252.32—Maintenance (upkeep) and repairs.
(a) Subsidy items.
The fair and reasonable maintenance and repair costs not compensated by insurance, if eligible for subsidy under the ODSA and the regulations in 46 CFR part 272, incurred by the operator during the calendar year.
(b) Subsidy rate.
The subsidy rate for maintenance and repair shall be the U.S.-foreign cost differential determined from price estimates of representative items of maintenance and repair work and by using the repair practices of the foreign-flag competition. See paragraph (b)(4) of this section for an example calculation.
(1) Cost survey.
MARAD shall select a sample of jobs which are representative of the various types of maintenance and repair work—drydocking and underwater repairs, machinery repairs, hull and deck repairs, electrical repairs, exterior painting and interior painting, etc. The jobs shall be described fully and combined into a standard set of specifications based on a particular type of vessel. The same specifications shall be used for obtaining all price estimates. MARAD shall request reliable and mutually acceptable ship repair cost experts to ascertain the U.S. and foreign M&R prices. MARAD shall survey foreign countries during a three-year cycle. The survey year prices shall be adjusted in the years between surveys by price adjustments estimated by the ship repair cost experts.
(2) Country cost differential.
A country cost differential shall be determined for each country where work was performed on the competitive vessels. The country cost differential shall be 100 percent minus the ratio of the estimated foreign price to the U.S. price estimate. The U.S. price estimate shall be representative of the coastal area included in the subsidized service (for example East Coast) or, if more than one coast is served, the coast where the company is home based. For example:
| [Year—1985; U.S. Atlantic—Gulf Coast; Foreign Country—Singapore] | ||
| Repair category | Foreign price | U.S. price |
|---|---|---|
| Drydocking and Underwater Repairs | $89,840 | $300,245 |
| Tank Cleaning and Coating | 70,160 | 77,080 |
| Boiler Repairs | 10,545 | 47,550 |
| Machinery Repairs | 22,505 | 108,165 |
| Hull and Deck Repairs | 33,500 | 99,370 |
| Piping System | 71,905 | 215,830 |
| Electrical Repairs | 12,340 | 36,660 |
| Exterior Painting | 5,035 | 30,640 |
| Interior Painting | 390 | 1,470 |
| Estimate Totals | 316,220 | 917,010 |
| Foreign/U.S. Price Ratio—34%. | ||
| Country Cost Differential (100-34)—66%. | ||
(3) Distribution of repairs.
The distribution of repairs refers to the countries where M&R work was performed on the vessels of the foreign-flag competitor. When data on the repairing practices are obtained directly from the foreign competitor, they shall be used. If information about such practices is unavailable—or only partially available—data, published by the classification societies and Lloyd's Voyage Record, reporting the dates and localities of drydocking and completion of the various types of vessel surveys, shall be used for determining the geographical distribution of the unknown repairing practices. If such information is unavailable, repairing practices shall be determined on the basis of the industry as a whole.
(4) M&R subsidy rate.
The U.S.-foreign cost differential for the foreign-flag competitor shall be determined by multiplying the percentage distribution of repairs for each country where repair work was performed by the country cost differential for that country, and by adding the resulting weighted cost differential for all countries. For example:
| Principal competitor | Distribution of repairs | Country cost differential percent(2) | Weighted cost differentials ___ (1) × (2) (percent)(3) | |
|---|---|---|---|---|
| Country(1) | Percent | |||
| Liberia | U.K. | 15 | 19 | 2.9 |
| Japan | 20 | 36 | 7.2 | |
| Singapore | 65 | 57 | 37.1 | |
| Subsidy rate | 47 | |||
(c) Data submission requirement.
The operator is required to submit a Subsidy Repair Summary (Form MA-140) quarterly, in accordance with 46 CFR part 272.
[51 FR 40426, Nov. 7, 1986, as amended at 54 FR 5086, Feb. 1, 1989; 58 FR 17349, Apr. 2, 1993; 61 FR 32706, June 25, 1996]