Voluntary Intermodal Sealift Agreement

SUMMARY: The Maritime Administration (MARAD) announces establishment of

the Voluntary Intermodal Sealift Agreement (VISA), pursuant to

provision of the Defense Production Act of 1950, as amended. The

purpose of the VISA is to make intermodal shipping services/systems,

including ships, ships' space, intermodal equipment and related

management services, available to the Department of Defense as required

to support the emergency deployment and sustainment of U.S. military

forces. This is to be accomplished through cooperation among the

maritime industry, the Department of Transportation and the Department

of Defense.

FOR FURTHER INFORMATION CONTACT: Mr. Thomas M.P. Christensen, Director,

Office of National Security Plans, Room P1-1303, Maritime

Administration, 400 Seventh Street S.W., Washington, DC 20590, (202)

366-5900, Fax (202) 488-0941.

SUPPLEMENTARY INFORMATION: Section 708 of the Defense Production Act of

1950 (50 U.S.C. App. 2158), as implemented by regulations of the

Federal Emergency Management Agency (44 CFR Part 332), ``Voluntary

agreements for preparedness programs and expansion of production

capacity and supply'', authorizes the President, upon a finding that

conditions exist which may pose a direct threat to the national defense

or its preparedness programs, ``* * * to consult with representatives

of industry, business, financing, agriculture, labor and other

interests * * *'' in order to provide the making of such voluntary

agreements. It further authorizes the President to delegate that

authority to individuals who are appointed by and with the advice and

consent of the Senate, upon the condition that such individuals obtain

the prior approval of the Attorney General after the Attorney General's

consultation with the Federal Trade Commission. Section 501 of

Executive Order 12919, as amended, delegated this authority of the

President to the Secretary of Transportation, among others. By DOT

Order 1900.8, the Secretary delegated to the Maritime Administrator the

authority under which the VISA is sponsored. Through advance

arrangements in joint planning, it is intended that the participants

that are party to a VISA will provide capacity to support a significant

portion of surge and sustainment requirements in the deployment of U.S.

military forces.

A proposed draft text of the VISA was published in the Federal

Register on August 17, 1994 (59 FR 42466), with a notice of a public

meeting. The meeting was held on August 31, 1994, and a transcript of

the proceedings was prepared. Another notice, published in the Federal

Register on August 31, 1994 (59 FR 45061), invited the public to submit

written comments on the draft VISA text. Several comments were

received, considered and placed in a public file that also contains the

above mentioned published notices and transcript. Further discussions

among MARAD, the United States Transportation Command (USTRANSCOM), and

representatives of the U.S. intermodal shipping industry have taken

place, resulting in publication of this text of the VISA in which

USTRANSCOM, the Department of Justice and the Federal Trade Commission

have concurred.

The VISA text being published herein facilitiates the incremental

activation of resources in staged response to an emergency, i.e., Stage

I, Stage II, and Stage III. MARAD, USTRANSCOM, and industry

representatives have recognized that further development is necessary

before implementation of Stages I and II. Therefore, only contractual

commitments to Stage III will be implemented at this time.

Copies of the VISA and the associated application form are being

sent, unsolicited, to U.S.-owned companies which provide intermodal

shipping services/systems, accompanied by an invitation to become a

participant. Copies will also be made available to the public upon

request.

Text of the Voluntary Intermodal Sealift Agreement:

Voluntary Intermodal Sealift Agreement (VISA)

Table of Contents

Abbreviations

Definitions

Preface

Voluntary Intermodal Sealift Agreement

I. Purpose

II. Authorities

III. General

A. Concept

B. Responsibilities

C. Modification/Amendment of this Agreement

D. Administrative Expenses

E. Record Keeping

F. MARAD Reporting Requirements

G. Plan of Action

IV. Joint Planning Advisory Group

V. Activation of this Agreement

A. Determination of Necessity

B. Peacetime

C. Stage I

D. Stage II

E. Stage III

F. Termination of Charters, Leases and Other Contractual

Arrangements

G. Voluntary Capacity

VI. Terms and Conditions

A. Participation

B. Agreement of Participant

C. Effective Date and Duration of Participation

D. Withdrawal from this Agreement

E. Standby Period

F. Rules and Regulations

G. Pooling Resources

H. Enrollment of Ships and Equipment

I. War Risk Insurance

J. Antitrust Defense

K. Breach of Contract Defense

VII. Plan of Action: Development Meeting

VIII. Application and Agreement

Abbreviations

``USCINCTRANS''--Commander in Chief, United States Transportation

Command

``DoD''--Department of Defense

``DOT''--Department of Transportation

``FTC''--Federal Trade Commission

``FEMA''--Federal Emergency Management Agency

``JPAG''--Joint Planning Advisory Group

``MARAD''--Maritime Administration, DOT

``MSC''--Military Sealift Command

``NDRF''--National Defense Reserve Fleet maintained by MARAD

``RRF''--Ready Reserve Force component of the NDRF

``SecDef''--Secretary of Defense

``SecTrans''--Secretary of Transportation

``USTRANSCOM''--United States Transportation Command (including its

sealift transportation component, Military Sealift Command)

Definitions

``Administrator''--Maritime Administrator.

