[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

REVIEW OF THE ADMINISTRATION'S
FISCAL YEAR 2012 BUDGET REQUESTS
FOR THE U.S. COAST GUARD,
FEDERAL MARITIME COMMISSION, AND
FEDERAL MARITIME ADMINISTRATION;
FINDING WAYS TO DO MORE WITH LESS

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

(112-11)

HEARING

BEFORE THE

SUBCOMMITTEE ON
COAST GUARD AND MARITIME TRANSPORTATION

OF THE

COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

__________

MARCH 1, 2011

__________

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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

JOHN L. MICA, Florida, Chairman

DON YOUNG, Alaska NICK J. RAHALL II, West Virginia
THOMAS E. PETRI, Wisconsin PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina JERRY F. COSTELLO, Illinois
JOHN J. DUNCAN, Jr., Tennessee ELEANOR HOLMES NORTON, District of
FRANK A. LoBIONDO, New Jersey Columbia
GARY G. MILLER, California JERROLD NADLER, New York
TIMOTHY V. JOHNSON, Illinois CORRINE BROWN, Florida
SAM GRAVES, Missouri BOB FILNER, California
BILL SHUSTER, Pennsylvania EDDIE BERNICE JOHNSON, Texas
SHELLEY MOORE CAPITO, West Virginia ELIJAH E. CUMMINGS, Maryland
JEAN SCHMIDT, Ohio LEONARD L. BOSWELL, Iowa
CANDICE S. MILLER, Michigan TIM HOLDEN, Pennsylvania
DUNCAN HUNTER, California RICK LARSEN, Washington
TOM REED, New York MICHAEL E. CAPUANO, Massachusetts
ANDY HARRIS, Maryland TIMOTHY H. BISHOP, New York
ERIC A. ``RICK'' CRAWFORD, Arkansas MICHAEL H. MICHAUD, Maine
JAIME HERRERA BEUTLER, Washington RUSS CARNAHAN, Missouri
FRANK C. GUINTA, New Hampshire GRACE F. NAPOLITANO, California
RANDY HULTGREN, Illinois DANIEL LIPINSKI, Illinois
LOU BARLETTA, Pennsylvania MAZIE K. HIRONO, Hawaii
CHIP CRAVAACK, Minnesota JASON ALTMIRE, Pennsylvania
BLAKE FARENTHOLD, Texas TIMOTHY J. WALZ, Minnesota
LARRY BUCSHON, Indiana HEATH SHULER, North Carolina
BILLY LONG, Missouri STEVE COHEN, Tennessee
BOBB GIBBS, Ohio LAURA RICHARDSON, California
PATRICK MEEHAN, Pennsylvania ALBIO SIRES, New Jersey
RICHARD L. HANNA, New York DONNA F. EDWARDS, Maryland
STEPHEN LEE FINCHER, Tennessee
JEFFREY M. LANDRY, Louisiana
STEVE SOUTHERLAND II, Florida
JEFF DENHAM, California
JAMES LANKFORD, Oklahoma

(ii)

Subcommittee on Coast Guard and Maritime Transportation

FRANK A. LoBIONDO, New Jersey, Chairman

DON YOUNG, Alaska RICK LARSEN, Washington
HOWARD COBLE, North Carolina ELIJAH E. CUMMINGS, Maryland
ANDY HARRIS, Maryland CORRINE BROWN, Florida
FRANK C. GUINTA, New Hampshire TIMOTHY H. BISHOP, New York
CHIP CRAVAACK, Minnesota MAZIE K. HIRONO, Hawaii
BLAKE FARENTHOLD, Texas MICHAEL H. MICHAUD, Maine
JEFFREY M. LANDRY, Louisiana, NICK J. RAHALL II, West Virginia
Vice Chair (Ex Officio)
JOHN L. MICA, Florida (Ex Officio)

(iii)

CONTENTS

Page

Summary of Subject Matter........................................ vi

TESTIMONY

Leavitt, Master Chief Michael P., Master Chief Petty Officer,
United States Coast Guard...................................... 5
Lidinsky, Jr., Hon. Richard A., Chairman, Federal Maritime
Commission..................................................... 5
Matsuda, Hon. David T., Administrator, Maritime Administration... 5
Papp, Jr., Admiral Robert J., Commandant, United States Coast
Guard.......................................................... 5

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Landry, Hon. Jeffrey M., of Louisiana............................ 40
LoBiondo, Hon. Frank A., of New Jersey........................... 41

PREPARED STATEMENTS SUBMITTED BY WITNESSES

Lidinsky, Jr., Hon. Richard A.................................... 43
Matsuda, Hon. David T............................................ 54
Papp, Jr., Admiral Robert J...................................... 63

SUBMISSIONS FOR THE RECORD

Leavitt, Master Chief Michael P., Master Chief Petty Officer,
United States Coast Guard:
Correction to his answer to Hon. LoBiondo's housing trust fund
question..................................................... 28
Suggestions for improving the housing situation................ 29
Papp, Jr., Admiral Robert J., Commandant, United States Coast
Guard:
Funding for the sixth National Security Cutter................. 27
Correction to his answer to Hon. Coble's question regarding the
decommissioning of Polar Sea................................. 32
The U.S. Coast Guard's enforcement policy regarding the
Transportation Worker Identification Credential (TWIC)....... 37

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REVIEW OF THE ADMINISTRATION'S
FISCAL YEAR 2012 BUDGET REQUESTS
FOR THE U.S. COAST GUARD, FEDERAL
MARITIME COMMISSION, AND FEDERAL
MARITIME ADMINISTRATION; FINDING
WAYS TO DO MORE WITH LESS

----------

Tuesday, March 1, 2011

House of Representatives,
Subcommittee on Coast Guard and Maritime
Transportation,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:00 a.m. in
room 2167, Rayburn House Office Building, Hon. Frank A.
LoBiondo, [chairman of the Subcommittee on Coast Guard and
Maritime Transportation] presiding.
Mr. LoBiondo. Good morning. The committee will come to
order. The Subcommittee on Coast Guard and Maritime
Transportation is meeting today to hear testimony on the
President's fiscal year 2012 budget request from the leaders of
the three Federal agencies which promote, protect, and regulate
vessels and mariners in U.S. waters and international trade.
As my colleagues know, our nation is facing a tremendous
budget crisis. Years of overspending have driven our national
debt and deficit to record levels. This congress must make
extremely difficult decisions in the coming months to bring our
spending under control and cut the deficit.
The effort continues today with the presentation of the
fiscal year 2012 budget request. The President's request, $9.85
billion for the Coast Guard in fiscal year 2012, an increase of
1.8 percent over the current level.
The members of this subcommittee are keenly aware that
resources have not kept pace with the service's rapidly
expanding mission portfolio in recent years. That is why I
commend Admiral Papp for publicly saying the service must
closely evaluate whether they continue to take on new missions
in the current fiscal environment.
I also commend the service for uncovering some savings
through efficiencies in operations and the consolidation of
services. I am interested in knowing if more operational
savings can be found that will not adversely impact safety,
security, and mission success.
I also have some concerns with the Coast Guard's budget
request. First, the service continues to push off investments
and the acquisition of assets. The five-year capital
improvement plan proposes a fantastic 66 percent increase in
funding over the next 3 fiscal years. The service needs to stop
burying its head in the sand, and propose a fiscally-
sustainable long-term capital acquisition plan.
I would point out that we should have had at least a
partial solution to this years ago. But the service and the
Department continued to refuse to provide this subcommittee
with the fleet mix analysis. I remind the service that the
subcommittee requested this analysis over 13 months ago. I urge
the service in the strongest possible terms to satisfy our
request for this document in very short and rapid order.
Second, the service continues to lack the polar missions
plan long sought by Congress. To add insult to injury, the
service intends to spend millions of unbudgeted dollars to
refurbish the Polar Sea's engine, and then decommission the ice
breaker. I don't quite understand this, but maybe you can help
us. A classic example of throwing good money after bad.
The budget request for the maritime administration
represents a 1.4 percent reduction below the current level.
Most of the cuts come from zeroing out funding for the grants
and other programs, which are meant to revitalize the maritime
sector and protect U.S. mariner jobs. At the same time, the
budget proposes to increase funding for operations and
administration at the Agency.
While I appreciate the difficult choices the administrator
made in developing this budget, I am concerned these programs
are being cut while operating expenses continue to grow.
I am also concerned with the tremendous amount of time it
takes the Administration to process applications for title XI
loans. This is even more concerning, given the fact the budget
proposes to rescind $54 million in unobligated title XI loans--
guarantees, when they have nearly $100 million worth of
applications still to process. If all the applications were
approved, it would provide $1.5 billion to U.S. shipyards and
create thousands of new jobs at a time when our nation
desperately needs to create jobs.
Finally, the budget request for the Federal Maritime
Commission proposes a three percent increase over the current
levels. Although a three percent increase in the FMC budget
amounts to less than $1 million, I really think it sends a
wrong signal in the current fiscal environment, where many
agencies are not receiving any increase, and some actually a
reduction. The Commission needs to take a much closer look at
their operations and try to develop savings through
consolidation of services and more efficient operations.
With that, I would like to yield to ranking member,
Congressman Larsen, for your statement.
Mr. Larsen. Thank you, Mr. Chairman. Mr. Chairman, I want
to thank you for conducting today's subcommittee hearing, and I
welcome the opportunity to discuss the President's fiscal year
2012 budget proposals for the U.S. Coast Guard, the Federal
Maritime Administration, and the Federal Maritime Commission.
Maritime transportation remains a critical component of our
national economy, contributing over $10 billion annually, and
generating nearly 270,000 jobs. So today's message is clear,
that we must continue to invest wisely to facilitate, protect,
and regulate maritime commerce, if we want to see the U.S.
economy expand and flourish.
Mr. Chairman, I have a great deal of interest in how
Congress spends our taxpayers' money and saves taxpayers'
money. There may be a practical reality that forces hard-
working public servants to do more with less. However, today's
testimony shows plainly that more will not get done with less.
Rather, less will get done with less. Regrettably, too much
emphasis is currently being placed on how much can we cut,
rather than a more appropriate question, which is how can we
best direct Federal resources to generate economic growth and
spur job creation.
It's our responsibility to ensure that these maritime
agencies which oversee fair and competitive shipping practices,
that respond to disastrous oil spills, or assist vessels in
distress, or that retain a secure fleet of ships to support
overseas deployment of our armed services have the necessary
resources to fulfill their respective missions.
Now, supporters and critics of the Coast Guard contend that
its budget is insufficient for the demands placed on the
service's nearly 50,000 military and civilian full-time
employees. Commander Papp acknowledged in a recent 2011 state
of the Coast Guard address, ``The Coast Guard does not have the
resources to perform at 100 percent in every one of its
missions on every given day.'' He went on to say that more with
less is not an acceptable option. ``Without continued
recapitalization, we will not be semper paratus.''
I am not convinced that the budget request for the Coast
Guard before us today is adequate to meet the demands that we
have placed upon the service. I am interested in hearing how my
colleagues expect the service to do more with less, and what
trade-offs they will find acceptable.
Now, the Maritime Administration is in a similar situation.
MARAD has two critical investment programs that support our
domestic shipbuilding industry, and they are both targeted for
reduction.
First, title XI, guaranteed loan program, provides
federally-guaranteed loans for purchasers of U.S. flagships
built or reconstructed by a U.S. shipbuilding industry, and for
the modernization of U.S. shipyards. Vessels constructed under
title XI contribute to the ability of the United States to
carry its foreign and domestic water-borne commerce, to help
sustain efficient shipbuilding facilities, and to help preserve
a skilled shipbuilding workforce.
No new funds for loan guarantees are requested for fiscal
year 2012. Of the unrequested amounts made available in 2009
and 2010, $54.1 million is proposed for cancellation. These
proposals effectively kill these investments that generate
good-paying jobs here in the U.S.
And second, the budget requests no additional funds for
assistance to small shipyards program. Similar to title XI,
these funds invest in American port infrastructure, create
American jobs, and help domestic shipyards such as Nichols
Brothers Boat Builders, located in Freeland, Washington,
helping them make the necessary capital investments to remain
competitive and generate new business.
Mr. Chairman, these cuts will not result in more with less,
but less with less. I know there is a strong desire to cut
Federal spending. I, myself, have voted for cuts in the last CR
debate. And I agree that we must bring discipline to the
nation's fiscal house, but I urge that we temper that effort
with reason and sound judgement.
Now, despite these tight budgets called for in fiscal year
2012, I am pleased that the Administration has proposed a
modest increase for the Federal Maritime Commission. In light
of the important role the Commission has in monitoring world
shipping practices, especially the growing trans-Pacific trade,
I will want to hear from Chairman Lidinsky on how the
Commission intends to use new funding to support U.S. exports,
ensure fair competition, and protect American consumers.
In closing, Mr. Chairman, the congress has recognized that,
since the founding of our republic, that our nation's economic
prosperity is interwoven with maritime commerce. The maritime
agencies before us today carry on that legacy of Federal
support for our domestic maritime industry and the oversight of
maritime commerce that produces, annually, billions of dollars
in economic activity, and thousands of jobs.
America does not want less with less. What America wants is
an efficient and effective Federal Government. When it comes to
maritime commerce, that should be an objective on which we can
all agree. Thank you, Mr. Chairman.
Mr. LoBiondo. Do any Members wish to make opening
statements? Mr. Coble?
Mr. Coble. I will be very brief, Mr. Chairman. I commend
you and the ranking member for having put together a very
outstanding panel. We keep hearing about more with less,
Admiral and Master Chief. The Coast Guard has been doing more
with less since 1790. They wrote the book on it. I don't mean
that you and the commandant have been around that long, Master
Chief, but I feel like I have.
But I was taken by a comment by the chairman--and maybe the
ranking member touched on it--regarding the Polar Sea. Much
monies are being expended to make certain repairs. And then,
I'm told, she's going to be dispatched to the boat yard. Now,
that hardly sounds prudent. So I hope we hear more about that.
But thanks to all of you for being here. Mr. Chairman, good
to see you again. Thank you, Mr. Chairman. I yield back.
Mr. LoBiondo. Congresswoman Hirono?
Ms. Hirono. Thank you, Mr. Chairman. Mr. Chairman and Vice-
Chair Landry, and Ranking Member Larsen, it is a pleasure to
join this subcommittee as a member. And, having reviewed the
testimony for today's hearing, I would like to associate myself
with the remarks of Ranking Member Larsen.
Having said that, I want to thank all of our witnesses for
being here today. As you probably know, the maritime industry
and security are very important to my home state of Hawaii. And
there aren't any roads between our islands; the only options we
have for moving goods and people from the mainland and between
islands are either by boat or by air. In fact, we have to
import 80 percent of our food and merchandise. And, of that 80
percent, over 98 percent of those imported goods come by ship.
So, shipping and maritime safety and security are of vital
importance to the economy and livelihood of Hawaii's people.
As Commandant Papp knows, ensuring the safety and security
of the maritime public is a full-time challenge. I commend the
work that the approximately 1,500 Coast Guard personnel in
Hawaii's 14th district does on so many fronts to make sure that
the people of the 14th district is protected. And you do have
14.2 million square miles that make up this district, which
includes Papahanaumokuakea, the northwestern Hawaiian Islands
monument, the biggest monument in the country. So, you have a
tremendous task, not just protecting the people and commerce,
but also protecting 140,000 square miles, as I mentioned, of
the monument.
As this committee knows, ensuring that our nation's ports
and harbors can handle the 21st century commerce is also of
vital importance to our future economic growth. And I
appreciate the work of the Maritime Administration and Maritime
Commission to help ensure that we are always expanding
commerce.
And the harbor improvements that the Maritime
Administration and Hawaii's Harbors Division have partnered on
in the past, and most recently, the Honolulu Harbor Pier 29
project, which received a $24.5 million Tiger Grant are
critical to Hawaii's economic future.
So, I look forward to hearing from you, and working with
you. Thank you.
Mr. LoBiondo. Thank you. We are going to turn to our panel.
And our panel today includes Admiral Robert Papp, Commandant of
the Coast Guard; Master Chief Michael Leavitt, the master chief
petty officer of the Coast Guard; Richard Lidinsky, the
chairman of the Federal Maritime Commission; and David Matsuda,
administrator of the Maritime Administration.
Thank you all for being here. Admiral Papp, the floor is
yours.

