INDEPENDENT FEDERAL MARITIME ADMINISTRATION THURSDAY, JULY 20, 1967 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON MERCHANT MARINE OF THE Washington, D.C. The subcommittee met at 10:15 a.m., pursuant to recess in room 1334, Longworth House Office Building, Hon. Edward A. Garmatz (chairman of the committee) presiding. The CHAIRMAN. The meeting will please come to order. Today we are continuing our hearings in H.R. 159 and other bills to establish an independent Maritime Administration. The committee is privileged to hear as its first witness our very distinguished colleague from Louisiana, Mr. Hébert. Mr. Hébert, we appreciate your appearance here. You may proceed in any way you see fit. STATEMENT OF HON. F. EDWARD HÉBERT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF LOUISIANA Mr. HÉBERT. Mr. Chairman, our Nation's policy has always been to maintain a powerful, diversified merchant marine. Why we have done so should be obvious: We need a strong merchant marine to transport supplies to the far points of the globe. And as a key support for our national defense, a strong merchant marine is indispensable. For example, we must import many of the 77 raw materials that are considered "strategic materials" by the President's Office of Emergency Planning. Of our bulk commodity imports, such as iron ore, manganese ore, bauxite, chromite, sugar, copper, crude oil, and others, 99 percent were carried by sea. The point is simple: Our Nation imports critical bulk commodities in such huge proportions that they can move only by ocean transportation. And that they are crucial to our national security erases any doubt that we must have the bulk carriers to move them. Experience has shown well that vessels, trained and experienced seamen, and shipbuilding capacity cannot be produced at a moment's notice. And so today, when warfare moves with almost blinding speed, it is extremely doubtful that we could adequately meet a crisis requir ing a strong merchant marine if we did not already have one in existence when the crisis begins. Secretary of Defense McNamara has often emphasized our need for bulk carriers and tankers to strengthen the Nation's defense capabili ties. Our present construction rate of fewer than 15 new vessels a yes: M is patently inadequate. Consequently, most of our foreign waterborne commerce is handl by foreign carriers, with the result that the development of our o merchant marine has been seriously impeded and our balance of pa ments has been hurt. Our dependence on foreign shipping and foreg yards to construct our vessels drains the economy of millions of do lars each year. Every major branch of Government has vigorously affirmed o need to maintain a strong merchant marine. Yet, we have done not ing to improve the sad condition that the U.S. merchant marine ha fallen into today. With those considerations in mind, we must decide how we can be secure the Nation's defense position and its economy. Does the answer lie within the Department of Transportation, where maritime iss would probably be handled as they have been by the Department Commerce? Or does the maritime industry merit a separate agen that could determine its own future? Mr. Chairman, this committee now has an excellent opportunity: reaffirm the great American concept that this Nation should mainta an influential role on the world seas. Your action to establish a fre and independent Martime Administration in the executive bran would be a decisive declaration in favor of a strong merchant marin Only through independence can the maritime industry even hope! serve the interest of this Nation as it is expected to. It must be able · determine its own future. And only an independent maritime agen reporting directly to the President and subject to the oversight of th committee, can accomplish that. The CHAIRMAN. Mr. Hébert, that was a very helpful statement. We thank you for giving your time to appear here today. The CHAIRMAN. Our next witness is the Honorable G. Elliott Hagar our colleague from Georgia. Mr. Hagan, the committee is pleased to have you appear and yo may proceed in any way you see fit. STATEMENT OF HON. G. ELLIOTT HAGAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA Mr. HAGAN. Thank you, Mr. Chairman, for this opportunity! express my views about the urgent need for action in the pending measure to establish the Maritime Administration as an autonomo agency of Government. We have many examples to make the case about the necessity for taking this kind of action, Mr. Chairman. Hardly a day passes that we do not read in the newspapers of Go ernment support to the aerospace industry. Yet how often do we rea of government support of our shipping industry-even though or 97 percent of troops and supplies going to Vietnam go by ship s not by air? Mr. Chairman, I am not criticizing the Government support or the programs of the aerospace industry. However, I am using these two ransportation agencies to compare the great inequities in the two. Extensive efforts were made to lay up the NS Savannah, an exremely valuable piece of maritime research. The maritime appropriaions are but a tiny proportion of those that go to the air and space gencies yet the spending of approximately $2 million to keep the Savannah in operation for another year was opposed. It was with nuch difficulty that the NS Savannah was kept in operation for another year-a year so important in the development of the nuclear ship program. The fight over the Savannah involved only $2 million, yet nearly $1 billion in funds were committed for the SST. Last year $4.3 billion was appropriated to NASA solely for research and development and $110 million allotted to the FAA for the same purpose. But only $7.5 million was allotted the Maritime Administration for its research and development. The entire appropriation was a mere onefourteenth of what NASA received. As a result, two-thirds of the Maritime fleet has fallen into obsolescence. While our airlines fly planes far superior to those they flew during World War II, our Nation still sails the same Liberty and Victory ships built a quarter of a century ago. Mr. Chairman, the maritime industry has been ignored to the point that nearly the entire fleet needs to be rebuilt. I submit that this sorry state of affairs has seriously limited our capability to meet our defense commitment. In addition, our commercial position in the world has been damaged. Those who degrade the merchant marine do not seem to realize that when the merchant marine suffers, so does the Nation. The solution to the problems besetting the merchant marine lies in the establishment of an independent Maritime Administration. Both NASA and FAA are established as independent agencies able to promote their interests while the maritime industry is hidden away in a Cabinet-level department and shuffled around from department to department. The result is