[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


   U.S. MARITIME AND SHIPBUILDING INDUSTRIES: STRATEGIES TO IMPROVE 
        REGULATION, ECONOMIC OPPORTUNITIES, AND COMPETITIVENESS

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

                                (116-4)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                COAST GUARD AND MARITIME TRANSPORTATION

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 6, 2019

                               __________

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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                    PETER A. DeFAZIO, Oregon, Chair
ELEANOR HOLMES NORTON,               SAM GRAVES, Missouri
  District of Columbia               DON YOUNG, Alaska
EDDIE BERNICE JOHNSON, Texas         ERIC A. ``RICK'' CRAWFORD, 
ELIJAH E. CUMMINGS, Maryland             Arkansas
RICK LARSEN, Washington              BOB GIBBS, Ohio
GRACE F. NAPOLITANO, California      DANIEL WEBSTER, Florida
DANIEL LIPINSKI, Illinois            THOMAS MASSIE, Kentucky
STEVE COHEN, Tennessee               MARK MEADOWS, North Carolina
ALBIO SIRES, New Jersey              SCOTT PERRY, Pennsylvania
JOHN GARAMENDI, California           RODNEY DAVIS, Illinois
HENRY C. ``HANK'' JOHNSON, Jr.,      ROB WOODALL, Georgia
    Georgia                          JOHN KATKO, New York
ANDRE CARSON, Indiana                BRIAN BABIN, Texas
DINA TITUS, Nevada                   GARRET GRAVES, Louisiana
SEAN PATRICK MALONEY, New York       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
MARK DeSAULNIER, California          PAUL MITCHELL, Michigan
STACEY E. PLASKETT, Virgin Islands   BRIAN J. MAST, Florida
STEPHEN F. LYNCH, Massachusetts      MIKE GALLAGHER, Wisconsin
SALUD O. CARBAJAL, California, Vice  GARY J. PALMER, Alabama
    Chair                            BRIAN K. FITZPATRICK, Pennsylvania
ANTHONY G. BROWN, Maryland           JENNIFFER GONZALEZ-COLON,
ADRIANO ESPAILLAT, New York            Puerto Rico
TOM MALINOWSKI, New Jersey           TROY BALDERSON, Ohio
GREG STANTON, Arizona                ROSS SPANO, Florida
DEBBIE MUCARSEL-POWELL, Florida      PETE STAUBER, Minnesota
LIZZIE FLETCHER, Texas               CAROL D. MILLER, West Virginia
COLIN Z. ALLRED, Texas               GREG PENCE, Indiana
SHARICE DAVIDS, Kansas
ABBY FINKENAUER, Iowa
JESUS G. ``CHUY'' GARCIA, Illinois
ANTONIO DELGADO, New York
CHRIS PAPPAS, New Hampshire
ANGIE CRAIG, Minnesota
HARLEY ROUDA, California
                                ------                                7

        Subcommittee on Coast Guard and Maritime Transportation

                 SEAN PATRICK MALONEY, New York, Chair
ELIJAH E. CUMMINGS, Maryland         BOB GIBBS, Ohio
RICK LARSEN, Washington              DON YOUNG, Alaska
STACEY E. PLASKETT, Virgin Islands   RANDY K. WEBER, Sr., Texas
JOHN GARAMENDI, California           BRIAN J. MAST, Florida
ALAN S. LOWENTHAL, California        MIKE GALLAGHER, Wisconsin
ANTHONY G. BROWN, Maryland           CAROL D. MILLER, West Virginia
CHRIS PAPPAS, New Hampshire          SAM GRAVES, Missouri (Ex Officio)
PETER A. DeFAZIO, Oregon (Ex 
    Officio)
                                CONTENTS

                                                                   Page

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

                   STATEMENTS OF MEMBERS OF CONGRESS

Hon. Sean Patrick Maloney, a Representative in Congress from the 
  State of New York, and Chair, Subcommittee on Coast Guard and 
  Maritime Transportation:

    Opening statement............................................     1
    Prepared statement...........................................     4
Hon. Bob Gibbs, a Representative in Congress from the State of 
  Ohio, and Ranking Member, Subcommittee on Coast Guard and 
  Maritime Transportation:

    Opening statement............................................     5
    Prepared statement...........................................     6
Hon. Peter A. DeFazio, a Representative in Congress from the 
  State of Oregon, and Chair, Committee on Transportation and 
  Infrastructure, prepared statement.............................     6

                               WITNESSES
                                Panel 1

Rear Admiral John P. Nadeau, Assistant Commandant for Prevention 
  Policy, U.S. Coast Guard:

    Oral statement...............................................     8
    Prepared statement...........................................    10
Mark H. Buzby, Administrator, Maritime Administration:

    Oral statement...............................................    11
    Prepared statement...........................................    13

                                Panel 2

Rear Admiral Michael Alfultis, USMS, Ph.D., President, State 
  University of New York Maritime College:

    Oral statement...............................................    40
    Prepared statement...........................................    42
Jennifer A. Carpenter, Executive Vice President and COO, The 
  American Waterways Operators:

    Oral statement...............................................    45
    Prepared statement...........................................    47
John E. Crowley, Jr., President, National Association of 
  Waterfront Employers:

    Oral statement...............................................    51
    Prepared statement...........................................    52
Michael G. Roberts, Senior Vice President and General Counsel, 
  Crowley Maritime Corp., on behalf of American Maritime 
  Partnership:

    Oral statement...............................................    56
    Prepared statement...........................................    57
Augustin Tellez, Executive Vice President, Seafarers 
  International Union, on behalf of American Maritime Officers; 
  International Union of Masters, Mates and Pilots; Seafarers 
  International Union; Marine Engineers' Beneficial Association; 
  and the Maritime Trades Department, AFL-CIO:

    Oral statement...............................................    61
    Prepared statement...........................................    62

                       SUBMISSIONS FOR THE RECORD

Maritime Administration posters: Maritime Security Program Fleet 
  poster and National Defense Reserve Fleet (Ready Reserve Force 
  and Special Mission) poster, submitted for the record by Hon. 
  Maloney........................................................    22
U.S. Coast Guard's response to request for information from Hon. 
  Graves of Louisiana............................................    27
U.S. Coast Guard's reponses to questions about post-hearing 
  information....................................................    27

                                APPENDIX

Questions from Hon. Sean Patrick Maloney for Rear Admiral John P. 
  Nadeau.........................................................    75
Questions from Hon. Rick Larsen for Rear Admiral John P. Nadeau..    78
Questions from Hon. Stacey E. Plaskett for Rear Admiral John P. 
  Nadeau.........................................................    79
Questions from Hon. Bob Gibbs for Rear Admiral John P. Nadeau....    80
Questions from Hon. Sean Patrick Maloney for Mark H. Buzby.......    80
Questions from Hon. Rick Larsen for Mark H. Buzby................    81
Questions from Hon. Sean Patrick Maloney for Rear Admiral Michael 
  Alfultis, USMS, Ph.D...........................................    82
Questions from Hon. Rick Larsen for Rear Admiral Michael 
  Alfultis, USMS, Ph.D...........................................    86
Questions from Hon. Sean Patrick Maloney for Jennifer A. 
  Carpenter......................................................    87
Questions from Hon. Rick Larsen for Jennifer A. Carpenter........    88
Questions from Hon. Sean Patrick Maloney for John E. Crowley, Jr.    89
Questions from Hon. Rick Larsen for John E. Crowley, Jr..........    90
Questions from Hon. Sean Patrick Maloney for Michael G. Roberts..    91
Questions from Hon. Rick Larsen for Michael G. Roberts...........    91
Questions from Hon. Sean Patrick Maloney for Augustin Tellez.....    92
Questions from Hon. Rick Larsen for Augustin Tellez..............    93



                           February 28, 2019

    SUMMARY OF SUBJECT MATTER

    TO:       Members, Subcommittee on Coast Guard and Maritime 
Transportation
    FROM:   Staff, Subcommittee on Coast Guard and Maritime 
Transportation
    RE:       Hearing on ``U.S. Maritime and Shipbuilding 
Industries: Strategies to Improve Regulation, Economic 
Opportunities, and Competitiveness''

                                PURPOSE

    The Subcommittee on Coast Guard and Maritime Transportation 
will hold a hearing on Wednesday, March 6, 2019, at 10 o'clock 
a.m., in 2253 Rayburn House Office Building to examine the 
State of the U.S. flag Maritime Industry. The Subcommittee will 
hear testimony from the U.S. Coast Guard, the Maritime 
Administration (MARAD), and representatives of the maritime 
industry.

                               BACKGROUND

U.S. MERCHANT MARINE

    The U.S. merchant marine is the fleet of U.S. documented 
(flagged) commercial vessels and civilian mariners that carry 
goods to and from, as well as within, the United States. These 
vessels are operated by a crew of U.S. licensed deck and 
engineering officers and unlicensed seafarers. During times of 
peace and war, the U.S. merchant marine acts as a naval 
auxiliary to deliver troops and war material to military 
operations abroad. Throughout our history, the Navy has relied 
on U.S. flagged commercial vessels to carry weapons and 
supplies and ferry troops to the battlefield. During Operations 
Enduring Freedom and Iraqi Freedom, U.S. flagged commercial 
vessels transported 90 percent of sustainment cargoes moved to 
Afghanistan and Iraq.\1\
---------------------------------------------------------------------------
    \1\ Maritime Administrator Mark H. Buzby Testimony before the House 
Committee on Armed Services on March 8, 2018.
---------------------------------------------------------------------------
    The merchant marine was formally recognized in statute with 
the passage of the Merchant Marine Act of 1920 (46 U.S.C. 
Subtitle V). Section 50101(a) of title 46, United States Code, 
States that ``[i]t is necessary for the national defense and 
the development of the domestic and foreign commerce of the 
United States that the United States have a merchant marine . . 
.'' Sections 50101(b) and 51101 of title 46, United States 
Code, establish that ``[i]t is the policy of the United States 
to encourage and aid the development and maintenance of the 
merchant marine . . .'' and that ``merchant marine vessels of 
the United States should be operated by highly trained and 
efficient citizens of the United States . . .''
    Currently, there are approximately 41,000 \2\ non-fishing 
related commercial vessels flagged and operating in the United 
States. The vast majority of these vessels are engaged in 
domestic waterborne commerce, generally referred to as the 
``Jones Act trade,'' moving 115 million passengers \3\ and 
nearly $300 billion worth of goods \4\ between ports in the 
United States on an annual basis. Each year, the domestic 
coastwise fleet carries nearly 900 million tons (877 million in 
2016) of cargo \5\ through the inland waterways, across the 
Great Lakes, and along the Atlantic, Pacific, and Gulf of 
Mexico coasts.
---------------------------------------------------------------------------
    \2\ USACE, Waterborne Transportation Lines of the United States 
Calendar Year 2016, http://www.navigationdatacenter.us/veslchar/pdf/
WTLUS2016.pdf.
    \3\ National Strategy for the Marine Transportation System: 
Channeling the Maritime Advantage 2017-2022, http://www.cmts.gov/
downloads/National_Strategy_for_the_Marine_
Transportation_System_October_2017.pdf.
    \4\ Economic Contribution of the US Tugboat, Towboat, and Barge 
Industry, https://www.marad.dot.gov/wp-content/uploads/pdf/Econ-Impact-
of-US-Tugboat-Towboat-and-Barge-
Industry-lh-6-22-17.pdf.
    \5\ The U.S. Waterway System 2016 Transportation Facts & 
Information, http://www.navigationdatacenter.us/factcard/
FactCard2016.pdf.
---------------------------------------------------------------------------
    The U.S. Government-owned fleet consists of 15 vessels 
operated by the Military Sealift Command and 46 vessels in the 
Maritime Administration's (MARAD) Ready Reserve Force. 
Together, these vessels provide the initial surge of military 
capability while the commercial fleet is responsible for the 
ongoing sustainment.
    Of the 41,000 U.S. flagged vessels, approximately 82 are 
operating in international commerce moving goods between U.S. 
and foreign ports.\6\ These vessels serve as a training and 
employment base for the civilian mariners who serve aboard the 
Government-owned fleet when they are called to deploy. The 
percentage of international commercial cargoes carried on U.S. 
flagged vessels has fallen from 25 percent in 1955 to 
approximately 1.5 percent today.\7\ Over the last 35 years, the 
number of U.S. flagged vessels sailing in the international 
trade dropped from 850 to 82 vessels. This decline corresponds 
with a decrease in U.S. mariners resulting in an estimated 
shortfall of 1,800 qualified mariners needed to crew the 
Government-owned fleet.\8\ Since the Department of Defense 
relies on civilian mariners to crew the Government-owned fleet 
through the Maritime Security Program (MSP) and the Voluntary 
Intermodal Sealift Agreement (VISA), maintaining a pool of 
highly trained mariners is imperative.
---------------------------------------------------------------------------
    \6\ U.S. Department of Transportation Maritime Administration 
United States Flag Privately Owned Merchant Fleet Report November 2017.
    \7\ MARAD Calculation using CBP, Census, and commercial data 
sources.
    \8\ Maritime Administrator Mark H. Buzby Testimony before the House 
Committee on Armed Services on March 8, 2018.
---------------------------------------------------------------------------
    Within the international U.S. flag fleet, 60 vessels are 
enrolled in the Maritime Security Program. Under this program, 
militarily useful oceangoing commercial vessels each receive an 
annual operating stipend of $5 million to provide military 
sealift for the United States Transportation Command within the 
Department of Defense (DoD).

U.S. SHIPBUILDING INDUSTRY

    Since the development of the clipper ships in the 1830's, 
the United States has a long tradition of producing some of the 
most modern and sophisticated vessels in the world. Today, U.S. 
shipyards of all sizes deliver a wide variety of commercial 
vessels including patrol boats, tugs, barges of all sizes, 
ferries, ocean going container and roll-on/roll-off (RORO) 
vessels, tankers, and oil and gas development support vessels, 
among many others. The U.S. commercial shipyard industry, as 
well as its supplier base, is essential to maintaining the 
government shipbuilding and ship repair industrial base.
    Currently there are 117 shipyards in the United States, 
spread across 26 States that are classified as active 
shipbuilders (Appendix A). In addition, there are more than 200 
shipyards engaged in ship repairs or capable of building ships, 
but not actively engaged in shipbuilding. In 2011, the U.S. 
private shipbuilding and repairing industry directly provided 
107,240 jobs, $7.9 billion in labor income, and $9.8 billion in 
gross domestic product (GDP) to the national economy.
    The Federal Government, including the U.S. Navy, U.S. Army, 
and U.S. Coast Guard, is an important source of demand for U.S. 
shipbuilders. While just 1 percent of the vessels delivered in 
2011 (15 of 1,459) were delivered to U.S. Government agencies, 
eight of the 11 large deep-draft vessels delivered were 
delivered to the U.S. Government, and roughly 70 percent of 
U.S. shipbuilding revenues came from military shipbuilding and 
repair.\9\
---------------------------------------------------------------------------
    \9\ Figure 5, The Economic Importance of the U.S. Shipbuilding and 
Repairing Industry, Maritime Administration, November 2015.
---------------------------------------------------------------------------

U.S. MERCHANT MARINE LAWS AND PROGRAMS

    Since 1789, Congress has passed several laws to help keep 
the U.S. merchant marine competitive in the global economy and 
maintain a sealift and shipyard industrial capacity necessary 
for our national security. In addition to the Maritime Security 
Program, these laws and programs include the Jones Act, Cargo 
Preference, and the Military-to-Mariner Program.

JONES ACT

    The Jones Act first came into effect as part of the 
Merchant Marine Act of 1920 to encourage the development of a 
strong merchant marine for both national defense and economic 
security. The Jones Act contains a number of provisions 
designed to encourage a robust U.S. shipbuilding capacity and 
employment opportunities for U.S. mariners:
    1.  U.S. Owned and Flagged--Chapter 551 of title 46, United 
States Code, requires that merchandise and passengers being 
transported by water between two points in the United States 
must travel on vessels owned by U.S. citizens and registered or 
``flagged'' in the United States with an endorsement by the 
Coast Guard to participate in the coastwise trade;
    2.  U.S. Built--Chapter 121 of title 46, United States 
Code, requires vessels to be eligible for a coastwise 
endorsement to be built in the United States. Chapters 551 and 
801 of title 46, United States Code, also place restrictions on 
the involvement of foreign owned, built, and flagged vessels in 
towing, dredging, and salvage activities in U.S. waters;
    3.  U.S. Crewed--Chapter 81 of title 46, United States 
Code, requires the master, all of the officers, and at least 
three-quarters of the crew to be U.S. citizens in order for a 
vessel to be flagged in the United States; and
    4.  Rebuild/Reflag Prohibition--Chapter 121 also prohibits 
vessels that were once eligible to engage in the U.S. coastwise 
trade and then later sold to a foreign citizen, documented 
under a foreign registry, or rebuilt outside the United States 
from engaging in the coastwise trade (a vessel may be 
considered rebuilt when work performed on its hull or 
superstructure constitutes more than 7.5 percent of the 
vessel's steelweight prior to the work).
    The Coast Guard is responsible for reviewing applications 
from vessel owners seeking a coastwise endorsement to 
participate in the Jones Act trade. The Coast Guard determines 
whether the owners meet the U.S. citizenship requirements and 
whether the vessel was built in the United States, or the 
extent to which it was rebuilt outside the United States, 
before it will issue a coastwise endorsement.
    U.S. Customs and Border Protection (CBP) determines whether 
the cargo to be moved on a vessel constitutes ``merchandise'' 
under section 55102 of title 46, United States Code. CBP also 
determines whether the movement of that cargo is transportation 
and subject to the Jones Act.
    Section 501 of title 46, United States Code, provides a 
mechanism to waive the Jones Act and other vessel navigation 
and inspection laws. The Jones Act can be waived by the 
Secretary of the department in which the Coast Guard is 
operating under subsection 501(a), at the request of the 
Secretary of Defense and to the extent the Secretary of Defense 
considers it necessary in the interest of national defense. 
Under subsection 501(b), the Secretary of Homeland Security may 
waive requirements for the use of a coastwise endorsed vessel 
for the purposes of national defense, only after a 
determination by the MARAD Administrator that no U.S. flagged, 
owned, built, and crewed vessels are available. Both 
authorities have been used sparingly by the executive branch, 
and most commonly to respond to instances of natural disasters 
or national emergencies.

PREFERENCE CARGO LAWS AND PROGRAMS

    The Cargo Preference Act of 1954 was designed to support an 
internationally trading commercial U.S.-flagged fleet. It 
requires that at least 50 percent of government impelled cargo 
is transported on privately owned U.S. flag ships. These 
vessels provide economic and national security by transporting 
cargo for the Department of Defense as well as serving as an 
employment base for the civilian mariners who are responsible 
for crewing the Government-fleet in times of war. Several Cargo 
Preference provisions promote the use of U.S. flagged vessels.
    1.  U.S. Owned and Financed--Chapter 553 of title 46, 
United States Code, requires that cargo procured, furnished, 
and financed by the U.S. Government must travel on vessels 
registered or ``flagged'' in the United States. This includes 
the movement of government personnel on official business. In 
2008, statutory amendments expanded application to vessels 
financed by the Federal Government as well (P.L. 110-417, 
Sec. 3511).
    2.  International Aid--Chapter 553 of title 46, United 
States Code, requires at least 50 percent of the gross tonnage 
of U.S. agricultural commodities provided under U.S. food aid 
programs must ship via U.S.-flag commercial vessels. Section 
55305 of title 46, United States Code, requires that ships 
eligible for food-aid cargoes must either be built in the 
United States, or, if built abroad, must have sailed under the 
U.S. flag for the previous 3 years. In 2012, chapter 553 was 
amended to reduce the percentage of food aid that must be 
shipped on U.S.-flag ships from 75 percent to 50 percent.
    Shipping operators are responsible for reporting the 
movement of preference cargo within thirty days of loading 
goods by providing receipt of the shipment to MARAD, the 
administering authority (P.L. 91-469). Shippers are required to 
go to ``great effort'' to secure U.S.-flag service before using 
a foreign carrier, communicating with U.S.-flag carriers at the 
earliest possible time to ensure the greatest degree of 
coordination and to obtain the best freighted rates. If, 
through demonstrably diligent efforts, they are unable to find 
U.S.-flag service, MARAD can issue a determination of the non-
availability of qualified U.S.-flag carriage.

MILITARY-TO-MARINER PROGRAM

    A healthy maritime sector is vital to our economy and 
national security. A significant proportion of U.S. mariners 
are nearing retirement age, prompting a potential future 
shortage of available and experienced maritime professionals 
which could impact military sealift and U.S. maritime commerce. 
Trained mariners separating from military service (e.g., Navy, 
Marine Corps, Coast Guard, Army), could help compensate for a 
potential shortage. Maritime stakeholders are aware of this 
looming workforce attrition and have expressed concern that 
more should be done now to maximize the potential of this 
highly trained, dedicated, and proficient labor pool.
    Originally formed in 1992, the Merchant Marine Personnel 
Advisory Committee (MERPAC) was statutorily authorized in 
section 310 of the Howard Coble Coast Guard and Maritime 
Transportation Act of 2014 (46 U.S.C. 8108). MERPAC advises the 
Secretary of Homeland Security, through the Commandant of the 
Coast Guard, on matters relating to personnel in the United 
States Merchant Marine including training, qualifications, 
certification, documentation, and fitness standards and other 
matters, as assigned. MERPAC meets twice a year and as of 
February 2017, has made 88 recommendations to streamline the 
process for military mariners to obtain their U.S. Merchant 
Mariner credentials and increase the participation of each 
military service in maintaining crosswalks and course 
approvals.
    Section 305 of the Howard Coble Coast Guard and Maritime 
Transportation Act of 2014 (P.L. 113-281) encouraged 
opportunities for sea service veterans by authorizing the 
Secretary of Homeland Security to issue an officer endorsement 
to a military mariner who: (1) has at least 3 months of 
qualifying service on a vessel of the uniformed services within 
the 7-year period immediately preceding the date of 
application; and (2) satisfies all other requirements for such 
a license. Section 305 also requires the Secretary to issue a 
sea service letter to a member or former member of the Coast 
Guard within 30 days of making such a request for an officer 
endorsement.
    Section 568 of the National Defense Authorization Act for 
Fiscal Year 2017 (P.L. 114-328) requires the Secretaries of 
Defense and Homeland Security to report to Congress on how the 
DoD can better harmonize active duty training requirements for 
military service members with the credentialing requirements 
for similar civilian merchant marine industry positions. 
Additionally, the Secretaries were directed to identify and 
rectify gaps that exist between current military standards and 
commercial credentialing standards. The DoD transmitted the 
report to Congress on September 28, 2017.

INTERNATIONAL CONVENTION ON STANDARDS OF TRAINING, CERTIFICATION AND 
                    WATCHKEEPING (STCW)

    The STCW sets qualification standards for masters, 
officers, and watch personnel on seagoing merchant ships. The 
STCW was adopted in 1978 by conference at the International 
Maritime Organization (IMO) in London, and entered into force 
in 1984. The IMO implements the convention which is designed to 
ensure global standards are in place to train and certify 
seafarers among all flag States. The Coast Guard enforces STCW 
requirements as implemented under U.S. law for U.S. flagged 
carriers.
    In 2010, after a 2-year comprehensive review of the entire 
STCW Convention and the STCW Code, the IMO adopted the ``Manila 
Amendments.'' In 2011, the Coast Guard proposed changes to 
amend its regulations to fully harmonize and incorporate the 
requirements for national licenses with those of the Manila 
Amendments.\10\ On December 24, 2013, the Coast Guard published 
a Final Rule to incorporate the 2010 Amendments into U.S. 
regulations. Full implementation of the 2010 Amendments took 
effect on July 1, 2017.
---------------------------------------------------------------------------
    \10\ August 1, 2011 Proposed Rule (RIN 1625-AA16) outlines the 
changes to U.S. regulations proposed by the Coast Guard.
---------------------------------------------------------------------------
    The most significant amendments include new rest hours for 
seafarers, new certificate of competency grades, updated 
training requirements, mandatory security training, and 
additional medical standards.

                               APPENDIX A
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                              WITNESS LIST

Panel I

      Rear Admiral John Nadeau, Assistant Commandant 
for Prevention Policy, United States Coast Guard
      Rear Admiral Mark H. Buzby, USN Ret., 
Administrator, Maritime Administration

Panel II

      Rear Admiral Michael Alfultis, PH.D., President, 
State University of New York Maritime College
      Ms. Jennifer Carpenter, Executive Vice President 
& COO, The American Waterways Operators
      Mr. John Crowley, President, National Association 
of Waterfront Employers
      Mr. Michael Roberts, Senior Vice President and 
General Counsel, Crowley Maritime on behalf of American 
Maritime Partnership
      Mr. Augustin Tellez, Executive Vice President, 
Seafarers International Union, on behalf of American Maritime 
Officers, Masters, Mates and Pilots, and The Seafarers 
International Union

 
   U.S. MARITIME AND SHIPBUILDING INDUSTRIES: STRATEGIES TO IMPROVE 
        REGULATION, ECONOMIC OPPORTUNITIES, AND COMPETITIVENESS

                              ----------                              


                        WEDNESDAY, MARCH 6, 2019

                  House of Representatives,
                    Subcommittee on Coast Guard and
                           Maritime Transportation,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:01 a.m. in 
room 2253, Rayburn House Office Building, Hon. Sean Patrick 
Maloney (Chairman of the subcommittee) presiding.
    Mr. Maloney. Good morning. The subcommittee will come to 
order. Welcome to the first hearing of the 116th Congress. We 
are going to look at strategies to improve the U.S. maritime 
and shipbuilding industry. It is an honor to chair this crucial 
subcommittee. I look forward to working alongside the maritime 
community, including the Coast Guard.
    The Subcommittee on Coast Guard and Maritime Transportation 
and its predecessors has been around in one form or another 
throughout the history of our country, supporting all of our 
maritime activities. I am privileged to assume the mantle of 
responsibility. I look forward to working in a genuine 
bipartisan manner with all of my colleagues on the other side 
of the aisle, with Ranking Member Gibbs, so we can write a new 
productive chapter in this subcommittee's history. And I really 
mean that, and I really want to run this committee in a way 
that is bipartisan and that is participatory, so thank you, 
gentlemen, for being here this morning.
    Before we begin I want to take a moment to recognize and 
thank the members of the Coast Guard, in particular, for their 
actions during the recent Government shutdown. You know, for 
the first time in our Nation's history members of an armed 
service force were not paid due to a lapse in appropriations. 
That was unacceptable, and something we cannot allow to occur 
again.
    To the men and the women of the Coast Guard, you deserve an 
apology from your Government, for what we put you through. And 
I, for one, am happy to deliver it. I don't think it is 
productive to get into a blame game here, except to say we 
appreciate you, we appreciate your service, and we should not 
have put you in that position. And I know a lot of us are 
committed to never doing so again, and we have some ideas on 
that, as well.
    I also want to remember, in particular, Chief Warrant 
Officer Michael Kozloski, a Coast Guard member who died in a 
tragic accident while on duty in January in Alaska. You know, 
Mike Kozloski dedicated his entire adult life to protecting our 
country as a member of the Coast Guard, and his service will 
not be forgotten. Our thoughts go out to his wife, Brie, and to 
his children.
    And I want to thank in particular Admiral Schultz, the 
Commandant, for joining me at the funeral in Mahopac, New York. 
It was not just Mike's hometown, it is in my district. It is 
about 10 miles from where I live. So we felt that loss in the 
Hudson Valley, it was close to home. So we appreciate Mike and 
his family. We lift them up in our prayers.
    And again, thank you to all of the members of the Coast 
Guard who attended that beautiful service. It was really a 
wonderful opportunity for me to see firsthand that the Coast 
Guard works as a family. And we should act as members of your 
family on this committee, even as we ask tough questions and do 
our jobs.
    Now, of course, one cannot overstate the importance of our 
Nation's maritime industry. Every year over $4.6 trillion worth 
of commerce flows through our maritime transportation system, 
and it is rapidly becoming more complex. Increases in the 
amount of cargo being shipped and the size of the vessels 
carrying that cargo challenge the industry and agencies 
responsible for its oversight.
    Similarly, new technologies are moving the industry 
forward, while also creating new vulnerabilities and challenges 
that must be addressed. So my hope is that this hearing will 
begin the dialogue to identify constructive, pragmatic 
strategies to protect, enhance, and expand the U.S. maritime 
and shipbuilding industries.
    Since 1789, Congress has passed laws to help keep the U.S. 
merchant marine competitive in the global economy, and to 
maintain a military sealift and shipyard industrial capacity 
necessary to ensure our national security. Durable maritime 
statutes, such as the Jones Act, cargo preference, and the 
maritime loan guarantee program have been supplemented by new 
program authorities such as the Maritime Security Program, 
small shipyard grant program, and the Military to Mariner 
initiative.
    The Jones Act first came into effect as part of the 
Merchant Marine Act of 1920 to encourage the development of a 
strong merchant marine for both national defense and economic 
security. The Jones Act requires that merchandise and 
passengers being transported by water between two points in the 
United States must travel on vessels that are built in the 
U.S., owned and manned by U.S. citizens, and registered or 
flagged in the United States, with an endorsement by the Coast 
Guard to participate in the coastwise trade.
    Ninety-one United Nations member states have similar laws 
to the Jones Act, which are called cabotage laws. Some maritime 
nations are expanding the scope of their cabotage laws, despite 
the proliferation of global free trade agreements. For example, 
last year Russia enacted a law requiring that all domestic and 
international shipments of oil, natural gas, gas condensate, 
and coal extracted from Russian Territory and loaded on vessels 
along the North Sea route must be carried by Russian-flagged 
ships.
    Despite other countries' cabotage laws, some free trade 
critics continue to attack the Jones Act as unnecessary, 
unhelpful to the U.S. economy. But we cannot become complacent 
in our defense of the Jones Act, which remains a critical 
component of U.S. maritime strategy.
    Another critical component of that strategy is the U.S. 
merchant marine, the fleet of the U.S.-flagged commercial 
vessels and civilian mariners that carry goods to and from, as 
well as within, the United States. These vessels are operated 
by U.S.-licensed deck and engineering officers and unlicensed 
seafarers. A significant portion of U.S. mariners are nearing 
retirement age, revealing a potential future shortage of 
available and experienced maritime professionals that could 
impact military sealift and weaken U.S. maritime commerce: a 
point I expect Admiral Buzby will make today.
    Maritime stakeholders are aware of this looming workforce 
attrition, and have expressed concern that more should be done 
now to expand this highly trained, dedicated, and proficient 
labor pool by any means necessary. So it is imperative that we 
examine every opportunity to grow and diversify the U.S. 
mariner workforce, including making it easier for separating 
military members to enter the maritime workforce and 
identifying ways we might better leverage the capabilities of 
State maritime academies.
    In addition to facilitating commerce in times of peace and 
war, the U.S. merchant marine acts as a naval auxiliary to 
deliver troops and war material to military operations abroad. 
Throughout our history the Army has relied on U.S.-flagged 
commercial vessels to carry weapons and supplies and ferry 
troops to the battlefield. During Operations Enduring Freedom 
and Iraqi Freedom, U.S.-flagged commercial vessels transported 
90 percent of sustainment cargoes moved to Afghanistan and 
Iraq. That is an extraordinary number.
    But the U.S.-flagged fleet in the foreign trade has 
shrunken to the point that it is a remnant of what it was just 
10 years ago. We must do more to address the competitive 
imbalance that exists between vessels operating under the U.S. 
flag with vessels operating under foreign flags of convenience.
    Additionally, we must do more to generate new cargo. Cargo 
is the life blood of the maritime industry. Without more cargo, 
there is no need to build more ships. And without new ships, 
there is little need to hire more mariners. I would like to 
learn more about what options or strategies we might consider 
to address these two fundamental challenges to the security and 
success of the U.S. maritime industry.
    So we are joined here today by experts from the U.S. Coast 
Guard and the Maritime Administration, as well as professionals 
from many sectors of the maritime industry.
    Welcome to one and all; we appreciate your being here. I 
look forward to hearing from you on how we might strengthen 
this indispensable sector of the U.S. economy.
    [Mr. Maloney's prepared statement follows:]

                                 
 Prepared Statement of Hon. Sean Patrick Maloney, a Representative in 
 Congress from the State of New York, and Chair, Subcommittee on Coast 
                   Guard and Maritime Transportation
    Good morning, and welcome to our first hearing in the 116th 
Congress to look at strategies to improve the U.S. maritime and 
shipbuilding industries.
    It is an honor to chair this crucial subcommittee, and I look 
forward to working alongside our maritime community, including the 
Coast Guard. The Subcommittee on Coast Guard and Maritime 
Transportation and its predecessors have been around in one form or 
another throughout the history of our country, supporting all of our 
maritime activities.
    I am privileged to assume that mantle of responsibility, and I look 
forward to working in a genuine bipartisan manner with Ranking Member 
Gibbs to write a new productive chapter in this subcommittee's history.
    Before we begin, I want to take a moment to recognize and thank the 
members of the Coast Guard for their actions during the recent 
government shutdown. For the first time in our Nation's history, 
members of an Armed Force were not paid due to a lapse in 
appropriations. It was unacceptable and something we cannot allow to 
occur again. To the men and women of the Coast Guard: thank you for the 
service you provide to this Nation every day.
    I also want to remember Chief Warrant Officer Michael Kozloski, a 
Coast Guard member who died in a tragic accident while on duty in 
January. Chief Warrant Officer Kozloski dedicated his entire adult life 
to protecting our country as a member of the Coast Guard, and his 
service will not be forgotten. Our thoughts go out to his family and 
shipmates.
    One cannot overstate the importance of our nation's maritime 
industry. Every year, over $4.6 trillion worth of commerce flows 
through a maritime transportation system that is rapidly becoming more 
complex. Increases in the amount of cargo being shipped and the size of 
the vessels carrying that cargo challenge the industry and agencies 
responsible for its oversight.
    Similarly, new technologies are moving the industry forward while 
also creating new vulnerabilities and challenges that must be 
addressed. My hope is that this hearing will begin a dialogue to 
identify constructive and pragmatic strategies to protect, enhance and 
expand the U.S. maritime and shipbuilding industries.
    Since 1789, Congress has passed laws to help keep the U.S. merchant 
marine competitive in the global economy and to maintain a military 
sealift and shipyard industrial capacity necessary to ensure our 
national security. Durable maritime statutes such as the Jones Act, 
Cargo Preference, and the Maritime Loan Guarantee Program, have been 
supplemented by new program authorities such as the Maritime Security 
Program, Small Shipyard Grant Program and the Military-to-Mariner 
Initiative.
    The Jones Act first came into effect as part of the Merchant Marine 
Act of 1920 to encourage the development of a strong merchant marine 
for both national defense and economic security. The Jones Act requires 
that merchandise and passengers being transported by water between two 
points in the United States must travel on vessels that are built in 
the U.S., owned and manned by U.S. citizens, and registered or 
``flagged'' in the United States with an endorsement by the Coast Guard 
to participate in the coastwise trade.
    Ninety-one United Nations member states have laws similar to the 
Jones Act, which are called ``cabotage laws''. Some maritime nations 
are expanding the scope of their cabotage laws despite the 
proliferation of global free trade agreements.
    For example, last year Russia enacted a law requiring that all 
domestic and international shipments of oil, natural gas, gas 
condensate, and coal extracted from Russian territory and loaded on 
vessels along the Northern Sea Route must be carried by Russian-flagged 
ships.
    Despite other countries' cabotage laws, some free trade critics 
continue to attack the Jones Act as unnecessary or unhelpful to the 
U.S. economy. But we cannot become complacent in our defense of the 
Jones Act, which remains a critical component of U.S. maritime 
strategy.
    Another critical component of that strategy is the U.S. merchant 
marine--the fleet of U.S. flagged commercial vessels and civilian 
mariners that carry goods to and from, as well as within, the United 
States. These vessels are operated by U.S. licensed deck and 
engineering officers and unlicensed seafarers.
    A significant proportion of U.S. mariners are nearing retirement 
age, revealing a potential future shortage of available and experienced 
maritime professionals that could impact military sealift and weaken 
U.S. maritime commerce--a point I expect Admrial Buzby will make today. 
Maritime stakeholders are aware of this looming workforce attrition and 
have expressed concern that more should be done now to expand this 
highly-trained, dedicated, and proficient labor pool by any means 
necessary.
    It is imperative that we examine every opportunity to grow and 
diversify the U.S. mariner workforce, including making it easier for 
separating military members to enter the maritime workforce and 
identifying ways we might better leverage the capabilities of state 
maritime academies.
    In addition to facilitating commerce in times of peace and war, the 
U.S. Merchant Marine acts as a naval auxiliary to deliver troops and 
war material to military operations abroad. Throughout our history, the 
Army has relied on U.S. flagged commercial vessels to carry weapons and 
supplies and ferry troops to the battlefield. During Operations 
Enduring Freedom and Iraqi Freedom, U.S. flagged commercial vessels 
transported 90 percent of sustainment cargoes moved to Afghanistan and 
Iraq.
    But the U.S. flag fleet in the foreign trade has shrunken to the 
point that it is a remnant of what it was just ten years ago. We must 
do more today to address the competitive imbalance that exists between 
vessels operating under the U.S. flag with vessels operating under 
foreign flags of convenience.
    Additionally we must do more to generate new cargo. Cargo is the 
lifeblood of the maritime industry. Without more cargo, there is no 
need to build more ships, and without new ships, there is little need 
to hire more mariners.
    I would like to learn more about what options or strategies we 
might consider to address these two fundamental challenges to the 
security and success of the U.S. maritime industry.
    We are joined here today by experts from the U.S. Coast Guard and 
the Maritime Administration, as well esteemed professionals from many 
sectors of the maritime industry. Welcome to one and all. I look 
forward to hearing from you on how we might strengthen this 
indispensable sector of the U.S. economy.
    Thank you.

    Mr. Maloney. I would now like to call on the ranking member 
of the subcommittee, Mr. Gibbs, for any opening remarks.
    Mr. Gibbs. Thank you. Thank you, Chairman Maloney.
    First, a procedural question. Representative Garret Graves 
from Louisiana, I just request that you ask unanimous consent 
that he sit in.
    Mr. Maloney. Yes, I think you are asking for a unanimous 
consent on that?
    Mr. Gibbs. Yes.
    Mr. Maloney. Hearing no objection, so ordered.
    Mr. Gibbs. Thanks.
    Mr. Maloney. Welcome, Mr. Graves.
    Mr. Gibbs. Thank you. He just stepped out, he will be back. 
Thanks.
    And also, I would like to offer my condolences to the 
family of the coastguardsman who lost his life. And I also 
wanted to thank our men and women in the Coast Guard, and our 
witnesses here today for the great work that they do, and great 
service to our country, protecting our citizens of our country, 
and also provide more safety on the--all the lakes and open 
seas.
    The U.S. maritime industry directly or indirectly employs 
more than 475,000 Americans, providing nearly $29 billion in 
annual wages. There are more than 40,000 commercial vessels 
currently flying the American flag, not counting the 35,000 
vessels in the U.S. fishing industry fleet. The vast majority 
of these vessels are engaged in domestic commerce through 
roughly 80 U.S.-flagged vessels that continue to operate in 
international trade. It is estimated that the U.S. maritime 
industry accounts for over $90 billion in economic output each 
year.
    Beyond the important contributions to our economy, U.S.-
flagged ships, U.S.-licensed mariners, and U.S. shipbuilders 
are vital to our national security. U.S. military relies on 
U.S.-flagged commercial vessels crewed by American merchant 
mariners to carry troops, weapons, and supplies to the 
battlefield. We cannot rely on foreign vessels and crews to 
provide for our national security.
    We must maintain a robust fleet of U.S.-flagged vessels--I 
keep saying vehicles there, don't I? Vessels--I am landlocked, 
I guess--and a group of skilled American mariners and a strong 
shipyard industrial base.
    I am interested in ways in which we can promote the U.S. 
Fleet through more efficient and less burdensome regulations, 
as well as increased investment.
    I look forward to hearing from the witnesses on ways in 
which we can further promote the U.S.-flagged fleet and create 
more U.S. mariner jobs.
    [Mr. Gibbs's prepared statement follows:]

                                
  Statement of Hon. Bob Gibbs, a Representative in Congress from the 
  State of Ohio, and Ranking Member, Subcommittee on Coast Guard and 
                        Maritime Transportation
    The U.S. maritime industry directly or indirectly employs more than 
475,000 Americans, providing nearly $29 billion in annual wages. There 
are more than 40,000 commercial vessels currently flying the American 
flag, not counting the 35,000 vessel U.S. fishing industry fleet.
    The vast majority of these vessels are engaged in domestic 
commerce, though roughly 80 U.S. flag vessels continue to operate in 
international trade. It is estimated that the U.S. maritime industry 
accounts for over $90 billion in economic output each year.
    Beyond the important contributions to our economy, U.S.-flag ships, 
U.S.-licensed mariners, and U.S. shipbuilders are vital to our national 
security. The U.S. military relies on U.S.-flag commercial vessels 
crewed by American Merchant Mariners to carry troops, weapons, and 
supplies to the battlefield. We cannot rely on foreign vessels and 
crews to provide for our national security. We must maintain a robust 
fleet of U.S.-flag vessels, a cadre of skilled American mariners, and a 
strong shipyard industrial base.
    I am interested in ways in which we can promote the U.S. fleet 
through more efficient and less burdensome regulation as well as 
increased investment.
    I look forward to hearing from the witnesses on ways in which we 
can further promote the U.S.-flag fleet and create more U.S. mariner 
jobs.

