[Federal Register Volume 60, Number 48 (Monday, March 13, 1995)]
[Rules and Regulations]
[Pages 13550-13566]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-6034]
[[Page 13549]]
_______________________________________________________________________
Part V
Department of Transportation
_______________________________________________________________________
Coast Guard
_______________________________________________________________________
33 CFR Part 143, et al.
Direct User Fees for Inspection or Examination of U.S. and Foreign
Commercial Vessels; Final Rule
Federal Register / Vol. 60, No. 48 / Monday, March 13, 1995 / Rules
and Regulations
[[Page 13550]]
DEPARTMENT OF TRANSPORTATION
Coast Guard
33 CFR Part 143
46 CFR Part 2
[CGD 91-030]
RIN 2115-AD78
Direct User Fees for Inspection or Examination of U.S. and
Foreign Commercial Vessels
AGENCY: Coast Guard, DOT.
ACTION: Final rule.
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SUMMARY: The Omnibus Budget Reconciliation Act of 1990 requires the
Coast Guard to establish user fees for Coast Guard services related to
the inspection and examination of U.S. and foreign commercial vessels.
Fees in this rule are based on existing vessel inspection program
requirements and services. The fees are established for the purpose of
recovering costs associated with providing Coast Guard vessel
inspection services.
EFFECTIVE DATE: This rule is effective on May 1, 1995.
ADDRESSES: Unless otherwise indicated, documents referred to in this
preamble are available for inspection or copying at the office of the
Executive Secretary, Marine Safety Council (G-LRA/3406), U.S. Coast
Guard Headquarters, 2100 Second Street SW., room 3406, Washington, DC
20593-0001 between 8 a.m. and 3 p.m., Monday through Friday, except
Federal holidays. The telephone number is (202) 267-1477.
For inquiries and payment information during initial implementation
of the rule, call, toll-free, 1-800-941-3337.
FOR FURTHER INFORMATION CONTACT: Denise J. Mursch, Planning Staff (G-
MP-2), Office of Marine Safety, Security and Environmental Protection,
(202) 267-0785.
SUPPLEMENTARY INFORMATION:
Drafting Information
The principal persons involved in drafting this document are LCDR
John J. Kelly, Project Manager, and LCDR J.K. Gillespie, Office of
Marine Safety, Security and Environmental Protection, and C.G. Green,
Project Counsel, Office of Chief Counsel.
Regulatory History
On December 18, 1991, the Coast Guard published in the Federal
Register (56 FR 65786) a notice of proposed rulemaking (NPRM) entitled
``Direct User Fees for Inspection or Examination of U.S. and Foreign
Commercial Vessels.'' On December 24, 1991, the Coast Guard published a
correction to the proposed rule (56 FR 66766). This correction added
Appendix A, a summary of the preliminary Regulatory Evaluation, to the
NPRM published on December 18, 1991. The initial public comment period
closed on February 18, 1992.
The Coast Guard received numerous comments requesting that public
hearings be held in connection with the vessel inspection user fee
rulemaking. The Coast Guard determined that public hearings would
significantly contribute to this rulemaking, and published a Notice in
the Federal Register on March 24, 1992 (57 FR 10149) to reopen the
public comment period and announce the scheduling of nine public
hearings. The nine public hearings were held between April 13, 1992,
and May 1, 1992, at the following locations: Baltimore, MD; Secaucus,
NJ; Boston, MA; Miami, FL; New Orleans, LA; Chicago, IL; Seattle, WA;
San Francisco, CA; and San Diego, CA. The public comment period closed
on May 18, 1992.
Background and Purpose
The Omnibus Budget Reconciliation Act of 1990 (the Act) amended 46
U.S.C. 2110 and removed long-standing prohibitions against imposing
certain user fees.
As amended by the Act, 46 U.S.C. 2110 now requires the
establishment and collection of user fees for Coast Guard services
provided under Subtitle II of Title 46, United States Code. The Coast
Guard is developing Subtitle II user fees in several separate
rulemakings, each of which covers services provided in an identifiable
program area. On March 19, 1993 (58 FR 15228), the Coast Guard
published the final rule on User Fees for Marine Licensing,
Certification of Registry, and Merchant Mariner Documentation (CGD 91-
002). On November 15, 1993 (58 FR 60256), the Coast Guard published the
final rule on User Fees for Documentation of Vessels and Recording of
Instruments (CGD 89-007). In addition to the fees for inspection or
examination of U.S. and foreign commercial vessels in this rule, the
Coast Guard also plans to establish fees for services related to Coast
Guard equipment approval and factory inspections (CGD 92-013);
inspections for the initial Certificate of Inspection (COI), such as
new vessel construction inspections, inspections of existing vessels
undergoing rebuilding, reflagging, or major conversion; and for
commercial vessel plan review.
Overview of the Rulemaking
This rule revises 46 CFR Part 2 and creates user fees for Coast
Guard inspections or examinations of existing U.S. and foreign
commercial vessels as follows:
For U.S. Vessels
(1) An annual vessel inspection fee which covers all periodic
inspections and follow-on inspections conducted during the course of a
given year for commercial vessels required to have a Coast Guard COI.
(2) An overseas inspection fee for inspections conducted outside
the United States and its territories, except for inspections conducted
in Canada, Mexico, and the British Virgin Islands.
For Foreign Vessels
(1) A fee for the biannual Letter of Compliance (LOC) examination
and for the annual reexamination of tankships carrying hazardous
liquids or liquefied gases in bulk in U.S. waters;
(2) A fee for the annual examination of tankships carrying oil in
bulk in U.S. waters;
(3) A fee for the LOC examination of mobile offshore drilling units
(MODUs) operating on the U.S. outer continental shelf;
(4) An annual vessel inspection fee for all vessels required to
have a Coast Guard COI, including Canadian tank barges and vessels of
nations not signatory to the International Convention for Safety of
Life at Sea (SOLAS).
(5) An overseas examination fee for examinations conducted outside
the United States and its territories, except for examinations
conducted in Canada, Mexico, and the British Virgin Islands.
Vessels Not Covered
This rule does not apply to foreign passenger vessels, to training
vessels operated by State maritime academies, or to public vessels of
the United States which are excluded from the provisions of subtitle II
of Title 46 U.S. Code.
Waivers
Collection of vessel inspection fees is waived for all vessels
whose fees would be paid directly using Federal appropriated funds.
Exemptions
No exemptions were proposed in the NPRM; however, the final rule
contains one exemption for charitable, not-for-profit, youth-oriented
organizations which use their vessel(s) exclusively for training youths
in boating, seamanship, and navigation skills. This exemption is
[[Page 13551]] discussed more fully in the section of this document
entitled Exemptions.
Fee Limit for Tank Barges
Annual vessel inspection fees calculated for tank barges in various
service and route categories all exceeded $500. However, the Act
provides that a user fee for inspection or examination of a non-self-
propelled tank barge may not exceed $500 per year. Thus, the Coast
Guard set the annual vessel inspection fee for tank barges at the
statutory limit of $500.
Types of Inspections Covered under this Rule
Fees established by this rule are based on Coast Guard costs of
providing inspection and examination services. These costs include
marine inspector hours, travel time, mileage costs, administrative
support costs, training costs, and overhead costs. In establishing
these fees, the Coast Guard reviewed all inspection requirements
contained in 46 CFR part 2, as well as the technical requirements for
inspections found in 46 CFR parts 31, 71, 91, 105, 107, 108, 109, 151,
167, 175, 176, 189, and 190 and in 33 CFR parts 140, 143, 151, 155, and
157.
Depending on vessel type, commercial vessels are subject to
periodic inspections at quarterly, 1 year, 1.5 year, 2 year, 2.5 year,
3 year, 5 year or 10 year inspection intervals. Typically, Coast Guard
marine inspectors visit each U.S. commercial vessel a minimum of once
each year to either: Inspect the vessel for reissuance of the COI; to
conduct the annual reinspection; or to inspect the vessel's hull. The
amount of time it takes to conduct any given inspection is often a
function of the type of inspection being conducted, the specific
category of vessel being inspected, the length and in some cases the
tonnage of the vessel being inspected, and the maximum number of
passengers the vessel is authorized to carry under the vessel's COI.
