[Federal Register Volume 60, Number 21 (Wednesday, February 1, 1995)]
[Proposed Rules]
[Pages 6067-6068]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2410]



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DEPARTMENT OF TRANSPORTATION

Maritime Administration

46 CFR Part 381

[Docket No. R-153]
RIN 2133-AB17


Cargo Preference--U.S.-Flag Vessels; Available U.S.-Flag 
Commercial Vessels

AGENCY: Maritime Administration, Department of Transportation.

ACTION: Proposed rule.

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SUMMARY: This amendment to the cargo preference regulations of the 
Maritime Administration (MARAD) would provide that during the 1995 
shipping season when the St. Lawrence Seaway is in use, MARAD will 
consider the legal requirement for the carriage of bulk agricultural 
commodity preference cargoes on privately-owned ``available'' U.S.-flag 
commercial vessels to have been satisfied where the cargo is initially 
loaded at a Great Lakes port on one or more U.S.-flag or foreign-flag 
vessels, transferred to a U.S.-flag commercial vessel at a Canadian 
transshipment point outside the St. Lawrence Seaway, and carried on 
that U.S.-flag vessel to a foreign destination. This amendment would 
allow Great Lakes ports to compete for agricultural commodity 
preference cargoes during an entire season trial period. MARAD issued a 
prior final rule on August 8, 1994, that adopted this policy for the 
1994 Great Lakes shipping season that had been in progress since April 
1994. This did not allow for a true trial period that MARAD could 
evaluate in determining whether to make this a permanent policy.

DATES: Comments must be received on or before March 3, 1995.

ADDRESSES: Send original and two copies of comments to the Secretary, 
Maritime Administration, Room 7210, Department of Transportation, 400 
7th Street S.W., Washington, D.C. 20590. To expedite review of 
comments, the Agency requests, but does not require, submission of an 
additional ten (10) copies. All comments will be made available for 
inspection during normal business hours at the above address. 
Commenters wishing MARAD to acknowledge receipt of comments should 
enclose a self-addressed envelope or postcard.

FOR FURTHER INFORMATION CONTACT: John E. Graykowski, Deputy Maritime 
Administrator for Inland Waterways and Great Lakes, Maritime 
Administration, Washington, DC 20590, Telephone (202) 366-1718.

SUPPLEMENTARY INFORMATION: United States law at sections 901(b) (the 
``Cargo Preference Act'') and 901b, Merchant Marine Act, 1936, as 
amended (the ``Act''), 46 App. U.S.C. 1241(b) and 1241f, requires that 
at least 75 percent of certain agricultural product cargoes 
``impelled'' by Federal programs (preference cargoes), and transported 
by sea, be carried on privately-owned United States-flag commercial 
vessels, to the extent that such vessels ``are available at fair and 
reasonable rates.'' The Secretary of Transportation wishes to 
administer that program so that all ports and port ranges may 
participate.

Prior Rulemaking

    On August 8, 1994, MARAD published a final rule on this subject in 
the Federal Register (59 FR 40261). That rule stated that it was 
intended to allow U.S. Great Lakes ports to participate with ports in 
other U.S. port ranges in the carriage of bulk agricultural commodity 
preference cargoes. Dramatic changes in shipping conditions have 
occurred since 1960, including the disappearance of any all-U.S.-flag 
commercial ocean-going service to foreign countries from U.S. Great 
Lakes ports. The static configuration of the St. Lawrence Seaway system 
and the evolving greater size of commercial vessels contributed to the 
disappearance of any all-U.S.-flag service.
    No preference cargo has moved on U.S.-flag vessels out of the Great 
Lakes since 1989, with the exception of one trial shipment in 1993. 
Under the Food Security Act of 1985, Public Law 99-198, codified at 46 
App. U.S.C. 1241f(c)(2), a certain minimum amount of Government-
impelled cargo was required to be allocated to Great Lakes ports during 
calendar years 1986, 1987, 1988, and 1989. That ``set-aside'' expired 
in 1989, and was not renewed by the Congress. The disappearance of 
Government-impelled cargo flowing from the Great Lakes coincided with 
the expiration of the Great Lakes ``set aside.''
    At the time of the opening of the 1994 Great Lakes shipping season 
on April 5, 1994, the Great Lakes did not have any all-U.S.-flag ocean 
freight capability for carriage of bulk preference cargo. In contrast, 
the total export nationwide by non-liner vessels of USDA and USAID 
agricultural assistance program cargoes subject to cargo preference in 
the 1992-1993 cargo preference year (the latest program year for which 
figures are available) amounted to 6,297,015 metric tons, of which 
4,923,244, or 78.2 percent, was transported on U.S.-flag vessels. 
(Source: Maritime Administration database.)
    MARAD issued the previous rule to provide Great Lakes ports with 
the opportunity to compete for agricultural commodity preference 
cargoes for only the 1994 Great Lakes shipping season cargoes, and to 
assess the results.

