[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]


      U.S. INTERNATIONAL FOOD AID PROGRAMS: TRANSPORTATION PERSPECTIVES

=======================================================================

                             JOINT HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   LIVESTOCK AND FOREIGN AGRICULTURE

                        COMMITTEE ON AGRICULTURE

                                AND THE

                            SUBCOMMITTEE ON
                COAST GUARD AND MARITIME TRANSPORTATION

             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           NOVEMBER 17, 2015

                               __________

                           Serial No. 114-34

                       (Committee on Agriculture)
                           Serial No. 114-31

            (Committee on Transportation and Infrastructure)
            
            
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                        COMMITTEE ON AGRICULTURE

                  K. MICHAEL CONAWAY, Texas, Chairman

RANDY NEUGEBAUER, Texas,             COLLIN C. PETERSON, Minnesota, 
    Vice Chairman                    Ranking Minority Member
BOB GOODLATTE, Virginia              DAVID SCOTT, Georgia
FRANK D. LUCAS, Oklahoma             JIM COSTA, California
STEVE KING, Iowa                     TIMOTHY J. WALZ, Minnesota
MIKE ROGERS, Alabama                 MARCIA L. FUDGE, Ohio
GLENN THOMPSON, Pennsylvania         JAMES P. McGOVERN, Massachusetts
BOB GIBBS, Ohio                      SUZAN K. DelBENE, Washington
AUSTIN SCOTT, Georgia                FILEMON VELA, Texas
ERIC A. ``RICK'' CRAWFORD, Arkansas  MICHELLE LUJAN GRISHAM, New Mexico
SCOTT DesJARLAIS, Tennessee          ANN M. KUSTER, New Hampshire
CHRISTOPHER P. GIBSON, New York      RICHARD M. NOLAN, Minnesota
VICKY HARTZLER, Missouri             CHERI BUSTOS, Illinois
DAN BENISHEK, Michigan               SEAN PATRICK MALONEY, New York
JEFF DENHAM, California              ANN KIRKPATRICK, Arizona
DOUG LaMALFA, California             PETE AGUILAR, California
RODNEY DAVIS, Illinois               STACEY E. PLASKETT, Virgin Islands
TED S. YOHO, Florida                 ALMA S. ADAMS, North Carolina
JACKIE WALORSKI, Indiana             GWEN GRAHAM, Florida
RICK W. ALLEN, Georgia               BRAD ASHFORD, Nebraska
MIKE BOST, Illinois
DAVID ROUZER, North Carolina
RALPH LEE ABRAHAM, Louisiana
JOHN R. MOOLENAAR, Michigan
DAN NEWHOUSE, Washington
TRENT KELLY, Mississippi

                                 ______

                    Scott C. Graves, Staff Director

                Robert L. Larew, Minority Staff Director

                                 ______

           Subcommittee on Livestock and Foreign Agriculture

                 DAVID ROUZER, North Carolina, Chairman

BOB GOODLATTE, Virginia              JIM COSTA, California, Ranking 
STEVE KING, Iowa                     Minority Member
SCOTT DesJARLAIS, Tennessee          STACEY E. PLASKETT, Virgin Islands
VICKY HARTZLER, Missouri             FILEMON VELA, Texas
TED S. YOHO, Florida                 RICHARD M. NOLAN, Minnesota
DAN NEWHOUSE, Washington             CHERI BUSTOS, Illinois
TRENT KELLY, Mississippi

                                  (ii)


             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                  BILL SHUSTER, Pennsylvania, Chairman

DON YOUNG, Alaska                    PETER A. DeFAZIO, Oregon, Ranking 
JOHN J. DUNCAN, Jr., Tennessee,      Minority Member
  Vice Chair                         ELEANOR HOLMES NORTON, District of 
JOHN L. MICA, Florida                Columbia
FRANK A. LoBIONDO, New Jersey        JERROLD NADLER, New York
SAM GRAVES, Missouri                 CORRINE BROWN, Florida
CANDICE S. MILLER, Michigan          EDDIE BERNICE JOHNSON, Texas
DUNCAN HUNTER, California            ELIJAH E. CUMMINGS, Maryland
ERIC A. ``RICK'' CRAWFORD, Arkansas  RICK LARSEN, Washington
LOU BARLETTA, Pennsylvania           MICHAEL E. CAPUANO, Massachusetts
BLAKE FARENTHOLD, Texas              GRACE F. NAPOLITANO, California
BOB GIBBS, Ohio                      DANIEL LIPINSKI, Illinois
RICHARD L. HANNA, New York           STEVE COHEN, Tennessee
DANIEL WEBSTER, Florida              ALBIO SIRES, New Jersey
JEFF DENHAM, California              DONNA F. EDWARDS, Maryland
REID J. RIBBLE, Wisconsin            JOHN GARAMENDI, California
THOMAS MASSIE, Kentucky              ANDRE CARSON, Indiana
MARK MEADOWS, North Carolina         JANICE HAHN, California
SCOTT PERRY, Pennsylvania            RICHARD M. NOLAN, Minnesota
RODNEY DAVIS, Illinois               ANN KIRKPATRICK, Arizona
MARK SANFORD, South Carolina         DINA TITUS, Nevada
ROB WOODALL, Georgia                 SEAN PATRICK MALONEY, New York
TODD ROKITA, Indiana                 ELIZABETH H. ESTY, Connecticut
JOHN KATKO, New York                 LOIS FRANKEL, Florida
BRIAN BABIN, Texas                   CHERI BUSTOS, Illinois
CRESENT HARDY, Nevada                JARED HUFFMAN, California
RYAN A. COSTELLO, Pennsylvania       JULIA BROWNLEY, California
GARRET GRAVES, Louisiana
MIMI WALTERS, California
BARBARA COMSTOCK, Virginia
CARLOS CURBELO, Florida
DAVID ROUZER, North Carolina
LEE M. ZELDIN, New York


                                 ______

        Subcommittee on Coast Guard and Maritime Transportation

                  DUNCAN HUNTER, California, Chairman

DON YOUNG, Alaska                    JOHN GARAMENDI, California, 
FRANK A. LoBIONDO, New Jersey        Ranking Minority Member
BOB GIBBS, Ohio                      ELIJAH E. CUMMINGS, Maryland
MARK SANFORD, South Carolina         CORRINE BROWN, Florida
GARRET GRAVES, Louisiana             JANICE HAHN, California
CARLOS CURBELO, Florida              LOIS FRANKEL, Florida
DAVID ROUZER, North Carolina         JULIA BROWNLEY, California
LEE M. ZELDIN, New York

                                 (iii)
                             
                             C O N T E N T S

                              ----------                              
                                                                   Page
Costa, Hon. Jim, a Representative in Congress from California, 
  opening statement..............................................     3
Garamendi, Hon. John, a Representative in Congress from 
  California, opening statement..................................     5
Hunter, Hon. Duncan, a Representative in Congress from 
  California, opening statement..................................     4
Rouzer, Hon. David, a Representative in Congress from North 
  Carolina, opening statement....................................     1
    Prepared statement...........................................     2

                               Witnesses

Berteau, Hon. David J., Assistant Secretary of Defense, Logistics 
  and Materiel Readiness, U.S. Department of Defense, Washington, 
  D.C............................................................     6
    Prepared statement...........................................     7
    Supplementary material.......................................    67
Jaenichen, Sr., Hon. Paul N. ``Chip'', Administrator, U.S. 
  Maritime Administration, U.S. Department of Transportation, 
  Washington, D.C................................................     8
    Prepared statement...........................................    10
    Submitted question...........................................    68
Caponiti, James E., President, American Maritime Congress, 
  Washington, D.C.; on behalf of USA Maritime....................    26
    Prepared statement...........................................    28
Shapiro, J.D., Philip J., President and Chief Executive Officer, 
  Liberty Maritime Corporation, New Hyde Park, NY................    34
    Prepared statement...........................................    36
Murray, CAPT John W., President and Chief Executive Officer, 
  Hapag-Lloyd USA, LLC, Piscataway, NJ...........................    41
    Prepared statement...........................................    43
Schoeneman, Brian W., Political and Legislative Director, 
  Seafarers International Union, Washington, D.C.................    46
    Prepared statement...........................................    48

 
   U.S. INTERNATIONAL FOOD AID PROGRAMS: TRANSPORTATION PERSPECTIVES

                              ----------                              


                       TUESDAY, NOVEMBER 17, 2015

                  House of Representatives,
         Subcommittee on Livestock and Foreign Agriculture,
                                  Committee on Agriculture;
                                                 joint with
   Subcommittee on Coast Guard and Maritime Transportation,
            Committee on Transportation and Infrastructure,
                                                   Washington, D.C.
    The Subcommittees met, pursuant to call, at 10:00 a.m., in 
Room 1300 of the Longworth House Office Building, Hon. David 
Rouzer [Chairman of the Subcommittee on Livestock and Foreign 
Agriculture] presiding.
    Members present from the Subcommittee on Livestock and 
Foreign Agriculture: Representatives Rouzer, Hartzler, 
Newhouse, Kelly, Conaway (ex officio), Costa, Vela, Nolan, and 
Bustos.
    Members present from the Subcommittee on Coast Guard and 
Maritime Transportation: Representatives Hunter, Gibbs, Graves, 
Curbelo, Garamendi, Cummings, and Hahn.
    Staff present: Bart Fischer, Caleb Crosswhite, Haley 
Graves, Mollie Wilken, Stephanie Addison, Faisal Siddiqui, John 
Konya, Andy Baker, and Nicole Scott.

  OPENING STATEMENT OF HON. DAVID ROUZER, A REPRESENTATIVE IN 
                  CONGRESS FROM NORTH CAROLINA

    Mr. Rouzer. This joint hearing of the Subcommittee on 
Livestock and Foreign Agriculture, of the Committee on 
Agriculture, and the Subcommittee on Coast Guard and Maritime 
Transportation, of the Committee on Transportation and 
Infrastructure, on U.S. international food aid programs will 
come to order. I want to thank each of you for joining us this 
morning. We are going to have two panels, and it is very 
important that we continue our review of international food aid 
programs.
    To date, we have heard from USDA and USAID officials 
charged with implementing these vital programs. We have heard 
from those tasked with program oversight and accountability 
about what is working, and what could be improved. We have 
heard from those producing and processing the food used in our 
food aid programs, and we have heard from on the ground 
implementers. Today we will hear from those who are tasked with 
shipping that aid to those in need around the globe. To that 
end, we are holding this hearing in collaboration with our 
colleagues from the Transportation and Infrastructure 
Committee. I want to thank my friend, Chairman Duncan Hunter, 
along with our other colleagues on the Coast Guard and Maritime 
Transportation Subcommittee, for their willingness to examine 
these issues with us.
    While the agriculture and maritime communities have worked 
hand in hand for the past 60 years to deliver food to hungry 
people around the world, the vast majority of government-
impelled cargo is military hardware. However, with the volume 
of military cargo declining, the availability of other 
government-impelled cargo, like food aid, has assumed greater 
significance in sustaining a viable U.S. merchant marine 
industry. Given this reality, I personally remain perplexed at 
USAID's continued push to move away from in-kind donations in 
exchange for more cash-based assistance. I am particularly 
concerned by the fact that they attempted to achieve this by 
driving a wedge between the agriculture and maritime 
communities, while using scarce food aid funding to do it. I 
look forward to exploring this, and confirming where things 
currently stand with our witnesses today.
    Given the interconnectedness of our maritime security and 
food aid programs, undermining one ultimately jeopardizes both. 
As we move forward, we must work to maximize cooperation and 
program efficiency throughout all sectors to reach the maximum 
number of people in need, but we must do so in a way that does 
not jeopardize the long-term support and accomplishments these 
programs have achieved.
    Again, thank you all for being here today.
    [The prepared statement of Mr. Rouzer follows:]

 Prepared Statement of Hon. David Rouzer, a Representative in Congress 
                          from North Carolina
    I want to thank each of you for joining us this morning as we 
continue our review of international food aid programs. To date, we 
have heard from USDA and USAID officials charged with implementing 
these vital programs; we have heard from those tasked with program 
oversight and accountability about what is working and what could be 
improved; we have heard from those producing and processing the food 
used in our food aid programs; and we have heard from on-the-ground 
implementers. Today, we will hear from those who are tasked with 
shipping that aid to those in need around the globe.
    To that end, we are holding this hearing today in collaboration 
with our colleagues from the Transportation and Infrastructure 
Committee. I want to thank my friend Chairman Duncan Hunter along with 
our colleagues on the Coast Guard and Maritime Transportation 
Subcommittee, for their willingness to examine these issues with us 
today.
    While the agriculture and maritime communities have worked hand-in-
hand for the past 60 years to deliver food to hungry people around the 
world, the vast majority of government-impelled cargo is military 
hardware. However, with the volume of military cargo declining, the 
availability of other government-impelled cargo--like food aid--has 
assumed greater significance in sustaining a viable U.S. merchant 
marine.
    Given this reality, I remain perplexed at USAID's continued push to 
move away from in-kind donations in exchange for more cash-based 
assistance. I'm particularly frustrated by the fact that they attempted 
to achieve this by driving a wedge between the agriculture and maritime 
communities, while using scarce food aid funding to do it. I look 
forward to exploring this and confirming where things currently stand 
with our witnesses today. Given the interconnectedness of our maritime 
security and food aid programs, undermining one ultimately jeopardizes 
both.
    As we move forward, we must work to maximize cooperation and 
program efficiency throughout all sectors to reach the maximum number 
of people in need, but we must do so in a way that does not jeopardize 
the long-term support and accomplishments these programs have achieved.
    Again, thank you all for being here today. I now yield to Ranking 
Member Costa for any remarks he would like to make.

    Mr. Rouzer. I now yield to Ranking Member Costa for any 
remarks he would like to make.

   OPENING STATEMENT OF HON. JIM COSTA, A REPRESENTATIVE IN 
                    CONGRESS FROM CALIFORNIA

    Mr. Costa. Thank you very much, Chairman Rouzer, and I want 
to also welcome Chairman Hunter, when he gets here, and Ranking 
Member John Garamendi, who I have worked with for years, not 
only in Congress, but in the California State Legislature, as 
we share a lot of common interests as it relates to California 
issues. It is, I believe, important that the House Committee on 
Transportation and Infrastructure, Subcommittee on Coast Guard 
and Maritime Transportation meet with our Subcommittee on this 
important issue. This hearing is the next part of the 
Committee's review of the international food aid programs that 
I have always taken an interest in, and I am glad that we have 
representatives from the maritime industry on the other panel 
that can also testify to the important role they play in 
transportation of food to countries and regions that are in 
need.
    The United States established itself as one of the global 
leaders, and we have led for decades, in international food 
aid. My constituents in California's great Central Valley, the 
San Joaquin Valley, are proud that the fruits, vegetables, and 
dairy products that they produce are used by numerous agencies, 
and for food aid programs, such as U.S. Agency for 
International Development, USAID. It is food that is not only 
used for my constituencies, throughout California, it is used 
throughout the country, because we do have the ability to 
produce an abundance of food, and this is an area where we can 
be helpful. These programs, which operate throughout the world, 
in some of the most dangerous regions in the world, such as 
Syria and the South Sudan, perform incredible services to bring 
food to those most in need living in those areas. You have 
abject poverty, you have conflict, and it seems like constant 
conflict, civil wars, in which man's inhumanity to mankind is 
being exhibited. And this food, therefore, provides the sort of 
humanitarian support that our nation must, and can, provide.
    The efforts also support countless jobs here in America, 
especially in the transportation and logistic side of these 
programs. That is why the reforms that have been made to our 
international food aid programs, for me, are troubling in some 
areas. It is clear that we need to have flexibility, and I 
don't think anybody argues against that, within programs on how 
the aid is delivered to these countries, and to the regions. 
However, let me be clear, the emphasis must remain on providing 
in-kind donations, such as these food products, whether they be 
fruits, vegetables, dairy products from my district, or other 
parts of the country, because, again, it is important that we 
provide the sustenance for these people most in need. I think 
that is far better than providing cash-based assistance. Cash-
based assistance, in which we have, I believe, less control 
over, it is akin to when sometimes we see a person asking for a 
handout in our communities. I used to go into the store and buy 
a sandwich and hand them something to eat, as opposed to giving 
them cash. I don't know what they are going to do with that 
cash.
    So I understand there are challenges, but our mariners also 
provide security, relative to the Maritime Security Program. 
Military cargo accounts for the vast majority of the cargo 
preferences tonnage, and it has been successful, but we have a 
responsibility and the resources to do what we can for those 
who are struggling to feed themselves. And that is why, again, 
these international food aid programs are so important. In a 
more perfect world, we would not have to struggle to find the 
space on ships to transport food aid on military cargo, but 
that is not the reality. Again, I welcome my colleagues from 
the Transportation and Infrastructure Committee, and I look 
forward to hearing the testimony of these witnesses that we 
have here today. And, Mr. Chairman, I yield back the balance of 
my time. Thank you.
    Mr. Rouzer. Thank you very much, and I recognize Chairman 
Hunter for a few remarks, if he has any to make.

 OPENING STATEMENT OF HON. DUNCAN HUNTER, A REPRESENTATIVE IN 
                    CONGRESS FROM CALIFORNIA

    Mr. Hunter. Thank you, Mr. Chairman. I have a little 
something to say, but let's focus on this right now. There is 
no peace dividend in terms of not having to move stuff around 
anymore. I think that we are seeing it is loud and clear, there 
is not going to be a time where we don't have to move military 
goods overseas somewhere. It is not going to happen. We are 
going to have to do it over and over, and it seems like a year 
or 2, or 3 years ago we reached a time where we thought it 
would be okay to start losing U.S.-flag ships, not having them 
ship the 75 percent cargo preference, moving that to 50.
    I think it is clear now, at least with what happened in 
Paris, and what a lot of us have been talking about non-stop, 
things haven't gone away, the world is not a safer place. You 
are going to need these ships to move gear to our troops on the 
ground overseas. And that is it. I mean, that is what I am here 
for. This is not about helping people. It is, in a way, about 
helping people, and giving food to third world countries, but 
in the end it is about national security. It is about 
maintaining a U.S. fleet to serve our U.S. military. That is 
what it is about. It is about national security. And this is a 
way to subsidize the national security aspect of our maritime 
fleet without having to spend tens of billions of dollars to 
create a just sit there forever fleet in the Navy, just in case 
we need it sometime. We are saving tens of billions of dollars 
with MSP, with food aid, and we just need to figure out how we 
make it clear to the government, the Executive Branch, that, as 
long as they keep putting us into wars, because that is what 
the Commander-in-Chief can do, you are going to need ships to 
supply those wars.
    So that is what I would like to get out of this today, is 
that we talk about MSP, talk about food aid, and how you can 
subsidize long-term the U.S.-flag cargo fleet to support our 
troops. That is it. And with that, I yield back. Thank you, Mr. 
Chairman.
    Mr. Rouzer. Thank you, Mr. Chairman. I now recognize 
Ranking Member Garamendi, if he has any comments to make.

 OPENING STATEMENT OF HON. JOHN GARAMENDI, A REPRESENTATIVE IN 
                    CONGRESS FROM CALIFORNIA

    Mr. Garamendi. Thank you, Chairman Rouzer. I appreciate 
your involvement in this. Mr. Hunter and I have been working on 
this for some time, and I know my good friend Jim Costa also. 
The international food aid program is perhaps mostly recognized 
as the P.L. 83-480 program. It is an issue of mutual strong 
interest between our two Committees. Regrettably, too much has 
been said in recent years to mischaracterize the program's 
multifaceted framework. I am pleased that we have this 
opportunity today to set this straight.
    First and foremost, I want to make it very clear that I am 
not going to take a back seat to anybody when it comes to food 
aid. My wife and I have been in the famine camps. We were there 
in the 1980s, my wife in the 1990s, and we have seen what 
happens when the lorry arrives with American food in that 
lorry. We know that that is food. That is real food available. 
We also know when cash arrives, it disappears. There is a very, 
very real difference. And if you want to feed people, then you 
bring food. If you want corruption and chaos, bring cash. It is 
that simple.
    Now, this is a multifaceted program. It is not just about 
delivering food to those who need it around the world. By the 
way, people say you can buy locally. That is where the famine 
is, folks. We are going to buy regionally? Sure, we can buy 
rice in Brazil, or grain in France. We could also buy it in 
America. Now, multifaceted it is. Emergency food assistance, 
yes, but it is also about the maritime industry, as our 
Chairman, Mr. Hunter, said. It is about the maritime industry, 
and the importance in the maritime industry being supported by 
impelled cargo. That is cargo that is required to be carried on 
American ships. It maintains our Merchant Marines. Lose that, 
and we lose the ability to deal with our national security 
issues around the world. We have a 60 year record of a 
successful P.L. 83-480 program, which provides food. It also 
provides the foundation for our Merchant Marines, for our ships 
and our sailors. It has been durable, it has been effective, 
and there are those who are determined in ways that lack 
understanding to somehow destroy that long established and 
successful program by cashing it out.
    So, I want to commend you for these hearings. We are going 
to learn today what this is all about. Mr. Jaenichen is here, 
and also the Department of Defense is here. And I would like to 
know from them what they think about maintaining our capability 
to transport personnel and equipment around the world in times 
of national security issues. You might also just think about 
what happened with Operation Desert Storm back in the 1990s, 
when we didn't have a viable shipping capability of our own 
ships. And so I am going to ask that question as we get into 
it. What happened in the 1990s, when we allowed our Merchant 
Marine capabilities to atrophy? What was the result? It is a 
question we will get to later. Mr. Chairman, thank you.
    Mr. Rouzer. The chair would request that other Members 
submit their opening statements for the record so the witnesses 
may begin their testimony, and to ensure there is ample time 
for questions. The chair would like to remind Members that they 
will be recognized for questioning in order of seniority for 
Members who were present at the start of the hearing. After 
that, Members will be recognized in order of their arrival, and 
I appreciate the Members' understanding. Witnesses are asked to 
limit their oral presentations to 5 minutes. All written 
statements will be included in the record.
    I would like to welcome our first panel of witnesses to the 
panel, Mr. David Berteau, Assistant Secretary of Defense, 
Logistics, and Material Readiness, Department of Defense, and 
the Honorable Paul Jaenichen, Administrator, Maritime 
Administration here in Washington. Gentlemen, thank you both 
for being here today. Mr. Berteau, we will begin with you.

         STATEMENT OF HON. DAVID J. BERTEAU, ASSISTANT
          SECRETARY OF DEFENSE, LOGISTICS AND MATERIEL
    READINESS, U.S. DEPARTMENT OF DEFENSE, WASHINGTON, D.C.

    Mr. Berteau. Thank you, Mr. Chairman. Chairman Hunter, 
Ranking Member Garamendi, Ranking Member Costa, distinguished 
Members of the Subcommittees, I appreciate the opportunity to 
testify today on behalf of the Defense Department on cargo 
preference, the U.S. Merchant Marine, and it is importance to 
us. My organization has the policy and oversight 
responsibilities for logistics and materiel readiness, as you 
noted, which includes sealift, air lift, transportation across 
the board. I ask, as you suggested, that my written statement 
in its entirety be included in the record, and I will summarize 
a little bit in my oral statement.
    I must start out by saying I was born on a farm in 
Louisiana, and grew up picking strawberries, and later ran a 
farm in Texas. I grew up in the auto parts business, and 
married a car dealer's daughter, so the union of transportation 
and agriculture makes perfect sense to me. It has been true for 
my entire life. The success, however, of the Defense Department 
is much more than just that union. Our success depends on 
getting to the mission, and sustaining that mission, and that 
means we have to be ready. We have to have the national 
security readiness. Sealift capability is a major aspect of 
that readiness. We meet those requirements in part by 
maintaining our own surge sealift capacity, mostly roll-on, 
roll-off ships, by pre-positioning military equipment and 
supplies onboard ships located in key areas. But we also rely 
on the ships and the mariners in the commercial U.S. Merchant 
Marine as a contributor to our capacity to surge when needed.
    We have a range of commercial sealift programs that we 
participate in across the government to support that role. My 
written statement covers some of those. I am sure we will 
discuss them today. They are important for the overall health 
of the Merchant Marine, as well as for providing the Defense 
Department with assured access to the capacity we need when we 
need it. The availability of mariners is at least as important 
as the availability of the number of ships for crewing both 
U.S.-flag commercial vessels, as well as for the Navy logistics 
support vessels, and the surge capacity. And as U.S.-flag ships 
decline in numbers, then the mariner jobs associated with those 
potentially also declines, and that is something that we watch 
carefully.
    Ultimately, American depends on the Defense Department to 
be ready to execute its national security missions. That is why 
we are here. The availability of ships and mariners from the 
U.S. Merchant Marine is an important element of that readiness. 
With that, Mr. Chairman, I want to conclude my opening remarks. 
I thank you for holding this hearing, and inviting us to 
participate, and I look forward to answering any questions you 
may have. Thank you.
    [The prepared statement of Mr. Berteau follows:]

  Prepared Statement of Hon. David J. Berteau, Assistant Secretary of
Defense, Logistics and Materiel Readiness, U.S. Department of Defense, 
                            Washington, D.C.
    Chairman Hunter, Ranking Member Garamendi, Chairman Rouzer, Ranking 
Member Costa, and distinguished Members of the Subcommittees, I am 
David Berteau, Assistant Secretary of Defense for Logistics and 
Materiel Readiness, and I appreciate the opportunity to testify today 
on behalf of the Defense Department on the importance of the U.S. 
Merchant Marine and cargo preference.
    National security readiness hinges on the success of the Department 
of Defense (DOD) in getting to the mission and sustaining that mission. 
Sealift capability is a major consideration. The Defense Department 
maintains surge sealift vessels (mostly Roll-On/Roll-Off) in a high 
state of readiness and maintains pre-positioning fleets with military 
equipment and supplies aboard ships located in key ocean areas to 
ensure rapid availability.
    The commercial U.S. Merchant Marine, consisting of ships and 
mariners, is equally important to the Department's organic sealift 
surge capability. The Department relies on the U.S. Merchant Marine as 
a key element of its readiness to perform all of its national security 
missions, working through a wide range of DOD commercial sealift 
programs that support deploying and sustaining military forces around 
the world. One such program is the Voluntary Intermodal Sealift 
Agreement program that provides assured access to U.S.-flag commercial 
sealift capacity during contingency operations in exchange for priority 
for DOD cargo. Another is the Maritime Security Program that provides a 
Federal support stipend for up to 60 U.S.-flag commercial vessels in 
exchange for military access to vessel capacity and global intermodal 
networks. These programs are important for the overall health of the 
U.S. Merchant Marine and for providing the Defense Department with 
assured access to sealift capacity in time of national need.
    U.S. Merchant Mariners are especially critical to the Department's 
ability to surge and sustain the mission. In addition to crewing U.S.-
flag commercial vessels in support of DOD requirements, the Department 
depends on U.S. Mariners to crew Navy logistics support vessels and 
reserve (surge) sealift vessels. The Defense Department plans to use 
the pool of actively sailing U.S. Mariners for the surge ships. To 
mitigate the risk of insufficient numbers of licensed mariners for the 
surge fleet, the U.S. Navy also maintains a Strategic Sealift Officer 
program comprised of approximately 2,000 Naval Reservists who are 
licensed mariners that could be activated, but only in the event that a 
sufficient number of licensed civilian mariners did not volunteer to 
crew the surge fleet.
    As U.S.-flag ship numbers in international trade decline, the 
number of U.S. Merchant Mariners employed in international trade also 
declines. If there are fewer job opportunities, there may be fewer U.S. 
mariners to crew the government-owned sealift ships if they are 
activated for a major crisis.
    There are many factors that affect the viability of the U.S. 
Merchant Marine to keep the ships and mariners needed to meet Defense 
Department needs. These include not only demand to transport DOD cargo 
for day-to-day defense needs but also other potential options to 
maintain mariner licenses. These factors combined may affect the 
ability of the U.S. Merchant Marine to provide the required sealift 
surge and sustainment needed for potential national security missions 
worldwide.
    The Administration continues to examine and propose policies to 
improve the balance of costs and benefits. The Department supports the 
reform of the P.L. 83-480 Title II food aid program and has assessed 
that the proposal will not impact its ability to crew the surge fleet 
and deploy forces and sustainment cargoes. The FY 2016 President's 
Budget food aid reform proposal improves the U.S. Government's ability 
to respond to humanitarian crises within current budget constraints.
    Ultimately, America depends on the Defense Department to be ready 
to execute all of its national security missions. The availability of 
ships and mariners from the U.S. Merchant Marine is an important 
element of that readiness. I thank you for holding this hearing and 
inviting DOD to participate.

    Mr. Rouzer. Mr. Jaenichen?

       STATEMENT OF HON. PAUL N. ``CHIP'' JAENICHEN, Sr.,
       ADMINISTRATOR, U.S. MARITIME ADMINISTRATION, U.S.
         DEPARTMENT OF TRANSPORTATION, WASHINGTON, D.C.