These three periodic inspections, namely the inspection for
certification, the reinspection (or mid-period inspection), and the
hull (or drydock) inspection, generally require the same amount of
inspection time for the majority of vessels in each vessel category.
Follow-on inspections ensure that a vessel remains in compliance
with its COI. The purpose of follow-on inspections varies from one
vessel to the next. However, these inspections typically include, but
are not limited to, any of the following four activities:
(a) Certifying that deficiencies noted during a previous inspection
have been satisfactorily corrected;
(b) Surveying either damaged ship structures or propulsion systems,
or lifesaving, navigation, or firefighting equipment which has failed;
(c) Inspecting, testing, or approving repairs either to damaged
ship structures or propulsion systems, or to lifesaving, navigation, or
firefighting equipment which has failed; or
(d) Verifying that vessel modifications or alterations meet
regulatory requirements.
Wide variations exist relative to the amount of time required to
conduct follow-on inspections, which include, but are not limited to:
Drydock extension inspections; MARPOL compliance inspections;
inspections to clear outstanding requirements issued by a Coast Guard
marine inspector on Coast Guard Form CG-835; damage surveys; repair
inspections; permit to proceed inspections; and non-credit drydock
inspections. These variations are attributable to many factors,
including: The degree to which the vessel is made ready for inspection
by the owner or operator; the knowledge, training, and experience of
shipyard personnel and the ship's crew; the knowledge and training of
the marine inspector; the vessel owner's or operator's management and
operating procedures; the level of coordination with third party
contractors; the nature and extent of the repairs required; and the
size and extent of any deficiency list to be inspected or cleared.
Generally, there are no accurate predictors as to the amount of time
each type of follow-on inspection should take.
Inspection and Examination Fees
For the purposes of this rule, vessels required to have a COI are
inspected, and foreign vessels not required to have a COI are examined.
Annual vessel inspection fees are payable each year on or before the
vessel's user fee anniversary date and entitle a vessel owner or
operator to all periodic and follow-on inspection services needed
during the year. All other inspection or examination-related fees are
payable by the vessel's owner or operator prior to the time that the
Service is provided.
Vessels of nations which are party to SOLAS are examined by the
Coast Guard only to the extent necessary to verify compliance with
their own nation's inspection laws, the requirements of various
international treaties, and any additional domestic regulations which
may be imposed by the United States. This rule does not establish fees
for SOLAS compliance examinations.
Derivation of the Annual Vessel Inspection Fee
Depending on the specific vessel category, COIs are issued for a
period of one, two, or three years. Reinspections are conducted during
the intervening years, on or about the anniversary date of the vessel's
COI. Hull inspection intervals vary from once every twelve months to
once every ten years, depending on the vessel category and whether the
vessel operates in salt water or fresh water. Follow-on inspections, on
the other hand, can occur at any time.
The length of the period for which a COI is issued is only one
factor in the annual vessel inspection fee calculation. Using vessel
inspection data, the Coast Guard determined the average amount of time
needed to conduct periodic and follow-on inspections for vessels in
each vessel category during a twelve month period. For Coast Guard data
capture purposes, hull inspections also included internal structural
inspections, fuel oil tank inspections, and tailshaft inspections,
since these inspections most often coincide or are associated with the
hull inspection.
The annual vessel inspection fee is based upon an equation which
calculates the average expected value (in terms of annual inspector
hours) of inspection services provided to each vessel category during
any given year. The average expected value is the average number of
hours it takes to conduct a type of inspection multiplied by the
probability of that inspection taking place during any given year. It
assumes that the average time to conduct an inspection is
representative for all vessels within a given vessel category; that the
distribution of the average inspection time about the mean is normal;
and that the average inspection time has a relatively small standard
deviation. However, while use of the average expected value worked well
for periodic inspections, it did not work as well for follow-on
inspections, because the standard deviation for many follow-on
inspections was several times the mean.
Constructing annual vessel inspection fees predicated on full
recovery of follow-on inspection costs would have resulted in
shipowners who require less inspection services subsidizing shipowners
who require significantly greater inspection services. For this reason,
the Coast Guard proposed to base charges for follow-on inspections at
50% of cost. Charging only 50% of the cost associated with conducting
follow- [[Page 13552]] on inspections minimized the impact of the large
standard deviations and reduced the potential for inequities within
vessel categories and subcategories. No comments on the NPRM suggested
that there was any disagreement with the proposal. The annual vessel
inspection fees in this final rule are thus based on the total cost of
conducting periodic inspections and half of the costs of conducting
follow-on inspections.
The Coast Guard developed its vessel inspection and examination
fees using information from a workload analysis study, vessel
inspection data contained in the Coast Guard's Marine Safety
Information System (MSIS), and costs associated with conducting vessel
inspection and examination activities by personnel assigned to Coast
Guard Marine Safety Offices and Coast Guard Marine Inspection Offices.
Vessel inspection and examination fees were developed to generate
receipts approximating the total vessel inspection program costs of
providing those services. Vessel inspection program costs include the
cost of personnel, local travel costs for inspectors, a portion of the
annual cost of operating MSIS, and the associated overhead required to
provide Coast Guard inspection and examination services (i.e., office
space; office equipment and supplies such as telephones, computers and
copiers; special training; and other personnel-related costs). Using
information derived from a workload analysis study, the hourly standard
rates provided in the Coast Guard Standard Rate Instruction (COMDTINST
7310.1), and the Coast Guard Staffing Standards Manual (COMDTINST
M5312.11), the Coast Guard calculated the total cost of the vessel
inspection program to be approximately $28.7 million. Of this amount,
an estimated $2.9 million will be the subject of a separate rule
covering fees for inspections associated with new vessel construction
and for commercial vessel plan review services.
Based on the workload analysis study and the total vessel
inspection program cost, the Coast Guard calculated a basic hourly rate
for vessel inspection services of $87 per qualified inspector hour. A
detailed discussion of the calculation of this figure is set out in the
Regulatory Evaluation.
Each fee was calculated based upon the time the Coast Guard would
reasonably expect to spend inspecting or examining vessels in specific
categories during an average year, including travel time to and from
the inspection site. All fees were rounded down to the nearest $5.00
increment. The costs associated with inspecting the different types of
MODUs were determined using Coast Guard historical information, because
workload data was not captured based on the type of drilling unit.
Consistent with guidance provided by the Office of Management and
Budget (OMB) Circular A-25, and except where otherwise mandated by
statute, the Coast Guard's goal in establishing user fees for Subtitle
II services is full cost recovery. This rule will recover an estimated
$17.2 million of the $25.8 million annual cost of providing Coast Guard
vessel inspection and examination services. An estimated $8.6 million
in costs will not be recovered by user fees due to statutory
prohibitions or limitations; lack of statutory authority; exemptions in
the rule from payment of fees; and administrative reductions during
development of the final fee schedule. These unrecovered costs are
listed in Appendix E of the Regulatory Evaluation for this rule.
OMB Circular No. A-25 requires that all user fees be reviewed
periodically to determine if adjustments or changes to the fees are
necessary. The fees in this rule will be revised if costs change due to
inflation or deflation; if the Coast Guard changes the manner in which
inspection or examination services are provided; or if otherwise deemed
appropriate. Revisions to the fees would be done through rulemaking.
Optional Prepayment of Annual Vessel Inspection Fee
The final rule allows a vessel owner or operator to prepay the
annual vessel inspection fee for any period of not less than three
years and not more than the design life or expected remaining service
life of the vessel. The Coast Guard will calculate the prepayment
amount using the net present value of each annual payment during the
requested prepayment period. The net present value is a discounted
amount which, if deposited in an interest bearing account until the
payment year and when added to the accumulated interest, would equal
the payment amount due. The interest rate used in calculating net
present value will be the 10-year Treasury note rate in effect at the
time of calculation, as adjusted for inflation using the projected rate
for Federal pay increases. Entitlement to inspection services during
the prepayment period is transferable to a subsequent owner of the
vessel, but the entitlement is not transferable to a different vessel.
