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Rule2022-26358

Tanker Security Program

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Published

December 7, 2022

Effective

December 7, 2022

Issuing agencies

Transportation DepartmentMaritime Administration

Abstract

This interim final rule provides procedures to implement certain provisions of the National Defense Authorization Act for Fiscal Year 2021 (FY21 NDAA) and the National Defense Authorization for Fiscal Year 2022 (FY22 NDAA). The FY21 NDAA authorized the Secretary of Transportation to establish the Tanker Security Program (TSP) comprised of a fleet of active, commercially viable, militarily useful, privately owned product tank vessels of the United States. The fleet will meet national defense and other security requirements and maintain a United States presence in international commercial shipping. The FY22 NDAA made minor adjustments related to the participation of long-term charters in the TSP. The Maritime Administration solicits written comments on this rulemaking.

Full Text

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<title>Federal Register, Volume 87 Issue 234 (Wednesday, December 7, 2022)</title>
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[Federal Register Volume 87, Number 234 (Wednesday, December 7, 2022)]
[Rules and Regulations]
[Pages 74977-74987]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-26358]

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DEPARTMENT OF TRANSPORTATION

Maritime Administration

46 CFR Part 294

[Docket Number MARAD-2022-0247]
RIN 2133-AB95

Tanker Security Program

AGENCY: Maritime Administration (MARAD), Department of Transportation
(DOT).

ACTION: Interim final rule; request for comments.

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SUMMARY: This interim final rule provides procedures to implement
certain provisions of the National Defense Authorization Act for Fiscal
Year 2021 (FY21 NDAA) and the National Defense Authorization for Fiscal
Year 2022 (FY22 NDAA). The FY21 NDAA authorized the Secretary of
Transportation to establish the Tanker Security Program (TSP) comprised
of a fleet of active, commercially viable, militarily useful, privately
owned product tank vessels of the United States. The fleet will meet
national defense and other security requirements and maintain a United
States presence in international commercial shipping. The FY22 NDAA
made minor adjustments related to the participation of long-term
charters in the TSP. The Maritime Administration solicits written
comments on this rulemaking.

DATES:
Effective date: This interim final rule is effective December 7,
2022.
Comments due date: Comments on this interim final rule must be
received on or before February 6, 2023.

ADDRESSES: You may submit comments identified by DOT Docket Number
MARAD-2022-0247 by any of the following methods:
<bullet> Federal eRulemaking Portal: <a href="http://www.regulations.gov">www.regulations.gov</a>. Search
``MARAD-2022-0247'' and follow the instructions for submitting
comments.
<bullet> Email: <a href="/cdn-cgi/l/email-protection#2e7c5b424b434f454740495d00636f7c6f6a6e4a415a00494158">[email&#160;protected]</a>. Include ``MARAD-2022-
0247'' in the subject line of the message.
<bullet> Mail/Hand-Delivery/Courier: Docket Management Facility;
U.S. Department of Transportation, 1200 New Jersey Avenue SE, Room W12-
140, Washington, DC 20590. If you would like to know that your comments
reached the facility, please enclose a stamped, self-addressed postcard
or envelope. The Docket Management Facility is open 9:00 a.m. to 5:00
p.m., Monday through Friday, except on Federal holidays. Call 202-493-
0402 to determine facility hours prior to hand delivery.
You may view the public comments submitted on this rulemaking at
<a href="http://www.regulations.gov">www.regulations.gov</a>. When searching for comments, please use the Docket
ID: MARAD-2022-0247. An electronic copy of this document may also be
downloaded from the Office of the Federal Register's website at
<a href="http://www.FederalRegister.gov">www.FederalRegister.gov</a> and the Government Publishing Office's website
at <a href="http://www.GovInfo.gov">www.GovInfo.gov</a>.

Note: If you fax, mail or hand-deliver your comments, we
recommend that you include your name and a mailing address, an email
address, or a telephone number in the body of your document so that
we can contact you if we have questions regarding your submission.
If you submit your comments by mail or hand-delivery, they must be
submitted in an unbound format, no larger than 8\1/2\ by 11 inches,
single-sided, suitable for copying and electronic filing.

Instructions: All submissions received must include the agency name
and docket number or Regulation Identifier Number (RIN) for this
rulemaking, 2133-AB95. All comments received will be posted without
change to the docket at <a href="http://www.regulations.gov">www.regulations.gov</a>, including any personal
information provided. For detailed instructions on submitting comments
and additional information on the rulemaking process, see the section
entitled Public Participation.

FOR FURTHER INFORMATION CONTACT: David Hatcher, Office of Sealift
Support, at (202) 366-0688, or via email at <a href="/cdn-cgi/l/email-protection#f1b590879895dfb9908592999483c0b1959e85df969e87">[email&#160;protected]</a>. You
may send mail to Mr. Hatcher at Department of Transportation, Maritime
Administration, Office of Sealift Support, 1200 New Jersey Avenue SE,
Washington, DC 20590. If you have questions on viewing the Docket, call
Docket Operations, telephone: (800) 647-5527.

SUPPLEMENTARY INFORMATION: The FY21 NDAA, with minor adjustments in the
FY22 NDAA, required that the Secretary of Transportation, in
consultation with the Secretary of Defense, establish a fleet of
active, commercially viable, militarily useful, privately-owned product
tank vessels to meet national defense and other security requirements.
The TSP will provide a stipend to tanker operators of U.S.-flagged
vessels that meet certain qualifications.
Congress appropriated $60,000,000 for the TSP in the Consolidated
Appropriations Act of 2022, Public Law 117-269. Authorized payments to
participating operators are limited to $6 million per ship, per fiscal
year and are subject to annual appropriations. Participating operators
will be required to make their commercial transportation resources
available upon request by the Secretary of Defense for military
purposes during times of war or national emergency.

Background

A fuel tanker study required by the Fiscal Year 2020 National
Defense Authorization Act (FY20 NDAA) examined the sufficiency of the
U.S.-flagged tanker fleet to meet National Defense Strategy (NDS)
requirements. A summary of the report is provided on the DOT/MARAD
docket for this rulemaking. The report's summary found there to be a
substantial risk to the nation's defense associated with a heavy
reliance on foreign-flagged tankers, particularly within a contested
environment. The location, timing, and specific missions associated
with some tanker requirements dictate the need for U.S.-flagged assets,
for which there currently are insufficient numbers available. The
report's gap analysis found a clear and critical need for a tanker
security program to increase U.S.-flagged tanker capacity, to reduce
the risk of reliance on foreign-flagged tankers for the most important
fuel missions, and to ensure the Department of Defense (DoD) has
sufficient tanker capabilities to meet NDS objectives.
In response to the FY20 NDAA Fuel Tanker Study, Congress directed
in the FY21 NDAA, with minor adjustments in the FY22 NDAA, that the
Secretary of Transportation, in consultation with the Secretary of
Defense, establish a fleet of active, commercially viable, militarily

[[Page 74978]]

useful, privately owned product tanker vessels to meet national defense
and other security requirements and maintain a United States presence
in international commercial shipping.\1\ The Maritime Administration
worked with the DoD's United States Transportation Command to identify
and shape TSP requirements and timelines.
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\1\ The tanker security program authority is codified at 46
U.S.C. 53402-53412.
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Pursuant to the statute, the rule establishes requirements that
support typical DOT and MARAD commercial economic objectives such as
the tanker vessel eligibility requirements of Section 294.9 to be
commercially viable, not more than 10 years in age, and to operate in
U.S. foreign commerce. (See 46 U.S.C. 53402(b)(2)-(4),(6)-(7)). In
addition, Section 294.9 requires tanker vessels to be suitable for use
by the United States for national defense or military purposes in time
of war or national emergency, as determined by the Secretary of
Defense. (See 46 U.S.C. 53402(b)(5).)). The statute also requires
vessel owners, charterers, and operators to meet certain requirements
under Section 294.11 intended to identify their corporate citizenship
as a matter of ensuring security through proper operational control.
(See 46 U.S.C. 54302(b)(1) and (c)). And, under Section 294.25 a TSP
participant must agree to the installation onboard its vessel of
militarily useful features for national defense purposes as approved by
U.S. Coast Guard and the vessel's classification society. (See 46
U.S.C. 53402(a), (b)(5); 46 U.S.C. 53407). Finally, in the event of a
national defense emergency, all TSP participants are subject to the
terms of an agreement \2\ that obligates the TSP participant to make
commercial transportation resources (including services) available for
military use, upon request by the Secretary of Defense during a time of
war or national emergency, or whenever the Secretary of Defense
determines that it is necessary for national security or contingency
operation. (See 46 U.S.C. 53403-53405, 53407). Section 294.31 also
provides for annual payments to program participants and specifies
payment conditions as specified in the statute. (See 46 U.S.C. 53406.)
Taken together, the TSP supports both the nation's economy and its
national security by strengthening and ensuring the continued
availability of U.S.-flag sealift capacity.
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\2\ See 50 U.S.C. 4558, Voluntary agreements and plans of action
for preparedness programs and expansion of production capacity and
supply.
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Immediate Effective Date and Request for Comment

