[Federal Register Volume 62, Number 19 (Wednesday, January 29, 1997)]
[Notices]
[Pages 4376-4377]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-2084]


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DEPARTMENT OF TRANSPORTATION
Maritime Administration
[Docket MSP-006/Docket S-942]


American President Lines; Notice of Application for a Waiver 
Pursuant to Section 804 of the Merchant Marine Act, 1936, as Amended

    American President Lines, Ltd. (APL), by application received 
November 7, 1996, applied under Section 651, Subtitle B, of the Act for 
participation in the Maritime Security Program (MSP). In support of its 
participation in the MSP, APL by letter dated January 17, 1997 has 
applied for a waiver pursuant to section 804 of the Merchant Marine Act 
of 1936, as amended (Act).
    On January 21, 1997, APL and MARAD entered into MSP Operating 
Agreements for nine vessels: APL KOREA, APL PHILIPPINES, APL SINGAPORE, 
APL THAILAND, PRESIDENT ADAMS, PRESIDENT JACKSON, PRESIDENT KENNEDY, 
PRESIDENT POLK and PRESIDENT TRUMAN. APL, in connection with the MSA, 
was awarded ``grandfather'' rights under section 804 for its six C-11 
vessels: APL KOREA, APL PHILIPPINES, APL SINGAPORE, APL THAILAND, APL 
JAPAN, and APL CHINA.
    APL states that in its capacity both (I) as a contractor under 
Subtitle A of Title VI of the Act under existing Contract No. MA/MSB 
417 and (ii) as an awardee of Operating Agreements and prospective 
contractor under the new Maritime Security Program established by 
Subtitle B of Title VI of the Act, APL requests a waiver of the 
provisions of section 804 to allow APL (or any holding company, 
subsidiary, affiliate or associate of APL or any transferee of any MSP 
Operating Agreement from APL to own, operate and/or charter up to 18 
foreign-flag vessels in line haul service between the United States and 
foreign ports in addition to the six such vessels that the Maritime 
Administration (MARAD) has determined that APL is entitled to own, 
operate and/or charter pursuant to section 804(f)(2)(A) of the Act. The 
requested waiver is for the full remaining term of APL's ODS contract 
and for the full term of APL's MSP Operating Agreements as well as any 
subsequent renewals of any such Operating Agreement.
    APL asserts that grant of the requested waiver is required for 
several reasons.
    1. On the date of enactment of the Maritime Security Act of 1996 
(MSA), APL moved cargo on 37 foreign-flag vessels in line haul service 
between the United States and foreign ports. Only six of these vessels 
were owned and/or operated by APL, viz., the six C-11 class vessels 
which are the basis for MARAD's above-noted determination that APL has 
an entitlement to six vessels under section 804(f)(2)(A). For 
historical reasons--including APL's pre-existing status as an ODS 
contractor subject to section 804, under which (prior to the amendments 
made by the MSA) it was considerably more difficult for a contractor to 
own and/or operate, as opposed to charter space on, foreign-flag 
vessels--APL's interest in the other 31 foreign-flag line haul vessels 
on the date of the MSA's enactment was in the form of space sharing and 
sailing coordination agreements. Under such agreements, APL chartered 
and utilized large proportions of the slot capacity of the 31 ships.
    APL's position is that it is entitled under section 804(f)(2)(A) to 
at least 37 foreign-flag line haul vessels, based on the six C-11s plus 
the 31 vessels subject to space charter agreements. A list of the 37 
foreign-flag vessels is provided as follows:

------------------------------------------------------------------------
             Vessel name                              Flag              
------------------------------------------------------------------------
ALIGATOR BRAVERY.....................  Panama                           
ALIGATOR COLUMBUS....................  Panama                           
ALIGATOR STRENGTH....................  Panama                           
ALIGATOR WISDOM......................  Panama                           
OOCL SHANGHAI........................  Panama                           
OOCL AMERICA.........................  Liberia                          
OOCL CALIFORNIA......................  Liberia                          
OOCL CHINA...........................  Liberia                          
OOCL HONG KONG.......................  Liberia                          
OOCL JAPAN...........................  Liberia                          
APL CHINA............................  Marshall Islands                 
APL JAPAN............................  Marshall Islands                 
APL KOREA............................  Marshall Islands                 
APL PHILIPPINES......................  Marshall Islands                 
APL SINGAPORE........................  Marshall Islands                 
APL THAILAND.........................  Marshall Islands                 
ALIGATOR AMERICA.....................  Japan                            
ALLIGATOR GLORY......................  Liberia                          
ALLIGATOR PRIDE......................  Liberia                          
ALLIGATOR VICTORY....................  Panama                           
OOCL FAME............................  Liberia                          
OOCL FRONTIER........................  Great Britain                    
AGLE ANAHUAC.........................  Liberia                          
TMM ACAPULCO.........................  Germany                          
TMM CHETUMAL.........................  Greece                           
TMM MANZANILLO.......................  Greece                           
TMM SINALOA..........................  Greece                           
TMM VERACRUZ.........................  Liberia                          
ALLIGATOR INDEPENDENCE...............  Panama                           
ALIGATOR LIBERTY.....................  Japan                            
ALIGATOR RELIANCE....................  Japan                            
ALLIGATOR TRIUMPH....................  Liberia                          
NEDLLOYD DEJIMA......................  Netherlands                      
NEDLLOYD DELFT.......................  Netherlands                      
OOCL FAIR............................  Liberia                          
OOCL FIDELITY........................  Liberia                          
OOCL FORTUNE.........................  Liberia                          
------------------------------------------------------------------------