If a vessel certificated for a single service changes service during
the prepayment period, the fee for the remainder of the prepayment
period must be recalculated using the vessel's new category. The
remaining prepaid balance will be applied to the fee calculated for the
remaining years in the vessel's new category, commencing with the next
user fee anniversary date. With the exception of a vessel that is
removed from Coast Guard certification, as discussed in Sec. 2.10-
105(e), prepayments of fees are non-refundable.
Overseas Inspection and Examination Fees
Approximately 40,000 inspector hours are expended annually in the
overseas inspection of U.S. commercial vessels. These overseas
inspections are conducted at the request of the vessel owner. Vessel
owners and operators reimburse the Coast Guard (under 46 U.S.C. 3317)
for travel and per diem expenses of the marine inspectors, but not for
the personnel costs associated with conducting overseas inspections.
Personnel hours expended during travel to the overseas inspection site
and at the overseas inspection site waiting for a vessel to be made
ready for inspection constitute the extra costs associated with
providing inspection and examination services at overseas locations
which are not included in the annual vessel inspection fees.
The Coast Guard proposed an additional flat fee for each overseas
inspection. The total marine inspector hours expended in conducting
overseas inspections divided by the number of overseas inspections
conducted provides an average time for each inspection of approximately
53 hours travel and delay time. At $87 per qualified inspector hour,
this rule sets the fee for each overseas inspection at $4,585.
Foreign Tankship Fees
Foreign tankships which carry hazardous liquids or liquefied gases
in bulk are issued a LOC, which is valid for two years. These tankships
are also examined annually, at which time the vessel's LOC is endorsed.
Foreign tankships carrying oil in bulk, on the other hand, are issued a
Tank Vessel Examination (TVE) Letter, which is valid for one year. The
time involved to conduct each of these tankship examinations is
essentially the same. The fee for each of the three examinations,
therefore, is the same amount, namely $1,100.
Foreign MODU Fees
Foreign MODUs are examined under the authority of the Outer
Continental Shelf Lands Act, codified in 43 U.S.C. 1356. The regulation
requiring a foreign MODU to obtain a LOC is published in
[[Page 13553]] 33 CFR 143.210. LOCs for foreign MODUs are valid for one
year or until the MODU departs the outer continental shelf, whichever
occurs first. Since certain other foreign vessels are required to pay
user fees for inspections and examinations, and since U.S. MODUs are
generally inspected by and pay fees to foreign agencies when operating
in foreign waters, the Coast Guard has established user fees for
examination services provided to foreign MODUs. Foreign MODU fees are
collected under the authority of 14 U.S.C. 664 and 31 U.S.C. 9701.
Foreign MODU examinations are conducted under 33 CFR 143.207 and
143.210 to ensure compliance with one of the following: (a) The design
and equipment standards for MODU's in 46 CFR part 108; (b) the design
and equipment standards of the documenting nation, if those regulations
have been found to meet or exceed U.S. standards; or, (c) the standards
issued by the International Maritime Organization.
Since examinations conducted to ensure compliance with (a) above
involve essentially the same inspection services provided to U.S.
MODUs, the fees for these foreign MODU examinations are identical to
the annual vessel inspection fees for U.S. MODUs. Likewise, since the
scope of the examinations conducted to ensure compliance with
categories (b) and (c) above are essentially the same, and involve the
same amount of time, the fee for each of these foreign MODU
examinations is the same amount, namely $1,830.
Foreign Passenger Vessel Fees
The Coast Guard examines foreign passenger vessels of nations that
are party to SOLAS to verify that these vessels are in substantial
compliance with the laws of their flag state and the controls imposed
by appropriate international treaties. The Coast Guard initially
proposed to charge the same fee for each initial, annual, and quarterly
foreign passenger vessel examination. However based on further review
and research, the Coast Guard has subsequently determined that the
reciprocity provision contained in 46 U.S.C. 3303(b) does not allow
imposition of a fee for the examination of a foreign passenger vessel
except to the extent that a foreign country charges vessels of the
United States trading to the ports of that country. Since there are no
U.S. passenger vessels being charged examination fees by a foreign
country, and no clear indication that any such fees would be charged,
the Coast Guard has not established a fee for the examination of
foreign passenger vessels under 46 U.S.C. 3303.
Fee Collections
The Coast Guard has established a vessel user fee anniversary date
for each existing vessel currently inspected by the Coast Guard. This
was accomplished by checking MSIS data for the COI anniversary date of
all Coast Guard inspected vessels and assigning the vessel's user fee
anniversary date as the first day of the next month after the COI
anniversary date, exclusive of the year. Once established, the vessel
user fee anniversary date remains the same for the service life of the
vessel. Annual vessel inspection fees are due on or before the vessel's
user fee anniversary date. Coast Guard inspection services will not be
provided until the annual vessel inspection fee for that year has been
paid in full. For new vessels entering service after the effective date
of this rule, the vessel user fee anniversary date will be based upon
the vessel's initial COI issuance date. This same method will be used
for existing vessels coming under Coast Guard certification for the
first time.
Annual vessel inspection fees and foreign vessel examination fees
must be mailed to the address specified in 46 CFR 2.10-20. Overseas
inspection and examination fees, on the other hand, must accompany each
request for an overseas inspection or examination as required by
Sec. 2.10-120.
Fees generated by this rulemaking will be deposited in the general
fund of the U.S. Treasury as offsetting receipts of the Department of
Transportation and ascribed to Coast Guard activities. This means that
the fees will not be added to current Coast Guard appropriations; nor
will the fees directly affect future appropriations used for
administration of the Coast Guard's marine safety programs. The Coast
Guard considers this to be an advantage, since funding for these
programs is more predictable when based on firm appropriations, and
administration of the vessel inspection program will not be dependent
on the amount of fees collected during any given year.
Discussion of the Comments
Overview
During the comment period, the Coast Guard received a total of
1,092 written comments to the docket. In addition, 176 persons either
testified or submitted written statements during the nine public
hearings.
All segments of the industry generally objected to the proposed
imposition of any user fees for the inspections of their vessels. They
also objected to the proposed fee amounts being too high. Many
requested an after-the-fact billing system to charge for the actual
inspection time rather than the proposed annual fees.
The largest number of comments came from owners and operators of
small passenger vessels who were primarily concerned with the
cumulative economic impact of local, State, and Federal fees and the
effect of the fees on their income.
Numerous comments were also received from the freight barge
industry. The industry's primary concerns were that they were not
included in the fee cap for tank barges and that they would be charged
twice for what appears to be identical services conducted by the Coast
Guard and American Bureau of Shipping (ABS).
The oceangoing merchant fleet industry was primarily concerned that
the proposed fees would place their vessels at a competitive
disadvantage relative to their foreign counterparts; that foreign
countries may choose to reciprocate and charge U.S. vessels fees for
operating in their ports; that the Coast Guard should delegate more of
its inspection responsibilities to ABS; that charging an hourly rate
would provide an incentive for owners to have their vessels ready for
inspection; and that if the industry must pay for vessel inspection
services, the Coast Guard needs to improve its efficiency and the
quality of its inspection corps.
The offshore oil industry also submitted numerous comments. The
primary concerns of this industry segment related to the economic
impact the fees would have on individual vessel operators supporting
their industry, i.e. offshore supply vessels (OSVs).
Some comments requested that more information be provided which
specifically shows how the annual inspection fees were derived. The
Coast Guard has included a detailed example of an annual fee
calculation in the final Regulatory Evaluation for this rule.
Exemptions
Under 46 U.S.C. 2110(g), the Coast Guard may exempt a person from
paying fees if it is determined to be in the public interest to do so.
