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49–951 PDF 2009

FISCAL YEAR 2010 BUDGET 

REQUESTS OF THE COAST GUARD, 

MARITIME ADMINISTRATION, AND 

FEDERAL MARITIME COMMISSION 

(111–31) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

COAST GUARD AND MARITIME TRANSPORTATION 

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

May 13, 2009 

Printed for the use of the 

Committee on Transportation and Infrastructure 

( 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

JAMES L. OBERSTAR, Minnesota, Chairman 

NICK J. RAHALL, II, West Virginia, Vice 

Chair 

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 

GENE TAYLOR, Mississippi 

ELIJAH E. CUMMINGS, Maryland 

ELLEN O. TAUSCHER, California 

LEONARD L. BOSWELL, Iowa 

TIM HOLDEN, Pennsylvania 

BRIAN BAIRD, Washington 

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 

MICHAEL A. ARCURI, New York 

HARRY E. MITCHELL, Arizona 

CHRISTOPHER P. CARNEY, Pennsylvania 

JOHN J. HALL, New York 

STEVE KAGEN, Wisconsin 

STEVE COHEN, Tennessee 

LAURA A. RICHARDSON, California 

ALBIO SIRES, New Jersey 

DONNA F. EDWARDS, Maryland 

SOLOMON P. ORTIZ, Texas 

PHIL HARE, Illinois 

JOHN A. BOCCIERI, Ohio 

MARK H. SCHAUER, Michigan 

BETSY MARKEY, Colorado 

PARKER GRIFFITH, Alabama 

MICHAEL E. MCMAHON, New York 

THOMAS S. P. PERRIELLO, Virginia 

DINA TITUS, Nevada 

HARRY TEAGUE, New Mexico 

JOHN L. MICA, Florida 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee 

VERNON J. EHLERS, Michigan 

FRANK A. LOBIONDO, New Jersey 

JERRY MORAN, Kansas 

GARY G. MILLER, California 

HENRY E. BROWN, JR., South Carolina 

TIMOTHY V. JOHNSON, Illinois 

TODD RUSSELL PLATTS, Pennsylvania 

SAM GRAVES, Missouri 

BILL SHUSTER, Pennsylvania 

JOHN BOOZMAN, Arkansas 

SHELLEY MOORE CAPITO, West Virginia 

JIM GERLACH, Pennsylvania 

MARIO DIAZ–BALART, Florida 

CHARLES W. DENT, Pennsylvania 

CONNIE MACK, Florida 

LYNN A WESTMORELAND, Georgia 

JEAN SCHMIDT, Ohio 

CANDICE S. MILLER, Michigan 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

ROBERT E. LATTA, Ohio 

BRETT GUTHRIE, Kentucky 

ANH ‘‘JOSEPH’’ CAO, Louisiana 

AARON SCHOCK, Illinois 

PETE OLSON, Texas 

(II) 

SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION 

ELIJAH E. CUMMINGS, Maryland, Chairman 

CORRINE BROWN, Florida 

RICK LARSEN, Washington 

GENE TAYLOR, Mississippi 

BRIAN BAIRD, Washington 

TIMOTHY H. BISHOP, New York 

STEVE KAGEN, Wisconsin 

MICHAEL E. MCMAHON, New York 

LAURA A. RICHARDSON, California 

JAMES L. OBERSTAR, Minnesota 

(Ex Officio) 

FRANK A. LOBIONDO, New Jersey 

DON YOUNG, Alaska 

HOWARD COBLE, North Carolina 

VERNON J. EHLERS, Michigan 

TODD RUSSELL PLATTS, Pennsylvania 

PETE OLSON, Texas 

(III) 

(V) 

CONTENTS Page 

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

TESTIMONY 

Allen, Admiral Thad, W., Commandant, Acting Administrator, United States 

Coast Guard; accompanied by Master Chief Petty Officer Charles W. 

Bowen, United States Coast Guard .................................................................... 5 

Brennan, Joseph E., Commissioner, Federal Maritime Commission .................. 31 

Creel, Jr., Harold J., Commissioner, Federal Maritime Commission .................. 31 

Dye, Rebecca F., Commissioner, Federal Maritime Commission ........................ 31 

Rivait, David J., Associate Administrator for Budget and Programs and Chief 

Financial Officer, Maritime Administration ...................................................... 38 

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS 

Cummings, Hon. Elijah E., of Maryland ............................................................... 42 

LoBiondo, Frank A., of New Jersey ........................................................................ 45 

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Allen, Admiral Thad W. .......................................................................................... 47 

Bowen, Master Chief Petty Officer Charles W. ..................................................... 57 

Brennan, Joseph E. ................................................................................................. 64 

Dye, Rebecca F. ........................................................................................................ 71 

Rivait, David J. ........................................................................................................ 78 

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(1) 

HEARING ON FISCAL YEAR 2010 

BUDGET REQUESTS OF THE COAST GUARD, 

MARITIME ADMINISTRATION, AND 

FEDERAL MARITIME COMMISSION 

Wednesday, May 13, 2009 

HOUSE OF REPRESENTATIVES

SUBCOMMITTEE ON COAST GUARD AND MARITIME

TRANSPORTATION, 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 2:00 p.m., in room 

2167, Rayburn House Office Building, the Honorable Elijah E. 

Cummings [chairman of the subcommittee] presiding. 

Mr. CUMMINGS. This hearing will now come to order. 

The Subcommittee convenes today to examine fiscal year 2010 

budget request for the Coast Guard Federal Maritime Commission 

and the Federal Maritime Administration. The President requested 

just under $9.5 billion in fiscal year 2010 to fund the United States 

Coast Guard. The request would provide an increase of approximately $371 million, 4.1 percent, over the service’s enacted fiscal 

year 2009 budget. 

The President request $6.55 billion for the Coast Guard oper- ating expenses in fiscal year 2010, an increase of more than $361 

million, or 5.8 percent, over the fiscal year 2009 level. The President has requested just under $1.4 billion to fund all 

planned Coast Guard capital acquisitions in fiscal year 2010, an 

approximately $100.6 million decrease from fiscal year 2009 appropriated level. Of this requested amount, $1.05 billion is requested 

for the Deepwater program, an approximately $72 million increase 

from the enacted funding for year 2009. The budget requests only $344 million for non-Deepwater ex- penses, including only $10 million for the repair of shore-side facilities and recapitalization of aids to navigation. The American Recovery and Reinvestment Act provided $98 million for the rehabilitation of Coast Guard shore and Cutter assets, of which the service 

has announced $88 million will go to shore facilities. However, the 

service has a backlog of shore facility repair needs exceeding $1 billion. And many Coast Guard personnel continue to work in trailers 

or in rapidly aging buildings. To be frank, some work is substandard conditions and I continue to believe that this backlog 

must be reduced to ensure that all Coast Guard personnel work in 

a safe and modern facility. 

2 

The fiscal year 2010 budget request can accurately be described 

as austere. While it would fund the operation of new assets recently acquired by the Coast Guard, and would fund the addition 

of 74 new positions in the marine safety function, in addition to the 

276 positions added in last year’s budget, the President’s request 

does not appear to fund any broad, new Coast Guard initiatives 

and even contains a slight reduction in the service’s overall authorization of military positions. While we obviously strongly support 

the addition of new personnel to the Marine Safety program, other 

mission areas are also stretched and I continue to believe that the 

Coast Guard’s resources, particularly in the area of personnel resources, must be more closely aligned with its mission. The President requests $24.5 million in fiscal year 2010 for Federal Maritime Commission activities, which is an increase of approximately $1.7 million, 7.5 percent, over the total amount enacted in fiscal year 2009 for the Commission. The Commission is 

typically composed of five commissioners appointed to five-year 

terms by the President, with the advice and consent of the Senate. 

The Chairman’s position has been vacant since 2006, one commissioner resigned in 2008. Next month a new commissioner will leave 

the Commission when his five-year term expires. His departure 

will leave only two commissioners to be responsible for the management of the agency. 

The effective administration of the Commission has been a major 

concern to the Subcommittee. The economic downturn in the world, 

the economy is reducing shipping volumes which may create a new 

regulatory issue for the Commission to consider. We look forward 

to examining these issues today. 

Regarding the U.S. Maritime Administration, the President has requested $345.5 million in fiscal year 2010 provided in fiscal year 

2009. The largest increase occurs in the request for MARAD’s operations and training budget, which would grow by $29.5 million. 

This account supports the U.S. Merchant Marine Academy, provides limited support for the State Maritime Schools, and funds 

MURAD’s operations. 

I am pleased that the President has requested $124 million for 

the Maritime Security Program, which provides direct payments to 

United States flag ship operators engaged in foreign trade to ensure that these vessels are available to the Department of Defense 

in time of war or national emergency. I strongly support this funding as it is critical to the preservation of our U.S.-flagged oceangoing fleet. 

The President did not request funding for the Assistance to 

Small Shipyards program in fiscal year 2010. MURAD received $98 

million from the American Government Investment Act to make 

grants under this program. The agency has already received more 

than 400 grant applications totaling more than $1 billion. Such a 

large number of applications demonstrates a wide demand among 

small shipyards for modernization support. 

The President requested only enough funding for the Title XI 

Guaranteed Loan Program to enable MURAL to administer an outstanding loan guarantees. No funding was requested to support 

new loan guarantees was requested. Under this program loan guarantees are available to those purchasing ships from the United 

3 

States shipbuilding industry and for the modernization of U.S. 

Shipyards. The U.S.-flagged ocean-going fleet is aging and the industry will likely need assistance if these vessels are to be replaced 

with new, modern vessels. 

We look forward to the opportunity today to examine all of these 

budget requests. We thank our witnesses for being with us. Admiral Allen, it is always a pleasure to see you, all of your command, 

and all of the other witnesses. 

With that, I yield to my distinguished Ranking Member, Congressman LoBiondo. 

Mr. LOBIONDO. Good afternoon, Mr. Chairman. Thank you very 

much for calling this hearing. Admiral Allen, Master Chief, thank 

you for being here. 

This afternoon the Subcommittee is reviewing the President’s request for the Coast Guard and Maritime Administration and the 

Federal Maritime Commission. As of today, there are only 170 days 

remaining in the current fiscal year, which gives us very little time 

to act on the requests. However, I appreciate the speed with which 

the Subcommittee is considering the budget given how late it was 

submitted to us. 

I have to start off by expressing my concern and frustration with 

the Coast Guard’s continued refusal to provide the Subcommittee 

with a detailed explanation of how it plans to utilize the stimulus 

funding that was provided by the Congress earlier this year. The 

Subcommittee staff has requested this information more than three 

weeks ago and we have been informed that the Service is not authorized to make this information available. I am not exactly sure 

what that means, Mr. Chairman, but it means we are working 

without information that we need. I do not understand how keeping us in the dark fits in with this new way of doing things in an 

open and transparent manner. The Service, however, submitted a 

full justification for its fiscal year 2010 budget request. 

The Coast Guard’s scope of responsibility seems to grow each and 

every year, and it is vital that Congress provide the Service with 

the resources necessary to support all of its missions. I have not 

been happy with the numbers in past years because of the increased requests, in fact demands, that have been put on the Coast 

Guard to do these additional missions. 

The request includes funding for the recapitalization of the Coast 

Guard’s deteriorating assets. The assets are increasingly unreliable, often suffering major failures while in operation and having 

a significant impact on the Service’s operational capabilities, not to 

mention the potential to put Coast Guard men and women in 

harm’s way because of failure of equipment. However, I remain 

concerned that the Coast Guard’s plans to replace these legacy assets cannot be carried out in a timely manner in the current funding level of roughly $1 billion per year. For the foreseeable future 

the acquisition budget is fully committed to the National Security 

Cutter, Fast Response Cutter, maritime patrol aircraft, and 

sustainment of the Medium Endurance Cutters. Unfortunately, 

that leaves little room for the acquisition of offshore patrol cutters, 

unmanned aerial systems, inland river tenders, Polar icebreakers, 

and what I expect will be a frighteningly large and as yet 

unbudgeted amount to keep the High Endurance Cutters afloat. 

4 

The Coast Guard needs to look at all of these planned acquisitions and determine what mix of assets the acquisition budget can 

support. And if more funding is needed, I humbly request, I plead 

with the Service to tell us what that request is, to tell us what we 

need to do. I hope our witnesses will speak to the Coast Guard’s 

strategy to overcome these challenges. 

The Coast Guard has also proposed to terminate operation of the 

LORAN–C system, which provides positioning information to commercial, recreational, and government aircraft and vessels. I am extremely concerned this decision will leave us without any backup 

to the global positioning system. Has the Federal Government determined that no supplemental navigation system is necessary? If 

that is the case, I would like that to be explained. What happens 

if G.P.S. becomes temporarily or permanently unavailable? What is 

the backup? What do we do? I am getting questions from some ship 

captains from New Jersey asking what the plan is and I cannot answer them right now. Furthermore, although the Administration 

has touted a $36 million savings they expect from shutting down 

LORAN–C, the Coast Guard has not developed an estimate of the 

cost associated with environmental cleanup at existing LORAN 

sites, nor has the Service determined what work would be necessary to the existing infrastructure to support E–LORAN or some 

other supplemental navigation system. I think these questions 

need to be addressed before any action to dismantle LORAN–C is 

taken. 

I am also perplexed by the Administration’s request of zero dollars for construction and maintenance of the Coast Guard’s shoreside facilities. The Coast Guard currently has a shore-side backlog 

of over $1 billion. Coast Guard station housing, hangars, and other 

support buildings are deteriorating as we speak. Yet, no funding 

has been targeted for these projects. I hope the Service has a good 

answer for us on how they intend to manage this serious situation. 

We will also welcome witnesses from the Maritime Administration, the Federal Maritime Commission this afternoon. I am 

pleased to see the President including funding to enhance infrastructure at our ports to improve the security and efficiency of 

cargo as it moves among different modes of transportation. Our Nation’s maritime highways are vastly underutilized as an asset and 

I look forward to hearing more from MURAD’s efforts to increase 

the use of our inland rivers and coastal routes as an alternative to 

our overloaded roads and rails. 

