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CED-81-154 1 (1981-09-04)

handle is hein.gao/gaobabcjj0001 and id is 1 raw text is: 874 ~ 2 UNITED S rAfES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 September 4, 1981 B-204453 The Honorable Walter B. Jones Chairman, Committee on Merchant Marine and Fisheries House of Representatives The Honorable Gene Snyder Ranking Minority Member Committee on Merchant Marine and Fisheries House of Representatives Subject: United States Lines, Inc.'s, Operating Differential Subsidy Agreement, Contract No. MA/MSB-483, Trade Route 5-7-8-9 (CED-81-154) This letter is in response to the committee's request of July 13, 1981, for specific information on United States Lines, Inc.'s, acquisition of Farrell Lines, Inc.'s, rights to Federal operating differential subsidies on trade route 5-7-8-9. Trade route 5-7-8-9 runs between the U.S. North Atlantic ports and certain ports in the United Kingdom and continental Europe. The committee's specific questions and our answers follow. The details are provided in enclosure I. 1. How much did U.S. Lines pay Farrell for the subsidy rights to trade route 5-7-8-9? U.S. Lines will pay Farrell about $15 million for the subsidy rights to trade route 5-7-8-9 and the bareboat charter rights to two container vessels. 2. How do the vessel replacement provisions in U.S. Lines' subsidy contract for trade route 5-7-8-9 differ from the standard subsidy vessel replacement provisions? The vessel replacement provisions in U.S. Lines' subsidy contract are unique, varying significantly from the stan- dard provisions in other subsidy contracts in terms of time allowed for vessel replacement. However, the Mari- time Administration (MarAd) considered U.S. Lines' subsidy application to be a unique situation because of (1) U.S. Lines' older vessels, (2) reduced construction differential subsidy funding, and (3) contemplated legislative changes to the construction subsidy program. (065552) COMMUNITY AND ECONOMIC DEVELOPMrNT DIVISION I(4xyKs 116298

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