Sea-level canal studies

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Material Information

Title:
Sea-level canal studies hearings before the Subcommittee on the Panama Canal of the Committee on Merchant Marine and Fisheries, House of Representatives, Ninety-fifth Congress, second session, on H.R. 10087 ... H.R. 13176 ... June 21, 27, 28, 1978
Physical Description:
v, 481 p. : ill. ; 23 cm.
Language:
English
Creator:
United States -- Congress. -- House. -- Committee on Merchant Marine and Fisheries. -- Subcommittee on Panama Canal
Publisher:
U.S. Govt. Print. Off.
Place of Publication:
Washington
Publication Date:

Subjects

Subjects / Keywords:
Canals, Interoceanic   ( lcsh )
Canals -- Law and legislation -- United States   ( lcsh )
Panama Canal (Panama)   ( lcsh )
Genre:
federal government publication   ( marcgt )
non-fiction   ( marcgt )
Spatial Coverage:
Panama Canal (Panama)

Notes

General Note:
"Serial no. 95-51."

Record Information

Source Institution:
University of Florida
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
oclc - 04706050
lccn - 79600775
ocm04706050
sobekcm - AA00006070_00001
Classification:
lcc - KF27 .M475 1978
ddc - 346/.73/0469164
System ID:
AA00006070:00001

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SEA-LEVEL CANAL STUDIES


HEARINGS
BEFORE THE

SUBCOMMITTEE ON THE PANAMA CANAL
OF THE

COMMITTEE ON

MERCHANT MARINE AND FISHERIES

HOUSE OF REPRESENTATIVES
NINETY-FIFTH CONGRESS
SECOND SESSION
ON
H.R. 10087
A BILL TO PROVIDE FOR AN UPDATING OF THE REPORT
OF THE ATLANTIC-PACIFIC INTEROCEANIC CANAL STUDY
COMMISSION
H.R. 13176
A BILL TO PROVIDE FOR AN UPDATING OF THE REPORT OF
THE ATLANTIC-PACIFIC INTEROCEANIC CANAL STUDY COM-
MISSION AND FOR THE ESTABLISHMENT OF A JOINT UNITED
STATES-PANAMA SEA-LEVEL CANAL STUDY COMMISSION, AND
FOR OTHER PURPOSES

JUNE 21, 27, 28, 1978


Serial No. 95-51

Printed for the use of the Committee on Merchant Marine and Fisheries





U.S. GOVERNMENT PRINTING OFFICE


32-461 O0


WASHINGTON : 1978















COMMITTEE ON MERCHANT MARINE AND FISHERIES
JOHN M. MURPHY, New York, Chairman


THOMAS L. ASHLEY, Ohio
JOHN D. DINGELL, Michigan
PAUL G. ROGERS, Florida
WALTER B. JONES, North Carolina
ROBERT L. LEGGETT, California
MARIO BIAGGI, New York
GLENN M. ANDERSON, California
E (KIKA) DE LA GARZA, Texas
RALPH H. METCALFE, Illinois
JOHN B. BREAUX, Louisiana
FRED B. ROONEY, Pennsylvania
BO GINN, Georgia
GERRY E. STUDDS, Massachusetts
DAVID R. BOWEN, Mississippi
JOSHUA EILBERG, Pennsylvania
RON DE LUGO, Virgin Islands
CARROLL HUBBARD, JR., Kentucky
DON BONKER, Washington
LES AuCOIN, Oregon
NORMAN E. D'AMOURS, New Hampshire
JERRY M. PATTERSON, California
LEO C. ZEFERETTI, New York
JAMES L. OBERSTAR, Minnesota
WILLIAM J. HUGHES, New Jersey
BARBARA A. MIKULSKI, Maryland
DAVID E. BONIOR, Michigan
DANIEL K. AKAKA, Hawaii


PHILIP E. RUPPE, Michigan
PAUL N. McCLOSKEY, JR., California
GENE SNYDER, Kentucky
EDWIN B. FORSYTHE, New Jersey
DAVID C. TREEN, Louisiana
JOEL PRITCHARD, Washington
DON YOUNG, Alaska
ROBERT E. BAUMAN, Maryland
NORMAN F. LENT, New York
DAVID F. EMERY, Maine
ROBERT K. DORNAN, California
THOMAS B. EVANS, JR., Delaware
PAUL S. TRIBLE, JR., Virgina


CARL L. PERIAN, Chief of Staff
ERNEST J. CORRADO, Chief Counsel
FRANCES STILL, Chief Clerk
W. PATRICK MORRIS, Chief Minority Counsel


SUBCOMMITTEE ON PANAMA CANAL
RALPH H. METCALFE, Illinois, Chairman


ROBERT L. LEGGETT, California
DAVID R. BOWEN, Mississippi
CARROLL HUBBARD, JR., Kentucky
BO GINN, Georgia
LEO C. ZEFERETTI, New York
JOHN M. MURPHY, New York
(ex officio)


GENE SNYDER, Kentucky
ROBERT K. DORNAN, California
PHILIP E. RUPPE, Michigan
(ex officio)


TERRENCE W. MODGLIN, Professional Staff
COLEMAN CONROY, Professional Staff
BERNARD TANNENBAUM, Consultant
NICHOLAS T. NONNENMACHER, Professional Staf, Minority















CONTENTS


Hearings held- Page
June 21, 1978----------------------------- --------------- 1
June 27, 1978--_-------------------------- 115
June 28, 1978------------------------------------------ 297
Text of-
H.R. 10087----------------------------------------- ------ 6
H.R. 13176---------------------------------------- 9
Amendment No. 1932 to H.R. 8309------------------------------ 2
Report from-
Transportation Department----------------------_---- 27
State Department--------------------------------------- 29
Statement of-
Brown, John, legislative director, International Union of Operating
Engineers, AFL-CIO-------------- ------------------- 34
Calhoon, Jesse M., president, Marine Engineers' Beneficial Association_ 298
Challinor, Dr. David, Assistant Secretary for Science of the Smith-
sonian Institution -----------------------------------______ 198
Constant, Thomas M., Secretary, Panama Canal Company --_____ 189
Dolgen, David, director of legislative activities, Maritime Trades
Department, AFL-CIO---------- ----------------- 34
Dolvin, Lt. Gen. Welborn G., U.S. Army (Ret.), Department of
Defense Representative, Panama Canal Treaty Affairs ----------- 173
DuVal, Capt. Miles P., Jr., U.S. Navy (Ret.)----------------- 391
Eddinger, John, executive director, National Association of Dredging
Contractors----------------------------------------------- 34
Prepared statement-------------------------------------- 78
Fortune, Terence J., attorney adviser, Department of State________ -116
Gravel, Hon. Mike, a U.S. Senator from the State of Alaska--------_ 34
Prepared statement---------------------------- 46
Gray, Comdr. Anthony W., Jr., Assistant Branch Head, Western
Hemisphere, Politico-Military Division, Office, Chief of Naval
Operations--------------------------- ----------------- 173
Holbrook, Marni, environmental associate, the Izaak Walton League
of America------------------------------------------------- 375
Prepared statement---------------------------------- 372
Jones, Dr. Meredith, Curator, Department of Invertebrate Zoology,
National Museum of Natural History, Smithsonian Institution-___ 198
Kujawa, Leonard J., partner, Arthur Andersen & Co__-- --------- 324
Marlowe, Howard, appearing on behalf of Jesse M. Calhoon _______ 298
Mundy, Daniel J., legislative director of the Building and Construction
Trades Department, AFL-CIO ----------------------- 76
Murphy, Hon. John M., a Representative in Congress from the State
of New York---_ ------------------------- 33
Ortman, David, Friends of the Earth ------- ------------- 375
Prepared statement_-- ------------------- 340
Parfitt, Gov. H. R., Panama Canal Company ----- ---------- 186
Popper, Ambassador David H., Coordinator for Treaty Implementa-
tions, Department of State -- --------------------- 116
Robins, Dr. C. Richard, professor of marine science, University of
Miami---------------------------------------------_------ 375
Prepared statement ----_------------------ --------- 374
Saul, Richard, director of domestic shipping activities, Transportation
Institute --- -----------------------------------_ 34
Prepared statement --------------------------_ 78
Selleck, Col. Clyde A., Jr., Executive Director, Civil Works, Office of
Chief of Engineers, U.S. Army ------------------ 173
(III)








Statement of-Con.
Sheffey, Col. John P. (Ret.), former military assistant for Canal
affairs, Office of the Secretary of the Army, and current executive 'Page
vice president, National Association for Uniformed Services---_____ 302
Spear, Moncrieff J., Treaty Implementation Staff, Department of
State------------------------------------ 116
Turner, J. C., general president, International Union of Operating
Engineers, AFL-CIO----------------- --------------__ 77
Vogel, Herbert D., consulting engineer------- -------- 388
Wyrough, Richard R., Deputy to Ambassador Popper____________ 116
Additional material supplied-
Army Department:
Transiting of a 265,000-)WT ship ---------------------_ 178
Sea-level canal safety--_-__-- ____________ 181
Challinor, David:
Bulletin of the Biological Society of Washington No. 2-"The
Panamic Biota: Some Obselvations Prior to a Sea-level Canal" 249
Responses to Mr. Nonnenmacher's questions ------------------ 248
The Atlantic-Pacific Intel oceanic Canal Study Commission (Study
of Engineering Feasibility) ---_____________ ____ 257
Defense Department:
Cost of nuclear Vessels __---------------------- _- 185
Sea-level canal vulnerability_--_ --------------------------_ 183
Dolgen, David: Policy statement of the executive board meeting,
Maritime Trades Department, AFL-CIO, Bal Harbour, Fla.,
February 17, 1978--------------------_-----------___-_ __ 81
DuVal, Capt. Miles:
An Engineer's Evaluation of Isthmian Canal Policy (April 1956),
by E. S. Randolph------------------ 461
Isthmian Canal Policy-An evaluation (March 1955) ____---- 415
Panama Canal (Encyclopaedia Britannica 1970) --____------ 450
Questions of Mr. Dornan and answers thereto--___ _--- ------ 479
The Interoceanic Canal-A problem (December 1964) -------- 442
S The marine operating problems, Panama Canal, and the solution
(February 1947) ----------------------- ------------ --- 428
Gravel, Senator Mike:
Answers submitted to questions posed by Mr. Metcalfe -------- 88
Answers to Mr. Snyder's questions--------------------------- 110
Holbrook, Marni: Questions of Mr. Metcalfe and answers thereto__- 385
Kujawa, Leonard J.:
Questions of Mr. Modglin and answers thereto-_ ----- --- 330
Questions of Mr. Nonnenmacher and answers thereto--____- 336
Mallowe, Howard: Would a new sea-level canal encourage the estab-
lishment of new trade routes?----------------------------- 301
Metcalfe, Hon. Ralph H.:
Article XII. A sea-level canal or a third lane of locks----- 240
National Academy of Sciences 1972 report dated September 28__ 249
Panama Canal traffic and revenue study 1978-2000 ---------- 268
Questions for-Senator Mike Gravel -- ------------_ 87
National Research Council: Committee on ecological effects of a
sea-level canal_ ----_ __--_ _---__------------- 235
Navy Department:
Size and speed of ships._ -----_ ----------- 179
Distances via Panama and Nicaragua ------------------------ 185
Newman, William A.: The National Academy of Science Committee
on the Ecology of the Interoceanic Canal ----------------------- 350
Ortman, David:
Article of November 1977: "Not Man Apart-Mingling the Two
Oceans" ---------------------------------- 363
Questions of Chairman Metcalfe and responses ------------ -- 386
Text of a telegram sent to President Carter by 11 national
environmental organizations ---------------_ 370
Panama Canal Company:
Alternate routes evaluation___ ------------------------ 195
Deforestation _____.___- ---------- 196









Additional material supplied-Con.
Panama Canal Co.-Con. Page
Question of Mr. Nonnenmacher and answered by Mr. Constant- 197
Vessels too large to transit canal ----.----------------------_ 194
Robins, Dr. C. Richard:
Questions of Mr. Metcalfe and responses thereto------------- 377
Questions of Mr. Nonnenmacher and responses thereto ---------380
The role of education in technology transfer ----------_- 378
Sheffey, Col. John P.:
Criteria for channel -------------- .______ ____314
Questions of Mr. Nonnenmacher and answers thereto------- 320
Skulberg, Olav M.: Opinion on proposed sea-level canal, Panama --- 349
Snyder, Hon. Gene:
Questions for Senator Gravel ----------.----------------- 109
Excerpt from Congressional Record of June 15, 1976: "Congress
faced up to Panama Canal's vulnerability 70 years ago! Had
President Ford been in office then, would it ever have been
built?" -----------------------------------------_ 96
State Department:
Documents involved in the ratification ceremony ------------- 131
Need for a sea-level canal-------------------- 127
Questions of Mr. Nonnenmacher and answered by Ambassador
Popper------------------------------------------------- 168
Two canals competition of operation------------------------- 128
Use of nuclear explosives ----------------------------------- 168
Vantine, Capt. W. H.: Panama Canal major modernization-Octo-
ber 15, 1973--------------------------------- 411
Vogel, Herbert D.: Questions of Mr. Nonnenmacher and answers
thereto------------------------------- 389
Wadsworth, Frank H.: Deforestation-death to the Panama Canal_ 168
Communications submitted-
Beeton, Alfred M.: Letter of September 28, 1977, to Hon. Frank Press_ 224
Bilonick-Paredes, R. A.: Letter of June 26, 1978, to Senator Mike
Gravel ---------- ---------------- ---------------- 82
Edey, Marion: Memorandum for Frank Press of August 23, 1977, on
followup on Panama Sea-Level Canal issue--------------------- 346
Grandy, John W., IV, et al.: Letter of October 26, 1977, to "Dear
Senator"--- -- -------- ------------------ 371
Grave], Sen. Mike: Letter of October 30, 1978, to Hon. Gene Snyder_ 93
Kimbal, Thomas L.: Letter of July 20, 1978, to Hon. Ralph H.
Metcalfe----------------------------------- 387
Kujawa, Leonard J.: Letter of April 18, 1978, to Senator Mike Gravel_ 74
McCosker, John E.: Letter of August 29, 1977, to Dr. Alfred M.
Beeton__ ------ -------------------- ----------- 344
McIntyre, Jim: Memorandum of October 6, 1977, to the President on
sea-level Panama Canal study_--------- 237
Randolph, E. S.: Memorandum of March 26, 1943, to Governor of
Canal Zone----------------------------------------- 466
Robins, C. Richard: Letter of August 1, 1978, to Hon. Ralph H.
Metcalfe -------- ------- ----------------- ---------- 378
Roosevelt, President Theodore: Letter of February 19, 1906, to the
Senate and House of Representatives-------------------------- 459
Sheffey, John P.: Letter of July 17, 1978, to Nicholas T. Nonnen-
macher-----------------------------------------__ 320
Vantine, Capt. W. H.: Letter of October 25, 1973, to "Dear Congress-
man" --------------------------_-------------- 411














































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UPDATING OF SEA-LEVEL CANAL STUDIES


WEDNESDAY, JUNE 21, 1978
HOUSE OF REPRESENTATIVES,
COMMITTEE ON MERCHANT MARINE AND FISHERIES,
SUBCOMMITTEE ON PANAMA CANAL,
Washington, D.C.
The subcommittee met, pursuant to notice, at 2:36 p.m., in room
1301, Longworth House Office Building, Hon. Ralph H. Metcalfe
(chairman of the subcommittee) presiding.
Present: Representatives Metcalfe, Murphy, Snyder, Dornan.
Staff present: Carl Perian, chief of staff; Ernest J. Corrado, chief
counsel; Coleman Conroy, professional staff member; Terrence
Modglin, professional staff member; Nicholas T. Nonnenmacher, pro-
fessional staff member, minority; and Anita Brown, clerk.
Mr. METCALFE. The Subcommittee on Panama Canal will come to
order.
I ask unanimous consent for the Panama Canal Subcommittee to
sit today, during the 5-minute rule, for the purpose of taking testi-
mony only.
Mr. SNYDER. Mr. Chairman, reserving the right to object, and I
shall not object, I am not even certain that it would make any dif-
ference, because such consent would have to be obtained from the
House under the Rules.
As I indicated to the chairman, I did check with the Clerk, and no
permission was obtained for the sitting of this committee during the
5 minute rule, and it is subject to objection by any member.
As I indicated to the chairman, the distinguished Senator from
Alaska is here, and not only is he here, but because of our vote, he
has had to cool his heels for 1 hour, and out of respect for the Sena-
tor, and the fact that he is here, I do not intend to object.
However, I want the Chair to be on notice that unless my opinion
changes about the subject matter of these hearings, in the days ahead
I will use whatever parliamentary tactics I may find available to me
to see that we do not move forward with building another canal.
I withdraw my objection, and have no further statement.
Mr. METCALFE. I thank the gentleman for his cooperation.
The Chair has attempted to get the unanimous consent of the
House, but unfortunately, the Speaker has not been in the Chair, and
therefore I could not obtain it. This is the reason for my unanimous
consent request.
Let the record show that the Chair expresses his appreciation to
the gentleman from Kentucky for his cooperation.
Ladies and gentlemen, good afternoon. This is the first of 3 days
of hearings which will address the question of whether the "1970









Interoceanic Canal Study" should be updated. These'hearings will
also address whether the United States should now join with Panama
to jointly study the feasibility of a sea-level canal on the Isthmus.
More specifically, our hearings will focus upon three legislative
measures. On May 4 the U.S. Senate approved an amendment to the
Navigation Development Act-H.R. 8309-an amendment that
would provide $8 million for an International Sea-Level Canal Study
Commission. The author of the amendment, the distinguished Demo-
cratic Senator from Alaska, is our first witness in these hearings..He
has brought with him a distinguished panel who, I understand, will
elaborate upon some of the Senator's contentions.
In addition to discussing the Gravel amendment to H.R. 8309,
these hearings will also consider two bills that have been introduced
by the committee chairman, H.R. 10087 and H.R. 13176.
[A copy of the amendment to the Navigation Development Act and
a copy of both H.R. 10087 and H.R. 13176, and reports thereon,
follow:]

AMENDMENT NO. 1932 TO H.R. 8309 (NAVIGATION DEVELOPMENT ACT)--
MAY 4, 1978
PURPOSE: TO ESTABLISH A COMMISSION TO ASSESS THE TECHNICAL, ECONOMIC, AND
ENVIRONMENTAL FEASIBILITY OF CONSTRUCTING A SEA-LEVEL CANAL)
(Mr. Gravel of Alaska, for himself and Mr. Magnuson)
The amendment is as follows:
,SEC. -. (a) (1) There is hereby established a Commission to be known as
the International Sea-Level Canal Study Commission, hereinafter referred to
as the "Commission".
(2) The Commission shall conduct such studies and investigations as may be
necessary, including onsite surveys, to update the report of the Atlantic-Pacific
Interoceanic Canal Study VGmmission (submitted pursuant to Public Law 88-
609) and to prepare an environmental impact statement in accordance with
section 102 of the National Environmental Policy Act. The Commission shall,
not later than three years from the date of enactment of this section, submit
to the President and the Congress a report on its findings and recommenda-
tions. The Commission shall cease to exist six months after submission of such
report. All records and papers of the Commission shall thereupon be delivered
to the Administrator of General Services for deposit in the Archives of the
United States.
(b) Studies and investigations undertaken by the Commission shall include,
but not be limited to-
(A) an inventory and assessment of flora, fauna and ecosystems of the
Isthmus of Panama including, but not limited to-
(i) potential migration of marine organisms through a sea-level canal
and the potential ecological effects of any such migration;
(ii) natural or manmade barriers that might mitigate the effects of any
such migration; and
(iii) other potential environmental effects of a sea-level canal;
(B) an analysis of the best techniques and equipment presently available or
which could be developed to excavate a sea-level canal;
(C) the preparation of alternative designs for financing the construction of
a sea-level canal; and
(D) an assessment of the economic feasibility of a sea-level canal, including,
but not limited to-
(i) a study of the obsolescence of the Panama Canal:
(ii) an analysis of a sea-level canal in relation to alternative transporta-
tion modes;
(iii) an evaluation of the potential contribution of a sea-level canal to
alleviate the problem of world energy shortages; and
.(iv) an assessment of the impact of a sea-level canal on world commod-
ity movements and world port development.









