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The original documents are located in Box 40, folder "Waterways" of the James M.
Cannon Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 40 of the James M. Cannon Files at the Gerald R. Ford Presidential Library
THE WHITE HOUSE
WASHINGTON
5/13/76
Sui Comor- -
Agree with
OMB
recomendation
Juni
THE WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.:
Date:
Time:
May 4, 1976
FOR ACTION:
CC (for information):
Jim Cannon
Max Friedersdorf
Jack Marsh
FROM THE STAFF SECRETARY
DUE: Date:
Wednesday, May 5
Time:
2 P.M.
SUBJECT:
Jim Lynn memo 5/1/76 re Status Report on
S. 2422, A Bill to Extend the Jones Act to the
Virgin Islands for Oil Products
ACTION REQUESTED:
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Reply
For Your Comments
Draft Remarks
REMARKS:
11 "Wait JRH Recommend and on,,, care gets hot,
monitoring
however.
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
telephone the Staff Secretary immediately.
Jim Connor
For the President
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON. D.C. 20503
MAY 1- 1976
INFORMATION
MEMORANDUM FOR:
THE PRESIDENT
FROM:
JAMES LYNN
SUBJECT:
Status Report on S. 2422, A Bill to
Extend the Jones Act to the Virgin
Islands for Oil Products
PURPOSE
This memorandum is to acquaint you with an issue on which you may receive
questions and on which a decision may be required in the future.
BACKGROUND
U.S. cabotage laws (the Jones Act) require all U.S. domestic ocean
shipping to be reserved for vessels built and registered in the United
States and owned, operated and manned by U.S. citizens. Traditionally,
U.S.-flag ship operators have been high cost carriers. The exclusion
of lower cost foreign-flag ship operators from the domestic ocean trades
has been estimated to increase U.S. shipping costs by about $150-200
million annually.
The cabotage laws do not currently encompass the U.S. Virgin Islands.
S. 2422 would extend the cabotage laws to the Islands for the transpor-
tation of oil products only. This has importance because an Amerada
Hess oil refinery, the world's largest, is located in the Virgin
Islands. This refinery produces residual fuel oil (used for industrial
power and generation of commercial electric power) which represents a
high proportion of consumption in the U.S. East Coast.
As a domestic refiner, Amerada Hess has benefited from the oil
"entitlements" program. Although it purchased its crude oil from
abroad, Amerada Hess received entitlements to oil at "old" domestic
prices, which it then sold to other domestic refiners. As a conse-
quence, Amerada Hess' crude oil purchase costs have been significantly
below those of foreign refiners who are not eligible for entitlements.
Amerada Hess primarily competes with foreign refiners located in the
Caribbean area for the East Coast residual fuel oil market. Most
domestic refiners do not produce this kind of fuel. The market
situation has posed immediate problems for these Caribbean refiners,
as well as for independent U.S. oil marketers reliant on supplies from
these refiners.
GERALD FORD LIBRERY
2
FEA believes that it is necessary to keep these Caribbean refineries operat-
ing because, at least for the next 3-4 years, there will not be sufficient
domestic refining capacity to replace the capacity in the Caribbean. Rec-
ognizing the market distortions, FEA announced the implementation of two
correcting mechanisms in a March 29, 1976, rulemaking--one to reduce
Amerada Hess' entitlements allotment, and the other to grant entitlements
to importers of residual fuel oil refined abroad.
Additionally, domestic U.S. refiners in the Gulf area who are developing
residual fuel oil refining capacity may be disadvantaged relative to
Amerada Hess. While these refiners must use U.S. tankers, Amerada Hess
is able to use the lower-priced foreign tankers.
The situation, therefore, has generated support for S. 2422 among two
groups:
-- Amerada Hess' oil industry competitors. Because the bill
would increase Amerada Hess' shipping costs from the Virgin
Islands to the U.S. mainland, these competitors have been
supporting efforts to reduce Hess' cost advantage and benefit
themselves.
-- U.S. maritime interests. Because U.S.-flag tankers would be
required to serve the Virgin Islands trades, additional U.S.
tankers and seamen would be employed.
Those who might be hurt by the legislation include:
-- U.S. consumers, particularly those in East Coast states, who
would end up paying the costs of higher-priced U.S.-flag trans-
portation of Virgin Islands' refined oil to the U.S. mainland.
-- The Virgin Islands, which would have a more difficult time
attracting the oil industry to locate in the Islands and might
suffer from a reduction in Amerada Hess' operations, thereby
reducing employment in the Islands.
-- Amerada Hess, who would have to pay higher transportation costs
to the U.S. mainland.
DISCUSSION
The bill is discussed below in reference to: (a) the U.S. maritime
industry; (b) oil industry competitors of Amerada Hess; (c) the Virgin
Islands economy; and (d) the U.S. consumer.
LIBRARY GERALD FORD
3
The U.S. Maritime Industry. The Commerce Department indicates that to trans-
port Virgin Islands refined oil in U.S.-flag tankers would require 750,000
total deadweight tons of tanker capacity. Currently there are about 17 U.S.
tankers in lay-up equaling 740,000 deadweight tons capacity. The number of
tankers in lay-up, however, fluctuates widely from week to week. The figure
will probably increase in the next year or two unless Soviet grain purchases
are sustained at the current high levels. The situation is much improved
compared with six months ago when there were 33 tankers in lay-up, account-
ing for 1,500,000 deadweight tons.
If S. 2422 were enacted, essentially all unemployed U.S. tankers (many of
which are antiquated and are approaching scrap condition) would be required
for service. In fact, with no margin of tankers available for alternative
service, orders would probably be placed for new U.S.-built tankers. This
would be done despite the fact that: (a) there is currently a worldwide
oversupply of tankers, and (b) U.S. shipyards build tankers (with Federal
subsidies) at twice the cost of Japanese shipyards.
