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The original documents are located in Box 2, folder "Cargo Preference" of the Philip
Buchen 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States of America his copyrights in all of his unpublished writings in National Archives collections.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.
Digitized from Box 2 of the Philip Buchen Files at the Gerald R. Ford Presidential Library
Cargo
preference
Wednesday 12/18/74
Meeting
12/18/74
5:15 p.m.
1:10 Mike DuVal's office called to say you are invited to a meeting
with the President in the Cabinet Room at 5:15 this afternoon --
subject: cargo preference. Those attending:
Seidman
(It will be for 10 minutes;
Greenspan
principals only)
Eberle
Ash
Secy. Dent
Baroody
Marsh
Timmons
Cole
DuVal
FORD it LIBRARY 07V830
THE WHITE HOUSE
WASHINGTON
To:
Phil Buchen
I have a few changes in mind, but
you will want to see this.
Phil Areeda
encl.
December 20, 1974
FORD : LIBRARY
I. The Meaning of the Waiver
The Merchant Marine Act, as amended by H. R. 8193, provides in
§901 (d)7 that:
"The [cargo preference] requirements of paragraph 1 may be
temporarily waived by the President upon determination that
an emergency exists justifying such a waiver in the national
interest.
The Conference Report describes this provision as "more restrictive" than
the original House bill which provided that cargo preference requirement
may be waived whenever Congress, or the President, or the Secretary of
Defense "declares that an emergency exists justifying a temporary waiver. "
The Conference Report goes on to say:
"It is the intent of the Conferees that the temporary duration of
the waiver referred to in the provision is to exactly coincide
with the duration of the emergency which triggered the waiver. 11
A declared: subsequent exchange of letters between the House and Senate Conferees
"That the statutory waiver language is intentionally broad in scope
and gives the President great flexibility. Upon determining that
an emergency exists, including a defense, economic or foreign
policy emergency, the provision would allow him to waive all or
a portion of the requirements of paragraph 1
In any event, we
believe that the intent of the Congress is to provide the President
broad authority to deal with emergencies, and that the legislation,
as written, provides such authority. 11
One may indeed conclude that the waiver authority is "broad" in the
sense that the triggering "emergency" may be military, economic, or
waiver. diplomatic. Nor is there any specific time limit on the duration of the
It should, however, be observed that the waiver is limited in the following
respects. First, it must, according to the statute, operate only "temporarily. "
and Thus the waiver must be grounded in some temporary condition or circumstance,
can continue only so long as that condition or circumstance continues.
FORD : LIBRAR) BERALD
- 2
Second, the triggering event must be an "emergency." " Third, the "emergency"
must be described with sufficient particularity by the President so that
the "temporary" waiver may be seen, in the Conference Report language,
"to exactly coincide" with it. Fourth, the triggering emergency and the
resulting waiver may not be so broad in character or extensive in duration
as to preclude meaningful cargo preference requirements which the statute
commands.
In short, the language of the statute and its legislative history are
unmistakable in authorizing only temporary waivers for rather precisely
defined emergencies. For the President to sign H.R. 8193 and then to
eviscerate it with a more or less continuous waiver would be both contrary
to law and evidence of "sharp dealing" in bad faith.
There should be no doubt, finally, that a waiver can be challenged in
court. The beneficiaries would probably have standing to challenge the
waiver directly in a declaratory judgment or other suit. Even so, the
Courts would allow the President broad discretion to determine what is an
"emergency" requiring a temporary waiver "in the national interest. " The
Courts probably would sustain a waiver grounded in a specified rate of
inflation (e.g., 10% or more). But a waiver grounded on, say, 3% inflation would
not be a "temporary" response to an "emergency." A series of waivers,
moreover, would ultimately be seen by the Courts as contrary to the statute.
But even if the Courts would sustain such a series of waivers, to eviscerate
a statute through Presidential waivers would not be faithfully to execute the
nation's laws.
GERALD FORD LIBRARY
II. Is the President Committed to Sign?
In his Message of November 18, 1974, the President addressed cargo
preference in the following language:
"Although I fully support a strong U.S. merchant marine,
I am seriously concerned about problems which this bill raises
in the areas of foreign relations, national security, and perhaps
preference. most significantly, the potential inflationary impact of cargo
"Administration officials have testified during congressional
hearings on our concerns about the impact of this bill.
"The House-Senate conferees adopted new language concerning
the waiver provision so that the requirements of this bill 'may be
temporarily waived by the President upon determination that an
emergency exists justifying such a waiver in the national interest.
