[Federal Register Volume 59, Number 221 (Thursday, November 17, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-28463]


[[Page Unknown]]

[Federal Register: November 17, 1994]


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DEPARTMENT OF TRANSPORTATION
Maritime Administration
[Docket 5-913]

 

SeaRiver Maritime, Inc.; Notice of Application for Approval To 
Transfer Operating-Differential Subsidy Agreement, Contract MA/MSB-439 
From the Bankruptcy Estate of Equity Carriers, Inc. and To Operate the 
S/R ``Mediterranean'' in the Foreign Trade With Operating-Differential 
Subsidy

    SeaRiver Maritime, Inc. (SeaRiver), by letter of September 29, 
1994, advises that it has purchased Operating-Differential Subsidy 
Agreement, Contract MA/MSB-439 from the bankruptcy estate of Equity 
Carriers, Inc., and that its purchase agreement with the bankruptcy 
estate is subject to:

 Maritime Administration (MARAD) approval of the transfer of 
Contract MA/MSB-439,
 MARAD obtaining approval of funding for at least one of the 
three operating subsidies comprising Contract MA/MSB-439 for the 
balance of the period of Contract MA/MSB-439, which expires on May 23, 
2001, and
 MARAD and SeaRiver agreement to necessary amendments to 
Contract MA/MSB-439.

    SeaRiver advises that the purpose of its petition to MARAD is to 
request approval of the transfer of Contract MA/MSB-439 to SeaRiver and 
to obtain confirmation that funding will be available for subsidizing 
the worldwide transportation of crude oil in bulk in the foreign 
commerce of the United States and between foreign ports on the S/R 
MEDITERRANEAN (Vessel), a 211,000 DWI tanker, which sustained bottom 
damage in 1989 when it ran aground on Bligh Reef in Prince William 
Sound. Following completion of repairs in 1990 and due to an expected 
decline in ANS transportation requirements, the Vessel was temporarily 
placed in foreign service and renamed accordingly. Subsequently, under 
a provision of the Oil Pollution Act of 1990, the vessel was, and 
remains, prohibited from operating in Prince William Sound, thereby 
denying the Vessel from operating in the only Jones Act trade for which 
it is operationally and economically suited.
    SeaRiver advises that since September 1990, therefore, the Vessel 
has operated in foreign service. In the four years of foreign 
operations, the Vessel has completed more than 60 voyages primarily 
transporting mid-East crude oil to European discharge ports. SeaRiver 
states that the Vessel's performance in this service has been 
exemplary, and the Vessel and its crew are highly regarded in the many 
foreign ports which it has entered. Moreover, as the only modern U.S. 
tanker consistently operating abroad, the Vessel and her crew have 
demonstrated and fostered the best traditions of the American flag 
merchant marine.
    SeaRiver advises that the Vessel is competing against low-cost 
foreign-flag operators for foreign commerce in a depressed-rate trade, 
which is not covering operating costs of foreign flag tankers with 
significantly lower operating costs than U.S. flag vessels. However, 
the Vessel is precluded from operating in the domestically protected 
trade for which it was primarily built. SeaRiver advises that given the 
losses sustained and the prospect of continuing losses on the operation 
of the Vessel, SeaRiver has to consider alternatives including lay-up 
and sale. The other viable and beneficial alternative is the granting 
of operating-differential subsidy (ODS) to support continued operation 
of the Vessel in foreign commerce.
    SeaRiver states that it is wholly-owned affiliate of Exxon 
Corporation (Exxon). SeaRiver is a ``stand alone'' company which has 
the responsibility to the shareholders to ensure that SeaRiver 
maintains its leadership presence as a technically proficient, high 
quality owner/operator of U.S.-flag vessels transporting crude and 
petroleum products. SeaRiver states that providing ODS will ensure that 
this modern state-of-the-art and technologically advanced Vessel will 
continue to operate and will provide for continuing employment for 
about 50 skilled, dedicated American seafarers.
    SeaRiver states that it owns and operates oceangoing tankers, tugs/
towboats and barges. It has an ocean fleet of 12 tankers totaling 1,200 
thousand DWT and an inland fleet of 16 tugs and towboats and 50 barges. 
SeaRiver advises that its principal operations involve the 
transportation of crude oil, petroleum feedstocks, and finished 
petroleum and chemical products and tug assist service.
    SeaRiver's principal operations are listed below:

 Alaskan crude from Valdez, Alaska, to U.S. west coast 
destinations;
 Motor gasoline, heating oil, jet fuel, and other petroleum 
fuel products to U.S. ports from Baytown, Texas; and Baton Rouge, 
Louisiana;
 Lubricating oils, solvents, and other specialty products from 
Baytown and Baton Rouge to east coast and inland destinations;
 Inter-refinery feedstock transportation;
 Harbor, escort and assist tug services to vessels; and
 International crude trade (one vessel).

