[Federal Register Volume 61, Number 222 (Friday, November 15, 1996)]
[Notices]
[Pages 58603-58604]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29458]


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DEPARTMENT OF TRANSPORTATION
Maritime Administration
[Docket MSP-003]


OSG Car Carriers, Inc.; Notice of Application Pursuant to Section 
656 of the Merchant Marine Act, 1936, as Amended

    OSG Car Carriers, Inc. (OSG) by application received October 22, 
1996, and supplemented by letter dated November 4, 1996 applied under 
Section 651, Subtitle B, of the Act for participation in the Maritime 
Security Program (MSP). In support of its application OSG submitted 
information pertaining to its level of noncontiguous domestic trade 
service. Pursuant to section 656 of the Act, the Maritime 
Administration must determine OSG's level of noncontiguous domestic 
trade service should it become party to a MSP operating agreement.
    In support of its request OSG described its level of service 
provided in each noncontiguous domestic trade served as of August 9, 
1995. The vessels listed below are contract (liquid bulk) carriers, 
rather than common carriers, and their itineraries are determined by 
their respective charters. These vessels operate from time to time in 
the noncontiguous domestic trades between the contiguous 48 States and 
Alaska, Hawaii, the U.S. Virgin Islands or Puerto Rico and between 
Alaska and the U.S. Virgin Islands. OSG's submittal of noncontiguous 
domestic trade service, as well as its affiliates, was provided as 
follows:

Applicant's Noncontiguous Trade

------------------------------------------------------------------------
                                                              Deadweight
                            Name                                tonnage 
------------------------------------------------------------------------
Overseas Boston.............................................    120,800 
Overseas Juneau.............................................    120,500 
Overseas Chicago............................................     90,650 
Overseas Ohio...............................................     90,550 
Overseas Washington.........................................     90,500 
Overseas New York...........................................     90,400 
Overseas Arctic.............................................     62,000 
Overseas Alaska.............................................     62,000 
Overseas New Orleans........................................     42,950 
Overseas Philadelphia.......................................     42,600 
Overseas Vivian.............................................     37,800 
Overseas Alice..............................................     37,800 
Overseas Valdez.............................................     37,800 
------------------------------------------------------------------------

    OSG further clarified the level of service provided by its 
affiliates in the noncontiguous domestic trades in the year preceding 
August 9, 1995 as being 100% of the annual capacity of their entire 
fleet of U.S. flag tankers, i.e., 926,350 deadweight tons.
    OSG states that the Maritime Security Act defines the term ``level 
of service'' provided by a contractor [operating non-container Vessels] 
in a trade as of a date * * *.'' to mean ``the total annual capacity 
provided by the contractor in that trade for the twelve calendar months 
preceding that date.'' [Section 4(h)(1)(A)]. OSG asserts that all of 
the U.S.-flag tankers operated by the Applicant's affiliates are liquid 
bulk carriers offered for charter; they are not common carriers that 
operate on predetermined schedules or itineraries. The movements of the 
vessels are entirely up to the charterer. The ``trade'' in which those 
tankers operate is therefore a worldwide trade, and by inclusion, the 
noncontiguous domestic trade.
    OSG states that the use of 100% of the capacity of tankers utilized 
in the noncontiguous domestic trade is supported by the proviso of 
Section 4(h)(1)(A) by which Congress permitted the ``level of service'' 
for certain ``contract carrier tug and barge service'' to be calculated 
on the basis of 100% of vessel capacity. Where Congress addressed the 
issue of ``level of service'' provided by carriers that have no 
itineraries (which is OSG's case), Congress prescribed a reference to 
100% of capacity. Congress states that it has recognized that a 
definition of ``trade'' by area, rather than specific ports, is 
required for bulk vessels. Before 1970, and before bulk carriers were 
made eligible for subsidy, Section 905(a) of the Merchant Marine Act, 
1936, 46 U.S.C. 1244, defined ``foreign trade'' as ``trade between the 
United States * * * and a foreign country''. The Merchant Marine Act of 
1970, P.L. 91-469, 91st Cong. 2d Sess., amended the definition in 
Section 905(a) to ``include, in the case of liquid and dry bulk 
carrying services, trading between foreign ports in accordance with 
normal commercial bulk shipping practices in such a manner as will 
permit U.S.-flag bulk vessels freely to compete with foreign-flag bulk 
carrying vessels in their operation or in competing for charters, 
subject to rules and regulations promulgated by the Secretary.'' As 
explained in the Senate Report on the Merchant Marine Act 1970, 
Congress was concerned that ``a narrow construction of the [earlier] 
definition [of foreign trade] might prove unduly restrictive as applied 
to bulk cargo

[[Page 58604]]

vessels which are not to be included in the program for the first 
time.'' Therefore, Congress ``amended this section to authorize the 
Secretary of Commerce to promulgate regulations to include sufficient 
flexibility to make the new bulk cargo vessels competitive.'' Senate 
Rept. 91-1080, 91st Cong. 2d Sess., reprinted in 1970 USCCAAN, p. 4194. 
Similar considerations require a nonspecific definition of the 
``trade'' of liquid bulk vessels under the Maritime Security Act.
    OSG asserts that the vessels ``provided'' in that ``trade'' are all 
the U.S.-flag tankers of OSG's affiliates. The service ``provided'' is 
construed to include periods of lay-up because the failure to operate 
was due to conditions beyond the control of OSG's affiliates. Compare 
Section 805 of the Merchant Marine Act, 1936. 46 U.S.C. 1223, which 
includes in grandfathered service ``interruptions of service over which 
the applicant or its predecessor in interest had no control.''
    Any person, firm or corporation having any interest in the 
application for section 656 consent and desiring to submit comments 
concerning OSG's request must by 5:00 PM December 16, 1996 file 
comments in triplicate to the Secretary, Maritime Administration, Room 
7210, Nassif Building, 400 Seventh Street, SW., Washington, DC 20590.

    By Order of the Maritime Administrator.

    Dated: November 13, 1996.
Joel C. Richard,
Secretary, Maritime Administration.
[FR Doc. 96-29458 Filed 11-14-96; 8:45 am]
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