``Agreement''--Agreement means an understanding, arrangement or

association (written or oral) and any modification or cancellation

thereof. For the purpose of this document, Agreement (proper noun)

refers to this actual agreement, the Voluntary Intermodal Sealift

Agreement.

``Attorney General''--Attorney General of the United States.

``Availability''--An asset or service is available if it is both

suitable and capable of meeting cargo or other requirements within the

prescribed delivery or performance date.

[[Page 54145]]

``Chairman''--Chairman of the FTC.

``Charter''--A contract between a shipper and shipping company for

the use of the entire vessel that details all aspects of the service,

including payment, to be performed by each party. Charter contracts may

be for the entire vessel, for a specific voyage, or for a specific time

period.

``Commercial''--Transportation service provided by a private ocean

carrier to a private or government shipper. The type of service may be

either common carrier or contract carriage.

``Common carrier''--A person holding itself out to the general

public to provide transportation by water of passengers or cargo for

compensation which assumes responsibility for transportation from port

or point of receipt to port or point of destination, which utilizes a

vessel operating on the high seas.

``Contingency''--An emergency involving military forces caused by

natural disasters, terrorists, subversives or by required military

operations whether or not there is a declaration of war or national

emergency.

``Controlling interest''--More than a 50 percent interest by stock

ownership or otherwise.

``Director''--Director of FEMA.

``Foreign flag''--A vessel registered and documented under the law

of a country other than the United States of America.

``Intermodal equipment''--Containers (including specialized

equipment), chassis, trailers, tractors, cranes and other material

handling equipment, as well as other ancillary items.

``Liner''--Type of service offered on a definite advertised

schedule (i.e., a scheduled common carrier service), given relatively

frequent sailing between specific U.S. ports or ranges and designated

foreign ports or ranges. The term includes ocean common carrier

services within the meaning of the Shipping Act of 1984.

``Management services''--Management expertise and experience,

intermodal terminal management, information resources and control and

tracking systems.

``Non-liner''--Type of service offered by vessels that are

chartered or otherwise hired for special voyages or period. Sailing

schedules are not predetermined or fixed.

``Organic sealift''--Ships considered to be under government

control or long-term charter--Fast Sealift Ships, Ready Reserve Force

and commercial ships under long-term charter to DoD.

``Participant''--A signatory party to this Agreement, and otherwise

as defined in this Agreement, VI.A., sometimes referred to as ``Program

Participant.''

``Person''--Includes individuals, corporations, partnerships, and

associations existing under or authorized by the laws of the United

States or of a foreign country.

``Pooling''--An agreement among participants to divide cargo

offerings, revenues, losses, assets (e.g., vessels, facilities,

material handling equipment, etc.), trade routes, etc., in accordance

with an established formula or scheme. Any such agreement shall be

between the participants only, and shall NOT be part of a contract with

the government. Participants may not discuss their commercial

commitments or other commercial information such as their rates,

revenues, losses or tonnage with pool participants.

``Prenegotiated Rates''--Rates developed for use during program

stages. For rates that are not prenegotiated, a prenegotiated rate

methodology will be developed.

``Representative of SecDef''--USCINCTRANS.

``Secretary''--Secretary of Transportation.

``Service contract''--A contract between a shipper and an ocean

common carrier or conference in accordance with the provisions of the

1984 Shipping Act.

``Teaming''--A combination of participants to bid and perform under

a government contract. Similar to a joint venture, wherein two or more

parties form a partnership and bid on a contract under the name of the

partnership, vice the name of each individual party. Any teaming

arrangement between or among ocean common carriers to concertedly offer

rates to DoD may be regarded as an agreement subject to filing and

review requirements under the Shipping Act of 1984 or the Shipping Act

of 1916.

``U.S. Flag''--A vessel registered and documented under the law of

the United States of America.

``Volunteers''--Any ocean carrier (liner or non-liner) or vessel

owner/operator who offers to make capacity, resources or systems

available under the terms of the Agreement for contract to USTRANSCOM

to support military requirements sooner than mandatory under the

Agreement.

Preface

The Administrator, pursuant to the authority contained in Section

708 of the Defense Production Act of 1950, as amended (50 U.S.C. App.

2158)(Section 708), in collaboration with representatives of the

intermodal shipping industry and USTRANSCOM, has developed this

agreement to provide commercial sealift and intermodal shipping

services/systems necessary to meet national defense requirements.

USTRANSCOM through its designee(s) procures commercial shipping

capacity to meet normal peacetime requirements for ships and intermodal

shipping services/systems through arrangements with common carriers,

with contract carriers and by charter. DoD (through USTRANSCOM) and

MARAD maintain and operate a fleet of ships owned by or under charter

to the federal government to meet the logistic needs of the military

services which cannot be met by commercial service. Ships of the Ready

Reserve Force (RRF) may be selectively activated for peacetime military

tests and exercises, and to satisfy military operational requirements

which cannot be met by commercial shipping in time of war, national

emergency, or military contingency. Foreign-flag shipping is used only

in accordance with applicable laws and policies.

