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National
United States Regulations
46 CFR PART 281—INFORMATION AND PROCEDURE REQUIRED UNDER LINER OPERATING-DIFFERENTIAL SUBSIDY AGREEMENTS

Title 46: Shipping





PART 281—INFORMATION AND PROCEDURE REQUIRED UNDER LINER OPERATING-DIFFERENTIAL SUBSIDY AGREEMENTS




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Authority: Sec. 204, 49 Stat. 1987, as amended; 46 U.S.C. 1114. Interpret or apply sec. 606, 49 Stat. 2004, as amended; 46 U.S.C. 1176.

§ 281.1 Information and procedure required under liner operating-differential subsidy agreements.
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In compliance with the terms of the operating-differential subsidy agreement, the following information shall be submitted to the Maritime Administration by each operator who is a party to any such agreement and operates liner type vessels pursuant to such agreement.

(a) Sailing schedules, routes, etc. (1) One copy of a list of sailings is required to be submitted not later than the 5th day of each month, listing each outbound sailing during the preceding month. Such list shall show for each such sailing: (i) Vessel name; (ii) voyage number; (iii) last continental U.S. port; (iv) sailing date; and (v) the service on which the sailing took place.

(2) A “Final Report” in five copies shall be submitted not later than 15 days after the end of the month in which the voyage is terminated and shall show: (i) The time and ports at which the voyage commenced and terminated; (ii) the arrival and sailing dates of the vessel at and from each United States and foreign port, including ports of call for bunkering and/or mail only; (iii) explanation of any delay in excess of 2 days at a United States or foreign port; (iv) appropriate notation of official authorization for any deviations from the service described in the applicable contract.

(3) The procedures outlined in paragraphs (a) (1) and (2) of this section shall be effective on the first of the month following publication in the Federal Register.

(4) The sailing schedules and lists of sailings specified in this paragraph shall be sent to the Division of Trade Studies, Office of Subsidy Administration, Maritime Administration, Washington, DC 20590.

(b) Condition of vessels, inspection and repairs. (1) In order that the Maritime Administration may have an opportunity to participate in the inspection of the vessels, the operator is required to give at least twenty-four hours' notice to the Maritime Administration as to the time and place of making inspections. In the event the Maritime Administration's representative is not available, the operator shall employ an independent surveyor, who shall be satisfactory to the Maritime Administration, and proceed with inspection, and a report thereof shall be made to the Maritime Administration on forms MA–55, MA–56, MA–57, and MA–58, sworn to by persons making the inspection.

(2) The operator shall give due notice to the local office of the Division of Maintenance and Repair, at the port at which the vessel is to be available, of the port, date and time for the making of repairs or replacements in the United States.

(3) In connection with further requirements, reference is made to General Order 20 (Part 271 of this chapter) and supplements thereto for more detailed instruction.

(4) Vessel repairs are to be performed within the continental limits of the United States, except in emergency cases the necessity for which the operator should be prepared to justify upon audit.

(c) Insurance. (1) Immediately upon the binding of any insurance with respect to any vessel covered by the operator's subsidy agreement, there shall be submitted to the Division of Insurance Office of the Comptroller, Maritime Administration, Washington, DC 20590, for the Maritime Administration's approval, a signed copy of each cover note issued by the operator's brokers, which, to the extent applicable, shall set forth as to such vessel the amounts covered by hull, disbursements and other forms of total loss protection, as well as P and I insurance. Such cover notes shall include the rates, the amounts placed in the different markets, the companies interested, the policy numbers and the amount underwritten by each policy; also, there shall be shown the amount of the deductible average, if any. Upon request, policies shall be submitted to the Maritime Administration for examination and return.

(2) The Maritime Administration shall be advised promptly of any cancellation, changes in terms, or companies interested, and of any lay-up periods which will permit of the collection of return premiums, and of any major casualty or total loss which may occur.

(3) Insurance arranged in conformity with the requirements of applicable mortgages held by the United States will be deemed sufficient to comply with the requirements of the operator's operating-differential subsidy agreement.

(4) The Maritime Administration furthermore, wishes to emphasize its desire that as much of the American Merchant Marine insurance coverage as is practicable be placed in the American insurance market. Therefore, when a renewal of policies or new insurance is under negotiation by an operator subject to the provisions of this order, it is urgently requested that particular attention be given to the Maritime Administration's desire as herein expressed with regard to markets in which such insurance may be placed, and that the Maritime Administration be notified in ample time to give consideration to the pertinent facts and circumstances of each case, so that prior to the attachment of such insurance, approval thereof or suggested changes may be indicated.

