[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
THE STATE OF THE U.S.-FLAG MARITIME INDUSTRY
=======================================================================
(115-32)
HEARING
BEFORE THE
SUBCOMMITTEE ON
COAST GUARD AND MARITIME TRANSPORTATION
OF THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
JANUARY 17, 2018
__________
Printed for the use of the
Committee on Transportation and Infrastructure
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Available online at: https://www.govinfo.gov/committee/house-
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transportation
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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
Panel 1
Rear Admiral John P. Nadeau, Assistant Commandant for Prevention
Policy, U.S. Coast Guard:
Testimony.................................................... 3
Prepared statement........................................... 42
Responses to questions for the record from Hon. John
Garamendi of California.................................... 45
Rear Admiral Mark H. Buzby, U.S. Navy (Ret.), Administrator,
Maritime Administration:
Testimony.................................................... 3
Prepared statement........................................... 51
Responses to questions for the record from Hon. John
Garamendi of California.................................... 61
Panel 2
Matt Woodruff, Chairman, American Maritime Partnership:
Testimony.................................................... 21
Prepared statement........................................... 65
Eric P. Ebeling, President and Chief Executive Officer, American
Roll-On Roll-Off Carrier Group, on behalf of USA Maritime:
Testimony.................................................... 21
Prepared statement........................................... 72
Aaron C. Smith, President and Chief Executive Officer, Offshore
Marine Service Association:
Testimony.................................................... 21
Prepared statement........................................... 77
Responses to questions for the record from Hon. David Rouzer
of North Carolina.......................................... 84
Matthew Paxton, President, Shipbuilders Council of America:
Testimony.................................................... 21
Prepared statement........................................... 86
Bill Van Loo, Secretary Treasurer, Marine Engineers' Beneficial
Association, on behalf of American Maritime Officers; Masters,
Mates and Pilots; and the Seafarers International Union:
Testimony.................................................... 21
Prepared statement........................................... 95
PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS
Hon. John Garamendi of California................................ 39
SUBMISSIONS FOR THE RECORD
Rear Admiral John P. Nadeau, Assistant Commandant for Prevention
Policy, U.S. Coast Guard, responses to requests for information
from Hon. John Garamendi of California and Hon. Garret Graves
of Louisiana................................................... 13
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
THE STATE OF THE U.S.-FLAG MARITIME INDUSTRY
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WEDNESDAY, JANUARY 17, 2018
House of Representatives,
Subcommittee on Coast Guard and Maritime
Transportation,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:06 a.m. in
room 2167, Rayburn House Office Building, Hon. Duncan Hunter
(Chairman of the subcommittee) presiding.
Mr. Hunter. The subcommittee will come to order. Good
morning.
The subcommittee is convening today to review the state of
the U.S.-flag maritime industry, including the U.S. merchant
marine.
The Jones Act was enacted in 1920 as part of the Merchant
Marine Act. It encouraged a strong merchant marine to support
both national defense and economic security. For a vessel to
move merchandise or passengers between two points in the United
States, also called the coastwise trade, a vessel is required
to be owned by a U.S. citizen, U.S. flagged, built in the
United States, and crewed with U.S. mariners.
There are over 41,000 U.S.-flag vessels in the U.S.
coastwise trade moving 115 million passengers and nearly $300
billion worth of goods between U.S. ports on an annual basis.
The use of a U.S. flagged, built, and crewed vessel in the
domestic coastwise trade can be waived by the Secretary of
Homeland Security in two ways under section 501 of title 46,
United States Code.
The first waiver authority, outlined in subsection 501(a),
is at the request of the Secretary of Defense for the purposes
of national defense. The second, outlined in subsection 501(b),
is also for the purpose of national defense; however, MARAD is
required to make a determination that no U.S. vessel is
available. The subsection 501(a) waiver authority was used by
the Secretary of Homeland Security for responses to Hurricanes
Harvey, Irma, and Maria. U.S industry raised concerns regarding
the use of the waiver authority, as did we.
Out of the over 41,000 U.S.-flag vessels, there are only 82
vessels active in international commerce, down from 850 vessels
35 years ago. The United States has cargo preference
requirements where a percentage of U.S. Government cargo,
including international food aid, be transported on U.S.-flag
vessels. One intention behind the requirement is to ensure a
merchant marine--both vessels and mariners--remain available
and capable to provide sealift capacity in times of conflict or
national emergencies. Out of those 82 vessels, 60 vessels
participate in the Maritime Security Program which provides an
annual stipend to military-useful oceangoing vessels to support
military sealift operations.
So, without the MSP we would have 20 vessels that can
operate without a stipend, basically.
In order to maintain the capabilities necessary to assist
military operations and continue to conduct coastwise trade
operations, the U.S.-flagged fleet needs a strong, proficient
pool of U.S. merchant mariners. Officials in the administration
have reported to the committee that the active pool of U.S.
merchant mariners is decreasing due to retirements and low
recruitment rates.
To work to address any potential gaps, members of this
subcommittee support increasing the opportunities for military
mariners to transition into civilian mariners. Mariners in the
Armed Forces have skills that can successfully translate into
the civilian workforce. Military mariners just need to know
about what civilian opportunities are available and how they
can attain the proper certificates during their military career
to successfully transition into a civilian career.
The subcommittee held two listening sessions in 2016 that
included military and civilian participants to discuss what
needs to be done to create a more seamless process for military
mariners to transition into a civilian mariner career. In
addition, the Department of Defense reported that in 2016 and
2017, the Navy, Army and Coast Guard participated in MERPAC
meetings, conferences, and working groups to make further
progress on this issue.
I look forward to discussing where we are now and the
importance of ensuring the United States has a strong, stable
merchant marine. The civilian mariner workforce is facing a
potential shortage and military mariners can be a way to bridge
any gaps, as well as provide an ongoing source of retired,
experienced military mariners.
I thank our witnesses for being here today and I look
forward to hearing their thoughts on issues regarding the state
of the U.S.-flag maritime industry.
And I will now yield to Ranking Member Garamendi.
You are recognized.
Mr. Garamendi. I thank you, Mr. Chairman, I appreciate your
testimony and laying out the issues before us. It has been
almost 3 years now since we last convened an oversight hearing,
although we did have the listening sessions on the status of
the U.S. maritime industry. Thank you very much for acting on
my suggestion, and scheduling this morning's hearing, as this
is a perfect opportunity to assess where the industry stands
and gather suggestions for issues that this subcommittee can
take up in the second session of the 115th Congress.
We already realize several items deserve our dedicated
attention. But by no means do these items represent the entire
universe of issues and challenges.
First and foremost, we cannot become complacent in our
defense of the Jones Act and our efforts, along with many other
organizations, some of whom will be testifying this morning, to
raise public awareness of the need for and the many benefits
that flow from this longstanding maritime policy that has stood
for nearly a century.
Second, we need to address the need to find new cargoes for
the U.S.-flag vessels in both the international and coastwide
trades. More cargo means more ships, and more ships mean more
good-paying maritime jobs that both directly and indirectly
support the hundreds of thousands of U.S. workers and bolster
national security. And, by the way, I have got some ideas on
how we can do that. The export of oil and natural gas give us
such an opportunity. But more about that later.
To this end, we need better enforcement of the existing
cargo preference requirements, especially for the food aid
shipments. We need to utilize new trades, such as the export of
crude oil and natural gas. We also need to look creatively at
how best to recapitalize our Nation's Ready Reserve, Military
Sealift, and Maritime Security Program Fleets.
In addition, if there is going to be an infrastructure bill
this year--and I hope there is--we need to make sure that the
infrastructure needs of our domestic maritime industries are
not left behind at the dock. Moreover, we have to begin shaping
a tractable plan to recruit and retain a new generation of
licensed and unlicensed seafarers. The crew and cadre of
mariners, which have served commerce and national security of
the United States so admirably since the end of the Vietnam
War, is quickly aging out, along with the ships.
It is imperative that the Federal Government, along with
its partners in the State and maritime academies and maritime
unions, develop a comprehensive plan to ensure that the absence
of qualified and experienced mariners in the workforce does not
become an Achilles heel limiting our military sealift
operations and our national security.
I am sure that our witnesses here this morning will offer
their own suggestions. And with that thought in mind, I welcome
the witnesses and look forward to engaging in the discussion.
Thank you, Mr. Chairman. I yield back.
Mr. Hunter. I thank the gentleman from California. We will
have two panels of witnesses today. On the first panel we will
hear from Rear Admiral John Nadeau. Yes, you like that? Got it
right--Assistant Commandant for Prevention Policy for the
United States Coast Guard.
And Rear Admiral Mark Buzby--Mark ``Buz'' Buzby--U.S. Navy
Retired, Administrator, Maritime Administration.
Admiral Nadeau, you are recognized to give your statement.
TESTIMONY OF REAR ADMIRAL JOHN P. NADEAU, ASSISTANT COMMANDANT
FOR PREVENTION POLICY, U.S. COAST GUARD; AND REAR ADMIRAL MARK
H. BUZBY, U.S. NAVY (RET.), ADMINISTRATOR, MARITIME
ADMINISTRATION
Admiral Nadeau. Good morning, Chairman Hunter, Ranking
Member Garamendi, and distinguished members of the
subcommittee. I am honored to be here today to discuss the
state of the U.S. maritime industry and the Coast Guard's role
serving that industry.
Mr. Chairman, on behalf of all the Coast Guard's men and
women, thank you for your leadership and strong support of the
Coast Guard.
The Coast Guard offers enduring value to our Nation. It is
the only branch of the U.S. armed services within DHS. It is
uniquely positioned to secure our ports, protect the maritime
transportation system, and safeguard America's national and
economic security.
As the Commandant said, years of fiscal constraint and
increasing mission demands have eroded our ability to fully
execute our suite of missions and remain ready to effectively
respond to all contingencies. We need to make investments to
rebuild and sustain Coast Guard capability and capacity,
including our marine safety programs.
The Nation's Marine Transportation System includes 25,000
miles of waterway traveled by several thousand vessels serving
361 U.S. ports every day. This system supports more than
250,000 American jobs and over $4.5 trillion of economic
activity every year. This system connects American consumers,
producers, manufacturers, and farmers, domestic and global
markets, and provides access to our Nation's vast natural
resources.
The Coast Guard ensures this system remains safe, secure,
and resilient. A strong U.S. maritime industry enables us to
protect U.S. interests and project power overseas. Ninety
percent of the military equipment used by the Nation's
warfighters is loaded in U.S. ports and delivered to theater on
Coast Guard-inspected U.S.-flag vessels that are operated by
Coast Guard-licensed, credentialed U.S. mariners.
Our support to the maritime industry is critical to our
Nation's military readiness and national security. Our robust
population of U.S. mariners is needed to maintain an effective
military sealift capability.
Coast Guard and industry are working together to mitigate
challenges facing mariners today. Our advisory committees
contain experienced merchant mariners, educators to the
maritime academies, and industry representatives. They help us
identify strategies to address challenges as they emerge.
Congress clearly recognizes the importance of having a
sufficient number of qualified mariners. DoD and DHS are
working together to implement the Military to Mariner program,
and make it easier for military members to receive credit for
experience, training, and qualification received while in the
military. We have partnered with the Navy to establish a
credentialing program and improved military member awareness of
civilian-mariner opportunities. We have cut through redtape,
and we continue to work closely with our fellow armed services
to make improvements to this program.
We know a healthy mariner workforce requires a safe,
secure, and competitive U.S. maritime fleet. The industry faces
a number of challenges beyond those of the workforce, including
an aging population of strategic sealift vessels. At the same
time, the complexity and pace of change in the industry have
never been greater. Industry is integrating new technology into
vessels and facilities to improve efficiency and effectiveness,
to increase capacity, and to reduce the environmental
footprint. This activity is making ships, facilities, and
ports, and the entire system more complex.
The use of third parties has helped industry and the Coast
Guard evolve to keep pace with these changes. Today, like other
flag states around the globe, the U.S. relies far more on third
parties than ever before. The vast majority of vessels in our
sealift fleet use third parties for many of their compliance
activities. The third-party programs have gone from an option
to a necessity.
The benefits of third parties are well documented. A study
by the National Academies of Sciences that was directed by the
subcommittee and published in 2016 concluded that our third-
party programs provide additional technical expertise, promote
innovation, and reduce cost for the U.S. Fleet.
