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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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MAY 9, 1996

Printed for the use of the

Committee on Transportation and Infrastructure


BUD SHUSTER, Pennsylvania, Chairman

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

Subcommittee on Coast Guard and Maritime Transportation

HOWARD, COBLE, North Carolina, Chairman

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

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


    Barrett, Rear Admiral Edward J., Chief, Systems Directorate, U.S. Coast Guard

    Collins, Rear Admiral Thomas H., Chief, Office of Acquisition, U.S. Coast Guard

    Flesse, C. Kenneth, Director of Traffic, LTV Steel Company and Chairman, Committee on Traffic, on behalf of the American Iron and Steel Institute

    Peschel, Rear Admiral Rudy K., Chief, Office of Navigation Safety, U.S. Coast Guard

    Ryan, George J., President, Lake Carriers' Association

    Skelton, Captain Ray, Director, Environmental and Government Affairs, Seaway Port Authorities Duluth

    Smith, Daniel, Vice President, American Maritime Officers (Great Lakes)
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    Barrett, Rear Admiral Edward J

    Collins, Rear Admiral Thomas H

    Flesse, C. Kenneth

    Peschel, Rear Admiral Rudy K

    Ryan, George J

    Skelton, Captain Ray

    Smith, Daniel

    Barrett, Rear Admiral Edward J., Chief, Systems Directorate, U.S. Coast Guard, responses to hearing questions


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U.S. House of Representatives,

Subcommittee on Coast Guard and Maritime Transportation,

Committee on Transportation and Infrastructure,

Washington, DC.

    The subcommittee met, pursuant to notice, at 12:10 p.m. in room 2167, Rayburn House Office Building, Hon. Howard Coble (chairman of the subcommittee) presiding.

    Mr. COBLE. The Committee on Coast Guard and Maritime Transportation will come to order.

    Ladies and gentlemen, at the outset, on behalf of our distinguished friend from Tennessee and me, we want to apologize for the belated start. Best laid plans of mice and men, you know, often times go awry. Today's been one of those days. No one is to blame, but we do apologize for the late start.

    The subcommittee is meeting today to hear testimony on the Coast Guard acquisitions, research and development, and domestic and international icebreaking missions.

    As all of you probably know, as we normally do, we limit opening statements to the chairman and the ranking minority member. If other Members have statements, they may be included in the hearing record.
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    This hearing is yet another in a series of subcommittee hearings to consider whether any of the Coast Guard missions should be performed differently or even eliminated to improve the overall level of Coast Guard service to the public.

    I don't know the answer to this question, and we may find that all Coast Guard missions are essential and being performed in the most efficient manner possible. I do believe, however, we owe it to the American taxpayer to make sure that we have thoroughly evaluated all Federal programs, including Coast Guard programs.

    Last year we conducted hearings to review two important Coast Guard responsibilities—illegal drug interdiction and the vessel traffic service system.

    I believe the drug interdiction matter has, in some instances, been ignored by the Administration, although recently revived, and it is my belief that we must increase the Coast Guard's budget for this mission. Four-tenths of 1 percent I think was the increase the President proposed for drug interdiction for fiscal year 1997, and it is my feeling that that is probably insufficient to respond to the massive quantities of drugs entering this country.

    Our hearing last year highlighted the need to correct this situation. I will continue to work, as I'm sure my friend from Tennessee will, to ensure that the Coast Guard receives the resources it needs to protect our country from the devastation that is present where illegal drugs are mentioned.

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    Our hearing today will review the Coast Guard's policies and procedures relating to the Coast Guard's capital acquisition program, its research and development program, as well as its domestic and international icebreaking activities.

    We will consider the current proposal for these programs, and also the Coast Guard's long-range plans for those areas. I am particularly interested in the Coast Guard's future vessel and aircraft acquisition strategy.

    The Coast Guard's research, development, test, and evaluation program's purpose is to help the Coast Guard improve the execution of existing missions and anticipate future Coast Guard activities by developing new equipment and systems to improve the productivity of Coast Guard operating forces.

    In 1993, the General Accounting Office conducted an audit for Congress to determine if the Coast Guard's policies and procedures for selecting research projects were adequate. The audit found that the Coast Guard needed to improve its procedures for selecting projects, as well as its management of the Coast Guard Research and Development Center.

    I have been informed that the Coast Guard has made efforts to improve this program, and look forward to hearing about the Coast Guard's progress in this important area.

    We will also look at the Coast Guard's international and domestic icebreaking missions. The Coast Guard has requested $128 million for its ice operations in 1997 and is currently building a third polar icebreaker. I know our Members from the Great Lakes region of the country will be very interested in hearing about the Coast Guard's plans for future icebreaking needs of these important waterways.
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    Gentlemen, as you all probably know, one of my favorite pet projects for a long time, at least for seven or eight, and maybe even 9 years, has involved the construction of this third polar icebreaker. I'm speaking from the top of my head now. I'm oftentimes amused how many people, when they hear icebreaking, their minds exclusively are directed to the Arctic or the Antarctic, overlooking the great lakes, overlooking inland rivers.

    Of course, as you all know, ice does manage to form in the Great Lakes and inland rivers, and we can't dispatch a polar icebreaker to every inland river and all the Great Lakes. I just wanted to throw that out because that's not our doing, I don't think, but that is something that I think we need—of which we need to be aware.

    As the subcommittee continues to conduct hearings focusing on different Coast Guard missions during the remainder of this year, I encourage all interested groups or individuals who have ideas or suggestions on how to improve Coast Guard operations to submit these proposals to our subcommittee so that we may have the benefit of these recommendations, in addition to the information that is received from our hearings.

    Later this year we will conduct several other hearings to evaluate the other important Coast Guard missions, including search and rescue, commercial vessel safety, and various law enforcement missions, as well.

    I appreciate everyone's presence here today and look forward to hearing from the witnesses.

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    I am now pleased to recognize the distinguished gentleman from Tennessee, the ranking member, Mr. Bob Clement.

    Mr. CLEMENT. Thank you, Chairman Coble, very much. Thank you, Mr. Chairman, for scheduling this hearing on the Coast Guard's acquisition, construction, research, and icebreaking programs.

    Two weeks ago we had the pleasure of hearing from the Commandant on the Coast Guard's proposed budget for fiscal year 1997. Today we'll have the opportunity to look at the Coast Guard in a more programmatic method.

    The Coast Guard saves billions of dollars annually in both lives and property saved. Men and women operate in hurricanes, tropical storms, blizzards, ice storms. Operating in these environments requires modern equipment, vessels, aircraft, and other state-of-the-art technologies.

    Today's hearing will give the subcommittee an opportunity to look at these programs and the Coast Guard's long-term needs for capital replacement.

    Several weeks ago I had the opportunity to review first-hand the Coast Guard's drug interdiction program. The technology being applied today is making a difference.

    I look forward to hearing from the Coast Guard on their research and development and how it can aid us in our war on drugs, pollution prevention, and marine safety.

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    We also have the chance to hear from the Coast Guard and private industry on the Coast Guard's international and domestic icebreaking mission. In 1981 the Subcommittee on Coast Guard and Navigation issued its report on the Coast Guard's roles and missions and stated that particular consideration should be given to the possibility that additional Arctic icebreaking services should be provided primarily, if not solely, by the private sector.

    Since that time the National Science Foundation has begun leasing its own icebreaker rather than paying for the use of the Coast Guard's polar class icebreakers.

    I look forward to hearing from the Coast Guard on how this mission has changed since 1981.

    Again, thank you, Mr. Chairman, for scheduling this hearing. These issues are all new to the Committee on Transportation and Infrastructure, and I believe that these series of hearings will help us all better understand the multi-mission capabilities of the United States Coast Guard.

    Mr. COBLE. I thank the gentleman.

    It's good, as well, to have the gentleman from California with us. Mr. Baker, do you have an opening statement, by the way, since there are only three of us here?

    Mr. BAKER. No. Thank you very much, Mr. Chairman.

    Mr. COBLE. All right, sir.
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    The first panel we are pleased to welcome: Rear Admiral Thomas Collins, Chief, Office of Acquisitions, U.S. Coast Guard; Rear Admiral Edward Barrett, chief, systems Directorate, U.S. Coast Guard; and Rear Admiral Rudy Peschel, chief of the Office of Navigation Safety, United States Coast Guard.

    Gentlemen, we have combined you all in the first panel, so there will only be two panels today.

    Admirals—I'll use the plural—we try to stay as close to a five-to 7-minute frame if we can. If you can't do that, no one will be keel hauled, but in the interest of time we do try to do that.

    Before you all commence, I would be remiss if I didn't say a good word about Captain Goodwin and Commander Gentile. They and their respective staffs perform admirably up here. Sometimes they give me a hard time, but I think they do it with tongues in cheek, so that's the way I take it. And I give the hard time back to them, as well. But they do a good job. Pass that along to the boss in case he doesn't know it.

    Gentlemen, good to have you all with us.

    Seniority, I guess, or however you all want to do this.

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    Admiral COLLINS. I believe I was the lead-off hitter, Mr. Chairman.

    Good afternoon. It's a pleasure to appear before this distinguished subcommittee to discuss the Coast Guard's acquisition program.

    The program was established nearly 10 years ago, largely in response to audit findings of significant problems in the way the Coast Guard conducted major acquisitions.

    Since that time, we have spent considerable effort in improving the way we do business. These efforts are detailed in my written statement.

    I'm pleased to report today that the Coast Guard acquisition program is running very well. Our processes are under control. We deliver products within cost, schedule, and performance dimensions established by Coast Guard's upper management.

    Our efforts have been recognized. In 1994, the Office of Management and Budget removed the Coast Guard's acquisition program from its list of high-risk areas.

    We feel we have a good process. It works well. We have improved our skills in how we buy things.

    I'd like to briefly discuss how our process works by summarizing our experience with the seagoing buoy-tender, the WLB.
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    The WLB followed the basics of OMB circular A–109 regarding major systems acquisitions, starting with pre-acquisition planning, followed by the four acquisition phases, concept exploration, demonstration and validation, full-scale development, and, finally, full production and deployment.

