[House Hearing, 111 Congress]
[From the U.S. Government Printing Office]
[H.A.S.C. No. 111-170]
FISCAL YEAR 2011 NATIONAL DEFENSE AUTHORIZATION BUDGET REQUEST FOR
OVERSIGHT OF THE ACTIVITIES OF THE MARITIME ADMINISTRATION
__________
HEARING
BEFORE THE
SUBCOMMITTEE ON SEAPOWER AND EXPEDITIONARY FORCES
OF THE
COMMITTEE ON ARMED SERVICES
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
HEARING HELD
JULY 14, 2010
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SUBCOMMITTEE ON SEAPOWER AND EXPEDITIONARY FORCES
GENE TAYLOR, Mississippi, Chairman
SOLOMON P. ORTIZ, Texas W. TODD AKIN, Missouri
JAMES R. LANGEVIN, Rhode Island ROB WITTMAN, Virginia
RICK LARSEN, Washington ROSCOE G. BARTLETT, Maryland
BRAD ELLSWORTH, Indiana J. RANDY FORBES, Virginia
JOE COURTNEY, Connecticut DUNCAN HUNTER, California
JOE SESTAK, Pennsylvania MIKE COFFMAN, Colorado
GLENN NYE, Virginia THOMAS J. ROONEY, Florida
CHELLIE PINGREE, Maine
MARK CRITZ, Pennsylvania
Will Ebbs, Professional Staff Member
Tom Holly, Professional Staff Member
Elizabeth Drummond, Staff Assistant
C O N T E N T S
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CHRONOLOGICAL LIST OF HEARINGS
2010
Page
Hearing:
Wednesday, July 14, 2010, Fiscal Year 2011 National Defense
Authorization Budget Request for Oversight of the Activities of
the Maritime Administration.................................... 1
Appendix:
Wednesday, July 14, 2010......................................... 23
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WEDNESDAY, JULY 14, 2010
FISCAL YEAR 2011 NATIONAL DEFENSE AUTHORIZATION BUDGET REQUEST FOR
OVERSIGHT OF THE ACTIVITIES OF THE MARITIME ADMINISTRATION
STATEMENTS PRESENTED BY MEMBERS OF CONGRESS
Akin, Hon. W. Todd, a Representative from Missouri, Ranking
Member, Subcommittee on Seapower and Expeditionary Forces...... 3
Taylor, Hon. Gene, a Representative from Mississippi, Chairman,
Subcommittee on Seapower and Expeditionary Forces.............. 1
WITNESSES
Matsuda, Hon. David, Maritime Administrator, Maritime
Administration, U.S. Department of Transportation.............. 4
APPENDIX
Prepared Statements:
Akin, Hon. W. Todd........................................... 30
Matsuda, Hon. David.......................................... 31
Taylor, Hon. Gene............................................ 27
Documents Submitted for the Record:
[There were no Documents submitted.]
Witness Responses to Questions Asked During the Hearing:
[There were no Questions submitted during the hearing.]
Questions Submitted by Members Post Hearing:
[There were no Questions submitted post hearing.]
FISCAL YEAR 2011 NATIONAL DEFENSE AUTHORIZATION BUDGET REQUEST FOR
OVERSIGHT OF THE ACTIVITIES OF THE MARITIME ADMINISTRATION
----------
House of Representatives,
Committee on Armed Services,
Subcommittee on Seapower and Expeditionary Forces,
Washington, DC, Wednesday, July 14, 2010.
The subcommittee met, pursuant to call, at 1:53 p.m., in
room 2212, Rayburn House Office Building, Hon. Gene Taylor
(chairman of the subcommittee) presiding.
OPENING STATEMENT OF HON. GENE TAYLOR, A REPRESENTATIVE FROM
MISSISSIPPI, CHAIRMAN, SUBCOMMITTEE ON SEAPOWER AND
EXPEDITIONARY FORCES
Mr. Taylor. The committee will come to order. Today, the
subcommittee meets in open session to receive testimony from
the Administrator of the Maritime Administration of the
Department of Transportation.
The Maritime Administration, or MARAD, has a variety of
functions, but their principal charge is to ensure that the
United States maintains a robust commercial fleet, along with
well-trained mariners capable of domestic and international
commerce that could be called upon in times of national
emergency to provide transportation of equipment and cargo and
other maritime services as needed.
In addition to ensuring an operational U.S. fleet of
privately owned commercial vessels, the Maritime Administration
must also ensure effective domestic shipbuilding and ship
repair facilities are available to build and maintain that
fleet.
Unfortunately, the nation has lost the entire world market
share in major commercial shipbuilding. We no longer construct
any large vessels for the international trade. The few medium-
sized product tankers or container ships that have been built
in this country in the last few years have been used
exclusively in a protective coast-wide trade known as the Jones
Act, or built with the expectation of a long-term charter to
the Military Sealift Command, or the United States Navy.
This total elimination of large commercial vessel
construction has the additional negative effect of increasing
the cost of our Navy ships. The shipyard overhead charges,
instead of being spread among commercial and government
construction, are all included in the Navy construction
contracts because there is no commercial work in our major
shipyards.
The facts of this loss of ability to build large commercial
vessels is not well known. I think many people would be shocked
to learn that this nation, which relies on sea transport for
our imports and exports, does not have a domestically produced
fleet.
We have a fleet of commercial vessels, some 80, all told,
which participate in a Maritime Security Program, or MSP. The
MSP [Maritime Security Program] pays a ship owner a subsidy,
which this year is $2.9 million per vessel, to register the
vessel in the United States and operate the vessel with an
American crew. They engage in international commerce, but they
agree to carry cargo for the United States government,
typically the Department of Defense, when requested.
Make no mistake, these MSP vessels are all foreign-built
ships, and there is no current plan that I am aware of for any
ship owner to source these vessels from domestic yards.
This nation has a mechanism in place which is not being
used for helping ship owners with financing of ship
construction. The formal name of the program is the Guaranteed
Maritime Loan Program that is commonly referred to as the Title
XI Loan Guarantee Program. From its historical roots in the
Merchant Marine Act of 1936, this program supports ship
mortgages with the full faith and credit of the United States
government. MARAD is the executive department tasked with
overseeing this program. Unfortunately, for whatever reason,
the previous administration decided to ignore this program and
failed to request any funding to support new ship guarantees.
Likewise, the current administration has also failed to request
any funding to support this program.
Without strong support from the President and the
Department of Transportation, this program, which could create
hundreds, if not thousands, of new jobs throughout the
shipbuilding industrial base, will perish, and with it any hope
this nation has to regain any viable market share in large
commercial vessel ship construction.
More than just the oversight of the program, I believe it
is MARAD's responsibility to actively encourage current and
potential ship owners to invest in the domestic maritime
industry. I believe MARAD should be working with other
departments within the Department of Transportation to
coordinate efforts to maximize the use of domestic shipping,
particularly shore-sea shipping.
