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CREATING JOBS AND INCREASING U.S. EXPORTS 

BY ENHANCING THE 

MARINE TRANSPORTATION SYSTEM 

(112–36) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

COAST GUARD AND MARITIME TRANSPORTATION 

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

JUNE 14, 2011 

Printed for the use of the 

Committee on Transportation and Infrastructure 

( 

Available online at: http://www.gpo.gov/fdsys/browse/ 

committee.action?chamber=house&committee=transportation 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

JOHN L. MICA, Florida, Chairman 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee 

FRANK A. LOBIONDO, New Jersey 

GARY G. MILLER, California 

TIMOTHY V. JOHNSON, Illinois 

SAM GRAVES, Missouri 

BILL SHUSTER, Pennsylvania 

SHELLEY MOORE CAPITO, West Virginia 

JEAN SCHMIDT, Ohio 

CANDICE S. MILLER, Michigan 

DUNCAN HUNTER, California 

ANDY HARRIS, Maryland 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

JAIME HERRERA BEUTLER, Washington 

FRANK C. GUINTA, New Hampshire 

RANDY HULTGREN, Illinois 

LOU BARLETTA, Pennsylvania 

CHIP CRAVAACK, Minnesota 

BLAKE FARENTHOLD, Texas 

LARRY BUCSHON, Indiana 

BILLY LONG, Missouri 

BOB GIBBS, Ohio 

PATRICK MEEHAN, Pennsylvania 

RICHARD L. HANNA, New York 

JEFFREY M. LANDRY, Louisiana 

STEVE SOUTHERLAND II, Florida 

JEFF DENHAM, California 

JAMES LANKFORD, Oklahoma 

REID J. RIBBLE, Wisconsin 

CHARLES J. ‘‘CHUCK’’ FLEISCHMANN, 

Tennessee 

NICK J. RAHALL II, West Virginia 

PETER A. DEFAZIO, Oregon 

JERRY F. COSTELLO, Illinois 

ELEANOR HOLMES NORTON, District of 

Columbia 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

BOB FILNER, California 

EDDIE BERNICE JOHNSON, Texas 

ELIJAH E. CUMMINGS, Maryland 

LEONARD L. BOSWELL, Iowa 

TIM HOLDEN, Pennsylvania 

RICK LARSEN, Washington 

MICHAEL E. CAPUANO, Massachusetts 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

RUSS CARNAHAN, Missouri 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

MAZIE K. HIRONO, Hawaii 

JASON ALTMIRE, Pennsylvania 

TIMOTHY J. WALZ, Minnesota 

HEATH SHULER, North Carolina 

STEVE COHEN, Tennessee 

LAURA RICHARDSON, California 

ALBIO SIRES, New Jersey 

DONNA F. EDWARDS, Maryland 

(II) 

SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION

FRANK A. LOBIONDO, New Jersey, Chairman 

DON YOUNG, Alaska 

HOWARD COBLE, North Carolina 

ANDY HARRIS, Maryland 

FRANK C. GUINTA, New Hampshire 

CHIP CRAVAACK, Minnesota 

BLAKE FARENTHOLD, Texas 

JEFFREY M. LANDRY, Louisiana, 

Vice Chair 

JOHN L. MICA, Florida (Ex Officio) 

RICK LARSEN, Washington 

ELIJAH E. CUMMINGS, Maryland 

CORRINE BROWN, Florida 

TIMOTHY H. BISHOP, New York 

MAZIE K. HIRONO, Hawaii 

MICHAEL H. MICHAUD, Maine 

NICK J. RAHALL II, West Virginia 

(Ex Officio) 

(III) 

(V) 

CONTENTS Page 

Summary of Subject Matter .................................................................................... vi 

TESTIMONY 

Cox, Joseph J., President and CEO, Chamber of Shipping of America .............. 4 

Matsuda, Hon. David T., Administrator, Maritime Administration ................... 4 

Mohr, John M., Executive Director, Port of Everett, Washington ....................... 4 

Roberts, Michael G., Senior Vice President and General Counsel, Crowley 

Maritime Corporation, on behalf of American Maritime Partnership ............. 4 

Tellez, Augustin, Executive Vice President, Seafarers International Union ...... 4 

PREPARED STATEMENT SUBMITTED BY MEMBER OF CONGRESS 

Hirono, Hon. Mazie K., of Hawaii .......................................................................... 28 

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Cox, Joseph J. .......................................................................................................... 30 

Matsuda, Hon. David T. .......................................................................................... 35 

Mohr, John M. .......................................................................................................... 42 

Roberts, Michael G. ................................................................................................. 53 

Tellez, Augustin ....................................................................................................... 61 

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(1) 

CREATING JOBS AND INCREASING 

U.S. EXPORTS BY ENHANCING THE 

MARINE TRANSPORTATION SYSTEM 

TUESDAY, JUNE 14, 2011 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON COAST GUARD AND

MARITIME TRANSPORTATION, 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:00 a.m., in Room 

2167, Rayburn House Office Building, Hon. Frank LoBiondo (chairman of the subcommittee) presiding. 

Mr. LOBIONDO. The subcommittee will come to order. 

The Subcommittee is meeting today to review the current condition of the Maritime Transportation System, as well as to examine 

ways to improve the system to create jobs to improve the flow of 

commerce and increase U.S. exports. 

Last month, the subcommittee met to examine the Coast Guard’s 

rulemaking process in an attempt to reduce burdensome regulations that stifle commerce and job creation. Today’s hearing is a 

logical extension of that effort, as we will step back and examine 

the system as a whole for similar efficiencies. 

The MTS is a vast resource that facilitates our robust maritime 

commerce. It consists of waterways, ports and intermodal landside 

connections that allow for movement of passengers and cargo on 

the water. The MTS includes nearly 360,000 miles of navigable 

channels, railways, and highways, as well as 238 locks and 3,700 

marine terminals. 

The commerce which moves on the MTS fuels the economy. Approximately 99 percent of the volume of overseas trades enters or 

leaves the United States by water. The movement of cargo and associated activities on the Marine Transportation System adds more 

than $649 billion annually to the U.S. gross domestic product, sustains more than 13 million jobs, and contributes over $212 billion 

in annual Federal, State, and local taxes. 

Domestic shipping alone is responsible for over half a million American jobs and a $100 billion in annual economic output. As 

such, ongoing maintenance and improvement of the MTS is essential to any effort to create jobs and expand exports. 

In July of 2008, the Cabinet level Committee on the Marine 

Transportation System released its ‘‘National Strategy for the Maritime Transportation System: A Framework for Action,’’ which 

identifies current challenges to marine transportation and several 

2 

actions to address these challenges. I look forward to hearing about 

the progress on those actions. 

Similarly, I hope that our witnesses will touch on ways to revitalize our marine highways. These rivers, canals and coastal routes 

are the most economical, environmentally sustainable, and safest 

mode of commercial freight transportation. I look forward to hearing about efforts to support and enhance the marine highways programs. 

As our economy struggles to recover, every agency in the Federal 

Government must seek ways to promote growth. That means exploring ways to create jobs, increase exports, and save taxpayers 

money. A robust Marine Transportation System can potentially accomplish all three. 

However, as we focus our efforts on ways to maximize the system’s potential, it is imperative that the policies we develop promote the transportation of goods on American ships, built in American shipyards, and operated by American mariners. 

I want to thank the witnesses for being here today. I look forward to hearing their testimony. 

And now I would like to yield to Mr. Larsen. 

Mr. LARSEN. Thank you, Mr. Chairman. 

Thank you for holding this morning’s hearing on how the Maritime Transportation System, our Nation’s network of ports, marine 

terminals, navigable waterways, vessels, and intermodal rail and 

highway connections, can do more to create jobs, boost exports, and 

stimulate economic growth. 

For the maritime industries and workers in my district, few 

issues are as important so I am particularly pleased to welcome 

John Mohr here today, the executive director from the Port of Everett, my home town, to this morning’s hearing. 

It is one of the goals of my office to implement a forward-thinking plan for long-term economic growth, Mr. Chairman, that works 

for all of us through the investment and the skills and knowledge 

of our people, support for innovation and infrastructure, all in 

order to maintain our economic leadership in the world. 

Last week at home, I spoke at a rail summit held by one of our 

county executives. The summit made it clear that rail and freight 

infrastructure is critical to our long-term economic growth. My office has established an export assistance program that connects 

local small manufacturers with people and resources they need to 

export their goods and create jobs. 

In order to remain competitive in a global economy, improving 

domestic infrastructure as well is a sound strategy to promote 

growth and efficiency, support increased manufacturing, feed the 

American market and serve as an export platform for manufactured goods around the world. Our economic prosperity is closely 

tied to and heavily dependent upon international trade. Since approximately 99 percent by volume of this overseas trade is moved 

by water, it underscores how pivotal the Maritime Transportation 

System is to our goal of supply chains and consequently to our economic and national security. 

You have noted the numbers with regard to waterborne cargo, 

Mr. Chairman, that contributes $649 billion annually to the U.S. 

gross domestic product and more than 13 million jobs. An anVerDate Aug 31 2005 10:51 Jan 03, 2012 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\CG\6-14-1~1\66919.TXT JEAN
3 

nouncement last week from the Commerce Department reaffirmed 

these numbers. New trade figures for U.S. exports of goods and 

services for April revealed a 1.3-percent increase from March to a 

record $175.6 billion, still with a trade deficit but causing the trade 

deficit to decline by 6.7 percent from the preceding month. 

