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    "title": "1974/10/27 S355 Motor Vehicle and School Bus Safety Amendments of 1974 (2)",
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    "ocrText": "The original documents are located in Box 11, folder \"1974/10/26 HR13561 Intercoastal\nShipping Act Amendments\" of the White House Records Office: Legislation Case Files at\nthe Gerald R. Ford Presidential Library.\nCopyright Notice\nThe copyright law of the United States (Title 17, United States Code) governs the making of\nphotocopies or other reproductions of copyrighted material. Gerald R. Ford donated to the United\nStates of America his copyrights in all of his unpublished writings in National Archives collections.\nWorks prepared by U.S. Government employees as part of their official duties are in the public\ndomain. The copyrights to materials written by other individuals or organizations are presumed to\nremain with them. If you think any of the information displayed in the PDF is subject to a valid\ncopyright claim, please contact the Gerald R. Ford Presidential Library.\nExact duplicates within this folder were not digitized.\nDigitized from Box 11 of the White House Records Office Legislation Case Files at the Gerald R. Ford Presidential Library\nTHE WHITE HOUSE\nACTION\nWASHINGTON\nLast Day - October 29\nOctober 25, 1974\nMEMORANDUM FOR:\nTHE PRESIDENT\nFROM:\nKEN CODE\nSUBJECT:\nEnrolled Bill H.R. 13561\nIntercoastal Shipping\nAct Amendments\nAttached for your consideration is House bill, H.R. 13561,\nsponsored by Representative Sullivan, which eliminates the\ncarriage, storage or handling of governmental or charitable\nproperty free or at reduced rates in the intercoastal trade\nof the United States.\nRoy Ash recommends approval and provides you with additional\nbackground information in his enrolled bill report (Tab A).\nWe have checked with the Counsel's office (Chapman) and\nBill Timmons who both recommend approval.\nRECOMMENDATION\nThat you sign House bill, H.R. 13561 (Tab B).\nAPPROVED\nEXECUTIVE OFFICE OF THE PRESIDENT\nOCT 26 1974\nOFFICE OF management AND BUDGET\nWASHINGTON, D.C. 20503\nOCT 2 3 1974\nMEMORANDUM FOR THE PRESIDENT\nPosted\nSubject: Enrolled Bill H.R. 13561 - Intercoastal Shipping\nAct amendments\n84/01\nSponsors - Rep. Sullivan (D) Missouri and 5 others\nJo Orchie\nLast Day for Action\n10/29\nOctober 29, 1974 - Tuesday\nPurpose\nEliminates the carriage, storage or handling of governmental\nor charitable property free or at reduced rates in the\nintercoastal trade of the United States.\nAgency Recommendations\nOffice of Management and Budget\nApproval\nDepartment of Commerce\nApproval\nDepartment of Transportation\nApproval\nFederal Maritime Commission\nApproval\nDepartment of Defense\nNo objection\n(informally)\nGeneral Services Administration\nDoes not recommend\na veto\nDiscussion\nThe Intercoastal Shipping Act authorizes the Federal Maritime\nCommission (FMC) to exercise economic regulation of common\ncarriers by water in the intercoastal trade of the United\nStates and between the continental United States and the\nnoncontiguous States and dependencies. Generally, the Act\nauthorizes the FMC to enforce maximum and minimum rates and\njust and reasonable trade practices. Section 6 of the Act\nprovides, however, that \" nothing in this Act shall prevent\nthe carriage, storage, or handling of property free or at\nreduced rates, for the United States, State, or municipal\nFORD & LIBRARY 070875\n2\nGovernments, or for charitable purposes. II The effect of\nSection 6 of the Act has been that substantial amounts of\nGovernment cargoes are carried at lower ocean freight rates\nthan those applying to commercial cargoes. The enrolled\nbill would amend the Intercoastal Shipping Act by deleting\nSection 6.\nSection 6 is virtually identical in purpose to section 22\nof the Interstate Commerce Act, which is applicable to trans-\nportation by rail and motor common carriers regulated by\nthat Act. The Administration has proposed a bill, the\nTransportation Improvement Act of 1974 (S. 3237, H.R. 12891),\nwhich would, among other things, repeal section 22. Accord-\ningly, deletion of Section 6 would be consistent with that\nAdministration proposal.\nThe purpose of these repeals is to place private and public\nshippers on an equal footing and to require the Government\nto pay its fair share of the nation's transportation costs.\nThe Federal Government is presently the largest purchaser\nof intercoastal transportation services. Most agencies have\nargued that the rates for Government cargoes, which are\nsubstantially lower than those applicable to comparable com-\nmercial cargoes, may have caused an artificial and excessive\ninflation of rates charged commercial shippers.\nOn the other hand, Defense has argued that its rates are\nadequate to cover costs plus a profit and that lower Govern-\nment rates have not caused higher commercial rates. It esti-\nmates increased transportation costs of $5 million a year as\na result of this legislation. It earlier estimated that\nrepeal of section 22 might cost it as much as $240 million a\nyear in increased costs until it could convert to a new rate\nsystem.\nDOT and we have doubted that Defense's costs would increase in\nthe magnitude it estimates although agreeing that there would\nbe some transition costs. Both of us felt that repeal of\nsection 22 was a price that had to be paid if the Administra-\ntion was to get the other regulatory improvements which were\nincorporated in the Administration's proposed Transportation\nImprovement Act.