[House Hearing, 115 Congress] [From the U.S. Government Publishing Office] BUILDING A 21ST-CENTURY INFRASTRUCTURE FOR AMERICA: COAST GUARD STAKEHOLDERS' PERSPECTIVES AND JONES ACT FLEET CAPABILITIES ======================================================================= (115-26) HEARING BEFORE THE SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION OF THE COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE HOUSE OF REPRESENTATIVES ONE HUNDRED FIFTEENTH CONGRESS FIRST SESSION __________ OCTOBER 3, 2017 __________ Printed for the use of the Committee on Transportation and Infrastructure [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Available online at: https://www.govinfo.gov/committee/house- transportation?path=/browsecommittee/chamber/house/committee/ transportation __________ U.S. GOVERNMENT PUBLISHING OFFICE 38-052 WASHINGTON : 2019 COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE BILL SHUSTER, Pennsylvania, Chairman DON YOUNG, Alaska PETER A. DeFAZIO, Oregon JOHN J. DUNCAN, Jr., Tennessee, ELEANOR HOLMES NORTON, District of Vice Chair Columbia FRANK A. LoBIONDO, New Jersey JERROLD NADLER, New York SAM GRAVES, Missouri EDDIE BERNICE JOHNSON, Texas DUNCAN HUNTER, California ELIJAH E. CUMMINGS, Maryland ERIC A. ``RICK'' CRAWFORD, Arkansas RICK LARSEN, Washington LOU BARLETTA, Pennsylvania MICHAEL E. CAPUANO, Massachusetts BLAKE FARENTHOLD, Texas GRACE F. NAPOLITANO, California BOB GIBBS, Ohio DANIEL LIPINSKI, Illinois DANIEL WEBSTER, Florida STEVE COHEN, Tennessee JEFF DENHAM, California ALBIO SIRES, New Jersey THOMAS MASSIE, Kentucky JOHN GARAMENDI, California MARK MEADOWS, North Carolina HENRY C. ``HANK'' JOHNSON, Jr., SCOTT PERRY, Pennsylvania Georgia RODNEY DAVIS, Illinois ANDRE CARSON, Indiana MARK SANFORD, South Carolina RICHARD M. NOLAN, Minnesota ROB WOODALL, Georgia DINA TITUS, Nevada TODD ROKITA, Indiana SEAN PATRICK MALONEY, New York JOHN KATKO, New York ELIZABETH H. ESTY, Connecticut, BRIAN BABIN, Texas Vice Ranking Member GARRET GRAVES, Louisiana LOIS FRANKEL, Florida BARBARA COMSTOCK, Virginia CHERI BUSTOS, Illinois DAVID ROUZER, North Carolina JARED HUFFMAN, California MIKE BOST, Illinois JULIA BROWNLEY, California RANDY K. WEBER, Sr., Texas FREDERICA S. WILSON, Florida DOUG LaMALFA, California DONALD M. PAYNE, Jr., New Jersey BRUCE WESTERMAN, Arkansas ALAN S. LOWENTHAL, California LLOYD SMUCKER, Pennsylvania BRENDA L. LAWRENCE, Michigan PAUL MITCHELL, Michigan MARK DeSAULNIER, California JOHN J. FASO, New York A. DREW FERGUSON IV, Georgia BRIAN J. MAST, Florida JASON LEWIS, Minnesota ------ Subcommittee on Coast Guard and Maritime Transportation DUNCAN HUNTER, California, Chairman DON YOUNG, Alaska JOHN GARAMENDI, California FRANK A. LoBIONDO, New Jersey ELIJAH E. CUMMINGS, Maryland GARRET GRAVES, Louisiana RICK LARSEN, Washington DAVID ROUZER, North Carolina JARED HUFFMAN, California RANDY K. WEBER, Sr., Texas ALAN S. LOWENTHAL, California BRIAN J. MAST, Florida ELEANOR HOLMES NORTON, District of JASON LEWIS, Minnesota, Vice Chair Columbia BILL SHUSTER, Pennsylvania (Ex PETER A. DeFAZIO, Oregon (Ex Officio) Officio) CONTENTS Page Summary of Subject Matter........................................ iv WITNESSES Panel 1 Rear Admiral William G. Kelly, Assistant Commandant for Human Resources, U.S. Coast Guard, and Rear Admiral Melvin W. Bouboulis, Assistant Commandant for Engineering and Logistics, U.S. Coast Guard: Testimony.................................................... 4 Joint prepared statement..................................... 44 Responses to questions for the record from Hon. Don Young, a Representative in Congress from the State of Alaska........ 47 Panel 2 Brian W. Schoeneman, Legislative Director, Seafarers International Union, on behalf of Maritime Labor: Testimony.................................................... 20 Prepared statement........................................... 62 Questions for the record for Mr. Schoeneman from Hon. Don Young, a Representative in Congress from the State of Alaska..................................................... 68 Anthony Chiarello, President and CEO, TOTE: Testimony.................................................... 20 Prepared statement........................................... 69 Responses to questions for the record from Hon. Don Young, a Representative in Congress from the State of Alaska........ 72 Michael G. Roberts, Senior Vice President and General Counsel, Crowley Maritime Corporation: Testimony.................................................... 20 Prepared statement........................................... 73 Questions for the record for Mr. Roberts from Hon. Don Young, a Representative in Congress from the State of Alaska...... 77 John Graykowski, Government and Regulatory Advisor, Philly Shipyard, Inc., on behalf of the Shipbuilders Council of America: Testimony.................................................... 20 Prepared statement........................................... 78 Questions for the record for Mr. Graykowski from Hon. Don Young, a Representative in Congress from the State of Alaska..................................................... 83 SUBMISSIONS FOR THE RECORD U.S. Coast Guard, submission of the following: Report, ``Acquisition, Construction, and Improvements: FY2018 Unfunded Priorities List,'' July 20, 2017.................. 84 Chart, ``FY2018-FY2022 Five-Year Capital Investment Plan: Acquisition, Construction, and Improvements''.............. 92 ``United States Coast Guard--FY 2018 Hurricane Supplemental Submission,'' a detailed list of hurricane damages summarized on page 12...................................... 93 Michael G. Roberts, Senior Vice President and General Counsel, Crowley Maritime Corporation, supplementary information for the record......................................................... 118 ADDITIONS TO THE RECORD Written testimony of James H.I. Weakley, President, Lake Carriers' Association.......................................... 121 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] BUILDING A 21ST-CENTURY INFRASTRUCTURE FOR AMERICA: COAST GUARD STAKEHOLDERS' PERSPECTIVES AND JONES ACT FLEET CAPABILITIES ---------- TUESDAY, OCTOBER 3, 2017 House of Representatives, Subcommittee on Coast Guard and Maritime Transportation, Committee on Transportation and Infrastructure, Washington, DC. The subcommittee met, pursuant to call, at 10:09 a.m., in room 2167, Rayburn House Office Building, Hon. Duncan Hunter (Chairman of the subcommittee) presiding. Mr. Hunter. The subcommittee will come to order. Good morning. The subcommittee is meeting today to discuss Coast Guard personnel and shoreside infrastructure and ongoing relief efforts for Puerto Rico by U.S.-flag vessels. The Coast Guard is the smallest of the Armed Forces with 41,000 Active Duty and 6,400 Reserve military personnel. It is also the only Service outside of the Department of Defense that has not been included in defense budget protections or increases. In fact, the Coast Guard has seen budget reductions requiring the elimination of over 1,500 positions between fiscal years 2013 and 2015. The Commandant has publicly stated he would like to grow the Coast Guard's Active Duty workforce by 5,000 people over the next 5 years. Members, I believe, of this subcommittee would support the Commandant's request if sufficient detail were provided to the committee regarding the requirements for such growth and information on current operational missions, which are undermanned. Limited budgets have also impacted the Coast Guard's ability to maintain its shoreside infrastructure. Shoreside infrastructure supports Coast Guard assets and provides housing for some of its personnel. Shoreside infrastructure needs have been pushed off due to budget tradeoffs, but these needs cannot be ignored over the long term without having an impact on the infrastructure's ability to support incoming new assets and on the personnel that have to live in degrading facilities. Over the past month, the Coast Guard has shown its mettle during Hurricanes Harvey, Irma, and Maria. The hurricanes impacted Texas, Louisiana, Florida, Georgia, the U.S. Virgin Islands, and Puerto Rico. Prior to, during, and after the hurricanes, the Coast Guard has been an integral component in the support provided by the Federal Government. I want to thank the Coast Guard for its efforts to help everyone affected by these recent storms. As a multimission Service, the Coast Guard provides personnel, aircraft, and cutters, as well as equipment to surge first responders, conducts search and rescue operations, provides humanitarian relief supplies, and conducts maritime and shoreside security. The Coast Guard proactively shut down ports and worked with its Federal partners to open them as quickly as possible after the hurricanes. The Coast Guard's initial cost estimates for Hurricanes Harvey and Irma is $33.5 million for operational cost. Direct cost estimates for hurricane-related destruction of property is roughly $198.4 million for Hurricane Irma and roughly $120 million for Hurricane Harvey. Indirect cost estimates for the two hurricanes is $337 million. Hurricane Maria cost estimates have not yet been provided. Hurricane Maria was a category 5 hurricane when it hit the Commonwealth of Puerto Rico. Massive relief efforts were immediate and included over 7,000 emergency response personnel from various departments and agencies, including the Department of Defense, the Coast Guard, FEMA, and the Army Corps of Engineers, among many others. Included in the response efforts were U.S.-flag vessels. There are 15 vessels that regularly supply Puerto Rico with cargo. These vessels were prepared with food, water, equipment, and supplies to restore power and emergency relief provisions for FEMA and the Red Cross. Critics continue to assail the U.S.-flag fleet and the Jones Act as an antiquated industry and law, unnecessary in today's world. These critics promoted claims the law prohibited supplies from getting to Puerto Rico; however, as we know, that was false. Supplies have been getting to the island and have been backlogged at the ports due to the devastation of logistics on the land. Foreign vessels are also bringing fuel and supplies to the island from foreign ports. The Jones Act does not prohibit that from happening. There are over 40,000 U.S.-flag vessels that work U.S. waterways. These vessels are U.S. built, owned, and crewed. These are good American jobs, and this should be a positive thing, not critiqued as antiquated or expensive. The Jones Act also ensures that our country has U.S. merchant mariners available to man U.S. military support vessels. This is a point ignored by many and something that needs more attention. Currently, we have enough U.S. mariners to support our current sealift response needs. However, we could reach a shortage if multiple military events were to occur around the world. If we support made in America, we support U.S. jobs, and we support U.S. citizens, we should always support the Jones Act. I look forward to hearing from witnesses today, and I now yield to Ranking Member Garamendi. You are recognized. Mr. Garamendi. I thank you, Mr. Chairman. And good morning to you, and good morning to our witnesses. I very much appreciate your talking about what the Coast Guard was able to do during the three hurricanes that impacted the United States. I will forgo the opportunity to go into that in more detail except to thank the Coast Guard for an extraordinary piece of work and look to their needs as they rebuild their facilities. The calamity affecting the island of Puerto Rico after the devastation unleashed by Hurricane Maria is simply astounding, both in its scale and magnitude. Just think about it. Across the island trees uprooted; roads impassable; houses blown apart as if hit by bombs; safe drinking water and sanitation unavailable, threatening to create a public health crisis; the entire electrical grid smashed, ruining what had been a tropical oasis into a dark, dangerous, and very foreboding place, especially for children and the elderly. Our hearts go out to the people of Puerto Rico as they endure the aftereffects of this unprecedented disaster. And our message to them is that you have not and you will not be forgotten. There has been a lot of misinformation, especially about the Jones Act. And it continues to float around in the media. This hearing provides a timely and valuable opportunity to set the record straight. Generally, media reports of the Federal response to this disaster paint a picture of a response scenario that has been too slow, too uncoordinated, and too ineffective. Yet, there has been one aspect of the Federal response that has responded with efficiency and dispatch, although it would be very hard to tell that by the narrative spun by the media and by critics of the Jones Act. The response of the U.S. merchant marine and the fleet of U.S. Jones Act carriers has been nothing short of superb. These domestic carriers immediately rerouted and assigned additional vessels to carry emergency supplies, food, fuel, water, medical supplies, and building materials to Puerto Rico in its time of greatest need. Within 3 days after Hurricane Maria's arrival, these Jones Act carriers had their terminals operational and awaiting deliveries from the U.S. mainland. This laudable service has somehow gone unnoticed as thousands of containers delivered thus far remain sitting on the docks awaiting transportation to areas of need on the island. It is a vexing challenge, as many of the island's roads remain impassable, fuel remains scarce, and drivers and trucks are in very short supply. Critics of the Jones Act, nonetheless, used this scenario to call for the administration to waive the Jones Act to allow more vessels, foreign flagged in this case, to come to Puerto Rico's aid. Regrettably, and contrary to the achievements of its own Department of Transportation, the President yielded to the political pressure and granted a 10-day waiver. What remains clear, however, is that more vessels delivering more supplies without any improvement of the island's surface transportation infrastructure will do little to improve the recovery effort on the island. In fact, it may create even greater congestion and confusion, which regrettably may only add to the misery of United States citizens and others on the island. Before anyone heeds any new, unwarranted calls to extend the Jones Act, or to do away with it, we first need to understand better the reality of what is happening on the island. I look forward to this morning's discussion and stand ready to assist the people of Puerto Rico as they recover from this disaster. I also look forward to hearing now from the Coast Guard as to its infrastructure needs, both before and after the three hurricanes. Thank you very much, Mr. Chairman. Mr. Hunter. I thank the ranking member. We will have two panels of witnesses today. On the first panel we will hear from the Coast Guard, Rear Admiral William Kelly, the Assistant Commandant for Human Resources; and Rear Admiral Melvin Bouboulis, Assistant Commandant for Engineering and Logistics. Did I say your name right, Admiral? Admiral Bouboulis. Close. Mr. Hunter. How do we say it? Admiral Bouboulis. Bouboulis, sir. Mr. Hunter. Bouboulis. All right, Admiral Kelly, you are recognized to give your statement. Thank you. TESTIMONY OF REAR ADMIRAL WILLIAM G. KELLY, ASSISTANT COMMANDANT FOR HUMAN RESOURCES, U.S. COAST GUARD; AND REAR ADMIRAL MELVIN W. BOUBOULIS, ASSISTANT COMMANDANT FOR ENGINEERING AND LOGISTICS, U.S. COAST GUARD Admiral Kelly. Chairman Hunter, Ranking Member Garamendi, honorable members of the subcommittee, good morning and thank you very much for your oversight and for your continued strong support of our United States Coast Guard. I am honored to testify before you here today with my colleague Rear Admiral Bouboulis. With your permission, I would now like to provide my opening statement, and I request that my written testimony be accepted as part of today's hearing official. Mr. Hunter. Without objection. Admiral Kelly. Thank you, sir. Thank you for the opportunity to discuss the Coast Guard's human capital strategy and our most valuable resource: our people. Representing over 40,600 Active Duty, 6,300 Reserve, and 8,300 civilian members is the highlight of my career. And I am ever mindful of my responsibility to care, serve, and support the men and women of the United States Coast Guard and their families. I am humbled as I address you here today from Washington, DC, while thousands of Coast Guard men and women are in the midst of serving and responding to incidents of national significance. Whether reacting to hurricanes in Texas and Florida or responding right now in Puerto Rico, your Coast Guard men and women have met the