Mormac Marine Transport, Inc.; Application for Written Permission Pursuant to Section 805(a) of the Merchant Marine Act, 1936, as Amended

DEPARTMENT OF TRANSPORTATION

Maritime Administration

[Docket S-906]

Mormac Marine Transport, Inc.; Application for Written Permission

Pursuant to Section 805(a) of the Merchant Marine Act, 1936, as Amended

Mormac Marine Transport, Inc. (Mormac), a subsidiary of Mormac

Marine Group, Inc. (Mormac Marine), by application of May 9, 1994,

requests, pursuant to section 805(a) of the Merchant Marine Act, 1936,

as amended (Act) and Article II-13 of Operating-Differential Subsidy

Agreements, Contracts MA/MSB-295 (a), (b), and (c) (ODSAs), written

permission for (1) James R. Barker and Paul R. Tregurtha (and members

of their immediate families), to own a pecuniary interest in Moran

Towing Corporation (Moran) and (2) Messrs. Barker and Tregurtha and

members of their immediate families to serve as officers and directors

of Moran and any of its subsidiaries.

Moran provides domestic coastwise transportation services and

performs harbor ship work with tugboats, more particularly described

below. Mormac is of the view that docking and undocking ships within

harbors is not subject to section 805(a), noting that that type of

service was within section 803 of the Act, which was repealed by the

Merchant Marine Act of 1970.

Mormac points out that it currently has approval for common

ownership, officers and directors of Mormac Marine and its subsidiaries

as well as the Interlake Steamship Company and Lakes Shipping Company,

Inc., both of which are involved in the domestic coastwise Great Lakes

service. Mormac needs approval for the acquisition of Moran for the

brief period of time remaining under the terms of Mormac's ODSAs.

Mormac's ODSAs will terminate in December 1995, June 1996, and February

1997, respectively.

Pursuant to the letter of intent, Messrs. Barker and Tregurtha,

members of their immediate families, and Lakes Shipping Company, Inc.

(which itself is owned in substantial part by the Barker and Tregurtha

families) will be purchasing the outstanding stock of Moran.

According to Mormac, Moran and its subsidiaries are currently

involved principally in the operation of tug boats from eight ports on

the U.S. east and gulf coasts used to dock and undock ships and also

tow barges and other vessels. Moran also uses its own tugs and barges

to transport cargoes along the east and gulf coasts and dry bulk

cargoes both in the coastwise and worldwide trades. The Moran fleet

currently consists of 54 tugs and 12 barges. Moran also indirectly owns

a 20-percent interest in tankers transporting crude oil from Alaska to

the continental U.S.

Mormac states that Moran and Mormac are both U.S. citizens within

the definition of section 2 of the Shipping Act, 1916, and section

905(a) of the Act, and will continue to be so after the consummation of

the proposed transactions. Following the change in ownership, Mormac

claims that Moran will continue to be involved in the same domestic

coastwise and worldwide service in which it is currently engaged, with

the possibility of future modifications and expansion to these services

as circumstances warrant and permit. Mormac feels that it is essential

that Moran be permitted freely to move tugboats and barges among the

several services in which they are presently employed and into new

services if conditions and circumstances so dictate. It is also

important that Moran be able to expand services geographically within

the regions currently being served.

Mormac maintains that the ownership of Moran by Messrs. Tregurtha

and Barker and their involvement in the management of Moran will not

result in any change in competitive conditions for U.S.-flag vessels

providing domestic coastwise marine transportation and harbor tug

services or for U.S.-flag vessels providing tanker services from Alaska

to the continental U.S. The only effect of the proposed transaction

will be a change in the ownership of Moran. Furthermore, it is expected

that the management of Moran will remain with Moran after the

acquisition. Messrs. Tregurtha and Barker will serve as Chairman and

Vice Chairman thereof, respectively.

Moran and Mormac are, and will remain, according to Mormac,

entirely separate corporate entities that will maintain separate and

discrete accounts so there will be no issue of a subsidy leakage or

diversion of subsidy. Following the consummation of the proposed

transaction, Mormac and Moran will consent to examination of their

books and records to the extent necessary to establish that there is no

diversion of subsidy. Mormac will receive no benefit from the

operations of Moran and Moran will receive no benefit from the

operations of Mormac.

Moran believes that no U.S.-flag competitor of Moran will be

subject to unfair competition nor will the ownership of Moran by

Messrs. Barker and Tregurtha and their family members be prejudicial to

the purposes and policies of the Act.

Mormac contends that no disputed issue of material fact is

anticipated by a transaction that simply changes ownership of a company

providing existing services. Any competitive condition that existed

before the transaction will exist after the transaction. Mormac

believes that no credible argument of leakage can be raised,

eliminating the possibility of any argument that a change in ownership

and the continuation of current services will result in unfair

competition to any U.S.-flag vessel. Under these circumstances, should

there be any request to intervene in this application, no issue is

expected by Mormac to be raised that could not be addressed on the

basis of available information provided to the record or subject to

official notice and certainly no issue that would involve the

submission of substantial evidence, either written or oral.

In Mormac's view, approval of this application is also entirely

consistent with the purposes and policies of the Act. This acquisition

will be a significant expansion of Messrs. Barker's and Tregurtha's

U.S.-flag fleets and a strong statement of continuing support for the

U.S. merchant marine by individuals who have a long history in and are

well respected by the maritime industry.

Mormac requests the scope of domestic operations permitted under

the ODSAs be modified to allow ownership of Moran by Lakes Shipping

Company, Inc., Messrs. Barker and Tregurtha and members of their

immediate families, as well as to allow Messrs. Barker and Tregurtha to

serve as officers and directors of both Mormac and Moran, with Moran

continuing to be involved in its current services (modified and

expanded as circumstances warrant and permit).

This application may be inspected in the Office of the Secretary,

Maritime Administration. Any person, firm, or corporation having any

interest in such application within the meaning of section 805(a) of

the Act and desiring to submit comments concerning the application,

must file written comments in triplicate with the Secretary, Maritime

Administration, together with petition for leave to intervene, Room

7300, Nassif Building, 400 Seventh Street SW., Washington, DC 20590.

Comments must be received no later than 5 p.m. on May 24, 1994. The

petition shall state clearly and concisely the grounds of interest, and

the alleged facts relied on for relief.

If no petition for leave to intervene is received within the

specified time or if it is determined that petitions filed do not

demonstrate sufficient interest to warrant a hearing, the Maritime

Administration will take such action as may be deemed appropriate.

In the event petitions regarding the relevant section 805(a) issues

are received from parties with standing to be heard, a hearing will be

held, the purpose of which will be to receive evidence under section

805(a) relative to whether the proposed operations (a) could result in

unfair competition to any person, firm, or corporation operating

exclusively in the coastwise or intercoastal service, or (b) would be

prejudicial to the objects and policy of the Act relative to domestic

trade operations.

Dated: May 11, 1994.

(Catalog of Federal Domestic Assistance Program No. 20.804

(Operating-Differential Subsidies))

By Order of the Maritime Administrator.

James E. Saari,

Secretary.

[FR Doc. 94-11825 Filed 5-12-94; 8:45 am]

BILLING CODE 9410-81-M