Operating-Differential Subsidies

 

To promote development and maintenance of the U.S. Merchant Marine by granting financial aid to equalize cost of operating a U.S. flag ship with cost of operating a competitive foreign flag ship.

Deleted 05/03/2004 (Budget authority expired upon completion of funding actions, per Maritime Security Act of October 6, 1996) 20.804 MARITIME ADMINISTRATION, DEPARTMENT OF TRANSPORTATION Direct Payments for Specified Use. As of October 1, 2002, all contracts have expired. Merchant Marine Act of 1936, Title VI, as amended; Public Law 74-835, 46 U.S.C. 1171-1183. Any U.S. citizen who has the ability, experience, financial resources, and other qualifications necessary to enable him or her to conduct the proposed operation of U.S. flag vessels in an essential service in the foreign commerce of the U.S. U.S. citizens. Proof of U.S. citizenship. This program is excluded from coverage under OMB Circular No. A-87. None. This program is excluded from coverage under OMB Circular No. A-102. This program is excluded from coverage under E.O. 12372. Not applicable. See the Uses and Use Restrictions section above. This program is excluded from coverage under OMB Circular Nos. A-102 and A-110. See the Uses and Use Restrictions section above. The Office of Insurance and Shipping Analysis reviews applications and determines that ODS may be paid if: (1) the operation is required to meet foreign competition; (2) the applicant owns, leases, can or will build competitive vessels; (3) the applicant possesses the ability, experience and financial resources necessary to conduct the operation; and (4) the granting of aid is necessary to place the proposed operation on a parity with foreign competition. Award decisions are approved by the Maritime Subsidy Board who will then notify operator of award. None. From 90 days to 2 years. Appeals of decisions of the Maritime Subsidy Board are directed to the Secretary of Transportation in accordance with Department Organization Order 1100.60. Not applicable. (1) The operation is required to meet foreign competition; (2) the applicant owns, leases, can or will build competitive vessels; (3) the applicant possesses the ability, experience and financial resources on a parity with foreign competition. Award decisions are approved by the Maritime Subsidy Board who will then notify operator of award. The Administration has a policy of awarding no new ODS contracts; all existing contracts will be honored. The Maritime Security Act, which was enacted on October 8, 1996, provides for the wind-up of the program by providing that the Secretary of Transportation shall not enter into any new contract for operating-differential subsidy (ODS). This law also provides that any ODS contract in effect before the date of enactment shall continue in effect and terminate as set forth in the contract. Title VI of the Act provides for the payment of operating-differential subsidy on vessels to be used in a foreign service in the foreign commerce of the United States, which has been declared to be essential by the Secretary of Transportation under Section 211 of the Act. Operating subsidy is based on the difference between the fair and reasonable cost of certain items of operating expense and the estimated cost of the same items of expense if the vessels were operated under foreign registry. See program 20.813, Maritime Security Fleet Program. The reports required and a list of records to be maintained are listed in the Maritime Administration Index of Current Regulations, published by the Maritime Administration. All financial records concerning subsidizable expenses are subject to audit, on a voyage basis. Audits shall be made of organizations participating in this program on an annual basis. These audits will be made by the Office of the Inspector General (DOT) in accordance with the General Accounting Office guidelines, "Standards for Audit of Government Organizations, Programs, Activities and Functions," and additional OMB guidance. See the Reports section above. The subsidy paid for liner vessels may not exceed the difference between the subsidizable cost of wages, subsistence of officers and crews on passenger vessels, and the fair and reasonable cost of insurance and maintenance and repairs not compensated by insurance, over the estimated subsidizable and fair and reasonable costs of the same items if the vessels were operated under foreign flag. Any vessel operating in an essential bulk service may be paid such sum as determined necessary by the Secretary of Transportation to make the cost of operating such vessel competitive with the cost of operating similar vessels under the registry of a foreign country. Not to exceed 20-year contracts. After signing of contract, subsidy is payable commencing with loading of cargo on first outbound voyage. See Maritime Administration Regional Offices listed in Appendix IV of the Catalog. Edmond J. Fitzgerald, Director, Office of Insurance and Shipping Analysis, Maritime Administration, Department of Transportation, 400 Seventh Street, SW., Washington, DC 20590. Telephone: (202) 366-2400. http://www.marad.dot.gov 69-1709-0-1-403. (Program Level) FY 02 $0; FY 03 est $0; and FY 04 est $0. Depending upon the type of service vessel and trade, the per day subsidy payments per ship normally range from about $5,000 to $10,000. 46 CFR Part 251; "The U.S. Merchant Marine-A Brief History." Operating-differential subsidy is paid on U.S. flag vessels operating in the foreign commerce of the United States. Subsidized vessels include container ships, lighter- aboard-ships (LASH), liquid and dry bulk cargo vessels, and tug-barge vessels.