accruals, the operator should communicate with the Comptroller, Maritime Administration, Washington 25, D. C., who shall forward necessary instructions and forms to be used.

(f) Current financial reports. Current financial reports are to be submitted by each operator in the manner described below:

(1) Balance Sheet: To be prepared as of March 31st, June 30th, September 30th and December 31st, of each calendar year, in conformity with the specimen appended to the Uniform System of Accounts prescribed in General Order 22 Revised (Part 282 of this chapter), and submitted in triplicate as soon as practicable but not later than forty-five (45) days after each of the aforesaid dates, except that in lieu of the Balance Sheet prepared as of December 31st of each year there shall be submitted a copy of the Balance Sheet as shown in Maritime Administration Form 172 Financial Report as soon as practicable but in any event not later than May 15th of each year.

(2) Income Sheet: An income sheet shall be prepared for the period January 1 to March 31 of each calendar year, and from January 1 to the end of each succeeding quarter of the calendar year, in conformity with the specimen appended to the Uniform System of Accounts prescribed in Part 282 of this chapter (General Order 22, Revised), and submitted in triplicate as soon as practicable but not later than forty-five (45) days after the end of the respective periods, except that in lieu of the Income Sheet prepared as of December 31st of each year there shall be submitted a copy of the Income Sheet as shown in Maritime Administration Form 172 Financial Report as soon as practicable but in any event not later than May 15th of each year. These statements shall include completed voyage accountings for all voyages which terminated during the period.

(3) Summary vessel operating statements by service and vessel type:

(i) A summary vessel operating statement shall be prepared for each service by vessel type (C-2, C-3, etc.) within each service in conformity with the voyage operating statements provided for in the Uniform Annaul Report form prescribed by the Maritime Administration. These statements will be prepared semiannually for the period January 1 to June 30 for each calendar year and from

January 1 to the end of said calendar year. Separate statements will be prepared for subsidized and non-subsidized voyages.

(ii) Summary statements are to be prepared and transmitted in triplicate and concurrently with the second and fourth quarter Balance Sheet and Income Statements required under subparagraphs (1) and (2) of this paragraph, and must reconcile with the voyage revenue and expense from all operations as reported in the Income Sheet.

(4) The current financial reports specified in this section shall be sent to the Comptroller, Maritime Administration.

(g) General. All reports and other communications called for by the foregoing should be addressed to the Secretary, Maritime Administration, Washington 25, D. C.

[G.O. 12, Rev., 14 F.R. 4875, Aug. 6, 1949, as amended by Supp. 2, Amdt. 1, 21 F.R. 323, Jan. 17, 1956; Supp. 2, Amdt. 2, 29 F.R. 12726, Sept. 9, 1964; Supp. 3, Amdt. 2, 29 F.R. 15758, Nov. 24, 1964]

As used in §§ 281.2 to 281.6, except as otherwise indicated by the context:

(a) The term "period of idleness" means any period between voyages during which the vessel is not being worked;

(b) The term "lay-up period" means that part of the period of idleness occurring in a continental United States port in excess of ten days, continuing until the commencement of the next voyage or until the vessel shall be temporarily or permanently withdrawn from subsidized service pursuant to the determination by the Maritime Administrator;

(c) The term "Administrator" means Maritime Administrator;

(d) The term "Coast Director" means the Coast Director of the Maritime Administration having jurisdiction over the port or ports involved;

(e) The word "operator" means an operator receiving operating-differential subsidy for the voyage involved under Title VI of the Merchant Marine Act, 1936, as amended.

[G. O. 27, Rev., 18 F. R. 909, Feb. 14, 1953] § 281.3 Method of commencing and terminating voyages and of determining lay-up periods.

following the termination of the prior voyage or, in the event that a period of idleness in excess of ten days follows a voyage termination, as of 12:01 a.m. of the day on which such lay-up period ends.