(d) Inventories. Twenty-four hours' notice shall be given to the Maritime Administration as to the time and place of inventorying classification-required spare parts, ship's spare equipment, fuel and stores as are customarily inventoried and the cost of which is charged to the voyage accounts. If, upon giving the above-required notice, the Maritime Administration's representatives are not present, the operator is to proceed with his inventory in the normal way. The operator may use his own inventory forms, one copy of which shall be sworn to by the persons taking the inventory and included in the voyage accounting.

(e) Partial payments on account. When partial payments are desired on account of operating-differential subsidy accruals, the operator should communicate with the Comptroller, Maritime Administration, Washington, DC 20590, who shall forward necessary instructions and forms to be used.

(f) Current financial reports. Each operator shall prepare current financial reports as specified in this paragraph and shall submit one copy each to the appropriate Region Director of the Maritime Administration and three copies each to the Director, Office of Financial and Rate Approvals, Maritime Administration, Washington, DC 20590. MARAD will accept electronic options (such as facsimile and Internet) for transmission of required information to MARAD, if practicable.

(1) Internal management reports. Each month the operator shall submit copies of such portions of its internal management reports that provide an estimate of its current operating results.

(2) Quarterly balance sheets. The operator shall prepare balance sheets as of March 31, June 30, and September 30 of each calendar year in conformity with section 282.6(A) of the Uniform System of Accounts (Part 282 of this chapter) and shall submit each as soon as practicable but not later than 45 days after the end of the respective quarter.

(3) Quarterly and cumulative income statements. The operator shall prepare income statements for the quarterly periods January 1, to March 31, April 1 to June 30, and July 1 to September 30, and for cumulative periods from January 1 to the end of the second and third quarters of each calendar year in conformity with section 282.6(B) of the Uniform System of Accounts (Part 282 of this chapter) and shall submit each statement as soon as practicable but not later than 45 days after the end of the respective quarter.

(4) Annual financial report. The operator shall submit Maritime Administration Form 172 for each calendar year by March 31 of the succeeding year. If the operator is unable to submit Form 172 by March 31 of the succeeding year he shall, prior to such March 31, request an extension for the filing of Form 172 from the Director, Office of Financial and Rate Approvals and shall submit by such March 31:

(i) A balance sheet for the year ending on December 31, in conformity with section 282.6(A) of the Uniform Systems of Accounts; and

(ii) An income statement for the quarterly period October 1 to December 31 and an income statement for the year ending on December 31, in conformity with section 282.6(B) of the Uniform System of Accounts.

(5) Vessel performance reports. Vessel performance reports shall be prepared for the period January 1 to March 31 of each calendar year, and from January 1 to the end of each succeeding quarter of the calendar year, in the form provided in Exhibit A of paragraph (f)(7) of this section and consistent with the allocation bases provided in paragraph (f)(6) of this section and shall include:

(i) A grand summary of all terminated voyage results for the reporting period including any idle status period occurring during the reporting period and any additional charges or credits from prior terminated periods;

(ii) Summaries of each service by vessel type, as indicated in Exhibit (D) of paragraph (7) of this section, as of December 31 of each year;

(iii) Individual reports by vessel for each idle status period occurring during any reporting period.

(A) Vessel performance reports shall be submitted with the quarterly balance sheets and income statements required under paragraphs (f)(2) and (3) of this section and must be reconciled with voyage revenue and expense from all operations as reported in the income statement.

(B) “Depreciation Vessels” is an example of a reconciling item. Vessel performance reports which are properly prepared and filed will satisfy the reporting requirements for sub-schedules 3002 of the Maritime Administration Form 172.

(6) Allocation bases. The allocation bases to be applied in preparation of vessel performance reports required by paragraph (f)(5) of this section are as follows:

(i) Terminal expenses. Terminal expenses defined by accounts 855 through 866 of the Uniform System of Accounts (§282.3(E) of this chapter), including depreciation accounts, for each terminal shall be allocated between terminated and unterminated voyages on the basis of freight payable tons loaded and discharged on each vessel and voyage during the reporting period, except that in the case of terminals handling only one cargo carriage technology type (CCTT), which can be expressed in common units such as twenty-foot equivalent container units (TEU's) or the number of individual barges, such common unit may be used for allocating terminal expenses by vessel and voyage for each terminal, as shown in Exhibit B of paragraph (f)(7) of this section.

