We can no longer afford the luxury and expedience of eliminating needed merchant ships as a convenient device for reducing budget outlays. Long-range legislation is pending which would call for a stepped-up maritime program for the future. Three years ago the President announced the need for such a program. The authorizations set forth in this bill will provide a sound basis for getting underway to meet our known needs within the framework of existing law and without prejudice to any new concepts which may be approved in connection with the pending long-range legislation. COST OF LEGISLATION The total cost of the legislation is $466,961,000, an increase of $122,105,000 over the budget request. CHANGES IN EXISTING LAW This legislation would make no change in existing law. DEPARTMENTAL REPORTS The executive communication transmitting the legislation and other agency reports are as follows: THE SECRETARY OF COMMERCE, Hon. JOHN W. MCCORMACK, DEAR MR. SPEAKER: There are enclosed four copies of a draft bill to authorize appropriations for certain maritime programs of the Department of Commerce, and four copies of a statement of purpose and need in support thereof. We have been advised by the Bureau of the Budget that there would be no objection to submission of this proposed legislation from the standpoint of the administration's program and that enactment would be in accord with the program of the President. Sincerely yours, HOWARD SAMUEL, Acting Secretary of Commerce. STATEMENT OF THE PURPOSES AND PROVISIONS OF THE DRAFT BILL TO AUTHORIZE APPROPRIATIONS FOR CERTAIN MARITIME PROGRAMS OF THE DEPARTMENT OF COMMERCE On September 5, 1967, Public Law 90-81 was signed by the President. That public law provided that after December 31, 1967 there were authorized to be appropriated for certain maritime activities of the Department of Commerce only such sums as the Congress may specifically authorize by law. The attached draft bill authorizes specific amounts for those activities listed in Public Law 90-81 for which the Department of Commerce proposes to seek appropriations during fiscal year 1969. The draft bill authorizes appropriations in the amounts contained in the Depart ment's budget submission for fiscal year 1969. A short justification for the various items in the draft bill follows: SHIP CONSTRUCTION, CONSTRUCTION-DIFFERENTIAL SUBSIDY, AND COST OF NATIONAL DEFENSE FEATURES Funds authorized to be appropriated under this heading would provide for the payment of construction-differential subsidy and national defense allowances on replacement vessels constructed for service on essential foreign trade routes by subsidized U.S. operators. In addition, these funds will provide for the acquisition of ships replaced by and traded in on newly constructed vessels and for the expenses associated with placing these replaced vessels in the national defense reserve fleet. Finally, funds for the administration of the ship construction program are included. The total authorization under this heading is $119,800,000 and the budget will propose transfer to the "Salaries and expenses" appropriation for administrative support of not to exceed $3,150,000 and for transfer to the appropriation for reserve fleet expenses of not to exceed $700,000. This latter transfer would be in addition to the sum authorized in the draft bill for reserve fleet expenses which is discussed below. OPERATING-DIFFERENTIAL SUBSIDIES The appropriation authorized under this heading would provide for liquidation of subsidy obligations incurred under permanent contract authority to ship operators in order to maintain a U.S. merchant fleet in support of U.S. foreign commerce and capable of serving as a naval auxiliary in event of a national emergency. The program is designed to pay the difference between the fair and reasonable cost of certain expenses (wages and subsistence of crew, insurance, vessel maintenance and repair) and the estimated cost of the same items if the ships were operated under foreign registry. The amount authorized to be appropriated for this item is $206 million. RESEARCH AND DEVELOPMENT Funds authorized to be appropriated under this heading are intended to finance MarAd projects designed to improve the competitive position of the American merchant marine while reducing the Government's share of the costs of its construction, operation, and maintenance. Major categories within the appropriation are: directed research, dealing with the adaptation of known technology concepts to problems of the marine industry; advanced concepts, providing for long-range research into new merchant marine concepts. In addition, the appropriation