STATEMENT OF FRANK M. DOOGAN, JUNEAU, ALASKA, REPRESENTING THE JUNEAU CHAMBER OF COMMERCE

Senator BARTLETT. May I interrupt you, Mr. Doogan, to suggest to you and to the witnesses who are to follow that, in identifying yourselves by name and position at the outset of your testimony, it will be appreciated if you will also furnish your mailing address. And that will do many things; among them, it will insure your prompt receipt of your printed copy of the hearings, later on, so that you can preserve in your library the remarks that you have made upon this

occasion.

Mr. DOOGAN. Thank you, Senator.

I am Frank M. Doogan, appearing at this hearing at the request of and as a representative of the Juneau Chamber of Commerce. My address is Post Office Box 1121, Juneau, Alaska.

At the outset, the chamber of commerce has authorized me to speak with reference to certain matters of legislation before the committee. I am not authorized to speak on them all. And we have taken, as a chamber, no action on the two bills relating to the Alaska Railroad, the first providing for the incorporation, and the second to place it under the regulation of one of the regulatory agencies.

I am authorized to make a statement-reiterate a statement which was the stand taken by the chamber with reference to the legislation permitting certain tonnage ships to operate between the continental United States and the State of Alaska; and our statement in that regard is this: That the Juneau Chamber of Commerce would oppose any legislation that would differentiate between water transportation permitted to operate to any of the communities in southeastern Alaska. We believe that if a type of water transportation is allowed to any community in southeastern Alaska, it should be allowed to all southeastern Alaska communities.

Now, possibly I had better explain that statement. Here a year or two ago, the Congress passed legislation permitting the relaxation of certain inspection and safety requirements with reference to vessels of 150 tons. Shortly thereafter, a second bill was introduced, I think the number was S. 1798, and that bill would have permitted the relaxation of these regulations with reference to vessels under 150 tons, which would serve communities in southeastern Alaska, not served on a weekly basis by a regular common carrier.

Now, that explains my statement, I hope, that we feel that all cities in southeastern Alaska-there should be no differentiation between water transportation to them; in other words, we would be against any legislation which would permit vessels to operate in one community, and not the others.

That is the end of my statement, with reference to that particular bill.

As a point of information, please, do you want me to make all of my positions clear on the various bills, and then to be questioned?

Senator BARTLETT. I think, perhaps the questioning, Mr. Doogan, had best be made at the conclusion of your statement on each bill. Is that agreeable to you?

Mr. DOOGAN. That is perfectly agreeable.

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Senator BARTLETT. I only have one question in reference to the statement that you have just made, and that is this: It has been suggested to the committee that it would be unfair to continue in effect legislation which permits charter ships which do not have to man their vessels or have their vessels inspected, as does the common carrier, compete with that common carrier in the business in the larger ports in southeastern Alaska. So far as I can recall, no opposition has been voiced, or no considerable opposition to service by these charter vessels at the so-called outports; but it has been represented, as I have indicated, that this constitutes the service, we will say, for example, to Juneau, by the charter vessels, unfair competition to the common carrier.

Would you care to comment upon that?

Mr. DOOGAN. I don't think I feel free to comment on it, Senator Bartlett, because, if I did, I would have to take a position, either supporting the continuance of the exemptions or take a position opposed to the continuance of the exemptions; and I am not authorized to take that position.

Senator BARTLETT. Your wishes in that respect, will be followed, and I am sure that there will be plenty of witnesses-or many witnesses, later in the day, who will not only be willing but very eager to state a position on one side, or the other; and, Mr. Barton, do you have any questions on that point?

Mr. BARTON. That was my question. The Chamber of Commerce of Juneau takes no position on the merits of the bill, I take it?

Mr. DOOGAN. Other than what you could draw or imply from the statement which I read from the chamber records.

Mr. BARTON. You want everyone treated alike, in any event, if there is legislation passed; is that right?

Mr. DOOGAN. Well, I-I don't believe that I exactly said that. I said with reference to a particular type of water transportation-and I think that the statement was directed toward the type of transportation which would be permitted under a relaxation of safety and inspection rules; in other words, if Petersburg is going to have it, then Juneau, Sitka, Wrangell, and all the rest of them should have it also. Mr. BARTON. I said "everybody"—I should have said "every town" in southeastern Alaska.

