Prompted by a worldwide surplus of tanker capacity that has caused hundreds ships to be scrapped or laid up, the Federal Maritime Administration proposed yesterday to allow operators of oil tankers built with U.S. subsidies to repay the money and enter the Alaskan oil trade, now closed to subsidized vessels.
Under rules published in the Federal Register, the owners of 15 international tankers with a total capacity of about 2.5 million deadweight tons would be expected to buy their way into the domestic routes by repaying $200 million in construction subsidies, plus interest.
The agency, known as MarAd, acknowledged in making the proposal that some small old tankers currently in the Alaskan oil fleet will probably have to be scrapped, and some jobs will be lost, if the subsidized tankers are admitted into the Alaskan trade. But the national economy would benefit, MarAd said, because the efficiency of the new tankers could lower oil transportation costs.
Under the complicated system of incentives and restrictions that has controlled shipping policy for decades, the government provided subsidies for ships built in U.S. yards and sailed under U.S. registry. Subsidized vessels are excluded from domestic traffic, however, because on domestic routes there is, by law, no competition from lower-cost foreign operators.
MarAd's new rule would lift that ban for those tanker owners who repaid the unamortized portion of their original subsidies. The U.S. Supreme Court has already ruled that MarAd has the legal power to do so.
Publication of the proposed new rules yesterday was one of the last official acts of outgoing Transportation Secretary Drew Lewis, who sought to dismantle the subsidy system and eliminate the market restrictions it entailed.
According to the notice, removal of the 15 tankers from the subsidized fleet would allow them "to compete freely in the commercial marketplace," in conformity with an overall administration campaign to "minimize government interference" with business decisions.
According to the International Association of Independent Tanker Owners, nearly 100 million tons of tanker capacity have been scrapped since 1973, and another 100 million will have to go to ease the glut. MarAd said its proposal could save part of the subsidized American fleet of 29 ships from meeting the same fate. Many of the 29 received federally guaranteed loans in addition to subsidies, MarAd said, and allowing them to compete for domestic cargo decreases the possibility of default on those loans. MarAd said 15 of the 29 would be expected to repay and qualify.
The irony of MarAd's proposal is that it assumes Alaskan oil will continue to be domestic cargo only. The Reagan administration is considering a request to Congress to allow Alaskan crude to be exported.