\nThe enrolled bill would also amend Section 5 of the Inter-\ncoastal Shipping Act to expressly apply the other regulatory\nprovisions of that Act to the carriage, storage, and handling\n3\nof Government and charitable cargo. As stated in the Report\nof the House Committee on Merchant Marine and Fisheries,\nthis provision is included in the enrolled bill:\n\"\nto make it clear that the intention of\nH.R. 13561 is to insure that rates charged for\nthe carriage of government and charitable\ncargo in the domestic offshore commerce of\nthe United States are subject to the same type\nof economic regulation by the Federal Maritime\nCommission as the Commission presently exer-\ncises over commercial rates in these trades.\nIf\nWufred H Romael\nAssistant Director for\nLegislative Reference\nEnclosures\nUNITED STATES OF AMERICA\n*\n*\n4\nGENERAL SERVICES ADMINISTRATION\n#\n*\nWASHINGTON, DC 20405\n*\n*\nGENERAL SERVICES\n* ADMINISTRATION\n*\n*\n*\nOCT 1 8 1974\nHonorable Roy L. Ash\nDirector, Office of\nManagement and Budget\nWashington, DC 20503\nDear Mr. Ash:\nBy referral dated October 16, 1974, from the Assistant Director for\nLegislative Reference, your office requested the views of the General\nServices Administration on enrolled bill H.R. 13561, 93rd Congress,\nan act \"To amend the Intercoastal Shipping Act, 1933.\"\nThe bill would repeal section 6 of the Act which presently permits\nthe carriage of property in intercoastal trade, free or at reduced\nrates, for the Federal Government or a State or local government\nor for a charitable purpose. It would provide for the regulation\nof such transportation by the Federal Maritime Commission.\nAlthough we have expressed opposition to this bill on the same\ngrounds as those advanced by the Department of Defense, its effect\non GSA will be very small by comparison. In view of this, and\nthe strong support of the bill by other agencies of the executive\nbranch, we do not recommend a veto of the bill.\nSincerely\nArthur F. Sampson\nAdministrator\nKeep Freedom in Your Future With U.S. Savings Bonds\nDEPARTMENT OF TRANSPORTATION\nOFFICE OF THE SECRETARY OF TRANSPORTATION\nWASHINGTON, D.C. 20590\nUNITED STATES OF AMERICA\nOCT 1 7 1974\nHonorable Roy L. Ash\nDirector, Office of\nManagement and Budget\nWashington, D.C. 20503\nDear Mr. Ash:\nYou have asked for our comments on H.R. 13561, an enrolled bill\n\"To amend the Intercoastal Shipping Act, 1933.\"\nThis bill would delete from the Act, Section 6 which permits a\ncommon carrier by water in intercoastal commerce to carry, store,\nor handle property free or at reduced rates (1) for the United\nStates, State, or municipal governments, or (2) for charitable\npurposes. The bill would also amend Section 5 so as to expressly\napply the other provisions of the Act to the classes of cargo\nmentioned in (1) and (2) above.\nWe note that the enrolled bill is similar in certain respects to\nSection 7 of an Administration bill proposed by this Department as\nthe Transportation Improvement Act of 1974 which now appears as\nSection 501 of the Surface Transportation Act of 1974 (H.R. 5385).\nSection 501 repeals that portion of Section 22 of the Interstate\nCommerce Act which permits rail and motor carriers to provide\ntransportation to Federal, state, and municipal governments at\nno cost or at rates below those charged private shippers. Carriers\nmay still provide such services at reduced rates in time of war,\nor when the shipment involves commodities that are exempt from\neconomic regulation under the provisions of Part II or Part III\nof the Interstate Commerce Act.\nBoth the enrolled bill and the provision in the surface transportation\nlegislation place private and public shippers on a more equal footing\nand require government, as a shipper, to pay its share of the nation's\nfreight bill instead of placing a substantial burden on private\nshippers or carriers. This was the reason that we supported the\nenactment of S. 3173, the Senate companion to the enrolled bill in\na letter to the Chairman of the Senate Commerce Committee dated\nJune 7, 1974. For the same reason, we recommend that the President\nsign the enrolled bill.\nSincerely,\nRodney E. Eyster\nGeneral Counsel\nDIPARTMENT OF COMMERCE\nGENERAL COUNSEL OF THE\nDEPARTMENT OF COMMERCE\nUNITED STATES OF AMERICA\nWashington, D.C. 20230\nOCT 18 1974\nHonorable Roy L. Ash\nDirector, Office of Management\nand Budget\nWashington, D. C. 20503\nAttention: Assistant Director for Legislative Reference\nDear Mr. Ash:\nThis is in reply to your request for the views of this Department\nconcerning H.R. 13561, an enrolled enactment\n\"To amend the Intercoastal Shipping Act, 1933.'\nH.R. 13561 would amend the Intercoastal Shipping Act by deleting\nSection 6 which authorizes free or reduced rate carriage of\ngovernment cargoes, and by amending Section 5 to subject government\ncargoes to the economic regulation of the Federal Maritime Commis-\nsion in the same manner as private cargo is subject to such\nregulation.\nThe Department of Commerce recommends approval by the President of\nH.R. 13561. The maintenance of stable rates and services in the\nintercoastal trade requires uniform treatment of all shippers and\nunder no circumstance should private shippers be compelled to\nsubsidize the transport of government cargo as is possible under\nthe present provisions of the Intercoastal Shipping Act of 1933.\nEnactment of H.R. 13561 would require no additional appropriations\nfor this Department.\nSincerely,\nKarl E. Bakke\nGeneral Counsel\nSTATEMENT E/F DEVENSI\nDEPARTMENT OF THE NAVY\nOFFICE OF THE SECRETARY\nWASHINGTON. D. C. 20350\nNAME\n23 October 1974\nHonorable Roy L. Ash\nDirector, Office of Management and Budget\nWashington, D.C. 20503\nDear Mr. Ash:\nYour transmittal sheet dated 16 October 1974, enclosing an enrolled bill\nof Congress, H.R. 13561, \"To amend the Intercoastal Shipping Act, 1933,\"\nand requesting comment of the Department of Defense has been received.