[Federal Register Volume 65, Number 162 (Monday, August 21, 2000)]
[Notices]
[Pages 50732-50740]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-21045]


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DEPARTMENT OF TRANSPORTATION

Maritime Administration

[Docket No. MARAD-2000-7798]


Criteria for Granting Waivers of Requirement for Exclusive U.S.-
Flag Vessel Carriage of Certain Export Cargoes

AGENCY: Maritime Administration, Transportation.

ACTION:  Notice of proposed policy revision.

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SUMMARY: The Maritime Administration (MARAD, we, us, our) is soliciting 
public comment on whether and/or how MARAD should amend its existing 
criteria for granting waivers of the requirement that cargo covered by 
Public Resolution 17 (PR-17) 73rd Congress, be carried on U.S.-flag 
vessels. Our goals for any policy amendments are: (1) the preservation 
of a cargo base financed by PR-17 for carriage on U.S.-flag vessels; 
(2) maximum export of U.S. manufactured goods; and (3) maintenance of a 
viable U.S.-flag merchant fleet for economic growth and national 
security. The intended effect is to set forth standard procedures for 
shippers and carriers to follow regarding PR-17 cargo in order to help 
support the U.S.-flag merchant fleet.

DATES: You should submit your comments early enough to ensure that 
Docket Management receives them not later than October 20, 2000.

ADDRESSES: Your comments should refer to docket number [MARAD-2000-
7798]. You may submit your comments in writing to: Docket Clerk, U.S. 
DOT Dockets, Room PL-401, 400 7th St., SW., Washington, DC 20590. You 
may also submit them electronically via the internet at http://dmses.dot.gov/submit/. You may call Docket Management at (202) 366-9324 and visit the 
docket Room from 10 a.m. to 5 p.m., EST., Monday through Friday, except 
Federal Holidays. An electronic version of this document is available 
on the World Wide Web at http://dms.dot.gov.

FOR FURTHER INFORMATION CONTACT: For non-legal issues you may call 
Thomas W. Harrelson, Director, Office of Cargo Preference at (202) 366-
5515. For legal issues you may call Murray Bloom, Chief, Division of 
Maritime Assistance Programs of the Office of the Chief Counsel at 
(202) 366-5320. You may send mail to both of these officials at 
Maritime Administration, 400 Seventh St., SW., Washington, DC 20590.

SUPPLEMENTARY INFORMATION:

Comments

How Do I Prepare and Submit Comments?

    Your comments must be written and in English. To ensure that your 
comments are correctly filed in the docket, please include the docket 
number of this document in your comments.
    We encourage you to write your primary comments in a concise 
fashion. However, you may attach necessary additional documents to your 
comments. There is no limit on the length of the attachments. Please 
submit

[[Page 50733]]

two copies of your comments, including the attachments, to Docket 
Management at the address given above under ADDRESSES.
    Please address whether the information collection in this proposal 
is necessary for proper performance of the function of the agency and 
will have practical utility, accuracy of the burden estimates, ways to 
minimize this burden and ways to enhance quality, utility, and clarity 
of the information to be collected.

How Can I Be Sure That My Comments Were Received?

    If you wish Docket Management to notify you upon its receipt of 
your comments, enclose a self-addressed, stamped postcard in the 
envelope containing your comments. Docket Management will return the 
postcard by mail.

How Do I Submit Confidential Business Information?

    If you wish to submit any information under a claim of 
confidentiality, you should submit three copies of your complete 
submission, including the information you claim to be confidential 
business information, to the Chief Counsel, Maritime Administration, at 
the address given above under FOR FURTHER INFORMATION CONTACT. You 
should mark ``CONFIDENTIAL'' on each page of the original document that 
you would like to keep confidential. In addition, you should submit two 
copies, from which you have deleted the claimed confidential business 
information, to Docket Management at the address given above under 
ADDRESSES. When you send comments containing information claimed to be 
confidential business information, you should include a cover letter 
setting forth with specificity the basis for any such claim.

Will the Agency Consider Late Comments?

    We will consider all comments that Docket Management receives 
before the close of business on the comment closing date indicated 
above under DATES. To the extent possible, we will also consider 
comments that Docket Management receives after that date. If Docket 
Management receives a comment too late for us to consider in developing 
a final policy (assuming that one is issued), we will consider that 
comment as an informal suggestion for future policy revisions.

How Can I Read the Comments Submitted By Other People?

