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






        MARITIME TRANSPORTATION SAFETY AND STEWARDSHIP PROGRAMS

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

                                (114-38)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                COAST GUARD AND MARITIME TRANSPORTATION

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 14, 2016

                               __________

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             Committee on Transportation and Infrastructure


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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

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

        Subcommittee on Coast Guard and Maritime Transportation

                  DUNCAN HUNTER, California, Chairman
DON YOUNG, Alaska                    JOHN GARAMENDI, California
FRANK A. LoBIONDO, New Jersey        ELIJAH E. CUMMINGS, Maryland
BOB GIBBS, Ohio                      CORRINE BROWN, Florida
MARK SANFORD, South Carolina         JANICE HAHN, California
GARRET GRAVES, Louisiana             LOIS FRANKEL, Florida
CARLOS CURBELO, Florida              JULIA BROWNLEY, California
DAVID ROUZER, North Carolina         PETER A. DeFAZIO, Oregon (Ex 
LEE M. ZELDIN, New York                  Officio)
BILL SHUSTER, Pennsylvania (Ex 
    Officio)
    
    
    
    
    
    
    
    
    
    
    
    
    
                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................     v

                               TESTIMONY
                                Panel 1

Rear Admiral Paul F. Thomas, Assistant Commandant for Prevention 
  Policy, U.S. Coast Guard.......................................     4
R. Keith Michel, NAE, Chair, Committee to Review Impediments to 
  United States-Flag Registry, Transportation Research Board, 
  National Academies of Sciences, Engineering, and Medicine......     4

                                Panel 2

Thomas A. Allegretti, President and Chief Executive Officer, 
  American Waterways Operators...................................    25
John W. Butler, President and Chief Executive Officer, World 
  Shipping Council...............................................    25
John Crowley, Executive Director, National Association of 
  Waterfront Employers...........................................    25
Donna Lemm, Chair, Container Weight Committee, Agriculture 
  Transportation Coalition, and Vice President of Global Sales, 
  Mallory Alexander International Logistics......................    25
Kendall Carver, Chairman, International Cruise Victims 
  Association, Inc...............................................    25

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Hon. John Garamendi of California................................    45
Hon. Doris O. Matsui of California...............................    47

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Rear Admiral Paul F. Thomas......................................    50
R. Keith Michel, NAE.............................................    59
Thomas A. Allegretti.............................................    65
John W. Butler...................................................    79
John Crowley.....................................................    90
Donna Lemm.......................................................    93
Kendall Carver...................................................    97

                       SUBMISSIONS FOR THE RECORD

Rear Admiral Paul F. Thomas, Assistant Commandant for Prevention 
  Policy, U.S. Coast Guard, responses to questions for the record 
  from the following Representatives:

    Hon Duncan Hunter of California..............................    54
    Hon. Bob Gibbs of Ohio.......................................    56
Hon. John Garamendi, a Representative in Congress from the State 
  of California, request to submit the following:

    Letter of April 6, 2016, from Chris Crutchfield, President 
      and Chief Executive Officer, American Commodity Company, 
      LLC, to Hon. Garamendi.....................................   121
    Written statements from the U.S, Navy, U.S. Maritime 
      Administration, and U.S. Army witnesses who testified 
      during the House Subcommittee on Seapower and Projection 
      Forces hearing entitled ``Logistics and Sealift Force 
      Requirements'' on March 22, 2016...........................   122
Hon. Duncan Hunter, a Representative in Congress from the State 
  of California, request to submit the following:

    Letter of April 7, 2016, from James I. Newsome III, President 
      and Chief Executive Officer, South Carolina Ports 
      Authority, to Hon. Hunter..................................   147
    Letter of April 13, 2016, from Teresa Craft, Head of 
      International Logistics, JBS USA Food Company, to Hon. 
      Hunter.....................................................   150
    Written testimony of April 13, 2016, from Lynda D. Sanford, 
      survivor of a cruise ship accident.........................   151
    Letter of April 12, 2016, from William R. Plourd, President 
      and Chief Executive Officer, El Toro Export, to Hon. Hunter   155

                        ADDITIONS TO THE RECORD

Comments of the Global Consolidators Working Group...............   156
Comments of the U.S. Clay Producers Traffic Association, Inc.....   167
Letter of April 6, 2016, from Greg Braun, President, Border 
  Valley Trading Ltd., to Hon. Duncan Hunter.....................   171
Letter of April 15, 2016, from Robyn Boerstling, Vice President, 
  Infrastructure, Innovation, and Human Resources Policy, 
  National Association of Manufacturers, to Hon. Duncan Hunter, 
  Chairman, and John Garamendi, Ranking Member, Subcommittee on 
  Coast Guard and Maritime Transportation........................   172
  
  
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        MARITIME TRANSPORTATION SAFETY AND STEWARDSHIP PROGRAMS

                              ----------                              


                        THURSDAY, APRIL 14, 2016

                  House of Representatives,
          Subcommittee on Coast Guard and Maritime 
                                    Transportation,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:05 a.m. in 
room 2253, Rayburn House Office Building, Hon. Duncan Hunter 
(Chairman of the subcommittee) presiding.
    Mr. Hunter. The subcommittee will come to order. The 
subcommittee is meeting today to hear testimony on a variety of 
maritime transportation safety and stewardship programs 
implemented and enforced by the Coast Guard. Actually, this 
hearing is going to cover everything.
    [Laughter.]
    Mr. Hunter. John was kind enough to just put everything 
into this hearing.
    The subcommittee has had--held periodic reviews of the 
Coast Guard's regulatory regime to keep the committee updated 
and to provide the regulated community an opportunity to relay 
information on what effects, positive or negative, new program 
or updates to regulations have on industry.
    As we have done with previous regulatory hearings, we will 
review pending and final rules impacting the safety and 
security of our ports and waterways, as well as regulations 
affecting business practices and the viability of the U.S. 
flag. The continued reviews allow for oversight on 
implementation and how the regulations are impacting vessel 
safety, the flow of commerce through our ports, and the ability 
to grow jobs in the maritime sector.
    Maritime commerce is essential to the U.S. economy. That is 
why we are all here, right? While regulations must address 
concerns related to safety, security, and stewardship, they 
must also balance the importance of maintaining the flow of 
maritime commerce. Domestic shipping alone is responsible for 
over 500,000 American jobs and $100 billion in annual economic 
output. In addition, 90 percent of all global trade and over 25 
percent of our GDP [gross domestic product] moves via the sea. 
The Federal Government should foster an atmosphere where our 
maritime industry can compete and expand.
    And I have got to say--and that I didn't make up--but if 
you control the ocean, you control the world. And that is why 
we are here. If you control the ocean, you control the world.
    The National Academies of Sciences Transportation Research 
Board recently released a report on the impact of Coast Guard 
regulations on the United States-flag registry. The good news 
for the Service is the board reported that U.S. regulations are 
not an impediment to the competitiveness of the U.S.-flag 
fleet. The board provided recommendations on further 
improvements that can be made by the Coast Guard to support the 
U.S.-flag fleet. What is an ongoing frustration is the lack of 
a unified approach within this administration to support 
programs that support--that promote the U.S.-flag fleet.
    In fact, we just had a--we had an issue yesterday where we 
found out that there was a U.S.-flagged, U.S.-crewed MSP 
[Maritime Security Program] vessel sitting outside of a port, 
while a foreign-flagged vessel got the contract to carry goods. 
And they are going to be late. So you had a U.S.-flagged, U.S.-
crewed vessel empty, an MSP vessel, which gets a U.S.-taxpayer-
dollar stipend, sat there while a U.S.--while a foreign-flagged 
vessel is going to be late to pick up a full load, a military 
load, to go from Jacksonville to Kuwait. That is a huge 
screwup.
    And you would think, as well as we are doing and what we 
know now, that that kind of stuff wouldn't happen. But it 
happens every day. And in fact, the head of TRANSCOM [United 
States Transportation Command] didn't even know it was 
happening until yesterday, until I talked to him. That is a sad 
state of affairs.
    The Coast Guard and the Environmental Protection Agency 
have developed separate regulations under two different Federal 
laws to govern ballast water discharges. Although the agencies 
have worked together to try to reach uniformity, the programs 
still differ in implementation dates, vessels covered, 
geographic reach, enforcement, and penalties for noncompliance.
    For instance, the Coast Guard rules allow for vessel owners 
to seek an extension if treatment technologies do not exist or 
cannot be installed by the deadline. The EPA provides no 
mechanism for an extension, leaving a vessel owner liable for 
civil and criminal penalties through no fault of their own.
    This blows my mind. You have an 80-percent solution on 
ballast water. You have an 80-percent solution that exists now. 
You can make--you can do ballast water so you can drink it if 
there was no salinity, but it is not good enough for the Coast 
Guard. Blows my mind. So let's do extensions to dump dirty 
water, instead of taking an 80-percent solution to kind of fix 
things. It is--let's just keep going. We will talk later.
    [Laughter.]
    Mr. Hunter. The situation only becomes more confusing and 
burdensome for vessel owners as each individual State adds its 
own ballast water discharge requirements on top of the EPA's 
program. Under the EPA's current program, numerous States and 
tribes have added their own differing discharge standards.
    Some States have laws in place for forcing vessel owners to 
treat their ballast water to a standard for which no technology 
has yet been invented. The situation is ridiculous. It is 
completely unreasonable to ask vessel operators to comply with 
two Federal standards and as many as 25 different, 
contradictory, and unachievable State and tribal standards. I 
hope my colleagues will join me in looking at ways to 
rectifying this issue in any way possible.
    Lastly, the International Convention for the Safety of Life 
at Sea was amended by the International Maritime Organization 
in 2014 to require verified gross weights of containers before 
they are loaded on vessels. Implementation of the provision 
goes into effect on July 1, 2016. I look forward to the 
witnesses' views on how to implement this requirement in a 
manner to ensure U.S. exports continue to move unimpeded, 
because what we really want to see is more burdens placed on 
small businesses that are shipping things. Not really. That was 
a joke.
    [Laughter.]
    Mr. Hunter. We want to do fewer things that impede the flow 
of commerce and the ability for the American people to keep 
their jobs, maintain their livability in the United States and 
make money.
    If we want to grow our economy and remain a world power 
capable of defending ourselves and our allies, we must work 
together to strengthen and preserve our maritime industry. I 
thank the witnesses for appearing today and look forward to 
their testimony.
    And with that I yield to the great ranking member, Mr. 
Garamendi.
    Mr. Garamendi. Thank you, Mr. Chairman. Sorry about your 
illness. And I expect I am going to separate myself from you.
    [Laughter.]
    Mr. Garamendi. Not in your testimony, which was--covers 
most everything I have to say here--so I'm going to just 
shorten this and put my comments into the record.
    But welcome to the witnesses. Admiral and Mr. Michel, thank 
you very much for being here. Mr. Michel, I am particularly 
interested in hearing your testimony about how we might do the 
regulations and the whole process a whole lot better. And so I 
really want to focus on that.
    It is obviously vital for the Coast Guard regulations to be 
targeted, fair, and reasonable, and to get them done on time, 
all of which seems to be a very difficult task for the Coast 
Guard to achieve. Eventually, you do get it right, and we thank 
you for that. Eventually it makes it tough when those years go 
by.
    I think I will just submit this for the record and get on 
with the testimony. You covered all of it very well in your 
statement, Mr. Chairman, so I will do that.
    And with your permission, I would like to introduce in the 
record a statement by Congresswoman Doris Matsui dealing with 
passenger safety on cruise ships, and also a statement from the 
American Commodity Company dealing with what seems to me to be 
the current issue du jour, which has to do--who is responsible 
for the weight of a container.
    Mr. Hunter. Without objection.
    [The written statements of Congressman Garamendi and 
Congresswoman Matsui are on pages 45-49. The letter from the 
American Commodity Company is on page 121.]
    Mr. Garamendi. Thank you.
    Mr. Hunter. On our first panel we will hear from Rear 
Admiral Paul Thomas, Assistant Commandant for Prevention Policy 
for the United States Coast Guard, and Mr. Keith Michel, chair 
of the Committee to Review Impediments to United States-Flag 
Registry for the Transportation Research Board of the National 
Academies of Sciences, Engineering, and Medicine.
    Admiral, thanks for being here. Keith, thanks for being 
here. And, Admiral, you are recognized.

TESTIMONY OF REAR ADMIRAL PAUL F. THOMAS, ASSISTANT COMMANDANT 
 FOR PREVENTION POLICY, U.S. COAST GUARD; AND R. KEITH MICHEL, 
 NAE, CHAIR, COMMITTEE TO REVIEW IMPEDIMENTS TO UNITED STATES-
    FLAG REGISTRY, TRANSPORTATION RESEARCH BOARD, NATIONAL 
        ACADEMIES OF SCIENCES, ENGINEERING, AND MEDICINE

