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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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MARCH 19, 1997

Printed for the use of the

Committee on Transportation and Infrastructure


BUD SHUSTER, Pennsylvania, Chairman

THOMAS E. PETRI, Wisconsin
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HOWARD COBLE, North Carolina
JOHN J. DUNCAN, Jr., Tennessee
JAY KIM, California
STEPHEN HORN, California
BOB FRANKS, New Jersey
JOHN L. MICA, Florida
SUE W. KELLY, New York
RAY LaHOOD, Illinois
FRANK RIGGS, California
CHARLES F. BASS, New Hampshire
JACK METCALF, Washington
ROY BLUNT, Missouri
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JOSEPH R. PITTS, Pennsylvania
JOHN R. THUNE, South Dakota
CHARLES W. ''CHIP'' PICKERING, Jr., Mississippi
JON D. FOX, Pennsylvania
J.C. WATTS, Jr., Oklahoma

NICK J. RAHALL II, West Virginia
ROBERT A. BORSKI, Pennsylvania
ROBERT E. WISE, Jr., West Virginia
BOB CLEMENT, Tennessee
ROBERT E. (BUD) CRAMER, Jr., Alabama
ELEANOR HOLMES NORTON, District of Columbia
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PAT DANNER, Missouri
JAMES E. CLYBURN, South Carolina
BOB FILNER, California
FRANK MASCARA, Pennsylvania
GENE TAYLOR, Mississippi
BILL PASCRELL, Jr., New Jersey
JAY W. JOHNSON, Wisconsin
JAMES P. McGOVERN, Massachusetts
TIM HOLDEN, Pennsylvania

Subcommittee on Coast Guard and Maritime Transportation

WAYNE T. GILCHREST, Maryland, Chairman

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FRANK A. LoBIONDO, New Jersey, Vice Chairman
HOWARD COBLE, North Carolina
BUD SHUSTER, Pennsylvania
(Ex Officio)

BOB CLEMENT, Tennessee
JAY W. JOHNSON, Wisconsin
ROBERT A. BORSKI, Pennsylvania
(Ex Officio)




  Becker, Captain Fred R., Jr. USN (Ret.), Reserve Officers Association of the United States

  Creel, Hon. Harold J., Jr., Chairman, Federal Maritime Commission, accompanied by Thomas Panebianco, General Counsel, Ming Hsu, Commissioner, and Joe Scroggins, Commissioner

  Kramek, Admiral Robert E., Commandant, U.S. Coast Guard
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  Martin, Cornel, Corporate Vice President, American Classic Voyages, Inc., and Chairman of the Legislative Committee for the Passenger Vessel Association

  Schneider, John, President, National Marine Bankers Association

  Trent, Master Chief Petty Officer Eric A., U.S. Coast Guard

  Tucker, Commodore Everette L., Jr., U.S. Coast Guard Auxiliary


  Clement, Hon. Bob, of Tennessee

  Gilchrest, Hon. Wayne T., of Maryland

  Shuster, Hon. Bud, of Pennsylvania

  Young, Hon. Don, of Alaska


  Becker, Captain Fred R., Jr

  Creel, Hon. Harold J., Jr
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  Kramek, Admiral Robert E

  Martin, Cornel

  Schneider, John

  Trent, Master Chief Petty Officer Eric A

  Tucker, Commodore Everette L., Jr


  Becker, Captain Fred R., Jr. USN (Ret.), Reserve Officers Association of the United States, responses to post hearing questions

  Creel, Hon. Harold J., Jr., Chairman, Federal Maritime Commission, responses to post hearing questions

  Kramek, Admiral Robert E., Commandant, U.S. Coast Guard, responses to post hearing questions

  Martin, Cornel, Corporate Vice President, American Classic Voyages, Inc., and Chairman of the Legislative Committee for the Passenger Vessel Association, responses to post hearing questions
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  Schneider, John, President, National Marine Bankers Association, responses to post hearing questions


  Fleet Reserve Association, Charles L. Calkins, National Executive Secrectary, statement

  Thacher Proffitt and Wood, Charles D. Brown, Chair, Maritime Financing Coommittee, on behalf of Marine Finance and Yacht Finance Subcommittee of the Maritime Law Association of the United States, legislative initiatives

  National Association of State Boating Law Administrators, Ed Carter, President, letter, March 17, 1997

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



U.S. House of Representatives,
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Subcommittee on Coast Guard and Maritime Transportation,

Committee on Transportation and Infrastructure,

Washington, DC.

  The subcommittee met, pursuant to notice, at 2:17 p.m. in room 2167, Rayburn House Office Building, Hon. Wayne Gilchrest (chairman of the subcommittee) presiding.

  Mr. LOBIONDO [assuming Chair]. The subcommittee on Coast Guard and Maritime Transportation will come to order.

  I'd like to thank everyone for coming today.

  The subcommittee is meeting today to hear the testimony on the President's fiscal year 1998 budget request for the United States Coast Guard and the Federal Maritime Commission.

  As you know, we will be limiting opening statements to the chairman and ranking minority member, and if other members have statements they can be included in the hearing record.

  I'm pleased to welcome everyone to our hearing today to discuss the presidents budget request for the closing and Federal Maritime Commission.

  I'm very pleased and honored to have been recently named as the vice chair of this important subcommittee. Unfortunately, Mr. Gilchrest has been called to a meeting in the Speaker's office and will join us just a little bit later in the hearing.
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  As some of you are aware, I represent the Second District of New Jersey, which has a long and close relationship with the United States Coast Guard.

  The Administration's budget request for fiscal year 1998 for the Coast Guard is $3.9 billion, an increase of $146 million over the amount appropriated for Coast Guard activities in fiscal year 1997. Most of this increase is to cover additional Coast Guard operating expenses and retired pay obligations.

  We will also hear today from The Honorable Harold J. Creel, chairman of the Federal Maritime Commission. The Administration requests $14.3 million in fiscal year 1998 for the Federal Maritime Commission, a $300,000 increase over fiscal year 1997.

  I'm very interested in hearing the latest developments concerning the Federal Maritime Commission's recent actions against Japan in response to restrictive Japanese port practices.

  But now I'd like to recognize the ranking minority member, Mr. Clement, for your opening statement.

  Mr. CLEMENT. Thank you, Mr. Chairman, for scheduling this hearing on the President's proposed budget for fiscal year 1998 for the Coast Guard and the Federal Maritime Commission.

  The President has requested that Congress appropriate approximately $3.9 billion for Coast Guard programs for fiscal year 1998. 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.
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  I believe the Coast Guard is leading the way in streamlining their operations and using technology to allow them to carry out their missions in a more efficient manner.

  I'm pleased to see that the Coast Guard is requesting an additional $34 million in funding for drug interdiction activities.

  I look forward to hearing today on our ongoing efforts to interdict drugs. In particular, I'm interested in hearing about what is going to be done to close off the flow of drugs through Puerto Rico.

  Operation Frontier Shield was successful in interdicting drugs that would have gone through Puerto Rico. I'm hopeful that we will be able to continue these efforts this coming year.

  Last year the Committee on Appropriations deleted the funding for the VTS 2000 vessel traffic system. I know that the members of this committee, the Coast Guard, and the maritime industry want to improve the safety of our waterways. As our international commerce continues to grow, we must also look to new technologies to ensure the safety of our ports and waterways. I'm hopeful that a consensus can be achieved so that modern technologies can be used to help make navigating our waterways safer and more efficient as we enter the new millennium.

  Admiral Kramek, I would like to commend you and your staff for your work to implement the Government Performance and Results Act, GPRA. Once again, the Coast Guard is pioneering a new way of measuring the work product of your agency against your goals.

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  This committee has received briefings on GPRA from many agencies, and your agency's briefing was one of the best.

  The Coast Guard clearly understands the purpose of the act and what it can do to help you accomplish your missions.

  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 look forward to hearing from Chairman Creel on their findings that led them to impose sanctions against Japanese flag carriers entering the United States.

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

  Mr. LOBIONDO. Thank you very much, Mr. Clement.

  To our distinguished witnesses, I would bear your indulgence. We will break now so that we can accommodate the vote that's on the floor, and as soon as that is over we will return and proceed.

  Thank you.

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  [The prepared statements of Mr. Clement, Mr. Gilchrest, Mr. Young and Mr. Shuster follow:]

  [Insert here.]

  Mr. COBLE [assuming Chair]. The committee will resume, in an impromptu way. We're still waiting for the chairman to come back, and he'll be here imminently, I'm sure.

  In the interest of time and to serve you all who are here, let's move this thing along.

  Admiral, it's good to see you again.

  I'm pleased to introduce our first panel: Admiral Robert Kramek, known to all of us; Master Chief Petty Officer Eric A. Trent, known as well to all of us, United States Coast Guard; and Everette L. Tucker, Commodore of the Coast Guard Auxiliary.

  Commodore, I don't think you and I know each other as well as the two guys to your left, but it's equally good to have you here from U.S. Coast Guard Auxiliary.

  Admiral, why don't you fire away?

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  Admiral KRAMEK. Good afternoon.

  Mr. Acting Chairman, you look so familiar in that seat.


  Admiral KRAMEK. And other distinguished members of the committee, it's a pleasure to appear before you today and discuss the Coast Guard's fiscal year 1998 authorization.

  Before I begin, I want to thank all the members of this subcommittee for their very strong bipartisan support of our authorization act of 1996. The provisions contained in that act have enabled the Coast Guard to sustain an outstanding level of public service to the American public.

  I'm joined today by two mainstays of our Coast Guard team: on my right, Commodore Ev Tucker, who is the commodore for the 34,000 members of the Coast Guard Auxiliary who so generously volunteer their ships, their planes, and their time towards saving lives and assisting the Coast Guard. Last year you reauthorized the Auxiliary, the first time since 1939, and now the Coast Guard Auxiliary can do all the missions for the Coast Guard except for maritime law enforcement. Commodore Tucker has got his hands full, and he looks forward to answering your questions and making a statement also on what he's doing there.

  On my left is the Master Chief Petty Officer of the Coast Guard. There are only five E—10s in the armed forces of the United States. Master Chief Eric Trent is one of them. He represents all of our enlisted personnel. He and his wife, Linda, travel with me when I visit all Coast Guard men and women throughout our land and overseas, consulting with me, keeping me advised on the status and support of our enlisted personnel. His wife, Linda, is also the ombudsman for the entire Coast Guard and runs all of our ombudsmen, so I have two for one in that particular situation. But they take care of our families, to a great extent.
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  This committee knows that we save people's lives and support their well-being. We keep our waters safe and clean. We are a member of the armed forces and operate jointly with members of the armed forces. We are always ready to respond, whether it's a bad ice season on the Great Lakes or whether there are floods, as are occurring right now in the midwest of our country. We've already rescued over 750 people by sending helicopters to that flood-stricken land from places as far away as east coast stations and the Great Lakes.

  We are also good stewards of the taxpayers' money, Mr. Chairman. We are completing our streamlining plan this year, and will have saved an annual savings of $400 million a year in operating expense money. The Coast Guard is 4,000 personnel less today than it was 4 years ago. In fact, there are less people in the Coast Guard today than since 1963.

  Having said that, we responded quickly to TWA 800, hurricanes such as Fran and Bertha. We operate with DOD not only off of Cuba and Haiti, but in the Black Sea in the Mediterranean this year, enforcing the embargo against Iraq and the Arabian Gulf, and this morning we're in the jungles of Peru, Bolivia, and Colombia training riverine teams to keep the drugs off the Amazon tributaries.

  We also responded to many major oil spills in the United States this year, one in particular in Portland, Maine, where we were able to respond in just 10 minutes and actually clean up and prevent over 75 percent of the cargo of that ship from entering the water.

  We're a quality organization. We have a team of Auxiliary, Reserve, civilian, and active duty personnel. It's necessary for us to use all of our Auxiliarists and all of our Reserves in a very meaningful way in order to augment our active duty forces, especially seeing as we've reduced the size of the active duty and civilian force by 4,000 people, because, while we did that, we maintained our service to the American public.
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  This budget is a current services budget. That means the amount of money that I'm asking to be authorized, the amount of funds and people, will provide the same level of service to the American public as I was able to provide last year, with a slight increase for drug law enforcement in order to carry out the Administration's new 10-year program to stop narcotics from ruining our society.

  I'd be very happy to answer any detailed questions about that, but, putting drug enforcement in perspective, if I may. The Coast Guard is the lead agency for the maritime interdiction of drugs in our country. Interdiction, as a total percentage of all money spent to counternarcotics in this country, is 10 percent of the budget. The Coast Guard's budget for maritime interdiction of drugs last year represented 8.7 percent of our total funding, and this year I'm asking for an increase up to 9.8 percent.

  I wanted to put that in perspective, because it's really less than 10 percent of what we do.

  I'm very happy to be here. I would ask for full authorization of the amounts that I've requested to provide current services for the American public. I'd be ready to answer any questions from the committee.

  Mr. COBLE. Thank you, Admiral.

  Why don't we hear from the Master Chief and then the commodore, in either order you all prefer, and then we'll question all of you simultaneously.
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  Admiral KRAMEK. That's fine.

  Petty OFFICER TRENT. Good afternoon, Mr. Chairman, members of the committee.

  It's certainly a pleasure to appear before this distinguished committee again to discuss quality of life issues for Coast Guard members and their families.

  Before I begin my remarks, I would also like to join the Commandant in thanking you for your strong support of the Coast Guard Authorization Act of 1996.

  My responsibilities as master chief petty officer of the Coast Guard include advising the Commandant on all matters that affect enlisted personnel and their families. I have personally met with thousands of members during visits to more than 200 Coast Guard units during the past 33 months.

  The biggest issue affecting enlisted quality of life is the increased work load that has come with streamlining. While the enlisted force has shrunk by some 3,500 members, there has been no decrease in the demand for our services. Many of our people are working harder and longer to maintain this level of service.

