[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


  AUTHORIZATION OF COAST GUARD AND MARITIME TRANSPORTATION PROGRAMS

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

                                (115-9)

                                 HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                COAST GUARD AND MARITIME TRANSPORTATION

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 4, 2017

                               __________

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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
FRANK A. LoBIONDO, New Jersey        JERROLD NADLER, New York
SAM GRAVES, Missouri                 EDDIE BERNICE JOHNSON, Texas
DUNCAN HUNTER, California            ELIJAH E. CUMMINGS, Maryland
ERIC A. ``RICK'' CRAWFORD, Arkansas  RICK LARSEN, Washington
LOU BARLETTA, Pennsylvania           MICHAEL E. CAPUANO, Massachusetts
BLAKE FARENTHOLD, Texas              GRACE F. NAPOLITANO, California
BOB GIBBS, Ohio                      DANIEL LIPINSKI, Illinois
DANIEL WEBSTER, Florida              STEVE COHEN, Tennessee
JEFF DENHAM, California              ALBIO SIRES, New Jersey
THOMAS MASSIE, Kentucky              JOHN GARAMENDI, California
MARK MEADOWS, North Carolina         HENRY C. ``HANK'' JOHNSON, Jr., 
SCOTT PERRY, Pennsylvania                Georgia
RODNEY DAVIS, Illinois               ANDRE CARSON, Indiana
MARK SANFORD, South Carolina         RICHARD M. NOLAN, Minnesota
ROB WOODALL, Georgia                 DINA TITUS, Nevada
TODD ROKITA, Indiana                 SEAN PATRICK MALONEY, New York
JOHN KATKO, New York                 ELIZABETH H. ESTY, Connecticut, 
BRIAN BABIN, Texas                       Vice Ranking Member
GARRET GRAVES, Louisiana             LOIS FRANKEL, Florida
BARBARA COMSTOCK, Virginia           CHERI BUSTOS, Illinois
DAVID ROUZER, North Carolina         JARED HUFFMAN, California
MIKE BOST, Illinois                  JULIA BROWNLEY, California
RANDY K. WEBER, Sr., Texas           FREDERICA S. WILSON, Florida
DOUG LaMALFA, California             DONALD M. PAYNE, Jr., New Jersey
BRUCE WESTERMAN, Arkansas            ALAN S. LOWENTHAL, California
LLOYD SMUCKER, Pennsylvania          BRENDA L. LAWRENCE, Michigan
PAUL MITCHELL, Michigan              MARK DeSAULNIER, California
JOHN J. FASO, New York
A. DREW FERGUSON IV, Georgia
BRIAN J. MAST, Florida
JASON LEWIS, Minnesota
                                ------                                7

        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
GARRET GRAVES, Louisiana             RICK LARSEN, Washington
DAVID ROUZER, North Carolina         JARED HUFFMAN, California
RANDY K. WEBER, Sr., Texas           ALAN S. LOWENTHAL, California
BRIAN J. MAST, Florida               ELEANOR HOLMES NORTON, District of 
JASON LEWIS, Minnesota, Vice Chair       Columbia
BILL SHUSTER, Pennsylvania (Ex       PETER A. DeFAZIO, Oregon (Ex 
    Officio)                             Officio)
                               
                               
                               CONTENTS

                                                                   Page

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

                               WITNESSES

Admiral Paul F. Zukunft, Commandant, U.S. Coast Guard, 
  accompanied by Master Chief Steven W. Cantrell, Master Chief 
  Petty Officer of the Coast Guard, U.S. Coast Guard:

    Testimony....................................................     5
    Prepared statement...........................................    41
    Responses to questions for the record from the following 
      Representatives:

        Hon. Duncan Hunter of California.........................    45
        Hon. Don Young of Alaska.................................    49
Hon. Michael A. Khouri, Acting Chairman, Federal Maritime 
  Commission:

    Testimony....................................................     5
    Prepared statement...........................................    57
    Responses to questions for the record from Hon. Duncan Hunter 
      of California..............................................    63
Joel Szabat, Executive Director, Maritime Administration:

    Testimony....................................................     5
    Prepared statement...........................................    69
    Responses to questions for the record from Hon. Duncan Hunter 
      of California..............................................    77

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Hon. John Garamendi of California................................    37

                       SUBMISSIONS FOR THE RECORD

Hon. John Garamendi, a Representative in Congress from the State 
  of California, submission of the following documents:

    Report from Hon. Garamendi's Maritime Advisory Committee, 
      ``Priorities of the Northern California Maritime 
      Industry,'' April 25, 2016.................................    78
    Written statement of General Darren W. McDew, U.S. Air Force 
      and Commander, U.S. Transportation Command, from the March 
      30, 2017, hearing of the House Armed Services Committee....   101
``Federal Maritime Commission 55th Annual Report for Fiscal Year 
  2016,'' submitted by Hon. Michael A. Khouri, Acting Chairman, 
  Federal Maritime Commission \1\

----------
\1\ The 59-page ``Federal Maritime Commission 55th Annual Report for 
Fiscal Year 2016'' can be found online on the Federal Maritime 
Commission's website at http://www.fmc.gov/assets/1/Page/
55AnnualReport.pdf.
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   AUTHORIZATION OF COAST GUARD AND MARITIME TRANSPORTATION PROGRAMS

                              ----------                              


                         TUESDAY, APRIL 4, 2017

                  House of Representatives,
          Subcommittee on Coast Guard and Maritime 
                                    Transportation,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2:38 p.m., in 
room 2167, Rayburn House Office Building, Hon. Duncan Hunter 
(Chairman of the subcommittee) presiding.
    Mr. Hunter. The subcommittee will come to order. Welcome, 
everybody. Good afternoon and welcome to our first hearing in 
the 115th Congress. We would have had this earlier, but it 
snowed out here.
    Today, we will review Coast Guard and maritime 
transportation programs. As we all know, the United States 
Coast Guard is a critical component of our Nation's defense and 
homeland security. It is an armed service; and of the five 
armed services, it is unique. It is the only one with law 
enforcement abilities. The Coast Guard has moved between 
different Federal departments over its history, with some 
departments being a better fit than others for the Service.
    I have ongoing concerns with the Coast Guard being within 
the Department of Homeland Security. On its face, the Coast 
Guard should fit comfortably within the Department, due to its 
role in defense and homeland security. However, when it comes 
to budgetary support, it appears the Department--or more likely 
it is the Office of Management and Budget--ignores Coast Guard 
priorities for Department or other administration priorities.
    The Coast Guard's budget has been determined to be 
nondefense discretionary, placing it in competition against all 
nonmilitary discretionary spending, despite the Coast Guard 
being a military service at its core. No other military service 
has experienced such a disadvantage and been denied budget 
clarity and foresight like the Coast Guard. This, without 
question, is a big risk to national security and should compel 
a more serious budget approach.
    There are a number of us, including the ranking member and 
myself, that are members of both this committee and the Armed 
Services Committee, who understand the requirements of the 
Service. When the Service is active in a time of conflict, it 
works as part of the Navy, but every day its missions are 
critical to our national defense. I will repeat myself. Every 
day the Coast Guard's missions are critical to our Nation's 
defense.
    We are nowhere near close to the budget numbers being 
final. And I look forward to working with the Coast Guard to 
provide the Service with the funding it needs to do its job.
    We will also hear from the Federal Maritime Commission, the 
FMC. The FMC implements the Shipping Act of 1984 and other 
shipping-related legislation. The FMC administers a limited 
antitrust exemption for ocean carriers, to ensure fair 
competition among foreign and U.S. shipping interests.
    The contraction of the ocean carrier industry over the last 
couple of years has many carriers operating within shipping 
alliances to reduce operating costs. The FMC oversees 
agreements that form these alliances, to ensure they adhere to 
the limited antitrust exemption. Recent action by the FMC has 
U.S. industry concerned that the limited exemption is being 
misused. The industry was also rocked by the Hanjin bankruptcy, 
which created turmoil in the supply chain. The subcommittee is 
interested in how the FMC assesses agreements and works with 
industry to prevent other supply chain disruptions and maintain 
fair shipping practices.
    MARAD is also with us today. The subcommittee shares 
jurisdiction over MARAD with the Armed Services Committee, 
having jurisdiction over the nonnational security aspects of 
the merchant marine. The subcommittee understands the critical 
role U.S. mariners have in supporting domestic shipping 
operations as well as defense operations, including the 
Maritime Security Program and sealift. The subcommittee looks 
forward to working with MARAD on these important issues.
    And I now yield to my ranking member, Mr. Garamendi; you 
are recognized.
    Mr. Garamendi. I thank you very much, Mr. Chairman. I 
appreciate your interest in beginning the process of writing a 
new 2-year Coast Guard maritime transportation authorization 
bill. I look forward to working with you again and with the 
committee members in the same successful--that we have had in 
the past.
    I would also like to welcome our witnesses, the U.S. Coast 
Guard, the Federal Maritime Commission, and the Maritime 
Administration. It is my expectation that this hearing will be 
but only the first of several exchanges as we work 
collaboratively to build and shape U.S. maritime policy to meet 
the many challenges and uncertainties in the world today. In 
fact, we are in a very, very turbulent and challenging time in 
the maritime world.
    Foremost, I remain extremely concerned about the reported 
$1.3 billion, 14-percent cut to the Coast Guard budget. The new 
administration has floated it. If they are serious, it is a 
pretty good example about knowing the cost of everything, but 
the value of nothing.
    There is little doubt that the administration heard the 
outcry from Members of Congress. Mr. Chairman, you were leading 
all of that. However, if the administration thought the release 
of its fiscal year 2018 skinny budget would somehow allay our 
concerns, no, it didn't happen. We remain deeply, deeply 
concerned about any cut to the Coast Guard.
    If there is perhaps one thing we could do to respond to the 
uncertainties that we confront in the maritime domain, it would 
be to make certain that the Coast Guard is fully funded even at 
a higher level than last year.
    Furthermore, if we are to be sincere in our commitments to 
protect our maritime borders as well as to ensure the 
reliability, safety, and security of the U.S. maritime supply 
chain, we will need to work tirelessly to prevent any 
shortsighted budget policy becoming a reality. I believe this 
is probably our first and foremost task ahead of us, but there 
are many, many others.
    For one, the global oversupply of container ships and the 
bottoming out of shipping rates have created turmoil in the 
global container shipping market. Bankruptcies, mergers, 
acquisitions and on and on, and this going on at a dizzying 
pace. We need to know: how will this transformation affect 
robust competition, fair pricing for the maritime 
transportation services and foreign trade? In addition, what 
collateral effects on U.S. marine terminal operators, escort 
tugs, and other marine service providers will result from the 
alliances and all of the shifting that is going on in that 
sector?
    The status and future of the U.S.-flag fleet in the 
international trade also remains a great concern, especially 
whether this fleet and its credentialed mariners that are on 
board will remain capable of providing the reliable, secure 
sealift capacity for our military. I bring our attention to 
last week's House Committee on Armed Services hearing with the 
U.S. Transportation Command and the concerns that they 
expressed about that.
    In closing, Mr. Chairman, we must begin now to rebuild our 
merchant marine and the U.S.-flag presence in global shipping. 
The United States has been, remains, or should remain, a 
maritime nation. Our future, our prosperity, and our security 
depends upon it.
    I am optimistic that the ``build America, buy America'' 
mantra of this administration applies equally to the U.S. 
maritime industry; and, assuming so, I extend my hand in 
cooperation to help that come to pass.
    Thank you, Mr. Chairman.
    I would like also to enter into the record a report from my 
Maritime Advisory Committee that met out in Vallejo, 
California, at the California State University Maritime 
Academy. If I could put that in the record for the edification 
of not only myself but the staff and anybody else that would 
like to access that.
    Mr. Hunter. Without objection.

    [The report entitled ``Priorities of the Northern California 
Maritime Industry'' can be found on pages 78-100.]

