H.R. 1211 would authorize admission to U.S. registry, after their transfer to the Ogdensburg Bridge Authority, of three Canadian-built vessels, the Fort Town, Maple City, and Windmill Point. These vessels are now owned by the Prescott Ogdensburg Ferry Co., Ltd., a Canadian corporation which is wholly owned by the Ogdensburg Bridge Authority, a public benefit corporation created by the State of New York.

The bill would authorize the vessels to engage in the coastwise trade and to transport passengers and merchandise between points in the United States, notwithstanding the provisions of section 4132 of the Revised Statutes of the United States, as amended (46 U.S.C. 11), which forbids foreign-built vessels from engaging in the coast wise trade, and section 27 of the Merchant Marine Act, 1920, as amended (46 Ú.S.C. 883), which forbids the transportation of merchandise between points in the United States in other than domestic-built and documented vessels of the United States.

There are special and extenuating circumstances here which fully justify an exception to this policy. As a necessary condition of reaching agreement between the Canadian Government and the Ogdensburg Bridge Authority, acting on behalf of the State of New York, the three ferryboats had to be acquired by the authority as part of the total assets of the Prescott-Ogdensburg Navigation Co. I am advised that the authority was an involuntary, if not unwilling, purchaser of these particular assets. In other words, these three vessels were not acquired by the authority with any intention of using them and, as a matter of fact, the date that Ogdensburg Bridge, a symbol of Canadian-American friendship, was opened to traffic, the ferries ceased operation and have been idle ever since.

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. The Ogdensburg Bridge Authority has tried to sell these ferries to Canadian and European firms but up to now it has 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 those vessels are of Canadian registry the authority has been unable to negotiate disposition of these vessels.

It seems clear the only likely purchaser of these vessels will be found among American interests. From time to time there have been legislative exceptions to the general coverage of our coastwise trade laws, where particular circumstances justify such exceptions. This bill clearly falls within the area of exception. I believe, therefore, that unless American parties and interests with a legitimate interest in this matter can come forward to show irreparable damage by reason of this transfer, this bill should be enacted into law.

This bill was passed by the Senate without objection last year but time did not permit the House full opportunity to consider the bill. I am hopeful that this measure will this year be acted upon favorably by both bodies.

Mr. GARMATZ. Thank you very much.

Are there any other witnesses?

Mr. Shapiro.

STATEMENT OF ALVIN SHAPIRO, VICE PRESIDENT, AMERICAN MERCHANT MARINE INSTITUTE

Mr. SHAPIRO. The American Merchant Marine Institute, a national trade association representing American shipowners and operators on all coasts of the United States, opposes enactment of H.R. 1211 which your subcommittee is now considering.

If this proposed legislation were enacted, it would authorize three Canadian-built ferry vessels to be admitted to American registry, and would permit them to engage in the coastwise trade, transporting passengers and merchandise between points in the United States, including districts and possessions thereof within the coastwise laws.

This bill deals with a type and size of vessel with which we are not normally greatly concerned. However, the principle involved in the proposal is of considerable concern.

It is our understanding that the Ogdensburg Bridge Authority, under agreement with Canadian authorities for certain necessary rights on the Canadian side, built the bridge which actually replaced these ferries. As part of the agreement the Ogdensburg Bridge Authority had to take over the assets (the three ferry boats) of the owning company. Now it chooses to seek authority to operate these ships in the domestic trade. Since this agreement was voluntarily entered into, we see no reason why the Congress of the United States should be asked to convert the consequences of that agreement into those more favorable than would otherwise obtain.

Existing law provides that only a U.S.-built, continuously U.S.-flag documented, vessel has the right to engage in our coastwise trade. This restriction was further tightened by enactment of legislation in the 86th Congress (Public Law 86-583) amending the Merchant Marine Act of 1920 to prohibit operation in the coastwise trade of a rebuilt vessel unless the entire rebuilding is effected within the United States. Regardless of the fact that each proposed relaxation of the coast wise restriction in regard to vessels of this type and size may be small in itself, the cumulative effect is to erode or create a background for the erosion of the entire policy until nothing remains. Obviously, legislation of this nature can be cited as a precedent in support of future attempts to enact this type of legislation which may be more consequential in impact than that embodied in H.R. 1211.

