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[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]

              PRESIDENT'S FISCAL YEAR 2016 BUDGET REQUEST
                      FOR COAST GUARD AND MARITIME
                        TRANSPORTATION PROGRAMS

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

                                (114-6)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                COAST GUARD AND MARITIME TRANSPORTATION

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 25, 2015

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure

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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                  BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska                    PETER A. DeFAZIO, Oregon
JOHN J. DUNCAN, Jr., Tennessee,      ELEANOR HOLMES NORTON, District of 
  Vice Chair                             Columbia
JOHN L. MICA, Florida                JERROLD NADLER, New York
FRANK A. LoBIONDO, New Jersey        CORRINE BROWN, Florida
SAM GRAVES, Missouri                 EDDIE BERNICE JOHNSON, Texas
CANDICE S. MILLER, Michigan          ELIJAH E. CUMMINGS, Maryland
DUNCAN HUNTER, California            RICK LARSEN, Washington
ERIC A. ``RICK'' CRAWFORD, Arkansas  MICHAEL E. CAPUANO, Massachusetts
LOU BARLETTA, Pennsylvania           GRACE F. NAPOLITANO, California
BLAKE FARENTHOLD, Texas              DANIEL LIPINSKI, Illinois
BOB GIBBS, Ohio                      STEVE COHEN, Tennessee
RICHARD L. HANNA, New York           ALBIO SIRES, New Jersey
DANIEL WEBSTER, Florida              DONNA F. EDWARDS, Maryland
JEFF DENHAM, California              JOHN GARAMENDI, California
REID J. RIBBLE, Wisconsin            ANDRE CARSON, Indiana
THOMAS MASSIE, Kentucky              JANICE HAHN, California
TOM RICE, South Carolina             RICHARD M. NOLAN, Minnesota
MARK MEADOWS, North Carolina         ANN KIRKPATRICK, Arizona
SCOTT PERRY, Pennsylvania            DINA TITUS, Nevada
RODNEY DAVIS, Illinois               SEAN PATRICK MALONEY, New York
MARK SANFORD, South Carolina         ELIZABETH H. ESTY, Connecticut
ROB WOODALL, Georgia                 LOIS FRANKEL, Florida
TODD ROKITA, Indiana                 CHERI BUSTOS, Illinois
JOHN KATKO, New York                 JARED HUFFMAN, California
BRIAN BABIN, Texas                   JULIA BROWNLEY, California
CRESENT HARDY, Nevada
RYAN A. COSTELLO, Pennsylvania
GARRET GRAVES, Louisiana
MIMI WALTERS, California
BARBARA COMSTOCK, Virginia
CARLOS CURBELO, Florida
DAVID ROUZER, North Carolina
LEE M. ZELDIN, New York
                                ------                                

        Subcommittee on Coast Guard and Maritime Transportation

                  DUNCAN HUNTER, California, Chairman
DON YOUNG, Alaska                    JOHN GARAMENDI, California
FRANK A. LoBIONDO, New Jersey        ELIJAH E. CUMMINGS, Maryland
BOB GIBBS, Ohio                      CORRINE BROWN, Florida
MARK SANFORD, South Carolina         JANICE HAHN, California
GARRET GRAVES, Louisiana             LOIS FRANKEL, Florida
CARLOS CURBELO, Florida              JULIA BROWNLEY, California
DAVID ROUZER, North Carolina         PETER A. DeFAZIO, Oregon (Ex 
LEE M. ZELDIN, New York                  Officio)
BILL SHUSTER, Pennsylvania (Ex 
    Officio)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    iv

                               WITNESSES

Admiral Paul F. Zukunft, Commandant, U.S. Coast Guard:

    Testimony....................................................     5
    Prepared statement...........................................    40
    Responses to questions for the record from the following 
      Representatives:

        Hon. Duncan Hunter of California.........................    48
        Hon. Don Young of Alaska.................................    49
        Hon. Peter A. DeFazio of Oregon..........................    52
        Hon. John Garamendi of California........................    59
        Hon. Lois Frankel of Florida, including the U.S. Coast 
          Guard's comments to the Federal Railroad 
          Administration's All Aboard Florida Draft Environmental 
          Impact Statement.......................................    68
Master Chief Steven W. Cantrell, Master Chief Petty Officer of 
  the Coast Guard, U.S. Coast Guard, testimony...................     5
Hon. Paul N. Jaenichen, Administrator, Maritime Administration:

    Testimony....................................................     5
    Prepared statement...........................................    81
    Responses to questions for the record from the following 
      Representatives:

        Hon. Duncan Hunter of California.........................    88
        Hon. Lee M. Zeldin of New York...........................    91
        Hon. John Garamendi of California........................    94
Hon. Mario Cordero, Chairman, Federal Maritime Commission:

    Testimony....................................................     5
    Prepared statement...........................................   105
    Responses to questions for the record from Hon. John 
      Garamendi, a Representative in Congress from the State of 
      California.................................................   118

                       SUBMISSIONS FOR THE RECORD

Admiral Paul F. Zukunft, Commandant, U.S. Coast Guard, response 
  to request for information from Hon. Garret Graves, a 
  Representative in Congress from the State of Louisiana.........    29

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
 
    PRESIDENT'S FISCAL YEAR 2016 BUDGET REQUEST FOR COAST GUARD AND 
                    MARITIME TRANSPORTATION PROGRAMS

                              ----------                              

                      WEDNESDAY, FEBRUARY 25, 2015

                  House of Representatives,
          Subcommittee on Coast Guard and Maritime 
                                    Transportation,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:03 a.m. in 
Room 2167, Rayburn House Office Building, Hon. Duncan Hunter 
(Chairman of the subcommittee) presiding.
    Mr. Hunter. The subcommittee will come to order. The 
subcommittee is meeting today to hear testimony on the 
President's fiscal year 2016 budget request from the leaders of 
the Coast Guard, the Maritime Administration, and the Federal 
Maritime Commission.
    This is our first hearing of the new Congress, so I want to 
take a moment and welcome back Ranking Member Garamendi, who 
will be here shortly, and thank him for working with me so well 
in the last Congress. I also want to welcome the new members of 
the subcommittee. I look forward to working with each of you 
over the next few years. We have two new members over here, on 
my right, and none on the other side.
    The President sent Congress a budget that would increase 
spending by nearly $75 billion over the fiscal year 2016 
spending cap. As a result, most Federal agencies are slated to 
receive generous increases in spending over current levels, 
including a nearly 20-percent increase for the Maritime 
Administration and a 7-percent increase for the Federal 
Maritime Commission. Yet, somehow, even with an additional $75 
billion, the President still proposes to cut funding for the 
Coast Guard, this time by 4 percent below the current level.
    The request would slash the Coast Guard's acquisition 
budget by 26 percent. The proposed level is at least $1 billion 
less than what is required to sustain the acquisition program 
of record. It will severely undermine efforts to recapitalize 
the Service's aging and failing legacy assets, increase 
acquisition costs for taxpayers, and seriously degrade mission 
effectiveness.
    For the fourth year in a row, the administration is playing 
a reckless game. They propose a budget that cuts funding for 
the Coast Guard so they can pay for increases at other 
agencies, betting that Congress will somehow restore the 
millions of dollars needed to sustain Coast Guard acquisitions 
and frontline operations. Quite frankly, I'm getting tired of 
playing this game. Congress is running out of quarters. If the 
President is going to continue to propose these cuts year after 
year, he needs to tell us how he intends to rescope the 
missions of the Coast Guard to reflect his reduced budgets.
    This is the first time Admiral Zukunft and Master Chief 
Cantrell appear before us. I want to commend both of you for 
your leadership and tremendous service to our Nation. I fully 
understand the situation they've been put in with this budget 
and I appreciate their candor in describing what these cuts 
will mean for the ability of the Service to successfully 
complete its missions.
    I also understand the situation you face on Saturday if 
Congress does not act on a fiscal year 2015 budget for the 
Department of Homeland Security. I know there will be a lot of 
questions about the impact a shutdown or a CR may have on the 
Coast Guard, and I know you will answer them candidly. However, 
I want to remind everyone that the House passed a bill. It is 
now up to the Senate to act. Unfortunately, the Senate minority 
refuses to even allow a discussion or a debate on the floor. I 
hope they understand the urgency of this issue, and act as soon 
as possible.
    The budget request for the Maritime Administration 
represents a nearly 20-percent increase over the current level. 
Much of the increase comes from a one-time payoff offered to 
the maritime industry in exchange for a permanent reduction in 
the number of U.S. mariner jobs carrying cargo under the hugely 
successful Food for Peace program.
    Since 1954, the Food for Peace program has provided 
agricultural commodities grown by U.S. farmers and transported 
by U.S. mariners on U.S.-flagged vessels to those threatened by 
starvation throughout the world. Unfortunately, for the third 
year in a row, the President proposes to restructure the Food 
for Peace program. This misguided proposal will eliminate a 
vital program for our farmers, put U.S. mariners out of work, 
and undermine our national security by reducing the domestic 
sealift capacity on which our military depends.
    Republicans and Democrats have repeatedly come together to 
vote down this flawed proposal. I hope my colleagues will join 
me once again in rejecting the President's proposal and work 
with me on efforts to strengthen our merchant marine. I look 
forward to hearing from the Administrator on how he intends to 
move forward with his efforts to revitalize the U.S.-flag 
fleet.
    Finally, the budget request for the Federal Maritime 
Commission proposes a 7-percent increase in funding over 
current levels and a nearly 10-percent budget increase in the 
number of staff. While this budget increase amounts to less 
than $2 million, I think it sends the wrong signal. I encourage 
the Chairman to continue to find ways to operate the Commission 
as efficiently as possible.
    Our Nation is facing a very tough budget climate and the 
President's unrealistic request only makes things harder. I 
look forward to working with my colleagues to enact a 
responsible budget.
    With that, I yield to Ranking Member Garamendi, who is 
right on time.
    Mr. Garamendi. Thank you, Mr. Chairman. I am anxious to 
hear from our witnesses, so I am going to try to be brief.
    First, congratulations to you on continuing the 
chairmanship. We have developed a very cooperative and cordial 
working relationship, and I look forward to continuing that. 
And thank you for the support on the issues that I care about--
and, obviously, you do, too.
    The maritime policy matters. It is our most--it is our 
national economic interest that we should act upon. As the 
world's largest trading nation, the United States exports and 
imports annually, in value, about one-fourth the global 
merchandise trade, approximately 95 percent of America's 
foreign trade: 1.3 billion tons moves by ships. Based on 
current projections, by the year 2020, U.S. foreign trade in 
goods may grow to four times today's value, and almost double 
its current tonnage.
    Additionally, our inland waterway traffic will increase by 
one-third, providing new economic opportunities in the U.S. 
farmlands. The economic potential is there for all of us to 
see, but so are the challenges, such as solving the port 
congestion issues, finding new cargo to grow the U.S.-flag 
fleet, and U.S. foreign trade, and developing new incentives to 
expand and diversify the U.S. shipbuilding industry.
    That is why we should not be shooting ourselves in the foot 
at a time when we should be ramping up our investments in our 
maritime agencies and in the U.S. maritime economy. But, 
unfortunately, we seem to be doing a lot of shooting towards 
our own feet.
    If the House fails to pass before February 27th either a 
clean fiscal year 2016 appropriation bill for the Department of 
Homeland Security or extending the continuing resolution to 
provide funding for DHS agencies, including the United States 
Coast Guard, we will be unnecessarily creating short-term havoc 
with potential long-term repercussions. This makes no sense, 
especially in light of the heightened terrorism potential.
    The Coast Guard is our first, our only line of defense 
protecting the U.S. maritime boundaries from all the threats 
abroad. It is irresponsible to subject the Coast Guard to a 
partial shutdown and ask active-duty coastguardsmen and 
coastguardswomen to work without pay simply to express a hard-
headed disagreement with the administration over immigration 
policy.
    In closing, Mr. Chairman, the Coast Guard prides itself on 
being semper paratus, or always ready. That is a fitting model 
for a very proud institution. Perhaps we ought to use that one 
ourselves. I hope, ultimately, that common sense might prevail, 
we can get past the current crisis of funding, make sure the 
Coast Guard has adequate funding, and our maritime industry is 
supported and given the opportunity to grow. Too much is at 
stake. We have our necessity to get our work done.
    Mr. Chairman, I thank you, yield back.
    Mr. Hunter. Thank the ranking member.
    On our panel of witnesses today is Admiral Paul Zukunft--I 
am sorry, we have the ranking member of the full committee.
    Mr. DeFazio. Thank you. Thank you. I won't prolong this. I 
want to thank everyone. I won't go through that again.
    I would just like to say I associate myself with the 
chairman's remarks about the President's budget as it relates 
to the Coast Guard. And I am going to say to the admiral--
although I know this is a difficult situation--but we once had 
a colleague named Mike Parker. And Mike was a Democrat turned 
Republican. And in the Bush administration they made him 
Assistant Secretary over the Corps of Engineers. And he came 
before us for one of these budget hearings, and I looked at the 
proposed budget. I reminded him that they had a $45 billion, 
you know, critical asset backlog. And I said, ``Is this budget 
adequate to meet the needs of your agency, the Corps of 
Engineers of the United States of America?''
    And he said, ``No, absolutely not.'' Now, that is the 
positive side, because I always try and get people who have 
that jurisdiction to tell us like it is. The downside was a 
week later he resigned because of family issues.
    Now--so I am not going to ask you to be quite that candid, 
Admiral. But I am going to observe when Congress orders you to 
produce a list of priorities that are unmet, and you come up 
with four things, I don't buy it. And I think you are being a 
little too much of a good soldier here--not to call a Coastie a 
soldier, but, you know, in terms of--it is not the way the 
Pentagon works, I will tell you that. They make their needs 
that are unmet in the budget known in a million different ways.
    I was just at Coast Guard Station Newport--beautiful. They 
do their own work. You don't find that on other military bases. 
They bring in contractors. You are the most frugal of the 
services, and you are critical. And you are absolutely critical 
on a day-to-day basis for the American people, and something 
they see--anybody who has access to the water or the coast--and 
saving lives.
    And, you know, we have to figure out a way to get you 
adequate resources to meet all your national security 
obligations, which have grown dramatically post-9/11, but also 
to meet your day-to-day obligations, in terms of lifesavings. 
And some of the cuts that are proposed this last year, like 
cutting my Coast Guard Air Station in Newport, which does half 
the rescues on the Oregon coast in water that never gets warm, 
where you are dead in half an hour, is not a place to be 
cutting. And we have got to find a way around this. And part of 
it has got to be you, as much as possible, within your chain of 
command from the White House, being candid with us about your 
needs.
    And, with that, I would yield back the balance of my time.
    Mr. Hunter. Thank the gentleman. And thank the gentleman 
for being here, too.
    On our panel of witnesses today is Admiral Paul Zukunft, 
Commandant of the Coast Guard; Master Chief Petty Officer of 
the Coast Guard, Steven Cantrell; the Honorable Chip Jaenichen, 
Administrator of the Maritime Administration; and the Honorable 
Mario Cordero, Chairman of the Federal Maritime Commission.
    Admiral, before I recognize you, I want to take a moment 
and thank you for your statement on the Jones Act. Your 
statement and your comments continue to prove that the Jones 
Act is critical to our economy, and is an important part of our 
national security.
    I also see your wife Fran behind you, and I want to welcome 
her. And you are welcome to take his place at the table, if you 
like, too, at any point. We would enjoy that more.
    So, thank you for coming, Admiral. You are now recognized.