    There were key decision points that required Coast Guard and Department of Transportation upper management review, and the deputy secretary's approval before proceeding to the next phase.

    The WLB was the first project to comply fully with the steps of A–109 in the Coast Guard. During the early and mid–80's, the short-range aids to navigation program conducted numerous studies and analyses to support the mission need to replace the buoy-tenders' capability.

    Based on this extensive review and forecast, we determined we had a mission need to replace the seagoing buoy-tender capability at key decision point one.

    The deputy secretary approved our findings contained in our mission needs statement. This was an important time in the life of the project. Because we received the Secretary's commitment to proceed with funding for this project, we were able to charter a project at that first step.

    We chartered the project, established a project manager, formally trained him, assigned him a fully skilled staff. In fact, the project management organization, which we developed for the WLB, has served as a model for our later project staffs.
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    The first acquisition phase was concept exploration. We looked at different ways to provide the needed capability. We did not assume that the existing buoy-tender or in-kind replacement was the answer, but we looked at different concepts, we closely examined the issue of privatization, and performed several studies and analyses of different platform types.

    At the same time, we looked at our mission analysis results, which identified the capabilities we needed to perform our mission, and the project sponsor took these capabilities and developed preliminary operational requirements.

    Once the concept was decided, we conducted cost and performance studies and analyses of our preliminary requirements to determine cost drivers. For example, we knew that the transit distances and speed would impact resource requirements of the fleet, and analyses of speed and power requirements determined an optimum cost-effective speed of 15 knots.

    The first phase of the acquisition concluded with our concept selected, our requirements set, and our planning completed for procurement approach, a logistics philosophy, and a testing program.

    We also developed our procurement approach—the first Coast Guard circular requirements to be developed—a performance-based specification, and a request for proposals.

    Once we received the deputy secretary's approval at key decision point two, the request for proposals were released for a three-way commercial design competition, with options for a lead ship and four low-rate initial production ships—another unique approach for us.
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    After the design competition, we evaluated the competing designs, refined our plans, cost, and schedules, chose the winning design, and gained the deputy secretary's approval to proceed with full-scale development at key decision point three.

    Our overall acquisition approach had substantial payoff from industry involvement early on. With the performance-based specification, we realized the advantage of industry knowledge and expertise and gained innovations that we might not have had in a Coast Guard design.

    Production efficiencies associated with design led to a contract award that was 20 percent lower than the initial Government estimate.

    Once the option was exercised with the winning contractor, our Project Resident Office was established to oversee the contract administration of the contractor's process.

    Aided by a productive Coast Guard/industry partnership, actual ship construction has gone well. The lead ship, ''Juniper,'' was delivered on January 12th of this year, she was delivered 2 months within the original schedule. This is a major, major accomplishment for a lead ship effort.

    Options for four additional ships have been awarded. We are now conducting testing of the vessel to confirm operational performance requirements will be met, and with a favorable review at KDP four—key decision point four—we will proceed to full production phase and a separate contract for construction of the remaining 11 vessels.
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    As you can see, this is a long, involved process, but it has been successful. With the WLB, we have followed it religiously. Our other major systems have also followed this process but have had varied acquisition strategies within the broad envelope.

    We believe the process is flexible and makes sense. Basically, it requires you to establish good, solid requirements, do your up-front planning, have someone in charge—a project manager, involve top management in the key important decisions, and follow a disciplined approach.

    We think the process works well for the Coast Guard. In fact, we've accumulated a number of success stories due to development of sound acquisition strategies, and we continue to leverage technologies to gain efficiencies. I think you can look at our buoy-tender project, our coastal project, our MLB project. With the fleet sizes going down because of enhanced productivity, savings are realized.

    The biggest challenge that we face is limited resources in conducting these plans. In constant fiscal dollars, 1973 dollars, recent AC&I funding levels have been the lowest in 22 years. Admiral Kramek indicated in his testimony before this committee last month that Congressional support is needed to ensure that we continue to replace old maintenance-intensive equipment with fewer and more-efficient systems.

    We feel we have the acquisition process in place to carry out these wise investments. We need the support of the President's budget request in fiscal year 1997 to make this a reality.
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    Mr. Chairman, thank you for the opportunity to discuss the acquisition program. I'm prepared to answer any questions you might have.

    Mr. COBLE. Thank you, Admiral.

    Mr. COBLE. Next on-deck hitter—we'll just hear from all three, and then we'll put questions to you at the conclusion of the testimony.

    Admiral BARRETT. Yes, sir. Good afternoon, Mr. Chairman. It's a pleasure to appear before this distinguished subcommittee to discuss the Coast Guard's research and development program.

    The challenge for our R&D program is to bring the most recent advances in technology to the attention of our Coast Guard program managers so that we can partner with them to select and conduct applied research that will help the program managers perform their missions more effectively and efficiently and service the American public.

    The R&D program is continuously trying to improve our processes so that we can produce more value for the R&D dollar. In response to the 1993 GAO audit, we have made several significant improvements, including issuing a Commandant's instruction which clearly defines what constitutes R&D and proper use of the appropriation, a long-range plan for R&D which directly aligns with operating and support program mission areas and goals.

    We also implemented a new project prioritization process which we first used in Coast Guard headquarters to build the fiscal year 1996 budget, which scores and ranks each project request by using an algorithm with four major criteria: linkage to strategic guidance—things like the Commandant's executive business plan and our operation program goals; benefits; cost; and risk, both financial and technical.
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    To provide the R&D center needed management tools, we are currently developing the R&D management information system, which we call RADMIS, that will create a single point-of-entry system that will provide project status and program-wide management information.

    Phase one of the RADMIS development was completed in February of this year, software was selected, and training completed. In addition, a program measurement plan was approved to assess the impact of our R&D, and this was accomplished in September 1994.

    I think I can best explain our R&D program by taking you through our process with an example R&D project. To do this, I have chosen our ionscan drug detection system.

    R&D personnel are actively engaged in staying abreast of new technologies. In the 1990–1991 timeframe, new drug detection systems were being developed from existing explosive detection technology. We reported this potential to our operations law enforcement division, which is are responsible for interdicting drugs. Particularly, cocaine was the target in this case.

    We partnered with our customer and helped develop a project request. The project request was submitted and scored by our prioritization process, it competed well, and was funded.

    R&D started working closely with the manufacturer to develop a field unit. Early problems included requiring too much of a sample, and the results were not always repeatable and therefore would not stand up in court.
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    The ionscan uses an ion mobility spectrometer technology, and we obtain our sample by using a wipe of either a bulkhead on a ship or someone's hands or clothes.

    In 1993, we fielded a prototype, which was the size of a desk. We located this in the Miami area at Group Miami. To date we have experienced excellent results. There have been 24 drug seizures of cocaine, with a street value of more than $480 million, directly attributable to ionscan.

    Also, we have had a 100 percent success rate in court as far as evidence goes.

    I will relate a couple of examples.

    We had some intel license on a fishing vessel in the Caribbean and we went aboard and did a quick search and found nothing, so we took some samples and we found that the skipper's hands tested positive for cocaine residue, so we focused in on the areas where he spent most of his time on the ship and we found a large cache of cocaine that was stored or hidden behind the walls, the panels in his stateroom.

    A second example, we had some intelligence on an island freighter, again in the Caribbean, and we did a similar type thing and we found that the engineer had cocaine dust on his clothes, and we concentrated on the engine room area and found the cocaine that was hidden in a fuel tank.

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    Also, in cooperation with other Federal agencies, the Connecticut Prison System was aware that the R&D Center in New London, Connecticut, was doing this testing, and they called one night. They had a prison guard who they thought had cocaine, and he had flushed it before the Connecticut State Police could get to them, so we went over and did the test and we found that he had cocaine dust all over his clothes, and when he was presented with this evidence he confessed, so there was cooperation with other agencies there.

    Currently the Coast Guard and our joint inter-agency task force in Key West have 12 units that we have procured, and we have strategically deployed these to our law enforcement detachments.

    I also wanted to add that the size of this piece of equipment has been reduced from desk-size to two briefcases, weighing 35 and 24 pounds, respectively, so they are transportable. We can get them to the people who have the need for them.

    So ionscan is a real success story, an example of how R&D can assist our operators, whose capabilities need to constantly evolve to counter the changing tactics, procedures, and practices of smugglers.

    The President's fiscal year 1997 budget request of $20.3 million for Coast Guard R&D will fund important technological advances in pursuit of improvements in productivity, savings, and efficiencies.

    The funds requested directly relate to improvement of Coast Guard mission performance and delivery of service to the public.
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    Mr. Chairman, thank you for the opportunity to appear before this distinguished subcommittee to discuss the Coast Guard's research and development program. I'll be pleased to answer any questions when it's my turn.

    Mr. COBLE. Thank you, Admiral.

    Mr. COBLE. Admiral Peschel?

    Admiral PESCHEL. Good afternoon, Mr. Chairman.

    I was prepared to speak about domestic icebreaking separate from polar icebreaking, and in that I have some colleagues from the Great Lakes, perhaps I would suggest I'll speak about polar first and maybe do the domestic in concert with our visitors.

    Mr. COBLE. Admiral, you're reading my mind. I was going to suggest, if it's convenient with your schedule, that you at least wait until when the second panel appears. I think it would be in order for you to be here in case they may want to—if for no other reason, so you can hear their testimony.

    Admiral PESCHEL. Yes, sir.

    Mr. COBLE. I think that would work better. Thank you, Admiral.

    Admiral PESCHEL. The prepared opening statement about polar icebreaking does not include a little bit of history, which I'd like to recite now. That's a mission that we inherited from the United States Navy some 20 to 30 years ago, and it was an acquisition of eight veteran icebreakers from the Navy that enabled us to take over that mission for the Nation.
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    We would deploy two at a time to McMurdo in Antarctica, one to Thule, a base in eastern Arctic, and we would be resupplying the DEW Line on the behalf of the Department of Defense in the Arctic west, and there would be some incidental oceanography going on at this time.

    The North Slope was being developed, so commerce was assisted as it made its passage around Point Barrow.

