ment for operation or December 7, 1941, whichever was later, until September 2 1945.

(5) In the case of any vessel covered by subparagraph (3) of this paragraph, the amount of difference in statutory sales price resulting from the presence of desirable features not contained in the standard vessel of the same type shall be depreciated from the date of delivery of the vessel or the date of installation of such features if such features were installed after delivery.

No adjustment, except in respect of passenger vessels constructed before January 1, 1941, shall be made under the act which will result in a statutory sales price which (1) in the case of any Liberty type vessel will be less than 311⁄2 percent of the domestic war cost of vessels of such type, (2) in the case of drycargo vessels (except Liberty type vessels) will be less than 35 percent of the domestic war cost of vessels of the same type, or (3) in the case of a tanker (except a Liberty tanker) will be less than 50 percent of the domestic war cost of tankers of the same type.

"Cessa

(g) Cessation of hostilities. tion of hostilities" means the date proclaimed by the President as the date of the cessation of hostilities in the present war,1 or the date so specified in a concurrent resolution of the two houses of the Congress, whichever is the earlier.

(h) Citizen of the United States. "Citizen of the United States" includes a corporation, partnership, or association only if it is a citizen of the United States within the meaning of section 2 of the Shipping Act, 1916, as amended, and section 905 (c) of the Merchant Marine Act, 1936, as amended. The Secretary of the Administration will furnish, on request, copies of memoranda dealing with citizenship.

(i) Affiliated interest. The term "affiliated interest" shall include any person or concern that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the applicant. The term "control" (including the terms "controlled by" and "under common control with") as used in this paragraph means the possession, directly or indirectly, of the power to direct or cause

1 Twelve o'clock noon, Dec. 31, 1946; see Proclamation 2714, Dec. 31, 1946, 3 CFR, 1946 Supp.

the direction of the management and policies of the applicant, whether through ownership of voting securities, by contract, or otherwise.

(j) Constructed or date constructed. "Constructed" or "date constructed" means the date upon which a vessel was originally delivered by the shipbuilder.

(k) Act. "Act" means, except where the context clearly indicates otherwise, the Merchant Ship Sales Act of 1946 (Public Law 321, 79th Cong., 2d Sess., approved March 8, 1946).

(1) Regulations. "Regulations" mean the rules and regulations prescribed by the Administration, under the Merchant Ship Sales Act of 1946 (Public Law 321, 79th Cong., 2d Sess), §§ 299.1 to 299.134, inclusive, published in the FEDERAL REGISTER and all succeeding amendments and supplements thereto similarly published in the FEDERAL REGISTER.

(m) Secretary. "Secretary" means the Secretary of the Administration or any Assistant Secretary thereof or any other official or employee of the Administration designated by the Administration to perform the duties required of the Secretary under this part. (Communications sent to the Secretary should be addressed "Secretary, Maritime Administration, Washington, D.C., 20235.")

2

(n) Working capital. "Working capital" means the excess of "tota! current working assets" over "total current working liabilities" determined in accordance with the instructions and balance sheet embodied in the form of "General Financial Statement" prescribed by the United States Maritime Commission (Budget Bureau approval No. 62-R010-42): 2 Provided, That (1) in determining the amount of working capital, unpaid tenders of "just compensation" made by the Maritime Administration (or made by the United States Maritime Commission or the War Shipping Administration to the extent approved by the Administration) for title to, or use (to the extent accrued) of, vessels (irrespective of whether or not such tenders have been accepted by the owners) may be included, (2) an amount equivalent to the excess (if any) of 50 percent of the amount of "Unterminated Voyage Revenue" over the amount of "Unterminated Voyage Expense" reflected in the balance sheet shall be deducted from the amount of working

2 Copies of the "General Financial Statement" will be furnished by the Maritime Administration on request.

capital determined in accordance with the preceding provisions of this paragraph.

(0) Net worth. "Net worth" shall include capital stock, capital suplus, and earned surplus adjusted to exclude capital stock subscribed but not issued, capital stock held in the treasury, appreciation, good will, and other intangibles not actually acquired for cash or for a consideration determined by the Administration to be equivalent thereof, and such other adjustments as are consistent with sound accounting principles.

(p) Preoperating and operating expenses. "Preoperating and operating expenses" shall include wages, subsistence, stores, supplies, equipment, fuel, maintenance, repairs, insurance, and other vessel expenses as described in the instructions embodied in the "General Financial Statement" prescribed by the Administration (accounts numbered 700.01 to 700.64 inclusive, pages 8 and 9) and overhead expenses, but shall not include agency fees and commissions; wharfage, dockage, and other port expenses; stevedoring and other cargo expenses; brokerage, canal tolls, and other voyage expenses. Such preoperating and operating expenses for a 60 day period (including prepaid insurance for one year) shall be deemed to aggregate:

1 Effective with respect to applications (and amendments of prior applications) received by the Maritime Commission during the period between July 12, 1946, and April 8, 1947.