Employment of the 17 currently laid-up tankers would create about 1,400
seafaring jobs.
Oil Industry Competitors of Amerada Hess. FEA indicates that the intent
of its March 29 rulemaking was to reduce Amerada Hess' competitive cost
advantage over foreign refineries from roughly $3 per barrel to about
$.60 per barrel. Accordingly, Hess would continue to enjoy a competitive
advantage over foreign refineries in the Caribbean, although of greatly
reduced proportions.
The cost advantage of using foreign-flag tankers instead of U.S.-flag
tankers is approximately $.50 per barrel for refined oil at current
"spot charter" rates. Proponents of S. 2422 point out that the applica-
tion of the cabotage laws to the Virgin Islands for oil transport would
thereby further reduce Amerada Hess' cost advantage over foreign re-
finers from $.60 to $.10 per barrel.
Although it may be possible for FEA to readjust entitlements to retain a
$.60 cost advantage for Amerada Hess, FEA reports that this would be
technically and politically difficult to achieve because of the impacts
of such readjustments on other refiners. FEA indicates that it wants to
avoid modifying entitlements if it can possibly do so.
The bill would also assist domestic refiners who are engaged in residual
fuel oil production and who would like to expand sales to the East
Coast market. Enactment of S. 2422 would put them on a cost par with
Amerada Hess because it would require Virgin Islands' refineries to use
U.S. tankers, like other domestic refineries. For example, tanker rates
GERALD FORD
4
between the Gulf and New England would closely approximate rates between
the Virgin Islands and New England.
Virgin Islands Economy. According to Virgin Islands' officials, S. 2422
could potentially seriously affect the overall economic health of the
Virgin Islands. Currently the Islands are suffering from a 10% official
unemployment rate. Specific problems foreseen by Islands' officials
include the following:
-- Other refiners are considering locating in the Virgin Islands.
One, the Virgin Islands Refinery Corporation, has already in-
vested in real estate in preparation for construction. Enactment
of S. 2422, with its attendant higher shipping costs, would dis-
courage this.
-- This bill, in conjunction with other pending legislation, could
undermine the area's trade and development. For example, there
is currently underway an effort (H.R. 9124) to limit Virgin
Islands' wool exports to the U.S. mainland. Also, there is a
fear that the cabotage laws would be "extended to other products.
-- If Amerada Hess' transportation cost advantage relative to
other U.S. refiners is eliminated, the refinery might have to
cut back operations, requiring employment reductions. Currently,
the refinery employs approximately 6% of the Virgin Islands
entire labor force.
U.S. Consumers. Enactment of S. 2422 would have the impact of shifting
the increased shipping costs onto East Coast U.S. oil consumers. The
annual cost is estimated to be about $75 million (150 million barrels of
oil shipped by Amerada Hess times $.50 per barrel increased costs for
using U.S. tankers). The direct beneficiaries of the $75 million would
be the maritime industry. With about 1,400 seafaring jobs created, this
equates to a public cost of about $50,000 annually for each maritime job.
However, depending on court action on oil import license fees, part of the
cost burden might be shifted to the Government in terms of reduced license
fee revenues.
Additionally, because of the increased demand placed on available U.S.
tankers, there would be a tendency for domestic tanker carriage rates to
rise, increasing costs to U.S. consumers.
AGENCY VIEWS
Federal agencies have expressed the following views relative to S. 2422.
FORD
GEBALO
LISTER
5
For the Bill
-- Commerce believes that S. 2422 would be desirable for the follow-
ing reasons: (a) enactment of the bill would constitute a logical
extension of U.S. cabotage laws in accord with congressional
intent in passing the original legislation; (b) it would eliminate
the tanker lay-up problem, reduce the possibility of default on
Government-guaranteed loans on these vessels, increase jobs for
U.S. seamen, and improve the U.S. balance of payments; (c) be-
cause it would eliminate tanker lay-ups, it would help the
Administration oppose a subsequent congressional effort to enact
oil cargo preference legislation (oil cargo preference is not
expected to be acted upon this year); and (d) costs associated with
the bill would not be high.
-- Council on International Economic Policy would support the bill
only if FEA is instructed, upon enactment, to readjust oil en-
titlements to retain Amerada Hess' $.60 per barrel cost advantage.
With this qualification, CIEP believes the bill is desirable for
reasons similar to those cited by Commerce and including the
following additional points: (a) it would help equate transpor-
tation costs to the East Coast among all domestic residual fuel
oil producers; and (b) increased shipping costs would be shifted
from the East Coast alone to the nation as a whole, and as a
result would be diluted.
Against the Bill
-- Transportation, Treasury, Justice and Council of Economic Advisers
oppose the bill. Principal arguments are that: (a) the economic
impact would be to insulate maritime transportation from world-
wide competitive factors which can only result in premium freight
rates; (b) it would lead to the employment of outmoded, high cost
U.S. tankers in a period in which modern foreign "super tankers"
are being laid up for lack of business; (c) it would raise oil
costs to consumers because of the higher rates of U.S. tankers;
(d) there is no national defense rationale for the employment of
additional U.S. tankers; and (e) the Administration has taken a
consistent position against actions which restrain trade.
-- Interior, in its stewardship role for the Virgin Islands, believes
that the bill would be detrimental to the economic health of the
Islands for reasons previously cited. It therefore strongly
opposes the bill.
FORD is LIBRARY
6
-- State opposes the bill on the ground that the extension of the
cabotage laws to the Virgin Islands would be inconsistent with
overall U.S. policy regarding the international carriage of trade.
