[Federal Register: July 20, 2004 (Volume 69, Number 138)]
[Rules and Regulations]
[Page 43328-43338]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20jy04-12]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
Maritime Administration
46 CFR Part 296
[Docket No. MARAD-2004-18489]
RIN 2133-AB62
Maritime Security Program
AGENCY: Maritime Administration, Department of Transportation.
ACTION: Interim final rule and request for comments.
-----------------------------------------------------------------------
SUMMARY: The Maritime Administration (MARAD) is issuing this interim
final rule to provide procedures to implement provisions of the
National Defense Authorization Act for Fiscal Year 2004, the Maritime
Security Act of 2003 (MSA 2003). The MSA 2003 authorizes the creation
of a new Maritime Security Program (MSP) that establishes a fleet of
active, commercially viable, privately owned vessels to meet national
defense and other security requirements and to maintain a United States
presence in international commercial shipping. This interim final rule
establishes the new MSP and provides, among other things, application
procedures and deadlines for enrollment of vessels in the MSP.
DATES: Effective Date: This interim final rule is effective on October
1, 2004.
Comment Date: MARAD will consider comments received not later than
August 19, 2004.
Application Due Date: Applications for enrollment of vessels in the
MSP are due by October 15, 2004, to the address listed in the ADDRESSES
section below.
ADDRESSES: Comment Submission: You may submit comments [identified by
DOT DMS Docket Number MARAD-2004-18489] by any of the following
methods:
Web site: http://dms.dot.gov. Follow the instructions for
submitting comments on the DOT electronic docket site.
Fax: 1-202-493-2251.
Mail: Docket Management Facility; U.S. Department of
Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401,
Washington, DC 20590-001.
Hand Delivery: Room PL-401 on the plaza level of the
Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9
a.m. and 5 p.m., Monday through Friday, except Federal Holidays.
Federal eRulemaking Portal: Go to http://www.regulations.gov.
Follow the online instructions for submitting
comments.
Instructions: All submissions must include the agency name and
docket number for this rulemaking. Note that all comments received will
be posted without change to http://dms.dot.gov including any personal
information provided. Please see the Privacy Act heading under
Regulatory Notices.
Docket: For access to the docket to read background documents or
comments received, go to http://dms.dot.gov at any time or to Room PL-
401 on the plaza level of the Nassif Building, 400 Seventh Street, SW.,
Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday,
except Federal Holidays.
Application Submission: Submit applications for enrollment of
vessels in the MSP to the Secretary, Maritime Administration, Room
7218, Maritime Administration, U.S. Department of Transportation, 400
Seventh Street, SW., Washington, D.C. 20590.
FOR FURTHER INFORMATION CONTACT: Taylor E. Jones II, Director, Office
of Sealift Support, Maritime Administration, Telephone 202-366-2323.
For legal questions, call Murray Bloom, Chief, Division of Maritime
Programs, Maritime Administration, 202-366-5320. For military utility
questions, call LTC Todd Robbins, U.S. Transportation Command, 618-229-
1451/1529.
SUPPLEMENTARY INFORMATION:
Background
On October 8, 1996 the President signed the Maritime Security Act
of 1996 establishing the Maritime Security Program (MSP) for FYs 1996
through 2005 to provide financial assistance of up to $2.1 million per
vessel per year to operators of U.S.-flag vessels with approved MSP
Operating Agreements. The MSP is funded at $100 million per year for
each year from FY 1996 through FY 2005, which covers a maximum of 47
vessels.
On November 24, 2003, the President signed the National Defense
Authorization Act for Fiscal Year 2004, which contained the MSA 2003
creating a new MSP for FY 2006 through FY 2015. This program also
provides financial assistance to operators of U.S.-flag vessels that
meet certain qualifications. The MSA 2003 requires that the Secretary
of Transportation, in consultation with the Secretary of Defense,
establish a fleet of active, commercially viable, militarily useful,
privately-owned vessels to meet national defense and other security
requirements. Section 53111 of the MSA 2003 authorizes $156 million
annually for FYs 2006, 2007, and 2008; $174 million annually for FYs
2009, 2010, and 2011; and $186 million annually for FYs 2012, 2013,
2014, and 2015 to support the operation of up to 60 U.S.-flag vessels
in the foreign commerce of the United States. Payments to participating
operators are limited to $2.6 million per ship per year for FYs 2006
through 2008, $2.9 million per ship per year for FYs 2009 through 2011,
and $3.1 million per ship per year for FYs 2012 through 2015. Payments
are subject to annual appropriations. Participating operators are
required to make their commercial transportation resources available
upon request by the Secretary of Defense during times of war or
national emergency.
Subtitle A, section 3517 of the MSA 2003 provides for a pilot
program under which the Secretary of Transportation may enter into an
agreement(s) to reimburse MSP vessel operators up to 80 percent of the
cost of performing maintenance and repairs in U.S. shipyards versus the
cost of performing this work in a geographic region in which the MSP
vessel generally operates. Funding to perform qualified maintenance and
repair work in the United States on MSP vessels is authorized to be
appropriated in the amount of $19.5 million for each of fiscal years
2006 through 2011.
Military Utility
The U.S. Transportation Command, on behalf of the Secretary of
Defense, will issue a press release or another form of announcement
within 20 days after the issuance of this regulation describing the
current operational requirements of the Department of Defense for
determining the award of operating agreements within a priority.
Current requirements may be stated in terms of capability to perform a
particular mission or in terms of vessel characteristics (militarily
useful square footage, deck height, deck strength, draft, ammunition
certification, etc.) or in other operational terms.
Rulemaking Analyses and Notices
Executive Order 12866 (Regulatory Planning and Review), and Department
of Transportation (DOT) Regulatory Policies; Pub. L. 104-121
This rulemaking is considered to be an economically significant
regulatory action under section 3(f) of Executive
[[Page 43329]]
Order 12866. This interim final rule is also considered a major rule
for purposes of Congressional review under Pub. L. 104-121. Since the
program is designed to support up to 60 vessels in FY 2006, each
receiving up to $2.6 million annually, the Maritime Administrator finds
that the program may have an annual effect on the economy of $100
million or more. Thus, it is considered to be a significant rule under
Executive Order 12866 and DOT's Regulatory Policies and Procedures (44
FR 11034, February 26, 1979), and has been reviewed by OMB. Changes
made in response to OMB suggestions or recommendations will be
documented in the public record. Under Executive Order 12866, MARAD is
required to provide an analysis of information developed as part of its
decisionmaking process, including the benefits anticipated from the
regulatory action, the costs anticipated from the action, and an
assessment of the costs and benefits of potentially effective and
reasonably feasible alternatives to the regulatory action. MARAD's
regulatory analysis follows.
Background
The Maritime Security Act of 1996 (MSA) was passed with strong
bipartisan support in Congress and was signed into law on October 8,
1996. The MSA outlined, in detail, the establishment of a fleet of
vessels, pursuant to agreement, engaged in U.S. foreign commerce and
available for use by the Department of Defense during times of war or
national emergency. Based on the success of the program under the
original MSA, Congress, as part of the recently enacted Maritime
Security Act of 2003 (MSA 2003), created a new program that permits an
increase in both the number of participant vessels as well as the
payment amounts such vessels will receive under the program.
Benefits
The major benefit of the MSA 2003 is that it will provide the
Department of Defense (DOD) with assured access of up to 60 vessels
that may be used during times of war or national emergency. The
existing MSP fleet of 47 vessels consists primarily of containerships,
which are mainly designed for the sustainment phase of sealift
operations that support military operations. In Operation Iraqi
Freedom, 35 MSP vessels were employed in support of military
operations. In addition, the MSP provides necessary support to help
maintain a U.S.-flag presence in international commerce. The MSP
vessels are a major component of the U.S.-flag capability that
contributes to the U.S. mariner base for utilization on both commercial
and DOD organic fleet.