  Last month I visited the 26 men and women assigned to our rescue station in Neah Bay, Washington. They regularly work 84 hours a week. That's continually, year-round. They stand 48 hours in a work duty status and then 48 hours off. That's over and over. That's what we in the sea services commonly refer to as ''port and starboard'' duty. It equals 84 hours of work per week.
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  I have also recently visited the men and women assigned to the high-endurance cutter MIDGETT. Like most of our deployable cutters, they average 90 hours per week when the cutter is underway. And, unfortunately, nowadays, when the cutter is in part that schedule doesn't improve very much.

  Frontier Shield, our drug interdiction operation near Puerto Rico, has also caused additional hardships for our people.

  I have often heard Dr. Perry, former Secretary of Defense, say, ''If you take care of your people, they'll take care of you.'' With your help, we have done a relatively good job of taking care of Coast Guard men and women. I believe that is one reason our people have such devotion to duty and why they are Semper Paratus.

  Even with all that you and the rest of Congress have done to support Coast Guard enlisted men and women, they need your assistance with several other important issues.

  I would urge you, just like I did last year, to reduce the statutory threshold defining high-cost areas that qualify for continental U.S. cost of living adjustment payments.

  If the members of the committee could, for a moment, just imagine that you are a second-class petty officer assigned to one of our Coast Guard units in Portsmouth, Virginia, and you barely manage to support a wife and two children on your monthly salary of $1,500. Even though you never requested a west coast assignment, you receive permanent change of station orders to Morro Bay, California.
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  The first thing that happens to you is your purchasing power will decrease significantly because the non-housing cost of living in Morro Bay exceeds that of Portsmouth, Virginia, by some 8.4 percent, yet does not qualify for the payment of CONUS COLA under Public Law 103—337.

  It is important to note that more than 90 percent of Coast Guard members are assigned to areas where the cost of living index exceeds the national average.

  I would also urge you to consider any additional authorization request that would reduce the out-of-pocket expense inequities that occur when Coast Guard men and women obtain health care for their families. The current TRICARE program for obtaining health care does not provide a uniform benefit to the eligible population.

  That same second class petty officer that transferred from Portsmouth, Virginia, to Morro Bay, California, was able to obtain medical care for his family at a military treatment facility in Norfolk, where care and prescription drugs were a no-cost benefit. Once he arrived in Morro Bay, TRICARE Standard was the only option available. This member must now satisfy a $300 annual family deductible, co-pay 20 percent of all the TRICARE Standard allowable charges, and also pay all charges that exceed the TRICARE Standard allowable charge.

  Because of where our people are assigned, 52 percent of our families are not able to access TRICARE Prime.

  We also need your assistance in maintaining compensation parity with the other armed forces in pay, entitlements, and benefits, and especially to maintain non-pay parity with items like child care fees, tuition assistance, and quality of housing.
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  Finally, even though Congress has enacted legislation that authorizes those enrolled in the Veterans' Educational Assistance Program to convert to the Montgomery GI bill, I'm truly disappointed for the thousands of service members that are not eligible to convert.

  I would urge you to support an amendment to this legislation that authorizes those still serving on active duty that have ever enrolled in the Veterans' Educational Assistance Program to also be allowed to convert to the Montgomery GI bill.

  Mr. Chairman, as I conclude my statement, I must ask for your continued support of the Coast Guard. Our people give you their youth, they give you their energy, they give you their enthusiasm, and, if need be, even their lives, as did Coast Guard members David Bosley, Matthew Schlimme, and Clinton Miniken, who made the ultimate sacrifice last month as they responded to a call for help from a sailboat in distress.

  The American people depend on the men and women of the Coast Guard and they are depending on you.

  Mr. Chairman, I appreciate the opportunity to meet with this committee today. Thank you for inviting me. I look forward to your questions.

  Mr. COBLE. Thank you, Master Chief.

  Commodore Tucker?

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  Mr. TUCKER. Yes, sir.

  Sir, I'm pleased to meet with you and the other members of this subcommittee to represent the good men and women volunteers of the Coast Guard Auxiliary.

  I would like to join the Commandant in also thanking this subcommittee for your support over the last several years that led to the new laws of the Coast Guard Auxiliary.

  You have my written statement for the record. If I may, I'd like to cover some examples of the support Auxiliarists are providing the Coast Guard and our citizens. I believe that these will give you a good idea of the diversity and the value that our service and contributions bring our country.

  Over the past few weeks, some 60 auxiliarists from the 8th Coast Guard District have been extremely busy supporting emergency flood response operations along the Ohio River.

  Additionally, the Auxiliary served in the State of Ohio emergency operations center, supported their operations by standing watch and assisting in their coordination actions.

  In Hawaii, Auxiliarists from the 14th Coast Guard District conducted boating safety classes for the crew of the cruise boat Navitac II. The turnover of cruise personnel in the cruise boating industry is very high. The use of volunteer instructors enabled the owners of the Navitac II to obtain essential safety training for their employees at minimal cost.

  Off the Florida Keys recently, Auxiliarists from the 7th Coast Guard District, while on an operational patrol, spotted a 232-foot freighter drifting towards a reef near Marathon. It turns out the ship's engine had broken down. The crew was busy making repairs and apparently did not realize the ship had drifted into an off-limits area to large ships.
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  On notification by the Coast Guard Auxiliary, the Coast Guard directed that the ship anchor until engine repairs were completed. This was done and a possible potential disaster averted.

  In the waters off Charleston, South Carolina, Auxiliary aircraft from the 7th Coast Guard District supported the Coast Guard and the local authorities in a 2-day search and rescue mission to locate a small private aircraft that was reported out of fuel in bad weather some 25 miles off Charleston.

  In Oregon, Auxiliarists from the 13th Coast Guard District quickly mobilized to support Coast Guard Station Chetco River, with an Auxiliary operational vessel and watch-standing personnel, while the Coast Guard ready boat and crew launched to respond to an extensive search and rescue mission. This ensured that the Chetco River bar had continued SAR coverage and a means to respond to calls for assistance.

  In California, Auxiliarists from the 11th Coast Guard District responded to a Coast Guard request for immediate communication backup when the Coast Guard VHF FM high-site antenna became inoperable. This site monitors for distress and operations along 120 miles of coastline and 50 miles out to sea. The Auxiliary activated six of their radio stations located along the coastline and handled all Coast Guard traffic, including a continual radio guard, until repairs to the high-site were made.

  This immediate response by trained Auxiliarists who had worked with the Coast Guard over a number of years ensured the maintenance of coastal communications vital to intermodal vessel traffic, as well as command and control for all Coast Guard units in the area.
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  These are only a few examples, sir, of the contributions of our men and women Auxiliarists, but I believe they point out very clearly the type of service and contributions provided by us throughout our Nation.

  With the new legislation now in place, we believe that the Coast Guard Auxiliary is now correctly positioned to support our Nation and the Coast Guard as we move into the next century.

  We look forward to the challenges and the opportunities that the future will bring us in serving our country.

  Sir, I'll be happy to answer any questions you or any other Members might have.

  Thank you.

  Mr. COBLE. Thank you, Commodore.

  We're appreciative to each of the three of you for being here.

  I think this goes without saying, Admiral. You know I'm one of the Coast Guard's most avid cheerleaders on the Hill, and I'm sure my colleagues up here share my enthusiasm about the Coast Guard. You all have for years--maybe since 1790 even--been the unsung heroes as far as the armed services are concerned, in my opinion. It's good to have you up here.

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  Admiral, let me ask you my perennial question: what's the progress on the icebreaker construction down in Louisiana? You knew that was coming, didn't you?

  Admiral KRAMEK. I didn't really think you were going to ask that this year, Mr. Chairman, but I just happened to have been in Avondale to look at the construction. In fact, I was there with the Chairman of the Appropriations Committee, Congressman Livingston, one of your colleagues.

  We went down there to look at the construction of that ship. There were 695 steel workers working on it at one time, if you can imagine. It is an enormous icebreaker for science research in the polar regions, both the Arctic and Antarctic.

  It's a couple of months behind schedule, Mr. Chairman. I think the launch is scheduled now for November. We've negotiated some contract modifications with the shipyard and they're going to do a little extra work for us at no additional cost, but we accept a couple-month delay in the ship.

  The Coast Guard Cutter Healy will be the name of that vessel. It will be commissioned in 1998. It will be ready to conduct all missions. It's about 60 percent complete. The hull was erected in modules, being welded together. The engines were in place. They were just waiting on some stem and stern castings.

  It was looking pretty good.

  Mr. COBLE. I regret to continue to have to continue to pester you annually with that question, but I'm very interested in that, as you know.
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  Let me ask you one more question, Admiral, and then I will yield. I see our chairman has returned.

  If you would, Admiral, give us an update on the Coast Guard's investigation into the recent collision involving the Brightfield in New Orleans. I guess it's a two-pronged question. When will the investigation be complete? And if you have any recommendations, Admiral, for legislative changes to improve navigation safety based on the Brightfield experience.

  Admiral KRAMEK. All the testimony has been taken. The investigating officer now is going through all of his documents. I expect it will be complete in several months with the complete written investigation.

  I'm not aware of any legislative changes that might be required at this time, although there's the potential for that.

  You can count on me coming before this committee and asking for legislative changes, if necessary.

  There has been lots of testimony taken as to the fact that there were some language barriers, there is also some indication that there was a need for more vessel traffic safety in the area.

  There are perhaps 50 things that contributed to that accident. The bottom line, though, was that the vessel was going downriver in a very strong current of about six or seven knots, so in order to maintain steerage it had to do about 10 more knots than the current, so it was coming downstream at 15 or 16 knots, fully loaded with grain.
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  We had instituted one-way traffic on the river at that time to allow that vessel to come down so it wouldn't collide with another.

  It lost steering and in a matter of four seconds collided to the dock.

  The good news is it missed the casino gambling vessel that was moored at the Riverwalk in New Orleans. I think it missed it, not by chance but because in 1994 the Coast Guard, the Corps of Engineers, and the city of New Orleans had gotten together and decided that was the only safe place on the river to moor that particular ship. It was in the least-dangerous area.

  Having said that, Algier's Point and the Crescent in New Orleans is the most dangerous waterway in the United States. There have been 150 collisions of ships with piers and fixed structures in that area over the last 10 years and over 100 collisions between ships and barges and tugboats in that area.

  It requires vessel control. It requires qualified pilots. It requires no language barriers.

  We'll be quick to come to this committee if any legislation is required to correct any situation we find that caused that accident.

  Mr. COBLE. Thank you, Admiral.

  Wayne, you may want to have a second round, but we have a vote on. Why don't I recognize the gentleman from Tennessee now.
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  Mr. CLEMENT. Thank you, Mr. Chairman. I'm going to yield to our ranking democrat of the Transportation and Infrastructure Committee, Mr. Oberstar, because he has a lot more water than we have in Tennessee.

  But I know the Admiral is going to work with me closely to bring an ocean to Tennessee, and I thank him.


  Mr. OBERSTAR. Do whatever he needs.

  I thank the gentleman for yielding and I appreciate the opportunity to just offer a few observations.

  First, I have always had enormous respect for the Coast Guard from my days of my first service on the Merchant Marine and Fisheries Committee, and but before that as administrative assistant to my predecessor. We watched the Coast Guard serve the needs of the Great Lakes communities in many ways.

  I have always felt, when I learned more about the Coast Guard serving on the Merchant Marine and Fisheries Committee and on its Coast Guard Subcommittee for years, that we get more than our dollar's worth out of the men in that color blue uniform. That's a very special uniform you wear and a very special service you provide to the people of our country--and abroad, as well.
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  Following on the icebreaker theme set by our chairman, we directed the Coast Guard last year to develop a plan and cost estimate for engineering, design, and retrofitting of our only capable-sized icebreaker on the Great Lakes, the Mackinaw. What is the status now of that work?

  Admiral KRAMEK. We've gone a bit further than what you had requested, Mr. Oberstar. What we have completed, with the help of the Great Lakes Carriers Association and other members of industry on the Lakes, is an icebreaking study on what was required to meet the needs of commerce.

  Our mission there is to facilitate domestic commerce--in particular, icebreaking in the winter shipping season.

  The conclusion of that study is that it requires heavy icebreaking capability in the Great Lakes to do that, which can now only be provided by the Coast Guard cutter Mackinaw.

  As you know, the ''MACKINAW'' is over 50 years old. Like some of our other vessels up there. Our buoy tenders in the Great Lakes are also over 50 years old.

  We are doing now an alternative analysis. First I'll say I've decided, as a result of the study, that ''MACKINAW'' needs to stay in commission until at least the year 2006, so we are going to----

  Mr. OBERSTAR. Let the record note that there was applause given to that remark.
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  Admiral KRAMEK. We are going to make what engineering modifications are necessary to keep that ship running until at least the year 2006, and I estimate that, over current operation and maintenance cost, that will require approximately $3.5 million during about the next 8 years to do that.

  In the meantime, we have some new vessels being built at Marinette Marine in Wisconsin, large buoy tenders, the Juniper class. We've asked the shipyard to give us some estimates, in the next bids that are going out for the next 11 vessels, for ice-strengthening several of those vessels. Based on those bids and affordability, we would station those in the Great Lakes, as well.

  And we're proceeding with an alternative analysis that will look at re-engining and modernizing the ''MACKINAW'' or replacing it with another vessel, either a single-draft or dual-draft icebreaker, or a combination of larger ice-breaking buoy tenders. There are proposals for that.

  We'll have that alternative analysis done in about 8 months to a year, and then we'll seek budget authority for whatever the right answer is.

