MSP Final Rule

Federal Register / Vol. 70, No. 183 / Thursday, September 22, 2005 / Rules and Regulations
chamber or after the waste heat recovery
equipment, if any; and the combustion
unit bottom ash system, which ends at
the truck loading station or similar
equipment that transfers the ash to final
disposal. The CISWI unit includes all
ash handling systems connected to the
bottom ash handling system. A CISWI
unit does not include any of the fifteen
types of units described in § 60.2555 of
this subpart, nor does it include any
combustion turbine or reciprocating
internal combustion engine.
Commercial or industrial waste means
solid waste (as defined in this subpart)
that is combusted at any commercial or
industrial facility using controlled flame
combustion in an enclosed, distinct
operating unit: Whose design does not
provide for energy recovery (as defined
in this subpart); or operated without
energy recovery (as defined in this
subpart). Commercial or industrial
waste also means solid waste (as
defined in this subpart) combusted in an
air curtain incinerator that is a distinct
operating unit of any commercial or
industrial facility.
*
*
*
*
*
Solid waste means any garbage,
refuse, sludge from a waste treatment
plant, water supply treatment plant, or
air pollution control facility and other
discarded material, including solid,
liquid, semisolid, or contained gaseous
material resulting from industrial,
commercial, mining, agricultural
operations, and from community
activities, but does not include solid or
dissolved material in domestic sewage,
or solid or dissolved materials in
irrigation return flows or industrial
discharges which are point sources
subject to permits under section 402 of
the Federal Water Pollution Control Act,
as amended (33 U.S.C. 1342), or source,
special nuclear, or byproduct material
as defined by the Atomic Energy Act of
1954, as amended (42 U.S.C. 2014).
*
*
*
*
*
Subpart DDDD—[AMENDED]
3. Section 60.2875 is amended by:
a. Removing the definition of
‘‘commercial and industrial waste’’;
■ b. Adding the definition of
‘‘commercial or industrial waste’’ in
alphabetical order; and
■ c. Revising the definitions of
‘‘commercial and industrial solid waste
incineration (CISWI) unit’’ and ‘‘solid
waste’’ to read as follows:
■
■

§ 60.2875

What definitions must I know?

*

*
*
*
*
Commercial and industrial solid
waste incineration (CISWI) unit means
any combustion unit that combusts

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commercial or industrial waste (as
defined in this subpart), that is a
distinct operating unit of any
commercial or industrial facility
(including field erected, modular, and
custom built incineration units
operating with starved or excess air),
and any air curtain incinerator that is a
distinct operating unit of any
commercial or industrial facility that
does not comply with the opacity limits
under this subpart applicable to air
curtain incinerators burning commercial
or industrial waste. While not all CISWI
units will include all of the following
components, a CISWI unit includes, but
is not limited to, the commercial or
industrial solid waste feed system, grate
system, flue gas system, waste heat
recovery equipment, if any, and bottom
ash system. The CISWI unit does not
include air pollution control equipment
or the stack. The CISWI unit boundary
starts at the commercial or industrial
waste hopper (if applicable) and extends
through two areas: The combustion unit
flue gas system, which ends
immediately after the last combustion
chamber or after the waste heat recovery
equipment, if any; and the combustion
unit bottom ash system, which ends at
the truck loading station or similar
equipment that transfers the ash to final
disposal. The CISWI unit includes all
ash handling systems connected to the
bottom ash handling system. A CISWI
unit does not include any of the fifteen
types of units described in § 60.2555 of
this subpart, nor does it include any
combustion turbine or reciprocating
internal combustion engine.
Commercial or industrial waste means
solid waste (as defined in this subpart)
that is combusted at any commercial or
industrial facility using controlled flame
combustion in an enclosed, distinct
operating unit: Whose design does not
provide for energy recovery (as defined
in this subpart); or operated without
energy recovery (as defined in this
subpart). Commercial or industrial
waste also means solid waste (as
defined in this subpart) combusted in an
air curtain incinerator that is a distinct
operating unit of any commercial or
industrial facility.
*
*
*
*
*
Solid waste means any garbage,
refuse, sludge from a waste treatment
plant, water supply treatment plant, or
air pollution control facility and other
discarded material, including solid,
liquid, semisolid, or contained gaseous
material resulting from industrial,
commercial, mining, agricultural
operations, and from community
activities, but does not include solid or
dissolved material in domestic sewage,

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or solid or dissolved materials in
irrigation return flows or industrial
discharges which are point sources
subject to permits under section 402 of
the Federal Water Pollution Control Act,
as amended (33 U.S.C. 1342), or source,
special nuclear, or byproduct material
as defined by the Atomic Energy Act of
1954, as amended (42 U.S.C. 2014).
*
*
*
*
*
[FR Doc. 05–18825 Filed 9–21–05; 8:45 am]
BILLING CODE 6560–50–P

DEPARTMENT OF TRANSPORTATION
Maritime Administration
46 CFR Part 296
[Docket No. MARAD–2004–18489]
RIN 2133–AB62

Maritime Security Program
Maritime Administration,
Department of Transportation.
ACTION: Final rule.
AGENCY:

SUMMARY: This rule revises and adopts
as final the interim final rule published
in the Federal Register on July 20, 2004.
The Maritime Administration (MARAD)
is issuing this final rule 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.
DATES: Effective Date: This final rule is
effective November 21, 2005.
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.
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 $98.7 million per
year for each year from FY 1996 through

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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 specified in
the statute at $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 enter into an Emergency
Preparedness Agreement, which would
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.
Interim Final Rule
As authorized by section 53103(b)(1)
of the MSA 2003, MARAD issued an
interim final rule on July 20, 2004 (69
FR 43328), which added a new part 296
to title 46 of the Code of Federal
Regulations. The interim final rule
established procedures to implement
the MSA 2003 with respect to the
application for, and award of, MSP
Operating Agreements that provide
financial assistance to owners and/or

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operators of the vessels enrolled in the
program. The program will be
administered on the basis of one-year
renewable MSP Operating Agreements,
provided funding is available in
subsequent years. Participating
operators will receive financial
assistance when operating eligible
vessels in the foreign commerce of the
United States, and certain specified
foreign and domestic areas, with a
minimum of operating restrictions, for
at least 320 days in any fiscal year.
Payment under the program will be
made on a prorated basis for vessels
operated less than 320 days in any year,
exclusive of days a MSP vessel is being
drydocked, surveyed, or repaired. In
addition, no payment will be made for
each day any vessel carries civilian bulk
preference cargoes of 7,500 tons or
more. MARAD’s interim final rule
solicited applications for participation
in the MSP using the application
approved under OMB Control No. 2133–
0525. MARAD received applications
from 26 applicants for 142 applicant
vessels; MSP Operating Agreements for
60 vessels were awarded on January 12,
2005.
Discussion of Comments and Changes
MARAD received fifteen sets of
comments on the interim final rule.
MARAD also received comments that
were not related to the interim final
rule, which will not be addressed in this
document. Comments on the interim
final rule, MARAD’s responses, and
changes made to the interim rule, are as
follows.
1. Definitions; Section 296.2
Definition of Citizen of the United States
Comment: One commenter approves
of the definition of ‘‘Section 2 Citizen’’
but urges that the definition of ‘‘Section
2 Citizen’’ be used in sections 296.20,
296.22, 296.30(f)(2)(ii)A&B,
296.31(d)(3), and 296.41(c)(ii) instead of
‘‘citizens of the United States under
section 2 of the Shipping Act, 1916 (46
App. U.S.C. 802).’’ The commenter
urges that the term ‘‘Citizen of the
United States’’ not be used because it is
duplicative, unnecessary, and
confusing.
Response: MARAD agrees to
substitute ‘‘Section 2 Citizen’’ for
‘‘citizens of the United States under
section 2 of the Shipping Act, 1916 (46
App. U.S.C. 802)’’. In the sections
referred to by the commenter, the term
‘‘Citizen of the United States’’ will be
deleted from the regulation.
Comment: One commenter argued
that the last phrase of the definition of
‘‘Citizen of the United States’’—‘‘or a