    You may read the comments received by Docket Management at the 
address given above under ADDRESSES. The hours of the Docket Room are 
indicated above in the same location.
    You may also see the comments on the Internet. To read the comments 
on the Internet, take the following steps: Go to the Docket Management 
System (DMS) Web page of the Department of transportation (http://dms.dot.gov/). On that page, click on ``search.'' On the next page 
(http://dms.dot.gov/search/), type in the four-digit docket number 
shown at the beginning of this document. The docket number for this 
document is [7798]. After typing the docket number, click on 
``search.'' On the next page, which contains docket summary information 
for the docket you selected, click on the desired comments. You may 
download the comments.
    Please note that even after the comment closing date, we will 
continue to file relevant information in the Docket as it becomes 
available. Further, some people may submit late comments. Accordingly, 
we recommend that you periodically check the Docket for new material.

Background

    PR-17 reads:

    Resolved by the Senate and the House of Representatives of the 
United States of America in Congress assembled, That it is the sense 
of Congress that in any loans made by an instrumentality of the 
Government to foster the exporting of agricultural or other 
products, provision shall be made that such products shall be 
carried exclusively in vessels of the United States, unless, as to 
any or all of such products, the Secretary of Transportation, after 
investigation, shall certify to the instrumentality of the 
Government, that vessels of the United States are not available in 
sufficient numbers, or in sufficient tonnage capacity, or on 
necessary sailing schedules or at reasonable rates. 46 App. U.S.C. 
1241-1.

    The reservation of PR-17 cargoes on U.S.-flag vessels helps support 
the U.S.-flag merchant marine, which is a vital national asset and is 
necessary in times of war or national emergency. In peacetime, the 
U.S.-flag merchant marine provides essential service to ensure the 
continued flow of foreign water-borne commerce. The Export-Import Bank 
of the United States (Eximbank) is the principal agency generating 
export cargo subject to PR-17.
    In 1934 and 1965, the Attorney General concluded that granting 
waivers does not violate PR-17. (see 37 Op. A.G. 546 (1934) and 42 Op. 
A.G. 301 (1965)) MARAD's current policy on granting waivers was first 
published in Pike & Fischer's Shipping Regulation Report (at para. 501) 
in 1959).
    On June 30, 1997, we published an amendment to our long established 
policy. The amendment essentially incorporated the compensatory waiver 
and a six-month long extended waiver into the policy. It also set forth 
standard procedures and processes for both shippers and carriers to 
follow. At that time, we advised that we would review the amended 
policy after two years to determine if it needed any additional 
changes.
    Thus, under our existing policy, we grant four types of waivers: a 
general waiver, statutory or non-availability waiver, extended waiver, 
and compensatory waiver. First, a ``general waiver'' allows the 
national flag vessels of the recipient country to carry up to fifty 
percent (50%) of the cargo. Our primary conditions for granting a 
general waiver is that the recipient country not maintain any 
discriminatory policies detrimental to U.S.-flag vessels.
    The second waiver is a ``statutory'' or ``non-availability'' 
waiver. MARAD's policy provides that Eximbank, or other government 
instrumentalities, loan or credit guaranty recipients may apply for a 
non-availability waiver when it appears that U.S. vessels will not be 
available within a reasonable time or at reasonable rates. Although 
U.S.-flag vessels are usually available to carry containerized cargo to 
most destinations, oversized pieces of equipment require breakbulk 
vessels. A limited number of U.S.-flag breakbulk vessels serve regular 
routes. Much of the Eximbank financed cargo is project cargo, 
comprising oversized pieces of equipment requiring breakbulk vessels. 
In the past, MARAD has granted non-availability waivers sparingly and 
only for specific voyages and specific cargoes.
    The third type of waiver is called an ``extended'' waiver. If a 
shipper determines there is no projected U.S.-flag service to the 
cargo's destination after meetings with the U.S.-flag carriers and us, 
the shipper can apply for a waiver which is good for up to six months 
and which covers multiple shipments involving specifically identified 
pieces of cargo.
    The fourth type of waiver is called a ``compensatory''waiver. When 
a shipper, in honest error or under what we determine to be extenuating 
circumstances, moves preference cargo on a foreign-flag vessel, he may 
apply to MARAD for a compensatory waiver. After investigation, MARAD 
may issue