TESTIMONY OF ADMIRAL ROBERT J. PAPP, JR., COMMANDANT OF THE
COAST GUARD; MASTER CHIEF MICHAEL P. LEAVITT, MASTER CHIEF
PETTY OFFICER OF THE COAST GUARD; RICHARD A. LIDINSKY, JR.,
CHAIRMAN OF THE FEDERAL MARITIME COMMISSION; AND DAVID T.
MATSUDA, ADMINISTRATOR OF THE MARITIME ADMINISTRATION

Admiral Papp. Good morning, Chairman LoBiondo, Ranking
Member Larsen, and distinguished members of the subcommittee. I
am privileged to appear before the subcommittee today for the
first time as commandant to discuss the Coast Guard's fiscal
year 2012 budget request, and also to proudly represent the men
and women of the United States Coast Guard.
I am particularly pleased to be accompanied by Master Chief
Petty Officer of the Coast Guard Michael Leavitt, as well as
our partners from the Maritime Administration and the Federal
Maritime Commission. My full written statement has been
submitted for the record, and I would like to offer this brief
oral statement.
I would like to start off by thanking the subcommittee for
the Coast Guard Authorization Act of 2010. We are using this
authority to move forward with our internal reorganization, and
increase support to our operational forces, and we will
continue to use it to enhance our marine safety program and
conduct acquisition reform. And we will use it to address an
important issue for our families: housing. And I want thank you
for that.
I am pleased to be speaking before the subcommittee on the
date of the eighth anniversary of the Department of Homeland
Security. The Coast Guard is honored to be anchored in DHS,
where we proudly serve as its maritime arm. While anchored in
DHS, we enhance our value to the country by maintaining bridges
to the Department of Transportation, the Department of Defense,
the Department Justice, the Department Interior, the
Environmental Protection Agency, and many other interagency
partners.
Now, as a ship captain having served 14 years of my 35
years of service at sea, I readily admit to viewing the world
through the lens of a sailor. Nine months ago, when I took
command of the Coast Guard, my first reaction was that of a
navigator: to take a fix, ascertain our position, and set a
course for the future. And that's what I did. My four guiding
principles--steady the service, honor our profession,
strengthen our partnerships, and respect our shipmates--set the
future course for our service.
I would like to start off--two weeks ago I gave a situation
report to the service in my State of the Coast Guard address,
and further refined the goals with the release of my
Commandants Direction 2011. As part of the release of the
President's fiscal year 2012 budget, I also released our
posture statement, which sets forth our budget objectives, all
of which link back to my guiding principles.
My priorities are: to sustain front-line operations, to
rebuild the Coast Guard, to enhance maritime incident
prevention and response, and to support Coast Guard families.
This fiscal year 2012 budget is the first waypoint on the
course to those priorities.
Now, as a ship's captain, first and foremost, the duty is
to assure the safety of the ship and the crew. This traditional
responsibility often requires making tough choices. Working in
the maritime environment is inherently dangerous, and captains
must continuously balance mission accomplishment against risk
to the ship and the crew. Today's challenging fiscal climate is
no different. We must make tough choices to preserve our ship
of the service. Working closely with and receiving strong
support from the Secretary Napolitano and the Department, I
have made the tough choices.
In his State of the Union speech, the President asked us
all to tighten our belts. While we tighten our belts, I will
not lose sight of our utmost priority, which is serving the
American people. The safety and security of our nation's
waterways impacts the lives of every American.
The challenge we face, though, is that the rising costs of
running aging cutters, boats, aircraft, and shore facilities
quickly consume any positive increment in our budget. In an
effort to avoid any reduction in those front-line operations I
talked about, we have carved out over $140 million by directing
management efficiencies and making targeted reductions in
administrative costs and professional services. We will invest
those savings in front-line operations. These were tough
choices, but, I think, the right ones.
As an operator, I can tell you that our readiness is
dependent upon simultaneously sustaining front-line operations
while recapitalizing assets. There needs to be a balance.
Unless we continue to recapitalize our ships, planes, and
boats, and improve our shore, stations will not be able to
maintain an acceptable level of readiness to perform our
missions. We won't be ready to respond quickly and effectively
to contingency operations, like we did in Haiti and Deep Water
Horizon.
We are requesting $1.4 billion in our acquisition request,
and that goes to fully fund national security covenant number
5, produces 6 new patrol boats, funding for 2 maritime patrol
aircraft, funds 40 new response boat mediums, and sustains
acquisition work in the design of our offshore patrol cutter,
which will be the replacement for our medium endurance cutter,
and funding to support critical shore recapitalization needs.
We want to continue to enhance our maritime incident
prevention and response, and this budget allows us to do that,
which--it provides $10.7 million to hire additional marine
safety inspections, investigators, and fishing vessel
examiners, and it allows us to establish an incident management
assist team, which will give us added capacity for
contingencies in the future.
And then, support for our military families. You can't have
a strong military workforce without a healthy military family.
So, Master Chief Leavitt will discuss some of the military
family initiatives in the fiscal year 2012 budget supports upon
the conclusion of my remarks.
So, in conclusion, the Coast Guard, as the maritime
component of the Department of Homeland Security, is committed
to working hand in hand with our many partners to assure the
safety and security of American citizens and our ports and
waterways. For over 220 years we have been protecting those on
the sea, protecting America from threats delivered by the sea,
and protecting the sea itself. This is our chosen profession,
this is our way, and this is what we do. I thank you for the
opportunity to testify today, and I look forward to your
questions.
Mr. LoBiondo. Thank you, Admiral Papp.
Master Chief?
Master Chief Leavitt. Good morning, Mr. Chairman and
distinguished members of the subcommittee. It is a privilege to
appear before you here today. This is actually the first time I
have ever testified before Congress, so it is truly an honor.
Also, it's an honor and privilege to represent more than 39,000
Coast Guard enlisted personnel.
In the past nine months, I have had the opportunity to
travel around the country and listen to the many challenges
facing our hard-working men and women and their families. One
of the most formal challenges is obtaining affordable and
adequate housing and child care. For example, one instance is
particularly telling: 14 percent of the DoD personnel have
their children enrolled in subsidized military child care
facilities, yet only 5 percent of Coast Guard personnel do.
In order to meet our mission requirements, Coast Guard
personnel are assigned throughout the United States and
overseas. In some cases, our personnel are fortunate enough to
be stationed on or near DoD or large Coast Guard facilities. In
these locations, our personnel have better access to reasonable
housing, affordable child care, and military treatment
facilities, or civilian providers that really accept the
military's health care program.
But for many of our members and their families who are
stationed in small coastal towns, or find themselves in
isolated or seasonal high-cost areas, it's a much different
story. In these locations, including the areas this
subcommittee represents, obtaining adequate or affordable
housing is a challenge. Child care providers are scarce and, in
most cases, very expensive. Often times, medical and dental
care providers are limited, and those who are nearby may not
accept military health care program. As a result, our personnel
tend to absorb these additional costs. These type of increased
financial burdens, compounded by limited employment
opportunities available to military spouses, stresses the
entire family.
So, that said, we are truly grateful for the housing and
child care provisions in the fiscal year 2012 budget. The
budget will ease the stress on our military members and their
families. Furthermore, this budget will put us on a course
towards closing the gap between the Coast Guard and our DoD
counterparts. And ultimately, these provisions will enhance our
mission readiness, and allow us to provide a much better
service to our taxpayer.
So, in closing, our Coast Guard men and women are standing
the watch. They risk their lives to rescue those in peril, and
they protect our homeland. They deserve these benefits.
So, thank you again, Mr. Chairman, for the opportunity to
discuss the needs of our Coast Guard personnel. I look forward
to answering any questions you may have.
Mr. LoBiondo. Thank you, Master Chief.
Chairman Lidinsky, you are now recognized.
Mr. Lidinsky. Thank you, Mr. Chairman, Mr. Ranking Member,
members of the subcommittee. Thank you for this opportunity to
present the President's fiscal year 2012 budget for the Federal
Maritime Commission. With me today are FMC Commissioners
Rebecca Dye and Michael Khouri. Your former colleague,
Commissioner Joe Brennan, is back manning the ship, and sends
his best regards.
With the committee's permission, I would like to summarize
my testimony, and request that my full written statement be
included in the record of the hearing.
The President's budget for this commission provides
$26,265,000 for fiscal year 2012. This represents an increase
of $2.1 million over the enacted fiscal year 2012
appropriation, or 3 percent, 767,000, over the President's
fiscal year 2011 request, and funds 133 positions. This
includes an increase of two positions targeted for our office
of consumer affairs and dispute resolution, who have seen a 16
percent increase in complaints and disputes that they handle.
This would strengthen our efforts to provide prompt, efficient
solutions for commercial disputes between ocean carriers and
their customers, and will help prevent problems with ocean
transportation or equipment from hindering the growth of our
exports.
As the committee knows, from late 2008 to late 2009, the
international container shipping industry suffered the worst
year in its 45-year history. Fortunately, in calendar year
2010, the U.S. liner trade saw a very rapid recovery, and U.S.
container volumes grew an average of 11 percent. In our largest
trade lane, the trans-Pacific, we saw shortages in early 2010,
when demand returned. But in April, carriers began adding
capacity. And by October, capacity passed its pre-recession
levels. Currently, weekly capacity in the trans-Pacific is 24
percent higher than it was last time this year, and container
shortages have virtually disappeared.
In the coming year, I plan working on the three top
priorities I outlined during my confirmation hearing. First,
the Commission must work for recovery and job growth within our
ocean transportation industry, particularly among exporters and
the businesses they serve.
Second, the Commission must focus on protecting our
country's shipping community from unfair and harmful practices
by foreign governments, cargo carriers, or cruise lines. More
than 95 percent of the United States ocean container trade
travels on ships controlled by foreign carriers. And we've been
watching them like a hawk to ensure that they efficiently and
fairly serve U.S. exporters and importers.
Third, the Commission shall work with all sectors of our
maritime family to help airports and the shipping industry.
Each commissioner at the FMC is committed to working in an
efficient, cooperative, and bipartisan manner to bring about
these goals.
Here are some highlights that we have taken in the recent
months. We are working hard to support our nation's export
growth. U.S. exporters must have an efficient, fairly-priced,
and reliable system to deliver goods to market.
We instituted Fact-Finding 26 under Commissioner Dye, which
interviewed over 170 witnesses to come up with explanations of
what had happened during the recession, and to provide
solutions to many of the problems that we faced. We are
continuing to roll out various recommendations of that fact-
finding.
Commissioner Khouri has undertaken a fact-finding to deal
with household goods issues. We have had thousands of
complaints in recent years, and we are working with the DoT on
coming up with solutions in that area.
The Commission is committed to applying the President's
2011 January executive order to improve regulations and make
them less burdensome. We have already made regulatory relief
and modernization a top priority.
We last week issued a final rule that will relieve more
than 3,300 licensed non-vessel-operating common carriers from
the cost and burdens of publishing tariffs in the rates they
charge for cargo shipments. There are reports that many
businesses could save up to $200,000 a year.
Also last week the Commissioner issued a final rule that
updates our filing requirements and clarifies procedures for
informal proceedings, also to help parties that bring their
business before the Commission. It is just the first step in an
ongoing project that made the Commission's procedure rules more
clear, modern, efficient, and cost savings.
We are closely monitoring the impact of the People's
Republic of China regulations on our trade. As part of our
emphasis on service to consumers, we are focusing our needs and
our growth in the consumer affairs division, where we hope that
service contracts will be brought to the Commission for
resolution.
We have also seen environmental issues becoming intertwined
with our area of regulation. One example of that is the slow
steaming. And we have issued an order of inquiry, notice of
inquiry, to solicit input that will give us guidance in that
area.
In conclusion, Mr. Chairman and members of the
subcommittee, we thank you for your support, particularly as we
celebrate our 50th anniversary year. It's an honor to appear
before the subcommittee, and I am happy to answer any questions
you may have later.
Mr. LoBiondo. Thank you.
Mr. Matsuda.
Mr. Matsuda. Good morning, Chairman LoBiondo, Ranking
Member Larsen, and members of the subcommittee. Thank you for
inviting me to be here today. I look forward to working with
you all in the 112th Congress. With your permission, I would be
happy to summarize my testimony and submit the complete
document for the hearing record.
Mr. LoBiondo. Please do.
Mr. Matsuda. Thank you, sir. And first, as you all know,
last week we saw the tragic and senseless murder of four U.S.
citizens at the hands of pirates. I want to assure the
subcommittee that piracy remains a key focus for the Maritime
Administration. Just yesterday I addressed a United Nations-
sponsored piracy working group, challenging our government and
industry partners around the world to step up their efforts,
harden the targets which pirates have turned into blood-stained
profits. We continue to work with the Coast Guard and the State
Department to take whatever steps are necessary to end this
threat.
I would also like to update you on another issue I know is
of great importance to the subcommittee, and that is the U.S.
Department of Energy's use of U.S. flagships to carry cargo for
its renewable energy loan guarantee program. I have good news.
Today the Department of Energy has formally changed its policy
to apply cargo preference requirements to their program. We are
working closely with our partners in the Administration to
ensure the cargo preference requirements are applied fairly,
consistently, and with common sense. This solution means we
manage to avoid costly and time-consuming litigation, and the
ultimate result is more cargo on U.S. ships crewed by U.S.
workers.
Let me provide you with an overview of the Maritime
Administration's budget priorities for the coming year. Mr.
Chairman, as Maritime Administrator, I am tasked with
overseeing the health of an industry that contributes more than
$10 billion each year to our economy, and employs more than a
quarter-million Americans. This important industry contributes
directly to our nation's economic competitiveness,
environmental sustainability, and readiness. And, given the
breadth and seriousness of these responsibilities, I am
confident that this proposal best serves the needs not only of
the Maritime Administration, but the nation, as a whole.
Of the $357.8 million the Maritime Administration is
requesting for 2012, the overwhelming share of the budget
supports the merchant marines' vital role in maintaining the
