national defense, maintenance of an adequate merchant marine, foreign policy of the United States, and the national interest.

II. CONDITIONS OF APPROVAL

The Maritime Administration's approval of transfer of vessels of 3,000 gross tons and over to foreign ownership or registry, or both, under sections 9 or 37 or both of the Shipping Act, 1916, as amended (whether such transfer is for operation or scrapping), shall be subject to the terms and conditions hereinafter stated.

If the vessel is being transferred for foreign flag operation, the terms and conditions shall run with the title to the ship and shall remain in effect for the period of the remaining economic life of the ship or for the duration of the national emergency proclaimed by the President on December 16, 1950, whichever period is longer. The economic life of a ship for the purpose of this statement of policy is 25 years from the date the vessel was delivered by the shipbuilder. This period will be extended another five years or such other period of time approved by the Maritime Administrator if the vessel is converted or jumboized. The terms and conditions are as follows:

A. Transfer of vessels of 3,000 gross tons and over to either foreign ownership or registry or both, and new ship construction for foreign-flag ownership and registry.

(1) Ownership. (a) Without the prior approval of the Maritime Administration, there shall be no transfer in the ownership or change in the registry of such vessel.

(b) Without the prior approval of the Maritime Administration, there shall be no transfer of stock interest in the foreign corporate contractor to persons not citizens of the United States (within the meaning of Section 2 of the Shipping Act, 1916, as amended). However, transfers of such stock or changes in ownership resulting from the death of any stockholder or owner are not subject to this condition. Notification of any such transfer of stock or ownership occurring by reason of death shall be filed with the Maritime Administration within 60 days from the date of the transfer of stock or change of ownership.

(2) Availability. The vessel, whether owned by the foreign contractor or any subsequent transferee, shall, if requested by the United States or any qualified department or agency thereof, be sold or chartered to the United States on the same terms and conditions upon which a ship owned by a citizen of the United States could be requisitioned for purchase or charter as provided for in Section 902 of the Merchant Marine Act, 1936, as amended (46 U.S.C. 1242). I the transfer of the vessel is to the flag of a country that is a member of the North Atlantic Treaty Organization (NATO), the Administrator will consider this condition satisfied if the vessel upon request is made available to a NATO country.

(3) Trade. (a) The vessel shall not engage in trade prohibited to U.S.-flag vessels under Department of Commerce Transportation Orders T-1 and T-2, as amended, or any modification thereof;

(b) The vessel shall not be chartered to aliens on a demise or bareboat basis without. the prior approval of the Maritime Administration; and

(c) The vessel shall not be chartered to aliens for carriage of cargoes of any kind to or from the Soviet Union, Latvia, Lithuania, Estonia, Poland, Czechoslovakia, Hungary,. Rumania, Bulgaria, Albania, North Korea, the Soviet Zone of Germany, Manchuria, Communist China, the Communist-controlled area of Vietnam, or Cuba, without the prior approval of the Maritime Administration.

(4) Default. In the event of default under conditions 1 or 2 or 3 above, the vessels approved for transfer shall be subject to the penalties imposed by Section 41 of the Shipping Act, 1916, as amended (46 U.S.C. 839). Pursuant to the provisions of Section 38 of the Shipping Act, 1916, as amended (46 U.S.C. 836), the Maritime Administrator may remit the forfeiture of the vessel provided for in Section 41 of the Shipping Act, 1916, as amended (46 U.S.C. 839), upon such conditions as may be required under the circumstances of the particular case, including the payment of a sum in lieu of forfeiture and the execution of a new agreement containing substantially the same conditions set forth above which will be applicable to the vessel for the remaining period of the original agreement. In order to secure the payment of any such sum of money, a foregin contractor owned or controlled by foreign citizens shall agree by way of a contract approved as to form by the General Counsel of the Maritime Administration to comply with the above conditions and to provide a United States commercial surety bond or other surety acceptable to the Maritime Administrator for an amount ranging from $25,000 to $250,000 depending upon the type, size and condition of the vessel. "Other surety" may be any one of the following:

(a) An irrevocable letter of credit from a United States bank;

(b) United States Government bonds; (c) The written guarantee of a friendly government of which the foreign buyer is a national;

(d) A written guarantee or penal bond by a United States corporation which is found to be financially qualified to service the undertaking to pay the stipulated amount;

or

(e) a foreign surety bond or guarantee of a foreign bank, if endorsed by a United States corporate surety company or a United States bank which would be responsible to the Maritime Administration.

