SeaRiver Maritime, Inc.; Notice of Application for Approval To Transfer Operating-Differential Subsidy Agreement, Contract MA/MSB-439 From the Bankruptcy Estate of Equity Carriers, Inc. and To Operate the S/R ``Mediterranean'' in the Foreign Trade With Operating-Differential Subsidy

DEPARTMENT OF TRANSPORTATION

Maritime Administration

[Docket 5-913]

SeaRiver Maritime, Inc.; Notice of Application for Approval To

Transfer Operating-Differential Subsidy Agreement, Contract MA/MSB-439

From the Bankruptcy Estate of Equity Carriers, Inc. and To Operate the

S/R ``Mediterranean'' in the Foreign Trade With Operating-Differential

Subsidy

SeaRiver Maritime, Inc. (SeaRiver), by letter of September 29,

1994, advises that it has purchased Operating-Differential Subsidy

Agreement, Contract MA/MSB-439 from the bankruptcy estate of Equity

Carriers, Inc., and that its purchase agreement with the bankruptcy

estate is subject to:

Maritime Administration (MARAD) approval of the transfer of

Contract MA/MSB-439,

MARAD obtaining approval of funding for at least one of the

three operating subsidies comprising Contract MA/MSB-439 for the

balance of the period of Contract MA/MSB-439, which expires on May 23,

2001, and

MARAD and SeaRiver agreement to necessary amendments to

Contract MA/MSB-439.

SeaRiver advises that the purpose of its petition to MARAD is to

request approval of the transfer of Contract MA/MSB-439 to SeaRiver and

to obtain confirmation that funding will be available for subsidizing

the worldwide transportation of crude oil in bulk in the foreign

commerce of the United States and between foreign ports on the S/R

MEDITERRANEAN (Vessel), a 211,000 DWI tanker, which sustained bottom

damage in 1989 when it ran aground on Bligh Reef in Prince William

Sound. Following completion of repairs in 1990 and due to an expected

decline in ANS transportation requirements, the Vessel was temporarily

placed in foreign service and renamed accordingly. Subsequently, under

a provision of the Oil Pollution Act of 1990, the vessel was, and

remains, prohibited from operating in Prince William Sound, thereby

denying the Vessel from operating in the only Jones Act trade for which

it is operationally and economically suited.

SeaRiver advises that since September 1990, therefore, the Vessel

has operated in foreign service. In the four years of foreign

operations, the Vessel has completed more than 60 voyages primarily

transporting mid-East crude oil to European discharge ports. SeaRiver

states that the Vessel's performance in this service has been

exemplary, and the Vessel and its crew are highly regarded in the many

foreign ports which it has entered. Moreover, as the only modern U.S.

tanker consistently operating abroad, the Vessel and her crew have

demonstrated and fostered the best traditions of the American flag

merchant marine.

SeaRiver advises that the Vessel is competing against low-cost

foreign-flag operators for foreign commerce in a depressed-rate trade,

which is not covering operating costs of foreign flag tankers with

significantly lower operating costs than U.S. flag vessels. However,

the Vessel is precluded from operating in the domestically protected

trade for which it was primarily built. SeaRiver advises that given the

losses sustained and the prospect of continuing losses on the operation

of the Vessel, SeaRiver has to consider alternatives including lay-up

and sale. The other viable and beneficial alternative is the granting

of operating-differential subsidy (ODS) to support continued operation

of the Vessel in foreign commerce.

SeaRiver states that it is wholly-owned affiliate of Exxon

Corporation (Exxon). SeaRiver is a ``stand alone'' company which has

the responsibility to the shareholders to ensure that SeaRiver

maintains its leadership presence as a technically proficient, high

quality owner/operator of U.S.-flag vessels transporting crude and

petroleum products. SeaRiver states that providing ODS will ensure that

this modern state-of-the-art and technologically advanced Vessel will

continue to operate and will provide for continuing employment for

about 50 skilled, dedicated American seafarers.

SeaRiver states that it owns and operates oceangoing tankers, tugs/

towboats and barges. It has an ocean fleet of 12 tankers totaling 1,200

thousand DWT and an inland fleet of 16 tugs and towboats and 50 barges.

SeaRiver advises that its principal operations involve the

transportation of crude oil, petroleum feedstocks, and finished

petroleum and chemical products and tug assist service.

