Operating-Differential Subsidies (20.804)
Program
20.804 Operating-Differential Subsidies
Federal Agency
MARITIME ADMINISTRATION, DEPARTMENT OF TRANSPORTATION
Authorization
Merchant Marine Act of 1936, Title VI, as amended; Public Law 74-835, 46 U.S.C. 1171-1183.
Program Number
20.804
Last Known Status
Deleted 05/03/2004 (Budget authority expired upon completion of funding actions, per Maritime Security Act of October 6, 1996)
Objectives
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.
Types of Assistance
Direct Payments for Specified Use.
Uses and Use Restrictions
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.
Eligibility Requirements
Applicant Eligibility
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.
Beneficiary Eligibility
U.S. citizens.
Credentials/Documentation
Proof of U.S. citizenship. This program is excluded from coverage under OMB Circular No. A-87.
Application and Award Process
Preapplication Coordination
None. This program is excluded from coverage under OMB Circular No. A-102. This program is excluded from coverage under E.O. 12372.
Application Procedure
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.
Award Procedure
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.
Deadlines
None.
Range of Approval/Disapproval Time
Appeals
Appeals of decisions of the Maritime Subsidy Board are directed to the Secretary of Transportation in accordance with Department Organization Order 1100.60.
Renewals
Not applicable.
Assistance Considerations
Formula and Matching Requirements
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.
Length and Time Phasing of Assistance
Not to exceed 20-year contracts. After signing of contract, subsidy is payable commencing with loading of cargo on first outbound voyage.
Post Assistance Requirements
Reports
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.
Audits
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.
Records
See the Reports section above.
Program Accomplishments
As of October 1, 2002, all contracts have expired.
Financial Information
Account Identification
69-1709-0-1-403.
Obligations
(Program Level) FY 02 $0; FY 03 est $0; and FY 04 est $0.
Range and Average of Financial Assistance
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.
Regulations, Guidelines and Literature
46 CFR Part 251; "The U.S. Merchant Marine-A Brief History."
Related Programs
None.
Information Contacts
Regional or Local Office
See Maritime Administration Regional Offices listed in Appendix IV of the Catalog.
Headquarters Office
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.
Web Site Address
Examples of Funded Projects
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.
Criteria for Selecting Proposals
(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.
