[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]

REVIEW OF FISCAL YEAR 2022 BUDGET FOR
THE COAST GUARD AND MARITIME TRANSPOR-
TATION PROGRAMS

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

(117-23)

REMOTE HEARING

BEFORE THE

SUBCOMMITTEE ON
COAST GUARD AND MARITIME TRANSPORTATION

OF THE

COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTEENTH CONGRESS

FIRST SESSION

__________

JULY 21, 2021

__________

Printed for the use of the
Committee on Transportation and Infrastructure

[GRAPHIC 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
47-004 PDF WASHINGTON : 2022

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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

PETER A. DeFAZIO, Oregon, Chair
SAM GRAVES, Missouri ELEANOR HOLMES NORTON,
DON YOUNG, Alaska District of Columbia
ERIC A. ``RICK'' CRAWFORD, Arkansas EDDIE BERNICE JOHNSON, Texas
BOB GIBBS, Ohio RICK LARSEN, Washington
DANIEL WEBSTER, Florida GRACE F. NAPOLITANO, California
THOMAS MASSIE, Kentucky STEVE COHEN, Tennessee
SCOTT PERRY, Pennsylvania ALBIO SIRES, New Jersey
RODNEY DAVIS, Illinois JOHN GARAMENDI, California
JOHN KATKO, New York HENRY C. ``HANK'' JOHNSON, Jr.,
BRIAN BABIN, Texas Georgia
GARRET GRAVES, Louisiana ANDRE CARSON, Indiana
DAVID ROUZER, North Carolina DINA TITUS, Nevada
MIKE BOST, Illinois SEAN PATRICK MALONEY, New York
RANDY K. WEBER, Sr., Texas JARED HUFFMAN, California
DOUG LaMALFA, California JULIA BROWNLEY, California
BRUCE WESTERMAN, Arkansas FREDERICA S. WILSON, Florida
BRIAN J. MAST, Florida DONALD M. PAYNE, Jr., New Jersey
MIKE GALLAGHER, Wisconsin ALAN S. LOWENTHAL, California
BRIAN K. FITZPATRICK, Pennsylvania MARK DeSAULNIER, California
JENNIFFER GONZALEZ-COLON, STEPHEN F. LYNCH, Massachusetts
Puerto Rico SALUD O. CARBAJAL, California
TROY BALDERSON, Ohio ANTHONY G. BROWN, Maryland
PETE STAUBER, Minnesota TOM MALINOWSKI, New Jersey
TIM BURCHETT, Tennessee GREG STANTON, Arizona
DUSTY JOHNSON, South Dakota COLIN Z. ALLRED, Texas
JEFFERSON VAN DREW, New Jersey SHARICE DAVIDS, Kansas, Vice Chair
MICHAEL GUEST, Mississippi JESUS G. ``CHUY'' GARCIA, Illinois
TROY E. NEHLS, Texas ANTONIO DELGADO, New York
NANCY MACE, South Carolina CHRIS PAPPAS, New Hampshire
NICOLE MALLIOTAKIS, New York CONOR LAMB, Pennsylvania
BETH VAN DUYNE, Texas SETH MOULTON, Massachusetts
CARLOS A. GIMENEZ, Florida JAKE AUCHINCLOSS, Massachusetts
MICHELLE STEEL, California CAROLYN BOURDEAUX, Georgia
KAIALI`I KAHELE, Hawaii
MARILYN STRICKLAND, Washington
NIKEMA WILLIAMS, Georgia
MARIE NEWMAN, Illinois
TROY A. CARTER, Louisiana
------ 7

Subcommittee on Coast Guard and Maritime Transportation

SALUD O. CARBAJAL, California, Chair
RICK LARSEN, Washington BOB GIBBS, Ohio
JAKE AUCHINCLOSS, Massachusetts, DON YOUNG, Alaska
Vice Chair RANDY K. WEBER, Sr., Texas
SEAN PATRICK MALONEY, New York MIKE GALLAGHER, Wisconsin
ALAN S. LOWENTHAL, California JEFFERSON VAN DREW, New Jersey
ANTHONY G. BROWN, Maryland NICOLE MALLIOTAKIS, New York
CHRIS PAPPAS, New Hampshire SAM GRAVES, Missouri (Ex Officio)
PETER A. DeFAZIO, Oregon (Ex
Officio)
CONTENTS

Page

Summary of Subject Matter........................................ v

STATEMENTS OF MEMBERS OF THE COMMITTEE

Hon. Salud O. Carbajal, a Representative in Congress from the
State of California, and Chair, Subcommittee on Coast Guard and
Maritime Transportation, opening statement..................... 1
Prepared statement........................................... 3
Hon. Jefferson Van Drew, a Representative in Congress from the
State of New Jersey, prepared statement........................ 4
Hon. Bob Gibbs, a Representative in Congress from the State of
Ohio, and Ranking Member, Subcommittee on Coast Guard and
Maritime Transportation, opening statement..................... 4
Prepared statement........................................... 6
Hon. Peter A. DeFazio, a Representative in Congress from the
State of Oregon, and Chair, Committee on Transportation and
Infrastructure, opening statement.............................. 8
Prepared statement........................................... 9
Hon. Sam Graves, a Representative in Congress from the State of
Missouri, and Ranking Member, Committee on Transportation and
Infrastructure, prepared statement............................. 53

WITNESSES

Admiral Karl L. Schultz, Commandant, U.S. Coast Guard, oral
statement...................................................... 10
Prepared statement........................................... 12
Hon. Daniel B. Maffei, Chairman, Federal Maritime Commission,
oral statement................................................. 17
Prepared statement........................................... 18
Master Chief Jason M. Vanderhaden, Master Chief Petty Officer of
the Coast Guard, U.S. Coast Guard, oral statement \\... 21
Lucinda Lessley, Acting Administrator, Maritime Administration,
oral statement................................................. 23
Prepared statement........................................... 25

SUBMISSIONS FOR THE RECORD

Draft Legislation for Barracks Modernization at the U.S. Coast
Guard Training Center Cape May, Submitted for the Record by
Hon. Jefferson Van Drew........................................ 54

APPENDIX

Questions from Hon. Don Young to Admiral Karl L. Schultz,
Commandant, U.S. Coast Guard................................... 55

----------

Master Chief Jason M. Vanderhaden did not submit a prepared
statement for the record.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

July 21, 2021

SUMMARY OF SUBJECT MATTER

TO: LMembers, Subcommittee on Coast Guard and Maritime
Transportation
FROM: LStaff, Subcommittee on Coast Guard and Maritime
Transportation
RE: LHearing on ``Review of Fiscal Year 2022 Budget
Request for the Coast Guard and Maritime Transportation
Programs''
_______________________________________________________________________

PURPOSE

The Subcommittee on Coast Guard and Maritime Transportation
will hold a hearing on Wednesday, July 21, 2021, at 11:00 a.m.
EDT in 2167 Rayburn House Office Building and via Zoom to
examine the President's fiscal year (FY) 2022 budget requests
for the Coast Guard and Maritime Transportation Programs. The
Subcommittee will hear testimony from the U.S. Coast Guard
(Coast Guard or Service), the Federal Maritime Commission
(Commission or FMC), and the Maritime Administration (MARAD).

BACKGROUND

COAST GUARD

The Coast Guard was established on January 28, 1915,
through the consolidation of the Revenue Cutter Service
(established in 1790) and the Lifesaving Service (established
in 1848). The Coast Guard later assumed the duties of three
other agencies: the Lighthouse Service (established in 1789),
the Steamboat Inspection Service (established in 1838), and the
Bureau of Navigation (established in 1884).
Under Section 102 of Title 14, United States Code, the
Coast Guard has primary responsibility to enforce or assist in
the enforcement of all applicable federal laws on, under, and
over the high seas and waters subject to the jurisdiction of
the United States; to ensure the safety of life and property at
sea; to carry out domestic and international icebreaking
activities; and, as one of the six armed forces of the United
States, to maintain defense readiness to operate as a
specialized service in the Navy upon the declaration of war or
when the President directs.
The Coast Guard is directed by a Commandant, appointed by
the President with the advice and consent of the Senate to a
four-year term. Admiral Karl Schultz was sworn in as the 26th
Commandant of the Coast Guard in June 2018.

Coast Guard FY 2021 Enacted to FY 2022 President's Budget Request Comparison
(Dollars in Thousands)
----------------------------------------------------------------------------------------------------------------
% Diff. Bet.
FY 2022 Diff. Bet. FY FY 2022
Program FY 2021 President's 2022 Budget Budget
Enacted Budget Request Request & FY Request & FY
2021 Enacted 2021 Enacted
----------------------------------------------------------------------------------------------------------------
Operations & Support (O&S).......................... $8,485,146 $9,020,770
Overseas Contingency Operations \1\ (OCO)........... $- $-
Environmental Compliance & Restoration (EC&R) \2\... $21,186 $23,456
Medicare-Eligible Retiree Health Care Fund (MERHCF). $215,787 $240,577
Procurement, Construction & Improvements (PC&I)..... $2,264,041 $1,639,100
Research & Development (R&D)........................ $10,276 $7,476
-----------------------------------------------------------
Subtotal, Discretionary........................... $10,975,250 $10,907,923 $(65,057) -0.6%
-----------------------------------------------------------
Retired Pay......................................... $1,869,704 $1,963,519
State Boating Safety Grants......................... $118,002 $128,987
Maritime Oil Spill Program.......................... $101,000 $101,000
General Gift Funds.................................. $2,864 $2,864
-----------------------------------------------------------
Subtotal, Mandatory............................... $2,091,570 $2,196,370 $104,800 5.0%
-----------------------------------------------------------
Total........................................... $13,066,820 $13,104,293 $39,743 0.3%
----------------------------------------------------------------------------------------------------------------
\1\ Coast Guard OCO funding is historically requested in the Navy's request but appropriated directly to the
Coast Guard.
\2\ EC&R funding is now under O&S.

The chart above compares the FY 2022 budget request to the FY
2021 enacted funding level.\1\
---------------------------------------------------------------------------
\1\ United States Coast Guard. Budget Overview: Fiscal Year 2022
Congressional Justification, available at https://www.uscg.mil/Portals/
0/documents/budget/2022/FY2022_Congressional_
Justification.pdf?ver=YXeBcfwpAIAE7RuU94zRJg%3d%3d.
---------------------------------------------------------------------------

FISCAL YEAR 2022 COAST GUARD BUDGET REQUEST

The President requests $13.1 billion in FY 2022 for the
activities of the Coast Guard, including $10.9 billion in
discretionary funding.\2\ The Elijah E. Cummings Coast Guard
Authorization Act of 2020 (Division G of P.L. 116-283) enacted
as part of the William H. Thornberry National Defense
Authorization Act authorized $11.9 billion in discretionary
funds for the Coast Guard in FY 2021, $766 million (or 7
percent) more than the FY 2020 enacted level of $11.2 billion.
The FY 2022 request of $10.9 billion for discretionary funds is
a decrease of $65 million (or 0.6 percent) from the FY 2021
enacted level of $11 billion. The budget does not provide a
specific request from the Department of Defense (DOD) Overseas
Contingency Operations (OCO) account. Although the budget
allocates $10 million to the OCO Transfer Fund, it is unclear
how much the Coast Guard would receive. The transfer of those
funds could support the ongoing deployment of Coast Guard
resources and defense operations around the world.
---------------------------------------------------------------------------
\2\ Id.
---------------------------------------------------------------------------
In FY 2019, the Coast Guard transitioned to the Department
of Homeland Security (DHS) Common Appropriations Structure
(CAS). Accordingly, activities funded through the previous
Operating Expenses, Reserve Training, and Medicare-Eligible
Retiree Health Care Fund Contribution were included as part of
the new Operations and Support (O&S) account in FY 2020.
Environmental Compliance and Restoration was included as part
of O&S in FY 2021 and has remained in that account for FY 2022.
In addition, acquisition personnel costs previously funded
through the Acquisition, Construction, and Improvements account
are included as part of the O&S account. The Acquisition,
Construction, and Improvements account transitioned to the
Procurement, Construction, and Improvements account and the
Research, Development, Test, and Evaluation account became the
new Research and Development account.

OPERATIONS AND SUPPORT (PREVIOUSLY OPERATING EXPENSES)

The President requests $9 billion for the O&S account in FY
2022, $536 million (or 6.3 percent) more than the FY 2021
enacted level. The O&S account supports the day-to-day
activities of the Coast Guard including administrative
expenses, support costs, travel, lease payments, and the
operation and maintenance of infrastructure and assets. The O&S
account also funds personnel compensation and benefits for the
Service's approximate 41,600 active-duty military members,
7,000 reservists, and 8,200 civilian employees.
The O&S budget request includes increases in funding to
cover follow-on costs for the operation and maintenance of
newly acquired assets and technology and increases in other
administrative expenses. These sustain critical frontline
operations with high priority recapitalization efforts for
cutters, boats, aircraft, systems, and infrastructure; operate
new air, surface, and shore facilities; fund increases for
military and civilian pay; and maintain parity with DOD
Services for military pay, allowances, and health care
benefits. The request includes a $172 million increase from the
FY 2021 enacted level to cover the cost of the 2022 military
pay raise (2.7 percent), 2022 civilian pay raise (2.7 percent),
2021 military pay raise (3 percent), and 2021 civilian pay
raise (1 percent).
The FY 2022 budget request includes an increase of 28
positions, 16 full time employees (FTEs), and $34.8 million to
fund initiatives in the Coast Guard's Technology Revolution
Roadmap. This comprehensive framework outlines investments
required to ensure mission execution supported by reliable,
mobile, and integrated technology.\3\ The investments in this
request are focused on three primary lines of effort: modernize
Command, Control, Communications, Computers, Cyber, and
Intelligence (C5I) infrastructure, improve cutter connectivity,
and transition to modern phone systems.\4\ The FY 2022 budget
request would include an increase of 11 positions, 6 FTEs, and
$20.6 million to fund initiatives to modernize C5I
infrastructure, improve cyber readiness, and transition to
modern software that provides mobility and leverages cloud
technology. The FY 2022 budget request would also include an
increase of 6 positions, 4 FTEs, and $16.9 million to modernize
information technology (IT) applications and deployment of
monitoring systems to defend against growing cyber threats to
Coast Guard IT networks.
---------------------------------------------------------------------------
\3\ United States Coast Guard. Tech Revolution: Vision for the
Future, available at https://www.dcms.uscg.mil/Portals/10/CG-6/roadmap/
C5i-roadmap-FINAL-v6.pdf.
\4\ Id.
---------------------------------------------------------------------------
O&S increases would be offset by $192 million in cuts
derived through decommissioning certain assets, fee and
operational adjustments, annualization of prior-year initiative
reductions, and the termination of one-time costs. The proposed
reductions in the O&S account include:
LAsset Decommissionings and Retirements: The FY
2022 budget request proposes to decommission five HC-130H Long
Range Surveillance Aircraft, five Island Class Patrol Boats,
and five legacy 87-foot Marine Protector Class Coastal Patrol
Boats. The Coast Guard estimates these decommissionings would
save an estimated total of $32.3 million ($25.4 million, $4.6
million, and $2.2 million respectively for each boat class) in
FY 2022.
LOperational Adjustments: Compared to FY 2021, the
FY 2022 budget request proposes $1.6 million in Coast Guard
Detailee Reductions, $814 thousand to consolidate redundant
stations, $895 thousand to improve boat operations, $27.8
million to improve management efficiencies, $3.3 million to
improve mission support efficiencies, $1 million to realign
support to departmental initiatives, and $1.9 million to
rebalance maritime patrol aircraft operations.

The Environmental Compliance and Restoration (EC&R) account
was moved to the O&S account in FY 2021. The President requests
$23.5 million within O&S for EC&R in FY 2022, $2.3 million (or
10.7 percent) more than the FY 2021 enacted level. The EC&R
funding provides for the clean-up and restoration of
contaminated Coast Guard facilities, and for the remediation of
Coast Guard assets to ensure they are safe to operate or can be
decommissioned in compliance with environmental laws.
The $23.5 million requested for EC&R continues long term
monitoring at 18 sites, begins or continues investigation/
remediation site work at 30 sites, and displays a commitment to
ongoing identification, investigation, cleanup, and long-term
management of contamination from hazardous substances and
pollutants for Coast Guard systems, buildings, structures, and
assets.
In January of 2020, the Coast Guard opened the Blue
Technology Center of Expertise (COE) at Scripps Institution of
Oceanography in La Jolla, California.\5\ This new COE, will
further act as a unique pipeline to innovation and enable
sharing of information between the Coast Guard, private sector,
other federal agencies, academia, and non-profit
organizations.\6\ Despite the creation of this new center, the
Coast Guard requests no additional funds to support and expand
the Blue Technology COE, which currently has only two
billets.\7\ The Coast Guard is still in the process of
performing a Requirements Analysis for the Blue Technology COE.
---------------------------------------------------------------------------
\5\ United States Coast Guard. Coast Guard opens new Blue
Technology Center of Expertise, available at https://www.dcms.uscg.mil/
Our-Organization/Assistant-Commandant-for-
Acquisitions-CG-9/Newsroom/Latest-Acquisition-News/Article/2065456/
coast-guard-opens-new-
blue-technology-center-of-expertise/. January 24, 2020.
\6\ Id.
\7\ United States Coast Guard. Budget Overview: Fiscal Year 2022
Congressional Justification, available at https://www.uscg.mil/Portals/
0/documents/budget/2022/FY2022_Congressional_
Justification.pdf?ver=YXeBcfwpAIAE7RuU94zRJg%3d%3d.
---------------------------------------------------------------------------

PROCUREMENT, CONSTRUCTION, AND IMPROVEMENTS

The President requests $1.6 billion for the Procurement,
Construction, and Improvements (PC&I) account, a $625 million
(or 27.6 percent) decrease over the FY 2021 enacted level. The
PC&I account funds the acquisition, procurement, construction,
rebuilding, and physical improvements of Coast Guard owned and
operated vessels, aircraft, facilities, aids-to-navigation,
communications and information technology systems, and related
equipment.
The FY 2022 budget request would include $1 billion
allocated for the acquisition of vessels and $222.8 million for
aircraft. This represents a decrease of $575.5 million (or 3
percent) from the FY 2021 enacted level. Specifically, the
budget request includes:
L$170 million to continue the construction of
Polar Security Cutter (PSC) 1, commence construction of PSC 2,
purchase Long Lead Time Materials (LLTM) for PSC 3, and prepare
to commence construction of PSC 3. The acquisition of three
PSCs supports the program management and production activities
associated with the Detail Design and Construction contract. In
2019, the joint Coast Guard and Navy Polar Security Cutter
Integrated Program Office (IPO) awarded the contract for the
construction of the nation's first heavy icebreaker in more
than 40 years to VT Halter of Mississippi.
L$78 million to support Post Delivery Activities
(PDA) for NSCs 9-11 and class wide activities, which include
test and evaluation; program execution and support; and program
close-out support to ensure an adequate and complete basis of
technical and logistical material and information for
transition to sustainment.
L$20 million for the acquisition of the current
program of record of 58 Fast Response Cutters (FRC) for the
Continental United States support production management costs,
PDA, Government Furnished Equipment (GFE), and logistics and
technical support for the FRC program. In 2019, FRCs 31 through
35 were delivered; in 2020 FRCs 36 through 40 were delivered
and Option 4 under the Phase II contract was awarded for FRCs
57 through 60. The Coast Guard plans to deliver FRCs 41 through
45 in 2021 and 46 through 50 in 2022. Bollinger Shipyards
currently has two FRC contracts (one in Phase I, one in Phase
II) with to-be-determined delivery dates, and the Coast Guard
expects to deliver four hulls in 2023 and four more hulls in
2024. The FRC program of record close out with Program Support
will begin in 2022 and end in 2024. The FY 2022 budget request
completes the FRC program of record.
L$597 million to support the construction of
Offshore Patrol Cutter (OPC) 4 and LLTM for OPC 5, and detail
design efforts for the OPC recompete effort. The funding also
supports other elements including warranty, outfitting
materials, spares, system stock, supply support, life cycle
engineering, Economic Price Adjustment, and Antecedent
Liability. The remaining funds would support Program Office
technical and project support for program-wide activities and
the Ship Design Team; Command, Control, Communications,
Computers, Intelligence, Surveillance, and Reconnaissance
(C4ISR) and combat system development and integration support;
test and evaluation efforts; logistics management and training
development; preparation for PDA; licensing, development, and
procurement of government-furnished information and equipment;
and contract recompete including industry studies. The OPC
program and the current contract were restructured following
then-Acting Secretary McAleenan's 2019 decision to grant
extraordinary contract relief under Public Law 85-804.
L$66.5 million to support logistics requirements,
regeneration, and missionization for 14 HC-27J aircraft
received from the U.S. Air Force; and $20 million for the
acquisition of HC-130J aircraft, development and installation
of the mission system, and associated logistics.
L$32 million for the continued modernization and
sustainment of the HH-65 helicopter fleet.
L$18 million for C4ISR design, development, and
integration.
LNo funding for the Alteration of Bridges program
in FY 2022. The program last received funding in FY 2010.
Established by the Truman-Hobbs Act of 1940 (33 U.S.C. 511 et.
seq.), the Alteration of Bridges program authorizes the Coast
Guard to share with a bridge's owner the cost of altering or
removing privately or publicly owned railroad and highway
bridges that are determined by the Service to obstruct marine
navigation.

The budget requests $279.7 million to construct or renovate
shore facilities and aids-to-navigation. This request would be
an $83.5 million (or 23 percent) decrease from the FY 2021
enacted level. The Coast Guard estimates that there is a $1
billion deferred shore facility maintenance backlog, while the
Government Accountability Office (GAO) approximated that number
at $2.6 billion in February 2019 (likely higher today),
according to Coast Guard information.\8\ As of 2018, the
deferred maintenance backlog included more than 5,600 projects,
while the recapitalization and new construction backlog
included 125 projects.\9\ GAO's analysis of Coast Guard data
found that as of November 2018, there were hundreds of
recapitalization projects without cost estimates--the majority
of recapitalization projects.\10\ Coast Guard officials told
GAO that these projects were in the preliminary stages of
development.\11\ From that report, the GAO recommended that the
Commandant of the Coast Guard employ models for its asset lines
to predict the outcome of investments, analyze trade-offs, and
optimize decisions among competing investments.\12\ The Coast
Guard concurred, and in response to Section 5108 of title 14,
United States Code, the Coast Guard produced their Unfunded
Priorities List (UPL) in order of priority on June 29,
2021.\13\ This included $992.2 million for Procurement,
Construction, and Improvements; and $121.1 million for
Operations and Support, totaling $1.1 billion across the two
accounts.\14\
---------------------------------------------------------------------------
\8\ GAO, Coast Guard Shore Infrastructure: Actions Needed to Better
Manage Assets and Reduce Risks and Costs. GAO-19-711T, September 25,
2019.
\9\ Id.
\10\ Id.
\11\ Id.
\12\ Id.
\13\ United States Coast Guard. FY 2022 Unfunded Priorities List.
\14\ Id.
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RESEARCH AND DEVELOPMENT (PREVIOUSLY RESEARCH, DEVELOPMENT, TEST, AND
EVALUATION)

The President requests $7.5 million in FY 2022 for the
Coast Guard's Research and Development (R&D) account, $2.8
million or 27.2 percent less than the FY 2021 enacted level.
The R&D account supports improved mission performance for the
Service's 11 statutory missions through applied research and
development of new technology and methods.
The Coast Guard intends to use the requested $7.5 million
in FY 2022 for programs to develop technologies and systems
that improve operational presence and response, as well as
perform technology assessments to inform the early stages of
the acquisition process. Of the funding, $0.5 million is
derived from the Oil Spill Liability Trust Fund as authorized
by the Oil Pollution Act of 1990 (33 USC Sec. 2701-2761).