    Mr. Jaenichen. Thank you, Mr. Chairman, good morning. 
Chairman Hunter, Ranking Members Costa and Garamendi, and 
Members of the Subcommittees, I want to thank you for the 
opportunity to discuss the United States Merchant Marine and 
its relationship to U.S. international food aid programs. I 
would like to note that the U.S. Merchant Marine is one of the 
safest fleets in the world, however, there is some risk 
involved whenever you are exposed to the elements, as noted by 
the tragic loss of the El Faro during Hurricane Joaquin. And as 
I point that out, we commend the sacrifice of those mariners 
who lost their lives.
    The U.S. Merchant Marine Act of 1936 declared that 
establishing an American Merchant Marine is a national 
priority. Over the course of their storied history, our 
nation's Merchant Mariners have made important contributions to 
a wide range of U.S. defense activities, and have provided 
critical support for both national emergencies and our economic 
security. To maintain a maritime presence in global trade, and 
assured ready access to ships and crews, to be able to move our 
armed forces when and where they are needed, the United States 
supports a fleet of privately owned and operated ships in 
international trade. The sufficiency of the mariner pool to 
support a large scale activation of the 61 ship government 
reserve sealift fleet, and the two vessels we have that support 
the Missile Defense Agency, directly depend upon the number of 
commercial U.S.-flag vessels that are actively sailing.
    A fleet that is sufficiently sized provides an adequate 
pool of qualified Merchant Mariners to meet the crewing 
requirements of both the commercial and the government sealift 
fleets to meet national defense requirements, during both 
national emergencies, and normal peacetime operations. To 
encourage an active privately owned and operated U.S.-flag 
fleet, Congress has enacted several measures, known as cargo 
preference laws. These laws require that shippers use U.S.-flag 
vessels to transport certain government-impelled cargoes, 
meaning cargo that is funded or financed in any way by the 
Federal Government. Congress has also passed the Maritime 
Security Act, which established the Maritime Security Program, 
or MSP, which provides direct annual stipends for a 60 ship, 
active, commercially viable, militarily useful, privately owned 
U.S.-flag vessels in exchange for assured access by the 
Department of Defense. Of the 78 vessels that trade 
internationally currently today, 57 participate in the MSP 
program, although the authorized level is 60. This is the first 
time that I know of that a Maritime Administrator has testified 
before Congress where we had vacancies in this critical 
program. The MSP provides critical employment for up to 2,400 
U.S. Merchant Mariners, creating a reliable pool of mariners 
ready to support the activation of the government's reserve 
sealift fleets.
    With respect to U.S. food aid programs, and like other 
civilian cargoes under cargo preference, substantial food aid 
is shipped on U.S.-flag vessels. In 2014 over 800,000 metric 
tons of food aid were shipped on U.S.-flag vessels. The vast 
majority of that tonnage, nearly 600,000 tons, consisted of 
P.L. 83-480 Title II food aid. Further, over \1/2\ of the Title 
II food aid cargo, 54 percent, is carried on dry bulk vessels, 
which, unlike most of the liner vessels, are not part of the 
MSP, and receive no active government support beyond cargo 
preference. Based on the recent levels of P.L. 83-480 Title II 
food aid shipments internationally, the Maritime Administration 
estimates that the food aid cargo preference laws sustains 
seven to ten liner-type ships and two dry bulk vessels in the 
U.S.-flag fleet, along with approximately 360 to 480 mariner 
jobs.
    While the Fiscal Year 2016 President's budget includes the 
Administration's food aid reform proposal, we have been 
prepared to work with Members of Congress and other 
stakeholders on alternate legislative approaches to achieve the 
Administration's goal for food aid reform. These goals include 
providing additional statutory flexibility that would allow 
feeding more starving people for no additional cost, while 
addressing the potential impact on food aid reform on maritime 
capacity for national security, and the potential to ensure 
minimal harm to domestic agricultural interests. The number of 
vessels in the international trading fleet has declined from 
106 vessels at the end of 2011 to 78 as of the 31st of October 
of this year. This decline can be directly attributed and 
related to the reductions in both DOD and agricultural cargoes, 
including food aid, in recent years. Vessel owners have taken 
into account a variety of factors before making a decision to 
leave the U.S.-flag fleet.
    However, we do know that the primary reason that privately 
owned and operated ships remain in international trade under 
U.S.-flag is to carry cargo. We also know that reduction in our 
fleet of U.S.-flag vessels trading internationally means a 
reduction in mariner jobs. MARAD closely tracks every billet 
onboard active commercial ships and government U.S.-flag ships, 
and we believe the current number of available mariners is only 
sufficient to meet the initial sealift surge when government 
reserve ships are activated. However, it will be extremely 
challenging to sustain crewing requirements over an extended 
period that requires a rotation of those crew members. Given 
this assessment, I am working closely with the Department of 
Defense, the U.S. Transportation Command, the U.S. Navy, and 
commercial maritime industry to develop proposals to maintain 
the adequate number of trained mariners. In addition, we are 
currently developing a National Maritime Strategy that will 
consider a comprehensive range of options to preserve and grow 
the U.S. Merchant Marine. I am very glad to have the 
opportunity to discuss the important issues with these 
Committees, and I look forward to any questions that you might 
have.
    [The prepared statement of Mr. Jaenichen follows:]

      Prepared Statement of Hon. Paul N. ``Chip'' Jaenichen, Sr., 
    Administrator, U.S. Maritime Administration, U.S. Department of 
                            Transportation,
                            Washington, D.C.
    Good morning, Chairmen Rouzer and Hunter, Ranking Members Costa and 
Garamendi, and Members of the Subcommittees. I want to thank you for 
the opportunity to discuss the United States Merchant Marine and its 
relationship to U.S. international food aid programs.
Overview of the Merchant Marine and its Relationship to Cargo 
        Preference Laws
    The Merchant Marine Act of 1936 declared that establishing an 
American Merchant Marine is a national priority. Over the course of 
their storied history, our Merchant Mariners have made important 
contributions to a wide range of U.S. defense activities and provided 
critical support for national emergencies.
    Under the Merchant Marine Act, it is U.S. policy that ``vessels of 
the merchant marine should be operated by highly trained and efficient 
citizens of the United States.'' The Jones Act requires the use of 
privately owned and operated U.S.-flag vessels for U.S. coastwise and 
non-contiguous commerce, including with Puerto Rico, Hawaii and 
Alaska.\1\ In addition, to maintain a maritime presence in global trade 
and ready access to ships and crews to move our Armed Forces when and 
where they are needed, the United States supports a fleet of privately 
owned and operated ships in international trades. The sufficiency of 
this mariner pool to support a large-scale activation of the 63 ship 
government reserve sealift fleet--measured by their U.S. Coast Guard 
Merchant Mariner Credentials, availability, commitment and skills--
directly depends upon the number of commercial U.S.-flag merchant fleet 
vessels actively sailing. A fleet that is sufficiently sized provides 
an adequate pool of qualified Merchant Mariners to meet the crewing 
requirements of both the commercial and government sealift fleets 
during national emergencies and during normal peacetime operations.
---------------------------------------------------------------------------
    \1\ About 85 U.S.-flag self-propelled ocean-going vessels operate 
in U.S. domestic commerce. Although this segment of the fleet does not 
depend on government-impelled cargoes, the crews of these vessels are 
qualified to operate sealift ships in the government reserve fleet.
---------------------------------------------------------------------------
    To encourage an active, privately owned and operated, U.S.-flag 
fleet, Congress enacted several measures known as ``cargo preference'' 
laws between 1904 and 1954. These laws require shippers to use U.S.-
flag vessels to transport certain government-impelled ocean-borne 
cargoes. Specifically, under the Military Cargo Preference Act of 1904 
and the Cargo Preference Act of 1954, 100 percent of military cargo, 
and at least 50 percent of non-military and agricultural cargoes, must 
be carried on U.S.-flag vessels.
    Congress provided additional support for sustaining a trained 
mariner reserve through the Maritime Security Act of 1996 as modified 
in 2003. This law established the Maritime Security Program (MSP), 
which provides direct annual stipends for up to 60 active, commercially 
viable, militarily useful, privately-owned U.S.-flag vessels. Under 
this program, participating operators are required to make their ships 
and commercial transportation resources available upon request by the 
Secretary of Defense during times of war or national emergency. Of the 
78 U.S.-flag vessels that trade internationally, currently 57 
participate in the MSP program. The MSP fleet ensures military access 
to a global fleet of ships in ocean-borne foreign commerce with the 
necessary intermodal logistics capability to move military equipment 
and supplies during armed conflict or national emergency. MSP vessels 
have been key contributors to our nation's efforts in Afghanistan and 
Iraq over the last decade, moving over 50 percent of all military 
cargo--over 26 million tons--to the Middle East. Since 2009, MSP 
carriers have moved over 90 percent of the ocean-borne cargo needed to 
support U.S. military operations and rebuilding programs in both 
countries. The MSP also provides critical employment for up to 2,400 
U.S. merchant mariners, creating a reliable pool of mariners ready to 
support the activation of the government's sealift fleets. The 2016 
Budget request includes the MSP funding level necessary to enable DOT 
to maintain a U.S.-flag merchant fleet operating in international 
trade, crewed by U.S. mariners, and available to serve the nation's 
homeland and national security needs.
    With respect to the Ready Reserve Force (RRF) government sealift 
reserve (the fleet of 46 former commercial vessels directly owned by 
the Department of Transportation), while there has not been a wartime 
activation of this reserve fleet in nearly a decade, U.S. merchant 
mariners supported Operation Unified Assistance, as the U.S. response 
to the Ebola crisis in West Africa, and a government reserve sealift 
ship that was converted to an Organisation for the Prohibition of 
Chemical Weapons (OPCW) approved destruction facility and subsequently 
destroyed 600 tons of the Syrian Government's declared chemical 
weapons.
U.S. Food Aid Shipments on U.S.-Flag Vessels
    Under the food aid reform proposal in the FY 2016 Budget, the vast 
majority of P.L. 83-480 Title II food aid would continue to be sourced 
and shipped from the United States. The President's FY 2016 Budget 
Request includes $25 million as a component of food aid reforms 
proposed for P.L. 83-480 Title II food aid that would provide 
flexibility to deliver emergency food where appropriate such as in 
conflict situations and logistically difficult crises. The additional 
funding would mitigate the impact that such reforms could have on 
mariner jobs. Most of the request would be devoted to provide direct 
stipend payments to operators of vessels in foreign trade, separate 
from MSP payments. Additionally, some of the request would support 
training programs to retain and educate U.S. mariners for critical 
occupations to preserve mariner employment on U.S.-flag vessels.
    With respect to U.S. food aid programs, in 2014, over 800,000 
metric tons of food aid was shipped on U.S.-flag vessels. The vast 
majority of this tonnage--nearly 600,000 tons--consists of food aid 
provided under the program established under P.L. 83-480 Title II.\2\ 
Further, over \1/2\ of the Title II food aid cargo--54 percent--is 
carried on dry bulk vessels, which, unlike most of the liner vessels, 
are not part of the MSP and receive no government support beyond cargo 
preference. The three internationally trading dry-bulk ships currently 
in the fleet are primarily carrying food aid and operated by a single 
carrier. Based on the recent levels of Title II U.S. food aid shipments 
internationally, the Maritime Administration (MARAD) estimates that 
food-aid cargo preference laws sustain seven to ten liner type ships 
and two dry bulk vessels in the U.S.-flag fleet, and approximately 360 
to 480 mariner jobs.
---------------------------------------------------------------------------
    \2\ During FY 2014, a total of 815,604 metric tons of food aid was 
shipped on U.S.-flag vessels as preference cargo. Of this, 592,549 
metric tons were P.L. 83-480 Title II food aid (318,710 metric tons dry 
bulk and 273,839 metric tons liner).
---------------------------------------------------------------------------
Trends Concerning the U.S.-Flag Vessel Fleet Size
    The total number of vessels in the internationally trading U.S.-
flag fleet has varied considerably over the years, rising from 92 in 
2001 to 106 in 2011and declining to 78 vessels in October 2015, 
continuing a long-term trend decline.
U.S.-Flag International Trading Fleet
2000-2015
Number of Ships
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    The continuing winding down of military operations and the 
decreasing number of U.S. bases in foreign countries and military 
personnel and families assigned overseas has reduced the volume of 
Department of Defense (DOD)-impelled cargoes. In addition, the Moving 
Ahead for Progress in the 21st Century (MAP-21), which took effect on 
July 6, 2012, returned the food aid preference threshold for U.S.-flag 
vessels from 75 percent to its previous level of 50 percent, which is 
the level for other civilian cargoes.
    Vessel owners take into account a variety of factors before making 
a decision to leave the fleet including government-impelled cargo as 
well as foreign-flag trading options for their vessels. In individual 
circumstances, particularly for operators that do not have the benefits 
of participating in the MSP, loss of government-impelled cargo could 
influence a vessel owner's decision to retire vessels from the fleet or 
reflag. Unfortunately, detailed data that would allow the exact 
calculation of when a vessel owner would make that decision are not 
available and are difficult to obtain.
    What we do know is that the reason that privately owned and 
operated ships remain in international trade under the U.S.-flag is to 
move cargo. We also know that a reduction to our fleet of U.S.-flag 
vessels trading internationally means a reduction in mariner jobs in 
international trade. While this does not preclude these mariners from 
seeking jobs in the growing Jones Act trade, the number of ocean-going, 
self-propelled vessels trading in the domestic coastwise trade has 
stayed roughly the same.
Sealift Manpower Assessment
    MARAD is currently working with DOD to address mariner requirements 
and to assess the availability and capacity of sealift assets to 
support national security. MARAD is responsible for determining whether 
adequate manpower is available to support the operation of sealift 
ships during a major crisis. Pursuant to this direction, while there 
are important data difficulties in assessing the availability of 
mariners, we continue to review the pool of civilian U.S. Merchant 
Mariners in international trade available to crew government sealift 
ships when activated and whether the current number of qualified and 
experienced mariners available will be adequate in the future to 
support a large scale activation that extends beyond 6 months in 
duration. This assessment of the status of the civilian Merchant 
Mariner pool includes close coordination with maritime labor and 
consultation with other maritime industry stakeholders.
    While domestic coastwise (Jones Act) trade has been growing in some 
sectors, the reductions in the number of afloat jobs have decreased the 
size of the blue water mariner pool. At the same time, the domestic and 
international training requirements for mariners in domestic coastwise 
and international trade are increasing due to Standards of Training, 
Certification and Watchkeeping passed by the International Maritime 
Organization that take effect in January 2017.
    We closely track every billet onboard the active commercial and 
government U.S.-flag fleet (commercial vessels average about 20 billets 
or 40 mariners on an annualized basis), and within current 
international trade there are approximately 11,300 readily available 
mariners to sail on either commercial or government reserve sealift 
ships. This revised analysis of the contract mariner pool, including 
both union and non-union mariners has been shared with DOD. In contrast 
to the past, the analysis assumes that any mariner, who has not sailed 
in the last 18 months, rather than 24 months, will not be available at 
a time of crisis. While this number of contract mariners is sufficient 
to meet the initial sealift surge when government reserve sealift ships 
are activated, it could severely challenge our ability to sustain 
crewing requirements over an extended period that requires the rotation 
of crew members on both government and commercial vessels. The initial 
activation of the 63 MARAD and Military Sealift Command surge vessels 
will require 1,255 mariners with an additional 1,910 mariners needed 
for sustained operation.
    Maritime labor unions have determined that mariners who remain out 
of work or are not actively sailing for a period of more than 18 months 
are unlikely to keep their mariner credential, training or other 
requirements current. It takes an average of 10 years to produce a 
Master (Ship's Captain) or a Chief Engineer, and current attrition 
rates are projected to overtake the advancement rate of new management 
level blue water mariners within the next 5 years.
    Given this assessment, I am working closely with the U.S. 
Transportation Command, the U.S. Navy, and the commercial maritime 
industry to develop proposals to maintain an adequate number of trained 
mariners. We are currently developing a National Maritime Strategy that 
will consider a comprehensive range of actions to preserve and grow all 
aspects of the U.S. Merchant Marine. We also look forward to continuing 
to provide technical assistance to policymakers in Congress who are 
working to address these important matters.
    I am very glad to have the opportunity today to discuss these 
important issues with the Committees at this critical juncture point 
for the long-term health of the international trading U.S. Merchant 
Marine. I welcome the input of the experts on this Committee along with 
other interested stakeholders on our continued efforts to support food 
aid initiatives and programs advancing our Merchant Marine and national 
security. I look forward to any questions you may have.

