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The original documents are located in Box 23, folder "3/23/75 S332 Maritime
Authorization FY 1975" 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States of America his copyrights in all of his unpublished writings in National Archives collections.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.
APPROVED MAR 23 1975
Digitized from the White House Records Office: Legislation Case Files at the Gerald R. Ford Presidential Library
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
March 18, 1975
Posted
MEMORANDUM FOR THE PRESIDENT
Subject: Enrolled Bill S. 332 - Maritime Authorization, fiscal
archine
year 1975
Sponsor - Sen. Magnuson (D) Washington
1/24/75
Last Day for Action
March 24, 1975 - Monday
Purpose
To authorize appropriations for certain maritime programs of the
Department of Commerce for the fiscal year 1975, and to require
establishment of an office in the Great Lakes Region.
Agency Recommendations
Office of Management and Budget
Approval
Department of Commerce
Approval
Department of Transportation
No objection
Discussion
The enrolled bill would authorize appropriations for fiscal year
1975 for certain programs of the Maritime Administration of the
Department of Commerce. The authorized funds would provide for
the following at levels requested by the Administration:
--
subsidies for construction or reconstruction of
U.S. flag vessels, and for costs of certain
national defense features for U.S. flag ships --
$275 million
--
operating differential subsidies -- $242.8 million
BERALD R. FORD LIBRARY
2
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.
In addition, the bill includes a provision not requested by the
Administration. It would require the establishment of a regional
Maritime Administration market development office for the Great
Lakes region in order to help assure consideration of the trans-
portation problems of the Great Lakes. Similar offices are now
staffed in the Atlantic, 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.
Other programs and administrative expenses of the Maritime
Administration have been provided for under the general Commerce
Department authorizations already enacted.
With one important exception, this bill is identical to H.R. 13296
of the 93rd Congress which you pocket vetoed on January 4, 1975.
H.R. 13296 included an objectionable provision which would have
established an indemnity program for U.S. fishermen whose equip-
ment was damaged by foreign vessels. The enrolled bill does not
contain this undesirable provision which was the only basis for
your veto.
Director
Enclosures
BERALD FORD UNIVER
THE WHITE HOUSE
ACTION
WASHINGTON
March 21, 1975
Last Day: March 24
MEMORANDUM FOR THE PRESIDENT
FROM:
JIM CANNON
3
SUBJECT:
Enrolled Bill S. 332
Maritime Authorization, FY 75
Attached for your consideration is S. 332 sponsored by
Senator Magnuson which:
-- Authorizes appropriations for certain maritime
programs of the Department of Commerce for FY 75
at levels requested by the Administration.
-- Requires the establishment of an office of the
Maritime Administration in the Great Lakes region.
This enrolled bill eliminates a provision in H.R. 13296
which you pocket vetoed on January 4, 1975, because that
provision would have established an indemnity program
for U.S. fishermen whose equipment was damaged by foreign
vessels. Otherwise, the bill is identical.
Additional information is provided in OMB's enrolled bill
report at Tab A.
OMB, Max Friedersdorf and Phil Buchen (Lazarus) recommend
approval of the enrolled bill.
RECOMMENDATION
That you sign S. 332 at Tab B.
( FORD
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
"Eib
WASHINGTON, D.C. 20503
March 18, 1975
MEMORANDUM FOR THE PRESIDENT
Subject: Enrolled Bill S. 332 - Maritime Authorization, fiscal
year 1975
Sponsor - Sen. Magnuson (D) Washington
Last Day for Action
March 24, 1975 - Monday
Purpose
To authorize appropriations for certain maritime programs of the
Department of Commerce for the fiscal year 1975, and to require
establishment of an office in the Great Lakes Region.
Agency Recommendations
Office of Management and Budget
Approval
Department of Commerce
Approval
Department of Transportation
No objection
Discussion
The enrolled bill would authorize appropriations for fiscal year
1975 for certain programs of the Maritime Administration of the
Department of Commerce. The authorized funds would provide for
the following at levels requested by the Administration:
--
subsidies for construction or reconstruction of
U.S. flag vessels, and for costs of certain
national defense features for U.S. flag ships --
$275 million
--- operating differential subsidies -- $242.8 million
a
FORD
BERALD
2
--
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.