(c) Following receipt by the President and the Congress of the report by the
Commission pursuant to subsection (a), the Council on Environmental Quality
shall afford interested persons an opportunity to present oral and written data,
views, and arguments respecting the environmental impact statement submitted
by the Commission pursuant to subsection (a). Not later than sixty days fol-
lowing the receipt by the President and the Congress of such report by the
Commission, the Council on Environmental Quality shall submit to the Presi-
dent and the Congress a report, which shall be contemporaneously made avail-
able to the public, summarizing any data, views, and arguments received and
setting forth the Council's view concerning the legal and factual sufficiency of
such environmental impact as the Council considers to be relevant.
(d) The President shall, not later than thirty days following the receipt by
him of the report of the Council on Environmental Quality pursuant to sub-
section (c), transmit his finding and recommendation to the Congress.
(e) The Commission shall be comprised of six members as follows:
(A) one member appointed by the President of the Senate;
(B) one member appointed by the Speaker of the House of Representatives;
(C) one member appointed by the President; and
(D) three members appointed by the President upon recommendation for
appointment by the Republic of Panama.
(f) The Chairman of the Commission shall be elected by the Commission
from among its members.
(g) (1) The Commission or, on authorization of the Commission, any commit-
tee of two or more members may, for the purpose of carrying out the provi-
sions of this section, hold such hearings and sit and act at such times and
places as the Commission or such authorized committee may deem advisable.
(2) The Commission is authorized to acquire from any department, agency,
or individual instrumentality of the executive branch of the Government any
information it deems necessary to carry out its functions under this section and
each department, agency, and instrumentality is authorized and directed to
furnish to the extent permitted by law such information to the Commission
upon request made by the Chairman.
(h) (1) Members of the Commission who are employed by the Federal Gov-
ernment, including Members of Congress, shall serve without compensation in
addition to that received for their services as employees of the Federal Gov-
ernment; but they shall be reimbursed for travel, subsistence, and other neces-
sary expenses incurred by them in the performance of the duties vested in the
Commission.
(2) Members of the Commission, other than employees of the Federal Gov-
ernment, who are nationals of the United States, shall each receive compensa-
tion at a rate not in excess of the maximum rate of pay for GS-18, as provided
in the General Schedule under section 5332 of title 5, United States Code, and
shall be reimbursed for travel, subsistence, and other necessary expenses in-
curred by them in the performance of the duties vested in the Commission.
(3) Members of the Commission who are nationals of the Republic of Pan-
ama shall be compensated as determined by the Republic of Panama; but they
shall be reimbursed for travel, subsistence, and other necessary expenses in-
curred by them in the performance of the duties vested in the Commission, not-
withstanding any other provision of law.
(i) (1) The Commission is authorized to appoint and fix the compensation of
a staff director, and such additional personnel as may be necessary to enable it
to carry out its functions. The Director and personnel may be appointed with-
out regard to the provisions of title 5, United States Code, covering appoint-
ments in the competitive service, and may be paid without regard to the provi-
sions of chapter 51 and subchapter III of chapter 53 of such title relating to
classification and General Schedule pay rates. Any Federal employees subject
to the civil service laws and regulations who may be employed by the Commis-
sion shall retain civil service status without interruption or loss of status or
privilege. In no event shall any employee other than the staff director receive
as compensation an amount in excess of the maximum rate for GS-18 of the
General Schedule under section 5332 of title 5, United States Code. In addition,
the Commission is authorized to obtain the services of experts and consultants
in accordance with section 3109 of title 5, United States Code, but at rates not
to exceed the maximum rate of pay for grade GS-18, as provided in the Gen-
eral Schedule under section 5332 of title 5, United States Code.
(2) The staff director shall be compensated at a rate equal to that for level









2 of the Executive Schedule in subchapter II of chapter 53 of title 5, United
States Code.
(j) The Commission is authorized-
(1) to enter into contracts or agreements for studies and surveys with pub-
lice and private organizations and, if necessary, to transfer funds to Federal
agencies of the Government of the Republic of Panama from sums appropriated
pursuant to this section to carry out the purposes of this Act;
(2) to use voluntary and uncompensated services and to accept, hold, ad-
minister, and utilize gifts in order to carry out the purposes of the Commis-
sion; and
(3) to employ non-United States citizens or nationals, notwithstanding any
other provision of law.
(k) Any vacancy which may occur on the Commission shall not affect its
powers or functions but shall be filled in the same manner in which the original
appointment was made.
(1) In addition to the studies and investigations provided for in subsection
(b) of this section, the United States members of the Commission shall conduct
a review and assessment of alternative routes for the construction of a sea-
level canal, such review and assessment to include an evaluation of potential
routes both within and outside the Republic of Panama. The United States
members shall, not later than one year from the date of enactment of this sec-
tion, submit to the President and the Congress a report on their findings and
recommendations.
(m) There are hereby authorized to be appropriated $8,000,000 to carry out
the provisions of this section. Funds appropriated under this section shall be
available to the Commission until expended.
[Rollcall Vote No. 152 Leg.]
ON SEA-LEVEL STUDY AMENDMENT
Yeas-63


Abourezk
Allen
Anderson
Baker
Bartlett
Bayh
Bentsen
Biden
Byrd, Robert C.
Chafee
Chiles
Church
Clark
Cranston
Culver
Curtis
Danforth
DeConcini
Dole
Domenici
Durkin

Bellmon
Brooke
Bumpers
Burdick
Byrd, Harry F., Jr.
Case
Ford
Garn
Goldwater
Griffin

Cannon
Hart
Haskell


Eagleton
Eastland
Glenn
Gravel
Hansen
Hatfield, Mark 0.
Hatfield, Paul G.
Hathaway
Heinz
Hodges
Hollings
Huddleston
Humphrey
Jackson
Johnston
Kennedy
Magnuson
Mathias
Matsunaga
McGovern
Melcher
Nays-29
Hatch
Hayakawa
Helms
Javits
Laxalt
Leahy
Lugar
McClure
Metzenbaum
Nelson
Not Voting-8
Inouye
Long
McIntyre


Moynihan
Muskie
Nunn
Packwood
Pell
Percy
Randolph
Ribicoff
Riegle
Roth
Sarbanes
Sasser
Sparkman
Stennis
Stevenson
Stone
Talmadge
Wallop
Williams
Young
Zorinsky

Proxmire
Schmitt
Schweiker
Scott
Stafford
Stevens
Thurmond
Tower
Weicker


Morgan
Pearson







5

So. Mr. Gravel's amendment (No. 1932) was agreed to.
Mr. GRAVEL. Mr. President, I move to reconsider the vote by which the amend-
ment was agreed to.
Mr. MAGNUSON. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
The PRESIDING OFFICER (Mr. Nunn). Are there further amendments?
If there be no further amendments to be proposed, the question is on the en-
grossment of the amendments and third reading of the bill.
The amendments were ordered to be engrossed, and the bill to be read a third
time.
The bill was read a third time.








95TH CONGRESS H 10
1rH.. 10087




IN THE HOUSE OF REPRESENTATIVES
NOVEMBER 15, 1977
Mr. MunrPHY of New York introduced the following bill; which was referred
to the Committee on Merchant Marine and Fisheries




A BILL
To provide for an updating of the report of the Atlantic-Pacific
Interoceanic Canal Study Commission.
1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 SECTION 1. The Congress finds and declares:
4 (a) The possible improvement of interoceanic transit
5 through an enlarged and modernized Panama Canal or a new
6 Atlantic-Pacific canal is of great national and international
7 interest.
8 (b) The Atlantic-Pacific Interoceanic Canal Study
9 Commission report in 1970 concluded that there were no
10 technical obstacles of sufficient magnitude to prevent success-
11 ful construction and operation of a sea-level canal between









1 the Atlantic and Pacific Oceans. Since the issuance 'of this

2 report the political, economic, and military circumstances
3 concerning such a canal may have changed.

4 (c) The effect of a sea-level canal upon the environment
5 is unknown, but there is a possibility that harmful and irre-

6 versible impacts on marine ecosystems might result from
7 the construction and operation of such a canal.

8 (d) The most up-to-date information on the benefits
9 and costs of the possible construction and operation of a
10 sea-level canal between the Atlantic and Pacific Oceans
11 should be available to the Congress and the public.

12 (e) It is the purpose of this Act to authorize the Presi-
13 dent to complete the studies and investigations necessary to
14 bring the report of the Atlantic-Pacific Interoceanic Canal
15 Study Commission up to date and to determine the environ-
16 mental effects of a possible sea-level canal between the
17 Atlantic and Pacific Oceans.
18 SEC. 2. The President shall conduct such studies and
19 investigations as may be necessary, including necessary

20 onsite surveys, to update the report of the Atlantic-Pacific
21 Interoceanic Canal Study Commission (submitted pursuant
22 to Public Law 88-609) and shall submit to Congress no
23 later than five years from the date of this Act a report on
24 the measures which should be taken by the United States
25 concerning a possible sea-level canal between the Atlantic








1 and Pacific Oceans. Such studies and investigations shall

2 include a full and complete inventory and onsite assessment
3 of the ecological processes which might be affected by the
4 construction and operation of such a sea-level canal and shall

5 be limited to an assessment of such a canal constructed by

6 nonnuclear means.
7 SEC. 3. The President shall prepare and consider an

8 environmental impact statement in accordance with section
9 102 of the National Environmental Policy Act with respect

10 to any recommendations set forth in the report provided in
11 section 2 of this Act.

12 SEC. 4. There are hereby authorized to be appropriated
13 not to exceed $10,000,000 to carry out the provisions of
14 this Act. In order to expedite initiation of the studies and
15 investigations authorized in section 2 of this Act, there is

16 authorized to be expended not to exceed $1,500,000 in
17 fiscal year 1978.








95TIr CONGRESS T 'I
21) SESSION
H. R. 13176



IN THE ITOUSE OF REPRESENTATIVES
JUNE 16, 1978
Mr. Mrnni'ii of New York introduced the following bill; which was referred.to
the Committee on Merchant Marine and Fisheries -




A BILL
To provide for an updating of the report of the Atlantic-Pacific
Interoceanic Canal Study Commission and for the estalr
lishment of a Joint United States-Panama Sea-Level Canal
Study Commission, and for other purposes.
1 Be it enacted by the Senate and House of Representa-
2 ties of the United States of America in Congress assembled,
3 That this Act may be cited as the "Interoccanic Canal
4 Study Act of 1978".
5 SEC. 2. FINDINGS.
6 The Congress finds and declares the following:
7 (1) The potential improvements in interoceanic
8 transit resulting from an enlarged and modernized
9 Panama Canal or a new Atlantic-Pacific canal are of
10 great national and international significance.









1 (2) The Atlantic-Pacific Interoceanic Canal Study
2 Commission report in 1970 concluded that there were no
3 technical obstacles of sufficient magnitude to prevent

4 successful construction and operation of a sea-level canal

5 between the Atlantic and Pacific Oceans. Since the

6 issuance of this report the political, economic, and mili-
7 tary circumstances concerning such a canal may have

8 changed.
9 (3) The effect of a sea-level canal upon the en-
10 vironment is unknown, but there is a possibility that
11 harmful and irreversible impacts on marine ecosystems
12 might result from the construction and operation of such
13 a canal.

14 (4) The most current information on the benefits
15 and costs of the possible construction and operation of a
16 sea-level canal between the Atlantic and Pacific Oceans
17 should be available to the Congress and the public in

18 view of the economic and national security importance
19 of a new canal.
20 SEC. 3. PURPOSES.
21 The Congress declares that the purposes of this Act are
22 the following:

23 (1) To provide for the completion of the studies
24 and investigations lnceccT Iry to make current the report

25 of the Atlantic-Pacific Interoceanic Canal Study Com-









1 mission and to determine the environmental effects of a

2 possible sea-level canal between the Atlantic and Pacific
3 Oceans.

4 (2) To provide for the determination based on the
5 best and most current information available of the feasi-

6 ability of and the most suitable site for the construction
7 of a new interoceanic canal between the Atlantic and

8 Pacific Oceans.

9 (3) To implement, for the United States, that pro-

10 vision of paragraph 1 of Article XII of the Panama

11 Canal Treaty in which the United States and Panama

12 "commit themselves to study jointly the feasibility of a

13 sea-level canal in the Republic of Panama".

14 TITLE I-INTEROCEANIC CANAL STUDY

15 COUNCIL

16 SEC. 101. ESTABLISHMENT.

17 There is hereby established an Interoceanic Canal Study

18 Council (hereinnftcr referred to in this Act as the

19 "Council") .

20 SEC. 102. DUTIES.

21 The Council shall conduct a review and assessment of

22 alternate routes for the construction and operation of a new

23 interoceanic canal across the Americas. The review and as-

24 sessment by the Council shall include, but not be limited to,

25 with respect to each major alternate route-


32-461 0- 78 2









1 mission and to determine the environmental effects of a
2 possible sea-level canal between the Atlantic and Pacific
3 Oceans.

4 (2) To provide for the determination based on the
5 best and most current information available of the feasi-

6 ability of and the most suitable site for the construction
7 of a new interoceanic canal between the Atlantic and

8 Pacific Oceans.

9 (3) To implement, for the United States, that pro-
10 vision of paragraph 1 of Article XII of the Panama

11 Canal Treaty in which the United States and Panama

12 "commit themselves to study jointly the feasibility of a

13 sea-level canal in the Republic of Panama".

14 TITLE I-INTEROCEANIC CANAL STUDY
15 COUNCIL

16 SEC. 101. ESTABLISHMENT.

17 There is hereby established an Interoceanic Canal Study

18 Council (hereinafter referred to in this Act as the

19 "Council").

20 SEC. 102. DUTIES.

21 The Council shall conduct a review and assessment of

22 alternate routes for the construction and operation of a new

23 interoceanic canal across the Americas. The review and as-
24 seessment by tie Council shall include, but not be limited to,
25 with respect to each major alternate route-









1 (1) an assessment of the general environmental
2 effects of construction and operation of a new inter-
3 oceanic canal along such route;

4 (2) a projection of the general terms of agreement
5 stipulated by the country in which the route is located

6 with respect to United States involvement in construc-
7 tion and operation of such a canal;

8 (3) an estimation of the United States national
9 security benefits that would be derived from construc-

10 tion of such a canal along such route; and

11 (4) an estimation of the engineering problems en-
12 tailed in the construction of such a canal along such
13 route.
14 SEC, 103. MEMBERSHIP.
15 (a) NUMBER AND APPOINTMENT.-The Council shall
16 consist of three United States citizen members as follows:
17 (1) One member shall be appointed by the Presi-
18 dent of the Senate.

19 (2) One member shall be appointed by the Speak-
20 er of the House of Representatives.
21 (3) One member shall be appointed by the
22 President.
23 A vacancy in the Council shall be filled in the manner in
24 which the original appointment was made.









1 (b) CHAImMAN.-The Chairman of the Council shall

2 be elected by the Council from among its members.
3 SEC. 104. POWERS.

4 (a) IEAIINGS.-The Council or, if authorized by the
5 Council, any committee of two or more members may, for

6 the purpose of carrying out the provisions of this title, hold
7 such hearings and sit and act at such times and places as

8 the Council or such committee deems advisable.

9 (b) OTHER POWERS.-The Council has such other
10 powers as are set forth in section 301.

11 SEC. 105. SUBMISSIONS.

12 (a) CouNCIL.-Not later than one year after the date

13 of the enactment of this Act, the Council shall submit to the
14 President a document setting forth the results of the review

15 and assessment carried out by it under section 102.
16 (b) BY PRESIDENT.-The President shall, after receiv-

17 ing the document required under subsection (a), prepare

18 and submit to CnIgr.-? a report containing his comments on

19 the matters covered by the document and any recommenda-
20 tions he deems appropriate.

21 SEC. 106. TERMINATION.

22 The Council shall cease to exist upon the establishment

23 of the Joint United States-Panama Sea-Level Canal Study

24 Commission or upon the expiration of six months following








1 submission of its report under section 105 (a), whichever

2 occurs first.
3 SEC. 107. TAKING EFFECT OF TITLE II.
4 Title II shall take effect if, and only if, the President
5 declares, in the report submitted by him to the Congress

6 under section 105 (b), that it is his intention to implement
7 the principle of paragraph 1 of Article XII of the Panama
8 Canal Treaty, that "the United States of America and the
9 Republic of Panama recognize that a sea-level canal may be
10 important for international navigation in the future." The
11 effective date of such title shall be the date of such report.
12 TITLE II-JOINT UNITED STATES-PANAMA SEA-
13 LEVEL CANAL STUDY COMMISSION
14 SEC. 201. ESTABLISHMENT.
15 Upon the taking effect of this title, there is established
16 the Joint United States-Panama Sea-Level Canal Study
17 Commission (hereinafter referred to in this Act as the
18 "Commission").
19 SEC. 202. DUTIES.
20 (a) IN GENERAL.-The Commission shall conduct such
21 studies and investigations as may be necessary, including
22 onsite surveys, to update the report of the Atlantic-Pacific
23 Interoceanic Canal Study Commission (submitted pursuant
24 to Public Law 88-609) and to prepare, if required under
25 subsection (c), an environmental report. The results of the









1 review and assessment by the Council under title I shall be
2 considered by the Commission in conducting such studies
3 and investigations.

4 (b) UPDATE OF PREVIOUS REPORT.-Within two
5 years after the date on which the initial appointment of all

6 members of the Commission is completed the Commission
7 shall submit to the President and the Congress a report

8 of its findings and recommendations relating to its update
9 of the final report of the Atlantic-Pacific Interoceanic Canal

10 Study Commission. The report of the Commission shall
11 include, but not be limited to-

12 (1) an analysis of the best techniques and equip-
13 meant presently available or which could be developed
14 to excavate a sea-level canal;

15 (2) the preparation of alternative designs for financ-
16 ing the construction of a sea-level canal;
17 (3) an assessment of the economic feasibility of a

18 sea-level canal, including, but not limited to-

19 (A) a study of the obsolescence of the Panama
20 Canal;

21 (B) an analysis of a sea-level canal in relation
22 to alternative transportation modes;
23 (C) an evaluation of the potential contribution
24 of a sea-level canal to alleviate the problem of world
25 energy shortages;








1 (D) aln assessment of the impact of a sea-level
2 canal on world commodity movements and world
3 port development.

4 (4) an assessment of the national security ramnifica-
5 tions of a sea-level canal; and
6 : (5) an assessment of the terms of agreement ex-
7 pected in connection with construction and operation of

8 a sea-level canal.
9 (c) ENVIRONMYENTAL REPORT.-If within six months
10 after the date on which the President receives the report of
11 the Commission referred to in subsection (b), the Presi-

12 dent submits to the Congress a declaration, in writing, that
13 in his opinion the findings set forth in such report indicate
14 that the construction of a sea-level canal would be advan-

15 tageous to the United States, the Commission shall prepare
16 an environmental report with respect to the construction
17 and operation of such a canal, which report shall include

18 an environmental impact statement prepared in accordance

19 with section 102 of the National Environmental Policy Act
20 and an inventory and assessment of flora, fauna, and eco-
21 systems of potential sea-level canal routes including, but
22 not limited to- --:.
23" (1) potential migration of marine organisms

24 through a sea-level canal and the potential ecological
25 effects of any such migration;









(2) natural or manmade harriers that might miti-

gate the effects of any such migration; and

(3) other potential environmental effects of a sea-

level canal.

The environmental report provided for in this subsection

shall be submitted by the Commission to the President and

the Congress before the closing date of the two-year period

beginning on the date the President submits the written

declaration referred to in this subsection to the Congress, or

the closing date of the four-year period beginning on the

date on which the initial appointment of all members of the

Colnlli,,ion is completed, whichever closing date first occurs.

SEC. 203. MEMBERSHIP.

(a) XNrItMER AND APPOINTMENT.-The Commission

shall consist of six members as follows:

(1) One member appointed by the President of the

Senate.

(2) One member appointed by the Speaker of the

House of Representatives.

(3) One member appointed by the President.

(4) Three members appointed by the President from:

among individuals recommended for appointment by the

republic of Panama.

A vacancy in the Commission shall be filled in the manner-

in which the original appointment was made.









1 (b) CHAIRMAN.'-The Chairman of the Commis-
2 sion shall be elected by the Commission from among its
3 members.

4 SEC. 204. POWERS.

5 (a) HIEARITNGS.-The Commission or, if authorized lb
6 the Commission, any committee consisting of two or more
7 members may, for the purpose of carrying out the provisions
8 of this title, hold such hearings an'd sit and act at such times
9 and places as the Commission or such committee deems

10 advisable.

11 (b) OTHER POWERS.-The Commission has such other
12 powers as are set forth in section 301.

13 SEC. 205. ACTION BY COUNCIL ON ENVIRONMENTAL
14 QUALITY.
15 If the Commission submits the environmental report

16 provided for in section 202 (c) to the Congress and the

17 President, the Council on Environmental Quality shall

18 promptly thereafter afford interested persons an opportunity

19 to present oral and written data, views, and arguments re-
20 specting the environmental impact statement included in such
21 environmental report. Not later than six months after the

22 date on which such report is so submitted, the Council on

23 Environmental Quality shall submit to the President and

24 the Congress a document, which shall be made available to
25 the public at the same time, summarizing any data, views,









1 and arguments received from the public and setting forth

2 the views of the Council on Environmental Quality con-
3 cerning the legal and factual sufficiency of such environ-

4 mental impact statement.

5 SEC. 206. FINAL PRESIDENTIAL REPORT.

6 After receiving the Commission reports provided for
7 in section 202 (b) and (c), and after taking into account

8 the views of the Council on Environmental Quality sub-
9 mitted under section 205, the President shall submit to the

10 Congress a final report containing his recommendation re-
11 guarding whether or not a sea-level canal should be con-

12 structed, the reasons for such recommendation, and such

13 other views and recommendations as he deems appropriate.
14 SEC. 207. EFFECT ON COMMISSION ACTION.

15 The carrying out of the duties provided for under this

16 title by the Commission shall be deemed to fulfill the respon-

17 sibilitics of the United States under paragraph 1 of Article

18 XII of the Panama Canal Treaty.

19 SEC. 208. TERMINATION OF COMMISSION.

20 The Commission shall cease to exist on whichever of the

21 following days first occurs:

22 (1) The thirtieth day after close of the six-month

23 period referred to in section 202 (c), if the President

24 does not submit to the Congress a declaration described

25 in such section before the close of such six-month period.









1 nlld arguments received from the public and setting forth
2 the views of the Council on Environmental Quality con-
3 corning the legal and factual sufficiency of such environ-
4 imintal impact statement.
5 SEC. 206. FINAL PRESIDENTIAL REPORT.

