Russian Tanker on the Way to Nome, AK

From a US Coast Guard Press and Photo Release: o6 January 2012

Photo Release: Coast Guard icebreaker escorts tanker

BERING SEA - The Coast Guard Cutter Healy crew escorts the tanker Renda and crew from Dutch Harbor, Alaska, to Nome Jan. 5, 2011. The 420-foot Seattle-based Healy is currently the Coast Guard's only operating Polar Icebreaker. U.S. Coast Guard photo by Petty Officer 3rd Class Jonathan Lally. BERING SEA - A Coast Guard Air Station Kodiak HC-130 Hercules aircrew conducts an overflight of the Coast Guard Cutter Healy as it escorts the tanker Renda from Dutch Harbor, Alaska, to Nome Jan. 5, 2012. The Healy crew is scheduled to break a path in the ice near Nome so the Renda crew can deliver critical fuel supplies to the city. U.S. Coast Guard photo by Petty Officer 3rd Class Jonathan Lally. For more information contact Petty Officer 1st Class Sara Francis at 907-321-4501.

The Russians Are Coming to Nome, AK.

The following is the text of a press release issued by the U.S. Coast Guard:

(04 January 2012)

(DUTCH HARBOR, Alaska) -- Coast Guard inspectors completed a port state control exam on the double-hulled ice-classed Russian tanker Renda today in Dutch Harbor.

"The tanker vessel Renda met all applicable federal laws and regulations and can operate in U.S. waters following the successful completion of a required Coast Guard port state control examination," said Rear Adm. Thomas Ostebo, commander District 17. "Our daily discussions will continue with our federal, state, local, tribal partners, and the marine industry to ensure the highest standards of safety and compliance are in place to mitigate risks to the people of Nome, the crews of the vessels, and the environment."

The Renda will be escorted by the Coast Guard Cutter Healy and is expected to arrive in Nome on Jan. 8, 2012 if on scene weather conditions permit safe passage.

The Healy will lead the Renda through 300 miles of ice to within a half mile of the harbor entrance. "Upon arrival, the Renda will transit the remaining distance to stable ice close to the harbor entrance to transfer fuel via hose under approved procedures," said Capt. Craig Lloyd, District 17 chief of response who is coordinating the mission. "University of Alaska personnel are in Nome to assist in determining the thickness of the ice outside the harbor entrance. Due to a large ridge of ice at the harbor entrance, the Renda is unable to enter the actual harbor."

The Secretary of the U.S. Department of Homeland Security approved a Jones Act Waiver Dec. 30, 2011 to Vitus Marine authorizing the foreign-flagged tanker to deliver gasoline from Dutch Harbor to Nome. Renda arrived in Dutch Harbor laden with diesel fuel that was on loaded in Asia. The Jones Act waiver was required since Renda could not load the gasoline cargo in Asia due to weather and scheduling constraints. The vessel is scheduled to take on additional cargo of gasoline in Dutch Harbor today.

The Healy's participation was contingent upon the following items: the Renda passed the port state control exam, there were no inordinate delays, the fuel transfer plans met federal and state requirements and on scene weather conditions permit safe passage.

Sitnasuak Native Corporation of Nome signed a contract with Vitus Marine LLC to deliver 1.3 million gallons of petroleum products to Nome via Renda around the second week of January. If successful, this will mark the first time that petroleum products have been delivered by sea to a Western Alaskan community through ice covered waters.

"This has been and continues to be a highly orchestrated effort between all stakeholders to ensure mission success" said Ostebo. "As we have done for more than 220 years, the Coast Guard is dedicated to ensuring the safe and secure transfer of maritime commerce. The Healy, our nation's only operating polar ice breaker, and its crew are committed to upholding our long history of service to the residents of Alaska."