little, if any, attention to our shipping needs. If we want our merchant marine to survive the only answer is the establishment of an independent agency. Organized independently, the Maritime Administration would be able to carry out its programs and policies without the fear of veto from some other level of bureaucracy. Maritime must be veto free if it is to rebuild our dying fleet. This is the only way that the decline of our maritime industry can be prevented. Thank you. The CHAIRMAN. Are there any questions? Mr. Hagan, the committee is grateful for your helpful testimony. We thank you for giving us your time. Mr. HAGAN. Thank you. The CHAIRMAN. Thus far, we have heard from several important Government witnesses, maritime labor, the subsidized liner companies, the unsubsidized operators, and a number of distinguished Members of Congress from among the 104 authors of the bills before us. The testimony has largely been in favor of the legislation, but we have also heard opposition views and other significant views of a copromise nature. We still have a number of witnesses who wish to appear. But of all the witnesses whom we have heard, or expect to hear, I believe our witness today is the most eagerly awaited. In fact, although these hearings are for the purpose of considering the legislation before us to create an independent maritime adiministration, the bulk of the testimony has been addressed to the so-called Boyd program, Boyd proposals, and the new Boyd maritime policy. All of us on the committee, and everyone in the audience, seems to have some understanding of these references. We read newspaper accounts of interviews, meetings with representatives of labor and management, speeches, and testimony before the other body. Yet we have nothing of this sort before us. A year and a half ago, the administration promised a new program, or a new policy. It has not yet been presented to us in the House in any form--although a few of us have had private conversations concerning it. Therefore, we are all looking forward to hearing the testimony of our witness today, the Honorable Alan S. Boyd, Secretary of the Department of Transportation. Hopefully, this Committee on Merchant Marine and Fisheries, haring jurisdiction over maritime legislation, will not only hear views on the legislation before us, but also the new program which we understand is being drafted within the Administration. We will now hear from Secretary Boyd. STATEMENT OF HON. ALAN S. BOYD, SECRETARY OF TRANSPORTATION, ACCOMPANIED BY PAUL L. SITTON, DEPUTY UNDER SECRETARY OF TRANSPORTATION, DEPARTMENT OF TRANSPORTATION; AND CARL C. DAVIS, GENERAL COUNSEL, MARITIME ADMINISTRATION, DEPARTMENT OF COMMERCE Secretary BOYD. Thank you, Mr. Chairman and members of the committee. I am accompanied by Mr. Paul Sitton on my left, who is Deputy Under Secretary of the Department of Transportation, and Mr. Car Davis, General Counsel of the Maritime Administration who has ga ciously agreed to appear with me to answer questions which may be raised on the law and on the details of current operations of the Mar time Administration. I have been asked to appear before this committee to comment or number of bills which would set up the Maritime Administration as a independent agency. First of all, I would like to say that the paramount maritime ne today is for a progressive program and not so much for an administrs tive home. Considering the question of where to lodge the Mari Administration now, I fear, is raising the old question of the juxtapos tion of horse and cart. The opposition of the administration to the substance of these bills well known. My opposition to them is also well known. I am hap. o reiterate that opposition at this time and to expand on the reasons for it. However, I would like to do so in the context of what the real naritime problem is. On May 1 of this year I testified before the Senate Subcommittee on Merchant Marine and Fisheries on the status of the U.S. merchant narine. I detailed at that time a new maritime program which had been developed in conjunction with all segments of the maritime industry. As I said at that time, that program was not being offered as an administration program because a small number of holdouts prevented us from obtaining the kind of agreement that would make that program a reality. As I said in May, and as I probably will still be saying in December, the basic problem borders on a paradox. We are faced with an industry which many describe as dying because of a lack of adequate Federal support. We are told that the death of this industry, or its continued decline, would be a tragic blow to our military and economic strength as well as to our national prestige. I have been told that, unlike most other similar problems we face, the only solution to our maritime problem is one that will fully protect every single interest and meet the demands of every single group. Acceptance and agreement is eternally conditioned on meeting these requirements. The tragic realization is that the demands confronting us will produce the very thing that everyone fears the most-continuation of the present financial and administrative patchwork, fewer maritime jobs, a shrinking fleet, less work for American shipyards, and continuing deterioration of our competitive position. It is clear that two things must not happen: The maritime industry must not be allowed to die and it must not be in effect nationalized. To do nothing would assure the former and to meet everyone's demands would require the latter. You do not revitalize an industry by flooding it with Federal dollars and imprisoning it within a wall of protection. What is needed is the provision of incentives so that the inherent energy of free private enterprise is able to do the job. A productive and revitalized merchant marine obviously makes good sense and can benefit every American and every industry. There is, however, a level of Federal subsidy beyond which the public interest is not served. The maritime program which I outlined 2 months ago approached that level. Basically it contains the following elements: Expand support for U.S. ship construction industry. Construction subsidies would be substantially increased over present levels. This proposed level would subsidize construction of about 30 ships annually (depending on the mix of types) as contrasted to recent subsidy support for an average of 13 ships annually. This program level would be maintained for 5 years and thereafter continued at a slightly lower level, about 25 ships per year. Subsidy would be paid directly to shipyards to help them compete for customers on world market. While present subsidy principle of reducing U.S. cost differential with foreign competitors to parity would be continued, the computation would involve types of ships rather than individual ships and would be constant for a fixed period of years. the |