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

REVIEW OF FISCAL YEAR 2023 BUDGET REQUEST
FOR THE COAST GUARD AND MARITIME
TRANSPORTATION PROGRAMS

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

(117-47)

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

SECOND SESSION

__________

APRIL 27, 2022

__________

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
48-450 PDF WASHINGTON : 2022

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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

PETER A. DeFAZIO, Oregon, Chair
SAM GRAVES, Missouri ELEANOR HOLMES NORTON,
ERIC A. ``RICK'' CRAWFORD, Arkansas District of Columbia
BOB GIBBS, Ohio EDDIE BERNICE JOHNSON, Texas
DANIEL WEBSTER, Florida RICK LARSEN, Washington
THOMAS MASSIE, Kentucky GRACE F. NAPOLITANO, California
SCOTT PERRY, Pennsylvania STEVE COHEN, Tennessee
RODNEY DAVIS, Illinois ALBIO SIRES, New Jersey
JOHN KATKO, New York JOHN GARAMENDI, California
BRIAN BABIN, Texas HENRY C. ``HANK'' JOHNSON, Jr.,
GARRET GRAVES, Louisiana Georgia
DAVID ROUZER, North Carolina ANDRE CARSON, Indiana
MIKE BOST, Illinois DINA TITUS, Nevada
RANDY K. WEBER, Sr., Texas SEAN PATRICK MALONEY, New York
DOUG LaMALFA, California JARED HUFFMAN, California
BRUCE WESTERMAN, Arkansas JULIA BROWNLEY, California
BRIAN J. MAST, Florida FREDERICA S. WILSON, Florida
MIKE GALLAGHER, Wisconsin DONALD M. PAYNE, Jr., New Jersey
BRIAN K. FITZPATRICK, Pennsylvania ALAN S. LOWENTHAL, California
JENNIFFER GONZALEZ-COLON, MARK DeSAULNIER, California
Puerto Rico STEPHEN F. LYNCH, Massachusetts
TROY BALDERSON, Ohio SALUD O. CARBAJAL, California
PETE STAUBER, Minnesota ANTHONY G. BROWN, Maryland
TIM BURCHETT, Tennessee TOM MALINOWSKI, New Jersey
DUSTY JOHNSON, South Dakota GREG STANTON, Arizona
JEFFERSON VAN DREW, New Jersey COLIN Z. ALLRED, Texas
MICHAEL GUEST, Mississippi SHARICE DAVIDS, Kansas, Vice Chair
TROY E. NEHLS, Texas JESUS G. ``CHUY'' GARCIA, Illinois
NANCY MACE, South Carolina ANTONIO DELGADO, New York
NICOLE MALLIOTAKIS, New York CHRIS PAPPAS, New Hampshire
BETH VAN DUYNE, Texas CONOR LAMB, Pennsylvania
CARLOS A. GIMENEZ, Florida SETH MOULTON, Massachusetts
MICHELLE STEEL, California JAKE AUCHINCLOSS, Massachusetts
Vacancy 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, RANDY K. WEBER, Sr., Texas
Vice Chair MIKE GALLAGHER, Wisconsin
SEAN PATRICK MALONEY, New York JEFFERSON VAN DREW, New Jersey
ALAN S. LOWENTHAL, California NICOLE MALLIOTAKIS, New York
ANTHONY G. BROWN, Maryland Vacancy
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. 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........................................... 5
Hon. Peter A. DeFazio, a Representative in Congress from the
State of Oregon, and Chair, Committee on Transportation and
Infrastructure, opening statement.............................. 6
Prepared statement........................................... 8
Hon. Sam Graves, a Representative in Congress from the State of
Missouri, and Ranking Member, Committee on Transportation and
Infrastructure, prepared statement............................. 55

WITNESSES

Admiral Karl L. Schultz, Commandant, U.S. Coast Guard, oral
statement...................................................... 10
Prepared statement........................................... 11
Master Chief Jason M. Vanderhaden, Master Chief Petty Officer of
the Coast Guard, U.S. Coast Guard, oral statement \\... 16
Hon. Daniel B. Maffei, Chairman, Federal Maritime Commission,
oral statement................................................. 18
Prepared statement........................................... 19
Lucinda Lessley, Acting Administrator, Maritime Administration,
oral statement................................................. 23
Prepared statement........................................... 24

SUBMISSIONS FOR THE RECORD

Framework Timeline for U.S. Coast Guard Training Center Cape May
Barracks Recapitalization, Submitted for the Record by Hon.
Jefferson Van Drew............................................. 56

APPENDIX

Questions to Admiral Karl L. Schultz, Commandant, U.S. Coast
Guard, from:
Hon. Salud O. Carbajal....................................... 57
Hon. Alan S. Lowenthal....................................... 58
Hon. Peter A. DeFazio on behalf of Hon. John Garamendi....... 58
Hon. Sean Patrick Maloney.................................... 59
Hon. Chris Pappas............................................ 59
Hon. Sam Graves.............................................. 59
Questions from Hon. Peter A. DeFazio on behalf of Hon. John
Garamendi to Hon. Daniel B. Maffei, Chairman, Federal Maritime
Commission..................................................... 65

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

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

April 22, 2022

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 2023 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, April 27, 2022, at 10:00 a.m.
EDT in 2167 Rayburn House Office Building and via Zoom to
examine the President's fiscal year (FY) 2023 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 and will retire from
his duty on June 1, 2022.

FISCAL YEAR 2023 COAST GUARD BUDGET REQUEST

The President's FY 2023 budget request for the Coast Guard
\1\ compares to the FY 2022 enacted funding level \2\ as shown
here:
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\1\ White House. FY 2023 President's Budget, available at https://
www.whitehouse.gov/wp-content/uploads/2022/03/budget_fy2023.pdf.
\2\ Consolidated Appropriations Act, 2022 (Public Law 117-103),
available at https://www.congress.gov/bill/117th-congress/house-bill/
2471.

Coast Guard FY 2022 Enacted to FY 2023 President's Budget Request Comparison
(Dollars in Thousands)
----------------------------------------------------------------------------------------------------------------
President's FY FY 2022 to FY FY 2022 to
Program FY 2022 2023 Budget 2023 Change FY 2023
Enacted Request ($) Change (%)
----------------------------------------------------------------------------------------------------------------
Operations & Support (O&S)........................ $ 9,162,120 $ 9,620,029 $ 457,909 5.0%
Environmental Compliance & Restoration (EC&R) \1\. $ 27,456 $ 24,386 $ (3,070) -11.2%
Medicare-Eligible Retiree Health Care Fund $ 240,577 $ 252,887 $ 12,310 5.1%
(MERHCF).........................................
Procurement, Construction & Improvements (PC&I)... $ 2,030,100 $ 1,654,850 $ (375,250) -18.5%
Research & Development (R&D)...................... $ 7,476 $ 7,476 $ - 0.0%
National Coast Guard Museum Grant \2\............. $ 50,000 $ - $ (50,000) -100.0%
-------------------------------------------------------------
Subtotal, Discretionary......................... $ 11,517,729 $ 11,559,628 $ 91,899 0.8%
-------------------------------------------------------------
Retired Pay....................................... $ 1,963,519 $ 2,044,414 $ 80,895 4.1%
State Boating Safety Grants....................... $ 128,987 $ 132,442 $ 3,455 2.7%
Maritime Oil Spill Program........................ $ 101,000 $ 101,000 $ - 0.0%
General Gift Funds................................ $ 2,864 $ 2,864 $ - 0.0%
Housing Fund \3\.................................. $ 4,000 $ 4,000 $ - 0.0%
-------------------------------------------------------------
Subtotal, Mandatory............................. $ 2,200,370 $ 2,284,720 $ 84,350 3.8%
-------------------------------------------------------------
Total......................................... $ 13,718,099 $ 13,844,348 $ 176,249 1.3%
----------------------------------------------------------------------------------------------------------------
\1\ EC&R funding was incorporated into the Coast Guard's O&S PPA in FY 2019; this row is therefore excluded from
the Discretionary Subtotal.
\2\ Museum funding was awarded as a one-time grant in FY 2022 and is not expected to continue on an annual
basis.
\3\ Housing funds appear as a discretionary offsetting fee in the Coast Guard Congressional Justification.
Housing funds appear as Administrative Provisions in the Joint Explanatory Statement as multiple line items.

The President requests $13.8 billion in FY 2023 for the activities
of the Coast Guard, including $11.5 billion in discretionary
funding.\3\ The discretionary request is an increase of $96 million
(0.8 percent) from the FY 2022 enacted level.
---------------------------------------------------------------------------
\3\ United States Coast Guard. U.S. Coast Guard Budget Overview:
Fiscal Year 2023 Congressional Justification, available at https://
www.uscg.mil/Portals/0/documents/budget/2023/
FY%202023%20Congressional%20Justification.pdf?ver=sNVot6ILB-
bDynTKEVPTBw%3d
%3d&timestamp=1648484167362.
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Operations and Support
The President requests $9.620 billion for the Operations and
Support (O&S) account in FY 2023, a $458 million (5.0 percent) increase
from the FY 2022 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 approximately
40,500 active-duty military members, 8,000 reservists, and 9,000
civilian employees.\4\ Included in this request is $5.1 billion for
military pay and personnel support; $430 million for mission support,
including enterprise management and environmental compliance and
restoration; and $3.9 billion for field operations.\5\
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\4\ United States Coast Guard. 2023 Budget Overview: Posture
Statement, available at https://www.uscg.mil/Portals/0/documents/
budget/2023/FY%202023%20Posture%20Statement.pdf?
ver=nSIvAr6imO5IsOC3m0PMsg%3d%3d.
\5\ Id.
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 to
cover the cost of the 2022 military pay raise (4.6 percent), 2022
civilian pay raise (2.7 percent), 2023 military pay raise (2.7
percent), and 2023 civilian pay raise (4.6 percent).
The FY 2023 budget includes an increase of 33 staff positions, 19
full-time equivalents (FTE), and $6.8 million to fund initiatives in
the Coast Guard's Technology Revolution Roadmap.\6\ This comprehensive
framework outlines investments required to ensure mission execution
supported by reliable, mobile, and integrated technology.\7\ The
investments in this request are focused on the sustainment of the rapid
application development platform, newly developed mobile applications
and telework capabilities, and sustainment of new enterprise
applications. The base for this program is seven positions, seven FTE,
and $6.0 million. This funding allows for the rapid development of
cyber-secure web-based applications for use by marine inspectors, law
enforcement officers, pollution investigators, recruiters, and other
field operators across the Coast Guard.\8\ It also provides personnel
to support the new capabilities offered by acquisitions programs,
including logistics information management and command and control
systems. Finally, this request sustains the Coast Guard's increased
telework capacity with dedicated personnel and contract services
support.\9\
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\6\ United States Coast Guard. U.S. Coast Guard Budget Overview:
Fiscal Year 2023 Congressional Justification.
\7\ 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.
\8\ United States Coast Guard. U.S. Coast Guard Budget Overview:
Fiscal Year 2023 Congressional Justification.
\9\ Id.
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In January of 2020, the Coast Guard opened the Blue Technology
Center of Expertise (BTCOE) at Scripps Institution of Oceanography in
La Jolla, California.\10\ This new Center of Expertise 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.\11\ Following the creation of
this new center, the President's FY 2023 budget request includes an
increase of one full-time position, one FTE, and $2.5 million to fund
personnel and operating costs associated with the BTCOE and the Defense
Innovation Unit detachment. This increase establishes a base for these
programs.\12\
---------------------------------------------------------------------------
\10\ 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.
\11\ Id.
\12\ United States Coast Guard. U.S. Coast Guard Budget Overview:
Fiscal Year 2023 Congressional Justification.
---------------------------------------------------------------------------
The Environmental Compliance and Restoration (EC&R) account was
moved to the O&S account in FY 2019. The President requests $24.4
million within O&S for EC&R in FY 2023, a $3.1 million (or 11.2
percent) decrease from the FY 2022 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.\13\ The $24.4 million requested for EC&R continues
long-term monitoring at 22 sites, begins or continues investigation and
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.\14\
---------------------------------------------------------------------------
\13\ Id.
\14\ Id.
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The FY 2023 budget request also transfers the coordination of
Maritime Operational Threat Response (MOTR; coordinated U.S. government
response to threats against the U.S. and its interests in the maritime
domain globally) \15\ and Spill of National Significance events (SONS;
oil spills that are sufficiently large or complex that coordination
between federal, state, local, and responsible party resources is
required to clean up the spill) \16\ to the U.S. Coast Guard as part of
the Department of Homeland Security (DHS) effort to realign certain
non-statutory functions from the DHS Office of Operations Coordination
and Planning (OPS).\17\ While such events are rare when they occur, the
Coast Guard is the primary subject matter expert and DHS OPS does not
provide dedicated resources in this area. By removing the coordination
step within DHS OPS, the Coast Guard will be better positioned to
directly seek input from across DHS. The assumption of MOTR and SONS
events by the Coast Guard does not include additional resources.\18\
---------------------------------------------------------------------------
\15\ Department of Homeland Security. Global MOTR Coordination
Center, available at https://www.dhs.gov/global-motr-coordination-
center-gmcc.
\16\ SONS Communications Coordination Workgroup. Spill of National
Significance Executive Reference Guide, available at https://
www.dco.uscg.mil/Portals/9/CG-5R/MER/MER%203/
SERG_04_April_2019_FINAL.pdf?ver=2019-06-08-153911-130.
\17\ United States Coast Guard. U.S. Coast Guard Budget Overview:
Fiscal Year 2023 Congressional Justification.
\18\ Id.
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The proposed O&S increases are offset by proposed cuts derived
through decommissioning certain assets, fee and operational
adjustments, annualization of prior-year initiative reductions, and the
termination of one-time costs. Specifically, the proposed reductions
affecting the O&S account include:
Asset decommissions and associated personnel reductions:
The FY 2023 budget request proposes the decommissioning of four HC-130H
Long Range Surveillance Aircraft ($12.9 million), one 210-foot Reliance
Class Medium Endurance Cutter (WMEC; $10.0 million), temporary
disestablishment of one 270-foot Famous Class WMEC crew during an
extended Service Life Extension Project (SLEP; $22.2 million), five
110-foot legacy Island Class Patrol Boats (WPBs; $6.8 million), and
five legacy 87-foot Marine Protector Class Coastal Patrol Boats ($2.2
million) for a total savings of $41.2 million in FY 2023.\19\
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\19\ United States Coast Guard. U.S. Coast Guard Budget Overview:
Fiscal Year 2023 Congressional Justification.
---------------------------------------------------------------------------
Operational adjustments: The FY 2023 budget request also
proposes savings of $1.6 million in Coast Guard detailee reductions,
$1.1 million in the consolidation of redundant stations, $896 thousand
in improved boat operations, $182 thousand in improved management
efficiencies,$775 thousand in improved mission support efficiencies,
$1.0 million from departmental initiatives, and $488 thousand from
rebalanced maritime patrol aircraft operations for an additional
savings of $5.9 million.\20\
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\20\ Id.
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Procurement, Construction, and Improvements
The President requests $1.655 billion for the Procurement,
Construction, and Improvements (PC&I) account,\21\ a $375 million (18.5
percent) decrease from the FY 2022 enacted level.\22\ 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 (AtoN), communications and
information technology systems, and related equipment. Specifically,
the budget request includes $1.476 billion for sustainment and
acquisition of the following assets:
---------------------------------------------------------------------------
\21\ Id.
\22\ Consolidated Appropriations Act, 2022 (Public Law 117-103).
---------------------------------------------------------------------------
In-service vessel sustainment: Major Maintenance
Availabilities (MMA) ensure in-service vessels continue to meet their
designed service life through the recapitalization of hull, mechanical,
electrical and electronic systems that have been identified as the
highest contributors to maintenance costs and operational availability
degradation. SLEPs increase in-service vessel service life without
significantly modifying capabilities.
+ $36 million for 47-ft Motor Life Boat SLEP;
+ $22.5 million for 225-ft Buoy Tender MMA;
+ $23.8 million for 270-ft Medium Endurance Cutter SLEP;
+ $7 million for 175-ft Coastal Buoy Tender MMA; and
+ $4 million for CGC HEALY MMA.
National Security Cutter (NSC): $60.0 million for
delivery of NSC #10 and continued construction of NSC #11, including
Post Delivery Activities (PDA) necessary to make these cutters ready
for operation.
Offshore Patrol Cutter (OPC): $650 million for the
construction of OPC #5, and Long Lead Time Materials (LLTMs) for OPC
#6. The acquisition of 25 OPCs, including PDA necessary to make these
cutters ready for operations, to replace the Coast Guard's fleet of
Medium Endurance Cutters (WMECs), and bridge the capabilities of the
NSC and FRC. The delivery of OPC #1 is anticipated to occur in FY 2023.
Fast Response Cutter (FRC): $16.0 million for the
delivery of FRCs #51-55. Continued construction of FRCs is necessary to
replace the Coast Guard's fleet of 110-ft Island Class Patrol Boats
(WPBs).
Boats: $8.0 million to order/deliver one Long Range
Interceptor (NSC #10-11), nine Over-The-Horizons (NSC #10-11, OPCs #1-
3, PSC #1), and six Maritime Security Response Team boats.
Polar Security Cutter (PSC): $167.2 million for the
continued construction of PSC #1, the start of construction of PSC #2,
and the continued purchase of LLTM for PSC #3.
$125 million for the purchase of a commercially available
Polar Icebreaker.
Waterways Commerce Cutter program: $77.0 million for
project planning and LLTM/construction of River Buoy Tender and
Construction Tender first articles, and the continued development of
government-led design for the Inland Buoy Tender.
$15.0 million for a multi-year CGC POLAR STAR SLEP.
$182.0 million for aircraft.
$82.0 million for other acquisition programs.

The budget request also includes $180 million for shore facilities
and AtoN.\23\ This request is a decrease of $183.2 million (50.4
percent) from the FY 2021 enacted level,\24\ and a decrease of $99.7
million (35.6 percent) from the President's FY 2022 budget request.\25\
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.\26\ As of
2018, the deferred maintenance backlog included more than 5,600
projects, while the recapitalization and new construction backlog
included 125 projects.\27\ 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.\28\ Coast Guard officials told GAO that these projects were
in the preliminary stages of development.\29\ 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.\30\ 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.\31\ 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.\32\
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\23\ United States Coast Guard. Fiscal Year 2023 President's
Budget: Fact Sheet, available at https://www.uscg.mil/Portals/0/
documents/budget/2023/FY%202023%20President's%20
Budget%20Fact%20Sheet.pdf?ver=gcTYiFH9QRw%3d.
\24\ 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.
\25\ Id.
\26\ Government Accountability Office. COAST GUARD SHORE
INFRASTRUCTURE: Actions Needed to Better Manage Assets and Reduce Risks
and Costs. GAO-19-711T, September 25, 2019.
\27\ Id.
\28\ Id.
\29\ Id.
\30\ Id.
\31\ United States Coast Guard. FY 2022 Unfunded Priorities List,
available at https://www.dhs.gov/sites/default/files/publications/
uscg_-_fy_2022_unfunded_priorities_list.pdf.
\32\ Id.
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Research and Development
The President requests $7.5 million in FY 2023 for the Coast
Guard's Research and Development (R&D) account, an amount equal the FY
2022 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.\33\
---------------------------------------------------------------------------
\33\ United States Coast Guard. Budget Overview: Fiscal Year 2023
Congressional Justification.
---------------------------------------------------------------------------
The Coast Guard intends to use the requested $7.5 million in FY
2023 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.\34\
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. Sec. 2701-2761).\35\
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\34\ Id.
\35\ Id.
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Federal Maritime Commission
The FMC was established in 1961 as an independent agency that
regulates ocean-borne transportation in the foreign commerce of the
United States.\36\ 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.\37\
---------------------------------------------------------------------------
\36\ Section 46101 of title 46, United States Code, available at
https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title46-
section46101&num=0&edition=prelim.
\37\ Federal Maritime Commission. Federal Maritime Commission FY
2023 Budget Justification, available at https://fmc2.fmc.gov/wp-
content/uploads/2022/03/Federal-Maritime-Commission-CONG23-Budget-
Submission.pdf.
---------------------------------------------------------------------------
The FMC is composed of five commissioners appointed for five-year
terms by the President with the advice and consent of the Senate. The
Honorable Daniel B. Maffei was designated Chairman of the Commission by
the President in March 2021.
The President's FY 2023 budget request for the FMC \38\ compares to
the FY 2022 enacted funding level \39\ as shown here:
---------------------------------------------------------------------------
\38\ Id.
\39\ Consolidated Appropriations Act, 2022 (Public Law 117-103).

FMC FY 2022 Enacted to FY 2023 President's Budget Request Comparison
(Dollars in Thousands)
----------------------------------------------------------------------------------------------------------------
President's FY FY 2022 to FY FY 2022 to FY
Account FY 2022 2023 Budget 2023 Change 2023 Change
Enacted Request ($) (%)
----------------------------------------------------------------------------------------------------------------
Office of Inspector General (OIG)............... $485 $544 \\ $70 14.4%
Operations and Administrative Program........... $32,384 $34,140 $1,756 5.4%
---------------------------------------------------------------
Total......................................... $32,869 $34,684 $1,815 5.5%
----------------------------------------------------------------------------------------------------------------
\\ FMC, with concurrence from the OIG, will no longer include a distribution of overhead costs in the
allocation of the budget for OIG expenses.

The President requests $34.7 million in FY 2023 for the activities
of the FMC, a $1.8 million (5.5 percent) increase from the FY 2022
enacted level. This request would permit additional personnel hires
(increase of 36 FTE compared to FY 2022 staffing level) \40\ in advance
of anticipated retirements in key high-level or hard-to-fill positions.
It also includes a projected 4.6 percent pay raise for personnel in FY
2023, information technology and cybersecurity modernization projects,
and activities of the Office of Inspector General.\41\
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\40\ Federal Maritime Commission. FMC FY 2023 Budget Request,
briefing delivered to the H.R. Committee on Transportation and
Infrastructure on April 19, 2022.
\41\ Office of Inspector General. Office of Inspector General FY
2023 Justification of Estimates for Congress, available at https://
oig.hhs.gov/documents/root/1026/FY-2023-HHS-OIG-CJ.pdf.
---------------------------------------------------------------------------
Maritime Administration
MARAD was established in 1950.\42\ 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
---------------------------------------------------------------------------
\42\ Section 109 of title 49, United States Code, available at
https://www.law.cornell.edu/uscode/text/49/109.
assistance programs to support the U.S. maritime and shipbuilding
industries.\43\ Lucinda Lessley has served as the Acting Administrator
of MARAD since January 2021.
---------------------------------------------------------------------------
\43\ Department of Transportation. FY 2023 Budget Highlights:
Maritime Administration, available at https://www.transportation.gov/
sites/dot.gov/files/2022-03/Budget_Highlights_
FY2023.pdf.
---------------------------------------------------------------------------
The President's FY 2023 budget request for MARAD \44\ compares to
the FY 2022 enacted funding level \45\ as shown here:
---------------------------------------------------------------------------
\44\ Id.
\45\ Consolidated Appropriations Act, 2022 (Public Law 117-103).

