This pool of nuclear trained seagoing personnel and shore staff members will quickly disappear if the vessel is withdrawn from service. The result will be that, when we again commence to build nuclear merchant vessels, we will find ourselves in the same position we were in, in 1958, when construction of the Savannah was started.

Many of the lessons we have learned, and much of the information. we have gathered, will be lost if we permit the trained and experienced operating organizations now involved in the operation of the ship to disappear. The know-how and experience which is required to operate vessels of this type cannot be passed to future staffs entirely in books and in training programs. A complete understanding of the many faceted problems encountered and solved, during the past few years in this project, will be lost and it is in this area that we will suffer our largest setback if present plans are followed. It is my belief that the decision to withdraw the vessel from service may be the result of a lack of understanding of these aspects on the part of some of the persons making this decision.

We feel that the Savannah should be continued in service so that government and industry may continue to expand our knowledge of this new and relatively undeveloped power source and to maintain a seed organization from which we can supply the know-how and experience to produce the next generation of commercial nuclear vessels. The program should be kept alive in order that we may add to our store of knowledge in the fields of crew selection, training, water chemistry, insurance, health physics, containment, instrumentation, licensing, foreign acceptance, mechanization, waste handling, refueling, safeguards, fuel management, materials, and equipment selection and reactor operation. The Savannah project has helped to place us far ahead of our competitors in these and other fields. It is obvious that our present advantage will be lost if we do not continue the project and quickly proceed with the production of a second generation of commercial nuclear vessels. Naturally, the military nuclear programs will continue to make progress in many areas but, due to the nature of these programs, certain vital areas of importance will be neglected. These include regulatory matters, foreign acceptance, insurance, and certain aspects of safeguards.

Unless we continue to operate the Savannah, we will not be aware of some of the problems future nuclear vessels will encounter. An example of the type of problem I refer to was encountered recently when we were negotiating with the Japanese to permit the Savannah to enter Japanese ports. It was found that the Japanese laws prevented proper indemnification and the vessel's visit was canceled. I would expect these laws to be altered within a reasonable period as Japan is a seafaring nation and one assumes they expect foreign nuclear ships will be using their harbors in the future.

I might add here also that Japan is planning to build a nuclear vessel, and we assume that they will want to bring her into our ports, for instance, so that some sort of reciprocity would have to be established.

Had the Savannah not been scheduled for a voyage to Japan, this matter would not have developed at this time and no consideration would have been given to a solution until some undetermined future date.

Recently the president of Waterman, Mr. E. P. Walsh, addressed a letter to Mr. James W. Gulick, Acting Maritime Administrator, which included the following statement:

Waterman Steamship Corporation is considering an expansion of commercial service in several trades and is contemplating the utilization of containerships in order to improve our cargo carrying capability and to increase the efficiency of our service. We are studying the possible use of nuclear power in order to produce the high speeds required and at the same time take advantage of the improved fuel rate offered by nuclear propulsion systems. The results obtained so far cause us to be reasonably optimistic about the use of nuclear propulsion in the vessels under consideration.

We hope and trust that the Maritime Administration is going forward with a program to resolve some of the problems that must be dealt with before the next generation of nuclear merchant ships is built and placed in operation. As you know, our Corporation is greatly interested in the future of nuclear power and its application in ocean-going merchant vessels. We are eager to participate in future nuclear ship programs as soon as adequate legislation has been passed, which will enable such programs to go forward.

Waterman Steamship Corporation will be interested in operating the “Savannah" under bareboat charter if the present operator does not choose to continue to charter the vessel and if the proper financial, legal and labor arrangements can be made to permit the operation of the vessel by our Company.

In closing, I would like to reiterate that we feel that there is a real future for nuclear power in the U.S. Merchant Marine and we hope that your office is doing all possible to promote the use of this new power source in some of the vessels which will be built in the near future.

From this, it is obvious where our interest lies. As stated before, it is our belief that large high-speed vessels can be profitably employed on certain trade routes. Our studies indicate that these vessels can produce a very high rate of return. The high potential productivity of such vessels is essential to the health and well-being of our industry. We cannot afford to lose the lead we presently hold if we are to successfully compete in the field of worldwide ocean transportation.

The CHAIRMAN. Mr. Ashley.

Mr. ASHLEY. Mr. Hansen, on the second page of your statement you indicate that a year ago your company in reply to a questionnaire from the Maritime Administration indicated that it would be interested in building and operating 12 nuclear ships to be used on various trade routes that it served.

