46 C.F.R. Subpart C—Eligibility Criteria for M&R Subsidy; Substantiation of M&R Expenses
Title 46 - Shipping
(a) Eligible maintenance and repairs. Costs of maintenance and repair are eligible for M&R subsidy participation if they are: (1) Performed on an Eligible Vessel; (2) Necessary, because of subsidized operation, for the M&R or replacement of damaged or worn parts of the vessel's hull, machinery, or Permanent Equipment; (3) Uncompensated by insurance; (4) Considered fair and reasonable by the Board; (5) Of Domestic Origin; and (6) Otherwise eligible in accordance with provisions of this part. (b) Off-subsidy survey items. Any M&R contained in an executed off-subsidy survey report is eligible maintenance and repair if: (1) Paragraphs (a) (1) through (6) of this section are met; (2) The work is accomplished by the Operator before or during the next drydocking period (periodic or otherwise); and (3) The vessel is either owned by the same Operator who owned it at the time of the off-subsidy survey, or ownership was transferred to the Federal Government pursuant to section 510 of the Act (46 App. U.S.C. 1160). (c) Operator furnished items. In addition to the general requirements of paragaph (a) of this section, the cost of the Operator's materials, supplies, or both, furnished by the Operator which are necessary to the performance of eligible M&R, is eligible for M&R subsidy if: (1) The items for which the cost was incurred are issued by the Operator from ship's inventory or the Operator's shoreside inventory, or are issued by direct purchase to the ship repair yard, other independent contractor, or shore gang labor; and (2) No subsidy, whether M&R or otherwise, has previously been paid for such material, supplies, or both; and (3) The items are of Domestic Origin. (d) Costs associated with shore gang labor. In addition to the general requirements of paragraph (a) of this section, the costs incurred with respect to the Operator's employment of U.S. shore gang labor necessary for the performance of eligible M&R are eligible for M&R subsidy participation only if such costs are: (1) For direct labor charges; (2) For eligible Spare Parts, as described in paragraph (e) of this section; or (3) Incidental to the payment of wages for the direct labor, to the extent that such costs are required by State or Federal law or by collective bargaining agreements. (e) Spare parts. Spare parts are eligible for M&R subsidy if they are: (1) Necessary for eligible M&R; (2) Issued by the Operator from the Operator's shoreside inventory or issued by direct purchase to a U.S. ship repair yard, U.S. independent contractor, or U.S. shore gang labor; and (3) Placed aboard an Eligible Vessel, and (4) Of Domestic Origin. (a) Eligible expenditures. Any expenditure not in excess of $200,000 for work effected during any one or a series of repair periods, which the Operator and MARAD consider to be an Improvement, is eligible for M&R subsidy if otherwise eligible for such subsidy pursuant to provisions of this Part. (b) Capital expenditures. An expenditure in excess of $200,000 for work effected during any one or a series of repair periods, which is not necessary for maintenance or repair shall be considered to be a capital expenditure, ineligible for M&R subsidy, except that work on an Eligible Vessel which the operator considers to be an Improvement is eligible for M&R subsidy if, before awarding this work: (1) The Operator submits a written request to the Director, Office of Ship Operations, for consideration of the expenditures; (2) The Director determines that the work is an Improvement and is technically acceptable; and (3) The Associate Administrator for Maritime Aids approves M&R subsidy for the work, as appropriate, pursuant to the provisions of title VI of the Act. (c) Improvements performed in more than one repair period. Whenever an Operator desires to spread the work incident to any Improvement over more than one repair period, the operator shall give written notice to the Director, Office of Ship Operations, prior to commencement of the work, as to the scope of work involved, expected benefits, the number of voyages over which the work will be spread and the estimated total cost. The operator shall report in the Subsidy Repair Summary (Form MA–140) the actual total cost of such work, covering the repair period in which it is finally completed, and shall attach a copy of the acknowledgement of such notification to the Form MA–140. Expenses ineligible for M&R subsidy participation include, but are not limited to, the following examples: (a) Specialized improvements. Any expenditure or Improvement required to alter, outfit or otherwise equip a vessel for its intended subsidized service which MARAD determines should have been performed before the initial entry of the vessel into subsidized service; (b) Convenience items. Any expenditure for items that the Region Director determines to be aboard a ship only for the convenience of the Operator or crew members, and which are not considered integral parts of the vessel and are not required for seaworthiness, navigation or the health or well-being of the crew or passengers. (c) Unsupported expenses. Any expense item which the Operator fails to substantiate adequately with