§294.21. General conditions.

Number of agreements. The Secretary may enter into up to ten TSP Operating Agreements for vessels that were either selected in accordance with § 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. ch. 531 and 46 CFR part 296, for fiscal year 2022 and any prior fiscal year. The Secretary may enter into as many additional agreements as is authorized under 46 U.S.C. 53403(c) under the same terms as the initial ten agreements.

Term of agreements. TSP Operating Agreements are authorized for 19 years, starting on October 1, 2021, and ending on September 30, 2040, but payments to Agreement Holders are subject to annual appropriations each fiscal year. MARAD may enter into TSP Operating Agreements for a period less than the full term authorized under 46 U.S.C. ch. 534.

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 § 294.9, if the Secretary, in conjunction with the Secretary of War, approves the replacement vessel.

Termination by the Secretary. Except as provided in § 294.23(d)(3), if an Agreement Holder fails to comply with the terms of a TSP Operating Agreement:

Eligibility of Vessel on long-term charter to the Government. Except as provided in § 294.23(d)(2), a TSP Fleet Vessel that is time chartered to the United States Government for a period that, together with options for extension, occurs for more than 180 continuous calendar days is ineligible to participate in the TSP Fleet as of the date and time the vessel is delivered to, and accepted by, the Government under the terms of the time charter. The Secretary may terminate the relevant Operating Agreement at that time unless the Operating Agreement holder has offered a qualified replacement vessel in accordance with paragraph (c) of this section.

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.

Nonrenewal for lack of funds. If, by the first day of a fiscal year, sufficient funds have not been appropriated under the authority of 46 U.S.C. ch. 534 for that fiscal year, the Secretary will notify the Senate Committees on Armed Services, Commerce, Science, and Transportation, and Appropriations, and the House of Representatives Committees on Armed Services and Appropriations, that TSP Operating Agreements for which sufficient funds are not available will not be renewed for that fiscal year if sufficient funds are not appropriated by the 60th day of that fiscal year. (If Congress does not appropriate funds at the authorized level by the 60th day of the fiscal year, MARAD will pay each vessel its pro rata share of the funds that have been appropriated.) If no funds are appropriated by the 60th day of the 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 § 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 to operate under the Operating Agreement.

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: