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PLEASE NOTE: The following transcript is a portion of the official hearing record of the Committee on Transportation and Infrastructure. Additional material pertinent to this transcript may be found on the web site of the Committee at [http://www.house.gov/transportation]. Complete hearing records are available for review at the Committee offices and also may be purchased at the U.S. Government Printing Office.







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APRIL 25, 1996

Printed for the use of the

Committee on Transportation and Infrastructure


BUD SHUSTER, Pennsylvania, Chairman

WILLIAM F. CLINGER, Jr., Pennsylvania
THOMAS E. PETRI, Wisconsin
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HOWARD COBLE, North Carolina
JOHN J. DUNCAN, Jr., Tennessee
WILLIAM H. ZELIFF, Jr., New Hampshire
BILL BAKER, California
JAY KIM, California
STEPHEN HORN, California
BOB FRANKS, New Jersey
PETER I. BLUTE, Massachusetts
JOHN L. MICA, Florida
ZACH WAMP, Tennessee
RANDY TATE, Washington
RAY LaHOOD, Illinois
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NICK J. RAHALL II, West Virginia
ROBERT A. BORSKI, Pennsylvania
ROBERT E. WISE, Jr., West Virginia
BOB CLEMENT, Tennessee
ELEANOR HOLMES NORTON, District of Columbia
PAT DANNER, Missouri
JAMES E. CLYBURN, South Carolina
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BOB FILNER, California
FRANK MASCARA, Pennsylvania
GENE TAYLOR, Mississippi

Subcommittee on Coast Guard and Maritime Transportation

HOWARD, COBLE, North Carolina, Chairman

TILLIE K. FOWLER, Florida, Vice-Chairwoman
BILL BAKER, California
BUD SHUSTER, Pennsylvania
(Ex Officio)

BOB CLEMENT, Tennessee
ROBERT A. BORSKI, Pennsylvania
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GENE TAYLOR, Mississippi
(Ex Officio)


    Creel, Harold J., Jr., Chairman, Federal Maritime Commission, accompanied by Robert D. Bourgoin, General Counsel

    Dillingham, Gerald L., Associate Director, Transportation and Telecommunications Issues, Resources, Community, and Economic Development Division, U.S. General Accounting Office, accompanied by Randy Williamson, Assistant Director, and Neil Asaba, Senior Evaluator

    Johnson, Peter A., Senior Staff Officer, National Research Council, on behalf of the Committee on Maritime Advanced Information Systems

    Kramek, Admiral Robert, Commandant, U.S. Coast Guard, accompanied by Master Chief Petty Officer Eric A. Trent


    Baker, Hon. Bill, of Louisiana

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    Creel, Harold J., Jr

    Dillingham, Gerald L

    Johnson, Peter

    Kramek, Admiral Robert

    Trent, Master Chief Petty Officer Eric A


    Creel, Harold J., Jr., Chairman, Federal Maritime Commission, responses to hearing question

Dillingham, Gerald L., Associate Director, Transportation and Telecommunications Issues, Resources, Community, and Economic Development Division, U.S. General Accounting Office:
Copy of laws on VTS system

GAO Report, Marine Safety: Coast Guard Should Address Alternatives as it Proceeds with VTS 2000, April 1996*

    Johnson, Peter A., Senior Staff Officer, National Research Council, on behalf of the Committee on Maritime Advanced Information Systems, responses to hearing question
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Kramek, Admiral Robert, Commandant, U.S. Coast Guard:

Responses to post hearing questioN
Statement of Commodore Peter W. Melera


    Aschemeyer, Capt. M.H.K., Executive Director, Marine Exchange, Los Angeles-Long Beach Harbor, Inc., statement

    Ouellette, Sergeant Major Michael F., USA, (Ret.), Director, Legislative Affairs, Non Commissioned Officers Association of the United States of America, statement

    *Maintained in subcommittee files.


U.S. House of Representatives,

Subcommittee on Coast Guard and Maritime Transportation,

Committee on Transportation and Infrastructure,
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Washington, DC.

    The subcommittee met, pursuant to notice, at 9:50 a.m. in room 2253, Rayburn House Office Building, Hon. Howard Coble (chairman of the subcommittee) presiding.

    Mr. COBLE. Good morning, folks. We're going to do this a little irregularly today. Admiral, good to have you here, Master Chief, and others.

    I have been advised there will be a journal vote at 10, at which time a new Member will be sworn in so you're talking probably conservatively 20 to 25 minutes.

    What I thought I would do, without objection, is to go ahead and get my opening statement in the record and perhaps conserve that much time, and we'll maybe get back on track.

    Let me get my breath. I'm getting old, Admiral, and losing my conditioning.

    Before I give my opening statement, what I'm about to say, Admiral, has nothing directly to do with the purpose of our meeting here, but I want to share it with you.

    Last Friday, Congressman LoBiondo, who represents the Cape May, New Jersey, area, invited me to be his guest in his home District. Commander Gentile accompanied us there, and we had the graduation exercise at Cape May, visited the nearby Cap May air station, where we talked to the aviation survivalmen who actually assisted or executed the very heroic rescue that was featured on NBC Dateline Sunday night.
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    The day, in its entirety, impressed me very favorably. So if the Coast Guard is an accurate reflection of what I saw at Cape May, Admiral, I feel good about the state of the Coast Guard. It was a very good day, and if you'll convey my good wishes to the Skipper there and all others—and I'll say a good word about Commander Gentile, too, while he's in the room, and let him know that we're praising him.

    With that in mind, folks, let me give the opening statement.

    The subcommittee is meeting today to hear testimony on the Coast Guard budget authorization for fiscal year 1997 and the Federal Maritime Commission's budget authorization for fiscal year 1997.

    As many of you know, we will generally limit opening statements to the chairman and ranking Member. If other Members have statements, when they get here they'll be invited to include it in the hearing record.

    It's good to have you all here today to discuss the fiscal year 1997 budget request for the Coast Guard and the Federal Maritime Commission. The subcommittee will receive testimony from the Commandant and the Master Chief of the Coast Guard and the chairman of the Federal Maritime Commission.

    We will also hear from the General Accounting Office and the Marine Board of the National Research Council about their reports on the Coast Guard's vessel traffic service 2000 proposal and marine information systems, in general.
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    The Administration's budget proposal for the next year requests 3.831 billion to fund Coast Guard activities and programs. This request is $112 million over the amount appropriated for the Coast Guard in fiscal year 1996.

    The Coast Guard budget request for operating expenses includes a funding increase of $115 million for items such as cost-of-living allowances, which will be offset by $54 million in operating expense reductions for other programs. These include a cut of approximately 850 Coast Guard military and civilian personnel and phasing out operations on Governor's Island in New York.

    The budget would also provide 49.2 million in additional Coast Guard acquisitions.

    I would like to commend the Coast Guard for its multi-year efforts at streamlining its organization. These cost-cutting efforts will reduce Coast Guard's work force by 4,000 people by fiscal year 1998 and make permanent recurring savings of about $400 million while maintaining the Coast Guard's operations.

    I know that the streamlining effort has been difficult, and I look specifically, Admiral, to you and the Master Chief representing the entire Coast Guard family. I know it has been difficult for the entire Coast Guard family.

    I want to commend you two, as representatives of the men and women in the Coast Guard, for their tireless efforts to make this organization one of the most efficient in the Federal Government.
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    As you all know, I am subjective when it comes to the Coast Guard. I am not objective and don't pretend to be. I'm family. But even that aside, you all do one heck of a good job.

    I've been a long-time critic, as many of you know, as well, of President Clinton's national drug control strategy. For 3 years now the Administration under-funded drug interdiction programs, has allowed vital Coast Guard and other law enforcement drug interdiction assets to be withdrawn from service, leaving borders more susceptible to drug smuggling.

    While the Administration has recently requested a $250 million fiscal year 1996 supplemental appropriation to intensify our drug law enforcement, treatment, and prevention efforts, I fear this may be an election year strategy. It may be too little too late.

    The Administration only plans for $8 million of this $250 million to be used for Coast Guard interdiction efforts in the transit zones. This amount, in my opinion, is far short of replacing the $20 million which was cut from the Coast Guard's drug interdiction budgets in 1994 and 1995.

    I will also be interested to hear the testimony of the General Accounting Office and the National Research Council about their studies of the Coast Guard's vessel traffic service 2000 procurement.

    Last year, this subcommittee, you will recall, held a hearing to examine the Coast Guard's VTS 2000 initiative. The subcommittee heard from individuals representing the U.S. Coast Guard, various U.S. port authorities, private operators of VTS systems, vessel operators, and maritime pilots.
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    Because of the concerns raised about the proposed VTS 2000 system at that hearing, the subcommittee requested that the GAO investigate the degree to which parties with an interest in marine transportation have a level of interest in acquiring and funding VTS systems.

    The subcommittee also requested that the GAO assess the key issues which would affect the establishment of alternatively funding VTS systems.

    The Coast Guard has contracted with the National Research Council to assess issues in the development and utilization of advanced information systems, as well as make recommendations for system improvements and for promoting implementation of marine information systems in the United States.

    The Marine Board of the National Research Council will bring us up to date on its progress with that study.

    We will also discuss today the fiscal year 1997 budget for the Federal Maritime Commission. Our position, not unknown to most of you in this room, consistent with the provision of H.R. 2149, the Ocean Shipping Reform Act, is that the Federal Maritime Commission should phaseout its operations during the next fiscal year. We must authorize an appropriate amount for the Federal Maritime Commission, however, for fiscal year 1997 because the House parliamentarian has informed us that any amount that is provided in an appropriations bill for the FMC may be stricken if the appropriation is not authorized.

    I was pleased to read that Federal Maritime Commission Chairman Creel supports reform of the Shipping Act of 1984, but that's pretty much where he draws the line. We disagree on several major areas of reform that are addressed in the Ocean Shipping Reform Act.
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    We're going to be here today primarily to discuss the FMC's budget, but I would be remiss if I did not get this into the record. There are over 50,000 large, medium, and small United States businesses supporting H.R. 2149 because they appear to be fed up with the U.S. laws that place them at a competitive disadvantage.

    When I say ''U.S. businesses,'' I'm talking about the economy, generally—agriculture, manufacturing, retailing. You name it, they're there.

    Foreign shipping has not come down on that side, of course. Foreign shipping opposes dismantling of FMC.

    I hope that we can count on the cooperation of the FMC as we reform this system to respond to the needs of our entire American economy.

    Now, having gotten my statement out of the way for the moment, let's suspend, because that bell will be activated imminently when we'll have a journal vote.

    You all rest easy until we come back from that journal vote.

    Thank you.


    Mr. COBLE. The Subcommittee on Coast Guard and Maritime Transportation will come to order again.
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    I say to the distinguished gentleman from Tennessee, the ranking Member, Bob Clement, in an irregular affront, I gave my opening statement earlier for the purpose of saving time because it's going to be one of them days today, so my opening statement is in the record.

    Before I recognize the gentleman from Tennessee, Admiral, I will say to you and the Master Chief we have two students from Springfield School who are on an educational project today, so I will say to you and Mr. Clement to make it good, because they've got to go back and report to their students how this hearing developed.

    I am now pleased to recognize the ranking Member, the distinguished gentleman from Nashville, Bob Clement.

    Mr. CLEMENT. Thank you very much, Chairman Coble. It's a real pleasure to have the opportunity to participate with you at any time. This is my first hearing as the ranking democrat on this subcommittee.

    Chairman Coble and myself are long-time friends. We're personal friends. We're professional friends. And he also loves country music, and a lot of you know I represent Nashville, Tennessee, Music City USA. So any time I——

    Mr. COBLE. There he goes bragging again.

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    Mr. CLEMENT. Any time I have country music entertainers here, I assure you Chairman Coble's on the front row.

    However, having served on the Subcommittee on Coast Guard and Navigation and the Committee on Merchant Marine and Fisheries in previous Congresses—a lot of you know that I've worked with in the past—I must say this is great to be back working with an organization like the Coast Guard. It's good to see Admiral Kramek and Chief Petty Officer Trent, who will both be testifying today.

    The President has requested that Congress appropriate approximately $3.9 billion for Coast Guard programs for fiscal year 1997. Over the last two decades, we've asked the Coast Guard to expand their missions and responsibilities. Given the current fiscal constraints, we must evaluate and reevaluate our budget priorities, both in terms of the overall Federal budget, as well as each agency's budget, as well as how agencies are implementing their programs.

    I believe the Coast Guard is leading the way in using technology to allow them to carry out their missions in a more efficient manner.

    As the old saying goes, it costs money to save money. While it costs money to buy computers and develop new and improved software programs, when this is completed the Coast Guard will be able to better manage and carry out its missions.

    I'm pleased to see that the Coast Guard is requesting additional funding for drug interdiction activities, law enforcement, marine transportation safety, and the replacement of the 82-foot patrol boats.
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    Several weeks ago Congressman Costello, Congressman Horn, and I received detailed briefings on our drug interdiction efforts. We were pleased to see the extent of the inter-agency cooperation between the Department of Defense, Department of Justice, and the Coast Guard that is increasing the effectiveness of our interdiction efforts.

    However, this battle requires a continuous changing of our tactics as the enemy changes theirs.

    To be effective, the Coast Guard needs state-of-the-art radar and communication systems, and we must look to our colleagues at the Department of Defense to see what technologies they have developed that may aid in the Coast Guard's efforts.

    As our international commerce continues to grow, we must also look to our new technologies to ensure the safety of our ports and waterways. Vessel traffic service systems are integral to protecting our harbors and communities.

    There are many segments of the maritime industry that are wary of these systems because of their concerns about Coast Guard-imposed user fees. We must look to improving our VTS systems in the most cost-effective manner possible.

    I'm hopeful that the reports by the General Accounting Office and the National Research Council will help to give us some guidance as we look to a system to lead us into the next millennia.

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    I do have a concern about the fact that the budget request does not include any funding for boating safety, based on the assumption that the program's funding will be changed from discretionary to a mandatory appropriation. As you know, the House Committee on Appropriations strongly opposed this change for fiscal year 1996. As a result, the authorization of appropriations for the Coast Guard must be increased by $45 million to provide the boating safety program with the same amount of funds requested by the Department.

    I look forward to hearing from the Commandant on this issue.

    I also look forward to receiving the testimony from Chairman Creel from the Federal Maritime Commission. The FMC has been very successful in combating unfair foreign trade practices and breaking down barriers foreign governments have erected against U.S. shipping and exports.

    I'd also like to congratulate Chairman Creel on his innovative approach to streamlining the Commission's field offices. Once again, agency is using technology to carry out its current missions in a more efficient and cost-effective manner.

    Thank you, Chairman Coble. I look forward to working with you on authorization of appropriations for these two agencies.

    Mr. COBLE. Thank you, Mr. Clement. Without objection, any opening statements by members of the subcommittee will be made part of the record, but since we have only one more here, I will happily recognize the gentleman from California—a former Coast Guardsman, I might add—Mr. Baker.
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    Mr. BAKER. Thank you, and welcome to our new distinguished Member. We're very happy to have you. Howard is doing a good job, as always, as chairman.

    I'm very excited about the innovations in this area. I'm excited about the Coast Guard working with the private industry to effect safety in navigation in the ports.

    I'll submit my statement and we'll hear the real experts—the Admiral who will make the decision and the Chief who will do the work.


    [Mr. Baker's prepared statement follows:]

    [Insert here.]

    Mr. COBLE. Thank you, Bill.

    I was remiss. I did not formally welcome you, Bob. This is the first time I guess we have done this in a formal setting, but you are, indeed, welcome aboard the subcommittee. I regret that I had to have the gentleman from California remind me of that.

    Gentlemen, as you all know, I try never to ask the Coast Guard to compromise safety as we go about our business. By the same token, I will not ask you gentleman to compromise your speeches in any way, but if you could confine it to on or about 5 minutes, that would be appreciated. If you can't do it, don't worry about it. We won't keelhaul you. But we try to go by the 5-minute rule, if we can.
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    I am pleased at this point to introduce our first panel. Unknown to none of us in the room is Admiral Robert Kramek, Commandant of the Coast Guard, and Eric A. Trent, the Master Chief of the Coast Guard.



    Admiral KRAMEK. Thank you, Mr. Chairman. Good morning to you and other distinguished members of the committee. It's a pleasure to appear before you today.

    The American people and others around the world hold your Coast Guard in high esteem. The Master Chief Petty Office of the Coast Guard and I travel together throughout the Coast Guard visiting all of our men and women at all of our stations to make sure they are being properly taken care of. I know in his comments he'll express his concern that people are our most important product, and we need to make sure that they have not only the resources but the safety net to ensure their productivity and well-being are maintained.

    Commodore Melera, Commodore of the Auxiliary, was going to join us this morning but he had to have some surgery this morning, but I bring you his greetings also because the Coast Guard is a team of not just 43,000 active duty and civilian employees, but includes 8,000 members of the Coast Guard Reserve, which you know so well, Mr. Chairman, and 35,000 members of the Coast Guard Auxiliary, a voluntary group which saves millions of dollars of property and thousands of lives every year, and is a very important part of Team Coast Guard.
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    As we streamline the Coast Guard and make ourselves more efficient, I rely much more heavily on the reserve forces and on the auxiliarists than ever before to augment the workers at our stations, the men and women on our ships and our aircraft, and all throughout the world that serve the American public.

    Mr. Chairman, our multi-mission Coast Guard has been asked to do a lot. I can report to you we've had a very, very successful year. Without going through a lot of statistics, though, I will mention that in some of our more noticeable and visible missions such as drug enforcement we interdicted over 46,000 pounds of marijuana and 49,000 pounds of cocaine this year, with a street value of over $2.8 billion.

    Our migrant business has been busier than ever before. While Cubans have slowed down, we have had the Cuban shoot-down inmcident to deal with and some other issues with Cuba that still go on.

    We're still picking up Haitians—we have interdicted—a couple of freighters this year with over 450 Haitians on less than a 70-foot ship, if you can imagine that, and shadowing one vessel inside Cuban waters for 4 days before we were able to interdict them.

    We have Chinese migrants coming at us from all directions, whether they're coming across the Mexican border or through the Mona Pass to Puerto Rico, and a new migrant threat that you don't hear much about consisting of 20,000 Dominicans a year that are leaving the Dominican Republic and crossing the Mona Pass to Puerto Rico. This year so far, we've interdicted over 6,000 Dominicans and returned them to the Dominican Republic.
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    The Dominicans are of concern not only to our economy as illegal migrants, but Dominicans are known to run all of the drug cartels in Puerto Rico, where I know the distinguished ranking Member has just visited.

    We saved over 4,400 lives in search and rescue and responded to over 47,000 cases.

    The oil spill response—there are no good oil spills, Mr. Chairman, but the response that the Coast Guard made, along with other Federal agencies, in the Rhode Island spill I think is notable—it has tested out the Oil Pollution Act of 1990 and shows that the response mechanisms that were put in place work.

    Our jointness with the Department of Defense has been well-tested also this year, not only during the Cuban shoot-down, but in nation-building overseas. The Coast Guard has been asked to train the navies of Latvia, Estonia, Lithuania, Bulgaria, Romania, and Albania, just to name a few countries, into being coast guard's so they can protect their economic interests, their exclusive zones, and not have offensive navies that would cause us a defense problem; rather, they will take care of their own natural resources and their own problems and serve their public, much as the Coast Guard does.

    Our maritime reform initiatives to make maritime standards in the United States equal to international standards so that there aren't any more-stringent regulations for our mariners is on track. We have tremendous new working agreements and partnerships with organizations such as the American Waterway Operators and the Passenger Vessel Association. We're very pleased with that.
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    I'm going to be very happy to answer questions on vessel traffic systems.

    Mr. Chairman, we wouldn't have vessel traffic systems in the world if they didn't avoid accidents. There are over 200 vessel traffic systems in the world, 8 in the United States. They're meant to protect the marine environment so we can have clean oceans and protect the safety of our mariners and our public.

    I think our goal is all the same. The questions we all have are: How are we going to reach that goal? How are we going to get there? And I think by virtue of this hearing this morning we'll have a little bit clearer path on how to do all of that.

    I must point out, though, that in the last few years, even with this good report I feel we get this last year, that the major problem for the Coast Guard has been one of budget. When I go out to the field and ask my people what their major problem is, it's in obtaining the resources that they need to do their job.

    In each of the last 3 years, Congress has not appropriated the amount of money that the President has asked for to show the Coast Guard to do its job. And if we have any concerns, it's because some of our stations and our operations are only funded at about 96 percent of what's required.

    In opening statements when we say that the Coast Guard is asking for more money than last year, I'm asking for the same amount of money, to within $1 million, as we asked for last year. But last year we were appropriated over $100 million less than, we asked for.
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    The Coast Guard will have less people on board at the end of this fiscal year than any time since 1973 and less money appropriated to us than any time since 1993.

    While we are leaders in streamlining and we're very proud that we're on a track to save $400 million a year recurring and 4,000 people—and, Mr. Chairman, by the time the budget's balanced in the year 2002 that will amount to a contribution from the Coast Guard of savings of $2.6 billion. We're very proud of that because we've done that without reducing any of our operations. I feel that, even in the face of that, to then receive additional reductions if our requested budget isn't approved, will cause us to have to reduce our performance and our mission areas, and in my view that's not something that the American public or any of us here wants.

    I must mention before I conclude my opening statement, my concern with previous years' authorizations. As you know, Mr. Chairman, you worked very hard to get our authorization bill passed last year, and it passed the House of Representatives, but it still awaits conference with the Senate. There are very important provisions in there in boating safety funding, in bridge funding, and the use of the Coast Guard Auxiliary.

    Commodore Melera has totally reorganized the Auxiliary to provide more augmentation for the active duty Coast Guard as I streamline, and he's done that with the expectation that last year's Coast Guard authorization bill will be passed, and it hasn't, and he's kind of hanging out there on a hook because the auxiliarists are not protected in liability, yet they're doing the job I asked them to do, which is more multi-mission, not just the boating safety mission.
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    I continue to ask for your support as we approach conference on last year's bill so we can get all of that approved.

    In conclusion, Mr. Chairman, we're very proud to serve the American public. I want to personally thank you for the oversight you've given the Coast Guard. And, as I told you the other evening, not only the oversight but, Mr. Chairman, you're at every important Coast Guard event, and sometimes not-too-important Coast Guard events, whether you're visiting Cape May or whether you're helping us award the gold lifesaving medals to the heroes of Pea Island Coast Guard Station posthumously or just, in general, supporting the Coast Guard all the time. We enjoy your presence, Mr. Chairman, and we look forward to continuing that relationship.

    Thank you.

    Mr. COBLE. Thank you, Admiral. I appreciate your saying that.

    Master Chief?