This agreement provides DoD a coordinated, seamless transition from

peacetime to wartime for the acquisition of commercial sealift and

intermodal capability, as necessary, to augment DoD's organic sealift

capabilities to meet DoD requirements. It establishes the terms,

conditions and general procedures by which sealift carriers or asset

managers may become Participants. This Agreement is designed to create

close working relationships among MARAD, USTRANSCOM and Participants

through which military needs and the needs of the civil economy can be

met by cooperative action. Through advance arrangements in joint

planning between USTRANSCOM, MARAD and the Participants, it is intended

that the Participants will provide predetermined capacity in designated

stages to support DoD contingency surge and sustainment requirements.

Participants to this program will be afforded first opportunity to

meet DoD peacetime and wartime requirements. In the event program

Participants are unable to meet fully the requirements in a

contingency, the shipping capacity made available under this Agreement

may be supplemented by ships requisitioned, under Section 902 of

Merchant Marine Act 1936 (as amended), from non-Participants in this

Agreement and from Participants. In addition, containers and chassis

made available under this Agreement may be supplemented by services and

equipment accessed by the Administrator through the provisions of 46

CFR Part 340.

[[Page 54146]]

SecDef will be asked to approve this Agreement as a sealift

readiness program for the purpose of Section 909 of the Merchant Marine

Act, 1936, as amended (46 App. U.S.C. 1248) (Section 909).

Voluntary Intermodal Sealift Agreement

I. Purpose

A. The Administrator has found, in accordance with Section

708(c)(1) of the Defense Production Act of 1950, that conditions exist

which may pose a direct threat to the national defense of the United

States or its preparedness programs and, under the provisions of

Section 708, has certified to the Attorney General that a standby

agreement where eligible carriers agree to become program Participants

and provide utilization of intermodal shipping services/systems is

necessary for the national defense. The Attorney General, in

consultation with the Chairman, has issued a finding that dry cargo

capacity to meet national defense requirements cannot be provided by

the industry through a voluntary agreement having less anticompetitive

effects or without a voluntary agreement.

B. The purpose of this Agreement is to provide a seamless, time-

phased transition from peace to wartime operations through coordinated,

prenegotiated contractually assured access to the type and quantity of

sealift capability, when and where necessary, to deploy and sustain

U.S. forces. It establishes procedures for the commitment of intermodal

shipping services/systems to satisfy military requirements. This

Agreement will change from standby to active status upon activation of

any of the Stages described in Section V.

C. The objectives of this Agreement are to promote and facilitate

DoD's use of existing commercial integrated intermodal transportation

systems, and to maximize DoD's use of commercial transportation

resources, while at the same time attempting to minimize disruption to

commercial operations.

D. Participants' capacity in this Agreement may include all

intermodal shipping services/systems and all ship types, including

container, partial container, container/bulk, container/roll-on/roll-

off, roll-on/roll-off (of all varieties), breakbulk ships, and barge

carrier (LASH, SeaBee, etc.).

E. It is intended that Participants in this Agreement will

contractually provide time-phased, predetermined capacity to support

military requirements.

II. Authorities

A. MARAD

1. Sections 101 and 708 of the Defense Production Act, as amended

(50 U.S.C. App. 2158); Executive Order 12919, 59 FR 29525, June 7,

1994; Executive Order 12148, 3 CFR 1979 Comp., p. 412, as amended; 44

CFR Part 332; DOT Order 1900.8; 46 CFR Part 340.

2. Section 501 of Executive Order 12919, as amended, delegated the

authority of the President under Section 708 to the Secretary, among

others. By DOT Order 1900.8, the Secretary delegated to the

Administrator the authority under which this Agreement is sponsored.

B. USTRANSCOM

1. Section 113 and Chapter 6 of Title 10 of the United States Code.

2. DoD Directive 5158.4 designating USCINCTRANS to provide air,

land, and sea transportation for the DoD.

III. General

A. Concept

1. This Agreement provides arrangements jointly planned by MARAD,

USTRANSCOM, and Participants and by which MARAD will allocate U.S. Flag

and/or controlled vessels and intermodal services to meet DoD

determined requirements. These sealift resources may be incrementally

activated in staged response. Activation of Stages I and II will be in

accordance with prenegotiated contractual commitments entered into

between Participants and USTRANSCOM or its designee. Stage III

activation will be in accordance with procedures developed by

USTRANSCOM, MARAD and Participants using pre-approved rate

methodologies. Stages I and II would require early access to

Participants' resources, while Stage III would be activated only after

Stage I and II resources are totally committed and adequate shipping

services are not available through established transportation

practices. In addition to vessels and intermodal equipment, USTRANSCOM

may contract for management expertise to operate more than one

carrier's resources as complete systems.