FEDERAL MARITIME COMMISSION (FMC)

The FMC was established in 1961 as an independent agency
that regulates ocean-borne transportation in the foreign
commerce of the United States. The FMC protects shippers and
carriers from restrictive or unfair practices of ocean
carriers, including foreign-flagged carrier alliances. The FMC
also enforces laws related to cruise vessel financial
responsibility to ensure cruise vessel operators have
sufficient resources to pay judgments to passengers for
personal injury or death or for nonperformance of a voyage.
The FMC is composed of five Commissioners appointed for
five-year terms by the President with the advice and consent of
the Senate. Daniel B. Maffei was designated Chairman of the
Commission by the President in March 2021.

FMC FY 2021 Enacted to FY 2022 President's Budget Request Comparison
(Dollars in Thousands)
----------------------------------------------------------------------------------------------------------------
Diff. Bet. FY % Diff. Bet.
FY 2021 FY 2022 2022 Request & FY 2022
Account Enacted President's FY 2021 Request & FY
Budget Request Enacted 2021 Enacted
----------------------------------------------------------------------------------------------------------------
Inspector General................................... $554 $578
Operational and Administrative...................... $29,746 $30,295
-----------------------------------------------------------
Total............................................. $30,300 $30,873 $573 1.89%
----------------------------------------------------------------------------------------------------------------

The chart above compares the FY 2022 budget request to the FY
2021 enacted funding level.\15\
---------------------------------------------------------------------------
\15\ The White House. Budget of the U.S. Government Fiscal Year
2022: Appendix, available at https://www.whitehouse.gov/wp-content/
uploads/2021/05/appendix_fy22.pdf.

The President requests $30.9 million in FY 2022 for the
activities of the FMC, $573 thousand (or 1.9 percent) more than
the FY 2021 enacted level. This budget request increase does
not consider the 2.7 percent civilian pay raise or average Cost
of Living Adjustment for 2022, which will not be released
officially until October but has been estimated to be as high
as 5.3 percent given recent increases in inflation.\16\
---------------------------------------------------------------------------
\16\ CNBC. Social Security cost-of-living adjustment for 2022 could
be higher based on rising consumer prices, available at https://
www.cnbc.com/2021/06/16/social-security-cola-for-
2022-could-be-higher-based-on-consumer-prices.html. June 16, 2021.
---------------------------------------------------------------------------

MARITIME ADMINISTRATION (MARAD)

MARAD was established in 1950. It administers financial
programs to build, promote, and operate the U.S. flag fleet;
manages the disposal of federal government-owned vessels;
regulates the transfer of U.S. documented vessels to foreign
registries; maintains a reserve fleet of federal government-
owned vessels essential for national defense; operates the U.S.
Merchant Marine Academy; and administers a grant-in-aid program
for state operated maritime academies and other financial
assistance programs to support the U.S. maritime and
shipbuilding industries. Lucinda Lessley has served as the
Acting Administrator of MARAD since January 2021.

MARAD FY 2021 Enacted to FY 2022 President's Budget Request Comparison
(Dollars in Thousands)
----------------------------------------------------------------------------------------------------------------
FY 2022 Diff. Bet. % Diff. Bet.
FY 2021 President's FY 2022 FY 2022
Account Enacted Budget Request & FY Request & FY
Request 2021 Enacted 2021 Enacted
----------------------------------------------------------------------------------------------------------------
Operations and Training.................................. $155,616 $172,204
Assistance to Small Shipyards............................ $20,000 $20,000
Ship Disposal Program.................................... $4,200 $10,000
Maritime Security Program................................ $314,008 $318,000
Title XI--Administrative Expenses........................ $3,000 $3,000
Title XI--Loan Guarantees................................ $- $-
State Maritime Academy Operations........................ $432,700 $358,300
Cable Security Fleet Program............................. $10,000 $-
Tanker Security Program.................................. $- $60,000
Maritime Transportation System Emergency Relief Authority $- $-
Port Infrastructure Program.............................. $230,000 $230,000
------------------------------------------------------
Total.................................................. $1,169,524 $1,171,504 $1,980 0.17%
----------------------------------------------------------------------------------------------------------------

The chart above compares the FY 2022 budget request to the FY
2021 enacted funding level.\17\
---------------------------------------------------------------------------
\17\ The White House. Budget of the U.S. Government Fiscal Year
2022: Appendix, available at https://www.whitehouse.gov/wp-content/
uploads/2021/05/appendix_fy22.pdf.
---------------------------------------------------------------------------
The President requests $1.2 billion in FY 2022 for the
activities of MARAD, $2 million (or 0.2 percent) more than the
FY 2021 enacted level.\18\
---------------------------------------------------------------------------
\18\ The FY 2021 budget request for O&T also includes $90.5 million
for the U.S. Merchant Marine Academy, including $85.0 million for
Academy Operations; $10 million for the Maritime Environmental and
Technical Assistance Program; $5.5 million for capital improvements,
repairs, and maintenance; $358.3 million for the six state maritime
academies, including $30.5 million for School Ship Maintenance and
Repair; and $81.7 million for MARAD Operations and Programs. The
Merchant Marine Academy is under jurisdiction of the House Committee on
Armed Services.
---------------------------------------------------------------------------
MARAD's budget request does not include funding for the:
LMaritime Transportation System Emergency Relief
Authority,
LCable Security Fleet Program, or
LTitle XI Loan Guarantees.

OPERATIONS AND TRAINING

The President's FY 2022 budget request of $172.2 million
for Operations and Training (O&T) would be $16.6 million more
than the FY 2021 enacted level of $155.6 million. O&T funds the
salaries and expenses for each of MARAD's programs, the
operation, maintenance, and capital improvements to the U.S.
Merchant Marine Academy, marine highway program, the Maritime
Environmental Technical Assistance Program, and financial
assistance to the six state maritime academies.

ASSISTANCE TO SMALL SHIPYARDS

The Assistance to Small Shipyards Grant Program provides
capital grants to small privately-owned shipyards to expand and
modernize shipbuilding capacity, efficiency, and
competitiveness. Grant requests routinely exceed available
funds. The program received $20 million in FY 2021, and the
President also requests $20 million in the FY 2022 budget.

SHIP DISPOSAL

The President requests $10 million for the Ship Disposal
Program, which would be $5.8 million or 138.1 percent more than
the FY 2021 enacted level of $4.2 million. The program provides
for the proper disposal of obsolete government-owned merchant
ships maintained by MARAD in the National Defense Reserve
Fleet. This request would include $3 million to maintain the
Nuclear Ship SAVANNAH in protective storage according to
Nuclear Regulatory Commission license requirements, while
decommissioning of the vessel's defueled nuclear reactor,
components, and equipment is in progress. The remaining $7
million is requested for ship disposal program support,
including salaries and overhead. The National Defense Reserve
Fleet is under the jurisdiction of the House Committee on Armed
Services.

MARITIME SECURITY PROGRAM

The President requests $318 million for the Maritime
Security Program (MSP), an increase of $4 million (or 1.3
percent). Under this program, $318 million in direct payments
are allocated among up to 60 U.S. flagged vessel operators
engaged in foreign trade. MSP vessel operators must keep their
vessels in active commercial service and provide intermodal
sealift support to the DOD in times of war or national
emergency. This budget request enables vessel operators to
remain active and available for service. This results in $5.3
million per stipend payment for each of the 60 ships in the
program. Allocating less than $318 million annually for the
program allows U.S. vessels to exit without penalty, and likely
also leave the U.S. flag registry. The MSP is under the
jurisdiction of the House Committee on Armed Services.

TITLE XI LOAN GUARANTEES

The President requests $3 million for administrative
expenses to carry out the guaranteed loan program, which shall
be transferred to and merged with the appropriations for
``Maritime Administration--Operations and Training''
(Department of Transportation Appropriations Act, 2021). The
Title XI Loan Guarantee program is under the jurisdiction of
the House Committee on Armed Services.

STATE MARITIME ACADEMIES

The President requests $358.3 million for the six State
Maritime Academies (SMAs), which is a decrease of $74.4 million
(or 17.2 percent) less than the FY 2021 enacted level of $432.7
million. Operations provides federal assistance to the six
SMAs, to help educate and train mariners and future leaders to
support the U.S. marine transportation system. These graduates
promote the commerce of the United States and aid in the
national defense by serving in the merchant marine. The SMA
Operations request funds student financial assistance, direct
assistance to each of the six SMAs, and construction of new
training vessels under the National Security Multi-Mission
Vessel Program.

TANKER SECURITY PROGRAM

The Tanker Security Program provides direct payments to
U.S. Flagship product tankers capable of supporting national
economic and DOD contingency requirements. The purpose of this
program is to provide retainer payments to carriers to support
a fleet of militarily useful, commercially viable product
tankers sailing in international trade, as well as assured
access to a global network of intermodal facilities. The
program will also sustain a base of U.S. Merchant Mariners to
support national security requirements during times of urgent
need. The FY 2022 budget requests $60 million for this new
program.

PORT INFRASTRUCTURE DEVELOPMENT PROGRAM

The President requests $230 million for the Port
Infrastructure Development Program (PIDP), representing no
change from the FY 2021 enacted level. The PIDP provides grants
for coastal seaports, inland river ports, and Great Lakes ports
infrastructure to improve the safety, efficiency, or
reliability of the movement of goods, and to reduce
environmental impacts in and around ports.

WITNESS LIST

- Admiral Karl L. Schultz, Commandant, United States Coast
Guard
- The Honorable Daniel B. Maffei, Chairman, Federal Maritime
Commission
- LMaster Chief Jason M. Vanderhaden, Master Chief Petty
Officer of the Coast Guard, United States Coast Guard
- Ms. Lucinda Lessley, Acting Administrator, Maritime
Administration

REVIEW OF FISCAL YEAR 2022 BUDGET FOR THE COAST GUARD AND MARITIME
TRANSPORTATION PROGRAMS

----------

WEDNESDAY, JULY 21, 2021

House of Representatives,
Subcommittee on Coast Guard and
Maritime Transportation,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to call, at 11:04 a.m., in
room 2167 Rayburn House Office Building and via Zoom, Hon.
Salud O. Carbajal (Chair of the subcommittee) presiding.
Members present: Mr. DeFazio, Mr. Carbajal, Mr. Larsen, Mr.
Auchincloss, Mr. Maloney, Mr. Lowenthal, Mr. Brown, Mr. Pappas,
Mr. Gibbs, Mr. Weber, and Ms. Malliotakis.
Mr. Carbajal. The subcommittee will come to order.
I ask unanimous consent that the chair be authorized to
declare a recess at any time during today's hearing.
Without objection, so ordered.
I also ask unanimous consent that Members not on the
subcommittee be permitted to sit with the subcommittee at
today's hearing and ask questions.
Without objection, so ordered.
For Members participating remotely, please let committee
staff know as soon as possible if you are experiencing a
connectivity issue or technical problems.
To avoid any inadvertent background noise, I request that
every Member please keep their microphones muted when not
seeking recognition to speak. Should I hear any inadvertent
background noise, I will request that the Member please mute
their microphone.
And, finally, to insert a document into the record, please
have your staff email it to DocumentsT&I@mail.house.gov.
Thank you very much. With that, we will proceed with our
hearing.
Good morning, and welcome to today's hearing on the review
of the fiscal year 2022 budget request for the Coast Guard and
maritime transportation programs.
Today, we will hear directly from the Commandant and the
Master Chief Petty Officer of the Coast Guard, the Chairman of
the Federal Maritime Commission, and the Acting Administrator
of the Maritime Administration on the President's budget
request and agency priorities.
The Coast Guard currently has approximately 41,600 Active
Duty military personnel members, 7,000 reservists, and 8,200
civilian employees supporting the Service's 11 missions,
including port and waterway security, marine environmental
protection, marine safety, aids to navigation, and search and
rescue, among others.
Despite the agency's importance as one of the six branches
of the military and their role in maritime law enforcement, the
Coast Guard is chronically underfunded and overextended. We
must support our servicemembers with every resource available
to carry out their missions.
I am particularly interested in updates on the
implementation of the Small Passenger Vessel Safety Act,
enacted as part of the fiscal year 2021 NDAA, and how the Coast
Guard is working to ensure that another event like the
Conception fire, which occurred in my district, does not occur
again.
I also look forward to updates on the Coast Guard's ability
to balance a diverse mission set, efforts to support Coasties
through housing and childcare investments, the status of the
Coast Guard's technology revolution, reimbursement levels to
the Coast Guard from the Department of Defense for their
defense readiness mission support, and the Coast Guard's
diversity and inclusion efforts that will strengthen the
Service.
On marine transportation, I look forward to MARAD's plan to
revitalize every facet of the U.S. maritime industry, from our
ports to the continually declining U.S.-flag fleet and the
associated American merchant mariners.
I would like to hear more about how the Port Infrastructure
Development Program can help address and prepare for climate
change. I am particularly interested in how the Port
Infrastructure Development Program will support the recently
announced Morro Bay wind project offshore of my district.
Building out the port infrastructure to receive and
transmit this energy, as well as creating laydown space for
shoreside wind turbine staging, is of critical importance and
will take a significant investment. This project is especially
timely for areas in my home district, such as San Luis Obispo
County, which may need Federal assistance to take full
advantage of this budding energy industry.
We must also invest in maritime sector decarbonization.
MARAD's Maritime Environmental and Technical Assistance Program
is crucial to supporting the technological advances to position
the United States as a leader in green shipping technology.
I am disappointed that the administration's national
maritime strategy remains incomplete. While mandated by
legislation in 2014, MARAD has yet to develop an implementation
plan or report on regulations that impact the competitiveness
of the industry.
The U.S.-flag maritime fleet has declined to an
unacceptable level, and the agency tasked with its promotion
has refused to act. I hope that under new leadership, we see
that change.
Following up on last month's hearing on shipping container
shortages and delays, and considering President Biden's
Executive order promoting competitiveness in the American
economy, I look forward to hearing from the FMC on how they
plan to allocate resources towards addressing these market
concerns and ensuring an even playing field.
We have a lot to cover and no time to waste, so let's jump
into it. I look forward to our witnesses' testimonies and
hearing each agency's spending priorities for the upcoming
fiscal year.
[Mr. Carbajal's prepared statement follows:]

Prepared Statement of Hon. Salud O. Carbajal, a Representative in
Congress from the State of California, and Chair, Subcommittee on Coast
Guard and Maritime Transportation
Good morning, and welcome to today's hearing on the ``Review of
Fiscal Year 2022 Budget Request for the Coast Guard and Maritime
Transportation Programs''.
Today, we will hear directly from the Commandant and Master Chief
Petty Officer of the Coast Guard, the Chairman of the Federal Maritime
Commission, and the Acting Administrator of the Maritime Administration
on the president's budget request and agency priorities.
The Coast Guard currently has approximately 41,600 Active Duty
military members, 7,000 reservists, and 8,200 civilian employees
supporting the Service's 11 missions, including Port and Waterway
Security, Marine Environmental Protection, Marine Safety, Aids to
Navigation, and Search and Rescue, among others. Despite the agency's
importance as one of the six branches of the military and their role in
maritime law enforcement, the Coast Guard is chronically underfunded
and overextended. We must support our servicemembers with every
resource available to carry out their missions.
I'm particularly interested in updates on the implementation of the
Small Passenger Vessel Safety Act, enacted as part of the FY 2021 NDAA
and how the Coast Guard is working to ensure that another event like
the CONCEPTION fire does not occur again. I also look forward to
updates on the Coast Guard's ability to balance a diverse mission set;
efforts to support Coasties through housing and childcare investments;
the status of the Coast Guard's Technology Revolution; reimbursement
levels to the Coast Guard from the Department of Defense for their
Defense Readiness mission support; and the Coast Guard's Diversity and
Inclusion efforts that will strengthen the Service.
On marine transportation, I look forward to MARAD's plan to
revitalize every facet of the U.S. maritime industry, from our ports to
the continually declining U.S. flagged fleet and the associated
American merchant mariners. I would like to hear more about how the
Port Infrastructure Development Program can help address and prepare
for climate change.
I'm particularly interested in how the Port Infrastructure
Development Program will support the recently announced Morro Bay wind
project offshore of my district. Building out the port infrastructure
to receive and transmit this energy, as well as creating laydown space
for shoreside wind turbine staging, is of critical importance and will
take a significant investment. This project is especially timely for
areas in my home district such as San Luis Obispo County, who may need
federal assistance to take full advantage of this budding energy
industry.
We must also invest in maritime sector decarbonization. MARAD's
Maritime Environmental and Technical Assistance program is crucial to
supporting the technological advances to position the United States as
a leader in green shipping technology.
I am disappointed that the Administration's National Maritime
Strategy remains incomplete. While mandated by legislation in 2014,
MARAD has yet to develop an implementation plan or report on
regulations that impact the competitiveness of the industry. The U.S.
flagged maritime fleet has declined to an unacceptable level and the
agency tasked with its promotion has refused to act. I hope that under
new leadership, we see that change.
Following up on last month's hearing on shipping container
shortages and delays and considering President Biden's Executive Order
promoting competitiveness in the American economy, I look forward to
hearing from the FMC on how they plan to allocate resources toward
addressing these market concerns and ensuring an even playing field.
We have a lot to cover and no time to waste, so let's jump into it.
I look forward to our witness' testimonies and hearing each agency's
spending priorities for the upcoming fiscal year.

Mr. Carbajal. I now would like to call on the ranking
member of our subcommittee, Mr. Gibbs, for an opening
statement.
Mr. Gibbs. Thank you. Before I start, Mr. Chairman, I would
ask unanimous consent that Representative Van Drew's statement
be submitted in the record. I guess he has laryngitis.
Mr. Carbajal. Without objection, so ordered.
[The information follows:]

Prepared Statement of Hon. Jefferson Van Drew, a Representative in
Congress from the State of New Jersey
Good morning Admiral Schultz and Chief Master Petty Officer
Vanderhaden and thank you for appearing before the Committee for this
very important hearing on the Coast Guard Budget.
The United States Coast Guard is expanding across the country and
across the world. To name just a few of Coast Guard's critical
missions:
Executing freedom of navigation operations in the South
China Sea;
Conducting search and rescue operations off the U.S.
Coast;
And interdicting drug traffickers in the Gulf of Mexico.

The Coast Guard has a lot to do and plans on doing even more in the
coming decades.
To execute its mission, the Coast Guard needs a robust and well-
trained workforce. Over 80 percent of the Coast Guard's workforce is
absorbed through Training Center Cape May in Southern New Jersey.
Training Center Cape May's barracks are nearly 60 years old. It is
time to modernize and expand this important facility to ensure that the
Coast Guard is ready to meet the missions of the future. Over the past
year I have strongly advocated for this modernization effort through
high-level hearings, meetings with members of Congress, and
conversations with top Coast Guard officials.
The Coast Guard has recognized the need for this project by placing
Phase I of the Training Center Cape May Barracks Recapitalization
project as the #1 Housing priority in its FY22 budget request to
Congress.
Furthermore, the House Committee on Appropriations has now cleared
a Homeland Security Appropriations bill that includes $55 million for
Phase I of this 4-Phase project, and an additional $10 million to
support the project over its entire lifecycle. The only step remaining
is for this Committee to include authorizing language in the 2022 Coast
Guard Authorization Act. I have drafted language for this purpose,
which I would like to submit for the record.
I urge the committee to adopt this language in the Authorization
bill.
Once completed, the recapitalization project will bring tremendous
benefits to the Coast Guard and the Nation. These benefits include:
A substantial increase in the number of recruits trained
every year;
Modernization of classrooms with digital infrastructure;
And increased opportunities for Female Coast Guard
recruits.

Commandant Schultz, Master Chief Petty Officer Vanderhaden, would
you both please expand upon the benefits of the Training Center
Recapitalization project, and explain how this project fits in to the
bigger picture of the Coast Guard's long-term growth strategy?

