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H.R. 2332, THE BINATIONAL GREAT LAKES-SEAWAY ENHANCEMENT ACT OF 1999
Wednesday, October 6, 1999
House of Representatives, Subcommittee on Water Resources and Environment,
Committee on Transportation and Infrastructure, Washington, D.C.
The subcommittee met, pursuant to call, at 10:00 a.m., in room 2167, Rayburn House Office Building, Hon. Sherwood L. Boehlert [chairman of the subcommittee] Presiding.
Mr. BOEHLERT. Good morning and welcome to the Water Resources and the Environment Subcommittee.
This morning's hearing will focus on the future management of the Saint Lawrence Seaway and specifically on the Binational Great Lakes-Seaway Enhancement Act of 1999, legislation introduced earlier this year by the distinguished Ranking Member of this committee, Congressman Oberstar.
As the senior New Yorker on the House Transportation Committee, I have been well briefed on the significance of the Saint Lawrence Seaway to the economic vitality of the entire state and the Great Lakes region.
The entire U.S. segment of the Seaway is along the northern border of my own home state. The efficient management of the Saint Lawrence Seaway is an objective that I share with the author of the legislation being discussed this morning. Through efficient management of this critical transportation asset, we should be able to enhance commerce in states and provinces throughout the Great Lakes Region.
However, after reviewing the testimony submitted for this hearing, I am somewhat concerned that H.R. 2332 may pose real problems for organized labor and the protection of the Great Lakes environment, and so we would like to address those two subjects in particular.
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At this time, I would like to have the statement submitted by the American Federation of the Government Employees placed in the record.
Though Greg Good, the President of Local 1968, could not be with us this morning, I would like to read to you a portion of his statement. ''we appreciate the legislative language to ensure that no current employee loses his or her job as a result of the establishment of this new binational corporation. However, we believe that the legislation as currently drafted falls short of the protections needed.'' this is a concern expressed by Mr. Good.
On the issue of adequate environmental safeguards, Mr. Jacquez raises a number of concerns in his testimony, specifically the application of NEPA to projects carried out by the proposed binational corporation and the application of the U.S.-Canada Great Lakes Water Quality Agreement.
The sea lamprey and zebra mussel stand as constant reminders to us that Great Lakes commerce can have a dramatic impact on the Great Lakes ecosystem. We must address the environmental and labor concerns raised by those impacted by H.R. 2332. And I know we can do so in a strong bipartisan manner.
Given my longstanding friendship with the author of this legislation and my high regard for him and the concern we share for the environment and our nation's workers, I am confident that we can work through these issues, as we are doing on a number of other prominent water infrastructure matters being considered by this committee.
I would now like to recognize the Ranking Member of the Water Resources and Environment Subcommittee, my distinguished colleague from the Commonwealth of Pennsylvania, Mr. Borski.
Mr. BORSKI. Thank you very much, Mr. Chairman. And I want to thank you very much for holding this hearing. I want to first commend our distinguished Ranking Member of the full committee, Mr. Oberstar, for his leadership in developing a Binational Great Lakes-Seaway Enhancement Act, which is the focus of today's hearing.
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There is no dispute that Congressman Oberstar is a leader on issues concerning the Great Lakes. After all, the Great Lakes start in his district. Perhaps less well-known is that his predecessor, John Blatnik, a former Chairman of this committee, is considered the father of the Saint Lawrence Seaway. When my Democratic leader took over from Chairman Blatnik, the torch passed to a new generation. Congressman Oberstar has been a forceful and effective champion of the Seaway ever since.
Mr. Chairman, the Seaway was officially opened in 1959 by President Eisenhower and Queen Elizabeth II. Earlier this year, the Seaway celebrated its 40th anniversary. Indeed, there is much for which to celebrate. With the opening of the Seaway, manufacturing and farm products from the Midwest can be shipped directly over waters to international markets.
As maritime transportation is often the lowest method of shipment, opening of the Seaway was a boom to manufacturers and farmers from industrial and agriculture heartland. Both vessel and cargo transportation experienced rapid growth in the early years due to the competitive advantage.
That advantage did not last very long, however. Part of the reason is weather. The Great Lakes and the Seaway ice over in winter interrupting navigation through the system. Another reason is that this international waterway is limited in size especially by the dimensions of the locks.
As ships get bigger, the Seaway's depth to 27 feet precludes an ever increasing portion of the world fleet from transiting the system. One only needs to look at the newest generation of vessels with their draft of over 50 feet to see the obstacle that the Seaway faces.
The result was a lull and decline in traffic through the Seaway beginning in the late 1970's. Our operating agency, the Saint Lawrence Seaway Development Corporation, has been very aggressive in cutting costs and promoting trade. Its efforts help produce positive results. The trend began to turn around in 1993. By 1997 cargo tonnage had gone up by 19 percent and vessel transits rose by 14 percent between, 1994 and 1997. These are very favorable developments.
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The Binational Great Lakes-Seaway Enhancement Act takes a more comprehensive approach to making the Great Lakes and the Seaway a more competitive transportation route. It addresses the structural problem of bifurcated management and the resulting inefficiency. The bill also deals with the infrastructure needs of a maritime industry in the Great Lakes region.
I want to welcome our guests, our colleague from Canada, Mr. Comuzzi and, of course, once again our distinguished Ranking Member of this committee, who is both a good friend and a greater leader for the Democrats, one who works tirelessly for his district.
Thank you, Mr. Chairman.
Mr. BOEHLERT. Thank you very much and let us move along unless anyone seeks recognition.
Our first panel consists of the Honorable Joe Comuzzi, a Member of Parliament from Thunder Bay, Ontario. And I notice the distinguished Ranking Member and the author of the legislation in question at the table.
And I would recognize Mr. Oberstar for any remarks he would care to make.
Mr. OBERSTAR. Thank you, Mr. Chairman. I greatly appreciate your kind words at the outset, and, Mr. Borski, thank you very much for your kind words, but especially for taking the time in the committee schedule to hold this hearing. And I particularly appreciate Chairman Shuster's approval of the hearing and we have discussed this matter at some length.
The Seaway is a very critical economic link to the heartland of America, as we stand at the threshold of the next century it is time to rethink the Seaway, how it has operated and how it should function in the future. Only time will tell the future of the seaway traffic pattern and toll revenues. The early years may be deficit years. A study of the Panama Canal, Suez Canal and other great waterways, however, point to the St. Lawrence Seaway becoming a heavy traffic artery, first in bulk mineral movements between Canada and the U.S., secondly in export grain, and third in overseas general cargo traffic.
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Shipping circles are buzzing in their plans to get into this Great Lakes trade. History alone will record its yearly verdict. Let us pass the bill, complete the Seaway, face the future with righteous optimism and a willingness to meet and overcome whatever problems arise.
Well, with those hope-filled words my predecessor John Blatnik, as Mr. Borski pointed out, known long as the father of the Seaway, opened the debate in the House Chamber on the Saint Lawrence Seaway legislation. This was the second of three bills that it enacted into law to establish the Saint Lawrence Seaway. The first was the Wiley-Dondaro bill in 1954. George Dondaro was Chairman of this committee and a Representative from Michigan and a very distinguished Member of the House and a visionary who saw with John Blatnik the importance of a waterway link to the heartland, industrial and agriculture heartland of America.
Congress did act, history has spoken. Just as John Blatnik, Wiley, Dondaro and others envisioned, the Seaway became one of the great waterways of the world, and we in June celebrated that great vision on the 40th anniversary of the opening of the Seaway, as Mr. Borski noted, celebrated by President Eisenhower and Queen Elizabeth.
The new international trade route began a new chapter and maritime commerce was initiated, it was exciting. There was a great deal of hope, but already the seeds of gridlock had been planted. The Seaway was built too small, locks too short and winter was against us. Every year the glacier stages a comeback as it once dominated the area 10,000 years ago.
