ENERGY TRANSPORTATION SECURITY ACT OF 1974

WEDNESDAY, OCTOBER 10, 1973

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON MERCHANT MARINE OF THE

COMMITTEE ON MERCHANT MARINE AND FISHERIES,

Washington, D.C.

The subcommittee met, pursuant to recess at 10 a.m. in room 1334, Longworth Office Building, Hon. Frank M. Clark, chairman of the subcommittee, presiding.

Mr. CLARK. Good morning.

The Subcommittee on Merchant Marine will please come to order. This morning the subcommittee continues hearings on H.R. 8193 and similar bills, and looks forward to receiving the views of the Department of Interior and the Department of State on this very important piece of legislation.

Before I call the first witness. I wish to emphasize the rule of the Merchant Marine Committee. This requires witnesses to furnish 50 copies of prepared testimony at least 24 hours before the hearing dates. This procedure must be followed if the subcommittee is to develop a meaningful record.

Before I call Mr. Duke Ligon to the witness table, I would first like to ask the lovely Lindy Boggs to give us her comments on this legislation. Mrs. Boggs, welcome to the subcommittee.

STATEMENT OF HON. LINDY (MRS. HALE) BOGGS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF LOUISIANA

Mrs. BOGGS. Mr. Chairman, I am pleased to have this opportunity to appear before the House Merchant Marine and Fisheries Committee to testify in support of H.R. 8193, the oil import bill.

This legislation which I have cosponsored would provide the means to continue the revitalization of the U.S. merchant marine, particularly its tanker fleet. It would build on the foundation established by the 1970 Merchant Marine Act and would provide the U.S. fleet with its most indispensable need, sustained cargo. At the same time, this legislation would provide the Nation with numerous other benefits, including new jobs in shipyards and aboard ships, new U.S. industrial output, a stronger U.S. economy and balance. of payments, and enhanced national security.

My State has long been in the forefront of efforts to facilitate. the importation of oil into the United States. We are currently engaged in the planning for the first U.S. deepwater port. By pas

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sage of this legislation, we would insure that this port is used not only by foreign-flag vessels, but also by a large fleet of U.S. tankers. If this port were in existence today, better than 95 percent of the oil it would receive from abroad would be on foreign vessels that deprive the United States of jobs, tax and payments revenue, and which leave the U.S. dependent on foreign nations for our oil transportation.

The new U.S. shipbuilding that would result from this bill would provide sustained work for American shipyards. Not only would existing yards be fully utilized, but at least one major new yard would be required.

To meet the mandate of this bill, that by 1980, 30 percent of U.S. oil imports be carried on U.S. ships, the construction of over 4.8 million tons of new tanker vessels will be required. This would produce over 45,000 man-years of ship construction work and would produce at least twice as many spin-off jobs in basic U.S. industries such as steel, lumber, electronics, and ironwork. This bill would thus produce a massive new source of employment and economic growth for the U.S. economy.

The legislation would also guarantee that refineries in my State, which will grow progressively more dependent on imported oil in the future, will not be subjected to economic coercion by the foreign nations which control much of the tanker tonnage now supplying the United States. Only with an assured supply of oil, carried on U.S.-flag tankers, can the United States be confident that the Nation's refineries will be supplied with the foreign oil they will need. These are the tangible and important benefits of H.R. 8193, the oil import bill. Its many benefits can be achieved at little, if any, cost to the Nation. And if these costs are placed in the perspective of the dangers this will help us avoid, they are no longer viable arguments for opposing this bill.

I support H.R. 8193 and urge the House Merchant Marine and Fisheries Committee to give it an early, favorable and strong endorsement.

Thank you.

Mr. CLARK. The subcommittee appreciates your well-prepared

statement.

I would now like to call the distinguished Member from Florida, the Hon. Claude Pepper, to the witness table.

STATEMENT OF HON. CLAUDE PEPPER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA

Mr. PEPPER. I thank you, Mr. Chairman. On May 8 of this year, I introduced H.R. 7606, which I feel will help strengthen our American-flag merchant marine. Specifically it will call on all Federal agencies which have a part to play in the imports of petroleum and petroleum products to assure that 20 percent of the tonnage be transported in U.S.-flag vessels.

But, just to make sure that are figure of 20 percent is not allowed to become a permanent ceiling on the importation of oil in U.S.-flag

tankers, the bill raises this percentage to 25 percent after June 30, 1975, and to 30 percent after June 30, 1977. As a safeguard, all of these percentage floors are made subject to the provision of availability of such vessels. In addition, H.R. 7606 requires the availability of fair and reasonable rates for such traffic. Finally, the bill requires that the importation of petroleum be arranged so that there is participation in the traffic by various geographical areas of the United States.