    Admiral Thomas. Well, thank you. Good morning, Mr. Chairman 
and Ranking Member, distinguished members of the subcommittee. 
Thank you for your continued strong support of our Coast Guard 
and for the opportunity to talk with you today about our 
maritime prevention program.
    As you know and as you said, maintaining and sustaining a 
robust maritime industry and maritime transportation system is 
a national security imperative, and our Coast Guard prevention 
program plays a key role. The Coast Guard concept of operations 
for prevention brings to bear our unique authorities and 
capabilities on the task of ensuring a safe, secure, 
environmentally sound, productive, and efficient global 
maritime transportation system, and on helping the maritime 
industry meet the triple challenge over the coming decades of 
growing capacity while reducing environmental footprint in the 
face of ever-increasing complexity.
    We do this by developing smart risk-based standards which 
include both domestic and international regulations; by 
providing a well-trained workforce in our ports that can ensure 
compliance with those standards and provide the level playing 
field the industry demands; and by conducting investigations 
into accidents and violations of law so that both the standards 
and the compliance procedures can be improved, as we are 
currently doing in the case of the El Faro.
    Thanks in large part to oversight provided by this 
committee, we have made significant improvements in our 
regulatory development program since 2009. We have added staff, 
reduced backlogs, cut our average age of our projects, and 
implemented process improvements. Most of the significant rules 
that we develop are developed in response to congressional 
mandates. In every case we work closely with all of our 
stakeholders, including the public and the industry, to ensure 
congressional intent is met, while providing maximum regulatory 
flexibility and minimum burden.
    A perfect example is the subchapter M towing vessel 
regulation, which will apply to about 6,000 towing vessels, and 
will effectively double the size of the U.S.-inspected fleet. 
This will significantly challenge the Coast Guard in terms of 
our resources. As a result, we will rely heavily on the use of 
third parties to meet the inspection and audit demands and to 
provide the industry the needed flexibility.
    We have developed a robust implementation plan for 
subchapter M, and we will bring industry into our 
implementation team as soon as the rule publishes. We have 
already developed a very comprehensive outreach plan that 
engages both internal and external stakeholders.
    But we know from experience that the publication of the 
final rule is really just the end of the first phase, and we 
are focused on smooth implementation. You mentioned our ballast 
water regulation, for example, which was published 4 years ago, 
and we are still in the implementation phase. Some of the 
challenges associated with that rule are due to overlapping 
jurisdictions between the Coast Guard and the EPA and between 
the States and the Federal Government. We appreciate the 
efforts of this committee to reduce those redundancies and to 
embrace standards based on best available technology that is 
both economically and operationally practical. We remain 
focused on type approval of ballast water management systems.
    You mentioned the TRB [Transportation Research Board] 
report, sir, and we welcome that report as part of our constant 
effort to improve our regulatory programs. As you mentioned, 
the report concluded that compliance with Coast Guard 
regulations is not an impediment to the competitiveness of the 
U.S. flag, and I agree. But I also agree with the 
recommendations that there is room for further improvement in 
the Coast Guard regulatory programs, and I have already taken 
steps in line with the committee's recommendations.
    Of the three recommendations in the report that are 
specific to the Maritime Security Program, two have already 
been enacted. To address the remaining recommendations, I have 
established a working group with industry operators to review 
and prioritize and suggest courses of action for each, and that 
group has its first meeting next week. We thank the TRB team 
for their efforts on our behalf.
    And finally, you mentioned the SOLAS [Safety of Life at 
Sea] requirements, the SOLAS amendments that have become known 
as the container weight or VGM [verified gross mass] 
amendments. As these amendments were developed at the IMO 
[International Maritime Organization], our delegation was 
mindful of the existing regulatory structure in the U.S. which 
already ensures that the weight of a container is known before 
it is shipped over road or rail, is lifted out of the terminal, 
or is loaded at a port on a ship. And it is precisely because 
of this underlying regulatory framework that additional 
regulations are not needed in the U.S.
    The SOLAS amendments may, however, require a change in the 
status quo in terms of how weights are verified and how that 
information is transmitted. I have been in contact with the key 
stakeholders, including those who will testify today, to ensure 
they understand the amendments and understand the flexibility 
that exists to achieve compliance. I will continue to 
facilitate discussions with them as I finalize their compliance 
strategies. There is no reason these amendments should cause 
any delays in our supply chain.
    Thank you again for your support, and I look forward to our 
discussion.
    Mr. Hunter. Thank you, Admiral.
    Mr. Michel?
    Mr. Michel. Thank you. Good morning, Chairman Hunter, Mr. 
Garamendi, and members of the committee. My name is Keith 
Michel and I am president of Webb Institute, a college that 
focuses on naval architecture and marine engineering. I spent 
40 years designing ships and--but I am here representing a 
National Academies' committee that was a committee mandated by 
Congress and tasked by the U.S. Coast Guard with evaluating 
whether Coast Guard regulations are an impediment to the 
competitiveness of the U.S.-flag fleet.
    The committee met once, heard from industry, and had many 
discussions amongst committee members. And we came out with the 
conclusion, as was mentioned earlier, that--or the finding that 
Coast Guard is not an impediment to competitiveness. The 
reasoning was that we found if you consider the increased costs 
of U.S.-flagged ships over their international counterparts, 
the percentage of that increased cost that we could attribute 
to the Coast Guard was less than 1 percent.
    Having said that, we found there were a number of areas 
where Coast Guard could improve processes and further reduce 
costs. So the report concentrates on that.
    There are nine recommendations. The first three relate to 
the Maritime Security Program. That program was put in place 
quite a few years ago, with the intent that there be a seamless 
transition from international flag to U.S. flag. And there has 
been some challenges with the program, as we have heard from 
industry. The cost of reflagging is in the range of $500,000 to 
$1 million. It includes about $250,000 related to requirements 
over and above the IMO related to engine room alarms and 
systems. So there is a significant cost in that transition.
    Once a ship is in MSP there are ongoing costs related to 
the fact that--at least originally--the Coast Guard implemented 
the CFR, rather than the alternative compliance program. So 
there were issues with the cost of following the CFR, and 
especially involving replacement of equipment when it was 
required to be Coast Guard type approved equipment.
    And finally, there were concerns with the MSP program. 
Coast Guard initially required that ships run with a 
watchstander in the engine room for up to 3,000 hours upon 
transition. These are ships that were operating in the 
international fleet without a watchstander. They had already 
been approved for unattended engine room operation, and had 
been operating that way. With the requirement that the 
watchstanding occur for up to 3,000 hours, that is an 
additional cost burden on the shipowner because that person 
could have been doing other work, maintenance work.
    The Coast Guard in May of 2015 made a number of changes. 
They have softened the impact of the reliance on CFR by 
allowing what they call MSP Select. After 3 years a ship can 
largely follow the ACP [Alternative Compliance Program] 
processes, which are more efficient. The committee recommends 
that be the case immediately, rather than waiting 3 years.
    The committee also recommends the Coast Guard look at, 
rather than using Coast Guard-type approval for these vessels, 
they consider allowing classification society approval for 
equipment. Again, these ships are built under international 
registry, the systems are all in place. And when you have to 
replace it with a Coast Guard--due to maintenance, if you have 
to replace equipment with Coast Guard-type approved, it can be 
quite costly.
    So those--and also the committee recommended that the 
requirement for watchstanding be reduced to 1,000 hours, and 
that consideration be given to eliminating it altogether if the 
crew is familiar with that particular ship and its automation 
systems.
    So those were three recommendations related to MSP. There 
were a series of other recommendations. The committee 
recommends that Coast Guard, with assistance from industry, 
look at the CFR regulations and do a risk-based assessment. 
That is a very extensive effort. It is recognized that will 
take time, so we recommended the Coast Guard prioritize and, 
working with industry, determine which of the regulations are 
most burdensome.
    There is also a recommendation that, in general, Coast 
Guard reconsider the equipment type approval, which can be 
quite burdensome on shipowners because most equipment is not 
U.S.-type-approved. The reason being the U.S. market is 
relatively small. And so if construction could use more of the 
internationally approved equipment, and if Coast Guard could 
rely on the approval processes of classification societies, the 
committee felt that would be more efficient without 
compromising safety.
    And finally, the committee recommends that Coast Guard rely 
even more on classification society and have less redundant 
inspections, but that it enhance its audit program over class. 
Again, this has become an issue after the committee met more in 
focus because of the El Faro accident. The Coast Guard is 
evaluating how well its whole ACP process is working. So we 
understand that this recommendation will have to be evaluated, 
taking into consideration what the Coast Guard learns from its 
El Faro evaluation.
    And so, those are the key recommendations. There were a few 
others in the report that--the report, again, is available on 
the NAE [National Academy of Engineering] Web site. Thank you.
    Mr. Hunter. Thank you, Mr. Michel. I am going to start 
recognizing Members for questions, starting with myself. So 
let's just go really quickly to the U.S.-flag fleet.
    So the Coast Guard, you said, is only responsible for 1 
percent. You said there is a 1--1 percent of the cost of being 
a U.S.-flag vessel----
    Mr. Michel. Yes. What it is is we evaluated, for a typical 
container ship, the increased cost of operation. And we 
determined the dominant factor is crew cost. Crew cost--U.S. 
crew cost is about five times international crew costs.
    Mr. Hunter. Why is that? We are just better at it?
    Mr. Michel. I think industry is better to answer it than 
me----
    Mr. Hunter. Go ahead. Give it a shot.
    Mr. Michel. But, you know----
    Mr. Hunter. But you are sitting there.
    Mr. Michel. Yes, I----
    Mr. Hunter. Give it a shot.
    Mr. Michel [continuing]. I--you know, I think there is 
probably a variety of reasons. You know, the higher standard of 
living is obviously part of it. Maybe there is less 
competitiveness with the unions and the shipping companies. 
There is a number of reasons. But it is substantially higher. 
And it is the dominant factor.
    If--so again, we estimated if you look at the increased 
cost alone versus total operating cost, crew costs were roughly 
57 percent, whereas the next most significant item was, as I 
remember, P&I [protection and indemnity] insurance is higher 
because of the way the Jones Act treats accidents on ships. And 
the drydocking costs are higher because there is a tax if you 
do your drydockings overseas, and they are much more expensive 
in the U.S.
    Those three--and then Coast Guard was only 1 percent of the 
additional cost that we attributed. So it----
    Mr. Hunter. That is great to hear.
    Mr. Michel. It is significantly reduced over time. Again, 
the ACP----
    Mr. Hunter. What was it?
    Mr. Michel [continuing]. Program--what is that?
    Mr. Hunter. What was the Coast Guard's influence 20 years 
ago?
    Mr. Michel. You know, I would guess it was 10 times higher 
than that. It is significantly lower.
    And likewise, we looked--we talked to shipyards in the U.S. 
about the cost of construction and the Coast Guard impact on 
that over and above if they were working towards an 
international flag. And there, as I remember, it was about 1 
percent of the cost of construction was related to the 
increase--the requirements of the Coast Guard over and above 
other international standards. So it is significantly reduced.
    Mr. Hunter. Thank you. The ranking member of the full 
committee is here. If we knew he was coming, we would have 
gotten a bigger room.
    [Laughter.]
    Mr. Hunter. That is why everybody is here.
    Mr. Garamendi. He would have given us one.
    Mr. Hunter. He would have given us one, that is right.
    Admiral, I guess I have got about 2 minutes left, so let's 
just talk ballast water. And I have talked to your staff and 
understand you are fully prepared to talk about it.
    Right now, is the Coast Guard giving waivers to ships to 
dump ballast water, untreated totally?
    Admiral Thomas. No, sir. And I am glad you asked that 
question so I can clarify that issue.
    Mr. Hunter. Yes.
    Admiral Thomas. When we grant a waiver there has to be some 
mitigating measures. Most of the vessels are mitigating the 
risk associated with invasive species by doing mid-water 
ballast water exchange, or mid-ocean ballast water exchange, 
which means--which is the protective measure that we have had 
in place for years.
    So it is absolutely misleading to----
    Mr. Hunter. Which is what? What does that mean?
    Admiral Thomas. So you load ballast water in a port. There 
are many, many more critters in a port environment than there 
is in mid-ocean.
    Mr. Hunter. Because there's people.
    Admiral Thomas. Well, and--yes, and sewage and other 
things.
    Mr. Hunter. Stuff.
    Admiral Thomas. So--but mid-ocean, as you exchange your 
ballast water, you are bringing on water that has many fewer 
critters. And in fact, you know, once we have type-approved 
systems, that mid-ocean ballast water exchange won't be 
required.
    Mr. Hunter. So what you are saying is you will grant 
waivers if you do a mid-ocean ballast water exchange----
    Admiral Thomas. Or there are some other alternatives.
    Mr. Hunter [continuing]. Or other mitigating----
    Admiral Thomas. Right.
    Mr. Hunter. And you--how long have ships been doing that?
    Admiral Thomas. Well, ships have been doing ballast water 
exchanges----
    Mr. Hunter. For 30, 40, 50----
    Admiral Thomas. Well, not quite that long, but a couple----
    Mr. Hunter. Twelve years?
    Admiral Thomas. Yes.
    Mr. Hunter. What did they do before that?
    Admiral Thomas. They did nothing, and that is one of the 