maritime transportation system and sealift capability, so that
when disaster strikes we are able to provide help quickly and
effectively whenever and wherever needed.
We are a maritime nation, dependent on our waterways to
survive. By weight, 95 percent of all goods imported into our
country arrive by ship. That is why we are focused on the
future of this important industry.
And our future is highly dependant on investing in
education. I share Secretary LaHood's vision to prioritize the
training of future maritime leaders by making the U.S. Merchant
Marine Academy at Kings Point, New York, a jewel among Federal
academies. To achieve this, we have requested an additional $19
million for necessary information technology updates,
improvements in academic programs, and long-overdue facility
capital improvements.
We are also requesting additional funds for our state
maritime academies. These investments in education are critical
for the long term. At the same time, we are also facing current
challenges head on, by requesting funds to honor maritime
security program commitments at the fully authorized level of
$186 million, including carry-over funds. This important
program provides our military assured access to the commercial
ships and crews we need to sustain U.S. forces overseas, as
well as provide for our nation's commercial and humanitarian
needs.
For 2012, I am pleased to report that the Obama
Administration has proposed funding for our nation's port
infrastructure. Building on the successful Tiger Grant program,
the budget proposal includes $5 billion for a national
infrastructure bank, funds which ports and maritime projects
will be able to compete for.
Also, the Maritime Administration has for the first time
proposed funding for two programs: the web portal MarView
program, and an environmental research initiative focused on
finding solutions to the maritime industry's environmental
challenges like ballast water and air emissions.
Funds requested for our ship disposal program will continue
to create jobs and clean up the environment, as we remove
obsolete vessels from the national defense reserve fleet.
Mr. Chairman and Members of the Committee, the budget
request I have outlined will help preserve and protect our
nation through maintaining a healthy maritime industry. While
meeting these critical needs, it is also sensitive to our
nation's economic conditions. Our request is actually $5
million less than fiscal year 2010. It reflects our confidence
that we can do more with spending less.
Thank you, and I am happy to answer any questions from the
subcommittee.
Mr. LoBiondo. Thank you. I would like to ask unanimous
consent to submit for the record a statement from the gentleman
from coastal Louisiana, Mr. Landry.
[No response.]
Mr. LoBiondo. Without objection, so ordered.
Mr. LoBiondo. We will now go to questions. Mr. Larsen?
Mr. Larsen. Thank you, Mr. Chairman. And I imagine we will
have a couple of rounds of questions, so I will maybe jump
around here with the panel. But I have got quite a number of
questions I want to ask. But I will start with Admiral Papp.
Regarding the recapitalization program for the Coast Guard,
it's estimated it costs in excess of $24 billion over the next
15 years. And in this budget request, or in your testimony, you
note it's--you have a $1.4 billion in fiscal year 2012. How do
you anticipate being able to achieve your full goals, given
this request level of funding? Is this getting you on your way,
or is this a tougher choice to take a small bite this year in
hopes you're going to get larger bites in the ensuing years?
Admiral Papp. Thank you, sir. First of all, I have made it
clear, speaking to groups across the country, we cannot get
these ships out there fast enough. I am continually reminded of
how desperately we need the new ships.
I was just out to the West Coast two weeks ago. I visited
one of our national security cutters, and saw the great
improvements that we are giving our people that have to go out
and do dangerous missions. And at the same time, I went and
visited some of the 42 and 43-year-old ships that are out there
at the same piers, and sort of the desperate situation we find
ourselves in, trying to keep those running. So we can't get
them out there fast enough.
However, what I will say is that we are getting there as
quickly as we can. And as I said in my opening statement, there
are tough decisions to be made when we are confronted with the
budget constraints that not only the Coast Guard has, the
Department has, but the country has. What I am gratified by is
the fact that the $1.4 billion request from the President is
the highest acquisition request that we have ever received. And
it is at a time where we have been demonstrating our competency
much better, in terms of our acquisition reform.
And I would say that, to a certain extent, the Coast Guard
is complicit in not being able to build up the credibility and
confidence in our program, but I think we have come an awful
long way. We have instituted acquisition reforms now that I
think serve as a model for other organizations across
government. We have come and gone through a very difficult
negotiation on the national security number four to get a fixed
price contract. But even working at a fixed price contract,
because of the delays of getting that contract awarded, it came
in more than it was budgeted for.
So we have had to do some creative moving around of funds
in concert with the Department and the Congress in order to get
number four awarded, and we are working as quickly as we can to
get number five.
We have had to fit a lot of projects into that $1.4
billion. I am satisfied at this point that we are moving along
on a lot of fronts, including patrol boats and boats for our
search and rescue stations. And as we have worked with the
Department, they have increased our level of funding in the
outyears in the capital and investment plan, and I am very
hopeful that we can start moving this along quicker in the
outyears.
Mr. Larsen. And we still do need to get to that funding in
the outyears, since we budget one year at a time.
I will just note, as well, you used the word ``desperate,''
or a form of it, twice in your response: desperately needing
new ships, and desperate to replace the old ones, and an
appropriate use of the condition right now of the position that
you're in at the Coast Guard, and I think a clear message that
we need to move forward on the recapitalization.
But you also have a lot of other things that we have asked
you to do, including several new initiatives in the 2010
authorization. Given the budget that the Coast Guard has
received, do you have sufficient funds to ensure the Coast
Guard is able to implement the measures that we have asked you
to implement in the 2010 authorization?
Admiral Papp. Yes, sir. We have amounts in there for
continuing our acquisition reform. We have received money in
there to continue our marine safety performance plan, and also
we have received money to help us out with our housing
authorities that the subcommittee gave us.
So, incrementally, I think we are making progress on all
fronts. And I cannot think of any areas that were put in the
authorization plan that we don't have some funding directed
towards that.
Mr. Larsen. Thank you. Of the 11 missions that the Coast
Guard has, you noted in your State of the Coast Guard speech
that there were going to be some choices you will have to make.
Of those 11 missions, are you doing 50 percent of 5 of them,
and 100 percent of the rest of them, or how would you
characterize your ability to make the full commitment to all 11
missions?
Admiral Papp. Well, sir, what I would say is I think in
various forms what I said has been mischaracterized a little
bit. I have no authority to stop doing any mission of the Coast
Guard.
Mr. Larsen. Right.
Admiral Papp. Those are statutorily required. And I am
given a finite set of resources to accomplish those missions.
We make judgements on a day-to-day basis--my operational
commanders do--to apply those resources against the highest
need.
A great example is a year ago, when I was one of those
operational commanders, we have cutters that are deployed for
various missions, interdicting migrants, interdicting drugs.
But when an earthquake occurs in Haiti, that's a higher
priority for us, and we were to redirect those resources,
knowing full well that we will suffer, perhaps, a little
degradation in migrant interdiction, and probably a little
degradation in drug interdiction. But those are the choices
that we make. We get the assets, we have to make the decisions
how to operationally employ them.
But I would say when I was talking in my speech, my State
of the Coast Guard speech, there is also--because of our can-do
attitude, there is a lot of things that we take on on our own.
We see a need, so we rush out there to do it, often times
saying we will do it, resource-neutral. Resource-neutral is
never neutral, because the resources have to come from some
other location within the Coast Guard.
And what we are about right now--in fact, I have commenced
a stem to stern review of what we call our deployable
specialized forces, to make sure we're not overburdening them--
what things should we be doing for our country? What things
were those teams intended to do? And then let's train them
well, make them proficient in what they're supposed to do, so
we serve the country well. And, oh, by the way, along the way,
we will also perhaps accrue some savings that we can devote to
other mission areas or jobs.
Mr. Larsen. Right. Thank you, Mr. Chairman, and in the
interest of, obviously, other members I will yield back, and--
--
Mr. LoBiondo. Thank you.
Mr. Larsen [continuing]. Do a second round later.
Mr. LoBiondo. Mr. Coble.
Mr. Coble. Thank you, Mr. Chairman. Good to have the four
of you with us. Thank you for your service.
Gene Taylor, the former congressman from Mississippi,
knowing of my Coast Guard background, always addressed me as
``Admiral.'' The present chairman, the gentleman from New
Jersey, knowing of my Coast Guard background, addresses me as
``Master Chief.'' I want the record to reveal that I am
qualified to perform the duties of neither admiral nor master
chief, but both titles have a real good ring to them. You may
continue to address me that way, Mr. Chairman.
Admiral, I was going to talk to you about recapitalization
of the Coast Guard, but I think you have already touched on
that. Let me get more directly to the Polar Sea. I am told that
the Coast Guard plans to decommission her within the next five
or six months. At the same time, I am furthermore told,
Admiral, that the several million dollars--six, I think--will
be expended to complete the overhaul of her main engine. Now,
Admiral, tell me what I am missing here.
Admiral Papp. Well, sir, while on the surface it looks like
a bad news story, there is actually some positive rays of light
there, at least as far as I am concerned. Once again, this goes
back to the very challenging tough decisions that we have to
make.
What I am confronted with, as I sit before you today, is
only one ice breaker that works. The Healy is working right
now, but that's a medium ice breaker. We have no heavy ice
breaker for the United States.
Now, we can continue to pour money into Polar Sea. It has
all its engines down right now. And we can continue to pour
money into that, and then get maybe a year or two out of her
once she gets--if she gets--back in service. What I have done
is I have made the decision that we do not pour more money into
that ship, using the scarce money we have to get Polar Star
reactivated.
The President proposes to transfer the funding back from
the National Science Foundation back into the Coast Guard.
That's the positive ray of light that I am talking about here.
Because I feel that we can better manage that money for our ice
breaker fleet, and start to build up the competencies of our
ice breaker sailors once again.
But given the limits under which I have to operate in terms
of that money, I think that it's best just to--what we're going
to do is continue to repair one of the engines on the Polar
Sea, test that and learn from it. And we can take all the parts
that we have purchased for the Polar Sea and transfer those
over to Polar Star. Now, there will be a gap while we do not
have a heavy ice breaker, but we've got a gap right now.
But in terms of taking the scarce resources that I have,
it's my judgement that we should transfer those over to the
Polar Star, and do a complete reactivation on her, so we have a
reliable heavy ice breaker that will last 7 to 10 years, rather
than trying to piece together Polar Sea and get maybe a year or
2 out of her.
Mr. Coble. Admiral, how many heavy-duty ice breakers are
active in the fleet now?
Admiral Papp. None within the Coast Guard. We have the----
Mr. Coble. I thought that's what you said.
Admiral Papp. Yes, sir. Both Polar Sea and Polar Star are--
well, Polar Star is in a long-term reactivation. We have about
$62 million that was appropriated to put her back into service,
and perhaps get 7 to 10 more years while the country decides
what we are going to do about ice breakers and the Arctic.
Polar Sea was the one that was active, and all the engines are
inoperative right now. We were going to spend a lot of money to
get all the engines back up to speed, but I feel that that
money is better devoted to getting Polar Star back online.
Mr. Coble. And Healy is inactive, as well?
Admiral Papp. No, Healy is our medium ice breaker for
scientific response in the Arctic.
Mr. Coble. OK.
Admiral Papp. And she is active. So we will have Healy
throughout this entire period.
Mr. Coble. I thank you, sir. Mr. Chairman, good to see you
again. Mr. Chairman, if carriers and shippers in their
respective service contracts don't come to FMC to resolve their
disputes, what action do you take?
Mr. Lidinsky. Thank you for that question, Mr. Coble. As I
said in my testimony, looking back at the recession that we
went through, and many of the troubles that were experienced
between carriers and shippers, the service contract is at the
core of it.
This is the document that does the deal in the moving of
the cargo. We have over three million of them on file at the
Commission, and nobody can argue they're not a successful
document. It's what cargo flows today with. But the contract
itself, in the 1984 Act, said that any dispute would go to
state court over the argument. We want parties to come to the
Commission, use our CADRS office to resolve their disputes, a
no-cost, confidential process.
Now, we're in a very crucial period at the moment of
carriers and shippers renegotiating these contracts up to--May
1 is the usual start date. If we find, come spring, come
summer, that they have not put voluntarily to come to CADRS, I
will come back to this subcommittee and request legislation
that we change the shipping act.
Mr. Coble. I got you.
Mr. Lidinsky. Thank you.
Mr. Coble. Thank you, Mr. Chairman. Mr. Chairman, I see my
red light has illuminated, so I yield back my time.
Mr. LoBiondo. Congresswoman Hirono.
Ms. Hirono. Thank you, Mr. Chairman.
Mr. Matsuda, I want to thank you for coming to Hawaii this
past August and engaging with our State Department of
Transportation.
I do have a question for you. There was a time when we had
a very robust shipbuilding industry in our country and not so
much now, and we want to do everything we can to encourage the
purchasing and acquisition of U.S. built ships. But I do note
that the Maritime Guaranteed Loan Program, which is one of the
ways that we can encourage shipbuilding in our country, is not
being funded and, in fact, some of the money that is already in
there is being canceled.
Can you talk a little bit about what the impact of this is
going to be? And are we doing anything else if we are going to
pretty much cut back on the loan program, anything else to
support a shipbuilding industry in our country?
Mr. Matsuda. Thank you.
And that is an excellent question. Let me be clear with the
Title XI Loan Guarantee Program proposal. We are continuing to
accept and process applications for loan guarantees in
shipbuilding. This is not something that we are going to stop
because of this proposal.
What this proposal does is this: The Administration
proposes taking an excess of funds it has accumulated in the
Title XI Shipbuilding Program and canceling it. It is a tough
choice in today's economy and the budget pressures that we are
all under, but it is one that we feel will still be able to
meet the needs of the industry as they look to continue to
build ships in the U.S.
I should point out that in my testimony I talk about the
Capital Construction Fund. This is another program we have that
allows tax deferred money to be used for shipbuilding. There is
currently $2.8 billion sitting in that account. Title XI is an
application driven process. We can only process what is in
front of us. If the carriers decide not to build ships, we
cannot really make them do it.
But when they do come to us, we want to make sure we have a
process that works and is efficient.