    Mr. Gibbs. And thank you, I yield back.
    Mr. Maloney. I would also--I would like at this time to ask 
unanimous consent to enter a statement from the chair of the 
full committee, Peter DeFazio, which he is not able to deliver 
in person.
    If there is no objection, it will be entered into the 
record.
    [Mr. DeFazio's prepared statement follows:]

                                 
 Statement of Hon. Peter A. DeFazio, a Representative in Congress from 
    the State of Oregon, and Chair, Committee on Transportation and 
                             Infrastructure
    Thank you, Chairman Maloney and Ranking Member Gibbs, I cannot 
think of a better way for this subcommittee to start off the 116th 
Congress than to convene this morning's oversight hearing on strategies 
to improve the U.S. maritime and shipbuilding industries.
    We begin the new Congress with a clean slate and I am eager to hear 
from our witnesses today how we can make these critical industries 
stronger.
    The maritime industry will continue to face challenges--such as 
increased shipping demand, larger vessels, and attacks on the Jones 
Act.
    Regarding the Jones Act, recent discussions to waive the Act to 
allow the movement of LNG to either Puerto Rico or other U.S. locations 
are exactly the kind of pernicious, thoughtless proposals that 
accomplish little but to fill the coffers of the oil and gas industry 
at the expense of developing new markets for our coastwise traders.
    Let me be clear: under current law, the only way the Jones Act can 
be waived is when such a waiver is determined to be ``in the interest 
of national defense'', period. And even in those instances, waivers are 
pursued as a last recourse, not the first option.
    I applaud the President for signing an executive order on Monday to 
support the transition of active duty service members and military 
veterans to careers in the U.S. Merchant Marine. That was the right 
thing to do. It would be a cruel irony, however, if the next action 
taken by this administration is to waive the Jones Act and 
simultaneously eliminate future job opportunities for those very same 
veterans and separating active duty service members.
    We are left with no other option other than to confront these 
challenges because the annual economic contribution of the maritime 
industry is simply too significant for us to remain indifferent. 
Remember, over ninety percent of U.S. imports and exports arrive or 
depart by ship.
    The Coast Guard's 2018 Maritime Commerce Strategic Outlook provides 
a succinct summation of what we risk to lose if we fail to act to 
rebuild and revitalize our maritime economy.
    Nationally, maritime commerce generates more than 23 million jobs 
and over $4.6 trillion in economic activity annually. More 
specifically, the U.S. maritime industry generates over $100 billion in 
annual economic output and sustains more than 500,000 good paying jobs 
in the U.S. industrial base.
    Not surprising, the maritime industry is an important engine in 
many state and local economies. For example, according to data compiled 
by the American Maritime Partnership, the maritime industry in Oregon 
alone contributes $1.2 billion annually to the Oregon economy and 
provides close to 7,000 jobs, including $367.2 million in worker 
income.
    We all have a stake in maintaining and growing a vibrant, diverse, 
and globally competitive U.S. maritime industry. The founders of our 
Republic recognized this fact in the late 18th century, and it remains 
as true and relevant today.
    The United States is a great maritime nation. However, to remain a 
great maritime nation in the future, we must renew our commitment, 
maintain our vigilance, embrace a new vision to support the U.S. 
maritime industry and unleash the great potential of our Nation's Blue 
Economy.
    Speaking of commitments, the government failed to uphold our 
commitment to members of the Coast Guard during the recent lapse in 
appropriations. It is unacceptable that the men and women of the Coast 
Guard had to worry about if and when they would receive their 
paychecks. I have introduced H.R. 367, the Pay Our Coast Guard Parity 
Act, to ensure that something like this never happens again.
    Not paying the Coast Guard during the shutdown was one of the most 
monumentally dumb things I have witnessed during my thirty-two years in 
Congress.
    For just a minute, think about it. These are the people we ask to 
go out selflessly into the jaws of violent storms to rescue people lost 
at sea. These are the people who are so proficient at combating illegal 
drug running that they interdict more contraband at sea than all other 
Federal, State and local agencies combined. Moreover, these are the 
people we turn to as first responders after natural and man-made 
disasters even though their own families and communities might be 
affected, too. Not paying the Coast Guard makes no sense.
    The Coast Guard provides vital service to the Nation around the 
world and around the clock. As members of the Armed Forces, they are 
uniquely responsible to continue to perform regardless of the political 
winds. I hope Rear Admiral Nadeau can share with us some of the impacts 
of the shutdown on the men and women of the Coast Guard.
    To that end, Mr. Chairman, I welcome the opportunity to renew our 
commitment this morning, and I look forward to hearing from our 
witnesses on how we might strengthen this often over- looked, but 
indispensable, sector of the U.S. economy.
    Thank you.

    Mr. Maloney. Well, at this time I would like to--is Mr. 
Graves with us? No. Well, then at this time I would like to 
invite and welcome our witnesses for today's panel.
    We are joined today by Rear Admiral John Nadeau.
    Am I saying your name correctly, sir?
    Admiral Nadeau. Nadeau.
    Mr. Maloney. Nadeau, Nadeau. I was told it rhymed with 
Maddow, which I was hoping would irritate the Republicans on 
the committee.
    [Laughter.]
    Mr. Maloney. But that was not to be. Admiral Nadeau, thank 
you for your presence today.
    Admiral Nadeau is the Assistant Commandant for Prevention 
Policy for the United States Coast Guard.
    We are also joined by Rear Admiral Mark Buzby, who is the 
Administrator of the Maritime Administration.
    Thank you both for being here today, for your service to 
our country.
    I would ask unanimous consent that our witnesses' full 
statements be included in the record.
    Without objection, so ordered.
    Since your written testimony has been part of the record, 
the subcommittee requests that you limit your oral testimony to 
5 minutes. And with that, Admiral Nadeau, welcome.

TESTIMONY OF REAR ADMIRAL JOHN P. NADEAU, ASSISTANT COMMANDANT 
  FOR PREVENTION POLICY, U.S. COAST GUARD; AND MARK H. BUZBY, 
             ADMINISTRATOR, MARITIME ADMINISTRATION

    Admiral Nadeau. Good morning, Chairman Maloney, Ranking 
Member Gibbs, distinguished members of the subcommittee. It is 
my pleasure--really, my privilege--to be here today to discuss 
the state of the U.S. maritime industry and the Coast Guard's 
role in advancing a safe, secure Marine Transportation System, 
and enabling the uninterrupted flow of commerce.
    On behalf of our Commandant, Admiral Schultz, and the 
entire Coast Guard, I would first like to express our gratitude 
for all this committee's support of the United States Coast 
Guard. Thank you all. Thank you.
    The U.S. Coast Guard is the world's premier, multimission 
maritime Service responsible for the safety, security, and 
stewardship of the maritime domain. At all times a military 
Service, a branch of the U.S. Armed Forces, a Federal law 
enforcement agency, a regulatory body, a first responder, and a 
member of the intelligence community, the Coast Guard operates 
on all seven continents and across the homeland.
    Last October, the Commandant released his Maritime Commerce 
Strategic Outlook and outlined the Coast Guard's vision for 
enabling maritime commerce throughout our Nation's Marine 
Transportation System. We call it MTS. The MTS consists of our 
95,000 miles of shoreline and 25,000 miles of navigable inland 
waterways, and it connects our 361 ports.
    This MTS is marked with nearly 50,000 buoys and navigation 
aids that facilitate the safe and secure movement of thousands 
of vessels any given moment, any given day, 24 by 7 by 365. It 
gives us unfettered access to two of the world's largest 
oceans, it links our Nation's sheltered harbors and deepwater 
ports to those of other countries, and it connects our 
heartland, the Nation's breadbasket, to consumers and markets 
all around the globe.
    The MTS supports $4.6 trillion of U.S. economic activity 
every year, and sustains more than 23 million U.S. jobs. It is 
the most efficient, environmentally sound, and sustainable way 
to meet our Nation's transportation needs both today and 
tomorrow.
    The MTS also enables our Nation to project our military 
force. It allows the movement and logistical support of the 
U.S. military. With the MTS, our DoD brothers and sisters can 
be transported anytime, anywhere around the globe, using U.S. 
sealift. It is on Coast Guard-inspected, U.S.-flagged ships 
that are manned with Coast Guard-credentialed U.S. mariners.
    In short, the MTS is a gift to this Nation. And the release 
of the Maritime Commerce Strategic Outlook reflects the Coast 
Guard's commitment to ensure a safe and secure MTS. And in 
honoring our commitment, we are pursuing precisely what this 
committee seeks to explore here today. That is, strategies to 
improve regulation, economic opportunities, and competitiveness 
in the U.S. maritime zone.
    At the operational level, the tragic sinking of the El Faro 
was over 3 years ago, but the lessons we learned are front and 
center as we work to make needed improvements in our marine 
safety mission.
    In the past year alone, we have established a new staff 
dedicated to reforming our oversight of third parties. We have 
prioritized inspector training. We have prioritized the hiring 
of civilian re-inspectors. We have increased opportunities for 
maritime graduates to join us and focus on the maritime safety 
missions. And we have developed new policy and training to 
improve our oversight of third parties who we entrust to work 
on our behalf.
    These actions and the mandates in the recently enacted Hamm 
Alert Maritime Safety Act, which this committee helped draft, 
will help us address all of our third-party oversight 
responsibilities, to include regulatory requirements under 
subchapter M, which recently added over 5,700 towing vessels to 
the U.S.-inspected fleet. That is a 50-percent increase.
    While pursuing all these recent initiatives, we have 
engaged stakeholders to understand their challenges. We are 
grateful for the outstanding relationships we have with the 
dedicated leaders across the U.S. maritime industry, including 
those of the American Waterways Operators, AWO; the Offshore 
Marine Service Association, OMSA; the Seafarers International 
Union, and the American Maritime Officers, SIU and AMO; and a 
whole host of other industry and labor groups that directly or 
indirectly, through our advisory committees, all provide us 
valuable insight, advice, and recommendations.
    In conclusion, a healthy maritime industry is vital to the 
Nation's economic prosperity and national security. The Coast 
Guard's marine safety missions and our day-to-day operations 
that support these missions must continue to evolve with 
stakeholder demands. They must keep pace with industry change, 
and ensure the safety, security, and environmental compliance 
of the MTS.
    We will continue to leverage the valuable support of our 
Federal, State, local, and Tribal partners. We will continue to 
be a commonsense regulator. And we will continue to support any 
and all efforts to improve regulation, economic opportunities, 
and competitiveness in the U.S. maritime.
    Again, thank you for the opportunity to be with you today. 
I look forward to your questions.
    [Admiral Nadeau's prepared statement follows:]

                                 
Prepared Statement of Rear Admiral John P. Nadeau, Assistant Commandant 
                for Prevention Policy, U.S. Coast Guard
                              introduction
    Good morning Chairman Maloney, Ranking Member Gibbs, and 
distinguished members of the Subcommittee. It is my pleasure to be here 
today to discuss the State of the U.S. maritime industry and the Coast 
Guard's role in advancing a safe, secure, and environmentally 
responsible U.S. Marine Transportation System.
    The U.S. Coast Guard is the world's premier, multi-mission, 
maritime service responsible for the safety, security, and stewardship 
of the maritime domain. At all times a military service and branch of 
the U.S. Armed Forces, a Federal law enforcement agency, a regulatory 
body, a first responder, and a member of the U.S. Intelligence 
Community, the Coast Guard operates on all seven continents and 
throughout the homeland, serving a Nation whose economic prosperity and 
national security are inextricably linked to broad maritime interests.
         the coast guard's maritime commerce strategic outlook
    Last October, the Commandant released his Maritime Commerce 
Strategic Outlook to communicate the Coast Guard's vision for enabling 
maritime commerce throughout the U.S. Marine Transportation System 
(MTS). From its origin, with the establishment of the Revenue Cutter 
Service, the Coast Guard has facilitated maritime security to promote 
and safeguard American commerce for more than 228 years. Today, the 
transportation of cargo on water by the global maritime industry is the 
most economical, and efficient mode of transport. An estimated 90 
percent of U.S. imports and exports move by ship through 361 commercial 
ports, along 95,000 miles of shoreline and 25,000 miles of navigable 
river and coastal waterways. Today's MTS supports $4.6 trillion in 
economic activity and more than 23 million jobs.
    The continued viability of the MTS also enables critical national 
security sealift capabilities, supporting U.S. Armed Forces' logistical 
requirements around the globe. By 2025, worldwide demand for waterborne 
commerce is expected to double, placing even greater demands on the 
MTS.
    The Maritime Commerce Strategic Outlook establishes three lines of 
effort that are critical to safeguarding the MTS in the future:
    1.  To facilitate lawful trade and travel on secure waterways;
    2.  To modernize aids to navigation and mariner information 
systems; and,
    3.  To transform our workforce capacity and partnerships to meet 
the increasingly complex operating environment.
        current and future coast guard marine safety initiatives
    The Coast Guard has already made substantial progress toward the 
Strategic Outlook's lines of effort. Notably, under Admiral Schultz' 
direction, the Coast Guard has prioritized marine inspector training, 
established a new staff dedicated to performing third party oversight, 
increased opportunities for maritime graduates to join the Coast Guard, 
and prioritized the hiring of civilian marine inspectors.
    Likewise, this Committee's continued support, to include 
legislation that is harmonious with the Coast Guard's Strategic 
Outlook, such as the Hamm Alert Maritime Safety Act of 2018, and a 
number of provisions in the more recently passed Coast Guard 
Authorization Act of 2018, has helped the Coast Guard refine and 
improve its marine safety mission.
    For example, as directed by the Hamm Alert Maritime Safety Act of 
2018, the Coast Guard is actively developing a comprehensive training 
architecture for our marine inspectors. This architecture will provide 
cohesive strategy, policy, and performance support to ensure that Coast 
Guard marine inspectors are trained consistently from the basic to the 
advanced level in a manner that keeps pace with industry, technology, 
and related regulatory changes.
    Second, the Coast Guard has improved and continues to modernize the 
Alternate Compliance Program (ACP). The ACP continues to leverage 
third-party statutory survey and certification services to reduce the 
costs and redundancies that may be associated with regulatory 
compliance. Using the lessons learned from the tragic sinking of the EL 
FARO, we developed new policy and training to improve our oversight of 
third parties. This new policy will help us equally address the new 
regulatory requirements of Subchapter M, which adds 5,700 vessels to 
the U.S. certificated fleet, a 50-percent increase.
    Third, the Coast Guard has made a deliberate push to focus vessel 
owners on Safety Management Systems. These systems are designed to 
proactively ensure safety at sea, prevent injury or loss of life, and 
avoid damage to the environment. Owners and operators of vessels are on 
the front line of a maritime safety net and are best positioned to take 
early and effective action to ensure their vessels remain in compliance 
with applicable requirements.
    To provide effective third-party oversight and monitor the 
effectiveness of Safety Management Systems, we have installed a 
competent and robust flag State control oversight framework aligned 
with international oversight methodologies.
    Marine inspector training, effective oversight of third party 
organizations, and a focus on safety management will be critical in 
directing our marine safety workforce while performing vessel 
inspection programs for towing vessels and fishing vessels.
    Staying abreast of changes in the maritime industry, such as 
integration of new technologies like LNG as fuel and automation; 
autonomous vessels, and maintaining effective risk management of 
growing cyber threats onboard vessels and within our ports, will also 
be critical areas of focus that will direct our present and future 
marine safety workforce.
    Throughout the MTS, the Coast Guard is also modernizing its 
constellation of over 45,000 federally maintained aids to navigation. 
This effort will leverage automatic identification system technology to 
improve service delivery to users that increasingly rely on electronic 
navigation. The balance of physical and electronic aids will be 
informed by outreach across user-groups under a first-ever National-
Level Waterways Analysis and Management System study. That balance of 
physical and electronic aids will be further informed by our intent to 
maintain a resilient MTS in the event of a GPS disruption.
    As the lead Federal agency of the U.S. flag Administration, the 
Coast Guard acts as both a regulator and a facilitator each day 
throughout our Nation's ports and waterways. Our marine safety program 
respects these roles by establishing a level playing field for industry 
through a framework of common-sense regulations. The Coast Guard's 
successful efforts to streamline regulations and to explore 
deregulatory options also promote investment and innovation throughout 
the maritime sector.
                               conclusion
    A healthy maritime industry is vital to the Nation's economic 
prosperity and national security. It must also become increasingly 
dynamic and continually evolve to meet stakeholder demands. The Coast 
Guard's marine safety missions must continue to evolve to keep pace 
with industry change and ensure the continued safety, security, and 
environmental compliance in the MTS. We are focused on ensuring every 
Coast Guard action sustains the safe operation of the MTS, without 
imposing unnecessary costs on U.S. entities competing in a global 
industry.
    Thank you for your continued support and the opportunity to testify 
before you today. I am happy to answer any questions you may have.

    Mr. Maloney. Thank you very much, Admiral Nadeau. I just 
want to observe for the record that you brought that in within 
2 seconds of the 5 minutes. That is impressive, sir, 
impressive.
    [Laughter.]
    Mr. Maloney. Admiral Buzby, the bar has been raised, sir. 
Thank you for being here. Please proceed.
    Admiral Buzby. All right. Good morning, Chairman Maloney, 
Ranking Member Gibbs, and members of the subcommittee. I 
appreciate the opportunity to discuss strategies to improve 
economic opportunities and competitiveness in the U.S. maritime 
and shipbuilding industries.
    The U.S. merchant marine, U.S. shipbuilding, and repair 
facilities, our Nation's port systems, and supporting 
industries integrate our economy with a global supply chain 
that moves more than 90 percent of the world's trade by 
tonnage. These industries, vessels, infrastructure, and 
personnel also play a critical role in our national security, 
supporting our ability to provide sealift to the Department of 
Defense.
    The mission that Congress gave the Maritime Administration 
back in 1936 is to foster, promote, and develop the maritime 
industry of the United States to meet this Nation's economic 
and security needs.
    For the past several decades our maritime industry has 
suffered losses as companies, ships, and jobs have moved 
overseas. As this valuable industry has eroded, our Nation's 
ability to trade internationally using U.S.-flagged ships has 
declined significantly. To address this multidecade trend, 
MARAD is working with stakeholders to identify ways to 
strengthen our industry.
    In addition, MARAD continues to leverage its existing 
programs to support critical mariner training, improve port 
infrastructure, and help address environmental challenges.
    U.S. strategic sealift relies on a fleet of 61 Government-
owned sealift ships, maintaining 5- and 10-day readiness 
status, plus oceangoing commercial vessels operating daily 
under the U.S. flag. Currently, 82 ships sail in that 
international trade, and 60 of those are enrolled in the 
Maritime Security Program. A domestic fleet of 99 large, 
oceangoing, self-propelled commercial vessels operating in 
Jones Act trade are operated by mariners with unlimited tonnage 
and unlimited horsepower licenses.
    All told, these commercial vessels form the primary 
employment pool for mariners with the unlimited credentials and 
training needed to meet the demanding need of our Nation's 
sealift capability. Estimates indicate that less than 2 percent 
of the U.S. waterborne imports and exports, by tonnage, move on 
those 82 internationally traded U.S.-flagged commercial 
vessels.
    The last year in which the U.S. Fleet carried at least 10 
percent of our trade was in 1960, when the fleet consisted of 
well over 1,000 ships. U.S.-flagged ships must compete against 
foreign-flagged carriers that benefit from major subsidies, tax 
benefits, or state ownership.
    For example, one large foreign-flagged carrier that is 
wholly state-owned has received nearly $2 billion in state 
assistance over the last several years, and will soon carry the 
single largest share of containerized imports to the United 
States. Absent such measures, U.S. shipping must rely primarily 
on cargo preference laws and the Maritime Security Program to 
maintain a level of competitiveness and help support the 
continued employment of American mariners.
    One of MARAD's principal responsibilities is to ensure a 
reliable flow of highly trained mariners available to satisfy 
sealift requirements. We accomplish this through our Nation's 
Center of Maritime Excellence, the U.S. Merchant Marine Academy 
at Kings Point, and through the six outstanding State maritime 
academies. Rear Admiral Michael Alfultis, president of State 
University of New York Maritime College, will address mariner 
training in greater detail in the followup panel.
    I am extremely proud of the Executive order that President 
Trump signed on Monday to address longstanding challenges to 
the transition of Active Duty uniformed service mariners and 
veterans, and to the merchant marine. In short, hiring veterans 
makes good business sense, and enables our highly trained and 
motivated service men and women to continue to serve our 
Nation's needs.
    In terms of shipbuilding, while the U.S. remains a global 
leader in naval shipbuilding, our large commercial shipyards 
are struggling to remain afloat, but for the Jones Act. 
However, U.S. shipyards have opportunities for growth. The 
expanding liquified natural gas market, for example, presents a 
unique opportunity to strengthen our maritime industry.
    Another challenge is the state of our Nation's gateway port 
infrastructure. The newest tool available to improve 
efficiency, for which we are most grateful, is the port 
infrastructure development grant funding authorized by Congress 
in the 2019 budget.
    MARAD's existing Marine Highway Program is working to 
develop and expand innovative services to better utilize our 
underutilized inland and coastal waterway system, which we 
expect will carry increasing levels of our Nation's commerce in 
the coming decades.
    Finally, MARAD's Maritime Environmental and Technical 
Assistance, or META program, helps ensure U.S. Fleet compliance 
and international environmental standards.
    Thank you for the opportunity to highlight MARAD's programs 
and support the competitiveness of the U.S. maritime industry. 
I look forward to working with you on these challenges.
    [Admiral Buzby's prepared statement follows:]

                                
     Prepared Statement of Mark H. Buzby, Administrator, Maritime 
           Administration, U.S. Department of Transportation
    Good morning, Chairman Maloney, Ranking Member Gibbs, and members 
of the Subcommittee. I appreciate the opportunity to discuss strategies 
to improve economic opportunities and the competitiveness in the U.S. 
maritime and shipbuilding industries.
    The U.S. Merchant Marine, U.S. shipbuilding and repair facilities, 
the Nation's port system, and supporting industries (collectively 
referred to as the U.S. maritime industry) integrates our economy with 
a vast global system that moves more than 90 percent of the world's 
trade by tonnage, including energy, consumer goods, agricultural 
products, and raw materials. Of the goods that the U.S. imports and 
exports, approximately 69 percent by weight and 40 percent by value 
move by water and through our national port system. These industries, 
vessels, infrastructure, and personnel also play critical roles in 
national security, supporting our Nation's ability to provide sealift 
for the Department of Defense (DOD) during times of war and national 
emergency.
    The mission Congress gave the Maritime Administration (MARAD) is to 
foster, promote, and develop the maritime industry of the United States 
to meet the Nation's economic and security needs. Unfortunately, over 
the last few decades, the U.S. maritime industry has suffered losses as 
companies, ships, and jobs moved overseas. To reverse this multi-decade 
trend, MARAD is continuing to work with its industry stakeholders to 
identify ways our U.S.-flag commercial fleet can better compete for 
international cargoes and our U.S. shipbuilding and repair industry can 
grow and continue to meet commercial and military shipbuilding needs. 
In addition, MARAD continues to leverage its existing congressionally 
authorized programs to support mariner training, improve port 
infrastructure, and assist industry to address environmental 
challenges.
                            u.s.-flag fleet
    U.S. strategic sealift consists of 61 Government-owned vessels 
maintained in reduced operating status, augmented by the U.S.-flag 
commercial fleet. Commercial vessels crewed with civilian mariners 
transport equipment and supplies around the world and provide the pool 
of mariners with the unlimited tonnage/horsepower qualifications needed 
to provide the additional crew for Government ships when they are 
activated. Our Nation relies on the fleet of large oceangoing self-
propelled commercial vessels operating in the domestic (Jones Act) and 
international trades to provide employment for these highly qualified 
mariners and auxiliary sealift capacity when needed.
U.S.-flag Vessels in U.S. Domestic Trades
    U.S.-flag vessels operating in domestic trades sail on U.S. inland 
and intracoastal waterways, lakes, oceans along the coasts of the 
United States, and between non-contiguous States and U.S. territories. 
The domestic water transportation market is served by a diverse array 
of approximately 41,000 vessels owned, operated, and largely built by 
U.S. citizens. The majority of vessels in the domestic trades consist 
of tugs and barges, with a smaller number of work and supply vessels 
used in the offshore oil industry, and specialty vessels such as 
dredges. As of February 4, 2019, 99 of the vessels operating in the 
domestic market were large cargo-carrying, merchant-type vessels 
capable of self-propelled operation in the deep oceans. These are the 
types of vessels needed to provide an employment base for mariners with 
the unlimited credentials and training required to also crew Government 
ships when needed to meet DOD sealift requirements.
U.S.-flag Ships in International Trades
    Cargo preference laws require shippers of Government-impelled cargo 
to use U.S.-flag vessels for the ocean-borne transport of a significant 
portion of certain cargoes purchased or guaranteed with Federal funds. 
Specifically, 100 percent of military cargo, and at least 50 percent of 
most non-military Government-owned or impelled cargo transported by 
ocean, must be carried on U.S.-flag vessels subject to a MARAD 
determination of vessel availability. U.S.-flag carriers engaged in 
international trading believe that shipping required by cargo 
preference laws provides critical revenue that significantly 
contributes to the economic viability of this portion of the U.S.-flag 
fleet.
    As of February 4, 2019, there were 82 large, U.S.-flag merchant-
type vessels operating in international trades. Estimates using 2016 
U.S. Census foreign trade data indicate that just 1.5 percent of U.S. 
waterborne imports and exports by tonnage move on oceangoing commercial 
vessels registered in the U.S. The last year in which the U.S.-flag 
fleet carried at least ten percent of our trade by tonnage was 1960 
when the U.S.-flag commercial fleet consisted of well over 1,000 ships; 
the share remained close to 4 percent from 1977 until 1993, and fell to 
2 percent as of 2003.
    U.S.-flag ships must compete against foreign-flag carriers that 
benefit from major subsidies or state ownership. For example, one large 
Chinese-flag carrier that is wholly state-owned has received at least 
$1.95 billion in state assistance over the last several years, and will 
soon carry the single largest share of containerized imports to the 
United States. Other foreign-flag carriers also receive state support 
through various means.\1\ Absent other measures, cargo preference helps 
support the sustainment of a minimal U.S.-flagged, privately owned 
internationally trading commercial fleet and the continued employment 
of the associated American merchant mariners.
---------------------------------------------------------------------------
    \1\ Cho Si-young, ``Korean government pledges $6 bn subsidy 
promotion for shipping sector,'' Pulse, October 31, 2016. https://
pulsenews.co.kr/view.php?year=2016&no=759165
---------------------------------------------------------------------------
                      supply of qualified mariners
    To ensure that qualified mariners remain available to satisfy DoD 
sealift requirements, the Department of Transportation (DOT) and MARAD 
are firmly committed to mariner officer development at the U.S. 
Merchant Marine Academy (USMMA) and six State Maritime Academies.\2\ 
Together, these academies graduate more than 1,000 entry-level new 
officers each year.
---------------------------------------------------------------------------
    \2\ The six State Maritime Academies (SMA's): California Maritime 
Academy, Maine Maritime Academy, Massachusetts Maritime Academy, Great 
Lakes Maritime Academy, Texas A&M Maritime Academy, and the State 
University of New York Maritime College.
---------------------------------------------------------------------------
    Hiring veterans makes good business sense, and in the case of the 
maritime industry, skills and experience from the sea services 
translate directly into qualifications needed in the U.S. Merchant 
Marine and maritime sector. In 2014, at MARAD's request, the U.S. 
Committee on the Marine Transportation System (CMTS) formed the 
Military to Mariner Task Force to help coordinate Federal efforts to 
facilitate the transition from military service to civilian employment 
in the U.S. Merchant Marine and other positions within the U.S. Marine 
Transportation System. The Maritime Administrator and the Executive 
Director of the Military Sealift Command lead this Task Force, with 
participation from all the sea services. As a direct result of this 
partnership, Federal agencies have committed time and resources to:
      crosswalk military ship-board training and qualifications 
to civilian mariner credential requirements,
      assign permanent staff to the Navy and USCG Credentialing 
Opportunity Online (COOL) projects,
      enable USCG Academy graduates to receive a 100 Ton 
Master-Near Coastal Credential upon graduation,
      increase the number of service training courses approved 
for Merchant Mariner Credentials, and
      identify ways to recruit, train, and retain Merchant 
Mariners to support both national Defense and Federal mission 
accomplishment.
    I am extremely proud of the Executive Order the President signed 
this week to address long-standing challenges to the transition of 
active-duty uniformed service mariners into civilian merchant mariners 
crewing U.S.-flag commercial vessels. The Military to Mariner Executive 
Order also directs the CMTS to pursue innovative ways to support 
merchant mariner credentialing through the existing Military to Mariner 
(M2M) Task Force and to provide a yearly status report on its efforts.
    Ensuring the availability of sufficient qualified contract and 
obligated mariners for a prolonged activation of U.S. reserve sealift 
capacity is a continuing concern. In 2017, Congress directed MARAD to 
convene a Maritime Workforce Working Group (MWWG) to assess the size of 
the pool of U.S. citizen-mariners necessary to crew the sealift fleet 
in times of national emergency. At that time, U.S. Coast Guard data 
indicated that 33,125 U.S. mariners held unlimited credentials, however 
the MWWG estimated a value of 11,768. The MWWG determined that the 
disparity between these values will remain unresolved until more 
research is completed.
                           u.s. shipbuilding
    Among the foremost challenges to the U.S. Merchant Marine and 
shipbuilding industry are low-cost foreign competitors (including 
heavily subsidized, state-owned fleet operators), diminishing 
government cargoes, and reduced commercial ship orders. Over the last 
several decades, large U.S. shipyards and their skilled labor forces 
have atrophied due to the uneven playing field of low-cost, highly 
subsidized international shipbuilding competition among other factors, 
resulting in shipyard closures and reductions in the U.S. vendor base.
    The few remaining large U.S. commercial shipyards rely on the small 
U.S. domestic market. The successful, multi-decade industrial policies 
of the principal shipbuilding nations have virtually eliminated the 
ability for U.S. shipyards to compete in the global market. Over 90 
percent of global shipbuilding occurs in three countries; China, Korea, 
and Japan. While the United States remains a global leader in naval 
shipbuilding, which represents the majority of the Nation's 
shipbuilding revenue, our large commercial shipyards are struggling to 
remain afloat. U.S. commercial shipbuilding of large merchant-type 
ships has been locked into a downward spiral of decreasing demand and 
an increased divergence between domestic and foreign shipbuilding 
productivity and pricing.
    In the case of large self-propelled oceangoing vessels, U.S. 
shipyards still lack the scale, technology, and the large volume 
``series building'' order books needed to compete effectively with 
shipyards in other countries.\3\ The five largest U.S. commercial 
shipyards construct limited numbers of large cargo vessels for domestic 
use, averaging five such vessels per year over the last 5 years, with a 
peak of ten such vessels in 2016. This production is small, however, 
relative to the worldwide production of 1,408 such ships in 2016.
---------------------------------------------------------------------------
    \3\ The issue of government subsidies to foreign shipyards has 
received significant attention recently. See, for instance, Nick 
Savvides, ``Japan complains over Korean shipyard subsidies,'' Fairplay, 
April 11, 2017, https://fairplay.ihs.com/ship-construction/article/
4284711/japan-complains-over-korean-shipyard-subsidies, and Myrto 
Kalouptsidi, ``Detection and impact of industrial subsidies: The case 
of Chinese shipbuilding,'' VOX, September 9, 2017, https://voxeu.org/
article/chinas-hidden-shipbuilding-subsidies.
---------------------------------------------------------------------------
    U.S. shipyards have opportunities for growth. The expanding energy 
sector, and the Liquefied Natural Gas (LNG) market in particular, 
presents a unique opportunity to grow the U.S. shipping and 
shipbuilding industry, provided domestic LNG import demand can be grown 
to the needed levels. The global LNG market, however, is anticipated to 
expand over the next 20 years and it is estimated that the number of 
LNG ships necessary to service the market will nearly double by 2040. 
The U.S. could capitalize on this growing industry. Ship owners are 
more likely to be able to secure financing and invest in the 
construction of LNG vessels in the U.S. if there are long-term 
contracts for coastwise transportation for LNG that would provide a 
reliable flow of cargo for new vessels to carry at the necessary price 
levels once completed. Therefore, encouraging demand for U.S.-flag 
coastwise vessels in the domestic LNG market could foster an improved 
prospect for domestic construction of LNG tankers, and more LNG 
bunkering vessels.
    The Jones Act requirement that vessels serving domestic markets 
must generally be built in the U.S, the Capital Construction Fund 
(CCF), and Construction Reserve Fund (CRF) programs are all tools 
Congress established to sustain U.S. shipyards. In addition, the Small 
Shipyard Grant Program is an important program for shipyard 
modernization. Since 2008, this program has provided grants totaling 
$203.79 million to 216 shipyards.
                  port infrastructure/freight movement
    Another challenge the U.S. maritime industry faces is the state of 
our Nation's gateway port infrastructure. The ability of our ports to 
increase capacity and handle cargo more efficiently is vital to the 
health of many domestic industries. Freight volumes are projected to 
increase by 31 percent, and U.S. foreign trade will more than double 
between 2015 and 2045.
    There is great potential to improve this system by increasing the 
efficiency of our ports. The newest tool available for DOT to improve 
efficiency is Port Infrastructure Development grants. The fiscal year 
Consolidated Appropriations Act, Pub. L. 115-141, appropriated a total 
of $292.7 million for the Port Infrastructure Development Program, 
which is authorized under 46 U.S.C. Sec.  50302. Through this program, 
MARAD will provide grants for coastal seaports for infrastructure 
improvement projects that are directly related to port operations, or 
intermodal connections to a port that improve the safety, efficiency, 
or reliability of the movement of goods into, out of, or around coastal 
seaports. Funds for the fiscal year grants will be awarded on a 
competitive basis.
    MARAD is also working through its America's Marine Highway Program 
to develop and expand services to move freight along our waterways and 
coastlines and to relieve land-side congestion. Given the immense 
economic and environmental benefits of increased waterborne 
transportation, this program represents an opportunity to enhance 
American supply chain competitiveness. Working with local sponsors, 
this program is gaining support and making a difference for regional 
economies and transportation infrastructure. For example, a new Baton 
Rouge-to-New Orleans, LA, barge service was recently established to 
transport heavy weight export containers. In the past 90 days, more 
than 11,000 truckloads have moved via the Marine Highway, reducing 
highway congestion by one million vehicle miles traveled. The fiscal 
year 2019 Consolidated Appropriations Act included $7 million in grant 
funding for the program.
                          environmental issues
    Finally, there is opportunity to foster the competitiveness of the 
U.S. maritime industry through MARAD's Maritime Environmental and 
Technical Assistance (META) program. Since maritime transportation is, 
by its nature, a global industry in most cases, U.S. vessel compliance 
with international environmental standards is required to compete in 
this realm. This program supports applied research and development to 
facilitate environmental compliance and enhance sustainability across 
the marine industry. Leveraging resources with the private sector and 
other government agencies, META's goal is to identify economically 
sustainable solutions to emerging maritime environmental challenges. 
The fiscal year Consolidated Appropriations Act includes $3 million for 
the META program. Following on the META model, MARAD is also exploring 
other areas in which partnerships with the private sector and other 
government agencies can be leveraged to further research, development, 
and technology transfer to make our fleets and ports safer, more 
efficient, and more competitive.
    Thank you for the opportunity to highlight MARAD's programs that 
support the strength and competitiveness our U.S. maritime industry. I 
appreciate this Subcommittee's continued support for the U.S. Merchant 
Marine and look forward to working with you to address the challenges 
facing the U.S. maritime industry and take advantage of opportunities 
to enhance and improve the U.S. maritime transportation system. I am 
happy to respond to any questions you may have.

