This is the first of what I hope will be several additional hearings

relating to the maritime security program. The next hearing will address

issues relating to commercial shipbuilding and the MSP program. I hope

that hearing will also address additional incentive programs—such as needed changes to our tax laws. We may also need to hear from other

components such as the bulk operators.

Before we proceed to markup, I believe the panel will need to hear

from those within the government who set the requirements for commercial reserve sealift capability. Accordingly, I will invite the head of the Transportation Command, General Handy, to testify. We all know that if we do not get his support for the key elements that reauthorization of MSP will be very difficult. Quite frankly, I think these two gentlemen recognize that we are not just getting access to ships in the Maritime Security Program but also the infrastructure that goes with them. We need to hear the importance of that part of the package.

Finally, after we build the record, I want to get the Administration before this panel to hear their view, get their support and—most

importantly-receive a commitment to include funding for a new program in

their budget.

I want to thank Mr. Allen, the ranking member for his support and

guidance, and I would now like to recognize the gentlemen from Maine for any comments he might wish to make.

CADocuments and Settings\alasselle\Local Settings\Temporary Internet Files\OLK8\Statement of Robert Alario July 02.doc

Good morning Mr. Chairman, ladies and gentlemen. My name is Robert J. Alario. I am privileged to serve as President of the Offshore Marine Service Association, based in New Orleans, La. My association represents 250 companies engaged directly or in general support of offshore oil and gas exploration, drilling or production, worldwide. A list of our members is attached, for the record. Our members and crews operate in excess of twelve hundred vessels worldwide.

We wish to thank you, Mr. Chairman, distinguished members of the Panel, for this opportunity, first and foremost, to express our fundamental support for an effective reauthorization of the U.S. Maritime Security Program. At the same time, however, we are compelled to express our opposition to the repeal or relaxation of the Section 2 U.S. Citizenship provisions of law governing companies that would own and operate ships under the Maritime Security Program.

While OMSA companies do not operate ships in the Maritime Security Program, we are concerned that the proposed change to U.S. maritime law governing U.S. Citizenship requirements (Section 2 requirements) for vessels operating under the U.S.-flag poses, in our opinion, a more fundamental, potentially corrosive threat to the citizenship requirements for operation of U.S.-flag vessels. We feel that the proposed change would, inexorably and inevitably, erode our ability to truly control the ownership, loyalty and reliability of access to vessels operating in our nation's domestic and offshore maritime sectors that presently fall within the Jones Act, as well as within the MSP. We have been assured that the proposals to modify ownership requirements from Sec. 2 to documentation citizens to qualify for operation of U.S. flag vessels within the Maritime Security Program will not translate into an erosion of citizenship standards relative to Jones Act operations. We want to believe, but our experience does not support this thesis, unfortunately.

If Congress is urged today, by parties supporting the premise that documentation citizenship is equivalent to Sec. 2 citizenship, and Congress is persuaded by them that it is acceptable for U.S.-flag ships to be operated, as a matter of course, in our U.S. to foreign trades

by foreign companies holding a Special Security Agreement with the Department of Defense,