However, because of much of the system’s infrastructure is aging 

and constrained by capacity limitations, this projection raises the 

fundamental question: Will the MTS be able to meet these new demands and continue to provide a seamless, integrated multimodal 

transportation system. 

In response to the 2004 Ocean Action Plan, the Committee on 

the Marine Transportation System did release in 2008 a national 

strategy that offered 34 recommendations to maintain and enhance 

the MTS, especially the system’s capacity, safety and security, environmental stewardship, resilience and reliability, and long-term financing. 

In general, progress towards fulfilling the national strategy is incomplete at best. Certainly efforts by this Administration to establish a pilot program for marine highways and to designate the marine highway corridors and grants awarded under the Recovery Act 

to fund MTS infrastructure investments have been positive steps, 

but they don’t seem to be enough and much more needs to be done. 

Unfortunately, the prospects don’t seem to be very good under 

present Federal budget constraints for finding new resources to 

maintain necessary infrastructure investments to maintain, enhance and expand the system to meet its future challenges. Nevertheless, we must find a way forward. 

With this in mind, I look forward to hearing the recommendations from our witnesses on how we might creatively and constructively address the needs of the Marine Transportation System. I 

will learn how we might leverage greater public and private investments to improve the efficiency and reliability of the system and 

how we can utilize the system to drive job creation and revitalize 

our maritime industries. 

The overarching reality is that our economic future and the Maritime Transportation System are closely intertwined. To think that 

our economy can fully recover and grow if we fail to invest in this 

critical infrastructure is both unrealistic and shortsighted. We 

must summon the world to invest in this system or we risk choking 

off the very conduit that makes our economy hum, that drives job 

creation and that ensures the U.S. market remains pre-eminent in 

global trade. Thank you, Mr. Chairman. 

Mr. LOBIONDO. Thank you, Mr. Larsen. 

And Rick, thank you for suggesting this hearing. 

Our witnesses today include the Honorable David Matsuda, administrator of the Maritime Administration; Mr. Joseph Cox, president of the Chamber of Shipping of America; Mr. Michael Roberts, 

testifying on behalf of the American Maritime Partnership; Mr. 

Augustin Tellez, executive vice president of the Seafarers International Union; and John Mohr, executive director of the Port of 

Everett in Washington. We thank you all for being here. 

Oh, excuse me. Do you have an opening statement? 

Mr. CRAVAACK. Sorry, Mr. Chairman. That is what I get for 

being late. 

4 

Mr. LOBIONDO. That is what you get for being late. 

Mr. CRAVAACK. Thank you, Mr. Chairman. 

And thank you Mr. Larsen for holding this important hearing 

today. 

I would like to welcome our witnesses as well to our panel. 

I appreciate the opportunity to hear from today’s witnesses about 

ways to create jobs through enhancing our Nation’s Maritime 

Transportation System. 

As a representative from Duluth, Minnesota, I understand the 

critical importance of the maritime transportation to our State and 

our Great Lakes region. Accordingly, I am very interested to hear 

how our Nation can further utilize maritime transportation by removing barriers, like double taxation under the Harbor Maintenance Tax. 

As a new Member of the House, I was disturbed to find how Congress has failed to use all of the harbor maintenance tax revenues 

for their intended use; namely, the dredging of our harbors and our 

channels. Presently, the harbor maintenance trust fund is running 

a $5 billion surplus. At a time when our Nation’s vessels are unable to carry full loads because of inadequate channel and harbor 

depths, it is imperative that we better utilize the Harbor Maintenance Trust Fund to increase transportation productivity. 

Again, I look forward to your testimony. And I thank you for 

being here today. 

And I yield back, sir. 

Mr. LOBIONDO. Thank you very much. 

Mr. Matsuda, the floor is yours. 

TESTIMONY OF THE HONORABLE DAVID T. MATSUDA, ADMINISTRATOR, MARITIME ADMINISTRATION; JOSEPH J. COX, 

PRESIDENT AND CEO, CHAMBER OF SHIPPING OF AMERICA; 

MICHAEL G. ROBERTS, SENIOR VICE PRESIDENT AND GENERAL COUNSEL, CROWLEY MARITIME CORPORATION, ON 

BEHALF OF AMERICAN MARITIME PARTNERSHIP; AUGUSTIN 

TELLEZ, EXECUTIVE VICE PRESIDENT, SEAFARERS INTERNATIONAL UNION; AND JOHN M. MOHR, EXECUTIVE DIRECTOR, PORT OF EVERETT, WASHINGTON 

Mr. MATSUDA. Good morning, Chairman LoBiondo, Ranking 

Member Larsen, members of the subcommittee. 

Thank you for inviting me here to testify on behalf of U.S. Transportation Secretary Ray LaHood. Before I begin, I would like to 

pass along my condolences to Congressman Cummings. He and his 

family are certainly within our thoughts and prayers at the Maritime Administration. 

With the subcommittee’s permission, I would like to submit my 

written testimony for the record and summarize it briefly. 

Now, let me take the opportunity to speak to you about the Marine Transportation System and its role in creating jobs and increasing exports. 

The Marine Transportation System supports millions of jobs, facilitates trade, moves people and goods in a safe, cost-effective, and 

efficient manner and allows our Nation to be competitive in the 

global marketplace. 

5 

As the members of the subcommittee know, export markets are 

fundamental to our manufacturing and agricultural industries. And 

as a result of sustained efforts, exports have rebounded to near 

2008 levels within the first year of President Obama’s National Export Initiative. With the understanding that the export initiative’s 

success is indelibly linked to the transportation industry, the Maritime Administration continues to execute a number of initiatives 

and grants to promote the continued growth of American exports. 

As one example, I am pleased to report that I recently approved 

the Federal financing of a $290 million export project at a shipyard 

in Panama City, Florida. I recall the subcommittee’s interest in 

this project when I was last before you. This project will result in 

300 new shipbuilding jobs as workers construct five new off-shore 

supply vessels for service in Brazilian waters. 

Another way we are supporting export goals is by developing 

America’s marine highway. The comprehensive report on marine 

highways sent to this committee in April can now be found on the 

Maritime Administration Web site. As the chairman alluded to, 

this DOT initiative promotes the use of waterways to move freight, 

providing shippers with a transportation alternative that reduces 

oil consumption and greenhouse gas emissions and reduces the 

wear and tear on our surface infrastructure. 

The department has also made targeted investments in our Nation’s port and rail lines for the first time ever through the TIGER 

grant program. Created in the Recovery Act, TIGER plays a critical 

role in creating jobs and supporting the National Export Initiative. 

It has been a tremendous success. 

As I describe the broad reach and range of these and other programs described in my written testimony and their role in our economic success, please note that these results would not have been 

possible without the partnership of many other agencies. 

The Committee on the Marine Transportation System chaired by 

Secretary LaHood brings various agency representatives together 

to facilitate the improvement of the U.S. supply chain through policy coordination, and we are working with our Federal maritime 

partners, the Coast Guard, the Army Corps, NOAA, a total of 27 

agencies, continuing to build on these efforts. 

Much is changing in the maritime industry and may increase export opportunities. Larger ships, more calls on America’s ports, and 

potential shifts in trade lanes due to expansion of the Panama 

Canal, as well as other factors, will all change the way in which 

we ship goods. In May, Agriculture Secretary Tom Vilsack reported 

that farm exports reached an all-time high of $75 billion during the 

first half of fiscal year 2011. In fact, every dollar in exports generates $1.31 in economic activity. 

At the same time, we are focused on improving our U.S.-flag 

fleet’s international competitiveness. That is why we are studying 

the various impediments to the use of the U.S.-flag registry, and 

we are expecting the study to be completed the summer of 2011. 

We are also focusing on cargo opportunities for U.S. carriers both 

at home and abroad. And by partnering with agencies like the Department of Energy, we will continue to strengthen these opportunities. 

6 

As I hope you can see, we are fully committed to utilizing the 

Marine Transportation System to increase our exports and support 

our domestic maritime industry. We believe that while it is critical 

to our economy today, it has the potential to create even greater 

economic growth tomorrow. 

At this time, I am pleased to take any questions you have. 

Mr. LOBIONDO. Mr. Cox. 

Mr. COX. Good morning, Chairman LoBiondo and Ranking Member Larsen. I appreciate the opportunity to be here. 

With your permission, Chair, I will submit my testimony and 

just make a few comments relative to it here. 

Marine Transportation System, as I look at this, gentlemen, I 

wonder if our Marine Transportation System as we describe it 

shares an equal status with our rail and road brethren, and I do 

think that is an important question that we in this Nation are 

going to have to face if we are going to move cargo and people in 

the future. 

In the past, the Maritime Administration was engaged in something called the Marine Transportation System National Advisory 

Council. We participated in that. We did not have a high degree 

of confidence in what came out of that. We would hope that the 

new Committee on Marine Transportation System does a better job 

than we did in the past. 

I am pleased to say that as president of the Chamber of Shipping 

of America, I am also chairman of the Marine Highways Cooperative, a public-private partnership among the Government, Maritime Administration, that is, and the private sector. And I should 

say that the private sector does fund at this point a little bit more 

than half the money that goes into the cooperative. It is a very 

modest budget, Mr. Chairman, but at the same time, we are dedicated to educating our own community about the benefits of what 

we call short sea shipping. 