    Master Chief TRENT. Good morning, Mr. Chairman. It's a pleasure to be here before this distinguished committee today.

    As Master Chief Petty Officer of the Coast Guard, it's my responsibility to keep the Commandant advised on all matters that affect enlisted members and their families. I feel very confident in my ability to do this. During the last 21 months I have visited 130 Coast Guard units and met with thousands of enlisted people. My wife, Linda, also travels extensively and has met with numerous ombudsmen and spouses of Coast Guard enlisted members around the Coast Guard.
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    During the past 2 years, the Coast Guard has accomplished significant streamlining, as you are aware. The enlisted force of the Coast Guard has decreased in size by almost 3,000 members since the spring of 1993, mostly through separations and retirements. Many were involuntary.

    The current enlisted strength is just over 27,500 members. That's the lowest it's been since 1965, and we have more work than ever to do.

    As you can imagine, this organizational change has caused some level of anxiety and uncertainty for Coast Guard members and their families; however, everything possible has been done to minimize the impact and take proper care of them. All authorized benefits and transition assistance services have been provided to the separating and retiring service members.

    Most Coast Guard men and women understand the need to streamline, and I find morale generally remains quite high. Our people still like their jobs and they are very proud of their accomplishments.

    I've always believed in the phrase, ''If you take care of your people, they'll take care of you.'' A year ago I asked this committee to take care of Coast Guard people by supporting our station re-leveling initiatives. We needed to provide relief to these members who were regularly working 80 to 90 hours per week.

    While Congress did not authorize any station closures, they did approve the necessary flexibility that allowed the Coast Guard to re-level.
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    Enlisted members assigned to these high tempo stations are now starting to feel some of this relief, and on their behalf I certainly thank you for that support.

    Congress has provided many other strong indications of their willingness to take care of those serving the armed forces. Of note was your help with variable housing allowance rate protection, single quarters allowance for first class petty officers serving on our cutters, and dislocation allowance for military members ordered to move or required to vacate Government housing as a regard of Coast Guard or DOD streamlining and base realignment or closure.

    Coast Guard men and women are most appreciative of Congressional action on these important issues, and on their behalf, once again, I thank you; however, there is still work remaining.

    If you could for a moment, try to imagine you're an E–5 making probably about $1,400 a month and you've got a wife and two kids to support. You're assigned to the Coast Guard Station at Panama City, Florida. You're just getting by.

    Even though you never requested an assignment to the west coast, you receive permanent change of station orders to report to Middletown Loran Station in California. As a direct result, your buying power decreases significantly. That's because the CONUS COLA index in Panama City, Florida, is exactly the national average, and in Middletown, California, it exceeds this average by 8 percent. However, members that make that move—and this particular E–5—are not able to draw that CONUS COLA because it's only payable when the CONUS COLA in that area, the index exceeds the national average by 8 percent.
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    In addition, your family's out-of-pocket medical expenses are going to rise significantly. In Panama City, Florida, your family received their medical care at the military treatment facility at Eglin Air Force Base. In Middletown, TRICARE Standard is going to be your only option, and you must satisfy a $300 annual family deductible, cost-share 20 percent of all your family's medical expenses, and pay most charges that exceed these allowable charges.

    Sir, if you are imagining along with me, I might ask you, with that relatively low income, just how would you cope with a fluctuation of that magnitude.

    I regularly hear member concerns regarding these cost of living inequities that occur during reassignment. While these are not Coast Guard-specific issues, our men and women are the most impacted. Over 90 percent of Coast Guard members are assigned to areas where the CONUS COLA index exceeds the national average—in other words, expensive areas.

    The No. 1 issue my wife hears about from enlisted spouses relates to affordable, quality medical care. Fifty-two percent of our members' dependents reside outside military treatment facility catchment areas where they do not have access to TRICARE Prime or to the military treatment facilities that we sometimes use.

    While CONUS COLA and TRICARE benefits have improved the quality of life for some of our members, we can still do better to ensure greater equity of member benefits.

    Mr. Chairman, Coast Guard enlisted men and women need your assistance with a number of other issues contained in the defense authorization bill for fiscal year 1997. I have included these items in my written testimony.
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    I hope you will give serious consideration to all the needs of Coast Guard enlisted men and women that I have outlined in my statement.

    I ask for your continued strong support of the Coast Guard, and I certainly thank you for inviting me to appear before this committee.

    Like the Commandant, I'd be pleased to answer any questions you might have.

    Thank you.

    Mr. COBLE. Master Chief, thanks to you and the Commandant for being here.

    Folks, I also failed to apologize to you all for our cramped conditions. The main transportation hearing room had already been scheduled for another hearing. That's why we're here. I hope the quarters are not too confined for you.

    Admiral, you've heard the old adage, ''Do as I say, don't do as I do.'' Well, you can do as we do when it comes to streamlining. Not only have we asked you all to streamline, but we have streamlined, as well. On the Coast Guard Subcommittee staff we now have three majority staffers and one minority staffer performing the work that was done heretofore by 15 or 16 staffers.

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    As you pointed out, Admiral, we got that authorization bill through in record time. Now, as to that Body on the other side of the Hill, that is an unanswered enigma for me. All I can say, Bob, is hold me harmless for that. I can't control that gang. But we'll try to get them moving as best we can.

    Let me just visit with you a minute or two here, Admiral, you and the Master Chief.

    Our subcommittee will be conducting four hearings throughout the year to complete our review of the Coast Guard's current missions. These hearings will complete our review of the Coast Guard operations which began last year with our hearings about the Coast Guard's VTS program, previously mentioned, and the drug interdiction programs.

    Admiral Kramek, if you could, how about providing us, say by early fall, a list of Coast Guard—and I'm just thinking aloud now—a list of Coast Guard suggestions of missions that might be performed differently. Now, by ''differently,'' that could mean privatization or elimination of current Coast Guard operation requirements. It could possibly mean the transferring of responsibility to another part of the Federal Government or another level of Government.

    Do you think you could do that, Bob, by say mid September?

    Admiral KRAMEK. Yes, Mr. Chairman. We'll provide such a list.

    I would like to point out, though, that we continuously look at how to do things differently, and perhaps with some of the answers to the questions today you'll see how we do that.
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    Probably one of the more dramatic things that you've recently participated in is the use of the global positioning system, and the fact the our very small investment in differential GPS has recently resulted in the startup of 48 differential GPS stations around the United States, Alaska, and Hawaii that the mariner can find, within 150 miles of the differential GPS station exactly where he is, within 8 to 10 meters with a differential GPS receiver. We see this as eventually replacing Loran.

    We're hopeful that by the year 2000 we'll be getting out of the Loran business. You know how many Loran stations we've had over the years and how expensive that is. By use of this 24-satellite technology where we correct the signal and retransmit it to the mariner, we're also going to reduce the amount of search time in our search and rescue efforts, so it will affect the type of units we use.

    I'd be very happy to provide that, Mr. Chairman.

    Mr. COBLE. Good. During your appropriations testimony in March you alluded to the pilot project on the west coast where the Coast Guard contracts out the maintenance of buoys. Elaborate a little bit about this, Admiral. Has this program been a success? Does it have the potential of saving Coast Guard money? Are there any other areas where the Coast Guard is considering contracting out or privatizing some of its work?

    Admiral KRAMEK. Mr. Chairman, we continually look for ways to outsource or contract out those functions that are not inherently governmental. It's a follow-on to the A–76 program, of course, of the 1980's.
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    In the particular case you mentioned, we've been very successful on contracting out the maintenance of buoys in the States of Washington and Oregon to private contractors, and those buoys are now delivered to the buoy tenders. We no longer have any buoy depots on that part of the west coast, and it's saved us millions of dollars.

    We have contracted out the construction of all new buoys to private contractors over the last few years, where they used to be manufactured at the Coast Guard yard. We're not in that business any more. We found we could save millions of dollars by contracting that out, and we have.

    We've now looked at our operations on the east coast, and in places like Mayport, Florida, as an example, and in Miami, we're going to be contracting out maintenance of buoys in those areas.

    More than that, as part of our streamlining study we have consolidated our Maintenance and Logistics Commands all around the United States into two major commands, one on the east coast and one on the west coast, and have taken all the small buoy bases that you may have been familiar with and have consolidated them into Integrated Support Commands.

    In fact, Captain Erol Brown, my chief of budget, is sitting behind me today. He's going to be commanding officer of the new one just being set up in Portsmouth, Virginia.

    We also contracted out the handling of those buoys, and we had five pilot projects. I would report to you that after study by the Coast Guard and GAO, they found that that was not economical; that contractors did not want to or could not invest in the type of seagoing of ships that had to go out there in all types of weather and handle those aids to navigation.
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    So after about 5 years of doing that, it was decided that the Government should continue that function, because it was more economical, plus the multi-mission cutters that were involved.

    But for the maintenance of the buoys, we've contracted out a good portion. We continue to look for opportunities to do that. And, as I just told you, we're going to be issuing some more contracts for the east coast this year.

    Mr. COBLE. Thank you. I have a question or two for the Master Chief, but my 5 minutes has expired. We may have a second round.

    At this time let me recognize the gentleman from Tennessee, Mr. Clement.

    Mr. CLEMENT. Thank you, Mr. Chairman.

    Admiral Kramek, the Administration has requested that $45 million in direct appropriations be made to fund the boating safety program. If we're unable to do that due to the opposition of the Appropriations Committee, how would you propose funding this program? Should we increase your budget or transfer the money from another program?

    Admiral KRAMEK. As you know, Mr. Clement, we were highly optimistic that the legislation to make the boating safety funds from the Wallop-Breaux fund mandatory rather than discretional would be passed. In fact, I'm sure it passed the House. It's considered in the Senate. It's in the markup now still to be considered, so it isn't dead yet.
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    I do know that at least my appropriations committee chairman is against it because he feels it's a matter of discretionary appropriations; however, when I take a look at what Mr. Shuster has just accomplished with moving certain trust funds off budget, this is the same type of situation. This is a trust fund that's been accumulating money from taxes on mariners who pay for gasoline, and therefore, in my view, it should be a mandatory account passed on to the States. That's what it's for—to pass to the States for grants.

    Now, if that legislation isn't passed, as you very clearly identified, there are zero dollars in this year's budget request for the Coast Guard for boating safety funds to grant to the States if, in fact, this doesn't become a mandatory account.

    The only way I see of funding this is through an increase to the Coast Guard budget. We have not provided funds for it because we were very optimistic the mandatory account would be approved.

    The amount we think would not be $45 million, however, it would be $35 million, if that was the case.

    Mr. CLEMENT. Admiral, what percentage of your operating expenses are for activities related to drug interdiction, and how does this compare to past budget requests for this activity?

    Admiral KRAMEK. This current budget requests counter-narcotics funds for our drug interdiction that will be about 12.5 percent of our total Coast Guard budget. Last year it was about 11 percent of our budget, and the year before that was about 7 percent of our budget—a bit of an anomaly there because, if you recall, Haitians were coming and the Cubans were coming and we had to back off a lot of our assets to take care of those two important mass migrations.
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    But in years before that, it was much more than that. As far back as 1991, 1990, 1992, perhaps almost 18 percent of the Coast Guard's budget was used for drug interdiction.

    In real terms, in the early 1990's about $600 million a year in operating expenses were used for drug interdiction. This year I'm asking for about $340 million, or about half of what we had in previous years.

    Mr. CLEMENT. The Department of Defense, Admiral, pays for the cost of weapon systems on Coast Guard vessels. Do you believe that it would be reasonable for them to also pay for other technology such as satellite communications systems for Coast Guard aircraft and vessels to ensure that they can work with DOD assets during time of national emergency or during or current war on drugs?