\nThe Department of the Navy has been assigned the responsibility for\nthe preparation of a report thereon expressing the views of the Department\nof Defense.\nH.R. 13561 repeals section 6 of the Intercoastal Shipping Act, 1933\n(46 U.S.C. 846) which has provided that common carriers by water in the\ndomestic offshore trades may lawfully transport cargo for the U.S. Govern-\nment, inter alia, at free or reduced rates. Additionally, H.R. 13561\namends section 5 of the Intercoastal Shipping Act, 1933 (46 U.S.C. 845b)\nby explicitly extending the application of the whole Intercoastal Shipping\nAct, 1933, to the carriage, storage or handling of property by the United\nStates, or municipal governments, or for charitable purposes.\nThe Department of the Navy on behalf of the Department of Defense, opposed\nenactment of H.R. 13561 in its report to the Chairman of the House Merchant\nMarine and Fisheries Committee dated 6 August 1974 because the act contra-\nvenes the common law right of the sovereign to reduced shipping rates for\nits cargo, and because the current negotiated contracts between the Military\nSealift Command and waterborne common carriers in the domestic offshore\ntrades allow a reasonable profit to the carrier, thus overcoming an appar-\nent objective of the bill.\nWhile the cost impact on DOD cannot be evaluated precisely, it is estimated\nto be $5 million annually. However DOD is more deeply concerned with the\nunsound fiscal precedent established by this legislation at a time when\nefforts are being mounted against rising costs. If this same legislative\naction were taken with respect to the current authority for reduced rates for\ndomestic inland surface transportation under section 22 of the Interstate\nCommerce Act, the cost impact could amount to $240 million in the first\nyear. Legislation is currently before the Congress to remove this authority.\nAlthough the Department of Defense has reservations as to the legislation\nas indicated above, it does not feel that they form a sufficiently strong\nbasis on which to recommend a Presidential veto.\nSincerely yours,\nNSPoths\nD. S. Potter\nActing Secretary of the Navy\nMARITIME\nFederal Maritime Commission\nWashington, D.C. 20573\n1961\nOffice of the Chairman\nOctober 17, 1974\nHonorable Roy L. Ash\nDirector, Office of Management\nand Budget\nWashington, D. C. 20503\nDear Mr. Ash:\nI am writing in reply to your request for the views and recommen-\ndations of the Federal Maritime Commission on H.R. 13561, an enrolled\nbill\nTo amend the Intercoastal Shipping Act, 1933.\nH.R. 13561 would delete Section 6 of the Intercoastal Shipping\nAct, 1933, which provides\nThat nothing in this Act shall prevent the\ncarriage, storage, or handling of property\nfree or at reduced rates, for the United\nStates, State, or municipal Governments,\nor for charitable purposes.\nSection 5 of the Act is amended to expressly apply the provisions\nof the Act to the cargos described in Section 6 which move in the do-\nmestic offshore trades of the United States. Signing of H.R. 13561\nwould insure the same statutory standards of reasonableness and fair-\nness to governmental and charitable cargos which presently apply to the\ntransportation of commercial cargos. The economic regulatory authority\nof this Commission over rates charged for the carriage of governmental\nand charitable cargos in the domestic offshore trades would be identi-\ncal to existing authority over commercial cargos. No additional costs\nwill be entailed by this Commission should H.R. 13561 become law.\nIn our testimony before the Congress your office approved and\nfound in accord with the program of the President, our reason for sup-\nporting H.R. 13561: it is inherently unfair for carriers in the domes-\n- 2 -\ntic offshore trades, commercial shippers, and our offshore citizens to\nsubsidize by inflated rates governmental or charitable shippers.\nAccordingly, the Federal Maritime Commission would recommend that\nthe President affix his signature to the enrolled bill H.R. 13561.\nSincerely,\nHelen Delich Bentley\nChairman\nWarren Hundride q.m.\nEXECUTIVE OFFICE OF THE PRESIDENT\nOFFICE OF MANAGEMENT AND BUDGET\nWASHINGTON, D.C. 20503\n11:20\nOCT 23 1974\nMEMORANDUM FOR THE PRESIDENT\nSubject: Enrolled Bill H.R. 13561 - Intercoastal Shipping\nAct amendments\nSponsors - Rep. Sullivan (D) Missouri and 5 others\nLast Day for Action\nOctober 29, 1974 - Tuesday\nPurpose\nEliminates the carriage, storage or handling of governmental\nor charitable property free or at reduced rates in the\nintercoastal trade of the United States.\nAgency Recommendations\nOffice of Management and Budget\nApproval\nDepartment of Commerce\nApproval\nDepartment of Transportation\nApproval\nFederal Maritime Commission\nApproval\nDepartment of Defense\nNo objection\n(informally)\nGeneral Services Administration\nDoes not recommend\na veto\nDiscussion\nThe Intercoastal Shipping Act authorizes the Federal Maritime\nCommission (FMC) to exercise economic regulation of common\ncarriers by water in the intercoastal trade of the United\nStates and between the continental United States and the\nnoncontiguous States and dependencies. Generally, the Act\nauthorizes the FMC to enforce maximum and minimum rates and\njust and reasonable trade practices. Section 6 of the Act\nprovides, however, that \" nothing in this Act shall prevent\nthe carriage, storage, or handling of property free or at\nreduced rates, for the United States, State, or municipal\nACTION\nLast Day - October 29\nOctober 25, 1974\nMEMORANDUM FOR:\nTHE PRESIDENT\nFROM:\nKEN COLE\nSUBJECT:\nEnrolled Bill H.R. 13561\nIntercoastal Shipping\nAct Amendments\nAttached for your consideration is House bill, H.R. 13561,\nsponsored by Representative Sullivan, which eliminates the\ncarriage, storage or handling of governmental or charitable\nproperty free or at reduced rates in the intercoastal trade\nof the United States.