And as I speak, we are putting on our Web site a calculator 

which shippers, the marine community, those who desire to have 

an investment in the maritime industry, and others can plug in the 

numbers into that system, which would include road and rail 

modes of transport, to see what is the most beneficial choice. We 

think one of the more useful aspects of it is carbon. 

We know carbon currently doesn’t have a price tag associated 

with it. I don’t want to get started with the politics of carbon. But 

at the same time, I think the public is becoming aware of the issue 

and so carbon is going to be an important consideration, we think, 

among the retailers of America. And this tool will enable them to 

utilize that when they make their decisions relative to transportation logistics. 

And Chairman, I am going to talk quickly about the harbor 

maintenance tax. Sir, you are not the Ways and Means Committee, 

I understand that. But the harbor maintenance tax is a major psychological impediment, in my opinion, to the furtherance of a review of short sea shipping, and there could be arguments as to 

whether it should be or not, but I think those arguments can be 

had behind doors. I think in the eyes of the industry, the taxation, 

if you will, a double taxation on shipping cargo through short sea 

7 

shipping modes is simply something that is inappropriate and 

ditto, Mr. Cravaack. Thank you for your earlier comments. 

Sir, I am going to talk quickly about business expectations because no one invests in anything in this country without an expectation of what they are going to have to face in the future relative 

to their cost structure. And I think that two items spring to mind. 

There may be others. 

But the first one in the maritime industry is ballast water and 

controls. We have a regrettable situation now where we do not 

have that necessary ingredient for us to consider what our investments are in shipping because the investment in ballast water 

technology controls is not an inconsequential one. So a decision in 

this area is certainly very important to the industry. And we need 

a uniform national standard. 

Now, I don’t know how strict it can or can’t be, but it should be 

as strict as technology permits with upgrading available as technology becomes more available. I think that we owe it to ourselves 

as a Nation to have a single uniform national standard. 

The second area is national ocean policy. There is a deliberation 

among the Administration where they have called the agencies together to involve a consideration of national ocean policy. This is 

geospatial planning, marine spacial planning. We are very concerned with whether or not that is operating to the full effect of 

what would be to the benefit of our sector of the usage of the 

oceans. And we certainly invite any oversight that the legislature 

might want to engage in with respect to the national ocean policy. 

Chairman, I don’t make any public comments unless I make this 

comment, and that is about piracy. Piracy is active. It is in place. 

It is a growing phenomenon in the Indian Ocean. Our seafarers are 

exposed. Other seafarers are exposed, and I believe, sir, that the 

U.S. should take and should continue to take a leading role in combatting piracy. 

And in conclusion, sir, our thoughts and prayers are also with 

Mr. Cummings and family during these difficult times. 

Thank you. 

Mr. LOBIONDO. Thank you. 

Mr. Roberts. 

Mr. ROBERTS. Good morning, Mr. Chairman, Mr. Larsen, members of the subcommittee. 

My name is Mike Roberts. I work for Crowley Maritime. I am 

here today as a representative for the American Maritime Partnership, or the AMP. Thank you for holding this hearing and inviting 

us to testify. 

With your permission, I would like to offer brief comments and 

ask my written testimony be included in the record. 

Let me first briefly introduce the American Maritime Partnership. We believe it is the largest maritime coalition ever formed. 

It includes companies that build ships in U.S. shipyards using 

union labor and non-union labor. It includes companies that operate U.S.-flag ships using union and non-union labor. It includes virtually all labor unions touching the maritime industry, other transportation industry stakeholders, defense groups, such as the Navy 

League of the United States. It is a very large and comprehensive 

organization. 

8 

We came together in 1995 around the simple proposition that the 

American domestic maritime industry should stay American; that 

the vessels should be built in the United States; that they should 

be owned, controlled, and crewed by American citizens; that those 

vessels should be fully subject to the laws of this country and not 

the laws of Liberia or the Marshall Islands or any other country 

that may be chosen by the ship’s owner. 

They always have been true-blue American vessels, and nothing 

we have seen suggests that should change. This structure supports half a million American jobs, a $100 billion in economic activity, as your opening comments noted, and at 

the same time, provides our military, the seafarers, the ships, the 

shipyards they need to get support to our troops around the world. 

Domestic shipping is the mainstay of the American maritime industry. This is partly because international shipping is overwhelmingly dominated by foreign—low cost—foreign—lowest cost foreign 

ships. While there are always ways to make American ships more 

competitive, the gap between American living standards on the one 

hand and lowest cost foreign shipping on the other is too large so 

that the only realistic way American ships with fully American 

crews can stay involved in international trade is through promotional programs like the Maritime Security Program. 

Those programs should be expanded, perhaps radically expanded, 

to assure there is a broad enough base of American skills and assets in this indispensably important industry. Simply put, America 

needs to have American sailing commercial vessels and Naval vessels all over the world. 

And as we draw down our budgets and look for smarter, more 

cost-effective ways to achieve national security goals, the MSP and 

other programs are proven performers that should serve as a model 

for other public-private partnerships. 

Viewed in that context, the very notion that we should allow foreign workers to take over our domestic maritime industry ought be 

a nonstarter. And thanks to your leadership and the leadership of 

others on this committee, we have not faced the kind of existential 

threats that initially brought us together. 

Your support for the Jones Act is vitally important to maintaining a strong domestic maritime industry. It encourages private sector investment and keeps jobs in American hands. 

Our industry has faced serious concerns but more of a technical 

nature. It is possible for clever lawyers to define the cabotage laws 

out of existence without many people recognizing it. It is possible 

to create exceptions to the laws that are so broad or so frequent 

or so unjustified that those of us who invest in U.S. shipping begin 

to wonder whether that is a very smart business strategy. 

The fact that we genuinely believe in the American maritime industry, that we are willing to risk literally billions of dollars building ships in American shipyards, providing tens of thousands of 

jobs to American workers in the shipyards and on the vessel, that 

is a good start. But it is vitally important that those who make and 

enforce the rules support those decisions. 

Again, we appreciate support from this committee and from the 

Administration in helping making sure that these very real threats 

are properly addressed. 

9 

In terms of what the Government can do to help create jobs and 

grow the American maritime industry, our message is fairly simple. 

Our Government needs to pay more attention to this committee 

and the opportunities that this committee pursues. We desperately 

need to modernize our maritime infrastructure, our rivers, and harbors. Money has always been the issue. We can provide jobs to 

Americans instead of handouts. We can transform our infrastructure at a fraction of what it would have cost 5 years ago. We can 

take the money we are borrowing from our children and make an 

investment that would actually pay dividends to our children. 

We know that that is an agenda that you have promoted, and we 

want you to know that we wholeheartedly support you in that endeavor. 

And I will end at this point. 

Thank you, Mr. Chairman. 

Mr. LOBIONDO. Thank you. 

Mr. Tellez. 

Mr. TELLEZ. Good morning and happy Flag Day, Chairman 

LoBiondo, Mr. Larsen, and the rest of the members of the committee. On behalf of the Seafarers International Union of North 

America and our fellow maritime unions, the master mates and pilots, marine engineers, and American maritime officers, I thank 

you for conducting this hearing, for the opportunity to testify, and 

for your continued support for the U.S. Merchant Marine. On their 

behalf also, I would like to offer our collective condolences to Congressman Cummings and his family for his tragic loss. 

As the organizations that represent merchant mariners, we have 

a deep interest in our Nation’s economy and national security. Our 

organizations are focused on jobs, increasing the size of our U.S.- 

Flag Merchant Marine and seeking opportunities for workers 

across America to obtain good-paying, secure American jobs that 

keep our economy moving forward. And we will do our best to 

make sure that Mike Roberts is proud to state that he is 100 percent union the next time he testifies. 

We strongly support the National Export Initiative and will work 

with Congress and the Administration to ensure its success. Doubling exports is an ambitious goal, but we believe it is an achievable one. However, in order for us to meet that goal, we must ensure that the American maritime industry remains strong both at 

home and abroad. We must ensure that our ports and infrastructure can handle the additional capacity needed to meet these goals. 

We must defend programs that support the Merchant Marine, 

like the Jones Act, the Maritime Security Program and cargo preference. We must innovate and expand our capacity by developing 

our coastwise trade through America’s Marine Highways Program. 

We must reform the harbor maintenance tax, expand the tonnage 

tax, and create a national regulatory regime for vessel discharge. 

Only by supporting our existing programs, reducing the regulatory 

burden on the industry, and seeking opportunities to expand the 

industry will we be able to create jobs and increase U.S. exports. 

Congress and the Administration must support the Jones Act 

and our cargo preference laws. Both have been under considerable 

attack recently, and losing either one of them would destroy the 

United States Merchant Marine. The Jones Act ensures we have 

10 

the domestic job base in peacetime that we need to support our 

troops in wartime. And our cargo preference laws provide the cargo 

we need to keep our ships moving. 

Put simply, the maritime industry’s lifeblood is cargo. It is what 

creates jobs, and it is what will help continue our Nation’s economic recovery. Though we cannot just simply defend the Jones Act 

and our laws, we must actively work to expand the industry. We 

must redevelop and recreate our coastwise trade industry. 

Europe has already discovered that using feeder vessels to move 

cargo between ports is an economical and fast way of getting goods 

and people from place to place. They have done it, and their model 

will work well here in America. It is time for America to redevelop 

our coastwise trade. It will not only create thousands of jobs, but 

by utilizing the latest technologies offers an opportunity to provide 

an effective green solution to the dangerous overcrowding of our 

highways and infrastructure and the serious issues this situation 

represents. 