[[Page 50734]]

such a compensatory wavier whereby the shipper contracts with MARAD to 
move an equivalent amount of non-government impelled cargo, i.e. 
commercial cargo, on U.S.-flag vessels within a specified time period.
    We have reviewed the results of the 1997 policy changes. Overall, 
the results have been very positive. The number of waiver requests has 
decreased and dialogue between individual shippers and carriers has 
increased. More cargoes are being booked directly with the U.S.-flag 
carriers without any waiver requests. The policy amendments have not 
increased the number of waiver requests that we have denied. On the 
contrary, the number of waiver denials has remained constant for pre 
and post policy amendments. We have received only three requests for 
the six-month extended waiver, all covering small amounts of short 
interval cargoes, and we granted all three.
    During the past two years, we have held extensive discussions with 
shippers and carriers. The shippers are particularly concerned that 
when they bid a project, a reasonable projection of transportation 
availability and costs is required. Project cargoes typically consist 
of shipments over an extended prior of time. Frequently, the shipments 
must be planned so the delivery is made in proper sequence and in 
critical time frames consistent with the construction schedule. Some 
cargoes require a long lead time to manufacture and if damaged during 
shipment there would be serious adverse effects on the project.
    The shippers have requested that MARAD consider making changes in 
the following four areas of our policy:
    First, the shippers request that MARAD formalize its current 
practice of not requiring transshipment for breakbulk cargoes that are 
either long lead time procurement or are critical items (LLIT&C). For 
the purposes of the proposed policy change, transshipment is defined as 
the off-loading of breakbulk cargo (cargo that is loose or non-
containerized) from one vessel at an intermediate port and reloading 
the breakbulk cargo on a different vessel for delivery to final 
destination. It does not include cargo in containers, trailers, or 
barges where the entire conveyance is transferred from one vessel to 
another vessel. The shipper must provide us with sufficient acceptable 
documentation for us to make a determination that an item is long lead 
time procurement or critical items. Incorporating this practice into 
the formal policy will provide both shippers and carriers with clear 
guidance on the requirements.
    Second, the shippers expressed a desire for a clear and predictable 
definition of ``reasonable rates'', as stated in PR-17, that will allow 
them to make a more accurate bid on their projects. Shippers state that 
PR-17 Guideline Rates should only apply to trade lanes where U.S.-flag 
liner breakbulk service is not available. Shippers requested that we 
establish a system for calculating guideline rates subject to PR-17 in 
much the same fashion as we provide for agricultural cargoes under the 
Cargo Preference Act of 1954, although the guideline rate would be 
expressed in dollars per revenue ton of cargo. MARAD has analyzed 
twenty actual voyages and several potential rate models. We believe a 
workable guideline rate system for PR-17 cargoes can be constructed 
within the basic framework of our current guideline rate regulations 
(46 CFR part 382). The modifications would tailor rates to more closely 
reflect the timing of the request, the requirements of the cargo, and 
vessels in, or potentially in, the trade.
    Third, the shippers requested that we change the ``extend waiver to 
become a ``condition wavier. This waiver would only apply to 
specifically identified breakbulk over-dimensional (oversize and/or 
heavylift) cargoes and integral components that could not be handled by 
the existing U.S.-flag liner services and which are part of multiple 
shipments to the same project. We would consider granting such waivers 
only in those trade lanes in which U.S.-flag breakbulk service was not 
available on a liner basis. We would grant the proposed conditional 
waiver in advance for a period of up to two year unless a U.S.-flag 
breakbulk carrier subsequently offers service at or below the guideline 
rates that we establish. If a U.S.-flag vessel offers service at or 
below the guideline rates during the period of the conditional waiver, 
the U.S.-flag vessel would get the cargo if the carrier meets our 
conditions of carriage.
    Fourth, the shippers recommend that any shipper wishing to obtain a 
waiver must provide us with all available cargo details including cargo 
value and rates, projected shipping time frame, and service 
requirements. Of this information, only essential cargo information 
will be posted on our web page. Carriers could then evaluate (1) The 
potential for combining various shippers' cargoes and (2) the economic 
feasibility of new U.S.-flag tonnage in that trade lane.
    MARAD is seeking comments on whether we should incorporate these 
suggestions into our existing PR-17 waiver policy. Our goals for any 
new proposals are (1) The preservation of a cargo base financed by PR-
17 for U.S.-flag vessels; (2) maximum export of U.S. manufactured 
goods; and (3) maintenance of a viable U.S.-flag merchant fleet for 
economic growth and national security.
    We ask the public to comment on the above proposed shipper 
suggestions and the below proposed language which would incorporate the 
above shipper suggestions. This proposed revision to the policy 
language would not be expected to significantly change the current 
requirement for the collection of information approved under OMB 
Numbers 2133-0013 or 2133-0514.