    Mr. Rouzer. Thank you both, gentlemen, for being here 
today. Mr. Jaenichen, my question is for you. As I said in my 
opening statement, I have serious concerns about USAID's back 
door attempt to exclude agriculture from negotiations that 
dramatically impact the delivery of in-kind food aid. I am 
concerned about the fact that those meetings excluded 
agriculture groups, a major food aid contributor, obviously. 
Now, in previous hearings we learned that these deals would 
have directed money from Title II food aid programs to MSP and 
non-MSP shippers of food aid. Please explain MARAD's position 
on this proposal, along with the agency's involvement in the 
development of this proposal, if you don't mind.
    Mr. Jaenichen. Thank you, Mr. Chairman. We support the 
Fiscal Year 2016 President's budget, which proposed 25 percent 
flexibility for local and regional purchase. You will note 
that, as part of that Fiscal Year 2016 budgeting, it did 
include $25 million to support and mitigate the impact on the 
U.S. Merchant Marine. One million dollars of that would have 
been used to support training and other efforts with regards to 
the mariners, and then the other $24 million would have been 
used as some kind of a stipend to support the ships most 
affected by that flexibility, and those would be in the non-MSP 
category.
    With regard to the proposal, to which you referred, the 
actual proposal, and MARAD became involved only after the 
former Administrator for USAID, Dr. Raj Shah, approached both 
Secretary Vilsack and Secretary Fox, and there was an agreement 
in principle. And we were tasked, at that time, to work the 
legislative language and the rulemaking that would invoke that 
deal. And that was what we were working on. At no time was this 
an attempt to be a back door, and we fully understood that it 
would require a legislative proposal that would be presented to 
Congress, as well as a rulemaking that would undergo public 
comment.
    Mr. Rouzer. To your knowledge, were the agriculture groups 
consulted at all?
    Mr. Jaenichen. I know that I personally talked with some 
USDA representatives, especially the Associate Administrator 
for Foreign Agricultural Service. I know that the Secretary was 
consulted. I do not know if the commodity groups, or any of 
those stakeholders, were consulted.
    Mr. Rouzer. Thank you. Mr. Costa, do you have any 
questions?
    Mr. Costa. Mr. Secretary, you mentioned that the 
President's budget for food aid also improves our ability to 
respond in these humanitarian situations. How do you think it 
does that?
    Mr. Berteau. How do I think what?
    Mr. Costa. It improves our ability to provide that 
humanitarian aid.
    Mr. Berteau. I think that, in many cases in humanitarian 
aid, the folks who are trying to figure out what to do, time is 
of the essence.
    Mr. Costa. But what is the measure, the criteria? I mean, 
besides time, compared to----
    Mr. Berteau. I think time----
    Mr. Costa.--the last couple of what? Do you have----
    Mr. Berteau. I think time is the critical measure there.
    Mr. Costa. Do you have metrics, in terms of assistance that 
is being provided in these----
    Mr. Berteau. Not that the Defense Department tracks. I 
suspect the Administration does, but I don't track those 
metrics.
    Mr. Costa. Do you track this? Do you provide the metrics to 
measure this? I guess we will find out, do you care to comment?
    Mr. Berteau. I would say that, for those areas where the 
Defense Department is directly involved, for instance the 
Defense Logistics Agency providing humanitarian assistance, and 
we are doing this right now, to refugee camps in Jordan, in 
Lebanon, in Turkey, in Iraq, we track very carefully the entire 
requirements which we receive from the U.S. Agency for 
International Development, or the State Department, through the 
purchase, the transportation, and the ultimate delivery to the 
endpoint. So we track that very carefully in----
    Mr. Costa. So for----
    Mr. Berteau.--but we don't set those requirements. Those 
requirements are set by other agencies----
    Mr. Costa. We have----
    Mr. Berteau.--in the Federal Government, and we respond to 
them.
    Mr. Costa. Because we all know we have a tremendous refugee 
problem in that part of the world, whether we are talking about 
Jordan or Turkey. So, for example, how would that be delivered? 
It would go through a U.S. carrier ship to Haifa, and then from 
there to Jordan?
    Mr. Berteau. For the most part it is going into ports in 
the Persian Gulf coming in, into Turkey coming down, or into 
Jordan directly. And it is both through ship and by air, 
depending--medical supplies, for instance, are often brought by 
air because of the perishability of them.
    Mr. Costa. Well, obviously you have less tonnage. I mean, 
it----
    Mr. Berteau. Right.
    Mr. Costa.--more cost-effective to bring----
    Mr. Berteau. Right.
    Mr. Costa.--it in by air----
    Mr. Berteau. We work hard in those cases to minimize the 
transportation costs, and maximize the amount of money 
availability to deliver humanitarian services. That is one of 
the trades that you have to make. But, again, time becomes a 
critical element----
    Mr. Costa. Yes.
    Mr. Berteau.--there as well.
    Mr. Costa. And you mentioned the assessment of the proposal 
would not impact DOD's ability to crew the surge fleet and 
deploy forces for sustainment of cargoes. Can you give an 
overview of that assessment on how that works?
    Mr. Berteau. If you look at the total amount of cargo 
preference capacity that we use, the single biggest factor of 
that, of course, is DOD's shipping of its own material and 
equipment. That runs roughly \4/5\ of the total cargo 
preference run across the board. Food aid ends up being about 
another 15 percent of the total, and then other Federal cargo 
preferences, Ex-Bank, et cetera, ends up making up the rest of 
the difference. The DOD portion of that, of course, has been 
declining, because we no longer have hundreds of thousands of 
troops deployed in Iraq and Afghanistan. I think Chairman 
Hunter mentioned that it is not going to zero. There is 
probably a floor here that we are at right now. So if we look 
at the modest impact of the----
    Mr. Costa. What could likely increase here in the next 
several years, with the whole issue with ISIL, and our efforts 
to focus a much stronger effort there.
    Mr. Berteau. I don't think I have a precise prediction of 
tonnage and dates for ships, but the chances are that we are 
going to be in that business for quite some time.
    Mr. Costa. Mr. Jaenichen, is it? Your testimony, you talked 
about examples of successful programs that have been 
administered over the last 50 years or so, and the positive 
impact of maintaining mariner jobs. My question to you is, why 
would we want to consider food aid reforms that would threaten 
those jobs?
    Mr. Jaenichen. One of my focuses, as the Maritime 
Administrator, is to minimize any impact on the U.S.-flag 
fleet, which is the reason why I was involved in the 
discussions with USAID for this. Going back to your previous 
question, with regards to metrics for humanitarian assistance, 
I would note that for the ready reserve fleet, we do track 
that, in terms of their readiness to be able to be activated in 
5 days to be able to support that. We most recently did that 
with three ready reserve force ships that supported United 
Assistance, which is the Ebola mission in West Africa, to be 
able to get those supplies, to be able to support the medical 
teams that were on the ground there almost immediately.
    Mr. Costa. Before my time runs out, do you think the food 
aid reform proposal in the President's budget would reduce the 
amount of cargo moved by U.S.-flag ships?
    Mr. Jaenichen. Yes. And that was the reason why there was a 
proposal in the budget to include $24 million, to mitigate the 
impact on the ships that we thought would most be affected, 
which we estimated to be four to six ships.
    Mr. Costa. All right, thank you. Mr. Chairman, my time has 
expired.
    Mr. Rouzer. I now recognize Chairman Hunter for any 
questions he may have.
    Mr. Hunter. Thanks, Mr. Chairman. I guess the first 
question is why do we have 57 and not 60 MSP ships for the 
first time ever?
    Mr. Jaenichen. I believe the real issue there, Chairman 
Hunter, is the lack of cargo. If you don't have cargo, you 
don't have ships, and if you don't have ships, you don't have--
--
    Mr. Hunter. But I thought, with the MSP, you are getting a 
stipend so that you can run your own stuff until the U.S. needs 
you, right?
    Mr. Jaenichen. No. The actual MSP program, under the 
Maritime Security Act, was based on three things. It was based 
on the stipend payment, which was never fully intended to cover 
the entire amount of the differential between operating under 
U.S.-flag versus foreign flag, which we estimate to be $5 to $7 
million. The other basis is you had to have access to 
government-impelled cargo. As Assistant Secretary Berteau 
indicated, those cargoes have declined. In fact, they have 
declined 50 percent since 2010, as has the food aid cargo, and 
other cargoes. I will note that, although the revenue base is 
about 15 percent for food aid, in terms of tonnage, it is about 
50 percent. It is tonnage that fills ships, not revenue. And 
so, from that standpoint, it does have an impact.
    Mr. Hunter. So you only have 57 because we only need----
    Mr. Jaenichen. We only have 57, but the other part of that 
is you have to have civilian cargoes. Today the global market 
is depressed. In fact, I just saw yesterday where the container 
rates are at the lowest level they have been since the 
recession in 2009. And the Baltic Dry Index has indicated that, 
for raw commodities, they are at the lowest level they have 
been in 30 years. And so, to compete in those markets, where 
you have a non-competitive advantage due to the financial 
constraints that you have to be able to operate under U.S.-
flag, it makes it very difficult. Those declining cargoes have 
put downward pressure on them, and they----
    Mr. Hunter. Okay.
    Mr. Jaenichen.--had to make decisions to be economically 
viable.
    Mr. Hunter. So when appropriators appropriate money, 
though, they appropriate for 60 ships, right?
    Mr. Jaenichen. They appropriate $186 million----
    Mr. Hunter. So what happens to the $3.2 million times three 
ships?
    Mr. Jaenichen. What ends up happening, it becomes 
carryover, and then we continue to carry that over through 
the----
    Mr. Hunter. So it stays in the MSP fund?
    Mr. Jaenichen. It stays in the MSP as new year funding, 
that is correct, sir.
    Mr. Hunter. Okay.
    Mr. Berteau. And, Mr. Chairman, for the record, we are 
encouraging them to try to get back up from 57.
    Mr. Hunter. Yes. So, Mr. Berteau, let me ask you, DOD was 
doing a study under General Paul J. Selva, before he moved on, 
USTRANSCOM, and I know MARAD did two strategic symposiums last 
year. What were your findings, number one, and have you shared 
with each other, number two, and I guess three, when do you go 
about implementing all of the things that you found in your 
review?
    Mr. Berteau. Let me start with the third of those, on the 
implementation end. We have a number of additional questions 
that have come up from the reviews that are put in place there, 
and chief among them is the constancy, and consistency, and 
reliability of the data that are generated underneath that. 
What we found is there are a number of disconnects in the 
information, and we have to resolve that. For example, the 
actual demand generated by the requirements that we have laid 
out can be interpreted in a variety of different ways, square 
footage, tonnage, or a specific capacity for cargo, and we have 
to reconcile those.
    Mr. Hunter. So by doing the study, you realized that you 
need to do a better study?
    Mr. Berteau. I arrived while--in my----
    Mr. Hunter. Okay.
    Mr. Berteau.--current job while that was underway, and that 
is exactly the first conclusion that I have come to.
    Mr. Hunter. Okay. So there are no real conclusions, then, 
from what the DOD has seen?
    Mr. Berteau. I think there are some, but not a sufficient 
number.
    Mr. Hunter. Okay. What about you guys? I went to one 
strategy meeting last year, I remember that, but you guys did 
these symposiums, right?
    Mr. Jaenichen. That is correct. In fact, we have a draft 
maritime strategy. It has been informally reviewed by the 
majority of our stakeholders. We have incorporated those 
comments. We intend to put that into formal interagency 
concurrents within the coming days, and our intention is to 
have a draft maritime strategy published by spring for public 
comment.
    Mr. Hunter. How was MARAD able to do it, and not DOD? I 
mean, you are going to ask the same questions.
    Mr. Jaenichen. Well, I would also tell you that we started 
that in 2013. The first National Maritime Strategy symposium 
you referred to was in January of 2014. We have spent some time 
to ensure that we got it right. Now, we have done some 
additional studies, including the availability of mariners----
    Mr. Hunter. What I am asking, though, is why doesn't DOD 
jump on that bandwagon? If you guys know how to ask the 
questions, and know----
    Mr. Jaenichen. They actually certainly have, sir. In fact, 
the Secretary's staff, and the Secretary himself, have provided 
direct comments back to that National Maritime Strategy, and we 
have incorporated those comments.
    Mr. Hunter. And does that help you, Mr. Berteau, on your--
--
    Mr. Berteau. We are looking forward to that. I have 
reviewed that draft strategy, and I did provide some comments 
back to them, and we are looking forward to the next round with 
them. I think that it gives a basis for us to work more closely 
together to make sure we are making the same decisions from 
common data.
    Mr. Hunter. Okay. I guess my last point is, and this will 
be fun for you to answer. Why is it so difficult to get the 
point across to all the stakeholders on how important it is to 
have a fleet on standby for the United States to use for any 
purpose that it sees fit, national security or otherwise? Why 
is it so difficult to get across to--I mean, you have folks 
like the Chairman of the Foreign Affairs Committee, Ed Royce, 
wants to get rid of food aid. So you would think that all the 
stakeholders in Congress, and in the Executive Branch, and the 
regulatory branches, would realize the impact of not having 
enough U.S.-flag ships, U.S. mariners, to crew those ships, and 
what it would do to the country if we really needed this 
capability. Why is it so hard, do you think, to get this point 
across?
    Mr. Berteau. I actually wish I knew the answer to that 
question, of why it is so hard. It is pretty obvious to me. 
Now, we are not using a lot of our capacity to support the 
kinds of long-term, high-sustained combat operations that we 
are actually designed to mobilize for. We are not doing them 
because that is not the war we are in right now. However, to 
say that we don't want to have the capability to do that would 
almost guarantee that the opposite outcome would occur. I 
literally don't know why this is so hard to understand.
    Mr. Hunter. Mr. Chairman, I have one last question. What 
would it cost to not have MSP, and to simply have enough ships 
on hand, let us say that the Navy did it, just sitting there? 
Kind of like the ready reserve fleet, but actually moving 
around every day. What would it cost to have that capability on 
standby 24/7 with the number of ships that we would need to 
surge into a part of the world?
    Mr. Jaenichen. Chairman Hunter, I can give you an example. 
Currently today the MSP program, assuming it is all 60 ships in 
the program, that costs us $186 million. The ready reserve 
force fleet, which is approximately 46 ships, It takes 
approximately $300 million a year to keep them in 5 day 
readiness status, with partial crews, to be able to be 
activated in 5 days. If I extrapolate that out to cover the 
cost to do that for 60, it comes up to about $390 million on an 
annual basis, and so that is nearly $200 million more than what 
it would take to operate the MSP, and that does not include 
recapitalization costs. The MSP, those recapitalization costs, 
are borne by the private operators who are part of the MSP. 
That cost would be in the billions. And so the program itself 
provides us that readiness. You could not afford to do that if 
the government had to pay for it on its own, without cargo 
preference.
    Mr. Hunter. Thank you. Thank you for your indulgence, Mr. 
Chairman.
    Mr. Rouzer. I kept my questions short so you could go long, 
Mr. Chairman. Mr. Garamendi.
    Mr. Garamendi. I will try to stay within my 5 minutes. The 
testimony you gave just a moment ago, Mr. Jaenichen, is 
extremely important, and apparently that information is lost on 
the Administration, as it continues to push the USAID notion of 
cashing out, which would inevitably result in less cargo, and 
less ships, and more expense to the total taxpayer. Is that 
correct? Is that the formula? Is that the equation? You reduce 
the cargo, you increase the cost of readiness to the U.S. 
military. And it is some $200 million additional money. Is that 
correct?
    Mr. Jaenichen. If you were to do it all in a reserve fleet, 
where you have a stationary fleet, and you did not have the 
MSP, that would be an accurate assessment. However, that is one 
of the reasons why, in the Administration's proposal for Fiscal 
Year 2016, it did include additional funding to offset the 
impact we believed it would have on the U.S.-flag fleet.
    Mr. Garamendi. Well, why don't we just ship more cargo, 
rather than more cash subsidy?
    Mr. Jaenichen. As I indicated in my testimony, Ranking 
Member Garamendi, it is cargo that is the reason why you have 
ships, and if there were cargo, the ships that either retired, 
scrapped, or re-flagged would have remained under U.S.-flag, in 
my opinion.
    Mr. Garamendi. Well, let us go to why there may not be as 
much cargo. Talk to me about your enforcement powers to enforce 
the current laws on impelled cargo. Mr. Hunter and I have put 
together, in the last two Coast Guard reauthorizations, 
specific language that you will be given the power to enforce 
the impelled cargo. What is your position with regard to that 
requirement, that is currently being discussed as we try to 
move towards a compromise with our Senate colleagues?
    Mr. Jaenichen. Thank you for the question, Congressman. I 
would note that we have a Notice of Proposed Rulemaking that is 
undergoing interagency review, and has been since March of this 
year. That Notice of Proposed Rulemaking would address many of 
the issues of which you are referring to, with regard to 
enforcement of cargo preference.
    Mr. Garamendi. It has been underway since March? Why hasn't 
it been completed, and where is it stuck?
    Mr. Jaenichen. It is in the interagency review process, 
sir.
    Mr. Garamendi. Meaning OMB?
    Mr. Jaenichen. Yes.
    Mr. Garamendi. So it is stuck in OMB?
    Mr. Jaenichen. I won't say that it is stuck in OMB. It is 
still undergoing interagency review.
    Mr. Garamendi. Very good. What is a sufficiently sized 
fleet? Mr. Berteau, what is a sufficiently sized fleet, and 
then what is the sufficient mariners to man that fleet.
    Mr. Berteau. So we create our requirements not in terms of 
number of ships, but in terms of the requirements of what goes 
on those ships. So it is square footage, it is tonnage, it is 
container capacity, it is roll-on/roll-off capacity across the 
entire fleet. Translating that into ship by ship numbers ends 
up with a range, if you will, of ships available to us. We 
haven't fully tested the limits of our current capacity and 
capability for quite a number of decades. I mean, the closest 
we have come was Operations Desert Shield and Desert Storm, 
which was mentioned earlier as a high demand test for our 
overall capacity. We used a lot, again, at the beginning----
    Mr. Garamendi. Were we able to meet the demand with 
domestic ships?
    Mr. Berteau. Today we can probably meet the demand. We have 
not done a capability requirements study in about 6 years now. 
I think it is about time for us to undertake another one. A lot 
of the world has changed since 2009, the last time we did it. I 
think it is time for us to update those requirements.
    Mr. Garamendi. I would say it is high time.
    Mr. Berteau. I would agree with----
    Mr. Garamendi. It could be tomorrow that we need those 
ships.
    Mr. Berteau. It could well be.
    Mr. Garamendi. And I just heard you say you don't know if 
you have sufficient ships.
    Mr. Berteau. I am insufficiently comfortable with the 
notion----
    Mr. Garamendi. So you are----
    Mr. Berteau. I am insufficiently comfortable with the 
statement that we have enough.
    Mr. Garamendi. Insufficiently comfortable?
    Mr. Berteau. Yes.
    Mr. Garamendi. Meaning you are uncomfortable?
    Mr. Berteau. It means I am uncomfortable, yes.
    Mr. Garamendi. In other words, you are not sure that you 
have sufficient ships to meet the demand that might occur?
    Mr. Berteau. I cannot sit here and tell you that we can 
meet the demand that might occur.
    Mr. Garamendi. Mr. Jaenichen, would you like to comment on 
that?
    Mr. Jaenichen. I can certainly give you some specific 
examples. With regard to Desert Storm and Desert Shield, about 
23 percent of the actual cargo that DOD actually moved, it was 
forced to go on U.S.-flag due to lack of availability. We also 
activated 76 out of the 96 ships that were in the ready reserve 
fleet at the time. I would note that that 76, although it was 
not a full activation, that is 30 more ships than I currently 
have in my ready reserve force fleet today of 46. Additionally, 
at that time, I had 199 ships under U.S.-flag in the 1990-91 
timeframe. Today that is 78. General McDew, who is the current 
Commander of the U.S. Transportation Command, is on record 
saying that if we were required to do the same amount of 
movement to be able to support Desert Shield and Desert Storm, 
we do not have the sealift capacity today.
    Mr. Berteau. And that is why I am uncomfortable.
    Mr. Garamendi. Does that also mean the mariners, as well as 
the ships?
    Mr. Jaenichen. It does. In fact, our mariner pool today 
stands at about 11,300, and I believe that we are on the very 
hairy edge of being able--we can certainly man all of the ships 
that we have currently in the reserve sealift fleet, however, 
we would not be able to support a rotation of those crew 
members at the 3 to 4 month point.
    Mr. Berteau. And I would note that the two examples we use 
here, Persian Gulf I in the early 1990s, Persian Gulf II in the 
early 2000s, neither one extended over a period of time longer 
than 6 months. So the real problem could become with a second 
rotation beyond a 6 month period.
    Mr. Garamendi. Mr. Chairman, just for the record, could you 
provide the specifics in this discussion for both of you? Thank 
you. I yield back.
    [The information referred to is located on p. 67.]
    Mr. Rouzer. Mr. Kelly.
    Mr. Kelly. Thank you, Mr. Chairman, and Ranking Member, and 
I thank the witnesses for being here. I have been on the 
receiving end of getting those goods on ships into theaters, 
and I understand having the capacity when we need it in a full 
spell, and there is a whole lot of difference between a Desert 
Storm and the type of wars that we are in right now, as far as 
what kind of material you have to ship. Your capacity needs to 
be built so that we can send the right amount of tanks, Brads, 
self-propelled Howitzers, all those very heavy things that take 
up a lot of space also.
    But as a theater matures, the need for that fleet goes 
down. No matter how long you stay in theater, you don't have to 
keep re-supplying. Your supplies change, and the types. So do 
you feel like, on a surge capacity, like Desert Storm, for a 
high-intensity conflict, as we say in the military, do you feel 
like we have sufficient ships now that could get us to where we 
need to be so that soldiers, sailors, airmen, and Marines have 
the right equipment when they arrive in theater?
    Mr. Berteau. The answer to that question is probably yes, 
but that is a scenario that actually doesn't reflect the full 
spectrum of the scenarios we have to prepare for. For instance, 
in that scenario there is zero attrition of those ships as they 
are on the way there. We have to be prepared for the potential 
scenario in which, in fact, there is an adversary out there who 
doesn't admit to zero attrition as their objective.
    Mr. Kelly. And having participated in the War on Terror 
since 2003, my first deployment was five, when we actually had 
goods shipped on ships over there, and filled up the CONEXes, 
and containers, and had equipment going. That has very much 
gone down over the last 14 years, so that we are not shipping 
near as much. So, that being said, do we not have room now for 
foreign food on those ships that are not currently shipping the 
same amount of quantities of supplies that they were in 2005 
and 2006, at the surge in Iraq? The amount of equipment and the 
amount of mobilizations has definitely gone down. Has not the 
amount of space required because of military shipments gone 
down since 2005 until the present?
    Mr. Jaenichen. Thank you for the question. What I would 
tell you is there is available capacity to ship U.S. food aid 
cargoes, however, the commodity prices are up high enough that 
there is less being shipped today. In Fiscal Year 2014 we 
shipped about 815,000 metric tons of food aid on U.S.-flag 
ships out of about 1.4 million, so we still met the cargo 
preference requirement. But I do know that today some of the 
ships principally involved in carrying food aid cargoes are 
actually sitting in lay-up, meaning that they are alongside the 
pier with no mariners assigned. So there is capacity, if there 
were additional cargoes to carry. As we pointed out before, it 
is the decline in cargoes which is having the most dramatic 
effect on the U.S.-flag fleet, because it is just a lack of 
cargo that is out there, both on the DOD side, and on the 
civilian cargo side as well.
    Mr. Kelly. And going to Ranking Member Costa's comment, and 
there was another comment, lack of food, or famine, is national 
security. The regions where they can't be fed, and they are too 
poor, and they don't have that, that causes instability in the 
regions. The places where our terrorists are being trained that 
are attacking this nation are places where they don't have 
food, they don't have jobs, they have nothing else, so these 
are training hotbeds for terrorists that want to attack and 
kill citizens of this nation. Would you agree that cash money, 
as opposed to food that has a U.S. flag on it, is much less 
effective in feeding that population? It is much more easily 
corrupted, or to spend money on weapons and those things, as 
opposed to food with a U.S. flag on the back on a U.S.-flag 
ship that delivers it.
    Mr. Jaenichen. I believe that the GAO report that was out 
in August of 2015 had comments about that. I don't have an 
opinion.
    Mr. Berteau. Yes, certainly from a Defense Department point 
of view, we would love to know the answer to that question, but 
it is not something we track.
    Mr. Kelly. But you would agree that money is much easier to 
spend on weapons, and to spend on things that are not good for 
the United States than bags of food with a U.S. flag on them 
that also shows our interest in those countries? And I am very 
pro-defense, but I am also very pro-agriculture.
    Mr. Berteau. The economic reality of what you said is 
indisputable.
    Mr. Kelly. Mr. Chairman, I yield back.
    Mr. Rouzer. The gentlelady from California, Ms. Hahn.
    Ms. Hahn. Thank you, Mr. Chairman, and our Ranking Members 
here today for this joint hearing. While USDA and USAID 
currently provide lifesaving support to people around the world 
in a manner that ensures minimal fraud, they are not perfect. 
But what we are hearing, of course, is these food aid programs 
support our maritime industry, an industry that is crucial for 
our U.S. national security. And what we have heard is a strong 
U.S. maritime industry prepares our nation not only for the 
threats today, but the threats that we can't even comprehend 
tomorrow. And I just want to urge these Committees to consider 
the impacts of food aid reform that are being discussed. I 
certainly want to make our aid more efficient and accountable, 
but not if it means compromising a critical industry for our 
national security.
    So we have heard how more cargo supports our maritime 
industry, and our U.S.-flag ships, and we sort of touched on it 
a little bit, but the actual delivery of aid and food is 
compromised if we are just talking about cash, not just because 
of the fraud issue, but let us remember some of the emergencies 
that we have had recently. The Philippines, that was ravaged by 
a typhoon, and we fed millions in the months that followed. But 
if we had relied just on developing farms, or cash to buy 
locally grown food, where was the capacity to purchase that 
food?
    I really want to talk about the actual delivering of the 
aid. Whether it be natural disasters, or climate change, it 
seems to me that we are having more drought. We are having more 
natural disasters. So if we switched to buying locally, and I 
am going to ask this to Mr. Berteau, what happens if that is 
where our focus is? If we are focused on buying locally, and 
cash instead of delivering food, how is this impacted by these 
natural disasters in the areas where we are attempting to 
deliver aid?
    Mr. Berteau. Congresswoman, I would refer back to a little 
bit of what Congressman Kelly said, that the national security 
implications of this are much broader than just the Defense 
Department point of view. And one of the realities that we face 
today is there is actually no part of the world that doesn't 
matter anymore. Everything matters. It used to be there were 
places we could ignore, and no bad consequences would come from 
it.
    When it comes to our ability to respond to major natural 
disasters, obviously Defense plays a critical role in both 
providing the capability to respond and the capacity to respond 
at the level we need to. But we do that in response, really, to 
the requirements that come from the broader national security 
community, interagency process and the White House. We don't 
generate those requirements. So I can't really analyze the 
specifics of the food aid impact of cash versus food in a 
generic sense there.
    I know that when we are responding to a particular crisis, 
what we bring is the capacity to deliver. We don't have the 
stocks of food ourselves, but we bring the capacity to both 
create not only the carrying capacity, but the infrastructure 
at the receiving end to be able to offload and distribute in-
country, and we have that capability inherent in our military 
today. And it is one of the key elements of shaping and 
engaging in nations all around the world that create the kind 
of bonds that we need to have with those nations in order to 
foster the kind of future we need to have.
    Ms. Hahn. But, again, could you specifically talk about how 
the attempt to reform this, by buying locally, or using cash, 
would be impacted in a region that was destroyed, where there 
is no food, where there is a drought, where there is a natural 
disaster? I think we would be very shortsighted to not realize 
that we could be reforming this to an extent that would be 
impractical in the very regions that we are asked to help and 
deliver aid.
    Mr. Jaenichen. Congresswoman, I would point out that 
typically the U.S. response in a humanitarian crisis is to 
match the response to what the need is. And I am sure, in the 
case what you are referring to, we would have to supply the 
right food versus a local regional purchase if there is not the 
infrastructure to be able to support that. So typically our 
response is in a nature that is tailored to the humanitarian 
crisis.
    Ms. Hahn. So you would think it would be shortsighted for 
us to move away from delivering food, or having the 
agricultural capacity, or the maritime industry capacity to do 
that, as opposed to just a move towards cash and buying 
locally?
    Mr. Jaenichen. I would point out that the Fiscal Year 2016 
budget is to provide the flexibility for up to 25 percent. It 
is not that it is going to be 25 percent, and that has been the 
Administration position.
    Ms. Hahn. Thank you. I yield back.
    Mr. Rouzer. I see the Chairman of the full Committee has 
arrived. All right. Mrs. Hartzler?
    Mrs. Hartzler. Thank you, Mr. Chairman. Thank you, 
gentlemen, for being here, and please walk us through the 
number of mariners that would be available during times of war, 
and how that number is calculated.
    Mr. Jaenichen. Thank you, Congresswoman. Currently today we 
estimate that there are 11,300 who are actively sailing to be 
able to support our international fleet, and also our reserve 
fleet. These are typically the officers who have unlimited 
ocean endorsements, for our deck officers, and unlimited 
horsepower, for our engineers. We also have what are called the 
unlicensed portion, which makes up about 60 percent of any crew 
on any one ship.
    We have actually done it three ways. We used the Coast 
Guard database for the Merchant Mariner credentials that have 
those endorsements on them. We also use our own calculation, 
based on the number of billets on each of the vessels, both on 
our government reserve sealift fleet and our commercial fleet. 
We multiply that by two because of the rotational nature of the 
billets themselves, so every billet typically has to have two 
seafarers to be able to support rotation. And then finally we 
engage the third way, with our maritime labor unions, to be 
able to get a number. And I will tell you that the numbers from 
each of those three different methods is within about 200, and 
so that is why we are pretty confident in the number that we 
have. So it is somewhere between about 11,200 to 11,400. So we 
are right in the middle of the band, at 11,300 as our best 
estimate.
    Mrs. Hartzler. Do you think that is the adequate to meet 
the defense strategy, or potential threats out there, or that 
we need more? How comfortable and confident do you feel that 
that is----
    Mr. Jaenichen. As I pointed out in both my written 
statement and in my oral statement, I believe that we are right 
on the border of not being able to provide sufficient--and as 
Secretary Berteau pointed out, typically our operations have 
not required in excess of 6 months to have a full activation. I 
would tell you that, with a full activation of the ready 
reserve force of the 46 ships, plus the ships in the military 
sealift command, a surge fleet, in addition to the 655 mariners 
that are on them today, they would require 1,200 more. I would 
need 1,900 at about the 4 month point to go in, and actively 
sailing I have about 7,100. So I actually have a shortfall at 
that point, at about the 4 to 5 month point, where the rotation 
would have to occur.
    If we have to go longer than that, I am concerned that we 
do not have the ability to do that, unless the mariners who are 
currently serving onboard agree to go longer. Now, 
historically, our mariners and our U.S. Merchant Marine has 
done whatever it takes to meet the mission, and so we 
anticipate that they would do that, but it is an all volunteer 
force. They are not required to, and we have no way to enforce 
them to do so.
    Mrs. Hartzler. Are you trying to recruit, and to increase 
that number? How are you trying to address what you think might 
be a shortfall?
    Mr. Jaenichen. We are currently working several different 
methods. With regards to the officer side, we do that through 
our state maritime academies, the six state maritime academies, 
and also the U.S. Merchant Marine Academy. And I know for the 
unlicensed side, that are unlicensed seafarers, they have an 
active recruitment process where they bring them in, they train 
them. It takes about a year to be able to get them out to sea. 
So we have an active ongoing process.
    The challenge is, if you do not have jobs, it is hard to 
entice people to come into an industry where there are no jobs, 
or they can't get full time employment. So the challenge is 
with a declining fleet size, it is hard to get folks to come 
into the industry. So we have to fix and stabilize and grow the 
fleet in order to improve those job opportunities.
    Mrs. Hartzler. Very good. Who picks the ships for the 
Maritime Security Program, and how are they selected?
    Mr. Jaenichen. Typically the manner in which we do it is if 
we have an opening, such as we have today, where we have 57 
ships currently in the program, the companies that are out 
there, if they have an operating agreement, they can submit a 
request for a replacement vessel. That replacement vessel would 
go through a review by USTRANSCOM to determine military 
usefulness, and then the Maritime Administration would do a 
review of the economic viability. We would take a look at the 
structure to make sure that it meets all the requirements to be 
able to be U.S. controlled, U.S. operated, so that we have 
direct assured access to be able to support that.
    When we have open solicitations that would come in, and we 
would do the same thing in a different manner, but we do have 
ability to transfer and substitute, and we will be coming out 
with a solicitation here within the next week or so, indicating 
that we have one or more slots to fill in the MSP program, and 
we would invite anybody who has a ship they would like to bring 
in, and we will do a review of that.
    Mrs. Hartzler. Okay. One other quick question. We hear 
that, to be in the Maritime Security Program, a ship must be 
American owned. So how, then, does Maersk, a Danish owned 
company, have 20 ships in MSP?
    Mr. Jaenichen. A Danish company is the parent. The actual 
company that actually has the operating agreement, and operates 
the U.S.-flag, is a U.S. company. It is, in this case, Maersk 
Maritime Limited. It actually has its headquarters in Norfolk, 
Virginia. All of the leadership of that company meets the 
requirement of a documented citizen, that they are U.S. 
citizens, and it is U.S. controlled, and that is part of the 
operating agreement, that we have direct control. The Danish 
company does not.
    Mrs. Hartzler. Thank you. I yield back.
    Mr. Rouzer. Mr. Newhouse?
    Mr. Newhouse. Thank you, Mr. Chairman, and thank you, Mr. 
Secretary and Mr. Administrator, for being here with us this 
morning. I just have one question in this area to ask you 
about. And following up a little bit on Mrs. Hartzler's line of 
questioning. Being from the State of Washington, we have a 
significant, I guess you could say, access to the Pacific Rim, 
but also that means access to areas of potential conflict, also 
areas of regular food need. So just some questions about how 
flagships are selected. Does geographical distribution play 
into that equation? And how much does proximity to potential 
conflict areas play into that? And how much deals with where 
food aid is being sent and distributed?
    Mr. Jaenichen. With regard to the actual selection of the 
ships that are in the MSP, or actually under the U.S. flag, we 
don't necessarily look at proximity. What we look at in the MSP 
program is whether they are commercially viable. Typically a 
company who is in the program, and has several operating 
agreements, they will be operating in some kind of a liner 
string, meaning that they are servicing Europe to the United 
States, for example, and we take a look at that viability. We 
do have vessels. Obviously, from a standpoint of being able to 
surge assets, we have them located around the country to be 
able to support DOD's operational requirements. The U.S.-flag 
typically comes in, and they provide the sustainment option. 
That is what the MSP does, for example, once we got into Iraq 
and Afghanistan, the MSP fleet and the U.S.-flag carried over 
90 percent of all the cargo that went in to support those 
troops, and it went into a line or service: 99 percent of that 
was actually on MSP participants.
    Mr. Berteau. But if I could add a little bit to that? The 
initial capacity is largely generated by our internal 
capability that we already have. We have pre-positioned ships 
in place both ashore and afloat. That is very geographically 
determined, and it ties to the operational plans that are the 
foundation of those requirements. The longer term surge 
capacity is built in both for the organic capacity the Defense 
Department owns, and for the capacity that we looked at the 
commercial, is much less dependent on the geography because it 
has the lead time.
    It also depends more on the geography of where the point of 
origin is for demarcation. Those are known quantities to us. 
Our ports where we are going to be shipping out of are known 
quantities to us, so we can align with that for planning 
purposes, because we have enough time, generally----
    Mr. Newhouse. Yes.
    Mr. Berteau.--in our war plan and our war games to exercise 
that.
    Mr. Newhouse. Okay. Yes. Well, there again, thank you very 
much for your contribution this morning. It is a very 
interesting subject, and I appreciate the joint committee 
hearing. Thank you, Mr. Chairman, I yield back.
    Mr. Rouzer. I would like to thank our witnesses on this 
first panel. I appreciate you being here today. I would like to 
go ahead and call forward our second panel at this time.
    We have with us on our second panel Mr. James Caponiti, 
President of the American Maritime Congress, Mr. Philip 
Shapiro, President and CEO of Liberty Maritime Corporation, 
Captain John Murray, President and CEO of Hapag-Lloyd USA, LLC, 
and Mr. Brian Schoeneman, Political and Legislative Director, 
Seafarer's International Union. I would like to thank each of 
you gentlemen for being here today, and, Mr. Caponiti, we will 
begin with you. And, if you can, try to keep your comments to 5 
minutes.

 STATEMENT OF JAMES E. CAPONITI, PRESIDENT, AMERICAN MARITIME 
     CONGRESS, WASHINGTON, D.C.; ON BEHALF OF USA MARITIME

    Mr. Caponiti. I am sorry, I haven't done this in a while. 
Good morning, Chairman Rouzer, Chairman Hunter, Ranking Member 
Costa, Ranking Member Garamendi, and Members. I appreciate the 
opportunity to testify on behalf of USA Maritime on the 
importance of the Maritime Security Program and food aid cargo 
preference to international trade and U.S.-flag fleet. USA 
Maritime is a coalition of ship owning companies, maritime 
labor organizations, and maritime trade associations which 
directly or indirectly represent the vast majority of privately 
owned U.S.-flag oceangoing commercial vessels operating 
regularly in U.S. foreign trade. For the record, I have 
submitted a list of members of the coalition. USA Maritime 
strongly supports the Maritime Security Program, and existing 
cargo preference laws applicable to military and civilian 
government-impelled cargoes. Taken together, MSP and cargo 
preference programs are the principal means by which our 
national interests are served by maintaining a U.S.-flag 
presence in international water-borne trade.
    Though it is fundamentally a commercial enterprise, the 
U.S. Merchant Marine has proven throughout history its 
capability to serve as an auxiliary force to the Navy. The 
often overlooked fourth arm of defense, as referenced by 
President Franklin Delano Roosevelt, the U.S. Merchant Marine 
and American seafarers have been called upon repeatedly to 
deliver U.S. military personnel and material to areas of 
conflict or emergency, no matter where they occur. The 
maintenance of a strong privately owned U.S.-flag Merchant 
Marine has remained an essential part of our nation's official 
national security strategy.
    According to National Security Directive 28, signed by 
President Bush in 1989, ``Sealift is essential both to 
executing this country's forward defense strategy and to 
maintaining a wartime economy. The United States' national 
sealift objective is to ensure that sufficient military and 
civil maritime resources will be available to meet defense 
deployment, and essential economic requirements in support of 
our national security strategy.'' This policy remains intact, 
and equally relevant, today. The U.S. Merchant Marine has 
continued to demonstrate its value as a strategic resource in 
the 21st century, providing worldwide shipping facilities in 
support to the Department of Defense, and to essential foreign 
assistance programs, as well as to provide water-borne response 
for domestic and international disaster recovery operations.
    MSP is a government-private partnership between the U.S. 
Government and the U.S.-flagged shipping industry, whereby DOD 
has provided assured access to privately owned commercial 
shipping assets, related global intermodal systems, and the 
active pool of U.S. citizen mariners necessary to deploy and 
sustain ground forces and related equipment during overseas 
combat operations. The development and implementation of MSP 
during the 1990s grew from an effort to re-engineer sealift 
capability as a consequence of lessons learned from the first 
Gulf War in 1990 and 1991. Less than a decade later, with 
respect to Afghanistan and Iraq, the effectiveness of MSP and 
its companion sealift readiness program were well proven during 
the sealift campaigns to support U.S. military operations and 
rebuilding programs.
    The U.S. Government also administers a framework of cargo 
preference statutes designed to promote and sustain the U.S.-
flagged fleet by prescribing a level of access to military and 
civilian government-impelled cargoes. It is important that 
these statutes, and the related programs, are adhered to by 
Federal agencies to ensure that taxpayer dollars are spent, at 
least in part, to promote U.S.-flagged shipping, thereby 
preserving national security as an alternative to the 
employment of foreign flag shipping and foreign crews.
    Cargo preference laws remain essential to maintaining a 
robust commercial U.S. Merchant Marine. Virtually every 
privately owned U.S.-flagged vessel engaged in foreign trade 
depends, to some degree, on cargo preference to remain 
economically viable. Indeed, without cargo preference, it is no 
exaggeration to say that the U.S.-flagged international trade 
fleet would continue to diminish to a level approaching MSP 
enrollment, currently at 60 vessels. As Administrator Jaenichen 
commented earlier, we have 78 currently in international trade.
    Nevertheless, the history of cargo preference 
administration indicates that cargo reservation requirements 
are often not self-enforcing, and strict Maritime 
Administration oversight is necessary to ensure that the law is 
followed, and its purposes fulfilled, across the U.S. 
Government. A new regulatory mandate to strengthen MARAD's 
oversight and enforcement authority has been under 
consideration for 7 years. USA Maritime remains disappointed 
that the Administration has thus far failed to formally propose 
an effective enforcement mechanism.
    It is important to note that U.S.-flag capability brought 
to bear in wartime and emergency missions often includes both 
U.S. Government owned sealift vessels and privately owned 
commercial vessels. In those instances, a single pool of 
trained, qualified mariners is called upon to crew government 
ships, the majority of which are idle, but maintained in 
readiness for activation, while simultaneously meeting the 
requirement to continue crewing commercial vessels. 
Accordingly, the availability of an adequate cadre of civilian 
mariners to support the activation and operation of the U.S. 
Government reserve fleet remains a key element of U.S. strategy 
and planning. I just need a moment more.
    Military planners understand that America's security is 
best protected when our country relies on a commercial shipping 
industry domiciled in the United States, employing U.S. 
citizens both at sea and ashore, and subject to U.S. laws and 
regulations. Historically, the United States has been able to 
respond to crises and support military engagements when its 
U.S.-flagged fleet has been sized to do so. The critical 
challenge of this strategy has been the availability of an 
adequate pool of oceangoing citizen mariners to crew the 
government's reserve ships to meet surge and sustainment 
requirements. However, an ongoing decline in the number of 
U.S.-flagged ships operating internationally is negatively 
impacting the mariner pool, a trend that is raising concern 
among military planners and industry officials alike.
    As MARAD's recent report on cargo preference reduction 
surmised, continued declines in cargo volumes could erode even 
the ability to maintain the 60 vessel fleet. In closing, we ask 
that U.S. cargo preference statutes be supported and upheld by 
Congress, and that the programs be fully implemented and 
enforced throughout the Federal Government. Again, thank you 
for this opportunity. I look forward to your questions. Thank 
you.
    [The prepared statement of Mr. Caponiti follows:]

