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[Senate Hearing 107-959]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 107-959

                   NOMINATION OF STEVEN ROBERT BLUST

                       TO BE COMMISSIONER OF THE

                      FEDERAL MARITIME COMMISSION

=======================================================================

                                HEARING

                               BEFORE THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                               __________

                              JUNE 5, 2002

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation

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                            WASHINGTON : 2003
____________________________________________________________________________
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           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

              ERNEST F. HOLLINGS, South Carolina, Chairman
DANIEL K. INOUYE, Hawaii             JOHN McCAIN, Arizona
JOHN D. ROCKEFELLER IV, West         TED STEVENS, Alaska
    Virginia                         CONRAD BURNS, Montana
JOHN F. KERRY, Massachusetts         TRENT LOTT, Mississippi
JOHN B. BREAUX, Louisiana            KAY BAILEY HUTCHISON, Texas
BYRON L. DORGAN, North Dakota        OLYMPIA J. SNOWE, Maine
RON WYDEN, Oregon                    SAM BROWNBACK, Kansas
MAX CLELAND, Georgia                 GORDON SMITH, Oregon
BARBARA BOXER, California            PETER G. FITZGERALD, Illinois
JOHN EDWARDS, North Carolina         JOHN ENSIGN, Nevada
JEAN CARNAHAN, Missouri              GEORGE ALLEN, Virginia
BILL NELSON, Florida

               Kevin D. Kayes, Democratic Staff Director
      Jeanne Bumpus, Republican Staff Director and General Counsel

                            C O N T E N T S

                              ----------                              

                                                                   Page
Hearing held on June 5, 2002.....................................     1
Statement of Senator Breaux......................................     1
Statement of Senator McCain......................................    11
    Prepared statement...........................................    11

                               Witnesses

Creel, Hal, Chairman, Federal Maritime Commission, FMC...........     2
Blust, Steven Robert, nominee to be Commissioner of the Federal 
  Maritime Commission............................................     3
    Biographical information.....................................     4

 
                   NOMINATION OF STEVEN ROBERT BLUST
                       TO BE COMMISSIONER OF THE
                      FEDERAL MARITIME COMMISSION

                              ----------                              

                        WEDNESDAY, JUNE 5, 2002

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:35 a.m. in room 

SR-253, Russell Senate Office Building, Hon. John B. Breaux, 
presiding.

           OPENING STATEMENT OF HON. JOHN B. BREAUX, 
                  U.S. SENATOR FROM LOUISIANA

    Senator Breaux. The hearing will be in order. This 
morning's hearing is for the confirmation of the nomination of 
Mr. Steven Robert Blust as our new Federal Maritime 
Commissioner. We are delighted to have him with us, and I 
understand your wife is with you, Mr. Blust. We are happy to 
have her here, and pleased to have you in attendance, and thank 
you for allowing him to serve.
    The Federal Maritime Commission, as everyone here knows, is 
a very important, independent commission. It is one that maybe 
the average person in Washington, the average person in the 
United States, does not understand, or is not very familiar 
with, but for those who are interested in trade, trading 
opportunities, fair trade, and level playing fields in the 
international arena, the Federal Maritime Commission obviously 
is very, very important.
    I want to congratulate Mr. Blust, you personally on your 
nomination, and also express my sincere appreciation on behalf 
of this Committee and, indeed, all Members of the Senate for 
your willingness to step out of the private sector and into a 
job that I am certain will pay a lot less financially, in terms 
of financial reward, but in terms of the challenges and the 
ability to do good things for your country and your nation, I 
know that it is a very rewarding challenge.
    The current Chairman, Hal Creel, is a good friend of this 
Committee and a good friend of mine, served on my staff as 
Counsel and Staff Director in his prior life. I understand that 
it is the President's desire that when you, Mr. Blust, join the 
Commission, you will begin service as the Chairman of the 
Commission. Hal has done a terrific job, and we appreciate his 
long service and the record that he has established in this 
very important position.
    I will just point out that the Commission has extremely 
important duties. Sometimes these duties have to be carried out 
with the honey and sugar approach, and sometimes you need to 
use the 2x4 approach. I think Hal has used both, from talking 
nicely to our trading partners and our port authorities around 
the world, to threatening to close the Port of Japan. We have 
done just about everything during your tenure, but that is the 
type of perspective that I think is needed in this very 
important position.
    I am delighted, Mr. Blust, that you are a person who comes 
to this nomination process with a great deal of professional 
credibility and background. You are not going to have a lot of 
on-the-job training, as Hal did when he got there. He knew what 
the Commission was about, and he had previously worked with the 
Commission. However, coming from your industry perspective, 
currently as manager of the Tampa Bay International Terminals, 
and prior to that, working for Lykes Brothers Steamship 
Company, the Port of Jacksonville, Crowley Maritime, Delta 
Steamship, and graduate of the Merchant Marine Academy. You had 
the good fortune of going to Louisiana, as Hal did, and 
receiving an MBA degree at Tulane in New Orleans. You obviously 
have the professional background, training, and educational 
experience I think that is needed in this job.
    No one can suggest that you are just a political appointee 
that they found a place for in the Administration. You are a 
professional, extremely well-qualified individual, and we look 
forward to having you in that position.
    I understand that Senator Bill Nelson from Florida was 
going to try and be here, but since he is not able, he sends 
his regards. I will ask Commissioner Hal Creel to have a word 
or two for introduction purposes. Hal.

