[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
                  MARITIME TRANSPORTATION REGULATIONS:

                   IMPACTS ON SAFETY, SECURITY, JOBS,

                      AND THE ENVIRONMENT, PART 2
=======================================================================

                                (113-56)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                COAST GUARD AND MARITIME TRANSPORTATION

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 4, 2014

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure


         Available online at: http://www.gpo.gov/fdsys/browse/
        committee.action?chamber=house&committee=transportation




                  U.S. GOVERNMENT PRINTING OFFICE
86-924                    WASHINGTON : 2014
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001



             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                  BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska                    NICK J. RAHALL, II, West Virginia
THOMAS E. PETRI, Wisconsin           PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         ELEANOR HOLMES NORTON, District of 
JOHN J. DUNCAN, Jr., Tennessee,          Columbia
  Vice Chair                         JERROLD NADLER, New York
JOHN L. MICA, Florida                CORRINE BROWN, Florida
FRANK A. LoBIONDO, New Jersey        EDDIE BERNICE JOHNSON, Texas
GARY G. MILLER, California           ELIJAH E. CUMMINGS, Maryland
SAM GRAVES, Missouri                 RICK LARSEN, Washington
SHELLEY MOORE CAPITO, West Virginia  MICHAEL E. CAPUANO, Massachusetts
CANDICE S. MILLER, Michigan          TIMOTHY H. BISHOP, New York
DUNCAN HUNTER, California            MICHAEL H. MICHAUD, Maine
ERIC A. ``RICK'' CRAWFORD, Arkansas  GRACE F. NAPOLITANO, California
LOU BARLETTA, Pennsylvania           DANIEL LIPINSKI, Illinois
BLAKE FARENTHOLD, Texas              TIMOTHY J. WALZ, Minnesota
LARRY BUCSHON, Indiana               STEVE COHEN, Tennessee
BOB GIBBS, Ohio                      ALBIO SIRES, New Jersey
PATRICK MEEHAN, Pennsylvania         DONNA F. EDWARDS, Maryland
RICHARD L. HANNA, New York           JOHN GARAMENDI, California
DANIEL WEBSTER, Florida              ANDRE CARSON, Indiana
STEVE SOUTHERLAND, II, Florida       JANICE HAHN, California
JEFF DENHAM, California              RICHARD M. NOLAN, Minnesota
REID J. RIBBLE, Wisconsin            ANN KIRKPATRICK, Arizona
THOMAS MASSIE, Kentucky              DINA TITUS, Nevada
STEVE DAINES, Montana                SEAN PATRICK MALONEY, New York
TOM RICE, South Carolina             ELIZABETH H. ESTY, Connecticut
MARKWAYNE MULLIN, Oklahoma           LOIS FRANKEL, Florida
ROGER WILLIAMS, Texas                CHERI BUSTOS, Illinois
MARK MEADOWS, North Carolina
SCOTT PERRY, Pennsylvania
RODNEY DAVIS, Illinois
MARK SANFORD, South Carolina
VACANCY
                                ------                                7

        Subcommittee on Coast Guard and Maritime Transportation

                  DUNCAN HUNTER, California, Chairman
DON YOUNG, Alaska                    JOHN GARAMENDI, California
HOWARD COBLE, North Carolina         ELIJAH E. CUMMINGS, Maryland
FRANK A. LoBIONDO, New Jersey        RICK LARSEN, Washington
PATRICK MEEHAN, Pennsylvania         TIMOTHY H. BISHOP, New York
STEVE SOUTHERLAND, II, Florida,      LOIS FRANKEL, Florida
  Vice Chair                         CORRINE BROWN, Florida
TOM RICE, South Carolina             JANICE HAHN, California
MARK SANFORD, South Carolina         NICK J. RAHALL, II, West Virginia
BILL SHUSTER, Pennsylvania (Ex         (Ex Officio)
    Officio)
VACANCY
                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    iv

                               TESTIMONY
                                Panel 1

Rear Admiral Joseph A. Servidio, Assistant Commandant for 
  Prevention Policy, United States Coast Guard...................     4
Hon. Michael H. Shapiro, Principal Deputy Assistant 
  Administrator, Office of Water, U.S. Environmental Protection 
  Agency.........................................................     4
Christopher Grundler, director, Office of Transportation and Air 
  Quality, Office of Air and Radiation, U.S. Environmental 
  Protection Agency..............................................     4

                                Panel 2

Thomas A. Allegretti, president and chief executive officer, The 
  American Waterways Operators...................................    24
Kathy J. Metcalf, director of maritime affairs, Chamber of 
  Shipping of America............................................    24
James Roussos, Vessel General Permit coordinator, LaMonica Fine 
  Foods and Oceanside Marine.....................................    24
Rod Jones, president and chief executive officer, CSL Group Inc..    24

           PREPARED STATEMENT SUBMITTED BY MEMBER OF CONGRESS

Hon. John Garamendi, of California...............................    36

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Rear Admiral Joseph A. Servidio..................................    38
Hon. Michael H. Shapiro..........................................    42
Christopher Grundler.............................................    51
Thomas A. Allegretti.............................................    57
Kathy J. Metcalf.................................................    66
James Roussos....................................................    71
Rod Jones........................................................    81
William Terry \\.........................................   108

                       SUBMISSIONS FOR THE RECORD

Hon. John Garamendi, a Representative in Congress from the State 
  of California, request to submit the following letters from:

    Mary D. Nichols, chairman, California Air Resources Board, to 
      Hon. Duncan Hunter, Hon. John Garamendi, and Hon. Janice 
      Hahn, Representatives in Congress from the State of 
      California, February 28, 2014..............................    18
    Christopher A. Coakley, vice president of government affairs, 
      Saltchuk Resources, Inc., to Hon. Duncan Hunter and Hon. 
      John Garamendi, Representatives in Congress from the State 
      of California, March 2, 2014...............................    21

----------
\ William Terry, president and chief executive officer, 
  Eagle Rock Aggregates Inc., was scheduled to be a witness at 
  the hearing but was unable to attend due to a family emergency. 
  His written statement is included in the record.

  [GRAPHIC] [TIFF OMITTED] 


MARITIME TRANSPORTATION REGULATIONS: IMPACTS ON SAFETY, SECURITY, JOBS, 

                      AND THE ENVIRONMENT, PART 2

                              ----------                              


                         TUESDAY, MARCH 4, 2014

                  House of Representatives,
          Subcommittee on Coast Guard and Maritime 
                                    Transportation,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The committee met, pursuant to call, at 3:05 p.m. in Room 
2253, Rayburn House Office Building, Hon. Frank A. LoBiondo 
presiding.
    Mr. LoBiondo. The subcommittee will come to order.
    Chairman Hunter, because of the crazy schedule this week, 
is in the air as we speak. He has asked me to sit in. And I 
believe Mr. Garamendi will be here very shortly. But out of 
respect for your schedules, we will go ahead and we will get 
started.
    The subcommittee is meeting today for the second part of 
our two-part hearing to review regulations affecting the 
maritime industry. Today's hearing will focus on environmental 
regulations and how such regulations impact the flow of 
commerce through our ports and the ability to grow jobs in the 
maritime sector.
    The Coast Guard and the EPA are writing and enforcing new 
regulations on vessel owners in an effort to improve water and 
air quality. While regulations should address ways to enhance 
environmental stewardship, they must also balance the 
importance of maintaining the free flow of maritime commerce. I 
am very concerned that some of these regulations fail to 
achieve that balance.
    Some of these rulemakings are extremely costly. They are 
burdensome and they are duplicative and they are not being 
applied and enforced in a fair manner. Take, for instance, 
regulations governing the discharge of ballast water.
    Currently the Coast Guard and the EPA have developed 
separate regulations under two different Federal laws to govern 
ballast and water discharges. Although the agencies have worked 
together to try to reach uniformity, the programs still differ 
in vessels covered, geographic reach, enforcement, and 
penalties for noncompliance.
    For example, the Coast Guard rules allow for vessel owners 
to seek an extension if treatment technologies do not exist or 
cannot be installed by the deadline. The EPA provides no 
mechanism for an extension, leaving a vessel owner liable for 
civil and criminal penalties through no fault of their own.
    The situation only becomes more confusing and burdensome 
for vessel owners as each individual State adds its own ballast 
water discharge requirements on top of the EPA's program.
    Under the EPA's current program, 25 States have added their 
own differing discharge standards. Some States have laws in 
place forcing vessel owners to treat their ballast water to a 
standard for which no technology has yet been invented. I would 
like to know what the rationale is behind that, but we will 
leave that go.
    The situation is ridiculous. It is completely unreasonable 
to ask vessel operators to comply with 2 Federal standards and 
as many as 25 different contradictory and unachievable State 
standards.
    I appreciate the committee's work to include legislation 
that Mr. Larsen and I drafted to address incidental discharges 
from fishing vessels in the Coast Guard bill, and I hope that 
legislation will move forward soon. However, we still need to 
tackle the issue of ballast water.
    I look forward to working with my colleagues in the House 
and Senate on bipartisan legislation to establish a uniform 
national ballast water discharge standard. I am also concerned 
about the implementation of the North American Emissions 
Control Area.
    Beginning January 1st of 2015, vessels transiting 200 miles 
from shore will need to burn ultra-low-sulfur fuel. While I 
understand the critical importance of improving the air quality 
in our coastal regions, I am concerned the EPA and Coast Guard 
did not properly consider the economic impact this rule will 
have on smaller vessels that must travel entirely within the 
EEZ.
    The costs associated with this new rule could severely 
undermine efforts to promote the use of short sea shipping as 
an alternative to moving freight along our congested highways. 
I look forward to hearing from our witnesses on what steps they 
plan to take to work with industry on this issue.
    As I have said before, maritime commerce is essential to 
the U.S. economy. Domestic shipping alone is responsible for 
over 500,000 American jobs and $100 billion in annual economic 
output. With the economy still in a fragile state, it is 
imperative that the Federal Government foster an atmosphere 
where our maritime industry can compete and expand.
    I want to thank Ranking Member Garamendi and the witnesses 
for working with us on rescheduling today's hearing, and I look 
forward to hearing from all of our witnesses.
    With that, I yield to Mr. Garamendi.
    Mr. Garamendi. Thank you, Mr. LoBiondo.
    I understand that our chairman is still trying to find his 
way here from California.
    Mr. LoBiondo. You seem to have mastered that.
    Mr. Garamendi. I didn't say that to draw that as a 
difference.
    Mr. LoBiondo. No. I mentioned right before you got here, he 
sent his regrets. There is an outside chance he could make it, 
but with the flight schedules that he had to deal with, he 
couldn't quite get here for 3 o'clock, and appreciates the 
cooperation to allow this important topic to move forward.
    Mr. Garamendi. I had the good fortune to have one of the 
few flights that actually did take off in the last couple days.
    In any case, I want to thank you and the chairman for 
rescheduling this hearing from this morning to this afternoon 
and for the previous effort to get it done.
    It is important, really. The status of the environmental 
regulations affecting the maritime transportation is of utmost 
importance to the industry as well as to the environment.
    I look forward to learning more about the status of the 
Coast Guard's and the Environmental Protection Agency's 
rulemaking activities and, as you said, either the coordination 
or lack of coordination.
    As I have stated before, making sure that the Federal 
regulations are targeted, fair, and reasonable is necessary to 
ensure that the ongoing recovery of the U.S. economy continues 
to gain traction and that the U.S. maritime industry remains a 
vibrant source of job creation. My constituents expect nothing 
less.
    In particular, I will be interested in hearing from both 
the Coast Guard and the EPA on the challenges that remain in 
implementing their respective rules to address the issue of 
ballast water discharge into the waters of the United States.
    According to the National Oceanic and Atmospheric 
Administration, every year there are more than 21 billion 
gallons, more than 40,000 gallons a minute, of ballast water 
that are discharged into U.S. waters.
    Moreover, every day an estimated 10,000 marine species are 
transported around the world in ballast water. The current 
number of invasive species in San Francisco Bay alone is now at 
212, and new species are appearing every 14 weeks.
    That is a major economic problem for the area that I 
represent, the San Francisco Bay and the delta. It has led to a 
huge blowup in the water issues.
    Unfortunately, the ecological havoc that is caused by this 
is not likely to get better. In fact, it is likely to get worse 
as the spread of invasive species is increased along with 
expansion of global trade.
    We need to hear from the EPA on what challenges may lay 
ahead in the Vessel General Permit to regulate vessel 
discharges.
    I also want to hear from the Coast Guard on its forecast 
for the type approval for ballast water treatment systems 
allowing shipping lines to comply with the Coast Guard and the 
EPA's ballast water discharge regulations. And, once again, I 
think it is extremely important that these regulations be 
coordinated and consistent and work together.
    I would also be interested in hearing from the EPA and 
witnesses from the maritime industry about EPA's ongoing 
implementation of its rule implementing the North American 
Emissions Control Area. We are a coastal State in California, 
and this issue was of considerable interest to the State.
    That North American Emission Control Area is intended to 
reduce vehicle emissions in the coastal airsheds and improve 
public health. The ECA is a vital contributor to the California 
strategy to meet its emission reduction targets.
    It is important that we understand how the rule is working, 
how the industry is adapting during its transition to meet the 
low-sulfur fuel standards and whether we can expect any 
shortage in the supply of low-sulfur fuel to vessel operators 
and the cost associated with that.
    Mr. LoBiondo, I thank you for conducting the hearing. I 
look forward to working with you as this hearing proceeds. And 
who knows. Maybe the chairman can actually catch a plane. We 
will see.
    Mr. LoBiondo. OK. Thanks, John.
    Mr. Garamendi. Or a plane can actually fly.
    Mr. LoBiondo. We welcome our first panel of witnesses 
today: Rear Admiral Joseph Servidio, Assistant Commandant for 
Prevention Policy at the United States Coast Guard; Mr. Michael 
Shapiro, Principal Deputy Assistant Administrator of the Office 
of Water at the Environmental Protection Agency; Mr. Chris 
Grundler, who is director of the Office of Transportation and 
Air Quality at the Environmental Protection Agency.
    Admiral, you are recognized.