However, third-party programs are not infallible. Third-
party programs require effective Coast Guard oversight and
clear accountability to realize these benefits. The Coast Guard
has the authority and competency we need. We will instill
better governance, we will improve our policy and training, and
we will provide increased accountability. We are also
supporting a safe, secure, and competitive U.S. Fleet.
In closing, a healthy U.S. maritime industry and a robust
pool of civilian mariners are vital to our Nation's economic
prosperity and national security. The Coast Guard's regulatory,
credentialing, and compliance programs are evolving to keep
pace with industry change. We are focused on ensuring every one
of our actions sustains a safe, secure, environmentally sound,
and productive operation of the Marine Transportation System
without imposing unnecessary costs or burdens.
Mr. Chairman, we thank you for this subcommittee, for your
strong leadership and support of the Coast Guard. I ask that my
written statement be entered into the record. Thank you.
Mr. Hunter. Without objection.
Thank you, Admiral.
Admiral, you are recognized.
Admiral Buzby. Good morning, Chairman Hunter, Ranking
Member Garamendi, and distinguished members of the
subcommittee, thank you for inviting me to discuss the state of
the U.S. maritime industry and the Maritime Administration's
programs that support it.
Our country's military relies on U.S.-flag ships, crewed by
volunteer American civilian mariners to move our combat forces'
equipment and sustainment whenever and wherever it needs to go.
Three-quarters of MARAD's budget goes to programs that help
to ensure that America has a viable commercial merchant marine,
one with enough ships and enough qualified merchant mariners to
meet our needs in peacetime and, critically, our emergency
sealift during times of crisis.
Unfortunately, over the past few decades, the U.S. maritime
industry has suffered significant losses, as companies, ships,
and jobs moved overseas. Cargo is one of the main factors
determining the number of ships in the U.S.-flag fleet.
Since 1992, the number of U.S.-flag ships has dropped from
183 ships to 82 now. This leaves us at the lowest number in the
deep-sea fleet in recent history. That has, in turn,
contributed to a loss of jobs available to U.S. citizen
mariners and international trade. Today, due to the
historically low number of ships, MARAD is concerned that there
might not be enough qualified mariners to sustain a prolonged
activation of the sealift fleet. I am working closely with
USTRANSCOM, the U.S. Navy's Military Sealift Command, the U.S.
Coast Guard, and the commercial maritime industry to develop
plans to maintain an adequate number of trained mariners.
This coordinated effort includes advancing the Military to
Mariner initiative, making it easier for transitioning veterans
to obtain their mariner credentials based on their service
experience. That is, however, only a small part of the
solution. To reverse this trajectory, my initial priorities as
Maritime Administrator have been to leverage the current
mainstays of the merchant marine--the Jones Act, cargo
preference, and the Maritime Security Program--and to rethink
how we address long-term strategic issues facing the industry.
The Jones Act ensures the U.S.-flag fleet in domestic trade
by requiring American built, owned, and crewed vessels to
transport passengers and cargo between U.S. ports.
Cargo preference laws, which require shippers to use U.S.-
flag vessels for oceanborne transport of certain cargoes
purchased with Federal funds, help ensure that the U.S.-flag
fleet has enough cargo to remain viable in international trade.
The Maritime Security Program, which supports 60 militarily
useful commercial vessels and their crews, along with a global
network of intermodal facilities, provides funding to help
offset the higher costs operating under the U.S. flag.
Continuing, strengthening, and adding to these three
pillars, the Jones Act, cargo preference, and the MSP, is
essential for maintaining the economic competitiveness, safety,
and productivity of the U.S. maritime transportation system.
They bolster the U.S.-flag fleet's ability to support the
national and economic security needs of the Nation.
MARAD provides funding support for mariner training
programs at our Nation's flagship maritime training facility,
and my proud alma mater, Kings Point, as well as the six State
maritime academies across the Nation. Virtually all entry-level
officers with unlimited U.S. Coast Guard licenses graduate from
these schools. These merchant mariners support the peacetime
U.S. maritime transportation infrastructure and serve our
Nation during military operations worldwide, in national
emergencies, and humanitarian crises.
Part of our assistance to the six State maritime academies
comes in the form of training ships, two of which are more than
50 years old. MARAD also manages and maintains the bulk of our
Nation's surge sealift capacity found in the Ready Reserve
Fleet. These 46 ships with an average age of 43 years are well
past their design service life. MARAD is working with the U.S.
Transportation Command and the U.S. Navy to determine how to
best recapitalize the RRF to ensure the continued readiness of
these vessels.
That is a brief overview of the priority action items that
I am involved in at MARAD. I appreciate the subcommittee's
continuing support for maritime programs, and will be happy to
respond to any questions you and the members of the
subcommittee may have this morning.
I ask that my written testimony be entered into the record.
Thank you, sir.
Mr. Hunter. Without objection.
Thank you, Admiral.
And Admiral, I will start by recognizing myself. Let's play
this out and set the scenario. So let's say that country X goes
off, and it is a real war, not counterinsurgency, or
counterterrorism. And you got to bring a bunch of stuff really
fast. Lay it out for us right now. What would move and what
wouldn't move? What is your guess on how many ships out of the
RRF we can actually get up and going. How would that look?
Right now.
Admiral Buzby. As we speak, as of this morning, the Ready
Reserve Force readiness was at 98 percent, which means that our
metrics that we use to measure how ready those ships are to----
Mr. Hunter. So let's break it down into a real scenario.
You told me you are doing a test right now.
Admiral Buzby. Correct.
Mr. Hunter. You are doing a callup on one of the biggest
Ready Reserve ships that you have, they have 5 days----
Admiral Buzby. Four of them, actually.
Mr. Hunter. Four of them.
Admiral Buzby. Right.
Mr. Hunter. And they have 5 days to prep.
Admiral Buzby. Correct.
Mr. Hunter. Your 98 percent is not coming from that. So if
you were to just guess and say in your mind, how many of your
ships could you get underway, loaded to the brim with ammo,
food, supplies, and everything that you would need? You could
get 98 percent of the Ready Reserve Fleet right now moving?
Admiral Buzby. Within the 5-day period, yes, sir. I have
good confidence that, as I said, 98 percent of those--we would
be able, within the 5-day period, to light off, crew up, and--
--
Mr. Hunter. When does that fall off and we start losing
that capacity? I mean if we don't do anything, you have got
steam engine Ready Reserve ships.
Admiral Buzby. Right.
Mr. Hunter. You have mariners that don't know how to work
steam engines any more, or parts. So you are at 98 percent,
which is awesome. But at some point I am guessing it goes to
95, 98, 85.
Admiral Buzby. Sure.
Mr. Hunter. Right?
Admiral Buzby. Yes, sir.
Mr. Hunter. When does that drop-off happen?
Admiral Buzby. Without funding commensurate with the age of
those ships as they become more difficult to maintain, I would
say we could start seeing that happen at any time, going
forward. You know, as I said, these ships are 43 years old; 24
of them will be 50 years old here by 2020. And each year that
an old ship gets older, it becomes more challenging to
maintain, and we won't be able to guarantee that readiness.
Mr. Hunter. How long does it take to figure out whether a
ship can be fixed up, or whether you just have to build a new
one and scrap it?
Admiral Buzby. We----
Mr. Hunter. That analysis.
Admiral Buzby. Actually going on board and doing the site
surveys and kicking the steel and that sort of thing, you know,
to do an entire survey of the fleet? We are constantly doing
that. But I would say to do a real focus survey, probably
several months to really get through----
Mr. Hunter. And you are going to be doing that?
Admiral Buzby. We are doing it constantly, because that is
part of our recapitalization effort, is to look and see what
ships potentially have----
Mr. Hunter. You will be able to come back to us in 6 months
or 4 months and say these are how many ships we need to build,
these are how many ships we can fix up?
Admiral Buzby. Conceivably, we could. Yes, sir.
Mr. Hunter. OK.
Admiral Buzby. Yes, sir.
Mr. Hunter. Well, let me switch really quick. I got 2
minutes.
Let's talk people. Let's talk first, Admiral Nadeau, it was
Navy in the beginning that had the big issue from transferring
a mariner's occupational specialty and certifications over to
the civilian world, right? The Navy had a lot of issues with
that. The Army was actually pretty good at it. How is it going
with the Coast Guard?
Admiral Nadeau. Sir, we have made a lot of progress, as
well. The Coast Guard has----
Mr. Hunter. Do you mind pulling the microphone closer to
you? I have got artillery ears.
Admiral Nadeau. Is that better?
The Coast Guard has two pieces to this. One is providing
experienced military members that can apply their skill sets
and the training to merchant credentials. We also have, of
course, the credentialing program. We are the ones that issue
those credentials.
Working with MERPAC and others and our partners in DoD and
in DOT, we have come up with about 88-some-odd recommendations
that we have been working to implement. And we have made
significant progress.
Around this time we have approved about 200 different
courses from different services. About 60-some-odd of those are
Coast Guard courses that allow the members to take again their
direct training they have had while in uniform and apply that
to obtaining a merchant mariner credential.
Mr. Hunter. So you are helping the Navy walk through this,
too?
Admiral Nadeau. Yes, sir. We have developed a crosswalk
that allows members to look again at their training and their
qualifications in the Service, and how they can apply that
directly to merchant mariner credentials.
Mr. Hunter. What is MARAD doing on the same line?
Admiral Buzby. Mr. Chairman, I cochair a subcommittee of
the Committee on the Marine Transportation System, along with
Commander of Military Sealift Command, which has members of all
of the sea services--NOAA, Army Corps of Engineers, anybody
that has mariners, Government mariners--to identify what are
the impediments, what are the roadblocks to keeping those folks
from transitioning cleanly using the Coast Guard certified
courses into the commercial maritime.
We have identified a lot of roadblocks and are--that is
actually a fairly active committee that we are--that is
producing some good results.
Mr. Hunter. Good. I look forward to hearing about it. I
have got one last question, if the Members will indulge me.
You have about 40,000 ships that are doing not coastwise
trade, but inland waterways trade, mostly.
Admiral Buzby. Jones Act trade, yes, sir.
Mr. Hunter. Admiral Nadeau, you are the head of prevention
policy, right?
Admiral Nadeau. Correct.
Mr. Hunter. So I would guess that means preventing bad guys
from doing bad things too on the waters. All 40,000 of those
ships have been approved by the U.S. Coast Guard, right? I mean
they have passed their certifications, they are crewed by
Americans, and they are American-made ships. You got American-
crewed, Coast Guard-approved crews and ships operating on the
rivers throughout all the ports in the entire country.
In your professional opinion as a military man, both of
you, would you like to see foreign ships in the inland
waterways? Chinese, Pakistani, name it.
Admiral Nadeau. Sir, I would say that you are absolutely
right. Right now, in the current laws and regulations, all of
those ships are U.S.-built, operated by U.S.-licensed, U.S.----
Mr. Hunter. From a homeland security point of view, how
important is it to you that you have U.S.-crewed, Coast Guard-
certified ships and crews operating where there is no
oversight, where you are going into middle America with
thousands of ships every day carrying chemicals, all kinds of
cargo? How important is it to you and homeland security?
Admiral Nadeau. Security is very important, sir. And you
are right, that would be a different paradigm, should that not
all be U.S. mariners, U.S. citizens on board those ships.
Admiral Buzby. Sir, you hit the nail on the head. Those
mariners are a de facto layer of our national security. If they
see something, they will say something. They know what is
normal on the waterways.
Mr. Hunter. And the Jones Act makes that possible, period.
Admiral Nadeau. Yes, sir.
Mr. Hunter. Thank you very much. I yield to the ranking
member, Mr. Garamendi.
Mr. Garamendi. Thank you, Mr. Chairman.
Well, let's start with Russia. There is legislation passed
by the Russian Parliament that requires that all ships
transiting the Northern Sea Route--that is, along the 4,000
miles of the Russian Territory--be Russian flagged, with a
small exception. Is that a Russian Jones Act? Either of the two
of you would like to respond?
And, if so, does this also indicate that our own Northern
Sea Route should have a similar program?
Admiral Buzby. I will take a crack at that first. Like
about 44 other countries around the world that have cabotage-
type laws, from at least my knowledge of what the Russian
proposal is, it sounds like a cabotage-type law, which, for all
the various same reasons why we want to have a Jones Act and
think a Jones Act is important----
Mr. Garamendi. Now, the United States is now an exporter of
LNG and oil. Would it be in the American interest in creating
cargo to have some percentage of that export of LNG and oil be
on American-flagged and American-built ships? Would that create
a cargo opportunity for the American maritime industry?
Admiral Buzby. Yes, sir. I think it would. You know, cargo
is king, as we have said, and as you all have pointed out. What
generates cargo generates ships and, therefore, generates jobs.
So, you know, where we can generate cargo in international
trade, that would be ultimately likely to the benefit of our
industry.
Mr. Garamendi. That now brings me to the issue of cargo
preference enforcement, which is a MARAD program--to some
extent also the Coast Guard.
The 2008 NDAA [National Defense Authorization Act] directed
MARAD to promulgate regulations to strengthen its enforcement
of cargo preference requirements. Since then, MARAD has been
unable to clear a proposal through the OMB office.
Admiral Buzby?
Admiral Buzby. Sir?
Mr. Garamendi. You are new at this. Are you going to give
it another shot? And are you capable of overcoming OMB, with
our help?
Admiral Buzby. That is a good question, sir, which we will
have to kind of see how that plays out.
Mr. Garamendi. Let the last question go. But the first
question, are you ready to proceed?
Admiral Buzby. Sure. The first part, sir, our cargo
preference office actually is very heavily engaged on both
sides, both with shippers and with the Government agencies that
ship cargo preference cargo. And we are working with them
actually pretty well to ensure that currently the 50-percent
cargo preference requirement is being met.
And where it is not specifically being met for a particular
cargo, we are doing what I would call a catchup procedure,
where if it is through the nonavailability of a U.S.-flag ship
to carry a particular cargo, we can make an exception to allow
that cargo to go on a foreign-flagged ship. However, another
cargo that is being shipped by an agency that may not be
required to be cargo preferenced, that gets made to be cargo
preference, so it catches up and fulfills the requirement.
Mr. Garamendi. Well, the cargo preference laws are more
than just food aid. They are also material goods that have been
financed by the Federal Government. So it is a very broad array
of things.
Admiral Buzby. Yes, sir.
Mr. Garamendi. The more active and the more aggressive you
are in investigating, quantifying, and reporting on these cargo
opportunities and missed opportunities, the more likely it is
that we will develop the cargo. If you are not willing to do
that, and if you are not active--and I hope you would be very,
very aggressive at this--it will move us towards more cargo,
rather than less.
So, we will, I hope--and certainly I think the chairman
would agree with this--we will hold you accountable for your
efforts and for your activity and investigating, quantifying,
and fully developing the information about all cargo that is
impelled on American ships.
Admiral Buzby. Yes, sir.
Mr. Garamendi. You ready for that?
Admiral Buzby. Absolutely, sir.
Mr. Garamendi. Good. I want to go to the issue of the Outer
Continental Shelf.
Admiral Nadeau, I want to talk to you about your B-1 visas.
Now, this is going to be a subject from the second panel, but
since you won't be around after the second panel, or for it,
let's get into it.
The Coast Guard issues B-1 visas for foreign mariners to
operate on either American or foreign ships, providing services
in the Outer Continental Shelf. How many visas have you issued?
Admiral Nadeau. Sir, I think that the Coast Guard issues a
letter of nonavailability to the vessels. We don't actually
issue the visas. So we do issue letters of nonavailability to
foreign-flagged vessels that are majority foreign-owned. Under
the Outer Continental Shelf Lands Act, OCSLA, there are
provisions in there----
Mr. Garamendi. The visas start with your letter, don't
they?
Admiral Nadeau. Yes, sir. That is correct.
Mr. Garamendi. OK. Then how many letters?
Admiral Nadeau. I would have to take that back and get you
exact numbers. I wouldn't want to make an estimate here. We
deal with those routinely. They come in, they are evaluated, we
issue them. And then, if there is a change in ownership or
change in operations, those operators are supposed to come back
to us to have them reevaluate it. But I can----
Mr. Garamendi. When can you get the information for me?
Admiral Nadeau. I would hope that we have good records,
sir, but it would be as soon as possible.
Mr. Garamendi. This afternoon?
Admiral Nadeau. I will do my best.
Mr. Garamendi. Good. You are aware that about half the
vessels that provide services to the Outer Continental Shelf,
or the--and inner shelf--are laid up?
Admiral Nadeau. Yes, sir. That is correct. We met with OMSA
last week, and they provided us an update.
Mr. Garamendi. And do you have information on the number of
ships that have foreign mariners, rather than American
mariners, of those?
So if half of the fleet is laid up, why? Is it foreign
competition?
Admiral Nadeau. At this time, sir, my understanding is it
is more because there is not as much activity in the Gulf of
Mexico.
Mr. Garamendi. OK.
Admiral Nadeau. So if we are talking strictly Gulf of
Mexico, my understanding is that the U.S. Fleet, a lot of those
vessels are tied up. I wouldn't have any statistics for the
global fleet.
Mr. Garamendi. I notice my colleague down the dais here
wants to jump in on this. So I guess you are going to be next.
And I would appreciate you jumping in and carrying on this
discussion. It is a big issue, because it not only affects the
mariners, but it affects the entire workforce and the ships.
And I think part of the problem is created by the Coast Guard,
with your letters. We want to get into this in detail.
When you issue a letter, do you also investigate whether
the individual that is working on these ships is qualified?
Admiral Nadeau. Sir, again, we issue a letter to the
vessel, and then that allows them to go out and find qualified
people that meet whatever standards you are trying to fulfill.
So there is----
Mr. Garamendi. You then investigate whether the jobs that
are being made available are filled by qualified foreign
nationals?
Admiral Nadeau. Foreign-flagged vessels are subject to the
manning as specified by the flag that they fly. Just like U.S.
vessels, we determine the manning to the state--we have to make
sure they meet SCCW, but for a lot of jobs in question, they
are back deck, where they have specialized skill sets.
Mr. Garamendi. So we may have foreign mariners operating in
the Outer Continental Shelf and the inner that may or may not
be qualified under U.S. law. Is that the case?
Admiral Nadeau. Sir, I would say U.S. law provides us to
issue those exemptions, which we issue to the vessel. Then it
is Department of State that issues the visa to the actual
crewmember. And then CBP [U.S. Customs and Border Protection]
handles the entry process as they come into the States.
Mr. Garamendi. But my question goes to the qualifications
of the mariner. Now, if they are American ships and American
mariners, they have to meet a certain qualification, correct?
Admiral Nadeau. That is correct, sir.
Mr. Garamendi. Do these foreign nationals providing these
services, do they meet the same qualifications?
Admiral Nadeau. Probably SCCW, the international
convention.
Mr. Garamendi. They do?
Admiral Nadeau. Yes, sir. For a foreign ship----
Mr. Garamendi. Who is responsible for checking whether they
do or do not?
Admiral Nadeau. The foreign flag? If they are a foreign-
flagged ship, that nation sets the manning and handles the
licensing for----
Mr. Garamendi. So you don't know whether they are qualified
or not.
Admiral Nadeau. As part of our routine port state control
boardings, we do go on board and we check the licensing
certificates and documentation of all members on board----
Mr. Garamendi. We will go into this in more detail.
Unfortunately, you will not be here after we hear from other
witnesses.
I yield back.
Mr. Hunter. I thank the gentleman. Mr. Graves is
recognized.
Mr. Graves of Louisiana. Thank you, Admirals. I appreciate
you being here today. And I want to start on the line of Mr.
Garamendi's line of questioning, which I think is excellent.
Admiral Nadeau, do you know how many countries you have
issued letters to under the waiver program, under the B-1?
Admiral Nadeau. So I think--we issue them to the vessel.
Mr. Graves of Louisiana. Right. I am sorry, yes, the flag
of those nations.
Admiral Nadeau. Off the top of my head I do not, sir. We
will have to try and get----
Mr. Graves of Louisiana. Do you know if there are any
vessels that are flagged from nations that would be considered
perhaps unfriendly to the United States that are operating in
the OCS?
Admiral Nadeau. Unfriendly? Like North Korea or Venezuela?
Mr. Graves of Louisiana. Take your pick.
Admiral Nadeau. I really doubt that, but I can provide
those numbers for you, or do my best to get those answers.
Mr. Graves of Louisiana. If we had a submarine, a Russian
sub sitting off the coast, a few miles off our coast, would
that concern you?
Admiral Nadeau. Absolutely.
Mr. Graves of Louisiana. Do you think it is possible that
some of these vessels perhaps are out there doing intelligence-
collecting and other things under the auspices of operating in
our OCS?
Admiral Nadeau. I guess it is possible.
[The U.S. Coast Guard has submitted the following in response to
the preceding line of questioning from Congressman John Garamendi and
Congressman Garret Graves. Congressman Garamendi asked how many Letters
of Non-Applicability the U.S. Coast Guard has issued:]
The Coast Guard issues Letters of Non-Applicability (LOAs) to
foreign owned or controlled foreign-flagged vessels that wish
to operate on the Outer Continental Shelf. An LOA is evidence
of a vessel's compliance with OCSLA and it authorizes the
foreign-flagged vessel to engage in OCS activity (i.e., those
activities pursuant to OCSLA). The Coast Guard has issued 459
LOAs since 2006. Of those 459, only 373 remain valid.
[Congressman Garret Graves asked if the U.S. Coast Guard knows if
there are any vessels flagged under the flag of nations considered
unfriendly to the United States operating, based on a LOA on the U.S.
Outer Continental Shelf (OCS):]
The Coast Guard has not issued an LOA for any Venezuelan
registered vessel or chartered Venezuelan vessel, nor has the
Coast Guard issued an LOA for a North Korean registered vessel
or chartered North Korean vessel.
Mr. Graves of Louisiana. It is possible. Yes, Admiral, just
this week I had a meeting with a number of constituents. In
fact, probably over 100 of them, expressing concern over the H-
2B visa program, a program whereby, if you are unable to get
domestic workforce, you can bring in foreign workforce to
address surge capacity in different industries. It has to be a
temporary basis, you have to demonstrate there is not American
workforce available.
In this case, it is clear--and I want to follow the
question that Mr. Garamendi asked--it is clear that there is
additional work in the OCS that American-crewed, American-
built, American-flagged ships could be doing. Otherwise, the
foreign vessels wouldn't be there, of course.
So there are numerous vessels tied up at Port Fourchon and
a number of other ports along the gulf coast that could be
doing this work. So I want to be very clear that there is a
strong sensitivity on our part, and I think I speak for many
members of this committee, that the perhaps lackadaisical
enforcement by our Federal Government--and I know there are
other agencies involved--is having an impact on American
workforce, on American investment, and, most importantly, just
on the families, on families right here in the United States.
I think that every person I know in south Louisiana knows
someone or has personally been impacted or laid off or lost
their jobs in these industries. And so, to watch these foreign
vessels come in is especially concerning.
Admiral, the CBP has admitted a lack of enforcement in the
OCS, has admitted violations and lack of enforcement. What is
the Coast Guard's position there? I mean do you think that it
is appropriate to have some of these foreign vessels operating
just miles off our coast, when we have domestic vessels that
are capable of doing this same work in compliance with the law?
Admiral Nadeau. Sir, we try to apply the laws and
regulations as they are given to us, and try to establish a
level playing field. There is tension between the citizenship
and under OCSLA and with the U.S. flag and trying to provide a
competitive fleet. We are in discussions about this with OMSA,
we had a discussion about it last week. We look forward to
working with industry to try and resolve some of that.
We know we have an extremely capable U.S. Fleet. Over the
past few years there are some amazing vessels that have been
built down in the Gulf of Mexico that can do amazing things. We
are committed to work with industry, with Congress, to try to
find out how we can best employ those vessels to serve the
Nation.
Mr. Graves of Louisiana. Well, I want to urge you to do so
with some urgency. As you know better than I, this isn't just
about employment and economy. This has national security
implications, when this snowballs, as you well know. And I
think it is important that we do keep this on the front burner.
Changing gears, Admiral Buzby, were you consulted whenever
the administration proposed to waive the Jones Act for some of
the hurricane response activities?
Admiral Buzby. No, sir.