Ms. Hirono. I think it is a real challenge to really
recreate a robust shipbuilding industry in our country, and I
am sure there are other ideas that we can bring to the fore to
do that. I am not sure that these two programs that sort of
maintain it seems to me a status quo kind of a situation so
that we are not falling further backward. Is that an accurate
way to look at it?
Mr. Matsuda. I believe so.
Ms. Hirono. For Commandant, when you allocate the scarce
resources, on what basis are you going to do that? Because, of
course, as I mentioned in my opening remarks, the 14th
District, which includes Hawaii, Guam and other areas, it is
14.2 million square miles that you have to cover in terms of
all of your activities.
So is the area of coverage one of the ways that you are
going to allocate scarce resources?
Admiral Papp. Yes, ma'am. Thank you for that question.
And as far as shipbuilding goes, we would be happy to build
more Coast Guard cutters to stimulate the industry, but the
14th District provides us with unique challenges that are not
found in all of our other districts in the expanse of the area
that they have to cover, given all of the fisheries in the
Western Pacific and as far over as deploying to do drug
interdiction in the Eastern Pacific as well.
So we have to have ships that can range far, that can
sustain themselves, that can operate independently. The two
high endurance cutters that you have out there, the Jarvis and
the Rush, are both over 40 years old. They are two of those
ships that I have been talking about, and across that fleet, we
are losing ship-days as we speak because we generally like to
get about 185 days a year out of each one of those ships, and
right now we are averaging closer to about 140 days because of
mechanical breakdowns.
So getting the high endurance cutters replaced by the
National Security Cutters is very important to us, and getting
the newer boats and patrol boats that take care of the stuff
closer to the islands out there is important, as well as long-
range aircraft to cover that broad expanse.
In terms of how we make those decisions, once again it goes
back to on a daily basis. The 14th District Commander will have
units assigned to him from the Commander, Pacific area. Most of
the time they will be on fisheries patrols or interdiction
patrols, but that operational commander only has those finite
resources, and based upon whatever cases come up, whether it
might be an unexpected search and rescue case or some other
security issue, we will have to redirect those resources.
So those finite resources get transferred across various
mission areas, which therein lies really the value of the Coast
Guard, as we have versatile and adaptable resources to be used
across those missions, as well as our people who are versatile
and adaptable as well.
Ms. Hirono. Thank you.
Thank you, Mr. Chairman.
Mr. LoBiondo. Mr. Harris.
Dr. Harris. Thank you very much.
If I could just ask Mr. Matsuda, the budget request that
you have represents a 1.5 percent reduction below the current
level, but if you remove the Title X area, it actually is an
increase.
First of all, I am going to ask you what was your fiscal
year 2008 budget because there are some of us who think that
that represents a realistic target for the non-defense portion
of the budget.
And how could you get there? How could you get to the
fiscal year 2008?
Mr. Matsuda. Thank you.
Although I do not have the 2008 numbers in front of me, I
can tell you that we have looked at what the impact would be at
operating under 2008 levels. The most severe impact would be to
the United States Merchant Marine Academy. They would be faced
with some very difficult choices with immediate layoffs of
faculty and staff, cutting the incoming classes, the class
size, or offering services or limiting the actual academic
year. All of those would severely impact the operations of the
school.
In addition, the budget for the academy has grown over the
past couple of years primarily because a lot of the funds that
were used to fund off-book or nonappropriated fund activities
have been brought on book and now made a more transparent part
of the budget.
So these are realities that have really shaped up to make a
harsh difference between the fiscal year 2008 environment and
the current one.
Dr. Harris. I came from State government before. I mean,
our colleges are asked to do more with less. This is consistent
across all of the institutions for higher education. So you are
suggesting that somehow what you are responsible for should be
exempt from doing more with less?
Mr. Matsuda. I am suggesting, and actually the story with
the academy and its capital needs are that these needs have
been long deferred, for years, decades. There are buildings
there that still exist from when they were built in 1945 or
earlier. It is before a time when women were actually allowed
at the school.
So there are basic things like making sure there are
sufficient women's restrooms or locker rooms that can
accommodate that introduction. This was the first academy to
actually allow women at the school. So there are some very
basic capital needs that need to be met at the academy, and
this budget that has been proposed by the President will go a
long way toward addressing them.
Dr. Harris. Well, I would suggest that these are the needs
that are seen in every institution of higher education. If you
look in our university system in Maryland, our university has
backlogs of hundreds of millions of dollars of capital projects
they would like to complete. They have buildings similarly as
old, and they are just going to be asked to do more with less.
So if you could just get the answer to me about what the
fiscal year 2008 budget was broken down by the various
components, I would appreciate that.
Now, Mr. Chairman Lidinsky, I would also ask you the same
question. You have actually asked for an increase in your
budget this year. What was your budget in fiscal year 2008?
You know, to the witnesses, this discussion has gone on for
a few months now, this target of 2008. So I am a little
surprised that some of you come to the Committee hearing
without knowing what your budget was two years ago, since this
has been much talked about.
But, Mr. Chairman, could you just indicate why, again, you
think your commission somehow needs an increase when every
other part of non-defense discretionary spending is going to be
asked for a decrease?
Mr. Lidinsky. Mr. Chairman, our budget in fiscal year 2008
was $22.072 million.
Dr. Harris. So then can you go ahead and review why you
think, you know, you need about 15 percent more?
Mr. Lidinsky. We are a very small agency. When Mr. Coble
brought up about the Coast Guard writing the book on doing more
with less, when I first served at the Commission as a young
lawyer back in the 1970's under Chairman Bentley, we had 330
people on staff. Today we have 200 people less although trade
is ten times what it was in that period.
So coming from a small agency, our salaries, our pensions,
our built-in costs are fixed at about 75 percent of the budget.
So in terms of dollar figures, we have to be very careful in
what we ask for in terms of meeting commitments for IT, for
mandated programs, for security, for pensions, for people
retiring, succession planning.
We have over two-thirds of our people who are eligible to
retire today if they wanted to retire. So when you are dealing
with 130 people and you have got very strong fixed costs, any
increase that you have to have for a mandated new program or to
do additional efforts to help our exporters is going to look a
large increase for a small agency.
Dr. Harris. Thank you very much.
Thank you, Mr. Chairman.
Mr. LoBiondo. OK. The gentleman from Minnesota.
Mr. Cravaack. Good morning. First off, Admiral Papp and
Master Chief Leavitt, I would like to thank the great men and
women of the fantastic Coast Guard for all of the missions that
they accomplish on a daily basis and all the sacrifices that
they render and their families as well. So thank you very much
for your service, gentlemen.
Mr. Matsuda, we talked just briefly up in Duluth and the
Great Lakes. We have a very, very large merchant traffic using
lakers and salties going up the seaway, and one of the things
that I noticed in talking to Mr. Ojard here, the Port Authority
out of Duluth, is that we do have a concern about the port.
The port is the second largest dry bulk port in the United
States, kind of funny even though it is in the middle of the
United States.
But my concern is that for the lack of shipping capital
investment that I am seeing. Obviously taconite is one of our
main exporters in that area, but we are seeing a very big
difficulty in seeing, like you just mentioned, people building
ships here in the United States under the United States flag.
So I know that there was a study. The merit study was
initiated just about a year ago; is that correct? Could you
tell me, sir, what the result is of that study?
Mr. Matsuda. Certainly. We made the decision to conduct a
study on the future of shipping in the Great Lakes and look at
the recapitalization options of the fleet. As you know, there
are many challenges that the Great Lakes face operating under a
full year, trying to meet the needs of the various shippers up
there. It is not easy.
We recently concluded a three-visit tour to Chicago, Duluth
and Cleveland in the Great Lakes, and we are happy to hear from
the stakeholders and discuss some of these issues. We focused
on some of the environmental challenges, as well as the port
and infrastructure challenges.
We recently did this. I literally just got back last week,
and we are happy to share with you the results of what we
learned.
We are going to take this data and also look at some more
in-depth material, given the current status of the fleet, what
are potential future shipping needs, and compile a full report,
and we are happy to discuss that with you and the subcommittee
as well.
Mr. Cravaack. Great. Thank you for that.
I would also like to dovetail on my colleague Ms. Hirono's
comments. What do you feel that the Federal Government can do
to help to promote business and industry in the Merchant
Marine?
I just had the great fortune of going to the Naval Academy
just yesterday and did a tour at the Naval Academy, visited
midshipmen there, and I realize how important an academy is. So
you do have my concerns there. But as my colleague, Mr. Harris,
did say, we are all under budget constraints, but hopefully we
will be able to reach the needs of what midshipmen need there
as well.
But what can the Federal Government, in my minute and 50
seconds left, can help promote us, that we can help you getting
business going under the U.S. flag?
Mr. Matsuda. Well, I could probably answer that question
two ways. One is for the international trade, and that is
something that we have been focused on, looking at the
differences between U.S. and foreign flag operating costs and
seeing if we cannot better understand what are the differences
and whether there are any regulatory or other impediments to
help encourage companies to flag under the U.S. registry.
That is a study we have ongoing. We are close to getting
the final results from, and again, we expect them some time
this spring, and we are happy to share those results with you
and the subcommittee.
On the domestic fleet, obviously the Jones Act plays a
strong role in making sure that there continues to be a strong
shipbuilding component in the U.S. Having the Title XI and
other shipbuilding tools are available. Title XI does not work
for everybody, especially projects where they are a smaller
size, smaller dollar value. But at the end of the day building
a ship is such a risky proposition. It is a long-term asset. It
is hard to find long-term money to do that, especially in
today's credit market and credit situation.
So making sure that we have all of the tools and programs
that are available to assist folks who desire to build a ship
in the U.S. is something that is very important to insuring the
long-term survival.
Mr. Cravaack. Thank you very much, sir.
And I will yield back the rest of my time.
Mr. LoBiondo. Mr. Cummings.
Mr. Cummings. Thank you very much.
Good morning, gentlemen. Mr. Matsuda, I am very pleased to
hear that the Department of Energy agrees that the cargo
preference requirement should apply to loan guarantee cargoes.
As you know, that is something that I have been very, very
concerned about.
And do you know when such cargoes may begin to be moved?
And how will you and the Department of Energy work together to
apply the cargo preference requirements?
Mr. Matsuda. Thank you, sir.
We are very pleased to report that this morning. The
language on the Department of Energy's Website has changed to
indicate how we will be working with them to make sure those
requirements are met.
Basically, we are integrated with our agency partners at
the Department of Energy to look at and work with the various
project sponsors to make sure they are meeting these
requirements. And a lot of times that means dealing with the
project engineers, the folks who are in charge of procurement,
making sure they understand the law and how they can meet it.
And we have done that successfully already on several of the
projects.
The change on the Website also helps indicate to future
applicants or those who might just be looking at the program
now about how it will work and what requirements they need to
meet.
Mr. Cummings. Chairman Lidinsky, can you provide us with an
update on Commissioner Dye's investigation, as well as whether
there are recent changes in the cargo rolling canceled books,
container shortages, and the attempts to force charges that
were not agreed and contracts that were just executed last
month?
And what else can the FMC do to address those problems?
Mr. Lidinsky. Thank you very much for the question, Mr.
Cummings.
The picture is much brighter than when we met a year ago.
As you know, Commissioner Dye conducted her fact finding over
the summer back in December. Many of her recommendations
involving the problems that took place during that period of
time have been rolled out here in the form of orders to the
carriers, further investigations taking place.
The issue that was of concern, we had a dialogue on this
this year about container shortages. It is a much more improved
picture today. Capacity is up.
The USDA Program is just about to be formally launched.
They have worked together with one of the shipping conferences
in the westbound trade to help identify through computers where
missing containers could be supplied to exporters.
So I would say that we face a much more positive situation.
The only cloud on the horizon, as I mentioned before you
arrived, was the fact that the service contracts still need to
be properly made in order to prevent rolling in the other
issues. We are in the negotiating season right now, and should
that not occur, we will be pleased to come back to the
subcommittee and ask for legislation to bring that about.
Mr. Cummings. Now, Admiral Papp, during your state of the
Coast Guard address, you said we made great progress in
executing our diversity strategic plan, but we have significant
gaps which require us to continue our efforts.
I recently visited the Coast Guard academy where I met with
the admission staff, and they are reaching into communities
where the Coast Guard is not well known and working hard to
recruit our future. The academy has made great strides to
increase the core of cadets' diversity, end of quote.
Can you update us on the ongoing efforts to increase
diversity at the Coast Guard Academy, including how things are
looking as you seek to recruit the next class at the academy?
Admiral Papp. Yes, sir, Mr. Cummings.
And thank you for your job as Chairman during the last
Congress. I got a chance to thank the subcommittee for their
work on the authorization bill. I thank you publicly as well,
but more importantly for your attention to the diversity
concerns of our service and giving us proper oversight in that
regard.
I had a chance to travel up to the Coast Guard Academy in
January to speak to the corps of cadets, 1,000 of them, about
leadership issues, and of course, as I was talking to them, I
talked about diversity as well. But I also took the opportunity
to go over personally a visit with the recruiting staff at the
academy.
And I am very pleased with the progress we have been
making. We have increased the number of people that are going
out to the field to those areas where we have not recruited
before, and what we are finding is that not only are there
areas that were unfamiliar with the Coast Guard Academy, but
also it is not just the students. It is also faculty advisors,
guidance counselors, and others that need to be educated.
And also many times some of the schools that we are
targeting that have very good students with very good academic
records, oftentimes the schools perhaps do not have the
resources in terms of the numbers of guidance counselors that
some more affluent localities do.
So we have provided funding to the Coast Guard Academy to
