01-1359. Crowley Maritime Corporation; Notice of Application for Written Permission Under Section 805(a) of the Merchant Marine Act, 1936, as Amended

AGENCY:

Maritime Administration, Transportation.

ACTION:

Notice of Application.

SUMMARY:

Crowley Maritime Corporation (Crowley), by letter dated January 4, 2001, requests written permission under section 805(a) of the Merchant Marine Act, 1936, as amended (Act), to allow Marine Transport Corporation's (MTC) vessels CHEMICAL EXPLORER and CHEMICAL TRADER to continue to receive operating-differential subsidy (ODS) after MTC becomes a subsidiary of Crowley. This section 805(a) permission is necessary for these vessels to continue to receive ODS because Crowley, through its subsidiaries, owns and operates vessels engaged in the domestic inter-coastal or coastwise service.

DATES:

You should submit your comments early enough to ensure that Docket Management receives them not later than close of business (5 p.m. est) on January 31, 2001.

ADDRESSES:

Your comments should refer to docket number MARAD-2001-8669. You may submit your comments in writing to: Docket Clerk, U.S. DOT Dockets, Room PL-401, 400 7th Street, SW, Washington, DC 20590. You may also submit them electronically via the internet at http://dmses.dot.gov/​submit/​. You may call Docket Management at [phone] and visit the Docket Room from 10 a.m. to 5 p.m., EST., Monday through Friday, except Federal Holidays. An electronic version of this document is available on the World Wide Web at http://dms.dot.gov.

FOR FURTHER INFORMATION CONTACT:

You may call Edmond J. Fitzgerald, Director, Office of Insurance and Shipping Analysis, [phone]. You may send mail to Edmond J. Fitzgerald, Director, Office of Insurance and Shipping Analysis, Room 8117, Maritime Administration, 400 Seventh St., SW., Washington, DC 20590.

SUPPLEMENTARY INFORMATION:

Comments

How Do I Prepare and Submit Comments?

Your comments must be written and in English. To ensure that your comments are correctly filed in the Docket, please include the docket number of this document in your comments. We encourage you to write your primary comments in a concise fashion. However, you may attach necessary additional documents to your comments. There is no limit on the length of the attachments. Please submit two copies of your comments, including the attachments, to Docket Management at the address given above under ADDRESSES.

If you wish Docket Management to notify you upon its receipt of your comments, enclose a self-addressed, stamped postcard in the envelop containing your comments. Docket Management will return the postcard by mail.

How do I submit confidential business information? If you wish to submit any information under a claim of confidentiality, you should submit three copies of your complete submission, including the information you claim to be confidential business information, to the Chief Counsel, Maritime Administration, at the address given above under FOR FURTHER INFORMATION CONTACT. You should mark “CONFIDENTIAL” on each page of the original document that your would like to keep confidential. In addition, you should submit two copies, from which your have deleted the claimed confidential business information, to Docket Management at the address given under ADDRESSES. When you send comments containing information claimed to be confidential business information, you should include a cover letter setting forth with specificity the basis for any such claim.

Will the Agency Consider Late Comments?

We will consider all comments that Docket Management receives before the close of business on the comment closing date indicated above under DATES. To the extent possible, we will also consider comments that Docket Management receives after that date.

How Can I Read Comments Submitted by Other People?

You may read the comments received by Docket Management at the address given above under ADDRESSES. The hours of the Docket Room are indicated above in the same location. You may also see the comments on the Internet. To read the comments on the Internet, take the following steps: Go to the Docket Management System (DMS) Web page of the Department of Transportation (http//dmses.dot.gov/), click on the box labeled “Search”. The docket number for this document is MARAD-2001-8669. After typing in the last four-digits of the docket number, click on “search.” On the next page, which contains the docket summary information for the docket you selected, click on the desired comments. You may download the comments.

Application Request

Crowley and its wholly owned subsidiary, Shiloh Acquisition, Inc. (Shiloh), entered into an Agreement of Merger with MTC dated December 20, 2000. As part of the process, Shiloh will make a Tender Offer to purchase all the shares of MTC on January 5, 2001, which offer will expire on February 5, 2001, at which time Crowley expects to have control of MTC and subsequently thereafter effect a complete merger between Shiloh and MTC, with MTC being the surviving corporation as a direct subsidiary of Crowley.

