[Federal Register Volume 62, Number 127 (Wednesday, July 2, 1997)]
[Notices]
[Pages 35881-35887]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17062]


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DEPARTMENT OF TRANSPORTATION

Maritime Administration


Criteria for Granting Waivers of the Requirement for Exclusive 
U.S.-Flag Vessel Carriage, of Certain Cargo Covered by Public 
Resolution 17 (PR 17), 73rd Congress

AGENCY: Maritime Administration, DOT.

ACTION: Policy revision.

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SUMMARY: This policy statement revises an existing Maritime 
Administration policy in effect since 1959 regarding criteria 
considered in granting waivers of the requirement for exclusive U.S.-
flag carriage of certain cargo covered by PR 17. Revision of this 
policy, following public notice and comment, is deemed necessary to 
suit the changing market environment in the maritime industry.


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EFFECTIVE DATE: June 30, 1997.

FOR FURTHER INFORMATION CONTACT:
Thomas Harrelson, Director, Office of Cargo Preference, Phone: (202) 
366-5515, Lester Levay, Chief, Division of Civilian Agencies, Phone: 
(202) 366-5512.

SUPPLEMENTARY INFORMATION: Promulgation of this statement of policy 
follows publication of advance notices of proposed rulemaking on 
October 28, 1996 (61 FR 55614) and December 24, 1996 (61 FR 67764), the 
receipt of comments in response, as well as, a public forum held on May 
29, 1997, which afforded interested parties an opportunity to address 
oral and written comments to the Maritime Administration and Export-
Import Bank officials. Based on the positions enunciated by ocean 
carriers and shippers, reflecting their divergent interests, MARAD 
concluded that the circumstances which lead to grant of waivers to 
allow use of foreign-flag vessels to carry PR 17 cargo when U.S.-flag 
vessels are not available are such that discrete rules of general 
applicability are not necessary or feasible. Accordingly, the grant of 
waivers will continue on the basis of the long held policy of case-by-
case determinations. Approval to amend the current information 
collection requirement (OMB No. 2133-0013) regarding Public Resolution 
17 is pending.

Statement of Policy on Public Resolution 17--73rd Congress

    The Maritime Administrator has authorized the following statement 
describing the policies and procedures in administration of Public 
Resolution 17, 73rd Congress, 48 Stat. 500, 46 App. U.S.C. 1241-1, as 
applies to credits of the Export-Import Bank of the United States. A 
statement of policies and procedures with respect to other agencies of 
the Government will be issued as required.

1. Scope of Applicability

    Public Resolution No. 17 provides that where loans are made by an 
instrumentality of the Government to foster the exporting of 
agricultural or other products, provision shall be made that such 
products be carried exclusively in vessels of the United States unless 
the Maritime Administration shall certify to the lending agency that 
such vessels are not available as to numbers, tonnage capacity, sailing 
schedule or at reasonable rates. The Resolution is applicable to 
credits of the Export-Import Bank for the purpose of financing the 
acquisition and shipment of United States products or services. The 
Bank includes in any such credit agreement a requirement that shipments 
be made in United States flag vessels, except to the extent a waiver of 
that requirement may be granted by the Maritime Administration, as 
outlined hereinafter. The Bank refers to the Maritime Administration 
any requests for waivers received by it and follows the decisions of 
the Maritime Administration with respect thereto.