MARAD FY 2022 Enacted to FY 2023 President's Budget Request Comparison
(Dollars in Thousands)
----------------------------------------------------------------------------------------------------------------
President's FY FY 2022 to
Account FY 2022 2023 Budget FY 2022 to FY FY 2023
Enacted Request 2023 Change ($) Change (%)
----------------------------------------------------------------------------------------------------------------
Operations and Training............................ $ 172,204 $ 192,000 $ 19,796 11.50%
Assistance to Small Shipyards...................... $ 20,000 $ 20,000 $ - 0.00%
Ship Disposal Program.............................. $ 10,000 $ 6,000 $ (4,000) -40.00%
Maritime Security Program.......................... $ 318,000 $ 318,000 $ - 0.00%
Title XI--Administrative Expenses.................. $ 3,000 $ 3,000 $ - 0.00%
Title XI--Loan Guarantees.......................... $ - $ - $ - 0.00%
State Maritime Academy Operations.................. $ 423,300 $ 77,700 $ (345,600) -81.64%
Cable Security Fleet Program....................... $ 10,000 $ - $ (10,000) -100.00%
Tanker Security Program............................ $ 60,000 $ 60,000 $ - 0.00%
Maritime Transportation System Emergency Relief $ - $ - $ - 0.00%
Authority.........................................
Port Infrastructure Development Program............ $ 234,310 $ 230,000 $ (4,310) -1.84%
------------------------------------------------------------
Total............................................ $ 1,250,814 $ 906,700 $ (344,114) -27.51%
----------------------------------------------------------------------------------------------------------------

The President requests $907 million in FY 2023 for the activities
of MARAD,\46\ a $344 million (27.5 percent) decrease from the FY 2022
enacted level.\47\
---------------------------------------------------------------------------
\46\ Department of Transportation. FY 2023 Budget Highlights:
Maritime Administration.
\47\ Consolidated Appropriations Act, 2022 (Public Law 117-103).
---------------------------------------------------------------------------
MARAD's FY 2023 budget request does not include funding for the:
Maritime Transportation System Emergency Relief
Authority;
Cable Security Fleet Program (although this program has
some funds that carried over from FY 2022); or
Title XI Loan Guarantees.
Operations and Training
The President's FY 2023 budget requests $192 million for Operations
and Training, an increase of $19.8 million (11.5 percent) beyond the FY
2022 enacted level. Included in this request is $87.8 million for
academic operating expenses of the U.S. Merchant Marine Academy
(USMMA), including the continued implementation of measures to help
prevent sexual assault and sexual harassment; $11.9 million to fund
routine and unplanned emergency facility maintenance and repairs of the
USMMA's aging buildings and infrastructure; $10 million for the
Maritime Environmental and Technical Assistance program, which advances
low carbon alternative energies and technologies that are safe,
affordable, and sustainable, while also supporting job growth in clean
energy and maritime transportation fields; $10.8 million for America's
Marine Highway grants to support the development, expansion and
modernization of America's navigable waterways and landslide
infrastructure to enable the movement of freight by water; and $4
million to support program evaluation assessments aimed at improving
the efficiency and resiliency of agency core assets and programs.\48\
---------------------------------------------------------------------------
\48\ Department of Transportation. FY 2023 Budget Highlights:
Maritime Administration.
---------------------------------------------------------------------------
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 2022, and the President also requests $20 million in the FY 2023
budget.\49\
---------------------------------------------------------------------------
\49\ Id.
---------------------------------------------------------------------------
Ship Disposal
The President requests $6 million for the Ship Disposal Program,
which is a $4 million (40 percent) decrease from the FY 2022 enacted
level. This program provides for the proper disposal of obsolete
government-owned merchant ships maintained by MARAD in the National
Defense Reserve Fleet. This request includes $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.\50\ This funding also includes $3 million for Ship Disposal
Program support, including salaries and overhead.\51\ The National
Defense Reserve Fleet is under the jurisdiction of the House Committee
on Armed Services.
---------------------------------------------------------------------------
\50\ Id.
\51\ Id.
---------------------------------------------------------------------------
Maritime Security Program
The President requests $318 million for the Maritime Security
Program (MSP), which is equal to the FY 2022 enacted level, to maintain
a viable commercial fleet that can support a U.S. presence in foreign
commerce. 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
Department of Defense in times of war or national emergency. This
budget request enables vessel operators to remain active and available
for service, and results in $5.3 million per stipend payment for each
of the 60 ships in the program.\52\ Allocating less than $318 million
annually for the program allows U.S. vessels to exit without penalty,
and likely would also leave to vessels exiting the U.S. flag registry.
The MSP is under the jurisdiction of the House Committee on Armed
Services.
---------------------------------------------------------------------------
\52\ Id.
---------------------------------------------------------------------------
Title XI Loan Guarantees--Administrative Expenses
The President requests $3 million for administrative expenses to
carry out the guaranteed loan program, which is equal to the FY 2022
enacted level. The Title XI Loan Guarantee Program helps to promote the
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.\53\ The program is under the jurisdiction of the House
Committee on Armed Services.
---------------------------------------------------------------------------
\53\ Id.
---------------------------------------------------------------------------
State Maritime Academies
The President requests $77.7 million for the six State Maritime
Academies (SMA), which is a decrease of $345.6 million (81.6 percent)
compared to the FY 2022 enacted level. This request includes $35
million for vessel management, logistics, and maintenance oversight to
support integration of National Security Multi-Mission Vessels (NSMMV)
into the schoolship fleet of training vessels; $30.5 million to
maintain the six legacy SMA training ships; $6 million in direct
payments to the schools; $2.4 million for student tuition assistance;
and $3.8 million for training ship fuel assistance. The decrease of
$345.6 million is primarily due to the completion of construction of
the sixth NSMMV. SMA 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 commerce
in 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 support of
new training vessels under the NSMMV program. SMAs are under the
jurisdiction of the House Committee on Armed Services.
Tanker Security Program
The FY 2023 request for the Tanker Security Program (TSP) is $60
million, an amount equal to the FY 2022 enacted level. TSP provides
direct payments to U.S. Flagship product tankers capable of supporting
national economic and Department of Defense 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 assure access to a
global network of intermodal facilities.\54\ The program will also
sustain a base of U.S. Merchant Mariners to support national security
requirements during times of urgent need. The program is under the
jurisdiction of the House Committee on Armed Services.
---------------------------------------------------------------------------
\54\ Id.
---------------------------------------------------------------------------
Port Infrastructure Development Program
The President requests $230 million for the Port Infrastructure
Development Program (PIDP), a decrease of $4.3 million (1.84 percent)
from the FY 2022 enacted level. This request is in addition to the $450
million investment in advance appropriations provided in FY 2023 under
the bipartisan Infrastructure Investment and Jobs Act (Public Law 117-
58).\55\ 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.\56\
---------------------------------------------------------------------------
\55\ Id.
\56\ Id.
---------------------------------------------------------------------------
WITNESS LIST
Admiral Karl L. Schultz, Commandant, United States Coast
Guard
Master Chief Jason M. Vanderhaden, Master Chief Petty
Officer of the Coast Guard, United States Coast Guard
The Honorable Daniel B. Maffei, Chairman, Federal
Maritime Commission
Ms. Lucinda Lessley, Acting Administrator, Maritime
Administration

REVIEW OF FISCAL YEAR 2023 BUDGET REQUEST FOR THE COAST GUARD AND
MARITIME TRANSPORTATION PROGRAMS

----------

WEDNESDAY, APRIL 27, 2022

House of Representatives,
Subcommittee on Coast Guard and
Maritime Transportation,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to call, at 10:02 a.m. in
room 2167 Rayburn House Office Building and via Zoom, Hon.
Salud O. Carbajal (Chair of the subcommittee) presiding.
Members present in person: Mr. Carbajal, Mr. DeFazio, Mr.
Larsen of Washington, Mr. Sean Patrick Maloney of New York, Mr.
Gibbs, Dr. Van Drew, and Mr. Graves of Louisiana.
Members present remotely: Mr. Auchincloss, Mr. Lowenthal,
and Ms. Malliotakis.
Mr. Carbajal. 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.
As a reminder, please keep your microphones muted unless
speaking. Should I hear any inadvertent background noise, I
will request that the Member please mute their microphone.
And to insert a document into the record, please have your
staff email it to DocumentsT&I@mail.house.gov.
Good morning, and welcome to today's hearing on the review
of fiscal year 2023 budget requests 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 Chair of the Federal Maritime Commission, and the
Acting Administrator of the Maritime Administration on the
President's budget request and agency priorities.
We begin with testimony from the Coast Guard, which has
nearly 40,500 Active Duty military members, 8,000 reservists,
and 9,000 civilian employees who carry out the Service's
missions, including port and waterway security, marine
environmental protection, border safety, and search and rescue,
among others.
Despite the agency's importance as one of the six branches
of our military, the Coast Guard is chronically underfunded and
overextended, even during its largest recapitalization effort
since World War II. To ensure our servicemembers have the
equipment, personnel, and support systems they need to complete
their missions and return home safe, the Service must be
supported with every available resource.
Following the Coast Guard, I look forward to hearing from
the FMC on how it plans to address supply chain issues and
ensure fairness in ocean shipping. The agriculture industry,
which includes many farmers and growers in my home State of
California, continues to be negatively impacted by these supply
chain issues. As the Federal agency tasked with enforcing
international shipping regulations, FMC has key authorities
which allow it to secure an even playing field for participants
in maritime commerce and continue to promote American jobs.
Last, but not least, I look forward to MARAD discussing its
plans to revitalize the American maritime industry, from ports
and infrastructure to our shrinking U.S.-flag fleet and the
availability of merchant mariners. Acting Administrator Lessley
has done a phenomenal job facilitating efforts to upend the
toxic culture that has allowed sexual assault and harassment to
fester within the maritime industry. Her leadership on EMBARC
and her work to bring industry along is remarkable and does not
go unnoticed. We have a long way to go, but I believe her
leadership in the passage of the Safer Seas Act, of which I am
an original cosponsor, will help protect future mariners and
bring justice to victims.
Ms. Lessley: Chair DeFazio and I stand ready to help you.
MARAD oversees vital grant programs, including the Maritime
Security Program, the new Tanker Security Program, META, and
the Port Infrastructure Development Program, which give
maritime users the opportunity to improve the safety,
efficiency, and reliability of their operations shoreside and
at sea. This benefits mariners, the U.S. economy, and our
irreplaceable natural environment.
To give one example, META, the Maritime Environmental and
Technical Assistance Program, supports the research,
development, installation, and use of new carbon technologies
that are safe, affordable, and sustainable. Investing in such
innovations is crucial to positioning the United States as a
leader in the global marketplace and reducing our carbon
pollution within the transportation sector.
For MARAD, I am particularly interested in how the Port
Infrastructure Development Program will support the Morro Bay
wind energy project offshore in my district, building out the
port infrastructure to receive and transmit this energy, as
well as creating laydown space for shoreside wind turbine
staging. It 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, that
may need Federal assistance to take full advantage of this
budding energy industry.
I will end my remarks here by thanking our witnesses and
attendees for their participation.
I want to especially thank Commandant Admiral Schultz, as
he will be retiring from his position in June. Admiral Schultz
has given his entire career in service to this country and has
been a knowledgeable and genial leader for the Coast Guard in
his work with us in Congress for the past 4 years.
I wish you a fulfilling next chapter of your life.
I hope today's testimonies and the discussions that follow
will call Congress' attention to priorities within America's
vital maritime domain.
[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 2023 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 Chair of the Federal Maritime
Commission, and the Acting Administrator of the Maritime Administration
on the President's budget request and agency priorities.
We begin with testimony from the Coast Guard, which has nearly
40,500 Active Duty military members, 8,000 reservists, and 9,000
civilian employees who carry out the Service's missions, including port
and waterway security, marine environmental protection, boater safety,
and Search and Rescue, among others. Despite the agency's importance as
one of the six branches of our military, the Coast Guard is chronically
underfunded and overextended even during its largest recapitalization
effort since World War II.
To ensure our servicemembers have the equipment, personnel, and
support systems they need to complete their missions and return home
safe, the Service must be supported with every available resource.
Following the Coast Guard, I look forward to hearing from the FMC
on how it plans to address supply chain issues and ensure fairness in
ocean shipping. The agriculture industry, which includes many farmers
and growers in my home state of California, continues to be negatively
impacted by these supply chain issues. As the federal agency tasked
with enforcing international shipping regulations, FMC has key
authorities which allows it to secure an even playing field for
participants of maritime commerce and continue to promote American
jobs.
Last but not least, I look forward to MARAD discussing its plans to
revitalize the American maritime industry, from ports and
infrastructure, to our shrinking U.S. flagged fleet, and the
availability of merchant mariners.
Acting Administrator Lessley has done a phenomenal job facilitating
efforts to upend the toxic culture that's allowed sexual assault and
harassment to fester within the maritime industry. Her leadership on
EMBARC and her work to bring industry along is remarkable and does not
go unnoticed.
We have a long way to go, but I believe her leadership and the
passage of the Safer Seas Act, of which I am original cosponsor, will
help protect future mariners and bring justice to victims. Ms. Lessley:
Chair DeFazio and I stand ready to help you.
MARAD oversees vital grant programs including the Maritime Security
Program, the new Tanker Security Program, META, and the Port
Infrastructure Development Program, which give maritime users the
opportunity to improve the safety, efficiency, and reliability of their
operations shoreside and at sea. This benefits mariners, the U.S.
economy, and our irreplaceable natural environment.
To give one example: META, the Maritime Environmental and Technical
Assistance program, supports the research, development, installation,
and use of new low carbon technologies that are safe, affordable, and
sustainable. Investing in such innovations is crucial to positioning
the United States as a leader in the global marketplace and help reduce
our carbon pollution within the transportation sector.
From MARAD, I'm particularly interested in how the Port
Infrastructure Development Program will support the Morro Bay wind
energy 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.
I will end my remarks here by thanking our witnesses and attendees
for their participation. I want to doubly thank the Commandant, Admiral
Schultz, as he will be retiring from his position in June. Admiral
Schultz has given his entire career in service to this country, and has
been a knowledgeable and genial leader for the Coast Guard in his work
with us in Congress for four years. I wish you a fulfilling next
chapter of your life.
I hope today's testimonies and the discussions that follow will
call Congress' attention to priorities within America's vital maritime
domain.

Mr. Carbajal. Now I would like to call on the subcommittee
ranking member, Mr. Gibbs.
Mr. Gibbs. Thank you, Mr. Chairman. And thanks to our
witnesses for being here today.
First of all, I congratulate the Commandant, Admiral
Schultz, as he completes his long service to the Nation this
next month. He has done much to repair the damage done to the
Service's budget by the Budget Control Act and has begun what
will be a long road to upgrading the Coast Guard's digital
capabilities to those needed by a 21st-century law enforcement,
marine safety, and environmental stewardship Service.
I am sure I speak for all my subcommittee colleagues in
wishing you well as you leave the Coast Guard, which you have
served for more than 40 years. Congratulations. I wish you all
the best.
While we do celebrate your service in the Coast Guard, I
have to mention the issues the Guard must address in your
absence. Since you appeared before the subcommittee last July,
nothing seems to have happened with respect to completing the
regulations implementing the recommendations of the Atlantic
Coast Port Route Study. I look forward to hearing whether we
are in any danger of seeing those regulations made final in the
near future, or will the Coast Guard continue to defer those to
the Interior Department. I continue to believe the Coast Guard
should take its role as the primary Federal agency responsible
for maritime navigation safety seriously, rather than act as an
adjunct permit reviewer for the Department of the Interior.
I was heartened to see the fiscal year 2023 increase in the
request for the Coast Guard's operating and support account.
But as always, I am extremely disappointed in the perennial
reduction in the procurement, construction, and improvement
account. The account falls from an appropriated level of more
than $2 billion in fiscal year 2022 and a House-passed
authorized level of $3.4 billion in fiscal year 2023 to a
requested appropriations level of $1.6 billion for fiscal year
2023. 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, prevent the Service from
falling further behind in its IT infrastructure, and allow
progress in the Service's far-behind-schedule cutter
acquisition program.
I urge the Commandant to assure his legacy by telling us
that he supports the acquisition of a 12th National Security
Cutter before that production line grows cold, and the
opportunity is 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, protect the Service's
future mission capabilities. Like last year, I noticed no funds
are requested for the new Great Lakes icebreaker. I will work
with my Great Lakes colleagues to correct this oversight. I am
also interested in whether a common hull design could be used
for a Great Lakes icebreaker in the notional Arctic Security
Cutter, if the Coast Guard remains committed to a two-size
polar icebreaker program. I think that could make sense.
A provision included in H.R. 6865 sets minimum standards
for alternative oil spill response planning criteria in western
Alaska. The section provides new authority that only applies if
the Coast Guard determines that the national planning criteria
don't apply in western Alaska. The Coast Guard has refused to
set such criteria, thus leaving it to Congress to do the job. I
regret that the Coast Guard has had difficulty understanding
the plain language of this section, and I look forward to
continuing to work with the Service on this issue.
An unprecedented surge of imported cargo is pressure-
testing the U.S. supply chain. Both the House and Senate have
passed ocean shipping reform measures at the behest of the
beleaguered importers and exporters who are finding their
products late in reaching their destinations. Thus far, as I
understand it, the Federal Maritime Commission has found no
collusion or illegal anti-competitive manipulation of vessels
and equipment.
However, I look forward to hearing from our former
colleague, and now Federal Maritime Commission Chairman, Dan
Maffei, to describe what resources the Commission needs to
assure that a robust, effective, ongoing ocean shipping
regulatory program is maintained.
I am pleased again to see a former Coast Guard and Maritime
Transportation Subcommittee staffer, Lucinda Lessley, back
today as the Acting Maritime Administrator. I look forward to
hearing today what actions the Maritime Administration is
taking to tighten down cargo preference regulations and ensure
that all Federal agencies abide by these important mandatory
set-asides of cargo for carriage on U.S.-flagged vessels. I am
also interested to hear if MARAD has received availability
determination requests in regard to the increased rate of
discharge from the Strategic Petroleum Reserve.
[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, Mr. Chairman, and thank you to our witnesses for being
here today.
First, congratulations to Commandant Admiral Schultz as he
completes his long service to the Nation in the next month. He has done
much to repair the damage done to the Service's budget by the Budget
Control Act and has begun what will be a long road to upgrading the
Coast Guard's digital capabilities to those needed by a 21st century
law enforcement, marine safety, and environmental stewardship service.
I'm sure I speak for all my Subcommittee colleagues in wishing you well
as you leave the Coast Guard in which you have served for more than 40
years.
While we do celebrate your service to the Coast Guard, I have to
mention the issues the Guard must address in your absence. Since you
appeared before the Subcommittee last July, nothing seems to have
happened with respect to completing the regulations implementing the
recommendations of the Atlantic Coast Port Route Study. I look forward
to hearing whether we are in any danger of seeing those regulations
made final in the near future, or will the Coast Guard continue to
defer to the Interior Department. I continue to believe the Coast Guard
should take its role as the primary federal agency responsible for
maritime navigation safety seriously, rather than act as an adjunct
permit reviewer for DOI.
I was heartened to see the FY23 increase in the request for the
Coast Guard's Operating and Support Account, but, as always, I'm
extremely disappointed in the perennial reduction in the Procurement,
Construction, and Improvement account. The account falls from an
appropriated level of more than $2 billion in FY22 and a House-passed
authorized level of $3.4 billion in FY23 to a requested appropriations
level of $1.6 billion in FY23.
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, prevent the Service from falling farther behind on
its IT infrastructure, and allow progress in the Service's far-behind-
schedule cutter acquisition program.
I urge the Commandant to ensure his legacy by telling us that he
supports the acquisition of a twelfth National Security Cutter before
that production line grows cold and that opportunity is 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, protect the Service's future mission capabilities. Like
last year, I noticed no funds are requested for a new Great Lakes
icebreaker. I will work with my Great Lakes colleagues to correct that
oversight. I am also very interested in whether a common hull design
could be used for a Great Lakes icebreaker and the notional Arctic
Security Cutter, if the Coast Guard remains committed to a two-size
polar icebreaker program.
A provision included H.R. 6865 sets minimum standards for
Alternative Oil Spill Response Planning Criteria in Western Alaska. The
section provides new authority that only applies if the Coast Guard
determines that National Planning Criteria don't apply in Western
Alaska. The Coast Guard has refused to set such criteria, thus leaving
it to Congress to do the job. I regret the Coast Guard has had
difficulty understanding the plain language of this section, and I look
forward to continuing to work with the Service on this issue.
An unprecedented surge of imported cargo is pressure testing the
U.S. supply chain. Both the House and the Senate have passed ocean
shipping reform measures at the behest of beleaguered importers and
exporters who are finding their products delayed in reaching their
destinations. Thus far, as I understand it, the Federal Maritime
Commission has found no collusion, or illegal anti-competitive
manipulation of vessels and equipment. However, I look forward to
hearing from our former colleague and now Federal Maritime Commission
Chairman Dan Maffei to describe what resources the Commission needs to
ensure that a robust, effective, ongoing ocean shipping regulatory
program is maintained.
I'm pleased again to see Lucinda Lessley back today as the Acting
Maritime Administrator. I look forward to hearing today what actions
the Maritime Administration is taking to tighten down cargo preference
regulations and ensure that all federal agencies abide by these
important mandatory set-asides of cargo for carriage on U.S.-flag
vessels. I am also interested to hear if MARAD has received
availability determination requests in regard to the increased rate of
discharge from the Strategic Petroleum Reserve.

Mr. Gibbs. Thank you, Mr. Chairman. I yield back.
Mr. Carbajal. Thank you, Mr. Gibbs. I now would like to
call on the chairman of the Transportation and Infrastructure
Committee, Mr. DeFazio.
Mr. DeFazio. Thank you, Chairman Carbajal. Thanks for this
important hearing today.
All of the witnesses here before us today play a vital
role--the Coast Guard, the Federal Maritime Commission, the
Maritime Administration--in our Marine Transportation System.
As an oceangoing nation, we have tremendous needs in this area.
I want to start the same way as the subcommittee chair and
the ranking member did, by congratulating the admiral and
thanking him for his strong leadership.
Chief, thank you. These were pretty tough and turbulent
times for the Coast Guard, and you have gotten through it in
good shape. So, for whatever you are going to do next, best
wishes.
I would also like to congratulate--although she is not yet
confirmed, I expect will be confirmed--Admiral Linda Fagan, who
is not here today, as the next Commandant, and, I think, will
be a tremendous successor to Admiral Schultz. I look forward to
working with her during my remaining time in Congress.
For the fiscal year 2023, Coast Guard has requested $13.82
billion. This is a 1.3-percent increase over last year. Now,
that is better than what you proposed last year, which was a
0.3-percent increase. But given the current rate of inflation,
which the Coast Guard is going to be subjected to in many ways,
from shoreside costs to fuel for the ships, I really don't
think that that is going to be an adequate amount of funding.
I also have ongoing concerns expressed by others about the
problems on your shoreside infrastructure, particularly the
inadequate housing. We have inadequate childcare. Those are
complaints I hear a lot. And in areas where there is inadequate
housing, members of the Coast Guard have to go into the private
market. Rents are skyrocketing. It is very difficult. And if we
want to do what we need to do to recruit and retain our
Coasties, we have got to do better for their working
conditions. That is really a tremendous concern.
When I was in Coos Bay, when the Commandant was there--I
think it was a year ago last summer to get the award--we saw
what they were doing to renovate some housing. It was a start.
But we need to do a heck of a lot more of that.
You are proposing to recruit 4,200 people this year. That
is a pretty high number. I hope you can achieve it. But then,
once we achieve it, we want to keep them. We want them to do
full careers.
So, as you know, during the shutdown I was very upset about
the lack of pay for the Coast Guard, and I attempted to move
legislation to prohibit that from happening in the future, but
was unsuccessful at that point in time.
The decrease in funding for shore facilities and aids in
navigation is puzzling to me, with the backlog we have. I want
to learn more about how you came to $180 million. I assume it
was the trolls over at OMB putting pressure on you. But anyway,
I would be interested in plumbing the depths of that.
I am constantly trying to deal with the Office of
Management and Budget. We would be much better off without
them, but that is for another day.
With regards to the Maritime Administration, MARAD is vital
for the successful management of our maritime shipbuilding
industries. I am constantly trying to see that we build more
U.S. ships, and also that we have a more competitive shipping
industry.
I note that the cartel of three major shippers made more
money last year than they made over the last decade. And yet we
don't think there is some collusion or price gouging or taking
advantage of the excuses of the pandemic. It is a real problem.
And I want to learn more about the decrease in your Port
Infrastructure Development Program requests, compared to the
2022 enacted. It all starts with port capacity. In fact, I am
advocating at this point for a mega-project so that we can have
a new container port. It would be the first direct ship-to-rail
container port on the west coast. Obviously, very efficient,
very environmentally responsible. And that would be in Coos
Bay, Oregon. And it could add 10 percent to west coast
capacity. There is not a lot more land area in L.A.-Long Beach,
and it is a heck of a long steam up the Columbia River to
Portland. Coos Bay has a lot of advantages, if the
administration has the vision to move forward with that, and I
am hopeful they will. The President did mention it when he was
in Portland last week.
But I am pleased to see an increase in the operations
training budget, and some of this goes to the Merchant Marine
Academy, and again, we need a lot of repairs for aged buildings
and facilities and dorms and things there.
And I am also pleased to support the EMBARC measures which
have been designed to protect cadets against sexual assault and
sexual harassment. Last year, the Academy faced a lot of
scrutiny regarding its culture of safety, for good reason.
Fortunately, I have witnessed steadfast leadership of MARAD's
Acting Administrator, Ms. Lucinda Lessley, during this time,
and she has worked diligently to motivate a major cultural
shift at the Academy, despite resistance. And I have every
confidence that she will continue to lead capably, with
competence and integrity, and hold steadfast on the changes we
need.
For the Federal Maritime Commission, I am pleased to see a
5.5-percent increase requested for overall funding. As the
ranking member mentioned, we haven't found collusion, but we
know there is collusion, and we are dealing with shipping
cartels. And you need those resources to enhance your oversight
enforcement capabilities, and that is critically needed to
lower the cost of shipping, which is going to help with
inflation. I look forward to hearing from all of our witnesses
today.
[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. The Coast Guard, Maritime
Administration, and Federal Maritime Commission all play vital roles in
safeguarding the economical movement of $5.4 trillion in our marine
transportation system, and I have stressed for decades that we need to
provide robust funding to these three agencies who are critical to our
national security and economic sustainability.
I would like to start by commending Admiral Schultz for his strong,
steadfast leadership of the Coast Guard. For the past four years, you
have steered the Coast Guard on a steady course through unprecedented,
turbulent waters. Through your vision, the Coast Guard has emerged more
ready, relevant, and responsive during these tough times. Your
retirement is well-earned. Thank you for your service to your country,
Admiral Schultz.
I'd also like to congratulate Admiral Linda Fagan on her historic
nomination as the next Commandant of the Coast Guard. I couldn't be
more pleased with her nomination to succeed Admiral Schultz and am
confident she will command the Coast Guard with honor, integrity, and
great devotion. I look forward to working together.
For fiscal year 2023 the Coast Guard has requested $13.82 billion,
just a 1.3 percent increase in its overall budget relative to the
fiscal year 2022 enacted level, including a 0.8 percent or $95.9
million increase in discretionary spending. I am encouraged by the
Coast Guard's request this year versus last when the Coast Guard's
budget request was a mere 0.3 percent increase from the fiscal year
2021 enacted level. However, given the Coast Guard's diverse array of
missions and increasing responsibility, 1.3 percent is simply not
enough.
My primary concern is the servicemembers and the deplorable,
dilapidated buildings they must work and live in on a daily basis.
Inadequate housing and childcare are a persistent complaint amongst
servicemembers. If we want to increase retention and diversity, we must
do more to support our Coast Guard members. I'm also concerned with the
downward trend in recruiting. The Service has set an ambitious goal to
recruit 4,200 new servicemembers in 2022. This is a huge undertaking
for a service that has only 320 recruiters and I look forward to an
update on progress made to meet this goal.
I am also deeply concerned with the 35.6 percent decrease in
funding requested for shore facilities and aids to navigation. This is
particularly alarming in light of the Coast Guard's estimated $3
billion shoreside infrastructure maintenance backlog. This deficit has
grown after many years of underfunding, and I am interested to learn
more about how the Coast Guard arrived at just $180 million needed to
address the backlog.
With regards to the Maritime Administration, MARAD is vital to
ensuring successful management of U.S. maritime and shipbuilding
industries. During the unprecedented events of the past couple of
years, we have seen that maritime commerce provides a direct lifeline
to the economy. Today, I am curious to learn more about the decrease in
MARAD's Port Infrastructure Development Program request compared to the
fiscal year 2022 enacted level. If we are going to provide for a
resilient supply chain, it all starts and ends with port capacity.
However, I am pleased to see an increase of $19.8 million or 11.5
percent over the fiscal year 2022 enacted level for MARAD operations
and training. This amount includes $99.7 million dedicated to the U.S.
Merchant Marine Academy, which is expected to fund some much-needed
maintenance and repairs to the Academy's aging buildings, and most
importantly, to support new EMBARC measures which have been designed to
protect cadets against sexual assault and sexual harassment while at
sea.
In the last year, the Academy has faced great scrutiny regarding
its culture and safety, and for good reason. Fortunately, we have been
witness to the steadfast leadership of MARAD's Acting Administrator,
Ms. Lucinda Lessley. She has worked diligently to motivate a major
cultural shift at the Academy despite significant resistance. I have
every confidence that Ms. Lessley will continue to lead with competence
and capability to benefit the Academy and MARAD at-large.
Turning to the Federal Maritime Commission, I am pleased to see a
5.5 percent increase requested for its overall funding. I believe it's
clear that the Commission needs additional resources to enhance its
oversight and enforcement capabilities due to disruptions to the global
supply chain over the past couple of years.
The increase is warranted to provide the Commission with the
resources needed to effectively oversee and ensure all foreign carriers
abide by fair shipping practices and comply with all U.S. anti-trust
requirements.
I look forward to hearing from our witnesses on how the President's
budget will ensure that the Coast Guard, MARAD, the FMC, and all the
programs that support and regulate the U.S. maritime industry are
adequately resourced.

Mr. DeFazio. Thank you, Mr. Chair.
Mr. Carbajal. Thank you, Mr. DeFazio. I would now like to
welcome the witnesses: Admiral Karl Schultz, Commandant of the
United States Coast Guard; Master Chief Jason Vanderhaden,
Master Chief Petty Officer of the United States Coast Guard;
the Honorable Daniel Maffei, Chairman of the Federal Maritime
Commission; and Ms. Lucinda Lessley, Acting Administrator of
the Maritime Administration.
Thank you 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 part of the
record, the subcommittee requests that you limit your oral
testimony to 5 minutes.
With that, Admiral Schultz, you may proceed.