But over its 40 years, there have been 20,000 vessel passages, 2 billion metric tons of cargo, and the Seaway ranks third among international shipping canals in the entire world after the Suez and the Panama Canal, followed by the Kiel Canal in Germany. After a long decline, traffic is beginning to grow again. There was a 14 percent increase in vessel transits between 1994 and 1997, and a 19 percent rise in cargo tonnage since the beginning of this decade.
The mix of cargo has changed as well. Grain, historically the largest of all cargos, has been cut in half. And general cargo, which is the bread and butter of shipping has almost doubled. The Seaway contributes an annual $2 billion and 50,000 jobs to the U.S. economy, and $3 billion and 17,000 jobs to the Canadian economy. 20 percent of the gross domestic product of the United States originates in the region served by the Great Lakes-Saint Lawrence Seaway System, and 15 percent of the Nation's total exports originate in these states.
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It is clear to me and it is clear to my good friend Mr. Comuzzi, a Member of Canadian Parliament, that the Seaway is a single international waterway, it is illogical to divide it into two components, to have two national agencies operate independently without unified or consistent direction. The result has been duplication, inefficiency, confusion and missed opportunities that threaten the long-term viability of the entire system.
There are two Seaway operating agencies, two coast guards, two Departments of Agriculture, two customs agencies, in addition, two Canadian pilotage authorities and one U.S. pilotage authority are responsible for guiding vessels safely through the Seaway. The regulations they enforce are often inconsistent, duplicating organizations, a confusing web of regulations add additional significant costs to the Seaway users. Those costs make the Seaway a less competitive waterway for international commerce. The result, fewer vessels and less cargo, at the very time when the rest of the American maritime industry is experiencing an unprecedented boom.
So I look back on the history of the Seaway and there are two limiting factors, one of these, I quote from the Congressional Record of June 26th, 1957, the second of the major bills to adjust the financing of the Seaway, it appears that the eastern railroads consider that the Seaway will not be competitive with them if these toll demands are met. The tolls that were imposed on the Saint Lawrence Seaway were imposed on no other waterway in the United States, not on the Tennessee-Tombigbee, $1 billion, not on the Gulf Intracoastal Waterway, over $2 billion of construction, not on the Mississippi system, not on any one of the 40-some locks on the Mississippi River system, only on the Saint Lawrence Seaway.
And the eastern railroads succeeded in restricting the size of the locks and the economic efficiency, it had to pay its capital costs with interest and imposed tolls to cover all of those costs. Over time, the support of the entire Great Lakes Delegation, the gentleman from New York, Chairman of the subcommittee included, worked to eliminate the repayment of costs and the tolls and to situate the Seaway on at least a principle of equality with other waterways in the United States.
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It is now time to take the next step, and that is to merge the two management authorities into one single binational authority. This bill addresses that structural problem by combining the two national agencies into a binational authority. There would be uniform requirements, uniform standards, greater efficiency, eliminate conflicting regulations and deal with the effective operation of the Seaway by basing workers' pay on job performance and provide labor protection.
I heard the Chairman's statement. I met numerous times, and my staff has met with the organizations representing the Seaway workers, and we will, of course, make any further adjustments that we can on a bipartisan basis. And I have talked with Mr. McHugh, who represents the Massena area and who, too, has offered suggestions. And we can work those issues through without any concern I am quite certain.
But the idea is to simplify this whole operation. I am sorry we don't have a large map, and I don't mean this to be an eye test, but this is the Seaway system, 2300 miles, from the time you get to Montreal all the way to salt water ocean, it is another thousand miles, you have got 1200 miles from Montreal all the way up to Duluth and it is, however, this very small segment that we are talking about, just that area in upstate New York, Massena, on the U.S. side that we are trying to address that is the Saint Lawrence Seaway portion.
Merging the two operations, simplifying the operations, reducing the costs, improving efficiency, and the next step, to create a non-Federal regional investment bank to provide financial and other assistance to the maritime industry throughout the Great Lakes for maritime commerce-related investments. Smaller businesses often face difficulty in getting financing from commercial interests that are unfamiliar with the maritime industry. This bank would be able to help them for investment and for general financial advice.
The bank would authorize financial contributions for the bill that I have introduced and would authorize initial financial contributions for capitalization of the bank, and it would limit liability to the United States by prohibiting the United States Government from being a member of the bank. The CBO has advised me there is no budgetary impact as a result of this legislation since there is no mandatory spending.
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The bill specifies the types of projects eligible for assistance and the forms of such assistance. I brought into discussions on the World Bank, the International Monetary Fund, the Office of Management and Budget, CBO. We had numerous discussions over a period of many, many months to craft this proposal. And I think it makes good sense.
Fundamentally what I want to see is what we did at Dulles and National Airports with the financing authority that has allowed the modernization of those two airports, give this binational authority the ability to expand the locks in the Welland Canal's facilities. Unless we do that, we are not going to be competitive with other ports, and we are not going to offer agriculture and manufacturing interests in the Great Lakes States the capability to compete in the world marketplace that they deserve.
40 years ago at the opening of the Seaway, a bronze plaque was mounted at the Cornwall-Massena power plant with this message engraved on it, ''This stone bears witness to the common purpose of two nations whose frontiers are the frontiers of friendship, whose ways are the ways of freedom and whose works are the works of peace.'' .
In that spirit, I launch the discussion, the debate on the future of the Saint Lawrence Seaway.
Thank you, Mr. Chairman.
Mr. BOEHLERT. I want to thank the distinguished gentleman for his comprehensive statement, and it is much appreciated.
Now we are privileged to welcome a fellow Parliamentarian, the Honorable Joe Comuzzi, a member of Parliament from Thunder Bay, Ontario.
Mr. Comuzzi.
Mr. OBERSTAR. If I may make an introductory comment on Mr. Comuzzi.
Mr. BOEHLERT. By all means.
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Mr. OBERSTAR. He represents the riding in Canada north of my congressional district. His district is or his riding is about the size of the State of Maine, has some 88,000 people. That is one per every thousand square miles. He is a member of the Caucus Committee on Better Roads. He was recently appointed Chairman of the National Highway Committee, the National Liberal Caucus. He was previously Vice Chair of the Transportation Committee in the House of Commons. He is Cochair of the Canada-U.S. Interparliamentary Group and has a deep love for and passion for the Saint Lawrence Seaway and for binational cooperation.
Mr. BOEHLERT. Thank you very much.
Mr. Comuzzi, the microphone is yours.
TESTIMONY OF HON. JOE COMUZZI, MEMBER OF THE PARLIAMENT OF CANADA, THUNDER BAY-SUPERIOR NORTH, AND CO-CHAIR, CANADA-UNITED STATES INTER-PARLIAMENTARY GROUP, AND FORMER CHAIR, HOUSE OF COMMONS SUB-COMMITTEE ON THE ST. LAWRENCE SEAWAY
Mr. COMUZZI. Thank you, Mr. Chairman, and members of the committee. Good morning ladies and gentlemen. I was asked to come to give evidence today, and I want to thank you all for allowing me the opportunity to come and support the bill that Congressman Oberstar is proposing to you folks today.
We have worked on this particular section of the bill in Canada for a good long time, along with Congressman Oberstar and some of his other colleagues. And so I can just perhaps set the record and to set the scene a little bit, is that Congressman Oberstar and I, if they just moved the border between Canada and the United States a little bit, could be a Parliamentarian from the House of Commons in Canada, and I could be a Congressman from the United States. But it so happens—.
Mr. BOEHLERT. Without objection, so ordered.
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Mr. OBERSTAR. Anything to get rid of me.
Mr. COMUZZI. So what we have got is basically the very same area. We have basically the same type of people. We have the same type of industry, and members of the committee, you would think that because we are here today to talk about the Seaway and the Duluth-Superior part of the district and the Thunder Bay we would be very parochial in our interest. I must admit at the outset that we are a bit parochial, but it is way beyond parochialism that I think we work on what can happen on the most vital transportation link in the heart of both of our countries.