Senator BARTLETT. You may proceed, then, Mr. Doogan.

Mr. DOOGAN. The next subject is contained in Senate Bill S. 2451 and S. 2452, which have for their purpose the establishment of a Joint Transportation Board, and S. 2451, the mandatory filing of routes and joint rates; and the other one, S. 2452, the permissive filing:

The chamber has taken no stand on either of those two bills, except that they would, if the legislation is to be enacted, they would prefer the requirement in the bill which would provide for the mandatory filing.

Actually, the subject is one which is more in the field of experts, rather than that of the chamber of commerce; however, our position is based upon the fact that we here in Juneau, would appreciate receiving the same freight rate, per ton mile, out of Seattle, or any other place of origin in the United States on a through rate basis that could take it on either to Hawaii, or on up to westward Alaska, or interior Alaska; in other words, when the freight is shipped by rail from the

point of origin in the States, and goes to Seward, which is another railhead, the rate is somewhat lower than similar freight which would come in here to Juneau, from the same point of origin, because it isn't from a railhead to a railhead; it is a railhead to an ocean terminal; and I have no further statement with reference to those two bills.

Senator BARTLETT. Let me ask you this, Mr. Doogan, in case you

care to answer:

Would you go so far as to say that the Juneau Chamber of Commerce would approve legislation in either form, permissive or mandatory, so long as that legislation permitted the establishment of through rates?

Mr. DOOGAN. Yes, Senator Bartlett, I would; however, with the emphasis being placed on the legislation which would provide for the mandatory filing.

Senator BARTLETT. Mr. Barton?

Mr. BARTON. No questions, thank you, Senator.

Mr. DOOGAN. There are two bills in which the chamber is very vitally interested, first the construction subsidy for ferries in southeastern Alaska, and second the bill which would permit the use of Federal highway funds to construct access roads and terminal facilities.

There is another witness who will appear here today and speak on those bills, Mr. Toner. The connection between Mr. Toner and the Juneau Chamber of Commerce is that he will speak as a representative of the Southeatern Conference, which is an organization of southeastern chambers of commerce and towns. The Juneau Chamber of Commerce, and myself, are very familiar with what Mr. Toner's testimony, and we want to endorse his remarks when they are placed on the record.

Senator BARTLETT. Yes, altogether, Mr. Doogan.

I have no questions. Do any members of the staff care to question Mr. Doogan?

Mr. BARTON. No questions.

Senator BARTLETT. Thank you very much, Mr. Doogan.

Mr. DOOGAN. Thank you for the opportunity of appearing here on behalf of the chamber of commerce.

Senator BARTLETT. We were most pleased to hear

(Witness excused.)

Mr. DOOGAN. Thank you.

you.

Senator BARTLETT. Now, the Chair is not equipped with a list of witnesses. We know that Mr. Toner desires to be heard, and I have the names of no other witnesses. During the remainder of the day, I think that I will be obliged to ask anyone who wants to be heard to stand up at the appropriate time, and then I will invite him to testify.

Since your name was mentioned, Mr. Toner, would you care to testify now?

Mr. TONER. Yes.

STATEMENT OF FELIX J. TONER, JUNEAU, ALASKA, REPRESENTING THE SOUTHEASTERN CONFERENCE

My name is Felix J. Toner, box 2534, Juneau, Alaska. I am here representing the Southeastern Conference, which, as Mr. Doogan ex

plained, is an association of all of the communities and all of the chambers of commerce in southeastern Alaska.

The bills upon which I wish to make statements or comments are Senate bill 1956, which is an amendment to the Merchant Marine Act of 1936, to permit subsidies to be granted to the vessels which are proposed for construction and use in a ferry system throughout southeastern Alaska.

Before getting onto the bill itself, I would like to make a rather brief statement about the system that we propose for installation and operation throughout southeastern Alaska, our reasons as to why we believe such a system is necessary, and our reasons why we believe that favorable consideration should be given to S. 1956.

With respect to the necessity for this system of transportation, you gentlemen are here in southeastern Alaska, and you arrived in Ketchikan, and you have now traveled on to Juneau, and from Juneau you will go on and go to the westward. Now, the interesting thing about that is that here in southeastern Alaska, the only way that you can travel through this portion of Alaska is by air. After you get into the interior portion of Alaska, between the major cities of Anchorage, Fairbanks, Seward, you will find that you will have your choice of transportation: you can go by rail, you can go by highway, you can fly; and in some instances, you can also travel by vessel.