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corporation, partnership, or association
as determined under section 2 of the
Shipping Act, 1916, as amended (46
App U.S.C. 802)’’—is too restrictive as
it defines U.S. citizenship and is not in
agreement with section 12102 of title 46,
United States Code. The commenter
stated that the definition of ‘‘Citizen of
the United States’’ should also include
documentation citizens.
Response: The commenter’s
suggestion is rejected because the
documentation statutes, 46 U.S.C.
12101, et seq., do not contain a
definition for ‘‘Citizen of the United
States’’.
Definition of Domestic Trade
Comment: One commenter seeks to
have the term ‘‘domestic trade’’ conform
with terminology used elsewhere in the
rule—‘‘coastwise trade’’.
Response: The terms ‘‘domestic trade’’
and ‘‘coastwise trade’’ are used in two
contexts in the statute. First, MSP
operators may not participate in
noncontiguous domestic trade unless
they are Section 2 Citizens. Second,
MSP vessels may be operated in mixed
foreign commerce and domestic trade
allowed under a registry endorsement;
however, the MSP vessel cannot
otherwise be operated in ‘‘coastwise
trade’’. The use of both terms in the
regulation is consistent with the statute.
The statute apparently uses both terms
‘‘coastwise trade’’ and ‘‘domestic trade’’
interchangeably to mean trade between
points in the United States. The
definition section will reflect both
definitions, which have been clarified
by removing ‘‘two or more ports and/or’’
as being redundant with the term
‘‘points’’.
Definition of Fleet
Fleet has been removed as the
definition of ‘‘Fleet’’ was redundant to
the definition of MSP Fleet.
Definition of Foreign Commerce
Comment: The definition of ‘‘foreign
commerce’’ is divided into two
paragraphs ‘‘the first paragraph
concerns vessels other than liquid or
dry bulk carriers; the second paragraph
concerns liquid and dry bulk carrying
services. Three parties commented on
the first paragraph. One commenter
stated that the term ‘‘cargo’’ in line ten
of the definition is ambiguous because
it could be interpreted that only cargo
originating in or destined for the United
States could be carried by a covered
vessel. The commenter urged that the
definition be clarified by adding the
word ‘‘any’’ in front of cargo, enabling
a single unit of cargo with origination in
or destination to the United States to

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Federal Register / Vol. 70, No. 183 / Thursday, September 22, 2005 / Rules and Regulations
qualify the vessel/voyage. Two other
commenters stated that 46 U.S.C.
53101(4)(A)(ii) clearly permits
‘‘commerce or trade between foreign
countries’’ without restriction. Both
commenters urged that the definition be
changed to reflect the statute’s language.
Response: MARAD agrees to add the
word ‘‘any’’ regarding origination or
destination to the United States to
qualify the vessel/voyage and will revise
the definition of foreign commerce
accordingly. MARAD does not agree
that the definition of foreign commerce
for MSP liner cargo is intended to be
between foreign countries if no cargo
originates in or is destined for the
United States.
Comment: Two parties commented on
the second paragraph. Both commenters
stated that the definition of ‘‘foreign
commerce’’ as written precludes the
carriage of cargo between the United
States and a foreign port.
Response: MARAD agrees that the
second paragraph could be interpreted
as precluding carriage of cargo between
United States ports and foreign ports
and needs clarification. We have added
a phrase that specifically permits
trading between United States ports and
foreign ports.
Definition of Militarily Useful
Comment: One commenter stated that
the definition of ‘‘militarily useful’’ may
limit the discretion of the Secretary of
Defense by binding him to ‘‘minimum
military capabilities, according to the
Department of Defense (DOD) Joint
Strategic Planning Capabilities Plan
(JSCAP) guidance.’’ The commenter
‘‘suggests that the definition of
‘‘militarily useful’’ be revised to confirm
DOD’s unfettered authority’’ over the
vessel selection process.
Response: The standards for
‘‘militarily useful’’ are DOD standards.
MARAD does not agree that the
definition limits the discretion of the
Secretary of Defense during the
selection of vessels for the MSP.
Definition of MSA 2003
MARAD has added a definition for
‘‘MSA 2003’’.
Definition of MSP Operating Agreement
MARAD has clarified the term MSP
Operating Agreement by defining it as
an assistance agreement as opposed to a
procurement.
Definition of Noncontiguous Domestic
Trade
Comment: One commenter seeks to
include the phrase ‘‘including
transportation under the Third Proviso
to Section 27 of the Merchant Marine

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Act of 1920 (the Jones Act) (46 App.
U.S.C. 883)’’ at the end of the definition
of ‘‘noncontiguous domestic trade’’.
Response: The Third Proviso provides
an exception to the prohibition in the
Jones Act on the use of non-coastwise
vessels for carriage of cargo between
points within the continental United
States, including Alaska, provided part
of the transportation is over Canadian
rail lines. However, 46 U.S.C. 53107,
specifically prohibits participation by
an MSP operator in transportation
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.’’ The
question is whether the current
definition is sufficient on the
prohibition of carriage of cargo in the
noncontiguous domestic trades under
MSP, even if allowed under the Third
Proviso to section 27. In our view, the
definition is specific, and the only
exception to the MSP prohibition is
spelled out ‘‘other than a point in
Alaska north of the Arctic Circle’’.
Definition of Operator
Comment: MARAD received two
comments that ownership alone does
not necessarily qualify an owner as an
operator.
Response: MARAD agrees and has
added the phrase ‘‘and operates that
vessel directly’’ immediately after the
words ‘‘owns a vessel’’ in the text.
Definition of Person
Comment: MARAD received two
comments that the concluding sentence
‘‘A trust is not a person’’ causes
unintended consequences particularly
with respect to ownership of enrolled
vessels.
Response: The purpose of this
determination is that MARAD did not
want to grant an MSP Operating
Agreement to a trust, because we believe
that an MSP Operating Agreement
should be awarded to an entity that can
actively manage a vessel in its own
right. Accordingly, a corporation,
limited liability company, partnership,
or individual are all acceptable
contractors. However, a trust cannot act
in its own right and should not be
eligible. Therefore, we are changing the
concluding sentence to ‘‘For purposes of
holding an MSP Operating Agreement,
the term ‘‘person’’ excludes a trust.’’
MARAD is adding to the definitions of
Applicant and Contractor that ‘‘the
term, applicant excludes a trust’’ and
‘‘the term, contractor excludes a trust’’,
respectively.