Proposed Revised Policy Language

    The Maritime Administration proposes to amend our policy governing 
the 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, to read as follows:

1. Scope of Applicability

    Public Resolution No. 17 provides that where an instrumentality of 
the Government makes loans or credit guarantees to foster the export of 
agricultural or other products, such products must be carried 
exclusively in vessels of the United States unless the Maritime 
Administration (we, us, or our) certifies 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 (Eximbank) or other Government 
instrumentalities for the purpose of financing the acquisition and 
shipment of United States products or services. The Eximbank must 
include in such credit agreement a requirement that shipments be made 
in United States flag vessels, except to the extent that we grant a 
waiver of the requirement as outlined in this policy statement. If the 
Eximbank receives a request for a waiver, it will refer the request to 
us.

2. Types of Waivers

    The general process for all waiver requests is set forth in 
Appendix A. Guidelines for the information to be included in the waiver 
request are set forth in Appendix B. We will post the essential terms 
of applications for, and status of, all waiver requests and waivers on 
our web site. Security access to waiver information will be limited to 
bonafide U.S.-flag carriers.

(A) Statutory (Non-Availability) Waiver

    When it appears that U.S. vessels will not be available within a 
reasonable

[[Page 50735]]

time or at reasonable rates, public or private foreign borrowers, or 
their representatives or their shippers in the United States may apply 
directly to our Office of Cargo Preference, for waiver of the U.S.-flag 
requirement. Requests for waivers must follow the format in Appendix B 
and must have a legal signature. We will make any necessary 
investigation to determine whether U.S.-flag vessels are available and 
will approve or deny the waiver request in writing. We may request 
additional information. Copies of approved waivers or denials will be 
sent to the Eximbank.
    Such waivers will apply to the specifically approved cargo 
movements. Within thirty (30) calendar days of vessel loading, 
applicants or their designated representatives in the United States 
must report the name of the vessel, registry, date of sailing, load and 
discharge ports, ocean freight amount, value of cargo, gross weight of 
cargo in kilos, gross volume of cargo in cubic meters, and total 
revenue tons, in the general form of Appendix F. A copy of the rated 
bills-of-lading must be attached to the report. The Eximbank Credit 
Number must be provided to the ocean carrier and must be shown clearly 
on the rated bill of lading issued by the ocean carrier. The Maritime 
Administration and the Eximbank will accept only the ocean bill of 
lading issued by the carrier operating the vessel as proof of export. 
An NVOCC bill of lading must be accompanied by a rated ocean bill of 
lading.
    We strongly encourage those public or private foreign borrowers, 
and/or their United States representatives or their shippers to meet 
with U.S. flag carriers and then to meet separately with our Office of 
Cargo Preference staff. During the meeting, we must receive full and 
complete information regarding the project, specifically identifying 
those cargoes for which a waiver might be sought. Appendix C lists the 
information that must be presented to us and the carriers. Waiver 
information will be posted on our web site for use by bonafide U.S.-
flag carriers.

(B) General Waivers

    In certain circumstances, although U.S.-flag vessels may be 
available, recipient nation vessels may be authorized to share in the 
ocean carriage of Eximbank financed movements, but not in excess of 
fifty percent (50%) of the total movement under the credit. Although 
allowing a recipient nation to share in this type of ocean carriage may 
reduce the U.S.-flag share, we may allow such participation if the 
recipient nation gives similar treatment to U.S. vessels in the trade 
of its foreign nation. When public or private foreign borrowers, or 
their U.S. representatives, or the primary U.S. shipper acting on 
behalf of the borrower desire a general waiver for partial use of the 
national flag vessels of the recipient nation, they must apply to our 
Office of Cargo Preference, for a General Waiver for the particular 
credit. When private interests apply, we may request sponsorship by a 
foreign government official of the recipient nation, to assure the 
recipient nation's responsibility to maintain fair and equitable 
treatment for U.S.-flag shipping.
    (1) If we grant such waivers, they will 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. The U.S.-flag portion should be awarded first to 
ensure the minimum fifty percent (50%) requirement.
    (2) General Waivers will normally apply throughout the life of the 
credit, but we or the Eximbank may reconsider the duration of the 
general waiver at any time in light of altered circumstances.
    (3) The record of cargo distribution between U.S. and recipient 
national flag vessels will be based on (a) revenue tons and ocean 
freight revenue; and/or (b) such other units as appropriate.
    (4) Applicants or their representatives in the United States must 
provide reports of movements to our Office of Cargo Preference, 
monthly. The reports must include the name of the vessel, registry, 
date of sailing, load and discharge ports, ocean freight, value of 
cargo, gross weight of cargo in kilos, gross volume of cargo in cubic 
meters, and total revenue tons in the general form of Appendix F. From 
time to time, we may change the data to be included on these reports to 
meet specific circumstances of the movements. Copies of the rated ocean 
bills-of-ladings must be attached. The Eximbank Credit Number must be 
provided to the underlying ocean carrier and must be shown clearly on 
the rated bill of lading issued by the ocean carrier. The Maritime 
Administration and the Eximbank will accept only the ocean bill of 
lading issued by the carrier operating the vessel as proof of export. 
An NVOCC bill of lading must be accompanied by a rated copy of the 
underlying ocean bill of lading.
    (5) We will not grant a General Waiver until our Office of Cargo 
Preference has received written confirmation of the applicant's 
agreement to the foregoing terms and 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 for 
providing the required monthly reports.
    (6) General Waiver information will be posted on our web site for 
use by bonafide U.S.-flag carriers.