Was this expression of interest predicated on a continuation of the Savannah in service?

Mr. HANSEN. Yes, I would say so. We would assume that the Savannah must continue in operation to provide us with the source of officers, crews, and shore staff and shore facilities required to support such vessels.

Mr. ASHLEY. Well, it is of course one thing to have a crew of an atomic-powered vessel. Presumably what you are referring to is a training program that would be established by Maritime in conjunction with the operation of this vessel that in turn could provide merchant seamen for your company and for others; is that right? Mr. HANSEN. That is correct. I think when we make reference to continuing the Savannah in operation, we could be a little more specific and say continue the Savannah project because there is much more to it

Mr. ASHLEY. Right.

Mr. HANSEN. Than the operation of the vessel. It is like an iceberg, let us say.

Mr. ASHLEY. Do you think that the state of the art as far as the development of the reactor in the Savannah is sufficiently far advanced at this point to suggest to your company, if the Savannah program is continue, to go ahead with plans for the construction of 12 such vessels?

Mr. HANSEN. Yes, we are optimistic from what we have learned from the reactor manufacturers. They have given us some indication as to fuel costs and the cost of the plants themselves. We constantly refer to large high-speed vessels. This plant may not be usable or practical in just any vessel. I think everyone is in agreement on that. It is a particular type of vessel utilized in a particular service where you would expect to use such a plant.

Mr. ASHLEY. Is it your opinion that the type of reactor that is in the Savannah is readily adaptable to the type of vessel that you are concerned with in your long trade routes?

Mr. HANSEN. We expect that the next generation of commercial maritime reactors will be quite different from that in the Savannah, more compact, relatively lighter, and having a more favorable fuel

cost.

Mr. ASHLEY. And this is possible from what has been learned to date from the operation of the reactor in the Savannah?

Mr. HANSEN. We feel that way.

Mr. ASHLEY. Does the cost of operation to date of the Savannah cause you any tremors?

Mr. HANSEN. We can't ignore it. We certainly have to consider this. When we consider the operation of any vessel, we give close attention to the operating costs so that we naturally would expect that the future nuclear ship operational costs would be given very close attention by everyone, the naval architects, the owners, the Government, all the different groups involved in the building and operation of these ships. Mr. ASHLEY. Let me just ask a final question.

Do you attach any significance to the fact that Japan as I gathered is putting its technical knowledge and ability as far as a nuclearpowered ship in an oceanographic vessel as distinct from a tanker which they are pretty good at building and that the Germans are putting theirs in other than cargo-carrying vessels of the type that you are operating?

Mr. HANSEN. First of all, the Otto Hahn is a cargo ship.

Mr. ASHLEY. But as I understand it, it is not of the type that you operate in your long trade route activities.

Mr. HANSEN. Well, let me answer the question regarding the Japanese. It is my personal opinion that the Japanese may not want to make the investment in certain aspects of a nuclear program that would have to be made if they were going to operate commercial vessels. They want to get the engineering behind them first.

Now, I don't know why the Germans decided on an ore carrier, but it may be for the same reasons that she will be in limited service, that they may not have to expend the effort in acceptance that will and has been expended in a program such as the Savannah. I am talking about foreign acceptance.

Mr. ASHLEY. In effect, what you are saying is that the Japanese, for example, who I believe are the prime shipbuilding country in the

world, may simply want an opportunity to develop nuclear technology before applying it in the vessels that they are building for the rest of the world.

Mr. HANSEN. Yes. To state it in another way, I think we both agree on what they are probably doing. They are limiting their effort to the scientific and engineering part of the program whereas the Savannah project is a broad program. It tackles all of the problems, and I think we have been much better off by taking this approach. We know a great deal more about a great many subjects, and I believe the Japanese return will be limited as a result.

Mr. ASHLEY. Thank you, Mr. Chairman.
The CHAIRMAN. Mr. Mailliard.

Mr. MAILLIARD. Thank you, Mr. Chairman.

As to the letter that you quote from Mr. Walsh to Mr. Gulick, did you ever get an answer?

Mr. HANSEN. I believe we have, but I am not positive.

Mr. MAILLIARD. It would be interesting to see what came back to such a letter. If you have an answer, could you make it available to the committee?