a. Stages I and II will be activated by USCINCTRANS. The

Administrator will be notified that USTRANSCOM will implement the pre-

approved DoD contracts, as necessary, with the Participant carriers to

meet the contingency requirements. MARAD will ensure that the necessary

Defense Production Act procedures and authorities are in place for the

carriers to immediately implement any pooling agreements they may have

executed to meet the Program's contract requirements. Arrangements

comprising Stages I and II will be pre-approved by MARAD. The

contracts, with agreed terms, conditions and rates or rate methodology,

will provide guaranteed access to specific carrier capability to be

provided within specified time frames. The amount of shipping capacity

to be committed by a Participant under such a contract between

Participants and USTRANSCOM or its designee will be provided to MARAD

during peacetime for pre-approval to ensure that the amount of sealift

assets committed to Stages I and II will not have an adverse, national

economic impact.

b. Stage III will be activated by SecTrans, upon request by

USCINCTRANS (on approval by SecDef), when defense sealift requirements

exceed the capabilities provided by Stages I and II and cannot be

obtained through established transportation practices, including

voluntary commitments outside this Agreement. MARAD will allocate

Participants' intermodal shipping services/systems to meet Stage III

requirements. Upon allocation, USTRANSCOM or its designee will execute

the necessary contracts, using a pre-approved rate methodology, to meet

DoD requirements established during joint planning.

2. USTRANSCOM may obtain sealift capacity on a voluntary basis

prior to activating Stages I and III. Participants will be given first

opportunity to provide capacity voluntarily to meet DoD requirements.

If Participant carriers volunteer capacity prior to Stage I, they may

request DoD to execute Stage I contracts in order to activate requisite

DPA defense. DoD/USTRANSCOM approval of such requests will not be

unreasonably withheld. If voluntary capacity from Participants is

insufficient and/or shortfalls persist prior to activating Stage III

after exhausting the Participants' Stage I and II contractually

committed resources, USTRANSCOM may obtain sealift capacity voluntarily

from non-Participants, without restriction. Following is the sequence

of actions to obtain sealift capacity:

a. Use existing DoD contracts for liner and chartered vessels.

b. Use DoD/DOT organic lift; plus request for shipping capacity

committed via Treaty agreement and coalition.

c. Use volunteers from within the Program.

d. Contract outside the Program without restriction to meet

specific requirements not contractually

[[Page 54147]]

committed or not voluntarily offered by Participants within the

Program.

e. Activate Stage I.

f. Activate Stage II.

g. Use all other established transportation practices.

h. Activate Stage III.

3. If sufficient sealift assets are not available through

established channels, SecTrans, upon declaration of war or Presidential

declaration of national emergency, will requisition necessary sealift

capability using the authorities of Section 902, Merchant Marine Act of

1936.

B. Responsibilities

1. USTRANSCOM shall:

a. Define the time-phased requirement for the numbers and types of

sealift capacity and resources needed in Stages I and II to augment DoD

sealift resources. Define Stage III requirements.

b. Advise MARAD annually of the numbers and types of sealift

capacity and resources needed for all three stages.

c. Obtain sealift capacity through the implementation of specific

prenegotiated contracts with Program Participants prior to stage

activation and/or activate Stages I and II.

d. Provide notice to the Administrator when USTRANSCOM plans to

implement the Stage I and II contracts, either in total or as a partial

activation, and when sealift resources are required for the activation

of Stage III.

e. Co-chair (with MARAD) the Joint Planning Advisory Group.

f. Develop and execute prenegotiated contracts (including rates and

rate methodology) with Participants for guaranteed access to time-

phased sealift capabilities in Stages I and II. During Stage III,

implement contracts with Participants for capacity allocated by MARAD.

2. MARAD shall:

a. Approve the amount of sealift resources committed to Stages I

and II and review the information provided by USTRANSCOM stating the

amount of shipping capacity under contract to ensure there will be no

adverse national, economic impact. Review, with USTRANSCOM, the Stage

III requirements, as developed.

b. Ensure that the necessary Defense Production Act procedures and

authorities are in place for the carriers to implement any pooling

arrangements they may have executed to immediately commit their

predetermined level of assets to meet the Program's contract

requirements.

c. After request by USCINCTRANS and upon approval by SecTrans to

activate Stage III, allocate sealift capacity and intermodal assets to

Stage III based on USTRANSCOM requirements after having considered

overall DOT/MARAD administrative and statutory responsibilities. DoD

shall have priority consideration in any allocation situation.

d. Co-chair (with USTRANSCOM) the Joint Planning Advisory Group.

C. Modification/Amendment of This Agreement

The Attorney General may modify this Agreement, in writing, after

consultation with the Chairman, the Administrator and USCINCTRANS. The

Administrator, USCINCTRANS and Program Participants (as specified by

the JPAG) may modify this Agreement at anytime by mutual agreement and

with the approval of the Attorney General. Participants may propose

amendments to this Agreement at any time.

D. Administrative Expenses

Administrative and out-of-pocket expenses incurred by a Participant

during the standby period shall be borne solely by the Participant.

Such expenses may include, among other things, traveling to meetings,

making reports of owned, chartered and leased intermodal ships, and

equipment.

E. Record Keeping

1. MARAD has primary responsibility for maintaining records in

accordance with 44 CFR Part 332.