    Mr. Garamendi. Many different recommendations that they 
made, some of which I am sure will find its way into 
legislation.
    With that, I yield back.
    Mr. Hunter. I thank the ranking member.
    And out of sorts here, but we are joined by the ranking 
member of the full committee. And if Mr. DeFazio has anything 
to say, feel free, have an opening statement.
    Mr. DeFazio. Thank you, Mr. Chairman. I appreciate you 
holding this hearing.
    And I would echo the concerns of both the chairman and the 
ranking member as regards the neglect that we have seen of the 
Coast Guard's needs in the budget proposals. The rumored $1.3 
billion cut to build a stupid wall that won't make our country 
any safer would just be outrageous. You know, the French built 
the Maginot Line, the Germans went around it.
    You know, even if the so-called beautiful wall is built 
across some very rugged terrain, obviously, they can tunnel 
under it, they can use catapults and send drugs over it. They 
can use drones to send drugs in, et cetera. It is not going to 
solve any national security problem but it would open up the 
same route the Germans used to invade France to drug smugglers, 
human smugglers, and potentially terrorists trying to get a 
tactical nuclear weapon into the United States, which is we 
would leave our vast coastal areas, 95,000 miles, and 28,000 
miles of navigable inland waterways, it would be open season, 
because the Coast Guard wouldn't be able to provide the 
coverage we need. They are struggling now with their current 
budget to provide that coverage.
    So if those cuts are a reality, it would be perhaps the 
most laughable thing, but serious, unfortunately, about the so-
called budget proposals and the skinny budget, which doesn't 
mention the Coast Guard whatsoever.
    And I also want to echo the concerns of Ranking Member 
Garamendi about U.S. flags. He showed tremendous leadership 
there. I mean, we can't be the greatest nation on earth and a 
great maritime nation without any maritime under our own 
control. And alliances are of tremendous concern. I think we 
should revisit the antitrust immunity that has been granted 
under law, limited as it is.
    Apparently, it may be that the Box Club, you know, was even 
exceeding, shall we say, the limited antitrust immunity, but as 
they were all handed subpoenas, much to their surprise, the 
meeting at the Four Seasons. And hopefully, we can get to the 
bottom of what they are really up to.
    But in terms of denying ports or marine terminal operators, 
you know, contracts, when you get down to three alliances or 
two alliances and alliances controlled substantially by foreign 
interests, I believe it presents national security issues, 
certainly economic issues, and it merits more attention by this 
committee.
    With that, Mr. Chairman, thanks for the hearing and I yield 
back the balance of my time.
    Mr. Hunter. I thank the gentleman.
    I am going to introduce the witnesses now, starting with 
the Commandant of the Coast Guard, Admiral Paul Zukunft; Master 
Chief Steven Cantrell, Master Chief Petty Officer of the Coast 
Guard; Mr. Michael Khouri, Acting Chairman for the Federal 
Maritime Commission; and Mr. Joel Szabat, executive director, 
in lieu of the Administrator, for the Maritime Administration.
    Admiral, you are recognized.


 TESTIMONY OF ADMIRAL PAUL F. ZUKUNFT, COMMANDANT, U.S. COAST 
 GUARD, ACCOMPANIED BY MASTER CHIEF STEVEN W. CANTRELL, MASTER 
CHIEF PETTY OFFICER OF THE COAST GUARD, U.S. COAST GUARD; HON. 
     MICHAEL A. KHOURI, ACTING CHAIRMAN, FEDERAL MARITIME 
   COMMISSION; AND JOEL SZABAT, EXECUTIVE DIRECTOR, MARITIME 
                         ADMINISTRATION

    Admiral Zukunft. Good afternoon, Chairman Hunter and 
Ranking Member Garamendi and distinguished members of the 
subcommittee. Thank you.
    I thank you, Chairman, especially for your unwavering 
support of the United States Coast Guard, and I ask that my 
written statement be entered into the record.
    The Coast Guard is first and foremost an armed service that 
advances national security objectives in ways no other armed 
service can. It begins with our broad authorities. Over 60 
bilateral agreements to enforce rule of law on the high seas 
and into the territorial waters of foreign nations, where 
transnational criminal organizations thrive, and they directly 
threaten our Nation's security.
    We are witness to illicit trafficking destined for the 
United States, exploiting vulnerable transit nations in Central 
America, spawning violent crime and bringing corruption and 
sowing the seeds of illegal migration, people fleeing their 
countries of origin to seek safe refuge here in the United 
States.
    In 2016, we removed a record 201 metric tons of cocaine, 
and we brought 585 smugglers to justice here in the United 
States, where we have a nearly 100-percent prosecution rate as 
compared to the less than 10-percent prosecution rate in their 
countries of origin.
    Our greatest challenge in this campaign is one of capacity. 
And we must maintain our current pace in recapitalizing the 
Coast Guard fleet while advancing shore-based unmanned aerial 
systems to enhance our surveillance capacity. Also, in 2016, we 
awarded a contract to complete the build-out of our fleet of 58 
Fast Response Cutters at an affordable price at Bollinger 
Shipyards, who delivered the most recent 4 ships with zero 
discrepancies.
    We awarded the acquisition of 9 Offshore Patrol Cutters to 
Eastern Shipbuilding Group, a downpayment for a program of 
record of 25 of these capable platforms that meet requirements 
and, again, at an affordable price. And we are cutting steel at 
Huntington Ingalls Shipyard today on the ninth National 
Security Cutter. We stood up an integrated program office with 
the Navy and recently awarded industry studies to commence the 
build-out of a fleet of three heavy and three medium 
icebreakers, all meaningful steps to keep our Nation on an 
accelerated path to deliver the first heavy icebreaker in 2023.
    And, again, thank you, Chairman and this committee, for 
your leadership and vision in helping us establish this 
collaborative approach.
    We also received our fourth consecutive clean financial 
audit opinion, and have minimized acquisition growth and also 
eliminated timeline slippages in our major acquisitions. Yet 
readiness, modernization, and force structure challenges 
inhibit our ability to fully address the asymmetrical threats 
in our increasingly volatile world.
    Like the other four armed services, the Coast Guard faces 
the menacing combination of increased mission demands, years of 
fiscal constraint, and lost purchasing power. The Budget 
Control Act has eroded our ability to simultaneously execute 
our daily missions, maintain our contributions to Combatant 
Commanders, and preserve our readiness for global 
contingencies.
    The Coast Guard is the only armed service that has been 
funded below the BCA floor in our annualized operations and 
maintenance appropriation. Our Service Secretary, John Kelly, 
understands this issue and fully supports the President's call 
to rebuild all the armed services.
    And I am working to rebuild our long overlooked fleet of 35 
inland construction tenders with an average age of 52 years. 
Now, this is critical in sustaining our inland river system and 
overall maritime transportation system that generates $4.5 
trillion of commerce on an annual basis. This fleet is critical 
to our economic and national security.
    Finally, we need to grow the Coast Guard. We have had 5 
consecutive years of funding offsets in our operations and 
maintenance account, and over the next 5 years we need to 
restore 1,100 Reserve billets and bring another 5,000 Active 
Duty members into our Service, while sustaining our more than 
8,500 civil servants.
    I appreciate the unwavering support of this subcommittee to 
address our most pressing needs. With the continued support of 
the administration and Congress, the Coast Guard will remain 
Semper Paratus--Always Ready.
    Thank you for the opportunity to testify today, and I look 
forward to your questions.
    Mr. Hunter. Thank you, Commandant, and thanks for what you 
do for obviously the men and women that you represent right now 
in this room.
    And Master Chief Cantrell, same to you. A happy Coastie is 
an effective Coastie. Thanks for what you do for looking out 
for the men and women and their families and their well-being. 
As you know, when you are on the water or in the air as much as 
you are, it is tough. So thank you.
    Master Chief, you are recognized.
    Master Chief Cantrell. Thank you, sir. And good afternoon, 
Mr. Chairman and distinguished members of the committee.
    It is a privilege to appear before you today to represent 
the nearly 41,000 Active Duty and 7,000 Reserve members of your 
United States Coast Guard, who stay on the watch every day 
protecting our Nation. As one of our Nation's armed services as 
well as a law enforcement agency, they represent the finest 
force we have ever had in our history.
    In this era of record operational demands and uncertain 
budgets, these dedicated men and women are charged with 
maintaining operational excellence around the globe in our own 
Nation's ports and waterways. Performing our missions in a 
maritime environment is inherently dangerous. Our people 
operate in the harshest and many times the most unforgiving 
conditions imaginable, but they are proud to do so every day, 
with a devotion to duty that is something to marvel at.
    Recent discussions surrounding proposed cuts to the Coast 
Guard budget have highlighted the importance of a strong 
relationship with our department. I am happy to say Secretary 
Kelly has shown an indepth appreciation for the hard work 
performed by Coast Guard men and women. His dedication to 
ensuring a predictable, supportive Coast Guard budget that 
reflects commitment to our members and their families is 
greatly appreciated.
    And I want to personally thank all the congressional 
delegations that have visited Coast Guard units, whether within 
your constituency or elsewhere. Visiting our Coast Guard men 
and women and speaking with them face-to-face gives you the 
ground truth about the impacts your decisions are having on 
even our most junior personnel. It is also great for our units 
as members show you the pride they feel every day.
    I also want to thank you for your continued support of our 
recapitalization efforts, which are making a tremendous impact 
on national security. Our new platforms are extremely capable 
and contribute to the efficient execution of our mission and 
our service to the Nation.
    But we mustn't lose sight of the fact that many of our 
Coast Guard men and women continue to serve in ships and at 
stations that are older than their parents or in some cases 
their grandparents.
    But the age and deteriorating state of our assets and 
infrastructure aren't the only challenges the members of our 
Service face. We continue to face quality of life concerns. 
With many of our workforce serving at remote units, far from 
bases or other military installations and in many cases high-
cost coastal areas, access to adequate and affordable housing, 
medical care, and child care will always be a challenge. It is 
critically important we find ways to ensure access to these 
services in these remote areas, especially for the nearly 70 
percent of our members who are married or have dependents.
    Many times, in addition to paying benefits, the support 
programs we provide to members and their families determine how 
long they remain in our Service. I believe we can all attest 
that we would not be successful in our careers without the love 
and support of our families. The sacrifices our members and 
their families make throughout a typical career are tremendous, 
yet they continue to volunteer to serve and reenlist and not 
just as individuals but as a family.
    Life in today's military presents unique challenges, and 
our leadership is deeply committed to providing every Coastie 
and their family with unparalleled quality of life as they 
serve this great country. I am pleased to have my wife, Janet, 
here with me today as a representative of our Coast Guard 
families and as someone who spends so much of her time devoted 
to meeting Coast Guard families throughout our Service to 
ensure their voices and concerns are always heard.
    We will continue to work on improving these support 
programs and services to ensure our workforce, both married and 
single, remain Semper Paratus. We must invest in them.
    It is very easy to look at shiny new ships and aircraft 
with modern capabilities and assume we have achieved some 
budget success. However, we cannot forget those soft costs that 
are so critical to our people and their families.
    Once again, we are grateful for your support as we address 
these challenges. I promise to remain steadfast in ensuring 
these and other quality of life programs are addressed in our 
budgets, as our current and future workforce depend on us to be 
their voice.
    Mr. Chairman, members of the committee, on behalf of the 
men and women of your United States Coast Guard and their 
families, I thank you for your continued and very public 
support, and thank you for the opportunity to discuss some of 
the highlights and challenges Coast Guard women and men face 
today. Thank you.
    Mr. Hunter. Thanks, Master Chief. I also want to recognize 
your wife sitting right behind you. Would you like to say a few 
words? No, just kidding. OK. You can really attest to the 
quality of life stuff. She said she wants you gone more, 
though. That is all right, right?
    Thanks, Master Chief.
    Mr. Khouri, I know you have got to roll after your opening 
statement. You are recognized.
    Mr. Khouri. Thank you, Chairman Hunter, Ranking Member 
Garamendi and members of the subcommittee. Good afternoon, and 
thank you for the opportunity to present testimony.
    And first I want to recognize my fellow Commissioners here 
today, Commissioner William Doyle and Daniel Maffei. 
Commissioners Dye and Cordero are traveling today.
    With your permission, I will summarize the prepared remarks 
and I request the written testimony, together with a copy of 
our fiscal year 2016 annual report submitted today, be included 
in the record.

    [The ``Federal Maritime Commission 55th Annual Report for Fiscal 
Year 2016'' can be found online at FMC's website at http://www.fmc.gov/
assets/1/Page/55AnnualReport.pdf.]

