time Administration will not honor the request for confidentiality at the time of any request for production of information made pursuant to the Freedom of Information Act by third parties.

(e) Priority. The Maritime Administration shall give priority for processing applications to vessels capable of serving as a naval and military auxiliary in time of war or national emergency, and requests for financing construction of equipment or vessels less than one year old as opposed to the financing of existing equipment or vessels that are one year old or older. Any applications involving the purchase of vessels currently financed under Title XI will also receive priority consideration for purposes of processing the assumption of the obligations as will applications from those willing to take guarantees for less than the normal term for that class of vessel.

(Approved by the Office of Management and Budget under control number 21330018)

[43 FR 60912, Dec. 19, 1978, as amended at 47 FR 25530, June 14, 1982; 50 FR 9446, Mar. 8, 1985; 50 FR 33050, Aug. 16, 1985]

Subpart B-Eligibility

§ 298.10 Citizenship.

(a) Applicability. Prior to acquiring a legal or beneficial interest in a Vessel financed under Title XI of the Act, the applicant and any other Person, (including, but not limited to settlors, owner trustees, owner participants, bareboat charterers and such charterers other than bareboat charterers whose charter exceeds the blanket approval period provided for in Part 221 of this Title 46), shall establish its United States citizenship, within the meaning of section 2 of the Shipping Act, 1916, (1916 Act), as amended, (46 U.S.C. 801-852), sections 37 and 38 of the Merchant Marine Act, 1920, as amended, (46 U.S.C. 861-889), and, as applicable, section 905(c) of the Act, unless the Secretary approves a non-citizen participation under the authority of sections 9 and 41 and section 37, as applicable, of the 1916 Act. The Secretary will not approve an application providing for ownership of such Vessel by, or bareboat chartering

of such Vessel to, a non-U.S. citizen. See also Part 221 of this Title 46 concerning the documentation, transfer or charter of vessels to non-U.S. citizens. Citizenship may also be required of any Person who does not have a legal or beneficial ownership in the Vessel if such Person is the operator or has authority to direct the operation of the Vessel on behalf of the Shipowner.

(b) Prior to Letter Commitment. The applicant and any Person identified in paragraph (a) of this section, who is required to establish United States citizenship shall, prior to the issuance of the Letter Commitment, establish United States citizenship in form and manner prescribed in 46 CFR Part 355. (c) After Letter Commitment. Any Person who has become identified with the project, for a reason indicated in paragraph (a) of this section, and who has not previously established United States citizenship within the prior twelve calendar months, promptly shall establish its United States citizenship in the form and manner prescribed in 46 CFR Part 355.

(d) Supplemental proof. Unless otherwise waived by the Secretary for good cause, at least 10 days prior to every Closing, all Persons identified with the project who have previously established United States citizenship in accordance with paragraphs (a) and (c) of this section shall submit pro forma Supplemental Affidavits of Citizenship which have previously been approved as to form and substance by the Secretary, and on the date of such Closing such Persons shall submit to the Secretary three executed copies of such Supplemental Affidavits of Citizenship evidencing the continuing United States citizenship of such Persons bearing the date of such Closing. § 298.11 Vessel requirements.

Each Vessel to be constructed, reconstructed or reconditioned and financed by issuance of Guarantees shall meet the following criteria:

(a) United States Construction. A vessel financed by obligation guarantees for which a Letter Commitment is issued on or after April 7, 1986 is con

sidered to be of United States construction if:

(1) It is built entirely in a shipyard or shipyards of the United States within the meaning of section 505 of the Act;

(2) All components of the hull and superstructure are fabricated in the United States; and

(3) The vessel is assembled entirely in the United States.

(b) Actual Cost. The applicant's estimated actual cost as described in § 298.21(b), must be approved by the Secretary for the construction, reconstruction, reconditioning of a vessel as a condition for issuance of the Letter Commitment. The Secretary may require the applicant to have the shipyard with whom he has contracted to build the vessel to submit additional technical data, backup cost details, and other evidence if the Secretary has insufficient data. The estimated cost of the vessel may include escalation for the anticipated construction period of the vessel, as described in § 298.21(e).