\nRoy Ash recommends approval and provides you with additional\nbackground information in his enrolled bill report (Tab A).\nWe have checked with the Counsel's office (Chapman) and\nBill Timmons who both recommend approval.\nI\nRECOMMENDATION\nThat you sign House bill, H.R. 13561 (Tab B).\nACTION\nLast Day - October 29\nOctober 25, 1974\nMEMORANDUM FOR:\nTHE PRESIDENT\nFROM:\nKEN COLE\nSUBJECT:\nEnrolled Bill H.R. 13561\nIntercoastal Shipping\nAct Amendments\nAttached for your consideration is House bill, H.R. 13561,\nsponsored by Representative Sullivan, which eliminates the\ncarriage, storage or handling of governmental or charitable\nproperty free or at reduced rates in the intercoastal trade\nof the United States.\nRoy Ash recommends approval and provides you with additional\nbackground information in his enrolled bill report (Tab A).\nWe have checked with the Counsel's office (Chapman) and\nBill Timmons who both recommend approval.\nRECOMMENDATION\nThat you sign House bill, H.R. 13561 (Tab B).\nACTION\nLast Day - October 29\nOctober 25, 1974\nMEMORANDUM FOR:\nTHE PRESIDENT\nFROM:\nKEN COLE\nSUBJECT:\nEnrolled Bill H.R. 13561\nIntercoastal Shipping\nAct Amendments\nAttached for your consideration is House bill, H.R. 13561,\nsponsored by Representative Sullivan, which eliminates the\ncarriage, storage or handling of governmental or charitable\nproperty free or at reduced rates in the intercoastal trade\nof the United States.\nRoy Ash recommends approval and provides you with additional\nbackground information in his enrolled bill report (Tab A).\nWe have checked with the Counsel's office (Chapman) and\nBill Timmons who both recommend approval.\nRECOMMENDATION\nThat you sign House bill, H.R. 13561 (Tab B).\nTHE WHITE HOUSE\nACTION MEMORANDUM\nWASHINGTON\nLOG NO.: 696\nDate:\nOctober 23, 1974\nTime:\n12:00 Noon\nFOR ACTION:\nMichael Duval\nCC (for information): : Warren K. Hendriks\nPhil Buchen\nJerry Jones\nBill Timmons\nPaul Theis\nFROM THE STAFF SECRETARY\nDUE: Date:\nFriday, October 25, 1974\nTime:\n2:00\np.m.\nSUBJECT:\nEnrolled Bill H.R. 13561 - Intercoastal Shipping\nAct amendments\nACTION REQUESTED:\nFor Necessary Action\nXX For Your Recommendations\nPrepare Agenda and Brief\nDraft Reply\nFor Your Comments\nDraft Remarks\nREMARKS:\nPlease return to Kathy Tindle - West Wing\nNo objection\nD.C.\nPLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.\nIf you have any questions or if you anticipate a\ndelay in submitting the required material, please\nWarren K. Hendriks\ntelephone the Staff Secretary immediately.\nFor the President\nTHE WHITE HOUSE\nACTION MEMORANDUM\nWASHINGTON\nLOG NO.: 696\nDate:\nOctober 23, 1974\nTime:\n12:00 Noon\nFOR ACTION:\nMichael Duval\nCC (for information): Warren K. Hendriks\nPhil Buchen\nJerry Jones\nBill Timmons\nPaul Theis\nFROM THE STAFF SECRETARY\nDUE: Date:\nFriday, October 25, 1974 Time: 2:00 p.m.\nSUBJECT:\nEnrolled Bill H.R. 13561 - Intercoastal Shipping\nAct amendments\nACTION REQUESTED:\nFor Necessary Action\nXX For Your Recommendations\nPrepare Agenda and Brief\nDraft Reply\nFor Your Comments\nDraft Remarks\nREMARKS:\nPlease return to Kathy Tindle - West Wing\nPLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.\nIf you have any questions or if you anticipate a\ndelay in submitting the required material, please\nWarren K. Hendriks\ntelephone the Staff Secretary immediately.\nFor the President\nTHE WHITE HOUSE\nWASHINGTON\nOctober 24, 1974\nMEMORANDUM FOR: MR. WARREN HENDRIKS\nFROM:\nWILLIAM E. TIMMONS\nSUBJECT:\nAction Memorandum - Log No. 696\nEnrolled Bill H. R. 13561 - Intercoastal\nShipping Act amendments\nThe Office of Legislative Affairs concurs in the attached\nproposal and has no additional recommendations.\nAttachment\nTHE WHITE HOUSE\nACTION MEMORANDUM\nWASHINGTON\nLOG NO.: 696\nDate:\nOctober 23, 1974\nTime:\n12:00 Noon\nFOR ACTION: Michael Duval\nCC (for information): Warren K. Hendriks\nThil Buchen\nJerry Jones\nBill Timmons\nPaul Theis\nFROM THE STAFF SECRETARY\nDUE: Date:\nFriday, October 25, 1974 Time: 2:00 p.m.\nSUBJECT:\nEnrolled Bill H.R. 13561 - Intercoastal Shipping\nAct amendments\nACTION REQUESTED:\nFor Necessary Action\nXX For Your Recommendations\nPrepare Agenda and Brief\nDraft Reply\nFor Your Comments\nDraft Remarks\nREMARKS:\nPlease return to Kathy Tindle - West Wing\nPLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.\nIf you have any questions or if you anticipate a\ndelay in submitting the required material, please\nK. R. COLE, JR.\ntelephone the Staff Secretary immediately.\nFor the President\nMEMORANDUM\nTHE WHITE HOUSE\nACTION\nWASHINGTON\nLast Day October 29\nMEMORANDUM FOR:\nTHE PRESIDENT\nFROM:\nKEN COLE\nSUBJECT:\nEnrolled Bill H.R. 13561\nIntercoastal Shipping\nAct amendments\nAttached for your consideration is House bill, H.R. 13561,\nsponsored by Representative Sullivan, which eliminates the\ncarriage, storage or handling of governmental or charitable\nproperty free or at reduced rates in the intercoastal trade\nof the United States.\nRoy Ash recommends approval etc.\nWe have checked with the Counsel's office (Chapman) and\nBill Timmons who both recommend approval.\nRECOMMENDATION\nThat you sign House bill, H.R. 13561 (Tab B).\nTHE WHITE HOUSE\nACTION MEMORANDUM\nWASHINGTON\nLOG NO.: 696\nDate:\nOctober 23, 1974\nTime:\n12:00 Noon\nFOR ACTION: Michael Duval\nCC (for information): Warren K. Hendriks\nPhil Buchen\nJerry Jones\nBill Timmons\nPaul Theis\nFROM THE STAFF SECRETARY\nDUE: Date:\nFriday, October 25, 1974 Time: 2:00 p.m.