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(continued) rage....................... $1,083,325
Average Premium Rate in British Market............... .32550%
Premium Cost in British Market..................................................... $3,526
C. Excess Liability, Total Coverage...................... None
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D. Total Premium Cost if Insured 100% in British Market.. $939,905
E. Deduct Particular Average Portion:
$936,379 Less $431,250=$505,129x62% \2\.......... 313,180
F. Net Premium Cost Exclusive of Particular Average...... $626,725
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Trade Route Trade Route Trade Route
No. X No. X No. X
Line A Line B LIne C
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Particular Average Adjustment:
P/A Portion of Premium Cost.......................... $313,180 $313,180 $313,180
M & R Subsidy Rate Complement \3\................ 84.48% 86.63% 87.34%
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Adjusted P/A Foreign Premium Cost.................... $264,574 $271,308 $273,531
Add: Net Premium Cost (Excluding P/A)................ $626,725 $626,725 $626,725
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2. Composite Foreign Premium Cost............................ $891,299 $898,033 $900,256
3. TOTAL PREMIUM COST TO SUBSIDIZED OPERATORS................ $1,068,998 $1,068,998 $1,068,998
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4. DIFFERENTIAL IN DOLLARS \4\............................... 177.699 170,965 $168,742
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5. COMPOSITE WEIGHTED DIFFERENTIAL \5\....................... 16.62% 15.99% 15.79%
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6. U.S._FOREIGN COST DIFFERENTIAL............................ 16.62% 15.99% 15.79%
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\1\ Estimated gross total loss rate adjusted for broker's discounts, policy tax and other costs, as necessary.
\2\ Percentage of particular average.
\3\ 100% minus M&R subsidy rate of the same calendar year.
\4\ Line 3 less line 2.
\5\ Line 4 divided by line 3.
§ 282.24 Protection and indemnity insurance.
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(a) Subsidy items. Items eligible for determination of subsidizable costs and the U.S.-foreign cost differential are:
(1) Premiums. The fair and reasonable net premium costs (including stamp taxes) of protection and indemnity, excess insurance, second seamen's insurance, “tovalop” or other forms of pollution insurance, bumbershoot (only that portion identified as applicable to P&I insurance), cargo liability if excluded from the primary policy, supplemental calls against liabilities covered under the terms and conditions of policies approved as to form and coverage by MARAD, less lay-up return premiums, shall be eligible for subsidy and used for determining the U.S.-foreign cost differential.
(2) Deductibles. The fair and reasonable cost of crew claims paid by and pending with the operator under the deductible provision of the protection and indemnity insurance policy approved as to form and coverage by MARAD, to the extent that such cost would have been paid by the insurance underwriter under the terms of the policy, except for the fact that it did not exceed the deductible provision of the policy, shall be eligible for subsidy. For subsidy purposes, the deductible absorption shall not exceed $50,000 for each accident or occurrence, provided however, that benefits paid on unearned wages, if excluded from coverage under the protection and indemnity insurance policy, shall be eligible, notwithstanding that the deductible provisions of the policy may be exceeded.
(b) Assumption made in calculation. For purposes of determining subsidy for protection and indemnity insurance, it shall be assumed that the cost differential between the subsidized vessels and the foreign competitive vessels is limited to those portions of premium costs and deductible absorptions which are related to crew liability and that the cost of all other liabilities is the same for both the subsidized vessels and the foreign competitive vessels.
(c) Calculation. The following is the method of calculating the U.S.-foreign cost differential for premiums:
(1) General. A differential shall be calculated for each subsidized service of the vessel. Since the premium cost for all other liabilities is assumed to be the same for both the U.S. and foreign competitive vessels, the calculation of the differential for protection and indemnity insurance premiums is in effect based on the difference between U.S. and foreign premium costs for crew liabilities. Premium costs are determined in costs per gross registered ton (GRT).
(2) Reporting Requirement. The operator shall submit the total premium cost for the subsidized year, plus any supplemental calls and lay-up return premiums not previously reported, to the Director, Office of Ship Operating Costs, not later than 60 days after the beginning of such year. The data shall be supported by invoices from the insurance underwriter.
(3) U.S. crew liability cost. The crew liability portion of the total premium cost shall be determined by applying a percentage to the total premium cost based on five (5) years of claims experience for the five years commencing six years prior to January 1 of the subsidized year. The percentage shall be determined by dividing the total of underwriter's absorptions for crew claims, paid and estimated, by the total of underwriter's absorptions for all claims, paid and estimated. The crew claims portion shall be limited to eighty-five (85) percent unless the operator can substantiate a higher percentage as a result of having crew liability and all other liabilities insured with different underwriters. The operator shall submit the five-year claims experience not later than 60 days following the close of each calendar year.