(ii) Container/barge expense—

(A) Allocation of expense. Container/barge expense defined by accounts 867 through 899 of the Uniform System of Accounts (§282.3(F) of this chapter), including depreciation accounts, shall be segregated between container and barge cost pools. Accounts 879, 880, and 894 shall be allocated between container and barge cost pools on an allocation basis developed by the operator.

(B) Allocation of cost pools. Container and barge cost pools shall be allocated among vessels by voyage and idle status for each vessel in the same ratio that the total container or barge capacity of each vessel multiplied by vessel days bears to the total container or barge capacity of the operator's entire fleet multiplied by vessel days. Total container or barge capacity of a vessel means the total container or barge capacity of the vessel, expressed in TEU's for containers and single units for barges, multiplied by the total number of containers or barges acquired for each available container or barge slot on the vessel. Vessel days means the number of days in the period for which an allocation of cost pools is being made. Containers and barges purchased by an operator for utilization in a particular trade route shall be allocated by vessel capacity among the vessels in the trade route for which they were purchased. See Exhibit C of paragraph (f)(7) of this section.

(iii) Administrative and general expenses. Administrative and general expenses defined by accounts 901 through 979 of the Uniform System of Accounts (§282.3(G) of this chapter) shall be allocated to terminated voyages for each vessel type by service or for each vessel by voyage, as required by paragraph (f)(5) of this section, based on the ratio that total terminated voyage operating expenses (accounts 701–773 of the Uniform System of Accounts) plus total terminated voyage operating revenue (accounts 601–624 of the Uniform System of Accounts) for each bears to the total terminated voyage operating expense plus total terminated voyage operating revenue for the period, except that account 945 (advertising passengers) will be allocated directly to passenger vessels based on passengers carried, account 955 (contributions to pools) may be allocated as an administrative and general expense or directly to vessel and voyage based on pool statements, and that portion of accounts 960 and 961 (interest expense) representing interest on vessels shall be allocated to vessels and voyages in the same ratio that depreciation is distributed among all vessels in the fleet. In addition to the above exceptions, significant interest expenses related to purchases of containers and barges should be charged directly to container and barge pools prior to allocation of the container and barge pools.

(7) Exhibits.


A. Vessel performance report. 1

1 Exhibit A filed as part of the original document.

B. Sample allocation of terminal expenses by vessel and voyage.

C. Sample allocation of container/barge expenses by vessel and voyage.

D. Examples of vessel types currently operated.


(g) General. All reports and other communications called for by the foregoing should be addressed to the Secretary, Maritime Administration, Washington, DC 20590.


Exhibit B_Sample Allocation of Terminal Expenses by Vessel and Voyage \1\
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Total units loaded and Voyage status end of the Ratio Terminal cost by vessel/voyage
discharged period vessel/ ---------------------------------------
Type of facility Vessel ----------------------------------------------------- voyage to
Total units Total Totals Terminated Unterminated
Voyage \2\ Terminated Unterminated (percent)
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Container yard............... Cont-1......... 1 500 500 ............ 31.7 $326.51 $326.51
LASH-2......... 1 359 ........... 359 22.7 233.81 ........... $233.81
LASH-2......... 2 260 260 ............ 16.5 169.95 169.95
B/B-4.......... 1 110 110 ............ 6.9 71.07 71.07
Cont-6......... 1 200 200 ............ 12.7 130.81 130.81
Cont-6......... 2 150 ........... 150 9.5 97.85 ........... 97.85
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(a) 1,579 1,070 509 100.0 1,030.00
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Container freight station/ LASH-2......... 1 17,002 17,002 ............ 22.8 175.56 175.56
break bulk.
LASH-2......... 2 11,002 ........... 11,002 14.8 113.96 ........... 113.96
RO/RO-3........ 1 30,525 30,525 ............ 41.0 315.70 315.70
B/B-4.......... 1 1,000 1,000 ............ 1.3 10.01
Bulk-5......... 1 15,000 15,000 ............ 20.1 154.77 154.77
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(b) 74,529..... 63,527 11,002 100.0 770.00
Barge terminal............... LASH-2......... 1 37 37 ............ 68.5 445.25 445.25
LASH-2......... 2 17 ........... 17 31.5 204.75 ........... 204.75
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(c) 54 37 17 100.0 650.00
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\1\ This allocation procedure shall be applied for each terminal maintained by an operator.
\2\ (a) Units for container yard=twenty foot equivalent units (TEU's)
(b) Units for container freight station and break bulk operation=freight payable tons (FPT's).
(c) Units for barge terminal=number of barges unless barges differ in size. Barges of different capacity must be reduced to equivalent units.
(d) Other terminal facilities (not illustrated) handling many or all cargo carriage technology types will allocate period costs on freight payable tons
load and discharged during the period.




