[Federal Register Volume 59, Number 220 (Wednesday, November 16, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-28268]


[[Page Unknown]]

[Federal Register: November 16, 1994]


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DEPARTMENT OF TRANSPORTATION
Maritime Administration
[Docket S-914]

 

Notice of Application for Approval, Pursuant to Sections 608, 
804(a), and 805(a) of the Merchant Marine Act, 1936, as Amended, for 
the Transfer of Certain Operating-Differential Subsidy Agreements to 
OMI Corp. and Operation of Vessels in the Foreign and Domestic Trades, 
Respectively

    Notice is hereby given that by application dated November 3, 1994, 
OMI Corp. (OMI), acting on its own behalf and as attorney-in-fact for 
Vulcan Carriers, Ltd. (Vulcan) requests, pursuant to section 608, 
section 804 and section 805(a) of the Merchant Marine Act, 1936, as 
amended (Act), 46 U.S.C. sections 1178, 1222 and 1223, Article II-16 of 
Operating-Differential Subsidy Agreements (ODSAs) MA/MSB-167(a), (b), 
(c), and (d), and Article 36 of Bareboat Charters between OMI Patriot 
Transport, Inc. (OMI Transport), OMI Courier Transport, Inc. (OMI 
Courier Transport), OMI Rover Transport, Inc. (OMI Rover Transport), or 
OMI Missouri Transport, Inc. (OMI Missouri Transport), and Vulcan, (1) 
permission to assign the ODSAs to OMI; and (2) following assignment of 
the ODSAs to OMI, a waiver of section 804(a) for OMI to operate vessels 
in the foreign trade and permission pursuant to section 805(a) for OMI 
to operate vessels in the coastwise trade.

Transfer of the ODSAS

    Article 36 of the Bareboat Charters dated February 5, 1990, between 
OMI Patriot Transport, OMI Courier Transport, OMI Rover Transport 
(formerly subsidiaries of OMI Bulk Transport, Inc. and now subsidiaries 
of OMI Corp., collectively the ``OMI subsidiaries''), or OMI Missouri 
Transport and Vulcan (collectively, ``the Bareboat Charters'') 
authorizes the OMI subsidiaries and OMI Missouri Transport, with the 
consent of OMI Oriole Transport, Inc. (OMI Oriole Transport) as time 
charterer, to name a successor bareboat charterer for the vessel named 
in the Bareboat Charter. The vessels named in the repective Bareboat 
Charters include the PATRIOT, COURIER, RANGER, ROVER, OMI MISSOURI and 
OMI SACRAMENTO (Official numbers 571049, 578746, 573810, 577241, 
662123, and 662124, respectively.) These vessels operate under a 
subsidy sharing agreement pursuant to the terms of the ODSAs.
    Further, a successor bareboat charterer can be named, without 
cause, at any time after the first anniversary of the effective date of 
the Bareboat Charters, upon 90 days written notice.
    In support of its instant application, OMI points out that it is an 
established vessels operator with over 25 years in operating 
experience. In addition, it is the second largest U.S. independent 
operator of bulk vessels. OMI notes in this regard that it has the 
ability, experience, financial resources, and other qualifications 
necessary to become an ODS operator. OMI is a citizen under the 
provisions of section 905(c) of the Act, and OMI's citizenship 
affidavit is on file with the Maritime Administration. OMI states that 
information on the experience and background of its personnel 
responsible for the administration of the ODSAs will be submitted prior 
to approval of the assignment of the ODSAs to OMI.

Waiver of Section 804

    In addition to the transfer of the respective ODSAs to OMI, OMI 
requests a waiver of the provisions of section 804(a) for its continued 
operation of foreign-flag vessels. OMI requests that this waiver be 
valid for the duration of the ODSAs. The termination dates are April 2, 
1996 (PATRIOT), July 30, 1996 (RANGER), January 26, 1997 (COURIER), and 
January 28, 1997 (ROVER).
    OMI currently operates 34 owned and chartered-in foreign-flag 
vessels, primarily crude and product tankers and dry bulk vessels. OMI 
also has one foreign-flag vessel on order. OMI advises that operation 
of its foreign-flag vessels permits it to help cover administrative 
expenses related to the operation of U.S.-flag vessels.
    OMI believes that authorizing it to continue to operate foreign-
flag vessels subsequent to the transfer of the ODSAs will not harm any 
U.S.-flag service. Moreover, no new service will be provided and no new 
vessels are being added to a trade.
    OMI asserts that given the limited time remaining on the ODSAs, the 
lack of negative effect of permitting it to continue operating foreign 
flag vessels and the substantial benefit it can derive by spreading 
overhead costs associated with its U.S.-flag vessels, good cause and 
special circumstances should be found for the requested waiver. In 
order to retain its growth possibilities, OMI requests that its section 
804 waiver permit OMI to operate up to 60 foreign-flag vessels for the 
time remaining on the term of the ODSAs.