I am also interested to hear more about the FMC’s ongoing efforts to level the playing field internationally for U.S. shipping interests and monitoring activities which impact commerce at U.S. 

ports. 

We once again, Mr. Chairman, want to thank you for holding 

this hearing. I thank the witnesses for being here. I am looking forward to their testimony. 

Mr. CUMMINGS. Thank you very much. Do other members have 

opening statements? Mr. Coble. 

Mr. COBLE. I will not take five minutes, Mr. Chairman. I thank 

you for calling the hearing. I will just say to the Commandant and 

to the Master Chief that Americans continue to be appreciative for 

the outstanding service the men and women of the Coast Guard 

5 

perform. I commend you two for a job well done. Thank you, Mr. 

Chairman. I yield back. 

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

Admiral Allen, I would appreciate it if you would address the 

stimulus question in your statement, if you do not mind, the question that was just raised. It concerns me, too. So we need to get 

that off the table. 

We now will hear from Admiral Thad Allen, the Commandant of 

the United States Coast Guard. He is joined by Master Chief Petty 

Officer Charles Bowen. I want to thank you for being with us also, 

Master Chief. 

Admiral? 

TESTIMONY OF ADMIRAL THAD W. ALLEN, COMMANDANT, 

UNITED STATES COAST GUARD, ACCOMPANIED BY MASTER 

CHIEF PETTY OFFICER CHARLES W. BOWEN, MASTER CHIEF 

PETTY OFFICER, UNITED STATES COAST GUARD 

Admiral ALLEN. Thank you, Mr. Chairman, Representative 

LoBiondo, and distinguished members of the Subcommittee. I am 

pleased to testify on the Coast Guard’s budget request this year for 

fiscal year 2010. I have brief opening remarks and ask that you 

submit my written statement for the record. 

When I became Commandant in 2006, one of my primary objectives was to evolve the Coast Guard into a change-sensitive organization to modernize command, control, and logistic support, to optimize workforce, and to improve business practices. Building upon 

the Coast Guard’s culture and bias for action, we have made significant strides toward those goals. Modernization remains Job One 

in the coming year as it impacts almost everything the Coast 

Guard does. And as we have carried out our modernization efforts, 

the dedication, expertise, and professionalism of your Coast Guard 

has been constant. Despite our Nation’s economic struggles and the 

numerous global threats we face, I believe the state of the Coast 

Guard remains strong. The Coast Guard has never been more relevant and never been in greater demand. The confluence of 

globalization, expanding maritime trade, energy exploration, and 

the tremendous value we provide throughout Government are stimulating unprecedented demand for our services. Going forward, we 

must ensure the Coast Guard has the resources, authorities, and 

competencies in place to continue to answer the call for our Nation. 

The 2010 budget provides much of what I need to manage safety 

and security risks in the maritime domain. As the Nation struggles 

with the current fiscal crisis, we are prepared to make difficult financial decisions to optimize our existing resources. However, we 

can no longer do more with less. As I told my folks at All Hands 

meetings and other fora where I meet, we will allocate or resources 

to buy down risk in the most vulnerable areas. But you cannot do 

more with less. You do the same with what you have got and you 

accept risk where you cannot act. 

As I reflect on my tenure of service, I am filled with pride and 

humbled to lead our remarkable workforce. Over the past year our 

men and women, active duty, reserve, and civilian and auxilliasts 

alike, performed with profound dignity, courage, and sacrifice, as 

their predecessors have for two centuries. They embody the highest 

6 

ideals of public service. Master Chief Bowen and I are concerned 

about the welfare of our workforce. Retaining military and civilian 

employees and attracting the highest quality workforce is the key 

to our current and future success. I have embraced the goal of a 

geographically distributed workforce and a diverse workforce. I 

look forward to working with the Committee on several workforce 

management issues, including opportunities to expand hiring authorities to increase our competitiveness with other Federal agencies. 

I also welcome your interest in how we can improve our accession program to United States Coast Guard Academy. I believe we 

can establish a process that achieves our shared goal of improving 

diversity by recognizing the value the Coast Guard Academy brings 

to this Nation. 

Guidance I provided during our review of the Management Directive 715, reviewed last Fall, together with the recent recommendations of the Booze, Allen, Hamilton report are being implemented 

by our civil rights program. We have added six new positions and 

reorganized headquarters staff to ensure all of our people are in 

the most productive environment possible. And earlier this week I 

approved a new field structure consistent with the Booze, Allen, 

Hamilton recommendations. 

As I mentioned, globalization is drawing the world closer together. Force multiplying partnerships are increasingly critical to 

protecting U.S. Interests around the globe. For example, in the Pacific we are working closely with Canada, Japan, and the Peoples 

Republic of China to halt illegal, unreported, and unregulated fishing of tuna, a multinational problem that taxes the global economy 

over $10 billion annually. 

Further, the Coast Guard law enforcement detachments regularly deploy with U.S. Navy and allied vessels to counter piracy 

and enforce laws and treaties. In Europe, we maintain close ties 

with the shipbuilding industry to ensure new cruise ships are safe. 

And in the central command area of operations, our support to Operations Iraqi and Enduring Freedom safeguard regional economic 

interests, build partner capacity, and bridge divides between ministries of defense and interior throughout the region. At home the 

maritime transportation system remains the life blood of our national economy. In the United States it carries 78 percent of our 

international trade, including 66 percent of all crude oil consumed, 

while generating and sustaining thousands of jobs. I expect these 

trends will increase in the next 15 years. 

Growth of the marine transportation system has increased demand for Coast Guard to conduct inspections, facilitate safe and efficient vessel movements, and ensure security in an increasingly 

complex port environment. Safety and security are inextricably 

linked here and we need to bolster national capability and competency. The President’s budget requests $7.5 million to add an additional 74 marine safety positions in support of Marine Safety Enhancement Plan. Included in this effort is the establishment of several marine safety centers of excellence, expertise that will ensure 

a collaborative national approach to complex specialized areas of 

industry such as on-and off-shore LNG terminals which are expected to grow over 200 percent in the next ten years. We expect 

7 

to convene a cargo security conference this Fall, Mr. Chairman, 

consistent with our prior conversations. 

Persistent threats including the specter of transnational terrorism, increased sophistication and frequency in human smuggling 

and drug trafficking , and steadily declining fish docks continue to 

present operational challenges for Coast Guard men and women. 

We must understand the most effective way to protect our border. 

This would address threats long before they make landfall. This requires an awareness of the maritime domain coupled with the right 

mix of authorities, competencies, capabilities, and partnerships. 

The receding Arctic icecap is inviting more tourism, energy exploration, and maritime shipping in this pristine environment. There 

is water where there once was ice and the Coast Guard has a burgeoning mission there. The signing of the recent National Security 

Presidential Directive sets interagency policy for the Arctic. However, our national efforts would be significantly enhanced if we 

ratified the U.N. Convention on the Law of the Sea. 

We have significant issues with our High Endurance Cutters, as 

was mentioned. As we speak today, four of the twelve High Endurance Cutters, representing 33 percent of our long-range fleet, are 

in dry dock or tied up for unscheduled maintenance. We must do 

something to sustain this fleet. I have committed base resources to 

do it and we must keep our promise to our people. 

Regarding the stimulus package, Mr. Chairman, Mr. LoBiondo, 

we are under guidance right now that the amounts of funding cannot be released. We will do that as soon as we can. That is not a 

decision that is held or taken inside the Coast Guard. 

In closing, I am grateful to help address these serious issues. 

While there will be challenges as we move forward, we have the 

right structure, institutions, and strategic approach lighting our 

way. The fiscal year 2010 President’s request supports my efforts 

to modernize, manage our workforce, and deliver the assets and 

systems needed to meet our future mission needs. 

I would add one thing since this is a MURAL hearing also, Mr. 

Chairman. On Monday the Acting Administrator Jim Caponiti and 

I met with General Duncan McNab, the head of the Transportation 

Command, and Vice Admiral Bill Gortney, 5th Fleet Commander 

from U.S. Central Command in Bahrain, with all U.S. Flag shippers off the Horn of Africa. I want to congratulate Mr. Caponiti on 

his collaboration and partnership as we issued a new Maritime Security Directive that raise security standards for U.S. Flag vessels 

operating in and around the Horn of Africa. 

I would be happy to take your questions. 

Mr. CUMMINGS. Thank you very much. 

I am going to just ask a few questions. First of all, let me say 

that I have often said that I am the Coast Guard’s biggest fan but 

also its biggest constructive critic. In the area of fan, I was just recently in Brazil and Mexico, Panama, and Colombia. I can tell you 

that the president of Colombia basically said to us, a delegation led 

by our Majority Leader Steny Hoyer, he said, I beg you to keep the 

Coast Guard involved with us. And it was extremely complimentary to hear a president of a country say those things. And we got 

the same thing from the head of the military in Mexico. So I just 

wanted to pass that along. 

8 

I am going to yield to Mr. LoBiondo and then I will come back. 

Mr. LOBIONDO. Thank you, Mr. Chairman. Admiral, I appreciate 

your comments concerning the details of the stimulus. I understand 

that your hands have been tied on this. Do you have any idea when 

we might get some details? 

Admiral ALLEN. Sir, I do not. But at the earliest opportunity we 

can provide it, we certainly intend to do that. 

Mr. LOBIONDO. Mr. Chairman, I would hope that we could 

maybe talk to Mr. Oberstar and whoever is blocking the Coast 

Guard from giving us that information that we might be able to 

convince them that this Subcommittee is charged with overseeing 

all Coast Guard personnel and programs. I think it is unacceptable 

that the Coast Guard is being told that they cannot give us this 

information. 

Mr. CUMMINGS. Will the gentleman yield? 

Mr. LOBIONDO. Yes. 

Mr. CUMMINGS. I will do everything in my power, because I 

would like to receive the information also. 

Mr. LOBIONDO. Thank you, Mr. Chairman. 

Admiral Allen, I wanted to talk to you about LORAN–C for just 

a minute. I talked about it a little bit during my opening statement. Do you think the Administration has determined that there 

is no longer a need for the supplemental positioning system? 

Admiral ALLEN. Mr. LoBiondo, what the Administration has 

done in the budget proposal this year is separate the issue of the 

continued operation of LORAN–C from the issue of whether or not 

G.P.S. requires a backup and what that backup should be. A year 

ago there was some discussion that the current LORAN–C system 

could be migrated to E–LORAN which could serve as a backup to 

G.P.S. With the rapid deterioration of our LORAN–C system, including four stations that are currently operating on vacuum tube 

technology, the decision was to proceed with the decommissioning 

of the LORAN–C chain and then revalidate the requirements for 

a backup for GPA, whether it would be LORAN or something else, 

and that would be done at the Department of Homeland Security 

level. So we are proceeding with the decommissioning of LORAN– 

C consistent with that policy decision. 

Mr. LOBIONDO. Understanding the system has challenges, can 

you comment on your views what would happen if G.P.S. information became unavailable on a temporary or longer term basis and 

LORAN–C was not available. 

Admiral ALLEN. Yes, sir. Speaking from just a maritime point of 

view, the Coast Guard sort of represents the stakeholders, loss of 

G.P.S. is a loss of one form of navigation. Navigation of a ship is 

the responsibility of the owner-operator or the master. There are 

other means by which they can determine their position whether 

it is visual lines of sighting, radar, and other sensors that are on 

the ship. The understanding is the loss of G.P.S. does not render 

the vessel unable to navigate. There are other means at their disposal if G.P.S. were not available. Some other input that I have received is there would be some degradation over time to the current 

locating position systems that are used out there. I am talking 

about the automated identification system and long range information and tracking which rely on G.P.S. to identify the position of 

9 

the vessel and then transmit that to other vessels and other users 

in the area. At some point that would be degraded as well. 

Mr. LOBIONDO. Admiral, could you talk a little bit about how the 

Coast Guard will address the rapidly decreasing readiness of the 

378 foot High Endurance Cutters? 

Admiral ALLEN. Yes, sir. First of all, we prioritized our maintenance programs. These vessels, we are not really talking about deferred maintenance here or maintenance that we would like to do, 

we are talking about things like watertight integrity, fire safety, 

actually the ability to operate the vessels in a safe manner. We recently took the Dallas and the Gallatin out of service. We took the 

Dallas out of the water just this last week and found three penetrations in the hull that we did not know existed and we are likely 

to find more as we do a survey of the hull. These vessels had their 

service life extended in the late 1980’s, early 1990’s. It was intended to be for 15 years while we proceeded with the Deepwater 

program. The service life of these ships and the Deepwater program have not matched up. These are the only long-range vessels 

that we have that are capable of extended operations at our EZ and 

beyond. So we are talking about required presence in the Bering 

Sea or down off Colombia supporting our Colombian partners interdicting drugs. These become the primary platform because of their 

endurance or staying power and the capabilities they have out 

there. So this is a significant mission degrader. And it is important 

enough where I will reprioritize internally to keep these ships safe 

so our Coast Guardsmen can operate on them and also because the 

Country needs those hours out there, sir. 

Mr. LOBIONDO. OK. Thank you, Admiral. 

Master Chief, I have some questions but my time is ready to expire. So, Mr. Chairman, maybe on round two. 

Mr. CUMMINGS. Thank you very much. 

Mr. TAYLOR. Mr. Chairman. Commandant, thank you again for 

being with us. Thanks for what you do. And your driver after 

Katrina, Dwayne Diaz says hello. 

As you know, I was very disappointed in the Coast Guard’s failure to enforce the Jones Act regulations on a vessel that was rebuilt in China recently. We supplied to the Coast Guard photographs that proved beyond a shadow of a doubt that what went on 

was not emergency repairs; it was literally the total rebuild of a 

ship. This was a vessel that was flying under the American Flag 

done in China. And nothing happened. I am curious, with the 

change in Administration, is it your intention to continue to ignore 

those laws or are we going to start enforcing that? 