    Admiral KRAMEK. I think it's right on the mark and, in fact, they do. I work very closely with the Department of Defense. Next week I'll be attending the quarterly CINC's conferences. I meet with the other service chiefs who are part of that operation as part of the armed forces.

    My Vice Commandant has a Navy/Coast Guard board where he meets with the Vice CNO of the Navy every several months and they identify these exact specific programs that you've mentioned for DOD funding.

    Last year DOD transferred almost $300 million to the Coast Guard from their appropriations to do these types of things. This year, to more formalize that, the budget that I've submitted and the President approves, recognizes $118 million in our budget request being funded from a non-Defense/Defense funds, function 054, to fund those defense-types of equipment, whether they're guns, bullets, or satellite communication systems. We call it C4I for the warrior—command, control, communications, computers, and intelligence systems that we need to carry out the operations like we just had in the Cuba shoot-down, where the President directed the Coast Guard to be the lead agency for the task force that responded to this incident.
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    What you didn't see, and the American public didn't see is that over the top of my task group was an AWACS aircraft, operated by the Air Force providing link 11 control between all of my ships. On the starboard side, was the cruiser Mississippi with standard missiles armed. On the port side, was the Ticonderoga with standard missiles armed. And on the runway at Homestead Air Force Base were 15 F–15 fighters with their engines running ready to work jointly together as members of the armed forces.

    The equipment and the communications to do all of that is presently funded by DOD, and they've been very responsive in providing that.

    Mr. CLEMENT. Admiral, the subcommittee's been working with the Coast Guard concerning new legal authority to meet the Coast Guard's housing needs that include authorizing you to make loans and loan guarantees to build these facilities.

    Could a loan and loan guarantee program for VTS also help you in the implementation of this system by decreasing the impact on the Coast Guard's budget for building these facilities?

    Admiral KRAMEK. Perhaps. And I say perhaps because I'm optimistic, first of all, that our acquisition cost of VTS will be much less than what we previously estimated, based on contracts we've just let, and the fact that I personally believe we'll probably never install 17 systems nationwide, and the estimates you see are for all 17 systems.

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    But I say perhaps in the loan guarantees because, just like it is for the housing program, we're not sure yet how that's going to work as a scoring mechanisms for budgets. That is, there are some real drawbacks in the housing program whereby, if we have a loan guarantee program or even a contractor builds housing for us and we guarantee him we're going to lease it back for 20 years, in our budget the whole 20-year funding of lease cost is scored against us in the first year, which makes it an overwhelming expense for a small agency like the Coast Guard.

    So we're interested to see how this works, and if we can correct the scoring on this—and I think it's something the committee and my staff and other agencies have to work out, but it's a pretty knotty issue right now.

    Mr. CLEMENT. I have some more questions, but I may be out of time.

    Mr. COBLE. Let's have a second round, then, for a moment. In the order of appearance, the Chair recognizes the gentleman from California, Mr. Baker.

    Mr. BAKER. Thank you. I'll be very brief.

    The recent budget for 1997 that was just announced, how are you standing in that as far as the Coast Guard recommendations from the Administration?

    Admiral KRAMEK. The President has approved my request to maintain our current service level for the Coast Guard and takes into account our streamlining. We have, as the Master Chief said, already reduced in our streamlining plan 3,200 personnel and saved about $250 million a year. Our goal is that by 1998 that will be 4,000 in personnel reductions and $400 million in savings a year.
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    Mr. BAKER. As far as total dollar amounts, Admiral, there is a rumor that last year may end today and that we can start this year.

    Admiral KRAMEK. Last year——

    Mr. BAKER. You've heard of Christmas in April, haven't you? This is the beginning of the budget year.

    Admiral KRAMEK. Last year the President requested the same amount for the Coast Guard as he has this year, and my report to you is I'm able to do current services levels and even improve and do the additional work you've asked me to do with the same amount of money that we got last year because we're streamlined and are going to save over $80 million in other costs this year.

    I was appropriated, however, over $100 million less last year than I asked for. This year I'm very hopeful and very optimistic that we'll be appropriated the amount that we've asked for to be able to maintain our Coast Guard service.

    Mr. BAKER. Thank you.

    Mr. COBLE. I thank the gentleman from California.

    The gentleman from Michigan?

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    Mr. EHLERS. Thank you, Mr. Chairman. Just one brief question.

    I heard your comments that you're still able to support personnel. I didn't hear your comments on that. I apologize that I was late. You're not putting forward any plans at this point to close Coast Guard stations?

    Admiral KRAMEK. No, we are not. As you pointed out, sir, it was provided in the appropriations conference report that all the 23 Coast Guard stations that we had intended to close were to remain open. We were allowed to shift people around to even out our work load—we call that ''station re-leveling—'' so that our average work hours for our personnel at each station is 68 hours a week. That's a pretty long time, but they stand watches there, too, and they're expected to do that and they don't complain about that.

    They were not able to work 90 hours a week, especially during heavy seasons, and that's why we wanted to do that.

    I'm keeping all 23 stations open that we wanted to close, and we have 185 of these stations; however, this budget asks for the funds that were taken away last year to fund those stations to be restored.

    As an example, when we proposed that the 23 stations be closed, it was a savings of $6 million. Those $6 million were taken out of our budget, and now I've kept the 23 stations open and I'm operating them without sufficient funds, so the 1997 budget asks for restoration of the $6 million. As long as we are legislated to keep them open, I need the money, sir, to keep operating them.
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    Mr. EHLERS. I got into this in quite some detail with you and your staff last year. It seems to me that you could make a good case for closing some of the stations.

    It seemed to me that there are a number of stations that could be closed. I didn't think as many as you had proposed should be closed, particularly in the areas I'm familiar with, but I think a number of them could be closed.

    I hope you weren't discouraged by last year's results from offering to close any, because I think, particularly along the Atlantic coast, there were several that I thought were duplicative, and some of the recommendations you made there were OK.

    I just wanted to make that comment and suggest that you keep that in mind for the future.

    Admiral KRAMEK. I will, and I think we should. We have to continue to look at them. But in the last four or 5 years, on at least two previous occasions in testifying before this committee and others, twice now Congress has legislated that we keep all Coast Guard stations open—once, a few years ago in the late 1980's, and again now this last year.

    The issue seems to be not so much sometimes the activity level or the benefit cost. They all save some lives. The issue seems to be the public safety net that the public perceives. That loss of a Coast Guard station in an area like Menemsha or in Point Judith, Rhode Island, where we just had a major oil spill and saved a whole bunch of people as a tug boat exploded and threw them into the water, as we were getting ready to downsize that station, there was a huge public outcry—kind of worse than losing a local fire house, I guess, because of the type of service we provide to the public.
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    Based on that public outcry, I think Members were convinced at conference to keep the stations open.

    Mr. EHLERS. Thank you. I yield back the remainder of my time.

    Mr. COBLE. I anticipated the gentleman from Michigan saying to you, Admiral, that it was OK to shut down some of these Coast Guard stations so long as they weren't in Michigan. You didn't go quite that far though.

    Admiral KRAMEK. Mr. Chairman, if I could mention one thing about Michigan and the Great Lakes, I think it's very important what we did there with the Coast Guard stations. In order to save some of the money, however—and we have saved funds—in order to reduce the work load to a 68 hour standard throughout the Coast Guard, I rely heavily on the Coast Guard Auxiliary and the Reserve on the Great Lakes. In the summertime we call it ''Operation Summer Stock.'' The reservists come on active duty and man a number of those stations for me, and I count on that, and that's in this bill and it's been supported before, so I don't have a problem.

    The Auxiliary, however, also mans some of those stations, and I'd like to use Green Bay as an example. In Green Bay, Wisconsin, if you had visited the Coast Guard rescue station, you'll see two active duty Coast Guard personnel—two first-class petty officers, a machinery technician and a boatswain mate—keeping the station up, keeping the boat ready to go—and 44 Coast Guard Auxiliarists that provide around-the-clock rescue service and communications services.
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    That's how I'm augmenting our personnel during this streamlining—using those other two sources of manpower—and why it's so important for this previous authorization bill to be approved, Mr. Chairman.

    Mr. COBLE. I just took the liberty of yanking my friend's chain. I regard him as one of the most learned Members of the Congress, and I can't match wits with him intellectually, so occasionally I'll yank his chain when he's not expecting it.

    Mr. EHLERS. Mr. Chairman, you do it very effectively.


    Mr. COBLE. Thank you very much. I appreciate that.

    Mr. EHLERS. If I can just comment, Mr. Chairman, the Admiral's point is well taken. The Michigan stations have—basically, a lot of stations were closed over the past decade and replaced—the functions were replaced by auxiliaries. I shouldn't say a lot of stations were closed, but a lot were downsized and some were closed. So we've taken our licks already.

    But when I got into this last year and looked at the maps, I noticed the northern Atlantic coast, I thought there was considerable duplication in some areas that were ripe for some cost-sharing and reduction of staff.

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    Thank you.

    Mr. COBLE. Thank you. The gentleman from Michigan raises a good point when he talks about duplication. I have said all along—Admiral, you've heard me say it, and Master Chief's heard me say it, and I know Guy has heard me say it—there is not a Federal agency in existence that's not guilty of duplication and that's not guilty of waste. I think the Coast Guard probably is less guilty than most of them, so that led me into that. Thank you for mentioning that.

    Round No. 2, very briefly.

    Admiral, this hasn't got a doggone thing to do with why you are here, but I was going to ask you this earlier. You know of my intense interest in the construction of the polar ice breaker. I presume things are in tow, moving according to schedule?

    Admiral KRAMEK. It's on schedule, Mr. Chairman. The steel has been cut. The machinery has been procured. The Vice Commandant just traveled down to Avondale here last month and reported back to me that everything is on schedule for delivery of that ice breaker in approximately 3 years. That will be the icebreaker Healy, primarily a polar ice breaker for science exploration to support our national interests in the arctic and the antarctic. It's on schedule.

    Mr. COBLE. As you know, I've been very interested in that since day one, so I'm glad to hear that.

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    The gentleman from Tennessee touched on the drug interdiction. That is another hot button I have. I presume, Admiral, judging from—as you said earlier, there is no such thing as a good oil spill. There is no such thing as good trafficking. But I presume that you are, on balance, pleased with the drug interdiction involvement with the Coast Guard? Of course, you never have enough money. I realize that.

    Admiral KRAMEK. I think that, in perspective, perhaps we shouldn't compare how much we got a few years ago to how much we got today because we're operating differently.

    No. 1, we're operating in a much more cooperative spirit. It's much more a concept of jointness.

    As you know, the President has appointed me to be the Interdiction Coordinator for the Western Hemisphere as a collateral duty, and I've given members of this committee some briefings on that and you've made some trips to see what's taking place.

    I know that you can see out in the field that there is cooperation amongst DEA and Customs, the Coast Guard, the Department of Defense, the FBI, CIA, and all of those folks that are out there operating.

    We also use intelligence to a great degree today. In the early 1990's, when we were out there burning holes in the sky and on the water looking for smugglers, perhaps only 15 or 20 percent of our operations were based on intelligence. Today more than 80 to 85 percent of all operations are based on intelligence, so we're operating a lot smarter.
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    We're still short, however. I would point out that interdiction is 9 percent of the total counter-narcotics budget for the United States. That is, of the total $14.3 billion in the counter-narcotics budget of the United States, interdiction is less than 10 percent, and I think there is some concern there. I've pointed that out to the new drug czar, General McCaffery. He's aware of that. He's working on a new drug strategy. I think that will be announced at the end of this month. He and the President have been working on that very hard. And you're going to see renewed interest in not only drug interdiction but in solving the entire drug problem in this country.