The Healy is named after Capt. Mike Healy, an 19th century Coast Guard hero. As the commanding officer of numerous Coast Guard cutters, "Hell Roaring Mike", enforced federal law, provided search and rescue, and provided humanitarian assistance along Alaska's 20,000 mile coastline in the late 1800s. The cutter is 420-feet long and has extensive scientific capabilities. Homeported in Seattle, the cutter has a permanent crew of 80 and was originally scheduled to return home in mid December. The primary mission is scientific support but it is capable of other Coast Guard and defense operations such as search and rescue, domestic ice breaking, environmental protection and the enforcement of laws and treaties in the Polar Regions.

Nome is Waiting On Jones Act Waiver

I am finding myself getting "sucked in" to another political article. I find it unavoidable this time. I apologize to all of the people on the Left and Right that I may offend.

Several weeks ago, the Congress and the Senate unanimously passed the America's Cup Act of 2011 in order to allow the America's Cup World Series (ACWS) Event to take place in San Diego. (See our blog entry from 06 November 2011) from The noteworthy aspect of this was that Congress provided, essentially, a Jones Act Waiver to host the ACWS event in under 10 days. Nome has been trying to solve their Winter/Spring fuel problem for over a month now.

I find it interesting that our elected congressional officials were the "only ones" who could preserve the America's Cup event enabling jobs, an economic boost for San Diego and San Francisco. They did this in 10 days, yet a small town in Alaska can wait for a month to find out if they will freeze in February. I see that congress is very concerned with the welfare of all Americans. 10 days to pass a waiver that will create nearly 8000 jobs is impressive until you contrast it with the heating fuel and gasoline that will keep 5000 people warm during the coldest part of the year.

The point of this being, the America's Cup Act was completely and entirely one politician's PR stunt to put a feather in her cap for her (and her party's) re-election hopes. It was unnecessary, because the America's Cup Authority could have gotten the Jones Act Exemption the same way Nome, Alaska is getting it. Now, for every expedited exemption to the Jones Act gets to be run through Congress, which will continue to punch holes in a law that has been around since 1925.

For now, Nome, Alaska's well being (financial and otherwise), according to congress' inaction has been told its citizens are not as important as San Diego's.


The following is an Broadcast from Alaska Public Radio:

By Ben Matheson, KNOM - Nome | December 29, 2011 - 5:51 pm

Vitus Marine, the company contracted to help get fuel delivered to Nome, is hoping to hear back Friday on the status of the Jones Act waiver for the Russian tanker Renda. The waiver is necessary for the tanker to be able to load gasoline in Dutch Harbor. Mark Smith, CEO of Vitus Marine says the Defense Department and Maritime Administration have weighed in to Customs and Border Protection, who ultimately makes the decision. The waiver claims that Nome’s fuel is of indirect significance to national security. Alaska’s congressional delegation has sent a letter urging the government to approve the waiver.
Meanwhile, the tanker is headed towards port. Smith says the Renda was 340 miles southwest of Attu this morning. It’s expected to be in Dutch Harbor by the afternoon of Jan. 2.
Several question remain on the final routing and offloading of the fuel, but the regulatory pieces are starting to come together. On Tuesday, Vitus submitted its delivery plans to be approved by the state, filing an amendment to its oil discharge prevention and contingency plan to incorporate the cold weather considerations. The vessel support plan is unique as ice-capable tugs and spare barges will not be on hand – instead the Healy will assist, and land based tanks will provide space in the case of an emergency. The Renda itself is ice capable, but the state Department of Environmental Conservation is requiring the Healy’s participation.
The plan calls for the staging of skimmers, thousands of feet of boom, pumps, sorbent pads, tank trucks, and a bobcat. Vitus has contracted with the Chadux corporation to have spill response equipment on hand. There will be a spare 610,000 gallon tank available for emergency use even after the fuel is transferred.
John Kotula is the Manager of the Marine Vessels section for the Department of Environmental Conservation. He says the agency now is making sure that the plans and resources will be ready.
Additional logistics plans are in place for lighting and monitoring the transfer hose if it goes across the ice. The Renda will have extra environmental protection on board, plus three extra officers for a crew of 21. The document says Crowley has agreed to lend equipment in Nome should it be needed. And in addition to the Healy, the plan calls for the Coast Guard to supply a helicopter on shore, with C-130 support overhead, plus specialty personnel. Kotula says the state is in communication with private industry and government groups to make sure the pieces come together in the plan.
Vitus CEO Mark Smith says he’s confident in the plan. He says it’s based in part on what happens on the North Slope on a regular basis. The oil spill response plan is out for public review until Jan. 3.