2. MARAD shall be the official custodian of records related to the

carrying out of this Agreement.

3. USTRANSCOM or its designee shall be the official custodian of

records related to the contracts to be used under this Agreement.

4. In accordance with 44 CFR 332.3(d), a Participant shall maintain

for five (5) years all minutes of meetings, transcripts, records,

documents and other data, including any communications with other

Participants or with any other member of the industry or their

representatives, related to the administration, including planning and

activation of this Agreement. Each Participant agrees to make records

available to the Administrator, USCINCTRANS, the Attorney General, and

the Chairman for inspection and copying at reasonable times and upon

reasonable notice any time that the Participant is required hereby to

maintain. Any record maintained by MARAD or USTRANSCOM as discussed in

this subsection shall be available for public inspection and copying

unless exempted on the grounds specified in 5 U.S.C 552(b)(1), (3) and

(4) or identified as privileged and confidential information in

accordance with Section 708(e).

F. MARAD

Reporting Requirements--Report to the Director, as required, on the

status and use of this Agreement.

G. Plan of Action

1. The Administrator and USCINCTRANS, in coordination with the

Participants, shall develop plans of action to implement this

Agreement. The contracts used by USTRANSCOM for carrier commitment of

intermodal shipping services/systems shall not be plans of action.

2. If any necessary Plan of Action has not been adopted at the time

of activation of this Agreement, the Joint Planning Advisory Group

(JPAG) may be convened to assure completion of such Plan of Action in

order to meet DoD requirements.

IV. Joint Planning Advisory Group

A. The JPAG provides USTRANSCOM, MARAD and Program Participants the

planning process to:

1. Identify and discuss DoD detailed sealift service and resource

requirements.

2. Match peacetime requirements related to exercises and special

movements with commercial capacity, as a method for testing wartime

arrangements.

3. Recommend concepts of operations to meet peacetime and wartime

requirements for use by contracting officials in developing contracts.

4. Provide carriers antitrust defense for pooling and teaming

arrangements developed in support of DoD requirements.

B. It will be co-chaired by MARAD and USTRANSCOM, and will convene

quarterly in peacetime, and as necessary after activation of any stage

of this Agreement as determined by the co-chairs.

C. The JPAG will consist of a designated representative (plus one

alternate) from MARAD, USTRANSCOM and each Program Participant

(including a representative from maritime labor). These representatives

will provide technical advice and support to ensure maximum

coordination, efficiency and effectiveness in the use of Participants'

resources.

D. The JPAG will not be used for contract negotiations and/or

discussions between carriers and the DoD; such negotiations and/or

discussions will be in accordance with applicable DoD contracting

policies and procedures. However, contracting officials will be guided

by the recommendations and

[[Page 54148]]

priorities established by the JPAG's concept of operations (CONOPS).

E. The JPAG co-chairs shall:

1. Notify the Attorney General, the Chairman, and all Participants

of the time, place and nature of the JPAG meeting.

2. Provide for publication in the Federal Register of a notice of

the time, place and nature of the JPAG meeting. If the meeting is open,

a Federal Register notice will be published reasonably in advance of

the meeting. If a meeting is closed, a Federal Register notice will be

published within ten (10) days after the meeting and will include the

reasons for closing the meeting.

3. Establish the agenda for each JPAG meeting and be responsible

for adherence to the agenda.

4. Provide for a full and complete transcript or other record of

each meeting and provide one copy each of transcript or other record to

the Attorney General, the Chairman, and all Participants.

F. Security Measures--The co-chairs will develop and coordinate

appropriate security measures so that contingency planning information

can be shared with Participants to enable them to plan their

commitment.

V. Activation of This Agreement

A. Determination of Necessity

1. This Agreement shall be activated in up to three time-phased

stages to satisfy DoD contingency sealift requirements in accordance

and within the scope of the Agreement.

2. The Administrator shall notify the Attorney General and the

Chairman when it has been determined that activation of this Agreement

is necessary.

B. Peacetime

1. During peacetime, the Joint Planning Advisory Group (JPAG) will

discuss requirements, capabilities, shortfalls and coordinate

recommended courses of action.

2. DoD peacetime sealift commercial requirements will be executed

via contracts using Participants' ships, intermodal shipping services/

systems and sealift resources to the maximum extent feasible or other

resources from non-Participants if Participants cannot meet the

requirement. Commercial resources owned and operated by U.S. citizens

will be given first consideration for peacetime cargo.

3. USTRANSCOM will advise MARAD of agreements and assets under

contract so that MARAD can monitor sealift asset status.

4. MARAD will advise USTRANSCOM on industry issues and pre-approve

the allocation of carrier commitments for Stages I and II of this

Agreement.

C. Stage I

1. Stage I may be activated partially, or in total, when DoD

organic sealift capability, commercial sealift under peacetime

contract, and voluntary commitments (as specified in Sections III.A.2

and V.G) do not meet DoD sealift requirements.