( After receiving the Commission reports provided for
7 in section 202 (b) and (c), and after taking into account

8 the views of the Council on Environmental Quality sub-
9 fitted under section 205, the President shall submit to the

10 Congress a final report containing his recommendation re-
11 guarding whether or not a sea-level canal should be con-
12 structcd, the reasons for such recommendation, and such

13 other views and recommendations as he deems appropriate.
14 SEC. 207. EFFECT ON COMMISSION ACTION.
15 The carrying out of the duties provided for under this

16 title by the Commission shall be deemed to fulfill the respon-

17 sibilities of the United States under paragraph 1 of Article
18 XII of the Panama Canal Treaty.

19 SEC. 208. TERMINATION OF COMMISSION.
20 The Commission shall cease to exist on whichever of the
21 following days first occurs:

22 (1) The thirtieth day after close of the six-month
23 period referred to in section 202 (c), if the President

24 does not submit to the Congress a declaration described
25 in such section before the close of such six-month period.









1 (2) The thirtieth day after the day on which the
2 Congress receives from the President his opinion on the
3 findings set forth in the report of the Commission sub-

4 emitted under section 202 (b) of this Act, if the Pre.ideiir

5 fails to declare that a sea-level canal would be advan-

6 tageous to the United States.
7 (3) The ninetieth day after the day on which the

8 Council on Environmental Quality submits its report to
9 the President and the Congress under section 205.
10 TITLE III-POWERS OF COUNCIL AND COMMIS-

11 SION AND ADMINISTRATIVE PROVISIONS

12 SEC. 301. POWERS.

13 (a) IN GENERAL.-For purposes of carrying out its
14 duties under this Act, the Council and the Commission may

15 each-
16 (1) secure directly from any department or agency
17 of the United States information necessary to enable it

18 to carry out such duties, and, upon request of the Chair-

19 man of the Council or the Commission, the head of such

20 department or agency shall furnish such information to

21 that body;

22 (2) accept, use, and dispose of gifts or donation or

23 services or property;

21 (3) use the United States mails in the same manner









1 and upon the same conditions as other departments and
2 agenleics of the United States;
3 (4) to such extent, or in such amounts, as are pro-
4 vided in advance in appropriation Acts, enter into con-
5 tracts, agreements, or other transactions without regard

6 to section 3709 of the Revised Statutes of the United
7 States; and

8 (5) utilize, on a reimbursable basis or otherwise,
9 the personnel and facilities of other departments and
10 agencies :of tie United States.

11 (b) ADDITIONAL COMMISSION POWERS.- (1) The
12 Commission may utilize, on a reimbursable basis or otherwise,
13 the personnel and facilities of any agency of the Government
14 of the Republic of Panama for purposes of carrying out its

15 duties under title II.
16 (2) The Commission may employ Panamanian citizens

17 or nationals, notwithstanding any other provision of law.
18 SEC. 302. DIRECTOR AND STAFFS OF COUNCIL AND COM-
19 MISSION.
20 (a) DIRECTOR.-The Council and the Commission shall
21 each appoint a Director who shall be compensated at the rate

22 of basic pay in effect for level II of the Executive Schedule..
23 (b) STAFF.-The Council and the Commission may









1 each appoint and fix the pay of such additional personnel as

2 it deems desirable.
3 (c) APPLICABILITY OF CIVIL SERVICE LAw.-The
4 Director and staff of the Council and of the Commission may
5 be appointed without regard to the provisions of title 5,

6 United States Code, governing appointments in the competi-
7 tive service, and may be paid without regard to the provi-

8 sions of chapter 51 and subchapter III of chapter 53 of
9 such title relating to classification and General Schedule

10 pay rates, except that no individual so appointed may receive
11 pay in excess of 'the annual rate of basic pay in effect for
12 grade GS-18 of the General Schedule.
13 (d) FEDERAL EMPLOYEES.-Any Federal employee
14 subject to the civil service laws and regulations who may be

15 detailed to either the Council or the Commission shall retain
16 civil service status without interruption or loss of status or
17 privilege.
18 (e) EXPERTS AND CONSULTANTS.-The Council and

19 the Commission may each procure temporary and intermit-
20 tent services to the same extent as is authorized by section
21 3109 (b) of title 5 of the United States Code, but at rates
22 for individuals not to exceed the daily equivalent of the
23 annual rate of basic pay in effect for grade GS-18 of the
24 (eiieral Schedule.








SSEC. 303. PAY AND TRAVEL EXPENSES.

2 (a)- IN GENERAL.-Except as provided in subsection
3 (b), members (if citizens or nationals of the United States)
4 of the Council and of the Commission shall each be entitled

5 to receive the daily equivalent of the annual rate of basic

6 pay in effect for grade GS-18 of the General Schedule for
7 each day (including traveltime) during which they are en-

8 gaged in the actual performance of duties vested in the Coun-
9 cil or the Commission. The compensation of members of the

10 Council or the Commission who are citizens or nationals of
11 the Republic of Panama for service thereon shall be as pro-

12 vided for under Panamanian law.

13 (b) EXCIPTIO-N.-Members of the Council and the
14 Commission who are full-time officers or employees of the

15 United States or Members of Congres,, shall receive no addi-
16 tional pay on account of their service on the Council or the

17 Commission.

18 (c) TRAVEL EXPENSES.--While away from their homes

19 or regular places of business in the performance of services

20 for the Council or the Commission, members thereof

21 (whether or not citizens or nationals of the United States)
22 shall be allowed travel expenses, including per diem in lieu

23 of subsistence, in the same manner as persons employed
24 intermittently in the governmentt service are allowed ex-









1 penses under section 5703 (b) of title 5 of the United States

2 Code.
3 TITLE IV-AUTHORIZATIONS AND EFFECTIVE

4 DATES
5 SEC. 401. AUTHORIZATION OF APPROPRIATIONS.

6 (a) FOR COUNCIL.-There are authorized to be appro-
7 priated for purposes of carrying out title I not to exceed

8 $1,000,000.
9 (b) FoR CoMMIssION.-There are authorized to be
10 appropriated for purposes of carrying out title II such sums

11 as may be necessary, but not to exceed $2000,000, for the

12 twenty-four-month period beginning on the month in which

13 the initial appointment of all members of the Commission
14 is completed.

15 SEC. 402. EFFECTIVE DATES.

16 (a) TITLE I.-Title I shall take effect on the date of the
17 enactment of this Act.

18 (b) TITLE III.- (1) The provisions of title III which

19 apply with respect to the Council shall take effect on the
20 date of the enactment of this Act.

21 (2) The provisions of title III which apply with respect

22 to the Commission shall take effect on the date on which title
23 II takes effect under section 107.













OFFICE OF THE SECRETARY OF TRANSPORTATION
WASHINGTON, D.C. 20590


GENERAL COUNSEL JUL 3 1978



Honorable John M. Murphy
Chairman, Committee on Merchant
Marine and Fisheries
House of Representatives
Washington, D. C. 20515

Dear Mr. Chairman:

This is in response to your request for Departmental comments on
H.R. 13176, a bill

"To provide for an updating of the report of the Atlantic-
Pacific Interoceanic Canal Study Commission and for the
establishment of a Joint United States Panama Sea Level
Canal Study Commission, and for other purposes."

This proposed legislation is being called the "Interoceanic Canal Study
Act of 1978." The bill contains three titles. Title I provides for the
creation of a three-member Interoceanic Canal Study Council (Council)
with one appointment each by the President, Speaker of the House of
Representatives and President of the Senate for the purpose of conducting
a review and assessment of alternate routes for the construction and
operation of a new interoceanic canal across the Americas. The Council
would have one year in which to report to the President the results of its
review and assessment. The President would then submit a report to
Congress with his comments and any recommendations deemed appropriate.
Title II would come into effect only if the President declares in his
report to Congress that it is his intention to implement the principle
of paragraph 1 of Article XII of the Panama Canal Treaty which deals
with jointly studying the feasibility of a sea-level canal. If Title II
comes into effect there would be established a Joint United States Panama
Sea Level Canal Study Commission (Commission). The members of the Com-
mission would be appointed in the same manner as the members of the
Council except there would be an additional three members appointed by
the President from individuals recommended by the Republic of Panama.
The main duties of the Commission would be to update the 1970 report
of the Atlantic-Pacific Interoceanic Canal Study Commission and prepare


32-461 0 78-3








28



an environmental report. The Commission would have two years in
which to submit a report to the President, who in turn submits a final
report containing his recommendation on whether or not a sea level
canal should be constructed. Title III relates to the powers of the
Council and Commission and administrative provisions. Among other
provisions, the Council and Commission would each have a Director
compensated at the pay rate in effect for level II of the Executive
Schedule and have staffs of a size "as it deems desirable." The
Council would be authorized funding not to exceed $1,000,000 and the
Commission $2,000,000.

Article XII of the treaty provides that during the duration of the treaty
both parties commit themselves to study jointly the feasibility of a sea
level canal in the Republic of Panama. However, we believe it would be
premature to embark on the study contemplated by Article XII at this
time.

Decisions concerning the future role of the Panama Canal and the need for
a sea-level canal will depend to a great extent on the demands of the
market place. A shipper's decision to use the Canal will depend on the
competitiveness of alternative routes and modes of transportation. These
alternatives include shipments around the Horn in supertankers, new oil
or slurry pipelines, railroad transport, or future "land bridge" or
"minibridge" developments. Now that the treaties with Panama have been
ratified, these market place decisions can be made in a climate of
"certainty" regarding that waterway. Since potential users of the
canal will be assured that the canal will continue to be operated
efficiently and that its capacity will be increased if economically
justified, the canal has the potential to become an increasingly
important transportation link.

Until these market place decisions have been made and their impact
can be assessed, the commercial need for a sea-level canal is not
absolutely clear. These market place decisions should materialize
in the next few years, and then it should be possible for a study
commission to determine the need for and economic feasibility of a
sea-level canal.

The Office of Management and Budget has advised that there is no
objection from the standpoint of the Administration's program to
the submission of this proposed report to the Committee.

Sin Hrely,




Linda Heller Kam










DEPARTMENT OF STATE,
Washington, D.C., September 15, 1978.
Mr. JOHN M. MURPHY,
Chairman, Committee on Merchant Marinc and Fisheries,
House of Representatives.
DEAR MR. CHAIRMAN: The Secretary has asked me to reply to your letter of
June 20, 1978 requesting our views on H.R. 13176 with respect to updating the
report of the Interoceanic Canal Study Commission and the establishment of a
joint U.S.-Panamanian Sea-Level Canal Study Commission.
Our comments are directed toward the foreign policy aspects of this bill, and
in particular toward its relationship to the provisions of Article XII of the
Panama Canal Treaty, which stipulates that ". during the duration of this
Treaty, both Parties commit themselves to study jointly the feasibility of a sea-
level canal in the Republic of Panama. ."
The Department of State would not oppose an updating of the 1970 report of
the Atlantic-Pacific International Sea-Level Canal Study Commission at an
appropriate time. Such a study was contemplated during the negotiations on
the Panama Canal Treaty and would be useful as a basis for decision with re-
spect to the desirability of constructing another canal.
We are concerned that a study at this time could be criticized as premature.
It might be preferable to put the new Treaty relationships in place and com-
plete consideration of the Treaty implementing legislation before embarking
on such a study.
Our principal concern is that any study undertaken should serve the pur-
pose of the study envisioned in the Treaty. We believe that the organization
and procedure of the proposed new Joint U.S.-Panamanian Sea-Level Canal
Study Commission should be modified so as to give greater prominence to its
bilateral character, so that it more clearly falls within the spirit of the pro-
visions of Article XII of the Panama Canal Treaty. This could be done by
changes along the following lines:
A. The President should be authorized to formalize the joint aspects of the
study through an agreement with the Government of Panama which will make
it clear that the joint study satisfies the requirements of Article XII of the
Treaty.
B. Provision should be made in the proposal for assuring that the terms of
reference of the study commission are sufficiently broad to allow us to imple-
ment arrangements we may conclude with Panama.
C. The Panamanian members of the commission should be appointed by the
Government of Panama, and not by the President of the United States.
D. The proceedings of the commission should be bilingual to the extent
necessary.
E. The report of the commission should be made to the Governments of the
United States and Panama.
Changes along these lines would markedly improve the acceptability of any
proposed commission in light of the Panama Canal Treaty requirements.
With regard to the proposed Interoceanic Canal Study Council, we share the
view that this should function as a separate American unit, without Panama-
nian participation, in the consideration of canal sites outside of Panama. We
question the desirability of laying out so specifically, however, the time limits
and phasing for the various stages of the proposed study. Given the uncer-
certainties of the situation, it might be preferable to give the President the
benefit of greater flexibility.
Finally, we would note that the costs of the study envisioned in Article XII
of the Panama Canal Treaty, including the funding of the Canal Study Coun-
cil and Commission would entail a new financial commitment of $3 million.
The Office of Management and Budget advises that from the standpoint of
the Administration's program there is no objection to the submission of this
report.
Sincerely,
DOUGLAS J. BENNET, Jr.,
Assistant Secretary
for Congressional Relations.









Mr. METCALFE. These hearings are critical because they are the
only ones convened in this Congress for the exclusive purpose of dis-
cussing a sea-level canal update. The Committee on Merchant Marine
and Fisheries, and this subcommittee, has jurisdiction over the Pan-
ama Canal and other interoceanic canals. As a result of this jurisdic-
tion, it was the Merchant Marine Committee which reported legis-
lation that authorized the "1960's Sea-Level Study." The committee
later authorized legislation to extend the life of the Atlantic-Pacific
Commission beyond its initial term.
Several important questions are of vital concern to the Chair, and
these must be addressed by the distinguished witnesses who will
appear.
Is it good timing to authorize a study before we have the compre-
hensive treaty implementing proposal of the administration?
Is it good timing to move before we know more about the views of
our new Panamanian partners on a sea-level canal?
Need we expend millions of dollars to update a sea-level study
when most of our preliminary data indicate such a sea-level project
is not necessary? In the subcommittee's vital interest hearings last
year, one witness called the sea-level idea "economic fantasy." All
our witnesses at that time agreed that the present canal could ade-
quately serve our needs until the year 2000.
We must also ask whether it is judicious to move when there are
presently so many uncertainties that relate to the traffic for a sea-
level canal. I refer to the unknown disposition of Guatemalan oil
pipeline, the so-called Mexican "dry canal," the Sohio California to
Texas pipeline, and many others.
Another guestt ion to be addressed is why the Congress should au-
thorize this study before the Administration has submitted the treaty
enabling legislation to the Congress. A study, in this form, seems to
me to contravene the intent of the treaty.
Whatever our preliminary views on the likelihood of a sea-level
canal, or the benefits of an update, I trust there will a unanimity
of opinion on one issue. I believe that we agree that there must be a
thorough and comprehensive body of facts which positively show a
sea-level canal to be advantageous before the billions that would be
needed for such a project could even be expended.
I also want to point out that these hearings are being held today
to accommodate Senator Gravel, who will be out of the country next
week.
I would now like to defer to the very distinguished Chairman
(Congressman Murphy from New York) if he should come in. He
may have a statement, when he arrives. We will proceed at this time.
I recognize the Senior Minority Member, the gentleman from Ken-
tucky, Mr. Snyder.
Mr. SNYDER. Thank you, Mr. Chairman.
I appreciate the opportunity to make some remarks. I, of course,
am intrigued by the way we.are getting the proposal before us, as a
Senate amendment to H.R. 8309, a bill that we sent to the Public
Works Committee, and the Ways and Means Committee, dealing with
Lock and Dam 26, and some taxing of the barges on the inland
waterways.









As the chiairIman, I am sure knows, the Committee on Public
Works, on which I am privileged to serve, is now holding hearings
on a multitude of projects which the Senate added to that bill, one
of which involves this Sea-Level Panama Canal matter, which is not
a unmatter under the jurisdiction of Public Works.
I do not anticipate that the Public Works bill will include this
provision, and should we go to conference, should the amendment of
the Senator from Ala-lk be Zicepted in the conference, it would 1)e
a subject of point of order, unless the rule were granted waiving that
point of order. My guess is that such a rule would probably not be
successful.
Mr. Chairman, beyond that I am a little bit more intrigued today.
We are opening hearings on proposals that would implement a single
aspect of the new canal treaties.
We are going to discuss a study regarding a new sea-level canal.
But the present canal needs our attention.
The administration still has to send to Congress a final draft of
legislation by which to implement the treaties in their entirety.
Many have concluded that. President Carter is so aware of the con-
tinuing opposition of the American people to the Panama Canal
giveaway that he dares not risk any House Democrat seats in a con-
frontation on the implementing legislation.
After the November elections, I trust we will get a look at it.
This delay is in total conformity with the ad(iiinit ration's goal
of keeping the House from voting on the disposal of the Canal Zone.
It is certainly not in conformity with the President's pell-mell
rush to complete the new treaties which he had enthusiastically pro-
clanimieil as the top priority foreign affairs item on his agenda.
He has concluded the numerous stage-managed treaty signing,
but he has put the brakes on the followthrough in this body.
Well, I have little enthusiasm for the sea-level canal proposal con-
tained in the treaties.
Neither have most American citizens.
Some of my constituents have described it to me as just something
else to sink their tax money into only to turn it over to Panama.
In my estimation, modernization of the present Canal makes much
more sense-but only as long as it is ours.
I have sponsored legislation to that end, H.R. 1587, together with
Chairman John Murphy and Congressman Daniel J. Flood.
However, with the canal no longer ours, I would not vote a dime
of taxpayers' money for such a purpose.
What this Nation needs is a national proposition 13 to close up
the foreign sinkholes that have drained countless billions of tax dol-
lars from the pockets of our citizens.
The new treaty speaks of a joint United States-Panama study of
a sea-level canal.
Not one word as to how it is to be funded, however.
We are in the process of giving billions upon billions of dollars
worth of Canal Zone and Panama Canal installations and facilities
to Panama.
We will pay hundreds of millions more to Panama between now
and year 2000 to take over the zone and waterway.









Yet, where is any indication that Panama will be asked to under-
write 50 percent, or even some lesser percentage of the sea-level canal
study?
The Senate chose to overlook it.
But, I believe debate on the implementing legislation in this body
will cause the sparks to fly over such an item. Though the study's
price tag may be insignificant in view of the treaties' total cost, some
of us keep in mind the hard-working taxpayers who must foot the
bill.
I want to join in welcoming Senator Gravel.
Senator, your arguments on the growing obsolescence of the Pan-
ama Canal, based on world shipping tonnage, were of interest to me
in the Senate debate.
However, I also found Senator Jesse Helms' April 5 remarks in
refutation of your position of equal interest.
I know you will have more to say on the matter today.
It has been my opinion that ships are built to meet the circum-
stances, that is-those that need to go through the Panama or Suez
Canals are so constructed. Those that do not-are not.
I would also suggest that while approximately 25,000 ships of
1,000 gross registered tons or more can go through the Panama Canal
-only 4,000 do. Routes are the important consideration.
Your concern for moving Alaskan oil to our gulf and east coast
refineries quickly is commendable. Royalties to your State of Alaska
from that oil are, of course, greatly important. And, certainly, the
rest of us need that oil.
I found it most interesting that Senator Stevens, who must have
the same concerns over the movement of Alaskan oil that you have,
voted against the new treaties you supported.
My lack of enthusiasm for a new sea-level canal has already been
stated. There are a number of reasons that I will not go into now
other than the one I mentioned.
However, I must admit that Alaskan oil and its importance to the
entire Nation is a whole new factor, relatively speaking, in consid-
eration of a sea-level canal.
In the absence of adequate pipelines to carry Alaskan oil to our
refineries, and in view of the total uncertainty as to future con-
struction of such pipelines, your testimony, and that of the other
witnesses, will have my careful attention.
I am especially interested in determining, (1) How long can
Alaskan oilfields be expected to produce profitably, and (2) to what
extent will there be need for either pipelines or canals to carry
Alaskan oil if import tradeoffs are made, such as one with Japan?
I welcome you here today, and will be interested in listening to
what you have to say.
Thank you.
Mr. METCALFE. Thank you, Congressman Snyder.
Let the record show that Congressman Murphy has to chair
another hearing, and cannot be present at this time. He has prepared
a statement, and I ask unanimous consent that his statement be en-
tered into the body of the record.