The Russians Are Coming!

This is a nice follow up to our post on November 29th about the failed fuel delivery to Nome, Alaska. The Jones Act Actually gets in the way of a more economical solution. I will also be a historical event for the Nome and the State of Alaska.


By Laureli Kinneen, KNOM - Nome | December 5, 2011 - 1:28 pm 

Photo courtesy of Elaine Smiloff, Adak Harbormaster

A failed marine delivery of 1.6 million gallons of fuel due to November’s storm spurred the leadership at the Sitnasuak Native Corporation in Nome to get creative. They’re looking to Russian and Korean companies to keep fuel costs down in the Western Alaskan community.
Sitnasuak and a Russian shipping company may very well make history this month. Sitnasuak Native Corporation has signed a contract with Vitus Marine to deliver 1.5 million gallons of fuel to Nome – via marine tanker. The delivery in the double-hulled Ice Classed Russian tanker is scheduled for late December and will replace the 1.6 million gallons that was not delivered by Delta Western due to the November storm.
If the newly-planned delivery is successful, Sitnasuak Board Chairman Jason Evans says the voyage will mark the first time a marine fuel delivery is made to a Western Alaska community in winter.
Evans says, overall, while untraditional, the icebreaking option is significantly lower in costs than flying fuel to Nome. He says there are too many variables at this point for a specific number that consumers will eventually pay.
The Russian vessel, the Renda is currently in Vladivostok, Russia and will be inspected by the Coast Guard on Wednesday. The Jones Act states that a foreign vessel cannot carry cargo from the U.S. to the U.S., so the fuel will be purchased in Inchon Korea. Evans says there will be added costs to this mode of delivery.
When it comes to Delta Western – the company that did not deliver the original fuel purchase – Vice President Kirk Payne says he’s not sure what fair share means.
Payne says there are no lawyers involved and nothing has been filed. He says a dialogue continues between the two companies.
The double-hulled Ice-Class Russian tanker the Renda is certified to travel through four feet of ice and recently traveled through five feet of ice while delivering fuel to the Russian Far East. It’s unclear whether the Renda will dock at the inner or outer harbor once it arrives in Nome. The tanker has two kilometers of hose that could be put over the ice to the fuel depot.
The U.S. Coast Guard is getting approval for the U.S.’s only icebreaker – the Healy – to remain in the area until the delivery is made.

