[Senate Hearing 112-]
[From the U.S. Government Publishing Office]



 
  DEPARTMENT OF HOMELAND SECURITY APPROPRIATIONS FOR FISCAL YEAR 2013

                              ----------                              


                         WEDNESDAY, MAY 9, 2012

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:05 a.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Mary L. Landrieu (chairman) 
presiding.
    Present: Senators Landrieu, Lautenberg, Coats, Cochran, and 
Murkowski.

                    DEPARTMENT OF HOMELAND SECURITY

                            U.S. Coast Guard

STATEMENT OF ADMIRAL ROBERT J. PAPP, JR., COMMANDANT


             opening statement of senator mary l. landrieu


    Senator Landrieu. Good morning. It is my pleasure to call 
our subcommittee to order, and it is my distinct honor to 
welcome the Commandant of the United States Coast Guard, 
Admiral Robert Papp, to discuss the Coast Guard's 2013 budget 
request.
    I particularly want to thank you, Admiral, for being here 
today so soon after undergoing a surgery, and I am happy to 
know that things are all working out fine. We wish you a speedy 
recovery. But we really appreciate the effort.
    The Coast Guard, as you know, I have said to you many 
times, both in private and public, will forever be in my heart 
and the hearts of the constituents that I represent in 
Louisiana and that I try to represent along the gulf coast. 
Following Hurricanes Katrina and Rita particularly, we saw the 
Coast Guard in action. The Coast Guard, the best of the Coast 
Guard, we saw them in action.
    We rescued 33,000 of our citizens during the largest search 
and rescue mission in the Coast Guard's history. I like to say 
that you all were complemented by our own Cajun flotilla and 
the entrepreneurs down in Cajun country that jumped in their 
boats to help save the day. It was a very dramatic moment in 
our Nation's history. But because of that, 33,000 people were 
saved, and the work to rebuild that great part of the United 
States is now underway.
    The Coast Guard is one of five branches of the military, is 
responsible for the safety and security of our maritime 
interests in our U.S. ports, waterways, and on the high seas. 
As we gather here today to examine the budget request for the 
Coast Guard, I can't help but think of the famous quote by Yogi 
Berra. ``It is like deja vu all over again.''
    Every year, Presidents submit budgets that are inadequate 
for the Coast Guard, and every year, Congress steps in to 
fortify them. Over the past 6 years, this subcommittee has 
increased the Coast Guard's budget by an average of $124 
million annually above the White House request. We have done 
that to fill operational and recapitalization shortfalls.
    In the 2012 bill, which was the first year that I chaired 
this subcommittee, Senator Coats, Vice Chairman Lautenberg, 
Senator Cochran, and other members of the subcommittee and I 
worked very hard together to accomplish some important goals 
for the Coast Guard.
    First, we strengthened the Coast Guard's capital program. 
We funded six fast response cutters (FRCs), long-lead time 
materials for the sixth national security cutter (NSC), plans 
and designs for new offshore patrol cutters (OPCs), and two 
maritime patrol aircraft.
    Operationally, we added funding for enhanced oil spill 
response capabilities, maintenance of aging assets, and 
improved quality of life for Coast Guard families by increasing 
access to child care services.
    Because I am from Louisiana, I think I have a bird's eye 
view of the work that the Coast Guard does day in and day out. 
I think that Senator Cochran from Mississippi, a strong 
advocate of the Coast Guard, also from his perch as the 
Senator, senior Senator, from Mississippi understands the 
multiple and important missions of the Coast Guard.
    And I do believe that even our Senators, as my colleague 
here, from interior States--although they don't have the oceans 
lapping up at their shores--understand the importance of 
keeping a Coast Guard strong not just for your traditional 
search and rescue, which is sometimes what people perceive, but 
in your new missions and important missions of drug 
interdiction and now with oil spill response, as we hope oil 
and gas production will be increasing, not decreasing, off of 
our State shores and around the world.
    Particularly off the coast of Cuba, which is a whole other 
issue, but interesting to know what our Coast Guard's role 
might be. Not, of course, in Cuban territory, but so close to 
the United States, just 90 miles from the coast of Florida.
    The President's 2013 discretionary budget request for the 
Coast Guard is $8.4 billion, 3.3 percent below enacted level, 
including the reduction of over 1,000 military billets and $200 
million less for capital expenditures. The budget includes $658 
million for the sixth national security cutter. But other 
priorities, like the fast response cutter, aircraft 
procurement, Coast Guard housing, and shore infrastructure, are 
substantially reduced below the 2012 level.
    This budget also signals that funds will not be requested 
for the final two national security cutters, Nos. 7 and 8. I am 
also concerned about the delays in procurement for the fast 
response cutters. The decision to go from acquiring six boats 
per year to two boats eliminates $30 million in savings. I want 
to say that the budget, as presented to us, decreases saving 
opportunities, doesn't increase them, and I am concerned about 
that.
    Finally, the budget proposes to decommission aging cutters 
before replacement assets are available, leaving operational 
gaps in important missions like drug interdiction, which I know 
is a priority for this Congress, both Republicans and 
Democrats. These cuts come at a critical time for the Coast 
Guard.
    Following 9/11, the Coast Guard received several new 
responsibilities that have been carried out with assets, might 
I say, built for the last century. For instance, major Coast 
Guard cutters average over 43 years in age as compared to Navy 
ships of 20 years.
    I understand that difficult tradeoffs need to be made in 
this particularly tight budget climate, but I believe the top 
line given to the Coast Guard in the President's budget is just 
not adequate. I believe this subcommittee has a responsibility 
to make sure the next generation of Coast Guard men and women 
have the tools they need to accomplish their many important 
missions, and I know that this goal is shared by our first and 
only witness today, Admiral Papp.


                           prepared statement


    Now before I move on, I want to acknowledge, of course, my 
vice chairman, Senator Lautenberg. But both Senator Coats and 
Senator Cochran have an important intel briefing. So they may 
have to slip out. But let me turn it to Senator Coats, and then 
when Senator Cochran gets here, if you don't mind, we will go 
to Senator Cochran.
    [The statement follows:]
             Prepared Statement of Senator Mary L. Landrieu
    Good morning. I call the subcommittee to order.
    Today I welcome the Commandant of the Coast Guard, Admiral Robert 
J. Papp to discuss the Coast Guard's fiscal year 2013 budget request. I 
particularly want to thank you Admiral for being here today so soon 
after undergoing surgery. I wish you a speedy recovery so you can get 
back to doing the job you love and do so well, leading the men and 
women of the Coast Guard.
    The Coast Guard will forever be in my heart and in the hearts of my 
constituents after its heroic efforts following Hurricane Katrina. The 
Coast Guard rescued over 33,000 of our citizens during the largest 
search and rescue mission in Coast Guard history.
    The Coast Guard is one of the five branches of the military and is 
responsible for the safety and security of our maritime interests in 
U.S. ports, waterways, and on the high seas.
    As we gather today to examine the budget request for the Coast 
Guard, I can't help but think of that famous quote by Yogi Berra, 
``It's like deja vu, all over again.'' Every year, Presidents submit 
their budgets that are inadequate for the Coast Guard and every year 
Congress steps in to bail them out.
    Over the past 6 years, this subcommittee has increased the Coast 
Guard's budget by an average of $124 million annually above White House 
request levels to fill operational and recapitalization shortfalls. In 
the fiscal year 2012 bill, which was the first year that I chaired this 
subcommittee, Senator Coats, Vice Chairman Lautenberg, Senator Cochran, 
other members of the subcommittee, and I worked together to accomplish 
some important goals for the Coast Guard. First, we strengthened the 
Coast Guard's capital program. We funded six fast response cutters, 
long lead time materials for the sixth national security cutter, plans 
and designs for new offshore patrol cutters, and two maritime patrol 
aircraft. Operationally, we added funding for enhanced oil spill 
response capabilities, maintenance of aging assets, and improved 
quality of life for Coast Guard families by increasing access to child 
care services.
    The President's fiscal year 2013 discretionary budget request for 
the Coast Guard is $8.4 billion, 3.3 percent below the enacted level, 
including the reduction of 1,000 military billets, and over $200 
million less for capital expenditures. The budget includes $658 million 
for the sixth national security cutter, but other priorities like the 
fast response cutter, aircraft procurement, Coast Guard housing, and 
shore infrastructure are reduced substantially below the fiscal year 
2012 level. The budget also signals that funds will not be requested 
for the final two national security cutters, Nos. 7 and 8. I am also 
concerned about the delays in the procurement of fast response cutters. 
The decision to go from acquiring six boats per year to two boats per 
year eliminates $30 million in savings and delays the delivery of key 
mission capabilities. Finally, the budget proposes to decommission 
aging cutters before replacement assets are available, leaving 
operational gaps in important mission areas like drug interdiction.
    These cuts come at a critical time for the Coast Guard. Following 
9/11, the Coast Guard received several new responsibilities and they 
have been carried out with assets built for the last century. For 
instance, major Coast Guard cutters average over 43 years of age as 
compared to Navy ships that average 20 years of age.
    I understand that difficult trade-offs need to be made in this 
budget climate, but I believe the topline given to the Coast Guard in 
the President's budget request is inadequate. I believe this 
subcommittee has a responsibility to make sure that the next generation 
of Coast Guard men and women has the tools they need to accomplish 
their many missions. I know that this is goal shared by our witness 
today, Admiral Papp.
    I look forward to examining these issues so we can make sound 
decisions about the resources and assets Coast Guard men and women need 
today and in the future.
    Before recognizing Senator Coats for any opening remarks he may 
wish to make, I understand that Senator Cochran needs to depart early, 
so I recognize Senator Cochran.
    I now recognize Senator Coats for any opening remarks he may wish 
to make.

    Senator Landrieu. Senator Coats.

                   STATEMENT OF SENATOR DANIEL COATS

    Senator Coats. Madam Chairman, thank you very much.
    Admiral, welcome. Good to see you here, and I apologize for 
having to not be here.
    It is clear that post 9/11, the Coast Guard is now playing 
a role in the defense of our homeland security and is part of 
the entire package that we need to put together to keep our 
people safe from threats both from home and abroad, and we 
really appreciate the Coast Guard stepping up to the task here. 
So we do want to make sure that you have the assets necessary 
for you to continue to be a vital part of that whole national 
effort, and so we thank you for your engagement there.
    Now, as someone from Indiana, we don't necessarily have the 
same direct engagement with the Coast Guard as the chairman, 
and I know Senator Murkowski very much appreciates this hearing 
also, given the role of the Coast Guard in her State of Alaska. 
But we do have some connections. Crane Naval Surface Warfare 
Center does some special ops and electronics work that is 
important to the Coast Guard, as well as all of our services, 
and we do have a small station up in Michigan City.
    We do have some water that we look at. Not very much, but a 
little bit of slice of Indiana faces, is on the Great Lakes, 
and so we are privileged to have at least some connection to 
the Coast Guard.
    What is important about this hearing is that we continue to 
deal with budget situations that put constraints on what we 
would like to do, and therefore, we have to pick out those 
priorities and make sure that the essential things that we need 
to do are adequately funded and carried out. And so, I think 
that is really the key here to this hearing.
    We know that as part of the submitted budget by the 
administration, that earmark is below fiscal year 2012 level 
and will require some adjustments on the part of the Coast 
Guard in terms of how these funds are allocated. And so, we 
want to make sure that while we are facing these difficult 
budget realities, we are not compromising the kind of vital and 
necessary effective services that you provide.
    So, again, with apologizes for having to leave, I thank the 
chairman for holding this, and I will get a full down brief on 
it from her.
    Thank you, Admiral.
    Senator Landrieu. Thank you. Senator Coats has been a very 
strong supporter of the Coast Guard. We appreciate it.
    Senator Lautenberg.

                STATEMENT OF SENATOR FRANK R. LAUTENBERG

    Senator Lautenberg. Thanks, Madam Chairman.
    And I am always glad to see the Coast Guard. Admiral, you 
represent a terrific unit, and we are proud of you and all of 
your people. I see them up close and often.
    And New Jersey is the home for the most at-risk area in the 
country for a terrorist attack, a stretch that includes the 
port, airport, chemical plants, refineries, and railways. 
Protecting this region is not only protecting lives, it also 
protects the economy.
    The Port of New York and New Jersey, the largest on the 
east coast, supports more than 270,000 jobs and $37 billion in 
business income. Protecting this region not only protects 
lives, it protects the economy.
    The men and women of the Coast Guard are America's eyes and 
ears on the seas, and we are safer because of them. And as you 
know, Admiral, I have marveled at the Coast Guard's ability to 
stretch, pull, push, and get more things done with fewer 
resources. And this is a very untimely thing to see a Coast 
Guard budget, in my view, being shrunken further. I am always 
surprised at the number of functions that we have the Coast 
Guard doing, whether it is as simple as navigational markers, 
fishing management.
    But today, with security as it is, the Coast Guard part of 
homeland security, it is a different ball game. So we ask you 
once again to inform your people that we think very well of 
them, make sure that we are not going to ignore our 
responsibility to the Coast Guard. We need some more funding in 
our society, in our budget, and that is where the problem is.
    But it is so important to support the Coast Guard and, 
again, asking you to do more with less. Unfortunately, 
discretionary spending has become the scapegoat of our deficit 
problems. This misguided ``cut at any cost'' approach has 
forced this year's reduction in the budget request for the 
Coast Guard and could lead to even more dangerous cuts next 
year.
    The brave men and women of the Coast Guard never let us 
down, and it is critical that we give you and your people the 
resources they need to do the missions that they respond so 
effectively to. One important mission for New Jersey is the 
Coast Guard's role in upgrading the Bayonne Bridge. The height 
of the bridge impedes the ability of larger ships to access the 
ports, and the game has changed substantially--with the opening 
of the Panama Canal, larger vessels, and we want those vessels 
to call on American ports.
    This access will become even more critical in 2014 when the 
number of large ships will increase significantly. The Port 
Authority of New York and New Jersey is working with the Coast 
Guard to accommodate these ships by raising the height of the 
bridge.
    So I look forward to hearing from Admiral Papp on the Coast 
Guard's efforts to advance this project and the impact. We are 
going to be asking questions, Admiral, as you would expect, 
what a reduced budget might do with the agency's operations.
    Thank you for your service.
    Senator Landrieu. Thank you.
    And Senator Murkowski, if you had a brief opening 
statement, and then, of course, we will take questions later. 
Thank you for joining us.