(C) Compensatory Waivers

    When public or private foreign borrowers, or their U.S. 
representatives, or their shippers in the U.S., prior to a decision to 
seek an Eximbank credit agreement, in honest error or through 
extenuating circumstances as approved by us, move cargo for which a 
waiver is necessary to meet Eximbank financing requirements, the 
exporter may apply to our Office of Cargo Preference for a Compensatory 
Waiver. After investigation, we may grant a Compensatory Waiver whereby 
the exporter contracts in writing with us to move an equivalent or 
greater amount of revenue tons and ocean freight revenue of non-
government impelled cargo on U.S.-flag vessels within a specified time 
period. If our Office of Cargo Preference determines that a U.S.-flag 
ocean carrier made the error, we may issue a retroactive Statutory 
Waiver.
    Waiver recipients or their representatives in the United States 
must provide reports of movements to our Office of Cargo Preference, 
monthly. The reports must include the name of the vessel, registry, 
date of sailing, load and discharge ports, ocean freight, value of 
cargo, gross weight of cargo in kilos, gross volume of cargo in cubic 
meters, total revenue tons,in the general form of Appendix F. From time 
to time, we may change the data to be included on these reports to meet 
specific circumstances of the movements. Copies of the rated ocean 
bills-of-ladings must be attached. The Eximbank Credit Number must be 
provided to the ocean carrier and must be shown clearly on the rated 
bill of lading issued by the ocean carrier. The Maritime Administration 
and the Eximbank will accept only the ocean bill of lading issued by 
the carrier operating the vessel as proof of export. An NVOCC bill of 
lading must be accompanied by a rated ocean bill of lading. All 
outstanding compensatory waiver amounts and shipper contact information 
will be published on our web site for use by bonafide U.S.-flag 
carriers.

(D) Conditional Waivers

    Public or private foreign borrowers or their U.S. representatives 
or their shippers in the U.S. may apply to our Office of Cargo 
Preference for a Conditional Waiver of the U.S.-flag requirement if 
they find that no U.S.-

[[Page 50736]]

flag breakbulk vessel service will be available during their proposed 
project to carry multiple shipments of overdimensional cargoes. Such 
Conditional Waiver may be for the length of the project but not greater 
than two years from the date of any such waiver approval. Also, if 
during the course of executing the project, U.S.-flag breakbulk liner 
vessel service becomes unavailable to carry the multiple shipments of 
their overdimensional cargoes, the borrower or their shippers also may 
apply for such a Conditional Waiver.
    Before we will grant a Conditional Waiver, the exporter must meet 
with the U.S.-flag carriers and then must meet separately with our 
Office of Cargo Preference staff, to provide full and complete 
information regarding the project, specifically identifying those 
cargoes on which the waiver is sought. Appendix C lists the information 
that must be presented to us and the carriers.
    We will grant a Conditional Waiver only for those trade lanes in 
which no U.S.-flag breakbulk liner service is currently available. A 
Conditional Waiver will only cover specifically identified and approved 
overdimensional cargoes and integral components. If a U.S.-flag carrier 
that is willing to provide the shipper at least thirty (30) days notice 
and is willing to carry the cargo at a guideline rate that we calculate 
(see Appendix D), becomes available later, then that U.S.-flag carrier 
will be entitled to carry the cargo, provided the carrier meets our 
conditions of carriage.
    Once we grant a Conditional Waiver, in order to meet the needs of 
the Eximbank, the shipper must provide us with the Export-Import Bank 
Credit Number and country, vessel name, registry, sailing date, load 
port, discharge port, cargo weight in kilos, cargo volume in cubic 
meters, revenue tons, FAS value of cargo, ocean freight, list of 
cargoes shipped, and a freighted copy of the ocean carrier's bills of 
lading for each voyage made under the terms of the Conditional Waiver. 
This information must be provided within fifteen (15) days of the date 
of loading. We will then issue a standard non-availability waiver 
letter, for presentation to the Eximbank, for each voyage. This 
standard non-availability waiver letter will cover only those cargoes 
specifically identified with projected shipping dates previously agreed 
to under the Conditional Waiver. A shipper wishing to place any 
additional cargoes on the same voyage must use the standard non-
availability waiver procedure, detailed in Appendix A, paragraph A, 
with appropriate notice to the U.S. carriers. We will post waiver 
information on our web site for use by bonafide U.S.-flag carriers.

