This is about an idea, a lobbyist and a blank check.
It is a Texas-sized story about well-connected people running a treasure hunt on Capitol Hill. It is about politics, backscratching and bending rules just enough to turn public money to private profit.
The idea is to develop Galveston, Tex., into a $500 million seaport like no other in the United States. It would be an onshore deep-water facility, capable of unloading two oil supertankers every day, next door to a major medical center at the entrance to one of the world's busiest ship channels.
The lobbyist is a Washington lawyer named Robert E. Losch, a tireless persuader who regularly makes the congressional rounds, pushing the idea. He represents the dredging industry and the oil-terminal company that are potential beneficiaries.
The blank check is what Losch, the business establishment of Galveston and some key Texas legislators are trying to get from Congress with a backdoor financing scheme unique for projects of this multimillion-dollar scope. Galveston will dredge 32 miles into the Gulf of Mexico and federal taxpayers will pick up most of the tab, no matter how high.
With an assist from influential allies, Rep. Jack Brooks, a Democrat whose district includes Galveston, got the House to adopt the harbor-financing idea in August as an amendment to an unrelated measure. Losch claims authorship of the language.
As Congress broke this month for its recess, Democratic Sen. Lloyd Bentsen was pushing the bill, modified to make it more generous to Galveston, through the Senate.
Losch, as orchestrator, worked urgently before the recess, hopeful of getting the measure to the White House to force a ticklish decision on a president who opposed the idea, but who also might covet the 26 electoral college votes from Texas that are vital to his reelection.
Lobbyist Losch claimed recently that unnamed White House advisers, at his behest, were warming to the Galveston port idea. Despite the adminstration's earlier opposition, Anne Wexler, assistant to the president, and Robert Hanfling, deputy undersecretary of energy, have written letters of encouragement.
Wexler's letter said the project "will provide the logistical systems that are needed for crude oil movement . . . keep us advised of your progress."
Big money is at stake. An estimated $500 million would be spent for dredging and construction to create a facility to handle huge loads of incoming oil and lesser amounts of outgoing coal and grain. Jobs and profits would follow.
But for starters, the first winners would be the dredge operators hired to dig a channel 32 miles into the Gulf of Mexico -- so the supertankers can get to Galveston -- and the Pelican Terminal Co., which would build an oil-unloading and storage facility once the channel is dug.
Losch represents both the dredgers and Pelican, a joint venture of Chicago Bridge and Iron, which builds oil tanks, and Northville Industries, a terminal firm based in Melville, N.Y.
Another early winner would be Houston oil magnate George P. Mitchell, owner of the land where the terminal would be. Mitchell has agreed to sell the land to the city for more than $6 million -- three times its assessed value and about 24 times the price he paid for it in the 1960s.
"Jack Brooks invented this project and as much as anyone, he understands how important it is," said G. S. Devoy, general manager of the city-owned Galveston Wharves. "Our concept is to build and then seek reimbursement. . . . We are charting a new course; nobody has done it this way. It takes 19 years to complete a usual port project. We can't wait that long."
Brooks has not been available during the past week for comment on the project, his legislative lobbying or his ties to Mitchell, who has contributed $2,000, the maximum allowable, to his campaign in 1979 and 1980.
Brooks, however, has been quoted as saying that President Carter will approve the Galveston legislation -- despite a record of administration opposition since 1977 to special treatment for the project.
"We were on the president's so-called 'hit list,'" Devoy said. "But I have a letter of endorsement or warm feeling from Ms. Wexler . . . . Any administration would find what we are trying to do in the national interest."
Almost from the start, the Galveston development scheme has been embroiled in debate, in Texas and Washington, over whose interests it actually would serve.
At a time when federal policies are aimed at developing deep-water ports offshore for reasons of cost, safety and the preservation of the environment, and at discouraging oil imports, the Galveston project would fulfill neither aim. Local environmentalist's and tax reformists' protest campaigns have not stopped the project.
