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1975/01/04 HR13296 Maritime Authorization (vetoed)
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1975/01/04 HR13296 Maritime Authorization (vetoed)
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The original documents are located in Box 22, folder "1975/01/04 HR13296 Maritime
Authorization (vetoed)" of the White House Records Office: Legislation Case 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 R. 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States of America his copyrights in all of his unpublished writings in National Archives collections.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.
Exact duplicates within this folder were not digitized.
the White House Records Office Legislation Case Files at the Gerald R. Ford Presidential Library
MESSUED OF VETO 1/4/75
ACTION
THE WHITE HOUSE
WASHINGTON
Last Day: January 4
January 3, 1974
MEMORANDUM FOR THE PRESIDENT
FROM:
KEN COLE
SUBJECT:
H.R. 13296 - Maritime Authorization
H.R. 13296 authorizes appropriations for maritime programs at Commerce
for FY 75. It provides funding authority for programs requested by your
Administration, but also includes an objectionable provision.
This provision, retroactive to 1972, would establish an indemnity program
for U.S. fishermen whose equipment is damaged by foreign vessels. If
enacted, the Secretary of Commerce would be required to make an interest
free loan to cover the property and produce value lost as a result of foreign
vessels operating in the area of the U.S. Continental Shelf. If proven that
the damage was caused solely by a foreign ship, the loan repayment would
be canceled and the U.S. would attempt to recover claims from the govern-
ments of the foreign nationals involved.
Bill Baroody talked to Paul Hall's people on this matter. They have no
problem with the fishermen's indemnity provision. They feel, however,
that if the bill is pocket vetoed for this provision, it should be clearly
reflected in the memorandum of disapproval and that the rest of the bill
be resubmitted to Congress.
Additional information is provided in the enrolled bill report (Tab A).
ARGUMENT FOR POCKET VETO
The indemnity for fishermen presents several problems. It is contrary to
existing claims procedures and sets a precedent for the relief of fishermen
from the actions of foreign nationals. Currently, relief is only extended to
seizures by foreign governments through the Fishermen's Protective Act.
This provision would be a problem to administer because of the difficulty
of establishing any factual basis of responsibility for damages and would
thus be prey to fraudulent claims. Finally, no analysis has been made to
determine whether or not this particular form of injury has had an adverse
impact on the U.S. fishing industry. If the bill were vetoed, operation of
FORD & LIBRARY 938870
-2-
the Maritime Administration programs would be provided under the con-
tinuing resolution, expiring on February 28, 1975.
ARGUMENT FOR SIGNING
Commerce recommends approval because it does not feel the indemnity pro-
gram is serious enough to warrant a veto and points out that the Fisheries
Loan Funds, which would support this provision, have been impounded
until the end of FY 75.
STAFF AND AGENCY POSITIONS
The following recommend signature:
Department of Commerce
The following recommend disapproval:
Areeda
Ash
Cole
Friedersdorf
Department of Treasury
The following have no objection:
Department of Transportation
Department of State
DECISION
Approve
Disapprove
MR7.
(Sign H.R. 13926 at
(Sign Memorandum of
Tab C.)
Disapproval at Tab B.)
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
DEC 31 1974
MEMORANDUM FOR THE PRESIDENT
Subject: Enrolled Bill H.R. 13296 - Maritime Authorization
Sponsor - Rep. Sullivan (D) Missouri and 16 others
Last Day for Action
January 4, 1975 - Saturday
Purpose
To authorize appropriations for maritime programs of the Depart-
ment of Commerce for the fiscal year 1975; require establishment
of an office in the Great Lakes Region; and require the creation
of an indemnity program for U.S. fishermen.
Agency Recommendations
Office of Management and Budget
Disapproval (Memorandum of
disapproval attached)
Department of the Treasury
Disapproval
Department of Transportation
No objection
Department of State
No objection
Department of Commerce
Approval
Discussion
The enrolled bill would authorize annual appropriations for
certain programs of the Maritime Administration of the Department
of Commerce as requested by the Administration. The authorized
funds would provide for the following:
-- construction or reconstruction of vessels and
construction differential subsidies and certain
costs of certain national defense features --
$275 million
2
-- operating differential subsidies -- $242.8 million
-- research and development programs to advance
ship development and construction, ship opera-
tions systems, and port and intermodal trans-
portation systems -- $27.9 million
-- maintenance expenses for the National Defense
Reserve Fleet -- $3.742 million
-- operating expenses for the Merchant Marine
Academy -- $10.518 million and
-- financial assistance to State maritime academies -
$2.973 million.
However, the bill includes two additional provisions not requested.
One would require the establishment of a regional Maritime Admin-
istration market development office for the Great Lakes region in
order to help assure consideration of the transportation problems
of the Great Lakes. Similar offices are now staffed in the Atlan-
tic, Pacific, and Gulf port areas. The establishment of this
fourth office, while not supported by the Administration, would
be consistent with the legislative intent of current maritime
statutes.
A second would establish an indemnity program for U.S. fishermen
whose equipment is damaged by foreign vessels. Specifically, the
bill would require the Secretary of Commerce to compensate owners
and operators whose fishing gear has been damaged by foreign fish-
ing vessels operating in waters above the Continental Shelf.
To implement this requirement, the bill would:
-- require the Secretary within 30 days after an
application by a fisherman, but after a deter-
mination that there was reason to believe a
loss occurred, to make an interest free loan to
cover the property damaged and the market value
of fish spoiled as a result of gear damage
-- require the Secretary to investigate each loan
application within 180 days and:
- cancel loan repayment if the damage was caused
solely by a foreign vessel, and
- require repayment of the loan with interest if
the damage was not caused by a foreign vessel
or was caused by the negligent or intentional
action of the fisherman
3
-- require the Secretaries of State and Commerce to
attempt to recover claims assigned by fishermen
from the foreign governments whose ships caused
the damage, and
-- make the program retroactive to January 1, 1972
through the enactment date if claims have been
previously filed, and effective prospectively
through March 15, 1976, when a Law of the Sea
Treaty is expected to have been ratified.
The program to compensate fishermen poses three serious problems.
First it would establish a precedent contrary to the current
international policy against national assumption of responsibility
for losses suffered by citizens because of actions by foreign
governments. There are international claims procedures for such
redress, and treaties to help solve disputes. This bill would be
a disincentive to continued efforts to make these procedures work.
The precedent might also lead to pressure for similar legislation
for other industries for losses due to actions of foreign nations.
Second, the bill would pose serious problems of administration.
Weather, actions of other U.S. vessels, or actions by the in-
jured vessel itself could result in illegal claims. Since all
eyewitnesses would likely be interested parties, establishing
the factual basis for the damage would be difficult or impossible.
Furthermore, since the bill provides no basis for any review of
such factors as ability to repay, no informed judgment of the
borrower's ability to repay could be made before loans are made.
Costs of implementing the bill are impossible to project, but
current estimates of claims already filed approximate $2 million.
Once the bill became law, there would be an incentive to file
many more claims. If claims of damage to U.S. flag ships by
foreign vessels cannot be validated, the program would essentially
be a grant program with few effective restraints. Furthermore,
Commerce states in its views letter on the enrolled bill that:
"
$4 million in Fisheries Loan Funds which are to
support the program have been impounded until the
end of FY 1975, under the Budget and Impoundment
Control Act of 1974. Further, funds authorized
FORD
under this section would not be available for such
compensation after March 15, 1976."
4
Third, when this amendment was added to the bill during Senate
floor debate, no attempt was made to validate the seriousness
of the problem to the U.S. fishing industry or the impact on
our national interests. In fact, no evidence has been presented
that the gear loss problem is substantially and adversely
affecting vital U.S. interests.
If this bill were vetoed, funds for the operation of the Maritime
Administration programs would continue to be provided under the
continuing resolution which now expires February 28, 1975.
We have attached for your consideration a draft memorandum of
disapproval.
the - a
/
Director
Enclosures
DEPARTMENT OF COMMERCE
THE UNDER SECRETARY OF COMMERCE
Washington, D.C. 20230
UNITED STATES OF AMERICA
DEC 27 1974
Honorable Roy L. Ash
Director, Office of Management
and Budget
Washington, D. C. 20503
Attention: Assistant Director for Legislative Reference
Dear Mr. Ash:
This is in reply to your request for the views of this Department
concerning H.R. 13296, an enrolled enactment
"To authorize appropriations for the fiscal year 1975
for maritime programs of the Department of Com-
merce, and for other purposes. 11
Section 1 of H.R. 13296 authorizes the appropriation of $562, 933, 000
for fiscal year 1975 for maritime programs of the Department of
Commerce.
Section 2 authorizes additional supplemental appropriations for fiscal
year 1975 for the activities specified in section 1, to the extent neces-
sary for increases in employee benefits authorized by law.
Section 3 amends the Merchant Marine Act, 1936 to provide that at
least one regional office of the Maritime Administration be maintained
for each of the four major seacoasts of the United States.
Section 4 amends the Fish and Wildlife Act of 1956 by authorizing the
Secretary of Commerce to compensate U.S. owners and operators whose
fishing vessels or gear have been destroyed or damaged by the actions
of foreign fishing vessels operating in waters superjacent to the Conti-
nental Shelf of the United States. However, it should be noted that the
$4 million in Fisheries Loan Funds which are to support the program
have been impounded until the end of FY 1975, under the Budget and
Impoundment Control Act of 1974. Further, funds authorized under this
section would not be available for such compensation after March 15,
1976.
FORD
ALD
2.
The amount of funds required to implement section 3 has not yet been
determined and will depend on the size and nature of a separate Great
Lakes regional office. Also, we are unable at this time to estimate
the extent of any additional appropriations required by section 4. This
is dependent upon the amount of claims filed, the extent of investigation
necessary and similar factors.
This Department recommends approval by the President of H.R. 13296.
Sincerely,
Johnk.Tabor
FORD i LIBRARY 07V839
DEPARTMENT
OF
THE
TREASURY
THE
THE UNDER SECRETARY OF THE TREASURY
THE
WASHINGTON, D.C. 20220
1789
DEC 2% 1974
Director, Office of Management and Budget
Executive Office of the President
Washington, D. C. 20503
Attention: Assistant Director for
Legislative Reference
Sir:
Reference is made to your request for the views of this
Department on the enrolled enactment of H.R. 13296, "To
authorize appropriations for the fiscal year 1975 for
maritime programs of the Department of Commerce, and for
other purposes."
Section 4 of the enrolled enactment, which was added
on the Senate floor, would establish a new loan program
under the Fish and Wildlife Act of 1956 which would make
eligible for loans owners and operators whose fishing
vessels or gear have been destroyed or damaged by the
actions of foreign fishing vessels operating in waters
superjacent to the Continental Shelf of the United States.
If the Secretary of Commerce determines that the damage
was caused solely by a vessel of a foreign nation, he shall
cancel repayment of the loan and refund any principal paid
thereon. If he determines that the damage or destruction
was caused solely by the negligence or intentional actions
of the owner or operator, he shall require the immediate
repayment of the loan plus interest.
In a February 13, 1974, report to your Office, the
Department concurred in clearance of a proposed Commerce
Department report opposing similar legislation to provide
compensation to U. S. fishing vessel owners for damages
incurred as the result of actions by foreign vessels and
the Department would concur now in a recommendation that
the enrolled enactment not be approved by the President.
Sincerely yours
Edward C. Schmults
OF
DEPARTMENT
OFFICE OF THE SECRETARY OF TRANSPORTATION
WASHINGTON, D.C. 20590
UNITED STATES OF AMERICA
DEC 27 1974
Honorable Roy L. Ash
Director
Office of Management and Budget
Washington, D.C. 20503
Dear Mr. Ash:
You have asked for our views on H.R. 13296, an enrolled bill
"To authorize appropriations for the fiscal
year 1975 for maritime programs of the
Department of Commerce, and for other purposes."
Sections 3 and 4 of the enrolled bill are of interest to this Department.
Section 3 of the enrolled bill amends Section 809 of the Merchant
Marine Act of 1936 by establishing within the Maritime Administration
of the Department of Commerce a regional office for each of the
United States port ranges -- Atlantic, Gulf, Great Lakes, and Pacific.
This provision would, in effect, require a new Great Lakes Regional
Office, since regional offices are already in existence for the other
coastal ranges. We endorse efforts to attract American flag service
into the Great Lakes, and do not have any objection to this provision.
Section 4 of the enrolled bill adds a new subsection (f) to Section 4
of the Fish and Wildlife Act of 1956. The Secretary of Commerce would
be authorized to use funds to compensate owners and operators whose
fishing vessels or gear have been destroyed or damaged by the actions
of foreign fishing vessels operating in waters lying over the
Continental Shelf of the United States as defined in the Convention on
the Continental Shelf. While we defer to the Department of Commerce
with respect to this matter, we have the following technical comments
to offer.