    The polar icebreakers ''POLAR SEA'' and ''POLAR STAR'' came about in the mid–1970's—a real horse of a class of vessel, 75,000 shaft horsepower. They provided the power for deeper insertion into the Arctic basin, in conformance with some global contingency plans. It enabled us to take part in arctic treaty observations. The retrofit of laboratories enabled these polar class icebreakers to be a bit involved in oceanography, and this was all through some reimbursement from the National Science Foundation and the Department of Defense for the operation of these icebreakers.

    OMB directed that a reimbursement program come about. In 1985 this was done, where we, the Coast Guard, as operators, funded the crew, users funded a portion of the fuel, a portion of the maintenance, and a portion of helicopter operations. That particular model for reimbursement goes on now with the polar class and it will be applicable to HEALY when HEALY is completed 3 years hence.

    A Presidential directive in 1990 dictated that four icebreakers would meet the national need—two polars that existed, the ''Nathaniel Palmer,'' which the National Science Foundation had leased for a period of 10 years, and one to be built and operated by the Coast Guard. Funds for that particular fourth icebreaker exceeded our capital plant, and money was added to the Defense Department budget and is being acquired through Navy sources.
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    The first Coast Guard design for Healy was too expensive. The design was changed back to a performance-based specification where competitors originated the design. That project is underway now and will be completed in the 1998–99 timeframe, and it looks like it has every capability to remain within that budget.

    National Science Foundation has been included in the preparation of these plans, and we have partnered with them with great success.

    The use of polar icebreakers is for a bit of national security, but more national awareness. We are the only agency that has this capability for the deepest of Arctic and Antarctic penetration.

    The science work that is done in that area is a combination of climate change and fisheries, and we will be on the look out for opportunities for commercial ventures in the Arctic and helping out the economies of American companies.

    The program is a bit dependent on others' values and others' perceived needs, and we are chosen as the agency to make those operations.

    The ''Nathaniel Palmer,'' operated by the National Science Foundation, does its work in the Antarctic with its superb scientific capability. HEALY's role will be for Arctic research, which has not happened in these last 3 years in that the polars have both been undergoing some mid-life preparations. A great bulk of our polar icebreaking budget amounts are being dedicated to upgrading and modernizing the polars—''POLAR SEA,'' ''POLAR STAR''—as they enter their second 20 years of existence.
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    Bridges and engine room information systems and the response capability are being improved, and the environmental adherence of these vessels as far as waste and oil protection are paramount in the work that's being done on those vessels right now.

    Again, the partnering with the National Science Foundation to ensure that we, as a nation, will have the capability in the Arctic as well as Antarctic is a primary justification for the implementation and the adoption of HEALY in 1999.

    That completes the Arctic or the—excuse me, the polar portion of my statement, sir, and I would take your advice on whether I should wait until the next panel to proceed with domestic icebreaking.

    Mr. COBLE. Admiral, why don't we do that. I think that would be better. My initial response in having you three appear together was to enable you to go back to your duties at headquarters in a more orderly way, but then, on second-guessing myself, I think it would be better, Admiral, if it suits you, for you to withhold the domestic testimony with the other panel. I think that would be more orderly.

    Admiral PESCHEL. Yes, sir. I'll do that.

    Mr. COBLE. Gentlemen, thanks again for you all being here.

    Admiral Collins, the Coast Guard capital investment plan makes the point that the current level of AC&I funding cannot sustain the recapitalization rate required to meet the requirements in your proposed plan, it seems to me, and also notes that you probably don't expect to receive anywhere near the AC&I appropriations you need.
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    Having said that, what alternatives are you all at the Coast Guard pursuing or exploring to deal with this situation, assuming I have portrayed it accurately?

    Admiral COLLINS. Mr. Chairman, clearly the present resource environment is one of great challenge to our capital program. We think we have the decade of the 1990's within manageable control. We have pursued replacement of our—a certain segment of our patrol boat community, and we're starting a second contract this spring to fulfill the rest of the patrol boat needs. Our black-hulled fleet is properly addressed with funding support through the end of this decade at reasonable levels. Consistent with the President's request in 1997, we will have addressed the black-hull fleet's needs.

    The issue is in the next decade. As we have our budget constrained each year and we stretch out existing projects in this decade and they fold over into the next decade and start colliding with the next portfolio of acquisitions that are needed—and that is our deep-water assets, our high-endurance cutters, our medium-endurance cutters, our long-range aircraft, and command and control requirements—we are very, very busy now worrying about that. We have commenced a major systems analysis effort that has been going on for the last year and a half, conducted within the Office of Operations, that has delineated the mission needs in those areas.

    We have just chartered a major systems acquisition project for the deep-water environment. We will, toward the beginning of this summer, go to the deputy secretary for approval of our mission needs statement and our key decision point one decision to proceed with the project.
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    This project will look at all those alternatives. During the concept exploration phase between key decision point one and key decision point two, we will map out alternatives. Some may be non-material alternatives.

    All alternatives will be looked at, and we'll also, for the first time, take a very systems approach with that operating environment, looking at how the air resources interact with the surface, which interacts with the command, control, and communications, and try to balance off those assets for the best and most efficient approach to this issue.

    Having said that, the costs involved of replacing or trying to recapitalize a $20 billion capital plant—that's the current value, approaching $20 billion, between $18 and $20 billion—are considerable. The 20 billion figure is the current value of our capital plant, including shore structure, boats, airplanes, and the like.

    Given their service lives, the recapitalization rate for that is not $300 million a year. We are consuming our capital plant at those funding levels, and the consequences are not pretty. The consequences are reduced readiness posture, increased maintenance cost, and the like.

    It's a great challenge. We're confronting it and pursuing it for the next decade.

    Mr. COBLE. Admiral Collins, what amount is currently unobligated in your AC&I account, approximately?
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    Admiral COLLINS. I don't have the exact figure on that.

    Mr. COBLE. Can you get that for us?

    Admiral COLLINS. I'll be glad to provide that for the record.

    Mr. COBLE. I'd be interested in knowing that.

    [The information received follows:]

    As of March 31, 1996, the Acquisition, Construction & Improvements (AC&I) available unobligated balance was $381.6 million.

    Mr. COBLE. We just had a bell go off. Let me ask one question of Admiral Barrett. Our bell just activated, indicating a vote on the floor.

    Admiral Barrett, let me put a question to you, and then I'll yield to the gentleman from Tennessee.

    I wanted to go into some detail with the technology that you all at R&D have developed as far as drug interdiction. You pretty well address that in your statement.

    What would the cost be to purchase this apparatus or device?

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    Admiral BARRETT. Sir, the ionscan systems that I talked about, the brief-case sized one, the acquisition cost was approximately $50,000 per unit.

    Mr. COBLE. That's $50,000?

    Admiral BARRETT. Yes, sir.

    Mr. COBLE. And, in fact, we saw that demonstrated——

    Admiral BARRETT. Yes, sir.

    Mr. COBLE [continuing]. I think in this room, in fact, some recent months ago. It was a very impressive demonstration.

    Admiral BARRETT. I think Congressman Clement also saw that when he was down in the Caribbean.

    Mr. COBLE. Yes.

    Admiral BARRETT. Sir, there are other systems, though. I just used that as an example to walk you through the process, but there are other technologies that we are using in conjunction with ionscan.

    Mr. COBLE. You know, in this era, Admiral, when privatization is popular in many instances, have you all at the Coast Guard considered contracting out any research and development projects to commercial contractors?
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    Admiral BARRETT. Yes, sir. As a matter of fact, our current project dollars, 80 percent of them are contracted out to commercial companies, to other universities, to other agencies that we partner with. So we do that now, sir.

    Mr. COBLE. Thank you, Admiral.

    Admiral BARRETT. To the maximum extent.

    Mr. COBLE. Admiral Peschel, I'll wait and you and I will visit during the next panel.

    I'll recognize the ranking member, Mr. Clement.

    Mr. CLEMENT. Admiral Collins, your capital investment plan calls for spending $20 to $25 million for satellite communications for 12 aircraft and $15 to $20 million for satellite communications for 38 cutters. Who will pay for this equipment, the Coast Guard or DOD?

    Admiral COLLINS. I'll have to provide that for the record, Mr. Congressman.

    Mr. CLEMENT. OK.

    [The information received follows:]
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    The funding for these projects will be requested in the Coast Guard's budget request.

    Mr. CLEMENT. I believe we have 10 minutes. I'll ask another question of you, Admiral.

    Your capital investment plan also calls for $60 to $65 million for a reliability improvement project for your two polar-class icebreakers. Will the beneficiaries of these vessels' services, the DOD and the National Science Foundation, help pay for any part of this project?

    Admiral COLLINS. No. These are primarily borne within the Coast Guard's acquisition appropriation. Those will be funded totally within that appropriation, and there are currently no plans for reimbursement.

    Admiral Peschel?

    Admiral PESCHEL. The amount of overhead that's recouped from the reimbursable account is ongoing expenses—operating expenses and maintenance per year, not for the capital-type improvements to the vessels, sir.

    Mr. CLEMENT. OK. Before contracting for the new icebreaker Healy, did the Coast Guard evaluate the need for this icebreaker, and how did the need for a new polar icebreaker compare to your need for new buoy-tenders and patrol boats in your capital investment plan in 1990?
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    Admiral COLLINS. There was a polar requirement study that was done in the early 1990's. It was a national-level study directed by the Administration and involved MARAD, NOAA, OMB, the Department of Transportation, the Coast Guard, the Department of Defense in the name of the Navy. They were all signatories to a final report that documented the national need for four icebreakers.

    That was the basis for the mission need, if you will, for the Healy.

    Mr. CLEMENT. What I was really asking: how did you evaluate the tradeoff?

    Admiral COLLINS. It didn't make a lot of sense to us to conduct a resource tradeoff because the dollar level of the HEALY just dwarfed our entire appropriation. The cost of building the HEALY, is more than we get in an appropriation in an entire acquisition, construction, and improvement appropriation in 1 year. It just couldn't fit into the budget envelope, and therefore the national decision was to fund that out of the construction appropriation within the Navy.