Costs
From the inception of the program, Congress set strict limits, not
subject to the Secretary of Transportation's discretion, on the number
of participant vessels and the annual payment per vessel. The MSA 2003
will permit an increase in the number of participant vessels from 47
authorized under the original MSA (for FYs 1996-2005) to 60 (authorized
for FYs 2006-2015). Similarly, the payments per vessel may be increased
from $2.1 million (under the original MSA for FYs 1997-2005) to $2.6
million (for FYs 2006-2008); $2.9 million (for FYs 2009-2011); and $3.1
million (for FYs 2012-2015). The maximum programmatic payment that
Congress directed through the MSA 2003 is $156 million, $174 million,
and $186 million per year for FYs 2006-2008, 2009-2011, and 2012-2015
respectively, subject to appropriation.
Analysis of Alternatives
The MSA 2003 expands the MSP program that was originally
established by Congress in 1996 by increasing the number of participant
vessels, annual funding amounts, and expenditure amounts for the new
MSP program. However, beyond the increased size of the new MSP program
under the MSA 2003, the underlying statutes are substantially similar,
and envision a new MSP program that is essentially a continuation of
the prior MSP program under the original MSA. Under both the original
MSA and the MSA 2003, Congress prescribed the salient details of the
MSP program, including ship ownership, vessel eligibility, vessel
documentation, program duration, the number of participants, the amount
of funding, and, under the MSA 2003, guidelines regarding the
composition of the fleet. Since the MSA 2003 provides detailed
requirements for continuing the MSP program, MARAD has little
discretion to propose regulatory options. In fact, given the highly
prescriptive nature of both the original MSA and MSA 2003, MARAD
believes that no viable regulatory alternatives exist in lieu of
implementing these regulations, which continue and expand the current
MSP program.
Administrative Procedure Act
Pursuant to authority granted by section 3533 of the MSA 2003,
which provides an exception from compliance with the notice and comment
requirements of section 553 of Title 5, United States Code, MARAD is
publishing this rule as an interim final rule. This will facilitate
establishment of the new MSP as early as possible. A final rule will be
published in the Federal Register after MARAD has had an opportunity to
consider all comments on this interim final rule. Section 3533 provides
that all interim rules under that section that are not superseded
earlier by final rules shall expire no later than 270 days after the
effective date of Subtitle C, or October 1, 2004. Accordingly, these
interim regulations shall no longer be effective after June 27, 2005.
Executive Order 13132
We have analyzed this rulemaking in accordance with the principles
and criteria contained in Executive Order 13132 (``Federalism'') and
have determined that it does not have sufficient Federalism
implications to warrant the preparation of a Federalism summary impact
statement. The regulations have no substantial effects on the States,
the current Federal-State relationship, or the current distribution of
power and responsibilities among various local officials. Therefore,
consultation with State and local officials was not necessary.
Executive Order 13175
MARAD does not believe that this interim final rule will
significantly or uniquely affect the communities of Indian tribal
governments when analyzed under the principles and criteria contained
in Executive Order 13175 (Consultation and Coordination with Indian
Tribal Governments). Therefore, the funding and consultation
requirements of this Executive Order do not apply.
Regulatory Flexibility
Because no notice of proposed rulemaking is required for this
interim final rule, as set forth in section 3533 of Subtitle C, Title
XXXV, of the National Defense Authorization Act for Fiscal Year 2004,
the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.)
do not apply. However, the Maritime Administrator certifies that this
interim final rule will not have a significant economic impact on a
substantial number of small entities. We anticipate that few, if any,
small entities will participate in this program due to the nature of
the shipping industry and the capital costs associated with ships that
are eligible for the program.
Unfunded Mandates Reform Act of 1995
This interim final rule will not impose an unfunded mandate under
the Unfunded Mandates Reform Act of
[[Page 43330]]
1995. It will not result in costs of $100 million or more, in the
aggregate, to any of the following: State, local, or Native American
tribal governments, or the private sector. This interim final rule is
the least burdensome alternative that achieves this objective of U.S.
policy.
Environmental Assessment
We have analyzed this interim final rule for purposes of compliance
with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C.
4321 et seq.) and we have concluded that, under the categorical
exclusions provision in section 4.05 of Maritime Administrative Order
(MAO) 600-1, ``Procedures for Considering Environmental Impacts,'' 50
FR 11606 (March 22, 1985), neither the preparation of an Environmental
Assessment, an Environmental Impact Statement, nor a Finding of No
Significant Impact for this rulemaking is required. This interim final
rule does not change the environmental effects of the current MSP,
which has been operational since FY 1997, and thus no further analysis
under NEPA is required. The vessels eligible for the MSP under the MSA
2003 (1) will continue to operate under the U.S. flag, and will
continue to be governed by U.S.-flag state control while operating in
the foreign commerce of the United States; and (2) are and will
continue to be designed, constructed, equipped and operated in
accordance with stringent United States Coast Guard and International
Maritime Organization standards for maritime safety and maritime
environmental protection.
Paperwork Reduction
MARAD has requested that the Office of Management and Budget revise
its approval of an information collection under the Paperwork Reduction
Act of 1995 (44 U.S.C. 3507 et seq.). The title of the information
collection is Application and Reporting Elements for Participation in
the Maritime Security Program, OMB 2133-0525.
This information collection requires vessel operators to continue
to submit initial applications, amendments to applications (if
necessary), and monthly and annual reports. We estimate that the number
of annual respondents under the new MSP program will increase from 12.5
to 15, the average total number of annual responses will increase from
132 to 198.5, and that the average annual recordkeeping and reporting
burden program total will increase from 152 hours to 224 hours. We
estimate that the total average annual cost burden associated with this
information collection will be $10,726.65, or $715.11 per respondent.
In accordance with the Paperwork Reduction Act, MARAD published a
60-day notice in the Federal Register seeking public comment on the
information collection on May 28, 2004 (69 FR 30744).
Privacy Act
Anyone is able to search the electronic form of all comments
received into any of our dockets by the name of the individual
submitting the comment (or signing the comment, if submitted on behalf
of an association, business, labor union, etc.). You may review DOT's
complete Privacy Act Statement in the Federal Register published on
April 11, 2000 (Volume 65, Number 70; Pages 19477-78) or you may visit
http://dms.dot.gov.
List of Subjects in 46 CFR Part 296
Assistance payments, Maritime carriers, Reporting and record
keeping requirements.
0
Accordingly, Part 296 is added to 46 CFR Chapter II, Subchapter C, to
read as follows:
PART 296--MARITIME SECURITY PROGRAM (MSP)
Subpart A--Introduction
Sec.
296.1 Purpose.
296.2 Definitions.
296.3 Applications.
296.4 Waivers.
Subpart B--Eligibility
296.10 Citizenship requirements of owners, charterers and operators.
296.11 Vessel requirements.
296.12 Applicants.
Subpart C--Priority for Granting Applications
296.20 Tank vessels.
296.21 Participating Fleet Vessels.
296.22 Other vessels.
Subpart D--Maritime Security Program Operating Agreements
296.30 General conditions.
296.31 MSP assistance conditions.
296.32 Reporting requirements.
Subpart E--Payment and Billing Procedures
296.40 Billing procedures.
296.41 Payment procedures.
Subpart F--Appeals Procedures
296.50 Administrative determinations.
Subpart G--Maintenance and Repair Reimbursement Pilot Program
296.60 Applications.
Authority: Pub. L. 108-136, 117 Stat. 1392; 46 App. U.S.C.
1114(b), 49 CFR 1.66.