Permission To Operate Coastwise Vessels

    OMI also requests permission pursuant to Section 805(a) to continue 
operating vessels in the coastwise trade following OMI's approval as 
operator of the ODSAs for the limited time remaining on the ODSAs.
    OMI currently owns in its U.S.-flag fleet one crude oil tanker, 
three chemical/product tankers, four product tankers, and three dry 
bulk carriers. The crude oil tanker operates primarily in the Alaska 
oil trade. The three chemical carriers are operated through a joint 
marketing arrangement and carry cargoes primarily from the Gulf of 
Mexico to the east and west coast. The three dry bulk carriers operate 
in the cargo preference trade and in the subsidized foreign trade under 
the subsidy sharing arrangements of the ODSAs. The four product 
tankers, bareboat operated by Vulcan, participate primarily in the 
vegetable oil trade in South America.
    In OMI's view, simply changing the operator of the ODSAs will not 
change the competitive marketplace for any U.S.-flag vessel operating 
in markets with the U.S.-flag vessels operated by OMI. These vessels, 
according to OMI, will face exactly the same competitive conditions 
after the transfer of the ODSAs as they did prior to the transfer.
    OMI states that permitting it to continue to operate U.S.-flag 
vessels following the transfer will not be prejudicial to the objects 
and policies of the Act. OMI states that it is a well established 
vessel owner and operator with a history of U.S.-flag operations. Thus, 
OMI asserts that permitting it to continue in that endeavor for the 
duration of the ODSAs will further the operation of the U.S. merchant 
marine.
    OMI advises that no subsidy received by it pursuant to the ODSAs 
will be used to benefit OMI's non-subsidized coastwise operations. In 
this connection, OMI points out that under current accounting 
practices, the use of subsidized funds can be audited easily and 
companies can provide needed assurances that funds will not be used for 
non-subsidized purposes.
    Finally, OMI notes that its request for permission under section 
805(a) does not involve any issue of material fact that cannot be 
resolved on the basis of available information.
    Any person, firm, or corporation having any interest in the 
application for section 804(a) waiver and/or section 805(a) permission 
and desiring to submit comments concerning the application must file 
written comments in triplicate, to the Secretary, Maritime 
Administration, Room 7210, Nassif Building, 400 Seventh Street, SW., 
Washington, DC 20590, by the close of business on November 30, 1994. 
The Maritime Administration, as a matter of discretion, will consider 
any comments submitted and take such action with respect thereto as may 
be deemed appropriate.
    If such comments deal with section 805(a) issues, they should be 
accompanied by a petition for leave to intervene. The petition should 
state clearly and concisely the grounds of interest and the alleged 
facts relied on for relief. If no petitions for leave to intervene on 
section 805(a) issues are received within the specified time, or if it 
is determined that petitions filed do not demonstrate sufficient 
interest to warrant a hearing, the Maritime Administration will take 
such action as may be deemed appropriate. In the event petitions 
regarding the relevant section 805(a) issues are received from parties 
with standing to be heard, a hearing will be held, the purpose of which 
will be to receive evidence under section 805(a) relative to whether 
the proposed operations (a) could result in unfair competition to any 
person, firm or corporation operating exclusively in the coastwise or 
intercoastal service, or (b) would be prejudicial to the objects and 
policy of the Act relative to domestic operations.

(Catalog of Federal Domestic Assistance Programs No. 20.800 
Construction-Differential Subsidies (CDS) and No. 20.804 Operating-
Differential Subsidies (ODS)).

    By Order of the Maritime Administrator.

    Dated: November 9, 1994.
Joel C. Richard,
Secretary.
[FR Doc. 94-28268 Filed 11-15-94; 8:45 am]
BILLING CODE 4910-81-P