    TESTIMONY OF REAR ADMIRAL JOSEPH A. SERVIDIO, ASSISTANT 
 COMMANDANT FOR PREVENTION POLICY, UNITED STATES COAST GUARD; 
      HON. MICHAEL H. SHAPIRO, PRINCIPAL DEPUTY ASSISTANT 
 ADMINISTRATOR, OFFICE OF WATER, U.S. ENVIRONMENTAL PROTECTION 
     AGENCY; AND CHRISTOPHER GRUNDLER, DIRECTOR, OFFICE OF 
 TRANSPORTATION AND AIR QUALITY, OFFICE OF AIR AND RADIATION, 
              U.S. ENVIRONMENTAL PROTECTION AGENCY

    Admiral Servidio. Chairman LoBiondo, Ranking Member 
Garamendi, distinguished members of the subcommittee, good 
afternoon.
    It is my pleasure to return today and continue our 
discussion about the Coast Guard's regulatory program and 
specifically our environmental reg initiatives.
    The Coast Guard's regulatory program focuses on managing 
maritime risks through the establishment of proficiency, 
safety, and security standards. Doing so protects life, 
property, and our precious marine environment.
    Our goal is to harmonize protection of the maritime 
environment with ensuring safe and efficient flow of commerce. 
Achieving the appropriate balance requires a pragmatic and 
transparent reg development process. We aim to produce 
relevant, environmentally sound, and achievable standards.
    More than half of the Coast Guard's rulemaking projects 
involve environmental issues, such as ships' discharge of solid 
waste and pollution from oil and hazardous substances.
    The Coast Guard has also published a number of rules aimed 
at protecting the marine environment. Two of the more notable 
ones include Ballast Water Discharge Standard and the Nontank 
Vessel Response Plan Final Rules.
    Ballast Water Discharge Final Rule established a Federal 
standard for the concentration of living organisms in ships' 
ballast discharged into the U.S. waters. The Coast Guard worked 
closely with our interagency partners to develop this rule, 
ensuring appropriate measures were in place to protect our 
waterways.
    The recently published Nontank Vessel Response Plan Final 
Rule requires nontank vessels to plan for and contract 
resources to respond to a fuel spill, a fire, a vessel 
grounding or other incidents posing environmental threats.
    This rule enhances national preparedness and response 
capabilities. It increases U.S. oil spill, marine firefighting, 
and salvage capabilities, and it ensures shortened response 
times to potentially catastrophic incidents.
    The shipping industry rose to meet the requirements by 
submitting 1,700 nontank vessel response plans for Coast Guard 
approval before the 30th of January with no apparent impact on 
commerce. To date, we have issued over 1,800 interim operating 
authorizations covering more than 12,000 nontank vessels.
    These rulemakings highlight two of the more significant reg 
projects finalized by the Coast Guard. My written statement 
provides details on others.
    The Coast Guard also works internationally to protect the 
marine environment with our interagency partners at the 
International Maritime Organization, or IMO. The Coast Guard 
has been successfully shaping and influencing initiatives that 
globally promote safe and effective environmental protection 
standards.
    Our efforts at IMO include working to reduce air emissions 
from ships through improved efficiency, implementing more 
stringent measures to eliminate at-sea garbage discharges, and 
developing standards for safe and environmentally friendly ship 
recycling.
    Through strong ties with Canadian counterparts and working 
with the EPA, we developed and implemented the North American 
and Caribbean Sea Area Emission Control Areas, or ECAs.
    In the polar regions, the Coast Guard recognizes expanded 
environmental risk. We worked with interagency and industry 
reps, including NOAA, the EPA, the National Science Foundation, 
and the Department of Defense, to develop a consensus U.S. 
position.
    The Polar Code will provide a crucial mechanism for 
ensuring vessels in Arctic waters meet safe and environmentally 
sound design and operating standards.
    Along with our interagency colleagues and the partnering 
Arctic States of Norway, Finland, Canada, Denmark, and Iceland, 
the Coast Guard is leading the development of the Polar Code's 
environmental component.
    In summary, the Coast Guard has a long and consistent 
history of collaboration with our interagency partners and the 
international community.
    We nurture these relationships to develop thoughtful 
standards that promote the protection of the marine environment 
while balancing the need for the efficient flow of commerce. 
This has been and will remain our core focus.
    As I said before, the Coast Guard thanks Congress and 
specifically this subcommittee for your interest and your 
involvement in our activities.
    Your continued support will ensure the Coast Guard is able 
to effectively advance marine environmental policy development 
in both domestic and international arenas.
    Thank you. I look forward to your questions.
    Mr. LoBiondo. Thank you, Admiral.
    Mr. Shapiro, you are now recognized.
    Mr. Shapiro. Good afternoon, Chairman LoBiondo and Ranking 
Member Garamendi. Thank you for the opportunity to discuss the 
EPA's regulation of vessel discharges under the Clean Water 
Act.
    All of us are concerned about the environmental and 
economic impacts of invasive species. Economic costs from 
invasions are in the billions of dollars annually.
    Over the past several years, we have worked together with 
the Coast Guard to develop a strong ballast water management 
program to help reduce the risk of new introductions.
    EPA's Vessel General Permit, or VGP, regulates discharges 
incidental to the normal operation of a vessel, including 
ballast water. The VGP includes discharge limits, monitoring, 
and recordkeeping requirements and other conditions.
    Discharge limits are primarily in the form of best 
management practices, or BMPs, that in many cases are already 
being performed on vessels. The 2013 Vessel General Permit went 
into effect in December of last year.
    As we have started to implement these requirements, we have 
been contacted by vessel owners concerned about the ballast 
water technology requirements in the Coast Guard's rule and the 
EPA's Vessel General Permit.
    To help address these concerns, the EPA issued an 
enforcement response policy in December of 2013 which states 
that vessels that cannot meet the VGP's numeric ballast water 
limits and have received a compliance extension from the Coast 
Guard are considered a low enforcement priority.
    The EPA and the Coast Guard worked together to develop and 
distribute a joint letter to those vessel owners that have been 
or will be granted an extension from the Coast Guard's 
regulations.
    Our coordinated response helps to provide the regulated 
community with a common understanding of how the permit and the 
rule work together with respect to such extensions.
    Regarding smaller vessels, the EPA proposed the Small 
Vessel General Permit, or SVGP, in 2011 to provide Clean Water 
Act authorization for fishing vessels and commercial vessels 
less than 79 feet if and when the congressional moratorium on 
these smaller vessels expires.
    Recognizing that these smaller vessels are different in how 
they operate, the draft SVGP is shorter and simpler than the 
VGP, which was developed for larger vessels.
    The draft SVGP specifies commonsense best management 
practices for several categories of discharges, all of which 
need to be covered in order for a vessel to operate in 
compliance with the Clean Water Act.
    We are currently considering public comments we received 
which will inform our development of a final Small Vessel 
General Permit.
    Once again, Chairman LoBiondo and Ranking Member Garamendi, 
thank you for the opportunity to discuss EPA's vessel permits. 
I look forward to answering any questions you may have. My full 
statement has been submitted for the record.
    Mr. LoBiondo. Thank you, Mr. Shapiro.
    Mr. Grundler, you are now recognized.
    Mr. Grundler. Thank you, Chairman LoBiondo, Ranking Member 
Garamendi, and other Members. I appreciate the opportunity to 
testify today on the implementation of the North American and 
U.S. Caribbean Sea Emission Control Areas, or ECAs.
    ECAs are one of the most important and cost-effective air 
quality programs the U.S. Government has put into place in the 
past decade and will result in the prevention of tens of 
thousands of premature deaths.
    The North American ECA is already yielding significant 
public health and environmental benefits extending from all 
U.S. coastal areas to hundreds of miles inland.
    In 2014, more than 135 million people living in ozone 
nonattainment areas and over 84 million people living in fine 
particle nonattainment areas will benefit from cleaner air due 
to the ECA.
    Furthermore, these air quality improvements are critical 
for States to attain and maintain the existing health-based 
National Ambient Air Quality Standards, or NAAQS.
    By 2030, emission reductions resulting from the North 
American ECA will prevent between 12,000 and 31,000 premature 
deaths and 1.4 million workdays lost in the United States.
    EPA estimates that the monetized human health and welfare 
benefits of this program outweigh the costs of this program by 
a factor of at least 30 to 1. In short, the ECA is one of the 
most cost-effective mobile source programs ever adopted.
    Implementation of the ECA started in August 2012 when the 
allowable marine fuel sulfur level was reduced to no greater 
than 10,000 parts per million.
    The Coast Guard and EPA have worked and continue to work 
closely with the regulated community to ensure an orderly 
transition during this first stage of ECA standards. Overall, 
implementation of ECA is going very well and ships are using 
compliant fuel in the ECA.
    A second stage of fuel sulfur controls takes effect in 
January 2015 when the allowable limit decreases to 1,000 parts 
per million.
    This ECA-compliant fuel is expected to be diesel fuel, 
which is already widely available at many ports as it is used 
on ships for auxiliary engines and for startup of the main 
engines.
    The EPA and Coast Guard will continue to work with vessel 
owners during the transition to the 2015 standards, just as we 
have done in the first stage of the fuel standards.
    While the ECA is a significant public health achievement, 
ECA fuel in 2015 will still have a much higher sulfur content 
than fuels used in any other U.S. transportation sector, more 
than 65 times higher than the allowable sulfur content for 
diesel fuel used in cars, trucks, trains, and ships operating 
on our inland waterways.
    MARPOL Annex VI contains some flexibility provisions, and 
several owners of ships that operate primarily in the ECA have 
requested and received permits to develop new technologies and 
methods that can achieve compliance at a lower cost.
    EPA has worked closely with the Coast Guard and the 
relevant flag countries to assess and approve several of these 
projects. As a result, these companies are making substantial 
investments to develop exhaust gas cleaning systems, convert or 
build new vessels to use liquefied natural gas fuel, and use 
shoreside power to reduce emissions.
    EPA has worked closely with these companies to ensure that 
they will receive equivalent or greater emission reductions and 
are incentivizing the development of this new technology.
    We will continue to work with the Coast Guard and the 
industry on programs to reduce costs and encourage the 
development of new lower cost technologies and compliance 
methods while meeting these tremendous public health benefits 
of the ECA.
    Thank you for the opportunity to appear before you today.
    Mr. LoBiondo. Thank you very much.
    We will now go to some questions.
    Admiral, first for you. Why do you think the manufacturers 
are reluctant to submit their treatment systems for type 
approval in the U.S. Coast Guard? I mean, why aren't we seeing 
some of that?
    Admiral Servidio. Sir, what I can say is that the G8 
guidelines, which are the international standards, are 
guidelines, and the interpretation by some of the 
administrations have been different on what needs to be done 
for an approved--an IMO-approved ballast water treatment 
system.
    I believe some of the manufacturers are going through 
testing now to make sure that their systems will pass Coast 
Guard type approval, which is going to be done by an 
independent third party.
    We have two consortiums of laboratories that have been 
identified, and they are looking--I am aware of one company 
that is looking in the next couple of months to aggressively 
begin type approval for its system that the Coast Guard has 
accepted as an alternate management system, sir, a system which 
currently has IMO type approval. When the Coast Guard brought 
AMSs into the AMS program, it was anticipated they would go 
through Coast Guard type approval.
    So, all of those systems are expected to go through Coast 
Guard type approval. I can only speculate on why it has taken 
some of them longer. We do anticipate at least one system will 
be going through type approval very shortly.
    Mr. LoBiondo. Admiral, does the Coast Guard support a 
single Uniform National Discharge Standard for ballast water?