 Prepared Statement of James E. Caponiti, President, American Maritime 
         Congress, Washington, D.C.; on Behalf of USA Maritime
Introduction
    Good morning, Chairman Rouzer and Chairman Hunter. I appreciate the 
opportunity to testify today on behalf of USA Maritime on the 
importance of the Maritime Security Program and food aid cargo 
preference to the international trading U.S.-flag fleet. USA Maritime 
is a coalition of ship owning companies, maritime labor organizations 
and maritime trade associations which directly or indirectly represent 
the vast majority of the privately owned U.S.-flag oceangoing 
commercial vessels operating regularly in the U.S. foreign trade. For 
the record, I have submitted a list of members of the Coalition.
Summary
    USA Maritime strongly supports the Maritime Security Program (MSP) 
and existing cargo preference laws applicable to military and civilian 
government-impelled cargoes. Taken together, MSP and cargo preference 
programs are the principal means by which our national interests are 
served by maintaining a U.S.-flag presence in international waterborne 
trade.
    MSP is a government-private partnership between the U.S. Government 
and the U.S.-flag shipping industry whereby the Department of Defense 
(DOD) is provided assured access to privately-owned commercial shipping 
assets, related global intermodal systems, and the active pool of U.S. 
citizen mariners necessary to deploy and sustain ground forces and 
related equipment during overseas combat operations. The development 
and implementation of MSP during the 1990s grew from an effort to re-
engineer sealift capability as a consequence of ``lessons learned'' 
from the First Gulf War in 1990-1991. Less than a decade later in 
Afghanistan and Iraq, the effectiveness of MSP and its companion 
sealift readiness program were unmistakenly proven during the sealift 
campaigns to support U.S. military operations and rebuilding programs.
    The U.S. Government also administers a framework of cargo 
preference statutes designed to promote and sustain a U.S.-flag fleet 
by prescribing a level of access to military and civilian government-
impelled cargoes. It is important that these statutes and the related 
programs are adhered to by Federal agencies to ensure that taxpayer 
dollars are spent, at least in part, to promote U.S.-flag shipping and 
preserve national security as an alternative to the employment of 
foreign-flag shipping and foreign crews. Cargo preference laws remain 
essential to maintaining a robust commercial U.S.-flag merchant marine. 
Virtually every privately owned U.S.-flag vessel engaged in the foreign 
trade depends to some degree on cargo preference to remain economically 
viable.\1\ Indeed, absent cargo preference, it is no exaggeration to 
say that the U.S.-flag international trade fleet would continue to 
diminish to a level approaching MSP enrollment, currently at 60 
vessels. Nevertheless, the history of cargo preference administration 
indicates that cargo reservation requirements are often not self-
enforcing and strict Maritime Administration (MARAD) oversight is 
necessary to ensure that the law is followed and its purposes fulfilled 
across the U.S. Government. A new regulatory mandate to strengthen 
MARAD's oversight and enforcement authority has been under 
consideration for 7 years, and USA Maritime urges the Administration to 
renew its efforts to implement an effective regulatory enforcement 
mechanism.
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    \1\ E.g., Econometrica, Inc., ``Maritime Security Program Impact 
Evaluation,'' Submitted to the U.S. Department of Transportation, 
Maritime Administration (July 2009) at 26-27, 45.
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The U.S.-Flag Commercial Industry is Critical to National Defense
    Throughout its history, the United States has depended upon a 
viable U.S.-flag merchant marine for its economic and military national 
security. In his second annual address to Congress on December 8, 1790, 
President George Washington encouraged Congress to ``render our 
commerce and agriculture less dependent on foreign bottoms.'' \2\ This 
proscription remains just as relevant 225 years later.
---------------------------------------------------------------------------
    \2\ Second Annual Address of George Washington (Dec. 8, 1790), in 
Edwin Williams, The Statesman's Manual 37 (1854).
---------------------------------------------------------------------------
    The United States benefits economically and strategically from an 
abundance of ocean coastline and internal rivers and lakes, and U.S. 
citizen merchant mariners who navigate, maintain, and work on the 
ships, tugboats, towboats, ferries, dredges, and other vessels that 
provide service in associated waterborne trades. U.S. mariners are 
expertly trained and perform their respective shipboard tasks to the 
highest of standards anywhere in the world. The importance and 
viability of a qualified pool of citizen mariners is distinguishable 
from many other civilian occupations since it is critical to U.S. 
national security and to America's ability to project power.
    Though it is fundamentally a commercial enterprise, the U.S. 
Merchant Marine has proven throughout history its capability to serve 
as an auxiliary force to the Navy. The often overlooked ``fourth arm of 
defense,'' as referenced by President Franklin Delano Roosevelt, the 
U.S. Merchant Marine and American seafarers have been called upon 
repeatedly throughout history to deliver U.S. military personnel and 
materiel to areas of conflict or emergency no matter where they 
occurred. Perhaps most notably, the U.S. Merchant Marine and civilian 
merchant mariners were integral to the Allied Forces' victory in World 
War II, delivering nearly 270 million long tons of cargo in support of 
the war while risking their lives in the treacherous waters of the 
North Atlantic and Pacific Oceans. All told, 733 American cargo ships 
were lost during World War II. Though U.S. Government records 
management for merchant mariners failed to match the precision applied 
to the other services, it is widely held that proportionately, the U.S. 
Merchant Marine suffered a higher death rate during World War II than 
any of the Armed Forces. In fact, according to the 1946 Report of the 
War Shipping Administration ``Up to V-J Day, 5,638 merchant seamen and 
officers are dead and missing; 581 were made prisoners of war.''
    The maintenance of a strong privately-owned U.S.-flag merchant 
marine has remained an essential part of our nation's official national 
security strategy. According to National Security Directive 28, which 
was signed by President Bush in 1989, and which still governs sealift 
policy:

          Sealift is essential both to executing this country's forward 
        defense strategy and to maintaining a wartime economy. The 
        United States' national sealift objective is to ensure that 
        sufficient military and civil maritime resources will be 
        available to meet defense deployment, and essential economic 
        requirements in support of our national security strategy.\3\
---------------------------------------------------------------------------
    \3\ National Security Directive 28 (Oct. 5, 1989).

This policy is reflected in more current pronouncements. For example, 
the Department of the Navy's Fiscal Year 2012 budget request provided 
---------------------------------------------------------------------------
that:

          This budget supports maintaining a robust strategic sealift 
        capability to rapidly concentrate and sustain forces and to 
        enable joint and/or combined campaigns. This capability relies 
        on maintaining a strong U.S. commercial maritime transportation 
        industry and its critical intermodal assets.

    As stated succinctly by General John W. Handy (then Commander, U.S. 
Transportation Command) in 2002--``We simply cannot, as a nation fight 
the fight without the partnership of the commercial maritime 
industry.'' \4\
---------------------------------------------------------------------------
    \4\ Statement of General John W. Handy, Commander, U.S. 
Transportation Command before the House Armed Services Committee, 
Merchant Marine Panel on the Maritime Security Program (MSP) (Oct. 8, 
2002). Similarly, the Navy League of the United States has recently 
indicated that ``[t]he ability to access this maritime capability of 
ships [the U.S.-flag commercial fleet] and seafarers is essential to 
our national and economic security.'' Navy League of the United States, 
Maritime Policy 2011-12 at 17.
---------------------------------------------------------------------------
    As General Duncan J. McNabb (then Commander, U.S. Transportation 
Command) in 2011 informed the U.S. Congress--``USTRANSCOM's partnership 
with the U.S. commercial sealift industry and the Department of 
Transportation has been vitally important in developing new routes for 
conveying cargo around the globe--particularly to regions with 
undeveloped infrastructure.'' \5\
---------------------------------------------------------------------------
    \5\ Id. at 15.
---------------------------------------------------------------------------
    The U.S. Merchant Marine has continued to demonstrate its value as 
a strategic resource into the 21st Century providing worldwide shipping 
facilities and support to the DOD and to essential foreign assistance 
programs, as well as waterborne response related to domestic and 
international disaster recovery operations. The U.S.-flag industry's 
sealift mission in support of U.S. military operations throughout the 
past decade was historically efficient, delivering more than 90 percent 
of all cargoes bound to and from Afghanistan and Iraq during Operations 
Enduring Freedom and Iraqi Freedom (OEF/OIF). U.S.-flag ships also 
supported months-long recovery efforts in the U.S. Gulf of Mexico in 
the aftermath of Hurricanes Katrina and Rita in 2005; in response to 
devastating earthquake destruction in Haiti in 2010; and to bolster 
Federal and state recovery efforts in the New York/New Jersey area that 
followed destruction to that region as a consequence of Hurricane 
Sandy. Few Americans will forget the evacuation of New York City on 9/
11 and the selfless acts of U.S. mariners and private sector companies 
to evacuate citizens from Lower Manhattan--the largest and safest 
evacuation of citizens in U.S. history.
    It is important to note that U.S.-flag capability brought to bear 
in the wartime and emergency missions noted above included both U.S. 
Government-owned sealift vessels and privately-owned commercial 
vessels. However, it is this same single pool of trained and qualified 
civilian mariners who are called upon during emergencies to crew 
government ships, the majority of which are idle but maintained in 
readiness for activation, while simultaneously meeting the requirement 
to continue crewing commercial vessels and maintaining services in the 
U.S.-flag commercial trades.
Origins of MSP
    The First Gulf War in 1990-1991 had highlighted a need for more 
effective and dependable sealift assets from the U.S.-flag commercial 
fleet, as well as upgraded reserve capacity in the government-owned 
surge fleet. An inadequate number of commercial vessels available to 
meet lift requirements together with readiness deficiencies encountered 
during the activation of numerous government reserve vessels had forced 
the DOD to charter foreign-flag vessels to meet 23 percent of its dry 
cargo lift requirement.
    During the effort to revitalize U.S.-flag sealift, special 
attention was directed to gaining assured access to militarily useful 
U.S.-flag commercial vessels. To achieve that outcome, MARAD 
collaborated with DOD's U.S. Transportation Command (USTRANSCOM) to 
develop and implement MSP and its statutorily required sealift 
readiness program, the Voluntary Intermodal Sealift Agreement (VISA).
    Insofar as national security and sealift readiness during 
emergencies are the underlying purposes for maintaining the program, 
MSP sustains civilian mariner jobs to retain an active mariner pool and 
provides a multiplier effect of economic benefits that accrue from 
promoting a U.S.-flag international trade fleet. Nevertheless, MSP's 
value to the government is underscored in many ways. MSP provides 
national control of sealift resources and capabilities during peacetime 
and in emergencies. The level of contingency readiness that carriers 
agree to in their VISA contracts, dictates the amount of preferred 
access to military cargoes that the carrier enjoys during peacetime. In 
this way, the transition to a wartime logistical footing is made easier 
by retaining the same partnerships and processes utilized and ongoing 
with commercial providers. Together with the annual retainer payment, 
the expectation of peacetime cargo revenues has been expected to 
provide a portion of the overall MSP enrollment compensation.
    The timing of MSP implementation in 1996 was fortuitous given the 
tragic events less than 5 years later on 9/11 and during the years that 
followed. As implied earlier, sealift support for the military 
campaigns in Afghanistan and Iraq was notably superior to what the 
government and the maritime industry were able to accomplish during the 
First Gulf War. In the early stages of simultaneous military 
operations, the government-controlled surge sealift components were 
timely activated and efficiently operated, and cargo volumes were large 
enough that it was necessary to involve MSP vessels in liner services 
from the outset. As the years of fighting wore on, the value and 
effectiveness of MSP was manifested with the liner service delivery of 
military cargoes to distribution points at or near the theatre. As the 
reliance on government-owned surge assets diminished after the earliest 
years of OEF/OIF, DOD's reliance on MSP grew to a degree that since 
2009 privately-owned U.S.-flag commercial vessels and their citizen 
crews have transported more than 90 percent of sustainment cargo needed 
to support U.S. military operations. Significantly, vessels enrolled in 
MSP carried 99 percent of those cargoes. Only three percent of OEF/OIF 
cargo moved on foreign-flag charters compared to 23 percent during the 
1990-1991 sealift mission. U.S. citizen merchant mariners crewed all of 
the U.S.-flag vessels--government surge and commercial alike--engaged 
in the sealift mission.
    The government relies on a partnership with U.S.-flag operators and 
maritime labor organizations to obtain the assured access to the 
commercial sealift capability and civilian merchant mariners. MSP/VISA 
are administered jointly by MARAD and DOD's USTRANSCOM. With MSP 
funding, the government leverages a relatively small investment, 
currently $186 million annually for 60 ships of diverse capability, to 
gain assured access to military useful ships and related intermodal 
transportation networks. The investment also works to ensure the 
continued viability of both a U.S.-flag fleet engaged in international 
trade and the pool of seafarers to crew those vessels. Without a viable 
U.S.-flag commercial fleet and the American merchant mariners this 
fleet supports, the United States would be unable to deploy and 
effectively sustain its military forces on a global basis.
    The government-private industry partnership itself is unique, and 
it entails peacetime planning and an operational relationship through 
peacetime service contracts. The U.S. companies enrolled in MSP/VISA 
agreements are required to be managed by U.S. citizens, and those 
companies having a foreign parent are required to execute security 
agreements that protect the rights and interests of the United States. 
The companies have the equivalent of a ``secret'' clearance enabling 
participation in joint planning and operational exercises with U.S. 
military commands in a secure environment at regular intervals.
    Effective October 1, 2015, the MSP authorization period was 
extended for 10 years through Fiscal Year 2025. Given the austere 
fiscal environment facing DOD and every other executive agency for the 
foreseeable future, it is important to note from a budgetary standpoint 
that the fleet of vessels and infrastructure available for military 
missions through the MSP is capitalized and recapitalized solely 
through the private investment of the owners and operators of enrolled 
vessels.
    The availability of a trained and qualified mariner pool sufficient 
to support the activation and operation of the U.S. Government's surge 
sealift assets remains a key element of U.S. strategy and planning. 
This organic lift includes MARAD's Ready Reserve Force (RRF) which 
currently numbers 46 ships and the Military Sealift Command's (MSC) ten 
Large Medium-Speed Roll-on Roll-off ships (LMSRs). These vessels are 
maintained by commercial ship managers in prescribed levels of 
readiness and outported in reduced operating status (ROS) in commercial 
berths or in government facilities, available to be activated when 
crises arise. To promote readiness and to enable rapid transition to 
operational capability, ROS vessels are partially crewed while idle. 
Once activated and fully crewed, all of these assets, RRF and LMSR 
alike, fall under MSC's operational control. The surge sealift 
capability comprised from these vessels enables the deployment of 
combat forces in the early stages of a conflict. Of course, the vessels 
themselves are essentially useless without trained civilian crews to 
operate them.
    The current taxpayer investment in MSP of $186 million annually is 
modest when compared to the alternative scenario that would call for 
the government to acquire, operate, and maintain equivalent sealift 
capabilities on its own. When assessing the cost effectiveness of the 
MSP, it is important to understand this huge cost avoidance at the same 
time one evaluates the cost of government programs and policies that 
support the U.S. Merchant Marine to achieve national sealift 
objectives. For example during the first 15 years that MSP has impacted 
American sealift policy, the U.S. Government benefited nearly $70 
billion in equivalent capitalization cost avoidance as a result of the 
vessel and intermodal infrastructure capabilities guaranteed through 
MSP/VISA and provided by the private companies participating in these 
programs. In comparison, outlays necessary to fund MSP operating 
agreements during the same period were less than $1.9 billion. 
Accordingly, a further testament to MSP's cost effectiveness lies with 
what the government does not spend.
The Need for a Robust U.S.-Flag Fleet
    Perhaps the largest bargain gained from the government's maritime 
investment lies in sustaining jobs on U.S.-flag ships which benefits 
America economically as a large international trading power while also 
ensuring our country has the readily available pool of trained and 
qualified citizen seafarers on which the nation relies to provide 
sealift during emergencies. A fundamental element of U.S. maritime 
legislative policy is--and has been--that ``vessels of the merchant 
marine should be operated by highly trained and efficient citizens of 
the United States'' (46 U.S.C. 51101). Of course, the application of 
this principle is especially true with respect to developing and 
maintaining the nation's military sealift capability. Military planners 
understand that America's security is best protected when our country 
relies on a commercial shipping industry domiciled in the United 
States, employing U.S. citizens both at sea and ashore, and subject to 
U.S. laws and regulations.
    The United States has been able to respond to crises and support 
military operations in recent decades because its U.S.-flag maritime 
industry was sufficiently sized to do so. Likewise, U.S. sealift 
strategy calling first for the deployment of government-owned surge 
assets followed by the use of commercially sourced ships for the longer 
sustainment phase of missions has been very effective. The critical 
component of this strategy has been maintaining a pool of qualified 
oceangoing U.S. mariners adequate enough to crew the government's surge 
ships when necessary without disrupting commercial crewing 
requirements. However, recent trends are causing concern among military 
planners and industry officials with respect to the availability of 
U.S. mariners to meet surge and sustainment requirements for the 
duration of a conflict in the future.
    The pool of U.S. mariners available to crew government ships when 
activated has been declining over the last decade, creating the 
distinct likelihood that America's national security will be adversely 
impacted in the near future if the trend continues. Much of this 
decline stems from the fact that it is increasingly difficult for U.S.-
flag ships to compete in international commerce against heavily 
subsidized foreign flag vessels, many of which operate in a tax-free 
environment.
    Competition in global shipping is fierce and survival depends on 
many factors. Quality of service can trump cost to a degree, but much 
of the market is driven by carriers adhering to a minimum level of 
compliance with international safety and environmental standards while 
employing mariners from under developed countries, all to minimize 
cost. Much of this occurs within open registries which account for more 
than \1/2\ the ships in the world's commercial trading fleet. 
Competitive pressures have been magnified in recent years by the 
economic crisis worldwide and by an oversupply of shipping tonnage. The 
result has been a loss of U.S.-flag oceangoing tonnage and related 
afloat jobs. This is occurring partly due to the framework reduction of 
Federal programs designed to support the maritime industry while other 
programs have failed to keep pace with rapidly changing national and 
international factors affecting shipping conditions and global 
economics. For example, DOD peacetime cargoes that were expected to be 
a principal source of compensation for MSP operators have declined due 
to the reduction in personnel and military bases overseas since 1990.
    The mariner pool has been further impacted by other issues. The 
loss of shipboard billets when U.S.-flag ships leave commercial service 
has a compounding effect on the mariner pool since each billet supports 
roughly two individuals when vacations, training, and other time spent 
on shore are taken into account. The loss of billets also negatively 
affects the ability to recruit and develop new mariners to grow the 
mariner pool. International and domestic regulatory rules limit the 
ability of mariners to maintain and upgrade their seafaring credentials 
without meeting required sea time and recency service requirements. For 
example, a mariner could be required to take specified training to 
update practical experience in technical skills before being allowed to 
volunteer for an emergency sealift billet during a contingency.
    Notwithstanding the willingness of U.S. mariners to maintain their 
qualifications and stand ready to sail--for any reason--into harm's 
way, the retention of mariners in the workforce is a growing and 
serious problem. This problem exists not only in the United States but 
globally, especially among mariners in developed economies. For more 
than a decade, there have been concerns about a global shortage of 
qualified seafarers and the reasons are numerous and varied. It is a 
difficult and often dangerous occupation that, for many, is arduous to 
endure long-term. Time away from family is probably the most prominent 
downside for individuals sailing far from home. In the modern age of 
containerization, expedited cargo handling, and sophisticated shipboard 
technology the job is more complex than ever. The sense of adventure 
once associated with going to sea has eroded significantly. A mariner 
today gets only a limited dose of ``seeing the world''. Turnaround 
intervals in ports today are usually numbered by hours--not days--and 
access to the cities attached to ports of call has realistically been 
eliminated, or at best minimized. Security issues, together with strict 
limitations on the granting of port states' entry visas also impact 
prominently in limiting port access. These and other issues cause some 
mariners entering the workforce to view it as a short-term opportunity 
to make some money rather than view the profession as a career. This is 
especially true in the United States where competition from onshore job 
opportunities is a significant factor that draws mariners away from 
sailing.
    Due in no small measure to America's standard of living and the 
reasonable expectations among all American workers for a living wage, 
health and pension benefits, a safe workplace environment, and other 
employment-related terms and conditions, it is difficult for the U.S.-
flag maritime industry to compete in the international cargo markets 
against foreign flag of convenience vessels and crews from under-
developed countries. This is why the Federal Government has implemented 
and must continue to oversee programs to support the industry.
    There are far fewer opportunities in recent years for MSP carriers 
to benefit from peacetime military cargoes due to the substantial 
reduction in DOD's peacetime footprint in Europe and Asia. The 
expectation that MSP carriers could rely on and benefit from DOD 
peacetime cargo revenues to supplement monthly MSP retainer payments 
was always intended as an economic incentive to enroll in the program. 
The combination of a flat annual stipend level until FY 2019 and an 
expectation that peacetime cargo levels will remain modest into the 
future is an issue of significant concern to MSP carriers that could 
soon jeopardize the program and existing levels of enrolled sealift 
capability.
    All of this points to a continued need to maintain and enforce 
cargo preference regimes. The nation's strategic sealift posture is 
directly dependent on an active pool of qualified U.S. citizen 
mariners. The OEF/OIF sealift missions clearly illustrated the demand 
for mariners during emergency scenarios. In an age when military 
conflicts do not impact significantly on sea-borne commerce, the sizing 
of the U.S. citizen mariner pool must be robust enough to provide for 
the activation of otherwise idle surge sealift for an indefinite period 
to meet wartime demands at a time when commercial activity continues 
unabated.
    It has been said that ocean-borne transport is taken for granted by 
the American public. It's predominantly about freight, and therefore 
essentially invisible to most citizens who view the television in their 
living room as having come from Wal-Mart instead of from Asia. Until 
this past year (apparently), the United States had remained the largest 
trading nation in the world. Yet less than four percent of U.S. foreign 
trade is carried on U.S.-flag ships. The benefits of maintaining a 
strong maritime industry does not naturally resonate with many 
citizens, and our industry remains challenged to raise awareness about 
its strategic value. Thank you for the opportunity provided to us 
through this hearing.
Conclusion
    Throughout U.S. history, the one constant has been that a strong 
commercial maritime capability enhances national security. This is as 
true today as ever. The Maritime Security Program remains the most 
important of the Federal programs that assist U.S.-flag ships in 
international trade, and it should be supported, fully funded, and 
modified to meet today's economic challenges affecting U.S.-flag 
shipping. The government also administers a framework of cargo 
preference programs designed to provide access to military and civilian 
government-impelled cargoes. These statutes and programs should 
similarly be support by all Federal agencies to ensure that taxpayer 
dollars are spent at least in part to support U.S.-flag shipping and 
not spent in their entirety to support foreign-flag shipping and 
foreign crews. Finally, the domestic shipping statutes commonly 
referred to as the Jones Act should be retained to sustain the 
commercial shipping base that helps support the civilian manpower pool 
needed to meet defense requirements.
    Members of USA Maritime:

   American Maritime Congress.

   American Maritime Officers (AMO).

   American Maritime Officers Service (AMOS).

   American Roll-on Roll-off Carrier LLC.

   APL Ltd.

   Hapag-Lloyd USA, LLC.

   Intermarine LLC.

   International Organization of Masters, Mates & Pilots.

   International Shipholding Corporation.

   Liberty Maritime Corporation.

   Maersk Line Limited.

   Marine Engineers Beneficial Association (MEBA).

   Maritime Institute for Research and Industrial Development 
        (MIRAID).

   Sailors' Union of the Pacific.

   Seafarers International Union (SIU).

   Transportation Institute.

    Mr. Rouzer. Mr. Shapiro?