Especially today, you know, our farmers in the western part of Canada are suffering a great deal, and as I am told, some of yours are, too. There seems to be a trend in transportation today with just on the time deliveries and just in time deliveries, but transportation is taking over from the costs of and exceeding the costs of what we produce but, more particularly, what we grow.
And we have been noticing for the last little bit of time, the last several years, that the costs of transportation for our farm products has been eroded, not because of world prices, but because of the costs of getting our goods and those products to market. Now, it goes without saying that the Great Lakes-Saint Lawrence Seaway System is the most economical way to ship bulk cargo.
Iron ore from the Mesabi Range, grain from Alberta-Saskatchewan and your states in the United States, it seems to me that the farmers should be getting a better break on our ability to produce a more economical way to transport the goods that they grow. I think that is a vital role that the Great Lakes-Saint Lawrence Seaway can play, particularly today when we are so competitive on a global scene that it is incumbent for both Members of Congress and Parliamentarians to try, through whatever means they can, to reduce those ever-rising costs of transportation, because the costs of our goods or the costs of those things that we grow do not increase in proportion to the costs of transportation.
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So I think this is very timely that we should be discussing this very issue today. I support and many of my colleagues along the Great Lakes-Saint Lawrence Seaway on the Canadian side support the undertakings of Mr. Oberstar and bill 2332. We think that many of the statements made, that both you made, Mr. Chairman, and Mr. Oberstar, and I won't reiterate them, I have a statement I would like to leave and enter into the record.
I will just highlight a couple of them if I may. Many of the statements that have been made previous we concur. Two things though that I would like to draw to the attention of the committee are often things that are not given the amount of emphasis that I think they should have. One is how environmentally friendly transporting goods on the Great Lakes-Saint Lawrence Seaway really is. When you consider the amount of fuel used, and there is empirical evidence to which I refer in my report, that it is 44 percent more costly to ship by rail than it is by ship.
It is 100 percent more costly in fuel efficiency to ship by truck then it is by ship. When you talk about pollution, there is 50 percent more pollution created by rail than by ship, and over double the amount of pollution on highways than if you ship using marine transportation. Those authorities are in the report. I won't trouble you with those.
More importantly, I was in Washington three weeks ago just before the storm, and we were here on a binational group meeting. We thought we better leave on the Wednesday before the storm hit, and we were on the highway. It really came to light, Mr. Chairman, and members of the committee, that you have without question, the best interstate highway system in the world.
But at that particular period of time, it occurred to me that if we could alleviate some of the traffic on our highways, and the thought came back to the Great Lakes-Saint Lawrence Seaway System, the amount of goods that could be transferred to marine transportation and take that transportation off the roadway system and perhaps enhance that a little better, and that particular storm with the congestion on the roads, led me to visual evidence on the congestion of our roads, and yet the marine transportation being so underutilized in both of our countries today, there has got to be a way that we as legislators got to correct that.
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As safety aspects go, Mr. Chairman, without saying, the amount of truck accidents on the roads in Canada, I can't speak for the United States, but on the roads in Canada is increasing so much every year that we have to find a different system, and as a result I chair the renewal of Canada's infrastructure with respect to a limited access four-lane highway system across the country. We hope that will alleviate some of the problems that we have on the road.
I am going to leave it there, Mr. Chairman, but I want to address one of the issues that I know Congressman Oberstar and I were very concerned about has to do with environmental concerns and the sea lamprey. The sea lamprey which was introduced by ocean going vessels some 40 or 50 years ago under the Great Lakes system. I want to talk about the sea lamprey program, because it is indicative of what our two countries, Canada and the United States, can do when they work together and work cooperatively together.
I think I may be one of the few people in the room that at one time felt that going out on Lake Superior you couldn't catch a fish, I can recall that vividly, because the lamprey had consumed all of the fish on the Great Lakes. Canada and the United States got together and decided through the international joint commission to fund a program for the control of sea lamprey on the Great Lakes, and including the Saint Lawrence Seaway System and, in my mind, and in the mind of many people who are involved in this control of this exotic species that it is a scientific miracle, and as long as we continue to regulate and to lamprocide those particular hot spots every year, the fishing industry both commercially and sports fishing along the whole Great Lakes system has been enhanced.
So that shows, Mr. Chairman, that working together we can do great things, and using that as an example, I would like to say to you, sir, and the members of your committee, if we can work together on the combined Binational Great Lakes-Saint Lawrence Seaway System, I think that we would be doing a service to both of the people we represent.
Mr. BOEHLERT. Thanks for that statement. And let us start out with a pledge from the Chair and from all the members of the committee that we will work with our neighbors to the north. We will continue to work well as we have on so many issues.
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Is there anyone that seeks recognition for any questions of our distinguished colleague from the Canadian House of Commons. Dr. Ehlers.
Let me tell you the Chair's intention. The Vice Chairman, Mr. Sherwood is dashing over to vote. He will come back and relieve me of the Chair and I will go over and vote. It is our intention to continue without any disruption. Let us hope we can pull it off.
Dr. Ehlers.
Mr. EHLERS. Thank you, Mr. Chairman.
Just a couple of comments. First of all, I agree with Mr. Oberstar's comments about the value of the Great Lakes Seaway. But we should also recognize the large cost of invasive species to our lakes, and you mentioned the one, the sea lamprey, another is the zebra mussel, as well as several others. There is a species doing great damage in the Chicago area and some microorganisms doing great damage in many of the lakes.
We have to deal with that better. It is incredibly expensive to try to deal with those afterwards, and I hope that through our efforts we can develop methods where the Seaway can check ballasts coming in to make sure that ships have followed the regulations about changing the ballast to saltwater and back to fresh water, so we can stop these invasive species from coming in.
On the substance of the bill itself, I commend you for your statement and your interests. In fact for both of you that is true. We absolutely have to do what you suggested. I have some ties to Canada. My parents lived there for 11 years in Hamilton. I was in college for 4 of those years and spent a lot of time there.
As we approach each problem one at a time, and we have to set up mechanisms for dealing more directly, more rapidly with issues that come up, whether it is this one or that one. And I think that more interparliamentary exchanges would help, perhaps more permanent commissions involving Members of Congress and Members of the Parliament would help.
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I just spoke there a few months ago and we had a very good session together. I hope we can continue that and really get some of this done. I certainly support this bill. I am one of the earlier cosponsors of it. And we will do everything we can to get it through.
The question is very simple, what are the chances that your parliament will approve a similar bill and that we can actually get this off the ground?
Mr. COMUZZI. What are the chances? Our government just a short while ago, about a year and a half, turned over the complete operation of the Great Lakes-Saint Lawrence Seaway System to a private consortium. At that time there was a group of us within the government that felt that it should go from a government-operated agency right into a binational panel.
As an interim, as I was told and as I am advised, as an interim measure they turned it over to a private consortium of users, and those private consortium of users have indicated to us that they are willing to discuss the creation of a binational panel in order to do the things that Congressman Oberstar is proposing to you.
And I suspect and I am told, I don't have this as factual, but in the last couple or three weeks that there was someone from the Saint Lawrence Seaway, Canadian Saint Lawrence Seaway Authority here in the United States discussing that very issue.
Mr. EHLERS. I appreciate anything you can do and we will certainly do what we can do.
I yield the remainder of my time to the gentlewoman from New York, Mrs. Kelly.
Mrs. KELLY. Thank you. I appreciate that very much, Mr. Ehlers. I am unable to return once I go over to vote.
I have a technical question that I would like to address not only to you, but to subsequent people. You spoke of sea lampreys but you didn't talk about zebra mussels. And there are concerns that I have, as Congressman Ehlers spoke to you, the bilge problems that brought us zebra mussels.
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We need to have some assurance, I believe, in any kind of legislation like this, and I want to know if you have thought about and addressed the problems of large ships, their bilge pumping, their washout facilities, in addition to the problems of ballast?