documentation, as required by §272.24. (d) Untimely requests for review. Any disallowed expense item for which the Operator fails to make a timely request for review, as required by §272.43. (e) Untimely appeals. Any expense item disallowed in the final determination by the Director, Office of Ship Operations, for which the Operator fails to make a timely appeal to the Board, pursuant to §272.43. (f) Absence of notice of multi-repair period Improvements. Any expenses for an Improvement extending over more than one repair period in which the Operator did not notify the Director, Office of Ship Operations, as required by §272.22(c). (g) Cargo expenses. Any expense of special cargo fittings of a temporary nature, dunnage, ceiling, battens, the cleaning of cargo holds and tanks for cargo, the reading and certification of temperatures for refrigerated cargoes, and similar expenses. (h) Stevedore damage. Any expense or any damage to the vessels or cargo gear directly attributable to a stevedore. (i) Rented equipment. Any expense for the rental of Permanent or Expendable Equipment, such as compressors, paint floats, and other similar items for use by shore gangs or ship's crew on repair or other work, radar, radio telephones, and other similar items for use by ship's crew in ship operations. (j) Special requirements for trade routes. Any expense for the initial installation of equipment necessary for the vessel's particular trade route, such as Suez Canal davits, which should have been installed before the entry of the vessel into the particular subsidized service. (k) General operating expenses. Any expense for the loading of stores, the landing and sorting of laundry, pilot service, tug charges, removing surplus equipment to warehouses, and other similar expenses which do not involve actual maintenance and repair. (l) Items attributable to unsubsidized operations. Any item of maintenance or repair that is clearly attributable to unsubsidized operation, including expenses noted in on-subsidy surveys for repairs which clearly should have been made before departure from the last United States port on the first voyage: (1) In subsidized service, or (2) Upon resumption of subsidized operation following temporary withdrawal. (m) Overdue classification and inspection requirements. Any expenses for work required by a classification society or an agency of the Federal Government, which was due (irrespective of any grace period granted) and not completed before the first voyage: (1) In subsidized service, or (2) Upon resumption of subsidized operation following temporary withdrawal, except when such work is attributable to prior subsidized service. (n) Foreign maintenance and repairs. Any expense for any item of M&R, including insurance repairs, that is not of Domestic Origin. (o) Marine or other loss. Any part of an expense or a repair which is recovered or recoverable from an insurer or another party. (p) Consumables, expendables. Any procurement expense for consumables, expendables, and Expendable Equipment, when used or installed by ship's crew or furnished for inclusion in ship's inventory, and any expense for maintenance, repair, or replacement of Expendable Equipment. (q) Excessive costs. Costs for M&R which MARAD considers excessive, after allowing the Operator an opportunity to present all relevant facts pertinent to such costs. (r) Overhead costs. Any expense included in shore gang labor charges which is an overhead item, as prescribed by 46 CFR part 232—Uniform Financial Reporting Requirements. (s) Guarantee items. Any expense for an item adjudged or noted as being a guarantee item of a construction or repair contractor. [55 FR 34919, Aug. 27, 1990, as amended at 57 FR 34690, Aug. 6, 1992] (a) Filing requirements. The Operator of an Eligible Vessel shall submit to the appropriate MARAD regional Ship Operations Office a Subsidy Repair Summary (Form MA–140) for each quarter of a calendar year in which one or more of the Operator's Eligible Vessels (including any vessel which has been temporarily withdrawn from subsidized service) terminates a voyage. This quarterly report shall include supporting documents and information, as described in paragraph (c) of this section. This summary may be for either a single voyage or multiple voyages, and shall be filed not later than 120 days after: (1) The close of the calendar quarter in which a voyage is terminated, or (2) The date the reported vessel is temporarily or permanently withdrawn from subsidized service. (b) Form requirements. MARAD will make available one copy of Form MA–140 upon request. Each Operator shall furnish its own supply of the form and prepare each form for submission. Information on any Form MA–140 shall pertain to only one vessel. The Operator's superintendent engineer or other responsible official shall certify every summary submitted by an Operator in the following manner:
This is to certify that, to the best of my knowledge and belief, and based on recorded entries through (Date), this is a true and correct statement of repair and maintenance expenditures for the period stated, and that the repair and maintenance items indicated as eligible for subsidy participation are reasonably attributable to service subsequent to commencement of the first voyage under the Operating-Differential Subsidy Agreement and were necessary, satisfactorily completed, and the price is fair and reasonable (exceptions are listed on separate page). (c) Categorization. The Operator shall exercise due diligence in identifying each item in the Form MA–140 within the following three separate categories: (1) Claimed for subsidy. This includes the following: (i) M&R (ii) Spare Parts (iii) Improvements (2) Marine loss. If any M&R expense is incurred because of marine loss, the Operator shall list such an M&R expense under this separate category, and shall exclude such expense from the totals for the “Claimed for Subsidy” and “Non-Subsidized Items” categories provided for in this section. (3) Non-subsidized items. This category shall include builders' guarantee items, foreign repairs, and other items of M&R expense not claimed for subsidy. (d) Required supporting documents and information—(1) General. The Operator shall support every item in the Form MA–140 with documents or other information, in sufficient detail to permit MARAD to determine the fairness and reasonableness of the prices for the submitted work. With respect to any claims for M&R performed outside the United States, the Operator shall submit with the claim a certificate, signed either by the Operator (if it uses its own shore gang labor or materials from its own inventory) or by an official of the ship repair yard or the independent contractor performing the work, stating that the M&R were performed with materials, labor, or both, of Domestic Origin. (2) U.S. Independent contractors. If a U.S. independent contractor performed M&R work, the Operator shall support each such expense with one copy of the contractor's invoices covering the work performed. If an invoice is not itemized and fully descriptive of the work performed with item prices then the Operator shall attach to the contractor's invoice other supporting documentation, such as specifications, prepared in sufficient detail to permit a determination of the fairness and reasonableness of the prices for each segment of the work performed. (3) Operator's shore gang. If an Operator's own U.S. shore gang has performed any M&R work, the Operator shall submit with the Form MA–140 specifications covering that work, prepared in sufficient detail (including the material and labor cost of each item) to permit a determination of the specific cost of each segment of work performed. (4) Operator furnished material. Whenever an Operator furnishes to a contractor material obtained either from the Operator's own ship stores or shoreside inventory, or by direct purchase for a specific job, the Operator shall include on the invoice, requisition form or other form of transfer memorandum the item number for which the material was used and the contract number covering the work performed. (5) Spare parts. The Operator shall ensure that the invoice covering any Spare Part for an Eligible Vessel which is to be used or installed as an integral, permanent part of the vessel, indicates the specific piece or part of the vessel's hull, machinery, or Equipment for which the Spare Part was obtained. (6) Foreign repairs. Operators receiving M&R subsidy shall submit copies of all U.S. Customs entry forms detailing foreign expenditures on behalf of Eligible Vessels. The copies shall include all expenditures made during the quarter.
Title 46: Shipping
PART 272—REQUIREMENTS AND PROCEDURES FOR CONDUCTING CONDITION SURVEYS AND ADMINISTERING MAINTENANCE AND REPAIR SUBSIDY
Subpart C—Eligibility Criteria for M&R Subsidy; Substantiation of M&R Expenses
§ 272.21 General eligibility criteria.
§ 272.22 Improvements and other similar work.
§ 272.23 Examples of ineligible expenses.
§ 272.24 Subsidy repair summaries.
§ 272.25 Requirements for subsidy repayment.
(a) Repayment of M&R subsidy for compensated marine or other loss. If an Operator eventually receives compensation from an insurer or any other person for a marine loss or any other loss for which M&R subsidy has been paid, the Operator shall repay to MARAD an amount equal to the amount of subsidy paid with respect to that loss.
(b) Repayment of M&R subsidy for Improvements—three year service requirement. If, within three years after the completion of an Improvement for which M&R subsidy was paid, the Operator permanently withdraws the Eligible Vessel from the ODSA, the Operator shall repay to MARAD an amount equal to the amount of M&R subsidy paid with respect to that Improvement unless MARAD shall have determined that such action was beyond the control of the Operator.
(c) Repayment of M&R subsidy due to allocation of costs. If the allocation of total M&R costs required by §272.41(e) of this part results in the allocation of a lesser amount of subsidizable M&R costs than were actually paid for during the calendar year, the Operator shall repay to MARAD the amount of ODS which was paid in excess of the allocated subsidizable costs.
(d) Administrative action. If an Operator fails to repay an M&R subsidy required to be repaid by this section, MARAD may either reduce any ODS payable by the amount of M&R subsidy required to be repaid by this section, or take any other action necessary to secure repayment.
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