Mr. Gibbs. Thank you, Mr. Chairman, and thank you to our
witnesses, I would like to say, for being here today.
I would like to say it would be nice if you were here in
person. It is my understanding that at least one of our
witnesses asked to be here in person and was told he could not
be here in person, and I think that is the wrong way to go
about it. Witnesses, if they choose to be here, they should be
able to be here in a face-to-face interaction with committee
members.
Before I get started on my comments on the budget request
for the Federal maritime programs, I wanted to express to the
Commandant the committee's disappointment at the Coast Guard's
relying on the Department of the Interior for its maritime
navigation safety responsibilities.
Since Congress passed section 414 of the Coast Guard
Authorization Act of 2006, the committee has repeatedly
reminded the Coast Guard of its responsibilities to establish
areas necessary for safe navigation before the Department of
the Interior leased areas on the Outer Continental Shelf for
wind farms. Navigation safety should have taken precedence.
In 2016, after a decade of Coast Guard inaction, Congress
directed the Service to undertake an Atlantic coast ports route
access study. The study was conducted. The Coast Guard
responded with silence when it came to implementing the study's
recommendations.
But the Coast Guard is late to the party. Only after the
Department of the Interior began moving forward with
significant leasing did the Coast Guard finally undertake a
rulemaking to implement the study's recommendations.
Yet the Coast Guard staff assures the committee that they
are participating in the Department of the Interior's permit
review, even though the rulemaking is now pushed off until next
year.
I believe the Coast Guard should take its role as the
primary Federal agency responsible for maritime navigation
safety seriously, rather than act as a secondary agency
commenting on Department of the Interior permits.
I was certainly heartened to see the increase in the
request for the Coast Guard's operating and support account.
That account has suffered restrictions under the Budget Control
Act to which the other armed services were not subjected.
However, I am extremely disappointed to see another new
administration fail to embrace desperately needed capital
funding for the Coast Guard. The procurement, construction, and
improvement account falls from an appropriated level of $2.2
billion and an authorized level of $3.3 billion in fiscal year
2021 to a requested level of $1.6 billion in fiscal year 2022.
That level of funding will not even allow the Coast Guard
to hold steady on the billions of dollars of shoreside
construction and maintenance needs and will restrict the
Service's far-behind-schedule cutter acquisition program.
But I do commend the Commandant for managing to get some
amounts added to begin the long process of rehabilitating the
Service's crumbling IT infrastructure, an issue I have raised
in the past.
Slashing the PC&I account would also eliminate the
opportunity to purchase a 12th National Security Cutter and up
to 6 Fast Response Cutters before those production lines grow
cold and those opportunities are lost.
I will work to see that the Congress steps in yet again to
reverse the budget request's harmful impact on the Coast
Guard's acquisition budget and, in turn, the Service's future
mission capabilities.
The Coast Guard's missions have grown more numerous and
more complex since the Department of Homeland Security blessed
the current fleet mix. Congress has directed the Coast Guard to
reexamine that fleet mix, and I look forward to hearing from
the Commandant when we will see the updated analysis.
I also noticed there is no request for funds for the new
Great Lakes icebreaker. I will work with colleagues in the
Great Lakes delegation to correct this oversight.
Perhaps not today, but I would like to discuss further with
the Coast Guard whether a single design may be used for a
cutter that can break ice on the Great Lakes and carry out the
missions of the Arctic National Security Cutter.
Finally, let me commend Coast Guard Ensign David Zenkel for
his article in the U.S. Naval Institute's publication,
Proceedings, recommending the Coast Guard establish and operate
e-loran.
Since 2008, when the Coast Guard discontinued the loran-C
signal, DOT and the interagency committee on position, timing,
and navigation has manifestly failed to provide a
recommendation on or follow Congress' direction to establish a
backup timing signal.
It is nice to see that someone outside of Congress
understands the urgency of the situation.
As we all know too well, the United States is in the midst
of a surge of imported cargo that is pressure-testing the
supply chain. It has led to greatly increased shipping costs
and has negatively affected those who distribute and retail
imports, and hurt some U.S. exporters, particularly ag
exporters.
I hope the Federal Maritime Commission Chairman Dan Maffei
can update us on the status of Fact Finding No. 29 and provide
any recommendations for minimizing supply chain disruptions
that may flow from that fact finding.
In addition, I am interested in whether the recent
Executive order on competition provides the Commission with any
authorities to prevent unfair and unreasonable practices by
ocean shippers and marine terminal operators.
I am pleased to see former Coast Guard and Maritime
Transportation Subcommittee staffer Lucinda Lessley back today
as the Acting Maritime Administrator.
Last year, Congress enacted the Maritime Transportation
System Emergency Relief Program. The U.S. maritime industry
estimates it needs $3.5 billion under the program to offset
unanticipated COVID-related expenses. Yet no such funds were
provided in the February COVID relief package, and none are
sought in the fiscal year 2022 budget request.
I look forward to hearing MARAD's position on whether these
funds are needed to help the U.S. maritime industry weather the
pandemic's economic storm.
And thank you, Mr. Chairman. I yield back.
[Mr. Gibbs' prepared statement follows:]

Prepared Statement of Hon. Bob Gibbs, a Representative in Congress from
the State of Ohio, and Ranking Member, Subcommittee on Coast Guard and
Maritime Transportation
Thank you to our witnesses for being here today.
Before getting to my comments on the budget request for federal
maritime programs, I want to express to the Commandant the Committee's
disappointment at the Coast Guard relying on the Department of Interior
for its maritime navigation safety responsibilities.
Since Congress passed section 414 of the Coast Guard Authorization
Act of 2006, the Committee has repeatedly reminded the Coast Guard of
its responsibilities to establish areas necessary for safe navigation
before Interior leased areas on the outer continental shelf for wind
farms. Navigation safety should have taken precedence.
In 2016, after a decade of Coast Guard inaction, Congress directed
the Service to undertake an Atlantic Coast Ports Route Access Study.
The study was conducted; the Coast Guard responded with silence when it
came to implementing the study's recommendations.
But the Coast Guard is late to the party. Only after Interior began
moving forward with significant leasing did the Coast Guard finally
undertake a rulemaking to implement the study's recommendations. Yet,
Coast Guard staff assures the Committee that they are participating in
Interior's permit reviews even though that rulemaking is now pushed off
until next year.
I believe the Coast Guard should take its role as the primary
federal agency responsible for maritime navigation safety seriously,
rather than act as a secondary agency commenting on Interior permits.
I was certainly heartened to see the increase in the request for
the Coast Guard's Operating and Support Account. That account has
suffered restrictions under the Budget Control Act to which the other
Armed Services were not subject.
However, I am extremely disappointed to see yet another new
Administration fail to embrace desperately needed capital funding for
the Coast Guard. The Procurement, Construction, and Improvement Account
falls from an appropriated level of $2.2 billion and an authorized
level of $3.3 billion in FY '21 to a requested level of $1.6 billion in
FY '22.
That level of funding will not even allow the Coast Guard to hold
steady on the billions of dollars of shoreside construction and
maintenance needs and will restrict the Service's far-behind-schedule
cutter acquisition program. Though I do commend the Commandant for
managing to get some amounts added to begin the long process of
rehabilitating the Service's crumbling IT infrastructure, an issue I
have raised in the past.
Slashing the PC&I Account would also eliminate the opportunity to
purchase a twelfth National Security Cutter and up to six Fast Response
Cutters before those production lines grow cold and those opportunities
are lost. I will work to see that Congress steps in yet again to
reverse the budget request's harmful impact on the Coast Guard
acquisition budget and in turn, the Service's future mission
capabilities.
The Coast Guard's missions have grown more numerous and more
complex since the Department of Homeland Security blessed the current
fleet mix. Congress has directed the Coast Guard to reexamine that
fleet mix, and I look forward to hearing from the Commandant when we
will see that updated analysis.
I also noticed there are no requested funds for a new Great Lakes
icebreaker. I will work with colleagues in the Great Lakes delegation
to correct that oversight.
Perhaps not today, but I would like to discuss further with the
Coast Guard whether a single design may be used for a cutter that can
break ice in the Great Lakes and carry out the missions of the notional
Arctic Security Cutter.
Finally, let me commend the Coast Guard Ensign for an article in
the US Naval Institute's publication, Proceedings, recommending the
Coast Guard establish and operate e-loran. Since 2008 when the Coast
Guard discontinued the loran-C signal, DOT and the interagency
committee on position, timing, and navigation has manifestly failed to
provide a recommendation on or follow Congress' direction to establish
a backup timing signal. It's nice to see someone outside of Congress
understands the urgency of this situation.
As we all know only too well, the United States is in the midst of
a surge of imported cargo that is pressure testing the supply chain. It
has led to greatly increased shipping costs and has negatively affected
those who distribute and retail imports, and hurt some U.S. exporters,
particularly ag exporters.
I hope Federal Maritime Commission Chairman Dan Maffei can update
us on the status of Fact Finding #29 and provide any recommendations
for minimizing supply chain disruptions that may flow from that Fact
Finding.
In addition, I'm interested to know if the recent Executive Order
on competition provides the Commission with any new authorities to
prevent unfair and unreasonable practices by ocean shippers and marine
terminal operators.
I'm pleased to see former Coast Guard and Maritime Transportation
Subcommittee staffer Lucinda Lessley back today as the Acting Maritime
Administrator. Last year, Congress enacted a Maritime Transportation
System Emergency Relief Program. The U.S. maritime industry estimates
it needs $3.5 billion under this program to offset unanticipated COVID
related expenses. Yet, no such funds were provided in the February
COVID relief package, and none are sought in the FY '22 budget request.
I look forward to hearing MARAD's position on whether these funds are
needed to help the U.S. maritime industry weather the pandemic's
economic storm.

Mr. Carbajal. Thank you, Mr. Gibbs.
I now would like to recognize the chairman of the
Transportation and Infrastructure Committee, Chairman DeFazio.
Mr. DeFazio. Well, thank you, Mr. Chairman. I am
disappointed. I know it's because of the trolls at OMB that the
Coast Guard has only requested a 0.3-percent increase in their
overall budget. I often say to agency heads, we would like to
hear honestly what you need, and I have brought this up with a
former Commandant in terms of the unmet needs list every year.
That is a very, very disappointing level that you have
requested, and the Polar Security Cutters, Offshore Patrol
Cutters, Congress is moving along with those, but the personnel
are the key to the whole thing. We are getting a small pay
increase. Good.
But a $2 billion and growing backlog, which the ranking
member talked about, I couldn't agree with him more, on the
shoreside infrastructure; that is the housing. The Commandant
was in Coos Bay last year and saw--they were doing some housing
renovations, the Coasties themselves. Pretty substandard
housing and obviously childcare facilities.
You are going to have trouble recruiting and retaining a
workforce, a great workforce, a diverse workforce that is
qualified, if you aren't providing for those sorts of basic
needs, particularly for the enlisteds, given the phenomenal
run-ups in rents all around the United States. On their
salaries, I don't know how they are going to find decent
civilian housing.
So, I have real concerns, and I would like to hear a bit
about rationale for allowing that to continue and not putting
forward a request. Again, I assume you have probably been
constrained by OMB, but if you don't tell us about it, we can't
advocate with the Appropriations Committee and look at the
authorization and deal with those things.
I am pretty disappointed in the request from the President
that we don't have money for the Port Infrastructure
Development Program proposed in this year's budget, no funding
for the Maritime Transportation System Emergency Relief
Authority, so the maritime transportation system didn't get any
relief during COVID, despite a number of us advocating for it
in a couple of the packages.
The industry is supposed to continue full and increased
operations throughout the pandemic but get no help. So, I am
hoping to hear from both Chairman Maffei and Administrator
Lessley about their vision for the future.
There is a miniscule increase for the Federal Maritime
Commission, but you need additional resources, and we would
have been pushing you to look at oversight and enforcement
having to do with the big shipping conglomerates and their
practices, and essentially their pricing schemes.
We have got to continue to push hard on those things, and
if you don't have the investigative staff and you don't have
the resources you need, it is going to be very difficult.
So, I hope you all will be just really honest with us today
because if we hear about it, we can try and deal with it, but
we just shouldn't deal with these--I was talking to someone at
Homeland. My State has a huge problem with Oath Keepers and
Three Percenters and all that, particularly in my district.
And we asked for a Homeland Security terrorism coordinator,
and OMB said, ``Oh, no, we can't have those, too expensive.''
Twelve States wanted them. I mean, this is ridiculous. We need
to meet the needs of the Nation, and the jerks at OMB shouldn't
be calling the shots.
[Mr. DeFazio's prepared statement follows:]

Prepared Statement of Hon. Peter A. DeFazio, a Representative in
Congress from the State of Oregon, and Chair, Committee on
Transportation and Infrastructure
Thank you, Chair Carbajal. Last year, we did not have a budget
hearing, and after reviewing the collective budget requests for the
three federal agencies responsible for overseeing, regulating, and
promoting the American maritime industry, Congress has some important
questions.
This fiscal year, the Coast Guard has requested only a 0.3 percent
increase in their overall budget relative to the fiscal year 2021
enacted level, including a 0.6 percent or $65 million decrease in
discretionary spending. This comes at a time when the Coast Guard is
tasked with expanding its mission reach and we must ensure the service
is adequately funded.
I am curious to hear the Coast Guard's plan to support the men and
women who are the backbone of the service. While Congress continues to
appropriate funding for Polar Security Cutters, Offshore Patrol
Cutters, and other acquisitions, I am concerned that the Coasties
charged with operating those assets are being left behind.
While the budget includes a 3 percent pay increase, I remain
concerned that the growing backlog of shoreside infrastructure,
including housing and childcare facilities, is being neglected. The
Coast Guard must do everything in its power to recruit and retain
highly qualified and diverse servicemembers.
As a maritime nation, our country's security and economic strength
is directly linked to our major oceans, inland rivers, deep-water
ports, and waterways. The Maritime Administration is vital to ensuring
successful management of U.S. maritime and shipbuilding industries.
We have seen with the unprecedented events of the past year that
maritime commerce provides a direct lifeline to the economy. I am
concerned that since the president's request contains no increase
compared to the fiscal year 2021 enacted level of $230 million for the
Port Infrastructure Development Program, our nation's ports will
continue to be underfunded. In order to ensure the smooth movement of
cargo, we must ensure that our ports are state of the art.
Furthermore, the omission of funding for the Maritime
Transportation System Emergency Relief Authority in MARAD's budget is
another cause for concern. Despite the Maritime Transportation System
receiving no financial assistance during this COVID-19 public health
emergency, the industry was expected to maintain full, if not
increased, operations throughout the pandemic.
We need to be doing much, much more to support our maritime
industry, and I hope that Admiral Schultz, Chairman Maffei, and
Administrator Lessley can provide answers and a true vision for the
future.
I am encouraged, however, to see a minor increase of 2 percent to
the Federal Maritime Commission's funding. It's clear the Commission
needs additional resources to enhance its oversight and enforcement
capabilities due to the disruptions to the global supply chain this
year.
Fact Finding 29 is an important first step toward improving
efficient cargo movement and providing timely information to direct the
Commission's action, none of which can happen without Congress
providing the agency adequate resources.
I look forward to hearing from our witnesses on how the president's
budget will ensure that the Coast Guard and the programs that support
and regulate the U.S. maritime industry are adequately resourced.

Mr. Carbajal. Thank you, Mr. Chairman.
With that, I would now like to welcome the witnesses on our
first panel. First, we have Admiral Karl Schultz, Commandant of
the United States Coast Guard; the Honorable Daniel B. Maffei,
Chairman of the Federal Maritime Commission; Master Chief Jason
M. Vanderhaden, Master Chief Petty Officer of the United States
Coast Guard; and, last, Ms. Lucinda Lessley, Acting
Administrator for the Maritime Administration.
Thank you all for being here today, and I look forward to
your testimony.
Without objection, our witnesses' full statements will be
included in the record. Since your written testimony has been
made a part of the record, the subcommittee requests that you
limit your oral testimony to 5 minutes.
With that, we will proceed.
Admiral Schultz, you may proceed.

TESTIMONY OF ADMIRAL KARL L. SCHULTZ, COMMANDANT, U.S. COAST
GUARD; HON. DANIEL B. MAFFEI, CHAIRMAN, FEDERAL MARITIME
COMMISSION; MASTER CHIEF JASON M. VANDERHADEN, MASTER CHIEF
PETTY OFFICER OF THE COAST GUARD, U.S. COAST GUARD; AND LUCINDA
LESSLEY, ACTING ADMINISTRATOR, MARITIME ADMINISTRATION

Admiral Schultz. Well, good morning, Chairman DeFazio,
Chairman Carbajal, Ranking Member Gibbs, members of the
subcommittee, and I appreciate each of your strong words about
the fiscal challenges and readiness challenges facing our
Service.
I am extraordinarily proud of our workforce and remain
humble to serve as their Service Chief. I appreciate the
opportunity to testify before you today and appreciate you
entering my written statement for the record.
On behalf of the men and women of our Service, please
accept my gratitude for your enduring support of the United
States Coast Guard in our efforts to restore Service readiness.
Coast Guard readiness is at the core of our ability to meet
the challenges of today while preparing for future threats and
opportunities. The fiscal year 2021, last year's Consolidated
Appropriations Act, helped sustain critical momentum for Coast
Guard surface and aviation fleet recapitalization, it injected
much needed funding to improve our aging shore and information
technology infrastructure, and made essential investments in
our workforce--the heart and soul of our Service.
Building off this momentum, the President's fiscal year
2022 budget request reflects some of these same priorities as
we look to continue our progress for restoring readiness and
providing our workforce with the capable assets, modern
systems, and resilient infrastructure they need to conduct
frontline operations.
Maritime security is, in fact, national security, and
demand for our Coast Guard services and capabilities is
increasing across the globe as the Coast Guard is viewed as the
unique instrument of international diplomacy and a reliable
partner to like-minded friends and allies, especially in the
geographically and strategically important areas like the
Arctic and the Indo-Pacific.
With your support, we continue to build the Nation's first
new heavy polar icebreakers in nearly half a century. As
mission demands continue to grow in the Arctic, completing the
Polar Security Cutter program of record will enhance
operational capability and capacity within the U.S. heavy
icebreaking fleet.
Funds appropriated in 2021 will enable construction of the
second Polar Security Cutter, and the fiscal year 2022
President's request continues to make investments for a third.
When fully operational, this new class of heavy icebreakers
will provide global reach and the icebreaking capability
necessary to sustain more persistent operations in the polar
regions, access which is critical to projecting U.S.
sovereignty and protecting our vital economic, environmental,
and national security interests.
Additionally, the funding provided in fiscal year 2021
allowed us to maintain momentum on our Offshore Patrol Cutter,
better known as the OPC program, a top acquisition priority.
Continued progress on the OPC program is absolutely vital
as these cutters will replace our legacy fleet of 200- and 270-
foot Medium Endurance Cutters. This legacy fleet has served
with distinction for decades but is becoming increasingly
challenging and expensive to maintain, and we continue to see
degradation in their operational availability.
Despite the extraordinary efforts of our Coast Guard men
and women, the Medium Endurance Cutter fleet has lost
approximately 11 percent of operational capacity in the past 2
years due to unscheduled maintenance and repair work,
negatively affecting Service readiness and frontline mission
performance.
Like my concerns with our surface assets, I have become
increasingly concerned about our ability to sustain operations
with our legacy rotary-wing aircraft. Our current fleet of MH-
65 Dolphin and MH-60 Jayhawk helicopters are undergoing
essential service life extension programs, better known as
SLEP, to push capabilities into the mid-2030s.
However, the rapidly declining availability of MH-65
Dolphin parts reveals that SLEP alone will no longer ensure MH-
65 readiness. Hence, the Coast Guard must immediately begin
transitioning towards an all MH-60 Jayhawk fleet while
continuing to participate with the Department of Defense in the
search for the next generation of future vertical-lift assets.
I am also mindful that every Coast Guard operational
mission is supported by our aging infrastructure, which is
degrading faster than we are capitalizing it.
Private organizations generally recapitalize their
infrastructure at a rate of 2 to 4 percent annually. Our 10-
year average of recapitalization is only 10 to 20 percent of
that value.
As such, recapitalization and deferred maintenance backlogs
continue to trouble the Service. To remain always ready, we
must invest in and update our shore facilities to meet today's
standards for efficiency and resilience.
The fiscal 2021 appropriation provided substantial support
here, and the fiscal year 2022 President's request includes
targeted investments to improve the condition and energy
efficiency of our shore facilities, but significantly more
remains to be done.
Modernized facilities, the appropriate technology, and
mobility will help close our readiness gap and enable our
workforce of 56,000 Active Duty, Reserve, and civilian
employees to continue to demonstrate their bias for action or
initiative to solve complex problems.
Critically important is operations and support, or O&S,
budget growth, such as the 6 percent requested in the
President's 2022 budget. In the outyears beyond 2022, sustained
predictable O&S budget growth of at least 3 to 5 percent, in
conjunction with strategic investments to recapitalize assets
and infrastructure, is essential to restore readiness and build
a 21st-century Coast Guard the Nation needs and deserves.
Thank you for the opportunity to testify today, and I look
forward to answering your questions.
[Admiral Schultz's prepared statement follows:]