SeaRiver's principal operations are listed below:

Alaskan crude from Valdez, Alaska, to U.S. west coast

destinations;

Motor gasoline, heating oil, jet fuel, and other petroleum

fuel products to U.S. ports from Baytown, Texas; and Baton Rouge,

Louisiana;

Lubricating oils, solvents, and other specialty products from

Baytown and Baton Rouge to east coast and inland destinations;

Inter-refinery feedstock transportation;

Harbor, escort and assist tug services to vessels; and

International crude trade (one vessel).

SeaRiver, by letter of October 24, 1994, provided additional

information in connection with its request of September 29, 1994.

SeaRiver advises that since September 1990, the Vessel has operated

in foreign service, having now completed more than 60 voyages,

primarily from the Middle East and Mediterranean areas to European

ports. On occasion, the Vessel has loaded North Sea crude in Scotland

for transportation to other European discharge ports. Earlier this

year, the Vessel also transported a Strategic Petroleum Reserve cargo

from Sullom Voe. SeaRiver advises that its plans are that the Vessel

will continue to operate in international service, optimally in the

Middle East and European foreign trades. However, this does not

preclude the vessel from trading in the U.S. In Attachment I to its

letter of October 24, SeaRiver shows the number of voyages and foreign

areas of operation for the Vessel for 1992, 1993, and 1994.

SeaRiver also requests the necessary written permission under

section 805(a) of the Merchant Marine Act, 1936, as amended (Act), for

vessels owned and operated by SeaRiver in the domestic trades. These

include tank vessels used to transport crude from Alaska to U.S. west

coast destinations and solvents, chemicals, specially and petroleum

products from the U.S. gulf to the U.S. east coast. SeaRiver also

operates towboats and barges that move petroleum fuel products,

specialty products and chemicals along the U.S. gulf coast and inland

waterways. SeaRiver advises that tugs are also used in harbor assist,

escort and oil spill response service on the U.S. west coast and in the

Gulf. SeaRiver states that it may acquire additional U.S. flag tonnage

as an owner/operator or may dispose of existing tonnage in the course

of normal business operations. Additionally, SeaRiver indicates that it

may spot, term or bareboat incharter and/or outcharter U.S.-flag

tonnage as necessary to satisfy business requirements. SeaRiver lists

its domestic fleet and areas of operating in Attachment II to its

letter of October 24, 1994.

SeaRiver advises that it presently distinguishes accounting for the

expenditures of the S/R MEDITERRANEAN separate from other operations.

SeaRiver will further guarantee to institute any additional internal

procedures that may be necessary to ensure that any operational subsidy

granted will apply only to the S/R MEDITERRANEAN.

SeaRiver is also requesting a waiver of section 804(a) of the Act.

In addition to owning, operating, inchartering and outchartering U.S.

flag vessels, SeaRiver also incharters foreign flag tankers to support

domestic operations (e.g. Gulf of Mexico ligthering service).

SeaRiver advises that Exxon also has international affiliates that

own, operate and charter foreign flag vessels. These affiliates are

located primarily in Europe, the Far East and Latin America. The

vessels are managed and operated by the affiliates and are totally

independent from the U.S. flag marine operations of SeaRiver. These

Exxon affiliates may acquire additional foreign flag tonnage as owners/

operators or may dispose of existing tonnage in the course of their

normal business operations. The affiliates may also spot, term, or

bareboat incharter and/or outcharter foreign flag tonnage necessary to

satisfy business requirements. Attachment III to SeaRiver's October 24,

letter details all of the Exxon affiliates's owned, operated, and

chartered foreign flag vessels.

SeaRiver advises that Exxon is a participant in the Revised

Voluntary Tanker Agreement (MARAD Contract MA-11725) under which Exxon

agrees to make foreign flag tanker tonnage capacity available to the

U.S. to further meet (beyond the SeaRiver U.S. flag tonnage) emergency

national defense needs. The Bahamian registered vessels which are noted

in Attachment III to the October 24 letter are covered by the

Agreement.

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

Maritime Administration. Any person, firm or corporation having any

interest in such application and desiring to submit comments concerning

the application must by 5:00 PM on December 7, 1994, file written

comments in triplicate with the Secretary, Maritime Administration. Any

person seeking to oppose the application must file a petition for leave

to intervene. The petition shall state clearly and concisely the

grounds of interest, and the alleged facts relied on for relief. The

Maritime Administration 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: November 10, 1994.

Joel C. Richard,

Acting Secretary, Maritime Administration.

[FR Doc. 94-28463 Filed 11-16-94; 8:45 am]

BILLING CODE 4910-81-M