MARAD is issuing this interim final rule without prior notice and
the opportunity for public comment and the delayed effective date
ordinarily prescribed by the Administrative Procedure Act (APA). MARAD
concludes that this rule involves a military function of the United
States under 5 U.S.C. 553(a)(1) and is therefore exempt from the
requirements of 5 U.S.C. 553 (see 5 U.S.C. 553(a)(1)). Nonetheless,
MARAD has also analyzed this rule under 5 U.S.C. 553(b)(B) and
determined that it has good cause to waive prior opportunity for notice
and comment. For similar reasons, MARAD has determined that it has good
cause to waive the 30-day delay in effective date under 5 U.S.C. 553.
MARAD seeks comment on this interim final rule and will consider
comments received in issuing any final rule.
Pursuant to section 5 U.S.C. 553(a)(1), the requirements of 5
U.S.C. 553, including general notice and the opportunity for public
comment on a proposed rule and a 30-day delay in the effective date of
a final rule, are not required with respect to a rulemaking ``to the
extent that there is involved . . . a military or foreign affairs
function of the United States.'' MARAD finds that this interim final
rule involves a military function of the United States and therefore
can be made effective prior to receiving public comment. 5 U.S.C.
553(a)(1). Under the requirements for establishment of the TSP set
forth in the FY21 NDAA, as amended by the FY22 NDAA, and this
rulemaking, vessels in the TSP must be militarily useful, participants
must be under the supervisory control of the DoD when requested during
times of war or national emergency, and participants will perform a
direct military function by providing emergency supply capacity. The
tanker security program established by the rule therefore directly
involves a military function, and the tanker vessels involved in the
program perform significantly more than ordinary civilian support
services.
Consistent with the statutory authority for the program at 46
U.S.C. 53402, the fleet must be established in consultation with the
Secretary of Defense and is intended to meet national defense and other
security requirements in addition to maintaining a U.S. presence in
international commercial shipping. As required by section 53402, the
regulation specifies that a vessel is eligible for inclusion in the
fleet only if it ``is determined by the Secretary of Defense to be
suitable for use by the United States for national defense or military
purposes in time of war or national emergency. . .'' In addition,
consistent with 46 U.S.C. 53407, the regulation requires that operating
agreements between the owner/operator of a vessel in the TSP must be
approved by the Secretary of Transportation and the Secretary of
Defense. The regulation also requires that a participant in the TSP
agree to the installation on its vessel of militarily useful features
for national defense purposes as approved by the U.S. Coast Guard and
the vessel's classification society. The statutory provision at 46
U.S.C. 53407, titled ``National security requirements,'' states
specifically that operating agreements ``shall provide that upon
request by the Secretary of Defense during time of war or national
emergency, or whenever determined by the Secretary of Defense to be
necessary for national security or contingency operation . . ., the
program participant shall make available commercial transportation
resources (including services) described in subsection (d) to the
Secretary of Defense . . . .'' 46 U.S.C. 53407(b)(1). For these
reasons, MARAD concludes that the rule involves a military function of
the United States and is thus exempt from the requirements of 5 U.S.C.
553.
While MARAD concludes that the rule is exempt from the requirements
of 5 U.S.C. 553 as a rule involving a military function, MARAD also
finds good cause under 5 U.S.C. 553(b)(B) to issue this interim final
rule to create the Tanker Security Program and establish, in
consultation with the Secretary of Defense, a Tanker Security Fleet.
Pursuant to 5 U.S.C. 553(b)(B), general notice and the opportunity for
public comment are not required with respect to a rulemaking when an
``agency for good cause finds (and incorporates the finding and a brief
statement of reasons therefor in the rules issued) that notice and
public procedure thereon are impracticable, unnecessary, or contrary to
the public interest.'' Similarly, pursuant to 5 U.S.C. 553(d), a 30-day
delay in effective date is not required if the agency finds good cause
to waive the delay and publishes its finding in the rule.
MARAD has determined that it would be impracticable and contrary to
the public interest to seek notice and comment on this final rule
because of the urgent need to ensure the nation's security in the face
of shifting real-time military priorities and requirements. To meet the
urgent national security demand explained in the National Defense
Authorization Act for Fiscal

[[Page 74979]]

Year 2020 Department of Defense Report on United States-Flagged Fuel
Tanker Vessel Capacity gap analysis (Tanker Study), MARAD must issue
this final rule to ensure its ability to notice, accept, and process
applications followed by the review and execution of supporting
agreements with qualified vessel operators. This urgency is heightened
by an increased DOD priority for tankers since issuance of the Tanker
Study. MARAD has consulted with DOD and is issuing this IFR to address
the heightened demand for tankers to meet national security objectives.
In addition, MARAD emphasizes that national security needs can change
quickly, and there is a need to establish the TSP through this IFR to
ensure that DOD can meet new or changed circumstances that may arise at
any time. There is good cause to make this rule effective immediately
to provide for the most efficient means of shoring up sealift capacity
not readily available to support DoD's national security mission
demands.
As discussed earlier in the SUPPLEMENTARY INFORMATION section of
this document, the intent of this action is to provide improved tanker
sealift capacity for the nation's security demands. The FY20 NDAA Fuel
Tanker Study found that while U.S.-Flag commercial tankers provide DoD
the greatest reliability for waterborne fuel transportation, the size
of the current U.S.-Flag tanker fleet is insufficient to meet specific
U.S. national security requirements, leaving significant gaps in DoD's
fuel transportation capabilities. DoD mobility studies have
demonstrated a growing concern that DoD's access to foreign-flag tanker
capacity to meet defense objectives will be negatively impacted by the
increasing influence and relative control of the global shipping market
by the United States' near-peer competitors. The increased volatility
in fuel commodity markets since the publication of the FY20 Fuel Tanker
Study has only increased these risks, particularly concerning fuel
distribution capabilities. The FY20 Fuel Tanker Study's analysis found,
and subsequent mobility studies and market volatility have underscored,
a clear and critical need for a Tanker Security Program to reduce DoD's
risk of reliance on foreign-flag tankers and stated that TSP should be
considered for rapid implementation given the military value it
represents.
For these reasons, MARAD also finds good cause to waive prior
opportunity for notice and comment on the rule and to waive the 30-day
delay in effective date as impracticable and contrary to the public
interest. MARAD issues this rule so that it may begin the
administrative process necessary to seek applicants and to evaluate and
engage qualified tanker vessels and vessel operators, thereby
establishing the TSP as early as possible. The Tanker Study's gap
analysis demonstrated pressing DoD fuel tanker supply needs. A delay in
this rulemaking could result in serious national security concerns if a
situation arises where TSP supply resources are necessary.
Though this interim final rule is effective immediately, MARAD
seeks comment in response to this interim final rule in determining how
to proceed with any final rule. Any final rule may differ from today's
rule in response to comments received. Comments are solicited from
interested members of the public on all aspects of the interim final
rule. MARAD is interested in information concerning whether the rule
will be comprehensive and effective in meeting both commercial product
fuel needs and DoD fuel transportation requirements and whether any
other steps could be taken to ensure that all qualified vessel
operators may overcome potential obstacles to admission.
Comments must be submitted on or before the date indicated in the
DATES section at the beginning of this document. MARAD believes that
the 60-day comment period will allow commenters sufficient time to
address any issues raised by the interim final rule and still meet the
national security demands contemplated. See ``Public Participation''
section below.