problems--one of the reasons we have zebra mussels and other 
invasive species in our ports.
    Mr. Hunter. So up to the early 2000s they did nothing. And 
then around the early 2000s they started doing ballast water 
exchanges, right--1996?
    Admiral Thomas. Yes, yes.
    Mr. Hunter. OK. So 1996 you started doing mid-ocean ballast 
water exchanges. And if you do that, then you get a waiver? Or 
if you do something like that?
    Admiral Thomas. Or--yes. There are other options, as well.
    Mr. Hunter. OK, sure. So if you do one of those other 
options--which are what?
    Admiral Thomas. You can use public drinking water supply 
for your ballast, which is not really practical, but it is one 
of the options. You can use what we call alternative management 
systems, which are systems that are approved to the SOLAS 
standard----
    Mr. Hunter. And if you do one of those things, and you show 
the Coast Guard, hey, we are trying to mitigate, then what does 
the Coast Guard do?
    Admiral Thomas. So what the Coast Guard is saying is, hey, 
we understand, Industry, that the systems that meet the 
standard that is required by our law are not yet there, but 
they are very close. And since they are not yet there, we will 
grant a waiver to your compliance date that says you have to 
have one of those systems that meets our standard.
    Mr. Hunter. So what is required by law? What does the law 
say?
    Admiral Thomas. What the law, sir, specifies is a certain 
discharge standard with regard to how many critters can be in 
how much volume of water. And it also requires that we 
determine that those critters are--we know that we have an 
efficacy test that we know is reliable and repeatable. So the 
efficacy test that we have now is one that is very reliable and 
repeatable across a broad spectrum of ballast water that we 
would seek from ships coming around the world, and that is the 
one that says we can count how many things are alive versus how 
many are dead.
    And so, that is--we are focused on ensuring that we bring 
to the market, to the world market, really--because it is the 
U.S. that is leading the world in this aspect--systems that----
    Mr. Hunter. How many U.S.-flag ships do we have in the 
U.S.-flag fleet?
    Admiral Thomas. Yes, sir, so that is a very----
    Mr. Hunter. Total.
    Admiral Thomas [continuing]. Very good point. We punch way 
above our weight with regard----
    Mr. Hunter. But how many ships do we have in the U.S.-flag 
fleet? I am just asking.
    Admiral Thomas. Internationally sailing?
    Mr. Hunter. U.S.-flag, international-sailing vessels. How 
many do we have?
    Admiral Thomas. If you are talking about deep-draft trading 
vessels, I have heard the Maritime Administrator use the number 
somewhere around 80. That is----
    Mr. Hunter. Eight zero?
    Admiral Thomas. Yes, sir.
    Mr. Hunter. And how many are in the world?
    Admiral Thomas. Thousands.
    Mr. Hunter. Just guess.
    Admiral Thomas. Yes, thousands.
    Mr. Hunter. Tens of thousands?
    Admiral Thomas. Thousands.
    Mr. Hunter. 100,000?
    Admiral Thomas. 12,000.
    Mr. Hunter. 12,000, total? So 12,000 total ships, and we 
have 8-0? OK.
    Admiral Thomas. Yes, sir, for many of the reasons that Mr. 
Michel mentioned.
    Mr. Hunter. So do any ships right now use any kind of 
technology to mitigate their ballast water critters?
    Admiral Thomas. Yes, sir. I am glad you asked the question. 
There are a number of systems out there, and hundreds of them 
on ships that have been approved under a scheme that was 
developed by the IMO.
    The IMO recently went back and reviewed the approval 
process for all of those systems, and have determined that 
there is great variance on how the standards were applied, and 
great deviation, in terms of interpretation, so much so that 
there really can be no confidence that the worldwide fleet has 
systems that will work, that actually----
    Mr. Hunter. The worldwide fleet or the U.S. fleet?
    Admiral Thomas. Most U.S.-fleet vessels have not yet 
installed ballast water systems. But those in the worldwide 
fleet who have chosen to have installed systems that they 
cannot have great confidence meet----
    Mr. Hunter. Then why would they----
    Admiral Thomas [continuing]. The standard----
    Mr. Hunter. Then why would a private company install 
something if they don't--why would they spend hundreds of 
thousands of dollars for no reason?
    Admiral Thomas. That is a good question, sir. I can't 
answer the decisionmaking process there. But what I will say is 
they bought a system that was certified to the international 
standard. Not to the U.S. standard. But the international 
standard is not robust enough to really drive the innovation 
and technology for systems that will meet this challenge.
    Mr. Hunter. OK. So again, let me ask you. What does the 
U.S. law state? What does U.S. law state on ballast water?
    Admiral Thomas. So the U.S. law and the SOLAS international 
convention are----
    Mr. Hunter. No, just----
    Admiral Thomas. They are exactly the same----
    Mr. Hunter. U.S. law, all right?
    Admiral Thomas. They are exactly the same with regard to 
the discharge standard, how many critters can come out at the 
other end of the machine. They are exactly the same. The 
difference comes with how do you prove to us that machine is 
actually meeting the discharge standard. That is the 
difference. And what I am telling you is our----
    Mr. Hunter. But U.S. law doesn't give you a number.
    Admiral Thomas. It does.
    Mr. Hunter. It doesn't state an actual number. It allows 
you to state the number.
    Admiral Thomas. Right. Yes, sir.
    Mr. Hunter. There is no----
    Admiral Thomas. Right, the standard. We set----
    Mr. Hunter. So once again----
    Admiral Thomas. And law----
    Mr. Hunter. U.S. law, what does U.S. law say? What does the 
United States law that Congress passed and the President 
signed, what does that say when it comes to ballast water 
critters?
    Admiral Thomas. It requires us to set a standard based on 
best available technology.
    Mr. Hunter. OK. Requires you to set a standard based on 
best available technology.
    Admiral Thomas. And the standard we currently have is----
    Mr. Hunter. What--so just----
    Admiral Thomas [continuing]. Synched with the international 
standard.
    Mr. Hunter. Let's go slow, let's just go slow. I am a slow 
Marine, all right?
    Admiral Thomas. Yes, sir.
    Mr. Hunter. Let's just go slow. So that is what U.S. law 
states. And you lay Coast Guard regulation on top of that, and 
what does Coast Guard regulation say?
    Admiral Thomas. So Coast Guard regulation sets a discharge 
standard, which is the same as the standard in the 
international convention. So it is a worldwide discharge 
standard, which----
    Mr. Hunter. OK.
    Admiral Thomas [continuing]. Since this is a worldwide 
global industry, seems to make sense. And you pointed out that 
it doesn't make sense to have individual State standards, and 
we would agree with that.
    Mr. Hunter. So what is the best available technology, in 
your opinion right now, for ballast water treatment?
    Admiral Thomas. So, sir, we currently have 19 systems 
actively testing to our standards. Nine of those systems are UV 
[ultraviolet] systems. Those manufacturers are investing lots 
of money to run their systems through our test battery. And 
they are very confident that technology they currently are 
working with will meet the U.S. standard.
    Mr. Hunter. So let's get down--let's just really quickly--
because I was confused about this yesterday when we were 
talking about this in our pre-hearing meetings. What is the 
Coast Guard regulation for what happens to the actual critters?
    Admiral Thomas. There is a number of critters per volume of 
water over a certain size that have to--the maximum number that 
can be----
    Mr. Hunter. Do you want to murder those critters?
    [Laughter.]
    Mr. Hunter. Or do you want to just render them harmless?
    Admiral Thomas. So the----
    Mr. Hunter. And you have heard the term ``rendered 
harmless,'' right?
    Admiral Thomas. Yes, sir----
    Mr. Hunter. And why is that? Why do you know the term 
``rendered harmless''?
    Admiral Thomas. Viable versus nonviable is how you hear it 
in this context. But let me----
    Mr. Hunter. But rendered harmless----
    Admiral Thomas. What we want to do----
    Mr. Hunter. But talk to me. Admiral, hang on.
    Admiral Thomas. Yes.
    Mr. Hunter. ``Rendered harmless,'' have you heard of that 
term before?
    Admiral Thomas. Yes, I have.
    Mr. Hunter. OK. Why have you heard that? Is that in Coast 
Guard regulation?
    Admiral Thomas. Render harmless?
    Mr. Hunter. Rendered harmless. Critters rendered harmless.
    Admiral Thomas. I am not--I don't--I will have to go back 
and see if ``render harmless'' is in Coast Guard regulations, 
sir.
    Mr. Hunter. OK. So here is the actual--this is their code, 
right?
    So here is your code. Let me tell you. ``Ballast water 
management system means any system which processes ballast 
water to kill, render harmless, or remove organisms.'' OK?
    Admiral Thomas. Yes, sir. So----
    Mr. Hunter. So those--any of those three. It doesn't say 
``and, and, and.''
    Admiral Thomas. Right.
    Mr. Hunter. It is any of those.
    Admiral Thomas. The trick, sir, comes in----
    Mr. Hunter. Tell me.
    Admiral Thomas [continuing]. Developing the test, the 
efficacy test for the system to determine whether the system 
has actually killed or rendered harmless. And what I am telling 
you is there is a reliable, repeatable efficacy test to 
determine if something is dead. There is not a reliable, 
repeatable efficacy test to determine if they have been 
rendered harmless.
    Mr. Hunter. And by rendered harmless it means they can't 
procreate.
    Admiral Thomas. They can't procreate. But due to the wide 
spectrum of species that we are talking about from ballast 
water all around the world, the fact that you don't even know 
which species you are trying to render harmless, it is 
difficult to prove that you have cultured enough of them to 
know whether or not they are able to reproduce. That is 
essentially the problem.
    So ballast water--so land-based water treatment systems, 
for example, are designed and constructed and operated for a 
known source of water that is to be treated. That water can be 
very well understood. You can know specifically which creatures 
you want to kill or render harmless----
    Mr. Hunter. Colorado River. You know what State it is going 
through, you know where it is going, right?
    Admiral Thomas. And you know--so you can not only tailor 
this treatment system to that specific water, you can tailor 
the efficacy test to that water.
    Ballast water comes from all over the world, so you can't 
tailor the treatment system or the efficacy test, so you need a 
test that is reliable and repeatable for water from anywhere. 
And that test today is dead, not render harmless.
    Mr. Hunter. OK. So I am going to ask you. So right now, 
what you can do is simply dump the water and mix it in the 
middle of the ocean.
    Admiral Thomas. Which avoids bringing invasive species into 
our ports.
    Mr. Hunter. As opposed to using technology to get an 80-
percent solution.
    Admiral Thomas. The 80-percent solution----
    Mr. Hunter. Or even a possible 100 percent solution. But 
the answer is you don't know, because you can't test it.
    Admiral Thomas. Absolutely, sir. And in our interpretation 
of congressional intent it wasn't put regulations that leave 
some doubt in terms of whether or not the----
    Mr. Hunter. I don't understand, so let's just get--I am 
using too much time, because I really don't understand this, 
right? This always blows my mind.
    So we allow ships to simply dump and mix their ballast 
water in the middle of the ocean, as opposed to setting 
guidelines for saying, ``Hey, we hope--we think that this 
works, we are pretty sure it works, but we are not going to 
count that. We just want you to dump the water in the middle of 
the ocean and mix it up.''
    I don't understand. Why not get an 80-percent solution? Why 
not say, ``Hey, we are pretty sure that these--we watched the 
organisms for 2 years, and they haven't procreated yet, but 
maybe they will last 10 years,'' and they may. And----
    Admiral Thomas. So two points I should make.
    Mr. Hunter. Yes.
    Admiral Thomas. The first is the 80-percent solution that 
you have referred to is still currently under review by the 
Coast Guard. So it has not been eliminated.
    Mr. Hunter. But do you understand what I am saying?
    Admiral Thomas. I do, but----
    Mr. Hunter. Right now they simply dump it in the ocean, 
right? They take the ballast water and they mix it, right?
    Admiral Thomas. But there is no evidence that dumping 
ballast water in mid-ocean does environmental damage----
    Mr. Hunter. Then why do we worry about it at all?
    Admiral Thomas. Because when you dump it in a port 
environment, sir, that is a very different story than in the 
mid-ocean. That is how we move species from one port to 
another. That is how you get zebra mussels and Asian carp in 
waterways where we don't want them.
    So there is a real difference. And we are not talking about 
a pollutant like oil. We are talking about moving species 
around the world.
    Mr. Hunter. OK. Once again, there is not technological--
there is no technology right now that the Coast Guard says, 
``Hey, guys, go with this. This is the best way that we know 
how to do it. This is as close as we can get right now, in 
2016.''
    Admiral Thomas. So there are----
    Mr. Hunter. There is----
    Admiral Thomas. There are at least 19 systems currently 
testing in----
    Mr. Hunter. But not testing. There is nothing that the 
Coast Guard has said, ``Hey, guys, go with this one.''
    Admiral Thomas. We don't have a Coast Guard type approved 
system.
    Mr. Hunter. At all?
    Admiral Thomas. We do not have a Coast Guard type approved 
system at all, including the systems that provide the 80-
percent solution, and precisely because----
    Mr. Hunter. Is the Coast Guard scared to back one of these? 
I mean what is----
    Admiral Thomas. Back one, sir?
    Mr. Hunter. Yes, to support some technology. Why not 
support the best technology----
    Admiral Thomas. We are----
    Mr. Hunter [continuing]. That is out there right now?
    Admiral Thomas. We are committed to the proven process of 
type approval. We are learning lessons from the less robust 
process in--undertaken by other flags that have resulted in the 
systems that IMO have identified as ineffective.
    And so, we are committed to a solution that actually meets 
the standard, and I am confident that we will very soon. And in 
the meantime----
    Mr. Hunter. What kind of solution are you thinking? If you 
are confident, then tell me. What is that going to be?
    Admiral Thomas. There are----
    Mr. Hunter. What is your guess?
    Admiral Thomas. There are 19 systems using various 
technologies today that are testing, and I expect we will see 
some data soon that indicates those systems meet the current 
Coast Guard requirement. And then we will be at 100 percent 
solution, sir.
    Mr. Hunter. OK. And what system might that be?
    Admiral Thomas. There are a number of them out there. Some 
of them are the UV systems----
    Mr. Hunter. No, don't--I am not asking what you are 
testing. I am asking what you think the technology will be.
    Admiral Thomas. Again, I think that this challenge is one 
that requires way more than one system, because every ship is 
different, every flow rate is different, every type of water 
is--so there needs to be a robust pool of these systems that 