Seaborne transportation is the most efficient and most
environmentally friendly method of moving cargo that exists.
Imagine the number of long-haul 18-wheelers that could be taken
off our highways if we only had a robust coast-wide container
vessel transport system.
I look forward to a discussion with the administrator on
these issues. We have also asked the administrator to update
the subcommittee on the findings and recommendations of the
Blue Ribbon Panel which was convened by Secretary LaHood to
make recommendations for capital investment and improvement at
the United States Merchant Marine Academy.
The Blue Ribbon Panel Report, ``Red Sky in the Morning,''
recommends significant investment and process and policy
changes to restore the infrastructure of the academy and, just
as important, maintain the buildings and grounds once they are
restored. I look forward to Administrator Matsuda's comments on
all aspects of the academy.
The Administrator has recently been confirmed by the Senate
but has been serving as acting administrator and deputy
administrator for some time. He has extensive experience in
maritime issues, both on and off Capitol Hill. We are indeed
fortunate to be able to find time for this hearing, because I
believe that these very important issues facing our nation, and
we should work together, both the congress and the
administration, to solve them.
Before I will call on Administrator Matsuda for his opening
statement, I turn to my colleague from Missouri, the ranking
member of this subcommittee, for any comments he would like to
make.
Mr. Akin.
[The prepared statement of Mr. Taylor can be found in the
Appendix on page 27.]
STATEMENT OF HON. W. TODD AKIN, A REPRESENTATIVE FROM MISSOURI,
RANKING MEMBER, SUBCOMMITTEE ON SEAPOWER AND EXPEDITIONARY
FORCES
Mr. Akin. Thank you, Chairman Taylor, and good afternoon to
our witness. That is a good way to start a week after the
Fourth of July break, ``witness'' as opposed to ``witnesses.''
And today, we turn our attention to a little-noticed but
vitally important part of the subcommittee's jurisdiction and
oversight responsibility, the U.S. Maritime Administration.
Even though the many issues and unmet requirements facing the
U.S. Navy and Marine Corps consume the bulk of the
subcommittee's time, I am glad that the chairman called for
this hearing.
U.S. and global economy are both utterly dependent on a
robust commercial shipping network, and the U.S. economy is
further buttressed by shrinking but resilient U.S. Marine
Maritime Fleet. With global maritime competition growing ever
fiercer and U.S. overseas commitments showing no sign of
abating, the United States must maintain a strong merchant
marine fleet as a key strategic enabler and economic engine.
Unfortunately, most aspects of our merchant marine policy are
reliant on some form of federal subsidies, which we seem to be
providing on the cheap in some cases.
I am a big supporter of less federal spending and fewer
federal subsidies, but believe that we must invest, as
necessary, to maintain a strong U.S. flagged merchant marine
fleet. Today's program, including the Title XI Loan Guarantees
for building new vessels, the Maritime Security Program and
Voluntary Intermodal Sealift Agreement, or VISA; which provides
subsidies to U.S. flag carriers who guarantee shipping
availability for national security needs, various cargo
preference laws, including 100 percent of defense cargo on U.S.
flag vessels; and finally, training of ships' officers in a
federal merchant marine academy and the six state maritime
academies.
While the hand of the federal government touches all of
these programs, the cost has been relatively modest. Too
modest, in fact, in the case of the Merchant Marine Academy.
And so, echoing the same chairman's comments about the
findings, particularly at the Kings Point facility, the U.S.
Merchant Marine Academy, I likewise am interested in hearing
about how we should proceed, and I believe that we must.
Thank you, Mr. Chairman. I yield back.
[The prepared statement of Mr. Akin can be found in the
Appendix on page 31.]
Mr. Taylor. Chair thanks the gentleman.
The chair now recognizes, with my apologies, Administrator
Matsuda, for butchering your name.
STATEMENT OF HON. DAVID MATSUDA, MARITIME ADMINISTRATOR,
MARITIME ADMINISTRATION, U.S. DEPARTMENT OF TRANSPORTATION
Mr. Matsuda. Thank you, Mr. Chairman.
Good afternoon, Chairman Taylor, Ranking Member Akin,
members of the subcommittee. I am honored to appear before you
to provide a general update on the Maritime Administration's
activities to sustain the U.S. Merchant Marine. With your
permission, I would like to submit my complete written
testimony for the record and summarize it for you here.
Mr. Taylor. Without objection, so ordered.
Mr. Matsuda. I would also like to introduce those joining
me here today, Deputy Administrator Orlando Gotay,
Congressional Affairs Director Julie Hrdlicka, and two interns
from the Maritime Administration, Mr. James Walsh and
Midshipman First Class Aaron Cummings, who is fresh off duty on
an APL international voyage.
Mr. Taylor. Welcome to all of you.
Mr. Matsuda. At the subcommittee's request, today my
testimony will focus on national security sealift programs,
shipbuilding programs, and operation of the U.S. Merchant
Marine Academy in Kings Point, New York. Our agency's primary
mission is to develop and maintain a viable and vital U.S.
Merchant Marine. This service includes both commercial and
government-owned vessels that are crewed by civilian merchant
mariners.
On the commercial side, our Maritime Security Program
sustains a small, modern U.S. flag fleet of 60 commercial ships
that trade internationally all with trained crews. Over the
years, the Maritime Administration has worked with the
commercial industry to provide the Department of Defense with
access to more types of ships they need in this program.
Together with the agency's cargo preference program, which
ensures federally financed cargo is transported on U.S.
vessels, this program helps ensure that commercial U.S. flag
ships can compete on a more level playing field in
international trade and will be available to our military when
called upon.
The Maritime Administration also owns, administers and
operates the Ready Reserve Force, an aging fleet of 49
government ships. We are working with our partners at the U.S.
Transportation Command, or TRANSCOM, to develop a
recapitalization plan so this fleet can continue to meet
strategic mobility needs in the future.
One option for refreshing part of the fleet involves
designing a new marine highway vessel to operate in commercial
service along America's coasts and waterways, yet be built to
be useful to the military. Secretary LaHood, as well as some of
our military colleagues, have advocated for developing
America's marine highway as a potential for introducing these
new military-capable commercial ships.
Mr. Chairman, as you know, a strong shipbuilding industry
is the backbone of seapower. Our Title XI Loan Guarantee
Program helps modernize shipyards and provides key financial
assistance to those looking to build ships in the U.S. Title XI
has proven even more critical since the credit markets dried up
in the current--or largely dried up--in the current recession.
So financing many shipbuilding projects has supported
approximately 2,400 direct shipyard jobs and 1,400 indirect
jobs through Title XI. The Maritime Administration currently
has $76.6 million in budget authority to cover the subsidy
costs for new Title XI loans.
This amount would support approximately $1.1 billion in new
loan guarantees. And we are processing applications, five
applications for new loan guarantees in excess of $1.5 billion.