Hearing no objection, it is so ordered and we will proceed.
[The following was received for the record:]

STATEMENT OF THE HON. JOIN M. MURPHY, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF NEW YORK AND CHAIRMAN, COMMITTEE ON MERCHANT
MARINEE AND FISHERIES
I would like to commend Chairman Metcalfe for convening these ]I:'riiis
on a continuation of sea-level canal studies. The other body passed judgment
on this issue on May 4, when it voted 63 to "'2 in favor of the amendment of
our witness today, the Senator from Alaska. We in the House now must con-
sider the proposal through committee hearings to derive our own position on
this issue.
While a Member of the House and this committee in the 1960's I took a
great interest in the work of the Atlantic-Pacific Interoceanic Canal Study
Commission. I acquainted myself with the major issues involved in the con-
struction of a new canal and the major alternate sites that were considered. I
look forward today, nearly a decade later, to hearing our witnesses again dis-
cuss the issues and routes. I have introduced two pieces of hIgi.lltiwii which
attempt to apply a balanced approach to the issues and routes involved in a
new canal. Comments on the approach taken in this legislation will be ap-
preciated.
Whatever canal treaty arrangement is applicable, the present arrangement
or the one recently approved, the United States has the same basic national
security and commercial interests to protect. Perhaps a new canal will en-
hance our national interests. Perhaps not. It is well-worth the expenditure of
a limited amount of funds to determine our future policy in this regard. Since
the issue of a new canal has been studied previously and in great length, the
legislation I introduced calls for a total of only $3 million to fund 3 years of
studies. However, if these ]hearinii,; demonstrate that these are subject areas in
which previous study material is deficient, or nonexistent, then additional funds
will be needed to provide proper studies.
As I said, an update of a sea-level study could occur without a heavy burden
on the U.S. Treasury. In line with H.R. 13176, for an amount just above 1
percent of the present canal's annual operating budget. we would be able to
better determine whether billions of dollars in economic benefits and uncal-
culable benefits in national security can be attained through the construction
of a sea-level canal.
We are relatively sure that there are certain benefits that could be provided
by a sea-level canal. According to the 1970 Atlantic-Pacific Interoceanic Canal
Study Commission report, such a canal would be easier to operate and defend.
But we know there are also potential obstacles, including environmental and
financial ones, to new canal construction.
The Atlantic-Pacific Interoceanic Canal Study Commission, chartered in
1964, was tasked to consider "national defense, foreign relations, intercoastal
shipping, interoceanic shipping and such other matters as they may determine
to be important" in relation to a sea-level canal.
Since the 1970 sea-level report was published, a number of the particulars
of those elements that formed the basis for the commission's findings have
changed:
In the foreign relations sphere, the United States has concluded a new treaty
relationship with Panama that precludes U.S. operation or direct defense of
the present Panama Canal after the year 2000. Termination of U.S. control
could have a profound effect on the thinking of leaders in the United States and
other countries.
In terms of interoceanic shipping, at least two projections of the commis-
sion were inaccurate:
(1) The number of annual transits of the present canal has been below what
was projected by the Commission; and
(2) The trend toward increased ship size has proceeded at a more rapid
pace than expected.
Third, the sensitivity to tolls increases of those commodities that transit
the present canal and would transit a sea-level canal has changed due to the
buildup of alternatives such as the landbridge. New commodities, such as the
Alaskan oil flow, have appeared.









Finally, environmental considerations, including consequences of the mixing
of marine organisms between two oceans, have become of greater concern. In
this committee and the Congress, as we know, we have expended every effort
to save and manage our fisheries, and we certainly do not want to foster any
policies that contravene that policy.
Tfo conclude, I am ready to listen to the gentleman from Alaska, and the
distinguished panel that accompanies him. Though I had some deep concerns
about the recently approved treaties, I remain optimistic about the ability of
our country to do big things in the world, and in my position as chairman of
the committee on Merchant Marine and Fisheries, I am particularly interested
ir those initiatives that would serve the national interest and spur U.S. mari-
time commerce.
Mr. METCALFE. Our first witness is Senator Gravel.
Senator Gravel, do you have other witnesses that you wish to
bring to the table while you are present?

STATEMENT OF HON. MIKE GRAVEL, U.S. SENATOR FROM THE
STATE OF ALASKA; ACCOMPANIED BY DAVID DOLGEN, DIRECTOR
OF LEGISLATIVE ACTIVITIES, MARITIME TRADES DEPART-
MENT, AFL-CIO; RICHARD SAUL, DIRECTOR OF DOMESTIC SHIP-
PING ACTIVITIES, TRANSPORTATION INSTITUTE; JOHN ED-
DINGER, EXECUTIVE DIRECTOR, NATIONAL ASSOCIATION OF
DREDGING CONTRACTORS; JOHN BROWN, LEGISLATIVE DIREC-
TOR, INTERNATIONAL UNION OF OPERATING ENGINEERS,
AFL-CIO
Senator GRAVEL. I would like to do that, Mr. Chairman, after I
have given this short presentation.
Mr. METCALFE. Very good.
Would you proceed, then?
Senator GRAVEL. First, I want to thank the committee for accom-
modating my schedule. I do appreciate your prveI.enc, Mr. Chairman,
and Mr. Snyder, and after you have gone through this bevy of wit-
nesses, which I think is an excellent hearing schedule, if you would
like me to come back, either in open session or markup session, how-
ever you would want to use what knowledge I have on the subject, I
would make myself readily available.
I did feel it was important to sort of kick the hearings off, because
we are here today mainly as a result of my efforts. I think there is
a lot of misunderstanding, a lack of knowledge, a lot of mispercep-
tion that I hope can be dispelled. I hope to win over converts on this
subject.
After initial pre-entation, I will speak to some of the comments
of Mr. Snyder and yourself, as to the existing perception of what
is going on. But first, I would like to make a formal presentation of
some facts which, I might say, were not refuted by anybody in the
IT.S. Senate. Proof of that was the number of votes that we finally
secured in the passage of my amendnient-over some 60 odd votes.
I would hope that the committee would report this as separate
lhgirilation. When the House passes it we could hold it at the desk in
the Senate and pass it right away. It was attached to the Public
Works bill only because I was the instigator of this. I have been
assiduous in guaranteeing to full committee of this subcommittee, MIr.








Murphy, and went to the Speaker, and told him that I would not
circumvent the jurisdiction of this committee.
I felt that the issue should come to this committee, and if the
Speaker wanted to appoint people from this committee at a confer-
ence on this particular subject, that would be, fine. But the fact that
the committee is now taking initiative to introduce legislation that
is close to what we had already passed in the Senate, I think is
excellent.
I would like to see this issue divorced from the Water Resources
bill, Lock and Dam 26, et al, since the success of that legislation is
dubious at best, with the threat of vetoes that we have heard.
I would like to see this legislation move, too, so that we can get to
checking the facts, so that we can make an intelligent decision, if
one is to be made, in our self-interest.
If we could lower the lights, I would like to walk you through a
slide presentation and explain what has brought me to this commit-
tee, which was the committee that first authorized the study that
took place bet \ween 1964 and 1970.
The study was promptly put on the shelf, and that was the end of
it, which unfortunately is what happens to most committee efforts
that do not develop a constituency as they go forward. The earlier
study did not have the support of its constituency because of the
political nature of the problem, which still exists. I think the state-
ment made by Mr. Snyder, with respect to Torrijos and Panama, is
evidence of that high threshold of emotional views on this subject.
In the Commission study they made various projections for the
future about transit, tonnage and revenues. They had a high figure,
a low figure, and we chose, for purposes of this presentation the
medium figures. The first slide you have before you is one that shows
a red line, which represents the projections that were made for a
number of years. We have only taken the 10 year period of pro-
jections as to the number of transits that would be going through the
present Pallanim Canal.
The actual transits is the blue line, below the red line. You see the
effect of our disengagement in Southeast Asia and the world-wide
recession. But taking those two points out, and projecting with a
straight line for a decade, you see that the Commission projections
were very much off the target as to what really did happen from the
point of view of the number of vessels going through the Panama
Canal.
The next chart here shows a red line projection of the tonnage
forecast. You also see the blue jagged line of the actual tonnage
through the canal, which also was responsive to the Vietnam situa-
tion and to the recession.
But if you were to project this jagged line out the way it seems
to be going, to a period of 10, 20, 30 years, you would be almost
exactly on target as to what the projections did put forward.
So, rega rdless of the capriciousness of the marketplace during that
period of time, the projections that they made of the tonnage that
would be going through the Panama Canal were on target.
Then when you take the next chart, you see that the revenues,
the actual revenues, really surpassed the projections. Part of the
reason for that is because you had some toll increases.








If you look at the red line you see that that projection would pay
for the construction of a sea level canal had it come into being in
1970. This is theoretical, because obviously it could not come into be-
ing that one year. But had it come into being that one year, those
revenues show that we would have handsomely paid for a sea level
canal.
This is not to speak of the oil that was sl icequllently discovered
right about the same time in Alaska. Because under those revenue
projections, there was only one-third of the quantity of oil that is
now projected that would be coming through. The Commission esti-
mated 40 million tons of oil per year, whereas Atlantic Richfield esti-
mates for 1990 are now as high as 120 million tons per year.
But, suffice it to say that the study that was completed in 1970
indicated that it would be economically sound to go ahead and
build it.
Why did it not take place? There are many reasons for that.
Suffice it to say that it just did not, until I picked up the cause as
a result of my visit to Panama a year ago March.
What kindled my interest was the obvious problem that I will
show you.
Before wo go into that, I would like to deal with the problem of
obsolescence. The three charts that I showed before indicated there
was something amiss. The projections were right on revenue, right
on tonnage, but wrong on transits, which means that the size of the
vessels were getting larger.
Here is the phenomena that occurred starting in the 1961-65
period. You see from 1950, up until that period, it is essentially a
flat line as to the size of the vessels that were built.
All of a sudden, at that point in time, we saw larger vessels being
built, regardless of the Suez Canel, and regardless of the Panama
Canal, in order to accommodate the greater shipment of bulk cargo,
to the point where we are today, where 19 percent. of the carriers, in
numbers, representing 43.8 percent of the tonnage, cannot go through
the present Panama Canal.
We can say that routes are there, and that these are built to routes.
No question about that. But when you are building to routes, it means
you are building around barriers, and when you build around bar-
riers, you do it to save money. If you are able to go through the
barriers with the same vessels that saved you money going around
the barriers, then you save even more.
Who saves money ? It is the taxpayers who save the money. These
downtrodden people who are paying too many taxes. Maybe we can-
not give them the succor we want to in taxes, but we can help them
in the marketplace by lowering the cost of living.
Next is the phenomena which occurred in the tanker size. You will
notice this is not-this is to show the additions to the fleet in cer-
tain periods.
In 1961, thereabouts, 2.4 percent of the vessels that were con-
structed in that year were in excess of 70,000 deadweight tons,
which is larger than can go through the Panama Canal. This rose
so that by 1975, 66.7 percent of the tonnage that was added to the
world fleet was above 70,000 deadweight tons.









This translates itself into a chart that looks like this. A very pre-
cipitous climb, to the point where in 1970-75, today's period, more
than 76 percent of the oil tonnage-not the vessels, but the oil ton-
nage-in the world cannot use the canal. And that is what counts.
The argument, and this was the original argument made by Mr.
Helms, that 98 percent of the vessels can go through the Panama
Canal-well, that statement is really quite meaningless, because it
is not the volume of vessels, it is what you carry. So if they have
1,000 small vessels, and one vessel than can carry the same as the
1,000 vessels, obviously it is more meaningful for that one big vessel
to go through. And that is what we say today, that 76 percent of the
oil tonnage, which represents 37 percent of the numbers of vessels,
cannot go through the Panama Canal today. Those are the two major
items in world maritime tonnage, bulk cargo and oil.
But let us look at what happens to the total maritime tonnage
situation. Back in 1966, 10.41 percent of the vessels could not go
through the Panama Canal. That has risen in a short 12 year period
to 57.8 percent of the vessels, which means that the Panama Canal
today is 57 percent obsolete. That is what it means.
Now, we can accept that or not accept it. We can vent our emo-
tions, but those are basic facts that have not been refuted by any-
body, and this data has been kicking around for several months, in
excess of 6 months.
So for somebody to step up and say, oh, the Panama Canal is
a great asset to us, we ought to keep it, these figures belie that
situation.
Now, if you reverse the figures, you see that back in 1966, 89.95
percent of the world fleet could go though the Panama Canal, and
in 1977, 42.20 percent could go through the Canal.
If you extend that to the year 2000, but not at the rate of the last
12 years, but only one-third of that rate, and you will see that in the
year 2000 only 7.64 percent of the world maritime fleet will be able
to use the Panama Canal.
Now, that is very significant, because we, the United States of
America, use one-third of that Canal, and so it means that we are
essentially losing the ability, the ability of moving cargo efficiently
on the oceans through the Panama Canal because of the increasing
obsolescence rate of the Panama Canal.
Now, we can let this happen, and wake up later. This committee
can hold hearings in the late 1990's and say what the heck happened
to this country ? We do not have a maritime interest to speak of, we
are not moving our cargoes and products efficiently to the market-
place as could happen. Why did it all happen?
You will just harken back to this chart, which shows that we do
not have to wait until that period. When something is over 50 per-
cent obsolete, it is time to think of a change.
I moved on this subject, as was pointed out by Mr. Snyder, be-
cause of my interest in moving Alaska's products to the market. It
would be no different with moving coal, or whatever motivates your
interest in your State activities.
But there are some very fundamental decisions that are involved









in this concept that not only affect Alaska, but affect the entire
United States.
What you see before you is a map put out by the Commerce Com-
mittee which shows all of the pipeline systems, oil and gas, in the
United States. You see that energy came out of the Southwest, Cen-
tral Southwest, and moved up into the industrial heartland of the
United States-the States of Kentucky, Tennessee, Illinois, Penn-
sylvania, New Jersey, New York, the bowels of this great Nation of
ours. That is where the energy was needed.
This is the infrastructure system that was used to bring it to
market. The energy is now being discovered in another part of the
world, up in Alaska, and particularly up in the Prudhoe Bay area,
and you still want to get that energy to the bowels of the United
States. You have got a very simple choice. You can take that infra-
structure system and bend it up to the west coast, and bring the
energy from Alaska into the Los Angeles area, and build a new infra-
structure system there, build new port facilities, obsolete the ones in
the gulf coast, obsolete the ones in the east coast, and feel that you
have done something worthwhile. But the capital investments of
the American people, who are the same taxpayers we are all con-
cerned about, represents some $40 billions of dollars.
I am not prepared to obsolete that. I am not prepared to despoil
this area with a pipeline system, traversing the entire Western part
of the United States. We have just been through a battle with the
environmental community, which is concerned about moving that
infrastructure system to traverse the central part of the United
States.
So, from an environmental point of view, if we have to satisfy
the energy needs of our great Nation, what is the best way to traverse
the continent ? Is to do if at its widest point of 2,500 miles, or is
it to pick an area where it is only 50 miles wide? So those of this
committee who say that we cannot build a sea level canal because
of the economic consequences, I think the germane question to ask
them is, How are you going to get the energy to the bowels of this
country, and are you prepared to put up with the environmental
degradation that is going to take place in that area?
The Senator from the State of Washington, the distinguished
Chairman of the Full Appropriations Committee of the Senate,
joins me as cosponsor of this legislation for the very simple reason
that he does not want to see the Puget Sound area despoiled.
The Senators from California. have sustained the action of the
Governor of Califorinia in delaying the pipeline systems that could
come across California to Texas, to feed the balance of the Nation,
because they do not want to see their States despoiled.
If these legislative leaders are prepared to do that, what chance
do we have of bringing efficiently the energy systems, and moving
them up and transversing the West ?
It is just not going to happen, and so we are going to be faced
with what we are doing today, which is essentially carrying the oil
around the central part of the Western Hemisphere, in buckets.
Let me now address myself to this next chart which shows the vari-
ous systems. It is difficult to see, but we have passed out to you maps









that show it more clearly. We have first the Trans-Mountain Re-
versal System, which goes through Can:ida, which is that yellow
line that he is pointing to right there. That was to take oil that
would come into the Puget Sound area, reverse the pipeline system
that is in existence into Edmonton, and then redistribute that oil
into the Northern Tier Refinery.
The oil needs in that area are about 600,000 to 700,000 barrels a
day. That could be done that way, and it will not be done that way
because legislation has passed the Congress that stops that from
happening.
It also could be done from the east coast by transferring oil to
Canada, on the east coast side, and then taking Canadian oil and
moving it into our area in the Northern Tier. So that could be done
through some oil swaps.
Whether or not we are politically prepared to do that is open to
question. But technically it is capable of being done.
The next pipeline system is the Northern Tier Pipeline System
which has no major oil companies supporting it, except Amoco.
They are not too enthusiastic, because one, you would have to
build a pipeline system whose economics would be in jeopardy
without the major oil companies endorsing it, and two, because of
the obvious environmental consequences involved.
Another pipeline system is the Sohio Line, which would bring
the oil into Long Beach, and utilize two gas lines from the Redlands,
build an oil line up to the Redlands, and utilize two gas lines that
would go into Midland, Tex., and could move oil from there up into
the central part of the United States.
Then there is another pipeline that has been spoken of, and that
is the Guatemalan Pipeline, which would set up the super port, and
take oil there, transport across, put it into smaller vessels, and then
move it up into the gulf coast of the United States.
Then you have the way the oil is going right now. When we were
in Panama for the signing of the treaties by the Chief of State, the
first vessel we saw was the Aleutian, which was laden with Alaskan
oil, going through the Panama Canal. That was a vessel that picked
up its oil in the Gulf of Panama, off of large veseels, and trans-
shipped it into Panama, into the Canal, and up into the New York,
East Coast area, and the Gulf Coast area.
The only other way to move oil around is to take a supertanker
and bring it around the Cape, and bring it up to the Virgin Island
area, where Hess brought its original cargo by supertanker. They
found it economical to do so, as compared to other methods.
The State of California retained Arthur D. Little to do a compara-
tive study of these pipeline systems and oil transportation systems
to find out which was the most economic to move the oil, and this is
what the study came up with.
You have the Trans-Guatemala, the Trans-Mountain Line, North-
ern Tier, Sohio, Panama Transshipment, and Cape Horn.
Obviously, the one that came out to be the cheapest was the Sohio
Line, which was $2.06 per barrel. Their projections through the
transshipment of Panama was $2.46. The actual tariffs that were
filed were between $3 and $3.30. That is what is being paid now for
the oil going through there.









So this study understated what that cost of transshipment would
be, but for comparative purposes it is still accurate. What I asked
Arthur D. Little to do was to compare a sea-level canal moving
supertankers, rather than shipment around the Horn, which were
$3.24, or bringing cargoes through the present Canal. We wanted to
see what it would cost to move a 300,000 deadweight tanker through
a sea-level canal, based upon the projections that were done by the
Sea Level Canal Commission.
Here is essentially what their study showed. Their computer run
showed that taking a 265,000 deadweight ton, then you could move
oil at $1.75, and with a 165,000 deadweight ton you could move it for
$2.18, as opposed to a pipeline cost of $2.06 for Sohio to $2.78 for
Northern Tier. This included a near doubling of the tolls through
the sea level canal.
If you compare this with the existing toll, with the existing ship-
ment, you almost have a dollar difference.
Now, for the amount of oil that is in Prudhoe Bay today, 10 bil-
lion barrels, you are talking about a saving to industry and to the
consumers of the United States, just on what we have found today,
of $10 billion, were all to go through the sea-level canal, compared
with the projected cost at this point in time of $5.3 billion for the
construction of such a sea level canal.
You can see that the economics are absolutely mind-boggling as to
what the benefits would be to the American people were that to take
place.
The next chart shows what would be the savings were we to deal
with natural gas.
Moving back to the oil line, the blue line is existing discoveries.
The red line is what we project moderately would be discovered
through 5 years, and the white line is 5 to 10 years. So we are
talking about what essentially will be, rather than a surplus in the
west coast, of 500,000 barrels, with these additional discoveries, that
surplus could run from 2,500,000 barrels to 4 million barrels surplus
per day.
We can't say grace over what we have now. Then add, on top of
that, the gas requirement. We are now drilling into the lower Cook
Inlet. If we were able to find natural gas there, the best way to get
it out would be through an LNG facility. There is not an LNG
tanker today that can go through the Panama Canal. Yet we are
making contracts to bring LNG into the east coast of the United
States, where we have a shortfall, and will be dependent upon the
Algerians for that natural gas.
Were they to stop delivery, we would have no way to bring LNG,
except to take tankers from the Kenai area, and to bring them to the
east coast of the United States.
The study that was done back in 1970 looked at 30 possible sea-
level canal sites, and narrowed it down to eight sites. The site that
was eventually selected was route 10 in Panama.
Now, the other sites showed at least 100 percent difference in cost.
So what we are talking about is not the political luxury of who we
want to give our business to if we are to build a canal. What we are
talking about is the American taxpayer.









The American taxpayer. What is going to be in his best interest ?
What is going to be in his best interest is the cheapest cost we have
in building a sea-level canal.
The site that was selected was this site, which was 10 miles to
the west of the present Canal. We may not like who runs the coun-
try, but that is beside the point. If we can make an arrangement with
whoever runs the country, to the benefit of the American consumer,
or the American taxpayer, then, of course, we will benefit greatly.
There has been no time in the last year that I have advocated
spending any tax dollars on building the sea-level canal. If this
thing does not make sense in the economic marketplace, then chuck
it. And if you want to add an amendment onto this, that this $8 mil-
lion that we are asking for to go out and get the facts to make an
intelligent decision, if you want that money back, put it into law
that there will be no Federal guarantees to any bonding until this
money is paid back by the Sea-Level Canal Company that will build
this facility.
If you want to make that requirement, go ahead and do it. But at
least spend the money to go out and find out what is in America's
economic interest, since we use the canal for a third of its traffic,
and it is the American consumer, and your constituents in Kentucky,
and in your State and my State, that pay for this obsolete canal,
which is not meeting our economic interests.
This next slide shows a cross section of the earth at route 10. You
will be getting some technical advice on that, but I will be happy
to respond to questions at a later time.
Let me speak to you briefly on what this next chart shows. It ad-
dresses the defense argument. A nuclear task force, the carrier, and
all the vessels that go with it cost about $20 billion.
Well, to move that $20 billion instrument into place, if you had
a crisis in Gibralter, would take 25 days. If you had a sea-level
canal you could move that $20 billion instrument into place in 15
days. It means that that economic tool of defense can be 10 days
more efficient if you had the sea-level canal than if not, and from
Naval defense theory, the equivalent of that 10 days is the equiva-
lent to having an additional nuclear aircraft carrier task force.
The defense benefits, the foreign defense benefits of a sea-level
enannl are inestimable. You cannot put a price tag on it, because you
do not know whether that 10 days would be the difference of nuclear
holocaust in the world, whether showing the proper amount of force
in the world would forestall a nuclear holocaust.
That is what is at stake. But I think the case should rest on eco-
nomics, and those economics can only be determined by the study
that I requested, and what the chairman of your full committee re-
quests in the legislation that he put forward.
I do not know who said it was "economic fantasy," but whoever
said it was not aware of the data I have compiled. I hope if there is
somebody who says it is economic fantasy, he will come before this
committee and show me wrong, and if I am wrong, I will be happy
to agree.
But until you can get facts that contradict the Arthur D. Little
study, and the projection on energy, I think what I have said must
stand.