               STATEMENT OF HAL CREEL, CHAIRMAN, 
                  FEDERAL MARITIME COMMISSION

    Mr. Creel. Thank you, Chairman Breaux. I am appearing 
before you today with the unusual task of recommending someone 
to replace me as Chairman. I cannot think of a better man than 
Steve Blust, to kick me out of a job of which I am so fond. 
Steve and I have had the chance to visit many times over the 
last several months, and I can tell you he is extremely 
qualified to be Chairman of the Federal Maritime Commission. 
His vast experience in both the terminal and the steamship 
sides of the business give him tremendous qualifications for 
that position. He understands the issues before the Commission, 
and he has the demeanor and the personal qualities, I believe, 
to be not only a good steward of the agency, but to be a leader 
as the agency enters a new era in the oversight of 
international ocean shipping.
    I have a lot vested in the FMC, and I want to see it and 
Mr. Blust succeed. I hope that you will favorably report him 
out of the Committee so I can start working with him, and that 
now I can be the one complaining about the Chairman, rather 
than the other way around.
    Thank you very much.
    Senator Breaux. Thank you very much, Hal, for attending and 
being with us once again.
    Mr. Blust, you are on board. Any comments you would like to 
make to the Committee?

        STATEMENT OF STEVEN ROBERT BLUST, NOMINEE TO BE 
        COMMISSIONER OF THE FEDERAL MARITIME COMMISSION

    Mr. Blust. Yes, Mr. Chairman, I do have an opening 
statement, if I may proceed with that. It is, indeed, an honor 
to appear before you and the other Members of the Senate 
Commerce, Science, and Transportation Committee as President 
Bush's nominee to be a Commissioner of the Federal Maritime 
Commission.
    During my life, I have been fortunate to have support from 
many individuals, including family, friends, colleagues, and 
alumni from the United States Merchant Marine Academy and 
Tulane University. I would like to publicly extend my thanks to 
them, and especially to my wife, Sharon, who is here today at 
the hearing, for all the support and help they have provided 
over the years.
    International ocean transportation is an industry that has 
played an important role in the history of this great land. 
From the arrival of the earliest explorers seeking new ocean 
routes for commerce, to the Boston Tea Party protest of unfair 
taxation on imports, and to today's global economy, our society 
and quality of life have benefited from international trade. 
Today, over 18 million TEUs of cargo move in the international 
commerce of the U.S. with a value of about $500 billion.
    The Federal Maritime Commission plays a crucial role in 
this marketplace by assuring that fair maritime competition 
exists, and that the maximum benefits of international ocean 
transportation are received by this nation at a minimum cost. 
The intent of our governing laws is to let the market forces 
guide the growth and development of U.S. international trade. 
The Federal Maritime Commission is charged with ensuring that 
there are no undue controls, influences, or non-market barriers 
imposed by any nation, carrier, cargo-owner, or intermediary 
which can affect U.S. ocean-borne trade.
    If I am confirmed by the Senate and designated as Chairman 
of the FMC, I will do all that I can to ensure that our U.S. 
exporters, importers, ocean transportation, intermediaries, and 
carriers are provided a fair and unencumbered operating 
environment in which to conduct their business in international 
trade.
    After graduation from the U.S. Merchant Marine Academy, my 
employment experience has been solely in the maritime industry. 
Many of the functions that I have performed in my career have 
been subject to the maritime laws and regulations that are 
administered by the Commission. I have extensive experience in 
the areas of ocean carrier liner trade management, marine 
terminal management, operations, public port administration, 
tariff and service contract use and publication, and liner 
operations.
    I believe that my diverse and proven background in the 
maritime industry will allow me to contribute to the efforts of 
the Federal Maritime Commission. The United States is a world 
leader in addressing international transportation issues. The 
Ocean Shipping Reform Act of 1998, OSRA, has proven to be a 
significant step forward for the U.S. international commercial 
sector. It has greatly benefited international trade by 
allowing shippers and ocean carriers to work more closely 
together through the use of confidential service contracts, to 
better meet the needs of both parties. Congratulations to this 
Committee for your wisdom and efforts in introducing and 
shepherding through the passage of OSRA.
    As a result of OSRA, the Federal Maritime Commission now 
focuses on marketplace trends for indications of disrupting and 
distorting practices adversely affecting U.S. international 
transportation. Upon our identifying adverse practices, the FMC 
can take appropriate steps initially through compliance efforts 
but, when required, through the use of penalties and sanctions 
to remedy the situation.
    OSRA has also strengthened the enforcement provisions of 
the Foreign Shipping Practices Act of 1988, thus giving the 
Commission greater ability to rectify unfair shipping practices 
of foreign countries and entities.
    In the area of transportation security, I will do all that 
I can to be certain that the Federal Maritime Commission works 
in concert with other agencies and Congress to ensure that the 
U.S. international commerce is conducted in a safe and secure 
manner.
    As a regulator of the business in which the FMC 
stakeholders operate and function, my relationship will be one 
of fairness and impartiality, combined with an understanding 
and support. I will strive to ensure that the stakeholders are 
allowed to function free from discriminatory practices, market-
distorting activities and, in the case of cruise passengers, 
protection from undue financial risk.
    Thank you for your time and consideration. I will be happy 
to answer any questions you may have.
    [The biographical information of Mr. Blust follows:]