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Definition of Section 2 Citizen
Comment: One commenter does not
understand or agree with the phrase
‘‘without regard to any statute that
‘‘deems’’ a vessel to be owned and
operated by a Section 2 Citizen’’, and
urges clarification as to the purpose of
this phrase.
Response: MARAD used the
‘‘deeming’’ phrase to account for the
possibility of future changes to the
‘‘deeming’’ law. The ‘‘deeming statute’’
is cited in 46 U.S.C. 12102(d)(4), as
amended, and does not currently apply
to chapter 531 of title 46.
Definition of Transfer of an Operating
Agreement
Comment: Two commenters objected
to the definition of ‘‘transfer of an
operating agreement’’. Both commenters
wanted the phrase ‘‘either directly or
indirectly’’ removed and both did not
want the definition to reflect intercompany transfers that, under the
existing MSP, do not require an
amendment to the MSP Operating
Agreement. Both commenters proposed
revised language and one offered an
additional definition.
Response: We do not feel that it is
unreasonable to require contractors to
report all proposed transfers. A transfer
of an MSP Operating Agreement could
be accomplished indirectly, if the MSP
Operator is acquired by another entity.
In such events, MARAD and DOD have
a responsibility under the statute to
review the transfer. Thus, MARAD
declines to revise this definition.
Definition of United States Citizen Trust
Comment: One commenter states that
section 53102 of the MSA 2003 requires
only that each trustee be a ‘‘citizen of
the United States’’ for a trust to qualify,
not a Section 2 Citizen, as specified in
the definition. The commenter requests
that MARAD’s definition conform to the
law.
Response: MARAD believes that the
intent of the statute is that each trustee
be a Section 2 Citizen. Further, not
requiring each trustee to be a Section 2
Citizen defeats the purpose of having a
United States Citizen Trust. Therefore,
no change will be made to this
definition.
2. Applications; Section 296.3
Comment: One commenter notes that
the term ‘‘contractor’’ in section 296.3(a)
should be replaced by ‘‘applicant’’.
Response: MARAD agrees and has
amended section 296.3(a) accordingly.
The sentence including this change has
been moved to a new section 296.24.
Comment: One commenter states that
MARAD should make clear what sort of

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substantiating information is required to
establish either ownership or the status
of a demise charter for the application
to be considered ‘‘complete’’.
Response: MARAD is adding to
section 296.3(a) the sentence
‘‘Contractors of MSP Operating
Agreements are required to submit
ownership information such as a vessel
title of ownership and signed charters to
MARAD for approval by July 1, 2005.’’
Comment: One commenter objected to
the qualifier ‘‘U.S.’’ before citizenship as
it applies to vessel managers in
paragraph (b)(1).
Response: MARAD is requiring that
vessel managers meet the same
standards of citizenship as the applicant
for whom they provide service. We have
modified the language to clarify that
vessel managers for Section 2 Citizen
applicant operators must meet Section 2
Citizenship standards, and vessel
managers for documentation citizens
must meet citizenship standards for
documentation citizens.
Comment: One commenter believes
that the use of the word ‘‘demonstrates’’
with regard to submitting an affidavit of
U.S. citizenship to qualify as being able
to document a vessel under 46 U.S.C.
chapter 121, needs to be changed to
‘‘declare’’ or ‘‘affirm’’.
Response: MARAD does not believe
that a change to the definition is
necessary as an affidavit is an
affirmation.
Comment: One commenter requested
changing ‘‘your’’ to ‘‘any’’ in section
296.3(b)(12) in reference to supplying
special security agreements with the
MSP application.
Response: MARAD agrees and has
changed ‘‘your’’ to ‘‘any’’ in section
296.3(b)(12).
Comment: One commenter states that
the text of section 296.3(b)(13) limits the
scope of the certification from a
documentation citizen who is a demise
charterer of the MSP vessel to only ‘‘the
foreign country of the parent’’ of any
documentation citizen required to so
certify, whereas the form of the
declaration states the scope as ‘‘laws of
the foreign country(ies) of the
[Applicant’s] ultimate foreign parent or
intermediate parents’’. * * *
Response: MARAD agrees and has
changed the text of section 296.3(b)(13)
to agree with the declaration.
Comment: One commenter argues that
section 296.3(b)(15) regarding
replacement vessel plans and age
waivers is inconsistent with the MSP
application form and that the
application form should prevail. The
commenter notes that item 17 of the
MSP application form requires that an
applicant for a Participating Fleet Vessel

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that is over 15 years of age include
detailed information on its intended
replacement vessel and item 18 requires
an applicant for an age waiver to
provide statutory information to support
an age waiver. The commenter believes
that section 296.3(b)(15) appears to
require applicants to provide details of
their replacement plan, which is
premature.
Response: MARAD agrees and has
added language regarding the
replacement plan to section 296.3(b)(15)
that is consistent with the MSP
application form.
3. Citizenship Requirements of Owners,
Charterers and Operators; Section
296.10
Comment: One commenter suggests
that in order to ensure proper
interpretation of MSA 2003
requirements, ‘‘entire’’ should be added
to section 296.10 to ensure that
citizenship requirements apply
throughout the term of an MSP
Operating Agreement.
Response: MARAD agrees and has
amended the regulation to read
‘‘Citizenship requirements are deemed
to have been met if during the entire
period of an MSP Operating Agreement
under this chapter’’. * * *
Comment: One commenter requests
that the word ‘‘person’’ should be
replaced by ‘‘non-Section 2 Citizen’’ so
that foreign certification and other
documentation requirements would
apply to only documentation citizens.
Response: MARAD agrees and has
amended the regulation to read ‘‘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 nonSection 2 Citizen’’.
Comment: One commenter states that
MARAD does not cover the procedures
it will follow as to the approval of board
and executive personnel at the time of
application in section 296.10(b)(2).
Response: MARAD does not believe
that establishing specific procedures for
approval of board and executive
personnel is necessary. MARAD
believes that maintaining flexibility to
consider all factors during the
evaluation of applications and
considering unforeseen events does not
require establishment of specific
procedures.
Comment: One commenter objects to
requiring a majority of the members of
the board of directors of a
Documentation Citizen charterer being
Section 2 Citizens and recommends that
‘‘section 2’’ be deleted and ‘‘of the

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United States’’ be inserted after
‘‘citizens.’’
Response: MARAD’s language in
section 296.10 conforms to 46 U.S.C.
53102(c)(2)(A)(ii)(II) of the MSA 2003.
Thus, no revision is necessary.
Comment: One commenter requested
that MARAD revise the introductory
text of section 296.10(c) by adding the
phrase ‘‘and operated’’ to indicate that
a vessel to be included in an MSP
Operating Agreement must be owned
and operated by defense contractors as
set forth in paragraph (c). The
commenter also suggested that MARAD
modify the phrase ‘‘owned and operated
by a defense contractor’’ by adding ‘‘or
a related person to include affiliated or
related companies within the same
corporate group’’ as the commenter
believes the phrase ‘‘who is a person’’
is too restrictive.
Response: MARAD agrees and has
added these changes to the section
296.10.
4. Vessel Requirements; Section 296.11
Comment: One commenter notes that
section 296.11(a)(5) should modify
section 296.11(a)(4)(ii).
Response: MARAD agrees and has
renumbered section 296.11(a)(5) to
section 296.11(a)(4)(ii)(A) and
renumbered sections 296.11(a)(5)(i)
through 296.11(a)(5)(iii) to sections
296.11(a)(4)(ii)(A)(1) through
296.11(a)(4)(ii)(A)(3), respectively.
Comment: One commenter argues that
the reflagging-in requirement as
stipulated in section 296.11(a)(4) (which
includes the former section 296.11(a)(5))
implies that the vessel standard
exception is a threshold for vessel
participation in the MSP, rather than an
exception from U.S. Coast Guard
standards that apply to every other U.S.flag vessel. The commenter requests that
this section be moved to another
subsection and clarified to state that a
vessel enrolled in the MSP that satisfies
the statutory requirements will receive a
valid Certificate of Inspection from the
U.S. Coast Guard for all purposes.
Response: MARAD believes that
section 296.11(a)(4) states clearly that in
order to be eligible for an MSP
Operating Agreement, a foreign flag
vessel must meet the Coast Guard
standards noted in section
296.11(a)(4)(ii)(A). Whether or not a
vessel meets the standards noted in
section 296.11(a)(4)(ii)(A) can only be
addressed by the U.S. Coast Guard.
Comment: One commenter noted that
MARAD did not address regulatory
relief provided in 46 U.S.C. 53108(c), as
enacted in the MSA 2003, regarding
telecommunications and other
electronic equipment on a foreign vessel