    However, MARAD determined that, with respect to the 31 vessels 
subject to space charter arrangements, APL would not be entitled to 
grandfather rights under section 804(f)(2)(A). APL states that, while 
it disagrees with this determination, APL is willing to pursue an 
alternative course--this waiver application--to obtain the 
authorization for foreign-flag line haul vessels that is essential to 
APL's success as an ODS and MSP contractor. The requested waiver for 18 
vessels is equivalent to half of the 31 vessels subject to space 
sharing agreements, rounded up to 18 to allow three six-vessel strings 
in recognition of the operational need to operate line haul vessels in 
strings providing regular weekly port calls. That number reflects the 
approximate vessel equivalence of APL's share of the 31 foreign flag 
line haul vessels on which APL is a charterer.
    In addition to the six ships grandfathered under section 804(f)(2) 
of rights recognized by MARAD based on

[[Page 4377]]

the C-11s, the requested 18-vessel waiver would give APL a right to own 
and/or operate a total of 24 foreign-flag line haul vessels calling on 
U.S. ports.
    2. APL states that the central purpose of the MSA and the MSP is to 
preserve and advance a U.S.-flag commercial fleet, not only by 
providing necessary financial assistance for the operation of U.S.-flag 
vessels, but also by allowing the operators of such vessels the 
flexibility to structure their overall fleet and services to be 
responsive and competitive in the world marketplace. APL argues that 
Congress recognized that, in order to achieve this purpose, ODS and MSP 
contractors must be free to utilize foreign-flag vessels in close and 
efficient conjunction with their U.S.-flag services, as evidenced by 
the dramatic amendments made to section 804 by section 5 of the MSA. 
APL maintains that Congress also clearly intended that, in this respect 
among others, the principal operators in the U.S. foreign trades should 
be placed on a level playing field.
    As noted above, for historical reasons that are unrelated to 
current economic and competitive realities, APL argues it has wound up, 
under MARAD's interpretation of section 804(f)(2)(A), with much less 
flexibility to efficiently structure its services than its major U.S. 
and foreign competitors. According to APL, grant of the requested 
waiver would rectify this situation, and carry out the intent of 
Congress in enacting the MSA.
    3. APL maintains that, to the extent the section 804 concepts of 
``good cause'' and ``special circumstances'' may have any continuing 
substance following the amendments made to that section by the MSA, 
they are clearly present here:
    a. Grant of the request would be mutually beneficial to APL as an 
MSP contractor and the U.S. Merchant Marine.
    b. The number of vessels for which a waiver is requested is fair, 
given that (I) it is far fewer than the 31 foreign-flag line haul 
vessels on which APL chartered substantial space on the date of 
enactment of the MSA, as discussed above, and (ii) it achieves parity 
with APL's major MSP competitors.
    c. Given the expansive authority to operate foreign-flag line haul 
vessels that MARAD has recognized for Sea-Land and Maersk, there can be 
no claim that the requested waiver would injure either of those MSP 
contractors (or any other MSP contractor) in any way. Moreover, given 
the limitations imposed on the MSP funding that is essential to vessel 
operations under the U.S. flag, there is no possibility that U.S.-flag 
operations could be performed in lieu of the foreign-flag authorities 
herein sought.
    4. Finally, given the importance of the requested waiver to APL as 
a MSP contractor, and the compelling reasons for grant of a waiver 
explained above, APL requests that MARAD act promptly on this 
application.
    The application may be inspected in the Office of the Secretary, 
Maritime Administration. Any person, firm or corporation having any 
interest in the application for waiver pursuant to section 804, and 
desiring to submit comments concerning APL's request must by 5:00 PM (5 
working days after the date of publication) file comments in triplicate 
to the Secretary, Maritime Administration, Room 7210, Nassif Building, 
400 Seventh Street, SW., Washington, D.C. 20590. This notice is 
published as a matter of discretion. The Maritime Administrator will 
consider any comments submitted and take such action with respect 
thereto as may be deemed appropriate.

    Dated: January 23, 1997.

    By Order of the Maritime Administrator.
Joel C. Richard,
Secretary, Maritime Administration.
[FR Doc. 97-2084 Filed 1-28-97; 8:45 am]
BILLING CODE 4910-81-P