Hornbeck Offshore orders 16 new OSVs from VT Halter, Eastern

From a Hornbeck Offshore Press Release
27 November 2011

COVINGTON, La., Nov. 17, 2011 /PRNewswire/ -- Hornbeck Offshore Services, Inc. (NYSE: HOS) announced today the execution of definitive contracts for the construction of sixteen high-specification offshore supply vessels ("OSV"), in connection with its latest newbuild construction program announced on November 7, 2011. This is the Company's eighth newbuild vessel program since its inception in 1997, and its fifth newbuild program involving state-of-the-art, technologically advanced new generation OSVs.
The Company has separately contracted with VT Halter Marine, Inc. of Pascagoula, Mississippi and with Eastern Shipbuilding Group, Inc. of Panama City, Florida for the construction at each yard of eight 300 class vessels with options to build additional such vessels should future market conditions warrant. The Company's first decision with respect to the exercise of options will need to be made in September 2012. Delivery dates for option vessels will be approximately 26 months following the option exercise. The aggregate cost of the first sixteen vessels under this program is expected to be approximately $720 million, excluding construction period interest. Construction costs will be funded with cash on-hand (including the net proceeds of the Company's recently completed equity offering), projected free cash flow from operations and, if necessary, available capacity under the Company's currently undrawn and recently expanded $300 million revolving credit facility.
VT Halter Marine will construct eight vessels based on the Super 320 design that it developed for Hornbeck Offshore. These DP2 OSVs are designed to have 6,200 long tons of deadweight capacity, approximately 20,900 bbls of liquid mud carrying capability, 11,863 sq. ft. of deck area and a fire-fighting class notation. The Super 320 design is based on a larger version of the HOS Coral, an existing 290 class DP-2 OSV which the Company has successfully operated since her delivery in early 2009. The Super 320 design has been developed with particular attention to the most stringent regulations for environmental stewardship, including a double-hull that eliminates any fuel storage adjacent to the sideshell, and propulsion machinery that meets the requirements of EPA Tier 3 for stack emissions.
The eight OSVs to be constructed by Eastern Shipbuilding Group will be DP-2 classed and consist of four vessels based on the STX Marine SV 300 design and four vessels based on the STX Marine SV 310 design. Features of the STX design include over 20,000 bbls of liquid mud carrying capacity and a fire-fighting class notation. In addition, the SV 300 design calls for 5,500 long tons of deadweight capacity and 10,976 sq. ft. of deck space, while the SV 310 design calls for 6,144 long tons of deadweight capacity and 11,536 sq. ft. of deck space. The STX designs meet the same environmental standards mentioned above for the Super 320 design and will also carry the ENVIRO class notation by the American Bureau of Shipping.
Based on the schedule of projected vessel in-service dates below, the Company expects to own and operate 56 and 67 new generation OSVs as of December 31, 2013 and 2014, respectively. These vessel additions result in a projected average new generation OSV fleet complement of 52.2 and 62.8 vessels for the fiscal years 2013 and 2014, respectively. Inclusive of the vessel deliveries referred to below, the aggregate cost of the Company's fifth OSV newbuild program is expected to be approximately $720 million, of which $44 million, $227 million, $348 million and $101 million is expected to be incurred in 2011, 2012, 2013 and 2014, respectively. The first sixteen OSVs under this newbuild program are expected to be placed in service in accordance with the schedule shown in the table below:

	2Q2013E	3Q2013	4Q2013	1Q2014	2Q2014	3Q2014	4Q2014
Estimated In-Service Dates:
300 design	1	1	1	1	-	-	-
310 design	-	-	-	1	1	1	1
320 design	-	-	2	2	3	1	-
	1	1	3	4	4	2	1

All of the above capital costs, anticipated periods of their incurrence and delivery date estimates for the contracted newbuild program are based on the latest available information and are subject to change. All of the figures set forth above represent expected cash outlays and do not include the allocation of construction period interest.
Hornbeck Offshore Services, Inc. is a leading provider of technologically advanced, new generation offshore supply vessels primarily in the U.S. Gulf of Mexico and Latin America, and is a leading short-haul transporter of petroleum products through its coastwise fleet of ocean-going tugs and tank barges primarily in the northeastern U.S. and the U.S. Gulf of Mexico. Hornbeck Offshore currently owns a fleet of 80 vessels primarily serving the energy industry.

Foss Maritime Awarded Washington State Ferry Newbuild Contract

WSF Director of Communications
17 November 2011

Washington State Department of Transportation (WSDOT), Seattle, WA, recently awarded a $9.6 million contract to Foss Maritime Co., Seattle, to build an all-aluminum, double-end, 20-car ferry to operate on Lake Roosevelt in Eastern Washington.
The new Keller Ferry vessel will have an overall length of 116 ft, beam of 45 ft 8 inches and molded draft of 7 ft. It will admeasure less than 100 gross tons and be built to conform with and certified to U.S. Coast Guard Subchapter T regulations. The ferry’s design and construction will be in accordance with ABS requirements, although it will not be ABS classed and the shipyard is not required to arrange onboard ABS inspection. ABS certificates will be required for certain pieces of equipment and the propulsion system vendor will be required to obtain ABS certification of the propulsion control system.

Building the ferry will also pose some unique challenges. The remote location of the Keller Ferry operation will require that the ferry be built in sections at Foss' Rainier, OR, facility and then transported about 350 miles across state and assembled on site at the ferry landing.

