SEPTEMBER 24, 1998

Mr. Chairman and Members of the Subcommittee:

I welcome the opportunity to be with you here today to introduce myself and discuss my objectives for the future of the Maritime Administration (MARAD). This is the first opportunity I have had to appear before this Subcommittee since becoming Maritime Administrator on

August 6th 1998. I trust that this will be the first of many appearances to discuss the challenges facing our nation's marine transportation system.


First, I would like to tell you a little about myself. It is safe to say that I have long had an interest in the areas of transportation and public service. Most recently, prior to my appointment as Maritime Administrator, I served as Senior Democratic Counsel of the U.S. Senate Committee on Commerce, Science and Transportation. In this position, I advised Committee members on legislative issues and oversight matters and assisted in the development of policy positions and legislative initiatives on a broad range of transportation and commerce issues such as regulatory reform of the trucking industry, pipeline safety, Amtrak reform, reauthorization of the Federal Aviation Administration, the sunset of the Interstate Commerce Commission (ICC) and the Maritime Security Act of 1996, administered by MARAD.

Prior to working at the Senate Commerce Committee, I served in a number of senior positions with the ICC. I have had the opportunity to serve as the ICC's Agency Management Counsel, as a trial attorney, as special counsel for Compliance and Consumer Assistance and as counsel to the Commission members. I also practiced law in the private sector at Akin, Gump, Hauer & Feld, here in Washington, D.C., specializing in the areas of anti-trust, banking, equal employment opportunity, labor, immigration and transportation law.

I believe that these many years of varied experience allow me to approach the challenges I will face as Maritime Administrator with a fresh outlook and an open mind.


I am very excited by the opportunities and challenges that await me as Maritime Administrator. As I stated during my confirmation hearing, there is no more important maritime issue than the continued existence and well-being of a U.S.-flag fleet. The United States is a sea power and must remain so. We, as a Nation, must find ways to increase the U.S.-flag fleet, because what we don't own as a nation, we cannot be said to control.

We must also ensure that the Nation's ports are able to compete in the global economy. Every day, millions of tons of cargo move through American ports, carried on ships. There is also the issue of the increasing intermodal nature of our transportation system. Goods that come to the United States ports do our citizens little good if they cannot efficiently move inland by either rail, motor or water transportation. Similarly, the movement of passengers requires that we think intermodally as well.


I also cannot miss this opportunity to stress that the Administration supports the Jones Act as an essential element of our Nation's maritime policy. Just as I stated at a hearing held by the Senate Commerce Committee on this issue last week, I repeat here before you that our need to maintain domestic shipping and an industrial shipbuilding base for national defense purposes and economic security must be a priority. The requirement that U.S.-flag vessels be U.S.-built, U.S.-crewed and U.S. citizen-owned ensures the continuation of a domestic merchant marine and shipbuilding industry -- important goals of the United States and MARAD.

Cabotage, or the reservation of a nation's coastwise trade exclusively for that nation's own vessels, is common among the maritime nations of the world. Most maritime nations maintain cabotage in some form such as domestic ownership and crewing requirements. Those countries that do not have domestic build requirements generally have some form of domestic fleet subsidies or shipbuilding subsidies. The Jones Act fleet receives no subsidies.

As I stated last week, the Jones Act fleet plays a significant role in our domestic economy. The debate over U.S. cabotage laws, however, is not solely an issue of economics and transportation. The U.S. ownership and build requirements for participation in coastwise trade are also critical to national security. By serving commercial interests during peacetime, American shipbuilders and ship repairers are able to ensure that a domestic shipbuilding base is in place during times of national emergency. The importance of the Jones Act, including its U.S.-build requirements, has been consistently supported by those who are most familiar with its implications for national security. Assistant Secretary of the Navy John Douglas stated in a letter to the Chairman of the Subcommittee on Surface Transportation and Merchant Marine, the Honorable Kay Bailey Hutchison, that the Navy strongly supports the Jones Act and opposes any changes in the law. In addition the former Commander in Chief of the United States Transportation Command, General Walter Kross, and the current Deputy Commander in Chief, Lieutenant General Roger Thompson have made it clear that they support the Jones Act unequivocally for providing the root structure to the strategic trans-oceanic sealift capabilities. During a military conflict, domestic carriers are part of the pipeline moving sealift cargoes from inland points to coastal ports for shipment to the theater of operations. In addition, domestic carriers continue to support the civilian economy and move the raw materials necessary to supply wartime production in the U.S. industrial base. I would like to provide you with a copy of Assistant Secretary Douglas' letter for the record.