                  STATEMENT OF SENATOR LISA MURKOWSKI

    Senator Murkowski. I do. Thank you.
    Thank you, Madam Chairman and to the ranking member, thank 
you for holding this hearing. Incredibly important. I had asked 
that we have a very specific hearing focused just on the Coast 
Guard. And I appreciate, Admiral Papp, your leadership, of 
course, with all of our fine Coast Guard men and women and all 
that you do.
    It has been kind of Coast Guard week for me already, and 
this is only Wednesday. We had an opportunity yesterday to have 
a very impressive presentation by Captain Havlik, who detailed 
the escort that the cutter Healy made last winter in escorting 
the Russian oil tanker Renda north to supply Nome and other 
coastal villages with fuel during a very, very cold winter.
    It was a reminder of the capabilities of our Coast Guard. 
It is a reminder of what it is that we have available to us. 
But it is also a reminder that we have got a lot of work to do, 
and as an Arctic nation, that is becoming more and more clear.
    I am looking at the threat areas map that has been 
presented to each of us at our desks here this morning, and I 
look at the threat areas and am very cognizant of my 
colleague's statement about the threats that New Jersey faces 
as a terrorist threat. But I look at the area around the State 
of Alaska and just the size and scope of what it is that we are 
facing, whether it is an increased presence in the Arctic 
because of resource development, the potential there, whether 
it is the activity that we see coming from the cruise industry 
coming across the top, whether it is the cargo traffic going 
between Alaska and Russia.
    There is so much happening in the Arctic, and I see one 
very small orange dot there that indicates offshore patrol 
cutter. And I look at the area that you are charged with 
oversight, and I know that the challenges are great.
    I know that from a budget perspective we are always 
cognizant of the responsibilities that we have directed toward 
the Coast Guard. And yet the resources, the revenues more often 
than not do not also accompany that.
    I am going to spend most of my time this morning talking 
about the opportunities for us when it comes to icebreaking 
capacity. As an Arctic nation, we are woefully unprepared. You 
have said that we are behind the power curve regarding the 
Arctic. I agree with that. We need the assets. We need those 
resources up north.
    I had an opportunity just yesterday to visit with a 
shipbuilder from Louisiana who has just completed an 
extraordinary vessel with icebreaking capacity, the Aiviq. It 
will be part of Shell's operations up north.
    But I look at the opportunities that we have in front of 
us. We have got difficult budget decisions. We have an 
opportunity to perhaps do something on the private side. And 
while you and I have had a discussion about this, I think we 
recognize that we have got to figure out how we thread this 
needle when it comes to meeting our responsibilities and 
dealing with the budget issues and the concerns.
    I am looking forward to this summer with the Arctic Shield 
deployment, where the Coast Guard will be testing the 
capabilities up there in the Arctic. I think we are all most 
interested to see that presence and see where our gaps truly 
are.
    But Madam Chairman, I thank you again for holding this 
hearing. And Admiral Papp, I thank you for your leadership. 
Once again, the men and women of the Coast Guard continue to do 
us proud, and you are very ably leading those men and women. So 
I thank you.
    Senator Landrieu. Thank you, Senator Murkowski. And I am 
looking forward to joining you and the Coast Guard in Alaska 
this summer to come visit and get a little bit better 
experience about what the magnitude and the dimensions of some 
of your threats there and challenges.
    And let me turn it to Senator Cochran, who also is going to 
have to probably leave, I think, shortly for an intel hearing.
    But before you came in, Senator, I said that you and I have 
two of the best positions really in the country to see the 
great work that the Coast Guard does, and we were grateful for 
them stepping up and saving about 33,000 of our citizens after 
Hurricanes Katrina and Rita, which was one of the bright 
chapters in many bright chapters of the Coast Guard history. 
And thank you for your support always of the Coast Guard.
    Senator Cochran.

                   STATEMENT OF SENATOR THAD COCHRAN

    Senator Cochran. Madam Chair, thank you very much for your 
leadership in convening this hearing and in managing the 
requests we have for funding that we have to act on and make 
recommendations or Senate consideration.
    It is a pleasure to see Admiral Papp here and to 
congratulate him for his continued excellent leadership as 
Commandant of the Coast Guard. We are impressed when we 
remember the terrible flooding challenges that we have had on 
the Mississippi River and tributaries there, too.
    In the last few years, it seems like we have had more than 
our share of 100-year floods. Somebody doesn't know how to 
count. We have got to change the way we talk about these 
things. But the Coast Guard is there.
    I remember flying with the Commandant on his plane down to 
New Orleans for an inspection, really an overview of the 
flooding that we had had on the Mississippi River and the 
tributaries there, too. But I was quite impressed with the 
dedication to the responsibilities that the Coast Guard has 
under the law, and it gives us another opportunity to thank him 
and his colleagues in the Coast Guard for the fabulous job they 
have done over the years, but particularly in the recent past, 
when we have been challenged as we never have before, 100 years 
or less.
    So we want to be sure we understand the priorities. We 
can't fund probably everything at the level that we would like 
to because of constraints on the budget and the limitations 
that we have imposed by the budget.
    But we want to do what we think is best, in the best 
interests of the country. And with your assistance, we will 
identify those priorities in a thoughtful way and carry out the 
missions not only of the Coast Guard, but protect and save a 
lot of our valuable human resources and property that is very 
valuable to the economic future of our State and Nation.
    Thank you.
    Senator Landrieu. Thank you, Senator.
    Admiral, we are prepared now for your opening statement.

                STATEMENT OF ADMIRAL ROBERT J. PAPP, JR.

    Admiral Papp. Thank you, Chairman Landrieu, Ranking Member 
Coats, Senator Lautenberg, Senator Cochran, and Senator 
Murkowski.
    It is a real honor for me to be here today and to be able 
to testify regarding our fiscal year 2013 budget. And on behalf 
of all the men and women of the Coast Guard, I want to thank 
you for that strong support that you spoke of in your opening 
statement over the last couple of years. It is gratifying to 
see the support from this subcommittee to help us to get the 
job done for this country.
    And as this subcommittee is well aware and you have stated 
already, we are facing very serious challenging fiscal times. 
But we must not forget that America is, first and foremost, a 
maritime nation, and I think the reason why even interior 
States understand the value of the Coast Guard is because 95 
percent of our foreign trade arrives or is shipped by sea.
    The maritime transportation system accounts for nearly $700 
billion of the U.S. gross national product and supplies 51 
million jobs to the U.S. economy. Our economy, our security, 
and our Nation's prosperity depend upon safe and secure 
maritime transportation routes.
    But these same approaches can be used by criminals as well 
or people who choose to do us harm. In the offshore transit 
zones, we face growing transnational crime, drug and human 
trafficking, and piracy. And just over 1 month ago, one of our 
new HC-144 aircraft on its first flight of its first deployment 
to the Caribbean used its state-of-the-art sensors to detect a 
submersible smuggling vessel, a vessel capable of carrying 5 
tons of cocaine inside.
    I went to Colombia recently, and I toured a number of these 
seized vessels. They can carry anywhere between 5 to 7 or 8 
tons of cocaine or other illicit material. Now that aircraft 
vectored in two Coast Guard cutters to interdict the sub. This 
was the fifth sub we have interdicted in the Caribbean since 
July 2001.
    And as you can see from the handout that I have provided, 
drug subs are just one of the offshore threats that we are 
facing. Our natural resources are also threatened by illegal 
fishing, which is increasing pressure on our valuable fish 
stocks. Offshore exploration, driven by an expanding global 
thirst for fossil fuel, is also on the rise. Oil exploration is 
planned in the United States Arctic waters this summer, and 
even closer to our shores, we face the threat of a possible 
transboundary pollution that could be produced by drilling in 
Cuba's outer continental shelf.
    Our Coast Guard is charged with ensuring the safety, 
security, and stewardship of this broad range of maritime 
activity. We protect people on the sea. We protect the Nation 
from threats delivered by the sea, and we protect the sea 
itself. There is no other United States agency that has the 
equivalent authorities, competencies, or capabilities to 
provide the Nation's maritime security and safety on the water 
and in the air and as far offshore as possible and within our 
ports.
    Now this unique mosaic is a foundational characteristic. It 
is what makes the Coast Guard just as effective in dealing with 
major catastrophes like Hurricane Katrina and the Deepwater oil 
spill as it is at performing our day-to-day operations.
    Our layered maritime security strategy focuses on three 
regions--overseas, offshore, and in-shore along the coast. This 
strategy seeks to optimize the use of our assets and 
authorities throughout the maritime continuum.
    To ensure the Coast Guard remains capable of confronting 
future threats, however, we must judiciously invest in ships, 
boats, and aircraft that we need to effectively operate in each 
of these three areas or this layered security that I have 
talked about. In the decade since 9/11, we have focused on 
investing in resources to strengthen our capabilities to 
counter risks in our ports and in the coastal zone, the inner 
layer.
    In the last 10 years, we have replaced almost our entire 
small boat fleet. We have added capable aircraft and more 
personnel to operate them. We have deployed the Rescue 21 
distress communications system. We have unified field 
operations through the creation of sectors to fully integrate 
and leverage our prevention and response activities. We have 
enhanced regulatory inspection and compliance programs, and we 
have built effective deployable specialized forces.
    We have also strengthened partnerships with the many 
agencies that we operate alongside. And although there will 
always be more work to do, these near-shore forces are far more 
prepared to address our risks than in the offshore layer. 
Simply put, what we have done over the last 10 years is we have 
built a strong defense in the inner layer--in our ports and 
along the coast--but the last place that you want to discover 
or confront a threat is near the shore or in your ports. That 
is playing goal-line defense.
    So we need to now focus on building our offshore forces so 
that we can respond in that layer. But the offshore layer is 
also where I am most concerned because that is where our aging 
fleet is, and that is really the most expensive part of this 
layered security that we try to provide.
    Our offshore fleet of cutters is aging. It is antiquated, 
and it is increasingly less effective. Even with the best 
efforts of my crews and the support from this subcommittee, the 
state of our major cutter fleet, most of which is in excess of 
40 years old, is alarming.
    Our 45-year-old average high endurance cutters are 
achieving only about 70 percent of their programmed underway 
hours, and more than 50 percent of the time, they sail with 
major casualties. This is a cause for concern because the key 
to interdicting threats offshore is maintaining a persistent 
presence to rapidly respond, interdict, and address any of 
those threats.
    If we don't have capable and reliable offshore cutters, we 
can't mount a response. We cannot enforce our laws, and we 
cannot adequately protect our national interests. It is that 
simple.
    This is why we must continue to build our new major 
cutters, such as the sixth national security cutter, as quickly 
as possible. I am thankful to Secretary Napolitano and the 
President for supporting the funding for production of No. 6 in 
the fiscal year 2013 budget. Maintaining shipbuilding momentum 
is what allowed us to get national security cutters Nos. 4 and 
5 on contract this past year for nearly the same price.
    We are now reaping the benefits of efficient shipyard 
processes and experienced shipbuilders. Now is the time to keep 
the production going. Now is the time to deliver these ships as 
inexpensively as possible. And now is the time to ensure the 
Coast Guard is capable of interdicting offshore threats for the 
next 30 to 50 years.
    The fiscal year 2013 budget reflects the threshold I need 
to acquire new cutters and aircraft designed to address our 
greatest threats. Right now, we are delivering these new assets 
at minimum production levels. This ensures we keep the most 
critical acquisition projects moving forward while at the same 
time maintaining our front-line operations.
    As this subcommittee clearly recognizes, given your strong 
support for the national security cutter program, we are 
balancing our investment in the future assets against resources 
required to maintain operations today. Doing so requires 
tradeoffs, but that is what leaders do. Leaders have to make 
tough choices in challenging times.
    And leaders also have to look to the future to make sure 
their service and their country is prepared for future threats. 
As we work together to confront these challenges, the men and 
women of the Coast Guard are standing the watch to protect our 
Nation. The budget submitted to you seeks to provide them with 
the tools they require to continue performing our challenging 
maritime missions.

