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privileges not available generally to foreign-built vessels owned by citizens of the United States. Whether such privileges should be granted is a matter of policy upon which this Department expresses no opinion.
Since the bill would waive only the prohibition against the use of foreignbuilt vessels in coastwise trade, the Department would require the vessels to comply with the vessel inspection and navigation laws administered by the Coast Guard. The Treasury Department anticipates no administrative difficulty in carrying out the purposes of the act.
The Department was advised by the Bureau of the Budget that there was no objection from the standpoint of the administration's program to the submission of an identical report to the Senate Committee on Commerce on S. 469, an identical bill. Sincerely yours,
G. D'ANDELOT BELIN, General Counsel. Mr. GARMATZ. The first witness this morning is the author of the bill, the Honorable Clarence Kilburn.
We are happy to have you here as sponsor of the bill.
STATEMENT OF HON. CLARENCE E. KILBURN, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW YORK
Mr. KILBURN. Thank you, Mr. Chairman and members of the committee. Thank you very much for having this hearing.
I have a brief statement of one page. Will it be all right to read that?
Mr. GARMATZ. Yes, sir.
Mr. KILBURN. I am Clarence E. Kilburn, a Member of Congress from the 31st District of New York, and I am here to testify on H.R. 1211.
The Ogdensburg Bridge and Port Authority, having completed construction of the international bridge across the St. Lawrence River to Prescott, Ontario, finds itself in possession of three ferries that no longer are needed by the organization.
Since the vessels were constructed by a Canadian subsidiary of the authority, they are under Canadian registry, and legislation is required to transfer them to U.S. registry so they may be sold. The authority promotion agent, Joel M. Howard, reports the vessels are in excellent condition and are fast, economical, and efficient in operation.
Since the Commerce Department has approved the use of a foreignbuilt vessel for Alaskan coastal trade, I can hardly see how there can be opposition to the registry transfer of the ferries Fort Town, Maple City, and Windmill Point. Most previous objections have disappeared, and the bill should be approved without delay.
This move would constitute no hardship to American domestic shipping and would be of great benefit to the Authority.
I sponsored an identical previous bill in the House, H.R. 4195, which I introduced February 9, 1961. Last year the Senate passed the same measure without dissent. Approval of the legislation is essential to permit the sale of the ferries to some agency that can use them instead of permitting them to lie idle and penalize the Ogdensburg Authority.
Mr. GARMATZ. Do you have any information as to the size of these boats, or their capacity, or a little background of them?
Mr. KILBURN. I do not.
If it is agreeable to the committee, I would like to ask Mr. Howard to testify. He can answer all those questions. Mr. Joel M. Howard is here.
Mr. GARMATZ. Are there any questions,
We have a witness here from Senator Keating's office and Senator Javits' office.
We will hear from Miss Patricia Connell.
If you have any more information, Mr. Kilburn, you may insert it in the record.
STATEMENT OF MISS PATRICIA CONNELL, COUNSEL TO SENATOR
Miss CONNELL. My name is Patricia Connell, and in the absence of Senator Keating, I would like to read his statement.
Mr. Chairman, I am very grateful for the opportunity to present this statement in support of legislation to admit the vessels Fort Town, Maple City, and Windmill Point to American registry and to permit their use in coastwise trade. I am delighted that this body is holding hearings on this legislation and am very hopeful that favorable action will be taken, for I believe the bill is highly meritorious.
The purpose of this bill is to enable the Ogdensburg Bridge Anthority of Ogdensburg, N.Y., to sell these three vessels. The authority was forced to acquire the vessels at an inflated price from the Canadian owner in order to obtain Canadian Government approval for a franchise to build a bridge over the St. Lawrence River. When the bridge was completed, the authority was required to discontinue the ferry service. Since these vessels were built in Canada, they cannot under existing law be sold in the United States. However, because they are very small vessels, without a seagoing capacity, it is virtually impossible to sell them overseas. Moreover, even if they could be sold under the present circumstances over half of the proceeds would revert to the Canadian Government as taxes.