    Mr. Maloney. Thank you, Admiral Buzby. Time to spare. We 
will now move on to Members' questions, beginning--we will 
limit Members' questions to 5 minutes, and we will start by 
recognizing myself.
    Admiral Buzby, can you tell us a little bit more about the 
President's Executive order that was recently signed? I think 
most of us support it, and certainly support the goals of the 
President's order. I am curious about your opinion about what 
kind of difference this is going to make around what 
timeframes.
    Could you give us your best thinking on what we can expect 
from that, in terms of the shortage of mariners we are looking 
at?
    Admiral Buzby. I think this was a very positive, important 
step that the President took on Monday, signing this Executive 
order.
    For some time we have been working with the Services on a 
Military to Mariner program. And I know this has had a lot of 
congressional interest over the years, and this particular 
Executive order helps smooth out that process, and gives some 
assistance and direction to the Services to carry out some of 
the mechanisms that are going to enable that flow of 
transitioning uniformed personnel and veterans into the 
merchant marine.
    It provides direction to provide payment, or waiver of 
payments for some of the applications. For instance, for TWIC 
cards. It directs Coast Guard to conduct crosswalks with the 
Services on a lot of their courses that are being--people learn 
about in the military----
    Mr. Maloney. Excuse me, Admiral Buzby. I am being told that 
we are having a little trouble with the audio. If I could ask 
both the witnesses to just move the microphones closer to their 
mouths and speak directly into them, same for the Members, so 
that we can have your testimony recorded. And we are also, you 
know, dependent on these for any transmission of the hearing.
    So excuse me, sir, go ahead.
    Admiral Buzby. OK. So to continue, we believe that this is 
going to have a positive effect on the ability for 
transitioning military members to come into the merchant 
marine. I am not--I don't think it is going to solve entirely 
our manning shortage, but it is going to help ease it in the 
future.
    Mr. Maloney. Right. I was hoping you might bottom-line it 
for me, though. Without other changes, do you expect this to 
keep it steady, slow the decline, reverse it?
    Admiral Buzby. I think it will be additive. It will help 
the situation. I think we are probably talking on the order of 
several hundred, probably, per year.
    Mr. Maloney. But net? What are we going to see to that 
shortage? If it is 1,800 now, where will it be if we did 
nothing----
    Admiral Buzby. It really is going to rely on the number of 
jobs that are out there. So it really comes back to ships. I 
mean we can bring people in, but if there is not a place for 
them to be employed, you know, it is--it will only do so much, 
I guess, is the----
    Mr. Maloney. Yes, thank you, sir. I appreciate that. And if 
you would, could you tell me a little bit about the role that 
the national training requirements play to the shortage of 
senior-level mariners?
    Admiral Buzby. Well, current--certainly, you know, the STCW 
requirements, which are on top of our national requirements 
that are set forth by the Coast Guard, add additional cost and 
time to a mariner, as they attempt to maintain their license, 
or upgrade their license.
    So what we see typically happen is, after about the 10-year 
point, as junior mariners are transitioning to the upper ranks 
of shipboard hierarchy, they are faced with a decision to make. 
If they don't see employment, they don't see opportunity for 
advancement because of, you know, lack of ships, lack of jobs, 
some of them are reticent about making that investment, 
financial investment, and time investment to get those more 
extensive credentials.
    Mr. Maloney. Thank you, sir.
    Admiral Nadeau, could you say a word about LNG for me, and 
the challenges with LNG bunkering? Have you considered 
implementing uniform guidance on regulations regarding LNG 
bunkering to ensure consistency and safety?
    Admiral Nadeau. Yes, sir. I would be pleased to. We have 
been working closely with industry. The LNG presents a great 
opportunity, particularly for operators that operate coastwise 
in the United States, due to some of the conditions we have 
along our coastline that require them to use low sulfur fuels. 
We have seen great growth in this area for shipping, 
particularly the new build and the recapitalization of the 
domestic fleet.
    We have worked with industry to use provisions in our 
regulations, because right now regulations would not cover LNG 
as fuel. But we do have provisions and regulations to allow us 
to do equivalencies, and that is what we have done, where we 
have worked in partnership with industry and some of the 
[inaudible] as well as the IMO and others around the globe to 
work with them and develop a set of standards that are uniform.
    And we have done that, both for the ships and--as well as 
some of the infrastructure. And we have worked with them, as 
well, on the actual procedures and the handling and the 
bunkering.
    So today, in fact, we have ships operating out of 
Jacksonville, Florida, U.S.-flagged ships go back and forth to 
Puerto Rico that use LNG as fuel, and they bunker from a barge. 
We have ships that operate out of Louisiana that go in and out, 
operating in the Gulf of Mexico, their offshore support vessels 
that have a bunkering facility there, in Louisiana. And we see 
more development in the Northwest.
    And in fact, this week I am meeting with some industry 
folks that are looking to both have the cruise ship industry, 
which are building brandnew, foreign-flagged cruise ships that 
will operate out of the U.S. with LNG as fuel, and some of the 
operators that will then provide them with that fuel, and are 
looking to do that via barge. So we are engaged, plugged in, 
and working closely with them to make sure that our regulations 
are not an impediment to that, and that it is done safely and 
securely to ensure, again, that we protect the MTS.
    Mr. Maloney. Thank you.
    Mr. Gibbs?
    Mr. Gibbs. Thank you, Mr. Chairman. I have a similar 
question, but for Admiral Nadeau.
    Is the Coast Guard continuing to work with the Department 
of Defense to align training courses so that the military 
mariners receive the proper credit when they apply for civilian 
mariner licenses? That is really a Coast Guard issue, I think, 
to question.
    Admiral Nadeau. Yes, sir. Thank you for that question. We 
are, in fact, working closely, as we have been. The Coast Guard 
fills two roles, I guess, with the military mariner. One, we 
are a provider. We have Active Duty members that choose to 
depart the Service or retire. They then can use their sea time 
to seek a credential. And we also, as the issuer of the 
credentials at the National Maritime Center, we in turn also 
evaluate the course work and figure out what can they get 
credit for.
    So to date, there has been almost 100 courses that have 
been approved. Those are courses--about one-third of them from 
the Army, about one-third are the Coast Guard, and the other 
one-third are from Military Sealift Command, the Navy, or NOAA. 
So we do work with them, we evaluate the courses to see how can 
we give them credit, how can we give the maximum amount of 
credit for the experience and the training they have already 
received to minimize any additional burden that might be there.
    Mr. Gibbs. Good, good. I want to make sure we get the 
alignment and everybody--makes it easier.
    Admiral Nadeau. Absolutely. As, I think, Admiral Buzby 
said, you know, we are trying to create a crosswalk to make it 
easy for people to really knock down any impediments that might 
be there.
    Mr. Gibbs. Admiral Buzby, MARAD has been working on a 
single document addressing both the national maritime strategy 
and the national sealift strategy. I also understand a draft 
strategy was completed in 2016, but subsequently it is under 
review by the current administration.
    The original statutory deadline for the strategy was 
February 2015, but the deadline was extended in the National 
Defense Authorization Act of 2019 to February 2020. Will MARAD 
make the new deadline?
    Admiral Buzby. Mr. Gibbs, it is well beyond my capability 
to swear to you that it will be making it. It is our intention 
that we will. It is in interagency coordination right now, to 
ensure that it meshes up with the other national strategies.
    Mr. Gibbs. How many U.S.-flagged, oceangoing vessels will 
have been lost between the original 2015 deadline and the new 
2020 deadline, and how many U.S. mariners?
    Admiral Buzby. I would say that my anticipation is that we 
are going to be adding ships, sir, rather than losing ships. 
That is my intention.
    Mr. Gibbs. Is it possible the strategy be released before 
February of 2020?
    [Laughter.]
    Admiral Buzby. It is entirely possible. That would be my 
hope, as well.
    Mr. Gibbs. OK. Admiral, do the National Academy of Sciences 
Committee on Polar Icebreaker Cost Assessment recommends a 
completion of planning and detailed design before the start of 
construction. Where is the Coast Guard, with regard to 
completion of the planning and detailed design at the start of 
the construction on that icebreaker?
    Admiral Nadeau. Yes, sir. We are very grateful for the 
fantastic support we have had from Congress and the 
administration to provide us the funding to recapitalize our 
40-year-old icebreaker, provide the Nation the capability it 
needs as to the expanding Arctic, as those waters become more 
and more active.
    With the funding we receive, the $650 million, we are able 
to move out. And if all goes according to plan--and it is going 
according to plan--we have an integrated project office set up 
with the Navy to make sure we incorporate best practices of 
both Services, and----
    Mr. Gibbs. I guess that----
    Admiral Nadeau [continuing]. Acquisitions, and we would 
expect to award contract fourth quarter of this year, sir.
    Mr. Gibbs. I guess the followup on that, the National 
Academy of Sciences and GAO recommends the acquisition best 
practices, where the design is completed before the start of 
the construction on the polar icebreaker. Does the Coast Guard 
plan to follow that recommendation?
    Admiral Nadeau. Sir, I am not the acquisition professional. 
That is probably something I would have to take back and bring 
back to you. I am not familiar with that exact recommendation 
that came out of the academy.
    Mr. Gibbs. OK. Also in 2018 towing vessels became subject 
to inspection under subchapter M of the title 46 of the Federal 
regulations. Subchapter M provides the establishment of third-
party inspections, the implementation of certificates of 
inspection, COI, and all applicable vessels, and a requirement 
for recurring compliance inspection or audits.
    How many towing vessels chose a third-party inspector 
regime? And how many chose the traditional Coast Guard 
inspection regime?
    Admiral Nadeau. Well, sir, they don't have to actually 
declare which way they are going to go until they approach 
their COI. The regulations phase in the COI, certificate of 
inspection. It is only 25 percent per year.
    Currently--so we are only in our first year of 
implementation--but currently we have signals that about 60 
percent of the fleet is--at this point indicated to us they are 
going to go third party.
    Of the COIs we have issued to vessels to date, about--I 
would say about 80 percent of those, maybe even more, have been 
to third party--those that use a third-party option.
    Mr. Gibbs. Did the Coast Guard receive any additional 
resources to conduct these inspections, or provide oversight to 
third-party inspections?
    Admiral Nadeau. We got some resources a few years back, but 
nothing recently. We are working to try and leverage third 
parties and----
    Mr. Gibbs. How you figure you can handle the workload?
    Admiral Nadeau. We do the best--we could always use more 
resources, sir, but we do the best with what we have, and apply 
it, and look across all the missions we have, all the risks 
that are out there, to make sure we are trying to address the 
highest risk as best we can. And leveraging third parties is 
one way to get after that, provided we do proper oversight.
    Mr. Gibbs. Yes, thank you. I yield back.
    Mr. Maloney. The gentleman's time is expired. Mr. 
Garamendi.
    I should add we are following a rule of seniority by 
arrival time at the committee.
    Mr. Garamendi?
    Mr. Garamendi. Thank you, Mr. Chairman, and congratulations 
on taking the chairmanship of this committee. And Mr. Gibbs, 
you have a powerful team at the head of the podium here.
    Mr. Buzby, Admiral Buzby, you went through the issue of the 
Executive order. You should take great pride in having pushed 
that through the administration, through the President's 
signature. It is going to carry a long, long way.
    You also mentioned that it may not do a whole lot of good 
if there are no ships upon which those sailors or those 
veterans who would become licensed would be able to sail.
    Two issues, specifically, one which will be the subject of 
tomorrow's hearing in the Armed Services Committee. You will be 
testifying, but I think we should be aware of it here, because 
it is crucial to this question, and that has to do with the 
Ready Reserve.
    The ships are aged out, as you have said in your written 
testimony and in other forms. Could you briefly describe the 
need for the rebuilding the new ships to replace the existing 
ships in the Ready Reserve Fleets?
    And then I would like to talk to you about your issue of 
the export of a strategic national asset called oil and natural 
gas.
    Admiral Buzby. Yes, sir. Thank you for your question. Yes, 
the Ready Reserve Force, it is a 44\1/2\-year-old average-age 
fleet. That is old for ships. I mean, you know, in the 
commercial world it is rare to see a ship beyond about 15 or 20 
years. So these ships, which have very unique military 
capabilities, admittedly, are old. They need to be replaced.
    The Navy recognizes that, we recognize that, U.S. TRANSCOM 
recognizes that, and we have a plan to try and do that, a 
three-pronged plan. The Navy has put this out--it has been out 
for about a year now--that talks about investment in some of 
the ships to extend the service life where it makes sense, to 
recapitalize using newer used ships from the open market that 
have military utility and modify them in U.S. shipyards, as 
required, and building new ships in U.S. shipyards. So those 
three sort of prongs, or strategies to get us where we need to 
go.
    I think the quickest and most affordable way of those three 
prongs to get after it is probably going to be to get ships 
from the open market currently, modify them in the U.S. yards, 
and put them to work in the RRF. We are pursuing that 
strategy----
    Mr. Garamendi. Thank you, I will go to the next question in 
just a moment. But to comment on that, of critical importance 
here is that these ships be replaced, and also that the 
American shipyards have a full role in rebuilding or 
repurposing ships that may be purchased, as well as building 
the new ships to replace those that are aging out within the 
Ready Reserve Fleet.
    I would draw to the attention of the committee here this 
wonderful little place card that lays out all of this. It is 
very useful. And Admiral Buzby, if you can make that available, 
because it came from you----
    Admiral Buzby. We are happy to make those available to the 
whole committee, sir.
    Mr. Garamendi. Secondly, you described in your written 
testimony and touched on it in your oral testimony that there 
is an enormous market for LNG and for the export of it, as well 
as for petroleum products--principally oil--that America is an 
exporting nation in both of these strategic assets.
    There is a piece of legislation that we would hope you and 
the administration would endorse. It is called the Energizing 
American Shipbuilding Act. It would require that a very small 
percentage of that export be on American-built ships. It is 
estimated that perhaps as many as 30 to 40 ships--perhaps more, 
as the exports increase--would be built in American shipyards, 
as well as manned and womanned by American mariners.
    Would you care to comment on what that might mean to the 
maritime industry in the United States and our national 
security?
    Admiral Buzby. Yes, sir. I appreciate the question. As we 
look across the size of the fleet that we need to provide the 
right pool of mariners to meet our sealift needs, we believe we 
are about 45 or so ships short right now to meet the manning 
needs. So to the extent that we can generate the cargo 
available for ships to be available to carry and to provide 
employment for those mariners that would be on those ships, I 
think that would be a step in the direction.
    We always talk about cargo as king, but we need the cargo 
first before we can get the ships. This is a natural cargo that 
exists now. We are an energy exporter, we should be taking 
advantage of it.
    Mr. Garamendi. Thank you, Admiral Buzby, I will take this 
issue to the members of the committee, since it is central to 
the purpose of this committee, and ask for their support of 
energizing American shipbuilding. Thank you.
    Admiral Buzby. Yes, sir.
    Mr. Garamendi. I yield back.
    Mr. Maloney. I thank the gentleman from California. If the 
gentleman would like to make a unanimous consent request that 
the two leave-behinds be entered as part of the record, I think 
that might be well received.
    I am having a little trouble with my chair. Other than 
that, I think the hearing is going very well.
    [Laughter.]
    Mr. Maloney. Thank you.
    Admiral Buzby. And we are happy to make copies available.
    Mr. Maloney. I know I am also familiar with these 
documents. If members of the committee haven't seen them, they 
are useful, in terms of both the Maritime Security Program and 
the Ready Reserve Force. I ask they be entered as part of the 
record.
    Without objection, so ordered.

                                
   Maritime Administration posters, submitted for the record by Hon. 
                                Maloney
    [MARAD's Maritime Security Program Fleet poster is available online 
at https://www.maritime.dot.gov/national-security/strategic-sealift/
msp-ship-poster-december-2018. MARAD's National Defense Reserve Fleet 
(Ready Reserve Force and Special Mission) poster is available online at 
https://www.maritime.dot.gov/national-defense-reserve-fleet/rrf/marad-
rrf-ship-poster. The information has also been retained in committee 
files.]

    Mr. Maloney. Mr. Gallagher?
    Mr. Gallagher. Thank you, Mr. Chairman.
    Admiral Nadeau, in your opening statement you noted that, 
``The Coast Guard has made a deliberate push to focus vessel 
owners on safety management systems.'' Can you explain what 
concrete steps you are taking to focus vessel owners on SMS?
    Admiral Nadeau. Yes, sir. Happy to do that. Again, in the 
aftermath of El Faro, though, the--we know the casualty was 
caused by some decisions made by the master. We learned some 
other things. And I think it highlighted for us again just the 
value and importance of an effective safety management system 
on any functioning ship.
    So we have doubled down on efforts. We have conducted 
training of our own people. We have trained over 100 people 
last year, some of our more experienced marine inspectors, on 
safety management systems. We developed policy--internal policy 
to instruct our people how to get out and start looking after 
these systems. We developed policy for industry that talked 
about what we expect in their safety management systems. We 
have been working with our third parties and are in regular 
contact with them to make sure that they are doing what we 
would expect them to be doing. And, in fact, we have stood up a 
brandnew element within our Coast Guard headquarters that is 
focused solely on the problem of watching and monitoring the 
U.S.-flag fleet and our third parties, to make sure that we 
track and get after this.
    So I am seeing some marked improvements, but we are not 
done. We have got more work to do.
    Mr. Gallagher. One thing I have heard is that the safety 
inspection fees required by the Coast Guard can disincentivize 
companies from choosing the safety management system. The Coast 
Guard authorization bill last Congress gave you the authority 
to revise those fees after studying the issue. What is the 
status of that?
    Admiral Nadeau. Yes, sir. We are thankful for the 
opportunity to go and look at those fees. They have been 
stagnant for some time. And that work is underway. We want to 
make sure that we do not disincentivize the idea of having a 
third party. That is an option under subchapter M, as we spoke 
about earlier.
    We encourage--and I truly believe--that using a safety 
management system is the right way to manage the risk, 
particularly as we look at a future as things get more and more 
complex.
    The responsibility should rest with the operator. The Coast 
Guard is on board, at best, once a year. That cannot ensure the 
vessel is going to be safe the other 364 days. The operator 
can, with a good, healthy safety management system. We want to 
ensure we incentivize that, and we are taking a hard look at 
our fees that we charge to make sure it does so.
    Mr. Gallagher. And I appreciate the fact that you guys are 
studying the issue. I just would like to sort of plant the 
flag. And hopefully at some point we could come back to the 
question of whether you think the current fee structure is 
sound. I just don't want to sort of lose sight of that. But by 
all means, study it in depth, and I look forward to following 
up with you at some point.
    My final question. The Coast Guard has allowed pilot 
compensation to increase. And check me on my numbers here, but 
I think by 20 percent in 2014, 24 percent in 2015, 14 percent 
in 2016, 13 percent in 2017, and another 8 percent in 2019. I 
have heard from my local stakeholders in the Port of Green Bay 
that these increases are unprecedented, they are unsustainable 
for ratepayers, taxpayers interested in moving waterborne 
freight in the Great Lakes.
    Is the Coast Guard open to reforming or deregulating 
pilotage on the Great Lakes?
    Admiral Nadeau. Sir, I have been intimately involved, I 
learned more about Great Lake pilotage than I ever thought I 
would. Last year I personally attended a public meeting we held 
up in New York. We brought all the people together to try and 
get after some of the issues we have had.
    I would welcome the opportunity to give you a more detailed 
brief on what we are doing there.
    To answer your specific question, no. We are never opposed 
to getting a little smarter, how we can better get after and 
serve. Again, make sure things are safe, secure, and resilient.
    I would point out, though, sir, that the numbers are up. We 
do see greater activity in the Great Lakes, even this year, and 
there seems to be both more cargo and more ships. So I don't 
think that we are impeding anything, but I would not discount 
the fact there is always ways to improve.
    Mr. Gallagher. And we will have to get you to come to the 
Port of Green Bay at some point and hear from the local 
stakeholders there. We have the best cheese and beer in the 
entire country.
    [Laughter.]
    Mr. Gallagher. So if that is not incentive enough, I don't 
know what is. Thank you.
    Mr. Maloney. I thank the gentleman from Wisconsin, and look 
forward to him bringing that to future committee hearings, as 
is allowed under House rules. I put in a word for cheddar. 
Other Members may have separate requests.
    Mr. Larsen?
    Mr. Larsen. Thanks, Mr. Chairman. First off, I would like 
to thank the Coast Guard team. I was with Admiral Schultz 
Friday night in Seattle as part of the recognition of the 
enlisted and Enlisted Reserve folks of the year, and we got two 
great candidates for the national competition. And if I was 
voting I would vote for them. But they just really impressed, 
with the enlisted--Active Enlisted Reserve folks, and the 
stories that they brought to everybody. And we should be really 
proud of our enlisted folks in the Reserve and the Active Duty 
components of the Coast Guard.
    Second, I want to echo your comments on the icebreaker, on 
the Polar Security Cutter. At this point I don't care what you 
call it. I have been at it for 18 years, and it is going to get 
built, and we are very happy about that. And I want to echo Mr. 
Gibbs's comments about timing and notification to us. I want to 
watch this closely.
    Admiral Buzby, with regards to MARAD and the small shipyard 
grants, I certainly want to see those continue. Last year the 
committee enacted legislation requiring MARAD to post a notice 
of funding within 15 days of Congress appropriating funding for 
the program. In the first year of the new law, MARAD already 
missed a deadline, which is last Saturday, March 2nd. And I am 
wondering when the notice of opportunity will be posted.
    Admiral Buzby. It is out, sir.
    Mr. Larsen. It is out? When was it out?
    Admiral Buzby. It was out the next day, I believe it was. 
We were just----
    Mr. Larsen. Maybe the 4th. Maybe not Sunday, but maybe the 
4th.
    Admiral Buzby. It was. Yes, sir.
    Mr. Larsen. OK, great. Thank you. And with respect to the 
2020 budget, I know we are always reluctant to say, ``Give us 
exact numbers.'' Will there be a number higher than zero in the 
President's budget for small shipyard grants?
    Admiral Buzby. I can say, sir, that we strongly support the 
program. We like it a lot, and we know it gives great benefit 
to the shipyard community.
    Mr. Larsen. Just say it is going to be higher than zero. 
That is all I am asking.
    Admiral Buzby. That is all I can say, sir.
    Mr. Larsen. I got it, I understand. I will take that as a 
positive.
    Admiral, as--I am sorry, is it Nadeau or Nadeau? Nadeau.
    Admiral Nadeau, in the Northwest, Pacific Northwest, the 
safe transportation of crude oil is a priority. We have got 
four refineries in the--five, actually, in the Puget Sound, 
north Puget Sound area, and there is--but there is a major 
project across the border in Canada, in Burnaby, British 
Columbia. And last month the Canadian National Energy Board 
recommended approval for the Trans Mountain pipeline extension 
project. They call it TMX.
    As a result, the number of vessels transporting crude out 
of that facility will go from about one per week to about one 
per day, if it is finally approved. And those vessels will be 
coming south of the Salish Sea, and then taking a hard right 
around Vancouver Island, and then going out to the Strait of 
Juan de Fuca, and then out to the Pacific, presumably on the 
Canadian side.
    But if there are oil spills, there is not a wall at the 
border in the water. And so the question, really, has to do 
with, from your perspective, about the available sources the 
Coast Guard has in the region and capacity, both to respond to 
an oil spill, as well as a planning taking place with your 
partners in the Canadian Coast Guard, in the event of a final 
approval of TMX.
    Admiral Nadeau. Sir, it is a little bit outside my 
wheelhouse. But I can speak in more general terms, in that we 
do have a robust framework in place to address those risks and 
those threats, and that we require both ship operator have 
plans in place, and the support in place that they can call 
upon, should they have an incident.
    The network--and I know we have a close workmanship with 
the Canadians and our District 13, partners with them, and I 
think we actually have joint plans. So--and through the, again, 
the whole infrastructure that is the area committee, and the 
regional committees, they all work together just to prepare and 
plan and make sure they are ready, should we have the 
misfortunate to experience that type of event.
    Mr. Larsen. Well, it is certainly a challenge to us, 
because it is a project that is on the other side of the 
border. So we don't have a lot of regulatory tools to address 
those issues that come with it. But we do have some, because of 
our strong working relationship with the Canadians on a variety 
of issues, including the Coast Guard.
    So I think what I would like to then follow up with you on 
or with the Coast Guard on is just to have you all come in, 
walk through those parts where you are cooperating with 
Canadian Coast Guard, specifically on this project, sort of the 
planning for it in the event that it is finally approved.
    Admiral Nadeau. Yes, sir. We can arrange that.
    Mr. Larsen. Thank you very much. I yield back.
    Mr. Maloney. Thank you, Mr. Larsen.
    Mr. Graves?
    Mr. Graves of Louisiana. Thank you, Mr. Chairman, and I 
want to congratulate you in the new position. I am looking 
forward to working with you.
    And I also want to congratulate Ranking Member Gibbs for 
the leadership position on this subcommittee.
    A few quick questions. Admiral, there was a moratorium that 
the Congress passed in the TWIC reader rule that prevented full 
implementation. Can you give us an idea of when the Coast Guard 
will be providing a report to Congress on that issue?
    Admiral Nadeau. Yes, sir. Thanks for the question. 
Currently DHS is responsible for providing a report back to 
Congress. And they are working with their FFRDC and have 
contracted that out, and we are supporting that effort and 
partnering, as we are called upon, to help them complete and 
conduct that analysis.
    Once complete, we look forward to having that report, as 
well. I am sure it will be delivered here. And we will use 
that, then, to inform where do we go next with the TWIC reader 
rule.
    Mr. Graves of Louisiana. So you are not clear on when we 
can expect it?
    Admiral Nadeau. We would expect to see a draft soon, but I 
don't know--it gets delivered to DHS, and then it gets 
delivered to you all.
    Mr. Graves of Louisiana. Yes.
    Admiral Nadeau. I don't have an estimate on that, sir.
    Mr. Graves of Louisiana. OK. Next question. I think 
National Academies and perhaps GAO suggested on the polar 
icebreaker that the Coast Guard do detailed design before 
moving forward on the--on construction. Is--do you have an 
understanding of what the Coast Guard's plan is there for 
acquisition?
    As you know, the appropriations bill done a few weeks ago 
does provide a significant amount of funding for that. I know 
Mr. Larsen and Congressman Maloney and many other folks were 
involved in that. I just want to get your read on progress 
there.
    Admiral Nadeau. Sir, I can't speak to that specific 
provision that the academy recommended. What I can tell you is 
that we are extremely grateful for the support that we receive 
to recapitalize and build a new Polar Security Cutter.
    That $650 million will enable us to award and continue to 
design and award a contract before the end of the fiscal year. 
Working closely with the Navy and the integrated program 
office, we are marching along, and we have everything we need 
to keep going on track.
    But I don't know if that gets to your specific question, 
sir. That might be a get-back we have to provide.
    [The information follows:]

                                
U.S. Coast Guard's reponse to request for information from Hon. Graves 
                              of Louisiana
    Consistent with best practices in other Coast Guard and Navy 
acquisition programs, the DD&C contract will commence a design phase 
immediately after award and prior to construction. The joint Coast 
Guard and Navy Integrated Program Office has structured the contract to 
require 80 percent design maturity prior to the start of construction. 
In addition, the contract structure uses days of production information 
as an indicator of design maturity. The request for proposal stipulates 
that the drawings and models necessary to support the initial 180 days 
of production be submitted 90 days before the production readiness 
review, which occurs prior to the approval to begin construction. This 
production information will be used to ensure the maturity of the Polar 
Security Cutter design.

        [The information provided above by the U.S. Coast Guard 
        prompted additional questions from the subcommittee. 
        Those questions, and the U.S. Coast Guard's answers, 
        follow:]

                                
U.S. Coast Guard's reponses to questions about post-hearing information
    Question 1. How and by what method did the CG/Navy IPO determine 
its 80 percent design maturity requirement before construction can 
begin? Is this a generally accepted standard for Navy ship construction 
contracts?
    Answer. The IPO evaluated Coast Guard and Navy best practices for 
several shipbuilding programs and adopted a standard comprising of both 
a minimum design maturity (80 percent) and days of production metric 
(180 days).
    Question 2. What components are left out in the remaining 20 
percent? Are these structural components of the vessel or equipment and 
appurtenances?
    Answer. The portion of design that may not be complete prior to the 
start of construction is related to sections of the ship that will not 
be constructed during the first 180 days. Structural design and general 
arrangements will be largely complete, but items such as software 
development, C4 system detailed design, and minor equipment selection 
may still be ongoing.
    Question 3. Is a 90-day review period sufficient to review the 
drawings and models?
    Answer. Yes. The PSC configuration will be established early in the 
design period and reviewed through phased Contract Data Requirements 
List (CDRL) data submissions and design reviews throughout the detail 
design period.