Nation's call. We answered when over 11,300 citizens put out a call for distress. We deployed over 3,000 Coast Guard men and women and 200 different assets from across the Service from Alaska to Maine. What is most notable is that while our members respond to help those that were displaced and distressed, many of them have also been displaced. In fact, we estimate approximately 700 Coast Guard families' homes have been damaged to the point where they will need to be relocated. To quantify the sacrifices Coast Guard men and women make in these scenarios is immeasurable. Yet, it is a hallmark of the pride we take in serving our country. To meet these dynamic challenges, we require a personnel system that is adaptive and responsive. Just as our Commandant formalized operational strategies to chart the Service's course in the Arctic, Western Hemisphere, cyber and energy realms, so too have we formally plotted the Service's course with our human capital strategy. Our human capital strategy is an enduring framework. It includes a series of transformative initiatives that address our most critical workforce challenges, such as developing the Coast Guard cyber workforce to address the increasing cyber threat, improving recruiting and retention of our Reserve workforce, and reshaping the prevention workforce to improve marine inspector retention. While these workforce challenges are our top priority, we continue to work to fill vacancies across the workforce. In our civilian workforce, we need to fill our human resource and acquisition experts, and we work to fill our rescue swimmers and culinary specialists, our chefs and our Active Duty workforce. We do have our challenges, but we look forward to what lies ahead. Our Coast Guard men and women are first and foremost proud members of a title 10 military service. As such, we are preparing for the implementation of the blended retirement system to ensure their futures are secure once they take off their uniforms for the last time. And I would like to thank you for your support to help ensure our men and women in uniform receive the same retirement benefits as their brothers and sisters in the Department of Defense. And we appreciate your continued support to assist us in crafting a long-term solution. Our strategy is to recruit, train, and retain the best and brightest our Nation has to offer. Our Coast Guard and the public we serve deserve this. This subcommittee's support is invaluable to the Coast Guard, and I look forward to addressing your questions or concerns. Thank you, sir. Mr. Hunter. Thank you, Admiral Kelly. Admiral Bouboulis, you do engineering and logistics but only for Coast Guard stuff. So you are not orchestrating the Puerto Rican Coast Guard logistics stuff, correct? Admiral Bouboulis. No, sir. Mr. Hunter. So just Coast Guard infrastructure is what you specialize in? Admiral Bouboulis. Correct. Mr. Hunter. OK. You are recognized. I just want to make that clear to my colleagues. Admiral Bouboulis. OK. Well, Chairman Hunter, Ranking Member Garamendi, members of the subcommittee, good morning and thank you also for the opportunity to speak about the Coast Guard's ongoing engineering and logistics support for our shore infrastructure assets. And with your permission, I would also like to make some opening statements and have my written testimony submitted for the hearing's official record, sir. Mr. Hunter. Without objection. Admiral Bouboulis. Thank you for your oversight and your continued support of our Service. And I am honored to represent the 5,000 military and civilian personnel dedicated to sustaining our aircraft, cutters, boats, and real property assets that serve our operational community, and especially the 500 professionals in our civil engineering program who support our entire $19.5 billion inventory of buildings, structures, and land. And as I speak, many of these men and women are providing critical repairs and support to enable around-the-clock Coast Guard operations in response to Hurricanes Harvey, Irma, and Maria. And as you know, our members live in the communities which they serve, and while responding to the crises across the gulf coast, Florida, and Puerto Rico, we have hundreds of Coast Guard families who suffered damage to their homes, as Admiral Kelly mentioned, and many of whom experienced catastrophic losses. The Coast Guard faces many challenges related to maintaining its shore facilities. We have a diverse facilities portfolio and a widely dispersed footprint of smaller installations, often in remote locations that present unique management and maintenance challenges. And we are largely located on the waterfront, clearly. And the daily effects of salt, air, and wind are challenges in and of themselves, but the devastation that we have seen from the recent hurricanes underscores the real risk that storm events pose for our facilities. And as both the first responder and a title 10 military service, the Coast Guard's ability to be always ready depends on having resilient infrastructure that can support continued operations following a storm or a hazard event. When we have the opportunity to recapitalize our facilities, we make them more storm resilient and survivable. In fact, several of our shore facilities that were rebuilt to more resilient standards following Hurricane Ike suffered minimal damages in Harvey and Irma. This effort goes hand in hand with the Coast Guard's human capital strategy to ensure that we take care of our people and their families. On the whole, the facilities challenges that we face are primarily due to shore infrastructure funding gaps. And with our shore infrastructure recapitalization backlog at over $1.6 billion, the Coast Guard has made and continues to make difficult decisions to postpone necessary facilities construction projects in order to recapitalize our cutters and aircraft. And just like any other aging asset, our facilities are experiencing an increase in maintenance costs. At the close of 2016, the deferred maintenance project list for our shore plant exceeded $700 million. And as you know, our 2018 unfunded priority list includes over $400 million to address the most critical shore infrastructure requirements. And this includes $77 million in damaged infrastructure that remains unfunded after the impact of Hurricane Matthew in 2016. Estimates for damage to the Coast Guard's facilities in Hurricanes Harvey and Irma are currently over $700 million. And the impact of Maria is still unknown, but it is approaching that. And the Commandant recently testified that in order to sustain and modernize our fleet while addressing our shore infrastructure, we need a stable and predictable $2 billion AC&I annual funding profile, that includes at least $300 million for shore infrastructure construction. In the meantime, we will leverage our authorities that we have to best use and right-size our infrastructure. For example, since being granted direct sale authority for excess real property, we have divested of over 205 assets and deposited over $24 million of proceeds into our housing fund and recapitalized housing for our servicemembers and their families. Additionally, we integrate real property and capital planning which looks for opportunities to optimize the use of our Coast Guard owned and leased facilities, and we continue to pursue initiatives to consolidate our footprint. Over the past 4 years, the Coast Guard reduced its overall inventory of facilities by 250,000 square feet. And as coined by Rear Admiral Kinghorn, my predecessor of 15 years ago, every Coast Guard mission begins and ends at a shore facility; and for that reason, no other asset is more important to our coastguardsmen and their families. So thank you for your support of the Coast Guard's efforts to provide our men and women the bases, search and rescue stations, repair facilities, and the training centers that we need to perform all Coast Guard missions. And I appreciate the opportunity to testify, and I look forward to your questions. Mr. Hunter. Thank you, Admiral. I am now going to start recognizing Members, starting with myself. Admiral Kelly, let's start with this: Can you provide an update on your manpower requirements, analysis, process, and progress you made determining the workforce the Coast Guard needs to meet mission demands? And basically this goes along with when can you provide us--you gave us something earlier this year, but it didn't have any specifics in it. So can we expect the report you submit in February will be more informative? That is basically what I need to know is when will we get what you really need to do the Coast Guard's missions in terms of personnel. Admiral Kelly. Yes, sir. That manpower requirements analysis is a project we are working on right now, sir, and are prepared to turn that in with the fiscal year 2019 budget. That manpower requirements analysis, sir, is specifically focusing right now on our new acquisitions, ensuring that we get the requirements right for our people, both on the assets and the supporting elements that are needed for those assets. We also believe we have a good construct for our legacy assets that are already in place. Mr. Hunter. How many people do you expect to add next year? Admiral Kelly. Sir, our Commandant has stated that over the next 5 years we want to add 5,000 people, as you mentioned already. So---- Mr. Hunter. Can you break that down? One thousand a year, or how does that work? Admiral Kelly. Yes, sir, we can break that down 1,000 a year, and we are working on that as we develop that manpower requirements analysis. Mr. Hunter. Do you then get increased funding for the personnel, or you take that out of other areas like infrastructure operations? Admiral Kelly. Yes, sir. I think our history will tell us over the past 5 years, 6 years when we did that in 2012, 2013, and 2014, we are living with the legacy of taking money, resources out of our budget for personnel and putting it towards other assets. And we are now trying to reconstitute that workforce so that we can get back to the force that we are currently appropriated for. Mr. Hunter. So what if you start adding the people and you don't get the money for the people? Admiral Kelly. Sir, we need to come to you to request the support going forward so that we can not only reconstitute our force but build our force going forward. Mr. Hunter. OK. Thank you. And we look forward to that, the analysis and the report. Let's go to infrastructure. The Coast Guard's initial cost estimates for Hurricanes Harvey and Irma is $33.5 million for your operational cost as of right now, right? That is Coast Guard operational cost dealing with Harvey and Irma. There is no operational cost yet for Maria. And damages of Coast Guard infrastructure for Irma--let's see--$194 million for Hurricane Irma and $119 million for Hurricane Harvey, so indirect cost estimates for both the hurricanes just for the Coast Guard is $337 million. Once you do Maria, let's say you are looking at $500 million. I am guessing there is going to be a supplemental that the President does for FEMA, does for whatever. Are you looking to be included in that supplemental? Admiral Bouboulis. Well, yes, sir, we certainly would look to be included in any supplemental funding and assistance for that. And let me speak to those numbers just briefly. It is a very dynamic situation. Our people, our damage assessment teams have responded both to Harvey, Irma, and Maria now. So those numbers are--underserved. I think you can appreciate it is, again, a very dynamic environment. So those numbers are changing as we speak. The estimates for Maria are just now starting to come to fruition. We can certainly provide the list of direct and indirect damages that we have sustained so far. My understanding is, the latest numbers I saw for Harvey and Irma were in the scope of $400 million for direct damages, about $330 million for indirect, sir. Mr. Hunter. And if you add in the current infrastructure backlog of simply fixing things, is $1.6 billion, right? That is just keeping--that is just shore infrastructure that needs to be maintained and upgraded. Is that correct? Admiral Bouboulis. That is our current backlog for recapitalization. Mr. Hunter. And then $708 million for new construction is what the Coast Guard said that they needed. Is that correct? Admiral Bouboulis. We have $700 million in---- Mr. Hunter. But that is a maintenance backlog, that $708 million. OK. So you combine---- Admiral Bouboulis. That is maintenance backlog for our---- Mr. Hunter. Maintenance backlog and construction backlog add up to $2.3 billion or $4 billion. Then you add in what might come from the hurricanes, and you are looking at over $3 billion, which is one-third of the entire Coast Guard budget that has now been affected by the hurricanes and your operations. Is there any--I mean, what are you thinking? Admiral Bouboulis. Well, I think we have a substantial amount of damage that we need to address. Mr. Hunter. Yeah but what are you thinking--how are you going to get the money? You haven't been able to get it up until now, and now you have had the hurricanes that have exacerbated everything, especially shoresided infrastructure, right? So what are your plans on getting the money to do those things and the hurricane stuff? So you have your normal backlog without the hurricanes is over $2 billion. Then you have got the hurricane stuff which could add up to $1 billion. When all is said and done, what is the plan? Admiral Bouboulis. Well, the plan is to seek your assistance, of course. We certainly hope that some of the supplemental funding that may become available will help us address some of our infrastructure recapitalization needs and realize that some of those items that are on that unfunded priorities list and that shore backlog for construction may be some of the same facilities that incurred damage during the supplemental. So I don't know that---- Mr. Hunter. So when Hurricane Matthew hit, how much did that cost the Coast Guard? Admiral Bouboulis. Hurricane Matthew, we sustained about $109 million worth of damage. I would have to look at the exact---- Mr. Hunter. And you got how much? Admiral Bouboulis. I believe we got about $15 million or $17 million. I do know there was $77 million worth of damage that was unfunded that we are still in the process of working. Mr. Hunter. Well, my point is, things don't look good. You have got about 10 percent of Hurricane Matthew's money, right, and that is thanks to Congress. And you have gotten more money every year than the President's budget request thanks to Congress. I think--I am out of time here, but I think it is important that you--that the Coast Guard go to the President at this point and say, look, this is what we have incurred and we need to be included in this supplemental. Because it is much easier for us to do our jobs if you request it and the President requests it from us as opposed to us trying to convince our colleagues without your help or the President's request that this money is necessary for you. Does that make sense? So I would just really strongly urge you and hope that the money for this is included in the President's budget request when it comes out, when all is said and done for what FEMA needs and everything else, because there is no opportunity like the present to get caught up on this stuff. Admiral Bouboulis. Sure yes, sir. And we are---- Mr. Hunter. If you miss this, then who knows when the next slate of funding will come in to make up for it, possibly-- based on history, never. Admiral Bouboulis. Yes, sir. And we have captured all of our damages. We are continuing to update those damage assessments, and we will provide that through the Department and any venue that we can to request consideration for supplemental funding, sir. Mr. Hunter. Thank you very much. I yield now to the ranking member, Mr. Garamendi. Mr. Garamendi. Mr. Chairman, I want to follow up on the line of questioning you were working on. The supplemental appropriations relating to the three hurricanes will be moving through Congress. One has already moved through, and I don't believe there is anything in that for the Coast Guard. So that brings me to the point I want to make in that the Coast Guard needs to tell us in very specific terms exactly what the needs are, both in terms of the personnel and the additional expenses that were directly associated with the three hurricanes and also with the infrastructure. And in my view, it has to be facility by facility and it has to be pictures. Lumping it all together doesn't really tell the story. We know that the Florida Keys were pretty well flattened, certainly Puerto Rico is, and undoubtedly Coast Guard facilities on Puerto Rico were damaged, similarly Harvey. So very specific