    Mr. Khouri. We are now in the 100th year of operation under 
the Shipping Act. The FMC mission is to foster and facilitate 
open, free, and competitive transportation market activity, 
while protecting the shipping public from unlawful, unfair, and 
deceptive practices, with a minimum of Government intervention 
and regulatory cost.
    Of recent note, on March 6, the Commission unanimously 
approved a new rule to reduce the complexity, burden, and cost 
for the 165 ocean carriers and the 6,200 ocean transportation 
intermediaries who file 53,000 contracts and over 730,000 
contract amendments with the agency each year.
    I intend for this deregulatory effort to continue as we 
take up other pending and proposed issues. After consulting 
with my fellow Commissioners, I have designated the FMC's 
managing director, Karen Gregory, as the regulatory reform 
officer. She is now standing up a task force to execute on the 
regulation review process.
    Two thousand sixteen was, indeed, a full and challenging 
year for the ocean shipping industry. A series of mergers by 
vessel operators saw the top 20 carriers consolidated into 17 
companies. These consolidations further led to a reshuffling of 
the four carrier alliances serving the U.S. trades.
    By mid-2018, with all announced mergers, there will be 10 
companies arranged into 3 operating alliances, as they carry 82 
percent of containerized cargo across all U.S. trade lanes. 
Even with these developments, the vessel liner industry is 
still relatively unconcentrated.
    The top three carriers in the U.S. trades have market 
shares of 12.42 percent, 12.39 percent, and 10.62 percent, 
respectively. These are far from market-dominant positions and, 
in fact, we are not close to a concentrated market in accepted 
economic regulatory terms.
    Individual alliance members do not coordinate on marketing 
or pricing under their operational agreements. The Commission's 
ongoing monitoring of all alliance activity serves to ensure 
that the U.S. container trades remain open and competitive. The 
alliance operations do create vessel utilization efficiencies 
and lower cost structures that directly benefit U.S. exporters, 
importers, and our U.S. consumers.
    All that being said, concerns about these trends have been 
expressed by U.S. cargo interests, our exporters and importers. 
All these new alliances have been filed at the Commission over 
the last year. We have strengthened all of our economic review 
processes and require tighter limits on the scope of each 
agreement's authority.
    Seaport efficiency and port congestion received significant 
attention by the Commission over the last several years. The 
supply chain innovation team, led by Commissioner Rebecca Dye, 
has been developing information-sharing protocols that should 
prove extremely beneficial, and integrating the global supply 
chain, and provide a boost to the American economy.
    Regarding our budget, the FMC is a small agency with a 
focused mission and a specialized workforce of 127 dedicated 
employees. Eighty-eight percent of our budget is rent and 
salaries. Much of the remainder is fixed overhead. I will focus 
our resources on the core statutory mission of the agency and, 
when necessary, I will reallocate resources to address mission-
critical needs.
    In summary, the maritime container supply chain is 
commercially and operationally complex. As international 
imports and exports grow, increased cargo volumes will continue 
to stretch this supply chain. The FMC's role is to ensure that 
the market for container shipping services remains open, 
competitive, free from unlawful, unfair, or deceptive 
practices, but, again, with a minimum of Government 
intervention and regulatory cost.
    Thank you for your attention, and I will be pleased to 
answer any questions.
    Mr. Hunter. Thank you, Mr. Khouri.
    Mr. Szabat, you are now recognized.
    Mr. Szabat. Good afternoon, Chairman Hunter, Ranking Member 
Garamendi, and distinguished members of the subcommittee. Thank 
you for inviting me to discuss the Maritime Administration's 
programs to foster and develop the maritime industry in the 
United States. Our military relies on U.S.-flag ships crewed by 
volunteer American civilian mariners to move our warfighters, 
equipment, and supplies whenever and wherever they need to go.
    Three-quarters of MARAD's budget goes to national security 
and ensuring that America has a viable commercial merchant 
marine, one that employs enough qualified merchant mariners 
through three programs: The Jones Act, the Maritime Security 
Program, MSP, and Cargo Preference.
    The Jones Act ensures a U.S.-flag fleet in domestic trade 
by requiring American-built, American-owned, and American-
crewed vessels to transport passengers and cargo between U.S. 
ports. MSP and Cargo Preference guarantee a U.S.-flag fleet in 
international commercial trade. Combined, these 3 programs 
support 97 large commercial ships in the domestic trade and 81 
large U.S.-flag commercial trade ships trading internationally.
    There is also a federally owned surge fleet, the first 
cargo ships out of port in a mobilization or a crisis. MARAD 
has three-quarters of the ships in this surge fleet. When 
mobilized, MARAD's 46 ships are crewed by volunteer civilian 
mariners from the U.S.-flag commercial fleet. As the commercial 
fleet has shrunk in recent years, it no longer employs enough 
qualified available American mariners to sustain a full 
sealift.
    MARAD is preparing a range of options to address the 
mariner shortfall, as Congress required by the House fiscal 
year 2017 Transportation, HUD appropriations report language. 
We are closely cooperating in this effort with our military 
partners and the U.S. Transportation Command and the Military 
Sealift Command.
    MARAD holds another 50 ships in the National Defense 
Reserve Fleet. Some are held for spare parts, others are being 
prepared for recycling, and some can be activated if needed. 
These NDRF vessels include six training ships used by the State 
maritime academies. MARAD has worked on a common design to 
replace the old training ships as they age out. We are also 
investigating other potential alternatives.
    The largest and oldest ship, SUNY Maritime's Empire State, 
is due to age out in 2019. Massachusetts Maritime's training 
vessel is 2 years behind. Texas Maritime also needs a large 
training vessel. No decision has been made about the Federal 
Government's role in replacing or overhauling these training 
ships.
    The education component, representing 17 percent of our 
budget, is primarily for the U.S. Merchant Marine Academy, the 
Federal flagship of the maritime academies. Over 20 percent of 
the officers in the U.S. merchant marine and over 70 percent of 
the merchant mariners who have a military service obligation 
come from the Academy. In order to graduate, midshipman train 
for a year on American commercial and sometimes Federal ships. 
This unique partnership with industry is a core part of the 
USMMA training, known as Sea Year.
    Last June, former Secretary Foxx made a decision to suspend 
Sea Year as part of an effort to combat sexual assault and 
sexual harassment at the Academy. Working with MARAD, industry 
and labor partners have developed new standards to address 
sexual assault and sexual harassment.
    Companies representing 60 percent of our Sea Year 
commercial capacity have already met the standards and have 
resumed training midshipmen. By summer, we will roll out best 
training practices developed with the industry.
    Last June, the Academy was put on warning for 
accreditation. Seven requirements have to be met to remove the 
warning. The Academy was required to do more to address sexual 
assault and sexual harassment on campus and at sea. The other 
five requirements are primarily about restoring authorities 
that were taken from the Academy's leadership after financial 
and operational shortcomings were uncovered in 2008 and 2009. 
The accreditors visited the campus last week. We anticipate 
that by July, we will know if our progress has been 
satisfactory.
    Finally, MARAD's transportation programs comprise 8 percent 
of our budget. Since 2009, the DOT's discretionary grant 
programs have also provided valuable resources. Among these are 
TIGER and FASTLANE grants, helping shippers expand and improve 
ports and intermodal infrastructure. We are also working on 
programs like Deepwater Port Licensing to export oil and 
liquefied natural gas.
    The Delfin LNG project will be the Nation's first deepwater 
port export facility to export billions of cubic feet of 
liquefied natural gas to foreign markets.
    Our Marine Highways Program is also helping us to maximize 
our underutilized maritime assets, rivers, lakes and waterways, 
to transport more cargo and to reduce congestion on our roads, 
highways and rails.
    That is a thumbnail view of MARAD. I ask that my written 
statement be entered into the record. Thank you for your time, 
and I am happy to answer your questions.
    Mr. Hunter. Thank you, sir.
    We will start with questions. I am going to start with 
myself. I recognize myself here.
    OK. Commandant, here is the opening, I guess my opening 
that kind of overstates and underscores what is happening in 
this administration and why you are here today.
    Tomorrow, there is a meeting on our other committee, the 
Armed Services Committee. There is a meeting with all the 
Service Chiefs except for you. So every Service Chief will be 
there of the five military services, of which you said in your 
opening statement you are first and foremost a military 
service. You are not going to be in that hearing. Why is that? 
Why are you here and not in the Armed Services hearing tomorrow 
with your Service Chief peers? Instead, you are here with the 
FMC and MARAD. It seems incongruent.
    Admiral Zukunft. I will answer the question as frankly as 
possible. Four percent of my budget is funded by defense 
discretionary. Ninety-six percent of it is nondefense 
discretionary, which then comes under the oversight of these 
other committees.
    So I typically testify with the other Service Chiefs when 
it comes to matters of personnel. And the last time we had a 
Commandant testify with the other Service Chiefs was with the 
repeal of ``don't ask, don't tell.'' But on budgetary matters, 
we do not have a seat at that table.
    Mr. Hunter. Well, when it comes to national security, when 
it comes to the national security plus-up right now, which is 
not being called that, it is mostly national defense, meaning 
the other four services, I think which hearings you sit in and 
which table you sit at plays a role in how you are perceived by 
the military establishment, by the Department of Defense, and 
by the American people. So, I mean, I guess this: Would you 
want to be at that table tomorrow?
    Admiral Zukunft. Yes.
    Mr. Hunter. So let's take this to where--you talked about 
increasing personnel. You said increasing 5,000 personnel. Let 
me see. This NDAA, this Authorization Act, of which you are not 
included, only a very small part of it, because you are 
nondefense discretionary instead of defense discretionary.
    Let me see. The bill increases the end strength of the 
Army. The Army was going to go down to 460,000. It keeps it at 
476,000. So basically, it increases 16,000. The Air Force got 
an Active Duty increase to 321,000, of about 4,000; and the 
Marine Corps was authorized to bump up of an increase of 3,000. 
That is all happening now. Like that is happening for the next 
fiscal year. That is going to be included in this National 
Defense Authorization Act.
    Have you requested to move to expand your numbers?
    Admiral Zukunft. When the original Executive order came 
out, I did send a letter to the chairman of the Joint Chiefs, 
and provided a list of plus-ups that we would need that meet 
defense requirements. And part of that is an increase to 
recapitalize the six patrol boats we have over the northern 
Arabian Gulf. So we have submitted a request. I have not 
received a reply.
    Mr. Hunter. You asked for six FRCs from CENTCOM? Is that 
what you were referring to?
    Admiral Zukunft. Yes.
    Mr. Hunter. To be included in OCO funding?
    Admiral Zukunft. Right. And any additional plus-ups, any 
supplemental funding.
    Mr. Hunter. And what have you seen to either of them saying 
yes or no to those six FRCs?
    Admiral Zukunft. I have not received a reply.
    Mr. Hunter. So you don't know yet whether that is going to 
be included in their OCO request?
    Admiral Zukunft. I do not.
    Mr. Hunter. OK. Going back to, there was an article a few 
days ago where Admiral Michel, the Vice Commandant, said that 
``there was only one skinny budget''--this is a quote--``that 
was delivered to Capitol Hill and when you look at that, that's 
a sustainment budget for the Coast Guard. That's something we 
can work with and that's what we're marching forward on.''
    The other four services are requesting a lot more than you 
are. They don't want a sustainment budget. And that goes in 
line with the President saying that we are going to build up 
the U.S. military. Yet your wise Commandant is saying that you 
are fine with a sustainment budget right now, that you are not 
asking for an increase. I guess my question is, which one is 
it?
    Admiral Zukunft. Well, a sustainment budget still funds us 
below the Budget Control Act. So I cannot take delight in a 
budget that continues to fall short of our annualized 
requirements and operations and maintenance, and also the 
critical need to continue the pace with which we are 
recapitalizing, our current level of service, our old ships, 
and underfunded and undermanned service.
    Mr. Hunter. So you say that Admiral Michel was not speaking 
on behalf of the Coast Guard, just his view?
    Admiral Zukunft. I would say part of that is taken out of 
context. It was looking at the potential of a 14-percent 
reduction and to remove that lodestone from around our neck, 
but it still leaves us stooped over with the other burdens that 
we have to carry.
    Mr. Hunter. So you want more than a sustainment budget?
    Admiral Zukunft. I do.
    Mr. Hunter. My last thing is something we have touched on a 
whole lot. Icebreakers. Let's talk icebreakers. You only have 
one U.S.-made Jones Act icebreaker in the United States, the 
Aiviq. And I know we have talked offline and online about this. 
I think Congress is prepared to support trials, longer term 
trials if Homeland Security is willing to support you by 
starting this process off to build the requirements and do the 
operational evaluation and R&D so you can build the 
requirements so you know exactly what you want in an 