In the NPRM the Coast Guard did not propose any exemptions, but invited
comments on exemptions that could be considered to be in the public
interest. Over 40 exemption requests were received, spanning a wide
range of vessel categories. The categories for which exemptions were
requested included: State, local, and private ferries; vessels
[[Page 13554]] operated by youth-oriented, not for profit, charitable
or educational organizations; vessels operated by nonprofit
organizations or foundations; oceangoing merchant vessels; small
passenger vessels less than 30 feet in length; certain historic
vessels; small entities; small passenger vessels; U.S. vessels engaged
in foreign commerce; small passenger vessels built before December 31,
1990; vessels whose gross profit was less than 20% of the proposed
annual vessel inspection fee; companies engaged in providing passenger
transportation services; auxiliary sailing vessels; sailing school
vessels less than or equal to 65 feet in length; yacht club launches
carrying 12 passengers or less; any small entity negatively impacted by
the fees; tourism vessels; U.S. flag liner vessels; small passenger
vessels less than 100 gross tons; small passenger vessels less than 100
gross tons and engaged in recreational diving and fishing activities;
foreign vessels; and U.S. vessels in general. Of this list, the
greatest number of comments came from the Boy Scouts of America (BSA);
state, local, and private ferries; and various not for profit
organizations. Comments from these groups presented a variety of
reasons to support their requests for exemption.
Most other requests for exemptions simply suggested an exemption
category but failed to provide an articulated rationale in support of
their request.
Several comments requested an exemption for ferries which are owned
and operated by local, state, or private entities and which support
local transportation systems. The comments indicated that ferries
reduced vehicle traffic congestion on area roads and provided access to
remote sites, such as to a barrier island State park, or to the islands
of Martha's Vineyard and Nantucket. The comments also indicated that
many ferries operate on a nonprofit basis in an effort to keep their
fares as low as possible, with fare increases often regulated by a
State Public Utilities Commission. One State transportation department
indicated that it received some type of subsidy from the Federal
Transit Administration (FTA) and stated that it is not logical for the
Federal Government to subsidize water-based nonprofit operations on the
one hand, while imposing a fee for Coast Guard inspection services on
the other hand.
A substantial number of comments requested exemptions for vessels
owned or operated by organizations that are charitable, not for profit,
and youth-oriented, such as the BSA, including the Sea Scouts and Sea
Explorers, Girl Scouts of the United States of America (GSA), and the
Young Men's Christian Association (YMCA) of the United States of
America. These organizations are involved in teaching youths maritime
skills, such as boating, seamanship, and navigational skills. These
organizations argued that since many of their programs rely solely on
volunteers, fund-raising activities, and private donations for their
total funding and support, their ability to continue offering these
programs would be adversely affected if fees were charged for the
inspection of their vessels.
In addition to organizations discussed above, several other
nonprofit organizations requested exemptions for their vessels. These
organizations provide the public with educational programs having an
environmental or historical focus, rather than teaching youths maritime
skills. One organization provides charitable medical care and therefore
has a humanitarian focus.
The Coast Guard acknowledges that there are many charitable
organizations which provide services to the public, and that even
commercial operations, such as ferries, benefit the general public.
However, the Coast Guard does not agree that all organizations which
serve or benefit the public in some manner should be exempted from the
vessel inspection fees.
The Coast Guard has a long-standing record of supporting national
youth programs (Coast Guard Public Affairs Manual--COMDTINST M5728.2B).
Charging fees for inspecting these vessels would not be in keeping with
this long-standing support, nor would it be consistent with other Coast
Guard user fee rulemakings such as the recreational vessel user fee and
merchant marine licensing user fees which have established a similar
exemption. Therefore, consistent with past practice, the Coast Guard
has decided to exempt vessels which are owned or operated by not for
profit, charitable, youth-oriented organizations and which are used
exclusively by those organizations for training youths in boating,
seamanship, and navigation skills.
A vessel meeting the criteria set out in the final rule may be
eligible for an exemption. Vessel owners and operators, including the
BSA, GSA, and YMCA organizations, desiring an exemption must submit a
written request to Commandant (G-MP) via the Officer in Charge, Marine
Inspection (OCMI) of the Marine Inspection Zone in which the vessel
normally operates. Since some of the vessels owned or operated by the
BSA, GSA, and YMCA organizations may not be used exclusively by those
organizations for training youths in boating, seamanship, and
navigation skills, it is expected that some of these vessels may not be
eligible for this exemption.
Historic Vessels
Several comments to the docket asserted that the proposed annual
vessel inspection fees will have an adverse impact on vessels listed on
the National Register of Historic Places and other vessels possessing
either historical character or historical significance. Section 106 of
the National Historic Preservation Act (NHPA) requires Federal agencies
to consider the effects of their actions on historic properties and to
seek comments from an independent reviewing agency, the Advisory
Council on Historic Preservation (ACHP). The purpose of the Section 106
process is to prevent unnecessary harm to historic properties arising
from Federal actions. Regulations for the Section 106 process are
contained in 36 CFR part 800.
Because a number of inspected vessels are listed on the National
Register of Historic Places, the Coast Guard referred this matter to
the Advisory Council on Historic Preservation. In November 1993, the
Advisory Council determined that this rule does not constitute an
undertaking under Section 106 of the National Historic Preservation
Act, therefore the Coast Guard did not do a Section 106 analysis.
Specific Comments
Several comments expressed the opinion that their taxes had already
paid for the cost of providing Coast Guard inspection services, and
that charging fees amounted to nothing more than ``double taxation.''
Some comments stated that the primary beneficiaries of Coast Guard
inspection services include the public, the ship's crew and its
passengers, and the environment, and that fees should be reduced
substantially in recognition of that fact.
The Coast Guard does not agree. The Omnibus Budget Reconciliation
Act of 1990 tasked the Coast Guard with establishing user fees for
services provided under Subtitle II of Title 46, United States Code.
This congressional mandate was aimed at recovering costs associated
with providing Coast Guard services from the recipients of those
services. OMB Circular No. A-25, dated July 15, 1993, states that when
a service or privilege provides special benefits to an identifiable
recipient beyond those that accrue to the general public, a
[[Page 13555]] charge will be imposed to recover the full cost to the
Federal Government for providing the special benefit, or the market
price. The Circular also provides that when the public obtains benefits
as a necessary consequence of an agency's provision of special benefits
to an identifiable recipient (i.e., the public benefits are not
independent of, but merely incidental to, the special benefits), an
agency need not allocate any costs to the public and should seek to
recover from the identifiable recipient either the full cost to the
Federal Government of providing the special benefit or the market
price, whichever applies.
Just as a business cannot operate legally without applicable State
and city business licenses, a U.S. commercial vessel of a certain size
or tonnage cannot legally carry passengers or cargo in U.S. waters
unless it has a valid COI issued by the Coast Guard. The Coast Guard's
position is that the vessel owner or operator is the primary
beneficiary of Coast Guard inspection services.
A few comments asserted that there were no cost controls inherent
in the proposed fees that would help ensure that the fees were
competitive, reasonable, and cost effective. Still others questioned
having 416 FTE (full time equivalents or man-years, as opposed to
actual personnel) associated with the total vessel inspection program
cost, because only about half of the FTE could be accounted for by the
MSIS inspection workload data.
Personnel such as the Chief of the Inspection Department, the
Assistant Chief of the Inspection Department, marine inspector
trainees, clerical and support personnel, and to a lesser extent the
Executive Officer and the Commanding Officer at each of the Marine
Safety Offices, all contribute to the 416 FTE associated with the
administration of the Coast Guard's vessel inspection program. However,
the hours for these support personnel are not in the MSIS inspection
workload data which tracks mainly those who are directly involved in
doing the inspection or processing the reports. The support and
administrative costs not tracked in MSIS are nonetheless necessary to
the vessel inspection program, as are the marine inspectors actually
conducting the onboard inspections.
Others asserted that the Coast Guard intended to charge a separate
fee for reinspections and follow-on inspections.
All reinspections, hull inspections, and follow-on inspections are
encompassed within the annual vessel inspection fee. With the exception
of the overseas inspection fee, the annual vessel inspection fee
represents the only inspection fee most U.S. vessel owners will pay
during any given year. Payment of the annual vessel inspection fee
entitles each owner or operator to a full year of periodic and follow-
on inspections, regardless of when the COI, or any other inspection, is
conducted.
Some comments stated that the Coast Guard's de facto COI issuance
policy is shortening the inspection cycle, causing inspections to occur
more frequently than statutorily required. They indicated the current
Coast Guard practice of listing the COI issuance date as the date that
the inspection was conducted (versus the actual expiration date of the
COI) would cause owners to pay an annual vessel inspection fee while
receiving less than 12 months of Coast Guard inspection services.
