[Federal Register Volume 69, Number 110 (Tuesday, June 8, 2004)]
[Rules and Regulations]
[Pages 31897-31904]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-12765]


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DEPARTMENT OF TRANSPORTATION

Maritime Administration

46 CFR Part 310

[Docket Number: MARAD-2004-17760]
RIN 2133-AB60


Merchant Marine Training

AGENCY: Maritime Administration, Department of Transportation.

ACTION: Interim final rule with request for comments.

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SUMMARY: The Maritime Administration is publishing this interim final 
rule to implement changes to its regulations in part 310 regarding 
Maritime Education and Training. This rulemaking updates the Maritime 
Education and Training regulations to conform with Title XXXV, Subtitle 
A, of the National Defense Authorization Act for Fiscal Year 2004, 
regarding the administration of state, regional and United States 
merchant marine academies. This rulemaking also makes non-substantive 
technical changes to part 310.

DATES: This interim final rule is effective July 8, 2004. Comments on 
the rule must be submitted by August 9, 2004.

ADDRESSES: You may submit comments [identified by DOT DMS Docket Number 
MARAD-2004-17760] by any of the following methods:
     Web Site: http://dms.dot.gov. Follow the instructions for 
submitting comments on the DOT electronic docket site.
     Mail: Docket Management Facility; U.S. Department of 
Transportation, 400 7th St., SW., Nassif Building, Room PL-401, 
Washington, DC 20590-001.
     Hand Delivery: Room PL-401 on the plaza level of the 
Nassif Building, 400 7th St., SW., Washington, DC, between 9 am and 5 
pm, Monday through Friday, except Federal Holidays.
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting 
comments.
    Instructions: All submissions must include the agency name and 
docket number or Regulatory Identification Number (RIN) for this 
rulemaking. Note that all comments received will be posted without 
change to http://dms.dot.gov including any personal information 
provided. Please see the Privacy Act heading under Regulatory Notices.
    Docket: For access to the docket to read background documents or 
comments received, go to http://dms.dot.gov at any time or to Room PL-
401 on the plaza level of the Nassif Building, 400 7th St., SW., 
Washington, DC, between 9 am and 5 pm, Monday through Friday, except 
Federal Holidays.

FOR FURTHER INFORMATION CONTACT: Jay Gordon, Maritime Administration, 
400 7th St., SW., Washington, DC 20590; telephone: (202) 366-5173; or 
e-mail: [email protected].

SUPPLEMENTARY INFORMATION: For purposes of the following analysis, the 
term ``Act'' refers to the National Defense Authorization Act for 
Fiscal Year 2004, Pub. L. 108-136, unless otherwise indicated.

Section-By-Section Analysis

Section 310.1 Definitions

    (b) Act--We update the term ``Act'' to include sections of the 
Maritime Education and Training Act of 1980, Pub. L. 96-453, as 
amended, which includes the changes effected by the National Defense 
Authorization Act for Fiscal Year 2004, Pub. L. 108-136, and any 
subsequent amendments.
    (i) Cost of Education Provided--is a concept added by the National 
Defense Authorization Act for Fiscal Year 2004, Pub. L. 108-136, in 
connection with requiring Student Incentive Payment (``SIP'') students 
defaulting on their obligations to repay the student incentive payments 
made to such students by the Federal Government.
    (j)-(r)--Definitions under these designations were renumbered.

Section 310.3 Schools and Courses

    Changes in this section include capitalizing the words ``training 
ship'' and replacing the title of the Office of Maritime Labor and 
Training with the Office of Policy and Plans.

Section 310.7 Federal Student Subsistence Allowances and Student 
Incentive Payments

    Section 310.7(b)(1)--Under the Oceans Act of 1992, Pub. L. 102-587, 
the student incentive payment amount was increased from $1200 per annum 
to $3000 per annum. While MARAD's regulations currently list $1200 as 
the annual SIP payment amount, students currently receive payments of 
$3000 per annum. Students receiving $3,000 under their existing service 
obligation contracts will have the option of continuing to receive the 
$3,000 payment under their old service obligation contracts or 
executing new service obligation contracts and receiving the increased 
amount of $4000 per annum. The new service obligation contracts will 
specifically list $4000 as the payment amount and will also have the 
increased obligations required by the new law. Individuals must execute 
the new service obligation contracts to receive the increased SIP 
payment amount.
    Section 310.7(b)(3) addresses the form of the service obligation 
contract. This paragraph is changed to reflect revisions in the Act.
    Section 310.7(b)(3)(ii)--Under former (b)(3)(ii), the separation of 
an individual by the School released that individual from his or her 
obligation to complete the course of instruction at the School. By 
virtue of the changes in the law, the separation of an individual by 
the School no longer releases an individual from this obligation. An 
individual who is separated by the School is now in default of his or 
her service obligations and is liable for the remedies for failure to 
fulfill these obligations, such as induction into military service or 
recovery by the Federal Government of the Cost of Education Provided, 
plus interest and attorney's fees.
    Section 310.7(b)(3)(iv)--The previous law required graduates to 
maintain their license for at least six (6) years following graduation. 
This required the graduate to maintain a Coast Guard license at least 
equal to the license that such graduate had upon graduation from the 
School. The subsequent promulgation of Standards of Training, 
Certification and Watchkeeping (STCW) requirements created a situation 
in which various graduates were required to take additional courses in 
order to maintain such a license. Given the unanticipated impact of the 
STCW requirements, the Administration has determined that individuals 
graduating without the necessary STCW courses need not take these 
courses and can satisfy their service obligations by