    Admiral Servidio. Mr. Chairman, I could say that right now 
we do have two different statutes with two different 
requirements. We are working closely with the EPA to, as best 
we can, mesh those systems. I have spoken to Mike Shapiro 
probably weekly on some of what we are trying to do.
    I think the fact that we cosigned a letter that accompanies 
all Coast Guard extensions for ballast water management systems 
speaks to the fact that we are looking to have one unified 
Government voice with regards to ballast water requirements, 
but there are two different statutes, sir, with two different 
requirements.
    Mr. LoBiondo. So as of now, you don't support a single 
uniform standard?
    Admiral Servidio. Sir, I can just say there are two 
different statutes that the Coast Guard works over and the EPA 
works under, and we are trying to mesh them as best we can. But 
they are two different statutes, sir.
    Mr. LoBiondo. Well, I certainly will not speak for other 
colleagues on the committee, but this, I think, is getting sort 
of to the heart of the problem, as some of us see it, and as 
what happens out in the real world. I don't know how you have 
people going to a couple different standards. But thank you for 
your answer.
    Mr. Shapiro, you talked in your statement about law 
enforcement priority. Can you tell us what that means. I mean--
I am sorry--low enforcement priority.
    Mr. Shapiro. Low enforcement priority is a way of guiding 
EPA's enforcement activities so as to avoid focusing on areas 
which we believe don't merit attention--or merit very low 
attention.
    In the case of the Vessel General Permit and those vessels 
that have been granted extensions by the Coast Guard and are 
otherwise in compliance with the other requirements of the 
Vessel General Permit, our strong belief is that looking at the 
discharge limits from the ballast water should not be a 
priority for our enforcement activities.
    And, again, the reason for that is we want our approach to 
be as closely aligned with the Coast Guard's as it can be under 
the statutory framework that we operate under.
    Mr. LoBiondo. So from your perspective or the EPA's, are 
these vessel owners going to be held in violation of the Clean 
Water Act or not?
    Mr. Shapiro. Again, our expression is it is a very low 
priority. I think history has shown, when we have used a 
similar tool in the past in other situations similar to this, 
EPA has not pursued enforcement where it has been designated a 
low priority.
    So I think there is a track record that we have to point to 
that shows that, when we say low priority, we mean very low 
priority.
    Mr. LoBiondo. Very low priority.
    But if you are a small vessel owner, I hope you can 
understand the uncertainty that is created, because what you 
are saying, I guess, is that, on a given day, under given 
circumstances, the EPA could choose to enforce, which would 
result in a fine. And that is, I think, getting to part of the 
heart of the problem that we are talking about here.
    One more question for you, Mr. Shapiro. Given the problems 
that have arisen due to the differences with the Coast Guard on 
scope, extension, enforcement, and, you know, the differing 
standards, does EPA support a single uniform ballast water 
discharge standard?
    Mr. Shapiro. The administration has not taken a position on 
that question.
    So as with Rear Admiral Servidio, what we have--based on 
the existing law and the court decisions affecting our 
jurisdiction, the serious intent on the part of EPA to align 
our work as closely as possible with the Coast Guard's, I think 
we both share the objective that, ultimately, vessels will be 
operating under type-approved systems which are meeting 
rigorous standards that EPA and the Coast Guard jointly worked 
on and hope to implement.
    So, you know, I think our two answers are the same. We 
don't have a position on that question. We are doing what we 
think are the appropriate measures in order to align our work 
together under the existing statutory framework.
    Mr. LoBiondo. Well, I think therein lies the problem, at 
least for myself and some of my colleagues.
    If we can't point to a single standard, I don't know how we 
go to the people who are operating vessels and give them any 
certainty about what they have to do and how they have to do 
it.
    I have a couple more questions, but I want to defer to Mr. 
Garamendi at this time, and then I will come back for the 
balance of mine.
    Mr. Garamendi. Thank you, Mr. LoBiondo.
    Admiral Servidio and Mr. Shapiro, you have both repeatedly 
said given the statute that you have to work with. It is our 
business to change statutes.
    I am not advocating that we change, but we--is there some--
what are the differences that are causing the discussion that 
we just had? What are the specific differences in the statutes 
that lead to this conflict between the statutes?
    Admiral Servidio. Ranking Member, the Coast Guard works 
under the National Invasive Species Act, and the EPA is working 
under the Clean Water Act. Those are very different statutes 
with different requirements, with different State requirements. 
There is a number of factors. The regimes are very different, 
sir.
    Mr. Garamendi. There is nobody else in this room that has 
the experience that the two of you have in working with these.
    Is there a way to coordinate these two statutes so as to 
eliminate the problem while maintaining the goal?
    Admiral Servidio. Ranking Member, I can say the cleanest 
way forward is to install a Coast Guard type-approved ballast 
water management system.
    At the present time we are working on that type approval 
process, but we don't have a Coast Guard type-approved ballast 
water management system, and that is causing some of the 
problems between the two statutes.
    Mr. Garamendi. But that is an industry issue trying to 
develop a specific solution, that is, technology, to address 
the problem. Is that correct?
    And then, if that were to happen, then you are suggesting 
the EPA's law and regulation would be satisfied?
    Mr. Shapiro. Well, certainly the particular issue we are 
talking about, which is the treatment of vessels whose owners 
have applied for and gotten an extension to the compliance for 
the ballast water numeric standard--that issue would certainly 
be resolved. Once the type-approved systems are available, 
vessels would have to adopt those systems.
    In the interim, though, there are differences in the way 
our laws are structured, which in this particular case gives 
EPA somewhat less flexibility than the Coast Guard in 
addressing the current unavailability of type-approved systems.
    Mr. Garamendi. You mentioned this. But what is the status 
of the type-approved system? You said there is one that is 
being reviewed now? Go into that----
    Admiral Servidio. Sir, the Coast Guard is required--sorry, 
sir.
    Mr. Garamendi. Just go into that in a little more depth, if 
you would, please.
    Admiral Servidio. An internationally approved ballast water 
management system, the Coast Guard was required to bring it 
into the alternate management system, which allows the vessel 
to keep that system on for 5 years until a type-approved system 
is available.
    The thought would be that they would be able to, during 
that 5-year period, make whatever modifications to that system 
so it could become type-approved. There is a requirement that, 
when you become part of the AMS process, that you have to 
submit for Coast Guard type approval.
    Of the 33 international systems now that the Coast Guard 
have brought into the AMS program, none of them have 
aggressively--or have at this point in time initiated the type 
approval process through those 2 designated independent 
laboratories that are capable of doing that.
    I have been told that one of them is going to be doing that 
shortly, sir, and I am hoping that others will also be doing 
that shortly.
    Mr. Garamendi. So it is the industry that has the 
initiative?
    Admiral Servidio. There is different segments of the 
industry, sir. It is both vendors and it is the shipowners and 
operators.
    Mr. Garamendi. Take them one at a time.
    What are the vendors doing?
    Admiral Servidio. Again, the vendors now are the ones that 
have to get their systems type-approved. The owners-operators 
are taking a risk by installing a system or even working with a 
vendor. If that does not become type-approved, they might have 
to replace that system, sir.
    Mr. Garamendi. So the initiative lies with the vendors and, 
I suppose, also with the shipowners, who I assume would be 
pressing for some approved system that they could then work 
with?
    Admiral Servidio. I think, sir, the second panel can 
probably talk more about what--the specific problems they have 
seen or what they have--why we haven't seen more type-approved 
systems at this point, sir.
    Mr. Garamendi. Then, I will get into it with the second 
panel.
    Mr. Shapiro, if there is a system approved or multiple 
systems approved, would they meet your requirements and fulfill 
your obligations under the law?
    Mr. Shapiro. Type-approved systems would certainly meet our 
requirements.
    Now, we also have some ongoing monitoring requirements as 
part of the Vessel General Permit regulation. So the systems 
would have to, in operation, achieve certain limits that are 
listed in our Vessel General Permit.
    But we start with the presumption that a type-approved 
system meets all the equipment requirements necessary for 
operation. So----
    Mr. Garamendi. The question----
    Mr. Shapiro [continuing]. We also----
    Mr. Garamendi. Please go ahead.
    Mr. Shapiro. We also do accept in our Vessel General Permit 
AMS systems that Rear Admiral Servidio referred to as well, but 
they would also have to meet the same numerical limits.
    Mr. Garamendi. Now, Admiral Servidio, do you also have 
ongoing monitoring requirements?
    Admiral Servidio. Sir, once we end up getting type-approved 
systems, we will develop a compliance and enforcement policy, 
and during that compliance and enforcement policy, we will get 
into the details of what sampling or other types of things 
might be necessary.
    Mr. Garamendi. Could that be coordinated and be the same as 
the EPA?
    Admiral Servidio. I think we can look to coordinate it, 
sir. But, again, the heart of the issue is the Invasive Species 
Act is different than the Clean Water Act.
    And even though we might be able to address something short 
term, I am not sure long term whether there will also be issues 
that pop up in the future, sir. They are different statutes. We 
are coordinating them as best as we can.
    Mr. Garamendi. I fail to see why they couldn't be 
coordinated. You both have to monitor the ongoing operation of 
that discharge system.
    What conceivable reason is there that you could not have 
the same form to fill out, the same monitoring, the same dates 
or the same time periods in which they would be monitored?
    Admiral Servidio. Sir, I am not an attorney, but I do 
believe there are some different requirements as far as 
technology that is different in the Clean Water Act than might 
be in the Invasive Species Act.
    Mr. Garamendi. Mr. Shapiro, is that the case?
    Mr. Shapiro. I don't know whether, in practice, that would 
be the case. I can say we would work as hard as possible with 
our colleagues in the Coast Guard to make sure things were 
aligned effectively. You know, we will have to look into it.
    Mr. Garamendi. And you guys get together every week?
    Mr. Shapiro. Recently we have been communicating, often by 
phone, almost weekly. Given the nature of the issues that we 
are addressing, we will continue to work closely with the Coast 
Guard.
    Mr. Garamendi. I am not going to speak for the chairman, 
but I will tell you the ranking member wants to know the 
specifics of how these two systems can coordinate.
    You have already said that it can be coordinated with the 
Coast Guard certifying these systems and that would suffice the 
EPA. Now you are down to monitoring.
    Am I right? I think I am right. I think that is what I 
heard.
    And I should think that the Coast Guard and the EPA could 
figure out how to have the same form, same timeframe for 
monitoring, you know, every 6 months or every 6 minutes, 
whatever it might be, and do it once.
    Now, if that is not the case, I want to know specifically 
where it is not going to be able to be done that way. OK?
    Admiral Servidio. Sir, yes, sir. What I can say is that 
there is a requirement under the Clean Water Act that States 
have authorities under that. They can file some requirements.
    Mr. Garamendi. That is yet another issue. Let's not get the 
States involved here right now.
    But just between the two of you, you are suggesting that, 
because the State might have a different system, that that 
would then make this more complex?
    Admiral Servidio. Sir, there are some States that have 
said----
    Mr. Garamendi. For one, California and New York.
    Admiral Servidio [continuing]. You have to do ballast water 
exchange and ballast water treatment.
    And right now on the--for Coast Guard type approval, it 
doesn't necessarily take into account having to do both of 
those aspects, both treating the water and exchanging the 