Prepared Statement of Admiral Karl L. Schultz, Commandant, U.S. Coast
Guard
Introduction
Chairman Carbajal, Ranking Member Gibbs, and distinguished members
of the subcommittee, I appreciate the opportunity to testify today and
thank you for your enduring support of the United States Coast Guard.
The Fiscal Year (FY) 2021 Consolidated Appropriations Act sustains
critical momentum for Coast Guard surface and aviation fleet
recapitalization, injects much needed funding to improve our aging
shore and information technology infrastructure, and makes essential
investments in our workforce. Today, I look forward to addressing how
the Administration's FY 2022 budget request provides a favorable
trackline for the Coast Guard our Nation needs.
Amidst the unique challenges presented by the global pandemic these
past 16 months, your Coast Guard continued to answer the call and
deliver mission excellence. Coast Guard forces responded to new threats
in the cyber domain, interdicted 130 foreign vessels engaged in illegal
fishing in the U.S. Exclusive Economic Zone, conducted 16,000 search
and rescue cases, and responded to the most active Atlantic Basin
hurricane season on record with 30 named storms, 12 making landfall in
the contiguous United States, six at hurricane strength.
This year, for the first time in nearly 40 years, the Coast Guard's
sole heavy icebreaker--the 44-year-old POLAR STAR--deployed to the
Arctic in the winter, overcoming treacherous environmental conditions
and engineering casualties to advance America's sovereign interests and
conduct vital scientific research. Coast Guard cutters on patrol in the
Eastern Pacific Ocean and Caribbean Basin interdicted 158 metric tons
of illegal narcotics worth $5.6 billion, reducing Transnational
Criminal Organizations' illicit profits, as well as helping to
attenuate the ``push factors'' that trigger migration and fuel violence
and instability across Central America. National Security Cutters
(NSCs) STONE, BERTHOLF and KIMBALL, and Fast Response Cutters (FRCs)
OLIVER BERRY and JOSEPH GERCZAK worked with strategic partners in
Oceania and Latin America to combat the threat of Illegal, Unreported,
and Unregulated (IUU) fishing. IUU fishing creates ecological damage to
the marine environment, jeopardizes food access and sustainable
fisheries, threatens the economies of fragile coastal states, and
undermines the global maritime rules-based international order. This
spring, two of the Service's newest FRCs, CHARLES MOULTHROPE and ROBERT
GOLDMAN, made a trans-Atlantic voyage to their new homeport in Manama,
Bahrain. En route, the FRCs conducted strategic engagements in Rota,
Spain; Tunis, Tunisia; and the Port of Piraeus, Greece, bolstering
regional cooperation.
These vessels replace two of the Service's six legacy 110-foot
patrol boats stationed at Coast Guard Patrol Forces Southwest Asia,
where they provide support to U.S. Navy Fifth Fleet operations in the
Arabian Gulf. The Coast Guard also served at the forefront of
strategically important multi-lateral venues, such as the operationally
focused Arctic Coast Guard Forum and the highly effective North Pacific
Coast Guard Forum, promoting dialogue across shared areas of common
interest with the seven other Arctic nations, as well as North Pacific
fisheries partners--Canada, Japan, Russia, China, and South Korea.
Maritime security is national security, and across the globe the
Coast Guard is in high demand as an instrument of international
diplomacy. Oftentimes viewed as the U.S. maritime service with the most
relatable mission profile to many nations' maritime forces, the U.S.
Coast Guard is often replicated and considered to be a tremendous
partner to our like-minded friends and allies.
I am extraordinarily proud of our workforce and remain humbled to
serve as their Service Chief. I would contend that it is a
transformational time for our Service as we become a true 21st century
Coast Guard--one that stands ready to operate in an increasingly
complex, inter-connected, and technologically sophisticated maritime
domain. This transformation hinges on sustained momentum to restore
readiness and continued strategic investments in the Coast Guard the
Nation is calling for. With the support of both Congress and the
Administration, we will continue to recruit, train, and retain a new
generation of Americans who better reflect the demographics of the
public we serve; we will recapitalize our surface and aviation assets;
we will revitalize our aging shore infrastructure; and we will invest
in modern technologies. The FY 2022 President's Budget request is a
direct reflection of those priorities.
Restore Readiness
Support the Mission Ready Total Workforce: At the core of our
mission success resides extraordinary people--the world's most capable
and talented Coast Guard comprised of over 56,000 Active Duty, Reserve,
and Civilian personnel, supported by 25,000 Auxiliary volunteers. The
Coast Guard entrusts and empowers its personnel at every level to lead
with a bias for action--taking on-scene initiative and delivering
solutions to complex problems. While extremely valuable in executing
the Service's missions, these traits may also serve to veil the true
impacts of the Coast Guard's readiness challenges. As Coast Guard men
and women take it upon themselves to accomplish the mission, the
thousands of added hours required to overcome asset, technology, and
infrastructure readiness issues drive workforce fatigue, and can often
come at the expense of training and critical skills retention.
Going forward, I remain committed to providing our dedicated and
talented workforce with the tools, resources, and policies that will
enable them to professionally thrive and personally grow. Our FY 2022
budget requests $170 million for pay and benefits; and $44 million to
address workforce gaps, to modernize the Service's antiquated training
system, to enhance recruiting and retention initiatives, to expand
diversity and inclusion efforts, and to continue the transition to
electronic health records. This funding is vital to continue the
progress we are making due in no small part to your support in the FY
2021 appropriation. This year we have continued the critically
important transition to electronic health records, bolstered our
childcare subsidy program, accelerated the modernization of our
training system, invested in critical course development, hired
additional recruiters, increased resources to support workforce mental
health needs, and made substantial investments in family housing
projects in Kodiak, Alaska and Staten Island, New York.
As the Coast Guard brings new assets online, it becomes
increasingly critical that we remain focused on our personnel. The FY
2022 budget allows the Coast Guard to continue to pursue policies and
practices that enable the Service to recruit and retain a highly
talented workforce increasingly representative of the American public
we serve. I remain committed to creating an environment that attracts
the best of our Nation's diverse talent and experience, and provides an
inclusive and rewarding journey that positions the Coast Guard as an
employer of choice in a highly competitive marketplace for talent. The
budget we will discuss today highlights that commitment.
Modernize and Sustain Operational Capability: The Coast Guard is in
the midst of the largest recapitalization effort in our history. Until
the work to recapitalize is fully completed, service members must
continue to conduct missions with legacy assets, many of which are over
50 years old, like our Reliance Class 210-foot medium endurance cutters
and our construction and inland waterways tenders. The Service must
also sustain our legacy fleet until new assets come online. This
recapitalization and sustainment balance is not only applicable to our
surface and aviation assets, but also for our shoreside and waterfront
infrastructure, where every mission begins. With the support of
Congress, we have seen significant increases to our shore
recapitalization funding in recent years; however, our ten-year average
recapitalization rate is at only 0.4%. A healthy organization
recapitalizes its infrastructure at a rate of 2 to 4%. Our current pace
equates to full replacement of the Coast Guard's shore plant every 267
years.
Surface Assets
With the strong support of the Administration and Congress, we
continue efforts to acquire the Nation's first new heavy polar
icebreakers in almost half a century. The $555 million provided in the
FY 2021 Consolidated Appropriations Act funds construction of the
second Polar Security Cutter. The FY 2022 request of $170 million will
sustain the program and procure initial long lead time materials for
the third. When fully operational, these Polar Security Cutters will
provide the global reach and icebreaking capability necessary to ensure
sustained operations in the Polar or High Latitude Regions, access
which is critical to projecting U.S. sovereignty and protecting our
national interests, countering malign actors, and responding to new
mission demands created by climate change.
The FY 2021 Coast Guard appropriation included $546 million for the
Offshore Patrol Cutter (OPC), one of the Service's highest acquisition
priorities. Continued progress on the OPC program is absolutely vital
to recapitalizing the capability provided by our legacy fleet of 210-
foot and 270-foot Medium Endurance Cutters (MECs). The FY 2022 request
provides $597 million for construction of the fourth OPC and long lead
time materials for the fifth. The OPC program is for 25 hulls. The
legacy assets the OPCs will replace have been workhorses for over 50
years and have served the Nation with distinction, but the MEC fleet is
becoming more difficult and expensive to maintain, and we continue to
see increasing degradation in its operational availability. Despite the
extraordinary efforts of our men and women, over the last two years
alone, our MEC fleet has lost nearly 500 annual patrol days due to
unplanned maintenance and repairs, the equivalent of 11 percent of our
MEC fleet capacity. To address this critical loss of operational
capacity, the FY 2022 President's Budget requests $60 million for
additional shore-side support personnel and funding to improve vessel
readiness across the Coast Guard's surface fleet due to deferred
maintenance, reduced dry docks and dockside availabilities, and rising
costs for parts and services.
We are also making progress on the recapitalization of our fleet of
inland tenders--some of which have been in service since the 1940s,
shouldering the herculean responsibility of maintaining both fixed and
floating aids to navigation on the U.S. Marine Transportation System
(MTS)--the 25,000 miles of rivers and navigable channels that support
$5.4 trillion in annual commerce and 31 million jobs. The MTS is the
lifeblood of the U.S. economy, supporting 26 percent of our Nation's
Gross Domestic Product (GDP). The FY 2022 request for $67 million would
allow the Coast Guard to award a detail design and construction
contract, with delivery of the first Waterways Commerce Cutter (WCC)
anticipated in FY 2024, maintaining momentum from the $25 million
provided in the FY 2021 appropriation. These cutters--which will
replace our legacy inland tender fleet--will feature modern designs for
propulsion and crew habitability, as well as enable gender equity in
this segment of our cutter forces community for the first time in
history.
Aviation Assets
Like my concerns with our aging surface assets, I have become
increasingly concerned about our ability to sustain operations with our
legacy rotary wing fleet. Our current fleet includes 98 MH-65 Dolphin
and 48 MH-60 Jayhawk helicopters. Both helicopters are undergoing
essential Service Life Extension Programs (SLEP) to push current
capabilities into the mid-2030s. However, the rapidly declining
availability of MH-65 parts is revealing that SLEP alone will no longer
ensure MH-65 readiness that far into the future. Even if a healthy
supply chain existed, the MH-65 fleet will exceed its service life well
before 2040 and the expected arrival of Future Vertical Lift
capability. Conversely, DoD operates more than 4,000 H-60s and is
poised to continue H-60 operations until Future Vertical Lift
technology is fully deployed. Combined with the rapid growth in use of
the H-60 variant in the civil aviation sector, the domestic H-60 supply
chain will remain viable well past 2040. Hence, while completion of the
MH-65 and MH-60 SLEP remains an imperative to meeting current mission
demand, the Coast Guard must immediately begin transitioning towards a
single airframe rotary wing fleet comprised of MH-60 helicopters. The
FY 2021 appropriation contained $29 million to enable the Service to
convert Air Station Borinquen, Puerto Rico, a critical first step
towards that transition.
The FY 2022 request proposes $83 million to expand the Coast
Guard's fleet of MH-60T helicopters with the conversion of low hour
former Navy air frames at our Aviation Logistics Center. The request
also supports the transition of Air Station New Orleans, Louisiana from
MH-65 to MH-60 helicopters using aircraft currently in the Coast
Guard's inventory. Lastly, to address broader aviation readiness
concerns and improve the operational availability of both our fixed and
rotary wing aircraft, the FY 2022 request includes $97 million to help
arrest the growth of aviation maintenance backlogs, rebuild critical
parts inventories, and enable avionics upgrades that ensure asset
airworthiness.
Shore Infrastructure
I am also particularly mindful of the condition of our aging shore
infrastructure and the adverse effects it has on readiness across all
mission areas. We greatly appreciate the $363 million provided by
Congress in FY 2021 to support critical shore facility investments in
Alaska, Florida, Hawaii, Maine, Maryland, New Jersey, New York, North
Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, and
Washington. While these investments enhance the resilience of our
infrastructure portfolio, we still have more work to do as our
facilities face new threats from natural hazards and the impacts of
climate change. Sustaining this momentum going forward is essential to
providing our Coast Guard men and women with the modern facilities
necessary to support 21st century Coast Guard operations.
The Coast Guard has been slowly recapitalizing our shore
infrastructure, updating and where possible replacing legacy military
housing and support facilities, and modernizing waterfront facilities
to accept new assets. Despite these efforts, the Service has a $2
billion infrastructure recapitalization backlog. Additionally, we have
accrued nearly $1 billion in deferred, depot-level maintenance projects
on our shore facilities. The FY 2022 budget supports the Coast Guard's
efforts to address the $1 billion deferred shore facility depot
maintenance backlog with targeted investments to improve the condition
and energy efficiency of shore facilities, and expedite the divestiture
of excess real property.
Improve Information Technology Reliability: We are now a year into
our ``Technology Revolution''--a ``Whole of Service'' effort to ensure
that our dedicated workforce is supported by a reliable, mobile, and
integrated information system. With your support in the 2020
Coronavirus, Aid, Relief, and Economic Security (CARES) Act, the Coast
Guard was able to make over $85 million in investments towards crucial
modernization efforts, from hardware and network upgrades that
facilitated remote work and telehealth capabilities, to modern data
analytics tools whose versatility helped Coast Guard leaders mitigate
the unprecedented challenges of the COVID-19 pandemic with accurate and
up-to-date personnel protective equipment and vaccine tracking and
distribution information. Furthermore, with the more than $100 million
provided in the FY 2021 appropriation towards our ``Technology
Revolution,'' we continue investments in software modernization and
network defense, replacement of obsolete hardware, enhanced
connectivity aboard our cutters, and we will begin the transition to an
enterprise big data platform to better inform future operations and
enhance our already stellar mission effectiveness.
To stay ready, the Coast Guard must keep pace with the
technological advances occurring across the maritime sphere, from the
cyber domain to renewable energy, and increased space operations, in
order to ensure a safe and secure Marine Transportation System. The FY
2022 budget request continues to make critical investments in the Coast
Guard's network, hardware, and software--including $17 million to
increase cyber hardening and improve the reliability and integrity of
Coast Guard information technology networks; $54 million to address
infrastructure shortfalls and communications equipment obsolescence, as
well as build resilient network delivery architecture that ensures no
single point of failure; and $22 million to transition to modern
software and provide mobile tools that improve the efficiency and
effectiveness of operators in the field. To have a truly 21st Century
Coast Guard, we must build off the momentum of previous Congressional
support and accelerate our efforts.
Conclusion
The Coast Guard is America's maritime first responder and must be
prepared for natural and manmade disasters, while also conducting an
array of steady state missions that enhance economic prosperity,
safeguard our environment, and advance the security of our homeland and
broader national security interests. New assets alone are insufficient
to sustain a mission-ready Coast Guard. A ready Coast Guard requires
operational platforms, reliable infrastructure, and above all else, a
well-trained and diverse workforce properly equipped with state-of-the-
market technology to enable mission performance.
With the continued support of the Administration and Congress, your
Coast Guard will live up to our motto--Semper Paratus--Always Ready.
Thank you for your enduring support of the men and women of the Coast
Guard.
FY 2022 Budget Highlights
Budget Priorities:

Restore Readiness--The Coast Guard must maintain momentum
to restore Service readiness. More than ever, the Nation needs a ready
Coast Guard with the tools and support systems necessary to operate in
the increasingly complex, interconnected, and technologically advanced
maritime domain.
Recapitalize Legacy Assets and Infrastructure--The Coast
Guard is in the midst of the largest recapitalization effort in its
history--an effort critical to building the Coast Guard the Nation
needs. However, until recapitalization is fully completed, service
members must continue to conduct missions with legacy assets, some of
which are over 50 years old.

The FY 2022 Budget requests $9.02 billion for Operations and
Support (O&S) and $1.64 billion for Procurement, Construction and
Improvements (PC&I). Budget highlights include:

Restore Readiness (O&S):
Support the Mission Ready Total Workforce
$127 million for requisite military pay and allowances
per National Defense Authorization Act requirements, maintaining parity
with the military branches within the Department of Defense, and $43
million for civilian pay and benefits (O&S).
$44 million for workforce readiness, including
recruiting, retention, diversity and inclusion, training, and
healthcare (O&S).
Modernize and Sustain Operational Capability
$194 million to address Coast Guard depot maintenance
backlogs, including: $97 million for fixed and rotary-wing aircraft
maintenance and critical parts; $60 million for vessel deferred
maintenance and shore-side support personnel; and $37 million for shore
infrastructure depot maintenance backlogs and divestiture of excess
real property.
$93 million for new assets including: operations and
maintenance (O&M) funds for Fast Response Cutters (FRCs) #47-51 and OPC
#1; crews for FRCs #49-54, OPC #2, and NSC #10; shoreside personnel and
support for FRCs #48-53 and OPC #1; support for NSC capabilities,
including tactical cryptology and small Unmanned Aircraft Systems
(sUAS); crew and O&M for three HC-130Js; O&M for a new C-37 Long Range
Command and Control Aircraft; and funds to operate and maintain new and
improved facilities at Air Station Ventura, California; the first OPC
homeport in San Pedro, California; a new aircraft simulator building at
Aviation Training Center Mobile, Alabama; and family housing in Perry,
Maine.
$23 million to transition Air Station New Orleans,
Louisiana from MH-65 to MH-60 helicopters and crew and O&M of MH-60T
hull #49 to continue the Coast Guard's efforts to transition to a
single-frame helicopter fleet.
Improve C5I Reliability and Performance
$54 million to address critical shortfalls in the Coast
Guard's IT hardware and infrastructure.
$22 million to transition to modern software and provide
mobile solutions for the workforce.
$17 million for improved cyber hardening to ensure
resilience, reliability, and integrity of Coast Guard IT networks.

Recapitalize Legacy Assets and Infrastructure (PC&I):

$1 billion for vessels, including: $597 million for the
construction of OPC #4, as well as long lead time materials for OPC #5;
$170 million for PSC including project management for the construction
of PSCs #1-2 and initial long lead time materials for PSC #3; $78
million for post-delivery activities for National Security Cutters
(NSCs) #10-11; and $67 million for the Waterways Commerce Cutter (WCC)
initial detail design and construction contract award.
$280 million for shore infrastructure improvements to
support new acquisitions and the execution of Coast Guard operations
including: PSC homeport in Seattle, Washington; recruit barracks at
Training Center Cape May, New Jersey; continued buildout of the
consolidated operational base in Charleston, South Carolina; and other
infrastructure repairs and upgrades.
$222 million to recapitalize and sustain fixed and
rotary-wing aircraft including: sustainment of the current MH-60T
helicopter fleet and initial funding for fleet expansion; modernization
and sustainment of MH-65 helicopters to extend service lift into the
2030s; and continued missionization of HC-27J medium-range surveillance
aircraft.

Mr. Carbajal. Thank you, Admiral Schultz.
We will proceed next with Chairman Maffei.
Mr. Maffei. Thank you very much, and good morning to you,
Chairman Carbajal, Chairman DeFazio, Ranking Member Gibbs, and
all the members of the subcommittee. I am honored to appear
today in support of the Federal Maritime Commission's budget
request for fiscal year 2022.
The FMC is a relatively small agency with an annual budget
of approximately $30 million that is charged with ensuring a
competitive and reliable international ocean transportation
system that supports the U.S. economy and protects the public
from unfair and deceptive practices.
At no time in decades has that mission been as important as
it is today. The United States has brought in more ocean
freight in less time than ever before in our Nation's history.
In fact, the U.S. imported more containers in the first 5
months of 2021 than in any previous entire year.
Exports are also up, substantially, including agricultural
exports, and that increase only looks modest when compared with
the explosion of imports.
The American demand for consumer goods, which started
largely due to online shopping during COVID, continues to
increase. This spike in demand for imports has pushed cargo
rates to record high, even higher now than they were when I
appeared before you just a month ago.
For example, the July spot rate to move a 40-foot container
from Shanghai to Los Angeles is approaching $10,000 and is more
than five times higher than in July of 2019, pre-COVID.
Depending on the specific circumstances, the actual rate to
book a trans-Pacific box could cost even more than that, and
this is without including congestion surcharges that can add
thousands more dollars to a shipper's cost.
And rates only tell part of the story. There is not enough
space on ships for all the shippers that want space, and so
some are having to wait for a future sailing, and once on the
ship, it may even be days or weeks of delay before it actually
gets there.
All of this notwithstanding, the world's containership
fleet remains effectively fully deployed, and ocean carriers
have accelerated their ordering of new ships, containers, and
other equipment.
Despite some gains in capacity in our ports and
maximization of global container fleet, the overall capacity
system is still limited by truck, rail, and warehouse bay
shortages.
The situation is creating real hardship for some shippers,
such as agricultural exporters that Ranking Member Gibbs
mentioned, particularly those that deal with the low-margin
commodities, U.S. manufacturers that depend on specific imports
from abroad, and small- to medium-size importers in ocean
transportation intermediaries.
It is these categories of shippers that can't afford the
rates or lack sufficient market power for the carriers to value
their continued business as much as they do those large,
nationally known shippers.
While the Shipping Act gives the FMC no authority to place
a cap on rates or set quotas for export carriage or require
carriers to offer the same rates to small shippers as bigger
shippers, we do have the authority to take on a major source of
headaches for shippers and truckers, and that is the
unreasonable detention and demurrage fees.
In the spring of 2020, the FMC unanimously voted for an
interpretive rule that identified when these fees would be
likely unreasonable and in violation of the Shipping Act.
Late last year, the FMC launched an investigation of
detention and demurrage, container return, and export carriage
policies at our Nation's two largest port complexes.
The Commissioner in charge of that fact-finding, Rebecca
Dye, will present her interim recommendations at the FMC
meeting next week.
One recommendation that she and I have already discussed is
to conduct audits of the major carriers to determine exactly
what they are doing to comply with the detention and demurrage
rules.
Such an audit could inform additional rulemaking or
enforcement, and given the urgency of the situation, this week
I used my authority as Chair to designate our managing director
to lead the audits and start as soon as possible.
Two other areas in urgent need of shoring up given the
current situation are our Bureau of Enforcement and the Office
of Consumer Affairs and Dispute Resolution Services we call
CADRS.
As Chairman, I have authorized additional hiring for these
offices which is in progress, including a specific advocate for
exports--an export advocate.
Now, while we are working hard to maximize this year's
resources, we respectfully request $30.8 million to fund FMC's
operations for the coming year.
This amount supports an agency workforce of 128 FTE
employees, many of whom must have advanced degrees and/or
specialized experience to facilitate implementation of all the
provisions of the Shipping Act.
That is why the bulk of our budget goes towards salaries
and benefits.
Lease and security represent the next part of our
Commission's budget, and the third largest part is technology
which allows our workforce to do their jobs both at the office
and in telework when necessary.
Again, I am grateful for this opportunity to appear before
you today, and I welcome any questions you may have about our
budget request or about the ocean transportation system
generally. Thank you.
[Mr. Maffei's prepared statement follows:]

Prepared Statement of Hon. Daniel B. Maffei, Chairman, Federal Maritime
Commission
Good morning Chairman Carbajal, Ranking Member Gibbs, and Members
of the Subcommittee. I am grateful to have this opportunity to appear
before you today and testify in support of the Federal Maritime
Commission's budget request for Fiscal Year 2022.
The Commission seeks $30.87 million to fund its operations for the
coming year to meet its mission of ensuring a competitive and reliable
international ocean transportation supply system that supports the U.S.
economy and protects the public from unfair and deceptive practices.
Before discussing our budget request in more detail, allow me to
provide a brief update on conditions in the industry since my
appearance before you in June.
Overall, the situation remains largely unchanged since my last
testimony.
Cargo volumes remain at record highs and show no signs of
dissipating in the near term. Historic levels of U.S. consumer demand
for goods manufactured overseas is primarily driving this cargo flow
although demand overseas for U.S. commodities and products has also
increased. Ports, marine terminals, and domestic freight delivery
networks continue to work vessels and deliver the cargo, but at less-
than-optimal performance due to congestion. Issues related to equipment
availability, a shortage of truck drivers, backups on the rails as well
at inland railyards, and lack of space at warehouses all contribute to
eroding the reliability of the system overall and increase delays.
The good news is the worker absences at the ports that were due to
COVID infections and quarantines has diminished, and at vital ports
such as New York/New Jersey, many COVID precautions that reduced
capacity have been safely drawn down. The bad news is the persistent
volumes continue to overwhelm what was considered by most terminals
only eighteen months ago to be an adequate workforce even in high
volume times.
Many of these problems feed on themselves such as when truck, rail,
and warehouse congestion cause terminals fill up with so many import-
laden containers that they cannot absorb more empty containers and
close to shippers and truckers trying to return those empties. Those
empties then remain on chassis tying up empties and the chassis amidst
shortages of both. The congestion forces truckers to wait in unusually
long lines to drop off an empty and/or pick up a full container
decreasing their productivity and exacerbating driver fatigue. Shortage
of space on the terminal leads to inefficient ship loading and
unloading and that leads to ships needing to wait at anchor and ``bunch
up'' so that several will enter a terminal at once adding to the
unload/load times, increasing the strain on our port workers, and
piling up import-laden containers so fast that there is no way the
land-side system can absorb them.
In short, trying to force more cargo through the freight
transportation system than it can handle creates a cargo jam analogous
to the traffic jam you get when forcing four lanes of cars down to one.
What will likely make this challenging situation even worse are
developments outside the United States that could have a direct impact
on the performance of the freight delivery system here. For example, an
outbreak of COVID-19 in the Southern China port of Yantian closed that
facility for four weeks in June. Yantian is the gateway for 23% of the
cargo destined for the United States. Ocean carriers had to cancel
vessel calls at Yantian. The closure of Yantian caused cascading
problems at other ports in Southern China. Though Yantian is now
operating again, the freight and ships delayed by the closure are now
headed for the U.S., likely to result in an unprecedented July and
August peak season and exacerbating port congestion. The consequences
of Yantian's closing will eclipse those associated with the grounding
of the Ever Given in the Suez Canal.
While the capacity of the system is being pushed to the brink, the
record demand for imports shows no sign of abating. As a result, cargo
rates have been at record highs, and are likely to go still higher in
2021 with no substantial decline likely until at least 2022. While
there are many factors contributing to the high prices, there is no
indication that the carrier industry as a whole or any individual
carrier is holding back on supply of cargo space. Instead, we find the
world's container ship fleet remains effectively full deployed. There
are essentially no additional vessels available to increase capacity to
carry cargo. In fact, as one would expect, ocean carriers are ordering
new ships. A total of 286 new container ships were ordered in the first
half of 2021, the highest level over the past two decades. The time it
takes to build new vessels means there will be a delay before they
launch and be available to shippers. Again, additional vessel capacity
without the ability to better serve those ships when they call does not
solve many of the underlying problems creating congestion and high
rates. Additionally, carriers and intermodal equipment providers
continue to buy additional containers and chassis to serve demand but
there is also a lag between the order and deployment of that equipment
as well.
I remain particularly concerned about exporters--especially many
agricultural exporters--due to the shifting dates of when ships are
expected to make their port calls and the lack of reliability of
service. While export shipping rates remain much lower than import
rates, they too have gone up dramatically. Furthermore, exporters are
finding themselves in the frustrating position of having to deal with
the fact that a carrier is making so much money on a container full of
imports than exports that it is often in the carrier's best short-term
economic interest to get more empty containers back to Asian factories
faster rather than carrying more export containers.
While the Shipping Act does not give the FMC authority to place a
cap on rates, set quotas for export carriage, or require carriers offer
the same rates to smaller shippers as bigger shippers, we are taking on
a major source of headaches for shippers and truckers--unreasonable
detention and demurrage fees. On April 28, 2020, the FMC unanimously
voted for an interpretive rule that I believe clearly defined when
carriers and terminal operators are permitted to charge these sorts of
fees and when these fees are unreasonable and therefore in violation of
the Shipping Act.
A supplemental order to Fact Finding 29 and issued in late November
of last year directed Commissioner Rebecca Dye to investigate if the
detention and demurrage policies and practices of shipping companies
operating in an alliance and calling Los Angeles, Long Beach, or New
York/New Jersey violate the law. The supplemental order also directed
her to examine policies and practices related to container return, and
container availability for U.S. export cargoes. Since then,
Commissioner Dye has issued an information demand order to 27 different
entities--ten ocean carriers and 17 marine terminal operators--and the
information gathered in response to these orders is being examined to
determine whether enforcement actions against any of these entities are
warranted.
Additionally, Commissioner Dye plans to present the Commission with
interim recommendations for action at our meeting next week. As you may
recall, in our appearance before you in June, both Commissioner Dye and
I testified that auditing the ocean carriers is action the Commission
should take. In the immediate timeframe, we need to more fully examine
and understand the way carriers determine who owes what fees, how they
bill, what their appeals processes are, and whether they place any
restrictions on shippers who refuse to pay a given fee while it is
being challenged. Such an audit could inform additional rulemaking or
enforcement, and I am using my administrative authority to start this
program as soon as possible. I would note though that this audit
program will be important, it's initial scope will be limited to just
the nine largest carriers and focus on their detention and demurrage
billing practices. I would like to be able to conduct more
comprehensive forensic audits of all major carriers and other entities
with substantial effect on the cost and efficiency of ocean shipping,
but that would require more resources than we currently have or are
asking for today.
Circumstances and conditions causing the cargo surge and related
congestion are beyond the jurisdiction, authority, or control of any
one agency. Many parties, at levels from local to national, have a role
to play in responding to challenges frustrating all involved in the
movement of ocean cargo. Toward that end, the Commission is involved in
the President's whole-of-government response and I have held calls with
White House officials, the Secretary of Transportation, the Chair of
the Surface Transportation Board, the Acting Administrator of MARAD and
the Acting Administrator of the FMCSA, among others. Everyone is
committed to interagency cooperation and doing what they can. We are
grateful to be included in these efforts and will remain actively
engaged in them for as long as necessary.
Two areas where the Commission can make an immediate impact is by
bolstering the resources and capabilities of its Bureau of Enforcement
(BoE) and Office of Consumer Affairs and Dispute Resolution Services
(CADRS). We are actively assessing what additional capabilities are
needed to reinforce BoE to make it more effective, particularly as I
place a higher emphasis on conducting enforcement actions. In CADRS, we
are in the process of hiring a Conflict Resolution Specialist to fill
an existing vacancy and are moving forward with creating a new position
for an Export Advocate. This will be a person who is solely responsible
for assisting export shippers in overcoming issues they have in moving
their cargoes.
On a related note, our Area Representatives are a resource for both
BoE and CADRS. These individuals work out of field offices in Southern
California, Tacoma, Washington, New York/New Jersey, Southern Florida,
and Houston. We are examining whether establishing a presence in an
additional city or cities would be beneficial to meeting the
Commission's mission.
In recent years, we have concentrated on building our capabilities
in the Bureau of Trade Analysis (BTA), which is responsible for
reviewing filed agreements (including those concerning the three major
carrier alliances) and then monitoring both agreements that have gone
into effect as well as the broader marketplace for ocean transportation
services. As a result of this emphasis, we have in place a strong group
of economists and analysts with the knowledge and skillsets necessary
to detect anticompetitive behavior in the marketplace. Our task going
forward is to maintain the capacity we have achieved in BTA through
recent hirings.
Our budget request supports an agency workforce of 128 fulltime
equivalent employees, including the five Commissioners and their
Counsels. The majority of our budget goes towards salaries and
benefits.
Office Lease & Security represents the next largest part of the
Commission's budget. The Commission, working with the General Services
Administration is expected to conclude negotiation of a lease that will
allow us to stay in our current Washington, D.C. location. Rent will
remain a significant cost for the agency but through this effort we
will avoid moving costs and mitigated the potential risk of higher
future lease costs. Our workforce views the proximity of our
headquarters building to a major mass transit and commuter hub as a
benefit. I should highlight that the Commission was rated seventh in
Small Agencies and the FMC continues as a Top 10 Best Places to Work by
the Partnership for Public Service. This is the fourth year in a row
the Commission has earned top ten distinction.
Information technology and cyber security are priorities for any
organization and require significant overhead. The Commission is no
different from any other agency and there are considerable costs
associated with providing the technology our workforce needs to do
their jobs, the platforms necessary to interact with our regulated
entities, and the defenses required to protect our systems from
nefarious actors. Past years' investments in providing our employees
with the assets they needed to be telework ready have paid dividends as
the Commission went to a ``maximum telework'' posture in response to
the COVID-19 pandemic.
Responsible stewardship of the public funds appropriated to the
Commission is a priority shared by myself, my colleagues, and the
senior career staff of the agency. We are constantly on watch to spend
a dollar more responsibly and only procure those goods and services
necessary to accomplish the mission of the Commission and comply with
all legal and administrative mandates.
Again, I appreciate this opportunity to appear before you today and
am prepared to answer any questions you might have.