New subsection (f) (1) refers to "actions of foreign fishing vessels."
New subsections (f) (2) and (f) (3), however, refer to "actions of a
vessel (including crew) of a foreign nation." This discrepancy may
result in interpretative problems as to the scope of these provisions.
FORD
2
Additionally, subsection (f) (2) contains the phrase "any vessel docu-
mented or certificated under the laws of the United States as a
commercial fishing vessel." The word "certificated" has no perceptible
meaning in regard to the documentation laws for vessels engaged in
either the merchant marine or the American fisheries, and the term
"commercial fishing vessel" is undefined in those laws. While we note
these technical deficiencies, we do not have any objection to the
President signing the enrolled bill.
Sincerely,
Rad
Rodney E. Eyster
General Counsel
DEPARTMENT OF STATE
Washington, D.C. 20520
December 27, 1974
Honorable Roy L. Ash
Director, Office of
Management and Budget
Dear Mr. Ash:
Thank you for your communication of December 26
requesting the views and recommendations of the
Department of State on the Enrolled Bill H.R. 13296,
"To authorize appropriations for the fiscal year
1975 for maritime programs of the Department of
Commerce, and for other purposes."
The Department has no objection to the proposed
legislation from the standpoint of foreign policy
and would defer to the views of other government
agencies more directly concerned.
Please continue to call on me whenever you believe
I might be of assistance.
Cordially,
Lemiood Holton
Linwood Holton
Assistant Secretary
for Congressional Relations
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
DEC 31 1974
MEMORANDUM FOR THE PRESIDENT
Subject: Enrolled Bill H.R. 13296 - Maritime Authorization
Sponsor - Rep. Sullivan (D) Missouri and 16 others
Last Day for Action
January 4, 1975 - Saturday
Purpose
To authorize appropriations for maritime programs of the Depart-
ment of Commerce for the fiscal year 1975; require establishment
of an office in the Great Lakes Region; and require the creation
of an indemnity program for U.S. fishermen.
Agency Recommendations
Office of Management and Budget
Disapproval (Memorandum of
disapproval attached)
Department of the Treasury
Disapproval
Department of Transportation
No objection
Department of State
No objection
Department of Commerce
Approval
Discussion
The enrolled bill would authorize annual appropriations for
certain programs of the Maritime Administration of the Department
of Commerce as requested by the Administration. The authorized
funds would provide for the following:
-- construction or reconstruction of vessels and
construction differential subsidies and certain
FORD
costs of certain national defense features ---
$275 million
MEMORANDUM OF DISAPPROVAL
ge 1-7-75
I am withholding my approval from H.R. 13296, a bill to authorize
appropriations for the Maritime Administration.
This bill is the annual appropriations authorization bill for certain
activities of the Maritime Administration in the Department of Commerce. I
would be to approve were limited to those authorizations.
pleand (the thif measure the bill if
amendment
Unfortunately, the Congress added an unacceptable rider to the
bill which would require the Federal Government to reimburse U.S. flag
fishing vessel owners for damage done to their equipment by acts of foreign
flag ships flagships.
amendment
The rider would require the Secretary of Commerce to provide
The value of produce
interest free loans to fishermen to cover the property and produce value lost
as a result of damage caused by foreign vessels operating in the area of the
an ensung
U.S. Continental Shelf. If the following investigation proved the loss was
caused solely by a foreign ship, the loan repayment would be cancelled and
the United States would attempt to recover claims from the governments of the
to
foreign national / involved. The program would be retroactive until January 1,
1972, with respectio claims already filed.
for
FORD
LIBRARY
817
This indemnity program would pose serious problems of administration
RARY
because it would be difficult to establish any factual basis of responsibility for
any
the damage caused and could be a vehicle for fraudulent claims. Futhermore,
advance
of the recipient
since the bill provides no basis the for any review prior to the initial loan of
Department
financial ability to repay a loan, Commerce could make no informed judgement
A
-2-
of a borrower's ability to repay before a loan was actually made and could find
arthe sometime,
itself in the position of holding a group of "bad debts". Since claims for damage
and the result
would be difficult to validate, the program would essentially be a grant program
with few effective restraints.
Moreover, this program sets a precedent for the Federal relief of private
parties from the actions of foreign nationals. Currently, relief is only extended
Stev
to fishermen whose vessels are the victims of actions by foreign governments
2
beyond recognized territorial limits. International procedures now exist
through which claims against foreign nationals can be asserted and adjudicated
and these should * be used in preference to a Federal indemnity program.
pass once again
I urge the Congress to repass the appropriations authorizations
provisions of the bill early in the next session. Meanwhile, the programs
covered by these authorizations and funded by appropriations already enacted
can be continued under the continuing resolution which runs through February
28, 1975.
FORD is LIBRARY
THE WHITE HOUSE
THE WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.: 938
Date: January 1, 1975
Time:
11:00 a.m.
FOR ACTION: Geoff Shepard
CC (for information): Warren Hendriks
Phil Areeda
Jerry Jones
Max Friedersdorf
Jack Marsh
Paul Theis
FROM THE STAFF SECRETARY
DUE: Date: Thursday, January 2
Time: noon
SUBJECT:
EnrolledBill H.R. 13296 - Maritime Authorization
ACTION REQUESTED:
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Reply
For Your Comments
Draft Remarks
REMARKS:
Please return to Judy Johnston, Ground Floor West Wing
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
Warren K. Hendriks
delay in submitting the required material, please
For the President
telephone the Staff Secretary immediately.
THE WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.: 938
Date: January 1, 1975
Time: 11:00 a.m.
FOR ACTION: Geoff Shepard
CC (for information): Warren Hendriks
Phil Areeda vets
Jerry Jones
Max Friedersdorf veto
Jack Marsh
Paul Theis
FROM THE STAFF SECRETARY
DUE: Date: Tuesday, January 2
Time: noon
SUBJECT:
Enrolled Bi-1 H.R. 13296 - Maritime Authorization
ACTION REQUESTED:
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Reply
For Your Comments
Draft Remarks
REMARKS:
Please return to Judy Johnston, Ground Floor West Wing
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
K. R. COLE, JR.
telephone the Staff Secretary immediately.
For the President
THE WHITE HOUSE
WASHINGTON
1/2/75
MEMORANDUM FOR:
WARREN HENDRIKS
VL
FROM:
MAX L. FRIEDERSDORF
SUBJECT:
Action Memorandum - Log No. 938
Enrolled Bill H.R. 13296 - Maritime
Authorization
The Office of Legislative Affairs concurs with the Agencies
that the enrolled bill should be VETOED.
Attachments
THE WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.: 938
Date: January 1, 1975
Time:
11:00 a.m.
FOR ACTION: Geoff Shepard
CC (for information): Warren Hendriks
Phil Areeda
Jerry Jones
Max Friedersdorf
Jack Marsh
Paul Theis
FROM THE STAFF SECRETARY
DUE: Date: Thursday, January 2
Time: noon
SUBJECT:
Enrolled3ill H.R. 13296 - Maritime Authorization
ACTION REQUESTED:
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Reply
For Your Comments
Draft Remarks
REMARKS:
Please return to Judy Johnston, Ground Floor West Wing
Agree with OMB: veto. that an But agring
should not mply mooke myched
fishermon message can realestically personally existing
international procedurs."
P. Acced
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
Warren K. Hendriks
delay in submitting the required material, please
For the President
telephone the Staff Secretary immediately.
MEMORANDUM OF DISAPPROVAL
I am withholding my approval from H.R. 13296, a bill
to authorize appropriations for the Maritime Administration.
This is the annual appropriations authorization bill
for certain activities of the Maritime Administration in
the Department of Commerce. I would be pleased to approve
the measure if it were limited to those authorizations.
Unfortunately, the Congress added an unacceptable
amendment which would require the Federal Government to
reimburse U.S. flag fishing vessel owners for damage to
their equipment by foreign flag ships.
The amendment would require the Secretary of Commerce
to provide interest free loans to fishermen to cover the
property and the value of produce lost as a result of
damage caused by foreign vessels operating in the area
of the U.S. Continental Shelf. If an ensuing investigation
proved the loss was caused solely by a foreign ship, the
loan repayment would be cancelled and the United States
would attempt to recover claims from the government
of the foreign national involved. The program would be
retroactive to January 1, 1972, for claims already filed.
This idemnity program would pose serious problems
of administration because it would be difficult to
establish responsibility for any damage caused. Furthermore,
since the bill provides no basis for advance review of
the recipient's financial ability to repay a loan, the
Commerce Department could find itself in the position of
holding a group of "bad debts". At the same time, claims
for damage would be difficult to validate and the result
would essentially be a grant program with few effective
restraints.
2
Moreover, this program sets a precedent for the
Federal relief of private parties from the actions of
foreign nationals. Currently, relief is extended only
to fishermen whose vessels are the victims of actions
by foreign governments beyond recognized territorial
limits. International procedures now exist through
which claims against foreign nationals can be asserted
and adjudicated and these should be used in preference
to a Federal indemnity program.
I urge the Congress to pass once again the
appropriations authorizations provisions of the bill
early in the next session. Meanwhile, the programs
covered by these authorizations and funded by appro-
priations already enacted can be continued under the
continuing resolution which runs through February 28, 1975.
Herald R. Ford
THE WHITE HOUSE,
January 4, 1975.
Phil Areeda:
May I have your approval of the
attached revised memorandum of
disapproval. Thank you.
Judy Johnston
WHITE
ACTION MEMORANDUM
WASHINGTON
LOG NO.: 938
Date: January 1, 1975
Time: 11:00 a.m.
FOR ACTION: Geoff Shepard
cc (for information): Warren Hendriks
Phil Areeda
Jerry Jones
Max Friedersdorf
Jack Marsh
Paul Theis
FROM THE STAFF SECRETARY
DUE: Date: Thursday, January 2
\
Time: noon
SUBJECT:
Enrolled3ill H.R. 13296 - Maritime Authorization
ACTION REQUESTED:
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Reply
For Your Comments
Draft Remarks
REMARKS:
Please return to Judy Johnston, Ground Floor West Wing
I point out, as I did before, that the "international procedures"
mentioned on page 2 are not realistically available to the small
fisherman.
On page I note that the proper term is 'foreign-flag ships", not
"foreign flagships.
Otherwise the message is OK.
P Aced
STATES FORD LIBRARY
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
IE you have any questions or if you anticipate a
Warren K. Hendriks
delay in submitting the required material, please
For the Fresident
telephone the Staff Secretary immediately.
Vern Loen:
May I have your approval of the revised
memorandum of disapproval attached asap.
Thanks.
Judy Johnston
OKL
ACTION MEMORANDUM
WASHINGTON
LOG NO.: 938
Date: January 1, 1975
Time: 11:00 a.m.
FOR ACTION: Geoff Shepard
CC (for information): Warren Hendriks
Phil Areeda
Jerry Jones
Max Friedersdorf
Jack Marsh
Paul Theis
FROM THE STAFF SECRETARY
DUE: Date: Thursday, January 2
1
Time: noon
SUBJECT:
EnrolledBill H.R. 13296 - Maritime Authorization
ACTION REQUESTED:
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Reply
For Your Comments
Draft Remarks
14
REMARKS:
Please return to Judy Johnston, Ground Floor West Wing
OK-POR
OK VVV
LIBRARY GERALD
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
Warren K. Hendriks
delay in submitting the required material, please
For the President
telephone the Staff Secretary immediately.
93D CONGRESS
HOUSE OF REPRESENTATIVES
REPORT
2d Session
No. 93-1074
MARITIME AUTHORIZATION-FISCAL YEAR 1975
MAY 31, 1974.-Committed to the Committee of the Whole House on the State
of the Union and ordered to be printed
Mrs. SULLIVAN, from the Committee on Merchant Marine and
Fisheries, submitted the following
REPORT
[To accompany H.R. 13296]
The Committee on Merchant Marine and Fisheries, to whom was
referred the bill (H.R. 13296) to authorize appropriations for the
fiscal year 1975 for certain maritime programs of the Department of
Commerce, having considered the same, report favorably thereon
without amendment and recommend that the bill do pass.
PURPOSE OF THE BILL
The purpose of this bill is to authorize certain appropriations for
programs of the Martime Administration within the Department of
Commerce for fiscal year 1975.
The appropriation authorization is in accordance with Public Law
90-81, which is now incorporated in section 209 of the Merchant Ma-
rine Act of 1936. This law requires that after December 31, 1967, only
such sums as the Congress may specifically authorize by law be ap-
propriated for the Maritime Administration of the Department of
Commerce for the following purposes:
1. Acquisition, construction, or reconstruction of vessels.
2. Construction-differential subsidy and cost of national defense
features incident to the construction, reconstruction, or reconditioning
of ships.
3. Payment of obligations incurred for operating-differential
subsidy.