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that will be documented under the U.S.
flag for operation in the MSP. The
commenter suggested that MARAD
incorporate the Federal
Communications Commission (FCC)
regulatory relief provisions into section
296.11(a)(5).
Response: MARAD agrees, and is
adding the FCC provision under section
296.11(c).
5. Tank Vessels; Section 296.20
Comment: One commenter stated that,
because of uncertainty of funding for the
National Defense Tank Vessel
Construction Assistance Program
(NDTVCP), the application process for
tankers in the MSP should be phased in.
The commenter stated the difficulty of
providing specific existing vessel
information when the uncertainty of
funding makes it impossible to know
how long the existing vessels need to be
contracted for, or even whether
NDTVCP funding will eventually occur.
The commenter urges MARAD to allow
NDTVCP applicants to provide generic
information on October 15, regarding
vessels for temporary slots, and to fill in
the specific data later.
Response: MARAD is keenly aware of
the dilemma presented to NDTVCP
tanker applicants. However, MARAD
was required to offer MSP Operating
Agreements to operators on January 12,
2005. Those MSP Operating Agreements
will, by necessity, include temporary
vessel slots for existing tankers or other
vessels to temporarily occupy the slots
of NDTVCP tankers well in advance of
MARAD knowing that tanker
construction money will be available.
Funding availability will determine
when NDTVCP permanent slots are
awarded.
Comment: One commenter noted that
section 296.20(e) specifies that if a tank
vessel contractor does not offer an
eligible existing tank vessel during
construction of the tank newbuilding,
then the Secretary may award an MSP
Operating Agreement to a non-tank
vessel of another contractor until
construction of the new tank vessel is
completed in the United States. The
commenter suggests that another
alternative would be to temporarily
award an MSP Operating Agreement to
a different contractor with an eligible
tank vessel.
Response: MARAD will amend the
language to change ‘‘non-tank vessel’’ to
‘‘any eligible vessel’’. In addition,
MARAD is adding to the end of this
section further clarification to this
section in accordance with MARAD’s
determination of January 12, 2005
specifying that a Contractor awarded
MSP Operating Agreements for three

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existing tank vessels must sign and
execute a binding agreement for
construction in the United States of
three replacement tank vessels to be
operated under MSP Operating
Agreements not later than nine months
after construction and MSP operating
assistance funding for three tank vessels
becomes available.
Section 296.20(b)(1) has been
amended for clarity, including that the
requirement for a Contractor to enter
into a binding agreement only occurs
after both construction and operating
assistance are available. Sections
(b)(2)(i) and (b)(2)(ii) have been
rewritten to reflect MSP Operating
Agreement language that was not
available when the Interim Final Rule
was published.
6. Participating Fleet Vessels; Section
296.21
Comment: One commenter suggests
revising the last sentence in section
296.21(d)(1) by inserting after
‘‘Applicants must certify that they will
have the requisite authority’’ the phrase
‘‘as of October 1, 2005 and for the full
period of the Operating Agreement
thereafter’’ and adding ‘‘that remains in
effect beyond September 30, 2015’’ to
the end of the sentence.
Response: MARAD agrees that this
language adds clarity but has changed
‘‘beyond’’ to ‘‘until’’ after ‘‘that remain
in effect’.
Comment: One commenter suggests
that requesting applicants to name a
replacement vessel with their
applications as noted in section
296.21(d)(2) is unreasonable and that a
‘‘replacement plan’’ is what should be
approved by MARAD.
Response: In conjunction with
comments on section 296.31, MARAD
has decided to change its requirements.
For companies requesting age waivers,
MARAD will require Applicants to
submit a replacement vessel plan at
least 120 days before the expiration of
age eligibility for the MSP vessel.
Comment: One commenter believes
that section 296.21(d)(2) is misplaced
because it refers to all vessels subject to
an age waiver, not just Participating
Fleet Vessels. The commenter further
believes that MARAD should clarify that
the decision to extend an MSP
Operating Agreement beyond the date
that the vessel becomes 25 years of age
will be made during the term of the
MSP Operating Agreement when an
appropriate vessel can be offered
instead of during the application
process.
Response: Section 296.21(d)(2) refers
to the need of the applicant to provide
replacement plans for vessels in section

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296.21(d)(1) that become over age. This
section relates only to Priority II vessels,
so no change to this section is required.
The statute does not give authority to
allow a vessel over 25 years of age in the
program unless it is a Priority II vessel,
and only during the first 30 months of
the program.
Comment: One commenter suggested
that DOD has the right to reject a
Participating Fleet Vessel if it is no
longer deemed militarily useful. The
commenter states that DOD has
authority to specify operational
requirements to determine the order of
priority within a category of priority and
the authority to approve or not approve
the award of an MSP Operating
Agreement within a priority. The
commenter believes that MARAD’s
reference in section 296.30(a)(2) to the
Commander establishing general
evaluation criteria for operational
requirements * * * for vessels eligible
under the third and fourth priorities is
incorrect, and should also be applied to
the second priority.
Response: MARAD does not agree as
a determination was made by the U.S.
Transportation Command
(USTRANSCOM) prior to acceptance of
applications that all the Participating
Fleet Vessels in Priority II have already
been deemed to be militarily useful, and
therefore, the Commander’s general
evaluation criteria will be restricted to
Priority III and Priority IV applicants.
While some Priority III and Priority IV
vessels having greater military
usefulness than some Priority II vessels
may be rejected, MARAD and the
Commander intend to honor the
‘‘grandfather’’ rights of the Participating
Fleet Vessels, pursuant to 46 U.S.C.
53103(a)(1)(B). No change needs to be
made to the regulation.
Comment: One commenter expressed
concern over the possibility that a
Participating Fleet Vessel may not be
available to participate in the MSP on
October 1, 2005 due to an unforeseen
casualty to the vessel, and suggested
that the Contractor be allowed to offer
an eligible replacement vessel with a 60
day (or other agreed upon) period to
preserve the MSP slot.
Response: MARAD agrees to add a
new paragraph (f) to section 296.21 to
address this concern. Section 296.21(f)
will read ‘‘In the event that a
Participating Fleet Vessel will be
unavailable to participate in the MSP on
October 1, 2005, due to an unforeseen
casualty to the vessel, a Contractor may
offer an eligible replacement vessel. The
replacement vessel must subsequently
be approved by MARAD and DOD. The
replacement vessel must operate under
an MSP Operating Agreement in