Admiral ALLEN. Sir, it has never been our intention to ignore 

laws. I have been briefed many, many times on the Jones Act and 

every time I think I understand it I get more confused after some 

of these briefings. There are issues that the Coast Guard is responsible for and there are issues other agencies are responsible for. 

But based on the criteria that has been established, and unless we 

want to consider a statutory change to that, we have been applying 

those criteria the best way that we know how to make these determinations. It appears over the years it has been a very great sense 

of frustration for the Congress, and for you particularly, and for us 

10 

trying to discern this. I would really appreciate some statutory 

clarification if we think that is the best way to go, sir. 

Mr. TAYLOR. I appreciate that. And Commandant, I want to mention to you, and I am not going to give you a name, but one of your 

admirals went so far as to say the Jones Act is an antiquated law 

that we feel like we do not need to enforce. Again, I want to remind 

you that is not subject to the interpretation of the individual Coast 

Guardsman. If it is the law, it is the law. 

Admiral ALLEN. Yes, sir. 

Mr. TAYLOR. Secondly, it has recently come to my attention, we 

had a shrimp boat sink off the Mississippi coast, another vessel hit 

it, unmarked, in speaking with the Group Commander in Mobile 

and basically was told it is not our responsibility to mark it, even 

though the Coast Guard rescued the crew of the sunken boat and 

knew it was there. Particularly since you were good enough to 

spend a lot of time down in that region and in that time down 

there I am sure you got to know a lot of fishermen who realize that 

a lot of those guys lost their homes, that the boat became their 

home and then when they lose the boat they have got nothing. 

They do not have a thousand dollars to go mark where that boat 

sank. With that in mind, I would ask that the Coast Guard would 

be more flexible in the decision for marking these wrecks when 

they occur, particularly if they are in an area where a sizeable 

number of vessels transit. Now the vessel that hit it was going 

seven knots. A steel boat gets scratched up, the guy’s pride gets 

hurt. If it had been a fiberglass boat going 30 miles an hour in the 

same circumstances, we probably would have been attending a funeral. So again, I realize the number of restraints that you have. 

You are being asked to do a lot of things. But I also think that as 

stewards of the taxpayers trust, we ought to be using common 

sense whenever we can. And I think the common sense rule would 

have been, hey, this fisherman does not have any money, he is not 

going to mark it, we as a Nation ought to remark it. I welcome 

your thoughts on that. 

Admiral ALLEN. Yes, sir. I am not familiar with the individual 

circumstances of the case. We have many, many cases where we 

will rescue somebody, cannot go in with a boat, usually we put out 

a broadcast. If it can be lit or marked, it is. The responsibility to 

do that depends on the circumstance. And I would be happy to look 

at the individual circumstances in this case and provide you an answer. 

Mr. TAYLOR. Again, I would hope as a policy FE if we know there 

is a wreck in a highly transited area and that the probability is 

that someone is going to hit it, then I think it would be prudent 

for us to have a policy, a common sense policy that says it ought 

to be marked with some sort of a device so the next guy will not 

hit it again. 

Admiral ALLEN. Yes, sir. 

Mr. TAYLOR. OK. Thank you, Mr. Chairman. 

Mr. CUMMINGS. Thank you very much. Mr. Coble. 

Mr. COBLE. Thank you, Mr. Chairman. Admiral, thank you for 

your testimony. In your testimony you indicated that this budget 

provides much of what you all need to accomplish the Coast 

Guard’s many missions. Are you suggesting that there are addiVerDate Aug 31 2005 10:22 Apr 13, 2011 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 P:\DOCS\49951.TXT JEAN
11 

tional resources not contained in this budget that you need to fulfill 

your duties? 

Admiral ALLEN. Mr. Coble, I would say, in general, there has 

never been a budget that is big enough. So we always have unmet 

needs. We also understand the current fiscal environment. Tough 

choices have to be made and Government has to take a position 

along with everybody else to be responsible in moving forward. Are 

there some things we would like to have in this budget? Sure. Can 

we proceed with the critical recapitalization issues that we need to 

take care of? Yes. Can I operate the Coast Guard with the operating funds? Yes. Am I going to have to make choices about how 

I maintain 378s versus some other part of the Coast Guard? I will 

probably have to do that. But I am prepared to make those choices 

and move forward at this funding level, sir. 

Mr. COBLE. Now that you have the benefit of the podium, would 

you like to specify any of those resources that may be missing that 

you would like to be included? 

Admiral ALLEN. I can talk in general terms, sir, and not get involved in any particular budget year levels. First of all, our fleet 

is older, more expensive, and current services, or even inflated cost 

of living, current services is not enough funds to support the fleet 

the way it is right now. The real issue is we need to retire these 

expensive vessels and get them replaced with the new ones. In the 

meantime, we have to manage that gap. That is what I get paid 

to do and that is what we are doing. We make the tough decisions. 

We take care of the Dallas and the Gallatin because our people deserve that. Are there other places we would spend money if we 

were not spending it on that? Yes, there are. But the highest priority is safety of the vessels that we operate out there. That is my 

challenge. In general, the maintenance accounts for our vessels, we 

could always use more money there. In general, in our acquisition 

programs, buying more and sooner is cheaper under a fixed cost environment. You cut costs, you do not break production, you get the 

assets sooner, and you get them at a better price. 

Mr. COBLE. I thank you, Admiral. I yield back, Mr. Chairman. 

Mr. CUMMINGS. Thank you very much. Mr. Kagen. 

Mr. KAGEN. Thank you, Mr. Chairman. Thank you for being 

here. I really appreciate the work that you are doing. I really appreciate the Coast Guard. I am going to be very helpful by pointing 

your attention to the backlog in medical reviews for mariners. You 

have a system now in place that has created such a backlog that 

people are having a hard time gaining full employment. I am just 

curious as to what you are going to do to remedy that, and hopefully appreciate that when a physician examines a patient that you 

might give that examination and determination more credence 

than somebody who has not. 

Admiral ALLEN. Sir, actually while we have had a backlog, I 

think in the long run we will improve service in the performance 

of the organization. The review of those medical records has taken 

place regionally at our regional exam centers with not a lot of consistency of the criteria being applied across those. In fact, a very 

legitimate point was raised about some of the medical records associated with the pilot of the Cosco Busan which were being managed 

locally and not centrally. We were in the process of centralizing all 

12 

those records in fact when that event occurred. What we have now 

is a professional cadre of medical professionals in one place that 

are reviewing all the records for consistency. The issue that caused 

the backlog was a low estimation of how many records would actually be brought to the central location. We are pretty much through 

that backlog right now. We are targeting individuals that need to 

get their licenses and get working. We are cueing those up to the 

front. We have gone a long way towards reducing the backlog, and 

I would be glad to give you a detailed answer for the record. We 

have got the right fix in place with the right professional eyes looking at those records. It is a matter of just getting that backlog 

down and just managing the day to day, sir. 

Mr. KAGEN. Thank you for your attention to that. I yield back. 

Mr. CUMMINGS. We are going to break because we have three 

votes. But let me ask you this before I leave. What is happening 

with the pool down there in North Carolina? 

Admiral ALLEN. The rescue swimmer facility, sir? 

Mr. CUMMINGS. Yes. 

Admiral ALLEN. Proceeding. I will give you the dates exactly, 

timing for it and everything. We will give you that. 

Mr. CUMMINGS. The reason why I asked that question is because 

I think in this Country we have to be very careful. When Mr. Coble 

asked you about the budget, I think we have to be very careful to 

make sure we get what the Coast Guard needs. I will never forget 

visiting that pool, the rescue—what do you call it? 

Admiral ALLEN. The rescue swimmer facility, sir. 

Mr. CUMMINGS. I will never forget it. And to know that our 

young men and women had to almost go to that facility 24 hours 

a day because it was not big enough. And I have said it over and 

over again, I am not knocking you, Admiral, because I know you 

have been fighting for it. But everywhere I would go I would talk 

about that pool because to me that leads to the culture of mediocrity. 

Admiral ALLEN. Yes, sir. 

Mr. CUMMINGS. Where you have got people who are brave, courageous, wanting to be the best they can be, patriotic. I do not care 

who you are, your son or daughter go there, they come to one of 

our academies or to one of our services and they bare supposed to 

be trained or whatever, we want them to have the best, we want 

them to live in decent facilities, and we want them to feel good 

about themselves. That is taking nothing away from the Coast 

Guard. It is like I said, we are the ones who are going to fight. I 

know you are in kind of a difficult situation here. You have got the 

President’s situation saying we have got to cut back, and I understand that, but you also have a duty to carry out the duties of the 

Coast Guard. So we understand the bind that you kind of get into. 

And some way we have got to find a point where we say OK, certain things maybe we can cut back on, but there are certain things 

we simply cannot. And I was just thinking of one of the things that 

we also have to do is we have to move more and more towards innovation. I heard you talk about the medical records. We have got 

to do those kind of things because I think those are the kinds of 

things that are going to make us more effective and efficient. 

13 

So with that, we will resume in about half an hour. I sorry about 

that but it is unavoidable. 

[Recess.] 

Mr. CUMMINGS. Welcome back. Mr. Bowen, please proceed. 

Master Chief BOWEN. Good afternoon, Mr. Chairman, Mr. 

LoBiondo, distinguished Members of this Subcommittee. On behalf 

of the over 51,000 men and women who comprise active and reserve components of our service, I would like to thank you for your 

support and continued efforts to help us position America’s Coast 

Guard to be ready to answer the call and execute the mission. 

The Coast Guard recently adopted a service-wide ethos along 

with our core values of honor, respect, and devotion to duty. The 

ethos provides a constant reminder to our people of the noble calling of this organization and the reasons why we serve and the critical importance of our mission. We call it the Guardian Ethos: I am 

America’s maritime guardian. I serve the citizens of the United 

States. I will protect them. I will defend them. I will save them. 

I am their shield. For them, I am semper paratus. I live the Coast 

Guard core values. We are the United States Coast Guard. 

A few months ago I attended a memorial service out at Coast 

Guard Air Station Barbers Point for the crew of the Coast Guard 

helicopter 6505. That helicopter crashed off Honolulu, Hawaii September 4th of last year. All four crew members lost their lives. The 

crew members were Captain Thomas Nelson, Lieutenant Commander Andrew Wischmier, AMT2 Joshua Nichols, and ASTI Dave 

Skimin. As I talked to their families and listened to the words of 

those who knew them at the memorial service, I thought about the 

Guardian Ethos. Our members are now required to memorize those 

words in recruit training. 

At the time of the 6505 crash, Coast Guard Cutter AHI, out of 

Honolulu, got underway to search. There is nothing more devastating than searching for your own. Their newest guardian, almost straight from recruit training, started reciting the Guardian 

Ethos and then the rest of the crew joined in. And I thought about 

why the AHI did that, and I think the answer is that sometimes, 

particularly difficult times, we as human beings need to be reminded of our core purpose. The ethos is who we are, why we 

serve, and why the crew of the 6505 and countless others before 

them have sacrificed. 

Our people live and work in hard, difficult, often dangerous environments, and while they perform their duties their families need 

to be taken care of. Along these lines, I have been concerned for 

some time regarding the state of Coast Guard-owned housing. The 

vast majority of Coast Guard personnel reside in private sector 

housing. However, there are some locations where private sector 

housing is insufficient and it is necessary for the Coast Guard to 

provide quarters. 

As you know, we operate in many remote coastal regions where 

private housing is unaffordable for our members or even unavailable. Currently, the Coast Guard owns over 4,000 family homes 

and 227 unaccompanied personnel housing facilities, otherwise 

known as barracks. The average age of Coast Guard housing is 40- 

plus years and we have an excessive maintenance and recapitalization backlog. Housing competes with other high priority projects, 

14 

including pier and hangar repairs, among others. We work very 

hard to allocate funding to the highest order needs and sometimes 

non-operational support requirements just do not fare as well. In 

my judgment, the use of public-private venture authority, PPV, has 

almost completely transformed the military housing landscape for 

the DOD military services. Over 80 percent of the Army, Navy, Air 

Force and Marine housing inventory in the United States have 

been upgraded from largely substandard condition to new, modern 

upscale housing. The quality of life for military families has increased by leaps and bounds. 

We have, the Coast Guard, more than 12,000 members and families living in our aged housing, some of which in my view are still 

substandard. These houses are expensive to maintain and have frequent maintenance issues. For these members and their families 

the contrast in the quality of life is now inescapable. The Coast 

Guard’s PPV housing authority lapsed a couple of years ago and 

prior to that lapse 2006 changes to PPV scoring methodologies 

challenged the Coast Guard’s ability to execute large scale PPV 

partnerships. Providing the Coast Guard with this authority and 

giving the Coast Guard an additional tool and greater flexibility to 

tackle our housing challenges, PPV can make a huge difference in 

the lives of our people. With your support we will be successful. 

Mr. CUMMINGS. Mr. Baird. 

Mr. BAIRD. Thank you, Mr. Chairman. I thank our witnesses and 

I thank you for your service to the Country. We are honored to 

have a number of your folks serve in our district at Cape May. You 

do a great job out there and save a lot of lives. 

Admiral Allen, you mentioned earlier right before the break 

about the choices you make with budget. We just heard some of the 

challenges. One of the issues in our district is the proposal to move 

a LNG tanker facility onto the Columbia River. One of the concerns 

I have had about that is that in order for it to be managed safely 

there would be a need for additional Coast Guard assets. Having 

served on this Committee for a while, I do not know where those 

assets would come from. How do you deal with that, sir, when you 

are asked to make reports about the safety of a vessel of some sort, 

how do you manage the issue of saying, well, theoretically, it could 

be done when you may not actually have the assets. I wonder if 

you could comment on that. 

Admiral ALLEN. Yes, sir. And I thank you for the question. 

