PERFORMANCE LEVELS

Senator CHILES. I would also be interested in any comments you would care to make on how the differences between your original request and the final request now pending before the committee will affect your performance levels in your various program areas such as search and rescue, drug interdiction, marine safety, and so on.

Admiral GRACEY. Let me start with drug interdiction, sir. You have already covered that nicely, but I think just to summarize there the impact that you noted. The new patrol boats will be single-crewed rather than double-crewed. Of course, there is an impact there.

We are going to have to decommission two of our high-endurance cutters on schedule rather than extending them until their replacements arrive. Of course, that puts us down below the 30-ship congressional mandate and also takes two cutters off the line.

Obviously, the closings on the Great Lakes will have some impact, although we believe we can cover that, obviously not to everybody's satisfaction, but within our broad standards.

And another primary area where we are getting wounded is in the Marine Safety Program. This is the fifth straight year we have gone down in our Merchant Marine Safety Program. We have cut some 400 or so people out of that program over the last 4 or 5 years. Frankly, sir, I think we are at the absolute end on that. That is an important program. I do not think we can go any further.

Search and rescue is one that we will do our best to maintain always, even when we have things like drugs and defense. Yes; those are top priority, but our instincts are to save lives, and we do that. If we are not going to be able to man a particular station up to full capability, we will just not man it at all, and take the people and put them where we can man something properly. Essentially that is the kind of thing we are doing in the Great Lakes.

I am concerned about our training cuts, and I am concerned about the impact. I am concerned about the fact that our Selected Reserve strength is not growing. We are standing still there. But there are some pluses in defense readiness as well.

In our Aids to Navigation Program we are going to do some contracting out on a trial basis. The anticipatory cuts from A-76 have eaten into a lot of our programs. Hopefully we will be able to get some of those contracts out and get some of those people back. In the meantime, most of this year we will not.

Some of our equipment buys are being curtailed a bit, but we are going ahead with rescue swimmers. We are going ahead with the aerostats. We have our next new tugboat, a 140-footer, coming. We are buying some secure voice installations. We are buying some side arms, the new 9 mm sidearms.

Meanwhile, our new patrol boats and the 270's and the helicopters are coming along the line, so there is a balance. It is a mixed bag, our operating expenses particularly.

The areas that I have described overall are the kinds of places where we are feeling pinched.

COCAINE TRAFFICKING

Senator CHILES. Admiral, I want to congratulate you on the Coast Guard's role in Operation Blue Lightning, which ended last Thursday, which netted 5,500 pounds of cocaine and 33,872 pounds of marijuana. I understand the operation included some 775 U.S. and Bahamian agents from 26 agencies, including Florida State and local units.

The operation included a military sweep of known Bahamian island staging areas and sea blockades to catch what was pushed off the islands. The operation was planned by the Miami NNBIS, chaired by Coast Guard Admiral Cueroni. This operation demonstrated good cooperation from the Bahamian Government. It also showed a great deal of cocaine is now coming in by sea.

Are cocaine shipments being diverted from air, or is it so much coming in now that it comes in both air and sea now?

Admiral GRACEY. My best guess, Senator, is that it is the latter. It is coming in both ways. I do not know what is happening with the air trafficking level, to tell you the truth.

I do not really know about that, but we do know there seems to be a great shift toward vessels. It may be that we are just getting more information-our intelligence network is so much better than it was.

Our cooperation with other agencies is good, and it may be just that we are getting better information, and therefore we are focusing on what has been going on all along. But I am inclined to think it is increasing. That is the best information I have.

Senator CHILES. Admiral, I know, because of security leaks on the operation it was started 3 days earlier, and over 20 percent of the cocaine was seized in the first 48 hours when the druggers were still off balance. I am certainly concerned about these leaks.

I am sure there is an investigation under way. When it is complete, I would like a briefing in my office on this matter.

Admiral GRACEY. Yes, sir; we would be happy to do that. There are some details we probably should talk about privately.

Senator CHILES. I understand that.

Admiral GRACEY. I can say that with the number of agencies involved, and two countries, and so forth, and really the first time this has been tried, we expected there might be some leaks.

I think what is really encouraging is the ability that was built into all of this with which the NNBIS coordinator, Admiral Cueroni, and his counterparts in the Bahamas and in the other agencies were able to shift gears and move rapidly once they found there was a leak. They had some really rather significant systems set up for shifting gears.

"OK, we have heard this leak, so we will shift to that." It seemed to be very effective. We will give you more details in private, sir. Senator CHILES. All right, sir.

USER FEE LEGISLATION

Admiral, switching over to user fee legislation, as you may know, the National Marine Manufacturers Association is in town. One of their main interests is full implementation of the Wallop-Breaux legislation which establishes a mechanism to use taxes on the boating community to fund boating safety programs and fishery enhancement programs.

That fund is projected to have a $150 million balance at the end of fiscal year 1985, because less than half of the boating safety money was spent and none of the fisheries money has been spent.

The boating community feels like they are already being taxed and the new Coast Guard user fee bill that would put a $20 tax on all recreational boats under 40 feet and a $40 tax on all recreational boats over 40 feet is not only unwelcome but in the view of some is a form of double taxation.

Other than raising revenue, what is the justification for the proposed Coast Guard user fee bill?

Admiral GRACEY. Of course, raising revenue, I guess, is one way to express it, and certainly anything that brings money in is raising revenue, but not in the sense of taxation. What you have going here are essentially two objectives.

One is to take the burden of services provided to a specific group of users off the back of the general taxpayer. Let those who are using the service help to fund it. I am saying, "help to fund it" because rarely is it going to cover the full cost.

Second, there is the idea that when things are free, people will tend to ask for more and more. With the fee being charged, we feel that people will tend to be more moderate in the additional services they would like to have from the Government.

There is a philosophical difference, as I understand it, between a tax and a fee. With a tax, you are required to pay a certain amount of money, and you do not know what it is going to be used for. It is just going into the Government, coming out the other end some place. With a fee, you know what it is for. You have the option to use the service or not. If you choose to use it, then you have accepted that you are going to pay for it.

USE OF BLIMPS

Senator CHILES. Admiral, I notice your budget request included $1.2 million for the lighter-than-air research. I know this is a continuing research project. What have you learned by prior years' expenditures on this program? And what additional information will the $1.2 million request bring us? When can we expect a decision from the Coast Guard on whether blimps have an operational role to play?

Admiral GRACEY. What we have learned in prior years, Senator, is that the modern day blimp is a very, very remarkable piece of equipment. We can do things from it that we would not have dreamed of. We can lower people onto boats. We can make rescues at sea.

We know, of course, that you can go out and stay there for a while. You can hover or patrol at slow speeds. We know just enough to whet