  But the specific question you asked last year, Is one of these alternatives?--in the meantime we're going to maintain our current capability until the year 2006 until we can get the proper mix of vessels and the funding stream we need to provide that service.
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  Mr. OBERSTAR. I thank you very much, Admiral. I have believed for 25 years that we need a new icebreaker on the Great Lakes, and I succeeded getting an authorization back in the 1970s for design and build alone or in cooperation with the Canadian authorities, and the Coast Guard started and stopped that process. It's not all the Coast Guard's fault. There were other pressures--the Office of Management and Budget, and there were other interests.

  I won't review the entire history of it here, but I've just been very disappointed that could build the wind-class icebreakers for polar duty, we could build a research vessel with icebreaking capability for that purpose, but we haven't been able to get to serve the needs of the greatest freshwater body on the face of the earth.

  Finally, the Administration, in its budget, has directed that the Coast Guard collect some--what we estimate to be in the range of $25 million in user fees for icebreaking services on the Great Lakes.

  Now, you know that there is no legal authority for such fees. I expect the Administration will be sending up a bill to propose legal authority for such fees. These are indirect services. Coast Guard has never charged fees for such services.

  If that's the case, then maybe we should be charging fees for hurricanes, floods, tornados, and other services the Coast Guard operates that are covered by the ''indirect services'' title.

  We are vigorously opposed on the Great Lakes for this fee proposal. It will be detrimental to our economy. It will raise the cost of taconite iron ore shipped from the Upper Lakes Region of both Minnesota and Michigan to the Lower Lakes steel mills. It will raise the cost of limestone needed in steel making. It will raise the cost of coal required in steel making. It's going to raise the price of domestic steel after a decade of cost reductions and productivity improvements that have made U.S. steel the most efficient and the least costly per ton in the world.
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  Now, we'll see a return to foreign government subsidization of their steel industry if we're so foolish as to load these additional costs on our steel industry and on other industries that benefit from icebreaking, including our midwest farmers whose grain has to move out through the St. Lawrence Seaway early in the season and late in the season, as well.

  I just want to put that on the record. I don't ask you for your comment. I know this was a budget item loaded upon the Coast Guard's hefty shoulders, but we're going to fight it with all that we have.

  Admiral KRAMEK. I would just say, in response to that, Sir, that the legislation that the Administration will be sending up is for Congress' consideration in this fiscal year to start collecting fees in fiscal year 1999. It also includes the northeast coast of the United States besides the Great Lakes.

  Mr. OBERSTAR. I thank the gentleman for yielding.

  Mr. GILCHREST [assuming Chair]. I thank the gentleman.

  Now, I think the time is Mr. Clement's. We have about 5 1/2 minutes left before we have to go to the vote.

  Mr. Clement, do you have a----

  Mr. CLEMENT. I'd yield to Mr. Johnson.
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  Mr. GILCHREST. Mr. Johnson just left.

  Mr. CLEMENT. Why don't we just go forward and come back.

  Mr. GILCHREST. You want to have questions when you come back?

  Mr. CLEMENT. And then I'll ask my questions when we come back.

  Mr. GILCHREST. If you don't mind staying, Admiral, we'll be back in 12 minutes.

  Admiral KRAMEK. We'll be here, sir.


  Mr. GILCHREST. The hearing will come to order.

  Gentlemen, I thank you for your patience and forbearance with your immersion in the ambience of democracy as we carry out the Nation's business the best way we can.

  Mr. Clement I believe is on his way back. He had a couple of questions. I'm not sure about Mr. Johnson. I'll ask the two that I have, and if they haven't returned then we'll ask them to submit their questions in writing and we can get them to submit those and I'm sure we can get an appropriate response.

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  Admiral, I had a couple of questions. One is: in the next 10 years or so, many of the vessels that you have right now will begin to show a good deal of wear and tear and have to be replaced. Does the Coast Guard have or are you working through a plan with a cost analysis attached to that as to how to refit those aging vessels?

  And I guess I can also ask: do you have some sense as to where much of the refitting will be done, or the new ships will be built? Or is that something that has to fall out as it comes along?

  Admiral KRAMEK. We have a replacement plan, Mr. Chairman. We put together what's called a ''Capital Investment Plan,'' CIP. It looks out 15 years into the future . In accordance with that Capital Investment Plan, our plan to replace our high-endurance cutters and medium-endurance cutters, which are 30 years old now--and some a little bit older than that--that plan is underway.

  In this budget we're asking for authorization, as part of our acquisition and construction portion of this budget, for $5 million to begin concept exploration for that replacement program.

  I expect we'll have that conceptual design done within 2 years and then we'll come before the Congress for the replacement program.

  I would tell you, based on my experience, it normally takes, from the time we start and are authorized concept exploration until we actually deliver the first ship of a new program, 7 or 8 years if we were really efficient by the time we're done with all of that.
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  We're probably going to have to replace almost 30 of these vessels over about a 10-year period. It will be the largest procurement the Coast Guard will make in the first part of the next century.

  It's impossible to tell what shipyards or what area of the country those vessels will be constructed at. It could be just about anywhere.

  We have vessels under construction now in the Great Lakes. We have vessels under construction in Louisiana, New Orleans area. And we have major repairs being accomplished in almost in every major shipyard in the United States.

  We are going to need help not only from this committee but all committees of Congress. I've already met with the Secretary and chairmen of my other committees because when this procurement takes place it will probably require funds outside of function 400, the transportation account, from which we're normally funded.

  In the past, the Coast Guard being a member of the armed forces, we've received assistance, as we have the last 10 years, from the Department of Defense.

  The new icebreaker under construction at Avondale, as an example, is being funded with Department of Defense funds that were allocated to the Coast Guard, almost $300 million.

  So for major ship procurement like that, we're usually assisted out of other accounts, and I see that that would be the case here.
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  I would also say that these vessels would do more than just serve the traditional Coast Guard missions. We're working with the Chief of Naval Operations and the Center for Naval Analysis to make sure that these vessels will have the warfare capability when called--and we have a responsibility for defense readiness, being a member of the armed forces--for the command, control, communications, and intelligence systems, the C3I, and for the weapons systems that would be on these ships to augment what the Navy would need.

  We have a Navy/Coast Guard board that is looking at that now.

  It's what I call the ''low end.'' We supply what the frigates would supply.

  As you look at naval construction of shipping in the future, the next 20 or 30 years, you'll see that most of the emphasis there is on the high end, on the Aegis cruisers, on the submarines and the aircraft carriers.

  So we're very carefully going ahead with this concept exploration. The funds to start this off are included in this particular budget, it's part of our request.

  Mr. GILCHREST. Admiral, I thank you for that complete answer.

  As you move along in this, are you satisfied with what you have at your disposal to take advantage of the latest advances in technology--in materials technology as far as what the ship is constructed with, with alternative fuels, with computer technology, a whole range of innovative technologies that come in recent years more rapidly than in the past? Are you satisfied with your plan and the people that you have and the infrastructure that is in place to make sure that this plan is carried out in a timely fashion, that the Coast Guard can take advantage of these advancing technologies?
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  Admiral KRAMEK. I do. The ships we have under construction now take advantage of almost all that technology that you mentioned already, except perhaps for fuel cells. Take for example, the new buoy tenders under construction in the Great Lakes at Marinette. I have 30 ships that will replace 37 because of improvements in technology. The crew sizes are only two-thirds of the existing crew size of the old ships. The engine rooms are fully automated.

  In fact, when we get a chance to visit one of these ships, we can program in the way points of where we need to go, Mr. Chairman, take the lines off, and the cutter can drive itself there and, with differential GPS, get within 5 feet of the position it needs to be to set its aids to navigation.

  We still have lookouts and we still have people checking that all this whiz-bang stuff works, but it's there.

  The icebreaker under construction will be equivalent to the Navy's ''smart ship'' that they've just put on the USS Yorktown. It will have a very, very reduced crew. It will be the largest icebreaker in the United States, one of the largest in the world. It will have a crew of about 70 people operating it--totally automated.

  The new ships that we will have will be even more in that direction, especially to save the sizes of the crews, because 65 percent of all of our costs are people costs.

  Mr. GILCHREST. Thank you.

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  One other quick question. We've discussed in prior conversations about drug interdiction and where it needs to be zoned, the cost of drug interdiction, and things of that nature. Just for the record, Admiral, would you say the present program to interdict the drug traffickers, is it effective? And if it isn't, just a word or two about some changes that could make it more effective.

  Admiral KRAMEK. It isn't as effective as it could be. The initial system was designed for a defense in depth of the whole area, in particular in the Western Hemisphere from South America up to the United States.

  There have been large reductions in the interdiction budgets from 1992 until 1996. Some of that money was restored last year.

  But the bottom line is--and I'll show you the threat here in a minute--that the Administration now has put together a new drug strategy. The President just rolled out the 1997 strategy. It's a 10-year plan. Five-year budgets will be submitted by agencies in support of that plan.

  This year in my 1998 authorization I'm asking for authorization of the first year of that step up to do a better job.

  Interdiction is only 10 percent of the entire counter narcotics budget for the United States. It also is about 9.8 percent in fiscal year 1998 budget request that I'm making before this committee for the Coast Guard's budget. So about 10 percent of what we do.

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  But the magnitude of the problem is shown on this chart that I've put up. This just looks at cocaine flow from South America--776 metric tons produced annually. Over 65 percent of that goes to the shores of Mexico, both on the west coast of Mexico and the east coast. You can see 234 metric tons up to the west coast of Mexico. We call that the ''Eastern Pacific.'' There are 264 metric tons up onto the east coast of Mexico and Central America; 110 metric tons to Puerto Rico and the Virgin Islands; and then about 40 metric tons into the Lesser Antilles.

  The interdiction is either on the water, over the water, or under the water, and your Coast Guard is the lead maritime agency to prevent interdiction in a maritime zone and co-lead with Customs for aiding interdiction. So we're very busy.

  But it takes all agencies working together--Customs, DEA, the Department of Defense, FBI, CIA. The President has given me a collateral duty to coordinate all of those agencies. I'm the U.S. Interdiction Coordinator for interdicting all drugs in the Western Hemisphere of the United States up to our borders.

  So there is a major operation in the Eastern Pacific now called ''Caper Focus.'' That's being run by Joint Inter-Agency Task Force, East, out of Key West. That happens to be supervised by a Coast Guard two-star admiral, but it's a joint operation with other members of the armed forces and all of our law enforcement agencies.

  And there are operations in each of these areas, but there are scarce resources to fully do the job, so the 5-year plan that I've been asked to submit within 6 months to the Administration will outline the resources that are necessary over a 5-year period that we'll need to do a better job.
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  Now, we've just experimented with one of those operations. I've held a prototype called ''OPERATION FRONTIER SHIELD'' to respond to a GAO report and Congressional hearings that were held in May of this last year indicating that 28 percent of all cocaine was going through Puerto Rico and the Virgin Islands.

  Frontier Shield--there's a little picture of Puerto Rico and the Virgin Islands down in the lower left-hand corner there. We stood that operation up on the 1st of October until the 1st of March. It is still underway.

  I've asked for money to be authorized in my 1998 budget to sustain this operation, because I feel this is the successful type of operation.

  Our purpose here was to stop 80 percent of the cocaine that was coming into the Puerto Rico area of responsibility. We didn't try 100 percent because it's kind of a learning curve operation. There are not enough resources available that you would want to pay for to try to achieve better than an 80 percent success rate here.

  Having said that, I think this will give you an example of what has to be done, because it's quite an effort.

  Again, from the 1st of October to the 1st of March, we assigned 10 Coast Guard cutters, about 8 aircraft, a couple thousand people, and worked together with Customs--Customs had a parallel operation in Puerto Rico called ''Gateway.'' And DEA also had another operation. So we all worked together in that area.
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  In that time we went out and sighted 17,968 vessels in transit to Puerto Rico--quite a lot of shipping. We suspected 1,562 of them were doing something wrong, they were targets of interest. Of that, we sorted out 892 to board. We went on board them in the high seas to inspect them.

  We seized 11 of them, we arrested 35 people, we seized 19,000 pounds of cocaine. We witnessed jettisons, aborts, and sinking--opening up the valves, throwing the stuff overboard--of another 24,200 pounds of cocaine.

  At the same time, we interdicted 2,237 illegal migrants that were on these ships trying to make their way to Puerto Rico. There are 20,000 Dominicans a year that try to get across the Mona Pass from the Dominican Republic to Puerto Rico.

  By the way, the Dominicans run the drug trade in Puerto Rico, as well as the cocaine trade in New York City, so we felt we had some effect there, too.

  That's a lot of sightings, a lot of targets of interest, a lot of boardings to get that amount of drugs, and one would think that isn't a lot, but it's estimated that that results in 195 million cocaine doses kept off the streets of our cities.

  The governor of Puerto Rico is very happy. He had to call out the National Guard for his housing projects there to maintain order, and we're hopeful he's not going to have to do that any more.

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  One of your colleagues, Congressman McCollum, is going to hold a field hearing on the 3rd of April in Puerto Rico where I'll testify to the success of this operation.

  So interdiction works. We've put together a 5-year plan in support of the new 10-year strategy. I believe it has bipartisan support. I would ask for continued support of operations like this at work.

  Mr. GILCHREST. Thank you very much, Admiral. Anything we can do to help sustain that program, we'll certainly do it.

  Mr. Clement?

  Mr. CLEMENT. Mr. Chairman, with your approval, I'd like Congressman Johnson to go first and then I'll ask my questions.

  Mr. GILCHREST. All right. Mr. Johnson?

  Mr. JOHNSON OF WISCONSIN. Thank you very much, Mr. Chairman.

  First of all, let me say, Admiral, I appreciate your coming here today and I appreciate the work of the Coast Guard and the commodore. And, Master Chief Petty Officer Trent, I appreciate your speaking up for the enlisted men. Having been not in the Coast Guard but an Army enlisted man, myself, I'm sure they appreciate having a voice in you. I know I appreciate the commodore for the Auxiliary in Green Bay and that area. You've done a lot in that area.