    Mr. CLEMENT. Admiral Barrett, you state that the Coast Guard SENTOR and CINDI drug detection systems were developed by your R&D program. What are these systems, and what is your research and development program currently doing to aid in our war on drugs?

    Admiral BARRETT. Sir, the different technologies involved—I would prefer to provide that information for the record. It's fairly technical.
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    [The information received follows:]

    [Insert here.]

    Admiral BARRETT. Just to let you know, the SENTOR unit, which we used—we were working with ONDCP on that, and that's on hold right now. The funding has been stopped. It basically is still a unit the size of a desk. It has not been miniaturized at all.

    CINDI is a hand-held device which uses back-scatterer gamma radiation, and it allows you to access a void or a tank on a vessel and then to measure, without going into that particular tank, to measure what's in there. We are using that on a regular basis now.

    Mr. COBLE. Admiral, let's suspend momentarily and we'll be back here imminently, so you all just rest easy and we'll be back in a few minutes.


    Mr. COBLE. Gentlemen, we will resume our discussion. Pardon the informality, but we had to go to the floor to vote.

    Admiral Barrett, you were in the process of responding to Congressman Clement's question. Did you finish your answer?

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    Admiral BARRETT. Yes, sir, I did. I would like to provide for the record the different technologies involved with the different systems.

    Mr. COBLE. That would be appreciated.

    Admiral Peschel, let me ask you a question before the next panel comes in.

    I presume—I don't think you touched on this—I presume that construction is moving along in a timely manner in Louisiana regarding the third polar icebreaker?

    Admiral PESCHEL. Yes, sir. It began in March and it will be completed in 1998, so construction has begun. The keel has not been laid, but metal is in place. We were there in February and actually watched the plates being cut.

    Mr. COBLE. And I'll have some domestic questions to put to you at a later time.

    Admiral PESCHEL. Yes, sir.

    Mr. COBLE. Mr. Clement?

    Mr. CLEMENT. Thank you, Mr. Chairman.

    Admiral Barrett, let me ask a question of you, if I may.

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    In 1981, the Coast Guard spent approximately $25 million on research and development. Your budget request for fiscal year 1997 is for $20 million. While that's an increase of $2 million over last year, in 1981 dollars you're way behind. What is the impact on the Coast Guard programs?

    Admiral BARRETT. Sir, you are correct that our program has been down-sized. I think that we, through our prioritization process, are ensuring that our best projects are funded. We have tried to cut fixed cost to put the most dollars into project work, and we continue to do that in line with the rest of the Coast Guard streamlining.

    We have tried to leverage the few Coast Guard dollars we have, working with other agencies. I have some examples of that I could provide for the record.

    Also, as I mentioned earlier, we contract out of project dollars approximately 80 percent of our project work, and we also do not chase technology. We look for proven technology and we look to apply state-of-the-market technology.

    Mr. CLEMENT. Can you tell me a little bit about the cost/benefit ratio for Coast Guard research and development? How much do you save the taxpayers through the technologies that you are developing?

    Admiral BARRETT. Sir, I really need to do a little more research on that. My staff is looking at that.

    But, as an example—and I don't know how you would equate this—the ionscan, SENTOR, CINDI, and a couple other related projects we used in drug detection. The total cost of those projects was less than $2 million, and we were—we contributed significantly to the seizure of over $480 million in drugs.
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    Now, how you equate that or quantify that I'm not sure, but just to give you an idea, that is one of our big success stories.

    Mr. CLEMENT. Thank you very much, Admiral.

    Thank you, Mr. Chairman.

    Mr. COBLE. Thank you.

    I think that exhausts my questions, gentlemen. Admirals Collins and Barrett, we appreciate you all being here.

    Mr. COBLE. Admiral Peschel, if it's convenient for you, why don't you just stand fast and we'll invite the next panel to come to the table. I'll introduce them as they are coming forward.

    Captain Ray Skelton is the director of Environmental and Government Affairs, Seaway Port Authorities in Duluth, Minnesota; Mr. George Ryan is the president of the Lake Carriers Association; Mr. C. Kenneth Flesse, chairman of the Committee on Traffic of the American Iron and Steel Institute, and director of traffic, LTV Steel Company; and, finally, Mr. Daniel Smith, Great Lakes, vice president of the American Maritime Officers.

    Gentlemen, good to have all of you here. As you can see, I changed my mind in the middle of the stream. I think it would be mutually beneficial for Admiral Peschel to appear on this program with you all so you all can hear from where he comes and he can hear from where you're coming.
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    It's good to have all of you here.

    Captain Skelton, why don't I start from my left and work our way down, if you'll begin it.

    Fellows, if you can stay on or about the five-to 7-minute rule, it's preferable. If you can't do that you will not be punished.

    Fire away, Captain Skelton.


    Captain SKELTON. Nobody is armed here, I hope, in case I do—actually, it shouldn't take me 5 minutes.

    Mr. COBLE. No one is armed, so far as I know. Now, the gentleman from Pennsylvania just came in and we haven't searched him yet. But I think we'll hold you harmless if you go beyond that time.

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    Captain SKELTON. I'll watch my watch here to make sure that I don't go beyond. Probably, besides that, if I went over 5 minutes I'd probably put everybody to sleep.

    Mr. COBLE. By the way, Captain Skelton, I'm reluctant to even mention that, because oftentimes when I say it I think people feel like, ''My gosh, I've got to stop abruptly at 5 minutes.'' I don't mean that at all, fellows, so don't compromise your testimony by giving way at the 5-minute mark.

    Captain SKELTON. Good morning, Mr. Chairman and committee members. On behalf of the American Great Lakes ports and the port of Duluth/Superior, I'd like to thank the committee for addressing an issue of urgent importance to the commerce of the Great Lakes.

    Considering the ice conditions and the reopening of the navigation this year, the timing is impeccable.

    I would, however, like to report that the ice conditions in Duluth are not as bad as reported. Reports of the 20-foot pressure ridges out in the lake are, at this time, exaggerated. I understand that they are only about 10 feet. Actually, in the port of Duluth/Superior, in the harbor right now we don't have enough ice to make a decent cocktail.

    I'm sorry. I forgot to introduce myself. My name is Ray Skelton. I am the environmental and government affairs director for the port of Duluth. I'm also a former Great Lakes sailor and vessel officer and currently hold an active master's license.
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    The Seaway Port Authority of Duluth is an agency created by the State to maintain and develop maritime commerce for the twin ports of Duluth and Superior.

    We act as local sponsor for harbor development projects, environmental efforts, and as the advocate for maritime commerce issues, in general, for the region.

    The port of Duluth/Superior is the largest of the Great Lakes ports and ranks generally among the 15 largest in the United States. Total maritime commerce through the port averages 36 million tons a year and exceeded 40 million tons in 1995. It is, by far, the largest port in the United States that does not have year-round navigation.

    The port of Duluth/Superior is a critical link in the Nation's transportation system. The steel mills in Illinois, Indiana, Michigan, Ohio, and Pennsylvania depend upon the nearly 20 million tons of iron ore that annually ship through the port. Power plants on the lower lakes are dependent upon the 12 million tons of low sulphur Powder River Basin coal. The midwest agricultural community uses the port for overseas direct and trans-ship grains that exceed four million tons a year.

    Even the sugar producers in the Red River Valley depend upon the port for their limestone processing requirements.

    Our regional transportation system and construction industries depend upon the low-cost stone and cement that's available to them because of waterborne commerce, and, indeed, the street and highway departments have better access to salt for their winter treatments of the highways.
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    All of this is accomplished between March 25 and January 15 of our Great Lakes shipping season. This year the 1996 season opening simply would not have occurred anywhere near the March 25 opening date it if weren't for the icebreaker ''Mackinaw.'' The extreme weather conditions created impassible barriers to the combined capacity of all U.S. Great Lakes icebreaking with the sole exception of the ''Mackinaw.'' As a matter of fact, it reminded me of the 1972 season. In 1972 I was still ship-board in those years. I remember being stuck off Two Harbors June 6th in ice in 1972. Again, that was a year where that icebreaking capacity just came to the forefront and literally kept shipping alive.

    The port of Duluth/Superior would have been closed this year for probably an extra two to 3 weeks.

    Congress has come to our aid in the past. The ''Mackinaw'' has been scheduled for decommissioning in the past, and it has still managed to keep it alive. Congressman Oberstar I understand sits on this committee. He got us our fixed aids to navigation. That's why we made him a complimentary international shipmaster some time in the past.

    Carriers have estimated that the loss of the ''Mackinaw'' would shorten the navigation season by perhaps 4 weeks. Although 4 weeks is only 7.7 percent of the year, it's almost a ninth of our navigation season. Last year the port of Duluth/Superior moved 40.6 million metric tons of waterborne commerce. Shortening the season 1 month would have left us about 4.5 million tons short. This is significant tonnage, considering that the volume of widely known ports such as Wilmington, Port Canaveral, Portsmouth, Anchorage, Brownsville, Gulf Port, and San Francisco all have less than 4.5 million metric tons for their entire year.
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    Economic impact upon our port region is easily calculable. During an average year we have about $250 million worth of regional economic impact, and we employ about 3,000 people in very high-paying jobs. If we reduce that season by 10 percent, the impact would be immediate and severe on our port community, and would also extend to other Great Lakes ports and industries equally reliant upon the cargoes originating in or destined for Duluth/Superior.

    Please recognize I'm only addressing Duluth/Superior perspective.

    Minnesota iron ore, which is required for generating more than 60 percent of the Nation's iron and steel, also moves through Lake Superior's ports of Two Harbors, Silver Bay, and Sackinhite Harbor. These ports, together with ore processing plants and steel manufacturers, are also dependent upon early and late-season shipping when the ice navigational problems occur.

    While we tend to focus on Lake Superior, the Soo Locks and the St. Marie River as requiring adequate Coast Guard icebreaking service, we can't overlook the fact that some of our most serious ice problems occur elsewhere.

    A case in point is this past spring when Lake St. Claire was blocked up. It's a critical link between Lake Huron and Erie. Without the ''Mackinaw's'' horsepower, dimensions, and maneuverability, navigation would have been impossible this spring on St. Claire and would have caused major hardship for business and industry throughout the Lake Erie as well as Lake Superior area.