(c) Class, condition and operation. The Vessel shall be constructed, maintained and operated so as to meet the highest classification, certification, rating and inspection standards for vessels of the same age and type imposed by the American Bureau of Shipping (ABS), or such other standards as may be approved by the Secretary, and comply with all applicable laws, rules and regulations as to condition and operation, including, but not limited to, those administered by the United States Coast Guard, Environmental

Protection Agency, Federal Communications Commission, Public Health Service, or their respective successors, and all applicable treaties and conventions to which the United States is signatory, including, but not limited to the International Convention for Safety of Life at Sea. All Vessels carrying passengers or freight shall be deemed to be carrying such passengers or freight for hire, and shall be inspected and certificated in accordance with the applicable United States Coast Guard regulations, if any, at the earlier of the delivery of such Vessel or Vessels and the initial Closing.

(d) Reconstruction or reconditioning. Repairs necessary for the Vessel to meet the classification standards approved by the Secretary, or any regulatory body, or because of previous inadequate maintenance and repair, shall not constitute reconstruction or reconditioning within the meaning of this paragraph. An applicant for Guarantees secured by a Vessel to be reconstructed or reconditioned shall make the Vessel available at a time and place acceptable to the Secretary for à condition survey to be conducted by representatives of the Secretary. The applicant shall pay the cost of the condition survey. The scope and extent of the condition survey shall not be less effective than that required by the last ABS special survey completed (if the Vessel is classified), next due or overdue, whichever date is nearest in accordance with the Vessel's age. The Vessel shall meet the standard of the survey necessary for retention of class (if the Vessel is classified), and the operating records of the Vessel shall reflect normal operation of the Vessel's main propulsion and other machinery and equipment, consistent with accepted commercial experience and practice.

[43 FR 60912, Dec. 29, 1978, as amended at 51 FR 7796, Mar. 6, 1986]

§ 298.12 Applicant and operator's qualifications.

(a) Operator's qualifications. No Letter Commitment shall be issued by the Secretary without a prior determination that the applicant, bareboat charterer, or other Person identified in the application as the operator of the Vessel, possesses the necessary experience, ability and other qualifications to properly operate and maintain the Vessel or Vessels which serve as security for the Guarantees, and otherwise to comply with all requirements of this part.

(b) Identity and ownership of applicant. In order to assess the likelihood that the project will be successful, the Secretary needs information about the applicant and the proposed project. To permit this assessment, each applicant shall provide the following informa

tion in its application for Title XI guarantees.

(1) Incorporated companies. If the applicant is an incorporated company, it shall submit the following identifying information:

(i) Exact name of applicant and tax identification number;

(ii) State in which incorporated and date of incorporation;

(iii) Address of principal executive offices and of important branch offices, if any;

(iv) The name, address, nationality and number and type of capital shares owned by each officer and director of the corporation.

(v) The name, address, nationality, and number of capital shares owned by each person not named in the paragraph (b)(1)(iv) answer, owning of record or beneficially 5 percent or more of any class of capital shares issued by the applicant;

(vi) A brief statement of the general effect of each voting agreement, voting trust or other arrangement whereby the voting rights with respect to any share of the applicant are owned, controlled or exercised, or whereby the control of the applicant is in any way held or exercised, by any person not the holder of legal title to such shares. (Give the name, address, nationality, and business of any such person, including the form of the organization.); and

(vii) A certified copy of the certificate of incorporation, charter and bylaws.