Regulatory Analyses and Notices

a. Executive Orders 12866, 13563, and DOT Rulemaking Procedures

Executive Order (E.O.) 12866, E.O. 13563, and the Department of
Transportation's administrative rulemaking procedures, provide for
determining whether a regulatory action is ``significant'' and
therefore subject to Office of Management and Budget (OMB) review. This
rule has been determined to be significant pursuant to section 3(f) of
Executive Order 12866.
Background
Congress authorized the establishment of a Tanker Security Fleet in
Sec. 3511 of the FY21 NDAA, which was enacted on January 1, 2021.
Section 3511(a) of the Act outlines the establishment of a fleet of
product tank vessels, pursuant to agreement, engaged in U.S. foreign
commerce and available for military use by the DoD during times of war
or national emergency. The statutory language defines, among other
elements: the maximum size of the fleet at ten vessels; the general
vessel selection criteria; the obligations and rights of program
participants; the maximum annual payments per vessel under each
agreement and the conditions of such payments; and each participant's
national security obligations under the program.
Benefits
The major benefits of TSP are that it will: (1) provide DoD with
assured access of up to 10 U.S.-flagged product tank vessels that may
be used to supply the armed forces of the United States with fuel
during times of war or national emergency, and (2) help to ensure that
a core fleet of U.S.-based product tankers can operate competitively in
international trade and enhance U.S. supply chain resiliency for liquid
fuel products. The report on U.S.-flagged fuel tanker vessels completed
by DoD in accordance with section 3519 of the National Defense
Authorization Act for Fiscal Year 2020 (Pub. L. 116-92) identified an
insufficient U.S.-flagged tanker capacity to meet National Defense
Strategy requirements. In addition, TSP will provide necessary support
to help maintain a U.S.-flag presence in international commerce. The
TSP vessels will be a critical component of the U.S.-flag capability
that contributes to the U.S. mariner base for utilization on both the
commercial and DoD fleets.
Costs
Congress set strict statutory limits, not subject to the Secretary
of Transportation's discretion, on the maximum number of participant
vessels and the annual payment per vessel. Section 3511(a) of the Act
authorized the participation of 10 vessels in TSP through the end of FY
2035. The operators of each of these 10 vessels may be paid up to $6
million per vessel per year, subject to specific operating
requirements, with a maximum programmatic payment authorization of $60
million per year for FYs 2022-2035, subject to appropriations.
Application costs for vessels that may apply for the TSP are discussed
in paragraph (e) of this section, describing MARAD's compliance with
the Paperwork Reduction Act for this rule.
Analysis of Alternatives
Section 3511 of the FY21 NDAA provides for the TSP with new funding
authorization and establishes a dedicated product tanker fleet program
distinct from the existing MSP. Congress also prescribed the minimum
requirements of the TSP, including ship

[[Page 74980]]

ownership, vessel eligibility, vessel documentation, program duration,
the number of participating vessels, the amount of funding, and
national security obligations. The Act provides detailed requirements
for starting and operating the TSP, and MARAD does not have discretion
to deviate from those requirements in the regulations that establish
the TSP's operation.

b. Regulatory Flexibility Act

Under the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., rules
that are exempt from notice and comment under the APA are also exempt
from the RFA analytical requirements, including conducting a regulatory
flexibility analysis. See 5 U.S.C. 603(a). Because, as discussed above,
this rule is exempt from the APA notice and comment requirements, MARAD
is not required to conduct a regulatory flexibility analysis.

c. Executive Order 13132, Federalism

MARAD has examined the interim final rule pursuant to E.O. 13132
(64 FR 43255, August 10, 1999) and concluded that no additional
consultation with States, local governments, or their representatives
is mandated beyond the rulemaking process. The Agency has concluded
that the rulemaking would not have sufficient federalism implications
to warrant consultation with State and local officials or the
preparation of a federalism summary impact statement. The interim final
rule will not have ``substantial direct effects on the States, on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government.''

d. The Unfunded Mandates Reform Act

The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires
agencies to prepare a written assessment of the costs, benefits, and
other effects of proposed or final rules that include a federal mandate
likely to result in the expenditure by State, local, or tribal
governments, in the aggregate, or by the private sector, of more than
$100 million annually. This action will not result in additional
expenditures by State, local, or tribal governments or by any members
of the private sector. Therefore, the Agency has not prepared an
assessment pursuant to the Unfunded Mandates Reform Act.

e. Paperwork Reduction Act

Under the Paperwork Reduction Act of 1995 (PRA), a person is not
required to respond to a collection of information by a federal agency
unless the collection displays a valid Office of Management and Budget
(OMB) control number. This interim final rule includes a new emergency
OMB approved collection of information under OMB Control Number 2133-
0554. The collection is necessary to accept applications, undertake the
review of applicant qualifications to ensure applications are complete,
and administer and maintain all aspects of the TSP program. MARAD
expects an estimated 10 respondents, with a response frequency of once
annually. The annual burden estimate is $2,438.50. We seek comment from
the public on our burden estimates.

f. Privacy Act

Anyone can search the electronic form of all comments received into
any of our dockets by the name of the individual submitting the comment
(or signing the comment, if submitted on behalf of an association,
business, labor union, etc.). For information on DOT's compliance with
the Privacy Act, please visit <a href="https://www.transportation.gov/privacy">https://www.transportation.gov/privacy</a>.

Public Participation

How long do I have to submit comments?

MARAD is providing a 60-day comment period.

How do I prepare and submit comments?

To ensure that your comments are correctly filed in the Docket,
please include the Docket Number shown at the beginning of this
document in your comments.
If you are submitting comments electronically as a PDF (Adobe)
File, MARAD asks that the documents be submitted using the Optical
Character Recognition (OCR) process, thus allowing MARAD to search and
copy certain portions of your submissions. Comments may be submitted to
the Docket electronically by logging onto the Docket Management System
website at <a href="http://www.regulations.gov">http://www.regulations.gov</a>. Search using the MARAD Docket
Number and follow the online instructions for submitting comments.
You may also submit two copies of your comments, including the
attachments, to Docket Management at the address given above under
ADDRESSES.
Please note that pursuant to the Data Quality Act, for substantive
data to be relied upon and used by the agency, it must meet the
information quality standards set forth in the OMB and DOT Data Quality
Act guidelines. Accordingly, we encourage you to consult the guidelines
in preparing your comments. OMB's guidelines may be accessed at <a href="http://www.whitehouse.gov/omb/fedreg/reproducible.html">http://www.whitehouse.gov/omb/fedreg/reproducible.html</a>. DOT's guidelines may
be accessed at <a href="http://www.bts.gov/programs/statistical_policy_and_research/data_quality_guidelines">http://www.bts.gov/programs/statistical_policy_and_research/data_quality_guidelines</a>.

How can I be sure that my comments were received?

If you wish Docket Management to notify you upon its receipt of
your comments, enclose a self-addressed, stamped postcard in the
envelope containing your comments. Upon receiving your comments, Docket
Management will return the postcard by mail.

How do I submit confidential business information?

Confidential business information (CBI) is commercial or financial
information that is both customarily and actually treated as private by
its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552),
CBI is exempt from public disclosure. If your comments to the interim
final rule contain commercial or financial information that is
customarily treated as private, that you actually treat as private, and
that is relevant or responsive to this interim final rule, it is
important that you clearly designate the submitted comments as CBI.
Please mark each page of your submission that constitutes CBI as
``PROPIN'' to indicate it contains proprietary information. MARAD will
treat such marked submissions as confidential under the FOIA, and they
will not be placed in the public docket of this interim final rule.
Submissions containing CBI should be sent to the email address provided
in the FOR FURTHER INFORMATION CONTACT section. In addition, you should
submit two copies, from which you have deleted the claimed CBI, to
Docket Management at the address given above under ADDRESSES. Any
comments MARAD receives which are not specifically designated as CBI
will be placed in the public docket for this rulemaking.