The annual vessel inspection fee will be due on the same date each
year, namely the user fee anniversary date, for as long as the vessel
remains in service. Therefore, the COI issuance date will have no
bearing on the amount of annual vessel inspection services provided.
A few comments suggested that inspectors may become even more
vigilant during future inspections so as to find discrepancies and
thereby generate additional user fee receipts for the U.S. Treasury.
Since the annual vessel inspection fee includes all periodic and
follow-on inspections conducted during the course of the year, there
exists no incentive for inspectors to uncover additional discrepancies
to increase fee collections.
A number of comments took exception to the Coast Guard's use of the
term ``privilege of inspection'' in the NPRM and suggested that since
inspections are required by Coast Guard regulations a more appropriate
phrase would be either ``right to be inspected,'' ``eligibility for
inspection,'' or ``entitlement to inspection.'' The Coast Guard agrees,
and the phrase ``privilege of inspection'' has been replaced by
language more correctly indicating that payment of the annual vessel
inspection fee entitles a vessel owner or operator to a full year of
periodic and follow-on inspection services.
Numerous comments suggested that the proposed $500 cap on tank
barge inspection fees was discriminatory and inequitable, especially
when compared to the fees proposed for small passenger vessels and the
fees proposed for freight barges.
The tank barge cap was part of the Act passed by Congress. The
calculated fees for tank barges ranged from an annual fee of $778 to
$1,015. Because the fees as calculated exceeded the statutory limit of
$500, and the Act prohibits charging a fee exceeding $500 per year for
these vessels, the Coast Guard set the annual vessel inspection fee at
the maximum amount allowed by Congress.
Some comments expressed the opinion that in response to the fees
established for foreign vessels under this rule, countries may elect,
in turn, to charge fees for U.S. vessels operating in foreign ports.
The Coast Guard acknowledges the possibility that foreign countries
may consider charging reciprocal fees. However, the Act requires that
fees be established for services provided under Subtitle II of Title 46
United States Code, except as otherwise provided in Title 46 and to the
extent that the fees are not in conflict with the international
obligations of the United States. The Coast Guard has determined that
user fees are enforceable for TVE and LOC examinations conducted on
foreign tankships and MODUs. These examinations are required by 46
U.S.C. Chapter 37 and are not based solely on any international
convention or agreement; rather, they are based on U.S. domestic port
entry requirements aimed at ensuring the protection of U.S. ports, its
waterways, and the environment.
Several comments suggested that annual vessel inspection fees will
place U.S. vessels at a competitive disadvantage relative to foreign
vessels engaging in U.S. or international commerce. One commercial
shipping representative commented that his company was attempting to
compete in an international market, where his competitor's costs
associated with regulatory bodies are limited to those of a
classification society. He objected to having to pay Coast Guard vessel
inspection fees in addition to classification fees stating that the
increased fee burden placed his company at a competitive disadvantage.
Just as the Coast Guard inspects the U.S. commercial vessel fleet,
SOLAS signatory nations inspect vessels belonging to their commercial
vessel fleets. Most of these nations charge their fleets fees for
providing these inspection services. Since these vessels have been
inspected by their ``flag state,'' and have been issued appropriate
international convention certificates prior to entering U.S. waters,
Coast Guard examinations are limited to ensuring compliance only with
U.S. regulations which may supersede international requirements. These
LOC and TVE examinations take less time to conduct than an inspection
for a COI. Thus, these examinations [[Page 13556]] have lower fees.
Vessels of foreign nations not party to SOLAS, and vessels to which
SOLAS does not apply are subject to the same inspection requirements as
U.S. vessels. Because these latter vessels require the same amount of
Coast Guard inspection services as their U.S. counterparts, they must
pay a vessel inspection fee equal to the annual vessel inspection fee
paid by U.S. vessels of the same vessel service category. Thus, foreign
vessels using U.S. ports pay the equivalent amounts for Coast Guard
inspection services as U.S. vessels.
One comment suggested that the proposed vessel examination fee
schedule should be expanded to include inspections of foreign cargo
vessels of nations that are signatory to SOLAS.
As authorized by 46 U.S.C. 3303 and required under 46 CFR 90.05-1,
foreign vessels of a country having inspection laws and standards
similar to those of the United States, and which have an unexpired COI
issued by proper authority of its respective country, receive only a
port state control examination to ensure that the condition of the
vessel is as stated on its COI. User fees solely for port state control
examinations would be inconsistent with the operation of customary
international practice and they are not included in this rule.
A few comments stated that every vessel carrying passengers for
hire should be inspected by the Coast Guard. Others stated that the law
concerning bareboat charters should be changed.
These suggestions would require changes to inspection statutes and
regulations which are beyond the scope of this rulemaking. However,
should additional categories of commercial vessels become subject to
Coast Guard inspection in the future, user fees will be established for
these vessels as well. For example, the Passenger Vessel Safety Act of
1993 now requires that certain additional vessels carrying passengers
for hire be inspected by the Coast Guard. Therefore, the fees
established in this rule also apply to these vessels.
A few comments expressed the concern that fees charged for vessel
inspection services were, in reality, paying for other Coast Guard
services provided to recreational and fishing vessels for which user
fees have not been proposed. The Coast Guard disagrees.
This rule establishes annual vessel inspection fees for those
vessels subject to Coast Guard inspection under 46 U.S.C. 3301.
Recreational vessels and fishing vessels are not currently required to
be inspected.
One comment suggested that the proposed annual vessel inspection
fee for liquefied natural gas tankships (LNG) was not based on the
actual time spent inspecting such vessels. The comment stated that the
proposed fee for LNG tankships was 244% higher than the proposed fee
for a non-LNG tankship, despite the fact that both tankship categories
should take essentially the same amount of time to inspect.
The Coast Guard agrees that if vessel size was the only factor, LNG
tankships should take essentially the same amount of time to conduct
the required inspections as non-LNG tankships. However, Coast Guard-
inspected LNG vessels operate almost exclusively in the overseas trade.
MSIS data indicates that most reinspections of LNG tankships occur
while the vessel is underway, and most drydockings often require the
services of a dedicated inspector for extended periods. The annual
vessel inspection fee for LNG tankships also includes Coast Guard costs
associated with conducting the annual testing of firefighting systems.
All of these factors increase the average annual inspection time.
Because there are only 10 active vessels in the LNG tankship fleet,
the Coast Guard reviewed MSIS data on each of the 10 vessels dating
back to 1987 to establish a more reliable average inspection time. Data
which clearly exceeded the mean inspection time was intentionally
eliminated from this analysis. The results indicated that a reduction
in the proposed annual vessel inspection fee for LNG tankships was, in
fact, justified. However, the recalculated annual vessel inspection fee
for LNG tankships remains almost twice as high as the annual vessel
inspection fee for a conventional tankship.
One comment asked whether a separate fee would be assessed to a
vessel operating part of the year in one region of the country and
operating the rest of the year in another region of the country.
Only one annual vessel inspection fee will be charged per vessel,
regardless of the number of regions in which a vessel operates during
any given year. Payment of the annual vessel inspection fee entitles a
vessel owner to a full year of periodic and follow-on inspections,
regardless of where in the country the vessel chooses to operate and
how often the vessel is inspected.
Several comments suggested that the Coast Guard should consider
billing at the conclusion of the inspection. Other comments expressed
the opinion that fixed annual fees do not provide an incentive for
owners to have their vessels ``ready for inspection.'' These comments
argued that paying an annual fee, in effect, rewards those owners and
operators who are not prepared for the inspection at the expense of
those who are prepared. One commenter said he objected to having his
annual fee become higher because of another company which makes no
attempt to maintain its vessels or prepare adequately for an
inspection. He suggested the Coast Guard establish a published
guideline of thresholds. When the number of visits exceeds that
threshold, the annual fee for that vessel should increase on its next
anniversary, and hopefully other more cooperative and prepared
companies' fees should decline. Generally, these comments stated that
charging for each inspection at a fair, hourly rate would not only be
more equitable, but would also ensure that the fees reflected the
actual amount of time spent on board the vessel.