We hope Congress will work with the industry to make the Marine Highways Program a reality. 

We also need to defend our cargo preference laws and ensure 

that they are being enforced. The efforts of some to cut PL 480 

Food for Peace Program, if successful, will harm many of our ships 

operators beyond repair. We must not allow that to happen, and 

lax enforcement of the programs in place has resulted in many 

preference cargoes being shipped on foreign vessels, which also 

hurts our operators and our mariners. We need strong enforcement 

of the cargo preference laws. 

In terms of enhancing the Maritime Transportation System, a 

simple means of doing so is regulatory reform, not only to help the 

ship operator but the mariner as well. Today, mariners have to 

jump through dozens of hoops just to enter the industry, and that 

is a deterrent to attracting new mariners. When a mariner goes for 

her physical of drug screening, they need to bring roughly a 100 

pages worth of supporting documentation for review. Hundreds of 

pages of documentation, and that is before they apply for a TWIC, 

a Merchant Mariner credential and an STDW certificate and whatever else may be required for the job. We need to seriously consider 

how to make it easier for potential mariners to enter our industry. 

In conclusion, maritime labor believes the best way to enhance 

our Maritime Transportation System and create jobs is to protect 

our existing programs, expand the ones that work well, redevelop 

our coastwise trade, and ensure that our existing laws are enforced. Doing so will keep America competitive, put mariners to 

work, and allow us to help us meet the goals of the National Export Initiative. 

I thank the committee for allowing me to testify today. And I will 

be happy to answer any questions. 

Thank you, sir. 

Mr. LOBIONDO. Mr. Mohr. 

Mr. MOHR. Good morning, Mr. Chairman and distinguished 

members of the subcommittee. My name is John Mohr, I am the 

executive director of the Port of Everett in Washington State. I 

have submitted my written testimony and will briefly summarize 

my remarks. 

11 

It is my pleasure to be here today to discuss how Federal policies 

can help Washington State ports and ports throughout our great 

country create jobs and facilitate increased U.S. exports. From our 

earliest history, the United States has been an exporting country, 

adding strength to our economy. Worldwide, countries have learned 

from our example and have in some ways have gone us one better. 

In a country as large as the United States, public ports are critical gateways for international trade and drivers of economic activity. American seaports are responsible for $3.2 trillion in annual 

trade value and support nearly 13.3 million family wage jobs. U.S. 

customs collections from waterborne commerce or waterborne cargo 

imports also provide tens of billion of dollars a year to the Federal 

Government. 

In fiscal 2008, Customs duties from waterborne cargo contributed 

$24.1 billion to the Federal Government. In Washington State, one 

of four jobs is tied to trade, making Washington State the most 

trade-dependent in the United States. 

Everett is home to the Boeing company’s largest manufacturing 

facility. The port serves a critical function in support of our Nation’s manufacturing and construction base, especially in the aerospace industry. The Port of Everett handles all of the oversize 

oceangoing parts for Boeing 747, 767 and 777 airplanes. Given that 

Boeing is the Nation’s number one exporter by value, it is not surprising that in 2010 the Port of Everett Customs District was attributed with more than $9.2 billion in exports, according to the 

U.S. Customs Report. 

Naturally, we support the National Export Initiative to double 

exports over the next 5 years. However, to accomplish this goal, we 

will need major investments in our freight transportation system 

nationwide. In the U.S., ports have tended to be viewed more as 

a private industry so State and Federal governments have limited 

their participation in promoting and investing in port facilities. 

For an alternative example of promoting international trade activity, let me focus on the Canadian challenge. In 2006, Canada 

kicked off its Asia Pacific Gateway and Corridor Initiative with a 

commitment to invest nearly $1 billion to make British Columbia 

ports a viable alternative for U.S.-bound cargo. Other Western 

Hemisphere countries, governments are also investing in their 

ports, such as Brazil, Panama, Colombia, and Mexico. 

With this background, we believe there are four steps the U.S. 

Government can that would enhance our Maritime Transportation 

System so it can achieve a doubling of U.S. exports while increasing our competitiveness with Canadian and Mexican ports. 

First, the U.S. Government can help streamline permit requirements to expedite the construction of port facilities. In Washington 

State, it can take up to 10 years to build a new terminal facility 

and up to 25 years to deepen a shipping channel, depending on 

State and Federal regulatory requirements and related litigation. 

These delays result in high costs to U.S. exporters and cargo opportunities lost to our foreign competitors. 

Quite simply, regulatory agencies must look for ways to partner 

with project sponsors to successfully build a terminal and deepen 

channels instead of simply saying ‘‘no.’’ 

12 

Second, the Federal Government must continue to invest in port 

infrastructure. The TIGER program is the first Federal program 

that I am aware of that allows ports to propose waterside projects 

for funding consideration. The program was so popular that U.S. 

DOT received $1.6 billion of grant requests from the ports in the 

first round. We support the effort to support a permanent and adequately funded port infrastructure grant program in the upcoming 

Surface Transportation Reauthorization Bill. 

Third, the Federal Government should change the current harbor 

maintenance tax system. The Federal Government should ensure 

equal treatment by taxing all U.S.-bound cargoes with an exemption for cargoes arriving by the marine highway but including cargoes that arrive by rail. 

We also support the effort to make sure that all funds collected 

through the HMT are spent on harbor maintenance. If all of the 

HMT taxes that were collected each year were reinvested in harbor 

maintenance, an additional half billion dollars would have been invested in U.S. port infrastructure in 2010 alone. 

Finally, the Port of Everett supports a high-speed rail corridor 

modeled after the Canadian Asian-Pacific gateway to increase the 

speed at which U.S. manufacturers and farmers can export their 

products overseas. In 2009, the Great Northern Corridor, which 

serves ports in Washington and Oregon among other regions, 

moved over 124 million tons of freight. 

In conclusion, Mr. Chairman, to double our exports, U.S. ports 

need Federal Government help to increase capacity and to keep 

ports competitive by reducing our permitting burden, modifying the 

harbor maintenance tax to increase revenues and to establish a 

level playing field, and finally, investing in port and high-speed rail 

infrastructure. 

The time for a passive Federal role is behind us. We need the 

Federal Government to make the policy changes necessary to ensure that the U.S. Marine Transportation System, including rail, 

road connectors and the marine highway, is efficient, effective and 

competitive. 

Thank you. 

Mr. LOBIONDO. Thank you. 

We will go to Mr. Larsen first for questions. 

Mr. LARSEN. Thank you, Mr. Chairman. 

And not surprisingly, my first questions are for Mr. Mohr from 

Everett, Port of Everett. 

Could you just again compare maybe briefly historically the Canadian Government’s model of investment in their port infrastructure, rail infrastructure, to how we have done it in the U.S. and 

then where that puts us sort of in relative development terms. 

Mr. MOHR. Up until the early 2000s, the Canadian system was 

much like the U.S. In fact, they provided much less support to 

their facilities than we did in the U.S. With the initiation of the 

Pacific Gateway, they made the determination that they would 

bring together all of their faculties to improve their marine terminals, improve their rail connections and actually make strategic 

purchases of U.S. Rail to be able to extend their cargoes down into 

the U.S. from Canada. 

13 

As a result, the majority of the containerized cargo growth on the 

West Coast since these improvements began being made in Vancouver and in Prince Rupert has been in the Canadian area. 

The recognition that a continuous system of freight movement 

that is modern and efficient can be competitive with the U.S. was 

a real revelation in Canada. It is my understanding that there is 

a similar port being considered in the northeast in Nova Scotia 

that would also then compete with our northeast ports to provide 

higher speed cargo and rail access movements into the U.S. and, 

frankly, out of the U.S. in terms of our exports. 

But there is a distinct advantage currently in moving cargo. 

Much of the cargo that comes in through Prince Rupert does not 

pay a harbor maintenance tax, therefore my reference to equally 

taxing all of the rail cargoes that come in. And in talking actually 

with leaders in Mexico, and although they are in real disarray 

right now, there is a similar plan in Mexico to bring cargoes in 

through Mexico and then into the Southwest via rail. 

Mr. LARSEN. So with regards to financing infrastructure investment in ports, what are your alternatives? 

Mr. MOHR. Currently the financing in terms of infrastructure of 

ports, really our only opportunities are through private investment, 

through port-generated investment and to eliminate the harbor 

maintenance tax. There is no specific connection at this point between the ports and rail, that rail is—the rail services of course, 

the track beds are owned by the private rail, and there is real confusion once that rail gets off the main line and then is moved into 

the ports in terms of how that is best and most efficiently handled. 

Mr. LARSEN. And the role of the TIGER grants? 

Mr. MOHR. TIGER grants did provide a real funding source for 

ports in the United States. Mr. Matsuda mentioned the investment 

that was made in the shipyard in Florida. There are a number of 

other investments that have been made through the TIGER program to improve port infrastructure. This is the first program that 

I am aware of, and I believe I am correct, the first program where 

actual infrastructure investments have been funded through Federal grant programs. 

Mr. LARSEN. My questions have focused on infrastructure, and I 

am going to continue that for Mr. Matsuda, and I will have questions about other aspects that have been brought up by other members of the panel on the second round. 

But Mr. Matsuda, the CBO has estimated the U.S. needs to 

spend about $20 billion more a year just to maintain its infrastructure at current and, I would say, inadequate levels. Do you know 

how U.S. investment in the Marine Transportation System compares to other nations and is adequate to the CMTS? Have you considered that question? 

