[Title 46 CFR ]
[Code of Federal Regulations (annual edition) - October 1, 2010 Edition]
[From the U.S. Government Printing Office]
Parts 200 to 499
Revised as of October 1, 2010
Containing a codification of documents of general
applicability and future effect
As of October 1, 2010
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Table of Contents
Chapter II--Maritime Administration, Department of
Chapter III--Coast Guard (Great Lakes Pilotage),
Department of Homeland Security 451
Table of CFR Titles and Chapters........................ 483
Alphabetical List of Agencies Appearing in the CFR...... 503
List of CFR Sections Affected........................... 513
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October 1, 2010.
Title 46--Shipping is composed of nine volumes. The parts in these
volumes are arranged in the following order: Parts 1-40, 41-69, 70-89,
90-139, 140-155, 156-165, 166-199, 200-499, and 500 to end. The first
seven volumes containing parts 1-199 comprise chapter I--Coast Guard,
DHS. The eighth volume, containing parts 200-- 499, includes chapter
II--Maritime Administration, DOT and chapter III--Coast Guard (Great
Lakes Pilotage), DHS. The ninth volume, containing part 500 to end,
includes chapter IV--Federal Maritime Commission. The contents of these
volumes represent all current regulations codified under this title of
the CFR as of October 1, 2010.
For this volume, Bonnie Fritts was Chief Editor. The Code of Federal
Regulations publication program is under the direction of Michael L.
White, assisted by Ann Worley.
(This book contains parts 200 to 499)
chapter ii--Maritime Administration, Department of
chapter iii--Coast Guard (Great Lakes Pilotage), Department
of Homeland Security...................................... 401
CHAPTER II--MARITIME ADMINISTRATION, DEPARTMENT OF TRANSPORTATION
SUBCHAPTER A--POLICY, PRACTICE AND PROCEDURE
201 Rules of practice and procedure............. 7
202 Procedures relating to review by Secretary
of Transportation of actions by Maritime
Subsidy Board........................... 29
203 Procedures relating to conduct of certain
hearings under the Merchant Marine Act,
1936, as amended........................ 33
204 Claims against the Maritime Administration
under the Federal Tort Claims Act....... 35
205 Audit appeals; policy and procedure......... 37
SUBCHAPTER B--REGULATIONS AFFECTING MARITIME CARRIERS AND RELATED
221 Regulated transactions involving documented
vessels and other maritime interests.... 38
232 Uniform financial reporting requirements.... 52
SUBCHAPTER C--REGULATIONS AFFECTING SUBSIDIZED VESSELS AND OPERATORS
249 Approval of underwriters for marine hull
251 Application for subsidies and other direct
financial aid........................... 65
252 Operating-differential subsidy for bulk
cargo vessels engaged in worldwide
272 Requirements and procedures for conducting
condition surveys and administering
maintenance and repair subsidy.......... 86
276 Construction-differential subsidy repayment. 95
277 Domestic and foreign trade; interpretations. 96
280 Limitations on the award and payment of
operating-differential subsidy for liner
281 Information and procedure required under
liner operating-differential subsidy
282 Operating-differential subsidy for liner
vessels engaged in essential services in
the foreign commerce of the United
283 Dividend policy for operators receiving
operating-differential subsidy.......... 125
287 Establishment of construction reserve funds. 130
289 Insurance of construction-differential
subsidy vessels, operating-differential
subsidy vessels and of vessels sold or
adjusted under the Merchant Ship Sales
Act 1946................................ 146
295 Maritime Security Program (MSP)............. 147
296 Maritime Security Program (MSP)............. 154
SUBCHAPTER D--VESSEL FINANCING ASSISTANCE
298 Obligation guarantees....................... 172
SUBCHAPTER E [RESERVED]
SUBCHAPTER F--POSITION REPORTING SYSTEM
307 Establishment of mandatory position
reporting system for vessels............ 206
SUBCHAPTER G--EMERGENCY OPERATIONS
308 War risk insurance.......................... 209
309 Values for war risk insurance............... 232
310 Merchant Marine training.................... 240
SUBCHAPTER I-A--NATIONAL SHIPPING AUTHORITY
315 Agency agreements and appointment of agents. 267
317 Bonding of ship's personnel................. 269
324 Procedural rules for financial transactions
under Agency agreements................. 271
325 Procedure to be followed by general agents
in preparation of invoices and payment
of compensation pursuant to provisions
of NSA Order No. 47..................... 276
326 Marine protection and indemnity insurance
under agreements with agents............ 277
327 Seamen's claims; administrative action and
328 Slop chests................................. 281
329 Voyage data................................. 283
330 Launch services............................. 285
332 Repatriation of seamen...................... 285
335 Authority and responsibility of general
agents to undertake emergency repairs in
foreign ports........................... 287
336 Authority and responsibility of general
agents to undertake in continental
United States ports voyage repairs and
service equipment of vessels operated
for the account of the National Shipping
Authority under general agency agreement 289
337 General agent's responsibility in connection
with foreign repair custom's entries.... 290
338 Procedure for accomplishment of vessel
repairs under National Shipping
Authority master lump sum repair
339 Procedure for accomplishment of ship repairs
under National Shipping Authority
individual contract for minor repairs--
340 Priority use and allocation of shipping
services, containers and chassis, and
port facilities and services for
national security and national defense
related operations...................... 303
SUBCHAPTER I-B--CONTROL AND UTILIZATION OF PORTS
345 Restrictions upon the transfer or change in
use or in terms governing utilization of
port facilities......................... 310
346 Federal port controllers.................... 312
347 Operating contract.......................... 315
349 Reemployment rights of certain merchant
350 Seamen's service awards..................... 325
351 Depositories................................ 327
355 Requirements for establishing United States
356 Requirements for vessels of 100 feet or
greater in registered length to obtain a
fishery endorsement to the vessel's
370 Claims...................................... 357
380 Procedures.................................. 357
381 Cargo preference--U.S.-flag vessels......... 362
382 Determination of fair and reasonable rates
for the carriage of bulk and packaged
preference cargoes on U.S.-flag
commercial vessels...................... 367
385 Research and development grant and
cooperative agreements regulations...... 370
386 Regulations governing public buildings and
grounds at the United States Merchant
Marine Academy.......................... 379
387 Utilization and disposal of surplus Federal
real property for development or
operation of a port facility............ 381
388 Administrative waivers of the Coastwise
Trade Laws.............................. 384
389 Determination of availability of coastwise-
qualified launch barges................. 388
SUBCHAPTER K--REGULATIONS UNDER PUBLIC LAW 91-469
390 Capital Construction Fund................... 392
391 Federal income tax aspects of the Capital
Construction Fund....................... 420
393 America's Marine Highway Program............ 440
SUBCHAPTER A_POLICY, PRACTICE AND PROCEDURE
PART 200 [RESERVED]
PART 201_RULES OF PRACTICE AND PROCEDURE--Table of Contents
Subpart A_General Information (Rule 1)
201.1 Scope of rules.
201.2 Mailing address; hours.
201.3 Authentication of rules, orders, determinations and decisions of
201.6 Documents in foreign languages.
201.7 Information; special instructions.
201.8 Use of gender and number.
201.9 Suspension, amendment, etc., of rules.
Subpart B_Appearance and Practice Before the Administration (Rule 2)
201.15 Appearance in person or by representative.
201.16 Authority for representation.
201.17 Written appearance.
201.18 Practice before the Administration defined.
201.19 Presiding officers.
201.20 Attorneys at law.
201.22 Firms and corporations.
201.24 Suspension or disbarment.
201.25 Statement of interest.
201.26 Former employees.
Subpart C_Parties (Rule 3)
201.30 Parties; how designated.
201.31 Public counsel.
201.32 Substitution of parties.
Subpart D_Form, Execution and Service of Documents (Rule 4)
201.41 Form and appearance of documents filed with the Administration.
201.42 Subscription, authentication of documents.
201.43 Service by parties.
201.44 Date of service.
201.45 Certificate of service.
201.46 Copies of documents for use of the Administration.
Subpart E_Time (Rule 5)
201.52 Additional time after service by mail.
201.53 Extension of time to file documents.
201.54 Reduction of time to file documents.
201.55 Postponement of hearing.
Subpart F_Rule Making (Rule 6)
201.61 Petition for issuance, amendment, or repeal of rule or
201.62 Notice of proposed rule making.
201.63 Participation in rule making.
201.64 Contents of rules.
201.65 Effective date of rules.
Subpart G_Formal Proceedings, Notice, Pleadings, Replies (Rule 7)
201.71 Commencement of proceedings.
201.73 Joinder of proceedings.
201.74 Declaratory orders.
201.76 Applications for Government aid.
201.77 Amendments or supplements to pleadings.
201.78 Petition for leave to intervene.
201.80 Answers to applications, petitions, or motions.
Subpart H_Responsibilities and Duties of Presiding Officer (Rule 8)
201.85 Commencement of functions of Department of Transportation Office
201.86 Presiding officer.
201.87 Authority of presiding officer.
201.88 Postponement or change of place by presiding officer.
201.89 Disqualification of presiding officer.
Subpart I_Summary Disposition (Rule 9)
201.91 Filing of motions, answers.
201.92 Ruling on motion.
201.93 Review of ruling, appeal.
Subpart J_Prehearing Conference; Settlements; Procedural Agreements
201.101 Prehearing conference.
201.102 Prehearing rulings.
201.103 Opportunity for agreement of parties and settlement of case.
Subpart K_Discovery and Depositions (Rule 11)
201.109 Discovery and production of documents.
201.110 Depositions: request for orders to take; time of filing.
201.111 Contents of order.
201.112 Record of examination; oath; objections.
201.113 Submission to witness, changes, signing.
201.114 Certification and filing by officer; copies.
201.115 Waiver of objections and admissibility.
201.116 Time of filing.
201.117 Inclusion in record.
201.118 Witness fees; expenses of taking depositions.
Subpart L_Subpoenas (Rule 12)
201.121 Application for subpoena ad testificandum.
201.122 Application for subpoena duces tecum.
201.123 Standards for issuance of subpoena duces tecum.
201.124 Service and quashing of subpoenas.
201.125 Attendance and mileage fees.
201.126 Service of subpoenas.
201.127 Subpoena of Administration employees, documents, or things.
Subpart M_Hearing Procedures (Rule 13)
201.131 Presentation of evidence.
201.132 Conduct of the hearing.
201.133 Appeal from ruling of presiding officer.
201.134 Separation of functions.
Subpart N_Evidence (Rule 14)
201.136 Evidence admissible.
201.137 Rights of parties as to presentation of evidence.
201.138 Unsponsored written material.
201.139 Documents containing matter both material and not material.
201.140 Records in other proceedings.
201.142 Further evidence required by presiding officer during hearing.
201.143 Exceptions to rulings of presiding officer unnecessary.
201.144 Offer of proof.
Subpart O_The Record: Contents; Development; Perfection; Confidential
Treatment (Rule 15)
201.146 Receipt of documents after hearing.
201.147 Official transcript.
201.148 Corrections of transcript.
201.149 Copies of data or evidence.
201.150 Record for decision.
201.151 Objections to public disclosure of information.
Subpart P_Briefs, Requests for Findings, Decisions, Exceptions (Rule 16)
201.155 Briefs; request for findings.
201.156 Requests for extension of time for filing briefs.
201.157 Reopening of a case by presiding officer prior to decision.
201.158 Decisions, authority to make and kinds.
201.159 Decisions, contents and service.
201.160 Decision based on official notice.
201.161 Exceptions to, and review by the Administration of initial or
201.162 Replies to exceptions.
201.163 Request for extension of time for filing exceptions and replies
201.164 Certification of record by presiding officer.
Subpart Q_Oral Argument; Submittal for Final Decision (Rule 17)
201.166 Oral argument.
201.167 Submission to Administration for final decision.
Subpart R_Stay of Administration's Decision, Reopening of Proceedings
201.171 Stay of Administration's decision.
201.172 Time for filing petition to reopen.
201.173 Reopening by Administration and modification or setting aside of
201.174 Petition for reopening.
201.175 Answers to petition to reopen.
Subpart S_Judicial Standards of Practice (Rule 19)
201.181 General matters.
201.182 Improper pressures.
201.183 Ex parte communications.
Subpart T_Effective Date (Rule 20)
201.185 Effective date and applicability of rules.
Authority: 46 App. U.S.C. 1114(b); 49 CFR 1.66 and 1.69.
Source: General Order 41, 3d Rev., 29 FR 14475, Oct. 22, 1964; 29 FR
15374, Nov. 17, 1964, unless otherwise noted.
Subpart A_General Information (Rule 1)
Sec. 201.1 Scope of rules.
The regulations in this part govern practice and procedure before
the Maritime Administration and Maritime Subsidy Board (as described in
49 CFR 1.66 and 1.67), hereinafter referred to collectively as the
``Administration,'' under the Merchant Marine Act, 1920, as amended,
Merchant Marine Act, 1936, as amended, Merchant Ship Sales Act, 1946,
Administrative Procedure Act, and related Acts. In addition, certain
proceedings under sections 605(c)
and 805(a) of the Merchant Marine Act, 1936, as amended, shall be
conducted in accordance with part 203 of this chapter except as may be
provided otherwise by the Administration.
[55 FR 12358, Apr. 3, 1990]
Sec. 201.2 Mailing address; hours.
Documents required to be filed in, and correspondence relating to,
proceedings governed by the regulations in this part should be addressed
to ``Secretary, Maritime Administration, Department of Transportation,
Washington, DC 20590.'' The Office of the Secretary, Maritime
Administration, including the public document reading room, located in
room 7210, 400 Seventh Street, SW., Washington, DC 20590, is open from
8:30 a.m. to 5:00 p.m.
[55 FR 12358, Apr. 3, 1990, as amended at 63 FR 9157, Feb. 24, 1998]
Sec. 201.3 Authentication of rules, orders, determinations and
decisions of the Administration.
All rules, orders, determinations or decisions issued in any
proceeding covered by the regulations in this part shall, unless
otherwise specifically provided by the Administration, be signed and
authenticated by seal by the Secretary of the Administration in the name
of the Administration.
Sec. Sec. 201.4-201.5 [Reserved]
Sec. 201.6 Documents in foreign languages.
Every document, exhibit, or other paper written in a language other
than English and filed with the Administration or offered in evidence in
any proceeding before the Administration under the regulations in this
part or in response to any rule or order of the Administration pursuant
to the regulations in this part, shall be filed or offered in the
language in which it is written and shall be accompanied by an English
translation thereof duly subscribed.
Sec. 201.7 Information; special instructions.
Information as to procedure under the regulations in this part, and
instructions supplementing the regulations in this part in special
instances, will be furnished upon application to the Secretary of the
Sec. 201.8 Use of gender and number.
Words importing the singular number may extend and be applied to
several persons or things; words importing the plural number may include
the singular; and words importing the masculine gender may be applied to
Sec. 201.9 Suspension, amendment, etc., of rules.
The regulations in this part may, from time to time, be suspended,
amended, or revoked, in whole or in part. Notice of any such action will
be published in the Federal Register. Also, any regulation in this part
may be waived by the Administration or the Presiding Officer to prevent
undue hardship in any particular case.
Subpart B_Appearance and Practice Before the Administration (Rule 2)
Sec. 201.15 Appearance in person or by representative.
A party may appear in person or by an officer, partner, or regular
employee of the party, or by or with counsel or other duly qualified
representative, in any proceeding under the regulations in this part. A
party may offer testimony, produce and examine witnesses, and be heard
upon brief and at oral argument if oral argument is granted. Any person
compelled to appear in a proceeding pursuant to subpoena may be
accompanied, represented, and advised by counsel and may purchase a
transcript of his testimony.
Sec. 201.16 Authority for representation.
Any individual acting in a representative capacity in any proceeding
before the Administration may be required by the Administration or the
Presiding Officer to show his authority to act in such capacity.
Sec. 201.17 Written appearance.
Persons who appear at any hearing shall deliver a written notation
of appearance to the reporter, stating for whom the appearance is made.
written appearance shall be made a part of the record.
Sec. 201.18 Practice before the Administration defined.
Practice before the Administration shall be deemed to comprehend all
matters connected with any presentation to the Administration or its
Sec. 201.19 Presiding officers.
Hearings on any matter before the Administration will be held by a
duly designated Member or Members thereof, or a Hearing Examiner
qualified under section 11 of the Administrative Procedure Act, assigned
by the Chief Hearing Examiner, who shall be designated as the Presiding
Officers. Where appropriate the Administration may designate other
members of the staff to serve as Presiding Officers in hearings not
required by statute, as provided in Sec. 201.86.
Sec. 201.20 Attorneys at law.
Attorneys at law who are admitted to practice before the Federal
courts or before the courts of any State or territory of the United
States may practice before the Administration. An attorney's own
representation that he is such in good standing before any of the courts
herein referred to will be sufficient proof thereof.
Sec. 201.21 [Reserved]
Sec. 201.22 Firms and corporations.
Except as regards law firms, practice before the Administration by
firms or corporations on behalf of others shall not be permitted.
Sec. 201.23 [Reserved]
Sec. 201.24 Suspension or disbarment.
The Administration may, in its discretion, deny admission to,
suspend, or disbar any person from practice before the Administration
who it finds does not possess the requisite qualifications to represent
others or is lacking in character, integrity, or to have engaged in
unethical or improper professional conduct. Disrespectful, disorderly,
or contumacious language or contemptuous conduct at any hearing before
the Administration or a presiding officer shall constitute grounds for
immediate exclusion from said hearing by the Presiding Officer. Any
person who has been admitted to practice before the Administration may
be disbarred from such practice only after he has been afforded an
opportunity to be heard.
Sec. 201.25 Statement of interest.
The Administration, in its discretion, may call upon any
practitioner for a full statement of the nature and extent of his
interest in the subject matter presented by him before the
Administration. Attorneys retained on a contingent fee basis shall file
with the Administration a copy of the contract of employment.
[General Order 41, 3d Rev., 29 FR 14475, Oct. 22, 1964; 29 FR 15374,
Nov. 17, 1964, as amended at 60 FR 38735, July 28, 1995]
Sec. 201.26 Former employees.
(a) No former officer or employee of the Administration, after his
or her employment with the Administration has ceased, shall act as agent
or attorney for anyone other than the United States in connection with
any particular matter in which a specific party or parties are involved
and in which the United States is a party or has a direct and
substantial interest and in which the former officer or employee
participated personally and substantially as an officer or employee of
the Maritime Administration through decision, approval, disapproval,
recommendation, the rendering of advice, investigation, or otherwise
while so employed by the Maritime Administration.
(b) No former officer or employee of the Administration shall
practice, appear, or represent anyone, directly or indirectly, other
than the United States, before the Administration in any matter for a
period of 1 year subsequent to the termination of his or her employment
with the Administration in connection with any proceeding, application,
request for a ruling or other determination, contract, claim,
controversy, or other particular matter involving a specific party or
parties in which the United States is a party or directly and
and which was under his or her official responsibility as an officer or
employee of the Administration at any time during the last year of his
or her service.
(c) Any person in doubt as to the applicability of paragraph (a) or
(b) of this Sec. 201.26 to a particular case or to the postemployment
activities of a former officer or employee of the Administration may
address an application to the Administration for the Administration's
consent to appear, stating his former connection with the Administration
or predecessor agency, identifying the matter in which he or she desires
to appear and describe in detail his or her participation in or
responsibility for the particular matter and the specific party or
parties involved and the extent, if any, in which the former officer or
employee had participated while employed by the Administration. The
applicant shall be promptly advised as to his or her privilege to appear
in the particular matter. Separate consents to appear must be obtained
in each particular matter.
[G.O. 41, 3d Rev., Amdt. 3, 36 FR 4377, Mar. 5, 1971]
Subpart C_Parties (Rule 3)
Sec. 201.30 Parties; how designated.
The term party, whenever used in these Rules, shall include any
natural person, corporation, association, firm, partnership, trustee,
receiver, agency, public or private organization, or governmental
agency. A party requesting official action subject to these Rules shall
be designated as applicant. A party whose petition for leave to
intervene is granted pursuant to Sec. 201.78 shall be designated as
intervenor. Only a party as designated in this section may introduce
evidence or examine witnesses at hearings.
Sec. 201.31 Public counsel.
The Assistant General Counsel, Chief, Division of Operating Subsidy
Contracts, shall be a party to all proceedings involving operating-
differential subsidy contracts. The Assistant General Counsel and his
representatives shall be designated as Public Counsel and shall be
served with copies of all papers, pleadings, and documents in such
proceedings. In addition the General Counsel may designate any member of
his staff to serve as Staff Counsel in contract appeal cases or any
other proceeding governed by the regulations in this part. Public
Counsel or Staff Counsel shall participate in any proceeding to which he
is a party, to the extent he deems required in the public interest,
subject to the separation of functions required by section 5(c) of the
Administrative Procedure Act.
Sec. 201.32 Substitution of parties.
Upon petition and for good cause shown, the Administration may order
a substitution of parties; except that in case of death of a party
substitution may be ordered upon suggestion and without the filing of a
Subpart D_Form, Execution and Service of Documents (Rule 4)
Sec. 201.41 Form and appearance of documents filed with the
All papers to be filed under the regulations in this part may be
reproduced by printing or by any other process, provided the copies are
clear and legible; shall be dated, the original signed in ink, and shall
show the docket description and title of the proceeding, and the title,
if any, and address of the signatory. If typewritten, the impression
shall be on only one side of the paper and shall be double spaced,
except that quotations shall be single spaced and indented. Documents
not printed, except correspondence and exhibits, should be on strong,
durable paper and shall not be more than 8\1/2\ inches wide and 12
inches long, with a left margin 1\1/2\ inches wide. Printed documents
shall be printed in clear type (never smaller than pica or 11-point
type) adequately leaded, and the paper shall be opaque and unglazed.
Briefs, if printed, shall be printed on paper not less than 6\1/8\
inches wide and 9\1/4\ inches long, with inside margin not less than 1
inch wide. All briefs over 15 pages shall contain a subject index with
page references and a list of authorities cited.
Sec. 201.42 Subscription, authentication of documents.
(a) Documents filed shall be subscribed: (1) By the person or
persons filing same, (2) by an officer thereof if it be a corporation,
(3) by an officer or employee if it be a government instrumentality, or
(4) by an attorney or other person having authority with respect
(b) Documents submitted pursuant to stipulation of counsel where no
sponsoring witness will be used must be verified.
Sec. 201.43 Service by parties.
All documents, when tendered for filing should show that service has
been made upon all parties to the proceeding. Such service shall be made
by delivering one copy to each party in person or by mailing by first-
class mail properly addressed with postage prepaid. When a party has
appeared by attorney or other representative, service upon such attorney
or other representative will be deemed service upon the party. All
documents served by mail preferably should be mailed in sufficient time
to reach the parties on the date on which the original is due to be
filed and should be air mailed if addressee is more than 300 miles
Sec. 201.44 Date of service.
The date of service of documents shall be the day when the matter
served is deposited in the United States mail, shown by the postmark
thereon, or is delivered in person, as the case may be.
Sec. 201.45 Certificate of service.
The original of every document filed with the Administration and
required to be served upon all parties to a proceeding shall be
accompanied by a certificate of service signed by the party making
service, stating that such service has been made upon each party to the
proceeding. Certificates of service may be in substantially the
I hereby certify that I have this day served the foregoing document
upon all parties of record in this proceeding by mailing, postage
prepaid (or by delivering in person) a copy to each such party.
Dated at ------------------ this ------------ day of --------------
Sec. 201.46 Copies of documents for use of the Administration.
Except as otherwise provided in the regulations in this part, an
original and fifteen copies of every document shall be filed for use of
the Administration, except written testimony and exhibits to be made a
part of a record, which shall be filed in triplicate unless otherwise
Subpart E_Time (Rule 5)
Sec. 201.51 Computation.
In computing any period of time under these Rules, the time begins
with the day following the act, event, or default, and includes the last
day of the period, unless it is a Saturday, Sunday, or national legal
holiday. When the period of time prescribed or allowed is less than
seven (7) days, intermediate Saturdays, Sundays, and holidays shall be
excluded from the computation.
Sec. 201.52 Additional time after service by mail.
Whenever service of a document has been made by mail in accordance
with Sec. 201.43 three (3) days shall be added to the prescribed period
Sec. 201.53 Extension of time to file documents.
Applications for extension of time for the filing of any document
shall set forth the reasons for the application and may be granted upon
a showing of good cause on the part of applicant. Answers to such
applications are permitted.
Sec. 201.54 Reduction of time to file documents.
Except as prohibited by law, for good cause the Administration, or
the Presiding Officer with respect to matters pending before him, may
reduce any time limit prescribed in the regulations in this part.
Sec. 201.55 Postponement of hearing.
Applications for postponement of any hearing date may be granted
upon a showing of good cause on the part of the applicant. Answers to
such applications are permitted.
Subpart F_Rule Making (Rule 6)
Sec. 201.61 Petition for issuance, amendment, or repeal of rule
Any interested person may file with the Administration a petition
for the issuance, amendment, or repeal of a rule designed to implement,
interpret, or prescribe law, policy, organization, procedure, or
practice requirements of the Administration. The petition shall set
forth the interest of petitioner and the nature of the relief desired,
shall include any facts, views, arguments, and data deemed relevant by
petitioner, and shall be subscribed to. If such petition is for the
amendment or repeal of a rule, it shall be accompanied by proof of
service on all persons, if any, specifically named in such rule, and
shall conform in all other aspects to subpart D of this part. Answers to
such petition shall conform to the requirements of subpart D of this
Sec. 201.62 Notice of proposed rule making.
After receipt of petitions and any answers thereto described in
Sec. 201.61, or upon its own initiative, the Administration may, in its
discretion, direct that notice thereof be published in the Federal
Register unless all persons subject thereto are named and either are
personally served or otherwise have actual notice thereof in accordance
with law. Except where publication of notice of proposed rule making and
public hearing is required by statute, this section shall not apply to
interpretative rules, general statements of policy, organization rules,
rules of procedure, or practice of the Administration, or amendments
thereto, or any situation in which the Administration for good cause
finds that notice and public procedure thereon are impracticable,
unnecessary, or contrary to the public interest.