The new ferry, shown in the computer rendering at right, is being built to replace the 63-year-old Martha S. The Martha S. makes about 30 to 35 daily trips on a 1.25 mile route crossing the Columbia River between Lincoln and Ferry counties. The operation serves as a critical transportation link for nearby residents, school children, freight haulers and emergency services.
WSDOT said that the bid by Foss of $9,557,178 was nearly $250,000 less than the state’s estimate. Foss will deliver the new ferry in May 2013.

Hornbeck Executes Contracts for Newbuilds, $720 Million

From Marine Log
17 November 2011

Hornbeck Offshore Services, Inc. (NYSE: HOS) says it has executed definitive contracts for the construction of sixteen high-specification offshore supply vessels. Deliveries will take place between the second quarter of 2013 and fourth quarter of 2014.

VT Halter Marine, Inc. of Pascagoula, Mississippi and Eastern Shipbuilding Group, Inc. of Panama City, Fla, will each build eight 300 class vessels, with options to build additional vessels. Hornbeck's first decision with respect to the exercise of options will need to be made in September 2012. Delivery dates for option vessels will be approximately 26 months following the option exercise.

The total cost of the first sixteen vessels under this program is expected to be approximately $720 million, excluding construction period interest. Construction costs will be funded with cash on-hand (including the net proceeds of a recently completed equity offering), projected free cash flow from operations and, if necessary, available capacity under the Hornbeck currently undrawn and recently expanded $300 million revolving credit facility.

VT Halter Marine will construct eight vessels based on the Super 320 design that it has developed for Hornbeck Offshore. These DP2 OSVs are designed to have 6,200 long tons of deadweight capacity, approximately 20,900 bbls of liquid mud carrying capability, 11,863 sq. ft. of deck area and a fire-fighting class notation. The Super 320 design is based on a larger version of the HOS Coral, an existing 290 class DP-2 OSV which the company has successfully operated since her delivery in early 2009. The Super 320 design has been developed with particular attention to environmental regulations, including a double-hull that eliminates any fuel storage adjacent to the sideshell, and propulsion machinery that meets the requirements of EPA Tier 3 for stack emissions.

The eight OSVs to be constructed by Eastern Shipbuilding Group will be DP-2 classed. Four vessels will be based on the STX Marine SV 300 design and four will be based on the STX Marine SV 310 design. Features of the STX design include over 20,000 bbls of liquid mud carrying capacity and a fire-fighting class notation. The SV 300 design calls for 5,500 long tons of deadweight capacity and 10,976 sq. ft. of deck space, while the SV 310 design calls for 6,144 long tons of deadweight capacity and 11,536 sq. ft. of deck space. The STX designs meet the same environmental standards as the Super 320 design and will also carry the ENVIRO class notation by the American Bureau of Shipping.


November 17, 2011

New amendment passes to boost transparency of Jones Act waivers

Press Release From US Representatives Elijah E Cummings and Jeff Landry
Cummings, Landry say measure will help preserve U.S. mariners' jobs
(11/15/2011)
(WASHINGTON) -- Congressman Elijah E. Cummings, Ranking Member of the House Committee on Oversight and Government Reform, and senior member of the House Committee on Transportation and Infrastructure, today joined Rep. Jeff Landry (R, LA-03), Vice Chairman of the Coast Guard Subcommittee, in applauding their colleagues in the House of Representatives who approved the Cummings-Landry amendment to the Coast Guard reauthorization bill that passed the House on Tuesday. The amendment will increase government transparency surrounding the issuance of waivers allowing non-Jones Act-qualified vessels to carry cargo between U.S. ports. It is nearly identical to the American Mariners Job Protection Act (H.R. 3202), a bill with bipartisan support that was introduced by Reps. Landry and Cummings earlier this year. “Americans are desperate for jobs,” said Cummings. “In this time of economic turmoil, we owe it to the people we represent to make full use of American maritime capabilities by adhering firmly to the Jones Act. Every single ship that can carry cargo under the Jones Act should be full and every American mariner should be able to work a fair day’s work for a fair paycheck. Congressman Landry has stood resolutely beside me as we protect the jobs of American mariners and I thank him for his support.” Under current law, when the head of the agency responsible for the administration of the Jones Act believes it necessary to waive the Act’s requirements in the interest of national defense, the agency must request the Maritime Administration to assess whether Jones Act-qualified vessels are available to carry the cargo under consideration. “I came to Congress to increase government transparency and get America back to work; today we took another step in that direction,” said Landry, whose district has the most domestic maritime industry jobs in the nation and transports much of the nation’s energy-based resources. Excited by today’s passage, Landry continued: “American mariners are the most qualified and safest workers in the world, and I am grateful my colleagues voted today to put them back to work. I thank Congressman Cummings for his leadership on this issue and thank him for working to ensure that the American mariner is always the first option.” The Cummings-Landry amendment will require the Maritime Administration to include in such assessments information on the actions that could be taken to enable Jones Act-qualified vessels to carry the cargo for which the Jones Act waiver is sought. The Maritime Administration would also be required to publish its determinations on its website. Further, the amendment would require notification to be provided to Congress when a waiver is requested or issued.