4. Expenses necessary for research and development activities (in-
cluding reimbursement of the Vessel Operations Revolving Fund for
losses resulting from expenses of experimental ship operations).
5. Reserve fleet expenses.
6. Maritime Training at the Merchant Marine Academy at Kings
Point, N.Y.
99-006
2
3
7. Financial assistance to State Marine Schools.
So-called construction subsidy is generally based on the difference
8. The Vessel Operations Revolving Fund.
between United States and foreign shipbuilding costs, and paid to
U.S. shipyards, SO that our vessels can compete in international trade.
BACKGROUND OF THE LEGISLATION
Prior to the Merchant Marine Act of 1970, such subsidy was gen-
erally limited to liner vessels: That Act expanded this aid to generally
By Executive Communication No. 1911, dated February 19, 1974,
include all types of United States-flag shipping engaged in foreign
the Secretary of Commerce recommended legislation pursuant to sec-
trade, and also sets forth guidelines for the gradual reduction of the
tion 209 of the Merchant Marine Act of 1936 to authorize appropri-
construction subsidy level to 35 percent in fiscal year 1976, and there-
ations without fiscal year limitation for certain maritime programs
after. In fiscal year 1975, the construction subsidy level will be reduced
of the Department of Commerce for fiscal year 1975. Accordingly,
from 39% to 37%.
H.R. 13296 was introduced on March 6, 1974, covering six categories
Subsidized shipbuilding orders exceeding $2.5 billion have been
of maritime programs of the Department of Commerce administered
generated by the 1970 Act. These comprise 52 new ships of 4.7 million
by the Maritime Administration.
deadweight tons and the conversion of 19 existing ships into con-
H.R. 13296 would authorize appropriations in the sum of $562,-
tainer-ships. As of March 1, 1974, 90 merchant ships valued at $3.6
900,000, in the following categories and in the amounts indicated:
billion and aggregating nearly 6.2 million deadweight tons were under
struction-differential subsidy and cost of national defense features
(a) Acquisition, construction, or reconstruction of vessels and con-
construction or on order. Significantly, these new orders have raised
the American Shipbuilding Industry to a leading position in the con-
incident to the construction, reconstruction, or reconditioning of ships,
struction of liquefied natural gas or LNG ships. The ships being built
$275,000,000. (b) Payment of obligations incurred for ship operating-differential
are not only of advanced and highly productive designs, but also com-
prise a diverse mix of types that will provide the United States with
subsidies; $242,800,000.
a more competitive fleet in a variety of trades. Thirteen of the 52 ships
(c) Expenses necessary for research and development activities,
ordered under the 1970 Act are lighter-abroad-ship or LASH vessels
$27,900,000. (d) Reserve Fleet expenses, $3,742,000.
and roll-on/roll-off ships. These ships will further enhance our leader-
ship in intermodel shipping. The remaining 39 ships are bulk carriers.
(e) Maritime training at the Merchant Marine Academy at Kings
This progress under the Merchant Marine Act of 1970, has been
Point, New York, $10,518,000.
made at the same time that government subsidy rates have been de-
(f) Financial assistance to State Marine Schools, $2,973,000.
clining. Subsidy rate guidelines are scheduled to decline by 2 per cent
H.R. 13296 also contains a section 2 that provides that "In addition
a year from a maximum of 45% in 1971 until a 35% maximum rate
to the amounts authorized by section 1 of this Act, there are authorized
is reached in 1976. These guideline rates are being met and in some
to be appropriated for fiscal year 1975 such additional supplemental
cases the subsidy awarded is significantly below the guideline rate.
amounts for the activities for which appropriations are authorized
A significant factor in the reduction of subsidy rates is series produc-
under section 1 of this Act as may be necessary for increases in salary,
tion. By building a large number of similar ships, the economies
pay, retirement, or other employee benefits authorized by law."
inherent in quantity procurement, a stable work force and job famil-
A statement of the purposes and provisions of H.R. 13296, is set
iarity are being realized. Additionally, continued government support
forth hereafter as an attachment to the letter of February 15, 1974,
has encouraged shipyard modernization and expansion. The shipbuild-
from the Honorable Frederick B. Dent, Secretary of Commerce, en-
ing industry has demonstrated its commitment by investment or firm
closing a draft bill "To authorize appropriations for the fiscal year
plans for investment of over $500 million.
1975 for certain maritime programs of the Department of Commerce."
The fiscal year 1975 request of $275 million is the same as that
authorized for fiscal year 1974. Assistant Secretary of Commerce for
HEARINGS ON H.R. 13296
Maritime Affairs Blackwell testified that these funds would sustain
an adequate and orderly shipbuilding program. The Maritime Admin-
H.R. 13296, the authorization bill for fiscal year 1975, includes re-
istration plans to execute contracts for 9 ships in 1975. Five of these
quirements for the fifth year of expanded activities under the new
ships, and seven ships resulting from 1974 contracts will be funded in
Maritime Program provided by the Merchant Marine Act of 1970
1975. The remaining four ships awarded in 1975 will be funded
(P.L. 91-169). The Merchant Marine Subcommittee of your Com-
in 1976.
mittee held hearings on H.R. 13296 on April 23, 1974. Careful inquiry
Your Committee was informed that the ships currently being built
was made as to the need for each element of the authorization request.
with the aid of construction differential subsidy are larger and more
SEC. 1 (a) Acquisition, construction, or reconstruction of vessels
costly than those envisioned when the Merchant Marine Act of 1970
and construction-differential subsidy and cost of national defense
was passed. Even though only 12 ships will be funded in 1975, their
features incident to the construction, reconstruction, or reconditioning
productive capacity exceeds the capacity goals established by the 1970
of ships, $275,000,000.
Act.
4
5
The Assistant Secretary further testified that the 1975 appropria-
tion request will allow series production of ships to continue at exist-
ing yards. The economics realized through series orders are essential
Ltd., now a part of American President Lines, Ltd., operates 10 con-
to achieve competitiveness in the production of energy carriers. Ad-
tainer and break-bulk vessels from the United States Pacific Coast to
ditionally, subsidized LNG construction will expand from three yards
the Far East. American President Lines, Ltd. operates 12 container
at present to four yards in 1975. The combined 1974 and 1975 program
vessels from the United States Pacific Coast to the Far East, and
will generate 50,000 man-years of work for shipyard employees and
from the United States Atlantic and Gulf Coasts to Asia. Delta
about an equivalent amount of employment in supporting industries.
Steamship Lines, Inc. operates 11 LASH and break-bulk vessels from
Mr. Blackwell was confident that in 1975 all ships would be awarded
the United States Gulf Coast to the East Coast of South America and
at a subsidy rate lower than the 37 per cent mandated by the Act.
West Africa. Ecological Shipping Corporation operates 1 liquid bulk
Subsidy rates are as low as 33.4% for some types of tankers and 16.5%
vessel in worldwide service. Farrel Lines, Incorporated operates 12
for LNG's. These declining subsidy rates mean that for a given level
container and break-bulk vessels from the United States Atlantic and
of government support, a larger shipyard orderbook is generated.
Gulf Coasts to Africa and Australia. Lykes Bros. Steamship Com-
Thus, while the 1975 program level is $23 million less than in 1974,
pany, Inc. operates 41 container, LASH, and break-bulk vessels from
due to a decrease in the availability of carry-over funds, the 1975 funds
the United States Gulf and South Atlantic Coasts to Europe, the
will generate approximately $976 million in shipyard orders; $65 mil-
Mediterranean, Far East, South and East Africa, and the West Coast
lion more than for fiscal year 1974.
of South America. Margate Shipping Corp. operates 3 tankers in
worldwide service. Moore-McCormack Lines, Inc. operates 14 break-
SEC. 1(b) Payment of obligations incurred for ship operation-
bulk vessels from the United States Atlantic Coast to the East Coast
differential subsidies, $242,800,000.
of South America, and the South and East Coasts of Africa. Pacific
So-called operating subsidy is generally based on the difference be-
Far East Line, Inc. operates 2 passenger vessels and 6 LASH vessels
tween United States and foreign vessel operating costs and paid to
from the United States Pacific Coast to Australia and the Far East.
U.S.-flag operators SO they can compete in international trade. The
Prudential-Grace Lines, Inc. operates 17 Combination, LASH, and
Merchant Marine Act of 1970 generally extended this subsidy to other
break-bulk vessels from the United States Atlantic Coast to the West
than liner operators.
Coast of South America, the Caribbean, the Mediterranean, and from
Subsidy is generally provided for U.S.-flag wage, maintenance and
the United States Pacific Coast to South America, the Caribbean, Cen-
repair, and insurance costs. Payments are determined as the difference
tral America and Mexico. States Steamship Company operates 13
between the fair and reasonable cost of these items and the cost of the
break-bulk and Ro/Ro vessels from the United States Pacific Coast
same items of expense if the vessel were operated under the registry
to the Far East. Waterman Steamship Corporation operates 15 break-
of the flag of substantial foreign competitors. Allowable U.S. wage
bulk and LASH vessels from the United States Atlantic and Gulf
costs are determined by a special non-Maritime U.S.-wage index de-
Coasts to the Far East and Asia.
veloped by the Bureau of Labor Statistics. This provides an incentive
Mr. Blackwell informed your Committee that subsidized liner ac-
to the subsidized operators to minimize wage increases reached in col-
tivity would remain at essentially the same level as in 1974. However,
lective bargaining agreements. Further control on wage costs is
bulk carrier service will increase from 3.1 ship years in 1974 to 6.8
achieved by requiring manning levels for new subsidized vessels to be
ship years in 1975. He further informed that the carriage of the 1973
determined prior to the time construction subsidy contracts are en-
grain purchases to the Soviet Union will be completed this year. No
tered into.
funds are requested in 1975 for special commodity shipments of this
The Honorable Robert J. Blackwell, Assistant Secretary of Com-
type due to uncertainties about the extent of possible future purchases
merce for Maritime Affairs, testified that the requested appropriation
and the level of charter rates prevailing at the time.
authorization for 1975 of $242,800,000 is to provide for payment of
With respect to the request for $242,800,000, an estimated $198,-
operating-differential subsidies to American ship operators in order
932,000, in subsidy will be paid in 1975 for 5.0 passenger and com-
to promote the maintenance of a U.S. merchant fleet capable of pro-
bination passenger/cargo, 153.2 general cargo, and 6.8 bulk carrier
viding essential shipping services. Essential services are defined as
ship years of operation. An additional $43,868,000 will be paid for
those ocean services, routes and lines and bulk cargo carrying services
balances due for operations in prior years. The 1975 request reflects
essential for the promotion, development, expansion and maintenance
a decrease of $15,489,000 from the 1974 adjusted level of $258,289,000.
of the foreign commerce of the United States.
In this regard, it should be noted that the 1974 level includes 1973 ap-
At the present time there are 14 United States-flag operators pro-
propriation carryover of $13,774,410, and a proposed supplemental
viding these essential shipping services. Aeron Marine Shipping Com-
request for $23 million that passed the House of Representatives on
pany operates 2 tankers in world-wide service. Aries Marine Ship-
April 2, 1974.
ping Company operates 2 liquid and dry bulk vessels in worldwide
service. American Export Lines, Inc. operates 19 container, break-
SEO. $27,900,000 1(c) Expenses necessary for research and development activities,
bulk and Ro/Ro vessels from the United States Atlantic Coast to
Europe, the Mediterranean, Far East, and Asia. American Mail Line,
The objective of the research and development program is to ex-
plore and find ways to make the U.S. merchant fleet and the U.S.
shipbuilding industry more efficient and competitive. Projects are
6
7
directed toward development of information and technology which
will aid in reducing construction costs, operating costs and Govern-
cient depth. Ships using offshore ports will have to be able to dis-
ment subsidies for ship construction and operation. The program aims
charge in most all weather conditions, SO exploratory investigations
at developing new and more efficient types of ships, machinery, equip-
will be conducted in underwater breakwater devices to diminish effects
ment for shipbuilders and operators, and at improving operational
of high waves. New, faster and more economical ways to handle car-
practices in shipyards and aboard ships. Projects with near-term bene-
goes between ships and terminals or other carriers will be investigated
fits are given priority. Industry participation and cost sharing projects
to improve our foreign and domestic trades. This will require im-
have been obtained and enlarged. This joint Government and industry
provement in port management methods and productivity.
coordination results in expanded efforts and in enhanced probability
The 1975 request of $27,900,000 is an increase of $8,900,000 from the
of use of results by the U.S. maritime industry.
1974 appropriation level. The 1974 appropriation of $19,000,000 was
R. & D. programs can generally be designed as follows:
augmented by $5,000,000 carried forward from 1973. Thus, the actual
(a) Advanced ship development and construction.-Ships built in
increase in program level from 1974 to 1975 is $3,900,000.