 TESTIMONY OF ADMIRAL PAUL F. ZUKUNFT, COMMANDANT, U.S. COAST 
  GUARD; MASTER CHIEF STEVEN W. CANTRELL, MASTER CHIEF PETTY 
  OFFICER OF THE COAST GUARD, U.S. COAST GUARD; HON. PAUL N. 
  JAENICHEN, ADMINISTRATOR, MARITIME ADMINISTRATION; AND HON. 
      MARIO CORDERO, CHAIRMAN, FEDERAL MARITIME COMMISSION

    Admiral Zukunft. Thank you, Chairman. And thank you, 
members of this committee. We have developed a number of 
strategies to address the concerns that were addressed by 
Ranking Member DeFazio, and we will talk about those in length 
later. But I am truly humbled to be here, to speak on behalf of 
the 88,000 men and women of our United States Coast Guard.
    Let me begin by emphasizing that there has never been a 
greater demand for our Nation's Coast Guard. In our own 
hemisphere, in the Western Hemisphere, we are witnessing 
extreme violence in Central America, stemming from insidious 
transnational organized criminal networks.
    We are also seeing significant maritime commerce ships 
fueled by the America energy renaissance. And we have rapidly 
seen increasing demands on both industry and Government in the 
world's newest domain of cyber.
    Mr. Hunter. Admiral, would you mind pulling the mic closer 
to you? I have artillery ears, hard to hear.
    Admiral Zukunft. OK. How is that, better? OK.
    And we have also seen a new ocean open in the Arctic. Most 
importantly, all of these geostrategic trends have converged on 
the Coast Guard in an unprecedented manner, dramatically 
increasing demands on our daily operations, and major 
contingency preparedness. This is at a time when much of the 
Coast Guard's buildings, piers, infrastructure, and many of our 
platforms are well past their service life.
    Last year I sent four 50-year-old Medium Endurance Cutters 
to costly emergency drydock availabilities, losing 20 percent 
of my planned patrol days, due to unscheduled maintenance. 
Those pressures put great strain upon the Coast Guard.
    Now, to help alleviate this strain, I have developed 
strategies to address these converging trends. And we are 
aligning our budget priorities to meet these. Let me just spend 
a few minutes talking about these four converging trends.
    The first trend is illegal trade in drugs, people, and 
weapons, which is now a $750 billion global enterprise. And, 
since 9/11, 450,000 Americans have died in this country due to 
drug violence and drug overdoses. Combating these networks 
requires a forward-based presence using Coast Guard authorities 
and our ability to attack illicit trafficking where it is most 
vulnerable: at sea.
    We have actionable intelligence, due to our commitment to 
the national intelligence community, on approximately 90 
percent of known maritime drug flow in the maritime domain. Yet 
we are only able to target, detect, and disrupt 20 percent of 
that 90 percent, due to our limited arsenal of aircraft and 
ships. This is simply a matter of capacity.
    This is one of the reasons why the Offshore Patrol Cutter 
is my number-one acquisition priority, with an emphasis upon 
affordability.
    Second emerging trend is our regulatory role. The United 
States is now the world's largest producer of natural gas and 
crude oil, and the maritime transportation system is a vital 
pathway for these products. It is imperative that our marine 
safety workforce continue to grow the expertise needed to keep 
pace with industry, and to facilitate commerce, not impede it.
    And the third trend, we also have a statutory role to 
ensure the maritime transportation system is secure and 
resilient against cyber threats. In coordination with the 
Department of Homeland Security, I will soon sign out a cyber 
strategy for the United States Coast Guard.
    And, fourth, looking to polar operations, changing ice 
patterns have created new frontiers for human activity, in 
exploration to tourism, and resource development. Notably, 
Shell Oil just announced its intent to drill this summer. 
Maintaining a sure access to the polar regions is vital to 
meeting the United States Arctic strategy. However, this is a 
global access challenge, and requires a national solution. 
Funding new icebreakers must be in addition to, and not at the 
expense of, our existing acquisition programs of record.
    Finally, investing in 21st-century Coast Guard platforms 
and people is a smart choice. No one will return more 
operational value on every dollar than the 88,000 men and women 
of the United States Coast Guard. Our workforce received five 
Federal acquisition awards in 2014, and we were the first 
military service to obtain a clean financial audit opinion, and 
we have now done it 2 years in a row. We proved to be 
responsible stewards of our financial resources, and capital 
plan operating, and maintaining platforms well beyond their 
service life.
    Going forward, the key to our future operational success is 
stable and predictable funding. To be very clear, a lapse in 
funding will jeopardize the construction of our eighth National 
Security Cutter. It will cause the furlough of more than 6,000 
Coast Guard civilians, and it will curtail Coast Guard 
operations worldwide.
    Mr. Chairman and members of this committee, as you have in 
the past--and I know it will continue--I seek your support to 
avert such a funding collapse. I look forward to working with 
this committee as we make prudent investments in the 21st-
century Coast Guard.
    Thank you, and I look forward to your questions.
    Mr. Hunter. Thank you, Admiral, for your testimony.
    Master Chief Cantrell, you are recognized.
    Master Chief Cantrell. Good morning, Mr. Chairman and 
distinguished members of the committee. It is my honor and 
privilege to appear before you today to represent the dedicated 
men and women of your United States Coast Guard who stand the 
watch every day, protecting and serving our Nation. They are 
charged with maintaining operational excellence across a broad 
and diverse spectrum of 11 statutory missions, and across all 7 
continents, from Antarctica to the Middle East, on the high 
seas and in our Nation's ports and waterways.
    As I continue serving my first year as the Master Chief 
Petty Officer of the Coast Guard, I continue to be impressed by 
the dedication, professionalism, and innovation of Coast Guard 
men and women, and the support they receive from their 
families.
    Performing our missions and conducting necessary training 
in a maritime environment is inherently dangerous. And our 
servicemembers operate in some of the harshest, most 
unforgiving environments imaginable. But our folks do this day 
in and day out, and they do it with a sense of devotion that is 
nothing short of spectacular. I offer two nearly simultaneous 
examples of the extraordinary devotion to duty and service to 
country.
    Early on the morning of February 15th, an H-60 Jayhawk 
helicopter crew from Air Station Cape Cod fought near-hurricane 
force winds and limited visibility to rescue a father and son 
150 miles off the coast of Nantucket. That same day, the crew 
of Coast Guard cutter Polar Star was called upon to rescue 26 
crewmembers on an Australian fishing vessel that had been 
stranded for nearly 2 weeks in thick ice only a few hundred 
miles north of Antarctica. These cases are perfect examples of 
how an appropriately trained, well-focused, and properly 
equipped Coast Guard can excel in carrying out its missions.
    As a leader, I have an absolute responsibility to equip, 
train, and care for our workforce and their families, with the 
understanding of the immense challenges my Service faces. We 
are doing all that we can do to be good stewards of our aging 
resources and limited funding, while we tend to the needs of 
our servicemembers and their families, who make so many other 
sacrifices.
    We ask so much of our well-educated, innovative, and 
professional workforce, some of which are serving on assets 
older than their parents, supported by infrastructure older 
than their grandparents. We ask them to maintain these 
platforms at the expense of their own time, as well as time 
with their families. It is impossible to calculate that lost 
time in dollars and cents.
    However, our newest asset, such as the National Security 
Cutters and Fast Response Cutters, are performing exceptionally 
well, and don't require these same sacrifices. I thank you for 
your continued support of our recapitalization efforts, despite 
these fiscal challenging times. Your support does make a 
difference, as these platforms are more capable, and contribute 
to the successful and efficient execution of our missions and 
our service to this Nation.
    We continue to face challenges with housing, medical, and 
child care services. But, once again, we are grateful for the 
support from this committee, as we address these challenges, 
ensuring these resources remain a top priority in our ongoing 
efforts to support our military members and their families.
    Mr. Chairman, members of the committee, on behalf of the 
men and women of your United States Coast Guard and their 
families, I thank you for your continued support, and thank you 
for the opportunity to discuss some of the highlights and 
challenges Coast Guard women and men face.
    Mr. Hunter. Thanks, Master Chief. Are each of those stripes 
4 years?
    Master Chief Cantrell. Yes, sir.
    Mr. Hunter. You got 28 years?
    Master Chief Cantrell. Thirty-one. I had another one, so--
--
    Mr. Hunter. You got to wait 1 more year before you get the 
stripe?
    Master Chief Cantrell. Yes, sir.
    Mr. Hunter. All right. Thank you very much.
    Master Chief Cantrell. Thank you, sir.
    Mr. Hunter. Administrator Jaenichen, you are recognized.
    Mr. Jaenichen. Chairman Hunter, Ranking Member Garamendi, 
and members of the subcommittee, I appreciate this opportunity 
to discuss President Obama's budget request for the Maritime 
Administration for fiscal year 2016. The budget request 
reflects my priorities for maintaining our country's national 
security and preparedness, investment in mariner training, 
investment in our maritime transportation system 
infrastructure, enhancing U.S.-flag competitiveness, and 
fostering environmental sustainability.
    The President's budget request continues to fund readiness 
programs that support Department of Defense sealift 
requirements. Funding provided from the U.S. Navy will allow 
the Maritime Administration to continue to provide ready surge 
sealift support in 2016 through the Ready Reserve Force. This 
is a fleet of 46 vessels whose primary purpose is to provide 
for rapid mass movement of defense equipment and supplies to 
support our armed forces, and to respond to national and 
humanitarian emergencies.
    One of these vessels, the motor vessel Cape Ray, earned 
special recognition for its unprecedented support of the United 
Nations and the Organization for Prohibition of Chemical 
Weapons mission to neutralize the Syrian Government's declared 
stockpile of chemical weapons. More recently, three Ready 
Reserve Force vessels were activated to support the DOD medical 
mission to Liberia for the Ebola virus response for Operation 
United Assistance.
    For fiscal year 2016, $186 million is requested to fully 
fund, at the authorized level, the Maritime Security Program. 
This program provides a fleet of 60 commercial privately owned, 
military useful, U.S.-flagged and U.S.-crewed ships whose 
primary purpose is to provide assured access to sealift to 
support global projection of our U.S. armed forces, including 
access to their worldwide intermodal logistics capacity. The 
MSP is the core of the U.S.-flag fleet, and provides critical 
employment for 2,400 U.S. merchant mariners, creating a 
reliable pool of mariners ready to support the activation of 
our Government's Reserve sealift fleets.
    The fiscal year 2016 funding enables the Department of 
Transportation to continue to maintain this critical national 
asset, and the men and women who crew them. However, declining 
cargoes are creating a significant challenge for the MSP, most 
notably the declining Department of Defense cargo to the 
drawdown in Afghanistan and Iraq, coupled with more than an 80-
percent reduction in personnel and military bases overseas 
since 1990 are impacting the U.S. fleet operating in 
international trade.
    It is for this reason we are working with industry and 
Government stakeholders to develop a National Maritime Strategy 
to support the U.S. maritime industry, and ensure the 
availability of U.S.-flag vessels to support national security. 
I know the committee is anxious for a strategy to be completed, 
and I am committed to providing one as soon as possible.
    I want to highlight that this budget request is an increase 
in our mariner training programs. This increase in funding will 
ensure that we can continue to produce highly skilled U.S. 
merchant marine officers to support America's economic as well 
as our national security requirements.
    The President's fiscal year 2016 budget request includes 
$34.6 million to support our six State maritime academies. 
Included in that request is $5 million for the planning and 
design of a national security multimission vessel to support 
the replacement of the 53-year-old training vessel Empire 
State, currently used by the State University of New York 
Maritime College.
    The budget also includes $22 million to fund maintenance 
and repair costs for federally owned training ships currently 
on loan from the Maritime Administration to the other five 
State maritime academies. These training vessels provide 
opportunities for midshipmen and cadets to get important hands-
on experience and technical training, a critical educational 
component, in order to qualify to take their U.S. Coast Guard 
merchant mariner officer examination.
    In addition to providing a training platform, these ships 
have been called up in the past to respond to humanitarian 
emergencies and disaster response efforts. For these training 
vessels are rapidly approaching the end of their useful life, 
and we must develop a recapitalization proposal and analysis of 
alternatives, with a multiyear budget scheme to address the 
replacement of vessels.
    The President's budget also includes $96 million for the 
U.S. Merchant Marine Academy, which will enable the Academy to 
effectively achieve its core responsibility of providing the 
highest caliber academic study and the state-of-the-art 
learning facilities in the Nation's future merchant marine 
officers and maritime transportation professionals.
    Finally, the fiscal year budget request reflects a 
continued commitment to reducing and mitigating transportation-
related impacts on the environment, including $5 million for 
the MarAd ship disposal program, which currently is at a 
historic low of 19 obsolete vessels, having responsibly 
disposed of over 200 vessels since the year 2000. With the 
requested funding level in 2016, we plan to remove an 
additional eight vessels in 2016.
    Mr. Chairman, I appreciate the subcommittee's continuing 
support for maritime programs, and I look forward to working 
with you on advancing the maritime transportation of the United 
States, and establishing a maritime strategy.
    And I am happy to respond to any questions that you or the 
subcommittee may have.
    Mr. Hunter. Thank you, Administrator. I still find that 
number, 80-percent reduction in forces around the world, 
military forces since 1990, extremely interesting. Thank you, 
Administrator.
    Chairman Cordero, you are recognized.