3. Considerations Influencing Approval of Applications for Waivers

    (A) In evaluating applications for non-availability waivers under 
Paragraph 2(A) or conditional waivers under paragraph 2(D) we will 
consider:
    (1) Whether 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 us at the beginning of the project 
to provide the information listed in Appendix C;
    (2) Whether a carrier's proposed transshipment of Long Lead time or 
Critical Item cargoes constitute non-availability. However, the shipper 
must provide sufficient documentation acceptable to us to prove the 
cargoes meet the definition of Long Lead Time or Critical Items 
(Appendix E).
    (3) Whether a non-liner breakbulk carrier's refusal to offer 
service at or below a guidelines rate may constitute non-availability. 
Upon application by the shipper, we will calculate a guideline rate for 
non-liner breakbulk service. The rate will be expressed as rate per 
revenue ton of cargo, as set forth in Appendix D. If a non-liner 
breakbulk carrier does not agree to carry the cargo at or below the 
guideline rate, we may deem the carrier not available for that specific 
cargo movement.
    (4) The national policy of the United States, including the 
Merchant Marine Act, of 1936, as amended, as well as the purpose of the 
Eximbank in authorizing the credit.
    (B) In evaluating applications for General Waivers under Paragraph 
2(B), we will consider:
    (1) The treatment given U.S.-flag vessels in the trade with the 
recipient nation, particularly whether U.S.-flag vessels have equal 
opportunity compared to 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. We will seek 
information 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, 1936, as amended, as well as the purpose of the 
Eximbank in authorizing the credit.
    (C) In evaluating applications for compensatory waivers under 
Paragraph 2(C), we will consider:
    (1) The circumstances leading to the movement on a foreign flag 
vessel;
    (2) The prior history of the exporter in shipping its government-
impelled and commercial cargoes on U.S.-flag vessels;
    (3) Any previous or current compensatory waivers used by the 
exporter and its efforts to comply with the terms of the previous or 
existing compensatory waivers; and
    (4) The national policy of the United States, including the 
Merchant Marine Act, 1936, as amended, as well as the purpose of the 
Eximbank in authorizing the credit;
    (D) Non-compliance with the terms of a waiver may result in the 
cancellation of the current waiver and/or a refusal to grant future 
waivers and/or other appropriate actions, including debarment from 
government contracts. Civil or criminal fraud will be penalized under 
the appropriate United States Code section.

    Attachments (these attachments are hereby incorporated into this 
policy):

Appendix A: Waiver Request Procedures
Appendix B: Waiver Request Required Information
Appendix C: Information and Communication Guide
Appendix D: Guideline Rate Policy
Appendix E: Definitions and Miscellaneous Information
Appendix F: Movement Reports Guide

Appendix A

(OMB No. 2133-0013 applies to this collection of information.)

Waiver Request Procedures

A. Statutory (Non-Availability) Waivers

    1. The public or private foreign borrowers of their United 
States representative, receives or expects to receive Eximbank 
credit approval. (Note: Shipments could begin before the credit 
approval. See the section on Compensatory Waivers.) In the early 
stages of the project, either before or when the credit is approved, 
the shipper should meet with the U.S.-flag carriers and us and 
discuss the project cargoes detailing the information suggested in 
Appendix C. We will confirm the Eximbank Credit Number.
    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 Martime Administration. The RFQ must 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.

[[Page 50737]]

    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 obtain service from a U.S.-flag 
carrier, the shipper may apply for a waiver from us. Such waiver 
application must be presented 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. We will review the application, verify the waiver 
documentation provided by the shipper, investigate or request 
further information as necessary, and search the market for U.S.-
flag carriers to handle the cargo.
    6. We will either approve or deny the waiver in writing.