(2) Partnerships, joint-ventures, associations, unincorporated companies. If the applicant is a partnership, jointventure, association, or unincorporated company, it shall submit the following identifying information:

(i) Name of partnership, association, or unincorporated company, and tax identification number;

(ii) Business address;
(iii) Date of organization;

(iv) Name of partners (general and special) of the partnership or trustee and holders of beneficial interest in the association or company;

(v) Equity interest or percentage of capital contribution of each partner, trustee, or beneficial owner;

(vi) If any partners are individuals, provide:

(A) Date of birth of each;

(B) Place of birth of each; and

(C) Nationality of each;

(vii) If a partner is a corporation, provide information requested in paragraph (b)(1) of this section.

(viii) Certified copy of Partnership or Joint Venture Agreement, as

amended; and

(ix) Offering Memorandum of Limited Partnership.

(3) Individual. If the applicant is an individual, he(she) shall submit the following identifying information: (i) Name;

(ii) Address;

(iii) Date of birth; (iv) Place of birth; (v) Nationality;

(vi) Principal place of business; and (vii) Trade name under which business is conducted.

(c) Applicants: business and affiliations. The applicant shall include:

(1) A brief description of the principal business activities during the past 5 years of applicant and of any predecessor of the applicant. If any change in the principal business activities is presently contemplated (whether in connection with the work to be financed by the guarantees applied for, or otherwise), applicant shall give a brief statement of the nature and circumstances thereof;

(2) A list of all companies or persons (hereinafter referred to as related companies) that directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with, the applicant. Also indicate the nature of the business transacted by each, the relationships between the companies named, and the nature and extent of the control. This information may be furnished in the form of a chart. Specify whether any related companies have previously applied for or received any Title XI assistance;

(3) A statement of whether or not during the past 5 years the applicant, or any predecessor or related company, has been in bankruptcy or in reorganization under the Federal Bankruptcy Act or in any other insolvency or reorganization proceedings, and

whether or not any substantial property of the applicant or a predecessor or related company has been acquired in any such proceedings or has been subject to foreclosure or receivership during such period, and details of all such occurrences; and

(4) A statement of whether or not the applicant or any predecessor or related company is now, or during the past 5 years has been, in default under any agreement or undertaking with others or with the United States or guaranteed or insured by the United States.

(d) Management of applicant. The applicant shall include:

(1) A brief description of the principal business activities during the past 5 years of each director and each principal executive officer of the applicant; and

(2) The name and address of each organization engaged in business activities related to those carried on or to be carried on by the applicant with which any person named in answer to paragraph (d)(1) of this section has any present business connection, the name of each such person and, briefly, the nature of such connection.

(e) Applicant's property and activity. The applicant shall provide:

(1) A brief description of the general character and location of the prinicipal properties of the applicant employed in its business, other than vessels, describing encumbrances, if any;

(2) A statement with respect to each vessel owned by the applicant, or operated by it under charter, stating name, gross tonnage, net tonnage, deadweight tonnage, age, type, speed, registry, cargo capacity and number and type of cargo units (container, trailer, etc.); and

(3) A summary statement which addresses the services, routes, or line (including ports served) on which the applicant operates any of the vessels owned or chartered by it. Also, a schedule and tonnage of cargo carried by the applicant during the two preceeding years, the units carried (containers, barges, passengers, etc.) and the cargo capacity utilization factor experienced.

(f) Operating ability. The applicant shall submit a detailed statement

showing its ability to successfully operate the vessel(s), including name, education, background of, and licenses held by all shore management personnel concerned with the physical operation of the ships owned by the applicant or proposed for construction. If not now an operator of vessel(s), the applicant shall indicate a proposed organizational structure of key operating personnel or the name of the proposed operating agent. If now the owner and/or operator of ships, the applicant shall furnish data as to union affiliations and existing contracts necessary to the management and operation of the vessel(s) covering such items as bunkers, repairs, stores and stevedoring, and names of companies (domestic and foreign) for which company acts as agent. If a company other than the applicant is designated to operate the vessel(s), then the above information shall be provided for that company, together with a copy of the proposed operating agreement(s).

[43 FR 60912, Dec. 29, 1978, as amended at 50 FR 9446, Mar. 8, 1985]

§ 298.13 Financial requirements.