Mr. MATSUDA. I can tell you they have not considered that question, but it is something we can certainly take to have the committee take a look at. 

The other countries have different geography, different needs. 

We certainly would like to think that the needs of the Maritime 

Transportation System here in the U.S. fit within a broader range 

of investments within the National Transportation System. I think 

the TIGER program is one that clearly demonstrates that because 

14 

you have got port projects that are eligible to be competing against 

rail projects or transit projects or road projects and that the port 

projects seem to compete very well. 

Mr. LARSEN. The economist last week did a report about U.S. investment and transport and water infrastructure overall and 

showed that as a percentage of GDP, it has fallen in the U.S. 

since—in the last 40 years or so, but doesn’t really break it out by 

particular aspects of infrastructure. 

Meanwhile, Europe as a continent is about 5 percent of GDP, 

and China is about 9 percent of GDP; 9 percent of their GDP is 

invested in infrastructure. 

So just to give us comparisons of where we stand relative to the 

other areas of the world, but getting that number regarding Marine 

Transportation System would be especially helpful. And I would 

appreciate it if you could take a look at that. 

And finally, just for Mr. Matsuda, and I will turn it back over, 

I understand that the Department of Transportation intends to develop a national trade policy. We have legislation that has been introduced by, I believe, Mrs. Richardson, which I am a cosponsor of, 

to develop a national freight policy and try to see what we can do 

to include that in a final surface transportation bill. Is that in 

fact—is that a fact that the department intends to develop a national freight policy, and how would you estimate that policy would 

help create jobs and increase exports and answer the questions 

that we are asking today? 

Mr. MATSUDA. I think that having a more coordinated freight 

policy would help on a number of levels. Currently, the Administration is examining those types of activities that can bring Federal 

agencies closer together to look at—for instance, let me give you a 

specific example, and this is one where the Committee on Marine 

Transportation System is actually working together to solve the 

problem for a particular project. And it is a railroad bridge in Iowa. 

This is a privately funded bridge by a railroad that would very 

much help alleviate a bottleneck in the supply chain. Given the 

various permitting requirements and the Federal agencies that are 

involved, the committee has provided a place where we can come 

together and actually help accelerate the process for clearing the 

permitting of this bridge. And I think it is a good example, one 

spurred by the Deputy Secretary at the department to really show 

how we can help improve and facilitate supply chain effectiveness. 

Mr. LARSEN. Thank you, Mr. Chairman. I will wait for a second 

round. 

Mr. LOBIONDO. Thank you, Mr. Larsen. 

Mr. Matsuda, the National Strategy for Marine Transportation 

System, what is the status of the work plan that you developed as 

a result of the National Strategy for this Marine Transportation 

System. 

Mr. MATSUDA. Well, it continues as we are trying to tackle it. As 

you know, we have limited ability with limited funds. There is no 

specific funding provided for the committee. All of it is basically 

taken from individual agencies. So we are trying to make as best 

progress as we can on the strategy. 

15 

Mr. LOBIONDO. So the strategy calls for 34 different actions. Can 

you tell us how many have been completed or implemented, and 

how many do you plan to complete prior to 2013? 

Mr. MATSUDA. I can give you a full report card on that. I would 

have to follow up with my staff. 

Mr. LOBIONDO. Do you have any examples of specific actions 

taken as a result of the National Strategy for the Marine Transportation System? 

Mr. MATSUDA. Again, I will have to follow up with you as far as 

specific examples of what the committee has accomplished. 

Mr. LOBIONDO. Can you tell us how often the Cabinet level committee meets? 

Mr. MATSUDA. I can tell you the Cabinet level committee does 

not meet very regularly. I believe the last meeting was 2007. But 

there is a coordinating board that meets, and that is made up of 

more agencies that come to the table that get more hands-on opportunities to deal with the direct issues involved. And that is quarterly meeting. 

Mr. LOBIONDO. OK. 

MARAD set the rules for the use of capital construction fund at 

a privately held tax-deferred ship construction finance account 

plan. Does the capital construction fund—it is limited to construction or acquisition activities only as it stands now is my understanding. Would MARAD support the extension of the program to 

cover long-term lease payments or vessel repair projects? 

Mr. MATSUDA. That is something we are evaluating because it 

could have the potential to stimulate shipbuilding in the U.S., but 

the Administration does not have a position on it at this time. 

Mr. LOBIONDO. OK. 

Mr. Cox, shipping is one of the most highly regulated industries 

in the world. Vessel operators comply with a whole host of big, long 

9 yards that you have got to comply with all kinds of State, Federal, international regulations. Has the industry identified current 

or emerging Federal regulations that may be duplicative, outdated 

or overly burdensome that we could focus on and try to get relief 

with? 

Mr. ROBERTS. Thank you, Mr. Chairman. I think I referred in my 

testimony to this ballast water issue that we have before us. I 

think that would be a rather critical one for our Government to 

solve on a national basis. I think with respect to—we say a lot of 

things about the degree to which this industry is regulated, but I 

must tell you that we comply with all of those regulations, and I 

think all of our people are trained to comply with those regulations. 

And I think the vast majority have a very good intent. 

And I think that over the years, we have been able to fine tune 

our compliance with the requirements so that we are operating, in 

my opinion, sir, probably the most safe and environmentally protective industry that we possibly can for the American people. 

So when you say, what is a duplication, I think that currently 

my main concern that I would talk to my members about is that 

the States are becoming more active in areas where they in turn 

are duplicating what we feel are Federal jurisdictional requirements. And I think that we are trying to get the message out to 

them but perhaps the message to you and this committee is that 

16 

in the maritime industry, there is a need for a national uniformity 

with respect to regulations and requirements. And to the degree to 

which there isn’t—to which there is duplication of effort among the 

various States, I am not saying they have a negative intent. They 

have a positive intent. But at the same time, it is not beneficial for 

the industry to go from port to port, region to region and be faced 

with various different requirements that they have to meet. The 

captain of the ship, then, the gentleman is not engaged then in 

navigating his vessel to the utmost. He is engaged in trying to 

make sure that he is in total compliance and therefore not putting 

himself at personal danger of being arrested for being in noncompliance with some requirement. 

Mr. LOBIONDO. Mr. Robert. On the Jones Act, the Jones Act requires merchandise and passengers moving between two points in 

the United States to be carried only on U.S.-flagged, U.S.-crewed, 

U.S.-owned, and U.S.-built vessels, something I strongly support. 

In your opinion, do you feel the Jones Act is being adequately enforced? 

Mr. ROBERTS. Thank you, Mr. LoBiondo. 

I think, as Joe put it, by and large, people comply with the law, 

and we see—we don’t have major issues most of the time. Where 

we do have exceptions, where we have compliance problems, the 

agencies have not uniformly responded forcefully, as forcefully as 

we would like. And it is, as I mentioned in my testimony, it is very 

concerning to make the kinds of billion-dollar investments that we 

are making based on an assumption about what the law requires 

and to see exceptions come through. 

So we believe it is very important to have enforcement. And generally we are getting good enforcement, but there are exceptions 

that we have to be vigilant about. 

Mr. LOBIONDO. Well, I thank you for that. 

I will speak for myself and I think for at least some members of 

the committee. I feel very strongly about this. I hear rumors from 

time to time about ideas or suggestions that can be advanced either 

legislatively or otherwise that would dramatically change or weaken the Jones Act. I can assure you that as chair of this committee, 

I’ll do everything in my power not to allow that to happen. 

One more question for you, Mr. Roberts, on the shipbuilding programs, the capital construction fund that we have talked about. Do 

you believe the shipbuilding industry supports the expansion of the 

program to cover long-term lease payments or vessel repair 

projects. 

Mr. ROBERTS. Yes, sir. Generally speaking, I believe we do support that proposal. 

Mr. LOBIONDO. OK. Thank you. 

Ms. Hirono. 

Ms. HIRONO. Thank you, Mr. Chairman. 

And thank you for your strong support of the Jones Act. Like 

you, I am a strong supporter of that Act and I just want to note 

for the record that in Hawaii, Jones Act shippers provide—Jones 

Act activities, I should say, provide for 23,000 jobs just in Hawaii 

and approximately $1.1 billion in wages and benefits to Hawaii’s 

economy. 

17 

And a number of you have testified as to the impact of the Jones 

Act in terms of job creation, 40,000 Jones vessels, 500,000 jobs nationwide, a $100 billion in annual economic output. And yet practically not a year goes by where the Jones Act does not come under 

attack. 

Most recently, former OMB Director Peter Orszag stated in a recent Newsweek article that the Jones Act represents a ‘‘operating 

tax on all of us’’ and that ‘‘the solution is to rescind the law to get 

an efficient and cost-effective mode of shipping.’’ 

Now those of you who are testifying in support of the Jones Act, 

which perhaps is all of you, would you like to comment on this 

most recent assault on the Jones Act? Any of you? 

Mr. ROBERTS. Well, I will take a shot at it. I think there is a— 

there is a perception. There is a group of people who wake up in 

the morning and think about expanding international trade, and 

that that is all they focus on. They may have a certain perspective 

on the Jones Act that is not the same as those of us who worry 

about American jobs, American productivity, American economic 

growth and our national security interests. And if you focus on 

those other issues, the American jobs and so on, you support the 

Jones Act. If you are more wake up and think about something different, then you may question it. 

Ms. HIRONO. Yes, go ahead. 