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    As the environmental representative for the port, I have concerns in addition to the obvious economic impacts not just on the port of Duluth/Superior, but upon the whole of the Great Lakes region. The environmental impact of a modal shift of commercial cargo has been well-documented. Waterborne transportation ranks far and above any other mode for fuel efficiency, emissions, safety, waste disposal, environmental damage, and societal disruption.

    Studies by the Minnesota Department of Transportation, the Great Lakes Commission, Transport Canada, and others all agree that waterborne is far and away the most environmentally preferred mode of transportation.

    At the end of the 1994 season, which we had had some ice problems in that year, as well, we did some calculations as to what would have transpired had we not had the ''Mackinaw'' or similar icebreaking capacity—and 1994 was nothing compared to 1995.

    Had the ''Mackinaw'' not been in operation during 1994, we would have seen 2.551 million tons shifted to rail transportation. This modal shift would have wasted almost 7 million gallons of fuel, dumped an additional 2,452 tons of solids into our atmosphere, and caused three additional rail crossing accidents.

    I have attached two sheets that show the breakdown of the cargo calculations.

    We consider the environmental impact, alone, great enough to warrant the continued operation of the ''Mackinaw'' until a suitable replacement is available. We realize that the ''Mackinaw'' is aging. The cost of operation and maintenance, combined with the large crew requirements, will eventually dictate her retirement. She's been a good and faithful servant to her country, and when she must finally retire we hope that she will be allowed to do so with the grace and honor that she has deserved.
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    We emphasize that it is absolutely imperative to Great Lakes maritime commerce, the regional economy, and the environment that her replacement be of equal or greater icebreaking and maneuvering capability.

    The Great Lakes echo system is considered by scientists to be quite fragile. We would ask that the environmental impact statement be prepared prior to any consideration of decommissioning the ''Mackinaw.'' Thank you very much.

    Mr. COBLE. Thank you, Captain Skelton.

    Mr. COBLE. Admiral?

    Admiral PESCHEL. Thank you, Mr. Chairman.

    My prior assignment before——

    Mr. COBLE. You can put on your domestic hat now, Admiral.

    Admiral PESCHEL. Yes, sir.

    Mr. COBLE. Remove your international hat.

    Admiral PESCHEL. My prior assignment prior to this Washington, D.C., tour of duty was as the Commander of the Great Lakes district, the ninth district, and I often told my colleagues here that I split the ninth into two regions. One was the front nine, which was Cleveland and Chicago and so forth, and then there was the back nine, the back nine ending so far away as Duluth. But there was no pejorative intent whatsoever when I put Duluth in that back nine.
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    I spent the—it was the 50th birthday of the Coast Guard cutter ''Sundew'' on the decks in Duluth harbor with the mayor, and it was minus 25 degrees, and I guess I would be the character witness for Captain Skelton when he characterizes his environment up that way.

    Domestic icebreaking is historic presence of our Coast Guard. It's enabled by title 14, which authorizes those sorts of operations. We are a facilitator of commerce, which fits directly in with a Department of Transportation strategic goal of doing that for the Nation.

    Domestic ice is directly involved in the lifeblood, not just in the Great Lakes but also in the greater New York area, New England, and even Chesapeake Bay.

    There is more to this lifeblood than just the taconite that we've heard about so far. There is concern about home heating oil in the regions I've mentioned, ferry services, flood control, and search and rescue. Safety of vessels is paramount, and ice does irreparable damage to these vessels.

    In New York and New England this winter, icebreaking was critical. In Chesapeake Bay just a few months ago, Tangier island was resupplied with fuel and food due to our icebreaking services.

    On the Great Lakes it isn't just the domestic vessels that we service. The saltwater ships, once they come into the system when the St. Lawrence Seaway opens on the 2nd of April, are as much of a concern for freedom of navigation in such places as Lake St. Claire and the St. Clair River that Captain Skelton speaks of.
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    Lake Carriers will be addressing you in a few moments, and they would be considered the Coast Guard's primary customer when it comes to icebreaking services on the lakes. ''Customer'' is an interesting word these days in that we partner and we negotiate and we deal with our friends that we call customers, yet we are still the regulator and their vessels are the regulatees, so it is a most interesting relationship.

    I want to use one of my regulatees' publications. It is the ''Lake Carriers Association Report,'' which I'm sure that Mr. Ryan will be talking about the statistics and the impacts therein, but I think that if you were to look at the picture on the front, a picture of a lake carrier pushing the water ahead with the American flag flying so grandly while transporting the freight of our United States, there is probably no better illustration for the need for this type of partnering.

    It is, indeed, a team effort in a place such as the Great Lakes. It is a team of not only ''Mackinaw,'' but the 140-foot icebreaker tugs that work in concert, and it's a combination of those resources that enables vessels such as this to make it through the ice.

    It's a team effort with our Canadian Coast Guard friends, and they have been committing a polar icebreaker, ''Pierre Raddison,'' into the lakes for two of the past four seasons.

    Our commercial icebreakers, those tugboats that operate in the harbors, are part of the team. There is a role for commercial icebreaking to help out in freeing the piers in the harbors.
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    The masters of these vessels are part of the team in that they have been operating with prudence and foresight.

    The companies have been partners in that some of them are choosing not to sail in the most difficult of times, but being ready to go as soon as the ice relents to a degree.

    ''Mackinaw'' has been the focus any time domestic icebreaking is spoken, and it has been in chambers such as this that that has been hotly debated. ''Mackinaw'' is a result of the war effort in the late 1940's when it was considered absolutely strategic that steel could move or iron ore could move from one place in our United States to another to be sure that our war effort was supplied, and ''Mackinaw'' has been fighting that fight ever since against the elements.

    The 1994 budget was the one where the combination of industry and Congressional wisdom turned the tables on the potential decommissioning of ''Mackinaw.'' From that came the commissioning of the Volpe Transportation System Center study that looked at the systematic icebreaking on the Great Lakes. That study has been forwarded to Congress just yesterday, and it will tell you that we benefit from the establishment of a fifth season, that it is cost advantageous to have vessels such as ''Mackinaw'' working on behalf of our industry, and that, in concert with our customer needs, in that customers participated in the evolution of that study, was all important.

    Heavy icebreaking is a piece of the President's budget, and funding for ''Mackinaw'' is a part of our 1997 request.
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    There are alternatives that have to be looked at some more, and I can say that it is only this insistence by our Commandant that heavy icebreaking be again a place of prominence in our budget, that alternatives have been on the back burner. They have been moved to the front burner to see whether we ought to fix ''Mackinaw'' once and for all; Whether or not new ship construction is the answer—I think you heard from Admiral Collins what the forecast is for our acquisition for these next few years; Whether our new buoy-tenders could be refit with hulls and propulsion systems that might be more capable in meeting the ice of the Great Lakes; Whether there should be lease arrangements that would take some new legislation and reflagging initiatives; And whether alternative funding sources really have a place in such a complicated thing as a domestic icebreaking network.

    This are all things that we, as an organization, will be looking at over these next 2 years as ''Mackinaw'' is provided for in the 1997 budget.

    Mr. COBLE. Thank you, Admiral.

    Mr. COBLE. Mr. Flesse, we'll be glad to hear from you.

    Mr. FLESSE. Thank you, Mr. Chairman.

    I'd like to thank you for the opportunity to be able to appear before the subcommittee today. My name is Ken Flesse. I'm director of traffic for LTV Steel, and current chairman of the Traffic Committee for the American Iron and Steel Institute.

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    The Great Lakes icebreaking has been a key issue for the American Iron and Steel Institute Committee on Traffic. It is an issue that has been raised each and every year for the last three or 4 years that I have been the chairman of it. It is important to the steel industry because it helps us remain cost competitive in an international market.

    There are over 125,000 steel workers and over 10,000 iron miners that rely on this industry each year, plus the other satellite industries that rely on the steel industry and the iron ore business.

    The Great Lakes-based steel industry in the States of Michigan, Indiana, Illinois, Ohio, and Pennsylvania produce about 60 percent of the basic raw materials that are used in the steel-making process. Even to this day, steel is still one of the most competitive and recycled materials in the world.

    In these Great Lakes industries, more than 50 million tons of iron ore and 15 million tons of limestone are consumed annually. This all moves in Great Lakes vessels, and these vessels carry this iron ore during a shipping season of March 25th to January 15th.

    For over 50 years, the steel industry has relied on the icebreaker ''Mackinaw.'' We use it to keep our ore boats and Great Lakes Carriers Association boats moving and delivering our raw materials to us.

    If it had not been for the ''Mackinaw'' this year—and I can basically speak for the industry this year, because with LTV I have just recently inherited the duties of the iron ore and limestone float for the company. Just as a side note, in the last meeting that I had with my predecessor, as he was leaving, he said that he had been in the business for 42 years, and this is the worst winter he had ever seen.
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    One of the things that, as I said, we need is that the ''Mackinaw'' has to be—the capability of the ''Mackinaw'' has to be there in order to keep our materials moving and make us competitive. If we do not have the capabilities of icebreaking supplied by the ''Mackinaw'' and had to go to another way of moving iron ore, it would be very cost-prohibitive.

    For example, this year moving some iron ore to keep one of our blast furnaces operating, we moved it by rail. The rail movement of this iron ore cost two-and-a-half to three times what it would have cost to move the same material by a lake vessel.

    The other alternatives that we would have would be building additional vessels or building inventories. With the capacity that the steel industry is running right now and the availability of iron ore, the possibility of building inventories is restrictive.

    As I said, the other two alternative ways would be of increasing inventories once again, if that was possible, and/or moving by rail.

    Just as a sidelight on the rail issue, you would have to go back and do considerable study to see if the amount of iron ore and the amount of limestone that we move during the first part of the shipping season and the latter part of the shipping season, when the need for the icebreakers are at the strongest, whether the capability would be there to move that iron ore would have to be discussed at a later date.