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

Admiral Schultz. Well, good morning, Chairman DeFazio,
Chairman Carbajal, Ranking Member Gibbs, distinguished members
of the subcommittee. Thank you for the opportunity to testify
today. On behalf of the entire Service, I thank you for your
enduring support of the Coast Guard and our efforts to restore
Service readiness.
Our 2022 fiscal year appropriation reflects Congress'
continued commitment to addressing the Coast Guard's readiness
challenges and maintaining progress on surface, aviation, and
infrastructure recapitalization, while also highlighting the
Service's increasing role in shaping global maritime affairs
and national security. Because of your support, we are
acquiring the Nation's first new heavy polar icebreakers in
almost a half century to enable a U.S. presence in the
geostrategically important high-latitude regions.
The operations and support increase of more than 20 percent
between the 2019 and 2022 budgets and the administration's 2023
budget request better positions the Coast Guard by investing in
our mission-ready total workforce, mission-enabling
technologies, and modern assets and capabilities to meet the
challenges today and in the future.
But critically important work remains. To advance our
national, economic, and environmental security interests in an
increasingly complex geopolitical and technologically
sophisticated environment, we must maintain this growth to our
operational funding and a keen focus on the resilience of our
capital infrastructure.
As a multimission Service, we are exceptionally agile and
adaptive, executing our 11 statutory missions simultaneously,
and we must apply these same skills to build a stable and
predictable PC&I funding of $2.0 billion-plus annually to
optimize our ability to plan the recapitalization of both our
facilities and our assets. While we have been very successful
in replacing frontline operational units devastated by recent
years' hurricanes, my crews on the Great Lakes praying for
hurricanes to reach their region is a poor way and an
unacceptable way to do business.
The administration's 2023 budget request supports continued
progress on the Offshore Patrol Cutter program, absolutely
vital to replacing the capability provided by our legacy fleet
of 210-foot and 270-foot Medium Endurance Cutters, which
largely operate in the Atlantic. These legacy assets have
served the Nation with distinction, some for 55 years, but are
increasingly more difficult and expensive to maintain.
The budget request also enables us to grow our fleet of MH-
60 Jayhawk helicopters, which operate with national and
Offshore Patrol Cutters as force multipliers. New Jayhawk hulls
or converted former Navy airframes per our Sundowner Program
will enable us to optimize Coast Guard aviation operations both
in near coast and distant waters.
Beyond 2023, we must continue to restore the Coast Guard
the Nation needs to ably conduct domestic operations,
facilitating the economic engine that is the Marine
Transportation System, as 95 percent of overseas trade enters
or leaves the U.S. by ship, as well as resourcing expanded
operations abroad in support of our national interests,
including those detailed in the White House's recent Indo-
Pacific strategy.
The Coast Guard contributes significantly to domestic as
well as global maritime safety and security by employing our
Service's unique blend of authorities and capabilities
collaboratively alongside our interagency and international
partners to achieve national objectives across a broad spectrum
of strategic challenges.
We are currently executing about $1.4 billion dedicated to
improving shore facilities across our Service, including $350
million provided in the 2022 appropriation that supports 11
critical shore facility investments, as well as the
supplemental inject of $430 million provided by Congress as
part of the Infrastructure Investment and Jobs Act, which in
itself funds 18 distinct projects.
We are grateful for this generous funding which enables us
to address some of our aging infrastructure, including
inventory that dates back to the late 18th century, as well as
provide new infrastructure for new assets we are fielding. But
our legacy assets remain vital operational contributors, and we
cannot shortchange their maintenance and sustainment funding.
Our forces are disaggregated across America's coastal
communities at roughly 1,000 individual units. Hence, we
maintain a significant inventory and backlog for both
recapitalization of infrastructure and asset maintenance. We
are appreciative in the 2022 funding that supports 26 new
engineering positions--civil engineering, specifically--to help
action those funds. This additional support to manage and
execute this critically important infrastructure work will help
us tackle projects at the speed of need.
Like the other DoD Armed Forces and DHS operational
components, the reality of high inflation, as well as the needs
of a modern workforce, warrant immediate review and retooling
of our policies to recruit, train, and retain the finest talent
in order to sustain Service readiness. While we diligently
address policies to eliminate barriers to success, we must
inject additional creativity in our thinking about how we
organize and employ people to continue to meet operational
demands.
The key to our success has always been and will remain our
people, the backbone of our Service. As previously stated, they
stand the watch 24 hours a day, 7 days a week, 365 days a year,
always ready for the call.
Thank you, and I look forward to your questions.
[Admiral Schultz's prepared statement follows:]

Prepared Statement of Admiral Karl L. Schultz, Commandant, U.S. Coast
Guard
Introduction
Good morning 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) 2022 Consolidated
Appropriations Act reflects Congress' continued commitment to
addressing the Coast Guard's readiness challenges and maintaining
progress on surface, aviation, and infrastructure recapitalization,
while also highlighting the Service's increasing role in shaping global
maritime affairs and national security. Today, I look forward to
discussing how the Administration's FY 2023 Budget request better
positions the Coast Guard to advance our national, economic, and
environmental security interests in an increasingly complex
geopolitical and technologically sophisticated environment.
The Coast Guard contributes significantly to global maritime safety
and security by utilizing its unique blend of authorities and
capabilities collaboratively in a ``whole of government'' approach; a
skillset increasingly vital to achieving national objectives across a
broad spectrum of strategic challenges. In 2021, as the Nation's
maritime first responder, we surged forces in response to domestic
natural disasters such as the deadly and destructive Category 4
Hurricane Ida that ravaged the Gulf region, and mobilized rapidly to
respond to the 14 August 7.2 magnitude earthquake that struck Haiti's
Southern Claw, saving hundreds of lives and providing other critical
assistance in the disaster's immediate aftermath. These contingencies
were additive to ``steady state'' operations in which your Coast Guard
saved 4,747 lives in Search-and-Rescue cases, interdicted 380,000+
pounds of cocaine, responded to 11,000+ pollution incident reports, and
facilitated the free flow of $5.4 trillion worth of commerce across the
Marine Transportation System (MTS) while global supply chain issues
impacted the availability and costs of goods and commodities.
As near-peer competitors, adversaries, and transnational criminal
organizations attempt to take advantage of finite resources within
others' sovereign waters, as well as erode the rules-based
international order that protects and enables the free flow of goods
and commerce on the world's oceans, like-minded countries look to the
U.S. Coast Guard for leadership and partnership. I would contend that
it is ``coast guard work'' to ensure the safety of life at sea, to
protect the marine environment, to promote economic prosperity, and to
generally maintain ``good order'' in waters of coastal state
jurisdiction.
This past year the Coast Guard's most modern and capable assets
operated across the globe with partners and allies in a manner that
further models maritime governance and ensures safe and free movement
across sea lines of communication. National Security Cutter (NSC) MUNRO
participated in cooperative at-sea exercises with the Royal Australian
Navy in the South China Sea, while NSC BERTHOLF enforced regional
fisheries management during Operation North Pacific Guard with maritime
law enforcement entities from Canada, the Republic of Korea, and
Japan--just one example of Service efforts to counter Illegal,
Unreported, and Unregulated fishing, a leading global maritime security
threat. In the South Pacific, the Coast Guard commissioned three new
154-foot Fast Response Cutters to operate from Coast Guard Forces
Micronesia/Sector Guam. These new assets are strategically placed to
support the White House's Indo-Pacific Strategy that details the need
for an expanding Coast Guard presence in the region to work
collaboratively with partners and bolster Indo-Pacific security.
In the Arctic, Coast Guard Cutter HEALY transited the Northwest
Passage and circumnavigated North America. Scientists routinely refer
to the Arctic as the world's thermostat, and on this important
deployment HEALY conducted seafloor mapping and analyzed meltwater from
Greenland's glaciers. This work proved critical not only to improving
navigation routes, but to also furthering scientific understanding of
how the ocean, atmosphere, and ice interact amidst a changing climate.
In the Antarctic, Coast Guard Cutter POLAR STAR, the Nation's only
heavy polar icebreaker, created a navigable path through ice as thick
as 21 feet to enable the annual replenishment of America's McMurdo
Station.
In 2021, your Coast Guardsmen worked overtime fulfilling all 11
``steady state'' statutory missions as well as supporting DoD and our
sister DHS agencies when needed. They contributed unique and
complementary Coast Guard capabilities to the Joint Force across both
geographic and functional Combatant Commands. They supported the
resettlement of Afghan refugees under the Department of Homeland
Security's ``Operation Allies Welcome.'' They provided critical
healthcare and other logistical support to meet surging demands on the
Southwest Border. Never has the utility of such diverse Coast Guard
services been so essential to our Department, the Nation, and the rest
of the world.
While I remain incredibly proud of the exceptional service the
Coast Guard provides to the American taxpayer, increasing mission
demands, inflationary costs, and constrained resource levels continue
to challenge Service readiness for both steady-state missions and
contingency operations. The Service requires increased operational
funding to continue closing the readiness gap while building the Coast
Guard the Nation needs, as well as funding to support the continued
recapitalization of operational assets and infrastructure.
I appreciate the significant investments for surface, aviation, and
shore maintenance included in the FY 2022 Appropriation; however, the
desired impacts of these investments are greatly diminished by the
historic inflation we experience today. In recent years, the Coast
Guard has been hamstrung by increasing maintenance backlogs resulting
in hundreds of lost patrol days for cutters and thousands of lost
flight hours for aircraft. This means that cutters, boats, and aircraft
are unable to deploy for planned operations, our people are unable to
complete their mission, and our partners are left without full Coast
Guard support. Rising inflation and supply chain issues continue to
increase costs throughout the life cycle for our assets.
For example, in the past year the price for steel to build our
ships has increased 48 percent, fuel costs have increased 20 percent
with an additional adjustment on the horizon, and the price for select
critical parts to maintain our Medium Endurance Cutters have increased
37 percent. These increasing costs for operating and sustaining our
fleet negatively impact our ability to perform our missions and our
combined efforts to restore service readiness.
Restore Readiness
Service readiness for the Coast Guard has been, and remains, my top
priority. Increasing global complexity and expanding demand for Coast
Guard capabilities necessitate modern technology, resilient
infrastructure, highly-capable assets, and a trained workforce that
reflects the diversity of our Nation. The FY 2023 budget request best
positions the Coast Guard by investing in mission-enabling technologies
and the modernizing of assets and capabilities to meet today's
challenges and prepare for tomorrow's threats.
Support the Mission Ready Total Workforce: Building and sustaining
a ``mission-ready total workforce'' is the cornerstone of our success,
and I remain committed to providing our dedicated and talented people
with the tools, resources, and policies that will enable them to
professionally thrive and personally grow. The world's most capable and
talented Coast Guard is comprised of over 57,000 Active Duty, Reserve,
and Civilian personnel, supported by 21,000 Auxiliary volunteers.
Moving forward, we will continue to pursue policies and practices
that maximize readiness and enable us to recruit, train, and retain a
workforce increasingly more representative of the American public we
serve. We remain committed to creating an environment that not only
attracts the best of our Nation's diverse talent, but also provides an
inclusive environment and rich experience that positions the Coast
Guard to be an employer of choice with unmatched retention in today's
highly competitive economy. We must adjust our human resource practices
to fill our ranks and optimize our mission ready total workforce. The
FY 2023 budget requests $170 million for pay and benefits; as well as
$53 million to enhance recruiting and retention initiatives, further
expand diversity and inclusion efforts, modernize training, and better
support the needs of our workforce.
Modernize Capability: The Coast Guard is in the midst of its
largest recapitalization effort since World War II--an effort critical
to ensuring our Nation has the capable, modern assets it needs to meet
the unprecedented growth in demand for Coast Guard services. However,
until fully recapitalized the Coast Guard continues to conduct missions
with legacy assets, some of which are over 50 years old.
Surface Assets
With the continued strong support of both the Administration and
Congress, we're acquiring the Nation's first new heavy polar
icebreakers in almost half a century. The $80 million provided in the
FY 2022 Consolidated Appropriations Act partially funded long-lead time
material for the third Polar Security Cutter (PSC). The FY 2023 request
of $167 million will sustain the program and procure an additional
portion of long-lead time materials for the third PSC. When fully
operational, PSCs will provide the global reach and icebreaking
capability necessary to ensure United States presence in the Arctic and
Antarctic regions in support of national interests and in furtherance
of the National Security Strategy and the National Defense Strategy, as
appropriate.
The FY 2023 request also includes the acquisition, modification,
and operation of a commercially available polar icebreaker in order to
add near-term national capability in the Arctic, train icebreaker
sailors, and help inform capability requirements for the future
acquisition of Arctic Security Cutters (medium icebreakers). As melting
sea ice creates new routes in the High Latitudes that increasingly
attract human activity, scientific discovery, and economic prospects,
the Coast Guard needs year-round surface access to the critically
important geo-strategic Polar Regions.
Continued progress on the Offshore Patrol Cutter (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 2023 request provides $650 million for construction of the fifth
OPC and long lead time materials for the sixth as we progress towards
our program of record of 25 hulls. The legacy assets the OPC's will
replace have been workhorses for decades and have served the Nation
with distinction, but the MEC fleet is becoming more difficult and
expensive to maintain, and we continue to see degradation in its
operational availability.
The FY 2023 request also includes $77M to support the Waterways
Commerce Cutter (WCC) program, specifically, the detailed design and
construction of the first two articles. Recapitalization of our fleet
of inland tenders--some of which have been in service since the 1940s--
is essential to maintaining both the fixed and floating aids that
enable navigation on the U.S. Marine Transportation System (MTS). This
system includes over 25,000 miles of rivers and navigable channels that
connect America's consumers, producers, manufactures, and farmers to
domestic and global markets; these marine highways are the economic
lifeblood of our economy, and are absolutely critical to American
prosperity.
Aviation Assets
The FY 2023 request continues the Coast Guard's transition of our
rotary wing fleet with $100M included for an additional four MH-60T
helicopters. 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
late 2030s. Growing the Coast Guard's fleet of MH-60s via the purchase
of new hulls, or the conversion of low-hour former Navy air frames at
our Aviation Logistics Center, is crucial to sustaining Coast Guard air
operations and meeting mission demands.
Expanding Operations--Arctic, Oceania, and the Atlantic Basin: Our
mission effectiveness and global impact is multiplied when we pursue
persistent efforts to address common challenges, share costs, and widen
the circle of cooperation. As transformational change in the maritime
domain triggers persistent demand for more ``coast guard work''
globally, coastal nations worldwide seek leadership from the U.S. Coast
Guard to establish or bolster their own coast guards or maritime
services, and to adapt or expand their existing maritime security
capabilities. Our collaboration in ``coast guard work'' strengthens
partnerships and amplifies our collective ability to disrupt threats
before they reach our shores. The FY 2023 request provides the Coast
Guard $118 million to expand the Service's operations in regions vital
to America's national security and prosperity--the Arctic, Oceania, and
the Atlantic Basin.
Cybersecurity and C5I Modernization: Evolving cyber threats
continue to present challenges to ensure the security of the Coast
Guard's network, but also that of the Marine Transportation System. The
FY 2023 request promotes continued efforts to modernize and protect the
Coast Guard's networks pursuant to Executive Order 14028 on Improving
the Nation's Cybersecurity, while positioning the Service to have the
robust suite of cyber tools and professionals necessary to keep pace
with technological advances and increasing cyber threats. Additionally,
we are leveraging the momentum of recent years' Congressional support
for our ``Technology Revolution''--a ``Whole of Service'' effort to
ensure our dedicated workforce has reliable, mobile, and integrated
information systems to empower operations, attract and retain a skilled
workforce, and leverage data.
Shore Infrastructure
Coast Guard facilities must be safe and resilient to meet mission
demands. Based on the nature of our missions, Coast Guard facilities
are located in areas prone to hurricanes, flooding, earthquakes, and
other natural disasters. The Nation's reliance upon the Coast Guard to
serve as a first responder after such disasters underscores the
importance of our facilities being resilient and ready for operations.
We greatly appreciate the $434 million provided by the Congress as part
of the Infrastructure and Investment and Jobs Act, and the $355 million
provided in FY 2022 to support critical shore facility investments.
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 carries
substantial backlogs for both the recapitalization of infrastructure
and asset maintenance. While we are making consistently strong headway
on recapitalizing our cutters and aircraft, that progress requires
making tough annual trade-offs that continue to impact our shore
infrastructure needs. Every Coast Guard mission begins and ends at a
shore facility, and the FY 2023 request includes targeted investments
to improve the condition of our aging shore facilities, and to prepare
for the Coast Guard's future fleet. Given the scope of the challenge,
both additional investments as well as a modern approach to project
planning, prioritizing, and execution are necessary to ensure the
Service has the adequately maintained and resilient infrastructure
required to meet the operational demands of both today and tomorrow.
Conclusion
As we look to FY 2023 and beyond, we must resource the Coast Guard
that our Great Nation needs to ably conduct domestic operations, as
well as leverage the unique authorities and capabilities of the
``World's Best Coast Guard'' to conduct operations far beyond our
coasts in support of our national interests. Funding provided in the FY
2023 President's Budget will enable the Service to protect the
Homeland, save those in peril, enhance our economic prosperity by
supporting the maritime industry, protect our national resources, adapt
to climate change, and strengthen the international rules-based order.
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 our Coast Guard workforce.
FY 2023 Budget Highlights
Budget Priorities:

Restore Readiness--The Coast Guard must maintain momentum
restoring Service readiness. More than ever, the Nation needs a ready
Coast Guard with the personnel, tools, and support systems to operate
in an increasingly complex, interconnected, and technologically
advanced maritime domain.
Build the Coast Guard of the Future--The Coast Guard is
in the midst of the largest recapitalization effort since World War
II--an effort critical to ensuring the Service has the capable, modern
assets it needs to meet the unprecedented growth in demand for Coast
Guard services.

The FY 2023 Budget requests $9.62 billion for Operations and
Support (O&S) and $1.65 billion for Procurement, Construction and
Improvements (PC&I). Budget highlights include:

Restore Readiness (O&S):
Support the Mission Ready Total Workforce
$170 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 $49
million for civilian pay and benefits (O&S).
$53 million for workforce readiness, including
recruiting, retention, diversity and inclusion, training, and support.
Modernize Operational Capability
$100 million for new assets including: operations and
maintenance for OPC #2; crew for OPC #3; operations and maintenance for
National Security Cutter (NSC) #10 and crew for NSC #11. Additionally,
the Budget provides funding for operations, maintenance, and crew for
three C-27J aircraft.
$11 million for marine safety capacity to modernize and
oversee the merchant mariner credentialing program, and additional
personnel to conduct timely and thorough marine inspections and
investigations to enable commerce and maritime security.
Expanding Operations: Arctic, Oceania, and the Atlantic Basin
$30 million to crew a commercially available polar
icebreaker to expand Coast Guard capacity, and near term enhanced
capability to conduct Arctic operations, grow High Latitude sailors,
and inform Arctic strategy.
$48 million to expand operations in the Indo-Pacific in
order to promote economic prosperity, combat IUUF, promote
environmental resilience, and ensure unrestricted lawful access to the
region's maritime environment.
$40 million to support activities in the Partnership for
the Atlantic Basin initiative to address maritime security issues.
Cybersecurity and C5I Modernization
$47 million to operate, maintain, secure, and protect
Coast Guard IT networks and conduct cyber effects operations to deter
and respond to cyber-attacks on the Marine Transportation System (MTS).
$7 million to transition to modern software and provide
mobile solutions for the workforce.

Recapitalize Legacy Assets and Infrastructure (PC&I)

$1.2 billion for vessels, including: $650 million for
construction of OPC #5 and long-lead time materials for OPC #6; $167
million for the PSC program, including project management and
construction of PSCs #1-2 and long-lead time materials for PSC #3; $60
million for post-delivery activities for NSCs #9-11; $77 million for
the Waterways Commerce Cutter (WCC) program, including project
management and long-lead time materials; and $125M to acquire a
commercially available polar icebreaker.
$182 million to recapitalize and sustain fixed and
rotary-wing aircraft including: sustainment of the current MH-60T
helicopter fleet and 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 fixed wing
surveillance aircraft.
$180 million for shore infrastructure improvements to
support new acquisitions and the execution of Coast Guard operations
including: PSC homeport in Seattle, Washington; FRC homeport in St.
Petersburg, Florida; WCC homeports; continued buildout of the
consolidated operational base in Charleston, South Carolina; and other
infrastructure repairs and upgrades.

Mr. Carbajal. Thank you, Admiral Schultz.
Next, we will go to Master Chief Vanderhaden.
You may proceed.
Master Chief Vanderhaden. Thank you, sir.
Good morning, Chairman DeFazio. Sir, it has been an honor
to serve with you. Thank you for inviting me and allowing me to
be your guest at the State of the Union Address. That was one
of the highlights of my life, and I am grateful for that. Thank
you. It was a wonderful, wonderful time.
Chairman Carbajal, Ranking Member Gibbs, and distinguished
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 Service readiness. This is likely the final time I will
appear before the committee as Master Chief Petty Officer of
the Coast Guard, because I also am retiring later next month.
As I reflect on the last 34 years, I am proud to observe
how much the Coast Guard has grown to better serve our American
people. I want to thank the members of this subcommittee and
the Congress for helping the Service continually evolve to meet
the complex challenges facing our Nation. Your advocacy has
been and continues to be essential to ensure that we provide
the best mission execution, and that we remain always ready.
The Coast Guard's relatively small force executes a broad
array of missions, and we are successful because we foster an
empowering environment where all our 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 with is
our ability to recruit and retain the workforce needed to
operate our cutters, boats, and aircraft. A close second
concern is the exponential increase in the cost of housing
facing our Coast Guard families.
As we replace our aging assets, the new cutters,
helicopters, and planes being built require us to grow our
workforce, so that we are prepared to operate these new,
amazing assets.
The Coast Guard enjoys the highest retention rate of all
the military Services. However, like the rest of the country,
we are challenged to find the next generation of dedicated men
and women who can and will serve in the military. It is an all-
hands-on-deck effort to attract the best and brightest, and
that is why we are expanding our Everyone Is A Recruiter
program. Finding new ways to attract talent to the Coast Guard
is tricky. If any of you know anybody that wants to serve in
the Coast Guard, I have got some Coast Guard swag for you, and
we can hand that out. So, we are really working hard to
recruit, but it is a tough recruiting environment right now.
A close second to recruiting is retention. If we want to
grow, we have to keep the people we have. But housing costs are
making it almost impossible for our people to find a place to
live. With the dispersed nature of the fifth largest branch of
the U.S. military, your Coast Guard, our members are forced to
live on the economy in most places. Our people are having to
live very far from their units, giving them untenable commute
times. It is having a detrimental effect on the servicemembers
and their families.
I know you can't bring housing costs down, but we need some
legislative help in addressing the speed and flexibility to
assess housing costs. The basic allowance for the housing cost
assessment system lags far behind the actual cost, especially
for the Coast Guard. This lag means that the rates never
reflect the actual costs that our people are paying for
housing. Policy changes are helpful for retention, but we are
always looking to do more to retain our best and brightest.
Having a mentor is proving to be very helpful to improving
retention. We have seen outstanding participation in our new
mobile-enabled mentoring program that connects mentors and
mentees through traditional one-on-one mentoring on a global
basis. We have thousands of Coast Guard members using this new
program, and that number is growing every day. Twenty-eight
percent of those users are women, and we are finding the
program is very popular with our affinity groups and other
underrepresented members. In fact, the Air Force, the Army, the
Navy, DHS, and many of our other Federal Government partners
are using the Coast Guard as a model for their mentoring
programs.
The Coast Guard is diligently developing innovative
strategies to build the workforce of the future. We recognize
the imperative to be an employer of choice that reflects the
public we serve. We are incorporating recommendations and best
practices from several workforce studies, along with human
resource management software improvements into a Ready
Workforce 2030 strategy. We are currently developing an
implementation plan for that strategy, which will help us
leverage data and technology to improve the quality of life for
our people.
As I depart the Coast Guard, I want to thank you on behalf
of the entire Coast Guard. You all have demonstrated not just
by word, but by action, how much you care about the Coast
Guard. Your staffs have enabled a small force to complete an
incredible amount of service to our country. You have improved
our morale by making each Coastie more effective and efficient
in their duties. And with your continued support, we will be
able to provide more and better service to our wonderful
Nation.
Thank you for inviting me to testify today, and I look
forward to answering your questions.
Mr. Carbajal. Thank you, Master Chief Vanderhaden. Let me
just say that I neglected to also recognize and thank you for
your service.
Master Chief Vanderhaden. Thank you, sir.
Mr. Carbajal. For some reason it just escaped my mind that
you too were retiring. So, congratulations. Thank you for your
service and leadership over your career, but as well as these
past 4 years, working with the Commandant, to make sure that
you guys provide extraordinary leadership for the Coast Guard
and our Nation. Thank you so much.
Master Chief Vanderhaden. Thank you, sir. It is an honor.
Mr. Carbajal. Next, we will go to Mr. Maffei.
You may proceed.
Mr. Maffei. Thank you. Good morning, Chairman Carbajal,
Ranking Member Gibbs, full committee Chairman DeFazio, and
members of the subcommittee. I am grateful to have this
opportunity to testify in support of the Federal Maritime
Commission fiscal year 2023 budget request, and answer your
questions.
The Commission seeks just under $34.7 million to support
its operations in the coming fiscal year. This would be a
substantial increase, a bit over 5 percent, from our fiscal
year 2022 enacted budget. The increase would go mainly to
enforcement and consumer assistance, since we continue to
receive large numbers of complaints commensurate with the high
freight rates, diminished reliability, increased delays, and
shortages of equipment such as containers and chassis that
currently plague our ports and ocean transportation.
We strive our best to review every potential case
thoroughly for violations of the law, and do all we can to
assist importers, and especially exporters, managing a system
where the capacity is simply unable to meet the continuing
surge of demand that started early in the COVID-19 pandemic.
That said, we are a small agency of fewer than 120 people
regulating an estimated $1.3 trillion of commerce.
As I have indicated to the subcommittee before, there are
potential enforcement cases that we cannot examine, or at least
not as thoroughly and expeditiously as they might merit,
because we simply do not have enough capacity. Your and your
colleagues' response to this situation is why I am bold enough
to ask you for this increase, while understanding that you are
contending with intense pressures on the Federal budget.
I also want to make it clear that, while I advocate for an
increase in resources, and I support bipartisan bills to
enhance our authority, the FMC is not waiting for these things.
We are already taking action on multiple fronts.
We have increased monitoring and enforcement activity,
paying particular attention to ocean cargo carriers and their
alliances, and I have directed our enforcement bureau to
prioritize export cases.
We have initiated a new focus on addressing fees and
surcharges with the goal of bringing greater transparency to
what shippers actually have to pay.
We have provided guidance to shippers on bringing
complaints to the FMC, and we are seeing a marked increase in
cases being filed.
With the support and advice of my Commission colleagues, I
directed the FMC to audit the major container carrier companies
to encourage and facilitate compliance on the Commission's
detention and demurrage rules, and their legal obligation not
to discriminate against exports.
The Commission is acting on all of the nonlegislative
recommendations of the fact-finding investigation on pandemic-
related effects led by Commissioner Rebecca Dye. These include
launching a new rulemaking to set forth standards governing
detention and demurrage billing practices, issuing policy
statements that address barriers to filing action at the FMC,
and placing an export advocate in our consumer affairs bureau.
Through multiple initiatives such as Commissioner Dye's
Supply Chain Innovation Teams and Commissioner Carl Bentzel's
data initiative, we have started tackling the complex issue of
shortages of usable equipment, such as export containers and
chassis, and the difficulties that shippers face in getting
reliable, useful information such as when ships will actually
take on export cargoes.
These efforts are contributing to increased incentives on
the containership lines and terminal operators to work together
with America's shippers to solve problems, rather than cause
them. I am gratified that some long-time critics of ours are
saying that they have not seen so much positive activity at the
FMC in years, and perhaps ever.
All of this said, the supply chain challenges are complex
and interconnected. Cargo transportation in foreign nations, as
well as the United States, as we have seen with the Shanghai
issues in this past week, and at sea, at ports, and inland has
all come up short when it comes to satisfying the vast demand
for ocean shipping. No single Government agency is capable of
addressing all these issues. So, the FMC works across
Government as well as with industry stakeholders to find
solutions to improve our Nation's cargo transportation
networks.
In ocean shipping, however, the FMC is at the vanguard. And
if legislation pending before Congress is enacted into law, as
I hope it will be, our workload will further increase. This is
the right time to invest in the ability of the Commission to
hold accountable the industry we regulate, and meet the needs
of American shippers. Thank you.
[Mr. Maffei's prepared statement follows:]