[[Page 31898]]

maintaining a more restricted type of Coast Guard license, other than a 
continuity license. Continuity licenses were not deemed acceptable 
because they do not allow such graduates to sail in any capacity.
    Individuals executing or reexecuting service obligation contracts 
after the effective date of the Act are now required to maintain 
licenses that are at least equal in status to the licenses they had at 
the time of graduation (i.e., the ability to sail without restrictions 
in both domestic and foreign commerce). Such graduates are required to 
take all courses necessary to maintain their licenses, even with 
respect to unforeseen future requirements. The type of Coast Guard 
license that is required to satisfy the service obligation of 
maintaining a license for at least six (6) years following graduation 
is a license containing appropriate national and international 
endorsements and certifications required by the United States Coast 
Guard for service both on domestic and international voyages. 
``Appropriate'' in this instance means the same endorsements and 
certifications held at the date of graduation, or the equivalent. 
Restricted licenses limited in applicability to just portions of the 
domestic or international voyages do not satisfy this obligation, nor 
do continuity licenses. This change confirms the Administration's 
longstanding interpretation of the law in this respect, that graduates 
continue to maintain Coast Guard licenses that are not more restricted 
than the licenses with which they graduated.
    Section 310.7(b)(3)(vi)--The Act now allows employment within the 
Federal Government to satisfy the requirement that graduates ``serve in 
the foreign or domestic commerce'' or ``national defense'' of the 
United States. Such employment in the Federal Government must be 
significantly maritime-related and serve the national security 
interests of the United States.
    The determination of whether such employment satisfies this service 
obligation is made by the Administration. Examples of civilian 
employment that might satisfy this obligation are civilian positions 
relating to vessel or port security in the Navy, the Department of 
Homeland Security, or the Transportation Security Administration. 
``Significant'' is equated to a material or essential portion of an 
individual's responsibilities. It does not mean a ``majority'' of such 
individual's responsibilities, but means more than just an incidental 
part.
    Section 310.7(b)(5)--The number of days required to qualify for an 
``afloat employment year'' for each year will be set forth on the 
Administration's Web site at http://www.marad.dot.gov.

Section 310.7(b)(7)--Breach of Contract

    Section 310.7(b)(7)(i)(A)--Undergraduate Breach/Induction into 
Armed Forces: This paragraph is substantially rewritten to conform to 
the new terms of the Act. Any individual who has accepted SIP payments 
for a minimum of two (2) academic years and fails to fulfill any of 
their service obligations may be ordered by the Secretary of Defense to 
active duty in the Armed Forces of the United States to serve a period 
of time not to exceed two (2) years. In cases of hardship or 
impossibility of performance of the provisions of the service 
obligation contract due to accident, illness or other justifiable 
reason, as determined by the Maritime Administrator, this requirement 
may be waived in whole or in part. See section 310.7(b)(8).
    Section 310.7(b)(7)(i)(B)--Undergraduate Breach/Collection of Cost 
of Education Provided: This paragraph contains a new provision set 
forth in the Act. It authorizes the Secretary of Transportation, acting 
through the Maritime Administrator, to take action against defaulting 
individuals to recover the Cost of Education Provided to such 
individuals, plus interest and attorney's fees. Such authority may be 
exercised in instances where the Maritime Administrator determines that 
it would better serve the national interest to recover the Cost of 
Education Provided from a defaulting individual rather than to refer 
such individual to the Secretary of Defense for induction into the 
Armed Forces of the United States.
    Section 310.7(b)(7)(i)(C)--Sets forth the discretionary authority 
of the Maritime Administrator to reduce the amount to be recovered from 
such defaulting individuals to reflect partial performance of service 
obligations and such other factors as the Maritime Administrator 
determines merit such reduction. This provision is in addition to the 
Maritime Administrator's authority to waive the service obligations as 
set forth in section 310.7(b)(8).
    Section 310.7(b)(7)(i)(D)--For purposes of paragraph (b)(7)(i)(A) 
of this section, an ``academic year'' is defined as the completion by a 
student of the required number of semesters, trimesters, or quarters, 
as applicable, whether at school or at sea, which comprise a complete 
course of study for an academic year. Thus, liability under paragraph 
(b)(7)(i)(A) begins for students at the beginning of their third (3rd) 
academic year, whether at school or at sea.

Section 310.7(b)(7)(ii)--Post Graduation Defaults

    Section 310.7(b)(7)(ii)(A)--Individuals who breach their service 
obligations after graduation are subject to be ordered to active duty 
in the Armed Forces of the United States for a period of time not less 
than two (2) years and not more than the unexpired portion of the three 
(3) years of service required in the foreign and domestic commerce or 
the national defense of the United States following graduation.
    Section 310.7(b)(7)(ii)(B)--If the Secretary of Defense is unable 
or unwilling to order an individual to active duty or if the Maritime 
Administrator determines that reimbursement of the Cost of Education 
Provided would better serve the interests of the United States, the 
Maritime Administrator may recover from the defaulting individual the 
Cost of Education Provided by the Federal Government, plus interest and 
attorney's fees.
    Section 310.7(b)(7)(ii)(C)--Sets forth the discretionary authority 
of the Maritime Administrator to reduce the amount to be recovered from 
such defaulting individual to reflect partial performance of service 
obligations and such other factors as the Maritime Administrator 
determines merit such reduction.
    This provision is in addition to the Maritime Administrator's 
authority to waive the service obligations. Such authority is set forth 
in section 310.7(b)(8) and may be exercised in cases where there would 
be undue hardship or impossibility of performance of the provisions of 
the service obligation contract due to accident, illness or other 
justifiable reason.
    Section 310.7(b)(10)(ii)(C)--Reflects that graduates are required 
to keep the Office of Policy and Plans, as opposed to the Office of 
Maritime Labor, Training and Safety, aware of the graduates' current 
mailing addresses.
    Section 310.7(b)(11)--This new paragraph reflects that the 
Administration is now authorized to collect debts owed to the Federal 
Government by commencing court proceedings as well as utilizing the 
Federal debt collection procedures set forth in chapter 176, title 28 
of the United States Code and other applicable administrative remedies 
for debt collection. Such administrative collection options include 
offsetting debts against defaulting individuals' tax refunds.