If the foreign contractor is owned or controlled by US. citizens, the foreign contractor and its principal U.S. citizen owners shall

agree in form satisfactory to the General Counsel, Maritime Administration, to pay an amount ranging from $25,000 to $250,000, such agreement to be secured by the written guarantee of said parties, or other form of guarantee, as may be required by the Maritime Administration.

B. The sale of U.S. privately-owned vessels of 3,000 gross tons and over to foreign buyers for scrapping abroad.

(1) Ownership. The vessel or any interest therein shall not be sold without the prior written approval of the Maritime Administration.

(2) Time within which to be scrapped. Within a period of 18 months from the date of approval of the sale, the hull of said vessel shall be completely scrapped, dismantled, dismembered, or destroyed in such manner and to such extent as to prevent the further use thereof, or any part thereof, as a ship, barge, steamship, or any other means of transportation.

(3) Distribution of scrap material. The scrap resulting from the demolition of the hull of the vessel, the engines, machinery, and major items of equipment shall not be sold to, or utilized by, any noncitizen of the United States residing in the Soviet Union, Latvia, Lithuania, Estonia, Poland, Czechoslovakia, Hungary, Rumania, Bulgaria, Albania, North Korea, the Soviet Zone of Germany, Manchuria, Communist China, the Communist-controlled area of Vietnam, or Cuba. Such scrap shall not be exported to these countries. In addition, the engines, machinery and major items of equipment shall not be exported to destinations within the United States.

(4) Default. In the event of default under any or all of (1), (2), and (3) above, the contractor shall pay to the Maritime Administration, Department of Commerce, without prejudice to any other rights which the United States may have, as liquidated damages and not as a penalty, the sum of not less than $25,000, depending upon the size, type and condition of the vessel. This payment shall be secured by a surety company bond or other guarantee satisfactory to the Maritime Administration. "Other guarantee" may be one of those set out in section A(4) of this statement of policy.

(5) Evidence of scrapping and destination of scrap materials. There shall be filled with the Maritime Administration a certificate or other evidence satisfactory to its General Counsel, duly attested and authenticated by a United States Consul that the scrapping of the vessel (hull only) and disposal or utilization of the resultant scrap, the engines, machinery and major items of equipment have been accomplished in the manner prescribed by this section.

C. Resident agent in the United States to accept service of process for foreign transferee.

All foreign transferees, whether corporate entities, associations, companies, partnerships, individuals, or joint ventures, which

or who have been granted approval by the Maritime Administration pursuant to Sections 9 or 37 or both of the Shipping Act, 1916, as amended (46 U.S.C. 808 and 835), shall, prior to the issuance and delivery of the Transfer Order covering the ship or ships to be transferred, appoint and designate a resident agent in the United States to receive and accept service of process or other notice in any action or proceeding instituted by the United States of America relating to any claim arising out of the approved transaction. This appointment and designation of the resident agent shall not be terminated, revoked, amended or altered without the prior written consent and approval of the Maritime Administration. The resident agent designated and appointed by the foreign transferee shall be subject to approval by the Maritime Administrator. To be acceptable, the resident agent must maintain a permanent residence in the United States, shall be a banking or lending institution, or a ship operating or shipowning company incorporated under the laws of the United States, or a U.S. corporation which is satisfactory from the standpoint of known integrity and responsibility. No individual will be accepted as a resident agent.

The foreign transferee shall file with the Maritime Administration a written copy of the appointment of the resident agent, which copy shall be fully endorsed by the resident agent that it accepts the appointment, that it will act thereunder and that it will notify in writing the Maritime Administration in the event it is disqualified from so acting by reason of any legal restrictions. If a corporation is selected and approved as resident agent, service of process or notice upon any officer, agent, or employee of the corporation at its principal place of business would constitute effective service on, or notice to, the foreign transferee.