Sec. 201.63 Participation in rule making.
Interested persons will be afforded an opportunity to participate in
rule making through submission of written data, views, or arguments,
with or without opportunity to present the same orally in any manner:
Provided, That where the proposed rules are such as are required by
statute to be made on the record after opportunity for a hearing, or
where a hearing is ordered by the Administration upon petition of any
party or upon its own initiative, such hearing shall be conducted
pursuant to sections 7 and 8 of the Administrative Procedure Act.
Sec. 201.64 Contents of rules.
The Administration will incorporate in any rule to be adopted a
concise general statement of their basis and purpose.
Sec. 201.65 Effective date of rules.
The publication or service of any substantive rule shall be made not
less than 30 days prior to its effective date except: (a) As otherwise
provided by the Administration for good cause found and published in the
Federal Register or (b) in the case of rules granting or recognizing
exemption or relieving restriction, interpretative rules, and statements
Subpart G_Formal Proceedings, Notice, Pleadings, Replies (Rule 7)
Sec. 201.71 Commencement of proceedings.
Formal proceedings may be commenced with respect to any phase of an
application for Government aid or other relief, the processing of which
by statute requires a public hearing. The Administration may, in its
discretion, also direct the holding of a hearing not required by statute
for any purpose authorized in the statutes it administers.
Sec. 201.72 Notice.
Notice of any matter which may result in or involves the institution
of a formal proceeding will be given by publication in the Federal
Register in sufficient detail and in sufficient time to apprise
interested persons of the nature of the issues to be heard and to
allow for an opportunity to file petitions for leave to intervene.
Sec. 201.73 Joinder of proceedings.
(a) Two or more matters which have been set for hearing by the
Administration, and which involve similar issues, may be consolidated
for the purpose of hearing. Such consolidation may, at the discretion of
the Administration, or Presiding Officer after hearing has been ordered,
be ordered upon petition of any party to said hearing or upon the
initiative of the Administration.
(b) A petition to consolidate shall be filed not later than the
first prehearing conference in the proceeding with which consolidation
is requested, and shall relate only to then pending applications. If
made at such conference, the petition may be oral. A petition which is
not timely filed shall be dismissed unless the petitioner shall clearly
show good cause for the failure to file said petition on time. A
petition which does not relate to an application pending at the time of
or before a prehearing conference in a proceeding with which
consolidation is requested, shall likewise be dismissed unless the
petitioner shall clearly show good cause for a failure to file the
application within the prescribed period.
Sec. 201.74 Declaratory orders.
The Administration may issue a declaratory order to terminate a
proceeding or to remove uncertainty. Petitions for the issuance thereof
shall state clearly and concisely the nature of the controversy or
uncertainty, shall cite the statutory authority involved, shall include
a complete statement of the facts and grounds supporting the petition,
together with a full disclosure of petitioner's interest.
Sec. 201.75 Petitions--general.
All petitions shall be written and shall state the petitioner's
grounds of interest in the subject matter, the facts relied upon, and
the relief sought, and shall cite the authority upon which the petition
rests. The petition shall be served upon all parties named therein or
affected thereby. Answers to petitions may be filed.
Sec. 201.76 Applications for Government aid.
Applications for operating-differential subsidies, charter of
Government-owned vessels, and other types of Government aid shall
conform to the requirements set forth in the various general orders and
other regulations of the Administration specifically provided therefor.
Sec. 201.77 Amendments or supplements to pleadings.
Amendments or supplements to any pleading will be allowed or refused
in the discretion of the Administration if the case has not been
assigned for hearing, otherwise in the discretion of the presiding
officer designated to conduct the hearing; Provided, That after a
prehearing conference has been held no amendment shall be allowed which
would substantially broaden the issues, unless an opportunity is
afforded all parties to answer such amended pleadings and to prepare for
hearing upon the broadened issues. The presiding officer may direct a
party to state its case more fully and in more detail by way of
amendment. If a response to an amended pleading is necessary, it may be
filed and served. Amendments or supplements allowed prior to hearing
will be served in the same manner as the original pleading. Whenever by
the regulations in this part a pleading is required to be subscribed,
the amendment or supplement shall also be subscribed.
Sec. 201.78 Petition for leave to intervene.
A petition for leave to intervene may be filed in any proceeding
before the Administration. The petition will be granted by the presiding
officer if the proposed intervenor establishes that it has a substantial
interest in the proceeding and will not unduly broaden the issues
therein or unduly delay the proceeding. All such petitions shall be
filed prior to the opening of the prehearing conference, or if none is
held, before the commencement of hearing, unless petitioner shows good
cause for allowing the petition at a later time. Intervention petitions
shall be served in the same manner as other petitions, and shall be
subject to answer. Intervention petitions will be granted where
necessary to protect substantial interests of the petitioner and where
intervention will not materially broaden the issues. A person granted
permission to intervene becomes a party to the proceeding.
Sec. 201.79 Motions.
All motions and requests for rulings shall state the relief sought,
the authority relied upon, and the facts alleged. If made before or
after the hearing, such motions shall be in writing. If made at the
hearing, they may be stated orally: Provided, however, That the
presiding officer may require that such motion be reduced to writing and
filed and served in the same manner as a formal motion. Answers to
formal motions shall comply with the requirements of Sec. 201.80.
Motions and answers thereto shall be addressed to the presiding officer
if the case is pending before such officer. Oral argument upon a written
motion in which an answer has been filed may be granted within the
discretion of the Administration or the presiding officer, as the case
may be. A repetitious motion will not be entertained.
Sec. 201.80 Answers to applications, petitions, or motions.
A pleading filed in response to an application, petition, or motion
is called an answer. An answer may be filed to any application,
petition, motion or pleading which is required to be served on the
answering party or noticed in the Federal Register. An answer to a
written application, petition, or motion shall be in writing and shall
be filed within ten days after service of the pleading which it answers.
Any new matter raised in an answer shall be deemed to be controverted. A
response to an answer is called a reply. A short reply restricted to
such new matters may be filed within five days of service of the answer.
Subpart H_Responsibilities and Duties of Presiding Officer (Rule 8)
Sec. 201.85 Commencement of functions of Department of Transportation
Office of Hearings.
In proceedings handled by the Department of Transportation Office of
Hearings, its functions shall attach upon notice of the institution of a
formal proceeding involving a prehearing conference and/or a hearing by
[General Order 41, 3d Rev., 29 FR 14475, Oct. 22, 1964; 29 FR 15374,
Nov. 17, 1964, as amended at 63 FR 9157, Feb. 24, 1998]
Sec. 201.86 Presiding officer.
An Administrative Law Judge in the Department of Transportation
Office of Hearings will be designated by the Department's Chief
Administrative Law Judge to preside at hearings required by statute, or
directed to be held under the Administration's discretionary authority
in hearings not required by statute, in rotation so far as practicable,
unless the Administration shall designate one or more of its officials
to serve as presiding officer(s) in hearings required by statute, or
member(s) of the staff in proceedings not required by statute.
[63 FR 9157, Feb. 24, 1998]
Sec. 201.87 Authority of presiding officer.
The officer designated to hear a case shall have authority to
arrange and issue notice of the date, time and place of hearings; under
appropriate circumstances consolidate dockets for joint hearing; sign
and issue subpoenas authorized by law; take or cause depositions to be
taken; rule upon proposed amendments or supplements to pleadings; hold
conferences for the settlement or simplification of matters embraced in
the proceedings; regulate the course of the hearing; prescribe the order
in which evidence shall be presented; dispose of procedural requests or
similar matters; hear and initially rule upon all motions and petitions
before him; administer oaths and affirmations; examine witnesses, direct
witnesses to testify or produce available evidence and to submit
reports, studies and analyses of data available to them which may be
generally relevant and material to the determination of any questions of
fact in issue; rule upon offers of proof and receive competent,
relevant, material, reliable, and probative evidence; exclude
irrelevant, immaterial, unreliable, repetitious or cumulative evidence;
exclude cross-examination which is primarily intended to elicit self-
serving declarations in favor of the witness; and limit cross-
examination of any questions of fact in issue; for a full and true
disclosure of the facts in issue; act upon petitions to intervene; act
upon submission of facts, or argument; initially consider offers of
settlement or other proposals of adjustment upon which recommendations
to the Administration may be made; hear oral argument at the close of
testimony; fix the time for filing briefs, motions and other documents
to be filed in connection with hearings and replies thereto; and issue
the initial or recommended decisions and dispose of any other pertinent
matter that normally and properly arises in the course of proceedings.
When the presiding officer is unavailable for any reason, and the
exercise of any of his powers and functions, as described herein, is
due, timely, and necessary, the Chief Administrative Law Judge may
exercise such powers and functions until the presiding officer becomes
available or until his successor is designated.
[General Order 41, 3d Rev., 29 FR 14475, Oct. 22, 1964; 29 FR 15374,
Nov. 17, 1964, as amended at 63 FR 9157, Feb. 24, 1998]
Sec. 201.88 Postponement or change of place by presiding officer.
If, in the judgment of the presiding officer, convenience or
necessity so requires he may postpone the time or change the place of
Sec. 201.89 Disqualification of presiding officer.
Any presiding officer may at any time withdraw if he deems himself
disqualified, in which case another presiding officer will be
designated. If a party to a proceeding, or his representative, files in
good faith a timely and sufficient affidavit of personal bias or
disqualification of a presiding officer, the Administration will
determine the matter as a part of the record and decision in the case.
Subpart I_Summary Disposition (Rule 9)
Sec. 201.91 Filing of motions, answers.
Any party or (if a petition to intervene shall have been filed but
not have been acted upon) any prospective party may at or before the
first prehearing conference in any proceeding, or at such later time as
might be allowed by the presiding officer, move with supporting
affidavits for a summary disposition in his favor of all or any part of
the proceeding. Any adverse party may within 20 days serve opposing
affidavits or may countermove for summary disposition. Oral argument
thereon may be granted in the discretion of the presiding officer.
Sec. 201.92 Ruling on motion.
The presiding officer may grant such motion if the application,
motion, or other pleadings, affidavits or depositions, if any, and
matters of official notice show that there is no genuine issue as to any
material facts, that there is no necessity that further facts be
developed in the record, and that such party is entitled to a decision
as a matter of law.
Sec. 201.93 Review of ruling, appeal.
The order of the presiding officer denying a motion for summary
disposition shall be subject to interlocutory appeal under the
provisions of Sec. 201.123. An order granting a motion for summary
disposition is automatically reviewable by the Administration in
accordance with the provisions of Sec. 201.133 and shall not be final
until acted upon by the Administration.
Subpart J_Prehearing Conference; Settlements; Procedural Agreements
Sec. 201.101 Prehearing conference.
Prior to any hearing a prehearing conference may be held before the
presiding officer. Written notice of a prehearing conference shall be
transmitted by the Secretary of the Administration or the Chief Hearing
Examiner to all parties of record including persons whose petitions for
leave to intervene in the proceeding have not
theretofore been granted, and where practicable, by general release to
the public press.
(a) At the prehearing conference the following matters, among
others, shall be considered: (1) Petitions for leave to intervene; (2)
motions for consolidation or severance of dockets for joint or separate
hearing to the extent that the Administration has not theretofore taken
specific action; (3) simplification and delineation of the issues to be
heard; (4) designation of matters in respect of which official notice
may be taken; (5) requests for discovery and production of evidence
considered to be generally relevant and material to the issues in the
proceeding; (6) stipulations; (7) limitation of number of witnesses,
particularly the avoidance of duplicate expert witnesses; (8) procedure
applicable to the proceeding; (9) offers of settlement, as hereinafter
to be more particularly discussed in Sec. 201.103; and (10) scheduling
of the dates for exchange of exhibits, written testimony both
affirmative and rebuttal and establishing the date, time and place for
(b) If deemed necessary or appropriate, the presiding officer may
also, on his own motion, or on motion of Public Counsel direct any party
to a proceeding to prepare and submit exhibits setting forth studies,
forecasts, or estimates on matters relevant and material to the issues
in the proceeding to be sponsored by witnesses available for cross-
Sec. 201.102 Prehearing rulings.
The presiding officer will, where practicable, issue prehearing
rulings, acting on petitions for leave to intervene, delineating the
issues, summarizing the rulings made at the conference, specifying a
schedule for the exchange of exhibits and written testimony, the date,
time and place of hearing and specifying a time for the filing of
exceptions to the rulings. The prehearing rulings shall be served upon
all parties to the proceeding and any persons who participated in the
conference. Exceptions to the prehearing rulings may be filed by any
such party or person within the time specified therein. The presiding
officer may serve amended rulings in the light of the exceptions
presented. Such rulings and amendments, if any, shall constitute the
official account of the conference and shall control the subsequent
course of the proceeding, but they may be reconsidered and modified at
any time to protect the public interest or to prevent injustice.
Sec. 201.103 Opportunity for agreement of parties and settlement of case.
Where time, the nature of the proceeding, and the public interest
permit, all interested parties shall have the opportunity for submission
to and consideration by the presiding officer of offers of settlement,
or proposals of adjustment together with facts and/or arguments relevant
to such offers or proposals without prejudice to the rights of the
parties. The presiding officer need not be present at any negotiations
of such nature. The presiding officer shall issue an initial or
recommended decision thereon recommending approval or disapproval of
such offer of settlement or proposal of adjustment to the Administration
for final action thereon. No agreement, offer, or proposal shall be
admissible in evidence over the objection of any party in any hearing on
the matter. When any settlement does not dispose of the whole
proceeding, the remaining issues shall be determined in accordance with
sections 7 and 8 of the Administrative Procedure Act.
Subpart K_Discovery and Depositions (Rule 11)
Sec. 201.109 Discovery and production of documents.
Upon request of any party showing good cause therefor, at the
prehearing conference or otherwise upon notice to all other parties, the
Administration or presiding officer may direct any party to produce and
permit the inspection and copying or photographing, by or on behalf of
the moving party, of any designated documents, papers, books, accounts,
letters, photographs, objects, or tangible things, not privileged which
constitute or contain evidence relating to any matter, not privileged,
which is relevant to the subject matter involved in the pending
proceeding, and which
are in his possession, custody or control. The order shall specify the
time, place, and manner of making the inspection and taking the copies
and photographs and may prescribe such terms and conditions as are just.
In lieu of such inspections the material may be produced in exhibit form
and served upon all parties to a formal proceeding. Such exhibits may
also, upon request of any party, be offered in evidence at a hearing.
Sec. 201.110 Depositions: request for orders to take; time of filing.
The Administration or presiding officer may, upon proper request of
a party to a proceeding or under circumstances deemed proper, issue an
order to take a deposition regarding any matter, not privileged, which
is relevant to the subject matter involved in the proceedings. A motion
to take a deposition shall be filed not less than fifteen (15) days
before the proposed date for taking the deposition, unless a shorter
period is fixed under Sec. 201.54, and shall set forth the reason for
the deposition, the place and time of taking, the officer before whom it
is to be taken, the name and address of each witness to be examined, if
known, and, if the name is not known, a general description sufficient
to identify him or the particular class or group to which he belongs,
and whether the deposition is to be based upon written interrogatories
or upon oral examination. If the deposition is to be based upon oral
examination, the motion shall contain a statement of the matters
concerning which each witness will testify. If the deposition is to be
based on written interrogatories, the motion shall be accompanied by the
interrogatories to be propounded, serially numbered. Copies of all
motions to take depositions, and accompanying interrogatories, if any,
shall conform to the requirements of subpart D of this part. Objection
to the taking of such depositions may be made in an answer to such
motion. Without prejudice to objection, the answer may also state
objection to any individual interrogatory, and if the deposition is
permitted, the presiding officer will rule upon such objections to
interrogatories. A party served with an order to take a deposition on
written interrogatories shall have ten (10) days after date of service
of such order unless a shorter period is fixed under Sec. 201.54,
within which to file and serve written cross interrogatories, which
shall be served pursuant to subpart D of this part. Answers to
applications for cross interrogatories may be filed in accordance with
Sec. 201.80. Upon the issuance of an order by the Administration or the
presiding officer for the taking of a deposition, the Docket Clerk shall
mail a copy thereof to all parties, including the party who requested
the deposition. An application to take a deposition in a foreign country
will be entertained when necessary or convenient, and authority to take
such deposition will be granted upon such notice and other terms and
directions as are lawful and appropriate.
Sec. 201.111 Contents of order.
The order issued authorizing the taking of a deposition will state
the name and address of each witness or a general description sufficient
to identify him or the particular class or group to which he belongs,
the matters concerning which the witness may be questioned, the place
where, the time when, and the officer before whom the deposition is to
be taken, any or all of which may or may not be the same as set forth in
the motion filed. If the deposition is to be taken upon written
interrogatories, a list of the interrogatories will accompany the order.
Sec. 201.112 Record of examination; oath; objections.
The officer before whom the deposition is to be taken shall put the
witness under oath and shall personally, or by someone acting under his
direction and in his presence, record the testimony of the witness. The
testimony shall be taken stenographically, shall be translated to
English, if necessary, and shall be transcribed unless the parties agree
otherwise. All objections made at the time of the examination to the
qualifications of the officer taking the deposition, or to the manner of
taking it, or to the evidence presented, or to the conduct of any party,
and any other objections to the proceedings, shall be noted by the
officer upon the
deposition. Any party served with a notice to take an oral deposition
may cross-examine a witness whose testimony is taken under such
deposition. In lieu of cross-examination, parties served with notice of
taking a deposition may transmit written interrogatories or cross-
interrogatories to the officer taking the deposition, who shall propound
them to the witness and record the answers verbatim together with any
objections interposed thereto by adverse parties.
Sec. 201.113 Submission to witness, changes, signing.
When the testimony is fully transcribed the deposition of each
witness shall be submitted to him for examination and shall be read to
or by him. Any changes in form or substance which the witness desires to
make shall be entered upon the deposition by the officer with a
statement of the reasons given by the witness for making them. The
deposition shall then be signed by the witness, unless the parties by
stipulation waive the signing or the witness is ill or cannot be found
or refuses to sign. If the deposition is not signed by the witness, the
officer shall sign it and state on the record the fact of the waiver or
of the illness or absence of the witness or the fact of the refusal to
sign, together with the reason, if any, given therefor; and the
deposition may then be used as fully as though signed, unless upon
objection the presiding officer holds that the reasons given for the
refusal to sign require rejection of the deposition in whole or in part.
Sec. 201.114 Certification and filing by officer; copies.
The officer taking the deposition shall certify on the deposition
that the witness was duly sworn by him and that the deposition is a true
record of the testimony given by the witness, and that said officer is
not of counsel or attorney to either of the parties and is not directly
or indirectly interested in the outcome of the proceeding or
investigation. He shall then securely seal the deposition in an envelope
endorsed with the title of the proceeding and marked ``Deposition of
(here insert name of witness)'', and shall promptly send the original
and two copies thereof, together with the original and two copies of all
exhibits, by registered mail to the Administration. Parties shall make
their own arrangements with the officer taking the deposition for copies
of the testimony and exhibits.
Sec. 201.115 Waiver of objections and admissibility.
Objections to the form of question and answer shall be made before
the officer taking the deposition by parties or representatives present,
and if not so made, shall be deemed waived. Depositions shall, when
offered at the hearing, be subject to proper legal objections.
Sec. 201.116 Time of filing.
Any depositions to be offered in evidence shall be filed with the
presiding officer not later than the close of the offering party's
Sec. 201.117 Inclusion in record.
No deposition or part thereof shall constitute a part of the record
in any proceeding until received in evidence.
Sec. 201.118 Witness fees; expenses of taking depositions.
Witnesses whose depositions are taken pursuant to the regulations in
this part, and the officer taking such deposition, shall severally be
entitled to the same fees and mileage as are paid in the courts of the
United States. All expenses of taking such depositions shall be paid by
the party at whose instance the deposition is taken.
Subpart L_Subpoenas (Rule 12)
Sec. 201.121 Application for subpoena ad testificandum.
An application for a subpoena requiring attendance of a witness at a
hearing may be made without notice by any party to the presiding
officer, or, in the event that a presiding officer has not been assigned
to a proceeding or the presiding officer is not available, to the Chief
Hearing Examiner, for action by him or by a member of the
Administration. A subpoena for the attendance of a witness shall be
issued on oral application at any time and shall be issued
upon request of any interested party upon tender of an original and two
copies of such subpoena. A record of the issuance of such a subpoena
shall be entered in the docket.
Sec. 201.122 Application for subpoena duces tecum.
An application for a subpoena duces tecum for documentary or
tangible evidence shall be in duplicate except that for good cause shown
it may be made during the course of a hearing on the record to the
presiding officer. Such application need not be served upon all parties.
All such applications, whether written or oral, shall contain a
statement or showing of general relevance and reasonable scope of the
evidence sought and shall be accompanied by an original and two copies
of the subpoena sought which shall describe the documentary or tangible
evidence to be subpoenaed with as much particularity as is feasible.
Sec. 201.123 Standards for issuance of subpoena duces tecum.
The officer considering any application for a subpoena duces tecum
shall issue the subpoena requested if he is satisfied the application
complies with this section and the request is not unreasonable,
oppressive, excessive in scope or unduly burdensome. No attempt shall be
made to determine the admissibility of evidence in passing upon an
application for a subpoena duces tecum and no detailed or burdensome
showing shall be required as a condition to the issuance of any
Sec. 201.124 Service and quashing of subpoenas.
Subpoenas issued under this section may be served upon the person to
whom directed in accordance with subpart D of this part. Any person upon
whom a subpoena is served may within seven (7) days after service or at
any time prior to the return date thereof, whichever is earlier, file a
motion to quash or modify the subpoena with the officer who issued the
subpoena for action by him, and serve a copy of such motion to quash
upon the party requesting the subpoena. If the person to whom the motion
to modify or quash the subpoena has been addressed or directed has not
acted upon such a motion by the return date, such date shall be stayed
pending his final action thereon. The Administration may at any time
review, upon its own initiative, the ruling of the officer denying a
motion to quash a subpoena. In such cases, the Administration may at any
time order that the return date of a subpoena which it has elected to
review be stayed pending Administration action thereon.
Sec. 201.125 Attendance and mileage fees.
Persons attending hearings under requirement of subpoenas are
entitled to the same fees and mileage as in the courts of the United
States, to be paid by the party at whose instance the persons are
Sec. 201.126 Service of subpoenas.
If service of subpoena is made by a United States marshal or his
deputy, such service shall be evidenced by his return thereon. If made
by any other person, such person shall make affidavit thereto,
describing the manner in which service is made, and return such
affidavit on or with the original subpoena. In case of failure to make
service, the reasons for the failure shall be stated on the original
subpoena. In making service the original subpoena shall be exhibited to
the person served, shall be read to him if he is unable to read, and a
copy thereof shall be left with him. The original subpoena, bearing or
accompanied by required return, affidavit, or statement, shall be
returned without delay to the Administration, or if so directed on the
subpoena, to the presiding officer before whom the person named in the
subpoena is required to appear.
Sec. 201.127 Subpoena of Administration employees, documents, or things.
No subpoena for the attendance of an Administration officer or
employee, or for the production of Administration documents or things
shall be complied with except upon written authorization of the General
Counsel upon written application by the party requesting the subpoena.
Subpart M_Hearing Procedures (Rule 13)
Sec. 201.131 Presentation of evidence.
(a) Testimony. Where appropriate, the Presiding officer may direct
that the testimony of witnesses be prepared in written exhibit form and
shall be served at designated dates in advance of the hearing. Evidence
as to events occurring after the exhibit-exchange dates shall be
presented by a revision of exhibits. Witnesses sponsoring exhibits shall
be made available for cross-examination. However, unless authorized by
the presiding officer, witnesses will not be permitted to read prepared
testimony into the record. The evidentiary record shall be limited to
factual and expert opinion testimony. Argument will not be received in
evidence but rather should be presented in opening and/or closing
statements of counsel and in briefs to the presiding officer
(b) Exhibits. All exhibits and responses to requests for evidence
shall be numbered consecutively by the party submitting same and
appropriately indexed as to number and title and shall be exchanged on
dates prior to the hearing prescribed in the prehearing rulings. Written
testimony should be identified alphabetically. Two copies shall be sent
to each party and two to the presiding officer. No response to a request
for evidence will be received into the record unless offered and
received as an exhibit at the hearing. The exhibits, other than the
written testimony, shall include appropriate footnotes or narrative
material explaining the source of the information used and the methods
employed in statistical compilations and estimates and shall contain a
short commentary explaining the conclusions which the offeror draws from
the data. Rebuttal exhibits should refer specifically to the exhibits
being rebutted. Where one part of a multipage exhibit is based upon
another part, appropriate cross-reference should be made. The principal
title of each exhibit should state precisely what it contains and may
also contain a statement of the purpose for which the exhibit is
offered. However, such explanatory statement, if phrased in an
argumentative fashion, will not be considered as a part of the
evidentiary record. Additional exhibits pertinent to the issues may be
submitted in a proceeding with the approval of the presiding officer.
(c) Cooperation on basic data. Parties having like interests are
specifically encouraged to cooperate with each other in joint
presentations particularly in such items as basic passenger, cargo, and
scheduling data compiled from official or semiofficial sources, and any
other evidence susceptible to joint presentation. Duplicate presentation
of the same evidence should be avoided wherever possible.
(d) Authenticity. The authenticity of all documents submitted as
proposed exhibits in advance of the hearing shall be deemed admitted
unless written objection thereto is filed prior to the hearing, except
that a party will be permitted to challenge such authenticity at a later
time upon a clear showing of good cause for failure to have filed such
(e) Statement of position and trial briefs. A written statement of
position should be exchanged by all counsel with copies to all other
parties prior to the beginning of the hearing: Provided, however, That
Public Counsel or counsel for a public body which has intervened as its
interests may appear, may offer his statement of position at the
conclusion of the evidentiary hearing, unless such is impracticable.
This statement should include a showing of the theory of the case of the
party submitting the statement and will not be subject to cross-
examination. Trial briefs are acceptable but will not be required.
Sec. 201.132 Conduct of the hearing.