Frankly, that question has arisen almost every place in the country 

where they are looking at either an offshore or inshore LNG facility, and the Chairman and I have actually had this discussion as 

well. Our role as a cooperating agency in the permitting process, 

in this case it would be the Federal Energy Regulatory Commission 

for inshore, I think you are probably talking the Bradwood facility 

in this case? 

Mr. BAIRD. Yes, sir. 

Admiral ALLEN. It is to make a determination regarding security 

and safety in the operation not only of tanker transit but in the facility itself and to make recommendations on the permitting process. That sends a waterway suitability assessment. Our job is to 

say it is either safe and secure or it is not. Sometimes we say it 

is not safe or secure but could be made safe or secure with the folVerDate Aug 31 2005 10:22 Apr 13, 2011 Jkt 000000 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 P:\DOCS\49951.TXT JEAN
15 

lowing measures that could be enacted, and that could be for the 

transportation higher security measures, or maybe perimeter security measures for the facility itself. 

We get in the horns of a dilemma here when you start talking 

about the sourcing of the security. OK? We want them to be safe 

and secure. I have said at other hearings if a condition of our waterway security assessment, our recommendation was that whatever recommendation we made had to be sourced by the Coast 

Guard, I would have no reason to ever approve another permit or 

recommend the approval of a permit. That said, I think we need 

to have a discussion about who bears the cost of security because 

that is really where we are going. Now once you decide it can be 

safely and securely operated, who should bear that cost? Personally, I think that ought to be passed on to the consumer in the 

price of goods. I think there is a role for the United States Government and the Coast Guard to establish standards, make sure they 

are complied with, and make sure that security and safety goals 

are met. But if we start having to earmark a portion of Coast 

Guard effort in a particular command area, they are going to have 

to start making trade-offs about which mission they are going to 

support or not support that day. That takes away the inherent 

flexibility which I believe is the genius of our organization to allow 

field commanders to manage risk and allocate resources to the 

highest need. 

I did not give you a real clear answer there, sir, but it is that 

complex of an issue. 

Mr. BAIRD. And that is the problem and I respect the position 

you are in. My concern is if you are asked to make a decision could 

this be safe and you decide yes, and therefore people go and say, 

OK, we can site it, but the yes was contingent upon the funding 

to provide the crew and the equipment to do the escort. Once they 

have sited it, presumably you have got to dedicate the equipment 

and crew to that mission. And what other missions get sacrificed 

at what other cost. That is our concern on this particular situation. 

Admiral ALLEN. Yes, sir. Mr. Chairman, could I provide a more 

extended answer. 

Mr. CUMMINGS. Please do. 

Admiral ALLEN. Could I compare and contrast, because I was at 

an extraordinary meeting on Monday regarding the protection of 

U.S. Flag ships operating off the Horn of Africa. Over there there 

are a number of ways you can protect a ship. But if you get to the 

point where you need a security team, whether armed or unarmed, 

it becomes a question of cost and sourcing. And if you look at the 

area we are talking about other, some people say it is the size of 

four Texas’, and with only 15 ships in that coalition task force you 

cannot be assured that we can put either a ship alongside or an 

armed team on every vessel. For that reason, I issued a maritime 

security directive on Monday under my authority as the Maritime 

Transportation Security Act competent authority to require anti-piracy plans in addition to the vessel security plans that are required 

for vessels operating in that area. It would have to be approved by 

the Coast Guard up to and including security teams that could be 

armed or unarmed. Now the inference there is that is the cost of 

doing business and that could be passed on in the price of goods. 

16 

And whether they are under charter or transcommerce, somebody 

else, there are ways to deal with the cost of that. But I think the 

larger issue is how do we clear the cost of security, who bears it, 

and who sets the standards. 

Mr. BAIRD. I fully concur with that approach, both in the Horn 

of Africa and on the Columbia River. I thank you again for your 

service and your answers. Thank you, Mr. Chairman. 

Mr. CUMMINGS. Thank you. Mr. Larsen. 

Mr. LARSEN. Thank you, Mr. Chairman. Admiral Allen, I want 

to thank you for your strong leadership on Arctic issues. My understanding is that there is currently a staff level agreement on the 

MOA with the National Science Foundation. Can you give us an 

update on the status of that MOA. 

Admiral ALLEN. Yes, sir. We provided guidance in the appropriations report for the conference last year on two things. One was to 

look at where the base money for ice breaking resided, and two, to 

revise the MOA to make sure National Science Foundation and 

Coast Guard were in alignment. I recently met with Arden Bement, 

myself, and at that point Acting Deputy Secretary Rambeers from 

Homeland Security. Mr. Bement and myself are in agreement that 

the MOU as constructed right now works for both of us. It is a useable document. One we can move forward on. He also agreed that 

were the fund transfer to take place between the National Science 

Foundation and the Coast Guard, the National Science Foundation 

had no objection to that and that was an appropriate thing to do. 

Mr. LARSEN. OK. I understand the Polar Sea will be underway 

later this summer on an NSF science expedition. Were you all able 

to secure an opportunity for polar sea crew training to occur in 

combination with this expedition? 

Admiral ALLEN. We will do some crew training. Not as much as 

we would like. That is where we are currently constrained by the 

base money residing in National Science Foundation but the Coast 

Guard owning the vessel and the crew. There is a certain amount 

of time you have to be underway to remain competent and proficient and those number of days have dwindled each year, and it 

is a concern. 

Mr. LARSEN. So is it dwindling this upcoming year compared to 

last year then? 

Admiral ALLEN. Yes, sir. I can give you a trend analysis. We also 

had some engineering issues with the Polar Sea this year that precluded her getting underway. But another thing is when you do not 

operate vessels you are going to have more engineering problems 

when you get underway because ships are like people, they atrophy. 

Mr. LARSEN. Right. Right. So did I hear you then say on this particular expedition this summer that you will have some crew for 

training? 

Admiral ALLEN. Yes, sir. We had to adjust the schedule due to 

some mechanical issues on the vessel, but I can give you an exact 

number of days for the record. 

Mr. LARSEN. Please do. 

Mr. LARSEN. Can you give a status on the Polar Star 

sustainment efforts and estimate of the amount of work the Star 

17 

will need to become operational. I understand the 2010 budget does 

not include any money for sustainment. 

Admiral ALLEN. Yes, sir. We structured the contract for the Polar 

Star so we had a series of options that can allow us to do work 

with operations and maintenance money but keep separate acquisition and construction money by contract line item numbers and 

give us a menu of things we could do based on the funding level 

we received. The current funding level for the Polar Star is about 

$30.2 million which was provided to us in 2009. That is enough 

work to get us through fiscal year 2009 and 2010. But the entire 

amount of money to make Polar Star operational is $62.8 million. 

So we have about a $32 million shortfall right now. We will continue to work inside the Administration, as we have with the new 

Arctic policy. But as it stands right now, the work can continue but 

there is a decision coming up on the other piece of funding 

Mr. LARSEN. For 2011 budget decisions? 

Admiral ALLEN. Yes, sir. We would have a discussion inside the 

Administration, sir. 

Mr. LARSEN. Right. OK. Chief, with regards to housing, the housing issue, and potential or discussion about PPV using the Defense 

model, have you look far into that? I know there is some testimony 

and some other comments that the DOD model is seen as the cat’s 

meow. But where I come from we have had some problems with it 

but we have worked through those problems and it seems to be 

working pretty well now. To get something started like that with 

the Coast Guard, what would that take? 

Master Chief BOWEN. In the past the Coast Guard had the authorities but when we were preparing to execute, which was 

around 2006–2007 time frame, there is a scoring methodology by 

CBO that requires the entire cost of the private loan or the private 

person that is in partnership with the Government to be carried on 

the agency’s budget. 

In our case, at that time for several properties in Alaska and 

Cape May it would have been about $200 million. Coast Guard 

could not afford to do that. Defense had a huge project cancelled 

several years ago and they were able to keep $8 billion in their 

budget as a line item, as a hedge against anything going wrong 

with their PPV acquisition. There are a lot of ways to do this. The 

first thing is we will be proposing legislation that will give us our 

authorities back. We have to have that so we ask for your support 

there. 

We could also partner with PPV with DOD. We did that successfully in Hawaii. But to do that, we actually had to transfer our 

properties, 318 family homes in Hawaii, to the Army. Now we have 

an agreement where we inhabit a inhabit a certain amount of the 

new, renewed homes. There is some risk, of course, involved with 

that in case the Army has some kind of a surge requirement in Hawaii in the future. So, there is some trepidation about going that 

way again. 

But there are a lot of ways to do this. I have traveled all over 

the Coast Guard. I have looked at these houses. In fifteen years, 

it is like these ships, they are going to be falling in. We have reduced the inventory to the point where they are only there where 

18 

we need them. But where we need them, we really need them and 

we need to maintain them. 

I can show you a house in Petaluma, California, a long way from 

any public housing, where when it rains there is two inches of 

water on the lawn and it sits there for a month. It is just mud. The 

piping is substandard. It is always clogging up. It is just old, costs 

a lot to maintain, and this needs to be fixed. 

Thank you. 

Mr. CUMMINGS. Let me make sure I am clear on what you are 

saying before we go to Ms. Richardson. You are saying you would 

like to have more money. I am hearing you. You know, I am trying 

to say this in a nice way. We hear you. The last thing I want is 

somebody living in a house that is going to fall in on them and I 

know you don’t. At some point, though, somebody has to say to 

Homeland Security, to the Congress, and yes to the President that 

we just want decent housing. I understand the whole idea that you 

have got to kind of stay within certain boundaries. But it makes 

absolutely no sense, none, to have substandard housing for our people while at the same time we are honoring them saying that 

they’re the greatest in the world, they have got a job to do. What 

I’m saying to is just say it. Do you want it or not? When I ask you 

just now, you act like you don’t know what I am talking about. 

Help me. 

Admiral ALLEN. This is where I do my job. 

Mr. CUMMINGS. Yes, please do your job. I’m not trying to be so 

hard. I want to know. 

Admiral ALLEN. Two things that are required to make this program successful. If it is successful, it shifts a good deal of the burden of investment in housing from the Government to the private 

sector. One is the authority to have public/private ventures. The 

second one under current CBO scoring standards is to have an 

amount of money set aside in budget that is basically an indemnifying the project in case something goes wrong up front so they 

know who is bearing the risk. 

So we don’t need money for construction and appropriations. We 

need authorization to enter into the ventures which requires and 

then deal with the issue on CBO scoring up front and how we can 

make that amount available to enter the venture, sir. 

Mr. CUMMINGS. Have you all ever made that known to us? 

Admiral ALLEN. Sir, this has come and gone over the years. I 

have been dealing with this for about 10 or 15 years clear back to 

when I was a budget officer. The issue is always been whether or 

not we can develop enough money out of our base budget to hold 

that up to go ahead with the venture. What you are doing is keeping money that could be used for something else and abeyance and 

you can do this. It is a trade-off for money that you don’t get anything for. It’s a very difficult dilemma for us. 

Mr. CUMMINGS. Chief, I hope you didn’t misunderstand me. I 

wasn’t trying to be smart. You gave some very compelling statements and that’s kind of what got me. I just want to make sure 

because I know how you are. You are a very compassionate, strong 

leader and you want the best for the men and women in the Corps. 

So we just need to know what you need. 

19 

I am convinced that while you have been fighting this battle for 

a long time, Admiral, maybe we need to join hands, all of us, and 

say, OK, we are going to stop it right here and try to get it done, 

whatever it is that we need to get done based upon what you just 

said. 

Admiral ALLEN. Yes, sir. I would be happy to participate. 

Mr. CUMMINGS. All right. Ms. Richardson? 

Ms. RICHARDSON. Thank you, Mr. Chairman. Actually, your question rolled right into the question that I had for the Master Chief. 

That question was, as I understand it, the Coast Guard has a backlog exceeding $1 billion in unmet repair needs throughout its aging 

shore facilities including its personnel housing, air stations, sector 

offices, small boat stations, and at the Coast Guard Academy. In 

many instances, the Coast Guard personnel are living and working 

in buildings that are substandard. Can you describe the extent of 

the need, which I think you just did, and can you indicate the number and the total cost of projects that could go to construction now 

if you had the funding? 

So if I understood you, Admiral, you are saying the problem isn’t 

that you have the funding, it is in the right category and getting 

proper authorization? 

Admiral ALLEN. Its authorizing legislation and then dealing with 

the issue on CBO scoring of the money up front. Those are the two 

things. 

Ms. RICHARDSON. Could you provide to this Committee, to our 

Chairman, explicit language clarifying that? Also include what particular sections of the categories that I listed, whether it is housing, 

air stations, sector offices, small boat stations, or the Academy, 

that would fall in that category that could have the exchanges if 

you had this occur. 

Admiral ALLEN. We can do that, ma’am. 

Ms. RICHARDSON. OK, thank you. My next two questions are for 

the Admiral about a towing vessel regulation. Admiral Watson indicated in an appearance before this Subcommittee that the notice 

of proposed rulemaking to initiate the rulemaking to bring towing 

vessels under inspection would be out in the spring. The spring is 

here; what is the status? 

Admiral ALLEN. The status is that we have drafted the notice of 

proposed rulemaking and we are finalizing some details and questions associated with the Department right now. 

Ms. RICHARDSON. So, what can we anticipate because the spring 

is here? 

Admiral ALLEN. As soon as we resolve the questions and the 

issues between the Coast Guard and the Department we would 

hope it would move forward, ma’am. We are right in the process 

right now. I could tell you next week but if its not next week then 

I would hate to commit because we don’t have the paper in the 

Coast Guard right now. 

Ms. RICHARDSON. Well with all due respect, this is I believe May 

12th and so the spring is here. So can we anticipate it in the next 

thirty days? 

Admiral ALLEN. I will be glad to carry that message back. Thank 

you, ma’am. 

Ms. RICHARDSON. OK, can you follow up? 

20 

Mr. CUMMINGS. Would the gentlewoman yield? 

