2133-0027 2008 Supporting Statement 1

SUPPORTING STATEMENT FOR PAPERWORK REDUCTION ACT SUBMISSIONS UNDER
5 CFR PART 1320
Information Collection: 2133-0027
CAPITAL CONSTRUCTION FUND AND EXHIBITS
A. Justification
1. Explain the circumstances that make the collection of information necessary. Identify any legal
or administrative requirements that necessitate the collection. Attach a copy of the appropriate
section of each statute and regulation mandating or authorizing the collection of information.
The Capital Construction Fund (CCF) is a tax deferred ship construction fund authorized by 46 USC
53501, et seq. (the Act). The program was created to assist owners and operators of US.-flag vessels in
accumulating the large amount of capital necessary for the modernization and expansion of the U.S.
merchant marine. The program encourages construction, reconstruction, or acquisition of vessels through
the deferment of Federal income taxes on certain deposits of money or other property placed into a CCF.
CCF vessels must be built in the United States and documented under the laws of the United States for
operation in the United States, foreign, Great Lakes, or noncontiguous domestic trade or its fisheries.
Participants must meet U.S. citizenship requirements. Each CCF applicant must provide to the Maritime
Administration such facts, documents and materials as required by the instructions in 46 CFR, Part 390,
Capital Construction Fund. No specific form is required, only a format specified in the regulations. These
applications will be examined by MARD officials to determine the applicant's eligibility for benefits and
retained as part of the official file.
Operators of US.-flag vessels are faced with competitive disadvantage in the construction and
replacement of their vessels relative to foreign-flag operators whose vessels are registered in counties that
do not tax shipping income. The CCF program helps counterbalance this situation through its tax deferral
privileges.
This information collection supports the Secretary of Transportation's economic growth and trade
strategic goal.
2. Indicate how, by whom, and for what purpose the information is to be used. Except for a new
collection, indicate the actual use the agency has made of the information received from the current
collection.
Citizens desiring to obtain benefits under the CCF program must submit an application, and the
information provided is utilized by the Maritime Administration to determine an applicant's ability to
enter into a CCF Agreement. Content of the application is prescribed in 46 CFR Part 390. The specific
information necessary to determine a citizen's eligibility is not generally available to the Maritime
Administration from other sources.
The Exhibits A through D that are required annually from each citizen once they have entered into a CCF
Agreement provide the Maritime Administration with the financial information as to how fundholders are
complying with the terms of their agreement and the total activity within the CCF program. In addition,
the Qualified Trade Affidavit (QTA) and citizenship affidavit are required annually from each fundholder.
The QTA provides the Maritime Administration with the information as to whether each fundholder is
operating its qualified agreement vessels in accordance with the terms of their Agreement and the Act.
The QTA is a statement that the fundholder has operated in one of the qualified trades during the

preceding year. The citizenship affidavit is initially required prior to approval of a CCF application, and is
required annually thereafter by the fundholder's CCF Agreement. This affidavit verifies that the
fundholder continues to meet the citizenship requirement. See attached regulations for sample QTA's,
citizenship affidavits, and exhibits.
3. Describe whether, and to what extent, the collection of information involves the use of automated,
electronic, mechanical, or other technological collection techniques or other forms of information
technology. Also describe any consideration of using information technology to reduce burden.
All companies submitting applications or documents required on an annual basis have been informed that
the Maritime Administration provides a total electronic option for this collection.
4. Describe efforts to identify duplication. Show specifically why any similar information already
available cannot be used or modified for use for the purposes described in item 2 above.
No other program offers the same type of benefits, scope of assistance, or requires precisely the same type
of information as the CCF program. There is no similar data available from other sources that can be used
or modified for use by the Maritime Administration in the CCF program.
5. If the collection of information impacts small businesses or other small entities (Item 5 of OMB
Form 83-I), describe any methods used to minimize burden.
The information requested herein is not expected to have other than a minimal impact on small business
as the applicants generally exceed the Small Business Administration's criteria for small business. Timely
information is requested when an applicant desires to obtain the benefits of the CCF program. There is no
requirement for any applicant to submit any information if they do not desire the CCF benefits. An
applicant for a CCF must demonstrate to the Maritime Administration that it has the financial capabilities
to accomplish its proposed program. It does this by submitting with the application, for each of its past
three fiscal years, audited balance sheets and income statements. In the case of a smaller company that
does not have audited statements, unaudited statements can be submitted.
6. Describe the consequence to Federal program or policy activities if the collection is not conducted
or is conducted less frequently, as well as any technical or legal obstacles to reducing burden.
The basic CCF application is submitted only when initially seeking a CCF Agreement. The application is
essential in determining qualification for benefits. The consequence to the Federal program or policy
activities if the information was not collected would be the Maritime Administration's inability to
properly administer the program.