[[Page 31899]]

Section 310.12-1 Form of Agreement

    The form of agreement has been deleted in its entirety. Setting 
forth a required agreement in the Administration's regulations 
constrained the ability of the Administration and the Schools to modify 
the agreement to reflect changing circumstances. Not only would the 
agreements have to be modified, but also the regulations would have to 
be changed. A model agreement will be posted on MARAD's Web site at 
http://www.marad.dot.gov.

Subpart C--Admission and Training of Midshipmen at the United States 
Merchant Marine Academy

Section 310.51 Definitions

    (b) Act--We update the term ``Act'' to include sections of the 
Maritime Education and Training Act of 1980, Pub. L. 96-453, as 
amended, which includes the changes effected by the National Defense 
Authorization Act for Fiscal Year 2004, Pub. L. 108-136, and any 
subsequent amendments.
    (f) Cost of Education Provided--is a concept added by the National 
Defense Authorization Act for Fiscal Year 2004, Pub. L. 108-136, in 
connection with recovery of funds from individuals failing to perform 
their service obligations, both before and after graduation. It is the 
intent of the Act that the Administration recover the financial costs 
incurred by the Federal Government for providing training or financial 
assistance to students at the Academy. For students at the Academy, 
this means the pro rata cost of all charges incurred with respect to 
the Academy for a given fiscal year, including room, board, classroom 
academics, and other training activity costs as well as any direct 
financial assistance given to such individual.
    (g)-(i)--Definitions under these designations were renumbered.

Section 310.58 Service Obligation for Students Executing or Reexecuting 
Contracts

    Section 310.58(a)--The terms of the National Defense Authorization 
Act for Fiscal Year 2004, Pub. L. 108-136, apply to individuals 
executing service obligation contracts after November 24, 2003. No 
individual previously having executed a service obligation contract is 
required by virtue of the amendments of the Act to execute a new 
service obligation contract. Individuals executing contracts after 
November 24, 2003, even those who have already executed a service 
obligation contract, are required to execute the new service obligation 
contract if they receive new consideration from the Federal Government 
for such execution.
    Section 310.58(a)(1)--Under former section 310.58(a)(1), the 
separation of an individual by the Academy released that individual 
from his or her obligation to complete the course of instruction at the 
Academy. By virtue of the changes in the law, the separation of an 
individual by the Academy no longer releases an individual from this 
obligation. An individual who is separated by the Academy is now in 
default of his or her service obligations and is liable for the 
remedies for failure to fulfill these obligations. Among these remedies 
are induction into military service or recovery by the Federal 
Government of the Costs of Education Provided.
    Section 310.58(a)(3)--Under former section 310.58(a)(3), graduates 
were required to maintain their license for at least six (6) years 
following graduation. This required the graduate to maintain a Coast 
Guard license at least equal to the license that such graduate had upon 
graduation from the Academy. The subsequent promulgation of STCW 
requirements created a situation wherein various graduates were 
required to take additional courses in order to maintain such a 
license. Given the unanticipated impact of the STCW requirements, the 
Administration determined that individuals graduating without the 
necessary STCW courses need not take these courses and can satisfy 
their service obligations by maintaining a more restricted type of 
Coast Guard license, other than a continuity license. Continuity 
licenses were not acceptable because they do not allow such graduates 
to sail in any capacity.
    Individuals executing service obligation contracts after the 
effective date of the Act are now required to maintain their licenses 
in at least equal status to the status they had at the time of 
graduation (i.e., the ability to sail without restrictions in both 
domestic and foreign commerce). Such graduates are required to take all 
courses necessary to maintain their licenses, even with respect to 
unforeseen future requirements. The type of Coast Guard license that is 
required to satisfy the service obligation of maintaining a license for 
at least six (6) years following graduation is a license containing 
appropriate national and international endorsements and certifications 
required by the United States Coast Guard for service both on domestic 
and international voyages. ``Appropriate'' in this instance means the 
same endorsements and certifications held at the date of graduation, or 
the equivalent. Restricted licenses limited in applicability to just 
portions of the domestic or international voyages do not satisfy this 
obligation, nor do continuity licenses. The Act confirmed the 
Administration's longstanding interpretation of the law in this 
respect, that graduates had to maintain a Coast Guard license that was 
not more restricted than the license with which they graduated.
    Section 310.58(a)(5) has been amended to reflect the statutory 
authorization of additional ways to perform the employment aspects of 
the service obligation requirements. The Act now allows employment 
within the Federal Government to satisfy the requirement that graduates 
``serve in the foreign or domestic commerce'' or ``national defense'' 
of the United States. Such employment in the Federal Government must be 
significantly maritime-related and serve the national security 
interests of the United States.
    The determination of whether such employment satisfies the service 
obligation requirements is made by the Administration. Examples of 
civilian employment that might satisfy the service obligation are 
civilian positions relating to vessel or port security in the Navy, the 
Department of Homeland Security, or the Transportation Security 
Administration.
    ``Significantly'' is equated to a material or essential portion of 
an individual's responsibilities. It does not mean a ``majority'' of 
such individual's responsibilities, but means more than just an 
incidental part.
    Section 310.58(b) is amended for purposes of clarity and to 
indicate that the number of days for satisfactory service for each sea 
year will be set forth on the Administration's Web site at http://www.marad.dot.gov.