Our agency is also exploring avenues to provide federal credit
assistance for smaller vessel construction projects, as well.
Finally, let me turn to the operation of the U.S. Merchant
Marine Academy in Kings Point, New York. Improving the profile
and prestige of the academy is one of Secretary LaHood's top
priorities.
To respond to a recent advisory panel's recommendations to
improve the academy's capital program, President Obama has
requested $100 million for the academy in fiscal year 2011.
This would double the school's capital budget. I note the
committee has acted to authorize this level of funding, which
we believe will be very helpful in making overdue improvements
to facilities and providing new educational opportunities for
midshipmen.
Our agency is also working to address government
accountability office recommendations concerning financial
conditions at the school. These improvements in fiscal
management and physical plant at the academy will help restore
it to its place as a preeminent federal academy. Together with
the six state maritime academies, which we provide funding and
support for, these schools graduate 700 trained maritime
officers each year.
Mr. Chairman, as a whole, all of these programs support a
U.S. merchant marine that has responded to two recent major
disasters in an unparalleled manner. Nearly 1,000 U.S. merchant
mariners participated in the U.S. response effort to the
earthquakes in Haiti earlier this year. These skilled crews
served on several maritime administration ships and at least 25
commercial vessels.
And the vast majority of the estimated 7,000 vessel
flotilla involved in the Deepwater Horizon oil spill response
are U.S. flag commercial vessels with U.S. citizen crews.
America's men and women of the merchant marine continue to
deliver, and we are proud of their work.
I appreciate the opportunity to be here and will be happy
to respond to any questions you and the members of the
subcommittee may have. Thank you.
[The prepared statement of Mr. Matsuda can be found in the
Appendix on page 31.]
Mr. Taylor. Thank you, Mr. Administrator. By previous
agreement, we agreed to recognize Ms. Pingree first so that she
could get on to her other duties.
Ms. Pingree for five minutes.
Ms. Pingree. Thank you very much, Mr. Chair. I greatly
appreciate that.
And thank you for your testimony. Appreciate having you
here before us today. And thank you for the work that you are
doing. I think particularly when you just mentioned, the work
that had been done in Haiti and around the oil spill, I think
it reminds people again and again of the importance of the
maritime industry and the well-trained mariners that we have in
this country, and the role and the impact that they have.
As you probably know, I am fortunate to represent the state
of Maine, so our identity is all about the sea, about people
who go to the sea, about building ships, boats, going fishing.
This is, of course, a very critical issue to us.
Then I want to say one thing about the Title XI. I
appreciate that the chair brought that up earlier and the
importance of fully funding all the possible options here and
making sure that the administration is fully committed to
investing in building United States-based ships and ships in
this country. We are losing our industrial capacity all too
fast, and that is just extremely important.
I have heard a little bit from people in the shipbuilding
industry about some concerns about shifting the focus into
small yards. I am fortunate enough to represent one of the
bigger yards in this country, Bath Iron Works, as well as many
small yards. But we want to make sure that the focus continues
to fund the bigger ships in this country.
But I have a second issue I want to take up with you and
just put it on your plate. And I appreciate, again, the
increased funding request for the Kings Point Academy, and I
know the concerns that have been raised there. But I also come
from one of the states that has a state maritime academy, Maine
Maritime Academy in Castine, Maine.
I live on Penobscot Bay. Castine actually happens to be on
the other side of the bay from me, which is in the second
congressional district, but I know Congressman Michaud and our
senators would join me in their concern about the level of
funding that is received by state maritime academies.
We are proud of our tradition of training young people and
people of all ages to go off to sea. I happen to live on an
island, so I ride a ferry when I get home, and often talk with
crewmen who have gone to school at the Maritime Academy. It is
a great choice for young people in our state who have the
opportunity to go to sea because of that training, but it is
often an unfair burden on our state legislature and our state
budget to fund all of the activities there.
It is my understanding that 70 percent of the new merchant
marine officers each year come from state academies, and yet
about $15 million in funding goes to state academies as opposed
to the money we spend on federal training of our maritime
personnel.
So I just want to talk a little bit, or at least put that
on your plate, of the disproportionate share, of the importance
of increasing the funding to our state maritime academies, of
the role that they play, and we hope the increasing role. If we
can increase shipbuilding, we would love to have more of a
maritime highway and see more transport going in that direction
instead of on our roads and bridges, which are already
overtaxed.
So let me just throw those things out there and let you
chat.
Mr. Matsuda. Thank you.
First I want to thank you for your interest in the Maine
Maritime Academy. Had I known, we had our--they were kind
enough to host a conference called The Women On The Water
Conference that the Maritime Administration co-sponsors last
fall. And, you know, had I known, I would have gladly sent you
an invitation to participate. It is a great opportunity to
bring together a number of young women in the industry and
others who are experienced and have really put their careers
into it.
Ms. Pingree. Well, thank you for that, and we are glad that
you came to Maine. Appreciate that.
Mr. Matsuda. Well, I understand the concern about the
funding for the Maine Maritime versus our--we hear that a bit
from some of the folks outside of Kings Point. Frankly, I hope
it does not seem like we are playing favorites, but Maritime
Administration has more of a direct role and responsibility in
overseeing and operating the U.S. Merchant Marine Academy.
By law, our relationship with the other schools is simply
limited to supporting their activities for student incentive
payments in which we can provide stipends or scholarships to
their students who apply, and in exchange, we retain them as
merchant marine reserve officers for a number of years after
they graduate. Every one of the midshipmen at Kings Point that
graduates remains in the Naval Reserve for six years following
their graduation.
The other thing that we can do with the state academies is
we provide them with a training ship and a budget for fuel and
maintenance costs. And we continue to do the best we can to
work with each one of the schools and make sure that these
students have an opportunity to get out on the water and get
actual experience before they graduate and come into the
maritime industry.
But we are happy to--we are more than willing to look at
other opportunities to help out, given, you know, whatever
resources we are able to use.
Ms. Pingree. Great. Well, I will definitely talk to you
further about that, but thank you. Thank you for that.
Mr. Taylor. Thank you, ma'am.
We were going to recognize Mr. Akin. He has been called out
of the room. So we will get back to the regular order.
Mr. Ortiz.
Mr. Ortiz. Thank you, Mr. Chairman.
Thank you so much for joining us today and for giving us an
insight into MARAD operations.
What I really want to know is, what is the annual upkeep
of--cost of the obsolete ships that MARAD has under its
control? And how does MARAD plan to remove the rest of the
obsolete ships in its current register? And specifically, what
is the release plan for the rest of the ships moored in Suisun
Bay? So maybe you can give us a little insight as to what you
are doing to address that problem, sir.