Will the agency consider late comments?

We will consider all comments that Docket Management receives
before the close of business on the comment closing date indicated
above under DATES. To the extent possible, we will also consider
comments that Docket Management receives after that date.

[[Page 74981]]

How can I read the comments submitted by other people?

You may read the comments received by Docket Management at the
address given above under ADDRESSES. The hours of the Docket Management
office are indicated above in the same location. You may also see the
comments on the internet. To read the comments on the internet, go to
<a href="http://www.regulations.gov">http://www.regulations.gov</a>. Follow the online instructions for
accessing the dockets.
Please note that, even after the comment closing date, we will
continue to file relevant information in the Docket as it becomes
available. Further, some people may submit late comments. Accordingly,
we recommend that you periodically check the Docket for new material.

List of Subjects in 46 CFR Part 294

Maritime carriers, Reporting and recordkeeping requirements.

0
For the reasons stated in the preamble, the Maritime Administration
adds Part 294 to Title 46 to read as follows:

PART 294--TANKER SECURITY PROGRAM (TSP)

Sec.
Subpart A--Introduction
294.1 Purpose.
294.3 Definitions.
294.5 Applications.
294.7 Procedural waivers.
Subpart B--Establishment of a Tanker Security Fleet
294.9 Product tanker vessel eligibility.
294.11 Owner, charterer, and operator citizenship eligibility
requirements.
294.13 Special rule for Fleet Vessel entry age.
Subpart C--Award of TSP Operating Agreements
294.15 Initial award of TSP Operating Agreements.
294.17 Subsequent award of TSP Operating Agreements.
294.19 Nature of award procedure.
Subpart D--TSP Operating Agreements
294.21 General conditions.
294.23 Special terms.
294.25 National security modifications.
294.27 Financial reporting.
Subpart E--Billing and Payment
294.29 Billing procedures.
294.31 Payments.
Subpart F--Appeals Procedures
294.33 Administrative determinations.

Authority: 46 U.S.C. chapter 534, 49 CFR 1.93.

Subpart A--Introduction

Sec. 294.1 Purpose.

This part prescribes regulations implementing subtitle B of Title
XXXV of the National Defense Authorization Act for Fiscal Year 2021
(Pub. L. 116-283), section 3511 and the National Defense Authorization
Act for Fiscal Year 2022 (Pub. L. 117-81), section 3515, codified at
Chapter 534 of Title 46, United States Code, governing the
establishment of a Tanker Security Fleet of product tank vessels
operating in the foreign trade or mixed foreign and domestic commerce
of the United States permitted under a registry endorsement issued by
the United States Coast Guard. The Department of Defense (DoD) and the
Department of Transportation (DOT) have joint responsibility for the
Tanker Security Fleet, with responsibility delegated to the Commander,
United States Transportation Command through the Secretary of Defense,
and the Maritime Administrator through the Secretary of Transportation.

Sec. 294.3 Definitions.

For the purposes of this part:
(a) Administrator means the Administrator, Maritime Administration,
United States Department of Transportation.
(b) Agreement Holder means the owner or operator of a Fleet Vessel,
excluding a trust, that:
(1) Meets the eligibility requirements of 46 U.S.C. 53402(c)(1),
(2), (3), or (4); and
(2) Enters into a Tanker Security Program Operating Agreement for
the Fleet Vessel with the Secretary of Transportation pursuant to 46
U.S.C. 53403.
(c) Applicant means a person applying for a Tanker Security Program
Operating Agreement, excluding trusts.
(d) Classification society means the American Bureau of Shipping,
or another classification society accepted by the Commandant of the
United States Coast Guard.
(e) CAP means Conditional Assessment Program, a voluntary program
offered by classification societies intended to measure and document
the actual technical and functional condition of tankers 15 years of
age or more.
(f) Coastwise trade means waterborne trade between points in the
United States as defined in 46 U.S.C. chapter 551.
(g) Commandant means the Commandant of the United States Coast
Guard.
(h) Commander means Commander, USTRANSCOM.
(i) CR means continuing resolution.
(j) Defense Contractor means a person that operates or manages
United States-documented vessels for SecDef, or charters vessels to
SecDef, and has entered into a special security agreement with SecDef.
(k) Documentation Citizen means a person able to document a vessel
under 46 U.S.C. chapter 121. This definition includes a United States
Citizen Trust.
(l) DoD means the United States Department of Defense.
(m) Emergency Preparedness Agreement means a voluntary agreement
established by the Maritime Administration (MARAD) under Section 708 of
the Defense Production Act of 1950, as amended (50 U.S.C. 4558).
(n) Fiscal Year means an annual period beginning on October 1 and
ending on September 30.
(o) Fleet means all Tanker Security Program (TSP) Fleet Vessels at
any given time.
(p) Fleet vessel means any product tank vessel operating under a
Tanker Security Program Operating Agreement on or after January 1,
2022, that--
(1) meets the requirements of 46 U.S.C. 53402(b); and
(2) is no more than 20 years of age.
(q) Foreign commerce means commerce or trade between the United
States, its territories or possessions, or the District of Columbia,
and a foreign country; and commerce or trade between foreign countries.
(r) Noncontiguous domestic trade means the waterborne
transportation of cargo between a point in the contiguous 48 states and
a point in Alaska, Hawaii, or Puerto Rico, other than a point in Alaska
north of the Arctic Circle.
(s) Person includes corporations, partnerships, and associations
existing under, or authorized by, laws of the United States, or any
State, territory, district, or possession thereof, or any foreign
country.
(t) Product tank vessel means a double-hulled tank vessel capable
of carrying simultaneously more than 2 separated grades of refined
petroleum products.
(u) SecDef means the Secretary of Defense.
(v) Secretary means the Secretary of Transportation unless the
context indicates otherwise.
(w) Section 50501 citizen means a person meeting the statutory
qualifications for United States citizenship designation under 46
U.S.C. 50501.
(x) Tanker Security Program Operating Agreement or TSP Operating
Agreement means the assistance agreement between an Agreement

[[Page 74982]]

Holder and MARAD that provides for payments under this part but is not
a procurement contract.
(y) United States Citizen Trust means:
(1) Subject to paragraph (3) of this definition, a trust that is
qualified under this definition.
(2) A trust is qualified only if:
(i) Each of the trustees is a section 50501 citizen; and
(ii) The application for documentation of the vessel under 46
U.S.C. chapter 121, includes the affidavit of each trustee stating that
the trustee is not aware of any reason involving a beneficiary of the
trust that is not a section 50501 citizen, or involving any other
person that is not a section 50501 citizen, as a result of which the
beneficiary or other person would hold more than 25 percent of the
aggregate power to influence or limit the exercise of the authority of
the trustee with respect to matters involving any ownership or
operation of the vessel that may adversely affect the interests of the
United States.
(3) If any person that is not a section 50501 citizen has authority
to direct or participate in directing a trustee for a trust in matters
involving any ownership or operation of the vessel that may adversely
affect the interests of the United States or in removing a trustee for
a trust without cause, either directly or indirectly through the
control of another person, the trust instrument provides that persons
who are not section 50501 citizens may not hold more than 25 percent of
the aggregate authority to so direct or remove a trustee.
(4) This definition will not be considered to prohibit a person who
is not a section 50501 citizen from holding more than 25 percent of the
beneficial interest in a trust.
(z) USTRANSCOM means United States Transportation Command.
(aa) Vessel of the United States means a merchant vessel that has
been documented under 46 U.S.C. chapter 121.

Sec. 294.5 Applications.