                      A. BIOGRAPHICAL INFORMATION

    1. Name: Steven Robert Blust.
    2. Position to which nominated: Commissioner of the Federal 
Maritime Commission.
    3. Date of Nomination: March 14, 2002.
    4. Address: (Information not released to the public).
    5. Date and place of birth: December 5, 1948, Sheboygan, WI.
    6. Marital status., Married, Sharon Rose Buckel.
    7. Name and ages of children: Kristian Robert Blust, age 22.
    8. Education: Sheboygan Falls High School, 09/1963-06/1967, 
Sheboygan Falls, WI, H.S. Diploma, June 7, 1967; United States Merchant 
Marine Academy, 07/1967-06/1971, Kings Point, NY, Bachelor of Science, 
June 9, 1971; Tulane University, 01/1975-05/1979, New Orleans, LA, 
Master of Business Administration, May 11, 1979.
    9. Employment record: Tampa Bay International Terminals, Inc., 
Tampa, FL, 10/1996 to Present, President/CEO. Chief Executive Officer 
of transportation service corporation. Increased business volume and 
profitability through diversification and expansion, expanded marketing 
activity, and revised operational focus. Lykes Brothers Steamship Co., 
Inc. Tampa, FL/New Orleans, LA, 02/1987-09/1996, Vice President 
Partnerships, 1996. Sought and secured alliance agreements with 
partners on strategic and tactical levels. Improved performance through 
asset sharing, service coordination, cost reduction and business 
growth. Vice President Mediterranean Service, 1991 to 1996, Profit and 
lost; responsibility for an international transportation service, 1993-
1996. Directed all aspects of business, including cargo management, 
tariff filings, carrier agreements, operations, business development, 
sales, marketing, and logistics. Negotiated contracts with top 5 
accounts. Developed annual operating and strategic business plans. 
Decision-maker at owner meetings; Director Marketing and Pricing, 1989 
to 1990. Directed business development activities of transportation 
service. Developed market strategy program including customer 
acquisition, profit improvement and business growth. Directed 
conference representatives. Designed customer plans for both private 
and public sector clients; Director Liner Services, 1987 to 1989, 
Directed service operations, traffic and documentation departments. 
Jacksonville Port Authority, Jacksonville, FL, 05/1985-01/1987, General 
Manager, 1986 to 1987 Managed 300-acre multipurpose facility that 
included cargo transit terminals, manufacturing plants, auto processing 
facilities, regional offices, and military depots. Provided services to 
customers including facility development, site management, security, 
cargo operations. Director of Marketing, 1985 to 1986. Directed port 
authority business development for domestic and international markets, 
including sales activities, managed pricing functions, and represented 
port in international and regional forums; Crowley Terminal Operators, 
New Orleans, LA, 09/1984-05/1985, Terminal Manager, 1984 to 1985. 
Managed terminal operations, cargo handling and labor management, with 
staff of 25 employees; Delta Steamship Lines, Inc., New Orleans, LA, 
01/1974-09/1984. Assistant Director, 1982 to 1984 Directed container 
fleet management, cargo development, and pricing. Managed intermodal 
services, traffic management, tariff publication, and vessel operations 
1974-1982. Texas A&M University, Galveston, TX, 06/1973-12/1973. Ship's 
Officer, RV Alaminos. Watch standing ship's officer on research vessel, 
responsible for ship's navigation and maintenance. Performed ship 
maneuvers during research projects. Central Gulf Lines, New Orleans, 
LA, 10/1972-06/1973. Operations Assistant, Coordinated LASH barge fleet 
movement, inventory control, fleeting and cargo operations. Ann Arbor 
Railroad, Frankfort, MI, 07/1971-06/1972. First Class Pilot, Watch 
standing ship's officer responsible for cargo operations and ship's 
navigation on railcar ferries operated on Lake Michigan.
    10. Government experience: None.
    11. Business relationships: Tampa Chamber of Commerce International 
Committee Member 2001-Present; Hillsborough Community College, 
International Advisory Committee, Member 1999-Present; Enterprise 
Florida International Advisory Committee, Member 1999-Present.
    12. Memberships: Propeller Club of the United States, Vice 
President, Port of Tampa 2001-Present; Boardmember, Port of Tampa 1997-
2001, Tampa Bay Cargo Association, President, 2000-Present; Vice 
President, 1998-2000, U.S. Merchant Marine Academy Alumni Assn., member 
1971-Present; President, New Orleans Chapter, 1988-1989; Tulane 
University Alumni Association, member 1979-Present; Navy League member, 
2001.
    13. Political affiliations and activities: (a) List all offices 
with a political party which you have held or any public office for 
which you have been a candidate. None.
    (b) List all memberships and offices held in and services rendered 
to all political parties or election committees during the last 10 
years. None.
    (c) Itemize all political contributions to any individual, campaign 
organization, political party, political action committee, or similar 
entity of $500 or more for the past 10 years. Contributed $360/year to 
Lykes Bros. Steamship Co. PAC 1992-1994.
    14. Honors and awards: United States Merchant Marine Academy Alumni 
Association, Meritorious Alumni Award 1991; Propeller Club of the 
United States, Port of Tampa Maritime Person of the year, 2002;
    15. Published writings: None.
    16. Speeches: Provide the committee with two copies of any formal 
speeches you have delivered during the last 5 years which you have 
copies of on topics relevant to the position for which you have been 
nominated.
    While I have not delivered any formal speeches, I participated as a 
panel member at the Journal of Commerce Breakbulk Conference on 10/1/
2001 using informal notes.
    17. Selection: (a) Do you know why you were chosen for this 
nomination by the President? I believe that my extensive professional 
experience in the maritime industry, formal maritime and business 
education, as well as my involvement in professional and fraternal 
organizations, were recognized by the President as providing a valuable 
base upon which I could effectively function as a Commissioner of the 
Federal Maritime Commission.
    (b) What do you believe in your background or employment experience 
affirmatively qualifies you for this particular appointment? My 
employment experience, after graduation from the United States Merchant 
Marine Academy, has been solely in the maritime industry. I have 
extensive experience in the areas of ocean carrier liner trade 
management, marine terminal management, public port administration, 
tariff and service contract use and publication, and liner operations.
    Many of the functions that I have performed in my career have been 
subject to the maritime laws and regulations that are implemented by 
the Federal Maritime Commission, and my experience will be beneficial 
to me, if confirmed as a Commissioner.