2. Types of Waivers

    The general process for all waiver requests are is set forth in 
Appendix A, attached hereto. Guidelines for the information to be 
included in the waiver request set forth in Appendix B, attached 
hereto.
(A) Non-Availability Waivers
    When it appears that U.S. vessels will not be available from the 
port or area of shipment to the foreign destination within a reasonable 
time or at reasonable rates, foreign borrowers, public or private, or 
their representatives in the United States may apply directly to the 
Maritime Administration, Office of Cargo Preference, for waiver of the 
U.S. flag requirement. Requests for waivers shall be in writing. The 
Maritime Administration will make such investigation as appears 
warranted to determine whether U.S. flag vessels are available and will 
reply in writing with approval or denial of the waiver or may request 
additional information. Copies of approved waivers or denials will be 
sent to the Export-Import Bank.
    Such waivers shall apply to the specific cargo movements occurring 
during the period of U.S. flag non-availability as approved and the 
name of the ship, date of sailing, load and discharge ports, ocean 
freight and weight of cargo shall be reported to the Maritime 
Administration with a rated copy of the bill of lading.
    Those foreign borrowers, public or private, and/or their United 
States representatives and exporters who know their credit will involve 
more than one shipment of cargo are strongly encouraged to meet with 
the U.S. flag carriers and then meet separately with the Maritime 
Administration, Office of Cargo Preference staff to provide full and 
complete information regarding the project, specifically identifying 
those cargoes on which a waiver might be sought. The information to be 
presented to the carriers and to the Maritime Administration is listed 
in Appendix C attached hereto.
(B) General Waivers
    In certain circumstances, notwithstanding the availability of U.S. 
flag vessels, recipient nation vessels may be authorized to share in 
the ocean carriage of Export-Import Bank financed movements, but not in 
excess of fifty percent of the total movement under the credit. Such 
participation, representing a reduction of the U.S. flag share, may be 
granted when the Maritime Administration is satisfied that parity of 
treatment is extended to U.S. vessels in the trade of the foreign 
nation. When foreign borrowers, public or private, or the primary U.S. 
exporter desire such general waivers in order to make partial use of 
their own national flag vessels, application must be made to the 
Maritime Administration, Office of Cargo Preference, for a General 
Waiver applicable to the particular credit. When application is made by 
private interests, sponsorship by an official of the foreign government 
may be requested in order to obtain satisfactory understanding that the 
recipient nation undertakes to maintain conditions of the fair and 
equitable treatment for U.S. flag shipping.
    (1) Such waivers, if granted, shall apply only to vessels of 
recipient nation registry to the extent of their capacity to carry the 
cargo, based on normal flow of the traffic from interior through ports 
of shipment, but not in excess of fifty percent of the total movement 
under the credit.
    (2) General Waivers will normally apply throughout the life of the 
credit, but may be reconsidered at any time by the Maritime 
Administration or the Export-Import Bank in the light of altered 
circumstances.
    (3) The record of flag distribution between U.S. and recipient 
national flag vessels shall be based on (a) both manifest weight and 
ocean freight revenue; and/or (b) such other units as may be found 
suitable in exceptional circumstances.
    (4) Applicants or their representatives in the United States shall 
provide reports of movements to the Maritime Administration, Office of 
Cargo Preference, at monthly or other intervals as arranged, in the 
general form of Appendix D, attached hereto. The data to be included on 
these reports may be varied by the Maritime Administration to meet 
specific circumstances of the movements from time to time.
    (5) The granting of a General Waiver will not take place until the 
Maritime Administration, Office of Cargo Preference, has received 
written confirmation of the applicant's agreement to the foregoing 
terms and

[[Page 35883]]

conditions and has been advised of the name and address of the designee 
located in the United States who will be responsible for controlling 
the routing of the cargo and providing the required monthly reports.
(C) Compensatory Waivers
    When a foreign borrower, public or private, or their 
representatives in the United States, prior to the Export-Import Bank 
credit agreement or in honest error, moves cargo on a foreign flag 
vessel and subsequently determines a waiver is needed to meet Export-
Import Bank financing requirements, said exporter may apply directly to 
the Maritime Administration, Office of Cargo Preference, for a 
Compensatory Waiver. The Maritime Administration, after investigation, 
may grant a Compensatory Waiver whereby the exporter contracts in 
writing with the Maritime Administration to move an equivalent amount 
of ocean freight revenue of non-government impelled cargo on U.S. flag 
vessels within a specified time period.
(D) Extended Waivers
    If a foreign borrower, public or private, or their representatives 
in the United States, believes that an Extended Waiver is necessary to 
best serve the exports of United States products or services related to 
the Export-Import Bank credit, said exporter may apply to the Maritime 
Administration, Office of Cargo Preference, for up to a six month 
waiver of the U.S. flag requirement. A condition precedent to the 
Maritime Administration granting an Extended Waiver is that the 
exporter shall meet with the U.S. flag carriers and then shall meet 
separately with the Maritime Administration, Office of Cargo Preference 
staff to provide full and complete information regarding the project, 
specifically identifying those cargoes on which the waiver is sought. 
The information to be presented to the carriers and to the Maritime 
Administration is listed in Appendix C, attached hereto.
    After investigation, the Maritime Administration may grant a waiver 
for a period of time not to exceed six months to cover specific 
identified cargoes. Depending on investigations of reasons cited by the 
exporter, and after consultation with the U.S. flag carriers, the 
Maritime Administration may grant up to a three month extension of the 
waiver on such specific identified cargoes.