-- Federal Energy Administration reports that it opposes the inter-
jection of the S. 2422 issue while it is handling questions and
criticisms regarding its March 29 rulemaking on Amerada Hess'
entitlements and prior to completion of action on FEA's March 29
residual fuel oil decontrol proposal. FEA believes that argument
over S. 2422 only confuses these more important, very sensitive
issues. FEA requested the Commerce Committee to delay hearings
until May to avoid this problem, but the Committee rejected FEA's
request. On the merits and demerits of S. 2422, FEA defers to
other agencies.
Neutral Positions
-- Labor reports that it does not oppose the bill because it sees a
balance between benefits (more jobs for U.S. seamen) and costs
(increased oil prices).
OMB Comments
OMB believes that the bill is undesirable because:
-- It is costly to the U.S. consumer;
-- It would interfere with separate FEA regulatory actions;
-- It may be detrimental to the Virgin Islands' economy;
-- It would further insulate the U.S. tanker industry from com-
petitive forces and may stimulate new tanker construction in
U.S. yards at a time when excess world tanker capacity exists;
-- There is not now a serious U.S. tanker lay-up problem; and
-- Because the House is not expected to pursue general oil cargo
preference legislation this session, there is no immediate need
to support this bill in an attempt to forestall enactment of a
broad cargo preference bill.
In spite of these problems with the bill, OMB believes that the Administra-
tion may wish to support such legislation later if circumstances should
change, such as:
is
FORD
RENALD
LIBRARY
7
-- If Congress begins to pursue general oil cargo preference legis-
lation, support for S. 2422 may be desirable as an alternative
which is less costly and which avoids the major foreign policy
problems; or
-- If the number of tankers in lay-up expands substantially.
ANTICIPATED CONGRESSIONAL ACTION
The Merchant Marine Subcommittee of the Senate Commerce Committee held
hearings on S. 2422 on February 18 and March 30. On February 18, the
Governor and the congressional delegate from the Virgin Islands opposed
the bill. On March 30, the maritime and oil industries supported it.
Also, the Departments of Commerce and Interior were requested to testify
on March 30. Commerce, in its maritime promotional role, favored the bill,
while Interior, in its Virgin Islands stewardship role, opposed it.
Only two Senators, both from Louisiana, attended the March 30 hearing--
Senator Long, the Subcommittee Chairman, and Senator Johnston, who
introduced S. 2422 but who is not a member of the Committee. Both
Senators indicated strong support for the bill. Reportedly, the active
interest of the two Senators is prompted by the support of the bill by
the Energy Corporation of Louisiana which is building a large refinery
operation in the Gulf area that is intended to compete with Amerada
Mess.
Senate Committee staff indicate that Committee mark-up is anticipated in
May. With Chairman Long's support, the bill is expected to be favorably
reported out by the Committee. Disposition in the Rules Committee and
on the Senate floor is uncertain, however, because of potential oppo-
sition to the bill by East Coast Senators.
No House action has yet been scheduled, and none is anticipated until
Senate action is complete.
CONCLUSION
This issue has been considered by the Economic Policy Board and it was
concluded that the Administration should not take a position on the bill
now because:
-- FEA objects to having the Administration comment on S. 2422 while
it is handling related, sensitive regulatory and legislative
issues; and
-- There is a strong possibility that S. 2422 will not move beyond
the Senate Commerce Committee.
Consensus of opinion is that a "wait and see" approach is preferable.
:-
FORD
GERALD
Rie
THE WHITE HOUSE
WASHINGTON
Transp
July 30, 1976
MEMORANDUM FOR:
JIM CANNON
FROM:
JUDITH RICHARDS HOPE
SUBJECT:
Navigability
few
On July 22, 1976 Bill Coleman responded to your request of
May 27 concerning the definition of navigability. He agrees
with you that the way these determinations are made often
does not make common sense. He points out, however, that
statutes using this term are administered by a number of
Federal agencies as well as the Departments of Defense,
Justice, Interior and Agriculture. Further, the definition
of navigable waters has been developed through 200 years of
judicial decision and Federal agencies cannot change judicial
definitions by administrative actions.
He recommends the establishment of an inter-agency group
composed of representatives from these departments and
agencies, as well as State governments, and chaired by the
Department of Justice. He offers DOT resources to aid in a
thorough and expeditious review.
I recommend that we ask DOT to prepare the necessary papers
to set up this group. We can then circulate the idea for
comment before making our final decision. I could do this
immediately and we could establish the group by mid-September
if it seems advisable.
Agree
Disagree
on
organi
LIDERAL GERALD R FORD
THE WHITE HOUSE
WASHINGTON
August 3, 1976
you
MEMORANDUM FOR THE HONORABLE WILLIAM T. COLEMAN, JR.
Secretary of Transportation
SUBJECT:
Navigability
Pursuant to your memorandum of July 22, 1976, concerning
Jim Cannon's May 27 request for a study of "navigability,"
Jim was interested in your proposed inter-agency group.
He asked that DOT prepare whatever papers you believe
necessary to establish this group, and submit these papers
for a quick review by the senior staff here so that we can
incorporate their views.
We would appreciate it if the papers could be available
for review and comment by Monday, August 23. Thank you
for your helpful suggestions and your willingness to
allocate DOT resources to the study and resolution of this
issue.
Ft.
Judith Richards Hope
Associate Director
Domestic Council
cc: Jim Cannon
COMMITTEE ON MERCHANT MARINE
AND FISHERIES
HOUSE OF REPRESENTATIVES
MEMORANDUM
Jim-
The enclosed is for your
information and possible assistance.
