(b) Early notice regarding legislated grant or other assistance programs will br provided by MarAd to the Office of Management and Budget for publication in the Catalog of Federal Domestic Assistance pursuant to Office of Management and Budget Circular No. A-89. When legislated assistance programs or program objectives which are to be implemented through assistance instruments reach the point where applications or proposals need to be obtained, timely notice of such solicitations will be published in the FEDERAL REGISTER, Commerce Business Daily, trade and professional journals which are widely circulated to state and local governments, and news media, as appropriate to communicate with potentially interested applicants. (c) When a MarAd assistance project involves making assistance available through prime recipients to subrecipients, such as through states to local governments, prime recipients should provide timely advance notice to subrecipients as to the availability of such assistance, and provide a reasonable time period for subrecipients to prepare applications and secure prerequisite local approvals. § 385.37 Requirement for unrestricted solicitations for discretionary assistance awards. (a) Policy. It is MarAd policy to maximize the opportunity for prospective recipients to be considered for assistance awards where eligibility is not prescribed by law. Therefore, when eligibility is not prescribed by law or a final program regulation, and when discretionary assistance awards are selected to accomplish a program objective, applications or proposals will be obtained, wherever practicable, by issuance of a written solicitation. When MarAd initiates the solicitation of applications or proposals, eligibility to be considered for discretionary awards will not be restricted by MarAd to one category of recipients or to a single recipient without adequate basis. (b) Justification of restricted eligibility. Where program legislation explicitly restricts eligibility, e.g., to state governments, no justification is required. When program regulations restrict eligibility beyond the restrictions required by the program legislation, the basis for the restriction shall be set forth in the program rulemaking. 41 CFR 9-3.805-51 shall be used as a guide in preparing the "justification for restricting eligibility." The reasons offered will be evaluated for consistency with the policy in paragraph (a) of this section, MarAd's overall mission, and the objective of maintaining an open and fair system of making assistance awards. (c) Approvals. Justifications of restricted eligibility will be signed by the Grants Officer and will be reviewed by Office of General Counsel for legal sufficiency prior to issuance of the restricted solicitation. The signed justification will be filed in official award file. § 385.38 Joint funding. (a) Pursuant to section 10(c) of the Act, MarAd is authorized to participate in joint funded projects with other Federal agencies in any funding relationship which will serve the best interest of all of the participating agencies' program. Such joint funding project may include more than one type of assistance relationship, e.g., some components of project may be funded by grants and other components of the project may be funded by cooperative agreements. (b) It is MarAd's positive policy, further, to encourage cost-sharing on the part of applicants for financial assistance. The willingness of applicants to cost-share is a primary factor in making, or not making, an assistance award. § 385.39 Socio-economic and environmental policies. A number of socio-economic and environmental policies of the Federal Government are incorporated into the standard general provisions of the grant agreement and cooperative agreements, and are identified as explicit criteria in §§ 385.51 and 385.52. § 385.40 Disputes. Procedures for resolution of disputes between a recipient and MarAd appear in the standard general provisions of the grant and cooperative agreements referenced in § 385.62, of this part. CRITERIA FOR AWARD § 385.50 Scope. Sections 385.51 and 385.52 set forth the criteria to be used by MarAd in evaluating all projects and all potential recipients prior to award of a grant or cooperative agreement. § 385.51 Criteria: Projects. The criteria to be used by MarAd in evaluating all projects prior to award of a grant or cooperative agreement are as follows: (a) In terms of the accomplishment of a public purpose (1) The potential contribution which the proposed work is expected to make to the MarAd assistance mission; (2) The economic, environmental, and societal significance which a successful demonstration or project may have for the nation, and in particular the national merchant marine program; (3) the relationship of the proposal to: (i) The public need for the potential results of the research, development, or demonstration effort, and whether it is unlikely that similar results would be achieved in a timely manner in the absence of Federal assistance; (ii) Whether the potential opportunities for non-Federal interests to recapture the investment in the undertaking through the normal commercial utilization of proprietary knowledge appear inadequate to encourage timely results; (iii) The extent of the problems treated and whether the objectives sought