information, site by site. I was just looking at the Matthew information here, and there is some specific information by facility. But frankly, it doesn't mean anything without both a more explicit description of exactly what the damage was and, frankly, photos. Pictures tell 1,000 words, and we need that to drive home the necessity for the money to repair the facilities. Similarly, we must do this soon. And I use the word ``we.'' It is you and us. If we are going to be able to obtain the money for the repairs of the facilities, it is now, like now. The Congress will be moving forward on supplemental appropriations for Puerto Rico, probably more for Houston, and certainly Irma along the way. So I am sure you are sending this information up through the Department of Homeland Security and OMB. It will undoubtedly find its way into a black hole and never see the light of day, but I am asking you specifically now for that information for this committee and for our use in designing and forming the Coast Guard part of the supplemental appropriations. If you would like to comment on that and how soon you can deliver that to us, it would be helpful, both on the personnel side and on the infrastructure side. Admiral Bouboulis. Well, I can address the infrastructure side, Ranking Member Garamendi. Thank you for that. And I do have some pictures that I would be happy to show, and I can speak to the details. So if we can get to the first slide and I will speak through or address each of these photos. And regarding the numbers and the listing of all the damages that we have, I will provide that to you. We have got a list by unit, both for Harvey and Irma. And as I said, we are developing Maria estimates and assessing all the damage there, and we will provide that to you. I will also ensure that you get that unfunded priorities list. Mr. Garamendi. Are these your photos? Admiral Bouboulis. They are. Mr. Garamendi. Can you list through them quickly? Admiral Bouboulis. This is Harvey damage. And you can see Port Aransas. That is one of our coastal search and rescue stations, small boat stations. There you can see the nature of the damage to the boathouse and the facility there. In fact, that facility is a total loss. Both the waterfront was damaged so all the piers that the boats tie up to, the boathouse, and the station. Mr. Garamendi. Inoperable now? Admiral Bouboulis. We are doing some operations but they are from trailers and from trailering boats and those types of activities. We can't operate out of that unit. Next. So here is station Port O'Connor, another coastal station. That is the boathouse. You can see the roof has been destroyed. There is also damage to the waterfront and then there was wind and water intrusion into all of the facilities that are--the shoreside facilities. So they also suffered significant damage. Next. Station Key West. Several stations there. Station Key West, Sector Key West, Marathon, and Islamorada housing were all damaged. I think we have some other pictures there, but that is the waterfront. This is the Marathon housing. You can see the roof is open. Water damage throughout, pretty much a total loss of all those facilities. Next. So this is Station San Juan. Both San Juan and Borinquen--which is on the west coast of Puerto Rico. San Juan is on the east coast--was damaged. The roof was removed off of the operations center, so you can think of all the radios, all the communications, all flushed with water and basically unusable. We are still operating out of some of the portions of that building. Our repair teams have covered up the roofs to mitigate any further damage, but significant damage through there. Next. This is the Borinquen Community Center. This is indicative of some of the housing damage that we have. The roof was removed there. And as you know, or you may know, that they have endured several inches of rain since those events so it just continues to incur more water and wind damage. Next. Now, this is important because as I mentioned in my previous opening statement, when we get an opportunity to rebuild--and this supplemental funding could be that opportunity--we always seek to rebuild to more resilient standards to really harden our infrastructure. What you see up here is OPBAT, our hangar facility in Great Inagua. And then Station Sabine. So Station Sabine was on the coast of Texas, and that was rebuilt after Ike to more resilient standards. Neither of those facilities suffered any significant damage, and folks went right to work out of those facilities immediately after the storms passed. So that is the importance of building to 21st-century standards and building the hardened, resilient infrastructure. Mr. Garamendi. Thank you. I believe for us to do our work we will need station by station, facility by facility, details, photos, and the like. It seems to me important that we present this information to the appropriate committees that are writing the legislation for the supplemental. I suspect there is a high level of ignorance about the damage that the Coast Guard has sustained and about the cost and the facilities. I am pleased that you are building resiliency into the new facilities or the rebuilt facilities. It would seem that we should require that just as a matter of course, although you seem to be doing it without being told to do it that way. Nonetheless, we ought to make it clear. I would expect that the committees who are responsible for the supplemental are in the process now, and so the information that we need to pass to them is now. So thank you for that. I have no further questions. I yield back. [The U.S. Coast Guard has provided information below about the costs of damages to its shore infrastructure units, facilities, etc. from Hurricanes Harvey, Irma, and Maria.] Attached is the Coast Guard's list of hurricane damages, as of the date of this hearing. This list includes approximately $400 million in damage and repair costs, $70 million in operational response costs, and over $700 million in costs to restore our facilities to meet modern resiliency standards to prevent damage during future natural disasters. ``United States Coast Guard FY 2018 Hurricane Supplemental Submission,'' including a detailed list of damages, is on pages 93-117. Mr. Hunter. I thank the ranking member. I just want to go through this again really quick. For the past 5 years, Congress has provided nearly triple the amount of shore infrastructure funding that was requested by you. So you guys requested way, way too little. It came nowhere near what you needed. Again, the President's fiscal year 2018 budget only requested $10 million to address the Coast Guard's--this is your request. You asked for $10 million up against infrastructure needs of $1.6 billion construction backlog and $700 million maintenance backlog. Hurricane Matthew resulted in $92 million in damages; you got $15 million. And you have included no funding request for the fiscal year 2017 to 2021 capital investment plan to rehabilitate housing for Coast Guard servicemembers. So you are showing us the housing, yet you requested no money for that in your last budget request. So unless you are asking for these things, they are not going to be wished upon you by the fairy God Congress, unless you are actually asking us for it. And that is the only way that you are going to get it, I think, is if you ask and make sure that that is in the President's budget. With that, I would yield to the gentleman from Louisiana, Mr. Graves. Mr. Graves of Louisiana. I am going to defer to the gentleman from Alaska for the first round of questions. Mr. Hunter. Look at that. That is called kissing up to seniority. Mr. Graves of Louisiana. Let me be very clear, that is exactly what it is. Mr. Young. That is what you call a Graves snapper. Anyway, Mr. Chairman, you covered most of the things that I would like to talk about. And I know we are sort of reprimanding the gentlemen at the witness stand. I believe very strongly--I know what you have to do. I have been here a long, long time, serving this committee a long time and with the Coast Guard and what it used to be in the other committee. You are requested to request a certain amount of dollars by the President and by Mr. Mulvaney. I think a good visit by one of your underlings, if you would like to sit down and have a drink at my office, it would be very helpful. And give us the mentions is really what we need, because I don't think the request when you made it through the President you had--you didn't know the hurricanes were going to hit. But to have a functioning agency, you have to have the replacement of all these facilities. And my main concern, Mr. Chairman, is that you don't take away from the money that we need to do the duty around the Nation. So somewhere along the line we will get that information from you, I hope one way or the other, to do the job because that is our job. Now, I have always said the President does not write the budget. We write the budget. And I think there are some numbers we have here. We pretty much know what you do need. We would prefer if you could ask support, but I know that doesn't happen. My main interest, Mr. Chairman, is another issue which does affect you is, of course, the administration's--we were told by, I believe it was the Brock Long administration the other day, the Federal Emergency Management Agency, that there is about 9,000 cargo ships in the area of Puerto Rico that can't be unloaded and can't distribute their goods. Are you helping those ships, or how is that jam working right there? How is the Coast Guard--you have some authority over it, I hope, as they come in. Is that correct? Admiral Bouboulis. The operational realm is probably not my area of expertise, but I can certainly speak to what I know regarding that. We have captain-of-the-port authorities where the Coast Guard does oversee port activities. We allow ships to come in and out. After a storm of that magnitude, our first priority is to respond to search and rescue, save lives, and then we immediately go to reconstitute the ports and restoring maritime transportation. So we will go in and survey the port areas, make sure that they are safe and secure, and then commerce can continue after that. Mr. Young. OK. Mr. Chairman, the second thing is, as you know, I am a big supporter of the Jones Act. And much as I like Puerto Rico, there has been a group of people over the years trying to subvert the Jones Act. This is not new. And they saw an opportunity. In your opinion, as a Coast Guard, you see--was there any need to raise that Jones Act waiver? I mean, I know the shipping industry. That is one thing I do know. And I am a little worried about that nose under the tent right now trying to take it--to circumvent it, because it is not the first time they tried to do this. What is your position as a Coast Guard as far as the Jones Act and the inspection of those foreign vessels that might come in? Admiral Kelly. Sir, neither of us are the experts in that area, but as Coast Guard officers we are prepared to speak from our experiences, which basically the Jones Act is an act that has been on the books for almost 100 years. And the Coast Guard is going to look at it specifically and work from a maritime security and maritime safety perspective. If there is a need for a deeper talk on the specifics of where the Coast Guard is at on that, we probably would be incumbered to get you the right person to speak to that. Mr. Young. My concern is, you know, I am not fond of foreign vessels. Are they safe? Are they going to be inspected as they come to the dock? Do they replace dockage from ships that are there that are Jones Act ships? Do they interfere with their transportation, any of that type of thing? Are you aware of any lines that that might have happened? Admiral Bouboulis. Well, the Coast Guard, regardless of whether it is a U.S. ship or a foreign ship, we are interested in ensuring the safety and the security of the Nation and the ports that they come in. So through our advanced notice of arrivals and inspecting ships, we are going to make sure that they are safe and that our ports are secure. Mr. Young. Well, OK, Mr. Chairman. I hope that it does take place. And I do--how many more days do we have left in this Jones Act though? Mr. Hunter. Five. Mr. Young. Five? Well, I want it stopped, Mr. Chairman. I can't see any benefit from it. No one has justified it to me. They say, oh, we don't have--we do have the ships. And I know that they are trying to do this to Hawaii. They are trying to do it to Puerto Rico, and then they go down the line. That affects a large, very viable section of our domestic industry and our national defense. The Jones Act is a great deal of that. So, Mr. Chairman, with that, I don't have any more time left. I have no more questions. Thank you for doing your job, Admirals. And try to--you know, like I say, I would love to have a little--we can have coffee if you don't have a drink. Just sit in the office, we will discuss a few things. And I have got some great stories to tell you too. Thank you. Mr. Hunter. He does have some great stories. I thank the chairman. Mr. Graves is recognized. Mr. Larsen doesn't have any questions. Mr. Graves of Louisiana. Thank you, Mr. Chairman, I appreciate it. I first wanted to ask you a question about Reserve capacity. I understand the Commandant has indicated his desire to increase Reserve capacity by an additional 1,000 personnel. Can you explain where that additional capacity will augment your existing full-time folks? Admiral Kelly. Yes, sir. So right now we have 6,300 Reserve members in our force. We are authorized 7,000. The Commandant has gone on record to increase the Reserves to 8,100. As we look across the Nation and across the globe right now, we know there are threats that our Reserve Forces would probably be the first to augment and to respond to. And our Reserve Forces have responded--just roughly short of 1,000 Reservists have been called up for Harvey, Irma, and Maria as well. So they are our only garrison force in the United States Coast Guard. Everyone else, the 3,000 folks that we talked about that responded to the hurricanes, they are coming and they are leaving their Active Duty, their bases. And so we are going at risk. We have a risk posture when we surge those folks. So our Reserve folks are--our Reserve members are the ones who serve in garrison and also are ready to respond to threats like we have seen from natural disasters but also threats that we know that are on the horizon. Mr. Graves of Louisiana. So I want to make sure I am understanding this. First of all, let me say that I think that using Reserve capacity to augment full time is a cost-effective strategy, provided that these folks can seamlessly integrate, provided that they have appropriate training and equipment. But if I heard you correctly, you indicated you have activated about 1,000 Reservists for Hurricanes Harvey, Irma, and Maria. Is that accurate? Admiral Kelly. Yes, sir. Mr. Graves of Louisiana. And you have approximately 6,300 right now? Admiral Kelly. Yes, sir. Mr. Graves of Louisiana. Has there been a scenario including perhaps the Deepwater Horizon incident where you have actually hit your capacity, full capacity in terms of activating Reservists? Admiral Kelly. Yes, sir. On Deepwater Horizon we were almost to the point where we were tapped out. We had utilized our full extent of our Reserve Force. Mr. Graves of Louisiana. So there have been real-world instances where your capacity or your bandwidth was nearly maxed out and---- Admiral Kelly. Nearly maxed out, yes, sir. Mr. Graves of Louisiana. OK. Thank you very much. I actually want to pivot over to the line of questioning that Mr. Young brought up. I understand your background. I understand your positions. But I also know that you are admirals in the Coast Guard and you can answer a few simple questions. Right now, under the Jones Act, are foreign vessels prohibited from bringing cargo into Puerto Rico? If a foreign vessel is coming from a foreign country to Puerto Rico bringing cargo, is there a prohibition on that? Admiral Bouboulis. I do not believe so. I understand that there is a notice of arrival. And a foreign vessel, if they request to come into one of our ports, will be screened to determine if there are any particular measures we need to take to ensure security, and then they would be allowed to come in. Mr. Graves of Louisiana. Thank you, Admiral. And I think that is everyone's understanding here as well, a foreign vessel can come into Puerto Rico and bring cargo. It is my understanding also that I think as of last week there were over 9,000 containers that were sitting at port facilities in Puerto Rico. And the challenge was not getting the containers there; the