   STATEMENT OF PHILIP J. SHAPIRO, J.D., PRESIDENT AND CHIEF 
              EXECUTIVE OFFICER, LIBERTY MARITIME
                 CORPORATION, NEW HYDE PARK, NY

    Mr. Shapiro. Good morning, Chairman Rouzer, Chairman 
Hunter, Chairman Conaway, Ranking Members Costa and Garamendi, 
and Members of the Subcommittees. Thank you for the opportunity 
to testify on the important issue of international food aid and 
the U.S. Merchant Marine. Let me add that your leadership on 
these issues is to be applauded.
    Liberty Maritime has been active in the carriage of P.L. 
83-480 cargoes since 1988, and has successfully delivered 
almost 30 million tons on over 500 voyages to needy people all 
over the world during the last 27 years. We are proud of the 
historic accomplishments of the P.L. 83-480 program, and of the 
critical role of the U.S. Merchant Marine, and the role it has 
played since 1954 in delivering food and supporting this 
important program.
    You have already heard from other witnesses about how 
important the carriage of food aid is to the Merchant Marine, 
as it comprises an essential cargo source for U.S.-flag 
vessels. I would like to add, from my long experience in this 
industry, that the current situation is unprecedented in its 
level of devastation to the U.S.-flag Merchant Marine. The 
U.S.-flag fleet is suffering economically from an enormous 
decline in available cargoes, not to mention the MAP-21 
reduction from 75 percent to 50 percent carriage. And many 
ships, including several of our own, have had to re-flag, with 
the resulting substantial loss of sealift capacity and maritime 
jobs. So I can say without reservation that the current food 
aid preference cargo base is already inadequate to support the 
existing fleet, and that new and substantial support is needed 
to prevent further deterioration in the fleet size and loss of 
sealift capabilities needed for the future.
    Let me add something about U.S.-flag rates, which have been 
criticized by out of touch academics. What these critics 
forget, first and foremost, is U.S.-flag carriers are rate 
capped by the U.S. Government in its determination of what is a 
fair and reasonable rate. So we cannot charge more than an 
average of our cost, plus a modest regulated profit on any 
particular voyage. And because of a lack of cargoes, and 
vigorous competition amongst U.S.-flag ocean carriers, we never 
come close to hitting the regulated profit amount or ceiling.
    I would like to say a few words about the Obama 
Administration proposals to dismantle P.L. 83-480 in the name 
of reform. As well intended as these proposals may be, they 
have already done substantial harm to P.L. 83-480, and will do 
irreversible damage if adopted by Congress. The proposals have 
put the public narrative on P.L. 83-480's imperfections, rather 
than recognizing the program's enormously impressive track 
record, and seeking to improve on it. In fact, it is hard to 
find another U.S. Government program that has achieved so much 
for so long with so little. I dare say that if other foreign 
assistance programs were anything like the P.L. 83-480 program, 
the American people would actually like foreign aid.
    Much of the funding is spent in the U.S. to buy U.S. 
agricultural products, to mill them here, send them to ports 
via rails, barges, and trucks, and ship them on U.S.-flag 
vessels, which are then delivered by U.S.-based private 
voluntary organizations. And most importantly, the program 
delivers assistance to persons who need it in a transparent, 
accountable, and efficient way. I would ask the Members of the 
two Committees represented here today whether we will be able 
to say that if P.L. 83-480 becomes a cash giveaway program. 
Will the American people support a giveaway program of cash 
that inevitably will be neither transparent nor accountable? I 
don't think we need any polling done to know the answer to that 
question.
    We strongly urge caution and prudence before dismantling a 
program that has worked so well for so long, and won't be easy 
to reconstitute if it turns out that cash and vouchers are the 
wrong way to go. We already are the leading provider of cash 
aid in the world. We need do no more. Indeed, we believe the 
evidence is already accumulating that shows that cash and 
vouchers lead, as one would expect intuitively, to enormous 
diversions of funds, fraud, waste, and abuse. I commend the 
Subcommittees to the November 2014 United Nations Inspector 
General report, and to the 2015 GAO reports, both of which 
indicate that cash voucher programs are rife with fraud and 
abuse, and lack transparency and accountability. One of my 
favorite vignettes from those reports is the admission by GAO 
that the only verification that vouchers are ending up in the 
right hands to be used for the right purposes has been by 
satellite surveillance. I urge the Subcommittees to contemplate 
how likely is it that sporadic satellite surveillance can 
prevent voucher fraud and abuse in Africa.
    From my own company's long experience, I can tell you that 
when we are hired to deliver food, not only to a foreign 
country, but also directly to a refugee camp, that food gets 
there every time. We take that obligation seriously, and 
shipping contracts make it our responsibility. The food gets 
delivered to the dock, or to the inland refugee camp, whatever 
is called for in the contract. Let me add that the President's 
proposal to transfer 25 percent more of P.L. 83-480 funding to 
be used for further cash giveaways tied to a one-time payment 
to carriers is unacceptable. It would hasten the dismantling of 
the P.L. 83-480 program in exchange for a token gesture. The 
U.S. Merchant Marine needs sustained support, not a severance 
payment.
    I respectfully urge that, instead of destroying P.L. 83-
480, Congress should consider ways to improve the purchasing, 
transportation, and distribution of in-kind food aid. We would 
be pleased to offer suggestions, as I am sure other carriers 
and program participants would as well. Most of the available 
ideas are not new. They have been proposed by GAO and others 
over the years, and ignored by shipper agencies, especially 
USAID. For example, the way shipper agencies contract for 
transportation services unnecessarily costs the U.S. Government 
money. In the commercial sector, contracts tend to apportion 
risk and responsibility to the person in the transportation 
chain that has the most control, and can mitigate the risk.
    So, for example, where the ocean carrier does not control 
the ocean terminal, the terminal is responsible for loading or 
discharge delays caused by its employees or actions, not the 
ocean carrier. Yet, ironically, the U.S. Government ignores 
this commercial sensibility in favor of putting all the risk 
and responsibility on the ocean carrier, even for things 
totally out of its control. The inevitable result is the ocean 
carrier rates are higher than they have to be to account for 
this risk.
    From the adoption of commercial terms, to incorporating 
priority berthing on load and discharge ports, these are just 
two of many contracting practices that would increase 
efficiency and lower costs. There are other--many other 
examples of ideas that can improve efficiency. We hope that we 
can continue to work with the Agriculture and Transportation 
and Infrastructure Committees to have those ideas reviewed and 
vetted for possible changes to the law. First and foremost, we 
need to reinstate the 75 percent carriage requirement that was 
in effect for the last 25 years, until the MAP-21 legislation 3 
years ago.
    Thank you again for inviting me to appear here, and I would 
be pleased to answer any questions you or your colleagues may 
have.
    [The prepared statement of Mr. Shapiro follows:]

  Prepared Statement of Philip J. Shapiro, J.D., President and Chief 
   Executive Officer, Liberty Maritime Corporation, New Hyde Park, NY
The Role of the U.S.-Flag Merchant Fleet in the Transportation of U.S. 
        International Food Aid
Background
    Formed in 1988, Liberty Maritime Corporation is the proud operator 
of five U.S.-flag vessels. Over the last fifteen years, the Liberty 
Shipping Group has invested almost $250 million in private capital to 
construct new vessels for the U.S.-flag fleet. Liberty Maritime and its 
affiliates are 100 percent U.S. citizen-owned and 100 percent U.S. 
citizen-controlled.
    Three of Liberty's vessels are modern dry bulk vessels primarily 
engaged in the carriage of U.S. Government international food-aid 
cargoes. Through its 25+ years of operating history, Liberty Maritime 
has successfully delivered almost 30 million tons of U.S. food aid to 
over 30 countries around the world on over 500 voyages.
    In the last few years, Liberty has had to reflag U.S.-flag vessels 
foreign that were purpose-built to carry U.S. Government food aid and 
which predominantly carried such aid since their delivery. The reason 
such vessels have had to leave the U.S.-flag is primarily because of 
the decline in international in-kind food aid. That decline in turn has 
been the result of a decrease in program funding during the Obama 
Administration, the diversion of international food-aid funds to 
expenditures other than delivering in-kind food aid and the reduction 
in the reservation of cargoes to U.S.-flag vessels in 2012 from 75 
percent to 50 percent.
    The other two vessels Liberty operates are roll-on/roll-off (Ro/Ro) 
vessels configured as Pure Car Truck Carriers or PCTC's. Those vessels 
are among the most modern vessels in the U.S.-flag fleet and are 
regularly engaged in both the carriage of U.S. Government military 
cargoes as well as a variety of commercial vehicles. The M/V Liberty 
Promise and M/V Liberty Pride, delivered in August 2009 and April 2010, 
respectively, can each carry about 6,500 cars and have a high degree of 
military utility because of their flexible deck configuration, ultra 
strong ramps and other factors.
    Liberty also participates in the Maritime Security Program. Both 
the Liberty Promise and the Liberty Pride are covered by Maritime 
Security Program Operating Agreements with the U.S. Maritime 
Administration (MARAD). All of Liberty's vessels are enrolled in the 
Voluntary Intermodal Sealift Agreement (VISA) Program and therefore the 
capacity of those vessels is fully committed to the U.S. Government in 
the event of national need.
    Liberty is no stranger to the tribulations of the international 
market. On April 14, 2009, Liberty's vessel the M/V Liberty Sun was 
attacked by pirates off the coast of Kenya while en route to deliver a 
U.S. Government food-aid cargo to Mombassa. [That] occurred shortly 
after the attack on the M/V Maersk Alabama. Both vessels were engaged 
in the carriage of U.S. Government international food aid. Liberty's 
crew performed admirably in implementing the company's security plan 
and in warding off the attack without a boarding. Fortunately, no one 
on the crew was hurt although the vessel was hit by rocket propelled 
grenades and automatic weapons fire.
Importance of the Privately Owned U.S.-Flag Commercial Fleet
    U.S. Government vessel promotional programs have long recognized an 
enduring truth about strategic sealift. That truth is that it is far 
more efficient and economical over the long-term to support a privately 
owned commercial fleet during peacetime to have available in times of 
war or national emergency than it is either to rely on the vicissitudes 
of the international market or to maintain on stand-by status a fleet 
of inactive government-owned ships.
    This axiom is reflected both in law and official national security 
policy.
    Section 50101 of Title 46 of the U.S. Code (going back to the 
Merchant Marine Act, 1920 and amended and affirmed over time) provides 
in part that: ``It is necessary for the national defense and the 
development of the domestic and foreign commerce of the United States 
that the United States have a merchant marine . . . capable of serving 
as a naval and military auxiliary in time of war or national 
emergency.''
    The official national security policy is reflected in National 
Security Directive 28 issued on October 5, 1989 which provides, in 
part, that ``[s]ealift is essential both to executing this country's 
forward defense strategy and to maintaining a wartime economy'' and 
that the ``U.S.-owned commercial ocean carrier industry, to the extent 
it is capable, will be relied upon to provide sealift in peace, crisis, 
and war.''
    These bedrock policies reject the alternatives of relying on the 
foreign market and U.S. Government vessel ownership and belie much of 
the criticisms of the U.S. maritime industry offered by uninformed 
observers.
    In the case of dependence on the international market, the U.S. 
Government has seen through its own experience as well as that of other 
governments (such as that of the United Kingdom in the Falklands War or 
Canada in Operations Desert Storm/Desert Shield) that foreign vessels 
are not always available when needed or reliable when chartered. 
Moreover, as the U.S. Government found when it needed Ro/Ro's in 
Operations Desert Storm/Desert Shield, foreign flag Ro/Ro's, when 
available, were only available at very high (some would say exorbitant) 
charter rates.
    In the case of dependence on inactive government-owned vessels, the 
cost of maintaining such vessels is often much higher than the cost to 
keep available a privately owned U.S.-flag commercial vessel. The 
reasons for this are obvious--the private operator has a high incentive 
to operate efficiently to maximize earnings and the U.S. Government is 
able to leverage the owner's receipts from the ongoing carriage of 
commercial cargoes to pay for maintenance, a well trained, loyal and 
motivated crew and other aspects of vessel operation.
Military Utility of Vessels Carrying Food Aid
    It has been wrongly suggested that U.S.-flag vessels transporting 
international food aid assistance are not ``militarily useful.'' The 
usual basis of this fallacious argument is the simplistic and wrong 
assertion that only vessels enrolled in the Military Sealift Program or 
MSP are ``militarily useful.''
    This approach is wrong on many levels.\1\
---------------------------------------------------------------------------
    \1\ For further information see USA Maritime, ``A Critical Analysis 
of `Food Aid And Agricultural Cargo Preference' '' (Dec. 2010) 
available at www.usamaritime.org.
---------------------------------------------------------------------------
    First, all vessels under the U.S.-flag are militarily useful and 
for that reason are subject to requisition by the U.S. Government for 
any declared national emergency.\2\ This is the case because vessels 
can be put to varied uses with or without modification. Moreover, every 
U.S.-flag vessel employs experienced and licensed U.S. citizen mariners 
who take years to train and are needed to man both privately and U.S. 
Government owned vessels committed to national defense.
---------------------------------------------------------------------------
    \2\ 46 U.S.C.  56301.
---------------------------------------------------------------------------
    Second, most every U.S.-flag vessel in the foreign trade is 
enrolled in the Voluntary Intermodal Sealift Agreement (VISA) program 
that provides for sealift readiness. VISA was established pursuant to 
section 708 of the Defense Production Act of 1950, as amended, which 
authorizes voluntary emergency preparedness programs. The VISA program 
is only ``open to U.S.-flag vessel owners of oceangoing militarily 
useful vessels, to include tugs and barges.'' \3\ Indeed, VISA defines 
``military planning capacity'' for bulk and breakbulk vessels based on 
deadweight measured in metric tons. The U.S. Government relies on VISA 
for sealift capacity and participation in that Program is a much more 
valid measure of ``military usefulness'' than participation in MSP. As 
of July 2015, there were 58 VISA participating companies of which only 
11 were MSP participants. Obviously, MSP participation is an 
insufficient measure of military utility.
---------------------------------------------------------------------------
    \3\ 79 Fed. Reg. 64462 (Oct. 29, 2014).
---------------------------------------------------------------------------
    The Liberty vessel M/V Liberty Eagle is a perfect example of a 
VISA-enrolled (but not subject to an MSP agreement) vessel carrying 
food aid on a regular basis that has substantial military utility. The 
Liberty Eagle is a 2004 built dry-bulk carrier capable of transporting 
51,812 metric tons of food aid or ammunition or other similar hazardous 
cargo and can also carry approximately 600 containers. In fact, we 
believe that the Liberty Eagle may be the largest [of the] U.S.-flag 
vessels specially configured to carry ammunition.
    Third, every U.S.-flag vessel of which we are aware which was built 
abroad and registered under U.S.-flag since the inception of MSP has 
accomplished its reflagging by first applying to MARAD for confirmation 
that the vessel would be eligible for MSP if an MSP agreement would be 
available. The reason this is done is that MSP-eligible vessels receive 
expedited reflagging processing by the U.S. Coast Guard. Therefore, all 
of these vessels meet the MSP standard of military utility.
State of the Privately Owned U.S.-Flag Commercial Fleet
    The privately owned U.S.-flag commercial fleet engaged in the 
foreign trade, so necessary to national defense, is in a state of 
crisis. A combination of the creation of the MSP in 1996 and its 
expansion in 2005 from 47 to 60 vessels, relatively robust levels of 
U.S. Government cargo reserved to U.S.-flag vessels by Federal cargo 
preference laws and international shipping conditions sustained a 
stable fleet from roughly the year 2000 to 2012. During that period of 
time, there were an average of 105 privately owned U.S.-flag vessels 
engaged in the foreign trade. However, since 2012 the fleet has been 
declining precipitously as vessels leave the U.S. registry. According 
to MARAD, that number of vessels as of October 30, 2015 was 77. With 
this trend, it is no exaggeration at all to say that the future of the 
privately owned U.S.-flag fleet hangs in the balance.
    The reason for this decline, we believe, is readily apparent--the 
number of cargoes reserved to U.S.-flag vessels by U.S. cargo 
preference laws has decreased substantially in the last few years. This 
has occurred both with international food aid (P.L. 83-480) and 
Department of Defense cargoes--which are the two main sources of U.S.-
flag U.S. Government freight revenue.
    With respect to the food aid, that program has been under siege by 
the Obama Administration which has decreased overall funding for the 
program while simultaneously diverting more and more of the program to 
agency overhead, ancillary expenses, vouchers and cash payments. And 
the reservation to U.S.-flag vessels--long a matter of bipartisan 
consensus--was decreased from 75 percent to 50 percent as a ``pay for'' 
expedient in the 2012 Federal highway legislation. According to a 
recent MARAD report, this led to a decline of about 40 percent in a 
single year in U.S.-flag freight revenue from Fiscal Year 2012 to 
Fiscal Year 2013.\4\ Overall, dry bulk food aid cargo volumes have 
declined 56 percent since 2010.\5\
---------------------------------------------------------------------------
    \4\ U.S. Maritime Administration, U.S. Department of 
Transportation, ``A Report to Congress--Impacts of Reductions in 
Government Impelled Cargo on the U.S. Merchant Marine'' (April 21, 
2015) at 12.
    \5\ Id. at 5.
---------------------------------------------------------------------------
    While food aid cargoes for the U.S.-flag have fallen precipitously 
in the last few years, nothing has taken their place. In March 2015, 
General Paul Selva, Commander, United States Transportation Command, 
stated--``The reduction in government-impelled cargoes due to the 
drawdown in Afghanistan and reductions in food aid . . . are driving 
vessel owners to reflag to non-U.S.-flag out of economic necessity . . 
. With recent reductions, the mariner base is at the point where future 
reductions in U.S.-flag capacity puts our ability to fully activate, 
deploy, and sustain forces at increased risk.'' According to an August 
2015 Government Accountability Office report,\6\ the United States is 
already short 1,400 mariners needed to meet DOD readiness requirements.
---------------------------------------------------------------------------
    \6\ U.S. Government Accountability Office, ``International Food 
Assistance--Cargo Preference Increases Food Aid Shipping Costs, and 
Benefits Are Unclear'' (August 2015).
---------------------------------------------------------------------------
    With respect to Department of Defense cargoes, from Fiscal Year 
2012 to Fiscal Year 2014 the volume of such cargoes declined almost 25 
percent as measured by tons.\7\ The carriers who have reflagged or 
retired vessels in the last few years have all stated ``that the 
predominate driver in their decision to remove vessels has been the 
loss of preference cargoes.'' \8\ This has occurred for the readily 
apparent reasons that the U.S. Government has reduced its overseas 
bases and installations and because of the decreased military 
operations in Iraq and Afghanistan. In fact, DOD has indicated that 
``the American military presence in Europe as of 2014 is 86 percent 
smaller than it was in 1989, with the closing of over 700 sites 
including hundreds of bases and radio and radar positions.'' \9\
---------------------------------------------------------------------------
    \7\ Id. at 3.
    \8\ Id. at 4.
    \9\ Id. at 16.
---------------------------------------------------------------------------
    Regrettably, these trends are likely to continue which will have a 
devastating effect on the privately owned U.S.-flag merchant marine. As 
the Members of the two Subcommittees are well aware, there are 
proposals pending in both Chambers to gut the in-kind international 
food aid program and essentially convert it into a cash and voucher 
program. And the critics of in-kind food aid--a program which has 
served the United States well since 1954 and has saved millions and 
millions of people around the world--are unceasing and shrill. In fact, 
even without a fundamental change to the U.S. food aid program, 
``overall cargo preference volumes will likely decrease over the next 2 
to 3 years . . . ''.\10\ The privately owned U.S.-flag fleet, already 
struggling financially, is not likely to survive such a further decline 
without direct, immediate and substantial U.S. Government support.
---------------------------------------------------------------------------
    \10\ Id. at 48.
---------------------------------------------------------------------------
Importance of Keeping a Viable In-Kind Food Aid Program
    Although P.L. 83-480 and related programs have historically been 
in-kind food aid programs where U.S. grown agricultural commodities are 
shipped abroad to needy people, there has been increasing pressure from 
the Obama Administration and certain academics to send cash or vouchers 
abroad instead and permit such cash or vouchers to purchase foreign-
sourced agricultural commodities. We believe that such a shift would be 
a tragic mistake on many levels and, as well intentioned as the 
pressure to shift to cash/vouchers may be, ultimately it will result in 
reducing U.S. aid to vulnerable populations or, in other words, the 
exact opposite of what is intended.
    There are those who say that cash/voucher aid is ``faster'' and 
more ``efficient'' than in-kind food--we would not agree. And there is 
no doubt that wiring money to a foreign account or printing vouchers in 
a foreign country can be done quickly and that cash can be handed out 
``efficiently''. But at what cost to accountability, efficacy and 
transparency and to the reputation of the program with the American 
people?
    The ``faster'' and more ``efficient'' theories, in any event, don't 
square with reality. In-kind food aid is usually delivered to places 
where there is known recurring food insecurity and therefore speed of 
delivery is not an issue. The U.S. Government already has other 
substantial programs, like the Foreign Disaster Assistance program and 
the Emergency Food Security Program, which are intended for 
unanticipated emergencies (where cash and vouchers can be used)--if 
those programs are under-funded, why has the Obama Administration not 
asked for substantial increases? Moreover, shipments can be diverted at 
sea and frequently are to meet present needs, and U.S. food can be 
stockpiled abroad to meet unanticipated needs and has in fact been so 
stockpiled.
    But these are issues for another hearing focused on the supposed 
benefits and downsides of sending cash and vouchers instead of U.S. 
food. We only would point out for the present that early returns on the 
extensive use of cash and vouchers are negative. Such use has led to 
fraud, abuse and a lack of transparency and accountability exactly as 
common sense would indicate when cash or vouchers are used in countries 
where there is war, violence and weak social, legal and political 
systems.
    For example, in March 2015 GAO released a report exposing numerous 
cash giveaway issues,\11\ including:
---------------------------------------------------------------------------
    \11\ U.S. Government Accountability Office, ``International Cash-
Based Food Assistance--USAID Has Developed Processes for Initial 
Project Approval but Should Strengthen Financial Oversight'' (March 
2015).

   There is little to no oversight of these cash programs, and 
        as a consequence there is widespread pilfering, corruption, 
        graft and diversion of funds. For example: USAID had only two 
        people in Syria to oversee $\1/2\ billion program; USAID let 
        contractors use overhead satellite imagery to monitor ``food 
        for work'' programs in Somalia; when GAO visited a food for 
        work program in Kenya, nobody from USAID had been there for 
        over a year to check on the program; and USAID is actually 
        handing out envelopes of cash to crowds in developing 
        countries, particularly Syria, without any accountability or 
---------------------------------------------------------------------------
        record of how that cash gets spent.

   The Report also indicated that USAID lacks guidance on 
        program award modifications which took awards from $91 million 
        to $626 million, or $535 million in program expenditures, and 
        that absent such guidance ``USAID cannot hold its staff and 
        partners accountable.'' The GAO report also found that handing 
        out cash in areas where people lack access to food caused local 
        food price spikes of 20-25 percent in numerous instances, and 
        that neither USAID nor its partners put in place protections to 
        prevent counterfeiting, diversions, and other misuse of funds 
        leading to fraud and theft problems.

    In November 2014 the UN World Food Programme's Inspector General 
also issued a report which made ``two high-risk and nine medium-risk 
observations.'' \12\ The high risk observations were that there is a 
persistent diversion of vouchers for non-food procurement purposes and 
that the WFP persons in charge of the program could only meet 25 
percent of their verification targets. Part of the problem was 
attempting to solve a humanitarian crisis in a war zone (Syria), but 
the problem of ``persistent encashment of vouchers'' was also prevalent 
in Jordan and Lebanon.
---------------------------------------------------------------------------
    \12\ United Nations World Food Programme Office of the Inspector 
General, ``Internal Audit of WFP Operations in Syria and Neighbouring 
Countries'' (November 2014).
---------------------------------------------------------------------------
Recommendations
    Liberty strongly recommends that the U.S. Congress consider making 
improvements in the way that U.S. in-kind food aid is contracted for 
and transported to increase transportation and other efficiencies with 
the use of privately owned U.S.-flag commercial vessels. Among the 
potential possibilities that should be considered are: (1) modifying 
contracting for transportation services so that it is based on 
established commercial practices which place the risk of loss on the 
person in the transportation chain most able to control and mitigate 
that risk; (2) moving the transportation function for P.L. 83-480 from 
the U.S. Agency for International Development back to the U.S. 
Department of Agriculture, as it used to be, to more closely align 
commodity purchasing decisions and practices with transportation 
purchases thereby making the program more cost efficient and reducing 
agency coordination delays; (3) requiring foreign ocean carriers to 
comply with the same tender and contractual terms and conditions as 
U.S.-flag carriers; and (4) requiring shipper agencies to comply with 
customary U.S. Government procurement integrity laws, such as the 
Competition in Contracting Act and the Federal Acquisition Regulation, 
to prevent non-competitive practices such as permitting foreign 
speculators to make offers to carry cargoes that they have no ships 
for.
    Finally, and most importantly, we believe that it is essential that 
Congress reverse the reduction in the percentage of international food 
assistance cargoes reserved to U.S.-flag vessels that occurred in 2012 
and resume the 75 percent reservation. Certain officials have grossly 
overestimated the cost of such a resumption using old, outmoded data 
not taking into account the current size of the food aid program and 
current freight costs. When the U.S. House of Representatives passed 
the 75 percent resumption in the 2014 Coast Guard authorization, CBO 
estimated the annual cost of the increase to be an average of $8.8 
million over 5 years in increased outlays.\13\ We respectfully submit 
that this is a very small price to pay to support the sealift 
capabilities provided by U.S.-flag vessels carrying food aid and other 
U.S. Government cargoes.
---------------------------------------------------------------------------
    \13\ H.R. Rep. No. 113-384, 113th Cong., 2d Sess. at 30 (March 25, 
2014).
---------------------------------------------------------------------------
Conclusion
    Liberty Maritime supports a strong and vibrant privately owned 
U.S.-flag commercial fleet and has proven that it is willing to invest 
significant capital to achieve that objective. The current fleet is in 
mortal danger because of declining cargo preference volumes and 
significant action is needed to prevent a precipitous decrease in the 
number of privately owned U.S.-flag vessels available for national 
defense.

    Mr. Shapiro. I apologize for being over the 5 minutes, but 
none of our testimonies were vetted by OMB, so we are going to 
say what we need to say.
    Mr. Rouzer. Point made. Try to keep your comments to 5 
minutes, and there will be plenty of opportunity to expound 
during the question and answer session.

STATEMENT OF CAPT JOHN W. MURRAY, PRESIDENT AND CHIEF EXECUTIVE 
         OFFICER, HAPAG-LLOYD USA, LLC, PISCATAWAY, NJ

    Mr. Murray. Good morning, Chairman Rouzer, Chairman Hunter, 
Chairman Conaway, Ranking Members Garamendi and Costa, and the 
Members of both of these important Subcommittees. I appreciate 
the opportunity to testify today on the subject of food aid, 
cargo preference, and the importance of the Maritime Security 
Program to the United States. As President and CEO of Hapag-
Lloyd USA, I deal with these subjects every day in the ordinary 
course of business. My testimony today aims to highlight the 
importance of these programs to maintaining a viable U.S. 
merchant fleet that is so essential to the national security of 
our country.
    Hapag-Lloyd USA is an American subsidiary of the global 
container carrier Hapag-Lloyd AG. We operate five container 
ships in a weekly liner service between the United States and 
North Europe. All five ships are crewed by American mariners, 
and fly the American flag. They carry cargo that sustains the 
U.S. military mission, and its service members, based in Europe 
and beyond, as well as other preference cargo, including 
American food aid that is delivered to destinations well beyond 
Europe. Our company has operated American ships in the foreign 
commerce of the United States since the early 1900s. Known then 
as Lykes Lines, the company supported our nation's sealift 
requirements for more than 90 years, including two World Wars, 
and numerous other humanitarian and military missions. When 
Congress enacted the Maritime Security Program in 1996, our 
company was one of the first to enroll. To this day, we have 
maintained continuous commitment to both MSP and the Voluntary 
Intermodal Sealift Agreement.
    Mr. Chairman, today's hearing also allows me the 
opportunity to speak personally about my experience as a U.S. 
Merchant Mariner, where I began my career. I graduated from 
Maine Maritime Academy in 1979, and sailed as a deck officer in 
the Lykes fleet. Our company then operated more than 40 U.S.-
flag ships alone, greater than \1/2\ of our nation's entire 
U.S.-flag fleet today. Preference cargoes were abundant then, 
and for our company, the most significant was the U.S. food aid 
that we carried to distressed nations throughout the world. To 
this day I remain proud to have sailed as an American Merchant 
Mariner, to have been part of the transportation link that 
delivered American produced food to desperate people in their 
time of need.
    Throughout our nation's history, the U.S. merchant fleet of 
privately owned U.S.-flag commercial ships, and their U.S. 
citizen crews, have always met our nation's call. We have 
consistently, efficiently, and effectively provided the 
commercial sealift capacity and the civilian mariners needed to 
meet our nation's worldwide military and political objectives. 
For example, the recent conflict in Afghanistan presented 
unique logistical challenges for U.S. military planners due to 
the country's landlocked borders. With an urgent need for new 
assured gateways, the Department of Defense turned to the MSP 
carriers to develop alternative routes. By leveraging existing 
intermodal networks, the MSP carriers were able to develop and 
expand new northern gateways into Afghanistan, and thus provide 
the DOD with continuous seamless distribution of supplies to 
our war fighters when other gateways were closed. It is not 
well known that certain U.S.-flag carriers had long been using 
this route, which gained fame as the Northern Distribution 
Network, to deliver U.S. food aid to counties in Central Asia. 
This is an excellent example of the partnership and 
interdependency that exists between DOD and the MSP operators.
    A strong Maritime Security Program is necessary to ensure 
the long-term success of the U.S.-flag fleet. American ships 
are simply more expensive to operate than their international 
counterparts. They are crewed by Americans, registered in the 
United States, and subject to U.S. laws, taxes, and 
regulations, all of which are greater than international flag 
options. The MSP stipend partially compensates for this cost 
difference, but the remaining cost delta must be achieved 
through access to our nation's cargo preference programs that 
reserve cargo specifically for U.S.-flag ships. There are three 
U.S. cargo preference laws that are vital to the U.S. maritime 
industry, and must be preserved, namely the Cargo Preference 
Act of 1904, Public Resolution 17, which governs the Export-
Import Bank, and the Cargo Preference Act of 1954. Congress 
enacted these laws to ensure that U.S. operators have a 
sufficient U.S. cargo base for their ships operating in foreign 
commerce. Strict enforcement of these laws is fundamental to 
our business success, and our survival as U.S.-flag carriers. 
It is worth noting that the volume of cargo moving under these 
programs for our company is the lowest I have seen in the last 
20 years, with a significant reduction just in the last 12 
months.
    Mr. Chairman, I would like to summarize my testimony as an 
MSP operator and a businessman. U.S. companies own all of the 
ships in the U.S.-flag privately owned fleet. As executives for 
these companies, we must routinely address the operational and 
political realities of our U.S.-flag businesses with our boards 
and shareholders. We frequently are asked to explain the 
implications of newswire political issues, such as the MAP-21 
food aid reduction, the expiration of the Ex-Im Bank charter, 
the future of MSP funding levels, and the overall degradation 
of U.S.-flag cargo, all of which are the result of budget cuts 
and reallocation of government priorities. To be blunt, our 
business model has become a tough sell with our shareholders, 
who, coincidentally, are the same folks that approve capital 
investments for the future of the U.S.-flag fleet. Given the 
precipitous decline in preference cargoes, combined with 
current MSP levels, I now believe it unlikely that we could 
retain the 60 ship MSP fleet if a comparable MSP shortfall were 
to occur today, such as the one that occurred in 2013. 
Likewise, a failure to realistically adjust the funding levels 
for MSP may yield a similar result.
    As a former Merchant Mariner, and a lifelong advocate of a 
strong U.S.-flag Merchant Marine, I know how urgent it is that 
we stabilize our few remaining U.S.-flag ships through the 
programs that exist today. The unfortunate reality of the 
business world is that if a service, product, or business unit 
does not perform, it is eliminated. Our nation's remaining 
U.S.-flag fleet is dangerously close to this reality.
    Mr. Chairman, thank you for the time and the opportunity to 
testify before the joint Committees.
    [The prepared statement of CAPT Murray follows:]