Secretary Slater has established the overall priorities for the Department of Transportation (DOT) as: ensuring the safety and security of our Nation's transportation system; continuing strategic investments and initiatives to improve America's transportation infrastructure; and bringing common sense to government to provide a DOT that works better and costs less. To achieve these goals we are committed to a visionary and vigilant DOT leading the way to transportation excellence in the 21st Century. Through such an organization, we intend to meet our greatest challenge: to build a transportation system that is international in reach; intermodal in form; intelligent in character; and integrated and inclusive in nature.

MARAD's own strategic goals are an outgrowth of DOT's: (1) to assure an intermodal sealift capability to support vital national security interests; (2) to enhance the competitiveness of the U.S. shipyard industry, including repair and related industries; (3) to improve intermodal transportation system performance through advanced technology and innovation; and (4) to increase the U.S. maritime industry's participation in foreign trade, and cargo and passenger movement in domestic trades. The program activities that MARAD undertakes to achieve these goals fulfill the Agency's legislative mandate as the primary Federal agency responsible for ensuring the availability of efficient water transportation service to shippers and consumers, an adequate domestic shipbuilding and repair service, efficient ports, effective intermodal water and land transportation connections, and sufficient intermodal shipping capacity for use by the Department of Defense (DOD) in time of national emergency.

Our program activities also seek to fulfill the national security objective set forth by Congress in Section 14 of the Maritime Security Act of 1996 (MSA), enacted on October 8, 1996. National security is enhanced through implementation of the Maritime Security Program (MSP) and the Voluntary Intermodal Sealift Agreement (VISA); maintenance of a Ready Reserve Force (RRF) able to rapidly deploy U.S. forces and supplies anywhere in the world during emergencies; and by ensuring an adequate workforce of merchant mariners in peacetime and wartime. In addition, national shipbuilding objectives are furthered through the elements of the National Shipbuilding Initiative -- working mainly through the Maritime Guaranteed Loan, or Title XI loan guarantee program, and MARITECH. Lastly, our ports and intermodal and trade activities seek to develop U.S. ports and waterways and increase the efficiency and safety of intermodal freight transportation, and to eliminate unfair trade practices, respectively.

I would now like to discuss MARAD's specific programs in the context of our four strategic goals.


With the end of the Cold War, the Department of Defense (DOD) has downsized significantly. To maximize DOD's logistics capability and minimize its cost, future defense transportation requirements will need to be met by increased reliance on the U.S. commercial sector. In recent conflicts, DOD relied extensively on the U.S.-flag commercial fleet to move critical military cargoes. However, increasing globalization and consolidation of transportation providers have left fewer U.S.-flag commercial carriers and increased the risk of disruption in defense transportation.

With the strong support of the President and Congress, a bipartisan action to prevent the demise of the oceangoing U.S. liner fleet resulted in passage of the Maritime Security Act of 1996. The Maritime Security Act created the 47 ship Maritime Security Program (MSP). MARAD quickly implemented the program and simultaneously moved forward with the MSP's new companion emergency preparedness sealift program, the Voluntary Intermodal Sealift Agreement (VISA).

For the time being, the exodus of oceangoing U.S.-flag vessels has been arrested, and in some cases, new vessels were brought in under the U.S. registry. Because a foreign-flag liner vessel wishing to register under the U.S. flag in order to participate in the MSP must be less than 10 years old, some of the most modern and efficient vessels have entered our U.S.-flag fleet.

The VISA program has succeeded in a way we scarcely thought possible when it was first developed. The essence of VISA is to create a genuine, dynamic and effective partnership among MARAD, DOD and the private sector to give DOD guaranteed access to intermodal transportation capabilities in the private sector. These capabilities consist of an $8 billion worldwide transportation network owned and operated by U.S. companies which offer vessel capacity, container assets, port and terminal operations, innovative management and the finest transportation professionals and skilled seafarers that can be found.

