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In addition, H.R. 5533 would be one of a number of issues that we would bring before the Congress next year to retaliate for the failure of a trade agreement to eliminate unfair trade practices.

Mr. TAYLOR. Thank you.

Our next witness is Mr. Eric G. Scharf, the Executive Director of the National Association of Passenger Vessel Owners.

Mr. Scharf, we welcome your statement. If you feel it is going to take a while, tell us and we will recess. Otherwise, you have about 10 minutes to make your statement.

STATEMENT OF ERIC G. SCHARF, EXECUTIVE DIRECTOR, NATIONAL ASSOCIATION OF PASSENGER VESSEL OWNERS, WASHINGTON, D.C.

Mr. SCHARF. Good morning, Mr. Chairman, and Members of the Committee.

My full statement has been submitted. I will summarize a few of our comments.

We represent some 400 companies that operate approximately 1,000 United States Coast Guard-inspected vessels in the United States. Our vessels are American-built, American-owned, American-operated, American-crewed and subject to the full safety oversight of the United States Coast Guard.

Our members operate throughout the country, providing the public with dinner cruises, sightseeing and tour excursions, car and passenger ferry services, charter vessel operations domestic overnight trips and other passenger-carrying operations; last year some 45 million people rode on safe, economical voyages.

We appreciate the opportunity to testify today on the subject of allowing gambling on United States vessels. This is a topic of much concern and interest within our membership. As you know, this legislation has only recently been introduced, at the height of the busy summer season for most of our members. Consequently, our public policy process has not yet reached a position on these specific pieces of legislation and I refrain from stating a position at this time.

Our membership will be holding its annual convention in January, at which time we should reach a consensus of opinion. I invite you or members of your staff to meet with our members at that time and to conduct a dialogue.

Our first priority is always ensuring that our passengers have a safe voyage. We support Federal efforts to regulate the passenger vessel industry, both through domestic vessel inspection and certification and the regulation of foreign ship activity in United States ports. We believe that the United States Coast Guard does an excellent job in ensuring the safety of United States passengers on United States vessels.

On the question of "voyages to nowhere," we do not like the fact that our vessels, which typically operate short trips, find themselves competing against foreign-flag vessels that offer gambling. Oftentimes gambling is more than the principal activity of the ship. We find that it is not a level playing field.

The written testimony has comments about the problems of the foreign-flag vessels and how they contribute to the foreign-flag cruise to nowhere problem.

Second, our concern is the impact riverboat gambling will have as it is developed in Iowa, Illinois and Mississippi. The Iowa and Illinois legislation doesn't actually go into effect until next year so we are not sure what impact that will have on the long run financial health of our industry. While many of our larger companies have the deep pockets to reach into and make the substantial investment necessary to enter the gambling business, some of the smaller members fear being swamped by having to compete with gambling operations nearby. They contend that no gambling may be better than either domestic or foreign-flag ship gambling. That is an issue we need to look at more carefully.

As you can see, the factors in reaching a position on this issue are complicated. There are many positive reasons to support United States-flag gambling. However, there are downsides.

Simply opening gambling to United States vessels will not solve the voyage to nowhere problem that troubles some of our members, nor open up new business opportunities for the bulk of United States passenger vessels still trying to compete with foreign vessels. Thank you for the opportunity to testify today.

[The prepared statement of Mr. Scharf can be found at the end of the hearing.]

Mr. TAYLOR. Thank you, Mr. Scharf.

One point I would like to make is that at this time the States have sole jurisdiction as to whether or not they will allow gambling activity on vessels in their State waters, so that any Federal rules have upheld the privilege of the State to have that exclusive jurisdiction. So anything that we would do would be limited to the situation that presently exists which forbids American-flag vessels with gambling devices onboard from sailing into international waters while it does not forbid their foreign competitors from doing

SO.

I hope that you would pass that on to your members. I want to commend your members for living by the rules. I represent a large number of seafood vessels, offshore supply boats, tug boats and they all live by the rules, pay dues, have boats built here and they resent the fact that the extremely lucrative cruise ship business with regard to gambling goes on on a foreign-flag vessel that does not live by the rules.

This legislation is to hopefully help our shipyards and to help our American seamen but above all to address the inequity where you are living by one set of rules than your competitors.

We don't think that is fair, and it flies directly in the face of the cabotage laws, one of the oldest laws in our republic, which reserves coastwide commerce for American-flag vessels.

If you have any additional statement, you are certainly welcome to make it. We are down to six minutes before the vote. We could recess or adjourn, whatever you prefer, sir.

Mr. SCHARF. I have no further statements.

Mr. TAYLOR. Does anyone else wish to testify before the Committee?

The meeting is adjourned.

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[Whereupon, at 11:50 a.m., the Subcommittee was adjourned, and the following was submitted for the record:]

1018T CONGRESS
2D SESSION

H. R. 5533

To provide for restricting foreign flagged gambling vessels to territorial seas.

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IN THE HOUSE OF REPRESENTATIVES

AUGUST 3, 1990

Mr. TAYLOR (for himself, Mr. TAUZIN, Mr. TRAFICANT, Mrs. BENTLEY, Mrs.
UNSOELD, Mr. RAVENEL, Mr. TALLON, and Mr. BORSKI) introduced the fol-
lowing bill; which was referred to the Committee on Merchant Marine and
Fisheries

A BILL

To provide for restricting foreign flagged gambling vessels to

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territorial seas.

Be it enacted by the Senate and House of Representa

2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

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This Act may be cited as "The Between the Capes

5 Competitive Revisions of 1990".

6 SEC. 2. TERRITORIAL SEA RESTRICTION.

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Subject to restrictions imposed by a State over vessels

8 operating in waters subject to State jurisdiction, only a docu9 mented vessel of the United States may operate as a gam10 bling ship in the territorial sea of the United States.

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1 SEC. 2. DEFINITIONS.

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For the purpose of this act—

(1) "territorial sea" means the belt of seas measured from the line of ordinary low water along that

portion of the coast which is in direct contact with the

open sea and the line marking the seaward limit of inland water, and extending seaward a distance of twelve miles.

(2) "gambling ship” means a vessel, regardless of tonnage, that can accommodate more than six passengers, and—

(A) carries and operates gambling devices for

the use of its passengers, or

(B) otherwise provides facilities for the pur

pose of gaming or gambling, including accepting, recording, or registering bets, or carrying on a policy game or any other lottery, or playing any

game of chance, for money or other thing of value.

(3) "vessel" includes every kind of water craft or other contrivance used or capable of being used as a

means of transportation on water, as well as any ship,

boat, barge, or other water craft or any structure capa

ble of floating on the water.

(4) "documented vessel" has the same meaning as

in chapter 121 of title 46, United States Code.

HR 5533 IH

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The provisions of this Act shall be effective one hundred

3 and eighty days after date of enactment.

HR 5533 IH

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