Subpart A--Introduction
Sec. 296.1 Purpose.
This part prescribes regulations implementing the provisions of
Subtitle C, Maritime Security Fleet Program, Title XXXV of the National
Defense Authorization Act for Fiscal Year 2004, the Maritime Security
Act of 2003 (MSA 2003), governing Maritime Security Program (MSP)
payments for vessels operating in the foreign trade or mixed foreign
and domestic commerce of the United States allowed under a registry
endorsement issued under 46 U.S.C. 12105. The MSA 2003 provides for
joint responsibility between the Department of Defense (DOD) and the
Department of Transportation (DOT) for administering the law. These
regulations provide the framework for the coordination between DOD and
DOT in implementing the MSA 2003. Implementation of the MSA 2003 has
been delegated by the Secretary of Transportation to the Maritime
Administrator, U.S. Maritime Administration and by the Secretary of
Defense to the Commander, U.S. Transportation Command, respectively.
Sec. 296.2 Definitions.
For the purposes of this part:
Act means the Merchant Marine Act, 1936, as amended (46 App. U.S.C.
1101 et seq.).
Administrator means the Maritime Administrator, U.S. Maritime
Administration (MARAD), U.S. DOT, who is authorized by the Secretary of
Transportation to administer the MSA 2003, in consultation with the
Commander, U.S. Transportation Command (USTRANSCOM).
Agreement Vessel means a vessel covered by an MSP Operating
Agreement.
Applicant means an applicant for an MSP Operating Agreement.
Bulk Cargo means cargo that is loaded and carried in bulk without
mark or count.
Chapter 121 means the vessel documentation provisions of chapter
121 of title 46, United States Code.
Citizen of the United States means an individual who is a United
States citizen, or a corporation, partnership or association as
determined under section 2 of the Shipping Act, 1916, as amended (46
App. U.S.C. 802).
Commander means Commander, USTRANSCOM, who is authorized by the
Secretary of Defense to administer the MSA 2003, in consultation with
the Administrator.
Contracting Officer means the Associate Administrator for National
Security, MARAD.
Contractor means the owner or operator of a vessel that enters into
an
[[Page 43331]]
MSP Operating Agreement for the vessel with the Secretary of
Transportation (acting through MARAD) pursuant to section 53103 of the
MSA 2003.
Documentation Citizen means an entity able to document a vessel
under 46 U.S.C. chapter 121. This definition includes a trust.
DOD means the U.S. Department of Defense.
Domestic Trade means trade between two or more ports and/or points
in the United States.
Eligible Vessel means a vessel that meets the requirements of
section 53102(b) of the MSA 2003.
Emergency Preparedness Agreement (EPA) means the agreement,
required by section 53107 of the MSA 2003, between a Contractor and the
Secretary of Transportation (acting through MARAD) to make certain
commercial transportation resources available during time of war or
national emergency or whenever determined by the Secretary of Defense
to be necessary for national security or contingency operation.
Enrollment means the entry into an MSP Operating Agreement with
MARAD to operate a vessel(s) in the MSP Fleet in accordance with Sec.
296.30.
Fiscal Year means any annual period beginning on October 1 and
ending on September 30.
Fleet means the Maritime Security Program Fleet established under
section 53102(a) of the MSA 2003.
Foreign Commerce means:
(1) For any vessel other than a liquid or a dry bulk carrier, a
cargo freight service, including direct and relay service, operated
exclusively in the foreign trade or in mixed foreign and domestic trade
allowed under a registry endorsement under section 12105 of title 46,
United States Code, where the origination point or the destination
point of cargo carried is the United States, regardless of whether the
vessel provides direct service between the United States and a foreign
country, or commerce or trade between foreign countries; and
(2) For liquid and dry bulk cargo carrying services, trading
between foreign ports in accordance with normal commercial bulk
shipping practices in such manner as will permit United States-
documented vessels to freely compete with foreign-flag bulk carrying
vessels in their operation or in competing for charters.
LASH Vessel means a lighter aboard ship vessel.
Militarily Useful is defined, in terms of minimum military
capabilities, according to DOD Joint Strategic Planning Capabilities
Plan (JSCAP) guidance.
MSP Fleet means the fleet of vessels operating under MSP Operating
Agreements.
MSP Operating Agreement means the agreement between a Contractor
and MARAD that provides for MSP payments.
MSP Payments means the payments made for the operation of U.S.-flag
vessels in the foreign commerce.
Noncontiguous Domestic Trade means transportation of cargo between
a point in the contiguous 48 states and a point in Alaska, Hawaii, or
Puerto Rico, other than a point in Alaska north of the Arctic Circle.
Operating Day means any calendar day during which a vessel is
operated in accordance with the terms and conditions of the MSP
Operating Agreement.
Operator is a person that either owns a vessel or charters in a
vessel at a financial risk through a demise charter that transfers
virtually all the rights and obligations of the vessel owner to the
vessel operator, such as that of crewing, supplying, maintaining,
insuring and navigating the vessel.
Owner means an entity that has title and/or beneficial ownership of
a vessel. Only an owner that is a person is eligible to enter into an
MSP Operating Agreement.
Participating Fleet Vessel means any vessel that:
(1) On October 1, 2005--
(i) Meets the citizenship requirements of paragraph (1), (2), (3),
or (4) of section 53102(c) of the MSA 2003;
(ii) Is less than 25 years of age, or is less than 30 years of age
in the case of a LASH vessel; and
(2) On December 31, 2004, is covered by an MSP Operating Agreement.
Person includes corporations, limited liability companies,
partnerships, and associations existing under or authorized by the laws
of the United States, or any State, Territory, District, or possession
thereof, or of any foreign country. A trust is not a person.
Roll-on/Roll-off Vessel means a vessel that has ramps allowing
cargo to be loaded and discharged by means of wheeled vehicles so that
cranes are not required.
SecDef means Secretary of Defense acting through the Commander
USTRANSCOM.
Secretary means the Secretary of Transportation acting through the
Maritime Administrator.
Section 2 Citizen means a United States citizen within the meaning
of section 2 of the Shipping Act, 1916, 46 U.S.C. 802, without regard
to any statute that ``deems'' a vessel to be owned and operated by a
Section 2 citizen.
Tank Vessel means, as stated in 46 U.S.C. 2101(38), a self-
propelled tank vessel that is constructed or adapted to carry, or that
carries, oil or hazardous material in bulk as cargo or cargo residue.
In addition, the vessel must be double hulled and capable of carrying
simultaneously more than two separated grades of refined petroleum
products.
Transfer of an MSP Operating Agreement includes any sale,
assignment or transfer of the MSP Operating Agreement, either directly
or indirectly, or through any sale, reorganization, merger, or
consolidation of the MSP Contractor.
United States includes the 50 U.S. states, the District of
Columbia, the Commonwealth of Puerto Rico, the Northern Mariana
Islands, Guam, American Samoa, and the Virgin Islands.
United States Citizen Trust means:
(1) Subject to paragraph (3), a trust that is qualified under this
definition.
(2) A trust is qualified only if:
(i) Each of the trustees is a citizen of the United States under
section 2 of the Shipping Act, 1916, as amended; and
(ii) The application for documentation of the vessel under 46
U.S.C. chapter 121, includes the affidavit of each trustee stating that
the trustee is not aware of any reason involving a beneficiary of the
trust that is not a citizen of the United States, or involving any
other person that is not a citizen of the United States, as a result of
which the beneficiary or other person would hold more than 25 percent
of the aggregate power to influence or limit the exercise of the
authority of the trustee with respect to matters involving any
ownership or operation of the vessel that may adversely affect the
interests of the United States.