Instead of seeking to replace, overlay and direct the utilization of private sector resources with government-owned or requisitioned resources -- something that is impractical, unrealistic and costly -- VISA contemplates a fully coordinated effort among DOD, MARAD and industry built upon joint planning, prior negotiation of terms and conditions and exercises to ensure that if and when we need international sealift support, it will be there.

Industry participation in VISA has been substantial. MARAD has enrolled all of the MSP carriers, who, in turn, have contributed 100% of their MSP vessel capacity. This provides 70% of the total ship capacity in the VISA program. The remaining 30% ship capacity in VISA is made up of carriers wishing to carry government preferred cargoes. In all, we have enrolled 27 U.S. companies and have gained guaranteed access to more than 200 vessels of all types as well as the entire worldwide structure supporting those vessel operations. Mr. Chairman, we are getting tremendous value from this program, along with MSP, at a very modest investment. What we've created here is exactly what government ought to be doing; i.e., working shoulder to shoulder on a common problem with the best our private sector has to offer to make America stronger.

The Ready Reserve Force (RRF), which MARAD manages, is one of DOD's key sources of surge strategic sealift capacity. The fleet is sized and configured to meet DOD requirements for specific ship types and for specially outfitted support ships to carry heavy and outsized military cargoes that cannot fit into the containerships that make up most of today's commercial general cargo fleet. A high level of operational reliability is essential for the RRF to effectively support DOD.

We currently have 91 vessels in the RRF which are maintained in various stages of readiness from 4 days to 20 days. These vessels consist of many types -- from 31 roll-on/roll off vessels (RO/RO's) to 29 breakbulk to 10 tankers, to specialized vessels such as 10 crane ships, 7 heavy lift ships, 2 aviation logistics support vessels, and 2 troopships. These ships are located around the country at outport locations near military loading facilities. Twenty-three of them are moored at three MARAD reserve fleet sites at Beaumont, Texas; Suisun Bay, California; and in the James River, Virginia. The rest are outported around the United States except for three small tankers located in Japan. Most of the outported ships are in reduced operating status maintained by civilian maintenance crews which work for private sector ship managers.

I am pleased to be able to say that the RRF operates at a high level of efficiency and readiness. In the 88 so-called "no notice" activations since DESERT SHIELD/DESERT STORM in the early 1990's, we delivered our ships on time, every time and in excellent condition with only two minor exceptions where ships were a few hours late. We have an over 99% reliability rating for our pre-positioned ships, and a 90% fleetwide readiness rating for our RRF ships located here. Currently over 90% of our 91 vessels are fully available for service; the others are undergoing scheduled routine maintenance and repair operations.

It is my goal to continue to maintain RRF readiness and meet DOD RRF activation requirements 100 percent of the time. Additionally, MARAD plans to award new RRF Ship Manager contracts for 89 vessels under a best value process. In July, MARAD rescinded the ship manager contracts awarded in June, when it was discovered that awards had been made to one offeror contrary to the offeror's proposed condition and this error potentially impacted other offerors. Discussions with all offerors in the competitive range have been reopened and offerors were given the opportunity to provide additional technical and pricing information. Contract awards are anticipated for the November timeframe.

The other component of MARAD's National Defense Reserve Fleet (NDRF) is the121 ships in varying degrees of condition which are not part of our front-line RRF. These vessels, which are moored at our Reserve Fleet sites in Virginia, California and Texas are in many cases obsolete and candidates for disposal. In addition, MARAD is in the process of accepting title to an additional 56 ships from the Navy that will have to be scrapped.

Mr. Chairman, I know of your interest and concern about issues pertaining to the proper disposal of obsolete government-owned vessels -- most of which reside in the MARAD and U.S. Navy fleets-- and which have gained prominence and visibility in the last year. I am aware that this Subcommittee held two hearings just this year, seeking to identify the problems of ship scrapping and pursue possible solutions.