3. Considerations Influencing Approval of Applications for Waivers

    (A) In the disposition of applications for General Waivers under 
Paragraph 2(B) the Maritime Administration will take into 
consideration:
    (1) The treatment accorded U.S. flag vessels in the trade with the 
recipient nation, particularly whether U.S. flag vessels have parity of 
opportunity vis-a-vis national flag or other foreign flag vessels to 
solicit and participate in movements controlled in the foreign nation; 
parity in the application of consular invoice fees, port charges and 
facilities; also parity of exchange treatment including the privilege 
of converting freight collections to dollars as needed. Information 
will be sought from U.S. ship owners and other sources as to their 
experiences in the particular trade;
    (2) The national policy of the United States, including the 
Merchant Marine Act of 1936, as well as the purpose of the Export-
Import Bank in authorizing the credit.
    (B) In the disposition of applications for non-availability waivers 
under Paragraph 2(A) or 2(D), the Maritime Administration will take 
into consideration:
    (1) If the applicant followed the process set forth in Appendix A 
and provided the waiver information in Appendix B and met with the U.S. 
flag carriers and with the Maritime Administration at the beginning of 
the project to provide the information listed in Appendix C;
    (2) The national policy of the United States, including the 
Merchant Marine Act of 1936, as well as the purpose of the Export-
Import Bank in authorizing the credit.

Attachments

Appendix A: Waiver Request Procedures
Appendix B: Waiver Request Required Information
Appendix C: Information and Communication Guide
Appendix D: Movement Reports Guide

Appendix A--(OMB No. 2133-0013 Applies to This Collection of 
Information)

Waiver Request Procedures

A. Non-Availability Waivers

    STEP:
    1. The foreign borrowers, public or private, or their United States 
representative receives or expects to receive Export-Import Bank credit 
approval. (Note: Shipments could commence prior to the credit approval. 
See the section on Compensatory Waivers.) In the early stages of the 
project, either prior to or when the credit is approved, the shipper 
should meet with the U.S.-flag carriers and the Maritime Administration 
and discuss the project cargoes detailing the information suggested in 
Appendix C.
    2. The shipper must present its Request for Quotation (RFQ) for 
ocean service to the carriers at least forty-five (45) calendar days in 
advance of the intended shipping date. For efficiency, the RFQ also 
should be sent to the Maritime Administration. The RFQ should be 
presented at the same time and with the same information to all 
carriers, both U.S. and foreign. The RFQ must be given to all U.S.-flag 
carriers who may have service or could initiate service and should 
contain the most detailed information available regarding the 
commodities, sizes and weights. The shipper must give carriers at least 
fourteen (14) calendar days in which to respond.
    3. The U.S.-flag carriers must respond to the RFQ within fourteen 
(14) calendar days either declining the cargo or providing an offer 
addressing both the rate quotations and the logistical needs expressed 
in the RFQ.
    4. If the shipper cannot find a U.S.-flag carrier to handle the 
cargo, the shipper must present a waiver request to the Maritime 
Administration at least thirty (30) calendar days in advance of the 
intended shipping date. The request must contain all the required 
information as shown in Appendix B.
    5. The Maritime Administration will review the application, verify 
the waiver documentation provided by the shipper, make such 
investigations or request further information as needed, and canvass 
the market for U.S.-flag carriers to handle the cargo.
    6. The Maritime Administration will reply in writing either 
approving or denying the waiver.