(a) Order of presentation. Normally the order of presentation at the
hearing will be alphabetical in each of the following categories:
(1) MarAd statistical material.
(2) Shipper interests, United States and foreign government
(5) Public counsel.
Normally, rebuttal should be presented without any adjournment in the
(b) Burden of proof. The burden of proof shall be (1) upon an
applicant for any form of government aid or grant; and (2) upon a
proponent for the issuance of any rule or order within the jurisdiction
of the Administration. The burden of going forward with rebuttal
evidence in proceedings involving matters under paragraphs (b) (1) and
(2) of this section shall fall upon opposing intervenors. Whenever an
intervenor is permitted by the presiding officer to raise or advance a
new issue in the proceeding, the burden of proof as to such issue shall
fall upon such intervenor. If the burden of proof is met as to such new
issue, the other parties shall have the burden of going forward with
rebuttal evidence in such regard.
(c) Requirement for submission of corrected copies of exhibits. Each
party shall present three fully corrected copies of its exhibits to be
offered in evidence, one for the docket and two for the presiding
(d) Offer of exhibits in evidence. The exhibits and written
testimony sponsored by each witness shall be offered in evidence at the
close of his direct examination to the extent practicable. After ruling
upon motions to strike they shall be received in evidence subject to
cross-examination. The presiding officer, in his discretion, may defer
such ruling until after completion of cross-examination.
(e)(1) Cross-examination. Cross-examination shall be limited to the
scope of the direct examination and, except for Public Counsel and
counsel for public bodies which have intervened as their interests may
appear, to witnesses whose testimony is adverse to the party desiring to
cross-examine--this being intended specifically to prohibit so-called
``friendly cross-examination''. Cross-examination, which is not
necessary to test the truth and completeness of the direct testimony and
exhibits, will not be permitted.
(2) Re-cross-examination. Second rounds of cross-examination
normally will not be permitted unless it is necessary to cover new
matters raised by a subsequent examination. Cross-examination of any
particular witness shall be limited to one attorney for each party and
shall not include subjects which are not germane to the interest
represented by the cross-examiner.
(f) Oral motions. Oral presentation on any motion or objection shall
be limited to the party or parties making the motion or objection and
the party or parties against which the motion or objection is directed
and Public Counsel. Such presentation shall also be limited to one
attorney for each party.
(g) Official notice; public document items. Whenever there is
offered (in whole or in part) a public document, such as an official
report, decision, opinion, or published scientific or economic
statistical data issued by any of the executive departments (or their
subdivisions), legislative agencies or committees, or administrative
agencies of the Federal Government (including Government-owned
corporations), or a similar document issued by a State or its agencies,
and such document (or part thereof) has been shown by the offerer to be
reasonably available to the public, such document need not be produced
or marked for identification, but may be offered for official notice as
a public document item by specifying the document or relevant part
(h) Oral argument at hearings. A request for oral argument at the
close of testimony will be granted or denied by the presiding officer in
Sec. 201.133 Appeal from ruling of presiding officer.
Rulings of presiding officers may not be appealed prior to, or
during the course of, the hearing except where the presiding officer has
granted a Motion for Summary Disposition under subpart I of this part,
or in extraordinary circumstances where prompt decision by the
Administration is necessary to prevent unusual delay, expense, or
detriment to the public interest, in which instances the matter shall be
referred forthwith by the presiding officer to the Administration. Any
such appeal shall be filed within fifteen (15) days from the date of the
ruling by the presiding officer.
Sec. 201.134 Separation of functions.
The separation of functions as required by section 5(c) of the
Administrative Procedure Act shall be observed
in adversary proceedings involving controverted factual issues arising
under the regulations in this part.
Subpart N_Evidence (Rule 14)
Sec. 201.136 Evidence admissible.
In any proceeding under the regulations in this part all evidence
which is relevant, material, reliable and probative, and not unduly
repetitious or cumulative shall be admissible. Irrelevant and immaterial
or unduly repetitious or cumulative evidence shall be excluded.
Sec. 201.137 Rights of parties as to presentation of evidence.
Every party shall have the right to present his case or defense by
oral or documentary evidence, to submit rebuttal evidence, and to
conduct such cross-examination as may be required for a full and true
disclosure of the facts.
Sec. 201.138 Unsponsored written material.
(a) Material that may be deemed evidence. Where a formal hearing is
held, a party shall be afforded an opportunity to participate through
submission of relevant, material, reliable and probative written
evidence including official notice matters covered in Sec. 201.132(g):
Provided, That such evidence submitted by persons not present at the
hearing will not be made a part of the record if opposed to by any party
for good cause shown.
(b) Material that may not be deemed evidence. Letters expressing
views or urging action and other unsponsored written material in respect
of matters embraced in, or related to, a formal hearing will be placed
in the correspondence section of the docket of the proceeding. These
data are not to be deemed part of the evidence or part of the record in
the material unless sponsored at the public hearing by an authenticating
and supporting witness.
Sec. 201.139 Documents containing matter both material and not material.
Where written matter offered in evidence is embraced in a document
containing other matter which is not intended to be offered in evidence,
the party offering shall present the original document to all parties at
the hearing for their inspection, and shall offer a true copy of the
matter which is to be introduced unless the presiding officer determines
that the matter is short enough to be read into the record. Opposing
parties shall be afforded an opportunity to introduce in evidence, or by
stipulations other portions of the original document which are material
Sec. 201.140 Records in other proceedings.
When any portion of the record before the Administration in any
proceeding other than the one being heard is offered in evidence, a true
copy of such portion shall be presented for the record in the form of an
exhibit unless the parties represented at the hearing stipulate upon the
record that such portion may be incorporated by reference.
Sec. 201.141 Stipulations.
The parties may, by stipulation in writing filed at the prehearing
conference, or by written or oral stipulation presented at the hearing
or by written stipulation subsequent to the hearing, agree upon any
facts involved in the proceeding and include them in the record with the
consent of the presiding officer. Proposed written stipulations shall be
subscribed by the sponsors and served upon all parties of record. Only
upon acceptance by all parties to the proceeding may a stipulation be
noted for the record or received as evidence.
Sec. 201.142 Further evidence required by presiding officer
At any time during the hearing the presiding officer may call for
the production of further relevant and material evidence, reports,
studies, and analyses upon any issue, and require such evidence, where
available, to be presented by the party or parties concerned, either at
the hearing or adjournment thereof in accordance with Sec. 201.132(b).
Such material shall be received subject to appropriate motions, cross-
examination and/or rebuttal. If a witness refuses to testify or produce
the evidence as requested, the presiding officer shall report such
refusal to the Administration forthwith.
Sec. 201.143 Exceptions to rulings of presiding officer unnecessary.
Formal exceptions to rulings of the presiding officer are
unnecessary. It is sufficient that a party, at the time the ruling of
the presiding officer is made or sought, makes known the action which he
desires the presiding officer to take or his objection to an action
taken, and his grounds therefor.
Sec. 201.144 Offer of proof.
An offer of proof made in connection with an objection taken to any
ruling of the presiding officer rejecting or excluding proffered oral
testimony shall consist of a statement of the substance of the evidence
which counsel contends would be adduced by such testimony; and, if the
excluded evidence consists of evidence in documentary or written form or
of reference to documents or records, a copy of such evidence shall be
marked for identification and shall accompany the record as the offer of
Subpart O_The Record: Contents; Development; Perfection; Confidential
Treatment (Rule 15)
Sec. 201.146 Receipt of documents after hearing.
Documents to be submitted for the record after the close of the
hearing will not be received in evidence except upon ruling of the
presiding officer. Such documents when submitted shall be accompanied by
proof that copies have been served upon all parties, who shall have an
opportunity to comment thereon; and shall be received not later than ten
(10) days after the close of the hearing except for good cause shown,
and not less than ten (10) days prior to the date set for filing briefs.
Exhibit numbers should be assigned by counsel or the party. In computing
the time within which to file such documents or other writings the five
(5) additional days provided in Sec. 201.54 shall not apply. Documents
which are submitted but do not comply with the provisions of this rule
will be filed in the correspondence section of the docket.
Sec. 201.147 Official transcript.
The Administration will designate the official reporter for all
hearings. The official transcript of testimony taken, together with any
exhibits and any briefs or memoranda of law filed therewith shall be
filed with the Administration. Transcripts of testimony will be
available in any proceeding under the regulations in this section, and
will be supplied by the official reporter to the parties and to the
public except when required for good cause to be held confidential, at
rates not to exceed the maximum rates fixed by the contract between the
Administration and the reporter.
Sec. 201.148 Corrections of transcript.
Motions made at the hearing to correct the record will be acted upon
by the presiding officer. Motions made after the hearing to correct the
record as to matters of substance rather than form, shall be filed with
the presiding officer within ten (10) days after receipt of the
transcript, unless otherwise directed by the presiding officer, and
shall be served on all parties. Such motions may be in the form of a
letter and shall certify the date when the transcript was received. If
no objections are received within ten (10) days after date of service,
the transcript will, upon approval of the presiding officer, be changed
to reflect such corrections. If objections are received, the motion will
be acted upon with due consideration of the stenographic record of the
Sec. 201.149 Copies of data or evidence.
Every person compelled to submit data or evidence shall be entitled
to retain or procure a copy of transcript thereof on payment of proper
Sec. 201.150 Record for decision.
The transcript of testimony and exhibits, together with all papers
and requests (except the correspondence section of the docket),
including rulings and any recommended or initial decisions filed in the
proceeding shall constitute the exclusive record for decision. Final
decisions will be predicated
on the same record, including the initial decision of the presiding
Sec. 201.151 Objections to public disclosure of information.
Upon objection to public disclosure of any information sought to be
elicited during a hearing, and a showing of cause satisfactory to the
presiding officer, the witness shall disclose such information only in
the presence of the presiding officer, official reporter and such
attorneys or representatives of each party with demonstrated interests,
as the presiding officer shall determine and after all present have been
sworn to secrecy. The transcript of testimony shall be held
confidential. Within five (5) days after such testimony is given, or
document received, the objecting party shall file with the presiding
officer a verified written motion to withhold such information from
public disclosure, setting forth sufficient identification of same and
the basis upon which public disclosure should not be made. Copies of
said transcript and motion need not be served upon any other parties
than those sworn to secrecy unless so ordered by the presiding officer.
Subpart P_Briefs, Requests for Findings, Decisions, Exceptions (Rule 16)
Sec. 201.155 Briefs; request for findings.
The time for filing briefs to the presiding officer, and extensions
thereof, shall be fixed by him. The period of time allowed shall be the
same for all parties unless the presiding officer, for good cause shown,
directs otherwise. Normally there shall be an opening brief by the
moving parties, an answering brief by the proponents of a contrary
conclusion and a short reply by the moving parties. Briefs and
statements of position as authorized, shall be served upon all parties
pursuant to subpart D of this part. Briefs shall include a summary of
evidence, together with references to exhibit numbers and pages of the
transcript, and memoranda of law with appropriate citations of the
authorities relied upon. They shall contain proposed findings of fact
and conclusions in serially numbered paragraphs.
Sec. 201.156 Requests for extension of time for filing briefs.
Requests for extension of time within which to file briefs shall
conform to the requirements of Sec. 201.53. Except for good cause
shown, such requests shall be filed and served not later than five (5)
days before the expiration of the time fixed for the filing of briefs.
Sec. 201.157 Reopening of a case by presiding officer prior to decision.
At any time prior to the filing of his initial or recommended
decision, the presiding officer, either upon petition or upon his own
initiative may, for good cause shown and upon reasonable notice, reopen
the case for the receipt of further evidence.
Sec. 201.158 Decisions, authority to make and kinds.
To the presiding officer is delegated the authority to render
initial or recommended decisions in all proceedings before him,
including motions, petitions and other pleadings. Tentative or final
decisions will be rendered by the Administration. The same officers who
preside at the reception of evidence pursuant to section 7 of the
Administrative Procedure Act shall render the initial or recommended
decisions except where such officers become unavailable to the
Administration, in which case another Presiding Officer will be
designated to make such decision or certify the record to the
Administration. Where the Administration requires the entire record in
the case to be certified to it for initial decision, the Presiding
Officer shall first recommend a decision, except that in rule making:
(a) In lieu thereof the Administration may issue a tentative
decision or any of its responsible officers may recommend a decision or
(b) any such procedure may be omitted in any case in which the
Administration finds upon the record that due and timely execution of
its functions in the public interest imperatively and unavoidably so
Sec. 201.159 Decisions; contents and service.
All initial, recommended, tentative, and final decisions, whether
orally or in writing shall include a statement of findings and
conclusions, as well as the reasons or bases therefor, upon the material
issues presented, as well as a statement of the appropriate rule, order,
sanction, relief to be imposed, or the denial thereof. A copy of each
decision when issued or when transcribed if orally rendered (and all
orally presented decisions shall be stenographically recorded) shall be
served on the parties to the proceeding, and furnished to interested
persons upon request.
Sec. 201.160 Decision based on official notice.
Official notice may be taken of such matters as might be judicially
noticed by the courts, or of technical or scientific facts within the
general or specialized knowledge of the Administration as an expert body
or of a document required to be filed with or published by a duly
constituted governmental body: Provided, That where a decision or part
thereof rests on the official notice of a material fact not appearing in
the evidence of the record, the fact of official notice shall be so
stated in the decision, and any party, on timely request, shall be
afforded an opportunity to show the contrary.
Sec. 201.161 Exceptions to, and review by the Administration of
initial or recommended decisions.
Within twenty (20) days after the service date of the initial or
recommended decision, whether oral or in writing, unless a shorter
period is fixed under Sec. 201.54, any party may file exceptions to any
conclusions, findings, or statements contained in such decision, and a
brief in support of such exceptions. Such exceptions and brief shall
constitute one document, shall indicate with particularity alleged
errors, shall indicate pages of transcript and exhibit numbers when
referring to the record, and shall be served on all parties pursuant to
subpart D of this part. Whenever the presiding officer renders an
initial decision, in the absence of the filing of exceptions thereto, or
notice of review thereof by the Administration, such decision, shall
upon the issuance of an appropriate order by the Administration, become
the decision of the Administration. Upon the filing of exceptions to, or
notice of review of, an initial or recommended decision, such decision
shall become inoperative until the Administration determines the matter.
Where exceptions are filed to, or the Administration reviews, an initial
or recommended decision, the Administration, except as it may limit the
issues upon notice or by rule, will have all the powers which it would
have in making the initial decision. Whenever the Administration shall
determine to review an initial or recommended decision on its own
initiative, notice of such intention shall be served upon the parties
within thirty (30) days after the date when the initial or recommended
decision is orally rendered and, if in writing, served.
Sec. 201.162 Replies to exceptions.
Any party may file and serve a reply to exceptions within twenty
(20) days after date of service thereof, unless a shorter period is
fixed pursuant to Sec. 201.54. Such reply shall indicate pages of the
transcript and exhibit numbers when referring to the record.
Sec. 201.163 Request for extension of time for filing exceptions
and replies thereto.
Requests for extension of time within which to file exceptions, and
briefs in support thereof, or replies to exceptions shall conform to the
applicable provisions of subpart E of this part. Except for good cause
shown, such requests shall be filed and served not later than five (5)
days before the expiration of the time fixed for the filing of such
Sec. 201.164 Certification of record by presiding officer.
The presiding officer shall certify and transmit the entire record
to the Administration when: (a) Exceptions are filed or the time
therefor has expired, (b) notice is given by the Administration that the
initial or recommended decision will be reviewed on its own initiative,
or (c) the Administration requires the case to be certified to it for
Subpart Q_Oral Argument; Submittal for Final Decision (Rule 17)
Sec. 201.166 Oral argument.
If oral argument before the Administration is desired on exceptions
or replies to exceptions to an initial, recommended, or tentative
decision, or on a motion, petition, or application, a request therefor
shall be made in writing properly addressed to the Administration. Any
party may make such request irrespective of his filing exceptions or
replies. If a brief on exceptions or replies thereto are filed, the
request for oral argument shall be incorporated therein. Requests for
oral argument on any motion, petition, or application shall be made in
the motion, petition, or application or in the reply thereto. Requests
for oral argument will be granted or denied in the discretion of the
Administration, and, if granted, the notice of oral argument will set
forth the order of presentation and the amount of time to be allotted.
Those who appear before the Administration for oral argument should
confine their argument to points of controlling importance and shall
limit their argument to points upon which exceptions have been filed.
Where the facts of a case are adequately and accurately dealt with in
the initial, recommended, or tentative decision, parties should, as far
as possible, address themselves in argument to the conclusions. Effort
should be made by parties taking the same position to agree in advance
of the argument upon those who are to present their side of the case.
The names of persons who will argue and the amount of time requested by
each should be received by the Administration not later than ten (10)
days before the date set for the argument. Ordinarily, consolidation of
appearances at oral argument will permit the parties' interests to be
presented more effectively in the time allotted.
Sec. 201.167 Submission to Administration for final decision.
A proceeding will be deemed submitted to the Administration for its
determination as follows: (a) If oral argument is had, on the date of
completion thereof, or if memoranda on points of law are permitted to be
filed after argument, the last date of such filing; (b) if oral argument
is not had, the last date when exceptions or replies thereto are filed,
or if exceptions are not filed, the expiration date for such exceptions
or the date when all parties have stated that no exceptions will be
filed; (c) in the case of an initial decision, the date of notice of the
Administration to review the decision, if such notice is given.
Subpart R_Stay of Administration's Decision, Reopening of Proceedings
Sec. 201.171 Stay of Administration's decision.
The Administration's decision or order shall be stayed pending
resolution by the Administration of a petition for reopening, duly
filed, and for so long as such Administration's action has not been
finally disposed of in accordance with the provisions of section 7 of
Department of Commerce Order 117 (Revised).
Sec. 201.172 Time for filing petition to reopen.
Except for good cause shown, and upon leave granted, petition to
reopen under Sec. 201.174, shall be filed with the Administration
within twenty (20) days after the date of service of the
Administration's decision or order in the proceeding, unless a different
period is fixed under Sec. 201.54.
Sec. 201.173 Reopening by Administration and modification or setting
aside of decision.
Upon petition and a showing of compelling cause, filed in accordance
with Sec. 201.174, or on its own motion, the Administration may at any
time reopen any proceeding under the regulation in this part for
rehearing, reargument, or reconsideration in whole or in part. After
reasonable notice and opportunity for hearing or such other procedure as
the Administration may direct, the Administration may alter, modify or
set aside in whole or in part its decision therein if it finds such
action is required by changed conditions in fact or law or by the public
Sec. 201.174 Petition for reopening.
A petition for reopening for the purpose of rehearing, reargument,
or reconsideration, shall be made in writing, shall state the grounds
relied upon, and conform to the requirements of subpart D of this part.
If the petition is for the purpose of rehearing, said petition shall
state the nature and purpose of the new evidence to be adduced and that
such evidence was not available at the time of the prior hearing. If the
petition be for reargument or reconsideration, the matter claimed to
have been erroneously decided shall be specified and the alleged errors
briefly stated. In case of exceptional circumstances, satisfactorily
shown by the petitioner, a request for modification of rules or orders
may be made by telegram or otherwise, upon notice to all parties or
attorneys of record, but such request shall be followed by a petition
filed and served in accordance with subpart D of this part.
Sec. 201.175 Answers to petition to reopen.
Answers to petitions to reopen shall conform to the requirements of
subpart D of this part.
Subpart S_Judicial Standards of Practice (Rule 19)
Sec. 201.181 General matters.
(a) In general, the functions of the Administration involve hearing
procedures comparable to those of a court and accordingly parties to
proceedings before the Administration and persons representing these
parties are expected to conduct themselves with honor and dignity. For
the same reasons, the members of the Administration and those of its
employees who participate with the Administration in the determination
of formal proceedings are expected to conduct themselves with the same
fidelity to standards of propriety that characterizes a court and its
staff. The standing and the effectiveness of the Administration are in
direct relation to the observance by it, its staff and the parties and
attorneys appearing before it of the highest of judicial and
(b) It is essential in cases to be determined after notice and
hearing and upon a record, or in any other cases which the
Administration by order may designate, that the judicial character of
the Administration be recognized and protected. As a consequence, from
the time of the filing of an application or a petition which can be
granted by the Administration only after notice and opportunity for
hearing, or in the case of other matters from the time of notice by the
Administration that such matters shall be determined after notice and
opportunity for hearing, no ex parte communications, as hereinafter
defined, are to constitute or be considered part of the record on which
the final decision is to be predicated.
Sec. 201.182 Improper pressures.
It is determined to be improper that there be any effort by any
person interested in a case before the Administration to attempt to sway
the judgment of the Administration by undertaking to bring pressure or
influence to bear upon the Administration, its staff, or the presiding
officer assigned to the proceeding. It is further determined to be
improper that such interested persons or any member of the
Administration's staff or the presiding officer directly or indirectly
give statements to the press or radio, by paid advertisements or
otherwise, designed to influence the Administration's judgment in the
matter. In addition, it is further determined to be improper that any
person solicit communications to the Administration or any of its
members, its staff or the presiding officer in the case other than by
counsel of record who shall serve copies thereof on all other parties to
Sec. 201.183 Ex parte communications.
(a) Requests for expeditious treatment of matters pending with the
Administration are deemed communications on the merits and as such are
improper except when forwarded from parties to a proceeding and served
upon all other parties thereto. Such communications from parties to a
proceeding should be in the form of a motion and are to be dealt with as
such by the Administration, the presiding officer, and
the parties to the proceeding. Any such request which is not made as a
motion shall be placed in the public correspondence file and will not be
considered by the Administration or any of its staff members or the
presiding officer in connection with the disposition of the case.
(b) Written or oral communications involving any substantive or
procedural issue in a matter subject to public hearing directed to a
Member of the Administration, its staff, or the presiding officer in the
case, from any individual in private or public life shall be deemed a
private communication in respect of the merits of the case. These
communications, unless otherwise provided for by law or a published rule
of the Administration are deemed ex parte communications and are not to
be considered part of any record or the basis for any official action by
the Administration, members of its staff or the presiding officer:
Provided, however, That this prohibition shall not be determined to
apply to informal petitions or applications filed with the
Administration; the usual informal communications between counsel
including discussions directed toward the development of a stipulation
or settlement between parties; communications of a nature deemed proper
in proceedings in U.S. Federal courts; and communications which merely
inquire as to the status of a proceeding without discussing issues or
expressing points of view. Any prohibited communications in writing
received by a Member of the Administration, its staff or the presiding
officer shall be made public by placing it in the correspondence file of
the docket which is available for public inspection and will not be
considered by the Administration or the presiding officer as part of the
record for decision. If the ex parte communication is received orally, a
memorandum setting forth the substance of the conversation shall be made
and filed in the correspondence section of the appropriate public
Subpart T_Effective Date (Rule 20)
Sec. 201.185 Effective date and applicability of rules.
The regulations in this part shall become effective October 23,
1964, and shall apply only to cases which are designated for hearing on
or after October 23, 1964: Provided, however, That the regulations in
this part shall be applicable to cases designated for hearing prior to
October 23, 1964, if consolidated with a case designated for hearing on
or after that date. All other cases designated for hearing prior to
October 23, 1964, shall be governed by the rules in effect immediately
prior to such date.
PART 202_PROCEDURES RELATING TO REVIEW BY SECRETARY OF TRANSPORTATION
OF ACTIONS BY MARITIME SUBSIDY BOARD--Table of Contents
202.2 Time and place for filings.
202.3 Form of petitions, requests and replies.
202.4 Petitions and requests for review--content.
202.5 Replies and requests that review not be exercised--content.
202.6 Grant or denial of review.
202.7 Supplemental briefs.
202.8 Oral argument.
202.9 Decisions by the Secretary of Transportation.
202.10 Petitions for reconsideration.
202.11 Ex parte communications.
Authority: Sec. 204, 49 Stat. 1987, as amended; sec. 204(b), as
amended, 46 U.S.C. 1114(b); Reorganization Plan No. 7 of 1961 (26 FR
Source: 32 FR 2705, Feb. 9, 1967, unless otherwise noted.
Sec. 202.1 Purpose.
The rules of this part prescribe procedures relating to Secretarial
review of any decision, report, order or action of the Maritime Subsidy
Board (Board) pursuant to Department Order 117-A (31 FR 8087, 15331).
Section 6 of Department Order 117-A is reprinted here for the
convenience of the public.
Sec. 6. Review and finality of actions by Maritime Subsidy Board.
.01 The Secretary of Transportation (hereinafter referred to as
``Secretary'') may, on his own motion or on the basis of a petition
filed as hereinafter
provided, review any decision, report and/or order of the Maritime
Subsidy Board based on a hearing held pursuant to (a) statutory
requirements or (b) Board order, by entering a written order stating
that he elects to review the action of the Board. Copies of all orders
for review shall be served on all parties of record (which phrase
includes the Board). Petitions for review under this paragraph may be
filed by parties of record, shall be in writing, and shall state the
grounds upon which petitioner relies. Ten (10) copies of such petitions
for review, together with proof of service thereof on all parties of
record, shall be filed with the Secretary within fifteen (15) days after
the date of the service of the Board's decision, report or order.
Parties of record may file replies in writing thereto. Ten (10) copies
of such replies, together with proof of service thereof on the
petitioner and all other parties of record, shall be filed with the
Secretary within ten (10) days after the date the petition for review is
timely filed. Petitions for review and replies thereto shall be limited
to the record before the Board. If a petition for review is filed within
the time prescribed, a decision, report or order of the Board shall be
final fifteen (15) days after expiration of the time prescribed for
filing a reply thereto unless the Secretary, prior to expiration of the
fifteen (15) days, enters a written order granting the petition for
review. If no petition for review is filed within the time prescribed, a
decision, report or order of the Board shall be final twenty (20) days
after the date of service of the decision unless the Secretary, prior to
expiration of the twenty (20) days, enters a written order stating that
he elects to review the action of the Board. If upon any review the
decision of the Secretary rests on official notice of a material fact
not appearing in the evidence in the record, any party of record shall,
if request is made within ten (10) days after the date of service of the
Secretary's decision on said party, be afforded an opportunity to show
the contrary. The said ten (10) days shall constitute the period for a
``timely request'' within the meaning of section 7(d) of the
Administrative Procedure Act.
