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Mr. CORLISS. "Is this it?
Mr. McGANNEY. That is it. We also handed a similar proposal, not in as much detail as that, to Admiral Biggs about 10 days ago, so they have had it. They have been working on it.
Mr. CORLISS. Admiral Biggs is a part of the Honorable Perkins McGuire's Office.
Senator STENNIS. All right. This is a firm proposal to the Navy and the Air Force?
Mr. McGANNEY. At Castle; yes, sir; that is correct.
Senator STENNIS. At Castle. If we did not have that, I would not ask you to do anything because we have got to have a firm proposal.
Mr. McGANNEY. Yes, sir. That is what we are here for, sir. We are here to try to find the part of the U.S. Government that will recognize this project as a Government project.
Senator STENNIS. All right. I am sure these gentlemen want to do the best they can.
Mr. CORLISS. Mr. Chairman, I would like to point out for some year or 18 months ago we were pleading with people in California to avoid a Government investment in the pipeline. There is no way in which the Navy wanted to incur more capital investment if we could obtain this as commercial service. We were not able to do this. .
Senator STENNIS. Well, it just shows that Rome was not built in a day. One step leads to another.
Mr. CORLISS. Thank you, sir.
Senator STENNIS. Thank you for being here and presenting this matter.
Is there any other matter now to come before the committee?
Mr. McGANNEY. Thank you, Mr. Chairman, very much for hearing us, and you, Senator Cannon, thank you very much indeed for listening to us.
(NOTE.—The following communications were subsequently received from the Department of Defense and the Southern Pacific Co., and are hereby made a part of the record at this point.)
OFFICE OF THE ASSISTANT SECRETARY OF DEFENSE,
Washington, D.C., April 29, 1960. Hon. JOHN STENNIS, Chairman, Subcommittee on Military Construction, Armed Services Committee, U.S. Senate, Washington, D.C.
DEAR MR. CHAIRMAN: The attached statement concerning the Lemoore pipeline is submitted in accordance with your request of April 28, 1960. It is requested that this statement be made a part of the record of your committee's hearings. Sincerely yours.
PHILIP LEBOUTILLIER, Jr., Acting Assistant Secretary of Defense (Supply and Logistics). STATEMENT REGARDING SOUTHERN PACIFIC PIPE LINE'S PROPOSAL The proposal of the Southern Pacific Pipe Lines, Inc., which was presented to the Senate Armed Services Subcommittee on April 27, has been carefully reviewed. As in the case of the two or three earlier proposals of this company, there is not sufficient merit in this latest offer as to warrant adoption of the plan by the Navy for delivery of jet engine aircraft fuel to NAS, Lemoore, Calif. Nor is there sufficient merit in the offering for delivery service to both Castle AFB and NAS, Lemoore, from an overall Government benefit standpoint. At present the Department of the Air Force has another pipeline proposal for Castle AFB only that reflects lower prices than those proposed by Southern Pacific.
In substance, the Southern Pacific Pipe Lines Co. testimony claims that the merit of their proposal for delivery of aircraft fuels to both Castle and Lemoore lies in the alleged annual refund in the amount of $694,616 to the Government in the form of income tax, based upon a gross business volume of $2,164,000. This alleged refund is in a large measure conjectural. It is not clear how much a nebulous gain to the Government can be admitted even in an evaluation. In any event, it must be obvious that adoption of the Southern Pacific Pipe Line Co. plan would require about $900,000 more per year in annual operating appropriations than otherwise necessary for Lemoore pipeline.
In his testimony, Mr. McGanney, president of Southern Pacific Pipe Lines, Inc., indicated that the company has about $672 million in the treasury which would be put to use, without interest charges, for construction of their proposed pipeline extension to serve both Lemoore and Castle. It is assumed that this may be the basis for their reduced service charge as compared with their last previous proposal. In any event, it appears to be a rather unrealistic use of capital as compared with amortization of the proposed Navy pipeline at 444 percent and 15 years, which is included in the Navy's annual cost.