    So I think on or about April 29th we all should look with interest at the new strategy that General McCaffery will promulgate and see then how we're all going to stand up and meet that new strategy.

    Mr. COBLE. Master Chief, you are like the rejected suitor at the prom. Nobody is talking to you, so I'm going to change that right now.

    Over the past year, Master Chief, our subcommittee has received numerous inquiries from Coast Guard personnel here, there, and yonder about the Coast Guard's streamlining initiatives. Can you give us an idea of the approximately number of Coast Guard enlisted personnel who have been forced to leave the Coast Guard involuntarily over the past 2 1/2 to 3 years?

    Master CHIEF TRENT. Yes, Mr. Chairman. I'll do better than that. I'll give you the exact. It's 1,160 that were involuntary, but I'd like to point out that about 570 of those were a result of our new high-year tenure program. If I could just take a moment, the high-year tenure program——
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    Mr. COBLE. That was going to be my next question. Go ahead.

    Master CHIEF TRENT. The high-year tenure program was implemented so that we could cause some upward mobility for our enlisted people. The other services have always had high-year tenure; we never did. If you achieved the lofty rank of E–3 and showed up every day, you had a right to stay until you were 62 years old. Quite frankly, we had too many people staying on, and there was no opportunity for advancement.

    So Admiral Kime, when he was Commandant about 3 1/2 years ago, decided to implement this high-year tenure program which basically is an up or out program. It forces people to leave at certain thresholds and caps a career at 30 years.

    Now, as some people say, timing is everything. Well, just as we implement high-year tenure we've got this streamlining need, so for a temporary time period here the high-year tenure program ended up causing involuntary separations that helped us achieve our downsizing or streamlining requirements.

    We are fast approaching a point where the enlisted reductions will be, for the most part, complete. At that time, we expect high-year tenure to have its initial impact or requirement that we implemented it for, so that it can cause advancements to return. That's a side effect of this streamlining: advancements are quite stifled. But I got long-winded. The answer was 1,160.

    Mr. COBLE. OK. Thank you.
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    Finally—and then I'll recognize the gentleman from Tennessee—Admiral, tell us about the Governor's Island move. Is it progressing favorably? Are we going to save a pot full of money or realize a pot full of money, hopefully, as a result of it?

    Admiral KRAMEK. Yes.

    Mr. COBLE. Yes to both?

    Admiral KRAMEK. I was just in New York earlier this week. The Governor's Island move is on schedule. We expect that the families will be moved off this summer. The high-endurance cutters in June will be on the way to Charleston, South Carolina. Tugboats and buoy tenders are moving to Bayonne, New Jersey. All activities that have to remain in New York, such as our Marine Safety Office and our rescue stations, will be moving to Fort Wadsworth, New York. These are all sites that DOD has just left, so I'll be able to take all of those places over without cost.

    At the end of 2 years, we'll be completely off the island. We are preserving the historicity, Mr. Chairman, until somebody buys the island, and it's for sale for a minimum of $500 million from the Federal Government. There are people interested in this.

    We will preserve the historicity of the island, and whoever takes it over will preserve it, too. That's part of the deal, if you will.

    This is going to save over $30 million a year in operating expenses for the Coast Guard and about 500 personnel, as a result of doing business elsewhere on the east coast of the United States, rather than in a high-cost area such as New York.
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    I would like to point out the tremendous impact on the 5,000 people that live and work there, and the Master Chief has brought that out in his testimony.

    While we sound like we're making this easy, the change to those families has been pretty tremendous. I need to personally thank them, and I have gone there to New York on several occasions to meet with them and thank them for not resisting this change and helping us make this major change out in New York City.

    Mr. COBLE. Thank you, Admiral and Master Chief.

    The gentleman from Tennessee?

    Mr. CLEMENT. Chief, you have made a number of very good recommendations concerning housing allowances and pay for enlisted personnel. Do you know if these type of changes are being considered for enlisted personnel in the other armed forces?

    Master Chief TRENT. Sir, they take quite a different approach. In the Department of Defense, they try to provide housing on-base for the majority of their people. Our point of view has always been—and because we're so dispersed and many of our units are so small, we want our people to integrate into the community. When the community they are in is too expensive, then our No. 2 line of defense, if you will, or what we want to provide is leased housing for those folks.

    We only actually want to own when it's fiscally responsible, it's more cost-effective than the lease program when we've got people in a very high-cost area, or where there just isn't enough housing there.
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    We're actually in fairly good shape. We have about 5,000 housing units. We could always use more. We're having 46 new units built this year, but those are across nine different locations. It's like eight houses here, six over there at very remote sites.

    The only thing I would point out is the existing housing that is there. We continually assess whether it's still needed. And, not to open a box up here, we have just made a decision to vacate one of our housing areas and let it go, and that's because we've determined the economy there supports this idea of our people being able to use their allowances and afford housing in the area.

    Mr. CLEMENT. Where is this?

    Master Chief TRENT. That's in New Orleans, Little Woods.

    Mr. CLEMENT. I was wondering about that. I had heard in New Orleans about the Coast Guard enlisted personnel preferred Coast Guard housing rather than receiving housing allowances and having to try to find safe, affordable housing in the private market, where they often end up commuting long distances to work. I didn't know whether you'd heard that or not.

    Master Chief TRENT. That won't be a problem in New Orleans, or at least that's our estimation. Quite frankly, sir, we've only run into about four or five specific families down there that still don't like this idea. It's going to be a good deal for most of them. And the money, it appears, is going to come back to the Coast Guard for the sale of that to help offset other things—about $3.5 million.
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    Mr. CLEMENT. Admiral, I understand that the Coast Guard provides training to foreign coast guards or maritime security forces on a reimbursable basis to help them combat the war on drugs. Do these countries have sufficient funds available to pay for this training, and what can we, in Congress, do to help expand this training effort?

    Admiral KRAMEK. That's an excellent question, sir, because if nations that are responsible for stopping smugglers from leaving their shores and coming to the United States are able to do that, then we wouldn't have to spend so much money on interdiction. Really, that's part of the basis of the source country strategy.

    The Coast Guard today is in the river system of Bolivia training the riverine forces called the Blue Devils in Bolivia on how to interdict smugglers.

    We're getting ready to, at the request of the Ambassador of Peru, go to Peru to do the same thing, because as we've shut down the air bridge and flow of cocaine between Peru and Colombia, the smugglers have taken to the Amazon River system in South America that's so extensive.

    It's kind of like riverine operations back in Vietnam, but training those countries to do it themselves. The money is provided usually through State Department assistance programs, and I would request, in answer to how they can best be assisted, grants to those countries by the State Department. The State Department budget has been cut substantially in years past on assistance to those countries and that's crippling some of our source country programs to stop the drugs in those countries where they're grown rather than having to chase smugglers all over the place. I think that's the center of gravity for the solution to that problem.
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    Mr. CLEMENT. Well, I know we've discussed this before about drugs and combatting drugs, and I don't think there is one solution to the problem. We've talked about the family structure, the low self-esteem, low self-worth of so many young people today, and very tempted to move toward a life of crime, as well as taking drugs and selling drugs.

    General McCaffery has got a big task in front of him, not only on the assignment of stopping a lot of these illegal drugs coming into the country, but how do we bring about reducing the demand for these drugs? Even if you stop or slow down the supply, if you still have a high demand those drugs are going to continue to get into this country somehow, some way. Do you believe that?

    Admiral KRAMEK. Well, I certainly believe that. All my law enforcement colleagues would, if they were testifying here this morning, would tell you that to win the war on drugs we have to reduce demand in the United States. That's No. 1.

    But in order to do that, in the meantime, and educate our children and get our families together and get the national will to stop and reduce drug demand in the United States, we have to protect our borders at the same time. We have to make a concerted effort to disrupt the supply lines, to make it expensive, to make it not available to our children, so there must be a balance between supply and demand.

    I go back to the strategy that's being re-tooled by General McCaffery that will be announced at the end of this month. That new strategy—I've already reviewed the draft of the strategy—presents a balance between supply and demand programs I think that's worthy of consideration. I'm sure there will be plenty of hearings here on the Hill to go over that strategy.
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    Once oversight is given to that strategy, then we all have to step up with the will in this Nation to put together the resources and the effort and the education programs and everything that's going to be needed to make it work. Otherwise, we won't be successful if we don't have the will to win. That's what seems to be lacking until just recently.

    Mr. CLEMENT. Mr. Chairman, I sure hope we'll proceed with hearings, too, after General McCaffery announces his plan about how to fight drugs in this country.

    Mr. COBLE. That would be in order, because I think there is a problem, folks. This is the gospel according to Coble. You all may or may not disagree, but I think there is no more pressing problem facing us today than illegal drugs. I think it has the potential of bringing this country to its knees, and I thank you for directing attention to it, Bob.

    The gentleman from Michigan?

    Mr. EHLERS. Thank you, Mr. Chairman.

    First of all, as a punster I do have to commend you, Admiral, when you made the comment that your new approach to interdiction was based on the concept of jointedness, which I thought was a very clever pun, even if you may not have intended it.

    The question is about—basically two questions. INTERTANKO has issued a report which is somewhat critical of safety of tankers in U.S. ports, and, based on two items—the qualities of pilotage available and also they are recommending that the VTS systems be made internationally compatible. I'd appreciate your comments on both of those issues.
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    Admiral KRAMEK. I'm very familiar with INTERTANKO's proposals. In fact, on Monday and Tuesday of this week I met with the new chairman of INTERTANKO and we had considerable discussions on that area.

    First, on their views concerning the safety of our ports, concerning vessel traffic systems, as I mentioned, we have eight ports and we've had them for about the last 8 years with vessel traffic systems in them. They meet international standards. They meet vessel traffic separation schemes that are adopted and abided by internationally.

    INTERTANKO's concern is that we don't have a standard system in the United States and that we don't have it in enough ports, in some of our higher-risk ports.

    The VTS study addresses this. We are now going through that study again. We've hired both the Marine Board and the Volpe Transportation Center to look at our port needs again and revalidate one of the most important ports.

    As we get into further testimony and you hear from GAO and the Marine Board, our goal is the same: to have safe ports, to help our global economy, to allow us to be globally competitive, to meet international standards, and protect our environment.

    VTS 2000 proposes a system that will meet all international standards. I think that when we come down to the final solution on how many ports should be outfitted and what the system should look like and what type of system it should be, then we'll find we've satisfied the American public and INTERTANKO.
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    I would point out that one tanker accident in San Francisco Bay would cause environmental damage and the American public more cost than probably 10 or 20 times the cost of the vessel traffic system that we're talking about. One accident of the magnitude of Exxon Valdez, which cost over $2 billion, is 15 or 20 times the cost of the vessel traffic system we're talking about.

    The vessel traffic systems we have now were brought about by environmental concerns, by tanker accidents in San Francisco, which was the first vessel traffic service that we had. They save hundreds of lives and prevent tremendous damage to the environment.

    However, what should it look like? What should the equipment be? What ports should it be in? That's part of the acquisition process—A–109. There are four key decision points. We're only at key decision point No. 1.

    All the questions the committee has previously asked and what the GAO is finding out, they are all steps on the way to this journey to decide in a year or so exactly what we're going to have.