.02 The Secretary may on his own motion review all actions of the
Maritime Subsidy Board other than those referred to in paragraph .01 of
this section by entering a written order stating that he elects to
review the action of the Board. Any person having an interest in any
action of the Board under this paragraph shall have the privilege of
submitting to the Secretary within ten (10) days after the date of such
Board action, a request that the Secretary undertake such review. Such
request shall be in writing and shall state the grounds upon which the
person submitting the same relies and his interest in the action for
which review is requested. Ten (10) copies of such requests shall be
submitted to the Secretary. Any other person having an interest in such
matter shall have the privilege of submitting within fifteen (15) days
after the date of the Board's action, a written request that the
Secretary not exercise such review. Copies of request that the Secretary
undertake or not exercise review will be open for public inspection at
the office of the Secretary of the Board. If either a request that the
Secretary undertake review or a request that he not exercise review is
submitted within the time prescribed, an action of the Board shall be
final in ten (10) days after expiration of the time prescribed for
submission of a request that review not be exercised unless the
Secretary, prior to the expiration of the ten (10) days, enters a
written order stating that he elects to review the action of the Board.
If neither a request that the Secretary undertake review nor a request
that he not exercise review is submitted within the time prescribed, an
action of the Board shall be final in twenty (20) days after the date of
such action unless the Secretary, prior to expiration of the twenty (20)
days, enters a written order stating that he elects to review the action
of the Board. Copies of all orders for review shall be served upon the
Board, and upon all persons filing requests as herein described.
.03 If a timely petition for reconsideration is filed under the
rules prescribed by the Board, the time for filing a petition or request
for review by the Secretary under paragraph .01 or .02 of this section,
respectively, or the entry of an order by the Secretary on his own
motion electing to review an action of the Board under paragraph .01 or
.02 of this section, shall, in the case of actions under paragraph .01
of this section run from the date of service of the Board's action and,
in the case of actions under paragraph .02 of this section, run from the
date of the Board's action, finally disposing of the issues presented by
the petition for reconsideration.
.04 In computing any period of time under this section, the time
begins with the day following the act, event, or default, and includes
the last day of the period unless it is Saturday, Sunday, or national
legal holiday, in which event the period runs until the end of the next
day which is not a Saturday, Sunday, or such holiday. The prescribed
time for action by the Secretary in a proceeding in which additional
days have been added pursuant to the provisions of this paragraph shall
be extended by the total of such additional days.
.05 Petitions and requests for review by the Secretary shall not be
a. Unless the petitioner shall have first exhausted his
administrative remedies (other than a petition for reconsideration)
before the Maritime Subsidy Board; nor
b. With respect to interlocutory decisions of the Maritime Subsidy
Board in actions or proceedings referred to in paragraphs .01 and .02 of
.06 The Secretary may, for good cause and/or in order to prevent
undue hardship in any particular case, waive or modify any procedural
provision of this section by written order.
Sec. 202.2 Time and place for filings.
All petitions, requests and replies relating to Secretarial review
of Maritime Subsidy Board actions shall be filed with the Office of the
Secretary of Transportation, Department of Transportation. Such papers
shall be filed in accordance with the provisions of and within the time
periods prescribed by Department Order 117-A.
Sec. 202.3 Form of petitions, requests and replies.
(a) All papers presented to the Secretary, other than records, shall
bear on the cover the name and post office address of the party, and the
name and address of the principal attorney or authorized representative
(if any) for the party concerned. Certification shall be made that
service of the paper has been made upon all parties of record (if any)
and upon the Secretary of the Maritime Subsidy Board. One copy of every
paper filed with the Secretary must in addition bear at its close the
hand written signature of the party or attorney.
(b) All papers presented to the Secretary, other than records,
shall, unless they are fewer than 10 pages in length, be preceded by a
subject index of the matter contained therein, with page references, and
a table of the cases (alphabetically arranged), textbooks, statutes and
other material cited, with references to the pages where they are cited.
(c) Whenever a reference is made to a transcript, exhibit or other
part of the record, such reference must be accompanied by a specific
citation identifying the document and indicating the relevant page
number of the document concerned.
(d) Papers filed with the Secretary should be logically arranged,
with proper headings, concise, and free from irrelevant and unduly
(e) It will not be necessary to reproduce the opinion of the Board.
Sec. 202.4 Petitions and requests for review--content.
Petitions and requests for review shall contain in the order here
(a) A reference to the decision, report, order or action of the
(b) A concise statement of the interest of the party submitting the
(c) A concise summary statement of the case containing that which is
material to the consideration of the questions presented;
(d) A listing of each of the grounds upon which the party seeking
review relies, expressed in the terms and circumstances of the case,
each ground set forth in a separate, numbered paragraph;
(e) The argument, generally amplifying the material in paragraph (d)
of this section and exhibiting clearly the points of law, policy and
fact being presented, citing the authorities, statutes and other
material relied upon. The argument should separately identify and treat
each of the grounds upon which review is sought. In cases where
reversible legal error is contended, a full legal argument on the points
concerned should be presented. In cases where policy error is contended,
it should be pointed out what policy of the Board is alleged to be
wrong, what is wrong with it and what policy the submitting party
advocates as the correct one. In cases where reversible factual error is
contended, the findings of fact alleged to be erroneous should be
pointed out along with citations to the record where appropriate. The
party should further indicate precisely what it contends to be the
correct findings of fact, with supporting references;
(f) A conclusion, specifying with particularity the action which the
submitting party believes the Secretary should take.
Sec. 202.5 Replies and requests that review not be exercised--content.
Replies and requests that review not be exercised shall contain in
the order here indicated--
(a) A reference to the decision, report, order, or action of the
(b) A concise statement of the interests of the party submitting the
(c) Where deemed necessary by the submitting party, a concise
summary statement of the case explicitly pointing out any inaccuracy or
omission in the statement of the other side, with references to the
record where appropriate;
(d) A listing of the reasons why review should not be exercised,
each reason set forth in a separate, numbered paragraph;
(e) The argument generally amplifying the material in paragraph (d)
of this section and, in addition, specifically replying to the points of
law, policy and fact presented by the other side (each stated
separately) citing the authorities, statutes, and other material relied
upon by the submitting party;
(f) A conclusion, specifying with particularity the action which the
submitting party believes the Secretary should take.
Sec. 202.6 Grant or denial of review.
(a) A petition or request for review by the Secretary of any
decision, report, order or action of the Board will not be granted
unless significant and important questions of over-all policy requiring
the Secretary's attention are involved or there appears to be
significant legal, policy, or factual error in the Board's action.
(b) The parties and the Secretary of the Board will be notified, by
Order, of the Secretary's decision to review a case on his own motion,
and of his decision to review or to deny review of a case where a
petition or request concerning review has been filed.
(c) Promptly upon notice of a decision by the Secretary to review a
case subject to review under section 6.01 of Department Order 117-A, the
Secretary of the Board shall certify to the Secretary the complete
record of the proceeding before the Board and shall serve upon all
parties a copy of such certification which shall adequately identify the
matter so certified. The Secretary of the Board shall further serve upon
all parties a copy of any further communication from the Board or
Maritime Administration on such a case.
Sec. 202.7 Supplemental briefs.
If an order taking review is entered by the Secretary, further
briefs supplementing the arguments set forth in the petitions and
replies may be requested in cases where the Secretary deems such to be
appropriate and desirable.
Sec. 202.8 Oral argument.
Generally, oral argument will not be necessary. However, the
Secretary reserves the right to schedule such when he deems it
Sec. 202.9 Decisions by the Secretary of Transportation.
Decisions of the Secretary will be reached in accordance with
applicable law and the evidence. Upon the determination of a case taken
under review by the Secretary, a written decision and opinion which
states the Secretary's conclusions and an explanation thereof will be
Sec. 202.10 Petitions for reconsideration.
Petitions for reconsideration of decisions by the Secretary in any
case taken under review will be considered, upon a showing of good
cause, if filed within ten (10) days of service of the Secretary's
Sec. 202.11 Ex parte communications.
Oral or written communications with the Department concerning a
matter subject to Secretarial review under section 6.01 of Department
Order 117-A, unless otherwise provided by law or by order, rule, or
regulation of the Department, shall be deemed ex parte communications
and shall not be part of the record and shall not be considered in
making any recommendation, decision or action; Provided, however, That
this rule shall not apply to customary informal communications with
Department counsel, including discussions directed toward the
development of a stipulation or settlement between parties;
communications of a nature deemed proper in proceedings in U.S. Federal
courts; and communications with Department counsel which merely inquire
as to procedures or the status of a proceeding without discussing issues
or expressing points of view. Any
written communication subject to the above stated rule received by the
Department shall be placed in the correspondence file of the case, which
is available for public inspection. If an oral communication subject to
the above stated rule is received, a memorandum setting for the
substance of the conversation shall be made and placed in the
PART 203_PROCEDURES RELATING TO CONDUCT OF CERTAIN HEARINGS UNDER THE
MERCHANT MARINE ACT, 1936, AS AMENDED--Table of Contents
203.1 Scope of rules.
203.3 Opposition to applications.
203.5 Types of hearings.
203.6 Oral evidentiary hearing before one or more members.
Authority: Secs. 204(b), 605(c) and 805(a), Merchant Marine Act,
1936, as amended (46 U.S.C. app. 1114(b), 1175(c) and 1223(a)).
Source: 55 FR 12358, Apr. 3, 1990, unless otherwise noted.
Sec. 203.1 Scope of rules.
(a) The provisions of this part apply to applications which involve
statutorily mandated hearings under sections 605(c) and 805(a) of the
Merchant Marine Act, 1936, as amended (46 U.S.C. app. 1175(c), 1223(a)),
hereinafter referred to as the ``Act'', conducted by the Maritime
Administrator or Maritime Subsidy Board of the Maritime Administration,
hereinafter referred to collectively as the ``Administration''.
(b) The provisions of this part are to be construed consistently
with the Administration Rules of Practice and Procedure in 46 CFR part
201. If this part and 46 CFR part 201 conflict, this part shall govern.
Sec. 203.2 Applications.
(a) Notice of all applications subject to this part shall be
published in the Federal Register, in accordance with the provisions of
46 CFR 201.72.
(b) All applications under section 605(c) of the Act shall specify,
at a minimum, full details of the existing or proposed new or amended
service, to include itineraries and the number and type of vessels
currently operated in the trade or trade route, the number and type of
vessels proposed to be operated in the trade or trade route, the
frequency of sailings and port calls and the nature and extent of U.S.-
flag and any foreign-flag competition. As a matter of discretion, the
Administration may request additional information, which may be
protected by a confidentiality ruling, if justified. If the application
is one for additional service on a route in which the applicant has an
established service, or for an existing service, then the applicant must
include information on its previous three years of operation. Applicants
for permission under section 805(a) of the Act must describe clearly the
scope of permission sought, including details of proposed domestic
service and existing or proposed foreign service, as well as the
applicant's operating structure.
(c) Applications under section 605(c) of the Act shall be filed on
Form MA-964, in accordance with the instructions annexed thereto. Copies
of Form MA-964 may be obtained on request from the Secretary of the
(d) Applications for permission under section 805(a) of the Act
shall be submitted in accordance with the procedures set forth in 46 CFR
part 380, and shall comply with all of the requirements of that part.
Sec. 203.3 Opposition to applications.
(a) Required documents. A person seeking to oppose an application
shall file with the Secretary of the Administration, and concurrently
serve upon the applicant, a petition for leave to intervene, together
with an answer, within the time period specified in the Federal Register
notice of the application. Normally, twenty days will be provided.
(b) Petition for leave to intervene. The petition for leave to
intervene shall specify the basis upon which such person asserts a right
to intervene and shall set forth with particularity:
(1) The number and type of U.S.-flag vessels currently operated by
the person seeking intervention in the trade or trade route to which the
(2) The frequency of sailings of vessels operated by such person in
the trade or trade route to which the application pertains in the 36
calendar months immediately preceding the date of the application.
(3) The specific ports of call conducted by such person in the trade
or trade route to which the application pertains in the 36 calendar
months immediately preceding the date of the application.
(4) The average annual carriage by such person for the past 36
months on the trade route to which the application pertains.
(5) If applicable, specific information detailing firm and definite
plans for the inauguration of a new service, including, as appropriate,
but not limited to, approval by the board of directors or general
partners, membership in applicable conference agreements, office
openings or the retention of agents in the proposed service area,
acquisition of vessels and related equipment, subsidy applications,
applications for any needed Government approvals or advertisement for
the proposed service.
(6) Such other information as the person believes should be
considered in a determination of such person's right to intervene.
(c) Answer. (1) The answer shall be simultaneously filed with the
petition for leave to intervene and shall specify the basis upon which
such person asserts the application should be denied or granted subject
(2) The answer shall set forth with particularity:
(i) The ground upon which opposition is based;
(ii) The factual matters which such person believes must be
determined by the Administration;
(iii) The legal matters which such person believes must be
determined by the Administration;
(iv) For each factual and legal matter raised such person's position
and basis therefor; and
(v) The precise nexus between each factual and legal matter raised
and the decision of the Administration.
(d) Right to intervene in Opposition to applications. (1) Leave to
intervene in opposition to applications under section 605(c) of the Act
will only be granted to operators of U.S.-flag vessels, and only to the
extent, as demonstrated by the petition for leave to intervene, that
such person provides an existing service, or that such person has firm
and definite plans to provide a service, by a showing that its vessels
operate in the same trade or on the same trade route as that proposed by
the applicant and so operate in a manner competitive with the specific
service proposed by the applicant. Although persons seeking intervention
need not call at the same specific ports proposed by the applicant by
direct vessel calls, any filing based on intermodal service in
opposition to an application shall demonstrate that such person
regularly competes by intermodal service for cargo moving to or from
ports in the service proposed by the applicant. The burden of
demonstrating competition between the vessels of the person seeking
intervention and those of the applicant will be with the person seeking
such intervention. Leave to intervene will not be granted to those
conducting a competing service on an intermittent or de minimis basis.
(2) Leave to intervene in opposition to applications under section
805(a) of the Act will be granted, as provided in the statute, to every
person, firm, or corporation ``having any interest'' in such
Sec. 203.4 Replies.
Within ten (10) days after the date for filing answers, the
applicant may file a reply specifically addressed to the issues raised
in the answers and to oppose the grant to any petitioner of leave to
Sec. 203.5 Types of hearings.
(a) Oral Evidentiary Hearing: If, upon review of the application,
answers, petitions to intervene and replies, the Administration
determines that the proceeding involves a disputed issue of material
fact which cannot be resolved on the basis of available information of
record, and that the case is anticipated to involve the submission of
extensive evidence, or the Administration determines that it is
otherwise appropriate, the Administration may issue an order referring
the case to an Administrative
Law Judge for oral evidentiary hearing. Such hearing shall be conducted
in accordance with the procedures set out in 46 CFR part 201. The
Administration may resolve issues of intervention in such order or refer
such issues to the Administrative Law Judge. The burden of establishing
that there is a disputed issue of material fact is upon the party
seeking the oral evidentiary hearing.
(b) Hearing on Submission of Written Evidence and Argument: If, upon
review of the application, answers, petitions to intervene and replies,
the Administration determines that the proceeding involves a disputed
issue of material fact which cannot be resolved on the basis of
available information of record, but which is not anticipated to involve
the submission of extensive evidence, the Administration may fulfill the
hearing requirement in sections 605(c) and 805(a) of the Act by
rendering a decision solely on the merits of papers submitted, provided
that a full and true disclosure of the facts is made and such procedure
is fair to all parties. The Administration may, in its discretion,
direct the submission of briefs on legal issues together with evidence
in written form, and/or the holding of oral argument before the
Administration prior to issuing its final decision on the proceeding.
(c) Show Cause Proceeding: If, upon review of the application,
answers, petitions to intervene and replies, the Administration
determines that the proceeding does not or is not likely to involve a
disputed issue of material fact or that if such facts exist they can be
resolved on the basis of available information subject to official
notice, and if the case is not anticipated to involve the submission of
extensive evidence, the Administration may determine to handle the
matter by show-cause proceeding. In that event, it will issue a decision
setting out its tentative conclusions on all of the matters of fact and
law at issue in the proceeding. A Notice summarizing such decision shall
be published in the Federal Register in accordance with 46 CFR 201.72.
Interested persons may file comments, including support or rebuttal for
any matter officially noticed, within 30 days of the date of service of
the tentative decision and responses to such comments shall be filed
within ten days thereafter unless a shorter or longer period is provided
by the Administration for such comments and answers.
Sec. 203.6 Oral evidentiary hearing before one or more members.
If an oral evidentiary hearing is to be conducted, the Maritime
Administration, or the Maritime Subsidy Board or one or more of its
members, may conduct such hearing. A member who is not present at the
hearing may participate in the consideration and the decision of the
case where the oral evidentiary hearing, if held, has been
stenographically recorded in full and transcribed for the member's
PART 204_CLAIMS AGAINST THE MARITIME ADMINISTRATION UNDER THE FEDERAL
TORT CLAIMS ACT--Table of Contents
204.1 Scope and procedure for filing claims.
204.2 Claims payable.
204.3 Claims not payable.
204.4 Time limitations on claims.
204.5 Notification to claimant of action on claim.
204.6 Payment of claims.
204.7 Delegation of authority.
204.8 Where to file claims.
204.9 Indemnity or contribution.
204.10 Attorney's fees.
Authority: 28 U.S.C. 2672; 28 CFR 14.11; 49 CFR 1.45(a)(2), (3), and
Source: 50 FR 25711, June 21, 1985, unless otherwise noted.
Sec. 204.1 Scope and procedure for filing claims.
This part prescribes the requirements and procedure for
administrative settlement of claims against the United States, involving
the Maritime Administration, under the Federal Tort Claims Act, based on
death, personal injury, or damage to or loss of property. The
controlling regulations are promulgated by the Department of Justice at
28 CFR Part 14--Administrative Claims Under Federal Tort Claims Act.
These regulations supplement those of the Department of Justice and
provide specific guidance regarding claims processing in the Maritime
Sec. 204.2 Claims payable.
Claims for death, personal injury, or damage to or loss of real or
personal property are payable when the death, injury or damage is caused
by a negligent or wrongful act or omission of an employee of the
Maritime Administration, while acting within the scope of employment and
under circumstances in which the United States, if a private person,
would be liable to the claimant under the law of the place where the act
or omission occurred.
Sec. 204.3 Claims not payable.
A claim is not payable under the regulations in this part 204, if
such tort claim is excluded from the scope of the Federal Tort Claims
Act, as amended, pursuant to 28 U.S.C. 2680.
Sec. 204.4 Time limitations on claims.
(a) A claim can be settled only if presented in writing within two
years after it accrues.
(b) The two year statute of limitations is not tolled until the
Office of the Chief Counsel of the Maritime Administration receives from
a claimant, or the claimant's duly authorized agent or legal
representative, an executed Standard Form 95, ``Claims for Damage,
Injury, or Death,'' or written notification of an incident, together
with a claim for money damages in a sum certain, for death, personal
injury, or damage to or loss of real or personal property. When a claim
is received in any office, mail unit, or other Maritime Administration
activity other than the Office of the Chief Counsel, such office, unit
or activity shall transmit it to the Office of the Chief Counsel without
[50 FR 25711, June 21, 1985, as amended by 64 FR 54782, Oct. 8, 1999]
Sec. 204.5 Notification to claimant of action on claim.
(a) If a claim is approved (either for the amount claimed or less
than such full amount), the claimant, prior to the disbursement of an
award, shall sign a document releasing the United States, its agents and
employees from all further claims relating to the incident giving rise
to the approved claim.
(b) If the claim is finally denied, the official vested with such
authority shall inform the claimant by certified or registered mail of
the final denial of the claim. Notification of final denial shall
include a statement that a claimant who does not accept or is
dissatisfied with the action may institute suit against the United
States not later than six months after the date of mailing of the notice
of final denial.
(c) A claimant may regard the failure of the Maritime Administration
to make a final disposition of a claim within six months after the date
of receipt of the claim by the Maritime Administration as a final denial
for the purpose of filing suit.
Sec. 204.6 Payment of claims.
(a) Once the amount to be paid has been agreed upon, the agency
shall attempt to forward a check for such amount to the claimant within
(b) If a claimant is represented by an attorney, both the claimant
and the claimant's attorney shall be designated as payees on any check
delivered to the claimant's attorney.
Sec. 204.7 Delegation of authority.
(a) Subject to written approval of the Attorney General of the
United States of any payment in excess of $100,000, the Chief Counsel of
the Maritime Administration is authorized to approve the award,
compromise, or settlement of any tort claim and to authorize payment of
(b) The Chief Counsel is authorized to deny any claim and to settle
and authorize payment of any tort claim involving the Maritime
Administration in an amount not exceeding $100,000.
[64 FR 54783, Oct. 8, 1999]
Sec. 204.8 Where to file claims.
Claimants must file claims with the Chief Counsel (MAR-220),
Maritime Administration, Department of Transportation, Room 7232, SW,
Washington, DC 20590 at the Nassif Building, 7th and D Streets.
[64 FR 54783, Oct. 8, 1999]
Sec. 204.9 Indemnity or contribution.
(a) Sought by the United States. If a claim arises under
circumstances in which the United States is entitled to indemnity or
contribution under a contract or the applicable law governing joint
tort-feasors, the Chief Counsel of the Maritime Administration shall
notify the third party of the claim and request the third party to honor
its obligation to the United States or to accept its share of joint
liability. If the issue of third party indemnity or contribution is not
satisfactorily adjusted, the underlying claim shall be settled only
after consultation with the Department of Justice as provided in 28 CFR
(b) Sought from the United States. Claims for indemnity or
contribution from the United States shall be settled under this part
only if the incident giving rise to liability and the claim is otherwise
cognizable under this part.
Sec. 204.10 Attorney's fees.
Attorney's fees for any claim settled under this part are limited to
not more than twenty percent of the amount paid in settlement.
PART 205_AUDIT APPEALS; POLICY AND PROCEDURE--Table of Contents
205.4 Finality of decisions.
205.5 Contracts containing disputes article.
Authority: Sec. 204, 49 Stat. 1987, 1998, 2004, 2011; 46 U.S.C.
1114, 1155, 1176, 1212.
Source: 66 FR 23861, May 10, 2001, unless otherwise noted.
Sec. 205.1 Purpose.
This part establishes the policy and procedure for parties to use
when seeking redress and appeals of audit decisions involving contracts
with the Maritime Subsidy Board or the Maritime Administration (MARAD,
we, our, or us). A party to a contract (you or your) may appeal MARAD's
findings, interpretations, or decisions of annual or special audits.
Sec. 205.2 Policy.
If you disagree with audit findings and fail to settle any
differences with the appropriate Office Director, you may ask the
appropriate office Associate Administrator to review the audit findings.
If you disagree with the Associate Administrator, you may appeal to the
Maritime Administrator (Administrator).
Sec. 205.3 Procedure.
(a) You have 90 days from the date you receive the initial audit
findings to file a written request for review of the audit findings with
the appropriate Associate Administrator. Your written request must state
the legal or factual bases for your disagreement. The appropriate
Associate Administrator will issue a written determination.
(b) You have 30 days following the Associate Administrator's final
audit determination to submit your appeal in writing to the
Administrator. Your written appeal must set forth the legal and factual
bases for your appeal. The Administrator may, at his or her discretion,
extend the time limitation in the case of extenuating circumstances.
(c) We will notify you, in writing, if you must submit additional
facts for our consideration of the appeal. We will notify you, in
writing, once the Administrator has made a decision regarding your
Sec. 205.4 Finality of decisions.
The Administrator's decision will be the final administrative action
on all audit appeals.
Sec. 205.5 Contracts containing disputes article.
When a contract contains a disputes article, the disputes article
will govern the bases for negotiating disputes regarding audit findings,
interpretations, or decisions made by MARAD and any appeals.
SUBCHAPTER B_REGULATIONS AFFECTING MARITIME CARRIERS AND RELATED
PART 221_REGULATED TRANSACTIONS INVOLVING DOCUMENTED VESSELS AND OTHER
MARITIME INTERESTS--Table of Contents
221.5 Citizenship declarations.
221.7 Applications and fees.
Subpart B_Transfers to Noncitizens or to Registry or Operation Under
Authority of a Foreign Country
221.11 Required approvals.
221.13 General approval.
221.15 Approval for transfer of registry or operation under authority of
a foreign country or for scrapping in a foreign country.
221.17 Sale of a documented vessel by order of a district court.
221.19 Possession or sale of vessels by mortgagees or trustees other
than pursuant to court order.
Subpart C [Reserved]
Subpart D--Transactions Involving Maritime Interests in Time of War or
National Emergency Under 46 App. U.S.C. 835 [Reserved]
Subpart E_Civil Penalties
221.65 Criteria for determining penalty.
221.67 Stipulation procedure.
221.69 Hearing Officer.
221.71 Hearing Officer referral.
221.73 Initial Hearing Officer consideration.
221.75 Response by party.
221.77 Disclosure of evidence.
221.79 Request for confidential treatment.
221.85 Hearing procedures.
221.89 Hearing Officer's decision.
221.93 Collection of civil penalties.
Subpart F--Other Transfers Involving Documented Vessels [Reserved]
Subpart G_Savings Provisions
221.111 Status of prior transactions--controlling dates.
Authority: 46 App. U.S.C. 802, 803, 808, 835, 839, 841a, 1114(b),
1195; 46 U.S.C. chs. 301 and 313; 49 U.S.C. 336; 49 CFR 1.66.
Source: 57 FR 23478, June 3, 1992, unless otherwise noted.
Sec. 221.1 Purpose.
(a) This part implements statutory responsibilities of the Secretary
of Transportation (the Secretary) with respect to:
(1) The regulation pursuant to 46 App. U.S.C. 808 of transactions
involving transfers of:
(i) An interest in or control of Documented Vessels owned by
Citizens of the United States (including the Transfer of a Controlling
Interest in such owners) to Noncitizens or;
(ii) A Documented Vessel to registry or Operation under Authority of
a Foreign Country or for scrapping in a foreign country; and
(2) Transactions involving maritime interests in time of war or
national emergency under 46 App. U.S.C. 835.