Mr. Carbajal. Thank you, Chairman Maffei.
Master Chief Vanderhaden, you may proceed.
Master Chief Vanderhaden. Good morning, Chairman DeFazio,
Chairman Carbajal, Ranking Member Gibbs, members of the
subcommittee. I want to join Admiral Schultz in extending my
utmost gratitude on behalf of the men and women of the Coast
Guard for your enduring support of our efforts to restore the
Service to readiness.
The Coast Guard is a truly unique agency. We are an Armed
Force of the United States, the Nation's lead maritime
enforcement agency, and we are a maritime safety and regulatory
agency.
The men and women I represent today truly make up the
finest Coast Guard in the world. Our dedicated Coasties are on
the front lines every day, carrying out operations globally and
protecting our homeland's maritime domain from constantly
evolving threats.
Our people accomplish a broad array of missions with a
relatively small force. We are successful because we foster an
inclusive work environment where all members understand the
importance of their service to their Nation.
As with all services, the Coast Guard faces numerous
challenges. The current challenge I am most concerned about is
our ability to recruit and retain the workforce needed to
operate our cutters, boats, and aircraft. As we replace our
aging assets, the new cutters, helicopters, and planes being
built require us to grow our workforce now so that we are
prepared to operate and maintain these technologically advanced
craft when they arrive.
Although today we enjoy the highest retention rate of all
the military services, we will need to retain the future
workforce at an even higher rate to meet increasing mission
demands, both domestically and abroad.
Coast Guard leadership is taking a proactive approach to
improving our retention by analyzing, evaluating, and
mitigating causes members might leave the Service early.
We contracted with outside agencies for several studies to
provide the Coast Guard with recommendations to remove
retention barriers and provide better quality of life for all
our members.
Based on these recommendations, we implemented several
workforce initiatives, including adjusting assignment policies
to facilitate the co-location of dual military families and
modernizing the body composition program to adopt compliance
methods similar to what the Air Force and the Navy use.
We also updated our parental leave policy, allowing for 120
days of leave for primary caregivers, and created a program
where Coast Guard reservists can be called to Active Duty to
backfill members when they go on prenatal, maternity,
convalescent, and primary caregiver leave.
These updates definitely enhance the quality of work life
for our members while maintaining our high standards of
readiness.
Policy changes are just one avenue to improve retention,
but policy change alone is not enough to retain our best and
brightest. We have developed an action plan to reinforce the
importance of inclusive leadership at all levels, especially
leadership by example.
And we started at the top, the top of the enlisted
workforce, to demonstrate our commitment to good leadership. We
completely changed our advancement process to master chief
petty officer.
This new process includes a panel that conducts a thorough
review of members' records with an emphasis on selecting proven
leaders who exemplify our core values of honor, respect, and
devotion to duty.
We have also stepped up our leadership game by expanding
the availability of mentoring. Our Office of Leadership
recently launched a new mobile-enabled mentoring program to
connect mentors with mentees through traditional one-on-one
mentoring on a global basis.
The industry-proven, at-base mentoring program provides
flexibility to people searching for a mentor. This technology
enables members from across the Service to connect with mentors
of their choosing and gain valuable advice and insight to
better manage their careers.
I just talked to the Chief Master Sergeant of the Air
Force, Chief Bass, and the Air Force is also considering using
this same mentoring program.
As we build the Coast Guard workforce of the future, we
recognize the imperative to be an employer of choice that
reflects the public we serve.
Last year, we entered into a study with the RAND
Corporation to identify barriers of recruitment and retention
of underrepresented racial, ethnic, and gender minorities in
the Active Duty Coast Guard.
That completed study will be delivered later this summer.
We look forward to sharing the results of the new RAND study
with the subcommittee and continuing to implement the
initiatives to ensure members from underrepresented minority
groups can thrive in the Coast Guard.
Your Coast Guard is hard at work to attract a talented and
diverse workforce, and I appreciate this committee's commitment
to creating a Coast Guard ready to protect and defend America's
maritime domain.
Thank you for inviting me to testify today, and I look
forward to answering your questions.
Mr. Carbajal. Thank you, Master Chief Vanderhaden.
Ms. Lessley, you may proceed.
Ms. Lessley. Thank you. Good morning, Chairman Carbajal,
Chairman DeFazio, Ranking Member Gibbs, and members of the
subcommittee. I am very honored to appear with my esteemed
colleagues--Admiral Schultz, Master Chief Petty Officer
Vanderhaden, and Chairman Maffei--and pleased to testify on the
President's fiscal year 2022 budget priorities for the Maritime
Administration.
Before I turn to the budget, I note that, as a former
staffer of this committee, I am astounded that my words will
appear in this committee's permanent record, and I want my
first words in that record to be those of gratitude, first to
my family; and my husband, Vivek; and my children, Sarah and
Luke; and then to Congressman Elijah Cummings, for whom I
worked for nearly 15 years.
For my entire time with him, I handled his assignment on
the T&I Committee, and I worked on this very subcommittee
during the 4 years in which he served as its chair.
Without the opportunities Chairman Cummings gave me, I
would not be here today, and, more importantly, the guidance,
counsel, and support he gave me and the wisdom and grace of his
example made me a better person.
I also want to thank the colleagues with whom I worked on
at MARAD and at the Department of Transportation. I am honored
to work with these extraordinary public servants.
The Maritime Administration supports our U.S. merchant
marine, maintains the Ready Reserve Fleet, administers grant
programs that invest in our ports and waterways, and operates
the Merchant Marine Academy.
MARAD is also supporting the President's Task Force on
Supply Chain Disruption. Just last week under the leadership of
Secretary Buttigieg, the Department held a roundtable with
stakeholders from the Ports of Los Angeles and Long Beach to
discuss opportunities to address port and supply chain
congestion. We were pleased that Chairman Maffei was able to
join that event.
To address critical infrastructure gaps while fostering and
sustaining job opportunities in the maritime industry, the
President's fiscal year 2022 budget requests just over $1
billion in funding for MARAD.
Looking first at sealift, the President's budget requests
the full authorized amount of $318 million in funding for the
Maritime Security Program, which will continue to assure DoD's
access to these 60 ships.
In addition, the President's budget requests $10 million
for a new Tanker Security Program. Funding is consistent with
DoD's recent study on the U.S.-flag tanker fleet, which found
that there is insufficient tanker-fleet capacity in the U.S.-
flag fleet to meet defense requirements.
MARAD also maintains 41 Ready Reserve vessels, that
together with the military sealift command vessels, provide
sealift surge capabilities in support of our military.
Funding from DoD in fiscal year 2022 will enable MARAD to
continue to provide this sealift support and to advance
essential recapitalization of this fleet whose vessels' average
age is more than 46 years.
MARAD recently awarded a contract for a vessel acquisition
manager to begin acquiring replacement vessels for our Ready
Reserve. The VAM will identify, modernize, and may operate
these vessels.
Looking at mariner training programs, the budget request
includes $358 million to provide Federal assistance to the six
State maritime academies, including funding for the purchase of
the fifth and final National Security Multimission Vessel. We
remain on schedule to take delivery of the first ship in fiscal
year 2023.
The fiscal year 2022 budget requests $230 million for the
Port Infrastructure Development Program, which several Members
have referenced, to fund grants that improve port
infrastructure and facilities.
The budget requests $20 million for MARAD's Small Shipyards
Grant Program, and it includes funding for the America's Marine
Highway Program to support the increased movement of freight by
water.
To advance the essential decarbonization goals set by the
administration, the budget requests $10 million to support the
Maritime Environmental and Technical Assistance Program, which
is researching alternative energies and technologies in the
marine environment.
Finally, the budget requests $90 million for the Merchant
Marine Academy. On June 19th, I visited the Merchant Marine
Academy to attend its 2021 graduation. I was inspired, as I
always am whenever I visit a Service academy, by all that the
graduates had accomplished, and particularly in a year that
presented profound and unprecedented challenges.
But I was deeply concerned by what I saw when I toured the
academy's facilities. I observed obvious disrepair and what
appeared to be either severely deferred maintenance or poorly
performed maintenance attempts, or both.
In the wake of my visit, the Department and MARAD have
acted immediately to begin to investigate these concerns,
including dispatching teams of building management and health
and safety professionals to conduct reviews of the campus.
We are seeking professional assistance from GSA and
developing plans to undertake a comprehensive building report.
We will keep Congress closely informed of our findings.
Thank you again for the opportunity to discuss the
President's budget for MARAD, and I am happy to answer any
questions that you may have.
[Ms. Lessley's prepared statement follows:]

Prepared Statement of Lucinda Lessley, Acting Administrator, Maritime
Administration
Good morning, Chairman Carbajal, Vice Chair Auchincloss, Ranking
Member Gibbs, and distinguished members of the Subcommittee, and thank
you for the opportunity to testify on the President's Fiscal Year (FY)
2022 budget priorities for the Maritime Administration (MARAD).
FY 2022 Budget Request
The United States is a maritime nation. MARAD's statutory mission
is to foster, promote, and develop a resilient United States merchant
marine and maritime transportation industry. A strong, resilient,
reliable, and efficient marine transportation system is required to
keep the United States competitive in the global economy and to provide
sealift capacity support for our military. The President's FY 2022
Budget requests a total of $1.2 billion for MARAD, and includes
investments that focus on the implementation of policies that address
critical infrastructure gaps while fostering and sustaining American
job opportunities in the maritime industry, increasing our global
competitiveness, and leveraging technology to meet the needs and
challenges of the maritime transportation system while minimizing the
environmental impacts of our ports on neighboring communities and port
workers. Funds requested are especially critical to support the U.S.
maritime industry as it continues to rebound from the coronavirus
disease 2019 (COVID-19) pandemic. The Budget also requests funds to
support MARAD's ongoing work to help mitigate climate change,
strengthen environmental justice, promote transportation equity and
inclusion, and support improvements in safety and security in the
maritime domain, including across the U.S.-flagged fleet and in
American ports.
On June 19, 2021, I visited the U.S. Merchant Marine Academy to
attend its 2021 graduation ceremony and tour the Academy's facilities.
Although I was pleased to tour several new facilities built by the
Academy in recent years, I was concerned by what I saw in some of the
older facilities on the campus. I observed several instances of
disrepair and what appeared to be either deferred maintenance or poorly
performed attempts at maintenance. In light of the age of some of the
buildings, a regular maintenance framework is essential for the health
and safety of Academy staff and students. Therefore, in the wake of my
visit, the Department and MARAD have acted immediately to begin to
investigate these concerns, including dispatching teams consisting of
building management professionals, contracting management
professionals, and environmental health and safety professionals to
conduct reviews of the campus. We are seeking professional assistance
from the General Services Administration, and putting in place plans to
undertake a comprehensive Building Evaluation Report. The Department
has initiated a thorough, top-to-bottom review of the physical
infrastructure and management practices, and will keep Congress
informed of our findings in a timely manner. We are also developing 30-
day, 60-day, and long-term work plans to address the most urgent
issues.
National Security
America's strategic sealift provides the Nation with the capability
to project power globally by deploying forces and moving cargoes
worldwide during peacetime, wartime, and/or in any contested
environment. Sealift requires a combination of commercial and Federal
resources to succeed. The Government-owned sealift fleet, which
includes the MARAD-maintained Ready Reserve Force (RRF) and the
Department of Defense (DOD) Military Sealift Command's (MSC) surge
sealift fleet, are supported by a fleet of privately owned,
commercially operated U.S.-flag vessels in the Voluntary Intermodal
Sealift Agreement, which includes vessels in the Maritime Security
Program (MSP). The U.S. Merchant Marine is a fundamental component of
our national defense strategy. Our strategic sealift relies on a
Government-owned fleet and assured access to commercially operated
U.S.-flag vessels--as well as the intermodal networks maintained by
these vessel operators--to transport equipment and supplies to deploy
and sustain our military forces anywhere in the world. Critical to the
operation of both Government-owned and commercial U.S.-flag vessels is
an adequate supply of qualified U.S. mariners to crew them.
The FY 2022 Budget requests the fully authorized level of $318
million for the MSP, which is the heart of sustainment sealift,
comprised of a fleet of 60 commercially viable, militarily useful
vessels, active in international trade and available on-call to meet
the Nation's need for sustained military sealift capacity. In return
for a stipend, MSP operators provide the Department of Defense (DOD)
assured access to their ships and their global network of critical
capabilities, including intermodal facilities used to unload and
transport military cargoes to final destinations. The MSP supports and
contributes to the expansion of the merchant mariner base, providing
employment for approximately 2,400 U.S. merchant mariners who may also
crew the U.S. Government-owned surge sealift fleet in a contingency, as
well as up to 5,000 additional shore-side maritime industry jobs.
The FY 2022 Budget for MARAD also includes $60 million to support a
new Tanker Security Program (TSP) that would provide $6 million in
stipend payments for up to 10 tanker vessels that will be enrolled in
the program. Funding will help to address national security
requirements for commercially viable U.S.-flag product tankers engaged
in international trade to support our deployed Armed Forces in
contingency operations and provide a global network of distribution
capabilities. Additionally, the TSP will also create and sustain U.S.
mariner jobs and support economic security. In DOD's recent study on
the US Flag tanker fleet \1\ just recently provided to Congress on June
30, 2021, the report stated that there is insufficient US Flag tanker
capacity to meet National Defense Strategy (NDS) requirements. The
analysis from this study demonstrated the need for a TSP that, when
working together with other solutions mentioned in the report, is an
important step towards a comprehensive strategy to increase US Flag
tanker capacity, to reduce the risk of reliance on foreign flag tankers
for the most important fuel missions, and to ensure the DOD has
sufficient tanker capabilities to meet NDS objectives.
---------------------------------------------------------------------------
\1\ United States Transportation Command, FY20 NDAA Fuel Tanker
Study Unclassified Executive Summary Report, June 30, 2021.
---------------------------------------------------------------------------
MARAD maintains a fleet of Government-owned vessels in the National
Defense Reserve Fleet (NDRF), including RRF ships and training ships on
loan to the six state maritime academies (SMAs) and the U.S. Merchant
Marine Academy (USMMA or Academy). The RRF vessels, along with a
smaller number of Military Sealift Command vessels, provide sealift
surge capability to deliver DOD equipment and supplies where needed
during the initial stages of a response to a major contingency. The RRF
fleet includes 41 vessels that are maintained and ready for operation
within five days of activation to transport military cargo to critical
areas of operation. In addition to providing strategic sealift support
for DOD, these RRF vessels are relied upon to provide support services
to emergency response personnel at impacted disaster areas during
national emergencies, including severe weather events.
The President's FY 2022 Budget requests $735 million from DOD
budgetary authority for MARAD to maintain the NDRF and RRF. Funds will
enable MARAD to continue to provide ready surge sealift support and
special mission vessels from the RRF fleet, and also maintain MARAD's
NDRF fleet mooring sites.
Our primary concern for the RRF is the recapitalization of the
aging existing fleet. The budget request includes an increase of $370
million from FY 2021 to support the acquisition of five used vessels
and four used ship conversions. The RRF fleet has an average age of
more than 46 years--some well past their expected use--which makes
recapitalization critical. While the fleet is still capable, the budget
request ensures MARAD will remain able to maintain the fleet's
readiness at levels that provide confidence to operational commanders.
As authorized in the FY 2018 National Defense Authorization Act
(NDAA), MARAD has advanced the acquisition of second-hand ships from
the open market for service in the RRF.o assist in this effort, MARAD
awarded a contract for Vessel Acquisition Manager (VAM) services in
July 2021. The VAM will identify, modernize, and may operate these
vessels after purchase. MARAD intends to rapidly seek suitable roll-on/
roll-off (RO/RO) vessels that can be modified to meet DOD's needs for
the organic sealift capability. We continue to work closely with the
U.S. Navy and U.S. Transportation Command, to complete this procurement
action.
U.S. Maritime Workforce Education and Training
MARAD provides funding and oversight for mariner training programs
to produce highly skilled U.S. Coast Guard (USCG) credentialed officers
for the U.S. merchant marine. It takes many years of training to
develop the necessary mariner competencies for deck and engineering
officer positions on large vessels in international trade. Access to an
adequate pool of U.S. merchant mariners is vital to both the peacetime
commercial success of the U.S.-flag fleet and to crew Government-owned
surge sealift vessels needed to sustain U.S. Armed Forces overseas.
The USMMA and SMAs support our Nation with well-educated and
trained merchant mariners entering the maritime industry. Despite the
tremendous challenges created by the COVID-19 pandemic, the USMMA
graduated 220 USCG-credentialed merchant marine officers last month who
hold unlimited licenses and are available to crew U.S.-flag ocean-going
ships. Additionally, the combined six SMAs graduated 757 unlimited
license merchant mariners in FY 2020.
The President's FY 2022 Budget for MARAD requests $90.5 million for
the USMMA. Funding will provide $85 million for academic operating
expenses, including continued support for health and safety protocols
in response to COVID-19, and $5.5 million for facility maintenance and
repair needs of the Academy's aging buildings and infrastructure. These
resources will enable the Academy to educate and train the next
generation of seagoing officers and maritime leaders, while providing
opportunities for a world-class education.
The Academy is a major source of U.S. Navy Reserve (USNR) Officers
and a principal source of new officers for the U.S. Navy's Strategic
Sealift Officer Program, which maintains a cadre of approximately 2,000
USNR Officers with the necessary training and credentials to operate
strategic sealift resources during operations relating to national
security matters. The skilled maritime leaders and military officers
produced by the U.S. Academy will keep the Nation's maritime industry
competitive in the global marketplace and ready to answer the call to
duty in the event of national emergencies that demand renewed sealift
capacity.
The FY 2022 Budget request also includes $358.3 million to provide
Federal assistance to support the six SMAs. Of that request, $315.6
million would fund a transformational investment through the National
Security Multi-Mission Vessel (NSMV) program.
The requested NSMV funding provides for the purchase of the fifth
and final NSMV vessel to be assigned to the California State University
Maritime Academy. In addition to providing a state-of-the-art platform
to support mariner education, the NSMVs will also provide significant
new capabilities to support National humanitarian and disaster relief
missions. The training ships are the most important assets provided by
the Federal Government to enable these schools to operate as maritime
academies, and are essential to each school's ability to provide a
training program that prepares students to pass the USCG licensing
examination.
Congress has recognized the need to replace these training ships,
and we thank you for supporting and appropriating funding for the
construction of four NSMVs. MARAD has implemented the approved
acquisition strategy utilizing a contracted Vessel Construction Manager
responsible for contracting for, managing, building, and delivering the
new ships. Construction is underway on the first two ships--the EMPIRE
STATE and the PATRIOT STATE--both are on schedule, as designed, and at
a fixed price. The first NSMV is expected to be delivered to MARAD in
FY 2023.
Other Transformational Infrastructure Investments
After reductions in trade volumes in 2020, the strong rebound in
U.S. consumer demand that's reached its peak in 2021 has spurred
unprecedented growth in cargo volumes that have stressed the maritime
supply chains on which the U.S. economy relies. Many in the industry
expect volumes to remain high throughout much of calendar year 2021,
straining America's ports.
The MARAD Port Infrastructure Development Program request of $230
million for FY 2022 will provide grants to improve port infrastructure
and facilities, and to stimulate economic growth in and around ports,
while also addressing climate change, improving safety and
transportation equity, and strengthening port resiliency. Investing in
the repair and modernization of ports creates well-paying union jobs
for American workers, helps transform our deteriorating infrastructure,
creates more opportunities in disadvantaged areas, and accelerates
equitable long-term economic growth and resilience. This program also
helps to increase our global competitiveness while leveraging
technology to meet the needs and challenges of the maritime
transportation system.
The FY 2022 Budget requests $20 million for MARAD's Small Shipyards
grants to support infrastructure improvements at qualified small U.S.
shipyards to help improve their efficiency and ability to compete for
domestic and international commercial ship construction and maintenance
opportunities. Investing in shipbuilding supports job creation in a
vital domestic industrial base, thereby advancing racial equity and
supporting underserved communities. These grants may also support the
acquisition of equipment that reduces climate impacts--including
engines with lower emissions, and improved climate control technologies
for buildings--and adapts technologies that reduce shipyard power
consumption and its impact on the environment.
The FY 2022 Budget requests $10.82 million for the America's Marine
Highway program and will provide grants to support the increased use,
development, and expansion of America's navigable waterways and
landside infrastructure to enable the movement of freight by water,
thereby reducing highway congestion and associated emissions. The
program facilitates partnerships with a variety of stakeholders
including shippers and manufacturers, truckers, ports and terminals,
ocean carriers, and U.S.-flag vessel operators to utilize our waterways
to move freight. These new supply chains enable more cost-effective
transportation options for U.S. shippers and manufacturers.
Within MARAD's FY 2022 Budget request, $10 million will support the
Maritime Environmental and Technical Assistance (META) program to
advance alternative energies and technologies, while also supporting
job growth in clean energy and maritime transportation fields. The META
seeks to augment and preserve the American maritime industry's
competitive edge by making maritime transportation more technologically
advanced, energy efficient, safe, affordable, and sustainable.
The FY 2022 Budget request for MARAD includes $3 million for the
Maritime Guaranteed Loan (Title XI) Program. This program is designed
to manage loans that help to promote economic growth and modernization
of the U.S. shipyard industry by providing additional opportunities for
vessel construction and modernization, including repowering, that may
otherwise be unavailable to ship owners. Funding requested will enable
MARAD to manage the current loan guarantee portfolio of $1.59 billion
in outstanding loan guarantees encompassing 18 contracts, as well as
new loan agreements.
The President's FY 2022 Budget also requests $10 million for
MARAD's Ship Disposal Program. As the ship disposal agent for Federal
government-owned merchant-type vessels of 1,500 gross tons or greater,
funding will enable MARAD to continue to put primary emphasis on the
disposal of the worst conditioned non-retention vessels to mitigate
environmental risks. Funding will also help to sustain the unique
infrastructure of the U.S. ship recycling industry base, including
supporting American jobs in economically depressed areas. This funding
also supports the continued maintenance of the Nuclear Ship SAVANNAH
(NSS) in protective storage pursuant to Nuclear Regulatory Commission
(NRC) license requirements while decommissioning of the vessel's
defueled nuclear reactor, components, and equipment is in progress. NSS
decommissioning and license termination must be completed by December
2031. MARAD is currently on track to meet this target date several
years early.
The American Jobs Plan (AJP), while a separate proposal,
complements the President's FY 2022 Budget by proposing a $6 billion
multi-year investment in a Healthy Ports Program. This program would
provide competitive grants for projects that minimize or mitigate
environmental impacts, such as shore power and electrification of port
equipment and drayage trucks. Funds may also support related
infrastructure for electric vehicle charging and hydrogen production
and use, and development and execution of port climate action plans, as
well as support for land-side rail and other projects that facilitate
intermodal connections and relieve congestion in and around ports.
Conclusion
These programs represent MARAD's priorities supported by the
President's Budget. We will continue to keep this Subcommittee apprised
of the progress of our program activities and initiatives in these
areas in the coming year.
Mr. Chairman, thank you for the opportunity to present and discuss
the President's Budget for MARAD. I appreciate the Subcommittee's
continuing support for maritime programs, and I look forward to any
questions you and the members of the Subcommittee may have.