In furtherance of the administration policy for Federal Government use of commercial and industrial facilities, careful comparison of the proposed Navy plan with all possible alternate fuel delivery patterns has been made. Even with such hypothetical factors added to the Navy plan as depreciation, insurance, overhead, taxes, profit, etc., the resulting annual cost was significantly lower than any other alternate plan, including that of Southern Pacific Pipe Lines, Inc. After a study of these comparisons, the Office of the Secretary of Defense authorized the Navy to pursue its proposed pipeline project as an exemption to the provisions of the Bureau of the Budget Bulletin No. 60-2. The latest Southern Pacific proposal has been similarly examined and the Office of the Secretary of Defense finds insufficient reason to modify this anthorization.
The data supplied as exhibit B with the testimony of Mr. D. J. McGanney have been rephrased to reflect more clearly the relationship of the various delivery costs for aircraft fuels to Lemoore and Castle as follows:
It is apparent that even with the newly reduced cost of the Southern Pacific Pipe Lines, Inc., offer, the Government would pay nearly $900,000 per year more for this commercial serrice. This amount for 5.4 years is equal to the estimated construction cost of the proposed Navy pipeline project ($4,759,000).
The Vary's recommendations in this case, and the project in the proposed fiscal year 1961 JCOX program for a Vary fuel pipeline, are based upon conclusive detailed engineering investigations of the Nary, and substantiated by the engineering and economic findings of a firm of consulting engineers from San Francisid.
It is urged that the Estero Bar-Lemoore fuel pipeline project be favorably considered as a project in the tiscal year 1961 military construction program in order that an adequate fuel delivery system mar be in operation when the planned numbers et aircraft are deplored at NAS. Lemoore.
SOUTHERN PACIFIC Co.,
Washington, D.C., May 2, 1960.
DEAR MR. NEASE: Mr. D. J. McGanney, president of Southern Pacific Pipe Lines, Inc., has requested that I supply you with some additional information for use of the Senate Military Construction Subcommittee in connection with the proposal of Southern Pacific Pipe Lines, Inc., to furnish pipeline facilities to Lemoore Naval Air Station and Castle Air Force Base in California.
In Mr. McGanney's testimony before the subcommittee on April 28 he stated that the through charge of 46 cents per barrel from the Richmond-Concord area to Castle Air Force Base represented a saving to the Air Force of approximately 9 cents per barrel as against present methods of handling. This would indicate that the present cost to the Air Force is 55 cents per barrel. The 55-cent figure was based on the following computations :
per barrel Barge rate from Bay area to Stockton, including 12-percent surcharge.- 9.502 Truck rate from Stockton to Castle Air Force Base--
--- 37. 380
46. 882 In addition to the 46.882-cents-per-barrel charge, is the charge made by
the Port Authority of Stockton and Time Oil Co. for handling through their tankage at Stockton, which we understand to be------
This makes a total charge of.----
-------- 53. 545 However, in addition to the foregoing charges there must be added the loss in loading the barges, transporting the fuel to Stockton, and unloading it at Stockton, which we have been advised amounts to one-half of 1 percent or, considering the value of the fuel to be $5 per barrel, a loss of 21/2 cents per barrel. Adding this loss to the cost above indicated of 53.545 cents per barrel gives us a total cost of 56 cents per barrel as the Air Force cost of transporting fuel to Castle Air Force Base.
The figure of 56 cents thus computed is approximately the same as the figure of 55 cents used in Mr. McGanney's testimony and furnished us at the conference between Navy and Air Force representatives and Southern Pacific Pipe Lines, Inc., on February 12, 1960. The conference report of that meeting, prepared by Mr. Darle Corliss, includes the following paragraph :
"(g) The discussion revealed that a reasonable average cost of truck delivery to Castle AFB from various sources shipped from Stockton area would be $0.55 per barrel. This cost consists of $0.085 barge delivery to Stockton, $0.015 per barrel cost through the fuel terminal, and $0.45 per barrel for truck delivery to Castle AFB."