by the undertaking are national, widespread, or regional in their significance; (iv) The extent of opportunities to induce non-Federal support of the undertaking; (v) The degree of risk of loss of the investment inherent in the research, and the availability of risk capital to the non-Federal entities which might otherwise engage in the field of the research so as to further timely development of the technology; and, (vi) The availability of appropriations to MarAd. (b) In terms of the particular objectives of the project, whether the project has: (1) High technical merit which promises or represents an innovative idea, method, or approach; (2) Program value not previously recognized or pursued by MarAd; and, (3) A reasonable degree of probability of achieving the stated objectives. § 385.52 Criteria: Applicant. The criteria to be used by MarAd in evaluating all applicants prior to award of a grant or cooperative agreement are as follows: (a) The qualifications, capabilities, resources (both financial and technical) and experience of the applicant; (b) The facilities or techniques which the proposer possesses and offers which are considered to be integral factors for achieving the objectives of the proposal; (c) The qualifications, capabilities, and experiences of the proposed investigator, team leader, or key personnel, who are considered to be critical in achieving the objectives of the proposal; (d) The precision and detail with which the applicant states its plan to further the formally adopted socioeconomic and environmental policies of the United States (e.g., the encouragement of minority business enterprises); and, (e) The extent to which the applicant will share the total estimated cost of the project. FORMS OF AGREEMENTS 8 385.60 Scope. Sections 385.61 through 385.62 describe the form and content of the two parts which comprise a grant agreement or a cooperative agreement which will be executed by MarAd and a recipient of financial assistance. § 385.61 Grant and cooperative agreements: Special provisions. (a) MarAd has adopted two format matrices, one for grant agreements and one for cooperative agreements, to accommodate the variables inherent in undertaking a project with a particular recipient. These variables include, for example, identity of the recipient, scope of work, schedule of performance and obligations assumed by both parties. (b) The format matrices are available on request from the Awards Officer, and a copy of each is included in the information kit provided to all potential recipients of financial assistance.1 (c) MarAd will adapt the appropriate format matrix to the extent deemed necessary when drafting the particular 'An informational copy of both format matrices accompany this regulation as filed in the Office of the Federal Register. agreement to be executed by MarAd and a recipient of financial assistance for a specific project. § 385.62 Grant and cooperative agreements: Standard general provisions. (a) MarAd has adopted two standard general provisions which apply to grant and cooperative agreements, respectively, and said provisions are hereby incorporated by reference into these regulations.2 (b) MarAd reserves the right to amend or to render inapplicable any portion of the particular standard general provisions required for any particular grant or cooperative agreement: Provided, That such modification shall be accomplished only by means of an explicit statement in the special provisions executed by MarAd and a particular recipient. 2A copy of both such incorporated provisions accompany this regulation and are on file in the Office of the Federal Register. SUBCHAPTER K-REGULATIONS UNDER PUBLIC LAW 91-469 390.1 Scope of the regulations. 390.2 Application for an agreement. 390.3 Policy considerations. 390.4 Description of the agreement. 390.6 Administration of the agreement. 390.11 Sale or other disposition of agreement vessels. 390.12 Liquidated damages. 390.13 Failure to fulfill a substantial obligation under the agreement. APPENDIX I-U.S. DEPARTMENT OF TRANSPORTATION, MARITIME ADMINISTRATION--APPLICATION INSTRUCTIONS APPENDIX II-SAMPLE CAPITAL CONSTRUCTION FUND AGREEMENT APPENDIX III-U.S. DEPARTMENT OF TRANS- APPENDIX IV-SAMPLE ADDENDUM TO MARI- AUTHORITY: Sec. 204(b), 49 Stat. 1987 as amended, 46 U.S.C. 1114; sec. 21(a), 84 Stat. 1026, 46 U.S.C. 1177. SOURCE: 41 FR 4265, Jan. 29, 1976, unless otherwise noted. § 390.1 Scope of the regulations. (a) In general--(1) Scope. The regulations prescribed in this part govern the capital construction fund ("fund") authorized by section 607, Merchant Marine Act, 1936, as amended (46 U.S.C. 1177). (2) Establishment of a fund. A fund is established by an agreement ("agreement"), which is a contract between the party ("party") and the United States. (3) Purpose of the fund. Section 607 provides that any agreement entered into with the Secretary of Transportation must be for the purpose of providing replacement vessels, additional vessels or reconstructed vessels to be built and documented in the United States and operated in the United States foreign, Great Lakes or noncontiguous domestic trade. (4) Benefits of a fund. Section 607 provides for the nontaxability of certain deposits of money or other property placed into a fund established pursuant to an agreement within certain