Mr. Graves of Louisiana. You were not. Now, that is not
required under the law, as I recall, but I think it----
Admiral Buzby. Not under the 501(a) statute, which was used
to grant those waivers. There were some other waivers that were
discussed earlier in support of Hurricane Harvey that went
through the 501(b) process that MARAD was consulted in. Our
role in that process is to provide CBP with a list of U.S.-flag
vessels that could be available to meet the needs with the
waivers being requested for----
Mr. Graves of Louisiana. As I recall, there were one or two
vessels perhaps that took advantage of those waivers. And when
I went down to Puerto Rico with Chairman Shuster, Ranking
Member DeFazio, and others, it was clear to me after seeing it
myself, after talking to folks, that the real challenge was the
internal infrastructure, perhaps the distribution system within
Puerto Rico that was significantly damaged, rather than
actually getting the cargo there. In fact, the ports were
clogged with cargo. Is that a fair assessment?
Admiral Buzby. That is my understanding of the situation,
yes, sir. From talking with all of the Jones Act shippers--and
I talked with all of them--they could not push any more cargo
into the ports. They literally could not get it outside the
gates.
Mr. Graves of Louisiana. So strong concern that we waived a
law. And again, I think it was a solution searching for a
problem. And I think that in many hearings that we had in this
committee and roundtables we had in this committee, that that
issue has come up.
And certainly I understand that there are a lot of
considerations at play when something like that happens. I
certainly would request that you weigh in and share your
expertise in this area in the event that something like this
happens in the future. We are going to continue to be working
to perhaps legislate a little bit better approach, perhaps, to
disasters in the future.
Last question. Admiral Nadeau, if you go back and you look
at the FRC, the OPC, and other programs that you are running,
that the Coast Guard is running right now, did you have just
one shipyard that bid for some of these boats?
Admiral Nadeau. I am not on the acquisition profession, but
no, I believe there were multiple yards that competed for that
work.
Mr. Graves of Louisiana. And I understand that it is not
your program, specifically, but certainly I think these are
things that most folks--and certainly I think you would have
some awareness of. The yards that are building some of these
boats, do these yards only do Government work?
Admiral Nadeau. The shipyards we are currently using? No,
sir. They also do private commercial work.
Mr. Graves of Louisiana. Do you appreciate the role that
the Jones Act plays in terms of ensuring we have an industrial
base here to ensure that we can build these vessels, that we
can build the latest technology, that we can build the safest,
most modern vessels available for our Coasties, that
relationship between the Jones Act--for example, if you are a
pilot and we said, ``Hey, we need you to come fly a plane once
every 10 years,'' my guess is you are going to say, ``Well, you
know what? I really need to have some type of gap training''
apply in this case. Does that make sense?
Admiral Nadeau. Absolutely. We do rely on the same yards
that use commercial work. We benefit from that tremendously.
Mr. Graves of Louisiana. Great, thank you.
Mr. Chairman, I apologize for going over. I yield back.
Mr. Hunter. I thank the gentleman. Mr. Larsen is
recognized.
Mr. Larsen. Thank you, Mr. Chairman.
Admiral Buzby, I just have a couple questions. They are
both for you.
Admiral Buzby. Sir.
Mr. Larsen. So the President and the administration has ran
on and announced, and rumors are flying as we sit here today
that a $1 trillion infrastructure package will find its way up
here to the Hill, at least principles for a package. And part
of infrastructure ought to be supporting the U.S. maritime
industry.
So my question is for you and if MARAD itself has been
consulted on part of that conversation within the
administration on what parts of the infrastructure package
would best serve maritime. And, if so, what parts?
Admiral Buzby. Thank you, sir. The answer to your question,
the short answer, is yes, we have been involved within the
Secretary of Transportation's office. We have been working very
closely with her staff, who have obviously, then, inputted into
the national strategy. We have made a very strong point that
our ports are our gateways to our economy.
I mean virtually everything in our economy flows through
our ports. Our key gateway ports and then all of our smaller
feeder ports really is where the majority of this Nation's
commerce gets done. And the importance of those ports and the
connections from those ports, via highway, via rail, via
adjacent airports, and via the waterways that we spoke of
earlier, using Jones Act vessels to move that cargo
intercoastal throughout our country are all very, very vital
and need further investment if we want to keep pace with the--
our growth to keep the flow moving.
Mr. Larsen. So perhaps you can't share with us, but are
there specific elements that you at MARAD brought to that
discussion?
Admiral Buzby. We thought that the maritime highway
initiatives was very important. That is, in our opinion, kind
of an underutilized mode of transport in our country that could
significantly impact the highway congestion by removing a lot
of containers that are moved around this country off of there
where it makes sense to, where it economically makes sense.
And we have several operating marine highways in this
country right now that are doing just that. It cuts down on
pollution. Instead of having a whole lot of diesel engines
moving things, you have one diesel engine moving cargo around.
So we think there is great benefit there.
Mr. Larsen. All right. Let me ask about one particular
program. It has been around since 2008 or so, the Small
Shipyard Grant Program. Do you anticipate this year that you
will be tendering grant applications for small shipyard grants?
And do you know yet how much MARAD will have to allocate for
that?
Admiral Buzby. I haven't seen any of the final numbers. I
expect that the program will continue to exist and be utilized.
It is a very popular program. We get roughly about 10 times the
amount of requests for grants, and they are typically small
amounts of money, but they have big impact across the maritime
industry, typically in the maintenance and repair area that are
very critical to maintaining the Coast Guard's vessels, the
Ready Reserve Force vessels, Military Sealift Command vessels.
We all benefit from investments in these small----
Mr. Larsen. I am glad to hear that. In its early life, once
it got started, it did have some struggles staying alive. But
members of this committee have been very strong advocates of
the program, of the Small Shipyard Grant Program. So I was glad
to see the allocation last year, and hope to see continued
support from this administration for that.
Thank you, I yield back.
Mr. Hunter. I thank the gentleman. Mr. Weber is recognized.
Mr. Weber. Thank you. That was a great exchange between
Congressman Garamendi about the B-1 visas. And so, Admiral
Nadeau, my question is--and you may not know the specifics--but
have there been instances where sailors, foreigners on those
vessels--I know you said you issue certificates to the vessel,
but are there any reported incidences where we have discovered
sailors that were not qualified?
Admiral Nadeau. Not to my knowledge on the OCS, no.
Mr. Weber. OK, fair enough. So I think one of the comments
that was made earlier is about the Jones Act and vessels up in
the waterways from the chairman, which I am all about, being
sure that we keep the Jones Act in place and be sure that we
protect the integrity of our country. Have there been any
incidents, Admiral--still with you--where there has been
discovered on the interior waterways--I mean I don't have what
happened, so I am just asking you--foreign-flagged vessels or
sailors that were not qualified?
Admiral Nadeau. Again, not to my knowledge. Those vessels--
and there are thousands of them--are manned, crewed by U.S.
citizens. They are credentialed by the Coast Guard.
Mr. Weber. How many thousands would you estimate?
Admiral Nadeau. In the heartland, it is hard to estimate. I
can tell you, sir, that we are embarking right now on
implementing subchapter M, which includes about 5,500 different
vessels. Then you got to add other vessels. Not just towboats,
but there are many other types of vessels, from pasture
ferries--but it has got to be more than 5,000, probably closer
to 7,000.
Mr. Weber. What is your biggest challenge around the
country? Is it the deep water ports of the West? Is it the Gulf
of Mexico? Where would you say most of your agency's time is
spent?
Admiral Nadeau. Well, distributed across the United
States--and I think that workload is--again, we see it--was a
lot of activity in the gulf coast. Some of that has shifted.
Certainly throughout the heartland, throughout the Marine
Transportation System, the 25,000 miles of rivers and those 360
ports, it is distributed across the country, sir. So it is hard
to say there is one particular area that is more important than
another. We have people----
Mr. Weber. Well, no. I didn't say ``important.'' I said
``activity.'' I chose my words carefully.
Admiral Nadeau. Yes, sir. I would hesitate to say. It
depends on the activity, because we are doing many different
functions and missions. Whether that is vessel inspection,
whether that is, again, the licensing and manning functions,
the investigations piece of this, the port security piece,
there is a lot of different activity, sir, by the Coast Guard
across the entire Nation.
Mr. Weber. Is there a particular product, whether it is
container or bulk, or whether it is tank vessels, is there a
particular product that presents the most problem to you all?
Admiral Nadeau. I wouldn't say there is one that presents a
problem. We established a regulatory regime to address the
challenges, and we have a risk-based, performance-based regime
in place to help make sure that we monitor and address whatever
challenges those might be.
Mr. Weber. Going to the gulf coast, Hurricane Harvey,
which--you guys did a fabulous job, by the way, the first three
coastal counties of Texas, starting at Louisiana, that other
foreign country, and Jefferson County, Galveston County, and
the southern half of Brazoria County. Were you all well
prepared for Hurricane Harvey and that kind of response, or is
there something we could have done better?
Admiral Nadeau. Sir, again, a little bit outside my
wheelhouse, but through talking with my peers, I mean, we are
always looking to improve. I thank you for the compliments to
our fabulous crew we had down there, I am very proud of them.
But we always look to improve, so we will be going through an
after-action process to make sure that we can improve.
Mr. Weber. Fair enough. Yes, I appreciate that.
Admiral Buzby, I am going to jump over to you now, and some
of the other questions.
You weren't consulted by the administration over the waiver
of the Jones Act you said.
Admiral Buzby. It is not required that MARAD be. No, sir.
Mr. Weber. Well, I get that. But we would have appreciated
that, right?
Is there a way or method or mechanism or a--I don't know
what you want to call it--an avenue where, in the future, going
forward, maybe you could establish that and say, hey, look, you
know, guys, going forward we would appreciate if maybe you
might want to check with us. Have you thought about an avenue
for that?
Admiral Buzby. Well, short of changing the statute, there
would be no legal precedent for that.
Mr. Weber. I get that.
Admiral Buzby. However, certainly there is, you know,
informal liaison that can go on. And we had heard that some of
that was occurring.
Mr. Weber. You didn't hear it through Twitter, did you?
Admiral Buzby. No, sir.
Mr. Weber. I am just asking.
Admiral Buzby. I don't tweet.
Mr. Weber. OK. Smart man. All right. Getting--what--and
Admiral, I will stay with you for just a minute--what is--your
opinion, what is the greatest hindrance that we currently faced
to keeping the Jones Act in place and making sure that it does
well for our country? What is the greatest hindrance?
Admiral Buzby. I think it is probably a misunderstanding by
many of exactly the role, the critical role, that the Jones Act
plays. A lot of people, I think, focus on strictly an economic
view of the impact of the Jones Act, and fail to recognize the
significance to national security.
Mr. Weber. Well, I would submit that if we don't have a
good economy then our national security is going to lag behind.
Admiral Buzby. Right, but by economy, you know, it is--I
mean the costs----
Mr. Weber. Sure.
Admiral Buzby [continuing]. Associated with the Jones Act
that people allege that adds to the cost of----
Mr. Weber. Let me jump over--I am a little bit out of
time--to you, Admiral. What is the greatest asset that we have
that is helping us with the Jones Act? What is the best thing
in place? I am going to do the opposite of what I asked him,
what is the greatest hindrance. Now to you, what is the
greatest thing we have making sure that we preserve the Jones
Act?
Admiral Nadeau. That is a tough one, sir. Again, the Jones
Act has been in place for nearly 100 years. And we see many
benefits and many impacts. Should one look to perhaps unwind
some of that, we have to be mindful second- and third-order
effects.
But we see tremendous benefits to the Jones Act, in terms
of safety and equality, the mariners, our industrial base, and
we would just offer that----
Mr. Weber. I am going to come back full circle, and that is
why I was questioning earlier about have we caught any sailors
that weren't qualified on foreign-flagged vessels, because that
would serve as a basis for us to say, look, we want to keep the
Jones Act in place and make sure that we have got American
vessels, make sure that we are doing our job. It is helping our
economy and it is helping our national security. So maybe it is
education, you guys helping educate?
Admiral Nadeau. Yes, sir. Coming back to your question
about mariners, I was answering directly for the Gulf of
Mexico. But we do, as part of our port state control boardings,
we go on foreign vessels, we do assess the competency of the
foreign crewmembers, and we do on occasion find that they are
not meeting the international standards.
Mr. Weber. So what happens with that vessel that you have
issued a certificate or a letter to when they have someone on
board that doesn't qualify?