    It has been well reported that the ''Mackinaw'' and the other icebreakers in service for two of the last three winters have kept the ore boats moving on schedule and, as a result, we did not have to shut down any of our facilities. Had we had to shut done one of our facilities, to shut down a blast furnace it is estimated that the cost would be in the neighborhood of $1 million a day.
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    We came precariously close to shutting down operations this year, but, thanks to the work of the Coast Guard and the ladies and gentleman of the Coast Guard, we were able to keep this going.

    One of the examples where we started off the beginning this season was that a normal transit time during summer conditions from a port in Minnesota through the Soo locks down into Lake Erie and the return movement would take five-and-a-half to 6 days. Normal wintertime movement is about seven-and-a-half days. This year the first vessel that delivered to our plant and returned back to the Duluth area took 14 days. The average convoy time was 10 to 12 days.

    Without the help of the icebreaker and without the help of the ''Mackinaw,'' we would not have been able to deliver ore into the plants. It would have gone more in the 14-plus day range if these vessels would have come out.

    We have, as the steel industry, worked very hard with the Lake Carriers Association and their efforts in maintaining the icebreaker ''Mackinaw.'' We know that there have been budget discussions in the past and are aware that there was a proposal by Congress to retire the ''Mackinaw.'' I think that the last two of three winters is one of the reasons why this has been changed.

    We are aware of the ''Mackinaw's'' high operating cost, but we think that something has to be done in order to either rebuild the ''Mackinaw'' or come up with a solution that will give us the icebreaking capacity of the ''Mackinaw.'' We have to have this icebreaking capacity to keep our iron ore deliveries and our limestone deliveries cost-competitive, and to keep us competitive within the international market.
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    With that, that concludes my statement, Mr. Chairman. I thank you for the opportunity, on behalf of LTV Steel Company and the American Iron and Steel Institute, to address this committee.

    Mr. COBLE. Well, I thank you all for being here, Mr. Flesse, each of you, because what—this hearing, I think, has the trappings of being very significant because we're getting a good cross-section input, and I appreciate you all being here.

    Mr. FLESSE. Thank you.

    Mr. COBLE. Mr. Ryan?

    Mr. RYAN. Thank you, Mr. Coble.

    It is a pleasure being with you today and on this panel, because this is truly the partnership on the Great Lakes between the Coast Guard, our customers, our labor unions, and the vessel operators. We have to work together on this, and we have been, so I'm pleased to be partnering with this at this table.

    I also want to thank the Congress and the U.S. Coast Guard for all the assistance you've given to us in providing the infrastructure, the icebreaking assistance, and other Coast Guard services over the years, but in particular this winter for the dedication and service given to us by men and women of the Coast Guard under very severe conditions to keep the commerce of the United States moving, and we appreciate that very much.
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    Today I do want to talk about the heavy icebreaking specifically. It's very tempting to just begin and probably end my testimony with a simple statement that today, on May 9th, the icebreaker ''Mackinaw'' has just been relieved from duty, I understand, from Marquette, Michigan, where she had been helping vessels in and out of that port for the past several weeks. She had been working in the St. Mary's River prior to that, but until even 4 days ago we had ridges of ten feet high—that's much higher than your own table, Mr. Coble—ten feet of ice that she was helping ships through just 4 days ago. Fortunately, it's dissipating, but when we think of that, that there is still ice up there in western Lake Superior and in the eastern end, and here in Washington, of course, the flowers have come and gone, but plenty of ice still up north.

    Every year we need the icebreaker, whether we have a good winter or a bad winter. Mild or harsh, that heavy icebreaking assistance has to be there so the reliability of resupply is there every year so the steel industry can count on that delivery of raw material without the expense of stockpiling.

    As was mentioned, the locks close on January 15th, but, as we know, it's not just the locks at Sault St. Marie. It doesn't stop when the Sault locks close.

    We operate out of Escanaba, Michigan, until the end of January, and during the 1994 season Escanaba shipped until February 10th, and that's in the northern part of Lake Michigan, not the most severe parts of Lake Superior. But in that northern part of Lake Michigan the ice is so severe that it constantly needs the assistance of Coast Guard heavy icebreaking not only for the iron ore industry, but for an oil industry that's resupplying the hospitals and homes in northern Michigan that can't get the resupply of oil from pipelines.
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    This year Escanaba ran until February 15th and resumed shipping on March 4th because the steel industry needed that iron ore to keep those blast furnaces going because our economy, fortunately, has gotten stronger, and because we are now exporting rather than importing, so we had to support that vital industry.

    Unfortunately, the lingering 1996 winter made 1993 and 1994 look tame, and that was the year in which we argued that the ''Mackinaw'' was needed, but now we've set new records for the record books that prove the need for heavy icebreaking on the lakes.

    Despite having that heavy icebreaking and with the support of the Canadian Coast Guard icebreaking, we still came up short at the end of last season and the beginning of this season, and my testimony will give the statistics on how much we came up short, but clearly, as Ken Flesse has indicated, blast furnaces would have been banked if the icebreaker ''Mackinaw'' had not been in service, and men and women would be out of jobs, and the steel industry would have significant losses because of that.

    So I must stress further that, while it's the iron ore industry and the steel industry that predominates our early and late-season sailing, Coast Guard icebreaking capability impacts all cargo movements on the Great Lakes. Many of the ships that carry iron ore during the season startup and close also haul coal and stone, and if we lose four to 6 weeks, six to 8 weeks of navigation because we lack adequate icebreaking services, then the stone and coal customers will not get the cargo they need during the season.

    There are several options to providing heavy icebreaking, and I'm glad that Rudy Peschel itemized some of them; however, as we look very hard at the need for future icebreaking, we come down strongly on the need to retrofit the ''Mackinaw.'' That hull is sound. She needs a new powerplant. She needs some internal improvements. She needs to have her crew reduced.
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    But with the shortage of capital in the Coast Guard's acquisition budget, we think, rather than spend big money in the future for a new icebreaker, we think we'd be better off getting that ''Mackinaw'' retrofitted, perhaps over a one-, two-, or 3-year period, but let's get that done and then we'll have an icebreaker for another 15 years.

    If it turns out that the only mission for that vessel is icebreaking, let's accept that and have it as seasonal operating vessel. I go into some details in my testimony on that.

    But what we need now, sir, is we urge Congress to consider this now. We've been studying. The Volpe study came up with a conclusion that we need heavy icebreaking. There are some internal studies going on within the Coast Guard now as to what kind of icebreaker resource it should be. We ask that action be taken now so our steel industry and iron ore mining industry and our shipping industry know what heavy icebreaking we'll have in the future.

    Thank you very much. I'll be available for questions.

    Mr. COBLE. Thank you, Mr. Ryan.

    Mr. COBLE. Mr. Smith?

    Mr. SMITH. Good afternoon. I'd like to start by thanking you, Mr. Chairman, and ranking member, Mr. Clement, for your patience in conducting this hearing, and also for the opportunity to present our views today with the issue of the operation of Coast Guard icebreakers and the domestic maritime commerce on the Great Lakes.
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    My name is Daniel Smith. I am the vice president of American Maritime Officers, Great Lakes, which has its Great Lakes headquarters in the Melvin Pelfrey Building in Toledo, Ohio.

    American Maritime Officers, or AMO, is a labor organization which represents U.S. citizen, U.S. Coast Guard-licensed navigation, engineering, and electronics officers who serve aboard U.S.-flagged vessels.

    American Maritime Officers represents the vast majority of licensed officers who serve aboard U.S.-flagged vessels in the iron ore, coal, stone, cement, salt, petroleum, and grain trades on the Great Lakes.

    Our primary purpose in being here today is to lend whatever support we can to my fellow panel members in their explaining of the need for heavy icebreaking on the Great Lakes. To that end, we feel that it's basic that an adequate and timely icebreaking service on the Great Lakes is a necessary component of America's manufacturers' ability to compete in the international trade in steel, steel products, automobiles, and automotive products.

    Our immediate concern is as stated: the efficient transportation of raw materials on U.S.-flagged Great Lakes vessels, but, in the broader context, is the continued prosperity of the Great Lakes industrial basin, which has founded and continues to flourish because of a skilled industrial work force, available raw materials, and billions of dollars invested in capital goods.

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    Our contention is that the policy issues surrounding the continued operation and eventual repowering of the ''Mackinaw'' and perhaps its eventual replacement are matters of concern in every State, city, and town and every Congressional District in the Great Lakes basin and also beyond, because of West Virginia coal and steel, Montana coal, and North and South Dakota grain exports, all of which move through the Great Lakes system.

    Therefore, encapsulating, the AMO urges this subcommittee to keep the ''Mackinaw'' in operation by authorizing sufficient money to have the vessel made as cost-efficient as possible. We also urge the repowering of the ''Mackinaw'' in an American shipyard so as to reduce the yearly crew cost.

    We believe an innovative approach to crewing—perhaps that suggested by the Lake Carriers Association—is worthy of additional study.

    Again, I want to thank you. I'm available for questions.

    Mr. COBLE. Thank you, Mr. Smith.

    Gentlemen, each of you have profusely thanked us. It is we who need to thank you all. I thank you all for having taken time to come down here and contributing very generously to a very important subject as far as we're concerned.

    I'll just question you all in order of your appearance.

    Captain Skelton, does your port or any other American Great Lakes port have any ideas or opinions about the possibility of a private enterprise operating an appropriate icebreaking vessel should the ''Mackinaw'' be decommissioned without a comparable replacement?
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    Now, folks, don't hit the panic button. Hypothetical questions all the time frighten people, and I don't suggest it's going to be, but should it be?

    Captain SKELTON. This has been suggested, and although we have not been able to fully explore the concept, I understand that it has been considered, even the possibility of seasonally operating the ''Mackinaw'' with reserve Coast Guard officers who are adequately trained in Arctic icebreaking.

    We are not dead set that the ''Mackinaw'' must survive. That is going to end up being a Congressional and Coast Guard decision. Our point that we always try to make most and foremost is that we must have equal capacity or greater in addition to the maneuverability that the ''Mackinaw'' possesses. There are other icebreakers out there that could conceivably break the same thickness of ice, but would they have that ability to maneuver within the restricted channels that we have all over the Great Lakes? That's our primary issue. Be it private or Coast Guard, we must have that capacity.