Senator STENNIS. Thank you very much. This concludes the hearing except that we have some people here from the Department of Defense, Senator Cannon, on the general provisions of the bill, you know, general legislation, that is always carried forward and, without objection, we will submit for the record statements by Senator Kefauver of Tennessee, Senator Young of North Dakota, and a joint statement by Senators Scott and Clark of Pennsylvania.
(The matter referred to is as follows:)
STATEMENT OF THE HONORABLE Estes KEFAUVER, SENATOR FROM TENNESSEE
Mr. Chairman, I am very grateful for the opportunity to appear before your subcommittee to urge strongly that consideration be given to the need for extension of the military runway at McGhee-Tyson Airport at Knoxville, Tenn.
What was formerly a U.S. Air Force base there was taken over by the Tennessee Air National Guard about 3 years ago. Before the Air Force left, it had
let contracts to extend the runway and by the time of deactivation about 40 percent of the required runway extension work had been completed. The guard hoped to be able to complete the work, but the contracts were canceled and the work stopped.
What makes the resumption and completion of the runway extension work a matter for serious consideration at this time is the fact that during this quarter 20 F-104 jet aircraft are being assigned to the 134th Fighter Interceptor Group of the Tennessee Air National Guard which is based at McGhee-Tyson. This group has assumed the defense mission formerly fulfilled by the Regular Air Force, and the unusually high proficiency of the volunteers who comprise this unit is reflected in the fact that the group is one of only two in the Nation which has been assigned the F-104 which is, as you know, a high performance aircraft, holding the current altitude record.
Although the technical manual for the F-104 indicates that it is capable of operating from a 7,500-foot runway (the present length of the military runway at McGhee-Tyson), provided all systems are operating normally, I'm told that experience indicates that on all systems of high performance aircraft there will be malfunctions. Therefore it cannot be said that the systems will function properly and in total 100 percent of the time. It is to provide a margin of safety that it is very desirable to extend the runway 1,500 feet for a total of 9,000 feet. In addition, there are factors such as high runway temperatures, failure of the drag chute to function, and the possible necessity of emergency landing with a full load of fuel make a 9,000-foot runway desirable.
Both the Continental Air Command and the Directorate of Flying Safety regard the present runway length as a deficiency which should be corrected in the interest of flight safety, and they have asked the National Guard Bureau its plans for runway extension. Actually, the Bureau is anxious to resume the extension work but up to now budget restrictions have prevented the Bureau from making the budget request necessary for the project.
The plans prepared for the Air Force by the Army Corps of Engineers, Nashville District, are available and would be used for the extension. The corps estimates the construction cost at $675,000, plus or minus 10 percent. This estimate takes into consideration the fact that some of the grading and fill was completed prior to termination of the Air Force contract.
It should be noted that when the Air Force had the runway extension under contract the city of Knoxville relocated Mentor Road and in other ways gave full cooperation to the Air Force. The city is still anxious to complete the extension work and it has very generously agreed to contribute $200,000 toward the runway's construction and will acquire the land necessary for the clear zone.
Since McGhee-Tyson is an alternate landing field for commercial jet planes bound for New York and Atlanta, and since many jets have been sent to McGheeTyson when weather conditions have prohibited their landing at their destinations, it is felt that the possibility of using FAA funds for part of the extension work should be explored. It is believed that the extension could be a joint project with the city of Knoxville contributing $200,000, the FAA $200,000, and the National Guard Bureau providing the balance.
In closing, Mr. Chairman, I'd like to say that it seems logical and advantageous to extend the existing 7,500-foot runway. If one were to consider only the dollar value of the F-104A ($1,692,023) and the F-104B ($2,364,950), it must be conceded that maximum safety should be provided in order to protect the aircraft investment. Of course, no dollar value can be placed on the life of a pilot, but we owe these dedicated volunteers every consideration in making the performance of their vital duties as safe as possible.