Prepared Statement of Hon. Daniel B. Maffei, Chairman, Federal Maritime
Commission
Good morning, Chairman Carbajal and Ranking Member Gibbs, I am
grateful to have this opportunity to testify in support of the Federal
Maritime Commission Fiscal Year 2023 Budget Request.
The Commission is seeking $34,683,500 to support its operations in
the coming Fiscal Year. This is a $1,815,000--or 5.2 percent--increase
from our Fiscal Year 2022 enacted budget and represents a substantial
expansion in our enforcement and consumer assistance capabilities.
This investment is needed. Demand for Commission services is not
dissipating. Our Office of Consumer Affairs and Dispute Resolution
Services continues to receive voluminous requests from the public for
assistance. Aggravated shippers continue to share information with us
about unsatisfactory service--all of which is reviewed for potential
violations of the law. There has been a noticeable uptick in litigation
initiated at the Commission, both in small claims as well as formal
complaints before our Administrative Law Judge. Our Area
Representatives and Bureau of Enforcement personnel are pursuing all
possible leads to identify possible enforcement actions.
Not only is the demand for Commission services not dissipating, the
reasons why people contact us do not appear to be going away anytime
soon.
The global, ocean-linked, supply chain system continues to suffer
from conditions that undermine its effectiveness and provide no obvious
or easy solutions. Congestion, diminished reliability, and shipper
competition for scarce resources--in this case space aboard vessels--
all work in tandem to force rates up. The longer demand remains at
historic levels, the longer it will take for the system to return to
some semblance of its normal operating rhythm.
Make no mistake, no part of the world escapes the consequences of a
system operating at the limits of its capabilities and at the maximum
of its capacity. This is not unique to the United States. No major
shipping nation in the world has not experienced similar problems.
However, given the strong demand of U.S. consumers and U.S.
manufacturers for goods, commodities, and industrial inputs, effects of
global supply chain problems are particularly pronounced in our Nation.
Shippers' frustration with ocean carriers and congested ports is
understandable, but the problem is fundamentally not that simple. Far
from carrying less cargo, ocean carriers are carrying record setting
volumes of containers into the United States. Our seaports are being
much more productive and handling much more cargo volumes. The biggest
challenge is not to get the ocean carriers and seaports to carry and
process more cargo, but how to address and resolve issues in the U.S.
domestic networks and infrastructure that are even more severe
limitations on the supply chain's capacity. The availability of
intermodal equipment, warehouse space, intermodal train service,
trucking, and enough workers in each of those sectors, remain
challenges to getting more cargo off our ports and to destination with
more certainty and reliability.
Foundationally, these are complicated, interconnected, and global
problems that can only be addressed by many parties and organizations
demonstrating leadership and taking responsibility for matters where
they can make a difference. There is no one government agency, nor one
company capable of unilaterally addressing the myriad causes that have
so totally disrupted the international ocean freight delivery system.
As I noted above, many parties have turned to the Federal Maritime
Commission for help during this disruptive period. We have responded as
comprehensively, aggressively, and creatively as possible within the
bounds of our present authorities. Among our initiatives are the
following:
We have increased investigative and enforcement activity,
paying particular attention to ocean carriers.
We have initiated a new focus on addressing fees and
surcharges with the goal of bringing greater transparency to rates.
We have increased the monitoring requirements of ocean
carrier alliances and continue to assess if further changes are
necessary.
We have invested in our Bureau of Trade Analysis and
their ability to conduct oversight of the markets and alliances by
adding staff with backgrounds in data science and analysis.
We have provided guidance to shippers on bringing
complaints at the Federal Maritime Commission and we are seeing an
increase in both formal and especially informal docketed proceedings
being filed.
We have reviewed hundreds of pieces of correspondence
sent to the Commission for potential actionable enforcement actions.
The Bureau of Enforcement has continued to investigate
for any illegal conduct in the marketplace and stands ready to
prosecute potential violations by any entity under our jurisdiction.
We have consulted with counterpart competition
authorities, the European Union, and the People's Republic of China,
regarding our respective efforts to ensure a competitive marketplace
for ocean transportation services, as well as observations and
conclusions from each regime's monitoring work.
I directed, following conversations with Commissioner
Dye, that the FMC created the Vessel-Operating Common Carrier Audit
Program to help ensure with compliance on the Commission's interpretive
rule on detention and demurrage and other important regulations.

Much of the focus on actions the Commission can take to address
pandemic-related impacts to the supply chain comes under the auspices
of Fact Finding 29 led by Commissioner Dye. In July of last year, the
Commission issued a set of eight Interim Recommendations based on what
she had learned from her work. The Commission unanimously embraced her
recommendations and has acted on each that did not require legislative
change to implement. Specifically:
The Commission issued an Advanced Notice of Proposed
Rulemaking in February to solicit feedback if a new rule governing
demurrage and detention billing practices would benefit the trade and
should apply to marine terminal operators and non-vessel operating
common carriers in addition to vessel-operating common carriers.
The Commission issued three policy statements in December
2021 providing new guidance to shippers and others on bringing private
party complaints at the Federal Maritime Commission. These policy
statements address barriers identified by the trade community as
disincentives to filing actions at the agency.
+ The Commission reiterated that shippers associations and trade
associations may file a complaint alleging a prohibited act violation
under 46 U.S.C. Chapter 411. This allows these organizations to protect
the interests of their members while also providing shippers with a
degree of separation and insulation from potential retaliation.
+ The Commission reiterated that a party who brings an
unsuccessful complaint is not automatically required to pay the other
party's attorney fees. The Commission will look favorably upon
complainants who raise non-frivolous claims in good faith, who litigate
zealously but within the rules and for proper purposes, and who comply
with Commission Orders.
+ The Commission emphasized that it broadly defines both who can
bring a retaliation complaint, as well as the types of shipper activity
that is protected under the existing retaliation prohibitions. This
policy statement also addresses the proof necessary for certain
retaliation complaints.
Commissioner Dye issued an advisory in February outlining
options shippers have for filing demurrage and detention complaints at
the Federal Maritime Commission. Her statement provides links to
information on the Commission's website that can be helpful to
individuals in determining which avenue to address their complaint and
the information necessary to initiate a proceeding. Finally, she
outlines the differences between filing a complaint and reporting
potential violations of the law that might be investigated by the
Commission's Bureau of Enforcement.
On a related note, a multimedia presentation explaining
Commission procedures is in final stages of production and will soon be
posted to the Commission's website.
As referenced above, an Export Advocate has been assigned
to CADRS to work directly with U.S. export shippers in addressing and
resolving the unique challenges they face.

The U.S. domestic freight transportation system has been strained
for years. It has operated sufficiently, but with essentially no excess
capacity to absorb shocks to the system. Previous significant
disruptions demonstrated shortcomings in our networks and
infrastructure and revealed the need to realize more capabilities to
move cargo. One obvious response is to build more capacity. To that
end, I applaud the Congress' passing of bipartisan legislation on
infrastructure that includes funding for ports. That will certainly
help.
An additional approach is to find ways to use existing
infrastructure more efficiently. Improving information sharing among
all those involved in moving containerized trade is a way to achieve
that goal. Toward that end, I asked Commissioner Carl Bentzel to take
on the Maritime Transportation Data Initiative which is identifying
data constraints that impede the flow of ocean cargo and add to supply
chain inefficiencies. His work has three key objectives: cataloging the
status quo in maritime data, storage, and access across the
transportation chain; identifying key gaps in data definitions/
classification; and developing recommendations for common data
standards and access policies/protocols. Since its launch in December,
Commissioner Bentzel has held weekly sessions with representatives from
all sectors of the maritime freight supply chain to gain their
expertise on how data can contribute to the long-term reliability of
the domestic cargo delivery system. Commissioner Bentzel will hold a
Maritime Data Summit on June 1, 2022, where he will present his
findings and receive feedback from industry participants.
In addition to addressing the concerns of cargo shippers, the
Commission has been active on issues related to the passenger cruise
industry. The COVID pandemic created a significant disruption to this
industry that employs hundreds of thousands of Americans and is a vital
part of the economies of several states. To do everything we could to
help, the Commission initiated Fact Finding 30 under the direction of
Commissioner Louis Sola. In March 2022, the Commission adopted a final
rule recommended by Commissioner Sola that establishes more rights and
options related to refunds for cruise passengers when a cruise line has
cancelled or delayed a voyage. These changes not only provide more
remedies to consumers, they help reestablish the public's confidence in
being able to book a cruise voyage.
Our newest Commissioner, Max Vekich, was sworn-in on February 15,
2022, and he brings to the Commission decades of experience in industry
working as a longshoreman. Commissioner Vekich is very interested in
issues related to port competitiveness and the role smaller and
regional ports can play in creating supply chain resilience and options
for shippers.
For my part, I have no higher priority as Chairman than using the
authority and jurisdiction of the Commission to help U.S.-based
exporters access shipping services and reach overseas markets.
I directed our Vessel-Operating Common Carrier Audit Team to expand
its scope and evaluate how 11 key shipping lines serve U.S. export
shippers, and in particular agricultural shippers. Responses will
provide better insight into market trends and performance and identify
where opportunities exist for individual lines to improve or increase
access to service offerings. The Audit Team completed their first round
of discussions last week and the Commission will be briefed on the
initial findings in the coming weeks.
As I testified above, we have added an Export Advocate to our
Office of Consumer Affairs and Dispute Resolution Services (CADRS), and
I have directed both CADRS and the Bureau of Enforcement (BoE)
prioritize any case that involves exporters.
Further, the BoE is examining the business practices of five
independent ocean carriers drawn to the U.S. markets by high freight
rates to determine how those companies are serving the export markets
and if they are meeting their legal obligations.
This is all in addition to other ongoing efforts such as
Commissioner Dye's work with Supply Chain Innovation Teams toward
solutions to some of the most challenging issues exporters face. These
include insufficient equipment availability, inefficient container
return procedures, and the lack of reliable information regarding
vessel calls and deadlines for delivering cargo for loading.
I honestly believe we are doing everything we can within our
current authority, however I am very openminded to ideas. I will do the
most I can to support U.S. exporters and I will note here my support
for versions of the Ocean Shipping Reform Act going through Congress
that is detailed in other places.
A valuable channel for receiving input is the Congressionally
established Federal Maritime Commission National Shipper Advisory
Committee, which is off to a very strong start. This group of 24
individuals representing exporters and importers has approached their
duties with a seriousness and sense of purpose that is impressive. They
are holding their fourth meeting in six months today and we are happy
to have them at the Commission in person for the first time.
Over the past year, the Commission has worked hard on many fronts
to make a difference where we can and within the bounds of our
authorities. I am proud of the work we have done, which is all the more
significant when one considers the relatively small size of the
Commission--approximately 115 fulltime equivalent personnel. With more
resources we can do more and the budget we are seeking provides us with
that opportunity.
An increase in our budget will allow me to add personnel to the
Bureau of Enforcement, the Office of Consumer Affairs and Dispute
Resolution Services, and the Office of the Administrative Law Judges.
We are moving forward with hiring actions in each of those functions
that will permit the Commission to assist more people, investigate more
allegations of wrongdoing, and provide more rapid consideration of
litigation. The requested Fiscal Year 2023 budget will allow us to grow
to approximately 150 fulltime personnel. Almost 80 percent of the 36
new positions the Commission will create will be in enforcement and
consumer assistance functions, greatly expanding the abilities to
assist consumers, investigate complaints, and pursue those who have
broken the law.
A significant demand for Commission services already exists and if
legislation pending before Congress is enacted into law, our workload
will certainly escalate significantly. This is the right time to invest
in the ability of the Commission to meet the needs of our regulated
community and we appreciate the support we are receiving from both the
Congress and the Administration to grow our capabilities.
Thank you for your attention. I look forward to your questions.