U.S. shipyards are expensive in comparison to ships built in foreign
Your Committee questioned Mr. Blackwell closely with respect to
yards. U.S. labor costs are not competitive and much activity by seg-
tangible benefits resulting from Research and Development efforts. In
ments of U.S. shipyards has to be subsidized. This program is directed
this regard, he mentioned Government/Industry jointly funded efforts
towards initiating methods that will cut costs by developing new ship
to develop gas turbine engines. At the present time, six nonsubsidized
designs and machinery that will result in greater shipyard produc-
vessels are being constructed that will incorporate these engines. Mr.
tivity. Efforts are conducted to improve ship types now in use by im-
Blackwell anticipated that as shaft horsepower requirements in-
proving utilization of space, developing new types of cargo handling
creased, there would be a good deal more interest in the gas turbine
gear, reducing waiting time for ships, and making use of safety im-
engine for United States-flag merchant ships. Another concrete bene-
provements in the transportation and handling of hazardous cargoes.
fit has been the skewed propellor that has proven SO successful in re-
ducing vessel vibrations.
The development and implementation of new systems, machinery. and
designs will benefit the operator by providing greater ship utiliza-
SEC. 1(d). Reserve fleet expenses, $3,742,000
tion, safety and productivity. This results in improved ability to be
The Maritime Administration maintains a so-called National De-
competitive with foreign-flag competition; shipyards benefit by in-
fense Reserve Fleet of Merchant ships in 3 anchorages in the United
creased efficiency, and competitive position with cost reductions due to
States. The objective of the program is to maintain viable ships under
new shipbuilding procedures and improved ship design. The Govern-
preservation in the National Defense Reserve Fleet to supplement the
ment benefits by reduction of subsidies paid to shipyards.
active fleet in times of war or national emergency. Due to mounting
(b) Advanced ship operations systems.-The program seeks oppor-
obsolescence, a portion of the fleet, most of which was build during
tunities for better use of people and equipment in the operation of
World War II, is sold for scrap each year.
U.S.-flag ships. Improvements in operational procedures will be re-
The authorization request for 1975 of $3,742,000 is $31,000 less than
flected in decreased operating costs. through eliminating inefficient
the 1974 request for this activity. Mr. Blackwell testified that this re-
practices, by providing new ways to increase operational productivity,
duction resulted from consolidating the reserve fleet into 3 sites on the
by encouraging U.S. ship operators to use modern management meth-
Atlantic, Gulf and Pacific coasts, and the eliminations of obsolete
ods resulting in better use of their ships. The result is more effective
capacity in the fleet. He informed that 29 merchant ships and 101
competition with foreign-flag operators. These results are pursued
Navy ships are scheduled for scrapping in 1975. Two hundred and
through development of more rapid communication between ships and
ninety-four merchant ships will be retained for national defense
operators, improved automated ship and cargo handling systems
purposes.
and better equipment, training for personnel, improved navigation and
SEC. 1(e) Maritime Training at the Merchant Marine Academy at
safety, and improvements in pollution control. The benefits to the op-
Kings Point, New York, $10,518,000
erator will come from less lost vessel time through more efficient
safety practices and through improved navigation and communica-
The Maritime Administration operates the United States Merchant
tion. Rapid communication by satellite can cut costs and allow greater
Marine Academy at Kings Point, New York, to train deck and engi-
vessel productivity and use. Automation techniques and management
neering officers for the U.S.-flag merchant fleet. The Academy offers
systems will improve competitive capability. Benefits accrue to the
a four year undergraduate program which leads to a Bachelor of
Government in the avoidance and reduction of operating subsidies
Science degree and to a Merchant Marine license as a Third Mate
and the improved economic status of the U.S. merchant marine in the
or Third Assistant Engineer. In addition, the cadets are enrolled as
world market.
midshipmen in the U.S. Naval Reserve and, if eligible, are commis-
(c) Advanced ports and intermodal systems.-This activity is
sioned upon graduation as Ensigns in the U.S. Navy Reserve. The
geared to investigate methods for establishing offshore deepwater
Academy has a current enrollment of about 950 students and gradu-
ports that will safely and economically handle the large tankers and
ates about 200 students annually. The Federal cost of graduating
each student is about $33,000.
bulk carriers that cannot be accommodated in our ports due to insuffi-
The Assistant Secretary of Commerce for Maritime Affairs re-
quested $10,518,000 for the continued operation of the Academy in
8
9
Fiscal Year 1975. The amount requested represents an increase of
ployees at the National Defense Reserve Fleets and at the Federal
$1.9 million over the 1974 level. Careful inquiry by your Committee
Maritime Academy are included in section 1 of the authorization re-
indicates that the major portion of the increase is for the purpose of
quest. Section 2 is required to avoid having to amend the fiscal year
continuing the modernization of facilities program at the Academy
1975 authorization request if supplemental appropriations for fiscal
and of initiating the renovation of its physical fitness facilities, includ-
year 1975 are sought for this purpose. There was no opposition to this
ing the construction of an indoor swimming pool, four squash courts,
section of H.R. 13296.
one wrestling room, shower and locker rooms for home and visiting
GENERAL STATEMENT
football teams and restrooms for spectators.
The $10,518,000 requested for Fiscal Year 1975 will be allocated as
The Merchant Marine Act of 1970 (Public Law 91-469) provides
follows: (a) $1,717,000 for cadet costs; (b) $1,731,000 for maintenance,
for the new Maritime Program proposed by your Committee and the
repair and operating requirements; (c) $2,717,000 for the moderniza-
Administration. This Program envisions the construction of a sub-
tion program; (d) $127,000 for the improvement of instructional
stantial number of vessels over a ten year period, substantial improve-
equipment; (e) $1,305,000 for program direction and administration,
ments in the operating-differential subsidy program, and a number of
and (f) $2,867,000 for the instructional program.
other provisions to revitalize the United States-flag merchant marine
and restore this country to its place as a leading maritime nation. In
SEC. 1(f). Financial Assistance to State Marine Schools, $2,973,000
this regard, H.R. 13296 includes requirements for the fifth year of
The Maritime Administration supervises the Government grants
expanded activities under the new Maritime Program.
and student aid given to the six State Maritime Academies which are
With respect to the authorization request of $275 million for con-
located in Maine, New York, Massachusetts, California, Texas and
struction subsidy, set forth in section 1(a) of H.R. 13296, your Com-
Michigan. These Schools have a combined total enrollment of about
mittee is of the strong view that these funds are the minimum required
2,000 students and graduate approximately 350 students annually.
to carry on the new Maritime Program provided by the Merchant
Most graduates are employed either in the U.S.-flag merchant fleet as
Marine Act of 1970, and that the proposed ship mix reflects the present
deck or engineering officers or ashore in the maritime industry. If
needs of the United States Merchant Marine.
offered a commission in the U.S. Naval Reserve upon graduation, they
With respect to the authorization request of $242,800,000 for oper-
are required to accept.
ating subsidy set forth in section .(b) of H.R. 13296, your Committee
Public Law 85-672 generally provides that Federal funds may be
is well satisfied that these funds are required by the Maritime Ad-
allocated to the State Maritime Academies for the following purposes
ministration for the continued operation of United States-flag pas-
(1) a $600 annual subsidy payment to each of a designated number of
senger, general cargo and bulk vessels in our foreign commerce. Your
students; (2) a grant of at least $25,000, but not more than $75,000 to
Committee notes that 19 vessels formerly receiving operating subsidy
each School, conditioned upon the admission of a certain percentage of
no longer receive this form of Government aid. Additionally, a number
out-of-State students and matching funds by the State, and (c) main-
of other capital intensive American vessels, such as containerships, are
tenance and repair expenses of the training vessels on loan from the
also competing in our foreign trade without such subsidy.
National Defense Reserve Fleet.
The authorization request of $27,900,000 provided by section 1 (c) of
The Assistant Secretary of Commerce for Maritime Affairs re-
H.R. 13296, for Research and Development activities of the Maritime
quested $2,973,000 which is an increase of $546,000 over the 1974 level
Administration, would appear to be in order. The Merchant Marine
of funding. Your Committee was informed that this increase was nec-
Act of 1970 provides for a gradual reduction of the construction sub-
essary to meet the rising maintenance and repair costs of the six train-
sidy level to 35 percent in Fiscal Year 1976 and thereafter. Research
ing vessels presently on loan to the State Maritime Academies from the
and Development programs of the Maritime Administration are one
Reserve Fleet.
of the tools to achieve this goal, and are also aimed at increasing the
Careful inquiry by your Committee revealed that the requested au-
productivity of American ships operations. Your Committee sup-
thorization of $2,973,000 would be expended among the six Schools as
ports the authorization request after careful inquiry of these research
follows: $439,000 to California; $690,000 to Maine; $519,000 to Massa-
and development programs.
chusetts; $238,000 to Michigan; $771,000 to New York, and $316,000
Your Committee supports the authorization request of $3,742,000
to Texas.
provided by section 1 (d) of H.R. 13296 for the continued operation of
SEC. 2. In addition to the amounts authorized by section 1 of this Act,
the National Defense Reserve Fleet. However, the present age of ves-
there are authorized to be appropriated for fiscal year 1975 such
sels in the National Defense Reserve Fleet is a source of grave con-
additional supplemental amounts for the activities for which ap-
cern, and your Committee has proposed suitable legislation (H.R.
propriations are authorized under section 1 of this Act as may be
12427) that would upgrade the vessels in this Fleet.
necessary for increases in salary, pay, retirement, or other em-
Your Committee supports the authorization request of $10,518,000
ployee benefits authorized by law
and $2,973,000, provided by sections 1 (e) and (f) of H.R. 13296 and
notes that a six member Ad Hoc Committee on Maritime Education
The Assistant Secretary of Commerce for Maritime Affairs testi-
and Training, of your Committee, is in the process of making a com-
fied that funds for the remuneration of Maritime Administration em-
prehensive evaluation of all of our Nation's Maritime Schools.
H. Rept. 93-1074-2
10
11
Section 2 of H.R. 13296 is basically a technical amendment to avoid
A BILL To authorize appropriations for the fiscal year 1975 for certain maritime
having to amend the Fiscal Year 1975 authorization request if sup-
programs of the Department of Commerce
plemental appropriations for Fiscal Year 1975 are required for the
Be it enacted by the Senate and House of Representatives of the
remuneration of Maritime Administration employees at the National
United States of America in Congress assembled, That funds are
Defense Reserve Fleet and the Federal Merchant Marine Academy.
hereby authorized to be appropriated without fiscal year limitation as
An identical provision was in the authorization act for Fiscal Year
the appropriation act may provide for the use of the Department of
1974. Your Committee supports this provision of the bill.
Commerce, for the fiscal year 1975, as follows:
(a) Acquisition, construction, or reconstruction of vessels and con-
CONCLUSION
struction-differential subsidy and cost of national defense features
incident to the construction, reconstruction, or reconditioning of ships,
Your Committee is unaware of any opposition to the proposed legis-
$275,000,000;
lation, and reported H.R. 13296, without amendment, unanimously,
(b) payment of obligations incurred for ship operating-differential
after full and careful consideration of the entire record. Your Commit-
subsidy, $242,800,000;
tee is of the strong view that the authorization for the requested funds
(c) expenses necessary for research and development activities,
provided by the bill is essential for the continuation of the new Mari-
$27,900,000;
time Program provided by the Merchant Marine Act of 1970.
(d) reserve fleet expenses, $3,742,000;
(e) maritime training at the Merchant Marine Academy at Kings
Cost OF THE LEGISLATION
Point, New York, $10,518,000; and
The total cost of the legislation is $562,900,000; the amount author-
(f) financial assistance to State Marine Schools, $2,973,000.
ized by the bill.
SEC. 2. In addition to the amounts authorized by section 1 of this
Act, there are authorized to be appropriated for fiscal year 1975 such
CHANGES IN EXISTING LAW.
additional supplemental amounts for the activities for which appro-
priations are authorized under section 1 of this Act as may be neces-
If enacted, this bill would make no changes in existing law.
sary for increases in salary, pay, retirement, or other employee benefits
authorized by law.
DEPARTMENTAL REPORTS
STATEMENT OF THE PURPOSES AND NEED OF THE DRAFT BILL To Au-
H.R. 13296 was the subject of an Executive Communication (No.
THORIZE APPROPRIATIONS FOR THE FISCAL YEAR 1975 FOR CERTAIN
1911) from the Secretary of Commerce. The text follows herewith.
MARITIME PROGRAMS OF THE DEPARTMENT OF COMMERCE
There also follows the text of reports received from the Departments
of Defense and State:
Section 209 of the Merchant Marine Act, 1936, provides that after
December 31, 1967 there are authorized to be appropriated for certain
[EXECUTIVE COMM. NO. 1911]
maritime activities of the Department of Commerce only such sums as
the Congress may specifically authorize by law.