                           PREPARED STATEMENT

    Thank you for the opportunity to testify before you today 
and for your continuing support of our Coast Guard. And I look 
forward to answering your questions.
    [The statement follows:]
           Prepared Statement of Admiral Robert J. Papp, Jr.
    Good morning Madam Chair and distinguished members of the 
subcommittee. Thank you for the continuing support you have shown to 
the men and women of the United States Coast Guard, including the 
funding provided in the fiscal year 2012 Consolidated Appropriations 
Act to recapitalize the aging fleet and sustain front-line operations.
    This year marks our 222nd year of protecting Americans on the sea, 
America from threats delivered by the sea and the sea itself. 
Throughout this period, our unique authorities, capable assets and 
determined personnel have adapted to meet the Nation's evolving 
maritime safety, security, and stewardship needs. We are locally based, 
nationally deployed and globally connected.
    I am here today to discuss the Coast Guard's fiscal year 2013 
budget request. Before discussing the details of the request, I would 
like to take this opportunity to discuss some of the Coast Guard's 
recent operational successes, our value and role in the Department of 
Homeland Security, and in service to the Nation.
    Over the past year, Coast Guard men and women--Active Duty, 
Reserve, civilian, and auxiliarists alike--continued to deliver premier 
service to the public. In the Midwest, Coast Guard disaster assistance 
response teams were among the first responders to residential areas 
impacted by severe flooding. In the Western Caribbean, Coast Guard 
medium endurance cutters and seagoing buoy tenders interdicted and 
supported the multi-agency recovery of self-propelled semi-submersible 
vessels. These ``drug subs'' are designed for one specific purpose--to 
deliver multi-ton loads of pure cocaine bound for our shores, streets, 
and schools. While the use of drug subs is increasingly popular in the 
Eastern Caribbean, these interdictions mark the first time we have 
encountered drug subs in the Western Caribbean. In the Arctic, the 
Coast Guard icebreaker Healy and her crew broke their way through 800 
miles of Bering Sea ice to enable the motor vessel Renda to deliver 1.3 
million gallons of fuel to the 3,600 people of Nome, Alaska after 
extreme weather and ice formation precluded safe delivery of this vital 
commodity.
    Last year, the Coast Guard responded to 20,510 search and rescue 
cases and saved over 3,800 lives; seized over 75 metric tons of cocaine 
and 18 metric tons of marijuana destined for the United States; seized 
40 vessels, detained 191 suspected smugglers; conducted over 10,400 
annual inspections of U.S. flagged vessels; conducted 6,200 marine 
casualty investigations; conducted more than 9,000 Port State Control 
and Security examinations on foreign flagged vessels; and responded to 
3,000 pollution incidents.
    I am pleased to report the Coast Guard recently commissioned the 
lead Sentinel class fast response cutter, the Bernard C. Webber. Just 
over 60 years ago, on February 18, 1952, Boatswain's mate first class 
Webber and his three-man 36-foot motorized lifeboat crew rescued 32 
souls, one by one, from the 503-foot tank vessel Pendleton after it 
broke in two in a nor'easter off Cape Cod featuring 60-foot seas, 70-
knot winds and blinding snow. Petty Officer Webber's seamanship, 
courage, and leadership serve as an enduring reminder of the Coast 
Guard's value to the Nation.
    The fiscal year 2013 budget represents a critical inflection 
point--the ships, boats, and aircraft we are investing in today are 
vital to ensuring the Coast Guard remains ready to respond to maritime 
threats and hazards, well into the future. Indeed, these resources will 
not just shape, but in a large part will define the Coast Guard's next 
50 years of capability. We are also exercising resource and operational 
stewardship while simultaneously preparing for the future. We recently 
completed a review of doctrine, policy, and our operations and mission 
support structure to ensure we are focusing resources and forces where 
they are most needed. This prioritization is reflected in our fiscal 
year 2013 budget submission, which focuses on balancing current 
operations with our need to recapitalize for the future. However, we 
must do so in a manner that sustains our capability to safeguard lives, 
protect the environment and facilitate safe and secure commerce 
throughout our Maritime Transportation System--a system which carries 
95 percent of all U.S. foreign trade and accounts for nearly $700 
billion of the U.S. gross domestic product and 51 million U.S. jobs.
    The Coast Guard's value and role:
  --We protect those on the sea: leading responses to maritime 
        disasters and threats, ensuring a safe and secure Maritime 
        Transportation System, preventing incidents, and rescuing those 
        in distress.
  --We protect America from threats delivered by sea: enforcing laws 
        and treaties, securing our ocean resources, and ensuring the 
        integrity of our maritime domain from illegal activity.
  --We protect the sea itself: regulating hazardous cargo 
        transportation, holding responsible parties accountable for 
        environmental damage and cleanup, and protecting living marine 
        and natural resources.
                        fiscal year 2013 request
    In recognition of the current fiscal environment, the Coast Guard's 
fiscal year 2013 budget strikes the optimal balance between current 
operations and investment in future capability to sustain the Coast 
Guard's ability to execute its missions, and address the most pressing 
operational requirements. This budget request includes investment in 
new assets which are critical to ensure the Coast Guard remains capable 
of carrying out its missions today and well into the future. 
Accordingly, the Coast Guard's fiscal year 2013 budget priorities are 
to:
  --Responsibly rebuild the Coast Guard;
  --Efficiently preserve front-line operations;
  --Strengthen resource and operational stewardship; and
  --Prepare for the future.
    Highlights from our request are included in appendix I.
    


    

The Coast Guard cutter Waesche conducts at-sea refueling operations for 
                 the first time in the ship's history.

Responsibly Rebuild the Coast Guard
    The Coast Guard continues to focus resources on recapitalizing 
cutters, boats, aircraft, and command, control, communications, 
computers, intelligence, surveillance, and reconnaissance systems, 
critical to sustaining the ability to accomplish missions well into the 
future. This budget request fully funds the sixth national security 
cutter, strengthening the Coast Guard's long-term major cutter 
recapitalization effort to replace its aged, obsolete high endurance 
cutter fleet as quickly as possible. The fiscal year 2013 investments 
are critical to replacing and sustaining aging in-service assets, and 
are key to maintaining future capability.
Efficiently Preserve Front-line Operations
    To ensure the Coast Guard remains ready to meet the Nation's safety 
and security requirements, the fiscal year 2013 budget request provides 
a balance between sustaining front-line operational capacity and 
rebuilding the Coast Guard. The fiscal year 2013 budget provides 
funding to operate and maintain Coast Guard assets and sustain 
essential front-line operations. Key investments include funding the 
operation of new assets delivered through acquisition programs and 
investment in military workforce pay and benefits.
Strengthen Resource and Operational Stewardship
    The fiscal year 2013 budget meets essential mission needs while 
simultaneously preparing for new and exigent demands. Through a 
comprehensive internal review of doctrine, policy, operations and 
mission support structure, the Coast Guard has focused resources and 
forces where they are most needed, while recognizing the current fiscal 
challenges. The fiscal year 2013 budget also proposes administrative 
and programmatic reductions to improve efficiency and service delivery, 
while continuing investment in Coast Guard activities that provide the 
highest return on investment.
Prepare for the Future
    The Coast Guard continuously identifies and prepares for emerging 
maritime threats facing the Service and the Nation. The fiscal year 
2013 budget request recognizes the criticality of the Arctic as a 
strategic national priority, given increasing presence and interest by 
other nations, the preponderance of natural resources available in this 
region, and increasing maritime commercial and recreational activity.
                               conclusion
    The role of the Coast Guard has never been more important. As we 
have done for well over two centuries, we remain ``Always Ready'' to 
meet the Nation's ever-broadening maritime needs, supported by the 
fiscal year 2013 request. I request your full support for the funding 
requested for the Coast Guard in the President's fiscal year 2013 
budget. Again, thank you for the opportunity to testify before you 
today. I am pleased to answer your questions.
              appendix i--fiscal year 2013 budget request
Responsibly Rebuild the Coast Guard
            Surface Assets--$879.5 Million (0 FTE)
    The budget provides $879.5 million for surface asset 
recapitalization and sustainment initiatives, including:
  --National Security Cutter (NSC).--Provides production funding for 
        the sixth NSC; NSCs will replace the aging fleet of high 
        endurance cutters, first commissioned in 1967. The acquisition 
        of NSC No. 6 is vital for performing DHS missions in the far 
        off-shore regions, including the harsh operating environment of 
        the Pacific Ocean and Bering Sea, as well as providing for 
        robust homeland security contingency response.
  --Fast Response Cutter (FRC).--Provides production funding to procure 
        fast response cutters (FRC) 19-20. These assets replace the 
        aging fleet of 110-foot patrol boats, and provide the coastal 
        capability to conduct search and rescue operations, enforce 
        border security, interdict drugs, uphold immigration laws, 
        prevent terrorism, and ensure resiliency to disasters. Hulls 
        Nos. 17-20 will be procured in fiscal year 2013 using fiscal 
        year 2012 and fiscal year 2013 funds, maintaining FRC 
        production at the current rate.
  --Offshore Patrol Cutter (OPC).--Continues initial acquisition work 
        and design of the OPC. The OPC will replace the medium 
        endurance cutter class to conduct missions on the high seas and 
        coastal approaches.
  --Medium Endurance Cutter (MEC).--Completes the Mission Effectiveness 
        Program for the 270-foot MECs at the Coast Guard Yard.
  --Survey and Design.--Initiates survey and design work for a mid-life 
        availability on the 175-foot Coastal Buoy Tender class.
            Air Assets--$74.5 Million (0 FTE)
    The budget provides $74.5 million for the following air asset 
recapitalization or enhancement initiatives, including:
  --HC-144.--Funds production of the 18th HC-144A Maritime Patrol 
        Aircraft. The HC-144A fleet will provide enhanced maritime 
        surveillance and medium airlift capability over the legacy HU-
        25 aircraft that they replace. The HU-25s will all be removed 
        from service by the end of their planned service life, in 
        fiscal year 2014.
  --HH-65.--Funds sustainment of key components requiring 
        recapitalization.
            Asset Recapitalization; Other--$76.5 Million (0 FTE)
    The budget provides $76.5 million for the following equipment and 
services:
  --Command, Control, Communications, Computers, Intelligence, 
        Surveillance, and Reconnaissance (C4ISR).--Deploys standardized 
        C4ISR capability to newly fielded NSCs, C-130s and MPAs, and 
        develops C4ISR capability for other new assets.
  --CG-Logistics Information Management System.--Continues development 
        and prototype deployment to Coast Guard operational assets and 
        support facilities.
  --Nationwide Automatic Identification System (NAIS).--Continues 
        recapitalizing the existing interim NAIS system in 58 ports and 
        11 coastal areas by replacing it with the permanent solution 
        design and technology via the core system upgrade.
            Shore Units and Aids to Navigation (ATON)--$69.4 Million (0 
                    FTE)
    The budget provides $69.4 million to recapitalize shore 
infrastructure for safe, functional, and modern shore facilities that 
effectively support Coast Guard assets and personnel:
  --Station New York Boat Ramp.--Constructs a boat ramp for launching 
        small boats at Station New York, New York, for both the Station 
        and Maritime Safety and Security Team New York.
  --Air Station Barbers Point.--Constructs an aircraft rinse rack 
        facility to properly and effectively rinse C-130 aircraft at 
        Air Station Barbers Point.
  --Major Acquisition Systems Infrastructure.--Commences construction 
        of piers and support facilities for three FRC homeports; 
        construction of an MPA training facility at Aviation Technical 
        Training Center in Elizabeth City, North Carolina; construction 
        of MPA maintenance facility hangar at the Aviation Logistics 
        Center at Elizabeth City, North Carolina.
  --ATON Infrastructure.--Completes improvements to short-range aids 
        and infrastructure to improve the safety of maritime 
        transportation.
            Personnel and Management--$117.4 Million (842 FTE)
    The budget provides $117.4 million to provide pay and benefits for 
the Coast Guard's acquisition workforce.
Efficiently Preserve Front-Line Operations
            Pay and Allowances--$88.9 Million (0 FTE)
    The budget provides $88.9 million to fund the civilian pay raise 
and maintain parity of military pay, allowances, and healthcare with 
the DOD. As a branch of the Armed Forces of the United States, the 
Coast Guard is subject to the provisions of the National Defense 
Authorization Act, which includes pay and personnel benefits for the 
military workforce.
            Annualization of Fiscal Year 2012--$54.2 Million (260 FTE)
    The budget provides $54.2 million to continue critical fiscal year 
2012 initiatives.
            Operating and Maintenance Funds for New Assets--$47.6 
                    Million (139 FTE)
    The budget provides a total of $47.6 million to fund operations and 
maintenance of shore facilities and cutters, boats, aircraft, and 
associated C4ISR subsystems delivered through acquisition efforts. 
Funding is requested for the following assets and systems:
  --Shore Facilities.--Funding for the operation and maintenance of 
        shore facility projects scheduled for completion prior to 
        fiscal year 2013.
  --Response Boat-Medium.--Funding for operation and maintenance of 30 
        boats.
  --Interagency Operations Center (IOC).--Funding for the operation and 
        maintenance of the Watch Keeper system.
  --Rescue 21 (R21).--Funding for the operation and maintenance of the 
        R21 System in Sector Sault Ste. Marie and Sector Lake Michigan.
  --FRC.--Operating and maintenance funding for FRCs Nos. 8-9 and 
        funding for crews Nos. 9-10. These assets will be homeported in 
        Key West, Florida. Funding is also requested for shore-side 
        maintenance personnel needed to support FRCs.
  --HC-144A MPA.--Operating and maintenance funding for aircraft Nos. 
        14-15 and personnel funding to operate and support aircraft 
        Nos. 15-16.
  --Air Station Cape Cod Transition.--Funding to complete a change in 
        aircraft type allowance, and programmed utilization rates.
  --Training Systems for Engineering Personnel.--Funding to support NSC 
        and FRC training requirements at Training Center Yorktown.
  --HC-130H Flight Simulator Training.--Funding to support aircraft 
        simulator training for HC-130H pilots, flight engineers, and 
        navigators.
            St. Elizabeths Headquarters Consolidation--$24.5 Million (0 
                    FTE)
    Provides funding to support the Coast Guard's relocation to the DHS 
consolidated headquarters at the St. Elizabeths Campus in Washington, 
DC. Funding supports the systematic move of equipment, employees, and 
work functions to the new headquarters location, beginning in the third 
quarter of fiscal year 2013.
Strengthen Resource and Operational Stewardship
            Asset Decommissionings
    In fiscal year 2013, in addition to the planned decommissioning of 
legacy assets, the Coast Guard will make targeted operational 
reductions to prioritize front-line operational capacity and invest in 
critical recapitalization initiatives.
            High Endurance Cutter (HEC) Decommissionings---$16.8 
                    Million (-241 FTE)
    The Coast Guard will decommission the fourth and fifth of the 
original fleet of 12 HECs. With the average cutter age at 43 years, the 
HEC fleet has become increasingly difficult to maintain and sustain 
operationally. The decommissioning of two HECs is critical to support 
ongoing major cutter recapitalization efforts. National security 
cutters, including the sixth NSC which is fully funded by this budget 
request, replace the aging HEC fleet.
            110-ft Island Class Patrol Boat Decommissionings---$2.0 
                    Million (-35 FTE)
    The Coast Guard will decommission three 110-ft patrol boats in 
fiscal year 2013. The 110-ft patrol boats are being replaced by the 
FRC.
            High Tempo High Maintenance Patrol Boat Operations---$33.5 
                    Million (-206 FTE)
    The Coast Guard will terminate the high tempo high maintenance 
(HTHM) operations program that facilitates augmented operation of eight 
in-service 110-foot patrol boats. Termination of this program coincides 
with commissioning of new FRCs which will mitigate this lost capacity.
            Close Seasonal Air Facilities---$5.2 Million (-34 FTE)
    The Coast Guard will improve the efficiency of domestic air 
operations by closing Seasonal Air Facilities and realigning rotary 
wing capacity to provide three medium-range H-60 helicopters to the 
Great Lakes region to replace the H-65s currently in service. Due to 
limited demand for services and improved endurance from the H-60, the 
Coast Guard will discontinue operations at two seasonal Coast Guard Air 
Facilities at Muskegon, Michigan, and Waukegan, Illinois.
            HU-25 Aircraft Retirements---$5.5 Million (-20 FTE)
    The Coast Guard will retire the three remaining HU-25 aircraft 
assigned to Coast Guard Air Station (CGAS) Cape Cod to allow for the 
transition to HC-144A aircraft. In fiscal year 2013, the Coast Guard 
will deliver and place in full-operational status three HC-144A 
aircraft at CGAS Cape Cod.
            Management Efficiencies
    The budget proposes administrative and programmatic efficiencies to 
improve service delivery, while continuing investment in Coast Guard 
activities that provide the highest return on investment.
            DHS Enterprise-Wide Efficiencies---$56.3 Million (-24 FTE)
    The Coast Guard will seek efficiencies and cost reductions in the 
areas of IT infrastructure, Government vehicles, professional services 
contracts, non-operational travel, GSA leases, permanent change of duty 
station relocation costs for military personnel, and logistics services 
by consolidating/centralizing functions in geographically concentrated 
areas.
            Programmatic Reductions
    In fiscal year 2013, the Coast Guard will make targeted reductions 
in base program areas. These base adjustments recognize changes in 
requirements for selected activities and redirect resources toward 
higher priorities, including critical recapitalization projects and 
essential front-line operations.
            Headquarters Personnel and Support Reduction---$12.7 
                    Million (-131 FTE)
    The Coast Guard will eliminate 222 headquarters positions through 
attrition and implementation of a civilian hiring freeze in the 
Washington, DC area. This reduction preserves the Coast Guard's 
critical capabilities to conduct front-line operations; mission 
support; and development and implementation of national policies and 
regulations.
            Recruiting Program Reduction---$9.8 Million (-39 FTE)
    The Coast Guard will make reductions to the recruiting program and 
selective reenlistment bonuses, which are not needed based on the 
current employment outlook.
            Other Targeted Program Reductions---$6.2 Million (-62 FTE)
    The Coast Guard will make targeted reductions to the intelligence 
workforce, organizational performance consultants, and non-reimbursable 
detached duty billets.
            Targeted Operational Reductions---$3.7 Million (-32 FTE)
    Based on an internal review and assessment of operational risk, the 
Coast Guard proposes to make targeted operational reductions by 
reorganizing the international Mobile Training Team, consolidating PWCS 
airborne use of force (AUF) capability at Elizabeth City, North 
Carolina; and San Diego, California, and eliminating the Vintage Vessel 
National Center of Expertise.
Prepare for the Future
            Polar Icebreaker--$8.0 Million \1\ (0 FTE)
    Initiates survey and design of a new polar icebreaker to ensure the 
Nation is able to maintain a surface presence in the Arctic well into 
the future.
            Alaska Shore Facilities--$6.1 Million \1\ (0 FTE)
---------------------------------------------------------------------------
    \1\ Note: Funding amounts within this section are included in 
totals listed within the Responsibly Rebuild the Coast Guard section.
---------------------------------------------------------------------------
    Provides funding to recapitalize and expand helicopter hangar 
facilities in Cold Bay, Alaska, and recapitalize aviation re-fueling 
facilities at Sitkinak, Alaska. These investments will sustain the 
Coast Guard's ability to establish effective presence in the Bering Sea 
and Aleutian Chain--the ``gateway'' to the Arctic.