(3) If any person that is not a citizen of the United States has
authority to direct or participate in directing a trustee for a trust
in matters involving any ownership or operation of the vessel that may
adversely affect the interests of the United States or in removing a
trustee for a trust without cause, either directly or indirectly
through the control of another person, the trust instrument provides
that persons who are not citizens of the United States may not hold
more than 25 percent of the aggregate authority to so direct or remove
a trustee.
(4) This definition shall not be considered to prohibit a person
who is not a citizen of the United States from holding more than 25
percent of the beneficial interest in a trust.
[[Page 43332]]
United States Documented Vessel means a vessel documented under 46
U.S.C. chapter 121.
Sec. 296.3 Applications.
(a) Action by MARAD.--Time deadlines. Applications for enrollment
of vessels in the MSP are due by October 15, 2004 to the Secretary,
Maritime Administration, Room 7218, Maritime Administration, U.S.
Department of Transportation, 400 Seventh Street, SW., Washington, D.C.
20590. If, for any reason, after the award of an Operating Agreement,
the Contractor is unwilling or unable to enter into an MSP Operating
Agreement, MARAD may award that contract to an Applicant having an
eligible vessel that applied but was not awarded an MSP Operating
Agreement. MARAD may also open a new round of applications at a later
date. Any applications received before October 15, 2004 shall be deemed
to have been submitted on October 15, 2004. Within 90 days after
receipt of a completed application, the Secretary shall approve the
application, in conjunction with the SecDef, or provide in writing the
reason for denial of that application. Execution of a standard MSP
Operating Agreement shall take place reasonably soon after approval of
the application.
(b) Action by the applicant. Each applicant for an MSP Operating
Agreement shall submit an application under OMB control number 2133-
0525 to the Secretary, Maritime Administration in the manner prescribed
on that form. Applicants may request an application form from MARAD's
Office of Sealift Support, or the application form can be downloaded
from the MARAD Web site, http://www.marad.dot.gov, and completed using
Microsoft Word. Completed forms must be received by MARAD no later than
close of business (5 p.m. Eastern Time) on October 15, 2004, and may be
submitted in person, by U.S. mail, Federal Express, United Parcel
Service, or DHL. Information required shall include:
(1) An affidavit of U.S. citizenship that comports with the
requirements of 46 CFR part 355, if applying as a Section 2 citizen.
Otherwise, an affidavit which demonstrates that the applicant is
qualified to document a vessel under 46 U.S.C. chapter 121. If the
applicant is a vessel operator and proposes to employ a vessel manager,
then an affidavit of U.S. citizenship meeting the same requirements as
applicable to the operator is required from the vessel manager;
(2) Certificate of Incorporation;
(3) Copies of by-laws or other governing instruments;
(4) Maritime related affiliations;
(5) Financial data:
(i) Provide an audited financial statement or a completed MARAD
Form MA-172 dated within 120 days after the close of the most recent
fiscal period; and
(ii) Provide estimated annual forecast of maritime operations for
the next five years showing revenue and expense, including explanations
of any significant increase or decrease of these items;
(6) Intermodal network:
(i) If applicable, a statement describing the applicant's operating
and transportation assets, including vessels, container stocks, trucks,
railcars, terminal facilities, and systems used to link such assets
together;
(ii) The number of containers and their twenty-foot equivalent
units (TEUs) by size and type owned and/or long-term leased by the
applicant distinguishing those that are owned from those that are
leased; and
(iii) The number of chassis by size and type owned and/or long-term
leased by the applicant distinguishing those that are owned from those
that are leased;
(7) Diversity of trading patterns: A list of countries and trade
routes serviced along with the types and volumes of cargo carried;
(8) Applicant's record of owning and/or operating vessels: Provide
number of ships owned and/or operated, specifying flag, in the last ten
years, trades involved, number of employees in your ship operations
department, vessel or ship managers utilized in the operation of your
vessels, and any other information relevant to your record of owning or
operating vessels;
(9) Bareboat charter arrangements, if applicable;
(10) Vessel data including vessel type, size, and construction
date;
(11) Military Utility: An assessment of the value of the vessel to
DOD sealift requirements. Provide characteristics which indicate the
value of the vessels to DOD including items of specific value, e.g.,
ramp strengths, national defense sealift features;
(12) Special Security Agreements: If applicable, provide a copy of
your Special Security Agreement;
(13) If applicable, Certification from documentation citizen who is
the demise charterer of the MSP vessel: In a letter submitted at the
time of the application addressed to the Administrator and the
Commander from the Chief Executive Officer, or equivalent, of a
documentation citizen that is the proposed Contractor of an MSP
Operating Agreement, provide a statement that there are no treaties,
statutes, regulations, or other laws of the foreign country of the
parent, that would prohibit the proposed Contractor from performing its
obligations under an MSP Operating Agreement. The statement should be
substantially in the following format:
``I, ------------, Chief Executive Officer of ------------,
certify to you that there are no treaties, statutes, regulations, or
other laws of the foreign country(ies) of ------------'s ultimate
foreign parent or intermediate parents that would prohibit --------
---- from performing its obligations under an Operating Agreement
with the Maritime Administration pursuant to the Maritime Security
Act of 2003.'';
(14) Agreement from the ultimate foreign parent of the
documentation citizen: An agreement to be signed and submitted at the
time of application from the equivalent of the Chief Executive Officer
of the ultimate foreign parent of a documentation citizen not to
influence the operation of the MSP vessel in a manner that will
adversely affect the interests of the United States. The Agreement
should be substantially in the following format:
``I, ------------, am the Chief Executive Officer [or
equivalent] of ------------, the ultimate foreign parent of --------
----, a documentation citizen of the United States that is applying
for an MSP Operating Agreement. I agree on behalf of the ``foreign
parent'' that neither ------------ (the ultimate foreign parent) nor
any representative of ------------ (the ultimate foreign parent)
will in any way influence the operation of the MSP vessel in a
manner that will adversely affect the interests of the United
States.'';
(15) Replacement vessel plan and age waiver: If applicable, an
applicant must submit a replacement vessel plan along with an age
waiver request if the applicant seeks an age waiver for an existing
vessel(s). Arrangements to obtain replacements for over-age vessel(s)
must be approved by the Secretary at the same time as the application
for an MSP Operating Agreement. The age restriction for over-age
vessels shall not apply to a Participating Fleet Vessel during the 30-
month period beginning on the date the vessel begins operating under an
MSP Operating Agreement under the MSA 2003 provided that the Secretary
has determined that the Contractor has entered into an arrangement for
a replacement vessel that will be eligible to be included in an MSP
Operating Agreement, and;
(16) Anti-Lobbying Certificate: A certificate as required by 49 CFR
part 20
[[Page 43333]]
stating that no funds provided under MSP have been used for lobbying to
obtain an Operating Agreement.
(Approved by the Office of Management and Budget under Control
Number 2133-0525)
Sec. 296.4 Waivers.
In general. In special circumstances, and for good cause shown, the
procedures prescribed in this part may by waived in writing by the
Secretary, by mutual agreement of the Secretary in consultation with
the SecDef, and the Contractor, so long as the procedures adopted are
consistent with the MSA 2003 and with the objectives of these
regulations.
Subpart B--Eligibility
Sec. 296.10 Citizenship requirements of owners, charterers and
operators.
Citizenship requirements are deemed to have been met if during the
period of an operating agreement under this chapter that applies to the
vessel, all of the conditions of any of the paragraphs (a), (b), (c),
or (d) of this section are met, and subject to conditions in paragraph
(e):
(a) A vessel to be included in an MSP Operating Agreement is owned
and operated by one or more persons that are citizens of the United
States under section 2 of the Shipping Act, 1916 (46 App. U.S.C.
802)(Section 2 citizens).