Mr. Matsuda. I am happy to. MARAD, I am proud to tell you,
has, once again, a very robust ship disposal program. For a
number of years, there has been a hiatus due to a pending
lawsuit over the removal of ships from the Suisun Bay Reserve
Fleet. And this is our site, our only site on the West Coast
that, as of last year, had about 57 obsolete vessels that were
slated for disposal.
As of today, there are only 47 left. We have made very good
progress in meeting our targets and schedules pursuant to
agreements we have made with local officials there.
Suisun Bay contains, I believe, all but one or two of the
ships in our entire fleet that are slated for disposal. So that
is really where our focus has been. I can tell you that most of
the ships, I believe 9 of the 10 ships, have all been recycled
in yards in Brownsville, Texas, and we hope to continue this
robust pace so long as we have funding available.
And I can tell you that, due to the lawsuit that, you know,
prevented the previous administration from moving a lot of
these ships, we have a current amount of carryover budget that
we have been able to utilize and push these ships through. They
have been cleaned in an environmentally responsible manner, in
a shipyard in the Bay area, and towed all the way around the
Panama Canal to the recycling sites in Brownsville.
Mr. Ortiz. You know, and specifically now with the budget
the way it is, when the Navy chose artificial reefing for the
disposal of the USS Oriskany. The end result was extremely
costly by the time you had to move--and I know we had a problem
with California, because they did not want those ships to move
because they would cause pollution. Well, they were causing
pollution right there.
So I know costs are very expensive, but when these people,
especially in Brownsville--I think they paid for the moving of
the vessel, and then they do disposal. And it works both ways,
because you keep a lot of people working.
And I hope that you can continue to do. You guys are doing
a good job by, you know, releasing the ships to be disposed of
and by breaking them up and putting people to work. And let me
say that we appreciate that.
So I hope that, by doing what you started to do, that you
will be able to provide more jobs not only in my district but
also in other districts.
Mr. Matsuda. We do our best. There is a limited supply of
recyclers around the country. Of the six certified recycling
sites, four of them are in Brownsville, one is in Louisiana,
and one in Virginia. But there are none on the West Coast, and
that makes it difficult and certainly adds cost to the
recycling of all the ships that we have out there. But we will
do our best to make sure that we maintain an aggressive pace
and a robust disposal program.
I should also mention, the USS Kittiwake is a ship we have
in the James River Reserve Fleet in Virginia that is slated for
artificial reefing. The reefing costs have been paid for by the
Cayman Islands government. They wanted to do this. They wanted
to pay for it. It has provided work in U.S. shipyards to
prepare the ship for reefing. And we were happy to work with
them to be able to do that.
Mr. Ortiz. Well, thank you so much.
Thank you, Mr. Chairman.
Mr. Taylor. In the continued absence of Mr. Akin, we are
now going to recognize Mr. Critz for what I think is his first
subcommittee meeting, and remind him that your predecessor, Mr.
Murtha, was a very, very strong supporter of the Title XI
program in his many years up here, and we hope you will follow
in that tradition.
Mr. Critz.
Mr. Critz. Thank you, Mr. Chairman. And following in my
former boss's footsteps, my question refers to the Title XI
program.
In looking through the documentation and the history of the
program, I see that, in the testimony that you supplied, Mr.
Administrator, that you have approximately $2.1 billion within
your portfolio under the Title XI program and that, over the
past I think it is 3 years, there has been no request for
funding for the loan subsidy portion, just administrative
expenses.
And I know that, over the past 2 fiscal years, Congress has
appropriated $70 million into the loan guarantee program, which
I notice in your testimony should cover the six applications
for loan guarantees that you have right now, which would cover
$1.6 billion in loans, although there seems to be a half a
billion dollars difference in what the amount will cover and
what the requests are.
But going further and following in the footsteps of the
chairman on the importance of a robust shipbuilding economy
here in the United States, I just would like to know that, if
Congress had not put that $70 million into the program, what
the implications would be if they had not added that funding.
And then, you know, what would not have occurred if it had not
been for that $70 million addition?
Mr. Matsuda. Thank you, sir.
I hate to speculate, but I can tell you that we currently
have a $79 million available to us in credit subsidy. So I
guess without the 70, we would still have $9 million available
to leverage into, you know, a certain amount of loan guarantees
for shipbuilding projects.
Now, having said that, we do have a number of five
applicants that are still working on their applications for
Title XI assistance. These projects, they are massive. They are
complex, and they require a bit of scrutiny and time to make
sure that they are understood as to what it is that the
government is getting into in terms of risk, and then we are
able to make decisions on that.
So it is hard to speculate, but I know that having that
number out there, that extra $70 million, it signals to the
industry that there will be continued support for shipbuilding
by the federal government. And that is something that the
customers can keep in mind as they are looking to recapitalize
their fleet or build new ships. So from that perspective, I
think it is important.
Mr. Critz. Well, thank you. And, you know, looking through
the documentation a little bit more, I noticed that you
mentioned about the 13 defaults since 1993, and that, as you
move forward, you are putting in, I guess, rules and
regulations that will hopefully prevent further. But if you
could, just brief a little bit on that topic as well, and then
I yield back.
Mr. Matsuda. Shipbuilding is a risky business. It is hard
when you build a 25-, 30-year asset to know what is going to
happen, you know, 5, 10 years down the road, much less 2 or 3.
So some of these vessels certainly had--you know, when the
market turned or the rates went up or down, they have been
affected by--many businesses have been affected by, the up-down
turns in the economy.
What we have done is respond to a number of inspector
general recommendations, dating back as far as 2003, to make
sure that there is a consolidated process within the
administration for considering credit applications where the
government is asked to extend credit in the form of either loan
guarantees or loans.
So we are treated no differently than other credit programs
at the Department of Transportation, where we are--basically we
present information about each loan application to an internal
kind of a credit council. This information is also passed along
to the Office of Management and Budget. But by and large, there
is definitely more focus on the risk to the government when it
comes to these applications.
Mr. Critz. Thanks.
Mr. Taylor. Chair now recognizes the Ranking Member for
whatever time he wishes to consume.
Mr. Akin. Thank you, Chairman.
In your testimony, Administrator, you mentioned that we
doubled the budget for getting the U.S. Merchant Marine Academy
back online and taking care of a lot of the things that had to
be done there. Is that correct?
Mr. Matsuda. That is correct. That is what President Obama
has proposed for 2011.
Mr. Akin. Okay, because what I have here in the numbers we
have, it looks like $100 million, and it looks like before, you
had $74 million in 2010, so that is about a 30 percent, not a
doubling.
Mr. Matsuda. I am sorry. To be clear, the doubling is for
the capital budget, the amount that is going into the
facilities to improve----
Mr. Akin. Oh, just the capital part of it.
Mr. Matsuda. Right.
Mr. Akin. Yes. Okay.
Is that going to be spent pretty much just to follow the
recommendations of that blue ribbon committee, or have you--
because that didn't seem like that was going to be enough to do
what they needed to do.