Section 310.58(e)(1)--Breach of Contract Before Graduation

    Section 310.58(e)(1)(i)--This paragraph is substantially rewritten 
to conform to the new terms of the Act. Any individual who has attended 
the Academy for a minimum of two (2) academic years who fails to 
fulfill any of their service obligations may be ordered by the 
Secretary of Defense to active duty in the Armed Forces of the United 
States to serve a period of time not to exceed two (2) years. In cases 
of hardship or impossibility of performance of the provisions of the 
service obligation contract due to accident, illness or other 
justifiable reason, as determined by the Maritime Administrator, this 
requirement may be waived in whole or in part. See section 310.58(f).

[[Page 31900]]

    Section 310.58(e)(1)(ii)--This paragraph contains a provision set 
forth in the Act. It authorizes the Secretary of Transportation, acting 
through the Maritime Administrator, to take action against defaulting 
individuals to recover the Cost of Education Provided from individuals 
who have attended the Academy for more than two (2) academic years, but 
not yet graduated.
    Section 310.58(e)(1)(iii)--For purposes of paragraph (e)(1)(i) of 
this section, an ``academic year'' is defined as the completion by a 
student of a total of three (3) trimesters, whether at the Academy or 
at sea. Thus, liability under paragraph (e)(1)(i) begins for students 
when they begin their seventh (7th) trimester, whether at the Academy 
or at sea.

Section 310.58(e)(2)--Breach After Graduation

    Section 310.58(e)(2)(i)--Individuals who breach their service 
obligations after graduation are subject to be ordered to active duty 
in the Armed Forces of the United States for a period of time of not 
less than three (3) years and not more than the unexpired portion of 
the five (5) years of service required in the foreign and domestic 
commerce or the national defense of the United States following 
graduation.
    Section 310.58(e)(2)(ii)--If the Secretary of Defense is unable or 
unwilling to order an individual to active duty or if the Maritime 
Administrator determines that reimbursement of the Cost of Education 
Provided would better serve the interests of the United States, the 
Maritime Administrator may recover from the defaulting individual the 
Cost of Education Provided by the Federal Government.
    Section 310.58(e)(2)(iii) sets forth the discretionary authority of 
the Maritime Administrator to reduce the amount to be recovered from 
such defaulting individual to reflect partial performance of service 
obligations and such other factors as the Maritime Administrator 
determines merit such reduction. This provision is in addition to the 
Maritime Administrator's authority to waive the service obligations as 
set forth in section 310.58(f).
    Section 310.58(h)(2)(iii)--Reflects that graduates are required to 
keep the Office of Policy and Plans, as opposed to the Office of 
Maritime Labor, Training and Safety, aware of the graduates' current 
mailing addresses.
    Section 310.58(i)--This new paragraph reflects that the 
Administration is now authorized to collect debts owed to the Federal 
Government by commencing court proceedings as well as utilizing the 
Federal debt collection procedures set forth in chapter 176, title 28 
of the United States Code and other applicable administrative remedies 
for debt collection. Such administrative collection options include 
offsetting debts against defaulting individuals' tax refunds.

Regulatory Analyses and Notices

    Executive Order 12866 and DOT Regulatory Policies and Procedures. 
This interim final rule is not considered a significant regulatory 
action under section 3(f) of Executive Order 12866 and, therefore, was 
not reviewed by the Office of Management and Budget. This interim final 
rule is not likely to result in an annual effect on the economy of $100 
million or more. This interim final rule is also not significant under 
the Regulatory Policies and Procedures of the Department of 
Transportation (44 FR 11034, February 26, 1979). The economic impact 
associated with this rule, if any, should be minimal; therefore, 
further regulatory evaluation is not necessary. This interim final rule 
is intended only to update provisions in Part 310 to conform to the 
National Defense Authorization Act for Fiscal Year 2004 and to make 
technical changes and corrections.

Administrative Procedure Act

    The Administrative Procedure Act (5 U.S.C. 553) provides an 
exception to notice and comment procedures when they are unnecessary or 
contrary to the public interest. MARAD finds that under 5 U.S.C. 
553(b)(3)(B) good cause exists for not providing notice and comment 
since this interim final rule only updates existing regulations to 
conform to the National Defense Authorization Act for Fiscal Year 2004 
and makes non-substantive technical corrections. While MARAD feels that 
public comment on this rule is unnecessary, we will accept comments 
during the timeframe outlined in the Dates section of this rulemaking.

Regulatory Flexibility Act

    The Maritime Administrator certifies that this interim final rule 
will not have a significant economic impact on a substantial number of 
small entities. This interim final rule is intended only to update 
provisions in Part 310, which do not affect a substantial number of 
small entities, but instead affect the United States Merchant Marine 
Academy, State merchant marine academies, and students thereof.