In addition, the bill includes a provision not requested by the
Administration. It would require the establishment of a regional
Maritime Administration market development office for the Great
Lakes region in order to help assure consideration of the trans-
portation problems of the Great Lakes. Similar offices are now
staffed in the Atlantic, 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.
Other programs and administrative expenses of the Maritime
Administration have been provided for under the general Commerce
Department authorizations already enacted.
With one important exception, this bill is identical to H.R. 13296
of the 93rd Congress which you pocket vetoed on January 4, 1975.
H.R. 13296 included an objectionable provision which would have
established an indemnity program for U.S. fishermen whose equip-
ment was damaged by foreign vessels. The enrolled bill does not
contain this undesirable provision which was the only basis for
your veto.
Jan L.Lg
Enclosures
&
FORD
BERALD
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
March 18, 1975
MEMORANDUM FOR THE PRESIDENT
Subject: Enrolled Bill S. 332 - Maritime Authorization, fiscal
year 1975
Sponsor - Sen. Magnuson (D) Washington
Last Day for Action
March 24, 1975 - Monday
Purpose
To authorize appropriations for certain maritime programs of the
Department of Commerce for the fiscal year 1975, and to require
establishment of an office in the Great Lakes Region.
Agency Recommendations
Office of Management and Budget
Approval
Department of Commerce
Approval
Department of Transportation
No objection
Discussion
The enrolled bill would authorize appropriations for fiscal year
1975 for certain programs of the Maritime Administration of the
Department of Commerce. The authorized funds would provide for
the following at levels requested by the Administration:
-
subsidies for construction or reconstruction of
U.S. flag vessels, and for costs of certain
national defense features for U.S. flag ships --
$275 million
-- operating differential subsidies -- $242.8 million
is
voce
THE
2
--
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.
In addition, the bill includes a provision not requested by the
Administration. It would require the establishment of a regional
Maritime Administration market development office for the Great
Lakes region in order to help assure consideration of the trans-
portation problems of the Great Lakes. Similar offices are now
staffed in the Atlantic, 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.
Other programs and administrative expenses of the Maritime
Administration have been provided for under the general Commerce
Department authorizations already enacted.
With one important exception, this bill is identical to H.R. 13296
of the 93rd Congress which you pocket vetoed on January 4, 1975.
H.R. 13296 included an objectionable provision which would have
established an indemnity program for U.S. fishermen whose equip-
ment was damaged by foreign vessels. The enrolled bill does not
contain this undesirable provision which was the only basis for
your veto.
Jane L.of
Enclosures
THE WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.:
Date: March 19, 1975
Time: 9:30 a.m.
Lynn May oh
FOR ACTION:
Max Friedersdorf
and CC (for information): Warren Hendriks
Jack Marsh
Ken Lazarus
Mike Duval
n
James Cavanaugh
FROM THE STAFF SECRETARY
DUE: Date: Thursday, March 20
Time: 2:00 p.m.
SUBJECT:
Enrolled Bill S. 332-Maritime Authorization, FY 75
ACTION REQUESTED:
For Necessary Action
X For Your Recommendations
Prepare Agenda and Brief
Draft Reply
X 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
March 20, 1975
MEMORANDUM FOR:
WARREN HENDRIKS
FROM:
MAX L. FRIEDERSDORF M.6.
SUBJECT:
Action Memorandum - Log No.
Enrolled Bill S.332-Maritime Authorization
FY 75
The Office of Legislative Affairs concurs with the Agencies
that the Enrolled Bill S.332 should be signed.
Attachments
THE WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.:
Date:
March 19, 1975
Time: 9:30 a.m.