Under the National Maritime Heritage Act of 1994 (P.L. 103-451), MARAD was directed to scrap all obsolete vessels in the NDRF in a manner which maximizes the economic return to the United States by September 30, 1999 (since changed to September 30, 2001) and to distribute the proceeds between three accounts: (1) 50% specifically for the acquisition, maintenance, repair, reconditioning and improvement of vessels in the NDRF (including the RRF); (2) 25% for payment or reimbursement of expenses of the State maritime academies or the U.S. Merchant Marine Academy for facility and training ship maintenance, repair and modernization or for purchase of simulators and fuel; and (3) 25% for the National Maritime Heritage Grants Program which is administered by the Department of the Interior.

The sale of obsolete vessels has historically been a positive source of funds to offset the need for federal appropriations for the purposes cited above. We are working within the Administration to move forward with our ship scrapping program. The need to move forward has been underscored by a recent release of oil from the vessel EXPORT CHALLENGER located in our James River Reserve Fleet site. Although the release was relatively minor, the cost of addressing the spill and pumping the oil out of the tanks as required by the Coast Guard is expected to cost in excess of $700,000. The vessel had already been sold for $14,000 to a scrapper in Texas, but at the time of the release title had not been transferred. A more significant release of the 2900 barrels of oil on board the vessel could have resulted in much greater environmental damage, cleanup costs and potential liability.

MARAD and the Navy continue to update their respective ship disposal programs and to implement the recommendations of the Interagency Panel on Ship Scrapping. For example, MARAD has revised its Invitation for Bid (IFB) to include a safety and health plan to specifically address worker health and safety issues, and we are currently limiting sales to the domestic market.

On September 18, 1998, we issued an IFB for the sale of 25 ships. The bids are due on November 18, 1998, and awards will be made in early 1999. This solicitation should provide MARAD with additional information about the interest and help determine the limitations of the domestic industry. The IFB is also intended to remove those vessels in the NDRF that are in the worst condition.

On September 23, 1998, Vice President Gore issued a memorandum to Secretary Cohen and Secretary Slater placing an further interim moratorium on efforts to award contracts or transfer vessels for scrapping of vessels overseas through October 1, 1999. However, the memorandum, recognizing the statutory deadlines applicable to MARAD, provides for an exemption from the moratorium by the Council on Environmental Quality (CEQ). Exemptions would be based on factors such as exigent threats to the environment resulting from deteriorating ships, the lack of a domestic ship scrapping industry capacity sufficient to meet MARAD's needs to remove vessels from the fleets quickly, or the environmental and worker safety safeguards presented in a particular proposal for overseas scrapping. However, no such exemption can be presented prior to January 1, 1999. I will be pleased to provide a copy of the Vice President's memo for the record.


Historically, U.S. shipyards have built some of the finest commercial and Naval ships in the world. After funding for the Federal commercial ship construction-differential subsidy (CDS) program was terminated in 1981, U.S. commercial shipbuilding of large oceangoing vessels for use in international trade virtually ceased. An ambitious Navy shipbuilding program in the 1980's provided a temporary offset to the loss of commercial shipbuilding opportunities for American shipyards, but that program was reduced significantly in the early 1990's with the end of the Cold War. Major barriers have also impeded the U.S. shipbuilding industry from competing in the international market, including substantial shipbuilding subsidies by foreign governments and greater economies of scale, efficiencies in foreign shipyards derived through series production of standardized vessels and disparate worker health and safety and environmental standards.

Recognizing this, in 1993, President Clinton, in conjunction with strong bi-partisan support from Congress, initiated a comprehensive plan for the revitalization of the U.S. shipbuilding industry. This action was taken out of a recognition by the Administration that this industry was critical to the national defense industrial base and that declining naval construction budgets would make it virtually impossible to maintain that base unless domestic commercial shipbuilding assumed a greater role in the nation's orderbooks. The President's plan included the reduction of international subsidies, as well as a plea for action on the OECD Shipbuilding Agreement. The Department supports the OECD shipbuilding agreement and believes it will have positive implications for the U.S. shipbuilding industry, enabling U.S. shipbuilders to compete on more equal terms with other OECD nations. It would also leave in place the U.S.-build requirements for cabotage trade that are important to sustaining the U.S. shipbuilding industrial base which contributes to U.S. military preparedness in national security.

