[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


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     Available online at: https://www.govinfo.gov/committee/house-
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                             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
  
  
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    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.]


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