Mr. Matsuda. Well, we believe it is a good start. They have
recommended more than just a list of projects. They are
really--made some great recommendations as to how do we make
sure that we maintain these facilities on a lifecycle basis so
that we have a regular capital maintenance budget and we don't
get into this position again.
Mr. Akin. Because it seems like the choices are either we
are going to do the job right or else we just close the place
down, one or the other. But you don't want to leave it just an
eyesore and a mess.
So, I mean--and it seems like, if you need some money to
get the thing kicked into shape--what, there is no hot water or
something like that? I mean, it just has really been let go for
a good many years, I assume.
Mr. Matsuda. Yes, there are many maintenance issues at the
campus. Sometimes our staff would describe them as daily
emergencies or putting Band-Aids on things, and that is taking
away the focus largely from moving these----
Mr. Akin. But the facility, is that pretty close to West
Point?
Mr. Matsuda. It is out on Long Island. I guess----
Mr. Akin. What is on Long Island?
Mr. Matsuda. As the crow flies maybe but----
Mr. Akin. Oh, no, because it is not up--so it is on Long
Island somewhere. Okay. All right.
So your plan is, is to follow, more or less, what the Blue
Ribbon Panel was saying to do, or along those lines anyway.
Mr. Matsuda. Well, we believe they made some very good
recommendations. This was a panel of experts comprised of folks
from around the government who have significant experience in
facilities maintenance. So we got them together, and the
Secretary asked them to come up with their recommendations on
how do we get this facility on the right path. And we are
certainly taking their recommendations to heart.
Mr. Akin. What is your anticipation in terms of what you
need for maritime officers? Do you see that growing a lot or
basically kind of holding its own because of the basic laws
that we have in this country, or how do you see that?
Mr. Matsuda. Well, I would say, by and large, we have an
aging workforce. It is tough to get especially younger
generation enthused about working in the maritime industry. And
that is part of our challenge at the Maritime Administration,
is making sure that there is a future. You know, there has
been, I think, any number of examples over the years where,
when called upon, we have been short on experienced mariners
and have had to really dip into the pool to come up with folks
to crew our ships.
Mr. Akin. But in answer to my question, do you anticipate
an increase in demand, or is it going to kind of stay the same,
or is it going to go down in terms of----
Mr. Matsuda. Well, a lot depends on the economy. But, you
know, regardless, we still have military requirements. But, you
know, even if we have a down economy for a number of years--it
is tough when you lose a trained mariner and they go do
something else and find a living--make a living doing something
else. Getting them back and getting them qualified and
certified is very challenging.
Mr. Akin. So that is a function of the economy, then,
whether or not they decide to stay in, etcetera, etcetera.
Mr. Matsuda. And we have seen that in terms of the
graduates from our academies. You know, the ones where they are
able to get on board a ship and take a shipboard job, they will
usually do so. And when those opportunities aren't there, they
are forced to take other jobs, you know, shore-side jobs.
Mr. Akin. And then they may not come back for that point.
Mr. Matsuda. Yes. True.
Mr. Akin. Thank you, Mr. Chairman.
Mr. Taylor. The chair thanks the ranking member.
Couple of things, Mr. Matsuda. And again, my apologies for
the mistake on your name early on.
The recent hearings in the Transportation Committee on the
Deepwater Horizon and other committees, was certainly an eye-
opener to discover the rig that has just caused so much turmoil
for so many people along America's Gulf Coast was made in
Korea, flagged in the Marshall Islands, and the taxes go to a
shell corporation in Switzerland. That rig was operating in the
American exclusive economic zone.
And one of the things that has come out of the bill that
just recently passed the Transportation Committee would be for,
in the future, those vessels to be U.S. flagged, U.S. owned,
U.S. crewed, made in America.
I mean, if you think about it, the absurdity of telling a
Gulf Coast shipbuilder that not only can you not go fishing
this summer, not only can you not take your kid to the beach to
go swimming because of what has happened, but your mom or dad
didn't even get the privilege of building that ship, that the
United States Coast Guard did not inspect it, that a third
party, hired by the Marshall Islands, did the inspection.
And quite frankly, when that rig caught on fire and those
people had to jump in the water, neither the Korean, the
Marshall Islands, or the Swiss Coast Guard was anywhere to be
found. Our nation picked up the initial cost of that disaster.
The people who profited from building it, from registering it
and the taxes from it, all went elsewhere.
So I would hope that your organization would very
aggressively pursue those requirements: U.S. built, U.S. owned,
U.S. crewed. And quite frankly, the ownership should be
American. We should not have to wonder about who is going to
pay the bill at the end of the day if something goes wrong.
Secondly--as far as ideas for the Title XI program, it has
come to my surprise, not pleasantly, that the last four single-
hulled tankers in America belong to the United States Navy. The
last 12 single-hulled tankers in America belong to the United
States Navy. And I think we could all imagine the ``60
Minutes'' episodes, or etcetera, if one of those tankers, by
some accident, hit a rock, ran over its own anchor, or any of
the other things that cause single-hulled vessels to start
leaking oil.
I would hope that your organization would very aggressively
look for someone who would be willing to use the Title XI
program to replace those vessels sooner rather than later,
given our already-stretched Navy budget.
And then, lastly, just by way of a request, I would hope
that you would keep a sharp eye on the Maritime Academy. I
don't think that Admiral Joe Stewart was given a fair shake
when he was dismissed. I very much support his efforts of
himself and other members to have the Global Maritime and
Training School on-site to help subsidize the cost of that
academy, save money for the taxpayers.
And quite frankly, I thought they were given a raw deal by
the previous administrator in not recognizing what a good thing
that they were doing for the nation, and instead being held
under a dark cloud to that. So I think it is important that
those maritime assets, we make the most of them. It is
important that we find jobs for these young mariners.
And making the best use of our own economic exclusive zone,
I would hope that you would actively pursue that that being
reserved for Americans.
Would you care to comment on any of those things?
Mr. Matsuda. Yes, sir.
First of all, we would be happy to work with this
subcommittee or the Transportation Infrastructure Committee on
any pending legislation certainly involving the maritime
industry. As you know, almost everything impacts whether or not
we will have a sufficient merchant marine, and we are happy to
provide our views and technical assistance.
Second, on the Title XI program, I believe we actually have
a number of double-hulled tankers that are part of pending
applications or the existing portfolio. Whether or not the Navy
decides to buy them, use them or charter them is somewhat out
of our hands, but we are certainly happy to work with our
partners in Transportation Command to get them to--at least
make them aware of these opportunities of our Title XI program.
And then last, with the GMATS [Global Maritime and
Transportation School], this is one of the organizations at the
Merchant Marine Academy, what we consider a non-appropriated
fund entity. And what we are doing is taking an organized look
at each one of these NAFI [Non-Appropriated Fund
Instrumentality] entities and making sure that we understand
what the relationship is between them and the federal
government and make sure there is a clear defined level of
accountability and that they are well run.