(b) The responsibilities in paragraph (a) (1) and (2) of this
section have been delegated by the Secretary to the Maritime
[57 FR 23478, June 3, 1992, as amended at 63 FR 6880, Feb. 11, 1998]
Sec. 221.3 Definitions.
For the purpose of this part, when used in capitalized form:
(a) Bowaters Corporation means a Noncitizen corporation organized
under the laws of the United States or of a State that has satisfied the
requirements of 46 App. U.S.C. 883-1(a)-(e) and holds a valid
Certificate of Compliance issued by the Coast Guard.
(b) Charter means any agreement or commitment by which the
possession or services of a vessel are secured for a
period of time, or for one or more voyages, whether or not a demise of
(c) Citizen of the United States means a Person (including
receivers, trustees and successors or assignees of such Persons as
provided in 46 App. U.S.C. 803), including any Person (stockholder,
partner or other entity) who has a Controlling Interest in such Person,
any Person whose stock or equity is being relied upon to establish the
requisite U.S. citizen ownership, and any parent corporation,
partnership or other entity of such Person at all tiers of ownership,
who, in both form and substance at each tier of ownership, satisfies the
(1) An individual who is a Citizen of the United States, by birth,
naturalization or as otherwise authorized by law;
(2) A corporation organized under the laws of the United States or
of a State, the Controlling Interest of which is owned by and vested in
Citizens of the United States and whose chief executive officer, by
whatever title, chairman of the board of directors and all officers
authorized to act in the absence or disability of such persons are
Citizens of the United States, and no more of its directors than a
minority of the number necessary to constitute a quorum are Noncitizens;
(3) A partnership organized under the laws of the United States or
of a State, if all general partners are Citizens of the United States
and a Controlling Interest in the partnership is owned by Citizens of
the United States;
(4) An association organized under the laws of the United States or
of a State, whose chief executive officer, by whatever title, chairman
of the board of directors (or equivalent committee or body) and all
officers authorized to act in their absence or disability are Citizens
of the United States, no more than a minority of the number of its
directors, or equivalent, necessary to constitute a quorum are
Noncitizens, and a Controlling Interest in which is vested in Citizens
of the United States;
(5) A joint venture, if it is not determined by the Maritime
Administrator to be in effect an association or a partnership, which is
organized under the laws of the United States or of a State, if each
coventurer is a Citizen of the United States. If a joint venture is in
effect an association, it will be treated as is an association under
paragraph (c)(4) of this section, or, if it is in effect a partnership,
will be treated as is a partnership under paragraph (c)(3) of this
(6) A Trust described in paragraph (t)(1) of this section.
(d) Controlling interest owned by and vested in Citizens of the
United States means that--
(1) In the case of a corporation:
(i) Title to a majority of the stock thereof is owned by and vested
in Citizens of the United States, free from any trust or fiduciary
obligation in favor of any Noncitizen;
(ii) The majority of the voting power in such corporation is vested
in Citizens of the United States;
(iii) Through no contract or understanding is it so arranged that
the majority of the voting power may be exercised, directly or
indirectly, in behalf of any Noncitizen; and
(iv) By no other means whatsoever control of the corporation is
conferred upon or permitted to be exercised by any Noncitizen;
(2) In the case of a partnership, all general partners are Citizens
of the United States and ownership and control of a majority of the
partnership interest, free and clear of any trust or fiduciary
obligation in favor of any Noncitizen, is vested in a partner or
partners each of whom is a Citizen of the United States;
(3) In the case of an association, a majority of the voting power is
vested in Citizens of the United States, free and clear of any trust or
fiduciary obligation in favor of any Noncitizen; and
(4) In the case of a joint venture, a majority of the equity is
owned by and vested in Citizens of the United States free and clear of
any trust or fiduciary obligation in favor of any Noncitizen; but
(5) In the case of a corporation, partnership, association or joint
venture owning a vessel which is operated in the coastwise trade, the
amount of interest and voting power required to be owned by and vested
in Citizens of the United States shall be not less than 75 percent as
required by 46 App. U.S.C. 802.
(e) Documented vessel means a vessel documented under chapter 121,
title 46, United States Code or a vessel for which an application for
such documentation is pending.
(f) Fishing vessel means a vessel that commercially engages in the
planting, cultivating, catching, taking, or harvesting of fish,
shellfish, marine animals, pearls, shells, or marine vegetation or an
activity that can reasonably be expected to result in the planting,
cultivating, catching, taking, or harvesting of fish, shellfish, marine
animals, pearls, shells, or marine vegetation.
(g) Fish processing vessel means a vessel that commercially prepares
fish or fish products other than by gutting, decapitating, gilling,
skinning, shucking, icing, freezing, or brine chilling.
(h) Fish tender vessel means a vessel that commercially supplies,
stores, refrigerates, or transports (except in foreign commerce) fish,
fish products, or materials directly related to fishing or the
preparation of fish to or from a Fishing Vessel, Fish Processing Vessel,
or another Fish Tender Vessel or a fish processing facility.
(i) Hearing Officer means an individual designated by the Maritime
Administrator to conduct hearings under Subpart E of this part and
assess civil penalties.
(j) Noncitizen means a Person who is not a Citizen of the United
(k) Operation under the authority of a foreign country means any
agreement, undertaking or device by which a Documented Vessel is
voluntarily subjected to any restriction or requirement, actual or
contingent, under the laws or regulations of a foreign country or
instrumentality thereof concerning use or operation of the vessel that
is or may be in derogation of the rights and obligations of the owner,
operator or master of the vessel under the laws of the United States,
unless such restriction or requirement is of general applicability and
uniformly imposed by such country or instrumentality in exercise of its
sovereign prerogatives with respect to public health, safety or welfare,
or in implementation of accepted principles of international law
regarding cabotage or safety of navigation.
(l) Party means the Person alleged to have violated the statute or
regulations for which a civil penalty may be assessed.
(m) Person includes individuals and corporations, partnerships,
joint ventures, associations and Trusts existing under or authorized by
the laws of the United States or of a State or, unless the context
indicates otherwise, or any foreign country.
(n) Pleasure vessel means a vessel that has been issued a
Certificate of Documentation with a recreational endorsement and is
operated only for pleasure pursuant to 46 U.S.C. 12109.
(o) Settlement means the process whereby a civil penalty or other
disposition of the alleged violation is agreed to by the Hearing Officer
and the Party in accordance with Sec. 221.73 of this part.
(p) State means a State of the United States, Guam, Puerto Rico, the
Virgin Islands, American Samoa, the District of Columbia, the
Commonwealth of the Northern Mariana Islands, and any other territory or
possession of the United States.
(q) Transfer means the passing of control of or an interest in a
Documented Vessel and includes the involuntary conveyance by a foreign
judicial or administrative tribunal of any interest in or control of a
Documented Vessel owned by a Citizen of the United States to a
Noncitizen that is not eligible to own a Documented Vessel.
(r) Trust means:
(1) In the case of ownership of a Documented Vessel, a Trust that is
domiciled in and existing under the laws of the United States, or of a
State, of which the trustee is a Citizen of the United States and a
Controlling Interest in the Trust is held for the benefit of Citizens of
the United States; or
(s) United States, when used in the geographic sense, means the
States of the United States, Guam, Puerto Rico, the Virgin Islands,
American Samoa, the District of Columbia, the Commonwealth of the
Northern Mariana Islands, and any other territory or possession of the
United States; when used in other than the geographic sense, it means
the United States Government.
(t) United States Government means the Federal Government acting by
through any of its departments or agencies.
(u) Vessel Transfer Officer means the Maritime Administration's
Vessel Transfer and Disposal Officer, whose address is MAR-745.1,
Maritime Administration, United States Department of Transportation,
Washington, DC 20590, or that person's delegate.
[57 FR 23478, June 3, 1992, as amended at 63 FR 6880, Feb. 11, 1998; 69
FR 34310, June 21, 2004]
Sec. 221.5 Citizenship declarations.
(a) Pursuant to 46 U.S.C. 31306(a), when an instrument transferring
an interest in a Documented Vessel owned by a Citizen of the United
States is presented to the United States Government for filing or
recording, the Person filing shall submit therewith Maritime
Administration Form No. MA-899 so it may be determined if sections 9 or
37 of the Shipping Act of 1916 (46 App. U.S.C. 808 and 837) apply to the
transaction. Form No. MA-899 is available from the Coast Guard
Documentation Office at the port of record of the vessel or from the
Vessel Transfer Officer.
(b) The filing required by paragraph (a) of this section is not
required for transactions involving vessel types described in Sec.
221.11(b)(1)(i) through (iv) of this part.
(c) The filing required by paragraph (a) of this section is waived
for transactions which are given general approval in this part.
(d) If the transfer of interest is one which requires written
approval of the Maritime Administrator, the Person filing shall submit
therewith evidence of that approval.
(e) A declaration filed by any Person other than an individual shall
be signed by an official authorized by that Person to execute the
Sec. 221.7 Applications and fees.
(a) Applications. Whenever written approval of the Maritime
Administrator is required for transfers to Noncitizens or to foreign
registry or Operation Under Authority of a Foreign Country, or pursuant
to a Maritime Administration contract or Order, an application on
Maritime Administration Form MA-29 or MA-29B giving full particulars of
the proposed transaction shall be filed with the Vessel Transfer
(b) Fees. Applications for written approval of any of the following
transactions shall be accompanied by the specified fee:
(1) Transactions requiring approval for:
(i) Sale and delivery by a Citizen of the United States to a
Noncitizen, or Transfer to foreign registry or Operation Under
Authority of a Foreign Country, of a Documented Vessel, per
(A) Of 1,000 gross tons and over............................... $325
(B) Of less than 1,000 gross tons.............................. 170
(ii) Transfer of any interest in, or control of, a Documented 250
Vessel owned by a Citizen of the United States to a Noncitizen,
(iii) Charter of a Documented Vessel owned by a Citizen of the 250
United States to a Noncitizen, per vessel.......................
(iv) Sale or Transfer of an interest in or the control of an 325
interest in an entity that is a Citizen of the United States and
owns, or is the direct or indirect parent of an entity that
owns, any Documented Vessel, if by such sale or Transfer the
Controlling Interest in such entity is vested in, or held for
the benefit of, any Noncitizen..................................
(2) Transactions requiring written approval pursuant to a Maritime
Administration contract or Order:
(i) Transfer of ownership or registry, or, both, of the vessel, $260
(ii) Sale or Transfer of any interest in the owner of the vessel, 235
if by such sale or Transfer the Controlling Interest in the
owner is vested in, or held for the benefit of, a Noncitizen,
(iii) Charter of the vessel to a Noncitizen, per vessel.......... 240
(c) Modification of applications or approvals. An application for
modification of any pending application or prior approval, or of an
outstanding Maritime Administration contract or Order, shall be
accompanied by the fee established for the original application.
(d) Reduction or waiver of fees. The Maritime Administrator, in
appropriate circumstances, and upon a written finding, may reduce any
fee imposed by paragraph (b) or (c) of this section, or may waive the
fee entirely in extenuating circumstances where the interest of the
United States Government would be served.
[57 FR 23478, June 3, 1992, as amended at 63 FR 6880, Feb. 11, 1998]
Subpart B_Transfers to Noncitizens or to Registry or Operation Under
Authority of a Foreign Country
Sec. 221.11 Required approvals.
(a) Except as provided in section 12106(e) of title 46, United
States Code, a Person may not, without the approval of the Maritime
(1) Sell, lease, charter, deliver, or in any manner Transfer to a
Noncitizen, or agree (unless such agreement by its terms requires
approval of the Maritime Administrator in order to effect such
transfer), to sell, lease, charter, deliver, or in any manner Transfer
to a Noncitizen, any interest in or control of a Documented Vessel owned
by a Citizen of the United States or a vessel the last documentation of
which was under the laws of the United States except as provided in this
(2) Place any Documented Vessel, or any vessel the last
documentation of which was under the laws of the United States, under
foreign registry or operate that vessel under the authority of a foreign
country, except as provided in this part.
(b)(1) The approvals required by paragraph (a)(1) of this section
are not required for the following Documented Vessel types if the vessel
has been operated exclusively and with bona fides for one or more of the
following uses, under a Certificate of Documentation with an appropriate
endorsement and no other, since initial documentation or renewal of its
documentation following construction, conversion, or transfer from
foreign registry, or, if it has not yet so operated, if the vessel has
been designed and built and will be operated for one or more of the
(i) A Fishing vessel;
(ii) A Fish processing vessel;
(iii) A Fish tender vessel; and
(iv) A Pleasure vessel.
(2) A vessel of a type specified in paragraphs (b)(1)(i) through
(iii) of this section will not be ineligible for the approval granted by
this paragraph by reason of also holding or having held a Certificate of
Documentation with a coastwise or registry endorsement, so long as any
trading under that authority has been only incidental to the vessel's
principal employment in the fisheries and directly related thereto.
[57 FR 23478, June 3, 1992, as amended at 63 FR 6880, Feb. 11, 1998]
Sec. 221.13 General approval.
(a) Transactions other than transfer of registry or operation under
authority of a foreign country. (1) The Maritime Administrator hereby
grants the approval required by 46 App. U.S.C. 808(c)(1) for the sale,
lease, Charter, delivery, or any other manner of Transfer to a
Noncitizen of an interest in or control of a Documented Vessel owned by
a Citizen of the United States or a vessel the last documentation of
which was under the laws of the United States except:
(i) As limited by paragraph (b) of this section for transfers to
(ii) As limited by Sec. 221.15(d) of this part for sales for
(iii) Bareboat or demise Charters of vessels operating in the
A Documented Vessel shall remain documented following any transaction
approved by this paragraph (a)(1). Other approvals may be required by
statutes other than 46 App. U.S.C. 808(c)(1) and/or by contract for
(2) The approvals granted by paragraph (a)(1) of this section shall
not apply to any such Transfer proposed to be made during any period
when the United States is at war or during any national emergency, the
existence of which has invoked the provisions of section 37 of the
Shipping Act, 1916, as amended (46 App. U.S.C. 835), or to any such
Transfer proposed to be made to a citizen of any country when such
transfer would be contrary to the foreign policy of the United States as
declared by an executive department of the United States.
(3) An information copy of any sales agreement, bareboat or demise
Charter entered into pursuant to this approval shall be submitted to the
Vessel Transfer Officer not later than thirty days following a request
by that official.
(4) Except for Charters to Noncitizens of documented bulk cargo
vessels engaged in carrying bulk raw and processed agricultural
commodities from the United States to ports in the geographic area
formerly known as the
Union of Soviet Socialist Republics, or to other permissible ports of
discharge for transshipment to the geographic area formerly known as the
Union of Soviet Socialist Republics, pursuant to an operating-
differential subsidy agreement that is consistent with the requirements
of 46 CFR parts 252 and 294, this approval excludes and does not apply
to Transfers to a Person who is subject, directly or indirectly, to
control of an entity within any country listed by the Department of
Commerce in 15 CFR part 740, Supplement 1, Country Group E, unless such
transferee is an individual who has been lawfully admitted into, and
resides in, the United States, or to Charters for the carriage of
cargoes of any kind to or from, or for commercial operation while within
the waters of (as distinct from passage through), any of these
countries. This list of countries is subject to change from time to
time. Information concerning current restrictions may be obtained from
the Vessel Transfer Officer.
(b) Bowaters corporations. (1) For documented Vessels other than
those operating in the coastwise trade, the approvals granted in
paragraph (a) of this section shall apply to Bowaters Corporations.
(2) The Maritime Administrator hereby grants approval for the time
charter of a Documented Vessel of any tonnage by a Citizen of the United
States to a Bowaters Corporation for operation in the coastwise trade,
subject to the following conditions:
(i) If non-self-propelled or, if self-propelled and less than 500
gross tons, no such vessel shall engage in the fisheries or in the
transportation of merchandise or passengers for hire between points in
the United States embraced within the coastwise laws except as a service
for a parent or subsidiary corporation; and
(ii) If non-self-propelled or, if self-propelled and less than 500
gross tons, no such vessel may be subchartered or subleased from any
such Bowaters Corporation except:
(A) At prevailing rates;
(B) For use otherwise than in the domestic noncontiguous trades;
(C) To a common or contract carrier subject to part 3 of the
Interstate Commerce Act, as amended, which otherwise qualifies as a
Citizen of the United States and which is not connected, directly or
indirectly, by way of ownership or control with such corporation.
[57 FR 23478, June 3, 1992, as amended at 63 FR 6880, Feb. 11, 1998; 69
FR 54248, Sept. 8, 2004]
Sec. 221.15 Approval for transfer of registry or operation under
authority of a foreign country or for scrapping in a foreign country.
In no case will approval be granted to place under foreign registry
or to operate under the authority of a foreign country a Fishing Vessel,
Fish Processing Vessel, or Fish Tender Vessel that has had its fishery
endorsement revoked pursuant to Appendix D of Public Law 106-554, 114
Stat 2763. Subject to this exclusion, approval requests will be
considered as set forth in this section.
(a) Vessels of under 1,000 gross tons. (1) The Maritime
Administrator hereby grants approval for the Transfer to foreign
registry and flag or Operation Under the Authority of a Foreign Country
or for scrapping in a foreign country of Documented Vessels or vessels
the last documentation of which was under the laws of the United States
and which are of under 1,000 gross tons if at the time of such Transfer
there are no liens or encumbrances recorded against the vessel in the
U.S. Coast Guard Documentation Office at its last U.S. port of record.
(2) This approval shall not apply if the vessel is to be placed
under the registry, or operated under the authority of, or scrapped in
any country listed in Sec. 221.13(a)(4) of this part.
(3) This approval shall not apply to any such Transfer proposed to
be made during any period when the United States is at war or during any
national emergency, the existence of which has invoked the provisions of
section 37 of the Shipping Act, 1916, as amended (46 App. U.S.C. 835),
or to any such Transfer proposed to be made to a citizen of any country
when such transfer would be contrary to the foreign policy of the United
States as declared by an executive department of the United States.
(b) Vessels of 1,000 gross tons or more. (1) Applications for
approval of Transfer to foreign registry and flag or Operation Under the
Authority of a Foreign Country or for scrapping in a foreign country of
Documented Vessels or vessels the last documentation of which was under
the laws of the United States and which are of 1,000 gross tons or more
will be evaluated in light of--
(i) The type, size speed, general condition, and age of the vessel;
(ii) The acceptability of the owner, proposed transferee and the
country of registry or the country under the authority of which the
vessel is to be operated; and
(iii) The need to retain the vessel under U.S. documentation,
ownership or control for purposes of national defense, maintenance of an
adequate merchant marine, foreign policy considerations or the national
(2) If the application is found to be acceptable under the criteria
of this paragraph, approval will be granted. For vessels of under 3,000
gross tons, in the absence of unusual circumstances, no conditions will
be imposed on the transfer. For vessels of 3,000 gross tons and above,
approval will be granted upon acceptance by the owner of the terms and
conditions referred to in paragraph (c) or (d) of this section, as
applicable. Additional terms deemed appropriate by the Maritime
Administrator may be imposed. The terms and conditions shall be
contained in an Approval Notice and Agreement (``Contract'') executed
prior to issuance of the Transfer Order. Unless otherwise specified, the
terms and conditions shall remain in effect for the period of the
remaining economic life of the vessel or for the duration of a national
emergency proclaimed by the President prior or subsequent to such
Transfer, whichever period is longer. The economic life of a vessel for
purposes of this regulation is deemed to be twenty (20) years for
tankers and other liquid bulk carriers and twenty-five (25) years for
other vessel types. This period is to be calculated from the date the
vessel was originally accepted for delivery from the shipbuilder, but
may be extended for such additional period of time as may be determined
by the Maritime Administrator if the vessel has been substantially
rebuilt or modified in a manner that warrants such extension.
(c) Foreign transfer other than for scrapping. If the foreign
Transfer of a vessel referred to in paragraph (b) of this section is
other than for the purpose of scrapping the vessel and other than a
Transfer to the government of an acceptable foreign country, and in the
absence of unusual circumstances as determined by the Maritime
Administrator (for example a Transfer to an entity controlled by the
government of an acceptable foreign country), the following conditions
will be imposed on the transferee:
(1) Ownership. (i) Without the prior written approval of the
Maritime Administrator, there shall be no further Transfer of ownership,
change in the registry or Operation of such vessel Under the Authority
of a Foreign Country; provided, however, that, if the Transfer of
ownership is to a Citizen of the United States or other entity qualified
under 46 U.S.C. 12102(a) to document a vessel and the vessel is
thereafter documented under U.S. law, no prior written approval shall be
required but the transferee shall notify the Vessel Transfer Officer in
writing of such change in the ownership and the U.S. documentation
within thirty (30) days after such change in ownership and
(ii) The restrictions contained in paragraph (c)(1)(i) of this
section shall not be applicable to a change in ownership resulting from
the death of the vessel owner, so long as notification of any such
Transfer of ownership occurring by reason of death shall be filed with
the Vessel Transfer Officer within 60 days from the date of such
Transfer identifying with particularity the name, legal capacity,
citizenship, current domicile or address of, or other method of direct
communication with, the transferee(s).
(2) Requisition. The vessel shall, if requested by the United
States, be sold or Chartered to the United States on the same terms and
conditions upon which a vessel owned by a Citizen of the United States
or documented under U.S. law could be requisitioned for purchase or
Charter pursuant to section 902 of the Merchant Marine Act, 1936,
as amended (46 App. U.S.C. 1242). If the vessel is under the flag of a
country that is a member of the North Atlantic Treaty Organization
(NATO), the Maritime Administrator will consider this condition
satisfied if the owner furnishes satisfactory evidence that the vessel
is already in noncommercial service under the direction of the
government of a NATO country.
(3) Trade. Without the prior written approval of the Maritime
Administrator, the vessel shall not carry cargoes of any kind to or
from, or be operated commercially while within the waters of (as
distinct from passage through), a country referred to in Sec.
221.13(a)(4) of this part, nor shall there be any Charter or other
Transfer of an interest in the vessel, other than to a Citizen of the
United States, for carriage of cargoes of any kind to or from, or for
commercial operation while within the waters of (as distinct from
passage through), any such country.
(4) Default. In the event of default under any or all of the
conditions set forth in paragraphs (c) (1), (2) or (3) of this section,
the owner shall pay to the Maritime Administration, without prejudice to
any other rights that the United States may have, as liquidated damages
and not as a penalty, the sum of not less than $25,000 or more than
$1,000,000, as specified in the contract, and the vessel shall be
subject to the penalties imposed by 46 App. U.S.C. 808 and 839. Pursuant
to 46 App. U.S.C. 836, the Maritime Administrator may remit forfeiture
of the vessel upon such conditions as may be required under the
circumstances of the particular case, including the payment of a sum in
lieu of forfeiture, and execution of a new agreement containing
substantially the same conditions set forth above and such others as the
Maritime Administrator may deem appropriate and which will be applicable
to the vessel for the remaining period of the original agreement. In
order to secure the payment of any such sums of money as may be required
as a result of default, the transferee shall contractually agree, in
form and substance approved by the Chief Counsel of the Maritime
Administration, to comply with the above conditions and to provide a
United States commercial surety bond or other surety acceptable to the
Maritime Administrator for an amount not less than $25,000 and not more
than $1,000,000, depending upon the type, size and condition of the
vessel. ``Other surety'' may be any one of the following:
(i) An irrevocable letter of credit, which is acceptable to the
Maritime Administrator, issued or guaranteed by a Citizen of the United
States or by a federally insured depository institution;
(ii) A pledge of United States Government securities;
(iii) The written guarantee of a friendly government of which the
transferee is a national;
(iv) A written guarantee or bond by a United States corporation
found by the Maritime Administrator to be financially qualified to
service the undertaking to pay the stipulated amount;
(v) If the transferee is controlled in any manner by one or more
Citizens of the United States, a contractual agreement in form and
substance acceptable to the Chief Counsel of the Maritime Administration
by the transferee and the Citizens of the United States with authority
to exercise such control, if found by the Maritime Administrator to be
financially qualified, jointly and severally to pay the stipulated
amount, such agreement to be secured by the written guarantee of the
transferee and each of the Citizens of the United States or other form
of guarantee as may be required by the Maritime Administrator; or
(vi) Any other surety acceptable to the Maritime Administrator and
approved as to form and substance by the Chief Counsel of the Maritime
(d) Foreign transfer for scrapping. If the transfer of control,
whether or not there is a transfer of registry, of a vessel referred to
in paragraph (b) of this section is for the purpose of scrapping the
vessel abroad, the following conditions will be imposed on the
(1) The vessel or any interest therein shall not be subsequently
sold to any Person without the prior written approval of the Maritime
Administrator, nor shall it be used for the carriage of cargo or
passengers of any kind whatsoever.
(2) Within a period of 18 months from the date of approval of the
sale, the hull of the vessel shall be completely scrapped, dismantled,
dismembered, or destroyed in such manner and to such extent as to
prevent the further use thereof, or any part thereof, as a ship, barge,
or any other means of transportation.
(3) The scrap resulting from the demolition of the hull of the
vessel, the engines, machinery, and major items of equipment shall not
be sold to, or utilized by, any citizen or instrumentality of a country
referred to in Sec. 221.13(a)(4) of the part, nor may such scrap be
exported to these countries. The engines, machinery and major items of
equipment shall not be exported to destinations within the United
(4) In the event of default under any or all of the conditions set
forth in paragraphs (d) (1), (2) or (3) of this section, the transferee
shall pay to the Maritime Administration, without prejudice to any other
rights that the United States may have, as liquidated damages and not as
a penalty, the sum of not less than $25,000 or more than $1,000,000, as
specified in the contract, depending upon the size, type and condition
of the vessel. This payment shall be secured by a surety company bond or
other surety satisfactory to the Maritime Administrator. ``Other
surety'' may be one of those set out in paragraph (c)(4) (i) through
(vi) of this section.