1
However, the legislative history of the waiver does not expressly
demonstrate that the Congress intends it to be broad in scope.
"The potential problems which could arise if this bill becomes
law require a provision which will permit the President to waive
its requirements for economic as well as foreign affairs and national
defense reasons. Since the waiver language in the bill is not
explicit, the Conference Committee Report should make it clear
that the Congress intends to grant broad waiver authority.
"Other provisions in the bill which concern me are: (1) the
narrowness of the definition of which ships are eligible to participate
in this trade, (2) the rebate of oil import fees and (3) the unnecessary
anti-pollution requirement that vessels serving certain ports be
built with expensive double bottoms. 11
The conclusions to be drawn from this language are several.
(a) The concerns stated in the final paragraph have not entirely
been met. The rebate on oil import fees is continued. (I cannot
speak to the other points.)
(b) The Conference Committee Report was not amended. This is
not, however, a significant point because an exchange of letters among
the Conferees provides a weighty legislative history that indeed "the
Congress intends to grant broad waiver authority. 11 Our problem
FORD is LIBRARY 02RALD
is not with the legislative history but with the statutory language
and the very concept of a "temporary" "waiver" to meet a defined
"emergency."
(c) The quoted language does not state a commitment to sign the
bill even if the concerns stated in the final two paragraphs were met.
The quoted language does not indicate that a bill so revised would
be acceptable--as was expressly stated about other bills elsewhere
in the message. It is not stated or suggested that the concerns
mentioned in the final three paragraphs resolve the basic concern
expressed in the initial paragraph.
(d) The quoted language is consistent with the view that cargo
preference is undesirable in any form, but that its worst features
ought to be lessened in order to minimize the problems that would
result if it became law through, for example, an override of a
Presidential veto.
FORD : GERALD LIBRARY
THE WHITE HOUSE
WASHINGTON
To:
Phil Buchen
I have a few changes in mind, but
you will want to see this.
Phil Areeda
encl.
December 20, 1974
FORD & LIBRA FRALD
I. The Meaning of the Waiver
The Merchant Marine Act, as amended by H.R. 8193, provides in
§901 (d)7 that:
"The [cargo preference] requirements of paragraph 1 may be
temporarily waived by the President upon determination that
an emergency exists justifying such a waiver in the national
interest.
The Conference Report describes this provision as "more restrictive" than
the original House bill which provided that cargo preference requirement
may be waived whenever Congress, or the President, or the Secretary of
Defense "declares that an emergency exists justifying a temporary waiver. "
The Conference Report goes on to say:
"It is the intent of the Conferees that the temporary duration of
the waiver referred to in the provision is to exactly coincide
with the duration of the emergency which triggered the waiver. It
A declared: subsequent exchange of letters between the House and Senate Conferees
"That the statutory waiver language is intentionally broad in scope
and gives the President great flexibility. Upon determining that
an emergency exists, including a defense, economic or foreign
policy emergency, the provision would allow him to waive all or
a portion of the requirements of paragraph 1.
In any event, we
believe that the intent of the Congress is to provide the President
broad authority to deal with emergencies, and that the legislation,
as written, provides such authority."
One may indeed conclude that the waiver authority is "broad" in the
sense that the triggering "emergency" may be military, economic, or
waiver. diplomatic. Nor is there any specific time limit on the duration of the
It should, however, be observed that the waiver is limited in the following
Thus respects. First, it must, according to the statute, operate only "temporarily.
and the waiver must be grounded in some temporary condition or circumstance,
can continue only so long as that condition or circumstance continues.
FORD i LIBRARY 03RALD
- 2 -
Second, the triggering event must be an "emergency. 11 Third, the "emergency"
must be described with sufficient particularity by the President so that
the "temporary" waiver may be seen, in the Conference Report language,
"to exactly coincide" with it. Fourth, the triggering emergency and the
resulting waiver may not be so broad in character or extensive in duration
as to preclude meaningful cargo preference requirements which the statute
commands.
In short, the language of the statute and its legislative history are
unmistakable in authorizing only temporary waivers for rather precisely
defined emergencies. For the President to sign H.R. 8193 and then to
eviscerate it with a more or less continuous waiver would be both contrary
to law and evidence of "sharp dealing" in bad faith.
There should be no doubt, finally, that a waiver can be challenged in
court. The beneficiaries would probably have standing to challenge the
waiver directly in a declaratory judgment or other suit. Even so, the
Courts would allow the President broad discretion to determine what is an
"emergency" requiring a temporary waiver "in the national interest. " The
Courts probably would sustain a waiver grounded in a specified rate of
inflation (e.g., 10% or more). But a waiver grounded on, say, 3% inflation would
not be a "temporary" response to an "emergency." A series of waivers,
moreover, would ultimately be seen by the Courts as contrary to the statute.