(a)(1) In general. To be eligible for guarantees, the applicant and/or the parent organization (when applicable), and any other participants in the project having a significant financial or contractual relationship with the applicant shall submit information, respectively, on their financial condition. This information shall be submitted at the time of the application and supplemented as subsequently re

quired by the Secretary. In addition, the applicant shall submit information satisfactory to the Secretary that financial resources are available to support the project which is the subject of the Title XI application.

(2) Cost of the project. Applicant shall submit the following cost information with respect to the project:

(i) A detailed statement of the estimated actual cost of construction, reconstruction or reconditioning of the vessel(s) including those items which would normally be capitalized as vessel construction costs. Net interest during construction is the total estimated

construction period interest on nonequity funds less estimated earnings from the escrow fund, if such fund is to be established prior to vessel(s) delivery. Each item of foreign equipment and services shall be excluded from Actual Cost unless a waiver is specifically granted for the item. If any of the costs have been incurred by written contracts such as the shipyard contract, management or operating agreement, signed copies should be forwarded with the application. The applicant may be required to have the contracting shipyard submit back-up cost details and technical data. This information shall be submitted in the format as prescribed by the Title XI application procedures.

(ii) A detailed statement showing the actual cost of any shore facilities, cargo containers, etc., required to be purchased in conjunction with the project.

(iii) A detailed statement showing any other costs associated with the project which were not included in paragraphs (a)(2) (i) and (ii) of this section, such as: legal and accounting fees, printing costs, guarantee fees, vessel insurance, underwriting fees, fee to affiliates, etc.

(iv) If the project involves refinancing, the exhibit entitled Request for Actual Cost Approval and Reimbursement, its summary sheet and supplemental schedules shall be submitted at the time of filing the application.

(3) Financing. The applicant shall describe, in detail, how the costs of the project (sums referred to in paragraph (a)(2) of this section) are to be funded and the timing of such funding. The applicant shall include any vessel trade-ins, related or third party financings, etc. The applicant shall also provide the proposed terms and conditions of all private funding, from both equity and debt sources and clearly identify all parties involved. If the applicant intends to utilize co-financing (involving a blend of Title XI and private financing for the 75% debt portion), the terms and conditions of such financing shall be subject to approval by the Secretary. The applicant shall demonstrate with financial statements that at least 25 percent of the construction costs of the vessel(s) will be

in the form of equity and not additional debt. The applicant shall disclose all of the vessel(s) financing in the format as prescribed by the Title XI application procedures.

(4) Financial Information. The applicant shall submit the following additional financial statements with respect to both the proposed Title XI project and the overall operations of the applicant, footnoted to explain the basis used for arriving at the figures:

(i) The most recent financial statement of the applicant, its parent and other significant participants, as applicable (year end or intermediate), and the three most recent audited statements with details of all existing debt. If the applicant is a new entity or is to be funded from or guaranteed by external source(s), it shall provide the above mentioned statements for the funding source(s);

(ii) A pro forma balance sheet of the applicant as of the estimated date of execution of the guarantees reflecting the assumption of the Title XI obligations, including the current liability;

(iii) A schedule of amortization of all existing debt (Title XI or otherwise) of the applicant for the period in which the guarantees are to be outstanding; and

(iv) A sources and uses statement for the first full year of operations and the next four years, including a clear source of funding for the payment of all debt when due.

(b) Financial definitions. For the purpose of this section and §§ 298.35 and 298.42 of this part:

(1) "Company" means any Person subject to financial requirements imposed under paragraphs (d) and (e) of this section and paragraphs (b) and (c) of § 298.35, as well as the reporting requirements imposed by § 298.42.

(2) "Working Capital" means the difference between current assets and current liabilities, both determined in accordance with generally accepted accounting principles, adjusted as follows:

(i) Current assets shall be reduced with respect to:

(A) Amounts in or required to be set aside in any Title XI Reserve Fund, pursuant to § 298.35(e) or CCF Security Amount prescribed by § 298.35(f),