(5) There shall be filed with the Vessel Transfer Officer a
certificate or other evidence satisfactory to the Chief Counsel of the
Maritime Administration, duly attested and authenticated by a United
States Consul, that the scrapping of the vessel (hull only) and disposal
or utilization of the resultant scrap and the engines, machinery and
major items of equipment have been accomplished in accord with
paragraphs (d) (2) and (3) of this section.
(e) Resident agent for service. (1) Any proposed foreign transferee
shall, prior to the issuance and delivery of the Transfer Order covering
the vessel or vessels to be transferred, designate and appoint a
resident agent in the United States to receive and accept service of
process or other notice in any action or proceeding instituted by the
United States relating to any claim arising out of the approved
(2) The resident agent designated and appointed by the foreign
transferee shall be subject to approval by the Maritime Administrator.
To be acceptable, the resident agent must maintain a permanent place of
business in the United States and shall be a banking or lending
institution, a ship-owner or ship-operating corporation or other
business entity that is satisfactory to the Maritime Administrator.
(3) Appointment and designation of the resident agent shall not be
terminated, revoked, amended or altered without the prior written
approval of the Maritime Administrator.
(4) The foreign transferee shall file with the Vessel Transfer
Officer a written copy of the appointment of the resident agent, which
copy shall be fully endorsed by the resident agent stating that it
accepts the appointment, that it will act thereunder and that it will
notify the Vessel Transfer Officer in writing in the event it becomes
disqualified from so acting by reason of any legal restrictions. Service
of process or notice upon any officer, agent or employee of the resident
agent at its permanent place of business shall constitute effective
service on, or notice to, the foreign transferee.
(f) Administrative provisions. (1) The subsequent Transfer of
ownership or registry of vessels that have been Transferred to foreign
ownership or registry or both, or to Operation Under the Authority of a
Foreign Country, that remain subject to Maritime Administration
contractual control as set forth above, will be subject to substantially
the same Maritime Administration policy considerations that governed the
original Transfer, including such changes or modifications that have
subsequently been made and continued in effect. Approval of these
subsequent Transfers will be subject to the same terms and conditions
governing the foreign Transfer at the time of the previous Transfer, as
modified (if applicable).
(2) The authorization for all approved transactions, either by
virtue of 46 App. U.S.C. 808, 835 and 839 or the Maritime
Administration's Contract with
the vessel owner, will be by notification in the form of a Transfer
Order upon receipt of the executed Contract, the required bond or other
surety, and other supporting documentation required by the Contract.
(3) In order that the Maritime Administration's records may be
maintained on a current basis, the transferor and transferee of the
vessel are required to notify the Vessel Transfer Officer of the date
and place where the approved transaction was completed, and the name of
the vessel, if changed. This information relating to the completion of
the transaction and any change in name shall be furnished as soon as
possible, but not later than 10 days after the same has occurred.
[57 FR 23478, June 3, 1992, as amended at 63 FR 6881, Feb. 11, 1998; 66
FR 55596, Nov. 2, 2001]
Sec. 221.17 Sale of a documented vessel by order of a district court.
(a) A Documented Vessel may be sold by order of a district court
only to a Person eligible to own a Documented Vessel or to a mortgagee
of the vessel. Unless waived by the Maritime Administrator, a Person
purchasing the vessel pursuant to court order or from a mortgagee not
eligible to document a vessel who purchased the vessel pursuant to a
court order must document the vessel under chapter 121 of title 46,
United States Code.
(b) A Person purchasing the vessel, pursuant to court order or from
a mortgagee not eligible to document a vessel who purchased the vessel
pursuant to a court order, and wishing to obtain waiver of the
documentation requirement must submit a request including the reason
therefor to the Vessel Transfer Officer.
(c)(1) A mortgagee not eligible to own a Documented Vessel shall not
operate, or cause operation of, the vessel in commerce. Except as
provided in paragraph (c)(2) of this section, the vessel may not be
operated for any purpose without the prior written approval of the
(2) The Maritime Administrator hereby grants approval for a
mortgagee not eligible to own a Documented Vessel to operate the vessel
to the extent necessary for the immediate safety of the vessel or for
repairs, drydocking or berthing changes, but only under the command of a
Citizen of the United States.
[57 FR 23478, June 3, 1992, as amended at 63 FR 6881, Feb. 11, 1998]
Sec. 221.19 Possession or sale of vessels by mortgagees or trustees
other than pursuant to court order.
(a) A mortgagee or a trustee of a preferred mortgage on a Documented
Vessel that is not eligible to own a Documented Vessel does not require
the express approval of the Maritime Administrator to take possession of
the vessel in the event of default by the mortgagor other than by
foreclosure pursuant to 46 U.S.C. 31329, if provided for in the mortgage
or a related financing document, but in such event the vessel may not be
operated, or caused to be operated, in commerce. The vessel may not,
except as provided in paragraph (b) of this section, be operated for any
other purpose unless approved in writing by the Maritime Administrator,
nor may the vessel be sold to a Noncitizen without the approval of the
(b) The Maritime Administrator hereby grants approval for such
mortgagee or trustee to operate the vessel to the extent necessary for
the immediate safety of the vessel, for its direct return to the United
States or for its movement within the United States, or for repairs,
drydocking or berthing changes, but only under the command of a Citizen
of the United States.
(c) A Noncitizen mortgagee that has brought a civil action in rem
for enforcement of a preferred mortgage lien on a citizen-owned
Documented Vessel pursuant to 46 U.S.C. 31325(b)(1) may petition the
court pursuant to 46 U.S.C. 31325(e)(1) for appointment of a receiver
and, if the receiver is Person eligible to own a Documented Vessel, to
authorize the receiver to operate the mortgaged vessel on such terms and
conditions as the court deems appropriate. If the receiver is not a
Citizen of the United States, the vessel may not be operated in
coastwise trade without prior written approval of the Maritime
[57 FR 23478, June 3, 1992, as amended at 63 FR 6881, Feb. 11, 1998]
Subpart C [Reserved]
Subpart D--Transactions Involving Maritime Interests in Time of War or
National Emergency Under 46 App. U.S.C. 835 [Reserved]
Subpart E_Civil Penalties
Sec. 221.61 Purpose.
This subpart describes procedures for the administration of civil
penalties that the Maritime Administration may assess under 46 U.S.C.
31309 and 31330, and section 9(d) of the Shipping Act, 1916, as amended
(46 App. U.S.C. 808(d)), pursuant to 49 U.S.C. 336.
Note: Pursuant to 46 U.S.C. 31309, a general penalty of not more
than $12,000 may be assessed for each violation of chapter 313 or 46
U.S.C. subtitle III administered by the Maritime Administration, and the
regulations in this part that are promulgated thereunder, except that a
person violating 46 U.S.C. 31328 or 31329 and the regulations
promulgated thereunder is liable for a civil penalty of not more than
$30,000 for each violation. A person that charters, sells, transfers or
mortgages a vessel, or an interest therein, in violation of 46 App.
U.S.C. 808 is liable for a civil penalty of not more than $12,000 for
each violation. These penalty amounts are in accordance with Pub. L.
101-410, amended by Pub. L. 104-134. Criminal penalties may also apply
to violations of these statutes.
[68 FR 33406, June 4, 2003]
Sec. 221.63 Investigation.
(a) When the Vessel Transfer Office obtains information that a
Person may have violated a statute or regulation for which a civil
penalty may be assessed under this subpart, that Officer may investigate
the matter and decide whether there is sufficient evidence to establish
a prima facie case that a violation occurred.
(b) If that Officer decides there is a prima facie case, then that
Officer may enter into a stipulation with the Party in accordance with
Sec. 221.67 of this subpart, or may refer the matter directly to a
Hearing Officer for procedures in accordance with Sec. 221.73 to 221.89
of this subpart.
Sec. 221.65 Criteria for determining penalty.
In determining any penalties assessed, the Vessel Transfer Officer
under Sec. 221.67 and the Hearing Officer under Sec. Sec. 221.73 to
221.89 of this part shall take into account the nature, circumstances,
extent and gravity of the violation committed and, with respect to the
Party, the degree of culpability, any history of prior offenses, ability
to pay and other matters that justice requires.
Sec. 221.67 Stipulation procedure.
(a) When the Vessel Transfer Office decides to proceed under this
section, that Office shall notify the Party in writing by registered or
(1) Of the alleged violation and the applicable statute and
(2) Of the maximum penalty that may be assessed for each violation;
(3) Of a summary of the evidence supporting the violation;
(4) Of the penalty that the Vessel Transfer Officer will accept in
settlement of the violation;
(5) Of the right to examine all the material in the case file and
have a copy of all written documents provided upon request;
(6) That by accepting the penalty, the Party waives the right to
have the matter considered by a Hearing Officer in accordance with
Sec. Sec. 221.73 to 221.89 of this subpart, and that if the Party
elects to have the matter considered by a Hearing Officer, the Hearing
Officer may assess a penalty less than, equal to, or greater than that
stipulated in settlement if the Hearing Officer finds that a violation
(7) That a violation will be kept on record and may be used by the
Maritime Administration in aggravation of an assessment of a penalty for
a subsequent violation by that Party.
(b) Upon receipt of the notification specified in paragraph (a) of
this section, a Party may within 30 days--
(1) Agree to the stipulated penalty in the manner specified in the
(2) Notify in writing the Vessel Transfer Officer that the Party
elects to have the matter considered by a Hearing Officer in accordance
procedure specified in Sec. Sec. 221.73 through 221.89 of this subpart.
(c) If, within 30 days of receipt of the notification specified in
paragraph (a) of this section, the Party neither agrees to the penalty
nor elects the informal hearing procedure, the Party will be deemed to
have waived its right to the informal hearing procedure and the penalty
will be considered accepted. If a monetary penalty is assessed, it is
due and payable to the United States, and the Maritime Administration
may initiate appropriate action to collect the penalty.
Sec. 221.69 Hearing Officer.
(a) The Hearing Officer shall have no responsibility, direct or
supervisory, for the investigation of cases referred for the assessment
of civil penalties.
(b) The Hearing Officer shall decide each case on the basis of the
evidence before him or her, and must have no prior connection with the
case. The Hearing Officer is solely responsible for the decision in each
case referred to him or her.
(c) The Hearing Officer is authorized to administer oaths and issue
subpoenas necessary to the conduct of a hearing, to the extent provided
Sec. 221.71 Hearing Officer referral.
If, pursuant to Sec. 221.67(b)(2) of this subpart, a Party elects
to have the matter referred to a Hearing Officer, the Vessel Transfer
(a) Decide not to proceed with penalty action, close the case, and
notify the Party in writing that the case has been closed; or
(b) Refer the matter to a Hearing Officer with the case file and a
record of any prior violations by the Party.
Sec. 221.73 Initial Hearing Officer consideration.
(a) When a case is received for action, the Hearing Officer shall
examine the material submitted. If the Hearing Officer determines that
there is insufficient evidence to proceed, or that there is any other
reason which would make penalty action inappropriate, the Hearing
Officer shall return the case to the Vessel Transfer Officer with a
written statement of the reason. The Vessel Transfer Officer may close
the case or investigate the matter further. If additional evidence
supporting a violation is discovered, the Vessel Transfer Officer may
resubmit the matter to the Hearing Officer.
(b) If the Hearing Officer determines that there is reason to
believe that a violation has been committed, the Hearing Officer
notifies the Party in writing by registered or certified mail of--
(1) The alleged violation and the applicable statute and
(2) The maximum penalty that may be assessed for each violation;
(3) The general nature of the procedure for assessing and collecting
(4) The amount of the penalty that appears to be appropriate, based
on the material then available to the Hearing Officer;
(5) The right to examine all the material in the case file and have
a copy of all written documents provided upon requests; and
(6) The right to request a hearing.
(c) If at any time it appears that the addition of another Party to
the proceedings is necessary or desirable, the Hearing Officer will
provide the additional Party and the Party alleged to be in violation
with notice as described above.
(d) At any time during a proceeding, before the Hearing Officer
issues a decision under Sec. 221.89, the Hearing Officer and the Party
may agree to a Settlement of the case.
Sec. 221.75 Response by party.
(a) Within 30 days after receipt of notice from the Hearing Officer,
the Party, or counsel for the Party, may--
(1) Pay the amount specified in the notice as being appropriate;
(2) In writing request a hearing, specifying the issues in dispute;
(3) Submit written evidence or arguments in lieu of a hearing.
(b) The right to a hearing is waived if the Party does not submit a
request to the Hearing Officer within 30 days after receipt of notice
from the Hearing Officer, unless additional time has been granted by the
(c) The Hearing Officer has discretion as to the venue and
scheduling of a hearing. The hearing will normally be
held at the office of the Hearing Officer. A request for a change of
location of a hearing or transfer to another Hearing Officer must be in
writing and state the reasons why the requested action is necessary or
desirable. Action on the request is at the discretion of the Hearing
(d) A Party who has requested a hearing may amend the specification
of the issues in dispute at any time up to 10 days before the scheduled
date of the hearing. Issues raised later than 10 days before the
schedule hearing may be presented only at the discretion of the Hearing
Sec. 221.77 Disclosure of evidence.
The Party shall, upon request, be provided a free copy of all the
evidence in the case file, except material that would disclose or lead
to the disclosure of the identity of a confidential informant and any
other information properly exempt from disclosure.
Sec. 221.79 Request for confidential treatment.
(a) In addition to information treated as confidential under Sec.
221.77 of this subpart, a request for confidential treatment of a
document or portion thereof may be made by the Person supplying the
information on the basis that the information is--
(1) Confidential financial information, trade secrets, or other
material exempt from disclosure by the Freedom of Information Act (5
(2) Required to be held in confidence by 18 U.S.C. 1905; or
(3) Otherwise exempt by law from disclosure.
(b) The Person desiring confidential treatment must submit the
request to the Hearing Officer in writing and the reasons justifying
nondisclosure. The Hearing Officer shall forward any request for
confidential treatment to the appropriate official of the Maritime
Administration for a determination hereon. Failure to make a timely
request may result in a document being considered as nonconfidential and
subject to release.
(c) Confidential material shall not be considered by the Hearing
Officer in reaching a decision unless--
(1) It has been furnished by a Party; or
(2) It has been furnished pursuant to a subpoena.
Sec. 221.81 Counsel.
A Party has the right to be represented at all stages of the
proceeding by counsel. After receiving notification that a Party is
represented by counsel, the Hearing Officer will direct all further
communications to that counsel.
Sec. 221.83 Witnesses.
A Party may present the testimony of any witness either through a
personal appearance or through a written statement. The Party may
request the assistance of the Hearing Officer in obtaining the personal
appearance of a witness. The request must be in writing and state the
reasons why a written statement would be inadequate, the issue or issues
to which the testimony would be relevant, and the substance of the
expected testimony. If the Hearing Officer determines that the personal
appearance of the witness may materially aid in the decision on the
case, the Hearing Officer will seek to obtain the witness' appearance.
The Hearing Officer may move the hearing to the witness' location,
accept a written statement, or accept a stipulation in lieu of
Sec. 221.85 Hearing procedures.
(a) The Hearing Officer shall conduct a fair and impartial
proceeding in which the Party is given a full opportunity to be heard.
At the opening of a hearing, the Hearing Officer shall advise the Party
of the nature of the proceedings and of the alleged violation.
(b) The material in the case file pertinent to the issues to be
determined by the Hearing Officer shall first be presented. The Party
may examine, respond to and rebut this material. The Party may offer any
facts, statements, explanations, documents, sworn or unsworn testimony,
or other exculpatory items that bear on the issues, or which may be
relevant to the size of an appropriate penalty. The Hearing Officer may
require the authentication of any written exhibit or statement.
(c) At the close of the Party's presentation of evidence, the
may allow the introduction of rebuttal evidence. The Hearing Officer may
allow the Party to respond to rebuttal evidence submitted.
(d) In receiving evidence, the Hearing Officer shall not be bound by
the strict rules of evidence. In evaluating the evidence presented, the
Hearing Officer shall give due consideration to the reliability and
relevance of each item of evidence.
(e) After the evidence in the case has been presented, the Party may
present argument on the issues in the case. The party may also request
an opportunity to submit a written statement for consideration by the
Hearing Officer. The Hearing Officer shall allow a reasonable time for
submission of the statement and shall specify the date by which it must
be received. If the statement is not received within the specified time,
the Hearing Officer may render a decision in the case without
consideration of the statement.
Sec. 221.87 Records.
(a) A verbatim transcript of a hearing will not normally be
prepared. The Hearing Officer will prepare notes on material and points
raised by the Party in sufficient detail to permit a full and fair
review of the case.
(b) A Party may, at its own expense, cause a verbatim transcript to
be made, in which event the Party shall submit, without charge, two
copies to the Hearing Officer within 30 days of the close of the
Sec. 221.89 Hearing Officer's decision.
(a) The Hearing Officer shall issue a written decision. Any decision
to assess a penalty shall be based on substantial evidence in the
record, and shall state the basis for the decision.
(b) If the Hearing Officer finds that there is not substantial
evidence in the record establishing the alleged violation, the Hearing
Officer shall dismiss the case. A dismissal is without prejudice to the
Vessel Transfer Officer's right to refile the case if additional
evidence is obtained. A dismissal following a rehearing is final and
(c) The Hearing Officer shall notify the Party in writing, by
certified or registered mail, of the decision and, if adverse, shall
advise the Party of the right to an administrative appeal to the
Maritime Administrator or an individual designated by the Administrator
from that decision.
(d) If an appeal is not filed within the prescribed time, the
decision of the Hearing Officer constitutes final agency action in the
Sec. 221.91 Appeals.
(a) Any appeal from the decision of the Hearing Officer must be
submitted in writing by the Party to the Hearing Officer within 30 days
from the date of receipt of the Hearing Officer's decision.
(b) The only issues that will be considered on appeal are those
issues specified in the appeal which were raised before the Hearing
Officer and jurisdictional questions.
(c) There is no right to oral argument on an appeal.
(d) The Maritime Administrator or an individual designated by the
Administrator will issue a written decision on the appeal, and may
affirm, reverse, or modify the decision, or remand the case for new or
additional proceedings. In the absence of a remand, the decision on
appeal is final agency action.
(e) The Maritime Administrator or an individual designated by the
Administrator shall notify the Party in writing, by certified or
registered mail, of the decision on appeal and, if adverse, shall advise
the Party of the right of appeal to the courts.
Sec. 221.93 Collection of civil penalties.
Within 30 days after receipt of the Hearing Officer's decision, or a
decision on appeal, the Party must submit payment of any assessed
penalty in the manner specified in the decision letter. Failure to make
timely payment will result in the institution of appropriate action to
collect the penalty.
Subpart F--Other Transfers Involving Documented Vessels [Reserved]
Subpart G_Savings Provisions
Sec. 221.111 Status of prior transactions--controlling dates.
(a) The Maritime Administrator hereby grants approval for any
transaction occurring on or after January 1, 1989 and prior to July 3,
1991 that was lawful under 46 CFR part 221, revised as of October 1,
(b) The Maritime Administrator hereby grants approval for any
transaction occurring on or after July 3, 1991 and prior to June 3, 1992
that was lawful under 46 CFR part 221, revised as of October 1, 1991.
(c) Any transaction approved by the Maritime Administrator prior to
January 1, 1989, or any transaction that did not require such approval
prior to that date, shall continue to be lawful.
PART 232_UNIFORM FINANCIAL REPORTING REQUIREMENTS--Table of Contents
232.1 Purpose and applicability.
232.2 General instructions.
232.3 Chart of accounts.
232.4 Balance sheet accounts.
232.5 Income statement accounts.
232.6 Financial report filing requirement.
Authority: Section 204(b), Merchant Marine Act, 1936, as amended (46
App. U.S.C. 1114(b)); 49 CFR 1.66.
Source: 48 FR 30122, June 30, 1983, unless otherwise noted.
Sec. 232.1 Purpose and applicability.
(a) Purpose. The purpose of this regulation is to establish uniform
reporting requirements for the preparation of financial reports and
submissions of information to the Maritime Administration. The Maritime
Administration will, as necessary, issue clarifying instructions to
those subject to these reporting requirements to assist in their
interpretation and application. The uniform reporting requirements
(1) A chart of accounts defined in this regulation.
(2) Standard financial report formats, set forth in Form MA-172
(b) Applicability. This regulation is application to all
participants in financial assistant programs administered by the
Maritime Administration, U.S. Department of Transportation, that are
required to file periodic financial reports with that agency.
[48 FR 30122, June 30, 1983, as amended at 58 FR 62043, Nov. 24, 1993]
Sec. 232.2 General instructions.
(a) Use of generally accepted accounting principles. All contractors
shall conform their accounting policies to generally accepted accounting
principles (promulgated by the Financial Accounting Standards Board of
the American Institute of Certified Public Accountants).
(b) Need to conform accounting information. All contractors may
continue to use their current accounting system, if the system provides
a basis for the preparation of reports in the prescribed formats and is
consistent with generally accepted accounting principles.
(c) Reconciliation of financial reports. When a program participant
issues certified financial statements following accounting policies
different from those followed for the financial statement filed with the
Maritime Administration (such as reports filed with the Securities and
Exchange Commission, public service commissions or other regulatory
agencies, or reports using other acceptable accounting methods differing
from methods used for this regulation's purposes), the program
participant shall clearly set forth the nature and amount of each
adjustment necessary to reconcile the published statements with those
filed with the Maritime Administration.
(d) Submission of questions. (1) A contractor may submit in writing,
or by electronic options (such as facsimile and Internet), if
practicable, any question involving the interpretation of any provision
of this part for consideration and decision to the Director, Office of
Financial and Rate Approvals, for the Maritime Security Program, or
Director, Office of Ship Financing, for the Maritime Loan Guarantee
Program (Title XI), Maritime Administration, Department of
Transportation, 400 Seventh Street, SW., Washington, DC
20590. Appeals from such interpretation will be in accordance with the
(2) A contractor who has a question of financial accounting or
reporting procedure pending before the Maritime Administration at the
time a financial report is due shall file the report in accordance with
established scheduled dates. The contractor shall include in the report
a footnote disclosure that adequately describes the question pending,
the manner of presentation in the report, and the relative impact on the
balance sheet and income statement, respectively.
(e) Effective Date. This regulation is effective as of December 27,
1993 and its requirements are mandatory for financial reports for
accounting periods ending on or after December 31, 1993.
[48 FR 30122, June 30, 1983, as amended at 58 FR 62043, Nov. 24, 1993;
68 FR 62537, Nov. 5, 2003; 69 FR 61449, Oct. 19, 2004]
Sec. 232.3 Chart of accounts.
(a) Purpose of accounts. A contractor shall use this chart of
accounts as a guide for preparing the financial statements and for other
required financial reports required to be submitted to the Maritime
Administration. However, whenever there is a conflict between the
meaning of any term used in the Chart of Accounts in this part 232 and
that stated in any revision to generally accepted accounting principles,
the meaning of the latter shall control and shall be followed.
(b) Account numbers. Contractors are not required to use these
account numbers or titles for their internal accounting.
(Approved by the Office of Management and Budget under control number
[48 FR 30122, June 30, 1983, as amended at 58 FR 62044, Nov. 24, 1993]
Sec. 232.4 Balance sheet accounts.
(a) Accounts defined. Each account is identified by an account
number and an account title, followed by a text describing the
accounting information to be included in that account. Where considered
necessary, accounting procedures are also included to explain how the
contractor shall disclose information for reporting purposes.
(b) Purpose of balance sheet accounts. The balance sheet accounts
are intended to disclose the financial condition of the contractor as of
a given date.
(A) Asset Accounts.
(1) 100 Cash.
(i) This account shall include the amount of current funds available
on demand in the hands of financial officers or deposited in banks or
trust companies, including cash in transit for which agents or others
have received credit. Cash appropriated or otherwise restricted for any
purpose shall be included in Account 300, ``Restricted Funds.''
(ii) Compensating balances included in this account shall be
disclosed by appropriate footnote.
(2) 120 Marketable Securities.
(i) This account shall include securities and other temporary
investments which are available for general purposes of the business. In
no case shall securities of the reporting contractor or of a related
party be included in this account. Separate subaccounts may be used to
account for discounts and premiums on marketable securities.
(ii) For financial reporting, the lower of aggregate cost or market
value at the balance sheet date shall be used to value securities
included in this account.
(3) 140 Notes Receivable.
(i) This account shall include the amount of all obligations in the
form of short-term notes receivable or other evidences (except interest
coupons) of money receivable and due on demand or within one year from
date of issue.
(ii) Separate subaccounts shall be used to segregate notes
receivable from related parties.
(4) 150 Accounts Receivable.
(i) This account shall include trade or traffic receivables and
claims receivable from insurance underwriters and other miscellaneous
receivables not otherwise provided for in other accounts. Accrued
accounts receivable for interest, dividends, rents, royalties,
charters and other unmatured receivables of a current nature shall be
reported in this account, except those accrued amounts which are
required to be deposited to a restricted fund.
(ii) Separate subaccounts shall be used to segregate trade or
traffic receivables, claims receivables and miscellaneous receivables.
Receivables arising from transactions with related parties shall also be
(iii) This account shall also be used to report construction-
differential subsidy (CDS) and operating-differential subsidy (ODS)
estimated to have accrued to the contractor and which remain unpaid as
of the balance sheet date.
(iv) Separate subaccounts shall be maintained by contract number
and, under each contract, identified by year of termination and by
category of subsidy as applicable, e.g., for CDS categories may include
design and inspection costs; and for ODS categories may include wages,
maintenance and repair, and any other category for which the contractor
receives an operating subsidy.
(5) 160 Allowance for Bad Debts.
This account shall be credited at the close of each accounting
period for estimated uncollectable notes and accounts.
(6) 170 Other Current Assets.
(i) Inventories, prepaid expenses and other items that are expected
to be used or consumed within 12 months of purchase or acquisition shall
be reported in this account.
(ii) Acquisition of similar items that will not be used or consumed
within one year should be reported as part of account 360, Other Assets.
(iii) For Financial Report purposes, this account shall be used to
record the contra entries of accrued deposits in account 300 Restricted
(7) 300 Restricted Funds.