(a) Applicants. Each applicant for a TSP Operating Agreement is
required to apply to the Tanker Security Program, Maritime
Administration, U.S. Department of Transportation, 1200 New Jersey
Avenue SE, Washington, DC 20590. Electronic submissions must be
submitted to <a href="/cdn-cgi/l/email-protection#374452565b5e5143444247475845437753584319505841">[email&#160;protected]</a>. Application forms are available
upon request or may be downloaded from MARAD's website. Required
information includes:
(1) An Affidavit of section 50501 ctizenship that comports with the
requirements of 46 CFR part 355, if applying as a section 50501
citizen. Otherwise, an affidavit which demonstrates that the Applicant
is qualified to document a vessel under 46 U.S.C. chapter 121 is
required. If the Applicant is a vessel operator and proposes to employ
a vessel manager, then the Applicant must supply an affidavit for the
vessel manager that meets the same citizenship requirements as the
Applicant;
(2) Corporate documents, to include the following:
(i) Certificate of Incorporation or other organization papers,
including amendments presently in effect;
(ii) Corporate by-laws or other governing instruments, including
amendments presently in effect;
(iii) Form or type of organization, i.e., individual, partnership,
corporation, etc.;
(iv) Federal, state, or other laws under which the Applicant is
organized or incorporated, and the date of organization or
incorporation;
(v) Address of principal offices, and of important branch offices,
if any;
(vi) Description of domestic and international and corporate
affiliations, including (but not limited to) parent companies,
subsidiary companies, and other related companies within its corporate
structure, along with a description of the nature of the business
transacted with each affiliated corporation;
(vii) Concerning each officer and director of the Applicant,
provide name, address, nationality, number of shares owned and specify
type of shares whether voting or non-voting;
(viii) For each individual or entity that owns 5 percent or more of
the outstanding capital shares of any class of stock of the Applicant,
include the name, address, nationality, and number of capital shares
owned and specify type of shares whether voting or non-voting; and
(ix) A brief statement of the general effect of each voting
agreement, voting trust, or other arrangement whereby the voting rights
of 5 percent or more of the outstanding shares of the Applicant are
owned, controlled, or exercised by any person not the holder of legal
title to such shares. Give the name, address, nationality, and business
of any such person, and if not an individual, the form of organization;
(3) Financial data, to include the following:
(i) An audited financial statement or a completed MARAD Form MA-172
dated within 120 days after the close of the most recent fiscal period;
and
(ii) Estimated annual forecast of maritime operations for the next
five years showing revenue and expense, including explanations of any
significant increase or decrease of these items.
(4) Maritime related affiliations including carriers or alliances
with which the Applicant maintains an ongoing relationship;
(5) Ongoing business relationships with any refineries, terminals,
distributors, or other entities engaged in refined petroleum production
and distribution, whether in the United States or in a foreign state,
both at the time of application and, if applicable, projected to be
established within the five years following the date of application;
(6) Diversity of trading patterns. List of countries and trade
routes serviced or trades in which the product tank vessel is to be
operated, whether the vessel is to be operated on a voyage charter, or
time charter, and any specific tanker pools the vessel is associated
with;
(7) Applicant's record of owning and/or operating product tank
vessels, include the following:
(i) Provide the number, type, and size of product tank vessels
owned and/or operated in the last ten years, specifying whether owned
or operated, flag(s) of the individual vessels, trades involved, number
of employees in your ship operations department, including the number
of employees directly employed in U.S.-flag operations;
(ii) Operating experience with product tank vessels in
international trade;
(iii) Demonstration of reliability and breadth of services and
experience;
(iv) Experience in delivering services in accordance with
government contracts or in relation to the carriage of DoD or other
government sponsored cargoes;
(v) Vessels owned by the applicant and chartered by other persons;
(vi) Vessels chartered by the applicant from other persons--provide
vessel name, flag of registry, period of charter, name of charterer or
owner (as applicable) and area of operation;
(vii) Vessel or ship managers utilized in the operation of your
vessels; and
(viii) Any other information you believe to be relevant to your
record of owning or operating vessels.
(8) Product tank vessel details and operational standards:
(i) Vessel must be a party to the Oil Companies International
Marine Forum's Ship Inspection Report (SIRE) System and applicant must
provide date of last SIRE report.

[[Page 74983]]

(ii) Applicant must confirm acceptances received and/or retained by
the vessel since the last SIRE report.
(iii) Applicant must confirm that the vessel has not been rejected
or refused by any Charterer since the inspections leading to the said
SIRE report.
(iv) Applicant must provide a current Intertanko Standard Tanker
Chartering Questionnaire 88 (Q-88) (no more than 60 days old).
(v) Applicant must confirm vessel has vetting approval from at
least two oil majors providing date of vetting and name of oil major,
at least one vetting approval must be less than 6 months old at time of
application.
(vi) Applicant must provide a copy of vessel's current Class
Society issued Safety Management Certificate.
(vii) Applicant must provide a copy of vessel's current Flag State
issued International Ship Security Certificate.
(viii) Applicant must confirm vessel's ability to carry one
complete un-decanted tank washing in dedicated slop tanks.
(ix) Applicant must submit a General Arrangement Plan, trim and
stability booklet, and a set of the ship's capacity and stowage plans.
This is to include cargo piping. Applicants are to provide narrative
descriptions to accompany the drawings indicating proposed locations of
all required spaces and compartments listed in the military
requirements.
(x) Applicant must provide evidence of the vessel's most recent
U.S. Coast Guard (USCG) and American Bureau of Shipping (ABS) (or other
classification society accepted by the Commandant of the Coast Guard),
inspections conducted within 12 months of the application.
(xi) Applicant must warrant vessel meets, or will meet, before the
start of a TSP Operating Agreement, the requirements of a Quality
Management System (QMS). If an applicant does not currently have the
required systems in place it will provide a narrative describing how it
will have these required systems in place.
(9) Provide an assessment of the utility of the product tank
vessel(s) to DoD fuel transportation requirements including any
specific national defense sealift features. Provide characteristics
that indicate the utility of the product tank vessel(s) to DoD
including items of specific value.
(i) Applicant must provide an assessment of the vessel's ability to
install CONSOL and the proposed locations for installation. CONSOL
details may be found on the Maritime Administration's Tanker Security
Program website at: <a href="https://www.maritime.dot.gov/national-security/tanker-security-program">https://www.maritime.dot.gov/national-security/tanker-security-program</a>.
(ii) Owner must confirm vessel's ability to sustain warranted speed
of 14 knots, fully laden, in moderate weather (Force 4 on the Beaufort
Scale).
(iii) Provide the number and location of available berths for
additional personnel beyond the ship crew.
(10) Provide an assessment of the commercial viability of your
proposed product tank vessel(s).
(11) Provide any charters or management agreements that would
govern the operation of the vessel if selected (pro forma copies are
acceptable), including but not limited to the following:
(i) Demise or bareboat charter;
(ii) Vessel management agreement; and
(iii) Crewing agreement.
(12) Special security agreements. If applicable, provide a copy of
any special security agreement.
(13) Documentation Citizen. If applicable, the Documentation
Citizen must submit a signed certification as the demise charterer of
the proposed Fleet Vessel. The certification must provide a statement
that there are no treaties, statutes, regulations, or other laws of the
foreign country of the parent that would prohibit the proposed
Agreement Holder from performing its obligations under a TSP Operating
Agreement.
(14) if operating under a foreign parent, the ultimate foreign
parent of the Documentation Citizen demise charterer must submit a
signed certification. The certification must provide a statement that
the foreign parent will not influence the operation of the Fleet Vessel
in a manner that will adversely affect the interests of the United
States.
(15) For a United States Citizen Trust agreement, ff the Applicant
intends to place the vessel in a United States Citizen Trust during its
operation in the fleet, provide a copy of any such trust agreement (pro
forma copies are acceptable).
(16) If applicable, provide a replacement product tank vessel plan
if your product tank vessel is a fleet vessel over 10 years of age. The
replacement product tank vessel plan must include:
(i) The vessel's characteristics as applicable in items (8-9)
above;
(ii) A letter of intent or other document indicating agreement for
purchase of product tank vessel; and
(iii) A forecast of operations for five years for the replacement
product tank vessel.
(17) Special rule regarding age of participating fleet vessel. Age
restrictions will not apply during the first 30-month period beginning
on the date the vessel begins operating under the TSP Operating
Agreement if the Secretary determines that the participant has entered
an arrangement to obtain a replacement vessel that will be eligible to
be included in a TSP Operating Agreement.
(18) Provide an anti-lobbying certificate as required by 49 CFR
part 20 stating that no funds provided under the TSP have been used for
lobbying to obtain a TSP Operating Agreement.
(b) Procedures for applications. (1) Address. Owners or operators
of an eligible vessel may apply to MARAD for inclusion of that vessel
in the fleet. Applications may be submitted electronically to
<a href="/cdn-cgi/l/email-protection#8af9efebe6e3ecfef9fffafae5f8fecaeee5fea4ede5fc">[email&#160;protected]</a> or in hard copy to the Tanker Security Program,
Maritime Administration, U.S. Department of Transportation, 1200 New
Jersey Avenue SE, Washington, DC 20590.
(2) Time deadlines. Within 90 days after the close of the
application period, the Secretary will approve an application, in
conjunction with the SecDef, or provide in writing the reason for
denial of that application.
(3) Existing maritime security fleet vessels. The Secretary may
approve a completed application from an Applicant that, on the date of
its application, is operating a product tank vessel in the Maritime
Security Fleet in accordance with 46 U.S.C. chapter 531 and 46 CFR part
296.