And so, we should be able to make some recommendations this
summer as to where we go from there with GMATS.
Mr. Taylor. Okay. And again, for those people who don't
live on Capitol Hill, NAFIs are Non-Appropriated Funds----
Mr. Matsuda. Right.
Mr. Taylor [continuing]. That, again, were being used to
help subsidize the academy and keep the costs down to the
taxpayer.
Last thing I would encourage you to do, it has been a while
since I checked on the number, but the last time I checked,
there were about 60 vacancies at the Merchant Marine Academy
for everything from squad-level officers to plumbers,
electricians and teachers.
I would certainly request that, to the greatest extent
possible, you work with our Wounded Warrior programs at Walter
Reed and Bethesda Naval Hospital to try to get some of those
people who have already paid a terrible price for their service
to our nation, to try, to the greatest extent possible,
encourage them to come work or teach or serve at the academies.
I think it would be a great way for them, too.
I know that all the services have agreed to keep them
within their ranks for a significant period of time as they
make an orderly transition to the private sector. And I think
this would be, for those who choose to do so, a great way to do
that.
Mr. Matsuda. Thank you, sir. I believe we have a good
relationship with these programs. I will go back and make sure
that it stands strong and that these folks are given
opportunities.
Mr. Taylor. And lastly, in the 20 years that I have been
lucky enough to do this, I regret to say that I have not really
seen an aggressive Maritime Administration. I hope that changes
on your watch. I hope that you will come to us with lots of
good ideas and challenge this committee to find a way to fund
them. And so I will leave it with that.
With that, the chair recognizes the father of a merchant
mariner, Mr. Wittman.
Mr. Wittman. Thank you, Mr. Chairman.
Administrator Matsuda, thank you so much for joining us
today. We appreciate it.
And as the chairman said, I hail from what I like to call
America's first district there in Virginia. We are the home to
a great shipbuilding workforce there that builds great Navy
ships and commercial ships, and also home to the James River
Reserve Fleet, which is based out of Ft. Eustis there. So as
you can see, we have great pride in our ships, and also we are
glad to be an important element of the ready reserve fleet,
making sure we have the ships needed whenever they need to be
called up.
There is one issue that I want to bring up that does
concern me. I have been out to visit the James River Reserve
Fleet a number of times. And always when I meet with the MARAD
administrator there to get his thoughts on things, several
things come up. One is the effort to make sure that we are
disposing of those ships that are non-retention status as
quickly as possible.
And last November, one of those ships broke loose, broke
off anchor, drifted away, caused about a half a million dollars
in damage. Took some time to find it, believe it or not, a big
ship. You would think you would be able to find out where it
is. But anyway, took a little while to find it.
Obviously caused some concern with folks in the region,
caused concern with myself to make sure that we are doing all
we can not just to secure the fleet, but to make sure those
non-retention ships are getting taken care of.
Secondly are the environmental issues. Obviously older
ships there, lots of substances on board. I appreciate what
MARAD is doing with the new ships that come into that reserve
fleet and making sure that any hazardous materials on board are
taken care of. But there are still some older ships there that
do cause some environmental concerns if there are rust-throughs
in the hull or if one breaks loose, as it did last year and
comes ashore, and we have a break in the hull or something
along those lines.
If I understand it correctly, we have 15 non-retention
ships, I believe, there in the James River Reserve Fleet. And
based on that, can you tell me, what do you think the expected
timeline is for further disposal of ships within the James
River fleet? And has there been a risk analysis for any
potential environmental impacts for the remaining ships there
in the fleet, both the ready reserve ships and the non-
retention ships?
And can you tell me, if that environmental impact statement
has been done, what are the potential impacts there, and what
is MARAD expected to do about planning for those? What
mitigation plans are maybe there, and where we are with the
disposal of the 15 non-retention ships?
Mr. Matsuda. Happy to, sir.
First, the James River Reserve Fleet is definitely one of
our valued sites. The Maritime Administration has made great
progress over the years in reducing the number of ships. My
first visit there was in 2002, where there were 80 or--a number
of ships that were ready to go, and I was surprised to see last
fall, in a quick trip there, that there were--down to 25 or
less total.
A number of those are--well, let me make this clear: none
of them there are considered high risk. We use a risk-based
process to determine nationwide where the highest risks are to
the environment and make sure we dispose of those ships first.
Because of all the great progress we had made in James
River, there are none that are there currently. But we will
continue to make sure that we dispose of those, of the non-
retention ships, as best we can given the funding resources we
have available.
As far as the Monongahela, this is that Navy oiler that
broke loose. After that happened and we were able to refloat it
and put it back in the fleet, I had asked our Maritime
Administration staff to put together a complete incident
report, determine how it happened, and how we can take steps to
prevent it from ever happening again.
I believe it was just a week or two ago I was able to send
you a copy of that report, or to your staff. I am happy to meet
with you personally and discuss it, or come down to the James
River fleet site, if you would like. If there are constituents
with questions about it, we are happy to let folks know exactly
what we are doing to make sure that doesn't happen again.
Mr. Wittman. Very good, thank you. I would be interested in
getting some of that information from you.
Let me ask this, too. Just looking out in the future for
the James River Reserve Fleet, tell me, where is the size of
the fleet going in light of the closing of Suisun Bay? And can
we expect more ships there, or is there a contingent plan for
the closing there? Where do you see us managing our ready
reserve fleet and non-retention ships based on that closing?
Mr. Matsuda. Well, let me just make clear, we are not
closing Suisun Bay. What we are doing is making a concerted
effort to address all of the high-risk non-retention ships kept
there.
There are still--we keep these fleet sites up for a number
of reasons, not just for the non-disposable ships, but we host
a number of ships for the Navy and other federal services to
make sure that there is a low-cost way to maintain these. And
we can do that with a limited staff and a very expert staff.
These folks know what to do to make sure they keep them, you
know, in whatever status they need to be kept.
So we are, you know, placing a great focus on Suisun Bay
right now, given our resources. If we had additional resources,
I am sure we would be able to move some of these other ships
that are ready to go, as well.
Mr. Wittman. Very good.
One additional question. In light of what is happening
there at Suisun Bay and you taking those ships and making sure
you are managing the high-risk vessels that you have, I think
there is also a concern, too, in looking at the companies that
do the salvage work and obviously, having that infrastructure
available for that. And as we know, there on the James River,
as you said, you all have done a fantastic job in getting that
fleet down to a very manageable size.
With that, though, as we know in the regions, whether it is
Texas, Virginia, California, there are folks that are in that
business that we all know that we want to try to keep that
industrial capacity there. Just like we do on the shipbuilding
side, we want to make sure we have it also on the disposal
side.
