[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\
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\1\ Maritime Administrator Mark H. Buzby Testimony before the House
Committee on Armed Services on March 8, 2018.
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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.
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\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.
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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.
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\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.
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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\
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\9\ Figure 5, The Economic Importance of the U.S. Shipbuilding and
Repairing Industry, Maritime Administration, November 2015.
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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.
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\10\ August 1, 2011 Proposed Rule (RIN 1625-AA16) outlines the
changes to U.S. regulations proposed by the Coast Guard.
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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.
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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.
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\2\ 46 U.S.C. Sec. 501.
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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.