                   B. FUTURE EMPLOYMENT RELATIONSHIPS

    1. Will you sever all connections with your present employers, 
business firms, business associations or business organizations if you 
are confirmed by the Senate? Yes.
    2. Do you have any plans, commitments or agreements to pursue 
outside employment, with or without compensation, during your service 
with the government? If so, explain. No.
    3. Do you have any plans, commitments or agreements after 
completing government service to resume employment, affiliation or 
practice with your previous employer, business firm, association or 
organization? No.
    4. Has anybody made a commitment to employ your services in any 
capacity after you leave government service? No.
    5. If confirmed, do you expect to serve out your full term or until 
the next Presidential election, whichever is applicable? Yes.

                   C. POTENTIAL CONFLICTS OF INTEREST

    1. Describe all financial arrangements, deferred compensation 
agreements, and other continuing dealings with business associates, 
clients or customers.
    (a) 401-K Defined contribution plan, Hartford Life, Tampa Bay 
International Terminals, Inc. (I will continue to participate. Neither 
I, nor my previous employer will continue to contribute).
    (b) Deferred Annuity, Equitable Life. Delta Steamship Lines 
terminated its retirement plan in 1985 and a deferred annuity was 
purchased from Equitable Life in Secaucus, NJ, which matures at 
retirement age.
    2. Indicate any investments, obligations, liabilities, or other 
relationships which could involve potential conflicts of interest in 
the position to which you have been nominated. None.
    3. Describe any business rellationship, dealing, or financial 
transaction which you have had during the last 10 years, whether for 
yourself, on behalf of a client, or acting as an agent, that could in 
any way constitute or result in a possible conflict of interest in the 
position to which you have been nominated. (a) Tampa Bay International 
Terminals, Officer of the company; (b) Tampa Port Authority, Tampa Bay 
International Terminals, performed terminal operations under agreement 
with the Tampa Port Authority; (c) Lykes Brothers Steamship Co. Inc., 
employee.
    4. Describe any activity during the past 10 years in which you have 
engaged for the purpose of directly or indirectly influencing the 
passage, defeat or modification of any legislation or affecting the 
administration and execution of law or public policy. None.
    5. Explain how you will resolve any potential conflict of interest, 
including any that may be disclosed by your responses to the above 
items. (a) 401-K Defined contribution plan, Hartford Life, Tampa Bay 
International Terminals, Inc. I will continue to participate. Neither 
I, nor my previous employer will continue to contribute. (b) Deferred 
Annuity, Equitable Life. Delta Steamship Lines terminated its 
retirement plan in 1985 and a deferred annuity was purchased from 
Equitable Life in Secaucus, NJ, which matures at retirement age. As 
this is a defined retirement program, it presents no potential 
conflict. (c) As required by 18 U.S.C. 208(a), I will not participate 
personally and substantially in any particular matter that has a direct 
and predictable effect on my financial interests or those of any other 
person whose interests are imputed to me, unless I first obtain a 
written waiver, pursuant to section 208(b)(1), or qualify for a 
regulatory exemption, pursuant to section 208(b)(2). I understand that 
the interests of the following persons are imputed to me: my spouse, 
minor children, or any general partner; any organization in which I 
serve as officer, director, trustee, general partner or employee; and 
any person or organization with which I am negotiating or have an 
arrangement concerning prospective employment. Upon confirmation, I 
will resign my position as President and CEO of Tampa Bay International 
Terminals, Inc. Furthermore, pursuant to 5 C.F.R. 2635.502, for 1 year 
after I terminate my position with Tampa Bay International Terminals, I 
will not participate in any particular matter involving specific 
parties in which Tampa Bay International Terminals is a party or 
represents a party, unless I am authorized to participate.
    6. Do you have any written opinions provided to the committee by 
the designated agency ethics officer of the agency to which you are 
nominated and by the Office of Government Ethics concerning potential 
conflicts of interest or any legal impediments to your serving in this 
position? Designated Agency Ethics Official of the Federal Maritime 
Commission, on March 15, 2002, issued a letter to the U.S. Office of 
Government Ethics, stating his opinion that the nominee will be in 
compliance with the conflict of interest laws and regulations that will 
apply to the nominee as a member of the Commission.
    Office of Government Ethics, on March 18, 2002, issued a letter to 
the committee stating that nominee is in compliance with applicable 
laws and regulations governing conflicts of interest.
    The General Counsel of the Federal Maritime Commission sent an 
opinion letter to the committee on March 20, 2002 stating his belief 
that nominee will be in compliance with the conflict of interest laws 
and regulations that will apply to the nominee as a member of the 
Commission if the nominee is confirmed.