It was in this context that Congress enacted the National Shipbuilding Initiative (NSI) which contained two provisions with a direct impact on MARAD's operations. The NSI expanded the Title XI loan guarantee program to permit, for the first time, guarantees to be issued for the construction of export vessels and for the modernization of U.S. shipyards. The second program that was created by NSI was the MARITECH shipbuilding technology investment program. I will discuss both more fully, but I am extremely proud to say that both have produced tangible results.

Since 1993, the Title XI program has been an integral part of the resurgence we have seen in the shipbuilding industry. We have approved 53 projects, both vessel construction and shipyard modernization, for a total investment of $2.8 billion, and a guaranteed amount of $2.3 billion. This includes large ocean-going vessels -- including double-hull tankers to meet the requirements of the Oil Pollution Act of 1990 -- as well as high-speed ferries, oil drilling rigs, barges, electric power barges and a new generation of oil supply vessels. We have approved shipyard modernization projects for several shipyards, including National Shipbuilding and Steel (NASSCO) and Avondale Industries, both large Navy shipyards. This is of particular note since both companies indicate that our investment has resulted in millions of dollars in savings to the Navy on its contracts.

Mr. Chairman, there have been virtually no defaults on Title XI loan guarantees since 1990 and the enactment of the Federal Credit Reform Act. The Title XI program allows the government to work effectively with the private sector in a partnership to achieve mutually beneficial goals -- it is a limited investment by the government that results in major investments by the private sector. In evaluating loan guarantee applications, we maintain rigorous standards of due diligence, are mindful of approving only those projects with a reasonable chance of success and assuring that projects that are approved will not unfairly prejudice existing operators and markets. Let me assure you that all of our projects will continue to meet our stringent requirements relating to economic soundness and financial security.

MARAD also jointly administers, with the Defense Advanced Research Projects Agency (DARPA), the MARITECH program. MARITECH is a government-industry shipbuilding technology effort funded through FY 1998 that requires industry to match government investments, and since 1993, more than 200 private sector participants have benefitted from the program.

MARITECH has been a major factor in the development of commercially competitive ship designs, improved commercial shipbuilding procedures and the use of stronger, lighter advanced materials and composites for ship construction. In the process, it has also provided the industry with some useful tools for reducing the costs of military shipbuilding. Of equal importance is the fact that MARITECH has been a catalyst for creating a business atmosphere in which competing U.S. firms are more willing to cooperate and combine forces to enhance the overall commercial competitiveness of our Nation's shipbuilding industry.

MARAD has also launched an effort to work with the U.S. maritime industry and domestic regulatory agencies and international agencies to develop economically sound and internationally competitive environmental standards and practices. We are working closely with the shipbuilding and repair industry, the Environmental Protection Agency (EPA) and the Coast Guard to raise the level of environmental awareness in our nation's shipyards and to strive for economically sound and internationally competitive environmental standards. Domestically, we have facilitated a dialogue between industry and EPA on critical environmental issues such as anti-fouling paints and the development of EPA's shipyard sector notebook. Internationally, MARAD is working with industry, EPA and other federal agencies to ensure that international actions addressing environmental issues, such as the control of aquatic nuisance species, do not adversely affect U.S. shipbuilding and repair yards.

Shipbuilding support remains one of MARAD's core activities and we are committed to working in full partnership with the industry to maintain this critical national resource. With your continued support, I am confident that the progress we have already witnessed will continue.


MARAD is the lead agency for international maritime negotiations and in this role we seek to open international markets to U.S.-flag carriers. Several major trading partners of the United States maintain restrictive laws and practices that deny U.S. shipping companies the opportunity to compete equitably in these markets. For example, in some countries, barriers to fair competition limit U.S. ship operators' ability to establish branch offices, making it impossible for operators to solicit, book, and collect payment for cargo. Certain countries prohibit foreign companies from owning and operating container terminals and terminal equipment, or from providing intermodal services such as trucking and rail transport. Although some of these practices reflect a country's general economic and political system, the effect is to prevent U.S. companies from operating efficiently, which reduces their competitiveness. MARAD seeks to achieve treatment for U.S. maritime companies conducting business abroad that is reciprocal to our own open market.

Japan, China and Brazil are among the countries absorbing our attention at present. Last October, we achieved a breakthrough agreement with the Government of Japan, which committed to reform its port practices. If fully implemented, the agreement would reduce the monopoly control over port services involved in the so-called "prior consultation" system and pave the way for approval of stevedoring and terminal operating licenses to U.S. companies. Because of our concern about the pace of reforms, the United States pressed for much speedier and fuller implementation of the agreement when I led informal consultations with the Japanese Government in Tokyo this past August. On that same trip, we pressed China to reduce its severe restrictions on port access and "doing business" activities of U.S. carriers. We continue to observe the bilateral agreement that formally expired September 15, 1998, but have declined to negotiate a new agreement until the Chinese follow through on earlier market opening commitments. With Brazil, we are working to resolve a number of issues, including a recently implemented freight tax exemption that favors its new second registry and discriminates against U.S. and other foreign carriers.

Ocean carriers register their vessels under the U.S.-flag only if it provides an economic opportunity for their shareholders. The economic benefits to the carriers are derived for the small liner sector by a minimal direct subsidy (as established in the Maritime Security Act of 1996) and, for all U.S.-flag vessels, by the indirect support of the "cargo preference" laws and by equal access to our international markets.

Congress has mandated that all Federal Agencies utilize U.S.-flag vessels in the shipment of their goods. The principal shipper agencies are the U.S. Department of Agriculture and the Department of Defense. Additionally, Congress mandates that any exporter who receives a subsidy (loans and grants) from the U.S. Government use the U.S. merchant fleet.

In 1996, the cargo preference laws of the United States generated over $900 million revenue for the U.S.-flag merchant marine, based on MARAD and DOD estimates. So you can see the vital importance of this program. MARAD has been active in the last year to streamline all cargo preference programs to ensure the U.S. government agencies receive the best value at the lowest possible cost to the taxpayer. I believe that we have been successful in building valuable partnerships with both federal shipper agencies and with commercial exporters.

We have reduced the regulatory burdens on these shippers while maintaining the integrity of the cargo preference programs. Working with other government agencies we have created innovative new programs to provide new services at less cost to them. Our carriers, many of them MSP and VISA participants, rely on these cargoes to maintain their service and operations. In return for the government's commitment to make these cargoes available, the industry is committed to the principle of providing these services at a reasonable cost to the government. MARAD also assists the shipper community in its compliance with cargo preference requirements in the most economical manner. Last year, MARAD answered over 500 requests for assistance in locating U.S.-flag vessels and granted 305 waivers when U.S.-flag vessels were not available. We will continue these activities as part of our national security mission.

The Administration remains fully committed to the maintenance of our domestic maritime industries, which are an essential component of our national security sealift program, as well as contributing billions to the national economy. It is a vibrant, competitive and efficient industry. About 90 million passengers and over one billion tons of freight move in the domestic trades every year. This activity contributes more than $15 billion to the gross domestic product and is responsible for 124,000 tax-paying jobs resulting in $1.1 billion in annual Federal income tax receipts. Water transport accounts for 24% of domestic inter-city freight ton miles for just two percent of the national freight bill. Industry has used our Title XI loan guarantees to invest hundreds of millions of dollars in assets.

MARAD is also very active in a partnership with industry that has evolved into the present day Ship Operations Cooperative Program (SOCP). The purpose of the SOCP is to address and promote commercially beneficial innovations in ship operations through the identification, development, and application of new methods, procedures and technologies - with an overall objective to improve the competitiveness, productivity, efficiency, safety, and environmental responsiveness of U.S. vessel operations. All U.S.-based vessel operators and organizations that support vessel operations are eligible to participate in the program. This cooperative program, which has grown to 33 members, allows members to participate in research which would not be economically feasible on an individual basis.

Current projects include training the seafarer, which incorporates development of a standard data field for inclusion in a mariner's record of training, developing a universal training course identifier, evaluation and production of training videos available to the industry, developing a training materials database and interactive training methods among member organizations. Another project RAM Database/Shipnet, has resulted in the development of an analysis methodology and network of databases to improve the total life cycle of ships in terms of effectiveness, reliability and overall quality- thus increasing safety and profitability.