icebreaker. Where are we in that?
    Admiral Zukunft. So we have written letters. The most 
recent was written on the 21st of February to the owners of the 
Aiviq. We have provided them with criteria of what sea trials 
would entail. And we would really like to sit down, you know, 
with the owners at the bargaining table to look at what all of 
this would entail.
    More importantly, what are the costs? Because the cost is 
of great concern to me. And if we are going to go any further 
than this, we will need top-line relief to be able to move 
forward. So this is a funding availability as much as anything 
else, but we are ready to roll up our sleeves, work with the 
offeror, and then walk them through.
    We have been in this business for going on 70 years of 
icebreaking. They are new to the business. We know a lot about 
it, and I think a lot of value can be made by us sitting with 
the owners with our experience in what this platform would need 
to be able to do to support our national security objectives.
    Mr. Hunter. What is preventing that, by the way? What is 
preventing the sit-down with the owners?
    Admiral Zukunft. We are waiting. I have written letters. We 
have received a few emails. But we are reaching out to the 
owners to have this discussion, which is really where I would 
like to have this discussion, at the bargaining table. And 
preferably, we can take some of that burden off your shoulders 
as well. But we have already committed ourselves in writing to 
have these discussions.
    Mr. Hunter. Have you gotten any reassurances from Homeland 
Security that the big Department is willing to find funding for 
this if it works?
    Admiral Zukunft. No, we have not had that level discussion 
yet. Until, again, we can sit down with the owner and look at--
we haven't even talked dollar figures of what all is entailed. 
So we need to do our homework first before I can present a 
package to the department.
    Mr. Hunter. Very quickly, Mr. Khouri, if you don't mind, we 
will submit questions to you for the record. Is there anything 
else you want to say besides your opening statement?
    Mr. Khouri. I just want to say not only for the record, but 
commit to every member of the committee that I would be happy 
to come and meet personally and answer any and all questions 
that they may have. And I have listened to every one of the 
opening statements. So, please, we will be available to answer 
every question. Thank you. I just have a hard stop and must 
leave to catch a flight.
    Mr. Hunter. I got you. And hopefully, for you and Mr. 
Szabat----
    Mr. DeFazio. Is he departing, Mr. Chairman?
    Mr. Hunter. He is.
    Mr. DeFazio. OK. That is unfortunate, because I do have 
some questions and very serious concerns about their actions 
regarding these alliances. So I would appreciate----
    Mr. Hunter. I would yield to Mr. DeFazio.
    Mr. DeFazio. Do you have a couple of minutes? I can have at 
it fast.
    Mr. Hunter. He has got to leave at 3:30.
    Mr. DeFazio. And you can give brief answers. Thank you. 
Thank you, Mr. Chairman.
    So now we are going to have these foreign alliances 
controlling 90 percent of the container market to the Pacific 
States. You know, aren't you concerned about the potential for 
antitrust collusion here? Yes or no, maybe?
    Mr. Khouri. There is--we need to understand----
    Mr. DeFazio. No, I understand the limitations of your 
authority, but you could have disapproved and had legal action.
    So the question is, you let it go through, what are you 
going to do to mitigate it? You have told some of our 
operators--this is another question--that the tug people 
shouldn't worry about their inordinate influence, because you 
are going to review any jointly negotiated contract between the 
alliance and U.S. tugboat operators.
    The FMC, I am not aware has the authority to do that. Do 
you have the authority to do that?
    Mr. Khouri. Can I answer the first question first and then 
second question?
    Mr. DeFazio. It has got to be brief, so yeah.
    Mr. Khouri. One needs to understand the nature of these 
alliances. They are purely operational. They do not have any 
price-setting agreement or discussion in any shape, form, or 
fashion.
    Mr. DeFazio. The Box Club who were just all subpoenaed, 
what were they doing?
    Mr. Khouri. Well, Congressman, with all due respect, you 
must know more about what the Department of Justice is doing 
than I do, because I have no idea what Department of Justice--
--
    Mr. DeFazio. Well, they have these famously--I mean, there 
is no one in the industry who thinks these people aren't 
getting together in the room and colluding over pricing and who 
is going to get--who is going to control what harbors, what 
marine facilities, who they are going to--what they are going 
to do. I mean, it is Pollyannaish to think, oh, these alliances 
are just to help make the industry more efficient. Twenty years 
ago that might have been true. It is not true today, and they 
are foreign-controlled.
    Mr. Khouri. If I could just go through a few numbers very 
quickly for you without going into weeds and not to be 
argumentative, Congressman. And you and I have met earlier and 
I am more than happy to come back to your office and spend as 
much time with you and staff as may be necessary.
    But as we go down, there are 5,000 container vessels in the 
world. There are 2,600 vessels that operate, are owned by the 
companies in the alliances. The alliance activity itself is 
only 887 vessels, meaning all the rest of the vessels are not 
in alliance activities. There are only 578 vessels for all of 
the alliances together in the U.S. trades. That means that you 
have over 2,000 vessels.
    Now, one of the core antitrust principles is, is the market 
contestable and is there entry that can come in, in case prices 
go up and become too remunerative. Are vessels going to come in 
and discipline that price. There are, again, 578 alliance 
vessels serving U.S. trades and there are 2,000 vessels to 
discipline the U.S. worldwide, there are 4,000 vessels 
available to come in and discipline the trades.
    Mr. DeFazio. Can I just for a moment--if you want to keep 
talking. But can we focus on where these vessels are serving? I 
believe a large number of the alliances happen to be serving 
China, the alliance vessels, and Japan.
    Doesn't that create some questions? I mean, when Chinese 
also have--you know, they are going to control who can come in 
and come out. So we now have a Chinese-controlled alliance, and 
they are going to want to favor that, you know, as they do 
famously.
    And so, you know, I mean, there is this, oh, all these 
other people can come in, except, well, the Chinese probably 
aren't going to load their ships or let them into their 
harbors. You know, I just think that this is really going too 
far. I mean, at what point will we think we are too 
concentrated, when we get to two or one alliances----
    Mr. Khouri. Well, sir----
    Mr. DeFazio [continuing]. That controls everything?
    Anyway, Mr. Khouri, I realize you have got to go. We can 
perhaps have another meeting to discuss this. But I really 
think that we need to revisit the act. We need to revisit the 
assumptions that we are creating efficiency in market forces 
here. In these modern times where we know that, you know, 
State-owned enterprises and governments that are acting in a 
mercantilist way are not really interested in competition, and 
they are interested in driving down their costs and dominating 
our markets and putting our people at disadvantage. That is my 
opinion. You may have a totally different one.
    Thank you, Mr. Chairman.
    Mr. Khouri. If I could, just one last comment, Mr. 
Chairman, and I will answer all of the questions in writing 
with much more specificity.
    But in terms of concentration, it was in my written 
statement and my oral statement. The transpacific trades, 
China, all of Asia over to the U.S. west coast. The standard 
initial measurement that every regulator uses, the Department 
of Justice, Federal Trade Commission, and the Federal Maritime 
Commission is what is called the Herfindahl-Hirschman Index, 
and it measures concentrations in markets.
    The transpacific--now, let me--where the standard is, 
anything from zero to 1,500 is deemed safe harbor, sufficiently 
unconcentrated that it does not normally warrant scrutiny. From 
1,500 to 2,500 is mildly concentrated, and then above.
    Our Bureau of Trade Analysis says in 2016, the transpacific 
HHI was 647. Worldwide, the HHI is 849. This is saying that 
these markets are still unconcentrated. Now, that is only the 
beginning of a long series of questions that have to be 
answered in an antitrust review.
    I would be more than happy to sit down with you. But I am 
not trying to be argumentative. I am just trying to say that 
there are traditional ways that whomever you may ask, 
Department of Justice, FDA or--excuse me, FTC or us, these are 
the principles that if we are to go now into court in front of 
a Federal judge and say, Your Honor, these are the economic 
indicators we have, and it is the judge, not us, who issues the 
injunction.
    So I have to have a solid economic argument to go in front 
of a Federal district judge to convince him or her that we have 
an economic situation. These are the numbers that we are 
working with. Happy to engage in this to your satisfaction, 
sir.
    Mr. DeFazio. Well, I have got to say just the marine 
terminal operators, the tug companies and others who are U.S. 
residents, U.S. citizens, and operating to the benefit of our 
country really don't share those views and think it is going to 
be much more of an antimarket force. So thank you.
    Mr. Khouri. Thank you, Mr. Chairman.
    Mr. Hunter. And it would be maybe strip out the limited 
antitrust exemption that FMC can grant these consortiums 
totally, so that they aren't allowed to join together to put 
pressure on the ports, collude on price, which you say they 
don't do, et cetera.
    But that is it, Mr. Khouri. Thank you.
    With that, I would like to recognize Mr. Graves.
    Mr. Graves of Louisiana. Thank you, Mr. Chairman. I want to 
thank all of you for being here today.
    Admiral, I would love to talk to you a little bit about 
some of the acquisition efforts underway. Obviously, I think 
all of us up here have strong concerns that the men and women 
of the Coast Guard have the vessels and the equipment that they 
need to properly do their job in an increasingly challenging 
and demanding work environment that many of our Coasties are 
subjected to.
    One thing I would love to talk to you about a little bit is 
the FRC. I know some folks just recently went down, including 
the ranking member of the subcommittee just went down to take a 
look at that. You mentioned in your testimony in the last four 
vessels that were delivered, there were no discrepancies. Is 
that correct?
    Admiral Zukunft. That is correct.
    Mr. Graves of Louisiana. Is that common?
    Admiral Zukunft. Rare.
    Mr. Graves of Louisiana. Cost per copy, how is that looking 
compared to estimates?
    Admiral Zukunft. So we renegotiated phase 2, and this came 
in at a very affordable range.
    Mr. Graves of Louisiana. So cost going down, no 
discrepancies. Do you see the--and you recently, as you know, 
awarded Eastern Shipbuilding Group to do the OPCs. Do you see 
benefits to the Jones Act in regard to the quality of vessels 
that you are getting? Meaning because of these companies' 
efforts to build domestic vessels and just making sure we have 
a robust defense industrial base, do you see benefits to the 
Coast Guard, to the Government, and the American public as a 
result of that?
    Admiral Zukunft. Congressman, absolutely. I have been to 
Bollinger Shipyard as well. And even in this job market today, 
I wouldn't call it jobs, I would call it skills. And there are 
still certain skills that are lacking in this country if we 
ever found an opportunity where we need to increase our 
shipbuilding capacity, but it is imperative that we continue to 
retain these skills and, more importantly, continue to build 
these skills as a maritime nation.
    Mr. Graves of Louisiana. Thank you. I will move on a little 
bit, but stay in the shipbuilding realm. The Coast Guard 
authorization bills, the last few of them have included 
provisions that require that smaller fishing vessels now comply 
with the standards of different classification societies. As a 
result of that, in Louisiana, the second biggest commercial 
fishing industry in the United States, we have not seen new 
vessels being built, none, because in many cases they are 
telling us it is cost-prohibitive.
    I have got concerns about two different things there:
    One, whether those standards are appropriate for fishing 
vessels.
    Number two, NIOSH, National Institute for Occupational 
Safety and Health, provides accidents per region for different 
incidents that happen on fishing vessels. However, it is not 
broken down by the type of fishing that is being done. And so I 
am a little bit concerned that this data is not properly 
conveying the information that we need. For example, you know, 
is it the ``Deadliest Catch'' folks that are truly running into 
the most accidents or problems, or is it ``Swamp People'' that 
actually don't really use vessels that are classified. But in 
any case, I was looking for another show.
    But does that make sense? I mean, is it shrimp fishing, is 
it king crab fishing, and getting a better understanding of 
which type of vessels or industries are actually having the 
higher number of accidents where perhaps there should be some 
intervention or looking to try and reduce accident rates.
    Admiral Zukunft. First of all, before there is any 
intervention, we engage with all stakeholders. We have a 
fishery advisory committee that we consult with as well. And 
there are proposed regulations, but, you know, those are being 
held back right now under an alternative safety compliance plan 
and what the impact of that would be.
    My only concern in all of this--and I have worked in both 
fleets--is when we have a gulf fleet vessel be reconfigured and 
now is operating up in the Bering Sea. And so that would be the 
only case. But, as you mentioned, the casualty rates speak for 
themselves. It is a safe fishery in the Gulf of Mexico. At the 
end of the day, you know, we want to not impede their 
livelihoods.
    Mr. Graves of Louisiana. Admiral, I would just appreciate 
if we could get a commitment out of you to work with us on 
finding the right solution there. I am not sure that some of 
the Coast Guard provisions that are in law today are 
necessarily as prescriptive as they should be, based upon the 