    Mr. Cordero. Mr. Chairman, Ranking Member Garamendi, and 
members of the subcommittee, thank you for this opportunity to 
present the President's fiscal year 2016 budget for the Federal 
Maritime Commission. With me today are my colleague 
Commissioners, Rebecca Dye, Michael Khouri, William Doyle, as 
well as the Commission's senior executives.
    With the committee's permission, I would like my full 
written statement to be included in the record, and submitted.
    The President's budget for the Commission provides 
$27,387,000 for fiscal year 2016. This will fund 135 full-time 
equivalent employees, as well as mandatory rent, interagency 
services, and critical commercial services. Our fiscal year 
2016 budget request includes $19.8 million for salaries and 
benefits of the 135 FTEs expected to be on board at the end of 
fiscal year 2016 to support the Commission's mandate and 
protect the American shippers.
    Administrative expenses are funded at $7.4 million in 
fiscal year 2016 to support our number of business expenses, 
representing a net increase of just $84,000 over fiscal year 
2015.
    The Commission continues to work diligently to support the 
Nation's goals to increase exports, the vast majority of which 
move through our ports. Ports are the gateways that handle $900 
billion worth of containerized goods annually.
    The Commission monitors the continued growth of chassis 
agreements, and the increase in ocean carriers divesting from 
chassis fleets, which impact cargo movements in ports. Several 
months ago, I hosted a forum on U.S. port congestions in Los 
Angeles to foster a dialogue between industry stakeholders, 
regulators, and the general public on the causes and impacts of 
congestion. Signs of chronic congestion in our Nation's ports 
have been surfacing over the last few years. Congestion is a 
serious threat to global trade. So much so that one private-
sector economist recently opined as follows: ``The biggest 
threat of global trade isn't protectionism, war, or terrorism, 
disease or natural disasters. But, instead, mounting congestion 
at global ports and the crumbling infrastructure surrounding 
them.''
    It is clear that much of the congestion plaguing U.S. ports 
is not tied to the absence of an ILWU-PMA agreement, for which 
there is now resolution. This conclusion is based on the input 
received by the Commission at its four regional port congestion 
forums held last fall. Forums were held in Los Angeles, 
Baltimore, Charleston, and New Orleans, in order that the 
industry participants in those gateways and port regions 
address causes and possible solutions to congestion.
    There are many factors causing congestion, including 
unavailability of chassis at U.S. ports. Ocean carriers serving 
Los Angeles, Long Beach, New York, New Jersey, Baltimore, and 
other ports have been withdrawing from owning and providing 
chassis in order to reduce costs. Another important source of 
congestion stands from the impact of the introduction of 15,000 
to 18,000 TEU vessels. Though the megavessels helped carriers 
significantly reduce their operating costs when they are 
unloaded at the U.S. ports, challenges have been presented. 
Logistics have been problematic, as a result.
    Presently, the Commission is working on a study that 
addresses congestion at U.S. ports, and continues to work with 
other Federal agencies to find solutions to supply chain 
bottlenecks. Closely related to congestion is the matter of 
marine terminal operator and ocean common carrier demurrage 
charges. The Commission is receiving numerous complaints by 
shippers, American shippers, who are repeatedly told that they 
may not retrieve containers due to on-dock congestion or gate 
delays. Furthermore, the container will not be released until 
demurrage is paid.
    The increased funding for fiscal year 2016 will allow the 
Commission to enhance its efforts in addressing both supply 
chain and port congestion issues. The recovery in the U.S. 
liner trades continued in 2014, with U.S. container exports and 
imports worldwide reaching 31 million TEUs in fiscal year 2014, 
compared to 30.5 million TEUs in 2013. The Commission continues 
to closely monitor the operation of the alliance agreements on 
the world's largest container operators that are filed with the 
Commission. The parties to four agreements account for 96.8 
percent of the containerized trade in the Asia-U.S. west coast 
trades.
    To reduce regulatory burdens, the Commission revised 
provisions from its advanced notice of proposed rulemakings to 
our OTI rules. Based on the feedback from the industry, 
Chairman Hunter, and other Members of the Congress, the 
Commission issued a proposed rule that would lengthen the time 
of the period for the OTIs to renew their license from 2 to 3 
years, and free--and no fee. So, essentially, free of charge. 
Commission staff is working on recommendations to streamline 
other parts of our regulations, including those with service 
contracts and NVOCC service arrangements.
    With the funding support that Congress provided for fiscal 
year 2014 and fiscal year 2015, the Commission has made great 
progress towards creating a modern, user-friendly, and, most 
importantly, efficient system that can make the agency more 
productive. With the increased funding for fiscal year 2016, 
the FMC will be able to continue to--its multiyear enhancement 
of its IT systems to carry out its congressional mandate.
    Mr. Chairman and members of the subcommittee, it is an 
honor to appear before the subcommittee, and I thank you for 
your support for the Commission throughout the years, and I am 
happy to answer any questions you may have.
    Mr. Hunter. Thank you for your testimony. Since we don't 
usually have a lot of people here--sometimes it is a party of 
two--we are going to go ahead and start with some of the new 
folks on the committee.
    So, thank you all for your testimony, and I am going to 
recognize the gentleman from Florida, Mr. Curbelo.
    Mr. Curbelo. Thank you very much, Mr. Chairman. And I 
certainly share your concerns with regards to the 
administration's fiscal year 2016 budget.
    Admiral Zukunft, welcome, and thank you very much for your 
testimony. I was in Coast Guard Station Key West on Wednesday 
of last week, and I was reminded of the importance and the 
unique challenges that the Coast Guard faces in the State of 
Florida.
    I specifically wanted to ask you with regards to Reserve 
training, the President requested a $9.4 million decrease for 
the Reserve training account in fiscal year 2016. The budget 
also assumes enactment of a proposal made in the fiscal year 
2015 request that would move 600 reservists from selected 
Reserve to inactive Ready Reserve, essentially making them 
unable to respond if the country needed them without 
significant lag time to train.
    As you know, in Florida we had--and all along the gulf 
coast--the unfortunate incident of the Deepwater Horizon some 5 
years ago. Considering the risk of terrorist attacks, of spills 
of national significance, do you think that these reduced 
numbers will allow the Coast Guard to effectively respond to 
these types of scenarios?
    Admiral Zukunft. Congressmen, those numbers cause me great 
concern. Our Active Reserve component is now the lowest it has 
been since 1957.
    Now, we can look back in the last 2 years. We have not had 
a significant natural disaster. But they have been out there. 
Super-typhoon Haiyan hit the Philippines a year ago with winds 
in excess of 190 knots. There was another typhoon out in the 
Pacific this year, Vongfong, with winds of 200 knots. And are 
we prepared to deal with a natural disaster of that magnitude 
here, in the United States? Because when we do, we field strip 
our other field units.
    The Coast Guard does not have a force in garrison, other 
than our Active Reserve. And so, I am deeply concerned with the 
number of Active Reserves right now, as we look at the 
disasters that may confront us in the 21st century. Your point 
is well taken. I cannot drop my Active Reserve level below 
where we are at right now. I would like to grow that back.
    Mr. Curbelo. Thank you for your answer. I have an 
additional question.
    In my discussion with Captain Young and Commander Reed on 
Wednesday down in Key West, they expressed some concerns with 
regards to, obviously, a potential shutdown of the department, 
but also of these short-term funding mechanisms for the 
department. Can you briefly expound on the challenges that 
these short-term funding measures pose to your department?
    Admiral Zukunft. Yes. I will expound a little bit on two of 
those.
    The first was when we had sequestration in 2013. And when I 
had to make those budget adjustments, the only thing I can 
adjust is the amount of fuel that I burn. And what burns the 
most fuel is airplanes and ships. So it has a direct impact on 
our operations.
    We entered 2014 with a funding lapse. The Budget Control 
Act was still 3 months out, and we didn't know if we would be 
sequestered that year, as well. So we have to scale back 
operations. And whenever you scale back operations, you play 
into the hands of our adversaries, and they take full advantage 
of the lack of Coast Guard persistent presence.
    Mr. Curbelo. Thank you, Admiral. And I will yield back. But 
before, I want to recognize the rest of the panel. Thank you 
all for being here, especially Chairman Cordero, who it is a 
pleasure to see.
    Thank you very much, Mr. Chairman.
    Mr. Hunter. Thank the gentleman. The ranking member, Mr. 
Garamendi, is recognized.
    Mr. Garamendi. Mr. Chairman, I think you have started a 
very good practice. Those who--you and I are always here, and 
we have time for our questions. I would like to pass my time to 
Member Hahn.
    Ms. Hahn. Thank you, Mr. Chairman, Ranking Member. I think 
I am always here, too, but I will take the opportunity to ask 
my questions.
    And I have several questions that if I--we need to do a 
second round, I want to do that, because I have some questions 
for the Coast Guard. But I wanted to start with Chairman 
Cordero, because you were really bringing it up about port 
congestion. And I will tell you. These last contract 
negotiations between the PMA and the ILWU were really long and 
arduous, and really had an impact, unfortunately, on so much in 
this country.
    And before I ask you my question, I just want to say it--to 
me, and to, I think, the rest of the country, what happened was 
unfortunate, and had nothing to do with the actual negotiations 
going on in San Francisco. I actually would like to see the 
Federal Maritime Commission look into some of the unilateral 
actions by the Pacific Maritime Association, in terms of, you 
know, not allowing the workers to work in the evenings and on 
the weekends. I think that was really untenable and 
unfortunate.
    And I would think the Coast Guard would also have--you 
know, would have had a fit. I can see, from my house, those--at 
one point there were 35 ships outside of Long Beach/Los Angeles 
breakwater. The Coast Guard base is right there. You know, that 
had to cause a lot of extra angst for the Coast Guard. So that 
would be something I would like to see, a full investigation on 
how, in 5 years from now, when we go back through these 
contract negotiations, we don't have that kind of, really, 
lockdown of our ports on the west coast.
    But Honorable Cordero, I am very concerned about the 
congestion at the ports. As you said, the fact that this 
contract was agreed to and will be ratified, most likely, does 
not necessarily change the congestion on the docks. And we got 
a lot of big problems. Panama Canal expansion project is coming 
online next year. We are not going to stop that. But what can 
we do for our ports in this country to really address this 
congestion?
    And I know you talked about it generally in your remarks, 
but could you be more specific on what is the Commission going 
to do to address the congestion on the docks, the last mile 
going in and out of our ports? It is a serious problem that 
could put us at a huge globally competitive disadvantage.
    I said a lot; I hope there was a question in there.
    Mr. Cordero. Well, thank you, Congresswoman. I appreciate 
the question.
    Number one, as I quoted a private-sector economist, and 
that quote came from the Journal of Commerce, and the economist 
is Walter Kemmsies with Moffatt and Nichol. Very respected 
economist. And you are absolutely correct; the congestion here 
at our ports is an issue, not only just here in--for the 
Nation, but it is a global issue. And, for that reason, in the 
summer of 2014, I identified the need to hold these congestion 
forums, and the Federal Maritime Commission proceeded with the 
assistance of my colleagues on the Commission to hold four 
forums.
    Now, one of our--we have nine basic responsibilities, the 
FMC. One of them is to monitor the activities of marine 
terminal operators, port authorities, and the foreign couriers. 
So this issue would be an interesting question, given what has 
occurred on the west coast. But let me say this.
    Number one, there are systematic causes to congestion. And 
I think it is fair to say that, as I have indicated--and I have 
been stating that, once the negotiation was over, that is not 
going to cure congestion. Absolutely not. And this is something 
that I shared, and I can represent. Everybody in industry 
shares that feeling, whether you are a carrier, whether you are 
a port authority, and whether you are a terminal operator.
    So, in essence, let me just highlight three particular ones 
that are really crucial at this time.
    Number one, I mentioned the question of the shortages of 
chassis. It has been very crucial. Now, on the optimistic side, 
I believe they are moving forward to a model which eventually--
that is going to be tweaked, and that is going to be cured at 
some point. But, for now, it is a problem.
    Number two, last year I testified, and this year I made 
reference again with regard to the involvement of these mega-
alliances, these alliances by the big carriers. And add to that 
the mega-vessels. When I was a commissioner at the Port of Long 
Beach at first we had, at best, a 5,000 TEU. That progressed to 
an 8,000 TEU. And now we have vessels three times as large as a 
football field. So, essentially, there are problems, and we are 
hopeful--we, the FMC--to kind of identify what these issues 
are, and suggest possible solutions, and identify possible 
bottlenecks to address.
    Ms. Hahn. Thank you. I appreciate that. And, again, I hope, 
as you have identified some of these other issues--for 
instance, demurrage--I think, you know, I really feel like 
something fishy was going on at our ports with the PMA not 
allowing the workers to load and unload the cargo. Meanwhile, 
charging folks for the storage of the containers on the docks, 
which weren't able to be loaded and unloaded. So I think there 
are some real--a lot of questions that we have about some 
actions that were taken during these contract negotiations, and 
I hope----
    Mr. Cordero. And I will say----
    Ms. Hahn [continuing]. The Commission looks into it.
    Mr. Cordero. And I just want to stress that this issue that 
I mentioned, including demurrage, is not an issue isolated to 
the west coast. This is a major issue at many of our ports.
    I will represent to you that the American shippers are very 
angry at this point with regard to that question. And, 