water.
    So there is potentials going forward, sir, that there might 
be some conflicts. I do think we are working closely together, 
as close as we can, to have a uniform----
    Mr. Garamendi. I want to be very specific here.
    When State regulation or State action--and this is yet 
another matter, and I am certainly familiar with that, being 
from California and actually being involved in that when I was 
in California as a Lieutenant Governor.
    But the issue here is between the two of you. And if there 
is another piece of this that comes in because a State--
California or New York--which, incidentally, have backed off--
leave that aside.
    So for the EPA and the Coast Guard, apparently, there is a 
way to have one system or multiple systems that are approved by 
the Coast Guard that would be OK for the EPA.
    Then comes the question of how do you continue to monitor, 
which I think is necessary, and I suspect you do and--kind of 
standard procedure.
    I want to know, is there something in the laws that 
prohibits you from having the same monitoring system?
    With that, I will let that question be answered soon, I 
hope, and I will yield back.
    Mr. Shapiro. We will respond.
    Mr. LoBiondo. Mr. Meehan.
    Mr. Meehan. I thank you, Mr. Chairman.
    And allow me to attach myself to the line of questioning of 
the gentleman from California because I am particularly 
concerned as well just from the practical perspective of a 
ship's operator.
    I mean, you both appreciate, do you not, the requirements 
that one as an owner has to go through to meet your inspection 
standards and why we would be requiring two separate 
inspections when they can be done simultaneously just as a 
matter of creating less ambiguity, but more efficiency, which 
is something that I hope we could work towards?
    I think we have established that you have created 
regulations for a technology that does not yet exist, isn't 
that accurate, what we are talking about, for the ballast water 
exchange?
    Let me ask you, Rear Admiral, first.
    Admiral Servidio. Sir, we recognize--we said in the 
preamble to the regulations that we believe the first type 
approval would be in 2015.
    And that is part of our regs. We have an extension permit 
process so that there is a way for vessels to stay in 
compliance until a type-approved system is available.
    Mr. Meehan. Why is that being done before the technology is 
available?
    Admiral Servidio. Sir, at times, there needs to be a 
forcing function. There is technology available. I believe 
there----
    Mr. Meehan. Saltwater technology. Right?
    Admiral Servidio. There are some systems that have had 
freshwater technology, too, sir, that are in the AMS system 
that are able to work on freshwater. I believe there is about a 
thousand systems that have been installed internationally right 
now, sir.
    Some of the issue is just how they were approved and 
whether it was done by a third party and whether they can meet 
the somewhat rigorous third-party independent laboratory 
process that we have established for type approval here in the 
U.S., sir.
    I believe we will have type-approved systems. I believe 
there is technology. We are going through that process right 
now, sir.
    Mr. Meehan. Well, let me ask a question of you, Mr. 
Shapiro, in terms of the regulations that are being conducted 
right now.
    We share that waterway, do we not, with a northern 
neighbor?
    Mr. Shapiro. Well, we certainly share a waterway with 
Canada. Yes.
    Mr. Meehan. So, in essence, these regulations are going to 
affect Canadian shipping as well. Is that not right?
    Mr. Shapiro. That is correct.
    Mr. Meehan. Now, do I understand that--while you have been 
contemplating this issue and the regulations will not be fully 
enforceable, I am assuming what you are saying is you are not 
going to enforce the regulation until 2015, until you think you 
have some standards for American shipping.
    Is that the same for Canadian shipping?
    Mr. Shapiro. Our Vessel General Permit applies to any 
foreign vessels that are entering U.S. jurisdictional waters. 
So, yeah, it would apply to Canadian vessels as well as vessels 
from other nations that are entering our waters.
    Mr. Meehan. Have you created special exemptions for 
American ships?
    Mr. Shapiro. No, sir.
    Mr. Meehan. So it is not accurate that there has been 
certain exemptions that have been identified by the EPA that--
regard to vessels that were constructed before 2009 do not have 
to meet standards that ships built after 2010 do?
    Mr. Shapiro. Vessels with respect to lakers, vessels 
operating on the Great Lakes, it is my understanding that you 
are correct. Vessels that were built before 2009 do not have to 
have ballast water discharge devices installed.
    Mr. Meehan. So what you are doing, even though this is a 
situation in which it is--largely the Canadian fleet has 
invested more in newer shipping and we have a more aging 
American fleet.
    But is it not accurate, then, that you are creating a--
perhaps you are sort of gaming the system, so to speak, so that 
Canadian shipping is put at a disadvantage?
    Mr. Shapiro. I think the requirement applies equally to 
Canadian or U.S. vessels. And so I don't think there was any 
intent to game, in your terms, the system to favor one nation's 
vessels versus another.
    Mr. Meehan. Well, it was my understanding that some of them 
were exemptions that were for uniquely--are you saying that 
there is no exemptions that relate exclusively to United States 
shipping?
    Mr. Shapiro. Well, for vessels that are solely operating in 
U.S. waters, for example, barges that are operating in the U.S. 
waters, they are not subject to ballast water requirements, but 
those are not doing international trade.
    Mr. Meehan. What I need from you is whether or not you can 
give us a representation that you will work on a resolution.
    I have great concern that what this is going to create is 
going to be retaliatory measures on the part of the Canadian 
authorities, who will turn around and create their own 
standards.
    And am I not correct that there are certain points where, 
regardless of the shipping, they may have to go through waters 
that are controlled by--in the Saint Lawrence Seaway and other 
things that are controlled by Canada?
    Mr. Shapiro. There is a long history of joint operations in 
the Saint Lawrence Seaway and others, but certainly Canada and 
the U.S., as you say, share that common seaway.
    Mr. Meehan. Are we looking at the possibility that there 
could be significant retaliatory measures if, in fact, we don't 
find a way in which there can be collaboration and equal 
treatment for the Canadian vessels as those that are--in the 
same way American vessels are being treated in this waterway?
    Mr. Shapiro. That issue has not been raised to my 
attention. I certainly would be willing to go back and look to 
see if we believe that such an issue is present.
    Mr. Meehan. Will you make a commitment to me that you will 
reach out to the Canadian authorities and determine whether or 
not there is a capacity for there to be a resolution on this 
issue before there is final decisionmaking about how things are 
going to be enforced?
    Mr. Shapiro. I am not actually sure of the specific issue 
you are referring to.
    I think you raised the issue of whether there was some 
uneven treatment between U.S. and American vessels, and I will 
certainly look into that. But until I know what the specific 
issue is, it is hard to make a commitment as to what we can do 
about that.
    Mr. Meehan. OK. Well, I don't--I am told it has to do with 
dates with regard to construction of ships and it also has--you 
know, exemptions that were made for American shipping, but not 
for Canadian shipping, with regard to the ballast, you know, 
equipment that must be put on it.
    You are saying that you are not going to, in effect, write 
the ticket against the American ship, even though the 
regulation is there, because the technology is not there.
    Isn't that, in effect, what you are both saying, that, ``We 
all know that, by the law, the standard is there, but we know 
it is not able to be reached yet. So we are not going to 
enforce it in the meantime''?
    Mr. Shapiro. Well, with respect to the ballast water 
provisions for the older vessels, we determined that it wasn't 
technically feasible to retrofit them. But, again, I don't 
think there was an intent to benefit one nation versus the 
other in our process.
    Mr. Meehan. If it is not technologically feasible, then are 
you by the rules then underwriting what would be older vessels 
that create a greater risk than the newer ones?
    Mr. Shapiro. Well, the net result of that finding is that 
the older vessels would not have the ballast water systems in 
them.
    Mr. Meehan. Well, then, we are not accomplishing the very 
thing that you are trying to create the whole thing for in the 
first place. Isn't that right?
    Mr. Shapiro. Well, as new vessels continue to move into the 
trade, ultimately, we will achieve----
    Mr. Meehan. But you are creating a regulation that is 
encouraging the continuation of older, ostensibly more 
threatening vessels.
    Mr. Shapiro. Well, in my experience as a regulator, in a 
number of different programs, we often find that, given the way 
our statutes ask us to make decisions, it is necessary to 
address new sources in a somewhat different way than existing 
sources because of the difficulties and costs associated with 
retrofit. So I don't think this is an unusual circumstance. 
But, again, I would be happy to go back and look at it.
    Mr. Meehan. I know my time has expired, Mr. Chairman. Thank 
you.
    Mr. LoBiondo. Mr. Shapiro, when can we expect the EPA will 
release a final Small Vessel General Permit?
    Mr. Shapiro. Well, as I mentioned in my testimony, it is 
currently at interagency review. That process is ongoing.
    Our goal has always been to issue the final Small Vessel 
General Permit well in advance of the expiration of the current 
moratorium at the end of this year.
    We are trying to move the process along as effectively as I 
can, but I cannot give you a specific date at this point.
    Mr. LoBiondo. That is about as ambiguous as we can get.
    I am not trying to be contradictory here, but I would ask 
you to put yourself in the position of one of us, who has 
constituents who come to us and ask for some degree of 
certainty on how they can conduct their business, and we look 
totally inept that we can't give them any answers at all.
    We can't give them any timing. We can't tell them we come 
up with a single standard. We can agree to do a single 
standard, not necessarily what it is. We just--I mean, it is 
very frustrating.
    Mr. Shapiro, one more question.
    Many of the proposed management practices are impossible to 
comply with, especially for fishing vessels. For example, the 
EPA prohibits the discharge of unused bait unless that bait had 
been caught in the same water body, but ``water body'' is not 
defined.
    So would this prohibit fishermen in the Gulf of Mexico from 
using as bait mackerel and herring caught in New Jersey?
    Mr. Shapiro. That provision, which--appeared in one version 
in our draft Small Vessel General Permit, but also in our final 
2000 permit, and in that case it applies to live bait only, not 
to all bait. But I think that there is, as you point out, a 
condition in there that basically talks about going from one 
water body to another.
    In the situation you are referring to where there is a 
substantial distance and certainly different environmental 
conditions, we would view that as a different water body. 
However, there are other questions that have been raised 
regarding that that will probably need some clarification.
    Mr. LoBiondo. So we just don't know, I guess, is--I mean, 
``water body'' not being defined, so the Atlantic Ocean, is 
that a water body? I mean--or is it that we don't define that?
    Mr. Shapiro. Well, you are correct that there is ambiguity 
in that language, which we will work on clarifying.
    Mr. LoBiondo. Mr. Grundler, from the record before us, it 
is pretty clear the EPA did not take smaller coastal vessels, 
such as certain self-unloading bulk carrier vessels, into 
account when it promulgated this rule.
    Can you tell us what the EPA is doing with these and other 
vessel classes that it did not consider when promulgating the 
rule, the ECA.
    Mr. Grundler. Sir, I have to correct the record.
    We certainly did take into account all vessels operating 
within this zone when we did our complex and, frankly, very 
rigorous economic analysis and air quality analysis.
    So all vessels that travel our shores were considered when 
we did our inventory assessment and then the air quality model.
    Mr. LoBiondo. Mr. Garamendi?
    Mr. Garamendi. Thank you, Mr. Chairman. A couple of things, 
just some housekeeping.
    I had asked the chairman of the California Air Resources 
Board to attend the meeting and to speak on this issue from the 
California perspective. She was unable to attend, but there is 
a letter I would like to have unanimous consent to enter into 
the record.
    Mr. LoBiondo. Without objection, so ordered.
    [The information follows:]
    [GRAPHIC] [TIFF OMITTED] T6924.007
    