Hourly fees would more accurately reflect the actual time an
inspector spends on board a vessel and would also likely result in
lower fees for those owners whose vessels were ``ready for inspection''
compared to owners whose vessels were ``not ready for inspection.''
However, the average expected value of services provided each year is
representative of the majority of vessels in each vessel category. In
addition to the average annual amount of time spent on board each
vessel, annual vessel inspection fees also include travel and
administrative (paperwork, review, and research) time.
Billing at the conclusion of each inspection poses essentially the
same problems as charging at an hourly rate. Charging at an hourly rate
would require creating and staffing a billing system that would
increase collection costs by an estimated $1.75 million, resulting in
higher fees for vessel owners and operators. Moreover, OMB Circular No.
A-25 guidance states that user charges will be collected in advance of,
or simultaneously with, the rendering of services unless appropriations
and authority are provided in advance to allow reimbursable services.
Thus, the Coast Guard decided not to bill at the conclusion of the
inspection using an hourly rate.
The small passenger vessel industry was particularly concerned with
the impact of the proposed fees on the ability of many operators,
especially small entities, to stay in business. Citing the poor state
of the economy and their declining revenues in general, they commented
on the cumulative adverse impact of the growing number of Federal,
State, and local fees and [[Page 13557]] regulations. The comments
cited more than 60 different fees and assessments, with the number of
fees applicable to any given vessel owner depending upon such
considerations as the type of operation, the vessel's size, the
geographic area of operation, and the number of passengers carried on
board a given vessel. Included were such fees as harbor maintenance
fees; drug testing fees; State gaming fees; tonnage fees; Animal and
Plant Health Inspection Service fees; State agricultural inspection
fees; Bureau of Land Management fees; State saltwater fishing license
fees; Customs fees; St. Lawrence Seaway tolls; Federal Communications
Commission (FCC) inspection fees; State vessel registration fees; State
and Federal water use fees; dockage fees; National Marine Fisheries
Service permit fees; municipal business registration fees; commercial
use permit fees; Federal reef fishing fees; State business license
fees; Gulf of Mexico Fishery Management Council fees; International
Pacific Halibut Commission permit fees; Mexican Fish Commission permit
fees; State fish and game permit fees; retail fish license fees;
lobster license fees; and Public Utility Commission fees. Other
comments mentioned State and Federal income taxes; State sales and
excise taxes; fuel taxes; corporation taxes; municipal head taxes;
self-employment taxes; unemployment taxes; winter boat storage fees;
lift fees; insurance and maintenance costs; proposed Coast Guard user
fees for marine licensing, vessel documentation, and plan review; and
compliance with the Oil Pollution Act of 1990, the Americans with
Disabilities Act, and the proposed Subchapter T, liferaft, and EPIRB
regulations.
While admitting that the proposed vessel inspection fees alone
would not likely cause them to consider leaving the industry, comments
stated that the increasing costs of operating small passenger vessels
is so overwhelming that some owners or operators will have little
choice but to exit the industry. They were also concerned that if they
went out of business there would be resulting loss of jobs and revenues
in the local communities which often rely on tourist dollars for their
income. Some small passenger vessel owners stated they were reluctant
or unable to pass on the cost of Coast Guard fees by raising their fees
to customers. Other small passenger vessel owners were concerned that
their customers would be unwilling to pay higher fares, and would seek
other, less costly leisure or tourist activities.
The Coast Guard considered the impact that the annual vessel
inspection fees would have, particularly on the ability of small
passenger vessel operators to remain in business. The Coast Guard held
nine public hearings on the proposed rule in order to gather more data
on the likely economic impact of the proposed fees. Based upon the
comments received, both in writing to the docket and during the public
hearings, the Coast Guard reviewed its proposed fees. The Coast Guard
recognizes that the economic impact on each owner or operator depends
on a myriad of factors including seasonal operation, number of
passengers, status of the economy, weather, and the ability to pass on
new costs to paying passengers. While the Coast Guard can calculate the
dollar amount of impact on individual vessel owners, it cannot
calculate the overall economic impact on each vessel owner and the data
in the comments did not support a finding of a significant impact on a
substantial number of small entities.
In the NPRM, the Coast Guard divided the U.S. fleet into 29
different vessel subcategories for the purpose of establishing annual
vessel inspection fees. The Coast Guard selected the fee subcategories
after observing patterns in the amount of time it takes to conduct an
inspection as a function of inspection type, vessel type, and other
factors.
Many comments stated that the costs for inspecting smaller vessels
appeared too high and did not accurately reflect the inspection time
required for these vessels. In response to these comments, the Coast
Guard reexamined its inspection data and found that other breakpoints
could be used to establish additional subcategories (see Figure 1). By
establishing these additional subcategories, the Coast Guard was able
to tier the fees differently in order to achieve a more precise
allocation of program costs. While reexamining the inspection data, the
Coast Guard also identified some outliers in the data that skewed the
average mean inspection time for all vessels of that category. By
disregarding these data outliers in computing the mean inspection time,
the Coast Guard was able to develop mean inspection times that more
precisely represent the average inspection time for each vessel
category resulting, in many cases, in lower fees.
Figure 1.--Number of Annual Vessel Inspection Fee Subcategories
------------------------------------------------------------------------
Final
Vessel category NPRM\1\ rule
------------------------------------------------------------------------
Freight Barges...................................... 1 3
Freight Ships....................................... 1 3
Ready Reserve Fleet Freight Ships................... 1 0
Industrial Vessels.................................. 1 2
Mobile Offshore Drilling Units...................... 4 4
Offshore Supply Vessels............................. 1 2
Offshore Supply Vessels in the Alternate
Reinspection Program............................... 0 2
Oceanographic Research Vessels...................... 1 3
Sea-going Towing Vessels............................ 1 1
Tank Barges......................................... 1 1
Tankships........................................... 1 3
Ready Reserve Fleet Tankships....................... 1 0
Liquefied Gas Tankships............................. 1 1
Small Passenger Vessels............................. 6 9
Sailing School Ships\2\............................. 0 3
Passenger Barges.................................... 1 4
Passenger Ships..................................... 5 5
Nautical School Ships............................... 1 3
All Other Inspected Vessels......................... 1 1
-------------------
Totals........................................ 29 50
------------------------------------------------------------------------
Notes:
\1\Ready Reserve Fleet Freight Ship and Ready Reserve Fleet Tankship are
not included as categories in the final rule.
\2\Sailing School Ships were included with Small Passenger Vessels in
the NPRM.
For instance, the Coast Guard initially proposed a single fee
subcategory for all small passenger vessels less than or equal to 54
feet in length. The annual inspection fee proposed for all vessels in
this category was $820. However, during the review of the proposed fees
for small passenger vessels, the Coast Guard determined that the
inspection data supported creating another subcategory based on length,
and recalculated the annual vessel inspection fees based on these new
subcategories. The Coast Guard also examined its inspection data for
DUKW vessels (ex-Army 2\1/2\ ton amphibian trucks), hydrojet boats,
swamp tour boats, and yacht club launches. Comments stated that due to
these vessels' simplified design, the time required to conduct an
inspection on these types of vessels was considerably less than the
time required for other small passenger vessels. However, MSIS
inspection data supported the creation of separate fee categories for
DUKW vessels and hydrojet boats, but did not [[Page 13558]] indicate a
significant difference in the mean inspection time for ``swamp tour
boats'' and yacht club launches when compared to other small passenger
vessels of the same length. Therefore the following new subcategories
were created for small passenger vessels (SPVs):
------------------------------------------------------------------------
Annual
New subcategories inspection
fee
------------------------------------------------------------------------
--DUKW vessels.............................................. $450
--Hydrojet boats............................................ 470
--SPVs length not greater than 30 feet...................... 545
--SPVs more than 30 feet but not more than 54 feet.......... 670
------------------------------------------------------------------------
Several comments stated that fees should be linked to some measure
of a vessel's ability to generate revenue, such as the number of
passengers a vessel can carry. Others stated that fees should take into
account a vessel's actual gross earnings for the year. For instance,
several comments asserted that the fees failed to take into account the
seasonal nature of many vessel operations, and that vessels operating
3-5 months a year should not be charged the same annual fees as vessels
which operate year-round.
