§ 237.3 Consumption entries.

All consumption entries involving repairs in foreign ports shall be filed and handled to a conclusion with the United States Customs, including payment of all unremitted duties, such payments to be allowed for reimbursement to the charterer by the owner as an additional cost of such foreign repairs.

PART 246-FORMULAE FOR DETERMINING SEA SPEED OF VESSELS

Sec.

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: Sec. 204, 49 Stat. 1987, as amended; 46 U.S.C. 1114.

SOURCE: General Order 43, 3d Revision, 24 FR 3793, May 12, 1959, unless otherwise noted.

§ 246.1 Method of calculating sea speed of vessels.

The speeds of vessels shall be based 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 horsepower required shall be made at speed-length 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 determina

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tions 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.

This part prescribes certain regulations governing the placement of marine hull insurance on vessels built or operated with subsidy or covered by vessel obligation guarantees issued pursuant to Title XI of the Merchant Marine Act, 1936, as amended (Act). (46 U.S.C. 1271-1279)

§ 249.2 Policy.

(a) It is the policy of the Maritime Administration (MARAD) that companies subject to requirements for the placement of marine hull insurance shall be afforded the widest possible opportunity to obtain the necessary coverage, with minimal regulatory constraints, with financially sound underwriters, and that such placement should not create any unnecessary impediments to competitive maritime operations.

(b) It is also the policy of MARAD to require owners of vessels with ODS or Title XI obligation guarantees to allow the American marine insurance market the opportunity to compete for the marine hull insurance on their vessels before such insurance is placed. Consistent with sound business judgment, owners will be expected to place their insurance with the American

market to the maximum extent possible when the rates, terms and conditions offered by American underwriters are competitive with those offered by foreign underwriters.

§ 249.3 Amounts of insurance.

MARAD will inform the owner of each vessel that is subsidized or covered by vessel obligation guarantees, prior to initial placement and at least annually thereafter, of the minimum amount of insurance required to be placed on the vessel.

§ 249.4 Eligibility.

In General. All required marine hull insurance must be placed with:

(a) Underwriters licensed to do business in one or more of the United States;

(b) Underwriters at Lloyds;

(c) Member companies of the Institute of London Underwriters; or

(d) Other underwriters specifically approved in advance by the Maritime Administration.

§ 249.5 Eligibility criteria.

(a) U.S. Underwriters. Underwriters licensed to do business in a state are eligible to participate without further consideration, provided they have at least a B security rating, as published in the latest edition of A.M. Best's Insurance Reports, and the amount of insurance does not exceed the limitation on risk prescribed in § 249.8.

(b) Foreign Underwriters. (1) Underwriters at Lloyds are eligible to participate without further consideration.

(2) Underwriters which are members of the Institute of London Underwriters (ILU) (i.e., member companies, not parents or affiliates of the member companies) are eligible to participate without further consideration, provided that the ILU member company actually underwriting the risk maintains a trust fund in the United States for the benefit of its U.S. policyholders in an amount at least equal to the minimum provided in § 249.7(d), and the amount insured does not exceed the

limitation on risk prescribed in § 249.8. Parent companies or affiliates of the ILU member companies are treated as other foreign underwriters under subsection (c) of this section.

MARAD reserves the right to review this eligibility at any time.

(c) Other Foreign Underwriters. For eign underwriters, other than those specified in paragraphs (b) (1) and (2) of this section, may also be eligible to participate in the writing of marine hull insurance on MARAD program vessels, if approved to do so in accordance with the procedures contained in §§ 249.6 and 249.7.

(d) Documentation of eligibility. It shall be the responsibility of the vessel owner and its broker to ensure that the requirements of this section are met, and they should be able to provide MARAD, upon request, with documentation to that effect.

§ 249.6 Application procedures.

(a) MARAD may grant specific approval for underwriters described in $249.5(c) to participate in the writing of marine hull insurance on MARAD program vessels, only in advance of any actual placement.

(b) Only those foreign underwriters who have obtained a high rating (A or comparable) from an accepted international rating service may apply, and if approved, such approval will be contingent upon continued maintenance of such rating. MARAD will make available to interested parties the names of any accepted international rating service.

(c) To seek approval, an applicant shall submit to MARAD:

(1) Certified financial data for the five previous years in sufficient detail to enable MARAD to assess the financial strength and solvency of the applicant. Normally, this would be the same data which the underwriter must submit to the regulatory agency in its country of domicile. However, MARAD may request additional data if the applicant's submissions are considered inadequate;

(2) A comprehensive description and English language version of the insurance regulatory regime that is in place in the insurer's country of domicile. (After review, MARAD may contact

the foreign national regulatory authorities, as appropriate);

(3) An affidavit in writing, executed by an agent of the applicant who is a domiciliary of the United States, and supported by appropriate documentation, to demonstrate that there is nothing in either law or practice to preclude a U.S. insurer from obtaining the same access to the applicant's home market as the applicant is seeking to the U.S. market, and

(4) The details of its reinsurance program, if it wishes to write any risks in excess of five percent of its policyholders' surplus. These details shall be accompanied by a statement that clearly demonstrates the special circumstances and good cause by which MARAD should be persuaded to modify its general policy on limitation of risk described in § 249.8.

§ 249.7 Approval

(a) Approval of the applicant will be based upon an assessment of the applicant's financial condition and solvency, its rating by an accepted international rating service, suitability of the regulatory regime under which the applicant must operate in its home country, and on the principle of reciprocal non-discrimination. MARAD will not approve access to the U.S. hull insurance market, if U.S. insurers are denied similar access to the hull insurance market in the applicant's home country.

(b) MARAD will publish in the FDERAL REGISTER each Notice of Application received from foreign underwriters described in § 249.5(c), affording interested persons an opportunity to bring to MARAD's attention any discriminatory laws or practices relating to the placement of marine hull insurance which might exist in the applicant's country of domicile.

(c) In granting approval, MARAD will consider all materials available to it, and may impose reasonable terms and conditions upon any such approvals granted.

(d) Upon approval, applicant will be required to establish and maintain for the benefit of its U.S. policyholders a U.S. trust fund in the amount of at least $1.5 million, such amount to be