use various types of technologies. And that is what is 
currently being tested. No one system, even if we had one 
system approved today, sir, it would not----
    Mr. Hunter. OK.
    Admiral Thomas [continuing]. Be effective on every ship.
    Mr. Hunter. Then which technologies? Instead of one, which 
one?
    Admiral Thomas. Well, there are some that use UV only, 
there are some that use UV with some other chemical processes. 
There are some that use chlorine. There--you know, there are a 
various number of different----
    Mr. Hunter. And which ones do you think are the ones that 
will do the job in the near future?
    Admiral Thomas. Well, I think the UV systems--there are two 
UV manufacturers who are already advertising that they can meet 
the Coast Guard standard. Some have already sold systems with 
guarantees that they will meet the Coast Guard standard. So, 
you know, those systems are promising.
    Mr. Hunter. All right. Sorry to--OK. Complicated issue.
    Admiral Thomas. It is a very complicated--that is why I 
appreciate the opportunity to have the discussion with you on 
it.
    Mr. Hunter. I yield to the ranking member.
    Mr. DeFazio. I had a hearing downstairs. We should have 
exchanged rooms, because we have fewer people for that hearing, 
even though it is important.
    In any case, Admiral, I--you know, the SOLAS requirements 
on shipping, on containers, are of particular concern to 
shippers in the Pacific Northwest of agricultural products. And 
the Coast Guard has taken a position that you feel that the 
U.S., with our current systems, is in compliance, and that it 
won't require dramatic changes.
    They have an opposite opinion, which is that this 
potentially becomes disruptive because it involves coming to a 
determination of both the weight of the content and the 
container. The containers are beyond the control of the 
agricultural producers, but they feel that, you know, they are 
going to be essentially having to sign off on something over 
which they don't have total control.
    And there is a good deal of confusion out there. How is it 
that you know or feel or can state that we are currently in 
compliance with these new standards? And if we are in 
compliance with these new standards, then I would assume that 
there will not be the sort of disruptions that the--some in the 
industry are anticipating.
    Admiral Thomas. All right, thanks for that question, 
because there is a lot of misunderstanding.
    In my statement, sir, I mentioned that we have a number of 
regulations in the U.S. already--not Coast Guard regulations--
that require the weight of a container be known before it is 
moved by road or rail or moved at a terminal. So the 
information required to be in compliance is already being 
generated. There may be a need for some business practice 
changes.
    Part of the confusion, though, is being generated by a lack 
of understanding of the flexibility that exists within the 
SOLAS requirement, both in terms of how the regulation itself 
is written, and in terms of the general provisions within the 
convention for equivalencies. So I have seen a number of 
documents floated by IMO, by the World Shipping Council, by 
OCEMA [Ocean Carrier Equipment Management Association], and by 
agricultural exporters, each of which defines a path to legal 
compliance with the SOLAS requirements, each of which will 
result in compliance with the SOLAS requirements.
    So this is for exporters and carriers to work out, in terms 
of which of those methods they are going to use with each 
other. But there is no reason that the regulation--there is no 
Government agency, no regulation, no international regulation 
that will cause a disruption in our supply chain. If it is 
disrupted it is because the shippers and the carriers haven't 
been able to figure out which of those many methods meet the 
SOLAS requirements they are going to employ.
    Mr. DeFazio. So you are saying it is really a dispute 
between different businesses involved in the supply chain over 
what is--what they would feel would comply. I mean----
    Admiral Thomas. I don't know that it is a dispute. Again, I 
think that there has been a large amount of misunderstanding of 
the flexibility that is already provided by the regulation. I 
think that that misunderstanding is starting to be cleared up, 
and maybe you will hear today from the panel that they are 
beginning to have productive discussions on how they are going 
to meet this challenge.
    But again, there is no reason that a regulation should 
cause a--this regulation should cause a disruption in our 
supply chain.
    Mr. DeFazio. OK. Well then, I will have staff here, and I 
will hear about that, and I may want to get back to you after 
we hear from the witnesses, and after I clarify with some of 
the Northwest shippers.
    And just--Mr. Chairman, on the issue of ballast water, I 
think we had hearings on this in the early 1990s, as I recall. 
And you know, we had heat, we had chemical, we had, you know, 
using the UV and the exchange, and none of them, I mean, have 
ever proved to be 100 percent effective. But it seems to me 
that a requirement both of a mid-ocean exchange and an 
effective approved treatment system is going to get us closest 
to the point. Because it doesn't take very many of these 
things, like zebra mussels or other--quagga mussels, these 
sorts of things, it takes very few to become essentially a 
plague, you know, and a significant invasion. Isn't that true?
    Admiral Thomas. Yes, sir, and that is why we are striving--
--
    Mr. DeFazio. Right.
    Admiral Thomas [continuing]. For the 100-percent solution.
    Mr. DeFazio. Right. And would 100 percent perhaps be a 
combination between both the mid-ocean exchange, which does 
help, to some extent, but isn't perfect, and a treatment 
system?
    Admiral Thomas. You know, I think once we have approved 
systems out there, we will continue to monitor how well they 
perform, and determine whether or not there needs to be that 
second step.
    Mr. DeFazio. OK. All right. Thank you. Thank you, Mr. 
Chairman.
    Mr. Hunter. I thank the ranking member for being here.
    Mr. Gibbs? You are recognized.
    Mr. Gibbs. Thank you, Mr. Chairman.
    Admiral, not to beat the ballast water to death--the 
chairman did a pretty good job--that is more of where my 
questions are going to, since I am from Ohio and represent the 
Great Lakes region. And start with my understanding on the EPA, 
they can--States can add additional requirements onto the--
wherever the rules might be. Is that true?
    Admiral Thomas. So, as you know, there's two Federal 
statutes that govern this. One, Coast Guard, Invasive Species 
Act, and the EPA. And neither of those Federal statutes provide 
for preemption of the States.
    Mr. Gibbs. OK.
    Admiral Thomas. So, yes, absolutely, it is true, the States 
can tack on additional requirements.
    Mr. Gibbs. States can, OK.
    Admiral Thomas. Yes.
    Mr. Gibbs. Because that is a real concern if you look at 
how the Great Lakes region works with the Saint Lawrence Seaway 
and--you know, so it makes sense that--I know the Coast Guard 
and EPA is trying to harmonize some of these separate laws and 
regulations.
    I think from your earlier comment you are a supporter of 
doing that to a single regulatory policy. And if that is the 
case, would the Coast Guard be the agency to perform that, 
then?
    Admiral Thomas. Well, I would say the Coast Guard and the 
EPA can't harmonize the requirements. Congress has to do that. 
Our objective is one, single Federal standard that does preempt 
the States, because----
    Mr. Gibbs. That is good clarification, and I meant to say 
it that way, yes.
    Admiral Thomas. Right.
    Mr. Gibbs. But you are--support that Congress does that, 
because it makes for smooth interstate commerce. And especially 
in the Great Lakes region, it makes sense, right?
    Admiral Thomas. It makes sense, given the nature of this 
industry.
    But--so we appreciate the opportunity we have had to work 
with this committee staff on drafting some language that might 
get to that problem.
    Mr. Gibbs. OK. Back on the technology, my understanding, 
that the International Maritime Organization, IMO, has approved 
UV technology, but the Coast Guard hasn't. Is that correct?
    Admiral Thomas. Yes, and that is correct. So that goes back 
to the difference between the Coast Guard and the IMO standard 
lies in the robustness of the type approval process. In other 
words, how do you actually prove that that box really does kill 
those critters? And what we found--and IMO themselves have gone 
back and found that the guidelines they have for type approval 
are probably not robust enough. In fact, they are in the 
process of revamping them to make them look a lot more like the 
U.S.
    And one of the reasons that we haven't approved all the 
systems--or any of the systems--that the IMO has is because our 
process is more robust.
    Mr. Gibbs. OK. So right now our shippers, vessel owners, 
are kind of just hanging in limbo because they--if they want to 
put in some newer technology, they don't know if it is going to 
get approved or not. So we are just--so we have all these 
extensions----
    Admiral Thomas. I would say yes, they are hanging in limbo, 
but they are hanging in limbo because of the pending 
ratification of the international convention to which we are 
not signatory. They are not hanging in limbo because of the 
U.S. regulations, because we are granting the waivers until the 
technology is available.
    Mr. Gibbs. OK. Has any other country established vessel 
ballast water treatment standards that--you know, that 
specifically require ballast water management systems that kill 
these organisms? Has any country done that, or not?
    Admiral Thomas. So again, if you look at the IMO guidelines 
on type approval of international systems, the standard is 
dead. The fact of the matter is that a number of 
administrations, because those guidelines are not mandatory, 
have approved systems that don't kill things. They apparently 
are satisfied with the efficacy test. We have not yet been able 
to determine that efficacy tests are reliable and repeatable.
    We continue to look at that. There is an appeal that is 
currently under review by the Coast Guard. We have got some new 
data. If we can determine that those tests are reliable and 
repeatable across the broad spectrum of species that you see in 
ballast water, then we will be in a better position to type 
approve those systems.
    Mr. Gibbs. OK. Thank you, Mr. Chairman.
    Mr. Hunter. I thank the gentleman.
    Mr. Garamendi?
    Mr. Garamendi. I know, Admiral Thomas, this ballast water 
thing is going round and round here, and I appreciate your 
attempt to try to clarify and to inform us. You said something 
here a moment ago in exchange with the chairman, that there 
were three different standards: dead, not viable, and the third 
one. And then you just said dead, the international standard, 
dead.
    I assume dead means not viable as in dead. Is that correct?
    Admiral Thomas. Not alive, sir.
    Mr. Garamendi. Not alive.
    Admiral Thomas. As opposed to alive but not viable.
    [Laughter.]
    Mr. Garamendi. It is the nonviable that seems to be 
questionable here. Is that the case?
    Admiral Thomas. Yes, sir. I think, intuitively, you say, 
``If I can render this organism so it can never reproduce,'' 
that is effectively dead for the attempt of the regulation. 
And, quite honestly, I would agree with that.
    The problem is demonstrating that you have, in fact, done 
that for every one of the organisms that might be in that 
ballast water. It is easier to demonstrate that they are dead 
than it is that they are nonviable.
    Mr. Garamendi. Now that is where I want to go. Is part of 
this problem the fact that we have at least two--and I think 
there was a third--was there a third standard, also, or just 
the two? Dead and not viable, is that correct?
    Admiral Thomas. Oh. Well, yes, he--the congressman--the 
chairman said render harmless, which I have come to know as 
viable versus nonviable.
    Mr. Garamendi. OK, so that is--we will stipulate that 
nonviable and----
    Admiral Thomas. Is harmless?
    Mr. Garamendi [continuing]. Rendered harmless are the same, 
and that is the second standard.
    If the standard was simply dead, would it be more likely 
and more feasible that the test and the replication of the test 
would be better achieved?
    Admiral Thomas. It is better. I mean, so that--efficacy 
tests for dead are reliable and repeatable. And if the standard 
were simply dead, then the industry that both needs to operate 
these things and needs to manufacture these things would have a 
larger degree of certainty.
    Mr. Garamendi. So why----
    Admiral Thomas. And we would have the technology on board 
those vessels----
    Mr. Garamendi. Why, then, do we even consider rendered 
harmless or not viable?
    Admiral Thomas. I think because the regulation is intended 
to be enduring. And there is a very good chance that in the 
future we will develop an efficacy test that may actually be 
effective to determine viability across the full subset. But 
today it doesn't exist. At least have not been able to--the 
data that we have been submitted--that has been submitted to us 
to substantiate this, we have run it through independent 
experts----
    Mr. Garamendi. Who then----
    Admiral Thomas [continuing]. And we haven't been able to 
get to that same conclusion.
    Mr. Garamendi. But we seem to be hung up on a shoal here 
called viable or nonviable.
    Admiral Thomas. The viability shoal.
    Mr. Garamendi. The viability shoal. So why don't we just 
dredge this thing out and say dead?
    Admiral Thomas. Well, sir, you know, effectively, we have, 
but we are still open to innovators who----
    Mr. Garamendi. Who created----
    Admiral Thomas [continuing]. Can come in and show us that 
they have been able to achieve the same standard through 
nonviability.
    Mr. Garamendi. Who created the option? Is it the Coast 
Guard that created the option, or are----
    Admiral Thomas. It is a----
    Mr. Garamendi [continuing]. We the responsible party here?
    Admiral Thomas. We--in our regulation I will tell you--and 
I wasn't involved in that, but the--there was a lot of 
discussion in the course of public comment about this very 
issue, of whether it has to be dead, or whether you should 
leave the option of nonviability----
    Mr. Garamendi. How many years have we been wrestling with 
this question of nonviable or rendered harmless?
    Admiral Thomas. It has been a part of the debate for 
ballast water as long as we have been talking about ballast 
water.
    Mr. Garamendi. Which is 1990s?
    Admiral Thomas. 1996 or so, yes.
    Mr. Garamendi. It seems to me there may be a solution. Dead 
is dead. That we can agree with. On all of these critters, is 
that correct?
    Admiral Thomas. We can agree that dead is dead.
    [Laughter.]
    Mr. Garamendi. And we can agree that it is going to be dead 
for all the critters.
    Admiral Thomas. And for the rest of their lives.
    [Laughter.]
    Mr. Garamendi. And so, the industry, whoever they may be--
and so the industry basically has been hung up on trying to 
wrestle with this not viable or rendered harmless?
    Admiral Thomas. Well again, I would tell you, the ballast 
water treatment industry is working hard to get to the dead, 
and there are 19 systems currently on--that those manufacturers 
are confident they are there, or else they would not have 
invested in the rigorous course of testing protocols.
    Mr. Garamendi. And the industry is hung up----
    Admiral Thomas. And the----
    Mr. Garamendi. It just seems to me that--I will just make a 