Mr. Carbajal. Thank you, Ms. Lessley.
We will now move on to Member questions. Each Member will
be recognized for 5 minutes, and I will start by recognizing
Chair DeFazio.
Mr. DeFazio. Thank you, Mr. Chairman.
To Admiral Schultz, you used some language saying there
would be targeted investments in the shoreside facilities, but
with this $2 billion backlog and a reduction of 23 percent in
this year's budget, how much are you going to be able to chip
away at that backlog?
Admiral Schultz. Chairman DeFazio, thanks for the question.
So let me, sir, if I could, put the President's budget request
in some context. So, if you look at the 2021 enacted budget and
the 2022 President's proposed budget, there is a small
decrement, and that is a factual statement.
What is different in this budget is we actually have a 6-
percent proposed increase in operations and support, which is
unprecedented. From the imposition of the Budget Control Act
back dating--what is that--2013 or so, and the caps are lifted
this year, we lost 10 percent of O&S purchasing power over the
good part of that decade.
So 2021 was starting to turn, 2020 a little bit; 2021 was a
strong next step, 2022 tends to build on that.
The PC&I numbers are lower in this budget, but last year we
looked at $555 million for the second Polar Security Cutter.
There are different step functions on different acquisition
programs that come at different times----
Mr. DeFazio. Sorry, but that is not--again, it is really
not getting at my concerns on the shoreside infrastructure, but
we will let that go for now. I know you have to defend what you
are told you are going to get.
Admiral Schultz. Well, there is a lot of work on the
infrastructure, sir, and we are starting to bite--you are
absolutely correct, sir. We need to put our foot on the gas on
shore infrastructure.
Last year was the highest mark. I think we really--it was
north of $350 million with [inaudible] projects. This year is
smaller than last year. I spend an inordinate amount of time
making the business case that, for the reasons you have talked
about--retention, recruiting--folks have to have adequate
facilities. They have to have mobility. And I will continue to
put my voice against that, Chairman.
Mr. DeFazio. OK. I appreciate that. What about
reimbursement from DoD? As I understand, with your extended
international presence, which DoD has requested, which I think
is excellent, for international relations, et cetera, but how
about DoD reimbursement? I don't think we are seeing that, are
we?
Admiral Schultz. Well, Chairman, there are certain
elements--first and foremost, we are one of the six Armed
Forces, as you know. We reside over in the Department of
Homeland Security. We are part of the Joint Forces team and do
have responsibilities there as well.
There are Pacific--up in the Pacific Northwest, Maritime
Force Protection Unit in Bangor. You understand the mission
there, protecting the [inaudible] to subs. The sister element
to that is down in Kings Bay. The National Capital Region Air
Defense mission here in Washington. Some of our port security
unit work down in places like Guantanamo Bay.
There are certain aspects where there is direct DoD
reimbursement for our services. What we do on a day-to-day
basis when we are over in the Arabian Gulf in the 5th Fleet,
what we call Patrol Forces Southwest Asia, that is funded under
overseas contingencies operations.
We brought that in 2021 into the Coast Guard budget at the
appropriate level. There was an uptick last year for the new
FRCs replacing two of the old Island, the Island patrol boats
there.
So I would say, sir, much of the work we do as part of the
Joint Forces, I think it is appropriately funded in the Coast
Guard's top line. I don't think we would do a reimbursable
basis for the work we do. That would be extremely difficult.
I think it is specific things like maritime force
protection work and other places that should [inaudible]
counternarcotics work, there is some 050 defense readiness
funds that date back into the 1980s that continue to pay
forward. They haven't been updated since about 2001. There
might be a conversation there, sir, but there is an interesting
[inaudible] I think there is a lot of ways to look at this
problem set.
I think specific end services we provide should be
reimbursed for. Other stuff, I think, is best addressed in our
top line, sir.
Mr. DeFazio. OK. Mr. Maffei, how are you doing on the
President's Executive order saying FMC should ensure fair
market pricing? We continue to hear a lot, but also we hear
that a lot of shippers are reluctant to file formal complaints
because they are dealing basically with monopolies who will
then, like, maybe not serve them anymore.
Mr. Maffei. Thank you for the question, Chairman DeFazio.
Essentially--well, first of all, I do want to thank the
President for, in the wording of the Executive order, he did
respect the independence of the FMC.
He did make two requests of the FMC essentially. One, as
you mentioned, that we crack down on unfair or unjust fees,
such as the detention and demurrage charges that were deemed
unreasonable in our spring 2020 rule, and the second, that we
work with the Department of Justice to investigate and punish
anticompetitive conduct.
So, we have been doing a lot on the cracking down on
unreasonable detention and demurrage, including an
investigation launched last fall with Commissioner Dye, that
continues to go through potentially for action, many, many,
many different cases that we are looking at.
But it is very important that we also have an audit
program. I decided that it was important to look at all nine of
the major carriers, whether or not we were getting any
complaints about them because the way that this is working, is
it is not sort of a cut and dry thing.
It is in billing, it is in those sort of details of whether
or not there really is an appeals process or that sort of
thing. So, we are looking specifically at that. I would like to
look at more stuff, but that we may not have the resources to
do, so we are going to keep it to specifics.
And then, on the second thing with DOJ, it is very, very
important. The concentrations in the industry are largely due
to the mergers and acquisitions over the last 20 to 25 years
that have brought us from 22 major carriers to less than 10.
But the FMC doesn't have jurisdiction over those. Those are
the jurisdiction of DOJ. So we are making sure we communicate.
A memorandum of understanding, well, has been signed and made
public this week. And so, we are going to make sure that, with
the President's leadership, that we do pay attention to that,
and we are very appreciative that he is instructing DOJ to help
us. They are obviously a lot bigger. But it is going to take
both of us to tackle the----
Mr. DeFazio. I appreciate it.
Mr. Maffei [continuing]. Concentration issues you
mentioned.
Mr. DeFazio. OK. Thanks. My time has expired, but, yes,
this President has awakened DOJ's Antitrust Division from a
very, very long slumber. So hopefully they will become more
active.
Thank you, Mr. Chairman.
Mr. Carbajal. Thank you, Mr. Chair. I will now recognize
Ranking Member Gibbs.
Mr. Gibbs. Thank you, Chairman.
Admiral Schultz, I am sure you will agree with me that the
Coast Guard is the lead Federal agency for navigation safety.
You concur with that, right?
Admiral Schultz. Yes, sir. I do, sir.
Mr. Gibbs. OK. Section 70003, title 46 of the United States
Code gives the Coast Guard the authority to designate fairways
and vessel traffic separation schemes in U.S. waterways in
order to recognize the paramount right of navigation over all
other uses. Do you agree with that?
Admiral Schultz. I do, sir. I do, yes.
Mr. Gibbs. So, as we know, there is, since early in 2006,
the Coast Guard became aware of efforts to lease areas on the
Outer Continental Shelf, the windmill farms, and the Department
of the Interior undertook 23 lease actions between October 2010
and February 2019, but the Coast Guard was slow or negligent to
implement their responsibilities under that section to provide
navigational safety.
Do you want to just expound on what happened there and what
your plans are to rectify this issue?
Admiral Schultz. Well, Ranking Member Gibbs, first off,
thanks for your pointing attention to the situation. I would
say, sir, on the Atlantic coast [inaudible] project bars on
access routes, I understand some frustration. This is a complex
business.
We are looking at many stakeholders as the permitting for
offshore wind alternative energy, as you mentioned in your
opening statement. We are looking at a final rule here in 2022
coming ahead, sir.
As you sort of look inside the Coast Guard workforce on the
navigation side--waterways management, marine inspectors--I
think the committee here knows as well as anybody some of the
challenges.
We were playing catchup ball in terms of marine inspectors,
now with a landscape increasingly sophisticated complex
maritime domain.
So we see, the [inaudible] and sir, for LNG and other
things. So we are building out our workforce waterways----
Mr. Gibbs. OK. I don't want to run out of time, so let me
just interrupt you, Admiral, and just say that we need to move
on with that rulemaking, and also the Gulf of Mexico, I think,
is going to be an issue, so we should be aware of that. I have
more questions for you, but----
Admiral Schultz. Yes, sir.
Mr. Gibbs [continuing]. I want to move on. Maybe on another
round.
But, Chairman Maffei, first of all, I want to commend you
yesterday for announcing you were going to do the audit for
competition and everything.
I have heard from many of our exporters and importers that
prices of containers have gone anywhere from $3,000 a container
to $20,000, and that is if they can get one. And so obviously
this is a big issue that needs to be addressed.
I know having the Fact Finding No. 29 was complete, but we
need to move on with enforcement and find out results. And one
suggestion--I would like to see what you think. I asked in a
previous hearing--I forget who I asked--about the hours,
especially at Long Beach and L.A. Ports.
Sometimes they could be working more, but they said they
couldn't handle it because the containers, they can't offload
and the infrastructure is not there.
Is there an issue, do you see, do we need to be talking
with both your agency and the Surface Transportation Board, to
maybe connect these? Is that part of the problem, why we can't
have more operating hours at those two ports?
Mr. Maffei. Mr. Gibbs, I think it is, and, in fact, Marty
Oberman, the Chair of the Surface Transportation Board, and I
have already had discussions about how we can better work
together between our two agencies to try to connect.
But I will tell you both of us are frustrated because there
are areas, such as some detention and demurrage charges, that
seem to not be in either one of these agency's jurisdictions,
or at least it is unclear. And I will say that potentially
maybe clarifying legislation might be helpful there.
But we are certainly working together, and I would say the
Republicans and Democrats, in both the STB and the FMC, so we
will get a more complete answer, but I know that you are----
Mr. Gibbs. Well, I have been told there is at least one
rail line that is going to suspend operations from Long Beach
into the interior of the country for at least 7 days to, quote,
``catch up,'' unless you want to pay a metering--a meeting
rate, a higher rate. I don't know how that helps the backlog by
shutting down most of the operations. They ought to be doubling
up. So, I think there is an issue there.
Before I run out of time here quickly, with your
cooperation and with the regulatory capabilities doing your
audit, what do you see with the Justice Department increased
competition, and what ramifications might you be able to
implement to help mitigate or rectify this issue we have?
Mr. Maffei. What issue specifically? The detention
demurrage, you mean?
Mr. Gibbs. Yeah, just the whole anti--well, I don't know if
it is anticompetition. The demurrage cost, this whole backlog
cost, and the escalating costs going on.
Mr. Maffei. It is the sort of nickel-and-diming thing,
that, you know, the rate is the rate and largely governed by
market forces, supply and demand. But then when you have all
these ancillary fees, and some of these fees we believe are
being charged, like detention, even if there is no way the
shipper could possibly do anything. That is what we are really
trying to get at.
We don't have authority, as I mentioned, to go after rates,
but we do have the authority to go after those fees if they
aren't reasonable, so that is what we are focusing on. And we
are doing a number of ways, and the audits is just the latest
way because the investigation is going, but just like any legal
process, any prosecutorial process, if you will, it is taking a
little longer than I think any of us would like to bring those
cases just because that is--those are the rules, and so we are
going forward with audits and also so we don't need a
complaint, right?
Someone, I think you mentioned maybe that the shippers are
loathe to file complaints sometimes. Actually, I think it was
Chairman DeFazio. So, we are going to go and look at their
books and look at the process of how they do the billing, even
if we don't have complaints. And maybe we will find out good
things, and then we can set sort of a standard, a good
standard.
Mr. Gibbs. OK. Thank you. I am out of time, but I will have
questions later. Thank you.
Mr. Carbajal. Thank you, Ranking Member Gibbs.
I will now recognize myself.
Commandant Schultz, can you provide an update on the
implementation of the new small passenger vessel safety
regulations that were included in the Elijah E. Cummings Coast
Guard Authorization Act of 2020? And how does the fiscal year
2022 President's budget request support private and commercial
vessel safety and the marine inspection program?
Admiral Schultz. Thank you, Chairman Carbajal.
First off, to the specifics of the question, so, earlier
this year in January, we issued an Advance Notice of Proposed
Rulemaking requirement for [inaudible] and systems aboard
domestic passenger vessels. So, if you walk back from the
regulatory piece of that, in the aftermath of the Conception
tragedy, sir, in your district, as you know, we did a targeted
nationwide concentrated inspection campaign, and those were
with our most experienced marine inspectors, investigators go
out and crawl on the 350 small passenger vessels, specifically
those with overnight accommodations, and identifying immediate
concerns.
We developed a risk-based approach to that fleet of vessels
now. We are actually using some of the moneys that are in the
2021 budget--there's moneys in the 2022 budget--where we are
using data analytics to help us refine our inspection criteria,
so we can really get after those highest risk fleet with the
most capable inspectors in our ranks to drive safety to the
highest levels possible.
We are moving forward on the regulatory front, sir, per the
naval legislation that the committee directed, and, sir, we are
trying to turn that story into a lesson learned, much more
constructive posture on the waterfront here with domestic
passenger vessels.
Your second question, I mentioned some of that it is in
tech revolution moneys. Some of that it is the people moneys,
the training moneys. We are continuing to build out our marine
inspectors support performance architecture. There is moneys in
there for inspectors, so it is sort of spread out across many
elements of budget, but there is moneys in there to get after
small passenger vessel safety.
Mr. Carbajal. Thank you. Commandant Schultz, diversity,
equity, inclusion, and justice, or DEIJ, issues in the Coast
Guard are a major concern, and the time for substantive action
is long overdue.
What definitive meaningful steps has the Coast Guard taken
to make this right? This includes reforming the Service's
sexual harassment and assault prevention and adjudication
procedures.
The Coast Guard's word and actions now will shape the
future of the Service by attracting Coasties that represent all
of America. What specifically are the Coast Guard's short-term
and long-term action plans to improve DEIJ in the Service? A
clear vision is imperative.
Admiral Schultz. Yes. Thank you, Chairman Carbajal, for
that question. Sir, we have invested both resources in
manpower, energy. We were spending about $600,000 and change in
2018 when I committed to this job. We are now investing, in
step functions, more than $12 million to advance a Coast Guard
more representative of the Nation, to ensure every man or woman
who enters the Service has an equitable experience, they see an
organization that is welcoming, an organization that every ship
is pushing each coastguardsman to the next rung on the ladder.
Sir, we have 30-plus initiatives on the D&I front. We
issued, back a year ago, a diversity and inclusion action plan,
and we have put that into action. We are well on our way to
having 125 change agents that will be taking to the field to
interact with local commands, the Leadership Diversity Advisory
Council, what we call the LDAC, and they will interface and
they will raise the D&I acumen of our Service. They will
support leadership. They will have those difficult
conversations, sir.
So, I think we have a very positive story in some regards.
I think we are leading on both our words and actions here, and
I am very encouraged we are heading in the right direction,
sir.
We have work to do. We need to be a Service that is more
representative, about 15 percent of women in our workforce. The
master chief spoke to many of the initiatives, and some of
those stemmed out of a RAND study we did, holistic study, at
women's retention. We will be taking results.
The master chief also alluded to another RAND study here,
probably in early to mid-August, that looks at underrepresented
minorities and factors that influence their career success and
their retention.
So, sir, I think we are getting after it. I think we have
very much an improving story, and I look forward to briefing
you or any other members of the committee that would like to
sit down and have those conversations.
Mr. Carbajal. Thank you, Commandant.
Master Chief Vanderhaden, the Coast Guard needs robust
investments in housing and childcare to support servicemembers
and their families. Could you detail the need of our
servicemembers and how this budget request addresses those
needs?
What else can Congress do to help the economic viability,
financial security, and peace of mind for our Coasties'
families?
Master Chief Vanderhaden. Thank you, Chairman Carbajal. I
appreciate the question. Congress helped us with the childcare
subsidy. Each year we put a little bit more in childcare
subsidy, so we have been able to offer our folks a little bit
more money to help pay for childcare.
We also completely overhauled our subsidy delivery. We are
utilizing the Navy now, and we went on a rank-based instead of
income-based delivery for childcare subsidies, which has been
extremely helpful for our most needy servicemembers.
And then, in housing, the Commandant has authorized in our
mission support enterprise, put together our housing assistance
teams. Chairman DeFazio's district is actually where we
pioneered this effort. And we are putting some training to our
Active Duty members to get in and get after some of our housing
needs in a cost-effective way.
We can always use some help in terms of our ability to
provide better housing and better quality of life for our
folks. We have about 9 or 10 childcare facilities around the
country, and they are located in places where the geography,
the base, really supports that type of footprint. The rest of
the places, we rely on the economy to provide childcare.
As we start to group our cutters and we build out some
larger home ports and we give our members an opportunity to do
multiple tours in the same geographic location, that will help
them invest in their--perhaps purchase a house or establish a
better Coast Guard leasing operation, to establish a lease-
based system for our folks.
But I am optimistic that the future and that the new
cutters and the way we are establishing our basing system will
also help meet the needs of our people. I tell you, as a Coast
Guard, we recruit young members, mostly single, but we retain
families. The Coast Guard is a family-oriented organization,
and most of them that reenlist in the Coast Guard are Coast
Guard families.
So, I appreciate your concern and Congress' support to take
care of our Coast Guard families because that really is the
future of the workforce.
Mr. Carbajal. Thank you very much.
We will now move to Representative Malliotakis.
Ms. Malliotakis. Thank you, Chairman.
Well, first of all, Admiral Schultz, I just want to thank
you and all the Coasties for what you do each and every day. I
appreciate your service.
And as a Representative from Staten Island and southern
Brooklyn, I am very proud to represent the New York Sector, and
I had a question related to housing. As you know, in 2019,
there was a terrible fire, and there was a lot of damage done
to the housing at the base. Congress had allocated $40 million
to provide repairs and also to improve some safety measures and
other upgrades to housing.
I would love to hear from you about what is going on now at
Fort Wadsworth, when we can actually expect some construction
to begin. And this is certainly something that is a concern to
the Coasties that I represent.
Admiral Schultz. Congresswoman, good to see you this
morning, and thanks for your advocacy for those Coasties you
represent there in New York.
Ma'am, I mentioned the $40 million was in the 2021
appropriation and that is to get after rebuilding. There is
going to be up to eight new Coast Guard family units there and
then plans to rebuild and repair additional units, so the total
housing inventory is 154 legacy units there.
There are many elements. So, when you deal with a fire
situation like that, just getting your arms around what is the
way forward here to build new takes a little bit of time. So,
we are doing extensive environmental assessments that go with
that type of project, the planning, and the environmental work.
I think the timeline question you are asking for, it is
probably about 24 to 28 months before we are probably shovel-
ready and starting to rebuild those units. But that has our top
attention. That is a tough area. It is like many parts of the
Coast Guard. To the master chief's point, housing--we have
3,200 housing units across the entire Coast Guard and an
organization of 42,000 people, so housing--we are generally on
the economy.
Where we have housing, it is typically in areas where it is
very hard to get housing, and New York, it is one of those
places. So, we are on this. Unfortunately, just the
requirements with environmental assessments and those type of
things, they take us some time. But it has front burner
attention, and we will keep that project moving forward, ma'am.
Ms. Malliotakis. I appreciate that, and anything I can do
to help advocate to move some of these reviews along, please
let me know. I want to be able to be helpful in trying to get
this done as soon as possible.
Do you have any idea of the impact that the not having this
housing fixed is having on the Coast Guard itself? Because it
is a major, major sector, and obviously New York Harbor is very
busy. Just wondering if you can maybe speak to that.
Admiral Schultz. Yeah, ma'am, I would say this: I would say
what we do in the New York Sector is a busy sector and one of
our busiest, as you know. Other members of the committee
alluded to some of the challenges with the housing crisis
nationally in terms of rent and things.
What we are trying to do on a national level, and I think
it rolls the New York subset in because the number of units
lost is fairly small, is we are having our Coasties in places
really advocating for the in-bound Coasties to help them find
housing.
We have got places, many Coasties sometimes want to try to
buy a house, get some stability where the financial advantages
are the same. They are getting outbid by tens of thousands of
dollars cash purchases, and we don't necessarily set our
housing allowances for purchases, but folks have that choice.
Where we have rentals, that is where it is challenging. Our
folks want first month's/last month's. So we are working with
things like Coast Guard Mutual Assistance, maybe help with some
relief when they just can't come up with that extraordinary
amount of 3 months' rent on the front side to do that.
So we are working sort of Coasties helping Coasties to help
identify available units, sort of pass them down from one
family that is departing to an inbound family. We are taking
some ownership of that.
We started something during COVID--just to wrap up, we
started what we call a float plan. Sort of a mariner takes
their boat out up in New York. You tell somebody behind where
you are going, so if you don't show up on time, they know
something is wrong.
We started a float plan for a PCS, permanent change of
station, Coastie. If you are moving from Miami to New York,
there is someone tracking that. There is a call-in number 24
hours a day, if you have a problem on the road, if your house
or goods get delayed. So we are much more actively managing our
relocations than we ever did before, and that dates back to the
COVID crisis. Some of the lessons learned we are carrying
forward, ma'am.
Ms. Malliotakis. OK. And, just, I am on the Foreign Affairs
Committee too, so I would be curious for you to comment on the
Department of Defense making more frequent use of Coast Guard
assets, including the deployment of National Security Cutter in
the South China Sea.
If you could just talk a little bit about that and any
other missions that are going unmet when you transfer
additional assets to provide additional services to the DoD.
And if you have a second, just comment on your role with
regards to Cuban dissidents. There may be an uptick of refugees
trying to escape the island.
Admiral Schultz. Let me start with the last part, ma'am,
and I know your heritage. I would say, the focus from the Coast
Guard with the situation in Haiti and Cuba both is the dangers
of taking to sea. You know, we had a case when Tropical Storm
Elsa passed over Cuba here on the Fourth of July weekend. There
were 22 Cubans on a rudimentary raft. Nine were never located.
We searched for days. There were two picked up by a local
passing ship, our Coast Guard, who just happened to find them
and rescued 11 of them. So, 13 of 22 saved. Nine perished.
I have witnessed this over my 38-plus years in the Coast
Guard how dangerous. It sounds like a short run from Cuba to
Key West, 90 miles, but it is a treacherous run. So, we are
focused on: Do not take to the water because you put your
family, your co-inhabitants--on generally rudimentary
raftings--at high risk.
So that is our message there, ma'am, and we have enhanced
our presence because if there is a propensity to take there, we
want to get those folks and keep them safe, first and foremost.
On the other topic about the global Coast Guard, we
absolutely have an increasing demand, unprecedented demand for
Coast Guard capabilities across the globe. We just had a
National Security Cutter come out of the Black Sea. We hadn't
been in the Black Sea since 2008. That was at the time that
Russia was mounting forces near the border and things, and that
was a U.S. warship, an alternative to maybe a cruiser or
destroyer being there.
We are getting an increasing demand from the INDOPACOM. I
am actually heading out next week with the master chief. We are
commissioning three Fast Response Cutters, this is the smaller,
154-foot vessel. We are going to be operating out of Apra
Harbor, Guam. But they have long, 10,000-mile lanes, and they
are going to be able to go and touch places, offer an
alternative to China's checkbook diplomacy by people-to-people
relationships, capacity building.
So, ma'am, you are absolutely correct. We have an
increasing demand for the cutter. We have a National Security
Cutter getting ready to sail to the 7th Fleet right now, ma'am.
We----
Mr. Auchincloss [presiding]. The gentlewoman's time has
expired.
Admiral Schultz. Thank you, ma'am.
Ms. Malliotakis. Thank you.
Mr. Auchincloss. The Chair recognizes Mr. Larsen for 5
minutes.
Mr. Larsen. Thank you, Mr. Chair.
Admiral, good to see you, and my question is about Whidbey
Island, which is in my district. I am hearing concerns related
to a rarely used Federal anchorage called Holmes Harbor, and I
am hearing from a lot of constituents about noise from the
ships moored in the harbor as well as bringing up environmental
concerns, and it has to do with the supply chain issues at our
ports.
But, from a Coast Guard perspective, what role do you have
to move these ships to lesser used anchorages quickly and
reduce the impacts on small communities like Holmes Harbor
bearing the brunt of the delays at ports?
Admiral Schultz. Well, Congressman, from a Coast Guard
perspective, and I sort of lean back to Ranking Member Gibbs'
question, maritime safety, environmental stewardship--that is
our job. And so, we do not specifically manage the number of
the volume in the anchorage.
We would anchorage--when it is overcrowded we think that
poses a safety risk to other vessels in the anchorage. At
anchor, you put an anchor down, you draw a watch circle of the
anchor because the ship tends to swing around the anchor. You
are a man of the waterfront; you understand that.
Our role would be to come in when there are unsafe
circumstances in an anchorage due to overcrowding. You are
absolutely correct, the container prices, the shortage of
containers, the backlogs in the ports, we have heard assertions
of light noise, other noise.
That is a little bit outside the Coast Guard realm. For us,
it really boils down to: Are the operations in the anchorage
remaining safe, or is the overcrowding-type situation
presenting a risk?
We saw a similar thing during the early days of COVID when
we had a lot of tankers down in L.A., that they were all going
to anchorage, and manifest risk with that with all those
heavily laden tankers in close proximity. And we took a similar
role there, sir. So our role is really on the safety front,
maritime safety front and environmental as well, sir.
Mr. Larsen. Yeah. So how recent--presumably these
anchorages are reviewed. How recently have the anchorages at
Holmes Harbor been reviewed by the Coast Guard to ensure that
they are adequate for the size of the ships that are being
anchored there?
Admiral Schultz. Sir, I will have to get back to you on
that. We do waterways analyses in an episodic periodicity, and
I don't know when the last time was up there on this specific
anchorage you are talking about.
So I would tell you, are we monitoring the increased
activity in the anchorages, absolutely. The inspector commander
in the Puget Sound is on top of that. But in terms of when we
last took a look at that anchorage and matching that analysis
to what is going on today, I will have to get back with your
staff with more----
Mr. Larsen. That is great. I look forward to it. Yeah, I
look forward to it.
Section 8284 of the 2020 national defense bill requires the
Coast Guard to issue a report and action plan on orca
enforcement opportunities, and that report was due 21 days ago,
on June 30. But I have been notified the report is being
reviewed at the Office of Management and Budget, so I presume
that we will never see it.
However, can you give us an update on the status of that
report and the action plan itself rather than waiting for OMB
to never get back to us? And when do you think we can see the
final product?
Admiral Schultz. Well, Congressman, there are a few
questions in there that I can't possibly answer. We try to meet
our reporting requirements on time, and they obviously go
through a clearinghouse through the Department and OMB. And I
am not throwing anybody under the bus.
I will tell you, sir, what we are doing, we know there is
keen interest in the resident orca whale preservation up there.
We are using our VTS capabilities in Puget Sound. We are
partnering with the Canadians. The Canadians I know have a
manned desk on that. We are sort of extrapolating, learning
what they are doing and informing our business on that, sir.
With the zones, the traffic zones, we are [inaudible].
In terms of reports, sir, I will pull the string on if I
can give you a better estimate on when that report may make it
to the Congress, sir, and in the specifics of its contents. I
don't have the report. I have seen the draft of the report.
Mr. Larsen. All right. That is fine. Thanks.
Administrator Lessley, success has many parents, and
failure is an orphan, and I think we can all claim success for
the assistance to the Small Shipyards Grant Program that MARAD
operates. The budget is asking for $20 million, which is the
same as last year.
But do you know what the current status of 2020 funding is,
or how much has been granted maybe in the 2019, and is there
another allocation period coming up soon?
Ms. Lessley. Thank you so much for that question, sir. We
have finished the awards for last year's funding, and I think
we just closed the application period for this year. I want
to--yeah, I want to check on that for sure, but--so those
applications will be in review, and we will obviously move them
as quickly as possible.
Mr. Larsen. That is great. That is fine.
Ms. Lessley. OK.
Mr. Larsen. It would just--it has been a great program. It
has been successful in the Pacific Northwest and I appreciate
the attention to it.
Ms. Lessley. Well, and we are obviously extremely pleased
to see the request in the budget, and this is the first time
that funding for the grant program, this one, as well as for
PIDP and for the marine highways, has appeared in the budget
request.
Mr. Larsen. Right, or we haven't had to fix the
administration mistake, and I appreciate that. And I thank you
and yield back.
Ms. Lessley. Thank you.
Mr. Auchincloss. The Chair recognizes Mr. Weber for 5
minutes.
Mr. Weber. OK. I think I have got me unmuted. Can you all
hear me?
Mr. Auchincloss. Yes.
