252 



Cost estimates currently being used by both the Coast Guard and the Mari- 

 time Administration for double bottomed and segregated ballast vessels are 

 considerably lower than corresponding estimates which have been developed 

 by Bethlehem and other shipbuilders. We believe that the estimates being used 

 by the government agencies are considerably understated and we are including 

 as Attachment D * a cost analysis which identifies the significant differences 

 between the hypothetical vessels which have been used to develop the govern- 

 ment's cost estimates and Bethlehem's 265,000 DWT vessels. 



THE NEED TO ENSURE THAT STANDARDS ARE ENFORCEABLE AGAINST 



FOREIGN-FLAG VESSELS 



If the 1973 IMCO Conference requires segregated ballast that will permit 

 vessels to operate safely on ballast voyages under weather and sea conditions 

 normally encountered, there should be no need for United States regulatory agen- 

 cies to impose unilaterally additional design standards. To the extent that 

 additional measures are considered necessary for the protection of U.S. waters, 

 we recommend that those measures be directed to the establishment of improved 

 traffic control systems. 



If the 1973 IMCO Conference should fail to produce a convention which ade- 

 quately deals with the marine pollution problem, it may be necessary for the 

 United States to consider taking some form of unilateral action. In that event, 

 the Congress and the regulatory agencies should proceed cautiously and with the 

 knowledge that the unilateral imposition of design standards could have iwten- 

 tially disastrous consequences for the U.S. Merchant Marine and the American 

 shipbuilding industry. 



Regulatory action by the Maritime Administration under its tanker construc- 

 tion program would not be effective because the Maritime Administration has no 

 authority to reach foreign-flag vessels entering U.S. waters. ImiX)sition of any 

 significant design requirement by the Maritime Administration would, in the 

 absence of a parallel Coast Guard requirement which could effectively reach 

 foreign-flag vessels, make it impossible for U.S. shipyards to compete with foreign 

 shipyards for vessel orders. Ship owners would, for economic reasons, simply 

 elect to have their vessels constructed in foreign shipyards where anti-pollution 

 design features would not be required. 



The likelihood of this result has been confimietl by our own recent experience. 

 Over the past several months Bethlehem has negotiated agreements with two 

 purchasers for the construction of 265,000 DWT vessels. Each agreement covers 

 two ves.sels. Each vessel will cost in excess of $72 million. Both of these agree- 

 ments are contingent upon the receipt of necessary subsidies under the Maritime 

 Administration's tanker subsidy program. What is of particular concern to 

 Bethlehem, is that both purchasers insisted on clauses that would permit them 

 to terminate their agreement with Bethlehem if the Maritime Administration 

 should require the addition of anti-pollution design features not required by 

 international agreement. 



Even if the Coast Guard were to attempt to promulgate regulations that no 

 vessel could enter U.S. waters unless it met certain design standards, there is 

 no assurance that such regulations would compel ship owners to have vessels 

 constructed to those standards. This is particularly true in the case of VLCC's. 

 Since there are no deep water ports located in U.S. waters capable of accom- 

 modating VLCC's, such vessels need not enter U.S. waters and their owners would 

 feel little compulsion to have vessels constructed to such standards. 



Thus, any unilateral standard setting could make it impossible for U.S. 

 shipyards to compete effectively with yards in foreign countries. Should that 

 occur, the consequences to the nation would be .serious. Bethlehem and other 

 ship builders would have to convert multi-million dollar tanker construction 

 facilities to other purpo.so.s. the important economic and national defense goals 

 e.stablished by the Merchant Marine Act of 1970 would be frustrated, the T'.S. 

 balance of payments i)osition would be adversely affected, shipyard iniemploy- 

 ment would undoubtedly increase, and the nation would be almost totally dei)end- 

 ent on foreign-flag tankers for essential energy resources. Ironically, risks to 

 the environment would also increase. In the ab.sence of I'.S. flag ves.sels, virtu- 

 ally all oil imports would be carried in foreign-flag tankers which are more 

 likely to be involved in accidents resulting in pullution. In this regard the Mari- 



*The attnchmont Is In the committee flies. 