The timber industry tells me it is going to be cheaper to get
timber from the west coast to the east coast in super vessels.
With a sea-level canal, for once, the Jones Act is going to help to
retool American maritime interests. We are going to have to redesign
the American fleet in order to accommodate the new efficiencies that
can take place.
The jobs that will result, the amount of ore that will have to be
mined, and the steel made, and the coal to come out of Kentucky to
make that steel, to make those vessels that will now be super in size,
so that we can have economic advantage to our consumers, is, I think,
an economic plus. You will hear testimony by the laboring com-
munity, the people that represent the laboring masses of this coun-
try, as to why this could be of benefit.
And the dredging that will have to be accommodated. If someone
says this is economic fantasy, then I would hope that that person
would come forward and dispute the figures that we have laid down
here, which are of benefit to the consumer, which are of benefit to
the laboring man, and which, of course, are of great benefit to mak-
ing us a maritime nation.
The problems that we are going to have are, of course, expressed in
statements such as: "Let us wait for the treaty." You have your
criticism of the administration in this regard; I may have my own.
I do not want to wait for the treaty. I do not think we need to wait
for a whole host of legislation that is going to be wrought with a lot
of debate, and filibustering on the House side and Senate side about
how the present canal is going to be handled.
You worry about the present canal somewhere else. Let us look at
the economics of the future, and not the past. I would rather the
Congress not fight about something that is obsolete.
Appropriate the money to find out what your future needs are, and
that may help us disentangle the situation that exists presently.
Now, for those that say, "Well, how the heck can we go build a
sea-level canal?" First off, let us not say we are going to build a sea-
level canal. I think it is the height of arrogance for us to look at
another country and say that is in our economic interest, so let us go
build it.
That is like saying to Saudi Arabia, we need oil, so that is our
oil. That is ridiculous. If it is in their economic interest to use it for
a sea-level canal, we should go up to them and say we have a com-
mercial deal that we think you cannot refuse.
If it is a canal to be built, and it is on Panamanian soil, or
Nicaraguan soil. or Bolivian soil, you better believe that it is going to
be a Panamanian Canal, it is going to be a Nicaraguan Canal or
Bolivian Canal, and anyone tht thinks it is going to be otherwise
has not arrived into the 20th century.
The other aspect of this now, since we have settled who is going
to own it politically, is: How are you going to do it commercially?
It is no big deal. If this thing washes economically, we can build it
with U.S. guarantees, and if the United States does not want to
guarantee it. the Japanese would guarantee it, the Germans will
guarantee it, and the Saudi Arabians would be happy to invest their
money. They do not have an intelligent place to invest the billions
that we are giving them, and this is the kind of an investment, in









real estate, that is the only sizable hedge against inflation that an
investor can have.
If we are not smart enough to go ahead and invest our money,
or provide the guarantees, so be it. That is a decision that Congress
can make 3 or 4 years from now. But I would submit that once the
facts are in as to what our enlightened self-interest is, you will see
the Congress move forward to provide a commercial guarantee on
the sale of the bonds, not for all of the canal, but just for the amount
that we are using, one-third of it.
Then if the Japanese want to finance 10 per cent of it, because
they are going to use 10 percent of it, let them finance it, and if the
other countries want to help finance it, let them join, too.
All I have to say is, this should rest on logic, and economic con-
siderations, and not upon false emotions.
I hope I have dispelled the point with respect to waiting on the
treaty. We could save millions, even billions of dollars for the
American people.
My question is very simple. Why wait? If we could save that
kind of money, we should be building this thing right now. The
problems that are going to be faced are in this order of priority:
First, the political problem. That challenges the political maturity
of our Congress in getting the study moneys, and then using the
study information and then challenging the maturity of the Ameri-
can people, and the people and the leadership of Panama, and the
other nations involved.
Two, would be the environmental question. People will oppose us
environmentally. I think the question is one of tradeoff. It involves
an ecological dislocation. I will not say it is environmental pollu-
tion, because I will not admit that my presence on this plant is a
pollution.
I said it is an ecological displacement, over maybe some fish, or
something else. So the tradeoff there is the ecological displacement
that would take place to breach the continent where it is 50 miles.
I think the minimum ecological displacement takes place obviously
at the 50-mile-wide point.
Speaking to the legislation that has been introduced in this com-
mittee, the difference between it and the Senate version is not at all
great. The biggest difference is in terms of mony. This committee
is talking about authorizing $3 million. I do not see how we could
quibble over the difference between $3 million and $8 million.
Taxpayers aside, we are talking about billions of dollars of sav-
ings to the consumers of this country, and to quibble over the funds
to acquire the information to make that decision, I think is penny-
wise and pound-foolish.
I have a letter that I would like to also include in the record from
Arthur Anderson & Co. You are going to have the gentleman from
Arthur Andersen testify. He talks in terms of an economic study
that would be between $1 million and $11/, million. Just the eco-
nomic investigation would cost that much. The study that took place
in 1970 was not strong in the economic arena, and in your legislation
you give even shorter shrift to economics.
I am not saving minimize the environmental side. I am not say-
ing minimize looking at where you should locate it. I am not saying









minimize the technical stuff to build it. The difficult part is going
to be environmental. The envirollnental; portion will require $3 mil-
lion to study, and 3 years to do it. Give it $3 million and 3 years, so
at the end of 3 years, if the environmentalists dispute what you are
trying to do, let them put their facts where their mouth is. That is
the only way to handle that issue-by satisfying the informational
needs that are there.
The other is the time element. The House bill would require a
5-year period. If you listen to the bureaucrats, it is going to take 14
years to build it, and 5 years to study it. It is not going to take that
long. You can have your choice of routes done in 6 monllths, you can
have your economic study done in 11/2 years, and you can have your
environmental study done in 3 years.
Why take 5 years when it can be done in 3 years? This is not
going into the bowels of the Department of Transportation or the
Corps of Engineers. These are going to be private studies, out of
the private area. If they cannot shape up and deliver this data in 1
year's time, or 11/2 years' time, or 3 years' time, then forget it. For-
get it. They can study this thing for 10 years if you let them do it,
but I would hope with the disciplines and the competitive influences
would bring the facts out in less time.
Every year that we delay making a decision and initiating con-
struction, is every year that the rate of obsolescence goes forward.
Now, if we have gone from 10 to 50 percent in 12 years, and we
delay 5 years, just diddling around in the study, and making a deci-
sion, then that obsole-,eii r could double in that period of time,
costing the consumer of this country con-idlirible sums of money.
I would hope that the committee would judge that the time ele-
ment in (quit ion can be shortened, and that the money for this study
should be the high figure that we came up with. And if later, after
the facts are in, there is quarrel with the leadership of Panama, a
quarrel over where it should go, that is the time to address yourself
to that, not now.
Now, we do not know. The only facts we have is what I have
before you. What I have before you shows that on oil alone we can
save almost $1 a barrel. What does it mean for coal? What does it
mean for wheat? What does it mean for timber? For the general
cost of living? What is the savings I do not know, and nobody else
knows at this point in time, and it would be foolhardy not to go find
out what is in the best interest of the people.
So I thank you very much for your attention. Maybe I can respond
to questions that you, Mr. Chairman, and Mr. Snyder might have,
before introducing the balance of the people who have joined me
as a panel.
Mr. METCALFE. Thank you very much, Senator Gravel.
The Chair would state, with great enthusiasm, its recognition of
the fact that you have been conscious of legislative jurisdiction, both
of the full Committee on Merchant Marine and Fisheries, and the
Subcommittee on Panama Canal. We appreciate your position. It
coincides with ours.
Now, if you would like to bring your panel to the table at this
particular time.







45

Senator GRAVEL. David Dolgen, Richard Saul, John Eddinger, and
John Brown.
Mr. Chairman, Dan Mundy could not be here, and I have a state-
ment that I would like to be put in the record.
I would like each person to introduce himself. They are have very,
very short statements, and maybe they could put their statements in
the record, and just state very briefly their policy statement.
Mr. METCALFE. Senator, your full statement in its entirety will be
entered into the record, unless there is objection.
Hearing none, it is so ordered.
[The following was received for the record:]













STATEMENT OF HON. MIKE GRAVEL, A U.S. SENATOR FROM THE STATE OF ALASKA

Foreign policy always starts with the question, What United
States interests need to be protected? And that is the beginning
point for any discussion of the Panama Canal.

There is no question that the United States has an interest
in a canal at the Panamanian isthmus. But I have become convinced
that our real interests lie less with the present canal than they
do with the opportunity to construct a new, sea-level canal.

I therefore joined with Senator Warren Magnuson in offering an
amendment to the Navigation and Development Act (H.R.8309) to
authorize a three-year study to update the report of the Atlantic-
Pacific Interoceanic Canal Study Commission. The Senate accepted
our amendment on May 4, 1978.

The Canal Study Commission, appointed by President Johnson in
1964 to study the feasibility of constructing a sea-level canal
across the Central American isthmus, issued its final report in 1970.
At that time it stated that a sea-level canal is wholly feasible
from a physical point of view and under reasonable assumptions could
be expected to pay for itself within 60 years. The Commission
further determined that the defense and foreign policy benefits of
a sea-level canal are sufficiently great to warrant writing off a
substantial portion of costs for those purposes.

In the eight years since the Commission issued its report it
has become increasingly apparent that the present canal is rapidly
obsolescing and that a sea-level canal would be not only of military
and foreign policy significance, but also of great economic value.
To fully appreciate this fact it is helpful to compare the economic
projections made by the Commission with actual experience over the
intervening years.

The most frequently heard argument against the economic via-
bility of a sea-level canal is that the actual number of ship
transits of the present canal has fallen considerably short of the
Commission's potential transit forecast. There can be no disputing
the facts,although as I shall show momentarily, the interpretation
placed upon them has been incorrect. In 1970 there were approximately
15.5 thousand transits of the canal per year. The Commission pro-
jected this figure would rise to 18.5 thousand by 1977. But in fact
the number of transits declined to just over 13 thousand by 1977.
(See Chart 1.)



























































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In part this discrepency can be explained as the result of
the world-wide recession which hit hard in 1974, and from which we
began to emerge in only the last year and a half. But this cer-
tainly does not explain the whole picture, because even before the
recession the number of transits was running noticeably below the
Commission's projection. Transits also went down with the end of
the Vietnam war, but this is not the whole story either.

The proper explanation becomes apparent when we look at the
tonnage which has moved through the canal in the years since the
Commission issued its report. As can be seen from Chart 2, the
1970 potential tonnage forecast is in fact an accurate reflection
of actual experience. When the actual tonnage figures are graphed
against the straight line projection of the 1970 Study, the crests
and valleys are just above and just below the forecast figures. If
anything, it appears that the tonnage forecast would have been too
modest had it not been for the recession years 1974 to 1976.

It is obvious that where the forecasters miscalculated was on
the growth of vessel size. The average vessel size in the world
shipping fleet has increased at a rate much greater than expected,
with the result that actual tonnage through the canal has met pro-
jections while the number of annual transits has actually declined.

This interpretation is further confirmed by comparing actual
canal revenues since 1970 with the potential revenue forecast. As
can been seen graphically in Chart 3, actual revenues have been
running substantially above those which the Commission projected
would be required to amortize the cost of a sea-level canal.

This unexpected growth in ship size revealed by comparing the
Commission's economic projections with actual experience points up
very starkly that the present Panama Canal is rapidly obsolescing.
To see just how rapidly,it is useful to take a look at ship growth
rates within recent years.

Chart 4 displays bulk carrier construction growth rates from
1950 to 1975 for those carriers over 60,000 dead weight tons (DWT)--
in other words, for those ships too large to use the Panama Canal.
It is readilyapparent that until 1965 the number of bulk carriers
too large for the canal were insignificant. But after that date
large bulk carrier construction soared, such that by 1975 almost 20
percent of all bulk carriers were 60,000 DWT or larger, and hence
too big to transit the canal. What is even more significant, in
carrying capacity these large, new vessels represented fully 43.8
percent of the world tonnage for the bulk carrier fleet.

The situation is even more dramatic when we look at tankers.
Chart 5 is a time-graph of average tanker size in the world fleet.


























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Bulk Carrier Construction
Growth Rates- World Reet
Bulk carriers


1000


1950 1951-66 1956-60 1961-65 1966-70 1971-75
Year Constructed
Source: The Butl Carier Register, H. Clarkson & Co., Ltd.


19.6% of all bulk carriers
are over 60,00 DWT,
accounting for 43.8% of -
total oWT




Carrlars ovw
MADWP DWT _
-mm

-----

--- -i -. __*


200


n


U


800












Average Tanker Size-

World Fleet
Thousands of DWT


zuu


180


160


140


120


100


66.7% of new
tankers over
70,00 DWT








____66% of new tankers
over 70,000 DWT





21.4% of new tankers
over 70,000 DWT



S, 2.4% of new tankers
over 70,000 DWT


1950 1951-56 1956-60 1961-65 1966-70 1971-75 1976-80 1981-85 1986-90
Year Constructed
SOURCE: The Tanker Register, H. Clarkson and Company, Ltd..








53


It shows that as recently as 1960 only 2.4 percent of newly built
tankers were over 70,000 DWT, and hence too large to use the canal.
But by 1975 this figure had jumped to 66.7 percent, a phenomenal
growth rate.

Chart 6 tells the same story in a slightly different way.
It displays graphically the percent of tonnage of the world tanker
fleet over 70,000 DWT. Again we see that the dramatic increase
began about 1960, when the total world fleet contained only about
25 tankers too large for the Panama Canal. But by 1975 there were
900 such tankers, representing 37 percent of the total number and
a whalloping 76.5 percent of the tonnage.
While Charts 4, 5, and 6 relate exclusively to bulk carriers
and tankers--the two types most significant in world trade--Chart 7
shows that these exponential growth rates in fact apply to the
world fleet as a whole, not just to two particular kinds of vessel.
As can be seen from the graph, in January 1966--a mere 12 years
ago--only 10.41 percent of the world fleet tonnage was too large
to transit the Panama Canal. But by January 1971 this had increased
to 31.77 percent, and by January 1977 to 57.80 percent. In other
words, more than half the world's tonnage is already too large for
the canal.

Looked at in another way, this means that in the eleven years
between 1966 and 1977, the portion of the world fleet tonnage able
to use the Panama Canal has dropped from nearly 90 percent to a
mere 42.20 percent. If we extrapolate this downward trend at only
one-third the actual rate of the past decade, we find that by the
year 2001 no more than 7.64 percent of the world fleet tonnage will
be able to transit the canal. (See Chart 8.)

These figures leave no doubt that the Panama Canal is in
large measure already obsolete. Its value is rapidly declining as
it is overtaken by advances in technology and engineering. It is
not hard to imagine what the situation will be in another ten or
twenty years, which is probably the shortest time in which we could
expect to have a sea-level canal complete.

At present the most striking evidence of the dated character
of the Panama Canal is its inability to handle economically the
transhipment of Alaskan oil. By next spring Alaska's North Slope
will be producing oil at the rate of 1.2 million barrels per day.
Within a relatively short time this will be increased to 1.6 million
barrels. Even at the lower 1.2 million barrel level, this will
produce a West Coast surplus of at least 500,000 barrels per day.

There is every likelihood that these figures, as high as they
are, will at least double in the next several years. The probability
that large quantities of oil will be recovered from the Alaskan
Gulf, National Petroleum Reserve No. 4, and other areas of Alaska,
both on and off shore, is very high. According to conservative
projections by the U.S. Geological Survey (USGS), recoverable
reserves in Alaska may be five times as large as already demonstrated
reserves.









Tanker Construction
Growth Rates- World Reet
Tankers


1UUU


1950 1951-56 1956-60 1961-65 1966-70 1971-75
Year Constructed
Source: The Tanker Register, H. Clarkson & Co., Ltd.


Tankers over I
Wof toDWT


--4--

I




-/--



37.0% of all tankers
/ are over 70,000 DWT
/ accounting for 76.5% -
of total DWT


800




600




400


n









Percent of World Fleet
Too Large for Panama Canal
Percent
100




80


60




40




20


57.M of uwsmb
9over W--, l FT







S__ o .77% of wrsrs


ow woDWT

I o verI O / 0
j I I00 I0


1966 1968 1970 1972 1974
Year
Source: Femnley 8 Egers Chartering Co., Ltd.


1976 1978


0











Declining Percent of World Fleet

Able to Use Panama Canal
1966- 2000*
Percent
100

89.59% of world
90 tonnage able to
use Canal

80


70


60


50
0 42.20% of world
H tonnage able to
4\ use Canal
40

30 tonnage able to
Suse Canal
S 17.64% of world
20 tonnage able to-
use Canal

10



1966 1971 1976 1981 1986 1991 1996 2001 2006
Year
1966-1977 actual figures from Fearnley & Egers Chartering Co., Ltd..
Projected figures assume vessel size growth rates equal to only
one third actual rates for the past decade.











I believe it i:; a conservative estimate that Alaska will be
producing an additional two million barrels of oil per day within
2 to 5 years, and yet another two million barrels per day within
5 to 10 years. (See Map No. 1.) Figures of this magnitude are
confirmed by an Atlantic Richfield Company estimate that the West
Coast oil surplus could be as high as 2.4 million barrels per day
in 1990.

As these Alaskan oil reserves are brought to production, a
sea-level canal becomes increasingly attractive. It would require
120 million tons of canal traffic per year to move a surplus of
2.4 million barrels per day through the canal. This represents
almost exactly one-half of the Commission's entire potential tonnage
forecast for 1990. They included in their 239 million tons per year
estimate only 41 million tons of petroleum, or about one-third the
volume that now appears likely to materialize from Alaska alone.

If this oil and the accompanying gas is to reach U.S. markets
where it is needed, it must be transported by tanker to the Gulf
of Mexico and the East Coast, or else it must be moved inland by
pipeline from the West Coast.

The pipeline alternative has considerable drawbacks. The
nation's pipeline infrastructure for the delivery of oil and gas
runs south to north, fanning out from the Gulf Coast States to
serve the Midwest and Northeast. (See Map No. 2.) The explanation
for this pattern is simple. Historically, oil and gas was dis-
covered in the Gulf region and was moved to the nation's population
and industrial center.

This infrastructure represents a $7 billion capital invest-
ment in the case of oil lines and $12.7 billion for gas lines.
There is also an investment of approximately $19 billion in Gulf
Coast refining capacity. If it were to become necessary in the
next several years to move our energy supplies from west to east,
rather than from south to north, much of this infrastructure would
have to be replaced at capital costs much higher than the original
investment.

For at least the next 2 to 3 years there is no real alternative
to using the existing canal for transporting West Coast surplus oil
to regions of the country which have a crude oil deficiency. But
because of the inefficient lightering operations that are involved,
transit charges on this route are sufficiently high that pipeline
alternatives become attractive even though new pipeline investment
costs would be required.

A number of such projects have been proposed to deliver surplus
oil to markets in either the Central or Gulf States. (See Table I
and Map 3.) The most important of these are as follows:































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32-461 78 5


















PROJECT


Trans-Guatemala


Trans-Mountain


Northern Tier


Thruput Projected
(MB/D) Start-up


1200


165


Phase I

Phase II


1/81


1/79




1/81

1/84


Capital
Investment
($ R)


1630


Transport
Costs by
Route
($/Bbl)
Chicago Houston


2.52 2.16


2.30


2.78


118
(incremental)


Sohio


Phase I


Panama Transshipment



Cape Horn


1/79


Immediate



Immediate


2.29 2.06


2.83 2.46



3.53 3.14


MB/D = Thousands of Barrels per
SM = Millions of Dollars
$/Bbl = Dollars per Barrel

Source: A.D. Little, Inc.


U)




(o



E H

03


E<11






61



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62


Traiis-Mountai Pipeline. Th'i:: is .in exi:,ting line which at
prescnt cjarites oil east to west from ldmonton to the Vancouver area.
Atlantic Richfield Company (ARCO) proposes a partial reversal of
the flow to move lbS thousand barrels per day of Alaskan crude from
Cherry Point in Washington to the so-called Northern Tier refineries
in Montana, North Dakota, Minnesota, Wisconsin, and upper Michigan.
The capacity of this line would satisfy the needs of these refineries.
Capital investment costs would be a relatively minimal $115 million
and transportation costs into Chicago would be $2.30 per barrel of
oil. This project has, however, run into stiff environmental
opposition in the State of Washington and may not get the necessary
permits. Moreover, federal legislation effectively prohibiting
supertankers at Cherry Point was enacted in the fall of 1977.

Northern Tier Pipeline. This proposal calls for the construc-
tion of 1570 miles of new pipe at a capital cost of $1.6 billion.
It would move 600,000 barrels per day of Alaska crude from the Port
Angeles area in Puget Sound to Clearbrook, Minnesota, thus serving
the refineries in the Northern Tier States. It would deliver oil
to the Chicago area at a cost of $2.78 per barrel. It faces environ-
mental objections in the State of Washington at least equal to those
confronting the Trans-Mountain project.

Kitimat Pipeline. This project would involve the construction
of 753 miles of pipe from the town of Kitimat in British Columbia to
Edmonton, Alberta. It would there interconnect with existing lines
to serve the Northern Tier States and the upper Midwest. It would
have a capacity of 525,000 barrels per day and would.entail an invest-
ment of some $969 million. Transportation costs to Chicago would be
$2.38 per barrel of oil. At present the sponsors of this project
are inactive. It seems unlikely that interest will be revived since
the Canadian Cabinet has expressed its opposition.