(i) This account shall include the amount of cash and securities (at
cost) deposited to any restricted fund, including but not limited to
Title XI Reserve or Restricted Fund, Capital Construction Fund,
Construction Reserve Fund, Title XI Escrow Fund, Title XI Construction
Fund, Drilling Rig Reserve Fund, Insurance Fund, Debt Retirement Fund,
special and guarantee deposits.
(ii) For each fund established, subsidiary accounts shall be used to
separately account for cash or securities deposited to the fund. At the
close of each accounting period accrual entries shall be made to account
for earned but undeposited investment income.
(iii) Compensating balances under an agreement which legally
restricts the use of such funds and constitutes support for borrowing
arrangements shall be included in this account.
(iv) Deposits required to be made into any Restricted Fund are to be
included in the column ``Accrued for Deposit''--appearing in Schedule
211. The contra entry for the accrual shall be credited to account 170
Other Current Assets.
(8) 310 Investments.
(i) This account shall include amounts of investment instruments
intended to be held more than one year and includes securities of
related parties, noncurrent notes receivable and noncurrent accounts
receivable, both from related parties and others, cash value of life
insurance policies and other investments. Noncurrent marketable
securities shall be carried at the lower of aggregate cost or market
value at the balance sheet date.
(ii) Separate subaccounts shall be maintained for the various
investments, including those resulting from related party transactions.
(iii) For financial reporting purposes, the lower of cost or market
value at the close of business on the balance sheet date will be used to
value the securities included in the account except as noted below.
(iv) Investments in related parties must be reported using the
equity or consolidated basis of accounting as adopted by the Financial
Accounting Standards Board.
(9) 330 Property and Equipment.
(i) This account shall include the cost of acquisition or
construction and related capitalizable cost, including additions and
betterments and all other associated cost necessary to place the
respective property and equipment in acceptable condition for its
intended use. This account shall also include the capitalized amount of
financing leases, computed in accordance with generally
accepted accounting principles, as prescribed by the Securities and
Exchange Commission and the Financial Accounting Standard Board.
(ii) Subaccounts shall be maintained by type and category of
property and equipment such as, but not limited to, the following: (A)
Floating equipment, including self-propelled vessels for transporting
cargo or passengers in U.S. foreign or worldwide foreign commerce, tugs
and barges, drilling platforms used in offshore operations, fishing and
associated service vessels, service vessels used in conjunction with
off-shore drilling platforms and deep-water mining operations, lighters
primarily used to transport cargo within port areas and river systems or
carried aboard mother vessels--i.e., LASH and SEABEE lighters and
barges, other floating equipment ancillary to the operator's primary
vessel operations; (B) containers and flat racks; (C) chassis and
trailer equipment; (D) terminal property and cargo handling equipment;
(E) other property and equipment; (F) leaseholds, leasehold improvements
and Capital Leases; and (G) construction work-in-progress (to provide
information by project or by type of capitalized asset cost category).
For each asset account within account 330 a separate depreciation or
amortization accumulation account must be established except for work-
(10) 360 Deferred Charges.
(i) This account shall be used to report expenses, the payment for
which the contractor has become liable currently, but which will not be
charged to income within one year of the balance sheet date.
(ii) Separate subaccounts shall be maintained to identify the
different categories of expense included in this account. These
subaccounts may include such items as prepaid insurance; the expense of
issuing long-term debt and for absorption of discounts on the stated
value of the debt instruments; organization expenses; deferred
prepayments and other deferred charges.
(iii) Separate subaccounts shall be maintained for amortization of
the various deferred charges included in this account.
(11) 380 Other Assets.
All assets, not otherwise provided for above, shall be reported in
this account. Separate subaccounts shall be maintained for the various
types of assets, including notes and accounts receivable which are not
due in the normal course of business within one year of the balance
sheet date. Each type of asset shall be further segregated to disclose
amounts due from officers and employees of the reporting contractor or
operator, officers and employees of related parties, related parties
themselves, allowance for the trade in of vessels to the Maritime
Administration (where the allowance is to be applied by the agency on
behalf of the contractor toward progress payments on new construction)
and other assets not otherwise accounted for as miscellaneous assets.
(12) 390 Intangible Assets.
(i) This account shall be used to report the amount of goodwill
attributed to the cost of acquiring a business or segment of a business
from an unrelated party, as well as the cost of acquiring by purchase,
development or other means such intangible assets as patents,
copyrights, trade names, operating rights, and similar assets.
(ii) The contractor shall maintain separate subaccounts for the
identified intangible assets, including subaccounts to identify their
(B) Liability Accounts.
(1) 400 Notes Payable and Current Portion of Long-Term Debt.
(i) The amount reported for this account shall include the face
value of notes, drafts and other evidences of indebtedness issued by the
contractor which are payable on demand or within one year of the balance
(ii) Separate subaccounts shall be used to identify different groups
of creditors, e.g., banks, insurance companies, officers and employees,
related parties and all other creditors.
(iii) The amount of capitalized lease liability maturing during the
twelve months following the balance sheet date shall also be reported in
this account. A record shall be maintained for each lease agreement,
with a description of the type of equipment under lease.
(iv) This account shall not include obligations due within one year
which the contractor intends to refinance on a long-term basis or which
are payable from restricted funds. Long-term refinancing of short-term
obligations means replacement with long-term obligations or equity
securities or renewal, extension, or replacement with short-term
obligations for an uninterrupted period extending beyond one year from
the balance sheet date. Such short-term obligations are to be recorded
in account 510, Long-term Debt.
(2) 420 Accounts Payable.
(i) The amount reported for this account shall include accounts
payable--trade; accounts payable--traffic; pension and welfare funds;
accounts payable--Maritime Administration; and other accounts payable.
(ii) Sufficient information shall be maintained to identify
individual creditors and the general categories or classification of the
(iii) Debts of individual creditors not incurred in the normal
course of business shall be identified by group, e.g., officers and
employees, affiliated companies, officers and employees of an affiliated
company, and other appropriate groupings of creditors not otherwise
affiliated in any way with the contractor.
(3) 440 Accrued Liabilities.
(i) This account shall be used to report the amount of accrued
taxes, accrued operating expenses and other accrued liabilities arising
in the regular course of business.
(ii) Subaccounts shall be maintained for each category of liability.
(4) 450 Other Current Liabilities.
(i) This account shall include all current liabilities for which no
other account has been provided.
(ii) Subaccounts shall be maintained to account separately for each
class of current liabilities that arise from transactions with officers
or employees, affiliated companies and officers or employees of
affiliated companies, and must be readily identifiable to facilitate
financial reporting requirements.
(5) 470 Advance Payments and Deposits.
(i) This account shall be used to report the balance of collections
from customers for services not yet provided by the contractor.
(ii) Sufficient accounting information shall be maintained to
readily disclose collections from related parties.
(6) 510 Long-Term Debt.
(i) This account shall be used to report the noncurrent portion of
long-term debt, including mortgage notes payable to the Maritime
Administration, U.S. Government insured or guaranteed debt obligations
issued under Title XI of the Act, and the face amount of bonds,
debentures and other long-term debt not provided for in other accounts.
(ii) Subaccounts shall be maintained to disclose unsecured and
secured debt by creditor and by secured asset.
(iii) This account shall also include the balance of the long-term
portion of capitalized lease liabilities. Reporting shall be by lease
agreement and type of asset leased.
(iv) This account shall also include obligations due within one year
which are expected to be refinanced on a long-term basis in accordance
with the discussion of Account 400.
(v) Separate subaccounts shall be maintained to record the premiums
for each class of funded debt (which shall be amortized over the
respective lives of the securities by credit to Account 670, Other
(7) 530 Other Liabilities.
(i) This account shall be used to report the balance of all other
liabilities maturing after one year from the balance sheet date and for
which no other account has been specifically provided.
(ii) Subsidiary accounts shall be maintained for each category or
type of liability and accounted for by debtor.
(iii) Reporting of balances outstanding shall show separately
amounts due to officers and employees, affiliated companies and officers
and employees of affiliated companies.
(8) 560 Deferred Credits.
This account shall be used to report the amount of accumulated
deferred income taxes, income or credits for which no other account is
(C) Equity Accounts.
(1) 570 Invested Capital.
This account shall be used to report the amount of capital
contribution by an individual in a proprietary company, by partners of a
partnership, and by stockholders of a corporation for the par or stated
value of the capital stock outstanding and additional paid-in capital.
(2) 580 Treasury Stock.
This account shall be used to report the cost to the contractor of
its stock that has been reacquired.
(3) 590 Retained Earnings.
(i) This account shall be used to report the balance of restricted
and unrestricted retained earnings for an incorporated business entity.
Subsidiary accounts shall be used for each class of restricted earnings.
(ii) Partnerships should make appropriate changes of titles to
account for partners accounts.
(iii) For purposes of meeting the Maritime Administration's Dividend
Policy for Operators Receiving ODS (46 CFR part 283), accounting
information for unrestricted retained earnings shall be made available
to show the income or loss taken into retained earnings, dividends and
other distributions paid, and the current balance of unrestricted
retained earnings available for distribution.
[48 FR 30122, June 30, 1983, as amended at 58 FR 62044, Nov. 24, 1993;
58 FR 64798, Dec. 9, 1993]
Sec. 232.5 Income Statement Accounts.
(a) Accounts Defined. Each account shall be identified by an account
number and an account title followed by a text describing the accounting
information to be included in that account.
(b) Purpose of Income and Expense Accounts. The income and expense
accounts shall show for each reporting period the amount of money the
contractor is entitled to receive for services rendered; the income
accrued from investments in securities and property; accrued expenses;
and income and expense attributable to extraordinary items.
(D) Revenue Accounts.
(1) 600 Vessel Revenue.
(i) This account shall be used to report revenue (including
surcharges) from operations. As used here, vessel refers to any asset
that qualifies for obligation guarantees pursuant to regulations issued
under Title XI of the Act (46 CFR part 298).
(ii) For contractors who operate vessels in the U.S. foreign
commerce with a construction or operating-differential subsidy agreement
(CDSA or ODSA), operating revenue attributed to such vessels shall be
separately accounted for to report the following: Freight-foreign,
freight-coastwise and intercoastal; passenger-foreign, passenger-
coastwide and intercoastal; charter revenue; and other voyage revenue.
Contractors with an ODSA shall further describe freight and passenger
revenue--foreign (including surcharges), U.S. foreign commerce revenue
outbound and foreign commerce revenue (transportation between foreign
ports). Revenue shall be accounted for to facilitate reporting the
source of revenue by trade route or service area.
(iii) All other contractors shall report vessel revenue by category
or class, or by operating segment or division if different business
segments or operating divisions produce vessel revenue.
(iv) Except as otherwise provided in paragraph (D)(1)(i) of this
section, vessel revenue shall be accounted for following generally
accepted accounting principles for the segment of the maritime industry
of which the contractor is a part and shall be applied consistently
between reporting periods.
(2) 640 Operating-Differential Subsidy.
(i) This account shall be used to report the revenue accrued under
provisions of the ODSA.
(ii) Subsidiary accounts shall be used to account for the amount of
subsidy accrued by expense classifications to include: Wages of officers
and crew; subsistence of officers and crew; maintenance, repairs and
upkeep not compensated by insurance; hull and machinery insurance
premiums; protection and indemnity insurance premiums; protection and
indemnity insurance; deductible expense attributed to illness or injury
of crew members; and other expense categories as may be specified in the
(iii) Records shall be maintained by vessel for each trade route or
area in which a vessel subject to an ODSA operates.
(iv) If ODS is accrued at substantially different rates developed by
the contractor applicable to any year in which final rates have not been
agreed to, the difference between the ODS accruals based on billing
rates established by MARAD and the ODS accruals based on the
contractor's rates shall be disclosed in appropriate footnotes to the
balance sheet and to the income statement.
(3) 650 Other Shipping Operations Revenue.
This account shall be used to report revenue earned from shipping
activities other than vessel operations. Examples are revenue from
pooling agreements, terminal services provided to others, and cargo
handling services performed for others; cargo equipment rentals, and
repairs to cargo equipment belonging to others; agency fees, commissions
and brokerage fees earned.
(4) 670 Other Revenue.
This account shall be used to report revenue from the following
sources: Interest bearing securities, dividends from capital stock,
gains from the sale of assets not accounted for under the provisions
prescribed for account 995, amortization of premium on funded debt,
income or loss from subsidiaries, and other revenue not otherwise
provided for, including nonshipping operations revenue.
(E) Expense Accounts.
(1) 700 Vessel Operating Expense.
(i) This account shall be used to report expenses of vessel
operations of any kind. As used here, vessel has the same meaning as in
paragraph (D)(1)(i) of this section.
(ii) For contractors with an ODSA who operate vessels subject to
such an agreement in the U.S.-foreign commerce or worldwide foreign
commerce, vessel expense shall be recorded by category as follows:
Salaries and wages of officers and unlicensed crew, including relief
crews and others regularly employed aboard the vessel; fringe benefits,
such as pension and welfare, vacation payments to unions on behalf of
the officers, crew and others, accrued payroll taxes; consumable stores,
supplies and equipment, sales taxes, delivery and inspection charges;
vessel maintenance and repair expense, including laundry service,
inspection services, cost of maintaining expendable equipment and other
costs not recoverable from insurance which are integral parts of vessels
(including the purchase of permanent equipment and spares required by
the classification societies in the United States and its territories
and possessions); hull and machinery insurance costs, including premium
expense, deductibles which have been incurred or paid, protection and
indemnity insurance, including premium expense, personal injury and
illness deductibles which have been incurred or paid, and second
seaman's insurance premiums; premiums for other marine risk insurance
involving the vessel and not properly chargeable to hull and machinery
insurance or to protection and indemnity insurance accounts; vessel fuel
and incidental costs; charter hire expenses, including time, trip,
short-term and long-term bareboat charter hire; and other vessel
expenses not properly chargeable to other accounts described herein
which are incidental to the operation of vessels.
(iii) For contractors who own or operate vessels not subject to an
ODSA, vessel expense shall include all expenses directly attributable to
the operation of vessels. Such expense shall include such expense
classifications as generally in use by the segment of the industry with
which the contractor is identified. To the extent applicable, the
expense classifications mentioned in the preceding paragraph (ii) shall
(iv) Contractors operating vessels to transport cargo or passengers
shall maintain appropriate vessel expense records for the purpose of
filing vessel operating reports with the Maritime Administration.
(2) 750 Vessel Port Call Expense.
(i) This account shall be used to report the expenses of a vessel at
each port of call. Port call expenses may include: Charges for wharfage
and dockage of the vessel, pilotage, entry dues and fees, port dues and
taxes; anchor dues; canal tolls; launch hire, and tug hire; dispatch and
husbanding fees of agents; and other port and terminal expenses.
(ii) Port charges attributable to the vessel's cargo or passengers
are not to be reported in this account. Such expenses shall be reported
in Account 760, Cargo Handling Expense.
(3) 760 Cargo Handling Expense.
This account shall be used to report all expenses directly
attributable to the handling of cargo or passengers for a fee. This
account shall include: Cost of preparing a vessel to receive cargo; cost
of loading and discharging of the vessel's cargo, including stevedoring
and equipment and service charges of stevedoring contractors; cost of
transporting cargo from the point of delivery into the possession of the
contractor to the loading port and from the discharge port to the point
of delivery stipulated by the freight agreement if different from the
port of discharge; brokerage expense, including commissions paid
brokers' agencies for the procurement of passengers or freight; cargo
loading plans, demurrage, costs incidental to receiving, delivering and
warehousing at freight station facilities; and other charges for cargo
services performed by others.
(4) 800 Inactive Vessel Expense.
(i) This account shall be used to report all expenses incurred
during and directly incident to inactive periods of vessels.
(ii) Expenses in this account include: Wages of officers and crew;
contributions to crew fringe benefit plans; accrued payroll taxes;
subsistence cost of personnel assigned to inactive vessels; consumables
other than subsistence items; vessel maintenance expense; vessel
repairs; insurance expense; charter hire cost; wharfage and dockage;
port expense; and miscellaneous expenses.
(5) 860 Other Shipping Operations Expense.
This account shall be used to report cost of container leasing,
maintenance and repair cost and costs of shipping related activities in
which the contractor engages to support vessels, such as terminal
operations, cargo equipment, fleet operations, cargo pooling agreements,
container loading and other activities that are not accounted for
elsewhere and that are ancillary to the contractor's vessel operations.
(6) 900 General and Administrative Expenses.
(i) This account shall be used to report the administrative and
general expenses incurred in the operation of the business.
(ii) This account shall include: Compensation of corporate officers,
directors, administrative and service employees; fringe benefits of
general and administrative personnel; legal fees; accounting and
auditing fees; other professional fees; office and storage expense;
utilities; communications expense; data processing expense; dues;
subscriptions; entertainment; travel expense; insurance expense;
maintenance and repair expense for office facilities; fixtures and
equipment; fees and commissions paid to managing agents; advertising
expense; foreign currency conversion; and other expenses to enhance the
operation of the business.
(7) 940 Depreciation and Amortization Expense.
(i) This account shall be maintained by class of assets as accounted
for in the property and equipment accounts.
(ii) Subaccounts shall be grouped by classifications such as:
Vessels; terminals; cargo equipment; office furniture and fixtures; and
(8) 950 Other Expense.
This account is to be used to report expenses not chargeable to any
other expense account. Such charges may include: Amortization of
deferred charges; taxes other than income; debt discount and expense;
nonshipping operations expense; organization and preoperating expense
and other miscellaneous deferred charges; as well as doubtful notes and
(9) 960 Interest Expense.
(i) This account shall be used to report all interest expense
accrued and charged to income during the period.
(ii) Subaccounts shall be maintained by debt source/contract to
provide information needed to fulfill reporting disclosure requirements.
(10) 970 Income Taxes.
(i) This account shall be used to report accrued income tax
liability for the current year's operation exclusive of extraordinary
items, discontinued operations and the cumulative effect of a change in
(ii) Sufficient accounting records shall be maintained to meet
income and expense allocation requirements that may exist as a result of
a Capital Construction Fund Agreement entered into under 46 CFR parts
390 and 391, pursuant to provisions of Title VI of the Act.
(11) 990 Cumulative Effect of Change in Accounting Policy.
(i) This account shall be used to report the cumulative effect of a
change in accounting policy or a change required under generally
accepted accounting principles.
(ii) A footnote shall be added to the income statement explaining
the substance of the old and new accounting methods and the reason
supporting the change in accounting policy.
(iii) The amount reported in this account shall be net of all taxes.
(12) 995 Income or Loss from Extraordinary Items Net of Taxes.
(i) Amounts representing gain or loss from extraordinary items, as
defined by generally accepted accounting principles customarily applied
in the industry of which the contractor is a part, shall be reported in
this account. Generally, these transactions would be attributed to
insurance proceeds from the total loss of a vessel or catastrophic
losses to shore-based facilities, as well as from sales of damaged
assets scrapped because of a natural catastrophe, and disposal of assets
used primarily in a business segment which is being discontinued.
(ii) Sufficient records shall be maintained to fully describe and
account for all aspects of each item reported in this account, and when
a firm commitment is made to dispose of an operating business segment, a
provision for anticipated gain or loss to be realized in the subsequent
period from disposal of assets and winding down of operations of the
discontinued segment shall be taken into income in the year the
contractor makes the decision.
(iii) Amounts in this account must be net of all taxes including
Federal income taxes.
[48 FR 30122, June 30, 1983, as amended at 58 FR 62044, Nov. 24, 1993]
Sec. 232.6 Financial report filing requirement.
(a) Reporting Frequency and Due Dates. The contractor shall file a
semiannual financial report and an annual financial report, in the
format referred to in Sec. 232.1(a)(2), which MARAD shall make
available to the contractor. This Form MA-172 (Revised) shall be
prepared in accordance with generally accepted accounting principles and
modified to the extent necessary to comply with this regulation. The
annual financial report shall be reconciled to the financial statements
audited by independent certified public accountants (CPAs) licensed to
practice by a state or other political subdivision of the United States,
or licensed public accountants licensed to practice by regulatory
authority or other political subdivision of the United States on or
before December 31, 1970. Both the annual and semiannual financial
reports shall be due within 120 days after the close of the contractor's
annual or semiannual accounting period. If certified (CPA) statements
are not available when required, company certified statements are to be
submitted within the due dates, and the CPA statements shall be
submitted as soon as available. The respondent may, in place of any
Schedule(s) contained in the Form MA-172, submit a schedule or schedules
from its audited financial statements, or a computer print-out or
schedule, consistent with the instructions provided in the MARAD
formats. MARAD will accept electronic options (such as facsimile and
Internet) for transmission of required information to MARAD, if
(b) Certification. Annual and semiannual reports shall be approved
by the Respondent and Official of Respondent whom MARAD may contact
regarding the report in the reporting formats prescribed as the MA-172
(c) Presumption of confidentiality. MARAD will initially presume
that each part of the financial reports or data submitted as prescribed
by this Regulation, other than Schedule 101--Identity of Respondent and
Schedules 102 and 103, only with respect to the
names and titles of directors and principal officers and employees, is
privileged or confidential within the meaning of 5 U.S.C. 552(b)(4). In
the event of a subsequent request for any portion of the reports or data
under 5 U.S.C. 552, the submitter will be notified of such request and
given the opportunity to comment. The contractor shall claim
confidentiality at that time by memorandum or letter stating the basis,
in detail, for such assertion of exemption, including but not limited to
statutory and decisional authorities. Those parts not so claimed by the
submitter to be confidential will be disclosed, and those parts so
claimed will be subject to initial determination by the Freedom of
Information Act Officer.
(Approved by the Office of Management and Budget under control number
[48 FR 30122, June 30, 1983, as amended at 68 FR 62537, Nov. 5, 2003; 69
FR 61449, Oct. 19, 2004]
SUBCHAPTER C_REGULATIONS AFFECTING SUBSIDIZED VESSELS AND OPERATORS
PART 249_APPROVAL OF UNDERWRITERS FOR MARINE HULL INSURANCE--
Table of Contents
249.3 Amounts of insurance.
249.5 Eligibility criteria.
249.6 Application procedures.
249.8 Limitation on risk.
249.9 American market participation.
249.10 Non-discrimination policy.
Authority: Sec. 204(b), 1109, Merchant Marine Act, 1936, as amended
(46 App. U.S.C. 1114(b), 1279b); 49 CFR 1.66.
Source: 53 FR 23119, June 20, 1988, unless otherwise noted.
Sec. 249.1 Purpose.
This part prescribes certain regulations governing the placement of
marine hull insurance on vessels built or operated with subsidy or
covered by vessel obligation guarantees issued pursuant to Title XI of
the Merchant Marine Act, 1936, as amended (Act). (46 U.S.C. 1271-1279)
Sec. 249.2 Policy.
(a) It is the policy of the Maritime Administration (MARAD) that
companies subject to requirements for the placement of marine hull
insurance shall be afforded the widest possible opportunity to obtain
the necessary coverage, with minimal regulatory constraints, with
financially sound underwriters, and that such placement should not
create any unnecessary impediments to competitive maritime operations.
(b) It is also the policy of MARAD to require owners of vessels with
ODS or Title XI obligation guarantees to allow the American marine
insurance market the opportunity to compete for the marine hull
insurance on their vessels before such insurance is placed. Consistent
with sound business judgment, owners will be expected to place their
insurance with the American market to the maximum extent possible when
the rates, terms and conditions offered by American underwriters are
competitive with those offered by foreign underwriters.
Sec. 249.3 Amounts of insurance.
MARAD will inform the owner of each vessel that is subsidized or
covered by vessel obligation guarantees, prior to initial placement and
at least annually thereafter, of the minimum amount of insurance
required to be placed on the vessel.
Sec. 249.4 Eligibility.
In General. All required marine hull insurance must be placed with:
(a) Underwriters licensed to do business in one or more of the
(b) Underwriters at Lloyds;
(c) Member companies of the Institute of London Underwriters; or
(d) Other underwriters specifically approved in advance by the
Sec. 249.5 Eligibility criteria.
(a) U.S. Underwriters. Underwriters licensed to do business in a
state are eligible to participate without further consideration,
provided they have at least a B security rating, as published in the
latest edition of A.M. Best's Insurance Reports, and the amount of
insurance does not exceed the limitation on risk prescribed in Sec.
(b) Foreign Underwriters. (1) Underwriters at Lloyds are eligible to
participate without further consideration.
(2) Underwriters which are members of the Institute of London
Underwriters (ILU) (i.e., member companies, not parents or affiliates of
the member companies) are eligible to participate without further
consideration, provided that the ILU member company actually
underwriting the risk maintains a trust fund in the United States for
the benefit of its U.S. policyholders in an amount at least equal to the
minimum provided in Sec. 249.7(d), and the
amount insured does not exceed the limitation on risk prescribed in
Sec. 249.8. Parent companies or affiliates of the ILU member companies
are treated as other foreign underwriters under subsection (c) of this
MARAD reserves the right to review this eligibility at any time.
(c) Other Foreign Underwriters. Foreign underwriters, other than
those specified in paragraphs (b) (1) and (2) of this section, may also
be eligible to participate in the writing of marine hull insurance on
MARAD program vessels, if approved to do so in accordance with the
procedures contained in Sec. Sec. 249.6 and 249.7.
(d) Documentation of eligibility. It shall be the responsibility of
the vessel owner and its broker to ensure that the requirements of this
section are met, and they should be able to provide MARAD, upon request,
with documentation to that effect.
Sec. 249.6 Application procedures.
(a) MARAD may grant specific approval for underwriters described in
Sec. 249.5(c) to participate in the writing of marine hull insurance on
MARAD program vessels, only in advance of any actual placement.
(b) Only those foreign underwriters who have obtained a high rating
(A or comparable) from an accepted international rating service may
apply, and if approved, such approval will be contingent upon continued
maintenance of such rating. MARAD will make available to interested
parties the names of any accepted international rating service.
(c) To seek approval, an applicant shall submit to MARAD:
(1) Certified financial data for the five previous years in
sufficient detail to enable MARAD to assess the financial strength and
solvency of the applicant. Normally, this would be the same data which
the underwriter must submit to the regulatory agency in its country of
domicile. However, MARAD may request additional data if the applicant's
submissions are considered inadequate;
(2) A comprehensive description and English language version of the
insurance regulatory regime that is in place in the insurer's country of
domicile. (After review, MARAD may contact the foreign national
regulatory authorities, as appropriate);
(3) An affidavit in writing, executed by an agent of the applicant
who is a domiciliary of the United States, and supported by appropriate
documentation, to demonstrate that there is nothing in either law or
practice to preclude a U.S. insurer from obtaining the same access to
the applicant's home market as the applicant is seeking to the U.S.
