[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
BUILDING A 21ST-CENTURY INFRASTRUCTURE FOR AMERICA: COAST GUARD
STAKEHOLDERS' PERSPECTIVES AND JONES ACT FLEET CAPABILITIES
=======================================================================
(115-26)
HEARING
BEFORE THE
SUBCOMMITTEE ON
COAST GUARD AND MARITIME TRANSPORTATION
OF THE
COMMITTEE ON TRANSPORTATION
AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
OCTOBER 3, 2017
__________
Printed for the use of the
Committee on Transportation and Infrastructure
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available online at: https://www.govinfo.gov/committee/house-
transportation?path=/browsecommittee/chamber/house/committee/
transportation
__________
U.S. GOVERNMENT PUBLISHING OFFICE
38-052 WASHINGTON : 2019
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska PETER A. DeFAZIO, Oregon
JOHN J. DUNCAN, Jr., Tennessee, ELEANOR HOLMES NORTON, District of
Vice Chair Columbia
FRANK A. LoBIONDO, New Jersey JERROLD NADLER, New York
SAM GRAVES, Missouri EDDIE BERNICE JOHNSON, Texas
DUNCAN HUNTER, California ELIJAH E. CUMMINGS, Maryland
ERIC A. ``RICK'' CRAWFORD, Arkansas RICK LARSEN, Washington
LOU BARLETTA, Pennsylvania MICHAEL E. CAPUANO, Massachusetts
BLAKE FARENTHOLD, Texas GRACE F. NAPOLITANO, California
BOB GIBBS, Ohio DANIEL LIPINSKI, Illinois
DANIEL WEBSTER, Florida STEVE COHEN, Tennessee
JEFF DENHAM, California ALBIO SIRES, New Jersey
THOMAS MASSIE, Kentucky JOHN GARAMENDI, California
MARK MEADOWS, North Carolina HENRY C. ``HANK'' JOHNSON, Jr.,
SCOTT PERRY, Pennsylvania Georgia
RODNEY DAVIS, Illinois ANDRE CARSON, Indiana
MARK SANFORD, South Carolina RICHARD M. NOLAN, Minnesota
ROB WOODALL, Georgia DINA TITUS, Nevada
TODD ROKITA, Indiana SEAN PATRICK MALONEY, New York
JOHN KATKO, New York ELIZABETH H. ESTY, Connecticut,
BRIAN BABIN, Texas Vice Ranking Member
GARRET GRAVES, Louisiana LOIS FRANKEL, Florida
BARBARA COMSTOCK, Virginia CHERI BUSTOS, Illinois
DAVID ROUZER, North Carolina JARED HUFFMAN, California
MIKE BOST, Illinois JULIA BROWNLEY, California
RANDY K. WEBER, Sr., Texas FREDERICA S. WILSON, Florida
DOUG LaMALFA, California DONALD M. PAYNE, Jr., New Jersey
BRUCE WESTERMAN, Arkansas ALAN S. LOWENTHAL, California
LLOYD SMUCKER, Pennsylvania BRENDA L. LAWRENCE, Michigan
PAUL MITCHELL, Michigan MARK DeSAULNIER, California
JOHN J. FASO, New York
A. DREW FERGUSON IV, Georgia
BRIAN J. MAST, Florida
JASON LEWIS, Minnesota
------
Subcommittee on Coast Guard and Maritime Transportation
DUNCAN HUNTER, California, Chairman
DON YOUNG, Alaska JOHN GARAMENDI, California
FRANK A. LoBIONDO, New Jersey ELIJAH E. CUMMINGS, Maryland
GARRET GRAVES, Louisiana RICK LARSEN, Washington
DAVID ROUZER, North Carolina JARED HUFFMAN, California
RANDY K. WEBER, Sr., Texas ALAN S. LOWENTHAL, California
BRIAN J. MAST, Florida ELEANOR HOLMES NORTON, District of
JASON LEWIS, Minnesota, Vice Chair Columbia
BILL SHUSTER, Pennsylvania (Ex PETER A. DeFAZIO, Oregon (Ex
Officio) Officio)
CONTENTS
Page
Summary of Subject Matter........................................ iv
WITNESSES
Panel 1
Rear Admiral William G. Kelly, Assistant Commandant for Human
Resources, U.S. Coast Guard, and Rear Admiral Melvin W.
Bouboulis, Assistant Commandant for Engineering and Logistics,
U.S. Coast Guard:
Testimony.................................................... 4
Joint prepared statement..................................... 44
Responses to questions for the record from Hon. Don Young, a
Representative in Congress from the State of Alaska........ 47
Panel 2
Brian W. Schoeneman, Legislative Director, Seafarers
International Union, on behalf of Maritime Labor:
Testimony.................................................... 20
Prepared statement........................................... 62
Questions for the record for Mr. Schoeneman from Hon. Don
Young, a Representative in Congress from the State of
Alaska..................................................... 68
Anthony Chiarello, President and CEO, TOTE:
Testimony.................................................... 20
Prepared statement........................................... 69
Responses to questions for the record from Hon. Don Young, a
Representative in Congress from the State of Alaska........ 72
Michael G. Roberts, Senior Vice President and General Counsel,
Crowley Maritime Corporation:
Testimony.................................................... 20
Prepared statement........................................... 73
Questions for the record for Mr. Roberts from Hon. Don Young,
a Representative in Congress from the State of Alaska...... 77
John Graykowski, Government and Regulatory Advisor, Philly
Shipyard, Inc., on behalf of the Shipbuilders Council of
America:
Testimony.................................................... 20
Prepared statement........................................... 78
Questions for the record for Mr. Graykowski from Hon. Don
Young, a Representative in Congress from the State of
Alaska..................................................... 83
SUBMISSIONS FOR THE RECORD
U.S. Coast Guard, submission of the following:
Report, ``Acquisition, Construction, and Improvements: FY2018
Unfunded Priorities List,'' July 20, 2017.................. 84
Chart, ``FY2018-FY2022 Five-Year Capital Investment Plan:
Acquisition, Construction, and Improvements''.............. 92
``United States Coast Guard--FY 2018 Hurricane Supplemental
Submission,'' a detailed list of hurricane damages
summarized on page 12...................................... 93
Michael G. Roberts, Senior Vice President and General Counsel,
Crowley Maritime Corporation, supplementary information for the
record......................................................... 118
ADDITIONS TO THE RECORD
Written testimony of James H.I. Weakley, President, Lake
Carriers' Association.......................................... 121
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BUILDING A 21ST-CENTURY INFRASTRUCTURE FOR AMERICA: COAST GUARD
STAKEHOLDERS' PERSPECTIVES AND JONES ACT FLEET CAPABILITIES
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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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