                            D. LEGAL MATTERS

    1. Have you ever been disciiplined or cited for a breach of ethics 
for unprofessional conduct by, or been the subject of a complaint to 
any court, administrative agency, professional association, 
disciplinary committee, or other professional group? If so, provide 
details. No.
    2. Have you ever been investigated, arrested, charged or held by 
any Federal, State, or other law enforcement authority for violation of 
any Federal, State, county, or municipal law, regulation or ordinance, 
other than a minor traffic offense? If so, provide details. No.
    3. Have you or any business of which you are or were an officer 
ever been involved as a party in interest in an administrative agency 
proceeding or civil litigation? If so, provide details. Federal 
Maritime Commission Docket No. 99-22, Tampa Bay International 
Terminals, Inc. (TBIT) v. Coler Ocean Independent Lines Company 
(Coler). Agency decision found Coler in violation of the Shipping Act 
of 1984 and TBIT was awarded reparations in the amount of $30,647.07 
plus interest.
    4. Have you ever been convicted (including pleas of guilty or nolo 
contendere) of any criminal violation other than a minor traffic 
offense? No.
    5. Please advise the Committee of any additional information, 
favorable or unfavorable, which you feel should be considered in 
connection with your nomination. None.

                     E. RELATIONSHIP WITH COMMITTEE

    1. Will you ensure that your department/agency complies with 
deadlines set by congressional committees for information? Yes.
    2. Will you ensure that your department/agency does whatever it can 
to protect congressional witnesses and whistle blowers from reprisal 
for their testimony and disclosures? Yes.
    3. Will you cooperate in providing the committee with requested 
witnesses, to include technical experts and career employees with 
firsthand knowledge of matters of interest to the committee? Yes.
    4. Are you willing to appear and testify before any duly 
constituted committee of the Congress, on such occasions as you maybe 
reasonably requested to do so? Yes.

                  F. GENERAL QUALIFICATIONS AND VIEWS

    1. Please describe how your previous professional experience and 
education qualifies you for the position for which you have been 
nominated. My employment experience, after graduation from the United 
States Merchant Marine Academy, has been solely in the maritime 
industry. I have extensive experience in the areas of ocean carrier 
liner trade management, marine terminal management, public port 
administration, tariff and service contract use and publication, and 
liner operations.
    The education that I received at the United States Merchant Marine 
Academy provided an excellent foundation upon which to build a career 
in the maritime industry. Both the technical and leadership skills that 
were taught at the Academy have proven to be invaluable to me during my 
career. Tulane University's Master of Business Administration program 
has greatly contributed to my ability to effectively work with 
customers and business partners.
    Many of the functions that I have performed, in my career, have 
been subject to the maritime laws and regulations that are implemented 
by the Federal Maritime Commission, and my experience will be 
beneficial to me, if confirmed, as a Commissioner.
    2. What skills do you believe you may be lacking which may be 
necessary to successfully carry out this position? What steps can be 
taken to obtain those skills? (a) My current knowledge of the technical 
processes and procedures within the Federal Maritime Commission may be 
lacking at this time. Expertise can be quickly developed by reviewing 
the Commission's written procedures and seeking guidance and 
explanations from the Commission staff.
    (b) I do not presently have a working relationship with Congress. I 
will meet with the appropriate Members of Congress and their staff to 
promptly develop the necessary working relationships.
    3. Why do you wish to serve in the position for which you have been 
nominated? I wish to serve as a Commissioner of the Federal Maritime 
Commission, so that I can contribute to the development of an efficient 
and competitive ocean transportation system, that benefits U.S. 
shippers, carriers, and the Nation overall, with a minimum of 
government intervention and regulatory costs.
    4. What goals have you established for your first 2 years in this 
position, if confirmed? (a) Fairly and impartially perform the 
functions of a Commissioner in the implementation and application of 
the relevant laws and regulations.
    (b) Improve the business climate for U.S. shippers and carriers by 
identifying and eliminating unfair shipping practices.
    (c) Pursue increased use of alternative dispute resolution to 
minimize regulatory costs borne by shippers, carriers and cruise ship 
passengers.
    5. Who are the stakeholders in the work of this agency? (a) 
Shippers in international liner trades; (b) Vessel operating common 
carriers; (c) Freight forwarders; (d) Non-vessel operating common 
carriers; (e) Marine terminal operators; (f) Cruise ship passengers; 
(g) Cruise liners; (h) Related trade associations.
    6. What is the proper relationship between your position, if 
confirmed, and the stakeholders identified in question No. 5? As a 
regulator of the business in which the stakeholders operate and 
function, my relationship will one of fairness and impartiality, 
combined with understanding and support, to ensure that the 
stakeholders are allowed to function free from discriminatory 
practices, market distorting activities, and undue financial risk borne 
by passengers.
    7. Please describe you philosophy of supervisor/employee 
relationships. Generally, what supervisory model do you follow? Have 
any employee complaints been brought against you? I believe that 
supervisor/employee relationships must be based upon open 
communications and mutual support. I follow the model of participative 
supervisory activities.
    It is important to encourage and support continued education and 
training programs for employees to improve promotional capabilities 
within an organization.
    I do not recall any substantive employee complaints being brought 
against me.
    8. Describe your working relationship, if any, with the Congress. 
Does your professional experience include working with committees of 
Congress? If yes, please describe. I have no current or past working 
relationship with the Congress.
    9. Please explain how you will work with this Committee and other 
stakeholders to ensure that regulations issued by your board/commission 
comply with the spirit of the laws passed by Congress. It is essential 
that regulations comply with the spirit of the laws passed by Congress. 
This can be accomplished by seeking comments and advice from both the 
Committee and the stakeholders to ensure that current or pending 
regulations are developed that are in concert with the law, are 
achievable and enforceable.
    10. In the areas under the board/commission jurisdiction, what 
legislative actions(s) should Congress consider as priorities? State 
your personal views. It is believed that Congress, with the passage and 
implementation of the Ocean Shipping Reform Act of 1998, has 
satisfactorily met the requirements under the board/commission 
jurisdiction for the foreseeable future.
    11. Please discuss your views on the appropriate relationship 
between a voting member of an independent board or commission and the 
wishes of a particular President. A voting member of an independent 
board, while greatly valuing the views of the President, must give all 
sides of an issue or case due consideration, must make an objective, 
impartial and fair decision based upon the merits of each issue or 
case.