Mr. OBERSTAR. I would like to respond to the gentlewoman's observation. It was this committee that recognized the problem. On two occasions, we have passed legislation, in the 103rd Congress and in the 105th Congress, the Nonindigenous Invasive Species Act, the second of which Mr. LaTourette was the sponsor, and it sets up a structure for enforcement of the bilge problem for ballast water exchange at sea before entering Great Lakes waters. The Canadians are doing something very similar to this.
Mrs. KELLY. That is why I asked, Mr. Comuzzi. Canada actually does have something that is similar or identical to ours?
Mr. COMUZZI. Mrs. Kelly, we have a program in place that very much is analogous to what you do here in the United States or the regulatory control that you have in the United States. Some of our areas are also, like in the Province of Ontario, go way beyond what the regulatory control is and have a voluntary program with the game and fish people who wash your boats down, wash your fishing rods, do all of the things that are necessary to try to avoid the introduction of these exotic species into the lake.
It should be perhaps regulatory control that is the same on both sides and adhered to by both sides.
Mrs. KELLY. Thank you very much.
Mr. Chairman, are you going to hold the record open for a few days?
Mr. BOEHLERT. By all means, the record will remain open for any comments. And also all of our panelists today should be on the alert that there may be some Members who would wish to submit questions in writing to further probe a particular area of interest, and we would appreciate a timely response.
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Thank you, Mrs. Kelly. The gentlelady's time has expired.
Mr. BOEHLERT. Thank you very much, Mr. Comuzzi, for being here, for being on the Resources Committee. Thank you for your eloquent statement, Mr. Oberstar, and for the passion you bring to this subject.
The committee will stand in very brief recess while I go to vote. Mr. Sherwood, the Vice Chairman is returning. As soon as he gets back, we will resume with Mr. Jacquez and continue right along.
Thank you so much. Temporary recess.
[Recess.]
Mr. SHERWOOD. [Presiding.] Our next witness will be the Honorable Albert Jacquez, the Administrator for Saint Lawrence Seaway Development Corporation.
TESTIMONY OF HON. ALBERT S. JACQUEZ, ADMINISTRATOR, ST. LAWRENCE SEAWAY DEVELOPMENT CORPORATION
Mr. JACQUEZ. Thank you, Mr. Chairman. Mr. Chairman, Ranking Member Borski, members of the committee, I want to thank you for giving me the opportunity to appear before you today. This is my second appearance in the short 9 months of my tenure and both appearances have been before this subcommittee, so I do appreciate it.
I know that Congressman Oberstar has left, but I particularly want to commend both the subcommittee and, in particular, Congressman Oberstar for his thoughtful initiative regarding one of our country's most important transportation resources; namely, the Saint Lawrence Seaway.
As has been told earlier, the idea of a binational seaway agency has been discussed on both sides of the border for a number of years now. And I know Congressman Oberstar has been a very strong opponent for such an entity. At this time however, the Administration does not support the creation of a binational seaway agency.
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As the Administrator of the Saint Lawrence Seaway Development Corporation, I have seen firsthand how the current management of the Saint Lawrence Seaway functions through two separate national entities with joint responsibility for the Seaway system. Saint Lawrence Seaway Development Corporation and its Canadian counterpart have worked hard over the past 40 years to present the Seaway user with as seamless a system as possible under the current national structures.
In many areas, including joint rules and regulations, joint vessel traffic control, joint ship inspections, the agencies have been successful in presenting the Seaway user with a unified system. The Administration does, however, endorse the bill's provisions that call for a performance based contract before the director general and the corporate board. Requiring a performance based contract ensures that the entire agency will be governed on the principles of performance based management.
This concept is in keeping with the Administration's proposal to convert the Saint Lawrence Seaway Development Corporation into a performance based organization. Indeed, the performance areas spelled out in Mr. Oberstar's bill, namely safety, reliability, environmental protection, trade and traffic development, intergovernmental cooperation and management and financial accountability are very similar, if not the same, to the Administration's PBO performance areas.
Making an organization performance based would help make managers and employees more focused on the results rather than on the process. Congressman Oberstar's proposal to create a binational seaway agency, together with the Administration's proposal to convert the Saint Lawrence Seaway Development Corporation into a PBO represent the two most significant U.S. legislative initiatives in decades regarding the Seaway.
As Congressman Oberstar stated earlier, the Great Lakes Seaway System generates over 50,000 jobs, almost $2 billion in business revenue and over $1.2 billion of personal income annually in the U.S. alone.
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It creates more than $155 million annually in Federal tax revenue and more than $100 million of State and local tax revenue annually. As these figures attest, the stakes are high for any legislation that seeks to ensure the future of the Seaway. I commend Congressman Oberstar for introducing his bill, and I look forward to working with him and the committee on such legislation.
Thank you for the opportunity for me to speak before you today. I am prepared to answer any questions you may have at this time.
Mr. SHERWOOD. Mr. Borski.
Mr. BORSKI. Thank you, Mr. Chairman.
Mr. Jacquez, thank you for your excellent statement. There was one point I wanted to make and I think you noted it in your written statement.
Your statement is about the labor concerns that we have. I just want to state for the record for those who don't know, and I am sure most people here do, that I don't think there is a stronger supporter for labor in the Congress than Congressman Oberstar, and I am sure that the differences that need to be ironed out will be and that the workers in here will be protected. I know you made some points about that.
What about the environmental concerns that were raised or talked about earlier by Mr. Comuzzi? Would you like to comment on that?
Mr. JACQUEZ. Yes. First, on your first comment, I think and I agree that Congressman Oberstar both has a reputation and a record of strong labor support. And I think it gets to the environmental issues that I raised, I believe the concerns are not so much what the bill says in regards to environmental protection or in some cases labor standards and there are some technical issues that need to be ironed out. It is more what it doesn't say.
I think the concern is that there are not any detailed provisions that talk about how they would be addressed. And as Congressman Oberstar said, he certainly is aware of the need for protection, and so that if those issues could be ironed out, I believe that those issues would be taken care of.
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Mr. BORSKI. Let me also ask, why does the Administration believe that two management entities for the Saint Lawrence Seaway are preferable to a single unified binational organization? Why is two better than one?
Mr. JACQUEZ. Well, I guess I haven't been here that long. I don't have a definitive response from the administration as to why two would be preferred. I guess what I could say is that there were a number of concerns that were presented to us on the provisions that are in the bill that exist today.
Perhaps it would be more fruitful for the committee and for the authors of the bill if you were to request formally of us, as you have in the past, a specific detailed section-by-section analysis of the bill and that would really elucidate all of those issues that they get to.
I will say that it has been brought to my attention on a number of occasions that there are some logical conclusions to be reached about a single binational agency, and we don't dispute those.
A couple of examples might be a seaway speaking with one voice. You know, one set of regulations, one policy voice speaking for the users could in fact be viewed as very efficient. But as to your question, I am sorry, I can't answer it directly, that it is not something that I can give to you right now at this point.
Mr. BORSKI. OK. I understand that the employees represented by the American Federation of Government Employees Local 1968 voted by a small margin not to support the Administration's PBO''s proposal. Is the Administration still pushing for the conversion of the Saint Lawrence Seaway Development Corporation into a performance based organization, even in the absence of workers' support?
Mr. JACQUEZ. Yes. The vote with our local union, as you said, was close. And I think maybe there is a distinction that I would like to make, and that was in the past they had actually voted overwhelmingly to oppose, the most recent vote which took place a couple of months ago was a close vote not to support, but they didn't come out in opposition.
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The second part of your question or my response would be that, yes, the Administration has submitted to Congress for consideration a PBO bill in August. I don't believe there has been any action on it though.
Mr. BORSKI. Thank you, Mr. Chairman.
Mr. BOEHLERT. [Presiding] Mr. Baird.
Mr. BAIRD. I have no questions.
Mr. BOEHLERT. Mr. Sherwood.
Excuse me for being out. I was over voting and I am coming back now.