hopefully, we will be able to identify some of these issues as 
part of our congestion study that we are--our staff--is working 
on.
    Ms. Hahn. Thank you. I yield back, and I hope we have a 
second round of questions.
    Mr. Hunter. Thank the gentlelady. Mr. Graves is recognized.
    Mr. Graves of Louisiana. Thank you, Mr. Chairman. Just want 
to make note that in the 2 minutes I had the gavel I didn't 
even screw up, and I already got demoted.
    [Laughter.]
    Mr. Graves of Louisiana. Admiral, thank you very much for 
being here. It is great to see you again, and I enjoyed your 
State of the Coast Guard speech yesterday. Chief, thank you for 
being here, as well.
    Louisiana is a huge maritime State, as you know, the third 
longest coastline in the Nation, 5 of the top 15 tonnage ports 
in the United States. We have a huge dependence upon Coast 
Guard doing its job well in Louisiana, and I want to thank you 
and all the men and women that work under each of you for your 
service.
    In looking at the budget request, you see a 26-percent 
reduction in the ACI account, as compared to last year. You and 
I in the past have had long conversations about the fact, for 
example, the 110s are operating decades beyond their intended 
service life. When you look at the fact that you are operating 
so far beyond the service life on your 110s, the 210s and 270, 
the Medium Endurance Cutters once again operating beyond their 
service life, is that reduction aligned with where the Coast 
Guard needs to be, in regard to reinvesting or recapitalizing 
in its equipment to ensure that the men and women of the Coast 
Guard have the resources and the equipment they need to do 
their jobs?
    Admiral Zukunft. Thank you, Congressman. We have 
identified, you know, the right platforms for the 21st century. 
Many of the platforms we operate today were designed to do 
coastal search and rescue--our 210-foot cutters, to go after 
mariners that wanted to be found. Today, we are going after 
narco traffickers, and the last thing they want to do is to be 
detected, apprehended, and brought to justice.
    The Fast Response Cutters that we are currently building in 
Louisiana, that is a game changer for us. And we will build 58 
of those. We will recompete the contract. But when you talk to 
the crewmembers on these cutters, especially those that have 
served on the 110 before that, it is truly a game changer.
    We had an increase in migrant flow over the Christmas 
holiday. And had it not been for these Fast Response Cutters 
standing the watch over that Christmas holiday, we would have 
seen a potential mass exodus from Cuba, if the Coast Guard 
wasn't out there, standing the watch. But we would not be able 
to sustain that watch with these new platforms that we are 
bringing to bear.
    We proved the same with the National Security Cutter. And 
that is why the Offshore Patrol Cutter will be so critical as 
that middleware between a coastal patrol craft, an off-water 
frigate, if you will, a National Security Cutter, and then that 
middleware, the Offshore Patrol Cutter, to protect our maritime 
equities, including those in the State of Louisiana.
    Mr. Graves of Louisiana. So is that a yes or a no, in 
regard to the budget being where it needs to be in order for 
you to recapitalize, considering that these vessels are 
operating well beyond their intended service life?
    Admiral Zukunft. Yes. The best part about the fiscal year 
2016 budget is it gives us the wherewithal to proceed with full 
rate production of the Fast Response Cutters: 6 per year, and 
then to build out all 58 of those. A challenge we have is the 
full funding for final design of our Offshore Patrol Cutter. I 
am quite confident that we will demonstrate that this will be 
an affordable platform, and that the funding will be 
forthcoming for us to proceed with what will be the most 
significant major acquisition in Coast Guard history.
    Mr. Graves of Louisiana. Well, with your happiness with the 
performance of the FRC, perhaps you can turn to Louisiana yards 
again on the OPC when you are ready to go there.
    Let me change gears very quickly in the last minute. You 
and I also had long discussions about the fact that the Coast 
Guard--and I think we both used the term--has become somewhat 
of a Swiss Army knife. If you look at the evolution of the 
Service over the last few hundred years, you have taken on all 
sorts of missions that never were initially considered within 
the Coast Guard realm.
    Looking at--and, as Congressman Curbelo noted, the 
reduction in your Reserve training budget this year, nearly 9 
percent, as I recall--that is what allows you to address some 
of the surge capacities that you need in some cases. 
Considering the multimission new face of the Coast Guard, all 
the things you are trying to do out there, do you have the 
resources you need, in order to continue carrying out the 
security mission that the--the growing security mission that 
the Coast Guard is faced with today?
    Admiral Zukunft. Congressman, right now I am resourced for 
a perfect world. If we don't have a terrorist attack, if we 
don't have a major natural disaster. Any one of those 
uncertainties, I am resourced for that. But that is--it is 
inconsistent with a Service that prides itself on being semper 
paratus.
    As the Commandant of the Coast Guard, what I will not do is 
offer up reductions to our force structure. We have done that 
over the last several years, due to making painful tradeoff 
decisions to meet current-year budget needs. But I cannot cut 
any deeper into our force structure, as Ranking Member DeFazio 
and others have brought up, and Congressman Curbelo, with our 
Reserve component. But that is also true in our active-duty 
component, as well. So I need to hold fast on my force 
structure, because that really is the backbone of our Coast 
Guard.
    Mr. Graves of Louisiana. Did you want me to yield back?
    Mr. Hunter. Thank the gentleman. I would like to recognize 
and again say how just honored we are to have such esteemed 
colleagues here, who could easily be the full committee 
chairman, but isn't right now. Mr. DeFazio is recognized.
    Mr. DeFazio. Thanks, Mr. Chairman.
    And thanks for that last testimony, Admiral. I appreciate 
that. But within force reduction I would want to include, you 
know, your basic function of, you know, safety of life at sea 
and, in my case, that gets a bit parochial with the Newport Air 
Station. Central coast we have North Bend, Astoria. They are 
involved in half of the rescues off the Oregon coast. As you 
know, very cold water, short survival time. Congress 
forestalled some proposed cuts there. I know you are trying to 
move money around.
    But I never--we haven't seen a real rationale for those 
cuts. What one would observe is, A, would be a longer response 
time from North Bend; B, that puts more wear and tear on the 
equipment, which seems to be a good deal of an offset, in 
addition to the potential for losing lives.
    So, I mean, if you are going to persist in that, obviously, 
I am going to do what I can to find a way to not let that 
happen. But, beyond that, in the interim, I would like to see 
the analysis of how this really would have saved money. Because 
I--if you are not reducing force--a lot of it was personnel 
cost--and if you are not reducing force, then they are just 
going somewhere else. So that is for that.
    Now, if we can move on beyond my parochial issues, which I 
obviously feel very strongly about, but--icebreaking. I have 
been on the Polar Star at the South Pole with the former 
Commandant. We got the Polar Sea. I am going to see the poor 
thing in dry dock. As I understand it, pretty much dismantling 
it to try and keep the other ship going. And you are at a point 
where there is nothing in your budget for a new icebreaker--
potentially $1 billion.
    You know, some are advocating that, on an interim measure, 
perhaps we should look at refitting the Polar Sea to try and 
get--because I understand the hull is fairly good. And I was 
on--not out on, but on--a 52 at Newport, which is 60 years old, 
which are unique boats. There are only four left. They can go 
out in a breaking 26-foot sea. The other cutters can't. I don't 
know what we are going to do for a follow-on for the 52s, or if 
we can keep them going for 100 years.
    So, the question would be, are you looking at and close to 
making a recommendation on what we are going to do in the 
interim, perhaps by refitting the Polar Sea?
    Admiral Zukunft. Yes, Ranking Member. We have got money in 
the 2015 budget to pull the Polar Sea out of the water so we 
can do a full materiel inspection of it. Unfortunately, under 
continuing resolution, my hands are tied in the ability to 
award that contract. So therein lies the challenges of 
operating under a continuing resolution.
    Then, until we can do a full assessment, then we can make a 
full business case analysis of whether it is prudent to invest 
in buying up to perhaps 10 years of service life on a nearly 
40-year-old ship, or do we repurpose that money for perhaps a 
total recapitalization of the fleet, as well, which--at some 
point we are going to have to make that decision. But we are 
running out of time, and----
    Mr. DeFazio. You just gave us a good action item there.
    Admiral Zukunft. OK.
    Mr. DeFazio. I wasn't aware that you couldn't do the 
contract under the continuing resolution, and that should be 
something we could fix.
    Would there be money--would you need an appropriation to 
follow that, or just need authorization?
    Admiral Zukunft. Just need authorization, an anomaly to the 
existing continuing resolution. The same would apply as we want 
to award the National Security Cutter number 8, and we need to 
make that decision by mid-March. So that time is rapidly 
running out on us.
    Mr. DeFazio. Well, I would think the chairman might be 
interested in us doing a little rifle-shot suspension bill that 
might deal with some of these issues. Good.
    And then, on the question about the 52s, I mean, I know you 
have got an awful lot of stuff out there that needs replacing. 
I mean what are we going to do in the future? These are unique 
boats, you use them around the country. We are down to the last 
four. Maybe you can squeeze another round of refitting out of 
them. Beautiful inside, I wish the inside of my boat looked 
like that in the engine room. But, still, it is 60 years old. 
You have a follow-on proposal there? Are you thinking about 
that?
    Because, again, I go back to, you know, your list of unmet 
priorities. And I guess maybe we need to direct you a little 
differently, in terms of what we want to see a list of. Maybe 
we should be asking about your unprogrammed, or unmet projected 
capital needs, which would go--which would be a much more 
comprehensive list, which might get the attention of Congress a 
little better than these four little items.
    Admiral Zukunft. And just on the 52--the hulls are as you 
have seen. I have been on those boats, as well. And there is 
great pride in ownership, and they are relatively easy to 
maintain, from an engineering standpoint. So right now there is 
no need to repurpose those. They have a very unique, high 
ability to tow other vessels and operate in those conditions 
that you have in the State of Oregon.
    So, right now, there is not a service need to recapitalize 
those four very unique boats for a very unique mission in a 
very unique environment.
    Mr. DeFazio. OK. So we will look forward to their 100th 
birthday, perhaps, with a fourth set of engines.
    Thank you, Mr. Chairman.
    Mr. Hunter. Thank the gentleman. OK, it is my turn. I guess 
the first question I have, Admiral, is this. I think since I 
have had this position chairing this subcommittee, 4 years in a 
row now the President has sent us a budget request that guts 
your acquisition. The administration seems determined not to 
spend more than $1 billion. That is what they keep doing, $1 
billion on recapitalization of Coast Guard's aging and failing 
legacy assets.
    The GAO and previous Commandants have testified that it 
takes a little bit more than $2 billion a year to keep you on 
your program of record and your current acquisition strategy on 
time and on budget. So the administration does not support your 
acquisition program. I mean that is pretty plain.
    And I talked to Secretary Johnson last week, and it seems 
he is kind of obviously focusing on what is happening right now 
with the entire Department, but he didn't seem too concerned. 
And I think the game is the administration does this, and it is 
up to Congress, then, to come in and say, ``Oh, we all love the 
Coast Guard, we are going to plus them up to what they need to 
be.'' I think it is a dumb game. So we are not going to play 
it.
    So, my question is, what are you--when are you going to 
give us the American people and the administration a new--
mission needs statements that cut out those missions which you 
can no longer do? And what are the missions that you can no 
longer do? If we pass a budget for you that reflects exactly 
the President's budget request, what missions are you going to 
not do?
    Admiral Zukunft. And, as you are probably aware, well 
aware, Chairman, the word ``no'' has not always been in our 
vernacular. I will produce a mission needs statement, and my 
staff will certainly brief yours this summer. But as we look at 
this mission needs statement, what has changed in just the last 
couple of years?
    As DOD rebalances, you know, what vacuums have been 
created, and what unique niches does the Coast Guard need to 
fill? And that is why I am very focused on the Western 
Hemisphere. I have tripled the number of ships in the Western 
Hemisphere today. It is not because I have triple the number of 
ships in my inventory. I had to take them from somewhere else 
and put other mission areas at risk as I look at what is the 
greatest risk to our national security right now. And it is in 
the form of transnational organized crime. And so, we need to 
include that in the mission needs statement.
    The energy renaissance. We didn't see that when we wrote 
the last mission needs statement in 2004. An opening Arctic, 
which requires command and control platforms to be up there, at 
least on a rotational basis, and certainly icebreakers, to have 
the ability to have persistent presence up there, as well.
    So, I owe you that mission needs statement. When I meet 
with every Department of Defense geographic component commander 
across the world, every one of them, as they look at the 
threats in their area of responsibility, many of those require 
Coast Guard-unique authorities. And so, the demand on a global 
scale continues to go up, whether it is in the East China Sea, 
off the coast of Nigeria, in the Pacific Island nations in 
those remote economic exclusive zones, where fish is their only 
source of economic prosperity. Time and time again we are 
seeing more and more demands for more Coast Guard. And so, that 
is what we need to capture----
    Mr. Hunter. Let me--I can go to the combatant commanders 
and get a requirement list for the Coast Guard, too. That is 
not what I am asking for. What I would like is a mission needs 
statement that reflects your budget. And you could put that, if 
you want to, side by side with the combatant commander, the 
geographic combatant commander requirements. That is fine. But 
I would like a mission needs statement that is actually what 
you can do, not what you would like to do, or have been asked 