Ms. RICHARDSON. Sure, Mr. Chairman. 

Mr. CUMMINGS. Admiral, how long do think it is going to take? 

Let me say it to the gentlewoman. The Admiral is reluctant to give 

a specific date because he knows that I am going to hold him to 

it. So I’m just curious. The gentlewoman was just trying an estimate. 

Admiral ALLEN. No, I understand. 

Mr. CUMMINGS. Because Admiral, you will be gone in 2010. 

[Laughter.] 

Admiral ALLEN. Sir, technically it is not a date you will be holding me to. Technically it is a date you are holding myself, the Department, and OMB to. 

Mr. CUMMINGS. OK. I don’t want you to go, but I’m just saying. 

Admiral ALLEN. Speaking collectively for the Government, I can 

control one part of it but I couldn’t tell you a date because I don’t 

control the entire process. That’s the issue. 

Mr. CUMMINGS. All right. Well, how soon do you think you can 

get us a date? 

Admiral ALLEN. Well, I think I just told you in 30 days and I am 

happy for the task. 

Mr. CUMMINGS. OK, we will give you 45. 

Admiral ALLEN. Sir. 

Mr. CUMMINGS. OK, we will get it in 45. I yield back to the lady. 

Ms. RICHARDSON. To build upon the Chairman’s request, the request would be either one, either giving us a date or giving us a 

timeline of how you’re going to get to a date. 

Admiral ALLEN. Yes, ma’am. 

Ms. RICHARDSON. My last question is a general budget issue because this is a budget hearing. The proposal before us is relatively 

plain. The funding is providing for operation of new assets that you 

have and acquiring them for a few ongoing initiatives such as the 

effort to strengthen the Marine Safety Program, which we obviously strongly support. However, few brand new capabilities are 

being provided. 

What level of additional personnel would you like to see the 

Coast Guard attain to better align your personnel resources with 

your mission objectives? Are there new initiatives or capabilities 

that you believe the Services currently need that are not funded in 

this budget? Finally, your budget request of 41.403 military positions would actually be a decrease of 24 positions below the enacted 

2009 budget. Why is this? 

Admiral ALLEN. Let me answer the last one first. Ma’am, there 

are puts and takes related to decommissioning vessels and aircraft 

before new ones come on. So that number can change from year to 

year. 

That said, we do know we have a workload coming that we 

should be planning on that will require increases in the Coast 

Guard. One of them is just what you mentioned. That is enforcement of the towing vessel regulations. That will require new inspections at frequent periods and a workforce ready to do that. 

So as we start looking at some of these rules coming online, I can 

tell you if you are looking at demand that will not be met, the first 

one I would give you it tow boat inspections, ma’am. 

21 

Ms. RICHARDSON. OK. So how are you going to achieve that if 

you are requesting a decrease in positions? 

Admiral ALLEN. Well, we are in a little bit of a chicken and egg 

thing here. Until we get the regulation out and we know what the 

requirements are, we can’t go for the workforce to support it. But 

I would anticipate coming in and saying this is the increment I 

need in my workforce to support enforcement of the towing vessel 

regulations. 

Ms. RICHARDSON. So for on the record, what do you think you are 

going to need? 

Admiral ALLEN. I would be glad to answer that for the record, 

ma’am. Off the top of my head, I would have to go back and talk 

to my experts on that. 

Ms. RICHARDSON. Can we get that in 45 days? 

Admiral ALLEN. Yes, ma’am. 

Ms. RICHARDSON. Thank you, sir. That is all. 

Mr. CUMMINGS. Thank you very much. I still have a few questions, Admiral. I want to just talk about acquisitions. We have a 

hearing on acquisitions on March 24th to examine the progress 

that the Service has made under your leadership in modernizing 

its acquisition management capability, including creating a new 

Acquisition Directorate and issuing and revising the blueprint for 

acquisition reform. That said, there are several issues of concern 

that I want to just ask you about. 

Admiral Blore testified that all of the projects considered to be 

a part of Deep Water, when combined with acquisition activities 

that are also part of Deep Water such as program management 

cost; systems engineering; and technology obsolescence preventions 

programs, are currently estimated to cost more than $26 billion to 

complete. The figure represents an increase of $2 billion above the 

May 2007 baseline cost estimate of $24 billion. 

What do you estimate the full cost of the procurements contained 

in Deep Water Program will be? What measures are you implementing to effectively control the cost? 

The reason why I am asking this, of course, is that the President 

has made it clear that he is trying to reduce costs. Deep Water, at 

the rate we are going, is going to be $2 billion above that. It is possible, I don’t know whether it is probable, but it is possible that if 

it keeps going up at the rate it is going that at the end of the Deep 

Water acquisition period we won’t have the kind of equipment we 

were bargaining for. 

As a matter of fact, I met with a team of manufacturers today 

and I said to them, you guys have got to get innovative. You have 

got to change the way you do business. All this cost overrun stuff, 

you have got to be a lot more careful. You come in, hypothetically, 

with a contract for $4 million and then we end up spending $7 million. I think this President is basically saying we have got to get 

a new culture. So I am just curious where do you see Deep Water 

going? 

By the way, I congratulate you on the efforts that you have made 

within the Coast Guard to move more and more towards much 

more effective and efficient acquisition process. But go ahead. 

Admiral ALLEN. Yes, sir. First of all let me state a general principle. Let me walk you through a couple of line items that support 

22 

that. The way to control cost is to do these acquisitions better 

based on a particular asset with open competition. Move into fixed 

price as soon as you can, removing the risk from the Government. 

What we have been doing over the last 18 to 24 months in assuming the lead systems integrator role from Integrated Deep 

Water Systems is to take each asset, separate it from the system, 

rebaseline that asset, and where it isn’t already under construction 

to openly compete it. So the reason that the change in the estimate 

occurred was we have taken every single asset in Deep Water—the 

national security cutter, the coastal patrol boat—and we have 

issued a new acquisition baseline validating the cost and the performance. 

So to date, I can give you them really quickly. These are the 

projects that we have rebaselined so far as we move to be the lead 

systems integrator: the national security cutter, the coastal patrol 

boat which is just about done, the Medium Endurance Cutter Mission Effectiveness Program, the Patrol Boat Mission Effectiveness 

Program, response boat medium, the maritime patrol aircraft, and 

Rescue 21. 

We are in the process of taking each asset apart and pulling it 

through a knot hole new acquisition baseline for the following: the 

fast response cutter, the H–65 sustainment, and the H–65J conversion. 

In other words, we are taking every asset and doing an evaluation on it. If there is still a decision to be made, we are not going 

to execute that decision through Integrated Coast Guard Systems. 

We will openly compete it, reduce the risk, and get to fixed price. 

So while there has been adjustment related to the early cost 

growth in Deep Water, some of that related to the national security 

cutter, the best way to control cost and reduce cost in the future 

is an asset by asset open competition, fixed price, disciplined acquisition process. That is where we are going, sir. 

Mr. CUMMINGS. Now, with the national security cutter, are we at 

that point yet where we level off the course when it began to go 

down a little bit? Are you following what I am saying? 

Admiral ALLEN. Yes sir, we are. 

Mr. CUMMINGS. Now that we have got the blueprints, we have 

been working out all the little kinks. I am just wondering at what 

point do we get to the point where we begin to see, not savings, 

but at least leveling off. 

Admiral ALLEN. Yes, sir. With hulls four and five, we are there, 

sir. 

Mr. CUMMINGS. Say that again. 

Admiral ALLEN. With hulls four and five, we are there. 

Mr. CUMMINGS. OK. 

Admiral ALLEN. That is why it is critical if we can not to break 

production between awarding the base contract for construction of 

the fourth cutter and keeping the long lead time materials in the 

works for cutter number five going off at the same time so they 

overlap in the workforces employed, sir. 

Mr. CUMMINGS. OK. Mr. Hutton with GAO testified at our hearing a few weeks ago before the Appropriations Committee, Subcommittee on Homeland Security that in September 2008 after conducting a full and open competition the Coast Guard awarded a 

23 

$88.2 million contract for the design and construction of a lead fast 

response cutter. However, the Coast Guard does not have an approved operational requirements document or test plan for this 

asset. 

Recognizing the risks that are inherent in this approach, the 

Coast Guard developed a basic requirement document and an acquisition strategy based on procuring a proven design. These documents were reviewed and approved by the Coast Guard’s Capabilities Directorate, the Engineering and Logistics Directorate, and the 

Chief of Staff before the procurement began. According to a Coast 

Guard official, the Coast Guard intends to have an approved operational requirement document before procuring additional ships. 

While I understand the urgent need to recapitalize the Coast 

Guard’s fleet, I am curious why the Coast Guard would deviate 

from the MSAM process on this procurement, one of the first that 

it is initiating and managing in house, totally independent of the 

ICGS contract team. 

Admiral ALLEN. Yes, sir. 

Mr. CUMMINGS. What was that about? 

Admiral ALLEN. That is a fair question. There were two competing dynamics here. One was the loss of patrol boat hours from 

the 123s that were taken out of service and our need to accelerate 

a replacement patrol boat. To mitigate risk, we put out the solicitation for proposals for the fast response cutter. We indicated there 

had to be a parent craft that was already in service operating for 

a certain number of years some place in the world where it was a 

demonstrated, proven design. That would stabilize the requirements by the fact that a parent craft had been operated. That was 

the risk mitigator shortening the process we normally would have 

followed with an operational requirements document. It was done 

because of the loss of the patrol boat hours. 

I would say that after they awarded that contract there was a 

protest to GAO. That was denied. The Contract Court of Appeals 

also heard the case and dismissed it with prejudice. In our mind, 

that validates the procurement strategy. We believe these are stable requirements. We will issue the operational requirements document but for this particular case the need to get this cutter built 

and into the hands of our people and the stability that comes with 

a proven parent craft design, which was a requirement, mitigates 

that risk, sir. 

Mr. CUMMINGS. I am concerned and this Subcommittee is concerned about the Coast Guard’s equal employment opportunity 

services. Did you have any comments about that, generally? 

Admiral ALLEN. Yes, sir. 

Mr. CUMMINGS. I know you got that report, didn’t you? 

Admiral ALLEN. Yes, sir. 

Mr. CUMMINGS. It was not very flattering to the Coast Guard. 

Admiral ALLEN. Yes, sir. 

Mr. CUMMINGS. Do you take any responsibility for that? 

Admiral ALLEN. I am totally responsible. I am the Commandant, 

sir. As I told you in the past, I am responsible to take care of this 

as well. 

Mr. CUMMINGS. I am going to let you talk. I just want to hear 

what you have to say. 

24 

Admiral ALLEN. Yes, sir. 

Mr. CUMMINGS. You can also tell us about what is going to be 

happening with the Academy. We have been looking at the numbers and it seems like, as far as African Americans are concerned, 

we are going backwards. 

Admiral ALLEN. Yes, sir. First of all, in regards to equal opportunity and civil rights, we have for about six months been looking 

at a number of issues related to that. That predates the Booz Allen 

Hamilton report, which was issued after the first of the year. I had 

personal concerns when I reviewed the Management Directive’s 7/ 

15 report last fall, which is our annual report that is due on equal 

opportunity. 

There were some issues raised in there that caused me some concern that we probably weren’t doing enough robust barrier analysis 

to entry into our workforce by our civilians. More troubling, we actually stated in our report that we weren’t resourcing our Civil 

Rights Office. 

The report was to me to sign leaving the Coast Guard. I thought 

at one point about sending back and changing the report but I 

think you and I would both agree that was disingenuous. So in December of 2008 I signed the report and I gave a direction to my 

Vice Commandant, the Chief of Civil Rights, and the Chief of Personnel to address resource shortfalls, organizational issues, and to 

come up with a plan to move this program forward. The points that 

were raised in that review are actually verified and ratified by the 

Booz Allen Hamilton study. 

So we have taken that for action. We have moved out aggressively. I have approved a reorganization of the Office of Civil 

Rights and the field organization structure. At the hearing you 

held recently, we said that by the end of May we would fill six positions. We have done that, sir. We have provided about $750,000 to 

the Office of Civil Rights this year to start doing manpower studies. Ms. Dickerson has been out visiting the district office, socializing the field changes that she has proposed. The restructuring of 

the Civil Rights Office is exactly in line with Coast Guard modernization and how we intend to do support services across the 

Coast Guard. 

So we are moving out very, very strongly on all points. We accepted the report. We saw where we need to make changes and we 

are making the changes, sir. 

Mr. CUMMINGS. I have just two other things. We learned during 

our hearing that you just referred to that the Office Of Civil Rights 

had repeatedly requested additional personnel specifically as documented in the Coast Guard’s own MD715 report. I guess that is 

what you are referring to? 

Admiral ALLEN. Yes, sir. 

Mr. CUMMINGS. The Office of Civil Rights had requested additional funding in fiscal year 2008 for six additional personnel to 

meet the field personnel resource level recommended in the 2001 

review of the Coast Guard civil rights program. The funding request was not funded in 2008 and was resubmitted in fiscal year 

2009. Why was the recommendation that was made in 2001 left 

unfulfilled for so long? That is a long time. 

25 

Admiral ALLEN. Yes, sir. I would just say this: Again, I wasn’t 

in the position to go back and change that report because it was 

submitted to me and I forwarded it on. 

Mr. CUMMINGS. You act like that is a big deal. I mean, I wouldn’t 

want you to change the report. 

Admiral ALLEN. Exactly, sir. But what I was going to say is—— 

Mr. CUMMINGS. We are just seeking the truth. 

Admiral ALLEN. We did provide resources over the last several 

years that may not have been identified in the report. That is what 

I saying. 

Mr. CUMMINGS. Oh, I see. 

Admiral ALLEN. Yes, sir. In fiscal year 2004, we actually added 

two GS–14 billets to both the Atlantic and the headquarters EEO 

staff. Over the years, the problem is being successful in an actual 

budget process for two or three positions. That is very difficult to 

do, moving that out through the Administration and OMB. So we 

have actually reprogrammed some base resources over the years. 