Admiral Nadeau. We intervene on the International
Convention and ensure that appropriate steps are taken to
correct the deficiencies, whatever they might be.
Mr. Weber. Does that vessel lose its ability to come back
into our area?
Admiral Nadeau. They must take corrective action to bring
it to the proper level of safety before they are allowed to
operate.
Mr. Weber. And who follows up on that?
Admiral Nadeau. The Coast Guard.
Mr. Weber. OK. Thank you, Mr. Chairman. I yield back.
Mr. Hunter. I thank the gentleman. Great, great questions.
I think that is it for this panel. No further questions.
Mr. Garamendi is recognized.
Mr. Garamendi. Thank you, Mr. Chairman. I appreciate the
opportunity for an additional question.
We went round and round on this issue of foreign vessels
operating in the Outer Continental Shelf. It seems to me that
the Outer Continental Shelf Lands Act is very, very clear that
it is a Jones Act region. Is there any doubt about that?
Admiral Nadeau. We have many foreign vessels with foreign
mariners that are permitted to work on the Outer Continental
Shelf, sir.
Mr. Garamendi. So there is doubt as to whether or not the
Outer Continental Shelf is subject to the Jones Act?
Admiral Nadeau. It is subject to the Jones Act if it is
moving cargo that is subject to Jones Act. But a vessel that is
just working out on the Outer Continental Shelf that is not
transferring cargo--can go out and work on the shelf.
Mr. Garamendi. And we are going to go into this a little
more in the second panel, I am sure. But I want to just ask the
question about the letter of nonavailability. That is issued by
the Coast Guard?
Admiral Nadeau. Yes, sir.
Mr. Garamendi. Is there a timeframe in which that letter of
nonavailability is applicable, or is it just available and then
goes on for an unlimited period of time?
Admiral Nadeau. Unless the circumstances change, it is
issued to the vessel based on the ownership of the vessel and
the flag of the vessel. If those conditions don't change, the
letter remains in effect.
Mr. Garamendi. OK. So you issue a letter of
nonavailability, authorizing a foreign-flagged vessel to
operate on the Outer Continental Shelf, correct?
Admiral Nadeau. Yes, sir. It allows them to use foreign----
Mr. Garamendi. OK.
Admiral Nadeau [continuing]. Foreign workers.
Mr. Garamendi. And now we have a situation where some 50
percent of the American vessels that would provide services in
the Outer Continental Shelf are laid up. Is there a
nonavailability today?
Admiral Nadeau. Is your question are there vessels that are
applying for letters of nonavailability today?
Mr. Garamendi. Wouldn't it be appropriate that, since half
of the American vessels are laid up, that there is no question
of availability, and therefore the letters of nonavailability
should terminate?
Admiral Nadeau. Sir, we are applying OCSLA and the domestic
law and statutes as they are presented to us, trying to enhance
a level and fair playing field. But there are some tensions
between, again, the citizenship, and trying to make sure we
recognize that in OCSLA, and then trying to keep our fleet
competitive. There is some tension there.
Mr. Garamendi. OK.
Admiral Nadeau. I would be happy to come back and get a
more detailed brief for you, though, sir.
Mr. Garamendi. I would appreciate that. Thank you.
Admiral Nadeau. Thank you.
Mr. Hunter. Just closing here, I think you heard from quite
a few Members. We have seen the crew lists of some of these
ships, where you have Moldovans, Chechens, Kazakhs, you got all
kinds of people on these ships, and you don't know who they
are.
You don't know who they are, which means the Department of
Homeland Security doesn't know who they are, which means U.S.
Government and the American people don't know who they are,
either. They could be great guys, they could be bad guys. You
don't know, because you issue that letter to the ship and say,
you got to comply now. And if they are a bad actor, they are
not going to comply, but they don't have to worry about it
because you don't check their crews.
And if you have Americans able to do it right now, and you
are having Moldovans and Kazakhs and Chechens out there, you
don't know who is out there on a Norwegian ship. You got a
Norwegian captain, a Norwegian first mate or whatever chief,
then you could have whoever. And we would like to know who is
manning those ships and, at the same time, we are curious as to
why you are allowing them at all, when you have U.S. ships able
to do it.
So at least make it more stringent on them so you have to
say, hey, you have got a terrorist on your ship that is maybe
bad, all right?
So with that, there are no more questions. Rear Admirals,
thank you very much for your time and your expertise and for
being with us today. And with that, we are going to move on to
the second panel. I appreciate it.
[Pause.]
Mr. Hunter. All right, panel two. OK. We are now going to
hear from Mr. Matt Woodruff, chairman of the board of
directors, American Maritime Partnership; Mr. Eric Ebeling,
president and chief executive officer of American Roll-On Roll-
Off Carrier Group on behalf of USA Maritime; Mr. Aaron Smith,
president and chief executive officer, Offshore Marine Service
Association; Mr. Matthew Paxton, president, Shipbuilders
Council of America; and Mr. Bill Van Loo, secretary treasurer
for the Marine Engineers' Beneficial Association and on behalf
of American Maritime Officers; Masters, Mates and Pilots; and
the Seafarers International Union.
Great to see you all here. Thank you for being here.
And Mr. Woodruff, you are now recognized to give your
statement.
Mr. Weber. Turn on your mic.
Mr. Woodruff. Absolutely, sorry.
TESTIMONY OF MATT WOODRUFF, CHAIRMAN, AMERICAN MARITIME
PARTNERSHIP; ERIC P. EBELING, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, AMERICAN ROLL-ON ROLL-OFF CARRIER GROUP, ON BEHALF OF
USA MARITIME; AARON C. SMITH, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, OFFSHORE MARINE SERVICE ASSOCIATION; MATTHEW PAXTON,
PRESIDENT, SHIPBUILDERS COUNCIL OF AMERICA; AND BILL VAN LOO,
SECRETARY TREASURER, MARINE ENGINEERS' BENEFICIAL ASSOCIATION,
ON BEHALF OF AMERICAN MARITIME OFFICERS; MASTERS, MATES AND
PILOTS; AND THE SEAFARERS INTERNATIONAL UNION
Mr. Woodruff. The American Maritime Partnership is the
largest maritime trade association in America, representing
vessel owners and operators, shipbuilders and repair yards,
dredging and marine construction contractors, trade
associations, pro-defense groups, and more.
And I would say that, on balance, the state of our industry
is good. There are bright spots, yet there are also very
significant causes for concern.
There has been a massive recapitalization in our industry
of late. And in some segments, that process is ongoing.
Billions have been invested. We have new tank, container,
offshore service vessels, dredges, towboats and tugboats built
at shipyards all around America, sailing all around America.
Our business tends to run in cycles, and many segments of
the domestic industry have been in a down cycle for some time.
So as I talk about the positive aspects of our industry, we
shouldn't forget that, for many of our companies right now,
even entire segments of our industry, they are having a really
hard time right now.
Despite our challenges, our industry continues to serve its
customers well with vessels that are purpose-built for the
needs of our markets.
The foundation of everything we do is the Jones Act. It
exists to protect America by enhancing our economic, national,
and homeland security. America needs the benefits provided by
the Jones Act as much today as it ever has. Our industry needs
certainty, as we invest in long-life assets. And we know we
will never get that certainty from the marketplace. But we need
regulatory certainty from our Government. We need the Jones Act
to remain the settled law of the land.
Hurricanes were a big issue for us in the past year, and
our people rose to the challenge. They implemented their
hurricane plans, they rode out the storms with remarkably
little damage. And when the rains stopped falling and the wind
stopped blowing, they got back to doing what they do best:
moving cargo for America, dredging channels impacted by the
storm, serving the offshore oil and gas industry.
In many cases, the people of our industry put aside the
damage to their own homes because they knew that the cargo they
carried represented a lifeline to the affected communities.
Florida was a case in point. Florida depends on tank
vessels to deliver its fuel and storm preparations, and
evacuations deplete fuel supplies. The ports closed during the
storms, but when they reopened, in the words of one reporter, a
Jones Act armada was waiting to resupply the State with
petroleum. Dozens of Jones Act vessels were streaming into
Florida ports to help their fellow Americans.
Puerto Rico was another example. As you all know, the
original story was that the Jones Act was impairing the
recovery effort. That was patently false. Thanks to your
hearing last October, among other factors, the story quickly
changed and the truth came out. The Jones Act fleet was
steadily delivering containers to the island, which were
stacking up on the terminals due to infrastructure issues
inland. The Jones Act fleet was and continues to be a major
part of the recovery effort, with almost 80,000 containers
delivered to the island so far. Our carriers stepped up to help
Puerto Rico, and they remain committed to Puerto Rico for the
long term.
I would be remiss if I didn't finish by mentioning our
industry's commitment to hiring veterans. When we have jobs to
offer, we love for those jobs to be filled with veterans. AMP
has run a series of programs to encourage hiring of veterans,
and we will be doing more. AMP has a new Military to Maritime
website, militarytomaritime.org, which is a central location
where applicants can go to receive information on careers in
the maritime industry.
I appreciate the opportunity to represent our industry here
today. As we face the challenges ahead and work to see our
industry return at least to profitability, if not prosperity,
we are grateful that the members of this subcommittee have
taken the time to understand our industry. And never was that
understanding more important than during the recent hurricanes.
With the airwaves filled with so much misinformation, you
helped set the record straight and we are so grateful for that.
Thank you.
The American Maritime Partnership stands ready to help as
you address the issues related to our industry. We would be
happy to answer any questions now or in the future. And I would
request that my written remarks be entered into the record.
Mr. Hunter. Without objection, so ordered.
And our condolences, too, on your promotion.
[Laughter.]
Mr. Hunter. Mr. Ebeling, you are recognized.
Mr. Ebeling. Good morning, Chairman Hunter, Ranking Member
Garamendi, and members of the committee. Thank you for the
opportunity to appear before you today to discuss the state of
the U.S.-flag international fleet. My name is Eric Ebeling, and
I am here today on behalf of USA Maritime, a coalition
consisting of American vessel owners and operators, trade
associations, and maritime labor.
As the president and CEO of American Roll-On Roll-Off
Carrier Group, a New Jersey-headquartered company, it is my
honor to lead an incredibly talented team of men and women at
the largest U.S.-flag RORO operator. We own and operator eight
roll-on roll-off vessels in international trade, all of which
are enrolled in the Maritime Security Program. Our newest
ships, MV Patriot and MV Liberty, joined the fleet in 2016 and
2017, respectively. All our vessels are crewed by American
mariners and fly the American flag.
The commitment U.S. carriers make to the national security
of the U.S., through programs like the Maritime Security
Program, MSP, and ironclad contracts like the Voluntary
Intermodal Sealift Agreement, VISA, and the global shipping,
intermodal, and logistics services U.S. carriers provide to the
Department of Defense, are a clear best value buy for the
taxpayer.
It is well documented that the U.S. Government does not
have a sufficient organic fleet, nor the intermodal and
logistics capabilities to do the job entirely on its own.
Studies have shown that it would cost the U.S. Government tens
of billions of dollars to organically obtain those same ships
and services. We have a great industry-Government-labor
partnership with clear and significant advantages, mutual
benefit, and we must maintain it or risk losing the ability to
deploy and sustain such asymmetrical logistics advantages.
According to MARAD, there are currently 82 non-Jones Act
U.S.-flag international fleet vessels. Over the last 5 years,
the U.S.-flag international fleet has decreased by about 25
percent. Not only do U.S.-flag carriers in international trade
compete in a hypercompetitive global marketplace, but we are
also uniquely sensitive to the ebb and flow of Government
policymaking, which, when translated to an economic impact on
the U.S.-flag carriers, can destabilize or support or even
turbocharge investment in the U.S.-flag international fleet.
The two most effective policies that support the U.S.-flag
international fleet are MSP and the cargo preference laws. MSP
is a proven national security program enacted to ensure that
the United States has the U.S.-flag sealift capability and
trained American citizen merchant mariners it needs in time of
war or other national emergency.
At the ship-naming ceremony for ARC's MV Liberty in June
2017, Department of Transportation Secretary Elaine Chao called
MSP a model public-private partnership. At a cost of $300
million per year, as currently authorized, the program is an
exceptional value for DoD and the taxpayer. But the program is
only authorized until 2025, and it is critical that it is
extended beyond 2025 as soon as possible.