bring on I believe we have got about a dozen people now that
are going out to targeted areas in the field, to work with
guidance counselors, to work with students, to make sure we get
the completed applications in, just to provide that little bit
extra of a boost in those areas that heretofore were unfamiliar
with the Coast Guard Academy.
Right now, I do not have any figures in terms of
acceptances or how many appointments have been issued because
it is a little too early in the process, but in terms of the
numbers of applications that we have coming in, it reflects
another increase over last year's very promising numbers.
Mr. Cummings. Thank you.
Thank you very much, Mr. Chairman.
Mr. LoBiondo. Mr. Farenthold.
Mr. Farenthold. Thank you very much.
Admiral, I would like to start with you if you would not
mind. What do you see is the growth areas within the Coast
Guard mission over the next five to ten years?
Admiral Papp. The growth areas will be, I think, and it is
reflected in our budget, how do we respond to incidents, such
as Haiti, Deepwater Horizon, hurricanes. We are seeing an
increased number of hurricanes, and thank goodness we dodged
that bullet this last summer, particularly when we were in the
midst of working on the oil spill down in the Gulf.
But what we have found over the past probably four years,
going back to Hurricane Katrina, is that we really lack the
capacity for incident response. What we do is we curtail
activities that we would normally be doing, and we deploy
people to take care of those responsibilities.
I will give you a for-instance. During the height of
Deepwater Horizon, we had about 3,000 people forward deployed
from the Coast Guard to man various incident command posts
across the Gulf of Mexico. These were not people that we had on
standby waiting to take care of incidents. In fact, I was
speaking to an Army officer, who when he heard me sort of
whining about the fact that we were so depleted, said, ``Well,
why don't you use your folks that are in garrison?''
And their mindset is you have these divisions of infantry
or artillery or whatever that are in training, and then when
crises come up, you order them up and you send them forward.
The Coast Guard just does not have that band strength. So
there----
Mr. Farenthold. Do you see the Coast Guard's role as a
direct responder or a first responder there, or do you see it
more as a supervisory role over private sector response team?
Admiral Papp. It is clearly a shared responsibility. One of
my principles is strengthening our partnerships. It has got to
be a partnership with industry, State, Federal and local
forces, just as it was during the oil spill. And primarily it
is supervisory.
Those 3,000 people down there were in incident command
posts, but it is also putting people out into the field either
working directly on a spill or whatever the incident might be
or supervising those people that industry is paying for out
there.
Mr. Farenthold. We also see a line item looking to purchase
some more aircraft and maintain the air fleet. Much of what the
Coast Guard does short of helicopter rescues, seems like it
would be something worth studying, moving to unmanned vehicles.
Are you all looking at rather than having guys flying up in
jets doing the patrols doing some of that with unmanned
vehicles as a cost savings?
Admiral Papp. Actually the HC-144 Ocean Sentry aircraft
that you see in the budget is a replacement for those jets that
we have used for many years. This is going to give us probably
in the long run a lower cost asset that is able to stay out
there for more hours, do greater surveillance, has better
sensors, has a sensor pallet that goes in there, and we have
been putting it to good use. That is another one of those
assets that we cannot get out there soon enough.
Mr. Farenthold. And you do not think that a lot of that
could be done with some of the technological advancements that
we are seeing with things like the Predator drone?
Admiral Papp. Some of it could be, and we are in the
process right now of working with our partner within the
Department of Homeland Security, Customs and Border Protection.
They do have a Predator program that they are working on right
now.
The challenge is coming up with a Predator that is adapted
to the maritime environment, which is completely different. It
is a whole new set of environmentals that you are dealing with,
with salt, air and other things.
Mr. Farenthold. I live on the coast. I understand that.
Admiral Papp. Yes, sir. So we are certainly interested in
it. We have been working on a trial project with CBP, and we
have, in fact, been providing some Coast Guard aviators to help
fly the Predators and see what sort of return we can get on it.
But those are very expensive, and I do not have the room in
the budget at this point.
Mr. Farenthold. And let's talk for just a quick second
about ship disposal. What is your all's procedure for ship
disposal? I understand there is a clean-up.
Are you all sinking them? Are you sending them to ship
recyclers? Are you stripping materials out and then selling
them?
It seems like there might be some people willing to take
these for nothing in exchange for the scrap.
Admiral Papp. Yes, sir. Actually that is a pretty good news
story as well. To be truthful, we are talking about 40 year old
ships. That means we have not been giving away too many ships
recently. We are hopeful that we will be giving away more here
in the near future, but what we do have is, first of all, we
have foreign military sales, and there are some opportunities
out there to sell the ships, getting money back, and also
saving us the cost of having to clean them up environmentally.
But we also have within the bill that is going forward, it
gives us the authority to work with Mr. Matsuda and the
Maritime Administration to go through their ship program, which
would then sell them off for scrap, which then saves us the
cost of having to have them environmentally pure before they
are transferred someplace else or sunk and possibly give some
returns to the Government.
Mr. Farenthold. Thank you very much, sir.
Mr. LoBiondo. Mr. Landry.
Mr. Landry. Thank you.
Commandant, of course, I do not have any problem with ICE
down on coastal Louisiana, but I was just curious as a business
owner, have you all looked into the possibility of leasing
icebreakers from the private sector rather than trying to pour
money into old assets and then come back to us and ask for
large capital expenditures?
Admiral Papp. Well, what happened here back in 2005, sir,
is the operating funds for our polar icebreakers were
transferred to the National Science Foundation, and I am not
sure of the logic in that or the wisdom, but in any case, the
National Science Foundation immediately turned around and then
started leasing foreign icebreakers.
It is interesting to note that the first year they did
that, they leased a Russian icebreaker to break out McMurdo at
the South Pole, and the Russian icebreaker broke down. We had
to activate our icebreaker and send it all the way from Seattle
to break it out.
So there certainly are possibilities for leasing
icebreakers, but I think there is probably some minimum number
of icebreakers that this country wants to have on hand.
Mr. Landry. Well, I would like you to lease them from U.S.
companies rather than from foreign companies. I know that on
the Great Lakes there are a number of icebreakers that are
leased by governments from companies in the United States. I
have one of the shipbuilders and owners in my district that
actually leases icebreakers out on the Great Lakes. So it is
amazing that we went out to foreign countries to lease
icebreakers when the gentlewoman was talking about how we
increase our shipbuilding capability and how we get people back
to work in this country.
It certainly seems to me that we could look at a cost
savings measure, possibly leasing those icebreakers from
companies right here in the United States.
Admiral Papp. It is certainly an option that is out there.
We have not investigated it because we are trying to come up
with the wherewithal to support the icebreakers that we have,
and most of the time we fall short of the hours just on the
icebreakers that we have.
Mr. Landry. Well, it seems like based upon the amount of
money you are pouring into a very old vessel, maybe you all
should have someone take a look at that. I will be more than
happy to send you a couple of names of people who are building
them and would lease them to you all.
Admiral Papp. Thank you, sir. We will take a look at that.
Mr. Landry. OK. Real quickly, as you know, seven years ago
Congress passed a statutory requirement for the Coast Guard to
craft regulations for touring vessel inspections, including
safety management systems for touring vessels. The goal of
these regulations is to increase the operational safety of the
largest segment of commercial U.S. flag vessels. The safety
management system required is one of the National
Transportation Safety Board's top ten most wanted
transportation safety improvements, and from what I have seen,
these draft regulations are a great example of how the Coast
Guard has worked, you know, to get input from private industry
and rely greatly upon the wisdom of the private industry in
promulgating those regulations.
I understand that we still have not published those in the
Federal Register, and after two congressional directives and
countless industry contacts, could you tell me why we have not
gotten those published yet?
Admiral Papp. Yes, sir, and I understand the importance of
pushing this through. There is a lot of good in there, but it
does, as you noted, reflect a huge change and probably impacts
a lot of resources not only for the Federal Government in terms
of having inspectors, but also for industry as well in terms of
changes they may need to make.
That regulations package has gone back and forth a lot. I
have had a chance to give it some focus now during the nine
months that I have been the Commandant. It has been back with
us and probably if there is any delay right now, it is because
we have been back and reviewing it in the midst of Deepwater
Horizon, and now we have been able to give some more attention
to it.
Frankly, I have taken the opportunity to go across the
country and talk to the industry groups as well, a broad watch
of the maritime industry, but in particular, the American
Waterways Operators who certainly are most affected by this
bill. In fact, I met with their executive committee just the
other night to get input from them.
We want to make sure we have got the right package going
forward. I think we have answered the questions that were posed
to us upon review, and we have transferred it back up to the
department to get their final review on it.
Mr. Landry. Seven years.
Admiral Papp. Yes, sir.
Mr. Landry. Mr. Commandant, that is a long time.
Admiral Papp. Yes, sir.
Mr. Landry. OK.
Mr. LoBiondo. Mr. Matsuda, I wanted to follow up on a
question that the Congresswoman from Hawaii posed to you about
the Title XI, and I believe that you stated that there was $2.8
billion in the capital construction fund that could be accessed
by account holders, if I am accurate here, and you also noted
that on the Title XI funds that you have to have applications
before you in order to be able to expend the money.
Well, unless we are mistaken, at present if your
applications that you have before you were to move forward, you
would not have enough money to approve them. You would not have
enough money to cover them.
I do not understand. Help me understand how you can say you
do not have applications before you when either I have got
wrong information or somehow you have got wrong information.
Mr. Matsuda. I believe the information you have is correct
in that that is the amount that the applications have
requested. At the end of the day, we go through this process of
determining whether this is a deal that is acceptable, an
acceptable risk to the taxpayers. And that may not be the case
by providing the amount of subsidy required compared to what
they originally proposed.
So at the end of the day some of these projects may not be
good projects. They may not move along through the process with
the same amount of speed that others do. We have found, given
recent history, that it takes some time to get some of these
projects moving along, and I know that that is due to a couple
of factors.
One involves our internal processes, and that is something
that I have taken a very close look at. We hired a consultant
to come look at the business processes used to see if we cannot
speed those up or make them more efficient. But on the outside,
the majority of the time it takes to process these applications
is spent waiting for an applicant to provide more information
on their application.
Mr. LoBiondo. Admiral Papp, the Coast Guard completed a
fleet mix analysis to determine the numbers and types of vessel
platforms that would be necessary to support Coast Guard
missions in the future. Chairman Mica and I requested this
report 13 months ago. It is pretty hard to understand why we
have not had it.
Were you going to be able to provide it to the subcommittee
by the end of the week?
Admiral Papp. I would be reluctant to give you a guarantee
that I could get it to you by the end of the week. I will
commit to you to do my best to move this forward though, sir.
Clearly, this is something that is very important to me as
well. As you know, as I think the subcommittee knows, we have
gone through phase one of the fleet mix analysis, which at
least validates the construct of what we have in the
acquisition baseline for what was known as the Deepwater
Project in terms of the mix of National Security Cutters,
offshore patrol cutters, fast response cutters, and the
associated aircraft.
Now it is in the process, a combination of the department,
us, and GAO, taking a look at various options within that that
would perhaps either provide better return or better value for
what is proposed.
But I commit to you to getting back and getting a timeline
on that so that we can get this to the subcommittee.
Mr. LoBiondo. I appreciate that. I hope we do not have to
ask for this in a public setting again.
Admiral Papp. Yes, sir.
Mr. LoBiondo. On the National Security Cutter, the Office
of Management and Budget is requiring the Coast Guard to have
available amounts sufficient to cover the cost of long lead
material, construction and post production before the
production begins. As a result, the fiscal year 2012 budget
requests $77 million to complete the construction of the
National Security Cutter No. 5, but does not request funding
for long lead materials for No. 6. This obviously will delay
delivery in the future of National Security Cutters and I think
cost the taxpayers millions more money.
Can you talk about what is the impact of OMB's new full
funding policy on the per vessel price of the National Security
Cutter and what is the impact on the delivery schedule of
future NSCs?
Admiral Papp. Well, that is the big issue, the full funding
in any given year for the long lead production and post
production costs. That obviously takes up a large portion of
whatever the amount is that we get for acquisitions in any
given year.
As we work through the fixed price contract, which I think
was a righteous effort for us in terms of our acquisition
reform, the fixed price contract on No. 4, and when the price
came in we had to move money that was originally dedicated
towards long lead time procurement for No. 5 and then work
within the continuing resolution to make sure we had enough
money to award the long lead money for No. 5.
We were granted an exception by OMB to be able to do this
because of the promise or at least what appeared to be the
intent of Congress to put the money for No. 5 into the 2011
budget.
But even at the amount that we are trying to predict, it is
hard for us to predict right now how much will come through in
the 2011 budget because of the continuing resolution. What we
think we are going to get would require another $77 million in
the 2012 budget, and because we had to put money for No. 5 in
the 2012 budget, we just could not come up with the room to fit
in the entire cost of NSC No. 6 without displacing a lot of
other very important projects that we cannot afford to breach
the acquisition project baselines.
And, frankly, I think we are gaining some savings by buying
some more patrol boats. We are going to build out our response
boat medium a little quicker and get that project out of the
way so we can make room in the out-years. All in all, as I said
right from the start, there were some very tough choices within
this budget, and I think we have optimized our purchases within
the amount of money that is available.
Mr. LoBiondo. Admiral, I understand we have some very tough
choices to make, but can you either tell me today or get back
to us on what this is going to cost the taxpayers?
Admiral Papp. In terms of a delay on No. 6 in terms of long
lead?
Mr. LoBiondo. Yes.
Admiral Papp. Yes, sir. We will provide that to you.
[The information follows:]