Tonnage Numbers Steady at U.S. Ports

 

From Marine link:

Great Lakes-St. Lawrence Seaway

Wednesday, November 16, 2011, 10:44 AM

U.S. ports continued to post positive tonnage numbers in October. The Seaway’s year-to-date total cargo shipments from March 22 to October 31 were 29 million metric tons, up 2 percent from the same period last year.

“With just two months left in the 2011 navigation season, the Seaway is on track to meet its projected seven percent improvement over last year’s tonnage performance,” says Rebecca Spruill, Director of Trade Development for the Saint Lawrence Seaway Development Corporation. “General cargoes like steel slabs and coils and wind turbine components are posting solid increases, while we’re moving nearly a million tons more of petroleum products than last season.”

In early October, 18,000 metric tons of hot-rolled steel coils produced at ArcelorMittal’s Burns Harbor facility in Indiana were delivered to the Republic of Macedonia. “Northwest Indiana is the richest steel-producing region in the world and being able to access world markets through our port is vital for ArcelorMittal and many other companies,” said Peter Laman, port director of the Port of Indiana-Burns Harbor.

He added, “This is the first substantial steel export from the port since 2008. Year-to-date steel shipments through the port are up more than 20 percent over last year, with 2011 on target for having the highest steel shipments since 2007. Whether it’s bringing in raw materials or shipping out finished products, steel companies can substantially reduce their logistics costs by shipping through our port.”

The Toledo Port Authority was another Great Lakes port registering tonnage increases. “Through the month of October, seaport cargo tonnage remained nearly 4 percent ahead of the same period in 2010 with increases in all major cargo categories (petroleum products, general cargo, and iron ore), with the exception of coal and grain. Through October, the port handled 9.2 million short tons and 13 more vessels than at the same point in 2010. The month finished strong as grain began to pick up due to the fall harvest,” explained Joseph Cappel, director of cargo development at the Port.

Diversification has been a critical component to growing port commerce during difficult economic times. “The Port of Green Bay has historically been a leading indicator of regional fiscal conditions in Wisconsin,” said Dean R. Haen, port manager.  “The fact that the port has seen a 26 percent increase in tonnage from 2010 to 2011 is a positive sign for the port and our regional economy.” One port tenant, US Venture, continues to be the main driver in increased tonnage and ship arrivals in 2011. They teamed with Wisconsin’s Department of Transportation and invested in opening an inactive port terminal last year which, amidst tough economic conditions, is now paying dividends. October tonnage increases for coal for power generation were up 15 percent year-to-date, while the construction industry demand for cement rose 11 percent from the same time last year. The 69 percent year-to-date increase in gypsum handled by the port was for industrial use.

St. Lawrence Seaway shipments of petroleum products and salt continued up at 90 percent and 33 percent respectively compared to October 2010. Coal shipments totaled 62,000 metric tons in October, a two percent increase from the same month last year. Year-to-date scrap metal and coke shipments saw double digit increases for October 2011. Other general cargo like wind turbine components, increased 31 percent over last year.