    Prepared Statement of CAPT John W. Murray, President and Chief 
        Executive Officer, Hapag-Lloyd USA, LLC, Piscataway, NJ
Introduction
    Mr. Chairman, I appreciate the opportunity to testify today on the 
subject of food aid, cargo preference and the importance of the 
Maritime Security Program (MSP) to the United States. As the President 
and CEO of Hapag-Lloyd USA, LLC, I deal with each of these subjects 
every day in the ordinary course of business. My testimony will 
highlight the importance of these programs to maintaining a viable U.S. 
merchant fleet that is so essential to the national security of our 
country.
    Hapag-Lloyd USA, LLC (HLUSA) is an American subsidiary of the 
global container carrier Hapag-Lloyd AG. We operate five geared 
container ships in a weekly liner service between the U.S. Gulf and 
East Coast to North Europe. All five ships are crewed by American 
mariners and fly the American flag. Our ships carry cargo that sustains 
the United States military mission and its service members based in 
Europe and beyond. Additionally, our ships are carrying other non-
military cargo including delivering American food aid to destinations 
well beyond Europe.
    HLUSA has a long and proud history of participating in our nation's 
global food aid efforts. By virtue of predecessor entities, our company 
has operated American ships in U.S. commerce since World War I. Known 
then as Lykes Lines and for more than ninety years, the Lykes fleet 
supported our nation through two World Wars and numerous other 
conflicts. In 1996, when Congress enacted the Maritime Security 
Program, our company was one of the first MSP participants. To this 
day, we have maintained continuous participation in both the MSP and 
the Voluntary Intermodal Sealift Agreement, which as defined by the 
U.S. Maritime Administration, ``provides commercial sealift for a 
seamless, time-phased transition from peacetime to wartime operations . 
. . [an] activation of state-of-the-art commercial intermodal equipment 
to coincide with DOD requirements while minimizing disruption to U.S. 
commercial operations.'' \1\ In 2006, during a turbulent period of 
consolidation among ocean carriers, the Lykes Lines name changed to 
Hapag-Lloyd following the purchase of its parent company.
---------------------------------------------------------------------------
    \1\ http://www.marad.dot.gov/ships-and-shipping/strategic-sealift/
voluntary-intermodal-sealift-agreement-visa/.
---------------------------------------------------------------------------
    Mr. Chairman, today's hearing also gives me the opportunity to 
speak on a personal note. The success of the U.S. Merchant Marine has 
been a primary focus of my entire career.
    I graduated from Maine Maritime Academy in 1979 and began sailing 
as a ship's deck officer in the Lykes fleet. At that time, the company 
operated more than forty U.S.-flag oceangoing ships in foreign 
commerce. That is more than \1/2\ the size of the entire U.S.-flag 
fleet today. Preference cargo was abundant at the time, the most 
significant of which for our company being the American humanitarian 
aid distributed to distressed nations throughout the world. It was 
always personally gratifying to see first-hand the result of delivering 
American produced food aid to those most in need.
    Today the shipping world is much different. Our company now 
operates in an extremely competitive global trade environment dominated 
by international carriers with very low cost operating structures, and 
government-supported operating environments, including tax and 
regulatory structures to favor investment in growth and profitability.
The Merchant Fleet Is Critical to Our National Defense
    Throughout our nation's history, the U.S. merchant fleet has 
provided sealift capability to our military in support of its global 
military operations. Each conflict has shown that the U.S. requires a 
strong and active fleet of vessels to support the Department of Defense 
(DOD) mission. Privately owned U.S.-flagged commercial ships and their 
U.S. citizen crews have always met our nation's call. We have 
consistently provided the commercial sealift capacity and the civilian 
mariners needed to meet our nation's worldwide military and political 
objectives.
    The U.S.-flag fleet provides daily support to DOD to sustain its 
global peacetime mission. Cargoes can include anything from subsistence 
supplies to personal household goods for military personnel based 
abroad. It is these same ships that also support DOD during contingency 
operations. The most recent examples include the sealift provided by 
U.S.-flag carriers during Operation Iraqi Freedom and Operation 
Enduring Freedom in Afghanistan. U.S.-flag ships moved more than 90 
percent of DOD's requirement.
    The conflict in Afghanistan provided unique logistical challenges 
for military planners due to the country's landlocked borders. Until 
2009, the only line of communication into the country was via Pakistan, 
which limited the United States to one supply gateway into Afghanistan. 
With an urgent need for assured gateways, DOD turned to the MSP 
carriers to develop alternative routes. By leveraging their existing 
intermodal networks, the MSP carriers were able to expand the ground 
lines of communication and provide DOD new gateways into Afghanistan 
from the north. Following the closure of the southern gateways, this 
Northern Distribution Network (NDN), as it became known, provided the 
United States' military effort with continuous seamless distribution of 
supplies to our warfighters.
    It is not well known that U.S.-flag carriers had long been using 
this commercially operated and maintained intermodal network, which 
ultimately gained fame as the NDN, to deliver U.S. food aid to 
countries in Central Asia. Expanding the network to include Afghanistan 
was an efficient and effective solution the MSP carriers provided to 
the U.S. military and is an excellent example of the partnership and 
interdependency that exists between DOD and the MSP operators.
The Maritime Security Program
    A strong Maritime Security Program is necessary to assure the long-
term success of the U.S. fleet. The MSP provides a significant national 
security benefit through a cost effective vehicle that provides DOD 
with assured access to ships and intermodal capacity in order to 
support and sustain our armed forces in a contingency. The program also 
ensures that we as a nation maintain a sufficient pool of U.S. citizen 
merchant mariners to crew all U.S.-flag tonnage at the time of need, 
including the U.S. Government's Ready Reserve Force that relies on 
commercial mariners.
    The MSP, established by the Maritime Security Act of 1996, 
originally provided for the participation of 47 United States flag 
commercial vessels. The success of the initial program led Congress to 
reauthorize and expand the fleet to 60 ships in 2005. In 2012, Congress 
reaffirmed its strong support for the program by reauthorizing and 
extending the 60 ship program through 2025. All existing MSP operators 
elected to extend their individual contracts through 2025.
    Under the MSP, participating U.S.-flag carriers commit their ships, 
as well as their global logistics networks that may include ports, 
rail, trucking and other infrastructure to support DOD in maintaining 
our nation's readiness. In exchange, each ship is paid a stipend that 
is intended to partially offset the higher costs to fly the U.S.-flag.
    By their very nature, U.S.-flagged ships are more expensive than 
their international counterparts. They are crewed by Americans, 
registered in the U.S. and subject to U.S. laws, taxes and regulations, 
all of which are greater than internationally flagged ships. The 
significant cost differences between U.S.-flag and non-U.S.-flag vessel 
operations are well researched and documented by the U.S. Maritime 
Administration, the Department of Defense and independent analysts. 
While the MSP stipend assists with this cost hurdle, it does not come 
close to equalizing the cost difference. This delta must be achieved 
elsewhere, which is why our nation's cargo preference programs are so 
critical to the survival of the U.S.-flag fleet.
The Cargo Preference Programs
    The MSP is a critical component to ensure the continued existence 
of a U.S.-flag fleet into the future. However, it is only one element 
required for the long-term viability of the fleet. American ships must 
have access to cargoes reserved for U.S. ships in order to be 
commercially successful in the modern competitive world. The MSP has 
always meant to be a partial offset to the additional cost of U.S.-flag 
ship operation while the balance was to come from the U.S. Government 
cargo preference programs.
    There are three U.S. cargo preference laws that are vital to the 
U.S. maritime industry and must be preserved:

   The Cargo Preference Act of 1904 requires all U.S. military 
        cargo be transported on U.S.-flag ships.

   Public Resolution 17 requires cargoes guaranteed by the 
        Export-Import Bank be transported on U.S.-flag ships.

   The Cargo Preference Act of 1954 required at least 50 
        percent of U.S. Government generated cargoes be shipped on 
        privately owned U.S.-flag commercial ships, if available, at 
        fair and reasonable rates. The Food Security Act of 1985 
        increased that percentage to 75 percent for certain foreign 
        assistance programs. Unfortunately, in 2012 the percentage was 
        reduced back to 50 percent and is partially responsible for the 
        current demise of U.S.-flag fleet size.

    As privately owned, commercially operated U.S.-flag ocean carriers, 
we live and survive by these U.S. laws. Congress enacted these laws to 
ensure that U.S.-flag operators have a U.S. cargo base to ensure 
successful commercial operations in foreign commerce. Enforcement of 
these laws is necessary, and remains the critical basis for maintaining 
a U.S.-flag fleet into the future.
    Unfortunately, the amount of cargoes moving under these programs is 
at the lowest point that I have seen in the last twenty years. The 
reduced cargo base places even more pressure on MSP carriers and unless 
rectified in some manner will lead to additional loss of U.S.-flag 
ships.
Current Realities and Conclusion
    The erosion of the U.S.-flag fleet is indisputable. The size of the 
U.S.-flag international trading fleet of privately owned ships has 
decreased by nearly 25 percent just in the past 5 years.
    The U.S. oceangoing merchant marine fleet has declined by 82 
percent since 1951, when the fleet peaked at 1,268 vessels.\2\ As of 
year-end 2010, the U.S.-flag fleet in foreign commerce was comprised of 
60 ships participating in the Maritime Security Program (MSP), and 
roughly 50 other ships carrying commercial and preference cargo on 
various routes.\3\
---------------------------------------------------------------------------
    \2\ ``Study of the Impediments to U.S.-Flag Registry Final 
Report,'' Price Waterhouse Coopers. September 20, 2011.
    \3\ ``Comparison of U.S. and Foreign-Flag Operating Costs,'' U.S. 
Department of Transportation Maritime Administration. September 2011.
---------------------------------------------------------------------------
    This reduction is the result of a combined precipitous decline in 
military, food aid and other government-impelled cargoes that are 
required by law to move on American ships with American citizen crews. 
U.S.-flag carriers are no longer able to operate competitively without 
adjustments to the MSP as well as the full support of the remaining 
cargo preference programs. Absent financial relief in the form of 
increased MSP stipends or additional U.S.-flag access to preference 
cargoes, carriers will have no economically feasible option but to 
continue removing ships from the U.S. registry.
    Mr. Chairman, I would like to summarize the current situation as an 
MSP ship operator and a businessperson. U.S. companies, each governed 
by a boards of directors and shareholders, own all of the ships in the 
MSP fleet. We, the senior management for these companies, must 
routinely address the operational realities of our U.S.-flag services 
with our boards and shareholders. We are frequently called upon to 
explain the implications of newswire political issues such as the MAP-
21 food aid reduction, the expiration of the Ex-Im Bank charter and the 
overall degradation of U.S.-flag cargo resulting from budget cuts and 
reallocation of government priorities. To be blunt, it is not easy to 
portray an optimistic view of our U.S.-flag industry's long-term 
prospects given the challenges before us today.
    As a former U.S. merchant mariner and a lifelong supporter of a 
strong U.S.-flag Merchant Marine, I have fought many battles over the 
years in support of our U.S.-flag industry. I fear that we are not just 
losing the battle, but now the war itself if we fail to stabilize the 
existing U.S.-flag fleet through the programs that exist today. The 
unfortunate reality of today's business world is that if a service or 
business unit does not perform, it is eliminated. The U.S.-flag fleet 
is getting dangerously close to this reality.
    I would like to close with a final comment that I believe 
illustrates the mixed messages sent to our boards regarding our U.S.-
flag services.
    In June of 2013 all existing MSP carriers extended their MSP 
contracts for 10 more years, affirming their commitment of ships to our 
nation until 2025. Despite the gloomy future commercial outlook for 
these businesses at that time, each carrier was able to obtain board 
and shareholder approval for their contract extension. Yet, within 2 
months of executing agreements, budget sequestration was enforced and 
the Maritime Security Program was one of the casualties. Each carrier 
lost 6 weeks of stipend per ship as a result. Fortunately, no ship left 
the program at that time. However, given the precipitous decline in 
preference cargoes combined with current MSP levels, I fear that it is 
unlikely that we would retain the 60 ship MSP fleet if a similar 
shortfall were to occur today. Likewise, a failure to realistically 
adjust funding levels for this program may yield the same result.
    Mr. Chairman, thank you for time and the opportunity to testify 
before the joint Committees today.

    Mr. Rouzer. Mr. Schoeneman?

        STATEMENT OF BRIAN W. SCHOENEMAN, POLITICAL AND
     LEGISLATIVE DIRECTOR, SEAFARERS INTERNATIONAL UNION, 
                        WASHINGTON, D.C.

    Mr. Schoeneman. Thank you, Chairman Rouzer, Chairman 
Hunter, Chairman Conaway, and Ranking Members Costa and 
Garamendi for the invitation to testify here today. My name is 
Brian Schoeneman, and I serve as the Legislative Director for 
the Seafarers International Union. I am here today representing 
all of seagoing labor, which includes the seafarers, the marine 
engineers, the masters, mates, and pilots, and the American 
maritime officers. Together, our four unions and our affiliates 
represent the bulk of America's internationally sailing 
civilian mariners. Before I begin, I would like to thank 
personally Chairman Hunter, on behalf of maritime labor, for 
his remarks on the floor of the House regarding the loss of the 
S.S. El Faro last month. It is hard to understate how difficult 
this has been to our union families, and it was a tremendous 
blow to the American Merchant Marine, and your heartfelt 
remarks meant a lot to the families of the crew, and all of us 
in the industry, so thank you, sir.
    I want to thank all the Members of both Subcommittees for 
holding this hearing today. All too often, when it comes to our 
international food aid program, the maritime industry is 
largely ignored. When we aren't ignored, we are vilified and 
lied about, accused of starving children and being greedy 
shills for foreign fat cats lining their pockets with taxpayer 
dollars. That is a fantasy. The reality is that the men and 
women of the American Merchant Marine have been a critical part 
of America's food aid program since their inception. As they 
have since the earliest days of our republic, our mariners put 
their lives on the line every time they leave the dock. Whether 
it is braving pirate infested waters, like the crew of the 
Maersk Alabama did to deliver food aid to Africa, the emergency 
deliveries of critical supplies to Haiti in the aftermath of 
the 2010 earthquake, or simply the daily dangers of the sea, as 
we have recently seen, the men and women of the Merchant Marine 
have helped make this program the undoubted success that it is. 
Food aid is, and remains, a critical part of the cargo base 
that ensures the existence, not the success, merely the 
existence, of our Merchant Marine. Our fleet employs thousands 
of Americans in shipboard jobs alone, and tens of thousands 
more in maritime and agriculture. If food aid cargo preference 
were to disappear, those jobs would disappear with it, and they 
won't come back. And with those jobs goes America's ability to 
project power and defend our allies and interests abroad.
    When it comes to food aid, the anti-maritime special 
interests have one goal, and that is to undermine the 
traditional relationship between agriculture, maritime, and the 
private voluntary organizations who have made our program so 
successful. We refuse to let them succeed. The arguments they 
make, essentially that food aid isn't an important source of 
cargo for the industry, that it isn't important to our farmers, 
and that ending in-kind food aid wouldn't cost a single job, 
are ludicrous on their face. Despite these recklessly false 
claims often made by hack academics who wouldn't know a bow 
from a stern, you all heard what the Maritime Administrator 
testified to earlier. There is no denying that the loss of food 
aid cargo resulting from reductions in appropriations, and the 
cuts to cargo preference in MAP-21, has cost this industry 
ships and jobs.
    Over the last 10 years food aid has made up a considerable 
portion of the preference cargo carried by American carriers, 
if not the majority. From 2000 to 2013 cargo volumes in the 
food aid program have dropped 77 percent. In 1999 there were 
106 American ships carrying approximately 6 million tons of 
food aid. In 2013 the fleet had dropped in size to 75 ships, 
carrying slightly more than 1 million tons of food aid. 
According to MARAD, since 2010 the size of the U.S.-flag fleet 
has dropped 23 percent, from 99 ships to the 78 ships mentioned 
today. And that has resulted in the loss of nearly 1,000 
mariner jobs. This loss is not a coincidence. It is the 
logical, expected result of a continued vicious, well-funded, 
and relentless assault against America's Merchant Marine and 
our military readiness. America's Merchant Mariners are a vital 
national security asset. We cannot allow the bad ideas of a few 
misguided academics who have forgotten that this program was 
always more than just a foreign aid program to destroy the jobs 
of tens of thousands of people, and cripple our ability to 
defend ourselves and respond to crises around the globe.
    I strongly urge you to reject these dangerous arguments. Do 
not allow the critics of in-kind food aid and the American 
Merchant Marine to accomplish what the Royal Navy could not do 
during the Revolution, what German submarines could not do 
during World War II, and what pirates could not do in 2009. I 
urge you to continue to support in-kind food aid, cargo 
preference, and Congress' steadfast support for the United 
States Merchant Marine. Thank you all, and I will be happy to 
answer any questions you may have.
    [The prepared statement of Mr. Schoeneman follows:]

 Prepared Statement of Brian W. Schoeneman, Political and Legislative 
       Director, Seafarers International Union, Washington, D.C.
    Good morning, Chairmen Hunter and Rouzer, Ranking Members Garamendi 
and Costa, and Members of both Subcommittees.
    On behalf of the Seafarers International Union, the Marine 
Engineers Beneficial Association, the International Organization of 
Masters, Mates and Pilots and the American Maritime Officers, I thank 
you for conducting this hearing and for giving me the opportunity to 
testify. I would also be remiss if I did not thank all of you for your 
continued support of the U.S. Merchant Marine and our international 
food aid programs.
    That we are here today to discuss these issues is a testament to 
your willingness to include all the relevant stakeholders in America's 
food aid programs. That alone is a heartening step as all too often, 
discussions regarding our international foreign assistance and food aid 
programs find the maritime industry largely ignored. When we are not 
ignored, we often find our contributions and concerns discussed by and 
trivialized by the legions of academics and lobbyists who know little 
and understand less about the maritime industry, and have made ending 
in-kind food aid and cargo preference their top legislative priority.
    This would be a disastrous mistake, not only for our industry and 
the men and women who put themselves in harm's way as members of the 
American Merchant Marine, but for the United States and the American 
taxpayer collectively.
    The Merchant Marine Act of 1936 codified what was long-standing 
American policy--that it was necessary for the national defense and the 
development of domestic and foreign commerce for the United States to 
maintain a merchant marine.\1\ For a variety of reasons, Congress has 
made the determination that an American merchant marine, crewed by 
American civilian mariners, made up of American-flag ships, is critical 
to our nation. The issue that Congress has been confronting since our 
independence--how best to foster our internationally sailing deep water 
merchant marine--is not a new one. During the debate on a number of 
merchant marine related bills in 1904, Congressman Edward De V. Morrell 
of Pennsylvania said,
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    \1\ See Merchant Marine Act of 1946, 46 U.S.C.  50101 (2015).

          ``It is admitted on all sides that our merchant marine in the 
        foreign trade is languishing. It is admitted that unless some 
        remedy for present conditions is devised before long it will 
        practically be swept from the seas. It is admitted that we are 
        confronted with a great national calamity, threatened by an 
        irreparable loss; but we stand here, year after year, disputing 
        about methods . . . [l]ike the ass in the old fable, we are 
        standing between two bundles of hay and yet perishing of hunger 
        by reason of our inability to decide which bundle we shall 
        choose; undecided because one bundle might possibly be better 
        than the other, and because we are too mulish to investigate 
        both before selecting either.'' \2\
---------------------------------------------------------------------------
    \2\ 38 Cong. Rec. 6131 (daily ed. Apr. 30, 1904) (statement of Rep. 
Morrell).

