03-6761. Sargeant Marine, Inc.; Notice of Application for Written Permission for Temporary Transfer to the Domestic Trade

AGENCY:

Maritime Administration, Transportation.

ACTION:

Notice of application.

SUMMARY:

Pursuant to section 506 of the Merchant Marine Act, 1936, as amended (Act), Sargeant Marine, Inc. (Sargeant), by letter dated March 11, 2003, as amended, requests approval for the temporary transfer of the ASPHALT COMMANDER (O.N. 663105) to the domestic trade for a period up to six months commencing on April 1, 2003. Sargeant advises that the ASPHALT COMMANDER would load asphalt and #6 fuel oil in Texas and discharge at any combination of ports from Tampa, Florida, then south to the southern tip of Florida, plus any port on the East Coat of the United States from Florida to Maine, plus Puerto Rico, during the requested six month period in the domestic trade in order to alleviate the shortage of these products on the East Coast, Florida and Puerto Rico. The ASPHALT COMMANDER (ex FALCON CHAMPION) was built with the aid of construction-differential subsidy (CDS) and is prohibited from operation in the exclusive domestic trade without the prior written permission of the Maritime Administration (MARAD).

DATES:

You should submit your comments early enough to ensure that Docket Management receives them not later than closes of business March 27, 2003.

ADDRESSES:

Your comments should refer to docket number MARAD 2003-14708. You may submit your comments in writing to: Docket Clerk, U.S. DOT Dockets, Room PL-401, 400 7th St., 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 Gregory V. Sparkman, Chief, Division of Shipping Analysis, [phone]. You may send mail to Gregory V. Sparkman, Chief, Division of 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 envelope 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 you would like to keep confidential. In addition, you should submit two copies, from which you have deleted the claimed confidential business information, to Docket Management at the address given above 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 the 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://dms.dot.gov. On that page, click on “search.” On the next page http://dms.dot.gov/​search/​ type in the four-digit docket number shown at the beginning of this document. The docket number for this document is MARAD 2203-14708. After typing the docket number, click on “search.” On the next page, which contains docket summary information for the docket you selected, click on the desired comments. You may download the comments.

Application Request

Pursuant to section 506 of the Merchant Marine Act, 1936, as amended (Act), Sargeant Marine, Inc. (Sargeant), by letter dated March 11, 2003, requests approval for the temporary transfer of the ASPHALT COMMANDER (O.N. 663105) to the domestic trade for a period up to six months commencing on April 1, 2003. Sargeant advises that the ASPHALT COMMANDER would load asphalt and #6 fuel oil in Texas and discharge at any combination of ports from Tampa, Florida, then south to the southern tip of Florida, plus any port on the East Coast of the United States from Florida to Maine, plus Puerto Rico, during the requested six month period in the domestic trade in order to alleviate the shortage of these products on the East Coast, Florida and Puerto Rico. The ASPHALT COMMANDER (the ex FALCON CHAMPION) was built with construction-differential subsidy (CDS) and is prohibited from operating in the exclusive domestic trade without the prior written permission of the Maritime Administration (MARAD).

Sargeant provides the following information in support of its section 506 waiver request for the ASPHALT COMMANDER to operate in the domestic trade for up to six months commencing April 1, 2003:

Sargeant states that there are fundamental problems of product imbalance and a lack of adequate ocean-going transportation for the distribution of asphalt and #6 fuel oil in the United States in 2003. The events that have caused this imbalance are unique in 2003 and are not expected to recur in future years.

Sargeant advises that generally, the United States imports approximately four million tons of asphalt, of which 60 percent, or 2.4 million tons, comes into Petroleum Administration for Defense District (PADD) I, which is the U.S. East Coast. About 60 percent of PADD I imports come from Venezuela. Since December 2, 2002, Venezuela has not exported asphalt due to disruptions in its oil industry. It is not known when Venezuela will resume normal asphalt production. Other sources of imported asphalt from Mexico and Spain are not sufficient to handle the loss of product from Venezuela. As a result, the current inventory levels of PADD I are extremely low.

Sargeant states that usually at this time of year PADD I asphalt inventory levels are full in anticipation of the usual demand beginning in spring. Average usage during the spring and summer months exceed the volume of asphalt that can be produced and imported into the region during those months. The vessels utilized to import asphalt from Venezuela, Mexico and Spain do not traditionally trade domestically.

Sargeant states that unless other PADDs, namely PADD III—the Gulf Coast region—can fill the product void, the East Coast will experience product outages this summer. Florida has already begun to experience outages. Such outages will cause the delay of road and housing construction, which have been critical to the Administration's plan for economic recovery. Sargeant refers to the two attached letters to the application, which emphasize these conditions. Although this discussion has been limited to asphalt, the same issues are true for #6 fuel oil.

Sargeant advises that the current inventory of high-heat, ocean-going domestic transportation vessels is not adequate to handle this one-time “bubble” of tonnage needed to move asphalt from PADD III to PADD I. Sargeant's proposal to allow the ASPHALT COMMANDER to trade asphalt and #6 fuel oil domestically for six months will provide alternate tonnage to allow the East Coast to avoid product outages.

According to Sargeant, the current asphalt shortage situation is exactly what the waiver provisions were designed for as shown by the following facts:

• There is an acute shortage of product in one section of the United States—the East Coast.
• The shortage is a direct result of product disturbances in a foreign country—Venezuela.
• The shortage is temporary and of a fixed duration—the asphalt season will end in the fall of 2003.
• The shortage is causing economic difficulties in the United States—the lack of product has already caused the price of asphalt to increase significantly in Florida. This is causing the Florida DOT to consider decreasing the project lettings, thereby decreasing road construction projects and corresponding economic activity. Lack of flux material will cause a shortage of housing construction materials this summer.
• There is product available in another area of the United States—the Gulf Coast.
• There is insufficient domestic transportation equipment to handle this temporary need.
• The ASPHALT COMMANDER is capable of filling the temporary gap in transportation.

As indicated above, Sargeant refers to two letters it has received emphasizing the deteriorating situation with respect to asphalt supplies in Florida and the U.S. East Coat. One of the letters is from the Asphalt Contractors Association of Florida, Inc. and the other from Owens Corning. The Florida group advises that they are facing a serious shortage of asphalt products across the state and major supply problems in South Florida, as a result of the Venezuela oil strike. The group anticipates a growing shortage and any relief that could be provided by Sargeant's ASPHALT COMMANDER would be of great help. Owens Corning is concerned about the present and future shortages of asphalt on the East Coast as a result of the Venezuelan situation and fully supports the use of the ASPHALT COMMANDER to bring flux from the U.S. Gulf to the U.S. East Coast.

This notice is published as a matter of discretion, and the fact of its publication should in no way be considered a favorable or unfavorable decision on the application, as filed, or as may be amended. MARAD will consider all comments submitted in a timely fashion, and will take such action as may be deemed appropriate.

(Catalog of Federal Domestic Assistance Program No. 20.800 Construction-Differential Subsidy)

By Order of the Maritime Administrator.

Dated: March 17, 2003.

Joel C. Richard,

Secretary.