MTC, through its subsidiaries, Frances ODS Corporation and Julius ODS Corporation, has two operating-differential subsidy agreements with the Maritime Administration dated as of September 30, 1998, Contract No. MA/MSB-442 and Contract No. MA/MSB-440, respectively. Pursuant to these agreements, Frances ODS Corporation receives ODS for the SMT CHEMICAL EXPLORER and Julius ODS Corporation receives ODS for SMT CHEMICAL TRADER. The agreement for SMT CHEMICAL EXPLORER will terminate by its terms on September 18, 2001 and the agreement for SMT CHEMICAL TRADER will terminate by its terms on March 25, 2001. Frances ODS Corporation receives approximately $8,500 per day pursuant to the agreement for the SMT CHEMICAL EXPLORER and Julius ODS Corporation receives approximately $8,100 per day pursuant to the agreement for SMT CHEMICAL TRADER.

Crowley, through its subsidiaries, owns and operates vessels engaged in the domestic inter-coastal or coastwise service, and has provided as an attachment to its application: Schedule A—the fleet of tugs and barges operating on the West Coast and Alaska and the Gulf; Schedule B—the fleet of tugs and barges operating in the U.S.-Puerto Rico trade; Schedule C—the fleet of tugs and barges operating on the East Coast and Gulf; and , Schedule D—the fleet of oil tankers operating throughout the Jones Act trading areas. These schedules show the horsepower of the tugs, capacity of the barges and tankers as well as the general itineraries. Interested parties may review these schedules by reading the application which is part of the docket and is accessible electronically via the internet, or personally at the DOT Docket Room, as described above under how to read comments submitted by other people.

In connection with these domestic services, Crowley requests written permission of the Secretary of Transportation, pursuant to section 805(a) of the Act to allow the MTC subsidiaries to continue to receive ODS pursuant to the subsidy contracts referred to above after MTC becomes a wholly owned subsidiary of Crowley.

In deciding whether to grant Crowley's application for a waiver pursuant to section 805(a) of the Act, Crowley requests the Maritime Administration to consider the following:

First, continued receipt by the two subsidiaries of MTC of ODS will not leak to Crowley. The subsidy dollars received by the two MTC subsidiaries will be used for the purposes set forth in the section 603 of the Act, as financial aid for the operation of the two vessels, the CHEMICAL EXPLORER and CHEMICAL TRADER. Thus, the ODS payments will remain with and be used by the ODS contractors, Frances ODS Corporation and Julius ODS Corporation.

Second, the continued receipt of ODS will be for (i) a relatively small amount of money and (ii) for a very short period of time. Crowley expects to have control of and complete the merger process by early February 2001. If this timetable holds firm, it would mean that Juluis ODS Corporation will receive subsidy for approximately one and a half months and Frances ODS Corporation will receive subsidy for approximately six and a half months. During this short period of time, the subsidy payments will be used by the ODS contractors and not leaked to Crowley.

Third, Crowley has been an operator in the Jones Act trades for over 100 years and, operates a wide range of vessels throughout the entire Jones Act trade area. Receipt of (i) a relatively small amount of ODS, (ii) for a short period of time; and (iii) earmarked for use by the Julius ODS Corporation and Frances ODS Corporation in the operation of the CHEMICAL TRADER and CHEMICAL EXPLORER will not leak to any of Crowley's wide range of Jones Act operations. In addition, it should be noted that by reason of the Title XI Reserve Fund and Financial Agreement between MARAD and the Julius ODS Corporation and the Frances ODS Corporation, those companies are prohibited from dividending any monies to their corporate parent and will continue to be so restricted through the date of the last ODS payment on September 18, 2001. Thus, there is no way for MTC to leak the ODS payments to Crowley.

For the reasons set forth above, Crowley believes that the grant of the requested section 805(a) waiver will not result in unfair competition to any person, firm, or corporation operating exclusively in the coastwise or inter-coastal service or that it would be prejudicial to the objects and policy of the Act and a hearing on the matter is not needed.

Any person, firm, or corporation having any interest (within the meaning of section 805(a)) in Crowley's request and desiring to submit comments together with petition for leave to intervene should do so in accordance with the above instructions for submitting comments. The petition should 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 with 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 action 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 inter-coastal service, or (b) would be prejudicial to the objects and policy of the Act relative to domestic trade operations.

(Catalog of Federal Domestic Assistance Programs No. 20.805 Operating-Differential Subsidies)

By Order of the Maritime Administrator.

Dated: January 11, 2001.

Joel C. Richard,

Secretary.