We urge that the bill not be given favorable consideration, and respectfully request that this letter be made a part of the written record of the bill.

Mr. GARMATZ. Did you testify on this bill when it was over in the Senate?

Mr. SHAPIRO. We submitted a letter, if I recall correctly.

Frankly, Mr. Chairman, there has been a substantial quantity of bills of this type. I believe I can say without question that we have always opposed legislation of this type on exactly the basis we present here today.

These vessels will not-and I want to make this perfectly clear to the committee-hurt our operators. The Shipbuilders Council has apparently, I understand, withdrawn its objection presumably because it will not hurt them. This is not done out of protecting our own interests as immediately involved in the three vessels. It is done in

protecting our interests because we know this is a problem we are going to face more and more. It has been continuously successful in the past. We think in this case, especially, since it is a financial problem, the Congress of the United States is asked to make this particular proposition more successful than is now the case. This is something the Congress of the United States should not do.

There are many things I could do more successfully if I could go back to the Congress and ask for amendments to law. I do not think it would be fair to do it. I do not do it personally.

Mr. GOODLING. What do you propose should be done with the ships?

Mr. SHAPIRO. These ships, (a) can be sold abroad. When I said "can be sold abroad," I do not say that I know they have a customer abroad. They can be legally sold abroad without the Congress doing anything.

(b) They than be transferred to U.S. registry and operated in trade between the United States and Canada, or trade between the United States and Mexico without any problem. They could not operate in the domestic trade of the United States unless the Congress makes an exception to the law.

It is this exception I do not suggest the Congress grant, although I would not consider these vessels dead losses where they are rotting away. They will rot away if the only customer for them, now and forever, wants to use them strictly in the domestic trade in the United States, unless the Congress does something. I do not mean to make too much of a fuss about this, but I want to explain our opposition to this.

Mr. GROVER. I take it you are proposing this just on principle only. Mr. SHAPIRO. Primarily on principle.

Mr. GROVER. No economic impact whatsoever?

Mr. SHAPIRO. No.

Mr. GROVER. You say this would set a precedent and it is something Congress should not do. Does not Congress set a precedent every time it passes a bill?

Mr. SHAPIRO. I guess from a certain point of view it actually does. The precedent here is one of amending law to accommodate the interests of the people who come before you. If there were real national interests in this, if I could say there was something the U.S. Government would gain, that I as a citizen would gain, I would hesitate about appearing before this group on this particular type of legislation, opposing these three small ferry boats. But the only party who gains by this legislation is the party who is seeking the legislation. I see nothing to balance this.

Mr. GROVER. I cannot agree with you there. You are dealing with a public authority which is serving thousands and perhaps millions of people in this bridge. You are dealing with an authority that apparently has had an international gun at its head in the purchase of these facilities, and which can well use these moneys and amortize the bonds which are in a sense public obligations.

Mr. SHAPIRO. I might say, too, Mr. Grover, at that point, I think it very unfortunate that the Canadian Government apparently used such pressure on this group to make them take on this particular asset. I would have hoped this at the proper time would have been a

State Department problem rather than a congressional problem. This is really a rather unfortunate development in that regard. I do not mean to overemphasize our point by any means.

Mr. GROVER. I am trying to deemphasize.

Mr. SHAPIRO. I recognize that, and doing quite well, I might re

assure you.

We are concerned primarily with the principle. There will be many others, as there were before. This is not a precedent. This has happened before with small vessels over our objection, and again our objection to those previous actions was an objection in principle. There are other things in other bills that are much more profound than just the principle, that have real economic impact, that can be justified on the same basis simply by changing the name of the vessel. Mr. GROVER. I cannot agree with that.

I think you have a unique situation here which will take another hundred years to repeat itself, and I hope it does not.

Mr. SHAPIRO. In answer to that, I would say in the last 5 years we have probably had 10 unique situations of a similar type. The point is, these people, whoever is fundamentally responsible, took advantage of the low cost of building the vessel in Canada. There is nothing wrong with that. It is cheaper to build the vessel in Canada. Now there are economic consequences that result from this vessel having been built in Canada, and they are coming to the U.S. Congress and saying, take away these disadvantages that we now face. That is the simple guts of this particular matter. They say they are small ships and not of grave consequence.