\nSUBJECT:\nEnrolled Bill H.R. 13561 - Intercoastal Shipping\nAct amendments\nACTION REQUESTED:\nFor Necessary Action\nXX For Your Recommendations\nPrepare Agenda and Brief\nDraft Reply\nFor Your Comments\n1\nDraft Remarks\nREMARKS: OK Mrs Donal\nPlease return to Kathy Tindle - West Wing\nPLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.\nIf you have any questions or if you anticipate a\ndelay in submitting the required material, please\nWarren K. Hendriks\ntelephone the Staff Secretary immediately.\nFor the President\n93D CONGRESS\nHOUSE OF REPRESENTATIVES\nREPORT\n2d Session\nNo. 93-1348\nECONOMIC REGULATION BY FEDERAL MARITIME COM-\nMISSION OF GOVERNMENT AND CHARITABLE CARGO\nIN U.S. DOMESTIC OFFSHORE COMMERCE\nSEPTEMBER 11, 1974.-Committed to the Committee of the Whole House on the\nState of the Union and ordered to be printed\nMrs. SULLIVAN, from the Committee on Merchant Marine and\nFisheries, submitted the following\nREPORT\n[To accompany H.R. 13561]\nThe committee on Merchant Marine and Fisheries, to whom was\nreferred the bill (H.R. 13561) to amend the Intercoastal Shipping\nAct, 1933, having considered the same, report favorably thereon with\nan amendment and recommend that the bill as amended do pass.\nThe amendment is as follows:\nStrike all after the enacting clause and insert in lieu thereof the\nfollowing:\nThat section 5 of the Intercoastal Shipping Act, 1933, as amended (46 U.S.C.\n845b), is amended by changing the period to a comma at the end and adding\nthe words: \"and shall apply to the carriage, storage or handling of property\nfor the United States, State or municipal governments, or for charitable\npurposes.\".\nSECTION 2. Section 6 of the Intercoastal Shipping Act, 1933, as amended (46\nU.S.C. 846), is deleted.\nPURPOSE OF THE BILL\nThe purpose of the bill, H.R. 13561, is to provide for economic regu-\nlation by the Federal Maritime Commission of ocean freight rates\napplicable to the transportation of government and charitable cargo\nin the domestic offshore trades of the United States in order to insure\nthat such rates meet the same statutory standards of reasonableness\nand fairness as presently apply to rates charged for the transportation\nof commercial cargo in these trades. This purpose would be accom-\nplished by deleting Section 6 of the Intercoastal Shipping Act, 1933,\na provision which specifically permits the carriage of government and\ncharitable cargo in the domestic offshore trades at free or reduced\nrates, and by adding language to Section 5 which would expressly\napply the other provisions of the Act to government and charitable\ncargo.\n38-006\n2\n3\nBACKGROUND OF THE LEGISLATION\nthe same economic regulatory authority over such rates as it exercises\nover commercial rates.\nThe Shipping Act, 1916, and the Intercoastal Shipping Act, 1933,\nIn its negotiations with the various steamship companies servicing\nauthorize the Federal Maritime Commission to exercise economic regu-\nour Nation's domestic offshore commerce, the Military Sealift Com-\nlation over the rates and practices of common carriers by water in\nmand adheres to the Armed Services Procurement Regulations which\nthe domestic offshore trades of the United States, i.e., the trades be-\ndisallow a number of substantial operating costs of the carriers,\ntween the continental United States and Alaska, Hawaii, Puerto Rico,\nthereby producing preferential or lower rates for the carriage of mili-\nGuam, American Samoa or the U.S. Virgin Islands. These statutes\ntary cargo. These differentials must either be absorbed by the carriers\nauthorize the Federal Maritime Commission, among other things, to\nor passed on to the shipping public, and ultimately to the consumer,\nmake, approve, suspend, or nullify rules and regulations of common\nin the form of higher transportation costs.\ncarriers by water in the domestic offshore trades; to investigate dis-\nThe Federal Maritime Commission informed the Merchant Marine\ncriminatory rates, charges, classifications, and practices of such car-\nSubcommittee of your Committee that a recent study by the Commis-\nriers; to conduct hearings and make determinations prescribed by law\nsion revealed that government military rates for the carriage of several\nrelating to the regulation of common carriers by water in these trades;\ncommodities from the West Coast of the United States to Guam ranged\nto receive, examine and accept their tariffs for filing; to make analyses\nfrom 12% to 139% below commercial rates. A spot analysis by the\nof the financial position of carriers servicing these trades and of their\nCommission of the Hawaiian trade showed government military rates\nneed for increased or lower tariff revenues; and, either upon com-\nas much as 122% below commercial rates. A similar analysis of the\nplaint or its own motion, to suspend rate changes by carriers servicing\nPuerto Rican trade indicated disparities between government and\nthese trades for a period of four months pending a hearing.\ncommercial rates of between 5% and 127%.\nThe Intercoastal Shipping Act, 1933, was originally enacted for the\nAt the present time there are no tariffs on file with the Federal Mari-\npurpose of subjecting carriers operating by water between the United\ntime Commission for the carriage of charitable cargo in our domestic\nStates Atlantic/Gulf and Pacific Coasts via the Panama Canal to\noffshore trades. It is the view of the Federal Maritime Commission\ncomplete economic regulation by the Federal Maritime Commission's\nthat if a steamship company wishes to assist a charity, it should make a\npredecessor agency. The legislative history of the Act reveals that\ndirect contribution out of its own profits. The transportation of chari-\nSection 6 (originally Section 4) was proposed as an amendment to the\ntable cargo at free or reduced rates would be included in the operating\nintroduced bill by the Federal Coordinating Service (a predecessor\nexpenses of the carrier and may ultimately have to be absorbed by its\nagency of the General Services Administration) for the sole purpose\ncommercial rate payers.