Participating companies must finance the purchase of
replacement tonnage, a 30-year asset that may cost up to $80 to
$100 million, based on a program that expires in a few years,
and is subject to the annual appropriations process. This could
be considered akin to going to your local bank with a proposal
to buy a home with a 30-year mortgage, knowing that you only
have 1 year of income. Carriers have collectively invested
billions of dollars. But for this investment to continue or
increase, continued stable funding is vital. And the program
must be extended or simply made permanent.
Cargoes generated by the cargo preference laws are the key
incentive for U.S.-flag operators operating in international
trade to remain under U.S. registry, and are part of Congress'
long-established intent to support the privately owned and
operated U.S.-flag fleet and merchant marine. It is a rather
simple equation: without cargo, carriers will not invest in
ships and, without ships, there will not be jobs for merchant
mariners.
Without those merchant mariners, the Government-owned
Reserve Fleet cannot be crewed. To that end, we offer three
suggestions.
First, as the ranking member noted earlier, Congress passed
legislation in 2008 to give MARAD stronger cargo preference
enforcement tools. Unfortunately, the previous administration
did not implement them. Congress should work with the
administration to ensure faithful implementation and execution
of these laws.
Second, under America's cargo preference laws, 100 percent
of all military cargoes and at least half of all civilian
agency cargoes must be shipped on U.S.-flag vessels. Why not
require 100 percent of all Government-owned or financed cargoes
to move on U.S.-flag ships?
Lastly, Ex-Im Bank, the national export credit agency of
the U.S., needs a board quorum that can approve new projects.
Without an Ex-Im Bank, America has effectively unilaterally
disarmed. And while most of the impact has been felt by the
American manufacturing base and workforce, there has been an
attendant impact to national security in the form of a reduced
U.S.-flag fleet and reduced manpower pool.
The U.S.-flag fleet has been at a crossroads in recent
years. We now have knowledgeable support of leaders at both the
Department of Transportation in Secretary Elaine Chao, and the
Maritime Administration in Administrator Buz Buzby. We also
have had steadfast leadership and support from USTRANSCOM and
its commander, General Darren McDew.
As General Darren McDew noted in an October 2017 speech,
``We don't know when, but some day the Nation is going to come
calling. When she does, she will need us, she will need our
ships, she will need our mariners...if we do nothing now, the
strength of the maritime fleet that brought the Nation to war
throughout history...that strength will not be here. It is
already in decline.''
It is incumbent on all of us as Americans to stay that
decline and ensure that this crown jewel capability continues
to be available to USTRANSCOM and the Nation. And you can help
by continuing to support laws and policies like MSP and cargo
preference that enhance the fleet.
Thank you. I look forward to your questions.
Mr. Hunter. Thank you. Thank you, Mr. Ebeling.
Mr. Aaron Smith is recognized as the president and CEO of
Offshore Marine Service Association.
Mr. Smith. Thank you, Chairman Hunter, Ranking Member
Garamendi, members of the subcommittee. Thank you for allowing
me time to speak this morning. My name again is Aaron Smith. I
am president and CEO of the Offshore Marine Service
Association. I ask for my full remarks to be submitted for the
record.
OMSA----
Mr. Hunter. Without objection.
Mr. Smith. Thank you, sir.
OMSA is the association of owners and operators of U.S.-
flag vessels engaged in constructing, servicing, and
maintaining offshore energy assets on our OCS. In total, we
represent 170 member companies, U.S. companies, and their
12,000 employees. We are a strong Jones Act supporter.
The first offshore well was drilled 11 miles off the coast
of Louisiana in approximately 18 feet of water. Today, instead
of 11 miles, projects are routinely done 100 miles from shore.
And instead of 18 feet of water, they are done in 10,000 feet
of water. This increasingly complex work yields increasingly
complex vessels. To keep up, OMSA members modernize and
recapitalize their fleet in U.S. shipyards and invest in
thousands of highly skilled and compensated U.S. mariners.
In turn, these mariners participate in the Ready Reserve
Force, and these shipyards build assets for the Navy and Coast
Guard. In short, when enforced, the Jones Act works as
intended.
The prolonged downturn in the worldwide energy markets has
greatly impacted OMSA members. As Ranking Member Garamendi
alluded to, more than half of OMSA member fleets are currently
in cold stack or laid up in the mud. Those that are working are
working at day rates below even OPEX. A recent IHS market
survey found that vessels that were commanding a day rate of
$40,000 in 2012 now are working for a day rate of between
$9,500 and $15,000.
However, as Matt alluded to, we are in a cyclical industry.
We understand this. These are forces we understand. We have
been through downturns before. We understand we will come out
on the other side. So my members get that, they have been there
before. The challenges that OMSA members can't understand is
understanding why the Government fails to enforce the Jones
Act.
More than the market downturn, this failure degrades the
confidence in our industry and pits U.S. vessels against those
that do not have to comply with the same tax, labor, or
regulatory costs.
As you know, current law, as represented by the Jones Act
in combination with OCSLA, is simple. It prohibits foreign
vessels from picking up cargo at U.S. ports and transporting it
to points on the U.S. OCS. Unfortunately, Customs and Border
Protection has confused and degraded that clear standard via
their issuing of private interpretations of the Jones Act
between 1976 and 2009. Many of these letter rulings, as they
are known, are directly contrary to the statute of the Jones
Act.
In 2009, CBP realized their errors and issued a notice of
its intent to revoke many of these flawed letter rulings. That
notice was very candid in admitting that these letter rulings
are ``contrary to the legislative intent of the Jones Act.''
However, after accepting public comments on the revocation
notice, and at the urging of foreign vessel owners and
charters, CBP punted, saying a new issue would be issued ``in
the near future.''
Spurred by this potential enforcement of the Jones Act,
OMSA members invested $2 billion in U.S. shipyards, building
dozens of state-of-the-art vessels capable of serving the
market covered by this revocation notice. But we had to wait 8
years for that ``near future'' to arrive. It finally came 364
days ago, when CBP again issued a notice of its intent to
revoke these flawed letter rulings.
Again, CBP accepted public comments on their notice. Like
in 2009, OMSA members and thousands of our employees submitted
comments in support, as did 34 Members of Congress and 10
Senators.
I would like to note half of this subcommittee signed those
letters. Thank you all.
Despite this acknowledgment, second acknowledgment that CBP
itself was not following the law, and despite this public and
political support, CBP again decided not to enforce the Jones
Act on May 10th, issuing a notice that they were ending the
revocation effort.
It is clear who benefitted from this decision. A London-
based trade association for the international competitors of
OMSA issued a press release saying that everyone should
``celebrate a positive result.'' OMSA members were not in a
celebratory mood. Twelve days after CBP stopped their
revocation effort, one of my members lost a previously secured
lucrative contract on the OCS. That vessel was provided cover
by the same letter rulings that CBP had sought to revoke. It
leveraged its lack of U.S. tax, labor, and regulatory
compliance costs to underbid my member.
The problem continues. In September, CBP reversed a $22
million Jones Act penalty. We believe that that penalty was
issued under those same letter rulings that they sought to
revoke. We believe this to be a strong signal to the
international market that the U.S. OCS is open to foreign
vessels.
Again, the Jones Act has proven time and again that it can
provide for our national, homeland, and economic security. But
it can only do so when it is properly enforced.
I welcome any questions you have and thank you all again.
Mr. Hunter. Thank you, Mr. Smith.
Mr. Paxton, you are recognized for 5 minutes.
Mr. Paxton. Thank you, Chairman Hunter, Ranking Member
Garamendi, and members of the subcommittee, for the opportunity
to provide testimony on the state of the U.S.-flag maritime
industry. I ask that my entire testimony be submitted for the
record.
Mr. Hunter. Without objection.
Mr. Paxton. In December 2016, the Navy released a new force
structure assessment that called for a fleet of 355 ships. To
achieve this buildup, a substantial and sustained investment is
required in both procurement and readiness, but our industry
stands ready to build and repair this fleet of the future.
Also critical to achieving this goal is strong
congressional and administrative support of the Jones Act. The
Jones Act ensures a commercial shipbuilding industry, supplier
chain, and workforce that can support building and maintaining
these Navy assets, making it a major national security benefit.
It is for this reason that the U.S. Navy has always and
continues to support the Jones Act. Long term, there needs to
be a workforce expansion, and some shipyards will need to
reconfigure or expand production lines to meet demands for both
Government and commercial construction. However, the
shipbuilding industry, like so many other manufacturing
sectors, faces an aging workforce. Attracting and retaining the
next generation shipyard worker is critical. Funding,
predictability, and sustainability, along with fully and
consistently enforcing the Jones Act, will allow industry to
invest in facilities and more effectively grow its skilled
workforce.
Consistent enforcement of the Jones Act is critical. A
recent decision by the Department of Homeland Security to not
revoke a series of letter rulings that have allowed foreign-
built and foreign-crewed offshore supply vessels to operate in
violation of the Jones Act has created uncertainty and resulted
in numerous new U.S. vessel construction contracts to be
canceled. I raise this issue as an example of how a decision by
an agency to not properly enforce the Jones Act can adversely
impact the entire shipyard industrial base.
Shipyard capacity is critical to recapitalize the Coast
Guard's desperately needed fleet modernization, including
inland waterway vessels, cutters of all sizes, and icebreakers.
Almost all of the shipyards that are building Coast Guard
vessels also build Jones Act vessels. It is because of this law
that the Coast Guard is receiving such robust competition to
build its various classes of ship, including the polar
icebreaker.
As we look at the current state of the U.S.-flag maritime
industry, we need to ask ourselves what is next. Recently, our
shipyards effectively built for the increased demand in the
tanker market, due to the oil and gas boom. It is a testament
to the Jones Act that the commercial shipbuilding sector
mobilized rapidly to meet the market demand and built state-of-
the-art tankers for that market. It was a true success for our
industry.
In addition, our shipyards recently delivered numerous
large oceangoing containerships to recapitalize the
noncontiguous fleets. Vessel construction for these important
shipping routes is ongoing at several shipyards, and will be
completed in the coming years. A common misconception, however,
is that without large vessel construction, the U.S. shipyard
industry is dormant.
However, nothing could be further from the truth. In 2015
our industry delivered 1,438 Jones Act vessels. And in 2016 we
delivered 1,329 vessels. Looking towards the future, we expect
there will be strong investment in expanded ferry and passenger
vessel services, hopper dredges, commercial fishing fleet
recapitalization, and a robust ATB market. We will also need to
be ready to build training ships to support our maritime
academies and recapitalize the severely aging Ready Reserve
Force.
As a closing observation, it is important to highlight to
this committee that U.S. shipyards do not compete on a level
playing field in the worldwide market. For example, last year
South Korea's Government injected $2.6 billion into one of
their most prominent shipyards in order to keep the yard from
going bankrupt. A September report from an international think
tank found evidence that shipyard costs in China decreased
between 13 and 20 percent between 2006 and 2012, leading to a
substantial misallocation of global production with no
significant consumer gains.
These are examples of the direct and indirect Government
subsidies provided by South Korea, Japan, and China that have
resulted in shipyards from those countries building for markets
that did not exist at rates subsidized by those foreign
governments. It is, therefore, an extreme misrepresentation to
compare foreign subsidized shipyard markets to that of the
Jones Act.
Thank you, Chairman Hunter and Ranking Member Garamendi for
allowing me to testify along such distinguished witnesses
today, and I look forward to your questions.
Mr. Hunter. Thank you, sir.
Mr. Van Loo, you are recognized.
Mr. Van Loo. Chairman Hunter, Ranking Member Garamendi, and
distinguished members of the subcommittee, my name is Bill Van
Loo, secretary treasurer of the Marine Engineers' Beneficial
Association and a third-generation marine engineer. I am
pleased to present testimony on behalf of the MEBA, the
American Maritime Officers, the Masters, Mates and Pilots, and
the Seafarers International Union.
Combined, our unions represent the men and women who
operate U.S.-flag vessels in both the domestic and
international trades, and we continue the patriotic tradition
of supporting the military whenever and wherever needed. We are
the fourth arm of defense.
Despite constant warnings from leaders in the Department of
Defense, the pool of mariners has shrunk to a critical level.
Without action, the military will no longer be able to rely on
the American merchant marine. We appreciate the subcommittee's
commitment to ensure the existence of a vibrant maritime
industry.