Mr. HANSEN. Yes, we will. Mr. Walsh has his office in New York and mine is in New Orleans, and sometimes it takes a little time for the mail to reach me.

(The information follows:)

Mr. E. P. WALSH,

U.S. DEPARTMENT OF COMMERCE,

MARITIME ADMINISTRATION,
Washington, D.C., May 3, 1967.

President, Waterman Steamship Corp., New York, N.Y.

DEAR MR. WALSH: Thank you for your letter of March 3, 1967 concerning your interest in the application of nuclear power to advanced high-speed containerships for use in an expansion of your commercial service.

We are pleased to note Waterman Steamship Corporation's active participation with the General Dynamics Corporation in connection with Maritime Administration's contracted study of a general hull arrangement and detailed engine room for such a vessel.

Although the President's budget proposal to Congress provided for lay-up of the NS Savannah after August 20, 1967, be assured that the current efforts toward the Savannah program objectives are to be continued unabated until that date. Furthermore, the Maritime Administration is reviewing alternate uses, lay-up plans and possible modifications to improve the revenue producing capability.

The Savannah has made and will continue to make contributions toward reducing first-of-a-kind costs of any advanced nuclear ship program by providing for:

1. Expansion of agreements between the United States and various other countries regarding the Savannah's use of their ports and waters.

2. Expansion of a cadre of skilled officer personnel capable to operate future nuclear vessels.

3. Accumulation of additional operating and technical data as a basis for improved design and operational procedures.

4. Development of a safety record for consideration by the insurance fraternity to reduce or minimize the basic uncertainties involved in nuclear ship operation and thereby tend to reduce future liability requirement costs.

We appreciate your interest in operating the Savannah and for your support of the broader objectives of providing nuclear shipping for the American Merchant Marine. Should a situation develop where your offer would be of service, we would be pleased to discuss it with you further at that time. With warm personal regards,

Sincerely yours,

CARL C. DAVIS,

Acting Maritime Administrator.

Mr. MAILLIARD. One other question.

In mentioning these 12 ships that you see the possibility of constructing, is this proposal predicated on construction or operating subsidy or both?

Mr. HANSEN. Certainly we would expect some Government aid. We don't know the extent of it, but we would not be able to do this with our own funds entirely.

Mr. MAILLIARD. Is this with respect both to construction and operation?

Mr. HANSEN. I believe so, although if some of the numbers that we have developed can be trusted, and hopefully they can, the amount of operating subsidy would be minimized considerably.

Mr. MAILLIARD. Where do you stand now on your application for operating subsidy?

Mr. HANSEN. I really don't know.

Mr. MAILLIARD. I didn't expect you would. Thank you.

The CHAIRMAN. Mr. Edwards.

Mr. EDWARDS. Thank you, Mr. Chairman.

Waterman has been trying to get a subsidy for about 11 years, as I recall. You figure that this is a way you might get in on the subsidy end of the business?

Mr. HANSEN. I don't know, but I don't believe that is the way to get in.

Mr. EDWARDS. I take it that if Mr. Gulick had given a favorable reply, you certainly would have known of that response, wouldn't you?

Mr. HANSEN. I would say "Yes."

Mr. EDWARDS. In your opinion, having spent some considerable time on the Savannah and with your background in shipping, you are convinced that nuclear propulsion is at the stage of development that you could take 12 ships and at this time or as soon as they could be built make a profit with a reasonable subsidy?

Mr. HANSEN. Yes. We have to realize that it would take some time to produce and phase this many ships into our operation. It couldn't be done in a matter of 4 or 5 years.

Mr. EDWARDS. What is the time frame that you are thinking about? Mr. HANSEN. Well, I think that it has been said earlier today that if we started building a vessel tomorrow, she could be launched in a couple of years and be in service in 4 years, a total of 4 years. I agree with that. As to how long it would take to build 12, I wouldn't hazard a guess. It depends on the availability of labor and ship facilities. It would take quite a while, perhaps 6 or 7 years, if you made an all-out effort.

Mr. EDWARDS. Have you gotten to the point where you have made any real estimate of cost?

Mr. HANSEN. We have a good many estimates, yes.

Mr. EDWARDS. What is the general price range

?

Mr. HANSEN. Well, it depends upon the size of the vessel and the horsepower naturally. We have as an example a container ship that would cost in the neighborhood of $22 million. We have a design in mind.

Mr. EDWARDS. Nuclear powered?

Mr. HANSEN. Yes.