    Senator Breaux. Thank you, Mr. Blust, for being with us and 
for, again, your willingness to serve in this position.
    You mention in your statement the question of security and, 
of course, that is appropriately the buzz word in Washington, 
as it appropriately should be today. About security, we happen 
to believe that port security is something that should be the 
highest priority.
    As you know, the Senate has passed the Port Security Act. 
We reported out of this Committee amendments to that Act to 
make it even stronger, yet the House of Representatives has 
failed to--I am sorry, they did pass it last night. Good news, 
they passed it last night, so at least the House has now 
finally acted, so we ought to have a port security bill passed 
by the Senate and the House and hopefully, the conference can 
come through with something quickly.
    My point in raising this is, how do you envision the 
Federal Maritime Commission being helpful in this whole area?
    As I have said in the past, we are not just going to be 
able to allow the Coast Guard to do everything. It seems that a 
lot of the ports and a lot of people in the shipping business 
feel that the Coast Guard is going to take care of port 
security. It actually has to be local government officials, 
local port authorities, the Coast Guard, state police, the 
National Guard, port and harbor police, everybody has to be 
involved.
    Now, I am wondering whether you envision any potential role 
for the Federal Maritime Commission in providing information, 
perhaps, to the Department of Transportation in terms of 
shipping contracts and who is doing what, and cargo, and 
anything of that nature. Is there anything that can come out of 
the Federal Maritime Commission that could be helpful in the 
area of security?
    Mr. Blust. Mr. Chairman, I do believe that the Federal 
Maritime Commission can greatly help in the process by being 
primarily in a support role to the major efforts that are going 
forward. The FMC has a tremendous wealth of information 
available through the licensing processes that they have, the 
agreements that are filed, the service contracts that are 
filed, the tariffs that are published in the process, and the 
FMC staff understands the business flow. They understand the 
commercial aspects of how cargo moves, and the relations 
between carriers and shippers, and the intermediaries, and I 
believe that they would be able to bring that into the process, 
cross-referencing information on shippers.
    If a particular entity is under review by another agency, 
it is possible that there may be information within the records 
or in the files of the FMC that could help in supporting that.
    Senator Breaux. I would certainly encourage you to do that 
as Chairman, and Hal being down there, it seems that a lot of 
the problems that we are seeing in intelligence information is 
due to a lack of sharing that information among the relevant 
agencies and the government, the CIA not wanting to tell the 
FBI, the FBI not wanting to tell the state police, and people 
wanting to keep their information internally, and sometimes if 
that information is shared, the results will be far more 
positive in helping to stop things that should not happen 
before they happen. I would really encourage the FMC to take a 
look at everything you all do and say, look, can anybody else 
benefit from this information?
    You would hate to find out that you had information 
internally that, had it gone to the proper law enforcement 
authorities from a criminal standpoint, or from an intelligence 
standpoint, may have prevented shipments from going someplace 
and causing damage. If you have information that should set off 
flags and bells and whistles that something is wrong with this, 
we have never seen this carrier before in this trade, and is 
there something we need to check here, and do not hesitate to 
do that.
    Let me ask a question about this recent Supreme Court 
decision, which I happened to read in the paper, and I see the 
staff has it listed here, about the cruise line that filed suit 
against the Port of South Carolina alleging discrimination in 
favoring one carrier over another carrier.
    That case went all the way to the Supreme Court, and the 
United States Supreme Court, in a recent 5-4 decision, said the 
FMC does not have jurisdiction to litigate against states, that 
the states are protected against federal suits because of state 
sovereignty.
    Do you have any concerns? Is that case going to cause us 
problems? As I read the Supreme Court decision, you are going 
to be prohibited from taking any action against any kind of 
state port authority. Do you have any comment on it, and I will 
ask Hal if he has a comment on it.
    Mr. Blust. Mr. Chairman, there is a fine point that was 
brought out in the ruling and the decision by the Supreme 
Court, and that is in the area where an individual, a private 
individual, a private citizen would go through the Federal 
Maritime Commission with a formal complaint seeking monetary 
reparations in the event of harm from a State agency.
    The Supreme Court said that the Federal Maritime Commission 
is not able to pursue that, but they could pursue non-monetary 
investigations, and on their own initiation, or through an 
informal complaint or request pursue it. But what it does is, 
it narrows some of the options that are out there. It would 
also have an impact on the Commission's staff, where more of 
the homework would have to be done by them, and more of the 
research, making it a little more difficult than if the prior 
belief, or what the Commission was pursuing, had gone forward.
    The other area is that the individual, the private 
individual that saw harm or felt that they were harmed now has 
to deal with several different approaches. If it is a terminal 
that is privately owned, they can pursue it through the Federal 
Maritime Commission. If it is owned by the State, as in the 
case of South Carolina, it has to go through another avenue, 
and they may not be able to collect any monetary reparations.
    Senator Breaux. Hal, how do you see that case?
    Mr. Creel. Mr. Chairman, I agree with Mr. Blust, the ruling 
is limited to a private individual bringing a case to the FMC 
formally. An individual could still bring a case informally to 
us and the FMC could of its own volition go forward against the 
State entity. Ironically, I think the press has characterized 
this as a diminution in the responsibilities of the FMC, and I 
would argue just the opposite, that it increases the 
responsibilities of the FMC, because now the FMC has to step 
into the shoes of those individuals that may be aggrieved 
because of problems with the State.
    Senator Breaux. You interpret the case to mean that the 
Federal Maritime Commission on its own initiative could file a 
complaint in Federal court against a State port authority for 
discrimination?
    Mr. Creel. Yes, sir.
    Senator Breaux. But they could not do it on behalf of a 
citizen?
    Mr. Creel. That is right. An individual citizen could not 
file a formal complaint with the FMC, but they could informally 
give us information that would lead us to go out on our own.
    Senator Breaux. So it is sort of a distinction without a 
difference, really.
    Mr. Creel. Except it really does put more of the onus on 
the Commission itself, rather than the aggrieved individual.
    Senator Breaux. But you interpret that case to mean that in 
the same set of facts in the South Carolina case that was 
presented at the Supreme Court, that had the carrier just 
informed the FMC of discrimination, and the FMC considered that 
evidence, that the FMC on their own then could file a complaint 
in federal court?
    Mr. Creel. That is right.
    Senator Breaux. So really you would still have the same 
ability to influence as you would before. That is an 
interesting idea, because you do not get that from reading the 
newspaper accounts of the case.
    Mr. Creel. That is right.
    Senator Breaux. Well, Mr. Blust, we are joined by our 
Ranking Member from the great maritime state of Arizona. The 
President has appointed a terrific gentleman here who is a 
Merchant Marine graduate, John, and with a great deal of 
experience in this business, to be Chairman. We have just asked 
him a few questions, and he has made an opening statement. If 
you have any comments you would like to make.