2. Stage I will be activated by USCINCTRANS. USCINCTRANS will

notify the Administrator that it will implement the pre-approved

contracts with Participants to meet contingency requirements. MARAD

will ensure that the necessary Defense Production Act procedures and

authorities are in place for the carriers to implement any pooling

arrangements they may have executed to commit their level of assets to

meet the Program's contract requirements.

3. USTRANSCOM will implement the prenegotiated contracts with the

Participants who have agreed, in accordance with Section VI of this

Agreement, to provide assets to meet the approved Stage I requirements.

4. Under Section VI of this Agreement, Participants will be allowed

to substitute and pool/team ship capacity and intermodal shipping

systems to fulfill their contractual commitments to meet Stage I

requirements. Substitutions and pooling/team arrangement for capacity

committed to DoD will be approved by USCINCTRANS or its designee.

D. Stage II

1. Stage II will be activated, partially or in total, when the DoD

requirement exceeds the capability of the Stage I resources.

2. Activation of Stage II will follow the same procedures as Stage

I.

3. Paragraphs 3-4 of Stage I also apply to Stage II.

4. Prior to requesting activation of Stage III, all efforts will be

made to meet DoD requirements through commercial means outside this

Agreement.

E. Stage III

1. Stage III will be activated when the DoD requirements exceed the

capability of the Stage I and II resources and shipping services are

not available through established transportation procurement practices.

2. It will be activated by SecTrans, upon request by USCINCTRANS

(on approval by SecDef).

3. All Participants' assets committed to this Agreement are subject

to use during Stage III. MARAD will allocate sealift resources of

Participants to meet the DoD requirements in Stage III.

4. Upon allocation of sealift assets by MARAD, USTRANSCOM will

implement contracts, using a pre-approved rate methodology established

in the JPAG, to meet the Stage III requirements.

F. Termination of Charters, Leases and Other Contractual Arrangements

1. USTRANSCOM will notify the Administrator as far in advance as

possible of the prospective termination of charters, leases, management

service contracts or other contractual arrangements under this

Agreement.

2. If this Agreement is superseded by the general requisitioning of

ships, the Administrator, as a matter of discretion, may replace

charters made under this Agreement with charters under requisitioning.

G. Voluntary Capacity

1. Prior to the activation of Stage I of this Agreement, DoD will

seek voluntary commitment of capacity or system to meet movement

requirements.

2. Requests for volunteer capacity will be extended simultaneously

to both Program Participants and other carriers. However, first

priority for award of this cargo will be to Program Participants, with

compensation as outlined in the USTRANSCOM Implementation Instructions

to this Agreement. Program Participants providing voluntary capacity

may request the activation of prenegotiated contracts. Volunteered

capacity will be credited against Participants' staged commitments, in

the event such stages are subsequently activated.

3. In the event USCINCTRANS determines Program Participants are

unable, or do not desire, to voluntarily provide required capacity, DoD

may attempt to contract with non-Program carriers prior to involuntary

activation of Stage I contracts.

4. Once Stage I of this Agreement is activated (unless such

activation is at the request of the Participant) by USTRANSCOM, non-

Program volunteers will not be utilized until all applicable programmed

capacity in Stages I and II, and any additional Participant voluntary

capacity, is exhausted.

5. Prior to requesting activation of Stage III of this Agreement,

DoD will attempt to obtain capacity from all appropriate sources, to

include non-Program Participants.

[[Page 54149]]

VI. Terms and Conditions

A. Participation

1. A liner or non-liner operator which is organized under the laws

of a state of the United States, or the District of Columbia, may

become a Participant by submitting an executed copy of the form

referenced in VIII below and by entering into a contractual agreement

with DoD or DOT which establishes a legal obligation to perform and

which specifies payment or payment methodology for all services

rendered.

2. A company which owns, or has obtained through lease, intermodal

equipment, and is not also a vessel operator under paragraph 1 above,

may become a Participant by submitting an executed copy of the form

referenced in VIII below and entering into a contractual agreement

which establishes a legal obligation to perform and which specifies

payment or payment methodology for all services rendered. Such a

company must be organized under the laws of a State of the United

States or the District of Columbia.

3. The term ``Participant'' includes the entity signing this

Agreement and all United States subsidiaries and affiliates of the

entity which own, operate or charter ships, or own or lease intermodal

equipment in the regular course of their business and in which the

entity holds a controlling interest.

4. The term ``Participant'' also includes specified controlled

nondomestic subsidiaries and affiliates of the entity signing this

Agreement; provided, that the Administrator, in coordination with

USCINCTRANS, grants specific approval for their inclusion.

5. An entity having an operating agreement (ODS or MSP) with the

Secretary shall become a ``Participant'' and remain one at all times

while receiving payment under such.

6. An ocean carrier participating in the DOT Maritime Security

Program will be enrolled in the Program for the duration of its

participation.

7. An ocean carrier eligible to participate in this Agreement, but

which elects not to do so, is subject to enrollment in the DoD SRP if

it: (1) Receives operating-differential subsidy or received

construction differential subsidy, or (2) enters into contractual

obligation to carry DoD cargo (e.g., World Wide Rate Agreement).