Port and intermodal facilities and operations provide the critical interface between the water and surface modes of transportation, handling U.S. domestic and foreign trade as well as military cargoes. As shipper demand for cost effective, door-to-door intermodal services has grown, liner shipping companies have evolved into intermodal transportation providers that integrate water, rail and trucking services to move freight seamlessly and efficiently nationwide and throughout the world. However, the development of a fully integrated U.S. transportation system is challenged by changes and growth in trade, congestion and intermodal access, environmental concerns and national security demands. Today, some U.S. ports do not have the capability to service the large, modern cargo ships ("megaships") that will become the norm in the 21st Century. Inefficiencies in intermodal transportation may impede our ability to project power overseas and to compete in the global economy. Ultimately, this will place stress on our trade-dependent economy and result in higher prices on the goods and services paid for by the American people. To meet these challenges requires improved transportation planning and management, and better utilization and integration of maritime capabilities and efficiencies.

In the area of ports and intermodal development, MARAD provides leadership and linkage between the commercial maritime sector and the military. During military operations, DOD must be able to move equipment and supplies through designated commercial port facilities on a timely basis if cargo is to be delivered to the theatre of operations when needed by U.S. troops. MARAD is responsible for the prioritized use of ports and related intermodal facilities during DOD mobilizations. On a day to day basis, MARAD also seeks to continually improve the capability and efficiency of the Nation's ports to transfer cargo between water and land transportation. Soon, Secretary Slater will be submitting to Congress a report on the Status of the Public Ports of the United States, which discusses many of the current issues facing the U.S. port industry as well as its contribution to the U.S. economy.

Within the United States, changing demographic and trading patterns, and advances in economic growth and consumer demand are straining the transportation infrastructure, intensifying congestion and increasing transportation-related pollutants. Expansion of domestic waterborne markets for the movement of freight and passengers could relieve congestion and improve air quality. To further these goals, Secretary Slater is leading a waterways management outreach effort by MARAD, the USCG and several other federal agencies. Although the initiative was discussed in-depth during a hearing on the Marine Transportation System held by your Subcommittee this past July, I would like to mention a few highlights.

In Fiscal Year 1998, we held seven regional listening sessions around the country. Over 300 stakeholders attended the series of events nationwide. The focus of the listening sessions was to simply find out what is working and what is not working in our water transportation system. The initiative led to a very comprehensive list of issues and recommendations for waterways management, which will be the topic of a national conference that Secretary Slater will chair on November 17-19, 1998 at Airlie House in Warrenton, PA. Invitations have been issued to over 140 federal and industry personnel, to address key issues identified in the regional listening sessions and other outreach efforts to develop potential solutions to these problems and explore potential strategies to implement these solutions.

MARAD is also assisting the U.S. port community with the development of an environmental management handbook to assist the ports in managing their increasingly complex environmental requirements. We are also working with the American Association of Port Authorities (AAPA) to encourage ports to consider brownfields and empowerment zones/enterprise communities in their economic development plans.

Since 1983, MARAD has administered and participated in the Cargo Handling Cooperative Program (CHCP). Today, under a new five-year agreement, the CHCP has as its mission to actively pursue industry-driven enhancements to cargo handling that increase productivity to improve customer service. Its primary objective is to provide leading-edge cargo handling solutions that support a sustainable and seamless transportation system for commercial and military use. The CHCP has been successful in playing a key role in two standards-development efforts for automatic equipment identification and demonstrating leading edge technology related to equipment location systems and hand-held computer technology. Members of the CHCP consist of private and public entities involved in the ownership, management, operation, and movement of marine freight. This includes members who are ocean carriers, terminal operators/stevedores, port authorities, railroad, trucking companies and U.S. government agencies responsible for marine transportation.

In FY 1997, MARAD entered into cooperative agreements with the U.S. Transportation Command (USTRANSCOM), of the Department of Defense, and California State University at Long Beach (CSULB) to assist in the management of the Center for the Commercial Deployment of Transportation Technologies (CCDoTT). The CCDoTT program demonstrates existing, emerging and developing technologies in cargo handling, tagging, tracking, information management systems and high speed sealift (HSS). These technologies, if adopted, will help the military deploy quickly, expand the ability of commercial transportation to quickly accommodate the surge of military cargo, minimize the surge impact on commercial transportation and improve the overall ability of terminals to accommodate a variety of ship types.