FOR ACTION:
Lynn May
Max Friedersdorf
00 (for information): Warren Hendriks
Jack Marsh
Ken Lazarus
James Cavanaugh
FROM THE STAFF SECRETARY
DUE: Date: Thursday, March 20
Time:
2:00 p.m.
SUBJECT:
Enrolled Bill S. 332-Maritime Authorization, FY 75
ACTION REQUESTED:
For Nocessary Action
X For Your Recommendations
Prepare Agenda and Brief
Draft Reply
X
For Your Comments
Draft Remarks
REMARKS:
Please return to Judy Johnston, Ground Floor West Wing
No objection. -- Ken Lazarus
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, planse
Warr
telephone the Staff Secretary immediately.
POP
THE WHITE HOUSE
ACTION MEMORANDIN
LOG NO.:
Date:
March 19, 1975
Time: 9:30 a.m.
FOR ACTION:
Lynn May
Max Friedersdorf
CC (for information): Warren Hendriks
Jack Marsh
Ken Lazarus
James Cavanaugh
FROM THE STAFF SECRETARY
DUE: Date: Thursday, March 20
Time: 2:00 p.m.
SUBJECT:
Enrolled Bill S. 332-Maritime Authorization, FY 75
ACTION REQUESTED:
For Necessary Action
X For Your Recommendations
Prepare Agenda and Brief
Draft Rebly
X 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 CAP questions or it you unticlysis C.
delay in submitting he required encluded, please
telephor the in
DEPARTMENT OF COMMERCE
THE ASSISTANT SECRETARY OF COMMERCE
Washington, D.C. 20230
UNITED STATES OF AMERICA
MAR 14 1975
Honorable James T. Lynn
Director, Office of Management
and Budget
Washington, D. C. 20503
Attention: Assistant Director for Legislative Reference
Dear Mr. Lynn:
This is in reply to your request for the views of this Department
concerning S. 332, an enrolled enactment
"To authorize appropriations for the fiscal year 1975
for certain maritime programs of the Department
of Commerce."
Section 1 of S. 332 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 necessary for increases in employee benefits authorized
by law.
The provisions of sections 1 and 2 are identical to those contained
in the draft bill submitted by this Department to the Congress on
February 15, 1974.
Section 3 amends the Merchant Marine Act, 1936 to provide that at
least one regional office of the Maritime Administration be main-
tained for each of the four major seacoasts of the United States.
The practical effect of the amendment is to require the establish-
ment of a regional office for Great Lakes ports, including the
St. Lawrence Seaway.
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.
This Department recommends approval by the President of S. 332.
Sincerely,
Tilton H. Dobain
Tilton H. Dobbin
Assistant Secretary
of Commerce for Domestic
and International Business
DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY OF TRANSPORTATION
*
*
WASHINGTON, D.C. 20590
UNITED STATES OF AMERICA
MAR 1 4 1975
Honorable James T. Lynn
Director
Office of Management and Budget
Washington, D.C. 20503
Dear Mr. Lynn:
You have asked for our comments on S. 332, an enrolled bill
"To authorize appropriations for the fiscal
year 1975 for certain maritime programs of
the Department of Commerce."
We defer to the Department of Commerce as to Sections 1 and 2 of
the enrolled bill, since those sections deal with fiscal year 1975
appropriations for that 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, on this basis, do not have any objection to the President
signing the enrolled bill.
Sincerely,
Rodney E. Eyster
General Counsel
S. 332
Ainety-fourth Congress of the United States of America
AT THE FIRST SESSION
Begun and held at the City of Washington on Tuesday, the fourteenth day of January,
one thousand nine hundred and seventy-five
An Act
To authorize appropriations for the fiscal year 1975 for certain maritime pro-
grams of the Department of Commerce.
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
features incident to the construction, reconstruction, or recondi-
tioning of ships, $275,000,000;
(b) payment of obligations incurred for ship operating-differ-
tial 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 necessary
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 Maritime
Administration such regional offices as may be necessary, including,
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.".
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.