    [GRAPHIC] [TIFF OMITTED] T6924.008
    
    Mr. Garamendi. And, also, a letter from Saltchuk Resources 
on the same issue.
    Mr. LoBiondo. Without objection, so ordered.
    [The information follows:]
    [GRAPHIC] [TIFF OMITTED] T6924.009
    
    [GRAPHIC] [TIFF OMITTED] T6924.010
    
    Mr. Garamendi. The issue of the air quality is one that is 
keenly felt in California. We have a very busy maritime 
industry in California, and the cities, the major ports, the 
San Francisco Bay area and Los Angeles, are questionable 
attainment districts.
    And so this--it turns out that this particular issue of the 
quality of the fuel is extremely important in that area, and I 
suspect it is in other parts of the Nation, although I am not 
familiar with those areas.
    It may be a burden--and I am stating my own opinion without 
asking a question here because I was deeply into this a few 
years ago--that this is an appropriate way to address a 
significant source of pollution, not easy, to be sure, and one 
that does have costs associated with it.
    But the necessity of maintaining--of obtaining an air 
quality standard in those two very important parts of 
California is going to be met by somebody.
    If one or another of the industries or polluters in the 
area don't meet their share of the burden, then somebody else 
is going to have to make it up. And so we are simply shifting 
the cost of implementation off to somebody else. There is no 
reason to believe this cannot be done.
    I do have some questions about the scrubbers that are 
available, that might be available.
    Mr. Grundler, in your testimony, you mention this. Could 
you go into that in more detail.
    Mr. Grundler. Certainly. We are very well aware of the 
challenges that, in particular, California faces in achieving 
public health standards, and we work very closely with our 
colleagues at the Air Resources Board as well as the South 
Coast in developing the proposal that United States and Canada 
took to the IMO.
    So you are right. It is not without cost. But the benefits 
are enormous and outweigh the cost by at least 30 to 1. The 
range goes from 30 to 90 to 1.
    But we do certainly recognize that it is a greater burden 
for those vessels that spend more time in this zone than 
others. They have a higher burden, but they also contribute 
more to the pollution that is traveling onto our shore and, 
frankly, well inland.
    What was remarkable when we did our modeling was to see how 
these public health benefits reach far hundreds of miles into 
the interior of the country and will be enjoying these 
benefits.
    There are provisions under the treaty that provide the 
Coast Guard and the EPA to develop alternative compliance--
lower cost compliance alternatives, and we have been exercising 
those flexibilities.
    We have entered into permits with a number of firms, both 
cruise lines as well as people engaged in the coastwise trade, 
to explore these other technologies, including fuel switching 
to liquefied natural gas in several instances.
    And we have ongoing conversations with other firms who are 
interested in LNG, other firms that the cruise lines in 
particular have opted to enter into a technology demonstration 
project to experiment with scrubbers and different ways to 
install those scrubbers as well as different types of scrubber 
technologies.
    So some firms look to install them while they are actually 
using the vessel, thereby not interfering with commerce. Others 
will be installing them during dry dock. But they are quite 
optimistic that this will be a lower cost way to achieve the 
goals than buying the more expensive clean fuel.
    Mr. Garamendi. The issue is that California has onshore 
winds. And so whatever is out there is coming on shore, and it 
creates a very substantial problem for all the industry in 
California.
    So the air quality attainment requirement is going to be 
met by somebody. And so it turns out that everybody from 
agriculture to cars, to diesel, to the ports, is sharing the 
burden here. I think I will let it go at that.
    Thank you, Mr. Chairman.
    Mr. LoBiondo. This will conclude our first panel.
    I just hope you think a little bit about the frustration 
that we are feeling and, more importantly, the folks who are 
expected to comply are feeling and understand how we have got 
to get some of this resolved and do it in a manner that can 
give some certainty, that the people we are asking to spend a 
whole lot of money just don't know where we are going on all 
this.
    So we will take a very brief recess while we can get set up 
for the second panel, and then we will proceed immediately.
    Our second panel today includes Mr. Tom Allegretti, 
president and CEO of The American Waterways Operators; Ms. 
Kathy Metcalf, director of maritime affairs at Chamber of 
Shipping of America; Mr. James Roussos, Vessel General Permit 
coordinator for LaMonica Fine Foods and Oceanside Marine in 
Millvile, New Jersey; and Mr. Rod Jones, president and CEO of 
the CSL Group Inc.
    Finally, I understand that Mr. Terry, president and CEO of 
Eagle Rock Aggregates, could not be here today due to a family 
emergency. So we will include his testimony as part of the 
record, and all wish him well with that family emergency.
    I will proceed. Mr. Allegretti, you are now recognized. 
Thank you for being here.