"We think the legislation to reimburse Galveston would set an extremely dangerous precedent," said an Army Corps of Engineers official here. "If Galveston got this kind of help, every port in the country would come in asking for the same thing."
U.S. Coast Guard traffic statistics indicate that the Galveston area, gateway to the busy Houston ship channel, is one of the most dangerous and accident-prone marine byways in the country. The addition of supertankers, longer than three football fields, would intensify congestion in the area.
The unloading bays proposed by Pelican, with the dangers of fire and explosion, are less than half a mile from a large residential area and 4,600 feet from the huge University of Texas medical branch. They are adjacent to a shipyard where an estimated 3,000 barrels of low-level radioactive waste are being stored above ground.
Citing those and other dangers, the Dallas regional office of the Environmental Protection Agency last December strongly advised against the project when the Galveston Wharves asked the Corps for federal dredging permits.
By spring, however, EPA regional adminstrator Adlene Harrison had removed her objections, and the corps issued the permits in July. Agency sources denied Harrison was pressured by superiors, although her objections had delayed the project for months. Both EPA in Washington and the White House queried Harrison about the project; DOE's Hanfling attended a permit-issuance ceremony.
Only objections by Rep. Paul N. (Pete) McCloskey Jr. (R-Calif.) prevented the Brooks-Calveston language from sliding to approval last June. McCloskey discovered that the authorization figure had mysteriously escalated overnight -- and no one has been able to explain how it happened -- from $25 million to a possible $100 million. The bill, suddenly controversial, was removed from the calendar.
The legislation hit the floor again in August, this time under regular procedures and with the original, smaller authorization amount, as an amendment to a simple bill extending federal deep-water ports authorizations.
Merchant Marine and Fisheries Chairman John M. Murphy (D-N.Y.), like Brooks a man of influence in the House, agreed to attach Galveston to the ports bill rather than allow it to face almost certain presidential veto as part of water-resources legislation that has been stalled this year and in 1978.
"We needed some other vehicle to get Galveston through Congress, and the deep-water bill was selected," Losch said.
Usually, in those water-resources bills, Congress directs the corps to study harbor development proposals. If they appear cost-beneficial, they are then authorized and slowly funded -- taking an average of from 17 to 19 years, start to finish.
But Galveston is in a hurry. The wharves authority, unwilling to wait for a federal authorization that might never get through Congress, decided several years ago to move on its own.
It is proposing to issue bonds to pay the cost of deepening its existing harbor and scooping the deeper, 32-mile-long channel to accommodate superships moving in from the gulf.
Then, under the reimbursement scheme, the federal government would repay Galveston for a share of its dredging expense -- the deeper the channel, the larger the U.S. share -- and take over the costly additional task of maintaining the new channel and keeping it open. Bentsen's changes would reimburse Galveston for up to 75 percent of the dredging bill.
The administration and the corps have steadfastly opposed this approach, which corps and congressional sources say could be an open-ended reach into the Treasury for a project that might never work.
In that sense, there is no clear sign that major shippers will use the port.
Devoy, of the wharves authority, agreed recently that not a single oil refining firm of the many in the Galveston-Houston-Texas City area has committed itself to using the new port. Coal export trade is only a hope. Grain deals are not yet made.
If the federal government, rather than the city, were building the project under usual procedures, there would be no authorization without user commitments and demonstrated need.
Robert Losch is undeterred. "We intend to be operational in 2 1/2 years. Construction bids will go out in the first quarter of 1981. We're the only deep-water port in the country ready to go," he said. "The White House was opposed but we've briefed everybody in the adminstration and there is recognition of the need for this." CAPTION: Picture, Fishmermen in the Galveston Bay near Seawolf Park. In background is Pelican Island, part of the area where dredging for a proposed $500 million, deep-water port would be necessary. AP; Map, no caption, By Dave Cook -- The Washington Post