Sohio Pipeline. Standard Oil Company of Ohio (SOHIO) proposes
to convert to oil service existing gas lines running from Midland,
Texas to Redlands, California. With the construction of an additional
219 miles of pipe, this would allow Sohio to move Alaskan crude from
Long Beach to Texas at a rate of 500,000 barrels per day. This is
the most economical of all the proposed pipeline projects, as it
riould transport the oil to Chicago for $2.29 per barrel and into
Houston for only $2.06 per barrel. The Sohio project faces two
major hurdles. First, the State of California has been extremely
reluctant to issue the necessary permits because of concern that
further degradation of air quality in the Los Angeles area might re-
sult. Second, both Federal Power Commission and California Public
Utilities Commission approval are required for conversion of the
existing gas lines to oil service. This approval may not be granted
due to new discoveries of gas in the Mexican Yucatan. Mexico could
very economically move its gas into Texas and then transport it
through the existing system to California.









63



Trans-Guatemala Pipeline. The Central American Pipeline
Company proposes to transport Alaskan crude 227 miles across Guatemala
for marine delivery to the Gulf Coast. Investment costs would he
$934 million for a ].2 million barrel per day pipeline. Transporta-
tion costs would be $2.52 into the Chicago market, and $2.16 into
Houston. The major drawback to this proposal is the absence of
interest from the major oil companies, and the possibility that it
could be interpreted as involving the export of Alaskan crude, which
is currently not permitted.

To summarize, existing pipeline systems in the United States
are designed to deliver oil and gas from the Gulf Coast to the Mid-
west and Northeast, where the nation's energy needs are the greatest.
Now that our major source of domestic supply is shifting from the
Gulf region to Alaska, we must either build new pipeline infra-
structures at large capital costs and potentially significant environ-
mental costs, or else we must find an economical marine delivery route
that will enable us to bring Alaskan crude into Gulf Coast ports
for transport through existing lines. Although a number of new pipe-
lines have been proposed, each has severe political or financial
hurdles to overcome. Moreover, even should one or two of these pro-
jects be built, their capacities would not be sufficient to handle
the surplus supply of Alaskan oil expected on the West Coast ten
years from now.

This set of facts, taken in conjunction with the generally
positive findings of the Canal Study Commission, appear to make a
sea-level canal a very attractive option. To further check this out
I compared the oil transportation costs via the combined pipeline-
marine routes I have just been discussing with an all marine route
through a sea-level canal.

The pipeline costs vary from $2.06 to $2.78 per barrel of
crude, and to be competitive transport costs through a sea-level
canal would have to fall within this range. Apparently they do.

I have asked Arthur D. Little, Inc., using the same computer
model from which the pipeline transport costs were derived, to cal-
culate costs between Valdez and Houston via a sea-level canal. Here
is what they found:

$1.74 per barrel for 165,000 DWT vessels

$1.35 per barrel for 225,000 DWT vessels

$1.31 per barrel for 265,000 DWT vessels

To these figures must be added a reasonable toll figure, which I
have calculated to be 444 per barrel of oil. (This compares with a
toll of 27 per barrel of oil through the present canal.)








64


This means that transport costs through a sea-level canal may
be preliminarily estimated to fall somewhere whthin a $1.75 to $2.18
range. As can readily be seen (See Chart 9), the low end of this
spectrum is 31t less, and the high end 60t less, than the respective
low and high ends of the cost range for combined pipeline-marine
routes.

Clearly, if these figures are sustained upon a more thorough
analysis, a sea-level canal is a highly competitive alternative for
transporting surplus West Coast oil. If we assume an oil surplus of
only 500,000 barrels per day (the amount we definitely will have this
spring), a sea-level canal would in ten years save the American public
$1.3 billion as compared with the existing canal. Over a similar
period of time, the savings would be $565 million when the sea-level
canal is compared with the most economic of the pipeline routes, the
Sohio project. (See Chart 10.)

In addition to the capital investment costs for pipeline and
refinery infrastructures which may be offset against the cost of
construction of a canal, there are extremely important military and
foreign policy values to be realized through a sea-level canal.
Under agreements already entered into or soon to be concluded, much
of the east coast of the United States will in the near future be
dependent upon Algeria, and possibly the Soviet Union, for its
natural gas supplies. Although such an arrangement is satisfactory
at the present time, the desirability of long-term energy dependency
on these two countries is questionable at best. The severe harm
which could be done to the economy of the eastern seaboard by a
cut-off of these foreign supplies is truly inestimable, but we may
be certain it would run into the billions of dollars. A sea-level
canal would enable us to meet these domestic energy needs with
Alaskan gas, and thus provide us a great deal more foreign policy
flexibility.

From a more strictly military point of view, a sea-level canal
offers quite significant strategic and logistical advantages over
the present canal. It would be almost totally invulnerable to long-
term interruption by military attack, whereas the present locks
canal can be incapacitated for as long as 2 years with relative
ease. This means that the canal's important role in providing
logistical support to military operations in the Pacific area would
be wholly dependable. To get some sense of what this would be worth
in dollar values, we may observe that since its inception in 1904
the U.S. Government has expended $5.31 billion--or approximately six
times the net civilian investment in the canal--to defend the canal.
These defense expenditures, as important as they are for the present
locks canal, could be greatly reduced for a sea-level canal because
of its invulntrnI;ility.













CHART 9

CRUDE OIL
TRANSPORTATION COSTS


Tier, $2.78)





5 DWT, $2.18)


Transport Mode


Dollars

per

Barrel


















































)L
o -J
E-4


LLJ

00


4 r-
<#. .


M 0
0 > > ES
0l i- ~ t
H I H

Ml I) M n


001
001
0.0
0
Si- L-I

-4


0 0
0 0
0 0
a in in
0 0 0

r'-


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CM 1
w- 2


0
*o

1 r-4






Q. 0
0 *
$40
M 0



0 4 0


0
4 04








67



In addition, a sea-level canal could be transited by our air-
craft carriers, which are too large for the present facility. At
present, a Carrier Task Group moving from one ocean to the other must
send part .f itr. force around South America while the remainder
trarisits Ith caiid l, only to lie idle for 1') days while the rest of the
force catches up.

As an example of the strategic shortcomings and military in-
efficiency of the present canal, let us assume there is an emergency
in the Mediterranean which calls for reinforcement from a Carrier
Task Group stationed on the West Coast.

Under present conditions, the Task Group's crusier and 15 of
its destroyers would sail through the canal, reaching Gibraltar in
15 days. Meanwhile, the carrier and an additional 10 destroyer escort
would steam the additional 5000 miles around Cape Horn, not reaching
Gibraltar for 25 days.

If a sea-level canal were available, the entire Carrier Task
Group could reach Gibraltar in 15 days, at a savings of 47,000 barrels
of fuel and $870,000. The strategic flexibility this would provide
our Navy would be equivalent to adding an entire Carrier Task Group
to our arsenal. In effect, this would provide us an additional $20
billion in defense capability at no extra cost to the taxpayers.
(See Map 4.)

Taken together, the military and foreign policy values, the
savings from retaining existing energy delivery infrastructures, and
the reduced transportation costs of a sea-level canal would appear
to justify such a project even in the absence of strict financial
feasibility, which, as we have seen, is far from lacking.

The United States perhaps in conjunction with other inter-
ested parties such as the State of Alaska, the international oil
companies, Japan, Mexico, Venezuela, and countries on the west
coast of South America could guarantee the bonds to finance a new
sea-level canal fully owned and operated by the Panamanians. It
would be strictly a business arrangement with a Panamanian guarantee
of access and reasonable tariffs as the only quid pro quo. This would
provide Panama the economic control over her resources she demands,
and would at the same time defuse the present controversy. The
United States, for her part, would obtain the economic advantages
already pointed out, and would achieve her ultimate goal of a defen-
sible canal available to all at reasonable rates.

I think there can be no doubt that the advantages to the
United States are sufficiently great to warrant the authorization
of a further $8 million to update the comprehensive work already done
by the Canal Study Commission. This update would include (1) a












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69


review of the shipping study, including an update of transportation
economics; (7) a review of potential environmental effects, including
the preparation ot an environmental impact statement in accordance
with section 102 of the National Environmental Policy Act, with
special attention being given to potential ecological effects of the
migration of marine organisms through a sea-level canal; and (3) a
review of the 1970 engineering findings and recommendations.















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SEA LE',l CANAL ROUTE 10

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*utNAVMNTUUA


I SCALE IN UILE


INTEROCEANIC CANAL ROUTE:
FIGURE 2 (1947 STUDY)


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I.ATA 1 I PACIF IC














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DISTANCE MIL!S


t, nT A N .N L.


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U Ib CI&L Ot I IdNtLE LA IE- It MI LE,
INITIAL CHANNEL A
f il ia L ,c i i i


IM L I 1 6.-Li 1 ...
DISTANCE Min F
,* rnt. LL l:o* l









!DITIONAL CHA PASEL A




I- -------
iS'.lL_ i I i B _______ |I
7 '' I IViiLE II IMik.S







. LA'I4n EXDTFNSIONOF BYPASS-C C



ROUTE 10 CHANNEL CONFIGURATIONS
ROUTE 10 CHANNEL CONFIGURATIONS








73







.
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Senator GRAVEL. And Dan Mundy's statement, I would also like
to be placed in the record, and a letter from Arthur Andersen.
Mr. METCALFE. I will ask unanimous consent that all of those state-
ments be entered into the record, unless there is some objection.
Hearing none, they will be entered into the body of the record.
[The following was received for the record:]

ARTHUR ANDERSEN & CO.,
Chicago, Ill., April 18, 1978.
Hon. Senator MIKE GRAVEL,
U.S. Senate,
The Capitol,
Washington, D.C.
DEAR SENATOR GRAVEL: You requested that I set down in writing my thoughts
on how to approach a financial feasibility study and an estimate of the cost
for such a study. In response to this request I am setting forth in this letter
my initial and tentative thoughts in this regard.
I strongly urge that the canal feasibility study give major emphasis to finan-
cial considerations. A canal serves a transportation market and the question
of what type of canal to construct should be substantially influenced by the
need for canal services represented by the willingness of users to pay prices for
the use of the facility that will justify the enormous capital expenditure in-
volved. Before engineering alternatives are considered, the financial analyst
needs to conclude as to the type of the facility that will be most attractive to
the user.
The basic approach to a financial feasibility study would be comparable to a
long range development plan t;kinii into consideration all alternatives includ-
ing a new facility. Although a sea-level canal is most attractive to you, I would
recommend that the financial feasibility study consider all alternatives for im-
proving canal service. These alternatives would include not only a sea-level
canal but also modernization of the existing canal, construction of a third set
of liuk-. and possibly other types of completely new facilities. As a result of
comparing a full raiig of alternatives, it will be possible to select the most
apprr'iriate plan taking into account such noneconomic factors as potential
political and social impact.
The basic approach to the study would be similar to that adopted by you in
your statement on "Sea-Level Canal Feasibility Study". In your statement you
looked at the market for a new canal and evaluated various alternatives to it.
Although your statement is broad in nature, the basic approach is sound and
would be followed in a more detailed feasibility study. Such a study would in-
clude the fll b\\ in:l major elements:
1. Potential market survey.
2. Analysis of transportation alternatives and related costs.
3. Alternative canal pricin: t rstitsgie-.
4. Alternative methods of financing capital requirements.
The Panama Canal Company has made many traffic forecasts over the years,
the most recent of which was completed by an outside economist in January,
1978. Although these traffic forecasts would be useful to the financial feasi-
bility study, they would require substantial expansion to make them relevant
because the level of traffic of the exi-tiniL facility is controlled by the limita-
tions of the facility and the current prices that are charged for its use. If
the facility were substantially different, it can be expected that the use would
he different. Accordingly, a key input into the financial feasibility study should
be a substantial market survey that looks for the potential demand for canal
service.
A significant problem to be dealt with in the market survey is the effect of
previous decisions by potential canal users that would limit their future use
of the canal. There is no question that a canal must be looked at over a long
horizon. The difficulty in d1i.ii so is the effect of previous long range deci-
sions. To illustrate. Atlantic Richfield is in the process of constructing a pipe-
line from California to Texas to transport approximately ,.I11 ImIII barrels of
Alaskan oil a day. Their decision in this regard was undoubtedly inipacted by
the limitations of the existing canal. Ilowever, since they may spend ulpwards
of $.',ni million to construct this pipeline they will probably continue to use it










even if a new canal became available. The reason for this is that their deci-
sion will be based on marginal cost which would likely be higher for the new
canal after the pipeline investment.
It is important to realize that the market survey should attempt to inven-
tory the absolute market for canal service. It should start with the assumption
of free canal service and who would use it on that basis. This absolute total
would be subjected to analysis based on alternative transportation costs which
could identify the watersheds where traffic would be discouraged from using
the canal because of toll levels. The fact that a potential user is constrained
by previous investments should not exclude him from the absolute inventory
of potential users for a future canal.
The next phase of the study would be extensive cost analyses of the per-
tinent transportation alternatives to transport goods within the market poten-
tial of the canal. These analyses should consider all transportation modes that
compete with canal service including ships too large to use the current canal,
routes avoiding the canal, railroads and pipelines. These analyses should dem-
onstrate the competitive advantage and disadvantage to the various potential
users of the canal identified in the market survey and should set forth the
revenue potential of a canal assuming the appropriate pricing strategy. The
very difficult question of potential users that could develop depending on where
they develop their resources must also be addressed in this phase of the study.
For example, assuming the existence of say undeveloped iron ore deposits in
multiple locations, an iron ore mine could be developed in a location either
requiring or not requiring the use of the canal, depending on the availability
of adequate canal service and the price charged therefore.
After having examined the absolute market for canal service and having
determined alternative transportation costs, the next phase of the financial
feasibility study should explore various pricing strategies to maximize reve-
nue. Approaches could be developed to commit potential users to canal service
over the long term, limiting the risk involved in the investment in a canal as
well as maximizing potential revenue.
The final phase of the financial feasibility study should summarize the re-
sults of the previous phases and review alternatives available to finance the
construction project. The involvement of more than the United States in the
financing of the project may be desirable both financially and politically to
place the canal in the context of an international utility serving the world.
It is, of course, very difficult to estimate the cost of such a study but I can
give you a ballpark guess based on my previous experience. As you indicated,
it is important that this undertaking be truly international in nature and that
it not be simply a U.S. effort. In this regard, important input would be re-
quired from the Republic of Panama, who would be the owner of the canal,
and substantial involvement of firms in the Republic of Panama would increase
the cost of performing the study. Also, from a purely technical standpoint, sub-
stantial fact gathering and analysis will be required to ensure the credibility
and acceptability of the result. Finally, it is important that firms with un-
questioned expertise and reputation be engaged to further enhance the study's
credibility. Based on these considerations, my guess would be that a financial
feasibility study extending over a period of two to three years would involve
the expenditure of between $1 million and $1.5 million.
It will probably be very difficult, however, to justify the substantial invest-
ment in a new or modernized Panama Canal based purely on economic data
now available. It will therefore probably be necessary to justify the project,
at least in part, on noneconomic factors or unquantifiable economic factors. As
you pointed out. a new canal facility will spur economic development not only
in Panama but in other locations in the Western Hemisphere. A canal capable
of handling large ships would spur the development of new ports to accommo-
ldate the larger ships. Also, ship construction may be stimulated in that ships
are currently being built based on the constraints of the existing Panama
Canal.
To some extent an investment in a canal should be looked upon by govern-
ments in a manner similar to construction of bridges and highways. The con-
struction of highways encourages economic development not only locally but
also in the nation where it is constructed. The canal is similar to a bridge as
part of a highway but in this case it is a bridge on one of the major sea high-
ways of the world. Governments sometimes must make the initial investment
to spur economic development in the world.


32-461 0 78- 6











If you have any questions regarding these preliminary observations or if
you would like to discuss this matter at further length, please do not hesitate
to contact me.
Very truly yours,
LEONARD J. KUJAWA.

STATEMENT OF DANIEL J. MUNDY, LEGISLATIVE DIRECTOR OF THE BUILDING AND
CONSTRUCTION TRADES DEPARTMENT, AFL-CIO
Mr. Chairman: My name is Dan Mundy, Legislative Director of the Building
and Construction Trades Department, AFL-CIO.
I greatly appreciate this opportunity to present testimony on an issue of vital
importance to the building tradesmen of this country.
I would especially like to express our gratitude to you, Mr. Chairman, and
to Senator Gravel who long ;in, recognized the need for the construction and
operation of a sea-level canal between the Atlantic and Pacific Oceans.
If the key question to be considered in these hearings is not so much whether
to build a sea-level canal, but whether an update of the 1970 Sea-Level Study
is needed, then lets all go home now.
For it seems to me that we are dealing with a need so obvious as to make
the question moot.
A quick glance at the roller coaster ride our economy has experienced in
the past 8 years should prove that the 1970 findings are grossly outdated.
It is the canal's economic feasibiltiy today which underscores its importance
to the building tradesmen of this country.
We acknowledge the significance of such issues as environmental effects and
financing of the sea-level canal.
But we are particularly concerned with the economic and national defense
issues.
Certainly, the improvement of interoceanic transit is a vital consumer issue.
And as consumers who have suffered from a five year depression in the con-
struction industry, the building tradesmen of this country are acutely aware
of the benefits gaineil from cost efficient transportation systems.
Although some have, for various reasons. di- transportation alternative, we consider pipelines as a necessary complement to
other transit systems.
Indeed, pipelines have already proved their cost efficiency and environmental
safety.
If the study of the canal's construction is a consumer issue then, it is also
an employment issue for us.
The construction industry is presently struggling out of a five year de-
pression.
And the severity of the depression has yet to be fully tempered, because the
building trades continue to suffer unemployment that is double the national
average.
Our figures show that the jobless rate of building tradesmen is about 17 per-
cent nationally.
The construction industry, the largest industry in our nation, long has been
the bellwether of our economy.
Any study of the economic benefits of the canal must surely address the
eventuality of domestic port expansion.
Only two ports in the U. S. today are capable of handling supertankers.
Construction of the sea-level canal will necessitate expansion of existing port
facilities to deal with increased supertanker traffic.
And expansion means jobs.
The building tradesmen of this nation stand ready to build these needed
facilities.
We think an updated study of the sea-level canal is warranted.
For we know that any perusal will show that construction of a sea-level
canal is not only economically feasible, but absolutely necessary.
Thank you.
Senator GRAVEL. On my left, Mr. Chairman, is Mr. David Dolgen,
the director of legislative activities, Maritime Trades Department,
AFL-CIO.










Mr. METCALFE. The other gentlemen have short statements, and if
they want to speak extemporaneously, they may do so, and let
the record show that their full statements will be printed in the
record.
Without objection, it will be so ordered.
[The following was received for the record:]

STATEMENT OF J. C. TURNER, GENERAL PRESIDENT, INTERNATIONAL UNION OF
OPERATING ENGINEERS, AFL-CIO
Mr. Chairman and Members of the Subcommittee on the Panama Canal of
the House Merchant Marine and Fisheries Committee, let me express my ap-
preciation for being given the opportunity of appearing before you today.
My name is J. C. Turner and I am General President of the International
Union of Operating Engineers, AFL-CIO representing over 420,000 Officers and
Members of our organization and we welcome the chance to express our views
on the feasibility of a further study on whether a sea-level canal should be
constructed.
There can be no question as to the importance of the Panama Canal and
the relationship it has to the interest of the United States and also the fact
that the importance will never totally diminish. However, we feel that a new
opportunity awaits our country in recognizing now the need to construct a
new sea-level canal.
The Canal Study Commission was appointed by President Lyndon B. Johnson
in 1964 to study the possibility of constructing a sea-level canal in the area
of Central America. The practicality of crossing the Central America isthmus
with a sea-level canal was reported favorably in its final version in 1970.
The report stated that the feasibility of constructing a sea-level canal was
wholly possible from a physical point of view and under reasonable conditions.
With our advanced technology a canal could be constructed so that it could
pay for itself within a period of sixty (60) years. The Commission also deter-
mined that from an economic, a defense and a foreign policy position, the bene-
fits derived from a sea-level canal would be of immense value to the United
States.
The Commission report although eight (8) years old was used as a basis
for an amendment to the Navigation and Development Act sponsored by Sena-
tors Magnuson and Gravel. In that amendment which recently passed the
Senate, an authorization of eight (8) million dollars was allowed to establish
an International Sea-Level Canal Study Commission.
rrhe new Commission would conduct studies and investigations to update the
1970 Report of the Atlantic-Pacific Interoceanic Canal Study Commission. The
International Commission as proposed by Senators Magnuson and Gravel would
consist of three (3) appointees of the United States and an additional three
(3) appointees recommended by Panama.
The report of the Commission which requires a study of the environmental
effects, financing, economic feasibility and excavation techniques for a sea-
level canal would be required to be submitted within three (3) years of the
date of the provision's enactment.
The International Union of Operating Engineers after reviewing the Senate
amendment worked very closely with Senator Gravel in having the amendment
pass the Senate because we feel that growth in ship size will continue upward.
This growth in ship size from World War II to date was unexpected, but
was also economically advisable. Yet this significance of that growth in ship
size points out why a sea-level canal is vitally needed and why a further
study to construct one is necessary.
The situation is even more dramatic if we look at our Naval fleet. Our need
in time of crisis to move our Naval force from one ocean to the other would
almost mandate that we move forward with a study for a sea-level canal.
We would also be remiss if we did not point out the size of oil bulk car-
riers that today are too large to use the Panama Canal. In an energy starved
nation, dependent upon oil as the main source of that energy, a sea-level canal
would provide a means of moving oil economically in bulk form from Alaska
and the West to our eastern industrial base. American oil to American
factories.
We sincerely request that your Subcommittee support the Senate amend-











ment and Chairman Murphy's proposals for updating the 1970 Report and
again extend our thanks to you for being given the opportunity to present
these views on the need for a further study.