to do.
    Admiral Zukunft. OK, understood.
    Mr. Hunter. Can you get us that?
    Admiral Zukunft. I will.
    Mr. Hunter. OK. Thank you, Admiral. I appreciate it, 
because we want to know what can you do with the budget that 
the President has laid out.
    Question for Administrator Jaenichen. Talked about the 
Jones Act a little bit. Talked about it in the Senate. Our 
colleague, Senator McCain, has talked about axing the Jones 
Act, getting rid of it. We think that would be a horrible, 
horrible thing for America's industrial base and our ability to 
fight wars, protect ourselves, protect the sea lanes, and build 
ships. So I want you to talk about it.
    What impact is even talking about it, about changing the 
build requirements or getting rid of the Jones Act, what does 
that mean for American ship manufacturers?
    Mr. Jaenichen. Chairman, a couple things. In 2013 the 
Maritime Administration put out an economic impact study of the 
shipyards and repairing industry. Essentially, what it said is 
there are 100,000 shipyard workers that are currently employed 
building ships. There are also--if you take the indirect jobs, 
there are another 300,000 jobs in a $36 billion industry.
    The challenge that we have is, today--the Commandant 
mentioned the energy renaissance. Today the order book at our 
shipyards around the country, we have 33 large vessels, 
oceangoing vessels. A significant number of them, 25, are 
actually supporting the energy industry. There are 12 of them 
that are 330,000-barrel tank vessels. There are also seven that 
are 110,000-barrel or greater, in terms of articulated tug and 
barges to be able to move those cargoes. Those are currently on 
the order book today. We additionally have eight container or 
RoCon kind of vessels that are also on the order book.
    The challenge is even the discussion of potentially 
changing the build requirement is enough to essentially 
influence some of the finance folks. And if they get concerned 
about the ability for the folks that are buying these ships to 
be able to get financing, or they take the risk and they make 
the risk too large so that they have to charge a higher risk 
rate to be able to get that, some of those projects that are 
currently on the order book today may not occur.
    And it has nothing to do with even changing the Jones Act. 
It is just the sheer threat of changing the Jones Act, because 
what ends up happening is, if you bring in tonnage that can be 
built overseas at shipyards that are subsidized by forward 
governments, you get a situation where you imbalance the 
economic model that these operators currently who have made the 
investment in Jones Act tonnage, built it in the U.S. to be 
able to be coastwise trade, they are now at a disadvantage in 
comparison. So now you have got projects that are currently 
financed for 25 or 30 years. They now can't compete in the same 
environment. So, potentially, those projects go under, or they 
can't pay their loans. So this is a cascading problem that 
could potentially be created.
    There are a number of folks that have said that the Jones 
Act is the problem and the reason why we have gas high at the 
pumps. Can I--I could take it through sort of a little 
mathematical analysis and say that is not exactly the case. If 
you take a look at the U.S. Energy Information Administration, 
they have said that, from a barrel of crude oil, you get 12 
gallons of diesel, 19 gallons of gas, and that is out of a 42-
gallon barrel. So about 31 gallons. So that is about 75 percent 
is useful.
    The difference in the rates to be able to move on a 
foreign-flag vessel versus a U.S.-flag vessel, say from the 
Gulf of Mexico to Canada, is about $2 per barrel. To move it to 
the refineries on the east coast, it is about $5 a barrel. The 
difference is about $3. So you take that 31, divide it into 3, 
and you get about $0.09. That is the cost to be able to move it 
per barrel. And that doesn't even count the 25 percent of that 
barrel that can be used for other things to be able to defer 
that cost.
    I compare that $0.09 to the Federal tax on gas, $0.18. In 
the State of New York, the local and State taxes is $0.44. So 
$0.62. And a comparison is $0.09. I also take $0.09 and I 
compare it to the price of a gallon of gas. It is less than 4 
percent. Whoever is saying that this is the cost of our woes 
for high gas prices is misinforming the American people.
    Mr. Hunter. Thank you for that. And I want to tie that in, 
Admiral. What is the Coast Guard's position, if you had 
foreign-flag vessels moving chemicals, flammable gas, oil, 
anything like that that can do anything up in the interior 
river system of the United States? What does that do to the 
Coast Guard?
    Admiral Zukunft. Yes. We have a very rigorous port State 
control program for foreign-flagged vessels in--on any given 
day in our U.S. ports we probably have at least a dozen vessels 
that are being detained because they do not comply with 
international standards for pollution and safety of life at 
sea.
    Those standards are the exact same standards that we apply 
to the U.S. fleet. There is no difference between the two. But 
we do see that flag States of convenience, some of them are 
cutting corners. And in this regard, moving highly volatile 
materials, this is not a place where we can afford to cut 
corners. And, as the Commissioner mentioned, in our very 
congested ports.
    Mr. Hunter. So let me ask you more to the point, then. 
Would the Coast Guard rather see American mariners on American-
flagged vessels that have been inspected by the U.S. Coast 
Guard and have been trained up to U.S. Coast Guard standards 
and U.S. mariner standards driving volatile ships up and down 
America's inland waterways? Or would you rather see folks from 
Pakistan, from Yemen, from Somalia driving those ships on the 
interior waterways? What is the Coast Guard's take on that?
    Admiral Zukunft. Yes. Certainly from our credentialing 
program, we run background checks on all of those mariners. 
They carry--many of them carry transportation worker 
identification credentials. So we have that trust and 
confidence in our American operators.
    So, to answer your questions, from a security aspect, that 
would be my preference.
    Mr. Hunter. Thank you, Admiral. Thank you, Administrator.
    I would like to yield to Mr. Garamendi.
    Mr. Garamendi. I yield to Mr. Cummings.
    Mr. Cummings. Let me--Mr. Chairman, I want to thank you for 
your comments that you just made.
    And I hope that--it just reminds me, with regard to the 
Jones Act, I agree with you, Administrator. I mean we can't 
even--we--you know, it seems as if there is some real short-
sightedness going on here, and that is a major problem. And I 
am hoping that the chairman will join all of us on this--
particularly on this subcommittee, to try to make sure that the 
Congress understands the significance of the Jones Act, because 
I think a lot of our colleagues just do not understand how 
significant it is, and how America is falling behind. I used to 
say slowly, but surely. Now it is fast.
    And that leads me to these questions. You know, as you 
know, our highest priority, Administrator, you know, was to try 
to make sure that we--well, when I go back and I think about my 
chairmanship of the subcommittee over the Coast Guard, you 
know, we spent a lot of time just trying to make sure that our 
ports were safe. And we put in a lot of measures to try to 
accomplish that. Where are we on that, the port--with regard to 
Coast Guard and ports?
    Admiral Zukunft. Chairman, I will be happy to take that 
question.
    Mr. Cummings. Yes.
    Admiral Zukunft. We have really matured our relationship 
with our Area Maritime Security Committees. And even taking it 
one step further, when I look at the State of California, and 
Florida, and others where we have transnational criminal 
organizations operating in those very same waters where we are 
trying to discriminate licit commerce from illicit commerce, 
working with Federal, State, local, and private-sector, the 
synergies that we have, many of those come under our captain-
of-the-port authorities. But we have literally come light years 
since the implementation of the Maritime Transportation 
Security Act of 2002.
    Mr. Cummings. Good. Administrator, how many vessels are 
currently flying the U.S. flag in oceangoing foreign trade?
    Mr. Jaenichen. Sir, as of the 1st of January of 2012, we 
had 106 vessels. Today that number is 81. And I anticipate that 
it is going to go lower than that before the end of the year. 
The challenge for the U.S.-flag internationally trading fleet 
is the lack of available Government-impelled cargo, which is 
one of the things that they rely on and have access to.
    DOD cargoes are principally one of the principal cargoes 
that they carry on an annual basis. The--General Paul Selva, 
the commander of U.S. Transportation Command, recently is on 
record as saying that this budget for transportation 
requirements, essentially, is 50 percent what it was just 2 
years ago. So that is a significant challenge for the U.S.-flag 
fleet, and we are seeing their exodus because of the lack of 
Government-impelled cargo and other cargo opportunities.
    Mr. Cummings. How many such vessels were there, say, 5 
years ago?
    Mr. Jaenichen. Five years ago, typically from--for about 
the last 20 years, all except for the year 2007, we had a 
number above 100 in that entire period. So we have been 
hovering around 100, somewhere between 103 and just below that 
in--only in 2007. But, essentially, from 2012 over the last 3-
year period, we have lost 25 percent of the U.S.-flag fleet. 
And that corresponds to about 2,200 U.S. mariner jobs that have 
been lost, as a result.
    Mr. Cummings. And I know you have been working diligently 
to strengthen the flag fleet. And I want to applaud you and 
Secretary Foxx for the efforts, and--because he has shown a lot 
of personal commitment to the success of the U.S. merchant 
marine, more so than just about any other Secretary that I have 
had a relationship with.
    Can you discuss what steps have been taken, and what 
additional ones are planned to support our U.S.-flag fleet in 
the foreign trade?
    Mr. Jaenichen. Thank you for your question, sir. We have 
done a couple of things. We started last year with two National 
Maritime Strategy symposiums. We did the first one--the first 
one we did in January was solely dedicated on the U.S.-flag 
fleet trading internationally. And so we met for several days, 
had about 600 stakeholders that participated in that particular 
symposium. We captured all those comments. We have now collated 
them, we have identified what we refer to as tenets that would 
be required to be supporting in a strategy, and we have also 
identified some options that might be available to be able to 
improve the number of ships operating under U.S. flag, 
internationally.
    We have shared that with our Marine Transportation System 
National Advisory Council. They have assisted us in 
prioritizing those. I have sat down with my Federal partners, 
the Federal Maritime Commission, members of the Commandant's 
staff, and others who are involved in this particular 
requirement to be able to get this National Maritime Strategy 
out.
    I have also employed an outside organization who is 
actually going and talking to stakeholders to make sure that we 
recognize what a National Maritime Strategy should and should 
not do. And we are in the process of getting that drafted, and 
then getting it coordinated with the agency. I hope to have 
that out very soon.
    Mr. Cummings. Thank you, Mr. Chairman.
    Mr. Hunter. Thank the gentleman. Ms. Brownley is 
recognized.
    Ms. Brownley. Thank you, Mr. Chairman. I appreciate it. I 
am a new member of the T&I Committee, and very, very honored to 
be able to sit on this subcommittee. And I have a very specific 
question, probably for you, Admiral. And it is--my 
understanding that the Coast Guard air station currently 
located at Los Angeles International Airport will be relocating 
to Point Mugu Naval Air Station, part of Naval Base Ventura 
County, which is in my district. I am very excited about this 
news, very pleased about the move, and look forward to 
welcoming new personnel to Ventura County.
    My first question is, if Congress does fail to fund DHS 
programs this week, would the shutdown affect the planning of 
this move, and would it impact it at all?
    Admiral Zukunft. Congresswoman, no, it would not. We are 
being squeezed out of the Los Angeles Airport, as you well 
know, due to growth in that sector. And so we need to continue 
to operate in that domain. What it does inhibit our ability to 
do, though, is to make upgrades that would be needed at Ventura 
County to permanently base aircraft there. But we can certainly 
operate from there in the near term. But what it does not 
provide us is the long-term solution, hangar upgrades and the 
like, to make that a permanent operating base.
    Ms. Brownley. And what is the timeframe, exactly, for this 
move?
    Admiral Zukunft. We will be relocating to Point Mugu in 
2016.
    Ms. Brownley. And in terms of buildings there, have you 
identified the buildings that need to be ungraded?
    Admiral Zukunft. There is a hangar that would need to be 
upgraded, and we are also looking across DHS to see if there 
might be an opportunity to have other components of the 
Department perhaps collocated there, as well. So we are looking 
at this from an all-of-DHS approach, not just from a Coast 
Guard approach.
    Ms. Brownley. And the money proposed within the fiscal 
budget, is that money enough to cover all of the costs and the 
upgrades on the site? You wouldn't need any additional money--
--
    Admiral Zukunft. Yes, we would need an additional 
appropriation to be able to build out a hangar to fully 
accommodate that. We can provide you what that dollar value 
would be, but right now we don't have an appropriation to do 
so.
    Ms. Brownley. Thank you, sir. And I yield back.
    Mr. Hunter. Thank the gentlelady. I think we are well 
represented by the west coast here.
    [Laughter.]
    Mr. Hunter. Yes. Except for a couple people. That is all 
right. I would like to yield to the ranking member, Mr. 
Garamendi.
    Mr. Garamendi. Mr. Chairman, thank you, and I thank my 
colleagues for their questions. Many of the questions that I 
was going to ask have been asked.
    But I want to follow up, Mr. Jaenichen, on the discussion 
that you were having with regard to the merchant marine, the 
critical role that it plays.
    And also, Admiral, in your opening statement, you mentioned 
the issue of LNG. We will be shipping LNG offshore this year, 
actually. Cheniere will begin its process. I think you are all 
aware of my particular interest in this. It may take 100 LNG 
ships to handle just the Cheniere shipments. The issue of 
safety is of utmost importance. We know that, under current 
law, imported LNG must be handled by American sailors, merchant 
marine. We passed a bill last year in the Coast Guard 
authorization that authorizes the Secretary to have 
discretionary authority on export.
    Mr. Jaenichen, what is the status of that discretionary 
authority? How will it be used with regard to the export from 
the Cheniere facility in Texas?
    Mr. Jaenichen. Ranking Member Garamendi, thank you for that 
question. We have done a number of initiatives. First, we have 
reached out to the LNG industry to try to better understand 