               STATEMENT OF SENATOR JOHN McCAIN, 
                   U.S. SENATOR FROM ARIZONA

    Senator McCain. Thank you, Mr. Chairman. After the next 
earthquake, we will be a coastal State. I congratulate you, 
sir, on your nomination to be Commissioner of the Federal 
Maritime Commission. With your years of experience serving in 
the maritime community, including your current position as 
President and CEO of Tampa Bay International Terminals, and 
your previous experiences, you are well-qualified, I believe.
    In your role, you will have the unique responsibility of 
setting the course the Commission takes over the next several 
years, and it will be important that, given the limited 
resources, the priorities you establish are sound and carried 
out in an efficient manner.
    Over the past several years, the liberalized exemption 
authority under the Ocean Shipping Reform Act has helped 
diminish this fear of collusion among carriers. A more defined 
commercial market system is creating new openings to increase 
trade among nations. The Ocean Shipping Reform Act has begun to 
show signs of success, and I would like to see this pattern of 
deregulation continue.
    The duties of the Commission are important to the daily 
functions of trade and commerce in the United States. In the 
age of the global marketplace, you will be in a position that 
can help ensure fair maritime trading practices. I am confident 
you will be up to the challenges in store for you both as a 
Commissioner and as a Chairman.
    [The prepared statement of Hon. John McCain follows:]

               Prepared Statement of Senator John McCain

    I congratulate you, Mr. Blust, on your nomination to be a 
Commissioner of the Federal Maritime Commission. The President has 
indicated that upon confirmation by the Senate, you will be designated 
its Chairman. With your years of experience serving in the maritime 
community, including your current position as President and CEO of Bay 
International Terminals and your previous tenure at Lykes Brothers 
Steamship Company, I believe you are well qualified for this position.
    As a Commissioner, you, along with your fellow commissioners, will 
be charged with regulating the waterborne foreign commerce of the 
United States and ensuring that U.S. international trade is open to all 
nations on fair and equitable terms. To ensure these mandates are 
achieved, you will have to, among other things, be vigilant in your 
enforcement of prohibitions against discriminatory acts and other 
prohibited practices. You will also be charged with ensuring that 
adequate levels of financial responsibility are maintained for 
indemnification of waterborne passengers.
    In your role as Chairman, you will have the unique responsibility 
of setting the course the Commission takes over the next several years. 
It will be important that, given the limited resources of the agency, 
the priorities you establish are sound and carried out in a efficient 
and effective manner.
    Over the past several years, the liberalized exemption authority 
under the Ocean Shipping Reform Act, (OSRA), has helped diminish the 
sphere of collusion among carriers. A more defined commercial market 
system is creating new openings to increase trade among nations. OSRA 
has begun to show signs of success, and I, for one, would like to see 
this pattern of deregulation continue.
    The duties of the Commission are important to the daily functions 
of trade and commerce in the United States. In the age of a global 
marketplace, you will be in a position that can help ensure fair 
maritime trading practices. I am confident you will be up to the 
challenges in store for you both as a Commissioner and as Chairman.
    I would like to take this opportunity to thank Mr. Blust for being 
here today and thank you in advance for your service. I know your 
nomination is a great honor and that your family is very proud.