STATEMENT OF RICHARD SAUL, DIRECTOR OF DOMESTIC SHIPPING ACTIVITIES
TRANSPORTATION INSTITUTE
Mr. Chairman and members of the Subcommittee: My name is Richard Saul.
I am the Director of Domestic Shipping Activities of the Transportation In-
sttute, a non-profit marine transportation research and informational organiza-
tion whose 160 member companies operate U.S.-flag ships in our Nation's
foreign and domestic trades including the Great Lakes and the intercoastal
and non-contiguous trades.
On behalf of the Transportation Institute, I allirvci:-te the opportunity to
testify on the sea-level canal study amendment to H.R. 8309, the Navigation
Development Act, as proposed by Senators Mike Gravel and Warren Magnuson.
We support the establishment of an Internatonal Sea-Level Canal Study Com-
mission to update the findings of the former Atlantic-Pacific Interoceanic
Canal Study Commission.
As proposed, the International Commission would consist of three appointees
of the United States and three appointees recommended by Panama. Its re-
port would study the environmental effects as well as the financing, economic
feasibility and excavation techniques required by a sea-level canal and its
findings would be submitted within three years after this provision's enactment.
We feel the Senators Gravel and Magnuson's proposal is timely and deserv-
ing of approval.
The Atlantic-Pacific Interoceanic Canal Study Commission concluded in its
1970 report that the construction of a sea-level canal was not only possible
from a physical standpoint, but also had, inherent in it, defense and foreign
policy benefits to the U.S.
It is well known that the Panama Canal is rapidly 1letmiini obsolescent to
a great extent as a result of the increase in the size of ships. In fact, nearly
20 percent of all bulk carriers are today too large to transit the Canal. While
this is seemingly a small pi-r' titJ:lIL'e of the world's bulk fleet, in carrying
capacity these vessels represent nearly 44 percent of the world's bulk tonnage.
The Canal's physical limitations adversely affect the flow of Alaskan oil
bound for eastern ports. The 70,000 DWT to 1911.(10 DWT currently loading oil
in Valdez are too large to transit the Canal and thus their (.cI'i, o. must be
lightered onto smaller vessels for the final leg of the voyage. This procedure
is not only time-consuming, but also costly because the economies of scale
inherent in the use of large tankers for the full voyage is lost.
Faced with the existing reality, as more and more Alaskan oil comes on
line, the Panama Canal will become a bottleneck in the intercoastal oil trade.
From a defense -taIjillint. the existing canal also represents a logistical
drawback. Too many of our warships, especially aircraft carriers, again are
too large for the canal's dimensions. In addition, the "locks" configuration
makes the Canal more vulnerable to attack and permanent interruption than
would a sea-level canal.
Tlie-t factors, then, emphasize, in our veiw the need for continued study
and evaluation of a sea-level canal. We wholeheartedly support Senators
Gravel and Magnuson's efforts in this regard.


STATEMENT OF JOHN M. EDDINGER, EXECUTIVE DIRECTOR, THE NATIONAL
ASSOCIATION OF DREDGING CONTRACTORS
Mr. Chairman, I am John M. Eddinger, Executive Director of the National
Association of Dreil-ilg Contractors, an oraniiatiiin that has been represent-
ing the nation's dredging interests for over 40 years. The Association appreci-
ates the opportunity to express its views before the Subcommittee today on
leZi-la:tion to update the Atlantic-Pacific Interoceanic Canal Study Commission
Report of 1970.
As specifically directed by the Subcommittee, my remarks will deal solely
with the question of whether an update of the 1970 Sea-Level Study is needed,
not whether the U. S. should ultimately construct or finance such a canal.







79

UPDATING THE STUDY
The Association wholeheartedly endorses the concept promoted by Chairman
John M. Murphy (D.-N.Y.) and Senator Mike Gravel (D.-Alaska) that the
advaintn es to the United States of a sea-level canal warrant authorization
of further funding to update the comprehensive work already done by the
Canal Study Commission.
The energy crisis has spurred a rapid increase in the number and capacity
of vessels to deliver our muiirh-needed energy supplies.
The threat of how easily the operations of the Panama Canal can be inter-
rupted for a long period of time has recently become crucial to national mili-
tary and diplomatic policy considerations.
The requirements of national and international trade are putting greater
demnn1ds on a more efficient and less costly system of transporting goods.
The solutions to our unemployment and inflation problems rely heavily on
a vigorous economy-flexible enough to expand business opportunities, with
the attendant creation of new jobs and their additional source of taxation.
In short, world events in the eight years since the Commission's original re-
port underscore the need to evaluate every alternative means of insuring our
continued economic growth and national security.

SPECIFIC PROPOSALS
Chairman Murphy's draft proposal is very similar to Sen. Gravel's plan,
passed by the Senate on May 4, 1978, which would:
Authorize $8 million to establish the International Sea-Level Canal Study
Commission for the purpose of conducting studies and investigations to update
the 1970 Report of the Atlantic-Pacific Interoceanic Canal Study Commission.
Provide for three Commission members to be appointed by the United States
and three members to be recommended by the Republic of Panama.
Require a study of the environmental effects, financing, economic feasibility
and excavation techniques for a sea-level canal.
Mandate a review and assessment of potential routes both inside and outside
Panama.
Require the Commission to submit a report on its findings and recommenda-
tions to, the President and the Ciingress within three years from the date of
enactment of the provision.
Senntor Gravel makes a convincing argument for the financial feasibility of
a sen-level canal, along with the military and foreign policy values inherent
in such a project.
Of critical importance to both the Murphy and Gravel proposals is that they
are workable. Numerous safeguards are contained in the proposals to assure
full consideration and proper review of all major aspects of the question. Each
phase iof continued study is monitored and assessed before further action can
be taken. Each interested Federal entity is afforded the opportunity to com-
ment on the findings.
ASSOCIATION ASSISTANCE
The American dredging industry has an obvious interest in the Commis-
sion's inquiry and study. We stand ready to be of any assistance possible in
providing information dealing directly with technological capabilities or in-
directly on the subject of navigation as a whole, of which we are an essential
part.
Again, Mr. Chairman, thank you for the opportunity to express our views
and please do not hesitate to contact the Association if we can be of any
assistance.

Mr. DOLGEN. Thank you, Mr. Chairman.
My name is David Dolgen. I am the director of legislative and
political activities of the AFL-CIO Maritime Trades Department,
the constitutional body created by the AFL-CIO to represent the
interests of the trade union members in the maritime industry. The
MTD is composed of 43 national and international unions with a
total membership of 8 million workers.








I am also the director of legislative and political affairs for the
Seafarers Interinalionmil Union of North America, AFL-CIO. The
SIU represents seamen manning American-flag vessels of all types
engaged in our Nation's foreign and domestic shipping trades and
in barge and tugboat operations on the Great Lakes and the 25,000-
mile network of United States inland waters.
We appr','iate the opportunity to express our support for the
establishment of an International Sea-Level Canal Study Commis-
sion. Senators Mike Gravel and Warren lMagnuson joined together
to recommend that such a study be undertaken to complete the com-
prehensive work of the Canal Study Commission, appointed by
President, Johnson in 1964. At that time the Commission's final re-
port was issued in 1970, the Commission had concluded that a sea-
level canal across the Central American Isthmus was wholly feasible
from a phy-i'al point of view.
As envisioned by Senators Gravel and Magnuson, this new Com-
mission would assess the technical, economic, and environmental feas-
ibility of constructing a sea-level canal. The Commission would
have 3 years in which to complete its study and submit its findings
to the President and the Congress.
The Commission would be comprised of six members. One Mem-
ber of the Senate, one of the House, one member appointed by the
President from the public sector, and three members appointed by
the President upon recommendation for appointment by the Re-
public of Panama. The Commission would be given $8 million to
carry out its mandate.
At. the executive board meeting of the AFL-CIO Martitime
Trades Department in February 1978, the MTD urged a review of
the 1970 report of the Canal Study Commission. The MTD, in a
policy statement unanimously adopted by its executive board, noted
that national security considerations, along with modern technical
shipping requirements, require that our Nation fully examine all
options available to it in this regard.
As such, the Maritime Trades Department supports the establish-
ment of the new Commission to complete the 1970 report for several
reasons: The Panama Canal, a remarkable construction feat when
completed in 1914, is no longer adequate to handle the passage of
large ships. Already more than 1,300 vessels are too large to pass
through the canal, and another 1,700 can use it only when not fully
laden.
Many shipbuilders, when constructing supertankers, discount the
canal which obviously cannot accommodate such vessels. Evidence
of the canal's growing physical obsolescence lies in its inability to
economically handle the transshipment of Alaskan oil. The 70,000 to
190,000 deadweight tankers that. move oil from Valdez to Panama
cannot pass through the canal which can handle ships no larger than
65,000 deadweight tons. Thus. oil must be lightered to smaller ships.
This situation highlights the need for a study to determine the
feasibility of building a sea-level canal in Panama. Not only would
a canal be justified from a strictly conlmnercial and economic stand-
point, but also from a military point of view. A sea-level canal, free
of locks, would be almost invulnerable to long-term interruption by









military attack. In addition, many of our warships which today are
too large for the canal, among them our new aircraft carriers, would
be able to transit the canal.
The Maritime Trades Department feels that in view of the physi-
cal constraints to the present Panama Canal and the impact such
limitations have on our intercoastal shipping, (-,pecially in terms
of the carriage of North Slope oil, there is ample justification to
renew and update the Canal Study Commission's 1970 report. We
applaud Senators Gravel and Magnuson for their efforts in this
direction.
Mr. Chairman, I would like to submit for the record the policy
statement adopted by the Maritime Trades Department at its execu-
tive board meeting in Florida, February 17, 1978, for the record.
Mr. METCALFE. Fine, unless there is objection it will be so ordered.
Hearing none, it is so ordered.
[The following was received for the record:]
POLICY STATEMENT OF THE EXECUTIVE BOARD MEETING, MARITIME TRADES
DEPARTMENT, AFL-CIO, BAL HARBOUR, FLA., FEBRUARY 17, 1978
A SEA-LEVEL CANAL
Since it \v;s opened to world shipping in 1914, the Panama Canal has played
an essential rule in the coldiuct of world commerce.
Notwithstanding the great construction feat the Canal represents, and its
virtually uninterrupted ability over the past 64 years to expedite the passage
of vessels, there is evidence that the Canal will be increasingly incapable of
accommodating the larger and larger ships that will be built in the future.
Moreover. U.S.-flag superships, hauling oil or minerals from Alaska cannot
now pass through the Canal.
Already more than 1,300 vessels are too large to be handled by the Canal;
another 1.700 can use it only when not fully laden.
Under these circumstances, consideration is again being given to the idea of
a sea-level canal which would not require a locks system and which would
have national security advantages.
Among these views are those of Senators Mike Gravel (D-AK) and Warren
Magnuis.n iD-WA) who are recommending a study that would include (1) a
review of the Report of the Canal Study Commission issued in 1970 and (2)
a review of the potential environmental effects of a sea-level project.
National security considerations, along with modern technical shipping re-
quirements. require that our nation fully examine all options available to it
in this regard. Accordingly, the Maritime Trades Department recommends
support of the Gravel-Magnuson proposal.
Mr. M ETCALFE. Thank you very much, Mr. Dolgen.
For the benefit of the otler members of the panel, and because of
the time constraints, we have your statements which have already
been entered into the record, so if you just want to make a very brief
statement, we would appreciate it.
The next witness, please ?
Mr. Bnow x. Thank you, Mr. Chairman. We will submit the state-
ment of J. C. Turner, general president of the International Union
of Operating Engineers, who could not be here this afternoon. He
extends his apologies, both to the Chair and to the subcommittee.
Mr. METCALFE. Thank you very much, Mr. Brown.
Mr. EDDINGER. Mr. Chairman, I am John Eddinger from the Na-
tional Association of Dredging Contractors. There is no way I can
improve on Senator Gravel's statement, and we would just associate
ourselves with this project.









Mr. METCALFE. Thank you very much, IMr. Eddinger.
Next witness, please.
Mr. SAUL. I am Richard Saul for the Transportation Institute.
The Institute believes that Senator Gravel's and Senator Magmnuson's
amendment is both timely and necessary. It, is only a matter of
time before the physical limitations of the Panama Canal makes the
bottleneck for interoceanic shipping. The east coast need for Alaskan
oil makes it imperative, and unduly hindered time delays are cer-
tain to occur as the Alaska Pipeline outfits ini-re~es are almost
certain.
Consequently, we feel that it is essential that studies be under-
taken to find a suitable alternative to the existing canal.
Gravel's and Magnuson's proposal does this, and we strongly sup-
port their efforts.
Mr. MI.TCALFE. Thank you very much. We appreciate your co-
operation.
We do have some questions to ask you, Senator Gravel.
Do you have official documentation relating to the Panananian
Government's attitude toward a sea-level canal study that ,you wou\\,l
care to introduce into the record?
Senator GRAVEL. I will have it shortly. Mr. Chairman. I took the
matter up with General Torrijos and Ambassador Lewis. Both were
very, very favorable. In fact, the evening of the first day of the
Senate debate of this issue, when there was a misunderstanding at
the adverse vote in the Senate, the general called me personally over
his concern about it. It is not their view that this should wait for
the balance of the treaty implementation, and they will he corninig
forward with their statement.
I have a letter from Mr. Stagg, the Counselor General fir o New
York. But I wanted-I think it would be better to get one from
the chief of the government.
IMr. METCALFE. The record will remain open. WThen you have that
material, you may submit it, and it will be entered into thi record.
Senator GRAVEL. I appreciate that very much.
[The following was received :]
EMBAJADA DE PANAMA.
Washington, D.C., Jun 26:. 1971.
Hon. MIKE GRAVEL,
U.S. Senator for the State of Alanka. Dirksen Senate Offirce Building, n'apitol Hill.
Washington, D.C.
DEAR SENATOR GRAVEL: Pursuant to your request and without any ldeigns to
intervene in the debate which is presently taking place around the Gravel
Magnum amendment to an act authorization certain Public Works on river. fiir
navigation (HR S.3093. I have been instructed by my government to reply toi y.lu
as follows:
The Government of Panama is interested in the completion of a joint study
which will update the Atlantic-Pacific Interoceanic Canal Study C('omni.sion
Report and Evaluate the economic and environmental factors considered, the
feasibility of a sea level canal.
I take this opportunity to reiterate the assurances of my highest esteem and
consideration.
R. A. BILONICK-PARFDES.
Ch ar <'* D'. .ffa i rr<

Mr. METCALFE. The new Panama Treaty does not contain the terms
recommended by the 1970 Commission Report. Does this not indicate









that the United States cannot get from Pananma the minimum terms
acceptable for U.S. participation in sea-level canal c)on-,st ruction?
Senator GRAVEL. No, Mr. Chairman. I would say that until I came
forward, it was something that was not even addressed. In fact, the
language that was in the treaty was at my behest.
The treaty might not even have focused on the subject. Both in
Panama and the United States, there was-the entire good work of
the Commission, that was completed in 1970, was just really forgot-
ten. And I fell upon it, per chance, when I went and visited the
economists of the canal, of the Panama Canal Co.
So there was no attention given to this by the Panamanians, none
by the Americans. It was my initiative that brought it into full
view.
And so far, I have been able to persuade the administration and
the Panamanian Government that this is-and the Senate-that this
is something that we should proceed with. So that is where it is.
There is no other constituency. That is what has built up in the
last year.
Mr. METCALFE. Thank you. Have you analyzed the effect of your
proposal for a new canal in relationship to the present canal? What
would happen to the present canal?
Senator GRAVEL. Well, two things would occur. I did analyze it.
I think that is essentially what those obsolescence charts showed,
and I was very concerned about that. And I picked up that data,
to put those charts together, in Norway. I kept trying to find out
what the present situation was today. These are the first charts of
that kind in existence, about the present Panama Canal.
Now, oiire the sea-level canal is completed, it would depend a
little bit on the construction, whether or not you would want to keep
the canal, the present canal in exi .tence. You might not want to.
The damming that you would use of the Gatun Lake, in order to
cut through-if that is the site-in order to cut through, you might
want to let that water just go down to the level of the Chagres
River, and not keep the lake at that 83-foot level. Just let it drain
down, and it would make wonderful farmland.
The other is that the traffic may expand to such a degree that
30o may want to use the sea-level canal for large vessels and the
smaller cnnal for smaller vessels. I think that the economics of the
time would dictate it.
For sure, regardless, the canal would also have historic value. I
think that the sea level canall, if the study is favorable, can be
brought into existence between 1987 and 1990. That would mean
that the other canal would then be completely obsolete, and it would
be no more than a historical attraction, and a very nice historical
attraction.
When you read the book, "The Path Between the Seas", by Mr.
McCullough, youn are overwlhlmene with the amount of history
going on in the area. So I think it would attract a lot of tourists,
and a lot of American toulrists.
Mr. MKETC.AIFE. It seems to me that you are ramiing a very, very
important q(ie-.tion, with all of the legotiatiolln that have gone on
trying to reach an agreeiient on the treaties-and with the signing of
the articles of ratification. Now, as I understand you to say, there is









a possibility-in response to my question-that the present canal as it
now exists, could be in one of two categories: It can be used only by
small vessels. Therefore, it wouldl mean a cutting down on the revenue
for PaRinama.
And the second alternative is that the canal could be rendered
obsolete, which means then that all of this negotiation that you
prompted, as to the language that is in the treaties, would possibly
not be germane. Yet we have sigrimd these agreements.
Senator GRAVEL. Mr. Chairman, you put your finger on what I
elaborated on at great length in the course of the debate. We have
been sort of, as a Nation, ripping our guts out over a canal which is
obsolete. I think I have proven that it is obsolete. I am trying to put
a motion to make an intelligent decision, based on the economics,
and the point you jilake, that the present treaties are going to be
moot is absolutely correct. When the study comes back and shows-
which I think it will show, unless my figures are wrong-shows it
is in the best American interest to have a sea-level canal, and to
build it as soon as possible, then the present Paunamri Canal is des-
tined to history. I mean, it is totally irrelevant.
If I could just project the future, I would say that once we have
deterriinic that it is in our best interest to have a new canal, we
would then try to push our participation in that, through guaran-
tees, or what have you, to get involved in the financing. That is it,
with a guarantee of access.
The one treaty, the neuitrality treaty, is very important, because,
you see, the neutrality treaty guarantees that we keep open the prevent
canal, or any other canal-the new sea-level. The responsibility to keep
that new canal open is already ours.
I think that we make the decision to get involved financially, if it
benefits us. If we don't, we still would be the ones using it. There
was a lot of discussion .and debate in the Senate to the effect that the
Panamanians could go off and build their own canal. We think we
would build ours. We cannot and they cannot. We are really locked
into each other. Since we use the canal to a third of its volume,
there is nobody that is really going to put up any money, unless they
are sure that the United States is going to continue with a normal
modus vivendi.
Somebody made the point that the Russians would come in and
build it, cut a deal, and we would have the communists' influence. It
would absolutely be the most ridiculous undertaking in the world,
because if we did not use it, the thing would go bankrupt. So the
Panamanians need us to use it; we need them to permit us to use
it, because it may be the most efficient way to move a lot of our
economic goods to the various consumers.
So in answer to your question, very briefly, I think this is appar-
ent: When the dust settles, these treaties-the one treaty, Panama
Canal Treaty, may be irrelevant and may have to be renegotiated.
But the neutrality treaty is perfectly germane and would remain in
place, and would be operable with a new agreement involving a sea-
level canal.
Mr. METCALFE. I do not want to belabor the question. I raised the
question, as to the impact of this matter, if we are having the prob-








lems-and we have had them, and we are having them now, with
regards to the canal. Now, you mean we are having to go through
another series of negotiations for a sea-level canal, when in fact, I
mean, we have not sold a sufficient number of Americans on the im-
portance- of the present program, as we now have it with respect to
the canal.
Senator GRAVEL. Well, first off-
Mr. ME'T'ALFE. You are inviting a lot of work, and maybe in your
enthusiasm, you are over-simplying the problem.
Senator GRAVEL. Well, I think not, Mr. Chairman. I think that
the Americans are intelligent enough to recognize whether they
pay $14 a barrel or whether they pay $13 a barrel for oil. And they
understand it in Kansas and they understand it in your State. And
if having a -ea-level canal i cans that they can get oil at a dollar
a barrel cheaper, that they can get wood 50 cents a thousand-board-
feet cheaper, or they can get their coal sold more advantageously to
Japan, or that they can get west coast products to the east coast, and
vice versa, cheaper, the American people can understand that.
I think many times we in the Congress get carried away as to what
they can comprehend. I am not advocating a new treaty. I am not
advocating new negotiations. I am just saying: "Let us go out and
do some study, based upon what I have shown."
If you do not want to do any new study, then you are compelled to
accept what I have laid on the table. It is in the best interest of the
American people to build a sea-level canal. I would not think that
otherwise the Senate, which has been through the catharsis of voting
on the treaty, through the pain politically of doing that, would still
be able to have a reservoir of good sense to vote, by 64 votes for this
study.
I had Senators come to me and say:
Boy, do not bring up another issue on the Panama Canal. I do not even
wan to hear the word Panama. Gravel, just do not even talk to me about
Panama one more time.
Hey, look at your emotional side. All I am asking you to do is
study the obvious. And to refuse to do this would be-to exaggerate
it is stupid, to not study what is in your best economic interest is
stupid.
I will be happy to debate .anybody in the United States on this
subject. We are talking about how to save money for the American
people, and there are a lot of other ways of saving money, other than
passing a proposition 13.
Mr. METCALFE. Again, I would like to compliment you on the re-
search you have done. I just have problems with it. I said before
that I think you are over-simplifying the matter. If we could not
convince the American people that we are not the sovereign over the
canal, that we do not have sovereignty there-but only act as if we
were sovereign-then why you are optimistic enough to think that
we can look at the economics of a sea-level canal and then be com-
pletely in accord with it, with the economics of it?
Senator GRAVEL. I have found, Mr. Chairman, in my experience,
politically, that the moral argument is not always very acceptable.
But when you talk about dollars and cents to the people, you get
their attention a lot easier.