Based on the current full funding policy, the funding
associated with the sixth NSC is not required until FY
2013. Future year requests will include funding for
both long-lead materials and production of the same
ship in a single fiscal year to ensure operational
return on fiscal investment.

Mr. LoBiondo. OK. Master Chief, the Coast Guard
Authorization Act of 2010 establishes a housing trust fund to
help finance the construction and renovation of Coast Guard
service member housing. Is the funding available in the trust
fund sufficient to cover the backlog of service member housing
improvement projects?
Master Chief Leavitt. Thank you, Mr. Chairman, for the
question. Thanks for approving that authorization, by the way,
too.
Right now we are in the process of identifying those
properties that that Authorization Act allows us to do, and
taking a look at the housing areas. Buckson, North Carolina,
that housing area is looking at they are being sold and then
put back, to reinvest back into our housing, along with other
properties.
The goal is probably to get those monies back in, look at
it, and then get them appropriated for fiscal year 2013. But to
be honest with you, this whole project is more to get us going,
more to help jump start the housing because the long-term
processes of our housing is to take a good look at our housing
over the general Coast Guard because there are a lot of areas
that it is going to take a lot more than $20 million that we
may be able to get into it in the fiscal year 2013.
[The information follows:]

CORRECTION: The current housing account balance does
not cover the projected backlog of proposed military
housing projects, but the provision within the Coast
Guard Authorization Act of 2010 provides the Coast
Guard with a vehicle to address military housing needs
on a recurring basis. The Coast Guard is in the process
of conveying several pieces of property, and recouping
the proceeds into the established housing fund for
future housing projects, as authorized by the Coast
Guard Authorization Act of 2010. The Coast Guard
housing project request in the 2012 budget, and
authorities contained in the new legislation will begin
to address the backlog of eligible government owned
housing improvement projects.

For example, across the broad base I think Admiral Allen
said a third of it is in pretty good shape, a third of it is in
medium shape, and a third of it is in poor shape, and that is
what we are facing. We are facing the high cost of
construction. Right now with this bill we are looking at $20
million, and we are looking at replacing the unaccompanied
personnel housing up at Cape Cod and as well as the lower
Columbia River there. It is very expensive taking a look at
that. So we are just looking at two housing areas. We have
4,000 houses, plus or minus a few, out there in our inventory.
So if you take a look at those numbers, you can see, well,
$20 million this year might be able to cover other area
housings right here, but the reality of it, Master Chief Bowen
came in here last year and he told you that we are about $300
to $350 million in backlog in the housing. So those are the
challenges that we face and how we are going to organize across
our mission because housing is included in the infrastructure
that we have also, our older infrastructure, about the same age
as our ships, Mr. Chairman.
Mr. LoBiondo. Well, either today or as a follow-up, if you
can suggest, make any recommendations to us, I mean, short of
striking the lottery for you, what we can do to help improve
the housing situation, we would be interested to try to
continue working on that.
Master Chief Leavitt. Yes, sir. One thing that we are doing
is an analysis of our housing to identify the numbers we have
throughout the country, to see what the supply and demand is
for our housing versus basic allowance for housing, and we will
have a much better idea once we run this analysis across to see
what our position is. We can give you a much better number of
what that deficit might be in that gap by identifying that gap,
sir.
[The information follows:]

The Coast Guard is very appreciative of the new housing
legislation contained in the Coast Guard Authorization
Act of 2010. Specifically, the authority to leverage
the proceeds from the sale of excess Coast Guard
property for repair and construction of Coast Guard
housing will be an important tool for the Coast Guard
in managing its housing program. Currently, the Coast
Guard is aggressively pursuing execution of these new
authorities in order to improve the material condition
of Coast Guard owned housing and the quality of life of
our service members. The Coast Guard has also embarked
on a comprehensive national assessment of government
owned family and unaccompanied personnel housing. The
results of this assessment will baseline current
maintenance conditions and the proper allocation of
Coast Guard owned housing. Additionally, this
assessment will also prioritize housing maintenance/
recapitalization requirements. Most immediately, the
Coast Guard requests the support of Congress in funding
the military housing projects contained in the
President's FY 2012 budget. These projects (Cape Cod,
MA and Sector Columbia River) are vital to providing
military members/families in these areas with
affordable, suitable housing critical to ensuring
operational readiness.