Exhibit C_Sample Allocation of Container/Barge Expenses by Vessel and Voyage
example
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(A) (B) (C) (D) (E) (F) (G) (H) (I) (J)
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Vessel days in period Total
--------------------------- Actual Containers container Allocation Allocation
Service Vessel Voyage container acquired capacity base col. Allocation of
Terminated Unterminated capacity of for each col. (D)x(G) percentages container
vessel slot (E)x(F) pool
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Calculations:........
A Container-1......... 1 90 ............ 1,050 2 2,100 189,000 39.3 $162,967
B LASH-2.............. 1 60 ............ 450 4 1,800 108,000 22.4 92,887
C LASH-2.............. 2 ........... 30 450 4 1,800 54,000 11.2 46,444
RO/RO-3............. 1 70 ............ 350 3 1,050 73,500 15.3 63,445
RO/RO-3............. I.S. 20 ............ 350 3 1,050 21,000 4.3 17,831
Break-Bulk-4........ 1 ........... 90 100 4 400 36,000 7.5 31,101
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Totals.............. ........... 240 120 ........... ........... ........... 481,500 100.0 414,675
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Assumptions:
Service A_One (1) Container vessel with an actual capacity of 1,050 containers with two (2) containers acquired for each container slot.
Service B_One (1) LASH vessel with an actual capacity of 450 containers with four (4) containers purchased for each container slot.
Service C_One (1) Roll on-roll off vessel with an actual capacity of 350 containers with three (3) containers acquired for each container slot.
W_One (1) Break-bulk vessel with an actual capacity of 100 containers with four (4) containers acquired for each container slot.
Total container pool costs for a ninety (90) day period equals $414,675.




Exhibit D_Examples of Vessel Types Currently Operated



C3-S-33a C4-S-49a C6-S-1gc
C3-S-38a C4-S1-49a C6-S-1w
C3-S-43a C4-S-57a C6-S-1x
C3-S-46a C4-S-58a C6-S-1xa
C3-S-46b C4-S-60a C6-S-6gc
C3-S-73b C4-S-64a C6-S-85a
C3-S-76a C4-S-64b C6-S-85b
C4-S-1a C4-S-65a C7-S-68c, d, and e
C4-S-1l C5-S-37e
C4-S-1g C5-S-37f C8-S-81b
C4-S-1sa C5-S-73b C8-S-82d
C4-S-1t C5-S-75a C9-S-81d
C4-S-1u C5-S-78a
C4-S-19a C6-S-1ga



(Approved by the Office of Management and Budget under control number 2133–0009)
[G.O. 12, Rev., 14 FR 4785, Aug. 6, 1949, as amended by Supp. 2, Amdt. 1. 21 FR 328, Jan. 17, 1956; 33 FR 2944, Feb. 14, 1968; Supp. 3, Amdt. 3, 34 FR 13369, Aug. 19, 1969; 40 FR 7430, Feb. 20, 1975; 47 FR 25530, June 14, 1982; 68 FR 62537, Nov. 5, 2003; 69 FR 61449, Oct. 19, 2004]

§ 281.2 Definitions.
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As used in §§281.2 through 281.6 of these regulations, except as otherwise indicated by the context;

(a) The word operator means an operator receiving operating-differential subsidy under title VI of the Merchant Marine Act, 1936, as amended (Act), for a voyage on an essential service as described in section 211(a) of the Act;

(b) The term Maritime Administrator means Maritime Administrator, Department of Transportation;

(c) The term Region Director means the Region Director of the Maritime Administration having jurisdiction over the port or ports involved;

(d) The term idle status means any period in port between or during voyages for which the vessel's normal crew complement is reduced by 10 percent or more and division of wages is not paid for the missing men. The idle status period shall continue up to, but not including, the day that the vessel is remanned to the extent that the vessel's normal crew complement is restored to more than 90 percent or division of wages is paid for the missing men, or the vessel is temporarily or permanently withdrawn from subsidized service;

(e) Normal crew complement means the basic crew complement which has been approved for operating-differential subsidy under the provisions of section 603 of the Act, or as established by collective bargaining or other agreement for the voyage involved, whichever is less.