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  I first of all want to agree and align myself with the Ranking Member Oberstar's comments regarding the fee for service for icebreaking on the Great Lakes. It has never been done before and we hope this isn't the time to start right now.

  But he also brought up the issue of icebreakers and the ''MACKINAW,'' which was brought up earlier.

  I'm wondering if there had been--I know they're looking at this when they studied the icebreaker issue and found out the ''MACKINAW'' was as old as I am, and I'm not as good at breaking ice as I used to be, I know it's a touchy decision whether to fix it up or to try and build a new icebreaker.

  I also understand that there's an alternative proposal for perhaps a smaller icebreaker that could serve a dual purpose.

  What's the status of that?

  Admiral KRAMEK. The shipyard that we presently have under contract to build both medium-class and large-class buoy tenders for the Coast Guard, Marinette Marine Corporation in Wisconsin, has submitted an unsolicited proposal for an icebreaking vehicle, a barge that would be pushed ahead of one of the buoy tenders, and they're also submitting a proposal for an ice-strengthened buoy tender, large buoy tender that may be able to provide the type of service we need on the Great Lakes.

  I intend, in our solicitation for the next 11 ships of the contract, to have options to allow them to bid on that, along with other shipyards, as well, and we'll evaluate that proposal as part of this icebreaking study to decide whether or not that's valid. And if it's less costly to do that, then they have the capability of doing that rather than replacing the ''MACKINAW.''
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  I think it will take a couple of years to get to that point. There are at least six different alternatives that have to be evaluated, because this is a very seasonal situation. The ice season on the Great Lakes, as you know, is very short. It's necessary, from the taxpayers' standpoint, I believe, to design that ship so it can do something else the rest of the year and not just be there, which is the case with the ''MACKINAW.''

  That's why the new buoy tenders we're building now are ice-strengthened and can break a considerable amount of ice, which is what the ''MACKINAW'' now needs to do for the large ore carriers.

  That's why other designs in the past that Mr. Oberstar mentioned were dual draft icebreakers. That means in the summertime I would sail them out the St. Lawrence Seaway so they would break ice in the Arctic where we have responsibilities to keep the dual line stations open, if you will, and our early warning stations in Greenland, and polar exploration, and then in the winter operate in the Great Lakes so that we can employ those ships year-round.

  Right now I'm using the Canadians under a memorandum of agreement to help me break out the ice both in the Greenland area and in the Great Lakes until we get the new icebreakers or renovated icebreakers that we need.

  Mr. JOHNSON OF WISCONSIN. We're looking forward to getting some new options for you. It's tough working with 50-year-old equipment and expecting it to last for another 40 or 50 years.

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  A question totally different. The Passenger Vessel Association I believe has a recommendation that there should be a new Federal law making it a Federal offense for anybody to endanger the operation of a commercial passenger vessel. They're trying to address the situation where the small vessels, maybe even personal watercraft, jump over the waves, come close to crashing into the vessels.

  Does this activity constitute, in your opinion, the negligent operation of a vessel and violate section 2306 of title 46 of the U.S. Code? Has there been a penalty ever imposed for this type of activity?

  Admiral KRAMEK. I consider it, in most instances, a negligent operation. Of course, you have to be there to see it. It's in how far behind they are when they're trying to jump the wake.

  But I've seen these wake jumpers everywhere from Puget Sound to Miami recently. They scare the devil out of me.

  I think existing law is sufficient to prosecute them. I know that NASBLA, the State boating law administrators, in many States already have some legislation to deal with that.

  I also know that personal watercraft are causing a tremendous increase in deaths and injuries. I'm very concerned about it.

  I'd like to ask if Commodore Tucker could respond, because he's put together a program to educate personal watercraft people, and also he's got Auxiliarists on personal watercraft out there trying to keep these people from jumping wakes.
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  I notice the State of Maine just produced legislation today to even increase the age of personal watercraft operators.

  I'd like to ask Commodore Tucker to tell you what the danger is out there.

  Mr. TUCKER. Yes, sir. Well, I might start off first off by letting you know some of the initiatives the Auxiliary has underway to try to deal with this problem.

  We've been working very closely, not only with the Coast Guard, but the State boating law administrators in the States, to come up with programs to deal with this.

  First off, the Auxiliary does have a personal watercraft course out there. We just recently made it a very short course covering only about one to two hours. These people are frequently difficult to get into a normal class, so we've tried to structure a class that will give them the essence of safety and make sure they understand the rules out there.

  We've also, over the last year, following our successful courtesy marine exam program, created a personal watercraft safety check where Auxiliarists go down on the boat ramps and where personal watercraft are on the beach and advise them of not only the safety equipment requirements, but talk to them about safe operation.

  Many of these people have never really boated before, and they are boating and using the personal watercraft in areas that there are all types of waterway users--commercial, recreational, fishermen, you name it, swimmers are out there. That has been fairly successful over the years.
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  This year we're going to kick off a brand new program to address a major problem that's out there, and that's with the personal watercraft livery--the people who rent them.

  We're going to set up a program to provide those people some assistance, some understanding of how they can follow safer operations, have their customer operate safer.

  Many people that rent personal watercraft are not boaters. They are going out there for the first time and, again, not realizing the situation that they're placing themselves into.

  For the Auxiliary, and for the States, personal watergraft represent a very unique problem. Normally boat owners will not casually loan their boat to the neighbor's son or friend. With personal watercraft, if we educate the owner, that only addresses part of the problem, because the owner may allow his sons' or his daughters' friends to operate the vessel.

  A number of States are coming forth with a decal that we put in a very visible spot which has some very simple safety tips for any operator.

  These are some of the things we have going.

  One major problem with personal watercraft is they don't operate like normal vessels. If you see a collision coming in a normal vessel, we teach people, ''Slow down and put the helm over, turn over away from the problem.'' In a personal watercraft, when you do that you lose the ability to steer the craft. The turning of the rudder is, in fact, the water jet, so once you slow down that's gone and you frequently just go straight in.
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  We're trying to reach the public. We have a number of initiatives through the media, through television.

  Like I said, we're working very closely with the Coast Guard and the States.

  Admiral KRAMEK. We think there is authority now for us to enforce current law. We really need to educate the public. The States--we're working closely with them. I think it's a two-pronged attack on this. If we're successful on the education and prevention front, people won't be jumping the wakes on passenger vessels and tankers and everything else out there to get some kind of a joy ride operation.

  Mr. JOHNSON OF WISCONSIN. Thanks very much. Thank you, Commodore, and thank you, Admiral. And thanks, Petty Officer Trent, for being here today. I appreciate, along with the other panel members, your efforts in terms of the drug interdiction.

  Thank you, Mr. Chairman.

  Mr. GILCHREST. Thank you, Mr. Johnson.

  I would guess the Coast Guard can also board those personal watercraft if there's enough room.


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  Mr. GILCHREST. Mr. LoBiondo?

  Mr. LOBIONDO. Thank you, Mr. Chairman.

  I have several questions, not too long.

  Admiral, the Coast Guard budget assumes $9 million from unspecified asset sales, as I understand it, but do these assets include any surplus at the Coast Guard property in Cape May?

  Admiral KRAMEK. No, they don't include any surplus property at Cape May. Surplus property at other areas, but not Cape May.

  Mr. LOBIONDO. Okay. Not either the electronics center or the base, itself?

  Admiral KRAMEK. No, not the electronics center or the base, itself, at this time. I would say that nothing on the base--the base is as it exists today. That is our only recruit training center in the United States, as you know.

  The Electronics Engineering Center at Wildwood, New Jersey, as you know, we're leaving that because we've created centers of excellence as part of our streamlining plan.

  Mr. LOBIONDO. Yes.

  Admiral KRAMEK. We're about to turn over 860 acres of our Wildwood property to the GSA next summer. The GSA will then go through their usual disposal procedures following GSA rules.
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  I'll have a small contingent of 30 people or so staying at Wildwood until the year 2000 as we continue to work on the LORAN—C program, and they're responsible for that. And in the year 2000 all the buildings and the rest of the station and the few remaining acres will be surplused to the GSA.

  So right now there is no asset disposal that the Coast Guard has that we're looking for remuneration from any of those properties.

  Mr. LOBIONDO. Okay. So then the GSA would just take over whatever it is that is not being used by the Coast Guard, itself, at the electronics center and you would keep the balance of it for the rest of your operation for the year 2000, or whatever you determine?

  Admiral KRAMEK. That's correct. I will say this, though. I think it's important. We feel that we've been one of the leaders in streamlining the Federal Government, in less cost, less-intrusive, less regulations, and in maintaining our service to the public. But we can't have it both ways.

  As an example, in Governor's Island, New York, I've moved 5,000 people off of Governor's Island. I've shut down Governor's Island. I was there in New York last week. The school is closed, the families are moved. We're moving to new places around the eastern seaboard pretty much.

  We're going to save a lot of money, $40 million a year, from being out of that high-cost area in New York, and 500 people I don't need to run that very beautiful historic landmark any more.
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  Governor's Island is worth between $500 million and $1 billion, and the Coast Guard has invested a great amount in its infrastructure over the years since we've lived there. In fact, it's a Federal enclave. It doesn't fall under the rules of the city or the State of New York. It's owned by the Federal Government since we had a Federal Government.

  And it's a very environmentally correct and sensitive historic landmark.

  When that island is sold by the GSA for $500 million, I know ranking members of my other committees had intended that some of those proceeds from the sale go back into the Coast Guard construction account to help us buy the new buoy tenders, the new icebreakers, and things that we need. They thought that was appropriate.

  That's the asset sale type of thing that we're seeing.

  So as we downsize and move from these areas where the Federal Government has made great investments, I just think it's appropriate that the Federal Government try to reap some benefit, whatever that benefit is decided by the GSA and should be returned to the Federal Government.

  Mr. LOBIONDO. Admiral, I understand what you're saying about Governor's island, but my concern rises from I guess maybe a little communications break last year with the electronics center and some language that was in one of the bills that could cause quite an uproar, and I just wanted an assurance that we weren't going to have to worry about that this year.

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  Admiral KRAMEK. I don't think that it's in any of our legislation. You should not have to worry about that.

  Mr. LOBIONDO. Okay. Admiral, as the Coast Guard modernizes its fleet, are any new vessels slated to replace existing ones in Cape May at the Cape May facility?

  Admiral KRAMEK. I don't believe any of the vessels at Cape May are scheduled for modernization. The ones that are stationed there are either new or have been modernized.

  It might be that there's an 82-foot patrol boat there. I'm not sure.

  The Coast Guard buoy tender, an 180-footer, is there now, so that vessel will be replaced with one of the new large buoy tenders being built at Marinette here in the next 3 or 4 years.

  I'm not sure if it's on our homeporting scheme, if it's scheduled to go back to Cape May or not, and that's because we're replacing 37 ships with 30.

  Mr. LOBIONDO. Okay.

  Admiral KRAMEK. So I'm not sure, as we're trying to reduce the size of the fleet and maintain our service to the public--because these ships are more capable--I'm not sure if Cape May is scheduled to get one of the replacement ships or somewhere else on the eastern seaboard. But I'd be happy to answer that for the record on what the proposed home ports are.

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  Mr. LOBIONDO. I just have two other quick questions.

  Admiral KRAMEK. It stays in Cape May, my staff informs me. The Hornbeam will be replaced with one of the new tenders now.

  Mr. LOBIONDO. Thank you. I just have two other quick questions.

  Will the budget request--how will that relate to the activities of the Coast Guard training facility in Cape May, New Jersey, your latest budget request? Will there be any dramatic change one way or the other?

  Admiral KRAMEK. There are no changes at Cape May, New Jersey, at all, other than in the quality of life initiatives that we have to make the people who work at Cape May, our men and women who run that facility, a little bit better off.

  In particular, it inspects their housing to make sure that the old housing isn't full of lead paint and radon, things of that nature, and it provides them with parity with other members of the armed forces.

  Other than that, there are no changes in the facilities of Cape May.

  Mr. LOBIONDO. And the last question, Admiral, how will the budget request affect the ongoing consolidation of the air groups in Atlantic City, or I guess Pomona, we should say?

  Admiral KRAMEK. This budget continues on in a very small way the multi-year program of consolidating air stations in the east coast and the mid-Atlantic region.
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  We're closing down Air Station Brooklyn, as you know. We're closing down Air Station Cape May. We're combining those two air stations in Atlantic City, New Jersey, at the regional center, the regional airport there. And we're saving helicopters and people and several million dollars by being able to do that.

  That project is on schedule with, I think, our final moving taking place in the summer of 1998, and so all of that is in progress now. This budget supports that.

  Mr. LOBIONDO. Thank you very much, Admiral.

  Thank you, Mr. Chairman.

  Mr. GILCHREST. Thank you, Mr. LoBiondo.

  Mr. Clement?

  Mr. CLEMENT. Thank you, Mr. Chairman.

  If you'll keep your remarks brief, that will be all right.

  Admiral Kramek, how is the Government Performance and Review [sic] Act changing the way you allocate your resources and meet your mission goal?

  Admiral KRAMEK. The Coast Guard is probably about a year ahead of schedule on instituting the Government Performance and Results Act. It's required that all agencies have that in full implementation by 1999.
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  Last year was the first year I submitted my budget with an appendix indicated in GPRA terms. This year was the second year of that effort.

  I think it's a good idea. It's really a quality management approach. We survey our customers, the American people, on what services we provide for them to make sure it's the right service. We also develop performance standards on how we intend to provide that service and we go to the American public and to Congress and to the Administration, through the oversight process, to see if that performance level is appropriate.

  Then we put together the operations needed to conduct services at that level, and if we're successful then we ask for support and funding and authorization to do it.

  If we're not successful, we ask for a change. And maybe sometimes we're not successful in those services.

  With the Coast Guard we have an interesting situation where we have about 20 percent more the public has asked us to do than we have assets for, so the GPRA really makes us more efficient.