    Senator McCain. Exercising the duties of old age and 
latitude on this Committee, I want to ask you what may be 
viewed by you as an off-the-wall question. Why is it that every 
yacht of any size that I see in any port in America with an 
American name on it has a foreign flag, any large vessel that 
you see in any port?
    Mr. Blust. In the commercial----
    Senator McCain. And non-commercial. I am talking about a 
yacht. Do you know why?
    Mr. Blust. No, sir. I am not a sailing buff.
    Senator McCain. Well, let me tell you why. It is because of 
the Jones Act, I am told, and that is that if you want to have 
a crew on your yacht, then that crew has to be all American 
employees. So all of these American yacht owners register their 
boats in Liberia, or the Cayman Islands, or some other place, 
so that they can have foreign-born and foreign citizens onboard 
their ships. You do not know anything about that?
    Mr. Blust. No, sir. It has been an area I have not been 
involved in, but I think the Federal Maritime Commission does 
not get involved in the Jones Act.
    Senator McCain. Does the Maritime Commission get involved 
in the issue of flagging non-commercial vessels?
    Mr. Blust. No, sir. The Federal Maritime Commission does 
support the commercial U.S. flag side, but not on the yacht 
side.
    Senator McCain. Let me switch subjects again. I was reading 
a story about Mr. Charles Taylor, the Liberian dictator who has 
been responsible for the deaths of thousands and thousands of 
people, I am told, in numbers, and according to several stories 
I have read, one of his major sources of revenue is from ships 
registered under a Liberian flag. Do you have any views on 
that?
    Mr. Blust. The flags are commonly called ``flags of 
convenience.'' Liberia and other countries have been in 
existence for a number of years, and it is an avenue for 
shipowners to have vessels that take advantage of lower 
taxation. Now it has become international manning standards. In 
years past, it had been done country by country, but now there 
is an international standard for the international flag vessels 
that are out there, which has reduced some of the risks and 
concerns of vessels that were operating that were not up to 
today's standards.
    Senator McCain. Should it not bother you that ships owned 
by citizens of the United States of America that operate 
carrying mainly U.S. goods and products around the world should 
be subsidizing and keeping in power a ruthless dictator who--I 
mean, the crimes that they have committed are unspeakable. Does 
that concern you?
    Mr. Blust. Of that nature, yes, sir, that would concern me.
    Senator McCain. Should we not look at why the laws are such 
that we drive these ships to register in a God-awful place like 
Liberia?
    Mr. Blust. That probably would be warranted.
    Senator McCain. It removes your supervision of them, does 
it not?
    Mr. Blust. Not in the U.S. trade, sir. In U.S. trade, the 
Federal Maritime Commission would oversee vessels in trade in 
the commercial liner side whether they are U.S. flag or non-
U.S. flag vessels, so it really does not change the 
Commission's role in that sense. But it does not help support, 
the support of the U.S. merchant fleet and, that being a 
separate issue, is a major issue that is well worth pursuing 
and reevaluating.
    Senator McCain. I mean, it is a joke and a sham. I doubt if 
there is one Liberian citizen that has any interest of any kind 
in any of these ships.
    Well, again, I understand that it is out of the norm, but 
those two issues have bothered me for some time, and I 
congratulate you on your nomination, and I look forward to 
working with you and Senator Breaux, who does represent a 
coastal State, who will be working with you more than I will, 
but I am sure you will enjoy that as well. I again congratulate 
you on your nomination, and we look forward to having you at 
work as soon as possible.
    Thank you, Mr. Chairman.
    Senator Breaux. I thank the Senator for making his comments 
on the point of the Liberian flag vessel. During the port 
security hearing, it is interesting that one of the things we 
learned was that Panama, which is also a flag of convenience 
where many of these ships are flagged, we actually caught them, 
the U.S. government, providing about a thousand false documents 
for Panamanian sailors on Panamanian ships. I mean, you just go 
in there and pay your money, and you get your documentation 
that you are a licensed crew person to serve on those vessels. 
These vessels come into every port in the United States, many 
of them with crews that have false documentation. How easy it 
is for a potential terrorist to go down to Panama and pay the 
right person, get the documentation that you are a licensed 
seaman to sail on one of their vessels, and to come into the 
Port of New Orleans, or the Port of Long Beach, or anywhere 
else, and cause a great deal of damage.
    It is a real, huge problem. It is not your area, but it is 
a huge problem.
    Well, I thank the Senator for making that point, and Mr. 
Chairman-to-be, congratulations, and we will get to your 
confirmation just as soon as we can, and with that, the hearing 
will stand adjourned.
    [Whereupon, at 10 a.m., the hearing was adjourned.]
  
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