Calendar No. 12
94TH CONGRESS
}
SENATE
REPORT
1st Session
No. 94-7
MARITIME ADMINISTRATION AUTHORIZATION
FISCAL YEAR 1975
FEBRUARY 5, 1975.-Ordered to be printed
Mr. LONG, from the Committee on Commerce,
submitted the following
REPORT
[To accompany S. 332]
The Committee on Commerce, to which was referred the bill (S.
332) 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 without amendment and
recommends that the bill 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 assure that the Maritime Administration maintains regional offices
for each of the nation's four principal seacoasts, including the Great
Lakes.
SUMMARY AND DESCRIPTION
The legislation provides for authorization of 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;
(2) Payment of obligations incurred for ship operating-differential
subsidy-$242.8 million;
38-010
2
(3) Expenses necessary for research and development activities—
$27.9 million;
(4) Reserve fleet expenses-$3.742 million;
(5) Maritime training at the Merchant Marine Academy at Kings
Point, N.Y.-$10.518 million; and
(6) Financial assistance to State marine schools-$2.973 million.
Section 2 authorizes additional supplemental appropriations for
fiscal year 1975 for the activities specified in section 1 of the bill, to the
extent necessary for increases in salaries, pay, retirement, or other
employee benefits authorized by law.
Section 3 of the bill amends the section of the Merchant Marine Act,
1936 which requires the four major seacoasts (Atlantic, Gulf, Great
Lakes, Pacific) to be treated equitably by providing that at least one
regional office of the Maritime Administration be maintained for each
of the four areas.
BACKGROUND
The 93rd Congress passed the fiscal year 1975 maritime authoriza-
tion (H.R. 13296) on December 20, 1974. That legislation was pocket-
vetoed by President Ford after the 93rd Congress had adjourned be-
cause of a provision providing for reimbursement for U.S. fishing
vessels and equipment damaged by foreign flag vessels. On January 23,
1975, S. 332 was introduced and ordered favorably reported, without
amendment, on January 27, 1975. The bill is identical to the vetoed
H.R. 13296 in every respect except that the amendment which required
the Federal Government to reimburse U.S.-flag fishing vessel owners
for damage to their equipment by foreign-flag vessels, was deleted.
EXPLANATION OF THE AUTHORIZATION FOR FISCAL YEAR 1975
In 1970, the most comprehensive and far-reaching maritime legis-
lation in decades was enacted in order to halt a pronounced decline of
the U.S. merchant marine. That legislation, the Merchant Marine Act,
1970 (Public Law 91-469) (the "1970 Act"), provided for a 10-year
program to improve the efficency of American shipyards and to build
a modern, efficient U.S.-flag merchant fleet SO that the United States
could once again be a major maritime Nation.
This bill, S. 332, authorizes appropriations for the 5th year of
the program established by the 1970 Act. In considering the authori-
zation request for fiscal year 1975, the Committee has reviewed the
performance of the Maritime Administration. Substantial progress has
been made toward rebuilding the U.S. merchant marine, and it has be-
come increasingly clear that with continued support the goals set in
1970 will be reached.
Shipbuilding has reached a new peacetime high. The backlog of
orders for new vessels is 31/2 times as large as when the program began
in 1970. The present backlog of 90 merchant ships valued at $3.6
billion represents 200,000 man-years of employment for shipyard
workers and those in the supply industries and a potential addition
to our fleet of nearly 6.2 million deadweight tons. U.S. shipbuilders
have begun for the first time to receive orders for very large crude
oil carriers and have advanced to a leading position in the construction
S.R. 7
3
of liquefied natural gas carriers. The progress in the field of energy
carriage balances earlier construction of modern liner vessels includ-
ing LASH and RO/RO vessels for intermodal operations.
Series production of vessels and shipyard modernization and expan-
sion have contributed to a reduction in subsidy rates for ship construc-
tion. The declining subsidy rates which encourage shipyard efficiency
are being met and, in certain cases, the subsidy award is significantly
below the guideline rate. While the guideline rate is presently 39 per-
cent, awards for tankers have been made at 33.4 percent and liquefied
natural gas carriers have been contracted for a 16.5 percent.