I would like to give you an answer for the record on where we 

have done that. In addition to the six that we have just provided, 

the entire strength before we provided the six was 45 EEO specialists and 14 support personnel. We have now added six to that so 

we are up to a total of 66 personnel in the civil rights program in 

the Coast Guard right now. I would like to lay that out for you if 

I could for the record, sir. 

Mr. CUMMINGS. All right. During our last year we saw from data 

provided by the Coast Guard—and this is just going back to the 

Academy—that nine African Americans had been offered admission 

to the Coast Guard Academy, Class of 2013. How many of the nine 

individuals who were offered admission came from the preparatory 

school and how many of the nine were direct offers to individuals 

who had not previously attended the Coast Guard preparatory 

school? And as of today, how many of the African Americans have 

accepted the offer for admission? 

Admiral ALLEN. Yes sir. Of the nine, four were direct or at large, 

and four were Coast Guard Scholars coming from the preparatory 

schools. As it stands right now, we have four acceptances but the 

window has not closed and we are working the kids as we speak, 

sir. 

Mr. CUMMINGS. And with regard to women, how are we doing 

with regard to women in the Academy? I understand we are doing 

pretty good there. 

Admiral ALLEN. Yes sir. I would have to go check, I think we are 

somewhere around 28 percent. 

Mr. CUMMINGS. I see. All right. 

Mr. LoBiondo? 

Mr. LOBIONDO. Thank you Mr. Chairman. Admiral Allen, can 

you talk a little bit about the current state of Coast Guard’s shore 

side support infrastructure? I talked about that a little bit in the 

opening statement, my concerns for how you are going to deal with 

that. 

Admiral ALLEN. Yes sir. Are you talking about shore infrastructure, buildings, and facilities? 

Mr. LOBIONDO. Yes sir. 

26 

Admiral ALLEN. As the Master Chief has stated, many of our facilities are very, very old, 40 or 50 years old. Some of them are actually historical buildings now based on the fact of when they were 

built. Some of our SAR stations were actually built in the 1930’s 

during the WPA era. When I became Commandant, our shore funding was around, I believe, $20 million a year. There was a time 

right after we were awarded the deep water contract, because of 

funding constraints, where the shore account was not funded at all. 

In other words, there was zero money. 

A couple of years earlier in the 2000 decade, I made it an internal goal of mine to raise the recurring amount for shore facilities 

to $100 million before I left as Commandant. I would certainly like 

to see it rise higher than that. 

If I could just make one clarification, there does not appear to be shore money in the 2010 request but a good deal of the $98 million provided for in the stimulus package will go there once we are 

allowed to release the details. So I am convinced that as far as establishing the $100 million goal that we are substantially there for 

2010. 

We are also the recipient of several hundred million dollars for 

hurricane repair money as a result of what happened in the Gulf. 

Sometimes a storm helps you. If you have got an old fallen down 

station, if it gets hit by a hurricane then you have emergency supplemental funding and you can build that station. Frankly, we 

have done that pretty much all over the Gulf Coast right now. 

So I would tell you, going through 2010, I am OK with where we 

are at. I am not OK that we have solved the problem long term 

and that we have got a wedge or a base in there that is enough 

to sustain us. The floor ought to be $100 million a year. 

Mr. LOBIONDO. I have just one more quick one before I go to the 

Master Chief. What percentage of Coast Guard owned housing 

would you say is in need of major repair? 

Admiral ALLEN. I would almost refer that to our civil engineers 

and give you a really detailed answer for the record, sir. The Master Chief and I go out and we see them. If I were to give you just 

an intuitive answer, if you will let me correct it in case I am wrong, 

I would say it is probably in thirds. We have a third that is really 

good; we have a third that is kind of right in the middle, it is kind 

of OK; and we have a third that you would really have to think 

twice about whether or not that is where you would want to put 

your people. 

Mr. LOBIONDO. Master Chief, I think that—— 

Mr. CUMMINGS. Would the gentleman yield? 

Mr. LOBIONDO. Certainly. 

Mr. CUMMINGS. We can do better than that. I know it is upsetting to you all, but this is the United States of America. This is 

not some Third World country where we can’t provide our members 

of the Corps with housing so they can have a decent night’s sleep 

and have a place to go to just rest. That is just unacceptable. Really, it is just unacceptable. I think anybody who will sit around and 

stand for that without fighting, there is a problem. We are going 

to fight. 

I think, I’m sure I speak for both sides, everybody is very complementary of these folks but we have got to make sure that we 

27 

provide them with that housing. That is why I am so glad that you 

said the things that both of you all have said. It means a lot to me. 

Thank you for yielding. 

Mr. LOBIONDO. Mr. Chairman, to further engage that fighting 

spirit about which I am very happy to hear, maybe the Master 

Chief can provide you with some photos that would give a clear indication of just how terrible some of this is. Master Chief, would 

that be a possibility? 

Master Chief BOWEN. Sir, that has already been provided. It is 

in the package for each Member. 

Mr. LOBIONDO. OK. I think Mr. Coble is going to have a question 

in one area of housing. 

But I wanted to ask you, Master Chief, the housing is very critical but in addition to the housing authorities, what other authorities does the Coast Guard currently lack with parity with the Department of Defense? Some of it maybe has to be dealt with by 

statute and some of it maybe doesn’t. We are going to maybe need 

to know that. If that is not something that you can answer today, 

maybe you can come back to us with a list on what we can do because we are just short of money on what we need statutory 

changes on to get ourselves parity with DOD. 

Admiral ALLEN. With trepidation, I speak for the Master Chief 

here. I would give you one kind of thematic issue, sir, to deal with. 

It is something I deal with and something the Master Chief deals 

with. This is not an act of commission. I am going to say that right 

now because we love our DOD partners. We fight and work together everywhere. 

But in many cases when you are looking at Defense Authorization, when they are talking about issues like family programs or 

access say to child development centers and things like that, if the 

language is not exact and precise about all of the Armed Forces, 

which include the Coast Guard, which is in DHS, we sometimes 

run into a barrier where there is an unimplied but all of a sudden 

a legal constraint because the terminology and legislation say Department of Defense rather than Armed Forces. Sometimes this is 

one of those things where if there is just better visibility and understanding, it takes care of itself. Master Chief? 

Mr. LOBIONDO. Well, before we go to the Master Chief let me 

just make sure I understand. So what you were saying is if in the 

Defense Authorization Bill, which is going to being taken up soon, 

if we are more precise with our language, this will enable the Coast 

Guard to participate in a fuller way. Is that what I am hearing you 

say? 

Admiral ALLEN. Yes, sir. In cases where there is an entitlement 

or a family program, there are times where we have gone to bases 

and approached them and they will say, we understand but you are 

not Department of Defense and that is what the law says. 

Mr. LOBIONDO. This is very timely then. 

Admiral ALLEN. I would ask the Master Chief to comment as 

well. 

Mr. LOBIONDO. OK. Master Chief? 

Master Chief BOWEN. Recently Admiral Allen’s spouse and my 

wife met with Mrs. Obama and she asked those very same questions. We provided her with a paper that definitely shows that 

28 

there is a gap in family program services between what the Coast 

Guard gets and what the Department of Defense family services 

are. That is just wrong. My wife hounds me up and down about it. 

For instance, I will just throw this out, the Department of Defense is able because they have the money to engage in what is 

called Military One Source which is a referral for many different 

support services for military families. The Coast Guard has a referral service. It is called EAP. My wife calls it the economy model. 

This is one of the differences: With EAP, you can get six referral 

visits to, say, get counseling for a number of issues. With Military 

One Source you get 12, which enables you to really get with a 

counselor and get to the meat of the problem. 

In this type of thing, we definitely need equity and we need to 

move closer to equity. One of the things is language. Another thing 

is we just need to work very hard to get funding for our work/life 

programs. 

Mr. LOBIONDO. So there is a list you can provide us of the authorities that we should look at changing? 

Master Chief BOWEN. Well, there is a paper that was given to 

the White House regarding the parity issue. But I don’t know that 

it is specific enough for what you are asking. 

Mr. LOBIONDO. OK. Well, very directly with the Defense Authorization Bill coming up we need to know what we maybe can fix this 

year by language so we don’t miss this opportunity with the Defense Authorization Bill this year. I would be willing to take that 

as a personal mission, being on that Committee. 

Admiral ALLEN. Yes, sir. We would be happy to create what I 

will call the art of the possible this year. We will also give you a 

copy of the paper that our spouses provided to the First Lady. 

Mr. LOBIONDO. OK. Thank you Mr. Chairman. 

Mr. CUMMINGS. Thank you. Mr. Taylor? 

Mr. TAYLOR. Thank you Mr. Chairman. Commandant, Chief, 

thank you for sticking around. Master Chief, that was a great 

statement you made a few minutes back. 

Chief, I am curious in your travels. I also serve on the Armed 

Services Committee. We are blessed with both Coast Guards and 

a large contingency of Navy in my district. Several of the Navy 

commanders have brought to my attention the high cost of wind insurance for those people who live on the local economy. Seeing as 

how the Coast Guard is in coastal America and that the insurance 

industry has pulled out of costal America, do you hear much of that 

from your folks who live on the local economy? 

Master Chief BOWEN. Sir, I think it is a rising problem, certainly. 

Say in Florida, many insurers have actually pulled out of there. It 

is not something that is brought up to me every day, but I am 

aware that it is rising problem because we have to move our people 

there and they have to live there. So they need to have affordable 

insurance. 

Mr. TAYLOR. Commandant, the other day a professional maritime 

operator stopped me and posed what I thought was a very smart 

question. That is why do we this late in the game still have two 

sets of rules for inland waters and western rivers with two sets of 

lights and two different documentations? Again, I didn’t have a 

29 

good answer for him, quite honestly. So I am asking you, the expert. 

Admiral ALLEN. I think the first time I had that question was 

when I was trying to learn the rules of the road as a Cadet. Can 

I go back and think about that? I am not sure that isn’t a good 

point. 

Mr. TAYLOR. Would you have someone consider that? Because 

again, I also had to memorize those rules many, many years ago. 

I just wonder if it wouldn’t make sense just to go to inland waters 

for everything. Could you can get back to me on that, again just 

in the name of standardization? 

Admiral ALLEN. Yes, sir. The only comment I would make is we 

do have a nexus now with the International Navigation Rules and 

the International Regime as well. But I would be happy to get back 

and give you some ideas on that, sir. 

Mr. TAYLOR. All right. The third thing goes to the failed 123 Program. The more I learn about it, I have to admit that as a taxpayer, the angrier I get. I will just say that up front. 

Number one, it was a performance specification. Then when the 

performance specification didn’t work, we pay apparently—and 

please correct me—we paid the contractor again to weld some plate 

along the gunnels to try to stiffen the hulls. This was to the tune 

of about $130,000 per boat times $8 million. Then we apparently 

we took it to a second yard and had many of these vessels replated, 

which I am certain with my limited legal knowledge, I strongly suspect is going to void the warranty at the first yard. That is just my 

opinion. 

What is being done? Number one, that contract had to have been 

horribly flawed for our Nation to have to pay that contractor in the 

first place to make the changes to a performance specification ship 

that didn’t perform. You would think that under normal circumstances that would have been their cost to fix it and their cost 

to continue fixing it until the ship worked. You would think someone in the acquisition community would have said, don’t take it to 

a second shipyard because we may void our warranty. 

What changes have been made? That is water under the bridge. 

What changes have been made so that you can assure me that this 

isn’t going to happen again? 

Admiral ALLEN. Yes, sir. We have had this discussion before, sir. 

I think one of the frustrations you had, let me talk about water 

under the bridge just for a little bit, I think there has been general 

frustration in the Congress and with everybody related Deep Water 

about what I would call a single point of accountability. So you go 

back and find out when the decision was made, who is accountable, 

why didn’t they perform, how you are going to hold them accountable, and what you are going to do about it. It was so diffuse and 

the contract structure was so vague about those types of responsibilities that I am not sure we are ever going to be able to figure 

that out. 

One thing we do know, if you have a technical authority established independent from the program people who are acquiring the 

vessel who are the ones who have to certify that the performance 

specification has been met in all technical ways, whether you are 

talking about hull and engineering, you are talking about the senVerDate Aug 31 2005 10:22 Apr 13, 2011 Jkt 000000 PO 00000 Frm 00045 Fmt 6633 Sfmt 6633 P:\DOCS\49951.TXT JEAN
30 

sors, you are talking about even the personnel accommodations associated with that, if there is a separate technical authority that 

is warranted to protect those interests then you get performance 

out of the acquisition. 

The new acquisition structure we have formed places a technical 

authority in a position to make sure the requirements are met. 

Those are dictated to the program manager that has to execute 

them to technical specifications. 

Many times, in fact more often than not, we will pull in partners 

to help us, whether it is the folks up at Carderock with the Navy 

or the American Bureau of Shipping. We use a lot of partnerships 

to ensure that the technical requirements are met. 

I believe that the modernized Coast Guard with the product line 

management scheme that we have set up, the Service Forces Logistics Center that we have now in Curtis Bay, is the right organizational model that could have helped people or succeeded at the 

start. I have held for a long, long time that if you are going to 

award a contract to Integrated Coast Guard Systems you had better damn well have an integrated Coast Guard. We did not. 

Mr. TAYLOR. As far as your legal staff, I really am amazed that 

that contract was allowed to become law without someone raising 

a flag that, hey, if they screw up building this thing, they ought 

to pay. As far as the legal end of it, is that part of—again, going 

forward—is that part of your contracting psyche changed so that 

the next time we build a cutter? 

Admiral ALLEN. Absolutely, sir. The other thing is, as I mentioned earlier, it is getting out of a cost plus contract environment 

to fixed price where the risk is assumed by the contractor, sir. 

Mr. TAYLOR. And going forward, that could be the case? 