Is there anything that you are doing to make sure that, as
you make decisions about the disposal of those ships, that you
keep in mind all of those companies that are doing that so we
don't lose a company that may, because of a gap in ships
available for disposal or may not be given an opportunity to
maybe bid on a ship that comes from another area, to make sure
we look at maintaining that industrial base for disposal so, as
those ships are needed, we have that strategic dispersal, we
will call it, of those disposal companies?
Mr. Matsuda. Understood, sir, and that is something. When
we first decided to focus on Suisun Bay, I wrote a letter to
each of the certified recycling companies and kind of let them
know our plan for the near future. And we maintain very good
contact, I believe, with every one of the six recyclers. We
want to make sure that they are available when we need them.
But I hear you loud and clear, and we will certainly make
sure we understand what the needs are to make sure they are
able to stay available.
Mr. Wittman. That will be great. As long as you stay in
touch with them and let them know, and give them all ample
opportunity if they want to bid on any of the ships that are
coming out of these fleets for disposal, sometimes for those
companies, as you know, even though it may cost them a little
more in transportation costs, as long as they can keep people
working so they can get to the next contract where they can
actually have a ship that is closer by, that does, I think,
everybody good.
Mr. Matsuda. We are happy to take bids from anyone who can
do the work.
Mr. Wittman. That is great. That is great.
Mr. Chairman, with that, I yield back.
Mr. Taylor. The chair thanks the gentleman.
Mr. Akin.
Mr. Akin. No, thank you, Mr. Chairman.
Mr. Taylor. Okay. Mr. Matsuda, I have noticed in the past
couple of weeks a heck of a lot of misinformation being put out
on the public airwaves, sometimes from people in elected
office, but often from people just in the media, as far as the
Jones Act. You know, they made a big deal of saying that vessel
skimmers from around the world were not being allowed in
because of the Jones Act, but where there is clearly an
exemption in the Oil Pollution Act of 1990 just for this
circumstance.
And so, just for the record, are you aware of any vessels
that were kept out of the oil spill recovery in the Gulf of
Mexico because of the Jones Act?
Mr. Matsuda. Absolutely not. We work very closely with the
National Incident Command. We have a role in executing the
Jones Act and understanding whether there are U.S. ships who
can do the work before a foreign--as part of the process to
understand whether a foreign flag oil spill response vessel
could be used.
So we certainly are dialed in, and I am not aware of any
instance----
Mr. Taylor. Okay.
Mr. Matsuda [continuing]. Where a Jones Act has prevented a
ship from being used where it is needed.
Mr. Taylor. And so, just for clarification, the law that
says that the towboats pushing gasoline barges up and down the
Mississippi River, that Jones Act says it has got to be
American made, American crewed, American owned. The repeal of
the Jones Act would mean it could be Mexican made, Mexican
crewed, Mexican owned. Is that correct?
Mr. Matsuda. That is right.
Mr. Taylor. That you could have crews and tugs from Somalia
transporting goods from one American port to another. Would
that be correct if the Jones Act were repealed?
Mr. Matsuda. Theoretically, yes, sir.
Mr. Taylor. Okay. Again, for the people on the other side
of this building who are calling for the repeal, particularly
given the immigration attitude of the American public right
now, I would hope that they would keep that in mind when they
try, once again, to repeal the Jones Act.
Mr. Critz.
Mr. Critz. Thank you, Mr. Chairman.
Just a couple of points came up when we were talking about
when the chairman noted that there is upwards, or he read that
there are 60 vacancies at the Merchant Marine Academy. And
having worked for Chairman Murtha for so many years, we put a
lot of stock in promoting all of the academies to students
throughout our district.
And the Merchant Marine is one that we promote pretty
heavily in our district, even though we are in the middle of
Pennsylvania and we have one inland port. It is a very busy
port, the Port of Pittsburgh, but, you know, we have really
enjoyed sending our young men and women there and have really
received good reports back.
But, you know, I know that there have been some financial
irregularities at the Merchant Marine Academy, and I would be
curious to know if they have been remediated at this point.
Mr. Matsuda. Now, thank you for the opportunity to talk
about this.
First of all, with the vacancies, we are extremely
concerned. I can tell you, we have got a number of vacancies at
the Maritime Administration as well. I think we are just at a
time where a lot of folks are retiring, and we have a lot of
positions unfilled. So we are working on both a staffing
strategy as well as a succession planning strategy to really
make sure that we can continue to function as folks retire.
As far as the--as far as the need to--I apologize, sir. I
did focus only on the first part of your question. Could you
repeat the second part?
Mr. Critz. Financial irregularity.
Mr. Matsuda. There are a number of financial irregularities
that were identified by the Government Accountability Office,
57--I am sorry, 47 recommendations they made on how to improve
financial controls and accountability. We are taking their
recommendations very seriously. To date, I believe we have
implemented 32 of those recommendations, and we expect to have
all of them addressed by the end of this fiscal year.
Mr. Critz. Well, that is good to hear. And one more
question about the academy would be that, you know, of course
such an esteemed academy, leadership plays a very important
role. And I would be curious to know when a new superintendent
will be appointed.
Mr. Matsuda. I can tell you, we are using a very thorough
process in ensuring that we find the very best candidates and
the best leader for this important role. I hope to have an
announcement shortly. You know, the federal hiring process is,
as I am learning, very complex, so we are getting there. But we
are pretty close. I hope we should have one before the recess.
Mr. Critz. Well, thank you very much. If I could, just one
more question.
And this goes back to the shipbuilding, is that there is no
request for the program that provides assistance to small
shipyards. And, you know, the assistance to small shipyard
program supplied grants and loans to improve infrastructure and
efficiencies at small shipyards. I would be curious to hear
your response as to why there are no requests in there and what
the plan is, going forward.
Mr. Matsuda. Well, we are continuing to monitor our small
shipyard grant program. For every dollar that we are given, we
are putting out the door and into the hands of these small
shipyards to enable them to purchase the equipment they need or
implement the worker training programs they need.
But as you correctly pointed out, the President's request
does not contain funding for additional funds for the program.
We are still continuing to see the impacts of the money
provided through the American Recovery and Reinvestment
programs that we are monitoring those.
Mr. Critz. Thank you. I have no further questions. I yield
back.
Mr. Taylor. Mr. Matsuda, my last question would be that my
observation during the previous administration was that the
Credit Council existed to deny every loan guarantee request,
that it was there for no other reason than to say, ``No, no,
no.'' Again, that is my observation, but I think it is pretty
close to fact. So the question would be, is there something
statutorily that needs to be changed in order to get this
program going again, or is it something administratively that
needs to be changed to get this program?
Because it is an important program. The price of metals has
dropped approximately in half in the past three years, great
time to buy steel, great time to buy aluminum.
We have 10 percent unemployment. We have a number of older
vessels. I just identified 12 single-hull tankers that this
nation owns that need to be replaced. So what recommendations
would you have for us, if need be, or for your own department,
if need be, to get this program going again?