Mr. GROVER. I think you are bridging over a few years when you bridge from the Canadian firm which had these built and operated under a Canadian license.

Mr. SHAPIRO. It is a Canadian subsidiary today.

Mr. GROVER. The franchise is owned by the New York State Public Authority.

Mr. SHAPIRO. The vessels are owned

Mr. GROVER. By virtue of their having purchased the franchise and facilities from a Canadian firm.

Mr. SHAPIRO. That is right.

Mr. GROVER. We are talking about New York State interests and not Canadian interests.

Mr. SHAPIRO. At the moment, yes.

Mr. CLARK. I wonder if we could clear up a point here. Who owns these vessels at the present time?

Mr. SHAPIRO. It is my understanding, Mr. Clark-and the gentleman in back of me can correct me on this if I am wrong, and I wish he would-they are now owned by the Ogdensburg Bridge Authority. Mr. CLARK. Of New York.

Mr. SHAPIRO. Of New York. But the bridge authority itselfMr. GARMATZ. The bill says:

Owned by the Prescott Ogdensburg Ferry Company, Limited, a Canadian corporation wholly owned by the Ogdensburg Bridge Authority, a public benefit corporation created by the State of New York.

Mr. SHAPIRO. This becomes a problem of how far you carry it. The subsidiary that owns the vessels is the same company that originally owned the vessel. You just read the name from the bill, Mr. Chair

man. It is now a subsidiary, and it is a Canadian corporation. It is a subsidiary of the Ogdensburg Bridge Authority, which I assume is an American corporation, incorporated in New York State, as a matter of fact.

They are still owned technically by the subsidiary of the bridge authority, which is a Canadian corporation.

Mr. MORTON. At the time these vessels were acquired by the bridge authority as part of the assets of the ferry company, what were they valued at?

Mr. SHAPIRO. I do not know, sir.

Mr. ZINCKE. A representative of the port authority said he did not know.

Mr. MORTON. Do we have a ball park figure of how much money we are dealing with here?

Mr. ZINCKE. We have the construction cost of approximately $125,000.

Mr. MORTON. Per vessel?

Mr. ZINCKE. Yes, and an asking price of approximately $80,000 per vessel.

Mr. Shapiro, the Canadian shipbuilding costs are approximately the same as American costs?

Mr. SHAPIRO. The cost in the yard I would say is roughly the same. I suspect it is probably a little cheaper before the subsidy available at the Canadian yards.

Mr. ZINCKE. We have established with respect to the vessel construction subsidy in the United States, that American-built vessels cost somewhat over twice foreign-built vessels.

Mr. SHAPIRO. That is correct, in representative yards.

Mr. ZINCKE. In representative yards, so it is not unreasonable to assume that such a ferry constructed abroad, as compared with Canadian costs, would cost in the neighborhood of one-half of the $125,000 figure.

Mr. SHAPIRO. It would cost one-half of the present U.S. construction cost, if that is $125,000.

Mr. ZINCKE. Using those figures?

Mr. SHAPIRO. Yes.

Mr. ZINCKE. That would be somewhere between $60,000 and $65,000 for a new vessel built abroad, so when the port authority is seeking to sell these vessels abroad for $80,000 apiece, it is not incredible they have had no success, is it?

Mr. SHAPIRO. No, not at all.

Mr. ZINCKE. These are 10-year-old vessels?

Mr. SHAPIRO. Yes, sir; quite right.

Mr. GARMATZ. Thank you very much.

Are there any other witnesses here on H.R. 1211?

(No response.)

Mr. GARMATZ. Is there anything else you want to add, Mr. Howard? Mr. HOWARD. I would like to have it firmly understood that these vessels are owned by the Prescott-Ogdensburg Navigation Co. and that is a wholly owned subsidiary of the Ogdensburg Bridge and Port Authority. We have been very, very careful in handling these vessels that all expenses and things like that should be paid out of the Canadian account which we keep in the bank in Canada. There is no commingling of funds in this matter.