7. Explain any special circumstances that would cause an information collection to be conducted in
a manner:
 requiring respondents to report information to the agency more often than quarterly;
 requiring respondents to prepare a written response to a collection of information in fewer
than 30 days after receipt of it;
 requiring respondents to submit more than an original and two copies of any document;
 requiring respondents to retain records, other than health, medical, government contract,
grant-in-aid, or tax records for more than three years;
 in connection with a statistical survey, that is not designed to produce valid and reliable
results that can be generalized to the universe of study;

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


requiring the use of a statistical data classification that has not been reviewed and approved
by OMB;
that includes a pledge of confidentiality that is not supported by authority established in
statute or regulation, that is not supported by disclosure and data security policies that are
consistent with the pledge, or which unnecessarily impedes sharing data with other agencies
for compatible confidential use; or requiring respondents to submit proprietary trade
secret, or other confidential information unless the agency can demonstrate that it has
instituted procedures to protect the information's confidentiality to the extent permitted by
law.

There are no special circumstances that require the collection of information to be conducted in a manner
described above.

8. If applicable, provide a copy and identify the date and page number of publication in the Federal
Register of the agency's notice required by 5 CFR 1320.8(d), soliciting comments on the
information collection prior to submission to OMB. Summarize public comments received in
response to that notice and describe actions taken by the agency in response to these comments.
Specifically address comments received on cost and hour burden. Describe efforts to consult with
persons outside the agency to obtain their views on the availability of data, frequency of collection,
the clarity of instructions and record keeping, disclosure, or reporting format (if any), and on the
data elements to be recorded, disclosed, or reported. Consultation with representatives of those
from whom information is to be obtained or those who must compile records should occur at least
once every three years - even if the collection of information activity is the same as in prior periods.
There may be circumstances that may preclude consultation in a specific situation. These
circumstances should be explained.
A Maritime Administration employee communicates with respondents regarding the basis and reporting
consistency of the information submitted. Since the CCF data is not available from any other source, no
consultations outside the agency other than with the companies with CCF agreements are required.
Respondents are encouraged to comment fully on the scope and accuracy of the reports.
In addition, the Maritime Administration published a 60-day notice and request for comments on this
information collection in the Federal Register on July 16, 2008, (FR 73, No. 137, at 40908) indicating
comments should be submitted on or before September 15, 2008. No comments were received.
9. Explain any decision to provide any payment or gift to respondents, other than remuneration of
contractors or grantees.
No payments or gifts are provided to respondents.
10. Describe any assurance of confidentiality provided to respondents and the basis for the
assurance in statute, regulation, or agency policy.
Article XI of the application instructions states that if a party desires certain information in the application
withheld from public disclosure, they must submit a written request concurrently with the application.
Any application and supporting information obtained in the course of administering the program is
subject to disclosure under the Freedom of Information Act (FOIA) unless the respondent has requested
exemption from public disclosure and the Maritime Administration has determined that an exemption is
applicable. The respondent is notified of the Maritime Administration's determination.