    Senator Landrieu. Thank you, Admiral.
    Senator, do you have a question? Okay, perfect.
    Senator Coats and Senator Cochran will submit questions for 
the record, and they have had to leave for an intel briefing.

                   FAST RESPONSE CUTTERS: PRODUCTION

    We will do 5 minutes each of rounds. Let me begin with the 
fast response cutters.
    Of course, I am familiar with these because they are built 
in Louisiana, and I am proud to say in Lockport, Louisiana. I 
was there in April with others to commission the first fast 
response cutter, the Bernard C. Webber. Now these cutters are 
going to provide 2,500 annual operation hours, which will allow 
the Coast Guard to close a 25-percent shortfall in patrol boat 
hours.
    In 2012, we fully funded the Department's request for six 
fast response cutters. The Department sold this subcommittee on 
the fact that building six maximizes the production line and 
actually saves taxpayers $30 million when you get the 
efficiency of building a line and keeping the production going. 
It also obviously accelerates the delivery of these ships that 
are important in your priority.
    Last year's budget request indicated that another six were 
necessary, but the budget before us includes funding for only 
two. Yesterday, the House Appropriations Committee released 
their draft, and it includes funds for four. If our Senate bill 
would include funds for four or more, will you be in a position 
to award a contract for six, continuing the savings and the 
efficiencies that we tried to create last year, Admiral?
    Admiral Papp. Yes, Chairman, absolutely. It is 
regrettable--and I understand the confidence and the support 
that you gave the Coast Guard by putting six patrol boats in 
last year's budget. Unfortunately, in trying to fit within the 
top line this year, acquisition funding was reduced by 20 
percent.
    I was forced into a position of having to maintain the 
minimum production levels in all our acquisition projects just 
to keep the lines going so that we don't have to restart lines 
later on at great cost. So I admit that it is a little bit of a 
shell game. What I did was I fit in as many things as I could 
and ended up with two FRCs in the fiscal year 2013 budget. And 
I was hopeful that we would get permission to be able to use 
the 2012 money to keep the production line going at at least 
four per year.
    But given the scenario that you have suggested here from 
the House mark, absolutely. If there are four FRCs in the 2013 
budget, that will allow me to execute six this year. And that 
is absolutely the way ships should be produced.
    You give the shipbuilder a constant stream of funding or a 
predictable stream of funding. They can keep their employees 
on. They can buy long-lead time parts. It is the most efficient 
way to run a shipyard. Much the same way as we need to run the 
national security cutter program as well at Huntington Ingalls. 
They need to have predictability and a steady funding stream, 
so that we can get the best efficiencies and get the best price 
for the taxpayer as we build these ships.

       NATIONAL SECURITY CUTTERS: POSSIBLE SHARED FLEET WITH NAVY

    Senator Landrieu. Thank you, and that leads into my exact 
second question with the national security cutter, which is 
built across the road in Mississippi. It is the most capable 
ship of the Coast Guard's recapitalization surface fleet. Each 
NSC is 418 feet long with an operational range of 12,000 
nautical miles. It can remain at sea for over 2 months. The 
budget request includes funding for the sixth, but no funding 
is projected for out-years for the final two.
    I know in the past that you have testified that Nos. 7 and 
8 are necessary to meet your requirements. When Secretary 
Napolitano testified before the subcommittee in March, she 
said, ``Before moving ahead on Nos. 7 and 8, we want to make 
sure we are coordinated with the Navy.'' Her point was to make 
sure the Coast Guard and the Navy fleets are not duplicative 
and complement each other.
    Have you talked with the Chief of Naval Operations about 
your respective fleet plans? Did your conversation provide more 
clarity on the need for Nos. 7 and 8? And what are the impacts 
to our Nation if Nos. 7 and 8 are not built?
    Admiral Papp. The answer to your immediate question, 
Chairman, yes, I have spoken with Admiral Greenert. We meet 
regularly. We see each other usually about twice per week. But 
we held a specific meeting to discuss shipbuilding in 
particular to make sure that both of our services are giving 
the American citizens the best return on their investment.
    And last week, even though I was still recovering, our 
staffs got together, and they compared our shipbuilding 
programs as well. And what we have determined is that the Navy 
is building ships that the Navy needs. The Coast Guard is 
building ships that the Coast Guard needs.
    And while these fleets are complementary, for best service 
to the American people, we need to be able to be interoperable, 
share some systems. So that if the worst case happens, Coast 
Guard cutters can be used to support the Navy, and likewise 
under domestic or security situations, Navy assets can help 
supplement the Coast Guard. So what we do is we build 
complementary vessels. But I can assure you they are 
nonredundant.
    If you ask the Chief of Naval Operations, I am sure he will 
tell you he doesn't have enough ships to do all the thing he 
needs to do. And I will tell you that I don't have enough ships 
to do all the things I need to do.
    As regards Nos. 7 and 8, I actually see a ray of optimism 
there. The fact of the matter is it remains the program of 
record, eight national security cutters, and Secretary 
Napolitano has confirmed that. And in fact, Nos. 7 and 8 are 
listed in the 5-year plan, and it is regrettable there are 
zeroes under there. I would like that to be different.
    But having said that, when I look at the cumulative figures 
that have been projected by the administration and our 5-year 
plan, it really brings us closer to the level of funding that I 
think is adequate to recapitalize the Coast Guard. In fiscal 
year 2014, it calls for almost $1.5 billion.
    I have gone on record saying that I think the Coast Guard 
needs closer to $2 billion per year to recapitalize, do proper 
recapitalization. And over that 5-year period, we build up to 
$1.7 billion. So a ray of hope for me is that we are getting 
closer to what we need to recapitalize the service.
    As regards the figures within the columns for each one of 
those years, I think we all know that, year to year, that is a 
negotiation process. It is a projection, but every year it 
seems to change.
    So what the Secretary has done is she has said we need to 
compare with the Navy. We need to make sure that we are not 
building something that is redundant, that is an unfair burden 
on the taxpayers because the Navy can do it or vice versa. And 
I think that we have determined in my discussions with the 
Chief of Naval Operations that we are not.
    Senator Landrieu. Okay. I really appreciate that 
clarification.
    I am going to turn it over to Senator Lautenberg in a 
minute. But because the three of us serve on the Appropriations 
Committee, I wanted to say this because I think my colleagues 
are well aware of this.
    I think the American people will continue to be surprised 
that the United States of America does not have a capital 
budget. I think the American people are just learning about how 
our budgets either operate or don't operate. I think they would 
be really shocked and somewhat disappointed that we don't have 
a capital budget.
    I represented the State of Louisiana for many years. I 
served as a legislator and appropriator and a State treasurer. 
Senator Lautenberg has experience. Obviously, Senator Murkowski 
served as a leader in your house, did you not, Senator?
    I mean, we had an operating budget. We had a capital 
budget. And so, for long-lead time things that we built, that 
took years to build, we would put in our capital budgets, 
managed our debt, maintained it, had an operational balanced 
budget.
    When I look at what I am going to have to fund as the chair 
of this subcommittee in homeland security in terms of really 
big-ticket items--like finding the funding for your icebreaker 
that costs, what, $1 billion plus? Eight hundred to $900 
million. We have got to build an icebreaker. We have to build 
that icebreaker.
    We also have to finish the headquarters complex. Now that 
could be some people might think yes or no. But you have got a 
new department that is very important. They need to have a 
building to operate. That has been put on hold.
    So these big capital projects. And then I have got several 
members of my subcommittee clamoring to build a $1 billion bio, 
what is it, agriculture bio in Kansas. And they want me to fund 
this out of our operating budget for homeland security?
    I don't know, Senator. I mean, it is not for the 
discussion. But you all can appreciate specifically--and I 
think we are going to have to do some more things for Alaska, 
given the activity that is going on in Alaska, which has not 
been there for the last 50 or 100 or ever, I mean, since they 
came into statehood.
    I could do a whole hearing on offshore Alaska and take up 
hours discussing it, which I might do, Senator Murkowski. So we 
can explain to people what is actually happening up your way.
    But anyway, this is a great challenge for our subcommittee. 
I am open to suggestions, and I thank you for trying to be as 
efficient as you can be. But at some point, Senator Lautenberg, 
we are going to have to bring this to the attention of our 
chairman.
    But let me turn it over to Senator Lautenberg now.

                         BAYONNE BRIDGE PROJECT

    Senator Lautenberg. Thanks very much, Senator Landrieu. 
Spoken like a true leader.
    I had a long business career before I got here. And capital 
budgets, you have an opportunity to amortize your investment 
over the life of the article, and so it reduces the need for 
cash on a constant basis and is more in keeping with the 
standard accounting procedures and giving us some latitude.
    I look at the things that you are asked to do in the Coast 
Guard, and there is never a place almost that your people and 
your organization can't be of help, whether it is moving into a 
combat zone, whether it is helping in the case of landings or 
knowledge or what have you.
    And the world is changing around us. Even though some here 
don't believe that global warming is happening, the fact of the 
matter is that it is happening, and it is happening in a way 
that will create more demand for Coast Guard presence.
    And I know that Senator Murkowski is very conscious of what 
is happening up near Alaska with the ships of other countries 
now getting into places that were not available to them before. 
So you have to be a bit of a magician, Admiral, and we are 
going to try to help you get the goods.
    As mentioned, the Bayonne Bridge in New Jersey is there, 
will be there to accommodate larger ships coming through the 
Panama Canal 2014, and it is essential to our region's economy 
and to our Nation's economy. And while we want a thorough 
environmental review, Admiral, we want it done as quickly as 
possible.
    As a leader of the review process, can you commit to 
working with us, with me to expedite consideration of this 
project?
    Admiral Papp. Senator Lautenberg, I certainly do. We are 
committed to working that project as quickly as possible. We 
are already at work with the Port Authority and the local 
agencies. I, myself, understand the value of that project, 
having cut my teeth as a young officer working in Kill Van Kull 
and Newark Bay underneath that same Bayonne Bridge that needs 
to be replaced.
    And I remember how tight it was there for ships even, I 
hate to say, 25 to 30 years ago when I was working there to get 
through that area. So that bridge, we wondered at that time, it 
probably should have been replaced then. So it is certainly in 
need of replacement now in order to keep the Port of Newark 
viable up there.
    So we understand the importance, and I commit to you to 
track this and work with my people up in that area to make sure 
that we are moving this along as quickly as possible.
    Senator Lautenberg. Thank you. More than 3 million vehicles 
cross the Bayonne Bridge every year. They connect two roads in 
the National Highway System. The Coast Guard is the lead agency 
on the Federal review, but the Department of Transportation 
(DOT) also is a key player. What steps are taken to involve DOT 
in this review process, Admiral?
    Admiral Papp. We work with the Department of Transportation 
very closely. Being our legacy department, we still have many 
contacts, and we have liaisons over there.
    And currently, we are working on a very important project 
out on the Columbia River right now. And Secretary LaHood and I 
met with the Oregon and Washington State delegations to make 
sure that we are keeping that project going along. So we have 
contact at the highest levels and at the working level of the 
DOT to make sure that these high-priority projects get the 
proper attention.