what it is they are shipping, how much they are shipping, and 
where they are shipping from. To be able to do that, we have 
partnered with the Department of Energy and a task force that 
is associated with the Committee on Marine Transportation, 
looking at--specifically at alternative energies.
    We also, as part of our international engagement with the 
bilaterals that we do on a maritime basis, and also what we do 
internationally, I have personally talked with members of the 
Japanese delegation, the South Korean delegation, and the 
Chinese delegation, with regard to some of these particular 
issues. I will say that they are not taking root very 
effectively, but we are continuing to engage on that, to see if 
there are opportunities in some kind of agreements that we 
might do.
    We are also taking a look, talking with our shipyards, in 
terms of their capacity. I think you know that the last LNG 
vessel that we built, we built 16 of them back in the 1970s and 
the 1980s, that the last one was built in 1980. The yards that 
did that here in the U.S. are no longer building commercial 
vessels, so we have some challenges to be able to reconstitute 
that particular capacity. So, we are doing a number of things 
to make sure that we can understand and be able to exercise the 
direction that you provided, sir.
    Mr. Garamendi. Specifically, having looked at all of that, 
is it the policy of the administration to encourage the 
construction, the building of LNG tankers, in the United 
States? Is that your policy, or is it not?
    Mr. Jaenichen. That is what we are working to put together, 
as a policy, to do that. It is not firmly set yet. I am working 
on that to be able to get to the Secretary.
    Mr. Garamendi. Well, let me be very clear where I am coming 
from. There are three critical national security elements 
involved in the LNG issue. First of all, the natural gas itself 
is a strategic asset of the United States. It has led to the 
repowering of many of our electrical power plants. And it has 
allowed us to have a significantly lower energy cost than many 
of our competitors. It is a strategic asset here, in the United 
States.
    Secondly, the shipbuilding industry is absolutely critical 
to the Coast Guard, to the U.S. Navy, and to the--what remains 
of the American merchant marine.
    Thirdly, the merchant marines themselves are critical. We 
have seen the discussion part of it today, that the merchant 
marines are absolutely critical for the--that is not only the 
mariners, but also the ships critical to the national defense. 
Ninety percent of military supplies are by ship. I do represent 
Travis Air Force Base and the Air Mobility Command. We love C-
5As and 17s. However, that is a small percentage of the 
materiel that needs to be moved around the world.
    So, we have three critical national security elements 
involved in the LNG trade. We should require that all LNG 
exported from the United States be on American ships, so that 
these three elements of national security are enhanced.
    A lot of mariners would be put to work. You mentioned the 
number of mariners that have lost their jobs: 2,000 in the last 
3 years. They could be on these ships. The shipbuilding 
industry can build these ships. They are going to take time to 
gear up, perhaps 3 to 5 years. So there would be a phase-in 
period of time for the LNG ships to come online.
    And, finally, it is a security issue. The chairman may have 
stacked the deck a little bit by mentioning Yemenis and 
Somalians and others that might be on these ships. And, in 
fact, perhaps they are on the ships, we don't know. But we do 
know that every American mariner is licensed. And we know who 
they are. We have their thumb prints, we have their 
identification. And all of these volatile cargoes, at least in 
American ports, in and out, ought to have American mariners.
    That ought to be our policy. And that ought to be your 
policy, Mr. Jaenichen. And you should ask for nothing less. And 
the Coast Guard should be equally certain, since the safety of 
our ports is your business, Admiral. So, having done that, I 
want to hear specifically where you are, Mr. Jaenichen, in this 
process. I know you are not going to get it today.
    Next, I am going to take just a few more minutes, if it is 
OK with you, Mr. Chairman. The National Maritime Strategy was 
supposed to be delivered to this committee last week. Where is 
it, Mr. Jaenichen?
    Mr. Jaenichen. Sir, it is going to be late, as you and I 
previously discussed.
    One of the challenges I want to make sure the National 
Maritime Strategy--that we deliver is the right one. I think we 
are only going to get one chance at this, to be able to get it 
right. We have done a significant amount of effort to make sure 
that we have captured stakeholder input, to make sure we have 
captured the--what is going to be required. And one of the 
things that was included in that Coast Guard authorization was 
that I have to also coordinate it within the interagency. That 
process takes a little bit longer than----
    Mr. Garamendi. Let me guess. Stuck in OMB. Is that correct?
    Mr. Jaenichen. The interagency process takes some time, 
sir.
    Mr. Garamendi. So it is stuck in OMB.
    [Laughter.]
    Mr. Garamendi. Well, we will see if we can pry it out of 
OMB. I assume that you have worked with the Coast Guard on this 
strategy. Is that correct, Mr.----
    Mr. Jaenichen. We have personally talked with them, sir. I 
have also met with Chairman Cordero and his Commissioners, and 
we have done a lot of what I would call the interagency 
engagement. I still have some drafting, the physical 
requirements to do. So we have gotten their feedback, and I am 
now in the process of drafting. So it is not----
    Mr. Garamendi. I suspect that the Chair and I would be 
interested in having a conversation with you about the general 
issues that are in the current strategy. We may have some views 
ourselves. So I would appreciate that conversation.
    Next, P.L. 480. I understand that USAID, OMB, Departments 
of Agriculture, Transportation have been involved in 
negotiating some sort of a new P.L. 480 program. Is that 
correct?
    Mr. Jaenichen. Mr. Garamendi, you are correct.
    Mr. Garamendi. My understanding is also none of that 
information has been shared with the people that actually write 
the laws--us. So when do we hear what the new strategy is?
    Mr. Jaenichen. Sir, what is in the President's budget for 
fiscal year 2016 is a 25-percent local and regional purchase 
requirement. Our budget supports that. What is being discussed 
is something more expansive than that. That legislative 
language I know is being drafted, and it is not at a point I 
think it is ready to be delivered to you.
    Mr. Garamendi. Well, we have two critical issues here that 
are kept secret from the Congress. Not a good thing to do. It 
is kind of useful to brief us along the way. You can get some 
input from us, may give better direction, more likelihood of 
something actually happening. The fact that it hasn't been done 
is disturbing.
    If I might, Mr. Chairman, there is one further question, 
and this is to the admiral, and it has to do with your new 
airplanes that you are getting from the Air Force. Neat little 
things, the C-27J models.
    Do you have any money to upgrade those, and to make them 
compatible with the Coast Guard requirements?
    Admiral Zukunft. Congressman, we do. And we have an 
appropriation to do so. In fact, that work is ongoing, as I 
speak.
    Mr. Garamendi. Let me guess. The continuing resolution 
makes it impossible for you to actually do the work?
    Admiral Zukunft. Some of this work is actually ongoing. And 
so we are still on a timeline where we will have four C-27Js in 
Sacramento in 2016.
    Mr. Garamendi. I do like the word ``Sacramento.'' My 
understanding is that they are to replace the C-130J model, or 
H model.
    Admiral Zukunft. This is actually a midrange aircraft, and 
so we have a C-144, which--originally, the program of record 
was for 36. We have 18 of those C-144 aircraft. And, as you 
know, we have 14 C-27Js, which is a much more capable aircraft. 
So we are reassessing is that total of 18 and 14, will that 
meet our service needs into the 21st century.
    Mr. Garamendi. OK. As the C-27s come on board, they are not 
all coming at once; they are going to be spread out over 3, 4 
years. Is that correct?
    Admiral Zukunft. That is correct.
    Mr. Garamendi. OK.
    Admiral Zukunft. At the same time----
    Mr. Garamendi. Is there a hiatus and, therefore, an 
insufficient number of aircraft, depending on the timing of the 
arrivals of the 27s?
    Admiral Zukunft. That is a good question. So we are phasing 
the arrival of the C-27Js with the dispatching of the Hercules 
version of the C-130, which is going to the Forestry Service. 
In fact, that first aircraft of eight is in the process of its 
transition, as well.
    So, the timing of that, so we don't create a gap for the 
Coast Guard, is that C-27Js come on board, the C-130H will go 
over to the Forestry Service. And that will happen over a 
period of the next 3 years.
    Mr. Garamendi. So there is or is not a gap?
    Admiral Zukunft. Right now there will be a small gap, but 
it is a negligible one.
    Mr. Garamendi. Where will that gap be?
    Admiral Zukunft. This is near-shore, since it is a midrange 
aircraft. And right now our greatest gap is when we are using 
long-range surveillance in the drug transit zones, which are 
normally staged out of a foreign country.
    Mr. Garamendi. I would like to get into this, a little more 
detail about the gap. The Forest Service will not be able to 
use those airplanes immediately, because they have to be 
reconfigured for this--for firefighting. And it may not be in 
the interest of drug interdiction and long-range surveillance 
that a gap exist at all. I think I can go on and on with a 
whole series of questions here about that issue, but I would 
like to get some more detail on that.
    A final point is that I--last week I was with the President 
of Panama, and had a discussion with him about their desire to 
work more closely with the Coast Guard. And actually, he was 
willing to establish some sort of a station and facility in 
Panama that would be available to the Coast Guard to be used. I 
know you have some facilities there now, but there would be a 
possibility of a more integrated facility.
    And, finally, back to Port Hueneme. The Navy will be flying 
its Poseidon version of the Global Hawk out of Port Hueneme, 
and they will be doing exercises in that area, training 
exercises. That piece of equipment observes the ocean well. I 
would like to have a discussion with you about using the 
Poseidon information in the training, as they observe the 
southern California coastal area. Might find it to be useful.
    Thank you very much. Yield.
    Mr. Hunter. Thank the ranking member. I would like to 
recognize Mr. Graves again for the second round.
    Mr. Graves of Louisiana. Thank you, Mr. Chairman. Admiral, 
we had the chance in a previous life to spend a good bit of 
time working on the oil spill. And, again, I want to thank you 
for your efforts there.
    As you know, the--you can do simple math, and you can come 
to the conclusion that you have more oil remaining in the Gulf 
of Mexico today than perhaps was spilled in the entire Valdez 
oil spill. And the State of Louisiana and the Coast Guard 
differed on the best approach to continue seeking the--and 
removing the oil that was there. Where is the best place for 
the State of Louisiana to turn if they have concerns related to 
the residual oil in the Gulf of Mexico resulting from Deepwater 
Horizon?
    Admiral Zukunft. Yes. The first place to begin is with the 
regional response team. But probably, to even navigate through 
that process, would--to meet with the sector commander in New 
Orleans, who now owns the Federal on-scene coordinator process. 
But to activate the regional response team, as we look at 
measures of whether it is more friendly to the environment to 
let the oil decay or to go in and do removal operations--now, 
this does not negate the fact that if there is report of oil or 
oiling, that oil will be removed under the Oil Pollution Act of 
1990.
    Mr. Graves of Louisiana. Well, I think for about 3 years we 
had asked the Coast Guard to compel the responsible parties to 
step in and require them to do additional oil removal, as you 
and I have discussed. Just by moving into the knee-deep water, 
as we discussed recently, as I recall, I think the 9-month 
period yielded a 15-time, 12-time increase in the removal of 
oil, indicating that that was a good scenario, in terms of 
finding additional oil and removing it.
    For years, we pushed the Coast Guard to require additional 
removal activities, and those were rejected. If the Coast Guard 
is unwilling to compel the responsible party, what--where does 
the State go then?
    Admiral Zukunft. Well, we compelled the responsible party. 
And in 2012, 2013--each year we removed about 6 million pounds 
of oil. And we continue that process into 2014. Whether it was 
weather-related or not, but--we only removed about 29,000 
pounds. That does not suggest that there is not still oil out 
there. But it just has not presented itself. But when it does, 
the Coast Guard will respond to any increased oiling.
    What we then do is we have to send it off to a lab and 
determine whose oil is it, to begin with. So this will be a 
Coast Guard-led evolution. And if this is BP's oil, then they 
will be held accountable for those removal actions.
    Mr. Graves of Louisiana. Do you see the State and the 
parish, county, local governments as having a role in the 
response?
    Admiral Zukunft. Absolutely, Congressman. And that was a 
big learning curve during, really, the most complex oil spill 
in U.S. history, was who is in charge. The State of Louisiana, 
as are most coastal States, typically operate under a Stafford 
Act. And it is the Governor of that given State that directs 
the day-to-day operations.
    Under the Clean Water Act, this is led by the Federal 
Government. And so it is a different governance structure. And 
so, what we felt was imperative is that every Governor, every 
parish president, every mayor on the coast of--the entire gulf 
coast have a Coast Guard liaison officer that they can talk to, 
to make sure that their equities were represented. We didn't do 
that at the very beginning, and so there were concerns of a 
breach of trust with the Coast Guard.
    Mr. Graves of Louisiana. But you do recognize that the Oil 
Pollution Act also has a savings clause that allows for State 
authorities, State laws, to continue to apply in cases when 
they don't--they generally conflict with Federal law.
    Admiral Zukunft. There is, correct.
    Mr. Graves of Louisiana. Let me change gears real quick. 
The Coast Guard leads a U.S. delegation in the IMO related to 
ship recycling. And it is my understanding there is currently a 
convention under discussion that would, in effect, encourage 
the use of foreign facilities for ship recycling, as opposed to 
those stateside.
    Could I just ask you, in the Coast Guard's role in that 
delegation to the IMO, could you also consider the use of 
stateside ship recycling facilities for foreign ship recycling?
    Admiral Zukunft. Yes, I will have to get back to you. I 
can't comment on that on the record right now, but I will be 
happy to back-brief you on that.
    [The information follows:]

