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This Department does not favor a waiver of the coastwise laws that would tend to break down the congressional policy of establishing an American merchant marine of citizen-owned vessels serving U.S. ports. The law as enacted in 1958 (Public Law 85-473) so limited the waiver that, if the Secretary of Commerce determines that U.S.flag service would be available, the waiver would then be terminated. This limitation of the waiver is provided in H.R. 2921, and is considered by the Department to be of primary importance in recommending favorable consideration of the bill.

The Bureau of the Budget has advised that there would be no objection to the submission of this letter to the committee.

Sincerely yours,

FREDERICK H. MUELLER,

Under Secretary of Commerce.

U.S. DEPARTMENT OF THE INTERIOR
OFFICE OF THE SECRETARY,
Washington, D.C., April 20, 1959.

Hon. HERBERT C. BONNER,

Chairman, Committee on Merchant Marine and Fisheries,
House of Representatives, Washington, D.C.

DEAR MR. BONNER: This responds to your request for the views of this Department on H.R. 2921, a bill to provide transportation on Canadian vessels between ports in southeastern Alaska, and between Hyder, Alaska, and other points in southeastern Alaska, and between Hyder, Alaska, and other points in the United States outside Alaska, either directly or via a foreign port, or for any part of the transportation.

Because the status of Alaska has been changed from that of Territory to that of a State there no longer exists in this Department direct responsibility concerning this matter. However, the problem concerning adequate water transportation in southeastern Alaska still remains. We would favor the enactment of H.R. 2921, subject, of course, to the desires of the new State.

This bill would permit until June 30, 1960, thetransportation of passengers and merchandise on Canadian vessels between Hyder, Alaska, and other ports in southeastern Alaska, or the continental United States either directly or via a foreign port, and the transportation of passengers only on Canadian vessels between ports in southeastern Alaska, either directly or via a foreign port. Section 8 of the act of June 19, 1886, as amended (46 U.S.C. 289), prohibits the transportation of passengers in foreign vessels between ports in the United States. Section 27 of the Merchant Marine Act of 1920, as amended (46 U.S.C. 883), imposes a similar prohibition upon the transportation of merchandise.

Legislation substantially the same as that embodied in the bill has been enacted annually since 1949. The latest statute, which is substantially the same as the bill, is Public Law 85-473, 85th Congress, 2d session, approved June 30, 1958 (72 Stat. 244). It permitted such transportation by Canadian vessels until June 30, 1959.

Such exemption from the provisions of the 1886 and 1920 statutes has been particularly necessary since October 6, 1954, when the Alaska

Steamship Co. terminated all passenger service to Alaska. The bill permits the necessary coastal transportation of passengers by Canadianflag vessels in southeastern Alaska. In our opinion, enactment of this legislation is still desirable as long as no domestic carrier provides transportation service.

Enactment of the bill would require no expenditure of funds by the United States.

The Bureau of the Budget has advised that there is no objection to the submission of this report to your committee.

Sincerely yours,

ROGER ERNST,

Assistant Secretary of the Interior.

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86TH CONGRESS HOUSE OF REPRESENTATIVES 1st Session

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REPORT No. 630

EXTENDING THE PROVISIONS OF TITLE XII OF THE MERCHANT MARINE ACT, 1936, RELATIVE TO WAR RISK INSURANCE

JULY 1, 1959.-Committed to the Committee of the Whole House on the State of the Union and ordered to be printed

Mr. BONNER, from the Committee on Merchant Marine and Fisheries, submitted the following

REPORT

[To accompany S. 1234]

The Committee on Merchant Marine and Fisheries, to whom was referred the bill (S. 1234) to extend the provisions of title XII of the Merchant Marine Act, 1936, relating to war risk insurance, for an additional 5 years, ending September 7, 1965, having considered the same, report favorably thereon without amendment and recommend that the bill do pass.

PURPOSE OF THE BILL

The bill would extend, for an additional 5 years, to September 7, 1965, authority presently given to the Secretary of Commerce under title XII, Merchant Marine Act, 1936, as amended (46 U.S.C. 1281 et seq.), to provide, with the approval of the President, war risk insurance and certain marine and liability insurance, when commercial insurance cannot be obtained on reasonable terms and conditions.

It is standby legislation, designed to meet emergency needs. In the event of war between any of the four powers-United States, Great Britain, the U.S.S.R., and France-commercial policies presently being issued or in effect would be subject to automatic termination clauses, and U.S. vessels and cargoes could not be moved without adequate insurance coverage such as existing law now provides, and which this bill would extend for an additional 5 years. The automatic termination clause in the commercial policies would apply even though the United States was not involved in such war.

Under the war risk and marine insurance provisions now in effect and designed under this bill to be extended, the Maritime Administration is authorized to make immediate protection available to U.S.flag vessels, both for the interim period when commercial insurance is automatically terminated and for the period when the full wartime

insurance program is placed in effect. Such coverage would include hull, protection and indemnity, and crew life and personal effects.