  That is, when we set a lifesaving standard--when you call the Coast Guard for help, I promise I'll be there in two hours to rescue you and that 90 percent of the lives will be saved and 70 percent of the property will be saved.

  In order to make sure that I can reach that performance standard, last year I asked for authorization from this committee, as an example, to reallocate resources through my 185 life-saving stations, small boat units around the United States, so that I could move people around, put the right boats in the right places to make all that happen.
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  I'm delighted to report that we reached out goal. I think we saved about 91 or 92 percent of all of the lives that we went after and about 73 percent of the property, and responded in an average of about 45 minutes--hardly any time longer than that.

  So that's the way we use it. It's more quality and efficiency. It does have a connectivity to resources in that you are using them the most efficiently that you possibly can.

  I would have one note of caution. I know, from a benefit/cost standpoint, because that's the way we used to measure our performance, that we provide $4 in services for every $1 that's authorized for the Coast Guard. That's not hard to do when you're a humanitarian life-saving service--most of the things we do help the American public.

  But developing performance standards is very difficult. Measuring yourself is not. You just train your people. I trained 6,000 people in the Coast Guard on how to measure last year so they could measure our performance and conform with this Act.

  It's very difficult to satisfy your customers with performance standards that say, ''I'm only going to save 90 percent of your lives.'' The other 10 percent want to know, ''What about us?'' Or we're only going to keep the Great Lakes free of ice a certain period of time. Shippers want to know, ''Why not longer?''

  And so it takes a lot of outreach, dialogue, partnerships, and meeting with communities.

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  We did this in the case of all of our small boat units all around the United States, we met with all the local communities, and they understand fully what we're doing, and that's about the best we could probably do with the assets that we have.

  Even if we got more, we probably couldn't do much better than that.

  So that's the way we're using them. It takes a lot of work but I think it's a good idea.

  Mr. CLEMENT. Commodore Tucker, last year's Coast Guard Authorization Act made a number of significant changes to broaden the responsibilities of the Coast Guard Auxiliary. Are there any other statutory changes that need to be made to help you accomplish your missions?

  Mr. TUCKER. Yes, sir. There's one that we could certainly use your assistance with, and this pertains to the governmental regulations concerning the disposal of excess property.

  Right now, under the current governmental regulations, if the Coast Guard, for example, excesses a small vessel, a vessel that's equipped for missions like the Auxiliary does for the Coast Guard, it is unable to give that vessel to the Auxiliary. It has to go down to be offered to all Federal agencies and then to State agencies, and then eventually, if no one claims it, the Auxiliary can request that vessel.

  Many of our members, especially the younger ones, do not possess boats. Those people have qualified and have met the Coast Guard standards for being crewmen, as well as coxswains. If we could get these vessels, it would greatly assist our ability to support the Coast Guard.
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  In addition, from time to time the Coast Guard will excess rescue equipment, de-watering pumps, things that we could use--again, to support the Coast Guard missions.

  If those regulations could be changed, it would greatly assist us, sir.

  Mr. CLEMENT. Master Chief Trent, thank you for the specific recommendations that you made to change laws to improve the quality of life and benefits for Coast Guard enlisted personnel.

  Beyond those issues regarding statutory changes by Congress, what more would you like to see the Coast Guard do to help improve the quality of life and working conditions for Coast Guard enlisted personnel?

  Petty OFFICER TRENT. Sir, actually we're doing quite a bit right now, and I just would give you a couple of examples.

  We have formed several study groups. We had what we called a ''Sea Duty Initiative Study'' 2 years ago looking for exactly what you're talking about--what policies are we in control of that we could change that would make the quality of life better for our people and not cost anything?

  For example, we found that all of our enlisted people have to take their exams for advancement on a certain date all over the world, and what we did is we gave the commanding officers on our cutters the authorization to change that date by up to 10 days if they're underway, because often the particular date of the exam that used to be required, they could be in terrible conditions for exam taking. Weather could be bad or they could be doing boardings.
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  So a simple idea like that has actually been an improvement--we've gotten a lot of very positive feedback about that one.

  In other words, we have authorized our COs to administer the exam on a different date if the conditions weren't good.

  We've also improved our members' ability to carry leave forward. They were losing leave because the law required or our policy required that they could only carry 60 days forward.

  Now, if our cutters are deployed over 60 consecutive days the previous year, we have authorized them to carry the legal limit of 90 days forward.

  We have also made some changes to the award process to streamline it a little bit.

  So we've done several things like that and we're still looking for more, and we actually have a new list of about 36 ideas that we're reviewing for opportunities like that.

  The work load I talked about earlier is where the real problem is, and that's going to be a long haul to fix that. We truly are working our people much harder.

  Several ideas have come forward on how to reduce that work load, to find better ways to do business, eliminate things that aren't really important, but it takes a little risk to change the way you've always done business.

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  Maybe I could relate it to the new buoy tenders. We've bought this technology, but we're still operating it exactly like we operated the 50-year-old boats because we have rules and policies.

  The Commandant has reached all the way down and selected four boats and empowered those COs to rewrite the book, if you will, find the right way to operate this thing, and maybe take slightly larger amounts of risk so that we can reduce the work load.

  So those are the kinds of things we're doing right now, sir.

  Mr. CLEMENT. All right. Thank you.

  Mr. GILCHREST. Thank you, Bob.

  Two more very quick questions, and then we'll get to our next panel.

  Commodore, your comment about changing the process by which excess equipment or vessels from the Coast Guard can finally get to the Coast Guard Auxiliary that has to go through this maze, if the law was changed that excess Coast Guard equipment and vessels could then go direct to the Coast Guard Auxiliary, what type of structure would be set up to distribute that equipment to the places--in an equitable fashion and places that really needed the equipment? Is there a plan? How does the Auxiliary now ensure that when they get those vessels, those excess Coast Guard vessels, how is the upkeep done on those vessels?

  Mr. TUCKER. Yes, sir. First off, we'd have to develop that plan in connection with the Coast Guard to pick the locations where these vessels would, in fact, reinforce or augment a Coast Guard requirement.
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  Mr. GILCHREST. I think that's probably a good idea to bypass GSA, but I think in order for it to fly here there would have to be some plan that could speak to that. My suggestion is that if it's something that you would like to pursue, I would like to ask you, as a member of this committee, if you could give us a plan on how that would work.

  Mr. TUCKER. Yes, sir. We'll have to provide that for the record.

  Mr. GILCHREST. Thank you.

  Mr. TUCKER. Yes, sir.

  [The information received follows:]

The plan to transfer excess Coast Guard property to the Auxiliary is currently under final review. The plan is expected to be forwarded to the Committee in June of 1997.

  Mr. GILCHREST. Mr. Trent, just one quick question about housing and health care for enlisted men. Is there a difference between enlisted men housing in the private sector as opposed to government housing that's provided for enlisted men? And are there any specific problems that you think we could deal with as far as health care?

  Petty OFFICER TRENT. Yes, sir. To your first question, in most places the Government housing might not be quite up to the quality that the member might choose in the community, but we've got to keep in mind members that choose to reside in the community using their allowances, are making a decision to pay for part of that out of their pocket, normally 15 to 20 percent of the cost.
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  So the big benefit in choosing Government-owned housing is cost control. You forfeit your allowances, but there is no other out-of-pocket expenses.

  Mr. GILCHREST. If an enlisted man living in Government housing wants to repair a window or paint a room or fix the chimney, how does he go about doing that?

  Petty OFFICER TRENT. Sir, most of that is done for them, but every one of those housing authorities has programs available--we call it ''self help.'' They'll provide the materials if the member wants to do that work themselves.

  One thing we've asked for in this authorization is some funding to beef up the people that are assigned to manage our housing back up to an appropriate number so we can do a better job.

  As to your question about health care, I spoke to that for the record earlier. The members don't need any assistance. The members are well taken care of and at no expense to themselves, quality medical care. The problem area is for the families.

  What I said earlier was 52 percent of our families are residing by orders in areas where they will not be able to access the TRICARE Prime, the Government's new military health care system for the families, and that is because, by requirement, you have to be in what we call a ''military treatment facility catchment area,'' usually a 40- or 50-mile radius.

  Most of our families--52 percent--are not assigned within those catchment areas, so they won't be able to access TRICARE Prime, which basically provides a very low-cost benefit.
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  What will be available to those families is what we call TRICARE Standard, which is no different than the CHAMPUS we've had in the past, so they suffer out-of-pocket costs of $300 annual fees for their families and then 20 percent cost share, plus they're responsible for any overcharges.

  So if there is anything you could do, it would be to provide or support any legislation that comes or any ideas that come from DOD--there are some floating around--where we would find a way to waive those expenses down so that there would be equal expense borne by everybody, no matter where you're doing the Government's work.

  Mr. GILCHREST. Thank you, Mr. Trent. You have our commitment to do what we can to make that happen as quickly as possible.

  Petty OFFICER TRENT. Thank you, sir.

  Mr. CLEMENT. Mr. Chairman, could I say one thing?

  Mr. GILCHREST. Yes, sir.

  Mr. CLEMENT. I know we had one of our members, Admiral, Congressman Gene Taylor, who had asked for this information previously regarding the fire aboard the ''Discovery I'' and never did get any information. On behalf of the committee, I'd like to ask for it at this time that it be submitted for the record.

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  Admiral KRAMEK. We'll submit that information for the record. Yes, sir.

  Mr. CLEMENT. All right. Thank you.

  [The information received follows:]

The Cruise Ship DISCOVERY I sustained an engine room fire in international waters three nautical miles west of Freeport, Bahamas on May 8, 1996. All passengers and nonessential crewmembers were safely evacuated to Freeport without injury.
The Coast Guard is currently completing its investigation of this incident. The final report is expected to be available for public release in June of 1997 and will be forwarded to the Committee.

  Mr. GILCHREST. Thank you, Mr. Clement.

  Gentlemen, thank you very much for the information that you've given us this afternoon. Thank you.

  Admiral KRAMEK. Thank you, Mr. Chairman.

  Mr. TUCKER. Thank you, sir.

  Mr. GILCHREST. Our next panel will be The Honorable Harold Creel, Jr., Chairman of the Federal Maritime Commission. And Mr. Creel is accompanied by Thomas Panebianco, the Federal Maritime Commission's general counsel.
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  Gentlemen, welcome. Mr. Creel, you may begin.


  Mr. CREEL. Thank you, Mr. Chairman.

  Mr. Chairman and Members of the Subcommittee, thank you for the opportunity to appear before you to present the President's fiscal year 1998 budget for the Federal Maritime Commission. With me today is Thomas Panebianco, the general counsel for the Federal Maritime Commission. I'm also accompanied today by two of our Commissioners, Ming Hsu and Joe Scroggins.

  I'd like to begin by reminding the Subcommittee that over the last two fiscal years the Federal Maritime Commission sustained significant cuts in funding, reductions of almost 25 percent from our fiscal year 1995 budget, and a 35 percent reduction in FTEs from our fiscal year 1994 authorized level. Through a series of extraordinary cost-cutting efforts, including personnel reductions and elimination of our district offices, we have been able to continue to carry out our statutory responsibilities at these reduced budgetary levels. However, I must inform you that all discretionary costs have been wrung from the agency, and the continued paring of our budget will cripple the Commission, disabling it from administering the important functions and programs entrusted to it by Congress.

  The President's budget for the Commission provides $14.3 million for fiscal year 1998. While this represents an increase of $300,000 over our fiscal year 1997 appropriation, it's solely to fund required annual salary and benefit adjustments for Federal workers. Official travel has been straight-lined at the 1996 and 1997 levels, and represents a reduction of almost 50 percent from our 1995 travel costs. Administrative expenses have likewise been held at the low levels set for 1997. As you can see, the Commission's budget contains absolutely no discretionary spending.
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  I would now like to highlight some of the Commission's more significant activities to give you a better understanding of how we attempt to fulfill our mission within the current budget constraints. In this regard, I would note that the industry the Commission oversees transported 13.3 million containerloads of imports and exports in 1996, with an estimated value of greater than $440 billion.

  One of the most important responsibilities vested in the Commission is its duty to protect U.S. ocean-borne trade and U.S. carriers from discriminatory or unfavorable treatment by foreign governments. For example, the Commission in recent years has used its authority to levy sanctions and other measures to break down discriminatory barriers to U.S. companies in Korea, Taiwan, and China. It has also used its authority to combat cargo reservation schemes in Peru and Ecuador.

  More recently, the Commission issued a final rule imposing a $100,000 per voyage fee on Japanese liner operators effective April 14, 1997, in response to unfavorable practices in Japanese ports. The Commission found a series of restrictive conditions involving the dominance of the harbor services industry in Japan by the Japan Harbor Transportation Association, an association of Japanese waterfront employers. The Commission also found unfavorable conditions with regard to the government of Japan's licensing requirement for terminal operators and stevedoring companies, which blocks new entrants from entering into those industries in Japan and ensures that the stevedoring market remains entirely Japanese. Because of the restrictive licensing requirement, U.S. carriers cannot perform stevedoring or terminal operating services for themselves or third parties in Japan, forcing them to submit their shoreside operations to JHTA or Japanese control.
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  In addition to Japanese port practices, the Commission is also investigating and monitoring conditions in Brazil and elsewhere in Latin America, as well as in China. The Commission has serious concerns about the developing maritime policies of the People's Republic of China. The Chinese government recently began implementing strict new rate filing and regulation rules on shipping lines through the newly-founded Shanghai Shipping Exchange. We find it troubling that rates charged by U.S. operators might be subject to review and disapproval by the same Chinese government agency that owns and operates the China Ocean Shipping Company, or COSCO, one of the world's largest and fastest-growing liner companies. We intend to use all available resources to ensure that Chinese practices do not have a discriminatory or destabilizing effect on U.S. shipping and commerce.

