46 C.F.R. Subpart C—Priority for Granting Applications
Title 46 - Shipping
(a) First priority for the award of MSP Operating Agreements under MSA 2003 shall be granted to a tank vessel that is constructed in the United States after October 1, 2004. (b) First priority for the award of MSP Operating Agreements under the MSA 2003 may be granted to a tank vessel that is less than ten years of age on the date it enters an MSP Operating Agreement: (1) Provided: (i) That the Contractor agrees to execute a binding agreement approved by the Secretary for a replacement vessel to be operated under the MSP Operating Agreement and to be built in the United States not later than nine months after the first date appropriated funds are available for construction and operating assistance for a minimum of three tank vessels; (ii) A tank vessel under this section is eligible to be included in the MSP under §296.11(a); and (iii) A tank vessel under this section is owned and operated during the period of the MSP Operating Agreement by one or more persons that are Section 2 Citizens; (2) No payment can be made for an existing tank vessel granted priority one status after the earlier of: (i) Four years following the date this MSP Operating Agreement is effective, except if amounts are available for construction of a minimum of three tank vessels under the National Defense Tank Vessel Construction Assistance Program (NDTVCP) by October 1, 2007, then no payments shall be made for the existing “tank vessel” after four years following the date such amounts are available; or (ii) The date of delivery of the replacement tank vessel constructed in the United States after October 1, 2004. (3) The Secretary will not enter into more than five MSP Operating Agreements for tank vessels under this priority. If the five tank vessel MSP Operating Agreement slots are not fully subscribed, the Secretary, in consultation with the SecDef, may award the non-subscribed slots to lower priority vessels, if deemed appropriate. If the Secretary determines that no funds are, or are likely to be, allocated for any tank vessel construction in the United States, the five slots may nevertheless be awarded to existing tank vessels or the slots may be awarded permanently to any eligible vessels. The Secretary may temporarily award a slot reserved for a tank vessel under construction to a lower priority vessel during the construction period of that vessel if an existing tank vessel offered by the tank vessel Contractor is not eligible for priority for that slot. If no existing tank vessel is offered by the tank vessel Contractor, the Secretary may temporarily award an MSP Operating Agreement to any eligible vessel of another Contractor until a new tank vessel's construction is completed in the United States. Such temporary MSP Operating Agreements may be terminated under terms set forth in the temporary MSP Operating Agreement. (a) Priority. To the extent that appropriated funds are available after applying the first priority, tank vessels, in §296.20, the second priority is applicable to Participating Fleet Vessels. (b) Number of MSP Operating Agreements. MARAD will not enter into more than 47 MSP Operating Agreements for Participating Fleet Vessels. (c) Reduction of Participating Fleet Vessel MSP Operating Agreements. The number of MSP Operating Agreements available to Participating Fleet Vessels shall be reduced by one for: (1) Each Participating Fleet Vessel for which an application for enrollment in the MSP is not received by the Secretary, Maritime Administration on October 15, 2004; or (2) Each Participating Fleet Vessel for which an application for enrollment in the MSP is received by the Secretary, Maritime Administration on October 15, 2004, but the application is not approved by the Secretary of Transportation and the SecDef by January 12, 2005. (d) Authority to Enter into an MSP Operating Agreement. (1) Applications for inclusion of a Participating Fleet Vessel under the priority in paragraph (a) of this section will be accepted only from a person that has authority to enter into an MSP Operating Agreement for the vessel with respect to the full term of the MSP Operating Agreement. Applicants must certify that they have the requisite authority as of October 1, 2005 and for the full period of the MSP Operating Agreement thereafter and provide the basis on which they rely for such certification, such as a copy of a vessel title of ownership or a demise charter that remains in effect until September 30, 2015. (2) The full term of the MSP Operating Agreement is the period from October 1, 2005 through September 30, 2015. If a vessel proposed to be included in the MSP will become ineligible for the program prior to September 30, 2015, due to vessel age restrictions, then the full term of the MSP Operating Agreement for that vessel for purposes of paragraph (d)(1) of this section is the period the vessel meets the applicable age restrictions. MARAD may still award an MSP Operating Agreement through September 30, 2015, to an applicant having authority to enter into an MSP Operating Agreement for a vessel whose age eligibility expires before that date. For companies requesting an age waiver, the Applicant must submit an appropriate replacement vessel at least 120 days prior to the date of expiration of age eligibility. (3) For the purposes of paragraph (d)(1) of this section, in the case of a vessel that is subject to a demise charter that terminates by its terms on September 30, 2005 (without giving effect to any