Federalism

    We have analyzed this interim final rule in accordance with the 
principles and criteria contained in Executive Order 13132 (Federalism) 
and have determined that it does not have sufficient federalism 
implications to warrant the preparation of a federalism summary impact 
statement. These regulations have no substantial effect on the States, 
the current Federal-State relationship, or the current distribution of 
power and responsibilities among the various local officials. 
Therefore, consultation with State and local officials is not 
necessary.

Executive Order 13175

    MARAD does not believe that this interim final rule will 
significantly or uniquely affect the communities of Indian tribal 
governments when analyzed under the principles and criteria contained 
in Executive Order 13175 (Consultation and Coordination with Indian 
Tribal Governments). Therefore, the funding and consultation 
requirements of this Executive Order do not apply.

Environmental Impact Statement

    We have analyzed this interim final rule for purposes of compliance 
with the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et 
seq.) and have concluded that under the categorical exclusions in 
section 4.05 of Maritime Administrative Order (MAO) 600-1, ``Procedures 
for Considering Environmental Impacts,'' 50 FR 11606 (March 22, 1985), 
neither the preparation of an Environmental Assessment, an 
Environmental Impact Statement, nor a Finding of No Significant Impact 
for this interim final rule is required. This interim final rule 
involves administrative and procedural regulations that have no 
environmental impact.

Unfunded Mandates Reform Act of 1995

    This interim final rule does not impose an unfunded mandate under 
the Unfunded Mandates Reform Act of 1995. It does not result in costs 
of $100 million or more, in the aggregate, to any of the following: 
State, local, or Native American tribal governments, or the private 
sector. This interim final rule is the least burdensome alternative 
that achieves the objective of the rule.

Paperwork Reduction Act

    This rulemaking contains no new or amended information collection 
or recordkeeping requirements that have been approved or require 
approval by the Office of Management and Budget.

[[Page 31901]]

Privacy Act

    Anyone is able to 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.). You may review DOT's 
complete Privacy Act Statement in the Federal Register published on 
April 11, 2000 (Volume 65, Number 70; Pages 19477-78) or you may visit 
http://dms.dot.gov.

List of Subjects in 46 CFR Part 310

    Grant programs-education, Reporting and recordkeeping requirements, 
Schools, Seamen.

0
For the reasons set forth in the preamble, MARAD amends 46 CFR Chapter 
II as follows:

PART 310--MERCHANT MARINE TRAINING

0
1. The authority citation for part 310 continues to read as follows:

    Authority: 46 App. U.S.C. 1295; 49 CFR 1.66.

0
2. Amend Sec.  310.1 by revising paragraphs (b), (i), (j), (k), (l), 
(m), (n), (o), (p), and (q) and by adding new paragraph (r) to read as 
follows:


Sec.  310.1  Definitions.

* * * * *
    (b) Act means the Maritime Education and Training Act of 1980, Pub. 
L. 96-453, as amended.
* * * * *
    (i) Cost of Education Provided means the financial costs incurred 
by the Federal Government in providing student incentive payments for 
students at the State maritime academies.
    (j) Deputy means the Deputy Maritime Administrator, Department of 
Transportation.
    (k) Maritime Service means the United States Maritime Service.
    (l) Midshipman means a student in good standing at a State maritime 
academy or college who has accepted midshipman status in the United 
States Naval Reserve (including the Merchant Marine Reserve, United 
States Naval Reserve) under the Act.
    (m) Officers means all officers and faculty employed by a State 
maritime academy or college.
    (n) Region Director means the Director of the Administration's 
region office in which a School is located or in which a training ship 
is located.
    (o) School means State or Territorial or regional maritime academy 
or college meeting the requirements of the Act.
    (p) Superintendent means the superintendent or president of a 
School.
    (q) Supervisor means the employee of the Administration designated 
to supervise the Federal Government's interest in a School under the 
provisions of the Act, an agreement, and this subpart.
    (r) Training Ship means a vessel used for training by a school and 
furnished by the Administration to a State or Territory, and includes 
the ship itself and all its equipment, apparel, appliances, machinery 
boilers, spare and replacement parts and other property contained in 
it.
* * * * *


Sec.  310.3  [Amended]

0
3. Amend Sec.  310.3 in paragraph (b)(1) by removing the words 
``training ship'' and adding in their place ``Training Ship'' and in 
paragraph (c)(3) by removing the words ``Maritime Labor and Training'' 
and adding in their place ``Policy and Plans.''
0
4. Amend Sec.  310.7 by revising paragraphs (b)(1), (b)(3), (b)(5), 
(b)(7), (b)(8), and (b)(10)(ii)(C), and by adding paragraph (b)(11) to 
read as follows:


Sec.  310.7  Federal student subsistence allowances and student 
incentive payments.