        The Coast Guard acknowledges its role as leading the U.S. 
        delegations to the International Maritime Organization (IMO). 
        However, the Coast Guard is not involved in the permitting of 
        vessels being recycled in the U.S. and is not in a position to 
        respond to the specific request presented by Representative 
        Graves. It is recommended that ship recycling-related questions 
        be posed to the Coast Guard's governmental partners at the U.S. 
        Maritime Administration (MarAd). MarAd generally manages U.S. 
        ship recycling issues/concerns for purposes of IMO activities.

    Mr. Graves of Louisiana. Thank you. I appreciate it. 
Administrator Jaenichen, you guys issued a contract in October 
of last year to scrap a vessel. And, as I recall, the way that 
works is you have companies that come in and bid, and that 
company that bids the highest actually pays you to scrap the 
ship, because they generate revenue from the recycling 
activities.
    It is my recollection that MarAd actually selected a 
company that was willing to pay $400,000 less, as opposed to 
more. And, again, just reminding folks that the higher the 
price, the better for taxpayers, because the revenues come to 
the State--excuse me, come to the United States.
    In this case, MarAd allowed additional time for the company 
to pay the fee that they were supposed to be paying, which, as 
I understand, is not allowed by the rules. And now it is my 
understanding that the company has actually shut down 
operations, and has four MarAd vessels. So, struggling with a 
few things.
    Number one, does MarAd actually do a financial evaluation 
to determine the solvency of the company, the ability of the 
company to pay? Now we are in a situation where the taxpayers 
have not received the funds, the vessels are not being 
scrapped.
    And secondly, just trying to understand best value for the 
taxpayer there, to choose a company that is willing to pay 
$400,000 less. Thank you.
    Mr. Jaenichen. Congressman, thank you for that particular 
question. I would have to go and take a look at the specific 
solicitation. Here is what I can tell you.
    Over the 90 contracts that we have either done through 
vessel sales or through service contracts, where we actually 
have to pay for them to actually dispose of the vessel, 72 of 
the 90 that we have done have, in fact, gone to the highest 
bidder. Under our best-value contract, we do--we take a look at 
a couple things. We take a look at the sales price or the 
service fee cost. We take a look at the production period. We 
take a look at the past performance of that particular company. 
And then we award it, based on best value.
    The GAO has looked at this program, and has validated our 
procedures for best value. And they have also ensured that we 
are in compliance with the Federal acquisition requirements.
    With regard to the current issue with the scrapyard that is 
currently disposing of a couple of our vessels, one of the 
things that has happened over the last probably month and a 
half or so, the bottom has dropped out of the scrap metal 
market, and so that is a challenge. We were made aware of this 
here recently. We are trying to ascertain what the status is, 
and how that might affect the actual performance period of the 
production contract. I would have to get back to you on the 
specifics, because I really don't have that information.
    I will tell you that we have had a situation in the most 
recent solicitation where we had ships that--bids were made. 
Because of the change in the scrap metal market, that the 
actual first and second bidder actually withdrew their sales 
contracts. We actually awarded it to the next lowest bidder, 
which was $400,000 less than the highest bid. But they were 
still willing to pay for that vessel sale. So those are the 
examples of what happens under the solicitation, and how it 
works.
    And so, to be able to go back to specific, you know, 
contracts, in terms of money lost, we do attempt to get the 
highest value, to make sure that the taxpayer is the 
beneficiary of that. And, again, 80 percent of the time we are 
able to do that.
    Mr. Graves of Louisiana. Thank you, Administrator. I would 
appreciate if you could follow back up on that. As I 
understand, the high bidder in this case actually did protest, 
and still lost out in this case.
    Thank you, Mr. Chairman.
    Mr. Hunter. Thank the gentleman. Ms. Hahn is rerecognized.
    Ms. Hahn. Thank you, Mr. Chairman. This is for the admiral, 
Admiral Z.
    I know you know that this Congress--or not this Congress, 
but a previous Congress, after 9/11 passed the law that would 
require 100 percent of scanning for the containers that are 
coming in and out of our ports. And it is clear, from this 
administration, that that goal is not even being attempted to 
be achieved. And, in fact, we have heard from, I think, both 
Secretaries of Homeland Security that it is just not something 
that is going to happen. And, instead, the administration has 
asked for a layered approach to security in and out of our 
ports.
    I think our ports are still one of the most vulnerable 
entryways into our country. And I think sort of the excuse that 
it may slow down commerce, and that would be of a bigger 
detriment to our economy than an attack at one of our ports 
would be, I disagree with that 100 percent. And, again, 
interesting that, through these last months of the contract 
negotiations, we have been told now that it might take 3 months 
to clear out the backlog of the ships on the west coast ports, 
which I think is a bigger issue.
    I have introduced a bill that would--the SCAN Act--that 
would authorize two ports in the country to do a pilot program 
of 100 percent scanning of the containers. I think the 
technology exists so that it wouldn't slow down commerce. Is 
that something that you think we ought to at least evaluate, or 
look into, as a possible long-term policy for this country?
    Admiral Zukunft. Yes, Congresswoman, that would really fall 
under the oversight of our Customs and Border Protection. So it 
would probably be unfair for me to comment on what Commissioner 
Kerlikowske would--this would come under his purview, whether 
that would be a prudent measure or not.
    I will say we have a seamless interaction with our Customs 
and Border Protection. Coast Guard and CBP work at the National 
Targeting Center together, where Coast Guard screens every 
foreign crewmember destined for the United States. It could be 
on a passenger vessel, it could be a commercial vessel. CBP 
does the same thing for every container. Where was it packed? 
Is it a trust shipper or not? Which would then make that 
particular container subject to further screening, or perhaps 
even more intrusive and time-consuming, actually opening and 
inspecting that container. But, at the end of the day, this 
bill would really need to be addressed to Customs and Border 
Protection.
    Ms. Hahn. Well, I just was asking you because, of course, 
Coast Guard oversees our ships coming in and out. And, again, 
on the west coast you are dealing with other issues, with panga 
boats, and that is even another layer of security coming in and 
out of our ports. So I appreciate that.
    So we--the Secretary of Homeland Security came out today 
with a statement that said if Congress was unable to reach 
agreement on the DHS funding this week, contract negotiations 
will be delayed to construct the Coast Guard's eighth National 
Security Cutter, which would lead to higher cost. And I was 
wondering if you could just elaborate to us, so that, while we 
are trying to make this decision, what kind of cost would be 
higher as a result of the DHS funding lapsing?
    Admiral Zukunft. Yes. Through our acquisition program, we 
go with a fixed-price contract. And so we have negotiated the 
price of that contract. And so the contract that will be let is 
$638 million. But we need to award that by mid-March, so it 
will be obligated by the end of the month. If we miss this 
timeline, then we have to renegotiate the price all over again. 
In our years of experience, every time you negotiate, you 
negotiate to a higher level, not to a lower level.
    So, it increases the cost and, more importantly, it also 
delays the construction of this final cutter of this program of 
record at a point in time where we need to build trade space in 
our acquisition budget to bring on the Offshore Patrol Cutter.
    Ms. Hahn. And I also--I understand that a lapse in the 
funding will impact your 225-foot buoy tender ships. And these 
ships, of course, are crucial to protecting vessels on our 
coastline, recovering spilled oil. What does a lapse in 
maintenance of these ships--what does that mean?
    Admiral Zukunft. Yes. So we have a very finite acquisition 
budget. And so we squeeze everything that we can into it. And 
so, with our 225-foot buoy tenders, this is a service life 
extension program to extend the service life of these ships out 
for a number of years ahead.
    And so, what that does create, then, is a backlog. And then 
we would have to look at the next year acquisition budget, but 
we would need some relief in that to deal with the backlog that 
the CR may create this year.
    Ms. Hahn. Thank you. I yield back.
    Mr. Hunter. Thank the gentlewoman. I want to yield to the 
ranking member, Mr. Garamendi.
    Mr. Garamendi. I want to thank the witnesses for their 
testimony today, the work that you do. We ask some questions. 
Some of them seem to be tough, but all of them are very 
important, and I want to thank all of you. I am going to have 
to slip away to attend another hearing over in the Committee on 
Armed Services. So thank you very, very much.
    Mr. Chairman, I yield.
    Mr. Hunter. Thank the gentleman. Master Chief, not 
forgotten about you.
    So let me ask. With all the stuff that is going on, all the 
budget cuts, and I guess you could say the kind of spurning by 
your own leadership within the administration and OMB and the 
Department of Homeland Security, they don't think much of the 
Coast Guard, as reflected by their budget. What is the biggest 
obstacle that you face in making sure that your Coast Guard men 
and women are able to function and live happy lives and go 
about their duties?
    Master Chief Cantrell. Well, thank you, sir. What--this is 
affecting folks right now today. And what we want our folks to 
be focused on is getting the mission done. And the last thing I 
want by a young petty officer on a buoy tender that has got a 
10,000-pound sinker swinging around on the deck as they work a 
buoy, is to worry about if he is going to get a paycheck or 
not, or worry about his training is going to be affected, or 
his transfer is going to be affected later on. We want them 
laser-focused on mission.
    Same thing for our folks that are out driving boats, that 
are out pounding through 20-foot surf to rescue a sinking 
fishing vessel. I want them focused on their job, not worried 
about whether they are going to get a funding bill, or 
whether--again, it goes back to the--are they going to get a 
paycheck or not. That is not what they should be focused on.
    Mr. Hunter. Let me----
    Master Chief Cantrell. I mean I think we have the----
    Mr. Hunter. Let me ask----
    Master Chief Cantrell [continuing]. Best, brightest, and--
--
    Mr. Hunter. If there is a shutdown, do the--does the Coast 
Guard not get funded?
    Master Chief Cantrell. A shutdown? If we are not funded, 
our folks, in essence, would not--I mean they are going to show 
up for work, because that is what they do. But a lapse this 
week in appropriations affects, of course, next week. But this 
is what is on their minds.
    Mr. Hunter. When is payday for the Coast Guard? It is every 
2 weeks?
    Master Chief Cantrell. Every 2 weeks. Yes, sir.
    Mr. Hunter. So the first iteration of not being paid would 
kick in 2 weeks next month?
    Master Chief Cantrell. They would be paid on the first of 
March, as the pay period ends at the end of this week. So they 
get paid at the end of this week. It is the next paycheck that 
folks will be concerned about.
    And, again--but they are worried about this now. And these 
are folks that live paycheck to paycheck, anyway, most of the 
time. And you could go to a commissary any of those paydays and 
see what I am talking about. But this is stuff that is 
affecting them.
    We have got a high retention rate and folks that really 
want to do great work, and lace up their boots and come to work 
and get after the jobs that they signed up to do. And I don't 
want them focused on the things that are certainly outside 
their paygrade to worry about, but it certainly has taken its 
toll.
    Mr. Hunter. Besides the budget woes right now, what is the 
biggest thing that worries you about your people?
    Master Chief Cantrell. Well, it does kind of go with budget 
uncertainty a lot, because, look, we are operating--I mean----
    Mr. Hunter. Let me phrase it differently. Is it housing? Is 
it commissaries on bases? Is it--what is it?
    Master Chief Cantrell. We are concerned--housing, medical, 
child care services are something that we stay focused on. We 
have good relationships with our DOD partners that allow us 
access to those facilities. But a lot of our units are remotely 
located, so we have to rerack our housing to make sure--some of 
our older housing is divested from, but that means that we have 
got to look for other options for our folks in some of these 
small areas that aren't base-centric like, you know, a lot of 
the DOD facilities are.
    But child care is a big thing that worries a lot of our 
folks that make career decisions sometimes on whether child 
care services are available, or even affordable. But we work on 
that, and we stay focused on it to make sure we are providing 
resources within our own Service, but also looking outside the 
Coast Guard to our DOD partners. And we maintain really good 
relationships there.
    Mr. Hunter. Thanks, Master Chief.
    Master Chief Cantrell. Thank you, sir.
    Mr. Hunter. Chairman Cordero, you requested an extra $1 
million, a bit over, to increase your workforce by 10 percent. 
That is not a lot, right? Ten percent is a small number of a 
small number. And your testimony indicates that these increases 
are needed to review a growing number of large and complex 
liner agreements to conduct--and to conduct basic day-to-day 
activities.
    Yet, over the last year, the FMC has held several public 
forums on ways to make ports and cruise lines more 
environmentally friendly, giving awards to companies with 
environmentally sustainable shipping practices, encourages the 
maritime sector to use FMC, the FMC to--dispute resolution 
services, to use them for resolution services instead of 
independent arbitrators. And, in some ways, you tried to put 
yourselves in between business and business, creating, I think, 
unnecessary regulatory burdens on small businesses.
    This sounds like mission creep. And just one example. You 
are giving an Earth Day award, in your position as Chairman of 
the Federal Maritime Commission, coming up. So, specifically, 
my question is two-part.
    One, mission creep adding more employees, and it seems like 
doing a little bit of busy work, just to stay busy.
    And, two, when it comes to things like giving environmental 
awards to companies, what statutory authority does the Federal 
Maritime Commission have to regulate environmental compliance 
of ships and ports? Do you enforce the act to produce--to 
prevent pollution from ships? The Clean Water Act? The Clean 
Air Act? The clean hull title of the 2010 Coast Guard, or any 
other Federal environmental statutes?
    Mr. Cordero. Thank you for your question, Chairman. First 
of all, with regard to the environmental component, I can 
assure the chairman and the committee that this is a very minor 
part of the FMC, in terms of our staff and the role that we 
play in, essentially, what we recognize as best practices. And 
I think, on that, the key question is with development.
    So, as a Commission, as a maritime Commission with the 
objective and the mission of fostering fair, efficient, 
reliable ocean transportation system, I think sustainable 
development is a concept that the--not only has the industry 
embraced, but it is a concept that--it is a global concept that 
