B-128826, OCT. 9, 1956

B-128826, OCT. 9, 1956

TO CHAIRMAN, FEDERAL MARITIME BOARD:

REFERENCE IS MADE TO YOUR LETTER OF JULY 31, 1956, REQUESTING TO BE ADVISED IF THIS OFFICE WOULD INTERPOSE ANY OBJECTION TO CERTAIN ACTIONS CONTEMPLATED BY THE FEDERAL MARITIME BOARD IN CONNECTION WITH TERMINATION OF THE CURRENT OPERATING-DIFFERENTIAL SUBSIDY CONTRACT WITH SEAS SHIPPING COMPANY, INC., ON TRADE ROUTE 15-A.

AS OUTLINED IN YOUR LETTER THE CONTRACT IN QUESTION BECAME EFFECTIVE ON OCTOBER 14, 1938, WILL TERMINATE ON DECEMBER 31, 1957, AND IS SUBJECT TO A SPECIFIC PROVISION CONTAINED IN ARTICLE I-2 THAT SAILINGS SHALL BE REDUCED IN THE YEAR PRECEDING THE TERMINATION DATE BY ELIMINATING VOYAGES WHICH WOULD NOT BE COMPLETED BY SUCH TERMINATION DATE. HOWEVER, THE CONTRACTOR HAS REQUESTED THAT, UPON TERMINATION AND IN LIEU OF RENEWAL, A NEW CONTRACT COVERING THE SAME SERVICE BE AWARDED TO ITS WHOLLY-OWNED SUBSIDIARY, ROBIN LINE, INC., TO WHICH SUBSIDIARY THE CONTRACTOR WILL TRANSFER TITLE TO ITS PRESENT FLEET OF TWELVE VESSELS. ACCORDINGLY, IN VIEW OF THE PROVISIONS OF ARTICLE I-2 AND IN ORDER TO AVOID ANY INTERRUPTION OR DIMUNITION OF ADEQUATE AMERICAN FLAG SERVICE ON TRADE ROUTE 15-A DURING THE TRANSITION PERIOD, YOU PROPOSE TO TAKE THE FOLLOWING ACTION:

"/1) BY MUTUAL AGREEMENT AMEND THE SEAS CONTRACT (A) TO SPECIFY A ONE YEAR EARLIER TERMINATION DATE, VIZ., DECEMBER 31, 1956; AND (B) TO DELETE THE ABOVE-QUOTED PORTION OF ARTICLE I-2 SO AS TO OBVIATE THE NECESSITY FOR ANY REDUCTION IN SAILINGS DURING THE LAST YEAR OF SAID CONTRACT; AND

"/2) AT THE SAME TIME, AWARD ROBIN LINE, INC. AN OPERATING DIFFERENTIAL SUBSIDY CONTRACT EFFECTIVE AS TO VOYAGES COMMENCING AFTER JANUARY 1, 1957, COVERING THE SAME VESSELS, SERVICES ROUTES AND LINES NOW COVERED IN THE SEAS CONTRACT.'

THE EXECUTION OF AN OPERATING-DIFFERENTIAL SUBSIDY CONTRACT WITH A NEW OPERATOR, PRIOR TO EXPIRATION OF AN EXISTING CONTRACT FOR THE SAME SERVICE, AND THE CONCURRENT OPERATION OF SUCH CONTRACTS DURING THE PERIOD OF TRANSITION IS INDISPENSABLE TO THE MAINTENANCE OF REGULAR AND UNINTERRUPTED SERVICE ON AN ESSENTIAL TRADE ROUTE, AND IT IS REASONABLE TO ASSUME THAT CONGRESS CONTEMPLATED SUCH ACTION BY THE BOARD TO EFFECTUATE THE PURPOSES OF THE MERCHANT MARINE ACT, 1936, AS AMENDED. SEE OUR LETTER TO THE MARITIME ADMINISTRATION DATED FEBRUARY 3, 1955, B-120594. IN THE INSTANT CASE IT IS ASSUMED YOUR PROPOSED ACTION CONTEMPLATES THAT SUBSIDY PAYMENTS WOULD BE MADE DURING THE PERIOD OF TRANSITION TO THE CONTRACTOR WHO HELD TITLE TO A PARTICULAR VESSEL DURING ITS ENTIRE VOYAGE. ADDITIONALLY, YOU INDICATE THAT THE FEDERAL MARITIME BOARD CONSIDERS THE ACTION CONTEMPLATED AS ADVANTAGEOUS TO THE UNITED STATES. UNDER THE CIRCUMSTANCES, MODIFICATION OF THE EXISTING CONTRACT WOULD APPEAR, IN ALL MATERIAL RESPECTS, TO BE CONSONANT WITH THE VIEWS EXPRESSED IN OUR LETTER OF FEBRUARY 3, 1955.

ACCORDINGLY, IN THE EVENT THE FEDERAL MARITIME BOARD IS ABLE TO MAKE THE PREREQUISITE FINDINGS PRESCRIBED BY THE MERCHANT MARINE ACT, 1936, AS AMENDED, TO SUPPORT THE AWARD OF AN OPERATING-DIFFERENTIAL SUBSIDY CONTRACT TO ROBIN LINE, INC., WE HAVE NO REASON TO OBJECT TO THE ACTION YOU HAVE PROPOSED.