challenge was actually distributing the containers. And if I recall correctly, the average throughput, meaning the processing of these containers into Puerto Rico for various commerce is in the hundreds per day. There is a maximum capacity, as I recall. Or excuse me, I think the normal capacity is somewhere around 400 to 500 containers a day, that are actually throughput, meaning taken from the ports and distributed into Puerto Rico. So we can quickly do the math. If we had last week over 9,000 containers, I believe there was another--if I remember right--4,000 containers that were on their way to Puerto Rico. You can do the math. And even if their logistical system, their transportation system were operating optimally, you would still be looking at several days before that capacity could be distributed. So I am concerned that some folks believed that by waiving the Jones Act for 10 days we were going to provide some immediate relief to the logistical challenge of getting the relief supplies distributed around Puerto Rico. And I believe that it is very clear that that is not the case. Are there challenges with transportation logistics in Puerto Rico? Absolutely. There was a hurricane, and much of that infrastructure was destroyed. But I think we need to make sure that we stay focused on real solutions that are going to address these logistical problems as opposed to solutions in search of problems like I am concerned that we have seen that in some cases in Puerto Rico. Do you disagree with any of those statements or want to issue any clarifying statements? Admiral Bouboulis. I don't disagree with any of those statements, sir. Mr. Graves of Louisiana. Thank you. Admiral Kelly, anything to add? Admiral Kelly. No, sir, not at this time. Mr. Graves of Louisiana. Thank you. Mr. Chairman, I yield back. Mr. Hunter. I thank the gentleman. Mr. Mast is recognized. Mr. Mast. Thank you, Chairman. You know, I think there is probably not one of us in this entire body that doesn't want you all to be mission ready. I think the reality of the mission that you all fulfill is that if one of us in here needs you and you are not there, we may very well not need you again because it is probably a life or death situation. That is the seriousness of the work in which you all go out there and provide services to us every single day. I have seen it firsthand as a resident of Florida, stations in Fort Pierce and Miami and down in Key West. I have seen the shortfalls. I have been up in the air with your folks. Your aircraft are not particularly fast. I know you are well aware of that. And you have spoken about the shortfalls. You have spoken about your taxes on the Reserves and just how strung out you have been. And so I just have one very important question, and that is, how close are you coming to not being mission ready? And I am well aware of your motto, semper paratus, and I know your commitment to it. I am not trying to say this in any way to degrade your commitment. But how close are we threading that needle to not being mission ready with an entity that provides life or death services? Admiral Kelly. Sir, from a people perspective, one of my largest concerns and something that keeps me awake at night, if you will, is the retention of our workforce. And as we deploy 3,000 men and women over a 6-week period--and we don't know what is on the horizon. But as we deploy 3,000 men and women, the resiliency of those men and women as they deploy, the resiliency of those families is something that concerns me. So I don't have a gauge. I don't have a metric that I can tell you that we are getting close. But 30 years of experience would tell me that as we continue to do this, as we continue to stress our folks, the resiliency of our people and our ability to retain the talent that we have concerns me greatly. Admiral Bouboulis. I will speak to that also from perhaps a little operational perspective and then from the facilities side. So I have spent about 20 years flying search and rescue helicopters, C-130s. I was actually stationed as the commanding officer in Borinquen--that is in Puerto Rico--from 2008 to 2011. And I appreciate that, Mr. Mast, you understand the nature of our services and when they are in need. It is something I have been very proud of being able to serve the Nation in that capacity. From the facilities side or from the organizational side, look, we are always going to respond. That is where our heart is. And every person in the Coast Guard has that mission focus. We will turn ourselves inside out to work through the budget limitations that we have to ensure that we maintain frontline readiness. That is why we make the difficult decisions that we have to do to prioritize recapitalizing our cutters and our aircraft to make sure that we can meet that mission and we can keep our people safe and give them good equipment to operate with. Where we are going to assume some risk or accept some risk is on the facilities side. And, Mr. Young, we talked about the budget. I think we know the game that we play with communicating the budget and working the budget. But our Commandant has gone on record. We have seen--since the Budget Control Act, we have experienced a 10- percent decrease in our buying power over the last 5 to 7 years. The Commandant has gone on record that we need to see a 5-percent increase in our operations and maintenance funding just to restore our buying capability. It is also said that we needed to have a $2 billion AC&I funding profile and a stable and predictable funding profile. That is the way that we can deliver goods and services to the Nation with good stewardship. This flexible budget, continuing resolutions just affects the way that we can execute acquisitions and award contracts and whatnot. And with a $2 billion AC&I budget, we need $300 million recurring for facilities infrastructure. So where we are going to accept those risks is on the facilities side, and that affects our people and ties right into what Admiral Kelly was talking about. To retain good quality people that are going to put their lives on the line for others, you have got to treat them well. You can't have them in shabby homes, in terrible stations. And when you get impacted with hurricane damage, it has got to be rebuilt, and that is a burden that I will carry. Thank you. Mr. Mast. Thank you, gentlemen. Thank you, Chairman. Yield back. Mr. Hunter. I thank the gentleman. The ranking member of the full committee, Mr. DeFazio, is recognized. Mr. DeFazio. Thank you, Mr. Chairman. I regret I was delayed, but I was dealing with NAFTA issues and Mexican trucks, which I think might have some support with members of this committee. Admiral Kelly, as I understand it, you are the personnel guy. Have you redeployed people from around the country, you know, down into that region? And how much has it interrupted your other activities around the Nation, and what sorts of extraordinary overtime are people putting in here? Admiral Kelly. Yes, sir. We have deployed just roughly 3,000 men and women, Active Duty, Reserve, and civilians to Texas, along the gulf coast, Florida, and now to Puerto Rico. We have deployed those folks from everywhere from Maine to Alaska, sir, along with their units. The cost of doing that--as my colleague already stated, we will never put search and rescue and we will never put our frontline missions at risk. But the cost of doing that is the maintenance of our equipment and the maintenance of our people long term, sir. Mr. DeFazio. OK. So that will be part of, when you quantify the physical damage, you will add in also perhaps costs that relate to this, that extra deployment and those costs? Admiral Kelly. Yes, sir. I can speak already. Just from a travel perspective, we have already exceeded $1 million in what we have had to do with sending people TDY to support. Mr. DeFazio. Right. You know, I have been critical of the Coast Guard in one respect on these issues, which is you are always too nice. And I am pleased to hear you are being a little bit more assertive about your unmet needs. I mean, you were already suffering a couple of billion dollars or so in terms of deferred capital investment, as I understand it, and now we are looking at these damages. And I would hope that you would ask for a very, very robust number, you know, and not--and, I think, Admiral Z has been getting more and more outspoken on this. I mean, you just need to tell us what you really need to fully mitigate all the additional costs because of these three hurricanes, and we will help you fight for it. And I hope I can get that commitment. Admiral Kelly. Yes, sir. And I think the Commandant going on record for the 5,000 men and women that we need in our service over the next 5 years is a clear statement, maybe a visionary statement on his part with regards to our ability to respond to contingency response across the Nation and around the globe. Mr. DeFazio. Great. I think--and I don't know whether either of you would be comfortable addressing this issue, but it does relate to your day-to-day activities. You know, there has been a lot of talk about the need to waive the Jones Act. On the other hand, I have been in touch with Jones Act companies who are, you know, they have made major investments with the idea of continuing to serve Puerto Rico. I just heard one of our colleagues on the floor talking about we had to have a permanent waiver for the movement of fuel to Puerto Rico. Is there a shortage of tonnage to serve Puerto Rico? I mean, what we are hearing is containers are piled up on the docks virtually to the capacity of those areas and they just can't get them distributed. Can either of you address that or-- -- Admiral Kelly. Sir, I would submit that neither of us are probably the best officers to address that, sir. Mr. DeFazio. OK. OK. No, that is fine, but I just wanted to see if we could get some response out of you, but---- Admiral Kelly. Yes, sir. I have sailed in and out of the Port of San Juan and Aguadilla, and my colleague has been commanding officer down there for 3 years, but to that specific question, sir, probably not the right person. Mr. DeFazio. OK. All right. I don't want to put you on the spot. Thank you, Mr. Chairman. Mr. Hunter. I thank the ranking member. Gentlemen, thank you. I would just ask here in the end that you give us--that you give--if they do a supplemental, it is almost all appropriations, right. I mean, that is the purpose. It is not going to go through any authorization committee unless you do something like the oil, it affects the Oil Pollution Act or vessel safety and then we might get a say in it here in this committee. Yes, Admiral. Admiral Bouboulis. Chairman Hunter, I appreciate that. And one thing I would like to qualify, because we did get some supplemental funding from Hurricane Matthew, but it is important---- Mr. Hunter. Hang on. I mean, if you want to call it that, you got, how much, $15 million and you requested $100 million, roughly? Admiral Bouboulis. Well, I just want to make a point, which I think is important as you go forward to support any supplemental activity. So after Matthew, I think we had limited-term funding. I think it expired in 18 months or so. So as we approach supplemental funding, it is important the characterization of the funding, because you can imagine the scope of impact that we are talking about really needs to be AC&I type funding or 5- year money that gives us time to plan and contract so that we can effect those repairs. Realize that we are going to be dealing with reconstituting our workforce, catching up on maintenance on our assets, addressing the immediate needs to repair some of those facilities, and we do have limitations on our contracting, our civil engineering program to digest that scope of money over a short period of time. So 5-year funding is important. Mr. Hunter. I mean, that sounds great, but, again, that is going to take you all requesting that and pushing hard and your Commandant pushing hard when they do this supplemental to maybe to get some of this back, not just the now hurricane stuff but maybe a little bit of the other backlogs as well. Because that is usually what happens, and if you are not at the table, you don't get any, right. But it is time that the Coast Guard stop fighting for scraps and got a seat at the table and got the big entree like everybody else, I think, especially with the work you are doing around the world. So with that, thank you very much, and we will start the second panel. Admiral Bouboulis. Thank you, sir. Mr. Hunter. Thank you, gentlemen. All right. Gentlemen, great to see you again. Thanks for being here. This one will be--this is an official hearing, as you might have guessed, compared to last week's listening session. On our second panel, we are going to hear from Mr. Brian Schoeneman, legislative director with the Seafarers International Union; Mr. Anthony Chiarello, president and CEO of TOTE; Mr. Michael Roberts, senior vice president with Crowley; and Mr. John Graykowski, government and regulatory adviser for Philly Shipyard, testifying on behalf of Shipbuilders Council of America. I have talked about some Jones Act stuff and about the U.S. Fleet in my opening comments. So I will reserve now to my question time. And, Mr. Schoeneman, you are recognized. TESTIMONY OF BRIAN W. SCHOENEMAN, LEGISLATIVE DIRECTOR, SEAFARERS INTERNATIONAL UNION, ON BEHALF OF MARITIME LABOR; ANTHONY CHIARELLO, PRESIDENT AND CEO, TOTE; MICHAEL G. ROBERTS, SENIOR VICE PRESIDENT AND GENERAL COUNSEL, CROWLEY MARITIME CORPORATION; AND JOHN GRAYKOWSKI, GOVERNMENT AND REGULATORY ADVISOR, PHILLY SHIPYARD, INC., ON BEHALF OF THE SHIPBUILDERS COUNCIL OF AMERICA Mr. Schoeneman. Thank you, Chairman Hunter, Ranking Member Garamendi, members of the subcommittee. I am very happy to see Captain Young with us today. Good morning. My name is Brian Schoeneman. I am the legislative director for the Seafarers International Union. I am here today on behalf of seagoing maritime labor, which includes the Seafarers, the American Maritime Officers, the Marine Engineers' Beneficial Association, and the International Organization of Masters, Mates and Pilots. Together, we represent all the mariners currently engaged in the Puerto Rico and Virgin Islands trade. All told, our unions represent tens of thousands of Americans who sail as Jones Act mariners across the United States today. The men and women of the United States merchant marines stand in solidarity with our brothers and sisters in Puerto Rico and the Virgin Islands and our members who live and work there. We remain committed to working with our operators, with the Federal Government, and the many, many others who are working right now to bring critical supplies of food, medicine, water, and fuel to those in need in Puerto Rico and in the Virgin Islands. Despite the misinformation that has spread like a disease throughout both the mainstream media and through social media, maritime labor knows--and we know this firsthand--the critical role that the Jones Act plays in keeping America safe, ensuring our economic, homeland, and national security. Our members have been serving Puerto Rico for more than half a century. Each of our unions has a presence in Puerto Rico, and two of our unions have facilities there. Between the four of us, our unions represent hundreds of Puerto Ricans and their families, and the SIU represents over 2,600 men and women in the Virgin Islands alone. We have been doing our part from the beginning of this crisis in Puerto Rico and in the Virgin Islands to help them recover because these are our friends. They are our family. They are our fellow American citizens, and they need our help. They have not been forgotten. The United States merchant marine has braved countless hazards over the centuries, from hurricanes to hostile warships, to deliver the goods to our troops and to people around the world whenever and wherever needed, and today is no different. Make no mistake: Maritime labor has never, not once, opposed the waiver of the Jones Act in an emergency when there were not enough ships or mariners to handle the job. We have never let a ship sail short-handed. At the same time, we have never been willing to support waivers of the Jones Act that were unnecessary. To be clear, the Jones Act is not impeding relief efforts in Puerto Rico right now, and it never was. It is not forcing aid to be turned away. It is not slowing down efforts to get relief supplies to people. Foreign-flag ships with cargo from ports outside the United States are and always have been allowed entry to Puerto Rico. The claim that the Jones Act is impeding relief efforts is a lie. No matter how many times those bought-and-paid-for academics, the folks on the news want to repeat it, it is still