ceilings. These ceilings are equal to: (i) Earnings or gains realized from the operation of an agreement vessel; (ii) Net proceeds realized from the sale or other disposition of an agreement vessel or from insurance or indemnification from the loss of an agreement vessel; and (iii) Earnings from the investment or reinvestment of amounts on deposit in the fund. (5) Delegation. The Secretary of Transportation has delegated the authority for matters relating to the United States Merchant Marine to the Maritime Administrator, Department of Transportation ("Maritime Administrator"). (b) Act. For purposes of this part, the term "Act" shall mean the Merchant Marine Act, 1936, as amended (46 U.S.C. 1101 through 1249). (c) Joint regulations. For purposes of of this part, the term “joint regulations" shall mean the regulations prescribed by the Secretary of Transportation and the Secretary of the Treasury under section 607 of the Act and published in Title 26, Part 3 of the Code of Federal Regulations (reprinted in Part 391 of this chapter). (d) Cross references. For rules relating to the Federal Income Tax aspects of a fund, see the joint regulations. For rules governing agreements relating to the fisheries of the United States, see the separate Secretary of Commerce regulations published in Title 50, Part 259 of the Code of Federal Regulations. (2) General eligibility requirements. Section 607 of the Act specifies who is eligible for a fund and the application instructions specify what information is required to establish such eligibility. An applicant must: (i) Be a citizen of the United States within the meaning of section 2 of the Shipping Act, 1916, as amended (46 U.S.C. 802, 803). See Part 355 of this Title for requirements for establishing United States citizenship; (ii) Own or be the lessee of one or more eligible vessels or share thereof as defined in section 607(k)(1) of the Act, or be party to a contract for the construction of one or more eligible vessels, or share thereof, as defined in paragraph (b) of § 390.5; (iii) Have a program which furthers the purposes of the Act (see § 390.3 relating to policy considerations) and provides for the acquisition, construction or reconstruction of a qualified vessel, as defined in section 607(k)(2) of the Act. Such provisions state that the vessel will be operated in the United States foreign, Great Lakes or noncontiguous domestic trade as defined in sections 607(k) and 905(a) of the Act; and (iv) Demonstrate the financial capabilities to accomplish the program. (b) Information which may be required in conjunction with the application. An applicant must provide such facts, documents and materials as the Maritime Administrator may require in considering whether to enter into an agreement. An applicant should be ready to make available such applicable materials, including, but not limited to: Design plans, data concerning the reasonableness of the cost of the program, construction contracts, financial statements, certificates of incorporation, bylaws, articles of partnership, stock ownership data and other information including judgments and pending litigation which would affect the proposed program. The specific information required is set forth in the instructions. (Approved by the Office of Management and Budget under control number 21330027) [41 FR 4265, Jan. 29, 1976, as amended at 47 FR 25530, June 14, 1982] § 390.3 Policy considerations. (a) In general. It is the policy of the United States, as set forth in section 101 of the Act, that for the national defense and the development of its foreign and domestic commerce, the United States shall have a merchant marine: sufficient to carry a substantial portion of its water-borne export and import foreign commerce and to provide shipping service essential for maintaining the flow of such commerce at all times; capable of serving as auxiliaries in time of war or national emergency; owned and operated by United States citizens insofar as practicable and composed of the best equipped, safest and most suitable types of vessels, constructed and documented in the United States and manned with United States citizens. (b) Unacceptable programs—(1) In general. The Maritime Administrator will not enter into an agreement where the proposed program is not, in his opinion, in consonance with the policies of the Act. (2) Specific unacceptable programs. The Maritime Administrator will not enter into an agreement where the proposed program is merely to accomplish the following: (i) Reconstruction of an existing vessel, unless such reconstruction will exceed $1,000,000 in cost, will be capitalized under the Internal Revenue Code of 1954, as amended, and the regulations thereunder and will result in a vessel which is significantly more competitive; or (ii) Acquisition of an existing vessel; (iii) Payment of the principal on existing indebtedness. (3) Waiver. The Maritime Administrator may, for good cause shown, waive the provisions of paragraph (b)(2) of this section. For example, the Maritime Administrator may waive the monetary limit in paragraph (b)(2)(i) of this section where the applicant proposes to reconstruct a small vessel. § 390.4 Description of the agreement. (a) In general. The agreement consists of a standard part and appended schedules. The standard part of the |