The subsequent transfer of ownership or registry of vessels which have been transferred to either foreign ownership or registry or both subject to Maritime Administration contractual control, as set forth above, will be subject to substantially the same Maritime Administration policy that governed the original transfer and sale, including such changes or modifications that have subsequently been made and continued in effect. Approval of these subsequent transfers will be subject to the same terms and conditions governing the transfer and sale of U.S. flag vessels to foreign registry or ownership or both at the time of the subsequent transfer.

The completion of all approved transactions, either by virtue of Sections 9, 37 and 41 of the Shipping Act, 1916, as amended (46 U.S.C. 808, 835 and 839), or the Maritime Administration's contract with the foreign owner, will be authorized by notification in the form of a Transfer Order to all interested parties, upon the receipt of the executed contract, the required bond or other surety, and other supporting documents required by said contract.

In order that the Maritime Administration's records may be maintained on a current basis, the owner or transferee of the ship is required to notify the Maritime Administration of the date and place where the approved transaction was completed, and the name of the vessel, if changed. This information relating to the completion of the transaction and the change in name should be furnished to the Maritime Administration as soon as possible, but not later than ten days after the same lias occurred.

III. VESSELS UNDER 3,000 GROSS TONS Generally, the Maritime Administration will grant approvals required by Sections 9 or 37 or both of the Shipping Act, 1916, as amended, of vessels of under 3,000 gross tons provided the vessel is not needed for reasons of national defense and provided also that the foreign buyer and country of registry are acceptable to the Maritime Administration. Except in unusual circumstances, no conditions will be imposed.

[29 F.R. 12030, Aug. 22, 1964]

Statements required to be filled pursuant to section 807, Merchant Marine Act, 1936.

222.2 Forms of vessel utilization and performance reports prescribed. Penalty.

222.3

222.4 Notice of failure to comply herewith and that petition for relief may be filed.

222.5 Petition for relief.

AUTHORITY: The provisions of this Part 222 issued under sec. 21, 39 Stat. 736, as amended, sec. 204, 49 Stat. 1987, as amended; 46 U.S.C. 820, 1114, except as otherwise noted. § 222.1 Statements required to be filed pursuant to section 807, Merchant Marine Act, 1936.

(a) Statement of shipbuilder or ship operator. Every shipbuilder or ship operator holding or applying for a contract under the provisions of the Merchant Marine Act, 1936, as amended, and every subsidiary, affiliate, associate, or holding company of such shipbuilder or ship operator who employs or retains any person (as defined in paragraph (c) of this section) to present, advocate, or oppose, before Congress or any committee thereof, or before the Secretary of Commerce, the Federal Maritime Board, or the Maritime Administration, any matter within the scope of the Shipping Act, 1916, as amended,

the Merchant Marine Act, 1920, as amended, the Merchant Marine Act, 1928, as amended, the Intercoastal Shipping Act, 1933, as amended, or the Merchant Marine Act, 1936, as amended, before performance by such person pursuant to such employment or retainer, shall file with the Secretary, Federal Martime Board/Maritime Administration, a statement containing the information specified in Form MA-807-1. While it is not required that Form MA807-1 be used, the statement must contain the information required by that form and the information must be arranged in the manner prescribed by that form. Copies of Form MA-807-1 may be obtained from the Secretary, Federal Maritime Board/Maritime Administration. Any changes which may occur in answer to any of the items in the statement shall be reported to the Secretary, Federal Maritime Board/Maritime Administration, within 10 days after such change.

(b) Statement of person employed or retained. Every person (as defined in paragraph (c) of this section) employed or retained by any shipbuilder or ship operator holding or applying for a contract under the provisions of the Merchant Marine Act, 1936, as amended, or employed or retained by any subsidiary, affiliate, associate, or holding company of such shipbuilder or ship operator to present, advocate, or oppose, before Congress or any committee thereof, or before the Secretary of Commerce, the Federal Maritime Board, or the Maritime Administration, any matter within the scope of the Shipping Act, 1916, as amended, the Merchant Marine Act, 1920, as amended, the Merchant Marine Act, 1928, as amended, the Intercoastal Shipping Act, 1933, as amended, or the Merchant Marine Act, 1936, as amended, shall file with the Secretary, Federal Maritime Board/Maritime Administration, within 30 days after the close of each calendar month during the period of such retainer or employment, a statement containing the information specified in Form MA-807-2. While it is not required that Form MA-807-2 be used, the statement must contain the information required by that form and the information must be arranged in the manner prescribed by that form. Copies of Form MA-807-2 may be obtained from the Secretary, Federal Maritime Board/Maritime Administration.