    TESTIMONY OF THOMAS A. ALLEGRETTI, PRESIDENT AND CHIEF 
 EXECUTIVE OFFICER, THE AMERICAN WATERWAYS OPERATORS; KATHY J. 
 METCALF, DIRECTOR OF MARITIME AFFAIRS, CHAMBER OF SHIPPING OF 
  AMERICA; JAMES ROUSSOS, VESSEL GENERAL PERMIT COORDINATOR, 
   LAMONICA FINE FOODS AND OCEANSIDE MARINE; AND ROD JONES, 
     PRESIDENT AND CHIEF EXECUTIVE OFFICER, CSL GROUP INC.

    Mr. Allegretti. Good afternoon. Thank you for the 
opportunity to testify on behalf of the American tugboat, 
towboat, and barge industry and our partners in the Shipping 
Industry Coalition, who together represent 90 percent of all 
vessels calling at U.S. ports in both domestic and 
international commerce.
    My testimony today will focus on one critical area, the 
regulation of ballast water and other vessel discharges, in 
which the current regulatory regime serves neither the economy, 
the environment, nor the American taxpayer well.
    Today the Coast Guard and EPA regulate ballast water and 
other vessel discharges under 2 differing statutory 
authorities, and because neither Federal statute preempts State 
action, more than 2 dozen States have established their own 
State-specific requirements for many of those same discharges, 
over 150 of them in all.
    This overlapping patchwork of Federal and State regulations 
makes compliance complicated, confusing, and costly for vessel 
owners and for mariners. It is counterproductive to the goal of 
enhanced environmental protection as companies have delayed 
investment in costly treatment technologies because they lack 
assurance that such systems will be acceptable wherever a 
vessel calls, and it has forced Federal and State agencies to 
duplicate efforts and expend significant time and taxpayer 
money in an unsuccessful effort to harmonize their 
requirements. This is a poster child for needed congressional 
reform.
    Today--and we have an illustration here for your 
information--a tug barge unit moving crude oil from Puget 
Sound, Washington, to the port of Richmond, California, must 
comply with requirements for vessel discharges established by 
both the Coast Guard and EPA. The same vessel must also comply 
with 25 State-specific conditions added to EPA's Vessel General 
Permit by Washington and California. In addition, the vessel 
must comply with State ballast water requirements established 
by Washington, Oregon, and California, outside the framework of 
the VGP.
    The situation is untenable, it is unnecessary, and 
bipartisan congressional leadership is badly needed to fix it.
    I hope that this example illustrates why the current 
situation is untenable. Let me explain what I mean when I say 
that it is unnecessary. Over the past 3 years, there has 
emerged a national scientific consensus about the capability of 
currently available ballast water treatment technology. 
Scientific experts, the Coast Guard, EPA, and the States, all 
of the States, are now in agreement on the ballast water 
treatment standard that is achievable with current technology. 
Last June, the California State Lands Commission acknowledged 
that the State's ballast water treatment standard could not be 
met with the best technology available today, and the 
California Legislature then acted to delay implementation of 
its State's standards.
    Unfortunately, the scientific consensus has not yet solved 
the problem faced by vessel owners. Despite the fact that the 
Coast Guard, EPA, and the States now agree on a ballast water 
treatment standard, Federal and State regulators have been 
unable to eliminate overlap and inconsistency between their 
regulations. This is because, as you heard, they are 
accountable to different statutory authorities which they 
believe limit their flexibility to act.
    It is not too much to say that governmental agencies have 
been set up to fail by a statutory framework that does not 
work. This should be unacceptable to all of us. Congress can 
rectify the situation. You can fix this problem and establish a 
single national framework for the regulation of vessel 
discharges in which vessel owners are subject to one set of 
scientifically based, environmentally protective and 
technologically achievable vessel discharge rules. You can pass 
legislation that provides vessel owners with the certainty that 
multimillion-dollar investments in ballast water treatment 
technology will be acceptable wherever that vessel calls. And, 
you can save the American taxpayer the wasteful expense created 
by duplication of effort among Federal and State agencies that 
will never be able to harmonize their regulations fully unless 
the statutory framework under which they operate is changed.
    Chairman LoBiondo and Ranking Member Garamendi, we implore 
you to take action. We thank you for your leadership in holding 
this hearing. We stand ready to work with you to enact 
legislation that is good for the marine transportation 
industry, good for the marine environment, and good for the 
American taxpayer.
    Thank you very much for the opportunity to testify.
    Mr. LoBiondo. Thank you, Mr. Allegretti.
    Ms. Metcalf.
    Ms. Metcalf. Thank you, Mr. Chairman. We would request that 
our testimony be entered into the record, our written and oral 
testimony as well.
    I am Kathy Metcalf, director of maritime affairs for the 
Chamber of Shipping of America. Today I am also testifying on 
behalf of INTERTANKO and the Cruise Lines International 
Association, or CLIA. A full detail of our members' credentials 
are contained in the written testimony, and I won't take my 
time up to go through that at this point.
    We are, all three of these organizations, are also members 
of the Shipping Industry Coalition that Mr. Allegretti alluded 
to. As such, we are fully supportive of the comments he has 
just provided to you, so I will try not to duplicate any of 
that.
    The fundamental tenet of our approach to these 
environmental issues has always been smart legislation and 
regulation discussed by all the stakeholders can result in 
smart and effective legislation and regulation.
    Aside from the challenges associated with the sheer volume 
of initiatives impacting the industry, the issues are further 
complicated by the fact that a number of executive branch 
agencies are involved in rulemaking processes. And that, 
honestly, is quite justifiable to be sure that there is, in 
fact, an administration sign-off on a very impactful regulatory 
process.
    For example, the U.S. approach to regulation of greenhouse 
gases is led by the State Department at the international 
level, while EPA is also developing domestic problems to 
address greenhouse gases. Now, while we understand the need for 
a unified U.S. position on this issue, it is critical that the 
nature of the sources being considered as we move this issue 
forward at the Federal and international level take into 
account the differences between stationary and mobile sources, 
something I would suggest probably was not fully appreciated 
when the EPA was forced to regulate ballast water discharges as 
well.
    With these many significant and diverse requirements, we 
offer two specific examples where we will believe smarter 
legislation and regulation would benefit everyone. First, with 
regard to vessel discharges, as Mr. Allegretti discussed, 
ballast water and the other discharges, quite frankly, are 
included in the EPA's program because a court said that the 
exemption that had been 35 years in existence was not legally 
applicable, and thus vessels would have to be included in this 
program. This is a program that was never anticipated to 
include things that move versus things that sit on the shore. 
So a lot of the problems that we are seeing now with vessels in 
the NPDES program is a result of that.
    Also, as was discussed earlier, the extension issue where 
the Coast Guard will issue the extension, but EPA cannot or 
will not be legally bound by it, we congratulate the Coast 
Guard and the EPA for doing everything they possibly could to 
reconcile the two sets of regulations. Looking at the proposed 
VGP and the Coast Guard regulations versus the final VGP, they 
have gotten rid of a lot of conflicts that were there, not the 
least of which was the definition of ``dry docking date'' that 
was 2 years apart.
    So they have done a lot of work on this, but in our 
opinion, EPA is legally constrained by what they can and can't 
do to individual sources that are covered under a general 
permit.
    Second example is requirements associated with the creation 
of the North American Emissions Control Area. We are not here 
to suggest that the ECA, or the ECA, was a bad idea or is a bad 
idea. It is clear from EPA's modeling there are going to be 
significant improvements in air quality as a result of this. 
However, for a number of ships, particularly those engaged in 
coastal trade, the significant increased costs associated with 
the use of currently the 1 percent fuel and, in 2015, .1 
percent fuel can be mitigated by the installation of scrubbers, 
which allow you to continue to use a higher sulfur fuel, but to 
have reduced emissions consistent as you would with an engine 
using low-sulfur fuel without the scrubber. However, EPA's 
Vessel General Permit covering exhaust gas scrubber discharges 
prevents the use of a mixing zone to measure the discharge 
effluent, such that most of the scrubbers that are being 
designed globally for use on ships will likely not meet the EPA 
discharge requirements, taking away a very cost-effective 
alternative to the use of fuels.
    We also know that we are going to see an increase in the 
cost of fuels. Thus far with the 1 percent, we have seen 
somewhere between the neighborhood of 10 and 30 percent. When 
it goes to .1 percent, hold onto our hats, because we believe 
we are going to see premiums in the 50 to 60 percent range.
    I see my time is up. I thank you for the opportunity to 
chat this morning.
    Mr. LoBiondo. Thank you, Ms. Metcalf.
    Mr. Roussos, you are now recognized.
    Mr. Roussos. Chairman LoBiondo, Ranking Member Garamendi, I 
am responsible for managing the NPDES Vessel General Permit, 
VGPs, for our fleet of five clam boats at LaMonica Fine Foods 
and Oceanside Marine in southern New Jersey.
    Several of our boats, which are 85 to 100 feet in length, 
will be subject to the requirements for ballast water, and all 
of them for incidental discharge. I want to fully thank this 
entire subcommittee and Mr. LoBiondo for keeping this 
unnecessary burden off of our backs for years and for moving 
H.R. 4005, which will permanently exempt the fishing industry 
from this permit. We appreciate your efforts and hope that the 
House and Senate will follow suit, because the new VGP 
requirements are being applied to the fishing industry with 
little merit. Under the guise of environmental legislation, 
they achieve no real positive environmental results. They serve 
only to make it harder for fishermen to fish and harder for 
this industry to attract qualified, career-seeking individuals.
    I want to be clear that these new requirements are not the 
result of any wrongdoing by our industry. The requirements are 
a result of the 2006 lawsuit brought by environmentalists over 
ballast water. Unfortunately it produced a whole new set of 
regulations that are excessive, burdensome and ineffective.
    The incidental discharges from our vessels were originally 
exempted from the Clean Water Act and the citizen lawsuit 
provisions, but this change with the 2006 lawsuit. Should our 
exemption not be reinstated, our small fishing business and 
many others like us will be exposed to substantial reporting 
and monitoring requirements, the potential for citizen 