Thanks
CAM
NINETY-FOURTH CONGRESS
CHIEF CC JNSEL
CRNEST J. CORRADO
LEONOR K. (MRS. JOHN B.) SULLIVAN, MO., CHAIRMAN
THOMAS L. ASHLEY, OHIO
PHILIP E. RUPPE, MICH.
CHIEF CLERK
JOHN D. DINGELL, MICH.
CHARLES A. MOSHER, OHIO
FRANCES STILL
THOMAS N. DOWNING, VA.
PAUL N. MC CLOSKEY, JR., CALIF.
PAUL G. ROGERS, FLA,
GENE SNYDER, KY.
U.S. house of Representatives
MINORITY COUNSEL
JOHN M. MURPHY, N.Y.
EDWIN B. FORSYTHE, N.J.
WALTER B. JONES, N.C.
PIERRE S. (PETE) DU PONT, DEL.
Committee on
RICHARD N. SHAROOD
ROBERT L. LEGGETT, CALIF.
DAVID C. TREEN, LA.
MARIO BIAGGI, N.Y.
JOEL PRITCHARD, WASH.
GLENN M. ANDERSON, CALIF.
DON YOUNG, ALASKA
Merchant Marine and Fisheries
E (KIKA) DE LA GARZA, TEX.
ROBERT E. BAUMAN, MD.
RALPH H. METCALFE, ILL
NORMAN F. LENT, N.Y.
Room 1334, Longmorth House Office Building
JOHN B. BREAUX, LA.
MATTHEW J. RINALDO, N.J.
FRED B. ROONEY, PA.
DAVID F. EMERY, MAINE
PAUL S. SARBANES, MD.
Washington, D.C. 20515
BO GINN, GA.
GERRY E. STUDDS, MASS.
Transp.
DAVID R. BOWEN, MISS.
JOSHUA EILBERG, PA.
August 10, 1976
RON DE LUGO, V.I.
CARROLL HUBBARD, JR., KY.
DON BONKER, WASH.
Waterways
LES AU COIN, OREG.
NORMAN E. D'AMOURS, N.H.
JERRY M. PATTERSON, CALIF.
LEO C. ZEFERETTI, N.Y.
JAMES L. OBERSTAR, MINN.
Mr. Nelson A. Rockefeller
Vice President of the United States
The White House
Washington, D.C.
Dear Mr. Vice President:
The Oceanography Subcommittee, on which I am Ranking Minority
Member, is planning to conduct some lengthy and intensive oversight
hearings on the subject of national ocean policy. We are hoping to begin
these hearings during the early part of September with presentations by
Secretary Kissinger, Secretary Richardson, and Secretary Kleppe. Knowing
of your many contributions to our national policy with respect to science
and technology, we would very much like to have you make some brief remarks
to officially open our series of hearings.
The subject is one in which you have shown great interest and
leadership over the past decade, and I personally believe that your
observations and suggestions would be very valuable to us in our upcoming
deliberations. In addition, the formulation and implementation of a wise
and comprehensive national ocean policy for the future is a task which
should not be left to one branch of government. By necessity, it will
take the cooperative wisdom and efforts of as many persons as possible
from the Executive departments, the Congress, and the public.
A formal letter of invitation will be sent to you shortly outlining
the specific subject areas under consideration. We are hoping to begin
our hearings on September 9, but we will adjust that date according to your
schedule. I would appreciate it if you could let me know whether you would
agree to make a presentation before our subcommittee, and to indicate which
dates in September would be preferable to you.
If your staff would like any further information concerning these
hearings, they can contact Wayne Smith of my staff at 225-3521.
Mr. Nelson A. Rockefeller
Vice President of the United States
-2-
I greatly appreciate your continued support of our important
national oceanic and scientific programs.
But
Sincerely
Charles A. Mosher
Representative to Congress
CAM:Sca
bcc: Mr. Jamès M. Cannon
Pending
pent J. H. on
8/18 lef
Navigability
THE WHITE HOUSE
WASHINGTON
8/14/26
Inder -
When due
This stand
>
She
FORD & 918870 LIBRARY
OF
DEPARTMENT
PRACTORTATION
THE SECRETARY OF TRANSPORTATION
UNITED
WASHINGTON, D.C. 20590
AMERICA
STATES
of
JUL 22 976
MEMORANDUM FOR JAMES M. CANNON
The White House
SUBJECT: Navigability
Although I have instituted review of the issues raised in your
memorandum of May 27 concerning the definition of "navigability,"
it is important to point out that these issues extend beyond the scope
of the Department of Transportation's activities. The statutory
term "navigable waters of the United States" is used to define Federal
jurisdiction for a variety of purposes. Statutes using this term are
administered by the Departments of Defense, Justice, the Interior,
and Agriculture, among other Federal agencies. In addition, the term
is used in statutes concerned solely with private rights.
When the status of a water body is not defined by statute or determined
by adjudication, the agency administering a statute must decide if the
water is "navigable. 11 As development of formerly remote areas is
undertaken, an increasing number of bodies of water become subject
to formal navigability determinations. Despite efforts to achieve
uniformity, agencies have differed in decisions as to whether a body
of water is navigable, and one agency's determination cannot bind
another. Moreover, the definition of navigable waters has been
developed by case law, and Federal agencies cannot change the judicial
definition by administrative action.
Because of an expanding view of society's needs, the collateral conse-
quences of these determinations are greater than in the past. I agree
that an agency's determination that waters are navigable under the
statute conferring jurisdiction may not always appear to make common
sense when viewed in light of collateral social considerations. Differing
interpretations of navigability by Federal agencies, as well as inter-
pretations that appear to require measures beyond a statute's original
intent, often confuse the public and frustrate Federal, State and local
officials by delaying government and private projects.