    SeaRiver, by letter of October 24, 1994, provided additional 
information in connection with its request of September 29, 1994.
    SeaRiver advises that since September 1990, the Vessel has operated 
in foreign service, having now completed more than 60 voyages, 
primarily from the Middle East and Mediterranean areas to European 
ports. On occasion, the Vessel has loaded North Sea crude in Scotland 
for transportation to other European discharge ports. Earlier this 
year, the Vessel also transported a Strategic Petroleum Reserve cargo 
from Sullom Voe. SeaRiver advises that its plans are that the Vessel 
will continue to operate in international service, optimally in the 
Middle East and European foreign trades. However, this does not 
preclude the vessel from trading in the U.S. In Attachment I to its 
letter of October 24, SeaRiver shows the number of voyages and foreign 
areas of operation for the Vessel for 1992, 1993, and 1994.
    SeaRiver also requests the necessary written permission under 
section 805(a) of the Merchant Marine Act, 1936, as amended (Act), for 
vessels owned and operated by SeaRiver in the domestic trades. These 
include tank vessels used to transport crude from Alaska to U.S. west 
coast destinations and solvents, chemicals, specially and petroleum 
products from the U.S. gulf to the U.S. east coast. SeaRiver also 
operates towboats and barges that move petroleum fuel products, 
specialty products and chemicals along the U.S. gulf coast and inland 
waterways. SeaRiver advises that tugs are also used in harbor assist, 
escort and oil spill response service on the U.S. west coast and in the 
Gulf. SeaRiver states that it may acquire additional U.S. flag tonnage 
as an owner/operator or may dispose of existing tonnage in the course 
of normal business operations. Additionally, SeaRiver indicates that it 
may spot, term or bareboat incharter and/or outcharter U.S.-flag 
tonnage as necessary to satisfy business requirements. SeaRiver lists 
its domestic fleet and areas of operating in Attachment II to its 
letter of October 24, 1994.
    SeaRiver advises that it presently distinguishes accounting for the 
expenditures of the S/R MEDITERRANEAN separate from other operations. 
SeaRiver will further guarantee to institute any additional internal 
procedures that may be necessary to ensure that any operational subsidy 
granted will apply only to the S/R MEDITERRANEAN.
    SeaRiver is also requesting a waiver of section 804(a) of the Act. 
In addition to owning, operating, inchartering and outchartering U.S. 
flag vessels, SeaRiver also incharters foreign flag tankers to support 
domestic operations (e.g. Gulf of Mexico ligthering service).
    SeaRiver advises that Exxon also has international affiliates that 
own, operate and charter foreign flag vessels. These affiliates are 
located primarily in Europe, the Far East and Latin America. The 
vessels are managed and operated by the affiliates and are totally 
independent from the U.S. flag marine operations of SeaRiver. These 
Exxon affiliates may acquire additional foreign flag tonnage as owners/
operators or may dispose of existing tonnage in the course of their 
normal business operations. The affiliates may also spot, term, or 
bareboat incharter and/or outcharter foreign flag tonnage necessary to 
satisfy business requirements. Attachment III to SeaRiver's October 24, 
letter details all of the Exxon affiliates's owned, operated, and 
chartered foreign flag vessels.
    SeaRiver advises that Exxon is a participant in the Revised 
Voluntary Tanker Agreement (MARAD Contract MA-11725) under which Exxon 
agrees to make foreign flag tanker tonnage capacity available to the 
U.S. to further meet (beyond the SeaRiver U.S. flag tonnage) emergency 
national defense needs. The Bahamian registered vessels which are noted 
in Attachment III to the October 24 letter are covered by the 
Agreement.
    This application may be inspected in the Office of the Secretary, 
Maritime Administration. Any person, firm or corporation having any 
interest in such application and desiring to submit comments concerning 
the application must by 5:00 PM on December 7, 1994, file written 
comments in triplicate with the Secretary, Maritime Administration. Any 
person seeking to oppose the application must file a petition for leave 
to intervene. The petition shall state clearly and concisely the 
grounds of interest, and the alleged facts relied on for relief. The 
Maritime Administration will consider any comments submitted and take 
such action with respect thereto as may be deemed appropriate.

(Catalog of Federal Domestic Assistance Program No. 20.804 
(Operating-Differential Subsidies)).

    By Order of the Maritime Administrator.

    Dated: November 10, 1994.
Joel C. Richard,
Acting Secretary, Maritime Administration.
[FR Doc. 94-28463 Filed 11-16-94; 8:45 am]
BILLING CODE 4910-81-M