Extension of Trial Period

    As predicted by numerous commenters, the timing of the final rule, 
which was not published until August 18, 1994, did not allow for a true 
trial period since it actually extended for less than one-half of the 
1994 Great Lakes Shipping season. Because of the long lead time 
required for arranging shipments of bulk agriculture commodity 
preference cargoes, there apparently was no real opportunity for U.S.-
flag vessel operators to make the necessary arrangements and bid on 
preference cargoes. Accordingly, MARAD proposes to extend the trial 
period for applying its modified policy with respect to shipment of 
preference cargoes on U.S.-flag vessels through the 1995 Great Lakes 
shipping season.

Rulemaking Analyses and Notices

Executive Order 12866 (Regulatory Planning and Review)

    This rulemaking has been reviewed under Executive Order 12866 and 
Department of Transportation Regulatory Policies and Procedures (44 FR 
11034, February 26, 1979). It is not considered to be an economically 
significant regulatory action under section 3(f) of E.O. 12866, since 
it has been determined that it is not likely to result in a rule that 
may have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities. However, since this rule would affect other Federal 
agencies, is of great interest to the maritime industry, and has been 
determined to be a significant rule under the Department's Regulatory 
Policies and Procedures, it is considered to be a significant 
regulatory action under E.O. 12866.
    MARAD projects that this rule would allow the movement of up to 
300,000 metric tons of agricultural commodities from Great Lakes ports, 
with a reduction in the shipping cost to sponsoring 
[[Page 6068]] Federal agencies up to $3 per metric ton ($900,000).
    Since the substance of this rule is identical to that contained in 
the May 11, 1994 NPRM, which solicited comments that MARAD addressed in 
its final rule issued on August 8, 1994, and since no commenter opposed 
a one-season trial period MARAD is allowing a 30-day comment period for 
this second proposed rule.
    If this rule is finalized, MARAD will evaluate the results of the 
one-season trial period before determining whether to issue a rule to 
make this arrangement permanent.
    This rule has been reviewed by the Office of Management and Budget 
under Executive Order 12866.

Federalism

    The Maritime Administration has analyzed this rulemaking in 
accordance with the principles and criteria contained in Executive 
Order 12612, and it has been determined that these regulations do not 
have sufficient federalism implications to warrant the preparation of a 
Federalism Assessment.

Regulatory Flexibility Act

    The Maritime Administration certifies that this rulemaking will not 
have a significant economic impact on a substantial number of small 
entities.

Environmental Assessment

    The Maritime Administration has considered the environmental impact 
of this rulemaking and has concluded that an environmental impact 
statement is not required under the National Environmental Policy Act 
of 1969.

Paperwork Reduction Act

    This rulemaking contains no reporting requirement that is subject 
to OMB approval under 5 CFR Part 1320, pursuant to the Paperwork 
Reduction Act of 1980 (44 U.S.C. 3501, et seq.)

List of Subjects in 46 CFR Part 381

    Freight, Maritime carriers.

    Accordingly, MARAD hereby proposes to amend 46 CFR part 381 as 
follows:

PART 381--[AMENDED]

    1. The authority citation for Part 381 continues to read as 
follows:

    Authority: 46 App. U.S.C. 1101, 1114(b), 1122(d) and 1241; 49 
CFR 1.66.

    2. Section 381.9 would be revised to read as follows:


Sec. 381.9  Available U.S.-flag service for 1995.

    For purposes of shipping bulk agricultural commodities under 
programs administered by sponsoring Federal agencies from U.S. Great 
Lakes ports during the 1995 shipping season, if direct U.S.-flag 
service, at fair and reasonable rates, is not available at U.S. Great 
Lakes ports, a joint service involving a foreign-flag vessel(s) 
carrying cargo no farther than a Canadian port(s) or other point(s) on 
the Gulf of St. Lawrence, with transshipment via a U.S.-flag privately 
owned commercial vessel to the ultimate foreign destination, will be 
deemed to comply with the requirement of ``available'' commercial U.S.-
flag service under the Cargo Preference Act of 1954. Shipper agencies 
considering bids resulting in the lowest landed cost of transportation 
based on U.S.-flag rates and service shall include within the 
comparison of U.S.-flag rates and service, for shipments originating in 
U.S. Great Lakes ports, through rates (if offered) to a Canadian port 
or other point on the Gulf of St. Lawrence and a U.S.-flag leg for the 
remainder of the voyage. The ``fair and reasonable'' rate for this 
mixed service will be determined by considering the U.S.-flag component 
under the existing regulations at 46 CFR Part 382 or 383, as 
appropriate, and incorporating the cost for the foreign-flag component 
into the U.S.-flag ``fair and reasonable'' rate in the same way as the 
cost of foreign-flag vessels used to lighten U.S.-flag vessels in the 
recipient country's territorial waters. Alternatively, the supplier of 
the commodity may offer the Cargo FOB Canadian transshipment point, and 
MARAD will determine fair and reasonable rates accordingly.

    Dated: January 26, 1995.
By Order of the Maritime Administrator.
Joel Richard,
Secretary, Maritime Administration.
[FR Doc. 95-2410 Filed 1-31-95; 8:45 am]
BILLING CODE 4910-81-P