2
Without prejudging the results of any review, I am of the opinion
that the present state of affairs is unsatisfactory. The administrative
burden upon the agencies that have to make these jurisdictional deter-
minations is increasing. However, I do not believe that the vantage
point of my Department is adequate to provide the complete analysis
the subject warrants. I believe that any recommendations on this
matter, whether involving legislative or administrative measures,
should be broadly based. Accordingly, I suggest the establishment
of an interagency group composed of representatives from the
interested departments, for the purpose of addressing the issues
raised in your memorandum. In my view, the Department of Justice
should chair this group, and I believe consideration should be given
to representation from State governments as well as the interested
private sectors. This interagency approach, recently used success-
fully in developing the Administration's Deepwater Port and Superfund
legislation, and, perhaps even more relevant, used by the Inter-
departmental Committee for the Study of Jurisdiction over Federal
Areas Within the States which reported in 1956 and 1957, will provide
the President with the kind of answers that are needed. The
Department of Transportation is prepared to devote whatever resources
are needed for a thorough and expeditious interagency review.
I would appreciate your reaction to this proposal so that I can direct
my departmental review process accordingly.
Bull
William T. Coleman, Jr.
THE WHITE HOUSE
WASHINGTON
May 27, 1976
MEMORANDUM FOR:
THE HONORABLE WILLIAM COLEMAN
SECRETARY OF TRANSPORTATION
FROM:
JAMES CANNON
SUBJECT:
Navigability
Since the issue of the navigability of Lake Winnipesaukee
received wide public attention, other states have raised
questions about whether certain lakes and streams should
be regarded as navigable.
Although Article I, Section 8 of the Constitution grants
Congress the authority to regulate commerce among the
states, the original definition of navigability has been
built upon so extensively that its application in some
areas does not make common sense.
I discussed this with the President, and he has directed
me to ask you to review the definition of navigability
with the objective of giving him your views and
recommendations on whether a more precise and practical
definition of navigability is needed.
Your review should include an examination of the
Constitutional and other legal implications of any
change, and the advantages and disadvantages of amending
the current definition of navigability.
THE WHITE HOUSE
WASHINGTON
April 15, 1976
MEMORANDUM FOR:
THE HONORABLE WILLIAM T. COLEMAN
Secretary of Transportation
SUBJECT:
Navigability
In recent months a number of questions about which waters
are navigable have been brought to our attention. The
historical and constitutional definition of navigability may
have evolved to the point where its application does not
always make common sense.
am
Will you please prepare a memorandum for the President re-
viewing the historical and constituionally-based concept of
navigability and analyzing alternative Administration actions,
including a possible recommendation to Congress of a more
precise and practical interpretation.
The memorandum to the President should be submitted to me by
in Monday, May 3. of Not, James Fids M. Cannon
President
regut completence Nobin N-CMAT revrew Assistant Domestic to Affilits the
artant what and arten
FORD : 078830 LIBRARY
2
2. Busing
I have had two good discussions with Secretary Mathews
about an attempt to find a better approach to this
problem. I talked briefly with Ed Levi and will meet
with him tomorrow.
At this point, we believe we must develop a concept
based on these premises:
(a) Communities should find solutions on their own
rather than have them imposed by the Federal
government;
(b) Remedies can best be reached before any court
action begins;
(c) Any approach must be in accord with Federal law
enforcement responsibilities.
If this meets with your approval, I will continue meeting
with both Mathews and Levi to develop specific proposals
for you.
Approve
Disapprove
3. Navigability of Waterways
In the wake of Lake Winnipesaukee, other questions
about which waters are navigable have been brought to
our attention.
Since the Constitution was written, the definition of
navigability has evolved to the point where its
application often does not make common sense.
As a result, we believe we should ask Secretary Coleman
to review the definition with the possible objective of
recommending to Congress a more precise and practical
interpretation. This review should include an examination
of the Constitutional implications, and the advantages
and disadvantages of making any changes in the definition
of navigability.
Approve
Disapprove
THE WHITE HOUSE
Judy
WASHINGTON
April 12, 1976
Many
MEMORANDUM FOR:
JIM CANNON
FROM:
JUDITH RICHARDS HOPE
SUBJECT:
Navigability
Jan
Article I, Section 8, Clause 3 of the Constitution of the
United States provides that "Congress shall have the power
to regulate commerce
among the several states."
The Congressional power to regulate navigable waters, while
not expressly granted in the Constitution, has for more than
150 years been construed as a power incidental to the
expressed Constitutional Commerce power. See e.g., Leony
V.S. U.S., 177 U.S. 632 (1900)
The power of Congress to regulate "commerce" comprehends
control, of all navigable waters in the United States which
are accessible from a state other than those in which they
lie. For that purpose, such navigable waters are "public
property" of the nation and are subject to all requisite
legislation by Congress. U.S. V.S. Chicago, Minneapolis
and St. Paul Railroad Company, 312 U.S. 592 (1941).
Historically, the commerce power has expanded to encompass a
broad and diverse spectrum of activities and issues. Window
washers on office buildings which contain business engaged
in interstate commerce have been held to federal minimum
wage and occupational safety and health standards because
they too are held to be in interstate commerce. Movement of
air pollutants across state lines have been held to be in
interstate commerce.
Thus, it is not surprising that the development of the
concept of navigability has historically been very broad as
well. Case law has developed 3 tests by which to determine
navigability: (1) if the water in question is navigable in
fact and crosses state lines, then it is a "navigable water-
way of the United States." The Daniel Ball, 10 Wall 557
(1870). (2) If a waterway has ever been navigable historically,
then it is considered navigable forever. Thus the "once
navigable, always navigable" test. Economy Light and Power
Company V.S. U.S, 256 U.S. 113 (1920). (3) Even if a waterway
is not in fact navigable, if it can be improved to make it
navigable, and if the cost of improvements is found to be
less than the benefits which would be derived from such
improvement, then that waterway is "navigable". U.S. V.