B. General Waivers

    1. As set forth in Policy Statement paragraph 2(B), if a foreign 
borrower or primary U.S. exporter desires to make partial use of 
registered vessels of the recipient nation for a specific Export-Import 
Bank credit, a written request must be made to the Maritime 
Administration, Office of Cargo Preference.
    2. The Maritime Administration will make such investigations as 
needed, including consultations with U.S.-flag carriers, to determine 
that parity of treatment is extended to U.S.-flag vessels in the trade 
of that foreign nation.
    3. If the Maritime Administration does not find discrimination, it 
will

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advise the applicant that a General Waiver may be granted at such time 
as the Maritime Administration receives written confirmation of the 
applicant's agreement to the terms and conditions set forth in Policy 
Statement paragraph 2(B). When such written confirmation is received, 
the Maritime Administration will grant the General Waiver in writing 
with a copy to the Export-Import Bank.

C. Compensatory Waivers

    1. If a Compensatory Waiver is needed (Policy Statement paragraph 
2(C)), the shipper should make a written application to the Maritime 
Administration, stating the reasons, identifying the Export-Import Bank 
credit number and country, and attaching freighted copies of the ocean 
bill of lading covering the erroneously shipped cargoes.
    2. After investigation, if the Maritime Administration decides to 
grant a Compensatory Waiver, the shipper will be notified of the 
requirements and will have to execute a written agreement to meet those 
requirements.
    3. Upon receipt of the written contract from the shipper, the 
Maritime Administration will issue the waiver.

D. Extended Waivers

    1. If an Extended Waiver (Policy Statement paragraph 2(D)) is 
desired, this should be made known during both the meeting with the 
U.S. carriers and the meeting with the Maritime Administration and the 
specific cargoes to be moved during said waiver time period should be 
identified. Subsequently, the shipper will canvass the market for U.S.-
flag carriers to handle the identified cargoes. If none can be found 
the shipper will make written application to the Maritime 
Administration detailing the information as required in Appendix B and 
stating the requested beginning and ending dates of the extended waiver 
period. The application must be received by the Maritime Administration 
at least forty-five (45) calendar days prior to the intended 
commencement of the requested Extended Waiver period.
    2. The Maritime Administration will review the application in light 
of the information presented at the earlier meeting and will also 
consult with the U.S. carriers. If necessary, additional information 
may be requested.
    3. If no U.S.-flag carrier can be found, an Extended Waiver for the 
agreed time period, conditions and specific identified cargoes will be 
granted.
    4. Should there be a delay in the availability for shipment of the 
identified cargo under an Extended Waiver, the Maritime Administration 
may consider an extension of time sufficient to ship said cargoes but 
not to exceed three months. In this event, the shipper should notify 
the Maritime Administration as soon as possible but at least 30 days 
prior to the end of the Extended Waiver period, documenting the reasons 
for the delay and requesting the extension. After investigation and 
consultation with the U.S. carriers, the Maritime Administration may 
grant an extension.
    5. To meet the needs of the Export-Import Bank, once an Extended 
Waiver is granted by the Maritime Administration, the shipper will have 
to provide the Maritime Administration the Export-Import Bank credit 
number and country, vessel name, registry, sailing date, load port, 
discharge port, weight in pounds, FAS value of cargo, ocean freight, 
list of cargoes shipped and a freighted copy of the bill of lading for 
each voyage made under the terms of the Extended Waiver. This 
information must be provided within thirty (30) days of the date of 
loading. The Maritime Administration will then issue a standard waiver 
letter for each voyage for presentation to the Export-Import Bank. This 
resulting standard waiver letter will only cover those cargoes 
specifically identified and previously agreed under the Extended 
Waiver. If a shipper wishes to place any additional cargoes on the same 
voyage, they must utilize the standard waiver procedure, detailed in 
Appendix A paragraph A, with appropriate notice to the U.S. carriers.

Appendix B--(OMB No. 2133-0013 Applies to This Collection of 
Information)