    The money I've asked for in this year's budget is just enough to keep that going. The big decision point on what it is going to look like and what we're going to have depends on the results of all these studies.

    On INTERTANKO's comments about the pilots, I can't verify that because I see the pilots in almost every instance as being a national asset. They mostly operate under their State pilot licenses, although they have to have Federal licenses in some cases, as well.
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    INTERTANKO wasn't specific enough about where their problems were or what ports, and until we are able to review exactly what their concerns are, I really can't comment in any further detail exactly on why they were so worried about that.

    Mr. EHLERS. All right. The second question relates—and you've already partially answered it. The next panel in this hearing will be dealing with VTS and a GAO report on it, and I think you've dealt with some of those issues, but I wanted to pin that down a little bit.

    There are a number of proposals for either private VTS systems in the ports or a private/public partnership. What is your view of that? Do you see that fitting into the system? Are you willing to join in private/public partnerships?

    Admiral KRAMEK. Absolutely. What we need to do is to hold an extensive alternative analysis of all the alternatives that are available. We have some successful operations in L.A./Long Beach that are certainly private/public. While there are some user fees being charged for that by the Port of L.A./Long Beach, I think they're somewhat moderate.

    There are also six Coast Guard personnel working there for them that are reimbursed. They are also on Coast Guard property, as an example. I consider that a partnership.

    It's been alluded to in some of the initial reports that have been looked at that we haven't spent enough time talking to the various members of the ports and harbors. I think the Marine Board report you receive in June will show that they've done an extensive visit of all these places, plus other VTSs worldwide in Antwerp, Rotterdam, Great Britain, as I have recently done, going to the great port of Rotterdam and seeing how they operate so I can compare it to see what we're doing.
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    So we're going to do an extensive alternative analysis, come up with a system that costs the least, gives us the most bang for the buck, protects our environment, gives a ship a turn-around in 24 hours, doesn't lose any containers, maintain our global competitiveness. We're an island Nation. Of our imports and exports, 95 percent come by sea. We need to do that efficiently and as economically as other nations in the world or we'll lose our competitive edge in the maritime industry, and we don't want to do that.

    The Coast Guard has no parochial view as to how many VTSs there should be or what they should be. Our goal is to find out what is the best for the United States, present this alternative to our committee for you to give us oversight, for you to also hear from other people such as the GAO, such as the Marine Board, so that we can decide what's best for America.

    I think we're on that track. I think we're probably about 6 months to a year short of seeing what the right path should be, but we're getting closer all the time, and I think we need to keep on that track, because, as I talk to owners and operators, who I just met with on Tuesday, I would say they are universally in favor of a vessel traffic system in the most dangerous ports of the United States with oversight by the United States Coast Guard but totally open to Federal/public partnership of who should operate them or how we should pay for them, and those alternatives are being explored by the Marine Board.

    Mr. EHLERS. Thank you very much. I yield back the balance of my time.

    Mr. COBLE. Thank you. Admiral, we appreciate you and the Master Chief and your presentations this morning. Thank you.
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    Admiral KRAMEK. Thank you, Mr. Chairman.

    Mr. COBLE. Our second panel will consist of Mr. Gerald Dillingham, associate director, Transportation and Telecommunications Issues, Resources, Community, and Economic Development Division of the General Accounting Office. Mr. Dillingham is accompanied by Randy Williamson, assistant director, Transportation and Telecommunications Issues, Resources, Community, and Economic Development Division; and Neil Asaba, senior evaluator; as well as Peter Johnson, staff officer, National Research Council, representing the Committee on Maritime Advanced Information Systems and the executive director, Port of Houston Authority.

    Gentlemen, it's good to have you all here. The dust is about to settle with the departure of the first panel. I have to go to another committee, but I'll be back very quickly. Mr. Ehlers will assume the Chair.

    Gentleman, it's good to have you all here. If you can, stay within the 5- to 7-minute timeframe, that would accelerate to motion as we move along.

    Thank you. We'll start with Mr. Dillingham.

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    Mr. DILLINGHAM. Good morning, Mr. Chairman and members of the subcommittee.

    With me this morning are Mr. Williamson and Mr. Asaba, two of the members of research team that conducted our port-specific research.

    Our testimony today responds to this subcommittee's request for assistance as it considers the funding request for the Coast Guard's vessel traffic service initiative, commonly known as VTS 2000.

    We addressed three specific questions. One: What is the current status of VTS 2000? Two: To what extent do the key stakeholders at the port support the VTS 2000 program. Three: What are some alternatives to VTS 2000 and the stakeholders' assessments of those alternatives?

    With regard to the first question on program status, the VTS program is a result of several years of study, but is in its early stage of development. To date, the Coast Guard has received about $25 million to bring the program to the point of awarding a set of contracts to design the system, including its hardware and software components and systems integration capability.

    The first prototype installation is scheduled for 1998 in New Orleans at a minimum cost of $24 million. At this point, the Coast Guard would have invested at least $50 million in the program.
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    By the year 2000, decisions will be made as to how many ports will be included in the program and the basic system design.

    The cost to install equipment and build facilities would be in addition to these developmental costs and are estimated to be between $5 to $30 million for each port, bringing a total developmental cost for VTS 2000 to between $260 and $310 million for the 17 ports.

    In addition to these capital costs, there will also be about $42 million for annual operating expenses. When these operation costs are projected over the expected 15-year life cycle of the system, if fully implemented, this will cost the Federal Government slightly more than half a billion dollars to operate.

    With regard to the second question about stakeholder support, we interviewed some of the key stakeholders at eight of the ports that are being considered for VTS 2000. Generally, these stakeholders did not offer very much support for the program, with the predominant perception being that the system would likely be more than what their port needs.

    A specific concern was that such a system would be expensive and that the funding and cost of the system would sooner or later transfer from the Coast Guard to the users.

    With regard to the third question, focusing on alternatives, the Coast Guard initiative has not given much consideration of whether feasible alternatives exist to VTS 2000. Although our work did not include an assessment of other alternatives as being preferable or not, the stakeholders we interviewed generally support some form of VTS that they perceived to be less expensive than VTS 2000.
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    Their comments fell into three basic categories: first, reliance on existing VTS systems. For example, the systems already in place in 7 of the 17 locations may be sufficient. This is the case because they have been recently upgraded or are scheduled to be upgraded in the near future, and with these planned upgrades, these systems may be able to provide benefits similar to that of VTS 2000.

    Second alternative: VTS systems with a smaller scope than that is proposed for VTS 2000. A number of studies, including the Port Needs Study, have proposed blanketing the entire port with VTS coverage, but less comprehensive coverage may be sufficient.

    For example, in our work, one vendor estimated that a system to cover key locations at Port Arthur, Texas would cost between $2 and $3 million, as compared to the VTS 2000 estimate of about $6 million.

    The third alternative was non-VTS approaches. In some cases, the reference was to waterway improvements that were less expensive than installing a VTS system. For example, establishing regulated navigation areas or improved navigational aids.

    In general, because the stakeholders perceive that these alternatives could be less costly than VTS 2000, they were also more disposed to consider paying for these alternatives.

    In the final analysis, there is an acknowledged need among the port stakeholders to improve marine safety at the ports, but not much agreement about how it should be done.
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    Conclusions about whether VTS 2000 represents the best approach are made more difficult by the uncertainties that currently exist surrounding its scope, its cost, or the appropriateness of other alternatives.

    Mr. Chairman, this concludes our prepared statement. We'd be pleased to answer any questions that you or the committee members may have.

    Mr. EHLERS [assuming Chair]. Mr. Williamson or Mr. Johnson, would you like to make a statement?

    Mr. JOHNSON. Yes. Thank you, Mr. Chairman and members of the subcommittee. It's a pleasure for me to be here today and to give you some aspects of an ongoing study that the Marine Board at the National Research Council is conducting.

    The focus is on vessel traffic services and other navigation information systems that are used to enhance the safety and efficiency of U.S. ports and waterways.

    My name is Peter Johnson. I'm the project director for the study. I'm testifying today on behalf of the chairman and members of the NRC's Committee on Maritime Advanced Information Systems.

    Because the study is not yet complete and the interim report, which we are working on right now, has not yet been approved through the NRC's report review process, I cannot disclose any of the committee's conclusions or recommendations at this time, but I can share with you some background on the work and discuss the basic issues that we are addressing in the study.
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    We understand that this committee needs to make some important decisions soon, and I would be happy to provide you with copies of this interim report as soon as it has been reviewed and released.

    I would just like to make a few comments about two subjects. One is the national interest in safe and efficient ports, and the next is just a few points about the study that's ongoing and about the scope of it.

    First, in several years since the VTS 2000 program was initiated, U.S. political and economic landscape has changed, and efforts to cut Federal budget deficit and reduce the role of the Federal Government in commercial activities have become dominant.

    One of the fundamental questions that we have thought was important to address, and that has arisen over the VTS 2000 is, whether the program should be federally funded or whether local users should pay.

    To address the question, it's appropriate to ask first whether there is a compelling national interest in ports and waterway safety and efficiency, and, second, whether VTS provides sufficient safety and efficiency benefits to justify Federal funding.

    The work that we've done at the Marine Board in the past has concluded that ports and waterways are essential to U.S. trade and economic prosperity. Foreign trade, in particular, is of increasing importance in the U.S. economy. As you've heard earlier, the majority of that trade moves by water through seaports on all our major coasts.
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    There is also a persistent risk of maritime accidents involving casualties and environmental damage that continue to be substantial public concern.

    The fact that there is this growing trade and the fact that our ports are increasingly impacted by larger ships, vessels taxing the actual waterway dimensions that are available, and ships are more complex and require faster turn-arounds, all these trends in the future indicate that there is a very substantial national interest in keeping U.S. ports safe and efficient.

    Also, another factor is that U.S. ports are remarkably diverse in terms of vessel traffic served, the variety of services provided, the geography of the ports and the environmental conditions in various ports. They vary according to their capabilities to modernize, to assure safety, and to provide efficient turn-around capabilities. They must accommodate not only expanding trade, but also the increasing size and speed of ocean-going ships.

    There are definite needs for new, improved navigation information systems of several types in many of the U.S. ports. For example, mariners site the need for improved basic data and basic navigation aids, updated nautical charts, accurate tide and current data and real-time water depth information.

    Past studies have also concluded that vessel traffic service can offer substantial safety benefits, especially in certain ports that have this complexity to the extent that justifies their use.

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    The key question that we are addressing, therefore, is whether benefits justify the cost for specific ports.

    Another point is that VTS technology is advancing rapidly. Studies have shown that technology is not a barrier to implementation of VTS in the United States. State-of-the-art components and systems are available to meet or exceed requirements for accuracy, reliability, and user adaptability.

    Considering this, the work that we're doing will evaluate such limiting factors as funding and institutional issues. Such issues include the capability to bring vital interests and stakeholders together and to foster consensus on local needs and mechanisms for both management and funding.

    We evaluated implementation issues for navigation information systems, in general, but focusing on the VTS question.

    The study that we're doing began in October of last year. We had many briefings from sponsoring agencies, including the Coast Guard, NOAA, the Department of Transportation, and MARAD. We organized the committee into work groups to address key issues. Some of the work groups included: a technology work group, foreign port, an implementation issues work group, and an outreach work group.

    The foreign ports work group visited major European ports—London, Rotterdam, and the Elbe River approaches to Hamburg—investigating VTS systems in use, as well as the related institutional issues. Some of our Members also visited ports in the Far East and other European locations.
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    We had an outreach program that included workshops at New Orleans, Delaware Bay, and San Francisco, soliciting information and views from the stakeholders in those and nearby locations.