Appalachian Electric Power Company, 311 U.S. 377 (1940)
The operation of something seemingly as crude as a log
raft may be evidence of susceptibility to substanţial commercial
navigation. Moreover, the presence of obstructions such as
waterfalls, rapids, or sandbars will not affect such a
determination if the cost-benefit ratio test of the Appalachian
Electric Power Company case noted above has been met.
The purpose of the commerce clause is to assure that commercial
enterprises in every state have substantial equality of
access to a free national market. It is not to usurp the
police power of the states, reserved under the 10th amendment.
American Can Company V.S. Oregon Liquid Control Commission,
517 P. 2d 691 (Ore. app. (1973). However, Congressional
power in this area is plenary and the practical result of
such broad power is that there is very little "police power"
reserved where questions of navigability are involved.
Hold until after
electron
File
THE WHITE HOUSE
WASHINGTON
September 7, 1976
Port
MEMORANDUM FOR:
JIM CANNON
FROM:
ART QUERN
SUBJECT:
Navigability
Attached is Secretary Coleman's response to your May 27
memorandum requesting him "to review the definition of
navigability with the objective of giving him (the
President) your views on whether a more precise and
practical definition of navigability is needed."
The Secretary's response is to offer the alternatives of:
a) an interdepartmental committee of Federal agencies
or
b) an Advisory Committee which included the Federal
agencies and also state and local government and
the private sector.
Given these two choices I would not take any action at this
time. I base this primarily on your guidance that we should
not create new groups to "study" things at this time.
AND
090708
THE WHITE HOUSE
WASHINGTON
August 30,
MEMORANDUM FOR:
ART QUERN
FROM:
JUDITH RICHARDS
SUBJECT:
NAVIGABILITY
Per Jim Cannon's request, attached is Bill Coleman's
response to the review of the navigability question.
As you can see, there are two approaches; one for an Advisory
Committee, comprised of representatives of the Federal
Government, State Governments, and the private sector (which
Secretary Coleman prefers), and another for an Interagency
Committee made up exclusively of representatives of Federal
departments and agencies.
At Tab A, I have also attached the Secretary's Draft Executive
Order establishing the committees and at Tab B and C respec-
tively, the proposed membership lists for the Advisory Committee
and the Interagency Committee.
If you feel that these should be staffed, please let me know.
Thanks.
Attachments
OF
INVESTATION
THE SECRETARY OF TRANSPORTATION
WASHINGTON, D.C. 20590
UNITED STATES OF AMERICA
AUG 26
MEMORANDUM FOR JAMES CANNON
THE WHITE HOUSE
Subject: Navigability
In response to the White House memorandum of August 3,
enclosed is a draft memorandum directing the Attorney
General to establish "The Interdepartmental Committee
on Federal Jurisdiction over Navigable Waters of the
United States." This Committee would be comprised
exclusively of representatives of Federal departments
and agencies.
As an alternative, also enclosed is a draft Executive
Order directing the Attorney General to establish the
"Advisory Committee on Federal Jurisdiction Over
Navigable Waters of the United States." This Advisory
Committee would be comprised of representatives of the
Federal Government, State governments, and the private
sector.
Although the Advisory Committee probably would require
more time to make its recommendations, I believe that
it would produce recommendations having broader support
than those of a federal interdepartmental committee.
Since much of the criticism of the present system arises
from state and private dissatisfaction, I prefer the
Advisory Committee approach. However, either group
should be able to develop sound recommendations for the
President's consideration.
The Department of Transportation remains prepared to
devote whatever resources are needed for a thorough and
expeditious interagency review.
William T. Coleman, Jr.
Enclosures
FORD is LIBRARY 07V835
DRAFT
EXECUTIVE ORDER
ADVISORY COMMITTEE ON FEDERAL JURISDICTION OVER NAVIGABLE
WATERS OF THE UNITED STATES
The large number of federal laws applicable to navigable
waters of the United States have increased public and
governmental (both State and Federal) concern over the
manner in which those laws are administered. Because
most of the laws concerned with navigable waters do not
contain a statutory definition of that term, federal
agencies must rely upon the judicially developed definition
to determine the extent of their respective jurisdictions.
Application of the judicial definitions has often led to
different treatment of particular bodies of water by federal
agencies. I have concluded that an advisory committee should
be established to recommend a method of simplifying and making
more uniform the exercise of federal jurisdiction over waters
located in the United States.
NOW THEREFORE, by virtue of the authority vested in me as
President of the United States, it is ordered as follows:
SECTION 1. The Attorney General of the United States is
directed to constitute and chair an advisory
committee for the purpose outlined above.
Compliance with the Federal Advisory Committee
Act (P.L. 92-463), 5 U.S.C. APP. I, is required.
SECTION 2. The Committee shall be known as "The Advisory
Committee on Federal Jurisdiction Over Navigable
Waters of the United States."
SECTION 3. The Committee shall be comprised of interested
Federal departments and agencies, among which
shall be those named in the attached list,
and representatives of State governments
and the private sector, all to be appointed by
the Attorney General. The views of those Federal
departments and agencies substantially involved
in navigable waters jurisdiction shall be given
emphasis.