PR-17 Statutory Waiver Request--Format

    The below information is required to process a statutory waiver 
request. This information should be mailed or faxed to Office of Cargo 
Preference, Room 8118, Maritime Administration, 400 Seventh Street, 
SW., Washington, DC 20590. Fax number is 202-366-5522.
    RE: Eximbank Credit No. (Enter the number)-Country (Enter Country 
name).
    Applicant: (Name of company seeking the waiver. Should be the cargo 
shipper or beneficial owner. If a freight forwarder or other party 
makes the application, it must clearly state on whose behalf they are 
seeking the waiver and that they legally represent said party.).
    Vessel: (Name of vessel you propose to use. Enter ``To Be Named'' 
if unknown. Note that actual vessel must be named prior to a final 
waiver being issued.).
    Registry: (Nation of registry of vessel).
    Commodity: (Short one line description similar to Acquisition List 
line items. Attach detailed description as part of packing list or 
similar document.).
    Weight: (Total weight in pounds. Attach details of individual 
shipping components with dimensions and weights as part of packing list 
or similar document.).
    Value of Shipment: (FAS value in US dollars).
    Ocean Freight: (Actual or estimated ocean freight charges from 
carrier you propose to use.).
    Loading Port: (Desired port to load cargo.).
    Loading Date: (Date when cargo will be ready to load.).
    Discharge Port: (Desired port of destination for ocean carriers.).
    Written reason(s) for the waiver request with documentation 
supporting each reason attached.
    The following language must be included in any waiver request above 
the signatory block.
    ``This application is made for the purpose of inducing the United 
States of America to grant a waiver of Public Resolution 17 and the 
rules and regulations prescribed to carry out the provisions of PR-17. 
I have carefully examined the application and all documents submitted 
in connection therewith and, to the best of my knowledge, information 
and belief, the statements and representatives contained in said 
application and related documents are full, complete, accurate and 
true.

Signature:
Name (typed):
Title:
Date:''

The Following Documents Must Be Attached

    1. Copy of the ``Request for Quotations (RFQ)'' package which the 
shipper sent to the carriers. Note it is preferable that the shipper 
send a copy of the RFQ to Maritime Administration at the same time it 
is sent to the carriers, in which case it is not necessary to attach 
another copy. The RFQ should contain the most detailed information 
available regarding the commodities, sizes and weights. A packing list 
is preferable.
    2. A list of all carriers, with names of personnel, to whom the RFQ 
was sent.
    3. Attach copies of any responses received from any US-flag 
carriers.
    4. Documentation supporting each reason justifying the need for a 
waiver.

[[Page 35885]]

For example, a contract problem requires a copy of the applicable 
contract clauses; a letter of credit problem requires a copy of the L/
C; US-flag service not available requires copies of written 
declinations by the US carriers; etc.

    Note: The U.S. Criminal Code makes it a criminal offense for any 
person knowingly to make a false statement or representation to, or 
to conceal a material fact from, any department or agency of the 
United States as to any matter within its jurisdiction (18 U.S.C. 
1001), or to file a false, fictitious or fraudulent claim against 
the United States (18 U.S.C. 287). Civil fraud may incur fines of 
$10,000 plus 3 times damages and expenses of government recovery. 
Criminal fraud provides up to 5 years imprisonment. In addition, 
corporations may be debarred from further Government contracts.

Appendix C.--(OMB No. 2133-0013 Applies to This Collection of 
Information)

Information and Communication

    At the beginning of a project shippers should:

--meet with the U.S.-flag ocean carriers
--meet with the Maritime Administration

    Purpose:

--layout project in as much detail as possible
--discuss contract requirements
--discuss any unique or expected problem requirements
--discuss purchase process, sourcing, timing
--provide best estimates, details, pictures of types of cargo
--discuss what cargoes should move together and why
--discuss anticipated shipment dates tied to project schedules
--discuss items which doubt U.S. carriers can handle & alternatives
--obtain carrier capabilities & alternatives
--discuss proposed allocations between U.S. & foreign carriers
--discuss impacts on foreign content requirements
--establish a working relationship with carriers

    In addition, for the Maritime Administration meeting:

--discuss potential compensatory waivers if applicable
--discuss reporting requirements
--provide written commitment to support the U.S. merchant marine on all 
cargoes when possible
--establish a working relationship with Maritime Administration

    As the project progresses, keep the carriers and Maritime 
Administration informed of progress related to initial projections and 
unforseen problems as they arise.
    The more each party understands the others objectives and 
capabilities, the better the communications and the smoother and faster 
the process if a waiver is ever needed.

BILLING CODE: 4910-81-P

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[GRAPHIC] [TIFF OMITTED] TN02JY97.003




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    Dated: June 25, 1997.
    By order of the Maritime Administrator.
Joel C. Richard,
Secretary,
[FR Doc. 97-17062 Filed 7-1-97; 8:45 am]
BILLING CODE 4910-81-C