I know this subcommittee will do all it can to assure that work on this necessary runway extension is resumed at the earliest practicable time, and I thank you again for the opportunity to appear in support of it.
STATEMENT OF SENATOR YOUNG OF NORTH DAKOTA
Mr. Chairman and members of the subcommittee, I am pleased to have the opportunity of submitting this statement urging the authorization for construction of two badly needed National Guard armories in my State of North Dakota.
For a number of years now, no armory construction has been undertaken in North Dakota although the State has submitted a number of requests for authorization. I respectfully submit that it is imperative in at least two
instances that construction be undertaken at the earliest possible time—both to assure an adequate defense establishment in our area and to fulfill the expectations of anticipated Federal action on the part of the cities involved. These cities, Hettinger, N. Dak., and our capital city of Bismarck, both took action and incurred obligations after they were led to believe by the National Guard Bureau that construction could be anticipated.
The North Dakota National Guard submitted for authorization for fiscal year 1961 a one-unit armory for Hettinger. The estimated cost for this installation is $154,000, including the architect's fee. The same circumstances prevailed with respect to a three-unit armory at Bismarck at a stipualted cost of $347,000. Neither of these two projects nor any other was included in the National Guard Bureau's fiscal year 1961 authorization request, even though the localities concerned fully met their obligations of raising funds and acquiring sites.
About 4 years ago, in anticipation of getting an armory, Hettinger held a special city election and passed a bond issue for $60,000. The bonds were sold and the city has been paying interest on them ever since. In addition, the city purchased property for the armory, removed the buildings on this property, and leveled it off in preparation for construction.
Two years ago, the Hettinger Armory was approved and ready to be programed for construction. Unfortunately, the unit temporarily dropped in strength and the project was thrown out of the assembly line. The unit strength presently makes the project eligible for consideration, but the unit is still unable to get back in.
Recently, the city of Hettinger held another election because some of the local people wanted to divert the money raised to another project. However, the people voted more than 2 to 1 to hold the money for an armory project. The State has long ago appropriated its share. An armory is needed very badly there and, under the circumstances, I sincerely hope that you will give favorable consideration to the requested authorization.
Much the same situation prevails with respect to the armory needed at Bismarck. For some time, the county commissioners of the county in which Bismarck is located have had $75,000 set aside to help finance construction of this armory. There has been a widespread clamor to divert this money to other uses, but the county commissioners have so far been successful in reserving it for the anticipated construction. The present units in Bismarck, our capital city, are operating under a severe handicap. They are storing equipment in an abandoned swimming pool and the only armory facilities they have available for use are in a basement. Other equipment is being stored in garages.
I strongly recommend that North Dakota not be forgotten in the military construction authorization bill again this year, and that the two cities of Hettinger and Bismarck be added to the authorization list.
(The joint statement of Senators Scott and Clark of Pennsylvania follows:)
The Department of Defense has transmitted a letter to the Armed Services Committee requesting that the military construction bill be amended to provide 400 units of Capehart housing for the Fourth Naval District, with headquarters in Philadelphia.
We wish to point out to the committee the urgent necessity of approval of this authorization at this time.
At the present time there are 663 families of Navy enlisted personnel living in a project in Philadelphia known as Passyunk Homes, which was constructed in 1941, and has been occupied by Navy personnel since that time.
Under the terms of the National Housing Act, Passyunk Homes automatically reverted to the Philadelphia Housing Authority for low-income public housing on January 1, 1960. In the 1959 session of Congress, because no Capehart housing had then been approved by Congress to provide for these Navy families the deadline for the reversion of Passyunk Homes was extended to February 1, 1962.
At that time the Senate and House Banking and Currency Committees made it clear to the Navy Department and Defense Department that the extension could not be renewed beyond 1962, and that the Defense Department would have to make other provisions for these families prior to February 1, 1962.
The Navy Department and Department of Defense have meanwhile explored other alternatives for providing housing for these families and has found none to be feasible. A thorough study of the possibility of using section 810 of the