(4) All other liabilities cost—U.S. and foreign. The all other liabilities portion of the U.S. premium cost shall be determined by subtracting the crew liability portion from the total premium cost. The same cost shall be used for the all other liabilities portion of the foreign-flag competitor's premium cost.
(5) Foreign crew liability cost. The crew liability cost of each principal foreign-flag competitor shall be used, if reliable cost data can be obtained. If such data cannot be obtained for a principal competitor, and it is determined that such competitor has a non-national crew, the crew liability cost for similar vessels registered under the flag of the crew's nationality may be used, at the Maritime Administrator's discretion, provided reliable cost data are obtained. If no reliable cost data are obtained for a competitor, the crew liability cost for that competitor shall be estimated by multiplying the subsidized operator's crew liability portion of the total premium cost by the ratio of that competitor's wage costs (FC) to the subsidized operator's wage costs (WC), as determined in the calculation of the wage differential.
(6) U.S.-foreign cost differential. The U.S.-foreign cost differential shall be the excess of the operator's total premium cost over the principal foreign-flag competitor's estimated total premium cost, expressed as a percentage, calculated in the following manner.
ABC Steamship Company, Inc., Trade Route X, Protection and Indemnity
Insurance Premiums, 1985
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United South
Premium cost (per GRT) States Greece Pakistan Africa
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Crew liability.................. \1\ \2\ \3\ \2\ 0.08
$3.98 $1.27 $0.45
All other liability............. $1.06 $1.06 $1.06 $1.06
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Total costs............... $5.04 $2.33 $1.51 $1.14
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Differential_Excess of U.S. cost $2.71 $3.53 3.90
over foreign cost..............
Unweighted differential 53.77 70.04 77.38
(percent)......................
Competition weight factor ........ 24.3 24.9 50.8
(percent)......................
Weighted differential (percent). ........ 13.07 17.44 39.31
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U.S.-foreign cost differential ........ ........ ........ 69.82
(percent)......................
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\1\ Determined by applying 79.03 percent (based on 5-year claims
experience) to total GRT premium rate of $5.04.
\2\ Crew liability data obtained by Maritime Administration.
\3\ The unweighted percentage of Pakistani to U.S. wage costs of 11.23%
was applied to $3.98 to estimate the foreign cost.
(d) Daily Subsidy Rate. The daily subsidy rate shall be calculated in the following manner:
(1) Premiums. The net premium costs per calendar day for the subsidized year shall be multiplied by the U.S.-foreign cost differential percentage determined for the most recent year. The product shall be the daily amount of subsidy for P&I premiums.
(2) Deductibles. (i) The eligible illness and injury crew claims paid and pending for each calendar year of a three-year period commencing six years prior to January 1 of the subsidized year shall be recalculated, if necessary, to reflect the operator's current deductible levels. These expenses, after audit, shall be multiplied by the percentage wage differential, as determined in the calculation of wage subsidy for the appropriate fiscal period. The resulting calendar period P&I deductible subsidy for the three-year period shall be divided by the voyage days for the period to arrive at an aggregate daily P&I deductible subsidy. The aggregate fiscal period wage subsidy accrued in the service for the three-year period shall be divided by the voyage days for the period to arrive at an aggregate daily wage subsidy amount. The aggregate daily P&I deductible subsidy for the three-year calendar period shall be divided by the aggregate daily wage subsidy for the three-year fiscal period. The resulting percentage shall be applied to the wage per diem calculated for each ship type in the service to derive the daily amount of subsidy for P&I deductibles. As to pending claims previously recognized in the historical period, only the amount of changes in cost with respect to such claims shall be subsequently recognized. The following methodology shall be used to determine subsidy for P&I deductibles.