8. A Participant in this Agreement will be subject only to the

provisions of this Agreement and not to the provisions of the SRP.

9. Periodically, a list of Participants will be published in the

Federal Register.

10. When a specific ship covered by this Agreement is removed from

its regular commercial service to meet a DoD requirement, the

Participant may replace the ship taken from regular service with a

foreign flag ship upon notice to the Administrator, and such approval

of the Administrator as required by law.

11. The Administrator retains the right under law to requisition

ships of Participants. A Participant's ships which are directly

requisitioned by the United States or which are under other U.S.

Government voluntary arrangements shall be credited against the

Participant's contribution under this Agreement.

B. Agreement of Participant

1. Each Participant agrees to provide commercial sealift and/or

intermodal shipping services/systems in accordance with the

prenegotiated contracts with USTRANSCOM.

2. In general, the concept for allocation of a Participant's

resources to the Agreement's stages is as follows:

a. Stages I and II: As reflected in the USTRANSCOM Implementation

Instructions, mobilization commitment is linked to the award of DoD

peacetime business. Mobilization commitment will be a consideration in

determining the level of contract award and long-term (i.e., one year

or longer) contracts will include a requirement for a minimum

commitment to Stages I and/or II. In addition, a Participating carrier

may voluntarily offer additional capacity to these stages. Such

additional commitment will be considered as a factor in determining

contract award. The level of carrier commitment for each stage will be

based on the DoD capacity requirement set for those stages. Given that

Stages II and III requirements are cumulative of Stage I, a carrier's

capacity committed to Stage I will also be considered contractually

committed to meet Stage II and Stage III requirements. Capacity

activated during Stages I and II will be paid at the Program's

prenegotiated contract rate.

b. Stage III: Carriers receiving DOT subsidies (and not in the SRP

program) will have subsidy specified capacity enrolled in Stage III.

Additional capacity will be as specified in DoD peacetime contracts and

in the USTRANSCOM Implementation Instructions to this Agreement.

Carriers utilized during Stage III will be paid based on a pre-approved

rate methodology developed by MARAD and USTRANSCOM in the JPAG.

3. Subject to the terms of USTRANSCOM contracts implementing this

Agreement, the Participant which owns, operates, or controls a ship or

ship capacity contributed will provide the intermodal equipment and

management services needed to utilize the ship at Participant's normal

efficiency.

C. Effective Date and Duration of Participation

Participation in this Agreement is effective upon execution of the

Program application form (Sec. VIII) by both the Participant and the

Administrator, or their designees. Participation remains in effect

until completion of the agreed upon obligation (Sec. VI.A.) to DoD or

DOT or both. Termination will be by the Administrator (or USCINCTRANS,

if appropriate), the Attorney General, the Chairman, or the Director on

due notice by letter, telegram, publication in the Federal Register, or

until the Participant withdraws.

D. Withdrawal From this Agreement

A Participant may withdraw from this Agreement, subject to

fulfillment of obligations incurred under this Agreement prior to the

date such withdrawal becomes effective, by giving 30 days written

notice, or as specified with the Administrator. However, a Participant

having an MSP operating agreement with SecTrans shall not withdraw from

this Agreement during the period the operating agreement is in effect.

Withdrawal from this Agreement will not deprive a Participant of an

antitrust defense otherwise available to it in accordance with DPA

Section 708. A Participant otherwise subject to the DoD SRP that

voluntarily withdraws from this Agreement will become subject again to

the DoD SRP.

E. Standby Period

The ``standby period'' is the interval between the effective date

of a Participant's acceptance into the Agreement and the activation of

any Stage.

F. Rules and Regulations

A Participant acknowledges and agrees to abide by all provisions of

DPA Section 708, and regulations related thereto which are promulgated

by the Secretary, the Attorney General, and the Chairman. Standards and

procedures pertaining to voluntary agreements have been promulgated in

44 CFR Part 332. Note is taken that 46 CFR Part 340 establishes

procedures for assigning the priority for use and the allocation of

shipping services, containers and chassis. The JPAG will inform

Participants of new and amended rules and regulations as they are

issued.

[[Page 54150]]

G. Pooling Resources

When this agreement is activated, Participants may pool their

assets to meet the needs of the Department of Defense and to minimize

the assets withdrawn from the civil economy to meet those needs.

H. Enrollment of Ships and Equipment

1. The Administrator will maintain a record of ships and intermodal

equipment enrolled under this Agreement according to a Plan of Action.

A schedule of Participants' ships and intermodal equipment will be

enrolled on the date the carrier becomes a Participant. Participants

will notify the Administrator of all changes, as required.

2. The Administrator will make the enrollment data and all changes

available to USTRANSCOM.

3. Information which a Participant identifies as privileged or

business confidential/proprietary data shall be withheld from public

disclosure in accordance with Section 708(h)(3) and Section 705(e) of

the Defense Production Act of 1950, as amended (50 U.S.C. App. 2155),

and 44 CFR Part 332.

4. Enrolled ships are required to comply with 46 CFR Part 307,

Establishment of Mandatory Position Reporting System for Vessels.