different fishing industries we have in different regions of 
the country. And I would appreciate it if we could work 
together with you to try and take a fresh look at that and see 
if we can find the right solution there.
    Admiral Zukunft. Congressman, you have my commitment that 
we will work with the stakeholders and with the fleet owners as 
well.
    Mr. Graves of Louisiana. Thank you. In my last 10 minutes, 
I just wanted to cover the icebreaker. I know that the chairman 
noted icebreaking capabilities. You and I have discussed that 
as well. I think that there is just complete support among the 
members of this committee about our strong concerns about the 
lack of icebreaking capability in the United States compared to 
other Arctic nations.
    We have talked at length about the idea of the Coast Guard 
obviously acquiring additional capabilities, new capabilities. 
And, again, I think everyone here fully supports that.
    The problem that I think most of us see is that there is 
this interim gap where we simply don't have capabilities. If 
there were an incident up there, we have already seen Russian 
aggression up in the Arctic area. Their capabilities, if I 
remember right, are--what is it?--40 times more than we have in 
the United States. Extraordinary difference in capabilities.
    Chairman Hunter noted the need to develop an interim 
strategy while we concurrently work on this long-term strategy 
for acquisition. And I once again would like to reiterate the 
chairman's comments and support for that, but I would like to 
hear a commitment from you that we are going to figure out how 
to work through this and develop an interim strategy.
    And I am not going to dictate any type of a path forward on 
that, but we have got to get interim capabilities, because we 
simply have insufficient capabilities for this interim period 
while we concurrently work on long-term acquisition of an 
icebreaker.
    Admiral Zukunft. My reply to that is we are working with 
one and the only U.S. offeror right now that might be able to 
bridge this gap. But what if we can't meet that requirement, 
then where do we turn to? We may have to look at other sources 
as well if we are, in fact, looking at a lease option.
    But, again, we are fully engaged, ready to sit down with 
the offeror, and put all the pieces on the table of what it 
would take to make sure that this vessel could meet our 
requirements in the high latitudes.
    Mr. Graves of Louisiana. Admiral, I think every time you 
have come before this committee, this issue has come up. There 
are strong concerns on both sides of the aisle here about this 
interim solution. I think all of us are willing to work with 
you on it.
    But I just want to push again that we need to see some 
substantial progress on finding a path forward for the interim 
solution here. So thank you.
    Admiral Zukunft. Thank you.
    Mr. Hunter. I thank the gentleman.
    The ranking member, Mr. Garamendi, is recognized.
    Mr. Garamendi. Thank you, Mr. Chairman.
    Mr. Graves, I almost was in your district at the shipyard.
    Mr. Graves of Louisiana. No, you were in the district. In 
between. That is right.
    Mr. Garamendi. Your boosterism is appreciated and correct. 
It really was quite an experience.
    Mr. Graves of Louisiana. The nice area was ours, just to be 
clear.
    Mr. Garamendi. Admiral, thank you. Your team did a great 
job on the codel that we did last weekend, the opportunity to 
see the Fast Response Cutter and then also over at Panama City, 
both of them moving along.
    I would appreciate a report on the progress in both, 
particularly the latter, the Offshore Patrol Cutter, where it 
stands. I notice some of your testimony covered it, but if you 
could provide some detail on that in the days ahead, it would 
be much appreciated, or you can give us a quick rundown now.
    Admiral Zukunft. I would be pleased to provide that report. 
And the date to keep in mind is delivery of the first ship in 
the year 2021.
    Mr. Garamendi. 2020 for the Offshore Patrol Cutter?
    Admiral Zukunft. 2021 for the first Offshore Patrol Cutter.
    Mr. Garamendi. Very good. We would want to watch that 
closely and monitor it along and any hiccups or slowdowns. But 
it was impressive to see what was going on there.
    Many, many questions. I want to just take a moment on the 
budget cuts, proposed, $1.3 billion. Please give me the top 
three problems that it would create for the Coast Guard.
    Admiral Zukunft. Well, I would begin with the acquisition 
of our ninth National Security Cutter, because that would be 
removed. We have already awarded long lead time materials.
    Steel is already being cut. We would incur a contract 
penalty and probably would face a penalty in the amount of what 
this offset was designed to provide, half a billion dollars. So 
there is no net savings there.
    It would cut our department's only counterterrorism 
capability. It has taken us the better part of 6 years, using 
Seal tactics training procedures, recruiting the best talent, 
to stand up these teams, and under this proposal we would lose 
that capability as well. And you don't lose these immediately. 
These are people, these are billets, and there are dollar 
figures assigned to them, and they don't leave overnight even 
if you do a reduction in force.
    We enjoy the highest retention rate of any armed service, 
but our servicemembers look to me as though I have broken faith 
as their leader. They look to me as their leader, nobody else. 
That I have broken faith with them. And then what does that do, 
as we heard from the Master Chief, to the men and the women of 
the Coast Guard and to their families that their Commandant 
broke faith? And I will not break faith with our people. But it 
does have an impact.
    Mr. Garamendi. I want to dwell on that for just a moment. 
Chief, you in a conversation indicated that it is important to 
have the men and women of the Coast Guard parallel, be equal to 
the benefits, pays, increases in pay, other benefits that the 
other four branches of the military has. Could you comment on 
that?
    Master Chief Cantrell. Yes, sir. And we do. We follow suit 
with DOD on all pay and benefits entitlements. We are eligible 
to go to their military treatment facilities and all those 
benefits of being an armed service.
    Where I get concerned is we are in a buildup of the 
military, and we are not included in that discussion. We have a 
young man or young woman that is considering joining the armed 
service. If they look to which service, if you would, is being 
invested in, and they don't see the United States Coast Guard 
then they choose not to come to our Service. And that is 
something that as we grow, want to grow over the next few 
years, that talent is out there.
    And we are already in competition with our sister services 
on getting that right talent, and not just recruiting them but 
keeping them in our Service, which is why these other housing 
and medical and child care and those things that some folks 
just don't think about will make them leave our Service. And we 
certainly don't want that. But we want to be part of that 
buildup, sir.
    Mr. Garamendi. I want to come back to that. And the 
chairman mentioned the hearing next week with the four other 
services. Perhaps, Admiral, you need to be invited. So maybe we 
can do some of that.
    Admiral Zukunft. And if I can, Ranking Member, right now 
our icebreaking program, to recapitalize that is being funded 
by the Department of Defense. The Coast Guard is at every 
COCOM. Every geographic Combatant Commander has Coast Guard 
forces chopped to it as well.
    And so yes, we do need to be a part of these discussions if 
we are talking about building the force for the 21st century.
    Mr. Garamendi. When Secretary Kelly was the commander of 
SOUTHCOM, he seemed to think that the Coast Guard was really 
important, but yet it is his budget that takes $1.3 billion out 
of your budget. I suspect he--well, let's hope he still thinks 
that the Coast Guard is important.
    Didn't he say that the southwest border is not along the--
is 1,500 miles south of the United States border?
    Admiral Zukunft. If we talk all borders, our maritime 
borders begin well south and well beyond and actually east and 
west as well, thousands of miles.
    Mr. Garamendi. If you are interdicting drugs off the coast 
of Colombia, what impact does that have in the Guatemala, 
Honduras area with regard to immigration from those countries 
into the United States? Is there an impact?
    Admiral Zukunft. So it is insidious the way this works. 
Colombia, the number one producer of cocaine. I met with 
President Santos 3 weeks ago. Can they cut back coca 
production? Can they step up their efforts? It is moved in bulk 
to Central America. And as soon as it lands in bulk in Central 
America, corruption goes up, rule of law goes down, and those 
who can afford a human trafficker will put their young children 
in a human trafficker to get them into the United States, the 
number one consumer of cocaine.
    So the irony is, it is our consumption that drives the 
shipment that creates this violent situation in Central 
America, and yet now people want to migrate to the United 
States. So this is a--you know, this is much about behavioral 
health as it is about law enforcement interdiction. It needs to 
be a campaign, and we need to tackle both of these.
    Mr. Garamendi. We are going to need to make an argument 
that a wall on the Mexican border isn't going to stop 
immigration or the drug issue. It is going to have to be a 
multiple program, including the Coast Guard in that. We will 
make that argument a little later.
    I do want to go to the maritime--excuse me, not the 
maritime. But, Mr. Szabat, last week we had a hearing on the 
Armed Services Committee with General McDew. I believe you are 
familiar with his testimony in which he spoke to the issue of 
the pending--not the pending, the real problem that exists 
today in the lack of mariners and the lack of ships, both the 
Ready Reserve as well as the MSP. You touched upon that. Is 
there a solution?
    Mr. Szabat. Congressman Garamendi, thank you for raising 
that important issue. Short answer is, yes, there is. And I 
would also say that there is no daylight between us and the 
U.S. Transportation Command on this issue. In many respects, 
the Maritime Administration serves as a component command of 
the USTRANSCOM in providing, you know, 46 of the 61 vessels 
that they need out of the surge fleet.
    Mr. Garamendi. We are aging out both the ships, the Ready 
Reserve ships as well as the sailors on those ships. What do 
you suggest we do about that?
    Mr. Szabat. Well, Congressman, we have a--as I mention in 
my testimony, we are, the Maritime Administration is 
responsible to Congress to come back with a list of options, 
and we owe it to our new political leadership team as they come 
on board to vet those options to determine what the 
recommendations would be. So I cannot speak to our 
recommendations, but I can speak broadly to what the range of 
options are.
    The policy that we have followed for years in the United 
States that we rely on the commercial U.S. merchant marine to 
employ and train enough mariners to serve in both those 
commercial vessels, but also to generate a surplus that we use 
on the Federal vessels to meet our sealift requirements.
    The challenge that we have today is that the U.S. 
commercial fleet is no longer large enough to provide both of 
those needs. So the--one of the two ways forward is, logically, 
to increase the size of the U.S. commercial fleet. From my 
testimony, just by doing the numbers, we estimate we are short 
about 2,000 of these qualified mariners. We need about 40, 45 
additional vessels to do that, so anything that would add those 
45 vessels.
    The two ways that we would do that, one, of course, is the 
expansion of an MSP or an MSP-like program where we include 
vessels not just for their military capability, but for their 
ability to serve in commerce, but also to employ enough 
mariners so that that pool is large enough to meet our national 
security needs.
    The second way, which would not involve a direct subsidy or 
direct stipend to the vessels, would be trade policies. Trade 
policies that would require additional U.S.-flagged vessels, 
whether they are carrying exports, as the bill that you and 
Chairman Hunter have proposed, or bilateral agreements as, for 
example, with China would require a certain number of vessels 
to sail under the U.S. flag. If you take those approaches, you 
could also either reduce or eliminate the shortfall of U.S.-
flagged vessels. And then--so that is one broad category of 
increasing the size of the U.S.-flagged fleet.
    The second category would be to divorce the need for 
mariners from the requirement that U.S.-flagged fleet be large 
enough to employ them. And then the most direct and obvious 
approach towards that would be to have the United States Navy 
or the Maritime Administration employ the additional mariners 
that were needed.
    So right now, we rely on the commercial fleet to provide a 
surplus of 1,300 mariners that we need to draw on within 4 
days, within 96 hours of a full sealift activation. The way to 
divorce that is to say to the Navy or to MARAD: Here are the 
funds for you to employ 1,300 additional mariners plus the 
relief crews that you would need going forward in the sealift.
    So there were many suboptions and variations within that, 
but broadly speaking, those are the options before us to 
address the mariner shortfall and still rely on the U.S.-
flagged fleet and U.S. mariners to meet our national security 
needs.
    Mr. Garamendi. Mr. Chairman, I am way over my time, so 
please excuse me. I am just going to wrap it up here very 
quickly. I would request that General McDew's statement from 
last week's hearing be entered into our hearing record as it 
pertains directly to this need for American mariners both for 
the Ready Reserve Fleet as well as for the MSP. So that would 
be helpful to understand it.
    Also, I draw the attention of the committee to one of the 
solutions that Mr. Szabat spoke to, and that is, to increase 
the size of the American merchant marine fleet. And I have some 
ideas on that, and I have shared that with many of the Members 
already, and that has to do with cargo and it has to do with 
trade negotiations. And for example, if we are going to exploit 
a strategic American resource, such as natural gas and oil, it 
ought to be on American-built ships with American sailors, thus 
providing a solution to the overarching problem at hand here.
    With that, Mr. Chairman, thank you for the additional time.