* * * * *
    (b) * * *
    (1) General provisions. In accordance with the Administration's 
established subsidy quotas for classes entering after April 1982, each 
school shall identify to the Administration, no later than February 1 
annually, those students who have been selected to receive the student 
incentive payment authorized by the Act. The students so identified 
must meet the requirements of Sec.  310.6(b). The Administration shall 
provide the school with the necessary service obligation contracts. The 
contracts will be signed by the designated students and returned by the 
School to the Supervisor and shall become effective when signed by the 
Supervisor or his or her designee. A copy shall be returned to the 
School for transmittal to the student. Payments will be issued to 
midshipmen in amounts equaling $4000 for each academic year of 
attendance whom execute the service obligation contracts providing for 
such payment amount. Payments shall commence to accrue on the day each 
such midshipman begins his or her first term of work at the School. 
Such payments shall be made quarterly to the midshipman until the 
completion of his or her course of instruction but in no event for more 
than four (4) academic years. The School shall submit a quarterly 
certified Daily Attendance Report listing the names of all designated 
midshipmen who are entitled to student incentive payments. Midshipmen 
who do not take all necessary steps to maintain their midshipman 
status, who lose their midshipman status due to action by the U.S. 
Navy, or who make the commitment identified in paragraph (a)(4) of this 
section will have their student incentive payment terminated.
* * * * *
    (3) Form of the service obligation contract. The service obligation 
contract shall obligate the midshipman to--
    (i) Use the student incentive payment to defray the cost of 
uniforms, books and subsistence;
    (ii) Complete the course of instruction at the School;
    (iii) Take the examination for a license as an officer in the 
merchant marine of the United States on or before the date of 
graduation from a School and fulfill the requirements for such license 
not later than three (3) months after such graduation;
    (iv) Maintain a valid license as an officer in the merchant marine 
of the United States for at least six (6) years following the date of 
graduation from a School, accompanied by the appropriate national and 
international endorsements and certification required by the United 
States Coast Guard for service aboard vessels on domestic and 
international voyages (``appropriate'' means the same endorsements and 
certifications held at the date of graduation, or the equivalent);
    (v) Apply for an appointment as, and accept if tendered, and serve 
as a commissioned officer in the United States Naval Reserve (including 
the Merchant Marine Reserve, United States Naval Reserve), the United 
States Coast Guard Reserve, or any other Reserve unit of an armed force 
of the United States for at least six (6) years following the date of 
graduation from a school; and
    (vi) Serve in the foreign or domestic commerce or both, and the 
national defense of the United States for at least three (3) years 
following graduation from a School--
    (A) As a merchant marine officer serving on vessels documented 
under the laws of the United States or on vessels owned and operated by 
the United States or by any State or Territory of the United States;
    (B) As an employee in a United States maritime-related industry, 
profession, or marine science (as determined by the Maritime 
Administrator), if the Maritime Administrator determines that service 
under paragraph (b)(3)(vi)(A) of this section is not available to such 
individual;

[[Page 31902]]

    (C) As a commissioned officer on active duty in an armed force of 
the United States or in the National Oceanic and Atmospheric 
Administration or in other maritime-related employment with the Federal 
Government which serves the national security interests of the United 
States, as determined to be satisfactory by the Maritime Administrator; 
or
    (D) By combining the services specified in paragraphs 
(b)(3)(vi)(A), (b)(3)(vi)(B) and (b)(3)(vi)(C) of this section; and
    (E) Such employment in the Federal Government must be both 
significantly maritime-related and serve the national security 
interests of the United States. ``Significantly'' is equated to a 
material or essential portion of an individual's responsibilities. It 
does not mean a ``majority'' of such individual's responsibilities, but 
means more than just an incidental part.
* * * * *
    (5) Afloat employment year. For purposes of the service obligation, 
a satisfactory year of afloat employment shall be a number of days 
employed afloat that is at least equal to the median number of days of 
seafaring employment under Articles achieved by deck or engine officers 
in the most recent calendar year for which statistics are available. 
Such figures for each year will be posted on the Administration's 
Internet site at http://www.marad.dot.gov.
* * * * *
    (7) Breach of contract--(i) Breach before graduation. (A) If the 
Maritime Administrator determines that any individual who has accepted 
Federal student incentive payments for a minimum of two (2) academic 
years has failed to fulfill any part of the contract set forth in Sec.  
310.7(b)(3), such individual may be ordered by the Secretary of Defense 
to active duty in one of the Armed Forces of the United States to serve 
a period of time not to exceed two (2) years. In cases of hardship as 
determined by the Maritime Administrator, the Maritime Administrator 
may waive this provision in whole or in part.
    (B) If the Secretary of Defense is unable or unwilling to order an 
individual to active duty under paragraph (b)(7)(i)(A) of this section, 
or if the Maritime Administrator determines that reimbursement of the 
cost of education provided would better serve the interests of the 
United States, the Maritime Administrator may recover from the 
individual the amount of student incentive payments, plus interest and 
attorney's fees.
    (C) The Maritime Administrator is authorized to reduce the amount 
to be recovered under paragraph (b)(7)(i)(B) of this section from such 
individual to reflect partial performance of service obligations and 
such other factors as the Maritime Administrator determines merit such 
reduction.
    (D) For purposes of paragraph (b)(7)(i)(A) of this section, an 
``academic year'' is defined as the completion by a student of the 
required number of semesters, trimesters, or quarters, as applicable, 
whether at school or at sea, which comprise a complete course of study 
for an academic year. Thus, liability under paragraph (b)(7)(i)(A) of 
this section begins for students at the beginning of their third (3rd) 
academic year, whether at school or at sea.
    (ii) Breach after graduation. (A) If the Maritime Administrator 
determines that an individual has failed to fulfill any part of the 
service obligations (described in Sec.  310.7(b)(3)), such individual 
may be ordered to active duty to serve a period of time not less than 
two (2) years and not more than the unexpired portion of the service 
obligation contract relating to service in the foreign or domestic 
commerce or the national defense, as determined by the Maritime 
Administrator. The Maritime Administrator, in consultation with the 
Secretary of Defense, shall determine in which service the individual 
shall be ordered to active duty to serve such period of time. In cases 
of hardship, as determined by the Maritime Administrator, the Maritime 
Administrator may waive this provision in whole or in part.
    (B) If the Secretary of Defense is unable or unwilling to order an 
individual to active duty under paragraph (b)(7)(ii)(A) of this section 
or if the Maritime Administrator determines that reimbursement of the 
Cost of Education Provided would better serve the interests of the 
United States, the Maritime Administrator may recover from the 
individual the Cost of Education Provided, plus interest and attorney's 
fees.
    (C) The Maritime Administrator may reduce the amount to be 
recovered under paragraph (b)(7)(ii)(B) of this section from such 
individual to reflect partial performance of service obligations and 
such other factors as the Maritime Administrator determines merit such 
reduction.
    (8) Waivers. Waivers may be granted in cases where there would be 
undue hardship or impossibility of performance of the provisions of the 
contract due to accident, illness or other justifiable reason. 
Applications for waiver will be submitted to the Supervisor.
* * * * *
    (10) Determination of compliance with service obligation contract; 
deferment; waiver; and appeal procedures.
    (ii) * * *
    (C) A decision is deemed to be received by a student or graduate 
five (5) working days after the date it is mailed by first class mail, 
postage prepaid, to the address for such student or graduate listed 
with the Office of Policy and Plans. It is the responsibility of such 
student or graduate to ensure that their current mailing address is on 
file with the Office of Policy and Plans, 400 7th St., SW., Washington, 
DC 20590.
* * * * *
    (11) Remedies. To aid in the recovery of the cost of education 
under this section, the Maritime Administrator may request the Attorney 
General to begin court proceedings, and the Maritime Administrator may 
make use of the Federal debt collection procedure in chapter 176 of 
title 28, United States Code, or other applicable administrative 
remedies.
* * * * *