    Mr. Graves of Louisiana. If you could. Again, I am not 
certain if it was GAO, National Academies, or both, but there 
was a recommendation that the Coast Guard complete detailed 
design before moving to construction. So if you could get back 
to the committee on that, I would appreciate it.
    Last question, and really, just both of you, kind of 
throwing this out there. You know, it is amazing, in the 
committee memo they talk about--and I apologize, I missed your 
testimony, so I might be asking you to repeat something, but I 
am just going to read you two lines out of here.
    Now, the percentage of international commerce cargoes 
carried on U.S.-flagged vessels have fallen from 25 percent in 
1955 to approximately 1.5 percent today. Over the last 35 years 
the number of U.S.-flagged vessels sailing in international 
trade dropped from 850 to 82 vessels.
    There have been rumors about the administration perhaps 
looking at tweaks to Jones Act requirements. I am just curious. 
Looking at some of these staggering statistics, looking at some 
of the challenges you have had in defense industrial base and 
even in some of the vessels that you need to acquire, do either 
of you have any comments on that, on that trend? If changes to 
the Jones Act would exacerbate that? Any thoughts or reaction?
    Admiral Buzby. I will go ahead and start, sir. You know, 
the internationally trading fleet, which carries commerce 
outside of our domestic, is really kind of a separate----
    Mr. Graves of Louisiana. Well, but Admiral, I mean--let me 
see if I can maybe hone in on my point.
    If we are seeing it dropping off like that, if we are going 
to not have a robust domestic fleet or domestic defense 
industrial base here, the shipyards that actually build these 
ships, wouldn't that actually further drive up the cost of 
having ships in the United States, U.S.-flagged ships, U.S.-
built ships? And wouldn't that further challenge our ability to 
compete on a----
    Admiral Buzby. Well----
    Mr. Graves of Louisiana [continuing]. Level playing field, 
internationally?
    Admiral Buzby. The Jones Act is enabling that--that is the 
business for those shipyards. We are not building any 
internationally trading ships in our shipyards today.
    Mr. Graves of Louisiana. If we--so if we poke holes in the 
Jones Act, though, doesn't that further undermine our 
shipbuilding capacity, domestically?
    Admiral Buzby. Absolutely.
    Mr. Graves of Louisiana. And that would--would that raise 
concerns with you?
    Admiral Buzby. Absolutely, it would.
    Mr. Graves of Louisiana. Admiral?
    Admiral Nadeau. Sir, we--the Jones Act is a longstanding, 
100-year statute on the books. It does a lot of things. I only 
offer that in--if anyone is going to start tinkering in there, 
you got to be mindful of second-, third-order effects that 
might occur.
    Mr. Graves of Louisiana. Potentially negative. Just because 
something is old, doesn't mean it is good. But in this case I 
think that it does actually provide significant protection.
    I remember Admiral Zukunft last year actually said that the 
Coast Guard is not outfitted to properly secure U.S. ports if 
the--if we do poke holes in Jones Act.
    Admiral Nadeau. I believe that is what Admiral Zukunft 
said. Yes, sir.
    Mr. Graves of Louisiana. Thank you. I yield back.
    Mr. Maloney. The gentleman's time is expired. Mr. 
Lowenthal?
    Mr. Lowenthal. Thank you, Mr. Chair. And I am pleased to 
again serve on the maritime subcommittee in this Congress. I 
look forward to working with my colleagues, and especially I 
want to include my cochair of the PORTS Caucus, Randy Weber, to 
address some of the critical issues that face our ports and our 
maritime industry.
    You know, ports across the country have applauded the 
inclusion of $293 million for the Port Infrastructure 
Development Program which is at MARAD, which is included in the 
most recent appropriations language.
    As we all know, ports face significant challenges from 
rising volumes, increased congestion, and the need to lower 
harmful emissions. Those are three critical things that ports 
are all confronted with. And so I am hoping that this program, 
this newly included infrastructure development program, will 
provide a strong Federal partnership to make these needed 
investments to modernize our ports, and also the terminals 
included within the ports.
    So, Admiral Buzby, my first question is to you. Can you 
give us an idea when we can expect to see the notice of funding 
opportunity for this program? And when does MARAD plan to award 
grants for this program?
    Admiral Buzby. Thank you for the question, sir, and thank 
you to the Congress for that very generous infusion of money 
for ports.
    Mr. Lowenthal. Yes.
    Admiral Buzby. It is very critical. I mean that--ports are 
our gateway to our economy. So to get them operating as 
efficiently as we can is very, very important.
    We are working really hard right now with the Secretary's 
office to get the NOFO put together to--how that program is 
going to be administered. We are working through to ensure we 
understand the guidance from Congress, so that we get the 
proper instructions into the NOFO when it goes out.
    I would expect it would be out in a matter of several 
months.
    Mr. Lowenthal. Several months?
    Admiral Buzby. Yes, to get that out, probably toward this--
certainly, this year, to get out----
    Mr. Lowenthal. So if we had another meeting in June, you 
would think that it would be out June, July?
    Admiral Buzby. My guess. But, you know, we are proceeding 
right along. Believe me, we are having meetings quite 
frequently to get that--we are anxious to get that out there, 
we are anxious to get that process in place.
    Mr. Lowenthal. Thank you. How about the eligibility? Maybe 
you might tell us about what type of projects you hope to 
support with these funds.
    Admiral Buzby. Well, there is a number of different 
projects. You know, I think we are looking to how do we, as I 
mentioned, make these ports more efficient, how do we account 
for the flow of cargo.
    You know, we have gigantic ships that are coming, much 
larger than----
    Mr. Lowenthal. Right.
    Admiral Buzby [continuing]. These terminals have handled in 
the past, upwards of 18,000 to 20,000 TEUs----
    Mr. Lowenthal. Even larger.
    Admiral Buzby. Right. So, you know, ships--this massive 
amount of cargo is going to be flowing, and it has to flow out 
through rail lines, through highways, and through our marine 
highways. So upgrading that flow, I think, is going to be a big 
focus, probably, for a lot of ports and terminals that put in 
for these, for this grant money.
    Mr. Lowenthal. Thank you. I have a question for the Coast 
Guard, a little different.
    You know, the development of offshore wind farms is growing 
steadily, especially along the east coast. BOEM, the Bureau of 
Ocean Energy Management, is responsible for the overall 
development of offshore energy, with input from other Federal 
agencies.
    So my question is, as the Federal agency that is charged 
with ensuring safe navigation, what is the Coast Guard's role 
in the development of offshore wind farms?
    Admiral Nadeau. Thank you for that question, sir. We have 
an active role in that, as you stated, and it is primarily in 
the navigation safety. We are in support to BOEM, as the lead 
Federal agency for the permitting and the development of that 
activity, but we are plugged in with them and engaged.
    In fact, we have an MOA that we signed a couple years ago 
that clearly outlines our roles and responsibilities, and we 
are active with them on a reoccurring basis where we meet with 
them to discuss and try and deconflict. We think this can be 
done right. It has to be mindful of the right--stakeholders 
have to come to the table. We are committed to working with our 
other Federal partners to ensure all stakeholder needs are 
addressed and considered as part of that process.
    Mr. Lowenthal. Thank you. I have one last question. And 
maybe you can--just a brief answer. Does the Coast Guard have 
the authority to ensure the safety of vessels and workers 
during wind farm development activities?
    Admiral Nadeau. We would regulate safety of the workers on 
U.S.-flagged vessels. But depending on where the activity is 
taking place, we may not have jurisdiction or authority. If you 
are on a foreign vessel more than 12 miles offshore, my sense 
is we, depending on what that vessel is doing, may not have the 
jurisdiction over that activity. That would be left to BOEM, in 
that case.
    Mr. Lowenthal. Thank you. And I yield back, Mr. Chairman.
    Mr. Maloney. I thank the gentleman. I would just like to 
note that we have been joined by the chairman of the full 
committee, Chairman Peter DeFazio. And without objection, I 
would like to yield to the chairman if he has any remarks he 
might like to make at this time. I would also like to 
congratulate him on his position as chairman of the full 
committee, and look forward to working with him.
    Mr. DeFazio. Well, Mr. Chairman, first I am sorry I 
couldn't be here for the testimony in the beginning. I was 
over--Ways and Means was holding the first meaningful hearing 
since 2010 on funding infrastructure. So I thought it was 
important I be there----
    Mr. Maloney. Starting on a bipartisan note----
    Mr. DeFazio [continuing]. To encourage them to move quickly 
and robustly to funding our infrastructure deficit.
    I just wanted, Mr. Chairman, to present you with this small 
token----
    Mr. Maloney. Thank you.
    Mr. DeFazio [continuing]. And congratulate you on your 
chairmanship of the committee. I had a statement which I 
rewrote that seems to be the earlier pablum statement I got, 
but I feel very strongly about the Jones Act, and I was very 
pleased that--hopefully, that is not what is in here.
    [Laughter.]
    Mr. Maloney. That is yours.
    Mr. DeFazio. Yes. I think--oh, yes, OK, this is better.
    You know, because the President's Executive order to 
facilitate the movement of personnel from active military 
service into the merchant marine, I think, is great. And--but 
it would be ironic if there wasn't a merchant marine for them 
to move to.
    We are seeing, you know, the Governor of Puerto Rico 
following on, you know, the myth that Puerto Rico pays a 
premium for its freight service from Jacksonville and 
elsewhere, is pushing for future exemptions under the Jones Act 
for potential future shipments of LNG, et cetera. It is just 
the oil and gas industry trying to get their foot in the door 
to disestablish, you know, what is a very successful U.S. 
story, in terms of maintaining at least a minimal merchant 
marine capability, shipbuilding capability, and that. And if we 
undermine the Jones Act we won't have that any more.
    I also in that testimony referenced the fact that the Coast 
Guard was the only uniformed military service not paid during 
the shutdown, and it was ironic in talking to the Commandant--I 
think it was the Commandant; I had numerous conversations with 
numerous people in the Coast Guard--about them escorting the 
submarines to Bangor. So the sailors in the subs are getting 
paid, but the Coasties on top of the water providing the 
security weren't. It was a little bit of--more than a little 
bit of irony to that.
    And also, the President made it all very much about drugs. 
You know, former Commandant, Admiral Zukunft observed that we 
only act on 20 percent of our actionable intelligence to 
intercept drug shipments, and yet the Coast Guard interdicts 
more drugs than every other agency in the Federal, State, and 
local governments, combined. And that--and there is a lot more 
out there, if they had additional resources.
    So I just want to thank the Coast Guard for being here 
today, I want to thank the chairman for convening this 
important hearing, and hope you enjoy that gavel.
    Mr. Maloney. I thank the gentleman. And I am particularly 
glad I yielded, given that it was the presentation of a gift, 
which I was unaware of. But I am very grateful for it, and 
appreciate----
    Mr. DeFazio. It is kind of small----
    Mr. Maloney. I appreciate--I think I will leave that right 
there. Thank you. Thank you very much, sir.
    And I have offered the Republicans offsetting time, which 
has been graciously declined by my colleague, Mr. Gibbs. But I 
do want to recognize Mr. Weber.
    Thank you, Mr. Chairman.
    Mr. Weber. I will take that time, if it is still available.
    [Laughter.]
    Mr. Weber. Thank you, Mr. Chairman. I am going to go a 
little bit different route. Most of you all know that I have 
Texas A&M Maritime Academy in Galveston in my district. And so 
I am very interested in the workforce, the training, and the 
like.
    In your testimony, Admiral Buzby, you said there are 61 
Government-owned vessels maintaining reduced operating status. 
Do you know where those are stationed?
    Admiral Buzby. Yes, sir. They are stationed on all three of 
our coasts: Atlantic coast, gulf coast, and Pacific coast, 
spread in groups of, typically, threes and fours.
    Mr. Weber. OK. But there is a group, Sabine-Neches 
Waterway, over by Beaumont.
    Admiral Buzby. Yes, sir. We have one of our Reserve Fleets 
there.
    Mr. Weber. How many ships are stationed there, do you know, 
offhand?
    Admiral Buzby. Let's see. There are four Ready Reserve 
Force ships there, and then a number of ships in the National 
Defense Reserve Force that are in longer term layup there.
    Mr. Weber. I am going to be pushing for my colleagues--
talking to the great chairman from our full committee that 
Sabine-Neches Waterway, as you know, has an authorized Chief's 
Report to be dredged to a deeper depth. And we certainly need 
that.
    The Port of Beaumont, for our friends here on the committee 
and those listening, sends out more military personnel and 
equipment than any other port in the other 49 lesser States in 
the country. And I just want to make sure I get that in the 
record. So any help that we can get from you all in getting 
that dredged will be really appreciated.
    Mr. DeFazio. If the gentleman would yield for 1 brief 
second?
    Mr. Weber. Yes, sir, Mr. Chairman.
    Mr. DeFazio. I certainly intend to address the harbor 
maintenance tax, fully expending the harbor maintenance tax, 
and I have been working with the Budget Committee in the hope 
of spending down the $10 billion balance that has already been 
sequestered. With needs like yours, it could be well spent.
    Mr. Weber. Well, thank you, Mr. Chairman. I appreciate 
that. Count me as a supporter of that idea. Let's use the 
Harbor Maintenance Trust Fund for, who knew, harbor 
maintenance, you know?
    [Laughter.]
    Mr. Weber. So I appreciate that.
    The number of maritime academies, is it--you pronounced 
your--Nadeau--the number of maritime academies, Admiral? How 
many?
    Admiral Nadeau. I could defer to my friend next door, but I 
believe it is six plus one. Is that right, Buz?
    Admiral Buzby. Federal academy at Kings Point, plus six 
State----
    Mr. Weber. Right. Right, right, right. You wouldn't happen 
to know which academy has the oldest, smallest ship, would you?
    Admiral Buzby. Yes, sir.
    [Laughter.]
    Mr. Weber. And, Admiral Buzby, which one would that be?
    Admiral Buzby. The Texas A&M Maritime Academy in Galveston.
    Mr. Weber. Darn, you don't say.
    Admiral Buzby. I do say, sir.
    Mr. Weber. Well, Mr. Chairman, are you still with us?
    [Laughter.]
    Admiral Buzby. Actually, the smallest. Not so much the 
oldest. The oldest, actually, is at State University in New 
York. They have the oldest.
    Mr. Weber. Right.
    Admiral Buzby. By a long ways.
    Mr. Weber. As you know, the General Rudder only houses 50 
cadets. And what does that one hold?
    Admiral Buzby. About 600.
    Mr. Weber. About 600? Gosh. I am thinking that is a little 
bit higher number. So we are obviously pushing for a ship to 
get funded, Mr. Chairman, in the appropriations coming up for a 
new ship for Texas Academy.
    Of the six academies that we have--Admiral Buzby, this 
might be for you--what are the capacities of the varying ships?
    Admiral Buzby. Well, the Empire State is right around 600. 
The Kennedy, which is the second largest and second oldest, is 
just shy of 600. It is almost the same capacity.
    Mr. Weber. OK.
    Admiral Buzby. The State of Maine and the Golden Bear, 
which are sister ships, are on the order of about 350, I want 
to say. And then the General Rudder and the State of Michigan, 
which are sister ships also, they are on the order of 50.
    Mr. Weber. OK. So we can see the disparity there. And so we 
certainly want to make that case for those for my friends here 
on the committee.
    You also talked about LNG bunkering. And you are probably 
aware that 95 percent of the Nation's LNG really is exported 
from the Sabine-Neches Waterway, the second longest waterway in 
the Gulf Coast, second only to the Mississippi River.
    Of course, it does have Cheniere Energy--did we lose Mr. 
Graves? It does have Cheniere Energy in those calculations, but 
the Sabine-Neches navigation district is responsible for making 
sure that LNG gets out. It is a coming--obviously, a coming 
industry.
    Do either of you know what percentage of those ships being 
built--are they all tankers that are going to be using LNG? Or 
are there containerships? Do you know any of those stats?
    Admiral Buzby. Are you talking U.S.----
    Mr. Weber. No, the new ones around the world that are----
    Admiral Buzby. Around the world?
    Mr. Weber [continuing]. Using LNG.
    Admiral Nadeau. So we are seeing development, both in 
cruise liners, some of the--a large--I would say a large--I 
would say--I am thinking, like, 25 percent of the new cruise 
ships that are on order right now will be LNG-fueled. We have 
seen other containerships, some of the big containerships that 
are operating around the world, switching to LNG as fuel. And I 
have not heard of any bulkers yet. But there is more and more 
developed, as the infrastructure around the globe develops and 
fuel becomes available. Particularly for those that are on a 
known trade route, it is very attractive.
    Mr. Weber. Thank you, Mr. Chairman, for your indulgence. I 
yield back.
    Mr. Maloney. I thank the gentleman.
    Mr. Brown?
    Mr. Brown. Thank you, Chairman Maloney and Chairman 
DeFazio, Ranking Member Gibbs.
    First of all, it is an honor to be able to serve with all 
of you on the Coast Guard and Maritime Transportation 
Subcommittee. I look forward to the work that we will do 
together this term.
    The U.S. maritime industry is essential to ensuring long-
term stability and security for our country. From supporting 
commerce within our own waters to providing aid to our security 
efforts abroad, the U.S. maritime industry is a critical 
element of our economic and military power.
    However, the maritime industry's strength is not 
guaranteed, and American dominance at sea is currently being 
challenged and threatened. And we face numerous challenges that 
we have to address. In order to combat these challenges, it is 
imperative, I believe, that the Maritime Administration issue 
the national maritime strategy, which is years overdue.
    Admiral Buzby, without a national maritime strategy, it is 
my belief that Congress does not have all the tools that we 
need to best support the U.S. maritime industry and ensure 
long-term competitiveness for U.S.-flagged vessels. I 
understand that no timeline has been established for the 
release of the report, GAO has recommended that a timeline be 
established. Can you give us an update on the progress 
developed in the national maritime strategy, and when we might 
expect to see it? Thank you.
    Admiral Buzby. Yes, sir. Thank you for the question. And if 
I may, Congress has extended our deadline for the report to 
February 2020. So technically, we are not late under the new 
extension. And obviously, we are striving mightily to make sure 
we deliver a product by then.
    I would agree with you wholeheartedly that a national 
maritime transportation strategy is really vital for all of us 
in the industry to be able to stack hands, along with Congress, 
to have a common way forward, an agreed way forward.
    The strategy is currently en route within the 
administration. Part of the delay was to ensure that our 
strategy meshed up and is coordinated well with the national 
defense strategy and national security strategy, because they 
are all complementary, and they really need to be in sync with 
one another. So that is what is going on right now with the 
strategy.
    Mr. Brown. That is early 2020?
    Admiral Buzby. February of 2020, yes.
    Mr. Brown. February. Thank you.
    And Admiral Nadeau? OK. Admiral--first name Rear, last name 
Admiral.
    [Laughter.]
    Mr. Brown. As you know, Chairman DeFazio referenced----
    Mr. Maloney. Spoken like an Army man.
    Mr. Brown [continuing]. The President signing the Executive 
order last week to help bolster the Military to Mariner 
program. I did arrive late at the hearing, perhaps you have 
spoken to it. Can you talk to me a little bit about the 
program, and how many military members and veterans have 
received credentials under this program?
    And I understand that the pool of credentialed mariners is 
declining. How many credentialed mariners are there, and is 
that number, in fact, decreasing?
    Admiral Nadeau. Yes, sir. Thanks for the question. We point 
out that we currently have about 200,000 credentialed mariners. 
How many of those are active, it is difficult for us to say. 
Our system is not set up to track. And I think we know that we 
need a better way to track and support the needs of MARAD, so 
they can know who is available and what is their availability 
and when could they serve.
    We have been working on this for some time. We use 
recommendations from our advisory committee, MERPAC, to help us 
establish the right way to move forward and give us advice and 
recommendations, not just to the Coast Guard, but to all the 
Services, how we can best taking the training and education, 
and mirror that to the international standard, so they can get 
credit for the experience and the training they receive.
    We have about--we believe--our system is not set up to 
track how many veterans, or people coming with military 
service. But we kind of have an ad hoc system we started in 
2016. To date I want to say it is about 2,000 folks that we 
know had military service that have now transitioned and have 
an actual credential that they are using.
    And we have done a lot of things along the way to make that 
easier, including transcripts of sea service, where they can 
easily map their time and credit that towards their 
credentialing.
    Mr. Brown. So I would just say that if accurate tracking of 
mariners is important, then be sure to, you know, make the 
appropriate request of Congress, how we can support you in more 
accurately tracking the mariners that are active.
    I yield back, Mr. Chairman.
    Mr. Maloney. I thank the gentleman. And at this time I 
would like to yield to the ranking member for a quick question, 
in the spirit of accommodation.
    Mr. Gibbs. Just to followup question from the gentleman 
from California.
    Admiral, the ``Atlantic Coast Port Support Access Route 
Study'' was completed 3 years ago, and the question is when is 
it going to be implemented. Because you identified the routes 
and the windmills, and stuff. When are you going to implement 
the routes?
    Admiral Nadeau. We are working to do that now, sir. Work 
has started. But I just would point out that, while we wait to 
complete the work that needs to do--and it looks like a 
rulemaking will be necessary--it doesn't prevent us from today 
sitting down with all stakeholders as the permitting process 
works itself out. We are at the table with BOEM and the 
stakeholders to ensure that what we learned through that 
process is taken into account as they proceed with issuing 
permits.
    So we will look to implement regulations. But in the 
meantime, we don't ignore the fact that we have this very 
useful information. We ensure that that is taken into account 
to keep the waterways safe, secure, and that we don't sacrifice 
safety at the expense of some other development.
    Mr. Gibbs. Thank you. I yield back.
    Mr. Maloney. I thank the gentleman. Ms. Plaskett?
    Ms. Plaskett. Thank you, Mr. Chairman. And congratulations 
to you and to the ranking member. This is a really important 
subcommittee, for me, being the representative from the Virgin 
Islands. I tell people back home that the reason that seven 
nations, over time, owned the Virgin Islands was not because 
they wanted a vacation spot. It was first because of our 
agriculture. But more importantly, it was because of our 
geographic location and our strategic importance for national 
security interests, as well as for commerce.
    And with that being said, this then--this committee and 
both of you are very important to us, both for a strategic 
location, in terms of commerce, and as well in terms of 
national security interests, as well. Because, listen, you 
know, there is a reason that Bluebeard, Blackbeard, and 
Redbeard had their homes on St. Thomas. It was very important 
to them, in terms of their commerce.
    And, unfortunately, in the 21st century, drug traffickers 
are very smart, as well. And they are using the Virgin Islands 
and Puerto Rico, as security interests are blocking the 
movement of drugs into the United States through land going to 
the sea. And having the sufficient funds from the Coast Guard 
to be able to fight that is very, very important to us.
    So you have my support, both of you, in terms of creating 
what is needed in the budget fight, and ensuring that you have 
the right amount of vessels, and our ports are in the shape 
that they are supposed to be, so that maritime work can be 
done.
    So, with that, one of my first questions to you, Admiral 
Buzby, is related to port infrastructure. And how will 
resilient port design, maritime highway design designation, and 
intermodal connections impact global shipping?
    Admiral Buzby. Thank you for your question, ma'am. And 
thank you for the support. You know, marine highways 
development is a very large priority with the Department of 
Transportation, and MARAD, in particular, because we see that 
mode as the mode with the greatest opportunity for expansion 
and capacity in the future. We are only going to be moving more 
things, as population increases and as we see flow of goods 
around the world.
    So, you know, our highways and our railroads are getting 
very crowded, as we all know, and air shipment is still pretty 
expensive. So our waterways, which our Nation is blessed with, 
provides a natural route to move more and more goods. So to the 
extent we can continue to develop our marine waterways, I think 
it is going to be to all of our national benefit.
    Ms. Plaskett. I agree. And with that, sir, you know, when 
you talk about LNG--my colleague sitting right next to me--you 
know, the Virgin Islands, we actually have deepwater ports, we 
are outside of the custom zone, and we already have an oil 
refinery. So LNG--you guys could bring it right to us. We will 
take care of you.
    [Laughter.]
    Ms. Plaskett. The other thing I wanted to ask about with 
regard to the Coast Guard is the support that you feel that you 
have from us, and what you need from us, and particularly in 
the area of the Virgin Islands.
    And I will ask you first with regard to drug trafficking, 
and the need for additional ships and et cetera. What would you 
want that to look like to be able to fight within the 
Caribbean?
    Admiral Nadeau. Not exactly within my current 
responsibilities, but I can speak in general terms, ma'am. And 
I would tell you that, first, we are grateful to the tremendous 
support that we have received from Congress and the 
administration. We are building. We received funding for our 
second OPC. We have got funding for six FRCs, two of which will 
go off to replacement, capitalized six that we have right now 
in CENTCOM AOR.
    And sir, Mr. DeFazio, I appreciate your thanks that we had 
people there, as well, working with the Navy during the 
shutdown over, actually, in CENTCOM AOR that were not getting 
paid. But they stood the watch, and we are very proud of them.
    Ma'am, to your question, we are grateful for the support. 
We are recapitalizing our assets. As you know, we recouped 
about $6 billion worth of drugs off the waterways last year, 
getting after those transnational criminal organizations where 
they are most vulnerable, which is at sea. We will continue 
that. That is the Commandant's--one of his top priorities.
    Ms. Plaskett. And what about shoreside infrastructure? Is 
there--is that--I know that we often talk about the actual--
when we talk about assets, we are talking about ships and your 
men and women who are out there fighting. But what about 
shoreside infrastructure to support the fleet, itself?
    Admiral Nadeau. We have an aging infrastructure there, as 
well, ma'am. I believe we are up to about $1.7 billion in our 
backlog. Recent committee support through Congress, we have got 
some funding to start getting after that. But there is still a 
lot more work to be done to get after all of our backlog there.
    Ms. Plaskett. OK, thank you very much for the time.
    Mr. Maloney. I thank the gentlewoman. And before I go to 
Mr. Pappas I would just like to advise the Members that after 
Mr. Pappas's questioning I would like to move to the second 
panel.
    Without objection.
    Mr. Pappas?
    Mr. Pappas. Thank you very much, Mr. Chairman. Thank you 
very much, Admiral Buzby and Admiral Nadeau, for joining us 
here today. I appreciate your thoughts and I read----
    Mr. Maloney. Nadeau.
    Mr. Pappas [continuing]. The written testimony, as I was--
--
    Mr. Maloney. Nadeau.
    Mr. Pappas. Nadeau, got it.
    [Laughter.]
    [Inaudible.]
    Mr. Pappas. Thank you. We have got a lot of French 
Canadians in my district, so I will----
    [Inaudible.]
    Mr. Pappas. OK. Great, excellent. I know it well, I know it 
well. It is about a mile from my house.
    Well, since we are talking about New Hampshire, I am very 
proud to represent the Granite State, 18 miles of coastline, 
the smallest coastline of any State in the country. I represent 
all of it. But yet the maritime industry is absolutely critical 
to the seacoast economy of the State of New Hampshire. 
According to the American Maritime Partnership, more than $113 
million annually is added to the economy from the maritime 
industry, and $75 million in workforce income is derived from 
that industry.
    I am concerned a great deal about, you know, the size of 
the mariner pool. I know you have touched on that a great deal 
this morning, so I appreciate your responses there.
    One thing I wanted to raise. Recently I saw something in 
the Wall Street Journal, a report on China attempting to hack 
U.S. universities, and targeting information on U.S. maritime 
research. And I am wondering if you could comment on that, if 
the Coast Guard or the Maritime Administration has looked into 
this to ensure that our universities have the technical 
assistance that they need to make sure that they are protected, 
and that the information is secure.
    Admiral Nadeau. I am not familiar with that specific 
incident, sir. But I can tell you in general, in terms of 
cyber, we have set up a Coast Guard Cyber Command, and have 
built that expertise out, and are leveraging that.
    In addition, we are looking to work with the stakeholders 
to ensure that there is sufficient guidance in place, that 
people know what to expect, that we continue to address all of 
the threats and hazards that may be coming.
    We do know that they present new risks. Cyber is a new 
world for us. But it is ever present, and the industry needs to 
take advantage of those efficiencies in order to remain 
competitive. So we don't want to impede their ability, we just 
want to make sure we are mindful of the risks, ensure that we 
have the proper resilience in place, and that redundancy is 
there, so that however we leverage this technology, we make 
sure that, should it go away or should it be impeded somehow, 
or should someone take it from us, we can continue to operate 
or deal with the consequences when that occurs.
    Mr. Pappas. Thank you.
    Admiral Buzby?
    Admiral Buzby. Yes, sir. We are not doing anything directly 
with any of the colleges and universities. As Admiral Nadeau 
said, we are primarily focused on the ships and the 
infrastructure, the connections to the ports, the terminals, 
all those things that enable our maritime transportation system 
to flow. And we participate widely with industry and with other 
parts of the Government to make sure that we are as secure as 
we can be.
    But as you are seeing in that article, we are under 
constant attack every day, many times a day.
    Mr. Pappas. Well, thanks for the response.
    The Jones Act seems to be working. I am a big supporter. I 
am wondering if you could just give us an overall comment of 
what the maritime industry would look like without the Jones 
Act.
    Admiral Buzby. Well, I would start, because we would not 
have a maritime industry without the Jones Act, quite plain and 
simple. You know, without--the majority of our unlimited 
tonnage mariners work on Jones Act ships. Those 99 large Jones 
Act ships, they employ the majority of the mariners that I am 
going to need to man up those 61 Government sealift ships. 
Absent the Jones Act and the jobs that go with them, we are not 
taking those ships to war, we are not taking this country to 
war. It is as simple as that.
    Mr. Pappas. Thank you.
    I yield back, Mr. Chairman.
    Mr. Maloney. Well, I thank the gentleman.
    And Admiral Nadeau, I think it is fair to say we have found 
every conceivable pronunciation of your name today.
    [Laughter.]
    Admiral Nadeau. I have heard it all, sir. Thank you.
    Mr. Maloney. If you were fishing with Barack Obama and you 
caught a big fish, you would say, ``Hand me the net, O,'' 
right? Is that it?
    [Laughter.]
    Mr. Maloney. But you will never forget. You will never 
forget now. It is in your head.
    Sir, thank you very much. Thank you, Admiral Buzby. Both of 
you, we are cognizant of the extraordinary service you have 
provided to our Nation throughout your careers, and continue to 
do so. I will let you both know, you know, we take our 
oversight responsibility seriously, and we all have a role to 
play. But we respect very much the jobs that you do, 
particularly the men and women of the Coast Guard.
    Let me just reiterate we appreciate you very much, and we 
share your commitment to that mission on this committee. Thank 
you.
    With that, we would like to adjourn the first panel and 
move to the second panel, if we could.
    [Pause.]
    Mr. Maloney. I will just note for the record--I think I 
note for the record this is not our normal committee room.
    [Pause.]
    Mr. Maloney. Well, thank you all. We would like now to 
welcome our next panel of witnesses. We are joined today by 
Rear Admiral Michael Alfultis.
    Sir, am I saying your name correctly?
    [Laughter.]
    Mr. Maloney. I can't do this again.
    Admiral Alfultis. If you had problems with the last 
admiral, you are really going to have problems with mine. 
Alfultis.
    Mr. Maloney. Alfultis. Alfultis. No one will make the 
mistake I just made. Thank you, sir. Mr. Alfultis, Admiral 
Alfultis, president of the State University of New York 
Maritime College, an institution I know well.
    We are joined by Ms. Jennifer Carpenter, executive vice 
president and COO of the American Waterways Operators. Thank 
you, ma'am, for being here.
    Mr. John Crowley, president of the National Association of 
Waterfront Employers.
    Mr. Michael Roberts, senior vice president and general 
counsel at Crowley Maritime, on behalf of the American Maritime 
Partnership.
    And Mr. Augustin Tellez, executive vice president, 
Seafarers International Union, on behalf of the American 
Maritime Officers; Masters, Mates, and Pilots; Marine 
Engineers' Beneficial Association; and the Seafarers 
International Union.
    Thank you all for being here today. I look forward to your 
testimony. I ask unanimous consent that our witnesses' full 
statements be included in the record. And without objection, so 
ordered.
    As per the previous panel, since that written testimony has 
been made part of the record, the subcommittee requests that 
you limit your oral testimony to 5 minutes.
    And with that, Admiral, you may proceed.

   TESTIMONY OF REAR ADMIRAL MICHAEL ALFULTIS, USMS, PH.D., 
   PRESIDENT, STATE UNIVERSITY OF NEW YORK MARITIME COLLEGE; 
 JENNIFER A. CARPENTER, EXECUTIVE VICE PRESIDENT AND COO, THE 
AMERICAN WATERWAYS OPERATORS; JOHN E. CROWLEY, JR., PRESIDENT, 
   NATIONAL ASSOCIATION OF WATERFRONT EMPLOYERS; MICHAEL G. 
  ROBERTS, SENIOR VICE PRESIDENT AND GENERAL COUNSEL, CROWLEY 
MARITIME CORP., ON BEHALF OF AMERICAN MARITIME PARTNERSHIP; AND 
     AUGUSTIN TELLEZ, EXECUTIVE VICE PRESIDENT, SEAFARERS 
 INTERNATIONAL UNION, ON BEHALF OF AMERICAN MARITIME OFFICERS; 
  INTERNATIONAL UNION OF MASTERS, MATES AND PILOTS; SEAFARERS 
INTERNATIONAL UNION; MARINE ENGINEERS' BENEFICIAL ASSOCIATION; 
          AND THE MARITIME TRADES DEPARTMENT, AFL-CIO

    Admiral Alfultis. Good morning, Chairman Maloney, Ranking 
Member Gibbs, and members of the subcommittee.
    I am president of State University of New York Maritime 
College, and I am here representing the Consortium of State 
Maritime Academies. I am here today about three very important 
issues as they pertain to the training, education, and 
development of future mariners: first, the importance of the 
State maritime academies in producing licensed mariners for 
national defense and economic security; second, the need to 
replace the fleet of aging State maritime academy training 
ships that are inextricably linked to our ability to train our 
students; and finally, the importance of employment and 
advancement opportunities for U.S. mariners.
    The six State maritime academies, along with the Federal 
United States Merchant Marine Academy, provide the pool of new 
mariners our Nation needs for national defense and economic 
security. Collectively, the State maritime academies annually 
graduate approximately 900 new deck and engine licensed 
officers. This equates to more than 70 percent of the new U.S.-
licensed officers each year, with the U.S. Merchant Marine 
Academy producing the remaining 25 percent, and another 5 
percent working up through the industry ranks. All of these 
sources are important in ensuring a healthy mariner pool.
    The ability of the State maritime academies to produce 
licensed officers is accomplished through a unique Federal-
State-citizen partnership. At SUNY Maritime College, student 
tuition and fees fund approximately 50 percent of our operating 
budget, and State funding accounts for over 47 percent. Federal 
support accounts for approximately 3 percent.
    The State maritime academies are grateful to Congress and 
the administration for the support provided. And as the fiscal 
year 2020 budget process progresses, we look forward to working 
with Congress to maintain the level of support received in 
fiscal year 2019.
    In addition to direct support, the Federal Government 
provides each State maritime academy with a training ship. The 
State maritime academies require modern vessels of sufficient 
size to provide the required sea time and training to meet 
licensing requirements. They are the primary and often the only 
means for cadets to learn, train, and earn federally required 
sea time for the U.S. Coast Guard merchant mariner license. 
These training vessels, owned by the Federal Government and 
operated by the State maritime academies, are also essential 
assets for humanitarian and disaster relief efforts, as they 
were for Hurricanes Harvey, Irma, Maria, Sandy, and Katrina.
    Recognizing urgency of replacing the fleet of aging 
training ships, Congress has partially funded the national 
security multimission vessel, or NSMV, program. The fiscal year 
2018 budget included $300 million for the first NSMV to replace 
the Empire State at SUNY Maritime College. The fiscal year 2019 
budget included another $300 million for a second vessel to 
replace Kennedy at Massachusetts Maritime Academy.
    The NSMVs are designed as multimission assets to serve in 
humanitarian aid and disaster relief efforts, as well as 
training ships. The State maritime academies are extremely 
appreciative of the bipartisan and bicameral support for the 
NSMV program and the two ships funded to date. To meet the 
training needs of the collective State maritime academies and 
have sufficient ships available to support other national 
tasking and missions, we request Congress continue to fund the 
NSMV program until three additional ships have been built and 
delivered. This will ensure adequate capacity for all State 
maritime academies' training requirements, while providing the 
flexibility to deploy the NSMVs in response to national 
emergencies.
    As others have testified, or will testify today, an 
adequate pool of skilled U.S. citizen mariners is essential for 
national defense sealift requirements and our economic 
security. While the State maritime academies and the U.S. 
Merchant Marine Academy currently produce an adequate supply of 
entry-level licensed officers, there is an estimated shortfall 
of 1,800 mariners to crew all U.S.-flagged commercial and 
Government Reserve sealift vessels for the same period of time 
of more than 6 months.
    We request strong congressional support for legislation and 
funding that strengthens and grows the U.S. maritime industry, 
in order to provide the employment and advancement 
opportunities needed to recruit and retain sufficient number of 
licensed mariners for commercial and strategic sealift 
requirements.
    So, in summary, the State maritime academies and the U.S. 
Merchant Marine Academy are essential to producing a pool of 
entry-level licensed officers for national defense and economic 
security. Funding is needed to replace three additional 
training ships used by the State maritime academies in order to 
maintain our Nation's ability to train mariners and respond to 
natural disasters. And full funding and expansion of current 
programs and new incentives and legislation are needed to 
provide employment and advancement opportunities for our 
mariners.
    Thank you for the opportunity to testify today on behalf of 
the Consortium of State Maritime Academies, and I look forward 
to answering any questions that you may have.
    [Admiral Alfultis's prepared statement follows:]

                                
   Prepared Statement of Rear Admiral Michael Alfultis, USMS, Ph.D., 
        President, State University of New York Maritime College
                              introduction
    Good afternoon Chairman Maloney, Ranking Member Gibbs, and members 
of the Subcommittee. I am Rear Admiral Michael Alfultis, President of 
the State University of New York Maritime College.
    Today I am representing the Consortium of State Maritime Academies 
(SMAs), which includes: California Maritime Academy in Vallejo, 
California; Great Lakes Maritime Academy in Traverse City, Michigan; 
Maine Maritime Academy in Castine, Maine; Massachusetts Maritime 
Academy in Buzzards Bay, Massachusetts; State University of New York 
Maritime College in Throggs Neck, New York; and Texas A&M Maritime 
Academy in Galveston, Texas.
    I am here today to talk about three very important issues as they 
pertain to the training, education, and development of future mariners:
    1.  The importance of the State maritime academies in producing 
licensed mariners for national defense and economic security;
    2.  The need to replace the fleet of aging SMA training ships that 
are inextricably linked to our ability to train our students; and
    3.  The importance of employment and advancement opportunities for 
U.S. mariners.
(1) State Maritime Academies Produce 70 percent of the New Licensed 
        Officers Each Year and Are Important to America's Commercial 
        and National Security.
    The six State maritime academies, along with the Federal United 
States Merchant Marine Academy, provide the pool of new mariners our 
nation needs for national defensive and economic security.
    Our national defense is dependent upon civilian mariners who 
provide logistical support for our operational and deployed forces in 
both peace and conflict. The Military Sealift Command (MSC) operates a 
fleet of over 120 ships which provide vital logistical and special 
mission support for U.S. operational forces across the globe. These 
vessels are crewed by U.S. civilian mariners serving in the U.S. 
Merchant Marine. Additionally, U.S. mariners are also required for 
another 100 ships in the National Defense Reserve Fleet (NDRF) and 60 
ships in the national Maritime Security Program (MSP) fleet. These 
ships are an essential ready source of ``surge'' shipping, when needed 
by the Department of Defense (DOD) to support the rapid deployment and 
global projection of U.S. military forces.
    In addition to DOD sealift and logistical requirements, 
agricultural products, petroleum products, and consumer goods in the 
U.S. are transported via vessels. Thus, as a maritime nation, the U.S. 
economy depends on a healthy maritime industry. U.S. licensed mariners 
operate vessels engaged in international trade, coastal trade, and 
transportation along inland waterways. They also serve as pilots 
responsible for the safe navigation of all vessels in U.S. waters. They 
operate the network of ferries transporting people, trucks, and autos. 
Eventually, many of our licensed mariners will become executives, 
managers, and leaders in other sectors of the maritime industry, 
including port and terminal operations, chartering and brokering, 
insurance underwriting, admiralty law, and maritime security.
    Enrollment in the six State maritime academies' license programs is 
near full capacity and currently stands at over 3700 cadets. In 
addition, nearly 1000 midshipmen are enrolled at the USMMA. Enrollment 
in the SMAs' license programs is limited by the capacity of the 
training ships, berths available for cadets on commercial ships, and 
shoreside training infrastructure.
    As with U.S. Merchant Marine Academy graduates, SMA licensed cadets 
historically have enjoyed high employment rates upon graduation. Our 
highly skilled graduates have many opportunities both afloat and ashore 
in the maritime industry, U.S. Armed Forces, the U.S. transportation 
eco-system, and energy sectors.
    The ability of the SMAs to produce licensed officers is 
accomplished through a unique Federal, State, citizen partnership.
    By Federal law, the U.S. Department of Transportation (DOT) 
Maritime Administration (MARAD) is responsible for the education and 
training of merchant marine officers to ensure national defense 
readiness and other national security needs. To that end, MARAD fully 
funds and operates the U.S. Merchant Marine Academy (USMMA), and 
provides training ships and limited funding to the six SMAs. Funding 
includes limited direct support and fuel funding, and stipends for 
cadets in the Strategic Sealift Officer Midshipman program. The State 
Maritime Academies are grateful to Congress and the Administration for 
the funding provided to the Maritime Administration especially as the 
cost to educate and train cadets and maintain our aging training ships 
has increased substantially. As the FY-2020 budget process progresses, 
we look forward to working with Congress to maintain the level of 
support we received in FY-2019.
    For their part, States with maritime academies are responsible for 
providing all the shore-based infrastructure including academic 
buildings, dormitories, simulators, laboratories, faculty and staff. 
While the Federal Government provides the SMAs training vessels and 
funds major maintenance and repair of the vessels, the SMAs provide 
berthing, crewing, and routine maintenance costs, and the cost of 
operating the ship.
    Our students are also partners as they are responsible for paying 
for tuition, fees, books, materials, and room and board. The average 
cost of attendance for in-State students at the SMAs is $ 27,000 per 
year. At SUNY Maritime College, student tuition and fees represent 
almost 50 percent of our operating budget and State funding accounts 
for over 47 percent. Federal direct funding and fuel reimbursement 
account for approximately 3 percent. Direct funding from MARAD is 
primarily used to offset training cruises and for unique and expensive 
equipment such as bridge and engineroom simulators and small vessels, 
used to meet U.S. Coast Guard Seamanship, Training, Certification, and 
Watchkeeping (STCW) requirements.
    A 2018 study completed for Massachusetts Maritime Academy concluded 
that based on the assumption that the Federal Government provides an 
additional $300 million to build a new ship to replace their aging 
training ship, the annualized Federal funding (over the 50 year service 
life of the new ship) received by Massachusetts Maritime Academy would 
be approximately $7.7 million, or 11 percent of the pro forma total 
sources of funds for the academy. This is reflective of funding for the 
other State Maritime Academies.
    In this unique Federal, State, citizen partnership, each partner 
plays an essential role in the production of licensed mariners at the 
SMAs.
(2) The New Program To Recapitalize The State Maritime Academy Training 
        Ship Fleet is Essential to the Continued World-Class Training 
        of American Mariners.
    All maritime academy cadets seeking a U.S. Coast Guard license are 
required to accumulate at least 360 days of sea time to qualify for a 
license. Therefore, a fleet of training vessels at the six SMAs is 
essential for the SMA cadets to meet the sea-time requirements. While 
the U.S. Merchant Marine Academy utilizes commercial ships for their 
cadets, there is an insufficient number of commercial vessels upon 
which all SMA cadets can also obtain the required sea time. Federal law 
(Title 46 USC 51504) and Federal regulations (46 CFR 310.4) 
specifically authorize the Department of Transportation to provide each 
SMA with a ``suitable ship'' under control of the Secretary, and if no 
such vessel is available, to build and provide such a vessel.
    The academy training ships are Federal assets that are owned by the 
U.S. Department of Transportation (DOT) Maritime Administration (MARAD) 
and operated by the respective SMAs. They are used extensively during 
training cruises and pier side at each academy. The SMA vessels are the 
primary--and often the only--means for cadets to learn, train, and earn 
federally required sea time for a U.S. Coast Guard Merchant Mariner 
license.
    The SMA vessels are also essential Federal assets for humanitarian 
and disaster relief efforts. The Federal Government has no other 
vessels in the NDRF with the 400-600 berthing capacity of these ships 
that can be called upon in times of national need. For example, the 
training ships for Massachusetts Maritime Academy, SUNY Maritime 
College, and Texas Maritime Academy housed disaster relief workers for 
an extended period during the response in fall 2017 to Hurricanes 
Harvey, Irma, and Maria. They also supported disaster recovery 
operations during Hurricanes Sandy in 2012, and Katrina in 2005. These 
vessels have also been used for international humanitarian missions and 
to support DOD missions. This relieves U.S. Navy ships of missions that 
would further impact their heavy operational and personnel tempo.
    Averaging 37 years of age, the SMA training vessels are approaching 
the end of their service life. The consequences of losing one of these 
training ships would significantly decrease the number of graduates 
produced by the State maritime academies and ripple through the State 
maritime academies and the entire American maritime industry.
    The age of the training ships also hampers the ability of the SMAs 
to train future licensed mariners on the use of current technology 
their graduates will experience on modern commercial vessels. While 
older systems are good for teaching fundamentals, they are not 
sufficient for ensuring we produce competent mariners who are 
technologically savvy. Although our modern simulators can compensate 
for some of this technology gap, simulation alone is not a substitute 
for actual hands-on experience. The SMAs require modern vessels of 
sufficient size to provide the required sea time and experience to meet 
licensing requirements.
    Recognizing the urgency of replacing the fleet of aging training 
ships, Congress has partially funded the National Security Multi-
mission Vessel (NSMV) program. The FY-18 budget included $300M to 
replace the TS Empire State VI at SUNY Maritime College with the first 
NSMV. This is the first ever U.S. purpose-built ship for cadet training 
and disaster response. The fiscal year 2019 budget included another 
$300 million for a second vessel to replace the TS Kennedy at Mass 
Maritime Academy. The NSMVs are designed as multi-mission assets, to 
serve in humanitarian aid and disaster relief efforts, as well as SMA 
training ships. For their part, the State maritime academies are 
working with their respective university systems and States to fund the 
outfitting of classrooms, labs, and dedicated training spaces onboard 
the NSMVs.
    The SMAs are extremely appreciative of the bipartisan and bicameral 
support for the NSMV program and the two ships funded to date.
    To meet the training needs of the collective SMAs and have 
sufficient ships available to support other national tasking and 
missions, we request Congress continue to fund the NSMV program until 
three additional ships have been built and delivered. This will ensure 
adequate capacity for all SMA training requirements, while providing 
the flexibility to deploy the NSMVs in response to national 
emergencies. An analysis provided by MARAD also indicates increasing 
the number of NSMVs constructed will reduce the per hull cost and the 
annual maintenance and repair costs due to a common hull for all 
academy vessels. Without a fully funded NSMV program, the SMAs cannot 
produce the number of capable licensed mariners required for a healthy 
mariner pool.
(3) Our Nation's Security Is Highly Dependent on the Availability of a 
        Pool of Highly Skilled Merchant Mariners.
    As others have or will testify today, at previous hearings by this 
committee, and before other committees, mariners are essential for 
national defense sealift requirements and our economic security.
    Our nation's ability to deploy, project, and sustain forces is 
dependent on two factors:
    1.  having a sufficiently large oceangoing U.S.-flag fleet 
operating in foreign and domestic trades, and
    2.  an adequate pool of skilled U.S. citizen merchant mariners to 
crew each commercial and government-owned reserve sealift vessel while 
continuing to crew the commercial Jones Act fleet which includes trans-
ocean ships, workboats, passenger vessels, and ferries.
    There are serious challenges to meeting national defense sealift 
requirements. Commercial U.S.-flag vessels engaged in international 
trade, and the Navy's and Maritime Administration's (MARAD's) reserve 
sealift fleets have declined dramatically, and are under economic and 
fiscal pressures that are impacting their long-term ability to surge 
and support our joint forces in a crisis.
    While the domestic Jones Act fleet remains strong and provides jobs 
for our new graduates, the number of non-Jones Act U.S. vessels in 
international trade has declined by more than 20 percent over the last 
5 years, from 106 to 83. This impacts employment and advancement 
opportunities for U.S. licensed mariners on U.S. flag vessels engaged 
in international trade and thereby threatens the availability of 
mariners available to support surge sealift requirements.
    While the SMAs and USMMA currently produce an adequate supply of 
entry level licensed officers, a working group comprising members from 
U.S. Transportation Command, the Office of the Secretary of Defense, 
the Coast Guard, Navy, and MARAD determined that we have a shortfall of 
1,800 mariners to crew all U.S.-flag commercial and government reserve 
sealift vessels during a full mobilization for a sustained period of 
more than 6 months.
    Full funding and expansion of new programs are needed to reverse 
the decline of military useful sealift ships and increase the pool of 
qualified mariners. In addition to full funding of the USMMA and SMAs 
and recapitalization of the training ships, these include:
      Full funding of the Maritime Security Program through 
2025 and new authorization through 2035 to keep ships under the U.S. 
flag;
      Restoration of U.S. cargo preference laws that require 75 
percent of the Food for Peace cargoes be carried on U.S.-flag;
      Requiring a percentage of liquefied natural gas and crude 
to be exported on U.S. built, U.S. flag ships as called for in the 2018 
Energizing American Shipbuilding Act;
      The repeal of current Internal Revenue Code language: to 
expand U.S. shipping by making the financing of U.S. ship construction 
less expensive;
      Legislation that supports explicitly U.S.-flag ships must 
be utilized in the transportation, construction, and maintenance of 
offshore wind generation farms that will be developed in the coming 
decades; and,
      Incorporating marine highway corridors, connectors, and 
State freight systems as part of the ``National Freight Strategic 
Plan'' to improve infrastructure and developing American Marine Highway 
vessels to expand the use of waterways for freight and passengers and 
provide a more sustainable form of transportation by removing trucks 
from overcrowded highways.
      Strong support for legislation that strengthens the 
Jone's Act and creates U.S. maritime jobs afloat and ashore.
    These initiatives will increase the number of U.S.-flag ships, 
provide sufficient employment and advancement opportunities to recruit 
and retain sufficient licensed mariners for the commercial fleet and to 
support national defense sealift requirements.
                                summary
    In summary, I leave you with three main points:
    1.  The State maritime academies and the U.S. Merchant Marine 
Academy are essential to producing sufficient mariners. Full funding, 
at authorized levels, is needed to meet the operational and maintenance 
requirements and capital improvements at the U.S. Merchant Marine 
Academy and Federal assistance at the six State maritime academies, 
including for the Student Incentive Program.
    2.  Recapitalization of five training ships for the State maritime 
academies is critical. Two NSMVs were funded in FY-18 and FY-19. 
However, three more ships will ensure the long-term capacity to train 
licensed mariners at the SMAs.
    3.  Full funding and expansion of current programs and new 
incentives and legislation are needed to reverse the decline of 
military useful sealift ships and increase the pool of qualified 
mariners.
    Thank you for the opportunity to testify today on behalf of the 
Consortium of State Maritime Academies. I look forward to answering any 
questions you may have.