Mr. Weber. OK. Very good. Thank you. You all bear with me.
I had to drive and pull over. It has been a hectic morning. I
appreciate this opportunity.
Admiral Schultz, it is good to see you again. Can you hear
me, Admiral?
Admiral Schultz. Congressman, I hear you loud and clear,
sir.
Mr. Weber. OK. Very good. Thank you.
So I have got a question from Texas A&M basically. The
State maritime academies have inquired about whether crews and
their cadets on their training vessels must wear masks at all
times. And apparently the Coast Guard has said masks are
required on, quote, ``commercial maritime conveyances,'' end
quote, and thus SMAs were covered. So I guess the question is,
does the Coast Guard consider SMA vessels commercial vessels,
and if so, why?
Admiral Schultz. So, Congressman, let me do this, sir. Let
me take that question back and specifically get that right
answer to you on that one. I am not sure that is an informed
position out there, but let me doublecheck on that, and we will
get your staff an answer on that today. I think it is a very
specific, targeted question. I want to get it right, and I will
have you an answer on that before close of business this
afternoon, sir, if that is OK.
Mr. Weber. Well, that would be absolutely great. Thank you,
Admiral. I appreciate that, and I appreciate all the work you
have done on our coast because you have been a stalwart for our
coast and I know the rest of the country, and we appreciate
you.
Admiral Schultz. And your Coasties in the gulf have been
busy, sir. Last year's, you know, record Atlantic Basin
hurricane season was a bit demanding on our folks, but we enjoy
the partnerships with----
Mr. Weber. Yeah.
Admiral Schultz [continuing]. All the Texas first
responders and partners down there.
Mr. Weber. Well, you all stepped up and got 'er done. We
appreciate that.
So let me go to Ms. Lessley, if I can. Good morning, Ms.
Lessley. It is nice to get to meet you. You doing OK?
Ms. Lessley. Yes, sir. Thank you, sir.
Mr. Weber. You bet. We sent you a letter. There is a
project in our district by Texas GulfLink, and it is to move
oil offshore through a terminal about 25 miles out in the gulf.
And we actually sent a letter to Secretary Pete Buttigieg on
June 23, and I think you were copied on that letter. Do you
recall that letter?
Ms. Lessley. Yes, sir. Thank you, sir.
Mr. Weber. Oh, you betcha. Well, thank you for being here.
This is going to be cutting-edge offshore stuff that will
actually move product, help with our trade, help with the
imbalance of trade and with energy independence and dominance,
quite frankly. And they are waiting on a permit. And I think
you have got it held up maybe in MARAD. Is that my
understanding?
Ms. Lessley. I want to be clear, sir, we are not holding
the permit. We have not completed the environmental evaluation
process, the NEPA process. So, once that is completed, the
agency's responsibility is to issue the record of decision. The
NEPA is a joint action between MARAD and the Coast Guard.
Mr. Weber. Has the NEPA--forgive me, but I was under the
impression that NEPA had already been pretty much accomplished.
No?
Ms. Lessley. We do not have a final environmental impact
statement. And you haven't asked me about this, but we are
working to ensure that we have a complete record. We have had a
variety of communication with the applicant, myself personally,
others on our staff, to complete what is required to ensure
that the NEPA is fully legally defensible and will support a
record of decision. That is the process we are in.
Mr. Weber. Is it your understanding that there is an
additional 45-day comment period that has been attached to this
process?
Ms. Lessley. We have had concerns about ensuring that
limited English proficiency communities were able to
participate in the NEPA process, and that is what we have asked
the applicant to address, and as part of that, there would be
an additional comment period, yes.
Mr. Weber. Well, we were a little--I guess the applicant
was caught a little bit by surprise because it is my
understanding that they went out in the community, and when
they did all of their hearings, all of their--or meetings, I
guess I should say, all of their fliers and all of their
distribution was bilingual. Did you all know that?
Ms. Lessley. Sir, we have reviewed the information that was
provided to us by them and concerns remained after that review
to ensure that we had all participation that was required by
limited English proficiency communities. Again, that is what is
being addressed, what is required to be addressed. There are
other elements of the NEPA process that are also in progress.
Mr. Weber. Well, would you be able to send our office the
other requirements in this English language proficiency that
you felt weren't quite met and the other NEPA concerns that you
have?
Ms. Lessley. Yes, sir, we will provide that to you.
Mr. Weber. Yeah. Well, thank you. I appreciate it, Ms.
Lessley.
And thank you, Chairman. I am going to yield back.
Mr. Auchincloss. The Chair recognizes Mr. Brown for 5
minutes.
Mr. Brown. Thank you, Mr. Chairman, and I certainly
appreciate the committee holding this important hearing.
I want to thank all of our panelists for your appearance
today, making yourself available as well as your service to our
Nation.
One of the areas that I focus on, particularly in my work
on the House Armed Services Committee, is rooting out extremism
in the military, and I am very much focused on ensuring that
our Service components and the Coast Guard have the tools and
the authorities to do just that. In particular, I am interested
in pursuing whether membership in an extremist organization is
a cause or should be a cause for separation from the Armed
Forces, from the Coast Guard.
Commandant Schultz, last month, during a Homeland Security
Committee hearing, you commented on the existence of extremism
in the ranks in the Coast Guard, and during this hearing, as
you always have, you have committed to accountability from the
Coast Guard. My question is, is it your understanding, is it
your view that membership in an extremist organization should
be cause for removal from the Coast Guard?
Admiral Schultz. Well, Congressman Brown, it is good to see
you, sir. Clearly, as I said at that other hearing, I think my
context was I don't kid myself to think there is not
potentially extremism in our ranks. I don't think we have a
prevalent problem.
But you turn back to 2019, and through our own internal
systems, we caught somebody that is doing 13 years in a Federal
penitentiary working with the U.S. attorney in the State of
Maryland here, planning some rampant attack. So, we take it
very seriously, sir.
We've done the training, self-launched on that by no later
than 31 March across the Coast Guard, extreme training in the
military ranks. Extremism goes against our fundamental
principles in the Constitution, sir, and it goes against our
core values.
So, your question about, is membership an illegal activity
for disenrollment from the Service; sir, I think that has to be
addressed at a level across the six armed services, probably
through their legal counsel, sir. If we have folks that are
demonstrating extremist behaviors beyond a membership or
whether they are a member or not, then we are very concerned
with that, sir. And we will investigate that, and we will root
out those behaviors because they don't belong in our ranks.
I hope that is responsive to your question. In terms of a
membership, I think that is solely ambiguous, and I would want
to circle back and talk to our lawyers. Today that is not the
standard, but I understand where you are going. If it is a----
Mr. Brown. Yeah.
Admiral Schultz [continuing]. We will absolutely
investigate and take action, sir.
Mr. Brown. Yeah. And I appreciate that, and I know that is
a sticking point about, first of all, to defining extremism and
then membership versus participation. All I know is that I have
got to imagine if I surveyed your Coasties, and I asked them
how would it impact your morale and readiness knowing that you
were serving side by side with a member of the Oath Keepers, I
think we would find that you would have a serious problem in
your ranks.
But you are correct, it is an issue that really needs to be
worked out. And we need to make sure you have got the
clarification on that and the authorities to address it if that
does become a standard where membership is cause for separation
or ineligibility from service.
I would like to ask, last year in the Defense Authorization
Act, we created the position of senior advisor basically
serving as the equivalent of a chief diversity officer who
would report directly to you. Can you tell us whether or not
you have appointed that senior adviser on diversity, and if
not, what the status of that personnel action is?
Admiral Schultz. Yes, sir, Congressman, sir. The short
answer is I have appointed a chief diversity officer in an
acting capacity while we are doing the actual hiring. For us,
if you look at our hiring process, it is unfortunately--and it
has been conflated a bit in the pandemic environment--north of
135 days. But we have put someone in the spot responsive to the
legislation in the NDAA, and we are working on a permanent
hire, and that is afoot as we speak today, sir.
Mr. Brown. Excellent. And then, finally, it is probably
more of a comment because I don't have much time remaining. I
was able to include in the Defense Authorization Act last year
a GAO study requiring the GAO to study reimbursements to the
Navy, particularly for some of the defense readiness resource
allocations that are placing a tremendous demand on the Coast
Guard and, I believe, pulling you away from a number of your
10, sort of, core nondefense mission requirements.
So, my time has expired. I, like others on the committee,
are concerned to make sure that the Navy is not tapping into
the Coast Guard as a resource and that you are not getting
reimbursed to do your mission.
So, with that, thank you, Mr. Chair, and I yield back the
balance of my time.
Mr. Auchincloss. The Chair recognizes Mr. Lowenthal for 5
minutes.
[Pause.]
Mr. Auchincloss. The Chair recognizes Mr. Lowenthal for 5
minutes.
[Pause.]
Mr. Auchincloss. It looks like Mr. Lowenthal is otherwise
engaged.
The Chair recognizes myself for 5 minutes.
Ms. Lessley, this question is for you. With smart
investments, we can ensure that our national security and
maritime systems are as sustainable as they are effective. In
my district, Bristol Community College is developing the
National Offshore Wind Institute, which will provide the
training and tools needed to develop a strong offshore wind
sector. How will your budget request advance the President's
goal to achieve 30 gigawatts of offshore wind capacity by 2030?
Ms. Lessley. Thank you for that question, sir. The budget
request, as I mentioned, for the first time supports--actually
makes requests for our grant programs. That includes the Port
Infrastructure Development Program for which $230 million is
requested, as well as America's Marine Highway Program. In
addition, we are requesting funding for the META program.
Our grant programs, particularly the Port Infrastructure
Development Program, is our primary method of investing in port
infrastructure. And I would note that this funding is available
to ports that are seeking to provide, lay down areas and other
infrastructure support for offshore wind.
I would also note that we have our Title XI program, which
provides funding for ship construction. It would also be
available for wind farm support vessels. These are really our
primary areas of supporting port infrastructure.
Mr. Auchincloss. And digging more into port infrastructure
and the onshore terminus, have you been engaged with
Massachusetts, which is really now the site of the Nation's
largest offshore wind projects with the Port of New Bedford,
with Brayton Point, with the cape, on any of their
infrastructure needs? And do you have operational needs or
infrastructure needs that are not being addressed in your
budget that would advance any aims in Massachusetts?
Ms. Lessley. Thank you so much for those questions. I have
not met directly with those ports. I want to emphasize that the
application period for our Port Infrastructure Development
Program is open now. Application period closes on July 30, so
we would welcome applications from any port seeking to support
wind farm projects.
Mr. Auchincloss. And is this a perennial window that is
opened every appropriation cycle, or how does this work?
Ms. Lessley. Yes, our Port Infrastructure Development
Program has received funding in many recent cycles, different
levels of funding. I will note that the program is severely
oversubscribed. So, you know, for example, in the last round,
we received requests for over $1.1 billion in funding. We were
able to award approximately $220 million in funding.
So, we understand that there is significant need for
investment to support wind projects, to support goods movement,
and are extremely pleased that the budget this year, for the
first time, as I mentioned, includes a budget request for that
program.
Mr. Auchincloss. And can you describe the dimensions of a
highly qualified applicant? What makes these requests go to the
top of your list?
Ms. Lessley. Well, the criteria laid out in our notice of
funding opportunities, we are looking for match. We are looking
for projects that are ready to go. We are looking for projects
that meet, of course, the administration's priorities as well.
The statute calls for supporting goods movement. These are
the essential criteria. A strong application will be able to
address all of the criteria and the NOFO and, of course,
matching funds for the Federal funds is important because,
again, the program is so oversubscribed.
Mr. Auchincloss. Are you intending to ask for a budget
increase the next appropriations cycle for this initiative?
Ms. Lessley. Oh, well, I am not able to comment on the next
year's budget. I can only speak to the budget for fiscal year
2022, or I will get in a lot of trouble. But, again, emphasize
how important this program is and how important investments
made through this program are.
Mr. Auchincloss. Well, recognizing that you are
circumscribable, and you can't say, I would encourage you to
double down on this program and to think of our office as one
to work with on this program.
Ms. Lessley. I appreciate that. I appreciate your
leadership and the leadership of the committee. You know,
investments in our port infrastructure are relatively new, and
I appreciate the support of this committee for those
investments.
Mr. Auchincloss. I yield back my time. And the Chair now
recognizes Mr. Lowenthal for 5 minutes.
Mr. Lowenthal. Thank you.
First, I want to thank the entire panel for their testimony
today. We are discussing programs which are critical to our
national security and the health of our country and to our
economy.
And so I would like to ask first Chairman Maffei of the
FMC. Chairman, I want to thank you for your comprehensive
update in the ongoing efforts to protect exporters and to
ensure that goods are moving efficiently. It has been a
pleasure listening to you on that.
Can you update the committee on how the FMC plans to
implement President Biden's Executive order on promoting
competition in the American economy and how your operations
will benefit the American people?
Mr. Maffei. Yes. Thank you for your question, Congressman
Lowenthal. And, as always, it is good to see you, even though I
have never seen you in person with your beard.
There are two ways basically, and this is because the
President requests--and I do appreciate that he made it a
request. He is respecting the independence of our agency. But
he requests that we work with the Justice Department and that
we do everything we can to make sure that we are enforcing
against any of these charges, particularly detention and
demurrage, that are unreasonable.
And in this case these are charges that are--for instance,
if you are late to pick up a container you could get charged,
or if you are late to bring back a container, you get charged.
The problem with that is often the shipper or the trucker
simply is not allowed to return it. The terminal could even be
closed, and yet these charges still come.
We have already been doing an investigation of that. Though
there has been concern expressed even in this hearing that many
are not willing to complain because they are worried about
retaliation or other things.
We are also doing an audit of the nine biggest carriers
just to see how they do it. And maybe some of them do it fine,
and we will establish good practices, but that way we can
really get to the bottom of it, refer for enforcement if needed
and try to set that straight.
On the working with the Justice Department, I have already
signed an MOU that the Justice Department and us worked out. I
think the President's interest in this is particularly helpful
because, of course, the Justice Department is much bigger than
us, and they do have to follow an Executive order. But we need
to cooperate with them.
I think people get confused because the Federal Maritime
Commission has jurisdiction over the alliances, the agreements
that are filed that allow the carriers to negotiate with each
other on things like space, but they do still compete on cost
as opposed to a merger.
In the last 20 years, we have seen so many mergers that we
have gone from 24 major carriers roughly down to 9. And that is
not under our jurisdiction; it is under the Department of
Justice. So the more we can work together, I think, the better.
And I might just add, Congressman Lowenthal, that it might be
helpful if we did have some input into those mergers as well.
Mr. Lowenthal. Thank you, Chairman Maffei. It is always
nice to see you, even if I do have a beard.
Mr. Maffei. I think it is great.
Mr. Lowenthal. Ms. Lessley, I would like to turn to you,
and I know you already responded to some questions about the
critical Port Infrastructure Development Program. I want to
return to that, and excuse me if you have already answered
this, but I want to focus on one part of that.
And I am glad to see that the administration has requested
funding for the critical Port Infrastructure Development
Program. However, Ms. Lessley, I am extremely concerned that we
are not increasing funding to help address historic backlogs,
as we have heard from Mr. Maffei, which are interrupting the
flow of goods.
And while I am extremely pleased that the administration
chose to add addressing climate change and environmental
justice impacts and advancing racial equity and reducing
barriers to opportunity as criteria for the program in fiscal
year 2021, without additional resources, I don't believe we are
going to be able to make progress on these critical priorities.
Can you address how the administration plans to advance these
particular goals?
Ms. Lessley. Thank you, sir. Thank you so much for the
question. As you mentioned, the NOFO that was issued for this
year's funding does indeed reflect the administration's
priorities, which is ensuring economic vitality, addressing
climate change, and addressing environmental justice, advancing
racial equity, and, of course, leveraging Federal funding, as I
mentioned. We will look to continue----
Mr. Lowenthal. With slightly less money. So I am just not
clear, with all the infrastructure needs, how we do this.
Ms. Lessley. Sir, as I mentioned, I worked for the
committee, so I understand the--we work with the funding that
is appropriated to us. As I mentioned, we understand there is a
severe backlog. And I want to get to your point. We also
understand there is an extraordinary challenge right now to
move freight through the Ports of Los Angeles and Long Beach
and through the entire supply chain.
This is getting highest priority from MARAD, from the
Department. As I mentioned, we just held a roundtable last
week. We were able to meet with stakeholders across the entire
spectrum, the port directors, the mayors of Los Angeles and
Long Beach, Secretary Kim from CalSTA, rail, trucking, the
ILWU, terminal operators, PMA.
We recognize the extensive needs for infrastructure, but we
also recognize that there are opportunities to reduce friction
and improve goods movement right now. I also----
Mr. Lowenthal. And increase the goals by increasing equity,
which are worthy goals and I truly support it, with less money.
Ms. Lessley. Well, again, we operate with the amount that
is appropriated to us. This is a remarkable budget for
investment in infrastructure by----
Mr. Auchincloss. The gentleman's time has expired.
Mr. Lowenthal. Thank you. I yield back.
Mr. Auchincloss. The Chair recognizes Mr. Gibbs for 5
minutes.
Mr. Gibbs. Thank you, Mr. Chairman.
I have got a question here from Representative Jeff Van
Drew. I guess he has laryngitis. But, Master Chief, I
understand the Coast Guard is about to begin a much needed
recapitalization of the Training Center Cape May barracks where
all enlisted members of the Coast Guard undergo basic training.
The question is, what additional capacities will the Coast
Guard acquire through this recapitalization?
Master Chief Vanderhaden. Well, Ranking Member Gibbs,
thanks for asking that on behalf of Congressman Van Drew, who I
happen to be a big fan of.
Cape May is a diverse place of the enlisted workforce, and
we need to put through about 4,000 young folks a year in order
to meet the needs of the Service. And that is difficult under--
with the barracks that we have right now are--we don't have an
outdoor training facility. So, when we want to test our young
folks running in the wintertime, they do 26 laps around the
basketball court in the gym.
It is a real challenge to be the world's best Coast Guard
with the infrastructure we have at Cape May. We are grateful,
very grateful for the resources to recapitalize the barracks to
provide better training opportunities for folks.
We are going to grow the Coast Guard over the next 10 to 12
years to be able to crew and maintain our new cutters and
aircraft, and so we have to up the throughput in Cape May. The
new resources will allow us to provide approximately, probably,
250 maybe 300 more recruits a year through the training center.
Mr. Gibbs. OK. Thank you, Master Chief.
Chairman Maffei, I just want to thank you, first of all,
for your comments about trying to deal with this issue of the
cost of the containers and the supply management. I just want
to emphasize again, the supply management issues, supply and
demand, that we have got businesses back here in the United
States that rely on a supply chain and also exporters, that it
is more than just cost. Some of these people are going to have
trouble staying in business and employing their people. So, I
just want to reemphasize the importance of this and the need to
expedite as much as we can to address this issue, so I want to
just mention that again.
Admiral Schultz, a couple things. My understanding, we have
an opportunity right now to acquire 12 National Security
Cutters and up to 6 additional Fast Response Cutters while the
production lines are still hot.
Missions have increased and become more complex since
decisions were made on what assets are needed. Congress
directed the Coast Guard to provide us a new fleet mix
analysis. When do you anticipate we will see the new analysis,
and--yeah, why don't you answer that first, I guess.
Admiral Schultz. Congressman, first off, my guess, we are
working that product. We have got the direction for that, and
then we have got the letter from the committee leadership that
sort of expanded the [inaudible] was in late February. I think
we will have that in September timeframe.
Sir, regarding the platforms you mentioned, if you want me
to address those, we have a domestic program of record of 58
FRCs all and 6 going to Bahrain for our PATFOR forces. The 15
domestic FRCs are 130 percent capacity of the 35 110-foot
domestic patrol boats, Island class, that have been in service
here in the Nation. So, we have an awful lot of FRC capability
here domestically. So, like I said, a 130-percent increase is
like 86,000 more operating hours than we had before.
In terms of the 12 NSCs, NSCs are great ships, sir. The
program of record was eight. The Congress had supported the
pyramid of a 9th, 10th, and 11th; 10 and 11 are under
construction.
Like Ms. Lessley answered, you sort of have a budget. You
work with it. Our top acquisition priorities in the service
community right now are Polar Security Cutter, OPC, and
Waterways Commerce Cutters. The whole conversation, just it
would be a nice to have, but it is hard to displace our other
programs of record, sir.
Mr. Gibbs. Great Lakes icebreaking, the 140-foot
icebreaking tug rehabilitation program is complete. What
percentage increase do you think this affects the icebreaking
effort in the Great Lakes?
Admiral Schultz. Sir, we have--the midlife on the 140s--has
completed, you know, six up there. We brought another one into
the lakes. We have the GLIB, the Great Lakes icebreaker. When
that fleet is all up, I believe we can cover down on all the
mission requirements up there.
Now, the fact is, those icebreaking tugs, the first one was
delivered around the mid-1980s, so that is approaching a 40-
year-old ship. Life expectancy reliability being a 40-year-old
ship over the course of the next decade or two.
It is clear to us that the Congress is signaling for more
icebreaking capacity on the Great Lakes, so we are driving in
on what a Great Lakes icebreaker, GLIB, equivalent capability
would be. We have an acquisition office to help with funding
[inaudible] continues back in 2020, sir. And we are doing the
analysis work, and then we are getting after what a solution
will look like.
We are going back and taking the GLIB and redesigning that,
so that is a 20-year-old plan. There is a lot of enhanced
technologies, propulsion means, but that would not be a good
starting point, sir. But we understand the intent of Congress
to look at more capacity on the Great Lakes. And I am confident
in our 140 fleet. But there is the perception that we need more
capacity, and the signals have been heard, sir, and we are
getting after that.
Mr. Gibbs. Well, I appreciate your willingness to address
this issue and willingness to--especially the congressional
Great Lakes delegation, the need for this and the importance of
the Great Lakes, and I appreciate all your efforts, and I also
thank you for your service. Good to see you again, Admiral.
I yield back.
Admiral Schultz. Good to see you, Ranking Member. Thank
you, sir.
Mr. Carbajal [presiding]. Thank you, Mr. Gibbs.
Mr. Maffei--oh, let me start by saying, I will recognize
myself now, and it looks like maybe the last speaker as well.
Mr. Maffei, the Federal Maritime Commission levied only
$103 in fines and penalties in fiscal year 2020. This is a
significant decrease from 2019, when $660,000 was levied, and
2018, when $1,108,000 were assessed for penalties. In a year of
unprecedented claims of wrongdoing, how can you explain this
downward trend?
Mr. Maffei. Well, there are a couple of different ways that
are important here. One of them is whether we can get the
complaints, and that does involve some of those fears that we
talked about earlier about retaliation or whatever.
I will tell you, I do think there is an issue, but the
number doesn't bother me so much because COVID--that is COVID-
related, and concluding these cases is rather challenging and
now a lot of them are coming up through the pipeline. So, just
like the carriers get backed up, sometimes these cases get
backed up too.
But what does concern me is that even when you do mention
the times when we have been collecting fees, and I should note
that I have only been Chair since late March, so both those
years where there were penalties collected and the year that
you mentioned, last year, I wasn't Chair, but, that said, most
of those are not on carriers or large MTOs.
There are technical violations, no qualified individual.
There are important things, sometimes mislabeling type issues.
They are important. But I am concerned that we need more
enforcement to capacity to really take on the big carriers when
they do something that is against the Shipping Act.
And so your point is well taken, and that is why my
emphasis has been so much on enforcement, auditing, more and
more scrutiny of these carriers. We do look at the alliances
because that has been our mandate for a long time, but the
individual carriers themselves, particularly with industry
consolidations so that there is now only nine of them, that is
where I think we need a lot more scrutiny.
So, those numbers need to improve, and they will improve
this year, but there are other issues that I am doing my best
to address, and I believe the other Commissioners are as well.
Mr. Carbajal. Thank you for that answer. Although, I must
say, basically, in 2020, $100 is almost zero collected when you
consider $660,000 or $1 million in 2018. The Commission must
have been asleep at the wheel or something. Somebody was not
working.
Anyways, moving on, Ms. Lessley, thank you for bringing to
our attention the structural deficiencies and lack of
maintenance at the Merchant Marine Academy. MARAD is the
preeminent Federal institution that oversees the academy, and
any deferred maintenance is unacceptable.
I am disappointed it has gotten to the point where DOT has
needed to institute these measures. I am very concerned and
anxiously await immediate and ongoing reports from DOT as they
conduct their assessments. When can I expect to hear an update
from MARAD?
Ms. Lessley. Thank you, sir. I thank you for that question
and want to emphasize I understand the information that
Congress needs so that they can have a full understanding of
the situation. You have my commitment that I will update you as
I learn things. You also have my commitment that we are right
now working to get to the bottom of that. We have another team
up there this week.
I have done investigations for a long time. I have a lot of
unanswered questions. I want to get to the bottom of all of it.
I want to understand both what the cause is, what the extent of
the deferred maintenance is, what the immediate needs are and
to move to address the immediate needs and to get systems in
place to ensure that this never happens again.
And I commit to update you, the committee, and all of
Congress as soon as we have information. I also recognize it is
suboptimal that I am coming to you with a problem without
understanding this whole extent but did not want to appear
before you today with these concerns without alerting you to
them.
Mr. Carbajal. Thank you very much. Again, I appreciate that
this administration and MARAD is giving these issues the
attention it deserves. I know that these have been known for a
while and at least in recent years, and, again, the lack of
action and followup has been unsatisfactory and inadequate. So,
I appreciate the attention that you are giving this very
important issue and look forward to ongoing reports.
As I mentioned in my opening remarks, the Morro Bay
offshore wind leasing area off the coast of my district will
require significant investments in shoreside infrastructure for
staging wind turbines and transmitting clean energy to the
grid. How can MARAD leverage existing programs, such as the
Port Infrastructure Development Program, to invest in and
promote this vital clean energy future?
Ms. Lessley. Thank you, sir. No, I really appreciate the
questions that I have received on this critical program. I
appreciate the question also on the Morro Bay program. As I
mentioned, application period is open right now, so we welcome
applications from all qualified ports, and due on July 30, so I
encourage everybody to get it in before the deadline.
As I mentioned to Mr. Lowenthal and am mentioning to you,
we recognize that the needs far exceed the availability of
funding. And I would be remiss by not drawing attention to the
fact that the President has proposed a significant investment
in port infrastructure as part of the American jobs program.
I know obviously discussions are ongoing, but the
administration recognizes the need for significant investment
in ports and that is reflected in the President's proposals.
So, we will, again, look forward to receiving applications, and
we will review those and make awards as quickly as we can.
Mr. Carbajal. Well, thank you very much. And, like I said,
that is extremely important, those programs, for my district.
Ms. Lessley, these and similar green infrastructure
investments are critical to reach our emission reduction goals,
and yet MARAD requests no additional funding for PIDP. Please
explain how additional funding for the program could help to
address emission reduction goals.
Ms. Lessley. Thank you so much. Well, obviously, if we have
additional funds to invest, we can support additional port
infrastructure, and that includes infrastructure that would
reduce emissions.
You mentioned--I just want to be clear, for the first time,
our President's budget has requested funding for the PIDP, and
of course the President has proposed an entire program to
address emissions associated with port operations. So, the
administration understands the extent of the need and has
proposed historic and unprecedented investments in port
infrastructure.
Mr. Carbajal. Well, thank you very much. This concludes our
hearing for today.
Oh, 1 second. Ranking Member Gibbs?
Mr. Gibbs. Mr. Chairman, I request unanimous consent to
submit Representative Don Young's questions for the record.
Mr. Carbajal. Without objection, so ordered.
With that, again, this concludes our hearing for today. I
would like to thank each of the witnesses for their testimony.
I ask unanimous consent that the record of today's hearing
remain open until such time as our witnesses have provided
answers to any questions that may be submitted to them in
writing.
I also ask unanimous consent that the record remain open
for 15 days for additional comments and information submitted
by Members or witnesses to be included in the record of today's
hearing.
Without objection, so ordered.
The subcommittee stands adjourned.
[Whereupon, at 12:52 p.m., the subcommittee was adjourned.]