    [The written statement of General Darren W. McDew, U.S. Air Force 
and Commander, U.S. Transportation Command, from the March 30, 2017, 
hearing of the House Armed Services Committee, can be found on pages 
101-122.]

    Mr. Hunter. I thank the ranking member.
    Let me throw in there too, what General McDew talked about, 
he said TRANSCOM has never looked at the attrition that would 
take place with a full sealift callup when you actually have 
ships sinking. Their numbers do not account for that, and I 
don't think yours do either.
    So they are now modeling what would happen with Korea, what 
would happen with China, what would happen with Russia, or 
whoever, if you actually had to call up everybody to deliver 
gear during wartime, and they are finally using a model that 
brings actual wartime attrition into that. And I hope you guys 
are tied in and in sync with that so that your end numbers 
would come up the same, roughly.
    Mr. Szabat. Mr. Chairman, yes, we are very much in sync 
with them.
    Mr. Hunter. And by the way, I don't want to take--we are 
going to come back around to me. I just wanted to throw that 
out there so that you know what we are looking at.
    With that, I would like to recognize Mr. Mast from Florida.
    Mr. Mast. Thank you. I appreciate that. Hey, as the only 
enlisted man on this subcommittee, I just figured it was my 
duty to harass you for a little while, Master Chief, so I will 
let you have it here.
    I want to get into a little bit into the minutia of your 
force. I suspect you feel that you feel the finest possible 
force out there.
    Master Chief Cantrell. Yes, sir, without a doubt.
    Mr. Mast. Without a doubt. And as we know, no matter what 
happens with cuts, what is asked of you is not going to change. 
People are still going to expect that you step up and meet the 
mission. You would consider that to be accurate?
    Master Chief Cantrell. Yes, sir. We call it the curse of 
Semper Paratus. Our folks will find a way, despite budget 
issues or anything else that is going on. They will find a way 
to make mission. They know what their job is, and it is 
something to marvel at. So yes.
    Mr. Mast. It is kind of a curse in that respect. You know, 
many that have never been a part of the force, they might take 
for granted that the mission gets accomplished because fine 
folks like yourself always do step up and they accomplish that 
mission. So like I said, I want to get into a little bit of the 
minutia of your force. About how many active you have?
    Master Chief Cantrell. Nearly 41,000 active, enlisted and 
officer.
    Mr. Mast. How many cutters?
    Master Chief Cantrell. Oh, gee. Total?
    Mr. Mast. Sure.
    Master Chief Cantrell. A couple hundred.
    Mr. Mast. A couple hundred. How many boats?
    Master Chief Cantrell. Overall?
    Mr. Mast. Yeah.
    Master Chief Cantrell. Several hundred boats.
    Mr. Mast. Aircraft?
    Master Chief Cantrell. Again, several hundred aircraft, 
helicopters.
    Mr. Mast. So what does it really look like to that force 
when you get cut? What does that literally look like to the 
operational ability of each one of those cutters, those boats? 
I suspect most of us can agree saltwater is not something that 
is usually that friendly to the equipment that we go out there 
and field. What actually gets cut? What actually happens to 
your force and your ability to go out there and conduct that 
cursed mission?
    Master Chief Cantrell. Well, maintenance always suffers 
when budget cuts happen, and personnel costs, I mean, those 
things are easy to cut, and they are very expensive. So when we 
scale back on our personnel and we scale back on the 
maintenance that they have to provide, those ships and 
airplanes and small boats get tied up and aren't able to go out 
and make mission. So we make do with what we have, and it adds 
extra burden on the folks that are still left around to 
maintain and do that mission. So they are just--it is added 
workload for them as they will continue to go out and do what 
we ask them to do.
    Mr. Mast. Very good. What happens with your enlist--you 
know, we all know, it doesn't matter, Army, Navy, Marines, Air 
Force, Coast Guard, you got to balance enlistments and 
retirements. What is going to happen with your force if we get 
behind the eight ball in balancing that and your ability to go 
out there and meet the needs of the future?
    Master Chief Cantrell. Right now, we really enjoy a high 
retention rate in the upper 80s, and it is more than any other 
of our services. And I believe it is in large part to just 
people love our Coast Guard mission, they love the way we make 
effort to take care of them and their families, and they want 
to stick around.
    And I will say personally, I joined the Coast Guard 34 
years ago for 4 years, and I am still here, and it is because 
of the mission and the people and what we do that keep our 
people coming back. But we have things like blended retirement 
and things that are on the horizon we have got to pay really 
close attention to as far as retention as we move out over the 
next decade. But I think for today, our force is happy to be 
part of the Coast Guard and will remain happy and will continue 
to reenlist every time they have the opportunity to.
    Mr. Mast. All right. Maybe I am just unique, you know, 
those of us, especially we come from the coastal communities, 
we see it in the port infrastructure, the ship traffic, you 
know, watercraft users, you know, we see your work every single 
day. I appreciate it, and I appreciate your comments.
    I yield back.
    Master Chief Cantrell. Thank you, sir. Thank you for your 
service.
    Mr. Hunter. Mr. Larsen, you are recognized.
    Mr. Larsen. Thank you, Mr. Chairman. Thanks all for coming. 
Oh, there you are. Good. I can see now.
    Admiral, can you--I don't want you to forget that there is 
a maritime border with Canada as well, especially in my 
district, and I want to emphasize that, and the Coast Guard has 
never forgotten that. I hopefully helped you not forget that as 
well.
    Recent challenges we are facing there have to do more with 
Canadian efforts to move oil by pipeline to an expanded 
pipeline in Vancouver, and then it would be put on ships and 
come down through Haro Strait and out to Strait of Juan de 
Fuca, all on the Canadian side. But if something were to occur, 
result in a spill, obviously, the spill would not be limited to 
the Canadian side.
    So I want to know--I would like to know how aware you 
particularly are to this challenge we are facing and what Coast 
Guard is doing about that.
    Admiral Zukunft. Thank you, Congressman. And we have 
regular engagements. We have been having these now for probably 
close to two decades now with Canada Coast Guard, with 
Transport Canada, with the RCMP. But to the specific concern 
that you raise, and especially if it involves tar sands and the 
like, and when that enters a maritime environment, as you well 
know, it sinks. And the oil spill technology is nascent, at 
best, in terms of the ability to remove a product that is 
heavier than water, and now it is spreading throughout the 
environment.
    So it is a technical challenge for us. It is a technical 
challenge for Canada as well. And an oil spill does not respect 
any borders, and for the very reason that you mention. So it is 
a concern for me because of the technology it is lacking. We 
are putting a lot of effort into this oil spill technology, 
working with oil spill response organizations, whether it is 
Canada, U.S. it is a concern, though, in your region.
    Mr. Larsen. Are you doing this particularly to the proposed 
project in Vancouver and British Columbia?
    Admiral Zukunft. We need to--yeah, there needs to be an oil 
spill response plan. There needs to be a contingency plan that 
goes with that. There needs to be a responsible party. Some of 
these governance structures, we have the Clean Water Act, 
Canada does not. Who is going to pay for that removal? So these 
are a whole list of concerns. And then finally, the ability to 
remove it, because that is the--really, the biggest challenge 
that we face right now with these products.
    Mr. Larsen. OK.
    Admiral Zukunft. We are not there yet.
    Mr. Larsen. OK. I would like to do some followup with you 
and your team on that, if I could. I will just note it is 
April, boating season is starting, so your folks will be even 
busier in the Pacific Northwest, and I always appreciate the 
great work that they do both with education of the boating 
community, the kayaking community as well. But it is coming up, 
and I look forward to the Coast Guard working with the 
community up there to maintain the safety of folks out in the 
water.
    Admiral Zukunft. Yeah. Thank you, Congressman. I look 
forward to working with you as well.
    Mr. Larsen. Great. Thanks.
    Is it--sorry, Szabat?
    Mr. Szabat. Yes, sir.
    Mr. Larsen. Great. Thanks. So can you give an update on how 
many outstanding either letters of commitment or loans, title 
XI program has right now?
    Mr. Szabat. When you say commitments for title XI, we have 
at the moment, there are--we have one loan that is in the 
approval--it has been approved and is in the process of final--
of a letter of commitment for us to actually put the money out. 
And then we have three other interested parties that are 
applying for title XI loans.
    Mr. Larsen. OK. Then how about in the outstanding side?
    Mr. Szabat. I mean, that universe of four is our universe 
right now.
    Mr. Larsen. OK. OK. Great. Thanks. And then with regard to 
small shipyards, there has been $177 million over the last 8 
years, 6 or 7 years, allocated for small shipyard grants, 
including some in my district, including some around the 
country. None of the shipyards in my area were able to get--
meet the standard last--in the last go-round, but I think there 
was $9 million total, if I am not mistaken. Is that right?
    Mr. Szabat. That is correct, sir.
    Mr. Larsen. OK. And then the proposed budget proposes zero 
this particular program out. Is that correct? Do I understand 
that?
    Mr. Szabat. The administration has not submitted a full 
fiscal year 2018 budget proposal yet, sir.
    Mr. Larsen. All right. Well, if it is anything like the 
Obama administration, it will be zeroed out, and then we will 
have to put money back into it.
    I think that if I got my numbers right as well on small 
shipyards, again, $4.9 million in 2016 funding nine projects. 
But I understand, was there nearly $100 million or so in 
requests in 2016?
    Mr. Szabat. Congressman, in your typical year, we are going 
to get somewhere between 10 and 15 times the request, you know, 
oversubscription.
    Mr. Larsen. In a dollar amount?
    Mr. Szabat. Yeah. So in a dollar amount from, you know, if 
it is a $10 million program, we will get $100 million or more 
in requests.
    Mr. Larsen. Yeah.
    Mr. Szabat. And part of that is limited by the fact that 
the recipients know the program, know that our awards are 
generally in the $1 million range, so that is what they are 
asking for. You know, if we had an unlimited amount, obviously 
they would be asking for more money.
    Mr. Larsen. Sure. And I am not going to assume all those 
requests are perfect or the best request, but certainly some of 
that--it is certainly more than what is usually allocated. I 
guess the point I want to make is that this is a program where 
there is not just a demand. Demand is infinite, as they say. 
There is a need, and it does exist and it continues to exist 
for smaller shipyards around the country and not just where I 
am from.
    So as we move forward to the budget cycle, I certainly will 
be watching this particular program very closely.
    Mr. Szabat. Congressman, thank you for drawing attention to 
the program. Your interest is noted, and of course, I will be 
carrying that back to the Department of Transportation.
    Mr. Larsen. I am sure they are waiting with bated breath to 
hear. Thank you very much.
    Mr. Hunter. I thank the gentleman.
    Mr. Weber for 5 minutes.
    Mr. Weber. Thank you, Mr. Chairman.
    Mr. Szabat, is that how you say that?
    Mr. Szabat. Yes, sir.
    Mr. Weber. Pronounce it for me.
    Mr. Szabat. Szabat.
    Mr. Weber. Szabat. OK. You may know I represent the gulf 
coast of Texas over Louisiana, that other foreign country, and 
the Texas A&M Maritime Academy is on Galveston Island in my 
district. We are very proud of that academy and the work going 
on there, but we are challenged by the limits on their 
shipboard training capacity. I don't know how familiar you are 
with the ongoing program there. Do you know that program? You 
know about it?
    Mr. Szabat. Yes, sir.
    Mr. Weber. OK. Good. We appreciate the support MARAD gives 
us, provides to the academy. However, our training vessel, 
General Rudder, is just too small. In fact, we are forced to 
outsource the shipboard training portion of our program to 
other, what I call the other lesser State maritime academies.
    And while we appreciate that support that those academies 
provide to us, the cost to our academy and our cadets is pretty 
substantial. Our superintendent, new superintendent, Rear 
Admiral Mike Rodriguez, tells me that the cost to the academy 
of outsourcing that shipboard training is more than $2.7 
million this year, and that doesn't even include travel cost 
for the cadets and the faculty or the staff.
    So in your view--and I am glad to hear you say you are 
going to carry a message back to the DOT, but we want you to 
take it to the guys that are going to make America great again 
and see how much stroke you have. In your view, what are the 
next steps toward ensuring that--you are making a note of that. 
I see that, ``take to Donald Trump.'' What are the next steps 
in ensuring that each State maritime academy, not just A&M in 
Texas, but that each maritime academy has shipboard training 
capacity to fill their missions? What does that take?
    Mr. Szabat. Congressman, you raise a very good and a very 
complicated issue. This is one that both the State maritime 
academies and the Maritime Administration have been wrestling 
with now for some years. I mention in my testimony, past 
practice has been for the Federal Government almost always to 
surplus vessels in the National Defense Reserve Fleet to 
provide vessels to the State maritime academies for training.