    Mr. Lowenthal [presiding]. Thank you, Admiral Alfultis.
    And next, Ms. Carpenter, you may proceed.
    Ms. Carpenter. Good morning. Thank you for the opportunity 
to testify today alongside my colleagues from across the 
maritime industry. We are all in this together, and we deeply 
appreciate your leadership and support. It is great to see that 
every member of this subcommittee hails from a maritime State 
or territory.
    Today I would like to discuss four pillars that form the 
foundation of our industry's health and viability, and the 
critical role that you play in preserving that foundation. 
Those pillars are the Jones Act, Federal preemption, waterways 
infrastructure, and marine safety.
    First, the Jones Act, the basis for every dollar that our 
members invest in American-built vessels, and every job they 
provide to American men and women. The Jones Act allows us to 
provide ladders of career opportunity and support hundreds of 
thousands of jobs in related industries, nationwide.
    The human dimension of the Jones Act is equally compelling. 
High school graduates and military veterans can work their way 
up from the deck to the wheelhouse, becoming captains on towing 
vessels and making six-figure salaries. In addition, many of 
our member companies are still owned by the third, fourth, or 
even fifth generations of the same families. We don't see 
either of those things much in the U.S. economy today.
    The Transportation and Infrastructure Committee has long 
been a bastion of bipartisan support for the Jones Act, as we 
saw most recently with your letter to Secretary Nielsen. We 
thank you for that, and ask that you continue to support the 
law vigorously.
    Second, Federal preemption. American farmers, energy 
producers, and manufacturers depend on our industry to move 
their products to market, and to deliver the inputs and the raw 
materials on which they rely. And because our vessels can pass 
through the waters of a dozen States in the course of a single 
voyage, our industry depends on a coherent and consistent 
regulatory regime administered and enforced by knowledgeable 
Federal agencies.
    The principle of Federal primacy was a foundation of the 
U.S. Constitution and has consistently been applied to 
interstate commerce for more than 200 years. It has also been 
reflected in thoughtful bipartisan legislation, from the 
landmark Oil Pollution Act of 1990 to last year's Vessel 
Incidental Discharge Act.
    Thank you for passing VIDA. It is important, both for the 
maritime industry, which needed the national uniformity that 
only Federal regulations can provide, and for the marine 
environment, which will benefit as the highest standards 
economically achievable are implemented nationwide. We urge you 
to continue to ensure the primacy of Federal laws governing 
vessel operations, and hold executive branch agencies 
accountable for actively defending Federal authority in this 
field.
    The third pillar is waterways infrastructure, which is in 
urgent need of modernization and repair. Critical failures and 
unscheduled closures have occurred at locks throughout the 
system. If left untended, these problems will increase the cost 
of marine transportation and call its reliability into 
question. That would be devastating, not only for our industry, 
but for the shippers who rely on us and for air quality and 
highway congestion, as well.
    Congress can continue to support waterways infrastructure 
by keeping the Water Resources Development Act on a 2-year 
reauthorization cycle, and opposing additional taxation, 
tolling, or lockage charges on users of the inland waterway 
system. We are already paying our share, supporting a 45-
percent increase in the inland waterways fuel tax in 2014.
    The fourth pillar is marine safety, our industry's 
franchise to operate. This responsibility falls primarily on 
us. Congress also has an important role to play. A quarter 
century ago, AWO developed the Responsible Carrier Program as a 
code of best practices for member companies. We later 
instituted a third-party audit mechanism to increase the 
integrity of our safety management system.
    Building on these industry-led initiatives, AWO worked with 
this subcommittee and the Coast Guard for more than a decade to 
develop comprehensive towing vessel safety and inspection 
regulations, which took effect last July.
    AWO members are committed to getting safer every day. Our 
goal is not simply to comply with the regulations, but to 
institute a culture of safety industrywide. Please hold us 
accountable for the commitments we make.
    In addition, please help the Coast Guard to promote a 
culture of safety by ensuring that regulations, policy, and 
user fees don't disincentivize safety management systems. 
Congress can also help by eliminating regulations that have 
little positive impact on safety or environmental protection.
    In closing, I thank you for your support for our industry, 
and ask for your continued support for the four pillars that 
enable us to serve our customers and our country.
    I look forward to answering your questions.
    [Ms. Carpenter's prepared statement follows:]

                                 
 Prepared Statement of Jennifer A. Carpenter, Executive Vice President 
     and Chief Operating Officer, The American Waterways Operators
    Good morning, Chairman Maloney, Ranking Member Gibbs and Members of 
the Subcommittee. I am Jennifer Carpenter, Executive Vice President & 
Chief Operating Officer of The American Waterways Operators. AWO is the 
national trade association for the inland and coastal tugboat, towboat 
and barge industry. On behalf of AWO's over 300 member companies, thank 
you for the opportunity to testify at this important hearing on 
strategies to improve regulation, economic opportunities, and 
competitiveness in the U.S. maritime and shipbuilding industries.
    I'm very pleased to be part of this panel alongside my colleagues 
from other sectors of the American maritime industry. We are truly all 
in this together and we deeply appreciate your leadership and support. 
To place the sector I represent in context, the tugboat, towboat and 
barge industry is the largest segment of our nation's domestic maritime 
fleet. We operate more than 5,500 towing vessels and 31,000 dry and 
liquid cargo barges on the navigable waterways that run through 
America's heartland; along the Atlantic, Pacific and Gulf coasts; on 
the Great Lakes; and in ports and harbors around the country. Each 
year, towing vessels and barges safely, securely and efficiently move 
more than 760 million tons of critical cargo, including agricultural 
products for export, coal to electrify our homes and businesses, 
petroleum products to fuel our cars, chemicals for manufacturing 
facilities, cement and sand for construction projects, and other 
building blocks of the U.S. economy. Tugboats also provide essential 
services in our nation's ports and harbors, including ship-docking, 
tanker escort and bunkering.
    Each one of you hails from a State with a proud maritime tradition, 
and you know how the work that tugboat, towboat and barge operators do 
contributes to the economy, environment and quality of life in New 
York, Ohio, and around the country. Our industry's work also has a 
vital impact nationwide. Today, I'd like to discuss the four pillars 
that, taken together, comprise the foundation our industry's health and 
viability. Those four pillars are the Jones Act, Federal preemption, 
waterways infrastructure, and marine safety.
    I would also like to emphasize the critical role that Congress, and 
especially this Subcommittee, play in preserving the strength of that 
foundation. The sound state of our industry, and the strength and 
resilience of our members to persevere through the ups and downs of the 
commercial market, are directly reliant on the certainty that those 
four public policy pillars provide. Were those pillars to erode, the 
vitality and viability of our industry would be threatened. Let me say 
a few words about each of them.
                            i. the jones act
    The Jones Act is the statutory foundation of the tugboat, towboat 
and barge industry. It is the basis for every dollar American companies 
invest in American-built vessels and every job they provide to American 
men and women. The Jones Act allows our industry segment alone to 
provide family wage jobs and ladders of career opportunity for more 
than 50,000 Americans--including nearly 39,000 positions as mariners on 
board our vessels--and support more than 300,000 jobs in related 
industries across the Nation. As Mr. Roberts has explained, the 
domestic maritime industry in total supports nearly 650,000 jobs and 
$155 billion in economic output nationwide.
    There is also a vitally important human dimension behind the 
statistics. In the tugboat, towboat and barge industry, many high 
school graduates and veterans of the U.S. Armed Forces have worked 
their way up from the deck to the wheelhouse, becoming captains on 
towing vessels and making six-figure salaries that allow them to 
provide for their families. Those salaries result in purchasing power 
that supports local economies in the communities where mariners live. 
And, our industry is a rarity in that many of our member companies, 
like Crowley Maritime, are owned by the third, fourth or even fifth 
generations of the same families that have deep roots in their 
communities. This is a testimony to the enduring strength of our 
members and the work they do. It is also something we see very rarely 
in our country today and is a really special and powerful thing.
    The Transportation and Infrastructure Committee, and especially 
this Subcommittee, has long been a deep reservoir of bipartisan support 
for the Jones Act, a fact demonstrated most recently by the powerful 
letter sent by Chairmen DeFazio and Maloney and Ranking Members Graves 
and Gibbs to Homeland Security Secretary Nielsen opposing a 10-year 
Jones Act waiver for LNG shipments to Puerto Rico. The men and women 
who own, operate, crew and build American vessels are deeply grateful 
for your support. Mr. Chairman, Mr. Ranking Member, Members of the 
Subcommittee, if you seek a single reason why the Jones Act remains 
critical to America as the law approaches its centennial, look no 
further than the tugboat, towboat and barge operators in your States. 
Their valuable work bears daily witness to the wisdom of a law that has 
sustained a vibrant industry--past, present, and future. Please 
continue vigorously supporting the Jones Act. It is essential to our 
industry and it is very important to our country.
                         ii. federal preemption
    An efficient marine transportation system is essential to a healthy 
American economy. American farmers, energy producers, and manufacturers 
depend on the tugboat, towboat and barge industry to safely, securely 
and efficiently move their products to market and to carry the inputs 
and raw materials on which they rely. In turn, this economic powerhouse 
relies on a nationally consistent regulatory regime administered by the 
Federal Government.
    Like other modes of transportation, the tugboat, towboat and barge 
industry operates nationwide: AWO member vessels can pass through the 
waters of a dozen States in the course of a single voyage. The smooth 
and uninterrupted interstate movement of cargo between U.S. ports is a 
centerpiece of our members' value proposition to their customers. As 
such, a coherent and consistent regulatory regime that is administered 
and enforced by knowledgeable Federal agencies--including the U.S. 
Coast Guard and the Environmental Protection Agency--is vital to the 
efficiency and the viability of our industry. Federal primacy in the 
regulation of maritime transport allows Federal agencies to take input 
from all stakeholders, including States and the public, to establish 
rules based on vessel operational experience that have been analyzed 
from a national perspective.
    Federal primacy is not a new concept. It is settled law that served 
as a foundation for the U.S. Constitution and has consistently been 
applied to interstate commerce for more than 200 years. The 
Constitutional Convention of 1787 unanimously adopted the Supremacy 
Clause, cementing the Federal Government's position as the supreme law 
of the land when regulating interstate commerce.
    Key to that supremacy is Congress' power to regulate commerce under 
Article I of the Constitution. The Federalist Papers cite this 
authority and the ability to regulate interstate navigation without 
intervention from individual States as one of the reasons for adopting 
the Constitution. Likewise, in 1824 the Supreme Court ruled that the 
power to regulate commerce undoubtedly included the power to regulate 
interstate navigation.
    Today, Federal primacy over navigation remains just as important to 
commerce as it was at the founding of our country. I would like to 
highlight two examples in which Congress worked in a bipartisan way to 
establish a nationally consistent Federal regulatory regime beneficial 
to both the maritime industry and the American public.
    The first is the Oil Pollution Act of 1990, landmark, bipartisan 
legislation that enabled vessel owners to plan for and make multi-
billion-dollar investments in state-of-the-art, environmentally 
friendly tank barges and tankers to carry the nation's vital energy 
cargoes. The phaseout of single-hulled vessels and transition to an 
all-double-hull fleet, combined with a comprehensive Federal regulatory 
regime for oil spill prevention, response and liability and the 
adoption by vessel owners of safety management systems, vendor vetting 
programs and other safety measures, has produced dramatic, positive 
results for the American public. Oil spills from tank barges have 
plummeted by 99.6 percent since enactment of OPA 90. This outstanding 
safety record is all the more relevant today given the nation's energy 
renaissance and the vastly increased need for marine transportation of 
crude oil and petroleum products.
    Second is the Vessel Incidental Discharge Act of 2018, or VIDA, 
passed last year by the 115th Congress as part of the Frank A. LoBiondo 
Coast Guard Authorization Act with the leadership and support of this 
Subcommittee. VIDA is another landmark bipartisan measure that will 
bring uniformity and certainty to the regulation of ballast water and 
other incidental discharges for vessels engaged in interstate commerce. 
While the law at its core is preemptive in nature, it is also notable 
for balancing the role of the States in the standard-setting and 
implementation process. VIDA represents both a win for the maritime 
industry, which needed the national uniformity that only Federal 
regulations can guarantee, and for the marine environment, which will 
benefit as the highest standards economically achievable are 
implemented nationwide. We hope that when history looks back on VIDA, 
as it has with OPA 90, it will see a success story that has benefited 
both the American economy and our precious marine environment.
    OPA 90 and VIDA have and will promote safety, protect the 
environment, and preserve the efficiency of barges and towing vessels 
engaged in interstate commerce. This should be the goal of Federal 
regulation of interstate commerce. As such, it is critical that Federal 
primacy be maintained. We urge the Committee to ensure the primacy of 
Federal laws governing the operation of towing vessels and barges and 
hold executive branch agencies accountable for actively defending and 
preserving Federal authority over vessel operations.
                          iii. infrastructure
    The third pillar, waterways infrastructure, is equally essential to 
the towing industry. It is a key component of the nation's intermodal 
transportation network that helps to make America competitive in world 
markets. However, that infrastructure is in urgent need of 
modernization and repair. For example, more than half of the 238 locks 
on our inland waterways system are over fifty years old and have 
exceeded their design lifespan. Critical failures, and significant 
unscheduled temporary closures, have occurred at locks across the 
system. If left untended, these problems will compound, increasing the 
cost of marine transportation and calling its very reliability into 
question. That would be devastating not only for the tugboat, towboat 
and barge industry, but for the shippers who rely on it and for air 
quality and highway congestion as well. Each barge that is pulled off 
the waterways adds 16 bulk rail cars to our railways or 70 tractor-
trailers to our highways, with a resulting increase in greenhouse gases 
of more than 20 percent and 150 percent, respectively.
    Fortunately, the ongoing revitalization of waterways infrastructure 
has shown Congress at its bipartisan best. For the past 6 years, 
lawmakers have worked across the aisle to secure long-sought 
improvements for our nation's coastal and inland waterways. The 
resulting authorization and appropriations bills have ensured that 
America's waterways will continue to remain vital to the safe, reliable 
and efficient movement of cargo.
    Congress can continue to support the pillar of infrastructure by 
doing two things. First, we urge you to keep the Water Resources 
Development Act (WRDA) on a 2-year reauthorization cycle. WRDA is a 
crucial part of a cooperative effort that involves the Inland Waterways 
Users Board, the U.S. Army Corps of Engineers, and the key committees 
of jurisdiction in Congress. As we have seen in the past, failure to 
enact WRDA bills on a regular basis causes backlogs in much-needed 
modernization and maintenance that result in costly navigation 
stoppages on the inland waterways system.
    Second, we urge Congress to oppose any additional taxation, 
tolling, lockage fees, or other charges placed upon the users of the 
inland waterway system. Our industry has already stepped up to the 
plate there. In 2014, Congress, at the industry's request, enacted a 45 
percent increase in the diesel fuel tax our member companies pay into 
the Inland Waterways Trust Fund (IWTF), a longstanding public-private 
partnership that yields positive results for our industry and the U.S. 
economy. We already pay our fair share.
                           iv. marine safety
    The fourth pillar is marine safety, which is our industry's 
franchise to operate. Unlike the other pillars, this responsibility 
falls primarily on us, and we know and welcome that. Congress also has 
an important role to play. For more than 25 years, our members have 
demonstrated their commitment to safety leadership through industry-led 
initiatives and partnerships with government to safeguard human life 
and protect the marine environment. AWO's top priority is to lead and 
support members in continuously improving safety, security, and 
environmental protection.
    A quarter century ago, AWO developed the Responsible Carrier 
Program (RCP) as a code of best practices for member companies. 
Companies use the program to develop safety management systems that 
meet or exceed applicable laws and regulations and are tailored to 
reflect their unique operational needs. We subsequently instituted a 
third-party external audit mechanism to enhance the integrity of our 
safety management system. Building on these industry-led initiatives, 
AWO worked with this Subcommittee to pass legislation giving the Coast 
Guard the authority to develop comprehensive towing vessel safety and 
inspection regulations, and worked closely with the agency for more 
than a decade to produce those regulations, which took full effect last 
July. These regulations, known as Subchapter M, will ensure that each 
of the 5,000 affected U.S.-flag towing vessels meet minimum standards 
of safety to protect lives, the environment and property, while 
recognizing and incentivizing operators who exceed minimum standards. 
The regulations also leverage safety management systems and third-party 
organizations to help the Coast Guard focus its limited resources where 
they're needed most.
    It is important to emphasize that, even while Subchapter M is now 
in effect, AWO members remain committed to getting safer every day. Our 
goal is not simply to comply with the regulations, but to institute a 
genuine culture of safety industry-wide. Last October, AWO's Board of 
Directors unanimously approved Safety Leadership 3.0, a vision to guide 
how AWO will lead and support members in continuously improving safety, 
security and environmental stewardship in the post-Subchapter M 
landscape. As we move forward with this initiative, we look forward to 
working with Congress, and especially this Subcommittee of 
jurisdiction, to build a safer marine transportation industry. Please 
hold us accountable for the commitments we make.
    In addition, please help the Coast Guard to incentivize a culture 
of safety, and not simply a culture of compliance. This includes 
ensuring that the agency's regulations and policy do not disincentivize 
the use of safety management systems, which are the foundation of every 
effective safety culture. We ask that you press the Coast Guard to 
establish towing vessel inspection user fees that are lower for vessels 
that have implemented a safety management system--in recognition of 
their reduced demand on agency resources, because of the Coast Guard's 
ability to leverage approved third parties to supplement their 
oversight. We thank the Subcommittee for directing the Coast Guard in 
the Frank LoBiondo Coast Guard Authorization Act to compare the costs 
to government of towing vessel inspections performed by the Coast Guard 
and those performed by a third party in order to more accurately assess 
inspection user fees.
    There are also other ways that Congress can help the industry and 
the agency stay focused on that which will truly improve safety, 
including eliminating regulations that pose implementation challenges 
for towing vessel operators, but offer little positive impact on 
personnel or vessel safety or environmental protection. Congressional 
assistance to resolve these low-risk compliance challenges will enable 
the Coast Guard and the industry to focus our attention on the 
regulatory requirements that will make a real difference in protecting 
people, the environment and property.
                             v. conclusion
    AWO's member companies are committed to a culture of continuous 
improvement--to making our domestic maritime industry ever safer, more 
efficient, and more environmentally sustainable. The vibrancy of the 
towing industry is a direct result of the ingenuity, resourcefulness, 
and work ethic of the men and women who comprise it. The sound state of 
our industry is also a direct result of the bipartisan support that it 
enjoys in this Subcommittee specifically and in the Congress generally. 
The statutory and regulatory certainty that you provide is foundational 
to our survival and success.
    I would again like to thank the Subcommittee for its demonstrated 
record of support for our industry, and ask for your continued support 
for the four pillars that undergird our industry and enable us to do 
what we do for our customers and for our country. It is no exaggeration 
to say that you are the guarantor of the certainty that will ensure the 
towing industry's continued success in the years ahead.
    Thank you for this opportunity to testify, and I look forward to 
answering your questions.

    Mr. Lowenthal. Thank you, Ms. Carpenter.
    Now, Mr. Crowley, you may proceed.
    Mr. Crowley. Good morning.
    Mr. Lowenthal. Good morning.
    Mr. Crowley. Thank you, Mr. Lowenthal, Mr.----
    Mr. Lowenthal. Good morning.
    Mr. Crowley [continuing]. Weber, both cochairs of the great 
PORTS Caucus.
    Mr. Lowenthal. That is why we are here, sitting up here.
    [Laughter.]
    Mr. Crowley. My name is John Crowley, and I serve as 
president of the National Association of Waterfront Employers, 
a role I have held for 5 years. Thank you for the invitation to 
be here today. I appreciate the opportunity to discuss the 
potential strategies to improve the regulation, economic 
opportunities, and competitiveness of our Nation's maritime 
industry.
    We are here today because of our need for Federal 
infrastructure investment accessible to port operators, and 
greater coordination and transparency to ensure the regulatory 
requirements are implemented in a cost-effective manner.
    My first goal is to share with you the critical role that 
terminals play in our national economy, as a national asset. As 
terminal operators, our customers are the ocean carriers who 
move global commerce to and from the United States. We move the 
cargo from the water to the rest of the Nation.
    U.S. port operators work off uniquely configured 
footprints, with varied water and landward access developing 
proprietary processes to optimize local productivity. 
Accordingly, port operators must be adaptive and forward-
thinking, looking to leverage advanced infrastructure to ensure 
the operators' skilled workforce can meet the Nation's multiple 
and dynamic needs. They require improved infrastructure to 
support the growing demands for economic opportunity throughout 
the country.
    I know this committee understands the strategic importance 
of moving freight and that ports require significant 
infrastructure investment. And I thank Congress for its 
leadership in providing focus on the importance of ports, and 
the nearly $300 million for their use through the Port 
Infrastructure Development Program. However, more work needs to 
be done.
    While the funding and support that Congress has established 
sets a strong foundation, we firmly believe that port 
infrastructure needs will not be met with just single-year 
funding, no matter how robust. We urge Congress to support 
self-sustaining, permanent funding specifically aimed at port 
operators, as well as the traditional port infrastructure 
development in a manner similar to the harbor maintenance tax 
and your efforts in that regard.
    We further seek to ensure that private port operators have 
access to available Federal funding and potential loan 
guarantees, both through public-private partnerships, and by 
ensuring direct port operator access and eligibility. Federal 
investment can have the largest impact when directly supporting 
port operators, because port operators have the largest direct 
impact on improving intermodal productivity.
    This Federal investment in port operators will result in 
the improved competitiveness of port operators. Each of these 
investments is an investment in a national asset, which will 
remain with the port facilities for the future operations and 
operators.
    Operators in any business sector face regulatory oversight, 
and port operators are no different. Congress' efforts to 
ensure robust port security, a coordinated and environmentally 
sensitive port infrastructure, and a competitive port 
environment are important and necessary to maintaining this 
competitive business operation. While Congress' leadership 
establishes standards, regulatory agencies implement the 
policy.
    NAWE members work closely with Federal agencies in pursuit 
of the Nation's policy objectives. And when executive agencies 
take expansive views of their authority to issue interpretive 
rules or policy statements, use of the Administrative Procedure 
Act is sorely needed in their regulatory development.
    Therefore, we recommend the creation of a coordinating 
committee dedicated to aligning agency actions with stakeholder 
input, and provide unified recommendations to Congress. I 
believe that, through the development of dedicated port 
infrastructure funding opportunities, accessible to port 
operators, coordinated agency oversight, and reasonable and 
transparent regulations, Congress and the executive branch can 
ensure that U.S. ports and port operators are prepared to meet 
tomorrow's needs of the U.S. economy.
    I appreciate this subcommittee's continued support for U.S. 
port operators, and I look forward to working with you to 
develop the strategies to improve the regulation of port 
operators in future, and new economic opportunities for our 
U.S. maritime transportation system.
    I am happy to respond to any questions you have.
    [Mr. Crowley's prepared statement follows:]

                                 
    Prepared Statement of John E. Crowley, Jr., President, National 
                  Association of Waterfront Employers
    Good morning, Chairman Maloney, Ranking Member Gibbs, and members 
of the Subcommittee. My name is John Crowley, and I serve as President 
of the National Association of Waterfront Employers (NAWE), a role 
which I've held for 5 years. Thank you for the invitation to be here 
today, I appreciate the opportunity to discuss potential strategies to 
improve the regulation, economic opportunities, and competitiveness of 
our Nation's maritime industry.
    The National Association of Waterfront Employers (NAWE) is the 
voice of the marine terminal operator and stevedore in Washington, 
representing interests in all of our Nation's major ports. Formed 
initially around common interests in providing compensation to injured 
longshoremen, NAWE was active in supporting maritime security 
regulation at our ports' facilities following 9/11. Today, NAWE's 
portfolio represents the full spectrum of port operators' interaction 
with the Federal Government, including guiding the development of 
national freight, infrastructure funding, port safety, security and 
environment, and workforce policies. Thus, through our work, NAWE 
ensures that there are open lines of communication between Congress, 
regulatory agencies, and the operators at our Nation's gateways to 
international commerce.
                      importance of port operators
    Port operators are a critical part of our maritime transportation 
industry. The port operators that NAWE represents hire labor, fund the 
purchase of equipment at U.S. ports, and most importantly serve as the 
critical link moving cargo between the sea and the land. It is the work 
of port operators that connects the products of American workers to the 
global economy and, in turn, ensures that global commerce constantly 
flows in support of our Nation's economy. As our Nation's economy 
continues to grow, so does the importance of our port operators. For 
example, according to the American Association of Port Authorities 
(AAPA) from 2007 to 2014, the total economic value that U.S. coastal 
port operators provided in terms of revenue to businesses, personal 
income, and economic output rose by 43 percent to $4.6 trillion. This 
accounted for 26 percent of the Nation's $17.4 trillion economy in 
2014. Moreover, Federal, State, and local tax revenues generated by 
port-sector and importer/exporter revenues rose 51 percent during this 
period to $321.1 billion. More than just serving as the gateway for the 
Nation's trade, port operators help to construct the foundation of our 
economic strength.
    In addition to directly supporting the flow of the Nation's 
commerce, the presence of port operators in port communities spurs 
American job development and commercial activity both on the facility 
and outside the gate. From 2007 to 2014, jobs generated by port-related 
activities jumped 74 percent to 23.1 million in the United States. 
Personal wages and local consumption related to the port sector 
increased during this period to $1.1 trillion, with the average annual 
salary of those directly employed by port-related businesses equating 
to $53,723. Port operators therefore continue to create numerous high-
paying American jobs, directly supporting our maritime communities.
    Port operators' customers are the ocean carriers who move global 
commerce to and from the United States; however, their work has a 
direct positive impact on numerous other stakeholders. These 
stakeholders include the port authorities with whom they operate, tugs, 
pilots and marine exchanges moving vessels alongside the port 
operators' facilities, rail and motor carriers that move cargo inland, 
and--of course--the importers and exporters who rely on port operators 
to provide exceptional service to ensure that their products arrive on 
time and in condition to meet their customers' needs.
    On our facilities, there are three distinct while simultaneous 
operations; waterside transfer, yard maintenance and landside transfer. 
Each operation faces changes of both customers and stakeholders, 
transportation modes, schedules of customers and stakeholders, volume, 
weather, and regulatory environment. The national economy is 
increasingly looking for just-in-time delivery and reductions in turn 
time for each operation are constantly demanded. Accordingly, port 
operators must be adaptive and forward-thinking, looking to leverage 
new technologies and advanced infrastructure to ensure that the 
operators' skilled workforce can meet stakeholders multiple and dynamic 
needs.
    In addition to supporting the flow of commerce to ensure our 
Nation's economic security, port operators also serve a critical 
function in U.S. national security. Terminal operators' facilities, 
equipment, and workforce support the staging and throughput of military 
cargo, during both initial deployments and sustainment operations. In 
this manner, port operators serve as a critical first link in the line 
of communications to U.S. Armed Forces operating throughout the world. 
In this manner, Federal investment in port operator infrastructure is 
an investment in a national asset, supporting our collective economic 
and national security.
                 the need for infrastructure investment
    Accordingly, today, our highest priority is to seek support for 
port infrastructure investment to assure an efficient supply chain, 
specifically focused on increasing port productivity. Investment in 
transportation infrastructure is a universally recognized need across 
all modes. Numerous studies have shown the challenges facing our 
Nation's roads, utilities, and rail infrastructure, and the State of 
U.S. port infrastructure has been demonstrated to be of equal national 
concern. NAWE therefore encourages Congress to continue to recognize 
the critical importance and immeasurable value of this national asset.
    We are thankful for Congress' leadership in providing $900 million 
for the Better Utilizing Investments to Leverage Development (BUILD) 
Grants Program (a portion of which will go to port infrastructure 
projects), nearly $300 million for the Port Infrastructure Development 
Program, and $7 million for the Short Sea Transportation Program 
(America's Marine Highways) under the Consolidated Appropriations Act, 
2019. NAWE is also thankful for Congress' efforts with regard to the 
Water Resources Development Act 2018 and the Harbor Maintenance Tax. As 
partners in the maritime industry we will all benefit and look forward 
to the support being delivered where it is most needed. However, 
despite this clear sign of support, there is much more work to be done. 
AAPA members have identified an additional $32 billion in needed 
Federal investments in port landside connections and port operator 
facility infrastructure. This number will inevitably increase with the 
continued growth of global commerce and resulting demand for larger 
container vessels, demanding new infrastructure capability and 
capacity. Accordingly, with the Nation's many urgent transportation 
infrastructure needs, there remains a present strategic opportunity to 
make a Statement on the enduring importance of ports, port operators, 
and the associated maritime communities.
    The funding and support that Congress has established sets a strong 
foundation, but the Nation's port infrastructure needs will not be met 
with single-year funding, no matter how robust. Nor will port operator 
needs be met within the current legislative structure, which does not 
recognize a port operator's asset as national in nature unless they are 
adopted by a local governmental entity. Accordingly, NAWE urges 
Congress to support self-sustaining, permanent funding specifically 
aimed at port operators as well as traditional port infrastructure 
development. That is, we seek to ensure that private port operators 
have access to available Federal funding, both through public-private 
partnerships (P3s) and by ensuring direct port operator eligibility for 
funding opportunities.
    Indeed, as the critical node between global commerce and our 
Nation's economy, port operators are uniquely positioned to understand 
the most pressing gaps in port infrastructure funding and development. 
U.S. port operators work off of unique configured footprints, with 
varied water and landward access, developing proprietary processes to 
optimize local productivity. While researchers review metrics that will 
gauge supply chain productivity, port operators are on the ground, with 
direct oversight of the equipment and infrastructure needs to best meet 
their customers' requirements and other aforementioned changing 
conditions. Accordingly, port operators are among the first to 
understand delays in both offshore ocean transport and landward freight 
mobility. They are constantly making adjustments in operation and 
require improved infrastructure to meet the growing demands of the U.S. 
economy.
    Not only do port operators have critical information as to where 
investment is required, Federal investment will often have the largest 
impact when directly supporting port operators, because port operators 
have the largest direct impact on improving intermodal productivity. 
This Federal investment in port operators may result in--for example--
the construction of new wharf or crane rails, shore-side power and 
associated infrastructure, electric cargo handling equipment, the 
purchase of larger and modernized ship to shore cranes, or the 
implementation of environmental or security requirements set by the 
Federal Government. Each of these investments--although developed 
through the existing port operator--is truly an investment in a 
national asset, which will always remain with the port facility in 
support of future operators and port operations.
    In order to ensure continued, dedicated funding to the Port 
Infrastructure Development Fund--and further ensuring that port 
operators can access that funding--Congress can continue to lend its 
strong support of this critical national asset by identifying a 
continuing source of such funding. Moreover, by reviewing the 
effectiveness of dedicated funding sources--outside of annual 
appropriations--Congress can support the development of self-sustaining 
port infrastructure funding without drawing resources from other 
national priorities. NAWE's members are eager to work with Congress to 
identify and develop these dedicated funding sources.
    Additionally, beyond the programs funded by the Consolidated 
Appropriations Act, 2019, a strategic opportunity exists to leverage 
Federal funding through loan guarantee programs. Although port 
infrastructure projects are eligible for loan guarantees under the 
Transportation Infrastructure Finance and Innovation Act (TIFIA) 
program, port funding is often secondary to other surface 
transportation modes, and port operators are not directly eligible. 
Dedicated and fully funded port infrastructure loan guarantees--similar 
to (or as an extension of) the Title XI Federal Ship Financing 
Program--could leverage Federal investment with private funds, leading 
to increased port infrastructure development. Through a focused 
strategy involving grant, loan, and loan guarantee funding--made 
available to port operators--Congress can ensure that appropriate 
investments are made today so that our Nation's ports are prepared to 
meet the future needs of our Nation's growing economy.
                opportunities for regulatory improvement
    Because port operations are responsible for delivering a 
significant portion of our Nation's diverse economy, Federal policy and 
oversight is understandably dispersed among various departments and 
agencies. As a clear example, the Federal Maritime Commission (FMC), 
U.S. Customs and Border Protection (CBP), Maritime Administration 
(MARAD), and U.S. Coast Guard (USCG)--among other agencies--all had a 
direct role to play in mitigating the impacts at port terminals 
associated with the 2017 bankruptcy of a major international ocean 
carrier.
    While the need for multi-agency oversight is understandable, a 
strategic opportunity exists to better align and coordinate the roles, 
missions, and authorities of these agencies to better address the 
various dimensions of freight movement through port terminals. Port 
operators are often subject to inconsistent or redundant requirements, 
often even within the same Department (as evidenced by various facility 
security plan requirements by USCG and CBP). Committees such as the 
U.S. Maritime Transportation System National Advisory Committee 
(MTSNAC) provide a forum for stakeholder input to the Administration. 
However, a coordinating committee among the stakeholder agencies is 
needed to align the disparate agency authorities with stakeholder 
input, and to provide unified recommendations to Congress regarding 
needed support for port operations and infrastructure development as 
well as oversight.
    In addition, while NAWE members work closely with Federal agencies 
in pursuit of the Nation's policy objectives, additional opportunity to 
participate in regulatory development under the Administrative 
Procedure Act (APA) is sorely needed. Executive agencies continue to 
take an expansive view of their authority to issue ``interpretive 
rules'' and policy Statements without public input. These rules and 
policy Statements, even when under the guise of facilitated 
discussions, become conflated with compliance and adjudicatory actions. 
In contrast to the current regulatory environment, in the immediate 
aftermath of the 9/11 attacks, NAWE members were invited to participate 
in the regulatory development in support of the Maritime Transportation 
Security Act (MTSA), which defined the operators' roles.
    Today, operators have not been asked to participate, even though 
they have been called on to fulfill potential additional roles such as 
paying for radiation portal monitors and agency man-hours where neither 
the equipment nor the process has been modernized. Operators are 
expected to contribute to environmental policy objectives such as 
emissions from customer and stakeholder equipment, even to the point of 
support and compliance by customers and stakeholders. The role and 
expertise of key policymakers should be to modernize and support 
acquisition of equipment, driving policy goals so that the operator can 
focus on innovating with equipment and processes to improve 
productivity. If operators' first effort and investment is in public 
policy goals, there are less resources to devote to being productive 
and competitive. It is time to reestablish that collaborative spirit, 
while recognizing respective roles, under Congress's leadership. 
Indeed, Congress's oversight is essential to ensuring that regulations 
and policies affecting port operations are developed publicly and 
transparently in a manner that increases the competitiveness of the 
U.S. maritime transportation system in the global market.
    Substantively, NAWE encourages a unified national policy and 
Federal oversight--with appropriate stakeholder input--to facilitate an 
efficient supply chain. NAWE members strive to achieve productive 
waterfront operations mindful of the national goals of safety, 
security, and environmental sustainability. Port operators therefore 
welcome meaningful regulations supporting the development of an 
efficient supply chain, while discouraging non-productive regulations 
that shift significant costs of these goals on private port operators 
and impede focus on achieving an efficient supply chain.
    Finally, true to its historical beginnings, NAWE and its operator 
members seek Federal support for a process that delivers medical care 
returning the workforce to full health following injuries on the job 
and provides fair and reasonable compensation for its workforce while 
disabled. We also join in the bicameral and bipartisan recognition of 
the importance of retirement systems and look forward to being heard 
during these discussions.
                                 * * *
    In aggregate, through the development port infrastructure funding 
opportunities accessible to port operators, coordinated agency 
oversight, and reasonable and transparent regulations, Congress and the 
executive branch can ensure today that U.S. ports and port operators 
are prepared to meet tomorrow's needs of the U.S. economy.
    I appreciate this Subcommittee's continued support for U.S. port 
operators and look forward to working with you to develop strategies to 
improve the regulation of port operators and to develop new economic 
opportunities for our U.S. maritime transportation system. I am happy 
to respond to any questions you may have.

    Mr. Lowenthal. Thank you, Mr. Crowley. Next we have Mr. 
Roberts.
    You may proceed.
    Mr. Roberts. Thank you, Mr. Chairman. Members of the 
subcommittee, thank you very much for convening this hearing. 
And thank you very much for being here, and caring about our 
industry. It is really important to us, and we really 
appreciate it. So I am here on behalf of the American Maritime 
Partnership. AMP has represented nearly every segment of the 
domestic maritime industry for 24 years. Our common interest is 
in ensuring that America has a vibrant domestic maritime 
industry and that the legal underpinning for that to happen, 
the Jones Act, remains intact.
    A just-released analysis by PricewaterhouseCoopers finds 
that more than 650,000 jobs are created by the American 
domestic maritime industry. This includes highly educated 
officers and engineers who have graduated from our State and 
Federal maritime academies to those with a high school 
education and vocational training who have found a career home 
in the maritime industry. It includes thousands of military 
service veterans. As we have heard, the President just Monday 
recognized them in issuing an Executive order that eases their 
transition into the industry.
    Please remember two things about these 650,000 jobs. First, 
they are vitally important to our national defense and our 
homeland security. The men and women who build and operate our 
commercial ships are the same people we rely on to respond to a 
national emergency. Many of them have served and continue to 
serve our country on ships involved in a variety of missions 
related to our Nation's defense.
    The second point is that these jobs depend upon the 
integrity of the Jones Act. My written testimony discusses the 
fact that the Jones Act reflects the normal rule of law, that 
those operating in our home markets must obey American law, and 
not the laws of Liberia or China or wherever a shipowner 
chooses to register their vessel. If the Jones Act is degraded, 
and foreign ships are allowed to displace American ships in our 
home markets, there will not be American citizens who know how 
to build ships, and there will not be American citizens who 
know how to operate ships. And we will be exposing tens of 
thousands of miles of our coastlines and our river systems to 
foreign ships and foreign mariners entering our country.
    Two subjects merit particular attention today: liquified 
natural gas, or LNG, and Puerto Rico.
    Less than 2 weeks ago in San Juan, my company christened 
the Taino, which is one of the newest vessels delivered by an 
American shipyard. It is a beautiful ship powered by LNG, built 
in Mississippi by American workers and custom designed to 
provide direct, nonstop service to customers in the market 
between the mainland and Puerto Rico.
    With more than $1 billion in total investment by the 
carriers in that trade, Puerto Rico now has the newest, most 
efficient, most environmentally marine logistic system that 
exists anywhere in the world, employing hundreds of Puerto 
Rican Americans. With all that Puerto Rico has been through, 
these ships and this unique logistics system and the commitment 
to Puerto Rico's long-term economic health that they represent 
should be a source of great pride and hope on the island.
    These ships not only are fueled by LNG, but they also carry 
LNG in 40-foot insulated tanks. To industrial facilities on the 
island, it is a new market that proudly developed a few years 
ago to offer a more reliable and less expensive source of 
energy.
    As you know, Puerto Rico has asked for a 10-year waiver of 
the Jones Act for deliveries of U.S. LNG to the island. AMP 
strongly opposes this waiver for several reasons. It is way too 
broad. There are now at least a dozen projects under 
development at shipyards around the country. Granting the 
waiver would kill those projects and create uncertainty that 
could affect the entire maritime industry.
    Granting such a waiver would also be illegal, as there is 
no national defense basis for it. Such a waiver would 
immediately be challenged in court, and the uncertainty that I 
just mentioned would be compounded.
    Finally, no case has been made as to why a waiver is 
needed. If there is a real near-term need for bulk deliveries 
of LNG to the island, the starting place to meet that need is 
with a solution that complies with the law, and keeps the Jones 
Act intact.
    Having said this, if someone believes that a waiver is 
needed, the place to make that case is in Congress, in this 
subcommittee and in the Senate counterpart, and not by asking 
the administration to twist the existing waiver law inside out.
    Let me finally say that we proudly at AMP want very much 
Puerto Rico to succeed in rebuilding a modern and resilient 
power system and a powerful and diversified economy, that 
continued support of Congress is critical to Puerto Rico's 
success, funding nutritional assistance and other support 
programs, continuing disaster recovery relief, and 
infrastructure support programs. We have supported Puerto Rico 
in these efforts, and will continue to do so.
    Thank you very much.
    [Mr. Roberts's prepared statement follows:]

                                
  Prepared Statement of Michael G. Roberts, Senior Vice President and 
   General Counsel, Crowley Maritime Corp., Vice President, American 
                          Maritime Partnership
    Mr. Chairman, Mr. Ranking Member, Members of the Subcommittee. 
Thank you for the opportunity to be with you today. I am Michael G. 
Roberts, senior vice president and general counsel of Crowley Maritime 
Corporation, a large, American domestic shipping company. We are a 
diversified marine transportation and logistics company based in 
Jacksonville, Florida. We employ about 3,000 American mariners, and 
have invested nearly $3 billion in vessels built by American workers in 
U.S. shipyards. Vessels in our fleet serve customers in Alaska, the 
U.S. West, East and Gulf coasts, the Caribbean and Central America.
    I am here today in my capacity as Vice President of the American 
Maritime Partnership (``AMP''). AMP is the largest maritime legislative 
coalition ever assembled. Our organization includes all elements of the 
American domestic maritime industry--shipping companies, ship 
construction and repair yards, mariners, and pro-defense organizations. 
Our singular focus is the Jones Act, the foundational law of our 
industry. As everyone in this room knows, the Jones Act requires that 
cargo moved by water in our home markets--between two points in the 
United States--be transported on American vessels.
    Putting this law into context requires a constant reminder that 
very different legal and regulatory systems govern domestic and 
international shipping. This is important in understanding why those 
markets may have different economic conditions, and in considering 
policy choices affecting this industry. ``Normal'' regulatory 
principles apply to domestic shipping in the sense that those who 
operate in American domestic trades must obey American laws. Ships must 
be registered under the U.S. flag, which means that in a legal sense, 
the vessels themselves are considered a part of American sovereign 
territory. The ship owner and all involved must comply not only with 
rules that apply particularly to the maritime industry, but also to 
rules applicable to American businesses generally. This includes 
immigration (officers and crew of a U.S. flag ship must be American 
citizens), employment, environmental, safety, tax, and other laws.
    Because ships in international trade do not operate within any 
single national jurisdiction, ship owners can simply pick the 
jurisdictional home of every element of their business, including, most 
importantly, where their ships are registered.\1\ This is not permitted 
in any domestic service business. For example, a restaurant or factory 
owner cannot plant the flag of another country at his / her facility in 
Poughkeepsie and declare it to be no longer part of America, so that 
they can reduce costs, replace American workers with foreign workers, 
eliminate U.S. tax liability, etc. Because of the Jones Act and other 
``cabotage'' laws in the U.S. and other countries, domestic shipping, 
aviation, and other service industries are governed by ``normal'' 
regulatory principles, i.e., the laws of the country in which they 
operate.