                      FULFILLING CRITICAL MISSIONS

    Senator Lautenberg. This budget has its shortcomings. We 
take whatever we can get, but doesn't mean we have to be happy 
along the way. You are having a difficult time, you said, 
meeting all the Coast Guard's missions under the current 
budget.
    Now how will the Coast Guard fulfill its critical missions 
if automatic spending cuts further reduce your budget next 
year?
    Admiral Papp. Senator, I simply do not know. I mean, I can 
give you a lot of hyperbole right now talking about massive 
cuts, massive decommissionings of ships, and all of that is 
true. I don't have the details. Quite frankly, it is a 
nightmare scenario for us.
    It would cause us to have to reduce our force 
significantly. I am not talking about 1,000 people like in this 
budget. It would be multiple thousands of people from the Coast 
Guard and likely front-line operational units that would have 
to be decommissioned, perhaps training centers.
    It would be going back to some of the things that we were 
confronting in the late 1990s as our budget was whittled down 
over time.

                           DRUG INTERDICTION

    Senator Lautenberg. Madam Chairman, we have to fight our 
way to not let that happen. And I am sure, Senator Murkowski, 
you agree. We are both water-contacted States. Not quite as 
much as you, but little New Jersey has got a lot of coastline 
for the size of the land mass.
    The new things that occur outside of your bailiwick that 
fall to further responsibilities for you. You mentioned these 
drug subs and people out there trying to create ways to get 
past the Coast Guard's purview and the rest of our law 
enforcement organizations. And according to the military, 
limited resources allow for only one-third of the drug 
shipments that the United States knows about to be intercepted.
    Now you said recently the Coast Guard will likely have to 
reduce its drug interdiction role in Latin America with limited 
resources. Now we pay for these deficiencies, one way or 
another. We pay for it in advance and prepare ourselves to stop 
these things before they become problems in both pain and 
suffering in so many ways.
    Costs continue to be there, whether it is incarceration or 
trials or whatever. And if we can cut the supply short before 
it gets here, we are a lot better off. If the Coast Guard's 
role is reduced, what is going to be the impact on our ability 
to prevent drugs from entering?
    Admiral Papp. Sir, this is one of those scenarios that 
doesn't make sense to me. I talked about the drug sub that we 
interdicted just this last month. There was another one just a 
couple of weeks ahead of that where we got 2 tons of cocaine, 
which we actually seized. We estimate in this sub, because they 
scuttled it, but ordinarily those that we have captured carry 
around 5 tons of cocaine.
    We interdict or stop, the Coast Guard, in the transit zone 
between South America and where it enters Central America 
annually roughly about 100 tons of pure cocaine. There is about 
700 tons that are produced in South America. There is a market 
for about 400 tons in the United States. We interdict about 100 
tons.
    The entire law enforcement establishment of the United 
States in the lower 48--Federal, State, and local--only seize 
40 tons each year. So if we can take it out of the transit zone 
before it reaches Central America, where it destabilizes 
countries and creates violence, and that violence is 
approaching our southwest borders, I think we are much better 
off.
    But the only way we can do that is by having substantial 
offshore cutters that we can deploy down to the deep Caribbean 
and to the Eastern Pacific to sit off Colombia and the other 
surrounding countries to interdict those vessels as they try to 
make their way up to Central America. Ninety percent of the 
cocaine produced goes by maritime routes.
    We know at least through South America; it has to transit 
the maritime to get into Central America. And as you say, out 
of all the intelligence that we have queued, we are only able 
to prosecute about 30 percent of that intelligence.
    Senator Lautenberg. Thanks very much, Admiral. Keep the 
ports tight and ready, and we will try to give you the 
equipment and you bring the spirit. Thank you very much.
    Admiral Papp. Thank you, Senator.
    Senator Landrieu. Senator Murkowski.

                              ICEBREAKERS

    Senator Murkowski. Thank you, Madam Chairman.
    And you remind us all, and I think this bears repeating, 
that what we are seeing in the Arctic right now is absolutely 
unprecedented, unprecedented in our Nation's history, in the 
history of the globe. Because what we are seeing is we are 
seeing more water up there. And as Admiral Allen said before 
you, Admiral Papp, I don't know whether it is climate change or 
what it is, but all I know is that the Coast Guard has more 
water that we are in charge of.
    So what we have done with our Coast Guard is the mission 
has expanded because we are seeing a change in the Arctic. We 
are seeing more water that the Coast Guard is now charged with, 
and yet what we haven't done as a Congress is step up to that 
responsibility, acknowledge that as an Arctic nation, we need 
to have an icebreaker. We haven't stepped forward with the 
resources necessary or the manpower or the assets.
    And so, we have got to recognize our role here and provide 
the requisite support for our Coast Guard. As I mentioned in my 
opening comments, Admiral, you have stated that the United 
States is behind the power curve regarding the Arctic. There 
was a Naval War College Gaming Department report that found 
that the Navy is also woefully unprepared and ill-equipped for 
activities in the Arctic.
    So we have got a situation here, whether it is potential 
for resource development that we are hopeful we will move 
forward this summer, or whether it is the increased traffic 
that we are seeing with just commercial activities and 
container ships moving minerals from Russia, moving through the 
straits there, or whether it is cruise ship activity, there is 
greatly stepped up activity in the north.
    So, Admiral, I would ask you to dream just a little bit for 
me. And I know that you are hesitant to say truly what you 
need. But as an Arctic nation, we don't have icebreaking 
capacity right now. The Polar Sea is being decommissioned. The 
Polar Star is being refurbished. She will be back in the waters 
in 1.5 years, but she has got a limited life expectancy, I 
understand, of just about another 10 years.
    We have got the Healy that is our research medium-strength 
cutter, but we don't have any icebreakers. What do we need as 
an Arctic nation to meet the responsibilities that we have?
    Admiral Papp. Senator, part of the problem is, you and I 
understand that we are an Arctic nation. It is hard to get the 
rest of the Nation's attention on----
    Senator Murkowski. So if you and I were in charge?
    Admiral Papp. First of all is educating people. This chart 
that I put down in front of you, the Chief of Naval Operations 
had an equivalent chart as well, and he showed where all his 
threats are. And one of the things that I found interesting is 
he had a little symbol for chokepoints. In other words, in the 
Straits of Malacca, in the Straits of Gibraltar, and other 
places, he had these symbols that indicate that they were 
chokepoints. And those are very important to freedom of the 
seas for the United States.
    And when I looked across his chart, I said you missed two 
key areas. And he said what do you mean? I said the Bering 
Strait and Unimak Pass. For our Nation's prosperity, those are 
two key chokepoints, but the Chief of Naval Operations for the 
United States didn't even recognize that because there are no 
threats for him to deal with up there at present.
    Senator Murkowski. And if we could just tell our colleagues 
here that with there, the Bering Straits, as I understand, is 
about 52, 57 miles, or something like that?
    Admiral Papp. That is about it between us and Russia, yes, 
ma'am.
    Senator Murkowski. Pretty close.
    Admiral Papp. And Unimak Pass, which is even less than 
that, between two islands is on the great circle route between 
the Asian Pacific and our west coast ports, and there are 
literally thousands of ships that transit through there, 
carrying fuel and other things that put us at risk for 
environmental disasters, sinkings, and other things.
    So these are key issues for the U.S. Coast Guard.
    Senator Murkowski. So how many ships, how many icebreakers 
do we need?
    Admiral Papp. Icebreakers, we have done a study. Our high-
latitude study said that, optimally, we should have three heavy 
icebreakers and three medium icebreakers. But that is also 
because we have responsibilities in Antarctica right now as 
well.
    With our present laydown of icebreakers, we are at an at-
risk position. In fact, I lucked out this particular year or we 
lucked out because the National Science Foundation lost their 
lease for the Swedish icebreaker that they were contracting to 
break out McMurdo in Antarctica this year, and they came to me 
and asked if I would change Healy's operational schedule and 
deploy Healy down to Antarctica.
    And my response was, no, I wanted to keep Healy close 
because we are at an at-risk position. And then, lo and behold, 
we had Nome freeze in, and we had to do that emergency fuel 
delivery----
    Senator Murkowski. We appreciate your foresight in not 
sending Healy down south.
    Admiral Papp. I am delighted that I don't have to sit here 
today and explain to you why Healy was in Antarctica when Nome 
was starving for fuel. But the truth of the matter is we simply 
lucked out.
    Senator Murkowski. Let me just finish up then because my 
time has expired here. We have got $8 million now in the budget 
requested for the study and the design of the new icebreaker. I 
have indicated to my colleague that it is somewhere between 
$800 million and $900 million, an 8-year build-out for an 
icebreaker.
    Can you give me a little bit of detail in terms of what is 
next in the acquisition process, what we can realistically 
expect in terms of a timeframe for a new icebreaker to be 
launched?
    Admiral Papp. Yes, ma'am. I would say the $8 million is a 
good start. Survey and design. We need to survey the 
interagency. This is not just a Coast Guard icebreaker. It is a 
United States icebreaker and a very valuable asset to this 
country.
    So we need to make sure that the Department of Defense is 
served, the National Science Foundation is served, the 
Department of the Interior is served. We need to reach out 
across the interagency to make sure we are making 
accommodations for everybody. We didn't necessarily do that in 
the past.
    Although Polar Star and Polar Sea were the best icebreakers 
in the world 30 years ago, they weren't really conducive for 
some of the things that the National Science Foundation has to 
do and other agencies. We built great icebreakers, but they 
weren't necessarily great scientific vessels.
    So if we are going to invest this much of our taxpayers' 
money, we really need the time to go across the interagency. 
Nobody really comes together until you have some money in hand. 
We now have the money in hand. People will come. We will 
consult with the interagency and come up with the design that 
best serves the United States.
    Given that deliberative process and our current acquisition 
rules, I would say that 10 years is probably a reasonable time 
period to figure before we have that ship delivered and able to 
start operations. That is why we have invested in Polar Star, 
to return her to service, so that we can gap that period for at 
least 10 years until we get the new icebreaker in the water.
    Senator Murkowski. I appreciate your statement there, 
Admiral, and I recognize the difficulties. I think we do want 
to make sure that we have got good design that does fit well 
with the needs that are out there.
    But I think we are doing a better job in terms of reminding 
people that we do have responsibilities as an Arctic nation, 
and that we are unprepared. And what can we do to expedite the 
process? What can we do to perhaps look to different 
alternatives?
    And that is why I mentioned in my opening comments, maybe 
it is time that we look to some of the other alternatives that 
might be out there in the private sector. I know that leasing 
is something that the Coast Guard has said you have got some 
real reservations about. But given what we are dealing with 
with budget issues and dealing with the time period that we are 
all talking about here, it causes me to wonder.
    Because I don't want us to be sitting 5 years from now not 
being able to meet the needs and wishing that we had done 
something either interim or had tried to expedite the process. 
I think we are all very concerned that we have got some real 
gaps currently, and how we deal with that is going to be very, 
very critical.
    Admiral Papp. Yes, ma'am. And I didn't want to leave you 
with the thought that I am not open to other ideas. I am. It 
has been suggested on the House side as well, and we will look 
at the leasing opportunities and assess how that works.
    I have just watched Shell Oil go out and get one built very 
quickly. It may not be the type of icebreaker that we would 
want. But on the other hand, you can get it done quickly. And 
if we can get it done quickly for less money, we are always 
open to something like that. So we will investigate that 
possibility.
    Senator Murkowski. Appreciate that. I will have more 
questions in the next round.
    Thank you, Madam Chair.
    Senator Landrieu. Thank you, Senator.

                     INNOVATIVE FINANCING SOLUTIONS

    And that really leads into the question that I wanted to 
ask about options for meeting the challenge that we have. We 
have already made it clear that the need is there. The budget, 
as we have been budgeting, is not going to meet that need.
    So I am either going to do two things. We are either going 
to create a capital budget for this subcommittee, or we are 
going to look for some innovative financing solutions. And I 
would like you to talk for 1 minute about innovative financing 
solutions that either the Coast Guard has considered or you 
have observed the Navy.
    And you don't have to go into too much detail, but give us 
some idea that there might be a way or two out of the situation 
that we are in. Take 1 minute or 2 to describe what you are 
hearing or what you are observing, what you consider, and if 
you have the current authority to do that. And if not, do you 
need this subcommittee or another committee to provide you with 
the authority you need?
    Admiral Papp. Thank you, Chairman.
    Going back to your last round of questioning and the 
statement you made about the capital investment plan and your 
comments now, a point that I would like to make is you 
frequently use the word ``leadership.'' And I think that is a 
key element to all of this that you are talking about.
    Leaders have to be concerned about year-to-year, but if you 
are a true leader and not a manager, you are looking out. You 
have vision. You have a plan. You take your service or your 
agency, you have an objective 10, 20, 30, or 40 years down the 
road that you are building toward because you have to have that 
vision to take into consideration the potential threats that 
your country is going to face along the line.
    The challenge for leaders in this town is we are consumed 
by people whose vision only goes from year-to-year. And we 
spend about 75 percent of our time dealing with people who do 
not have vision, that only focus on year-to-year challenges and 
how to fit within a top line, and it consumes us.
    If we had some way to have stable, predictable, consistent 
funding for our projects, you gain the efficiencies of being 
able to transfer that to industry, which looks for stable, 
consistent, predictable funding for the projects and their 
workforces and their capital plans all along the line.
    Part of the challenge that I face is in order to comply 
with A-11 requirements, we have in the past had to try to fit 
entire costs of one ship into one budget year. And when the 
total cost, long-lead production and post-production cost for, 
let us say, a national security cutter gets up in the vicinity 
of about $700 million, and I am only getting $1.2 billion or 
$1.4 billion in acquisition money, that is half our acquisition 
budget right there.
    Senator Landrieu. So what is an alternative? I mean, just 
roughly. I mean, some other countries must be experiencing some 
of these challenges. The private sector experiences some 
similar challenges.
    So what are some options that you hear about? Is a leasing 
arrangement possible? And if so, are you authorized to consider 
it, or do you need new authorizations?
    Admiral Papp. I will have to get back to you for the record 
on that. We are looking at that because the question has come 
up so often, and I think we are----
    Senator Landrieu. I appreciate you taking a look at it.
    Admiral Papp. We are all a little reluctant. I mean, I have 
leased cars in the past. And I spend a lot of money, and at the 
end of 3 years, I don't have a car.
    So the Coast Guard's practice, because of our funding 
levels for two centuries now, is we generally get a lot more 
out of our assets than any other agency. There is no other navy 
in the world, certainly not the U.S. Navy, that would keep 
ships like ours around 40, 45 years. They are generally 
decommissioned at about 25 years.
    So we have this mindset of taking care of things for long 
periods of time. Maybe there is a better way of doing it. 
Getting for short term and then turning around and getting 
newer things. But we will----
    Senator Landrieu. Okay. I just want you to know that this 
subcommittee is not interested in managing on the margins. Our 
subcommittee is interested in helping you build the Coast Guard 
we need for the country. And in that, I need you to provide us 
with some options and some information.
    [The information follows:]