0
5. Section 310.12-1 is revised to read as follows.


Sec.  310.12-1  Form of agreement.

    The form of agreement between the Maritime Administrator and 
schools for annual maintenance and support payments, Federal student 
subsistence and incentive payments and fuel assistance under the 1958 
Act and the Act is available on MARAD's Web site at http://www.marad.dot.gov.
* * * * *

0
6. Amend Sec.  310.51 by revising paragraphs (b), (f), (g), and (h), 
and by adding a new paragraph (i) to read as follows:


Sec.  310.51  Definitions.

* * * * *
    (b) Act means the Maritime Education and Training Act of 1980, Pub. 
L. 96-453, 94 Stat. 1997, as subsequently amended, 46 App. U.S.C. 1295-
1295g.
* * * * *
    (f) Cost of Education Provided means the financial costs incurred 
by the Federal Government for providing training or financial 
assistance to students at the United States Merchant Marine Academy, 
including direct financial assistance, room, board, classroom 
academics, and other training activities.
    (g) Foreign student means an individual who owes national 
allegiance

[[Page 31903]]

to a country or political entity other than the United States, and the 
term includes United States nationals.
    (h) NOAA means the National Oceanic and Atmospheric Administration.
    (i) USNR means the United States Naval Reserve.
* * * * *

0
7. Amend Sec.  310.58 by revising the section heading, paragraphs (a), 
(b), (e), (f), (h)(1), and (h)(2), and by adding a new paragraph (i) to 
read as follows:


Sec.  310.58  Service obligation for students executing or reexecuting 
contracts.