Last year, after looking into the matter thoroughly, the Department of Commerce withdrew its objections to this bill, as did the Shipbuilders Council of America some time before. This measure passed the Senate without objection last fall, but there was not sufficient time for this committee to hold hearings or investigate the very clear merits of this legislation.
I cannot imagine anyone opposing a bill which will, in effect, provide revenue for the community involved at no expense whatsoever to the Federal Government. In fact, if the bill is not passed, these vessels will undoubtedly remain tied to the dock in Ogdensburg until they rot or any revenues that could accrue from their sale abroad would end up in the hands of the Canadian Government.
I am very hopeful that this committee and the House of Representatives will give favorable consideration to the bill promptly so that this unfortunate situation can finally be ended.
Thank you, Mr. Chairman.
Mr. GLENN. I wonder how they could be used in coast wise trade which to my mind envisions up and down the coastal waters of the Atlantic Ocean.
Miss CONNELL. I am afraid I cannot answer that for you.
STATEMENT OF JOEL M. HOWARD, PORT PROMOTION AGENT,
OGDENSBURG BRIDGE AND PORT AUTHORITY, OGDENSBURG, N.Y.
Mr. HOWARD. My name is J. M. Howard, the port promotion agent of the Ogdensburg Bridge and Port Authority.
The Ogdensburg Bridge and Port Authority, the successor by New York State statute to the assets and liabilities of the Ogdensburg Bridge Authority, has empowered me to make the following statement:
Prior to the development of the St. Lawrence Seaway and power projects, Ogdensburg, N.Y., enjoyed a year-round open harbor in that no appreciable amount of ice formed in the St. Lawrence River between Ogdensburg, N.Y., and Prescott, Ontario. For approximately 50 years ferry service was available to the public unhampered by ice. The planning of the St. Lawrence development indicated that the favorable conditions for year-round ferry service would not exist upon the completion of the St. Lawrence projects.
In view of this information, the Ogdensburg Bridge Authority originally created in about 1950 by the New York State Legislature was further authorized by the New York State Legislature to proceed with engineering studies, plans, specifications and subsequent construction contracts for the building of a vehicular bridge between Ogdensburg, N.Y., and Johnstown, Ontario, which is approximately 2 miles east of Prescott, Ontario.
During the negotiations with the Canadian Government certain agreements had to be made to facilitate the work.
One of these agreements had to do with the disposition of the stock and physical assets of the Prescott-Ogdensburg Navigation Co. These assets consisted of stock owned principally by the Dubrule family of Prescott and three ferry boats; namely, the Fort Town, Maple City, and Windmill Point. The Canadian Government insisted that the Ogdensburg Bridge Authority purchase in total the assets of the above-mentioned company before they would agree to allow the bridge to be built on Canadian soil.
The Ogdensburg Bridge was built and opened to traffic on September 21, 1960. On this day the ferries ceased to operate and they have not been in operation since that time.
The Ogdensburg Bridge was constructed without any financial assistance from either the U.S. Government or the Canadian Government. The money to build this structure came from the State of New York on loan which must be paid back by the authority out of revenues.
This $20 million structure stands today as a monument to the longstanding good will that exists along a friendly border between this great Nation of ours and our neighbor, the Dominion of Canada.
The Ogdensburg Bridge Authority has tried to sell these ferries in Toronto and Montreal, Canada, London, Stockholm, Hamburg and they have been listed by several other foreign ship agents, but up to now they have been unable to negotiate a sale. The authority has had a few inquiries from interested parties within the United States, but due to the fact that these vessels are of Canadian registry, the authority has been unable to negotiate disposition of these vessels.
The purpose of this bill is to gain an exception to section 4132 of the Revised Statutes of the United States (46 U.S.C. 11 and section 27 of the Merchant Marine Act, 1920, 46 U.S.C. 883). To allow these three vessels, Fort Town, Maple City, and Windmill Point to be admitted to American registry and documented under the laws of the United States, and be entitled to engage in the coastwise trade and to transport passengers and merchandise between points in the United States, including districts and possessions thereof embraced with the coast wise laws.
The authority feels that the special circumstances that exist in this case justify the Congress making an exception to their long-established practices in these matters.
Mr. GARMATZ. Can you give any information as to the length of these boats and their capacity?