lawsuits, and harsh punishments that will prove costly.
    Please understand that those of us in the business of 
harvesting food for the benefit of this Nation do so in a 
hostile environment. We are under constant scrutiny by 
environmentalists who petition or sue the Federal Government on 
a regular basis to increase environmental protection and 
restrict fishing activities.
    We have already filed two lawsuits on this issue, so we 
fully expect the citizen lawsuit provision will be used against 
us. Environmental regulation by litigation is out of control 
and could potentially cripple our industry. Congress correctly 
and permanently exempted 13 million pleasure boats in this 
country from the regulations, but did not permanently exempt 
commercial fishing vessels even though the environmental risks 
are no greater for commercial fishing vessels than pleasure 
craft. In fact, fishing vessels are less likely than pleasure 
boats to be the carrier of invasive species, for example, 
because our boats do not travel to foreign destinations or 
between bodies of water. We typically fish in a very small area 
of the ocean, usually leaving and returning to the same port.
    So 13 million pleasure craft, including 125-foot yachts, 
are exempt from this regulation; but our smaller clam boats and 
a 38-foot gillnetter out of Puget Sound in Washington--sorry, 
out of Viking Village, New Jersey, and the 24-foot salmon boat 
on Puget Sound in Washington, as well as an 18-foot open skiff 
on the Chesapeake Bay all will be subject to the new discharge 
regulations. This is not fair or logical.
    Despite our best efforts to make sensible changes to the 
regulations, we are left with troubling issues related to some 
details of the permit. Frankly, the VPG attempts to solve 
problems that don't exist or even make common sense; for 
example, the requirement to collect refrigeration condensation 
or having to wash the anchor and chain thoroughly every time it 
is used, or the fact that naturally occurring fish slime 
combined with seawater is now an effluent, and consider that 
too much vegetable oil in the galley sink dishwater and too 
many crew showers while at dock would now be violations of 
Federal law.
    These permits are not written for the facile use of 
fishermen for whom it was intend to regulate. Many will have to 
hire lawyers or consultants to navigate the ridiculously 
complicated reporting requirements in attempts to comply. If 
they do not, then they risk being fined out of business. The 
permit, if inflicted upon the fishing industry, will only add 
more paperwork and bureaucracy, further demoralize our 
workforce, and cause economic hardship.
    For the sake of our fishing industry and coastal economies, 
we respectfully request permanently extending the moratorium 
for the NPDES permits for commercial and charter fishing 
vessels and fairly treating our vessels like 13 million sport 
boats that are already exempted.
    We appreciate your leadership and the hard work that Mr. 
LoBiondo and Mr. Larsen are doing to rectify the situation for 
the long term, and we strongly support their efforts and 
encourage all Members to join with them.
    Mr. LoBiondo, Ranking Member Garamendi, members of the 
subcommittee who aren't here, thank you for the opportunity to 
speak to you today.
    Mr. LoBiondo. Thank you, Mr. Roussos.
    Mr. Jones, you are now recognized.
    Mr. Jones. Good morning, Chairman LoBiondo, Ranking Member 
Garamendi. My name is Rod Jones, and I am president and CEO of 
the CSL Group. I appreciate the invitation to speak to you 
today about the North American Emission Control Area, or ECA, 
and its unintended consequences. I am pleased to represent our 
Massachusetts-based U.S. operations, where we specialize in the 
coastal shipping of strategically important cargoes such as 
iron ore, coal, petroleum coke, road salt, aggregates and 
gypsum.
    I also speak for the Maritime Industrial Transportation 
Alliance, or MITA, which is a coalition of industry members who 
rely on the safe and efficient, environmentally smart short sea 
shipping. ECA is designed to reduce emissions of nitrogen 
oxide, dioxide particulate matter and sulfur dioxide. It 
creates a 200-mile zone around the United States and Canada 
where, as of 2012, ships must use fuel with no more than 1 
percent sulfur. In 2015, ECA sulfur levels will be dramatically 
lowered to .1 percent for all ships, again out to the 200-mile 
limit regardless of size.
    My primary point is that the 200-mile ECA boundary was 
established for all ship sizes without firm scientific 
rationale. It did not differentiate between large oceangoing 
ships and smaller short sea vessels. The engines on these 
smaller ships emit much lower amounts of pollutants.
    Intuitively it doesn't make sense that all ship sizes would 
have the same onshore impact, so putting our intuition to the 
test, we commissioned a scientific study using the same or 
similar models as those relied on by the EPA. The resulting 
study examined the emissions and movements of sulfur dioxide, 
which is the main pollutant emitted from sulfur found in fuel. 
The study shows the coastal air quality impacts diminish as 
expected. The ships move away from the coast with a sharp drop 
in impact at about 40 miles off shore. However, it also shows 
that short sea ships with propulsion systems of under 20,000 
horsepower have negligible air quality impacts on the shore 
when they are only 50 miles at sea.
    The EPA's forecast that the new ECA limits would impact 
vessel operating costs by about 3 percent may be correct for 
transoceanic voyages, but it is plain wrong for coastal 
voyages. Smaller short sea ships operate almost completely 
within the ECA, requiring extended or in many cases exclusive 
use of the highest priced fuel.
    The EPA did not consider short sea ships as a sector, and 
equally the EPA didn't weigh the benefit that that short sea 
shipping provides by reducing truck and rail emissions and 
their associated social impacts, particularly road congestion 
and infrastructure wear and tear.
    Furthermore, our efficient self-unloading ships discharge 
very, very quickly and typically reduce unload port stays from 
4 to 5 days to often less than a day. No matter the size of the 
eco zone, ship emissions are most damaging when the ship is in 
port, and our self-unloading ships are in port for less time 
than any other bulk vessel.
    When we last addressed the subcommittee in 2012, we 
projected a fuel cost increase for our sector of at least 40 
percent in 2015. We were correct; .1 percent sulfur fuel is now 
as much as 40 percent higher than intermediate fuel. And we 
underscore that these aren't predictions, but actual market 
prices. Under the 2015 ECA, we estimate that our fuel costs 
will increase over $14 million per year. Now, this would be OK 
if it would result in a significant environmental benefit; 
however, for almost no incremental benefit, as our scientific 
study has proven, it is an unacceptable cost burden for our 
customers.
    CSL estimates that the 2015 ECA limits will force us to 
raise our rates by about 35 percent in most trades. Many of our 
customers cannot absorb these freight rates. Despite well-
documented social and environmental benefits of short sea 
shipping, consumers will obviously opt for the lowest cost, 
which will mean more trucks and trains. Bill Terry was expected 
to testify on this here today, but unfortunately, as you 
mentioned, he was unable to make it.
    As environmental stewards, CSL supports the aims of ECA. We 
simply disagree, based on our scientific study, with the EPA's 
policy prescription. Smaller, cleaner ships should not be 
lumped together with much larger ships. Specifically we propose 
that in 2015, when the sulfur standard reduces to .1 percent, 
the EPA reduce the 200-mile ECA to 50 miles for ships of less 
than 20,000 horsepower, while continuing to require the use of 
1 percent sulfur fuel between 50 and 200 miles.
    In addition, MITA continues to advocate congressionally 
supported dialogue with the EPA to explore other impact-based 
alternatives.
    Chairman LoBiondo, distinguished Members, clean air is the 
responsibility of all users of fossil fuels, and the shipping 
industry is no exception. We support the ECA to help improve 
air quality, but vigorously challenge the 200-mile boundary for 
smaller ships. We urge the Coast Guard and the EPA to work with 
MITA to find a compromise solution that does not add 
unacceptably high costs to our customers' businesses with 
almost no incremental environmental benefit.
    Thank you.
    Mr. LoBiondo. Thank the panel.
    Mr. Garamendi.
    Mr. Garamendi. With regard to the air quality issue, the 
question arose as to, Ms. Metcalf, about mixing zone and 
scrubbers. Could you go into that quickly?
    Ms. Metcalf. As an ex-mariner, I will go into it with the 
level of scientific detail that I have been equipped with with 
my mariner education.
    Essentially what it means is that how you measure an 
effluent, an overboard discharge from a ship, whether it is 
right at the side of a ship, or whether it is in a 3-foot 
radius outside the ship----
    Mr. Garamendi. I understand that mixing zone. The mixing 
zone I thought you were referring to was associated with 
scrubbers, which I think is the air quality issue. If that is 
not the case, then I just----
    Ms. Metcalf. Yes, sir, it is. The IMO development of 
effluent scrubber guidelines would permit the use of a mixing 
zone to determine if you met the effluent standards. It is our 
understanding the EPA regulations relative to measurement of 
that effluent do not. So you are going to have a world full of 
scrubbers out there that could be installed as a cost-effective 
alternative to low-sulfur fuels, but not be passable under the 
EPA's effluent guidelines.
    Mr. Garamendi. You look like you want to jump in.
    Mr. Jones. Well, I just think she was talking about the 
effluent from the overflow of the chemicals that are created 
when you scrub, not from the air itself, so I think that might 
have been the misunderstanding.
    Mr. Garamendi. Thank you. Clearly I didn't quite catch what 
you guys were talking about here.
    It seems to me that there is a solution to that problem. 
You can find a way to it. The point here really is scrubbers. 
Can we get to scrubbers? And do they work? Are they effective? 
The argument basically made by Ms. Metcalf was that scrubbers 
are economically desirable compared to the cost of the fuel. Do 
you agree?
    Mr. Jones. Yes. I think in most cases they would be 
economically desirable. CSL has put a scrubber on one of our 
ships. These are in developmental stages right now. They don't 
work as well as they are being advertised yet, and there is 
some differences between cruise ships, which have a lot of room 
on them, and our old ships, which are very small, and it is 
very difficult to install. So it is something that we are 
considering doing and we think should be done in some certain 
cases, but it also will not improve the air quality any more 
than what we are able to demonstrate by being 50 miles 
offshore, so for us it doesn't seem to be worth it.
    Mr. Garamendi. Let me get to that question. You have a 
study. The EPA has a study. Have you submitted your study to 
the EPA for their review, and analysis and comment?
    Mr. Jones. Yes, we have had discussions with the EPA on our 
study. They don't necessarily agree with us on most of the 
study. They felt that we should have included NOx in the study. 
But NOx we are not disagreeing with. We are not saying we would 
do anything different on NOx. NOx has been legislated as an 
engine issue, and that is something that we just don't disagree 