THE SECRETARY OF COMMERCE,
The draft bill authorizes specific amounts for those activities listed
Washington, D.C., February 15, 1974.
in section 209 for which the Department of Commerce proposes to
Hon. CARL ALBERT,
seek appropriations for the fiscal year 1975, and reflects the continuing
Speaker of the House of Representatives,
Department efforts to provide the essential resources required to ac-
Washington, D.C.
complish the objectives of the Merchant Marine Act of 1970.
DEAR MR. SPEAKER: Enclosed are six copies of a draft bill to author-
(a) acquisition, construction, or reconstruction of vessels
ize appropriations for the fiscal year 1975 for certain maritime pro-
and construction-differential subsidy and cost of national de-
grams of the Department of Commerce, together with a statement of
fense features incident to the construction, reconstruction, or
purposes and provisions in support thereof.
reconditioning of ships, $275,000,000.
We have been advised by the Office of Management and Budget that
there would be no objection to the submission of our draft bill to the
The fiscal 1975 ship construction program will provide multi-year
Congress and further that its enactment would be in accord with the
funding of some ship construction contracts. It is anticipated that 1975
program of the President.
funding will cover unfinanced balances for 7 ships under fiscal 1974
Sincerely,
contracts. Construction subsidy contracts for 9 ships are planned in
FREDERICK B. DENT,
1975, with 5 ships being financed with 1975 funds and multi-year
Secretary of Commerce.
financing being utilized for the remaining 4.
Enclosures.
(b) payment of obligations incurred for operating-differ-
ential subsidy, $242,800,000.
13
12
Operating subsidy funds requested for FY 1975 would provide for
signed to this Department by the Secretary of Defense for the prepara-
tion of a report expressing the views of the Department of Defense.
payment of subsidy on two passenger ships, three combination pas-
senger-cargo ships, 185 general cargo liners, and 22 bulk carriers dur-
As stated in its title, H.R. 13296 would authorize appropriations for
ing the year. Additionally the request includes funds for payment
the fiscal year 1975 for maritime programs in the Department of
Commerce.
of subsidies determined to be due subsidized operators for operations
The Department of the Navy, on behalf of the Department of De-
in prior years.
fense, defers to other interested agencies on the merits of the bill.
(c) expenses necessary for research and development activi-
This report has been coordinated within the Department of Defense
ties, $27,900,000.
in accordance with procedures prescribed by the Secretary of Defense.
The 1975 program provides funding for the initiation and continua-
The Office of Management and Budget advises that, from the stand-
tion of R&D efforts to reduce the costs of operating and building U.S.
point of the Administration's program, there is no objection to the
ships. Major efforts in FY 1975 are planned in the areas of advanced
presentation of this report on H.R. 13296 for the consideration of the
nuclear ship development, ship machinery, more productive ship-
Committee.
building methods, improved navigation/communication systems, and
For the Secretary of the Navy.
investigation of shipboard automation. The principal aims are to im-
Sincerely yours,
prove the productivity of U.S. shipyards and to reduce the life cycle
E.H. WILLETT,
costs of U.S.-flag ships in order to make the U.S. maritime industry
Captain, U.S. Navy,
more competitive with foreign fleets. The continued participation of
Deputy Chief.
industry in cost-sharing of R&D projects provides increased results
for the government investment.
DEPARTMENT OF STATE,
(d) reserve fleet expenses, $3,742,000.
Washington, D.C., April 17, 1974.
Hon. LEONOR K. SULLIVAN,
Funding provides for the preservation, maintenance and security of
Chairman, Committee on Merchant Marine and Fisheries, House of
ships held for national defense purposes, distributed among three
Representatives, Washington, D.C.
active fleet sites. Periodic represervation of hulls, machinery, and
DEAR MRS. SULLIVAN: The Secretary has asked me to reply to your
electrical components, combined with continuous application of ca-
letter of March 11, 1974 requesting comment on H.R. 13296, a bill "To
thodic protection to the bottoms, are methods employed in maintain-
authorize appropriations for the fiscal year 1975 for certain maritime
ing the ships for further service.
programs of the Department of Commerce".
In fiscal 1975, funds will be used for the care of approximately 294
The Department has no objection to the proposed legislation from
ships retained for national defense purposes. 130 other vessels will be
the standpoint of foreign policy and would defer to the views of other
scrapped by June 1975, assuming there is an acceptable market in
government agencies more directly concerned.
scrap.
The Office of Management and Budget advises that from the stand-
(e) maritime training at the Merchant Marine Academy at
point of the Administration's program there is no objection to the
Kings Point, New York, $10,518,000.
submission of this report.
This requested authorization is for the operation of the Merchant
Sincerely yours,
Marine Academy at Kings Point to train cadets as officers for the U.S.
LINWOOD HOLTON,
merchant fleet in both peacetime and national emergencies. Approxi-
Assistant Secretary
mately 200 officers graduate each year. A program increase is included
for Congressional Relations.
to implement the Facilities Modernization Program at the Academy
by expanding the physical training facilities, and by renovating part
of one academic building.
DEPARTMENT OF THE NAVY,
OFFICE OF LEGISLATIVE AFFAIRS,
Washington, D.C., April 22, 1974.
Hon. LEONOR K. SULLIVAN,
Chairman, Committee on Merchant Marine and Fisheries, House of
Representatives, Washington, D.C.
DEAR MADAM CHAIRMAN Your request for comment on H.R. 13296,
a bill "To authorize appropriations for the fiscal year 1975 for certain
maritime programs of the Department of Commerce," has been as-
Calendar No. 1193
93D CONGRESS
2d Session
}
SENATE
-
REPORT
No. 93-1260
MARITIME ADMINISTRATION AUTHORIZATION
FISCAL YEAR 1975
REPORT
OF THE
SENATE COMMITTEE ON COMMERCE
TOGETHER WITH
SUPPLEMENTAL VIEWS
ON
H.R. 13296
TO AUTHORIZE APPROPRIATIONS FOR THE FISCAL YEAR
1975 FOR CERTAIN MARITIME PROGRAMS OF THE
DEPARTMENT OF COMMERCE
OCTOBER 9, 1974.-Ordered to be printed
U.S. GOVERNMENT PRINTING OFFICE
38-010
WASHINGTON : 1974
Calendar No. 1193
93D CONGRESS
SENATE
REPORT
2d Session
No. 93-1260
MARITIME ADMINISTRATION AUTHORIZATION
FISCAL YEAR 1975
OCTOBER 9, 1974.-Ordered to be printed
Mr. LONG, from the Committee on Commerce,
submitted the following
REPORT
together with
SUPPLEMENTAL VIEWS
[To accompany H.R. 13296]
The Committee on Commerce, to which was referred the bill (H.R.
13296) to authorize appropriations for the fiscal year 1975 for certain
maritime programs of the Department of Commerce, having con-
sidered the same, reports favorably thereon with amendments and
recommends that the bill as amended do pass.
PURPOSE
The purpose of the bill as reported is to authorize appropriations
for programs of the Maritime Administration for fiscal year 1975 and
to amend organic acts to permit a State government to safety embark
on a program of financial aid to the fishing industry and to assure that
the Maritime Administration maintains regional offices.
SUMMARY AND DESCRIPTION
The legislation provides for authorization for appropriations for
six categories of maritime programs of the Department of Commerce,
which are administered by the Maritime Administration, in the ag-
gregate sum of $562,933,000. Those programs, and the amounts author-
ized, are as follows:
(1) Acquisition, construction, or reconstruction of vessels and con-
struction-differential subsidy and cost of national defense features
incident to the construction, reconstruction, or reconditioning of
ships-$275 million;
(1)
2
3
(2) Payment of obligations incurred for ship operating-differential
Subsection (5) of the Ship Mortgage Act (46 U.S.C. 922 (a) (5))
subsidy-$242.8 million;
requires that the mortgagee of a preferred ship mortgage be a citizen
(3) Expenses necessary for research and development activities-
of the United States and provides that for purposes of the Ship
$27.9 million;
Mortgage Act those designated in sections 37 and 38 thereof shall be
(4) Reserve fleet expenses-$3.742 million;
deemed citizens of the United States. Section 37 (46 U.S.C. 888) states
(5) Maritime training at the Merchant Marine Academy at Kings
that the term "citizen of the United States" shall have the meaning
Point, N.Y.$10.518 million; and
assigned to it in sections 1 and 2 of the Shipping Act, 1916.
(6) Financial assistance to State marine schools-$2.973 million.
However, the term "citizen of the United States" is not presently
Section 2 authorizes additional supplemental appropriations for
defined in section 1 of the Shipping Act, 1916, and section 2 of that
fiscal year 1975 for the activities specified in section 1 of the bill, to the
act only sets forth controlling interest prerequisites for a corporation,
extent necessary for increases in salaries, pay, retirement, or other
partnership or association to be deemed a citizen.
employee benefits authorized by law.
A State, or other governmental entity, is nowhere defined in the
Section 3 of the bill inserts into the Shipping Act, 1916 a definition
Ship Mortgage Act, 1920, or the Shipping Act, 1916, as being a citizen.
of "citizen of the United States" which includes a State or a political
The Ship Mortgage Act is specific as to the requirement for citizenship
subdivision of a State, thereby making the provisions of the Ship
and it would be imprudent for a State, or other governmental entity
Mortgage Act applicable to State governments as well as to private
to be the mortgagee on a ship mortgage for that mortgage could pos-
lenders and mortgagees.
sibly be later held by a court to be invalid or less than "preferred."
Section 4 of the bill amends the section of the Merchant Marine Act,
In 1972, the State of Alaska enacted legislation creating a commer-
1936 which requires the four major seacoasts (Atlantic, Gulf, Great
cial fishing loan program to provide long-term, low-interest loans to
Lakes, Pacific) to be treated equitably by providing that at least one
fishermen for the purposes of repair, construction or purchase of ves-
regional office of the Maritime Administration be maintained for each
sels (Alaska Statutes 16.10.300-.370). The Commercial Fishing Loan
of the four areas.
Act includes a provision that loans "shall be secured by a first lien"
BACKGROUND
(Alaska Statutes 16.10.320). This first lien requirement will only be
satisfied in the case of loans for use in connection with documented
Hearings were held by the Merchant Marine Subcommittee of the
Merchant Marine and Fisheries Committee of the House of Rep-
vessels of the United States by the perfection of a preferred ship
resentatives on H.R. 13296 on April 23, 1974. The Merchant Marine
mortgage as provided in section D of the Ship Mortgage Act, 1920
Subcommittee of this Committee on May 16, 1974 held hearings on
(46 U.S.C. 922). Security instruments other than preferred ship
S. 3319, a bill identical to H.R. 13296, as introduced.
mortgages are junior in priority to subsequently perfected preferred
On June 4, 1974, the House of Representatives passed H.R. 13296,
mortgages and to maritime liens arising at any time.
without amendment. On October 2, 1974, this Committee in executive
The typical loan applicant is unable to offer any collateral other
session ordered H.R. 13296 favorably reported, with amendments. The
than his fishing vessel and thus is unable to perfect a preferred ship
amendments are similar to the provisions of S. 1748 and S. 3915.
mortgage under the Ship Mortgage Act. To obtain a preferred ship
mortgage, a State such as Alaska must put together a complicated
EXPLANATION OF COMMITTEE AMENDMENTS
alternative in the form of a trust indenture and bond arrangement,
(as authorized by 46 U.S.C. 808 for alien lenders). A State should not
The Committee adopted two amendments to the bill which are in-
be required to go through such complicated and expensive maneuvers
corporated as sections 3 and 4 respectively.
and techniques to effect national purposes.
1. Section 3.-Mortgages of vessels registered or enrolled as vessels
The Committee amendment places the new definition of citizen in
of the United States are regulated in various respects by the pro-
the Shipping Act, 1916 (46 U.S.C. 801), rather than in the Ship
visions of the Ship Mortgage Act, 1920 (section 30 of the Merchant
Mortgage Act, 1920 (46 U.S.C. 922). Section 922 refers back to
Marine Act, 1920, 46 U.S.C. 911-984). The Ship Mortgage Act, 1920,
section 888 which, in turn, refers back to sections 801-803 for the
gives preferred status to mortgages of vessels of over 200 gross tons,
definition of a citizen. The amendment would cover a State's owner-
on compliance with registration and other provisions of the act, pro-
ship interest as well as mortgagee interest in a vessel in the event a
vided that such a preferred mortgage constitutes a lien on the vessel
preferred ship mortgage had to be foreclosed. It would also clarify
that can be enforced by the mortgagee by suit in rem in admiralty,
the definition of "citizen" by negating the inference, possible until
and provided that the mortgagee can, in addition to all other remedies
now, that the only citizens for purposes of the Shipping Act, 1916, are
granted by the act, bring suit in personam in admiralty in a Federal
the corporations, partnerships and associations that fulfill the re-
district court against the mortgagor, for the amount of the outstand-
quirements of section 2 and natural persons who are citizens.
ing mortgage indebtedness secured by the vessel. The grant is thus
The Committee amendment will enable the governmental bodies con-
one of exclusive jurisdiction to enforce the lien of a "preferred mort-
cerned to create and hold ship mortgages and thus enable them to pro-
gage"; and if the mortgage is preferred within the definition of the
vide financing of fishing vessels which benefit many small but vital
act, jurisdiction is granted, but otherwise not.