Mr. Matsuda. As far as I can tell, sir, the program is
driven by the applicants. Somebody has got to have an idea and
funding for a ship that they want to build before they come to
us. As far as I could tell, given the current credit situation,
Title XI is one of the best deals in town if you are trying to
build a large vessel or sinking many millions of dollars into
building a vessel.
So the process is also largely driven by the applicant.
Sometimes I have heard discussion about why it takes so long to
get approval for one of these things and whether the Credit
Council is the holdup, or what is the--is it MARAD.
I can tell you that, usually in the past several
applications that we have approved, the largest chunk of time
it takes is waiting on an applicant to produce additional
information about either the design of the ship, the market for
which they are going to use it, you know, how they intend to do
that.
There is a fairly thorough process that is involved, and we
do our best to try and make sure that the applicants understand
up front, they need to get this information in and get it
quickly. And we will process the application as soon as we can
to make sure that it keeps moving and gets considered in a
timely manner.
I know usually, with the amount of money we are talking
about, you know, time is a big difference in terms of what kind
of market rates you can get on your loans. So we certainly keep
that in mind, and we do our best to communicate with the
applicants to make sure they understand what is expected of
them.
But I guess the best thing we could do to stimulate
shipbuilding is to really make sure this economy turns around
and that there is a need for more ships in the future to make
sure it can carry the goods for America's economy.
Mr. Taylor. How would you rank, in the order of importance,
the functions of the Maritime Administration? What would you
say is your most important function, second, and third?
Mr. Matsuda. Well, we have got--probably making sure that
we have a viable merchant marine is our overall goal. As we
know, it is so critical to both the economy and the military,
that that is probably singularly one of our largest areas of
focus.
Close second I would have to say is--and many of our
programs tie into that goal--second I think would be to make
sure that we have an efficient freight transportation system,
of which water transport is such a key element of, making sure
that folks understand, when they plan for future investments,
what it means to how goods move through their district or state
or through their country is important. So many of these freight
flows are--they go between or over state lines or district
lines, and lines between the metropolitan planning
organizations.
Really, the federal government's one of the only entities
in the right place to understand what is going on at the
national level. So that is something we take very seriously and
been working with a number of ports around the country to try
and understand what we can do to help improve the efficiency of
the system.
These are probably the top two. I would say a number of the
programs that we have really do feed into whether we can
sustain the number of skilled mariners or vessels we need in
the U.S. to keep the merchant marine.
Mr. Taylor. Okay. Any further questions from the panel? Mr.
Wittman.
Mr. Wittman. Thank you, Mr. Chairman.
Administrator Matsuda, one other question. I know that we
had just traded some conversations here about the Title XI
program, making sure we look at all the different shipyards.
Obviously, there is a need to make sure we are looking at our
small- and medium-size shipyards.
Let me ask this, though. I am hoping that that doesn't
result in two different Title XI programs. I think we want to
make sure that we are looking for opportunities for all of our
yards. We want to make sure that capacity grows everywhere. But
that means also to make sure we are not, you know, selecting
one or the other.
Another concern of mine is making sure that the terms and
conditions on these loans are significant across all the
different sectors, in other words making sure that we aren't
having a different set of terms and condition for one size
shipbuilder versus another. And again, this is to make sure
that we are standing up and helping the entire shipbuilding
industrial base.
I just want to get your feedback on that element of the
Title XI program to make sure that it is--we are doing
everything we can to help all of our yards, just not picking
out a particular segment.
Mr. Matsuda. Thank you, sir.
The Title XI program is really just--we look at it as one
tool. It is a major tool we have to enable folks to be able to
build ships in this country.
Unfortunately, just given the time and expense involved in
pursuing one of these applications, it has really been not as
useful for folks who are building a ship or a barge of, you
know, 25 to 5, 10, $15 million. And that has been a real
challenge, too, because we don't want that market to go away,
either.
Mr. Wittman. That is great. And if there are ways that you
can streamline that process, again not changing the terms and
conditions, making sure that we require the same of the
fiduciary responsibility for every corporation, but as you
said, maybe streamlining the administrative process. So for the
smaller companies who don't have the wherewithal, they don't
have to go through, you know, the same realm of paperwork that
maybe a larger company that could do that more easily.
So if we can look at ways to administratively cut that
burden on folks, I think that would be great. But again,
keeping in mind the same time that, you know, we have got to be
making sure that we stand up all of our yards. And I agree, we
need to make things easier so people can get through the
paperwork and through the administrative process easier.
Mr. Matsuda. We are happy to work with the committee on
that.
Mr. Wittman. Thank you, Mr. Chairman. I yield back.
Mr. Taylor. In the ``No news is good news'' department, the
question of piracy was a red-hot topic in this town a year ago
right now. Like many other things, it has been put on the back
burner, thank goodness, because of a lack of activity at least
directed towards American vessels.
Were the changes made in the law last year adequate? What
are the people in the maritime industry saying as far as if
there is need for additional changes in the law in order to
protect American flag vessels and their crews?
Mr. Matsuda. Thank you, sir. That is a very good question.
I am not sure that, given that the many number of federal
agencies and others that have oversight over the security of
American ships and protection of them that I would be able to
speak for everyone.
But I can tell you that we have noticed, over the past
year, an increase in piracy activity, but a decrease in
activity with respect to U.S. ships. We have worked with our
partners very closely to make sure that we can improve training
of U.S. crews for piracy. Recently we produced a training
video, working with the ship operations cooperative program. It
is a short video, just basic training for how to avoid piracy
situations or what to do in case of attack.
We are also working with the Naval Criminal Investigative
Service to do inspections aboard ships, U.S. ships, just to
point out what kinds of vulnerabilities we see in the event of
a piracy attack. And that has been an ongoing successful
program--it is voluntary--that U.S. carriers can come to us and
we will work with them to get them this advice.
So we are continuing to work also with the rest of the
world through what is called the--it is a U.N. body that has
put a number of countries together to focus on the piracy
problem. It is the Working Group 3 of the Contact Group on
piracy off the coast of Somalia. And we have been able to work
with industry very quickly over the past year to come up with
best practices, which the companies can use to try and help
prevent pirate attacks.
And by and large, we have seen--we have encouraged our
fellow shipping countries to adhere to those best practices.
And we are making efforts, working with the State Department
and others, to make sure that we do everything we can to reduce
the risk.
Mr. Taylor. Do you know of any additional legislative
changes that any of your shippers are asking for in order to
protect the crews?
Mr. Matsuda. Legislative changes? I would have to get back
to you, sir. I am not aware of any off the top of my head.
Mr. Taylor. Okay.
Are there any additional questions? Again, thank you very
much for coming by, and the subcommittee stands adjourned.
[Whereupon, at 2:59 p.m., the subcommittee was adjourned.]
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A P P E N D I X
July 14, 2010
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PREPARED STATEMENTS SUBMITTED FOR THE RECORD
July 14, 2010
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