(b) A vessel to be included in an MSP Operating Agreement is owned
by a person that is a Section 2 citizen or a United States Citizen
Trust, and the vessel is demise chartered to a person--
(1) That is eligible to document the vessel under 46 U.S.C. chapter
121;
(2) Whose chairman of the board of directors, chief executive
officer, and a majority of the members of the board of directors are
Section 2 citizens; and are appointed and subjected to removal only
upon approval by the Secretary as follows:
(i) Proposed changes to the chairman of the board, chief executive
officer, and membership of the board of directors must be submitted to
the Administrator 60 days before scheduled to take effect; and
(ii) MARAD must approve or disapprove changes within 30 days of
receiving the proposed changes;
(3) That certifies to the Secretary in a format substantially
similar to the format at Sec. 296.3(b)(13) that there are no treaties,
statutes, regulations, or other laws that would prohibit the Contractor
from performing its obligations under an Operating Agreement at the
time of application for an MSP Operators Agreement; and
(4) The ultimate foreign parent of that person proffers, at the
time of application for an MSP Operating Agreement, an agreement in a
format substantially similar to the format at Sec. 296.3(b)(14) not to
influence the vessel's operation in a way that is detrimental to the
United States.
(c) A vessel to be included in an MSP Operating Agreement is owned
by a defense contractor who is a person that:
(1) Is eligible to document the vessel under 46 U.S.C. chapter 121;
(2) Operates or manages other United States-documented vessels for
the SecDef, or charters other vessels to the SecDef;
(3) Has entered into a special security agreement with the SecDef;
(4) Certifies to the Secretary, at the time of application, in a
format substantially similar to the format of Sec. 296.3(b)(13), that
there are no treaties, statutes, regulations, or other laws that would
prohibit the Contractor from performing its obligations under an
Operating Agreement; and
(5) Has its ultimate foreign parent proffer, at the time of
application for an MSP Operating Agreement, an agreement in a format
substantially similar to the format of Sec. 296.3(b)(14) not to
influence the vessel's operation in a way that is detrimental to the
United States.
(d) The vessel is owned by a documentation citizen and demise
chartered to a Section 2 citizen.
(e) Where applicable, the Secretary and the SecDef shall notify the
Senate Committees on Armed Services, and Commerce, Science, and
Transportation and the House of Representatives Committee on Armed
Services that they concur with the certifications by the documentation
citizens under Sec. 296.3(b)(13) and that they have reviewed the
agreements proffered by the ultimate foreign parent under Sec.
296.3(b)(14), and agree that there are no other legal, operational, or
other impediments that would prohibit the contractors for the vessels
from performing their obligations under MSP Operating Agreements.
Sec. 296.11 Vessel requirements.
(a) Eligible vessel. A vessel is eligible to be included in an MSP
Operating Agreement if:
(1) The vessel is:
(i) Determined by the SecDef to be suitable for use by the United
States for national defense or military purposes in time of war or
national emergency; and
(ii) Determined by the Secretary to be commercially viable;
(2) The vessel is operated or, in the case of a vessel to be
purchased or constructed, will be operated to provide transportation in
the foreign commerce of the United States;
(3) The vessel is self-propelled and is:
(i) A Roll-on/Roll-off vessel with a carrying capacity of at least
80,000 square feet or 500 twenty-foot equivalent units and is 15 years
of age or less on the date the vessel is included in the MSP;
(ii) A tank vessel that is constructed in the United States after
November 24, 2003;
(iii) A tank vessel that is 10 years of age or less on the date the
vessel is included in the MSP Fleet;
(iv) A LASH vessel that is 25 years of age or less on the date the
vessel is included in the fleet; or
(v) Any other type of vessel that is 15 years of age or less on the
date the vessel is included in the fleet;
(4) The vessel is:
(i) A United States documented vessel under 46 U.S.C. chapter 121;
or
(ii) Not a United States-documented vessel under 46 U.S.C. chapter
121, but the owner of the vessel has demonstrated an intent to have the
vessel documented under 46 U.S.C. chapter 121 at the time the vessel is
to be included in the MSP fleet; and
(5) The vessel is eligible for a certificate of inspection if the
Secretary of the Department in which the United States Coast Guard is
operating determines that:
(i) The vessel is classed and designed in accordance with the rules
of the American Bureau of Shipping (ABS) or another classification
society accepted by such Secretary;
(ii) The vessel complies with applicable international agreements
and associated guidelines as determined by the country in which the
vessel was documented immediately before becoming a U.S.-flag vessel;
and
(iii) The flag country has not been identified by such Secretary as
inadequately enforcing international vessel regulations.
(b) Waiver of age restriction of vessels. The SecDef, in
conjunction with the Secretary, may waive the age restriction in
paragraph (a) of this section if the Secretaries jointly determine that
the waiver:
(1) Is in the national interest;
(2) Is appropriate to allow the maintenance of the economic
viability of the vessel and any associated operating network; and
(3) Is necessary due to the lack of availability of other vessels
and operators that comply with the requirements of the MSA 2003.
Sec. 296.12 Applicants.
Applicant. Owners or operators of an eligible vessel may apply to
MARAD for inclusion of that vessel in the MSP Fleet
[[Page 43334]]
pursuant to the provisions of the MSA 2003. Applications shall be
addressed to the Secretary, Maritime Administration, Room 7218,
Maritime Administration, U.S. Department of Transportation, 400 Seventh
Street, SW., Washington, DC 20590.
Subpart C--Priority for Granting Applications
Sec. 296.20 Tank vessels.
(a) First priority for the award of MSP Operating Agreements under
MSA 2003 shall be granted to a tank vessel that is constructed in the
United States after October 1, 2004.
(b) First priority for the award of MSP Operating Agreements under
the MSA 2003 may be granted to a tank vessel that is less than ten
years of age on the date it enters an MSP Operating Agreement:
(1) Provided that a binding contract for a replacement vessel to be
operated under the MSP Operating Agreement and to be built in the
United States has been executed and approved by the Secretary not later
than nine months after the first date appropriated funds are available
for construction assistance; and
(2) No payment can be made for an existing tank vessel granted
priority one status after the earlier of:
(i) Four years after the first date appropriated funds are
available to carry out the construction of a tanker in the United
States; or
(ii) The date of delivery of the replacement tank vessel.
(c) A tank vessel under this section must be eligible to be
included in the MSP under Sec. 296.11(a);
(d) A tank vessel under this section must be owned and operated
during the period of the operating agreement by one or more persons
that are citizens of the United States under section 2 of the Shipping
Act of 1916 (46 App. U.S.C. 802); and
(e) The Secretary will not enter into more than five Operating
Agreements for tank vessels under this priority. If the five tank
vessel Operating Agreement slots are not fully subscribed, the
Secretary, in consultation with the SecDef, may award the non-
subscribed slots to lower priority vessels, if deemed appropriate. If
the Secretary determines that no funds are, or are likely to be,
allocated for any tank vessel construction in the United States, the
five slots may be awarded permanently to non-tank vessels. The
Secretary may temporarily award a slot reserved for a tank vessel under
construction to a lower priority vessel during the construction period
of that vessel if an existing tank vessel offered by the tank vessel
Contractor is not eligible for priority for that slot. If no existing
tank vessel is offered by the tank vessel Contractor, the Secretary may
temporarily award an MSP Operating Agreement to a non-tank vessel of
another Contractor until a new tank vessel's construction is completed
in the United States. Such temporary agreements shall be terminated at
the convenience of the Secretary under terms set forth in the temporary
MSP Operating Agreement.
Sec. 296.21 Participating Fleet Vessels.