statement and then we will try to wrestle with this. It seems 
to me as though we are--I mean I understand dead. You are able 
to replicate tests that a system kills it, they are dead.
    Admiral Thomas. Yes.
    Mr. Garamendi. You are not able to replicate the question 
of viable, nonviable, rendered harmless. That is where the 
hangup is. Is that correct?
    Admiral Thomas. Yes, sir. The efficacy test for 
nonviability is not----
    Mr. Garamendi. And we have more than a dozen different 
systems that will kill.
    Admiral Thomas. Under testing today.
    Mr. Garamendi. Period.
    Admiral Thomas. Yes, sir.
    Mr. Garamendi. Well, it seems to me that the solution lies 
in eliminating the question of whether something is viable or 
not, and simply say if we are going to install this system, it 
is going to require that all the creatures, critters, are dead. 
Correct? And then we don't have any question.
    Admiral Thomas. I think you will get a different opinion 
when you hear from the industry panel on that, because they 
would like to retain the flexibility for future innovation.
    Mr. Garamendi. And therefore, the entire industry is hung 
up, and we are left with mid-ocean exchange.
    Admiral Thomas. Right. That is why we are working hard on 
systems that we know will actually meet the standard.
    Mr. Garamendi. Well, I will be interested to hear the 
witnesses. I think I will let it go at that. Thank you.
    Mr. Hunter. Mr. Sanford is recognized.
    Mr. Sanford. I thank the chairman. I guess the first 
question is are we making the perfect the enemy of the good 
with regard to the ballast water discharge issue? I mean we 
have had different iterations of the same question.
    I have been approached by a number of different users in 
the Port of Charleston on this issue. It seems to be important. 
They brought up the UVA--the UV technology, and suggested that, 
you know, if it is good enough for the international standard, 
why isn't it good enough--a little bit--would you just flesh 
that just a little bit as to why we couldn't go with something 
that would give them certainty, or a greater degree of 
certainty? It may not be the perfect, but it would be the good, 
and it would allow them to move forward, particularly on the UV 
front, given some of the comments that they have offered in my 
direction.
    Admiral Thomas. All right. So just to reiterate, there 
are--UV systems are still viable with regard to being able to 
meet our standard. There are at least eight or nine of them 
currently being tested to the ``dead'' standard.
    Mr. Sanford. Right.
    Admiral Thomas. The question about why don't we just use 
the systems that have already been proven or international 
regime is answered really by the study that the IMO did on 
those systems, and they--when they looked at how those systems 
were approved, and what data was used, and how that data was 
interpreted, they found a wide variance in what--great 
deviation from even their own guidelines. And they concluded 
that we really have no certainty that these systems will work 
reliably and consistently.
    And, in fact, that particular issue is what has thrown such 
a great deal of uncertainty into the international shipping 
industry. There are a number----
    Mr. Sanford. But the net consequence is you extend over 
5,000 waivers, as I understand it. You continue to extend 
waivers. So the net effect is the same. In other words, you 
would still continue to move ahead with uncertain technology. I 
mean----
    Admiral Thomas. Well, again, I will remind you that it is 
not as if we are extending waivers with no mitigating actions 
in place. We are still requiring an action to mitigate the 
threat associated with invasive species. And while we do that, 
we are focused on a long-term solution that will really meet 
this challenge for the long term, and we are very close to 
getting there.
    Mr. Sanford. OK, which would bring me to my second 
question. My colleague, Congressman DeFazio, had raised the 
SOLAS question. That too has come up back home in Charleston. 
And I think one of the questions with regard to--particularly 
on the shipper side--is to what extent is Coast Guard going to 
enforce the new regulations, which I think are--I guess a July 
date, if I am not mistaken. It is this summer some time. I 
thought it was July, but--and they want, you know, some degree 
of clarity, one on enforcement and, two, on penalties.
    Admiral Thomas. Right, and thanks for that question. The 
first key point is that this is not a new regulation. This 
particular regulation has been in place since 1994. And so--but 
there are amendments to the regulations that are going into 
place, and those amendments will not cause any changes in the 
Coast Guard's current enforcement stance for that particular 
regulation.
    Mr. Sanford. But it is July 1st, if I am not mistaken, that 
the new regulations or the new amendments to the regulation go 
into effect. Is that the case?
    Admiral Thomas. Yes, sir, but you asked about our 
enforcement stance on that.
    Mr. Sanford. Right.
    Admiral Thomas. What I am saying is that the enforcement 
stance after 1 July will be the same as it is prior to 1 July. 
That is a SOLAS regulation. So we enforce that as a flag state 
on U.S.-flag vessels, and we are confident that U.S.-flag 
vessels already have the guidance they need to be in compliance 
with that standard. We enforce that as a port state on foreign-
flag vessels that come to U.S. ports, and our primary role 
there is to ensure that those vessels are operating in 
compliance with the requirements from their flag state.
    Mr. Sanford. So your point to the maritime community in 
Charleston would be there would be no big delta with regard to 
what they have seen----
    Admiral Thomas. So our----
    Mr. Sanford [continuing]. Past versus present.
    Admiral Thomas. Our authority, for example, on the port 
terminal is not derived from SOLAS. It is derived from Congress 
and from----
    Mr. Sanford. Right.
    Admiral Thomas [continuing]. CFR. So the enforcement that 
we do on deck at a terminal will be--will remain the same, 
because nothing has changed. Nothing has been amended, nothing 
has changed.
    Mr. Sanford. Sure, OK. Last question. I see I have 48 
seconds. If you were to pick out the two most wasteful 
regulations that you are forced to enforce from the Coast Guard 
standpoint that probably have little in the way of effect, what 
would they be?
    Admiral Thomas. You would have to give me more time on 
that. But your point is well----
    Mr. Sanford. Well, what would come off just the top of your 
head? What would you say, you know, ``That is kind of a waste 
of time, we''----
    Admiral Thomas. In our last----
    Mr. Sanford. [continuing]. ``Spend X number of man-hours 
doing it, but, you know, it probably provides little in the way 
of utility or real difference in terms of environment, or real 
difference in terms of''----
    Admiral Thomas. We have been seeking legislative relief 
from the requirement in the Maritime Transportation Security 
Act, sir, that we have to go to every MTSA facility twice a 
year, regardless of risk. We would prefer to be able to target 
our resources to the highest risk facilities so that a rock 
facility, for example, doesn't necessarily need to get visited 
twice a year, whereas a bulk liquid terminal, we would like to 
have the freedom to do it more often.
    Mr. Sanford. That would be one.
    [Laughter.]
    Admiral Thomas. I thought it was good enough to come up 
with----
    [Laughter.]
    Mr. Sanford. I will come back to you on that. Thank you, 
sir. I see my time has expired.
    Thank you, Mr. Chairman.
    Mr. Hunter. I thank the gentleman. Mr. Graves is 
recognized.
    Mr. Graves of Louisiana. Mr. Michel, Admiral, thank you for 
being here.
    Mr. Michel, in all the meetings we have had with industry 
in the last year and a half I have heard a lot of concerns 
expressed about the cost of compliance by U.S. shippers as 
compared to some of their foreign competitors. The report that 
you provided and some of the summary information in your 
testimony doesn't seem to be consistent with a lot of the 
feedback or a lot of the information we are receiving from 
stakeholders.
    Could you speak to that disconnect? I mean do you think 
this evaluation was robust? Do you think that there were some 
deficiencies? Could you help connect the dots here?
    Mr. Michel. No, I feel the numbers are good in our report. 
The--it is not insignificant. The cost of reflagging at $1 
million, taking 3 days, when if you were reflagging the other 
direction it would be 1 day and a fraction of the cost. It is 
not insignificant. But compared to the total increased cost of 
a U.S.-flag operation, it is not a major part. And so we didn't 
consider it an impediment to U.S.-flag competitiveness.
    We have nine recommendations because we feel there is a lot 
of room for the Coast Guard to make further improvements and 
reduce costs. But it is not what we would call an impediment, 
because it is a very small percentage of overall increased 
costs.
    So industry has a--you know, again, a strong position 
that--we have to be very careful about redundant inspections, 
about CFR requirements that require type approval and keep them 
from using current best available technologies and the most 
cost-effective way--Coast Guard needs to look at those type of 
issues. But when we add it all up, the numbers in the report 
are robust. That is a good estimate of the cost. It varies ship 
by ship, of course.
    Mr. Graves of Louisiana. Yes, sure, thank you. And I just 
want to highlight the point that perhaps some of the estimates 
pertain to relative costs. And I am anxious to hear from AWO 
[American Waterways Operators] and others in the next panel to 
understand that disconnect.
    Admiral, the Academies' report notes that significant 
improvements have been made in regard to efficiency, 
environmental improvements, and I think helping reduce costs of 
regulatory compliance. Does the Coast Guard meet on a regular 
basis with stakeholders to discuss with them their perspective 
in regard to compliance and ways to comply with regulations and 
ways to perhaps update existing regulations?
    Admiral Thomas. We do. [Microphone off.]
    Mr. Graves of Louisiana. Thank you. I want to change gears 
a little bit, but similar questioning. I would like to talk 
about Coast Guard requirements for systems to be used aboard 
vessels navigating inland waterways, which is very different 
than oceangoing. I am not sure if it is legal or not, so I will 
just say that I may or may not have driven any tow barge 
configuration through some Mississippi River bridges and other 
places.
    Admiral Thomas. I haven't done it, either.
    [Laughter.]
    Mr. Graves of Louisiana. And--but industry, again, it is 
very different than oceangoing. Even when I go out fishing, 
just fundamentally different navigation situation in those two 
scenarios.
    There has not been a standard for electronic charting 
systems for the past 15 years. And, as you know, the industry 
has been working on their own to develop a standard. And you 
may recall that Congressman Abraham and our office and a few 
others sent you a letter last year on this topic.
    I understand that you may be coming to the point where you 
are going to finalize some type of recommendation or some type 
of standard. But I would like to understand, if you are 
approaching a decision, how is that going to comply with or 
sync up with the efforts of the inland navigation community in 
what they have been doing over the last 15 years? As you know, 
compliance costs could be pretty hefty. I have seen numbers 
anywhere from $20,000 to $50,000 per vessel. And I just wanted 
to understand sort of how--what they have been doing so far on 
their own to ensure safety is going to comply, or the 
consistency with what you believe your final recommendation 
could be.
    Admiral Thomas. Well, I--thanks for that question, because 
this is really a good-news story here.
    I want to be clear, though. You mentioned the term 
``compliance costs.'' We have issued a NVIC [Navigation and 
Vessel Inspection Circular] on this topic, but it is not a 
regulation and it does not require anyone do anything. So there 
is no compliance to be added, and no associated compliance 
cost. The NVIC was issued in response to the demand signaled 
from the industry that they wanted the Coast Guard to provide a 
pathway to remove paper charts that are currently required by 
regulation. And, as you said, the existing standards for 
electronic systems were just not appropriate for that part of 
the industry. They work for large, oceangoing vessels.
    So we work hard with our FACAs [Federal Advisory Committee 
Act] and with other organizations that develop these types of 
standards internationally, and we finally developed a good 
standard for this type of system. And that is the standard that 
is in the NVIC that says if you have systems that meet this 
standard and you employ them in certain ways with certain 
redundancies you can legally remove your paper charts.
    The problem is that the existing standards on the vessels 
that are out there already operating aren't built to this 
standard, which is not a surprise, since it is a new standard. 
Right? So the market hasn't built things to meet this standard 
because this standard is just now out there. The fact of the 
matter is, though, that many of the systems that are already 
out there, if the manufacturers test them, they will meet the 
standard. And working with AWO and others, the big-time 
operators who buy lots of these systems are putting the 
pressure on the manufacturers to test their systems.
    And so, this is a case where the market will drive the 
solution. Eventually, it may become a regulation. But if it 
does, it is a market--an industry-driven regulation, as opposed 
to implementing a regulation that then causes the market 
industry to catch up.
    Mr. Graves of Louisiana. Thank you, Mr. Chairman. I just 
want to urge, Admiral, as you finalize this, I will say it 
again, compliance with what they have been doing for the last 
15 years, I think, is pretty critical. They are the ones who 
have really been the leaders in regard to establishing 
technology and standards in this case.
    Thank you, I yield back.
    Mr. Hunter. I thank the gentleman. I think that is all we 
have. I think what we established today is it is not Descartes, 
``I think; therefore I am,'' it is, ``I procreate, therefore I 
am.''
    [Laughter.]
    Mr. Hunter. That is what we have figured out today. It is 
very philosophical, and hopefully that will make some news. 
Right? Yes, right? Or you are considered dead, yes.
    So, hey, thank you both very much. Thanks for being here, 
Admiral, and thanks for what you guys do.
    Admiral Thomas. Thank you.
    Mr. Hunter. The witnesses for the second panel include Mr. 
Thomas Allegretti, president and CEO for American Waterways 
Operators; Mr. John Butler, president and CEO for the World 
Shipping Council; Mr. John Crowley, executive director for the 
National Association of Waterfront Employers; Ms. Donna Lemm, 
Agriculture Transportation Coalition SOLAS committee chair and 
vice president of global sales for Mallory Alexander 
International Logistics; and Mr. Kendall Carver, chairman for 
the International Cruise Victims Association, Incorporated.
    [Pause.]
    Mr. Hunter. We don't have to restart up, because we have 
already started. And I introduced everybody while you were 
getting seated. So thank you all for being here and taking 
time. And I am going to go ahead and just start from left to 
right.
    Mr. Allegretti, you are recognized.