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11. Provide additional justification for any questions of a sensitive nature, such as sexual behavior
and attitudes, religious beliefs, and other matters that are commonly considered private. This
justification should include the reasons why the agency considers the questions necessary, the
specific uses to be made of the information, the explanation to be given to persons from whom the
information is requested, and any steps to be taken to obtain their consent.
Not applicable. There are no questions of a sensitive nature.
12. Provide estimates of the hour burden of the collection of information. The statement should:
Indicate the number of respondents, frequency of response, annual hour burden, and an
explanation of how the burden was estimated. Unless directed to do so, agencies should not conduct
special surveys to obtain information on which to base hour burden estimates. Consultation with a
sample (fewer than 10) of potential respondents is desirable. If the hour burden on respondents is
expected to vary widely because of differences in activity, size, or complexity, show the range of
estimated burden and explain the reasons for the variance. Generally, estimates should not include
burden hours for customary and usual business practices.
If this request for approval covers more than one form, provide separate hour burden estimates for
each form and aggregate the hour burdens in item 13 of OMB Form 83-1. Provide estimates of
annualized cost to respondents for the hour burdens for collections of information, identifying and
using appropriate wage rate categories. The cost of contracting out or paying outside parties for
information collection activities should not be included here. Instead, this cost should be included in
item 14.
With respect to the annual reports which are required once a CCF is established, it is estimated that 75
percent of the fundholders would require approximately 10 hours to prepare the Exhibits A through D,
and the other 25 percent of the fundholders, which consist of large corporations or consolidated groups,
could require up to 20 hours to prepare the exhibits. It should not require more than one hour per
company to prepare both the citizenship affidavit and the QTA. At present, there are 180 companies
maintaining CCF Agreements. Therefore, we currently have 180 responses for Exhibits A through D and
180 responses for the QTA and citizenship affidavit, both of which are submitted annually. A summary of
the hours required to prepare the exhibits, the QTA, and the citizenship affidavit is as follows:
Exhibits A through D
75 % of 180
135 x 10 hours
25 %of 180
45 x 20 hours
Total Hours

135 responses
1350 hours
45 responses
900 hours
2250 hours

2250 hours divided by the 180 respondents = 12.5 hours average per year per respondent to prepare
Exhibits A through D.
Each respondent requires one hour to prepare both the QTA and the citizenship affidavit.
Total annual average hours by classes of responses:
Exhibits A through D
12.5 hours
QTA & Citizenship Affidavit
1.0 hours
Total Hours
13.5
180 respondents times 13.5 average hours = 2430 annual hours required by the respondents.

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Assuming that ten new CCF applications will be approved, it is estimated that 135 annual hours (10
companies x 13.5 hours per company) will be required by these additional respondents for annual
reporting. In addition, as mentioned above, it is estimated that the completion of a CCF application will
require 48 hours for each respondent. Hence, the total number of annual hours required by all respondents
totals 2,865 (2,250 + 135 + (10 x 48)).
The estimated annual cost burden to the respondents who submit one response each requiring 13.5 hours
per response is as follows:
It is estimated that an employee in each of 6 separate areas spends eight hours of their time collecting and
assimilating the information submitted with each application. Therefore, given an average salary of
$200/hour for each of the employees, the cost to the respondent is estimated as follows:
No. of
Employees
6