Mr. LoBiondo. Thank you, Master Chief.
Mr. Lidinsky, in December 2010, the FMC formally accepted
the report of Commissioner Dye's investigation into vessel
capacity and equipment shortages. Has the FMC established the
shipper-carrier working groups to follow up on the
investigation's recommendations?
Mr. Lidinsky. We have, Mr. Chairman.
Mr. LoBiondo. Is your mic on?
Mr. Lidinsky. I say we have, Mr. Chairman, moved forward.
The fact finding had six or seven different areas of action for
the Commission to follow. Commissioner Dye is overseeing most
of those. The Commission had a vote on several of those, such
as getting full transcripts from some of the carriers, a Notice
of Inquiry concerning the alliances that run certain carrier
groups, and bringing together the shippers and carriers and the
working groups as well.
Mr. LoBiondo. Thank you.
Mr. Larsen, back to you.
Mr. Larsen. Thank you, Mr. Chairman.
Back to Chairman Lidinsky, it was noted that you have a
slight increase in your budget, and it seems that from my
perspective the only possible way to justify that in this
current fiscal environment is that there is some relation to
your increase to economic growth and creating U.S. jobs here as
a result of the trade that the Commission has responsibility to
oversee.
Can you give us an indication that that is, in fact, the
case?
Mr. Lidinsky. That is a correct analysis, Mr. Larsen. Every
action that the Commission takes, whether approving an
agreement or whether overseeing a new program such as Pier
PASS, which on the West Coast, which has created hundreds of
jobs for truckers, has an economic impact on our employment
situation.
In the specific case of the increases in the budget where
we call for these two additional spots in our Consumer Affairs
Office, this would help shippers who maybe just enter into the
international export stream, to overcome any problems we are
having with carriers.
So I think it is a very strong investment to make just for
two positions. At the current moment we have two people
assigned from another office to help out that office because
we're seeing an increase of over 16 percent in cases so far
this year, a projected total of about 650 cases for the year
resolving these issues.
But people who would go particularly into the export trade
often try it once and if they are unsuccessful for whatever
reason, then they back off, and there are jobs that are not
create.
Mr. Larsen. Thank you.
Chairman Matsuda or Administrator Matsuda, with regards to
the MSP, you note that the Administration has requested $174
million for the Maritime Security Program to support sealift
operations. Considering the current and continued deployment of
U.S. Armed Forces overseas, the unrest throughout the Middle
East, and so on, and the likely scenario of increased fuel
cost, is your request sufficient to meet the sealift needs of
our Armed Forces?
Mr. Matsuda. This request for the Maritime Security Program
would fully fund the program at the authorized level, and this
is a program that has throughout its history has always been
funded at the authorized level. It has been a progressively
larger amount. Over every several years it gets adjusted in the
authorization, and that approach has helped to deal with things
like fuel costs and inflation.
I note that recently Congress extended the program for ten
years, and we hope to have a proposal up to Congress shortly
that would talk about how we might be able to address some of
the details in the program.
But it is a critical one. It is one that we work very
closely with our partners, the United States Transportation
Command and the Department of Defense, to make sure it is
meeting their needs. Right now we will note that General Duncan
McNabb, the commander, has called for more of specific types of
ships, roll-on/roll-off vessels, for instance. Some of these
have a hard time meeting commercial viability tests that you
need to be able to operate in the foreign trade.
So we are working with them to make sure it is a program
that delivers the right mix of vessels and crews to make sure
it meets their needs.
Mr. Larsen. Thanks.
With regard to the assistance to small shipyards, we had
occasion to discuss this a little bit yesterday, and I have
given my assessment of how the shipyards in my district have
utilized it in order to become more efficient today so that
they are more efficient over the next ten years. So the payback
on this is not a one-year payback. It is a payback over the
life of the shipyard.
Given that, can you talk a little bit about why this is in
the request zeroed out?
Mr. Matsuda. Well, the Shipyard Grant Program is something
that we take very seriously. We continue to administer the
grants to make sure that the funding that has been provided,
which was $100 million in the Recovery Act; there was another
$15 million before that and I believe a similar amount in
another previous year; overall these grants have done wonderful
things. We have tallied at least 500 jobs created to date as a
result of the grants. It helps the small shipyards purchase new
equipment.
Some of these equipment manufacturers have hired new folks
to help produce the stuff here in the U.S. So overall we think
it has had a great impact. It is too early to see maybe in the
long term how that might impact the competitiveness of our
shipyards and repair facilities, and so that is something we
are continuing to monitor, but we certainly understand the
importance of it.
Mr. Larsen. If I could just note, Mr. Chairman, before I
yield back that you mentioned 500 jobs, which obviously does
not seem like a lot, given what has been put in this program,
but again, none of these shipyards look at this as a one-year
investment. They all look at it as part of investment today
that pays off over the long term for them.
And, again, I have invited you to several shipyards in my
district to see what they have done with these grants that will
mean a long-term investment for the shipyard so that they can
maintain their viability, their competitiveness, and to get out
there and go out and compete for shipbuilding jobs.
Mr. LoBiondo. I would be happy to witness that.
Mr. Larsen. Thank you. Thank you, Mr. Chairman.
Mr. LoBiondo. I would like to ask unanimous consent that
Mr. Southerland, a Member of the full Committee, be allowed to
sit on the subcommittee for the hearing today.
Without objection, so ordered.
Master Chief Coble.
Mr. Coble. Thank you.
Mr. Chairman, when you address me in that manner, at least
when Admiral Allen was here, there would be a broad smile
across his face when you said that.
Admiral and Mr. Chairman and Ranking Member, I do not want
to be a Johnny One Note, but I am still having difficulty
embracing the Polar Sea problem, Admiral. I am still steaming
in the fog.
Let me ask you this, Admiral. What do you plan to do with
her once she is decommissioned? Are there plans to perhaps
retain her with the hope of reactivating her at a subsequent
date?
Admiral Papp. Yes, sir, absolutely. The challenge that we
are confronted with, and perhaps I should have given a little
bit more detail here, is the money that is transferred back
from the National Science Foundation back into the Coast Guard
budget in the President's recommendation is enough to operate
one medium icebreaker and one heavy icebreaker. So Healy, of
course, will be operated. She is operating and will continue to
do that.
But right now we have only got one icebreaker crew. Polar
Star, the one that has been under reactivation, has no crew.
She was laid up in caretaker status for a number of years
pierside, and then we have just recently gotten the funding to
reactivate that, but we do not have operating funds for that
ship. We only have operating funds for the Polar Sea, which is
broken down and which I do not want to invest any more money
in.
So what we will do is we will transfer the operating funds
from Polar Sea over to Polar Star to complete the reactivation
and then have a full up ship ready for about another ten years
of service.
Mr. Coble. That being the Polar Star.
Admiral Papp. The Polar Star.
Polar Sea, we will lay that up and put it in caretaker
status like Polar Star was before. We will retain it to see the
outcomes of our high latitude study and other decisions that
are made by the country in terms of what we want for organic
icebreaking services for this country.
[The information follows:]

CORRECTION: After the POLAR SEA is decommissioned in FY
2011 and all personnel have been transferred to the
POLAR STAR, the Coast Guard will immediately begin the
disposal process with MARAD. Disposal plans have not
been finalized, but POLAR SEA will likely be
transferred to MARAD's Reserve Fleet in FY 2012 with
final disposal options at MARAD's discretion. We
strongly support enactment of DHS General Provision
Section 539 in the President's 2012 Request to enable
the most efficient means for disposition.