Mr. HOWARD. I have that.
The first two, the Fort Town and the Maple City, have a draft of 6 feet 7 inches. The Windmill Point is the same size and has a draft of 6 feet 6 inches.
These vessels are powered by General Motors diesel engines. They carry 10 automobiles, or 200 passengers.
Mr. GARMATZ. Both?
With 10 automobiles, the passenger limitation would possibly be 60 and not above 75.
Mr. GLENN. When were they built?
Mr. Howard. The Fort Town and Maple City were built in 1952. The Windmill Point was built in 1954. These vessels were in drydock as late as 1959. Last year they were steam cleaned, sandblasted, and thoroughly painted. The engines are in excellent condition. They have been very,very well taken care of.
Since these vessels have always been in fresh water, they are in excellent shape, sir.
Mr. GLENN. Thank you very much.
Mr. GROVER. What was the approximate construction cost when they were built?
Mr. HOWARD. The approximate construction cost is, as I understand, about $125,000. These vessels would very readily be salable in Canada today if it were not for the subsidy which the Dominion of Canada has on shipbuilding. With the 40-percent subsidy that is available to new ships in the Dominion of Canada today, it comes down very close to what our price is.
Mr. GROVER. What is the approximate appraised value of them today?
Mr. HOWARD. The approximate appraised value of these vessels today is around $93,000 each.
Mr. GROVER. Does the authority owe the State any money? Mr. HOWARD. The authority owes New York State $22 million. Mr. GROVER. This would be a little bit of a help? Mr. HOWARD. I guess it would. As Congressman Kilburn said before, and as Senator Keating's witness said, these vessels, if we are not allowed to sell them, are going to be there for some time. They have presented a good deal of difficulty to the authority.
Mr. ZINCKE. What was the acquisition cost of these vessels to the authority?
Mr. HOWARD. The acquisition cost of the entire Dubrule assets was slightly over $870,000.
Mr. ZINCKE. That included the franchise. What part was allocated to the vessels?
Mr. HOWARD. I think we would have to say a half million dollars was allocated to the vessels.
Mr. ZINCKE. In other words, the authority paid substantially more than the construction cost of the vessels?
Mr. HOWARD. Yes, sir. Mr. ZINCKE. You stated you had made efforts to sell them abroad. What was your asking price for the vessels abroad?
Mr. HOWARD. $80,000 each.
Mr. ZINCKE. What prospects do you have of selling them in the event they are transferred to American registry?
Mr. HOWARD. As of now, I am not sure, sir, that we have any prospects whatsoever. A year ago we had a prospect for disposing of these vessels on Lake Champlain.
Mr. ZINCKE. At what price?
Mr. ZINCKE. But at the moment you have no prospect whatsoever for selling them in the event they are transferred? Mr.
HOWARD. No. I cannot honestly say, sir, we have any prospect. However, we get several letters each week on this. There may be some bona fide offers.
Mr. ZINCKE. You mentioned the special circumstances involved in this particular case that should take it out of the general rule. What do you regard as the special circumstances—merely that you can get more money for them under American registry?
Mr. HOWARD. If they are sold under Canadian registry, approximately 50 percent of what we realize will have to be paid in taxes to the Canadian Government.
Mr. ZINCKE. The only point is, you will wind up with more money if they are under American registry, is that right?
Mr. HOWARD. That is right.
Mr. ZINCKE. Is that not a circumstance that would be involved in any transfer of a foreign-built, foreign-registry vessel to U.S. reg. istry? It is worth more here, is it not?
Mr. HOWARD. I am no expert on shipping, sir. I cannot answer that question.
Mr. ZINCKE. No further questions.
Mr. GARMATZ. In the statement from Senator Keating, the Shipbuilders Council of America did not object to this. Do you know anything about the Shipbuilders Council ?
Mr. HOWARD. I do not.
STATEMENT OF GERARD H. MANGES, ASSISTANT COUNSEL TO
SENATOR JAVITS OF NEW YORK
Mr. MANGES. Mr. Chairman, my name is Gerard H. Manges, assistant counsel to Senator Javits, of New York. I appreciate this opportunity to read this statement for the Senator.