    Mr. COBLE. As you all testified today, it made me feel proud, for want of a better word, as a former Coast Guardsman, as a former icebreaker sailor, to hear you all speak of the love affair between the Coast Guard generally and the ''Mackinaw'' specifically that has endured between those two entities and various Great Lakes communities.

    Admiral, I was going to ask you this in your first appearance, Admiral, and I forgot to. As a matter of interest, approximately what are the amounts that the Coast Guard will expend on international icebreaking fiscal year 1996 and domestic icebreaking in the same period?
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    If you don't know that, get that to us, but I'd be curious to have a ball park figure.

    Admiral PESCHEL. I could get that to you, Mr. Chairman, because it involves a number of different appropriations and different bits of capital repair and operating expenses, but each polar icebreaker, the polar class, take about $11 million apiece to operate for a year, and all of the Great Lakes icebreakers in the vicinity of $12 to $15 million a year.

    I will just have to refine those costs and put them in context for you, sir.

    Mr. COBLE. OK.

    [The information received follows:]

    The fiscal year 1996 program operating expenses budget estimate for polar icebreaking operations is $67 million. Polar icebreaking is performed to support national security interests and other agencies' scientific and logistic requirements.

    The fiscal year 1996 program operatimg expenses budget estimate for domestic icebreaking is $23 million.

    Mr. COBLE. Another hypothetical, Admiral. I like the way you smiled when I said, ''hypothetical,'' because oftentimes they give people the willies.
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    In the event, Admiral—again, hypothetically—that the ''Mackinaw'' would be decommissioned, how many days—and then perhaps other members of the panel might know this, as well—would be eliminated from the Great Lakes' navigation season?

    Admiral PESCHEL. It looks like 3 weeks to a month on either end of the season would be adversely affected by that. I consulted with Admiral Jerry Woolever, the incumbent ninth district commander, just this morning, and he came up with that same number.

    It's an interesting phenomenon that we're going through these years in that we thought the 1993–1994 ice season was the mother of all winters, and this last one has been named the grandmother of them, and I'm not sure what mother name will be used in these future ones in that we seem to be getting worse up there.

    We're operating on a less-than-reliable data base, and I would say that when I think back at what the Volpe study looked at, it was a decade of ice conditions that were much milder compared to what we have been experiencing, so the data base is a very difficult one to lean on.

    Mr. COBLE. But three to four to 5 weeks, generally, as an average?

    Admiral PESCHEL. Yes, sir.

    Mr. COBLE. And I realize that, with severe winters such as the one we just endured, it would extend that several days.
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    Mr. SMITH. Mr. Chairman?

    Mr. COBLE. Yes, sir?

    Mr. SMITH. If I just embellish on the admiral's figures, we have looked at this, and the potential, just by eliminating those weeks from either end of the season, could deny the productivity of the entire region anywhere from 10 to 20 percent per year, and that would be the adverse impact.

    Mr. COBLE. And that's significant. Thank you, Mr. Smith.

    Mr. SMITH. Thank you.

    Mr. COBLE. Mr. Flesse, this is sort of an extension of Mr. Smith's comment. How much more would it cost your company to have to stockpile raw materials during the heaviest or most severe part of an ice season, and what would this do to LTV Steel's international competitiveness?

    Mr. FLESSE. I do not know the exact number of cost of building the iron ore. It would depend on the amount of tonnages that we would have to build and at the various location.

    We operate blast furnaces in Cleveland, Ohio, and in East Chicago, Indiana. That would depend on where we would have to build that inventory, Mr. Chairman.
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    I can get those numbers and supply that for the record.

    Mr. COBLE. If you could do that without great difficulty, I would appreciate that.

    Mr. FLESSE. Yes, sir.

    Mr. COBLE. Mr. Flesse—again, hypothetically—would your company consider—strike that. Let me rephrase that. Would you all be amenable to consider paying for private icebreaking services to keep shipping lanes open on the Great Lakes during the navigation season? Have you ever thought about that?

    Mr. FLESSE. Yes, sir, we have thought about that, and I would say that what was formed early on was that the Government had agreed the keep the shipping lanes open, and we would not look to expend the money to keep the shipping lanes open.

    I'm not convinced right now, sir, that there would be enough private capacity to keep those shipping lanes open. I think we need the capabilities of the ''Mackinaw'' or a ship similar to the ''Mackinaw'' and the Coast Guard to keep those lanes and the reliability of opening those lanes or the Coast Guard, sir.

    Mr. COBLE. Mr. Ryan, I see you're nodding. Let me ask you, Mr. Ryan, essentially the same question. Should the ''Mackinaw'' be decommissioned and not replaced, have the Lake Carriers considered joining or consolidating with the industries which depend upon water transportation in the winter to work out private contractual arrangements to break ice on the rivers and lakes?
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    Mr. RYAN. Let me go back in history. Before the ''Mackinaw,'' in fact, it was our association which contracted for icebreaking services. Since that time—and that was prior to 1944. The seasons were much shorter then. We didn't operate as early as beginning of March. We didn't operate as late as the end of January. Conditions have changed significantly.

    We operate in a bi-national environment. Where the heaviest icebreaking is required, it's on the borders between the United States and Canada. The icebreaking is done in jurisdictions of several States and the Province of Ontario. There are environmental rules.

    The system has many channels, and if one were to be saying, ''OK, let's have only commercial icebreaking assistance,'' and some would operate without that assistance, it would plug up the entire system.

    We have found that having U.S. and Canadian government-supplied icebreaking assistance provides the uniformity of icebreaking. It also gives everybody the same ground rules. We often compare ourselves with other coasts which have other environmental problems—hurricanes, fires—and the Federal Government provides with taxpayer assistance what's needed to overcome those local environmental problems. Our local environmental problem happens to be 10 to 15 feet of ice every now and then.

    Last, the cost of icebreaking during this extended period we believe would be so devastating on our customers that we would find there would be much more imported steel coming in. It would be detrimental to our iron ore mining industry and our shipping industry, as well as our steel industry on the Great Lakes.
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    Would could not support the kind of heavy icebreaking that is required in today's environment.

    Mr. COBLE. The question was put to you, Mr. Ryan. We don't know until we're asked. That was sort of a rhetorical question, and that's the answer I expected, but I wanted to hear it from you, and I have no problem with that.

    Mr. RYAN. Thank you, sir.

    Mr. COBLE. Mr. Smith, you, along with your other panelists, bring great arsenal of experience to this table today, and I thank you all for that.

    Earlier, when I addressed the first panel, I did some boasting about the two Coast Guardsmen who were assigned over here, Goodie and John Gentile. I would be remiss if I didn't say to you that Charlie and Gordon and Tom and others represent AMO very well in this town.

    Mr. SMITH. If I may, I'd certainly concur.

    Mr. COBLE. We don't always sing from the same song sheet, but we always get along well, and they do a good job for you all.

    Mr. Smith—and the gentleman from Tennessee, I'm finally winding down. I'll get to you in just a minute.

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    Sort of a repeat, Mr. Smith, of what I put to the other group or other members of your panel. In your statement you mentioned that the American Maritime Officers would support having the Coast Guard charter a rebuilt or rehabbed ''Mackinaw'' to a private entity for the purpose of icebreaking on the Great Lakes. Has your organization pursued this idea with the Coast Guard, Lake Carriers, and/or other businesses that depend on lake cargo? That's No. 1.

    No. 2, if you have, in fact, engaged in dialog with those people, what has been the reaction?

    Mr. SMITH. We have not, beyond the conceptual stage, engaged in any positive dialog; however, there is an example already in existence with the fast sea lift vessels which are operated with civilian crews in reserve operating status for the military. They are manned with a crew sufficient to allow them to leave the dock with short notice. They save a great deal of the operating cost by doing that, and yet they are readily available.

    The fast sea lift ships with the heavy armor on them were the first vessels into Kuwait during the Iraq war because they were ready to go.

    This concept we feel could be extended to icebreaking operations on the Great Lakes, with a Government-owned, civilian-manned vessel in reserve operating status, or ROS, as they refer to it, probably eight or 9 months out of the year.

    Mr. COBLE. Thank you, Mr. Smith. Thank you, gentlemen.

    The gentleman from Tennessee, Mr. Clement.
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    Mr. CLEMENT. Thank you, Mr. Chairman.

    My first couple of questions are for the industry.

    Can you give us some examples of the type of benefits that people from regions beyond the Great Lakes receive due to the ability of the ''Mackinaw'' to keep our industries operating year-round?

    Mr. RYAN. Mr. Clement, when I mentioned that it's iron ore at the beginning and the end of the season, it's because that's the cargo which flows, but the Great Lakes commercial vessel infrastructure operates during the rest of the year carrying cargoes for other shippers.

    North Dakota and South Dakota grains are exported through the lakes, often by saltwater vessels. The icebreakers assist in getting those vessels through, even at the beginning of the season and the end of the season.

    West Virginia coal miners move their coal through the Great Lakes through various Great Lakes ports. Again, the Great Lakes ships, even during the middle of the season, are benefiting from the icebreakers in that those ships are available in the summer to carry that West Virginia coal.

    It's the same with Montana and Wyoming coal being shipped through the port of Superior that Mr. Oberstar is so familiar with. They benefit.
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    I think the whole Nation benefits by having a strong steel industry. A great power needs to have a steel industry, and we happen to have the iron ore reserves in the United States in the Great Lakes basin, and so it's that which supports the entire Nation from a national defense as well as a national economy standpoint.

    Mr. CLEMENT. Do either one of you want to comment, as well?

    Mr. FLESSE. Also, Mr. Clement, if I may, as you know and the rest of the committee would know, steel is shipped, once it is made, throughout the United States. It goes into your automobiles, it goes into your appliances. It even goes in for your tin cans that are used for canning and food industries, so it's very important that we remain competitive in this industry because it has an affect on the economy throughout the United States.

    Mr. CLEMENT. Mr. Smith, you state that AMO is prepared to work with the Coast Guard and the subcommittee to study the feasibility of having the Government charter the powered ''Mackinaw'' to a private entity to break ice on the Great Lakes. Under this scenario, would the private entity pay the Government for using the ''Mackinaw,'' or would the government pay the private entity to operate the vessel?