  I do not know if the Commission would have been able to achieve its past successes or to act to address Japanese port practices if the agency were part of a Cabinet-level department. Under such an agency, proceedings such as the Commission's current Japan rule would be subject to review, delay, modification, and veto for a wide array of reasons. Moreover, if the Commission were part of an Executive Branch agency, foreign countries could be expected to focus less on reforming unfair practices and more on pressuring the Administration to delay or abandon retaliatory proceedings. For these reasons, maintaining the Commission's independent status is vital.

  The Commission has continued to perform a wide range of other statutory functions as well. However, in some areas of Commission responsibility, such as field operations and investigations, the effects of diminished resources have been keenly felt. As I reported to you last year, because of significant budget cuts the Commission downsized its field operations in fiscal year 1996 by closing offices and significantly reducing personnel. Since June 1996, field activities have been the responsibility of four individuals serving as representatives in Los Angeles, Miami, Seattle, and New Orleans--four individuals. While we are pleased with the exceptional reception of the public to our area representatives and the fine work they are performing, we are experiencing significant levels of frustration because we are not able to respond effectively to every request for assistance. We simply do not have an adequate number of personnel available to perform these functions. Notwithstanding these resource constraints, the Commission has continued investigative and enforcement activities with respect to all of its statutorily-mandated responsibilities.
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  Mr. Chairman, with the recent introduction of S. 414, Congress has once again embarked on an effort to improve our method of regulating the ocean shipping industry. In fact, I'll be testifying tomorrow on the bill in the Senate. The Commission fully supports this objective and will work with Congress to achieve the best possible system; however, such legislation has not yet been enacted, and even if it is passed immediately would make no major changes to the Commission's programs until well into fiscal year 1998. In the meantime, the Commission must be permitted to do the job that Congress has entrusted to it under the law, as currently in force.

  Simply put, the Commission needs its entire fiscal year 1998 budget request in order to effectively fulfill its many statutory duties. Even a small reduction in our budget, given the non-discretionary nature of our expenses, would require lengthy furloughs for the entire staff, and would force us to separate numerous valuable employees. This would have devastating effects on our efforts and our standing to combat restrictive foreign shipping practices and to perform other essential functions.

  Mr. Chairman, I hope I have adequately expressed the importance of the work of the FMC, and I respectfully request favorable consideration of the President's budget so that the FMC may continue to perform our statutory functions in fiscal year 1998 without further reductions in effectiveness.

  Thank you very much.

  Mr. GILCHREST. Thank you, Mr. Creel.

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  We have a vote on. I apologize for that again. We actually missed the last vote, so what we're going to do this time is recess the committee, vote, and then we'll come back. We hope we can expedite the rest of the hearing.

  I thank you all for your patience. We'll recess and be back as soon as we can, 10 or 12 minutes.

  Thank you.

  Mr. CREEL. Thank you.


  Mr. GILCHREST. The committee will come to order.

  Mr. Clement I believe will be coming back, so we'll proceed. If he doesn't arrive before we're done here with this panel, I'm sure any questions that he has we can forward to you, Mr. Creel, and then we can get a response.

  Can you tell us--you spoke a little bit about the situation with the Japanese and the $100,000 fine that will be levied beginning in April. Has there been any movement at all in that area? Can you tell us the status of that today and any predictions you might have that we won't hold you to.

  Mr. CREEL. Certainly. There was actually a report in Journal of Commerce today that a deal had been brokered. I understand that's not true. I've heard from the State Department and from the U.S. carriers that operate out of Japan that that is not the case.
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  The State Department and Transportation, the Department of Transportation, have been talking to the Japanese since we issued our proposed rule and now our final rule. Quite honestly, there has not been a breakthrough yet.

  We had made our decision at the Commission to go forward on the 14th of April with the sanctions unless there is some sort of concrete proof that the Japanese are truly moving towards reform of this restrictive harbor operating system they have in Japan.

  Mr. GILCHREST. What would the concrete proof have to be before you would lift the fines?

  Mr. CREEL. I think that, first of all, the government of Japan would have to address the issues in our final rule. There are two main issues. One is the prior consultation issue, which requires U.S. and all carriers that call at Japanese ports to submit any sort of changes, even a minor change like changing the name of a vessel to the Japan Harbor Transportation Association, which is basically an association controlled by one man. It has no rules that are written, no appeals procedures. It's basically one man that decides whether these changes are approved.

  So the prior consultation is one issue that would have to be resolved. The other is the licensing issue.

  Mr. GILCHREST. When you say it would have to be resolved, what if they said, ''We're going to resolve it.''
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  Mr. CREEL. That's not concrete.

  Mr. GILCHREST. That's not concrete. Okay.

  Mr. CREEL. I think that's probably a good way to approach it. It's kind of like pornography--you know it when you see it. I think that we would know the resolution to this problem or the concrete steps towards it if we were to see it.

  I would expect some sort of strict time lines, not some sort of illusory time period. I'd want it strictly laid out with certain goals to be met.

  Mr. GILCHREST. And none of that has been done so far?

  Mr. CREEL. Not at all.

  The second issue, if I could continue responding, I think that the other issue that would have to be addressed is the licensing issue. Currently in the United States the Japanese carriers that we're actually fining have terminal facilities that they operate in Tacoma, Seattle, Los Angeles, and that's precisely the kind of operation that we want our carriers to have access to in Japan and they don't. So some move on the licensing issue would also be critical.

  Mr. GILCHREST. When the Japanese vessels come to our ports and this situation has not been resolved, then that Japanese vessel will pay a fine of $100,000. I would assume that that's a Japanese vessel with a Japanese flag. Is there ever a situation where you might have a Liberian flag on the vessel, but the predominant ownership is from Japan?
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  Mr. CREEL. If it's one of the vessels owned or operated by the Japanese carrier, then it would be hit with a fine. And there is also an issue as to whether alliance members--if space is shared on a vessel--there are actually space-sharing agreements, I think, between U.S. carriers and Japanese carriers. There has been some concern that the Japanese may try to hit the U.S. carriers with paying part of that fine. That's certainly not sanctioned under our rule, and----

  Mr. GILCHREST. So, in other words, those shared vessels are not going to be fined?

  Mr. CREEL. They will be fined.

  Mr. GILCHREST. They will be fined.

  Mr. CREEL. But the Japanese are responsible for paying that fee.

  Mr. GILCHREST. I see.

  Mr. CREEL. And let me also add that we've reserved an option. The head of JHTA has threatened retaliation against the United States if we move on this on the 14th. The Commission voted to include in its final rule a provision which would allow it, upon making a finding--which we could do on very short notice--that if retaliation does exist in the trade, that we can up the fee.

  I would remind you, $100,000 is one-tenth of what we're allowed to impose cunder the statute. We can go up to $1 million per voyage and ask the Coast Guard to deny entry or Customs to prevent a vessel from leaving United States ports.
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  Mr. GILCHREST. Has there been any negotiations on this at all between yourself and the Japanese?

  Mr. CREEL. We are not the ones that negotiate. State Department does, and actually the Department of Transportation at this point is talking to the Japanese, and they report back to us on any sort of progress that has been made.

  Mr. GILCHREST. Does the State Department or Department of Transportation have any input with FMC prior to making this decision?

  Mr. CREEL. We do coordinate with State Department and Transportation. We don't have to defer to them. As an independent agency, we're free to do this on our own, but we do certainly coordinate with those two departments.

  Mr. GILCHREST. Who actually collects the fine at the ports?

  Mr. CREEL. Actually I think what they do is they'll write the check to us, the Federal Maritime Commission.

  Mr. GILCHREST. But who gets the check? Customs?

  Mr. CREEL. They would report this to us. The Japanese carriers would send us a check on a monthly basis. Customs would have a listing of how many calls they made into the United States.
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  Mr. GILCHREST. So the check is mailed to you. The check doesn't get delivered at the port; the check gets mailed to you from the owner?

  Mr. PANEBIANCO. On a monthly basis, Mr. Chairman, the carriers under the rule would be required to do see. The Rule names three specific Japanese carriers, so any vessels that are owned or operated by those carriers would be subject to the fine.

  Mr. GILCHREST. What happens if they don't mail the check?

  Mr. PANEBIANCO. If they don't mail the check on a monthly basis that's consistent with the number of vessel calls that they've made, we would notify Customs that they are not to give clearance and we would also notify the Department of Transportation and ask the Secretary of Transportation to direct the Coast Guard to deny them access to our ports or, if they're already at our ports, to detain them from leaving the ports.

  Mr. GILCHREST. When you say a monthly check, does that mean they can make 10 installments to the $100,000, or it has got to be $100,000 check?

  Mr. CREEL. For every voyage they made that month.

  Mr. GILCHREST. I see.

  Mr. CREEL. That's $100,000.

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  Mr. PANEBIANCO. If there were eight----

  Mr. GILCHREST. Then it would be $800,000?

  Mr. PANEBIANCO. That's right.

  Mr. CREEL. We estimate the effect to be about $40 million a year.

  Mr. PANEBIANCO. That's right. Between the three carriers, it would amount to about $42 to $45 million per year.

  Mr. GILCHREST. Could you address--just moving away from that issue, the President has authority, apparently, to override FMC decisions under national security reasons. Could you explain that a little bit to us?

  Mr. CREEL. Yes, sir. I think that's just his Constitutional authority. It's actually in our rule, but he certainly--it's his prerogative to at any time lift the sanctions or direct us to lift the sanctions.

  Mr. GILCHREST. So if the President deemed this an emergency--when you say ''lift sanctions,'' could you give me an example of that?

  Mr. CREEL. For us to not impose the $100,000 fee on the carriers.

  Mr. GILCHREST. The President could say, ''You can pull into the port and you don't have to pay the fine''?
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  Mr. PANEBIANCO. What would happen, Mr. Chairman, is that if the President requested the Commission cancel or modify or suspend its rule, then the Commission is under an obligation to do so----

  Mr. GILCHREST. I see.

  Mr. PANEBIANCO.----if he cites security or foreign policy reasons.

  Mr. GILCHREST. Okay.

  Mr. PANEBIANCO. So he could effectively nullify the rule.

  Mr. GILCHREST. I guess if the Japanese are delivering us tanks that we're going to use in the Persian Gulf--I mean, that might not ever happen, but----

  Mr. PANEBIANCO. I think we'd consider that national defense or security.

  Mr. GILCHREST. Thank you. One other--just the last question that I have sort of is a fiscal question. I don't want to say it's mundane. It's almost curious.

  I think we're all aware that FMC has reduced its staff and their funding has been reduced, as well as numerous other agencies within the Federal Government to streamline how we do things.

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  Could you respond to the fact that it's my understanding that the rent for FMC is about $1.9 million. There's a work force of about 150 people. Now, I'm not good at numbers, so I hope you are. The prevailing rental rate is about $25 per square foot. I know that varies from place to place. Where I come from it's about $6 a square foot, so maybe FMC could just shift over to Kennedyville. But that would amount to about 500 square feet of rented space per employee.

  Can you explain why the rental expenses appears to be about two or three times higher than the GSA norm? And how much office space have you given up in D.C. as your work force has been reduced by about a third?

  Mr. CREEL. Actually, our rent is about $35 a square foot. The FMC was moved from its previous location. It was a forced move by GSA in 1992 into this location.

  Mr. GILCHREST. What was it where you were?

  Mr. CREEL. We were at L and----

  Mr. PANEBIANCO. At 1100 L Street.

  Mr. GILCHREST. And that cost per square foot was what?

  Mr. CREEL. A little over $21.

  Mr. GILCHREST. Why did GSA make you move?

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  Mr. CREEL. I'm not sure. I just know that I pass that building every day and I know that it has been renovated and probably being rented out a lot higher than $25.

  Mr. GILCHREST. I was just told the landlord couldn't meet the fire safety standards.

  Mr. CREEL. John would know.

  Mr. PANEBIANCO. Justice Department is there now.

  Mr. GILCHREST. Justice Department is there now?

  Mr. PANEBIANCO. They've made some renovations, I understand.

  Mr. GILCHREST. They've made some renovations. I wonder what their square footed cost is now.

  Mr. CREEL. I bet it's more than $25.

  Mr. GILCHREST. So yours is about $35?

  Mr. CREEL. Yes, $35. And let me continue to address that question. We have given up space in Washington. Most unfortunately, we've given up our hearing room. We've had to give up storage space. As we downsize, GSA requires us to give 120 days notice before giving up space. We can not give up pockets of space here and there. If we have a little office, we can't give it up. It has to be a segregated space so that it could at least conceivably be rented out.
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  So what we've got is a few pockets here and there. We are looking at that, though, as we do get smaller. There may be some opportunity to compress the staff space and make some changes there.

  There are also costs associated with making those changes, moving walls and things like that, too. And there's this reform bill, as you are aware, in the Senate that we're watching to see if we're going to be merged with the STB. If that's the case, then we don't want to spend any unnecessary dollars at this point.

  Mr. GILCHREST. Well, Mr. Creel, thank you very much.

  For the record, I think you guys do a pretty good job.

  Mr. CREEL. Thank you.

  Mr. GILCHREST. Mr. Clement?

  Mr. CLEMENT. Yes.

  Chairman Creel and Mr. Panebianco and Commissioners--Chairman Creel, are your investigators finding that shippers are misdescribing their cargoes to carriers in order to receive a lower rate?

  Mr. CREEL. Yes, sir, they are. There is misdescription in the marketplace.
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  What you have in the liner shipping industry is a value-based pricing system so that hay bales go at a different price than electronics. Electronics go at a higher price than hay, for example. Otherwise, you wouldn't be able to move the hay at a reasonable rate because the rates would be elevated to cover the higher-value commodities and allow the carriers to get a return on their investment.

  What we have seen is, as long as there is that incentive to misdescribe cargoes you're going to have misdescriptions. For example, patio furniture or knocked-down furniture is transported at a much lower rate than electronics. You'd be amazed at the amount of ''patio furniture,'' coming into this country. There should be patio chairs everywhere.