(b) Voyage terminations. Voyages shall terminate at the last United States port of call at midnight of the day of the completion of the paying off of the crew from foreign articles, or upon the completion of the final discharge of cargo or ballast at the last United States port of discharge, or upon the completion of voyage repairs, whichever event occurs last: Provided, however, That if a vessel sails outward on a new voyage prior to midnight of the same day, the inward voyage shall terminate as of midnight of that day, and the outward voyage shall commence as of 12:01 a. m. of the succeeding day; and that where a portion of any particular voyage overlaps a portion of the next succeeding voyage and the quantity of inward cargo remaining aboard at the port at which major cargo activities for the outward voyage are begun does not, in the opinion of the operator, justify extension of the inward voyage beyond that port, the operator shall immediately request the Coast Director for permission to treat the inward voyage as having terminated at midnight of the day specified in such request and shall advise the Coast Director what cargo has been and is still to be discharged and loaded at each port of the inward voyage; and that where, in the opinion of the operator, voyages as a general practice should terminate at the home or terminal port, rather than at the last inward port of discharge, application for such termination may be made to the Coast Director, and in such cases the voyage termination date shall be as approved by the Coast Director. The Coast Director shall advise the operator promptly if he disapproves the operator's request, and, in the event of such disapproval, the Coast Director's decision as to such termination shall prevail: Provided, That all terminations shall be as of midnight of the day specified.

(c) Periods of idleness. In the event that a period of idleness, in excess of ten days, should immediately follow the termination of a voyage (subsidized or unsubsidized), the first ten days of such period of idleness shall be included in the preceding voyage and the date of termination thereof adjusted accordingly. If

a vessel which has been idle commences loading cargo, stores, or fuel prior to the eleventh day of such idleness, the commencement of the new voyage shall be antedated to coincide with the termination of the preceding voyage.

(d) Lay-up period. A separate accounting period shall be created to cover each lay-up period.

(e) Excessive delays in United States Ports. Whenever a vessel is delayed in a continental United States port during a voyage for a period of ten days or more in excess of its normal period of operations in said port, the operator immediately shall report said circumstance, together with all pertinent facts, to the Coast Director. The Coast Director shall determine whether or not said delay was justified and if operating costs for said period were reduced to a minimum in accordance with sound commercial practice.

[G. O. 27, Rev., 18 F. R. 910, Feb. 14, 1953 as amended by Supp. 1, 20 F. R. 3098, May 7, 1955; Amdt. 2, 23 F.R. 7295, Sept. 19, 1958] § 281.4 Treatment of subsidy during period of idleness, lay-up period and off-hire period.

During a lay-up period, subsidy shall be payable only for such subsidizable items of expense as are determined by the Maritime Administrator, after presentation by the operator of the facts relating to such lay-up period, to be necessary for the maintenance, preservation, repair, or husbanding of the vessel during and under the circumstances of such lay-up; however, the Maritime Subsidy Board reserves the right to suspend at any time the payment of subsidy on laid-up vessels when, after consideration of the facts and circumstances regarding such lay-up period, it determines that an unreasonable lay-up period has elapsed or such lay-up was not warranted: Provided, That as to a chartered ship operated under a "Use Agreement," operating-differential subsidy shall cease to accrue to the ship simultaneously with the time it goes "off hire" and subsidy shall not again accrue to said ship until it is reemployed in the subsidized service as determined in accordance with § 281.3. Nothing herein shall limit any other rights of the United States with respect to the payment or non-payment of subsidy.

[G.O. 27, Rev. Amdt. 3, 26 F.R. 8317, Sept. 2, 1961]

§ 281.5 Right of Administrator to recover subsidy for any period of idleness.

The Administrator may, prior to payment of subsidy for any voucher period which includes a period of idleness, require the operator to establish to the satisfaction of the Administrator that such period of idleness could not have been prevented in whole or in part through the most efficient and economical operation. The Administrator may recover any payment of subsidy for any item of expense allocable to such period of idleness which in the opinion of the Administrator could have been avoided by efficient and economical operation. [G. O. 27, Rev., 18 F. R. 910, Feb. 14, 1953] § 281.6

Interpretation.

All questions of interpretation arising under the sections of this part shall be submitted to the Administrator for determination, whose decision thereon shall be final.

[G. O. 27, Rev., 18 F. R. 910, Feb. 14, 1953]

NON-SUBSIDIZED VOYAGES

SOURCE: The provisions of §§ 281.11 to 281.17 contained in General Order 80, 22 F.R. 2911, Apr. 25, 1957, unless otherwise noted. § 281.11 Scope and general comments.

(a) Except as provided below, §§ 281.11 to 281.17 apply to non-subsidized voyages to be made by a subsidized operator or by a related company, as referred to in Article II-16 of the operating-differential subsidy agreements. Except as provided below it also applies to non-subsidized voyages of subsidized ships.