(a) Priority. To the extent that appropriated funds are available
after applying the first priority, tank vessels, in Sec. 296.20, the
second priority is applicable to Participating Fleet Vessels.
(b) Number of Operating Agreements. MARAD will not enter into more
than 47 Operating Agreements for Participating Fleet Vessels.
(c) Reduction of Participating Fleet Vessel Operating Agreements.
The number of Operating Agreements available to Participating Fleet
Vessels shall be reduced by one for:
(1) Each Participating Fleet Vessel for which an application for
enrollment in the MSP is not received by the Secretary, Maritime
Administration on October 15, 2004; or
(2) Each Participating Fleet Vessel for which an application for
enrollment in the MSP is received by the Secretary, Maritime
Administration on October 15, 2004, but the application is not approved
by the Secretary of Transportation and the SecDef by January 12, 2005.
(d) Authority to enter into an Operating Agreement. (1)
Applications for inclusion of a Participating Fleet Vessel under the
priority in paragraph (a) of this section will be accepted only from a
person that has authority to enter into an MSP Operating Agreement for
the vessel with respect to the full term of the Operating Agreement.
Applicants must certify that they have the requisite authority and
provide the basis on which they rely for such certification, such as a
copy of a vessel title of ownership or a demise charter.
(2) The full term of the Operating Agreement is the period from
October 1, 2005 through September 30, 2015. If a vessel proposed to be
included in the MSP will become ineligible for the program prior to
September 30, 2015, due to vessel age restrictions, then the full term
of the Operating Agreement for that vessel for purposes of paragraph
(d)(1) of this section is the period the vessel meets the applicable
age restrictions. MARAD may still award an operating agreement through
September 30, 2015, to an applicant having authority to enter into an
MSP Operating Agreement for a vessel whose age eligibility expires
before that date, provided an appropriate replacement vessel is
approved by MARAD.
(3) For the purposes of paragraph (d)(1) of this section, in the
case of a vessel that is subject to a demise charter that terminates by
its terms on September 30, 2005 (without giving effect to any extension
provided therein for completion of a voyage or to effect the actual
redelivery of the vessel), or that is terminable at will by the owner
of the vessel after such date, only the owner of the vessel (provided
the owner of the vessel is a ``person'' as defined in Sec. 296.2)
shall be treated as having the authority referred to in paragraph
(d)(1) of this section.
(4) If two or more applicants claim authority for the same vessel,
the Secretary may request additional information bearing on the issue
of which party has authority to enter into an Operating Agreement, and
the Secretary shall, in his/her sole discretion, decide the matter as
he/she deems appropriate.
(e) During the 30-month period commencing October 1, 2005, the age
restrictions set forth under Sec. 296.11(a) and Sec. 296.41(c) do not
apply to a Participating Fleet Vessel operating under an MSP Operating
Agreement, provided:
(1) The Contractor has entered into an arrangement to obtain and
operate under that MSP Operating Agreement a replacement vessel for
that Participating Fleet Vessel; and
(2) The Secretary determines that the replacement vessel will be
eligible to be included in the MSP Fleet under Sec. 296.11(a).
Sec. 296.22 Other vessels.
(a) Third priority. To the extent that appropriated funds are
available after applying the first priority, tank vessels, in Sec.
296.20, and the second priority, Participating Fleet Vessels, in Sec.
296.21, the third priority is for any other vessel that is eligible to
be included in an MSP Operating Agreement under Sec. 296.11(a), and
that, during the period of that Agreement, will be:
(1) Owned and operated by one or more persons that are citizens of
the United States under section 2 of the Shipping Act, 1916 (46 App.
U.S.C. 802); or
(2) Owned by a person that is eligible to document the vessel under
46 U.S.C. chapter 121 and operated by a person that is a citizen of the
United States
[[Page 43335]]
under section 2 of the Shipping Act, 1916 (46 App. U.S.C. 802).
(b) Fourth priority. To the extent that appropriations are
available after applying the first priority in Sec. 296.20, the second
priority in Sec. 296.21, and the third priority in paragraph (a) of
this section, the fourth priority is for any other vessel that is
eligible to be included in an MSP Operating Agreement under Sec.
296.11(a).
(c) Discretion within priority. The Secretary--
(1) Subject to paragraph (c)(2) of this section, may award
operating agreements within each priority as the Secretary considers
appropriate; and
(2) Shall award Operating Agreements within a priority--
(i) In accordance with operational requirements specified by the
SecDef;
(ii) In the cases of the priorities listed in paragraphs (a) and
(b) of this section, according to the applicants' records of owning and
operating vessels; and
(iii) Subject to the approval of the SecDef.
Subpart D--Maritime Security Program Operating Agreements
Sec. 296.30 General conditions.
(a) Approval. (1) The Secretary, in conjunction with the SecDef,
may approve applications to enter into an MSP Operating Agreement and
make MSP Payments with respect to vessels that are determined by the
Secretary to be commercially viable and those that are deemed by the
SecDef to be militarily useful for meeting the sealift needs of the
United States in time of war or national emergencies. The Secretary
will announce an initial award of no more than 60 MSP Operating
Agreements and announce those applications deemed ineligible by January
12, 2005. In addition, the Secretary will advise those applicants found
to be eligible but not included in the initial award that those
applicants will be wait-listed for an award of an MSP Operating
Agreement if additional slots become available.
(2) The Commander will establish general evaluation criteria for
operational requirements for considering replacement vessels described
in Sec. 296.21(e), and for vessels eligible under the third and fourth
priorities described in Sec. 296.22. These general evaluation criteria
will be made available by the Commander in sufficient time for
preparing applications.
(b) Effective date. (1) General rule. Unless otherwise provided,
the effective date of an MSP Operating Agreement is October 1, 2005.
(2) Exceptions. In the case of an Eligible Vessel to be included in
an MSP Operating Agreement that is on charter to the U.S. Government,
other than a charter under the provisions of an Emergency Preparedness
Program Agreement provided by section 53107 of the MSA 2003, unless an
earlier date is requested by the applicant, the effective date for an
MSP Operating Agreement shall be:
(i) The expiration or termination date of the Government charter
covering the vessel; or
(ii) Any earlier date on which the vessel is withdrawn from that
charter, but not before October 1, 2005.
(c) Replacement vessels. A Contractor may replace an MSP vessel
under an MSP Operating Agreement with another vessel that is eligible
to be included in the MSP under Sec. 296.11(a), if the Secretary, in
conjunction with the SecDef, approves the replacement vessel. The
replacement vessel must qualify with the same or with more militarily
useful capability as the MSP vessel to be replaced for operational
requirements as determined by the Commander.
(d) Termination by the Secretary. If the Contractor materially
fails to comply with the terms of the MSP Operating Agreement:
(1) The Secretary shall notify the Contractor and provide a
reasonable opportunity for the Contractor to comply with the MSP
Operating Agreement;
(2) The Secretary shall terminate the MSP Operating Agreement if
the Contractor fails to achieve such compliance; and
(3) Upon such termination, any funds obligated by the relevant MSP
Operating Agreement shall be available to the Secretary to carry out
this chapter.
(e) Early termination by Contractor, generally. An MSP Operating
Agreement shall terminate on a date specified by the Contractor if the
Contractor notifies the Secretary not later than 60 days before the
effective date of the proposed termination that the Contractor intends
to terminate the Agreement. The Contractor shall be bound by the
provisions relating to vessel documentation and national security
commitments, and by its Emergency Preparedness Agreement for the full
term, from October 1, 2005 through September 30, 2015, of the MSP
Operating Agreement.