a lie. The amount of fake news that we have seen around the Jones Act during this crisis has been staggering. It is critical that Congress not act rashly in response to this disaster. Some of the proposals being made, whether for long-term waivers of the Jones Act or for a permanent exception for Puerto Rico, are foolhardy and misguided at best and blatantly anti-American opportunism at worst. These legislative proposals would have severe and drastic consequences, not only for Puerto Rico but for the entire United States. Both would be unprecedented, and neither should be considered seriously without significant congressional oversight and a better understanding of the potential impacts of such a drastic change to literally centuries of fundamental American maritime law. We urge Congress to exercise due diligence and fact-finding and beware of this false misinformation and the claims that are being propagated by the anti-Jones Act agitators who are, as they always do, attempting to hijack this crisis to further their political agenda. We also ask that a full accounting be made at the end of the temporary 10-day waiver the President granted last week so that we can know what the actual impact of this waiver was, if any. Finally, we ask that Congress continue to stand with us in bipartisan support of the Jones Act. Maritime labor, alongside our colleagues, remains committed to doing everything in our power to help our fellow Americans in Puerto Rico and the Virgin Islands in the aftermath of these devastating storms. We were here before. We will be there now. We will be there in the future. Thank you, and I am happy to answer any questions you all may have. Mr. Hunter. Thanks, Mr. Schoeneman. Mr. Chiarello, you are recognized. Mr. Chiarello. Yes, good morning, Chairman Hunter, Ranking Member Garamendi, and members of the subcommittee. Thank you for this opportunity to be with you today. My name is Anthony Chiarello. I am president and CEO of TOTE. I have been involved in the maritime industry for more than 38 years and have been in the role that I hold at TOTE today for the last 10. Before I share the details of our work in Puerto Rico, I would like to express to you how personal this situation is for TOTE. Our employees, families, friends, and our customers have experienced the devastation firsthand. Many of our employees in Puerto Rico have damage to their homes and there are families that are struggling following the hurricane but continue to come to the terminal every day to support the offloading of containers and cargo, which they know is critical to the larger Puerto Rican community. We are extremely proud of the work of our team of over 200 employees and partners doing everything they can to get important cargoes to Puerto Rico, and we will not rest in our efforts. TOTE is a leading transportation and logistics company and oversees some of the most trusted companies in the U.S. domestic maritime trade. TOTE is comprised of three operating companies, two of which are U.S. Jones Act, while the third company provides crewing and management services to a number of carriers, including both the Maritime Administration, as well as the Military Sealift Command. TOTE Maritime Puerto Rico has served the people of Puerto Rico for more than 32 years, providing twice weekly service to the island between Jacksonville, Florida, and San Juan. We have invested in excess of a half a billion dollars in the world's first LNG-powered containerships constructed specifically to service Puerto Rico. We strive for on-time, efficient operations that support the daily life in the noncontiguous United States. We are an American-owned company serving the needs of our fellow Americans. Our vessels were built in American shipyards by American workers and are crewed by American mariners. Since Hurricane Maria made landfall in Puerto Rico on September 19, the people of Puerto Rico have been struggling to gain access to the goods and services necessary for their daily life, goods that are sitting on our docks as we speak and that need to be moved. Even before Hurricane Maria made landfall, TOTE was working closely with customers and other parties, such as the Red Cross, to prepare for what was forecasted to be a devastating blow to the island. TOTE's vessel, Isla Bella, departed Jacksonville on September 20, as Puerto Rico was still feeling the effects of Hurricane Maria, with more than 900 containers of cargo and relief goods for the island. The Isla Bella arrived at the Port of San Juan on the 24th of September following the opening of the port September 23 by the U.S. Coast Guard. Immediately after the discharge of the Isla Bella, TOTE's second ship, Perla del Caribe, arrived in San Juan with more than 1,000 additional containers of relief goods. Our vessels will continue to supply relief aid, including food and water, to the island along with the daily needs, such as clothing and household goods for the residents. TOTE's transit time from Jacksonville to San Juan is less than 3 days. This means that we are uniquely positioned to respond to emerging needs on the island, providing the critical supplies to the people of the island as the situation on the ground continues to evolve. TOTE will serve the people of Puerto Rico throughout this crisis and long after TV cameras have left. Despite news and misinformation about the Jones Act that was referenced earlier, American companies like TOTE have ample capacity to ship supplies to Puerto Rico. This has to be understood. The challenges are not with the maritime industry getting the goods to the island. The challenge is distributing the goods throughout the island communities. Infrastructure and roads have been compromised as a result of the storm, making transport and delivery of goods extremely challenging. We need to get the water and other life-saving supplies to those who need it. Over the past few days, we have seen more and more containers leave our facility in San Juan, but there are still many on the terminal of more than 2,000 containers just in the TOTE terminal, and more keep coming every time a ship unloads. As an example, on Tuesday, September 26th, 110 containers left our facility. Yesterday, 280 containers left our facility. So things are significantly improving, but still that is only 1,274 total since the first day that the terminal was opened, and we typically would have 600 or so containers departing the terminal on a normal day prior to the hurricane. In addition to the Isla Bella arriving Sunday morning with 1,046 containers of relief cargo, the Perla del Caribe is due to arrive later this week. We are working with our customers, the Puerto Rican Government, and FEMA to solve this bottleneck, and in some cases, we are providing refrigerated containers as temporary storage for warehouses and stores that were damaged and destroyed. All of these efforts would not be possible without the hundreds of U.S. mariners who sail on TOTE vessels and employees in Puerto Rico who are working the terminals and docks to efficiently manage the cargo flow. In addition to our efforts, TOTE Maritime Puerto Rico, TOTE Services, our crewing and ship management division, has activated the TS Empire State. The Empire State was initially deployed to the Florida Keys following Hurricane Irma but was redirected to San Juan to support Puerto Rico. The Empire State arrived in Puerto Rico on Sunday. She is able to house more than 600 relief and recovery workers and will provide critical support for the island in the coming weeks. I am grateful for the opportunity to testify today and discuss ways that TOTE can work in concert with the Government and the stakeholders to help accelerate the recovery efforts of the people of Puerto Rico. Thank you. Mr. Hunter. Thank you, sir. Mr. Roberts is recognized. Mr. Roberts. Good morning, Chairman Hunter, Ranking Member Garamendi, and members of the subcommittee. It is good to see you, Mr. Young. Thank you for holding this hearing and inviting me here today to testify on behalf of Crowley. I would ask that my written statement be included in the record. And I will try and summarize some of the main points out of that statement, really focusing on the commitment of Crowley to Puerto Rico, our involvement in the response effort following the hurricane and on an ongoing basis, the Jones Act waiver, and then the arguments made by opponents of American maritime workers in response to these events. Crowley's dedication to Puerto Rico is illustrated by--you know, it has been serving Puerto Rico for more than 60 years. We have a $600 million capital investment nearing completion that includes vessels built in the United States, including by 160 Puerto Rican workers in Mississippi. They will, of course, be crewed by American mariners, many of whom live in Puerto Rico as well as Florida and other States. Our terminal investment, which is entirely funded by Crowley, is one of the largest infrastructure projects on the island in the past year. Crowley is also very actively involved with FEMA in responding to Hurricane Maria. As of yesterday, we have delivered more than 2,700 loads equal to about 7,000 standard shipping units since the port was reopened September 23rd. By the end of next week, we will have about 7,500 loads--this is Crowley alone. This includes 3,200 loads for FEMA. FEMA cargo is a mix of water, MREs, generators, tarps and other items along with rolling trucks. Yesterday, we delivered 125 loaded fuel trucks off the barge, and they were met by 125 truck drivers that were flown into the island, and distribution got underway immediately. The story, as has been discussed this morning, the story last week was that loads of cargo were getting off the ships and to our terminals much faster than they were being dispatched off the terminal and sent to where the supplies were actually needed. While this is frustrating, it was not surprising. Damage to the port was minimal. So our dock workers could unload vessels quickly, and they did a great job. In contrast, the next links in the supply chain were severely damaged. Roads were impassable. Power lines were down. People had to get their family situations squared away before returning to work. Trucking needs were skyrocketing while the tractors and the drivers and the diesel fuel in particular have been in short supply. So, hopefully, what we delivered yesterday will start to make a difference. Businesses couldn't open to receive cargo because of hurricane damage. So the net effect of this is that, with the exception of the FEMA loads, commercial cargo has been stacking up on the marine terminal. Normally, we would have about 900 loads on the terminal waiting for dispatch. We have more than four times that amount today plus another 1,800 loads that have been dispatched but not returned. Our normal gate dispatch time is 400, 500 loads a day, and, you know, until the middle of last week, we were in the double digits. We are now less than half of our normal rate today. So, looking ahead at least for the next week or so, the story of terminal congestion is likely to get worse before it gets better, given the continuing flow of vessels delivering cargo to the terminal and the relatively slow pace of dispatch off the terminal into the island. Again, I would emphasize the FEMA loads are moving quickly. FEMA is doing a great job of trying to find creative ways to solve these problems. For example, they have worked with the Puerto Rican Government to buy commercial loads of food, dry food items that could then be distributed throughout the island. We have almost 1,000 of those loads sitting on our terminal now. So progress is being made. Creativity is being applied. As has been discussed, the Jones Act waiver will not help. Bringing cargo to the island is not the issue. Getting cargo off the terminal and where it is needed has been the bottleneck. Let me end there and say that the attacks that have been made on the Jones Act in connection with this disaster are unfortunate. The mistruths are abundant, and it is a missed opportunity for those who really care about Puerto Rico because they need to be talking about the funding that is going to be needed to repair the damage and put the infrastructure back in place. And the more time that is wasted worrying about the Jones Act is just wasted time. So I thank the committee for the opportunity to testify and look forward to your questions. Mr. Young [presiding]. Thank you for the testimony. Mr. Graykowski, please. Mr. Graykowski. Thank you, Mr. Chairman and Ranking Member. I ask that my entire testimony be included in the record. Good morning, and I would like to thank Chairman Hunter and Ranking Member Garamendi and members of the entire subcommittee for this opportunity to provide shipbuilding industry perspectives on the Jones Act. My name is John Graykowski. I am representing Philly Shipyard, which is located on the site of the former Philadelphia Naval Shipyard. Since 2000, Philly Shipyard has achieved a remarkable record of on-time deliveries of 26 large oceangoing vessels of all types. Most recently, the last several vessels have been delivered immediately following sea trials without any defects or exceptions, which is an indication of the quality of the work at Philly Shipyard. But Philly is by no means alone in improving productivity, quality, and efficiency. Our entire industry has made great strides, as well. PSI is a proud member of the Shipbuilders Council of America, the largest trade association representing the U.S. shipbuilding industry. The SCA represents 85 shipyard facilities and 112 industry member partners that are part of the vital supply chain for the shipyard industrial base. My testimony this morning will focus primarily on the people, the capability, and the capacity of the domestic shipyard industry, and how the Jones Act strengthens not only our industry but our national security as well. The Jones Act is a core value promoted by the Shipbuilders Council of America. This policy, which has no cost to the U.S. Government, helps to maintain a merchant marine that is sufficient to carry our domestic waterborne commerce and also ensures that there is sufficient U.S. capacity to serve as a naval and military auxiliary in time of war and national emergency. The Jones Act also ensures that the U.S. maintains critical shipyard infrastructure and a skilled workforce that can build, repair, modernize, and maintain the more than 40,000 vessels that comprise the domestic Jones Act fleet. This industrial base also ensures that there is a sufficient workforce to support the construction and repair of our critical national security fleets. U.S. shipyards build some of the most technologically advanced vessels in the world. For example, the world's first LNG-powered containership was built in the U.S. by my colleague Mr. Chiarello's company, TOTE, and is now serving Puerto Rico. Our shipyards also build world-class offshore service vessels for oil and gas exploration and production. According to MARAD, the U.S. shipbuilding industry ran a trade surplus in 6 out of 9 years between 2006 and 2014, resulting in a cumulative trade surplus of $1.5 billion. A 2015 report by MARAD found that there were more than 110,000 Americans directly employed by private U.S. shipyards and an additional 280,000 people employed by indirect or induced operations associated with the shipyards. The nearly 400,000 people who work in this industry generate $25.1 billion a year in labor income and $37.3 billion to the GDP. In 2016, the Navy released an updated force assessment that called for a fleet of 355 ships. The Jones Act ensures that the shipbuilding industry, supplier chain, and workforce can support the building and maintaining of these Navy assets. It is for this reason that the U.S. Navy has always and continues to support the Jones Act because of its national security benefits. A strong shipyard base and our skilled merchant mariners are critical to fulfilling the Navy's role in maintaining a forward presence in the world's sea lanes and trouble spots. GAO recently stated: The military strategy of the United States relies on the use of commercial, U.S.