    (a) The service obligation contract shall obligate each midshipman 
who is a citizen and who executes or reexecutes a service obligation 
contract to:
    (1) Complete the course of instruction at the Academy;
    (2) Fulfill the requirements for a license as an officer in the 
merchant marine of the United States on or before the date of 
graduation from the Academy;
    (3) Maintain a license as an officer in the merchant marine of the 
United States for at least six (6) years following the date of 
graduation from the Academy accompanied by the appropriate national and 
international endorsements and certifications as required by the United 
States Coast Guard for service aboard vessels on both domestic and 
international voyages (``appropriate'' means the same endorsements and 
certifications held at the date of graduation, or the equivalent);
    (4) Apply for an appointment as, accept any tendered appointment as 
and serve as a commissioned officer in the USNR (including the Merchant 
Marine Reserve, USNR), the United States Coast Guard Reserve, or any 
other Reserve component of an armed force of the United States for at 
least six (6) years following the date of graduation from the Academy;
    (5) Serve in the foreign or domestic commerce and the national 
defense of the United States for at least five (5) years following the 
date of graduation from the Academy:
    (i) As a merchant marine officer serving on vessels documented 
under the laws of the United States or on vessels owned and operated by 
the United States or by any State or territory of the United States;
    (ii) As an employee in a United States maritime-related industry, 
profession or marine science (as determined by the Maritime 
Administrator), if the Maritime Administrator determines that service 
under paragraph (a)(5)(i) of this section is not available;
    (iii) As a commissioned officer on active duty in an armed force of 
the United States or in the National Oceanic and Atmospheric 
Administration; or
    (iv) Other maritime-related employment with the Federal Government 
which serves the national security interests of the United States, as 
determined by the Maritime Administrator; or
    (v) By combining the services specified in paragraphs (a)(5)(i), 
(ii), (iii) and (iv) of this section; and,
    (vi) Such employment in the Federal Government that satisfies 
paragraph (a)(5)(iv) of this section must be both significantly 
maritime-related and serve the national security interests of the 
United States. ``Significantly'' is equated to a material or essential 
portion of an individual's responsibilities. It does not mean a 
``majority'' of such individual's responsibilities, but means more than 
just an incidental part; and
    (6) Submit periodic reports to the Administration to establish 
compliance with all the terms of the contract.
    (b) Service as a merchant marine officer. For purposes of the 
service obligation set forth in paragraph (a)(5)(i) of this section, a 
satisfactory year of service on vessels in the United States merchant 
marine as a merchant marine officer shall be the lesser of--
    (1) 150 days; or
    (2) The number of days that is at least equal to the median number 
of days of seafaring employment under articles achieved by deck or 
engine officers in the most recent calendar year for which statistics 
are available. The number of such days for each year as determined by 
the Administration are set forth at http://www.marad.dot.gov.
* * * * *
    (e) Breach of contract.
    (1) Breach before graduation: (i) If the Maritime Administrator 
determines that an individual who has attended the Academy for not less 
than two (2) academic years has failed to complete the course of 
instruction at the Academy, such individual may be ordered by the 
Secretary of Defense to active duty in one of the Armed Forces of the 
United States to serve for a period of time not to exceed two (2) 
years. In cases of hardship, as determined by the Maritime 
Administrator, the Maritime Administrator may waive this provision in 
whole or in part.
    (ii) If the Secretary of Defense is unable or unwilling to order an 
individual to active duty under the previous paragraph, or if the 
Maritime Administrator determines that reimbursement of the Cost of 
Education Provided by the Federal Government would better serve the 
interests of the United States, the Maritime Administrator may recover 
from the individual the Cost of Education Provided by the Federal 
Government.
    (iii) For purposes of paragraph (e)(1)(i) of this section, an 
``academic year'' is defined as the completion by a student of a total 
of three (3) trimesters, whether at the Academy or at sea. Thus, 
liability under paragraph (e)(1)(i) of this section begins for students 
when they begin their seventh (7th) trimester, whether at the Academy 
or at sea.
    (2) Breach after graduation: (i) If the Maritime Administrator 
determines that an individual has failed to fulfill any part of the 
service obligation contract (described in Sec.  310.58(a)), such 
individual may be ordered to active duty to serve a period of time not 
less than three (3) years and not more than the unexpired portion of 
the service obligation contract relating to service in the foreign or 
domestic commerce or the national defense, as determined by the 
Maritime Administrator. The Maritime Administrator, in consultation 
with the Secretary of Defense, shall determine in which service the 
individual shall be ordered to active duty to serve such period of 
time. In cases of hardship, as determined by the Maritime 
Administrator, the Maritime Administrator may waive this provision in 
whole or in part.
    (ii) If the Secretary of Defense is unable or unwilling to order an 
individual to active duty under paragraph (e)(2)(i) of this section or 
if the Maritime Administrator determines that reimbursement of the Cost 
of Education Provided would better serve the interests of the United 
States, the Maritime Administrator may recover from the individual the 
Cost of Education Provided.
    (iii) The Maritime Administrator may reduce the amount to be 
recovered from such individual to reflect partial performance of 
service obligations and such other factors as the Maritime 
Administrator determines merit such reduction.
    (f) Waivers. The Maritime Administrator shall have the discretion 
to grant waivers of all or a portion of the service obligation contract 
in cases where there would be undue hardship or impossibility of 
performance due to accident, illness or other justifiable reason. 
Applications for waivers shall be submitted in writing to the Academies 
Program Officer, Office of Policy and Plans, Maritime

[[Page 31904]]

Administration, 400 7th St., SW., Washington, DC 20590.
* * * * *
    (h) Determination of compliance with service obligation contract; 
deferment; waiver; and appeal procedures.
    (1) A designated official of the Administration shall:
    (i) Determine whether a student or graduate has breached his or her 
service obligation contract;
    (ii) Grant or deny a deferment of the service obligation, except 
for obligations otherwise a part of the graduate's commissioned officer 
status; and,
    (iii) Grant or deny a waiver of the requirements of the service 
obligation contract in cases of undue hardship or impossibility of 
performance due to accident, illness or other justifiable reason.
    (2)(i) If a student or graduate disagrees with the decision of the 
designated official, the student or graduate may appeal that decision 
to the Maritime Administrator. The appeal will set forth all the legal 
and factual grounds on which the student or graduate bases the appeal. 
Any grounds not set forth in the appeal are waived.
    (ii) Appeals must be filed with the Maritime Administrator within 
thirty (30) calendar days of the date of receipt by such student or 
graduate of the written decision of the designated official. Appeals 
must be filed at the Office of the Maritime Administrator, Maritime 
Administration, Room 7210, 400 7th St., SW., Washington, DC 20590. Each 
decision will include a notice of appeal rights.
    (iii) A decision is deemed to be received by a student or graduate 
five (5) working days after the date it is mailed by first class mail, 
postage prepaid, to the address for such student or graduate listed 
with the Office of Policy and Plans. It is the responsibility of such 
student or graduate to ensure that their current mailing address is on 
file with the Office of Policy and Plans, Maritime Administration, 400 
7th St., SW., Washington, DC 20590. Students and graduates can 
determine the current address on file with the Office of Policy and 
Plans by logging into the service obligation contract compliance Web 
site at http://mscs.marad.dot.gov. Changes in the address listed can be 
made through the Internet.
* * * * *
    (i) Remedies. To aid in the recovery of the Cost of Education 
Provided the Maritime Administrator may request the Attorney General to 
begin court proceedings, and the Maritime Administrator also may make 
use of the Federal debt collection procedures in chapter 176 of title 
28, United States Code, and other applicable administrative remedies.
* * * * *

    By Order of the Maritime Administrator.

    Dated: June 2, 2004.
Joel C. Richard,
Secretary, Maritime Administration.
[FR Doc. 04-12765 Filed 6-7-04; 8:45 am]
BILLING CODE 4910-81-P