Since 2011, the U.S.-flag international fleet has shrunk
from 106 to 82. This should be concerning to every American. In
order to change course and reverse the downward trend, we must
protect and fully fund existing programs and create new
programs and opportunities that will increase the number of
U.S.-flag vessels. That effort should start with national
maritime policy that ensures a steady stream of cargo which, in
turn, creates employment opportunities for militarily needed
U.S. merchant mariners.
By providing a minimal level of cargo, U.S.-flag preference
shipping requirements are an essential to maintaining a strong
industry. We strongly urge Congress to restore the U.S.-flag
share of P.L. 480 Food for Peace cargoes to the 75-percent
level that was in place since 1985 until 2012, when it was
reduced to a mere 50 percent. It is no coincidence that the
size of the U.S.-flag fleet has shrunk by more than 26 percent
as a result.
All too often, Federal departments and agencies and
Government contractors have ignored U.S.-flag shipping
requirements for the carriage of cargoes paid for by the U.S.
American taxpayer. Not only are U.S.-flag vessels denied those
cargoes, but there is no recourse when it is ultimately
determined that the law was violated. We implore Congress and
the administration to reinforce to all Federal agencies and
their contracting officers that cargo preference laws must be
adhered to.
In 2008, Congress passed the Duncan Hunter National Defense
Authorization Act that made it abundantly clear that the
Maritime Administration was the final enforcer of cargo
preference. Unfortunately, the administration has failed to
fully adopt that language, and we must be concerned that the
refusal to implement this law indicates an unwillingness to
abide by cargo preference laws. Congress required the
administration to fully comply with cargo preference laws.
We also recommend that Congress should receive a detailed
record of the bills of lading associated with the program.
It is very simple. Without cargo, our ships do not sail,
and our mariners will not be standing by in times of need.
Another key component of American maritime policy is the
Maritime Security Program. The MSP is a unique public-private
partnership that ensures that the DoD has the sealift
capability and intermodal network it needs while cutting costs.
It would cost the Government over $65 billion to replicate the
capacity provided by the MSP.
While Government cargoes continue to decline, the MSP
allows American ship operators to compete for commercial cargo
with vessels that do not comply with our more stringent laws
and regulations. We are pleased that Congress recently
reaffirmed support for the program by increasing the authorized
funding amount. In order to secure the availability of U.S.-
flag ships and the American mariners, we ask for your help to
secure full appropriations for the program.
The export of strategic American energy assets presents an
opportunity to increase the size of the fleet and associated
employment opportunities. We support the efforts of Congressmen
Hunter, Garamendi, and Duncan, and their legislation to require
the exports of strategic energy assets to travel on U.S.-flag
vessels.
I am a third-generation merchant mariner, and it is
incredibly important to me and the labor organizations that I
represent today that this industry is viable for generations to
come. Not just for the important source of reliable middle-
class jobs, but for the vital role that the U.S. merchant
marine serves to safeguard our country's military, economic,
and homeland security.
We are encouraged that the administration and Congress seem
poised to consider comprehensive infrastructure policy. It is
important that renewal of the U.S. merchant marine is
considered as a part of that discussion. We stand ready to work
with you to achieve these objectives. Thank you.
Mr. Hunter. Thank you, Mr. Van Loo. And thank you to all of
you. I am going to recognize myself.
I guess my first question is this. You have all very
eloquently laid out how important the Jones Act is, the
benefits of it, and the downside to losing it. What do you
think is behind--you might even call it a deep state in our own
Government with CBP and the administration. Why do you think
that U.S. officials, or U.S. Government employees that work for
the American people, want to get rid of the Jones Act? Why? Why
do you think that is?
Mr. Woodruff. I will take----
Mr. Hunter. Because it--yes, please. Go ahead, Mr.
Woodruff.
Mr. Woodruff. I think they are misguided. I think that they
have people who are trying to get an undue advantage over a
situation who are trying to tell them things that aren't
necessarily true. And you know, there are a lot of people out
there who are trying to make a buck, and they think that they
can do so by promoting a false narrative about cost
associated----
Mr. Hunter. Well, let me make my question more explicit,
then, so you all have a better way to answer it, maybe.
Why would an American Government employee, whether it is
CBP or Department of Energy or anything, want to outsource all
of the shipping that they do? Meaning why would they not want
Americans to do it? I mean they are not making money off of
energy company X from Great Britain, right? They work for CBP.
So why would they want to give preferential treatment of
foreign countries over Americans?
[Pause.]
Mr. Woodruff. I can't----
Mr. Hunter. Any of you, please. Help me out here.
Mr. Paxton. Chairman Hunter, I think there is some inherent
belief in free trade that the Jones Act is a protectionist
statute, and therefore there is a belief that they don't want
to enforce this or being guided by an administration that
might----
Mr. Hunter. Do any of you know of any maritime nation--I
mean a nation around the world that is on the ocean or that can
get to the ocean that does not have cabotage laws? Does one
exist?
[No response.]
Mr. Hunter. So every maritime nation in the world has a
Jones Act, and we are one of them. We are not special. Every
single maritime nation that I know of, industrialized nation,
has cabotage laws. Why do you think people in our Government
want to give foreign interests preferential treatment over
Americans?
[No response.]
Mr. Garamendi. I think you stumped them.
Mr. Hunter. I mean there has got to be a reason. Any of
you?
Mr. Smith. Mr. Chairman, if I could----
Mr. Hunter. Well, we have all laid out the--what is going
on, right? So tell me why.
Mr. Smith. For CBP's part, in many cases, what I think you
saw from 1976 through 2009 was lack of understanding of our
industry.
Many of these letter rulings had confusing terms in them
that built one upon each other, that talked about--when we
finally got into CBP and explained what we were doing, they
didn't understand that these blowout preventers or wellheads or
jumpers or compressors, things that are one-quarter of the size
of this room, were left on the sea floor. They thought, from
the rulings they were given, or from the letter requests they
were given, that that was ``equipment of the vessel,'' and
stayed with the vessel. And it wasn't until we told them that,
no, that is left on the OCS for perpetuity, that they
understood what was going on. And when they did, they issued
the 2009 notice of revocation.
And so there is a lack of understanding for some when you
receive a request for a ruling to understand what is actually
going on.
Mr. Hunter. Thank you. Anybody else want a try at this one?
No? OK. I will just finish up by saying the absurdity of
trying to take away America's cabotage laws, the reason that
Great Britain was able to conquer the world from a little
island is because they had a great navy. The reason we have
been left untouched and didn't have the wars like World War I
and II is because we got the Pacific and the Atlantic, so
people can't drive tanks across our borders here.
In order for us to maintain the way of life as we know it,
as a Nation that is secure and is able to project power, be it
navy power or commercial power, the Jones Act is intrinsic to
that. It is the cornerstone of all of them. And I think you all
very eloquently laid out how important it is.
But the absurdities of some of those in this Congress and
in Government, to think that you want Korean or Chinese or
name-your-country-made ships and taking away the entire
American workforce of making ships and driving them and getting
something from point A to point B in America, it is all--it is
stupid, it is absurd. And I hope that we just keep educating
and educating, because that is what it is going to take so that
people understand what this is and how it is one of the
cornerstones of our entire country's national security
apparatus.
It is the Jones Act, and it is what allows us to project
power and be the greatest country in the world. It is the Jones
Act. That is one of the cornerstones. And I firmly believe
that.
Thank you for your testimony. I am going to yield to the
ranking member.
Mr. Garamendi. Mr. Chairman, I couldn't agree with you more
on your point about the Jones Act and a cornerstone.
Into the details, gentlemen, I want to thank all of you for
your testimony. And I want to get into a series of questions
that we discussed with Admiral Nadeau. And it has to do with
the letters of nonavailability.
If half of the offshore marine supply and work vessels are
laid up, how can there be a nonavailability? Mr. Smith?
Mr. Smith. Yes, sir. I believe the term for the letter is
non-applicability, as in OCSLA does not apply to that vessel.
And what they are being utilized for is, in some cases, yes,
those letters, the vessels that have those letters, are taking
work away from the vessels that my members own and operate.
In other cases, those vessels are doing completely legal
activities, such as a drill ship or a MODU [mobile offshore
drilling unit]. Those type of vessels are not transporting
merchandise between two points on the OCS. And we do not have
those vessels. So those vessels have letters of non-
applicability, I am sure, and it would not matter.
But there are also foreign supply vessels that have letters
of non-applicability that are operating on the OCS--those are
the vessels that are taking work away from U.S.-built, U.S.-
crewed, and U.S.-owned vessels.
Mr. Garamendi. You said earlier in your testimony that this
dates back to 1976, and a series of letters that have come
forward from the CBP, Customs and Border Patrol. Could you--and
in your testimony you also discussed efforts that have been
made to rectify the inaccuracy in those letters. Could you go
into that in just a little bit more detail here, and lay out
for this committee, and specifically what we might be able to
do to rectify the situation?
Mr. Smith. Certainly, sir. So, yes, starting in 1976 was
the first letter ruling that we look at dealing with
merchandise on the OCS. And that letter dealt with a pipeline
barge that was transporting merchandise. From that it was
declared that the lane of that pipeline was not a Jones Act
activity. And that is not a point we are challenging right now,
I do want to make that clear. But the other activities, the
ancillary activities, we are looking at.
Now, the CBP revocation effort also kept that pipeline
ability in there, but also said you can't transport pipeline
connectors, tools, or other materials and leave them on the
OCS.
Additional letter rulings have been issued for items such
as de minimis activities. Basically, as long as you are not
breaking the law too much, you can do what you are doing. Or
unforeseen repairs was an interesting letter ruling. Someone
submitted a letter ruling request for preventative maintenance,
and CBP responded and said no, preventative maintenance is an
intrinsically foreseeable activity. Well, the next letter
ruling that came in said, well, we have an intrinsically
unforeseeable activity. Is that allowed? CBP said yes.
We also had some for other similar activities. Hey, we are
doing a permitted activity. And while we are doing that
permitted activity, we would also like to do an unpermitted
activity. Would you allow that? That was also agreed to. So
that was kind of the letter rulings that built upon
themselves----
Mr. Garamendi. I understand that you filed a lawsuit to try
to clear up this situation. Is that correct?
Mr. Smith. Yes, we have, sir.
Mr. Garamendi. And that suit is proceeding?
Mr. Smith. Yes, it is.
Mr. Garamendi. What can we do, by law or--well, basically,
by law to make clear that there is a differentiation between
reasonable activities and unreasonable activities? Is there a
lack of clarification in the current law? Does it need to be
clarified?
Mr. Smith. As I said in my testimony, sir, I think OCSLA
and the Jones Act are very clear. If you are transporting
merchandise from point A to point B, that has to be on a U.S.-
built, U.S.-crewed vessel.
Mr. Garamendi. So it is really about the enforcement of the
law.
Mr. Smith. Yes, it is, sir. And I understand that the
committee is going to be having a hearing later this month on
that, and I applaud that effort. Thank you all.
Mr. Garamendi. OK, very good. I want to go into another
question area, and I am out of time, so I will wait until we
come back around.
Mr. Hunter. Mr. Weber is recognized.
Mr. Weber. Gosh, John, you shocked me there. I thought you
had 3 or 4 minutes left in you.
Mr. Garamendi. Thank you for yielding, and I will carry on.
Mr. Weber. Next time.
We appreciate you guys being here. I want to go back to
something the chairman said--and, Mr. Chairman, you have been
at this a lot longer than I have. You know, you are asking why
was that happening, for example, with CBP. And y'all talked
about some different ideas.
Well, I would submit this, that sometimes, in the name of
free trade, maybe our bureaucrats think we need to be fair, we
ought to be fair in this. There is a world market out there,
and somehow we have got to, you know, be world-market-oriented
and fair about it. But there is nothing fair when you are
dealing with a lot of other countries who subsidize and do all
the things that we know that they do.
So Duncan, maybe that is the answer to the question.
Somehow we have gotten this idea that we need to be fair, we
need to be the leader in fairness. Well, I submit that we want
our economy to be the best. We need to be fairly in the lead.
We want our national security to be best. We need to be fairly
in that lead, and that is the fairness we ought to be concerned
about.
Let me jump over to LNG. I know that--many of you may not
know that I represent the gulf coast of Texas--the first three
counties from Louisiana. The Sabine-Neches Waterway is
currently sending out about 95 percent of the LNG from my
country.