Determination of Daily Amount of Subsidy for P&I Deductibles
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Calendar year Calendar year Calendar year
T.R. 98 item 1979 1980 1981 Total
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P&I Deductible C.Y. Expenses................ $1,680,000 $1,220,000 $1,400,000
Diff. Foreign/U.S. Wage Cost.................... 26.00% 23.00% 20.00%
Subsidy......................................... $436,800 $280,600 $280,000 $997,400
Voyage Days..................................... 1,140 1,100 1,225 3,465
Average Subsidy Per Voyage Day ($997,400÷3,465 days)=$287.85
Fiscal year Fiscal year Fisal year Total
1979 1980 1981
Wages F.Y. Per Diem Rate........................ $7,660 $7,700 $8,050
Voyage Days..................................... 1,090 1,180 1,230 3,500
Subsidy......................................... $8,349,400 $9,086,000 $9,901,500 $27,336,900
Average Subsidy Per Voyage Day ($27,336,900÷3,500 days)=$7,810.54
Ratio P&I Deductible ODS to Wage ODS
$287.85÷$7,810.54=3.69%
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Ratio P&I
T.R. 98 ship type Daily wage ODS 1/ ded. to wage ODS Daily P&I
1/85 (percent) ded. ODS 1/1/85
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C4-A................................................... $9,000 x3.69 $332.10
C5-B................................................... 9,300 x3.69 343.17
C6-C................................................... 9,600 x3.69 354.24
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(ii) In cases where national insurance schemes cover crew claims costs in their entirety, resulting in no cost to the foreign competitor for deductible absorptions, the composite percentage differential for wages shall be adjusted by substituting a zero cost for such foreign competitor in the calculation of the differential. The adjustment of the wage percentage differential shall not be used for Japan, where operators incur minimal costs for deductible absorptions, rather than no costs. For Japan, the insurance related costs which are normally included in the calculation of Japanese wage costs shall be excluded in adjusting the wage percentage differential for this purpose.
(3) Data submission requirement. The operator is required to submit annually a certified statement of eligible and audited crew claims, as identified in paragraph (d)(2) of this section, for the historical period identified therein. The report shall be submitted to the Director, Office of Ship Operating Costs no later than January 1 of the subsidized year.
Subpart D—Subsidy Payment and Billing Procedures
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§ 282.30 Payment of subsidy.
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Submission of voucher. At the close of each calendar month, the subsidized operator may submit a voucher, and include for payment in such voucher the amount of ODS accrued for the voyages terminated during the period.
§ 282.31 Subsidy billing procedures.
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(a) Subsidy voucher—(1) Form. Requests for payment of ODS shall be submitted on a public voucher, Standard Forms 1034 and 1034A, which can be obtained from the Superintendent of Documents, U.S. Government Printing Office, Washington DC 20402.
(2) Copies. The operator shall submit the original and 3 copies of the voucher to the MARAD Region Director for payment. The original and 2 copies must be supported by schedules and an affidavit. The third copy is the payee's copy and need not be supported.
(b) Schedules and affidavit. (1) The following schedules shall be used for calculating the amount of ODS payable:
Schedule A
____________________
(Company)
ODSA No. ___________
ODS Accrued During Fiscal Year 198__
ODS Payable for the Month of___________
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Current Previous
voucher voucher Total
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Total Accrued ODS (Sched. B). $ $ $
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Less ODS Reductions:
DTR/Deviations (Sched. C) $
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Reduced Crew (Sched. D).. $
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Net ODS Accrued.............. $ $ $
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Less Previous Payments....... $
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ODS Payable.................. $
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Schedule B
____________________
(Company)
ODS Accrued for the Month of___________
Trade Area ______________________
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Voyage dates
Vessel name Voy. ---------------------------- Voy. Per diem rates Net subsidy
No. From To days \1\ \1\
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$.............. $
ODS payable for unpredictably ....... ............ ............ ........ ............... $
timed expenses not included in
daily amount (attach
supporting information).
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Total accrued subsidy ....... ............ ............ ........ ............... $
(enter on Schedule A).
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\1\ Place* next to applicable ``Voy. days'' or ``Per diem rate'' of vessel and voyage requiring reduction of
ODS because of domestic trade operations or voyage deviations.
Schedule C
____________________
(Company)
Domestic Trade and Voyage Deviation ODS Reductions
Domestic Trade Reduction (DTR):
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% of
Voy. Gross Domestic dom. to Per Per diem DTR ODS
Vessel name no. voyage revenue gross diem reduction days reduction
revenue revenue rate
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....... $....... $........ ........ $...... $......... ....... $
%
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Deviation Reduction:
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Deviation days or
Vessel name Voy. no. % of day Per diem rate ODS reduction
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................... .................. $................. $
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(Enter total Reductions on Schedule A).