The Coast Guard does not agree. The number of passengers for which
a vessel is certificated is not a direct measure of actual revenues, it
is a measure of potential revenues. The authorized total number of
passengers is not necessarily the same as the actual number of
passengers a vessel carries during any given voyage. Indeed, many small
passenger vessel owner comments indicated that their vessels frequently
sail with fewer than half the authorized number of passengers on board.
Nor is the number of months a vessel may operate during the year an
effective predictor of revenues for that year. For instance, revenue
generated by a vessel carrying one-half its passenger capacity for
twelve months would be comparable to a similar vessel carrying full
passenger capacity for six months.
Although the economic impact of an annual fee may be greater for a
vessel with a short operating season, than for a similar vessel with a
longer season, the amount of resources expended by the Coast Guard to
inspect these vessels is the same whether a vessel operates for one
month or for twelve. The Coast Guard based its annual vessel inspection
fees on the average cost to the Coast Guard of inspecting each category
of vessels.
Some comments expressed the opinion that Coast Guard travel costs
ought to reflect the proximity of the inspector to the job site,
instead of attributing a fixed amount of average travel time to each
vessel per year. Others pointed out that many small passenger vessel
owners and operators, especially those located in remote areas, often
coordinate inspections with other vessel owners and operators in an
effort to minimize Coast Guard travel time.
Coordinating inspections is a common practice within the small
passenger vessel industry. This practice most often applies to
inspection sites located several hours from the Coast Guard inspection
unit. However, Coast Guard MSIS data shows that travel time averages
just over two hours per inspection, regardless of the number of
inspections conducted during a particular inspection trip. It is not
uncommon for inspectors to travel three hours each way to get to an
inspection site. In other cases, one inspector may inspect three
vessels in the same day. The practice of doing multiple inspections
during a single inspection trip allows the Coast Guard to minimize its
travel costs; otherwise, average Coast Guard travel costs would be
greater. Thus, the Coast Guard considers it reasonable that it include
in the vessel owner's annual vessel inspection fee an average of about
two hours travel time per vessel per year.
Comments from various industry segments recommended that the Coast
Guard not impose any user fees until all the proposed user fee rules
have been published, so that the cumulative economic impact of these
fees on owners and operators could be properly evaluated.
The user fee rules under development by the Coast Guard may impact
some of the same segments of the regulated marine community. One
example is the small passenger vessel industry, where vessels are often
owned and operated by the same individual who may be subject to both
marine licensing fees (CGD 91-002) and inspection fees from this rule.
On December 18, 1991, the Coast Guard reopened the comment period for
the Marine Licensing NPRM to run concurrently with the comment period
for the Commercial Vessel Inspection NPRM. Establishing the concurrent
comment period did not provide any new information to the marine
licensing user fee rule, or to this rule concerning cumulative impact
of the fees. Since these two rules are the most likely to have affected
the same segments of the regulated community, and since the Coast Guard
did not receive data from the licensing rule comments during the
concurrent comment period that necessitated changes in this final rule,
the Coast Guard decided not to delay publication of this final rule
pending comments on remaining user fee proposals.
A number of comments expressed concern over the apparent
duplication of inspection services by Coast Guard, ABS, and other
parties for which fees are charged. One commercial shipping
representative suggested that when a classed vessel is surveyed by ABS
that the survey be accepted by the Coast Guard. One barge company
stated that barge owners will incur inspection charges for essentially
the same service from both Coast Guard and ABS, i.e., an inspection and
survey to ensure the structural integrity of the vessel.
The Coast Guard is aware that inspections or surveys done by other
agencies such as FCC, by classification societies like ABS, and by
marine surveyors are subject to fees. Although activities of the same
type done by different agencies may appear to be at least partially
duplicative, the activities have a different purpose. Other third party
inspections or surveys, such as those conducted by marine surveyors,
are also for a different purpose, usually to meet insurance company
requirements.
The Coast Guard agrees that cost savings could result if some
inspections or surveys done by one agency could be used by other
agencies or third parties for several purposes. Acceptance of third
party inspections or surveys as evidence of compliance with Coast Guard
regulations is an issue which is being reviewed by the Coast Guard as
part of its Maritime Regulatory Reform initiative, and could result in
changes to the Coast Guard's marine inspection program. However, such
program changes are beyond the scope of this rule.
A few comments suggested that the Coast Guard should consider
revising its vessel inspection intervals so that the various inspection
requirements such as hull inspection interval and mid-period inspection
or COI inspection interval coincide, thereby reducing the number of
required Coast Guard inspections. One commercial shipping
representative stated that presently, the rules call for drydocking
deep-draft vessels twice in five years with a maximum of three years
between drydockings. In addition, there are two inspections for
certificate renewal and three annual inspections. As it stands now,
some owners will schedule an inspection for certificate renewal at the
two year interval and then drydock the vessel 6 to 12 months later and
again request a new certificate. [[Page 13559]] The existing
certificate expiration schedule and the new drydock provisions do not
complement each other and cause both parties additional inspection time
and delays. He suggested that adopting a 2.5 year COI with a 15 month
reinspection schedule would rectify this situation.
Because the Coast Guard is currently unable to apportion its hull
inspection costs more precisely, it chose to compute the annual vessel
inspection fee based upon the longest hull inspection interval
applicable to each vessel category or subcategory. Although the Coast
Guard is reexamining this subject with a view to minimizing the
intervals to the extent allowed by law, this and other similar
suggestions to revise the Coast Guard inspection intervals would
involve program changes which are beyond the scope of this rule.
Some comments recommended deferring follow-on overseas inspections
until the next scheduled reinspection or inspection for certification.
Follow-on inspections can often be scheduled around or in conjunction
with a periodic inspection. Only in extreme cases is it necessary to
dispatch an inspector overseas solely for the purpose of conducting a
follow-on inspection. Certain deficiencies may impact a vessel's
overall safety and must be corrected prior to the next scheduled
periodic inspection. The OCMI may extend the compliance date for
certain deficiencies which do not jeopardize the safety of the vessel,
its passengers, or its crew. Other deficiencies can be cleared
administratively by the vessel's master or chief engineer submitting
written servicing reports or certifications. The cognizant OCMI
possesses the authority to determine whether a deficiency's compliance
timeframe can be extended or whether it can be cleared
administratively. If it requires a separate overseas trip, then another
overseas fee must be paid. The overseas inspection and examination fee
will apply to each periodic and follow-on inspection conducted
overseas, as well as to each foreign vessel examination conducted
overseas.
Some comments indicated that the overseas inspection or examination
fee would be excessive for inspections or examinations conducted in
locations near the continental U.S. These comments indicated that it
may take less time to travel to the inspection site outside the
continental U.S. than to travel to other inspection sites within the
continental U.S. For instance, one commenter indicated that on occasion
his firm, and at least one other U.S. shipping company, has used a
Canadian shipyard requiring approximately 35 miles of inspector travel
from the Marine Safety Office in Buffalo, New York, for required
inspections.
The Coast Guard agrees. The overseas inspection or examination fee
in the final rule does not apply to inspections or examinations
conducted in Canada, Mexico, or the British Virgin Islands. The
overwhelming majority of inspections or examinations conducted in these
countries involve only a short commute by either car, boat, or plane.
For example, it is not uncommon for Coast Guard inspectors to travel to
sites in Canada and Mexico by car or short plane trip, and sites in the
British Virgin Islands by short boat trip. Coast Guard data indicates
that it actually takes less time to travel to some of these sites than
it does to travel to a remote inspection site in the continental United
States. For this reason the Coast Guard will not charge the additional
overseas inspection or examination fee for these inspections or
examinations.
Another comment stated that it would be more equitable to owners
whose vessels operate overseas if the Coast Guard charged just one
overseas inspection fee per vessel per year instead of charging an
overseas inspection fee each time an overseas inspection is conducted.
Overseas inspections involve travel and delay time of approximately
40,000 hours annually. Much of this time is expended in direct support
of conducting periodic inspections; however, some of the time is
expended conducting follow-on inspections, such as clearing
deficiencies (i.e., CG-835s).
Several comments suggested that the Coast Guard should consider
expanding the OSV alternate reinspection program for mid-period
inspections to MODUs operating outside the U.S. for extended periods.