\nof placing intercoastal steamship carriers on a parity with rail car-\nriers, with which they were presumably competing. (Section 22 of the\nGENERAL STATEMENT\nInterstate Commerce Act permitted railroads to grant reduced rates\nto the Government in consideration of their land grants from the\nYour Committee has concluded that H.R. 13561, as amended, would\nGovernment).\ncorrect the inequities which have resulted from permitting the car-\nIn 1938 the provisions of the Intercoastal Shipping Act, including\nriage of government and charitable cargo at preferential rates in the\nSection 6, were extended to those domestic offshore carriers providing\ndomestic offshore commerce of the United States. Tariffs covering\nservice between the continental United States and Alaska, Guam,\nthese shipments would be required to be filed with the Federal Mari-\nHawaii, Puerto Rico, the U.S. Virgin Islands, or American Samoa.\ntime Commission in the same manner and for the same regulatory\nThe Transportation Act of 1940 transferred to the Interstate Com-\nobjectives as tariffs pertaining to commercial shipments are required\nmerce Commission jurisdiction over intercoastal water carriers, i.e.,\nto be filed with the Commission.\nthose carriers operating by water between the United States Atlantic/\nUnder H.R. 13561 the economic regulatory authority of the Federal\nGulf and Pacific Coasts via the Panama Canal, and which the 1933 Act\nMaritime Commission over rates charged for the carriage of govern-\nwas originally intended to regulate. Domestic offshore carriers were,\nment and charitable cargo in the domestic offshore trades would be\ntherefore, left subject to a statutory provision which was designed\nidentical with the Commission's present economic regulatory authority\nneither historically nor economically for them. Your Committee found\nover rates charged for the carriage of commercial cargo in these trades.\nthat for the past thirty-four years the Federal Maritime Commission\nThe same standards and cost bases which presently determine appro-\nhas been in the position of having to administer an anachronism.\npriate levels of commercial rates in these trades would be applied in\nThe principal beneficiary of Section 6 of the 1933 Act has been the\nestablishing fair and reasonable rates for the carriage of government\nFederal Government, primarily the Department of Defense. Pursuant\nand charitable cargo. Moreover, shippers of government and charitable\nto Section 6, a considerable amount of military cargo is transported\ncargo would have the same standing before the Federal Maritime Com-\nin the domestic offshore trades of the United States at freight rates\nmission as commercial shippers to protest the reasonableness and fair-\nwhich are established through direct negotiation between the Military\nness of rates charged for the carriage of their cargo.\nSealift Command of the Department of the Navy and the carrier. Such\ntariffs are filed with the Federal Maritime Commission on an informa-\nHEARINGS\ntional basis only. Section 6 prevents this Commission from exercising\nAt the hearings on H.R. 13561 before the Merchant Marine Sub-\ncommittee of your Committee strong testimony in support of the legis-\nH.R. 1348\nH.R. 1348\n4\n5\nlation was received from the Honorable Spark M. Matsunaga (D-\nHawaii), the Honorable Helen Delich Bentley, Chairman of the\nDEPARTMENTAL REPORTS\nFederal Maritime Commission; John R. Kuykendall, Vice-President\nH.R. 13561 was referred for comment to the Department of Com-\nof Matson Navigation Company; and Albert E. May, Vice-President\nmerce, the Department of Defense and the Federal Maritime Com-\nof the American Institute of Merchant Shipping. Statements in strong\nmission. The Federal Maritime Commission offered strong testimony\nsupport of the bill were received from the Honorable Antonio Borja\nin support of the bill in lieu of a report. The text of reports from the\nWon Pat, Delegate from Guam; the Honorable Carlos G. Camacho,\nDepartment of Commerce and the Department of the Navy follow\nGovernor of Guam; the Transportation Association of America; and\nherewith:\nthe National Industrial Traffic League.\nThe Military Sealift Command of the Department of the Navy pre-\nGENERAL COUNSEL OF THE DEPARTMENT OF COMMERCE,\nsented the only adverse testimony on H.R. 13561, which did not repre-\nWashington, D.C., July 25, 1974.\nsent the position of the Administration.\nHon. LEONOR K. SULLIVAN,\nAMENDMENT TO H.R. 13561\nChairman, Committee on Merchant Marine and Fisheries, House of\nRepresentatives, Washington, D.C.\nAmong the reasons stated by the Military Sealift Command for its\nDEAR MADAM CHAIRMAN This is in response to your request for the\nopposition to the bill was its belief that if the legislation were enacted,\nviews of the Department of Commerce concerning H.R. 13561; a bill\nthe military, in the absence of an express statutory prohibition, would\nto amend the Intercoastal Shipping Act, 1933, by deleting section 6\nretain a residual or common law right of the sovereign to have its cargo\nthereof.