-flag vessels and crews, and the availability of shipyard industry base to support the national defense. Additionally, a critical component of the national fleet is the Coast Guard. Shipyard capacity is required for the desperately needed modernization of the entire fleet, from inland aids to navigation to cutters of all sizes to the polar icebreaker. Indeed, almost all of the shipyards that are currently building Coast Guard vessels also build Jones Act vessels. It is because of the Jones Act that the Coast Guard is receiving such robust competition to build its various classes of ships. Thank you again, Mr. Hunter, Mr. Garamendi, and the entire subcommittee, for this opportunity, and I look forward to your questions. Mr. Hunter [presiding]. Thank you, Mr. Graykowski. My wife's maiden name is Jankowski, which is special until you realize that the ``kowski'' is like Smith. Mr. Graykowski. It always sounds harder than it seems to me anyway. Mr. Hunter. Let me start off by recognizing myself for 5 minutes. Mr. Schoeneman, you might be able to answer this. Let's just go really quick to the crux of this. What or who is behind the false Jones Act narrative? I mean, this has been on every news station. I have never seen such negative, negative press on an American union--and because a lot of the ship industry is unionized, right? That is, most of it is unionized that is on the open ocean. Most of the interior stuff is not, right? That is kind of how it is broken down. But I have never seen a direct attack by the media, from MSNBC to FOX News, on an American institution like maritime. Shipbuilding, ship repairing, all American workers, all American made. I have never seen it. So what is behind it? Mr. Schoeneman. Two things. First of all, if you are on the ground in Puerto Rico right now, you step into a cab in San Juan, you ask the guy to take you to a bar, you ask him, ``What do you think about the Jones Act,'' he is going to tell you that every single problem on the island is the result of the Jones Act. It is down to the basic--it is a fundamental thing in Puerto Rican politics that the Jones Act causes every problem. So that is what I think part of what you are going to see is the result of that. Now, if you look more carefully, in addition to that and where the media is getting a lot of their information from, you will see studies and all kinds of position papers being put out by all the organizations that we know in Washington. They are getting funding from somewhere. All of a sudden, the big uptick--and this all happened a couple years ago when the freight rates in the oil industry--Jones Act carriers was way out of control. They were very high. That is not a coincidence. So, in my opinion, you have got Puerto Ricans on the ground who believe this is the result of--the Jones Act is causing all the problems on the island, increasing costs, which is not true, and on the other side, you have the oil interests who are trying to get rid of this as a protections program and kill it because it is a union program, they claim, and that it is costing them all kinds of money on the other side. The perfect storm then results. You have got folks on the left and the right, Democratic Party and the Republican Party all piling on the Jones Act. They are all putting out false information to make their cases better, and the reality is you guys are being confronted with problems that don't exist, issues that don't exist, with bad information that is getting pushed out on a daily basis and bad information that keeps getting repeated, and every time the lie is repeated, it becomes more and more factual in the minds of people out there. We have been desperately trying to correct the record on all of these issues, and I will tell you that the amount of things we have been hearing that are just flat out lies, that are wrong, they are not true, that are constantly repeated, is out of control. I get told on a daily basis that the Jones Act prohibits foreign ships from ever even touching in Puerto Rico. That is insane. That is completely untrue. Foreign ships--GAO did a study in 2011. Two-thirds of the vessel calls in Puerto Rico were from foreign-flag ships. The vast majority of the fuel being transported to Puerto Rico right now is being done on foreign ships coming from foreign ports. There has never been an issue with the Jones Act stopping ships from coming to Puerto Rico. The same in terms of cargo---- Mr. Hunter. Mr. Schoeneman, let me interrupt you really quick. There are two things I want to get to before my time is up. Two really important things. MARAD is not sitting here today. They opted out of this. But we have a statement from MARAD, and this was a day before the White House waived the Jones Act. So President Trump went very anti-Trump by waiving the Jones Act. He went anti-American worker, anti-American made, and basically sold out to Wall Street and big corporate interests that don't want American made. Wall Street is happy to have jobs anywhere that aren't here in the U.S. For the most part, that is what Wall Street likes. This is from MARAD, quote: ``Waiving the Jones Act now will not provide any additional relief to the hurricane victims on the island. The U.S.-flag fleet has the capability of carrying food, water, fuel, and emergency and recovery supplies that Puerto Rico needs from the rest of the United States. The problem for Puerto Rico in the next few weeks is not procuring enough ships to carry the cargo, it is the difficulty of unloading the ships and getting the relief supplies to where they are desperately needed, given the fact that the ports, the roads, the power grid, and communications have all been heavily damaged by Hurricane Maria.'' And they end with this: ``As Puerto Rico's infrastructure is repaired, the administration may ultimately decide that additional ships are needed to serve the people. If so, CBP and MARAD should be allowed to follow the established procedures for a case-by-case review of any waiver requests. There should not be any blanket waivers of the Jones Act.'' That is from the Maritime Administration. Now let me read you the quotes here from the President's Homeland Security Advisor Tom Bossert; he was asked about the Jones Act: ``If there are not enough U.S.-flag vessels--the capacity, in other words, to meet the need--then we waive the Jones Act. In this particular case, we had enough capacity of U.S.-flag vessels to take more than or to exceed the requirement and the need of diesel fuel and other commodities into Puerto Rico.'' He says: ``What happened is I think almost 17 or 18 days' worth of now of what you are seeing backlogged diesel fuel is needed on the island, but it was a little bit misunderstood and misreported that we had a capacity problem and had to waive the Jones Act. Not the case. The idea here is that we had provided as many commodities as were necessary to the island, and the challenge became then land-based distribution. That remains the challenge. That remains a priority today.'' He then goes on. So, after saying all of that, the President's guy says: ``However, last night, Governor Rossello called me a little after 8 o'clock and said, `At this point, to ensure that the additional needs are met as we move forward, it might be a good idea to proactively make sure that we pull out all the stops, just in case that capacity problem ran into the requirement problem.' I talked to the President, and he thought that was absolutely the right thing to do and waived it right away.'' He was asked again a quick follow-on: Had Governor Rossello not requested proactively a waiver on the Jones Act, would you have seen a compelling reason to initiate a waiver? The President's Homeland Security Advisor says: ``No, I would not have. And I was not recommending to the President that he waive the Jones Act at the time, until I got the Governor's request. And it may be a historical note of relevance. Sometimes we will see the carriers request the waiver, right, so you will have foreign-flag vessels or U.S.- flagged vessels or carrier companies call us and say, please waive it because there is an issue. We did not to my knowledge get any carrier requests.'' So those are two things from the administration saying there was no need to waive the Jones Act. They had plenty of capacity. They had plenty--you have plenty of everything that you need. This was pure politics. This was pure politics. They even used the national security waiver, which is the waiver that doesn't require the administration to show the need for a specific ship for a specific good. They waived it. In fact, they don't even need to tell us why they waived it if they use a national security waiver, which is what the administration used against what MARAD said and against what its own Homeland Security adviser said. The President I think granted the Governor's request because of the distress that the island finds itself in for political motives. And, frankly, I think that is why it was only done for 10 days. I think hopefully this was a goodwill gesture by the President to say, fine, even though it won't make a difference, we are going to do this, but that is one thing that helped pour gas on this firestorm that is a natural disaster. So, with that, I would like to yield to the ranking member. Do you want me to go to Mr. DeFazio first? Mr. Garamendi is recognized. Mr. Garamendi. Just a couple of questions. Mr. Chairman, thank you for bringing that information to this formal hearing and to those members of the press that probably need to hear that. The question for any of the witnesses, given that there is a waiver, have any ships, foreign ships, utilized the waiver to deliver goods from an American port to Puerto Rico? Mr. Chiarello. I will attempt to answer that and maybe there are some others that would like to add on. So, both Mr. Roberts and TOTE, our companies operate two of the three terminals in the Port of San Juan that would be contacted in order to unload vessels that would be under the waiver that was issued. We have not received a call requesting the need to unload the ships. Mr. Roberts could certainly answer on behalf of Crowley. Mr. Roberts. Same for Crowley. We have not received a call to have a foreign ship unload at our terminal, and I would just add a couple of other points. If there was a foreign vessel bringing cargo from the U.S. mainland to Puerto Rico, they would--or they may call at the international terminal there, and I am told that the congestion on that terminal is very similar to what we have in our terminals. So, again, if a foreign ship brought the U.S. relief cargo to Puerto Rico, it would sit there on the dock the same as all the others. Mr. Garamendi. At the moment, you are unaware of any ship-- -- Mr. Roberts. No, and I did also check this morning the port--I don't think it is the marine exchange--but the port traffic, marine traffic indicated no change in foreign vessels. Mr. Garamendi. Has there been any requirement for shipments from a U.S. port to Puerto Rico that has not--has not--been met by any of the Jones Act carriers? You? I guess the only other one is Trailer Bridge, right? Mr. Roberts. Right. Not to our knowledge. Mr. Chiarello. Not to our knowledge. No, sir. Mr. Garamendi. You have received no information, no requests from FEMA, from the Department of Homeland Security, from the military, to move equipment, goods to Puerto Rico from an American port that has not been met? Mr. Roberts. That is correct. Mr. Chiarello. May I also add, sir, that, you know, our industry is a small industry and you hear rumors often that are out there specific to the waiver and the interest of foreign carriers to provide services. We heard that there were a few carriers out there testing the market to see if there was freight available or interest to move their freight to the island, and no response to that in terms of a positive response by shippers to move their freight, but an interesting data point to note is that the transit times that were quoted by at least one carrier in the marketplace was to get freight from Jacksonville to San Juan, Puerto Rico, on a foreign ship would take somewhere between 15 and 20 days. Mr. Garamendi. And what is your transit time? Mr. Chiarello. Two and a half days. Mr. Garamendi. Two and a half days versus 15 to 20 days. Mr. Chiarello. Yes. Mr. Garamendi. Crowley, similar? Mr. Roberts. Transit time right now is around 5 to 6 days. Mr. Garamendi. Five to six days, and you are using the barges presently? Mr. Roberts. Correct. We are using railroad barges. Mr. Garamendi. The shipbuilding industry in the United States, the domestic shipbuilding industry, is it dependent upon the Jones Act? Mr. Graykowski. In my opinion, having been associated with it for some almost 30 years, absolutely. Mr. Garamendi. Is the U.S. national security dependent upon the Jones Act and the American merchant marine? Mr. Graykowski. Categorically, yes. The entire structure has actually evolved since the nineties. When you enacted the MSP program, the reliance of the military certainly on the commercial sealift industry has grown exponentially to the point where the Navy--or we can't pursue our international objectives without the assistance of and reliance on the U.S. maritime industry. From that follows the shipbuilding industry, the ability to build, repair, and modernize the ships that the Navy is running day in and day out, as well as the commercial industry. Mr. Garamendi. So the Jones Act is critical to the domestic shipbuilding and ship repair industry. You indicated a number. I think it was 400,000? Mr. Graykowski. Yes, sir. Mr. Garamendi. Men, women, that are in the domestic shipbuilding and repair industry. Is that correct? Mr. Graykowski. The figure, that is the entire--if you take sort of the direct employment and all of the supplier industry that feeds into the industry, it is roughly 400,000 people. That is correct. And that is a MARAD number, not an industry number. Mr. Garamendi. OK. My time has expired. Thank you Mr. Chairman. I yield back. Mr. Hunter. I thank the ranking member. I would like to yield to the former chairman of the full committee, Mr. Young. Mr. Young. Thank you, Mr. Chairman. And do you know what a pleasure it is to hear somebody-- four people on the panel all agreeing with me? I do think there has been some misinterpretation. There is nothing that precludes a foreign vessel from going to Puerto Rico from a foreign port. The Jones Act that Senator Jones passed--I believe he was a Senator; maybe one of the good things to come out of that body--he passed that act to build a maritime fleet that was very frankly from port-to-port no foreign boats could do this, primarily to keep our maritime fleet and our shipyards active so we would have a nice security blanket and have good service. Now, I have lived this battle a long time. In Alaska, I heard it many years ago: Oh, the Jones Act is hurting us. And one of the one times it bothered me, I was in Ketchikan, Alaska. And I went to buy a battery for my watch, and they wanted $25 for it. And I said: How come it is so high? He said: Freight. And I thought, what in the world are they trying to kid? We have been under attack, but this maintains, Mr. Chairman, the best Navy fleet, the best ships, modern technology, huge workforce, and good service. So I again thank the witnesses for your testimony, and as long as I am sitting where I am, I am hopeful we will never see the day, but there is the enemy out there. This is not the first time this has occurred. And they want to get port-to-port shipping on rust buckets, nonspeaking English crewmen, nonunionized, and that is really what they want to do. So I think we have a responsibility as a committee to make sure that this 10-day didn't do any good. To my knowledge, you just testified to that. I didn't think it would. And their argument was we are not getting our fuel. Puerto Rico was. And it is a matter of distribution, and that has nothing to do with it. But it is a little nose under the tent. Next it will be Hawaii. Then it will be one of the ports on the west coast. Then one of the ports on the east coast. So our job is to make sure we maintain this, and I am confident we have support within the committee to maintain the Jones Act as it should be for America. With that, Mr. Chairman, I yield back. Mr. Hunter. I thank the chairman. The ranking member, Mr. DeFazio, is recognized. Mr. DeFazio. Thank you, Mr. Chairman. Can we go back to the foreign--the potential foreign shipping? Why would it take 15 days? Mr. Chiarello. Yes. So, again, this is what we are hearing in the industry of one or two carriers, Puerto Rico having been on the international side of the industry for 30-plus years of my career, Puerto Rico would be a very, very, very small piece of their global supply chain and network. So they would fit it into an existing network. They are not going to put assets specifically just for Puerto Rico in as we have done and the other carriers in the trade have done. So they would figure out: OK. So maybe I will come out of Houston. And before that, I will go to Freeport, and I will go to the Dominican Republic, and then I will stop by Puerto Rico. It is all tied to that network. So that is how they come up with that transit time, which the people of Puerto Rico could never live with that level of inefficiency. It just wouldn't work. Mr. DeFazio. OK. No, that