Mr. Carbajal. Thank you, Mr. Maffei.
And next, Ms. Lessley, you may proceed.
Ms. Lessley. Good morning. Thank you, Chairman Carbajal,
Ranking Member Gibbs, and, of course, Chairman DeFazio and
members of the subcommittee. Thank you for the opportunity to
appear.
I also want to thank you for your support and leadership as
we have worked to address the many challenges at the Merchant
Marine Academy and to support culture change throughout the
maritime industry. Your leadership support and that of your
staffs have been absolutely essential to all of our efforts,
and I just can't thank you enough.
I am honored to appear with my colleagues, Admiral Karl
Schultz, Commandant of the Coast Guard; Master Chief Petty
Officer of the Coast Guard Vanderhaden; and, of course,
Chairman Maffei, to testify on the President's fiscal year 2023
budget priorities for the Maritime Administration. I would like
to begin by providing an update on Sea Year.
As has been discussed, last year we made the difficult
decision to briefly pause the Merchant Marine Academy's Sea
Year training aboard commercial vessels, so that we could
institute new safety policies to help prevent sexual assault
and harassment, to support survivors, and to strengthen a
culture of accountability.
We developed a program called the Every Mariner Builds a
Respectful Culture, or EMBARC, which enumerates new safety
requirements for vessels that carry our cadets. MARAD will not
place cadets on commercial vessels that have not enrolled in
EMBARC.
We have, critically, also instituted new policies at the
Merchant Marine Academy to improve the support we provide to
our cadets at sea, and to try to remove barriers to reporting
when assault or harassment do occur. Cadet embarkations resumed
in December, initially on training vessels and vessels operated
by the Navy, the Military Sealift Command, and the U.S. Coast
Guard. We thank them for their support of our midshipmen, and I
particularly want to thank Admiral Schultz for his leadership,
for the unwavering support of the Coast Guard at all stages of
this effort.
With their assistance, the members of the class of 2023 are
accumulating the sea time they need to graduate on time. If,
however, due to any unforeseen circumstances a midshipman is
not able to accrue all required sea time, the Coast Guard has
indicated that midshipmen can still take their license exam at
the expected time, and then complete all required sea time. No
one will leave the Academy without all of the sea time they
need to obtain their licenses.
As of today, we have, I am pleased to announce, seven
commercial carriers enrolled in EMBARC. We just enrolled one
more this morning. Through continuous review, we will work to
identify areas where our policies fall short and improve them.
And we will work to support urgently needed culture change
across the maritime industry.
We know we did not get everything right. We have put EMBARC
in the Federal Register, and encourage everyone who has
comments to submit them.
Turning to the budget request to address critical
infrastructure gaps while fostering and sustaining job
opportunities in the maritime industry, the President's fiscal
year 2023 budget requests $906 million for MARAD. The
Bipartisan Infrastructure Law also provides $450 million in
advance appropriations for our Port Infrastructure Development
Program, which I know is a priority for this subcommittee. This
funding, when coupled with the budget request, represents a
nearly $1.4 billion investment in the merchant marine and the
maritime industry.
Looking first at sealift, the budget requests $318 million
in full funding for the Maritime Security Program, which will
continue to assure the Department of Defense has access to the
60 ships enrolled in the program.
The budget request would continue funding for the Tanker
Security Program, and we look forward to the enrollment of 10
U.S.-flagged tankers. MARAD, of course, maintains 41 Ready
Reserve vessels that provide sealift surge capacity in support
of our military. Funding from DoD in 2023 would enable MARAD to
continue to maintain this sealift support and to advance
essential recapitalization of the fleet.
MARAD has awarded our vessel acquisition manager contract,
and two used vessels have been procured. Construction is also
well underway on the first two of the five National Security
Multimission Vessels, with the first expected to be delivered
in early 2023.
Looking at mariner training programs, the budget requests
$77 million to provide Federal assistance to the six State
maritime academies for our grant programs. As I mentioned, the
budget requests $230 million for the Port Infrastructure
Development Program to fund grants that improve port
infrastructure and facilities. This funding, which, when
combined with the $450 million provided in the Bipartisan
Infrastructure Law, would create a total proposed investment of
$680 million.
The budget requests $20 million for our Small Shipyards
Grant Program and $10 million for the America's Marine Highway
Program to support the increased movement of freight by water.
To advance our essential decarbonization goals, the budget
requests $10 million for the Maritime Environmental and
Technical Assistance Program.
And finally, the budget requests $99 million for the
Merchant Marine Academy.
Thank you for the opportunity to discuss the budget
request. I am happy to answer any questions.
[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. Thank you
for your tremendous support for the Maritime Administration (MARAD),
the U.S. Merchant Marine Academy (USMMA), and the U.S. maritime
industry. We greatly appreciate the opportunity to testify today on the
President's Fiscal Year (FY) 2023 budget, and how this request will
continue to advance MARAD's key priorities.
FY 2023 Budget Request
MARAD's statutory mission is to foster, promote, and develop a
strong and resilient United States merchant marine and maritime
transportation industry to provide essential sealift capacity support
for our military and to support the competitiveness of the U.S.
economy.
The President's FY 2023 Budget request of $906.7 million for MARAD
will continue to strengthen resiliency in the maritime transportation
system by advancing recapitalization of our sealift capacity,
supporting investments in our ports and waterways, and expanding our
efforts to address climate change. Funding would also continue critical
investments to address the many urgent and long-standing challenges at
USMMA.
The Bipartisan Infrastructure Law (BIL) also provides $450 million
in advance appropriations which, when coupled with the FY 2023
President's Budget, would represent nearly a $1.4 billion investment.
The BIL funding will be invested through our Port Infrastructure
Development Program (PIDP), which enables us to support the
construction of new capacity at ports around the United States to
improve cargo throughput, eliminate bottlenecks, and reduce the time
and cost of shipping goods.
National Security
Providing the sealift that the Nation needs is a critical part of
MARAD's mission, and we are proud to be in our 76th year of managing
the National Defense Reserve Fleet (NDRF). America's strategic sealift
provides the Nation with the capability to project power globally by
deploying Department of Defense (DOD) forces and moving cargoes
worldwide during peacetime, wartime--and through contested environment.
Our Nation's sealift requires assured access to a combination of
commercial and Federal resources to succeed.
Our Government-owned sealift fleet is supported and leveraged by a
fleet of privately owned, commercially operated U.S.-flag vessels in
the Maritime Security Program (MSP). The new Cable Ship Security
Program (CSP) also supports U.S.-flagged ships, and the Tanker Security
Program (TSP) funded in the Consolidated Appropriations Act, 2022, will
soon add U.S.-flag capability to transport fuel to enable DOD to meet
its operational needs.
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. Access to a pool of qualified mariners from a robust,
commercial maritime fleet is essential to maintaining sufficient
sealift readiness capacity for contingencies. Due to the declining
number of ships in the U.S.-flag oceangoing fleet, MARAD is concerned
about our ability to quickly assemble an adequate number of qualified
mariners to operate large ships for surge and sustainment sealift
operations if an extended mobilization were to occur.
As they always have during times of crisis in our nation's history,
U.S. merchant mariners and other critical transportation infrastructure
workers--including longshore workers, truckers, rail workers, and
warehouse workers--have gone above and beyond during the COVID-19
pandemic to ensure the effective operation of our maritime
transportation system and our intermodal supply chains. These essential
workers have moved record volumes of cargo often at great personal
risk, and we remember their heroic efforts and sacrifices during the
COVID-19 pandemic.
Our nation's strategic sealift is hindered by a number of
challenges, including: an aging fleet, the threat of operations in
increasingly contested environments, the shortage of available
mariners, and unprecedented readiness challenges brought on by the
COVID-19 pandemic. Funding requested in the FY 2023 Budget will support
efforts to address these challenges.
The FY 2023 Budget requests the fully authorized level of $318
million for the MSP, which is the heart of sustainment sealift. The MSP
is composed 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 DOD with 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 sustainment of the merchant
mariner base, providing employment for approximately 2,400 highly
trained, skilled U.S. merchant mariners who may also crew the U.S.
Government-owned surge sealift fleet when activated, as well as support
for more than 5,000 additional shore-side maritime industry jobs. MSP
encourages newer vessels to enter the U.S.-Flag fleet. In FY 2021,
there were six new vessels that flagged into the U.S.-Flag fleet to
participate in MSP.
In addition, the newly funded and authorized TSP will begin to
address the need for more U.S.-flag product tankers capable of loading,
transporting, and storing on-station bulk petroleum refined products to
meet both national economic needs and DOD contingency requirements.
Thank you for your support for the TSP. The FY 2023 Budget for MARAD
continues funding to maintain this critical program, and we look
forward to the enrollment of ten U.S.-flag tankers in the TSP, and
anticipate this would create and sustain more than 500 critical U.S.
mariner jobs.
MARAD maintains a fleet of Government-owned vessels in the NDRF,
including the Ready Reserve Force (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 ships, 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
consists of 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 ships are relied upon to provide support services to
emergency response personnel at impacted disaster areas during national
emergencies, including severe weather events such as major hurricanes.
The President's FY 2023 Budget requests $730 million from DOD
budgetary authority for MARAD to maintain vessels in the NDRF and RRF.
Funds will ensure MARAD's ability to maintain the fleet in a ready,
reliable, and responsive condition to meet strategic sealift for the
U.S. Armed Forces, and humanitarian support when called upon during
national emergencies, as well as maintain MARAD's NDRF fleet mooring
sites.
Our primary concern for the RRF is the recapitalization of the
aging current fleet. The budget request includes funding to support the
acquisition of two used vessels. The RRF fleet has an average age of
more than 46 years--some well past their expected duration of use--
which makes recapitalization critical. The COVID-19 pandemic has
exacerbated difficulties in maintaining ship and even mariner
readiness. The challenges have included widely varied local public
health control measures, shipyard and local marine repair delays due to
COVID-19 effects on the workforce, training shortfalls, and delays in
the receipt of replacement equipment and even raw materials like copper
windings for motors. While these challenges have contributed to longer
out-of-readiness periods, our overall readiness actually increased over
the last year thanks to modest increases in resources.
MARAD has been actively working on recapitalization. As authorized
in the FY 2018 National Defense Authorization Act (NDAA) and following
an acquisition protest upheld by the Government Accountability Office,
MARAD re-solicited and awarded the Vessel Acquisition Manager (VAM)
contract to manage our recapitalization efforts. After a global vessel
search, screening, and onboard inspections, two vessels were selected
for procurement in 2021. The first vessel was delivered to MARAD in
March, for rapid enhancement as an RRF sealift vessel and delivery of
the second vessel is imminent. We continue to work closely with DOD,
U.S. Transportation Command , and the Navy to support the procurement
actions necessary for these vessels to meet the Initial Operational
Capability as RRF ships.
Wherever possible, the RRF program will advance recapitalization
and seek opportunities to increase the rate of vessel replacement. As
vessels are reassigned to MARAD from DOD components for maintenance in
the RRF program, our recapitalization requirements will increase. The
rate of recapitalization is limited by the number of ships we are
currently authorized to purchase.
U.S. Merchant Marine Education and Training
MARAD supports mariner training programs to produce highly skilled
U.S. Coast Guard (USCG) credentialed officers for the U.S. merchant
marine. MARAD continues to support mariner education and training
through the USMMA, and facilitates mariner education through the
support we provide to the six SMAs.
USMMA is a major recruitment source of U.S. Navy Reserve (USNR)
Officers and also 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 at times of national
need. The skilled maritime leaders and military officers that graduate
from USMMA help keep the nation's maritime industry competitive in the
global marketplace and also answer the call to duty when the nation
needs their service.
The President's FY 2023 Budget for MARAD requests $99.7 million for
the USMMA. Funding will support academic operating expenses for an
estimated 1,010 midshipmen and 296 faculty and support staff, including
continued support for measures to help prevent sexual assault and
sexual harassment, and provides for routine and unplanned facility
maintenance and repair needs of the Academy's aging physical plant.
The Academy, MARAD, and DOT are committed to ensuring the safety of
midshipmen both on campus and during their training at sea. As the
Committee is aware, late last year, we made the difficult decision to
pause the Merchant Marine Academy's Sea Year training aboard commercial
vessels that midshipmen undertake to earn sea time. We did this so we
could strengthen both the measures we require of the commercial
operators carrying cadets and our own institutional policies,
procedures, and training instructions to prevent sexual assault and
sexual harassment (SASH), improve maritime safety, and support a
culture of respect in the merchant marine.
In response to a request from Members of Congress--including
leaders of the Transportation and Infrastructure Committee--for a
public plan to prevent SASH and improve safety, we implemented a new
Superintendent's Instruction to govern Sea Year at the Merchant Marine
Academy. We also revised the Sea Year guide to include new policies and
procedures to improve the support we provide to midshipmen, including a
new amnesty policy for SASH survivors, witnesses, and bystanders. We
also provided cadets with satellite phones they can use at sea to
contact the Academy as well as their wider support network, including
family and friends.
In addition, we developed a program called ``Every Mariner Builds a
Respectful Culture,'' (EMBARC). This program enumerates policies
intended to help prevent sexual assault and sexual harassment, to
support survivors, and to support a culture of accountability.
Commercial carriers must adopt these policies before cadets can embark.
Critically, we intend for these policies not only to strengthen
cadet safety, but to be the first steps in what must be an ongoing
effort to strengthen safety for every mariner. That is why we have
required these practices be implemented as part of vessels' Safety
Management System. Doing so will reinforce a long overdue change in
shipboard culture that will promote fair and equitable treatment of all
mariners on board and thereby contribute to a safe working environment
in which employers do not tolerate sexual assault and sexual
harassment. We appreciate this Subcommittee's leadership on these
issues and its support for our ongoing efforts to spur urgently needed
culture change in the maritime industry.
As of April 19, 2022, five carriers are enrolled in the EMBARC
program. We continue to meet with carriers to answer their questions
about EMBARC standards and have published and updated a compilation of
``Frequently Asked Questions'' to provide additional clarity.
We are also committed to complementing these foundational efforts
with a comprehensive review of sexual harassment and sexual assault
incidents experienced by cadets, both on campus, and aboard commercial
vessels during Sea Year.
Cadet embarkations resumed in December 2021, initially on training
vessels and vessels operated by Military Sealift Command (MSC), the
Navy, and the Coast Guard. We greatly appreciate the support provided
by the MSC, the Navy, and the U.S. Coast Guard to our cadets. Thanks to
their assistance, we currently expect that the midshipmen in the USMMA
Class of 2023 will accrue the sea time needed to qualify for their
licensing exams. We also appreciate the concessions that the Coast
Guard has provided to support our midshipmen. We note that thanks to
these concessions, should any midshipman have a sea time deficit, they
will still be able to take their licensing exams on time and any
remaining sea time will be provided by USMMA working in coordination
with our partners. No student will leave USMMA without all of the sea
time they need to graduate with their licenses.
As the Committee knows, we have been providing Congressional staff
with weekly updates on these issues since January 5, 2022. We continue
to meet with carriers to answer their questions about EMBARC, and have
published and updated a ``Frequently Asked Questions'' page to address
issues of concern. We urge every U.S.-flagged carrier to enroll as
quickly as possible so that we can continue to expand cadets'
commercial embarkations.
The FY 2023 Budget for USMMA includes $11.9 million for essential
and recurring maintenance and repair activities, and unplanned
emergencies on campus. An increase in funding will support the
realignment of certain routine maintenance and repair activities and
expenses of environmental and energy management control systems, and
safety functions as we transition to a Campus-wide Maintenance Contract
to more effectively and efficiently manage these annual requirements.
Additional funding will also facilitate requisite replacement and
rehabilitation of major operating systems (chillers, boiler plants,
sewage plants, water mains, etc.) that have been operating beyond their
useful lives.
We greatly appreciate the support from Congress to ensure that the
Academy has the resources necessary to modernize its facilities, and
most recently approving the reprogramming of certain Academy prior-year
balances to among other things: will support the hiring of additional
infrastructure staffing; provides MARAD with additional oversight
resources for the Academy's capital improvement program; and funding
for maintenance and repair needs. MARAD and DOT will continue to work
to identify and evaluate the long-term infrastructure needs of the
Academy, and ensure that facilities are maintained to provide a safe
and healthy environment for Midshipmen, faculty and staff while
enhancing the quality of education at all times. We are also working to
strengthen USMMA's institutional capacity to manage capital and
maintenance programs according to professional project management
principles.
The FY 2023 Budget request also includes $77.7 million to provide
support to the six SMAs in educating and training mariners to become
future leaders in the maritime industry. This request includes funding
for vessel management, logistics, and maintenance oversight to prepare
the schools to receive and operate the National Security Multi-Mission
Vessels (NSMV). The budget request would address unanticipated
increases in steel costs for the NSMVs, support for pier improvements
necessary for heavy weather mooring of the NSMVs, maintenance and
repair costs to maintain the legacy school ships, and continue our
direct support to the SMAs.
The new NSMVs will provide a state-of-the-art platform to support
mariner education, and also provide significant new capabilities to
engage in national humanitarian and disaster relief missions. The
training ships are the most important assets provided by the Federal
Government to enable the SMAs to maintain their mariner education
programs that prepare cadets to obtain unlimited USCG licenses.
Congress has recognized the need to replace these training ships,
and we thank you for supporting and appropriating funds for the
construction of five NSMVs. MARAD has implemented the Congressional
acquisition strategy utilizing commercial best practices through a
contracted Vessel Construction Manager (VCM) to negotiate for, manage,
build, deliver, and warrant these new ships. Construction is fully
underway at Philly Shipyard on the first two ships --the EMPIRE STATE
and the PATRIOT STATE--as designed and at a fixed price. The first NSMV
is expected to be delivered to MARAD in early 2023, and we will
continue to keep the Committee informed as the NSMV program progresses.
Until the final delivery of the fifth NSMV, MARAD anticipates the
continued need for the SMAs to share vessels in the training fleet to
mitigate shortfalls in the current availability of berths so cadets can
gain the requisite number of sea days to meet their licensing
requirements. Funding requested in FY 2023 will continue to support
this effort. The challenge of providing sea days to cadets has been
exacerbated by the COVID-19 pandemic, which caused nearly all SMA
training cruises to be cancelled. Utilizing funds appropriated by
Congress to support SMA training vessel sharing, MARAD has sponsored
training cruises to help make-up opportunities for creditable sea days.
Other Economic and Climate Sustainability Investments
The strong rebound in U.S. consumer demand that reached its peak in
2021 has spurred unprecedented growth in cargo volumes and 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
2022.
The MARAD Port Infrastructure Development Program request of $230
million for FY 2023 will provide grants to improve port infrastructure
and facilities, and to stimulate economic growth in and around ports,
while also improving safety, addressing climate change and equity, and
strengthening our supply chain. In addition to the FY 2023 Budget, the
BIL provides $450 million in advance appropriations for this program in
FY 2023. Together, this funding would provide a $680 million investment
for port infrastructure projects. Investing in the 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 to strengthen our supply chains.
The FY 2023 Budget requests $10.8 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, as well
as damage to the roadways. There are currently 54 Projects and 29
Routes. The routes encompass 41 states, the District of Columbia, and
all five U.S. territories. They serve as extensions of the supply
chains within the surface transportation system, and enable more cost-
effective transportation options for U.S. shippers and manufacturers.
Funding for grants will seek to focus on projects that mitigate and
minimize the environmental impacts of our ports and along the waterways
to reduce negative impacts on neighboring communities and port workers.
The FY 2023 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. These grants may also support the
acquisition of equipment that reduces climate impacts and adapts
technologies that reduce shipyard power consumption
Within MARAD's FY 2023 Budget request, $10 million will support the
Maritime Environmental and Technical Assistance (META) program to
advance low carbon alternative energies and technologies, while also
supporting job growth in clean energy and maritime transportation
fields. This is the only Federal government program that 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 2023 Budget request for MARAD includes $3 million for the
Maritime Guaranteed Loan Program to provide the salaries and overhead
support to manage the loan portfolio, currently at $1.5 billion in
outstanding loan guarantees. 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.
The President's FY 2023 Budget also requests $6 million for MARAD's
Ship Disposal Program for support staff and overhead costs 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. Since 2007, MARAD has removed a total of 174 non-
retention vessels from the various fleet sites. 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.
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.
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 Chairman DeFazio.
Mr. DeFazio. Thank you. Thank you, Chairman Carbajal. And
this would either be to the Commandant or Master Chief.
What percent of your budget is fuel costs? Do you have a--
not an anticipated question, it just sort of--I am just sitting
here thinking about it, and what impact that is going to have
on your operational capabilities.
Admiral Schultz. Yes, Chairman, I will be honest with you.
Unless the Master Chief knows the answer, I don't know the
percent of our budget.
Mr. DeFazio. OK.
Admiral Schultz. I do know under the DLA, Defense Logistics
Agency, contract we have got about a 20-percent increase, due
to inflation, that has recently been announced to us. So, that
is a fairly significant lift inside our budget.
Mr. DeFazio. OK. All right, that is good. I don't want to
belabor it, but back to the shoreside infrastructure. Again, I
am puzzled by the President's budget, and I have, shall we say,
raised with you and former Commandants your role in terms of
the Coast Guard is always going to do with what they've got.
But sometimes it is just not enough, in my opinion. And we hear
perhaps other Services and other agencies squawk a little bit
more about the inadequacies of their budget. And I just can't
reconcile the reduction to $180 million this year, and don't
see how are you going to begin to catch up with your backlog
with those numbers.
Do either of you want to address that, or do you just want
to let that drop?
Admiral Schultz. Chairman, I would say this. I think, when
you look into our Coast Guard budget across the top line, and
you do a year-by-year comparison, I think there are different
pieces.
From the 2011 Budget Control Act, 2013 sequestration, the
subsequent 8 years, we lost 10 percent of operations and
support purchasing power. That was very deleterious to the
readiness of the Coast Guard. In recent budget cycles--2019,
2020, 2021, 2022--we have actually seen a 20-percent increase
in O&S, and that has been very helpful, and we are very
appreciative of that.
The $1.65 billion, $1.6 billion that Ranking Member Gibbs
mentioned in the PC&I budget, I overtly stated we would like to
see $2.0 billion-plus on an annual basis for predictable,
stable peacetime funding. That would put us on the most healthy
trajectory course.
There are large variations. If you have a large lift of a
capital asset--say a Polar Security Cutter--in 1 year, that can
move that, a half billion dollars, pretty easily.
But I would tell you, sir, from a budgetary standpoint, we
have started to turn a corner. And we are very appreciative of
the Congress, both chambers, both sides of the aisle embracing
that the Nation needs a more ready Coast Guard.
On infrastructure, sir, I would tell you right now we are
executing about $1.4 billion. We have never done that before.
Twenty-two--I mentioned twenty-six extra civil engineers to
help us get after that work. If we can sustain the momentum
that we are starting to build in recent years, I think it puts
us on a good trajectory.
But I am leaving operational cutter days on the table,
operational aviation days. There is a lot of money in the
budgets in the last couple of years for spare parts. I think we
have sort of got the issue on the table.
When we roll in the IIJA Infrastructure Investment and Jobs
Act, we roll in the moneys in the 2022 budget, it is almost
$800 million to get after infrastructure. We are building the
first childcare centers that we have had in 10 years. The IIJA
has five new childcare centers plus upgrades to the unit in
Cape Cod. We also have new MASI--Major Acquisition Systems
Infrastructure--that is going to build childcare in Seattle and
Charleston. We have got our first new aviation unit out in
California, Point Mugu. That is under construction, sir.
So, I think the story is bettering. There is a long history
and things we drag with us. But if we can maintain the momentum
we have started to build, sir, I think we can get after this.
Mr. DeFazio. OK, thank you.
Acting Administrator Lessley, I just want to again
congratulate you on your work on the EMBARC program. Every
mariner does deserve respect. But I noticed that some shipping
companies have acted pretty quickly, others haven't. I am
looking at my Safer Seas Act as a necessary adjunct. What other
steps would you recommend so we can get more full compliance?
Ms. Lessley. Thank you for the question, and thank you also
for your leadership.
We continue to have dialogue with the carriers. I
appreciate Chairman Carbajal, also Congressman Suozzi, who have
helped convene the carriers. I believe that they are making the
changes they need to make to enroll and appreciate those who
have enrolled. Obviously, we want every carrier to enroll.
I appreciate also all of the resources that you are
bringing to bear, work on the legislation, the Safer Seas.
This is a long-term process. And I think what is essential
is that we not only implement the initiatives we have underway,
but that we look to make sure that everyone is part of this
process, that everyone understands the expectation that every
maritime workplace must be a place where every person is safe,
where they have the opportunity to advance on the basis of
their competency and skills. That is what we are aiming for.
Within MARAD we will also be continuing to strengthen our
work. We have a lot to do at the Merchant Marine Academy in
terms of continuing to review our policies and procedures to
make improvements. We are also standing up a new office of
cadet training and safety that will help us at MARAD strengthen
our oversight and support of the Academy in line with the
recommendations of the National Academy of Public
Administration report.
Mr. DeFazio. Great. OK, I am pleased to hear that.
Quickly, Chair Maffei, you have recently released a ruling
against Hapag-Lloyd, which found them to be acting in violation
of the Shipping Act. These additional resources that we are
proposing for this year, will they help you pursue more
investigations and handle more complaints?
Mr. Maffei. Absolutely. That is the point of asking for
them. As I mentioned, we are going to devote most of those to
investigations and enforcement. I can't speak in particular to
that ruling, because I might be sitting in a----
Mr. DeFazio [interrupting]. OK. Now----
Mr. Maffei [continuing]. But I will say that there are many
investigations going on. There are a couple of additional cases
that the FMC has brought against carriers that are still in
process. There are some in the pipeline. But clearly, we would
be able to do more.
I think the ranking member mentioned that I had said at one
point that we have not yet found collusion among the carriers.
And while that is technically true, I do want to make it
absolutely clear that that is not because the industry is
holier than the pope. That is because freight rates remain
incredibly high anyway, even with expansions of capacity. And
also, there are certainly many, many reports of issues with the
individual carriers that are members of these alliances.
So, this is not an--this is an industry that, in my view,
needs more assessment in the enforcement section, and that is
what these resources will allow us to do. And I appreciate
again, Mr. Chairman, you allowing me to make that point.
Mr. DeFazio. I am pleased to hear that, and it is a breath
of fresh air compared to under the last administration, where
the problem was substantially ignored. So, thank you for your
work.
Thank you, Mr. Chair.
Mr. Carbajal. Thank you, Mr. DeFazio. And next I will
recognize Mr. Gibbs.
Mr. Gibbs. Thank you, Mr. Chair.
Admiral, I just have a couple of comments here, building on
what Chairman DeFazio was talking about on the administration's
budget for procurement, construction, and improvement, $1.654
billion. We approved--what was it--$2 billion, I guess, for
fiscal year 2022, and the Don Young Coast Guard bill we just
authorized, $3.5 billion for fiscal year 2023, which is twice
the request.
My concern--I think we share up on the dais here, is how
much would the shoreside infrastructure construction backlog
grow from the 2023 to 2025 fiscal years, and the maintenance
backlog?
And then I also want to tag on to that about the 12th
National Security Cutter. I mean, maybe I am missing something
here, but my understanding is, on the 12th National Security
Cutter, the construction, that pipeline is hot. And if we don't
do it, it will go cold. And my understanding is that we can
probably build that for $700 million. If we let it go cold, it
is going to be over $1 billion. And then you tack on inflation.
Do you have any more additional comments you want to make
about this President's request in the budget? Because it seems
to me you said $2 billion a year would be enough to sustain
making progress. But when I look at the maintenance backlog,
with inflation and all that, I think the Coast Guard needs to
be more aggressive in trying to get the funds that we are
trying to authorize and appropriate.
Admiral Schultz. Thank you, Ranking Member Gibbs. I would
say, sir, from a predictable stable fund level, $2 billion
would be a good number for the Coast Guard.
I would tell you, we obviously, as an operating agency
inside the Department, have to work within the top line, and
there is puts and takes. I think, when you look at the unfunded
priority list, which Congress enabled us to start submitting
years back, we have lifted quite a bit consistently,
increasingly so, each of the previous budget years, and are
picking up a lot of those projects. So, we identified those
predominantly PC&I infrastructure-type projects, capital
projects, and the Congress has been putting that on top of the
President's request. So, I think we are making some progress
there.
You asked about the National Security Cutter, 12th National
Security Cutter, sir. I have, I think, consistently, for 4
years, said that National Security Cutters are remarkably
capable global deployers. The program of record was eight
ships. The Congress has supported the procurement of three
additional ships. The 10th and 11th ships are under
construction. We will take acceptance of number 10 in 2023.
We have got about a $208 million shortfall budgetarily to
bring 10 and 11 into service. The 2023 budget bites down about
a little less than one-third of that. So, there is still going
to be about $150 million outstanding bill. Were the Congress to
lift a 12th National Security Cutter on top of the President's
budget, sir, the Coast Guard would not push back on that. There
are still costs----
Mr. Gibbs [interrupting]. But I think maybe--I think the
Coast Guard needs to be a little bit more aggressive in
requesting it from the appropriators.
Admiral Schultz. Well, sir, it is hard for me to request
that when my top priorities, from an acquisition standpoint,
are the Offshore Patrol Cutter and the Polar Security Cutter.
So, this gets into the top-line maneuver space, sir.
But I would tell you, National Security Cutters, as you
defined them, are incredibly capable. We are three beyond the
program of record.
Mr. Gibbs. OK.
Admiral Schultz. It would displace something within our
current plan, sir.
Mr. Gibbs. All right. I've got to move on here.
Admiral Schultz. Yes, sir.
Mr. Gibbs. I want to quickly--I've got a text here from the
Capitol Police on 6:33 p.m. on April 20th about aircraft
intrusion to evacuate this complex, I guess, as the Army Golden
Knights were doing a jump for the Nationals baseball game.
My question is, what happened here? Did we have a
communications breakdown? Why didn't the Capitol Police know
about it? Because anything in this zone, in this area, is under
the Coast Guard, because I have ridden in the Coast Guard
choppers. Can you just briefly tell me what happened? Because I
am a little concerned.
Admiral Schultz. Congressman, what I know of that, it was--
we do have a mission here, the National Capital Region Air
Defense Mission. We have MH-65 Dolphin helicopters that stand a
7/24/365 ready watch on very short alert.
My understanding was the Golden Knights did not notify the
FAA. The operation occurred. It created some excitement, once
they figured out what was going on. So, why the notification
did not occur, sir, I do not know on that. But we do have that
presence here.
Mr. Gibbs. Yes, I----
Admiral Schultz [interrupting]. A little bit different than
what we generally train for.
Mr. Gibbs. Yes, I just want--I am just raising it. I just
raised it, because communications, as you know, are--it is very
important.
Admiral Schultz. It is the grease that makes the wheels
turn, sir.
Mr. Gibbs. Yes. And obviously, there was a communication
breakdown there. And fortunately, it wasn't--there wasn't a
national security issue. But----
Admiral Schultz [interrupting]. I think the notification,
if I understand it, should have probably went to FAA, because
it involved Capital Region airspace, sir.
Mr. Gibbs. Before time runs out too much----
Admiral Schultz [interrupting]. But we were not notified--
--
Mr. Gibbs [continuing]. Here, I want to--help me
understand. We had the Coast Guard Atlantic Coast Port Access
Route Study that Congress required in 2016. We have been
waiting on the Coast Guard to complete the rulemaking process
for recommended set-asides for navigation in the Atlantic Coast
Port Access Route Study and on top of that, the Department of
the Interior intends to begin leasing areas in the Gulf of
Mexico for a wind energy project in the near future. We also
have the Arctic and the West Coast Port Route Access Studies.
Maybe I am wrong, but it doesn't seem to me that this has
been a top priority for the Coast Guard to develop these lanes,
shipping lanes, with the wind projects, kind of deferring or--
by talking to the Department of the Interior. Can you explain
what is going on here?
Admiral Schultz. Absolutely. I would tell you we take our
waterway safety management security roles very seriously, sir.
The ACPARS, Atlantic Coastal Waterways Port Access Route
Study that you are talking about, we will issue the final rule
this calendar year.
Mr. Gibbs. OK.
Admiral Schultz. We will issue it this calendar year. It
has been longer than anyone desires. That is fair criticism. I
own that. But we are working with BOEM, the Bureau of Ocean
Energy Management. We are working with other Federal
stakeholders. We have worked on the spacing of wind.
We currently have, I think, eight towers off of Rhode
Island. There are two off Virginia Beach. There is permitting
for up to 1,700. There are multiple Captain of the Port Zones
and regions here. But the frustration is fair, the criticism.
But we will have a final rule this calendar----
Mr. Gibbs [interrupting]. On the Gulf of Mexico, what is
the status on that?
Admiral Schultz. The Gulf of Mexico, sir, it is a work in
progress, again. But we understand the urgency. But I assure
you that we are not ceding ground on our safety
responsibilities established by law.
Mr. Gibbs. I am just encouraging you to make sure the Coast
Guard isn't ceding ground, because I think that is----
Admiral Schultz [interrupting]. Yes, we are not--that is
not our intention----
Mr. Gibbs [interrupting]. I yield back at this time. Thank
you.
Mr. Carbajal. Thank you, Mr. Gibbs. I will now recognize
myself.
Ms. Lessley, 2 weeks ago, I was made aware of a report
conducted by SUNY Maritime, which was completed in January.
Among other things, the report discussed deficiencies
associated with diversity, sexual assault, and sexual
harassment.
While every institution should be looking inward on this
issue, the circumstances surrounding this report are troubling.
In its publicly released versions, SUNY Maritime redacted
seemingly important portions of the report associated with
sexual harassment, sexual assault, and racial harassment that
certainly went beyond shielding names for privacy. The Academy
even refuses to share the unredacted version with me, as well.
The report states that the committee has found that, across
the board, there are issues regarding how racial and sexual
harassment or claims of sexual assault are handled. I can only
imagine what is in the redacted portions. The SMAs received
$1.6 billion from 2018 to 2022, and it is my understanding that
they are asking for significant help in recapitalizing some of
their shoreside infrastructure.
Ms. Lessley, is it appropriate that they operate outside
the reach of any meaningful Federal Government oversight, while
still continuing to receive Federal funds?
Ms. Lessley. Thank you for the question. So, I will give
you a multipart answer.
Obviously, there are, for example, Title IX and other
Federal requirements that apply, and we are also looking at our
policies and procedures, including opportunities to strengthen
Title VI oversight.
That said, I think that there are many novel issues that
are being raised. Particularly of concern to me is, for
example, custodial arrangements for the NSMV, which are meant
to be dual-purposed. There are novel questions that are not
necessarily anticipated in statute. Our regs are, to the extent
that we have them, are outdated. And there are also limits to
our resources. And as I mentioned, as you know, we have a
tremendous amount of work to do at the Merchant Marine Academy.
That said, our North Star is safety, creating safety for
everyone at sea. As we look at our policies and procedures, as
we look at these opportunities, I would like to continue the
dialogue with you, with your staff, and obviously with Congress
to ensure that we are meeting Congress' expectations, and
certainly, as we discuss these issues that are not necessarily
anticipated in statute.
Mr. Carbajal. Thank you. And I would be interested in
knowing what legislative solutions might exist, as well.
So, Admiral Schultz, in March's field hearing on small
passenger vessel safety, we discussed the severe shortage of
maritime safety inspectors. The Coast Guard itself estimates it
has only two-thirds of the inspectors it needs to conduct
timely vessel inspections. Can you please explain what impact
the President's requested increase of 38 FTEs and $11.2
million, or 3.8 percent, would have on the current staffing
shortfall?
Admiral Schultz. Chairman, thanks for the question, sir.
So, the proposed budget has $11 million-plus, 73 FTPs is my
account. Those are marine inspectors, investigators,
environmental specialists. They build on previous budget
cycles' numbers. I think that rolls up to be a couple of
hundred additional marine inspectors.
We're rolling out and implementing now the Marine Inspector
Performance Support Architecture and the modernized learning
environments, so, we are very much focused on the increasing
technological sophistication of the maritime domain.
I put out a strategy, the maritime commerce strategy, back
in the early part of my tenure in 2018, that fall, and we are
actioning that. We need to build the workforce with the
expertise to deal with the increasingly complex,
technologically sophisticated landscape. And so, this is
another investment towards that end.
Mr. Carbajal. Thank you.
Ms. Lessley, in 2021, the United Nations issued a
declaration on zero-emission shipping by 2050. The
International Maritime Organization, of which the United States
is a member, similarly issued an ambitious greenhouse gas
reduction strategy. What role do you foresee MARAD programs
such as META playing in making the United States a global
leader in maritime decarbonization?
Ms. Lessley. Thank you for the question. Obviously, it is a
very important program.
The President's budget for 2023 requests $10 million for
the program, which would be an increase over the 2022 enacted
level. And that would be consistent with the administration's
priorities to support decarbonization, the development of
alternative fuels, and future energy technologies to improve
energy efficiency improvements. We think we have a unique
opportunity with our domestic fleet to pioneer these new
technologies and emission reduction efforts, which can serve as
a proof of concept for the oceangoing fleet, so, very excited
about this program and about the President's support in his
request.
Mr. Carbajal. Thank you. Now I will recognize
Representative Garret Graves.
Mr. Graves of Louisiana. Thank you, Mr. Chairman. And I
want to thank both of you for your service. And I hope you all
get some great fishing in during retirement.
Commandant, I wanted to ask you. As part of the Don Young
Coast Guard Authorization Act, Congressman Garamendi and I
offered an amendment on manning, and we added section 518 to
the bill that effectively treats foreign vessels operating in
the offshore working on energy-type projects the same way as
domestic vessels would be treated. Things like ensuring you are
proving ownership, things like making sure that your crew
matches the flag of the vessel, making sure that we actually
enforce the terms of the work visas that are granted to these
foreign workers working in our near-shore environments.
I know that you have been a big advocate of our national
security, marine security, maritime security. Do you think it
is fair to require foreign vessels to operate under rules
similar to those of domestic vessels?
Admiral Schultz. Congressman, I think there is an ongoing
dialogue with you in terms of the U.S. crew. There is some
waiver authority for us on that. I think we look forward to
continuing to work and have those conversations, sir, on that
amendment here, in terms of how we implement in terms of
consistency across other foreign crewing type conversations.
Mr. Graves of Louisiana. Commandant, this amendment, if I
remember right, I think it passed 58 or 59 to 2 in this
committee, strong bipartisan support for the amendment. I would
urge you to think for just a minute about having a level
playing field, and not actually prioritizing foreign vessels
and foreign crews over those of the United States.
And I don't think I have to remind anybody here what
happens when we compromise our energy security in the United
States.
Admiral Schultz. Yes, sir.
Mr. Graves of Louisiana. Based on, of course, what is going
on in the Ukraine----
Admiral Schultz [interrupting]. Sir, I think I have been a
pretty consistent voice on Jones Act in support, and support
for the U.S. merchant fleet and American mariners, sir. I
think, like I said, I just--I think that conversation is--we
are working--your point is taken, sir. I am not disagreeing
with that. I think it is a--just a little bit back and forth
here, with drafting assistance, those kind of conversations.
Mr. Graves of Louisiana. And I am happy to get technical
assistance or drafting assistance from the Coast Guard on this.
I do want to reiterate that I think, just from a marine domain
awareness perspective, it is important that we are actually
enforcing the conditions of these work visas, and that we know
who is in our waters, making sure that they are playing by fair
rules, and we are not giving foreign vessels and workers a
competitive advantage over American vessels----
Admiral Schultz [interposing]. Yes, sir.
Mr. Graves of Louisiana [continuing]. And American
workforce.
And as you mentioned, Commandant, Admiral, I know that you
are a big Jones Act supporter, and I think that this is
consistent with the objectives of the Jones Act.
Admiral Schultz. Yes, sir.
Mr. Graves of Louisiana. So, I look forward to working with
you on that.
The second thing I wanted to ask you--and I know you have
covered this in your opening--on an icebreaker. And you and I
have had numerous discussions over the need for the United
States to increase its capability to operate in polar
environments. We have both looked at the chart and the number
of vessels that other countries operating in the Arctic have in
terms of heavy capabilities, as compared to the United States.
I know that you all have been cannibalizing the Polar Sea and
Polar Star to try to use duct tape and bubble gum to do what
you can. And I appreciate that the budget request includes, I
believe, $125 million to give you capabilities in the short
term for a commercially available vessel.
I think it requires a purchase to give you operational
capabilities, but I wanted to ask you if you thought that a
leasing capability or a leasing option would make sense for the
Coast Guard in terms of more quickly trying to achieve that
capability operating in polar environments.
Admiral Schultz. Yes, Congressman. We have had some
interesting conversations over the previous administration, the
current administration. The conversations with my predecessors
was leasing in lieu of procuring the Polar Security Cutters,
heavy breakers we need. Once we sort of got the card down on
the program of record, we had a chance to revisit that.
I believe, after pretty diligent homework and study on
this, that a procurement option--because we are going to need--
I have talked about 6-3-1, a minimum of 6 breakers, 3 are
heavy, 3 beyond that. I think that conversation has really
evolved with some additional--based on the high latitude study.
We probably need four to six heavy breakers and three to five
medium breakers, what we are going to call Arctic Security
Cutters.
This commercial available option could feed that for the
good part of the next 25 years. So, the ability to go out with
$125 million, another $25 million made available in the 2023
budget for crewing and operating that, I think we could bring