However, down here, we are limited. We only have one system of transportation for the average traveler through southeastern Alaska, and that is by air. From the freight standpoint, we have a regular freight service supplied us down here; some of the communities are served weekly, some biweekly, and some once a month.

The remainder of the freight service that is available to those communities and the remainder of the mail service available is entirely by air. Our problem that we are confronted with is that because of our topographic features, it is a virtual impossibility to connect us by any way except by water transportation, as a result of which there have been several studies made. The principal one was made by W. Gilman Smith, and in that he outlines the details of a proposed ferry system to serve southeastern Alaska.

Under Mr. Smith's proposal, it was to be a State-owned and operated system, that would operate from Prince Rupert, British Columbia, to Haines and Skagway, Alaska, tying together most of the major communities in southeastern Alaska; and as the service developed, and got on a stronger revenue basis, the service was to be extended off of this main run to some of the smaller communities in southeastern Alaska. We very quickly ran into some problems from the standpoint of financing, and as a result of that, we came up with various proposals to finance it and tied in with that are these amendments, or this one particular amendment, now, of which I am speaking, and that is of the Merchant Marine Act. Under title 11 of that act, it is possible to have vessels that operate in foreign service receive a construction subsidy, roughly in the amount of 45 percent of the construction cost, to foster construction within American yards.

Actually, the service that we propose, between British Columbia and Alaska, is foreign service, within the definition of that act, any vessel traveling on a run between British Columbia and Alaska would be eligible for this construction subsidy; however, as part of our

service, we have also fallen in a category termed domestic coastwise service the minute that we started to stop at the other ports within Alaska; and, as a result of this, and in looking over the act, we see that there were certain exemptions, or certain variances to the act that permitted a limited type of coastwise service on the east coast of the United States, if the vessels then went into Far Eastern waters; and likewise, there was a limited type of service, coastwise service along the west coast of the United States, if the vessel left there and went to European ports.

We felt that we had somewhat of a similar circumstance here whereby we were interested in a limited coastwise service in Alaska and then going to a foreign country; as a result of that, the proposed amendment in S. 1956 was written up and presented to the conference; and, of course, we are vitally interested in having such a piece of legislation passed, because it will enable us to do a major part of our financing in a manner that will enable us to create a rate structure to operate the system at a high revenue level.

If we go the other way, we must-on a bonding program, we must have a rate structure that in effect might even defeat the idea of the system; it would be so high that the users would tend to avoid it, if possible; and we are trying to get into a rate field where we can attract tourists, where intercommunity transportation between the towns of southeastern Alaska can be built up on a daily basis, where a carrier can transport things that your aircraft simply cant touch.

The system which we proposed is not in competition with any water service presently serving southeastern Alaska. The system as we proposed it is limited to wheeled vehicles, operating under their own power, going onto a ferry, and rolling off; and also to walk-on passengers, and to passenger cars. There will be no ordinary cargo handled of the type such as an ordinary freighter, or anything like that, would carry.

I think that the next thing I would like to comment on would be a letter that Senator Magnuson received from the Secretary of Commerce, I believe. In reading the letter, it appears that Senator Magnuson addressed an inquiry to the Department to find out what their position would be with relation to S. 1956, and the answer came back from the Secretary of Commerce, a very clear one, that "the Department does not recommend enactment of S. 1956."

Now, the reasons set forth in the letter are that under the wording of the amendment, the amendment states that for the purpose of this section, if the majority of the miles logged by any vessel during a calendar year are logged in round voyages, from Alaska to British Columbia, Canada, such vessels shall be deemed to have been operated exclusively in foreign trade during the year.

Now, the Secretary goes on to point out that actually what could occur under this, would be that you could take a vessel and operate it so that 51 percent of its mileage would be in this particular run; it would be classified in foreign trade; and you then could take the vessel, and for the remainder of the year, you could operate it coastwise in the United States, or you could operate it in almost any trade you might want; and because you had logged the majority of its mileage on this particular run, of which we are speaking, it would not be required to pay any of the construction subsidy and would be an unfair