In the area of vessel operations, modern bulk carriers built with
Federal assistance are beginning to enter foreign trade. This is impor-
tant because over 90 percent of our country's foreign trade tonnage is
comprised of bulk cargoes and U.S. participation in this trade has
been minimal for many years. In the liner trades, the average age of
our subsidized fleet has decreased by 20 percent and the average ship
size has increased by 17 percent, reflecting the replacement of older
vessels with larger ships of advanced design.
Progress is also being made toward reducing the dependence of op-
erators on operating subsidies. A number of capital intensive U.S.-flag
vessels, such as container ships, are competing in our foreign trade
without subsidy. Nineteen vessels previously receiving operating sub-
sidy no longer receive such aid.
The 10-year merchant marine program is approaching its mid-
point. Clear signs of progress are evident. The construction of a mod-
ern, balanced, competitive American merchant fleet is well underway.
As these vessels are delivered and enter service, U.S.-flag penetration
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-
propriate instrument for restoring our Nation's prominence in inter-
national shipping. In the opinion of the Committee, this program
should be continued to its completion.
SUMMARY
The amounts authorized by the bill are as follows:
(a) Acquisition, construction, or reconstruction of vessels and con-
struction-differential subsidy and cost of national defense features in-
cident to the construction, reconstruction, or reconditioning of ships,
$275,000,000.
These funds finance payment of construction subsidies based on
the difference between United States and foreign shipbuilding costs.
These sums are paid to U.S. shipyards SO that operators can purchase
American-built vessels at the same prices as similar foreign-built ves-
sels. In order to encourage the competitiveness of American yards, the
1970 Act provides for the gradual reduction of the construction sub-
sidy level from 45 percent in 1971 to 35 percent in 1976.
Subsidized shipbuilding orders exceeding $2.5 billion have been
placed with U.S. shipyards since enactment of the 1970 Act. These
orders have provided for the construction of 52 new ships of 4.7 million
deadweight tons and for the conversion of 19 existing ships into con-
S.R. 7
4
tainer ships. These vessels are of advanced and highly productive de-
sign. They comprise a diverse mix of types that will provide the
United States a more competitive fleet in a variety of trades.
The authorization request for this activity for fiscal 1975 ($275
million) is the same as that for fiscal year 1974. This amount will sus-
tain an adequate and orderly shipbuilding program. Maritime Ad-
ministration officials project awarding contracts for fourteen new
ships, the conversion of four container ships into larger capacity con-
tainer ships and funding for three shops for which contracts were
awarded in 1974.
Ships currently being built with the aid of construction-differential
subsidy are larger and more costly than those envisioned when the
1970 Act was passed and their productive capacity exceeds the capacity
goal established in 1970. The fiscal year 1975 authorization request
will allow series production of bulk cargo ships to continue at exist-
ing yards. The economies realized through series orders are essen-
tial to achieve competitiveness in the production of energy carriers.
When in service, these ships will help to create a competitive U.S.-
flag bulk cargo fleet. The combined 1974 and 1975 programs will gen-
erate 50,000 man-years of work for shipyard employees and about an
equivalent amount of employment in supporting industries.
Maritime Administration officials have expressed confidence that in
1975 all ship construction contracts will be awarded at a subsidy rate
lower than the 37 percent mandated by the 1970 Act. Subsidy rates
have been as low as 33.4 percent for some types of tankers and 16.5
percent for LNG's. These declining subsidy rates mean that for a given
level of Government support, a larger shipyard orderbook is gen-
erated. Thus, while the 1975 program level is $23 million less than in
1974 due to a decrease in the availability of carryover funds, the 1975
funds will generate approximately $976 million in shipyard orders—
$65 million more than generated by the higher 1974 level of funding.
(b) Payment of obligations incurred for ship operating-differential
subsidies, $242,800,000.