Sec. 294.7 Procedural waivers.

In consultation with DoD, MARAD may, at MARAD's own initiation or
in response to a request by an interested party, after a finding of
good cause to suspend, revoke, amend, or waive any requirement of the
regulations in this part, subject to the provisions of the
Administrative Procedure Act and any statutory limitations.

Subpart B--Establishment of a Tanker Security Fleet

Sec. 294.9 Product tanker vessel eligibility requirements.

(a) Eligibility. To be eligible to be included in the fleet, the
vessel must:
(1) Meet the requirements of Sec. 294.11;
(2) Operate (or in the case of a vessel to be constructed, will be
operated) in providing transportation in United States foreign
commerce;
(3) Be self-propelled;
(4) Be not more than 10 years of age on the date the vessel is
first included in the Fleet;
(5) Be suitable for use by the United States for national defense
or military purposes in time of war or national emergency, as
determined by the Secretary of Defense;

[[Page 74984]]

(6) Be commercially viable, as determined by the Secretary of
Transportation; and
(7) Be--
(i) A vessel of the United States; or
(ii) Not a vessel of the United States, but the owner of the vessel
has demonstrated that--
(A) The vessel is eligible for a USCG certificate of inspection;
and
(B) The vessel owner intends to have the vessel documented under 46
U.S.C. chapter 121 at the time the vessel is to be included in the
fleet.
(b) Telecommunications and other electronic equipment. The
telecommunications and other electronic equipment on an existing vessel
that is redocumented under the laws of the United States for operation
under a TSP Operating Agreement will satisfy all Federal Communications
Commission equipment certification requirements if:
(1) The equipment complies with all applicable international
agreements and associated guidelines as determined by the country in
which the vessel was documented immediately before becoming documented
under the laws of the United States;
(2) The country has not been identified by the Secretary as
inadequately enforcing international regulations as to that vessel; and
(3) The equipment, at the end of its useful life, will be replaced
with equipment that meets Federal Communications Commission equipment
certification standards.

Sec. 294.11 Owner, charterer, and operator citizenship eligibility
requirements.

Eligibility determination. For a vessel to be eligible to be
included in the Fleet, vessel owners, charterers, and operators must
evidence that, during the period of a TSP Operating Agreement, one of
the following must be true:
(a) The vessel is owned and operated by one or more persons that
are citizens of the United States in accordance with 46 U.S.C. 50501.
(b) The vessel is owned by a citizen of the United States in
accordance with 46 U.S.C. 50501, or United States Citizen Trust, and
the following conditions are met:
(1) The vessel is demise chartered to a person or entity that:
(i) Is eligible to document the vessel under 46 U.S.C. chapter 121;
(ii) Is organized such that the chairman of the board of directors,
chief executive officer, and most of the members of the board of
directors are citizens of the United States, and are appointed and
subjected to removal only upon approval by the Secretary;
(iii) Certifies to the Secretary that there are no treaties,
statutes, regulations, or other laws that would prohibit the program
participant for the vessel from performing its obligations under a TSP
Operating Agreement; and
(iv) In the case of a vessel that is demise chartered to an entity
that is owned or controlled by another person or entity that is not a
citizen of the United States under 46 U.S.C. 50501, that other person
or entity certifies to the Secretary that there are no treaties,
statutes, regulations, or other laws that would prohibit the person or
entity from performing its obligations under a TSP Operating Agreement
and enters into an agreement with the Secretary not to influence the
vessel's operation in any way that would be detrimental to the United
States.
(2) The Secretary and SecDef notify the Committee on Armed Services
and the Committee on Commerce, Science, and Transportation of the
Senate and the Committee on Armed Services and the Committee on
Transportation and Infrastructure of the House of Representatives that
the Secretaries concur with the certifications by the documentation
citizen required under Sec. 294.5(a)(13), and any ultimate foreign
parent corporation under Sec. 294.5(a)(14), and after a review, agree
that there are no legal, operational, or other impediments that would
prohibit the owner or operator of the vessel from performing its
obligations under a TSP Operating Agreement.
(c) The vessel is owned and operated by a defense contractor,
including affiliated or related companies within the same corporate
group, that meets the following requirements:
(1) Eligible to document the vessel under 46 U.S.C. chapter 121;
(2) Operates or manages other United States-documented vessels for
the SecDef, or charters other vessels to the SecDef;
(3) Enters into a special security agreement with the SecDef;
(4) Certifies to the Secretary, at the time of application and
consistent with Sec. 294.5(a)(13), that there are no treaties,
statutes, regulations, or other laws that would prohibit the Agreement
Holder from performing its obligations under a TSP Operating Agreement;
and
(5) Any foreign corporate parent company of the Defense Contractor
proffers, at the time of application for a TSP Operating Agreement, an
agreement consistent with Sec. 294.5(a)(14), not to influence the
vessel's operation in a way that is detrimental to the United States.
(d) The vessel is owned by a Documentation Citizen in accordance
with 46 U.S.C. Chapter 121 and demise chartered to a Citizen of the
United States in accordance with 46 U.S.C. 50501.

Sec. 294.13 Special rule for fleet vessel entry age.

An Applicant may apply for a TSP Operating Agreement with a vessel
that exceeds the maximum entry age requirement of Sec. 294.9(a)(4), if
it satisfies the following conditions:
(a) The Applicant demonstrates their intent to replace the non-
compliant vessel within 30 months after the commencement of operations
under a TSP Operating Agreement;
(b) Nominated vessels 15 years or older must be enrolled in a
classification society's CAP and be rated equivalent to ABS CAP 2 or
better; and
(c) The Secretary determines that the Applicant has entered into an
agreement to obtain and operate a replacement product tank vessel
which, upon commencing operation under the same TSP Operating Agreement
for the non-compliant vessel, will be eligible to be included in the
fleet under Sec. 294.9.

Subpart C--Award of TSP Operating Agreements

Sec. 294.15 Initial award of TSP Operating Agreements.

(a) Number of agreements. The Secretary, in concurrence with
SecDef, may award up to ten TSP Operating Agreements for the operation
of product tank vessels from among those applications submitted by
qualified Applicants. If the Secretary and SecDef are unable to select
ten vessels for inclusion in the Fleet from their initial review of
applications, they may accept additional applications for review to
ensure that the Secretary can award ten TSP Operating Agreements.
(b) Vessel selection priority. In consideration of the
applications, the Secretary and SecDef will consider each Applicant's
vessel(s)'s qualifications as they relate to subpart B and will give
priority to applications based on the criteria in paragraphs (b)(1)
through (3) of this section:
(1) Vessel capabilities, as established by SecDef;
(2) Applicant's record of vessel ownership and operation of tanker
vessels; and
(3) Applicant's citizenship, with preference for section 50501
citizens.
(c) Consideration of applications requesting an age waiver. If an
Applicant applies for a TSP Operating Agreement under the provisions of
Sec. 294.15, the Secretary and SecDef will consider:
(1) Whether the vessel is enrolled in its class society's CAP and
has

[[Page 74985]]

maintained a rating equivalent to ABS CAP 2 or better;
(2) The vessel priority factors in Sec. 294.15(b) for both the
proposed non-compliant vessel and the vessel proposed to replace the
non-compliant vessel within the initial 30 months of the TSP Operating
Agreement; and
(3) The feasibility of the Applicant's plan to obtain and operate
the compliant replacement vessel within the initial 30 months of the
TSP Operating Agreement.
(d) Notification to Applicants. After the Secretary, in concurrence
with SecDef, has selected those vessels to be included in the Fleet,
the Secretary will notify all Applicants as to whether their
applications were successful or unsuccessful.
(1) For each successful application, the Secretary will extend an
offer to the Applicant to enter into one or more TSP Operating
Agreements, based on the number of vessels selected from the
Applicant's application for inclusion into the Fleet. Successful
Applicants will have up to 90 days in which to accept or decline the
Secretary's offer.
(2) For each unsuccessful application, the Secretary will inform
the Applicant of the reason(s) why the application was unsuccessful.