So we want to be in the lead, and we want to maintain that
as long as we can. So the United States has become a leader in
regard to LNG-powered vessels. How can we maintain that
position to the benefit of the fleet, overall, as well as the
safety and security, national security, and the economy of our
Nation?
I will start with you, Mr. Woodruff.
Mr. Woodruff. You know, LNG propulsion, I think, is what
you are----
Mr. Weber. You bet.
Mr. Woodruff [continuing]. Speaking of. It is a great
opportunity to bring a cleaner, more environmentally friendly
way of running a lot of our vessels. And I think it is just a
matter of building out the infrastructure.
We have vessels that are LNG-capable now in the domestic
fleet. The first containership that was capable of running on
LNG in the world was built in America for the American market.
Mr. Weber. How long ago was that, do you----
Mr. Woodruff. It was about a year and a half ago----
Mr. Weber. Got you.
Mr. Woodruff [continuing]. That that vessel went into
service, thereabouts. And there are many more coming along
behind it. Now we are in the process of building out the bunker
barges and the other infrastructure necessary. And so I think
it is just going to be a matter of time. You have a bit of a
chicken and an egg. You need the vessels out there in order to
incentivize the building of the bunker vessels. They are under
construction now. And so I think it is something you will see
growing over time.
Mr. Weber. Anybody else want to weigh in?
Mr. Smith. Congressman, I have one of my members has a
dual-fuel fleet of OSVs that run on both natural gas and
diesel. They have seen some good success with those. It lets
the vessel stay out a long time because when you run out of one
you just switch to the other. I am, of course, oversimplifying
it.
But they have had some good success with those. If you are
ever down in south Louisiana and it is not snowing in south
Louisiana I would invite you to come tour that vessel.
Mr. Weber. Is it snowing there today?
Mr. Smith. It looks like it was. Yes, sir.
Mr. Weber. OK.
Mr. Van Loo. U.S. mariners do have experience with LNG. And
as LNG evolves and we get more experience, it will be
beneficial for the industry.
Mr. Weber. Well, we would love to see that coming from our
district, because that is very, very important to our district.
And on the national market, you know, the United States is
going to be sending a lot of LNG around the world, and we want
to continue that. So everything we can to push that.
Let me change gears just a little bit here. A question for
each of you. Does the strength of the U.S.-flag fleet bolster
the credibility of the United States and the International
Maritime Organization, or other international maritime
organizations? And if you think that it does, how so?
We will start down here on this end, Mr. Van Loo.
Mr. Van Loo. Absolutely. Strength in numbers. The more U.S.
flags we have on the international worldwide, the stronger the
U.S. will look in the IMO and all the other international
organizations.
Mr. Weber. And I will let you each go and then I have got a
followup question.
Mr. Paxton?
Mr. Paxton. Yes, sir. I think what you look at, if you look
at our domestic fleet of 40,000 vessels waving the U.S. flag,
we are the envy of the world. I think that is why you see so
many foreign operators trying to----
Mr. Weber. That actually is part of my second question, let
me interrupt you. How close to other--who is the second country
to that? We have 40,000. Who is second?
Mr. Paxton. Well, because of the Jones Act, we have 40,000
vessels that operate under the U.S. flag in our waterway----
Mr. Weber. I mean would you be privy to the information--
China, how many vessels they have, or----
Mr. Paxton. I was going to go to my next point, which is
you will often hear of reports of Australia lamenting the fact
that they don't have a similar cabotage law, and they will have
foreign operators run aground and hurt Australians and, you
know, folks on those vessels. We don't have that problem here.
And so, I think that is the power of the U.S. flag, and it
is also the power of the national security asset to have those
vessels plying the waters----
Mr. Weber. And we want to maintain that.
Mr. Smith?
Mr. Smith. Yes, Congressman. We have--OMSA has sent
delegations to the IMO in most years in recent memory. And I
know we have individuals going to the IMO within the next
month. We look forward to that, and I know we are well
respected and well received there because of the strength of
our maritime industry and because of not only its number, but
our technological capabilities and how, especially in our
industry, we have led the world in developing these, these
vessel types and capabilities.
Mr. Weber. OK. Mr. Ebeling?
Mr. Ebeling. Thank you. Yes, the chairman mentioned
actually the Jones Act as being one of the cornerstones, and
you are----
Mr. Weber. Absolutely.
Mr. Ebeling [continuing]. Mentioning that, as well. I would
argue that there are actually three cornerstones, or a three-
legged stool, if you will. It is the Jones Act, which obviously
is essential, but also MSP, the Maritime Security Program, and
the cargo preference laws. All three are essential to national
security and economic security. And the strength of each leads
us to having a stronger representation at the international
level, including the Coast Guard being able to represent us at
the IMO level as strongly as they do.
So thank you for the question.
Mr. Weber. Mr. Woodruff?
Mr. Woodruff. As the domestic fleet, we don't deal with
IMO. We answer to you, who answer in turn to the American
people. And we think that is the way it should stay. We don't
think that the IMOs should be telling us how to move cargo
within America.
Mr. Weber. Sure. But you all would all agree that the fact
we have got 40,000 flagged vessels is probably a pretty good
arrow in our quiver when it comes to national/international
security.
Mr. Chairman, I thank you, I yield back.
Mr. Hunter. I thank the gentleman.
Mr. Lowenthal, you are recognized.
Dr. Lowenthal. Thank you, Mr. Chair, and I thank all the
panelists for being here. My question is for Mr. Smith.
As you have pointed out, last spring the CBP reversed its
notice on the application of the Jones Act to oil field
operations on the Outer Continental Shelf. That notice would
have reversed, as you pointed out, a series of misguided
rulings, and would clarify that subsea construction and other
activities do fall under the Jones Act requirement.
And also from your testimony and also from an analysis from
your association, you have identified over $2 billion in
investment to construct or retrofit 31 vessels to service these
operations with Jones Act-compliant ships, and that this
shipbuilding activity occurred between CBP's announcement in
2009 that it would revoke the flawed interpretations of the
Jones Act regarding undersea operations and the new notice in
2017.
So with that as a frame, I want to ask you four questions,
each one separately.
My first question is after this notice was revoked by the
administration, what is the current status of these newly built
or retrofitted vessels? And I will ask you the other questions
after.
Mr. Smith. Certainly. Thank you, sir. For these dozens of
vessels referred to as multipurpose support vessels, or MPSVs,
they are doing different things. Some are still on contract and
engaged with different operators and different charters. They
are capable of doing this work, they can beat any international
vessel in doing this work. So they do get employed. Others are
on Government contracts, and are doing services for NOAA or MSC
or other Government agencies. But the majority of them are
currently at the dock.
Dr. Lowenthal. So they are sitting idle.
Mr. Smith. They are--yes, sir. They are sitting idle.
Now, there are vessels that are--last I looked, there are,
you know, let's call it circa 5 to 10 foreign MPSVs in the gulf
right now, taking work away from Jones Act-qualified vessels.
So there is some of that. That is down from historical
averages, because of the downturn. But even outside of the
downturn, we have, as you mentioned, built enough to cover
capacity.
Dr. Lowenthal. So you have--so I want--you have already
answered my second question. So some have been shifted to other
operations, oil operations or other duties, and some are
sitting idle.
So a question I am asking you is was this a waste of $2
billion? What do your members think? Did they waste its money
now?
Mr. Smith. I certainly would hope they wouldn't think of it
as a waste, because we have a Government agency, which has
twice said that they are not following the law. Sooner or
later, that is going, I believe, to prove us right, to prove
that we have been right. So these vessels have a long life span
and will be utilized.
Additionally, and maybe it is a very small victory, but by
building these vessels we have recapitalized some of Mr.
Paxton's shipyards here, which have then enabled those
shipyards to participate in some very big Government projects.
And again, I think that in itself proves that the Jones Act
works as intended. And I am not saying that is worth $2
billion, but I do think that that shows something.
Dr. Lowenthal. All right. So let's say, as you say--you
know, you are assuming that at some point we will do the right
thing and CBP will change its interpretation and come back to
the rightful interpretation that the Jones Act does cover this.
So the question is, if that occurs, what economic benefits
do you think this proper enforcement of the Jones Act will have
for your members? How will this impact your members? If what
you are saying is ultimately the CBP understands and makes the
right interpretation, how will this impact your members?
Mr. Smith. You know, I think it will definitely provide an
economic benefit for our members.
But more than that, I would look at what it would provide
for our Nation. And looking at that, my organization hired a
domestic economist here from within the United States. And that
economist found that correct interpretation of the Jones Act by
CBP would create 3,200 new jobs in the United States, would put
$700 million into the United States economy, and would create
wages of $155 million--increase. That is, of course, in
addition to the 500,000 men and women in this country that are
already employed due to the Jones Act.
Dr. Lowenthal. So what you are saying is if there was a
correct interpretation of the Jones Act by the CBP, we truly
would make America great again.
Thank you, and I yield back.
Mr. Hunter. Amen. I would like to close here by yielding to
the ranking member, Mr. Garamendi.
Mr. Garamendi. I will try to do this quickly. Mr. Weber
appropriately raised the question of the export of a strategic
national asset, natural gas and LNG. It is estimated that just
10 years from now that it will take about 140 ships to export
the potential LNG that is available in the United States for
foreign trade. If just 5 percent of that were on American-built
ships, we are talking some seven ships. Probably four, maybe
five, would have to be built in the meantime.
Similarly, on crude oil, by 2028, if just 5 percent of the
crude oil were to be shipped on American-built ships, we are
talking some 12 ships. So if we were to require, as we once did
with the North Slope of Alaska, that all of that oil be on
American-built ships--but let's not be greedy, let's just say 5
percent--we could substantially increase the number of ships
built in America by a significant number. Maybe half a dozen by
2028 in LNG, maybe a little less. Crude oil, probably in the
range of 12 to 15 ships in just 10 years, giving new life to
the commercial shipbuilding industry in the United States.
Now, the fact that we are proposing a piece of legislation
that would do that brings me to the question to Mr. Paxton.
Can you do it? Is it possible that we could actually build
commercial LNG ships for the international trade, as well as
crude oil----
Mr. Paxton. Yes.
Mr. Garamendi [continuing]. In that range over the next
decade?
Mr. Paxton. Well, first, I want to say thank you very much,
Congressman----
Mr. Garamendi. Microphone.
Mr. Paxton [continuing]. The work you have been doing on
this. Your staff has been excellent. I appreciate your time
spent with a lot of my members, working on really hard
legislation.
But yes, the answer is we can meet that demand. Again, we
still want to build that 355-ship navy. But, truly, building
commercial vessels for LNG and crude export is what we did with
the North Slope. I mean that was part of the deal.
And so, if we could have some configuration of that again,
you know, I know you have been working with my trade
association for a long time on this. We want to get it right,
we want it to be defensible, and we want to fight for it along
with this committee and with you, sir.
But yes, the answer is yes, we could do that.
I would say on LNG, as you know, sir, that is a very
complex vessel. We haven't built those in a little while now.
But based on my members and what I have been told, we could
gear that up in time with timelines that we have seen in some
proposals that you have been working on.
Mr. Garamendi. I thank you.
Mr. Van Loo, are the mariners available over that period of
time?
Mr. Van Loo. That is a concern. Because as the industry
continues to decline, we are going to lose more mariners. So
hopefully we have bottomed out, flat-lined, and we will be able
to supply the mariners if it stays consistent or we can grow a
little bit. It is tough to recruit when you are talking to
young people about an industry that is not doing very well.
Mr. Garamendi. Well, our goal is to make sure this industry
remains strong for the benefit of the committee members here.
We will soon be bringing to all of our attention a piece of
legislation that I think will have support from the
shipbuilding industry, as well as the mariners, and probably
not the petroleum industry, but 5 percent, 10 percent--they can
do it, they could live with that.
With that, Mr. Chairman, you have a hard stop at 12
o'clock, so I will yield back my remaining 1 minute.
Mr. Hunter. I thank the gentleman. There are no further
questions.
I want to thank all of you, just for all you do, all the
time and effort you put in, and for doing something that is
more important than just business. I mean this is, like we
talked about, a national security cornerstone and an economic
cornerstone of this Nation. So thank you very much for all that
you do.
And with that, this subcommittee stands adjourned.
[Whereupon, at 12:02 p.m., the subcommittee was adjourned.]
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