Admiral ALLEN. Yes, sir. 

Mr. TAYLOR. OK. 

Mr. CUMMINGS. The gentleman’s time is expired. 

Mr. TAYLOR. Thank you, Mr. Chairman. 

Mr. CUMMINGS. Thank you. Mr. Coble? 

Mr. COBLE. Thank you, Mr. Chairman. 

Master Chief, the distinguished gentleman from Washington 

started the question on housing. The Chairman and the Ranking 

Member picked up on it. I want to continue it because I believe 

that second only to safety, I know of no more issue any more pressing or important than housing. Good housing is a direct contributor 

to high morale. 

In your statement you indicated your concern, and I share that 

concern, about the state of Coast Guard owned housing. The average age is in excess of four decades and not unlike many cutters 

in the Coast Guard fleet, getting older. 

We have a good number of DOD bases in my State of North 

Carolina and, as you know, in your State. But the Department Of 

Defense has been very successful in using public/private venture 

housing authority to improve the quality of their housing facilities. 

While I know you all have many demands on your budget and 

that you may not currently have the resources to commit, would reauthorization of public/private venture housing authority for the 

Coast Guard be an important first step towards improving the 

31 

state of your housing and the quality of life for your shipmates and 

their families? 

Master Chief BOWEN. Yes, sir. I thank you for the question. It 

absolutely would. I would like to continue with saying that public/ 

private venture is now a proven way using mostly private money 

to renew these houses. And that is, Mr. Chairman, the reason why 

I probably looked a little taken aback when you made your statement. It is because I didn’t ask for money. 

That is the beauty of this. It doesn’t take a huge amount of Government money. As long as there aren’t failures, and there haven’t 

been, most of it is private money. It can be done. They are over 80 

percent complete, all houses in the continental United States and 

DOD. 

Mr. COBLE. Thank you, Master Chief. 

I will put this question, Mr. Chairman, to the Commandant and/ 

or the Master Chief. And maybe it has already been answered. You 

all fielded a lot of questions today. But could you all provide background information on your efforts to privatize family housing and 

your requirements for achieving parity with the Department of Defense? Could you all do that? 

Master Chief BOWEN. Yes, sir. We could. 

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

yield back, Mr. Chairman. 

Mr. CUMMINGS. Thank you very much. Mr. Larsen, you don’t 

have anything? Very well. 

Thank you all very much. We really appreciate it. 

We will now call the Commissioners of the Federal Maritime 

Commission: Commissioner Joseph E. Brennan, Commissioner 

Harold Creel, and Commissioner Rebecca Dye. Thank you all for 

being here. It is my understanding that you will be speaking for 

the Commission. 

Mr. Brennan, Ms. Dye, and Mr. Creole if you have anything to 

say, you are welcome to. Mr. Brennan? 

TESTIMONY OF JOSEPH E. BRENNAN, COMMISSIONER, FEDERAL MARITIME COMMISSION; HAROLD J. CREEL, JR., COMMISSIONER, FEDERAL MARITIME COMMISSION; AND REBECCA F. DYE, COMMISSIONER, FEDERAL MARITIME COMMISSION 

Mr. BRENNAN. Mr. Chairman and Members of the Subcommittee, 

thank you for the opportunity to present the President’s budget for 

the Federal Maritime Commission. Two other Commissioners are 

here today, Rebecca Dye and the former and esteemed long term 

Chairman who will soon be leaving the Commission, Harold Creel. 

He is well known to many on this Committee. 

The FMC is an independent regulatory agency with 120 employees. The main responsibilities of the Commission are to first, enforce the commercial conduct in the transport of containers internationally; second, to stop unreasonable price fixing agreements of 

ocean carriers of marine terminal operators; third to ensure that 

passenger vessels have adequate financial resources to repay passenger deposits when a voyage is canceled and to pay judgments 

for personal injury or death of a passenger; and fourth, to take acVerDate Aug 31 2005 10:22 Apr 13, 2011 Jkt 000000 PO 00000 Frm 00047 Fmt 6633 Sfmt 6633 P:\DOCS\49951.TXT JEAN
32 

tion against foreign practices that are unfavorable to American 

shipping. 

For the fiscal year 2010 the President’s budget provides for $24.6 

million for the Commission. This represents an increase of about 

$1.8 million. Most of our spending relates to mandatory and nondiscretionary expenses such as salary and rent. The requested increase is due to two main expenses, pay increases in benefits and 

funds to keep the Commission up to date in information technology. 

Now with regard to the state of the shipping industry, I have a 

few key figures. Last year about 15 million containers came in and 

out of the Country. About 2,200 container vessels called at U.S. 

ports. The number one U.S. export by volume, very sadly, continues 

to be waste paper. In fiscal year 2008, the volume of U.S. container 

exports grew by 15 percent and imports decreased by 6 percent. 

However, the demand for cargo fell sharply last fall and continued to decline this year. In February of this year 2009, the total 

volume of U.S. container exports dropped an alarming 33 percent 

over February of 2008 while imports fell 25 percent. With the decrease in demand, there is a surplus of vessel space and freight 

rates have fallen. I would say several hundred container ships lie 

idle now. 

In the fall of 2008, the European Union repealed most anti-trust 

immunity for container operations in the European trades. The 

Commission will study the impact of Europe’s action and will share 

that study in a report to the Congress. 

Over the past year, the Commission has continued to watch and 

study international container transport as it relates to the Shipping Act. We have focused on the competitive impact of carrier or 

terminal operator agreements having rate making authority or 

high market share. 

The last time we were here, questions were raised about employee satisfaction at the Federal Maritime Commission. I am 

pleased to report that in the 2008 Federal Human Capital Survey, 

the responses of FMC employees were again more positive than the 

Federal average. For over 95 percent of the questions asked, 71 out 

of 74, the responses of the Federal Maritime Commission employees were more positive than the Federal average. The 2008 Survey 

shows that FNC employees like the work they do and improved the 

Commission’s performance in recruitment, employee development, 

and employee retention. 

The Independent Partnership for Public Service has invited the 

FMC to receive an award on May 20th of this year at the release 

of the 2009 Best Places to Work in the Federal Government, kind 

of a long way since a year ago. 

The Survey results and the Best Places to Work award I think 

confirm that the Commission is moving in the right direction. 

Mr. Chairman and Members of the Subcommittee, thank you for 

supporting the important work of the Federal Maritime Commission. I respectfully request on behalf of the Commission favorable 

funding consideration for 2010. Now I and my fellow Commissioners are ready to try to answer any questions you might have. 

Mr. CUMMINGS. Mr. Creel? 

33 

Mr. CREEL. Thank you, Mr. Chairman. I ask just a moment, if 

I may. Mr. Chairman and Members of the Subcommittee, I am 

pleased to appear before you today with my colleagues to discuss 

the President’s fiscal year 2010 budget for the Federal Maritime 

Commission. 

This will likely be the last time I appear before you as a Commissioner since I will be leaving the Commission next month to pursue 

new ventures in the private sector. It has been and honor for me 

to serve on the Commission since 1994 and to serve as Chairman 

from 1996 to 2002. I am pleased to say I was the longest serving 

Chairman in the history of the agency, beating out my good friend, 

Helen Bentley’s record by a matter of a few days. As you can imagine this is a thorn in Helen’s side and she hits me with her cane 

every time that I remind her of it. 

Mr. Chairman, I would take this opportunity to thank you and 

the Subcommittee for your support and guidance over the years. I 

also want to impart to you my belief in the importance of the mission of the Federal Maritime Commission, and that is regulation of 

the ocean borne transportation and the foreign commerce of the 

United States. 

As an independent agency, the Commission is in the unique position of ensuring that our Country’s international trade is fair and 

unfettered by noncompetitive conditions or the unfair shipping 

practices of foreign countries. After all, the vast majority of goods 

coming into this country come to this Country on a ship. Most 

Americans don’t even realize that. One reason the consumers are 

not aware of that is because the industry works. While occasionally 

there may be hiccups in the system that cause delays, generally 

goods flow into the Country freely and unencumbered. Therefore 

the American consumer has little reason to inquire about how 

goods are delivered. 

I want to take the opportunity to thank my fellow Commissioners 

for many years we have worked together. You should know that 

the staff at the FMC is an extremely well qualified and dedicated 

bunch who are proud of the work they do in the service of the 

Country. 

Mr. Chairman, I wish you, all the Members of the Subcommittee, 

and the Federal Maritime Commission fair winds and smooth sailing. Thank you, sir. 

Mr. CUMMINGS. Thank you very much. Ms. Dye? 

Ms. DYE. Thank you Mr. Chairman. I heard you mention earlier 

the benefits of constructive criticism. I want to tell you that we 

have taken your suggestions from the last hearings to heart. I believe we have improved working conditions and operational efficiency of the Federal Maritime Commission to the benefit of the 

folks at the Commission and the American consumer. 

Thank you for having me here today. I want to compliment Commissioner Creel. I know that I speak for everybody at the Federal 

Maritime Commission that it is tough for us to tell him goodbye. 

He has been an excellent Commissioner and Chairman before my 

term. We appreciate his service. Thank you again. 

Mr. CUMMINGS. Thank you very much. I just want to thank all 

of you for what you do. We thank you. 

34 

Mr. Creel, since you are leaving, I want to thank you. I may not 

have a chance to do this again in a public forum like this. I want 

to thank you for all that you have given. 

This kind of service to the public is not always easy. I think that 

you folks are exposed to the public, while they could do some other 

job and nobody would ever have an idea of what they are doing. 

But the fact is that you are giving a lot and we do appreciate you 

very much. 

I just want to ask a few questions. But first I am going to yield 

to my colleague Mr. LoBiondo. 

Mr. LOBIONDO. Thank you Mr. Chairman. I too want to join with 

you in thanking Commissioners for your work. I had a chance to 

work with Commissioner Dye on the Subcommittee before she 

moved over. Mr. Creel, I worked with you for a long time. I wish 

you all the best. I thank you for your service. It is a great record 

that you have accomplished. Mr. Brennan, I look forward to continuing to work with you. 

I had one question that you sort of addressed. That had to do 

with the price fixing. I think you indicated that you are going to 

be studying what has happened with the Europeans to determine 

if that makes sense for us to proceed in that way here? Is that 

what I understood you to say? 

Mr. BRENNAN. Yes, the staff is working on that to analyze what 

will the effect be, will it result in less service, increased cost, or 

just what. So we are very conscious of that. I think Commissioner 

Dye recently went to England to make some observations. 

Mr. LOBIONDO. Commissioner Dye, do you have anything that 

you would like to add? Because without studying it, it seems like 

it is not necessary. That is the reaction that I have. I would hope 

that we don’t have some long drawn out study that comes back and 

tells us that yes we can do this and find out we maybe could have 

been saving money or encouraging more goods transported. 

Ms. DYE. Yes sir, I understand. I did have the benefit of speaking 

in London to the Europeans about the recent changes in their system, their elimination of the competition exemption and how we 

could harmonize the two systems to make sure that international 

ocean shipping proceeds unaffected. The Commission has analyzed 

all of our existing agreements to make sure that there are no problems between the two existing systems. 

Of course we deregulated substantially in 1998. So we like to say 

we were actually ahead of the Europeans. A shipper recently said 

to me while the Americans have allowed the Europeans to kick in 

the door, we loosened it substantially and they took it to the next 

step. 

Of course we will be analyzing the benefits of the system here. 

We won’t take years. But we will have to get some experience with 

the European system before we have good hard data to analyze. 

Thank you. 

Mr. CREEL. Could I just add to that? One thing that sort of 

clouds the issue at the moment is this economic downturn and determining whether what the Europeans have done has resulted in 

benefits to the consumer or not. Across the board the numbers are 

down tremendously as Commissioner Brown just said. It is not a 

35 

market that we have seen in a long time and so I think we have 

to be considerate of that in doing our study. 

But we are just at the point now where we are laying out the 

parameters. We will have two years, the first year of experience 

under the European regime and then the second year to be able to 

make up a realistic judgment as to the effect of that. 

Mr. LOBIONDO. Thank you. Thank you, Mr. Chairman. 

Mr. CUMMINGS. Thank you. I want to go back to this 2008 Federal Human Capital Survey showing a 20 percent increase in satisfaction with the practices and policies of the FMC senior leaders, 

an 11 percent increase in job satisfaction, and a 17 percent increase 

in satisfaction with employee training. That is simply astounding 

One of the things that happens is that when people get used to 

voting negatively, it is hard to get out of it. In other words, there 

is a presumption that things are going to stay the same so people 

have a tendency to vote the same way no matter how much you 

do. First of all, I congratulate you all because I know you all 

worked so hard on that. I’m just wondering what do you attribute 

these increases to? Anybody want to go first? Ms. Dye, I see you 

smiling. 

Ms. DYE. We all worked very hard Mr. Chairman. For myself, I 

think that we have a greater openness at the Commission in our 

decision making process. We have worked hard together to reach 

the best decisions for the Commission and their staff. The most important thing that I was pleased to see is that we began regular 

open meetings. 

Our decision making process is open and everybody is heard before we reach a decision. Of course not everybody’s opinion is accepted but everybody’s opinion is heard at those times. And we all 

get the benefit of those. If I had to point to one most important 

change I would say that is it. 

We also filled a lot of personnel positions. We got staff back up 

as quickly as we could. We filled a couple of important positions 

with excellent folks. 

Right off the top of my head I would have to say those are the 

things that I would point to first. Thank you. 

Mr. CUMMINGS. Mr. Creel? 

Mr. CREEL. Yes, sir. I think that as Commissioner Dye says we 

have been open. 

As you said, you can continue along your way doing the same 

thing in the same way and think that you are getting the word out 

that we value the work of the staff. But sometimes that is not the 

message that is being received. I think that it takes an initiative 

to make them realize that and to be proactive in that. 

We have done that, whether it is through the SES Candidate Development Program at the very top, or whether it is our Emerging 

Leaders Program at sort of mid-level, or the term of ours is upward 

mobility for the GS–9 and below. I use upward mobility broader 

than that in speaking. 