In your statement did you address specifically the Administration's view on the proposed establishment of a development bank, is that in your statement?
Mr. JACQUEZ. It is not in the statement, no.
Mr. BOEHLERT. Would you comment on that?
Mr. JACQUEZ. The comments we received from the Administration essentially pointed to the possibility of the bank as structured, could be a way of bypassing the budget process. That is really most of the comments or the heart of the comments that they made to us. We did not put it in there.
I have some experience myself in working on regional financial institutions, and I know that, you know, if structured correctly and if structured in a way that they would not violate those principles, but as for further comments on this specific bank, those were really the only comments that we received.
Mr. BOEHLERT. OK. Thank you very much. Therefore let me thank you for your testimony, I appreciate it very much. Mr. Oberstar has a question.
Mr. OBERSTAR. Thank you, Mr. Chairman.
I want to express my great appreciation to Mr. Jacquez and to his predecessor, although not officially the Administrator, the interim Administrator David Sanders for the excellent support that we received throughout the time of formulation of this proposal.
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You have been very cooperative, very supportive, provided information at every request and offered many useful suggestions which I think have been helpful in shaping the issue for us and responding to various concerns.
I found it encouraging that Mr. Comuzzi so he expressed the interests of the Canadian Management Authority in discussions with the U.S. to work toward a binational authority. I also found at the 40th anniversary, which you so graciously hosted and which you made such a splendid presentation, Mr. Jacquez, a discussion with your counterpart in the Canadian—.
Mr. JACQUEZ. Guy Veroneau.
Mr. OBERSTAR. —Guy Veroneau on this subject, with whom I had a very fine discussion in French on this matter, and he expressed the keen interest of the Canadian authority to work with us on the U.S. side toward a binational authority. I think there is great movement in this direction, and I appreciate it.
Now, there is a question of whether there is any budgetary impact. Our committee staff on our side have asked CBO and I have had discussions with CBO. They say that since there is no mandatory spending, there is no budgetary impact. Does OMB have any observation on that aspect?
Mr. JACQUEZ. Well, as I mentioned just earlier, the comments we received were essentially that it may—I don't have the comments in front of me, we didn't put them in our remarks. It may cause a situation where the budget process would be bypassed. What I had suggested earlier, and I will suggest again, is I think it would be fruitful for both the committee and for us if we would submit to you a detailed section by section and get the comments of the entire Administration that would have a say in this as to the impact and what they saw needed changes in. And I think that would be useful. And we would be certainly willing to provide that.
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Mr. OBERSTAR. I appreciate that very much. And that was going to be my last point requesting that, and you indeed provide us that section by section summary response and analysis and we can proceed further from that point. I just want to make it clear the United States Government is not a participant in this bank. So OMB's fears are once again misguided.
Mr. JACQUEZ. Mr. Oberstar, if I could make a statement, you had commented on the growing interest on the Canadian side and had mentioned the management corporation's interest as well as the board of directors of that corporation, and I would just say that I concur in that observation. I just spent about a week with the chairman of the board of the management corporation as well as with Guy Veroneau on a trip to Japan. And they discussed that with me at length and they are very interested in pursuing it. And so I would just concur that, yes, that is something that we are hearing as well.
Mr. OBERSTAR. Thank you very much, Mr. Jacquez.
Mr. BOEHLERT. Mr. Administrator, thank you very much for your testimony. I hope you will be prepared to respond to any questions we might subsequently submit in writing. Respond in a timely fashion if you can. Thank you.
Our third and final panel today consists of Mr. John Jamian, Chairman of the American Great Lakes Ports Association, Mr. Donald Morrison, Canadian Shipowners Association. He is the President of that organization. The manager of marine operation for the Shipping Federation of Canada, Captain Ivan Lantz. And from the U.S. Great Lakes Shipping Association, the Executive Director Ms. Helen Brohl.
As the panelists make their way to our table let me advise you that each of your statements will be included in the record at this point in their entirety. We would ask in the interest of time that you try to summarize your statements in approximately 5 minutes. The Chair will not be arbitrary but we would like to try to restrain the timing of the formal submission in order to allow opportunity for questions.
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We will proceed in the order that our panelists were introduced. First from the American Great Lakes Ports Association, Chairman John Jamian. Mr. Jamian, it is all yours.
TESTIMONY OF JOHN JAMIAN, CHAIRMAN, AMERICAN GREAT LAKES PORTS ASSOCIATION; DONALD N. MORRISON, PRESIDENT, CANADIAN SHIPOWNERS ASSOCIATION, ON BEHALF OF THE CHAMBER OF MARITIME COMMERCE; CAPTAIN IVAN LANTZ, MANAGER OF MARINE OPERATION, SHIPPING FEDERATION OF CANADA; HELEN BROHL, EXECUTIVE DIRECTOR, U.S. GREAT LAKES SHIPPING ASSOCIATION
Mr. JAMIAN. Thank you, Mr. Chairman and members of the subcommittee. I am John Jamian, Executive Director of the Detroit-Wayne County Port Authority and also Chairman of the American Great Lakes Port Association. American Great Lakes Ports is an organization representing 12 public port authorities on the U.S. side of the Great Lakes. Our member ports are in each of the eight Great Lakes states and each a division of state, local government or an independent public entity created by state statute.
As public agencies we are charged with the responsibility of facilitating commerce, economic development and, of course, job creation. In this regard, we advocate those policies and practices that foster maritime commerce on the Great Lakes. Likewise, we oppose those efforts that would hinder either domestic or international shipping on the Great Lakes.
I want to thank you for your leadership in holding these hearings today on H.R. 2332. I particularly want to thank Congressman Oberstar for his tireless efforts on behalf of the Great Lakes maritime industry. Certainly in Detroit at our port we have heard of your name many, many times. Whether fighting for Coast Guard, ice breaking services, development of the Soo Locks, control of aquatic nuisance species, or funding for the harbor maintenance or creation of a binational Seaway agency, Jim Oberstar has stepped forward to tackle the tough issues and has been a champion for our entire region. The Great Lakes maritime industry is characterized by many small businesses struggling to make ends meet. For that reason leadership from the private sector has often been lacking. We are indeed fortunate that Congressman Oberstar has and continues to take such a strong interest in all of our future. Let me assure you it does not go unnoticed or unappreciated.
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I would be remiss though if I did not mention the strong cooperative effort we also enjoy from the remainder of the Great Lakes House delegation. Unlike any other region of the country I am proud to say that our legislators work together for our common good. I thank many Great Lakes representatives who have added their names as cosponsors to this bill.
While in 1959 President Dwight Eisenhower joined Queen Elizabeth II in dedicating the St. Lawrence Seaway, there was a tremendous optimism during that period for what the new maritime system would become. Many of the dreams were realized but many were not. Changes in the shipping industry left the Great Lakes behind as containerization became widespread and ships of enormous size and draft became more effective. Nevertheless, for the movement of bulk and breakbulk cargoes the Great Lakes and St. Lawrence Seaway system remain a competitive transportation system having accommodated more than 39 million tons of cargo last year.
This transportation system is not without its challenges. Intense competition from both railroads and the inland river system will continue to require our industry to find ways to become more efficient. Binationalizing the Seaway is one such efficiency. The concept of binationality was born out of a realization that there are cost savings to be enjoyed by eliminating duplicative services and functions of the American and Canadian Seaway management agencies. Beyond the actual dollars that could be saved, a simplification of the bureaucratic structure of the Seaway can do much to make the system more user friendly.
To their credit the St. Lawrence Seaway Management Corporation and the St. Lawrence Seaway Development Corporation have done much in recent years and worked towards operational binational. The agencies have coordinated their activities to eliminate duplication as much as possible. But the current structure places limitations on how far they can go. The evolution of the Seaway requires this last step to be taken and the agencies merged.