that ship--once we work--we need a little help on how we--some
legislative help on how we actually go execute that. But sir, I
think that brings in a ship. So, it is a bridging strategy.
Polar Security Cutter contract date is May 25. Obviously,
we haven't started cutting steel on that. This allows us to
build a fleet of icebreaker sailors, allows us to gap between
that ship, that new polar security, about 27 before it is
operational. And it helps us to find the requirements for those
medium breakers down the road, sir.
Mr. Graves of Louisiana. And Commandant, I am out of time.
Admiral Schultz. I got you.
Mr. Graves of Louisiana. But I just want to make sure,
including a leasing strategy?
Admiral Schultz. Sir, I think the leasing--just as we did
the cost analysis, it would cost us more to lease that vessel
for some specified period of time than to procure that and have
it in the inventory as one of these Arctic Security Cutters
henceforth.
Mr. Graves of Louisiana. I would love to be able to
continue that conversation with you.
Thank you, Mr. Chairman.
Admiral Schultz. Thank you.
Mr. Carbajal. Thank you, Mr. Graves. Next we will go to
Representative Larsen.
Mr. Larsen of Washington. Yes, thank you, Mr. Chair.
Administrator Lessley, on the Tanker Security Program, that
is a program that is under the jurisdiction of the House
Committee on Armed Services. But MARAD implements it, is that
correct?
Ms. Lessley. That is correct.
Mr. Larsen of Washington. Yes. Could you discuss how the
TSP, Tanker Security Program, how you are thinking about it
with regards to the announced closure of the Red Hill facility
in Hawaii, where the Defense Department has said we are going
to distribute fuel distribution throughout the Indo-Pacific?
Have you guys thought through that, what that vision looks
like?
Ms. Lessley. So, a few weeks ago, I had the opportunity to
testify in front of the Committee on Armed Services with
General Van Ovost, the TRANSCOM commander, and would emphasize
that General Van Ovost made clear that the DoD are looking at
options and things like long-term charters for tankers. And I
would not opine on that. It is really a DoD.
But we are excited about the TSP. And to your point, it
would obviously provide access to much-needed tankers for our
DoD. We are in the process, as I testified there, of developing
a rule, and hope to have that in place as quickly as possible
so that we could ideally have enrollments begin by the end of
the calendar year.
And we recognize the urgency of this program, getting it up
and getting it going correctly.
Mr. Larsen of Washington. OK, that is fine. Can I just
shift to the Small Shipyards Grant? Where are you in the fiscal
year 2022 process on small shipyards?
Ms. Lessley. Thank you so much for that question. So, we
issued our notice of funding opportunity earlier this year.
Grant applications are due on May 16th, and we have
approximately $20 million to award. And as we talked last time,
in the last round for 2021, we issued 31 Small Shipyards Grants
in 15 States.
So, the NOFO is out, it is open. We encourage all small
shipyards to apply.
Mr. Larsen of Washington. That is great, thanks. Yes, it is
used a lot and very well in Washington State.
Mr. Maffei, this morning I met with some folks from ILWU,
the longshore union on the west coast. And the way they
described the potential reopening of Shanghai ports because of
the shutdown is a tsunami of containers and goods coming back
in the United States. So, a little bit of relief on the west
coast right now, because of the unfortunate circumstance of
COVID in China.
Do you anticipate that same picture, that we are going to
have backups again and use of anchorages?
And then what would FMC's response be to that?
Mr. Maffei. I do anticipate that. I mean, the FMC will
continue to be vigilant in terms of making sure that nobody is
violating the Shipping Act. There are not a whole lot of levers
we have to reduce congestion in itself, other than to make sure
that we're continuing to do the audits that we are doing to
make sure that best practices are followed amongst all the
carriers and certain MTOs.
We have been meeting with the WCMTOA, the organization of
the MTOs that manages PierPASS, to help facilitate coming up
with additional ideas to help with congestion. But congestion
is the biggest challenge, particularly that exporters face.
So, the irony is, we are going to get this wave of imports,
and it is going to end up hurting exports. And that is of
extreme concern.
I will only say that the respites that we have had are not
due to any lessening of the overall problems or situation, but
simply the market cyclical forces. And the same thing will
happen with this. We will get, unfortunately, a fair amount of
a wave from Shanghai, and that will eventually dissipate in the
same way, but not because any problem has been fundamentally
solved.
Mr. Larsen of Washington. Yes, thank you.
Admiral Schultz, I have a lot of other questions. I had a
great tour of Coast Guard Seattle last week, and Admiral
McAllister was up from Pacific Command. So, I will save you the
questions about Seattle and the Protecting Our Marine Mammals
Act, and all these--I am getting those answered back home. So,
I appreciate that.
But, having said that, the polar security program, as we
have discussed a little bit, there was $800 million in funds in
the budget reconciliation package, which hasn't passed. So, how
is the lack of reconciliation funding forced you all to change
plans on the Polar Security Cutter program?
Admiral Schultz. Well, Congressman, the Polar Security
Cutter program, I think, is on a good trajectory. The 2023
budget has about $167 million. That gets after program
management, long lead-time materials, 2022 buys some of the
long lead-time materials on the Caterpillar key engines. The
other pieces we were able to roll into 2023.
We should be maintaining positive momentum on the PSC
program of record of three ships. I think there is a
conversation beyond that, as I indicated to Mr. Graves,
possibly a hot production on more ships. But we are still
getting ready to cut steel, hopefully before this calendar
year, on the first Polar Security Cutter.
Mr. Larsen of Washington. OK, thank you, that is great.
Thank you.
And I yield back.
Mr. Carbajal. Thank you, Mr. Larsen. Next we will go to
Representative Malliotakis.
Ms. Malliotakis. Thank you, Mr. Chairman. And thank you to
the witnesses for being here today.
My district on Staten Island, we have Coast Guard Sector
New York, which represents the largest operational field
command on the east coast. In October of last year I had the
opportunity to visit with the leadership of our U.S. Coast
Guard Sector New York, and one of the main issues that we spoke
about was the need for housing upgrades for the men and women
stationed there.
Certainly, housing is a big part of being able to attract
and retain Coasties. And as you know, adequate housing--and it
is also important that we give our Coasties and their families
the quality of life that they deserve, and that the homes they
come back to at the end of the day are ones that they are proud
of.
Housing upgrades at Fort Wadsworth Base have been long
overdue. As you know, there was a fire a couple of years ago.
There was $40 million put aside for phase 1 to rehab those
homes. And I was also pleased to work to push for another $5
million from the Infrastructure Investment and Jobs Act for
phase 2 to upgrade 154 legacy housing units.
I am also encouraged to see that there is $10 million in
funding for phase 3 that is included in the U.S. Coast Guard
unfunded priority list for fiscal year 2023.
Admiral, I know that you also visited our station in
September, and saw the housing for yourself. I would love a
comment from you on the status of the upgrades, and what is the
timeline for the project's overall completion.
Admiral Schultz. Well, Congresswoman, thank you for your
advocacy of the Coast Guard writ large, and our men and women
in New York, and Fort Wadsworth housing.
As you mentioned, $40 million in the 2021 budget that gets
after the fire-destroyed units there, additional moneys in
2022, $5 million to continue efforts. We were able to touch the
upgrades of the 154 legacy units. We were able to do safety
assessments of their condition and make upgrades to all those
units. I think that is critically important.
The environmental due diligence contract--excuse me on that
one--the Staten Island units, I think it is the phase 2, just
gets after the continued body of work there, ma'am.
So, in terms of the actual timeline, I don't have the dates
in front of me about when you would see the actual timeline for
the work there. But the good news is, we have secured the
funding. It allows us to do the detailed planning. And with the
multiyear commitment, I think it sends a very strong signal to
our men and women that live in a very high-cost area, but have
a high-paced and high demand of Coast Guard services there,
this is all part of the equation that Master Chief spoke to
about recruiting and retaining the men and women with the right
skills to do the work of the Nation.
Ms. Malliotakis. Well, thank you. And as you said, for all
those reasons, time is of the essence to make sure that we get
this construction going. And I look forward--if you can look
offline and get back to me on some type of a more concrete
timeline, I very much look forward to being with you at the
groundbreakings and the ribbon cuttings, because this is, as
you said, a really important part of retaining Coasties. It is
something that the commander made very clear, that New York
City is a very expensive place to live, and so, providing this
housing at the base is very, very important.
Is there any other issue that I should be looking at as
relates to New York Coast Guard Station? Any way that I can
help advocate to help my Coasties do their job better?
Admiral Schultz. Congresswoman, we will get back to you on
more specificity on the timeline. Let me just defer to the
Master Chief if he has anything on your question about the
people up in Sector New York.
Anything on that, Jason?
Master Chief Vanderhaden. So, the way we--just supporting
with the cost of living allowances, and paying attention to the
increased cost of living, basically just doing your job there,
we need to pay attention to that and be able to assess that,
and accurately compensate our people on a timely basis so that
as rents go up, as groceries--as things become more challenging
and more expensive, that we definitely need to be able to make
sure that people have the same quality of life year after year
without--some help with that. And I can get back with you on
what that would look like.
Ms. Malliotakis. OK. I look forward to that. Thank you very
much.
I yield back.
Mr. Carbajal. Thank you, Representative Malliotakis. I now
recognize the distinguished gentleman from California,
Representative Lowenthal.
Mr. Lowenthal. Thank you. Thank you, Chairman. I found this
to be a very interesting hearing, and I have learned a lot. And
I am going to start with Chairman Maffei.
Thank you for being here with us today. Thank you for your
testimony. I especially liked, if I was correct, your
presenting to us that the improvements that you have kind of
led on the FMC have been noticed by people who interact with
the FMC, and that people are getting back to you in a very
positive way. That is always nice to hear.
And obviously, when we talked about supply chain issues,
they are under stress at every level. And no single agency, as
you pointed out, can end the impact of the pandemic alone. But
I want to underscore something, and I wanted to ask you if what
I am going to share with you is what you are hearing also.
There is a small importer in my district. He imports,
basically, olives from Europe. And he brings them into the
Ports of L.A. and Long Beach. And he said that his container
fees, 40-foot containers, had increased from less than $4,000--
I think it was $3,940--from January of 2020 to over $12,000 in
March of this year. And in April it had gone up to $14,000. I
don't need to tell you how that increase can hurt businesses
and lead to tremendous increases in inflation, and consumers
all over the country--I am wondering, are those the same
numbers you are hearing about importing, and how [inaudible]?
That is one question.
The second question is, you have provided an important
update on the FMC's activities to make sure that people are
playing by the rules. And I appreciate all your work. But I
want to make sure you have the resources to make sure that
these companies are playing by the rules, and that they aren't
profiting from unfair fees. Can you speak to the importance of
more resources and to the impact of your February MOU with the
Department of Justice?
Mr. Maffei. Thank you for the questions, Mr. Lowenthal. I
will try to answer them as expeditiously as I can.
There is not one price for ocean transportation. There are
spot rates, contract rates, tariff rates. That said, though,
what you are saying does ring true. And the unfortunate thing
is that the size of a shipper does make a huge difference
because of their market power. If you are a big box importer,
one of those big stores or online companies that we all know so
well, you can guarantee hundreds of thousands of containers
sometimes to get a much lower rate. So, their rates have gone
up, those big cargo importers, but nowhere near as much as the
medium-size and small shipper, because of the differing degrees
of market power. So, unfortunately, your small importer is
probably paying that much more. It is not an aberration at all.
What we have tried to do at the FMC is, even though we are
not allowed to regulate the rate itself, we are trying to make
sure that there is no additional fees that are hidden
someplace, like a congestion surcharge. We are trying to make
sure that your constituent is not being charged unfair
detention and demurrage, which they cannot control. And that is
what we have focused our efforts at under our current
authority.
In terms of other things that we are doing, first of all, I
appreciate that we are getting some compliments. But that
doesn't mean we are near doing as much as we need to do. We are
clearly ramping up as quickly as we can, given the situation.
The memorandum of understanding with the Justice Department
is helpful. We mostly exchange expertise. We both do
independent investigations. The Justice Department is currently
investigating carrier alliances, as well as we do. And we do
exchange information, but we keep those investigations
separate. Those sorts of cooperations have been beneficial in
the past, and we will continue them.
And in terms of our overall request, I mean, obviously, I
don't take lightly the fact that, in this current budget
environment, we are asking for about 5 percent more. But it is
essential, given the number of cases. With this kind of--this
demand surge, there have been very high rates affecting all
sorts of shippers, and then the congestion makes everything
much worse.
So, I think I have addressed all of your questions. But if
I haven't sufficiently, please let me know.
Mr. Lowenthal. Thank you.
Mr. Chairman, how much time do I have left?
Mr. Carbajal. You are out of time, Mr. Lowenthal.
Mr. Lowenthal. Well, that is too bad. I had great questions
to ask.
Mr. Carbajal. We are going to have a second round, so, hold
your questions. We will come back to you shortly. Thank you,
Mr. Lowenthal.
With that we will move on to Representative Van Drew.
Dr. Van Drew. Thank you, Chairman, and thank you for
holding today's hearings on the Coast Guard's 2023 budget.
As we know, we have our great Commandant, Karl Schultz,
here, and our Master Chief Petty Officer Vanderhaden, who
equally does a great job.
Admiral Schultz, thank you for the decades of dedicated
service to the United States of America. Your extraordinary
tenure as a Commandant has built a stronger United States Coast
Guard. The contributions you have made will endure long after
your retirement. I want to thank you for attending my
community's Coast Guard ball last week. It was an honor hosting
you with such a momentous occasion for the Cape May County's
Coast Guard community. Our friendships will only become
stronger as the Coast Guard invests in the Training Center Cape
May.
In the Don Young Coast Guard Authorization Act of 2022,
this committee authorized $120 million for phases 1 and 2 of
the U.S. Coast Guard's Training Center Cape May barracks
recapitalization. Congress then appropriated $55 million
towards phase 1 in a bipartisan and in a bicameral manner.
Yesterday, the Coast Guard provided an unfunded priority list
to Congress.
The list includes a request for $60 million to fund phase 2
of the barracks project. Funding phase 2 in this year's
appropriations legislation is a national security imperative.
Global threats, such as Chinese aggression in the South China
Sea and Russia's expansion into the Arctic have greatly
increased the importance of the Coast Guard to America's
national security. Only the Coast Guard has the tools to
encounter China and Russia's gray zone strategy.
To address this global challenge, the Coast Guard needs
more and better prepared personnel. Eighty percent of all Coast
Guard personnel comes through the training center in my
district in Cape May. The expansion of the Training Center Cape
May is the expansion of the Coast Guard itself, and we must
expand the Coast Guard to meet the national security challenges
of our 21st century.
The training center project will also provide more
opportunities for women to serve. Just as Admiral Linda Fagan
has been nominated to be the new Commandant, we should provide
women the opportunity to serve their country in this, our Coast
Guard. The training center current infrastructure can only
accommodate 30 percent female recruits. The proposed
recapitalization will accommodate 50 percent female recruits.
The barracks recapitalization must move forward to expand
opportunities for women in the Coast Guard, and I look forward
to working with Admiral Fagan to fully deliver on the Training
Center Cape May project and give more women the chance to serve
their country.
The Training Center Cape May barracks recapitalization
project is crucial to the future of the Coast Guard and the
United States. We have got to get this project done. When the
training center was last being renovated, a funding lapse
resulted in an incomplete project. This cannot happen again. We
must ensure this project is fully funded and fully delivered.
I have proposed with you a framework to deliver this
critical project. The first step is for Congress to fund the
Coast Guard's year 2023 request of $60 million for the already
authorized phase 2 of the barracks projects. The next phase is
to authorize phase 3 and 4 in the 2024 Coast Guard
authorization legislation. Congress should then fund phase 3
and 4 in fiscal years 2024 and 2025. This framework ensures
that the barracks project is fully funded by the start of phase
1 and delivers the full project by 2032.
This proposed approach was evaluated by the Coast Guard
engineering and budgetary officials, as you know, as
operationally, financially, and legally feasible. This plan
will ensure that this project is fully delivered, and I submit
to the record a framework timeline for this proposal. My
framework to implement a prioritized timeline for the U.S.
Coast Guard Training Center Cape May barracks project is
feasible, responsible, and imperative to the national security
of the United States of America in the 21st century.
Admiral Schultz, thank you again for your leadership and
your integral role in delivering phase 1 of the training center
barracks project. Could you please speak on what the training
center barracks means to the Coast Guard and to the United
States of America?
And secondly, I yield the remainder of my time for you to
speak freely on your time of your great service as Commandant
of the United States Coast Guard.
Admiral Schultz. Congressman, let me just start by saying--
--
Mr. Carbajal [interrupting]. Excuse me.
Admiral Schultz. I am sorry.
Mr. Carbajal. Mr. Van Drew, you are out of time. I will let
the witness answer your question briefly, and then we will move
on.
Admiral Schultz. Yes, sir. I would just say thank you for
the support of the training center. The unfunded priority list
for 2023 that just reached the Hill here, it includes $60
million for phase 2.
As we sequence the conversations earlier about working
within the top lines of a Federal agency, it maintains my
commitment. I speak for my successor that we are committed to
building out all phases of Cape May. There is $10 million that
came in the IIJA that kind of keep moving the ball forward.
And to your last question, I will speak for myself and the
Master Chief. It has been the privilege of our lifetimes to
serve in these leadership positions. And we appreciate the
support of this committee as we try to make the Coast Guard a
little bit better each and every day. Thank you.
Dr. Van Drew. Thank you for your service.
Mr. Carbajal. Thank you, Mr. Van Drew. We'll now move on to
the former chairman of this subcommittee, Representative
Maloney.
Mr. Sean Patrick Maloney of New York. The highlight of my
career, Mr. Chairman, and it is great to see the tradition of
excellent leadership of this subcommittee maintained and
expanded upon by your own distinguished leadership.
I am tempted to yield more time to expand on your great
leadership, Admiral Schultz, but I actually do have a question
for you. It is great to see you again, sir.
It is great to see you, Master Chief. It has been terrific
working with you all. Thank you for treating me so well and the
work you do when I chaired the subcommittee.
But I am curious about a couple of things. And I will just
note in passing my ongoing belief that, for the 13 billion
bucks you guys were requesting, we got a hell of a lot for the
taxpayers' dollars to the 11 statutory missions you perform. It
doesn't mean we don't have challenges. It doesn't mean we don't
have things to work on. But bang for the buck, I have always
been incredibly impressed by all of you and, of course, the
Coasties who do those missions. So, thank you for that.
And it is great to see my former colleague, Dan Maffei,
here. It is nice to know there is life after Congress, sir. You
give us all hope. Say hi to your beautiful family for me, and
thank you for your service to New York.
So, look, I just had a couple of questions. As you know, a
real priority of mine was the ban on oil barge anchorages in
the Hudson River between Kingston and Yonkers. Obviously, that
is Federal law. Now, that is not my question, but there was a
required assessment that went along with that study about the
effects of that. And I hope we can look forward to that.
And in addition to that, I am curious about the progress on
a second study that was required as well, under the 2021
authorization, which was a plan to analyze the effectiveness of
what are called wing-in-ground craft, which I think you are
familiar with, which are the really remarkable craft that
attempt to use new technology to sort of operate above the
surface of the water on dynamic air suspension and can attain
speeds in excess of 100 miles an hour.
I know for your missions in the East Pacific, for example,
getting at those distances would be very helpful, but I am sure
for other missions, as well.
Could you comment for me, if you could, on the progress of
those two studies, the Hudson River anchorages and the wing-in-
ground craft?
Admiral Schultz. Congressman, to be frank, sir, I need to
circle back with you on both of those. The wing over water that
you talked about----
Mr. Sean Patrick Maloney of New York [interposing]. Yes.
Admiral Schultz [continuing]. I have not received a recent
update.
I will tell you, the increasingly complex nature of the
waterway, recreational boating up 15 percent. I mentioned
earlier, before you came in, about 1,700 permitted wind towers
off the eastern coast. There is a question about the ACPARS
route study. There are a lot of moving things in the waterway.
So, we need to--autonomous vessels are right around the corner.
So, we are defining, sort of, the criteria by which we judge
the ability for these craft to operate safely.
But in terms of that type of specific craft, sir, on the
river, I would take those both for homework to get back to you
here----
Mr. Sean Patrick Maloney of New York [interposing]. Right.
Admiral Schultz [continuing]. This week.
Mr. Sean Patrick Maloney of New York. Just to be clear,
separate studies----
Admiral Schultz [interposing]. Yes, sir.
Mr. Sean Patrick Maloney of New York [continuing].
Reflecting the anchorages on the river, but the craft in
general.
So, I am happy to take your commitment to get back to us--
--
Admiral Schultz [interposing]. Yes, sir.
Mr. Sean Patrick Maloney of New York [continuing]. On the
completion of those, I appreciate that.
Admiral Schultz. And thanks for your committee leadership,
and your support of the men and women of the Coast Guard, sir.
Mr. Sean Patrick Maloney of New York. Well, and thank you
for your forbearance with the current leadership. We are doing
what we can.
And I would like to yield my remaining time to Mr. Larsen,
who I believe had an additional question. But thank you all.
Admiral Schultz. Thanks, sir. Good to see you.
Mr. Larsen of Washington. Yes, Admiral Schultz, the other
question I had was--I have two.
But quickly, on OPC, the OPC cutters and the timing, is the
delivery still on schedule for those or not?
Admiral Schultz. Congressman, yes, sir. We are on schedule.
Earlier this week we awarded a contract for the construction of
OPC number 4. This quarter--and I say fiscal year quarter, so
that is April, May, June--we should award phase 2 for the OPC
program. That will be hulls 5 through 15, the next 11 hulls.
And I think we are on track, sir.
The 2023 budget includes a large chunk of money for OPC
number 5, and long-lead materials--I think it is $650 million--
long-lead materials for number 6.
Mr. Larsen of Washington. All right.
Admiral Schultz. So, that program is progressing as
planned, sir.
Mr. Larsen of Washington. All right. And then the second
question to wrap up for me, the cruise industry is a pretty big
deal in Washington State and other places around the country.
We have been through COVID, and I think this year alone Seattle
is expecting 300 port calls, which is more than, I think, the
2019 number, the pre-COVID number. So, people are coming back.
Cruises are up and going. I just want to get a flavor from you
about your preparation in order to serve safety at sea with the
increased number of folks who are rushing back into the cruise
industry.
Admiral Schultz. Congressman, we are absolutely ready. We
have seen various levels of return to normal activities, pre-
COVID activities, in different parts of the country. I was in
south Florida here this past Friday and talked to the different
lines coming back at different paces, sir.
But we are ready to work in terms of any inspection-type
work that needs to go on. And we are ready, should we have some
other challenges. Each and every one of those almost 250,000 to
300,000 people that were removed from the cruise lines was
challenging. But we really worked with local CDC, local
officials, different safety entities, and I am proud of the
work of the Coast Guard. But we stand ready, sir, for a full
resumption of normal operations.
Mr. Larsen of Washington. I appreciate that.
Thank you, and I yield back.
Mr. Carbajal. Thank you, Mr. Larsen. I will now recognize
each Member for an additional 5 minutes, a second round of
questions, and I will start by recognizing myself.
Mr. Maffei, I am aware there are multiple efforts underway
to increase information transparency in the U.S. supply chain.
Would you please talk about the importance of information
transparency in improving the cost and efficiency of
transporting goods?
How does the fiscal year 2023 President's budget take into
account this data initiative?
Mr. Maffei. I will answer the second part of the question
first, which is that we are definitely proceeding with a number
of efforts, not the least of which is my colleague,
Commissioner Bentzel's, data to start.
In terms of the specific resources we give to it, some of
it will come out of recommendations that he makes. This is a
huge area, as you know, and we want to make sure that we are
putting the resources in the right places.
But there is no question that, both in terms of our ability
to analyze trends in the industry and even potential violations
of the Shipping Act, information is essential, and in terms of
serving the shipping public.
Information transparency is incredibly important for two
reasons. One is that, given that this is a market-based system,
and has been since the 1984 Shipping Act, how can consumers--in
this case, shippers--make the right decisions if they don't
know?
So, for instance, if they are comparing rates, but one of
the rates isn't really the full rate, there is also a
surcharge. Or even in one case we had a value-added charge, a
congestion surcharge. Everything is congested, so, putting a
congestion surcharge, in my view, isn't a legitimate thing. It
is simply part of the rate.
You need to be able to compare rate versus rate. So, that
is one reason.
The second thing is that, particularly for exporters, the
logistical challenges involved right now are extreme. A good
portion of the reason why exports are not getting on ships is
not so much because the carriers won't take the exports, but
because it is so unpredictable when that ship will be exactly
in the right place in the berth accepting exports.
And so, Commissioner Rebecca Dye, in particular, is
focusing on working with the industry to try to uncover that.
There is also a lot of private-sector work here, particularly
by the Port of Los Angeles and many others. But in any event,
this kind of information is absolutely crucial to expanding the
capacity of our ports.
Keep in mind, our ports have not reduced their overall
throughput. Quite the opposite, they have all set productivity
records. But the demand is so intense that, even setting those
productivity records, we are still jamming up with long lines
of ships and high containers that are not getting out fast
enough.
Mr. Carbajal. [Inaudible] transparency initiative?
Mr. Maffei. Yes, the transparency--I mean, I was sort of
answering both because, to me, transparency means being able to
see the accurate information. So, all of--I think that is--it
is the same answer.
Mr. Carbajal. Thank you very much.
Ms. Lessley, according to the GAO, the size of the U.S.-
flagged commercial fleet decreased by about 60 percent between
1990 and 2017. This mariner shortage drives up the cost for
shipping, and poses a serious threat to our national defense
capabilities.
What action, if any, has MARAD proposed to remedy this
persistent challenge?
Ms. Lessley. Thank you so much for this question, and a
critical issue. And I will say that, back in 2008, 2009, when
Congressman Cummings, for whom I worked, was chair, we had a
series of hearings on that very issue, which was the decline of
the U.S.-flagged fleet and the fact that we were not carrying a
substantial portion of our waterborne import-export commerce on
our U.S.-flagged vessels.
I think part of the--there are, obviously, significant
consequences from having a small U.S.-flagged fleet. But I
think part of the challenge is that at the merchant--here, at
the Maritime Administration, where our priority is, obviously,
supporting our U.S.-flagged fleet, we are implementing the
authorities that we have, which yield the fleet that we have. I
think it is a policy question of whether there should be
changes.
But I do recognize, again, that there are significant
consequences from having the small fleet. One of them, as you
mentioned, is having a small mariner pool. And we do believe
that there would be a shortage if we had to ever activate all
of our Ready Reserve, and keep our commercial vessels going to
provide essential sealift.
I think that there are--the variables here are known, and
it really comes down to the policy question. Like I said, we
implement the authorities that we have, fully, and defer in
terms of whether or not there should be changes to Congress.
Mr. Carbajal. Thank you, Ms. Lessley. Well, I look forward
to working with you to identify what incentives, what policy
suggestions, solutions might exist for us to remedy that
challenge that I think is so important for us to address in the
near future. So, thank you very much.
Ms. Lessley. Thank you. And I know time is out, but I just
want to say again, recognizing that the maritime industry has
never been more critical to our Nation, and having U.S.-flagged
fleet, having mariners who can both meet our economic and
national security needs, is a critical concern.
Mr. Carbajal. Thank you. I will move on and recognize Mr.
Gibbs.
Mr. Gibbs. Thank you, Mr. Chairman.
Acting Administrator Lessley, the Maritime Administration
issues permits for deepwater ports and is the agency's only
permit-granting program.
It is my understanding that one such project is now being
required to do a second Draft Supplemental Environmental Impact
Statement. Ironically, this statement is due to the proposed
addition of vapor uptake systems, which will result in
significant emission reductions. It is unfortunate that this
project is being slowed down because it is attempting to meet
more stringent emission standards. This is particularly true
during a time in which our allies are looking at oil import
reductions from Russia and threats to reduce their oil
supplies.
When do you expect MARAD to issue a Final Environmental
Impact Statement for the GulfLink project?
Ms. Lessley. Thank you for that question. So, yes, as you
indicated, the project sponsors were advised in April that they
would be required to do a Draft Supplemental Environmental
Impact Statement, given the addition of a vapor recovery
system.
We are working with our Coast Guard partners on the details
of that, and developing a detailed timeline for the remainder
of the application review process through the Final
Environmental Impact Statement and the Record of Decision. We
are estimating the Record of Decision to be completed in early
2023 and hope to have the SEIS process well underway in
midsummer.
Mr. Gibbs. Well, I hope it gets done as expeditiously as we
can. I hope you are not slow-walking the process, because it is
important that, I think, this gets done. And I think the
additional regulations are causing--are damaging in what we can
do, especially for helping our allies in this oil situation.
Mr. Maffei, I've just got a quick question. I am trying
to--it came up earlier about the increases in container costs.
And my question is dealing with container costs versus
contracts. And I guess it is kind of a two-part thing.
Obviously, when looking at those escalating costs for the
containers, that is really in the spot market, correct?
And the contracts, I assume, are less. I don't know how
long the contracts go for.
And then also, the second part of that, the small shippers,
do they have opportunities to contract too, or were they pushed
out of the marketplace by the big shippers?
The large retailer--we all know who the large retailers
are. They have some advantage, I know, anyway, it is economics
of scale. But is your agency kind of monitoring that, and what
are your thoughts?
Is it just pushing out the smaller shippers and making
bigger retailer shippers at such an advantage that we are just
seeing more of that going on? Can you comment quickly?
Mr. Maffei. Yes, that is an excellent question, Ranking
Member Gibbs, and I think you are really on to something,
because it is one of those unfortunate things that is going on
that, yes, prices are going up for everybody, of course, the
demand is high. But much, much less for the big--the bigger you
are, kind of the more market power you have. And when there is
such scarcity, it really flattens out and lengthens, so that a
small shipper may not be able to get contracts now, even when
they were before.
But we at the Commission try to work with them. We have
made it clear that various shipper alliances can help with
making contracts, and we have made it clear that shipper
alliances can also bring cases to the FMC. So, some of these
small shippers----
Mr. Gibbs [interrupting]. So, are you seeing a growth in
the alliances, then?
Mr. Maffei. In these sort of shipper----
Mr. Gibbs [interposing]. These shipper alliances, you see
any growth?
Mr. Maffei. Anecdotally, yes, but I don't have any data on
that.
Mr. Gibbs. OK, because it seems like, to me, that would
be----
Mr. Maffei [interposing]. Yes.
Mr. Gibbs [continuing]. A way to compete.
Now, my third part, the question comes up, I assume that
this is not--hopefully, it is not an issue. The shippers that
have contracts for the containers and stuff with the shipping
company--the ships like Maersk or whatever, they are not
getting an advantage to get loaded quicker, move up in front of
the line to get around the congestion, or not?
Mr. Maffei. Are you asking if the ships are prioritized, or
if the cargo is unloaded quicker?
Mr. Gibbs. Yes. I mean, do they get to move ahead?
Mr. Maffei. I will look into that.
Mr. Gibbs. I am just raising the question just to see.
Mr. Maffei. Yes.
Mr. Gibbs. You know----
Mr. Maffei [interrupting]. No, no, no, it is a good
question. I will look into it. I don't believe that--because of
the--how complex it is----
Mr. Gibbs [interposing]. Yes.
Mr. Maffei [continuing]. To unload these containerships, I
don't think there is that kind of----
Mr. Gibbs [interrupting]. Well, I think this is----
Mr. Maffei [continuing]. But that said, though, you are
onto something, again, because these contracts, the shippers
signing these contracts are led to believe, one way or another,
that they are very binding. Often what we find when we look
into it is they are actually not binding on the carrier as much
as the shipper thought. And so, there are a lot of issues with
these contracts----
Mr. Gibbs [interposing]. Yes.
Mr. Maffei [continuing]. Notwithstanding the fact that the
shipper thinks they got a better--a rate, and particularly a
guaranteed number of spaces, and then it turns out that they
don't. And that has been a big problem.
Mr. Gibbs. And that is probably why we need the Maritime
Transportation Data Initiative that your agency is working on.
When do you think we can receive that report?
Mr. Maffei. I will have to get back to you on that.
Mr. Gibbs. OK.
Mr. Maffei. I mean, obviously, as expeditiously as
possible.
Mr. Gibbs. Mr. Chairman, just indulge me here. I've got a
question for the admiral.
Mr. Carbajal. Yes, yes, by all means.
Mr. Gibbs. I was going to say nobody else is here.
Mr. Carbajal. By all means, go ahead.
Mr. Gibbs. It is just me and you.
Mr. Carbajal. We do have one more.
Mr. Gibbs. Oh, do we? OK, OK.
Anyway, Admiral, I have to bring this up, of course. The
Great Lakes carriers continue to believe additional Coast Guard
icebreaking capacity is needed in the Great Lakes. What is the
percentage increase in the Coast Guard icebreaking effort now
that the 140-foot icebreaking tug rehabilitation program is
complete?
And also, I guess more important to me to understand this
better, could the Great Lakes icebreakers share a common hull
and powertrain with what is now being called the Arctic
Security Cutter? My understanding is the Arctic Security Cutter
is a smaller vessel compared to the--up in the Arctic, and the
Coast Guard wants that to do activities in the North. It would
be the Northwest Atlantic, I guess, up there in the Greenland
area. Is it possible to--it seems like to me to be a cost
efficiency thing if they shared the same hull and powertrain
with the Arctic Security Cutter and a Great Lakes icebreaker.
Would that make sense?
Admiral Schultz. Congressman, thanks for the question. I
will say it this way. I think it is possible.
I think we had some earlier conversations. I think, as we
think about what we have, sort of, notionally called an Arctic
Security Cutter or medium breaker, I think that is probably
bigger than the capability to the Great Lakes. Let me walk the
conversation back.
In the Great Lakes, there are six 140-foot icebreaking
tugs. It used to be five, we added the sixth. Congress has
signaled clearly over the last five budget cycles, to the tune
of almost $20 million, that you are looking for more capacity
there. We are looking at--we call it the GLIB program. I don't
think we want to build another Mackinaw off the existing
designs--that is a 20-year-old design now--but something that
is Mackinaw-like. Two of the 140s up there operate with a 100-
foot barge. Maybe there is a platform that is Mackinaw-like
that also would be the replacement for the 140-foot barges,
sir.
So, we understand the clear intent that Congress has made a
business case for more capacity. We are pressing in on that. We
have a program office based on previous years' budgets with 11
bodies. There are additional bodies going in. So, we are
getting after pre-acquisition activities to come forward with a
clear plan on what we are going to do in the Great Lakes in
terms of capacity.
The linkage outside for the Arctic, sir, I think that is
going to be a vessel with too much draft to be of utility on
the Great Lakes, having sailed up there for 3 years. So, I
actually started that conversation, as I have sort of had a
chance to cogitate on that, looked at this commercially
available icebreaker. There is one I won't mention by name. We
have got to go through acquisition processes. But when you look
at the draft--and that is probably closer to what we need for
the Arctic work outside the lakes--I am not so sure that would
get after the mission on the Great Lakes, sir.
Mr. Gibbs. OK. Well, I appreciate the response, and your
looking into it, and concern, sir.
Admiral Schultz. Thank you.
Mr. Gibbs. And as I just close out here, I wanted to thank
you again for your service.
And Master Chief, thank you. I didn't even realize you were
retiring, too. I have heard great things about you, and I wish
you all the well.
[To Admiral Schultz and Master Chief Vanderhaden:] And I
was thinking about this: You, you, me, and Chairman DeFazio are
all retiring.
[To Mr. Carbajal:] So, good luck.
[Laughter.]
Mr. Gibbs. Thank you very much, and I yield back.
Admiral Schultz. And Congressman, congratulations to you.
Thanks for your support.
I just want to say both the committee staff has been a
pleasure to work with over my 39 years. I have got to know the
CGMT Subcommittee, and I have worked with John Rayfield for
most of my entire Coast Guard career. So, I want to thank John,
and Matt has come in and filled big shoes and done a great job.
So, thank you. And it is a privilege to be here with Lucinda
Lessley, who is a key partner in working together on some hard
issues in the maritime today about safety at sea for all
sailors, and particularly women these days.
Master Chief Vanderhaden. Thank you.
Mr. Carbajal. Thank you. There is always the next
generation, Mr. Gibbs.
With that we will move on to close out our hearing with
Representative Lowenthal.
[Pause.]
Mr. Carbajal. I think you are muted. I can't hear you.
[Pause.]
Mr. Lowenthal. Am I unmuted now?
Mr. Carbajal. We can hear you.
Mr. Lowenthal. Thank you, and it is nice to be cleanup. And
my questions, I want to follow up on questions that I was going
to ask in the first round, and that is to Ms. Lessley. And my
first one is more of a statement than a question.
And I want to thank you for being here, and I want to lend
my support to the strongest possible funding for programs like
the Port Infrastructure Development Program. And I think you
talked about that in your statement, and how the bipartisan
infrastructure bill greatly--it enhanced the funding for that
program.
But I do want to note that, in the fiscal year 2021, there
were applications for over $1.3 billion in Federal funds, while
we only gave out a total of $239 million. I know that will go
up this year.
The program is--at that point, in 2021--was oversubscribed
by a factor of 5.4 to 1. And there is a huge demand for these
resources. They are even more important as the program expands
to fund the electrification and decarbonization projects. So, I
just want to kind of reiterate what you have said and say, the
importance of the Port Infrastructure Development Program.
But I do want to turn briefly to the importance of funding
our Merchant Marine Academy, and I thank you for your efforts
in providing more light on the new standards to ensure that
students are protected at our Academy.
And I would just like to know if you can give us a little
more insight on what it is like bringing the carriers into
compliance with the EMBARC standards.
And in protecting students, it was my understanding that
usually the student had a Sea Year before they graduated. Will
every student have a Sea Year before they graduate now? Are we
able to provide that to them?
Ms. Lessley. Thank you so much for your questions. I want
to address the Merchant Marine Academy, but also I want to just
associate myself with your comments on the critical importance
of the Port Infrastructure Development Program, and the
historic investments that the President, President Biden's
Bipartisan Infrastructure Law are providing our Port
Infrastructure Development Program--will provide $2.25 billion
in investments over 5 years, all made possible by the
Bipartisan Infrastructure Law.
Looking at the Merchant Marine Academy, so, our process for
bringing carriers into the program, they complete a self
assessment, and provide policies which are then reviewed by our
staff, and they are then enrolled.
And we are also in the process of, as I mentioned, standing
up our office of cadet training and safety, which will take
over responsibility for doing the assessment visits to the
carriers, which is required by statute.
As I mentioned, we instituted new policies and procedures
at the Academy, and are in the process of now reviewing EMBARC,
reviewing the policies and procedures, so that we can continue
to identify opportunities for improvement, and then we can
remove barriers to reporting. The essential thing here is
trust, and we have a lot of work to do to build that.
In terms of Sea Year, so, yes. Our class of 2022 will
graduate on time. They had their Sea Year. The class of 2023 is
the most affected by this. And all of our eligible students are
gathering their sea days. We are tracking very closely and
anticipate that everyone will have the time they need to
graduate. Obviously, Sea Year is a requirement. They need the
sea days so that they can sit for the licensing exam. We are
tracking closely.
We did come into the temporary pause with deficits because
of COVID. If there are any students who do not--any midshipmen
who do not gather the time they need by the time of the
licensing exam, they will be able to take the exam--thank you
to the Coast Guard--on time, and then accumulate the sea days
that they still require after the licensing exam. No one, as I
said in my opening statement, will leave the Academy without
the sea time that they need.
I want to again thank Military Sealift Command, the Navy,
and the Coast Guard for providing billets. In any given year,
the Military Sealift Command vessels have provided about 25
percent of our sea days. Without their support, we would not
have been able to get our students underway, our midshipmen
underway. But with their support, we are looking good in terms
of having the class of 2023 gather their--crew their sea time,
so that they can take their licensing exams and graduate on
time.
Mr. Lowenthal. Thank you.
And with that, I yield back.
Mr. Carbajal. Thank you, Mr. Lowenthal. It seems that Mr.
Gibbs, in light of his pending retirement, has a lot more
questions. So, we are going to let him have another crack at
it.
Mr. Gibbs?
Mr. Gibbs. I just want to make a request to the Admiral,
because I wanted him to have something to do here in this last
month.
But we were talking about the western Alaska national
planning criteria. I just want the Coast Guard to submit to the
committee for the record a list of the equipment necessary to
be located in Alaska in order to meet the time deadlines
included in the national planning criteria, and the capital
cost of such equipment. Just send it in to the committee. I
would appreciate it.
Admiral Schultz. Congressman, western Alaska is, obviously,
a unique place with unique challenges in terms of vessels
complying with national compliance. We have an altered
compliance program. We are watching what is going on, and
encouraging private-sector investment and other things. We look
forward to continuing to work with the Congress on that
challenge up in that area. So, we understand that, and we have
to come up with a workable solution because it is not
reasonable for compliance with other national standards
elsewhere.
Mr. Gibbs. I agree with that, and we just want to see your
plan. Thank you.
Mr. Carbajal. Thank you. With that, that concludes our
hearing for today.
I would like to thank the witnesses for your testimony
today.
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 any 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 11:58 a.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 the
``Procurement, Construction and Improvement'' Account is yet again
being slashed in the President's budget request.
Last year Congress appropriated more than $2 billion to acquire
needed cutters and other operating assets, put a dent in the
multibillion-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 for the Coast Guard to even 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 a 12th and final
National Security Cutter, and exercise contract options for additional
Fast Response Cutters before those production lines go cold. These two
opportunities 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.
The Federal Maritime Commission seldom finds itself in the public
policy spotlight. However, for the last two years it has received much
attention because of the ongoing cargo surge at U.S. ports. Though the
Commission has identified no collusion on pricing or artificially
manipulating vessel availability, the rapid astronomical rise in
container shipping rates has put significant pressure on the FMC to be
particularly vigilant.
I hope our former House colleague, FMC Chairman Dan Maffei, can
share with us what resources he and the other Commissioners believe the
FMC needs to right-size its enforcement of ocean shipping regulations.
Finally, welcome to Acting Maritime Administrator Lucinda Lessley.
I look forward to hearing how MARAD is working to assure that all
Federal agencies strictly apply mandatory cargo preference requirements
to their programs.
Thank you, Chair Carbajal. I yield back.

