246.1 Method of calculating sea speed of vessels.

246.2 Other provisions.

246.3 Speed formula requiring the substantiating data of § 246.2(b).

246.4 Modification of formulae.

AUTHORITY: The provisions of this Part 246 issued under sec. 204, 49 Stat. 1987, as amended; 46 U.S.C. 1114.

SOURCE: The provisions of this Part 246 contained in General Order 43, 3d Revision, 24 F.R. 3793, May 12, 1959, unless otherwise noted.

§ 246.1 Method of calculating sea speed of vessels.

The speeds of vessels shall be basea on the methods of calculation described herein.

(a) The basis for calculation shall be the data relating to the vessel as certified in the register of the appropriate Classification Society. The American Bureau of Shipping record shall be used except for vessels not having this classification.

(b) The charts and methods outlined in "Speed and Power of Ships" by D. W. Taylor, shall be the bases for determining effective horsepower required, except that of the four methods given therein for wetted surface determination, the one based on Froude's formula shall be used. Calculations for effective horse

power required shall be made at speedlength ratio of 0.60 and corrected to actual speed-length ratio by the cube rule.

(c) The maximum total continuous horsepower available for propulsion (IHP, SHP, BHP) as determined from the register of the appropriate Classification Society, shall be used as a basis for determining the shaft horsepower available except that for all machinery of a steam reciprocating type, 0.90 mechanical efficiency shall be used with the IHP. The effective horsepower available to be used in conjunction with the speed calculations for single screw vessels shall be determined by multiplying the shaft horsepower available by an appropriate factor based on vessels of 450' length. For all vessels constructed subsequent to January 1, 1925 this factor shall be 0.50. For all vessels constructed prior to January 1, 1925 this factor shall be 0.50 for vessels having 6,000 SHP or more, 0.47 for vessels having power less than 6,000 SHP but more than 3,000 SHP, and 0.44 for vessels having 3,000 SHP or less. The above factors are to be corrected for length with an increase or decrease of 0.1 per 150' of length that the vessel is greater or less than 450'. (For new vessels 0.4 at 300 feet and 0.6 at 600 feet, etc.)

(d) For twin screw vessels the foregoing factors for single screw vessels shall be reduced by 10 percent.

§ 246.2 Other provisions.

(a) At any time the Maritime Administrator has the privilege to request a trial in deep water, either on a standard deep water measured mile or other course approved by the Maritime Administration. On this trial, the operator shall determine, to the satisfaction of representatives of the Maritime Administration, the speed at which the vessel runs when the engines are developing 80 percent of their normal power and the vessel has a mean draft corresponding to its assigned freeboard. All expenses, etc., in connection with such a trial shall be borne by the Operator.

(b) Notwithstanding the provisions herein, the Maritime Administrator will consider the request of any owner for a waiver of the speed required herein and the acceptance of a speed certificate computed in accordance with § 246.3, upon submission by the owner of pertinent applicable data proving to the satisfaction of the Administrator that the speed of

the vessel, as determined in accordance with § 246.3, is not in excess of fair and reasonable speed satisfactory to the Administrator but the determinations of the Administrator, in this respect, shall be final and conclusive.

§ 246.3 Speed formula requiring the substantiating data of § 246.2(b).

The speed of vessels calculated under this section shall be calculated on the same basis as set forth in § 246.1 (a), (b), (c), and (d), except for the following:

(a) Section 246.1(c) is modified to eliminate the correction for vessels constructed prior to January 1, 1925.

(b) Upon request and the submission by the owner of pertinent applicable data, such as standardization trial and self-propelled model test results, the Maritime Administrator shall give consideration to modifications of results obtained by the foregoing method but the extent to which such data may affect the results shall be determined by the Maritime Administrator.

§ 246.4 Modification of formulae.

The formulae set forth herein are subject to modification, as may be determined hereafter.

247.4 Responsibilities of the operator. AUTHORITY: The provisions of this Part 247 issued under sec. 204, 49 Stat. 1987, as amended; 46 U.S.C. 1114. Interpret or apply secs. 502, 702, 49 Stat. 1996, as amended, 2008, as amended; 46 U.S.C. 1152, 1192.