\ntransported at preferential rates. In support of this position the witness\nThe Intercoastal Shipping Act, 1933, 46 U.S.C. 843-848 (the Act)\ncited two decisions by the Federal Maritime Commission and the 1928\nprovides for the economic regulation of water carriers in the non-\nSupreme Court case of U.S. Shipping Board, Emergency Fleet Cor-\ncontiguous domestic trade by the Federal Maritime Commission\nporation V. Western Union Company. The Merchant Marine Subcom-\n(FMC). Generally, the Act authorizes the FMC to enforce just and\nmittee of your Committee found this argument, as well as the other\nreasonable maximum and minimum rates and trade practices. Section\narguments of the Military Sealift Command, to be self-serving,\n6 of the Act provides, however, that nothing in the Act shall prevent\nwithout merit, and not representative of the position of the\nthe carriage, storage or handling of property free or at reduced rates\nAdministration.\nfor the United States, State or municipal governments, or for chari-\nHowever, in order to make it clear that the intention of H.R. 13561\ntable purposes.\nis to insure that rates charged for the carriage of government and\nThe effect of section 6 of the Act has been that substantial amounts\ncharitable cargo in the domestic offshore commerce of the United\nof Federal government cargoes are carried at lower rates than those\nStates are subject to the same type of economic regulation by the Fed-\napplying to commercial cargoes. It can be surmised that a degree of\neral Maritime Commission as the Commission presently exercises over\nsubsidization of the government rates by the higher commercial rates\ncommercial rates in these trades, an amendment to H.R. 13561 was\nmust necessarily result from this disparate treatment of shippers.\npresented to the Merchant Marine Subcommittee by the Honorable\nFurther, the section 6 exemption removes a significant segment of\nFrank M. Clark. The Clark Amendment to Section 5 of the Inter-\nshipping from regulatory oversight that is intended to protect the\ncoastal Shipping Act, 1933, specifically applies to the carriage, storage\ncarriers as well as shippers. As a result of charging unrealistically\nand handling of government and charitable cargo all of the existing\nlow rates in order to obtain government cargoes, the economic viability\nprovisions of the Intercoastal Shipping Act, 1933. The Amendment\nof the carriers and ultimately the service that is available to all ship-\nwas unanimously adopted by the Merchant Marine Subcommittee.\npers may well be affected.\nH.R. 13561 was unanimously reported by both the Merchant Marine\nThe maintenance of stable rates and services in the trade involved\nSubcommittee and by the Committee on Merchant Marine and\nrequires uniform treatment of all shippers, and under no circumstances\nFisheries.\nshould private shippers be compelled to subsidize the transport of\nCOST OF THE LEGISLATION\ngovernment cargoes. For these reasons, the Department of Commerce\nrecommends enactment of the bill.\nIt is not possible to accurately estimate the cost to the government\nThe Office of Management and Budget has advised us that there\nof H.R. 13561 because such an estimate would depend largely on the\nis no objection to the submission of this report and that enactment\nfuture tonnage requirements of the Department of Defense. In re-\nof H.R. 13561 would be in accord with the program of the President.\nsponse to an inquiry from the Merchant Marine Subcommittee of your\nAn Administration bill, the Transportation Improvement Act, in-\nCommittee, the Military Sealift Command of the Department of the\ntroduced as S. 3237 and H.R. 12891 has a similar provision relating to\nNavy testified that the transportation of its cargo in the domestic\nsection 22 of the ICC Act which is similar to section 6 of the Inter-\noffshore commerce of the United States at commercial rate levels\ncoastal Act.\nwould result in an increased cost of approximately $5 million annually.\nSincerely,\nThe Federal Maritime Commission testified that H.R. 13561 would\nBERNARD V. PARRETTE,\nentail no additional costs to that agency.\nDeputy General Counsel.\nH.R. 1348\nH.R. 1348\n6\n7\nDEPARTMENT OF THE NAVY,\nOFFICE OF LEGISLATIVE AFFAIRS,\ncontracts with various ocean carriers offering service in the domestic\nWashington, D.C., August 9, 1974.\noffshore trades. The more recent contracts have been negotiated after\nHon. LEONOR K. SULLIVAN,\nanalysis of cost data furnished by the carriers and audited by the De-\nChairman, Committee on Merchant Marine and Fisheries, House of\nfense Contract Audit Agency. The resulting contracts recover all ap-\nRepresentatives, Washington, D.C.\nplicable costs plus a profit. Since the Military Sealift Command con-\nDEAR MADAM CHAIRMAN: Your request for comment on H.R. 13561,\ntracts provide for only three \"class\" rates (vehicles, refrigerated cargo,\na bill \"To amend the Intercoastal Shipping Act, 1933,\" has been\nand cargo not otherwise specified) and commercial tariffs contained\nassigned to this Department by the Secretary of Defense for the\nhundreds of specific commodity rates, a comparison with commercial\npreparation of a report expressing the views of the Department of\nrates is difficult. However, since the negotiated military rates are prof-\nDefense.\nitable, the Government should not be required to pay the commercial\nThe bill would amend the Intercoastal Shipping Act, 1933 (46\ntariff rates, an apparent objective of the bill.\nU.S.C. § 843 et seq.) by deleting section 6 thereof (46 U.S.C. § 846),\nIn view of the above, the Department of the Navy, on behalf of the\nwhich provides that common carriers by water in the domestic off-\nDepartment of Defense, is opposed to the enactment of H.R. 13561.\nshore trades may lawfully transport cargo for the U.S. Government,\nThis report has been coordinated within the Department of Defense\ninter alia, at free or reduced rates. (Section 6 of the Intercoastal\nin accordance with procedures prescribed by the Secretary of Defense.