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    \1\ Ship owners usually choose jurisdictions that minimize tax and 
regulatory burdens. According to a 2010 U.N. report, the top five 
registries for international shipping are: Panama, Liberia, Marshall 
Islands, Hong Kong, and Greece. These jurisdictions, which account for 
.4 percent of world population, register more than 50 percent of the 
world's tonnage. U.S. flag vessels (including domestic and 
international) accounted for 1 percent of world tonnage, while U.S. 
population accounts for about 4.5 percent of the world total.
---------------------------------------------------------------------------
    Those who support free enterprise and fair competition support the 
Jones Act. It is not protectionist to insist that maritime work 
performed within our country be handled by American workers and under 
American laws. To the contrary, it is an appropriate assertion of our 
basic sovereignty as a country to prohibit foreign workers operating 
under foreign rules from operating within our domestic economy. That is 
the fundamental purpose and effect of the Jones Act.
    With that background, if there were one word to describe why we 
have a Jones Act in our country it would be ``security.'' The Jones Act 
provides important national, economic and homeland security benefits 
throughout our country. Simply put, our Nation needs a critical mass of 
Americans who know how to build and operate ships. The commercial 
American maritime industry provides that critical mass--the expertise 
and resources needed to provide surge and sustainment sealift capacity 
during a military contingency, and the basis on which to scale up our 
maritime capabilities should the need arise. Without the Jones Act (and 
the Maritime Security Program and Cargo Preference laws in 
international trade), the overwhelming operating advantages of foreign 
flag ships, and the overwhelming subsidies and other advantages of 
foreign shipbuilders, would quickly drive Americans out of the 
industry.
    The national security and homeland security benefits have been 
well-documented through writings and statements by the Defense 
Department, Coast Guard, and Customs and Border Protection officials, 
as well as independent experts like the Lexington Institute. For 
example, recently former Defense Secretary James Mattis referred to the 
U.S. Merchant Marine as our Nation's ``Fourth Arm of Defense.'' I will 
discuss the economic security benefits in a moment. But in every case, 
the policy rationales for the Jones Act can be summarized in the phrase 
``American security.''
                         summary of key points
    Today I would like to talk about two topics. First, I will provide 
you a brief update on the state of the American domestic maritime 
industry. Second, I will talk about one issue that threatens to 
undermine our industry, and that is possible changes to longstanding 
interpretations of the Jones Act administrative waiver process. Nothing 
is more essential to the long-term investments that are necessary for 
success in our industry than a reliable, predictable, and consistent 
legal framework.
                state of the american maritime industry
    The American maritime industry is comprised of many different 
segments, from large ocean-going ships to small river barges, from 
inland towboats to huge offshore development ships. Scores of 
shipbuilding and repair yards dot our coastlines and river systems. 
Vibrant industries support our shipbuilding and ship operations, from 
naval architects to the suppliers of nearly everything needed to build 
and operate a vessel. Thousands of young Americans enter the industry 
each year, including men and women with engineering and technical 
degrees (and practical experience) from our maritime academies, as well 
as those with no college education who are looking to work hard, earn a 
decent living and start a family.
    The American domestic maritime industry is strong--growing, 
innovating, and thriving. A recent study by PricewaterhouseCoopers for 
an AMP board member, the Transportation Institute, shows that ours is 
an industry that supports total employment of about 650,000 Americans 
and total economic impact of more $150 billion annually. There are 
approximately 40,000 vessels in the U.S. fleet distributing 877 million 
short tons of cargo annually in a highly efficient, cost-effective and 
environmentally friendly manner. These jobs and economic benefits touch 
almost every corner of America, and we would be happy to visit with 
your offices to describe the industry's presence in your districts.
    Americans are among the world leaders in innovating the maritime 
industry. We are building and operating many of the most advanced tug 
boats to escort tankers through our waters, and highly sophisticated 
vessels to support safe offshore resource development. Several American 
shipyards and operating companies are beginning to build and deploy 
clean burning liquified natural gas (LNG) in a variety of different 
applications.
    Those who oppose the Jones Act seek to destroy this American 
industry and outsource these jobs because foreign workers would be 
cheaper. AMP exists to resist those efforts by educating policymakers 
and the public about our industry.
         the core element of continued success--legal certainty
    We have one primary request when it comes to the Jones Act and that 
is legal certainty. Americans who invest their time and money into this 
industry need to have confidence that their commitments will not be 
undermined by capricious decisions that undo the legal framework of the 
Jones Act. This includes all participants, from young Americans who 
commit their career choices to this industry, to those in the financial 
sector. We exist in a highly technical and capital-intensive business, 
and our human and financial investments in vessels and other 
infrastructure are long-term. All of us make those commitments in 
reliance on U.S. law as it stands today and as it has generally stood 
for nearly 100 years. Our single biggest concern is unanticipated 
changes to the rules ``in the middle of the game.'' It is critically 
important that the legal, regulatory and administrative framework that 
serves as the foundation for the American maritime industry remains 
predictable and certain. Hundreds of thousands of Americans depend on 
that.
    In that light, our greatest concern today would be changes to 
longstanding, consistent interpretations of the Jones Act 
administrative waiver rules. As you know, administrative waivers to the 
Jones Act are exceedingly rare and are granted only under the specific 
requirements of 46 U.S.C. Sec. 501, a law not specific to the Jones Act 
but permitting waivers of ``navigation or vessel-inspection laws'' 
under certain extremely limited circumstances. The core requirement of 
Sec. 501 is that Jones Act waivers must be ``necessary in the interest 
of national defense.'' \2\ ``Necessary,'' of course, means an action 
that is ``essential or required.'' As such, the applicants for this 
waiver must demonstrate that approval is required or essential for 
national defense. In fact, Customs and Border Protection (CBP), the 
agency within the Department of Homeland Security with initial 
responsibility for managing administrative waiver requests, has 
recognized that the burden for approval of an administrative waiver is 
high and has ruled that there must be a showing of an ``immediate and 
adverse impact to national defense.'' Indeed, CBP has repeatedly held 
in their rulings that a Jones Act waiver cannot be issued solely for 
economic reasons or economic benefit. The Defense Department has 
historically analyzed administrative waivers by asking if there would 
be an ``immediate adverse impact on defense operations'' absent the 
waiver.

---------------------------------------------------------------------------
    \2\ 46 U.S.C. Sec. 501.
---------------------------------------------------------------------------
    Into this longstanding statutory regime governing administrative 
waivers of the Jones Act has come the Government of Puerto Rico, which 
in December filed a request for an unprecedented 10-year administrative 
waiver under Sec. 501 to import LNG from domestic sources. There are 
many reasons why this administrative waiver should not be granted. 
There is no precedent for a waiver of anywhere near that length. The 
longest waiver we can recall was for 30 days following Hurricane 
Katrina.
    Moreover------
      American shipping companies are taking U.S. LNG to Puerto 
Rico today on Jones Act vessels. They move scores of ISO tank loads of 
LNG from Florida to San Juan to power industrial facilities on the 
island. They created this market 5 years ago, a market that is expected 
to grow over the next few years as Puerto Rico moves toward a more 
diversified and resilient power generation and distribution system.
      It is grossly misleading to claim that there are no bulk 
LNG Carriers (LNGCs) in the Jones Act fleet today. First, such vessels 
are not built ``on spec'' but are rather built to meet the needs of 
customers based on contracts to move products in particular markets. No 
such contracts for domestic markets have yet been agreed. Second, a 
1996 waiver would have allowed scores of LNGCs to become Jones Act 
vessels over the past 22 years, including many that could still be used 
today. Not once has that waiver been used--because there has been no 
market for bulk LNG shipments from the U.S. to Puerto Rico.
      There still is no market for bulk LNG cargoes from the 
U.S. to Puerto Rico. The one facility on the island that can physically 
receive bulk LNG is under a long-term contract to receive LNG from 
Trinidad. One proposed facility might be able to receive relatively 
small bulk shipments in the near term if it can clear regulatory and 
financial hurdles. (That same facility, however, could be used to 
compete with the existing LNG ISO tank business moving on Jones Act 
vessels.) Every other LNG receiving facility on the island is 
conceptual--it exists on paper with no concrete plans for actual 
development. It would likely take several years for any of these 
concepts to be developed. Hence, any LNG waiver would not even be used 
for months if not years.
      Given the possibility that bulk LNG shipments could 
develop over the next 5 years, American carriers have begun actively 
exploring building Jones Act LNGCs in American shipyards. They have 
proposed different ship sizes and configurations to shipyards in 
Pennsylvania, Florida, Mississippi, Louisiana, Texas, California, and 
elsewhere, asking the shipyards for design options and indicative 
pricing. With that information, serious discussions can take place with 
LNG power developers about shipping contracts that would justify making 
binding contracts with shipbuilders. Thousands of good paying, skilled 
jobs could be developed building LNGCs in those States. Those jobs 
support the defense industrial base and the Jones Act would be working 
exactly the way it was intended.
    Returning to the technical basis for issuing an administrative 
waiver, there simply is no credible argument that Puerto Rico's request 
for a 10-year Jones Act waiver is ``necessary in the interest of 
national defense.'' Puerto Rico government officials have repeatedly 
described their interest in LNG in economic terms. AMP appreciates the 
desire of Puerto Rico to reduce its energy costs and, as noted, AMP 
members are actively engaged to find solutions that comply with all 
laws, including the Jones Act, to achieve that goal. No one is better 
positioned than the leading participants in the domestic shipping 
industry to assess the economics of moving LNG to Puerto Rico. We are 
confident that solutions can be developed that will comply with 
American law, provide thousands of family wage skilled jobs to Puerto 
Ricans and other Americans, and achieve the substantial savings touted 
by Puerto Rico's leaders. Stated otherwise, Puerto Rico can fully 
realize the benefits of shifting to an LNG energy supply without 
bypassing Puerto Rican and other American workers in the American 
maritime industry.
    There have been other recent discussions regarding waivers to move 
LNG to the Northeast. In addition, one prominent oil and gas executive 
has publicly called for a national waiver to move LNG. But a waiver 
under these circumstances would face the same challenge as the Puerto 
Rico waiver--they would require a complete administrative 
reinterpretation of the waiver statute and its unambiguous ``interest 
of national defense'' requirement. As we have said previously, there 
are no precedents for long-term waivers and no precedent for economic 
waivers.
    As markets develop and if the price of domestic natural gas remains 
low, customers and developers are likely to enter into the types of 
long-term gas supply contacts that will bring state-of-the-art Jones 
Act LNG vessels into those markets. Granting an administrative waiver, 
however, would kill the further development of American LNG vessels. In 
fact, the novel use of the Sec. 501 authority for an extended LNG 
administrative waiver could destabilize the entire American domestic 
shipping industry by introducing extreme uncertainty and volatility 
into the market.
    Finally, Congress can waive the Jones Act for specific vessels or 
services, imposing terms and conditions that accommodate the specific 
need without undermining the core objectives of the Jones Act. If 
proponents of the Puerto Rico LNG waiver believe they can make an 
appropriate showing, they should engage with Congress and the American 
maritime industry to search for solutions.

                               conclusion
    Again, thank you for allowing us to be with you today for one of 
the first Subcommittee hearings under your leadership. We are grateful 
for the chance to tell our story and to emphasize to you the exciting 
growth of our industry. Our industry is a great American success story, 
and the key to our continued success is a predictable, sound, 
consistent legal framework so that we can ``deliver the goods'' for our 
Nation.

    Mr. Lowenthal. Thank you, Mr. Roberts.
    And now, Mr. Tellez, you may proceed.
    Mr. Tellez. Mr. Lowenthal, Ranking Member Gibbs, members of 
the committee, thank you for this opportunity. As the chairman 
mentioned, my name is Augie Tellez. I would only add to the 
people I am representing today the Maritime Trades Department 
of the AFL-CIO, representing approximately 4 million working 
people in America today.
    End of written stuff. Too bad those other guys left, 
because now I wing it.
    [Laughter.]
    Mr. Lowenthal. Best presentation so far.
    Mr. Tellez. I must add my name to those thanking the 
President and his administration for the Executive order on the 
Military to Mariner Executive order. Now we just have to make 
sure, as someone said, that there is an industry in which to 
employ them.
    As the world's foremost superpower, we have got to project 
our force to any spot on any given day on this planet. That 
force has to be maintained, sustained, supplied, with all the 
stuff to do their job, and then brought home. That role has 
fallen on the U.S. merchant marine in every conflict since the 
Revolution, and we have done that job admirably and, at times, 
with sacrifice.
    Sadly, today, the answer to the question as to whether we 
can recreate that effort is very unclear. We are at a critical 
time. And to reverse that critical situation, I think it is 
time for some bold moves. Bold moves, not in the sense that 
some have proposed, that to make them more competitive we 
should add foreign workers to do our job on ships, but boldness 
in the sense that we create opportunity, untold opportunities 
for American seafarers in the future.
    If we are to be able to perform our wartime duties, then we 
have to be supported in peacetime. And in peacetime, cargo is 
king. And we rely heavily on preference cargoes. Every day we 
argue should it be 75, should it be 50. Are the laws being 
enforced? Are they being complied with? Let's be bold. Let's 
supply 100 percent cargo preference to all Government-impelled 
cargoes across the Government. Let every Federal agency buy, 
build, and ship American. End of argument.
    The Maritime Security Program is another linchpin in our 
peacetime fleet. It needs to be extended, expanded, and 
increased, so that we can realize Admiral Buzby's vision of the 
larger fleet that includes U.S. tankers to meet our military's 
fueling needs.
    LNG--we are becoming and have become a premier energy 
producer and exporter. Sadly, there is no U.S.-flag involvement 
in that trade. Let us be bold and enact Mr. Garamendi's 
Energizing American Shipbuilding Act into law, embrace it as a 
national energy policy that will create thousands of jobs on 
land, in the shipyards, at sea, create a trade for American 
companies to be involved in, and silence those Jones Act waiver 
demands for the transportation of energy.
    Let us be creative in recapitalization and utilization of 
our Ready Reserve Force. Let us utilize it and man it smartly, 
operationally, so that we have not nine men taking care of 
three or four ships, but an operational crew that is taking 
care of them, so that they truly become a ready and a Reserve 
Force. You have a training platform and a manning platform that 
will answer the question of mariner shortage.
    Do not be fooled or confused by the number of 200 
certificates issued by the Coast Guard. That number has no role 
in the question of whether we have enough mariners or not. 
Right now, right now, we are--our wartime requirements are 
about a little shy of 12,000 folks, 12,000 mariners. We have 
the capability of reaching back and probably grabbing hold of 
about 12,000 mariners. Whether each one of those will come to 
the fight remains a question. We meet our needs if everyone 
says yes.
    Those are the bold moves we need to make. There are other 
things included in all the testimonies, written testimonies: ad 
valorem tax, this tax, this measure. But I think the time is 
now to make these bold moves. We cannot wait. If we act now--
and I believe you have the ability. And in my humble opinion, 
you have the responsibility not only to the legacy of all those 
who sacrificed before, but for the future mariners and for the 
future security of this Nation to make those bold moves.
    And some day, when you ask me whether we can get the job 
done, the answer would be a resounding and indisputable yes, we 
can. Thank you.
    [Mr. Tellez's prepared statement follows:]

                                 
    Prepared Statement of Augustin ``Augie'' Tellez, Executive Vice 
   President, Seafarers International Union, testifying on behalf of 
                             Maritime Labor
    Good morning, Chairman Maloney, Ranking Member Gibbs, and the 
members of the subcommittee.
    I thank you for conducting this hearing and for giving me the 
opportunity to testify. I also thank all of you for your continued 
support of the United States Merchant Marine. My name is Augie Tellez 
and I am the Executive Vice President of the Seafarers International 
Union. I am testifying today on behalf of maritime labor, which 
includes the SIU, the American Maritime Officers, the Marine Engineers' 
Beneficial Association, the International Organization of Masters, 
Mates and Pilots, and the Maritime Trades Department of the AFL-CIO. 
All told, the members of these seagoing labor organizations and the 
affiliates of the MTD number over 4 million working people in America.
    Today is the Maritime Industry Congressional Sail-in, our 
industry's annual day to visit Capitol Hill. As we speak, nearly 200 
representatives of the U.S.-Flag maritime industry, from CEOs and union 
leaders to actively sailing merchant mariners, are meeting with Members 
of Congress and their staff. Their goal is to educate our elected 
officials and staff about the importance of the merchant marine, to 
request support for the laws that keep our ships sailing and our 
members employed, and to put a human face on what is often a forgotten 
industry in America.
    This hearing could not be timelier. The United States Merchant 
Marine is at a crossroads, and if we are to continue to meet the 
challenges of the 21st century and an unstable world, the Federal 
Government and the maritime industry must work together to find 
solutions to help keep our industry viable against the unlevel playing 
field that is world commerce and the opposition of misguided interest 
groups on both the left and the right here at home.
    This committee is well-aware of the ongoing mariner shortage that 
the United States faces and the implication that shortage has for 
national security. The Maritime Administrator has testified repeatedly 
about these concerns, and this committee has heard from several current 
and former United States Transportation Command leaders that our 
mariner pool is already at the breaking point. This is the paramount 
issue facing the Merchant Marine today, and all of the issues that are 
the subject of this hearing--improving regulations, providing greater 
economic opportunities and increasing competitiveness--are important 
factors in helping the industry get back to where we need to be to 
continue our efforts to protect American economic, homeland and 
national security.
    The U.S.-Flag merchant marine relies on three pillars to support 
its mission to fulfill the mandate set forth in the Merchant Marine Act 
of 1936: the Jones Act, the Maritime Security Program, and Cargo 
Preference. All these laws, working together, create the environment 
necessary for a successful and commercially viable merchant marine--
trained mariners, jobs for those mariners, ships for those mariners to 
crew, and cargo to keep those ships moving.
    Whatever else we talk about at this hearing today, keep those four 
things in mind, because everything we do in the industry and everything 
the government does to support the industry has to go toward supporting 
one of those four things.
    Mariners. Jobs. Ships. Cargo.
    Without mariners, jobs, ships and cargo, the U.S. Merchant Marine 
ceases to exists. They must be taken together because each of them 
depends on the existence of the other. A solid, workable government 
policy on the merchant marine needs to fulfill the needs of each of 
these things in order to be successful.
    Let's first talk about mariners and jobs.
    The mariner shortage that we currently face has two aspects to it: 
first, the recruitment of new mariners into the industry and second, 
the continued training and retention of existing mariners. In order to 
get new mariners in the door, we need to be able to demonstrate to them 
that choosing a career in maritime is a viable option for them. A life 
at sea isn't for everyone--it's long hours, time away from family, and 
dangerous work. In a modern-day economy that seems to expect every 
worker to go to college and then work a 9 to 5 job, it's difficult for 
many people, young people especially, to imagine a career in the 
merchant marine.
    We have found, however, that one of the easiest transitions is the 
transition between a career in the military to a career in the maritime 
industry. While the merchant marine is not a uniformed service, the 
relationship between the merchant marine and the uniformed services is 
clear, and the lifestyle is similar. The maritime industry has put 
together a ``Military to Maritime'' program that is designed to help 
identify military veterans who are looking for jobs and pair them with 
the jobs, training and credentialing they need in order to begin a 
career in the maritime industry, and more easily transition to civilian 
life. At the same time, Congress should work to help veterans while 
reducing bureaucratic burdens.
    One of the biggest barriers to entry into the industry is the 
number of credentials and fees that must be paid by a mariner before 
they can even begin to look for a job. These include fees for both the 
Transportation Worker Identification Credential and the Merchant 
Mariner Credential. Additional fees are required for officer licenses, 
as well. Waiving those fees for veterans entering the industry would 
help remove one barrier to entry and provide an additional benefit to 
those who have served and are now looking to enter the merchant marine. 
In addition, by allowing the Coast Guard to accept a valid military 
Common Access Card (CAC) in lieu of a TWIC and accepting a recent 
military physical examination instead of requiring a mandated maritime 
related physical, we could help reduce duplicative burdens on former 
servicemembers transitioning into the industry.
    This Committee has been instrumental in bringing the services to 
the table to address these issues. The roundtables you have organized 
over the past few years have been a great example of what Congress can 
accomplish. In that line, we continue to urge the Coast Guard to 
continue working with the Navy to ensure that military personnel are 
given full credit toward their commercial credentials and licenses for 
comparable service attained at sea. We also urge them to continue 
creating clearer pathways forward to the credentialed positions that 
exist in the industry. We also hope that the Navy would work with the 
Coast Guard to ensure that their training and shipboard assignments can 
more closely mirror international maritime standards including the 
Standards of Certification, Training and Watchkeeping (STCW) that 
govern crewmembers in both the United States and overseas. Congress 
should also allow GI Bill eligible veterans to continue receiving 
subsistence benefits while they are enrolled in training institutions 
that are qualified by the Coast Guard to offer maritime course 
instruction leading to a commercial certification or license. Many 
veterans are deterred from entering a training program because they 
would potentially lose subsistence benefits during training before they 
begin receiving a steady income.
    Rest assured, that no matter how difficult it is, U.S. maritime 
labor is committed to ensuring that for every mariner job there is a 
trained, skilled, and motivated mariner to fill it. When the balloon 
has gone up, U.S. maritime labor has never let a ship sail into harm's 
way without enough mariners aboard to get the job done safely. No 
matter what, maritime labor has always gotten the job done, and we will 
continue to get the job done.
    As we have always said to our friends in the industry--give us the 
jobs, and we'll fill them.
    Moving on, there are a few ideas that can help us bring new ships 
and more cargo into the merchant marine.
    First, as this committee is aware, the 2008 Coast Guard 
Authorization Act gave the Maritime Administration the authority to 
enforce existing U.S.-flag cargo preference laws, but the agency has 
been unable to set the necessary enforcement. Despite the clear intent 
of Congress, MARAD continues to find itself blocked in the interagency 
review process from publishing implementing regulations for this 
authority. Without these implementing regulations, MARAD has been 
unable to use the power granted it by Congress to hold shipper agencies 
of the Federal Government accountable when they fail to comply with 
existing cargo preference requirements.
    Evidence supports a strong belief in certain areas of the industry 
that the commercial fleet is missing opportunities across all the major 
sectors of cargo preference--whether it's defense related cargo, 
Eximbank financed cargo, or P.L. 480 and other food aid cargoes--and 
that this missing cargo is contributing to the decline of the fleet. It 
is critical that MARAD be able to use the power Congress intended it to 
have to hold other Federal agencies accountable for following the law. 
This is common sense, yet it remains an issue over a decade later. This 
must change.
    A key legislative option to consider that would have a positive 
impact on jobs and ships would be rolling back the cuts to cargo 
preference that were enacted in 2013. The Maritime Administration 
(MARAD) has made it clear that the changes made to cargo preference in 
the Moving Ahead for Progress in the 21st Century Act of 2013 (MAP-21), 
which reduced the percentage of foreign food aid cargoes reserved for 
the Merchant Marine from 75 percent to 50 percent, were responsible for 
the loss of over 25 ships in the U.S.-Flag international fleet. 
Congress can reverse that change and restore the 75 percent 
requirement--or even expand the requirement to 100 percent to mirror 
the requirement for defense related cargo. Doing so would ensure the 
additional cargo needed to sustain the ships and jobs that existed just 
a few years ago, and help reverse the negative trend we have seen since 
that misguided change in the law.
    On the Jones Act front, we continue to push for creative solutions 
to kickstart Short Sea Shipping projects across the country. MARAD's 
Marine Highways program is a good start, but more must be done to help 
make short sea shipping more than just a paper program. As we see more 
and more people concerned about climate change, the more sense Short 
Sea Shipping makes--not only will it result in new jobs and new ships 
for the Jones Act domestic fleet, it will help reduce greenhouse gas 
emissions by getting trucks off the highways and moving those goods via 
ships or barges.
    A variety of tax related issues have been discussed over the years 
to promote the maritime industry. Most recently, Congress adopted the 
tonnage tax, which brings the industry in line with the tax regimes of 
most of our foreign competitors. Congress should continue to look at 
ways to use the tax code to incentivize shipping cargo on American 
ships. Past ideas have included tax breaks for shippers to encourage 
them to utilize American shipping companies to move their cargo.
    These are just a few ideas that the industry has discussed over the 
years to help promote the industry. And while it is clear there are no 
silver bullets that can solve every problem the industry faces today, 
there is one idea--and one bill--that comes close.
    The Energizing American Shipbuilding Act is a comprehensive bill 
designed to address all four of the major concerns--mariners, jobs, 
ships and cargo. This bipartisan bill, which was introduced in the last 
Congress by Congressman John Garamendi and Senator Roger Wicker, would 
reserve a small portion of exported American crude oil and liquefied 
natural gas for ships built in the United States, flagged American and 
crewed by American mariners.
    The resulting cargo would be sufficient to create thousands of new 
shipbuilding and mariner jobs, while adding dozens, if not a hundred, 
new ships to the U.S.-Flag international fleet. With the lifting of the 
ban on the export of crude oil in 2015, the United States has seen 
rapid growth in the oil export business, yet none of that trade is 
being done right now on American ships.
    Adding American crude oil and LNG to cargo preference is a simple, 
cost-effective way to help bolster both the U.S. shipbuilding industry 
as well as help us to boost the size of the U.S.-Flag international 
fleet, which has been losing ships steadily for several years. This 
bill is similar to one that was passed in 1974 by Congress but vetoed 
by President Ford. In addition, given that this trade did not exist 
prior to 2015, it is not unreasonable for Congress to reserve a portion 
of this new cargo for American industries, knowing that the benefit to 
both national security and the merchant marine will be significant.
    We look forward to Congressman Garamendi and Senator Wicker 
reintroducing this bill in the 116th Congress and we urge Congress to 
pass it and the President to enact it into law.
    Now, let me be frank.
    For decades, we have been coming to Congress, stressing the need 
for more ships and more jobs. Today is no different, and the need for 
these new jobs and new ships is more important than ever before.
    I have testified before this committee many times, and each time I 
have stressed that those of us in the industry and our allies in 
Congress must stop constantly playing defense, protecting the ships and 
jobs we have. We need to go on the offense and start trying to find 
ways to grow the industry. We can't simply rely on maintaining MSP, 
stopping attacks on the Jones Act and cargo preference, and hope that 
things turn around.
    They won't. Not unless we act.
    Now is the time for action. It's not the time for us to play 
defense, or to accept half measures that are politically expedient but 
largely ineffective. We need bold leadership from Congress, and we look 
to the members of this Committee for that leadership. We have an 
opportunity now to fix these problems and put our Merchant Marine back 
on the right course. I urge you to stand with us.
    The United States Merchant Marine has stood by America in peace and 
war for over two hundred years. If we want it to continue to do so, it 
is critical that we act today to not just protect but to expand the 
maritime industry and our international fleet. Working together I am 
confident that Congress, the Administration, and the maritime industry 
can find solutions that will result in more trained mariners, more 
mariner jobs, more ships, and more cargo--all the things needed to keep 
our Merchant Marine sailing now and well into the future.
    Thank you for allowing me to testify today, and I look forward to 
answering any questions you may have.

    Mr. Lowenthal. Thank you. Now we are going to move on to 
Member questions. Each Member will be recognized for 5 minutes. 
And I am going to start by recognizing myself.
    Mr. Crowley, I know it hasn't been easy, but terminal 
operators have been in an essential part of our ports' efforts 
to reduce emissions. They have played a critical role in this. 
For example, at my home port, which, as you know, is the Port 
of Long Beach, diesel particulates from cargo handling 
equipment has been cut by 93 percent from 2005 levels. NOx 
emissions are down 73 percent, while container volume has 
increased by 12 percent.
    This is very, very important progress, and I am proud that 
the State of California and local partners, such as the 
industry itself, have committed resources to help with this 
effort. With State resources we have funded demonstration 
programs for zero-emission handling equipment, and rolling out 
charging outlets for cargo equipment at some of our busiest 
terminals. But we know that much of the investment in low- and 
zero-emission equipment will come from private terminal 
operators. That is where much of it is going to come.
    So both in your written testimony and in your oral 
testimony you talked about loan guarantees, or low-interest 
financing programs as one way for Congress to spur investments 
at marine terminals. Can you dig a little deeper, and tell us 
how you see that playing out, and what--what is the scope of 
what you are talking about?
    Mr. Crowley. Thank you, Mr. Lowenthal. And again, I 
appreciate your leadership in the PORTS Caucus and the efforts 
on behalf of ports. Thank you for the question.
    Certainly, port operators and terminal operators support 
the goals of lower emissions and being good port stakeholders 
in the communities in which they live. It is with that in 
mind--takes significant investment into those efforts, which 
are important to the Nation and local communities, but deter 
from them getting to the productivity of the business that they 
are about, moving cargo. And that is part of our focus on 
trying to achieve more flexibility and receiving support for 
things that are broadly good and national goals in order to 
support the investments that can be done throughout the 
facility.
    Loan guarantees are amongst other avenues of means to 
support that investment, and everything that gets done on the 
terminal operation. You know, we are reminded of title 11 in 
the vessel construct of loan guarantees and support. Not 
available today, certainly, and probably not prospectively 
available, but that sort of program, as a dedicated means for 
national asset, would seem to be something that we could 
consider. And I would be happy to work further with the 
committee and staff towards that end.
    Mr. Lowenthal. Thank you. I would like to work together 
with you on that.
    Also you mentioned talking about how these loan guarantees 
or low-interest finance programs can help programs or projects 
that are--I think you mentioned the term ``broadly good,'' in 
terms of the public's interest. Could you be more specific?
    What investments do you think our terminal operators right 
now--would they make, if we did provide these low-interest 
loans, if we did help them by providing the financing that they 
need to do this? What specifically do you think they would be 
focusing on?
    Mr. Crowley. Well, the first dollar always goes to--Mr. 
Lowenthal, to your question--to the things that are required as 
part of being good citizens in the community, such as the 
environmental matters that you have previous questioned. But 
they reach to many other things, such as--all the way to the 
development of better wharfs, stronger rails, to transit, the 
larger cranes that are needed to efficiently and productively 
move cargo today, all things which don't run out of their 
useful life by the terminal operator standards, but are needed 
because of outside influences. And all of those things together 
are increasingly, you know, over $1 billion for many entities.
    Mr. Lowenthal. Thank you, and I yield back. Now Ranking 
Member Gibbs.
    Mr. Gibbs. Thank you, Chairman.
    Mr. Roberts, going out to Puerto Rico and the LNG Jones Act 
waiver, several questions there. But I guess a two-part first: 
Does the pending Jones Act waiver for carrying LNG to Puerto 
Rico argue on the basis of national defense, and does waivers 
under section 501 and title 46 of the United States Code 
require national defense rationale for approval?
    Mr. Roberts. Mr. Gibbs, we see no basis for finding that 
there is a national security or national defense initiative 
that is the basis for issuing this waiver. It is entirely based 
upon an economic argument, and the prospect of some potential 
future need that has yet to be identified.
    Mr. Gibbs. We agree, because we sent the letter.
    Mr. Roberts. And we thank you very much for that.
    Mr. Gibbs. Puerto Rico's current LNG needs, are they being 
met either through imports, or by the Jones Act-qualified 
vessels carrying ISO LNG tank containers?
    Mr. Roberts. Yes, Mr. Gibbs. The one facility on the island 
that is physically capable of receiving LNG is under a long-
term contract to receive from Trinidad, and that is working. 
The other demand on the island for LNG at this time is being 
met and was created by our company, honestly. And that is being 
met through ISO tanks that are being carried on Jones Act 
vessels from the mainland.
    Mr. Gibbs. Do you know if a section 501 waiver has ever 
been granted to transport material to a facility which is not 
designed, and has not been funded, has not been permitted, and 
has not been built, and does not exist?
    [Laughter.]
    Mr. Roberts. That would be a unique application of that 
law.
    Mr. Gibbs. But you don't know if it ever happened, right?
    Mr. Roberts. It has not.
    Mr. Gibbs. OK. I guess Ms. Carpenter and maybe Mr. Roberts, 
too, about the towing vessel inspections. We talked about with 
the first panel under subchapter M and the certificates of 
inspection. But how many towing vessels choose to use third-
party inspection, or choose national Coast Guard inspection 
regimes, do you know?
    Ms. Carpenter. Yes. Our experience with our members very 
much tracks what you have heard from Admiral Nadeau earlier. 
About 80 percent of our members who have received certificates 
of inspection are using the towing safety management system 
option, which leverages third parties.
    Mr. Gibbs. You know, also, the shipping inspections, 
geographic restrictions, is there a plan for allowing towing 
vessels to operate as response vessels beyond the geographic 
area in which their certificate inspection is applied? And does 
the geographical limitations of the certificate inspection pose 
other problems for traditional towing vessel operations?
    Ms. Carpenter. Yes, so this is something that our members 
have an interest in, both as subcontractors to salvage and 
response organizations who may be providing services to vessel 
owners. But our members are also tank barge operators and 
towing vessels who are required to have response plans, and 
rely on these response resources. So it is very important to 
us, from both perspectives, that we have a sufficient network 
of response providers whose vessels are properly outfitted and 
whose mariners are properly credentialed to do the work.
    We have encouraged all of our members to meet with their 
Coast Guard officer in charge of marine inspections to talk 
with them about the work that their vessel may do in the event 
of an emergency, and to make sure that they have the necessary 
certifications in place, and that we have productive plans.
    I will just add we have been talking with our colleagues at 
the American Salvage Association, who have expressed real 
concern here. We are very much interested in hearing their 
members' perspective, as the folks who are doing the 
subcontracting to our members. If they see a gap, that is 
something we are going to want to work with them and with the 
Coast Guard and with this subcommittee----
    Mr. Gibbs. I do know the salvage industry has some concerns 
on the inspection process and how it is going on.
    I guess, Mr. Tellez, I love your testimony, especially the 
beginning.
    [Laughter.]
    Mr. Gibbs. I understand in the Coast Guard we have had--
talked about the Military to Mariner initiatives. And this is--
do you have any further ideas on improving these operations, or 
other ideas to help preserve the experience of military 
mariners for use in the private sector? You know, ideas to help 
facilitate this?
    Mr. Tellez. In 2004 the industry created a veterans--
accelerated veterans program. At that time we were probably 
getting about 10 per class. That program today gets about three 
per class. Part of the reason, at some point, because we do not 
charge tuition, the VA stopped allowing these veterans to use 
their benefits to either pay for documentation, pay for 
transportation, to pay for all the paperwork and documents they 
need to come to school. What the Executive order does, it 
repairs that pathway and allows them to use that money, and 
also maintain their per diem.
    So for a married guy with a family, that per diem becomes 
very important while they're in school. The key there, again, 
is two things. The Coast Guard has to be able to give them 
equivalency for their sea time experience in the military. And 
then we have a job to put them to.
    Mr. Gibbs. OK, I appreciate that.
    Mr. Lowenthal. Thank you, Ranking Member Gibbs.
    Next, Mr. Brown, Representative Brown.
    Mr. Brown. Thank you, Mr. Chairman. Just, I think, two 
clarifying questions. One for Mr. Tellez.
    And good afternoon, I am glad to be your host at your 
headquarters in----
    Mr. Tellez. Glad to have----
    Mr. Brown [continuing]. Camp Springs, Maryland.
    Mr. Tellez. Always glad to have you, sir.
    Mr. Brown. Yes, indeed. So you mentioned a war--and I may 
have this inaccurate, so that is why it is a clarifying 
question. You said there is a--you see a 12,000 war-time 
requirement shortage, in terms of the number of----
    Mr. Tellez. Oh, not a shortage.
    Mr. Brown. OK.
    Mr. Tellez. We are tracking about an 1,800 to 2,000 
manpower shortage to meet our military requirements, 
sustainable. Surge, we can handle, which is the initial--how we 
place those folks and keep it going, there is about an 1,800--
--
    Mr. Brown. So does the--that Military to Mariner program--I 
mean that helps address this shortage.
    Mr. Tellez. It helps address it. The shortage is a 
potential shortage. You still have--you can't have people just 
sitting around, waiting for something to happen. So if you 
bring them in and recruit them and train them, they can't just 
be sitting around, waiting for the balloon to go up.
    Mr. Brown. You can't retain them.
    Mr. Tellez. You can't retain them, so you have to be able 
to place them somewhere. We do the best we can, putting them in 
what we have right now. That is our goal. And we are pretty 
successful at it. But to close that 1,800-man gap takes a lot 
more than just bringing in 200 or even 2,000 over a period of 
years.
    Mr. Brown. Thank you.
    And for Admiral Alfultis, you had mentioned that--and this 
is, again, a clarifying question--that the academies produce a 
sufficient number of merchant marine officers. Yet somewhere in 
your testimony you talked about a shortfall. Can you just 
clarify that?
    Admiral Alfultis. Yes, sir. Thank you for the question. So 
the shortfall we are all talking is the same shortfall, about 
1,800 mariners. We are producing--again, the number of mariners 
that we produce each year, entry level, certainly meets the 
need for--we believe, the need for entry-level mariners.
    The issue is, again, the retention issue. If they don't 
have jobs to continue sailing on their license and advance on 
their license to the more senior-level mariners, we lose them. 
I think Admiral Buzby testified, you know, typically about the 
6- to 10-year mark, that is where we are losing our mariners, 
because some just want to come to shore for a different 
lifestyle, but many are just hitting a wall, where there is 
just not enough jobs available for all these mariners.
    And frankly, one of the issues we are having, as my 
colleague here alluded to, we are having a hard time finding 
enough positions for the kids that are graduating. We have 
students that are graduating with an officer's license. They 
are taking jobs as able-bodied seamen, not even sailing as an 
officer, because there is not enough third-mate positions 
available to them, because there is not enough ships for all 
these people who are graduating.
    So we are graduating a sufficient number. The trick, again, 
is to have enough positions for them when they graduate, enough 
positions for them to continue to sail and advance through 
their career.
    Mr. Brown. And then, just in terms of retirements, is that 
a challenge? Are you seeing, you know, bubble or--tell me about 
retirements, and what that--impact that is having on the 
shortage that you could see in this area.
    Admiral Alfultis. I am going to concede to some of my other 
colleagues on that question. I am more--I produce the entry-
level mariners. I will concede that to some of my other 
colleagues who could possibly answer that question.
    Mr. Tellez. Two issues there. On the license side, part of 
the problem is that they are not retiring. And what happens is 
you have the top officer staying beyond and aging, and at the 
same time his nominal replacement would be the chief mate, 
going at the same time. So there is the potential that both of 
them would retire at the same time. It takes maybe 8 to 10 
years to create those positions. Where are you going to fill 
those gaps in?
    On the unlicensed side, we have probably about two dozen 
folks retiring every month. We bring in recruits every month or 
so. We try to maintain a balance there. The problem again that 
we are going to face is that the demographics are going to 
create a skill gap, whereas because there are not enough jobs, 
there is not enough opportunity, people are staying on beyond 
what they should do, and clogging up that pipeline, so to 
speak. And that is the problem we are having and will be facing 
very, very shortly.
    Mr. Brown. Thank you. I yield back.
    Mr. Lowenthal. Thank you. And now I turn to my colleague 
and cochair of the PORTS Caucus, Representative Weber from 
Texas.
    Mr. Weber. Thank you, Mr. Chair.
    Mr. Tellez, you said that the average retirement per month 
is two dozen.
    Mr. Tellez. On my union. That is within my union.
    Mr. Weber. Oh, I got you. What is the average age, would 
you guesstimate?
    Mr. Tellez. Within my union?
    Mr. Weber. Yes, sir. Those that are retiring.
    Mr. Tellez. [No response.]
    Mr. Weber. I mean is it 60, is it 50?
    Mr. Tellez. It is over that, anywhere between 65 to 70.
    Mr. Weber. So safe to say they get in the industry and they 
stay there a long time.
    Mr. Tellez. Once they get that salt in their blood, yes, 
they are there for a while.
    [Laughter.]
    Mr. Weber. OK.
    Mr. Tellez. They forget how to act on land.
    Mr. Weber. OK. Well, I will leave that alone for right now.
    [Laughter.]
    Mr. Weber. So I guess this is really kind of a question for 
all of you, and I will start over here.
    How do we explain that there is a national security tie to 
our Acting Secretary of Defense? Are you all engaged in 
explaining that? Do you meet with him or his staff? Any 
thoughts?
    Admiral Alfultis. I would say I--we--yes, we engage with 
Military Sealift Command, we engage with U.S. Transportation 
Command. They are actually two of our greatest advocates, so 
there is certainly a dialogue between the DoD, through MARAD, 
to the State maritime academies. We do have that dialogue about 
what their needs are, and how we can meet their needs.
    And I would say some of our strongest advocates for things 
like the Jones Act, the need for mariners, are actually DoD.
    Mr. Weber. So you are having that ongoing dialogue. I don't 
know if that means an annual meeting. You are trying to--the 
last thing we want is a national emergency that all of a sudden 
we have to make the--or the Secretary is charged with giving 
the waiver. The last thing we want is to try to explain that in 
an emergency.
    So we are--this is an ongoing--what do you call it, 
continuing ed training session, Mr. Crowley? Are we meeting 
with him or his staff?
    Mr. Crowley. I would have to defer on many of these manning 
issues to the other colleagues here.
    I will say with respect to terminal operators, there is a 
continuing negotiation with the logistics staffs for outflow 
and inflow of----
    Mr. Weber. OK. Mr. Roberts, your thoughts?
    Mr. Roberts. Yes. There is an organization called the 
National Defense Transportation Association.
    Mr. Weber. OK.
    Mr. Roberts. Admiral Buzby was the president of that before 
taking his current position. They meet on a regular--and that 
is----
    Mr. Weber. Good to hear.
    Mr. Roberts. That is the association that facilitates the 
interface between TRANSCOM and its component commands, and the 
industry to stay ahead of this. And there is a very good 
dialogue there. That organization is very successful.
    Mr. Weber. Good to hear.
    Mr. Tellez, your thoughts?
    Mr. Tellez. I serve on something called the VISA Executive 
Working Group over at TRANSCOM, and that is--peacetime, it is 
probably a quarterly meeting.
    Mr. Weber. OK.
    Mr. Tellez. We have met with the former Secretary and his--
--
    Mr. Weber. OK. Well, maybe we----
    Mr. Tellez. It is an ongoing----
    Mr. Weber. That is what I like.
    Ms. Carpenter, let's go to you real quick.
    Ms. Carpenter. I would just say we talked about the lack of 
a national defense reason for a 10-year waiver to move LNG to 
Puerto Rico. If we give Jones Act waivers----
    Mr. Weber. For those nonexistent facilities?
    Ms. Carpenter. Right. If we give Jones Act waivers where we 
don't have a national defense emergency, we will find ourselves 
with a national defense emergency----
    Mr. Weber. That is part of the fear, right.
    Ms. Carpenter. We won't have a domestic maritime industry.
    Mr. Weber. OK, thank you.
    And Mr. Tellez, you said you think there is about a 1,800-
mariner shortage. And then you said that you could sustain the 
surge, but it wasn't sustainable. I think you said something 
like that.
    So define the difference in numbers between the--handling a 
surge and handling something sustainable.
    Mr. Tellez. Well, in surge--and we do worst-case scenario 
in conjunction with MARAD. We meet and we consider surge and 
worst-case scenarios using everything that floats. And to have 
everything that floats sailed into the war zone would require 
about 11,500 or----
    Mr. Weber. OK, I have only got 47 seconds left. Thank you. 
So what is the number-one thing we can do to encourage 
shipbuilding in this country?
    I will start here real quick. Short, please.
    Admiral Alfultis. Build three more NSMVs.
    [Laughter.]
    Mr. Weber. Well, and I have got a name for one of them.
    Mr. Crowley?
    Mr. Crowley. I think I defer to the other members on the 
panel.
    Mr. Weber. Mr. Roberts?
    Mr. Roberts. Well, I think defending the Jones Act, and I 
think the--looking at the--revitalizing the shipbuilding--Mr. 
Garamendi's bill.
    Mr. Weber. OK.
    Mr. Tellez. Create the requirement, create cargo.
    Mr. Weber. Sure. Well, that is trade, balance of trade. And 
I hate to be specific, but--dare I call it Trinidad, having a 
contract with Trinidad--anybody know what the length of that 
contract is?
    Ms. Carpenter?
    Mr. Tellez. It was 10 years.
    Mr. Weber. It was 10 years.
    Mr. Tellez. Yes, I don't----
    Mr. Weber. Because we would sure like to sell them some 
from Texas. I am just saying.
    [Laughter.]
    Mr. Tellez. Now they are booked, but you got to get in 
line.
    Mr. Weber. I thank you.
    I yield back. Mr. Chairman.
    Mr. Lowenthal. Thank you. And further questions for members 
of the panel? I know Ranking Member Gibbs----
    Mr. Gibbs. Thank you, Chairman. Just kind of a followup 
question to Mr. Crowley's testimony, talking about--it was 
Congress', really, I think, intent of the Committee on the 
Marine Transportation System to serve as a coordinating agency 
to align the different thoughts of different agencies' 
authorities, which--stakeholder, in part.
    What actions do you think we need to take, as Members of 
Congress, to make this happen? Looking at your testimony, you 
talk about the different agencies here.
    Mr. Crowley. Yes, Mr. Gibbs. I appreciate the question.
    You know, one of the ways to look at it is if you are 
calling someone from the administration to testify as to the 
health or the challenges of the port operator in this industry, 
I think your challenge is to find who that is. And so we end up 
sometimes, for example, overlapping security regulations by two 
members of the same department on the same facility security 
plans, providing a redundancy and a cost that distracts us from 
other worthy efforts.
    Mr. Gibbs. So we really need to somehow align the marine 
transportation--the--on your testimony--get the name of it 
here----
    Mr. Crowley. There are--if I may?
    Mr. Gibbs. Yes.
    Mr. Crowley. I think I know where you are going----
    Mr. Gibbs. Yes.
    Mr. Crowley [continuing]. Mr. Gibbs. There are committees 
that exist now, but they are primarily intended to advise 
individual secretaries and heads of agencies on their own 
status and where they are--how their work is evolving.
    We find--and the Hanjin bankruptcy is a good example--that 
there are multiple agencies trying to help out in a case like 
that, none of which had any coordinating mechanism across the 
board that had been instituted, and we find ourselves more 
answering questions than getting help for the challenges that 
the ports also face.
    Mr. Gibbs. It is the old saying, the right hand and the 
left hand doesn't know what is going on.
    Mr. Crowley. There is----
    Mr. Gibbs. Some of that.
    Mr. Crowley. This is a diverse community, and it has 
generated diverse sponsorship within the administrations and, 
you know, across the effort. Understandable, but we call upon 
the administrations and the agencies to do the same sort of 
work we have to do, which is make sense of the various 
requirements and the policies to make them efficient and 
productive to our Nation's economy.
    Mr. Gibbs. Thank you.
    Thank you, Mr. Chair.
    Mr. Lowenthal. Thank you. And now I would like to ask any 
of the Members--are there any more questions?
    Not hearing any more questions, I would like to thank each 
of the witnesses for your testimony. Your contribution to this 
discussion has been very helpful. And it has been very 
informative.
    And I would like to now ask unanimous consent that the 
record of today's hearing remain open until such time as our 
witnesses have provided answers to any questions that may be 
submitted to them in writing.
    And I ask unanimous consent that the record remain open for 
15 days for any additional comments and information that is 
submitted by Members or witnesses, which will be included in 
the record of today's hearing.
    Without objection, that is so ordered.
    If no other Members have anything to add, this subcommittee 
stands adjourned.
    [Whereupon, at 12:20 p.m., the subcommittee was adjourned.]