Upward mobility has been one thing that I have been very concerned about because we are a very small agency. It is difficult to 

give people encouragement that they can move up. But we have 

seen that in the last year and we have made a concerted effort. You 

can’t make jobs out of something that is not there but you can be 

36 

cognizant of it whenever there is a job opening. And we have seen 

that over the last year. We have had folks moving into positions 

who have been with the Commission for a long time and tapped out 

at a certain level. They then been able to move up into a more professional level. And that is very rewarding, not only to that person 

but I think to others who see that. 

Mr. CUMMINGS. We will get to you in a moment, Mr. Brennan. 

What you just talked about Mr. Creel is something called hope, 

really. When people feel that they can move forward, even if they 

don’t move forward, if they see somebody in their sphere moving 

forward I think the natural inclination may be some envy. But 

then they back off and they look and say, you know what, it is 

probably a good decision that Mary moved up. But you know what, 

I’m going to be the next one. 

But if they never see that, then the question is do I stay where 

I am or do I move on? 

Mr. CREEL. That is when you lose some of your best. 

Mr. CUMMINGS. Right. Then they say, I only have one life to live. 

This is no dress rehearsal. This is that life. So since this is that 

life, I am moving on. 

Mr. CREEL. Excuse me, sir, but I would just point out here that 

the response to one of the questions was that ‘‘promotions in my 

work unit are based on merit.’’ We went up 24.2 percent in that 

category. 

Mr. CUMMINGS. Say that one more time. 

Mr. CREEL. ‘‘Promotions in my work unit are based on merit,’’ 

there we are 24.2 percent increased. 

Mr. CUMMINGS. What you just said is very powerful. People want 

to know if they put out the effort somebody is watching with a possibility, not necessarily the probability, but the possibility that it 

may yield a promotion. 

But if I remember your testimony before, you all talked about 

how you had a lot of very dedicated employees who really wanted 

to be there but at the same time seemed like they were hitting a 

brick wall. 

Mr. CREEL. If I could, I would just lead with another one that 

is even better than that. ‘‘How satisfied are you with the recognition you received for doing a good job?’’ We are up on that as well. 

Mr. CUMMINGS. Yes. It is nice to hear some good news. 

Mr. BRENNAN. I would say that one of the things that contributed to the increased morale is the meetings every other week. Virtually the entire agency is there—it is a small one—for the first 

part of the meeting. Then some parts are closed and they go out. 

But they feel like they are more part of a team. 

But I would say, you mentioned hope. If I were starting over in 

Government and could roll the clock back 40 years, I think the 

FMC is a great place to work because I think there is upward mobility. Of 120 people, there are five SESs. Some of them come in 

at the lowest level. Also in a small agency, if you do a good job, 

you are quickly recognized and you can move ahead. I think it is 

a terrific agency to work at. That is my view. 

Mr. CUMMINGS. You know, I am going to be giving some graduation speeches. As a matter of fact, on Friday I am speaking at the 

University of Maryland Law School. I am going to pull some stuff 

37 

from this report because I think it has a lot to do with how these 

folks will go out being leaders. They need to remember the people 

who they may be supervising or what have you. It is very significant. 

Mr. Larsen? 

Mr. LARSEN. Thank you, Mr. Chairman. Commissioner Dye, as 

you are looking at the implications of the EU’s decision, or whomever can answer this best, obviously you are going to know a little 

bit more about this than I will, considering impacts on the East 

Coast of the U.S. versus the West Coast of the U.S., I am just 

checking now to see if there are any impacts on the West Coast as 

well as you are moving forward in looking at this. 

The second question has to do with today’s state of the economy. 

The ports of my district in Washington State are seeing it like any 

other point with 20 to 30 percent decreases in activity coming in 

and going out. That is reflected in trade numbers all over the world 

as well. 

One of the concerns I have as we look at the potential global economic recovery, as we hit a bottom and come out of that, especially 

on the West Coast what is the impact that State owned or State 

operated carriers have? Do they have a different advantage over 

private common carriers? As well, does this global economic recession give folks an opportunity to establish barriers to access to protect themselves better as we recover? Do you have some thoughts 

on that? 

Ms. DYE. Thank you, Mr. Larsen. It is interesting that you would 

ask about controlled carriers because we have just had this conversation before I came over today. Obviously, during a time of economic uproar, it is our responsibility to keep on top of those developments. We started last fall to have regular briefings from the 

staff on the effects of the downturn on all of our stakeholders 

across the board. 

One of the things that we have been watching with controlled 

carriers is contract prices. We haven’t seen any evidence yet that 

any controlled carrier has actually used unfair advantage against 

American or for that matter any other interests. In fact, those carriers have seen a decrease in their revenues as well. 

Mr. LARSEN. Is that something then you will continue to evaluate 

as you move forward? 

Ms. DYE. Yes, of course. 

Mr. LARSEN. That is really just a couple of thoughts I had, Mr. 

Chairman. I appreciate it. 

Ms. DYE. Thank you. 

Mr. CUMMINGS. Again, I want to thank you all very much. Mr. 

Brennan and Ms. Dye, continue on. I am sure that you will be 

joined by others soon. To Mr. Creel, again, I thank you very much. 

You are now dismissed. 

We will now call up Mr. David Rivait who is the Associate Administrator for Budget and Programs and Chief Financial Officer 

of the Maritime Administration. You have a whole room to yourself. 

Mr. RIVAIT. I am feeling a little lonely down here, Mr. Chairman. 

Mr. CUMMINGS. You may proceed. 

38 

TESTIMONY OF DAVID J. RIVAIT, ASSOCIATE ADMINISTRATOR 

FOR BUDGET AND PROGRAMS AND CHIEF FINANCIAL OFFICER, MARITIME ADMINISTRATION 

Mr. RIVAIT. Mr. Chairman, Mr. LoBiondo, Mr. Larsen it is a 

pleasure being here today. My name is Dave Rivait. I am MariAd’s 

Associate Administrator and Chief Financial Officer. I am here to 

present the Maritime Administration’s 2010 budget request that 

we received from annual transportation appropriations. In 2010, the President is requesting $345.5 million for the Maritime Administration, an increase of 3.6 percent over the 2009 enacted level. That is excluding those funds we received from supplemental appropriations for the Economic Recovery Act. 

In 2010, the Maritime Administration has three principle initiatives that are highlighted in more detail in my written testimony. 

Let me just briefly summarize them here. First, a $15 million increase is included for a Secure and Efficient Ports Initiative which 

is part of a larger initiative that is also funded within the Department of Homeland Security. Second, the budget includes a program 

increase of $12 million to enhance programs at the U.S. Merchant 

Marine Academy in New York. Third, our request includes an increase of $1.1 million to enhance our support to the six State maritime academies across the Country. Let me just give you a bit more 

detail on each of those three items. 

First, in the Secure and Efficient Ports Initiative, the $15 million 

program that I mentioned is going to be managed through our Office of the Associate Administrator for Intermodal Systems Development. As I said, it is in partnership with the Department of 

Homeland Security, which includes $10 million in their budget for 

this program. The principle focus of this effort is in considering 

major port improvements around the Country. This Initiative is 

going to help identify strategies for integrating security considerations into projects improving port capacity and efficiency. 

The main way we are going to do this through these new monies 

is to provide Federal assistance for studies and joint planning that 

will assist in preparing for the larger infrastructure expenditures 

that would be forthcoming for some of these major port improvements. These sorts of study efforts would focus on some of the program areas that are of keen interest to the Maritime Administration, particularly the consideration of links for coastal and inland 

ports to highways and rail as well as increased use of the marine 

highway system. 

That could have an important security nexus by, for example, 

moving hazardous materials and hazardous freight away from surface modes and onto what are now underutilized marine corridors. 

The second major initiative in the budget is additional funding for the U.S. Merchant Marine Academy, an increase of $12 million, 

bringing the total funding for the Academy in 2010 to $74.4 million. This includes an additional $4.8 million to support the operations of the school as well as an additional $7.2 million to enhance 

the school’s capital improvement program. That brings total funding to $15.4 million. 

I wanted to briefly mention as part of my presentation on the 

Academy that the school has experienced some significant financial 

management and internal control weaknesses that we identified 

39 

last year and brought to the attention of the Congress. These matters as well as others are now the subject of a GAO audit that has 

been ongoing since July. We expect results from that audit to be 

delivered to the Secretary and to Congress within the next many 

weeks. I would be happy and prepared to discuss those additional 

issues with the Committee. 

Finally, the last major initiative that is included in the budget, 

as I had mentioned previously, is an increase of $1.1 million so 

support the State maritime academies, bringing total funding to 

$15.6 million. This increase will principally support first an increase to student incentive payments. This is direct assistance to 

cadets attending these schools. The last Congress enacted legislation that allowed an increase in the annual payment that we could 

make to each of these students. So this additional funding is in 

part to help support that. 

In addition, there is additional money included in the budget for 

school ship maintenance and repair. Each of these six State maritime academies have a Federal ship that is owned by the Maritime 

Administration that we make available to these academies. This 

funding will help support the adequate maintenance and repair of 

those ships for the safety of the cadets. 

Those are my brief oral comments. I have a longer written statement I would like to submit for the record. I am ready to answer 

your questions. 

Mr. CUMMINGS. Thank you very much. Mr. Taylor wanted us to 

ask you—he had to leave to go to another hearing—but he wanted 

to ask how much Title 11 funds do you currently have in hand? 

How much do you expect to expend this year? 

Mr. RIVAIT. Mr. Chairman, I don’t have a good answer for you 

in terms of our plans for spending this year. Perhaps we can get 

a response quickly for the record. 

But I can tell you that we do have a balance available. Last year 

we received through the Department of Defense resources that 

were designed to support the Title 11 program, $48 million. Of that 

balance, we have only utilized $3 million of the $48 million as supporting loan guarantees. So there is still a balance of $45 million 

that remains available to support additional loan guarantees. 

Mr. CUMMINGS. Is that why the Administration did not request 

in increase in this program in fiscal year 2010? 

Mr. RIVAIT. I think that is one of the principal increases apart 

from some of the tough trade offs that were made in the budget. 

It was also the case that we did have resources that would support 

additional loan guarantees from the prior action. 

Mr. CUMMINGS. Mr. LoBiondo? 

Mr. LOBIONDO. Mr. Chairman, I really don’t have any questions. 

Mr. Rivait, I want to thank you for your presentation. I want to 

thank you for your service and keeping things moving forward. 

Thank you, Mr. Chairman. 

Mr. CUMMINGS. Mr. Larsen? 

Mr. LARSEN. Thank you, Mr. Chairman. Can you talk a little bit 

about the assistance to small shipyards program? It is a little bit 

in your testimony. Discuss the timeline for the fiscal year 2009 

money as well as the timeline for the ARRA era money. 

40 

Mr. RIVAIT. Sure. I can tell you the Secretary places a very high 

priority for all of the economic assistance money getting obligated 

and out as quickly as possible. For the $100 million, $2 million of 

which is being reserved for administrative expenses so $98 million 

in the shipyard loans from the supplemental appropriation, there 

were 451 applications. Many of these our Associate Administrators 

who have briefed us on this indicate are quite strong. They are in 

the process now of plowing through those. We expect to essentially 

make awards all at once sometime around the middle to third week 

in August. The $17.5 million that was appropriated for the program essentially through regular appropriations, applications for that program 

were actually due earlier this week. I believe the number was 75 

applications for that $17.5 million. We are on a timeline that is actually to make awards for that program I think a bit earlier than 

the August timeframe. But I would say to call it late July. That 

is the time period we are on right now. 

Mr. LARSEN. Just to clarify, it was the stimulus package for the $100 million? 

Mr. RIVAIT. Yes. 

Mr. LARSEN. Right, OK. Can you talk as well about piracy? We 

are having a hearing next week. Thanks to the leadership of the 

Chairman, the Subcommittee is continuing to not just monitor piracy but also to consider the roles that you all, the Coast Guard, 

and the Navy as well are playing in that. Could you update us in 

MariAd’s continued role in the training and best practices development for industry? 

Mr. RIVAIT. Well, I can say that I am not the piracy expert for 

our agency. 

Mr. LARSEN. OK, let me ask how much money are you spending 

on developing practices? 

[Laughter.] 

Mr. RIVAIT. Well, we are spending no more than we usually 

would. It is part of our base resources, what we are accomplishing 

this through. 

But MariAd has been very involved with industry and other government partners in the international community in both developing and disseminating best practices. I think one of the areas 

that we have been actively involved with is working with the Naval 

Investigative Service on anti-piracy assistance teams. These actually assist shipping companies in examining the capacities of individual vessels in order to make recommendations that would make 

them less vulnerable and often times would not cost a lot of money. 

Mr. LARSEN. Thank you very much. Thank you very much, Mr. 

Chairman. 

Mr. CUMMINGS. I have just two quick things. Do you know how 

many U.S. flag vessels transit the Horn of Africa region on an annual basis? 

Mr. RIVAIT. I have seen different numbers. But in the Gulf of 

Aden there may be on any given day 50 to 60 ships that are 

transiting the region. So that would be something on the order of 

around 20,000 or a bit more per year. I can say that on any given 

day, of those 50 or so ships one of them is likely to be a U.S. flag 

vessel. 

41 

Mr. CUMMINGS. What impact is the increase in piracy in the 

Horn of Africa having on insurance and related costs charged to 

U.S. flag vessels? 

Mr. RIVAIT. Mr. Chairman, I don’t have the specifics for you in 

terms of what the difference would be other than to represent that 

I know there has been an impact on insurance that shipping companies are paying in order to travel through that region. But we 

can provide those greater details for the Committee. 

Mr. CUMMINGS. I appreciate it. We will be submitting some other 

questions also. 

Thank you very much. This hearing is ended. 

[Whereupon, at 5:10 p.m., the subcommittee was adjourned.] 

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