OSG Car Carriers, Inc.; Notice of Application Pursuant to Section 656 of the Merchant Marine Act, 1936, as Amended

DEPARTMENT OF TRANSPORTATION

Maritime Administration

[Docket MSP-003]

OSG Car Carriers, Inc.; Notice of Application Pursuant to Section

656 of the Merchant Marine Act, 1936, as Amended

OSG Car Carriers, Inc. (OSG) by application received October 22,

1996, and supplemented by letter dated November 4, 1996 applied under

Section 651, Subtitle B, of the Act for participation in the Maritime

Security Program (MSP). In support of its application OSG submitted

information pertaining to its level of noncontiguous domestic trade

service. Pursuant to section 656 of the Act, the Maritime

Administration must determine OSG's level of noncontiguous domestic

trade service should it become party to a MSP operating agreement.

In support of its request OSG described its level of service

provided in each noncontiguous domestic trade served as of August 9,

1995. The vessels listed below are contract (liquid bulk) carriers,

rather than common carriers, and their itineraries are determined by

their respective charters. These vessels operate from time to time in

the noncontiguous domestic trades between the contiguous 48 States and

Alaska, Hawaii, the U.S. Virgin Islands or Puerto Rico and between

Alaska and the U.S. Virgin Islands. OSG's submittal of noncontiguous

domestic trade service, as well as its affiliates, was provided as

follows:

Applicant's Noncontiguous Trade

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

Deadweight

Name tonnage

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

Overseas Boston............................................. 120,800

Overseas Juneau............................................. 120,500

Overseas Chicago............................................ 90,650

Overseas Ohio............................................... 90,550

Overseas Washington......................................... 90,500

Overseas New York........................................... 90,400

Overseas Arctic............................................. 62,000

Overseas Alaska............................................. 62,000

Overseas New Orleans........................................ 42,950

Overseas Philadelphia....................................... 42,600

Overseas Vivian............................................. 37,800

Overseas Alice.............................................. 37,800

Overseas Valdez............................................. 37,800

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

OSG further clarified the level of service provided by its

affiliates in the noncontiguous domestic trades in the year preceding

August 9, 1995 as being 100% of the annual capacity of their entire

fleet of U.S. flag tankers, i.e., 926,350 deadweight tons.

OSG states that the Maritime Security Act defines the term ``level

of service'' provided by a contractor [operating non-container Vessels]

in a trade as of a date * * *.'' to mean ``the total annual capacity

provided by the contractor in that trade for the twelve calendar months

preceding that date.'' [Section 4(h)(1)(A)]. OSG asserts that all of

the U.S.-flag tankers operated by the Applicant's affiliates are liquid

bulk carriers offered for charter; they are not common carriers that

operate on predetermined schedules or itineraries. The movements of the

vessels are entirely up to the charterer. The ``trade'' in which those

tankers operate is therefore a worldwide trade, and by inclusion, the

noncontiguous domestic trade.

OSG states that the use of 100% of the capacity of tankers utilized

in the noncontiguous domestic trade is supported by the proviso of

Section 4(h)(1)(A) by which Congress permitted the ``level of service''

for certain ``contract carrier tug and barge service'' to be calculated

on the basis of 100% of vessel capacity. Where Congress addressed the

issue of ``level of service'' provided by carriers that have no

itineraries (which is OSG's case), Congress prescribed a reference to

100% of capacity. Congress states that it has recognized that a

definition of ``trade'' by area, rather than specific ports, is

required for bulk vessels. Before 1970, and before bulk carriers were

made eligible for subsidy, Section 905(a) of the Merchant Marine Act,

1936, 46 U.S.C. 1244, defined ``foreign trade'' as ``trade between the

United States * * * and a foreign country''. The Merchant Marine Act of

1970, P.L. 91-469, 91st Cong. 2d Sess., amended the definition in

Section 905(a) to ``include, in the case of liquid and dry bulk

carrying services, trading between foreign ports in accordance with

normal commercial bulk shipping practices in such a manner as will

permit U.S.-flag bulk vessels freely to compete with foreign-flag bulk

carrying vessels in their operation or in competing for charters,

subject to rules and regulations promulgated by the Secretary.'' As

explained in the Senate Report on the Merchant Marine Act 1970,

Congress was concerned that ``a narrow construction of the [earlier]

definition [of foreign trade] might prove unduly restrictive as applied

to bulk cargo

[[Page 58604]]

vessels which are not to be included in the program for the first

time.'' Therefore, Congress ``amended this section to authorize the

Secretary of Commerce to promulgate regulations to include sufficient

flexibility to make the new bulk cargo vessels competitive.'' Senate

Rept. 91-1080, 91st Cong. 2d Sess., reprinted in 1970 USCCAAN, p. 4194.

Similar considerations require a nonspecific definition of the

``trade'' of liquid bulk vessels under the Maritime Security Act.

OSG asserts that the vessels ``provided'' in that ``trade'' are all

the U.S.-flag tankers of OSG's affiliates. The service ``provided'' is

construed to include periods of lay-up because the failure to operate

was due to conditions beyond the control of OSG's affiliates. Compare

Section 805 of the Merchant Marine Act, 1936. 46 U.S.C. 1223, which

includes in grandfathered service ``interruptions of service over which

the applicant or its predecessor in interest had no control.''

Any person, firm or corporation having any interest in the

application for section 656 consent and desiring to submit comments

concerning OSG's request must by 5:00 PM December 16, 1996 file

comments in triplicate to the Secretary, Maritime Administration, Room

7210, Nassif Building, 400 Seventh Street, SW., Washington, DC 20590.

By Order of the Maritime Administrator.

Dated: November 13, 1996.

Joel C. Richard,

Secretary, Maritime Administration.

[FR Doc. 96-29458 Filed 11-14-96; 8:45 am]

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