The American Great Lakes Port Association supports H.R. 2332 as a means of achieving a binational Seaway management structure. In doing so we acknowledge the very difficult issues that Congress and Oberstar had to tackle in constructing this bill. It is not often that a binational entity is created and there were few precedents to study as a model in this process. Complex questions regarding national sovereignty, diplomatic process, labor protections and financing all had to be addressed in this one package.
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We would like to raise one issue of particular concern to our members. Title I, Section 101(7) of the legislation details one of the functions of the new St. Lawrence Seaway Corporation, to include developing a long term plan for operating, maintaining and improving Seaway assets and for financing such operation maintenance and improvements on a self-sustaining basis. We strongly urge the words ''on a self-sustaining basis'' be dropped from this legislation. We thought the issue had been resolved in discussions with the committee staff, but were kind of dismayed to see the language reappear when the legislation was reintroduced to this Congress.
The concept of a self-sustaining Seaway suggests that revenue will have to be generated presumably from the users of the Seaway. Such a notion is contrary to the more than a decade of effort to eliminate tolls and other fees on maritime commerce on the Great Lakes. We will note that Congressman Oberstar himself has supported the elimination of U.S. tolls on the St. Lawrence Seaway and has urged the Canadian government to eliminate tolls, and most recently proposed doing away with the remaining portion of the U.S. harbor maintenance tax. We strongly support these efforts to eliminate government imposed costs which make the Great Lakes less competitive.
We are pleased with provisions in the legislation which require the new corporation to utilize a performance based management system and we commend Mr. Oberstar again for including these provisions which are an outgrowth of the current efforts of the St. Lawrence Seaway Development Corporation and other Federal agencies in which they want to be more responsive to their constituencies. We concur that a system of specific performance goals and a reward system for meeting those goals will help to ensure this new binational agency's success.
A key feature of the legislation is the establishment of a Great Lakes Development Bank. Such a bank can be an important source of capital for port development projects, vessel financing, and shipyard modernization. With regard to modernizing the Seaway's infrastructure itself, we urge caution. While the development bank may provide a source of capital someone still has to pay the debt. We feel that asking the Great Lakes commerce to bear the burdens of financing a modernization and rehabilitation or reconstruction of the Seaway locks will chase more cargoes away to competing modes of transportation. The flow of commerce through the Great Lakes is frail already. No one has to use the Seaway. Rail and barge operators offer competitive alternatives to the Seaway system.
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And we have all watched with great concern as this committee has taken a very different approach towards the inland river system. In recent years this committee has authorized literally billions of dollars in infrastructure modernization on the Ohio River. Plans are under development now for billions more to be spent on the Mississippi. As you can imagine, this is of great concern to all of our ports and our maritime industry on the Great Lakes-St. Lawrence system.Again the inland river system directly competes with the Great Lakes-St. Lawrence Seaway system.
We welcome the development bank as one means of financing infrastructure but not the only means of financing infrastructure. Just as inland river locks have required modernization and reconstruction, the Seaway locks will require the same someday. When that time comes we will expect Congress to be just as forthcoming.
Finally, it is our hope that the committee will not only move this legislation forward but that your influence can be brought to bare on reestablishing direct discussions between the U.S. and Canadian governments on this topic. Earlier discussions showed great promise but formal activity has languished for the past year or so during Canada's transition from a government operated agency to a private nonprofit operation. We believe that these talks are an important complement to this legislation and will ultimately be necessary as part of the overall process.
So thank you very much, Mr. Chairman and members of the committee, and thank you, Mr. Oberstar, for considering our views and creating this important legislation.
Mr. BOEHLERT. Thank you very much for the testimony. Mr. Morrison.
Mr. MORRISON. Good morning. Thank you, Mr. Chairman. I am pleased to be able to appear before you here this morning and in the interest of time, as requested by the chairman, I will forego some of the description of our associations which I represent this morning. I am representing both the Canadian Shipowners Association, of which I am president, and the Chamber of Maritime Commerce. I will forego brief because—briefly, the description of our organizations is to impress you with the importance of the associations and the fact that we are a major player in the Great Lakes-St. Lawrence.
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Mr. BOEHLERT. Consider the subcommittee duly impressed.
Mr. MORRISON. You can read those. They are already in the record. Currently the Canadian Shipowners Association members account for more than 95 percent of Canadian flag commercial tonnage. And the Chamber of Maritime Commerce represents both shippers and carriers on both sides of the border in Canadian and foreign flag fleets. Our two associations' goals include promoting an economic and competitive Canadian marine industry and making the Great Lakes-St. Lawrence waterway the most competitive, environmentally responsible water management system in the world. Between our two great countries we feel this vision is possible.
In 1997 these two associations, the Canadian Shipowners and the Chamber, produced a document entitled the Competitive Vision for the Great Lakes-St. Lawrence Waterway. One of the main recommendations of this document was a request that the government of Canada make the establishment of a binational management of the St. Lawrence Seaway a priority and to work with the United States to achieve this as expeditiously as possible.
In 1997 Congressman Oberstar wrote to my predecessor to note that your inputs, the Canadian Shipowners Association inputs, have been invaluable to our effort to draft legislation that will create a binational corporation to structure operation of the Seaway. This work was ultimately used to prepare H.R. 3147 during the second session of the 105th Congress and our commitment to that approach has not changed.
Further, and your presentation notes should be amended and can be amended to include this, section 78 of the Canada Marine Act, subsection (h) states the objectives of this park, and I quote, are to encourage new cooperative arrangements with the U.S. for the management of the transportation facilitation of services in the Great Lakes-St. Lawrence region.'' these statements, these three statements set the stage for the comments to you today.
First, Congressman Oberstar is to be lauded for his efforts in support of the Seaway and for his specific initiative to table this proposed legislation which we see as a steppingstone to achieving a new governance and management system for the Seaway. In our country we often quote Congressman Oberstar when we wish to make a point about the Seaway system. So you have a valuable resource in the Congressman who continues to try to push the betterment for the future of the Seaway.
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It is recognized, however, that much dialogue will be required between our two countries at the political, bureaucratic, and we have to stress commercial levels before any agreement is finalized. But we in Canada recognize and appreciate the Congressman's continued interest to create change for this most important commercial infrastructure.
At this time, since supporting comments are pertinent, we have heard that the Seaway is celebrating its 40th anniversary. I won't describe the two million tons, the $360 billion of cargo. Suffice it to say it has paid many times over its original investment in jobs and economic prosperity. And one comment about concerns of employees working on both sides of the border in the present administration, we have to feel that commercially the best protection for employees is to increase the business and the industry of the St. Lawrence Seaway, and we see this binational approach as being one of those ways to do that.
The American and Canadian fathers of this waterway had a vision and we would have to say they were right. The U.S. and Canada are joint custodians of the Great Lakes and St. Lawrence Waterway and our history in this matter has been one of cooperation and coordination of services across the border. Seaway operations, management and governances can be connected to some degree to be precursor to free trade between our countries.
CSA and the CMC actively supported the government of Canada in creating a new commercial entity for Seaway management on the Canadian side. This was accomplished in 1998. Our organizations are driven by the need to improve the competitiveness and cost effectiveness of the complete waterway from Duluth, Minnesota to the Gulf of St. Lawrence. CSA and the Chamber cannot speak on behalf the Canadian government on this bill, but we will and can certainly support a binational agreement as a matter of our own policies and we will continue to encourage both governments to continue in this direction.
Some concerns: Governance and management issues require further discussions. The method of continued and long term financing of the U.S. portion of the Seaway needs to be addressed. I believe that people have already been discussing that this morning. The initial financing as well must undergo further scrutiny. Make it a joint approach to it rather than having one banking system in one country and one banking system in the other. Implementation factors of the equity provisions will have to be identified. That is a case of filling out the first part of the bill as it is presented.