    A total of approximately 120 participants from at least 10 major port areas in the United States attended our workshops.

    In addition, the full committee or subgroups of the committee visited ports and inspected VTS systems in New York, L.A./Long Beach, San Francisco, New Orleans, Tampa, Delaware Bay, and a few other places. A variety of VTS and VTIS, or vessel traffic information systems, were evaluated, and we interviewed representatives from other local port interests.

    The underlying theme of the study is how to serve both the national and local interests, while also obtaining the greatest possible benefits from increasingly scarce Federal dollars.

    We will discuss the national interest in ensuring port safety and efficiency and describe some of the lessons the committee has learned from conducting local outreach workshops on three coasts of the U.S., and also the ports in Europe that the outreach group visited. We'll discuss various approaches for VTS funding and mechanisms of cost-sharing among Federal, State, and local entities, and consider opportunities for enhancing safety and efficiency while meeting local port needs.

    Mr. Chairman, I hope our interim report, which will be released in June, as we are scheduled right now, will be of value to your future deliberations on the Coast Guard's important role of keeping U.S. ports and waterways safe and free of polluting accidents, and at the forefront of promoting the U.S. position in world trade.
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    Thank you very much. I'll be happy to answer any questions that you may have.

    Mr. COBLE [resuming Chair]. Thank you, gentlemen, for being here. I apologize for my brief departure. Some days you have to be at five places simultaneously. This is one of those days, and I guess for you, too, Bob, but it's good to have you all here.

    You were the only two who were to testify, right?

    Mr. JOHNSON. Yes, sir.

    Mr. COBLE. Mr. Dillingham, what ways, in your opinion, can the Coast Guard reduce the cost of its VTS 2000 effort? And what other choices may be available if the proposed development effort and costs are not justified?

    Mr. DILLINGHAM. Mr. Chairman, I think the fundamental issue is an issue of scope—scope on two different levels: scope in term of the number of ports that is eventually decided that will need a VTS 2000-type system; also, scope in terms of the coverage of an individual port.

    As we mentioned in the statement, there are some ports where what's being proposed, the stakeholders in the port believe that it's too much, that they don't need that much coverage.

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    Also, from the earlier port Needs Study and subsequent studies, what we found is that about two-thirds of the ports that are proposed, of the 17 ports that are proposed, that there is little or no net marginal benefit from installing a VTS 2000, in fact, there are some ports that have existing VTS systems that have been upgraded or scheduled to be upgraded that will serve the same purpose as at least the first level of VTS 2000.

    So, in short, it's scope.

    Mr. COBLE. Mr. Dillingham, how do foreign countries finance the establishment and operation of VTS systems, and what sort of oversight role do these foreign governments play in VTS systems in their respective countries?

    Mr. DILLINGHAM. Mr. Chairman, during the course of our work we did not visit foreign countries, but we did, in fact, contact port authorities in five countries—some of the same places that the Marine Board has touched base with. What we found was that the central authority either paid all or some of the capital costs for developing these systems.

    We also found that the central government played a significant role in establishing standards and regulations for these systems. Even those that were operated by private entities, they still operated under the rules set by the central government.

    We also found, I think in most of the cases there was a user fee attached to the use of these VTS systems, either as a separate line item for a vessel or rolled into other port fees.
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    Mr. COBLE. Mr. Johnson, do you see a future marine information system which merely transmits traffic and other information between vessels without the need for VTS command center, for want of a better way of saying it?

    Mr. JOHNSON. Yes. Just something I'd like to say before I answer this. I hope you will understand that my answers, if they express any viewpoint, are my personal ones, because I can't speak for the committee at this time.

    Mr. COBLE. I understand that.

    Mr. JOHNSON. But, in any case, as I said earlier, there are advancing technologies, as you know, that may enable vessels to carry aboard their own tracking systems and transponders. This system would not require transmitting position information to shore stations.

    However, in order to envision such a system working without a central station on shore, one would have to think about very special circumstances.

    In most cases around the world, people are thinking of tracking transponders as an adjunct to the radar systems that are already in ports, because they are able to better identify and track those vessels which carry the transponders.

    However, if you want to perform a function of data management it would require a central shore station. It may not be possible in very large, complex ports for each vessel to do its own data management and to get information from all the traffic in the ports.
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    You also have to consider the fact that, in order for a vessel to have its own set of trafficadation data—each vessel would be required to have a transponder aboard. Also, there needs to be some international standards for that so that all vessels will be so equipped and that everyone will play by the same rules.

    If, for example, there are vessels that do not abide by the rules or do not carry transponders or were in a situation where there is a variety of traffic that's not just large vessels but small craft and fishing vessels and that sort of thing that will not have transponders, those are the situations where it's very important to have traffic management, and therefore very important to have central stations.

    So there may be some special circumstances where a silent VTS without a central station could apply, but it's not the case in very large and complex ports that are the case in most big U.S. ports.

    Mr. COBLE. Thank you, sir. I have a couple more questions, but for the moment I will recognize the gentleman from Tennessee.

    Mr. CLEMENT. Mr. Dillingham, you said that two States have passed laws limiting the liability of VTS systems under State law. What States have done this, and would you please provide the subcommittee with copies of these State laws?

    Mr. DILLINGHAM. Yes, Mr. Clement. We'd be glad to provide that information to you.
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    [The information received follows:]

    [Insert here.]

    Mr. DILLINGHAM. The States are California and Delaware.

    Mr. CLEMENT. Mr. Dillingham, you note that a few days ago the Coast Guard awarded contracts for the initial development of the VTS 2000 system. Do you believe that it was premature to award these contracts?

    Mr. DILLINGHAM. No, sir. This acquisition process that the Coast Guard has followed has been evaluated, looked at all across the board and has received high marks.

    What they've done is, in fact, issued a competitive contract to three vendors to see who can come with the best system at the point of conclusion of that contract.

    Mr. CLEMENT. Mr. Johnson, Mr. Dillingham has said that GAO has heard many negative or concerned comments about VTS 2000 as they visited ports around the U.S. Have you heard similar concerns from ports and stakeholders in the U.S.?

    Mr. JOHNSON. Yes, Mr. Clement. The work that we have done has included a number of outreach workshops, as I said, and interviews. There were a variety of comments that we hear from stakeholders in many ports.
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    In general, the users of VTS systems in ports that already have them operating are far more positive toward the value of VTS for safety and other reasons than ports where there are no VTS systems operating today.

    I believe that sometimes asking local users about systems that they really are not familiar with, and also that they don't have any experience with, you get a variety of answers.

    The other problem is, as Mr. Dillingham has mentioned, that the VTS 2000 is in the very early stages of development and there really hasn't been a definition of a specific system in any one port, so many people who give a response to the need for VTS 2000 base their responses on what they think it might be. They have to conjure up their own understanding of what they think VTS 2000 may be in the future.

    That's unfortunate, because that really doesn't give you a complete, accurate response to some specific question.

    Mr. CLEMENT. Mr. Johnson, is the National Research Council evaluating other methods of financing VTS systems, such as providing Federal loans or loan guarantees for the construction of VTS systems by ports or private nonprofit organizations? And, if so, will there be any analysis of these options in your interim report in June?

    Mr. JOHNSON. We have looked at a number of approaches in our study on financing and on collecting fees for VTS operations. Some of those include the ones that are in place already, such as the user fees being charged in L.A./Long Beach and the pilot fees being charged in Delaware Bay.
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    We have looked into trust funds and did some evaluation of the existing trust funds that are in use for other purposes today, as well as whether a trust fund approach is a useful approach to consider.

    We have done some initial analysis on these various approaches, but I think that we haven't done a detailed analysis because it's a bit premature. Some basic decisions need to be made in the first instance, I think, about what the Federal role is going to be and how the Federal Government and local governments and private interests will work together.

    It's a very complicated arrangement. Most ports have a very fragmented structure of operations, and every port is a bit different, so it's difficult to make generalizations about what would work one place or what could be a universal approach.

    Mr. CLEMENT. All right. Thank you.

    Mr. COBLE. Mr. Johnson, your statement discusses outreach workshops and other meetings with local port users, industry, and interested parties. How about commenting on local concerns about individual port safety needs and the role of VTS maybe a little more in detail.

    Mr. JOHNSON. Certainly, Mr. Coble. We received many comments about problems in ports that require some attention, and they range from questions about traditional navigation aids to information about water depths and channel conditions and weather information and real time information of that sort, as well as traffic management.
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    There were a whole variety of concerns in individual ports. It's very difficult to generalize about them. Each port has some specific needs.

    But sometimes the best generalization is that all ports do not need the same VTS system and all ports are not of the same caliber as far as attention to navigation information systems, in general, so each port needs to be considered separately.

    Mr. COBLE. Gentlemen, I thank you all. Mr. Asaba and Mr. Williamson, you are not being cutoff. Did you want to be heard?

    [No response.]

    Mr. COBLE. Gentlemen, thank you all for being here. We will continue and stay in touch with you. Thank you.

    Mr. DILLINGHAM. Thank you.

    Mr. JOHNSON. Thank you, Mr. Chairman.

    Mr. COBLE. The third and final panel will be Mr. Harold J. Creel, Jr., chairman of the Federal Maritime Commission. Chairman Creel is accompanied by Robert Bourgoin, general counsel.

    We'll let the people clear out, Chairman, and then be right with you.
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    Mr. CREEL. Yes, sir.

    Mr. COBLE. I think we're about ready to commence here.

    The gentleman from Tennessee and I were discussing the possibility of recessing for lunch. How detailed is your statement?

    Mr. CREEL. I can be brief.

    Mr. COBLE. I was going to say, brevity is the word. And I'm by no means cutting you off or limiting you.

    Mr. CREEL. Yes, sir.

    Mr. COBLE. But if you think we can move along on this, we will not recess for lunch.

    Mr. CREEL. Yes, sir. Absolutely.

    Mr. COBLE. It's good to have you with us, Chairman.

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    Mr. CREEL. Thank you, sir.

    Mr. Chairman and members of the subcommittee, thank you for the opportunity to appear before you today to present the President's fiscal year 1997 budget for the Federal Maritime Commission. With me today is Robert D. Bourgoin, the Commission's general counsel.

    The President's budget for the FMC provides $15 million for fiscal year 1997, which represents a net increase of $145,000 from the Continuing Resolution fiscal year 1996 funding level of $14,855,000. Included in the increase is $535,000 for administrative expenses offset by a reduction of $390,000 for salaries and benefits.

    While there is a slight increase of $145,000 in our funding request for fiscal year 1997, I wish to point out that the Commission sustained a 20 percent cut in its budget resources between fiscal year 1995 and fiscal year 1996—almost $4 million.

    The FMC's budget contains very limited discretionary spending—in fact, less than $150,000. Virtually all of the FMC's budget is composed of mandatory or essential expenses such as salary, rent, and telephone costs. Such expenses make up approximately 99 percent of our appropriation.

    In order to operate within this budget, we have provided minimal funding for promotions, supplies, furniture, and equipment. We've also reduced office space, and travel is straight—lined at the 1996 level of $81,000 for the entire agency, a 50 percent reduction from the 1995 level.
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    At present we have 159 employees on board, down from 231, 5 years ago.

    Shortly after assuming the chairmanship, I initiated a review of the FMC's field operations, consistent with instructions from our Appropriations Subcommittee that the FMC explore ways to maximize the utilization of modern communications capabilities to improve effectiveness and reduce reliance upon physical office space.