                                Appendix

                              ----------                              


              Questions from Hon. Sean Patrick Maloney for
                      Rear Admiral John P. Nadeau

Question 1. We are seeing a large increase in the number of LNG powered 
ships, including cruise ships, calling upon U.S. ports. To facilitate 
that traffic, ports need to be able to provide the LNG to fuel the 
ships, some through bunkering operations.
    Has the Coast Guard considered implementing uniform guidance or 
regulations regarding LNG bunkering to ensure consistency and safety 
across the nation?
    Answer. Through ongoing engagement with both Coast Guard field 
commands and the maritime industry, the Coast Guard has promulgated 
uniform/nationwide guidance related to LNG bunkering.
    In 2015, the Coast Guard published guidance that addresses 
guidelines for LNG fuel transfer operations and training of personnel 
on vessels using natural gas as fuel (CG-OES Policy Letter 01-15).
    In 2017, the Coast Guard published guidance for evaluating 
simultaneous operations during LNG fuel transfer operations (CG-OES 
Policy Letter 01-17).
    Subsequently, guidance specifically for Coast Guard field personnel 
overseeing LNG transfers was promulgated and distributed to Coast Guard 
field units. These policy letters and field guidance provide a basis 
for uniform oversight of LNG bunkering operations across the United 
States.
    Through regular engagement with the industry, local stakeholders 
and federal advisory committees, the Coast Guard will continue to 
consider whether additional guidance and/or regulatory standards are 
warranted for LNG bunkering operations.

Question 2. MMD Requirements: Under title 46 of the United States Code, 
anyone who works onboard a vessel is required to have a merchant 
mariner's document. This requirement ensures that mariners engaged in 
vessel operations are properly vetted and qualified. However, vessel 
operations have changed since we first passed the law requiring those 
aboard vessels to possess merchant mariners' documents. Increasingly 
modern vessels often carry specialized workers that are not involved in 
the safe navigation or operation of the vessel. For example, today's 
vessels often carry specialized individuals such as divers, industrial 
workers, and remotely operated vehicle pilots.
    In enforcing this requirement, does the Coast Guard believe there's 
a safety concern that this Committee should be mindful of if it were to 
change the law?
    Answer. The MMD requirement addresses three safety related areas:
    1)  Background checks. The MMD requirement allows the Coast Guard 
to review a mariner's criminal record and determine if the individual 
is a safe and suitable person for serving on a vessel. (This concern is 
less if the person possesses a Transportation Worker Identification 
Credential or another background check that establishes that he or she 
is not a security threat.)
    2)  Safety training and indoctrination. Mariners, to include entry-
level mariners, are aware of the dangers of shipboard life and 
regularly participate in emergency drills such as abandon ship drills.
    3)  Chemical testing. MMD applicants must pass a chemical test for 
drugs prior to being approved.

    Question 3. Would the Coast Guard oppose a revision to this law 
that excludes non-operating personnel such as divers or remotely 
operated vehicle pilots from needing a merchant mariner credential?
    Answer. The Coast Guard does not oppose a revision to this law 
provided that the revision includes requirements for background checks, 
safety training, and chemical testing of a sufficient scope to address 
the safety concerns raised in Part 1.

    Question 4. What steps has the Coast Guard taken to implement the 
Maritime Safety Act of 2018 to facilitate proper vessel inspections and 
oversight of the maritime industry, to ensure that vessels and crew 
have necessary safety equipment, and to make sure relevant casualty 
data is available after an accident?
    Answer. On July 3, 2018, in response to Section 215 of the Hamm 
Alert Maritime Safety Act of 2018 (Act) and to address a number of 
other mandates in that Act, the Coast Guard: established the Flag State 
Control Division (CG-CVC-4) in the Office of Commercial Vessel 
Compliance to provide oversight of Recognized Organizations and third-
party organizations; developed additional program guidance to improve 
oversight and assess Authorized Classification Societies; developed 
supplemental flag-state guidance on safety management systems; and 
increased oversight training for marine inspectors. For more 
information, see attached report.
    Finally, the Coast Guard continues to capture relevant marine 
casualty data after accidents and makes that data available. Certain 
marine casualty data related to the U.S. fleet can now be found at page 
5 of the following report: https://www.dco.uscg.mil/Portals/9/
DCO%20Documents/5p/CG-5PC/CG-CVC/CVC1/AnnualRpt/
2018DomesticAnnualReport.pdf.

Question 5. In October 2018, the Coast Guard released the Maritime 
Commerce Strategic Outlook to guide Coast Guard efforts in securing the 
maritime environment while enabling maritime commerce.
    Admiral, can you talk to us a little bit about the three lines of 
effort included in the Strategic Outlook and the steps the Coast Guard 
is taking to implement them?
    Answer. The MCSO relies on the implementation of three lines of 
effort (LOE), each of which has multiple objectives:
  loe no. 1--facilitating lawful trade and travel on secure waterways
    The Coast Guard will advance American prosperity through securing 
ports and waterways that enable commerce and ensuring vessels are 
subject to uniform, consistent standards.
      Objective 1: Mitigate Risk to Critical Infrastructure
       Fortify cybersecurity in the Marine Transportation System (MTS) 
by developing incident prevention and response frameworks. Enhance 
risk-based planning for Maritime Security and Response Operations 
(MSRO) such as security boardings, security zone enforcement, and 
aerial, shore-side and waterborne patrols. Bolster intelligence 
collection and use to improve security procedures, enhance the 
International Port Security Program, and leverage best practices in 
security among global partners. Enhance Maritime Domain Awareness and 
information sharing among maritime security partners.
      Objective 2: Build Resiliency within the Marine 
Transportation System
       Strengthen Marine Transportation System Recovery Unit 
procedures, data models, and catalogs of critical infrastructure and 
navigation aids to improve re-opening ports following natural and man-
made disasters. Further promote a safety culture within industry by 
overseeing optimal uses of safety management systems and procedures to 
identify and mitigate risks and respond to incidents.
      Objective 3: Enhance Unity of Effort in the Marine 
Transportation System
       Enhance cooperation among federal, state, local and tribal 
agencies and maritime stakeholders, especially within the U.S. 
Committee on the Marine Transportation System, Area Maritime Security 
Committees, and Harbor Safety Committees. Leverage relationships within 
international organizations to shape global standards, such as the 
International Maritime Organization, International Association of 
Lighthouse Authorities, and International Hydrographic Organization. 
Identify emerging environmental threats and reconfigure Area 
Contingency Plans to address them.
   loe no. 2--modernizing aids to navigation and mariner information 
                                systems
    The Coast Guard will ensure America's waterways and maritime 
industry employ state-of-the-art systems that ensure America's 
competitiveness as a global trading partner.
      Objective 1: Improve the Nation's Waterways
       Ensure the on-going viability of the existing constellation of 
fixed and floating aids to navigation (ATON), including new 
technologies such as electronic ATON and improved, data-driven and 
risk-based models that optimize the marking of navigable waters and 
obstructions. Enhance Marine Safety Information systems to provide 
mariners with real-time, accessible and relevant voyage planning data. 
Promote the use of electronic navigation charts and risk-based 
decision-making while maintaining an equitable level of safety. Improve 
bridge permitting procedures and information related to bridge 
operations in order to minimize chokepoints at bridge-waterways 
intersections. Support the U.S. Army Corps of Engineers efforts to 
optimize the reliability of locks and dams.
      Objective 2: Optimize Maritime Planning
       Engage maritime stakeholders within the public, private, and 
academic (marine science) sectors to identify potential conflicts in 
waterway uses and overall needs of the industry and local communities, 
while protecting the marine environment. Balance development of 
navigation routes with the development of renewable energy 
installations, aquaculture, and technologies related to commercial 
infrastructure and vessel construction and operation. Develop next-
generation waterway designs to improve Maritime Domain Awareness, 
mariner information, and waterway resiliency.
      Objective 3: Recapitalize Aging Assets
       Faced with aging surface and aviation assets and antiquated 
shore infrastructure, invest in modern assets to perform the ATON 
mission and domestic and polar ice operations mission, including the 
development of effective fleets of Waterways Commerce Cutters, buoy 
tenders, and heavy icebreakers. Strengthen partnerships with 
international agencies and maritime stakeholders in order to ensure 
effective prioritization of icebreaking services during asset 
recapitalization and construction.
      Objective 4: Streamline and Update Information Systems
       Faced with the increasing obsolescence of Coast Guard marine 
safety, credentialing, and navigation information systems, initiate 
research and development of modern, adaptable information systems. 
Promote the sharing and leveraging of public and private data sources 
in order to make risk-based decisions that counter safety, security, 
and environmental threats. Promote a shift from an antiquated rules-
based regulatory structure to a risk- and principles-based regulatory 
structure that keeps pace with emerging practices and technologies.
      loe no. 3--transforming workforce capacity and partnerships
    The Coast Guard will continuously review the human capital system 
that recruits, develops, and retains the best possible workforce to 
ensure it can adapt within a constantly changing environment.
      Objective 1: Leverage and Ensure Effective Oversight of 
Third Parties
       Increase the use and oversight of third-party organizations for 
regulatory functions and standards accrediting bodies in order to align 
with global practices while maintaining an equitable level of safety. 
Ensure the Coast Guard retains the necessary proficiency and technical 
expertise to conduct proper oversight of third-party organizations. 
Adapt the Coast Guard's organizational structure and responsibilities 
to sustain its ability to monitor the global performance of the U.S. 
flag fleet and third-party organizations.
      Objective 2: Sharpen High-Tech and Adaptive Service 
Competencies
       Leverage new technology to improve the way the Coast Guard 
conducts oversight of the MTS, expanding the use of condition-based 
monitoring and analytics. Maintain awareness of industry trends that 
have the potential to transform or disrupt the MTS. Optimize the use of 
technology, mobility, data analytics, and artificial intelligence to 
enhance vessel inspections and investigations. Invest in advanced 
education and industry training in emerging fields like automation, 
artificial intelligence, data analytics, and cybersecurity.

       Promote and establish groups of non-traditional thinkers, 
academic professionals, and government stakeholders to identify, 
address, and leverage emerging technologies and industry practices.
      Objective 3: Advance the Prevention and Response 
Operations Workforce
       Broaden the diversity of our workforce to be more reflective of 
the population we serve. Implement state-of-the-art training and 
qualification programs that will enable professional mastery. Recruit, 
develop, and retain professionals who thrive during constant changes to 
technology and tools. Develop a repository of information about 
advanced navigation control and vessel propulsion systems. Develop a 
repository of methods for leveraging new technologies, responding to 
and managing crises, and contingency planning.
    Beyond the organic authorities the Coast Guard already possesses to 
carry out statutory missions to further the MCSO, the Coast Guard 
established a task force to ensure continued implementation of the 
MCSO's three lines of effort and to assess what, if any, additional 
legal authorities may be necessary to carry out statutory missions to 
further the MCSO.

    Question 6. Does the Coast Guard need any additional authorities or 
legislative assistance to fully implement the Maritime Commerce 
Strategic Outlook?
    Answer. Not at this time. The Maritime Commerce Strategic Outlook 
(MCSO) aligns with the existing Coast Guard statutory missions as set 
forth at Title 6, U.S. Code, Section 468 and the primary duties set 
forth in Title 14, U.S. Code, Section 102.

    Question 7. Can you discuss why the presence of U.S. Flag fleet in 
world ports is meaningful towards the exercise of U.S. sovereignty and 
economic strength?
    Answer. From the Coast Guard's perspective, a U.S.-flagged fleet 
that trades in foreign ports demonstrates our Nation's commitment to 
safe, secure, and environmentally sound shipping worldwide.

    Question 8. Does the strength of a U.S. Flag fleet bolster the 
credibility of the U.S. at the International Maritime Organization or 
other international maritime organizations? How?
    Answer. From the Coast Guard's perspective, while less than one 
percent of the global ship portfolio currently trades under U.S. flag 
registry, the United States' credibility at international fora such as 
the International Maritime Organization is bolstered by its distinction 
as the leading port state for foreign vessel arrivals.

    Question 9. U.S. vessels with U.S. crews can be ``ears and eyes'' 
in ports and trade lanes throughout the world. Are you aware if other 
countries leverage their fleets to bolster national security goals such 
as intelligence-gathering?
    Answer. Yes, the Coast Guard understands that other countries 
leverage their vessel fleets to bolster their national security goals.

    Questions from Hon. Rick Larsen for Rear Admiral John P. Nadeau

    Question 1. Can you provide us an update on the Coast Guard's 
progress in streamlining the process for military members to transition 
to licensed mariners?
    Answer. Once the establishment of the Coast Guard's Credentialing 
Opportunities On-Line (CG COOL) website goes live and the program 
manager position is established in the Summer of 2019, the Coast Guard 
will have a streamlined web-based resource and subject matter expert 
for all military members who are interested in a mariners license.

    Question 2. What steps has the Coast Guard taken internally to 
assist Coast Guard members in becoming licensed mariners?
    Answer. The Coast Guard is currently identifying formal training 
courses and qualification processes for approval towards a merchant 
mariner credentialing license. Additionally, the Coast Guard has 
established a form to account for career sea time that meets experience 
requirements.

    Question 3. What steps are being taken in the Armed Forces to 
ensure members are aware of the availability, requirements, and 
assistance offered as part of the military-to-mariner process?
    Answer. The Coast Guard is establishing a CG COOL web presence, 
similar to the other military services' COOL sites. Internal 
communications will be circulated by various means to all members of 
the Coast Guard. We anticipate this site being live by the end of 
summer 2019 and for credentialing payment processes to be in place by 
January 2020.

Question 4. In the Pacific Northwest, the safe transportation of crude 
oil is a priority; a major spill could have devastating impacts on the 
regional economy, public safety and environment. Last month, the 
Canadian National Energy Board recommend approval for the TransMountain 
Pipeline Extension Project. As a result, the number of vessels carrying 
crude oil could grow.
    Can you speak to the available resources the Coast Guard has in the 
region and its capability to respond to an oil spill?
    Answer. Within the United States, vessels carrying bulk liquid 
petroleum, non-tank vessels (self-propelled vessels of 400 gross tons 
or greater operating on the navigable waters of the United States and 
carrying oil of any kind as fuel for main propulsion), marine 
transportation-related facilities, pipelines and offshore facilities 
must submit oil spill response plans for approval by the U.S. 
government. The response plan specifies a means to mobilize and manage 
necessary personnel and resources required to mitigate up to a worst-
case discharge. The Vessel Response Plan (VRP), the Non-Tank Vessel 
Response Plan (NTVRP) and Facility Response Plan (FRP) holders must 
cite specific Oil Spill Removal Organizations (OSROs) with whom the 
plan holder has a contractual agreement to provide equipment and 
personnel to abate a spill. OSROs provide specific amounts of core 
equipment to plan holders per regulations set out in 33 Code of Federal 
Regulations (CFR) 155 (tank and non-tank vessel requirements) and 33 
CFR 154 (marine transportation-related facility requirements).
    In District 13, the Coast Guard has at its disposal the entire 
commercial OSRO equipment inventory resident in the region, including 
spill response equipment owned by other federal agencies, such as the 
U.S. Navy.

    Question 5. Are these resources adequate? If not, what additional 
resources does the Coast Guard need?
    Answer. Yes. The response equipment located in the Pacific 
Northwest region meets or exceeds the regulations set out in 33 Code of 
Federal Regulations (CFR) 155 (tank and non-tank vessel requirements) 
and 33 CFR 154 (marine transportation-related facility requirements).

Question 6. At the recent full Committee hearing on climate change, one 
witness highlighted the importance of federal funding for climate risk 
assessments at U.S. ports and recommended developing resiliency 
standards for port infrastructure that maps to regional predictions of 
sea level change.
    Does the Coast Guard have a plan in place to address these issues?
    Answer. As Coast Guard facilities and assets are planned for 
recapitalization, resiliency for natural disasters is factored into 
facility plans and designs. Additionally, Coast Guard shore 
infrastructure is constructed in accordance with international and 
local building codes when there are more stringent codes due to 
localized vulnerabilities such as natural disasters. With an over $1.7 
billion shore infrastructure backlog, the Coast Guard must continue to 
invest in our shore infrastructure and build resiliency to withstand 
damage from natural disasters.

    Question 7. How do you anticipate resilient port design will impact 
the U.S. maritime system?
    Answer. The Coast Guard believes that more resilient port and 
maritime facility design could make the U.S. Maritime Transportation 
System (MTS) less susceptible to damage from natural disasters.

 Questions from Hon. Stacey E. Plaskett for Rear Admiral John P. Nadeau

    Question 1. How has climate change and associated physical impacts 
(e.g., sea level rise, increased storm surge, higher flood levels, 
etc.) affected Coast Guard facilities and assets, and what are the 
practical impacts on the Coast Guard's budget and operational 
readiness?
    Answer. As Coast Guard facilities and assets are planned for 
recapitalization, resiliency for natural disasters is factored into 
facility plans and designs. Additionally, Coast Guard shore 
infrastructure is constructed in accordance with international and 
local building codes when there are more stringent codes due to 
localized vulnerabilities such as natural disasters. With an over $1.7 
billion shore infrastructure backlog, the Coast Guard must continue to 
invest in shore infrastructure and build resiliency to withstand damage 
from natural disasters. As a first-responder, and when shore 
infrastructure is not built to 21st century standards, assets and 
personnel may be unable to respond as promptly and effectively in 
support of our statutory missions.

    Question 2. How is the Coast Guard spending the $835 million in 
supplemental appropriations provided in the Further Additional 
Supplemental Appropriations for Disaster Relief Requirements Act, 2018 
for expenses related to the consequences of the 2017 hurricane season?
    Answer. The Coast Guard is spending the $835 million in 
supplemental appropriations to rebuild and repair damaged or destroyed 
facilities and equipment and to replace inventories of supplies crucial 
for readiness that were expended in the Coast Guard's response to the 
storms.

    Question 3. How have those resources been used for expenses related 
to the consequences of Hurricanes Irma and Maria in the U.S. Virgin 
Islands?
    Answer. The Coast Guard is repairing its facilities and equipment 
in the U.S. Virgin Islands, to include the Rescue 21 tower, the Marine 
Safety Detachment building, and waterfront piers. The U.S. Virgin 
Islands also received operational support from the Coast Guard in the 
form of cutter and aircraft activities that are not easily attributable 
to a single state or territory, and these resources are being used to 
restore operational readiness for such assets.

    Question 4. How much of the overall total has been used for such 
expenses in the U.S. Virgin Islands?
    Answer. $15.6 million is planned for direct expenses in the U.S. 
Virgin Islands.

     Questions from Hon. Bob Gibbs for Rear Admiral John P. Nadeau

    Question 1. Is the Coast Guard aware of any technical corrections 
needed to the Frank LoBiondo Coast Guard Authorization Act of 2018 in 
addition to correcting the subtitle numbering inconsistencies in 
Chapter 700 of Title 46, United States Code?
    Answer. Generally, the Coast Guard provides proposed technical 
corrections to legislation and similar input to Congress through the 
Department of Homeland Security by way of an established process. The 
Coast Guard will follow this process to provide information regarding 
technical corrections to the Frank LoBiondo Coast Guard Authorization 
Act of 2018.

       Questions from Hon. Sean Patrick Maloney for Mark H. Buzby

Question 1: The Department of Defense relies on the U.S. Merchant 
Marine to deliver personnel and material to forward operating bases 
around the world. You have stated that there is a shortage of 1,800 
mariners needed to sustain our presence overseas.
    How did the Maritime Administration arrive at that number?
    Answer. In 2017, Congress directed MARAD to convene a Maritime 
Workforce Working Group (MWWG) to assess the size of the pool of U.S. 
citizen-mariners necessary to crew the sealift fleet in times of 
national emergency. At that time, U.S. Coast Guard (USCG) data 
indicated that 33,125 U.S. mariners held unlimited credentials, however 
the MWWG estimated a value of 11,768. The MWWG determined that the 
disparity between these values (21,357 mariners) will remain unresolved 
until more research is completed.
    The 1,800 mariner figure was derived by the Maritime Workforce 
Working Group in their Report (Jan. 2018, Table 3 on p.24 of the MWWG 
Report). Additional analysis is needed to refine this number. 
Concurrent operations of the U.S.-flag commercial fleet in addition to 
sustained surge sealift, was estimated to require 13,607 mariners. The 
MWWG (chaired by MARAD) estimated that 11,768 qualified mariners with 
unlimited credentials might be available to crew the Ready Reserve, MSC 
contract mariner crewed ships, and commercial U.S.-flag fleets based on 
the group's selected methodology.

    Question 2: What had led to the shortage?
    Answer. More research is required to determine the number of 
merchant mariners with the credentials necessary to participate in 
sealift operations. The number of U.S. mariners who maintain their 
proficiency and remain active is proportional to the number of vessels 
flying the U.S.-flag. The declining number of U.S.-flag ships reduces 
the available employment base for merchant mariners aboard this fleet, 
which is the number one factor influencing the size of the active 
merchant mariner pool. Without those jobs, mariners are unlikely to 
maintain their credentials or to take lower paying seafaring jobs. This 
affects mariner recruiting and retention. In addition, the increased 
costs and additional requirements associated with renewing their 
mariner credentials to meet requirements under the International 
Convention on Standards of Training, Certification, and Watchkeeping 
that went into effect on January 1, 2017 have contributed to more early 
retirements of mariners holding senior level credentials.

    Question 3: Can you please explain why our shortage would 
significantly impact sealift capabilities?
    Answer. Ensuring the availability of sufficient qualified contract 
and obligated mariners for a prolonged activation of U.S. reserve 
sealift capacity is a continuing concern. MARAD estimates that the 
supply of available mariners is sufficient to activate the sealift 
mobilization assuming the MWWG derived estimate of 11,768 civilian 
mariners are willing to serve when called upon. (It should be noted 
that most civilian mariners are not obliged to report.) However, 
sustaining the sealift operations will require crew rotations, which is 
where a problem could occur absent other mitigating measures. With this 
number of mariners, and assuming a full activation of all applicable 
sealift assets concurrent with full steady state commercial U.S.-flag 
shipping activities, a shortage could be felt beginning with 4th month 
of surge operations.

Question 4: Last Thursday, the Department of Energy announced a sale of 
6 million barrels of crude oil from the Strategic Petroleum Reserve. 
According to the Department's notice, prospective buyers can take 
delivery by pipeline, tanker, or barge and are referred to the 
Department of Homeland Security concerning individual waivers of the 
Jones Act.
    Administrator Buzby, is the Jones Act fleet ready to assist with 
this sale or are we going to hear complaints of an unsuccessful sale 
due to lack of available Jones Act vessels?
    Answer. Neither the Jones Act nor the Cargo Preference Act apply to 
the sale of SPR crude oil abroad because the purchasers are private 
sector individuals that are buying the commodity with their own funds 
and without receiving any financing from the United States. Domestic 
purchasers who require ocean shipping will make arrangements with Jones 
Act carriers for barges, Articulated Tug Barges, or Tankers. In the 
last sale of 4.74 million barrels SPR oil in April, May and June of 
2018, all deliveries were made using pipeline, U.S.-flag coastwise 
qualified vessels and foreign-flag export.

    Question 5: Have you consulted with the Defense Department, Customs 
and Border Protection and Department of Energy regarding how any Jones 
Act waiver requests will be handled?
    Answer. DOD, DOE, CBP and MARAD have consulted and are standing by 
for any Jones Act waiver requests.

    Question 6: In your discussions with the Defense Department, do you 
believe they see the need for foreign ships here as a ``national 
defense'' emergency?
    Answer. We have not engaged the Defense Department in any such 
discussion.

    Question 7: The Department of Energy is offering 6 million barrels 
of oil, but according to their notice, each of their own 2 barge docks 
can only handle ninety (90) thousand barrels per day and will only be 
open for fourteen (14) days. This means the maximum amount of oil that 
can be carried by barge in this sale is 2.5 million barrels, or less 
than half of the total 6 million barrels being offered. Since there 
appears to be no rush or emergency to complete this sale, have you 
asked the Department of Energy why they don't make more of this oil 
available to move by barge?
    Answer. We have been in touch with Department of Energy on this 
release and they have indicated to us that with the availability of 
pipeline deliveries, barge deliveries and foreign export, they see no 
forthcoming Jones Act issues.

    Question 8: The Department of Energy guidelines for Strategic 
Petroleum Reserve oil delivery by barge require a minimum lot size of 
forty-thousand (40,000) barrels. I understand that the predominant size 
tank barge the U.S. industry uses is thirty-thousand (30,000) barrels. 
Does this pose a barrier to entry for Jones Act fleet operators?
    Answer. With the options of using pipelines and foreign vessels for 
foreign sales, neither we nor DOE anticipate a problem.

           Questions from Hon. Rick Larsen for Mark H. Buzby

Question 1: Small Shipyard grants help shipyards, like Dakota Creek 
Industries in my district, to modernize their facilities purchase new 
equipment purchases and improve worker training. Last year, this 
Committee enacted legislation requiring MARAD to post a notice of 
funding opportunity within 15 days of Congress appropriating funding 
for the program. In the first year of this new law, MARAD already 
missed the deadline, which was Saturday, March 2. This hurts these 
small shipyards by giving them less time to prepare proposals and may 
hurt the allocation of federal funding to the highest quality projects.
    When will the notice of opportunity be posted?
    Answer. The Notice of Funding Opportunity (NOFO) was approved on 
March 5 for posting and it went live on grants.gov on March 6, 2019.

    Question 2: How do we ensure this does not happen again?
    Answer. As is stated in the question, the deadline for publication 
of the Notice was March 2--a Saturday. It was available to the public 
the following Wednesday. Should appropriations be made available for 
future Small Shipyard grants, the Department of Transportation and 
MARAD will make every effort to ensure that reviews are completed in a 
timely manner.

    Question 3: With President Trump's FY2020 budget expected to be 
released in the upcoming weeks, do you anticipate full funding will be 
maintained for the Small Shipyard grants?
    Answer. Similar to previous budget requests since Congress 
established the Small Shipyard Grants Program, the Presidents 2020 
budget does not request funding for the program. MARAD stands ready to 
administer grants in the future should Congress make appropriations 
available. MARAD will also continue to oversee the current portfolio of 
previously awarded projects to help make the shipbuilding industry more 
competitive and efficient in building, repairing and reconstructing 
modern vessels.

Military-to-Mariner Transition:
    Question 4: Has MARAD increased the number of military mariners 
joining the civilian fleet as Congress has increased the focus on the 
military-to-mariner process?
    Answer. MARAD does not have access to tracking veterans using the 
Military-to-Mariner program. We do not have access to any such data and 
this question should be addressed to the Army, Navy, and USCG.
    The best we can do at this juncture is to add a question to the 
Mariner survey that we plan to execute (after receiving all approvals 
and concurrences) in June 2020. Thereafter, the survey will be repeated 
every two years so that we can build our own estimates based on survey 
results.

Question 5: At the recent full Committee hearing on climate change, one 
witness highlighted the importance of federal funding for climate risk 
assessments at U.S. ports and recommended developing resiliency 
standards for port infrastructure that maps to regional predictions of 
sea level change.
    Does MARAD have a plan in place to address these issues?
    Answer. Transportation infrastructure assessment, planning, and 
investment in the face of sea level change and extreme weather events 
has been the subject of multi-modal discussions and investigations at 
the Department of Transportation (DOT) for years. As hurricanes closed 
26 coastal seaports in the Gulf and along the Atlantic during a six-
week period in 2017, it became more evident that new tools are needed 
to properly assess risks and assist in investment and recovery 
decisions. In developing those tools, damage to and flooding of near-
port intermodal infrastructure must also be considered.
    The MARAD Ports Team is currently scoping a framework for a 
proposed asset management tool called the ``Waterfront Asset Management 
Tool'' (WFAM) for domestic port planning. This proposed asset 
management tool will aid domestic port planning, targeting waterfront 
structures as the assets that pose the greatest risk of both short- and 
long-term freight and economic disruption for our Nation's ports. This 
tool will assist public and private ports with tools to establish risk 
based asset management plans to prioritize maintenance dollars and 
provide justification for spending scarce funding for maintenance and/
or resiliency priorities. The tool will seek to balance risk, 
operational, and business priorities. The forecast of long-term 
spending, including long term maintenance of projects with long (50+ 
year) service lives will be incorporated into the tool including 
projected sea-level predictions during that timeframe.
    In addition, MARAD is working with the DOT's Office of the 
Assistant Secretary for Research and Technology to develop nationally 
applicable modeling tools that incorporate the costs and benefits of 
resilience into the transportation infrastructure planning process. 
Furthermore, MARAD completed an assessment of port facilities (under 
the direction of the Department of Homeland Security, FEMA) for various 
ports that were damaged by the 2017 hurricanes in Puerto Rico. These 
assessments included proposals for resiliency to affected sites.

    Question 6: Follow-up: How do you anticipate resilient port design 
will impact the U.S. maritime system?
    Answer. The impacts of resilient port design are unknown because 
the industry does not currently have a systemic method or standard for 
assessing resilience and maintaining or hardening port infrastructure 
and systems. Outreach during our WFAM tool-scoping, has revealed that a 
variety of approaches are being used by port managers and stakeholders 
to prioritize improvement and maintenance projects, or assess the 
magnitude of sea level changes and extreme weather events. We believe 
that waterfront asset management is essential to promote and improve 
the resiliency and efficiency of freight movement by targeting 
investment in facilities that are most vulnerable. The proposed tool 
will provide effective management tools and provide leadership with 
information that will support resilient infrastructure investment and 
lifecycle planning.

              Questions from Hon. Sean Patrick Maloney for
               Rear Admiral Michael Alfultis, USMS, Ph.D.

Investing in Vocational Training:
    Question 1: What steps need to be taken by the federal government 
in order to broaden the base of U.S. civilian mariners to ensure 
military sealift readiness?
    Answer. There are three primary ways to broaden the base of U.S. 
civilian mariners. First, increasing federal funding to state and 
federal maritime academies to help expand training and education 
capacity is essential. Sealift requires mariners with ``Oceans 
Unlimited Tonnage'' deck licenses and engineers with ``Any Horsepower'' 
licenses. The State Maritime Academies (SMAs) collectively produce 70% 
of entry-level licenses each year. SMA capacity is currently limited by 
shore-side facilities designed years ago for a smaller student 
population, antiquated training vessels and a limited number of 
simulators due to cost and amount of sea service/training credit 
allowed by the Coast Guard (not more than 30 days).
    Second, the recent Presidential Executive Order for a ``Military to 
Mariner'' program can help broaden the mariner base for military 
sealift readiness, but requires the Coast Guard to publish policy and 
work with the academies for how military personnel may apply their 
training and sea service toward satisfying the U.S. Coast Guard 
credentialing requirements in existing programs. In addition, the U.S. 
Coast Guard should be directed to work with the SMA's to create new 
programs (similar to continuing education) for veterans that will allow 
shorter and quicker routes to completing requirements for licensing 
outside the approved programs that are connected to academic degree 
programs.
    Third, retain the mariners that are being produced. To do this, 
there must be advancement opportunities for mariners in the U.S. 
commercial fleet. Full funding and expansion of new programs are needed 
to reverse the decline of military useful sealift ships and increase 
the pool of qualified mariners. We support the following initiatives:
      Full funding of the Maritime Security Program through 
2025 and new authorization through 2035 to keep ships under the U.S. 
flag;
      Restoration of U.S. cargo preference laws that require 75 
percent of the Food for Peace cargos be carried on U.S.-flag;
      Requiring a percentage of liquefied natural gas and crude 
to be exported on U.S. built, U.S. flag ships as called for in the 2018 
Energizing American Shipbuilding Act;
      The repeal of current Internal Revenue Code language: to 
expand U.S. shipping by making the financing of U.S. ship construction 
less expensive;
      Legislation that supports explicitly that U.S.-flag ships 
must be utilized in the transportation, construction, and maintenance 
of offshore wind generation farms that will be developed in the coming 
decades;
      Incorporating marine highway corridors, connectors, and 
state freight systems as part of the ``National Freight Strategic 
Plan'' to improve infrastructure and developing American Marine Highway 
vessels to expand the use of waterways for freight and passengers and 
provide a more sustainable form of transportation by removing trucks 
from overcrowded highways; and,
      Strong support for legislation that strengthens the 
Jone's Act and creates U.S. maritime jobs afloat and ashore.
    These initiatives will help increase the number of U.S.-flag ships, 
provide sufficient employment and advancement opportunities to recruit 
and retain sufficient licensed mariners for the commercial fleet and to 
support national defense sealift requirements.