    Nowadays, if we were to pursue that option, it would be 
very, very expensive to take an old T5 tanker, for example, and 
convert her into a vessel that would meet modern safety of life 
at sea standards, would be about as expensive as purchasing a 
newly built vessel in a U.S. shipyard. And both of them are--in 
a tight budget environment, they are both very costly.
    Complicating that factor. So right now we have--putting 
aside Great Lakes Maritime Academy under freshwater, which has 
issues of its own, you have five State maritime academies 
essentially sharing four large ships, because as you note, the 
General Rudder----
    Mr. Weber. Say that last line again.
    Mr. Szabat. Five State maritime academies essentially 
sharing four large ships. As you note, the General Rudder is 
not a large ship.
    Mr. Weber. Yeah.
    Mr. Szabat. And Texas A&M is the fastest growing and will 
have a need for a large ship going forward.
    What complicates this, from my perspective, is the two 
ships with the largest training capacity, the Empire State at 
SUNY Maritime and the Kennedy at Massachusetts Maritime, are 
the two oldest ships and the two ships that are slated to age 
out first, so that there is some--there is a time pressure on 
all of us to identify what the solution is, not just for Texas 
Maritime, but for all of the State maritime academies going 
forward.
    Mr. Weber. Well, I appreciate that. We want to know, are 
you--do you get to have any input with the Office of Management 
and Budget, OMB, at all?
    Mr. Szabat. It is correct to say, Congressman, that we have 
an input, but I would go back to Congressman Larsen's comment 
and say: I am sure they are waiting for my input with bated 
breath.
    Mr. Weber. Well, now, I gotcha.
    Let me jump over to you, Admiral, if I may. My District 14 
in Texas, starting in Louisiana and going down not--to 
Freeport, has five ports, more than any other Member of 
Congress. Sixty percent of the Nation's jet fuel is produced in 
our district. It is energy. It is just absolutely used.
    The Port of Beaumont, as you may know, moves more military 
personnel and equipment than any other port in the United 
States, and that does not include the use of the ship channel 
in my five ports, by the way. We have the Sabine-Neches 
Waterway that feeds the Port of Port Arthur and Port of 
Beaumont. Are you familiar with that area?
    Admiral Zukunft. Congressman, I am, and in fact, I went out 
to Cheniere LNG 2 years ago----
    Mr. Weber. OK.
    Admiral Zukunft [continuing]. Before that facility came 
online. And we are starting to see an increase in shipping 
traffic at a brandnew facility as well.
    Mr. Weber. Sure. Well, we would love to see--we have got 
two Chiefs Reports, you know, on file, if you will, with the 
Army Corps. We would love to see both the Sabine-Neches 
Waterway dredged out and the Port of Freeport as well. So we 
have got channel improvements on the board.
    Do those impact the Coast Guard's ability--when we can't 
get the Sabine-Neches Waterway dredged to the appropriate depth 
in Freeport, does that impact your ability to carry out your 
mission? You talked about it earlier.
    Admiral Zukunft. Precedent does not--we certainly have a 
responsibility to maintain aids to navigation in these 
waterways, mark where the good water is, where it isn't. But if 
it is dredged, then we can anticipate to see increasing 
shipping traffic.
    Mr. Weber. Absolutely.
    Admiral Zukunft. And then it becomes a traffic management 
concern for the Coast Guard.
    Mr. Weber. OK. Before I yield back, Mr. Chairman, I want to 
note that we have two LNG plants in our district. We are the 
13th largest exporting district in the country out of 435 
Members of Congress before our 2 LNG plants come online, which 
is just almost any day now. And we have a third LNG plant that 
has applied for permit and on the drawing board.
    Mr. Chairman, thank you for the time. I yield back.
    Mr. Hunter. I thank the gentleman.
    Master Chief, it is back to me now, and then we will go to 
Mr. Garamendi when he gets back. I have got--I just want to run 
this by you, because you are probably the most deeply in tune 
with the men and women of the Coast Guard, what they are doing, 
how they live, how their healthcare is, what they eat, how they 
go to school, so let me ask you this.
    Would you say that the men and women of the Coast Guard, 
when it comes to operational tempo, housing, healthcare, and 
mission are more aligned, and I am going to use in this 
instance, the Navy, and I am going to read off some 
comparisons. Do you think that your men and women of the Coast 
Guard are more aligned with the Navy or the United States 
Citizenship and Immigration Services?
    Master Chief Cantrell. Neither. I don't think we are 
aligned with the Navy or with----
    Mr. Hunter. Does the United States Citizenship and 
Immigration Services have base housing?
    Master Chief Cantrell. No.
    Mr. Hunter. Do you have base housing?
    Master Chief Cantrell. Yes, sir.
    Mr. Hunter. OK. Do you get BAH?
    Master Chief Cantrell. Yes, sir.
    Mr. Hunter. They don't. The Navy does. The Navy has base 
housing.
    How about are you on TRICARE, or are you on some other kind 
of civil----
    Master Chief Cantrell. TRICARE.
    Mr. Hunter [continuing]. Healthcare? You are on TRICARE, as 
is the Navy.
    How about CBP, Customs and Border Protection? Do you think 
that the way that your bases are set up, your operational 
tempo, your base housing, your healthcare, is it more in line 
with the military or is it more in line with CBP?
    Master Chief Cantrell. With the military.
    Mr. Hunter. So FEMA. Is it more in line with FEMA or the 
Department of Defense in the military?
    Master Chief Cantrell. Military.
    Mr. Hunter. We can go through this. Federal Law Enforcement 
Training Center, United States Immigration and Customs 
Enforcement, ICE.
    TSA. Are you more in line with TSA or the military?
    Master Chief Cantrell. Military.
    Mr. Hunter. OK. I think you see my point here, Commandant, 
and I will switch to you. You--it seems like we are getting--
what we are getting hung up in is would you rather be in the 
budget pocket of OMB that rules you with an iron fist and 
treats you as not like a military service to where the plus-up 
that is happening right now with this administration does not 
even mention you. All right.
    You are talking about budgets, or where do you fit as an 
operational unit, basically, right? And I think we are getting 
those two things mixed up. Where would you best fit, if you had 
your druthers? And I understand you have the first Secretary of 
Homeland Security that knows, no joke, ran SOUTHCOM, who worked 
with Coast Guard every day, especially after the Navy left, 
Coast Guard became the Navy for him in Southern Command, and 
basically you were the assets for that combatant command in 
that area.
    You have John Kelly right now as your Secretary. There is 
nobody better, could be than Homeland Security Secretary for 
the Coast Guard's budget and for just knowing what you all do, 
and you are still at a sustainment budget. That is with the 
best Secretary in the world in U.S. history for Homeland 
Security is in there right now, and you are at a sustainment 
budget and not mentioned with the other services, right?
    Where--explain to me the differences between where you want 
to sit budgetarily and where you think that you fit in when it 
comes to your mission, your tempo, your base housing, your men 
and women, and what you do for this country, national 
securitywise.
    Admiral Zukunft. I would just begin with an annually 
recurring $2 billion acquisition and construction budget, $2 
billion. That is not a lot of money in the Pentagon. We need 5 
percent growth in our annualized operation and maintenance, 
recurring 5 percent growth. We are bringing new assets on 
board, and it is great that our acquisition budget is being 
held up. We can't lose sight of the outyear sustainment cost of 
that.
    As a Service Chief--and I sit with all the members of the 
Joint Chiefs and with the chairman and we help craft a national 
military strategy, the 4 plus 1 that addresses North Korea, 
Russia, China, Iran, the Mideast. It doesn't address the 
Arctic. It does not address the Western Hemisphere.
    So I look at where the other services are and then where 
are they not and then where do our authorities resonate the 
most, and I have extreme agility. I don't have to go through an 
ops step, I don't have to go through a tank, I don't have to 
write a dep board. I just move our ships because I am also the 
operational commander for the Coast Guard.
    I would lose all of that authority if I became a very small 
component within the Department of Defense. I would much rather 
be the largest component within the Department of Homeland 
Security. There will never be a perfect fit. With all of our 
other statutory authorities, there will never be a--we are a 
regulatory service. I doubt the Secretary of Defense wants to 
be dealing with boating safety. He has got higher priorities.
    So we always have this regulatory--and a lot of other 
authorities as well. But our best fit today, Chairman, is with 
the Department of Homeland Security, but we have got to speak 
for what our needs are. Part of it is in our culture. We come 
from a culture of austerity and a culture of offsets, and we 
need to think of being in a culture of prosperity and growing 
and not offsetting the Coast Guard, and that is just as much a 
responsibility of mine as it is for our Service Secretary. And 
as you mentioned, we have a Service Secretary who gets it, and 
this is a time for us to come out swinging.
    Mr. Hunter. I mean, you are talking to a U.S. marine here, 
and they used to--the Marine Corps used to brag about doing 
more with less. You had 9/11 where operational tempo for 
everybody, including the Coast Guard, skyrocketed, and they 
finally realized we can't do as much with less.
    They are now asking for the moon, and if they get a little 
bit less than that, then they are happy with it, and if they 
have to get what they had last year or just a very small plus-
up, they can make do. But your funding requests and the 
President's funding request in OMB does not match your op tempo 
and does not match your acquisitions.
    If you were in the Department of Defense, I think it would 
match that. You would be given what you needed to accomplish 
the missions that are statutory for the U.S. Coast Guard. I 
think you are kind of stuck somewhere in the middle right now. 
And I think, if you are going to stay in Homeland Security, 
then you should get more DOD funding and take on more of a DOD 
role.
    If you go to DOD, you are not going to lose your other core 
competencies that are regulatory as opposed to warfighting, but 
if you stay out of DOD, then you will lose that warfighting 
edge. I think the best analogy that I have read from an article 
written by the U.S. Naval Institute is you would never send 
LAPD to Fallujah, but you can take National Guard from Fallujah 
and put them in L.A. If there is riots, same with Katrina. The 
military has the ability to come in and do a lot of the natural 
disasters and humanitarian work that the Coast Guard does. You 
would team nicely with the Navy as opposed to losing your 
warfighting capability but keeping those regulatory 
capabilities in Homeland Security.
    I think this is something--I mean, this kind of--people 
have been talking about this forever, and I--once again, I 
think you are in the best position you can be in with the 
Secretary of Homeland Security and this President, and yet you 
are not seeing--you aren't seeing the rewards from that like 
other services are. So there has got to be a disconnect, and I 
think that that disconnect's name is OMB.
    Would you like to comment on that?
    Admiral Zukunft. Well, how did we get to where we are 
today?
    I will go back over the last 5 years, you know, since BCA 
came into effect, and we have been funded in our operations and 
maintenance budget below the BCA floor. So as we put our budget 
together, we are directed to identify a 5-percent excursion 
from what is already a minimalist budget, and now take 5 
percent off of that as well. And we have done this iteratively 
for the last 5 years.
    I am not aware of my Service Chiefs, as they are doing 
their budget bill, say, well, now whack everything off the top. 
In fact, they are getting supplemental funding through OCO.
    Mr. Hunter. In OCO funding.
    Admiral Zukunft. And so if we just stop with these offset 
drills that we do year in and year out, we have squeezed 
everything out of the Coast Guard. The last time we went 
through this, I am tying up ships and I am grounding airplanes, 
because I have already taken everything else out of it. I have 
shut down pharmacies, I have shut down clinics, I have shut 
down galleys that affect quality of life at our field units. 
And every year we go back to say we need 5 percent more, and I 
can't continue to operate that way.
    So one, yeah, we need to change the rule set. This is vital 
to national security. We can't offset national security. 
Someone is going to pay the price for it, and I am not willing 
to pay the price. What has helped us, Chairman, is the work 
that you have done, and it has been Congress who has restored 
the Coast Guard, and we will continue to work these 
relationships.
    We have an opportunity with this Service Secretary, who is 
already engaged at the highest levels, as we look at sustaining 
the Coast Guard in 2018, but we need to do more than just 
sustain. That keeps us on life support. Now we need to grow the 
Service and not continue to be in the ICU on life support.
    Mr. Hunter. Last question then. How then do you reconcile 
wanting a plus-up like the other services are now getting and 
knowing that you are not going to get it because of OMB? How do 
you reconcile those two things?
    Admiral Zukunft. Well, that is predecisional right now, and 
so we will see how this plays out.
    Mr. Hunter. OMB, first off, they weren't going to leave you 
sustained. They were going to cut you massively, right. So now 
they are back to sustainment. But if you were part of the 
Department of Defense, you wouldn't be seeing that. You would 
be seeing more money.