(f) Early termination by Contractor, with available replacement. An
MSP Operating Agreement shall terminate without further obligation on
the part of the Contractor upon the expiration date of the three-year
period beginning on the date a vessel begins operating under the MSP,
if:
(1) The Contractor notifies the Secretary, by not later than two
years after the date the vessel begins operation under an MSP Operating
Agreement, that the Contractor intends to terminate the Agreement; and
(2) The Secretary, in conjunction with the SecDef, determines that:
(i) An application for an MSP Operating Agreement has been received
for a replacement vessel that is acceptable to the Secretaries; and
(ii) During the period of an MSP Operating Agreement that applies
to the replacement vessel, the replacement vessel will be:
(A) Owned and operated by one or more persons that are citizens of
the United States under section 2 of the Shipping Act, 1916 (46 App.
U.S.C. 802); or
(B) Owned by a person that is a Documentation Citizen and operated
by a person that is a citizen of the United States under section 2 of
the Shipping Act, 1916 (46 App. U.S.C. 802).
(g) Non-renewal for lack of funds. If, by the first day of a fiscal
year, sufficient funds have not been appropriated under the authority
of MSA 2003 for that fiscal year, the Secretary shall notify the
Senate's Committees on Armed Services and Commerce, Science, and
Transportation, and the House of Representatives' Committee on Armed
Services, that MSP Operating Agreements for which sufficient funds are
not available, will not be renewed for that fiscal year if sufficient
funds are not appropriated by the 60th day of that fiscal year. If only
partial funding is appropriated by the 60th day of such fiscal year,
then the Secretary, in consultation with the SecDef, shall select the
vessels to retain under MSP Operating Agreements, based on the
Secretaries' determinations of the most militarily useful and
commercially viable vessels. In the event that no funds are
appropriated, then all MSP Operating Agreements shall be terminated
and, each Contractor shall be released from its obligations under the
MSP Operating Agreement. Final payments under the terminated agreements
shall be made in accordance with Sec. 296.41. To the extent that funds
are appropriated in a subsequent fiscal year, former operating
agreements may be reinstated if mutually acceptable to the
Administrator and the Contractor provided the MSP vessel remains
eligible.
(h) Release of vessels from obligations: If an MSP Operating
Agreement is terminated by the Contractor, with available replacement
[[Page 43336]]
under paragraph (f) of this section, or if sufficient funds are not
appropriated for payments under an MSP Operating Agreement for any
fiscal year by the 60th day of that fiscal year, then--
(1) Each vessel covered by the terminated MSP Operating Agreement
is released from any further obligation under the MSP Operating
Agreement;
(2) The owner and operator of a non-tank vessel may transfer and
register the applicable vessel under a foreign registry deemed
acceptable by the Secretary and the SecDef, notwithstanding section 9
of the Shipping Act, 1916 (46 App. U.S.C. 808) and 46 CFR part 221;
(3) The owner and operator of a tank vessel must formally apply to
MARAD pursuant to section 9 of the Shipping Act, 1916 to transfer and
register the vessel under a foreign registry; and
(4) If section 902 of the Act is applicable to a vessel that has
been transferred to a foreign registry due to a terminated MSP
Operating Agreement, then that vessel is available to be requisitioned
by the Secretary pursuant to section 902 of the Act.
(5) Paragraph (h) of this section is not applicable to vessels
under MSP Operating Agreements that have been terminated for any other
reason.
(i) Foreign transfer of vessel. A Contractor may transfer a non-
tank vessel to a foreign registry, without approval of the Secretary,
if the Secretary, in conjunction with the SecDef, determines that the
contractor will provide a replacement vessel:
(1) Of equal or greater military capability or of a capacity that
is equivalent or greater as measured in deadweight tons, gross tons, or
container equivalent units, as appropriate;
(2) That is a documented vessel under 46 U.S.C. chapter 121 by the
owner of the vessel to be placed under a foreign registry; and
(3) That is not more than 10 years of age on the date of that
documentation.
(j) Transfer of Operating Agreements. A Contractor subject to an
MSP Operating Agreement may transfer that Agreement (including all
rights and obligations under that Agreement) to any person eligible to
enter into an Operating Agreement under Sec. 296.10 provided that
prior approval to transfer the Agreement is granted by the Secretary
and the SecDef. The Contractor should allow at least 90 days for
processing of a transfer request.
Sec. 296.31 MSP assistance conditions.
(a) Term of MSP Operating Agreement. MSP Operating Agreements are
authorized for ten years, starting on October 1, 2005 and ending on
September 30, 2015, but payments to Contractors are subject to annual
appropriations each fiscal year. MARAD may enter into MSP Operating
Agreements for a period less than the full term authorized under the
MSA 2003.
(b) Terms under a Continuing Resolution (CR). In the event funds
are available under a CR, the terms and conditions of the MSP Operating
Agreements shall be in force provided sufficient funds are available to
fully meet obligations under MSP Operating Agreements, and only for the
period stipulated in the applicable CR. If funds are not appropriated
at sufficient levels for any portion of a fiscal year, the Secretary
shall determine to which MSP Operating Agreement to apply the available
funds. With regard to an MSP Operating Agreement that does not receive
funds, the terms and conditions of any applicable MSP Operating
Agreement may be voided and the Contractor may request termination of
the MSP Operating Agreement.
(c) National security requirements. Each MSP Operating Agreement
shall require the owner or operator of an Eligible Vessel included in
that agreement to enter into an EPA pursuant to section 53107 of the
MSA 2003. The EPA shall be a document incorporating the terms of the
Voluntary Intermodal Sealift Agreement (VISA), as approved by the
Secretary and the SecDef, or other agreement approved by the
Secretaries.
(d) Vessel operating agreements. The MSP Operating Agreement shall
require that during the period an Eligible Vessel is included in that
Agreement, the Eligible Vessel shall:
(1) Documentation: Be documented as a U.S.-flag vessel under 46
U.S.C. chapter 121;
(2) Operation: Be operated exclusively in the U.S.-foreign trade or
in mixed foreign and domestic trade allowed under a registry
endorsement issued under 46 U.S.C. 12105, except for tankers, which may
be operated in foreign-to-foreign commerce, and shall not otherwise be
operated in the coastwise trade of the United States; and
(3) Noncontiguous domestic trade: Not receive MSP payments during a
period in which the Contractor participates in noncontiguous domestic
trade unless the Contractor is a citizen within the meaning of section
2(c) of the Shipping Act, 1916.
(e) Obligation of the U.S. Government. The amounts payable as MSP
payments under an MSP Operating Agreement shall constitute a
contractual obligation of the United States Government to the extent of
available appropriations.
(f) U.S. Merchant Marine Academy cadets. The MSP Operator shall
agree to carry two U.S. Merchant Marine Academy cadets, if available,
on each voyage.
Sec. 296.32 Reporting requirements.
The Contractor shall submit to the Director, Office of Financial
and Rate Approvals, Maritime Administration, 400 Seventh St., SW.,
Washington, DC 20590, one of the following reports, including
management footnotes where necessary to make a fair financial
presentation:
(a) Form MA-172: Not later than 120 days after the close of the
Contractor's semiannual accounting period, a Form MA-172 on a
semiannual basis, in accordance with 46 CFR 232.6; or
(b) Financial Statement: Not later than 120 days after the close of
the Contractor's annual accounting period, an audited financial
statement in accordance with 46 CFR 232.6 and the most recent vessel
operating cost data submitted as part of its Emergency Preparedness
Agreement.
(Approved by the Office of Management and Budget under Control
Number 2133-0005.)
Subpart E--Billing and Payment Procedures
Sec. 296.40 Billing procedures.
Submission of voucher. For contractors operating under more than
one MSP Operating Agreement, the contractor may submit a single monthly
voucher applicable to all its agreements. Each voucher submission shall
include a certification that the vessel(s) for which payment is
requested were operated in accordance with Sec. 296.31(d) and
applicable MSP Operating Agreements with MARAD, and consideration shall
be given to reductions in amounts payable as set forth in Sec.