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The CSA and the Chamber feel that the proposed government oversight in the bill is too pervasive and feel that commercial interests have to have a higher priority. We suggest that the current Canadian Seaway management structure may provide a good example of separation of government and commercial interest. There is an absolute need to ensure involvement of government of Canada officials in this proposal at the earliest opportunity. Notwithstanding we are from the private sector, when we started dealing with our government officials and to come down here for this presentation we feel that they have to be involved so that we will have further support for this bill.
As a final comment, we see the commercialization of the Seaway system through a binational agency as a way of the future. We have appreciated the opportunity to appear before the subcommittee. And we would be pleased to further address this issue as required in the future either at other formal sessions or reply to specific questions as they arise.
Thank you for the opportunity to share our comments with you.
Mr. BOEHLERT. Thank you very much, Mr. Morrison.
Captain Lantz.
Mr. LANTZ. Thank you, Mr. Chairman and members of this distinguished subcommittee, for inviting me to be here today. My name is Ivan Lantz and I am the Manager of Marine Operations for the Shipping Federation of Canada and I also act as the Secretary of the International Carriers Seaway Committee.
For information this Shipping Federation was created by an act of Parliament in 1903 as an association of shipowners and agents whose vessels are engaged in the deep sea trades.
Our members represent over 90 percent of the international carriers using the St. Lawrence Seaway and Great Lakes system. The federation has a mandate to represent its members on issues of common concern, and to foster the interests of the various trades in which they are involved.
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We entered the current debate on the future of the St. Lawrence Seaway in 1994 as a participant in the Canadian government's deliberations on the Canada Marine Act. Those deliberations and the development of the Canada Marine Act created a new management structure for the Canadian portion of the Seaway and not for profit corporation to manage the waterway's day-to-day activities.
The act also left the door open for discussions on the possible development of a binational agency to manage the Seaway, an idea which was well under discussion under the guidance of Congressman Oberstar and many people by that time.
The St. Lawrence Seaway Management Corporation has been in operation only since October of last year. To date the transition has been relatively seamless. It has been absolutely seamless. The corporation has performed better than budget despite significant fluctuations in traffic and it has negotiated new collective agreements without strike or dispute and embarked on an aggressive program to improve operational procedures with a view to enhancing the waterway's competitiveness.
To date the commercialization project has served as an example of a successful partnership between government and private sector. However, given the limited time frame and the conditions under which the corporation has operated thus far, we truly believe that a more realistic evaluation will be possible in another two years or about that time.
The binational Great Lakes Seaway Enhancement Act of 1990 is based on realistic findings and objectives. Congressional authorization for an executive agreement between the United States and Canada would appear to be a necessary and diplomatically correct and an important thing to do.
Although sections of the bill dealing with the administrative structure and management of the binational agency represent a balanced approach, we believe that it may be premature to include such details in the current legislation. Further discussions between the United States and Canada on a binational management structure may prove to be more fruitful if the parties are free to negotiate such matters at their own pace rather than being limited or encumbered by the details already cast in legislation.
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Congressman Oberstar has worked hard and earnestly on this bill. He has a passion for the Great Lakes and the world trade afforded by the Seaway and the St. Lawrence River. We share his passion and his dreams.
The objects of this bill are to increase the competitiveness of the Great Lakes and Seaway route to the benefit for Americans and Canadian producers and the vibrance of the North American economy. The work of Congressman Oberstar has kept the objectives of the binational agency alive. And we applaud his tenacity and dedication.
Early dialogue on the binational management of the Seaway focused on the establishment of a government agency and the same approach can be found in Congressman's Oberstar's bill. However, Canada's experience with the St. Lawrence Seaway Management Corporation, limited though it may be, suggests that this option of a private and public sector partnership in which the government acts as the landlord of the waterway, and contracting operational matters to the private sector style of partnership on a not for profit corporation, we believe that this gives you the best of operation conditions that we can have.
Under this structure, you have users representing ship owners and the major shipping sectors seated at the board of directors along with Federal Government representatives and regional public representatives. These directors run a corporation that is structured to deliver in accordance with a contract with government. In fulfilling its objectives, the board must be accountable to both government and users.
I will conclude. In our opinion, the most important aspect of the proposed legislation is the provision of an authorization to initiate discussions with Canada on the creation of a binational Seaway agency and that will be reasonable for the operation and fiscal management of the waterway. The private sector, industry, and the users of the Seaway-Great Lakes system expect to play a major role in the development of such an agency and its development operational and administration. We firmly believe that such a partnership is workable, feasible, and a recipe for success. Mr. Chairman, members of the subcommittee, thank you for this opportunity.
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Mr. BOEHLERT. Thank you very much Captain Lantz. Ms. Brohl.
Ms. BROHL. Thank you. We would like to thank Congressman Oberstar for his extraordinary and ongoing leadership in the Great Lakes in support of commercial maritime and for the entire committee for allowing us to be here today.
I am Helen Brohl. I am the Executive Director the U.S. Great Lakes Shipping Association. We are an association established in 1954 of ship agents who work with the international vessels that navigate the St. Lawrence Seaway in order to call on U.S. Great Lakes ports. Ship agents in our association remain most interested in the safe and efficient movement and handling of vessels through the system, including the locks, the navigation channels at terminals and with the myriad of government agency clearances required by the Port State Control, IMO and by being a vessel involved in international trades in U.S. waters.
We are very operations oriented. As an organization whose primary concern is to promote these goals, our view of the binational Seaway proposal is one of pragmatism. We support your effort to proceed with the process of binational legislation and H.R. 2332, and hope that your colleagues in Canada feel the same.
However, our operational needs are very simple: Continue to promote safe and efficient navigation and, if possible, include provisions that will promote a competitive system and we believe that this will do that. We do ask that you ensure that the positive activities between the current St. Lawrence Seaway Development Corporation and the St. Lawrence Seaway Management Corporation will remain or be enhanced further.
There is at least one area in which we have been very satisfied and that is in the joint inspection program. Before Transport Canada reverted the old St. Lawrence Seaway Authority to the privately operated St. Lawrence Seaway Management Corporation an effort had been implemented to make seaway operations more efficient. Working with their counterparts from the St. Lawrence Seaway Development Corporation and the Coast Guard Marine Safety Office in Buffalo, the operations officers in the SLSA created a very good joint inspection program for the Great Lakes which eliminated duplicative and burdensome inspections. The inspection program and in particular the self-inspection program which originated in the Lakes and is now used nationwide by the Coast Guard was a great boon to the shipping companies that frequented the system. We would like continued support for these types of streamlining projects now as well as under a new binational system.
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Since our friends with the American Great Lakes ports have well expressed cost and competitive issues with the bill, we would also like to take this opportunity while discussing the Great Lakes-St. Lawrence Seaway System to ask your consideration of three Great Lakes shipping issues. The USGLSA believes that one the most positive ways to promote the system is to make it more user friendly. The streamlining inspection program mentioned is an example of providing a user friendly system.
Additionally, the St. Lawrence Seaway Development Corporation has done a great service to the industry by actively educating shipowners and shipbuilders on the specifications needed to operate in the system and the ways in which the ship's design can be enhanced to make the trade more lucrative. This effort has made the system more user friendly.
The USGLSA would like your support in the development of a government industry organized into a real time Internet project which would take this concept of user friendly promotion further. A real time communications network with an emphasis on operations might allow the ship operator in Hamburg, for example, to feel more at home in the system. It could provide ship agents access to information in a day which might now take a month or more. It might allow terminal operators a real time determination of port arrival in order to assess labor needs or even provide a central communications network for those of us in the industry with operational concerns. We call this concept LakesNet and a system of this type is already being used by at least one other port area in the country with great success. We believe its application on a regional level in the Great Lakes would be a very exciting step.
A real time Internet site is one where information is automatically pushed. For example, Seaway data may be automatically updated daily. NOAA Weather Service information by port could be viewed. Monthly Army Corps of Engineers lake levels or Coast Guard notices to mariners might be automatically blotted on digitally reproducible and certified NOAA charts, and the list goes on. This would promote the system by making it more user friendly. Shipowners unfamiliar with the system somewhat view the Great Lakes as a black hole. This site would be their pulse on the system.
