Lykes Bros. Steamship Co., Inc.; Notice of Additional Application for Written Permission Pursuant to Section 805(a) of the Merchant Marine Act, 1936, As Amended

DEPARTMENT OF TRANSPORTATION

Maritime Administration

[Docket S-944]

Lykes Bros. Steamship Co., Inc.; Notice of Additional Application

for Written Permission Pursuant to Section 805(a) of the Merchant

Marine Act, 1936, As Amended

Lykes Bros. Steamship Co., Inc. (Lykes), by letter of April 4,

1997, requests further written permission, in addition to its March 14,

1997, request published on March 19, 1997 (62 FR 13209-11), and its

March 20, 1997 request published on March 25, 1997 (62 FR 14183),

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

(Act), and Lykes' Operating-Differential Subsidy Agreement (ODSA),

Contract MA/MSB-451. The April 4, 1997 letter requests permission for

Lykes to become affiliated after the confirmation of its Chapter 11

plan of reorganization (Reorganization Plan), when it will emerge from

Chapter 11 as a reorganized entity (Reorganized Lykes) with Gilman

Financial Services Inc. (Gilman) through Gilman's wholly owned

subsidiary GFS Second Transportation Leasing, Inc. (GFST). Reorganized

Lykes will be 50% owned by GFST. Lykes' operating-differential subsidy

(ODS) is effective through December 31, 1997, for seven vessels. The

additional request involves another wholly owned Gilman subsidiary, GFS

Third Transportation Leasing, Inc., which is the Owner Participant in a

trust agreement under which Fleet Bank is the Owner Trustee and

documented owner of the vessel SEA-LAND NAVIGATOR, which is bareboat

chartered to and operated by Sea-Land Service, Inc. (Sea-Land). The

SEA-LAND NAVIGATOR, which was built with construction-differential

subsidy, operates in a mixed domestic/foreign trade, and carries cargo

between the United States Pacific Coast and Hawaii.

The ``affiliation'' giving rise to this request for permission will

be created as part of a restructuring under the supervision of the

United States Bankruptcy Court. Lykes believes that the operational

facts of this situation should be distinguished from the more common

section 805(a) situation in which an ODS contractor wishes to directly

or indirectly establish a domestic service. While Gilman, through GFS

Third Transportation Leasing, Inc., indirectly holds a beneficial

interest in the SEA-LAND NAVIGATOR, that vessel is bareboat chartered

to and operated by Sea-Land. Lykes states that Reorganized Lykes, as

the ODS contractor, has absolutely no affiliation with Sea-Land.

According to Lykes, nothing in the affiliation of Reorganized Lykes and

Gilman (and its subsidiaries) created by the reorganization will have

any effect on the operation or competitive status of the SEA-LAND

NAVIGATOR, and there will be no impact on any competitor of that

vessel. Lykes indicates that neither it nor Reorganized Lykes plans to

operate in the trade in which the SEA-LAND NAVIGATOR sails.

For the foregoing reasons, and in light of the complete operational

separation between Reorganized Lykes and the operator of the vessel in

which Gilman indirectly holds a beneficial interest and the short

remaining term of Lykes' ODS contract, Lykes requests that the

Secretary issue written permission pursuant to section 805(a) for

Reorganized Lykes to become affiliated with Gilman and its

subsidiaries. Lykes states that grant of the requested permission will

facilitate the consummation of the Reorganization Plan and accordingly

preserve U.S.-flag service and the employment of U.S. seamen. Lykes

respectfully requests that its application be given the most

expeditious possible consideration.

[[Page 17281]]

Notice is also given that Lykes has been authorized to be a party

to operating agreements under the Maritime Security Program (MSP)

Contract Nos. MA/MSP-21 through MA/MSP-23. Section 656 of the Act

provides that no contractor or related party shall receive MSP payments

during a period when it participates in a noncontiguous trade without

written permission. The SEA-LAND NAVIGATOR operates in the

noncontiguous trade to Hawaii. Sea-Land made application under section

656 for the operation of the SEA-LAND NAVIGATOR among others. A Gilman

subsidiary is the Owner Participant of the SEA-LAND NAVIGATOR. The

section 656 aspects are being addressed in Docket MSP-002.

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

Maritime Administration. Any person, firm or corporation having any

interest (within the meaning of section 805(a)) in Lykes' request and

desiring to submit comments concerning the request must by 5:00 PM on

April 16, 1997, file written comments in triplicate with the Secretary,

Maritime Administration, together with petition for leave to intervene.

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 actions 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.

(Catalog of Federal Domestic Assistance Program No. 20.805

(Operating-Differential Subsidy)).

Dated: April 7, 1997.

By order of the Maritime Administrator.

Joel C. Richard,

Secretary.

[FR Doc. 97-9205 Filed 4-8-97; 8:45 am]

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