    Mr. SMITH. I would envision it, as I said before, with the current operation of the pre-positioned vessels operated by the Marine Corps and the fast sea lift ships operated for the military with civilian contracted crews, with the employer being the Government.

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    Mr. CLEMENT. Admiral, when will you complete the evaluation of re-engining the ''Mackinaw'' or building a new dual-draft icebreaker?

    Admiral PESCHEL. Mr. Clement, that work has not yet begun because of the years of indecision of exactly what the future of the vessel would be. No effort had been expended to firm up those costs or concepts, and that work is yet to come.

    Mr. CLEMENT. How much would re-engining the ''Mackinaw'' cost?

    Admiral PESCHEL. We have one estimate from an overall look at the systems in the vicinity of $42 million to modernize not only the engine room but some of the other support plants and habitability of the vessel, itself.

    Mr. CLEMENT. If you decide to re-engine the ''Mackinaw,'' when would that begin?

    Admiral PESCHEL. A future year, sir. We would have to look at the funding source and see if that could be done within existing bases or if that would have to be a specific line item addition to the budget.

    Mr. CLEMENT. Thank you.

    Admiral PESCHEL. Mr. Clement, may I offer up——

    Mr. CLEMENT. Yes.
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    Admiral PESCHEL. One thought that came to me as you were discussing civilian crewing, I would be remiss in not mentioning that ''Mackinaw'' is not just a vessel that goes from point A to point B, as some of these civilian-manned vessels might be. There is an element of command and control that is exercised in the ice system where there are orders given and orders listened to. There is this regulator/regulatee relationship that I discussed a bit that sometimes is essential as priorities are set and as conditions are met, so there is an element of need for a degree of Governmental control over how things work on the rivers.

    Mr. CLEMENT. Thank you.

    Mr. RYAN. Mr. Clement, may I add to that? I would agree with Admiral Peschel and with Dan Smith on each of what they have stated; however, it's certainly not impossible to have a Coast Guard officer on board to handle that command and control while a commercial crew would be operating. If this becomes the most effective way of providing future icebreaking services, I think it could be worked out.

    Mr. CLEMENT. Mr. Smith?

    Mr. SMITH. I concur.

    Mr. CLEMENT. Mr. Fleese?

    Mr. FLESSE. Yes.

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    Mr. CLEMENT. Thank you.

    Mr. COBLE. Thank you. Gentleman from Tennessee, we've been joined by the ranking member of the full committee, Mr. Oberstar, the gentleman from Minnesota.

    Mr. OBERSTAR. Thank you very much, Mr. Chairman. These hearings are very appropriate, very timely, and very important.

    Admiral Peschel, I heard you say, ''due to years of indecision,'' in responding to Mr. Clement's question about the future of the ''Mackinaw.'' That's a very generous way to put it.

    Now, I love the Coast Guard and I respect the Coast Guard immensely. A former commandant of the Coast Guard, Jim Gracey, said, ''The country gets more out of the people who wear this particular color blue than they do of any other service in the Federal Government,'' and he's right. But I wouldn't call it years of indecision; in all candor, I'd call it years of resistance.

    The Coast Guard, not you, but your predecessors—and I don't ask you to defend it, but I've been doing this for 30 years, working on winter navigation. In my previous incarnation served as a staff member and administrative assistant for my predecessor in Congress, John Blatnick, and later as administrator of this committee staff. I am now a Member of the Committee. One of my long-term projects has been the extended season navigation on the Great Lakes, the program that demonstrated you can ship, you can move goods all year long on the Great Lakes and the inter-connecting channels and the Soo Locks with adequate and proper icebreaking capability. I've still got one of the patches that was issued that year we were able to navigate—George Ryan will remember that—year 'round.
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    But every time we came for new icebreaker or significant upgrade of the ''Mackinaw,'' the Coast Guard had another way to do it. One time it was, ''We're going to cooperate with Canadians.'' And I put an authorization into the bill in 1977, I think it was, or 1978, to authorize design/construction of an icebreaker or to buy an icebreaker flat out from the Finns, who were the world's best icebreaker manufacturers. We could have gotten one then for $53 million, which was less than we could produce it in the United States—a 25,000 shaft horsepower icebreaker. We wouldn't be here talking about this thing today. But then it was, ''We'll cooperate with the Canadians.'' And so who came along? We didn't want to buy from Vartsula Shipyards in Finland, so who comes along as the counselor and consultant for the Canadian government? Vartsula Shipyards. The Finns are in there telling them what kind of an icebreaker to build.

    Then it was, ''Well, we'll build harbor tugs, 2,500 shaft horsepower harbor tugs. They all got stuck in the ice. They could hardly move the ice, itself, let alone the ships that they need to move through that ice.

    You know, maritime shipping is our least-cost, most energy-efficient means of transportation. You know that. You understand that. You are the guardians of that trust and of that unique responsibility.

    I know the last glacier retreated 10,000 years ago, but every year it makes a come-back.

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    Mr. OBERSTAR. And this year we've still got ice. In fact, I think we're going to have to enlist one of those harbor tugs to go up on Rainy Lake and open the ice this coming Saturday, Mr. Chairman, for the opening of fishing season. We've still got 36 inches of ice on inland fishing lakes in northern Minnesota. It's cold in those northern tier States, Mr. Chairman, not like your country where all you have to deal with is hurricanes and stuff like that, tornados.

    But, in all seriousness, I am disappointed with the foot-dragging of the Coast Guard over this issue of an icebreaker.

    We don't need to decide whether we need a dual draft or single draft or single purpose, or whatever. The Coast Guard finally came up with an icebreaker design, Mr. Chairman. They had guns on it. We're not at war with Canada; we're at war with ice.

    We need to proceed with a heavy-duty icebreaker. I don't care if you refurbish the ''Mackinaw'' or you design/build a new one at a cost of $270 million or $320 million or whatever million dollars it costs. It would pay for itself. We're going to need those lakes. They are going to be there for another 10,000 years. They're going to carry the commerce of the industrial upper midwest.

    This is the region of the country where we produce 45 percent of the Nation's agriculture, produce 25 percent of its industrial exports. We have one out of every five industrial jobs in America. The sinews of our industrial might come in the form of iron ore and taconite from the upper lakes, coal to the lower lakes, and steel back upstream, and limestone, and all the other bulk commodities that are shipped on the lakes, and then, in conjunction with the St. Lawrence Seaway, shipment of grain from the heartland of America.
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    We've got to be able to keep those shipping lanes open. Those little, dinky harbor tugs don't do it. We need a ''Mackinaw''-class icebreaker, and I want to see us get on with it, and I want to see the Coast Guard committed to doing it and doing it within a year, making a decision. Go ahead. We'll put the authorization in this. I'm sure the chairman would support it.

    Mr. COBLE. I thank the gentleman. As an aside, I said to the gentleman from Minnesota about four or 5 weeks ago that I'm one of these odd-balls who enjoys inclement weather. I'm a snow/rain/wintertime guy. And when I was talking to him, Jim said to me, ''Have you ever spent a winter in Minnesota?'' I had to respond negatively. I guess you didn't say this, Mr. Oberstar, but I guess you would say that if I ever did, then come talk to you about wintertime.

    Gentlemen, this has been a very, as far as I'm concerned, productive hearing. We will review this in great detail, Mr. Oberstar and Mr Clement and—I stand corrected. Another gentleman for the Great Lakes has come in. We'll be glad to hear from you, sir.

    Mr. EHLERS. Thank you, Mr. Chairman. Most people don't notice me. I'm used to that. I do apologize for being late. I had other meetings going on, and I just wanted to come over.

    I understand you've already registered your concern, and I believe Mr. Oberstar has, about the proposed demise of the ''Mackinaw.'' I just wanted to come in and make a very strong statement that we absolutely have to continue that service in the Great Lakes and assume that the ''Mackinaw'' will either be renovated and restored to service or an equivalent ship will be obtained and used for that purpose.
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    If there is any doubt about that, I could go on at much greater length, but since we're nearing the end of the hearing, I will cease and desist at this point, Mr. Chairman.

    Thank you for the opportunity. We will discuss this further in the future.

    Mr. COBLE. Mr. Ehlers, you and Mr. Oberstar are from the great north. You all weren't here when I put a hypothetical question in. My question was: if the ''Mackinaw'' is decommissioned—and I assured these folks that was a hypothetical question—and now Vern comes in and says ''the proposed demise.'' You're going to have these folks in sackcloth before it's over with, Vern.

    Yes, sir, Admiral?

    Admiral PESCHEL. Mr. Chairman, I sat at Mr. Oberstar's knee when I first came to the Great Lakes to the back ninth some time ago, and he advised me that any time he looked out his window he could see the ''Mackinaw,'' so I want to be sure Mr. Oberstar brings a picture of this back with him which shows the ''Mackinaw'' totally overshadowing one of those dinky, little 2,500 horsepower harbor tugs in the background.


    Admiral PESCHEL. Before you came, sir—I don't mean to give you a lesson, but I talked about the fact that it does, indeed, take team work on the Great Lakes to do the icebreaking. These tugs are very essential to being sure that—systematically we could work together to be sure that commerce is moved.
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    Mr. OBERSTAR. They have their role, but they cannot replace the ''Mackinaw.'' Mr. COBLE. I'm pleased to have Mr. Oberstar and Mr. Ehlers both here, because they live with this day in and day out.

    Vern, if you have other questions—I'm not cutting you off if you have——

    Mr. EHLERS. No, I don't, Mr. Chairman. I would observe that, had I been born and lived in your State of origin, I would probably enjoy cold, ice, and snow, too.


    Mr. COBLE. I'm getting it from both sides.

    With that, I will again express thanks to the witnesses for what I regard as valuable testimony, and the Members for their questions.

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

    If there is no further business, again, thanks to the Members and the panel for your contribution today.
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    The subcommittee stands adjourned.

    [Whereupon, at 2:14 p.m., the subcommittee was adjourned, to reconvene at the call of the Chair.]

    [Insert here.]