Sec. 294.17 Subsequent award of TSP Operating Agreements.

(a) Availability. When a TSP Operating Agreement becomes available
through termination by the Secretary or early termination by an
Agreement Holder, and no transfer under 46 U.S.C. 53405(e) is involved,
MARAD will accept applications for a new TSP Operating Agreement
pursuant to paragraphs (a)(1) through (3) of this section:
(1) The proposed vessel must meet the requirements of Sec. 294.9;
(2) The Applicant must meet the requirements of Sec. 294.11; and
(3) The Applicant must apply in accordance with the requirements of
Sec. 294.5.
(b) Consideration of applications. The Secretary and SecDef will
consider all applications within the priority structure of Sec.
294.15(b).
(c) Notification and award of a new TSP Operating Agreement. Upon
selection of the best-qualified vessel(s) from among the applications
received, MARAD will enter into a new TSP Operating Agreement with the
successful Applicant as soon as is practicable. Successful Applicants
must notify the Secretary of their acceptance of an offer to enter into
a TSP Operating Agreement within 90 days.

Sec. 294.19 Nature of award procedure.

TSP furthers a public purpose and MARAD does not acquire goods or
services through TSP. Therefore, the selection process for awarding TSP
Operating Agreements does not constitute an acquisition subject to
procurement law or the Federal Acquisition Regulation.

Subpart D--TSP Operating Agreements

Sec. 294.21 General conditions.

(a) Number of agreements. The Secretary may enter into up to ten
TSP Operating Agreements for vessels that were either selected in
accordance with Sec. 294.15 or which, on the effective date of a TSP
Operating Agreement, were operating under an MSP Operating Agreement in
accordance with 46 U.S.C. chapter 531 and 46 CFR part 296, for fiscal
year 2022 and any prior fiscal year.
(b) Term of agreements. All TSP Operating Agreements will be
effective for one fiscal year and subject to the availability of
appropriations, may be renewed for each subsequent fiscal year through
the end of fiscal year 2035.
(c) Replacement vessels. An Agreement Holder may replace a vessel
under a TSP Operating Agreement with another vessel that is eligible to
be included in the fleet under Sec. 294.9, if the Secretary, in
conjunction with SecDef, approves the replacement vessel.
(d) Termination by the Secretary. If an Agreement Holder fails to
comply with the terms of a TSP Operating Agreement:
(1) The Secretary will notify the Agreement Holder and provide a
reasonable opportunity for the Agreement Holder to comply with the
terms and conditions of the TSP Operating Agreement; and
(2) The Secretary will terminate the TSP Operating Agreement if the
Agreement Holder fails to achieve such compliance.
(e) Termination by the Secretary for long-term charter. If an
Agreement Holder time charters a vessel enrolled in the TSP to the
United States Government for a period that together with options,
occurs for more than 180 continuous days, then the Secretary will
terminate the TSP Operating Agreement.
(f) Early termination by an Agreement Holder. The Agreement Holder
must notify the Secretary no later than 60 days before the proposed
effective termination date that the Agreement Holder intends to
terminate the TSP Operating Agreement. Even after early termination of
the Operating Agreement, the Agreement Holder will remain bound by the
provisions related to vessel documentation and national security
requirements, including any commitments under an Emergency Preparedness
Agreement, for the full term of the TSP Operating Agreement.
(g) Nonrenewal for lack of funds. If only partial funding is
appropriated by the 60th day of the fiscal year, then the Secretary, in
consultation with SecDef, will select the vessels to retain under TSP
Operating Agreements, based on the Secretaries' determinations of the
most militarily useful and commercially viable vessels. If no funds are
appropriated by the 60th day of such fiscal year, and notwithstanding
any other provision, then all TSP Operating Agreements will be
terminated, and each Agreement Holder will be released from its
obligations under the TSP Operating Agreement. Final payments under the
terminated TSP Operating Agreements will be made in accordance with
Sec. 294.31. To the extent that funds are appropriated in a subsequent
fiscal year, former TSP Operating Agreements may be reinstated if
mutually acceptable to the Administrator and the Agreement Holder,
provided the TSP vessel remains eligible.
(h) Release of vessels from obligations. For Agreement Holders who
have been released from their obligations under a TSP Operating
Agreement due to lack of funds in any fiscal year by the 60th day of
that fiscal year,
(1) The Agreement Holder may transfer and register each vessel
covered by a terminated TSP Operating Agreement to a foreign registry
that is acceptable to the Secretary and SecDef, notwithstanding 46
U.S.C. chapter 561 and 46 CFR part 221;
(2) If 46 U.S.C. chapter 563 is applicable to a vessel that has
been transferred to foreign registry due to the termination of a TSP
Operating Agreement, then that vessel remains available to be
requisitioned by the Secretary pursuant to 46 U.S.C. chapter 563; and
(3) The provisions of this section do not apply to vessels under
TSP Operating Agreements that have been terminated for any other
reason.
(i) Transfers of TSP Operating Agreements. An Agreement Holder may
transfer a TSP Operating Agreement, including all rights and
obligations under the TSP Operating Agreement, to any person that is
eligible under Sec. 294.11 to enter into a TSP Operating Agreement, if
the Secretary and SecDef jointly determine that the transfer is in the
best interests of the United States. A transaction is not considered a
transfer

[[Page 74986]]

of a TSP Operating Agreement if the same legal entity with the same
vessels remains the Agreement Holder under the TSP Operating Agreement.

Sec. 294.23 Special terms.

(a) TSP Operating Agreement. Each TSP Operating Agreement will
require that, during the period a fleet vessel is operating under that
TSP Operating Agreement, the fleet vessel must:
(1) Be documented as a vessel of the United States under 46 U.S.C.
chapter 121;
(2) Operate exclusively in:
(i) Foreign commerce;
(ii) Mixed foreign commerce and domestic trade permitted under a
registry endorsement issued under 46 U.S.C. 12111, and to those points
identified in 46 U.S.C. 55101(b);
(iii) Foreign-to-foreign commerce; or
(iv) Under charter to the United States, except as provided in 46
U.S.C. 53404(b); and
(3) Not otherwise operate in the coastwise trade of the United
States;
(4) Not receive payments during a period in which the Agreement
Holder owns, operates, or charters a vessel engaged in noncontiguous
domestic trade, unless the Agreement Holder is a section 50501 citizen,
applying the 75 percent ownership requirements of 46 U.S.C. 50501; and
(5) Enroll, for vessels 15 years or older, in their classification
society's CAP and maintain a CAP rating of 2 or better.
(b) Operating agreement as an obligation of the United States
government. The amounts payable to an Agreement Holder under a TSP
Operating Agreement constitute a contractual obligation of the United
States Government to the extent of actual appropriations.
(c) Operating under a Continuing Resolution. In the event funds are
available under a Continuing Resolution (CR), the terms and conditions
of the TSP Operating Agreements will be in force provided sufficient
funds are available to fully meet obligations under TSP Operating
Agreements, and only for the period stipulated in the applicable CR. If
funds are not appropriated under a CR at sufficient levels for any
portion of a fiscal year, the Secretary will select the vessels to
retain within the funding level of the previous fiscal year, in
consultation with the SecDef, based on the Secretaries' determination
of the most militarily useful and commercially viable vessels. For any
Agreement Holder with a TSP Operating Agreement that does not receive
funds, the terms and conditions of any applicable TSP Operating
Agreement may be voided, and the Agreement Holder may request
termination of the TSP Operating Agreement.
(d) National security. Each TSP Operating Agreement will require
the Agreement Holder to enter into a Voluntary Tanker Agreement (VTA),
as approved by the Secretary and the SecDef, or other agreement
approved by the Secretaries.
(e) United States Merchant Marine Academy cadet training. The
Agreement Holder must agree:
(1) To carry on the fleet vessel two United States Merchant Marine
Academy cadets, if available, on each voyage; and
(2) To implement prior to accepting an Operating Agreement
appropriate policies, programs, and criteria necessary to comply with
all MARAD cadet safety guidelines that address sexual harassment,
sexual assault, and other inappropriate conduct.
(3) Upon a finding of non-compliance, the Administrator may require
the Agreement Holder to take corrective actions or find such failure to
constitute a violation of the TSP Operating Agreement.