4
5
business enterprises in the fishing industry which is sorely pressed
economically.
Series production of vessels and shipyard modernization and expan-
2. Section 4.-The second Committee amendment would modify
sion have contributed to a reduction in subsidy rates for ship construc-
section 809 of the Merchant Marine Act, 1936, as amended (U.S.C.
tion. The declining subsidy rates which encourage shipyard efficiency
1213) to establish by law at least one regional office of the Maritime
are being met and, in certain cases, the subsidy award is significantly
Administration for each of the Nation's four seacoasts.
below the guideline rate. While the guideline rate is presently 39 per-
Section 809 currently provides that contracts entered into under the
cent, awards for tankers have been made at 33.4 percent and liquefied
1936 Act shall "equitably serve, insofar as possible, the foreign-trade
natural gas carriers have been contracted for at 16.5 percent.
requirements of the Atlantic, Gulf, Great Lakes, and Pacific ports of
In the area of vessel operations, modern bulk carriers built with
the United States." This amendment would provide the administra-
Federal assistance are beginning to enter foreign trade. This is impor-
tive structure for implementing that obligation as well as other re-
tant because over 90 percent of our country's foreign trade tonnage is
sponsibilities of the Maritime Administration.
comprised of bulk cargoes and U.S. participation in this trade has
Since the Maritime Administration already mantains regional offices
been minimal for many years. In the liner trades the average age of
for the Atlantic (New York), Gulf (New Orleans), and Pacific (San
our subsidized fleet has decreased by 20 percent and the average ship
Francisco) ports, the practical effect of the amendment is to require
size has increased by 17 percent, reflecting the replacement of older
the establishment of one additional regional office for Great Lakes
vessels with larger ships of advanced design.
ports and the St. Lawrence Seaway. A Great Lakes regional office can
Progress is also being made toward reducing the dependence of op-
and should serve as a focal point for efforts to re-establish overseas
erators on operating subsidies. A number of capital intensive U.S.-flag
U.S.-flag service in the Lakes and to realize the full potential of our
vessels, such as container ships, are competing in our foreign trade
fourth seacoast.
without subsidy. Nineteen vessels previously receiving operating sub-
The amendment also requires the Secretary of Commerce to appoint
sidy no longer receive such aid.
a director for each regional office and it is the Committee's expectation
The 10-year merchant marine program is approaching its mid-
that, where necessary, these offices will be established and adequately
point. Clear signs of progress are evident. The construction of a mod-
staffed as promptly as possible.
ern, balanced, competitive American merchant fleet is well underway.
As these vessels are delivered and enter service, U.S.-flag penetration
EXPLANATION OF THE AUTHORIZATION FOR FISCAL YEAR 1975
of our essential trades should become more evident, especially in the
area of bulk carriage. The 1970 act's program is proving to be an ap-
In 1970, the most comprehensive and far-reaching maritime legis-
propriate instrument for restoring our Nation's prominence in inter-
lation in decades was enacted in order to halt a pronounced decline of
national shipping. In the opinion of the Committee, this program
the U.S. merchant marine. That legislation, the Merchant Marine Act,
should be continued to its completion.
1970 (Public Law 91-469) (the "1970 Act"), provided for a 10-year
program to improve the efficiency of American shipyards and to build
SUMMARY
a modern, efficient U.S.-flag merchant fleet SO that the United States
could once again be a major maritime Nation.
The amounts authorized by the bill are as follows:
This bill, H.R. 13296, authorizes appropriations for the 5th year
(a) Acquisition, construction, or reconstruction of vessels and con-
of the program established by the 1970 act. In considering the authori-
struction-differential subsidy and cost of national defense features in-
zation request for fiscal year 1975, the Committee has reviewed the
cident to the construction, reconstruction, or reconditioning of ships,
performance of the Maritime Administration. Substantial progres has
$275,000,000.
been made toward rebuilding the U.S. merchant marine, and it has be-
These funds finance payment of construction subsidies based on
come increasingly clear that with continued support the goals set in
the difference between United States and foreign shipbuilding costs.
1970 will be reached.
These sums are paid to U.S. shipyards SO that operators can purchase
Shipbuilding has reached a new peacetime high. The backlog of
American-built vessels at the same price as similar foreign-built ves-
orders for new vessels is 31/2 times as large as when the program began
sels. In order to encourage the competitiveness of American yards, the
in 1970. The present backlog of 909 merchant ships valued at $3.6
1970 Act provides for the gradual reduction of the construction sub-
billion represents 200,000 man-years of employment for shipyard
sidy level from 45 percent in 1971 to 35 percent in 1976.
workers and those in the supply industries and a potential addition
Subsidized shipbuilding orders exceeding $2.5 billion have been
to our fleet of nearly 6.2 million deadweight tons. U.S. shipbuilders
placed with U.S. shipyards since enactment of the 1970 Act. These
have begun for the first time to receive orders for very large crude
orders have provided for the construction of 52 new ships of 4.7 million
oil carriers and have advanced to a leading position in the construction
deadweight tons and for the conversion of 19 existing ships into con-
of liquefied natural gas carriers. The progress in the field of energy
tainer ships. These vessels are of advanced and highly productive de-
carriage balances earlier construction of modern liner vessels includ-
sign. They comprise a diverse mix of types that will provide the United
ing LASH and RO/RO vessels for intermodal operations.
States a more competitive fleet in a variety of trades.
6
7
The authorization request for this activity for fiscal 1975 ($275
From the $242,800,000, an estimated $198,932,000 in subsidy will be
million) is the same as that for fiscal year 1974. This amount will sus-
paid in fiscal year 1975 for 5 passenger and combination passenger/
tain an adequate and orderly shipbuilding program, with contracts
cargo, 153.2 general cargo and 6.8 bulk carrier ship-years of operation.
for nine vessels planned for the year. Five of these ships, and seven
An additional $43,868,000 will pay obligations incurred under subsidy
ships resulting from 1974 contracts will be funded in 1975. These ves-
contracts for subsidized operations in prior years. The fiscal 1975 re-
sels will include four intermediate size tankers, four liquefied natural
quest reflects a decrease of $15,489,000 from the 1974 adjusted level of
gas carriers, and four very large crude carriers. The remaining four
$258,289,000. It should be noted, however, that the 1974 level includes
ships awarded in 1975 will be funded in 1976.
1973 appropriations carryover of $13,774,410 and a 1974 supplemental
Ships currently being built with the aid of construction-differential
authorization for $23 million (P.L. 93-308).
subsidy are larger and more costly than those envisioned when the
(c) Expenses necessary for research and development activities,
1970 Act was passed. Even though only 12 ships will be funded in
$27,900,000.
1975, their productive capacity exceeds the capacity goal established
The Maritime Administration research and development program
when the 1970 Act was passed. The fiscal year 1975 authorization re-
has as its purpose the development of technological superiority in
quest will allow series production of bulk cargo ships to continue at
order to enable U.S. shipyards and vessel operators to become more
existing yards. The economies realized through series orders are essen-
competitive. Projects under the program involve the development of
tial to achieve competitiveness in the production of energy carriers.
new and more efficient types of ships, machinery, and equipment, and
When in service, these ships will help to create a competitive U.S.-
the improvement of operating practices in order to improve American
flag bulk cargo fleet. The combined 1974 and 1975 programs will gen-
shipping and shipbuilding and help overcome foreign advantages (e.g.
erate 50,000 man-years of work for shipyard employees and about an
as low-wage costs). Industry participation and cost sharing have been
equivalent amount of employment in supporting industries.
emphasized to insure the relevance and practicality of these projects.
Maritime Administration officials have expressed confidence that in
In the area of advanced ship construction, the 1975 program will
1975 all ship construction contracts will be awarded at a subsidy rate
continue to explore new ship construction methods and equipment
lower than the 37 percent mandated by the 1970 act. Subsidy rates have
as well as new ship designs which will lower shipbuilding costs. Ex-
been as low as 33.4 percent for some types of tankersand 16.5 percent
amples of this research include new welding procedures, standardized
for LNG's. Those declining subsidy rates mean that for a given level
component designs, shipyard automation, and the development of
of Government support, a larger shipyard orderbook is generated.
improved transmission and propulsion systems, such as an advanced
Thus, while the 1975 program level is $23 million less than in 1974 due
gas turbine and nuclear power.
to a decrease. in the availability of carryover funds, the 1975 funds
In order to reduce operating costs and improve ship utilization,
will generate approximately $976 million in shipyard orders-$65
the Maritime Administration supports research and development in
million more than generated by the higher 1974 level of funding.
the area of advanced ship operations systems. Projects in this area
(b) Payment of obligations incurred for ship operating-differential
include computerized models to assist operators with cargo space
subsidies, $242,800,000.
documentation, intermodal distribution coordination, fleet manage-
Operating subsidies are generally based upon the difference between
ment, and computers to aid in navigation, communications, ship
U.S. and foreign vessel operating costs and are paid in order to pro-
maneuvering and collision avoidance. These improvements will result
mote the maintenance of a U.S.-flag merchant fleet capable of provid-
in greater vessel utilization and increased safety of operation. This
ing essential shipping services. Essential services are defined as those
activity also supports R. & D. efforts in the areas of pollution abate-
ocean services, routes and lines, and bulk cargo carrying services
ment and safety improvements. The 1975 program will continue to
essential for the promotion, development, expansion, and maintenance
develop cost-effective means of reducing pollution.
of the foreign commerce of the United States. Operators receiving
The fiscal year 1975 request for research and development of
subsidies for the provision of such services must operate Ameri-
$27,900,000 is an increase of $8,900,000 from the 1974 appropriation
can-built vessels manned by American crews. The fiscal year 1975
authorization request of $242,800,000 will finance operating subsidies
level. The 1974 appropriation of $19 million was augmented by $5
to U.S.-flag operators in order to promote the continuation of essen-
million carried forward from 1973. Thus, the actual increase in pro-
gram level from 1974 to 1975 is $3,900,000.
tial American merchant marine services. Subsidized liner activity will
(d) Reserve Fleet expenses, $3,742,000.
remain at essentially the same level as in fiscal 1974. New bulk vessels,
The Maritime Administration maintains the National Defense Re-
most of which were built under the construction subsidy program, will
be entering into service this year and in 1975. This is reflected by an
serve Fleet in order to supplement our active merchant fleet in time
increase in subsidized regular bulk carrier service from 3.1 ship-years
of war or national emergency. The authorization request for this
in 1974 to 6.8 in 1975. Carriage of the 1973 grain purchases to the
activity in fiscal year 1975 is $3,742,000. That is $31,000 less than in
Soviet Union will be completed this year. No funds have been re-
1974. This reduction in Reserve Fleet expenses results from the con-
quested for fiscal 1975 for special commodity shipments of this type
solidation of the fleet at the sites and the elimination of obsolete ton-
due to uncertainties about the extent of possible future purchases and
nage. In 1975 29 merchant ships and 101 Navy ships are scheduled for
the level of charter rates prevailing at the time.
scrapping. The fleet will then consist of 294 ships.
S. Rept. 93-1260-2
8
9
(e) Maritime training at the Merchant Marine Academy at Kings
tures incident to the construction, reconstruction, or recondition-
Point, N.Y., $10,518,000.
ing of ships, $275,000,000;
This authorization request of $10,518,000 is for the operation of
(b) payment of obligations incurred for ship operating-differ-
the Merchant Marine Academy at Kings Point, N.Y., to train cadets
ential subsidy, $242,800,000;
service as officers in the U.S. merchant marine. The 1975 program
(c) expenses necessary for research and development activities,
anticipates a graduating class of 200 officers, approximately the same
$27,900,000;
level as in the past several years.
(d) reserve fleet expenses, $3,742,000;
The major portion of the $1.9 million increase requested for this
(e) maritime training at the Merchant Marine Academy at
category is for the necessary modernization program at the Academy,
Kings Point, N.Y., $10,518,000; and
including renovation and improvement of the physical fitness facilities.
(f) financial assistance to State Marine Schools, $2,973,000.
(f) Financial assistance to state marine schools, $2,973,000.