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sufficient time to meet the 180
minimum operation days required
during the fiscal year to avoid being in
default of the MSP Operating
Agreement.’’
7. Discretion Within Priority; New
Section 296.23
Comment: Several commenters stated
that Discretion Within Priority applied
to all priorities and placing it in section
296.22, which only references Priority
III and Priority IV vessels, implies that
Discretion Within Priority applies only
to Priority III and Priority IV vessels.
Response: MARAD agrees and has
moved the provisions regarding
Discretion Within Priority to a new
section 296.23.
A new subsection has been added
stating that the Secretary must follow
the priority system established in 46
U.S.C. 53103(c) when awarding initial
MSP Operating Agreements. In other
words, MARAD cannot, for example,
favor a Priority III applicant over a
Priority II applicant.
8. Subsequent Awards of MSP Operating
Agreements; New Section 296.24
Comment: One commenter indicated
that 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 operating agreement to
an applicant having an eligible vessel
that applied but was not awarded an
MSP Operating Agreement or may
award that operating agreement
following a new round of applications at
a later date.
Response: MARAD is adding section
296.24 to adopt these views by
providing for subsequent awards of MSP
Operating Agreements should an
opening occur at a later date. Part of
section 296.3(a) concerning failure of
MSP Operating Agreement holders to
commence operations pursuant to the
terms of the MSP Operating Agreement
has been restated and moved to the new
section 296.24. Section 296.24 also
provides procedures for awarding
replacement MSP Operating Agreements
subsequent to October 1, 2005. MARAD
retains the discretion envisioned in the
statute to award an MSP Operating
Agreement either from the original pool
of applicants or from a new pool of
applicants. At the time subsequent
awards are made, MARAD will
determine if the original applicant pool
is stale. Section 296.24 also states that
inasmuch as MSP furthers a public
purpose and MARAD does not acquire
goods or services through MSP, the
selection process for award of MSP
Operating Agreements does not

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constitute an acquisition process subject
to procurement law or the Federal
Acquisition Regulations. This
determination results from recent ‘‘bid
protests’’ that were filed with the
Government Accountability Office and
subsequently withdrawn.
Comment: One commenter argues that
MSP applicants meeting the Section 2
Citizenship requirements, whose vessels
have been found eligible but are wait
listed for an award of an MSP Operating
Agreement due to the lack of available
slots, should receive first priority
consideration if slots become available.
Response: Until October 1, 2005 MSP
applicants meeting the Section 2
citizenship requirements will get
priority because the priority system will
apply, subject to approval of
USTRANSCOM. After October 1, 2005
MARAD, in conjunction with
USTRANSCOM, will select vessels on
the basis of military utility and
commercial viability, giving priority to
applicants that have the same or more
restrictive citizenship status as the
original awardee of the slot returned to
MARAD for reissue. New section 296.24
covers the procedures to be used by
MARAD to select vessels if slots become
available. No change is necessary in
section 296.30.
9. General Conditions; Approval;
Section 296.30
Comment: One commenter stated that
MARAD should have the flexibility to
consider newbuilds other than tank
vessels, but that the language of section
296.30(b) seemed to preclude this as the
starting date for the new MSP was
established as October 1, 2005. The only
exception listed in section 296.30(b)(2)
is for vessels under charter to the
Government. The commenter
recommended language for a second
exception specifically for newbuilds.
Response: One of the goals of the new
MSP is to have 60 vessels selected and
ready to enter the program on October
1, 2005. There were a couple of
applications that featured newbuilds.
For those applications, MARAD has the
discretion to offer temporary slots to
existing vessels if the newbuilds are
selected for future inclusion when they
are delivered. MARAD does not believe
additional language is necessary.
Comment: One commenter noted that
the sections under 296.30 address the
situation of partial funding by Congress
for the MSP, and that section 296.30(g)
specifies that a determination on which
vessels will be funded will be based on
the most militarily useful and
commercially viable vessels. The
commenter argues that a determining
consideration of which vessels will be

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funded should also include the
Contractors’ services and systems. In
addition, the commenter believes that
the priority system must be followed.
Response: MARAD believes that a
determination of ‘‘commercially viable’’
vessels addresses the commenter’s
concerns about Contractors’ services
and systems. MARAD is not required to
follow the initial application priority
system in determining which MSP
Operating Agreements to fund when the
program is partially funded after
October 1, 2005.
Comment: One commenter stated that
tank vessels not built under the
NDTVCP should not be treated the same
as tank vessels built under the NDTVCP
with regard to flagging out vessels in the
event of termination of the MSP
Operating Agreement with replacement
by the Contractor or if sufficient MSP
funding is not appropriated for any
fiscal year by the 60th day of that fiscal
year. Section 296.30(h) requires the
owner and operator of any tank vessel
to formally apply to MARAD pursuant
to section 9 of the Shipping Act, 1916
to transfer and register the vessel under
a foreign registry.
Response: MARAD agrees that the
requirement for formally applying under
section 9 of the Shipping Act, 1916, to
flag out tankers applies only to tankers
built under the NDTVCP. Appropriate
changes have been made to sections
296.30(h)(2) and 296.30(h)(3).
Comment: One commenter argued
that the transfer of MSP Operating
Agreements should be allowed only to
a person with the same or more
restrictive U.S. citizenship priority. The
commenter also urged that MARAD
should render decisions on MSP
transfer requests within 90 days—not
with a minimum of 90 days without an
upper limit to process such transfer
requests.
Response: MARAD agrees that
transfers of MSP Operating Agreements
will be to persons of the same or more
restrictive U.S. citizenship priority.
However, the statute provides for both
DOD and MARAD approval of transfers,
and does not set a time limit for review.
Therefore, MARAD will not limit MSP
transfer requests to 90 days or less.
MARAD does not believe any changes
are necessary to the rule with regard to
the commenter’s suggestions.
Comment: One commenter believes
that a transfer from a holder of an MSP
Operating Agreement under the Third
citizenship category be required to
transfer that MSP Operating Agreement
to another person that qualifies under
the Third citizenship category. In
connection, the commenter requests that
section 296.30(f)(2)(B) be reworded to