    So how do you--so how do you say that we fit the best in 
the organization that keeps cutting us so we can't do our job? 
I just don't think it--it doesn't make sense to me. So how do 
you reconcile that?
    Admiral Zukunft. Again, we are an instrument of national 
security. We cannot see these iterative cuts from the top.
    Mr. Hunter. But you are not funded as an instrument of 
national security.
    Admiral Zukunft. And these are the dialogues that we are 
having right now, you know, with our department, and so we 
don't find ourselves surprised when we see a passback of this 
magnitude.
    Mr. Hunter. Is it possible to be included in defense 
discretionary funding and still be under Homeland Security?
    Admiral Zukunft. That is the option that we are exploring 
right now.
    Mr. Hunter. Say it again?
    Admiral Zukunft. We are exploring that option right now.
    Mr. Hunter. What would it take to be considered non--or 
defense discretionary?
    Admiral Zukunft. Defense discretionary. That, I don't know. 
I mean, it would probably take authorization language to be 
able to do that.
    Mr. Hunter. That is law?
    Admiral Zukunft. Law. To fence off our budget so it does 
not become subjected to nondefense discretionary offsets.
    Mr. Hunter. What if there were strings attached with that 
where if you are considered defense discretionary and you get 
extra money, that that money is put towards those capabilities, 
which are national security related? Would you have a problem 
with that?
    Admiral Zukunft. I would not. What we do today or every 
mission set that we do, all 11 of them touch upon national 
security.
    Mr. Hunter. All right. Thank you.
    Mr. Garamendi, you are recognized.
    Mr. Garamendi. Mr. Chairman, your discussion here is an 
extremely important one, and it seems to me the solution lies 
with us. OMB has done its thing, and that is fine. They can 
suggest, but we are the ones that are actually going to write 
the appropriation as well as the budgets. And you and I have, 
for the first time, I think, in a long, long time, you and I 
also sit on the Seapower and Projection Forces Subcommittee of 
the Armed Services Committee. And as members of that committee, 
I think we have an opportunity here to achieve what you said in 
your last couple of sentences, and that is to work with the 
Department of Defense budget so that some portion of that plus-
up, that additional money, is available to meet the needs of 
the Coast Guard, the national security issues of the Coast 
Guard, not degrading in any way the national security issues 
dealing with drug interdiction. But also, you are deeply 
engaged in what we might call specific defense issues in the 
Persian Gulf, for example, and other places.
    So I think we have an opportunity in that--in our role on 
the House Armed Services Committee to see that there is a 
certain level of funding, if it is $54 billion or whatever the 
additional funding is, that it becomes available to the Coast 
Guard for a couple of things, and they are on my mind, that the 
men and women of the Coast Guard have the same benefit package 
that the men and women of the Department of Defense have so 
that those needs, and that is housing and all of the rest of 
it.
    Secondly, that there is money for the ongoing development 
of the icebreakers, not one but three that we need to build in 
order to meet the needs that we have talked about so many times 
in the Arctic so that we have set in place in that Department 
of Defense, National Defense Authorization Act, and in the 
appropriations and money necessary to carry that out. And the 
other--and to provide specific money for those things that are 
specific for the military side of national defense, so that we 
can parcel out of the budget, whether it is 4 percent or 5 or 
10 or 15 percent of your budget and say, OK, here is the OCO 
funding that you are doing in the Persian Gulf or wherever else 
that might be.
    So I think we have the opportunity, perhaps unique at this 
particular period of time, because, Mr. Chairman, you and I are 
on that Seapower and Projection Forces Subcommittee, and we 
already have a relationship with the Navy with regard to the 
Coast Guard.
    I have asked for some specific information, Commandant, for 
the scheduling of the money necessary to carry out the Coast 
Guard program year 1, 2, 3, 4, and so forth, and I want to 
collapse it into 3 years. You can do it, right, if you had the 
money?
    Admiral Zukunft. Big if. Yes, sir, I am all in.
    Mr. Garamendi. We understand the difficulties, sir.
    I want to move to what is, I guess, my--I don't know, it 
has become an obsession, how to build ships in the United 
States, I mean, oceangoing ships.
    So, Mr. Szabat, if we could, I want to go through a series 
of questions with you. You have already spoken to the 78 
vessels and probably going down. Has MARAD conducted a formal 
analysis of the needs and shortfalls it sees in the military 
sealift for both ships and seafarers?
    Mr. Szabat. Congressman, yes, we have.
    Mr. Garamendi. Can you broadly describe it, what it is that 
you--what your analysis is?
    Mr. Szabat. Yes, sir. So just building off of my testimony, 
and thank you for raising this because from our perspective, 
this is the single biggest issue that the Maritime 
Administration and our counterparts in sealift and military 
side are facing.
    So we have identified a shortfall, as I said of about 2,000 
mariners, of qualified available mariners in the commercial 
sector, which equates to, roughly speaking, a shortfall of 
about 45 vessels sailing under the U.S.-flagged fleet if we 
continue to rely, as our policy has been and as it makes sense 
to have a policy to do, to rely on the U.S.-flagged fleet to 
provide those mariners.
    So the first answer to your question, sir, is, yes, we have 
done the analysis, we have identified the shortfall, and we 
identified how many vessels would have to be employed, would 
have to be added to eliminate that shortfall.
    However, it does not address a point that Chairman Hunter 
had made. We are doing this all under the sealift requirements 
that are established by the Department of Defense, and those 
requirements, as the chairman mentioned, at the moment leave 
off two things. One is that they assume that all vessels would 
be available 100 percent of the time if they are sailing, you 
know, commercially or activated in wartime, and we know that 
even in peacetime, no vessel is available 100 percent of the 
time. There is down time, there is scheduled maintenance, and 
there is some percentage of breakdowns.
    But the other important issue that the chairman identified 
for going forward for the next war plan is that up until this 
point, really since the end of World War II, we have always 
been able to assume no attrition with the merchant marine in 
our future conflicts, which is a bloodless way of saying that 
we have been able to assume that we would never have ships 
torpedoed or just bombed or destroyed by missiles and we would 
not have fleet merchant marines killed.
    Mr. Garamendi. OK. I am going to move along here.
    Mr. Szabat. Yes, sir.
    Mr. Garamendi. We are getting near the end of all of this. 
Can you provide us with both of those scenarios, that is, a 
peacetime scenario of what our needs are and then a wartime 
scenario?
    Mr. Szabat. Sir, I cannot provide you with the wartime 
scenario until we get that from the Department of Defense. I 
can certainly provide you with the information on the current 
scenarios that we plan for.
    Mr. Garamendi. Very good. I would appreciate it if you 
could do that.
    As you know, I have introduced a bill, H.R. 1240, which 
would expand the U.S.-flagged fleet by requiring a percentage 
of U.S. crude oil and LNG on American-flagged vessels. We 
talked to you about this. Would this make a difference?
    Mr. Szabat. Congressman, yes, it would.
    Mr. Garamendi. How and why?
    Mr. Szabat. So the Government Accountability Office 
indicated that, looking at your proposal, that by around 2025, 
it would be adding about 100 ships sailing under the U.S. flag 
for exporting LNG. If I recall correctly, your proposal would 
be for 30 percent of that to be sailing on U.S. flag, so that 
would add the equivalent of 30 vessels to the U.S.-flagged 
fleet, which is a huge cut into our deficit of about 45 vessels 
that we have today.
    Mr. Garamendi. Is that for the LNG?
    Mr. Szabat. That is just for the LNG side.
    Mr. Garamendi. Crude oil, have you done an analysis of what 
it would mean for crude oil?
    Mr. Szabat. A crude analysis, if you will, Congressman.
    Mr. Garamendi. Very good. I will take that.
    Mr. Szabat. So currently, we export the equivalent of about 
one large tanker a day of crude oil, and the challenge here is 
projecting with the volatility of prices. But if you assume 
that that stays roughly equal, you are looking at another, you 
know, 30 or so vessels being employed a year if they were all 
U.S. flagged. So again, 30 percent of that is another 9 or 10 
vessels that would be added to the U.S.-flagged fleet.
    Mr. Garamendi. So how many, once again, for LNG?
    Mr. Szabat. For LNG, you are looking at 30.
    Mr. Garamendi. And crude?
    Mr. Szabat. And again, a crude estimate for crude is about 
another 10, as things stand today.
    Mr. Garamendi. Another----
    Mr. Szabat. Ten.
    Mr. Garamendi. Ten.
    Mr. Szabat. Yeah.
    Mr. Garamendi. All right. So some 40 ships that could be 
built if we were to pursue such a policy?
    Mr. Szabat. That is what the numbers would say, yes, 
Congressman.
    Mr. Garamendi. We heard from Mr. Khouri the issue of 
bilateral negotiations. I think he mentioned China as an 
example of a bilateral negotiation. They are set to require 
that all of the importation of LNG and oil be on Chinese ships. 
Some of that may be American crude oil and American LNG. I 
suppose since the President is so intent on bilateral 
negotiations and he is such a good dealmaker, maybe it could be 
done.
    I think we have covered it here. You did talk about adding 
sailors with regard--on the military budget, so that is already 
covered here. I think we have covered those particular issues.
    The Ready Reserve capitalization. General McDew said that 
he would look for ships that are in the worldwide fleet that 
might be able to replace the Ready Reserve. Would those be 
American-built ships?
    Mr. Szabat. The ships in the worldwide fleet, Congressman, 
no, sir. And the challenge with that is just the ships that we 
have that were built in American shipyards, I think the 
youngest ship that we have that is sailing currently under a 
foreign flag is about 34 years old.
    So to General McDew's testimony, as I have heard him talk 
about, is a mix of having some new built in U.S. shipyards, 
coupled with purchasing foreign-built vessels that would--much 
younger vessels than the average age of our Ready Reserve force 
or surge fleet ships today, which are nearly 40 years old.
    And I think just to underscore General McDew's point, there 
has never been a time like there is today in terms of if you 
want to purchase ships in the international market on the 
cheap, now is the time to do that. There is a huge surplus on 
those vessels right now.
    Mr. Garamendi. We would be purchasing foreign-made ships 
for a tradition of American-built ships in the Ready Reserve? I 
think it has been more than the--is it also the law?
    Mr. Szabat. So, Congressman, yes and no. Yes in the sense 
that we would be building foreign-flagged ships, and yes in the 
sense that the law currently requires us to have them built in 
U.S. shipyards. No in the sense that the vast majority of the 
ships that we have in the Ready Reserve force today were not 
built in U.S. shipyards. They were brought on board under 
exceptions or before the law was put in place.
    Mr. Garamendi. So exception by exception and ship by ship 
not built in the United States.
    Mr. Szabat. So again, I don't want to speak for General 
McDew, but from what I have heard from his testimony, he is 
looking for a cost-effective mix, recognizing that it is hard 
to build--any proposal to replace, to recapitalize all 61 ships 
we have in the surge fleet, MSC has 15, we have 46, would be 
hard to justify for new construction for all 61 of those 
vessels, especially since all of those vessels, once built, 
would be going into reserve and would not be going into any 
sailing service.
    So I believe, again, his proposal or his vision is to have 
that mix of having a good mix of vessels that are built in U.S. 
shipyards as well as vessels that could be purchased 
inexpensively overseas to recapitalize the fleet. One way or 
the other, the fleet does need to be recapitalized.
    Mr. Garamendi. Well, I for one await his strategy. And I 
would appreciate your analysis of his strategy and what it 
means for lost jobs in American shipyards. Apparently, it would 
not mean for lost sailors on the ship or mariners on the ship, 
but it would be a problem.
    Mr. Chairman, you have already dealt with the issue of the 
maritime academy ships, which is an ongoing issue that we have, 
so I won't go to that.
    The training vessels. We have heard about the small 
shipyard grant program. I will say that I was pleased to see 
how well it operated in the Bollinger yard as well as in the--
one of the other yards.
    So with that, I think I have covered it. There may be some 
additional questions that I would like to put for the record at 
some time. And I thank--Chief, Admiral, Mr. Szabat, thank you 
so much.
    Mr. Hunter. I thank the gentleman.
    I think we are moving forward. I think this is a great time 
for the Coast Guard. I think that the American people don't 
know how blessed they are to have leaders like you leading 
America's Coast Guard. And if we can get you in the right place 
with the right amount of money, you can do even greater things 
than you are doing now. So thank you very much for your service 
and leadership in being here.
    Mr. Szabat, thanks for not leaving early. I appreciate it. 
Maybe and hopefully in the next couple of months we will have 
more than acting administrators and so forth there. So thanks 
for being here.
    And with that, the subcommittee stands adjourned.
    [Whereupon, at 4:28 p.m., the subcommittee was adjourned.]
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