    TESTIMONY OF THOMAS A. ALLEGRETTI, PRESIDENT AND CHIEF 
   EXECUTIVE OFFICER, AMERICAN WATERWAYS OPERATORS; JOHN W. 
 BUTLER, PRESIDENT AND CHIEF EXECUTIVE OFFICER, WORLD SHIPPING 
COUNCIL; JOHN CROWLEY, EXECUTIVE DIRECTOR, NATIONAL ASSOCIATION 
 OF WATERFRONT EMPLOYERS; DONNA LEMM, CHAIR, CONTAINER WEIGHT 
   COMMITTEE, AGRICULTURE TRANSPORTATION COALITION, AND VICE 
  PRESIDENT OF GLOBAL SALES, MALLORY ALEXANDER INTERNATIONAL 
 LOGISTICS; AND KENDALL CARVER, CHAIRMAN, INTERNATIONAL CRUISE 
                   VICTIMS ASSOCIATION, INC.

    Mr. Allegretti. Good morning, Mr. Chairman and Ranking 
Member Garamendi. Thank you for the opportunity to testify 
today. This hearing comes at a very consequential time, both 
for the towboat and barge industry and for our country. We face 
a year of great challenge and extraordinary opportunity, and we 
need the bipartisan leadership of this subcommittee to 
successfully confront these challenges and take maximum 
advantage of these opportunities that are before us.
    I come before you today with four requests. First and 
foremost, please continue to lead and vocally and actively 
support the Jones Act, and please strongly oppose the inclusion 
of measures to weaken the law in legislation that may originate 
in other committees.
    The Jones Act is critical to our Nation's economic, 
homeland, and national security, and to the hundreds of 
thousands of good, family-wage American jobs and the billions 
of dollars of investments made by American companies in 
American-built vessels.
    Those few but vocal critics who assert that the Jones Act 
raises the price of gasoline at the pump, or that repeal of the 
Jones Act will solve Puerto Rico's economic woes are, quite 
simply, wrong. Repealing or weakening the Jones Act won't make 
it a penny cheaper to fill up your car, and it will have no 
effect on Puerto Rican Government debt. What it will certainly 
do is destroy the domestic maritime industry, it will kill 
American jobs, and it will undermine U.S. homeland security: a 
bad deal, if ever there was one.
    Second, please exercise your oversight responsibility and 
pay careful attention to the Coast Guard's implementation of 
the towing vessel inspection rule slated for publication this 
spring. This subcommittee's leadership was instrumental in the 
passage of the 2004 law that required this rulemaking and 
enjoyed AWO's strong support. We look forward to working with 
the Coast Guard to implement this rule that will raise the 
regulatory floor and take safety and environmental protection 
in our industry to a new and historic level without disrupting 
the efficient flow of maritime commerce. Please stay close to 
the implementation of this rule to ensure that it achieves both 
of those goals.
    Third, please reaffirm by your words and your actions the 
Coast Guard's preeminent role in the regulation of navigation 
and vessel operations. The safe and efficient flow of 
interstate commerce depends upon clear Federal statutes and 
regulations consistently and uniformly applied nationwide. When 
States or localities muddy the waters by establishing their own 
requirements for vessels and interstate commerce, it not only 
does violence to the U.S. Constitution, but it places mariners, 
vessels, and the environment at risk. We urge you to support 
the Coast Guard in finalizing its proposed preemption 
statement, and speaking out in opposition when States attempt 
to usurp the Coast Guard's regulatory authority.
    Fourth and finally, please pass the Vessel Incidental 
Discharge Act this year, and put an end to the dysfunctional 
regulatory system in which two Federal agencies and more than 
two dozen States regulate ballast water and other vessel 
discharges in overlapping and inconsistent ways. We have a real 
window of opportunity for the 114th Congress to accomplish what 
previous Congresses have not: to establish a uniform, science-
based Federal framework for the regulation of vessel discharges 
that is good for the environment, good for the economy, and 
good for the American taxpayer.
    Chairman Hunter, thank you for sponsoring this much-needed 
legislation, and we urge every member of the subcommittee to 
cosponsor H.R. 980 and to communicate to Chairman Shuster and 
Ranking Member DeFazio your support for passage this year.
    Our industry very much appreciates this subcommittee's 
effective oversight of and your long record of support for the 
American maritime industry, and thank you for holding this 
hearing today and for the opportunity to appear before you.
    Mr. Hunter. For America.
    Mr. Butler, you are recognized.
    Mr. Butler. Chairman Hunter, Ranking Member Garamendi, 
distinguished members of the subcommittee, thank you for the 
invitation to testify today. I would ask that my full statement 
be included in the record.
    The World Shipping Council represents the liner shipping 
industry, and our members operate about 90 percent of global 
container ship capacity. Today I would like to address an 
amendment to the Safety of Life at Sea, or SOLAS, convention, 
that becomes effective on July 1 of this year. You have heard a 
bit about this already today.
    That SOLAS amendment addresses a very serious safety 
problem that has affected the container shipping industry for 
many years. That safety problem is the fact that in far too 
many cases the packed container weight provided to the carrier 
by the shipper is inaccurate.
    In response to this problem of misdeclared container 
weights, industry and Governments began a discussion at the 
International Maritime Organization about how to fix the 
problem. That discussion at the IMO began in earnest in 2010, 
and continued over the next 4 years. Governments, shippers, 
labor, insurance providers, terminal operators, and carriers 
all participated. The United States Government, through the 
U.S. Coast Guard, actively participated in that process.
    In 2014 the IMO member countries unanimously adopted a 
revised regulation under SOLAS that requires the shipper to 
provide an accurate gross weight for each packed container 
before that container can be loaded on to a ship for 
international transportation. The regulation provides two 
methods that the shipper can use to establish an accurate 
weight. Under method one the container is weighed after it is 
packed. Under method two the shipper weighs the cargo and the 
packing material and then adds that weight to the empty or tare 
weight of the container. And the tare weight of the container 
is conspicuously painted on the door of every container.
    The amended SOLAS regulation requires two things that the 
existing SOLAS regulation does not. First, the amended 
regulation explicitly requires that the loaded container must 
be weighed. Estimating weights is no longer allowed. Second, 
the amended regulation now explicitly states that the carrier 
and the marine terminal operator may not load a packed 
container unless the shipper has provided a verified weight. 
Without a verified weight, the carrier and the marine terminal 
cannot put the container on the ship.
    Compliance date is 2\1/2\ months away. A tremendous amount 
of work has been done around the world to make sure that the 
new regulation can be implemented smoothly. Carriers, shippers, 
and terminal operators are in the process of adjusting their 
procedures and their communication channels in order to be able 
to share the verified gross weight information that needs to be 
provided before the container goes on the ship.
    Although companies worldwide are preparing for compliance 
and making very good progress, there is disagreement from a 
group of U.S. exporters that you will hear from today. I 
address that situation in length in my written testimony. But 
to summarize, there are some shippers that would prefer to 
provide only part of the required weight information, and to 
have the carrier then provide the other part.
    The problem with that approach is that it will not work 
with the information technology solutions the carriers have 
built to implement the SOLAS amendment. Those IT systems are 
designed to receive and process a complete verified gross mass 
number, a number that includes both the content of the 
container and the container weight itself. That is what the 
regulation says. And because that is what the regulation says, 
that is the way carriers have built their systems.
    So, if shippers only provide the cargo weight, as a few 
wish to do, that would trigger a manual data handling process 
by the carriers. Such a manual process would not be able to 
efficiently handle the documentation flow. And that scenario, 
if it comes to pass, could lead to disruptions in cargo flow, 
and that is something everybody wants to avoid.
    Obtaining and using accurate weights to stow ships is a 
shared safety responsibility of carriers, shippers, and 
terminal operators. The amended SOLAS regulation spells out 
what each party in the chain needs to do. Those tasks are 
reasonable and necessary. And if everyone does their part, the 
system will work and will make international shipping safer and 
more efficient for everyone. I hope that we can use the time 
that we have now--between now and July 1 to work together 
toward that goal. Thank you.
    Mr. Hunter. Thank you, Mr. Butler. We will just go all the 
way through.
    Mr. Crowley, you are recognized.
    Mr. Crowley. Good morning, Mr. Chairman and Mr. Ranking 
Member. I appreciate the invitation to be here today and your 
recognition of the importance of marine safety throughout our 
maritime transportation chain. I represent the marine terminal 
operator and stevedoring industry. I, from a visual standpoint, 
look at them as that engine within the fence in our ports that 
make the economy work, that make the intermodal transfer work 
safely, productively for our businesses, exports and imports.
    Despite being a volume-based, cycle-time industry, safety 
is always job one for industry members. Safety, it comes in 
many forms. But for today's purpose we are looking at container 
weights. Containers originate from all over the world. They are 
carried by multiple flag vessels. They arrive at marine 
terminals, both here and abroad. The importance of having a 
consistent safety standard is almost without question. Those 
safety standards the National Association of Waterfront 
Employers look forward to.
    We look forward to the amendments to ensure that that is 
continued, and that the condition, the contents, and the weight 
processes that are available and the records provided to us are 
dependable for marine terminal--those inconsistencies, if they 
are wrong, show up immediately and have the potential of 
grinding operations literally to a halt.
    And we look forward to increased productivity. Toward that 
end, our members have worked hard to reengineer their 
processes, including technology solutions in concordance with 
our customers, those that Mr. Butler represents, and provide 
systems that are more agile, that provide a faster, better, 
safer system towards the improvement of our marine cargo 
transportation system.
    Thank you for your attention, and look forward to questions 
from you today.
    Mr. Hunter. You win the shortest testimony yet. You get a 
prize after this.
    [Laughter.]
    Mr. Hunter. Ms. Lemm, you are recognized.
    Ms. Lemm. I am here today representing many of your 
constituents that are moving thousands and thousands of ocean 
container goods, specifically agricultural goods and forest 
products. These exports are critical to our economy, and they 
are critical to our Nation. I am the vice president at Mallory 
Alexander, based in Memphis, Tennessee. And our responsibility 
is to prepare the export documentation for exporters, as well 
as provide ocean services.
    I am also the chair of the SOLAS--Safety of Life at Sea--
Agriculture Transportation Coalition's Container Weight 
Committee. Today our coalition is very strong. We come here 
with one voice for both your small farmer in your district, as 
well as your largest exporter in your district. The voice is 
one in unison for one reason: we are very, very concerned about 
these new regulations the World Shipping Council has announced, 
because there are only two methods that they have announced 
that are, in their minds, regulatory. And they are asking the 
shipper to abide.
    My goal today is, first and foremost, to share with you 
that the U.S. exporter is committed to safety. We also have in 
place today, as the admiral said, a compliant method in which 
we report our weights to the ships. And we report both gross 
weights and net weights every day on our bill of ladings. This 
has been approved and with the SOLAS regulation for decades.
    The problem, in a nutshell, is that there is flexibility, 
as the admiral said, in the regulation. This is not a change in 
regulation. These are modifications. This is the heart of the 
disagreement. The guidelines that have been presented by the 
World Shipping Council are mandatory in tone. They are required 
in tone. They are not flexible, they are not commercial in 
setting, ``Let's go discuss this.''
    And I am here to tell you that the two methods proposed--
the first one, scaling, is nearly impossible for most of your 
ag and forest product shippers. Why? Where are the scales? Just 
last week, we saw the southern ports of the west coast announce 
that they were not ready or capable to weigh our containers. I 
live in New Orleans. There are no scales in New Orleans. Where 
are the scales? You know how expensive it is? Two hundred to 
two hundred and fifty dollars to weigh a container. Remember, 
they are asking us to certify. It is redundant. We are 
certifying today.
    The admiral made reference to laws that exist today. We 
have the Intermodal Safety Act, which mandates that we certify 
the weights that we produce. We produce a bill of lading. 
Shipper load and count, certified.
    Second method that has been proposed is that we not only 
submit our gross weights, but we are also asked to submit the 
tare weight of a container we don't own or lease. We have 
members that their legal departments are saying, ``There is no 
way we are going to allow you to certify or report on a weight 
on a piece of equipment you don't own or lease.'' The 
ramifications for port disruption are huge.
    We are at total opposite ends. Many exporters--I was just 
at a conference last week--don't even have a field for tare 
weight. These IT systems that we talked about today honestly 
just started getting developed November, December. They have 
not been rolled out. There is no EDI [Electronic Data 
Interchange] standard. There are multiple portals, multiple 
carriers, multiple, multiple IT elements that the average 
exporter hasn't even begun to understand.
    So, I am outlining one cost. I am outlining two--this 
window, VGM, is going to require a new cutoff, a totally new 
cutoff. We have one member that--they move 10,000 containers. 
They believe they will only be able to move half that number of 
containers because of this new window, this tighter window. 
These are huge ramifications.
    We believe that, first and foremost, the solution is to 
recognize that the United States is not the problem. These 
incidents that they talk about did not happen off of our 
shores.
    In the spirit of working together with the carriers we have 
tried for months now to find best practices. We have said that 
we will certify yet again in some kind of business 
arrangement--perhaps in contract--that our weights are true and 
correct. We have been met with the answer ``no'' each and every 
time.
    In summary, I ask this committee please to help us, even if 
it is through legislative processes, to acknowledge that the 
processes that exist today are indeed compliant, that there is 
flexibility in this regulation. And if, in fact, the ocean 
carriers refuse to cooperate, we ask you to please seek the 
opinion of the Federal Maritime Commission for this collective 
activity.
    In summary, I do ask, please, that you ask the Coast Guard 
for written statement about the many methods in which we can 
report and verify gross mass. I think there is some ambiguous 
discussion and confusion because it has only been in dialogue.
    We thank you very much for the opportunity to talk to you 
today.
    Mr. Hunter. Thank you, Ms. Lemm.
    Mr. Carver, you are recognized.
    Mr. Carver. I would like to thank Chairman Hunter and 
Ranking Chairman Garamendi and members of the committee for the 
opportunity to be here. I serve as chairman of a group called 
International Cruise Victims. Prior to that I spent 18 years in 
New York City as CEO of an insurance company, which--we were in 
a similar business at that time.
    It was just 10 years ago that I sat here for the first 
time, one of five testimonies that I have given, and it 
resulted--the testimony--the hearing was called because Chris 
Shays, a Republican, had had a hearing in December of 2005, 
raising questions about safety on cruise ships. At the hearing 
at which we testified, we had six victims tell their sad story, 
but we did something nobody suspected. We gave a 10-point 
program to improve safety, a simple program that anybody should 
accept.
    After several more congressional hearings, the cruise lines 
failed to accept any of these points. As a result, the Congress 
shifted from the Republicans to the Democrats, so Senator Kerry 
and Representative Matsui picked up the cause, and the Cruise 
Vessel Security and Safety Act was passed.
    For the first time a law was passed that mandated basic 
safety and security measures, some which were as fundamental as 
have been in hotels forever. Man overboard systems, rights to 
victims to contact the FBI directly, and other such provisions.
    In addition, victims on a cruise ship, U.S. citizens, are 
subject to the rights of the Crime Victims Rights Act, which is 
a separate legislation which gives U.S. victims rights.
    I would like to say that these major steps to improve 
safety have improved safety, but it hasn't really worked. 
Generally speaking, the bill is not being enforced. We are 
hoping, however, that the final regulations will correct the 
deficiencies that we are concerned with. As an example, in 2006 
there were 19 convictions of crimes on a cruise ship. In 2013, 
after the law took effect, there were three convictions of 
crimes on a cruise ship. We are moving backwards instead of 
forwards.
    There are several--most of the major items in the bill are 
not being enforced, and we ask the support of the committee 
with the regulations that have been developed, to make sure 
that they are issued in line with the goal of the passage of a 
bill that was passed with only four votes against it, first 
started by the Republicans for the first two hearings, and then 
taken over by the Democrats.
    In addition, new legislation has been introduced. House 
bill 3142 needs to be passed to correct some of the 
deficiencies of the first bill and improve safety that includes 
the prompt reporting of crimes to the FBI, improved video 
surveillance, man overboard systems be installed on cruise 
ships, and improved medical standards.