Framework Timeline for U.S. Coast Guard Training Center Cape May
Barracks Recapitalization, Submitted for the Record by Hon. Jefferson
Van Drew
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Appendix

----------

Questions from Hon. Salud O. Carbajal to Admiral Karl L. Schultz,
Commandant, U.S. Coast Guard

Transition to H-60's I:
Question 1.a. As the Coast Guard transitions to H-60's, the H-65's
provide important capacity but are in need of sustainment to continue
to support the Coast Guard's no-fail mission set. It is my
understanding that within the Coast Guard's $699.208 million budget
request for ``Air Operations,'' there is $23 million to purchase main
gear box parts and $4.6 million to purchase engine cowlings for the MH-
65s.
Can you confirm that these funds are part of that ``Air
Operations'' request?
Answer. Funding to support the aviation maintenance Inventory
Control Point (ICP) is a single account within the Air Operations
Programs, Project, or Activities (PPA), which is prioritized throughout
the year based on immediate and forecasted needs across the Service's
aviation platforms to ensure adequate sparing for operational units and
depot repairs conducted at the Aviation Logistics Center (ALC). Funding
is not appropriated by aviation parts per airframe, and specific
direction on what parts or airframes to prioritize may limit the
Service's ability to meet its most exigent needs. With the MH-65
helicopter and its civilian variant no longer in production, the Coast
Guard works closely with Airbus and communicates forecasted parts needs
to ensure adequate sparing is available when needed. These parts, like
main gearboxes and engine cowlings, are purchased using funds from the
Air Operations PPA. Any additional funding directed to the ICP will be
used to procure the most critical parts necessary to ensure
airworthiness based on the current needs of the Service.

Question 1.b. During the transition to H-60's, how critical is it
for the Coast Guard that the MH-65 helicopters are mission ready and
fully operational?
Answer. The continued modernization and sustainment of the Coast
Guard's MH-65 fleet is critical to Coast Guard operations. The
transition to an all MH-60 helicopter fleet will take up to 15 years.
As the MH-60 fleet grows and the MH-65 fleet is strategically drawn
down, sustainment of the remaining MH-65s is critical to maintaining
vertical lift capability.

Question 1.c. What would be the consequences of Congress not
appropriating sustainment funding for the MH-65 helicopters?
Answer. The continued operational availability of the MH-65 fleet
is a critical component to maintaining the Service's vertical lift
capability and is dependent on continued sustainment funding. A lack of
sustainment funding will result in reduced operational readiness of
Coast Guard aviation assets, including the MH-65.
Investigating Cases:
Question 2. There have been many recent allegations of sexual
assault and sexual harassment from U.S. Merchant Marine cadets while
fulfilling their Sea Year requirement on board commercial vessels.
Unfortunately, this pattern is not new. The Coast Guard has
institutional shortcomings that have contributed to a history of sexual
assault and sexual harassment in the maritime industry.
Are there any impediments to the Coast Guard's authority to
investigate and prosecute sexual assault and sexual harassment cases on
state maritime academy vessels?
Answer. Sexual assault is a serious crime that directly undermines
the safety of life at sea. The Coast Guard remains committed to
investigating all reports of sexual assault aboard U.S. commercial
vessels and taking the necessary action to revoke the Coast Guard
issued credentials of any U.S. mariner who poses a threat to the safety
or security of a vessel and its crew. The largest impediment to Coast
Guard investigations is mariners, masters, and companies. All mariners
should expect to work on vessels characterized by climates of safety,
inclusion and respect. This includes clearly communicated information
about resources and reporting options for individual mariners who do
experience sexual assault, and sexual harassment. For example, victim
reporting increased after the Coast Guard released Marine Safety
Information Bulletin 11-21 on Reporting Sexual Assaults on U.S.
Vessels. While masters are legally required to report alleged sexual
assault to the Coast Guard, a continued effort to change the culture
aboard commercial vessels is required to ensure that all mariners and
companies accept their responsibility to report these crimes to the
Coast Guard and help eradicate sexual assault in the commercial fleet.
The Service is actively engaged with Congress regarding the
proposed language in the Coast Guard Authorization Act of 2022 to
prevent and respond to sexual assault and sexual harassment. Companies
play a critical role in fostering a culture of respect among their
employees and must actively participate in removing predatory and
harassing behavior from the fleet.

Question from Hon. Alan S. Lowenthal to Admiral Karl L. Schultz,
Commandant, U.S. Coast Guard

Smart Buoy Technology:
Question 1. For hundreds of years, maritime pilots have relied on
buoys as aids to navigation (AToNs) while at sea. The Coast Guard's
Fiscal Year 2023 budget request identifies ATON maintenance as one of
the top 3 non-pay cost drivers resulting citing an increased in lost
ATONs. I understand that the U.S. Coast Guard (USCG) is currently
piloting ``smart'' buoy technology that includes geolocation, wind,
current and weather monitoring that will help reduce lost ATONs and
speed ATON recovery time.
How does the Coast Guard expect that ``smart'' buoy technology will
help curb the cost of lost ATONs and when do you expect to receive
initial data on the success of the current pilot program?
Answer. The Coast Guard is evaluating the effectiveness and utility
of smart and monitored aids to navigation (ATON). Specifically, the
Coast Guard is assessing the ability of integrated satellite
communication technology to provide increased resiliency to the Marine
Transportation System. Additionally, the Coast Guard is evaluating
Global Positioning System monitoring to provide immediate notification
to waterways managers if an ATON is outside of its assigned positioning
tolerance. In late 2021, the Coast Guard contracted SailPlan Inc. for
one year to provide ``Smart Buoy'' technologies to be deployed on two
buoys located in the Chesapeake Bay. However, the deployment and
subsequent evaluation have not commenced. Working in cooperation with
the Maryland Pilots Association, the Coast Guard will evaluate the
effectiveness of providing real-time environmental data including wind,
current, and wave height. SailPlan will also perform remote monitoring
of the ``health'' of the buoy such as monitored power consumption and
positioning data. The Coast Guard seeks to learn what types of
environmental sensors may be needed on ``Smart Buoys'' to improve
safety and efficiency.

Question from Hon. Peter A. DeFazio on behalf of Hon. John Garamendi to
Admiral Karl L. Schultz, Commandant, U.S. Coast Guard

Joining Joint Chiefs:
Question 1. I recently learned that the U.S. Coast Guard, our
nation's sixth military branch, is only considered a de facto member of
the Joint Chiefs of Staff. There is legislation that my colleague
Representative Charlie Crist has proposed (H.R.2136) to promote you, as
the Commandant of the Coast Guard, to a full voting member of the Joint
Chiefs.
What is your position on promoting the U.S. Coast Guard to a full
voting member of the Joint Chiefs?
Answer. The current participation of the Coast Guard Commandant on
the Joint Chiefs of Staff improves synergy and streamlines efforts of
the U.S. Department of Homeland Security (DHS) with the U.S. Department
of Defense (DoD) while respecting the unique authorities of each
department. While not a member by law, the Coast Guard Commandant is
invited to and attends all meetings of the Joint Chiefs of Staff.

Question from Hon. Sean Patrick Maloney to Admiral Karl L. Schultz,
Commandant, U.S. Coast Guard

Report Status:
Question 1. During the hearing I asked for the status of two
reports: Anchorages and traffic on the Hudson River, and Wing-in-ground
crafts. These reports were required as part of the Elijah E. Cummings
Coast Guard Authorization act of 2020 and are overdue. Please provide
an update on the status of these reports. When should Congress expect
to receive them?
Answer:
Establishing Anchorage Grounds on the Hudson River Report: The
``Establishing Anchorage Grounds on the Hudson River'' Congressional
report is drafted and undergoing Coast Guard review. The Coast Guard
anticipates delivery of this report to Congress by the end of the
calendar year.
WIG Report: The Coast Guard, with support from the Federal Aviation
Administration (FAA), is developing a Request for Information (RFI) to
seek input from the public, and particularly from offshore facility
operators, including gas and oil facility operators, wind farm
operators, persons conducting operations in airspace that may be
affected by the operation of wing-in-ground (WIG) craft, and WIG craft
developers on the state and capability of this growing industry.
Through the RFI, the Coast Guard seeks to better understand the current
state and potential capability of the WIG industry to support
transportation in the outer continental shelf and to understand the
interest and resources necessary for offshore facility operators to
support a demonstration program.

Questions from Hon. Chris Pappas to Admiral Karl L. Schultz,
Commandant, U.S. Coast Guard

Replacing Legacy Buoys:
Question 1. I understand the Coast Guard is currently in the
process of testing and evaluating modern polyethylene buoys and their
potential to replace legacy steel buoys currently used by the
Department. I am very encouraged that the Coast Guard is working on
this project, which has the potential to significantly reduce both
procurement and lifecycle sustainment costs for marine aids to
navigation.
I would appreciate an update on the status of the program.
Specifically, can you confirm that effort is funded in the ``Waterways
Management and Environmental Response'' account in the Coast Guard's
R&D budget?
Answer. This project is progressing and is scheduled for completion
in April 2024. Test buoys have been deployed in the Coast Guard's 1st,
8th and 13th Districts. The Research and Development Center and
supporting Coast Guard units are performing ongoing inspections on
deployed buoys and assessing buoy-hull failures as they occur.
Additional buoys are scheduled for deployment in the 13th District and
Western Rivers this summer.
Deploying Polyethylene Buoys:
Question 2. Lastly, I understand that following the evaluation, the
Coast Guard aims to produce a report detailing the results in mid-2023.
What, if any, planning is currently underway in terms of contract
mechanisms, acquisition strategies, and timeframes to procure and
deploy polyethylene buoys following the evaluation and report? I
understand that no formal acquisition decisions can be made prior to
the report's conclusion, but I am hopeful that, in the event the report
is positive, the Coast Guard is prepared to rapidly transition to
procurement and deployment given the potential for significant cost
savings and operational improvements.
Answer. The Coast Guard is awaiting the results of the report
before making acquisitions plans or decisions.

Questions from Hon. Sam Graves to Admiral Karl L. Schultz, Commandant,
U.S. Coast Guard

Navigation as Paramount Use/Navigation Safety:
Question 1. Is the Coast Guard the lead Federal agency for
navigation safety?
Answer. Yes. The Coast Guard is responsible for ensuring the safety
of navigation and mixed use of all U.S. waterways. Accordingly, the
Coast Guard is the lead agency for all efforts to balance competing
interests offshore in order to maintain safe and efficient navigation
routes to and from U.S. ports.

