would be raised to 35 feet high, allowing over 15 million cubic yards of material to be placed over a period of years. Under this option, the dredged material could also be used in marsh cells and the placement areas nearby—sites which either already exist or are under construction by the Army Corps.

Discussion Points Talking with the Port of Houston Authority’s Director of Channel Development, COL Mark Vincent, USA (Ret.), noted that the permit request is not a “do it and done” project—that once the work begins, the requirement exists to continue assuming maintenance, so the project permit is for widening and deepening the channel as well as for ten years of maintenance dredging. Doing the maintenance dredging will allow the Port Authority to present shippers and carriers with long-

term knowledge that the Bayport Container Terminal will be prepared to handle cargo well into the future.

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As part of the planning process, the Port Authority was required to present the Army Corps with its rationale for the project selection and had to show that the project would result in a substantial increase in navigation efficiency while minimizing environmental impacts on oyster acres and minimizing community impacts by reducing the number of vessels calling on the fully constructed Bayport Container Terminal. As part of the considerations of placement areas, existing information was used taking into account the five-mile radius established for practical use of a hydraulic dredge—previous experience has shown that farther out would result in environmental and cost impacts well in excess of the project’s scope of work.

As the comment period draws to a close, the Port Authority has come under fire at the same time that it’s been lauded for its forward thinking and planning. “One thing that it’s probably good to stress is that if we build a new marsh, the drawing submitted to the Army Corps is a notional depiction of the possible site; we will not fill the entire planning area.” COL Vincent continued, “We have sized the marsh based on the expected project and there is a possibility that we could end up with a smaller marsh but we still would only be permitted to a certain size—we wouldn’t have the right to make it bigger.”

The expansion of the Bayport Channel will be a welcome project for shippers, receivers and transportation professionals using the waterway. Right now, the current 40-foot depth frustrates cargo which could otherwise make use of the 45-foot channel a few short miles away. The Port Authority is continuing to work with the community and the Army Corps is gathering comments, but one thing is certain: this type of planning and forward thinking can only help the Houston region stay competitive and maintain its healthy lead as the largest and most efficient container port on the Gulf of Mexico. - P. Seeba, GHPB

Upcoming Events: 12 July

Commerce Club Luncheon Port Director CAPT. Mike Mierzwa, USCG (Ret.), Port of Galveston

25 July

Area Maritime Security Committee Meeting 0900-1100—Galveston Cruise Terminal

10 August

Lone Star Harbor Safety Committee 1000—1200—USCG MSU Texas City

18 August

2012 Annual Maritime Dinner

(SOLD OUT)

13 September Commerce Club Luncheon ASAC Michael Anderson, FBI

11 October

Greater Houston Coffee Association Annual Luncheon

5 November

GHPB Captain’s Cup Golf Tournament

8 November

Houston Ship Channel Security District Annual Luncheon

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