Mr. COX. As the Chamber of Shipping of America, Ms. Hirono, 

we represent American companies that own and operate ships. And 

they operate both foreign flag and U.S. flag, and they are engaged 

in domestic shipping as well as international shipping. And we do 

support the Jones Act, and our members recognize that. 

And the question comes to mind when this is raised, and I just 

wonder why water is considered somewhat different when we are 

dealing with American cargoes moving between American ports; 

why are we being treated differently than the railroads or trucking 

or airlines? Would anybody at all suggest that we should have foreign truck operators moving our cargo because after all, it would 

be cheaper. Yet, when it comes to water, this seems to just likely 

be thrown out there, why are Americans moving cargo between 

American ports using American equipment run by Americans? It is 

a bizarre question in my opinion. 

And I operate internationally in many areas. And on one committee, I have to keep telling my friends and colleagues in the 

international community, Europe in particular, saying well, you 

look across the river, and you are making an international movement. Here, you look across the river and you see another State. 

That is why we treat ourselves in a particular way, and the Jones 

Act is used by some as sort of this pejorative reference as to how 

we are operating. I look at it as an American way of operating. 

Ms. HIRONO. Mr. Cox, you make a very good point, and I wish 

that more of our community and people who continue to raise the 

issue of the Jones Act adding to consumer costs, they should hear 

from you. 

And I also want to make sure, Mr. Matsuda, I would like to 

know what the U.S. DOT’s position is on the Jones Act for the 

record. 

18 

Mr. MATSUDA. Absolutely supportive. It is the lifeblood of the 

Merchant Marine, the U.S. maritime industry, and it helps not just 

with the economy, but there are so many ways in which it supports 

our national security. 

Ms. HIRONO. Thank you. And as we are focusing on creating jobs 

and making it in America, I do have some—I have a wish that our 

shipbuilding industry in this country becomes much more robust, 

and it is really gone from what used to be a much more—a very 

robust industry, manufacturing, in our country to something far, 

far less. 

And Mr. Tellez, you mentioned that you would like to support 

the shipbuilding industry in our country and enhance opportunities 

for domestic shipbuilding, do you or any of the others have a big 

idea on what we can do to promote our domestic shipbuilding industry? 

Mr. TELLEZ. Big ideas? First of all, Aloha and Mahalo, for your 

recent support of the Jones Act on the floor. We thank you very 

much for that. 

We talk about the marine highway and short sea shipping as one 

of the vehicles to achieve this overall expansion and creation of 

jobs. That is going to require a tremendous—if left alone for the 

private sector, that will require a tremendous private investment. 

And there will be no private investments if there is no proof of life. 

No one is going to invest that kind of money without proof that 

there is going to be a trade there for them to get their return on 

their money. 

So to start to initiate it, I hate to use the word stimulate, but 

to stimulate it and to get this project started, this marine highway 

project started, it is going to need and require Federal support. 

And to be frank and honest, the recent—the $7 million thrown at 

the idea by the Federal Government by DOT is, frankly, a paltry 

sum in the face of bigger investments in other trades. You are talking about a major shipbuilding initiative. You are talking about 

major port infrastructure initiatives. So it is going to require a 

major, major investment. 

On another point to that matter, the short sea shipping takes 

care of a lot of ills created by the overcrowding of the highways. 

Anyone who has taken a family trip down to Disneyland by car will 

testify to the problems they face. Short sea shipping can alleviate 

and take care of a lot of those problems in a very green and environmentally safe manner. 

Again, it is going to take investment. And it is also going to take 

not competing the truckers but becoming an adjunct and a partner 

to the truckers by taking a long-haul industry and converting that 

to a short-haul industry. We think we can get that done. 

Ms. HIRONO. Mr. Chairman, thank you for your indulgence. My 

time is up. I yield back. 

Mr. LOBIONDO. Mr. Cravaack. 

Mr. CRAVAACK. Thank you, Mr. Chairman. 

I appreciate the testimony today. It has been very enlightening. 

Being a retired Navy captain, I understand the importance of a 

maritime industry, and how important it is to have a U.S.-flag, 

U.S.-crewed vessel ensuring that when we do have to go over the 

horizon, we have the proper assets to do it and the proper people 

19 

that have been trained in a way that we need to make sure that 

they will be able to carry the flag when the rubber starts hitting 

the road. So I highly support U.S. Vessels and the U.S. Jones Act 

as well. 

But how do we get there? That is the big thing for me. I am seeing a lot of challenges. 

Lake Superior, for example, the harbor maintenance tax. Mr. 

Cox, can you help me help us making sure that the right money 

gets to the right projects to start making sure that our vessels can 

get into our harbors to start exporting product? But also, expound 

upon that a little bit more, and just like we were talking about 

shipping within the United States, the double taxation that occurs 

as well. We need to get commerce rolling. That is how we get good 

shipbuilding. I don’t think we have had a salty or a laker built in 

Superior for decades. So what we need to do is get the economy 

rolling, get jobs rolling. That is how we start inspiring our shipping 

industry. Mr. Cox, if you would, sir. 

Mr. COX. Thank you, Mr. Cravaack. 

I am going to stay away from which ports need dredging and 

support therefore. But I think your point about the harbor maintenance tax is an important one, and the double taxation. We have 

never spent what we have collected in the harbor maintenance tax. 

So it sits in a pot; and I understand we borrow from that pot, and 

we put an IOU in it so it is a convenient repository for cash flow 

purposes. 

But at the same time, if we are talking about removal of a double 

taxation, I think that it is very small right now and I can’t give 

you numbers, Chairman and Members, but it is very small because 

we are trying to initiate short sea shipping. In fact, as we sit here, 

I think there is some short sea shipping in California that is occurring right now. There is, I believe, the Richmond barge ship movement is happening. And I know that the American Feeder Line, in 

fact yesterday, just started their initial short sea shipping. 

So I think we have to try and support that. I think that the 

elimination of that double tax might be one of those little prods 

that lets everyone in the industry know that yes, our Government 

is behind us, that they are supportive of us. Does that mean that 

we look to you for the answers to everything? No, but at least take 

an impediment out of our way. I think that signal would be important to the industry with respect to the harbor maintenance tax. 

I am going to stop because I will get into which ports deserving 

dredging and which don’t, and I am going to stay away from that. 

Mr. CRAVAACK. I appreciate that. We do have $5 billion sitting 

in that account. And you are right, they have been used as offsets. 

One of the chief concerns I have, especially coming from the Lake 

Superior region, is the locks and dams. Even going down the Mississippi as well. The locks and dams associated with the age of 

these, they are well over their actual life span. So I am very concerned with that, and making sure that we start spending the 

money to support our shipping industry because I, like Mr. Tellez 

says, I strongly believe that this will be part of a component of getting commerce rolling here in the United States. 

Mr. Cox, if I can just ask you about another thing, a proposal has 

been introduced where the House would exempt nonbulk, primarily 

20 

containerized cargoes from the harbor maintenance tax if it is 

transported between U.S. ports and Canada and U.S. ports of the 

Great Lakes and the St. Lawrence Seaway for the purpose of reducing costs of container movements by ship and barge. Do you 

think this would be a good proposal in getting traffic rolling on the 

seaway? 

Mr. COX. Yes, sir. That would be the removal of the double taxation that I’m speaking of. Focusing on containerized cargo, of 

course, is focusing on the more valuable cargo. And since harbor 

maintenance tax is ad valorem, then you are getting the bulk of the 

coverage that we expect. I think with bulk trade, we are not quite 

as—the value there probably doesn’t have the same meaning as the 

containerized movement would. In fact, my thought begins to say 

we are moving a lot of bulk in containers now, too. Grain is moving 

in containers because of ease of movement. 

But I think we ought to also review the bulk area. I think a lot 

of bulk is included now in the double taxation. So I am not sure 

how much more we would have to change that language to include 

the totality of cargo movement in the country. 

Mr. CRAVAACK. I am trying to get containerized vessels on Lake 

Superior. That is one of my main objectives. 

Mr. COX. I am fully supportive of that, sir. 

Mr. CRAVAACK. Thank you. 

Mr. Chairman, I yield back. 

Mr. LOBIONDO. Mr. Harris. 

Dr. HARRIS. Thank you, Mr. Chairman. I thank the panel for 

coming here to testify today. 

Mr. Matsuda, let me ask, we heard a lot about the harbor maintenance trust fund. I know it is a big issue for the port of Baltimore. What is the position of the Administration on the use of that 

harbor maintenance trust fund? Does the Maritime Administration 

feel that if we used all of that $1.3 billion, we could work through 

our backlog of dredging projects which would permit our ships to 

be at least fully loaded coming into our ports? It seems it is pretty 

inefficient if 30 percent of our vessels can’t carry a full load because of a dredging backlog? 

Mr. MATSUDA. Well, the Administration doesn’t have a formal position other than fiscal year 2012 budget proposal for use of the 

harbor maintenance. 

Dr. HARRIS. Do you agree with that proposal that doesn’t fully 

use all of the funds submitted for the harbor maintenance trust 

fund for dredging projects? 

Mr. MATSUDA. It is the position of the Administration. 

Dr. HARRIS. What do you think, within the shipping community, 

is it a reasonable request, do you think, that they have to use those 

taxes that they pay for the purpose for which they are collected? 

Mr. MATSUDA. Well, certainly there is that expectation. I think 

that there are—— 

Dr. HARRIS. You can see the reason behind that expectation, I 

guess? 

Mr. MATSUDA. Yes. 

Dr. HARRIS. OK. Thank you very much. 