SEC. 2. In addition to the amounts authorized by section 1 of this
The requested authorization is for the training of cadets at six par-
act, there are authorized to be appropriated for fiscal year 1975 such
ticipating state maritime schools located in California, Michigan,
additional supplemental amounts for the activities for which appro-
New York, Maine, Massachusetts, and Texas. Federal assistance to
priations are authorized under section 1 of this act as may be neces-
these schools, authorized by the Maritime Academy Act of 1958, as
sary for increases in salary, pay, retirement, or other employee bene-
amended (46 U.S.C. 1383), includes subsidies and grants to the schools,
fits authorized by law.
allowances to cadets for uniforms, textbooks and subsistence, and main-
SEC. 3. Section 1 of the Shipping Act, 1916, as amended (46 U.S.C.
tenance and repair expenses of training vessels on loan from the
801) is amended by inserting, after the introductory paragraph and
National Defense Reserve Fleet.
prior to the paragraph that begins "The term 'common carrier by
The 1975 authorization request of $2,973,000 reflects an increase over
water in foreign commerce' the following new paragraph:
1974 of $546,000. Expenditures under this authorization will remain
"The term 'citizen of the United States' means any State or political
at essentially the same level as in 1974 except in the area of mainte-
subdivision thereof, any individual who is a citizen of the United
nance and repair of Federally owned schoolships. The requested in-
States by birth, by naturalization or other legal judgment, or any cor-
crease will allow conversion from a reactive to a preventive main-
poration, partnership, or association organized under and maintained
tenance program and assure continued compliance with Coast Guard
in accordance with section 2 of this Act and the laws of any State. As
and American Bureau of Shipping safety standards.
used in this paragraph, 'State' means any of the several States, the
Section 2 of the bill is basically a technical amendment to avoid
District of Columbia, the Commonwealth of Puerto Rico, American
having to amend the 1975 authorization request if supplemental ap-
Samoa, the Virgin Islands, and the territories and possessions of the
propriations for fiscal year 1975 are required for increases in renumer-
United States."
ation of employees at the National Defense Reserve Fleet and the
SEC. 4. Section 809 of the Merchant Marine Act, 1936, as amended
Merchant Marine Academy.
(46 U.S.C. 1213) is amended (a) by inserting "(a)" immediately be-
fore "Contracts" in the first sentence thereof; and (b) by adding at the
ESTIMATED COSTS
end thereof the following new subsection:
(b) There shall be established and maintained within the
Pursuant to section 252 (a) of the Legislative Reorganization Act
Maritime Administration such regional offices as may be necessary,
of 1970 (Public Law 91-510), the Committee estimates that the cost
including, but not limited to, one such office for each of the four
of the legislation is $562,900,000, the amount authorized by the bill.
port ranges specified in subsection (a) of this section. The Secre-
The Committee amendments will not result in additional cost to the
tary of Commerce shall appoint a qualified individual to be the
Government, except for administrative expenses incurred in establish-
Director of each such regional office and shall carry out approri-
ing an additional regional office.
ate functions, activities, and programs of the Maritime Adminis-
An act to authorize appropriations for the fiscal year 1975 for mari-
tration through such regional offices."
time programs of the Department of Commerce, and for other
purposes.
TEXT OF H.R. 13296, AS REPORTED
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That funds are
hereby authorized to be appropriated without fiscal year limitation as
the appropriation act may provide for the use of the Department of
Commerce, for the fiscal year 1975, as follows:
(a) acquisition, construction, or reconstruction of vessels and
construction-differential subsidy and cost of national defense fea-
SUPPLEMENTAL VIEWS OF MR. COTTON
Although I interpose no objection to the bill, H.R. 13296, author-
izing appropriations for the fiscal year 1975 for certain maritime pro-
grams of the Department of Commerce, I believe it appropriate to
bring to the attention of my colleagues in the Senate the relationship
between this maritime promotional legislation and H.R. 8193-the so-
called "Energy Transportation Security Act of 1974"-which was
passed by the Senate on September 5, 1974. H.R. 8193 represents
another maritime promotional program to be financed by the Ameri-
can taxpayers, albeit indirectly rather than directly as authorized by
H.R. 13296.
Thus, on the one hand, the Senate will be called upon to consider
H.R. 13296, authorizing appropriations of Federal funds of slightly
more than one-half billion dollars to finance directly maritime promo-
tional programs for the fiscal year 1975. On the other hand, the Sen-
ate already has passed H.R. 8193, providing a statutory requirement
that an increasing percentage of all oil imported into the United
States shall be transported on higher-costing United States-flag ves-
sels. Simply stated, this constitutes indirect Federal aid to the Ameri-
can merchant marine, the total cost of which may never be known
to the American taxpayer, or for that matter, to the Congress. Accord-
ing to estimates made by the Department of Commerce, under the
most optimistic assumption, the combined minimum cost of construc-
tion-differential and operating-differential subsidy through 1980 will
be approximately $800 million!
Certainly, the direct subsidy approach of H.R. 13296, utilizing the
Congressional authorization and appropriation process through which
the Congress and the public will know its cost, is much more prefer-
able than that taken by H.R. 8193, since the latter approach involves
substantial indirect costs which are hidden from public and Congres-
sional scrutiny.
Almost 40 years ago, Congressional concern over revealed abuses of
similar indirect aid in the form of ocean-mail contract payments to
the American merchant marine led to the enactment of the Merchant
Marine Act of 1936 providing for direct Federal subsidies. And, it
was in this context that President Roosevelt in his message of March 4,
1935, on the American merchant marine made the following
observation:
"In many instances in our history Congress has provided for vari-
ous kinds of disguised subsidies to American shipping *
*
*
"I propose that we end this subterfuge. If the Congress decides that
it will maintain a reasonable adequate American Merchant Marine I
believe that it can well afford honestly to call a subsidy by its right
name."
Apparently, this lesson of history has been lost upon a majority of
the members of this Congress. While H.R. 13296 avoids such subter-
fuge, H.R. 8193 does not!
NORRIS COTTON.
(11)
93D CONGRESS
HOUSE OF REPRESENTATIVES
REPORT
2d Session
No. 93-1638
MARITIME AUTHORIZATION
DECEMBER 19, 1974.-Ordered to be printed
Mrs. SULLIVAN, from the committee of conference,
submitted the following
CONFERENCE REPORT
[To accompany H.R. 13296]
The committee of conference on the disagreeing votes of the two
Houses on the amendments of the Senate to the bill (H.R. 13296)
to authorize appropriations for the fiscal year 1975 for certain mari-
time programs of the Department of Commerce, having met, after
full and free conference, have agreed to recommend and do recommend
to their respective Houses as follows:
That the Senate recede from its amendment numbered 1.
That the House recede from its disagreement to the amendment of
the Senate numbered 2 and agree to the same.
That the amendment of the Senate numbered 3 is reported in dis-
agreement.
That the House recede from its disagreement to the amendment of
the Senate to the title of the House bill and agree to the same.
LEONOR K. SULLIVAN,
FRANK M. CLARK,
THOMAS L. ASHLEY,
JOHN D. DINGELL,
THOMAS N. DOWNING,
JAMES R. GROVER,
CHARLES A. MOSHER,
PAUL N. McCLOSKEY,
Managers on the Part of the House.
WARREN G. MAGNUSON,
VANCE HARTKE,
EDMUND S. MUSKIE,
TED STEVENS,
J. GLENN BEALL, Jr.,
Managers on the Part of the Senate.
38-006
FORD & LIBRARY RALD
JOINT EXPLANATORY STATEMENT OF THE
COMMITTEE OF CONFERENCE
The managers on the part of the House and the Senate at the con-
ference on the disagreeing votes of the two Houses on the amendments
of the Senate to the bill (H.R. 13296) to authorize appropriations for
the fiscal year 1975 for certain maritime programs of the Department
of Commerce, submit the following joint statement to the House and
the Senate in explanation of the effect of the action agreed upon
by the managers and recommended in the accompanying conference
report.
AMENDMENT No. 1
HOUSE BILL
No comparable provision.
The Senate adopted an amendment, adding a new section 3 to the
House-passed bill, which amended the Shipping Act, 1916 by adding
a definition of "citizen of the United States" which would include a
State or a political subdivision of a State, thereby making the pro-
visions of the Ship Mortgage Act applicable to State governments
as well as to private lenders and mortgagees.
CONFERENCE AMENDMENT
Although the conferees rejected the Senate amendment, there was
no disagreement about the need for the proposal and the Managers on
the Part of the House agreed to act expeditiously in the 94th Con-
gress on similar legislation if it should be approved by the Senate.
AMENDMENT No. 2
HOUSE BILL
No comparable provision.
SENATE AMENDMENT
The Senate adopted an amendment, adding a new Section 4 to the
House-passed bill, which would create by statute at least one regional
office of the Maritime Administration for each of the four major sea-
coasts of the United States.
CONFERENCE AGREEMENT
The conferees agreed to the Senate amendment.
The Merchant Marine Act of 1970 (Public Law 91-469) made com-
prehensive amendments to the Merchant Marine Act, 1936. One such
amendment was to make specific reference to the Great Lakes in sec-
(3)
H.R. 1638
4
5
tion 809 of the Merchant Marine Act, 1936 (46 U.S.C. 1213). This
Congress to evaluate the success of this program after a year's experi-
was to give long overdue recognition to the Great Lakes as the fourth
ence. Second, the Conferees agreed to restrict the retroactive provision
major seacoast of the United States. The Maritime Administration
(paragraph 5 of the Senate amendment) to only that damage or
of the Department of Commerce implements the Merchant Marine
destruction for which claims for compensation were filed with the
Act, 1936 through its Washington, D.C. office, and a regional office
Federal Government between January 1, 1972, and the date this
on the Atlantic, Gulf and Pacific coasts of the United States. The
amendment would become law. Those who filed such claims would also
conferees agreed to the Senate amendment as it would provide for a
file applications for compensation, pursuant to this new program. In
Great Lakes regional office as contemplated by the legislative history
addition, the program would be available for compensating damage
of the Merchant Marine Act of 1970. It is anticipated that this office
or destruction to U.S. fishing vessels or gear occurring between the
will be established and adequately staffed before the end of the cur-
effective date of this new provision and March 15, 1976. Funds author-
rent fiscal year.
ized under this section would not be available for compensation after
AMENDMENT No. 3
March 15, 1976.
It is the intent of the Conferees that the "fisheries loan fund" pro-
HOUSE BILL
vided for in subsection (c) of section 4 of the Fish and Wildlife Act
of 1956 be the source of funds for compensation made pursuant to this
No comparable provision.
amendment. Currently, the fund contains approximately $4,000,000.
However, because of past administrative difficulties the Adminis-
SENATE AMENDMENT
tration has imposed a moratorium on the use of these funds, although
Reported in technical disagreement. The managers on the part of
these difficulties may soon be resolved. Since the purposes of this
the Senate will offer a motion to recede from its amendment with an
amendment do not involve past differences with the general loan pro-
amendment changing paragraph (5) of the proposed new subsection
gram and since it is tied to a compensation program which will keep
(f) to read as follows:
the fund replenished, this moratorium should not apply to the program
created by this amendment. The funds to be used are not expected to
(5) This subsection shall apply with respect to uncompen-
exceed $250,000 per year.
sated damage to or destruction of any vessel or the gear of
Paragraph (2) of the amendment outlines the procedures and states
such vessel occurring:
the basic conditions of the loan/compensation program. These proce-
(A) during the period from January 1, 1972, through
dures begin with an application by an owner or operator claiming to
the date of enactment of this subsection, if an applica-
have had his vessel or gear either damaged or destroyed by the actions
tion for a claim for such damage or destruction has been
of a foreign vessel or its crew. After receiving the application, but
filed with the Federal Government during such period;
not more than 30 days after it is filed, the Secretary of Commerce
and
determines whether there is reason to believe that damage or destruc-
(B) during the period from the day after the date of
tion did, in fact, occur as a result of actions by vessels of a foreign
enactment of this subsection through March 15, 1976.
nation. To establish a prima facie case, a fisherman should submit the
Funds authorized under this section shall not be available for
following: (1) a copy of the vessel's log showing the location of the
compensation under this subsection after March 15, 1976.
vessel and the location, quantity, and type of gear alleged to be lost,
The managers on the part of the House will move to concur in this
damaged, or destroyed; (2) a statement by an appropriate Govern-
amendment.
ment official (e.g., someone from the U.S. Coast Guard) that foreign
The Senate adopted an amendment, adding a new section 5 to the
vessels were known to be in the area at the approximate time the gear
House-passed bill, which would establish a special loan program to
was lost, damaged, or destroyed; and (3) an affidavit of the owner or
provide for the payment of compensation to U.S. owners and opera-
operator of the vessel that, to the best of his knowledge, the damage
tors whose vessels or gear are damaged by the actions of foreign ves-
or destruction of the gear or vessel was not caused by his negligence
sels on the U.S. Continental Shelf. This amendment would amend
or intentional acts, natural causes, or other U.S. fishing vessels, and
section 4 of the Fish and Wildlife Act of 1956 (16 U.S.C. 742c: 70
that he was not operating his vessel or employing his gear in viola-
Stat. 1121) which creates a more general loan program for financing
tion of any applicable laws or regulations. To knowingly falsify such
or refinancing the cost of purchasing, constructing, and equipping,
statements will subject the applicant to the penalties contained in 18
maintaining, repairing, or operating commercial fishing vessels or
U.S.C. 1001 relating to false statements.
gear.