Submissions for the Record

----------

Prepared Statement of Hon. Sam Graves, a Representative in Congress
from the State of Missouri, and Ranking Member, Committee on
Transportation and Infrastructure
Thank you, Chair Carbajal, and thank you to our witnesses for being
here today.
I am concerned that despite an ever-growing mission set and ever-
increasing mission complexity, the Coast Guard's budget request for
``Procurement, Construction and Improvement'' Account is being slashed.
Last year Congress appropriated more than $2.2 billion to acquire
needed assets, put a dent in the multi-billion-dollar shoreside
maintenance and construction backlog, and begin the modernization of
the Service's quickly degrading IT systems.
The Administration's request cuts that number to $1.6 billion--well
below what is needed even to allow the Coast Guard to tread water with
its aging infrastructure.
I am particularly concerned that the Coast Guard is failing to take
advantage of the one-time opportunities to purchase an additional
National Security Cutter and up to six additional Fast Response Cutters
before those production lines go cold. This opportunity for increased
mission capability won't come again. The Coast Guard needs to seize the
day especially while it has the Congressional support to do so.
As for the Federal Maritime Commission, the agency does not always
find itself at the cutting edge of public policy issues.
However, this year it has received much public attention as a
result of the ongoing cargo surge at U.S. ports. The port congestion,
equipment shortages and soaring freight rates have both importers and
exporters up in arms.
I hope our former House colleague and now FMC Chairman, Dan Maffei,
can give us an update on any recommendations which may come out of Fact
Finding #29, and on the implementation of the recent Executive Order on
competition.
I continue to be concerned about the difficulties some ag exporters
are facing, and I am concerned about the regular complaints I hear from
importers ranging from folks who sell fireworks and import meat to
those who distribute chemicals and healthcare products.
Finally, to Acting Maritime Administrator Lucinda Lessley (who also
happens to be a former T&I Committee Staffer).
Last year, Congress authorized a Maritime Transportation System
Emergency Relief program.
Unfortunately, this program was not funded in the February COVID
relief package, and no funds are requested in MARAD's Fiscal Year 2022
budget.
Industry has requested $3.5 billion in pandemic-related assistance
through this program. I look forward to hearing your views on whether
such relief is needed.
Thank you, Chair Carbajal. I yield back.

Draft Legislation for Barracks Modernization at the U.S. Coast Guard
Training Center Cape May, Submitted for the Record by Hon. Jefferson
Van Drew

SEC. __. BARRACKS MODERNIZATION.

Of the amounts authorized to be appropriated by section
[4902(2)(A)] of title 14, United States Code, as amended by section
[___] of this title, for each of fiscal years 2022 and 2023,
$60,000,000 is authorized for the Secretary of the department in which
the Coast Guard is operating to fund Phase I, in fiscal year 2022, and
Phase II, in fiscal year 2023, for the recapitalization of the barracks
at the United States Coast Guard Training Center Cape May in Cape May,
New Jersey.

Appendix

----------

Questions from Hon. Don Young to Admiral Karl L. Schultz, Commandant,
U.S. Coast Guard

Question 1. Admiral Schultz, I am interested in the Polar Security
Cutter (PSC) program. The FY22 request reflects a 27.6 percent decrease
in shipbuilding funding over the FY 21 enacted level.
a. Is the FY22 request sufficient for the on-time delivery of the
first PSC by 2024 as well as the 2nd and 3rd PSCs?
Answer. The FY 2022 request includes funds for ongoing program
activities in support of PSC #1 and PSC #2 as well as Long Lead Time
Material (LLTM) purchases for PSC #3. This level of funding is
sufficient to maintain the current schedule. A contract change was
executed in September 2021 to finalize the PSC design requirements,
which incorporated several major additional scope items. These scope
changes in conjunction with major supply chain disruptions caused by
the on-going global pandemic added 12 months to the delivery schedule
of PSC #1. The current contractual delivery date for PSC #1 is May
2025. Delivery dates for PSC #2 and PSC #3 are also impacted by this
change.

b. When is the anticipated delivery date for the 2nd and 3rd PSCs?
Answer. Notional delivery dates for PSC #2 and PSC #3 are FY 2027
and FY 2028, respectively. The specific delivery dates will be
negotiated via future contract actions.

Question 2. I commend the USCG for the Healy's passage through the
Northwest Passage this summer. As you are aware, Alaska is what makes
the United States an Arctic nation.
a. Where is the Coast Guard planning to homeport the PSCs and is
it considering an Alaskan port?
b. If not, why not?
Answer. In 2019, the Commandant of the Coast Guard approved
Seattle, WA, as the homeport for PSCs # 1-3 based on a feasibility
study conducted by the Coast Guard of potential homeports for
icebreakers acquired by the Service, which included Alaskan ports.
Future icebreaker homeport decisions will include Alaskan ports for
consideration.

Question 3. There was a time in 2020 when the United States had
zero icebreaking capability with the Polar Star undergoing overhaul and
the Healy under repair for an engine fire.
a. What is the projected service life extension for the Healy
after the overhaul and how many icebreakers is the USCG planning to
commission to fulfill its mission set?
Answer. The USCGC HEALY's Service Life Extension Program (SLEP)
will maintain the vessel's operational availability at least until the
Polar Security Cutter (PSC) fleet is operational. It is currently
projected that the Coast Guard's first PSC will be operational in 2027.
The USCGC HEALY's SLEP will enable the Service to continue to meet
statutory icebreaking requirements and support strategic Arctic
objectives, including scientific support.
The Coast Guard is executing the Program of Record (POR) for Polar
Security Cutters (PSC), which is comprised of three heavy polar
icebreakers (PSCs # 1-3). The Elijah E. Cummings Coast Guard
Authorization Act of 2020 authorized the acquisition of three
additional PSCs beyond the POR, for a total of six. The Coast Guard has
begun preliminary pre-acquisition activities to evaluate what surface
capability gaps remain in the polar regions but has not received
appropriations to facilitate additional acquisitions beyond the current
program.

Question 4. The budget request reflects a $83.5 million decrease
from the FY21 for the shoreside construction budget. This is alarming
given the overall backlog and need for upgrades to shoreside
infrastructure in Alaska.
a. What is the status for the Fast Response Cutter dock in Sitka?
Answer. The Coast Guard has completed its analysis of alternatives
and will execute this project in conjunction with a rebuild of the
existing pier, currently used by the USCGC KUKUI, a 225ft seagoing buoy
tender. The Coast Guard is also in real property negotiations with the
State to acquire an adjacent parcel of land as our needs have grown
with the addition of the FRC. The target contract award is CY 2023,
followed by approximately two years of on-site construction. The
property acquisition must be complete before issuing the contract for
proposal.

b. Do you have an estimate in dollars of the overall need for
infrastructure upgrades across Alaska to meet the demands of your
Arctic strategy?
Answer. The cost estimate for infrastructure upgrades across Alaska
to meet the demands of the Coast Guard's Arctic Strategy have not been
completed.

Question 5. It is my understanding that an 87, Marine Protector
class patrol boat will be deployed to Petersburg, AK, in 2022.
a. Do you have any additional detail on that timeline?
Answer. The Coast Guard anticipates completing the homeport shift
of USCGC PIKE, an 87, Coastal Patrol Boat, from San Francisco, CA to
Petersburg, AK no later than June 30, 2022.

Question 6. It is my understanding the Coast Guard is on track to
get estimates and make repairs on the vessel tracking radars in the
Prince William Sound that are critical for oil spill response
capability.
a. Is that accurate?
Answer. The Coast Guard completed repairs on all three radar sites
in FY 2021. Currently, each site has one functioning radar. Additional
efforts are underway to repair redundant equipment and maintain the
radars.

Question 7. It is also my understanding that there is adequate
funding to complete the repairs to the radio towers in the Gulf of
Alaska that support VHF Channel 16 communications.
a. Is that accurate?
Answer. The Coast Guard included $8.9M on its FY 2022 Unfunded
Priority List (UPL) to fund the installation of new VHF radio hardware
to mitigate against declining system reliability in the harsh
operational environments of Alaska. If appropriated, those funds will
strengthen the reliability of Coast Guard Search and Rescue operations
in Alaska.

Question 8. Reduced year-round ice cover is likely to result in
increased vessel traffic through the Bering Strait. Increasing
commercial traffic in the Arctic creates a host of opportunities and
risks that we should be preparing for.
a. What is the Coast Guard's current estimation of oil spill
response capability in western Alaska?
Answer. There are six Oil Spill Response Organizations (OSRO) with
an OSRO Classification issued by the Coast Guard in western Alaska.
This region has response gaps (e.g., timeline of resources on-scene)
affecting service providers' ability to meet National Planning Criteria
(NPC) requirements. While industry is the primary provider of oil spill
response capabilities, the Coast Guard manages a limited number of oil
spill response resources located in a few locations in Alaska.
Additionally, the Coast Guard may leverage resources from the U.S. Navy
Supervisor of Salvage and Diving inventory through a memorandum of
agreement.

b. Does the Coast Guard believe there are ample resources to
respond to a major oil release incident in the Bering Strait?
Answer. The Coast Guard regulations provide vessel owners or
operators with an option to submit an Alternative Planning Criteria
(APC) as a risk mitigation measure until NPC in the region can be met.
Due to the resource and infrastructure challenges and limitations in
the Bering Strait, the Coast Guard thoroughly reviews all elements for
Bering Strait APC requests, such as response capabilities, prevention
and mitigation strategies, and special measures to address
environmentally sensitive areas.
The Coast Guard, through the Maritime Oil-Spill Response Plan
Advisory Group, will continue to engage with federal, state and, local
agencies and federally recognized tribal governments in Alaska to
address these complex resource challenges associated with the Bering
Strait through mechanisms such as the Western Alaska Area Committee.

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