But even if the Courts would sustain such a series of waivers, to eviscerate
a statute through Presidential waivers would not be faithfully to execute the
nation's laws.
FORD i LIBRARY GERALD
II. Is the President Committed to Sign?
In his Message of November 18, 1974, the President addressed cargo
preference in the following language:
"Although I fully support a strong U.S. merchant marine,
I am seriously concerned about problems which this bill raises
in the areas of foreign relations, national security, and perhaps
most significantly, the potential inflationary impact of cargo
preference.
"Administration officials have testified during congressional
hearings on our concerns about the impact of this bill.
"The House-Senate conferees adopted new language concerning
the waiver provision so that the requirements of this bill 'may be
temporarily waived by the President upon determination that an
emergency exists justifying such a waiver in the national interest.
1
However, the legislative history of the waiver does not expressly
demonstrate that the Congress intends it to be broad in scope.
"The potential problems which could arise if this bill becomes
law require a provision which will permit the President to waive
its requirements for economic as well as foreign affairs and national
defense reasons. Since the waiver language in the bill is not
explicit, the Conference Committee Report should make it clear
that the Congress intends to grant broad waiver authority.
"Other provisions in the bill which concern me are: (1) the
narrowness of the definition of which ships are eligible to participate
in this trade, (2) the rebate of oil import fees and (3) the unnecessary
anti-pollution requirement that vessels serving certain ports be
built with expensive double bottoms. 11
The conclusions to be drawn from this language are several.
(a) The concerns stated in the final paragraph have not entirely
been met. The rebate on oil import fees is continued. (I cannot
speak to the other points. )
(b) The Conference Committee Report was not amended. This is
not, however, a significant point because an exchange of letters among
the Conferees provides a weighty legislative history that indeed "the
Congress intends to grant broad waiver authority. " Our problem
FORDO & LIBRARY OFRALD
is not with the legislative history but with the statutory language
and the very concept of a "temporary" "waiver" to meet a defined
"emergency. "
(c) The quoted language does not state a commitment to sign the
bill even if the concerns stated in the final two paragraphs were met.
The quoted language does not indicate that a bill so revised would
be acceptable--as was expressly stated about other bills elsewhere
in the message. It is not stated or suggested that the concerns
mentioned in the final three paragraphs resolve the basic concern
expressed in the initial paragraph.
(d) The quoted language is consistent with the view that cargo
preference is undesirable in any form, but that its worst features
ought to be lessened in order to minimize the problems that would
result if it became law through, for example, an override of a
Presidential veto.
BERALD FORD LIBRARY
THE WHITE HOUSE
WASHINGTON
B
mr.
Eva,
FYI
Since Mr. Buchen received
a copy of the draft, I thought you'
ould want a copy of the final to
complete your file.
Eleanor
12/26
GERALD LIBRARY ? FORD
INFORMATION
December 21, 1974
MEMORANDUM FOR THE PRESIDENT
FROM:
PHILLIP AREEDA
SUBJECT:
CARGO PREFERENCE BILL
H. R. 8193
You asked about the meaning of the waiver provision in the cargo
preference bill, H.R. 8193. I conclude that the grounds for waiver
are "broad" but that any waiver must be a "temporary" response
to an "emergency." A succession of temporary waivers might
possibly be sustained in the courts but would be contrary to the
statute. More detail is stated in the attachment.
The attachment also discusses whether your November 18 statement
about eargo preference commits you to sign H.R. 8193.
Attachment
PA chron.
Memo to President's file
Cargo Preference (HR 8193)
FORD & LIBRARY DERALD
I. The Meaning of the Waiver
The Merchant Marine Act, as amended by H.R. 8193, provides in
§901 (d)7 that
"The [cargo preference] requirements of paragraph 1 may be
temporarily waived by the President upon determination that
an emergency exists justifying such a waiver in the national
interest. "
The Conference Report describes this provision as "more restrictive" than
the original House bill which provided that cargo preference requirement
may be waived whenever Congress, or the President, or the Secretary of
Defense "declares that an emergency exists justifying a temporary waiver. "
The Conference Report goes on to say
"It is the intent of the Conferees that the temporary duration of
the waiver referred to in the provision is to exactly coincide
with the duration of the emergency which triggered the waiver. "
A subsequent exchange of letters between the House and Senate Conferees
declared
"That the statutory waiver language is intentionally broad in scope
and gives the President great flexibility. Upon determining that
an emergency exists, including a defense, economic or foreign
policy emergency, the provision would allow him to waive all or
a portion of the requirements of paragraph 1.