The necessity and effectiveness of the war risk insurance provided by the Government was demonstrated in both World Wars I and II. The protection afforded to both civilian and military commerce more than paid its way financially.

Your committee is convinced of the great desirability of continuing in force the existing law and the program and procedures established thereunder.

SUMMARY OF DEPARTMENTAL RECOMMENDATIONS

The Department of Commerce, at whose request S. 1234 and the House companion bill, H.R. 4327, were introduced, urges enactment of the bill in order that there may be no break in the arrangements for immediate provision of the various types of insurance noted above, in event of war or critical emergency.

Also urging enactment was the Department of the Navy, for the Department of Defense. No opposition to enactment has been expressed by any Government department or agency.

The Commerce Department's statement of purpose and provisions of the bill, dated June 29, 1959, and revised as of May 31, 1959, is printed herewith, together with the report of the Department of the Navy and the Civil Service Commission.

STATEMENT OF THE DEPARTMENT OF COMMERCE AND MARI-
TIME ADMINISTRATION BEFORE THE SUBCOMMITTEE ON
MERCHANT MARINE OF THE HOUSE COMMITTEE ON MER-
CHANT MARINE AND FISHERIES, on the BILL, H.R. 4327
The bill, H.R. 4327, would extend the life of title XII of
the Merchant Marine Act, 1936, as amended (46 U.S.C.
1281, et seq.), for an additional 5 years. Section 1214 of
the act now provides for expiration of marine war risk insur-
ance authority September 7, 1960. The Department of
Commerce submitted this measure in draft form to the
Congress and recommended enactment thereof.

The Marine War Risk Insurance Act (title XII, 1936 act),
which will expire September 7, 1960, is standby legislation
which authorizes the Secretary of Commerce with the ap-
proval of the President, to provide war risk and certain
marine and liability insurance for protection of vessels,
cargoes, and crews and personal effects, when commercial
insurance cannot be obtained on reasonable terms and condi-
tions. At present, as at the time of enactment of the War
Risk Insurance Act, commercial policies covering maritime
war risks are issued only subject to automatic termination
clauses in the event of outbreak of war between any of the
four powers-United States, France, Great Britain, and the
Union of Soviet Socialist Republics. Even though the
United States may not be involved immediately, American
vessels would be without protection against loss by risks of
war. Ships and cargoes could not be moved without ade-
quate insurance coverage.

War risk insurance was provided by the Government in both World Wars I and II, and proved both necessary and effective in protecting the United States and its civilian and military commerce, with premium receipts in excess of losses paid.

Arrangements necessary to have war risk insurance immediately available when its protection is needed for the commerce of the United States are in effect under the Marine War Risk Insurance Act. The United States is now prepared to put into effect in case of need a full wartime insurance program on hulls, cargoes, and personnel.

General Order 75 (revised) of Maritime Administration, published in the Federal Register on Februtry 28, 1957, states that the Maritime Administrator is prepared to provide hull, protection and indemnity, and crew life and personal effects war risk insurance as specified in section 1203 (a), (d), (e), and (f) of title XII, except for vessels under construction as specified in section 1203 (a), for the interim period between the time commercial insurance subject to the "automatic termination clauses" is automatically terminated through the operation of such clauses and the time a full wartime insurance program is placed in effect.

Binders and extensions of binders outstanding as of May 31, 1959, were hull, 994; protection and indemnity, 960; and crew life and personal effects, 866. Amendment 2 to General Order 75, published in the Federal Register on July 2, 1958, extended the expiration date of interim binders to September 7, 1959.

Binder and extension fees (not premiums) have been collected up to and including May 31, 1959, in a net amount of $208,658.53, after payment of agency fees and expenses. General Order 82, published in the Federal Register on November 1, 1958, establishes title XII war risk hull insurance values, pursuant to Public Law 958, 84th Congress, for certain self-propelled oceangoing iron and steel vessels.

Under the authority of section 1203 (a) of title XII war risk insurance on American vessels under construction in shipyards in the United States (which insurance is not available in the commercial market), has been furnished. As of May 31, 1959, the Maritime Administration was providing such insurance on 28 vessels under construction. From the inception of this program to May 31, 1959. premiums received have totaled $774,456.36.

At the request of the Secretary of the Navy, second seamen's war risk insurance is being provided without premium, as authorized under section 1205 of title XII, on tankers operated for the account of the Military Sea Transportation Service. This arrangement has been in effect continuously since January 1, 1954. Under section 1205 the Secretary of the Navy has agreed to indemnify the Maritime Administrator against all losses covered by such insurance. As of today, 27 tankers are covered under this program.

The USNS Mission San Francisco was in collision with a foreign-flag vessel on March 7, 1957, which resulted in claims 59014° 59 H. Rept., 86-1, vol. 4 28

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