    As a result of that review, on April 3rd of this year I announced that the FMC would be closing its district offices in June. The FMC will maintain a presence in Los Angeles, Miami, New Orleans, and Seattle/Tacoma through four area representatives, supported by headquarters staff, who will use up-to-date telecommunications and information systems technologies.

    Today I want to address the current role of the FMC and the continued need for sufficient funding to administer the statutes under which the FMC operates. In this regard, I firmly believe that an agency with independent status is required to oversee our oceanborne foreign commerce. An independent agency can be impartial in performing regulatory functions. Moreover, it is imperative that an independent entity continue to exercise the FMC's mandate to protect against restrictive trade practices by foreign countries.

    Until such time as legislation is enacted to amend our shipping laws, the FMC must be permitted to do the job entrusted to it. Some would advocate cutting the agency's budget and then making changes in the law. I believe the better way to address change is to make the appropriate substantive changes first, then tailor the funding to suit the agency and its functions, as crafted by the new legislation.
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    The agency needs its full fiscal year 1997 budget request in order to fulfill its many statutory duties effectively. First, although we have downsized our enforcement program in 1996, some unavoidable, temporary, termination and start-up costs associated with that reorganization will result in our requiring the full amount requested in the fiscal year 1997 budget. Significant reductions will begin in fiscal year 1998.

    Second, the FMC retains all the statutory responsibilities with which it has been charged since the shipping acts were enacted, despite operating with 30 percent fewer personnel than 5 years ago.

    Were the FMC to be under-funded in its statutory function remained intact, the result would be a severe strain on its ability to perform its mandate appropriately.

    Most statutory functions would be hampered or delayed. If Congress ultimately decides to revise some of these functions and programs, then, of course, it would make sense to adjust the agency budget accordingly.

    In the meanwhile, however, I urge the subcommittee to ensure that the FMC is not de-funded or under-funded. Even a minor reduction in funding, given the 99 percent non-discretionary spending, would likely necessitate reductions-in-force and/or furloughs, and it would seriously jeopardize the agency's programs. For example, a 10 percent reduction in our budget would require us to impose 29 furlough days on the entire staff. In addition, we would be forced to RIF 25 employees. With such reductions in resources, the agency would be put in the untenable position of choosing which of its statutory functions to administer and which to ignore.
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    Though operating with greatly reduced resources, the Commission still has a wide range of functions and programs dictated by our statutes. De-funding of the FMC would mean, among other things, that restrictive foreign shipping practices harming U.S. interests would go unchallenged, concerted carrier activity would continue to receive antitrust immunity with no oversight, unbonded NVOCCs and unlicensed freight forwarders could prey on American consumers with impunity, and U.S. cruise passengers would lose financial protection against casualty and nonperformance of passenger vessel operations.

    I want to make it clear that I support Shipping Act reform. The shipping industry is constantly evolving, with new technology and market conditions, especially the emergence of global carrier alliances; however, any regulatory scheme designed to benefit both the maritime industry and U.S. trade and commerce requires a balancing of competing and often conflicting interests. It's imperative that the concerns of all segments of the maritime industry be considered in this process.

    Although not part of the FMC's fiscal year 1997 budget request, I want to alert the subcommittee that OMB has instructed the FMC to establish a ''robust'' fee schedule in order to accomplish the goal of fully funding the agency in fiscal year 1998; however, since there are statutory limits placed on the assessment of user fees, it's not possible for the FMC to recover its entire budget simply from user fees. Therefore, the FMC has begun discussions with OMB to explore how to obtain additional legislative authority to recover the full cost of the FMC's yearly appropriation, beginning in fiscal year 1998.

    Mr. Chairman, I hope I have expressed adequately the importance of the work of the FMC and our efforts to downsize the agency significantly, while achieving our mission in the most efficient and economical manner.
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    I respectfully request favorable consideration of the President's budget so that we may continue to effectively perform our statutory functions in fiscal year 1997.

    Thank you, sir.

    Mr. COBLE. Thank you, Mr. Chairman. That was good to have seen you at the Propeller Club the other night.

    Mr. CREEL. Nice to see you, too.

    Mr. COBLE. That was a very nice meeting.

    Mr. Chairman, you have proposed to fund the FMC budget in fiscal year 1998 and beyond entirely from user fees collected by the agency, by the FMC. What is the annual amount of user fees currently collected by the FMC, and from whom were they collected?

    Mr. CREEL. Last year it was about $1.3 million in user fees. This year we're about at the halfway mark at about $800,000. Those fees are collected from the individuals that we regulate including carriers seeking antitrust immunity, freight forwarders and their applications, passenger vessel operators, etc.

    Mr. COBLE. That's $800,000 thus far this year?

    Mr. CREEL. Thus far. Yes, sir.
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    Mr. COBLE. I believe that the FMC will have to request from our committee to make legislative changes which will permit or allow the FMC to collect assessments to fully fund the agency. What type of assessments, Mr. Chairman, will you propose, and which organizations regulated by the FMC would pay these assessments?

    Mr. CREEL. Yes, sir. The amount would actually be determined by whatever our appropriation is, obviously, if we were to recover that full amount.

    The entities and the functions that would be assessed would be, again, the freight forwarders, the cruise passenger vessels, carriers that have antitrust immunity—those sorts of entities.

    Mr. COBLE. Regarding travel activities, if you know, Mr. Chairman—if you don't, let us know—I'm interested in knowing what the FMC's travel budget request for fiscal year 1997 is and how this compares with the fiscal year 1996 appropriated level.

    Mr. CREEL. Yes, sir. The fiscal year 1997 request includes $81,000 for the entire agency, and that is the same as for fiscal year 1996. We're straight-lined at the 1996 level, which was a 50 percent reduction from the 1995 level.

    Mr. COBLE. So $81,000 in both 1996 and 1997?

    Mr. CREEL. Yes, sir.
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    Mr. COBLE. How many trips did the five commissioners take last year, if you know, and what were the general purposes of these trips?

    Mr. CREEL. I think there were about 40 or 41 trips taken by the five commissioners, and those trips were taken for a variety of reasons—to inform the public about what we're doing, what the functions are of the FMC, and meeting with the regulated parties.

    Mr. COBLE. And these trips, I presume, were domestic and international?

    Mr. CREEL. Yes, sir.

    Mr. COBLE. And did the agency or outside groups pay for the travel?

    Mr. CREEL. Both. Under an ethics law that was passed in 1989, we're permitted to have an outside party pay for certain travel expenses if it's approved by the FMC's our Ethics Officer.

    Mr. COBLE. And who would some of these outside groups have been?

    Mr. CREEL. Typically, they are associations that would like commissioners to present testimony or speeches to those groups—freight forwarder groups are typical, port associations, that sort of thing.
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    Mr. COBLE. Yes. Thank you, Mr. Chairman.

    The gentleman from Tennessee?

    Mr. CLEMENT. Chairman Creel, I want to congratulate you first for becoming chairman.

    Mr. CREEL. Thank you.

    Mr. CLEMENT. But I also wanted to know which is the best job, working for Hollings & Breaux or the job you have now.

    Mr. CREEL. I'm not sure one is easier than the other.

    Mr. CLEMENT. Chairman Creel, I recall, from when I was on the Merchant Marine and Fisheries Committee, that the FMC raised significant revenues through penalties for rebating and other illegal practices by carriers. Are there any indications that these type of activities are still going on? And what are your projected revenues for civil penalty collections for fiscal year 1997?

    Mr. CREEL. Yes, sir. I think that clearly there are violations that are still going on. I think this really goes in waves, and when we have a period of enforcement where the word gets out, there is more compliance following that.

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    Currently I think we're collecting around—last year I think it was around $400,000, and we're ahead of that this year. We're almost at $1 million this year thus far.

    Mr. CLEMENT. Chairman Creel, do you believe that activities such as tariff filing could be privatized by simply requiring carriers to make their tariffs available on the internet instead of to your automated tariff filing system? And, if so, how much would this save?

    Mr. CREEL. Yes, sir. I think that that would be a possibility. Availability of the rates is what is important to some parties. That would provide them with the same access to those rates.

    Currently, we have in our—I guess the way you'd figure the savings, we have about 38 people in the whole Bureau that includes tariffs, but also freight forwarder licensing and certification for passenger vessels.

    So the real figure for the number of employees involved in tariff filing is around 26, something like that, which would be a savings. I don't have a figure specifically broken out for that. I can tell you what we're budgeted for.

    Mr. CLEMENT. You can submit it for the record.

    Mr. CREEL. OK. We'll do that.

    [The information received follows:]
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    [Insert here.]

    Mr. CLEMENT. In your testimony you point to ongoing diplomatic efforts to eliminate unfair foreign shipping practices imposed by China and Japan. How long do you normally give diplomatic efforts to work before you move on to a more formal proceeding under section 19 of the Foreign Shipping Practices Act?

    Mr. CREEL. I'm glad to say that we haven't had to move on. The threat of section 19 of the Merchant Marine Act and the Foreign Shipping Practices Act has been enough of a deterrent, a big stick, to prevent these sorts of practices by foreign countries.

    I should note, Congressman, that on that note, just a couple of days ago I got a call from a large U.S. carrier who is negotiating with China right now on a freight forwarder issue. We allow the Chinese and anyone else to set up freight forwarding operations here. They don't allow us to do the same type of thing there. We've been negotiating to permit that sort of authority.

    They are finally coming to the table, and we'll probably reach an agreement. I was told by the carrier and also by Admiral Herberger, head of the Maritime Administration, that it was the FMC and, as the carriers described to me, the credible threat of the FMC's authority, that brought the Chinese to the table and made that possible.

    Mr. CLEMENT. Chairman Creel, you state that OMB has instructed the FMC to develop a robust fee schedule to pay for the FMC's operating expenses through assessments on carriers, freight forwarders, and marine terminal operators?
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    Mr. CREEL. Yes, sir.

    Mr. CLEMENT. What statutory limits currently limited your ability to collect these type of user fees?

    Mr. CREEL. Currently we only have the authority to collect user fees, per se. They're talking about additional fees. User fees basically cover the actual cost of providing a service. We can collect no more, and so that has limited us, obviously, to under $2 million, so we'll be seeking additional authority for those assessment fees.

    Mr. CLEMENT. When do you expect to have this fee schedule developed?

    Mr. CREEL. We have already talked to OMB about it. I hope to sit down with your staff and appropriations staff and discuss it more fully.

    Mr. CLEMENT. Thank you.

    Mr. CREEL. Thank you.

    Mr. COBLE. I thank the gentleman.

    Mr. Chairman, I also want to thank you and your staff. You all responded very promptly to questions by our staff yesterday regarding technical questions, and I thank you for that.
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    Mr. CREEL. If there is anything else we can provide, let us know.

    Mr. COBLE. Thank you, sir.

    I thank the witnesses—you all as well as the first and second panels—for their testimony, and the Members for their questions.

    Members of the subcommittee may have additional questions for the witnesses, and we will ask you to respond to those in writing if they are, in fact, put to you. The hearing record will be held open for these responses and any additional statements that are submitted for the hearing record.

    If there is no further business—Mr. Clement, anything further?

    Mr. CLEMENT. No, sir.

    Mr. COBLE. Again, we thank you all, the members of the subcommittee and the witnesses.

    The subcommittee stands adjourned.

    [Whereupon, at 12:25 p.m., the subcommittee was adjourned, to reconvene at the call of the Chair.]
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