After being satisfied that any owner or operator has a bona fide case
CONFERENCE SUBSTITUTE
according to the above guidelines, the Secretary is to make a non-
interest bearing loan to each such owner or operator from the fisheries
The conference substitute is identical to the Senate amendment with
loan fund. The loan would essentially cover "out-of-pocket" losses of
two changes. First, the Conferees agreed to incorporate an expiration
the vessel owner. It would be made in an amount equal to the replace-
date of March 15, 1976, on this new program. This will allow the
ment value of the damaged or destroyed property and the market value
H.R. 1638
H.R. 1638
6
of fish proved to be onboard a damaged or destroyed vessel or within
lost, damaged or destroyed fishing gear.
The loan is made subject to the following conditions:
(1) assignment to the Secretary of Commerce of any right
to recover for damages caused by foreign fishing activities;
(2) the other requirements of section 4 relating to loans to the
extent they are not inconsistent with the purpose of this amend-
ment; and
(3) any other conditions determined by the Secretary to be
necessary.
As soon as an application is received, the Secretary must begin a
thorough investigation of the incident alleged to have taken place.
Although this investigation may be completed before a loan is made
(which is unlikely), it must be completed within six months after the
loan compensation application is filed. In this time frame, it is believed
an adequate investigation can be efficiently completed. If the Secretary
finds that the damage or destruction was indeed caused by the actions
of foreign vessels, he is required to cancel repayment of the loan made
and to seek recovery from the foreign nation involved. If, however,
despite the truthful sworn statement of the owner or operator, the
Secretary finds that the damage or destruction was caused by natural
events (storms, waves, etc.) the non-interest bearing loan is to be con-
verted into one with interest at a rate determined appropriate by the
Secretary. In addition, if the owner or operator is at fault because of
negligence or intentional actions, the Secretary is to require the imme-
diate repayment of the loan with interest.
Paragraph (4) directs and authorizes the Secretaries of State and
Commerce, with the help of the Attorney-General if need be, to seek
recovery of damages from the foreign nation whose vessels are found
to be at fault.
LEONOR K. SULLIVAN,
FRANK M. CLARK,
THOMAS L. ASHLEY,
JOHN D. DINGELL,
THOMAS N. DOWNING,
JAMES R. GROVER,
CHARLES A. MOSHER,
PAUL N. McCLoskey.
Managers on the Part of the House.
WARREN G. MAGNUSON,
VANCE HARTKE,
EDMUND S. MUSKIE,
TED STEVENS,
J. GLENN BEALL, Jr.,
M anagers on the Part of the Senate.
II.R. 1038
CORRECTED SHEET
H. R. 13296
LIBRARY
Ainety-third Congress of the United States of America
FORD
GERALD
AT THE SECOND SESSION
Begun and held at the City of Washington on Monday, the twenty-first day of January,
one thousand nine hundred and seventy-four
An Act
To authorize appropriations for the fiscal year 1975 for maritime programs of
the Department of Commerce, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That funds are
hereby authorized to be appropriated without fiscal year limitation as
the appropriation Act may provide for the use of the Department of
Commerce, for the-fiscal year 1975, as follows:
(a) acquisition, construction, or reconstruction of vessels and
construction-differential subsidy and cost of national defense fea-
tures incident to the construction, reconstruction, or recondition-
ing of ships, $275,000,000;
(b) payment of obligations incurred for ship operating-differ-
ential subsidy, $242,800,000;
(c) expenses necessary for research and development activities,
$27,900,000;
(d) reserve fleet expenses, $3,742,000;
(e) maritime training at the Merchant Marine Academy at
Kings Point, New York, $10,518,000 and
(f) financial assistance to State Marine Schools, $2,973,000.
SEC. 2. In addition to the amounts authorized by section 1 of this
Act, there are authorized to be appropriated for fiscal year 1975 such
additional supplemental amounts for the activities for which appro-
priations are authorized under section 1 of this Act as may be neces-
sary for increases in salary, pay, retirement, or other employee benefits
authorized by law.
SEC. 3. Section 809 of the Merchant Marine Act, 1936, as amended
(46 U.S.C. 1213) is amended (a) by inserting "(a)" immediately
before "Contracts" in the first sentence thereof; and (b) by adding at
the end thereof the following new subsection:
"(b) There shall be established and maintained within the Mari-
time Administration such regional offices as may be necessary, includ-
ing, but not limited to, one such office for each of the four port ranges
specified in subsection (a) of this section. The Secretary of Commerce
shall appoint a qualified individual to be the Director of each such
regional office and shall carry out appropriate functions, activities,
and programs of the Maritime Administration through such regional
offices."
SEC. 4. Section 4 of the Fish and Wildlife Act of 1956 (16 U.S.C.
742c; 70 Stat. 1121), as amended, is further amended by adding the
following new subsection:
"(f) (1) The Secretary of Commerce is authorized, under such
terms and conditions as he may prescribe by regulation to use funds
appropriated under this section to compensate owners and operators
whose fishing vessels or gear have been destroyed or damaged by the
actions of foreign fishing vessels operating in waters superjacent to the
Continental Shelf of the United States as defined in the Convention
on the Continental Shelf.
"(2) Upon receipt of an application filed by an owner or operator
pursuant to this subsection after the effective date of this subsection
by the owner or operator of any vessel documented or certificated
under the laws of the United States as a commercial fishing vessel and
LIBRARY
FORD
071835
H. R. 13296-2
after determination by the Secretary that there is reason to believe
that such vessel or its gear was destroyed or damaged while under
the control of such owner or operator in waters superjacent to the
Continental Shelf of the United States by the actions of a vessel
(including crew) of a foreign nation, the Secretary shall, as soon as
practicable but not later than thirty days after receipt of an applica-
tion, make a non-interest-bearing loan to such owner or operator from
the fisheries loan fund created under subsection (c) of this section.
Any such loan, as determined by the Secretary, shall be in an amount
equal to the replacement value of the damaged or destroyed property
and the market value of fish, if any, onboard such vessel and within
such gear which are lost or spoiled as the result of such damage or
destruction. Any such loan shall-
"(A) be conditional upon the owner or operator of such dam-
aged or destroyed property assigning to the Secretary of
Commerce any rights of such owner or operator to recover for
such damages;
(B) be subject to other requirements of this section with
respect to loans which are not inconsistent with this subsection;
and
"(C) be subject to other terms and conditions which the Sec-
retary determines necessary for the purposes of this subsection.
"(3) The Secretary of Commerce shall, within one hundred and
eighty days of receipt of a loan application, investigate each incident
as a result of which a loan is made pursuant to this subsection and-
"(A) if he determines in any such case that the destruction or
damage was caused solely by a vessel (including crew) of a foreign
nation, he shall cancel repayment of such loan and refund any
principal paid thereon prior to such cancellation and seek recovery
from such foreign nation;
((B) if he determines that the damage or destruction was not
caused solely by a vessel (including crew) of a foreign nation
or solely by the negligence or intentional actions of the owner or
operator of the vessel, he shall require such owner or operator
to repay such loan at a rate of interest determined by him, pur-
suant to subsection (b) of this section, which rate shall be retro-
active to the date the loan was originally made; or
(C) if he determines that the damage or destruction was
caused solely by the negligence or intentional actions of the owner
or operator, he shall require the immediate repayment of such
loan at a rate of interest determined by him, pursuant to subsec-
tion (b) of this section, which rate shall be retroactive to the date
the loan was originally made.
"(4) The Secretary of Commerce and the Secretary of State shall,
with the assistance of the Attorney General, take steps to collect any
claim assigned to him under this subsection from any foreign nation
involved. Amounts collected on any such claim shall be deposited in
the fisheries loan fund.
(5) This subsection shall apply with respect to uncompensated
damage to or destruction of any vessel or the gear of such vessel
occurring:
LIBRARY
FORD
H. R. 13296-3
"(A) during the period from January 1, 1972, through the
date of enactment of this subsection, if an application for a claim
for such damage or destruction has been filed with the Federal
Government during such period; and
"(B) during the period from the day after the date of enact-
ment of this subsection through March 15, 1976.
Funds authorized under this section shall not be available for com-
pensation under this subsection after March 15, 1976.".
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.
FOR IMMEDIATE RELEASE
January 4, 1975
Office of the White House Press Secretary
THE WHITE HOUSE
MEMORANDUM OF DISAPPROVAL
I am withholding my approval from H.R. 13296, a bill
to authorize appropriations for the Maritime Administration.
This is the annual appropriations authorization bill
for certain activities of the Maritime Administration in
the Department of Commerce. I would be pleased to approve
the measure if it were limited to those authorizations.
Unfortunately, the Congress added an unacceptable
amendment which would require the Federal Government to
reimburse U.S. flag fishing vessel owners for damage to
their equipment by foreign flag ships.
The amendment would require the Secretary of Commerce
to provide interest free loans to fishermen to cover the
property and the value of produce lost as a result of
damage caused by foreign vessels operating in the area
of the U.S. Continental Shelf. If an ensuing investigation
proved the loss was caused solely by a foreign ship, the
loan repayment would be cancelled and the United States
would attempt to recover claims from the government
of the foreign national involved. The program would be
retroactive to January 1, 1972, for claims already filed.
This idemnity program would pose serious problems
of administration because it would be difficult to
establish responsibility for any damage caused. Furthermore,
since the bill provides no basis for advance review of
the recipient's financial ability to repay a loan, the
Commerce Department could find itself in the position of
holding a group of bad debts". At the same time, claims
for damage would be difficult to validate and the result
would essentially be a grant program with few effective
restraints.
Moreover, this program sets a precedent for the
Federal relief of private parties from the actions of
foreign nationals. Currently. relief is extended only
to fishermen whose vessels are the victims of actions
by foreign governments beyond recognized territorial
limits. International procedures now exist through
which claims against foreign nationals can be asserted
and adjudicated and these should be used in preference
to a Federal indemnity program.
I urge the Congress to pass once again the
appropriations authorizations provisions of the bill
early in the next session. Meanwhile, the programs
covered by these authorizations and funded by appro-
priations already enacted can be continued under the
continuing resolution which runs through February 28, 1975.
GERALD R. FORD
THE WHITE HOUSE,
January 4, 1975
# # #
December 24, 1974
Dear Mr. Director:
The following bills were received at the White House on December 24th:-
S.J. Res. 40
S. 3481
H.R. 8958
H.R. 14600
S.J. Res. 133
S. 3548
H.R. 8981
H.R. 14689
S.J. Res. 262
8. 3934
H.R. 9182
H.H. 14718
S. 251
S. 3943
H.R. 9199
H.R. 15173
S. 356
S. 3976
H.R. 9588
H.R. 15223
S. 521
S. 4073
H.R. 9654
H.R. 15229
S. 544
S. 4206
H.R. 10212
H.R. 15322
S. 663
H.J. Res. 1178
H.R. 10701
H.R. 15977
S. 754
H.J. Res. 1180
H.R. 10710
H.R. 16045
S. 1017
H.R. 421
H.R. 10827
H.R. 16215
S. 1083
H.R. 1715
H.R. 11144
UH.R. 16596
S. 1296
H.R. 1820
H.R. 11273
H.R. 16925
S. 1418
H.R. 2208
H.R. 11796
H.R. 17010
S. 2149
H.R. 2933
H.R. 11802
H.R. 17045
S. 2446
H.R. 3203
H.R. 11847
H.R. 17085
S. 2807
H.R. 3339
H.R. 11897
H.R. 17468
S. 2854
H.R. 5264
H.R. 12044
H.R. 17558
S. 2888
H.R. 5463
H.R. 12113
H.R. 17597
S. 2994
H.R. 5773
H.R. 12427
H.R. 17628
S. 3022
H.R. 7599
H.R. 12884
H.R. 17655
S. 3289
H.R. 7684
H.R. 13022
S. 3358
H.R. 7767
H.R. 13296
S. 3359
H.R. 8214
H.R. 13869
S. 3394
H.R. 8322
H.R. 14449
S. 3433
H.R. 8591
H.R. 14461
Please let the President have reports and recommendations as to the
approval of these bills as soon as possible.
Sincerely,
Robert D. Linder
Chief Executive Clerk
The Honorable Roy L. Ash
Director
Office of Management and Budget
Washington, D. C.