PART 295—MARITIME SECURITY PROGRAM (MSP) Authority: 46 App. U.S.C. 1171 et seq.; Source: 62 FR 37737, July 15, 1997, unless otherwise noted. Subpart A—Introduction § 295.1 Purpose. This part prescribes regulations implementing the provisions of subtitle B (Maritime Security Fleet Program) of title VI of the Merchant Marine Act, 1936, as amended, governing Maritime Security Program 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. § 295.2 Definitions. For the purposes of this part: (a) Act, et seq. (b) Administrator, (c) Agreement Vessel, (d) Applicant, (e) Bulk Cargo, (f) Chapter 121, (g) Citizen of the United States, (h) Contracting Officer, (i) Contractor, (j) DOD, (k) Domestic Trade, (l) Eligible Vessel, (m) Emergency Preparedness Program Agreement, (n) Enrollment, (o) Fiscal Year, (p) LASH Vessel, (q) Militarily Useful, (1) U.S. Sources (2) Dry Cargo (r) MSP Fleet, (s) MSP Operating Agreement, (t) MSP Payments, (u) Ocean Common Carrier, (v) ODS, (w) Operating Day, (x) Related party, (1) a holding company, subsidiary, affiliate, or associate of a contractor who is a party to an operating agreement under Subtitle B, Title VI, of the Act; and (2) an officer, director, agent, or other executive of a contractor or of a person referred to in paragraph (x)(1) of this section. (y) Roll-on/Roll-off Vessel, (z) Secretary, (aa) United States Documented Vessel, § 295.3 Waivers. In special circumstances, and for good cause shown, the procedures prescribed in this part may be waived in writing by the Maritime Administration, by mutual agreement of the Maritime Administration and the Contractor, so long as the procedures adopted are consistent with the Act and with the objectives of these regulations. Subpart B—Establishment of MSP Fleet and Eligibility § 295.10 Eligibility requirements. (a) Applicant. (b) Eligible Vessel. (1) Vessel Type Liner Vessel. (ii) Specialty vessel. (A) a Roll-on/Roll-off vessel with a carrying capacity of at least 80,000 square feet or 500 twenty-foot equivalent units; or (B) a LASH vessel with a barge capacity of at least 75 barges; or (iii) Other vessel. (2) Vessel Requirements U.S. Documentation. (ii) Age. (A) a LASH Vessel that is 25 years of age or less; or (B) any other type of vessel that is 15 years of age or less. (iii) Waiver Authority. (iv) Intent to document U.S. (3) MARAD's determination. § 295.11 Applications. (a) Action by MARAD Time Deadlines. (2) Closure of Applications. Federal Register. (3) Reflagging for Eligible vessels. (4) Reflagging ODS and MSC chartered vessels. (b) Action by the Applicant. (1) Intermodal network. (2) Diversity of trading patterns. (3) Vessel construction date; (4) Vessel type and size; (5) Military Utility. (Approved by the Office of Management and Budget under Control Number 2133-0525) [62 FR 37737, July 15, 1997, as amended at 68 FR 62537, Nov. 5, 2003; 69 FR 61451, Oct. 19, 2004] § 295.12 Priority for awarding agreements. Subject to the availability of appropriations, MARAD shall enter into individual MSP Operating Agreements for Eligible Vessels according to the following priorities: (a) First priority requirements. (1) U.S. citizen ownership. (2) Other corporations. (i) eligible to document a vessel under 46 U.S.C. chapter 121; and (ii) affiliated with a corporation operating or managing for the Secretary of Defense other vessels documented under 46 U.S.C. chapter 121, or chartering other vessels to the Secretary of Defense. (3) Limitation on number of vessels. (i) For any U.S. citizen under paragraph (a)(1), the number of vessels may not exceed the sum of: (A) the number of U.S.-flag documented vessels that the Contractor or a related party operated in the foreign commerce of the United States on May 17, 1995, except mixed coastwise and foreign commerce; and (B) the number of U.S.