Operating subsidies are generally based upon the difference between
U.S. and foreign vessel operating costs and are paid in order to pro-
mote the maintenance of a U.S.-flag merchant fleet capable of provid-
ing essential shipping services. Essential services are defined as those
ocean services, routes and lines, and bulk cargo carrying services
essential for the promotion, development, expansion, and maintenance
of the foreign commerce of the United States. Operators receiving
subsidies for the provision of such services must operate Ameri-
can-built vessels manned by American crews. The fiscal year 1975
authorization request of $242,800,000 will finance operating subsidies
to U.S.-flag operators in order to promote the continuation of essen-
tial American merchant marine services. Subsidized liner activity will
remain at essentially the same level as in fiscal 1974. New bulk vessels,
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
increase in subsidized regular bulk carrier service from 3.1 ship-years
in 1974 to 6.8 in 1975. Carriage of the 1973 grain purchases to the
Soviet Union will be completed this year. No funds have been re-
quested for fiscal 1975 for special commodity shipments of this type
S.R. 7
5
due to uncertainties about the extent of possible future purchases and
the level of charter rates prevailing at the time.
From the $242,800,000, an estimated $198,932,000 in subsidy will be
paid in fiscal year 1975 for 5 passenger and combination passenger/
cargo, 153.2 general cargo and 6.8 bulk carrier ship-years of operation.
An additional $43,868,000 will pay obligations incurred under subsidy
contracts for subsidized operations in prior years. The fiscal 1975 re-
quest reflects a decrease of $15,489,000 from the 1974 adjusted level of
$258,289,000. It should be noted, however, that the 1974 level includes
a 1973 appropriations carryover of $13,774,410 and a 1974 supple-
mental authorization for $23 million (P.L. 93-308).
(c) Expenses necessary for research and development activities,
$27,900,000.
The Maritime Administration research and development program
has as its purpose the development of technological superiority in
order to enable U.S. shipyards and vessel operators to become more
competitive. Projects under the program involve the development of
new and more efficient types of ships, machinery, and equipment, and
the improvement of operating practices in order to improve American
shipping and shipbuilding and help overcome foreign advantages (e.g.
as low-wage costs). Industry participation and cost sharing have been
emphasized to insure the relevance and practicality of these projects.
In the area of advanced ship construction, the 1975 program will
continue to explore new ship construction methods and equipment as
well as new ship designs which will lower shipbuilding costs. Exam-
ples of this research include new welding procedures, standardized
component designs, shipyard automation, and the development of im-
proved transmission and propulsion systems, such as an advanced gas
turbine and nuclear power.
In order to reduce operating costs and improve ship utilization,
the Maritime Administration supports research and development in
the area of advanced ship operations systems. Projects in this area
include computerized models to assist operators with cargo space
documentation, intermodal distribution coordination, fleet manage-
ment, and computers to aid in navigation, communications, ship
maneuvering and collision avoidance. These improvements will result
in greater vessel utilization and increased safety of operation. This
activity also supports R. & D. efforts in the areas of pollution abate-
ment and safety improvements. The 1975 program will continue to
develop cost-effective means of reducing pollution.
The fiscal year 1975 request for research and development of
$27,900,000 is an increase of $8,900,000 from the 1974 appropriation
level. The 1974 appropriation of $19 million was augmented by $5
million carried forward from 1973. Thus, the actual increase in pro-
gram level from 1974 to 1975 is $3,900,000.
(d) Reserve Fleet expenses, $3,742,000.
The Maritime Administration maintains the National Defense Re-
serve Fleet in order to supplement our active merchant fleet in time
of war or national emergency. The authorization request for this
activity in fiscal year 1975 is $3,742,000. That is $31,000 less than in
1974. This reduction in Reserve Fleet expenses results from the con-
solidation of the fleet at the sites and the elimination of obsolete ton-
S.R. 7
6
nage. In 1975 29 merchant ships and 101 Navy ships are scheduled for
scrapping. The fleet will then consist of 294 ships.
(e) Maritime training at the Merchant Marine Academy at Kings
Point, N.Y., $10,518,000.