Mr. Coble. Thank you, Admiral. I am still not grasping it,
but I appreciate that, Admiral.
Thank you, Mr. Chairman.
Mr. LoBiondo. Mr. Cravaack.
Mr. Cravaack. Thank you, Mr. Chairman.
Mr. Matsuda, I would like to go back again. One of the main
concerns that I have is regarding your Merchant Marine
availability. With China developing a deep water navy, my
question would be: how quickly could we spool up, if necessary,
if we became involved in a global conflict once again where we
would need our Merchant Marine fleet to be fully active under
U.S. flag hopefully, if not, our allies, to be able to move men
and materials to where they need to be for the conflict?
Mr. Matsuda. I am happy to talk to you about that. This is
something that we work very closely with the Department of
Defense on, to make sure that as they are the customer, so to
speak, that we meet their needs in terms of delivering this
commercial capability to carry goods on U.S. ships with U.S.
crews.
One of the most important programs to make sure that can
happen is the Maritime Security Program, and that provides an
economic incentive for these private U.S. companies to maintain
a ship under U.S. flag and hire U.S. crews.
The other flip side of that is the Cargo Preference
Program, which makes sure that they can carry cargos that are
financed by the Federal Government and able to sustain their
business operations and meeting their costs.
These programs work to provide a Merchant Marine that is
capable and available, ready to meet the needs of the military.
In addition to this, we have a fleet of our own vessels
that are held in reserve status around the country, 49 large
cargo ships, some of them specialty mission, but for the most
part these are crewed with a skeleton crew, and they rely on
this pool of U.S. commercial mariners employed by American
companies in the MSP program, and these are ships that can be
available within five days' notice.
The Maritime Security Program and the commercial ships,
generally speaking, some of these can be anywhere in the world
trading at any particular time. Generally speaking, they will
take longer to make sure that they are available, but with the
whole package of programs, we make sure that we have a product
that works and delivers everything that our troops need on the
front line when they need it.
Mr. Cravaack. Thank you for that.
Now, once step further, engaging, we have casualties to our
maritime fleet. How are we prepared to replace those ships?
Mr. Matsuda. Do you mean the reserve ships held by our
agency or----
Mr. Cravaack. Well, if we were in a full conflict, for
example, obviously there will be casualties to our maritime
fleet. How quickly is the United States able to respond to
building more ships if necessary or being able to acquire
assets needed to make sure that we are able to maintain the
war?
Mr. Matsuda. That is a good question. Obviously that
depends on both our own country's industrial shipbuilding
capability. I think that for the most part the focus of our
Nation's shipbuilding has been on the military side and less so
on the commercial side. However, given what the market is right
now for vessels available in the world to sail, there is an
abundance of, for instance, tanker vessels. This is just a fact
of the industry.
If we were to need one of these ships, we might not be able
to get one fairly quickly, depending on the state of the
current industry. For other types of vessels, we do not know,
and that is why we focus more on maintaining a U.S. capability.
But at the end of the day what we want to make sure we deliver
to the military is assured access to sealift capability.
Mr. Cravaack. Thank you much, sir.
And I will yield back the rest of my time, Mr. Chairman.
Mr. LoBiondo. Mr. Landry.
Mr. Landry. Commandant, in your prepared statement you
stated the Coast Guard provides our Nation with tremendous
value and service to the public, and I could not agree with you
more. You all do a great job. You all have done a great job
during the Deepwater Horizon accident and also during the
hurricanes that have plagued our coast.
However, according to the Coast Guard's Website, there are
more than 6,500 oil and gas producing wells in the Gulf of
Mexico and fishing vessels numerous enough that nearly 40
percent of the U.S. commercial catch is landed along the Gulf
Coast.
Considering the staggering number of commercial activity in
the Gulf, is it realistic to expect the Coast Guard to reach
every drilling platform accident site in enough time to save a
maritimer's life who must abandon the platform by jumping
overboard?
Admiral Papp. Well, it might be unreasonable, sir, if that
was the only response, and I will emphasize the word
``response.'' We do two things in the Coast Guard. We do
prevention and response, and part of our process is to make
sure that platforms have the proper firefighting equipment;
that the crews are trained; that there are lifeboats and other
facilities that take care of that.
In other words, we do not want the fire to start or an
explosion or whatever it might be in the first place. So we
pour a lot of effort into those prevention activities.
In terms of response, we will continue to do our best. It
is a lot to expect, but on the other hand, we do not get a lot
of cases, and we do have sufficient helicopter coverage out
there and boats that are close enough to respond within a
required time period.
Mr. Landry. And I appreciate that. I just know that there
were two accidents actually in the Gulf of Mexico this year,
one right after or a couple of months after the Deepwater
Horizon accident. In both of those accidents men had to jump
overboard. I think that probably as careful and as prudent as
you can be when a man or a woman is faced with a disaster on a
platform and trying to make a decision on how to survive, they
have a tendency to want to jump into the water.
I think we were lucky with the Deepwater Horizon that the
Bankston Todd was there at the time. However, in the Manor
accident, those men stayed in the water for ten hours. If that
would have been in January or February when the Gulf
temperatures are in the mid-50's, I do not know if we would
have picked them all up alive, which is my concern.
Admiral Papp. Yes, sir. Well, it is always balancing
against risk. In an unlimited resource environment you could
provide more out there, but then how many of them do you cover?
How much do you keep in full-time reserve? I think we have got
adequate resources.
Mr. Landry. Would you say that the private sector could do
as good of a job putting some sort of standby vessels within
certain maybe three or four blocks of man?
Admiral Papp. Well, it is an intriguing concept, sir, but
it is going to cost somebody some money somewhere, and I do not
know if you can predict where the optimal location would be. It
is certainly something worth looking at.
Mr. Landry. Thank you.
Mr. LoBiondo. Mr. Southerland, you are up.
Mr. Southerland. Mr. Chairman, thank you very much.
Though not a regular sitting member of this subcommittee, I
appreciate the opportunity to speak today.
My questions today are for you, Mr. Matsuda, and I thank
you for allowing me the opportunity to ask you a few questions.
My questions today are in regards to the Title XI Loan Program.
There is an application before you right now that I think
you are aware of, Eastern Shipbuilding application, and the
reason I am bringing my questions today is right now with
Florida at historical unemployment numbers, 12 percent,
creating jobs is clearly a mantra that gains traction in
Florida.
This application, which has been before MARAD for two years
now, we are quickly approaching a deadline, March 10th, for
this application to be heard and a decision made. I know that
the Credit Committee will see this application on March 8th,
just two days, 48 hours before the expiration, and I just
wanted to get some feedback from you, if possible, regarding
this application.
Seeing the crisis that we are in in this country of having
to create jobs, can you address this particular application?
Mr. Matsuda. I surely can, sir, and this is one that we
have been watching closely, as we know how important it is to
you all and others certainly in the region and the industry.
Like this application, we treat every application as one
that has the potential to be successful, and so in many ways we
work very closely to make sure we can put together a deal that
meets the financial tests to allow the Federal Government to
put their guarantee behind the project.
There has been a number of instances in the past where
decisions were made that, well, maybe they were not the best in
terms of the risk that was before the Administration, but this
is something we take very seriously and we look very closely
at. We understand that we are approaching the statutory
deadline. We do not think that that deadline will stand in the
way of them actually refiling to make sure it is fully
considered with sufficient time.
Mr. Southerland. But you clearly understand though that in
the business world time is not just money, but speed is also
profit, and so therefore, there is a sense of urgency out there
in the private sector that clearly, if this deadline is not
met, that there is a great, I would almost tell you a better
than average chance that this contract to build these vessels
would go to a foreign country somewhere else.
And so, therefore, I think that is why I just bring it up
today. The sense of urgency, I appreciate the deadline
extension, but after the project moves on, the extension to be
able to attract a contract like this goes away.
Mr. Matsuda. We are fully aware of it, and I assure you we
are moving with all due haste to make sure it is considered.
What we cannot change are the merits of the deal. If it is not
a good deal for the Federal Government----
Mr. Southerland. No, I understand. But here we are. It has
been filed for two years. It is a two-year application, and we
now hear this in the Credit Council 48 hours before the
deadline, and so, therefore, I mean to say that we are at the
11th hour, I would say that we are at like the 11th hour 59
minutes.
And so what happens? Is there, in your opinion, is there
time for the Credit Council to hear this application, approve
this, and will that be done on the 8th? Is it possible for this
to meet the deadline or have we push this to the Credit Council
to where it is impossible to approve this on the 8th and for
this to be approved for funding by the 10th?
Mr. Matsuda. Well, we do not like to put these types of
applications before the Credit Council and other internal
review processes until we are confident that this is a deal
that can be approved that works for the Federal Government and
they can make a recommendation to the Secretary.
Mr. Southerland. So you feel, and the only reason I am
hastening is because I am running out of time; so you feel that
it has met that standard to be worthy to go before the Credit
Council. Because you just stated that you did not want to put
an application before the Credit Council unless it has met
certain standards. So I am assuming since it is going before
the Credit Council on the 8th that it has met certain standards
that you feel that it is worthy to go before them
Mr. Matsuda. Well, I do not think I could speak to the
particulars of it or the merits of it, but I can tell you that
we are working very hard to make sure that it is in that shape
by that time, and we hope that we can get there.
Mr. Southerland. So if it goes before them and if it be
approved on the 8th and it can still meet the deadline on the
10th in order for full approval so that we can create 300 jobs,
1,500 ancillary jobs, a huge economic boost in a region that
was hit by and affected by the Deepwater Horizon?
Mr. Matsuda. Well, again, I could not speak to the
particulars. I will tell you that we will not let the process
be upended nor get in the way of these important goals that we
understand.
Mr. Southerland. But be sensitive that the process could
very well be the reason that these jobs go elsewhere in the
world. OK? So there is a sense of urgency here.
Mr. Matsuda. Yes.
Mr. Southerland. And I would just ask that it is my
understanding that this transaction clearly falls inside the
guidelines and that this is a very credit worthy applicant that
can stand on its own merits. I appreciate you today and your
comments. I would just ask that because of the sense of
urgency, OK, that we would do our due diligence on the 8th and
then do our due diligence on the 10th so that this contract and
the jobs it will create will not go overseas.
Mr. Chairman, I thank you for the time, and I really
appreciate you allowing me to ask these questions.
I yield back.
Mr. LoBiondo. Sure. Mr. Matsuda, we understand you cannot
speak to particulars today, but I guess it is only fair to tell
you that the Chairman of the full Committee, Mr. Mica, will
probably ask you for particulars if this falls apart from a
timeline standpoint. The Committee is very interested in it,
American jobs, and you heard all of the arguments.
So just know there is a bigger picture than what you are
hearing just here for Mr. Southerland.
Mr. Matsuda. I fully appreciate that, sir, and I would be
happy to talk about that. In the meantime, I will inform the
Chair of the Credit Council, our Deputy Secretary, of your
interest in this.
Mr. Southerland. Thank you.
Mr. LoBiondo. OK. Mr. Larsen.
Mr. Larsen. Thank you, Mr. Chairman.
Just a couple of questions to clean some things up. First,
I am impressed with this subcommittee's full recognition
apparently that there is definitely a Federal Government role
in supporting jobs in this country, and that seems to be shared
on both sides of the aisle, something we are hearing a lot of
lately.
Admiral Papp, last year's authorization bill in Section 809
specified that not all Coast Guard licensed captains need to
have TWIC, Transportation Worker Identification Credentials.
Only those having unescorted access for secure areas of vessels
would be required, that are required to have vessel security
plans, but I am told that the National Maritime Center is still
advising mariners that a license or a merchant mariner document
is not valid unless the person also possesses a TWIC.
And further, the center will not issue or accept an
application without proof that the applicant has applied for
the TWIC card.
Is what I am hearing correct? Is the Coast Guard requiring
TWIC as a prerequisite for obtaining a mariner license?
Admiral Papp. Sir, I am not sure whether we are requiring
it for the license itself. What I do know is that in the spirit
of unintended consequences, when we move forward with the TWIC,
often times like any other regulation or change that is
developed, we find there are probably some groups that we
probably did not intend to include.
We discovered in my previous job as the Commander, Atlantic
Area, we had laytexoma. We had some of the outer regions of the
boundary waters up in Minnesota where you have uninspected
vessel owners, fish guides and other people who clearly need
some sort of licensing, but perhaps do not need the requirement
of the TWIC.
Unfortunately, the processes that we developed in terms of
screening for both rely upon the same resources, and because of
the database and their interaction together, and I cannot get
into the technicality of this.
Mr. Larsen. Sure.
Admiral Papp. But what I do know is we came up with means
to do these in tandem, and now we are in the process of trying
to separate those. There are clearly some groups that we had
not intended to have to take on this extra burden of having the
TWIC as well, and we are working diligently to change that.
Mr. Larsen. Can you get back to us with the specifics of
how you are addressing this?
Admiral Papp. Yes, sir. We will submit that for the record.
[The information follows:]

The present policy regarding the Transportation Worker
Identification Credential (TWIC) requirement for
mariners seeking a Coast Guard-issued credential
mandates that mariners provide their biometric and
biographic information to a Transportation Security
Administration (TSA) enrollment facility. This policy
and approach is in accordance with the regulations
required pursuant to 46 U.S.C. 70105, requiring all
mariners to hold a TWIC. DHS designed this requirement
to eliminate the multiple collection of similar
information by the Coast Guard and TSA--creating
efficiencies for both the Federal government and the
mariner. The coupling of the Merchant Mariner
Credential (MMC) with the TWIC allows TSA to collect
the information, perform the security threat
assessment, and then share the data with Coast Guard
for use in issuing the MMC.

In response to the Coast Guard Authorization Act of
2010, the Coast Guard is in the process of developing a
short-term strategy to modify the TWIC enforcement
policies for the affected mariners and a long-term
strategy to decouple having a TWIC be a pre-requisite
for a MMC. Accordingly, the Coast Guard is working
closely with the DHS Screening Coordination Office and
TSA to maintain the efficiencies gained from sharing
enrollment centers with TWIC to obtain necessary safety
and suitability information for issuing MMCs, preserve
the convenience to the mariner of access to
significantly more enrollment locations than were
available before coupling TWIC and MMC enrollment, and
afford those individuals relief from financial costs
associated with the TWIC. These things are not easy to
accomplish, especially as we seek to avoid reversing
the efficiencies and elimination of unnecessary
redundancies gained under the current system. The
Service is currently working to issue both near-term
policy and longer term regulatory relief to affect
those statutory changes.

In the short-term, the Coast Guard will develop and
implement policy that would remove the requirement for
holding a TWIC when serving under the authority of
their credential. Affected mariners would still be
required to use the TSA enrollment facilities to
provide their biographic and biometric information. The
Coast Guard is seeking to complete the short-term
solution during 2011. The long-term solution will
require a regulatory change.

Mr. Larsen. That is great. I appreciate that very much.
For Mr. Lidinsky, Chairman Lidinsky, I understand the
Commission has recently published new rules that will relieve
more than 3,300 licensed, non-vessel operating common carriers
from the costs and burdens of publishing tariffs in tariffs or
rates they charge for cargo shipping. Do you anticipate
additional rulemaking in the upcoming year that will further
reduce regulator burdens on the maritime industry and provide
them additional incentives for economic growth?
Mr. Lidinsky. We are, Mr. Larsen. In that NVOCC proceeding
where I had mentioned before we had identified certain business
that would save $200,000, we made the point that we hope some
jobs come out of this. Of course, that is the decision of each
individual business.
But we are also agreeing all of our rules, regulations, and
other orders and directives that we have put out under the
spirit of the President's Executive Order, which as an
independent agency you know we do not have to adhere to, but we
are certainly doing so, to translate savings that could be
translated into jobs in our ports and airlines.
Mr. Larsen. Excellent. Well, if you can keep the
subcommittee up to speed on the further steps you are taking to
reduce regulatory burdens, I would certainly appreciate it.
Mr. Lidinsky. We certainly will.
Mr. Larsen. And my final question, Mr. Matsuda, MARAD has
requested $2 million in base funding to support midshipmen
finance requirements at the Merchant Marine Academy that were
previously funded through midshipmen fees, which have since
been discontinued. Is this the last budget or will we see
additional plus-ups to the academy's base budget to cover these
costs?
Mr. Matsuda. For these costs we hope so. As we address the
Government Accountability Office's recommendations, there are
47 recommendations they made to help improve the accountability
and transparency of the school's finances, and we have
addressed 42 of them to date. We are making very good progress
on closing out the remaining recommendations.
Mr. Larsen. I am sorry. When you say the 42, have those
been closed out? Have those been checked off?
Mr. Matsuda. They have.
Mr. Larsen. OK.
Mr. Matsuda. And we have shared our work with the GAO, and
they are going back over them as we speak.
Mr. Larsen. OK.
Mr. Matsuda. But I know that we made very good progress in
cleaning up the finances and making sure that everything is
working transparently and with full accountability.
With the midshipmen fees, this is one that was responsible
for a number of their recommendations, and we felt that it was
actually less efficient to collect these than to simply request
for the funds from Congress.
Mr. Larsen. Thank you.
Mr. Chairman, thank you very much for indulging me. Thank
you.
Mr. LoBiondo. Additional questions? The gentleman from
Minnesota? The gentleman from Louisiana? Are you good?
Mr. Landry. Yes, sir, Mr. Chairman. Thank you.
Mr. LoBiondo. I would like to thank our distinguished panel
very much.
And the committee is adjourned.
[Whereupon, at 11:55 a.m., the subcommittee was adjourned.]