The Great Lakes-St. Lawrence Seaway maritime industry supports 227,000 jobs in the U.S. and Canada, and annually generates $14.1 billion in salary and wages, $33.5 billion in business revenue, and $4.6 billion in federal, state/provincial and local taxes. North American farmers, steel producers, construction firms, food manufacturers, and power generators depend on the 164 million metric tons of essential raw materials and finished products that are moved annually on the system. This vital trade corridor saves companies $3.6 billion per year in transportation costs compared to the next least-costly land-based alternative.

America's Cup Act of 2011 has passed! Now what?

While it is commendable that the Senate and House passed the America's Cup Act of 2011, I still question the need for the bill. This created a loophole in the Jones Act of 1920 and sets a precedent for every on the water sporting event to be held in the future. It will effect any boat race, power or sail, held in U.S. Waters. The America's Cup World Series Events and the America's Cup Challenge are very big events. The question now is, are they going to write new bills into law for the small events held in Florida, California, Washington and New England that draw international teams? 

Here is the Press Release from the America's Cup Race Authority:

America’s Cup Event Authority today issued the following statement on the America’s Cup Act of 2011:

Saturday, 05 November 2011

“We applaud the members of the U.S. Senate and U.S. House of Representatives who voted overwhelmingly in support of the America’s Cup Act of 2011,” said Craig Thompson, Chief Executive Officer, America’s Cup Event Authority. “This Act enables our international field of America’s Cup teams to participate in the only global sporting event currently committed to come to the United States in the next decade.”

The upcoming America’s Cup events in Newport, Rhode Island, San Francisco and San Diego, California are predicted to create thousands of jobs and over $1 billion in economic impact over the next two years. For the first time in history, the America’s Cup will be able to be seen from shore, creating tremendous public access for spectators as well as drawing large spectator crowds to benefit the port cities hosting America’s Cup events.

“We are very proud that our host cities of San Diego, San Francisco, and Newport, Rhode Island will benefit greatly from hosting America’s Cup events,” said Thompson. “We are working closely with the cities of San Diego, San Francisco, and Newport, Rhode Island to maximize this economic impact.”

Third party sources estimate a $20-million economic impact to San Diego from the event to be staged November 12-20, 2011, with an estimated $72-million economic benefit to Newport, Rhode Island, which will be held in June 2012.  Additionally, the America’s Cup is predicted to deliver an estimated over $1 billion economic impact to the San Francisco Bay area, with more than 8,500 jobs that will be created due to the America’s Cup.

The 34th America’s Cup is the oldest trophy in modern sport and continues to build upon its rich heritage of leading-edge innovation with an event that is designed to showcase the best sailors in the world on the fastest boats.

Is the America's Cup in Jeopardy?

San FranciscoBusiness Times reporter Eric Young reported October 27th, 2011 that U.S. Senator Dianne Feinstein (D-CA) introduced a bill to the Senate on 20 October 2011 to facilitate the America's Cup Match to occur in San Francisco in 2013. Senate bill 1759 basically saves the America's Cup from the prohibitive rules outlined in the Jones Act of 1920. Commendable for her to do this I think, considering it will be a huge windfall for the City of San Francisco and the State of California. This is an example of a Senator doing the right thing to help out her constituency. There is only one question I have, which by the way is intended to be very cynical. Why was the Jones Act not a problem from 1920 thru 1995, when the Americas Cup was hosted in United States Waters?

 I have read the Bills, S.1759 and H.R.3270 (the House of Representatives nearly identical version), and they seem rather harmless in the grand scheme of things. They are very limited in focus, and effect primarily support vessels for the event. I also re-read every piece of the Jones Act I could think of that might affect the event, and I don’t believe the bills are necessary. Primarily because the waiver authority for Jones Act regulation  already resides with several government agencies. 