SOURCE: The provisions of this Part 247 contained in Order 77; 19 F.R. 4360, July 15, 1954; 19 F.R. 7543, Nov. 23, 1954; 19 F.R. 7605, Nov. 25, 1954, unless otherwise noted.

visions of the guarantee clause of such contracts in order to assure proper handling and fulfillment of the builder's obligation thereunder with respect to deficiencies, defects, weaknesses, etc., developing during the vessel's guarantee period of operation and deemed to be the builder's responsibility.

(b) The procedure established in this part is also applicable to the purchaser of a vessel newly constructed under Federal Maritime Board-Maritime Administration ship construction contracts, where it is the desire of the purchaser of such vessel to have the Maritime Administration enforce the construction guarantee rights in his (the purchaser's) behalf.

§ 247.2 Acceptance survey and final guarantee survey.

The Trial and Guarantee Survey Boards, Office of Ship Construction and Repair, Maritime Administration, are responsible for the conduct of an Acceptance Survey prior to delivery of a ship by the builder to the Maritime Administration and for the conduct of a Final Guarantee Survey at the expiration of the guarantee period. Any deficiency, defect, weakness, etc., outstanding at the time of these surveys and considered by the Board to be the builder's responsibility under the construction contract will be recorded in the Acceptance Survey Report and/or Final Guarantee Survey Report, as the case may be. The Trial and Guarantee Survey Boards will furnish the operator with copies of these surveys. The Chairman of the Trial and Guarantee Survey Boards will request attendance of all interested parties at the Acceptance and Final Guarantee Surveys.

Survey it shall be the Operator's responsibility to:

(1) Maintain records, including log extracts of all deficiencies, defects, weaknesses, etc. found in the ship while in the Operator's custody and operation and, if possible, the causes thereof, such records to be retained for a period of three years after date of the Final Guarantee Survey.

(2) Furnish advance notice to the appropriate Maritime Administration Ship Repair and Maintenance Office, having Jurisdiction over the port at which a ship is scheduled to arrive, of any items which developed or were discovered on the voyage and are considered to be the builder's responsibility. If such advance notice is not feasible, the said Ship Repair and Maintenance Office must be notified as soon as possible and, if practicable, prior to the performance of any work considered to be the builder's responsibility.

(3) Notify the builder, in writing, of the scheduled arrival of a ship on which items considered the builder's responsibility will require correction. The builder may, at his discretion, inspect such items and arrange for their correction. Should the builder not accept responsibility for certain of these items, or be unable to attend the ship, or should it be impracticable to delay repairs due to commitments of the ship, the corrective work may be put in hand without further delay for the account of the

owner.

(4) At the termination of each repair period, prepare a memorandum report of repairs performed of a vital or major nature outlining the cause and necessity for such repairs, and submit said report, in duplicate, to the Ship Repair and Maintenance Office having jurisdiction in the port at which the work is performed. No supporting data such as specifications, etc., are required. When, in the opinion of the Operator, guarantee items are involved, the report shall include the following information:

(1) Whether or not the builder was notified.

(11) Whether or not the builder sighted the defect.

(iii) Whether or not the builder accepted responsibility for the defect.

(iv) If the builder was not notified, the reason therefor.

(5) Maintain 12 complete sets of records of the items deemed to be the builder's responsibility, including the initial report of the deficiency, specifications, itemized costs, and completion certificates for all such work awarded during the guarantee period and if possible the cause of the deficiencies and all related correspondence for use at the time of the Final Guarantee Survey.

(b) In connection with the conducting of the Final Guarantee Survey it shall be the Operator's responsibility to:

(1) Notify the Chairman, Trial and Guarantee Survey Boards, Maritime Administration of the availability of the ship for the Final Guarantee Survey which will be held at the completion of the voyage coming at or near the end of the guarantee period (usually six months).

(2) Furnish 12 copies of the data specified in paragraph (a) (5) of this section to the Chairman, Trial and Guarantee Survey Boards in attendance at the guarantee survey.

(c) Subsequent to the Final Guarantee Survey it shall be the Operator's responsibility to:

(1) Advise the Ship Repair and Maintenance Office having jurisdiction in the port at which repairs are to be effected prior to the accomplishment of any items listed in Final Guarantee Survey Report and request a representative of that office to attend the repairs.

(2) Notify the builder prior to the awarding of any work correcting a guarantee item in order that the builder may, if practicable, arrange for performance of the work for his account.