This authorization request of $10,518,000 is for the operation of
the Merchant Marine Academy at Kings Point, N.Y., to train cadets
service as officers in the U.S. merchant marine. The 1975 program
anticipates a graduating class of 200 officers, approximately the same
level as in the past several years.
The major portion of the $1.9 million increase requested for this
category is for the necessary modernization program at the Academy,
including renovation and improvement of the physical fitness
facilities.
(f) Financial assistance to state marine schools, $2,973,000.
The requested authorization is for the training of cadets at six par-
ticipating state maritime schools located in California, Michigan,
New York, Maine, Massachusetts, and Texas. Federal assistance to
these schools, authorized by the Maritime Academy Act of 1958, as
amended (46 U.S.C. 1383), includes subsidies and grants to the
schools, allowances to cadets for uniforms, textbooks and subsistence,
and maintenance and repair expenses of training vessels on loan from
the National Defense Reserve Fleet.
The 1975 authorization request of $2,973,000 reflects an increase over
1974 of $546,000. Expenditures under this authorization will remain
at essentially the same level as in 1974 except in the area of mainte-
nance and repair of Federally owned schoolships. The requested in-
crease will allow conversion from a reactive to a preventive main-
tenance program and assure continued compliance with Coast Guard
and American Bureau of Shipping safety standards.
Section 2 of the bill is basically a technical amendment to avoid
having to amend the 1975 authorization request if supplemental ap-
propriations for fiscal year 1975 are required for increases in remuner-
ation of employees at the National Defense Reserve Fleet and the
Merchant Marine Academy.
Section 3 of the bill would modify section 809 of the Merchant
Marine Act, 1936, as amended (46 U.S.C. 1213) to establish by law. at
least one regional office of the Maritime Administration for each of
the Nation's four seacoasts.
Section 809 currently provides that contracts entered into under the
1936 Act shall "equitably serve, insofar as possible, the foreign-trade
requirements of the Atlantic, Gulf, Great Lakes, and Pacific ports of
the United States." This amendment would provide the administra-
tive structure for implementing that obligation as well as other re-
sponsibilities of the Maritime Administration.
Since the Maritime Administration already maintains regional
offices for the Atlantic (New York), Gulf (New Orleans), and Pacific
(San Francisco) ports, the practical effect of the amendment is to
require the establishment of one additional regional office for Great
Lakes ports and the St. Lawrence Seaway. A Great Lakes regional
office can and should serve as a focal point for efforts to re-establish
overseas U.S.-flag service in the Lakes and to realize the full potential
of our fourth seacoast.
S.R. 7
7
The amendment also requires the Secretary of Commerce to appoint
a director for each regional office and it is the Committee's expectation
that, where necessary, these offices will be established and adequately
staffed as promptly as possible.
ESTIMATED COSTS
Pursuant to section 252 (a) of the Legislative Reorganization Act
of 1970 (Public Law 91-510), the Committee estimates that the cost of
the legislation is $562,933,000, the specific amounts authorized by the
bill, plus administrative expenses incurred in establishing one addi-
tional regional office.
TEXT OF S. 332, AS REPORTED
To authorize appropriations for the fiscal year 1975 for maritime
programs of the Department of Commerce.
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, N.Y., $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 be-
fore "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
Maritime Administration such regional offices as may be necessary,
including, but not limited to, one such office for each of the four
port ranges specified in subsection (a) of this section. The Secre-
tary of Commerce shall appoint a qualified individual to be the
Director of each such regional office and shall carry out appro-
priate functions, activities, and programs of the Maritime Ad-
ministration through such regional offices."
S.R. 7
March 12, 1975
Dear Mr. Director:
The following bill was received at the White
House on March 12th:
S. 332
Please let the President have reports and
recommendations as to the approval of this bill
as soon as possible.
Sincerely,
Robert D. Linder
Chief Executive Clerk
The Honorable James T. Lynn
Director
Office of Management and Budget
Washington, D. C.