Mr. Mohr, you have mentioned some of the regulations that may 

keep us from being competitive with regards to I guess permitting 

21 

regulations, things like that. Can you be specific about any regulations that as a subcommittee we should be looking at where the 

Federal Government is at a competitive disadvantage, America is 

at a competitive disadvantage to other countries with regard to 

shipping? 

Mr. MOHR. Thank you very much. 

Particularly when you look in Asia, they can take a port from 

concept to operation in about 5 years. They are able to meet their 

demands. They are able to focus on their exports. In the U.S., we 

tend to go through a number of layers of regulatory review, having 

separate reviews at the Corps of Engineers, at EPA, and at U.S. 

Fish and Wildlife and so on. These reviews are all done independently and then combined, and if there is an issue with one, it is 

an issue for the entire process. 

Frankly, the permit process tends to be almost a fetch rock sort 

of an effort. You bring in your rock, and they tell you if they like 

it or not. And if they don’t, you go get another rock. 

Dr. HARRIS. Well, thank you. Let me just ask you, because Mr. 

Cox testified that some of the issues and regulations with regards 

to the different States having different regulations, but your impression with regard to at least port enhancements, that a lot of 

these problems are Federal level? 

Mr. MOHR. I think there are issues at all levels. Certainly I agree 

with Mr. Cox that certain issues need to be dealt with entirely at 

the Federal level. The ballast water issue is one where we don’t 

want to balkanize the process and have different requirements for 

different shipping regions. There needs to be uniformity on issues 

such as this. 

But I think a more collaborative approach, particularly from the 

Federal regulators on how we address the construction of a facility 

or the deepening of a channel is much more productive, in which 

we could, in fact, work together to be able to define a reasonable 

response rather than trying to meet a standard that can change actually over the period of time that the permit is in play. 

Dr. HARRIS. When that process becomes long, I’m sure that can 

happen. 

Mr. Roberts, what is AMP’s vision for the marine highway? This 

projects seems like a project that is worthwhile idea. Of course, in 

the fiscal year 2012 budget, I believe that feasibility moneys have 

been eliminated. But what does AMP think about this? 

Mr. ROBERTS. Yes, the AMP certainly supports the marine highway system. We stand united with our brothers on this panel in 

that regard. It already exists in certain respects. If you consider 

there are 40,000 vessels in domestic commerce operating now, 

there is a lot of cargo that moves in coastwise trade. 

The focus of the marine highway is on intermodal cargoes that 

now currently move predominantly on the highways. Getting those 

cargoes off the highways and on the waterways makes abundant 

sense and would be a great project to do. 

I have to say that we have not been asked by our customers to 

create such a system, and that leads to the suggestion that is sort 

of consistent with the harbor maintenance tax reforms that are 

being discussed, that the harbor maintenance tax falls on the customers. If you can remove that disincentive that the customers 

22 

have to using the waterways, and focus on providing incentives for 

customers to use the waterways, we think that may be a very effective way of stimulating demand and then allowing the private sector to respond to that demand. 

Also, continue making the Government investments in infrastructure. Those are critically important, and the harbor maintenance tax is there to support that. 

Dr. HARRIS. Thank you very much, Mr. Roberts. 

Thank you, Mr. Chairman. 

Mr. LOBIONDO. Thank you. 

Mr. Cummings, we first offer you our deepest sympathy and wish 

you and your family peace and strength during this difficult time. 

You are recognized for 5 minutes. 

Mr. CUMMINGS. Thank you very much, Mr. Chairman. 

Mr. Matsuda, as you know, last year I convened two hearings in 

this subcommittee to examine the state of U.S.-flag vessels in the 

foreign trade. According to data provided by MARAD and compiled 

in part by contractors engaged by MARAD to assess the U.S. maritime transportation system, the U.S.-flag fleet, which was comprised of 94 vessels as of March 2010, was carrying less than 2 percent of the U.S. foreign trade. How many vessels are currently in 

the U.S.-flag ocean-going fleet, and what percentage of U.S. foreign 

trade is it carrying? 

Mr. MATSUDA. Currently there are about 120, or slightly below 

that, in U.S. ocean-going trade; but there is also about the same 

amount of cargo, relatively speaking, carried on those vessels 

versus overall foreign trade of the U.S. 

Mr. CUMMINGS. So what steps has MARAD taken in the last year 

to increase the number of vessels in the U.S.-flag ocean-going fleet? 

Mr. MATSUDA. Well, our strategy was multifaceted. First, we 

wanted to make sure that we got a full understanding of the situation and that is why we launched the study in cooperation with the 

subcommittee last year. That study is nearing conclusion. We are 

getting work back from our contractors. And, obviously, we want to 

make sure that it is accurate and are satisfied with the result. 

But secondly, it is securing the cargoes that are necessary to 

build the industry. That starts with the cargo preference program. 

As you know, we have made headway with a number of our agencies that ship Federal products—or finance Federal shipments recently with the Department of Energy. Also, we held the first ever 

Federal shipper forum, where we brought these agencies together 

and started the conversation about how we can more effectively 

run this program to make sure that they are complying with the 

law and that cargoes that are federally financed are going on U.S.- 

flag vessels. 

Mr. CUMMINGS. Now you said the report is due soon? 

Mr. MATSUDA. Yes. We expect this summer. 

Mr. CUMMINGS. This summer. Can you give us a date? We like 

deadlines. 

Mr. MATSUDA. I do, too, sir. We always want to make sure that 

we are releasing the best quality product. 

Mr. CUMMINGS. Give us a date. Give us some kind of date now. 

Don’t take us into the winter. When are you talking about? 

Mr. MATSUDA. Our best estimate is September 1. 

23 

Mr. CUMMINGS. Well, see if you can get it by September 15. That 

would give you 2 extra weeks; how about that? 

Mr. MATSUDA. Thank you, sir. 

Mr. CUMMINGS. Sure. What trends do you project regarding the 

size of the U.S.-flag fleet in the foreign trade over the next 5 years? 

Mr. MATSUDA. Well, it largely depends on cargo. As we heard 

from a number of the witnesses today, the support that the Federal 

Government provides this industry is what largely dictates what 

cargo opportunities will be there. It is not just a matter of subsidies. These companies in return are providing a very useful, in 

fact vital, support to the U.S. military and other parts of the Government. We respond to humanitarian missions, carry food aid, and 

do a number of things that carry out the Government’s mission. So 

it largely depends upon whatever kind of support the Federal Government can provide. 

Mr. CUMMINGS. How many MSP eligible vessels are currently 

documented in the U.S. but are not receiving payments because the 

MSP program is fully subscribed? 

Mr. MATSUDA. Approximately 55. 

Mr. CUMMINGS. On another note, what steps has MARAD taken 

since the President established his export initiative to ensure that 

U.S.-flag ocean-going fleet is part of and benefits from that export 

initiative? 

Mr. MATSUDA. Well, we have met with the Export-Import Bank. 

We have also participated in meetings with the National Export 

Council. As you know, Secretary LaHood serves on that council. 

It is true that the United States maritime industry does provide 

an export service, whatever we are carrying that is not something 

that a foreign flagship is carrying or a foreign company is carrying, 

so working within this system and trying to make sure that these 

opportunities exist to carry the Nation’s export cargo as it continues to grow, make sure that we can help provide more opportunities for the fleet as a whole, and grow the industry. 

Mr. CUMMINGS. Mr. Chairman, I yield back. Thank you very 

much. 

Mr. LOBIONDO. The gentleman from coastal Louisiana. 

Mr. LANDRY. Thank you, Mr. Chairman. 

Mr. Matsuda, we have been following closely the efforts of 

MARAD’s ship disposal program. The National Maritime Heritage 

Act requires you all to dispose of vessels at the least cost to the 

Government and regardless of whether a vessel is disposed of 

through a procurement contract or sale to a private party for recycling. Each contract, and I quote, ‘‘shall use full and open competition.’’ My concern is that you all recently awarded a contract on a 

noncompetitive basis totaling $3.1 million to a California recycler 

of you all’s choosing, even before the recycler’s yard was fully operational. Why was this facility given these contracts, and why did 

your agency not utilize a fully transparent process when awarding 

this contract? 

Mr. MATSUDA. First, I can speak to that. This was the contract 

awarded to ADR Systems in Vallejo, California. ADR is a certified 

facility that meets all of the regulatory and environmental requirements in order to operate a ship recycling facility in the U.S. 

24 

The process for awarding this contract was followed whereby we 

do publish in the Federal Register a rationale for awarding it. The 

bottom line is that, frankly, if we had not done this, we would be 

stuck working with sole-source contracts to clean up and dispose of 

ships in the Suisun Bay fleet for the time to come. We needed to 

end that cycle of sole-source contracts by, unfortunately, presenting 

a sole-source contract. 

Mr. LANDRY. Well, in order to participate, and I am glad you 

brought up the certification of facilities because I am also concerned with that, too. There is a facility in my district whose certification has languished in your agency for more than a year while 

evidently other facilities have been certified. Even facilities that 

have had questionable environmental histories, have seen their certifications kind of fly through your agency. 

I received a letter from a particular company in my district who 

has been trying to get their certification done. This facility is specifically in Amelia, Louisiana, and if you are not familiar with it, 

if you can send me some information as to why that facility has 

languished in its certification, I would appreciate it. 

Mr. MATSUDA. I am happy to follow up with you on that, sir. 

Mr. LANDRY. OK, thank you. 

Mr. Chairman, I yield back. 