296.41(b) and (c). All submissions shall be forwarded to the Director,
Office of Accounting, MAR-330, Room 7325, Maritime Administration, 400
Seventh Street, SW., Washington, DC 20590. Payments shall be paid and
processed under the terms and conditions of the Prompt Payment Act, 31
U.S.C. 3901.
Sec. 296.41 Payment procedures.
(a) Amount payable. An MSP Operating Agreement shall provide,
subject to the availability of appropriations and to the extent the
agreement is in effect, for each Agreement Vessel, an annual payment of
up to $2,600,000 for FY 2006, FY 2007, FY 2008; $2,900,000 for FY 2009,
[[Page 43337]]
FY 2010, FY 2011; and $3,100,000 for FY 2012, FY 2013, FY 2014, FY
2015. This amount shall be paid in equal monthly installments at the
end of each month. The annual amount payable shall not be reduced
except as provided in paragraphs (b) and (c) of this section.
(b) Reductions in amount payable. (1) The annual amount otherwise
payable under an MSP Operating Agreement shall be reduced on a pro rata
basis for each day less than 320 in a fiscal year that an Agreement
Vessel:
(i) Is not operated exclusively in the U.S.-foreign trade or in
mixed foreign and domestic trade allowed under a registry endorsement
issued under 46 U.S.C. 12105, except for tank vessels, which may be
operated in foreign-to-foreign commerce;
(ii) Is operated in the coastwise trade; or
(iii) Is not documented under 46 U.S.C. chapter 121.
(2) To the extent that a Contractor operates MSP vessels less than
320 days under the provisions of Sec. 296.31(d), payments will be
reduced for each day less than 320 days.
(c) No payment. (1) Regardless of whether the Contractor has or
will operate for 320 days in a fiscal year, a Contractor shall not be
paid:
(i) For any day that an MSP Agreement Vessel is engaged in
transporting more than 7,500 tons (using the U.S. English standard of
short tons, which converts to 6,696.75 long tons, or 6,803.85 metric
tons) of civilian bulk preference cargoes pursuant to section 901(a),
901(b), or 901b of the Act, provided that it is bulk cargo;
(ii) During a period in which the Contractor participates in
noncontiguous domestic trade, unless that Contractor is a citizen of
the United States within the meaning of section 2 of the Shipping Act,
1916 (46 App. U.S.C. 802(c));
(iii) While under charter to the United States Government other
than a charter pursuant to an Emergency Preparedness Agreement under
section 53107 of the MSA 2003. A voyage charter that is essentially a
contract of affreightment will not be considered to be a charter;
(iv) For a vessel in excess of 25 years of age, except for a LASH
vessel in excess of 30 years of age or a tank vessel which is limited
to 20 years of age, unless the vessel is a participating fleet vessel
meeting the requirements of Sec. 296.21(e);
(v) For days in excess of 30 days in a fiscal year in which a
vessel is drydocked or undergoing survey, inspection, or repair unless
prior to the expiration of the vessel's 30-day period, approval is
obtained from MARAD for an extension beyond 30 days. Drydocking,
survey, inspection, or repair periods of 30 days or less are considered
operating days; and
(vi) If the contracted vessel is not operated or maintained in
accordance with the terms of the MSP Operating Agreement.
(2) To the extent that non-payment days under paragraph (c) of this
section are known, Contractor payments shall be reduced at the time of
the current billing. The daily reduction amounts shall be based on the
annual amounts in paragraph (a) of this section divided by 365 days
(366 days in leap years) and rounded to the nearest cent. Daily
reduction amounts shall be applied.
(3) MARAD may require, for good cause, that a portion of the funds
payable under this section be withheld if the provisions of Sec.
296.31(d) have not been met.
(4) Amounts owed to MARAD for reductions applicable to a prior
billing period shall be electronically transferred using MARAD's
prescribed format, or a check may be forwarded to the Maritime
Administration, P.O. Box 845133, Dallas, Texas 75284-5133, or the
amount owed can be credited to MARAD by offsetting amounts payable in
future billing periods.
Subpart F--Appeals Procedures
Sec. 296.50 Administrative determinations.
(a) Policy. A Contractor who disagrees with the findings,
interpretations or decisions of the Contracting Officer with respect to
the administration of this part may submit an appeal to the
Administrator. Such appeals shall be made in writing to the Secretary,
within 60 days following the date of the document notifying the
Contractor of the administrative determination of the Contracting
Officer. Such an appeal should be addressed to the Maritime
Administrator, Attn.: MSP Contract Appeals, Maritime Administration,
400 Seventh St., SW., Washington, DC 20590.
(b) DOD determinations. The MSA 2003 assigns joint and separate
roles and responsibilities to the Secretary and to the SecDef. The
Administrator and the Commander will enter into an agreement describing
the interagency process for making joint and separate findings,
interpretations, and decisions necessary to implement the MSA 2003. A
Contractor who disagrees with the initial findings, interpretations or
decisions regarding the implementation of the MSA 2003--whether joint
or separate in nature--shall communicate such disagreement to the
Contracting Officer. Pursuant to the interagency agreement or other
agreement of the Administrator and the Commander, any disagreement or
dispute of a Contractor may, where appropriate, be transferred to the
Director, Policy and Plans, U.S. Transportation Command (Director), for
resolution. A Contractor who disagrees with the findings,
interpretations, or decisions of the Director, with respect to the
administration of this part, may submit an appeal to the Commander.
Such an appeal shall be made in writing to the Commander within 60 days
following the date of the document notifying the Contractor of the
administrative determination of the Director. Such an appeal should be
addressed to the Commander, U.S. Transportation Command, 508 Scott
Drive, Scott Air Force Base, IL 62225-5357.
(c) Process. The Administrator, or the Commander in the case of a
DOD determination, may require the person making the request to furnish
additional information, or proof of factual allegations, and may order
any proceeding appropriate in the circumstances. The decision of the
Administrator, or the Commander in the case of a DOD determination,
shall be final.
Subpart G--Maintenance and Repair Reimbursement Pilot Program
Sec. 296.60 Applications.
Section 3517, Subtitle A of Title XXXV establishes a five-year
pilot program for MSP vessels to perform maintenance and repair (M&R)
work in United States shipyards.
(a) The M&R pilot program is authorized at $19.5 million per year
for FYs 2006-2011.
(b) The M&R pilot program is a voluntary program and MSP operators
are not required to participate.
(c) Subject to available funding, expenses are reimbursable at 80
percent of the difference between the fair and reasonable costs of the
repairs in a foreign shipyard in the geographic region in which the MSP
vessel operates and the fair and reasonable costs of performing the
repairs in a United States shipyard.
(1) An MSP operator must apply at least 180 days in advance of
anticipated M&R work.
(2) The application must include estimates of M&R costs in the
United States and outside the United States in the geographic region in
which the MSP vessel operates.
(d) MARAD has 60 days to notify the M&R applicant if the repair
work meets the requirements of the M&R pilot program, if there is a
shipyard in the
[[Page 43338]]
United States that can perform the approved repairs, and whether funds
are available.
(e) Qualified M&R work includes any required inspection and any M&R
work determined in the course of an inspection that is necessary to
comply with the laws of the United States.
(f) Qualified M&R work does not include routine M&R or emergency
M&R that is necessary to enable a vessel to return to a port in the
United States.
Dated: July 15, 2004.
By Order of the Maritime Administrator.
Joel C. Richard,
Secretary, Maritime Administration.
[FR Doc. 04-16454 Filed 7-19-04; 8:45 am]
BILLING CODE 4910-81-P