with.
    They also felt that our CALPUFF model was not completely 
appropriate, and I can't get into the science on this. We have 
a Ph.D. who understands it, but our scientists feel very 
strongly that it is.
    Mr. Garamendi. It is really important for me, for a policy 
point of view and for decisions here, to have a clarity of the 
differences in view of the two studies. If your study is valid, 
then you have got a good argument. If it is not valid, then you 
don't.
    There is another thing that is going on, at least on the 
west coast, and that is cap and trade. And your industry will 
be involved in that also, and I think certainly California is 
there, and there is somewhat of an agreement between the three 
coastal States on that matter, which might change this entire 
argument. I would appreciate your comments on that, at least 
insofar as the west coast is concerned, but not right now. If 
you could provide written comments to us about how that might 
affect this, I think it may significantly affect it.
    Mr. Jones. Yes. I think it is a different issue, but I will 
make comments on that and try to tie it together.
    Mr. Garamendi. Please. I don't want to tell you how to do 
it, but if you are going to a lower, you may be significantly 
reducing carbon along the way and which you can trade and pay 
for the fuel or the scrubbers, but I will leave that to you.
    The other question has to do with--Mr. Allegretti, with 
regard to the ballast water. We had a long discussion here 
earlier with the previous panel about how they might integrate 
their activities. Do you have any comment about that discussion 
we were having here; and specifically, can those businesses 
that are developing the mechanical solutions or solutions to 
ballast water, why are they not pushing that issue forward with 
the Coast Guard?
    Mr. Allegretti. I don't know that I can speak to the issue 
of why companies are not pushing the technology with the Coast 
Guard. My observation on the conversation that you heard 
between Admiral Servidio and Mr. Shapiro is--and I think, you 
know, they were being careful and polite, but they were telling 
you that they have worked to the very best of their ability to 
reconcile the differences between their two ballast water 
standards, and what they have produced today is as good as they 
feel they can get. The gaps that exist between the two are 
apparently gaps that they don't feel they can reconcile, given 
the differing requirements of the two statutes under which they 
operate. I think it points up the need for a single national 
Federal standard.
    As I listened to that conversation, Mr. Garamendi, I really 
was thinking about it from the perspective of a vessel owner 
who is facing a multimillion-dollar investment in this 
technology and asking himself, am I prepared to make this 
investment with this lack of certainty from the Government 
agencies that are regulating the program?
    Mr. Garamendi. I understand and appreciate that point. I 
think I heard it slightly different, that they were looking at 
the--that these systems, once certified, meet the EPA 
requirements. Then the question is one of monitoring, and I 
find it difficult that they could not figure out how to monitor 
in a coordinated fashion or exactly the same way. If they 
can't, then surely there is a slight tweak to one of the other 
laws that would cause that to happen.
    But I don't--and I don't have a clear answer now about why 
these systems are not being pushed forward. It would seem to me 
that there is a business opportunity here that somebody seems 
to be missing, because apparently these systems are going to go 
into place at some point, and that doesn't speak to the issue 
between the two laws, but rather just the Coast Guard itself.
    We will have to find out an answer to that, and I don't 
think I am going to get it from the witnesses here. I guess I 
am right.
    I think I have run my time. I have got a lot more 
questions, but I think I will put those in writing to the Coast 
Guard and the EPA. Specifically I would like some more 
information on the scrubbers if you can handle it. And if you 
could also--well, we will ask the EPA and you to provide me 
with specific information on the study that you did and the way 
it works. If you would do that, Mr. Jones, I would appreciate 
it. Thank you.
    Mr. LoBiondo. John, if you want some extra time, or are you 
pressed to go?
    Mr. Garamendi. Well, let's just say it is all of the 
elected officials from my district that are outside that door. 
Maybe I should stiff them? I can blame it on New Jersey.
    Mr. LoBiondo. Blame it on New Jersey. Thanks, John.
    Mr. Garamendi. Thank you.
    Mr. LoBiondo. So for Mr. Allegretti and Ms. Metcalf, we 
have talked about this a lot, but can you just tell us in sort 
of simple terms so we can maybe disseminate this to our 
colleagues why it is necessary for Congress to act to establish 
a single Uniform National Discharge Standard?
    Mr. Allegretti. In simple terms, the system under which we 
operate today does not work. It is not good for industry, it is 
not good for the environment, it is not good for mariners, it 
is not good for the companies.
    That illustration there is only three States. Imagine a 
tugboat going down the Ohio and Mississippi rivers from 
Pittsburgh to New Orleans. It is going through the 
jurisdictions of 11 States and facing that kind of complexity. 
You have regulations coming at the industry from four separate 
vectors, the EPA, Coast Guard, the States in VGP State-specific 
conditions, and then the States as they legislate outside the 
framework of the VGP. It is an operational nightmare for a 
vessel owner to ensure that he is in compliance with that 
system as he moves from one State line to another. Also it is 
legally treacherous for companies, and it is legally 
treacherous for mariners to operate within this system.
    Mr. LoBiondo. Yes.
    Ms. Metcalf. I will take 30 seconds, Mr. Chairman, if I 
could.
    There is a precedent that this Congress has done a number 
of years ago, and that is the Uniform National Discharge 
Standards rule, the UNDS rule, that is applicable to Armed 
Forces vessels.
    I want to be sure that we have not been misleading you as 
far as terminology goes, but for the 401 State certifications 
as part of the Clean Water Act and VGP program, the performance 
standard that the Coast Guard and EPA have established is the 
same standard. So the big machine, the big concept, there is a 
lot of consistency with, but it is in the nuts and bolts of the 
implementation where some of the disconnects are occurring.
    So as Mr. Allegretti said, that if we could create one 
Federal program under an appropriate statute that regulates 
vessel discharges and preempts State actions, then we have that 
consistency, much like the UNDS program created for the Armed 
Forces vessels.
    Mr. LoBiondo. OK. Mr. Roussos, we talked about it, and the 
EPA has recently announced a new Small Vessel General Permit 
which will apply to commercial fishing vessels. In your view, 
are some of these proposed new management practices even 
feasible? Can it work?
    Mr. Roussos. From what I know now, having read what I have 
read and the research--I was charged with the VGPs for our 
company and spent scores and scores of hours trying to decipher 
what it was that they were trying to accomplish, what they were 
trying to permit, and what their objective was. And it is 
greatly obfuscated what they are attempting to do, but what is 
clear and was clear was that the recordkeeping was ridiculous 
and with no apparent benefit.
    So do I think it is possible to implement with the guy that 
has got the open boat trying to make a living, working as a 
one-man business? Where is he supposed to put these records? 
How is he supposed to do it?
    These are people--you know, these are some of the hardest 
working people you are going to find anywhere in America. They 
have done it the way their fathers have done it and their 
grandfathers have done it. The industry has evolved in the over 
200 years that it has been around, but it is not going to 
evolve any more with a hammer. You can't beat it into them. We 
need education. We need resources.
    It is an onerous document that is doomed to failure, or if 
you want to talk about evolution of fishing, there is going to 
be a lot of dead ends in that evolution. There is going to be a 
lot of people that are going to go extinct because of this 
permit as I understand it now.
    Mr. LoBiondo. Could you even venture a guess as to what 
these new regulations would cost the fishing industry, or is it 
kind of too hard to get the brain around?
    Mr. Roussos. I haven't approached it from that point of 
view. I couldn't venture a guess.
    Mr. LoBiondo. OK. Mr. Jones, can you tell us what your 
costs have been to comply with the EPA--or ECA, sorry?
    Mr. Jones. The 1 percent sulfur requirement that is in 
place now? Actually I can't give you that off the top of my 
head here, but I can say we consider those costs to have been 
manageable. The difference between our old sulfur and the 1 
percent sulfur has been something like--I think it is like $30 
a ton or something like that, and we have been able to program 
that into our program, and our customers have been able to 
record that. It is the $300 to $400 a ton that is what is 
really scaring us.
    Mr. LoBiondo. And I think you alluded to this, that there 
is a real fear and a real possibility that shippers could 
decide to move cargo by other means with this?
    Mr. Jones. Yes. These are very low-value commodities. This 
is like aggregate that is used for road construction. So the 
transportation is sort of more than half the cost of the 
delivered product, so if we increase that cost significantly by 
30 or 40 percent, we have been told by our customers that they 
will not be able to move that cargo by ship anymore, and there 
will be movements by other modes of transportation.
    Economic theory, if you raise the price of something, 
something else will substitute in to move it. So it is very 
difficult to pin down exactly what that is, but we are quite 
concerned and quite convinced that we will lose a big part of 
the business that is currently moving by ship to other forms of 
transportation because of mobile or sourcing shift. It may be 
that instead of moving the product to one place, it will be 
sourced from another closer place and moved by truck, for 
instance.
    Mr. LoBiondo. This is certainly one of the concerns that at 
least some of us have, and as we struggle in the next few 
months to try to come up with some kind of a solution for the 
highway bill, it almost further underscores that with not being 
able to come up with enough money for highways, you are not 
actually asking for money, you are asking for certainty and 
regulatory relief here, which could help balloon out a 
problem--keep from ballooning out a problem at the other end if 
we could just be sensible, because in many respects, especially 
with the short seas shipping, this makes sense for America, it 
makes sense for shippers. And it is very, very frustrating to 
deal with the bureaucracy from our standpoint when that which 
is so obvious to so many, just is--we can't get to a conclusion 
on it.
    So unless any of you have any last comments, I want to 
thank you very much for being here today. I assure you on 
behalf of Chairman Hunter and the rest of the subcommittee that 
this is an issue we will continue to try to find a way to get 
you some relief. And the committee now stands adjourned.
    [Whereupon, at 4:46 p.m., the subcommittee was adjourned.]


                                 