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We currently believe that such a sight should be overseen by the St. Lawrence Seaway Development Corporation in partnership with their friends in Canada, the St. Lawrence Seaway Management Corporation. The capabilities already exist for this type of project, making start-up costs quite low and would fully replace the Seaway Nightcast program which has been languishing. We would be happy to facilitate a demonstration of this type of site at your convenience.
The USGLSA would also like your consideration in the areas of market diversification. As you are well aware, the international Great Lakes system is predominately dependent on inbound steel and outbound grain. This year the House of Representatives voted to limit the amount of imported steel in the United States in response to the high spike of 1998 tonnage. International carriers as well as steel ports and export grain ports in the Great Lakes benefited from the extra business in 1998. However, when Congress sought to legislate a limit on our business we were sorely reminded at how vulnerable we are in the Great Lakes by living in a niche market.
We would like your support in providing a study by which the Great Lakes maritime industry is evaluated in its ability to diversify its market. The Great Lakes maritime industry and myself included have been prone to say, oh, someone tried that 30 years ago or it has been done 20 years ago and it just can't work. Well, maybe we can't be everything to everybody in the Great Lakes but perhaps there are a few new areas in which we could excel.
Thirdly and lastly, please help keep an ever vigil watch on the ways in which fees and regulations and legislation impact the Great Lakes in particular. I have been told at various times by agency personnel in the government that I shouldn't be concerned about an issue in the Great Lakes because the Great Lakes doesn't have international shipping, which was a surprise to me frankly. Other times I have had to explain how charter and tramp vessels operate as compared to liner and container trade. We are special in the Great Lakes. I can cite an example of where customs legislation created to simplify customs law in general implicitly penalizes vessels which call on the Port of Toledo because of the geography in the western basin of Lake Erie. Custom's response is we sympathize, but the law is the law. We are now being forced to request a legislative amendment because an agency failed to consider the implications to the Great Lakes.
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Of course there are many regulations and costs which we share with all international vessels calling in all U.S. waters. The GAO recently confirmed that we are subject to 127 different fees. When we share sometimes how the State Department increased the cost of personal visas and essentially eliminated the crew list visa, it was as if they were telling the crews of commercial cargo vessels that they are not welcome on U.S. soil.
We share many stories such as this where we might think that the U.S. Government doesn't really want to be involved in international trade by vessel because of how difficult it can be to get business done. This is not a one-stop-shop country for foreign vessels or any vessel in international trade.
On the other hand, we in the Lakes can get one step ahead by joining to create the most operationally efficient system imaginable. We trust that you will be closer to this goal through your efforts in a binational system and by investigating further ways to enhance our standing in the international shipping market place.
Thank you again for allowing us to participate today. Thank you for your continued support.
Mr. BOEHLERT. I thank each of you for your testimony and for your willingness to serve as resources for this committee. The Chair would be pleased to recognize the author of the base bill for any questions he may care to have at this juncture.
Mr. OBERSTAR. Thank you very much, Mr. Chairman, for that courtesy and I appreciate it. Again I want to thank you for scheduling the hearings and for taking the time that you and the personal interest that you have genuinely shown. I especially want to express my appreciation to Captain Lantz for participating in the several discussions throughout 1997 and to Mr. Morrison's organization and his predecessor for participating, Mr. Jamian also. All of you have, and Ms. Brohl, the association has been wonderfully supportive and had great ideas in helping us shape this legislation.
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And let me make it clear what I have done with this bill and those who have supported it in its formulation is to set forth an idea to challenge our thinking, to move into the next century. This is not the definitive sort of—I hate to use the word—carved in stone thing, this is all I will take and nothing else. This is the beginning of what I think is a constructive dialogue to shape the future of the St. Lawrence Seaway and the states and the provinces that depend upon it for their livelihood and for their future. And I welcome your suggestions.
Mr. Jamian, you questioned the constraint that might result from the language 'self-sustaining basis.' Well, I left that language in because I wanted to provoke the discussion about this point rather than take it out and dust it over. I left it in because I think this is an issue that will be raised and should be raised. It has been raised against the Seaway since the very first introduction of the bill that John Blotnik offered in 1947 in his first year in Congress. They said, oh, it is going to cost too much, it is going to cost billions of dollars and so forth. Let's face that issue squarely, honestly, openly and deal with it. That is what we are going to do here.
I hear you when you say eliminate government-imposed costs. That is the principal objective of this binational authority, eliminate the duplications. You have cited those points. So I take those to heart.
Mr. Morrison, you say much dialogue will be required on the political level, bureaucratic level and the commercial level. Our very first objective was to bring commerce into these discussions. And all of you on the business side have been very constructive in your ideas about how this authority should be created and crafted and operated. So I welcome again those suggestions. If the business side is not satisfied, this isn't going to work. The whole purpose of this is to expand business opportunities. The whole purpose of this binational authority is to expand business opportunities and unleash the economic power of agriculture and industry in our great midsection of the United States and Canada. You know, the Great Lakes States represent 45 percent of the Nation's agriculture. One out of three industrial jobs in America is located in the states that border the Great Lake as does the great engine of Ontario in Canada. So we want to unleash that power by providing a means to make the Seaway more competitive.
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And Captain Lantz, I was very touched with your concluding comments that the idea of a partnership of private sector industry and government users is a recipe for success. That is exactly what I like, that constructive approach. We will take those thoughts further and hone them more carefully.
Ms. Brohl, I hear your three points. I think those are very good, making the Seaway user friendly and Internet project for information on the Lakes, it is a terrific idea. We have the beginnings of such already but it can and should be done, regardless of this binational authority, and control costs, of course, that is what we want to accomplish. You didn't address the question though of the binational authority. Do you think this is moving in the right direction?
Ms. BROHL. Yes. To put it simply, yes. We do support it. As I mentioned of course, when I use the word efficiencies, that is a nice way of saying we would like to keep the costs in check. And frankly, we trust you implicitly that you understand the importance of that. So to that extent, yes, we do support it wholeheartedly.
Mr. OBERSTAR. Mr. Morrison, one question. You expressed a concern that government oversight might be too pervasive and without being extensive, could you cite perhaps a major concern.
Mr. MORRISON. It is not necessarily for us to comment on but to reply generally to your question, the possibility of a government veto I don't think would sit very well with us at this time. Because we don't even have that within the commercial side on the Canadian side now. And we are finding it works well. Ultimately with the government control of the infrastructure, that is why I said I think there can be a separation of government and commercial. Perhaps government with the control, perhaps vetoes over infrastructure changes but in terms of the operation of binational group rating, they should perhaps have somewhat unfettered ability to move the Seaway in the direction that they see fit.
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Now, I can understand there ultimately may have to be some controls but considered as an example of presidential veto over certain decisions on the American side would mean that it then becomes not a binational group but rather two groups unless Canada followed in the same route which commercially we wouldn't like them to do.
Mr. OBERSTAR. I appreciate that. Of course half of the binational authority board could come from the private sector and that might respond to your concerns about the private sector involvement.
Mr. Chairman, the question of government veto is rather a thorny one. Both the government of Canada and the government of the United States continue to be owners of the real estate and the locks that are in their respective territories. And what I was trying to shape with all the various input and with Mr. Comuzzi's thoughts is how do we retain that overriding national interest. And if the veto gives you heartburn, that is a point that we will have to continue to debate and explore.
Mr. BOEHLERT. Thank you very much, Mr. Oberstar. I wish to thank all of our panelists. This is easy. You are getting off easy.
I hope each of you will be prepared to accept any written submissions we might have from the subcommittee and respond in a timely manner. But with that let me thank each of you for serving as resources for the subcommittee. We appreciate what you are doing.
Mr. Oberstar we appreciate your initiative in this area. And we thank all in attendance. This hearing is adjourned.
[Whereupon, at 11:50 a.m., the subcommittee was adjourned.]
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