I. War Risk Insurance

1. SecDef will reimburse carriers for additional commercial war

risk insurance. DOT will provide no-premium government war risk

insurance, subject to the provisions of Section 1205 of the Merchant

Marine Act, 1936, as amended [46 App. U.S.C. 1285(1)].

2. Each ship enrolled under this Agreement shall be eligible for

U.S. Government war risk insurance and for an interim insurance binder

under the provisions of 46 CFR Part 308, notwithstanding restrictions

on eligibility set out in subparts thereof.

J. Antitrust Defense

1. Under the provisions of DPA Section 708, each Participant in

this Agreement shall have available as a defense to any civil or

criminal action brought under the antitrust laws (or any similar law of

any State) with respect to any action taken to develop or carry out

this Agreement or a Plan of Action, that such act was taken in the

course of developing or carrying out this Agreement or a Plan of Action

and that the Participant complied with the provisions of DPA Section

708 and any regulation thereunder, and acted in accordance with the

terms of this Agreement or a Plan of Action.

2. This defense shall not be available to the Participant for any

action occurring after termination of this Agreement. Nor shall it be

available upon the modification of this Agreement with respect to any

subsequent action that is beyond the scope of the modified text of this

Agreement, except that no such modification shall be accomplished in a

way that will deprive the Participant of antitrust defense for the

fulfillment of obligations incurred.

3. The defense shall be available only if and to the extent that

person asserting it demonstrates that the action, which includes a

discussion or agreement, was within the scope of this Agreement or a

Plan of Action.

4. The person asserting the defense bears the burden of proof.

5. The defense shall not be available if the person against whom it

is asserted shows that the action was taken for the purpose of

violating the antitrust laws.

6. As appropriate, the Administrator will support applications by

Participants to the Federal Maritime Commission or the Interstate

Commerce Commission to exempt this Agreement and any Plan of Action

from the operation of statutes administered by either agency.

K. Breach of Contract Defense

Under the provisions of DPA Section 708, in any action in any

Federal or State court for breach of contract, there shall be available

as defense that the alleged breach of contract was caused predominantly

by action taken by a Participant during or in imminent anticipation of

an emergency to carry out this Agreement or a Plan of Action. Such

defense shall not release the party asserting it from any obligation

under applicable law to mitigate damages to the greatest extent

possible.

VII. Plan of Action: Development Meeting

The Administrator, in coordination with USCINCTRANS shall convene

the JPAG within 90 days of the effective date of the first

Participant's application. The purpose shall be to develop Plans of

Action to implement this Agreement.

VIII. Application and Agreement

The Administrator, in coordination with USCINCTRANS has adopted a

form on which intermodal ship operators and intermodal-equipment

leasing companies may apply to become a Participant in this Agreement

(``Application and Agreement to Participate in the Voluntary Intermodal

Sealift Agreement''). The form incorporates, by reference, the terms of

this Agreement.

United States of America

Department of Transportation

Maritime Administration

Application to Participate in the Voluntary Intermodal Sealift

Agreement

The applicant identified below hereby applies to participate in

the Maritime Administration's agreement entitled ``Voluntary

Intermodal Sealift Agreement.'' The text of said Agreement is

published in Federal Register ________, ________, 19____. This

Agreement is authorized under Section 708 of the Defense Production

Act of 1950, as amended (50 U.S.C. App. 2158). Regulations governing

this Agreement appear at 44 CFR Part 332 and are reflected at 49 CFR

Subtitle A.

The applicant, if selected, hereby acknowledges and agrees to

the incorporation by reference into this Application and Agreement

of the entire text of the Voluntary Intermodal Sealift Agreement

published in Federal Register ________, ________, 19____, as though

said text were physically recited herein.

The Applicant, as a Participant, agrees to comply with the

provisions of Section 708 of the Defense Production Act of 1950, as

amended, the regulations of 44 CFR Part 332 and as reflected at 49

CFR Subtitle A, and the terms of the Voluntary Intermodal Sealift

Agreement. Further, the applicant, if selected as a Participant,

hereby agrees to contractually commit to make specifically enrolled

vessels, intermodal equipment and management of intermodal

transportation systems available for use by the Department of

Defense and to other Participants as discussed in this Agreement and

the subsequent contract for the purpose of meeting national defense

requirement.

Attest:

----------------------------------------------------------------------

(Corporate Secretary)

(CORPORATE SEAL)

----------------------------------------------------------------------

(Applicant-Corporate Name)

By:--------------------------------------------------------------------

(Signature)

----------------------------------------------------------------------

(Position Title)

Effective Date:--------------------------------------------------------

----------------------------------------------------------------------

(Secretary)

(SEAL)

UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION MARITIME

ADMINISTRATION

By:--------------------------------------------------------------------

Maritime Administrator

By Order of the Maritime Administrator:

Dated: October 13, 1995.

Joel C. Richard,

Secretary.

[FR Doc. 95-25896 Filed 10-18-95; 8:45 am]

BILLING CODE 4910-81-P