\nShipping Act is virtually identical in purpose to section 22 of the\nWhile the Office of Management and Budget has no objection to the\nInterstate Commerce Act (49 U.S.C. § 22) applicable to transportation\npresentation of this report, it has advised us that enactment of H.R.\nby surface common carriers regulated by that Act. Bills designed to\n13561 would be in accord with the program of the President. An Ad-\nrepeal section 22 of the Interstate Commerce Act have also been intro-\nministration bill, the Transportation Improvement Act, introduced as\nduced (H.R. 12891 and S. 3237).\nH.R. 12891, has a similar provision relating to section 22 of the I.C.C.\nA fundamental precept in U.S. Government regulation of both land\nAct, which is similar to section 6 of the Intercoastal Shipping Act.\nand water common carriers is that all shippers should be treated alike\nFor the Secretary of the Navy.\nby the carriers SO that no shipper gains a competitive advantage over\nSincerely yours,\nanother through preferential or discriminatory arrangements for\nE. H. WILLETT,\ntransportation charges. Such practices are forbidden. Since the Gov-\nCaptain, U.S. Navy,\nernment in transporting military cargo for defense purposes is not\nDeputy Chief.\ncompeting with any shipper, the reason for prohibitions against\npreference and discrimination does not exist. Therefore, the Inter-\nCHANGES IN EXISTING LAW\nstate Commerce Act and the Intercoastal Shipping Act, 1933, specifi-\ncally provide that a carrier who transports Government cargo at free\nIn compliance with clause 3 of rule XIII of the Rules of the House\nor reduced rates will not be found guilty of engaging in discrimina-\nof Representatives, as amended, changes in existing law made by the\ntory or preferential practices which would be condemned if accorded\nbill as reported are shown as follows (existing law proposed to be\none commercial shipper, but not another.\nomitted is enclosed in black brackets, new matter is printed in italic,\nPursuant to 46 U.S.C. § 883, only U.S.-flag vessels may engage in\nexisting law in which no change is proposed is shown in roman)\nocean transportation in the domestic offshore trade (i.e., between the\n48 contiguous states and Alaska, Hawaii, Puerto Rico and other U.S.\nSECTIONS 5 AND 6 OF THE INTERCOASTAL SHIPPING ACT, 1933, AS AMENDED\noverseas territories and possessions). Since the Government has pro-\ntected U.S.-flag carriers serving these trades from foreign-flag com-\n(47 Stat. 1427, 46 U.S.C. 845b, 846)\npetition, it is not unreasonable to expect that the protected U.S.-flag\ncarriers may lawfully accord the Government reduced rates under\nSEC. 5. The provisions of this Act are extended and shall apply to\nappropriate circumstances.\nevery common carrier by water in interstate commerce, as defined in\nThe Government's entitlement to transportation services at reduced\nsection 1 of the Shipping Act, 1916, and shall apply to the carriage,\nrates has been supported on a broad basis. Nashville, Chattanooga &\nstorage or handling of property for the United States, State or mu-\nSt. Louis Railway et al. v. Tennessee, 262 U.S. 318 (1923) ; In the\nnicipal Governments, or for charitable purposes.\nMatter of the Carriage of Military Cargo, 10 FMC 69, 81 (note 19)\n[SEC. 6. That nothing in this Act shall prevent the carriage, storage,\n(1966) ; Assembly Time-Port of San Diego, 13 FMC 1, 6 (note 7)\nor handling of property free or at reduced rates, for the United States,\n(1969) ; Emergency Fleet Corporation, U.S. Shipping Board V. West-\nState, or municipal Governments, or for charitable purposes.\nern Union Telegraph Company, 275 U.S. 415, 425 (1928).\nIn addition, the bill is not needed to ensure that military rates do\nnot burden commercial rates, which appears to be a purpose of the bill.\nAt the present time the Military Sealift Command has entered into\nH.R. 1348\nH.R. 1348\nCORRECTED SHEET\nH. R. 13561\nNinety-third Congress of the United States of America\nAT THE SECOND SESSION\nBegun and held at the City of Washington on Monday, the twenty-first day of January,\none thousand nine hundred and seventy-four\nAn Act\nTo amend the Intercoastal Shipping Act, 1933.\nBe it enacted by the Senate and House of Representatives of the\nUnited States of America in Congress assembled, That section 5 of the\nIntercoastal Shipping Act, 1933, as amended (46 U.S.C. 845b), is\namended by changing the period to a comma at the end and adding\nthe words: \"and shall apply to the carriage, storage or handling of\nproperty for the United States, State or municipal governments, or for\ncharitable purposes.\".\nSEC. 2. Section 6 of the Intercoastal Shipping Act, 1933, as amended\n(46 U.S.C. 846), is deleted.\nSpeaker of the House of Representatives.\nVice President of the United States and\nPresident of the Senate.\nHH\nOctober 17, 1974\nDear Mr. Director:\nThe following bills were received at the White House on\nOctober 17th:\nS.J. Res. 236\nS. 2840\nH.R. 7768\nH.R. 14225\nS.J. Res. 250\nS. 3007\nH.R. 7780\nH.R. 14597\nS.J. Res. 251\nS. 3234\nH.R. 11221\nH.R. 15148\nS. 355\nS. 3473\nH.R. 11251\nH.R. 15427\nS. 605\nS. 3698\nH.R. 11452\nH.R. 15540\nS. 628\nS. 3792\nH.R. 11830!\nH.R. 15643\nS. 1411\nS. 3838\nH.R. 12035\nH.R. 16857\nS. 1412\nS. 3979\nH.R. 12281\nH.R. 17027\nS. 1769\nH.R. 6624\nH.R. 13561\nS. 2348\nH.R. 6642\nH.R. 13631\nPlease let the President have reports and recommendations\nas to the approval of these bills as soon as possible.\nSincerely,\nRobert D. Linder\nChief Executive Clerk\nThe Honorable Roy L. Ash\nDirector\nOffice of Management and Budget\nWashington, D. C."
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