    It was 10 years ago that ICV [International Cruise Victims] 
turned to our Republican Representative, Chris Shays, for help. 
Again, as I said, when the Democrats took over, the Democrats 
picked up the ball and ran with it. Chairman Hunter recently 
had several mothers in his office in Temecula with their sad 
story. These women were from your district. One was a woman 
whose daughter was raped by a crewmember, and it has been 
covered by ``60 Minutes'' in Australia, the Anderson Cooper 
show.
    Another mother was there who, on a family trip with 13 
members of the family, lost a son. And he was a twin. His twin 
came to your office and said the impact that this has had on 
him. Two other mothers from California were there that lost 
their children. These stories just continue on and on and on.
    My point is this. It all started with Republicans and the 
Democrats continued the effort. And now it has shifted back to 
the Republicans. The many victims in the United States and 
around the world are hoping that with the current leadership 
this effort to protect passengers will be seen as a bipartisan 
issue and move forward like the original legislation passed in 
2010.
    How will the cruise lines respond to this request that we 
have for more legislation? They will say that they are already 
highly regulated is their standard phrase. Well, in March of 
2014, the National Transportation Safety Board had a meeting. 
The IMO came to that meeting and made a presentation. I can 
give you that presentation, if you like, but I am going to 
quote from one of the slides that said, ``Role and function of 
the IMO. IMO is not a policeman. IMO does not implement 
anything, develop standards for strength or determine design 
requirements, approve equipment and systems, have (m)any 
sanctions.'' That is from a direct quote from their PowerPoint 
presentation. Therefore, it is up to the United States to 
protect our citizens.
    Since flag states have taken no action for victims of 
crimes on cruise ships, we ask your support in working with the 
preliminary regulations that have been issued, and we ask for 
your support in the passage of the additional legislation that 
has been submitted. Thank you.
    Mr. Hunter. Thank you, sir. Before we start, I ask 
unanimous consent from us that the following materials be 
included in the record of today's hearing: a letter from the 
South Carolina Ports Authority; a letter from JBS USA Food 
Company; a written statement for the record from Ms. Lynda D. 
Sanford; a letter from Mr. William Plourd, president and CEO of 
El Toro Export.
    [No response.]
    Mr. Hunter. Without objection, so ordered.
    [The information is on pages 147-155.]
    Mr. Hunter. And with that I am going to yield to Mr. 
Garamendi, and go have a coughing fit outside, and I will be 
right back.
    Mr. Garamendi. Very good. Mr. Allegretti, you spoke of the 
Jones Act and potential legislation in--from other committees. 
Could you be more direct as to what you fear going on in other 
committees?
    Mr. Allegretti. Today the Natural Resources Committee is 
holding a markup of various provisions that may find their way 
into the Puerto Rico relief bill. And reports last night were 
that an amendment dealing with the Jones Act was poised to be 
offered.
    Mr. Garamendi. In the Natural Resources Committee.
    Mr. Allegretti. Natural Resources Committee.
    Mr. Garamendi. Seems to be beyond their jurisdiction.
    Mr. Allegretti. You would think so. And I will say that 
your subcommittee, Mr. Ranking Member, and the full committee 
have been clear and resolute and we very much appreciate your 
vocal support for the law and your clarity with the other 
committees that you intend to maintain your jurisdiction over 
this vital law.
    Mr. Garamendi. Thank you for that. I understand that the 
provisions of the Jones Act do not apply to the Virgin Islands, 
is that correct?
    Mr. Allegretti. That is correct.
    Mr. Garamendi. And the cost of fuel on the Virgin Islands 
is, therefore, cheaper than the cost of fuel at Puerto Rico? I 
have been told by the Representative from the Virgin Islands 
that that is not the case, that in fact the cost of fuel in the 
Virgin Islands is substantially higher than the cost of fuel in 
Puerto Rico. Do you have--know if that is true or not?
    Mr. Allegretti. I don't know specifically if that is true, 
but I will tell you this. This is exactly the kind of debate 
that takes place with respect to the Jones Act, that someone 
takes a particular data point and then tries to make that a 
larger point about the effect of the Jones Act on a particular 
territory or locality when, in fact, oftentimes the 
transportation costs have absolutely nothing to do with the 
delivered price of the cargo. It has to do with supply, demand, 
and all kinds of other things unrelated to waterborne 
transportation.
    Mr. Garamendi. Well, if the Representative is correct--and 
apparently, she is, since she lives there and buys fuel on the 
Virgin Islands--that it is not the Jones Act issue----
    Mr. Allegretti. Yes, sir.
    Mr. Garamendi [continuing]. That raises the cost, but other 
matters.
    Yes, I represent a big agricultural district. For the life 
of me I am not quite sure I understand why we are in such a 
quandary about this business of tare weights. It appears as 
though it might be the liability issue. Is that correct, Ms. 
Lemm?
    Ms. Lemm. We believe that.
    Mr. Garamendi. So the liability issue revolves around the 
question of the tare weight written on the side of the 
container.
    Ms. Lemm. Correct.
    Mr. Garamendi. So if we want to solve this problem, we 
could--are there other issues besides that?
    Ms. Lemm. There are issues. I mean for--let's take the 
issue of the tare weight, itself. The carriers have said 
themselves that the tare weights are often inaccurate. We have 
members who have run their own tests to prove that the tare 
weights that are stenciled on the side of the container are not 
accurate, based on their data.
    Mr. Garamendi. Within what range of accuracy or lack of 
accuracy? Five percent? Ten percent? One hundred percent off?
    Ms. Lemm. Roughly 10 to 12 percent. But here is the issue--
--
    Mr. Garamendi. And the container weighs how much?
    Ms. Lemm. The container--let's take a 40-foot standard, 
generally around 8,000 pounds.
    Mr. Garamendi. And 10 percent?
    Ms. Lemm. 800 pounds. But here is the deal. What is 
bothering the shipper, the ag shipper, is that we have never 
been responsible for this tare weight before. The--OK.
    Mr. Garamendi. I get it, and I don't have that much time, 
but----
    Ms. Lemm. OK.
    Mr. Garamendi. But it--your principal concern has to do 
with the liability. OK. So there is something printed on the 
side that gives you the tare weight. And if it is not--if the 
gross weight is not accurate, then you fear that you are going 
to be held liable if there is some accident or something 
happens along the line. Is that correct?
    Ms. Lemm. That is correct.
    Mr. Garamendi. So, really, it has to do with not being 
liable. Well, we could deal with that, but I suppose a court 
case could also deal with it.
    OK. Are there any other issues beyond this liability issue?
    Ms. Lemm. It is the administrative task of having to report 
equipment we don't own or lease. The----
    Mr. Garamendi. That takes us back to the liability.
    Ms. Lemm. OK.
    Mr. Garamendi. So we are really stuck on the----
    Ms. Lemm. Well, and it is cost. We talked too about IT, IT 
programming. Please remember, for decades we have only reported 
the gross weight of our cargo.
    Mr. Garamendi. Well----
    Ms. Lemm. And now we are being asked to report the weight, 
the tare weight of that empty container.
    Mr. Garamendi. That would involve--I think my granddaughter 
now does that kind of mathematics in kindergarten.
    Ms. Lemm. Well, we move thousands and thousands of 
containers that are transloaded every day. And so we have a 
timing issue. For us to sit and look to the side of the 
container and actually record the side of the container and 
that tare weight and then have to report it and certify it, 
time and energy.
    I think it boils down to we are told that the practice that 
we are doing today is compliant. It is compliant. And if it is 
in compliance with the regulation, then we are asking why can't 
we continue to do what we are doing----
    Mr. Garamendi. So you are essentially asking this committee 
to somehow sort out this issue of who is responsible for the 
tare weight.
    Ms. Lemm. Actually, no. What we are asking the committee 
is--the changes are so drastic, so drastic in reporting in 
either, A, scaling or, B, in the way we report VGM--it is also 
a timing issue. There is a new cutoff. Please remember that the 
verified gross mass now will require certification. They are 
programming for a whole new certificate for a database.
    And so, if, in fact, there is a new cutoff that is given to 
the U.S. ag shipper, that cutoff must be before that container 
rolls into the gate for that terminal operator. We are 
transloading constantly at a minute's notice. The fear is that 
the cutoff will be moved up another day, losing a whole other 
day to transload export goods--time and money. And so, we 
believe that it is an administrative function. The carrier 
already knows the weight of their container.
    Mr. Garamendi. OK. Mr. Butler, what have we got going here?
    Mr. Butler. Mr. Garamendi, let me address a couple of 
things in order, if I may.
    First of all, Ms. Lemm started by saying that this was a 
regulation that was announced by the World Shipping Council. We 
are a trade association. This regulation was adopted by the 
International Maritime Organization with the participation of 
all the Governments of that organization, including the United 
States. So it is the law. So we have to follow it. We need 
cooperation from our customers so that we can all be in 
compliance.
    Secondly, on this issue of tare weight, on the legal issue 
I do address that in my written testimony. We think this is a 
nonissue. I have said it in public, many of our members have 
said it in public. No one is going to hold a shipper liable for 
any inaccuracy of the tare weight of the container. It is our 
equipment. We put that number there, and if there is a problem 
associated with it, that is for us.
    The other thing I would say about the method number two, 
where the tare weight----
    Mr. Garamendi. Excuse me. At that point can we make sure 
that is in the testimony? Because some trial lawyer is going to 
want to come back and look at that----
    Mr. Butler. And they are welcome to, yes.
    Mr. Garamendi. Thank you.
    Mr. Butler. The other thing I would just mention about the 
tare weight, it only comes up in this method number two, where 
you put the two pieces together, you don't weigh the whole 
container. That was put in at the request of shippers. It 
wasn't this set of shippers, but it was a shippers group at the 
IMO that asked for that additional way of complying with the 
regulation. So it was an accommodation. You don't have to use 
it.
    Mr. Garamendi. OK. We can go around and around. I just 
wanted to get this little piece on the record. I see the 
chairman is back, and--you want to take it from here?
    Mr. Hunter. I am going to yield to Mr. Sanford.
    Mr. Sanford. I thank the chairman. I guess I want to go 
back to your comment earlier on the Jones Act with questions on 
that front.
    I think it is interesting that--I actually pulled the 
numbers here. I guess my query would be this. If it is good 
enough for the United States military to trust change on that 
front, why shouldn't it be good enough for the rest of the 
country, from the standpoint of looking at security?
    What I mean by that is this. If you look at the Maritime 
Administration's Ready Reserve Fleet, a full 30 of their 46 RRF 
ships are foreign built. In other words, they don't comply with 
the Jones Act. Yet they have exemption at the Federal level, 
based on DOD [Department of Defense] needs. And yet oftentimes 
the argument is used, ``Well, we need the Jones Act from the 
standpoint of national security.'' But the national security 
entity of our country, the DOD, has said, ``No, we really don't 
need that. We trust foreign-flag ships to transport war 
materials from the United States to the Middle East.'' Why, if 
it is good enough for the DOD, is it not good enough for the 
United States, from the standpoint of national security?
    Mr. Allegretti. From the perspective of the view of the 
American military as it applies to the Jones Act, they have 
been actually quite clear that they do not want to entrust the 
movement of domestic commerce on foreign-flagged vessels.
    Mr. Sanford. But they do the opposite. I mean, again, I 
look at the numbers here. Thirty of the forty-six ships in the 
RRF fleet don't comply with Jones Act.
    Mr. Allegretti. In respect to the movement of domestic 
commerce, they want to preserve that and the military leaders, 
the Commandant of the Coast Guard, the Vice Chairman of the 
Joint Chiefs of Staff, the head of the U.S. Department of 
Transportation, have all spoken on--sorry, have all spoken 
recently and vocally on this matter, that it is--it will 
denigrate the national security of the United States to allow 
foreign vessels to move our domestic commerce.
    Mr. Sanford. I hear you. But again, their actions speak 
otherwise.
    Let me try a different bite at the apple. So I pulled the 
numbers. I don't know that we would view GAO as a biased 
source. I mean everybody has their bias, but the Government 
Accountability Office, I think, would be a fairly reliable 
source. And their numbers indicate, based on a report that I 
have here in front of me, that it, in essence, cost double to 
send a 20-foot container from the east coast of the United 
States to San Juan, Puerto Rico, than it would to Santo Domingo 
in the Dominican Republic, literally just a few sea miles away, 
if you look at the transit distance, whether you are going out 
of New Jersey or Charleston or, for that matter, Miami.
    And so you are actually looking at a doubling of cost. So 
you could look at security within the confines of DOD 
perspective, and whether or not foreign flagged is acceptable 
from the standpoint of their security concerns or not, but you 
could also look at security from the standpoint of the economy.
    And if you look at that kind of impact, for instance, in 
that one quadrant as it impacts San Juan--I am looking here 
and, for instance, their Farm Bureau in Puerto Rico, the rate 
of deference to the Jones Act carrier and foreign carriers has 
led farmers and ranchers on the island to more often source 
animal feed and crop fertilizer from foreign sources than U.S. 
sources because of, again, the difference in cost.
    I look at here a report I saw just a moment ago from a 
State senator in Hawaii, talking about the difference in 
shipping cost. A 40-foot container from L.A. to Shanghai costs 
around $790 at the time of this report, which was May 22, 2014, 
versus the cost to ship that same container from Los Angeles to 
Honolulu, $8,700. Again, basically, a tenfold increase.
    And so, you look at those kind of increases, whether it is 
in Puerto Rico, which is in the news, or Honolulu, which is not 
in the news, you are looking at multiples of cost from the 
standpoint of shipping cost, which then does, at an economic 
level, begin to factor in national security. What would be your 
thoughts there?
    Mr. Allegretti. I would tell you, sir, that I think that is 
a very narrow reading of the Jones Act benefits and the costs. 
And while I am not familiar with the particular numbers that 
you are citing, I am familiar with the most recent report done 
by GAO, which was designed to look specifically at the cost of 
moving cargo to Puerto Rico, and the essential result of that 
report was they were not able to reach a firm conclusion about 
the cost differential, and here is why.
    The difference that you look at when you look at those two 
numbers, is you are comparing apples to oranges, you are 
looking at an American vessel crewed with American mariners 
operating under the laws of the United States, and that is the 
cost basis for that vessel. You compare that to a foreign 
vessel that is not in compliance with any of those laws, any of 
our societal norms. And so their cost basis is lower.
    So, if you were to allow them into the U.S. domestic trade, 
would you allow them to transport domestic cargo outside of our 
laws, or would you apply our laws to them? And so, if you are 
going to apply our laws to them, I would argue to you that 
their cost basis goes up, and thus so does their transportation 
rate.
    Mr. Sanford. I hear you. I see my time has expired. But I 
would simply, I guess, make this point, which is the question 
is how many of those different laws--in other words, whether it 
is from the standpoint of a fully unionized labor force--many 
of the companies in the Northeast or the Upper Midwest have 
come to a place like South Carolina because of a different type 
workforce. I don't know that that is absolutely essential to 
the creation of any product in the domestic United States.
    I would also, I guess, make this point, which is I suspect 
you have traveled on foreign-flagged air carriers, and done so 
quite comfortably. They may not have all of the same standards 
that we do have in America, but the fact is, if you have been 
in Germany or you have been in the Far East, or you have been 
in Asia, and you have traveled on a Boeing jet that happens to 
be, you know, running in a different part of the world with a 
different standard, you feel relatively comfortable doing that 
or you don't take the flight.
    I don't know that I would completely agree with your 
reasoning, but I see I am out of time, and to be continued. 
With that I would yield back, Mr. Chairman.
    Mr. Hunter. I thank the gentleman. And if anybody wants to 
really look at the national security implications of a defense 
industrial base and a shipping industrial base, we have tons of 
testimony that Mr. Forbes, who is chairman of the Seapower and 
Projection Forces Subcommittee on the Armed Services Committee, 
we go through this all the time.
    And just for the record, the RRF, the Ready Reserve Fleet, 
and the MSP fleet are all U.S.-flagged, U.S.-crewed. They are 
not--Jones Act--they are not built in the U.S., but they are 
U.S.-flagged, U.S.-crewed vessels. And DOD is also subject to 
use 100 percent of their movement of cargo on U.S.-flagged, 
U.S.-crewed vessels. They get waivers, unfortunately, every now 
and then when they shouldn't----
    Mr. Sanford. But they get lots of waivers, if I am not 
mistaken.
    Mr. Hunter. They do, but they screw up all the time. Like 
we had an incident yesterday, truly. We had a U.S.-flagged, 
U.S.-crewed vessel sitting off the port, waiting for cargo that 
went to--they got subcontracted to a foreign vessel that is 
going to be late because TRANSCOM screwed up. So just for the 
record, in the end, I would like to say this. It is not 
necessarily about the Jones Act and the requirements.