In the area of emergency port readiness, MARAD -- as the permanent chair of the National Port Readiness Network (NPRN) - works closely with both the military and U.S. ports to ensure that commercial port facilities, services and personnel are available to meet DOD requirements and to coordinate port operations at the local level during a deployment of U.S. military forces or other requirements of the Nation's defense. The NPRN is a dynamic partnership between MARAD and eight Federal agencies. A signed Memorandum of Understanding on coordination and cooperation ensures strategic port readiness to support military force deployments during contingencies and other emergencies. The NPRN also provides the means for coordinating peacetime preparations for emergency operations as well as coordinating multimodal actions during government relief operations of natural disasters. Further NPRN partnering activities and alliances with government organizations are being explored.

MARAD's Port Facility Public Benefit Conveyance Program, which allows for the conveyance of surplus Federal property to non-Federal public entities for the development or operation of a port facility, has generated much interest since its enactment as part of the National Defense Authorization Act for Fiscal Year 1994. In September 1996, MARAD conveyed property to the Port of Benton in Richland, Washington for use as a foreign trade zone and industrial park. In March 1997, surplus property was conveyed to the Oxnard Harbor District in Port Hueneme, California for the development of a cargo staging area, terminal access improvements and the expansion of storage facilities. MARAD has approved applications from the Port of Los Angeles, Los Angeles, CA; the Port of Stockton, Stockton, CA; and the Rhode Island Economic Development Corporation, North Kingstown, RI. Additional applications have been received from the Port of Long Beach, Long Beach, CA; and the Village of Harrisonburg, Harrisonburg, LA. Mr. Chairman, this program is creating jobs, revitalizing local economies and increasing maritime port capacity.

MARAD also chairs the Organization of American States (OAS) Technical Committee on Port Training. In this area, we have coordinated, developed, and conducted a number of courses and seminars for Latin American and Caribbean port personnel in management; security; control of drugs, chemicals, and dangerous cargo; multi-modal transportation; strategic planning; marketing; finance; pricing; competition; privatization; market based labor reforms; automated information systems; port operations and inland waterway transportation. In 1998, six port management training courses and three port security training courses will have been held in the region.

Additionally, MARAD is developing a feasibility study which will demonstrate if Geographic Information System (GIS) technology can be used to integrate, display, and analyze multiple databases in a geographic format in the Western Hemisphere. The training programs and continuation of the GIS project have been proposed to the OAS for 1999, and have been financed by the OAS. MARAD's cooperation with the OAS in these efforts helps to strengthen the port system in the Western Hemisphere thereby increasing more efficient handling of cargo in U.S. trade.


Lastly, I don't want to forget the area of Maritime Education. As you know MARAD operates the U.S. Merchant Marine Academy at Kings Point, New York, and provides support to six State maritime schools which prepare licensed officers for maritime careers. Our educational programs are of great importance to the maritime industry. We train the finest and most highly skilled transportation professionals in the world. There is a universal shortage of skilled merchant mariners throughout the industry, and our professionals remain the key to our ability to meet U.S. national security requirements. In addition, our academies have begun to expand their educational programs to include emphasis on intermodal transportation operations. During the next few months, MARAD will conduct a study to examine maritime education and training as it relates to the achievement of national security goals. This effort will provide additional data on mariner availability and demand and will enable us to assess the need for change in maritime education programs.

A priority in maritime training is to implement the International Convention on Standards of Training, Certification and Watchkeeping, as amended in 1995, at the U.S. Maritime Academy and the State maritime academies. A joint MARAD/Coast Guard Review Team, chaired by MARAD, reviewed proposals from all seven schools and expects to grant conditional approval of their programs by the end of the year.


Our goals are challenging, and we have much to achieve. I look forward to working with you, and our partners in government and the private sector, to build the maritime transportation system America needs for the 21st Century. Mr. Chairman, members of the Committee, I would be happy to address any questions or concerns you may have at this time.