view that payment practice should not be changed from reimbursement for operating expenses, to direct payment, following the institution of the ceiling. To make such a change serves to make the ceiling ineffective.

3.

Captain Becker, your statement mentions that the Coast Guard no longer uses Coast Guard reservists in its Coast Guard Reserve Recruiting efforts.

Do the other military services use reservists to recruit their reserves, and how successful are Reserve recruiters at their jobs?

The Coast Guard presently has approximately 20 Reservists involved in recruiting for both the active duty and Reserve forces. Prior to integration, Reserve Commanding Officers had specific Reserve recruiting responsibilities. These responsibilities have not been reassigned to active duty Commanding Officers, even where the command has no recruiting office in close proximity.

Other military services do use Reservists to recruit their Reserve forces and they are extremely effective. As previously noted, all the other Reserve components are meeting their recruiting goals.

4. Do you believe the Coast Guard is adequately training its reservists?

Yes. There have, however, been some anecdotal comments received that certain Reservists believe that they are not receiving the training that they believe requisite. This may again be attributed to the competition within the Coast Guard for limited resources.

The Administration's Proposed

Navigational Assistance Tax

Fails to Pass Muster

Introduction

Good morning, Mr. Chairman and members of the Subcommittee. My name is Joseph J. Cox and I am President of the Chamber of Shipping of America. Today I have the pleasure of testifying not only on behalf of my members, but also on behalf of the American Waterborne Commerce Coalition. I have attached to this testimony a list of the vessel owners; operating companies; maritime labor interests; port representatives; shippers of agricultural products, minerals, steel, petroleum, finished goods and related cargoes; and others concerned about the Administration's proposed navigational assistance tax.

Our Coalition is an international affiliation representing enterprises which are concerned with the efficient movement of vessels and their cargoes through U.S. waterways. Waterborne transportation is the backbone of the American economy. Well over ninety percent of our imports and exports move by water. The Great Lakes and inland waterways handle hundreds of millions of tons of dry and liquid bulk cargoes every year in interstate and international

commerce.

The Administration proposes to tax commercial cargo carriers, but no other users, for the cost of various federal marine navigation safety services. Mr. Chairman, we strongly object to the Administration's proposal. In the following pages, we will outline the basis of our objection. We urge you to reject the inclusion of these proposed taxes as revenue sources in the budgets of the Coast Guard and the National Atmospheric Administration (NOAA). At the same time, we recognize the important work of these agencies and support the full funding from general revenues of the Acquisition, Construction, and Improvements (AC&I) and other appropriate accounts of these agencies so that they can continue to accomplish their assigned missions.

Summary

Federal agencies may only charge user fees in narrow, prescribed circumstances - namely, where those fees impose specific charges for specific unique services to specific individuals or companies. An agency may not institute fees to fund "some general practice of merely general benefit to the industry as a whole" or to "recoup some of the general costs to the government of operating a particular regulatory scheme." The proposed navigational assistance tax, charging commercial cargo carriers for general assistance to maritime navigation, fails to pass muster under these well-established tests and would be both bad policy and bad law.

The Budget Proposal

The Administration's Budget for Fiscal Year 1999 (FY99) proposes a new "navigational assistance user fee" to cover the cost of various forms of navigational assistance provided by the Coast Guard and the National Oceanic and Atmospheric Administration (NOAA), including the placement and maintenance of buoys and other short-range aids-to-navigation, radio navigation, and vessel traffic services by the Coast Guard and nautical charting and related assistance provided by NOAA. Specifically, the FY99 Budget states:

The Administration proposes to levy a fee on U.S. and foreign commercial cargo carriers for the use of Coast Guard navigational assistance services. Navigational assistance services include the placement and maintenance of buoys and other short-range aids-tonavigation, radio navigation, and vessel traffic services. Fishing and recreational vessels would be exempt.'

The FY99 Budget contains a similar provision with regard to a proposed navigational assistance user fee to recover the cost of nautical charting and related assistance provided by the National Oceanic and Atmospheric Administration (NOAA).2

The Administration estimates that collections under these new Coast Guard and NOAA user fees will total $35 million and $3 million respectively in 1999 and $165 million and $11 million annually in subsequent years.3 The lesser amounts in the first year are based on the assumption that the fees will not be in place until part way through the year.

The Coast Guard portion of the FY99 Budget supplies additional information regarding the intent of the Administration in this regard. It states:

[B]eginning in fiscal year 1999 and thereafter the Secretary [of Transportation] shall, under 31 U.S.C. 9701 and 14 U.S.C. 2110 (sic),* establish and adjust user fees for any services provided: Provided further, That such fees shall be implemented by publication

'FY99 Budget, User Fees and Other Collections, Department of Transportation, p. 83.

2FY99 Budget, User Fees and Other Collections, Department of Commerce, p. 81. Under the Administration's proposal, the NOAA user fee would be collected by the Coast Guard. Again, fishing and recreational vessels would be exempt.

3 FY99 Budget, User Fees and Other Collections, Table 4-2, Proposed User Fee Collections, p. 82.

4 There is no 14 U.S.C. § 2110. Rather, the Coast Guard has two general user fee statutes: 14 U.S.C. § 664 and 46 U.S.C. § 2110. These two statues will be addressed individually below.

of an initial fee schedule as an interim final rule in the Federal Register not later than 150 days after enactment of this provision: Provided further, That not to exceed $35,000,000 of offsetting collections from such user fees shall be collected and available until expended for necessary expenses under this heading: Provided further, That any such additional fees received in excess of $35,000,000 shall remain available until expended, but shall not be available until October 1, 1999.5

Further on in the document it states:

The 1999 Budget proposes the establishment and collection of a user fee on commercial cargo carriers for navigational assistance provided by the Coast Guard. This fee will be credited to the [Coast Guard's] Acquisition, Construction, and Improvements account. Fiscal year 1999 fee collections are estimated to be $35 million, based on one-quarter year implementation of the charge (yielding a 1999 AC&I program level of

$442,773,000). When fully implemented, fees are expected to recover $165 million of the Coast Guard's costs annually.

As noted in the Administration's FY99 Budget proposal, a user fee is a fee, charge, or

assessment:

levied on a class directly benefiting from, or subject to regulation by, a government program or activity, to be utilized solely to support the program or activity. In addition, the payers of the fee must be limited in the authorizing legislation to those benefiting from, or subject to regulation by, the program or activity, and may not include the general public or a broad segment of the public. The user fee must be authorized for use only to fund the specified programs or activities for which they are charged, including directly associated agency functions, not for unrelated programs or activities and not for the broad purposes of the Government or an agency.?

Beneficiaries of Navigational Assistance

7

All persons who navigate or operate on the waters of the United States, along with many who do not, benefit from the services provided by the Coast Guard and NOAA that are cited in the Administration's Navigational Assistance User Fee proposal. The Coast Guard estimates that there are 20 million recreational boats in the United States and approximately 78 million recreational boaters who use the navigable waters of the United States each year. There are

'FY99 Budget, Appendix, Department of Transportation, Coast Guard, Acquisition, Construction, and Improvements, p. 690.

'FY99 Budget, Appendix, Department of Transportation, Coast Guard, Acquisition, Construction, and Improvements, p. 690.

'FY99 Budget, User Fees and Other Collections, p. 79.