B. General Waivers

    1. As set forth in Policy Statement paragraph 2(B), a foreign 
borrower or primary U.S. exporter who desires to make partial use of 
registered vessels of the recipient nation for a specific Eximbank 
credit must send our Office of Cargo Preference a written request.
    2. We will make necessary investigations, 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 we do not find discrimination, we will advise the 
applicant that we may grant a General Waiver upon receipt of written 
confirmation of the applicant's agreement to the terms and 
conditions set forth in Policy Statement paragraph 2 (B). When we 
receive the written confirmation, we will grant the General Waiver 
in writing with a copy to the Eximbank.

C. Compensatory Waivers

    1. If a Compensatory Waiver is needed (Policy Statement 
paragraph 2 (C)), the shipper should apply to us in writing, stating 
the reasons, identifying the Eximbank Credit Number and country, and 
attaching freighted copies of the ocean bill of lading covering the 
applicable cargoes.
    2. If, after investigation, we decide to grant a Compensatory 
Waiver, we will notify the shipper of the requirements. The shipper 
must then execute a written contract to meet those requirements.
    3. Once we receive the written contract from the shippers, we 
will issue the waiver.

D. Conditional Waivers

    1. An applicant for a Conditional Waiver (Policy Statement 
paragraph 2(D) must fulfill the conditions and information stated in 
Appendix C and must identify the specific overdimensional and 
integral component cargoes with projected shipping dates during the 
waiver time period. The shipper must search the market for U.S.-flag 
carriers to transport the identified cargoes. If the shipper cannot 
find such carriers, the shipper may apply in writing to us and must 
provide the information required in Appendix B and state the 
requested beginning and ending dates of the conditional waiver 
period. We must receive the application at least sixty (60) calendar 
days before the intended start of the requested Conditional Waiver 
period.
    2. We will review the application in light of the information 
presented at the earlier meeting, will consult with the U.S. 
carriers, and will request additional necessary information.
    3. We will calculate a Guideline Rate for the specific cargoes, 
as set forth in Appendix D, and will publish the Guideline Rate on 
our web site. If no U.S.-flag breakbulk liner carrier can be found, 
we will grant a Conditional Waiver for the agreed time period, 
conditions, and specific identified cargoes.
    4. If at any time during the period of the Conditional Waiver, a 
U.S.-flag carrier gives at least a thirty (30) day notice to the 
shipper and us in which the U.S.-flag carrier offers to carry the 
cargo at or below the published guideline rate, the U.S.-flag 
carrier will be entitled to do so provided the carrier meets our 
appropriate and approved conditions of carriage.
    5. Immediately after each shipment departs the load port, the 
shipper must give us an update of the remaining project cargoes 
previously approved under the Conditional Waiver and an update of 
the projected shipping dates.
    6. To meet the needs of the Eximbank, once we grant a 
Conditional Waiver, the shipper must give us the Eximbank Credit 
Number and country, vessel name, registry, sailing date, load port, 
discharge port, cargo weight in kilos, cargo volume in cubic meters, 
revenue tons, FAS value of cargo, ocean freight, list of cargoes 
shipped, and a freighted copy of the ocean carrier's bill of lading 
for each voyage made under the terms of the Conditional Waiver. This 
information must be provided within fifteen (15) days of the date of 
loading. We will then issue a standard non-availability waiver 
letter for each voyage for presentation to the Eximbank. This 
standard non-availability waiver letter will cover only those 
cargoes specifically identified and previously agreed to under the 
Conditional Waiver. A shipper who wishes to place any additional 
cargoes on the same voyage must use the standard non-availability 
waiver procedure, detailed in Appendix A paragraph A, with 
appropriate notice to the U.S. carriers.
    7. A shipper who needs additional time beyond the original 
Conditional Waiver period must apply for an extension by following 
steps 1 through 6 above. After investigation and consultation with 
the U.S. carriers, we may grant an extension.

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. 
Electronic mail address is [email protected]
    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 
it is seeking the waiver and that it legally represents said party.)
    Vessel: (Name of vessel you propose to use. Enter ``To Be 
Named'' if unknown. Note that actual vessel must be named before a 
final waiver is issued. Shippers should be aware that Pub.L. 105-383 
prohibits the carriage of preference cargoes on substandard vessels. 
See the Maritime Administration web site.)
    Registry: (Nation of registry of vessel. Enter ``To Be Named'' 
if unknown.)
    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 kilos. Attach details of individual 
shipping components with dimensions and weights as part of packing 
list or similar document.)
    Volume: (Total volume in cubic meters. Attach details of 
individual shipping components with dimensions and weights as part 
of packing list or similar document.)
    Revenue Tons: (Shipper's estimate of cargo revenue tons.)
    Value of Shipment: (FAS value in U.S. dollars.)
    Ocean Freight: (Actual or estimated ocean freight charges from 
carrier applicant proposes 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 of 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 
policy 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 representations 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.