Effective from August 2, 1946.

Effective from Aug. 2, 1946, to Apr. 11, 1947, both inclusive.

Effective from Apr. 12, 1947, to Aug. 12, 1949. both inclusive.

(q) Related company. The term "related company," used to indicate a relationship with the applicant, shall include any person or concern that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the applicant. The term "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the applicant (or related company), whether through ownership of voting securities, by contract, or otherwise. § 299.2 Order of preference.

(a) In general. All citizen applications received by the Secretary within a given calendar month shall be given preference over all applications received by the Secretary in any subsequent calendar month. For the purposes of this section the first calendar month shall be considered to include the period from April 23, 1946, to June 1, 1946. For applications involving vessels with respect to which the original publication of prices was made in the FEDERAL REGISTER of August 17, 1946, the first calendar month shall be considered to include the

period from the date of such publication to September 1, 1946.

(b) Citizen applications over noncitizen applications; purchase over charter. The Administration will give preference to citizen applications over noncitizen applications, and, as between citizen applications to purchase and citizen applications to charter, will, as far as practicable and consistent with the policies of the act, give preference to citizen applications to purchase.

(c) Preference among citizen applications. In determining the order of preference between citizen applications to purchase or between citizen applications to charter, the Administration will consider, among other relevant factors, the extent to which losses and requisitions of the applicant's prewar tonnage have been overcome, and will, in all cases, in the sale and charter of war-built vessels, give preference in such sale or charter, as the case may be, to the former owner of such vessel or to the person for whom the vessel was constructed but to whom delivery thereof was prevented by the United States.

(d) Preference among noncitizen applications. In determining the order of preference between noncitizen applications to purchase, the Administration will give preference to citizens of the Commonwealth of the Philippines and in determining the preference between other noncitizen applicants, will consider, among other relevant factors, the extent to which losses in prewar tonnage of the various member nations of the United Nations, incurred in the interest of the war effort, have been overcome, and the relative effects of such losses upon the national economy of such member nation.

(e) Preference where citizen application shows intent to transfer vessel(s) to foreign registry or flag after purchase. With respect to any application in which the citizen applicant states that it will apply to the Administration for approval to transfer the vessel(s) to foreign registry or flag, if and when purchased by the applicant, the Administration reserves the right to defer action until after all other applications by citizens of the United States filed within the same preference period have been acted upon and the Administration reserves entire discretion in determining whether transfer to foreign registry and flag will be approved.

(1) If the citizen applicant states that it will not apply to the Administration for approval to transfer the vessel(s) to foreign registry or flag, if and when purchased by the applicant, the Administration will give the application the preference provided for applications by citizens of the United States, but if, thereafter, a request is made (pursuant to section 9 or section 37 of the Shipping Act, 1916, as amended), to transfer or place any of such vessel(s) under foreign registry or flag, the Administration will take into consideration the fact that the applicant stated in the application that such a request would not be made.

(2) In no case will the Administration approve transfer of a P-2 type or other passenger type or a Liberty type collier or Liberty type tanker.

(f) Application of charterer to purchase chartered vessel; preference over all other applicants. A charterer of a vessel may file an application for the purchase of such vessel in any case where an application has previously been made by another applicant to purchase the same vessel, and, if filed within fifteen days from the date of the filing of the first application, a charterer filing such purchase application shall have preference over all other applicant subject only to the statutory preference granted to the former owner of such vessel or to the person for whom such vessel was constructed but to whom delivery thereof was prevented by the United States. § 299.5 Limitation on eligibility for benefits of act.

No person shall be eligible to purchase or charter a war-built vessel under the act, or to receive an adjustment under section 9 of the act, unless such person makes an agreement with the Administration (which agreement shall be incorporated in every contract for sale or charter entered into pursuant to the provisions of the act) binding upon such person and any affiliated interest to the effect that the liability of the United States under any charter party or taking for use, made or effected prior to the date of the enactment of the act, for the loss, on or after such date of enactment and prior to September 3, 1947, of any vessel owned by such person and under charter to the United States (excluding a vessel with respect to which an adjustment under section 9 of the act is made) shall be limited to an amount equal to just compensation as

(a) Any person applying to purchase or charter under the regulations may attach to his application an application in substantially the form provided in § 299.134, that the Administration reconvert or restore the vessel(s) for normal operation in commercial services, including the removal of national defense or war service features. Any such request shall include such detailed information as is necessary to advise the Administration fully of the work required.