Mr. Chairman, I have given this matter my support for several reasons. In the first place, as a major maritime nation with a very significant total volume of imports and exports, we have a poor track record as far as transporting this traffic in our own flag vessels. It's less than 5 percent at present. As a result of the Merchant Marine Act of 1970, we are committed to a 10-year program, of rebuilding a strong maritime industry. It seems to me that strengthening our merchant marine goes hand in hand with substantially raising the percentage of our foreign commerce which is transported in vessels of our own flag, manned by our own seamen. Petroleum and petroleum products constitute a substantial portion of our foreign commerce. Accordingly, this is a logical place to initiate some improvement in the amount of traffic moved in U.S.flag ships. And this is especially true since in all likelihood, oil imports will increase significantly in future years.

A second reason for supporting legislation designed to increase the ratio of oil imported in U.S.-flag vessels concerns the balance of payments. The use of foreign-flag tankers, of course, has an adverse effect on our balance of payments. This is important because our oil imports are already large, and will certainly continue to grow. It has been estimated that the use of foreign-flag vessels for oil imports caused a $500 million deficit. By 1975 it is expected to reach $600 million.

A third reason is that U.S.-flag vessels will employ American seamen, helping to preserve a supply of trained ocean-going personnel to man our ships. And, of course, use of U.S.-flag vessels affords employment to Americans.

Finally, U.S.-flag tankers are subject to safety and environmental standards imposed by the U.S. Government. I feel it is important to maximize safety while minimizing environmental hazards in our merchant marine industry.

Mr. Chairman, I have already mentioned that petroleum and petroleum products together constitute a significant item in our foreign imports. Petroleum and products are important import commodities to Florida. Through Florida's major harbor areas, more than 5 million tons of fuel oil imports entered the country in 1971. Thus, the provision in H.R. 7606 that there be participation in this traffic in future years by geographical area could be important to Florida ports, as well as other port districts in the country. But above all, H.R. 7606 is important to help assure that our objective and declared policy of a strong merchant marine industry is realized. It is for this and the other reasons I have discussed that I have introduced the measure, and have availed myself of the privilege of appearing before the subcommittee to discuss it.

Mr. Chairman, I wish to express my thanks for that privilege. and I urge the members to give this matter their most earnest consideration.

Mr. CLARK. An excellent statement, Claude. We thank you so much for your appearance here this morning.

The gentleman from West Virginia, Hon. Bob Mollohan, would like to give a brief statement at this time. Congresman, we thank you for coming.

STATEMENT OF HON. ROBERT H. MOLLOHAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WEST VIRGINIA

Mr. MOLLOHAN. Thank you Mr. Chairman. The measure which this committee is considering today is significant because it marks a congressional effort to halt, and hopefully, reverse the deterioration of the role played by the U.S. merchant marine fleet in international commerce. For far too long, we have accepted the philosophy that the ships flying the flag of other countries could transport cargo more cheaply than U.S. vessels. In a direct cost per barrel sense, this philosophy may still be valid for the transportation of imported petroleum products, but to passively accept this situation as inevitable is shortsighted and unrealistic.

From a national defense standpoint, it is totally unacceptable to become dependent upon foreign sources for the necessary oil to keep our economy and our defense establishment functioning. To depend upon transportation that is under foreign regulation and control to bring that oil to our shores is even more irresponsible.

This measure is a reasonable effort to assure that this dependency is not compounded as a result of the current demand for fuel.

We are asking that a modest 20 percent of our imported petroleum and petroleum products be transported on U.S.-flag commercial vessels. This amount increases to 30 percent by 1977. This formula will provide incentive for private ship operators to maintain and expand their U.S.-flag fleets with a reasonable assurance of cargoes. It will give the United States improved control over the transport used to carry this essential product, and will improve the labor market for our maritime workers. These are only a few of the advantages to be gained from this measure. I, therefore, urge, Mr. Chairman, that the committee report favorably on the proposed amendment to the Merchant Marine Act of 1936.

Mr. CLARK. A very brief, but informative statement.

Our last member to testify this morning, is our good friend and colleague, an ex-member of this committee, Hon. Jack Edwards.

STATEMENT OF HON. JACK EDWARDS. A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ALABAMA

Mr. EDWARDS. Mr. Chairman, members of the committee, I am appearing today to testify in favor of my bill. II.R. 10285, which requires that U.S.-flag vessels carry a minimum of 20 percent of U.S. imports of petroleum and petroleum products. A minimum of 30 percent would be required by 1977.