(3) Prepare a summary at the end of each repair period of the work authorized by himself or the builder which corrected defects noted in the Final Guarantee Survey Report. Three (3) copies of this summary are to be furnished to the Ship Repair and Maintenance office having jurisdiction in the port at which the work is effected and one copy is to be submitted to the Chief, Division of Technical Development. Each summary is to be supported by specifications and item prices for all work authorized by the operator and shall indicate for whose account the corrective repairs were performed.

[Order 77, 19 F. R. 4360, July 15, 1954; 19 F. R. 7605, Nov. 25, 1954, as amended, 21 F. R. 8107, Oct. 23, 1956]

251.31

251.21 Applications under sections 803, 804, 805 (a) and (d), and 605 (b), Merchant Marine Act, 1936. Charges for processing applications for authorization to transfer ownership of ships built with construction-differential subsidy.

AUTHORITY: The provisions of this Part 251 issued under sec. 204, 49 Stat. 1987, as amended; 46 U.S.C. 1114, unless otherwise noted.

§ 251.1 Applications for constructiondifferential subsidy under Title V, Merchant Marine Act, 1936, as amended.

(a) Applications under section 501 of the Act for subsidy to aid in the construction of new vessels or the reconstruction of existing vessels, to be operated in the foreign commerce of the United States, shall be filled on form FMB-8 in accordance with the instructions annexed thereto.1

(b) Applications for aid in the construction of new vessels to be operated in domestic trade shall be filed on Form VA-9 in accordance with the instructions annexed thereto.1

APPENDIX No. 1-POLICY

1. To the maximum practical extent as determined by the Maritime Subsidy Board applicants for construction-differential subsidy (CDS) under Title V of the Merchant Marine Act of 1936, as amended, shall duplicate designs of ships previously approved by the Board for Subsidized Ship Construction. Such duplication contemplates retention of: hull form; major structure, i.e., shell, transverse bulkheads, decks, girder systems etc.; machinery horsepower and arrangement; and arrangement of deck house. However the Board will permit modifications such as changes to reefer cargo capacity, deep tankage, and cargo gear in a manner so as

1 Copies of forms referred to may be obtained on request from the Secretary, Maritime Subsidy Board, Washington, D.C.

not to disrupt the basic configuration of the ship and without sacrificing gains that can be made from group production. New ship designs will be considered from any operator who has already constructed sufficient ships of a given design to have optimized the economy of standardized ship construction, when the applicant feels that a new design is necessary in exceptional cases and justifies this need to the Board. Where the Board concludes contrary to an applicant that a previously developed design can be satisfactorily adapted to requirements of the intended service at a substantial saving compared with building to a new design, invitations to bid shall be issued for both the standard design and the custom design of the owner's preference. Construction-differential subsidy will be based on whichever design requires the least subsidy.

2. The Board may require such variations from designs of ships previously approved as are necessary to optimize the economic utilization of mechanization and labor saving equipment with the potential of reducing operating-differential subsidy (ODS). Other nonstandard equipment or shipbuilding components shall be eligible for CDS, only if (a) their effect is to decrease the total sum of such CDS and ODS projected over the life of a ship, or (b) when it can be demonstrated with reasonable certainty that the added investment will produce a return to the owner of at least 10 percent per annum after taxes over the life of the investment.

3. Value engineering provisions will be included in all construction-differential subsidy contracts and construction contracts. Value engineering items considered mandatory by the Board prior to or during the development of the bidding plans and specifications and during the actual ship construction period shall be incorporated in the plans and specifications or incorporated in the ship. If the mandatory items are not acceptable to the owner the difference in cost, as determined by the Board, between the value engineered and the installed item will be borne by the owner. This paragraph shall not be construed (a) as revising the present appeal rights of the shipowner, or (b) as imposing upon the shipbuilding contractor any requirement for employment of a specific number of value engineering personnel.

