[Federal Register Volume 61, Number 148 (Wednesday, July 31, 1996)] [Notices] [Page 40067] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 96-19363] ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Maritime Administration [Docket S-939] Lykes Bros. Steamship Co., Inc.; Notice of Application for a Waiver of Section 804(a) of the Merchant Marine Act, 1936, as Amended, to Participate in a Space Charter and Sailing Agreement With Foreign- Flag Operators Lykes Bros. Steamship Co., Inc. (Lykes) by application dated July 11, 1996, requests a waiver of the provisions of Section 804 of the Merchant Marine Act, 1936, as amended (Act), through December 31, 1997, the expiration of its operating-differential subsidy (O.D.S.) contract MA/MSB-451, to permit it to participate in a space charter and sailing agreement with Transportacion Maritima Mexicana, S.A. de C.V. (TMM), and Contship Containerlines Ltd. (Contship) to serve primarily the foreign commerce of the United States. The purpose of the Agreement is to improve the productivity and operating efficiency of the parties' vessels and equipment and to provide efficient, reliable and stable liner shipping services through space chartering and coordination of sailings. The Agreement does not authorize the parties to fix rates. The Agreement covers the trade between ports on the Atlantic Coast of Florida and U.S. Gulf Coast, and ports in Spain, Italy, and France and between ports on the Atlantic Coast of Florida and the U.S. Gulf Coast and ports on the Gulf Coast of Mexico. Assuming approval of the Agreement by the Maritime Administration and the Federal Maritime Commission, Lykes three subsidized Pacesetter Class vessels--HOWELL LYKES, THOMPSON LYKES, and JEAN LYKES--will serve the Mediterranean trade from U.S. Atlantic ports North of Florida. Lykes will initially charter space on TMM and Contship vessels providing service between Mexican, U.S. Gulf and Florida ports and Mediterranean ports in Spain, Italy and France. The vessels are scheduled to call at ports including but not limited to: Houston, Altamira, Veracruz, New Orleans, Mobile, Miami, Valencia, Barcelona, La Spezia, and Gioia Tauro. According to Lykes, the Contship and TMM vessels that serve the above trades and any Lykes vessels that might ultimately serve those trades will not compete ``with any American-flag service determined by the secretary to be essential as provided in Section 211 of this Act'' as that term is used in Section 604(a) of the Act. Lykes points out that Sea-Land does not provide an all U.S.-flag direct service to the Mediterranean from Mexican, U.S. Gulf or Florida ports. Farrell Lines, Inc.'s (Farrell) Mediterranean service does not include U.S. Gulf, Mexican or Florida ports. Waterman Steamship Co. (Waterman) only serves Mediterranean ports in Egypt from the U.S. Gulf. Because the parties to the proposed Space Charter and Sailing Agreement will provide direct service to the Western Mediterranean ports in Spain, Italy, and France, Lykes believes that the parties to this Agreement will not compete with any American-flag service determined to be essential by the Secretary. In Lykes' view, there are ample good cause and special circumstances to support the granting of this application. The opportunity this proposed agreement offers to rationalize schedules will permit operational savings to be realized and lend considerable flexibility to Lykes' schedules through the use of space on Contship and TMM vessels. The agreement will enable Lykes to offer shippers broader, more responsive service without any additional capital outlays. Lykes contends that its presence on the proposed routes is essential to the preservation of its customer base which relies on Lykes to provide a sufficiently broad array of services to satisfy their multitrade transportation needs. It will also assist Lykes in maintaining its experienced management. The additional revenue that the agreement will permit Lykes to earn will also spread overhead costs currently being borne by a limited number of Lykes U.S.-flag vessels, over an additional number of vessels. Lykes notes that the scrapping of its older U.S.-flag vessels has accelerated and there is no program in place for the construction of replacement tonnage in the United States. Moreover, satisfactory existing U.S.-flag vessels are also not available to serve the contemplated services. Consequently, Lykes maintains that the proposed Agreement will not affect U.S. seafaring jobs. Since Lykes' O.S. contract expires in approximately seventeen (17) months, Lykes concludes that approval of this Agreement is critical if it is to gradually position itself as a viable mixed U.S.-flag, foreign-flag operation capable of operating independent of subsidy. This application may be inspected in the Office of the Secretary, Maritime Administration. Any person, firm, or corporation having any interest in such request within the meaning of section 804 of the Act and desiring to submit comments concerning the application must file written comments in triplicate with the Secretary, Maritime Administration, Room 7210, Nassif Building, 400 Seventh Street SW., Washington, DC 20590. Comments must be received no later than 5:00 p.m. on August 2, 1996. This notice is published as a matter of discretion and publication should in no way be considered a favorable or unfavorable decision on the application, as filed or as may be amended. The Maritime Administrator 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: July 24, 1996. Edmund T. Sommer, Jr., Acting Secretary. [FR Doc. 96-19363 Filed 7-30-96; 8:45 am] BILLING CODE 4910-81-P