(b) Sections 281.11 to 281.17 do not apply to (1) non-subsidized voyages specifically authorized by the operating-differential subsidy contract of the operator and non-subsidized voyages by subsidized ships in the subsidized services of the operator, which voyages will be acted on under the provisions of the operator's operating-differential subsidy agreement; or (2) non-subsidized voyages in services that have not been determined to be essential as provided in section 211, Merchant Marine Act, 1936, as amended, by a non-subsidized ship operated by a non-subsidized company related to a subsidized operator.

(c) Sections 281.11 to 281.17 apply to the following categories only to the extent indicated:

(1) Charters to the Military Sea Transportation Service or to a non-sub

sidized operator-paragraphs (a) and (e) of this section; §§ 281.12 (a) (6) and (b); 281.15 (b); 281.16 (a), (b), (c), and (f); and 281.17.

(2) Non-subsidized voyages by nonsubsidized ships (other than those excluded under paragraph (b) of this section) in a service where there are no U. S.-flag berth sailings by other operators-paragraphs (a), (e), and (f) of this section; §§ 281.12 (a); 281.15; 281.16 (a), (b), (c), (e), and (f); and 281.17. (3) Ships chartered from the Maritime Administration-§ 281.16.

(d) Except as otherwise determined by the Maritime Administrator, application by a subsidized operator to make a non-subsidized voyage on a route, line or service on which U. S.-flag berth service is maintained but on which the applicant does not maintain a berth operation will not be approved unless the applicant has requested and furnished the written consent of such operator(s) of the U. S.-flag berth service(s). Failure of other operator(s) of U. S.-flag berth service(s) to protest or consent to a nonsubsidized voyage within 2 working days, Saturdays, Sundays, and legal holidays excluded (one working day in the case of single voyage charters for the carriage of bulk cargoes) after notification may be interpreted by the Maritime Administrator as consent to such voyage. Such consent will not be required from any U. S.-flag berth operator who is employing any U. S. Government-owned ship(s) competitively in such route, line, or service under charter pursuant to Public Law 591, 81st Congress.

(e) Responsibility for compliance with §§ 281.11 to 281.17 shall rest on the subsidized operator regardless of whether he is owner, operator, or charterer of the ship involved.

(f) "U. S.-flag berth operator" as used in §§ 281.11 to 281.17 means an operator rendering on the given route, line, or service an exclusively U. S.-flag service maintaining a definite advertised schedule, giving relatively frequent sailings at regular intervals between specific United States ports or range and designated foreign ports or range.

(g) For the purposes of §§ 281.11 to 281.17, competition shall be deemed to exist between the proposed non-subsidized voyage and voyages of other U. S.flag berth operators in the event the non-subsidized voyage operates in the same route, line, or service as regularly scheduled voyages by such other opera

tors, whether or not the respective itineraries cover identical ports or follow the same order of port calls. Generally, the test will be whether the proposed non-subsidized voyage will provide a service of the type which would be competitive under the considerations of section 605 (c) of the 1936 Act.

§ 281.12 Application for non-subsidized

voyages.

(a) Unless a shorter period is acceptable to the Maritime Administrator, application must be filed not less than five working days, excluding Saturdays, Sundays, and legal holidays (two working days in the case of single voyage charters for the carriage of bulk cargoes) prior to the date by which the operator requires action thereon, accompanied by the following data:

(1) Name of vessel and date by which decision on application is required.

(2) Statement showing why the voyage is needed, why it will not prejudice other sailings of applicant, and what effect the results will have on the Government's recapture position.

(3) Nature and amounts of anticipated cargo (indicating the approximate amounts of MSTS, bulk commercial and other commercial cargo, separately) on the proposed non-subsidized voyage, outbound and inbound, by principal loading and destination ports. If no inbound cargo is indicated, the operator shall not, in the event of approval of its application, lift inbound cargo unless and until it secures the approval of the Maritime Administration pursuant to an application filed in accordance with the procedure specified in §§ 281.11 to 281.17.

(4) Proposed sailing schedule for the voyage for which approval is requested, including estimated total voyage days.

(5) Pro forma financial results of said voyage including all charges for overhead (showing basis for allocation thereof), depreciation and interest, and all other applicable items.

(6) If the non-subsidized voyage is to be made with a chartered vessel, or if charters are made to MSTS or a nonsubsidized operator-name and type of vessel, from whom or to whom chartered, type and period of charter, charter hire rate, range of ports, and other pertinent charter terms.

