Hon. LEONOR K. SULLIVAN, DEPARTMENT OF STATE, Washington, D.C., June 13, 1973. Chairman, Committee on Merchant Marine and Fisheries, Washington, D.C. DEAR MADAM CHAIRMAN: The Secretary has asked me to reply to your letter of March 22, 1973, requesting comment on H. R. 5898, a bill "To amend the Merchant Marine Act, 1936, to provide authority to the Secretary of Commerce to issue permits to construct, operate, and maintain certain offshore port and terminal facilities." The Department notes that H. R. 5898 would amend the Merchant Marine Act, 1936 (Chapter 27 of Title 46, United States Code) by adding at the conclusion thereof the following new Title: "Title XIII-Offshore Port and Terminal Facilities." The Administration forwarded to Congress on April 18, 1973, a draft bill (H. R. 7501) "To amend the Outer Continental Shelf Lands Act and to authorize the Secretary of the Interior to regulate the construction and operation of deepwater port facilities." The Department supports the Administration's bill which provides a comprehensive legislative approach for the construction and operation of deepwater port facilities. Consequently, we are opposed to H. R. 5898. The Office of Management and Budget advises that there is no objection to the submission of this report and that enactment of H. R. 7501 would be in accord with the program of the President. DEAR MADAM CHAIRMAN: Reference is made to your request for the views of this Department on H.R. 5898, "To amend the Merchant Marine Act, 1936, to provide authority to the Secretary of Commerce to issue permits to construct, operate, and maintain certain offshore port and terminal facilities." The bill would add a new title XIII to the Merchant Marine Act, 1936 to require that no port or terminal facility shall be constructed, operated, or maintained by any person beyond the territorial waters of the United States, unless he has obtained a permit from the Secretary of Commerce. In lieu of H.R. 5898 the Department recommends enactment of H.R. 7501, "To amend the Outer Continental Shelf Lands Act and to authorize the Secretary of the Interior to regulate the construction and operation of deepwater port facilities", which was included in the President's April 18, 1973 Message to the Congress on Energy Policy. The Department has been advised by the Office of Management and Budget that there is no objection from the standpoint of the Administration's program to the submission of this report to your Committee and that enactment of H.R. 7501 would be in accord with the program of the President. Sincerely yours, EDWARD C. SCHMIDT, The CHAIRMAN. Assuming that we receive all the necessary information during the course of these hearings, I foresee a combination of the two approaches represented by these two bills, with additional provisions to cover all facets of the overall problem. In addition, I think I should state that, since the problem area also impinges upon the responsibilities of other House committees, I have discussed the overall problem with the chairmen of those committees, and I can state that we all intend to work together, 22-635-73- -2 consistent with the rules of the House, to produce legislation, whether in one bill or in several, which will serve the overall needs. I look forward with interest to the hearings which we are now undertaking. Because of the extensive time which will be involved, I have asked the Honorable Thomas N. Downing, Chairman, Subcommittee on Oceanography, to share with me the responsibility for the conducting of these hearings. Not only is Mr. Downing's subcommittee responsible for matters concerning the ocean and ocean resources generally, but it was from his subcommittee that this committee developed and reported the Coastal Zone Management Act of 1972, which, when implemented, will have a significant bearing on this problem. In addition, of course, Mr. Downing is a senior member of the Subcommittee on Merchant Marine and in the past has served on both the Subcommittee on Coast Guard and Navigation, and the Subcommittee on Fisheries and Wildlife Conservation and the Environment. I welcome his participation with me in chairing these hearings, and before recognizing the first witness, I will call on Mr. Downing for whatever comments he might like to make. Mr. DOWNING. Thank you, Madam Chairman. I am greatly honored that the chairman has asked me to join her in sharing the responsibility for the conduct of this series of hearings on offshore ports and terminals. Rather than going over the same ground that the chairman has so adequately covered, I would simply say that in my opinion it is not a question of whether we should go forward with some type of offshore transfer capability but what direction our efforts should take. I am particularly interested in the potential impact of an offshore terminal program on the future of the U.S. merchant marine, on U.S. shipyards and on our ability to keep price increases at an absolute minimum for consumers. In addition, I want to be sure that whatever solutions we arrive at provide for the best possible protection to our marine environment and our coastal areas. One of the significant things we must explore is the potential relationship between the offshore terminals and the adjacent shore areas, including present port operations. Considerations of that interface makes it all the more apparent how valuable a piece of legislation the Coastal Zone Management Act of 1972 could be, if only we could get a little cooperation from the administration in its implementation. I intend to pursue this issue as the hearings develop. Thank you very much. The CHAIRMAN. Thank you, Mr. Downing. The first witness to be heard this morning is a representative of the Department of the Interior. That Department is deeply involved in seeking solutions to the Nation's energy problems, and has the present responsibility for the leasing of the Outer Continental Shelf areas for the recovery of oil. In addition, the Department of the Interior has been proposed as the nucleus of a new Department of Energy and Natural Re T sources, in which the President is proposing to repose even more responsibility in the energy field. I will ask Assistant Secretary Jack O. Horton to come forward to the witness chair. If you will introduce the gentleman who accompanies you, for the record, it will be helpful. Mr. HORTON. I am happy to do so. I have on my right Jared Carter, the Deputy Under Secretary, and on my left Mr. John Allen, the Assistant Legislative Counsel. STATEMENT OF HON. JACK HORTON, ASSISTANT SECRETARY FOR Mr. HORTON. Madam Chairman, we appreciate this opportunity to testify on the subject of deepwater ports. As you know, the Department of the Interior is deeply concerned with developing ways to bridge the gap which is growing between the Nation's supply of and demand for energy. We are concentrating on encouraging more intensive development of domestic reserves of oil and gas, and on ways to utilize our vast coal reserves without degrading our environment. We are devoting efforts toward conserving energy. But, regardless of how successful we are in these efforts it is clear to us, as it is to you