is excellent. So you have built a dedicated fleet to serve Puerto Rico, and that is how you can do a 2\1/2\-day run? Mr. Chiarello. Yes, sir. We did the same thing in our Alaska trade. We have two vessels up there that make two calls a week, and it is basically the same transit time. But those assets were built specifically for those Jones Act trades. Mr. DeFazio. Are the U.S. Virgin Islands covered by the Jones Act? Mr. Roberts. No, sir. They are not. Mr. DeFazio. It is interesting. I have been both to Puerto Rico and the U.S. Virgin Islands, and I didn't observe any discrepancy. In fact, it seemed to me things were more expensive in the U.S. Virgin Islands than they were in Puerto Rico. So, I mean, how does this fantasy get started that somehow Puerto Ricans are--it is like former Chairman Young said: Everybody uses it as an excuse, so. Mr. Roberts. Correct. So, when we have looked at this in terms of the shipping rates, for example, we found that the rates--and we did this a couple of years ago--the rates in the Puerto Rico trade were--in the Virgin Islands trade, again, a non-Jones Act trade, were 20 to 40 percent higher than in the domestic, in the Puerto Rico trade. And it has to do with market size and other factors like that. But that is the reality in those markets. Mr. DeFazio. That is essentially reinforcing what Mr. Chiarello just said, which is Puerto Rico would be sort of like a comma in a paragraph in terms of interest of major foreign fleets and directly serving them versus trying to squeeze it in somewhere in the schedule that makes sense for their other routes. Mr. Schoeneman. Congressman, to bring up the point of cost, I think we hear random numbers thrown out literally every day as to what the cost of the Jones Act is in Puerto Rico, what it is in Hawaii, what it is in the Virgin Islands--it is not in the Virgin Islands because there isn't any. No one can tell you for sure. So, if you hear somebody say it costs double, it costs 15 to 20 percent more, it adds 20 cents to every item, that is a lie. It is not true. It is unprovable. GAO did a full study in 2013 looking at freight rates, what goes into those freight rates, what the impact is to the cost of these goods, and they came away saying that there were so many variables that changed on such a quick basis that there is literally no way to make that determination. So all of these questions about cost, there is nothing to compare them to. There is no domestic versus international trade in Puerto Rico that we can even compare it to because there has been no international trade from U.S. ports ever. So all of these questions of cost, they are assumptions that are being made by people who aren't taking into account all of the various factors that go into these prices. Mr. DeFazio. Let's go back to the--since this requires DoD to sign off on a waiver and find that it is in the national security interest, what would DoD do if we didn't have a domestic fleet? How are they going to move troops? How are they going to move heavy equipment? Mr. Roberts. Mr. DeFazio, certainly every admiral that we have spoken to and general that we have spoken to are strong supporters of the Jones Act because it does provide a basis for both the manpower on the ships and in the shipyards, and their expertise that is needed to do exactly, as you say, to provide sealift in times of military emergencies and in circumstances like this to respond to natural disasters and other---- Mr. Graykowski. If I may add, Mr. DeFazio, every commander at TRANSCOM in my memory since TRANSCOM was stood up will make the direct connection between what he or she has to do to implement his or her mission and our industry, and it is the Jones Act, industry, it is the shipyards, and it is the operators. Mr. DeFazio. If we didn't have a domestic fleet crewed by Americans and we start looking at how the international industry has worked, you know, basically registries are secret. We don't really know who owns some of these ships. They all dead-end in Cyprus or somewhere else--well, not Cyprus, I guess. Many places. And so then, I mean, the potential is that, if we were in, you know, a conflict overseas and we wanted to transport, and we didn't have a U.S. Fleet, we might be chartering ships that are owned by hostiles. Mr. Graykowski. Well, there is an article in the Post I think 2 days ago about North Korea smuggling 50,000 RPGs into Egypt on a ship that was flagged in Cambodia. Mr. DeFazio. Right. Mr. Graykowski. And so, yes, your point is I think relevant and should be listened to. Mr. DeFazio. OK. Thank you. Thank you, Mr. Chairman. Mr. Hunter. Thank you to the gentleman. Mr. Weber is recognized. Mr. Weber. Thank you. I apologize for being late. I had another committee I had to sit on and be the chair for a while. So these may have been asked. So forgive me if they are redundant. But, very quickly, I guess we will take it from the left here. The Jones Act is fairly obscure, but you guys know a lot more about it than most Americans. Most Americans don't know. There is a lot of misunderstanding. Succinctly, without giving us too much history, can you tell us in your opinion the purpose of the Jones Act, and is that purpose still being met? We will start with you, Mr. Schoeneman. Mr. Schoeneman. The purpose of the Jones Act is to ensure that a jobs base exists for the U.S. maritime industry so that the merchant marine can carry a significant portion of the waterborne commerce of the United States. It protects national security because our guys---- Mr. Weber. There you go. Mr. Schoeneman. Yes. And it hasn't changed. It hasn't changed from the days of the First Congress until today, and it is not going to. Mr. Weber. So you think it is still intact and doing a good job? Mr. Schoeneman. Absolutely. Mr. Weber. Is changing it or trying to suspend it, is that going to affect it? Mr. Schoeneman. Change it. Even talking about trying to change it impacts it. Because all these guys need financing, and if anybody thinks that the Jones Act is not solid, it impacts their ability to---- Mr. Weber. It is going to make waves, pardon the pun. Mr. Schoeneman. Absolutely. Mr. Weber. How about you, would you like to weigh in on that? Mr. Chiarello. I certainly agree with everything that was just stated. To the financing piece, that would be detrimental to any of us that are looking to further reinvest into the Jones Act trades like we have done and will continue to do. And, you know, on top of everything else about the job security--and it is cabotage laws. It is no different than any major power around the world. They have cabotage laws, as well, and we need to protect our homeland security. We need to protect our national security. We need to protect the job security that goes along with the act. Mr. Weber. Mr. Roberts? Mr. Roberts. Yes, sir. I agree with everything that has been said so far. Also, but I would just add that the interesting thing or the ironic thing about this conversation we are having now is that it is in the Puerto Rico trade where the Jones Act is proven that it works best because of the investment that his company made and our company is making. Mr. Weber. With some certainty. He alluded to absolute certainty. Mr. Roberts. These are innovative LNG-powered containerships. Nowhere else in the world are they operated, and they are built in the United States by American workers. Mr. Weber. I get that. And Mr.--is it Graykowski? Mr. Graykowski. Graykowski, yes, sir. Mr. Weber. From a regulatory standpoint? Aren't you the adviser on the Government and regulatory affairs? Mr. Graykowski. Shipbuilding. Mr. Weber. Shipbuilding. OK. Sure, go ahead. Mr. Graykowski. As you would say, I associate myself with the remarks of all three of my colleagues here, but it has always struck me, and I just don't get it: To me, the Jones Act is a simple proposition. You want to replace, you know, 1,000 highly skilled, highly paid shipbuilders working in Philly with foreign labor because that is going to be the net effect of taking away the U.S.---- Mr. Weber. It is hard to make America great again when you do that, isn't it? Mr. Graykowski. Yes, I don't get it. And the same with Brian's guys, and all of the investment that Anthony and Mike Roberts have made, and that is the pure essence of what this debate is about to me. And people are dressing it up, but it is coming down to people working at highly skilled, highly paid jobs here or somewhere else. Mr. Weber. So, before the waiver was granted last week, was the Jones Act inhibiting the transportation and distribution of relief supplies? Mr. Roberts. No, sir. Mr. Chiarello. Absolutely not. Mr. Weber. A little sarcasm there. Does the island receive supplies, including fuel, from foreign ports, despite the Jones Act? Mr. Roberts. The Jones Act does not apply to fuel and other commodities sourced from foreign sources. Mr. Weber. Right. So---- Mr. Schoeneman. There are no taxes or tariffs added to that either. Mr. Weber. I am sorry? Mr. Schoeneman. There are no taxes or tariffs or any other things that are designed to make the Jones Act more attractive; those don't exist either. That has been repeated in the media, too. Mr. Weber. And I guess we just went through three hurricanes. I mean, unbelievable. My district in Texas is arguably ground zero for flooding. The first three coastal counties, coming from Louisiana--I have five ports, more than any other Member of Congress. Some have four, but we have five. So this is very near and dear to our hearts. If you had two or three hurricanes in different parts of the country, let's just say, do we have enough vessels--are there enough U.S. vessels and mariners to meet the demands in that instance where there are three or more hurricanes? Mr. Schoeneman. Absolutely. Mr. Chiarello. Yes, sir. Mr. Weber. That is not an argument for suspending the Jones Act. I appreciate that. Mr. Chairman, I yield back. Mr. Hunter. I thank the gentleman. Mr. Larsen is recognized. Mr. Larsen. Thank you, Mr. Chairman. I want to remind folks that the Jones of the Jones Act was a Washington State Senator, as well. Wesley Jones. He was also for prohibition, a position that I don't think Mr. Young would have been appreciative of. So I guess it is always six or one-half dozen the other. So I will pick Mr. Roberts just so I can get an answer from somebody. The practical effects of the Jones Act has been that we have been getting containers of relief supplies to Puerto Rico. Mr. Roberts. Yes, sir. Mr. Larsen. So anybody on the panel, there is just no doubt of the Jones Act has not been a barrier to getting relief supplies to Puerto Rico. Brian, or Mr. Schoeneman? Mr. Roberts. Absolutely. Mr. Schoeneman. No, I mean, if you are watching the news, I mean, CBS has--David Begnaud has been down on the ground. He has done a great job. We are showing containers--I mean, the entire port is full. Mr. Larsen. Yes. Mr. Schoeneman. So the idea that the Jones Act is somehow impeding this, we had containers on the ground before the hurricane hit. I mean, we were prepositioning containers on the ground in the event that there was an issue. So, no, absolutely not. Mr. Larsen. So I want to ask two questions about the other practical effects. Is there a practical impact of extending the waiver? You know, we come to Sunday or Saturday night or whenever, and the administration says we are going to do 10 more days for a waiver, is there a practical impact to that? Mr. Chiarello. So it didn't make sense to us why the waiver was put in place the first time. Mr. Larsen. Yes. Mr. Chiarello. So an extension of the waiver would make even less sense. We have the capacity. We are moving the freight. There isn't a bottleneck of cargo to get to the island. The bottleneck is on the island. Mr. Larsen. There is no proof of a bottleneck to get supplies onto the ports of Puerto Rico. Mr. Chiarello. That is correct. Mr. Larsen. Except for the land-side infrastructure itself. Mr. Roberts. That is correct, and I think the problem with the 10-day waiver and any extension of it is that it is a blanket waiver. Mr. Larsen. It is what? Mr. Roberts. It is a blanket waiver. It applies to anybody who self-selects to try and use it. And let me emphasize that, you know, our primary priority, our top priority is to help the people of Puerto Rico get the supplies they need. And if there was a particular movement that couldn't be satisfied with a Jones Act vessel, we would not stand in the way of getting that done quickly. That is just not the case now. Mr. Larsen. Yes. Mr. Graykowski, could you answer the question? There has been--you know, in the Senate, they offered to do--to just get rid of the Jones Act, and there has been discussion in this Chamber--not in this committee, but in this Chamber--about a 1- year waiver. Since you are sort of in the long game, along with TOTE and others, but you are sort of in the long game of shipbuilding, what if a 1-year waiver passed? What does that mean for you from a planning perspective? Mr. Graykowski. Well, two of my customers or one customer and one soon to be hopefully are at the table here, and---- Mr. Larsen. Save your pitch for outside. Mr. Graykowski. I am showing my slides, PowerPoint. The longer the waiver is extended, if it is, the greater the uncertainty. And Anthony Chiarello and Mike both referred to the financing issues. And so the most critical part of the shipbuilding deal, if you will, is, how am I going to pay for it? And ships are expensive, $100 million, more than $100 million. So probably the most frequent call I get and many of us get is from people in New York, banks and that, all wanting to know what is going to happen with the Jones Act. I think Anthony can speak to it personally, but trying to assemble a financial package to build a ship when you are facing this kind of a question and the uncertainty because it is a long-life asset, people are putting a lot of money into it, it just makes it more difficult and, in this case, for no reason whatsoever. Mr. Schoeneman. Mr. Larsen, if I can answer that, as well? Mr. Larsen. Make it quick because I have a concluding statement. Mr. Schoeneman. I will be very quick. We don't know what-- we don't even know how this would work. There has never been a waiver of that length in the history of the Jones Act. Even an exemption to Puerto Rico, we don't know how this is going to work because, as far as I can tell looking at the law, every single--all the tax law, the immigration law, every other kind of law that applies to these companies would apply to a foreign company that is engaged in that service. So how is that even going to work? And if that is the case, if all the laws are the same and all the competitive advantage that these companies might have bringing in foreign goes away, so the cost changes go away, so what is the point? Mr. Larsen. All right. I just wanted to make a concluding statement. I think that, on this committee, in fact, in all the Congress and all the House of Representatives, we all want to help Puerto Rico, and we are going to have a debate about what that might mean and what the shape would be to that and how much money it will be, where it ought to go. We want to help Puerto Rico, and what I am hearing is that waiving the Jones Act doesn't contribute to that effort. That is what I hear. Thank you. Mr. Roberts. I would say that we believe it is a distraction and a harmful distraction. Mr. Larsen. Thank you, Mr. Chairman. Mr. Hunter. I thank the gentleman. Mr. Cummings is recognized. Mr. Cummings. Thank you very much, Mr. Chairman. I will be very brief. Mr. Chairman, I want to pick up where Mr. Larsen ended. You know, a lot of people in Congress are saying, and particularly I just left a meeting with FEMA, and Ms. Plaskett and others feel that the Jones Act definitely causes the prices of most things to be higher. And you just presented--I was glad I caught that part of your testimony--the idea that there are those forces who want to do away with the Jones Act for whatever reasons. Why would someone want to put the U.S.