They were read twice in their respective forums and will be up for discussion and the a vote. This is government efficiency, right? (Warning, I'm going to get cynical again.)So, my first question stands, why wasn't this a problem from 1920 thru 1995? The next question is, are we going to hear anything about this as it progresses? Answer: Probably not. Why do we care now. Let me think … oh yeah, its an election year next year. This would be a harmless feather in the cap of the good Senator on how her bill saved the America's Cup Event in San Francisco. A more sinister answer could be that since this is an "under the radar" bill (Her office didn't even issue a press release about it), how easy would it be to tack something more meaningful onto it?  I hope this is not the case.

Now, Senator Feinstein has done many things and has many accomplishments. Some of them I actually agree with and some of them (I believe) did more harm than good. I believe that she is doing what she feels is in the best interest of her constituency as well as our country (No I don’t think she's evil), however, I question the need for this Bill now, when the only thing it really threatens immediately is the San Diego America's Cup World Series Match beginning November 12th.

Introduction of this now will not only create panic for the organizers of the America's Cup and the World Series events, but it will open the door for a lot of confusion regarding the Jones Act, which has done pretty well for us since 1920.

Lets leave this fine event and its coverage to the Port Authority of San Francisco, the US Coast Guard, Immigrations  and Customs Enforcement (ICE), and the governing body of the America's Cup Event.  I for one think that this should remain a sporting event with a long and distinguished history dating back to 1851, before it became the America's Cup.

In August of 1851, a Schooner christened America raced against 15 other yachts in a 53 nautical mile regatta around the Isle of Wight. She finished 8 minutes ahead of the nearest rival. This is when its said Queen Victoria asked who was second and someone replied to her,"Ah, Your Majesty, there is no second."

Since 1857, the America's  Cup (newly renamed) has been a perpetual challenge trophy via Deed of Gift of the Americas Cup to the New York Yacht Club.

Politics were not involved in 1851, and should not be involved now. It’s a stretch (at the least) to say the Jones Act will interfere with the upcoming events and our politicians have more to worry about than a yacht race in San Diego or San Francisco.

How Significant is One Company?

It is not often that I write about a specific shipping company, however today I feel that this one is worth mentioning. There is more to this article than just one shipping company, there is a more important issue for people to think about. In a time where it is commonplace for companies to be "delisted" by the New York Stock Exchange (NYSE)  or the NASDAQ there is significance to the fact Horizon Lines was delisted from the NYSE.

What is it about Horizon that makes this so significant? The short answer is the Jones Act of 1920. Horizon lines is one of the largest Jones Act cargo carriers in business today. What the Jones Act does is restrict domestic cargo to U.S. manufactured, U.S. owned and U.S. crewed vessels for interstate cargo.

Horizon shares traded (at the time of writing this article) in the .24-.25 range, whereas in January, shares were trading at 52 week highs of 5.95. While I don’t believe this company is in serious trouble, its stock price has put its future in question.

If a foreign company were to come in and purchase this company, it would be one less Jones Act Carrier to become history. (Remember must be U.S. owned) This would mean, assets would be sold or moved and the remaining Jones Act Carriers would pick up the slack. Demand for shipping would go up, because there would be less supply. Prices would go up for shipping, and then eventually tacked on to the products each of us buys.

The government isn't helping either. Refer back to the blog article regarding the implementation of fuel usage fees on October 19, 2011. With the expansion of the definition of U.S. Waterways in the proposed fuel usage fees could in fact change the scope of the Jones Act.

The bottom lie is that if Horizon lines disappears from the list of Jones Act Carriers, it wouldn’t be the end of the shipping industry within the United States. However, there are many overlapping factors that get overlooked. If the operating costs are increased for carriers, companies that are struggling could be forced out of business. Because of the economic crisis, our elected officials are scratching their heads trying to uncover more funding. A fuel usage fee, or expansion of areas covered could give the government more funds to resolve the debt crisis. When a congressman, or senator or even the president says "this will provide millions if not billions" I submit that they have not researched the overarching effect to companies like Horizon who are struggling to come back from the last crisis caused by inappropriate legislation.

I'm thinking about this stuff, are you?

K.Swanson