The pren-tnt treaty issue is truly based upon a moral situation.
And I think I share the same views that you do on that subject, but
that is at variance with a lot of sincere Americans who hold differ-
ent views.
But there is one thing that we can all agree on, that we know how
to count money. And regardless if you are for or against the canal,
I think-one thing we are all for is to save our constituents money.
And that is what this study will show.
And I would respectfully disagree with you. I think it should be
very .:,;v-if tlhe facts are borne out. If the facts do not bear me
out, I will not stand behind this issue for one moment. But if the
facts bear me out, then of course you will not see a situation where
one Senator from Alaska votes one way on this issue and the other
Senaor votes another way. Because you could not go back and say
that Gravel is a nice guy, but he has got no facts to back him up.
All I have got now is this Arthur D. Little study to back me up.
You put up $8 million, and there will not be a person who will be
able to stand the heat once the electorate is knowledgeable about
those facts.
Mr. BuowN. Mr. Chairman, I am speaking again on behalf of the
General President. But our International Union, representing 420,000
members-and we are talking about-and we look very closely into
the whole picture-No. 1, the emotion that is raizedl about giving
something away, such as the matter of the Panama Canal, and I
think if you basically :e(.lpt. that Americans have always been
builders, our whole history has been one of accomplishment. And I
think there are a different range, or different perspective of building
a canal and giving one away.
I do not think you will find emotionalism generated from peo-
ple from a different point of view. Maybe we can sell this by
trying to provide jobs for our people. We are looking anywhere from
10 to 25 years of work.
But members of our union not only are seafarers, and I think that
will make a difference.
Senator GRAVEL. I did not touch
Mr. METCALFE. Let me just interrupt you if I may. Senator.
The Chair is cognizant of the restraint of time. I have not com-
pleted my questions with you on this subject, nor have I for the
gentleman who has just spoken, because in my mind I am wondering
what were the maritime unions doing in order to convince the
American public that we needed a new treaty.
I think that is something to which we should give some consider-
ation, because if you are optimistic about your proposal, why was
there not that optimism in order to take a frontal position in regards
to the facts of the treaty negotiations?
But I do not want to continue this, because-
Mr. DOLGEN. May I address myself to that ?
Mr. METCALFE. Briefly.
Mr. DL;r:N. If you would like something, we can submit it for
the record.
When the Maritime Trades Department, affiliated with the Na-
tional AFL-CIO, and affiliates of the Maritime Trade Department
stood with the position of the National AFL-CIO to support Presi-









dent Carter's position on the Panama Canal, it was very public, well
stated, and very direct. And I think that there is no question, rela-
tive to that.
Mr. BROWN. We lobbied, Mr. Chairman, on behalf of that posi-
tion, with the U.S. Senate.
Mr. METCALFE. I will refrain, with great reluctance, from asking
any further questions at this particular point, because of that time.
Maybe we can get into this, with more discussion, at some Inter
date.
Senator Gravel, do we know for certain that there do exist the
oil and gas reserves that would be the basis for this traffic of a sea-
level canal?
Senator GRAVEL. Well, Mr. Chairman, right now we have a sur-
plus of somewhere around 500,000 barrels that we are having to put
through the canal, and at a very imnfficient process. If we expand the
pipeline to its full capacity, there will be an additional 600,000-
800,000 barrels of surplus oil a day coming out of Alaska. So that
would be more than a million barrels a day, surplus, until we can
get one of the pipeline systems.
But my original thesis was not based upon the existing oil dis-
covery. It was based upon the oil that would be discovered. It is well
known that of the 18 .sedimienitary basins in the Outer Continental
Shelf, eight of them are in Alaska. I have got to believe that in all
those eight there is going to be some oil discovered. My projections
are from a conservative USGS estimate.
Mr. METCALFE. I have other questions, but I ask unanimous con-
sent that the Chair be able to submit those questions to you, and you
and the other members of the panel would be able to answer those
questions.
Senator GRAVEL. In writing.
[The questions and answers to which reference is made follow:]
QUESTIONS OF HON. RALPH H. METCALFE FOR SENATOR MIKE GRAVEL
1. Does your proposal presuppose that any new sea-level canal would be
built in Panama?
2. There is some uncertainty in your proposal as to who will chair the Ifi-
ternational Commission. Would it not be easier to designate in the legislation
who will chair the Commission?
3. Is it correct that in your proposal the Commission could not carry on ifs
work until all members, including the Panamanians, had been appointed?
4. Could you elaborate on that provision in your amendment which author-
izes the International Commission "to transfer funds to Federal agencies and
to agencies of the government of the Republic of Panama"?
5. In recent decades about 5% of the world's merchant traffic has transited
the Canal each year. Theoretically, if 95% of the world's fleet had been too big
to transit the Canal many years ago, the Canal would still have done well
financially.
Of course, as a practical matter, vessels of previous decades could not be
constructed in the magnitude they are today.
Isn't the more relevant figure to determine the obsolescence of the Canal
not the number of vessels in the world fleet too large to transit the Canal,
but rather the number of those vessels which are too large to transit the
Canal and which are carrying cargo that previously went through the Canal?
6. What evidence do we have of any interest on the part of either the state
of Alaska or the countries mentioned in your statement as to their participa-
tion in financing a sea-level canal?
7. Exclusive of the new economic factor of the flow of oil and gas from
Alaska, would recent economic changes make an update of the 1970 Atlantic-
Pacific Commission meritorious?








88

8. If the SOHIO pipeline from Midland, Texas to Redlands, California were
constructed, or the Guatamalan pipeline, would there remain enough surplus
Alaskan oil and gas to make a sea-level canal financially viable?
9. If an oil swap with Japan for Alaskan oil were arranged, would that not
vitiate the economic rationale as you have presented it for a new sea-level
canal?
10. The conclusions of the Atlantic-Pacific Commission are based on the as-
sumption of a sea-level payment to Panama of 44< per ton. The recently-
approved treaties provide a payment of 30 per Panama Canal ton to Panama
as well as a fixed annuity and a c'iitiln'l nt one. The 30( per ton will increase
with the wholesale price index. Therefore, won't this treaty provision mean
that the royalties needed by Panama for a sea-level canal would have to out-
weigh benefits from recently approved treaty relationship, and that the royal-
ties would have to exceed 44 cents.
11. Wouldn't Panama have a monopoly position if Panama had a sea-level
canal and the present canal? Wouldn't it be better to build a new canal in
another country to create economic competition between routes?
On October 14, 1977, before the Senate Foreign Relations Committee, former
Secretary of State Kissinger said:
"These treaties establish for any possible sea-level canal the same rules and
the same standards of neutrality that would apply to the existing canal and
they give priority to Panama in the establishment of a sea-level canal.
"From the point of view of the rules they establish for the sea-level canal
they are definitely an adva ijtl,;I'. I, myself, have raised the question whether
it is wise to place two canals in the same country-we have eniiouih problems
with one of them there-and whether it might not be better to have a sea-level
canal, if we build it, in some other country."
12. It was often said in the 1960s that the chief reason for constructing a
sea-level canal study was to better treaty relations with Panama, and that
absent treaty involvements there is inadequate justification for a new canal.
The 1all Strcet Journal, on December 1, 1970, declared that John Sheffey,
the :Ex.liitive Director of the Atlantic-Pacific Interoceanic Canal Stldy Com-
mission made it clear at a news conference that a major purpose of building
a new canal is achievement of "excellent treaty relationships" between the
U.S. and Panama, ending the recurring disputes over canal operation and
,<\.r--iui"ty. "If we don't get those," he said. "then there's no justification for
doing it." On eronomnic grounds alone, lie added, "the justification for a new
canal is quite weak."
Now that we have a new treaty relationship with Panama, without a man-
(late for a sea-level canal, doesn't that dispose of the chief rationale for a
new canal?
13. What is the rationale for the appointment by the House and Senate of
the Commission members contemplated in your proposal?
14. Do you think the creation of the International Commission as it is con-
templated in your amendment would contravene the spirit of the 1977 Treaty
in that the Commission would be primarily a creature of U.S. law?
Do you not think that there ought to be a diplomatic exchange of notes with
Panama, before the establishment of the Commission, to ensure that Panama
regards its participation in the sea-level study as fulfilling its obligations un
der paragraph 1 of Article XII of the Treaty?


ANSWERS SUBMITTED BY SENATOR MIKE GRAVEL TO QUESTIONS POSED
BY IION. RALPH H. METCALFE

1. No, my proposal does not presuppose that any new sea-level canal would
be built in Panama. Based upon the evidence now available, it is my judg-
ment that Panama is the most economic place to build it, but my legislation
in no way prejudges that issue.
2. I do mnt think it desirable to designate in the hli-lntion itself who would
be chairman of the Commission. I an persuaded that the effectiveness of any
commission is in direct proportion to the degree to which members of the
commission share in full participation. Sl]v tiil' their own chairman is cer-
tainly an important part of such participation, and I can see no offsetting
gains in denying it.







89

3. Ye.. it is correct that the Commission would not be functional until all
memni-er- are appointed. I take this to be true of all commissions.
4. The provision in my ]cLisla ;iicn to allow the Commission "to transfer
fuiiln to Frdieral :Ineili pulilic ilf Panama" is included to allow the Commission to obtain, if needed,
exlpeir assistance from appropriate governmental agencies on a reimburseable
ba.sis. I -ee no reason why the Commission should either be denied applropri:,[e
assista:iiit from the respective governments, nor be able to commandeer such
' as'.: taiiet free of chi irge.
5. I feel that this question somewhat misses the point. There is no reason
.that in making decision about the economic feasibility and desirability of
a sea;-level canal that we should limit ourselves to an examination of past ship-
ping patterns. These will certainly be of interest to the degree that they allow
us Ito project future commodity movements. But more important will be an
Ianalyis iof what commodity movements could be expected if we had a sea-
lvet- can.jl. Historical patterns are important only as they contribute to the
answer to this larger question. Such patterns in themselves are by no means
exhaii-uive of what we may expect. The obsolescence of the present canal must
It, in-.i-iired in terms of what traffic patterns could be expected if the physical
carrier of the isthmus were to be breached by a sea-level canal capable of
handling vessels of a given size.
6. No country or no State has at this point stated unelliv\.'ally that it
would parti-ilpate, in the financing of a sea-level canal. It would, of course,
Le inappropriate for them to do so until such time as the study I have pro-
p,.sil is completed. However, I have had conversations with governmental
leaders of Jaip,;,. Veiitzlila. Mexico, Brazil and the United States, and they
have expressed their keen interest in possible participatory financing of a
new canal.
7. Yes. My formal statement to the Committee addresses this question at
le n th.
b. First, let me reiterate that I do not regard the financial viability of a
sea-level canal as resting wholly upon Alaskan oil. I have merely used
Alaslkan oil as one example (the one on which information is at present most
readily available) of why a sea-level canal would seem to be financially viable.
The t udy I propose would also need to examine in depth such possible com-
nmidity movements as Venezuelan oil, grain, coal, timber, minerals, etc.
Thlar .aid, however, I would add that the so-called Alaskan oil surplus on the
West Coast would not be eliminated by construction of either the SOHIO or
Guiatenmllaii line. At present the West Coast surplus is approximately 700,000
barrel- pjr day. Atlantic Richfield estimates that by 1990 the surplus could
be as hlighl as 2.4 million barrels per day. The proposed capacities of the
Giiateminahi and SOHIO lines are, respectively, 1.2 million barrels per day and
one million barrels per day (if both Phase I and Pli;se II of the SOHIO pro-
posal are assumed).
9. Here, I would mention again the caveat at the beginning of my answer
to iiiue-tiin 8: I do not reu4:rd the financial viability of a sea-level canal as
'4dpeFndent solely upon Alaskan oil. Whether or not a swap with Japan for
Alaskan oil would .iipmlhnjletly solve the West Coast surplus problem is un-
known. It depends first upon how much of the Japanese oil could be replaced
with Alaskan crude. Certainly not all of it could be, as Alaskan crude is not
apl,~propiate for certain uses made of present Japanese imports. For instance,
Alaska crnde could never replace Indonesian light crude. The degree to which
swa pl could solve the surplus problem is also dependent upon the level of
future Alaskan discoveries and the production of Venezuelan discoveries.
These are precisely the kinds of questions the study should address.
10. I find this question somewhat con fuiing because the facts as it presents
I them would appear to be incorrect. It is stated that the Atlantic-Pacific Inter-
oceanic Canal Study Commission assumed a sea-level canal payment to
Panama of 44 cents per ton. This is incorrect. On page 92 of the Commission's re-
port, it is stated that the assumption was 22 cents per ton. Nonetheless, I believe
this error does not affect the correctness of the question's assumption that the
royalties (or earnings) required by Panama for a sea-level canal would have
Sto exceed the earnings they would obtain from the present canal. Otherwise
there would be no incentive for them, or presumably for anyone, to build a







90

new canal. It should be remembered, however, that just as earning; from
the present canal will be affected by inflation, so will the potential earnings of
a sea-level canal.
11. I think it makes no sense to talk of creatinez competition wth Paama
by building a sea-level canal in some other country. If a sea-level canal is
financially viable, then in realtiy it will have no competition, r.Inrlless of
where it is constructed. It will be so much more efficient than the present
lock canal both in terms of transit time and size of vessels able to use it,
that the present canal could not hope to compete. Moreover, the decisiinu as
to where to build a new canal should be based upon the cost of construction.
The lower the cost, the lower the tolls will be since there will be less expense
to amortize. We can assure ourselves reasonable tolls by contractual provisions
in ircnrmenlnt to provide financial guarantees for construction of the .anawl.
12. The new treaty relationship by no means disposes of the main raltinale
for a new canal. If it is justifiable, it is justifiable on economic grounds. Jl..hn
Slriff.y's remarks in 1970 were based upon his perceptions at the time. They
in no sense control today, eight years later, regardless of their accuracy at
the time they were made.
113. House and Senate members should be appointed to the Commission be-
cause any future decision concerning construction of a sea-level canal will
depend upon the Congress.
14. I do not think the creation of the Commission as contemplated in my
legislation would in any way contravene the spirit of the 1977 Panama Canali
Treaty. The treaty calls for a joint study, as does my legislation. One country!
or the other must initiate the process. Since the United States is iby far thel
wealthier nation, and consequently will bear the larger share of the cost of:
the study, it is wholly appropriate that we should take the lead.
While I certainly see no objection to an exchange of notes between the twol
countries, it seems to me that the appointment of its respective members to:
the Commission by both countries would constitute recognition that the obli-
gations of each under Article XII of the Treaty were being fulfilled.
Mr. METCALFE. Protocol indicates that we should now recognize
the distinguished Chaiirman of the Merchant Marine and Fisheries,;
the gentleman from New York, Mr. Murphy, for a statement.
Mr. MURPHY. I certainly appreciate your courtesy, IMr. Chairman,
I regret that I was not here at the very outset. I had to chair ai
hearing on equal access, a piece of legislation that the Senate, in its;
wisdom, has attached to one of the other pieces of legislation that,
is coming before us very shortly. And we had to get that hearings
done. And today was our only open date.
I have studied Senator Gravel's proposal for sometime now, par-
ticularly after hearing his very convincing presentation before the;
Allen committee, back a few months ago. I also have tried to analyze
it, in light of our American energy picture.
We saw last week a Department of Energy decision, which was
rather strange in its construction, that on a temporary basi- crude
oil from Alaska could go down to California refineries, get turned,
into residual oil, and then go to Japan. Then, it is thought, we would
take some type of transfer of Japanese-purchased crude from the
Persi;nl Gulf, presumably, into our east coa-t.
It just does not sound like what the Congress intended when we
derived our national energy policy provisions, where it is c-learly
stated, I think, that we would not permit transfer of American
petroleum products outside of the United States.
We take that and realize that at the present time there is-I want
to call it a glut of oil-on the west coast. The question is certainly
not that of a surplus of oil. It is a question of distribution of oil.
And I think Senator Gravel's propn al deals with the proper
distribution of Amterican; resources to the rest of America.








How does that get done? We must look at some of the proposals,
for example, to come by pipeline .across Canada, and look at other
proposals that must somehow concur with environmental consider-
ations in the great State of California-the SOHIO line-and
realize that we are presently relying upon the existing canal in order
to transfer some of the west coast products to the gulf and east
coast. At the same time the Outer Continental Shelf oil and gas
amendments will probably be finished by July 1. That will expedite
the development of the Gulf of Alaska exploration and develop-
ment.
We are talking now about very significantly increasing the product
supply on the west coast, Alaska being considered part of the west
coast. And the question is how to distribute it to the area that needs
it in America. Obviously, under existing distribution systems, move-
ment by water is probably the most practicable. And I think if care-
ful study of Senator Gravel's proposal were done, it would indicate
that water movement would certainly be the most economical and,
of course, the oil could move properly into the areas of the East
where the present refinery caLpacity exists.
And I would think that maybe $8 million is not the exact figure
to update our study of the sixties, but I certainly think it would be
well worth our while to bring into focus the entirely new picture
of energy resources, particularly in Alaska and California, because
of the lease sales that are coming with respect to the California area
as well, and then redo our thinking on a interoceanic sea-level canal.
And I would support that proposal, and have communicated to
the Speaker, as well as the chairman of the Public Works Committee
of the House, my feelings on that matter. And hopefully, if we get
a conference, we will deal with the issue.
I realize that it is going to take a while for people to settle in on
this matter just as are the deep implications of the Panama Treaty.
But I think that we of course must look at an interoceanic canal as
serving world commerce as well as our own economic interests, par-
ticularly in the specific instance of the movement of energy to the
east coast and gulf area, where the traditional refineries are that
supply America. For these reasons, I would support Senator Gravel's
position.
Thank you.
Mr. METCALFE. Thank you.
Mr. MURPHY. I would also like to state for the record that I pre-
sume that we all agree that DOE's residual movement to Japan is a
temporary measure-and by "temporary," we are not talking about
a decade or a decade and a half.
Mr. BROWN. A permanent thing, many, many years from Alaska
into Japan. As far as wood is concerned, here we are on the east
coast crying about housing for our people, and trying to produce
the necessary wood to build houses. And yet we find the whole area
of southeast Alaska shipping their logs directly into Japan, because
it is cheaper to ship over there than bring it around. And they sent
us back the finished products, actually depriving American workers
of the jobs.
And here is an area, for God's sake, you could take your logs, bring


32-461 0 78 -7








them into the east coast and have the finished product made by
American workers, if the canal is completed.
Mr. MUnRPHY. Liquified natural gas would also go on a weekly
basis to Japan, Senator Gravel states.
Senator GRAVEL. Not one of those vessels, Mr. Chairman, goes
through the Panama C nall.
Mr. MURPHY. Thank you, Mr. Chairman.
Mr. METCALFE. Thank you, Mr. Chairman. Do you have any ques-
tions at this time ?
Mr. MURPHY. I have no questions.
Mr. METCALFE. The Chair recognizes the gentleman from Ken-
tucky.
Mr. SNYDER. Thank you, Mr. Chairman.
I want to compliment Senator Gravel for a most informative
statement. I think he certainly has presented some new and interest-
ing aspects of his proposal which we have not heard before this sub-
committee-or this committee before.
I have a question in regard to your last comment to Chairman
Murphy, that not one of those vessels which take the LNG to Japan,
goes through the canal.
How many of them dock in American ports ?
Senator GRAVEL. Right now ?
Mr. SNYDER. Yes, sir.
Senator GRAVEL. They could dock on the east coast. We have two
facilities that are being completed, or I think one is already com-
pleted. And there will be two more. You are going to have four
facilities on the east coast that they could dock in and unload their
products. As you know, you need a receiving-you need to uncool
the LNG.
One for Columbia gas, that can take care of the Baltimore area.
There is one at Boston, in the Massachusetts area, that is in oper-
ation right now. And then there is one in the Long Island Sound
area.
But right now, the only source they have is Algerian, or coming
around the Cape with ours. Our gas is committed, but we have an
interruptable arrangement. If we had a U.S. emergency, we could
use it.
Mr. SNYDER. During the discussions of this proposal, you are
always referring to a sea-level canal. I think the inference is that
this canal is one free of locks and barriers. It seems to me that may-
be I ought to ask a que-.tion: How does your proposal intend to deal
with the 22-foot difference in the levels of the respective oceans ? Do
you propose tidal barriers or locks?
Senator GRAVEL. There is no difference, you know. All oceans are
essentially at zero. What happens now, there is a tide of 22 feet on
the Pacific side, maximum, and there is a tide of 2, 3 feet on the
Atlantic side.
The Pacific tide only comes in less than 10 miles, and the Atlantic
tide is about 3 miles. So you never really get the tides mixing. The
waters, technically, would not be mixing in that fashion. So that
would pose no problem.
You would have tidal gates, that would be used for very, very