  So it is a problem and we try to address that as best we can with our limited resources.

  Mr. CLEMENT. Are shippers misdescribing their cargoes because they can't enter into a confidential service contract?

  Mr. CREEL. No, sir. I don't think so. We're seeing the same thing with service contracts now, and I think that, again, there's always that incentive to misdescribe if you can push it under a lower rate than the proper rate.

  Mr. CLEMENT. Would the FMC have been able to take action as effectively against Japan if its functions were an agency under the Department of Transportation?

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  Mr. CREEL. That would concern me. The one good thing about being an independent agency that seems to always surprise not only our trading partners but also some of the United States Government is that this little agency can take these actions on its own without interference from the political forces that prevail in an Administration.

  We could take a back seat to aviation, for example, if we were part of Transportation.

  So I think that maintaining the independence of the agency is absolutely essential so that we can continue to take these sorts of positions.

  Mr. CLEMENT. Does the U.S. impose the same types of restrictions against Japanese carriers that U.S. carriers are facing in Japan?

  Mr. CREEL. No, sir. In fact, as I mentioned just a moment ago, these very same Japanese carriers operate terminals on the west coast. In fact, there is this debate now about the issue of COSCO, the China Ocean Shipping Company, leasing this facility in Long Beach.

  Well, at least they have the opportunity to do that here. We can't do that in Japan. That's the whole problem.

  Mr. CLEMENT. Thank you.

  Mr. CREEL. All we're asking for is fairness here.

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  Mr. CLEMENT. Right. Thank you.

  Mr. CREEL. Thank you.

  Mr. GILCHREST. Thank you, Mr. Clement.

  Just one more quick question about the misdescribing of cargo. Whose responsibility is it to make sure that what it says on the outside of the box is actually on the inside of the box? Customs?

  Mr. CREEL. You mean which Federal agency has the responsibility?

  Mr. GILCHREST. Which Federal agency?

  Mr. CREEL. We are the ones that go after the misdescriptions.

  Mr. GILCHREST. How do you do that?

  Mr. CREEL. We've got a new situation where we're closely working with Customs. They have a manifest of items that are coming in in boxes and we have bill of lading, and sometimes those don't match up. And if they don't match up we know there's a problem.

  And so the cooperation we've had from Customs has been very helpful. Our four area reps are actually housed in Customs facilities.

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  Mr. GILCHREST. Is that a system that works pretty well?

  Mr. CREEL. Yes, sir.

  Mr. GILCHREST. What happens when you find somebody that has misdescribed their cargo?

  Mr. CREEL. Well, we give them an opportunity to settle, if that's appropriate. If not, then we'll fine them.

  Mr. GILCHREST. if that's working well, then I don't need to bring up this next topic, which is the military has a device where they can look on the inside of a shell and tell the type of--either the type of gunpowder that's in there or the type of chemical that may be in there or the type of biological material that may be in there. They can just see right through it. But I guess this is not a problem where you need a device like that.

  Mr. CREEL. We'd certainly welcome any help we could get, although I don't think we're going to get that on our little budget.

  Mr. GILCHREST. We'll see what we can do, if we can mass produce those things.

  Mr. CREEL. Okay.

  Mr. GILCHREST. I was fully expecting you to say the Department of Transportation could do a better job than the FMC.

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  Mr. CREEL. No.

  Mr. GILCHREST. I was so surprised at your answer.

  Gentlemen, thank you very much. We appreciate your patience.

  Mr. CREEL. Thank you.

  Mr. PANEBIANCO. Thank you.

  Mr. GILCHREST. Now I'd like to introduce for panel three: Captain Fred R. Becker, Jr., Reserve Officers Association of the United States; Mr. Cornel Martin, corporate vice president, American Classics Voyages, Inc., and chairman of Legislative Committee for the Passenger Vessel Association; and Mr. John Schneider, president, National Marine Bankers Association.

  Gentlemen, thank you all for coming. Captain Becker, you may begin.


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  Captain BECKER. Yes, sir. Thank you very much.

  Mr. Chairman, it's a pleasure to represent the Reserve Officers Association before this committee on the fiscal year 1998 budget request for the Coast Guard.

  We commend the streamlining of the Coast Guard that has reduced resource requirements while maintaining the capability upon which our Nation depends. The Coast Guard has its smallest work force in 30 years.

  Concomitantly, the responsibilities of the Coast Guard have not been reduced. Given the downsizing that has occurred thus far, we're concerned that the Coast Guard not be further stretched to the breaking point by under-funding.

  Turning specifically to the Coast Guard Reserve, we would summarize our concerns in three basic areas: first, end-strength as impacted by recruiting; second, equipment funding; third, Reserve force support as impacted by Team Coast Guard.

  As to end-strength, we strongly support the fiscal year 1998 authorization request to maintain the Coast Guard at 8,000 in the Reserves. While recognizing the Coast Guard's reserve end-strength is currently below 7,600, we have serious concerns regarding an appropriated end-strength of only 7,600.

  The Coast Guard Reserve has clearly become a value-added resource for the Coast Guard's peacetime day-to-day operations, as well as a source of needed personnel to meet military contingency and other surge requirements.
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  As a result, we're concerned that the Administration and the Coast Guard have allowed the Coast Guard's Reserve end-strength to fall below the authorized and appropriated level for fiscal year 1997.

  We attribute the end-strength shortfall to a failure to devote requisite assets to recruiting reservists.

  Team Coast Guard, with limited exceptions, has resulted in complete assimilation of reservists into the active force. Prior to Team Coast Guard, a commanding officer of the Reserve unit had a responsibility for recruiting. These responsibilities have not been transferred to active duty commanding officers.

  Furthermore, recruiting quotas have not been assigned to active duty Coast Guard recruiters. Until just 1 year ago, no recruiter had ever recruited a reservist. Recruiting a reservist is also substantially more difficult than recruiting a new entrant, because the reservist must be recruited to a targeted billet at a specific location.

  Concomitantly, we'd like to note that the Coast Guard has taken some effort to recruit reservists. The issue is even being briefed at the ongoing Coast Guard Flag Officer Conference that is occurring today.

  Notwithstanding these efforts, progress is not being made to get the Reserve force up to its authorized and appropriated end-strength.

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  Second, regarding equipment funding. As part of the continuing review of mission requirements, the Coast Guard must establish three additional port security units, or PSUs, to meet validated Commander-in-Chief, CINC, war-fighting requirements. These efforts are being coordinated with the joint chiefs of staff and the CNO.

  PSUs are manned by 115 selected reservists and two active duty personnel. They're deployable worldwide on 4 days notice and provide waterside security to ports and to high-value assets to fill the perimeter gap between the land side and its coastal assets.

  The three existing port security units performed critical mission-essential functions during Desert Storm and Desert Shield and during Operation Support Democracy in Haiti.

  Major lessons learned were that the port security mission is a logical one for the reserves, three additional port security units are needed to meet CINC requirements, and equipment is needed to replace what has been consumed by the high tempo of operations of the three existing units, as well as to fund the three additional units.

  Accordingly, although not directly within the cognizance of this committee, we'd request your support for National Guard equipment account funding as a part of the DOD fiscal year 1998 bill to refurbish the existing PSUs and address the three additional PSUs that are needed.

  Lastly, reserve force support as impacted by Team Coast Guard. The Coast Guard has clearly embraced the reality that its reserve is a vital value-added resource. This fact has been demonstrated by Team Coast Guard, which includes the full integration of Coast Guard reservists into their parent active force commands.
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  This expansion and modification of the historic method of training benefits the Coast Guard and, in particular, the active duty force. As a result, reservists now perform day-to-day operations as an integral part of the active duty force.

  In addition, integration has reduced administrative overhead by making the parent command, the active duty command, responsible for the reservist in the same manner they're responsible for active duty personnel.

  We support these goals and objectives. The result is the reserve has become the bench strength of the active duty force. At a strength of 8,000, they consume only 700 full-time positions.

  Simply stated, the reserve leverages the entire organization and stands ready to go in response to both domestic and national emergencies. As a result, the Coast Guard is able to surge its forces to meet these emergencies in a cost-effective manner.

  Concomitantly, the Coast Guard active duty force must now recognize its role over reservists from the deck plate to headquarters, and direct responsibility therefor.

  As previously noted, integration has eliminated the reserve support structure in the field. Reserve training officers and administrative officers no longer exist. As a result, questions regarding career progression, professional development, meaningful assignments for senior reservists, both officer and enlisted, and effective advocacy for reserve issues are not fully resolved.
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  We'd encourage the Coast Guard to step forward and take a proactive leadership role with direct responsibility for their reservists to ensure they're not lost in the shuffle as a result of integration.

  Again, thank you for this opportunity to present the position of the Reserve Officers Association to this committee.

  I'd be pleased to respond to any questions you may have, Mr. Chairman.

  Mr. GILCHREST. Thank you very much, Captain Becker.

  Mr. Cornel Martin?

  Mr. MARTIN. Thank you, Mr. Chairman, Mr. Clement.

  Today I appear before you as chairman of the Legislative Committee of the Passenger Vessel Association. PVA is made up of nearly 500 owners, operators, builders and suppliers of passenger vessels across the country, which range from small tour operators to overnight oceangoing cruise ships.

  I appreciate this opportunity to share some of our industry's concerns as part of this annual Coast Guard authorization hearing.

  First, Mr. Chairman, I would like to thank the members of this subcommittee and your staff for your untiring efforts in the last Congress to enact the Coast Guard Authorization Act for fiscal years 1996 and 1997. The cap on Coast Guard user fees and several other key provisions of that bill were critical to our industry.
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  That authorization act also included other provisions which will change the way we do business in the future. The act allowed the Coast Guard more flexibility in dealing with the industry and the ability to share responsibility for certain missions. It also allowed the Coast Guard to establish the streamlined inspection program. The SIP encourages close cooperation between the industry and the Coast Guard and it will allow the Coast Guard to reallocate assets and manpower to more pressing missions with no impact on safety.

  We applaud this type of initiative as a wise use of energy and resources. Similarly, the Coast Guard has signed an agreement with our association, creating the Partnership Action Team.

  The purpose of the PAT between our association and the Coast Guard is to improve communication and the working relationship between the Coast Guard and the passenger vessel industry.

  Basically, we will work together to improve the way we do things today.

  A sincere thank you is in order here for Rear Admiral and I understand soon to be Vice Admiral Jim Card for his leadership and persistence in improving Coast Guard/industry relations which has made this all possible.

  The SIP and PAT programs are positive steps in improving the way our industry works and interacts with our primary regulatory body; however, not all of our concerns can be resolved in a timely manner through these venues. From time to time we will still have to come to Congress and to this subcommittee for assistance in funding solutions to our problems.
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  Specifically, we would like to ask the subcommittee to address a couple of those issues in this authorization bill.

  First, we are here to ask Congress to make activities which endanger the operation of a commercial passenger vessel carrying passengers for hire a Federal offense with appropriate penalties mandated by law.

  We were very encouraged by the comments of the commandant earlier when the question was posed to him by Mr. Johnson, and he replied that he believes the Coast Guard has authority to prohibit this activity. Unfortunately, Mr. Chairman, there seems to be a disconnect between Coast Guard headquarters and the field offices responsible for enforcing what the commandant clearly stated was legal Federal authority in this area. We have had many areas in the country where the Coast Guard has pointed to local authorities and local authorities have pointed back to Coast Guard, with no correction of the problem.

  Similarly, another activity which endangers the safe operation of our vessels and therefore the lives of our passengers is what we call ''rail jumping.'' More common than most sensible people would guess, passengers jump overboard while the vessel is underway. This situation, whether it is an attempted suicide or a stunt to impress others, creates havoc for the captain and crew of commercial passenger vessels. Therefore, a Federal law mandating against the interruption of the safe navigation of the vessel would give us the background we feel necessary to discourage these types of practices.

  A second issue which has caused our industry a great amount of difficulty over the last several years is the problem of inaccurate record-keeping, which has the ultimate effect of serving as justification for new regulations.
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  Recently the Coast Guard recommended new regulations based on data collected in the broad category of marine casualties. Close analysis of these marine casualty statistics revealed that few of the incidents in question had any relationship whatsoever to the operation of a documented, inspected commercial passenger vessel.

  Included in the statistics used to justify this new regulation were the drowning of refugees fleeing certain Caribbean Islands in all types of vessels that can hardly compare to inspected commercial passenger vessels.

  Flawed regulations developed and implemented with faulty, inaccurate data cause an unnecessary burden on good, safe operators, and such unnecessary regulations will eventually come before this subcommittee as an oversight topic.

  But of greater concern, faulty data has the potential for alarming the public over the safety of commercial passenger vessels when no alarm is warranted. It is patently unfair to everyone.

  We request, therefore, that the Congress direct the Coast Guard to begin to develop data gathering and management systems which segregate marine incidents which are truly and directly linked to the operation of a documented commercial passenger vessel.

  Finally, Mr. Chairman, our industry and other maritime industries are growing more concerned with the seemingly endless number of regulatory proposals originating from the International Maritime Organization and international law.
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  Rules promulgated for vessels with multi-national crews and significant language barriers operating on the high seas in numerous international ports are not appropriate for a dinner cruise vessel operating in St. Louis, yet we find that these same IMO-promulgated regulations are impacting our domestic rules.

  Perhaps this entire matter should be the subject of an oversight hearing, but it is a matter that merits this subcommittee's attention.

  Mr. Chairman, I thank you for the opportunity to appear here before you. I'd be happy to answer any questions.

  Mr. GILCHREST. Thank you very much..

  Mr. Schneider?

  Mr. SCHNEIDER. Thank you, Mr. Chairman, members of the committee, for inviting me to this hearing.

  I'm here in my capacity as president of the National Marine Bankers Association, representing that organization of financial institutions whose customers include hundreds of thousands of Americans who borrow money for the purchase of watercraft for recreational use on our country's lakes, rivers, and oceans.