    For purposes of executing the duties and functions of the Coast 
Guard, the Secretary of the Department of Homeland Security, under 14 
U.S.C. 92, may within the limits of available appropriations ``design 
or cause to be designed, cause to be constructed, accept as gift, or 
otherwise acquire vessels. . . .'' The Federal Acquisition Regulation 
defines ``acquisition'' as ``acquiring by contract with appropriated 
funds supplies or services. . . . by and through purchase or lease.  . 
. .'' The Federal Acquisition Regulation further provides that leasing 
is appropriate if entering into a lease is advantageous to the 
Government. These basic authorities establish that the Secretary has 
the ability to acquire a vessel for the Coast Guard, through a lease 
arrangement. Whether a lease is advantageous must be evaluated based on 
a host of factors, including the likelihood of sufficient budget 
authority and funding to support the lease, and the comparative costs 
between leasing and outright purchase.
    While there are ways to mitigate risks and costs associated with 
leasing, the reality for the Coast Guard is that given the need for a 
domestic producer to design and construct a specific vessel unique to 
Coast Guard multi-mission requirements, the risks are enormous for the 
shipbuilder. The shipbuilder will seek to shift those risks and costs 
to the Coast Guard. That dynamic is likely to undermine many of the 
advantages the Coast Guard would seek to exploit by pursuing a lease.
    The Coast Guard has traditionally acquired its capital assets 
through procurement. This approach is undertaken primarily due to the 
length of time the Coast Guard maintains these assets in service. For 
example, the majority of the Coast Guard's major cutters have been in 
service for more than 40 years, which from a business case perspective, 
generally makes acquisition more cost effective than leasing.

    Senator Landrieu. I think Senator Murkowski and I are in a 
great position in the leadership positions that we hold, both 
on Appropriations and Energy, et cetera, to think outside of 
the box and to make some things happen. I have no intention of 
serving as chairman of the Homeland Security Committee and 
operating around the margins.
    I will not be constrained by the current nonsense that I 
hear about the budget of the United States. And so, while I 
realize that resources are limited, ideas are not limited. And 
dreams are not limited, and new approaches aren't limited. And 
so, we are going to explore them because I intend to build and 
support the Coast Guard the country needs.
    We can't close our eyes to the things happening around the 
world. I mean, what the Senator described in Alaska, whether 
people acknowledge it or not has no bearing on whether it is 
true. I mean, it is true, period. Their acknowledgment of it or 
their education of it matters nothing to me because we know 
what we have to do.
    And when I look at the budget that I have, I honestly have 
to say I can't do it, and I am not prepared to not do it. So I 
have really got a big challenge here, and I need you to help 
me.

                   HOUSING AND CHILD CARE FACILITIES

    Let me just move to one more question and then I am going 
to submit the rest for writing. But I am very interested in 
this issue. First Lady Michelle Obama and Dr. Biden have spent 
a lot of their time on something that I think is very 
important, and that is really meeting our commitment to the men 
and women in the military by caring for their families.
    Everybody I have ever met that served in any service has 
said to me over and over again, and I am sure, Senator, to you. 
``Please, Senator, don't worry about me. I want you to take 
care of my spouse. I want you to take care of my children.''
    So I have taken that to heart, and we have tried to focus 
some efforts as appropriators on housing, on daycare, on good 
education systems for our men and women in uniform. I am sure 
that the men and women of the Coast Guard tell you the same 
thing.
    So, in our budget last year, we plussed up a little bit 
what we could on our daycare and our education. But unlike the 
Army and the Navy, of which I serve on the Milcon subcommittee, 
which are in cities and near urban areas, the Coast Guard finds 
itself in very rural areas, just by the nature of your mission.
    I mean, you are on the coast. Sometimes there are big 
cities there, but sometimes, often--and I am sure this is true 
in Alaska--it is very rural. So what are we doing to help our 
Coast Guard families? Could we suggest some things, some new 
opportunities for financing, and how tough is the situation 
that you are facing?
    And if you could sort of describe the general housing that 
your Coast Guard people and families are living in. Is it very 
good? Is it mediocre? Is it very poor? If you could help us 
understand what we might be able to do because we want to make 
sure our families are safe and that we really do honor their 
service by providing them a safe and adequate place to live.
    Admiral Papp. Thank you, ma'am.
    I think, as you know, my wife Linda and I have taken this 
to heart. Two of our highest-priority projects that we have 
been working in all the extra time that we have in our visits 
as we travel around the country is housing for our people and 
getting proper child care facilities for our people as well.
    That is why we so deeply appreciated the plus-up that we 
received last year, and we have put that to good use. We have 
lowered cost for our junior families to be able to put their 
children in child care centers. We have brought on new 
instructors. We have trained people so that they can do at-home 
daycare as well. We have also had the opportunity to take on a 
couple of housing projects that we desperately need.
    But I would categorize housing for our people, because that 
is a specific question, I would say mediocre to poor for the 
most part, particularly when you compare it to what the 
Department of Defense has. And I will qualify that by saying 
that we have been able to take advantage of, in numerous areas 
now, the authorities that the Department of Defense has for 
public-private ventures.
    I was just out in the 14th Coast Guard district, Hawaii, 
recently to do some official visits out there. We transferred 
property. It used to be the Coast Guard Red Hill housing area. 
We transferred that property to the Army, and the Army took it 
over as the manager. The Army used its authorities, and it 
built brand-new houses. And I toured a couple of those.
    Senator Landrieu. Aren't they amazing?
    Admiral Papp. I am proud to say our Coast Guard people live 
in those houses. I, myself, live in a public-private venture 
house. Now we sold the Commandant's home that we had for 40 
years, and we went public-private venture with the Air Force 
over at Bolling. So I know the benefits of that process.
    The challenge for the Coast Guard is we will never have 
enough money in our budget to be able to score against 
contracts. Plus, it is hard to get contractors to come in 
because we are so widely dispersed. They really need a large 
focused area. That is why we are using the Department of 
Defense, and I think that is the best route for us right now.
    We are doing it in Puerto Rico. We are doing it in the 
Alameda area, San Francisco area and, as I said, out in Hawaii, 
and it is working very well for us.
    To take care of that mediocre to poor housing, we have 
taken some of our money, and we have done a complete survey of 
all our housing across the Coast Guard. We will probably divest 
ourselves of some of that poor housing in order to take the 
limited resources that we have and improve the mediocre up to 
good.
    And we are well into that project. We have created a 
project line at one of our civil engineering units that is 
focused solely on our Coast Guard housing, and we are moving 
out smartly to make sure that we do better for our people.
    In Alaska, for instance in Juneau, we found that there were 
people waiting 6 months for housing up there in some cases. And 
we have now instituted Government leases, and we have relieved 
that challenge that we face. So it is a multivariable problem 
for us that we are confronted with because we are so widely 
dispersed and that we don't have the same authorities as the 
Department of Defense.
    One of the other things that we are very proud of as well 
is we have taken our limited money, and some of our commanding 
officers out there have initiated self-help projects. Our 
people who live in the housing, with limited funding that we 
have to buy paint and materials, have done self-help projects 
and done significant repairs and improvements to the housing.
    We had hoped to be able to take the proceeds from the sales 
of Coast Guard properties like the Commandant's house. We sold 
the Commandant's house for nearly $2 million. And we thought 
that that was going to go in a revolving fund that we would be 
able to then take out and use for improvements to the housing 
that we already own.
    What I have discovered is the way the law was written or 
the bill was written, it is a little challenging, and it gets 
scored against our other budget. So we have got that money in 
escrow right now, and we are investigating to see what we need 
to do to----
    Senator Landrieu. I am going to help you fix that, and I am 
going to put language in my bill to make sure that when you 
sell surplus property, you get to keep the proceeds to invest 
back into your housing. And I don't know how much pushback I am 
going to get, but I am going to try to do it.
    Senator Murkowski, go ahead.

                       SHORE-SIDE SUPPORT ASSETS

    Senator Murkowski. Thank you, Madam Chairman.
    I appreciate that you brought up the quality of life issues 
and what we are doing for our families. And Admiral, please 
convey my personal thanks to your wife. Linda has taken a true 
leadership role and in doing I think a very considerable reach-
out to the families and to look at issues that I think we 
recognize is the quality of life things that will keep our men 
and women within the Coast Guard. So it is very, very 
important.
    And I would also be remiss if I did not acknowledge the 
very difficult situation that the men and women in Kodiak are 
facing currently. We had a double homicide on the Kodiak air 
base there that is as yet unresolved. And in a small island 
community like Kodiak, it is, I think, quite nerve-wracking for 
the families concerned about their security.
    I know the Federal agencies are working hard and with the 
great help of the Coast Guard to try to resolve this. But when 
we talk about the health and safety, I think we are always 
concerned when there is something of this nature. So my 
thoughts and prayers go out to all those that are working so 
hard to resolve this.
    I have spent most of my focus this morning on the issue of 
icebreakers, but I think we recognize that we are also going to 
require some shore-side support facilities, both for surface 
and afloat assets. Contained within your budget here is support 
for the shore-side facility, $6.1 million to recapitalize and 
expand the hangar facilities there in Cold Bay and also the 
refueling facilities there at Sitkinak. Very important.
    But I think it is important for people to understand that 
when we are talking about servicing, using our helicopters 
going from Kodiak to respond up to Barrow, it would be the 
equivalent, if you will, of basing yourself in Miami and flying 
across to San Diego to respond. This is what we are talking 
about.
    And so, not only are our helicopter assets limited, but 
where do you stop to fuel up? How do you get from point A to 
point B when the weather is difficult? So having these 
additional facilities, I think, is going to be key and will be 
part of what we have to move forward in the Arctic.
    We have got community leaders, as you know, in spots along 
the Northwest that are all advocating for improved 
infrastructure, whether it is Nome or Kotzebue, Port Clarence, 
the other locations that are willing to help meet the needs of 
this changing Arctic, focus on the deepwater port, and the 
study that we are all awaiting.
    And I guess the question to you this morning, Admiral, on 
that is what is the Coast Guard's involvement at this point in 
time in the planning for these locations? Are you working with 
the Corps of Engineers on this? Where are we with regards to 
the deepwater port, as well as some of the onshore 
infrastructure, the shore-side assets that we are talking 
about?
    Admiral Papp. Right. As far as the deepwater port project 
goes, certainly that is of interest to me because we are going 
to be increasingly sending our ships, our aircraft, our people 
up there, and we need a means of support for them as well. I 
will admit to you that I don't have the details of where we are 
as of today.
    Admiral Ostebo and his folks up in Juneau and Anchorage 
have been monitoring and working with the Corps of Engineers 
and the State to look at recommendations and make 
determinations as to where we should go up there.
    Senator Murkowski. Who is the lead agency on that? Is it 
the Corps of Engineers? Is it Coast Guard? Do you know?
    Admiral Papp. My belief--it would be the Corps of 
Engineers--is inevitably, whatever you have to do, there is 
going to be structures that are placed in the water, perhaps 
some dredging that has to occur. And all of that is a challenge 
up there for any one of those ports.
    Senator Murkowski. And it may just be that I need to visit 
with Admiral Ostebo myself and just get a better understanding 
in terms of where we are. Because I have streams of folks 
coming in, wanting to know where we are, whether or not--
wherever it is Nome, Kotzebue, Port Clarence, wherever, what 
the situation is on the ground. And I would like to have a 
little better understanding.
    At a minimum, I think what I would like is to know what the 
requirements are for the deepwater port, the pier service 
location because it may be if we know what the requirements are 
ahead of time, you will have communities say, we can't meet 
that or we can meet that. So that they know whether or not 
there is more that they might be able to offer up. Are you 
aware of whether or not we have pinned any of that down yet?
    Admiral Papp. No, we haven't. And quite frankly, what I 
have been focused on is what are the infrastructure needs that 
the Coast Guard will need up there operating?
    Senator Murkowski. Right.
    Admiral Papp. We haven't projected any shore-side 
construction. I mean, at a minimum right now, there is a need 
for hangar space in Barrow.
    Senator Murkowski. Right.
    Admiral Papp. And we are not talking deepwater port when we 
talk that. But in terms of conducting Coast Guard operations, 
at some point in time, we are going to need a communications 
infrastructure across the North Slope. We are probably going to 
need expanded landing strip capability, tarmacs, a hangar, 
places to put people, all of which don't exist in Barrow right 
now, but that is the optimal spot for it.
    The challenge I face is I have probably about, right now as 
we speak, a $2 billion shore backlog of repairs and 
improvements needed for shore infrastructure, and we haven't 
even begun to consider what we might need on the North Slope up 
there. In this year's budget, I think we try to get about $200 
million a year in the budget to try chipping away at that 
backlog.
    Last year, we got close to $200 million. We are down to 
about $70 million because of tough tradeoffs we had to make in 
the budget this year. So, suffice it to say, we aren't making a 
lot of progress against that backlog, and it is very difficult 
to take on new projects for infrastructure as well.
    That is why it is so important for this national security 
cutter. For the foreseeable future--I would say the next 5 
years--we are going to be safe and secure up there during the 
months that Shell and the other companies are up there 
drilling, and the influx of people and ships that will bring. 
Because a national security cutter, quite frankly, is floating 
infrastructure.
    It has a flight deck. It has worldwide communications, 
command, and control. It can sustain itself for 90 or more days 
with fuel, water, and supplies that it brings on. And it is 
like having a sector Anchorage and being able to uproot it and 
sail it up there off the North Slope. So it will serve us well 
for the next 5 years or so as we start putting together plans 
for what we need for infrastructure up there in the Arctic.