Question 2. Does section 70(a) of title 46, United States Code,
give the Coast Guard the authority to designate fairways and vessel
traffic separation schemes in U.S. waters in order to recognize the
``paramount right of navigation over all other uses''?
Answer. Under section 70003, the Secretary of Homeland Security has
the duty to perform Port Access Route Studies (PARS) to ensure that
vessel traffic has safe and open access to U.S. places and ports. The
law directs the Secretary to consider all other waterway uses, and ``to
the extent practicable, reconcile the need for safe access routes with
the needs of all other reasonable uses of the area involved.''

Question 3. Does section 70003(b) title 46, United States Code,
limit the authority in subsection (a) in cases where such designations
would deprive any person the effective exercise of rights granted by a
lease making navigation a lesser use?
Answer. The extent to which preexisting lease rights take
precedence over navigation depends upon the nature of the lease rights
vested at the time the notice of the PARS is published in the Federal
Register.
Designate Fairways:
Question 4. Since as early as 2006 when the Coast Guard became
aware of efforts to lease areas on the outer Continental Shelf, did the
Coast Guard proactively designate fairways or establish vessel traffic
separation schemes under section 70003(a) before the Department of the
Interior undertook 23 lease actions between October 2010 and February
2019 thus limiting area in which navigation is the paramount use?
Answer. The test for priority set forth in 70003(b)(1)(a) and (b)
requires an analysis of the lease to determine what rights were already
vested on the date the PARS was announced in the Federal Register.
Regarding U.S. Department of the Interior (DOI) leases for offshore
wind energy development, the winning bidder/lessee initially has the
exclusive right to submit a Site Assessment Plan (SAP). As stated by
the one Federal court to have analyzed an Offshore Wind Energy lease,
``on its own, the lease at issue does no more than grant [the lessee]
the exclusive right to submit a Site Assessment Plan and Construction
and Operations Plan to DOI's Bureau of Ocean Energy Management (BOEM)
for approval: See Fisheries Survival Fund v. Jewell, 2018 WL 4705795,
Sept. 30, 2018. The lease, itself, does not authorize any activity in
the leased area. Once BOEM evaluates and approves the SAP, the lessee
has the vested right to undertake the approved data collection
activities in the area described in the SAP. Following approval of the
SAP, a lessee has the right to collect data and submit a proposed
Construction and Operations Plan (COP), which can only be approved once
all National Environmental Policy Act (NEPA) requirements and
consultations are completed. In determining priority between navigation
and all other offshore uses, the Secretary of the Department of
Homeland Security (DHS) is directed by 46 USC 70003(b) to determine
which, if any, of a lessee's rights were vested before the Coast Guard
published a Federal Register notice announcing a Port Access Route
Study for that same sea area. Two fairways and 14 vessel traffic
separation schemes were designated by the Coast Guard along the
Atlantic coast prior to 2010. Any future designation under 46 USC
70003(a) will be performed in accordance with all requirements in 46
USC 70003, including the consultation requirement with DOI pursuant to
46 USC 70003(b)(2) if the designation would deprive the lessee of the
effective exercise of a right granted by a lease. To date, BOEM has
approved two COPs (Vineyard Wind--July 2021; and Southfork--January
2022). The two COPs do not predate studies for those areas announced by
the Coast Guard in accordance with 70003(c)(1). The Coast Guard
completed its study of these areas (Massachusetts and Rhode Island
PARS) and determined that fairways were not necessary to protect
historic shipping routes.
Atlantic Coast Port Access Route Study:
Question 5. When the Coast Guard completed the Atlantic Coast Port
Access Route Study required by Congress in 2016, how long did the Coast
Guard wait before initiating rulemaking action to implement the Coast
Guard's own recommendations in the Study?
Answer. The Coast Guard announced the availability of and requested
comment on the final Atlantic Coast Port Access Route Study (ACPARS) on
March 14, 2016, with a 30-day comment period. The Coast Guard published
an Advanced Notice of Proposed Rulemaking on June 19, 2020.

Question 6. The Subcommittee understands that since beginning the
rulemaking the Coast Guard has undertaken four additional supplemental
port route access studies and that a Notice of Proposed Rulemaking will
go out when the fourth of those studies is complete. Why was the 2016
study so deficient that four additional studies were necessary before
even a Notice of Proposed Rulemaking (NPRM) could go forward? When does
the Coast Guard intend to publish the NPRM? Complete the rulemaking?
Answer. The ACPARS evaluated coastwise shipping traffic as a first
step in the process to identify areas where prospective renewable
energy installations should not interfere with historic vessel traffic
lanes. These lanes were not charted, as prior to advancing developments
in BOEM's offshore wind program, there was not a need for offshore
fairways. Once the routes were identified, the Coast Guard subsequently
studied the connecting routes to the individual ports to determine if
existing Traffic Separation Schemes were adequate or required
modifications to determine if fairways were necessary to keep
structures at a safe distance from routes used by vessels transiting to
and from each port on the Atlantic Coast. The Coast Guard is working
towards publication of a Notice of Proposed Rulemaking.

Question 7. How many areas recommended to be set aside for
navigation in the 2016 Atlantic Coast Port Access Route Study are now
unavailable for such uses because those areas have subsequently been
leased?
Answer. All of the areas recommended to be set aside for navigation
remain available. The leasing of an offshore area only provides the
lessee the exclusive right to submit a Site Assessment and Construction
and Operations Plans. The lease does not guarantee the lessee the right
to construct or operate any structures or other potential obstructions
to navigation.
Implement Recommendations:
Question 8. Why is it necessary for Congress to tell the Service to
implement recommendations made by the Service in their own study?
Answer. The Coast Guard intends to implement the recommendations of
the ACPARS final report in accordance with sections 70003(c)(2) and
(3), 70004, the Administrative Procedure Act, the NEPA, and several
other environmental control laws requiring consultations on matters
including State coastal development, endangered species, and marine
mammals. Implementing a vessel traffic scheme covering the majority of
the U.S. East Coast is a significant undertaking with many interested
stakeholders.
Navigation Rights:
Question 9. Does the Coast Guard consider navigation to be the
``paramount right . . . over all other uses'' as stated in Section
70003 of title 46, United States Code?
Answer. The Coast Guard recognizes the priority the law provides to
navigation relative to other potentially competing uses of the
waterway.
Deference in the Gulf:
Question 10. The Department of the Interior has announced it
intends to begin leasing areas in the Gulf of Mexico for wind energy
project in the near future. Does the Coast Guard intend to show the
same subservient deference to the Department of the Interior in the
Gulf with regards to navigation safety that it has shown on the
Atlantic Coast?
Answer. Shipping safety fairways are already established in the
Gulf of Mexico. The Coast Guard is working with BOEM and maritime
stakeholders to ensure safe access routes that preserve the paramount
right of navigation throughout the region.
Study Status:
Question 11. What is the status for the Gulf of Mexico, Arctic and
West Coast Port Route Access Studies?
Answer. With the existing fairways in the Gulf of Mexico, the Coast
Guard has not determined if a Gulf of Mexico Port Access Route Study
will be necessary. The Coast Guard announced the Alaskan Arctic Port
Access Route Study on December 21, 2018. The Coast Guard extended the
comment period twice and reopened the comment period two additional
times to provide adequate opportunity for public meetings in impacted
Arctic communities, given the COVID-19 impacts to travel. The period
officially closed on March 31, 2022, and the Coast Guard is
adjudicating comments. The recently commenced Pacific Coast Port Access
Route Study (PACPARS) will likely go through more than one comment
period with an expected completion by the end of next year. The Coast
Guard anticipates that implementing recommendations resulting from the
PACPARS will be challenging due to concerns about the protection of
marine mammals and other endangered species.
Move to All MH-60 Rotary Wing Aircraft/Transition to H-60's II:
Question 12.a. The Coast Guard has announced a decision to phase
out its MH-65 short range helicopters and move to an all MH-60 medium
range helicopter fleet. There many versions of MH-60, including the
version which the Coast Guard currently flies.
Has the Department of Homeland Security signed an Approved Baseline
for the transition to an all H-60 fleet?
Answer. The current MH-60 Sustainment Program is in the Obtain
Phase of the acquisition lifecycle framework and is required to have
only a preliminary APB (P-APB) at this stage. However, in concert with
DHS, the Coast Guard is developing an APB that encompasses the MH-60T
Service Life Extension Program (SLEP) and the transition to an all-MH-
60T fleet (Growth). An Acquisition Decision Memorandum is forthcoming
from DHS that will allow the Program to execute both MH-60 SLEP and
Growth efforts while developing the entrance/exit criteria
documentation for an Acquisition Decision Event to adopt this combined
APB.

Question 12.b. Has the Coast Guard selected which version of MH-60
it will acquire. Will it continue to convert Navy SUNDOWNER hulls and
newly acquired original equipment manufacturer hulls to the
configuration currently used by the Service? Select a new Coast Guard
specific MH-60? A version already being built for other clients?
Answer. The Coast Guard has selected the MH-60T, which is uniquely
suited for Coast Guard operations, with the ability to accommodate
greater fuel loads, land on small flight decks, and operate in all
weather conditions. The MH-60T airframe with forged spar fittings is
airworthy to 20,000 flight-hours, a far greater life span than the
8,000 flight-hour limit of the riveted H-60 airframe currently in use
by the U.S. Navy, which needs recapitalization every ten to twelve
years. Furthermore, a single rotary wing fleet composed of all MH-60T
airframes enables maintenance, logistics, training, operations, and
overhaul efficiencies.
The Coast Guard has successfully converted ten U.S. Navy
``Sundowner'' hulls at the Aviation Logistics Center to the MH-60T
configuration to replace both MH-60 and MH-65 operational losses and
transitioned two air stations from the MH-65 to MH-60 to mitigate MH-65
fleet gaps. The Coast Guard must begin MH-60T fleet growth immediately
to mitigate the supply chain challenges that will continue to make
sustaining the current fleet of 98 MH-65s difficult. The Service is
beginning MH-60T fleet growth using retired U.S. Navy SH-60F and HH-60H
hulls at ALC using the funding appropriated in Fiscal Year (FY) 2022.
The Coast Guard intends to continue these efforts with the funding
requested in FY 2023.
All new hulls purchased from the original equipment manufacturer
(OEM) are intended for SLEP. The Coast Guard will continue to convert
Navy hulls to support MH-60 fleet growth efforts. Given current
production and delivery schedule of new Sikorsky hulls, the Coast Guard
will need to convert U.S. Navy hulls until new hulls from the OEM are
available to meet both MH-60 growth and SLEP needs. The 20,000 flight-
hour limit of a new hull compared to the approximately 12,000 flight-
hour remaining service life of the U.S. Navy hulls makes the transition
to MH-60 fleet growth with new hulls the best strategy to maintaining
vertical lift capability.

Question 12.c. Has the Coast Guard conducted review of
alternatives? Are there other helicopters more appropriate for cutter-
based operations and the National Capital Air Interdiction Mission, an
inherently short-range function?
Answer. Yes, the Coast Guard conducted an Alternative Analysis in
April 2019 prior to the start of the MH-60 Service Life Extension
Program.
The MH-60 is the ideal platform for cutter-based operations and the
National Capital Air Interdiction Mission. An all MH-60 fleet improves
mission effectiveness due to the greater range, endurance, and power-
to-weight ratios over the MH-65, streamlines the Service's training and
logistics systems, and provides for smaller total fleet inventory. For
this reason, new Coast Guard major cutter acquisitions are being
specifically designed to land, operate, and hangar Coast Guard MH-60
aircraft.

Question 12.d. Do H-60s have to fold their tail rotors in order to
be stowed on USCG cutters?
Answer. Yes. In order to hangar MH-60s on the Polar Security,
National Security, and Offshore Patrol cutters the main rotor and tail
boom must be folded. Legacy Coast Guard cutters such as the 270-foot
and 210-foot WMECs cannot hangar the MH-60.
Logistics Information Management System:
Question 13.a. For many years, the Committee has expressed
skepticism that the Coast Guard's custom-designed Logistics Information
Management System would work or was worth the millions so unnecessary
dollars the Coast Guard spent on it. The Committee was pleased to see
the Coast Guard finally abandon this custom system in 2021. In FY '23,
the Coast Guard requests $15 million for a system based on Naval
Operational Business Logistics Enterprise (NOBLE) Family of Systems
capability, but still named the Logistics Information Management
System. The Coast Guard budget shop insists this is the same program.
The Committee is again highly skeptical that is the case.
Is the NOBLE-based Logistics Management System now being developed
the same system as the custom program the Coast Guard spent many years
and many millions of dollars developing?
Answer. The NOBLE-based Logistics Management System is not the same
system as the legacy CG-LIMS system developed by the Coast Guard from
2011-2018. The Coast Guard chartered its Logistics Information
Management System (CG-LIMS) Acquisition Program to replace the Coast
Guard's aging fleet of logistics IT systems in 2008. From 2011-2018,
the Acquisition Program conducted a pilot project utilizing the Oracle
eBusiness Suite (EBS) for aviation logistics IT systems, also named CG-
LIMS.

Question 13.b. Please provide the Committee a year-by-year summary
of the money the Coast Guard spent on the system named the Logistics
Information Management System prior to the Coast Guard's 2021 decision
to abandon that system and use the Navy's NOBLE system.
Answer. The year-by-year summary of funds expended in support of
the Oracle EBS solution is provided below:

----------------------------------------------------------------------------------------------------------------
FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Total
----------------------------------------------------------------------------------------------------------------
$Obligated................... $8.1 M $7.1 M $2.6 M $1.6 M $4.9 M $8.5 M $6.9 M $6.5 M $46.2 M
----------------------------------------------------------------------------------------------------------------

The Coast Guard's acquisition plan has been to leverage a
commercial-off-the-shelf (COTS) software products, rather than building
a custom software solution. In 2011, the Coast Guard selected the
Oracle eBusiness Suite (EBS) as the underlying COTS solution for CG-
LIMS through a competitive solicitation. In 2018, the Coast Guard
realigned the acquisition with the U.S. Navy (USN). From 2011 to 2018,
the Service delivered Coast Guard Logistics Information Management
System Technical Information Management (CG-LIMS TIM), which is a
technical information management portal for Coast Guard logistics
assets replacing the legacy systems of Aviation Technical Information
Management System and Naval Engineering Technical Information
Management System. Today, this technical information provides logistics
support artifacts to over 13,000 unique users, supporting Coast Guard
surface, air, and boat assets, ATON equipment, and numerous Command,
Control, Communications, Computers, and Information Technology systems/
sub-systems. Also during this timeframe, CG-LIMS successfully
demonstrated the use of a COTS software solution (Oracle EBS
Maintenance, Repair, and Overhaul Module) to support aircraft
sustainment operations at Aviation Training Center, Mobile, AL.

Question 13.c. Does the Coast Guard really believe that by using
the same name for the two system Congress will be fooled into thinking
the Coast Guard did not have to abandon as a failure its effort to
design a custom logistics management system?
Answer. The Coast Guard considered rebranding CG-LIMS concurrent
with the decision to transition from EBS to USN NOBLE as the
Acquisition Program's IT solution. While the Coast Guard's underlying
technical solution has changed, its logistics IT modernization
requirements have not. Therefore, the Service decided that the name CG-
LIMS would be maintained. By retaining CG-LIMS, the Coast Guard could
utilize the already established lines of accounting/financials,
acquisition documentation, save time and rebranding costs of the system
for future users, and preserve the integrity of the existing
Acquisition Program.
The partnership with the USN allows the Coast Guard to leverage the
expertise and resources of the USN to obtain levels of logistics IT
modernization that would be difficult to attain if it were to proceed
with a Coast Guard-only solution. It also avoids duplication of effort
in the planning, resourcing, procurement, and development of redundant
logistics IT capabilities. Further, this partnership supports Coast
Guard and USN strategic objectives to improve naval logistics
interoperability and commonality as detailed in the National Fleet Plan
and Naval Logistics Integration Strategic Plan.
Physical Access Control System/DoD System:
Question 14.a. According to a report received last July from the
Coast Guard pursuant to 2020 Coast Guard Authorization Act, Service
facilities are not in compliance with the physical access control
requirements of Homeland Security Presidential Directive (HSPD) 12 or
Federal Information Processing Standard (FIPS) Publication 201. Before
Coast Guard facilities can be brought into compliance, the Service must
have access to one of two potential technological solutions. The first
solution--the Department of Defense (DOD) Defense Enrollment
Eligibility System database--uses the DOD Common Access Card (CAC)
which the Coast Guard uses as their Personal Identity Verification
credential. However, there is no agreement between that Department of
Homeland Security and DOD which would allow DHS information to be
maintained and processed in a DOD system. The lack of such an agreement
prevents the CAC from also being used for physical access control even
though it is the Coast Guard's Personal Identity Verification
credential. The other option is the DOD's Defense Biometric
Identification System.
Why has DHS not entered in an agreement with DOD to allow DHS data
to be maintained and processed in a DOD system thus requiring the Coast
Guard to use a separate Personal Identity Verification credential, and
a separate Physical Access Control mechanism?
Answer. The Coast Guard, as the only Armed Service within DHS,
continues to work with the Department to seek a solution to enable
Common Access Card use for personal identity and facilities access
validation purposes.

Question 14.b. What is that status of discussions between DOD and
the Coast Guard regarding the use of the DOD's Defense Biometric
Identification System? Would use of that system require Coast Guard
personnel to carry a separate identity credential?
Answer. The Coast Guard continues to work with DoD to adopt the
Department of Defense Biometric Identification System (DBIPS) to meet
physical security and access validation requirements related to
personal identity credentials. If DPIBS is adopted, Coast Guard
personnel would continue to utilize current identity credentials.
Increased Threats:
Question 14.c. While the Service is out of compliance with HSPD 12
and the FIPS 201 standards and the bureaucrats dither over access over
one U.S. government department's access to another U.S. government
department's data, to what additional threats or increased level of
danger are Coast Guard facilities and personnel being exposed?
Answer. The Coast Guard is committed to the safety and security of
its personnel and facilities. The Service employs a comprehensive
approach to threat identification and mitigation in accordance with
unit specific requirements based on mission profile, geographic
location, and recurring threat assessments.
GPS Backup/LORAN Transfer :
Question 15.a. Since 2008 when the Coast Guard shut down LORAN-C
and despite ever increasing concerns about GPS jamming, spoofing and
signal failure, the Department of Transportation has failed to carry
their mission to provide a GPS timing backup signal--the signal on
which modern telecommunications rely. Congress has prohibited the Coast
Guard from removing its LORAN towers pending a request from DOT to
transfer these towers to that department.
Has the Coast Guard received any such request from DOT?
Answer. No. The Coast Guard has not received any LORAN-C related
requests from the U.S. Department of Transportation.

Question 15.b. If Congress lifts the prohibition, is the Coast
Guard prepared to remove the towers?
Answer. Yes. The Coast Guard is prepared to transfer the towers to
the U.S. Department of Transportation or divest the towers.
Alternative Planning Criteria for Western Alaska:
Question 16. The House-passed Don Young Coast Guard Authorization
Act of 2022 includes a provision that sets minimum standards for any
Alternative Planning Criteria approved by the Coast Guard for the
Western Alaska Captain of the Port Zone. This provision was requested
by our late colleague Don Young who represented Alaska for 49 years.
The new standards apply ``in any case in which the Secretary has
determined that the national planning criteria . . . are inappropriate
for a vessel operating in the area of responsibility of the Western
Alaska Captain of the Port Zone.''
The Coast Guard makes the claim that it is working toward a system
in Western Alaska that will meet national planning criteria. Please
provide the Committee with:
Question 16.a. A list of the equipment necessary to be located in
Alaska in order to meet the time deadlines included in the national
planning criteria;
Question 16.b. The capital cost of such equipment;
Question 16.c. The increase in the cost of compliance for Vessel
Response Plans to pay for such equipment.
Answer to 16.a.-16.c. The determination of resources necessary to
meet time deadlines for the national planning criteria (NPC) are not a
cumulative summation, but rather a matrix of factors unique to each
class of vessel and operating area. The required resources to meet NPC
are determined by an evaluation of the vessel's needs based on vessel
type, oil type, fuel oil and oil cargo volume, and operating
environment. The vessel owner and/or operator are required to consider
all potential response resources (e.g., equipment, personnel, and
services) that could arrive within the required timelines when
developing a Vessel Response Plan and coordinate with resource
providers to determine whether NPC can be met.
The Coast Guard does not appraise or audit the capital cost of
resources owned or contracted by vessel owners and/or operators.
The cost of compliance determination depends on the matrix of
factors unique to each class of vessel and its operating area. In
accordance with 33 CFR 155 Subparts D through G and J, vessel owners
and/or operators are responsible for evaluating and securing the
requisite resources and services to meet the national planning criteria
requirements.

Questions from Hon. Peter A. DeFazio on behalf of Hon. John Garamendi
to Hon. Daniel B. Maffei, Chairman, Federal Maritime Commission

Question 1. Are you seeing the foreign-flagged ocean carriers
change their business practices as result of recent FMC action and the
Ocean Shipping Reform Act, on which I am working to negotiate a final
compromise with the Senators?
Answer. Based on observations of the staff and reports from
shippers, ocean carriers are responding to the Federal Maritime
Commission's initiatives and activities on several key fronts--such as
increased responsiveness, changes in the fee structures, and higher
numbers of waivers of per diem fees. Certainly, the FMC action combined
with Congressional attention to the industry and its practices--
especially the overwhelming bicameral and bipartisan support for the
Ocean Shipping Reform Act--has motivated the most senior executives of
shipping companies (in the U.S. and abroad) to address criticisms about
their service. Several lines have initiated new programs to increase
their outreach to exporters which I think is a direct result of the
legislative efforts and the FMC initiatives such as the Vessel-
Operating Common Carrier (VOCC) Audit Program. That said, there remains
much work to do.
Commission activities can be characterized by two broad themes: (1)
enforcement, and (2) engagement/compliance.
In July 2021 at my direction, following conversations with
Commissioner Rebecca Dye, the Commission established the VOCC Audit
Program. Initially, this program was established to analyze the top
nine ocean carriers by market share for compliance with the Commission
rule interpreting 46 U.S.C. Sec. 41102(c) as it applies to demurrage
and detention practices. In March 2022, again at my direction, the VOCC
Audit Program expanded its scope to evaluate how 11 key ocean carriers
are serving U.S. export carriers. The Audit Team lead has reported that
the ocean carriers are approaching this exercise positively and are
demonstrating constructive and cooperative attitudes. Not surprisingly,
there are differences from company to company in terms of how
sophisticated their respective commitments are to demurrage and
detention compliance, as well as serving the U.S. export market, but
overall, trends are pointing in the desired direction. We have seen a
general desire to meet the Commission's expectations for what
individual lines should do to comply with the rule on demurrage and
detention, with most lines willingly meeting most, if not all, of the
``best practices'' identified by the VOCC Audit Team in October 2021.
Further, we know that many of the 11 lines we are engaging on export
service have strategies in place, or being developed, to serve this
market. More work needs to be accomplished on both these fronts and I
am committed to continuing them until satisfactory progress has been
achieved.
The Commission has initiated three Orders of Investigation and
Hearing. These cases examine the practices of ocean carriers, Hapag-
Lloyd and Wan Hai, as it relates to demurrage and detention, and
against ocean carrier ONE for its violation of 46 U.S.C. Sec. 41102
(c). In April 2022, the Commission's Administrative Law Judge issued an
Initial Decision finding Hapag-Lloyd had violated the Commission's Rule
on Demurrage and Detention and issued a fine in the amount of $822,200.
Hapag-Lloyd and the Commission's Bureau of Enforcement subsequently
entered into a settlement agreement that, if adopted, will result in a
$2 million fine and changes to that carrier's demurrage and detention
practices. In May 2022, Wan Hai and the Commission's Bureau of
Enforcement entered into a settlement agreement for $850,000. All three
of these matters remain pending before the Commission. In addition to
the Commission's formal proceedings, its Bureau of Enforcement and Area
Representatives are investigating the many allegations it receives from
the public daily.
We know our efforts have had an effect, and that ocean carriers are
placing a renewed emphasis on compliance more broadly. Information we
have gathered indicates the ocean carriers are looking to establish new
programs ensuring their compliance with relevant regulations and
statutes. Further, one of the Final Recommendations made by
Commissioner Dye from her work on Fact Finding 29 is that each ocean
carrier be required to establish a Chief Compliance Officer who reports
directly to the Chief Executive Officer. I am supportive of this
proposal.
While our work has had a positive effect in many regards, rates to
ship cargo remain historically high and ocean carrier performance
continues to be sub-par. Progress on those issues will likely only be
achieved when supply and demand become more balanced and consistent
with historic ebbs and flows of international trade patterns. There are
many issues outside the scope of the legislation or the Commission's
now or future authorities that must be resolved such as the need for
more truck drivers, warehouse workers, added intermodal rail capacity,
and creating additional warehouse capacity. Nevertheless, legislation
pending before the Congress will help make a difference in the
Commission being able to address ocean carrier practices that can be
improved or that need to be investigated.

Question 2. Do you agree that the FMC must play a more active role
in the marketplace, so that the foreign-flagged ocean carriers that
currently dominate global commerce cannot continue to run the table, to
the detriment of U.S. exporters, and exacerbate our nation's
longstanding trade imbalance with export-driven countries in the Asia-
Pacific like mainland China?
Answer. Yes, and provisions in both the House and Senate versions
of the Ocean Shipping Reform Act (OSRA) will allow us to do so.
As I stated in both my oral and written statements at the hearing
held on April 27, 2022, I have no higher priority as the Chairman than
using the authority and jurisdiction of the Commission to help U.S.-
based exporters access shipping services and reach overseas markets. We
have acted to do so within the limitations of our current authorities
and in all candor, our efforts have reached the boundaries of what is
possible to address. I have identified many of these initiatives in my
preceding answer.
Requirements in legislation will be helpful in strengthening
service contracts, specifying ocean carrier obligations in serving the
export market, creating more visibility into how the export trade is
being served, and investigating potential bad conduct by ocean
carriers. These are welcomed new authorities that will have a
beneficial effect on how U.S. shippers are served and bring more
accountability to how ocean cargo services are provided.
While I do not want in any way to be seen as criticizing the OSRA,
the answer to the question would be incomplete without mentioning that
for the FMC, the capacity to be an active regulator is limited by the
limitations on its authority to oversee the limited antitrust exemption
that was included in the Shipping Act of 1984. The exemption applies to
alliances of ocean carrier lines and groups of ocean terminal operators
which file agreements with the FMC. These alliances and other
agreements can be beneficial and can have pro-competitive effects. That
said, the FMC remains vigilant on review of all agreements. I believe
the FMC should have more robust statutory authority to stop agreements
(at least temporarily) on its own authority and that agreements should
be limited in duration so that the parties have to come back to the FMC
for renewal every five to ten years. These antitrust enhancements are
not included in OSRA but could be included in subsequent legislation.

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