(Sec. 807, 49 U. S. C. 1225)

Stat. 2014, as amended; 46 [22 F. R. 1087, Feb. 22, 1957]

NOTE: The reporting requirements contained in this section have been approved by the Bureau of the Budget in accordance with the Federal Reports Act of 1942.

§ 222.2 Forms of vessel utilization and performance reports prescribed.

Pursuant to authority of section 212 (A) of the Merchant Marine Act, 1936, as amended by Public Law 612, 84th Congress; 70 Stat. 332; 46 U.S.C. 1122a, the Secretary of Commerce has determined that it is necessary and desirable in order to carry out the purposes and provisions of the Merchant Marine Act, 1936, as amended (49 Stat. 1985, et seq.; 46 U.S.C. 1101, et seq.) to require an operator of a vessel in waterborne foreign commerce of the United States to file an accurate report on Form MA-578 with respect to passenger and dry cargo vessels and an accurate report on Forms MA-7803 and MA-7804 with respect to tankers; such Forms and Instructions for the preparation thereof are hereby prescribed and approved.1 An accurate report on Form MA-578, Vessel Utilization and Performance Report, shall be filed in duplicate with the appropriate district director of customs for transmittal to the Maritime Administration by the operator of every self-propelled dry cargo and passenger vessel of 1,000 or more gross registered tons before midnight of the 15th day after entry into the first U.S. port and before midnight within 15 working days (Saturdays, Sundays, and Holidays excluded) after clearing the last U.S. port. Operators desiring to submit combination reports for dry cargo and passenger vessels (inbound and outbound portions) after

1 Copy each of the Form MA-578 (Rev. 8-66) and Instructions for its use were filed with the Office of the Federal Register; Forms MA-7803 and MA-7804 and Instructions were filed previously with said Office. These forms and instructions may be obtained from the Marine Section, District Director of Customs at United States ports.

clearing the final U.S. port may do so upon obtaining written permission from the Maritime Administration, Washington, D.C. 20235. Separate reports on Forms MA-7803 and MA-7804 for tankers shall be filed within 15 working days after entering or clearing. Forms MA578, MA-7803 and MA-7804 are required to be filed in duplicate for all voyages of merchant vessels operated by or for the account of the Department of Defense except vessels of the Military Sea Transportation Service (MSTS) nucleus fleet. By agreement with the Bureau of Customs, District Directors will be responsible for policing receipts of dry cargo vessel inbound, outbound and combination inbound/outbound reports on Form MA-578 as well as tanker inbound and outbound reports on Forms MA-7803 and MA-7804.

The changes effected in this amendment being minor in nature, it is considered impracticable to delay the effective date thereof; therefore, the foregoing shall become effective as stated at the beginning of this document.

The reporting requirements herein have been approved by the Bureau of the Budget in accordance with the Federal Reports Act of 1942.

[G.O. 39, 3rd Rev., Amdt. 2, 31 F.R. 11607, Sept. 2, 1966]

§ 222.3 Penalty.

Section 212(A) of the Merchant Marine Act, 1936, as amended (Public Law 612, 84th Congress; 70 Stat. 332; 46 U.S.C. 1122a), provides:

SEC. 212(A). The operator of a vessel in waterborne foreign commerce of the United States shall file at such time and in such manner as the Secretary of Commerce may prescribe by regulations, such report, account, record, or memorandum relating to the utilization and performance of such vessel in commerce of the United States, as the Secretary may determine to be necessary or desirable in order to carry out the purposes and provisions of this Act, as amended. Such report, account, record or memorandum shall be signed and verified in accordance with regulations prescribed by the Secretary. An operator who does not file the report, account, record, or memorandum as required by this section and the regulations issued hereunder, shall be liable to the United States in a penalty of $50 for each day of such violation. The amount of any penalty imposed for any violation of this section upon the operator of any vessel shall constitute a llen upon the vessel involved in the violation, and such vessel may be libeled therefor in the district court of the United

States for the district in which it may be found. The Secretary of Commerce may, in his discretion, remit or mitigate any penalty imposed under this section on such terms as he may deem proper.