Madam Chairman as you point out in your statement, and to most observers that we are going to have to rely on increased imports of petroleum to meet the demand for energy in the coming few decades. Projections always vary, but it seems pretty safe to say that by 1985, we will be importing at least one-half of our total domestic demand for oil. Most of that imported oil will come from the Middle East and Africa and will be brought into east coast and gulf coast ports. A second, interrelated trend is the increase in tanker size. In 1955, Spyro Niarchos launched the largest tanker then afloat47.000 deadweight tons. Recently the Globtic Tokyo came into service at 477,000 dwt. Tankers of 530,000 dwt have been ordered by Shell Oil Co. and a letter of intent has been signed for a 706,000 dwt tanker. We are deeply concerned about the impact these trends will have on existing port facilities and on the environment. In 1970, 2.5 million barrels of oil a day were brought into east coast ports by a tanker fleet averaging 30,000 dwt. By 1980, the east coast could be importing as much as 6.6 million barrels crude oil per day. Of the principal tanker ports on the east coast only Portland, Maine, can accommodate fully loaded tankers exceeding 55,000 deadweight tons. Even if average tanker size. went to 50,000 dwt, tanker calls to east coast ports in 1980 would be double the 1970 level. This magnitude of small tanker traffic would necessarily result in a substantial increase in oil pollution from groundings and collisions. The prospect of ever increasing numbers of small tankers plying coastal waters and crowding into existing harbors is highly disturbing. The alternative spelled out in the legislation which the Department has proposed as well as in bills before this committee is to license the construction of deepwater terminals off our coasts. Tankers would tie up to them and off load their oil into a pipeline connected to the mainland. This has two principle advantages. First it would reduce port. congestion and the attendant risk of oil spill from collision or grounding. Also, if a spill did occur at a deepwater port, there is more time to clean it up before it reaches the beaches and sensitive estuarine areas. The second obvious advantage of deepwater ports is that they can accommodate deepdraft tankers. These tankers, known as VLCC's for "very large crude carriers," are generally classified as 200,000 dwt and upward. They require from 60 feet of water for the smallest to over 100 feet of water for the largest. The Atlantic and gulf coast ports are relatively shallow waters and the surrounding seabed slopes off gradually. The Port of Houston for example is 110 miles away from water 100 feet deep. VLCC's are unquestionably here to stay for the very simple reason that they can move oil for significantly less cost, particularly on the long haul from the Persian Gulf. These tankers will be used. The question is simply whether these large tankers will unload in the Carribean or Canada for transshipment to the United States or whether they will bring their cargoes directly to this country via deepwater ports off our own coasts. The construction and operation of our own deepwater ports will provide substantial savings for the American consumer. In addition to economic advantages, these large newer tankers could offer environmental advantages in the form of advanced pollution control devices such as segregated ballast systems, and improved navigation and fire control systems. The administration's proposal authorized the Secretary to include as a condition of the deepwater port license measures to minimize or prevent pollution of the surrounding waters. Such measures would relate to the design and operation of vessels using the structure. Notwithstanding such requirements there are economic incentives to vessels owners to incorporate these devices. A barrel of oil spilled is a barrel that cannot be sold. Moreover, the Federal Water Quality Improvement Act of 1970 assigns legal liability to vessel owners up to $14 million for oil spills. That law is specifically extended to facilities which would be licensed under the administration's proposal. Segregated ballast tanks cut down turn around times by permitting unloading of ballast and loading of cargo and vice versa simultaneously. When you have a tanker costing $100 million every day of delay eliminated means real savings. I think it is important to note at this point that the technology for unloading large tankers in deepwater and piping the oil ashore is well established. The single point mooring technique has been in successful use since 1959 and presently there are more than 100 in use around the world. An alternative means of accommodating deepdraft tankers would be to deepen existing channels. We do not in general favor this alternative. While it might replace small tankers with one large one, that large tanker would be exposed to a greater risk of grounding, because of its greater draft, and would be exposed to collision from other vessels. In most cases, particularly the gulf coast where the shelf slopes off very gradually, dredging deeper channels would be more costly economically and would be prohibitive in terms of environmental cost. Having established what I believe is a strong case for deepwater ports, I would like to make a few brief points about what form the legislation should take. First, a word about why we consider legislation to be necessary. There are basically two reasons: First, there is enough uncertainty about existing federal law that we do not believe we have a clear mandate to grant a license to authorize the construction and operation of deepwater ports off U.S. coasts. The second reason is to assure that deepwater ports built off our coast meet specific environmental and navigational safeguards. For that reason, one purpose of the bill is to prohibit transporting any cargo to the United States from a deepwater port off our coast unless that port is licensed under the act. I should note at this point that we believe the proper basis for this Federal jurisdiction beyond the 3-mile limit is the principle in international law that all nations can make reasonable uses of the high seas. We consider deepwater ports to be a reasonable use and one of the conditions of the license should be to make sure that the operation of the facility does not violate that principle. A principal difference between the administration's bill and the one pending before this committee is that our bill gives Federal jurisdiction to the Department of the Interior, whereas H.R. 5091 and H.R. 5898 would give jurisdiction to the Department of Com merce. Three factors led to the administration's decision: First, Interior has the fundamental federal responsibility for assuring the Nation an adequate supply of energy. This entails supervising the oil import program, administering all emergency fuel supply programs and providing analytical support for the present Oil Policy Com mittee. We also lease all energy resources on public lands and the Outer Continental Shelf. At the President's direction we have recently created an Office of Energy Conservation. |