    The debate Congress had in 1904 over how best to protect and 
preserve our merchant marine could be the same debate we are having 
today. Fortunately, Congress in 1904 began the process of developing 
Federal programs to preserve, protect and expand our merchant marine. 
Since 1904, Congress has developed a number of programs that provide 
the necessary economic base to support a U.S.-flag merchant fleet in 
the foreign trades. Today, those laws include the Maritime Security 
Fleet Program (MSP) \3\ and the various cargo preference laws that, all 
working together, support the U.S.-flag international fleet.
---------------------------------------------------------------------------
    \3\ 46 U.S.C.  53101-53111 (2015).
---------------------------------------------------------------------------
    In 1904, Congress passed the first cargo preference statute, the 
Military Cargo Preference Act of 1904.\4\ Future Congresses would pass 
the Cargo Preference Act of 1954,\5\ and a variety of other legislation 
that ensured that U.S.-flag ships with American crews would carry a 
substantial portion of all the cargo bought and shipped using taxpayer 
dollars. This government-impelled cargo is critical to ensuring the 
continued existence--not success, but simply the continued existence--
of a U.S.-flag fleet sailing in the international trades.
---------------------------------------------------------------------------
    \4\ 10 U.S.C.  2631 (2015).
    \5\ 46 U.S.C.  55305 (2015).
---------------------------------------------------------------------------
    In 1996, Congress passed the Maritime Security Act of 1996, which 
created the MSP Fleet. The MSP Fleet is a privately owned, 
internationally trading fleet of U.S.-flag vessels, that are both 
militarily useful and commercially viable. MSP represents the backbone 
of the U.S.-flag international fleet, and the readiness stipend 
provided to vessel owners and operators helps to off-set the higher 
costs required to keep a ship under the U.S.-flag. MSP eligible ships 
must meet Department of Defense requirements for military usefulness, 
must be commercial viable as determined by the Department of 
Transportation's Maritime Administration (MARAD), must be American 
owned, American crewed and American flagged.\6\
---------------------------------------------------------------------------
    \6\ See generally, U.S. Dept. of Transp., Mar. Admin., The Maritime 
Security Program: Meeting National Sealift Needs, (2015).
---------------------------------------------------------------------------
    Together, MSP and cargo preference work to ensure the continued 
existence of the United States Merchant Marine. MSP provides the ships, 
and cargo preference provides the cargo necessary to keep those ships 
economically viable. A ship without cargo is like a car without an 
engine--not moving.
    Amidst all of the discussion about ships and cargo, it is easy to 
forget (and those who are most critical of cargo preference always do) 
the most important aspect of the American Merchant Marine--what makes 
the merchant marine fundamentally American--the men and women who crew 
these vessels.
    These men and women, some of the most highly trained and skilled 
mariners in the world, are the heart of our merchant marine. They are 
the one irreplaceable asset in any discussion of maritime policy. These 
are the same men and women who willingly brave the dangers of the sea, 
who sail into combat zones with military cargo, or pirate infested 
waters with critical, life-saving food aid, who helped evacuate 
Manhattan Island on September 11, 2001, and who provided the critical 
sealift necessary to support our warfighters in every American conflict 
from the earliest days of the Revolution to Operations Enduring Freedom 
and Iraqi Freedom.
    Supporting the military has been fundamental to the American 
Merchant Marine for its entire existence. For example, since 2009, 
privately-owned U.S.-flag commercial vessels and their civilian U.S. 
citizen crews have transported more than 90% of the sustainment cargo 
needed to support U.S. military operations and rebuilding programs in 
Iraq and Afghanistan.\7\
---------------------------------------------------------------------------
    \7\ Hearing on the Maritime Administration's Fiscal Year 2016 
Budget Request Before the Subcomm. On Coast Guard and Maritime 
Transportation of the H. Comm. on Transportation and Infrastructure, 
114th Cong. 2 (2015) (statement of Paul N. Jaenichen, Administrator, 
Maritime Administration, U.S. Department of Transportation).
---------------------------------------------------------------------------
    Ensuring that we have an adequate mariner pool to crew the 
privately-owned U.S.-flag international fleet (both MSP and non-MSP 
vessels), our government fleets (including the civilians who crew 
vessels of the Military Sealift Command), and our reserve fleets 
(including the Ready Reserve Force and the National Defense Reserve 
Force) has been the fundamental purpose of Federal maritime policy in 
modern times.
    Today, that mariner pool is at risk. Our U.S.-flag international 
fleet faces one of the toughest economic environments in recent memory, 
as even now the Organisation for Economic Co-operation and Development 
(OECD) is warning of a potential global recession.\8\ Anemic trade 
growth has placed a significant burden on the maritime industry, and 
that, coupled with significant reductions in government-impelled cargo, 
has put increased pressure on the U.S.-flag international fleet.
---------------------------------------------------------------------------
    \8\ Szu Ping Chan, World Flirts With Global Recession as Trade 
Growth Slows, Warns OCD. The Telegraph, Nov. 9, 2015, http://
www.telegraph.co.uk/finance/economics/11983690/global-recession-trade-
growth-warns-oecd.html.
---------------------------------------------------------------------------
    If American ships and the companies that operate them cannot 
continue to compete internationally, those vessels will leave the U.S.-
flag and the mariners who crew them will be thrown out of work. If too 
many mariners cannot find steady employment at sea, not only will they 
leave the industry, they will lose the critical licenses and 
credentials they must maintain to crew these ships under existing 
Federal and international law.\9\
---------------------------------------------------------------------------
    \9\ See generally 46 CFR 11.102 (2015) (incorporating by reference 
the International Convention on Standards, Training, Certification and 
Watchkeeping for Seafarers of 1978 as amended 1995, and the Standards, 
Training, Certification, and Watchkeeping Code).
---------------------------------------------------------------------------
    If we lose these jobs, these mariners will go away, and they are 
not easily replaceable in the event of a national emergency or major 
conflict. For example, under the International Convention on Standards, 
Training, Certification and Watchkeeping (STCW), the primary regulation 
for international and U.S.-flag mariners, to receive a ship's master 
endorsement for operating vessels of more than 3,000 gross tons, at a 
minimum, the applicant must have 1,080 days of service as the officer 
in charge of the navigational watch (OICNW) on the oceans or Great 
Lakes.\10\ That represents the equivalent of almost 3 years of twenty-
four hour days at sea. It could take a mariner close to a decade to 
accrue that much sea time in order to qualify. Even entry level 
mariners require significant training in order to become qualified and 
competent at sea. The Seafarers International Union's entry-level 
unlicensed apprentice program is a year-long program designed to take 
those unfamiliar with the maritime industry and prepare them for a 
career at sea.\11\ These are difficult, demanding jobs, but they are 
jobs that are critical to the national security of the United States. 
Without American civilian mariners, the United States cannot project 
power overseas and it cannot go to war. It is the American civilian 
mariners of the U.S. Merchant Marine who crew all of the vessels--
whether privately-owned or government-owned--available to our country 
in time of crisis.
---------------------------------------------------------------------------
    \10\ See id.
    \11\ The Seafarers Harry Lundeberg School of Seamanship, http://
www.seafarers.org/jobs/ua.html (last visited November 12, 2015). As 
noted on the website, entry level mariners are sent through five phases 
of training, each phase taking between 2 to 3 months, with the final 
phase requiring an unspecified amount of time to upgrade skills 
consistent with the needs of SIU contracted employers. At a minimum, 
each entry level mariner will spend at least thirteen months in 
training to successfully complete the unlicensed apprenticeship 
program.
---------------------------------------------------------------------------
    It is that simple. Our mariners need good, steady jobs in the 
industry during peacetime in order to ensure that they are available 
and ready to serve America in wartime. As Rear Admiral Thomas Shannon, 
the commander of the Military Sealift Command said during this year's 
National Maritime Day commemoration, ``[i]t is our U.S.-flagged 
merchant fleet and our mariners that ensure that our Soldiers, Sailors, 
Airmen and Marines are supplied. From Inchon to Iraq, our mariners and 
our maritime industry delivered . . . Let us not, as a nation, sign 
away our remaining sealift capacity to non-U.S.-flagged fleets sailed 
by non-U.S. mariners.''\12\
---------------------------------------------------------------------------
    \12\ Marshall Ainley, et al., Maritime Labor Supports Maritime 
Security Program and Crude Export Legislation, The Hill, Oct. 8, 2015, 
http://thehill.com/blogs/congress-blog/labor/256420-maritime-labor-
supports-maritime-security-program-and-crude-export.
---------------------------------------------------------------------------
    As noted before, under the Cargo Preference Act of 1954, at least 
50% of all cargoes shipped by U.S. Government agencies outside the 
Department of Defense, including foreign food aid cargoes, must be 
carried by U.S.-flag ships. Since 1954, the men and women of the U.S. 
Merchant Marine have been in a partnership with the American farmer 
community in ensuring the success of America's premiere international 
food assistance program,\13\ the P.L. 83-480 Title II Food for Peace 
program.\14\ Food aid has long accounted for the largest source of non-
defense preference cargo available to the U.S.-flag international 
fleet.\15\
---------------------------------------------------------------------------
    \13\ David Rogers, A Food Fight Over Aid Program, Politco, Apr. 24, 
2013, http://www.politico.com/story/2013/04/a-food-fight-over-aid-
program-090607.
    \14\ Agricultural Trade Development and Assistance Act of 1954, 
Pub. L. No. 83-480 (1954) amended by Food for Peace Act of 1966, Pub. 
L. No. 89-808 (1966).
    \15\ See U.S. Mar. Admin., Report for Congress on the Impacts of 
Reductions in Government Impelled Cargo on the U.S. Merchant Marine 
(2015) 2-3. [hereinafter MARAD Impacts Report].
---------------------------------------------------------------------------
    Food aid is a critical component to America's strategic sealift 
program. It is vital that Congress continue its steadfast support for 
in-kind food aid as part of our Federal support for the Merchant 
Marine.
    Despite the oftentimes absurd and patently offensive claims of the 
opponents of the Merchant Marine regarding the importance of food aid 
to the sustainment of the U.S.-flag fleet,\16\ there is ample evidence 
that recent reductions in food aid cargoes has harmed the maritime 
industry.\17\ These reductions, caused both by declining appropriations 
for the P.L. 83-480 Program as well as the statutory reduction in the 
percentage of cargo reserved to American ships from 75% to 50% in the 
Moving Ahead for Progress in the 21st Century Act of 2013 (MAP-21),\18\ 
and other changes wrought by USAID which reduce food aid cargoes, have 
had a significant adverse impact on the America's Merchant Marine.
---------------------------------------------------------------------------
    \16\ See, e.g., Reforming Food Aid: Desperate Need to Do Better: 
Hearing Before the H. Comm. on Foreign Affairs, 114th Cong. 5-6 (2015) 
(statement of Christopher B. Barrett, Cornell University). [hereinafter 
Barrett Testimony].
    \17\ See generally MARAD Impacts Report, supra note 15.
    \18\ Moving Ahead for Progress in the 21st Century Act, Pub. L. No. 
112-141  100124, 126 Stat. 915 (2012).
---------------------------------------------------------------------------
    The Consolidated Appropriations Act of 2014 \19\ required MARAD to 
prepare a report to Congress on the current and future impacts of 
reductions in government-impelled cargo on the U.S. Merchant Marine as 
a result of changes to cargo preference requirements, including those 
made as part of MAP-21 and reductions to P.L. 83-480. The report, which 
was transmitted to Congress on April 21, 2015 paints a clear picture--
without cargo preference, most of the U.S.-flag fleet would disappear 
and the reductions in food aid cargoes have had a real, meaningful 
impact on the decline of the merchant marine.\20\
---------------------------------------------------------------------------
    \19\ Consolidated Appropriations Act of 2014, Pub. L. No. 113-76,  
169, 128 Stat. 598 (2014).
    \20\ See generally MARAD Impacts Report, supra note 15.
---------------------------------------------------------------------------
    Over the last 10 years, food aid has made up more than \1/2\ of the 
preference cargo carried by U.S.-flag carriers--more than even 
Department of Defense cargoes.\21\ We have seen a major drop in the 
amount of food aid cargo carried by the U.S.-fleet, with total cargo 
amounts dropping 77% from 2000 to 2013. In 1999, 103 American ships 
carried 6,361,000 gross tons of food aid cargo, both pre-packaged and 
bulk. In 2013, the fleet had dropped to 76 ships, carrying only 
1,070,000 tons of food aid.\22\ Although some critics have wheeled 
forward various theories questioning the role of food aid cargoes in 
sustaining the merchant marine,\23\ the correlation between the decline 
of food aid tonnage and our fleet is undeniable.
---------------------------------------------------------------------------
    \21\ Id.
    \22\ Id.
    \23\ See, e.g., Barrett Testimony at 5-6, supra note 16.
---------------------------------------------------------------------------
    Since 2010, the size of the U.S.-flag fleet has dropped by 23%, 
from 99 vessels to 76, and that number is expected to continue to 
drop.\24\ The resulting loss of ships represents the loss of 
approximately 1,000 mariner jobs since 2010 alone.\25\
---------------------------------------------------------------------------
    \24\ Id. at 7. MARAD projected that, based on their analysis of 
trends in cargo preference from 1990 through 2013, the U.S.-flag liner 
(non-dry bulk and non-tanker) fleet would decline to 76 ships by 2023. 
MARAD noted in the same report, however, that the liner fleet is 
currently at 73 vessels as of April 2015, indicating their projections 
may have been optimistic. With all vessel types included, the U.S.-flag 
privately-owned self-propelled fleet in the international trade is 81 
ships as of April 2015. Id.
    \25\ Id. at 8. Generally speaking, each ship represents two crews 
of approximately 20 crew members, officers and engineers, thus each 
ship lost represents the loss of approximately 40 jobs. MARAD notes in 
their report that the ``number of mariner jobs associated with the loss 
of three ships is approximately 120 mariners.'' Id. at 8.
---------------------------------------------------------------------------
    As MARAD noted in their report, food aid quantities are affected by 
a variety of factors, including appropriations levels, food prices, 
emergencies and where they are located, and the differing kinds of 
commodities carried.\26\ This makes it exceedingly difficult to 
predict, with any reliability, what future impacts will be on cargo 
volumes. That being said, however, it is clear that the current trend 
of reductions is likely to continue barring some significant natural or 
man-made disaster that would likely result in an increase in 
appropriations for food aid.
---------------------------------------------------------------------------
    \26\ Id. at 17.
---------------------------------------------------------------------------
    Critics of the merchant marine contend that the cuts in food aid 
over the last few years, coupled with the MAP-21 cuts have not had a 
significant impact on our maritime industry.\27\ MARAD has determined 
the opposite, finding that ``carriers who have reflagged or retired 
ships out of the U.S.-flag fleet during the last 3 years have stated 
that the predominate driver in their decision to remove vessels has 
been the loss of preference cargoes.'' While the largest reductions 
have been in DOD cargoes,\28\ it is clear that the reductions in food 
aid have made matters worse.
---------------------------------------------------------------------------
    \27\ See generally Barrett Testimony, supra note 16.
    \28\ MARAD Impacts Report at 3.
---------------------------------------------------------------------------
    That is why the on-going attacks on the merchant marine by those in 
the so-called ``Food Aid Reform'' community are so unfortunate. By 
willfully distorting the role the maritime and agriculture industries 
play in the continued success of these programs, opponents of maritime 
and agriculture have damaged the overall credibility of P.L. 83-480. Of 
particular note are the writings and public statements of Cornell 
University's Dr. Christopher Barrett. Dr. Barrett recently testified 
before the House Foreign Affairs Committee on food aid reform issues--a 
hearing that the maritime industry was specifically excluded from. Dr. 
Barrett's testimony at that hearing is representative of the kind of 
flawed scholarship and willful distortion of facts common amongst those 
seeking to end cargo preference and in-kind food aid. Given his lack of 
experience with the maritime industry, he made a common mistake and 
focused almost all of his attention on the ships and virtually ignored 
the importance of trained, reliable and trustworthy American crews in 
his criticisms. Where he did mention the mariners, he still got it 
wrong, even going so far as to claim that reductions in food aid 
cargoes have not resulted in the loss of any vessels or jobs \29\--
facts that are easily disproven by the MARAD study referenced 
above.\30\ His cherry picking of facts and data, and his reprehensible, 
ridiculous claim that Congress' support of food aid cargo preference 
represents the ``trade [of] 11 or 12 children's lives for a single 
job[,]'' demonstrates the depths to which the opponents of cargo 
preference will go in their efforts to destroy America's military 
readiness. He does a discredit to himself, his university and those he 
represents with his misguided and appalling rhetoric.
---------------------------------------------------------------------------
    \29\ Barrett Testimony at 6 (stating ``[y]et, the 2012 reforms that 
reduced cargo preference coverage from 75% to 50% do not appear to have 
led to a single vessel ceasing ocean freight service nor to the loss of 
any mariner jobs.'').
    \30\ MARAD Impacts Report at 47 (stating ``[t]he number of vessels 
in the total U.S.-flag international trading fleet has fallen from 106 
at the beginning of 2011 to 81 at the end of 2014, representing a loss 
of 25 vessels and up to 1,000 mariner jobs.'').
---------------------------------------------------------------------------
    This type of internecine warfare between stakeholders in our 
international food aid programs is counterproductive. Instead of 
working with us to find meaningful ways to make the process more 
efficient without sacrificing the domestic benefits, or working to help 
increase annual appropriations to help feed more people, we are instead 
attacked and vilified. Rather than acknowledging us as crucial 
partners, we are treated like robber-barons. That is unfair. The men 
and women of the merchant marine, including the members maritime labor 
represents, are committed, patriotic Americans who go to work every 
day, work hard every day, and take risks most Americans never face on 
the job, often while delivering food aid. Whether it is bad weather, 
pirates or terrorists, the men and women who crew the vessels carrying 
food aid have done so gladly, with honor and courage, and they deserve 
more respect than the Food Aid Reform community has given them.
    The Food Aid Reform community also refuses to acknowledge the 
legitimate concerns those of us in the maritime and agriculture 
communities have about the potential for fraud and abuse that would 
come with shifting the basis of our food aid programs from in-kind aid 
to one that is primarily cash based. Despite on-going press reports 
about concerns with USAID administration of foreign aid programs \31\ 
and an internal World Food Programme audit indicating that USAID cash 
vouchers for food have been diverted away from the hungry to middlemen 
profiteers,\32\ the Food Aid Reform community continues to insist that 
cash is as safe from diversion and theft as in-kind food aid.\33\
---------------------------------------------------------------------------
    \31\ Saba Imtiaz, U.S. Aid Agency's Efforts Are Yielding Dubious 
Results, N.Y. Times, Sept. 13, 2015, at A8.
    \32\ George Russell, U.N. Agency Food Aid Vouchers In Syrian Crisis 
Diverted And Sold For Cash, Fox News, April 15, 2015, http://
www.foxnews.com/world/2015/04/17/un-agency-food-aid-vouchers-in-syrian-
crisis-diverted-and-sold-for-cash/?intcmp=latestnews [hereinafter WFP 
Audit Article].
    \33\ See, e.g., Barrett Testimony at 7. Dr. Barrett goes so far as 
to claim that ``[a]nother myth is that cash-based food aid programs are 
somehow more vulnerable to theft and corruption, although not a shred 
of serious evidence exists to support this claim,'' despite the World 
Food Programme's audit finding diversion of vouchers in Syria, which 
was published months before his testimony. See WFP Audit Article, supra 
note 31.
---------------------------------------------------------------------------
    That argument strains credulity. The Government Accountability 
Office has called for increased internal controls over cash-based 
programs, noting that ``USAID relies on implementing partners for 
financial oversight of [its Emergency Food Security Program] projects 
but does not require them to conduct comprehensive risk assessments to 
plan financial oversight activities, and it provides little related 
procedural guidance to partners and its own staff[,]'' and that ``[a]s 
a result, partners may neglect to implement appropriate financial 
controls in areas that are most vulnerable to fraud, diversion, and 
misuse of EFSP funding.'' \34\
---------------------------------------------------------------------------
    \34\ U.S. Gov. Accountability Office, International Cash-Based Food 
Assistance: USAID HasDeveloped Processes for Initial Project Approval 
But Should Strengthen Financial Oversight 1 (2015). The GAO report is 
scathing in its criticism of some of USAID's practices. It notes that 
USAID had only two people on the ground in Syria to oversee $\1/2\ 
billion program. Id. at 29. USAID let contractors use overhead 
satellite imagery to monitor ``food for work'' programs in Kenya. Id. 
at 43. When GAO visited a food for work program in Somalia, they noted 
that no one from USAID had been there for over a year to check on the 
program. Id. at 43. USAID is actually handing out envelopes of cash to 
crowds in developing countries, particularly Syria, without any 
accountability or record of how that cash gets spent. Id. at 10.
---------------------------------------------------------------------------
    Finally, there is an elephant in the room that few in the Food Aid 
Reform community seem willing to accept or acknowledge. Despite the 
great work that food aid has done over the years feeding billions of 
hungry people across the world, there is no denying that foreign aid 
remains unpopular with the American people. A 2013 Pew Poll found that, 
in response to the sequester, 48% of Americans--the largest percentage 
for of any of the 19 categories of spending tested--supported cuts to 
foreign assistance programs.\35\ The same poll indicated that of all 
the categories tested, only foreign aid failed to muster a majority of 
Americans supporting increased or sustained funding.
---------------------------------------------------------------------------
    \35\ Michael Dimock, et al., Pew Research Ctr. for the People & the 
Press, As Sequester Deadline Looms, Little Support for Cutting Most 
Programs 1 (Feb. 22, 2013), http://www.peoplepress.org/2013/02/22/as-
sequester-deadline-looms-little-support-for-cutting-most-programs/.
---------------------------------------------------------------------------
    Despite foreign aid's lack of public support, the P.L. 83-480 Food 
for Peace program has survived and thrived for sixty years, thanks in 
large part to the domestic economic benefit provided to America's 
farmers and mariners. That support has provided a base of political 
support that has ensured that P.L. 83-480 would be shielded from the 
harshest of spending cuts necessitated by public concerns about the 
Federal budget deficit and the national debt.
    Without the support made possible by the coalition of agriculture, 
maritime and our private voluntary organizations, food aid would likely 
see major cuts, if not complete repeal. Were Congress to repeal cargo 
preference for food aid or otherwise make major changes to the P.L. 83-
480 program that reduce its domestic economic benefit, there is a 
strong chance that the program itself may not survive in today's harsh 
budgetary climate. Were that to happen, the Food Aid Reform community 
would have no one to blame but themselves for the disastrous impact 
such cuts would have on the welfare of millions of hungry people around 
the world who rely on the generosity of the American people to survive. 
We owe it to the American taxpayer to do our best to provide as much 
domestic benefit, economic and diplomatic, for every dollar they 
willingly send abroad to help needy people.
    As has often been the case, those pushing ``reform'' are blind to 
the reality that their efforts, if successful, could destroy the entire 
program. Fundamentally changing the Food for Peace program from an in-
kind program that provides domestic benefits to the agriculture and 
maritime industry while supporting our diplomatic mission abroad into a 
cash giveaway program is ensuring the program ends up on the road to 
permanent repeal. While we are committed to working with Congress and 
the Executive Branch to ensure food aid's continued viability and to 
explore efforts to create greater efficiencies, we cannot support any 
changes that would undermine the political viability of such a critical 
program to the lives of so many. That would be irresponsible and 
morally wrong.
    To be clear, those of us in the maritime industry wish to continue 
the decades long partnership between America's farmers, her mariners, 
and those committed to feeding the hungry around the world. This is a 
partnership that has worked for over sixty years and we hope will 
continue to work for many, many more. I would call upon all to soften 
the bitterly divisive rhetoric being used against the maritime and 
agriculture industries. Accusing us of wanting to starve children in 
order to line the pockets of greedy foreign businessmen is not only a 
ridiculous falsehood, it undermines the credibility of those making 
that argument.
    America's cargo preference laws are critical to the continued 
existence of our merchant marine. Tinkering with P.L. 83-480 and the 
calls for repeal of cargo preference threaten that existence, and 
threaten our overall military readiness.
    The bottom line is simple--without cargo there are no ships, 
without ships there are no mariners. The American merchant mariner is a 
critical national security asset that must be protected. Continued 
Congressional support for cargo preference, food aid, the Maritime 
Security Program and our other Federal maritime programs ensures that 
we have a sufficient mariner pool to meet our commercial and military 
sealift needs no matter the crisis, foreseen or unforeseen. It is 
critical that we do not allow the Food Aid Reform community to 
accomplish what the Royal Navy could not do in the Revolution, what 
German submarines could not do during World War II, and what pirates 
off Africa could not do in 2009.
    I strongly urge you to reject the dangerous arguments made by those 
seeking an end to in-kind food aid and cargo preference and continue 
the steadfast, bipartisan support the United States Merchant Marine has 
enjoyed from Congress for over 200 years.