4. Subsidy for changes under the construction contract will be allowed only when the net effect of the change will with reasonable certainty (a) comply with the standard in 2 (a) or (b) above, (b) correct a deficiency in design which is clearly essential, or (c) comply with a change in the requirement of a regulatory body which becomes effective after 30 days preceding bid opening. Any changes desired by the owner which do not adversely affect the safe, efficient or economical operation of the ship will be

costs

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permitted, but without the benefit of subsidy. Subsidy for changes under category 2(b) shall be based on an estimate as to what the work would have cost if it had been included in the bidding specifications. 5. Post-contract engineering curred by the owner for engineering review and plan approval will be subsidized within a ceiling. The owner's expenses for such engineering and plan approval shall be limited for subsidy purposes to a maximum of 2 percent of the low bid for each of one ship in each contract. This limitation shall apply to liner cargo vessels of the break bulk type with no more than twelve passengers, but including special features such mechanization, container carrying devices, special cargo handling equipment, refrigeration spaces and special deep tanks, etc. This upper limit shall be adjusted downward to take into account features including, but not limited to, standardized design, successive flights of ships in the same yard, or successive flights of ships in different yards. 6. Construction-differential subsidy owner's engineering expenses for inspection when only one ship is being built shall be limited to an amount equal to 1.3 percent of the bid price. For multiple ship construction the amount subsidizable will be 1.3 percent of the contract price per ship plus an additional increment of 0.36 percent for each vessel beyond the first. For example, the subsidizable amount for inspection on a four ship contract would be 1.3 percent plus 1.08 percent (0.36×3) or 2.38 percent times the cost of the each of four ship bid price.

on

This limitation shall apply to liner type cargo vessels of the break bulk type with no more than 12 passengers but including special features such as mechanization, container carrying devices, special cargo handling equipment, refrigeration spaces and special deep tanks, etc. This upper limita

tion shall be adjusted downward to take into account features including, but not limited to, standardized design, or other vessels for the same owner and in the same shipyard.

7. Interior decorators' fees will be limited to a maximum of $10,000 per contract.

8. Construction-differential subsidy will not apply to owner furnished equipment. All material or equipment to which construction-differential subsidy shall apply must be included in the plans and specifications upon which the competitive ship construction bids are based or included in authorized changes under contract.

9. Notwithstanding any of the foregoing limitations on subsidy the Board will in exceptional cases authorize subsidy or research and development grants for new ship concepts or individual ship features whose economic justification lie in the possibility of future major advances in ship construction or operation and which in the Board's judgment may lead to greater efficiency and economy.

APPENDIX No. 2-STATEMENT OF GENERAL POLICY

1. The appropriations available for the subpayment of construction-differential sidy by the Maritime Subsidy Board necessarily are limited. Present replacement program schedules for individual operators repeatedly have been revised and extended in recent years in accordance with the operating-differential subsidy contracts. It is possible that further delay will occur in the replacement of some of the vessels required to be replaced pursuant to the existing contractual obligations of those operators under operating-differential subsidy contracts with the Government. These standards are designed to provide better guidance for the operators and the Government in making the judgments necessary in selecting from among competing applications for limited funds. This policy will apply to requests for and allocations of appropriations for fiscal year 1967 and thereafter. It furthermore applies only to awards of financial assistance in the construction of vessels for liner service.

2. (a) To provide for the optimum development of the American Merchant Marine in number of vessels and in shipping capability, the Board will allocate federal financial assistance for construction or reconstruction of vessels so as to give priority to those proposals which, having met all requirements of Title V, Merchant Marine Act, 1936, will in the Board's opinion utilize such assistance to obtain the greatest shipping capability and productivity possible. In making its determinations under this policy, the Maritime Subsidy Board will take into consideration the following factors:

(1) Number of vessels proposed for construction by the applicant.

(2) Cubic and deadweight capacities and speed of the proposed vessels.

(3) Proposed cargo handling equipment and techniques for transfer of cargo in and out of vessels and to and from inland points. In this connection, the applicant will be required to set forth the estimated rate of loading and of discharge of cargo, as well as the adaptability of the proposed vessel to integrated systems of transportation embracing both ocean and overland transportation. (4) Estimated domestic cost of construction.

(5) Estimated revenues and cost of operation; and with respect to wage cost, the proposed manning schedule on the proposed vessels.

(6) The applicant's intention to seek operating subsidy and if so, the duration and amount of such subsidy payments.

The Board will weigh the above factors in such a fashion as will measure the productivity of the vessel (1.e., its carrying capacity, speed, and rate of cargo handling) against the Government's cost of construction and operating aid. The Board will award aid