(4) The details of its reinsurance program, if it wishes to write
any risks in excess of five percent of its policyholders' surplus. These
details shall be accompanied by a statement that clearly demonstrates
the special circumstances and good cause by which MARAD should be
persuaded to modify its general policy on limitation of risk described
in Sec. 249.8.
Sec. 249.7 Approval.
(a) Approval of the applicant will be based upon an assessment of
the applicant's financial condition and solvency, its rating by an
accepted international rating service, suitability of the regulatory
regime under which the applicant must operate in its home country, and
on the principle of reciprocal non-discrimination. MARAD will not
approve access to the U.S. hull insurance market, if U.S. insurers are
denied similar access to the hull insurance market in the applicant's
(b) MARAD will publish in the Federal Register each Notice of
Application received from foreign underwriters described in Sec.
249.5(c), affording interested persons an opportunity to bring to
MARAD's attention any discriminatory laws or practices relating to the
placement of marine hull insurance which might exist in the applicant's
country of domicile.
(c) In granting approval, MARAD will consider all materials
available to it, and may impose reasonable terms and conditions upon any
such approvals granted.
(d) Upon approval, applicant will be required to establish and
maintain for the benefit of its U.S. policyholders a U.S. trust fund in
the amount of at least $1.5 million, such amount to be
reviewed periodically (but not more frequently than annually), and
adjusted as appropriate. This requirement may be satisfied by means of
an appropriate irrevocable letter of credit.
(e) All policies, at the time of issuance, shall contain the latest
American Institute of Marine Underwriters' forms, or equivalent, as
approved by MARAD.
(f) All policies issued by foreign underwriters shall include New
York Suable Clause or Service of Suit (USA) Clause.
(g)(1) To maintain approval, foreign underwriters, other than those
specified in Sec. 249.5(b), shall, in addition to retaining the high
rating from an accepted international rating service, file annual
financial statements in the same level of detail as required for
original approval. Such statements shall be due within 120 days after
the close of the underwriter's annual accounting period.
(2) In addition, a new affidavit concerning the lack of
discriminatory laws or practices related to hull insurance in the
underwriter's home market, as described in Sec. 249.6(c)(3), shall be
filed annually at the same time as the financial statements.
(h) Since there is no annual reapproval required, foreign
underwriters which are approved shall agree to submit additional
information, as requested by MARAD, if it has reason to believe there
has been a change in the underwriter's financial status or business
practices which could affect the quality of its security. Failure to
provide such information on a timely basis could result in immediate
withdrawal of the authorization to write hull insurance on MARAD program
Sec. 249.8 Limitation on risk.
(a) Underwriters may take a line on any single risk in excess of
five percent of its Policyholders' Surplus only with the prior approval
of MARAD. MARAD will grant such approval to certain underwriters only in
special circumstances, and for good cause shown. The standard to be
applied in such cases shall be that the underwriter's net retention on
any single risk may not exceed five percent of its Policyholders'
Surplus, the gross amount of the risk may not exceed its surplus, and
the reinsurers must have a high (A or comparable) rating from an
accepted international rating service.
(b) The vessel owner shall also provide MARAD with a mortgagee's
interest policy in an amount equal to the difference between the net
retention and the amount of the line taken by such underwriter.
Sec. 249.9 American market participation.
(a) Owners of vessels receiving ODS or Title XI vessel obligation
guarantees, or their brokers, shall offer to the American marine
insurance market the opportunity to compete for the placement of marine
hull insurance on each vessel. Consistent with sound business judgment,
owners will be expected to place their insurance with the American
market to the maximum extent possible when the rates, terms and
conditions offered by American underwriters are competitive with those
offered by foreign underwriters. MARAD will make available a list of
approved American underwriters and their capacities.
(b) In the event that less than 50 percent of the placement is made
with the American marine insurance market, the owners, or their brokers,
shall file an affidavit confirming that the risk has been offered to a
substantial portion of the American market. The affidavit shall list the
American underwriters to which the risk was offered, and such
underwriters shall account for at least 50 percent of the approved
American market capacity, or 75 percent in the event that more than 75
percent of the risk was placed in foreign markets.
(c) Failure to comply with (a) or (b), above, may result in MARAD
requiring that the risk be reoffered and that the existing placement be
modified, as deemed appropriate.
Sec. 249.10 Non-discrimination policy.
To administer effectively the policy regarding non-discrimination
against U.S. insurers in other countries, as described in Sec. Sec.
249.6(b)(3) and 249.7(a), MARAD seeks the assistance of the American
marine insurance industry to
provide information at the time of publication of Notice of Application
described in Sec. 249.7(b) concerning the existence of any
discriminatory laws or practices in the marine hull insurance market
abroad. Upon receipt of such information, MARAD will take whatever
action it deems appropriate.
Sec. 249.11 Confidentiality.
(a) If the data submitted under this rule contain information that
the submitter considers to be commercial or financial information and
privileged or confidential, or otherwise exempt from disclosure under
the Freedom of Information Act (FOIA) (5 U.S.C. 552), the submitter
shall assert a claim of exemption at the time the data are submitted.
The claim shall be made in a letter contained in a sealed enveloped
marked ``Confidential Information,'' addressed to the Secretary,
Maritime Administration. The submitter shall stamp or mark
``confidential'' on the top of each page containing information claimed
to be confidential.
(b) In claiming an exemption under FOIA, the submitter must state
the basis for such action, including supporting information showing: (1)
That the information claimed to be confidential is a trade secret or
commercial or financial information in accordance with statutory and
decisional authority; and (2) that measures have been taken by the
submitter of the information to ensure that the information has not been
disclosed or otherwise made available to the public, or, if the
information has been disclosed or otherwise becomes available to the
public, why such disclosure or availability does not compromise the
confidential nature of the information.
(c) In the event of a subsequent request for any portion of the data
under the FOIA, those submissions not so claimed by the submitter will
be disclosed, and those so claimed will be subject to the initial
determination by the Secretary, Maritime Administration.
(d) If the Secretary makes a determination unfavorable to the
submitter, the submitter will be advised that MARAD will not honor the
request for confidentiality at the time of any request for production of
information under the FOIA by third parties.
Sec. 249.12 Waivers.
The provision of this part may be waived in writing, for special
circumstances and good cause shown, provided the procedures adopted are
consistent with the Act and with the intent of these regulations.
PART 251_APPLICATION FOR SUBSIDIES AND OTHER DIRECT FINANCIAL AID--
Table of Contents
251.1 Applications for construction-differential subsidy under Title V,
Merchant Marine Act, 1936, as amended.
251.11 Applications under Title VI, Merchant Marine Act, 1936, as
251.21 Applications under sections 803, 804, 805 (a) and (d), and
605(b), Merchant Marine Act, 1936.
251.31 Charges for processing applications for authorization to transfer
ownership of ships built with construction-differential
Authority: Sec. 204, 49 Stat. 1987, as amended; 46 U.S.C. 1114.
Sec. 251.1 Applications for construction-differential subsidy under
Title V, Merchant Marine Act, 1936, as amended.
(a) Applications under section 501 of the Act for subsidy to aid in
the construction of new vessels or the reconstruction of existing
vessels, to be operated in the foreign commerce of the United States,
shall be filed on form FMB-8 in accordance with the instructions annexed
\1\ Copies of forms referred to may be obtained on request from the
Secretary, Maritime Subsidy Board, Washington, D.C.
(b) Applications for aid in the construction of new vessels to be
operated in domestic trade shall be filed on Form VA-9 in accordance
with the instructions annexed thereto. \1\
Appendix No. 1--Policy
1. To the maximum practical extent as determined by the Maritime
Subsidy Board applicants for construction-differential subsidy (CDS)
under Title V of the Merchant Marine Act of 1936, as amended, shall
duplicate designs of ships previously approved by the Board for
Subsidized Ship Construction.
Such duplication contemplates retention of: Hull form; major structure,
i.e., shell, transverse bulkheads, decks, girder systems; etc.;
machinery horsepower and arrangement; and arrangement of deck house.
However the Board will permit modifications such as changes to reefer
cargo capacity, deep tankage, and cargo gear in a manner so as not to
disrupt the basic configuration of the ship and without sacrificing
gains that can be made from group production. New ship designs will be
considered from any operator who has already constructed sufficient
ships of a given design to have optimized the economy of standardized
ship construction, when the applicant feels that a new design is
necessary in exceptional cases and justifies this need to the Board.
Where the Board concludes contrary to an applicant that a previously
developed design can be satisfactorily adapted to requirements of the
intended service at a substantial saving compared with building to a new
design, invitations to bid shall be issued for both the standard design
and the custom design of the owner's preference. Construction-
differential subsidy will be based on whichever design requires the
2. The Board may require such variations from designs of ships
previously approved as are necessary to optimize the economic
utilization of mechanization and labor saving equipment with the
potential of reducing operating-differential subsidy (ODS). Other
nonstandard equipment or shipbuilding components shall be eligible for
CDS, only if (a) their effect is to decrease the total sum of such CDS
and ODS projected over the life of a ship, or (b) when it can be
demonstrated with reasonable certainty that the added investment will
produce a return to the owner of at least 10 percent per annum after
taxes over the life of the investment.
3. Value engineering provisions will be included in all
construction-differential subsidy contracts and construction contracts.
Value engineering items considered mandatory by the Board prior to or
during the development of the bidding plans and specifications and
during the actual ship construction period shall be incorporated in the
plans and specifications or incorporated in the ship. If the mandatory
items are not acceptable to the owner the difference in cost, as
determined by the Board, between the value engineered and the installed
item will be borne by the owner. This paragraph shall not be construed
(a) as revising the present appeal rights of the shipowner, or (b) as
imposing upon the shipbuilding contractor any requirement for employment
of a specific number of value engineering personnel.
4. Subsidy for changes under the construction contract will be
allowed only when the net effect of the change will with reasonable
certainty (a) comply with the standard in 2 (a) or (b) above, (b)
correct a deficiency in design which is clearly essential, or (c) comply
with a change in the requirement of a regulatory body which becomes
effective after 30 days preceding bid opening. Any changes desired by
the owner which do not adversely affect the safe, efficient or
economical operation of the ship will be permitted, but without the
benefit of subsidy. Subsidy for changes under category 2(b) shall be
based on an estimate as to what the work would have cost if it had been
included in the bidding specifications.
5. Post-contract engineering costs incurred by the owner for
engineering review and plan approval will be subsidized within a
ceiling. The owner's expenses for such engineering and plan approval
shall be limited for subsidy purposes to a maximum of 2 percent of the
low bid for each of one ship in each contract. This limitation shall
apply to liner cargo vessels of the break bulk type with no more than
twelve passengers, but including special features such as mechanization,
container carrying devices, special cargo handling equipment,
refrigeration spaces and special deep tanks, etc. This upper limit shall
be adjusted downward to take into account features including, but not
limited to, standardized design, successive flights of ships in the same
yard, or successive flights of ships in different yards.
6. Construction-differential subsidy on owner's engineering expenses
for inspection when only one ship is being built shall be limited to an
amount equal to 1.3 percent of the bid price. For multiple ship
construction the amount subsidizable will be 1.3 percent of the contract
price per ship plus an additional increment of 0.36 percent for each
vessel beyond the first. For example, the subsidizable amount for
inspection on a four ship contract would be 1.3 percent plus 1.08
percent (0.36x3) or 2.38 percent times the cost of the each of four ship
This limitation shall apply to liner type cargo vessels of the break
bulk type with no more than 12 passengers but including special features
such as mechanization, container carrying devices, special cargo
handling equipment, refrigeration spaces and special deep tanks, etc.
This upper limitation shall be adjusted downward to take into account
features including, but not limited to, standardized design, or other
vessels for the same owner and in the same shipyard.
7. Interior decorators' fees will be limited to a maximum of $10,000
8. Construction-differential subsidy will not apply to owner
furnished equipment. All material or equipment to which construction-
differential subsidy shall apply must be included in the plans and
specifications upon which the competitive ship construction bids are
based or included in authorized changes under contract.
9. Notwithstanding any of the foregoing limitations on subsidy the
Board will in exceptional cases authorize subsidy or research and
development grants for new ship concepts or individual ship features
whose economic justification lie in the possibility of future major
advances in ship construction or operation and which in the Board's
judgment may lead to greater efficiency and economy.
Appendix No. 2--Statement of General Policy
1. The appropriations available for the payment of construction-
differential subsidy by the Maritime Subsidy Board necessarily are
limited. Present replacement program schedules for individual operators
repeatedly have been revised and extended in recent years in accordance
with the operating-differential subsidy contracts. It is possible that
further delay will occur in the replacement of some of the vessels
required to be replaced pursuant to the existing contractual obligations
of those operators under operating-differential subsidy contracts with
the Government. These standards are designed to provide better guidance
for the operators and the Government in making the judgments necessary
in selecting from among competing applications for limited funds. This
policy will apply to requests for and allocations of appropriations for
fiscal year 1967 and thereafter. It furthermore applies only to awards
of financial assistance in the construction of vessels for liner
2. (a) To provide for the optimum development of the American
Merchant Marine in number of vessels and in shipping capability, the
Board will allocate federal financial assistance for construction or
reconstruction of vessels so as to give priority to those proposals
which, having met all requirements of Title V, Merchant Marine Act,
1936, will in the Board's opinion utilize such assistance to obtain the
greatest shipping capability and productivity possible. In making its
determinations under this policy, the Maritime Subsidy Board will take
into consideration the following factors:
(1) Number of vessels proposed for construction by the applicant.
(2) Cubic and deadweight capacities and speed of the proposed
(3) Proposed cargo handling equipment and techniques for transfer of
cargo in and out of vessels and to and from inland points. In this
connection, the applicant will be required to set forth the estimated
rate of loading and of discharge of cargo, as well as the adaptability
of the proposed vessel to integrated systems of transportation embracing
both ocean and overland transportation.
(4) Estimated domestic cost of construction.
(5) Estimated revenues and cost of operation; and with respect to
wage cost, the proposed manning schedule on the proposed vessels.
(6) The applicant's intention to seek operating subsidy and if so,
the duration and amount of such subsidy payments.
The Board will weigh the above factors in such a fashion as will
measure the productivity of the vessel (i.e., its carrying capacity,
speed, and rate of cargo handling) against the Government's cost of
construction and operating aid. The Board will award aid (so far as
funds are available) for the construction of those vessels otherwise
eligible, as will give the greatest productivity for each dollar of
(b) The Board reserves for determination at a later time standards
to be applied in the allocation of federal financial assistance for the
construction of vessels to be used in non-liner operations.
Appendix No. 3--Construction-Differential Subsidy for Machinery and
Electric Plant Spare Parts
1. The total cost of machinery and electric plant spare parts
(whether shore-based or carried aboard ship), which are in addition to
those spare parts required by all cognizant regulatory bodies (including
ABS, Coast Guard and the FCC), which shall be eligible for CDS, shall
not exceed the amount determined by application of the percentages shown
in the Table below:
2. Table 2--Cost of additional spare parts eligible for CDS
[Footnotes at end of table]
Cost class Type of equipment covered \2\ spare
12.................... Gallley, pantry, and utility space 1.0
15.................... Ventilation and heating.................. 2.0
17.................... Air-conditioning machinery............... 3.0
18.................... Hull piping (engineering)................ 2.0
19.................... Cargo oil system......................... 2.0
20.................... Hull piping (domestic)................... 2.0
21.................... Deck machinery........................... 8.0
22.................... Electric generation and distribution..... 5.0
23.................... Electronics.............................. 5.0
25.................... Main engine.............................. 3.0
26.................... Shafting and propellers.................. 6.0
27.................... Condensers............................... 1.0
28.................... Boilers.................................. 1.0
29.................... Fuel oil service piping.................. 4.0
30.................... Steam piping............................. 4.0
31.................... Feed, condensate, circulating, and drain 4.0
32.................... Lube oil piping.......................... 4.0
33.................... Salt water evaporator system............. 7.0
34.................... Feed heaters and other heat exchangers... 3.0
35.................... Pumps.................................... 13.0
36.................... Miscellaneous auxiliaries................ 7.0
39.................... Instruments and gauges................... 15.0
40.................... Engineers workshop....................... 1.0
\1\ Expressed as percentage of base cost of the equipment in each cost
\2\ Cost of spare anchor, propeller, or tailshaft is not included in
this allowance and is handled as a separate Maritime Subsidy Board
3. This regulation shall be implemented in accordance with the
following procedures and guidelines:
(a) The allowance is to be calculated by the Maritime Administration
and will be included in the contract price for all new contracts for
which CDS is awarded after this regulation becomes effective. For ships
under contract on the effective date of this regulation, the regulation
shall form the basis for permitting a change under contract for
additional spare parts to be subsidized, provided that a request for CDS
participation is submitted to the Maritime Administration prior to
delivery of the applicable ship.
(b) The allowance is to be fixed and will not be escalated under the
escalation provisions (if any), of the contract. For changes to existing
contracts, the allowance will be computed based on the original contract
(c) An audit, as deemed appropriate by the Maritime Administration,
will be made at the end of the contract to determine total spare parts
expenditures and a change under contract will be issued if actual
expenditures are less than the allowance. The audit will be based on
Maritime Administration review of a priced list, by shipyard purchase
orders, of spare parts furnished pursuant to this Sec. 251.1.
(d) Shipping and shipyard handling costs are to be included in the
(e) If the cost of material in a cost class is increased or
decreased by reason of a change under contract, the total spare parts
allowance will not be increased or decreased unless included as part of
the change under contract.
(f) The actual expenditure of funds for spare parts by the Owner
need not correspond to the percentages shown in the table which are used
to determine the total amount eligible for CDS.
(g) An owner may exceed the limit set by this regulation, provided
such excess is for his sole account.
(Approved by the Office of Management and Budget under control number
(Reorganization Plans No. 21 of 1950 (64 Stat. 1273) and No. 7 of 1961
(75 Stat. 840), as amended by Pub. L. 91-469 (84 Stat. 1036); and
Department of Commerce Organization Order 10-8 (38 FR 19707, July 23,
[G.O. 11, 2 FR 2205, Sept. 22, 1937, as amended by Amdt. 1, 24 FR 7832,
Sept. 29, 1959; 30 FR 11756, Sept. 15, 1965; 30 FR 14598, Nov. 24, 1965;
43 FR 1622, Jan. 11, 1978; 47 FR 25530, June 14, 1982]
Sec. 251.11 Applications under Title VI, Merchant Marine Act, 1936, as amended.
(a) Applications under title VI of the Act for subsidy to aid in the
operation of vessels in the foreign commerce of the United States shall
be filed on Form MA-632 in accordance with the instructions annexed
(b) Copies of Form MA-632 may be obtained on request from the
Secretary, Maritime Subsidy Board, Washington, D.C., 20590.
(Approved by the Office of Management and Budget under control number
[G.O. 13, Rev., 36 FR 11033, June 8, 1971, as amended at 47 FR 25530,
June 14, 1982]
Sec. 251.21 Applications under sections 803, 804, 805 (a) and (d),
and 605 (b), Merchant Marine Act, 1936.
Form VI-B of instructions is the required form for the preparation
of applications under sections 803, 804, 805(a) (see procedure for
805(a) applications covered in part 380 of this chapter (General Order
86)) and (d), and 605(b), Merchant Marine Act, 1936 (49 Stat. 2012,
2013, 2003; 46 U.S.C. Sup., 1221-1223 (a), (d), 1175(b)). \1\ All
applicants for operating differential subsidies who file such
applications are required to comply therewith.
\1\ Copies of form referred to may be obtained from the Secretary,
Maritime Subsidy Board, Washington, D.C.
[G.O. 14, 2 FR 2295, Sept. 28, 1937, as amended at 23 FR 7538, Sept. 27,
Sec. 251.31 Charges for processing applications for authorization to
transfer ownership of ships built with construction-differential subsidy.
(a) Applications for an amendment or addendum to construction-
differential subsidy contracts to provide for the sale of a vessel built
under Title V, Merchant Marine Act, 1936, as amended, to a buyer who
assumes the obligations under said contracts, shall be filed with the
Secretary, Maritime Subsidy Board, Washington, DC 20590.
(b) Fee. Each such application shall be accompanied by the sum of
which sum will be retained to recover the cost of processing the
(Sec. 4; 5 U.S.C. 553)
[G.O. 106, 31 FR 3397, Mar. 4, 1966]
PART 252_OPERATING-DIFFERENTIAL SUBSIDY FOR BULK CARGO VESSELS ENGAGED
IN WORLDWIDE SERVICES--Table of Contents
Subpart B_Eligibility and Agreement
252.11 Application forms.
252.20 Subsidized and nonsubsidized voyages.
252.21 Essential service requirement.
252.22 Substantiality and extent of foreign-flag competition.
252.23 Financial and other reporting requirements.
252.24 Continued eligibility for subsidy.
Subpart D_Calculation of Subsidy Rates
252.30 Amount of subsidy payable.
252.31 Wages of officers and crews.
252.32 Maintenance (upkeep) and repairs.
252.33 Hull and machinery insurance.
252.34 Protection and indemnity insurance.
Subpart E_Subsidy Payment and Billing Procedures
252.40 Payment of subsidy.
252.41 Subsidy billing procedures.
252.42 Appeals procedures.
Authority: 46 app. U.S.C. 1114(b), 1117, 1121, 1171, 1172, 1173, and
1175; 49 CFR 1.66.
Source: 40 FR 43490, Sept. 22, 1975, unless otherwise noted.
Sec. 252.1 Purpose.
This part prescribes regulations implementing provisions in Title VI
of the Merchant Marine Act, 1936, as amended (46 App. U.S.C. 1171-1176
and 1178-1181) governing operating-differential subsidy for bulk cargo
vessels engaged in carrying bulk cargo in essential services in the
foreign commerce of the United States.
[51 FR 40425, Nov. 7, 1986, as amended at 61 FR 32706, June 25, 1996]
Sec. 252.2 Policy.
The policy of the Merchant Marine Act, 1936, as amended, is set
forth in section 101 thereof, as follows:
It is necessary for the national defense and development of its
foreign and domestic commerce that the United States shall have a
merchant marine (a) sufficient to carry its domestic water-borne
commerce and a substantial portion of the water-borne export and import
foreign commerce of the United States and to provide shipping service
essential for maintaining the flow of such domestic and foreign water-
borne commerce at all times, (b) capable of serving as a naval and
military auxiliary in time of war or national emergency, (c) owned and
operated under the United States flag by citizens of the United States
insofar as may be practicable, (d) composed of the best-equipped,
safest, and most suitable types of vessels, constructed in the United
States and manned with a trained and efficient citizen personnel, and
(e) supplemented by efficient facilities for shipbuilding and ship
repair. It is hereby declared to be the policy of the United States to
foster the development and encourage the maintenance of such a merchant
Sec. 252.3 Definitions.
When used in this part:
(a) Act means the Merchant Marine Act, 1936, as amended (46 U.S.C.
(b) Maritime Administrator means the Maritime Administrator,
Department of Transportation of the Department of Transportation.
(c) Board means the Maritime Subsidy Board of the Maritime
(d) Bulk cargo vessel means a vessel built to carry solid, liquid or
gaseous commodities that in normal shipment are contained only by the
(e) Citizen of the United States includes a corporation, if all
directors of the corporation are citizens of the United States,
partnership or association but only if it is deemed a citizen of the
United States under section 2 of the Shipping Act, 1916, as amended (46
(f) Contracting Officer means the Associate Administrator for
(g) Fiscal year means any annual period beginning on July 1 and
ending on June 30.
(h) Foreign-flag competition means those foreign-flag vessels deemed
by the Board to be competitive with the subsidized vessel.
(i) Gross revenue means the operator's total gross receipts from
cargoes or fixtures of a vessel or both.
(j) Operating-differential subsidy agreement (ODSA) means the
agreement entered into by the operator and the United States government
for the payment of operating-differential subsidy.
(k) Operating-differential subsidy (ODS) means, except as the
operator and the United States government should agree upon a lesser
amount, the excess of the cost of subsidizable items of expense incurred
in the operation under United States registry of a vessel over the
estimated fair and reasonable cost of the same items of expense
(excluding any increase in the cost of such items necessitated by
features incorporated for national defense), if such vessel were
operated under the registry of a foreign country whose vessels are
substantial competitors of the vessel, or such sums as the Board may
determine to be necessary to make the cost of operating such vessel
competitive with the cost of operating similar vessels under the
registry of a foreign country.
(l) Operator means any individual, partnership, corporation or
association that contracts with the United States government under Title
VI of the Act to receive ODS.
(m) Reduced crew period means any period in port beginning on the
day that a vessel's normal crew complement is reduced by 4 or more men
and division of wages is not paid for the missing men and ending on the
day prior to the day that the vessel's crew complement is restored to
not more than 3 men less than the normal crew complement, or division of
wages is paid for the missing men, or the vessel is temporarily or
permanently withdrawn from subsidized service, whichever occurs first.
(n) Region Director means the Region Director of the Maritime
Administration within whose region the principal office of the operator
(o) Subsidized service means the operation of a vessel other than in
the coastal or intercoastal trade in accordance with the terms and
conditions of the ODSA.
(p) Subsidy rate means the method adopted by the Board for
determining the amount of ODS that is to be paid for an item of
(q) Subsidized vessel means a vessel covered by an ODSA.
(r) U.S. foreign commerce means the commerce or trade between the
United States, its territories or possessions, or the District of
Columbia and a foreign country.
(s) Vessel means subsidized vessel unless otherwise specified.
(t) Voyage day means any day or part of a day during which a
subsidized vessel is operated in accordance with the terms and
conditions of the ODSA.
[40 FR 43490, Sept. 22, 1975, as amended at 45 FR 30442, May 8, 1980; 51
FR 40425, Nov. 7, 1986]