  The association has 70 participating firms who together hold in excess of $8 billion in outstanding retail and wholesale recreation loans.
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  We are joined by a number of industry partners who support many or all of the initiatives that I will be discussing today. These partners include the National Marine Manufacturers association on behalf of its 1,500 members, the Marine Retailers Association of America on behalf of its 4,000 members, the Maritime Law Association, the National Association of State Boating Law Administrators, and others.

  My testimony today centers on Public Law 100—710 passed by Congress in 1988, and Public Law 101—225, which contained follow-up technical corrections.

  Among other elements, this legislation created the Vessel Identification System, or VIS, a nationwide database administered by the Coast Guard, capable of containing information on nearly every boat owned or operated on U.S. waters.

  This system was conceived by people of vision, for when fully implemented the VIS will serve as a silver bullet in the fight against boat theft and fraud on America's boating public.

  VIS will also provide powerful data to the States to help carry out boat safety programs and to better target the use of boater fees and taxes.

  It will also provide a wealth of information to industry that will lead to safer products produced at lower price and more efficiently delivered so that more consumers can enjoy the rewards of recreational boating.

  In our opinion, everyone wins with the VIS.
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  The VIS also creates a new structure for the titling of boats in America contained in the set of guidelines that are an integral part of that legislation. States that choose to adopt these guidelines by enacting the appropriate statutes will be able to confer special status on security interest liens created in those States--a status that will mirror the preferred mortgage status now available under Federal law.

  The creation of this new class of liens clearly signals Congress' intent to promote boat financing in America, making it more available and more affordable to the boating public.

  There are approximately 16 million boat owners in the U.S. today, and these new provisions can only help to raise that number dramatically.

  As I've said, this legislation was visionary in its concept, but it was not enacted without flaws. The are few, but they may prove fatal. Let me explain how.

  The law, when passed, contains language that ultimately will render registration and titling under State law incompatible with registration of a boat under Federal law, the process known as ''documentation.'' It took only seven words to create this new exclusion, but they are deadly words, indeed, for, once effective, this provision will require that documented vessels, if already also State titled, will actually be undocumented, destroying in the process the supremacy of the vessel's Federal documentation. And should a vessel document be invalid, a preferred ship mortgage on that vessel will never actually attain preferred status, even though it might appear so.

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  This has grave consequences for those who manufacture, sell, and lend against documentable vessels, since the majority of such craft are sold and financed using Federal ship mortgages.

  These documentable craft represent a considerable portion of the marine industry's annual input and closely parallels that segment that was devastated by the ill-timed luxury tax on boats from 1990 to 1993.

  This flaw must be corrected to give back to the Federal system of registration the primacy it deserves over State systems. To reinforce this primacy, current statutes should be amended to delete these seven deadly words and to further prohibit State titling of a vessel that becomes documented.

  The primacy of Federal vessel documentation dates back to the earliest Federal laws of this country and has been the cornerstone of vessel financing since 1920. Courts have upheld this primacy as an essential element of this country's maritime law.

  While addressing problems in one area of marine finance, the new law should not wreak havoc in other long-established practices.

  The VIS will cause States to choose to participate and enact conforming State boat titling laws because the VIS is good and helpful. There is no value to creating a defect in alternative methods of marine financing in the process.

  A second flaw is not as obvious but serious, nonetheless. when Congress created the special lien class for boats in States that adopt the VIS titling guidelines, it did so without also including the same remedies that their counterpart liens created under Federal law enjoy. Without proper remedies, this new class of liens remains hollow and will not promote the more widespread availability of credit for recreational boating that we believe Congress intended.
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  We have advanced a legislative initiative that addresses these problems, along with other minor technical corrections, and they are outlined in our written testimony submitted earlier. We urge their inclusion in the authorization bill now before the subcommittee.

  Mr. Chairman, I thank you for the opportunity to appear before you today. I'd be happy to answer any question now or later for the hearing record.

  Mr. GILCHREST. Thank you very much, Mr. Schneider.

  Captain Becker, could you give us a number that you think would be the ideal number for reservists in the Coast Guard. I understand there are about 7,400 there now. They've been authorized at 7,600 or authorized at 8,000, and they're down to about--the Administration requested 7,600, and it's at a level of about 7,400 now.

  What would your ideal number be?

  Captain BECKER. It would be 8,000, sir. That's what's authorized. They currently, as of the end of January, had 7,299. That was the number I had, which is even below that which the Administration is asking to have appropriated for fiscal year 1998.

  My concern is that it's a self-fulfilling prophecy. If you're existing today with less than you're authorized or appreciated to have, having worked at OMB I can tell you what they'll do tomorrow. They'll put you at that level.

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  As long as the Coast Guard doesn't recruit to that level, we'll never get there, and we'll be decreasing all the way down.

  Mr. GILCHREST. You made some reference to the change in structure where the reservists have been integrated into the active units and then the difficulty as a result of that of the pursuit or the ability to recruit reservists as opposed to recruiting active duty members as a part of the problem for the reduction in the reserve forces.

  How would you fix the present problem, as you see it, of the integration of the reservists to the active duty units? What would you do to change that structure?

  Captain BECKER. Well, I wouldn't change the structure at all. I think there are two problems. One, the reserve unit CO used to be responsible for recruiting. That responsibility has not been assigned to the active duty CO. In addition--no active duty recruiter until a year ago had responsibility for recruiting reservists. Heightened attention needs to be brought to that recruiter as to his responsibility to recruit reservists.

  Mr. GILCHREST. So you're saying the Coast Guard recruiter that sits next to the Giant Food Store, or whatever, that active duty Coast Guard recruiter has no responsibility now or hasn't taken the initiative to pursue reservists?

  Captain BECKER. My understanding is that he's not being given quotas where he has to produce, to a certain level, reservists. In addition, it's more difficult to recruit a reservist because, as opposed to just recruiting the active duty member and shipping him off to a location for training, you have to, for the reservist, get him a specific billet, find the specific billet that's open at a specific location. There are also geographic requirements that they're now waiving as to where he has to live in proximity to that billet.
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  The second part of the problem is in the sense of the integration. I'll use one example. There is one lieutenant that I know who serves as command duty officer on a frigate or on the Coast Guard vessel. That is, he's responsible for that vessel overnight. He comes there, takes charge of the vessel, and acts as the commanding officer's surrogate. He's the only reservist on that vessel, so he has no mentor or someone else to refer to as to his career progression, etc. That's now fallen to the active duty force.

  Now, the active duty commanding officer, something needs to be done to bring them up to speed as to what's good for a reservist for training, etc., because it's not all exactly the same.

  Mr. GILCHREST. Thank you.

  Captain BECKER. Yes, sir.

  Mr. GILCHREST. Mr. Martin, you made some reference to inaccurate marine data by the Coast Guard, and one of your references, at least as far as I understood, for the Coast Guard to carry out its responsibilities and issue regulations and issue reports that we take into consideration, one of those reports that you said, at least in my judgment, caused a misunderstanding in your industry was that the Coast Guard calculated refugees fleeing to this country having accidents and dying at sea in with the commercial vessel calculation of accidents.

  Did I interpret that correctly?

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  Mr. MARTIN. Correct, Mr. Chairman. In examining casualty data, it became apparent that data is basically all categorized as marine casualties or deaths related to passenger vessels operations.

  Mr. GILCHREST. So you're saying Haitians coming to this country or Cubans coming to this country or whoever that die at sea are calculated into a problem you might have on your commercial vessel going up and down the Mississippi River or something like that?

  Mr. MARTIN. Correct. As it was explained to us, because there was no way, once the vessel was lost at sea, of determining whether or not that was a U.S. passenger vessel, they categorized it as such and included those deaths in the number of deaths attributed to the U.S. passenger vessel industry for that year.

  Mr. GILCHREST. Basing what you just said on the fact that they couldn't determine what type of vessel it was, what's the alternative for the Coast Guard?

  Mr. MARTIN. A separate category that would recognize clearly that accidents on U.S.-flagged commercial passenger vessels would be attributed to those vessels, and there may be a subcategory of ''other, undetermined,'' in that case.

  Mr. GILCHREST. When someone on one of your vessels decides to jump into the water because he wants to win a $100 bet, or whatever, at the moment that he jumps in what do you do? Do you stop the ship and go back?

  Mr. MARTIN. Exactly. You have to implement a full man overboard procedure.
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  Mr. GILCHREST. You can't put up a sign, ''All people who jump overboard will be shot'' or anything?


  Mr. GILCHREST. You can't put that sign up?

  Mr. MARTIN. No, but if you could put up a----

  Mr. GILCHREST. Strike that for the record.

  Mr. MARTIN.----placard suggesting that it is a violation of Federal law to impede the progress of a vessel by jumping overboard, then it may discourage some prankster from doing such.

  Mr. GILCHREST. If that were to become a Federal law, what do you think the appropriate penalty should be?

  Mr. MARTIN. Well, I would think a penalty similar to that of interrupting the safe navigation of a vessel. Present rules provide a $1,000 fine. I would think that would be sufficient enough to discourage a prankster from pulling such a stunt.

  Mr. GILCHREST. Very good. Thank you.

  Mr. Schneider, do you have any idea or have you discussed the issue of this VIS with the Coast Guard as to why, after 7 years, it has been implemented?
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  Mr. SCHNEIDER. Actually, we've had extensive discussions with the Coast Guard. I believe that for the first several years, perhaps as many as five, it was not funded. There was no authorization to spend the money required to set up this nationwide database. I believe that funding became available perhaps 3 or 4 years ago and rulemaking has been occurring for about that long.

  In fact, the VIS at this point, as I understand it, is in a prototype phase. Four States have submitted data. They've actually got it to a point where you can go down and see what it looks like.

  Mr. GILCHREST. Do you know what four States?

  Mr. SCHNEIDER. I believe they are Maryland, Arizona, Virginia, and Wisconsin.

  Mr. GILCHREST. And it may have----

  Mr. SCHNEIDER. I'm sorry. Did I say Maryland? I meant Massachusetts.

  Mr. GILCHREST. Massachusetts?

  Mr. SCHNEIDER. Massachusetts.

  Mr. GILCHREST. How long have they been in this pilot program?

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  Mr. SCHNEIDER. I believe the States first begin--the Coast Guard probably can answer these questions better. I'll do my best. I believe they first started submitting this data in the fall of last year, and----

  Mr. GILCHREST. Is it your understanding--that's September or October, so it hasn't been a great deal of time. But is it your understanding that through this at least early stages of the pilot program that this looks like it's a positive thing that's going to work?

  Mr. SCHNEIDER. It has all the markings of a very successful program. We've talked to the folks at NASBLA. They're very excited about it. The Coast Guard has high expectations for it. Everything seems to be on track. In fact, I think those four States have representatives in Washington right now to review the first set of screens coming out of the program, I'm told.

  Mr. GILCHREST. Great. Thank you very much, Mr. Schneider.

  Mr. Clement?

  Mr. CLEMENT. Thank you, Mr. Chairman.

  Captain Becker, while this committee authorizes the budget for the Coast Guard, it is the House Committee on National Security which sets the Coast Guard's end-strength levels, as you know. Have you discussed your concerns about these levels with that committee?

  Captain BECKER. With the committee staff, sir, and the national executive president will testify and it's planned he will discuss it in his testimony.
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  Mr. CLEMENT. Has this been a recent problem with the Coast Guard concerning recruiting reservists? I know I'm in the National Guard. I served 2 years in the regular Army and joined the National Guard, and I'm still in. I knew how to get in, but I don't know how to get out.


  Mr. CLEMENT. But I will say in all honesty I have truly enjoyed it. I almost made a career our of the military.

  Captain BECKER. Yes, sir. Well, maybe we can help you get in the Coast Guard.

  Yes, sir, I think it is a recent problem. The integration has just happened. In addition, the Coast Guard reserve reduced its reserve end-strength from 12,000 to 8,000, and it it's an unintended and unenvisioned consequence of the integration.

  Mr. CLEMENT. Mr. Martin, the type of detailed marine incident statistics that you're asking the Coast Guard to compile will require your members to file very detailed accident reports to the Coast Guard.

  Are your members willing to take the time to supply the type of detail that the Coast Guard will need in order to more accurately correlate their regulations and to their statistics?

  Mr. MARTIN. Mr. Clement, I believe that our members already do file fairly detailed reports. To add a page to those reports and ask for additional detail would not be a problem if it results in data that we can all use to recognize and identify what may or may not be real problems.
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  Mr. CLEMENT. So----

  Mr. MARTIN. So the answer is yes, we would be more than happy to provide additional information.

  Mr. CLEMENT. Will the forms have to be changed significantly or what?

  Mr. MARTIN. I would suggest that through one of these working groups that we've established with the Coast Guard we can work out that detail, but I think what the Coast Guard needs possibly from this committee is a little bit of a push in that direction.

  Mr. CLEMENT. Mr. Schneider, if your legislative proposal is adopted, do you believe that bankers will agree to finance yachts over five tons that are titled with a State rather than requiring the yacht to be documented with the Coast Guard?

  Mr. SCHNEIDER. Given that all the initiatives are passed, that several address that issue, I think yes, they will, since it is going to be less costly, less time consuming, and ultimately will provide savings that can be passed on to the consumer.

  So yes, I do believe that will occur.

  Mr. CLEMENT. All right. Thank you.

  Mr. GILCHREST. I thank the witnesses for their testimony, their patience, and their forbearance on this lengthy afternoon that has eased its way into the evening, but I have some good news. I think it's snowing--well, maybe it's bad news for some people, but the snowing has stopped. So I wish you all a pleasant evening here in Washington, D.C.
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  If there is no further business, the subcommittee is adjourned.

  [Whereupon, at 6:10 p.m., the subcommittee was adjourned, to reconvene at the call of the Chair.]

  [Insert here.]