                    NUMBER OF FAST RESPONSE CUTTERS

    Senator Murkowski. Yes, the national security cutters are 
incredibly impressive. Let me ask one more question, if I may, 
Madam Chairman, and then I will submit additional questions for 
the record.
    And this relates, too, to the fast response cutters. I 
guess the question would be what the ideal number is. It is my 
understanding that if we don't move forward with what I am 
assuming would be the ideal number out there, that the proposal 
currently, which is Ketchikan receiving two of the FRCs--and I 
understand also Hawaii would receive two additionally--that 
those are then not necessarily off the table, but for the 
foreseeable future we may not be seeing those assets coming 
north. Is that your understanding?
    Admiral Papp. I have high confidence that this project is 
going to continue through to completion. With this budget, we 
will be up to 20 of the fast response cutters of the 58 that we 
planned to build out in the program of record, and it has got 
great support. So I see us continuing.
    Now given the funding levels in any particular year, yes, 
there could be some delays in how they are and when they are 
delivered. We are hopeful that we can keep up the schedule that 
we currently have.
    Under the scenario that was given earlier, we put six back 
into 2012. And if we were to build four or more in 2013, that 
keeps us on track and moving along. It also gives us 
substantial savings as well. When you are building six per year 
down in Lockport, you are saving yourselves probably about, 
saving us and the taxpayers about $30 million a year.
    Senator Murkowski. And keeping that production moving is 
good again for the efficiencies, but there is also a real 
concern that if we do reduce it--you are talking about minimum 
production levels. If we go below those minimums, I think there 
is real concern about how we meet that ideal number, that 
number that I think you and I would agree is necessary to 
provide for the work that needs to be done.
    Admiral Papp. Yes, ma'am.
    Senator Murkowski. Thank you, Madam Chairman.

                     NATIONAL SECURITY CUTTER COST

    Senator Landrieu. Thank you, Senator.
    And I have just two brief questions. We are going to close 
out by 11:30 a.m.
    Following up the long-lead time on the national security 
cutter, our subcommittee included $77 million above the request 
for the Coast Guard to acquire long-lead time materials for 
national security cutter No. 6 in advance of production. We 
have talked about this, but I just want to be clear. How has 
this funding helped minimize the cost for the national security 
cutter?
    And if no funding is provided for NSC No. 7, will there be 
a likely break in production? And for each delay, what are the 
projected cost increases for those cutters?
    Admiral Papp. Yes. First of all, we are deeply appreciative 
that we received that $77 million last year. And in fact, just 
to show the efficiencies of having predictability and a funding 
stream and everything else, my recollection is we actually came 
in $2 million below that for the long-lead materials because 
they were able to gain some efficiencies through their 
purchasing processes, and we executed that.
    Having those materials on hand allows the ship to be 
constructed. Our estimate is between $30 million to $40 million 
in savings, and it gets us the ship delivered a year earlier. 
So if there is any break in subsequent funding for follow-on 
national security cutters, you can expect probably a cost 
increase, an every year delay of probably about 10 percent is 
what we estimate. And a commensurate delay in delivery.
    Senator Landrieu. Okay. Let me just close out with some 
comments about the Panama Canal because I think this is 
something that is also, Senator Murkowski, just game-changing 
for our country. I have some information here that I want to 
submit to the record about these new Panamax cruise ships.
    The length of the new Panamax cruise ship is 1,200 feet. 
The current lock, the length of the current, the old lock is 
1,050 feet. So when the new locks are built, the new locks are 
going to 1,400 feet to accommodate a new length for these huge 
cruise ships of 1,200 feet.
    So for people to understand, the cruise ships that are 
coming through, that want to come through the Panama Canal, 
physically cannot fit through the canal today, and that is why 
it is being expanded. In addition to the tremendous potential 
growth in cruise ships, which the Coast Guard is responsible--
not the Navy--but the Coast Guard is responsible for the safety 
of the souls on these cruise ships, and there are more and more 
souls now that are going to be on the cruise ships in the event 
that something would happen.
    You also, I think, have some obligation for any pollution 
or discharges that are illegal. And it is growing industry of 
which your State, of course, benefits. So does my State. But 
these are the kinds of extraordinary changes that are taking 
place that I don't think our budgets, Senator, are preparing us 
to accommodate.
    This is just one industry. This isn't the cargo. The large, 
large containers of cargo that are going to be unloading three 
times to four times the amount of the containers. So I know we 
have a real challenge before our budget, and I am not going to 
spend the next 5 years, 6 years, or 10 years, as long as I am 
here, nibbling around the margins. Not going to happen.
    So we are going to have to find a way forward that 
accommodates the reality of industry and life and challenges in 
the United States, and we have a big job to do.

                     ADDITIONAL COMMITTEE QUESTIONS

    So I thank you, Admiral, for your testimony. Please submit 
anything else about the Panama Canal for the record, about 
Alaska, about our lease opportunities, about new ways of doing 
things, because we obviously can't continue to put the pencil 
to this budget and wake up in 20 years and think we have done 
our job. Because our job will not have been done well.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
            Questions Submitted by Senator Mary L. Landrieu
                     support for military families
    Question. Last year, First Lady Michelle Obama and Dr. Jill Biden 
launched efforts to strengthen support for military families and set 
four strategic priorities:
  --Enhance the psychological health of the military family;
  --Ensure excellence in military children's education and development;
  --Develop career and educational opportunities for military spouses; 
        and
  --Improve the quality and availability of child care services.
    In fiscal year 2012, we included $9.3 million to help Coast Guard 
families offset the costs for child care. We also included $20 million 
to address a shortage of military housing in areas where there is a 
lack of affordable accommodations.
    Can you describe what the Coast Guard is doing to make additional 
improvements in these areas?
    Answer. The Coast Guard is using the fiscal year 2012 appropriation 
of $20 million to build 15 family units and complete initial site work 
for future phases of housing construction in Columbia River Astoria, 
Oregon and renovate one wing of unaccompanied personnel housing to meet 
current construction code and habitability standards in Cape Cod, 
Massachusetts. These two initiatives will enable the Coast Guard to 
address critical housing shortfalls affecting military family readiness 
and provide for the well-being of our junior enlisted personnel. 
Additionally, the Coast Guard leases residential housing for military 
families in locations that lack adequate affordable housing, and most 
recently entered into leases in Juneau, Alaska for single non-rated 
personnel assigned to afloat units and not entitled to basic allowance 
for housing. The Coast Guard continues to look for situations where we 
can partner with DOD and leverage their housing programs. In the past, 
we have successfully partnered with DOD and their housing areas, such 
as the joint Army-Coast Guard project at Red Hill, Hawaii, and the 
Navy-Coast Guard partnership at Belle Chase, Louisiana.
    The Coast Guard is using the additional $9.3 million to expand our 
Childcare Subsidy Program. The Coast Guard has adjusted income 
categories to align with DOD child care programs and increase the total 
family income cap, offsetting the cost of child care for additional 
Coast Guard families. In addition, the Coast Guard received funding for 
seven training and curriculum specialist (TAC) and five child 
development services specialist (CDSS) positions. Recruitment efforts 
for these positions are currently in progress. The seven TACs will be 
assigned to our Child Development Centers (CDC) to ensure the centers' 
continued accreditation by providing consistent, enhanced curriculum 
for both CDC staff and the children attending the CDCs. The five CDSSs 
will allow the Coast Guard to sustain and expand our Family (In-Home) 
Child Care Program, increasing the availability and accessibility of 
child care for families in Coast Guard-owned and leased housing. The 
CDSSs will also assist both the CDCs and Coast Guard families in 
addressing child educational and developmental issues.
    Question. Has the Coast Guard asked the authorization committees 
for authority to spend receipts deposited in the Coast Guard Housing 
Fund on military housing without the funds being subject to 
appropriation? If so, what is the status of that request? Does the 
Coast Guard have an estimate of potential receipts from the sale of 
surplus property?
    Answer. The Coast Guard has not requested the authority to spend 
Coast Guard Housing Fund moneys without an appropriation.
    The table below depicts the receipts and expected receipts from the 
sale of real properties.

                                          REAL PROPERTY SALES RECEIPTS
----------------------------------------------------------------------------------------------------------------
                                                                        Coast Guard
                Property                          Sale status          sale proceeds           Date sold
----------------------------------------------------------------------------------------------------------------
Kennedy Drive, Chevy Chase, MD..........  Sold......................      $1,700,000  Sep 2011
Snug Hill Lane, Potomac, MD.............  Sold......................         845,000  Aug 2011
Goldsboro, Bethesda, MD.................  Sold......................       1,400,000  Oct 2011
Clyde Hill, Seattle, WA.................  Sold......................         635,000  Feb 2012
Parcel 1, Maui, HI......................  Sold......................     \1\ 270,000  May 2012
Parcel 2, Maui, HI......................  Sold......................     \1\ 271,400  May 2012
Parcel 3, Maui, HI......................  Sold......................     \1\ 278,000  May 2012
Parcel 4, Maui, HI......................  Sold......................     \1\ 231,100  May 2012
Parcel 5, Maui, HI......................  Sold......................     \1\ 274,000  May 2012
Parcel 6, Maui, HI......................  Sold......................     \1\ 285,000  May 2012
Buxton Housing, Cape Hatteras, NC.......  Awarded \2\...............       2,625,000  July 2012 (pending)
                                         -----------------------------------------------------------------------
      Total Receipts....................  ..........................       8,814,500  ..........................
----------------------------------------------------------------------------------------------------------------
\1\ Receipts from sale have not been transferred to the Coast Guard.
\2\ Awarded indicates the selection of a buyer following the end of the auction period.