    Question 2: What new incentives or changes in existing training and 
credentialing requirements and programs could be enacted to encourage 
more people to enter the maritime workforce?
    Answer. First, there need to be sufficient jobs for them to enter 
the workforce. This is especially true for shipbuilding business and 
license jobs within the U.S. flag fleet. Without sufficient deep-sea 
entry-level officer positions, our license graduates will sail on 
inland and coastal vessels of limited tonnage or foreign deep draft 
ships. This will limit their ability to advance their license.
    Another way we can encourage more people to enter the maritime 
workforce is to make the Coast Guard's training and credentialing 
requirements less complex, cumbersome and costly. Current training, 
especially to meet international STCW requirement, is overly burdensome 
and costly and does not help to attract and retain mariners. 
Requirements are largely dictated by the international community 
without regard to lessons learned from marine casualties and do not 
follow a risk-based approach to maritime safety.
    Current regulations for approval of academy training programs is 
also overly burdensome (e.g., checklists for hundreds of individual 
assessments) and is more focused on documentation through a Quality 
Standards System (QSS) than on educating and training students on 
current technology and industry practices.
    To encourage more U.S. citizens to enter the maritime workforce 
there needs to be a robust, comprehensive, and coordinated national 
level recruiting and marketing program for the public that highlights 
educational and career opportunities in the maritime industry. We 
frequently see advertisements for the armed services on television. 
However, there is no one paying for prime-time advertisement of the 
force that is going to project and sustain combat power or that is 
essential to our national economic prosperity.
    One way to do this is by improving and enhancing the existing 
Strategic Sealift Midshipman Program (SSMP) available for SMA Cadets. 
The mission of the SSMP is to produce a cadre of Strategic Sealift 
Officers (SSOs) for the reserve component of the U.S. Navy. The 
Strategic Sealift Officer Reserve Groups is comprised of actively 
sailing officers in the U.S. Merchant Marine who are qualified to 
operate merchant ships as naval auxiliaries and provide officer crewing 
for ships in the Ready Reserve Force (RRF) and Military Sealift 
Command's (MSC) Surge Sealift Fleet.
    Currently, administration for SSMP is split between the U.S. Navy 
and MARAD. The Navy is responsible for the program administration, 
eligibility, and participation requirements under the NROTC program 
(which is directed by the Navy Education Training Command's Naval 
Service Training Command). MARAD is responsible for recruiting SMA 
Cadets into the program and administering the Student Incentive Program 
which provides a stipend. Unlike the tax-free Navy ROTC Scholarship 
program that awards academic scholarships that cover the full cost 
tuition, room, and uniforms, the MARAD SSMP stipend normally provides 
$8,000 per year (or a maximum $32,000 total) for eligible candidates. 
This stipend counts as income, is taxed, and counts against other 
scholarships and grants a student receives.
    Students who participate in this voluntary program and receive the 
stipend are commissioned as in the U.S. Navy reserve component as a 
Strategic Sealift Officer and are obligated to sail on their licenses 
for five years.
    To explore ways to incentivize more license cadets to participate 
in the SSMP, we recommend that Congress direct DOT and DOD to establish 
a working group that includes representation from the SMAs to conduct a 
full review of this program to include:
      Program objectives
      Program administration and funding
      Medical requirements for program participation
      Scholarship/stipend incentives
      Obligations upon graduation
      Assignment of a dedicated SSO at each SMA to support 
program objectives

Maritime Academy and Maritime Industry Jobs:
    Question 3: Can you describe the current ability of state maritime 
academies to attract diverse applicants who desire to enter the 
maritime industry?
    Answer. Like all educational institutions, the SMAs are seeking to 
become more diverse, which will inevitably transfer into a more diverse 
workforce. This will also expand opportunities to work in the maritime 
industry to a greater number of people and help fill the anticipated 
workforce gap.
    One way we are doing this is through outreach to maritime/marine K-
12 schools and technology schools in urban port areas. There are now 
over 45 maritime and marine science high schools across the country and 
each year more are opening. These students have already been exposed to 
the maritime environment: they are a natural source for maritime 
training schools, colleges, and industry apprenticeships. As such many 
of the SMAs have established pipelines and partnerships with these 
schools.
    These specialized schools alone will not solve the anticipated 
shortages within the maritime workforce. Toward this end, the SMAs have 
afterschool and summer STEM and leadership programs specifically aimed 
at exposing K-12 children in our local areas to opportunities at our 
institutions as well as the maritime industry. Funding for such 
programs comes from grants and industry partners. Many companies also 
have community outreach programs.
    While these programs are laudable, there needs to be a coordinated 
and concerted effort at the national level that brings government and 
industry together to educate students and teachers about the maritime 
industry and the opportunities it holds. We must work together to 
better educate all K-12 students about the ``ladders of opportunity'' 
within the maritime industry. While most Americans have almost daily 
contact with the trucking and airline industries and readily understand 
their importance, less noticeable is the maritime industry that tends 
to be ``out of sight and out of mind.'' As Congressman Elijah Cummings 
said at the ``Securing Maritime's 21st Century Workforce'' conference 
in the fall of 2015, ``If you never see anything, how can you dream 
about it? How can you reach for something that you don't even know is 
there?''
    Another valuable source of diverse, energetic and mature employees 
is veterans. We need to educate veterans about maritime workforce 
opportunities both at sea and ashore. We need to make it less onerous 
for veterans to translate their military experience toward training and 
assessment requirements to meet international Standards for Training, 
Certification, and Watchkeeping for Seafarers (STCW) requirements for a 
Coast Guard merchant mariner license. While some progress has been made 
in this regard, there needs to be greater urgency and cooperation to 
remove obstacles that hinder a smooth transition for veterans. We 
welcomed the President's recent Executive Order that directs the U.S. 
Coast Guard to do this.

    Question 4: Have you noticed any trends in the desire to get a 
merchant mariner's license or serve at sea?
    Answer. The SMAs continue to experience robust interest and 
enrollment in our license programs. Our graduates' education and 
training also make them sought out for shoreside maritime industry and 
engineering jobs. As far as the trends go, the Coast Guard could 
provide data on this if requested. We believe that with fewer U.S. flag 
vessels and advancement opportunities, and a stronger economy, more 
mariners may be electing to place their credentials into ``continuity'' 
rather than spend the time and money to obtain required STCW refresher 
or revalidation training.

    Question 5: What could be done to make careers in the U.S. maritime 
industry more appealing to your students or prospective mariners?
    Answer. As previously discussed, marketing, recruiting, and jobs/
opportunities. Interest tends to follow the demand signal. For example, 
when the Gulf of Mexico oil patch was booming, our graduates sailed on 
oil rigs and limited tonnage off-shore supply vessels. When the jobs 
disappeared, those mariners went back to deep water vessels. This 
resulted in fewer jobs for newly licensed officers being available. If 
we increase the size of the U.S. flag fleet, then this will create a 
demand for mariners, who will also be available in time of national 
emergencies to crew our NDRF/RRF ships when they activated. Bottom line 
an increased U.S. flag fleet will keep more mariners sailing on their 
licenses, and more U.S. shipyards economically competitive.
    As discussed previously, we must also enhance the current Strategic 
Sealift Midshipman program incentives to encourage more participation 
in the program, which requires cadets upon graduation to sail on their 
licenses.

State Maritime Academies' License Programs:
Question 6: In your statement, you state that the state maritime 
academies' license programs are limited by the capacity of the training 
ships, berths available to cadets on commercial ships, and shoreside 
training infrastructure.
    Can you provide us more detail on each of those limitations?
    Answer. Cadets must obtain 360 days of sea time. This is 
accomplished through a combination of time and experience in simulators 
and onboard academy small vessel, training ships and commercial 
vessels.
    The SMA training ships are essential in that cadet berthing onboard 
commercial ships is extremely limited. This limitation is due to:
      The shrinking U.S. deep-sea merchant fleet
      Limited number of berths on U.S. government and civilian 
owned/operated ships which were not built with excess berthing 
specifically for cadets
      Since the U.S. Merchant Marine Academy has no training 
ship, they rely exclusively on the U.S. fleet to provide their cadets 
the required sea time and training leaving only limited berthing for 
SMA Cadets.
    The primary means for cadets at State Maritime Academies to obtain 
the required sea time is onboard the federally owned and provided 
training ships. Each academy must limit participation in their 
respective programs based on the capacity of their training ship. For 
example, at Maritime College we limit our program to 1150 cadets as we 
try to limit summer sea term to 500 cadets even though our ship could 
accommodate 600 cadets. To provide maximum training opportunities, we 
essentially do two summer sea term cruises each summer with about 500 
cadets on each half.
    Additionally, the training vessel at Texas A&M Maritime Academy in 
Galveston (TAMMA), TS General Rudder, is insufficient to meet the at-
sea and alongside education and training needs of TAMMA's cadets. With 
capacity for only 50 cadets, TS General Rudder is also inadequate to 
meet national emergency or urgent humanitarian aid requirements in the 
Gulf Region. TAMMA must share a ship with another maritime academy and 
the Maritime Administration must activate training vessels from other 
academies to meet mission requirements in the Gulf. This impacts both 
Texas and the SMAs that are sharing the ship, since the ships are also 
utilized pier side at the academies to support labs and provide 
training throughout the year.
    The number and capacity of the SMA training ships also limit the 
number of license cadets we can accept in our programs. To provide 
cadets watchstanding experiences of sufficient quality and quantity to 
ensure that they have the requisite proficiency, we are forced to limit 
the number of cadets in our license programs. We are also limited by 
the number of cadets who can utilize our shoreside bridge and 
engineroom simulators which can only accommodate 4-6 cadets at a time 
and require a licensed instructor to operate the simulator and 
individually assess the cadets. To increase capacity, we would need to 
increase the number of simulators, operators and instructors. This 
would be expensive and require more direct support.
    The SMAs would also like the U.S. Coast Guard to count more 
simulator time toward the required sea time. Currently, the U.S. Coast 
Guard permits only 30 days of simulator time to count toward the 
required sea time. With additional simulators, and more simulator time 
counting toward the license, this would enable our cadets to experience 
a wider range of situations (such as weather, maritime traffic, and 
emergencies) that cannot be replicated at sea due to safety concerns.

    Question 7: What steps and what level of additional funding are 
necessary to remove those limitations?
    Answer. To provide sufficient capacity for training SMA Cadets it 
is imperative that the NSMV program is fully funded for the 
construction of five ships. This will provide adequate berthing for SMA 
Cadets and flexibility should an academy training ship be activated to 
support a national emergency or urgent humanitarian aid need.
    Additionally, full funding of other State Maritime Academy 
programs, including direct payments, student incentive payments, 
school-ship maintenance and repair and fuel assistance at 2019 levels 
is essential. The direct support funds enable the academies to offset 
the costs of expensive simulators and labs that support mariner 
training.

Marine Highway Corridors:
Question 8: In your written testimony, you said that Congress should 
consider ``[i]ncorporating marine highway corridors, connectors, and 
state freight systems ... to improve infrastructure and ... expand the 
use of waterways for freight and passengers ...''
    In your opinion, would there be a sufficient number of U.S. 
mariners to man the additional vessels required to support such a plan?
    Answer. The vessels supporting the marine highway would primarily 
require license mariners. The Coast Guard can provide data on the 
number of mariners with the proper credentials to support such a plan. 
However, an unknown will be whether or not these mariners are available 
and willing to work in this area.

    Question 9: How could the number of mariners be increased to match 
a surge in demand?
    Answer. Through marketing, recruitment and funding for training 
programs leading to required credential endorsements.

                  Questions from Hon. Rick Larsen for
               Rear Admiral Michael Alfultis, USMS, Ph.D.

Question 1: Northwest Washington is a leader in renewable energy and 
the state continues to invest in innovative and efficient technologies 
to reduce emissions, such as electrification of Washington's 
transportation system including the Guemes Island Ferry project in my 
district to construct the country's first all-electric passenger ferry.
    How do you anticipate vessel electrification will impact the U.S. 
shipbuilding industry?
    Answer. Most of the industry projections that we see predict that 
the number of hybrid and electric propulsion vessels will increase over 
time. Current technology, especially in the area of storage technology 
does not provide enough power in a small enough package to be useful 
beyond short coastal and inland routes. As all-electric and hybrid 
propulsion-powered ferry fleets are coming online, this will 
incentivize the market to push development of more powerful and 
affordable batteries. As the cost comes down, we believe this will 
provide incentives for owners to recapitalize their fleets, which will, 
in turn, benefit the U.S. shipbuilding industry, especially those 
involved in building ferries and workboats.
    This being said, the impact of the transition from combustion to 
electric drive system on the shipbuilding industry, can be positive 
economically, environmentally and strategically, because it will revive 
an important sector of US economy vital to both trade and national 
security.
    The economic activities resulting from electrification of the 
shipbuilding industry will reinvigorate the maritime industry as a 
result of the:
      Introduction of new technologies and modernization of 
functionalities of ships and infrastructures
      Creation of alternative means for ships maintenance and 
infrastructure
      Generation of new businesses
      Growth of clean energy produced by utilizing ocean 
energies, electronics and machine building sectors.
    Environmentally, the industry will play an important role in 
accelerating research for high energy density fuel storage, such as 
solid and liquid recyclable hydrogen storage and implementation of 
existing technologies, such as hydrogen and new high capacity batteries 
for both long and short distances, leading to simpler design and cost 
reduction in shipbuilding.
    Strategically, transitioning to hybrid/electric propulsion will put 
US shipbuilding on the world arena to compete, acquiring global 
recognition in offering efficient low emission and cost-effective 
vessels for short and long haul.

    Question 2: How can the federal government support states and 
localities seeking to electrify their maritime network?
    Answer. One approach may be expanding the current Better Utilizing 
Investments to LeverageDevelopment, or BUILD Transportation 
Discretionary Grant program to subsidize states and localities that 
want to electrify their maritime network. We recognize the needs across 
the transportation eco-system exceed the available funding through 
BUILD grants.

    Question 3: Are State Maritime Academy graduates prepared to work 
with these new technologies?
    Answer. A World Maritime University report on the maritime 
workforce opines that the process of electrification will be 
evolutionary and there will be a shift in workforce rather reduction in 
labor. The SMAs have the capacity and potential to deliver graduates 
for the successful implementation of new technologies in shipbuilding 
industry through changes in our current curricula. However, these 
changes must be well informed by U.S. Coast Guard requirements.
    Currently, our license cadets receive steam, diesel, and gas-
turbine endorsements on their Third Assistant Engineer, Any Horsepower, 
U.S. Coast Guard credential. There is currently no specific endorsement 
for electric or hybrid propulsion. The IMO and the U.S. Coast Guard 
have not yet established any specific requirements for licensed 
mariners serving on hybrid and electric propulsion vessels. We 
recommend the U.S. Coast Guard be directed to establish requirements 
for electric/hybrid propulsion.

   Questions from Hon. Sean Patrick Maloney for Jennifer A. Carpenter

Question 1: As you describe, implementing federal oil pollution 
standards has both encouraged stateside shipbuilding and reduced tank 
barge oil spills by 99.6 percent.
    How can pollution regulations simplify interstate commerce? Could 
you elaborate on the maritime industry response?
    Answer. Uniform, nationwide pollution prevention standards are the 
most effective way to support commerce, safety and environmental 
stewardship. A single vessel can pass through the waters of multiple 
states in a single voyage and complying with a myriad of state 
regulations leads to inefficiency, waste and confusion for vessel 
owners and mariners. Those compliance costs are ultimately borne by 
shippers and consumers, who may shift to less environmentally-efficient 
modes of transportation that are governed by national standards. 
Uniform national standards also encourage investment in advanced 
pollution prevention technology because they give vessel owners the 
certainty that such equipment can be utilized nationwide. This is 
crucial because such equipment--from ballast water treatment systems to 
double-hulled tank vessels--is very costly.
    The recently-enacted Vessel Incidental Discharge Act (VIDA) is an 
important step in the direction of uniform, nationwide regulations for 
the maritime industry that balance the needs of efficient commerce, 
safety and environmental stewardship. In addition to the pollution 
standards themselves, interstate commerce can be simplified by 
minimizing redundant reporting and enforcement regulations between and 
across states and the federal government. Efficiencies gained under a 
nationwide standard can easily be stymied if operators must continue to 
report to both state and federal regulators. One standard. One 
reporting process. One enforcement mechanism.
    The Oil Pollution Act of 1990 (OPA 90) brought about many changes 
that spurred both American shipbuilding and improved pollution 
prevention. OPA 90 compelled a 25-year phase-out of single-hull tankers 
and tank barges in favor of double-hull vessels. Importantly, Congress 
understood that retiring single-hulled vessels and replacing them with 
new double-hulled vessels was a multi-billion-dollar undertaking that 
needed to be carried out in a phased process over time. Instead of 
requiring that all single-hull vessels be immediately retired, and 
therefore causing a major disruption to shipping, OPA 90 required that 
new tankers and tank barges be doubled-hulled and provided for the 
orderly phaseout of existing single-hulled vessels over a 25-year 
period based on vessel age and size.
    In addition to complying with the requirements of OPA 90, the 
maritime industry has actively worked to implement additional measures 
to prevent oil spills. AWO's Responsible Carrier Program (RCP) requires 
vessel operators to implement a safety management system that seeks to 
achieve zero harm to human life, property and the environment. In a 
2012 report to Congress, the Coast Guard noted that ``[a]nother 
downward shift in spill volume occurred about 1997, which corresponds 
to the implementation of voluntary industry standards, known as the 
`Responsible Carrier Program'.'' Further, since ``most of the U.S. tank 
barge population belongs to member companies of AWO'' that must comply 
with the RCP, ``spill volumes reach new record low values'' that 
represent ``approximately one gallon spilled for every 71.4 million 
gallons transported.a remarkable improvement given that the amount of 
oil transported by barge has been relatively constant, at approximately 
69 billion gallons per year.''
    In sum, the dramatic reduction in oil spills is the result of both 
well-reasoned government regulation and industry commitment to a 
comprehensive oil spill prevention and response regime that recognizes 
the importance of continuous improvement and strong safety cultures.

    Question 2: How will the United States' growing LNG industry impact 
interstate commerce?
    Answer. The growth of LNG offers significant opportunities and 
challenges for the transportation of LNG and the use of LNG as a 
maritime fuel source. America's Jones Act carriers have the distinction 
of owning and operating the world's first LNG-powered containerships 
and the first combination container and roll-on/roll-off (ConRo) ships. 
While those ships currently operate on the Jacksonville-Puerto Rico 
trade lane, LNG-powered vessels that will serve the U.S. mainland-
Hawaii trade lane are under construction and there are plans underway 
to convert vessels on the Alaska trade lanes to LNG as well.
    As the market demand for LNG as a maritime fuel continues to 
increase, the chain of interstate commerce needed to transport LNG will 
also continue to grow. For example, to safely fuel LNG-powered ships in 
the Puerto Rico trade, the first U.S.-built LNG bunker barge was 
delivered for service last fall. Recognizing that LNG may increasingly 
be transported by barge, in 2016 the U.S. Coast Guard tasked its Towing 
Safety Advisory Committee (TSAC) with drafting recommendations and best 
practices for the towing of LNG barges. In March 2018, TSAC delivered 
its recommendations to the Coast Guard, and the towing vessel industry 
will continue to work with the Coast Guard to ensure the safe operation 
of LNG transportation as the market grows.

       Questions from Hon. Rick Larsen for Jennifer A. Carpenter

Question 1: Northwest Washington is a leader in renewable energy and 
the state continues to invest in innovative and efficient technologies 
to reduce emissions, such as electrification of Washington's 
transportation system including the Guemes Island Ferry project in my 
district to construct the country's first all-electric passenger ferry.
    How do you anticipate vessel electrification will impact the U.S. 
shipbuilding industry?
    Answer. The design, construction, and operation of electric and 
hybrid vessels is already impacting the U.S. shipbuilding industry in 
exciting ways. Naval architects and marine engineers are evaluating a 
number of different models and concepts to fully or partially electrify 
vessels, and new prototypes will inform future development. AWO 
anticipates continued growth in vessel electrification, particularly as 
cities and ports invest in shoreside infrastructure. However, towing 
vessel operators have specific needs around safety, power, and 
operational profile that are different from ferries or passenger 
vessels.
    The most important aspect of vessel electrification and driving a 
shift towards cleaner propulsion is shoreside infrastructure to support 
and maintain a fully-electric or hybrid fleet. Jurisdictions seeking to 
drive technological change must commit to investment in shoreside 
infrastructure and maintain that commitment throughout the development 
process to ensure that environmental benefits are fully realized. 
Jurisdictions that abandon or relax those commitments in mid-
development harm the business community and hamper the implementation 
of future beneficial initiatives.
    Another important element is the Jones Act. As the federal 
government, states and local jurisdictions implement emission reduction 
initiatives, it is vital that shipyards and vessel operators be able to 
rely on the certainty and stability of a national commitment to 
domestic vessel construction. Policymakers must ensure that domestic 
shipyards and vessel operators can meet aggressive timelines and 
achieve challenging goals. Without strong support for the Jones Act, 
pressures to develop environmental control technologies outside the 
U.S. could lead to less-sustainable and problematic foreign-sourcing 
that could undermine U.S. economic and security interests.
    With strong, vocal support for the Jones Act, however, vessel 
operators invest in their fleets and the entire shipbuilding supply 
chain becomes an engine of economic growth. As a concrete example of 
that impact, Nichols Brothers Boat Builders of Freeland, Washington, is 
currently constructing a hybrid electric tugboat for Baydelta Maritime, 
which provides ship assist and escort services in the San Francisco 
Bay. Not only is the hybrid tug being constructed in Washington, but it 
was also designed by Seattle-based Jensen Naval Architects & Marine 
Engineers. While this example is only a small piece of the shipbuilding 
industry, the U.S. Maritime Administration estimates that shipbuilding 
contributes $972 million annually to the Washington economy, including 
$634 million in worker income.
    Continue the market certainty supported by the Jones Act and vessel 
operators will invest in new technologies that are more efficient and 
economical, in tandem with the investments the federal government, 
states, localities and ports make in the infrastructure needed to 
support those technologies. In turn, those investments will drive 
growth in the shipbuilding market and positively impact the supply 
chain from raw materials and manufacturing to design and construction 
services.

    Question 2: How can the federal government support states and 
localities seeking to electrify their maritime network?
    Answer. Providing shoreside electrical infrastructure for vessels 
is a significant financial undertaking for ports. Much like the 
certainty of the Jones Act to vessel operators, ports need long-term 
certainty to make these infrastructure investments. Investment from the 
federal government is an important component in ensuring the financial 
viability of port electrification initiatives.
    In Seattle, for example, the Northwest Seaport Alliance is 
undertaking a $300 million modernization of Terminal 5 that includes 
installing electrical infrastructure to provide shore power to vessels. 
This project has taken several years, and numerous regulatory and 
permitting steps, to reach its current stage of soliciting construction 
bids. Additionally, long-term infrastructure investment is well 
underway at the Ports of Los Angeles and Long Beach in Southern 
California that would enable vessels to plug into a shoreside 
electrical grid at port to reduce dwell-time emissions. These 
initiatives have broad support across multiple levels of government and 
this alignment is crucial to realizing economic and environmental 
benefits.

   Questions from Hon. Sean Patrick Maloney for John E. Crowley, Jr.

    Question 1: How are current federal port security measures like 
TWIC achieving or failing to meet current security needs?
    Answer. TWIC provides a government validated process for vetting 
personnel seeking regular unaccompanied access to our nation's ports 
and related facilities. As terminal operators, we are unable to judge 
how effective the vetting is in either achieving or failing to meet 
security needs. While the TWIC is a government provided card, it is not 
being utilized as intended. The current TWIC program lacks the use of 
biometrics and updated readers that allow for the validation of 
individual identities along with their current access status and do not 
significantly aid in controlling access. TWIC and port security in 
general are federal responsibilities that require direct federal 
investment in programs and measures that are developed and implemented 
in open and honest partnership with private business interest. Federal 
agencies involved in port security need to be funded at a sufficient 
level of port security investment and they need to increase information 
sharing with industry partners to foster sustainable port security 
measures.

    Question 2: What advancements in port cyber security, like 
container scanning, require further research or investment?
    Answer. While container screening has aided in traditional port 
security measures such as drug interdiction, it has not revealed 
significant threats from terrorism and the lack of modernization 
continues to restrict port and terminal productivity. In terms of 
NAWE's members, there remains only limited cyber connections to port 
wide operations, which reduces overall risk. Risk is further reduced by 
operators that continue to invest and update their cyber security to 
address threats, but the threats from state actors and global criminal 
networks require appropriate government efforts. This includes federal 
agencies that focus on such threats, sharing complete and timely 
information on threats with industry.

    Question 3: Are there additional legislative actions that could be 
taken to improve maritime safety?
    Answer. NAWE members put safety as ``Job One.'' Federal studies 
should be pursued to evaluate the safety of container contents carried 
in global marine shipping and during terminal handling. Results should 
be shared with industry and cooperative actions to improve safety 
should be implemented.

    Question 4: What is your experience with Customs and Border Patrol 
agents? Are there a sufficient number of agents in ports to handle 
current and future capacity?
    Answer. We have no understanding of long-term Customs and Border 
Protection (CBP) staffing as we have been unable to ascertain the 
annual budgetary level of supported staffing at regional or port 
levels. Operators appear to obtain sufficient agent presence until CBP 
announces that it will begin to seek payments for certain services 
through the Reimbursable Services Program (RSP). The inconsistent 
application of the program across region and ports has further 
complicated our ability to understand how CBP seeks to meet current and 
future capacity needs. The use of agents at our facilities has not been 
modernized or made more efficient over time.

        Questions from Hon. Rick Larsen for John E. Crowley, Jr.

Question 1: Northwest Washington is a leader in renewable energy and 
the state continues to invest in innovative and efficient technologies 
to reduce emissions, such as electrification of Washington's 
transportation system including the Guemes Island Ferry project in my 
district to construct the country's first all-electric passenger ferry.
    How do you anticipate vessel electrification will impact the U.S. 
shipbuilding industry?
    Answer. NAWE does not have views as to the impact of 
electrification to shipbuilding.

    Question 2: How can the federal government support states and 
localities seeking to electrify their maritime network?
    Answer. NAWE is not aware of the direct impact of electrification 
on states and localities. However, we do know that federal, state and 
local requirements that seek to reduce a dependence on fossil fuels and 
associated emissions at port facilities, often result in operators 
being compelled to make investments that not only do not aid in 
productivity but restrict operator's ability to invest in systems that 
do. Like many businesses today, port operators are faced with urgent 
need to replace aging infrastructure and invest in infrastructure and 
technology that increases productivity. Port productivity is directly 
tied to our nation's economy and without this investment both will be 
negatively impacted. While NAWE supports efforts such as 
electrification of maritime networks, direct investment from federal, 
state and local government is needed to support them and balance 
overall investment in our nation's ports.

Question 3: Your testimony highlights the importance of ``port 
infrastructure investment to assure an efficient supply chain, 
specifically focused on increasing port productivity.'' In particular, 
you mentioned Congress' recent $900 million appropriation for the BUILD 
program. Mid-sized cities, including several in Washington's Second 
District, often have trouble competing for federal infrastructure 
funding.
    How can the federal government help to better ensure port 
infrastructure funding gets to small and mid-sized cities?
    Answer. Federal financial support for port infrastructure 
investment that prevents deterioration of, and allows for increased, 
productivity is an issue at ports across our country, regardless of 
size. The first step to better ensuring that port infrastructure 
funding gets to small and mid-sized cities is ensuring that adequate 
federal support is available for ports. While limited federal program 
funding in recent years has gone to select port projects, program 
limitations (authorization and funding levels) and competition from 
other modal project prevents most ports and operators from obtaining 
support. NAWE would recommend that Congress modify existing support 
programs to allow broader port infrastructure projects to compete for 
federal support. Additionally, NAWE would recommend Congress establish 
a program with designated funding that would include a fair 
distribution based on port size to support rebuilding and growing port 
infrastructure and assets required by facility operators.

    Questions from Hon. Sean Patrick Maloney for Michael G. Roberts

Question 1: The Jones Act ensures that cargo shipped between U.S. ports 
be carried on U.S. built vessels, owned by U.S. companies, and crewed 
by U.S. mariners.
    What would happen if efforts to repeal or make substantial 
exemptions to the Jones Act were successful?
    Answer. The Jones Act is the backbone of the domestic maritime 
industry and without it, vessels serving American home markets would 
not be built, crewed, or owned by Americans. Repealing the Jones Act 
and treating American home markets the same as international markets 
would result in most American commercial shipyards closing as orders 
are sent to government-subsidized yards in Asia and Europe. American 
commercial mariners would quickly be replaced by foreign mariners 
willing to work for a small fraction of American-scale wages. Control 
over the American maritime industry would be ceded to companies from 
countries that could well be our political rivals.
    Closing these yards and reflagging these vessels would eliminate 
hundreds of thousands of jobs for skilled American workers. These are 
precisely the kinds of family-wage jobs that should be supported, not 
exported. This is both for economic reasons and because keeping these 
jobs and this industry in American hands serves important national and 
homeland security interests. Simply put, our defense industrial base 
requires a critical mass of Americans who know how to build and operate 
ships. Without commercial demand, the pool of skilled shipyard workers 
and mariners would shrink, and critical skills could be lost forever. 
We would not have a maritime defense industrial base to scale up when 
needed. And our homeland security would be dramatically compromised by 
granting foreign mariners greatly expanded access to our ports and 
other critical infrastructure, including the tens of thousands of miles 
of coastline and inland waterways running through our nation's 
heartland.

    Question 2: Who would be responsible for the carriage of cargo on 
our coasts and inland rivers?
    Answer. As noted, without the Jones Act and if we treated American 
domestic commerce the same as international commerce, cargo moving 
along our coasts and inland rivers would be carried by foreign carriers 
using foreign vessels and foreign mariners.

         Questions from Hon. Rick Larsen for Michael G. Roberts

Question 1: Northwest Washington is a leader in renewable energy and 
the state continues to invest in innovative and efficient technologies 
to reduce emissions, such as electrification of Washington's 
transportation system including the Guemes Island Ferry project in my 
district to construct the country's first all-electric passenger ferry.
    How do you anticipate vessel electrification will impact the U.S. 
shipbuilding industry?
    Answer. As a preliminary comment, we note that in addition to the 
Guemes Island Ferry, Representative Larsen's district includes numerous 
routes serviced by Washington State Ferries--one of the largest 
passenger ferry systems in the world and also an excellent opportunity 
to have Washington State lead the nation in capitalizing on high-impact 
vessel electrification opportunities. Further enhancing the opportunity 
for the Pacific Northwest to effectively lead vessel electrification, 
is the region's access to cost-effective renewable power sources, a 
crucial aspect to jump-starting vessel electrification as a viable 
alternative to conventional power.
    In terms of impact on the Shipbuilding industry, significant 
investment in new vessels, vessel upgrades, and supporting 
infrastructure will be required. Vessel electrification, in particular 
electrification of primary propulsion systems, requires investment in 
new vessels or in significant upgrades to existing vessels. Electrified 
vessels currently represent a higher capital expense than conventional 
(primarily diesel engine-powered) vessels. While there is potential for 
lower operating costs of an electrified vessel to offset the higher 
capital expense, there are several issues that make this a difficult 
investment:
      Lower cost, conventionally-powered vessels are able to 
comply with current emission regulations;
      Shore-side electrical infrastructure can't deliver the 
high power needed for efficient operation of electrified vessels; and
      Technology and workforce required to support vessel 
electrification is not widely available and requires development 
investment.

    Question 2: How can the federal government support states and 
localities seeking to electrify their maritime network?
    Answer. Support financing to offset capital expenditures required 
for vessel electrification--Significant federal support by Northern 
European countries has provided industry-leading electrified vessels as 
well as state-of-the-art technologies. Similar support for R&D 
expenditures in the U.S. could advance projects where there is a high 
likelihood of demonstrable improvements in efficiency and emissions, as 
well as the opportunity to advance U.S.-based engineering, technology, 
and manufacturing.
    Support marine electrical workforce development programs--Shipping 
industries will need to develop a highly-skilled workforce with 
requisite marine electrical capability to support vessel 
electrification. The industry will need to build new capabilities in 
development, engineering, installation, operation, and maintenance of 
electrified vessels and vessel systems. There are currently very few 
educational programs focused on the marine electrical systems needed to 
develop this workforce. Support is needed for college and university 
programs, in marine electrical trade/apprentice programs for shipyard 
workers, and in maritime education programs for vessel officers and 
crews.
    Provide consistent, well-enforced maritime emission regulations--
Vessel electrification is currently driven almost exclusively by 
emission regulation compliance. Investment in a regulatory-driven 
environment demands predictable regulation, including firm phase-in 
schedules and consistent enforcement of compliance. With predictable, 
enforced regulation, investment in electrification will be able to 
advance technologies, grow market share, and drive down implementation 
costs so that electrified vessels can compete with conventionally 
powered vessels.
    Enhance shore-side power grid connectivity--Providing required 
electrical infrastructure to connect the region's renewable power to 
maritime consumers is prohibitively expensive and creates a real 
barrier to development of otherwise prime applications for electrified 
vessels. Federal funding for high capacity electrical grid-connections 
at docks, piers, and other vessel access points to augment state and 
local funding will be crucial to moving vessel electrification 
technology forward.

      Questions from Hon. Sean Patrick Maloney for Augustin Tellez

Question 1: The Department of Defense relies on the U.S. Merchant 
Marine to deliver personnel and material to forward operating bases 
around the world. It is commonly recognized that there is a shortage of 
1,800 mariners needed to sustain our presence overseas.
    a. How did the industry and the Maritime Administration arrive at 
that number?
    Answer. The shortage number is designed to highlight a worst-case 
scenario where the entire Maritime Security Fleet is activated, both 
the Military Sealift Command and Ready Reserve Fleets are activated, 
and all of the existing commercial obligations of the international 
sailing U.S.-Flag fleet are still being met. This provides us with a 
base number of billets that must be filled. This number is then doubled 
to provide a 2-1 mariner to billet ratio.Generally speaking, one job or 
billet can provide sufficient work for two merchant mariners.
    MARAD and the industry track mariner sea-time for a variety of 
purposes, and MARAD considers any mariner who has active sea-time on 
their record in the past 18 months as being ``available'' and qualified 
for service. The available and qualified service number subtracted from 
the two-to-one ratio is what gives us the 1,800 number.
    It's important to note that the 1,800 number also assumes that 
every mariner that MARAD believes is available and qualified for 
service is actually available, willing and qualified to serve.

    b. What had led to the shortage?
    Answer. There are two major issues that are contributing to the 
shortage. First, the average age of merchant mariners is steadily 
increasing, which means that more and more mariners are close to or are 
hitting retirement age and there are too few new recruits to replace 
those retiring mariners. Second--which contributes heavily to the 
first--the number of jobs available in the industry has been dropping 
as the size of the U.S.-Flag international fleet has been dropping. The 
loss of those ships and jobs has a variety of causes, including--as 
noted in my testimony--changes in the cargo preference laws that have 
been responsible for the loss of over a quarter of the fleet since 
2013.
    The solution to the crew shortage is more cargo, more ships and 
more jobs.

    c. Can you please explain why our shortage would significantly 
impact sealift capabilities?
    Answer. First, while we are confident that we have sufficient 
capacity for initial surge requirements in the event of a future 
conflict, the shortage will have a significant impact on sustainment 
operations, especially once we hit the six-month mark. Crews need rest 
and relief in order to operate at peak efficiency and safety. It is 
also important to note that these numbers do not consider potential 
casualties in future conflicts where our opponents have a maritime 
presence and attempt to disrupt our sea lines of communication. As we 
have seen in past conflicts, especially during World War II, 
significant losses of personnel at sea will have an impact on our 
capabilities and the shortage will only exacerbate that impact.

    Question 2: What are the most common roadblocks that impede the 
ability of prospective U.S. mariners from earning their credentials?
    Answer. Obtaining adequate sea-time to qualify for a credential, 
the cost of those credentials, the need to travel to a regional exam 
center and the limited number of those facilities are some of the most 
common obstacles.
    In addition to those above, U.S. Coast Guard medical requirements 
are also more stringent than Military Sealift Command and the 
equivalent international standards.
    Finally, the increase in the number of special mission vessels has 
generated a significant need for mariners with security clearances. 
Given the backlogs within the existing security clearance system, this 
has created another substantial obstacle for mariners.

    Question 3: What benefit could a robust marine highway system 
provide for the U.S. maritime industry? What would increased coastwise 
shipping mean for the manpower shortage? What are the necessary next 
steps to fully integrate marine highways into our transportation 
system?
    Answer. Having a robust marine highway system would provide a 
significant number of jobs for merchant mariners and their reliefs, 
allowing them to keep their skills and credentials current. Most, but 
not all, coastwise maritime jobs have similar skills to those required 
in deep sea shipping and those skills would be transferable. A new 
market for the industry to expand into would also provide new economic 
opportunities for operators, faster and more fuel-efficient options for 
shippers, reduced pollution, and increased efficiency throughout the 
intermodal transportation system.
    The two biggest issues in getting short-sea-shipping off the ground 
are the initial investment costs and securing access to cargo. In order 
for a route to be successful there needs to be sufficient cargo to 
justify placing a ship in service. If that exists, then the next 
biggest issue is the investment capital needed to get some of these 
programs off the ground. In order to qualify for a coastwise 
endorsement under the Jones Act, ships entering the trade must be built 
in the United States, and obtaining enough capital to build a ship, 
create routes and enter into agreements has been a major barrier for 
startup companies to break into the coastwise trade. There also need to 
be adequate port facilities, including connections between the ports 
and inland destinations equipped to handle coastwise trading.

          Questions from Hon. Rick Larsen for Augustin Tellez

    Question 1: Can you describe some of the impacts you have seen from 
the focus on Military-to-Mariner transition program in recent years?
    Answer. We have seen a marked increase in the number of veterans 
entering our training programs and joining the industry compared to 
prior to the focus. Nonetheless, we had to overcome a significant 
number of obstacles, including issues with U.S. Coast Guard equivalency 
being granted for military sea-time, and the inability of veterans to 
use GI Bill and other veteran benefits to transition into industry 
training programs.
    With the President's recent Executive Order, coupled with 
Congress's efforts to address these issues and promote the program, we 
are confident that we'll see another uptick in veteran recruitment.

Questions 2 and 3: Northwest Washington is a leader in renewable energy 
and the state continues to invest in innovative and efficient 
technologies to reduce emissions, such as electrification of 
Washington's transportation system including the Guemes Island Ferry 
project in my district to construct the country's first all-electric 
passenger ferry.
    How do you anticipate vessel electrification will impact the U.S. 
shipbuilding industry?
    How can the federal government support states and localities 
seeking to electrify their maritime network?
    Answer. As with any maritime technological advancement, whether 
it's in navigation, propulsion, fuels or equipment, we believe these 
changes will require a vigorous training and retraining program for our 
mariners. We do our best to ensure that our mariners have all the 
skills they will need to meet the requirements of any new maritime 
technology and electrification is no different. We've done this many 
times before and we expect to continue doing it as we watch new 
technologies emerge and evolve.
    As demand increases for green transportation systems, it is likely 
that more shipyards will begin to specialize in this kind of 
construction, as we have seen in the recent increase in the number of 
LNG powered vessels being built in American yards for the Jones Act 
trade. Our goal will be to ensure that, as with LNG, our mariners 
remain on the cutting edge of maritime technology.
    Continued support for the Maritime Administration's small shipyard 
grant program, as well as the Title XI shipbuilding loan guaranty 
program can help to ensure that shipyards and ship operators have 
access to capital to invest in this new work. Federal support, either 
in the form of direct grants or tax incentives, for state and local 
port agencies to provide the infrastructure necessary for vessel 
electrification programs can also have an impact here.