    The cargo preference laws that we have are not--it is not 
an economic thing. It truly isn't. It is about national 
security because when you have to start making ships and 
crewing those ships in times of war, when we go to war, you 
have to have U.S. crews to do that. If you don't have U.S.-
flagged vessels, you don't have U.S. crews to crew them. And 
once you lose that ability, it is gone. It is gone forever.
    Mr. Sanford. Agreed. And I would always defer to you on 
military issues.
    But having said that, I think the question is do we have to 
have the same standard of security in shipping a container, a 
20-foot container carrying fertilizer from the east coast in 
Charleston down to Puerto Rico?
    Mr. Hunter. I yield to the gentleman. Go ahead, Mr. 
Garamendi.
    Mr. Garamendi. Mr. Chairman, I would ask that we place into 
the record here the testimony from a recent hearing that the 
Seapower and Projection Forces Subcommittee of the Armed 
Services Committee had on this issue of the Jones Act. I will 
paraphrase very, very briefly a piece of it--all of it. And 
this came from TRANSCOM and from MarAd [Maritime 
Administration].
    The testimony was, the Jones Act is absolutely essential 
for national security. And without the Jones Act, the military 
cannot have a reliable and available sea--shipment by sea. That 
testimony was extensive. Mr. Forbes asked a series of 
questions, as did I. Those questions completely--would be of 
most interest to you, to my--to the gentleman from South 
Carolina with regard to the Jones Act. I will make that 
available to you, and I would ask that that testimony be placed 
in the record here.
    [The information is on pages 122-146.]
    Mr. Hunter. I would yield to the gentleman if you have any 
more talk about it.
    I actually don't know what to think about the container 
weight issue. I don't think this is a congressional issue. I 
don't think you are going to--there is not going to be 
legislation. I think this is a deal that needs to be worked out 
between the shippers and the shippees. Right?
    I don't think there is a legislative answer for this 
because, according to the U.S. Coast Guard, which would be the 
ones who would regulate this, correct? In a legal battle, who 
would be the overseers of people--of the farmers and shippers 
and the carriers? I mean who would administer it? Who would 
have oversight?
    Mr. Butler. Mr. Chairman, the U.S. Coast Guard--excuse me--
is the sole U.S. agency with that authority.
    Mr. Hunter. And the U.S. Coast Guard has not taken a 
position on this yet, correct?
    Mr. Butler. I don't want to speak--pardon me--I don't want 
to----
    Mr. Hunter. Well, how about I tell you? The U.S. Coast 
Guard has not taken a position on this yet.
    Mr. Butler. Correct. What they----
    Ms. Lemm. May I----
    Mr. Butler. What they have said is that there are many 
different ways to do this. And, frankly, the discussion that 
has been going on back and forth between the carriers and the 
shippers, it is not really so much about, you know, what is 
legally required. It is about how do we do this in a way that 
we can keep commerce moving.
    And there are certain ways of doing this, if we have a 
uniform process, that is going to make it--particularly with a 
deadline coming up July 1, it is going to make it a lot more 
likely that we have a smooth process if we all do it the same 
way. If everybody comes in and wants----
    Mr. Hunter. Let me ask you this, though. Here is what I 
don't understand. What has been--what happens until now? I mean 
everybody--when you get on an airplane the luggage gets 
weighed, they have to know how much stuff weighs. Same with 
ships, right? You got to know what stuff weighs, so you can 
load the ship properly, right?
    So what has been happening until now in the United States? 
Forget the world.
    Mr. Butler. It is a bit of a mix. Today carriers use 
various sources of weights in order to stow the ship. Sometimes 
they use the weight from the shipper, sometimes experience says 
that the weight from the shipper is, unfortunately, inaccurate 
and they have to disregard that. In that case they may use the 
in-gate weight when a truck comes across through the gate into 
the port.
    In some cases, frankly, carriers have--excuse me--default 
weights for certain commodities. They know essentially what it 
is going to weigh, and they will use that. But too many times--
and there is--I have talked to lots of our carriers, they are 
involved in this. And over the years, far too many times the 
weights are simply inaccurate.
    Mr. Hunter. Do--are containers not standard? Do they 
differ?
    Mr. Butler. Well, containers--sure, there are standard 
sizes, but they differ--any given run of manufacturing of 
containers there is going to be some differences between the 
container weights. They will fall within a range.
    Mr. Hunter. A range, I mean, I would guess--pretty close, 
right?
    Mr. Butler. Generally, yes.
    Mr. Hunter. So what does the Coast Guard say now, a 5 
percent variance is fine?
    Mr. Butler. The Coast Guard hasn't announced a numeric 
variance.
    Mr. Hunter. All right. What is the international standard 
for variance?
    Mr. Butler. There is not an international standard. The 
U.K., for example----
    Mr. Hunter. All right. Where did 5 percent come from, then?
    Mr. Butler. Five percent came from the United Kingdom.
    Mr. Hunter. OK.
    Mr. Butler. And that is being discussed in Europe, it is 
being discussed in other places. And that is an enforcement 
variance----
    Mr. Hunter. What is their deadline?
    Mr. Butler. Everybody's deadline is the same, July----
    Mr. Hunter. For the----
    Mr. Butler. July 1----
    Ms. Lemm. Chairman Hunter, I would just like to say that--
--
    Mr. Hunter. Yes, ma'am.
    Ms. Lemm [continuing]. Only 10, 10 countries, have even 
taken a position, 10 of 171 countries that are affiliated with 
the IMO, have taken a position on this.
    I would also like to say that the Coast Guard has been very 
clear that this is not a new regulation. I meant to say that 
the World Shipping Council has issued guidelines without 
flexibility. The Coast Guard has also been clear that there is 
flexibility and there are multiple ways in which we can report 
gross mass. Historically, gross mass has been reported by the 
shipper to the carrier.
    The responsibility has been the carrier to the master to 
report accurate weights. This VGM is a new term. Never before 
heard it before until a few months ago. Verified gross mass now 
replaces the term gross mass. And in its replacement of gross 
mass, it totally replaces the way we have for decades reported 
weights. The shipper has forever reported the gross weight of 
their cargo, and never had to report also the tare weight of an 
empty container that they don't own or lease.
    One thing that I failed to say in my final summary, that if 
in fact these changes are mandated, and they are regulatory 
changes, then we have to follow and ask the Coast Guard for a 
rulemaking, an official rulemaking. Now, I believe the Coast 
Guard, in good faith, really thought we could just work it out, 
that in a commercial setting we could dialogue. But 
unfortunately, the margins are so thin on our agricultural 
commodities we can't afford a $250 scale.
    One shipper believes it is going to cost to his bottom line 
$4 million if we are forced to scale. This is a major U.S. 
shipper.
    Mr. Hunter. When you say scale you mean $250 every time you 
weigh----
    Ms. Lemm. A container.
    Mr. Hunter. Got you.
    Ms. Lemm. A lot of money on super thin margins for our 
exports. And we feel that that is burdensome. And the option, 
frankly, for most is a no-go.
    Mr. Hunter. Let me ask you this, Mr. Butler. Why--I mean 
this is the U.S. Congress. We have 80 U.S.-flag vessels that 
sail internationally. Sixty of them are MSP so they get 
stipend, right? So we have got about 20, is that about right? 
We have about 20 vessels that aren't MSP that are 
internationally--that are U.S.-flag international cargo 
vessels?
    So why should we here put a burden on our shippers when it 
is more of an international issue than it is our issue? Meaning 
why should we worry about the international carriers, as 
opposed to the U.S. fleet?
    Mr. Butler. The cargo----
    Mr. Hunter. And the U.S. economy, the U.S. businesses, and 
the people that are actually making things and exporting them, 
which is very--that is very few. We don't export a whole bunch 
of stuff. A lot of ag stuff. We aren't China, obviously, and we 
are not a lot of other countries that export a bunch of stuff. 
So why is this an issue for Congress?
    Mr. Butler. Well, Mr. Chairman, I don't think it is an 
issue for Congress.
    Mr. Hunter. Then why are you here?
    Mr. Butler. I think this--because I was invited to come.
    Mr. Hunter. I mean but what I am--I mean why are we talking 
about this, then, if it--you are saying that you might want 
legislative action----
    Ms. Lemm. I am saying please----
    Mr. Hunter [continuing]. If things aren't solved.
    Ms. Lemm. Well, what we would like to do is continue the 
practice that we are doing today. We would like to meet the 
carrier halfway by saying we will certify again--yet again--the 
gross weights of our cargo under contract, or perhaps when we 
send our shippers instructions for that master bill of lading, 
a check box and a signature that we verify our weights to be 
true and accurate.
    Mr. Hunter. Yes. I am missing something, then. What is 
wrong--how is that different than what you are asking for?
    Mr. Butler. It is not what we are asking for, sir, it is 
what is in the regulation.
    Mr. Hunter. OK. Well, how----
    Mr. Butler. And the question----
    Mr. Hunter. How is it different than what the regulations 
are asking for, and what she just said?
    Mr. Butler. It depends on what the shipper is doing today. 
If the shipper today is weighing the cargo and providing us a 
full weight of the loaded container, then they are already in 
compliance.
    Mr. Hunter. Then that is it.
    Mr. Butler. Right? Ms. Lemm has talked about the added cost 
of weighing things. Well, if you are not weighing things today, 
how do you know how much it weighs?
    Mr. Hunter. I think she--what she is saying is they have--
they don't weigh the container that is full, right? They weigh 
their stuff----
    Mr. Butler. Right, which----
    Mr. Hunter. They know what that----
    Mr. Butler. Which takes us back to this method two, which 
we discussed a little bit while you were outside of the room. 
And the concern that has been raised there by shippers--a small 
number of shippers, but some shippers--is legal liability, or 
taking the weight that is painted on the door of the container, 
and adding that to the contents. And what I said at that time 
is we have been very clear. The carriers aren't looking to hold 
shippers liable for a weight that we wrote on the door of the 
container. That is on us.
    But it was put in the regulation as an accommodation to 
shippers so that they could use method number two and not have 
to go find a scale to weigh----
    Mr. Hunter. And method two, again, is weighing your 
products outside of the container, right? And then adding 
that----
    Mr. Butler. Tare weight.
    Mr. Hunter [continuing]. That is on the----
    Ms. Lemm. And we contend----
    Mr. Butler. Correct.
    Ms. Lemm. We contend that if, in fact, we have to certify 
``C,'' which is VGM--``A'' being gross weight of our cargo plus 
``B,'' tare weight of their cargo, ``Don't worry about it, Mr. 
Shipper, you are not liable, but sign here,'' ``C,'' verified 
gross mass--that any part of that equation then ties us to that 
certification.
    We are also asking about the administrative function. Why 
would we be asked--we have heard the carriers say, one, tare 
weight is insignificant. Anybody--yes, a second grader can 
read, you know, the sides of the container. We are asking why 
would you burden the U.S. exporter who is already at an all-
time low with U.S. exports, why would you burden them with 
another administrative function that is not necessary? Why 
would you ask them to report on the tare weight of a container? 
When you own it, you already know. It is in your database.
    They are--the World Shipping Council, several members, have 
suggested we go to their Web site to pull the container weight 
if we don't want to look at the sides of the containers. We are 
contending, ``Come on, guys, why are we making this harder than 
it is?'' You have already said it is insignificant. You have 
already said what you really want to look at is that gross 
weight. We agree, it should be reported accurately, and that is 
the only thing we, as U.S. shippers, have control over.
    Mr. Hunter. I am still--I am trying to get my hands around 
this. If the Coast Guard is not going to enforce the new 
regulation, what do you contend with that, then? If they are 
going to say, ``The way things are, it complies, the way things 
are now, it complies with this regulation,'' that is basically 
what they are saying. The Coast Guard is not demanding that 
anybody do anything differently, correct?
    Mr. Butler. I think actually, Mr. Chairman, that is not 
correct. What I heard today from Admiral Thomas is there are 
lots of ways of complying with this regulation in terms of your 
processes and so forth.
    But he did say that because of the amendments to the 
regulation there will be changes in business processes. And 
there will be. And carriers have spent millions of dollars 
around the world, reconfiguring their systems so that we can 
efficiently process this information in conformance with the 
regulation. And the hope is that, in setting up these new 
processes and getting more accurate weight, we will have safer 
vessels to carry the commerce of the world and also the United 
States, to your original point.
    Mr. Hunter. Mr. Garamendi?
    Mr. Garamendi. I don't know that this is the correct panel, 
but I am back to viable and dead.
    [Laughter.]
    Mr. Garamendi. And I don't know anybody that wants to 
comment on it, but it seems to me that the problem we are 
having with this discharge--and I guess there are the shippers 
here, so--Mr. Butler, you are going to be on here in a moment--
the problem is that we can verify dead, and we can replicate 
that test that it is dead, but we can't get down to viable or 
whatever, inherently----
    Mr. Hunter. Rendered harmless?
    Mr. Garamendi. Rendered harmless, whatever. Why don't we 
just say dead and be done with it? And apparently the systems 
are out there that can kill it.
    Mr. Butler. Well, a couple of things. The systems may be 
out there. The problem is we don't know. No systems--and the 
admiral spoke to this earlier--no systems have yet been type 
approved by the United States. What that means is nobody has 
yet come in with test data that shows dead all the time.
    Mr. Garamendi. I didn't hear it that way, and I think we 
need to go back and go back over this again. And I will, after 
the hearing.
    I heard it that it is the viable or nonviable issue that 
they are not able to replicate, but that they can replicate and 
have high level of certainty that it is dead.
    Mr. Butler. I think I can clear that up. I think he was 
talking about two things. One is how many systems today have 
been type approved by the U.S. Coast Guard. The answer is zero.
    Mr. Garamendi. Correct.
    Mr. Butler. With respect to the test, you are correct, sir. 
He said we can tell when something is dead, we are not so sure 
we can tell when it is viable.
    From a carrier standpoint operating globally, what we want 
to know is when we put a system on a ship--and these things are 
not cheap--when we put a system on a ship, we want it to work 
and be recognized every place in the world, and we want to know 
that we have investment certainty that if we spend that $1 
million, $2 million per ship to do this, it is going to have 
some environmental benefit, and we can count on being in 
compliance.
    Ms. Lemm. And what we are saying is that at--the issue is 
what is compliance, what is compliant. What the admiral said 
was that our method, our current method, is compliant. And what 
we are suggesting is the problem is that the World Shipping 
Council and its members are telling us dogmatically, ``We can't 
accept your current compliant method. You have to do one of 
these two other methods.'' These----
    Mr. Garamendi. We are talking two different things here.
    Mr. Butler. Yes.
    Mr. Garamendi. I have moved over to----
    Mr. Hunter. It is analogous, maybe.
    [Laughter.]
    Ms. Lemm. It is analogous, in my mind. It is a circle.
    Mr. Garamendi. Well then, just--I am into creatures of the 
sea.
    Ms. Lemm. No, I understand.
    Mr. Garamendi. OK. Then just hold it for a second, because 
we are going to be out of time here in a few moments.
    Yes, I need to go back, and I will talk to the admiral 
about the tests themselves. And we don't have the companies 
that manufacture or purport to manufacture the equipment, but I 
think we need to--I need to get into it in more detail. I think 
at this moment I am headed down the line that it is the viable 
issue or nonviable issue that is hanging everything up here, 
and that the technologies may be available to kill, as in dead, 
creatures that might be in the ballast water.
    Mr. Butler, final comment on that. Then I have got----
    Mr. Butler. The final comment is that would provide 
certainty to everybody, and on this issue certainty would be 
most welcome.
    Mr. Garamendi. Thank you. Man overboard surveillance. This 
issue is an issue requiring a requirement for cruise ships to 
install a system to monitor and detect incidents where a person 
falls overboard.
    Mr. Carver, you said there were a couple of technologies 
that seem to be available for this?
    Mr. Carver. There may be more than two, but I listed in my 
written testimony two companies that have systems that have 
been tested. In 2011 the Coast Guard asked for proposals on man 
overboard systems. They got them. But to the best of my 
knowledge, they never contacted the companies that issued the 
proposals to validate their proposal.
    And so, I have often asked them----
    Mr. Garamendi. In your written testimony, which I must have 
missed, did you name the companies?
    Mr. Carver. Yes, I did.
    Mr. Garamendi. Thank you. Well, David is going to contact 
them and we are going to see what those systems are and whether 
they really do work. And then, if they do, or at least they 
purport to do, we will do that. I assume the witnesses here are 
not into man overboard issues.
    OK. Thank you. That is it.
    Mr. Hunter. Thank you all for being here, and thanks for 
staying a little bit extra time. We talked about a lot of 
things today. And I am not even going to rehash everything.
    There are no further questions. There are no--any--there is 
nobody else here but me and John. So, with that, the 
subcommittee stands adjourned.
    [Whereupon, at 12:15 p.m., the subcommittee was adjourned.]

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