SECTION 4. The Committee shall consider the broad spectrum
of navigable waters jurisdiction, including,
but not limited to, jurisdiction over navigable
waters, navigable waters of the United States,
waters subject to the jurisdiction of the United
States, waters of the United States, and naviga-
ble rivers, streams, and harbors. The Committee
shall analyze the relationship between the
Commerce Clause jurisdiction, the admiralty and
maritime jurisdiction, and the general welfare
power under the Constitution. The Committee
shall consider the purpose of particular statutes
in relation to their jurisdictional bases. The
goal of the Committee should be to recommend a
uniform concept of federal jurisdiction over
bodies of water. Differences in the application
of that concept should be based upon the specific
public purpose to be served.
SECTION 5. The Committee may request any executive department
or agency to furnish any information or assistance
deemed necessary to carry out its duties under this
order. All executive departments and agencies of
the Federal Government are authorized and directed
to cooperate with the Committee and to furnish
whatever information, personnel, and assistance,
not inconsistent with law, as the Committee may
require in the performance of its duties.
SECTION 6. The Attorney General shall submit the Committee's
recommendations, together with the comments thereon
of participating Federal departments and agencies
to me within [one year] from this date.
2
DRAFT
MEMORANDUM FOR THE HONORABLE EDWARD H. LEVI
ATTORNEY GENERAL
Subject: Formation of Interagency Study Group on
Navigable Waters Jurisdiction
There has been significant public and governmental (both
state and federal) concern over the myriad federal laws
applicable to "navigable waters of the United States."
Since most of the laws concerned with navigable waters
do not contain statutory definitions of that term, federal
agencies must rely upon the judicially developed definition
to determine the extent of their respective jurisdictions.
Application of the judicially developed definition has often
led to differing treatment of particular waters by federal
agencies.
Thus, in response to an inquiry by my staff, the Department
of Transportation recommended that the Department of Justice
chair an interagency study group composed of representatives
of interested federal agencies to analyze navigable waters
jurisdiction and make appropriate recommendations. The goal
of this group would be to reduce the administrative problems
caused by the current state of affairs.
Therefore, I direct that the Department of Justice consti-
tute and chair an interagency study group for the purpose
outlined above.
This group shall be known as "The Interdepartmental Committee
on Federal Jurisdiction over Navigable Waters of the United
States."
A list of other federal agencies that shall, as a minimum,
comprise this Committee is provided in enclosure (1). The
views of those federal agencies substantially involved in
navigable waters jurisdiction shall be given emphasis. You
are authorized to solicit the views of interested state
governments and members of the private sector.
- 2 -
The Committee shall consider the broad spectrum of navigable
waters jurisdiction, including, but not limited to, juris-
diction over navigable waters, navigable waters of the
United States, waters subject to the jurisdiction of the
United States, waters of the United States, and navigable
rivers, streams, and harbors. The Committee shall analyze
the relationship between the constitutional commerce clause
jurisdiction, the admiralty and maritime jurisdiction, and
the general welfare power under the Constitution. The
Committee shall consider the purpose of particular statutes
in relation to their jurisdictional bases. The goal of the
Committee should be to recommend a uniform concept of
federal jurisdiction over bodies of water. Differences in
the application of that concept should be based upon the
specific public interest to be served.
All executive departments and agencies of the Federal
Government are authorized and directed to cooperate with
the Committee and to furnish whatever information, person-
nel, and assistance as the Committee may require in the
performance of its duties.
You are directed to submit the Committee's recommendations,
together with the comments of participating Federal departments
and agencies thereon to me within [one year] from this date.
Enclosure
Copy to:
All Agencies in Enclosure
B
FEDERAL AGENCIES TO BE REPRESENTED ON THE ADVISORY COMMITTEE
ON FEDERAL JURISDICTION OVER NAVIGABLE WATERS OF THE UNITED
STATES
1. DEPARTMENT OF JUSTICE
Suggested Divisions
Land and Natural Resources Division
Admiralty and Shipping of Civil Division
2. DEPARTMENT OF TRANSPORTATION
U.S. Coast Guard Office of the Chief Counsel
3. DEPARTMENT OF THE ARMY
Corps of Engineers Office of the General Counsel
4. DEPARTMENT OF THE INTERIOR
Solicitor's Office
5. DEPARTMENT OF AGRICULTURE
Office of the General Counsel
6. DEPARTMENT OF THE TREASURY
Division of Carriers, Drawbacks and Bonds
7. DEPARTMENT OF COMMERCE
Office of the General Counsel
8. ENVIRONMENTAL PROTECTION AGENCY
Office of the General Counsel
9. COUNCIL ON ENVIRONMENTAL QUALITY
Executive Office of the President
10. OFFICE OF MANAGEMENT AND BUDGET
Executive Office of the President
ATTACHMENT
FEDERAL AGENCIES TO BE REPRESENTED ON THE INTERDEPARTMENTAL
COMMITTEE FOR THE STUDY OF FEDERAL JURISDICTION OVER
NAVIGABLE WATERS OF THE UNITED STATES
1. DEPARTMENT OF JUSTICE
Suggested Divisions
Land and Natural Resources Division
Admiralty and Shipping of Civil Division
2. DEPARTMENT OF TRANSPORTATION
U.S. Coast Guard Office of the Chief Counsel
3. DEPARTMENT OF THE ARMY
Corps of Engineers Office of the General Counsel
4. DEPARTMENT OF THE INTERIOR
Solicitor's Office
5. DEPARTMENT OF AGRICULTURE
Office of the General Counsel
6. DEPARTMENT OF THE TREASURY
Division of Carriers, Drawbacks and Bonds
7. DEPARTMENT OF COMMERCE
Office of the General Counsel
8. ENVIRONMENTAL PROTECTION AGENCY
Office of the General Counsel
9. COUNCIL ON ENVIRONMENTAL QUALITY
Executive Office of the President
10. OFFICE OF MANAGEMENT AND BUDGET
Executive Office of the President
ENCLOSURE (1)
Withings
THE WHITE HOUSE
ACTION
Last Day: October 18, 1976
WASHINGTON
Monday
October 13, 1976
MEMORANDUM FOR:
JIM CANNON
FROM:
JUDITH RICHARDS HOPE JRH
SUBJECT:
Enrolled Bill H.R. 13326 - Exempting Judy
the Steam Boat "Delta Queen" from
Certain Vessel Inspection Laws
Sponsor: Representative Sullivan
(D) Missouri
I attach for your consideration, a memorandum from you
the President urging him to sign the private bill which
good
to
would save the historic steam boat "Delta Queen." Although
both OMB and DOT have recommended veto of this bill, Ifeel
strongly that the President should sign it. The issue is
whether the exemptions from the fire laws which have been
made for the "Delta Queen" in recent years should be dis-
continued as of 1978.