under this heading will finance the operation of the NS Savannah as well as reimbursement to the "Salaries and expenses" appropriation for expenses applicable to research and development activities. The authorization for this appropriation is $6,700,000, of which the budget will propose $3,400,000 for operation of the NS Savannah and $931,000 for transfer to the appropriation for "Salaries and expenses" to cover administrative expenses. Further, transfers from this appropriation are authorized to the "Vessel operations revolving fund" to cover losses resulting from expenses of experimental ship operations. RESERVE FLEET EXPENSES Funds are provided under this activity for the preservation and security of priority merchant ships maintained for national defense purposes. Additionally, security is provided for those ships not of a high-priority nature awaiting sale. This activity is one of three limitations under the "Salaries and expenses" appropriation; $5,279,000 are authorized to be appropriated for this purpose. In addition, as noted above under the heading "Ship Construction, Construction-Differential Subsidy, and Cost of National Defense Features," not to exceed $700,000 may be transferred from funds appropriated thereunder. MARITIME TRAINING Funds under this appropriation heading provide for a program of training of cadets for service as officers in the U.S. merchant marine. A 4-year training course, including 1 year of sea duty is designed to qualify graduates for licenses as merchant marine deck or engine officers. The authorization for appropriations under this heading is $5,177,000 of which the budget will propose that $2,500 be available for contingencies for the Superintendent of the Academy. In addition, the budget will propose a limitation on the average yearly cost per cadet of uniform and textbook allowances of $475. The budget further will propose that this appropriation may be reimbursed for expenses incurred in support of activities financed from other appropriations. STATE MARINE SCHOOLS Funds under this appropriation are intended to provide Federal assistance to participating States for the training of cadets as officers in the merchant marine. The assistance is in the form of direct grants to the States; allowances to cadets for uniforms, textbooks, and subsistence; and for repairs to Federal training ships on loan to the schools. The authorization for this purpose is $1,900,000. The budget will propose that $625,000 be earmarked for maintenance and repairs of Federal training ships on loan to the schools, and $1,275,000 be earmarked for direct grants and allowances to cadets. COMPTROLLER GENERAL OF THE UNITED STATES, Hon. EDWARD A. GARMATZ, Chairman, Committee on Merchant Marine and Fisheries, House of Representatives. DEAR MR. CHAIRMAN: Your letter of February 8, 1968, requests our comments on H.R. 15189, a bill to authorize appropriations for certain maritime programs of the Department of Commerce. We have no special information or knowledge that would assist in the consideration of H.R. 15189, and therefore have no comments to offer. Chairman, Committee on Merchant Marine and Fisheries, DEAR MR. CHAIRMAN: This is in response to your request for the views of the Bureau of the Budget on H.R. 15189, "To authorize appropriations for certain maritime programs of the Department of Commerce." The bill is identical to a draft of legislation transmitted to the Congress by the Department of Commerce on January 31, 1968. The Bureau of the Budget recommends favorable consideration of H.R. 15189, the enactment of which would be in accord with the program of the President. Sincerely yours, WILFRED H. ROMMEL, Assistant Director for Legislative Reference. Hon. EDWARD A. GARMATZ, DEPARTMENT OF THE NAVY, Committee on Merchant Marine and Fisheries, MY DEAR MR. CHAIRMAN: Your request for comment on H.R. 15189, a bill "To authorize appropriations for certain maritime programs of the Department of Commerce, has been assigned to this Department by the Secretary of Defense for the preparation of a report thereon expressing the views of the Department of Defense. This bill would authorize appropriations for the use of the Department of Commerce for fiscal year 1969 for ship construction and operating differential subsidies, research and development activities, reserve fleet, Kings Point and State marine schools. The Department of the Navy, on behalf of the Department of Defense defers to the views of the Department of Commerce on this legislation. This report has been coordinated within the Department of Defense in accordance with procedures prescribed by the Secretary of Defense. 90-760 O-74-76 |