extension provided therein for completion of a voyage or to effect the actual redelivery of the vessel), or that is terminable at will by the owner of the vessel after such date, only the owner of the vessel (provided the owner of the vessel is a “person” as defined in §296.2) shall be treated as having the authority referred to in paragraph (d)(1) of this section. (4) If two or more applicants claim authority for the same vessel, the Secretary may request additional information bearing on the issue of which party has authority to enter into an MSP Operating Agreement, and the Secretary shall, in his/her sole discretion, decide the matter as he/she deems appropriate. (e) During the 30-month period commencing October 1, 2005, the age restrictions set forth under §296.11(a) and §296.41(c) do not apply to a Participating Fleet Vessel operating under an MSP Operating Agreement, provided: (1) The Contractor has entered into an arrangement to obtain and operate under that MSP Operating Agreement a replacement vessel for that Participating Fleet Vessel; and (2) The Secretary determines that the replacement vessel will be eligible to be included in the MSP Fleet under §296.11(a). (f) In the event that a Participating Fleet Vessel will be unavailable to participate in the MSP on October 1, 2005, due to an unforeseen casualty to the vessel, a Contractor may offer an eligible replacement vessel. The replacement vessel must subsequently be approved by MARAD and DOD. The replacement vessel must operate under an MSP Operating Agreement in sufficient time to meet the 180 minimum operation days required during the fiscal year to avoid being in default of the MSP Operating Agreement. (a) Third Priority. To the extent that appropriated funds are available after applying the first priority, tank vessels, in §296.20, and the second priority, Participating Fleet Vessels, in §296.21, the third priority is for any other vessel that is eligible to be included in an MSP Operating Agreement under §296.11(a), and that, during the period of that MSP Operating Agreement, will be: (1) Owned and operated by one or more persons that are Section 2 Citizens; or (2) Owned by a person that is eligible to document the vessel under 46 U.S.C. chapter 121 and operated by a person that is a Section 2 Citizen. (b) Fourth Priority. To the extent that appropriations are available after applying the first priority in §296.20, the second priority in §296.21, and the third priority in paragraph (a) of this section, the fourth priority is for any other vessel that is eligible to be included in an MSP Operating Agreement under §296.11(a). The Secretary— (a) Subject to paragraph (b) of this section, may award MSP Operating Agreements within each priority as the Secretary considers appropriate; and (b) Shall award MSP Operating Agreements within a priority— (1) In accordance with operational requirements specified by the SecDef; (2) In the cases of the Priorities III and IV, according to the applicants' records of owning and operating vessels; and (3) Subject to the approval of the SecDef. (c) The Secretary does not have discretion to override the priority requirements with respect to the initial award of MSP Operating Agreements. (a) Until October 1, 2005, if, for any reason, after the award of an MSP Operating Agreement, the Applicant is unwilling or unable to commence operations pursuant to the terms of the MSP Operating Agreement, MARAD may, pursuant to the priority criteria, award that MSP Operating Agreement to an Applicant having an eligible vessel that applied but was not awarded an MSP Operating Agreement. (b) After October 1, 2005, MARAD intends to ensure that all available MSP Operating Agreements are fully utilized at all times, in order to maximize the benefit of the MSP. Accordingly, when an MSP Operating Agreement becomes available through termination by the Secretary, expiration of a temporary MSP Operating Agreement or early termination by the MSP contractor, and no transfer under 46 U.S.C. 53105(e) is involved, MARAD will reissue the MSP Operating Agreement pursuant to the following criteria. (1) The proposed vessel must meet the requirements for vessel eligibility in 46 U.S.C. 53102(b); (2) The applicant must meet the vessel ownership and operating requirements for priority in 46 U.S.C. 53103(c); and (3) Priority will be assigned in accordance with operational requirements specified by the SecDef. (c) MARAD will use the following procedures in reissuing an MSP Operating Agreement. MARAD and USTRANSCOM will determine if the applications received on October 15, 2004 form an adequate pool for award of a reissued MSP Operating Agreement. If so, MARAD will award a reissued MSP Operating Agreement from that pool of qualified applicants in its discretion, subject to approval of the SecDef. MARAD and USTRANSCOM may decide to open a new round of applications. Applicants for reissued MSP Operating Agreements must meet the citizenship requirements of Priority III. Inasmuch as MSP furthers a public purpose and MARAD does not acquire goods or services through MSP, the selection process for award of MSP Operating Agreements does not constitute an acquisition process subject to any procurement law or the Federal Acquisition Regulations.
Title 46: Shipping
PART 296—MARITIME SECURITY PROGRAM (MSP)
Subpart C—Priority for Granting Applications
§ 296.20 Tank vessels.
§ 296.21 Participating Fleet Vessels.
§ 296.22 Other vessels.
§ 296.23 Discretion within priority.
§ 296.24 Subsequent awards of MSP Operating Agreements.