-flag documented vessels the person chartered to the Secretary of Defense on that date; and (ii) For any corporation under paragraph (a)(2) of this section, not more than five Eligible Vessels. (4) Related party. (b) Second priority requirements. (1) U.S. citizen. (2) Other. (c) Third priority. (d) Number of MSP Operating Agreements Awarded. Subpart C—Maritime Security Program Operating Agreements § 295.20 General conditions. (a) Approval. (b) Effective date General Rule. (2) Exceptions. (i) The expiration or termination date of the ODS contract or Government charter covering the vessel, respectively, or (ii) Any earlier date on which the vessel is withdrawn from that contract or charter. (c) Replacement Vessels. (d) Notice to shipbuilders. Federal Register (e) Early termination. (f) Non-renewal for lack of funds. (g) Operation under a Continuing Resolution. (h) Requisition authority. (i) Transfer of Operating Agreements. (1) The Contractor gives notice of any such transfer to the Maritime Administrator by filing a completed application; (2) The transfer is not disapproved in writing by the Maritime Administrator within 90 days of the notification; and (3) the vessel to be covered by the Agreement after transfer is the same vessel originally covered by the Agreement or is an eligible vessel under section 651(b) of the act and is the same type, and comparable to, the vessel originally covered by the Agreement. § 295.21 MSP assistance conditions. (a) Term of MSP Operating Agreement. (b) Terms under a Continuing Resolution (CR). (c) National security requirements. (d) Vessel operating requirements. (1) Documentation. (2) Operation. (e) Limitations. (f) Non-Contiguous Domestic Trade. (g) Obligation of the U.S. Government. § 295.22 Commencement and termination of operations. (a) Time frames. (1) Existing vessel. (2) New building. (b) Unused authority. § 295.23 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 [Note: MARAD will accept electronic options (such as facsimile and Internet) for transmission of required information to MARAD, if practicable.]: (a) Form MA-172. (b) Financial Statement. (Approved by the Office of Management and Budget under Control Number 2133-0525) [62 FR 37737, July 15, 1997, as amended at 68 FR 62538, Nov. 5, 2003; 69 FR 61451, Oct. 19, 2004] Subpart D—Payment and Billing Procedures § 295.30 Payment. (a) Amount payable. (b) Reductions in amount payable. (2) There shall be no payment for any day that a MSP Agreement Vessel is engaged in transporting more than 7,500 tons (using the U.S. English standard of short tons, which converts to 6,696.75 long tons, or 6,803.85 metric tons) of civilian bulk preference cargoes pursuant to section 901(a), 901(b), or 901b of the act, provided that it is bulk cargo. § 295.31 Criteria for payment (a) Submission of voucher. (1) Payments shall be made per vessel, in equal monthly installments, of $175,000. (2) To the extent that reductions under § 295.30(b) are known, such reductions shall be applied at the time of the current billing. The daily reduction amounts shall be based on the annual amounts in 295.30(a) of this part divided by 365 days (366 days in leap years) and rounded to the nearest cent. Daily reduction amounts shall be applied as follows: FY 1997—$5,753.42 FY 1998—$5,753.42 FY 1999—$5,753.42 FY 2000—$5,737.70 FY 2001—$5,753.42 FY 2002—$5,753.42 FY 2003—$5,753.42 FY 2004—$5,737.70 FY 2005—$5,753.42 (3) In the event a monthly payment is for a period less than a complete month, that month's payment shall be calculated by multiplying the appropriate daily rate in § 295.31(a)(2) by the actual number of days the Eligible Vessel operated in accordance with § 295.21. (4) MARAD may require, for good cause, that a portion of the funds payable under this section be withheld if the provisions of § 295.21(d) have not been met. (5) 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. (b) [Reserved] Subpart E—Appeals Procedures § 295.40 Administrative determinations. (a) Policy. (b) Process.