Schedule D
____________________
(Company)
Reduced Crew Period
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Reduced crew dates No. of
-------------------------- reduced No. of Man-day Reduced
Vessel crew days crew Man-days amount crew
From To (a) reduced reduction
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........... ........... x = x $= $
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........... ........... x = x $= $
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........... ........... x = x $= $
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........... ........... x = x $= $
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Total Reduced Crew
Reduction (Enter on
Schedule A).
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(a) If licensed crew, indicate (a), (b) If unlicensed crew, include (b).
(2) A notorized affidavit as shown below shall be signed by an official of the subsidized operator who is familiar with the ODSA, these regulations, the operation of the subsidized vessel and the accounts, books, records, and disbursements of the subsidized operator relating to such operation:
Affidavit
State of____________________
City of____________________
County/Parish of____________________
I, ____, being duly sworn, depose and say, that I am (title) of the ____ (herein referred to as the “Operator”), and as such am familiar with (a) provisions of the Operating-Differential Subsidy Agreement, Contract No. ____, dated as of ____, as amended, to which the Operator is a party; and (b) the regulations governing the payment of operating-differential subsidy for liner vessels, PART 282, Title 46, CFR; and (c) the operation of the vessels covered by said Agreement and regulations; and (d) the accounts, books, records, and disbursements of the Operator relating to such operation.
Referring to the public voucher dated ____, covering voyage days allowed for subsidy during the periods commencing ____ and ending ____, and attached, submitted by said Operator concurrent herewith for a payment on account in the sum of ____, under said Agreement, I further depose and say that, to the best of my knowledge and belief, the Operator has fully complied with the terms and conditions of said Agreement and regulations, applicable orders, rulings and provisions of the Merchant Marine Act, 1936, as amended, and is entitled, under the provisions of said Agreement and regulations, orders and rulings applicable thereof, to the amount of the payment on account requested; and further depose and say that the vessels named in the attached schedules were in authorized service for the vessel operating days on which the payment is requested and has not included in the calculation of the amount of subsidy claimed in the attached voucher any costs of a character that the Maritime Administration, or Secretary of Transportation acting by and through the Maritime Subsidy Board or any predecessor or successor, had advised the Operator to be ineligible to be so included, or any costs collectible from insurance, or from any other source.
Payment by the Maritime Administration of all or part of the amount claimed herein shall not be construed as approval of the correctness of the amount stated to have been due, nor a waiver of any right of remedy the Maritime Administration, or Secretary of Transportation, acting by and through the Maritime Subsidy Board, or any predecessor or successor, may have under the terms of said Agreement, or otherwise.
I further depose and say that this affidavit is made for and on behalf and at the direction of the Operator for the purpose of inducing the Maritime Administration to make a payment pursuant to the provisions of the aforesaid Operating-Differential Subsidy Agreement, as amended.
Subscribed and sworn to before me, a Notary Public, in and for the aforesaid County and State, this ____ day of ____,
My commission expires____________________
Notary Public____________________
(3) The subsidized operator shall furnish its own supply of supporting schedules and affidavit.
§ 282.32 Appeal procedures.
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(a) Appeals of annual or special audits. An operator who disagrees with the findings, interpretations or decisions in connection with audit reports of the Office of the Inspector General and who cannot settle said differences by negotiation with the Contracting Officer may submit an appeal to the Maritime Administrator from such findings, interpretations or decisions in accordance with part 205 of this chapter.
(b) Appeals of administrative determinations—(1) Policy. An operator who disagrees with the findings, interpretations or decisions of the Contracting Officer with respect to the administration of this part may submit an appeal from such findings, interpretations or decisions as follows:
(i) Appeals shall be made in writing to the Secretary, Maritime Subsidy Board, Maritime Administration, within 60 days following the date of the document notifying the operator of the administrative determination of the Contracting Officer. In the appeal to the Secretary, the operator shall indicate whether or not a hearing is desired.
(ii) MARAD will notify the appellant in writing if a hearing is to be held and whether the operator is required to submit additional facts for consideration in connection with the appeal.
(iii) When a decision has been rendered, the Board shall notify the appellant in writing.
(2) Appeal to the Secretary of Transportation. An operator who disagrees with the Board may appeal such findings and determinations by filing with the Secretary of Transportation, a written petition for review of the Board's action. The petition shall be filed in accordance with provisions of the Department of Transportation pertaining to Secretarial review.
(3) Hearings. MARAD shall follow the Rules of Practice and Procedure (46 CFR part 201, subpart M) for hearings granted under 46 U.S.C. 1176 and 46 CFR 282.32.