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‘‘Owned by a person that is a
Documentation Citizen and operated by
a person that is a Section 2 Citizen.’’
Response: MARAD agrees to this
language and has revised the regulation
accordingly.
10. MSP Assistance Conditions; Section
296.31
Comment: One commenter requested
that MARAD amend the proposed
regulations to allow U.S. Merchant
Marine Academy (USMMA) cadets to be
carried either on the MSP vessel or on
non-MSP U.S.-flag vessels in the
Contractor’s fleet.
Response: MARAD does not agree to
this change. One of the requirements for
receiving an MSP Operating Agreement
is that MSP vessels carry USMMA
cadets. Section 296.31 has been
amended for clarity.
11. Payment procedures; Section 296.41
Comment: One commenter claims that
MARAD has exceeded its authority in
section 296.41(c)(1)(v) by limiting the
number of days that a vessel may be
drydocked, surveyed, inspected, or
repaired without MARAD approval to
30 days, and requests removal of this
section or, alternatively, an increase in
the number of days to 45.
Response: MARAD believes thirty
days is a reasonable limit. If a
Contractor anticipates that the number
of repair days will exceed this amount,
a request for MARAD approval may be
submitted by the Contractor.
Comment: One commenter believes
that MARAD must set a limit per voyage
on carriage of preference cargo of 7,500
tons bagged and/or bulk, or
alternatively, MARAD should adopt
rules requiring that full shipment lot
bids submitted to agricultural agencies
on behalf of MSP vessels be augmented
with the per ton value of the daily
government assistance from MSP.
Response: Section 296.41(c)(i) states
that no payments will be made ‘‘[f]or
any day that an MSP Agreement Vessel
is engaged in transporting more that
7,500 tons* * *of civilian bulk
preference cargoes pursuant to section
901(a), 901(b), or 901b of the Act
provided that it is bulk cargo.’’ Section
296.41(c)(i) comports with the language
in 46 U.S.C. 53106 which does not
allow for ‘‘7,500 bagged’’ preference
cargo or a reduction based on a per ton
value of the daily government MSP
assistance. Therefore, MARAD is not
changing section 296.41(c)(i).
MARAD has replaced the words ‘‘of
up to’’ preceding $2,600,000 in the first
paragraph in section 296.41 with ‘‘equal
to’’ to comport with the governing
statute, 46 U.S.C. 53106(a).

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12. Administrative Determinations;
Section 296.50
Section 296.50(a) has been amended
to clarify and to indicate that appeals to
the Administrator under this paragraph
are a prerequisite to exhausting
administrative remedies. Section
296.50(b) has been amended for
purposes of clarity.
13. Miscellaneous Editorial and
Clarifying Changes Adopted
The commenters submitted several
editorial and clarifying comments
which MARAD is incorporating in this
final rule. In section 296.11(a)(2), the
reference to foreign commerce of the
United States, and in sections
296.31(d)(2) and 296.41, the
descriptions of ‘‘foreign trade’’ are being
replaced by the words ‘‘foreign
commerce’’ because the reference and
the descriptions closely mirror the
definition of ‘‘foreign commerce’’ in
section 296.2.
MARAD has amended Section
296.31(b) to clarify funding levels and
vessel selection under a continuing
resolution, and section 296.31(d)(3) to
clarify the meaning of the term
‘‘participates’’.
MARAD has added the phrase ‘‘or if
not current year data, a Schedule 310 of
the MA–172’’ to section 296.32(b) to
clarify MARAD’s expectations if current
year data is not available.
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
Order 12866 and 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 equal
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. Under
Executive Order 12866, MARAD is
required to provide an analysis of
information developed as part of its
decision making 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

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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 (DOD)
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
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 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,
40 MSP vessels were employed in
support of military operations. Four
additional MSP ships have been utilized
for reconstruction of Iraq. 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
fleets. The MSP also supports the
training of merchant mariners by
including United States Merchant
Marine Academy cadets on voyages of
MSP vessels.
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 1997–2005) to 60
(authorized for FYs 2006–2015).
Similarly, the payments per vessel are
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

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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.
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
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.

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Regulatory Flexibility

Paperwork Reduction

Because no notice of proposed
rulemaking was required prior to
issuance of this 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 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. In
addition, because this final rule
implements a financial assistance
program, it does not impose an
economic burden on small entities.

The Office of Management and Budget
extended its approval of an information
collection under the Paperwork
Reduction Act of 1995 (44 U.S.C. 3507
et seq.) for three years on January 31,
2005. The title of the information
collection is Application and Reporting
Elements for Participation in the
Maritime Security Program, OMB
Control No. 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.

Unfunded Mandates Reform Act of 1995
This final rule will not impose an
unfunded mandate under the Unfunded
Mandates Reform Act of 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.
Environmental Assessment
We have analyzed this 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 final rule does not change
the environmental effects of the current
MSP, which has been operational since
FY 1997. This final rule implements a
financial assistance program which
results in a negligible, if any cumulative
effect on the environment. 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.

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List of Subjects in 46 CFR Part 296
Assistance payments, Maritime
carriers, Reporting and recordkeeping
requirements.
Accordingly, the interim final rule
adding part 296 to title 46, Code of
Federal Regulations, which was
published at 69 FR 43328 on July 20,
2004, is revised and adopted as a final
rule 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.
296.23 Discretion within priority.
296.24 Subsequent awards of MSP
Operating Agreements.
Subpart D—Maritime Security Program
Operating Agreements
296.30 General conditions.
296.31 MSP assistance conditions.
296.32 Reporting requirements.

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Subpart E—Billing and Payment
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
§ 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.
§ 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. The term,
‘‘applicant’’ excludes a trust.
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.

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Coastwise Trade means trade between
points in the United States.
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
MSP Operating Agreement for the vessel
with the Secretary of Transportation
(acting through MARAD) pursuant to
§ 53103 of the MSA 2003. The term,
‘‘Contractor’’ excludes a trust.
Defense Contractor means a person
that operates or manages United States
documented vessels for the Secretary of
Defense or charters vessels to the
Secretary of Defense and has entered
into a special security agreement with
the Secretary of Defense.
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
points in the United States.
Eligible Vessel means a vessel that
meets the requirements of § 53102(b) of
the MSA 2003.
Emergency Preparedness Agreement
means an agreement, required by
§ 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 § 296.30.
Fiscal Year means any annual period
beginning on October 1 and ending on
September 30.
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 any cargo carried is the United
States, regardless of whether the vessel
provides direct service between the
United States and a foreign country, or

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commerce or trade between foreign
countries; and
(2) For liquid and dry bulk cargo
carrying services, includes trading
between ports in the United States and
foreign ports or 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.
MSA 2003 means the Maritime
Security Act of 2003.
MSP Fleet means the fleet of vessels
established under section 53102(a) of
the MSA 2003 and operated under MSP
Operating Agreements.
MSP Operating Agreement means the
assistance agreement between a
Contractor and MARAD that provides
for MSP payments, but is not a
‘‘procurement contract.’’
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 and operates that vessel directly
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.

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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. For purposes of holding an
MSP Operating Agreement, the term
‘‘person’’ excludes a trust.
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.
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.
Secretary means the Secretary of
Transportation acting through the
Maritime Administrator.
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) of this
definition, a trust that is qualified under
this definition.
(2) A trust is qualified only if:
(i) Each of the trustees is a Section 2
Citizen; 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
Section 2 Citizen, or involving any other
person that is not a Section 2 Citizen, 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

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operation of the vessel that may
adversely affect the interests of the
United States.
(3) If any person that is not a Section
2 Citizen 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 Section 2 Citizens 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 Section 2 Citizen from holding
more than 25 percent of the beneficial
interest in a trust.
United States Documented Vessel
means a vessel documented under 46
U.S.C. chapter 121.
§ 296.3

Applications.

(a) Action by MARAD.—Time
Deadlines. Applications for enrollment
of vessels in the MSP were due by
October 15, 2004 to the Secretary,
Maritime Administration, Room 7218,
Maritime Administration, U.S.
Department of Transportation, 400
Seventh Street, SW., Washington, DC
20590. Any applications received before
October 15, 2004 were deemed to have
been submitted on October 15, 2004.
Within 90 days after receipt of a
completed application, the Secretary
was obligated to 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
took place reasonably soon after
approval of the application. Contractors
of MSP Operating Agreements were
required to submit ownership
information and signed charters to
MARAD for approval by July 1, 2005.
(b) Action by the Applicant. Each
applicant for an MSP Operating
Agreement was required to submit an
application under OMB control number
2133–0525 to the Secretary, Maritime
Administration in the manner
prescribed on that form. Application
forms were made available from
MARAD’s Office of Sealift Support, or
the application form could be
downloaded from the MARAD Web site,
http:www.marad.dot.gov, Information
required included:
(1) An Affidavit of Section 2
Citizenship that comports with the
requirements of 46 CFR part 355, if
applying as a Section 2 Citizen.