In any event, we
believe that the intent of the Congress is to provide the President
broad authority to deal with emergencies, and that the legislation,
as written, provides such authority."
One may indeed conclude that the waiver authority is "broad" in the
sense that the triggering "emergency" may be military, economic, or
diplomatic. Nor is there any specific time limit on the duration of the
waiver.
It should, however, be observed that the waiver is limited in the following
respects. First, it must, according to the statute, operate only "temporarily. 11
Thus the waiver must be grounded in some temporary condition or circumstance,
and can continue only so long as that condition or circumstance continues.
FORD LIBRABY
- 2 -
Second, the triggering event must be an "emergency. 11 Third, the "emergency"
must be described with sufficient particularity by the President so that
the "temporary" waiver may be seen, in the Conference Report language,
"to exactly coincide" with it. Fourth, the triggering emergency and the
resulting waiver may not be so broad in character or extensive in duration
as to preclude meaningful cargo preference requirements which the statute
commands.
In short, the language of the statute and its legislative history are
unmistakable in authorizing only temporary waivers for rather precisely
defined emergencies. For the President to sign H.R. 8193 and then to
eviscerate it with a more or less continuous waiver would be both contrary
to law and evidence of "sharp dealing" in bad faith.
There should be no doubt, finally, that a waiver can be challenged in
court. The beneficiaries would probably have standing to challenge the
waiver directly in a declaratory judgment or other suit. Even so, the
Courts would allow the President broad discretion to determine what is an
"emergency" requiring a temporary waiver "in the national interest. 11 The
Courts probably would sustain a waiver grounded in a specified rate of
inflation (e.g., g., 10% or more). But a waiver grounded on, say, 3% inflation would
not be a "temporary" response to an "emergency. 11 A series of waivers,
moreover, would ultimately be seen by the Courts as contrary to the statute.
But even if the Courts would sustain such a series of waivers, to eviscerate
a statute through Presidential waivers would not be faithfully to execute the
nation's laws.
FORD LIBRARY it 078830
3
II. Is the President Committed to Sign?
In his Message of November 18, 1974, the President addressed cargo
preference in the following language:
"Although I fully support a strong U. S. merchant marine,
I am seriously concerned about problems which this bill raises
in the areas of foreign relations, national security, and perhaps
most significantly, the potential inflationary impact of cargo
preference.
"Administration officials have testified during congressional
hearings on our concerns about the impact of this bill.
"The House-Senate conferees adopted new language concerning
the waiver provision so that the requirements of this bill 'may be
temporarily waived by the President upon determination that an
emergency exists justifying such a waiver in the national interest.
However, the legislative history of the waiver does not expressly
demonstrate that the Congress intends it to be broad in scope.
"The potential problems which could arise if this bill becomes
law require a provision which will permit the President to waive
its requirements for economic as well as foreign affairs and national
defense reasons. Since the waiver language in the bill is not
explicit, the Conference Committee Report should make it clear that
the Congress intends to grant broad waiver authority.
"Other provisions in the bill which concern me are: (1) the
narrowness of the definition of which ships are eligible to participate
in this trade, (2) the rebate of oil import fees and (3) the unnecessary
anti-pollution requirement that vessels serving certain ports be
built with expensive double bottoms. 11
The conclusions to be drawn from this language are several.
(a) The concerns stated in the final paragraph have not been met.
Ships built abroad are not eligible to participate even if operating
under the U.S. flag; and the rebate on oil import fees is continued.
(b) The Conference Committee Report was not amended. There
was, however, an exchange of letters among the conferees which establishes the
legislative history that "the Congress intends to grant broad waiver authority. "
FORD
LIBRARY
- 4 -
Our problem is not with the legislative history but with the statutory
language and the very concept of a "temporary" "waiver" to meet
a defined "emergency. 11
(c) The quoted language does not state a commitment to sign
the bill even if the concerns stated in the final two paragraphs
were met. The quoted language does not indicate that a bill so
revised would be acceptable- as was expressly stated about other
bills elsewhere in the message. It is not stated or suggested that
the concerns mentioned in the final three paragraphs resolve the
basic concern expressed in the initial paragraph.
(d) The quoted language is consistent with the view that cargo
preference is undesirable in any form, but that its worst features
ought to be lessened in order to minimize the problems that would
result if it became law through, for example, an override of a
Presidential veto.
is
FORD
&
LIBRARY