Sec. 294.25 National security modifications.

A participant agrees to the installation onboard its Fleet Vessel
of militarily useful features for national defense purposes as approved
by U.S. Coast Guard and the vessel's classification society.

Sec. 294.27 Financial reporting.

The Agreement Holder must submit the following reports to MARAD,
including management footnotes where necessary to make a fair financial
presentation:
(a) Vessel operating cost information. Not later than 120 days
after the close of the Agreement Holder's semiannual accounting period,
a Form MA-172 on a semiannual basis, in accordance with 46 CFR 232.6;
and
(b) Financial statement. Not later than 120 days after the close of
the Agreement Holder's annual accounting period, an audited financial
statement in accordance with 46 CFR 232.6 and the most recent vessel
operating cost data submitted as part of its Emergency Preparedness
Agreement, or if not current year data, a Schedule 310 of the MA-172.

Subpart E--Billing and Payment

Sec. 294.29 Billing procedures.

All Agreement Holders must submit a voucher to the Maritime
Administration for payment. For Agreement Holders operating under more
than one TSP Operating Agreement, the Agreement Holder may submit a
single monthly voucher applicable to all its TSP Operating Agreements.
Each voucher submission must include a certification that the vessel(s)
for which payment is requested were operated in accordance with Sec.
294.23(a) and applicable TSP Operating Agreements. All submissions must
be forwarded to the Tanker Security Program, Maritime Administration,
via email to <a href="/cdn-cgi/l/email-protection#2c5f494d40454a585f595c5c435e586c484358024b435a">[email&#160;protected]</a>. Payments will be paid and
processed under the terms and conditions of the Prompt Payment Act, 31
U.S.C. 3901, et seq.

Sec. 294.31 Payments.

(a) Amount payable. A TSP Operating Agreement will provide for each
Fleet Vessel, an annual payment, subject to the availability of
appropriations, equal to $6,000,000 for each of fiscal years 2022 to
2035. This amount will be paid in equal monthly installments at the end
of each month. The annual amount payable will not be reduced except as
provided in paragraphs (b) and (c) of this section.
(b) Reductions in amount payable. The annual amount otherwise
payable under a TSP Operating Agreement will be reduced on a pro rata
basis for each day less than 320 days in a fiscal year that a Fleet
Vessel is not operated in accordance with Sec. 294.23(a)(1) through
(3).
(c) No payment. (1) Regardless of whether the Agreement Holder has
or will operate the Fleet vessel for 320 days a year, the Agreement
Holder will not be paid:
(i) For any day in which the TSP Vessel is engaged in transporting
more than 7,500 tons of civilian bulk preference cargoes pursuant to 46
U.S.C. 55302(a), 55305, or 55314 (using the United States standard of
short tons, which is equivalent to 6,803.85 metric tons or 6,696.75
long tons);
(ii) During a period in which the Agreement Holder participates in
noncontiguous domestic trade, unless that Agreement Holder is a Section
50501 Citizen, applying the 75 percent ownership requirement of that
Section;
(iii) For any days in which the Agreement Holder operates a TSP
Vessel that is 15 years or older which is not enrolled in their
classification society's CAP or is not maintaining a CAP rating of 2 or
better;
(iv) For any day in which the Agreement Holder operates a TSP
Vessel that is in excess of 20 years of age;
(v) For days in excess of 30 days in a fiscal year in which a
vessel is drydocked or undergoing survey,

[[Page 74987]]

inspection, or repair, unless, prior to the expiration of the vessel's
30-day drydock and repair period, the Agreement Holder obtains approval
from MARAD for an extension beyond 30 days;
(vi) For any day in which the Agreement Holder does not, at the
request of the Administrator, carry up to two United States Merchant
Marine Academy cadets onboard; and
(vii) If the Agreement Holder does not operate or maintain the
Fleet Vessel in accordance with the terms of the TSP Operating
Agreement.
(2) To the extent that non-payment days under paragraph (c) of this
section are known, Agreement Holder payments will be reduced at the
time of the current billing. The daily reduction amounts will be based
on the annual amounts in paragraph (a) of this section divided by 365
days (366 days in leap years) and rounded to the nearest cent.
(3) MARAD may require, for good cause, that a portion of the funds
payable under this section be withheld if the provisions of Sec.
294.23(a) have not been met.
(4) Amounts owed to MARAD for reductions applicable to a prior
billing period must be electronically transferred using MARAD's
prescribed format, or the amount owed can be credited to MARAD by
offsetting amounts payable in future billing periods.

Subpart F--Appeals Procedures

Sec. 294.33 Administrative determinations.

(a) Policy. An Agreement Holder who disagrees with the findings,
interpretations, or decisions of MARAD with respect to the
administration of this part or any other dispute or complaint
concerning the Agreement Holder's TSP Operating Agreement(s) may submit
an appeal to the Administrator. The appeals must be made in writing to
the Maritime Administrator, within 60 days following the date of the
document notifying the Agreement Holder of the administrative
determination of MARAD. Such an appeal should be addressed to the
Maritime Administrator, Attn.: TSP Operating Agreement Appeals,
Maritime Administration, 1200 New Jersey Avenue SE, Washington, DC
20590 or via email to <a href="/cdn-cgi/l/email-protection#55263034393c3321262025253a272115313a217b323a23">[email&#160;protected]</a>. An appeal is a
prerequisite to exhausting administrative remedies.
(b) DoD determinations. 46 U.S.C. chapter 534 assigns joint and
separate roles and responsibilities to the Secretary and the SecDef.
The Administrator and the Commander will make joint and separate
findings, interpretations, and decisions necessary to implement 46
U.S.C. chapter 534. An Agreement Holder who disagrees with the initial
findings, interpretations, or decisions regarding the implementation of
46 U.S.C. chapter 534--whether joint or separate in nature--must
communicate such disagreement to MARAD. Any disagreement or dispute of
an Agreement Holder may, where determined appropriate by MARAD, be
transferred to the Director of Policy and Plans, USTRANSCOM for
resolution. An Agreement Holder who disagrees with the findings,
interpretations, or decisions of the Director of Policy and Plans,
USTRANSCOM, with respect to the administration of this part, may submit
an appeal to the Commander. Such an appeal must be made in writing to
the Commander within 60 days following the date of the document
notifying the Agreement Holder of the administrative determination of
the Director of Policy and Plans. Such an appeal should be addressed to
the Commander, United States Transportation Command, 508 Scott Drive,
Scott Air Force Base, IL 62225-5357. or via email to
<a href="/cdn-cgi/l/email-protection#196d6b78776a7a7674376a7a766d6d376d7a7a7a37747b61377a76747478777d7c6b597478707537747075">[email&#160;protected]</a>.
(c) Process. The Administrator, or the Commander in the case of a
DoD determination, may require the person making the request to furnish
additional information, or proof of factual allegations, and may order
any proceeding appropriate in the circumstances. The decision of the
Administrator, or the Commander in the case of a DoD determination,
will be administratively final.

(Authority: 46 U.S.C. chapter 534, 49 CFR 1.93)

By order of the Maritime Administrator.
T. Mitchell Hudson, Jr.,
Secretary, Maritime Administration.
[FR Doc. 2022-26358 Filed 12-6-22; 8:45 am]
BILLING CODE 4910-81-P

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