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Otherwise, an affidavit which
demonstrates that the applicant is
qualified to document a vessel under 46
U.S.C. chapter 121 is required. If the
applicant is a vessel operator and
proposes to employ a vessel manager,
then the applicant must supply an
affidavit for the vessel manager that
meets the same citizenship
requirements applicable to the
applicant;
(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: Provide 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

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specific value, e.g., ramp strengths,
national defense sealift features;
(12) Special Security Agreements: If
applicable, provide a copy of any
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(ies) 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, llll, Chief Executive Officer of
llll, certify to you that there are no
treaties, statutes, regulations, or other laws of
the foreign country(ies) of ll’s ultimate
foreign parent or intermediate parents that
would prohibit ll 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, llll, am the Chief Executive
Officer [or equivalent] of lll, the ultimate
foreign parent of llll, 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
llll (the ultimate foreign parent) nor any
representative of llll (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). The vessel
replacement plan shall include the
vessel’s characteristics, a letter of intent
or other document indicating agreement
for purchase of vessel, and a forecast of
operations for five years for the
replacement vessel. The age restriction
for over-age vessels shall not apply to a
Participating Fleet Vessel during the 30month period beginning on the date the
vessel begins operating under an MSP

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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
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)
§ 296.4

Waivers.

In General—In special circumstances,
and for good cause shown, the
procedures prescribed in this part may
be 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
§ 296.10 Citizenship requirements of
owners, charterers and operators.

Citizenship requirements are deemed
to have been met if during the entire
period of an MSP 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 Section 2 Citizens.
(b) A vessel to be included in an MSP
Operating Agreement is owned by either
a person that is a Section 2 Citizen or
a United States Citizen Trust, and the
vessel is demise chartered to a nonSection 2 Citizen—
(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 subject 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;

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(3) That certifies to the Secretary in a
format substantially similar to the
format at § 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
MSP Operating Agreement at the time of
application for an MSP Operating
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
§ 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 and
operated by a defense contractor or a
related person to include affiliated or
related companies within the same
corporate group 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
§ 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 MSP
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 § 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
§ 296.3(b)(13) and that they have
reviewed the agreements proffered by
the ultimate foreign parent under
§ 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.

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§ 296.11

Federal Register / Vol. 70, No. 183 / Thursday, September 22, 2005 / Rules and Regulations
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;
(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 MSP 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 MSP 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
(A) 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:
(1) 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;
(2) 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
(3) The flag country has not been
identified by such Secretary as
inadequately enforcing international
vessel regulations.
(B) [Reserved]
(b) Waiver of Age Restriction of
Vessels. The SecDef, in conjunction
with the Secretary, may waive the age
restriction in paragraph (a) of this

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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.
(c) Telecommunications and Other
Electronic Equipment. The
telecommunications and other
electronic equipment on an existing
vessel that is redocumented under the
laws of the United States for operation
under an MSP Operating Agreement
shall be deemed to satisfy all Federal
Communications Commission
equipment certification requirements, if
(1) Such equipment complies with all
applicable international agreements and
associated guidelines as determined by
the country in which the vessel was
documented immediately before
becoming documented under the laws
of the United States;
(2) That country has not been
identified by the Secretary as
inadequately enforcing international
regulations as to that vessel; and
(3) At the end of its useful life, such
equipment will be replaced with
equipment that meets Federal
Communications Commission
equipment certification standards (see
49 CFR Chapter I).
§ 296.12

Applicants.

Applicant. Owners or operators of an
eligible vessel may apply to MARAD for
inclusion of that vessel in the MSP Fleet
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
§ 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: (i) That the Contractor
agrees to execute a binding agreement
approved by the Secretary for a

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replacement vessel to be operated under
the MSP Operating Agreement and to be
built in the United States not later than
nine months after the first date
appropriated funds are available for
construction and operating assistance
for a minimum of three tank vessels;
(ii) A tank vessel under this section is
eligible to be included in the MSP under
§ 296.11(a); and
(iii) A tank vessel under this section
is owned and operated during the
period of the MSP Operating Agreement
by one or more persons that are Section
2 Citizens;
(2) No payment can be made for an
existing tank vessel granted priority one
status after the earlier of:
(i) Four years following the date this
MSP Operating Agreement is effective,
except if amounts are available for
construction of a minimum of three tank
vessels under the National Defense Tank
Vessel Construction Assistance Program
(NDTVCP) by October 1, 2007, then no
payments shall be made for the existing
‘‘tank vessel’’ after four years following
the date such amounts are available; or
(ii) The date of delivery of the
replacement tank vessel constructed in
the United States after October 1, 2004.
(3) The Secretary will not enter into
more than five MSP Operating
Agreements for tank vessels under this
priority. If the five tank vessel MSP
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
nevertheless be awarded to existing tank
vessels or the slots may be awarded
permanently to any eligible 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 any eligible
vessel of another Contractor until a new
tank vessel’s construction is completed
in the United States. Such temporary
MSP Operating Agreements may be
terminated under terms set forth in the
temporary MSP Operating Agreement.
§ 296.21

Participating Fleet Vessels.

(a) Priority.—To the extent that
appropriated funds are available after
applying the first priority, tank vessels,

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in § 296.20, the second priority is
applicable to Participating Fleet Vessels.
(b) Number of MSP Operating
Agreements.—MARAD will not enter
into more than 47 MSP Operating
Agreements for Participating Fleet
Vessels.
(c) Reduction of Participating Fleet
Vessel MSP Operating Agreements.—
The number of MSP 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 MSP
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 MSP Operating Agreement.
Applicants must certify that they have
the requisite authority as of October 1,
2005 and for the full period of the MSP
Operating Agreement thereafter 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 that remains in effect until
September 30, 2015.
(2) The full term of the MSP
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
MSP 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 MSP
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.
For companies requesting an age waiver,
the Applicant must submit an
appropriate replacement vessel at least
120 days prior to the date of expiration
of age eligibility.
(3) For the purposes of paragraph
(d)(1) of this section, in the case of a

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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
§ 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 MSP 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 § 296.11(a)
and § 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
§ 296.11(a).
(f) In the event that a Participating
Fleet Vessel will be unavailable to
participate in the MSP on October 1,
2005, due to an unforeseen casualty to
the vessel, a Contractor may offer an
eligible replacement vessel. The
replacement vessel must subsequently
be approved by MARAD and DOD. The
replacement vessel must operate under
an MSP Operating Agreement in
sufficient time to meet the 180
minimum operation days required
during the fiscal year to avoid being in
default of the MSP Operating
Agreement.
§ 296.22

Other vessels.