x

Hourly
Wage
$200 x

Project
Time
8 hours

=

Cost per
Application
$9,600

1 Accountant, Auditor or Bookkeeper
1 Professional and Technical Worker
1 Clerical
1 Manager Administrator
1 Lawyer
1 Service Worker
With regard to the annual statements to be provided by each respondent, it is estimated that an accountant,
auditor and/or bookkeeper will spend 13.5 hours of their time collecting and assimilating information for
the annual Exhibits A through D, the QTA, and the citizenship affidavit to be filed with the Maritime
Administration.
Therefore, the estimated cost to the respondent is 13.5 x $200/hour x (180 + 10 applicants) = $513,000.
Total of all the above costs = ($9,600 x 10 applications) + $513,000 = $522,600.
13. Provide an estimate of the total annual cost burden to respondents or record keepers resulting
from the collection of information. (Do not include the cost of any hour burden shown in items 12
and 14).
The cost estimate should be split into two components: (a) a total capital and start-up cost
component (annualized over its expected useful life); and @) a total operation and maintenance and
purchase of services component. The estimates should take into account costs associated with
generating, maintaining and disclosing or providing the information. Include descriptions of
methods used to estimate major cost factors including system and technology acquisition, expected
useful life of capital equipment, the discount rate(s), and the time period over which costs will be
incurred. Capital and start-up costs include, among other items, preparations for collecting
information such as purchasing computers and software; monitoring, sampling, drilling and testing
equipment; and record storage facilities.
If cost estimates are expected to vary widely, agencies should present ranges of cost burdens and
explain the reasons for the variance. The cost of purchasing or contracting out information
collection services should be a part of this cost burden estimate. In developing cost burden
estimates, agencies may consult with a sample of respondents (fewer than 10), utilize the 60-day

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pre-OMB submission public comment process and use existing economic or regulatory impact
analysis associated with the rulemaking containing the information collection, as appropriate.
Generally, estimates should not include purchases of equipment or services, or portions thereof,
made: (1) prior to October 1, 1995, (2) to achieve regulatory compliance with requirements not
associated with the information collection, (3) for reasons other than to provide information or keep
records for the government, or (4) as part of customary and usual business or private practices.
Total Capital and Start-up Costs Estimate:
There are no capital or start-up costs associated with this information collection.
Total Operation and Maintenance and Purchase of Services Estimate:
There are no operation and maintenance costs associated with this information collection.
14. Provide estimates of annualized cost to the Federal Government. Also, provide a description of
the method used to estimate cost, which should include quantification of hours, operational
expenses (such as equipment, overhead, printing, and support staff), and any other expense that
would not have been incurred without this collection of information. Agencies also may aggregate
cost estimates from items 12, 13, and 14 in a single table.
The total annual cost to the Federal Government for processing the collection is estimated as follows:
It is estimated that eight employees in various areas of the Maritime Administration spend between 50
percent and one eighth of their time collecting, reviewing and assimilating information submitted with
CCF applications and the annual Exhibits A through D and QTA reports as well as citizenship affidavits
filed by CCF respondents. Therefore, given average salaries of seven staff members and an overhead cost
of 85% of the salaries, the cost to the Government is estimated as follows:
Number of
Employees
1
1
3
2
1
Total Salary

Percentage of
Time
SES
GS-15
GS-14
GS-13
GS-9

25
27.5
40
50
12.5

Annual
Wage

Total
Cost

$143,334
$130,694
$111,104
$94,025
$54,525

$35,834
$35,941
$44,442
$47,013
$6,816
$170,044

Overhead at 85%
Total Estimated Cost

$144,537
$314,582

15. Explain the reasons for any program changes or adjustments reported in items 13 or 14 of
OMB Form 83-1.
The Maritime Administration anticipates ten more participants in addition to the approximately 40
fundholders added during the previous period.
16. For collections of information whose results will be published, outline plans for tabulation and
publication. Address any complex analytical techniques that will be used. Provide the time schedule for

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the entire project, including beginning and ending dates of the collection of information, completion of
report, publication dates and other actions.
There are no plans to publish the results of the information collection for statistical purposes or for any
other use. A summary of Exhibits A through D is provided to the Internal Revenue Service on an annual
basis.
17. If seeking approval to not display the expiration date for OMB approval of the information
collection, explain the reasons that display would be inappropriate.
Not applicable.
18. Explain each exception to the certification statement identified in Item 19, "Certification for
Paperwork Reduction Act Submissions," of OMB Form 83-1.
Not applicable. There are no exceptions to the certificate statement.

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