[G.O. 27, Rev. 2, 37 FR 18466, Sept. 12, 1972]

§ 281.3 Method of commencing and terminating voyages and of determining idle status.
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(a) Voyage commencements. Voyages shall commence as of 12:01 a.m. of the day that loading of cargo, stores, or fuel begins, or as of 12:01 a.m. of the day following the termination of the prior voyage or, in the event that an idle status period follows a voyage termination, as of 12:01 a.m. of the day following the day on hich such idle status period ends.

(b) Voyage termination. Voyages shall terminate at a U.S. port of call at midnight of the day of completion of paying off the crew from foreign articles, or the completion of final discharge of cargo or ballast at the last U.S. port of discharge, or the completion of voyage repairs, whichever event occurs last: Provided, however, That if a vessel sails outward on a new voyage prior to midnight of the same day, the inward voyage shall terminate as of midnight of that day, and the outward voyage shall commence as of 12:01 a.m. of the succeeding day; and that where a portion of any particular voyage overlaps a portion of the next succeeding voyage and the quantity of inward cargo remaining aboard at the port at which major cargo activities for the outward voyage are begun does not, in the opinion of the operator, justify extension of the inward voyage beyond that port, the operator shall immediately request the Region Director for permission to treat the inward voyage as having terminated at midnight of the day specified in such request and shall advise the Region Director what cargo has been and is still to be discharged and loaded at each port of the inward voyage; and that where, in the opinion of the operator, voyages as a general practice should terminate at the home or terminal port rather than at the last port of discharge, or a voyage should terminate on the day prior to commencement of an idle status period, or on the day that the voyage would have terminated had strikes not interfered with normal operations, application for such terminations may be made to the Region Director, and in such cases the voyage termination date shall be as approved by the Region Director. The Region Director shall promptly advise the operator of his determination approving or disapproving any request filed under this paragraph (b), and the Region Director's decision as to such termination shall prevail, provided that all terminations shall be as f midnight of the day specified.

(c) Idle status periods. Idle status periods shall be identified separately, whether occurring during or between voyages, and, if occurring during a voyage shall be identified with the applicable voyage number. A separate accounting period shall be created to cover each idle status period, and all such periods shall be reported to the Region Director.

(d) Excessive delays. Whenever a vessel is delayed in port for a period of 10 days or more in excess of its normal period of operations in said port, the operator immediately shall report said circumstances, together with all pertinent facts, to the Region Director. The Region Director shall determine whether or not said delay was justified and if operating costs for said period were reduced to a minimum in accordance with sound commercial practice.

[G.O. 27, Rev. 2, 37 FR 18466, Sept. 12, 1972]

§ 281.4 Treatment of subsidy during idle status and off-hire period.
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During an idle status period, subsidy shall be payable only for such subsidizable items of expenses as are determined by the Maritime Administrator, after presentation by the operator of the facts relating to such idle status period, to be necessary for the maintenance, preservation, repair, or husbanding of the vessel during and under the circumstances involved; however, the Maritime Subsidy Board reserves the right to suspend at any time the payment of subsidy on idle vessels when, after consideration of the facts and circumstances regarding such period, it determines that an unreasonable period has elapsed or such idle period was not warranted: Provided, That as to a chartered ship operated under a “Use Agreement”, operating-differential subsidy shall cease to accrue to the ship simultaneously with the time it goes “off hire” and subsidy shall not again accrue to said ship until it is reemployed in the subsidized service as determined in accordance with §281.3. Nothing herein shall limit any other rights of the United States with respect to the payment or nonpayment of subsidy.

[G.O. 27, Rev. 2, 37 FR 18466, Sept. 12, 1972]

§ 281.5 Right of Maritime Administrator to recover subsidy for any period of idleness.
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The Maritime Administrator may, prior to payment of subsidy for any voucher period which includes a period of idleness, require the operator to establish to the satisfaction of the Maritime Administrator that such period of idleness could not have been prevented in whole or in part through efficient and economical operation. The Maritime Administrator may recover any payment of subsidy for any item of expense allocable to such period of idleness which in the opinion of the Maritime Administrator could have been avoided by efficient and economical operation.

[G.O. 27, Rev. 2, 37 FR 18466, Sept. 12, 1972]

§ 281.6 Interpretation.
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All questions of interpretation arising under the sections of this part shall be submitted to the Maritime Administrator for determination, whose decision thereon shall be final.

[G.O. 27, Rev. 2, 37 FR 18466, Sept. 12, 1972]