is now being embraced. So I can assure the committee that it is 
a minor part.
    So, essentially, with regard to the agreement component, 
that is a major role, absolutely. And I think, if I may add, 
just in the last quarter of 2014 there were 83 agreements filed 
at the Commission. That is the most agreements filed in--going 
back 10 years. Total agreements filed with the Commission are 
540.
    Now, if I may add two other things, two offices are 
involved with that. It is the Office of Agreements. We only 
have three people handling that. Once they review and process 
those agreements, then we have the Office of Economic and 
Competition Analysis. We have been operating with four 
economists--recently are adding a fifth. Given the size of the 
agreements and our main mandate, as you have indicated, we have 
been operating basically in survival mode.
    As to the dispute resolution component, I will say that I 
have met with many industry stakeholders. I think they have 
embraced that. It is a cost savings effort, in terms of 
volunteering informal processes to dispute resolution issues. 
One issue that we talked about earlier was the demurrage. The 
demurrage is an issue for the American shippers. They have 
filed complaints, and some of that I could--it fair to say that 
the--you know, our dispute resolution component, by way of our 
department, has been able to work as a mediator to try to 
comply--or, excuse me, to try to have the parties come forward 
with a compromise on that.
    So, the raise that we seek, the increases, of course, with 
our nine responsibilities that we have, that I have mentioned, 
or--a couple of them are major. And I just represent to the 
fact that we have been operating on survival mode. I mean right 
now we have 500--excuse me. We have 115 employees.
    Mr. Hunter. All right, let me ask you this. Considering a 
lot of the stuff that you just mentioned is regulatory in 
nature, and could be done by a regulatory agency versus a 
Presidentially appointed Commission, where the President 
appoints the Commissioners, and the Senate approves them, do 
you see a need--do you think that a lot of what you do could be 
done by a regulatory agency, such as MarAd?
    Mr. Cordero. Well, I think, going back to 1961, in 1961 the 
FMC, as it is composed today, the objective is to have a 
Commission and agency to specifically oversee the activities of 
foreign carriers. Given the globalized world that we have 
today, it is ever more important to have a well-funded FMC. And 
I think, going back specifically to 1961, the decision was made 
at that point, as I understand it, there would be a domestic 
component that my colleague, Chip Jaenichen, or the 
administrator handles at MarAd, and it would be the 
international component, particularly the regulatory aspect of 
that the FMC handles.
    So, if I may respectfully say, it is ever more important to 
have an FMC to regulate the foreign carriers who bring most of 
the cargo, if not in the 90th percentile, to our shores.
    Mr. Hunter. Thank you.
    Mr. Cordero. Thank you.
    Mr. Hunter. Mr. Cummings, you are recognized.
    Mr. Cummings. Thank you very much, Mr. Chairman. Admiral, 
let me ask you this. As you know, one of my highest priorities 
when I was Chair was ensuring that the student body at the 
Coast Guard Academy reflected the diversity of the Nation that 
the Coast Guard serves. And great strides were made, no doubt 
about it. It has been simply astounding, what we were able to 
achieve.
    But certainly we ought to hold and protect our progress. 
And I am wondering what is going on there, and are those 
efforts continuing to make sure that we have a diverse Academy?
    Admiral Zukunft. Congressman, I am pleased to say that 
today probably the United States Coast Guard Academy is the 
most--or certainly one of the most--diverse service academies 
of all of military service academies. This year about 39 
percent of our entrants were underrepresented minorities.
    So, we have turned the corner. The next step is we need to 
retain. We are doing well, but we need to continue to mentor 
and grow this diverse workforce at every level in our 
organization, and we still have more work to do in that regard.
    I have taken a personal interest in this, as well. I am 
active in NNOA, I have gone out through our CSPI program to 
actually recruit college candidates in their second year of 
college to be part of our Coast Guard team. They get a stipend 
of about $36,000 a year to finish out their last 2 years of 
college, go off to officer candidate school, take the oath, and 
wear this Coast Guard uniform as a commissioned officer. I take 
this--this is one of the key pinnacles of my Commandant's 
direction. And you can count on me to follow through on this.
    Mr. Cummings. You know, it was interesting. When we were 
working on this issue years ago, people kept saying, with 
regard to the Academy, that if you make your force more 
diverse, the SAT scores would be lower, and that people would 
not be successful. And, you know, I kept telling them, you 
know, you have to go and find people. And I have sat now, I 
guess for 10 years, on the Naval Academy Board of Visitors. And 
I know we had an opportunity to have some--a lot of 
conversations between the Coast Guard and the Naval Academy, 
because the Naval Academy has done a pretty good job on this 
issue, too.
    So, I just want to make sure that, you know, we are 
continuing to do that. And, based on what you just said, I am 
glad that we are going to the colleges and--because in today's 
world, with so many students having such a difficult time with 
money, and getting through school, I mean, if they can get that 
education, get paid, and then have a job, that is the other 
piece. After you get out, I mean, that is major. And so that is 
good to hear.
    Master Chief, you know, you said something about--you were 
talking about child care. And we--in my district we did a 
series of forums with women. And we did one with women in 
business, we did another one with women in education. But we 
also did one with women in the military. And I was--and I am 
telling you it was one of the most enlightening events that I 
have ever done in my 18 years of being in Congress, because we 
sat there and women literally cried. It got very emotional 
about being able to get decent child care, and how so often 
they had to end their careers.
    I mean this was just--this was mainly Army and Air Force, 
but it was just very interesting. And I never--I guess I--I 
mean I had three kids, and we had to go through the child care 
thing. I did not know it was such a major issue. So it is a 
problem, isn't it?
    Master Chief Cantrell. Yes, sir. And we see it more and 
more with folks making these career decisions. Even when they 
are looking at whatever their next assignment is going to be of 
is there affordable and acceptable child care in there. And we 
work really hard with the GSA child care subsidy reimbursement 
program, as well as our DOD folks where we can, to get our 
members access to those facilities. And we are continuing to 
work that, and we are getting better each year, I think.
    But it is a daunting task for them sometimes to think about 
whether it is worth it to stay in the Service. And we have got 
an investment in those folks that--we don't want to let them 
walk out the door. So we are focused on trying to find other 
ways to take care of them.
    Mr. Cummings. Well, anything I can do to be supportive, 
please let me know.
    Master Chief Cantrell. Yes, sir.
    Mr. Cummings. Thank you, Mr. Chairman.
    Mr. Hunter. Thank the gentleman. You could always institute 
the rules that the Marine Corps had about 60 years ago, which--
you can't get married until--in 7 years, or go on two floats or 
go to war once, or something like that. It is a--having 
families on base is a burden. And the military did recognize 
that 50, 60 years ago. I mean that is where a lot of the 
resources go.
    Admiral, I just got a few more questions here. Towing 
vessel safety rule. It has been 10 years. It has been 10 years. 
A decade. Anything?
    Admiral Zukunft. First response, complex. We have had, 
literally, thousands of comments. And we have adjudicated every 
one of those. This and balanced water regulations are two of my 
highest regulatory packages in my inbox. Actually, not on my 
desk. Trust me. When they arrive, they will be off the same 
day.
    I am confident that we will have a rulemaking package ready 
to leave my Coast Guard headquarters within the next several 
months. What we have to adjudicate is what are the unintended 
consequences, especially to the small operators? Is this going 
to squeeze them out of business? And so we go through a very 
extensive economic analysis that goes through that, as well.
    At the same time, we take on the burden of having to 
inspect 6,000 more vessels that currently aren't in our 
inspection fleet of responsibility. But that rulemaking package 
is--as you have highlighted, definitely needs to get moving. 
And I will move it out.
    Mr. Hunter. Thank you. At least it will happen under your 
tenure.
    Admiral Zukunft. This will happen this year. Again, I have 
been given--I am not always optimistic with rulemaking 
packages, but I expect to have it out this spring.
    Mr. Hunter. OK, thank you. Along with that, we changed the 
rules for the inspection of the distant water tuna fleet to 5 
years last year. When is the Coast Guard going to release 
guidance to its inspectors and industry implementing the new 
change?
    Admiral Zukunft. Yes, that is an amendment to a policy 
letter. That will come to me, and I expect to see that within--
probably within the next month, and we will be able to push 
that out, and then move that forward. And I know that is a high 
priority for you.
    Mr. Hunter. It goes to you from where?
    Admiral Zukunft. It goes from me and then to the Department 
of Homeland Security.
    Mr. Hunter. From you to the Department?
    Admiral Zukunft. Right.
    Mr. Hunter. The DHS. OK. With that, the one final thing 
that I have, I know that you have looked at the Presidential 
budget request. And I know that you have at least scrubbed it, 
and said, ``How do we make our acquisition strategy line up 
with this, if this is our actual budget?'' And I am just--if 
you could, just say a few words on--just from your very first 
scrub on this, what would you do right now, if the budget that 
is reflected right now is the actual budget, going forward into 
2016? What are you going to do with the OPCs? What are you 
going to do with final down-select from your three to one next 
year?
    I saw, instead of asking for money now, you are hoping that 
next year the Department, DHS, just gives you a bunch of money 
to be able to do it once you down-select to one, which is never 
going to happen. I mean that is a--it is just not ever going to 
happen. So what would you say on your first scrub right now? 
What do you drop? What do you keep? What do you push out? Do 
you not have your eighth NSC? I mean what do you do?
    Admiral Zukunft. Right. Actually, what I asked first is 
that my written statement be entered into the record.
    Mr. Hunter. Without objection.
    Admiral Zukunft. Because we went through some of that 
scrub, as well.
    Where we are really feeling the pain the greatest is in our 
shore infrastructure. I have got about a $1.4 billion backlog 
in shore infrastructure. And I am making an annualized 
downpayment of $40 million. It is like paying the bare minimum 
on a credit card. But I am still paying interest on that.
    So, we are barely keeping pace with that backlog, but I am 
having to make those deferments in order to keep our 
operational platform acquisition program of record viable. So 
those are the very tough tradeoff decisions----
    Mr. Hunter. You are saying you are trading off your shore 
facilities. So that is what you would do in the end, in order 
to keep the acquisition program of record on track, you would 
not spend money--you are going to just keep spending the bare 
minimum?
    Admiral Zukunft. Well, obviously, there is a prioritization 
process that goes with that. Ironically, we get some relief 
when you have a hurricane, and then we get relief funding to 
then restore infrastructure that was also on that backlog. So 
at least we can use disaster relief funding. But that is not--
you know, that is using hope as an acquisition strategy, so I 
can't do that.
    And so, I struggle with an acquisition budget that is, you 
know, hovering somewhere near $1 billion, as I look at what the 
Coast Guard is going to need in the 21st century. And so that 
is what we need. We look at a mission needs statement built to 
budget, what I really need is a reliable and predictable 
budget, because we have really been on a roller coaster here 
for the last several years.
    Mr. Hunter. OK. So, looking at your acquisition--ship 
acquisition, which ships get cut, based on this budget?
    Admiral Zukunft. Yes. We can't cut any of our programs of 
record. What we----
    Mr. Hunter. But you would have to. I mean you are getting--
--
    Admiral Zukunft. We would not.
    Mr. Hunter [continuing]. Reduction.
    Admiral Zukunft. Right now, you know, we have an 
appropriation for our eighth National Security Cutter. That 
finishes that program of record. As we go into 2016 we have got 
to bring the Offshore Patrol Cutter, you know, on to full 
budget. And I will continue to endeavor, and with the great 
support that we have had from the Department of Homeland 
Security to get where we need to be, because that is my 
Secretary's--one of his highest priorities is to recapitalize 
the Coast Guard.
    Mr. Hunter. I don't understand, then. How does the budget 
reflect the Secretary's highest priority by cutting it?
    Admiral Zukunft. Again, you have seen the same provision. 
We have got about a $70 million gap to go to final design work 
to award the Offshore Patrol Cutter to its--and so the 
Department, as they look at is this affordable, has given me 
assurances that we will look within the Department to raise the 
Coast Guard to a point where we can move forward with the 
Offshore Patrol Cutter.
    Mr. Hunter. So you think that, instead of having Congress 
budget out the Offshore Patrol Cutter, and taking the money 
from within DHS when you do a downselect, you think that that 
is a viable--that money coming from DHS is a viable alternative 
to congressional budgeting?
    Admiral Zukunft. Obviously----
    Mr. Hunter. For right now?
    Admiral Zukunft. Yes. From a budgeting process, much more 
preferable to see the full appropriation that we had requested 
in that budget. But we need to move forward with the Offshore 
Patrol Cutter. And I can't emphasize that enough. By the time 
that first ship is delivered in 2021, it will replace ships 
that are 55 years old. And we can't let that drag out any more. 
Or we just abdicate to the adversary and say, ``We are not 
going to use the authorities, and the United States, the most 
powerful Nation in the world, is not going to assert its 
sovereignty using the broad authorities of the United States 
Coast Guard.'' I will not let that happen on my watch.
    Mr. Hunter. Thank you. Do you think the Coast Guard is 
tasked with doing too much right now?
    Admiral Zukunft. Our authorities resonate very well, and I 
wouldn't take any one of our authorities away. And this was 
actually looked at about 100 years ago. Our first Commandant of 
the Coast Guard. They thought, ``Well, hey, if we split the 
Coast Guard up and have other components do it''--well, first 
they have to take on a maritime capability, they have to 
understand the authorities. But they become one-trick ponies, 
that is the only thing they do.
    But when you look at what a buoy tender does, it tends 
buoys, it cleans up oil spills, it does law enforcement, search 
and rescue. So when you look at our platforms, they are really 
multipurpose. And the Nation really gets the best bang from the 
buck from these multipurpose platforms because of the 
authorities that are vested in the United States Coast Guard.
    Mr. Hunter. Thanks, Admiral. Gentlemen, thank you very 
much. Appreciate it. Adjourned.
    [Whereupon, at 12:05 p.m., the subcommittee was adjourned.]
    
    
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