[[Page 50738]]

    2. A list of all carrier, with names of personnel, to whom the RFQ 
was sent.
    3. Copies of any responses received from any U.S.-flag carriers.
    4. Documentation supporting each reason justifying the need for a 
waiver. 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; U.S.-flag service not available requires copies of written 
declinations by the U.S. carriers; etc.

    Note: The essential terms of the waiver application and cargo 
shipment information will be posted on the Maritime Administration 
web site but restricted to bonafide U.S.-flag cariers.


    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 (required for 
Conditional Waivers):

--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
--Provide best estimates, details, pictures of types of cargo
--Identify any long lead time or critical items
--Discuss what cargoes should move together and why
--Discuss anticipated shipment dates tied to project schedules
--Discuss items which it is doubtful U.S. carriers can handle & 
alternatives
--Obtain carrier capabilities & alternatives
--Establish and maintain a dialogue with U.S.-flag carriers

    Note: For Conditional Waivers, the shipper must specify the 
projected overdimensional cargoes and integral components and 
specify their projected shipping dates.

    In addition, for the Maritime Administration meeting:

--Discuss potential waivers, if applicable
--Discuss reporting requirements
--Establish a working relationship with Maritime Administration

    The essential information will be posted on the Maritime 
Administration web site.
    As the project progresses, keep the carriers and Maritime 
Administration informed of progress related to initial projections 
and unforeseen problems as they arise.
    Increased understanding of each party's objectives and 
capabilities will establish better communications and create a 
smoother/faster process.

Appendix D

(OMB No. 2133-0013 and 2133-0514 apply to this collection of 
information.)
    Once a shipper requests a Conditional Waiver of the U.S.-flag 
requirement of PR-17, we will calculate a guideline rate or rates as 
part of the waiver process. The guideline rate will be for the 
proposed movement of a specific cargo or cargoes on a specific 
voyage or voyages on U.S.-flag non-liner breakbulk vessels. For the 
purpose of this PR-17 policy, the guideline rates will be calculated 
using the basic framework contained in the Maritime Administration 
regulations at 46 CFR 382.3, except as follows:
    1. We calculate the guideline rate based on a vessel or group of 
vessels we determine is most suited to the cargo and destination.
    2. Costs will be indexed to the year of cargo carriage.
    3. The calculation will assume, unless we determine otherwise, 
that the cargo occupies seventy percent of the cubic capacity of the 
selected vessel(s).
    4. The rate will be specified in U.S. dollars per revenue ton.

Appendix E

(OMB No. 2133-0013 applies to this collection of information.)

Definitions

    The following definitions apply to this PR-17 policy.
    Critical Item Cargo: A product whose non-availability to support 
the required installation date would cause the project to shut down 
or to incur substantial liquidated damages.
    Foreign Borrower: A foreign government, corporation, or person 
who is the recipient of a loan or credit guarantee by an 
instrumentality of the United States.
    Liner Service: A service provided on an advertised schedule 
giving relatively frequent sailings between specific U.S. ports or 
ranges and designated foreign ports or ranges.
    Long Lead Time Cargo: A product which, if damaged during 
shipment, would require more than six (6) months to repair or 
remanufacture and which is not available sooner from the shipper's 
inventory or from any other manufacturer.
    Ocean Carrier: The operator of the ocean vessel which carries 
the cargo between one or more United States ports and one or more 
foreign ports.
    Overdimensional Cargo: A specific piece of cargo is considered 
overdimensional or out-of-gauge when one or more of its dimensions 
exceed the interior dimensions of a standard maritime industry 
forty-foot container or the cargo weight exceeds 39 metric tons.
    Revenue Ton: A metric ton or cubic meter of cargo, whichever 
yields the greatest revenue to the ocean carrier.
    Shipper: A person or company who contracts with a shipping line 
or shipowner for the carriage of cargo.
    Transshipment: The offloading of breakbulk cargo from one vessel 
at an intermediate port and reloading the breakbulk cargo on a 
different vessel for delivery to final destination. It does not 
include cargo in containers, trailers, or barges where the entire 
conveyance is relayed form one vessel to another vessel under a 
through bill of lading.

BILLING CODE 04910-81-P

[[Page 50739]]

[GRAPHIC] [TIFF OMITTED] TN21AU00.000



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    By Order of the Maritime Administrator.

    Dated: August 14, 2000.
Joel C. Richard,
Secretary, Maritime Administration.

[FR Doc. 00-21045 Filed 8-18-00; 8:45 am]
BILLING CODE 4910-81-C