    Question. Please evaluate existing laws for the Department of 
Defense which provide authority or guidelines for incremental funding 
of major assets and housing and provide to the subcommittee your 
assessment of the value of such authorities or guidelines were they to 
be applied to the Coast Guard.
    Answer.
    Housing.--The Coast Guard is unaware of any instance where Congress 
has granted permanent or project-specific authority to the Department 
of Defense that would allow for the use of appropriated funds, on an 
incremental basis, for the acquisition of real property, the 
improvement of undeveloped land, or the rehabilitation or redevelopment 
of existing improvements.
    Major Assets.--Limitations on the use of funds through the Anti-
Deficiency Act (31 U.S.C. section 1341, 31 U.S.C. section 1342 and 31 
U.S.C. section 1517) serve as the foundation of the full-funding policy 
and preclude incremental funding.
                           arctic operations
    Question. Currently, the Coast Guard has two heavy polar 
icebreakers, the Polar Sea and the Polar Star. The Coast Guard is 
planning to decommission the Polar Sea and the Polar Star is being 
refurbished and will be reactivated in 2013 for another 10 years of 
service. The budget request includes initial funding for a new 
icebreaker, but it will take 8-10 years to complete, assuming funding 
is provided.
    Royal Dutch Shell hopes to begin exploratory drilling operations in 
U.S. Arctic waters this summer.
    Following the Deepwater Horizon spill in 2010, over 47,000 
personnel and 7,000 vessels were deployed in response.
    Can you discuss the Coast Guard's offshore response capabilities in 
the Arctic region today?
    Answer. A spill response by Coast Guard in the Arctic would 
primarily differ compared to a spill in non-Arctic regions because of 
the distance to remote spill locations, lack of pre-staged equipment, 
and lack of supporting shore-based infrastructure. Adverse weather 
conditions such as ice, low visibility, and prolonged darkness also 
reduces the effectiveness of a response effort. However, exploratory 
drilling in the Arctic is at much shallower depths, with significantly 
lower well pressures and therefore smaller worst case discharge as 
compared to deepwater wells in the Gulf of Mexico.
    Unlike smaller commercial entities operating in the Gulf of Mexico, 
drilling projects in the Arctic maritime are currently feasible only 
for highly capitalized companies such as Shell. Such companies are able 
and committed to bringing substantial resources to the region to 
fulfill their regulatory mandate to provide spill response equipment. 
Also, the Department of the Interior and the Coast Guard review prior 
to approval to move/activate drilling equipment into the drilling 
region the following items: whether the rig conforms with international 
safety and security standards; performance of safety equipment (i.e., 
the blowout preventer, emergency generators, lifesaving and 
firefighting equipment); and crew certifications. Cascading additional 
private resources into the region after an incident will be a challenge 
due to distances involved and a lack of supporting infrastructure in 
the Arctic. Cascading Coast Guard oil spill response resources into the 
Arctic would face similar logistical challenges.
    In the event of a spill, the responsible party is accountable for 
controlling the release and mitigating any damage. As a regulatory 
agency and Federal first responder, the Coast Guard has worked closely 
with other Federal, State, tribal, and industry stakeholders to review 
contingency plans so that if an incident does occur, the Coast Guard 
can, with its partners, assist the responsible party to minimize 
adverse impacts to the environment, individuals, and commerce.
    The Coast Guard has conducted extensive oil spill planning at the 
regional response team and local sub-area committee levels to address 
the challenges of responding to an incident in the Arctic region. The 
Alaska Federal/State Preparedness Plan for Response to Oil and 
Hazardous Substance Discharges/Releases is referred to as the Alaska 
Unified Plan. The North Slope and the Northwest Arctic Subarea 
Contingency Plans are 2 of 10 subarea plans that make up the Alaska 
Unified Plan. These plans represent a coordinated and cooperative 
planning effort between members of the Environmental Protection Agency, 
U.S. Coast Guard, Alaska Department of Environmental Conservation, U.S. 
Department of the Interior, and numerous other Federal, State, local, 
and native as well as industry participants. These plans include site-
specific response strategies known as geographic response strategies 
that are tailored to protect sensitive areas threatened by an oil 
spill. The Alaska Unified Plan and its Sub-Area Contingency Plans 
contain extensive guidance on response procedures that have been 
developed for the challenges specific to Alaska and the Arctic 
including response to oil spills in or near ice conditions. The Coast 
Guard, the Alaska regional response team, in coordination with the 
private sector and local community, have actively updated these plans 
to address the challenges presented by offshore drilling within the 
last 6 months.
    This summer, the Coast Guard is planning Operation Arctic Shield 
2012 that will stage ships and aircraft in the vicinity of proposed 
Arctic drilling sites (Chukchi and Beaufort Seas). These assets will be 
prepared to respond to and provide command and control for search and 
rescue, law enforcement, and oil spill response incidents should they 
occur.
    Operation Arctic Shield 2012 will be supported by a mixture of 
Coast Guard flight-deck equipped cutters, sea-going buoy tenders, 
fixed-wing aircraft and helicopters, and shore forces.
    Question. If a spill of significance occurred in the Arctic, how 
long would it take to get response personnel and vessels in place?
    Answer. Shell oil spill response vessels and crews, as well as 
other private sector resources will be pre-positioned near the proposed 
drilling sites available for response to potential oil spills while 
drilling activities are underway.
    The Coast Guard will have ships and aircraft in the vicinity of 
proposed Arctic drilling sites (Chukchi and Beaufort Seas) that, in 
conjunction with our partners and industry, can respond to and provide 
command and control for an oil spill incident.
    Additional response equipment is located throughout Alaska and the 
United States, and can be cascaded into the affected area in the event 
of a spill but will be a challenge due to vast distances and lack of 
supporting infrastructure. Any cleanup operation that occurs beyond 
that period into the Arctic winter months would present significant 
challenges; due to extremely harsh operating environment, including 
adverse weather, cold temperatures, ice, and periods of extended 
darkness.
    Effective preparedness and response is dependent on the equipment, 
capabilities, and logistical infrastructure the private sector (vessel, 
facility, and offshore platform operators) has in place coupled with 
diligent Federal and State oversight and cooperative exercise to ensure 
that systems are in place and manageable during an event.
                             c-27j aircraft
    Question. The U.S. Air Force has targeted over 280 aircraft for 
elimination over the next 5 years, including 21 new C-27Js that are 
essentially brand new planes that haven't been used. The Coast Guard 
has a significant need for similar type planes.
    Could these aircraft be used for Coast Guard missions and are you 
looking at the possibility of acquiring them from the Air Force?
    Answer. The Coast Guard has previously established that the C-27J 
meets the key performance parameters of a medium-range surveillance 
maritime patrol aircraft. However, in its current state, the aircraft 
would require maritime missionization to meet all Coast Guard 
requirements. The Coast Guard is conducting a holistic cost analysis to 
identify the feasibility and specifically what funding would be 
required to operate the aircraft as part of the Coast Guard fleet; the 
Coast Guard has communicated our potential intent to the Air Force.
    Question. What are the potential budgetary savings if the Air Force 
were to transfer these C-27Js to the Coast Guard as compared to buying 
new aircraft?
    Answer. Coast Guard's preliminary business case analysis estimates 
that the transfer of C-27J aircraft to the Coast Guard would result in 
an approximately $900 million capital cost avoidance as compared to the 
Program of Record. The estimated savings considers only the cost of the 
acquisition of those airframes and does not include the net cost to 
missionize the asset, infrastructure costs, or cost to crew, operate, 
and maintain the C-27.
                    semi-submersibles ``drug subs''
    Question. As you know, there is a troubling trend of semi-
submersible vessels being used by smugglers to transport cocaine to the 
United States. The Coast Guard recently intercepted its 31st semi-
submersible in the Western Caribbean. Over the last 6 years the Coast 
Guard has intercepted 26 of these vessels in the eastern Pacific and 
five in Caribbean waters.
    What is the most effective strategy to counter this threat and is 
the Coast Guard properly resourced to address it?
    Answer. Transnational criminal organizations (TCO) use self-
propelled semi-submersible (SPSS) vessels whenever they believe that 
these more costly vessels will have the best chance of successfully 
delivering drugs to their initial landside transit point. The Coast 
Guard employs specific tactics, techniques, and procedures for 
detecting and interdicting SPSS vessels at sea. The Coast Guard 
utilizes various surface and air assets for detection of SPSS vessels 
including maritime patrol aircraft (MPA), cutter-based helicopters, and 
boats and cutters. The Coast Guard also deploys law enforcement 
detachments onboard U.S. and Allied Naval vessels that deploy to the 
drug transit zones and operate under the control of the Coast Guard or 
joint task force. All of these assets possess both day/night optical 
detection equipment, including but not limited, to night vision, 
infrared cameras, and radars. As the Coast Guard recapitalizes its 
aging fleet, we are increasingly effective at implementing these 
tactics.
    The Coast Guard and Joint Interagency Task Force South (JIATF-S) 
partner to conduct the detection and monitoring (JIATF-S led) and 
interdiction and apprehension (Coast Guard led) missions against 
counter-drug threats, including SPSS vessels. The Coast Guard, U.S. 
Navy, and certain Allied Partners deploy surface and air assets to 
JIATF-S, which best positions these assets to detect and interdict 
SPSS.
    The best strategy is to deter TCOs from building and employing SPSS 
vessels. The Drug Trafficking Vessel Interdiction Act of 2008 (Public 
Law 110-407) criminalizing the operation of and embarkation in 
stateless submersible and semi-submersible vessels navigated outside 
the territorial seas of any country with intent to evade detection, 
provides a necessary legislative tool to counter this threat. 
Subjecting the crew of interdicted SPSS to prosecution in U.S. courts 
can lead to new intelligence for identifying SPSS points of origin and 
positioning assets for future interdictions.
                              panama canal
    Question. The Panama Canal is being widened to accommodate larger 
cargo vessels. This expansion is expected to be completed in 2015. Some 
U.S. ports are anticipating larger ships and increased ship traffic 
after the expansion project is completed.
    What is the Coast Guard doing to respond to this development and 
are there any budget implications?
    Answer. The Coast Guard's Port State Control program is not 
anticipating a significant increase in workload as a result of the 
arrival of larger vessels that may result from the widening of the 
Panama Canal. Larger vessels may reduce the number of calls in certain 
ports and increase in others. Workforce adjustments can be made as a 
result of workload changes, if necessary.
    Coast Guard aids to navigation (ATON) may be affected if channels 
are required to be widened to accommodate larger ships. The U.S. Army 
Corps of Engineers would be responsible for providing notification to 
the Coast Guard for any congressionally approved channel improvement 
project that will affect Federal ATON; this notification will provide 
the Coast Guard with time to analyze the current ATON system and assess 
impacts. As these impacts are not yet known, there are currently no 
estimated budget implications.
                       unmanned maritime vehicles
    Question. Do you support increased use of these alternative 
platforms that may provide the potential for cost savings and improved 
performance to the Coast Guard for diverse missions such as improved 
situational awareness, search and rescue, and oil spill detection and 
response?
    Answer. The Coast Guard supports the employment of unmanned 
capabilities as a complement to manned assets. The Coast Guard is 
currently preparing to test a cutter-based unmanned aircraft system 
(UAS) onboard a national security cutter this summer. Unmanned aerial 
maritime vehicles are expected to provide increased surveillance and 
detection capability, and reduce the exposure of Coast Guard personnel 
to hazardous operating environments.
                                 ______
                                 
              Questions Submitted by Senator Thad Cochran
    Question. If you do not achieve your National Security Cutter 
Program of Record, how will this impact Coast Guard operations? Would 
you have to sacrifice execution of some missions as a result?
    Answer. There has been no decision to change the current Program of 
Record. The major cutter acquisition programs (NSC and OPC) are 
currently under review to assess whether alternative mixes of these 
assets would achieve similar overall performance or better. The Coast 
Guard will continue to assign available resources to address the 
greatest risk areas.
    Question. Is it feasible and cost-effective to keep the remaining 
high endurance cutters running?
    Answer. Maintaining the remaining high endurance cutters (HECs) is 
necessary to continue front-line operations, but doing so long-term is 
not effective from a return on investment standpoint. Built between 
1967 and 1972, the HECs are currently operating beyond their economic 
service life and experiencing decreased operational availability and 
increased maintenance costs. Now approaching 50 years of service life, 
the Coast Guard is continuing to spend considerable additional 
maintenance funds in order to keep these cutters operational; thus, the 
priority of the Coast Guard is recapitalizing the major cutter fleet.
    Question. Your fiscal year 2013 budget request reflects plans to 
decommission two high endurance cutters, three patrol boats, and 
termination of the high tempo high maintenance patrol boat program. If 
this happens, will the Coast Guard face challenges with regard to 
meeting its statutory operational requirements? If so, how large and 
how long will the gap in operational capabilities be? What can be done 
to mitigate the effects of these potential gaps?
    Answer. The Coast Guard is decommissioning legacy cutters as new 
and more capable assets become operational; five fast response cutters 
(FRC) and three national security cutters (NSC) are expected to be 
fully operational by the end of fiscal year 2013. Each FRC will provide 
20 percent more capacity in terms of operational hours than the 110-
foot patrol boats that they are replacing.
    In fiscal year 2013 major cutter capacity will drop by 2,498 
programmed hours as older in-service assets are decommissioned and 
newer, more capable cutters are brought on-line. Also patrol cutter 
capacity will drop by 13,750 programmed underway hours, primarily 
reflecting cessation of high tempo high maintenance operations.
    The 110-foot Patrol Boat Mission Effectiveness Project, which will 
complete the final hull in summer 2012, has improved patrol boat 
reliability for remaining in-service hulls, until transition to the FRC 
fleet is completed. The Coast Guard will continue to assign available 
resources to address the greatest risk areas.
    Question. Admiral, with your statement in February 2012 that 
national security cutter No. 1, Bertholf will deploy to the Arctic this 
year, does this mean that other national security cutters will continue 
to deploy there? If so, how will that impact other future missions and 
major cutter availabilities? What is the long-term strategy with 
respect to supporting the myriad of missions the Coast Guard capably 
performs given the current resource constraints that you face?
    Answer. Similar to the legacy high endurance cutters that operate 
in the Arctic, the national security cutter will patrol and provide a 
response and command and control platform during the ice-free portion 
of the summer, with some enhanced operating capability. The Coast Guard 
will continue to utilize the most appropriate assets to balance risk 
across all mission areas.
    The Coast Guard will continue to allocate resources in a manner 
that strikes the optimal balance between sustaining current operations 
and investment in future capabilities required to sustain the ability 
to execute missions and address the most pressing operational 
requirements.
    The Coast Guard strategy includes the four following priorities:
  --Responsibly rebuild the Coast Guard;
  --Efficiently preserve front-line operations;
  --Strengthen resource and operational stewardship; and
  --Prepare for the future.
    Responsibly rebuilding the Coast Guard requires a continued focus 
of resources on recapitalizing cutters, boats, aircraft, and command, 
control, communications, computers, intelligence, surveillance, and 
reconnaissance systems as quickly and cost-effectively as possible.
    To preserve front-line operational capacity, the Coast Guard will 
prioritize investments for the operation of new assets delivered 
through acquisition programs.
    Strengthening resources and operational stewardship is achieved 
through a doctrine, policy, operations, and mission support structure 
that focuses resources and forces where they are most needed.
    To prepare for the future, the Coast Guard continuously assesses 
emerging maritime threats facing the Service and the Nation and feeds 
that information to the DHS Future Years Homeland Security planning 
process.
    Question. Please describe the Coast Guard's current acquisitions 
strategy for unmanned aircraft systems. What specific challenges are 
you facing today with regard to testing and integrating possible 
vertical take-off UAS?
    Answer. The Coast Guard's unmanned aircraft systems (UAS) strategy 
is to acquire existing cutter-based and mid-altitude land-based UASs 
while emphasizing commonality with existing Department of Homeland 
Security and Department of Defense programs that are technologically 
mature. To that end, the Coast Guard's UAS project is now in the pre-
acquisition ``need'' phase.
    The Coast Guard established a Joint Program Office with U.S. 
Customs and Border Protection (CBP) to jointly operate the CBP's 
Guardian UAS in maritime missions. The Coast Guard has eight pilots and 
four system sensor operators qualified in and flying Guardian missions.
    The Coast Guard has also established a formal partnership with the 
Navy's vertical takeoff unmanned aerial vehicle (UAV) (Fire Scout) 
program office to collaborate on a cutter-based solution. Utilizing 
fiscal year 2012 Coast Guard research, development, test and evaluation 
funds, the Coast Guard intends to procure and install the ground 
control segment of a Fire Scout system aboard a national security 
cutter (NSC) to facilitate a future at-sea technical demonstration. 
Ultimate completion of the underway demonstration is contingent upon 
Navy Fire Scout air vehicle accessibility for Coast Guard use. Other 
challenges to address include coordinating Navy technical assistance 
for Fire Scout shipboard analysis, equipment maintenance and 
installation aboard an NSC, logistics support of the MQ-8B as the Navy 
begins production of the larger MQ-8C and Fire Scout reliability and 
overall system maturity.
    The Coast Guard is also pursuing a non-major system acquisition of 
a small ScanEagle UAS for the NSC, as an interim, cost-effective UAS 
capability. To support this strategy, the Coast Guard plans to conduct 
technical demonstrations of the ScanEagle aboard an NSC during fiscal 
years 2012 and 2013.
                                 ______
                                 
             Questions Submitted by Senator Lisa Murkowski
                      port clarence loran station
    Question. A memo to me from Coast Guard CEU Juneau dated February 
7, 2012, states that the Coast Guard ``is proposing to issue a Finding 
Of No Significant Impact (FONSI)'' following an environmental 
assessment of the divestiture of the LORAN-C station Port Clarence, 
Alaska. These actions would result in the relinquishment of the 1962 
land withdrawal for Port Clarence and transfer the property back to 
BLM. Has the FONSI been issued yet?
    Answer. The Loran Station Port Clarence final environmental 
assessment and finding of no significant impact has been approved and 
signed.
    Question. How long do you expect that it will take for the approval 
of the Coast Guard's environmental assessment and the acceptance of the 
notice of release of property by BLM?
    Answer. The Coast Guard plans to submit a notice of intent to 
relinquish letter to the Bureau of Land Management (BLM) in June 2012 
stating that the Port Clarence Loran Station is no longer needed by the 
Coast Guard. BLM will decide whether to accept the land for return to 
the public domain or issue a public land order permanently withdrawing 
the land.

                         CONCLUSION OF HEARINGS

    Senator Landrieu. Thank you, and we will reconvene in a 
couple of weeks on another subject.
    Admiral Papp. Thank you, ma'am.
    Senator Landrieu. The subcommittee stands in recess, 
subject to the call of the Chair.
    [Whereupon, at 11:27 a.m., Wednesday, May 9, the hearings 
were concluded, and the subcommittee was recessed, to reconvene 
subject to the call of the Chair.]
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