    Mr. Rouzer. I thank each of you for your testimony. Mr. 
Chairman, do you have any comment or question?
    Mr. Conaway. No, just refreshingly blunt comments from all 
four of the witnesses, so I thank you for that, but no 
questions.
    Mr. Rouzer. Mr. Shapiro, my question is directed towards 
you. Of course, in the past USDA and USAID have each handled 
substantial components of the food aid programs, including 
shared responsibilities for commodity transportation and 
procurement. I think this would make sense, I wanted to see 
what you think. Would it make sense to consolidate the 
commodity transportation and procurement within USDA instead of 
duplicating much of that at USAID?
    Mr. Shapiro. Absolutely, Mr. Chairman. I think that, in the 
commercial world, the purchasing of commodity and the awarding 
of transportation contracts are handled in the same place. They 
are not handled in different places. And in the commercial 
world, it is a much more efficient practice because the 
commodity and the transportation are done consecutively, with 
each other, by the same people. To have it split amongst two 
different government agencies, one in Washington, one in Kansas 
City, makes no sense at all to me. It is a redundancy. It is a 
waste of money, and it is an inefficient way to operate.
    Mr. Rouzer. My next question is for all of you on the panel 
that wish to respond, and I want to attack this head on. 
Critics of U.S. delivery of in-kind international food aid 
complain about inefficiencies in delivering food aid as a 
physical commodity. For each of you that have a comment on 
this, I would like to hear your response to those criticisms, 
and your perspective on what can be done to address any of 
those criticisms.
    Mr. Shapiro. I am not sure what inefficiencies people are 
talking about. When I listen to some of the hearings by 
Chairman Rouzer's Committee, they talk about the delay in the 
delivery of cargo. I can tell you, for my company, we have been 
in lay-up half the year with each of our three ships. That has 
never happened in 27 years in business. And since we have less 
ships than we had before, that illustrates how disastrous this 
current market is.
    The inefficiencies which exist are inefficiencies in 
contracting by the government, frankly, where risk is 
apportioned to us. If we are giving food aid to a starving 
nation, why should we have to wait 20 days to discharge into 
port because there is no priority berthing agreement between 
the United States Government and the recipient nation? Why do 
we not have priority berthing in the United States? We are 
paying for the ship. Our ships are more expensive than the 
foreign ships that are loading at the same terminals. It seems 
to me that if the government is doing food aid, and giving 
money and benefits to starving foreign nations that need to 
feed their people, they should be able to dictate terms that 
would arrange for an expedient delivery of the cargo to the 
recipients.
    Mr. Schoeneman. In addition to what Mr. Shapiro said, I 
would like to point out, one of the problems that I have with 
the argument about inefficiencies, I mean, we have been working 
on trying to resolve inefficiencies for a decade or more. We 
have started pre-positioning food in warehouses across the 
world that is close enough to the regions that it needs to go 
to. We have been involved in that process for a while now.
    But, one of the things that gets lost is we need to 
recognize, P.L. 83-480 is not just a disaster assistance 
program. It is a chronic hunger alleviating program that is 
designed to go into regions of the world that have chronic 
hunger problems that we know in advance. And USAID prides 
themselves on being able to tell where there is going to be a 
crop failure, or where there is going to be a need for food 
years in advance of when it actually happens. So the idea that 
we aren't efficient enough, or we can't get food fast enough, 
well, I would not agree with that statement, but it underlines 
an attempt to change what the purpose of P.L. 83-480 is, away 
from a long-term sustained program to alleviate world hunger, 
and into a disaster program that simply reacts to problems 
around the world. We have programs like that. We have an 
international disaster assistance account. We have other 
programs that are focused on emergencies. P.L. 83-480 is the 
only program that attacks systemic ongoing hunger, and that is 
why these programs needs to survive, and they need to thrive, 
and we can't do that if we are constantly fighting with each 
other over a continued limited amount of appropriations.
    Mr. Caponiti. If I could just add, and Philip may need to 
back me up a little bit on this, but the issue of commercial 
terms has been something that we have debated for many, many 
years. I know MARAD debated with USAID, the carriers themselves 
have debated with USAID, the acceptance of the notion of 
commercial terms. A lot of the delays, we believe, are because 
of the terms that are concocted inside USAID, the way they do 
business. And Philip, you basically referred to that, but, I 
mean, this idea of commercial terms is something that the 
industry has urged for quite some time.
    Mr. Shapiro. We carry, Mr. Chairman, under a different set 
of rules than every other commercial shipment which is going on 
the high seas because USAID refuses to change its charter party 
and allocate risk to the person in the transportation chain 
that has the ability to control that risk, be it from loading 
the vessel to discharging the vessel.
    On inefficiency, the inefficiency that I can demonstrate is 
the inefficiency of cash. If you read the November 2014 United 
Nations Inspector General of the World Food Programme's report, 
he says that of the $700 million that was sent to Syria, 
Lebanon, and Turkey for cash vouchers, that there was 
substantial, ``encashment of vouchers for less than face value 
for things other than the intended purpose.'' That kind of 
inefficiency is the grossest violation of what could be 
expected from this kind of program. We need to restore the 75 
percent. The Congressional Budget Office says we need 
approximately $8 million a year to restore 75 percent carriage 
for U.S.-flag ships. But in the Lebanon, Syria, Turkey relief 
program, we gave hundreds of millions of dollars in vouchers 
away that disappeared. So the inefficiencies that I see are the 
inefficiencies of cash.
    And those academics who claim--there were government people 
who claim they need flexibility. We have seen what flexibility 
happened when Mr. Bremer brought suitcases of cash into Iraq. 
We have seen that flexibility. That is not the kind of 
flexibility we need.
    Mr. Rouzer. My time has expired. Mr. Costa.
    Mr. Costa. Thank you very much, Mr. Shapiro, for your 
passion on this issue, and let us call it for what it is. I 
mean, these vouchers, sadly, corruption in that part of the 
world is the grease that makes that place work. And who knows 
whose hands it has gone in? Potentially some of our enemies. I 
mean, it is outrageous, and I couldn't agree with your concerns 
more.
    You recommend an improvement in contracting and 
transportation for practices for in-kind food aid, and you 
talked about specifically putting the risk of loss on the 
person in the transportation chain most able to control and 
mitigate the risk. Could you give some specific example in that 
instance?
    Mr. Shapiro. I think I have already done that, but, for 
instance, when we discharge a vessel, if we are bringing--our 
ships carry 50,000 tons of cargo. If we are bringing 50,000 
tons of corn, wheat, sorghum, soybean meal, rice, whatever it 
is, there are certain ports that we go into, and we discharge 
right away. There are other ports, in Africa, where we sit for 
20 days, waiting to discharge, because other commercial 
shipments are coming in, and the receivers of those cargoes 
have to pay money to the ships that wait. The U.S.-flag ships 
don't get that benefit. We have usually a line----
    Mr. Costa. So you sit there?
    Mr. Shapiro. Which means that the risk is on us to have----
    Mr. Costa. Right.
    Mr. Shapiro.--built that cost into our rate.
    Mr. Costa. Okay. Mr. Caponiti, could you give more detail 
on how the new regulatory mandate might strengthen MARAD's 
oversight and enforcement authority, and some examples of the 
problems inherent in that new regulatory scheme?
    Mr. Caponiti. Thank you for the question, sir. We need a 
mechanism that makes it clear that one entity is setting the 
rules and interpreting the law. Right now, and for many years, 
the shipping agencies themselves might disagree with the 
interpretation of how to implement a portion of the law or the 
regulation. And I know that MARAD and USAID have had many 
disagreements over the years, and the shipping agencies 
themselves choose to follow their own policies. The regulation, 
hopefully, would make it very clear where the buck stops, and 
MARAD would have to issue this regulation that would be subject 
to the public process. There would be comments and evaluation 
of the rule, and then they implement it. And then from that 
point forward, that is how the law is interpreted, and that is 
how the program will be carried out.
    Mr. Costa. Thank you. Captain Murray, you said that, in 
essence, it is much cheaper to maintain a U.S.-flag fleet as 
opposed to maintaining a fleet of inactive government owned 
ships on standby. I mean, it seems to me we are being penny 
wise and pound foolish in this effort. Do you want to explain 
as to when we look at our current predicament.
    Mr. Murray. I would agree that our commercial fleet--you 
have to understand, on our Maritime Security Program fleet, we 
engage in a whole host of activities, commercial, non-U.S.-flag 
cargo, et cetera. So we have an opportunity to deliver to the 
government a very reasonably priced asset at time of need. That 
ship is 100 percent at the disposal of the government, and 
under VISA and the MSP. But normally we don't operate with full 
government cargo. There is no way we could ever do that.
    Mr. Costa. Now, did you say you are a graduate of the 
Merchant Marine Academy?
    Mr. Murray. No, sir, Maine Maritime Academy. It is a better 
school.
    Mr. Costa. Okay. I wanted to make sure. So, as a graduate 
of the Maine Maritime Academy, what role does your company, in 
addition, provide to training mariners today and future 
mariners tomorrow?
    Mr. Murray. Well, our company today also carries cadets 
from the United States Merchant Marine Academy. We also carry 
cadets----
    Mr. Costa. They are pretty good too, right?
    Mr. Murray. Pardon?
    Mr. Costa. They are pretty good too, right?
    Mr. Murray. Yes.
    Mr. Costa. Okay.
    Mr. Murray. We have Mass Maritime, Maine Maritime, New York 
Maritime----
    Mr. Costa. We have an ability to make appointments to 
those, and I am always interested in how that academy's doing, 
in terms----
    Mr. Murray. They are all doing well. The problem that we do 
have is there aren't enough ships for the cadets coming out of 
the academies for training purposes. And we have had, at times, 
as many as six cadets on a ship just to provide the billets for 
them to get their sea time. They cannot be licensed upon 
graduation without having a pre-requisite amount of sea time, 
and we have had to double and triple them up. Normally we carry 
two, but, as I say, we have carried as many as six.
    Mr. Costa. Mr. Schoeneman, do you want to comment on that, 
in terms of providing an adequately trained mariner force?
    Mr. Schoeneman. Absolutely. I think Captain Murray's point 
here is valid. When we don't have ships sailing, and we don't 
have jobs available for our members, that has a real impact on 
their credentials and their ability to remain actively serving 
in the Merchant Marine. Under the standards, basically the 
convention on standards, the STCW is what we call it, 
essentially those rules require strict amounts of time at sea 
in order to maintain, and to continue to maintain, for 
officers, their licenses, for my own licensed members, all of 
their endorsements. They have to be able to be working in order 
to do that. When they are not working, they are losing that 
time, and that has a real impact on their ability to maintain 
their professional credentials in the industry.
    The SIU, along with all of the major maritime unions, we 
have training programs for our members. We have an unlicensed 
apprentice program that brings in folks who aren't familiar 
with the industry and gets them trained up and ready, and 
guarantees them their first job, and that is about a year long 
process. And we do that every year, and then all of the other 
maritime unions also have training programs and upgrading 
programs for their members as well. Training is a critical 
thing that we provide to our membership, which is one of the 
reasons why we have such high union density in maritime.
    Mr. Costa. Thank you very much. My time has expired.
    Mr. Rouzer. Chairman Hunter?
    Mr. Hunter. Thanks, Mr. Chairman. First, this is proof that 
there is somebody watching this hearing. I already heard from 
the Foreign Affairs Committee that I might have misrepresented 
Chairman Royce's take on food aid. Now, I want to get this 
straight, because it is interesting, they said--and he is pro-
MSP too, we helped--and he helped with the language of the MSP 
and the National Defense Authorization Act, but he is pro-
commodity. He is pro-food aid, but for cash, which is what we 
have been talking about, as opposed to shipping the commodity, 
giving them cash where there is famine, and having them buy it 
there. Obviously that is what we have been talking about for 
the last 2 hours. That is a big difference. So I just wanted to 
set that straight.
    I guess the question is, are there government agencies that 
don't go by the cargo preference rule? I mean, are they 
breaking the law? And if they are breaking the law, who is 
supposed to enforce them? Who is supposed to enforce the law, 
the cargo preference law?
    Mr. Caponiti. It is MARAD's responsibility to enforce the 
cargo preference law. The idea behind the regulation is to give 
them more specificity, give them the club. I mean, they need a 
regulation to make it clear that they are the ones that 
interpret this provision, or that provision, and the provision 
itself would be----
    Mr. Hunter. So there is no overarching umbrella law? I was 
reading that USDA and USAID both interpret the law differently 
on geographic location of where they take the food, right?
    Mr. Caponiti. That is correct.
    Mr. Hunter. Because there is no overarching direction from 
MARAD. I would ask Chip, because he is still here, is MARAD 
working on giving that direction, and do you have the ability 
or the purview, I guess, to even do that.
    Mr. Jaenichen. Let me tell you, sir, that that is in the 
rule that is under----
    Mr. Hunter. So what is the recourse, then, of MARAD if 
someone doesn't follow the cargo preference law?
    Mr. Schoeneman. That is the problem.
    Mr. Hunter. Do they sue them?
    Mr. Schoeneman. That is the problem, Mr. Chairman. Right 
now the enforcement mechanisms just aren't there. There is the 
ability, under the new law that was passed, I guess it was 2008 
now, that would allow MARAD to charge a $25,000 fine a day for 
folks who violate cargo preference, but those regulations 
haven't been issued. And the joke we have internally, and we 
always talk about this, there is no cargo preference jail. We 
can't put somebody in cargo preference jail because they 
violated the law.
    Mr. Hunter. Yes, so what happens if the Department of 
Energy or somebody else violates the cargo preference law?
    Mr. Schoeneman. Nothing.
    Mr. Shapiro. Nothing.
    Mr. Caponiti. Nothing.
    Mr. Hunter. How many waivers are requested every year to go 
to use foreign flag ships for commodity trade, for food aid? Do 
we know?
    Mr. Shapiro. I am not aware of any. I can tell you that 
there is another part of this program that needs to be 
addressed, and that is that, for an American company to bid on 
a cargo preference tender, we have to own or control a vessel. 
Yet, we are bidding against foreigners who don't have to own or 
control a vessel. They have to name a vessel that is ``on the 
merit approved list''. And the merit approved list could be any 
vessel that has carried a cargo preference cargo for the last 
20 years.
    Mr. Hunter. Explain this.
    Mr. Shapiro. And if they then speculate and get the cargo, 
then they go out into the market, and they find----
    Mr. Hunter. Well, let us go from scratch. So you have a 
cargo preference cargo----
    Mr. Shapiro. Correct.
    Mr. Hunter.--and then American shippers bid against foreign 
shippers----
    Mr. Shapiro. Well, okay, so a tender comes out, each 
company responds to the tender, if they have a ship available.
    Mr. Hunter. A foreign company and a domestic?
    Mr. Shapiro. An American company, in order to put their bid 
in, has to own or control the vessel that it is offering, which 
they usually do own them, or have chartered them, and the 
government agencies know that that company controls----
    Mr. Hunter. And how does a foreign----
    Mr. Shapiro.--that vessel?
    Mr. Hunter.--company bid if they don't own a U.S. vessel?
    Mr. Shapiro. Well, how a foreign--how many of the foreign 
companies that carry bid is they are located somewhere in a 
garage or in a house, and they put in an offer. If, all of a 
sudden, they are low bid, because they are foreigners, they win 
the cargo, they then go out and try to find a vessel.
    Mr. Hunter. A U.S. vessel?
    Mr. Shapiro. No, a foreign flag vessel, because the USAID 
today makes the decision on whether----
    Mr. Hunter. They have an understanding.
    Mr. Shapiro.--it goes on a U.S.-flag vessel, or a foreign 
flag vessel, or split between the two. But what the process, I 
am trying to point out, does, it allows people with no 
experience, no money, to basically speculate on the U.S. 
Government's foreign carriage side without having any stake in 
the game. And we are competing as Americans, where we are 
subject to a whole set of rules, including the fact that we own 
or control the vessel. Chip knows this, we have discussed it. 
It is another area that needs to be addressed.
    Mr. Schoeneman. And a follow-up on what Mr. Shapiro said, 
the other thing we like to remind everybody, the 50 percent 
requirement, that is a minimum, it is not a maximum. USAID and 
USDA are more than welcome to put more than 50 percent of their 
food aid cargo on American-flag ships, and we would encourage 
them to do that. There is nothing in the law that says that 
they can't do that. The issue there is simply that they are 
trying to get the most bang for their buck, and they would 
rather, and, frankly, some of the folks up here that have been 
working with them, would rather that there be no cargo 
preference at all, because then they could feed more people----
    Mr. Hunter. They would be happy if there was no cargo at 
all.
    Mr. Schoeneman. That is exactly right. And the problem for 
us is I would much rather come up here hand in glove with USAID 
and the rest and try to fight for a larger appropriation for 
the P.L. 83-480 program, because it has such an important 
impact not just on American security, but also on international 
security. But, instead, we are spending all of our time 
fighting over numbers that have been reducing and dropping over 
the years.
    Mr. Hunter. There is one thing I don't understand still, 
though. So you have two companies, a foreign company and a U.S. 
company, and say that there is 100,000 pounds of food, okay?
    Mr. Shapiro. Let us start with tons.
    Mr. Hunter. Or----
    Mr. Shapiro. Say 100,000 tons.
    Mr. Hunter. Whatever you want to say. Half of that has to 
go to a U.S. company.
    Mr. Shapiro. Depending on when in the year it goes, 
correct.
    Mr. Hunter. Okay.
    Mr. Shapiro. Because they have to fix America----
    Mr. Hunter. When you say that you compete, though, against 
a foreign company, that is for the other 50 percent, not the 50 
percent that is guaranteed to a U.S.-flag vessel, right?
    Mr. Shapiro. Not necessarily, Chairman Hunter. How it works 
if we are starting the fiscal year, the first cargo to a 
certain country or region has to be fixed American. But once 
they have done that--let us just say 40,000 tons, they ship 
20,000 tons on a U.S.-flag vessel, and 20,000 tons on a foreign 
flag vessel. The next tender that comes out doesn't necessarily 
mean it is a different country or a different region, depending 
on whether it is USDA or USAID. They determine what the breakup 
is between foreign companies----
    Mr. Hunter. I see.
    Mr. Shapiro.--and American.
    Mr. Hunter. So say in a geographic region, they could say 
all of Africa, as opposed to a country in Africa, we have 
already met 50 percent for this region?
    Mr. Shapiro. Absolutely correct. In the----
    Mr. Hunter. I see----
    Mr. Shapiro. In the Reagan years----
    Mr. Hunter.--vessels.
    Mr. Shapiro.--the Maritime Administration took the 
position, with the shipper agencies, that they were going to go 
to regions because they were looking to maximize the amount of 
cargo that could be sent----
    Mr. Hunter. On foreign----
    Mr. Shapiro.--and on American ships country by country, we 
may have 200 tons going to one country, 300 tons, but 50,000 
tons going into a geographic area. They wanted to have the 
maximum tonnage available to move because it was economically 
efficient to move it that way.
    Mr. Hunter. Okay. Thank you. Thank you, Mr. Chairman.
    Mr. Rouzer. Mr. Garamendi?
    Mr. Garamendi. This is extremely useful testimony. I thank 
the gentlemen for all of the testimony. There has been 
discussion back and forth here about how to improve the P.L. 
83-480 program and related programs, the 50 percent, 75 
percent, and the like. Just to inform the Members of the 
Committee here, we are in the process of drafting legislation. 
We welcome any ideas that the panel has, or any of the 
witnesses in this hearing, anybody else, about how to improve 
the issues. Mr. Shapiro, you have stated several of them. I 
know that Captain Murray and the other witnesses have also. I 
am not going to go into it now, but I want to put that on the 
table. That draft legislation should be available the 1st of 
the year. It will be out for discussion. It ought to cover much 
of the questions that have been raised here, including the last 
question, about regionality, and the games that are played with 
regard to the 50 percent minimum, or is it 75 percent?
    Second, P.L. 83-480 is not the only way in which we can 
enhance the Merchant Marine and our national security. There is 
a piece of legislation moving around through Congress on the 
export of crude oil. Back in the 1960s we talked about 
exporting crude oil out of Alaska, North Slope, and it was 
required to be on American ships with American sailors. Good 
for the shipbuilding industry, good for the shipping industry, 
good for the sailors--or the mariners, let me make it more 
broad. Here we are again, with an opportunity, should we take 
advantage of it, and simply say it is United States policy, for 
national security reasons, that this essential national asset, 
oil, be shipped on American ships. Why not? Why not do that? 
Why not build those ships in America, crew them, put them under 
American flag?
    I will put that on the table for you, if you gentlemen 
would like to take 10 seconds apiece, or 15 seconds, and just 
comment on that, and then we will move to LNG.
    Mr. Caponiti. Well, I will begin. I think it is safe to say 
that we would applaud such a thing, to have a mandate to ship 
some portion of the crude, or the LNG, whatever it is, on U.S.-
flag ships. With respect to the shipbuilding, we would probably 
recommend that is a little bit steeper hill to climb. We 
support shipbuilding in the United States, but the immediacy of 
it would be difficult. I think you might have to have a pilot 
program, or something like that, to kind of try to ease that 
in----
    Mr. Garamendi. We call it a phase in over time.
    Mr. Caponiti.--as a conceptual idea----
    Mr. Garamendi. And I am perfectly willing to negotiate 
downward from 100 percent to 95 percent.
    Mr. Caponiti. The other thing that you run into a little 
bit, this obviously helps the mariner pool, which, as you have 
heard over and over, is essential. Crude carriers themselves 
are not something that the military needs. They need product 
carries so a crude oil carrier might not be a militarily useful 
vessel, from the standpoint of the military. A product carrier 
would. So that is a wrinkle that you need to consider in the 
equation.
    Mr. Shapiro. Congressman, I support all programs that call 
for the building of ships and the employment of Merchant 
Mariners. And any program we can have, be it cargo preference, 
cargo reservation, export of crude, grossing up MSP, whatever 
we can do, we need to have a U.S. Merchant Marine that is 
capable of providing what we provided over the last 20 years to 
this country, in the conflicts, especially in the Middle East, 
and any program that, ship owners always say, ``Give us cargo, 
and we will build ships.'' Well, we need cargo, because our 
cost structure is higher than the foreigners because of U.S. 
regulations and taxes.
    Mr. Garamendi. Captain Murray?
    Mr. Murray. Congressman, yes, we would support that. That 
makes a lot of sense. And I understand the comments on the DOD 
aspect, and that is fair. But I will say that it would enhance 
the mariner pool, and that is what I see as the biggest 
challenge that we have in our country right now. It is not just 
ships, it is people to run them. And Mr. Schoeneman can expound 
on that more, but I see that in my side of it as well, so----
    Mr. Schoeneman. Mr. Garamendi, you get us the jobs, we will 
fill them.
    Mr. Garamendi. Very good. I will take the last 16 seconds 
here to simply say we ought to be doing this. If we care about 
America, and it is America's future, everywhere from 
manufacturing ships, and sailors, and everything in between, 
this is how we can do it. And we can do it within the current 
trade laws, including the TPP. And by the way, gentlemen, for 
the record, your analysis of the TPP on shipping would be 
appreciated, can you do that for the record. Mr. Chairman, I 
think I am out of time. Thank you so very much.
    Mr. Rouzer. Mr. Graves?
    Mr. Graves. Thank you, Mr. Chairman. I just want to note 
for the record that for the last 2 years the House passed Coast 
Guard authorization bill did include stronger cargo preference 
enforcement provisions that were ultimately rejected by the 
other body, so I am going to make a motion to migrate to a 
unicameral form of government, as opposed to this. No, I am 
kidding, sort of.
    I wanted to mention some things that I have had the 
opportunity to discuss with some of you in the past, just the 
kind of competitive regulatory environment in the United 
States, as compared to other countries where you operate. Can 
you talk about some of the economic, regulatory, and other 
factors that have the biggest impact on the number of vessels 
and the operating environment in the United States, as opposed 
to other countries?
    Mr. Caponiti. Well, I will begin. For one thing, our 
companies and our mariners pay taxes. Many foreign regimes do 
not. Many foreign regimes have hidden subsidies. You can be 
sure that China is absolutely supporting their Merchant Marine. 
They want to be the Merchant Marine. I don't know if that is 
the proper term in China, but they want to dominate world 
shipping. They want to crew every ship sailing the seas. That 
is part of their policy.
    Among the foreign trade fleet, you are competing against 
the lowest common denominator in bad acting, that is compliance 
to regulatory provisions, compliance to IMO rulemakings. The 
United States, we kind of gold plate what we do here, and we 
follow the law, and we have high standards. You are not 
necessarily competing against a foreign carrier that has 
equally high standards. The cost of living, to pay a living 
wage in the United States vis-a-vis what you could call slave 
conditions in some foreign flag regimes. I don't want to say 
that they all use slaves, but the level of compensation, and 
the concept of a living wage isn't necessarily available on all 
the foreign flag ships that we might be competing against. So, 
I mean, there is a whole array of things. And I will let my 
colleagues continue.
    Mr. Graves. Mr. Schoeneman, could you comment on that?
    Mr. Schoeneman. Absolutely. I mean, there was a great 
article in The New York Times in July of 2015. The headline 
was, Stowaways and Crimes Aboard a Scofflaw Ship. It was 
written by a guy named Ian Urbana. It was great. Essentially it 
demonstrated that the reason why the U.S. has trouble competing 
internationally is we play by the rules. We actually follow the 
law, and we hold ourselves accountable when we make mistakes. 
The rest of the world does not do that. And, unfortunately, as 
a result of playing by the rules, we sometimes end up competing 
internationally with one hand tied behind our back.
    There are minimum standards in the international fleet, 
both in the United States and globally, that the International 
Maritime Organization and others put forward that are supposed 
to govern everybody uniformly, and some countries don't follow 
them as well as we do. And that, unfortunately, puts us at a 
competitive disadvantage.
    Mr. Graves. Thank you.
    Mr. Schoeneman. The bottom line is, we follow the rules.
    Mr. Graves. Thank you. Right now we have fewer than 90 
U.S.-flag vessels that are participating in foreign trade. We 
have seen the trend going downward. Can you tell me how many 
vessels it is going to take, and when our next major military 
sealift is going to occur? Obviously there is not an answer to 
that question.
    Mr. Schoeneman. I wish I had a crystal ball----
    Mr. Caponiti. Well, I mean----
    Mr. Schoeneman.--to tell you that.
    Mr. Caponiti. I mean, the MSP is viewed as the primary 
resource that they would use. Obviously we have the organic 
fleet that we have talked about, the ready reserve force, and 
the command. I mean, Iraq and Afghanistan was historic from 
the--whether you liked the war or not----
    Mr. Graves. Sure.
    Mr. Caponiti.--the sealift to Iraq and Afghanistan was 
historic. It was very, very cost-effective, very, very timely. 
The improvements that were made between the first Gulf War and 
the Iraq conflict were night and day. I mean, the ready reserve 
force itself wasn't too ready in 1991. DOD was smart enough 
to----
    Mr. Graves. I have a few seconds left. Let me just make one 
point and get one last question out real quick. With the fraud 
and abuse that has been documented as we have migrated to a 
cash-based system, in effect you are subsidizing other 
countries, as many of these governments are subsidizing their 
own shipping interests. I think it is an important point to 
make, in some of the testimony today we have talked about the 
additional cost by being a U.S.-based company. Captain Murray, 
could you talk a little bit about the tax differences in U.S. 
operations, as compared to international, and foreign 
governments, what are the efforts they take to subsidize their 
foreign shippers?
    Mr. Murray. Congressman, I would be glad to do that. Some 
countries don't have a personal income tax, or that sort of 
thing. The point I would like to make is that the cost 
differentials have been well studied. MARAD has done it, DOD 
has done it, independent analysts have done it. The bottom line 
is there is a cost differential to operate a U.S.-flag vessel 
versus a foreign flag vessel, and a respectable international 
flag vessel is still three times cheaper to operate than an 
American ship.
    So the question we should be asking is not where the cost 
differentials are. How do we overcome that delta? And we have 
always overcome it, the MSP stipend covers maybe 30 percent of 
the delta. The balances have to come from cargo. Be it 
military, food aid, Ex-Im Bank, that cargo is reserved for 
U.S.-flag carriers. The other guys can't get at it, only us. 
And on that basis, that is how we get over the cost hump.
    Mr. Shapiro. Congressman, can I just add one thing before 
you depart? On the cost differential, I agree with Captain 
Murray that it is a 300 percent differential. One area where it 
is a 400 and 500 percent differential is insurance, and we need 
to address that as an industry, but we need Congress' help. 
Because, frankly, when someone is hurt on one of our vessels, 
we want to be fair to them, and pay them what they are entitled 
to get paid. But we have jury verdicts coming out of certain 
states that are millions of dollars for a broken arm, millions 
of dollars for a hurt back, and----
    Mr. Graves. Look, after I am finished moving to a 
unicameral system of government, I am going to go to bad 
attorneys, so we will take care of all this.
    Mr. Shapiro. And we do have a responsibility to work with 
you to try to reign in some of these differential costs. And on 
the insurance side, it is achievable if we went to a Federal 
Workmen's Comp kind of panel that would decide what these 
injuries were worth.
    Mr. Murray. Mr. Chairman, if I could just jump on that, if 
it is okay? I agree with everything Mr. Shapiro just said, 
however, we are where we are today. That is not going to get 
fixed overnight.
    Mr. Shapiro. Yes.
    Mr. Murray. That is a process, a legislative process, more 
debate. I think the state of our Merchant Marine today is much 
more urgent than that.
    Mr. Rouzer. The gentleman from Maryland, Mr. Cummings.
    Mr. Cummings. Thank you very much, Mr. Chairman. In 2010, 
when I was the Chairman of the Coast Guard Subcommittee, I 
convened two hearings to examine the status of a U.S.-flag 
fleet. During those hearings, our Subcommittee Members bemoaned 
the continuing decline of the U.S.-flag oceangoing fleet, noted 
its dependence on preference cargoes, and the MSP program, and 
emphasized that if we did not take decisive action to arrest 
the decline, it would continue. During those hearings, we were 
repeating warnings and observations that had already been made 
in the 2000s, the 1990s, and then the 1981 GAO study.
    In the intervening 5 years, the MAP-21 highway bill cut, 
from 75 to 50 percent, the amount of government-impelled 
agricultural commodities that have to be carried on U.S.-flag 
vessels. The drawdown from Iraq and Afghanistan has sharply 
reduced U.S. military cargoes, and no new policies have been 
implemented to stabilize the U.S.-flag fleet in foreign trade. 
And, guess what, the size of the U.S.-flag oceangoing fleet in 
foreign trade has continued to decline. When I was Subcommittee 
Chairman, we had just over 100 vessels in the fleet. As of last 
month, we have 78.
    Today's hearing appears to be an exercise in repetition. 
However, there is no mystery surrounding the decline of our 
fleet that needs further study. The only question is whether 
we, as a nation, are simply resigned to see our oceangoing 
foreign trade fleet sail away, and leave our nation, and its 
commerce, totally dependent on foreign flag vessels. I believe 
that, contrary to mischaracterizations prevalent in the media, 
that the United States Merchant Marine is an essential 
component of a vast network of logistics contractors that 
support our U.S. military and sustain and create broader 
economic opportunities in communities around our nation. And I 
also believe that spending U.S. taxpayer dollars to buy food 
grown by U.S. farmers, and transport it on U.S.-flag vessels 
crewed by U.S. seafarers is not unlike other Buy America 
policies that ensure the expenditure of U.S. taxpayer dollars 
to support the interests of the United States taxpayers.
    And with that, let me ask all of the witnesses, what is the 
most important thing that could be done right now to at least 
arrest the decline in the U.S.-flag oceangoing fleet in foreign 
trade?
    Mr. Shapiro. Well, I would say there are several factors. 
One would be on the food aid side, for the food aid program to 
restore the 75 percent, or even go to 100 percent. There are 
many nations in the world that give aid, and require that that 
aid move on their ships. Japan being one, for instance.
    Mr. Cummings. Okay, number two?
    Mr. Shapiro. Number two, we need to increase the stipend 
for MSP ships to cover the loss of defense preference cargo. 
Number three, we should be looking, as Congressman Garamendi 
has suggested, at alternate cargo sources, whether they come 
from the commercial, the military, or the government side. We 
need to set aside cargo in order to have ships.
    Mr. Cummings. What happened to four, five, six, and seven?
    Mr. Shapiro. Well, I could do that, sir, but I----
    Mr. Cummings. Go ahead.
    Mr. Shapiro.--might exceed my time.
    Mr. Cummings. Does does anybody else have anything?
    Mr. Murray. Congressman, it is very important, and I agree 
with Mr. Shapiro, and in our case, MSP is number one. I don't 
believe you were here earlier, when Administrator Jaenichen 
testified that we only have 57 ships in the MSP program today. 
Traditionally, as we have worked together as MSP operators, if 
an extra slot became available, we would kind of work our way 
around it with a--somebody would want it. Today, the 
Administrator said he is going to be publishing a notice here 
shortly that slots are available. Nobody is running to get them 
right now.
    Mr. Shapiro. I will take it, John. If it is available, 
Liberty will take them.
    Mr. Schoeneman. Look, bottom line, just to follow up on 
what Mr. Shapiro and Captain Murray said, we have to get MSP to 
$5 million a ship, period. That has to happen. I mean, the fact 
is we do not; frankly, not only do we have to get it to $5 
million a ship, we have to make sure that that appropriation is 
solid. Every single year all of us up here, and the folks 
behind you, we go up on the Hill, and we pound the pavement, 
and we tell everybody we absolutely need this money, and it is 
getting harder, and harder, and harder to make that case, 
particularly given the tough budget environments we are in.
    But the second thing, obviously cargo is critical. Cargo 
for a ship is like an engine in a car. If there is no cargo, it 
is not moving. And if it is not moving, my guys don't have 
jobs, and these guys aren't making any money. So, at the end of 
the day, we have to find, as Mr. Garamendi pointed out, we have 
to find new and outside of the box thinking, try to get us some 
additional cargo sources that will make it possible for us to 
carry things into the future.
    One last thing, I want to point something out on the in-
kind food aid versus the cash issue. Go and read this GAO 
report from August. It is unbelievable the stuff that is 
happening right now that we are letting happen. Philip pointed 
this out to a certain extent in his comments with the overhead 
imagery. GAO report, we are handing out envelopes of cash to 
crowds of people in Syria. There is no way to know where that 
is going. There is no way to make sure that that is accountable 
and being spent on food. It could be spent on anything, and I 
don't even have to tell you what it could have been spent on, 
because you guys are thinking like I am.
    They are talking about areas in Africa with USAID programs 
that have not seen a USAID person on the ground in over a year. 
They are viewing these work programs with satellite imagery. 
Really? The bottom line is we all need to work together, but 
the best way to make sure that someone is fed is to put some 
food in their hand. And we have been doing that for the last 60 
years, and we absolutely need to keep doing that well into the 
future. We can't allow any of these misguided notions of 
efficiency, or folks that are constantly trying to find ways to 
scrimp and save, and squeeze that extra dollar, to really take 
food out of the hands of people, which is what is happening 
right now.
    Mr. Cummings. Thank you very much, Mr. Chairman.
    Mr. Rouzer. The gentleman's time has expired. In closing, 
let me say I greatly appreciate the gentlemen on the panel, and 
thank you for your participation. And, of course, I appreciate 
the gentlemen who were on the first panel for today's hearing. 
I think this has been a very informative, very good joint 
Subcommittee hearing. Mr. Garamendi, do you have any closing 
comment you would like to make?
    Mr. Garamendi. I see a woman walking up a hill with a 50 
kilo sack of grain on her back, and I see the hands clasped, a 
gift from the American people. She did not starve, nor did her 
family.
    Mr. Rouzer. Under the rules of the Committee, the record of 
today's hearing will remain open for 10 calendar days to 
receive additional material and supplementary written responses 
from the witnesses to any questions posed by a Member. This 
joint hearing of the Subcommittee on Livestock and Foreign 
Agriculture of the Committee on Agriculture, and the 
Subcommittee on Coast Guard and Maritime Transportation of the 
Committee on Transportation and Infrastructure is now 
adjourned.
    [Whereupon, at 12:12 p.m., the Subcommittees were 
adjourned.]
    [Material submitted for inclusion in the record follows:]
  Supplementary Material Submitted by Hon. David J. Berteau, Assistant
Secretary of Defense, Logistics and Materiel Readiness, U.S. Department 
                               of Defense
Insert
          Mr. Garamendi. Very good. What is a sufficiently sized fleet? 
        Mr. Berteau, what is a sufficiently sized fleet, and then what 
        is the sufficient mariners to man that fleet.
          Mr. Berteau. So we create our requirements not in terms of 
        number of ships, but in terms of the requirements of what goes 
        on those ships. So it is square footage, it is tonnage, it is 
        container capacity, it is roll-on/roll-off capacity across the 
        entire fleet. Translating that into ship by ship numbers ends 
        up with a range, if you will, of ships available to us. We 
        haven't fully tested the limits of our current capacity and 
        capability for quite a number of decades. I mean, the closest 
        we have come was Operations Desert Shield and Desert Storm, 
        which was mentioned earlier as a high demand test for our 
        overall capacity. We used a lot, again, at the beginning----
          Mr. Garamendi. Were we able to meet the demand with domestic 
        ships?
          Mr. Berteau. Today we can probably meet the demand. We have 
        not done a capability requirements study in about 6 years now. 
        I think it is about time for us to undertake another one. A lot 
        of the world has changed since 2009, the last time we did it. I 
        think it is time for us to update those requirements.
          * * * * *
          Mr. Jaenichen. I can certainly give you some specific 
        examples. With regard to Desert Storm and Desert Shield, about 
        23 percent of the actual cargo that DOD actually moved, it was 
        forced to go on U.S.-flag due to lack of availability. We also 
        activated 76 out of the 96 ships that were in the ready reserve 
        fleet at the time. I would note that that 76, although it was 
        not a full activation, that is 30 more ships than I currently 
        have in my ready reserve force fleet today of 46. Additionally, 
        at that time, I had 199 ships under U.S.-flag in the 1990-91 
        timeframe. Today that is 78. General McDew, who is the current 
        Commander of the U.S. Transportation Command, is on record 
        saying that if we were required to do the same amount of 
        movement to be able to support Desert Shield and Desert Storm, 
        we do not have the sealift capacity today.
          Mr. Berteau. And that is why I am uncomfortable.
          Mr. Garamendi. Does that also mean the mariners, as well as 
        the ships?
          Mr. Jaenichen. It does. In fact, our mariner pool today 
        stands at about 11,300, and I believe that we are on the very 
        hairy edge of being able--we can certainly man all of the ships 
        that we have currently in the reserve sealift fleet, however, 
        we would not be able to support a rotation of those crew 
        members at the 3 to 4 month point.
          Mr. Berteau. And I would note that the two examples we use 
        here, Persian Gulf I in the early 1990s, Persian Gulf II in the 
        early 2000s, neither one extended over a period of time longer 
        than 6 months. So the real problem could become with a second 
        rotation beyond a 6 month period.
          Mr. Garamendi. Mr. Chairman, just for the record, could you 
        provide the specifics in this discussion for both of you? Thank 
        you. I yield back.

    The Department used the Mobility Capabilities and Requirements 
Study 2016 (published 2010) and the Mobility Capabilities Assessment 
(published 2013) collectively to determine mobility requirements for 
sealift force projection and sustainment. Capacity requirements are not 
measured by number of vessels, but by usable square feet for Roll-On/
Roll-Off (RO/RO) vessels, Twenty-Foot Equivalent Units (TEU) for 
container ships and Barrels for tank vessels.
    The RO/RO requirement is 19.9M\2\. The square footage was achieved 
using vessel capacity from government-owned organic vessels, allied 
shipping and U.S.-flag commercial industry, and equates to 
approximately 91 vessels. The commercial portion of this requirement is 
approximately 3.8M\2\ which equates to approximately 23 vessels. 
Currently there are 18 vessels accessible through the Voluntary 
Intermodal Sealift Agreement (VISA) Stage III, or approximately 
3.1M\2\ of capacity, resulting in a moderate risk to force closure. 
The shortfall is expected to be met once the three vacated Maritime 
Security Program slots are filled early next year.
    The Container requirement is approximately 34,000 TEUs, with a peak 
demand of approximately 3,000 TEUs per week. The requirement was 
achieved using 36 commercial containerships. The 52 containerships 
currently committed to the VISA program provide sufficient capacity to 
meet this requirement.
    The Tank vessel requirement is approximately 420,000 barrels per 
day. This requirement is met using a combination of four vessels in the 
Voluntary Tanker Agreement, two alliance vessels and the remaining 80 
vessels accessed through the international market or requisitioning.
    To meet the mariner requirements, DOD relies on U.S. commercial 
mariners credentialed to operate unlimited tonnage upon any oceans. The 
Maritime Administration (MARAD), under National Security Directive 28 
(NSD-28), is tasked with ensuring there are sufficient mariners 
available to support the DOD Ready Reserve Fleet and commercial vessels 
needed to meet national security requirements.
                                 ______
                                 
                           Submitted Question
Response from Hon. Paul N. ``Chip'' Jaenichen, Sr., Administrator, U.S. 
        Maritime Administration, U.S. Department of Transportation
Question Submitted by Hon. Carlos Curbelo, a Representative in Congress 
        from Florida
    Question. In the southern portion of Miami-Dade County, Florida, 
our farmers are facing a quarantine of 97 miles\2\ to contain a nasty 
invasive pest, the Oriental Fruit Fly. Since the initial Fly was first 
discovered in Miami-Dade County on August 26, officials have found 165 
individual pests. Luckily the last time this fly was found was on 
October 10, but the quarantine is still supposed to last until February 
21, 2016.
    Since the Oriental Fruit Fly has already been discovered, there is 
great fear it could be spread by the public when they bring or mail 
uninspected fruits, nuts, vegetables, or other host plants from foreign 
or domestic quarantine areas to uninfected areas of the United States. 
Although the USDA, as well as the Florida Department of Agriculture and 
Miami-Dade County's Department of Consumer Services are tasked with 
dealing with the current crisis by providing safeguards to prevent the 
diseases' spread, they are limited in their resources.
    This quarantine of the 97 miles\2\ in South Florida is having a 
devastating effect on our farmers and agribusinesses. The crops grown 
year-round and the agriculture industry in Florida contribute $120 
billion to the state's economy. Because of Florida's warm climate, our 
farm production provides essential produce to most of the nation 
during, and immediately following, each winter season.
    What can be done, whether it be at the ports of entry with CBP, 
with USDA and Florida Ag, or perhaps even stricter safeguards from the 
maritime industry, to search for and eradicate these invasive pests 
before they come on land? Do you have any suggestions how we can avoid 
future infestations of the Oriental Fruit Fly or other diseases like 
Citrus Greening?
    Answer. Although the Maritime Administration (MARAD) has no 
regulatory or enforcement authority with regard to agricultural 
inspections of vessels, MARAD cooperates with sister Federal agencies 
to prevent the introduction of invasive species, including the Oriental 
Fruit Fly. As you are aware, Customs and Border Protection actively 
enforces regulations issued by the Department of Agriculture's Animal 
and Plant Health Inspection Service, which require inspection of any 
and all agricultural products entering the U.S. by any mode of 
transportation, including ships. MARAD-owned vessels, including those 
of the Ready Reserve Force and the training ships used by the nation's 
six state maritime academies and the U.S. Merchant Marine Academy, 
comply readily and fully with these regulatory requirements.

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