Mr. LOBIONDO. Mr. Larsen. 

Mr. LARSEN. Thank you, Mr. Chairman. 

We talked about infrastructure and the Jones Act. We talked 

about a variety of things, but I want to talk about the people. 

Mr. Tellez, you noted that the present paperwork required for 

mariner licenses is an impediment to expanding the maritime job 

market. Has your organization and others approached the Coast 

Guard about this? 

Mr. TELLEZ. Yes, sir. 

Mr. LARSEN. Can you talk about what you recommended—— 

Mr. TELLEZ. As I mentioned, one of the big impediments has 

been the recent NVIC on medical requirements instituted by the 

Coast Guard. It was causing a major problem. The commandant 

called a meeting of all the maritime unions and training centers. 

We met. To their credit, one of the actions that they took part in 

was to kind of focus on the medical review process. They added 

some folks at the National Maritime Center. They created a dedicated 800-telephone number just to handle folks who have problems with the medical review. That has somewhat alleviated the 

problem; but the problem still exists. 

It is caused mainly by the myriad number of various kinds of 

documents that are required to support whatever application you 

are submitting. Unless those documents, that documentation comes 

in beforehand, or rather with the application, you are going to run 

into a lot of delays. The word we are getting out there is it is up 

to a couple of months, maybe even longer if that documentation 

isn’t fully submitted with the initial application. 

Again, they are trying, but I would suggest that even their correction and their improvement still leaves a major hold up of folks 

trying to get their licenses. 

Mr. LARSEN. If you could keep us up to speed on your thoughts 

and your evaluation of the progress, we would appreciate it. 

25 

Mr. TELLEZ. Yes, sir. 

Mr. LARSEN. Mr. Roberts, we haven’t asked about Title 11, Federal ship financing. It provides for a full faith and credit guarantee 

by the U.S. Government to promote the growth and modernization 

of the U.S. Merchant Marine and U.S. shipyards. Does AMP have 

any recommendations for changes to Title 11 amending the act to 

raise the cap on the overall amount on guarantee, smaller scale 

programs to be more responsive to the needs of smaller ports and 

harbors, has AMP taken positions on those or other reforms? 

Mr. ROBERTS. No, Mr. Larsen, we have not considered those 

issues. We do support the Title 11 program. We believe it is basically sound, that the valuation criteria make sense, and that they 

are consistent with commercial underwriting requirements. And we 

would encourage an efficient processing of applications. I know 

there are challenges there sometimes, but generally we very much 

support the program. We would be glad to take a look at some of 

the suggestions that you have presented. 

Mr. LARSEN. Excellent. I would appreciate if you would do that. 

Mr. Mohr, at least one of your tenants at the port is a shipyard, 

a smaller shipyard, and I know they have been a recipient of an 

assistance to small shipyard grant to be able to expand their facilities and improve the footprint and efficiency of the facility. Can you 

comment on your view, the port’s view of the effectiveness of this 

grant program as it applies to the shipyard? 

Mr. MOHR. I can, Mr. Larsen. The yard you are referring to, 

Everett Shipyard, a subsidiary of Vigor Marine, has increased its 

employment by about 30 percent since the grant has been received. 

The facility that we are referring to largely does U.S. ferry work 

for the Washington State ferry system and also Navy work and has 

been able to add, in addition to that some—as a matter of fact, 

Crowley tug boats have been in there recently and some barge 

work and other things to fill in. 

But the grant that they received added stability to the overall organization. Prior to that, they were largely kind of a boom-bust 

kind of an operation. When they received bids, they were busy; 

when they didn’t, they were virtually empty. But the work that has 

been done to date, and I believe they are continuing to apply for 

these grants, has added substantially to the stability of the employment, and they are able to additional facilities and take on additional work as well. 

Mr. LARSEN. Can you provide, Port of Everett being an example, 

and obviously you are not a larger port like a Seattle or Tacoma 

or L.A.-Long Beach on the West Coast, but you do have a variety 

of niche markets you are serving so your infrastructure needs 

would be smaller than your larger ports. But as an example, for 

your capital plan, what are your infrastructure needs in terms of 

total amount of dollars you need every year, if it is a 1-year or 5- 

year timeframe, whatever you use? 

Mr. MOHR. Our current infrastructure plan requires just over $100 million in investment. It includes the strengthening and expansion of our facilities. Our community is a historic industrial 

community; and as such, included in that money, there is a substantial amount for cleanup for past pollution that has taken place 

by the manufacturing facility that was located there previously. 

26 

Mr. LARSEN. When you say previously, give us the timeframe of 

previously? 

Mr. MOHR. From about 1930 to 1981. 

Mr. LARSEN. And you are still cleaning it up? 

Mr. MOHR. We are cleaning it up, yes. It was the site of a former 

pulp and paper mill. 

We also are deepening our facilities in recognition of the—we do 

have natural draft at our port and require very little dredging. But 

by moving our docks out just another 100 feet, we are able to pick 

up another 5 feet of depth at dockside, which adds substantial advantage. 

Our port really serves a very narrow market in our support for 

the aerospace industry, but we also handle a lot of value-added 

type of products and manufactured products, windmills and such. 

But we export large pieces of machinery because of our specialty 

in handling very expensive, one-off types of equipment. So we move 

a lot of mining equipment, a lot of farm equipment, and a lot of 

critical path equipment into Asia and into the Arctic Circle area of 

Russia. 

Mr. LARSEN. Equipment manufactured in the United States? 

Mr. MOHR. Equipment manufactured in the United States. 

Mr. LARSEN. But the point I want to make is you are a smaller port, you serve niche markets, and your capital plan is still $100 

million? 

Mr. MOHR. It is. In fact—any time you talk to any port in the 

United States that is doing a serious infrastructure upgrade or expansion, it is always in the hundred million dollars. Even a small 

barge dock that we built to handle aerospace parts was a $30 million endeavor. 

But having said that, we also support 31,000 jobs in our community directly from the products that we do handle. 

Mr. LARSEN. Thank you. 

One final question. Mr. Roberts, I think maybe this question has 

been asked a little bit, but how likely is it that an expansion of 

U.S. exports would trigger cargo preference requirements to increase the demand for U.S.-flag vessels and U.S. crews? 

Mr. ROBERTS. Can you ask that again? I’m not sure I got your 

question. 

Mr. LARSEN. How likely is it that an expansion of U.S. exports 

would trigger cargo preference requirements to increase the demand for U.S.-flag vessels and U.S. crews? 

Mr. ROBERTS. I am afraid I haven’t thought about that. I would 

be happy to do so and get back to you. 

Mr. LARSEN. Mr. Tellez? 

Mr. TELLEZ. Although the initiative has been created to double 

the exports over 5 years, that doesn’t happen just because somebody says it. The Government has to basically start that off. One 

of the major players in starting that off is going to be Ex-Im Bank 

projects, which are projects funded by taxpayer dollars that by law 

have to be carried on U.S.-flag ships. 

If the national initiative is going to be a very real effort, that is 

where it is going to start. When those Ex-Im Bank projects get 

going, you will see an expansion, and we have already seen expansion. We have seen at least four new U.S.-flag vessels flagged in 

27 

to take advantage of this cargo. The more that those Ex-Im Bank 

cargoes are generated, you will see more U.S. jobs, more ships reflagged to take advantage of those that are in that business get full 

employment for at least the next 5 years. 

Mr. LARSEN. Thank you. 

Thank you, Mr. Chairman. 

Mr. LOBIONDO. Mr. Tellez, do you feel that the cargo preference 

laws are being adequately enforced? 

Mr. TELLEZ. Anecdotally, I can only say no. I don’t have any 

numbers or proof. But just from the industry and from what we 

hear from the industry, no. 

Mr. LOBIONDO. If you come across anything that would be specific, if you can pass it on to us, I would appreciate it. 

Mr. TELLEZ. Again, other than what we have already spoken 

about, the Department of Energy cargoes and some of these Ex-Im 

Bank cargoes, that I know specifically, if those laws are enacted— 

or, rather, enforced, as I just mentioned, we will get our full share 

of employment and of U.S.-flag vessels employed. 

Mr. LOBIONDO. Thank you. 

One last question. Mr. Matsuda, help me understand this. You 

needed to end sole-source contracting by awarding a sole-source 

contract? I don’t get it. 

Mr. MATSUDA. This was a particular problem with the ship disposal program. We have got a number of vessels in the Suisun Bay 

reserve fleet which are required by court order to be disposed of 

within a certain time schedule. To meet that time schedule, we 

needed to add capacity to help either recycle those vessels locally 

or have their hulls and cleaned of invasive species and transported 

to other recycling facilities around the country. 

Unfortunately, we were dealing with only one single shipyard 

which was large enough to process these vessels before they could 

be transported around to other facilities, and we had to deal with 

them on a sole-source basis for a number of contracts. 

By certifying and working with the new facility in the Bay Area 

Region, we now introduced competition so that there are in fact 

two shipyards that can compete for that work. 

The reason we issued it as a sole source, it still was within the 

limits obviously and in accordance with the law, we had to have 

a fair and reasonable price, and it turns out that the price that was 

negotiated was lower than the average of all of the other ships that 

had been disposed of. 

Mr. LOBIONDO. I am not sure that I fully get it, but OK. 

I would like to thank all of the panel members for being here 

today. I think this was helpful and informative. The committee now 

stands adjourned. 

[Whereupon, at 11:30 a.m., the subcommittee was adjourned.] 

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