(Sec. 212(A), 70 Stat. 332; 46 U.S.C. 1122a) [G.O. 39, 3d Rev., 27 F.R. 4883, May 24, 1962]

§ 222.4

Notice of failure to comply herewith and that petition for relief may be filed.

(a) Every offender under the regulations in this part shall be advised by the collector of customs of any penalty incurred by him and of his right to apply for relief under § 222.5. If the offender fails to petition for relief or pay the penalty within 60 days from the date of mailing of the notice of violation as provided for herein, the case shall be referred immediately to the United States attorney for appropriate action, unless it appears that the person liable for the penalty is absent from the United States or during the said period was absent for more than 30 days, in which event the collector may withhold such action for a further reasonable time, or unless other action is expressly authorized by the Maritime Administrator. When a penalty is mitigated, and the mitigated penalty is not paid nor a supplemental petition filed within 60 days from the date a notice of the settlement is mailed to the petitioner, the matter shall be referred immediately to the United States attorney for appropriate attention, unless other action has been directed by the Maritime Administrator.

(b) No action looking to the remission or mitigation of a penalty shall be taken on any petition, irrespective of the amount involved, if the case has been referred to the Department of Justice for the institution of legal proceedings. (Sec. 212(A), 70 Stat. 332; 46 U.S.C. 1122a) [G.O. 39, 3d Rev., 27 F.R. 4883, May 24, 1962] § 222.5 Petition for relief.

(a) Any petition for relief from a penalty incurred under these regulations shall be addressed to the Maritime Administrator, signed by the petitioner, and filled with the collector of customs of the district in which the penalty was imposed. It shall set forth the facts relied upon the petitioner to justify his request for relief.

(b) Upon receipt of a petition, the collector shall cause such investigation to be made as the facts in the case may warrant. In forwarding the petition to

the Maritime Administrator, he shall forward with it a copy of the report of the investigation, if any, a statement of all other facts which may have come to his knowledge, and his recommendation as to the final action to be taken. If the petition involves a matter which has been referred to the Department of Justice for the institution of court proceedings, the collector shall transmit the petition immediately upon receipt to the appropriate United States attorney and notify the petitioner of such action.

(c) The decision of the Maritime Administrator will be forwarded to the collector for delivery to the petitioner. (Sec. 212(A), 70 Stat. 332; 46 U.S.C. 11228) [G.O. 39, 3d Rev., 27 F.R. 4883, May 24, 1962]

NOTE: The reporting requirements under this General Order have been approved by the Bureau of the Budget in accordance with the Federal Reports Act of 1942.

PART 237-REPAIRS TO VESSELS UNDER BAREBOAT CHARTER

Sec.

237.1 Detailed repair specifications; payment and audit.

237.2 Repairs outside United States prohibited; exceptions.

237.3 Consumption entries.

AUTHORITY: The provisions of this Part 237 issued under sec. 204, 49 Stat. 1987, as amended; 46 U.S.C. 1114.

SOURCE: The provisions of this Part 237 contained in General Order 51, 7 F.R. 910, Feb. 10, 1942, unless otherwise noted. § 237.1 Detailed repair specifications; payment and audit.

All required repairs and betterments (alterations and/or improvements) authorized for the owner's accounts shall be covered by specifications prepared by the charterer in sufficient detail to describe fully all items of work to be performed and shall be paid for by the charterer and allowed for reimbursement to the charterer by the owner at rates not exceeding those which would have been paid had such work been accomplished under an existing master contract between the owner and the repair company, or in the absence of such a master contract at rates not in excess of those then being currently paid by the owner to the repair company or to other repair companies in the vicinity, and the charterer in ordering any such work otherwise than upon a basis of proper competitive bids shall cause full right of audit to be reserved to the owner.