(b) Any person applying to purchase or charter a war-built vessel under this part may attach to this application an application substantially in the form provided in § 299.134, that the Administration make replacements, alterations, or modifications with respect to the vessel applied for or install therein such special features as may be necessary or advisable to make such vessel suitable for commercial operation on trade routes or services or comparable as to commercial utility to other vessels of the same general type. Any such request shall include such detailed information as is necessary to advise the Administration fully of the work required.

(c) In approving or disapproving applications under paragraph (a) or (b) of this section, the Administration will consider, among other relevant factors:

(1) The availability of other suitable vessels for sale or charter to the applicant;

(2) Whether such reconversion, restoration, replacement, alteration or modification is essential in order to dispose of the vessel under the provisions of the act;

(3) Whether such reconversion, restoration, replacement, alteration or modification could be effected under any other provisions of law; and

(4) Whether such reconversion, restoration, replacement, alteration or modification is essential to the foreign or domestic commerce of the United States and would otherwise effectuate the policy and purposes of the act.

(d) Restoration or installation of special features, unless such features are

of

(Exact name the applicant on

of applicant) whose behalf I have executed the foregoing application, that the applicant is a citizen --3, that this application is made for the purpose of inducing the Maritime Administration to take the action requested herein, pursuant to the provisions of the Merchant Ship Sales Act of 1946, and particularly to section thereof; that I have carefully examined the application and all documents submitted in connection therewith and, to the best of my knowledge, information, and belief, the statements and representations contained in said application and related documents are full, complete, accurate, and true.

the profit and loss statement should be to the effect that, to the best of the knowledge and belief of the person making the certification, such statement correctly states the operating results of the applicant for the period covered thereby.

(c) Administration examination of books and accounts. The Administration shall have the right to examine the books, records, and accounts of applicants if and to the extent deemed necessary to verify financial statements submitted to it pursuant to this subpart.

§ 299.9 Exceptions and exemptions to rules and regulations.

(a) The Administration reserves the right to amend, modify, or terminate the regulations in this part at any time, either as a whole or with respect to any particular case or classes of cases, but without the consent of the applicant, no amendment or modification of this part shall be binding upon any transaction approved by the Administration prior to the date of publication in the FEDERAL REGISTER of such amendment or modification.

(b) Any of the forms set forth in this part may be modified to meet the requirements of the Administration in any particular case.

(c) The Administration, in any instance where it deems it necessary or desirable to do so, may employ bases other than those expressed in §§ 299.21, 299.25 and 299.31 in determining financial responsibility.

§ 299.10 Termination date.

No contract of sale will be made under the regulations in this part after January 15, 1951.

Subpart B-Sales of War-Built Vessels § 299.21

Sales of war-built vessels to citizens of the United States.

(a) Application. Any citizen of the United States as defined in § 299.1 (h) may apply to the Administration to purchase a war-built vessel at the statutory sales price (or price floor if higher). The application to receive consideration must be substantially in the form prescribed by the Administration in § 299.125. Three executed copies and fifteen conformed copies of the application must be filed with the Secretary, Maritime Administration, Washington, D.C., 20235. Each application must contain sufficient information to enable the Administration

to make all necessary determinations including the following:

(1) Citizenship of the applicant. (2) That the applicant possesses the following minimum financial requisites: (i) Sufficient working capital as defined in § 299.1 (n) and unrestricted special funds to enable it to make payment for, or the down payment on, the war-built vessel (the down payment to be not less than 25 percent of the statutory sales price (or price floor if higher) of such vessel);

(ii) After such payment, the sum of (a) sufficient working capital and/or available special funds to provide for payment of one annual installment on the deferred portion (if any) of the purchase price of the vessel and (b) sufficient working capital alone to provide for payment of (1) interest on the deferred portion (if any) of the purchase price of the vessel for one year at the rate of 32 percent per annum and (2) all required insurance on the vessel for one year in the amount stipulated in § 299.1 (p); and

(iii) Net worth, as defined in § 299.1 (o), at least equal to the sum of (a) 25 percent of the purchase price of the warbuilt vessel or such higher percentage as the Administration may require, and (b) one annual installment on the deferred portion (if any) of the purchase price of such vessel, such requirements to be maintained on each vessel until such time as the outstanding mortgage balance on each such vessel is reduced to an amount whereby the net worth requirement exceeds such balance by at least 10 percent, thereafter the minimum net worth requirement with respect to such vessel shall be 110 percent of the outstanding balance of the mortgage on that vessel.

Such minimum financial requirements shall be applicable with respect to each vessel applied for. In instances where the applicant is engaged in the operation of other vessels or in activities other than the operation of vessels, the amount of working capital and net worth required for such purposes will be taken into account in addition to such minimum financial requirements in determining whether the applicant possesses the required financial resources.

(3) The applicant's ability, experience, and other qualifications, necessary to enable him to operate and maintain the