In view of the President's demonstrated love for travel on
the Mississippi River, the historic significance of the
steamship "Delta Queen," and the nostalgic loyalty which
fun
many Americans have for this grand lady of the Mississippi,
I feel that it would be a great mistake to veto this bill.
Recommendation:
Sign
In This is not fire on he easy danger energency neto one & would yet eyes sign b he
The
Veto
There a D a in the Art BERALD n. FORD LIBRARY
10/318
THE WHITE HOUSE
ACTION
WASHINGTON
Last Day: October 18, 1976
October 13, 1976
MEMORANDUM FOR:
THE PRESIDENT
FROM:
JIM CANNOR
Enrolled June H.R. 13326 - Exempting
SUBJECT:
the Steamboat Delta Queen from
Certain Vessel Inspection Laws
This is to present for your action H.R. 13326, a private
bill which would exempt from certain statutory fire safety
standards, the historic Mississippi River steamboat
Delta Queen.
BACKGROUND
The Delta Queen was built in 1928 and has stateroom accom-
modations for about 190 passengers. It was entered on the
national register of historical vessels in 1970. Many
people in the country, and particularly residents of States
bordering the Mississippi River, have a strong interest in
its preservation as the last remaining survivor of the
historical and colorful Mississippi Riverboat Era.
The Delta Queen does not meet the fire safety standards
enacted by Congress in 1966 (Public Law 89-777).
The owners of the Delta Queen have voluntarily undertaken
certain alterations of the boat to improve her fire safety.
Moreover, the Coast Guard has increased the number of
inspections it regularly conducts on this boat. The pub-
licity used by Delta Queen owners states that the boat
operates under an exemption from Federal boat safety fire
laws.
Representative Sullivan of Missouri, in her swan song from
Congress, introduced this private bill to extend the Delta
Queen's exemption from 1978 to 1933. The bill was over-
whelmingly supported in Congress, and has the strong support
of a number of Senators and Congressmen in the Ohio and
Mississippi River area.
2
ARGUMENTS FOR APPROVAL
1.
There are strong historical and sentimental motivations
to preserve the Delta Queen.
2.
School children have, for a number of years, raised
nickels and pennies to save this boat, and it
draws huge crowds along the Mississippi wherever
it docks. It is one of the last remaining paddle
wheel vessels in America.
3.
Your clear interest in the enjoyment of Mississippi
Riverboat travel is consistent with signing this
bill.
4.
Admiral Siler, Commandant of the Coast Guard, indicates
that although the Coast Guard is, as a matter of
institutional policy, opposed to this bill, he feels
that the Delta Queen's historic significance coupled
with more frequent Coast Guard safety inspections
could justify signing the measure.
ARGUMENTS FOR DISAPPROVAL
1.
The original exemptions for the Delta Queen were to
remain only until the new vessel, the Mississippi
Queen, was ready. That boat is now in operation on
the Mississippi, and has been successful. Some
Coast Guard officials conjecture that the owners of
the Delta Queen will, if the boat's exemption is
extended, move the vessel's operations to a different
area so that it will not be competing with the new
Mississippi Queen.
2.
The Delta Queen is constructed primarily of wood,
and, operating in the overnight passenger trade,
presents in the minds of some DOT officials an
unacceptable fire safety risk. The Delta Queen is the
only U.S. passenger ship that does not meet the
1966 Act fire safety standards.
3.
The Delta Queen would still be entitled to operate
in daylight hours; only overnight passenger service
would be prohibited under the 1966 Act.
3
Additional background information, including letters from
Secretary Coleman and the General Counsel of the Department
of Commerce, is provided in OMB's enrolled bill report at
Tab A.
AGENCY RECOMMENDATIONS
DOT and OMB recommend disapproval. The Department of
Commerce defers to DOT.
STAFF RECOMMENDATIONS
Max Friedersdorf
"Strongly recommend approval"
Counsel's Office
"Disapproval"
(Lazarus)
RECOMMENDATION
I recommend approval of H.R. 13326. The historic and nostalgic
significance of this boat cannot be overestimated. Moreover,
the additional Coast Guard inspections, the publicity noting
that the boat operates with a fire safety exemption, and the
commitment by Admiral Siler to continue extra inspections
indicate that the safety issue is not as severe as some
believe.
I also recommend that you issue the attached signing statement
which has been approved by Max Friedersdorf, Counsel's Office
(Lazarus) and the White House Editorial Office (Smith).
OMB recommends that if you decide to sign the bill you do
not issue a signing statement.
DECISION
Sign H.R. 13326 at Tab B
Issue signing statement at Tab C
Approve
Disapprove
Disapprove H.R. 13326 and sign Memorandum of Disapproval
at Tab D which has been cleared by Doug Smith.