--I mean, because basically what it would do is put our shipbuilders out of business and put our workers out of work. I mean, why in the world would someone or anybody want to do that? Mr. Schoeneman. Your guess is as good as mine, Congressman, because it doesn't make an ounce of sense to me. I mean, the only thing I can think of, at least from an ideological standpoint, is there is a belief that the Jones Act is protectionist, and there is just a knee-jerk aversion in some places to the idea of protectionism. But I want to recall all of my colleagues who think that this is protectionist as some kind of ideological issue. We have got Adam Smith up on the wall over here. Even he said that cabotage and protecting domestic transportation was part of what nation-states should do. It is not protectionist to ensure that Americans have jobs. It is not protectionist to put Americans first and put American workers first. And, I mean, frankly, everything that I have seen from the folks--the folks who are requesting a long-term waiver, I think their hearts are in the right place. They just don't understand the way the Jones Act works. Those who are requesting that this be permanently exempted, those folks are the real problem. They know the truth, and they are doing this on purpose. And, frankly, as far as I can tell, they really--what they effectively are asking this Congress to do is to subsidize foreign workers against American workers because that is exactly what happens if the Jones Act goes away and these foreign ships get to operate in American trade. Mr. Cummings. And that is how I see it. And it does concern me when we are trying to make sure that Americans have good jobs so that they can raise their families. Several years ago, I worked on legislation, and actually, it was adopted by the Congress. It is section 301 of the Coast Guard Maritime Transportation Act of 2012. This measure tightens restrictions on the issuance of Jones Act waivers by asking DOT to determine what actions could be taken to enable a Jones Act qualified vessel to meet the specific sealift needs. Do you know if DOT performed this analysis at all and did DOT reach out to our Jones Act carriers to assess the availability of sealift capacity? Mr. Schoeneman. I mean, I can answer that. Mr. Roberts. Go for it, Brian. Mr. Schoeneman. The problem right now the way that this waiver was granted by going through using national security, a DoD waiver, it bypassed the entire DOT process. Our friends at MARAD are in constant communication with Customs and Border Protection, with our operators to let them know that where the availability of these vessels are. The MARAD process works. I mean, if there is a single waiver--I mean, typically the way this is supposed to work is a single waiver request for a single ship for a single purpose comes in. MARAD reviews it. CBP reviews it. They canvass the industry and find out if there are vessels available. If there are not, they issue the waiver; the ship can go. That process can take 5 hours; it can take 24 hours. But it is very quick. These blanket waivers, they cut DOT, they cut MARAD, they cut these guys completely out of the process, and it simply allows anybody to do anything. And that is why we are very--we don't like DoD waivers. We don't like national security waivers because they are too amorphous. The set process that exists thanks to the law that you passed and the way that MARAD is activated is the right way to do it, and we really shouldn't be bypassing it if there is not a good reason for it. Mr. Cummings. I think some kind of way, going back to my initial question, the word needs to get out to the Puerto Rican people, I guess, that this is not responsible for higher prices and whatever research. I would love to have some of that because my colleagues have been very adamant about that, and I agree that the more discussion, the more uncertainty. And uncertainty gives business a real, real big problem. And, with that, I yield back. Mr. Hunter. I thank the gentleman. Mr. Lowenthal, my colleague from California, is recognized. Dr. Lowenthal. Thank you, Mr. Chair. You know, I represent the Port of Long Beach. I also am the cochair, along with Ted Poe, of the PORTS Caucus here. And I am an unabashed supporter, unabashed supporter of the U.S. merchant marine, U.S. maritime interests, and the Jones Act, so let me get that out. I have watched over the years the loss in terms of containerships and others of U.S. interests and watched foreign interests kind of dominate, and I worry that we don't have enough support for our own maritime interests. So I start from there watching this occur, not only in Puerto Rico but in my own district and throughout the Nation, and I think it is a critical issue that I am glad that we are discussing. I am also glad for this hearing, let me preface, for us to begin to correct the misinformation that I hear all the time now about the Jones Act and for us to really understand what the Jones Act really does and what it doesn't do and to stop and to clarify this misinterpretation. So I am so glad to be back here. I actually just ran from the Supreme Court because we are having a major, major hearing today on a whole entirely other issue. I hope this doesn't get to the Supreme Court also. So my issue is about this issue of rates. But I want to talk about, you know, what we are doing is not only now concerned about the immediate--which we are--getting goods to Puerto Rico, but I am also concerned about the reconstitution of the industries and the businesses in Puerto Rico and getting those goods back to the mainland. So I would like, Mr. Chiarello and Mr. Roberts, to discuss the backhaul rates your companies offer from Puerto Rico back to the mainland and how these inexpensive rates help Puerto Rican manufacturers and other businesses serve the American markets because, unless we are also concerned about that, how we are going to help the Puerto Rican economy, we are only doing half the job here. So I would like to hear a little bit about what are backhaul rates and what do they mean. Mr. Chiarello. Thank you very much, sir. So the trade in and out of Puerto Rico is about a 2-to-1 trade, so two loads are going down to Puerto Rico for every load that is coming back. So, as a carrier--and I am sure Mr. Roberts will speak on behalf of carriers as well. But as a carrier, we work very, very closely with the exporters out of Puerto Rico to try to figure out what opportunities there are for freight movement to help improve their economy. I will tell you, without giving exact numbers, because I don't have them off the top of my head, the export rates, so from Puerto Rico back to Florida, are significantly less than the rates going from Florida down to Puerto Rico just because of, number one, the demand, and, for us, because we move so many empty containers coming out of Puerto Rico on a 2-to-1 trade, there are opportunities to help support that exporting community. We are seeing biomedical products that are starting to take hold. Medical devices, that is an industry that seems to be picking up on the island. We see fruits and vegetables that come out during certain times of the year, certainly supporting that. But there should be more opportunity for freight. And from a carrier perspective, we are trying to work with the Government and the shippers to support that. Dr. Lowenthal. Before I get to Mr. Roberts to answer, because I am going to let you answer, but I want to ask you a further question to Mr. Roberts. And that is that a 2013 GAO report that stakeholders were concerned that changes to the Jones Act would jeopardize these inexpensive backhaul services from Puerto Rico to the mainland if we jeopardize the Jones Act. Can you comment on that and also backhauling rates? Mr. Roberts. Sure. Thank you for asking. And let me say first that I completely agree and appreciate your focus on rebuilding the island afterwards and rebuilding those industries. That is where the focus needs to be. Dr. Lowenthal. That is right. That is exactly right. At least not only getting--it is important to get those right there, but we have to help rebuild the island, and you are going to be part of that solution. Mr. Roberts. We are looking forward to that, sir. I would say that, as Mr. Chiarello said, the backhaul rates are a competitive advantage that Puerto Rico has that other islands in the Caribbean don't have. I would estimate, and it is only an estimate, that you could probably get a container load of cargo from Puerto Rico to Jacksonville cheaper than you could get it from Atlanta to Jacksonville. We are checking, anyway. So it is a true competitive advantage that Puerto Rico has. They have built industry around that and around the tax breaks that unfortunately expired, and that is an issue. Dr. Lowenthal. And so you would concur with that GAO report that changes or loss of the Jones Act would actually jeopardize these backhaul rates? Mr. Roberts. Absolutely. Dr. Lowenthal. Thank you. And I yield back. Mr. Hunter. I thank the gentleman. I think everybody has gotten a chance to ask their questions. I am going to close here, unless Mr. Graves gets here, and I will yield to him for one last series. I just want to start at the beginning. The Jones Act is what is called a cabotage law. It is a maritime law. Every modern and even not-modern country known in existence on the Earth right now has cabotage laws. The first cabotage laws in the U.S. were put into effect in 1789. It wasn't the 1920s. It was 1789. And it was based on what Mr. Schoeneman said just now, and I am actually going to quote Adam Smith, talking about some exceptions to the free- market ideals, which all of us strive to but, on the Republican side, more so than like the open market. But here is what Smith had to say: ``There seem, however, to be two cases in which it will generally be advantageous to lay some burden upon foreign for the encouragement of domestic industry. The first is, when the particular sort of industry is necessary for the defense of the country. The defense of Great Britain, for example, depends very much upon the number of its sailors and shipping. The act of navigation, therefore, very properly endeavors to give the sailors and shipping of Great Britain the monopoly of the trade of their own country in some cases by absolute prohibitions and in others by heavy burdens upon the shipping of foreign countries. As defined, however, it is of much more importance than opulence, the act of navigation is, perhaps, the wisest of all the commercial regulations of England.'' So Adam Smith didn't just say, it is OK to have the Jones Act, he said the cabotage laws and the British Jones Act are the greatest civilian laws that they have in place for the existence of their country. So that is number one. Number two, we talked about jobs. Mr. Graykowski talked about jobs. The Jones Act is there for national security. It is the American ability, because we are surrounded by oceans, whether to our southeast, east, and west, the Jones Act is what provides for our ability to navigate those waters and not by foreign ships and not by foreigners. We haven't talked at all about the inland waterways. You get rid of the Jones Act, the majority of the Jones Act ships, the tens of thousands are on the inland waterways, the Ohio, the Missouri, the Mississippi. I would like to ask the American people if they agree that we should have the Yemenis, Pakistanis, Egyptians, Iraqis, Iranians, name your former Soviet satellite state countries, if we want them operating barges, carrying chemicals, carrying fuels, carrying gravel, carrying coal, carrying grain, carrying gases, carrying things that are explosives, if we want them operating their barges on our inland waterways. If you want every town that sits on a U.S. river, if you want a foreign company with a foreign-crewed ship that you have no idea where they come from operating on your waterways and bringing highly explosive deadly things to your ports every single day on the inland waterways, getting rid of the Jones Act would allow that. The maritime industry in this country is one of the only industries left besides construction, which is up and down based on the economy, for anybody in this Nation to go with a high school degree or equivalent and get a job that pays over $50,000 a year almost immediately, almost immediately, whether you are a welder in a shipyard or you are a 23-year-old crewing one of these barges on the inland waterways. This is an industry that provides great-paying jobs without having to go get your poli-sci degree. And I think this is one of the things that our President right now has been talking about. This is one of the main things when he signed the apprenticeship bill. He had guys standing next to him with tattoo sleeves. I mean, these are American men and women that don't want to go to college, that want to work and make something with their hands and make an impact on the country and the world, and they do that in this industry, in the maritime industry. Lastly, and this goes back to what Adam Smith said and someone said this before me, but if you control the ocean, you control the world. Wall Street foreign investors have realized this too. That is why the Jones Act is under assault. This is from Wall Street and probably foreign energy companies that want to decimate the U.S. market and put in their cheap foreign workers with their cheap ships and take our jobs and our ability to move goods if we have to during wartime. During wartime it is all civilians. When I went to Iraq on my second tour, I loaded up a RORO in San Diego with all of our artillery battery's equipment. We then fell off--on into it in Kuwait. That is how things were. If President Trump does what he has been talking about in his campaign and after he has gotten elected, the last thing he should be doing is waiving the Jones Act. If the President stands for American workers and American entrepreneurship and American investment, what he should not do is give into the foreign corporate energy lobby that is lobbying to have the Jones Act taken away. Hopefully this was a misunderstanding and 10 days is all they are going to get. They are going to see that it did nothing whatsoever. It had no impact whatsoever. It was purely political. And I think that is what we are going to find. But in the meantime, what we are going to do on this committee and in this Congress is stand up for the rights of the American people to have good jobs in this country, not just for the sake of having good jobs but protecting the one industry that can keep us safe. The one industry, besides our defense industry, that shifts from commercial industry to defense on a dime is the maritime industry in this country. And if the President stands for the American worker and the President stands for American jobs and national security, which he said over and over that he does, then what he did was a mistake, and he won't do it again, and instead of lambasting the Jones Act or waiving it, he will be standing up for it in his next speech. With that, I would like to yield to Mr. Garamendi for any closing remarks he may have. Mr. Garamendi. I will start by saying amen. You got wound up, and it is best that I not get wound up equally so, but just a couple of things I want to make clear. The private American companies that employ the Jones Act have made significant investments in Puerto Rico. I think you--and that is in your testimony. I would like you to repeat the number--the investments that Crowley and TOTE have made in Puerto Rico and the number of employees that you have in Puerto Rico. Mr. Roberts. Mr. Garamendi, we--Crowley is in the final stages of a $600 million capital investment in Puerto Rico, building the ships and the terminal infrastructure there. That terminal project is one of the largest infrastructure projects on the island in the last year. We employ on the island 300 Puerto Ricans directly, and that translates into, you know, I don't know how many indirect jobs. Mr. Garamendi. Thank you. TOTE. Mr. Chiarello. On behalf of TOTE, our vessels and the supporting infrastructure is approximately--or in excess of $500 million. That does not include the investment in an LNG plant which was made in Jacksonville to support the vessels. And on top of that, we have with our partners who operate the terminals for us as well as our direct employees in excess of 200 employees. Mr. Garamendi. Very good. The chairman made the point about the Jones Act is far more than Puerto Rico, Guam, Hawaii. It is the inland waterways. He said it so very, very well. I won't repeat it but just to call attention to the fact that the Jones Act does include the inland waterways. And my final point has to do with the shipbuilding industry in the United States. We have had significant testimony on that. Mr. Chairman, I thank you very much for holding the hearing and for the witnesses and for the information. And we do have a challenge out ahead, and that is to push back against all of the fake news surrounding the Jones Act. Thank you very much, Mr. Chairman. Mr. Hunter. All the fake news. I thank the gentleman. I thank the witnesses. And we had great Member participation today. I think you see that--that actually is pretty striking in and of itself that we had more than me and John here today. We appreciate it. With that, the subcommittee stands adjourned. [Whereupon, at 12:21 p.m., the subcommittee was adjourned.] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] [all]