(b) In the case of charter of a subsidized ship between subsidized operators, the charterer shall furnish the required data, and the owner shall furnish to the

(a) When in the judgment of the Maritime Administrator it appears that the individual non-subsidized voyages for which approval is requested are forming or tending to form a pattern leading to the establishment of a regular non-subsidized service, or, if in the case where such a non-subsidized service has already been established, it appears that the operator proposes to continue such service indefinitely, the Maritime Administrator may call an informal public hearing prior to making a final decision. Such hearing shall consider evidence respecting adequacy or inadequacy of service and such other evidence as the Maritime Administrator determines is pertinent to the proceedings consistent with his responsibilities under the Merchant Marine Act, 1936, as amended. Such hearing, for advisory purposes only, may be held by the Administrator, or in his discretion, by his designee.

(b) In the event favorable action is taken subsequent to a hearing under § 281.13 (a) authorizing a series of voyages, the findings and determinations of the Maritime Administrator shall be subject to annual review, except that upon presentation of new evidence, the Maritime Administrator may at any time reopen for review and after reasonable notice to the operator may cancel or modify any such authorization. In the event the operator requests permission to continue its non-subsidized operations beyond the period authorized by the Maritime Administrator, the Maritime Administrator shall determine whether or not further hearing on said matter is warranted prior to taking final action upon such request.

(c) In the event an operating-differential subsidy application or a request for an adjustment in the number of sailings under an existing contract is

or has been filed by a subsidized operator and is under consideration by the Federal Maritime Board or scheduled for a section 605 (c) hearing, the hearing provisions of these rules and regulations may be waived or suspended by the Maritime Administrator and he may grant such authorizations as he deems appropriate under the circumstances. § 281.14 Prior authorization.

A series of non-subsidized voyages previously authorized by the Maritime Administration may continue under the terms of such authorization but may be set for hearing in the discretion of the Maritime Administrator. § 281.15

Criteria for approval of nonsubsidized voyages.

(a) Service. Each non-subsidized voyage application must show definite need for the voyage whether or not in addition to the regular sailings maintained by the applicant and that approval of the voyage will not adversely affect applicant's regular sailings.

(b) Financial results. Each voyage should show expectation of profit after all proper charges, including overhead, charter hire, depreciation, and interest. However, the Maritime Administrator, in his discretion, may waive or modify this condition.

§ 281.16 Conditions to attach in event of approval of application.

(a) No subsidy shall be payable with respect to said voyage.

(b) The voyage shall not count toward the operator's compliance with the minimum and maximum sailing requirements of its operating-differential subsidy contract.

(c) The financial results (including overhead, depreciation, interest, and all proper charges) of voyages made in other than the operator's subsidized service with subsidized or non-subsidized ships shall not be included in net earnings from subsidized operations; and the "capital necessarily employed" attributable to the ship(s) performing such operations shall also be excluded from subsidized operations.

(d) The financial results (including overhead, depreciation, interest, and all proper charges) of non-subsidized voyages made by non-subsidized ships in the operator's subsidized service shall be in

cluded in net earnings from subsidized operations, and the "capital necessarily employed" attributable to the ship(s) performing such operations shall be taken into account as capital necessarily employed in subsidized operations for the period of such voyages; provided, however, the results:

(1) Shall be included in the subsidized operations for recapture and reserve fund purposes if the voyage is partially within the subsidized service and 50 percent or more of the total gross voyage revenue is derived from carrying cargo between ports within the subsidized service, and

(2) Shall be excluded from the subsidized operations for recapture and reserve fund purposes if the voyage is partially within the subsidized service and less than 50 percent of the total gross voyage revenue is derived from carrying cargo between ports within the subsidized service.

(e) The operator shall not advertise non-subsidized voyages outside his subsidized service except (1) for passenger ships, (2) where no established U. S.-flag service exists, or (3) where the voyage is part of a non-subsidized service authorized by the Maritime Administrator. Compliance with the requirements of this section is waived in the event a U. S.-flag berth operator is employing any U. S. Government-owned ship(s) competitively in such route, line, or service under charter pursuant Public Law 591, 81st Congress.

to

(f) Without prior written approval of the Maritime Administrator, there shall be no deviation from the terms and conditions of the authorization of the nonsubsidized voyage(s). However, the Maritime Administrator may, in his discretion, where unusual circumstances in any particular case so require or where it may be in the mutual interest of the operator and the Government, authorize a departure from or modification of any of the conditions of paragraphs (b) through (e) of this section.

§ 281.17 Determinations and questions of interpretation.

The decision of the Maritime Administrator shall be final with respect to all determinations and questions of interpretation arising under §§ 281.11 to 281.17.