(a) Third Priority.—To the extent that
appropriated funds are available after
applying the first priority, tank vessels,
in § 296.20, and the second priority,
Participating Fleet Vessels, in § 296.21,
the third priority is for any other vessel
that is eligible to be included in an MSP
Operating Agreement under § 296.11(a),
and that, during the period of that MSP
Operating Agreement, will be:
(1) Owned and operated by one or
more persons that are Section 2
Citizens; or

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(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 Section 2 Citizen.
(b) Fourth Priority.—To the extent that
appropriations are available after
applying the first priority in § 296.20,
the second priority in § 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 § 296.11(a).
§ 296.23

Discretion within priority.

The Secretary—
(a) Subject to paragraph (b) of this
section, may award MSP Operating
Agreements within each priority as the
Secretary considers appropriate; and
(b) Shall award MSP Operating
Agreements within a priority—
(1) In accordance with operational
requirements specified by the SecDef;
(2) In the cases of the Priorities III and
IV, according to the applicants’ records
of owning and operating vessels; and
(3) Subject to the approval of the
SecDef.
(c) The Secretary does not have
discretion to override the priority
requirements with respect to the initial
award of MSP Operating Agreements.
§ 296.24 Subsequent awards of MSP
Operating Agreements.

(a) Until October 1, 2005, if, for any
reason, after the award of an MSP
Operating Agreement, the Applicant is
unwilling or unable to commence
operations pursuant to the terms of the
MSP Operating Agreement, MARAD
may, pursuant to the priority criteria,
award that MSP Operating Agreement to
an Applicant having an eligible vessel
that applied but was not awarded an
MSP Operating Agreement.
(b) After October 1, 2005, MARAD
intends to ensure that all available MSP
Operating Agreements are fully utilized
at all times, in order to maximize the
benefit of the MSP. Accordingly, when
an MSP Operating Agreement becomes
available through termination by the
Secretary, expiration of a temporary
MSP Operating Agreement or early
termination by the MSP contractor, and
no transfer under 46 U.S.C. 53105(e) is
involved, MARAD will reissue the MSP
Operating Agreement pursuant to the
following criteria.
(1) The proposed vessel must meet the
requirements for vessel eligibility in 46
U.S.C. 53102(b);
(2) The applicant must meet the
vessel ownership and operating
requirements for priority in 46 U.S.C.
53103(c); and

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(3) Priority will be assigned in
accordance with operational
requirements specified by the SecDef.
(c) MARAD will use the following
procedures in reissuing an MSP
Operating Agreement. MARAD and
USTRANSCOM will determine if the
applications received on October 15,
2004 form an adequate pool for award
of a reissued MSP Operating Agreement.
If so, MARAD will award a reissued
MSP Operating Agreement from that
pool of qualified applicants in its
discretion, subject to approval of the
SecDef. MARAD and USTRANSCOM
may decide to open a new round of
applications. Applicants for reissued
MSP Operating Agreements must meet
the citizenship requirements of Priority
III. Inasmuch as MSP furthers a public
purpose and MARAD does not acquire
goods or services through MSP, the
selection process for award of MSP
Operating Agreements does not
constitute an acquisition process subject
to any procurement law or the Federal
Acquisition Regulations.
Subpart D—Maritime Security Program
Operating Agreements
§ 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 announced an initial award of
60 MSP Operating Agreements on
January 12, 2005. In addition, the
Secretary advised 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 established
general evaluation criteria for
operational requirements for
considering replacement vessels
described in § 296.21(e), and for vessels
eligible under the third and fourth
priorities described in § 296.22. These
general evaluation criteria were 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

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Operating Agreement that is on charter
to the U.S. Government, other than a
charter under the provisions of an
Emergency Preparedness Agreement
(EPA) provided by § 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 § 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 the MSP.
(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
MSP Operating Agreement. The
Contractor shall be bound by the
provisions relating to vessel
documentation and national security
commitments, and by its EPA 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:

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(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 MSP Operating 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 Section 2
Citizens; or
(B) Owned by a person that is a
Documentation Citizen and operated by
a person that is a Section 2 Citizen.
(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 will 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 MSP
Operating Agreements shall be made in
accordance with § 296.41. To the extent
that funds are appropriated in a
subsequent fiscal year, former MSP
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
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—

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(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 nontank vessel or a tank vessel not built
under the NDTVCP 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 built under the NDTVCP 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 MSP Operating
Agreements. A Contractor subject to an
MSP Operating Agreement may transfer
that MSP Operating Agreement
(including all rights and obligations
under that MSP Operating Agreement)
to any person eligible to enter into an
MSP Operating Agreement under
§ 296.10 and of the same or more
restrictive U.S. citizen priority,
provided that prior approval to transfer
the MSP Operating Agreement is
granted by the Secretary and the SecDef.
The Contractor should allow at least 90
days for processing of a transfer request.
§ 296.31

MSP assistance conditions.

(a) Term of MSP Operating
Agreement. MSP Operating Agreements
are authorized for 10 years, starting on

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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 under a CR at
sufficient levels for any portion of a
fiscal year, the Secretary will select the
vessels to retain within the funding
level of the previous fiscal year, in
consultation with the SecDef, based on
the Secretaries’ determination of the
most militarily useful and commercially
viable vessels. 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 MSP
Operating 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 MSP Operating
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 foreign commerce, 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, i.e., directly or indirectly
owns, charters, or operates, a vessel
engaged in noncontiguous domestic
trade unless the Contractor is a Section
2 Citizen.
(e) Obligation of the U.S. Government.
The amounts payable as MSP payments
under an MSP Operating Agreement

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55595

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 on the MSP vessel two U.S.
Merchant Marine Academy cadets, if
available, on each voyage.
§ 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 EPA, or if not
current year data, a Schedule 310 of the
MA–172.
(Approved by the Office of Management
and Budget under Control Number
2133–0005.)
Subpart E—Billing and Payment
Procedures
§ 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 MSP
Operating Agreements. Each voucher
submission shall include a certification
that the vessel(s) for which payment is
requested were operated in accordance
with § 296.31(d) and applicable MSP
Operating Agreements with MARAD,
and consideration shall be given to
reductions in amounts payable as set
forth in § 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.
§ 296.41

Payment procedures.

(a) Amount payable. An MSP
Operating Agreement shall provide,
subject to the availability of
appropriations and to the extent the
MSP Operating Agreement is in effect,

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for each Agreement Vessel, an annual
payment equal to $2,600,000 for FY
2006, FY 2007, FY 2008; $2,900,000 for
FY 2009, 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
foreign commerce, 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 § 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 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 Section 2 Citizen;
(iii) While under charter to the United
States Government other than a charter
pursuant to an EPA under § 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
§ 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

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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 § 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
§ 296.50

Administrative determinations.

(a) Policy. A Contractor who disagrees
with the findings, interpretations or
decisions of the Maritime
Administration or the Contracting
Officer with respect to the
administration of this part or any other
dispute or complaint concerning MSP
Operating Agreements 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 Operating
Agreement Appeals, Maritime
Administration, 400 Seventh St., SW.,
Washington, DC 20590. Such an appeal
is a prerequisite to exhausting
administrative remedies.
(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 make 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—

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shall communicate such disagreement
to the Contracting Officer. 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
§ 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

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Federal Register / Vol. 70, No. 183 / Thursday, September 22, 2005 / Rules and Regulations
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

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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.

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By order of the Maritime Administrator.
Dated: September 15, 2005.
Joel C. Richard,
Secretary, Maritime Administration.
[FR Doc. 05–18678 Filed 9–21–05; 8:45 am]
BILLING CODE 4910–81–P

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