Currently, OSVs under 400 gross tons, operating outside the continental
U.S., have the option to participate in an alternate reinspection
program, under the regulations contained in 46 CFR 91.27-13. If
accepted into the alternate reinspection program, OSV owners perform an
alternate reinspection of their vessel, in lieu of having a Coast Guard
marine inspector perform the inspection, and then submit results to the
OCMI for review.
This rule establishes a lower annual vessel inspection fee for OSVs
participating in the alternate reinspection program than for those OSVs
which do not participate in the alternate reinspection program. This
lower fee reflects the fact that since a marine inspector is not needed
for the inspection, it takes less time for the Coast Guard simply to
review the results of the alternate reinspection. Although expansion of
the alternate reinspection program to include U.S. MODUs operating
overseas is beyond the scope of this rule, the Coast Guard will examine
this issue independently of this rule.
A few comments suggested that vessel owners should receive either
credit or a refund for ``unused certificate time'' to cover that
portion of a year during which a vessel may be laid up or otherwise
taken out of service.
If the vessel owner pays the annual vessel inspection fee, and the
vessel is subsequently laid up or taken out of service for part of the
year, the Coast Guard will not issue a refund for the portion of the
year for which the vessel was laid up or taken out of service. If a
vessel is laid up or out of service on its user fee anniversary date,
and the vessel is expected to remain laid up or out of service until
its next user fee anniversary date (twelve months later), the vessel
owner or operator will not be required to pay the annual vessel
inspection fee for that year. When the vessel is placed back in
service, however, the owner or operator will be required to pay the
full annual vessel inspection fee before the vessel is inspected.
Additionally, OSVs will occasionally surrender their COI in order
to operate as an oceanographic research vessel. Upon compliance with
the procedures set forth in 46 CFR 3.10, the OCMI issues a Letter of
Designation as an Oceanographic Research Vessel. Uninspected vessels
may also be issued a Letter of Designation. For the purposes of this
rule, vessels operating under a Letter of Designation as an
Oceanographic Research Vessel will not be charged an annual vessel
inspection fee. However, if the vessel returns to inspected service, it
must pay the annual vessel inspection fee for that year before any
inspection services are provided.
Several comments suggested Coast Guard marine inspectors should
conduct FCC radio inspections, thereby saving vessel owners the cost of
the FCC radio inspection fee.
When Coast Guard marine inspectors conduct inspections for COIs or
reinspections, they do not conduct the FCC radio inspection. They only
verify that a vessel has a valid Safety Radiotelephone Certificate
issued by the FCC and ensure that the vessel's radio equipment passes
an operational test. The Coast Guard and FCC have previously considered
this issue and determined it was not feasible to combine these
inspection activities. [[Page 13560]]
Several comments expressed the opinion that if an OSV were to
change its service to a freight vessel at any time during the course of
a given year, the vessel owner should not have to pay the higher annual
vessel inspection fee applicable to freight vessels. Another commenter
suggested that since many OSV crewboats and utility boats are inspected
under Subchapter T, these vessels should not have to pay an OSV fee
that is any higher than the fee for a corresponding small passenger
vessel.
Annual vessel inspection fees for vessels certificated for single
service will not be adjusted for the year in which a change in vessel
service occurs. The vessel's service at the time of its user fee
anniversary date will thus determine which annual vessel inspection fee
the owner must pay. Regardless of whether or not a crewboat or a
utility boat is inspected under Subchapter T or Subchapter I, the
vessel is still an OSV. Annual vessel inspection fees are based on the
COI, reinspection, and hull inspection intervals applicable to each
vessel category, and the average amount of time it takes to conduct
each of these inspections. Thus, since small passenger vessel COIs are
valid for three years and OSV COIs are valid for two years, an OSV
owner should expect to pay a higher annual vessel inspection fee in
comparison to a small passenger vessel of equivalent size.
A few comments asked which fee would apply on vessels operating in
more than one service under their COI. Vessels which are authorized to
operate in more than one service are referred to as ``dual-
certificated.'' In such instances, the vessel owner will pay the higher
annual vessel inspection fee of the two.
Several questions were raised regarding the examination of foreign
vessels and applicable fee payment procedures. For instance, how will
fees be collected, and what billing system will be in place?
As with U.S. vessels, foreign vessel fees must be paid before the
examination is conducted. The fee may be paid by either the vessel
owner, the vessel operator, or some other designated vessel
representative (e.g. the vessel's agent); however, the primary
responsibility for payment of the fees resides with the vessel owner.
Since it is not uncommon for a vessel to arrive in a U.S. port with an
expired TVE Letter or LOC, foreign vessel representatives will need to
plan accordingly. Payment must be received before the examination is
conducted.
The fees listed in Sec. 2.10-125 apply for foreign tank vessel
examinations required by the Coast Guard. For vessels receiving a LOC,
which is valid for two years, the $1,100 fee must be paid for each
initial (or biennial examination, as appropriate), and for the
examination conducted in the intervening years. For foreign tank
vessels receiving a TVE, which is valid for one year only, the $1,100
fee applies to each annual TVE letter examination. As with annual
vessel inspection fees, follow-up visits necessary for corrections of
deficiencies related to the above examinations are included in the fees
established for TVE and LOC examinations.
Foreign vessel examination fees are based on the cost of providing
required examination services, regardless of how many or how few port
calls are made during the course of a given twelve month period. If a
foreign tank vessel carrying oil in bulk has a TVE conducted one year
and does not make another U.S. port call until three years later, its
TVE letter will have expired and the $1,100 fee must be paid before
another TVE is conducted. If, on the other hand, a chemical tankship
has a LOC examination conducted one year and doesn't return to U.S.
waters until thirteen months later, its intervening annual examination
will be due and the $1,100 fee must be paid before the LOC endorsement
examination is conducted.
Comments Beyond the Scope of the Rule
The Coast Guard received many other suggestions for changing the
way the Coast Guard conducts its inspection program. These persons
believed these changes would result in more efficient use of Coast
Guard resources and would reduce the fees. For instance, several small
passenger vessel owners recommended that the Coast Guard accept
inspections by non-Coast Guard inspectors, such as insurance industry
inspectors; qualified members of the marine surveying community
belonging to a recognized professional organization; or qualified
marine surveyors certified by the Coast Guard. These comments asserted
that private sector companies could conduct vessel inspections in a
more cost-effective manner.
Also, a few comments indicated that it takes a significant amount
of time just to inspect lifejackets on large passenger vessels. They
suggested that this activity should be performed by an individual whose
services would cost less than a marine inspector, such as a Coast Guard
petty officer.
All these comments are beyond the scope of this rule, and the Coast
Guard will examine these issues independently of this rule.
Other Changes
In addition to changes discussed in the preceding sections, the
Coast Guard made other substantive changes to the proposed regulations.
Applications for Inspections
In the NPRM, the Coast Guard proposed in Sec. 2.01-1, Applications
for inspections, that application forms would be accompanied by
applicable fees, that evidence of payment would be endorsed on the COI,
and that payment of fees would be verified before the inspection was
scheduled. The Coast Guard has determined that this language is now
redundant or inconsistent with the requirements of subpart 2.10 and,
therefore, has been deleted from the final rule.
Definitions
Most vessel definitions are based on regulations or statutes. In
addition to a few minor revisions to certain proposed definitions which
are editorial in nature, the definition for ``Towing vessel'' has been
changed to ``Sea-going towing vessel.'' A definition for ``Submersible
vessel,'' the ``user fee anniversary date'' and the ``vessel
identification number,'' the latter two of which relate to the
collection process, have been added, and the definition for
Oceanographic research vessel has been corrected to conform with the
definition in 46 U.S.C. 2101.
Also, definitions of the following have been revised to conform to
revisions made by the Passenger Vessel Safety Act of 1993:
1. Offshore supply vessel
2. Passenger vessel
3. Sailing school vessel
4. Small passenger vessel
The revised definitions in the final rule do not change the category in
which a vessel would have been placed by the NPRM. However, the
Passenger Vessel Safety Act of 1993 has resulted in certain previously
uninspected charter vessels now coming under Coast Guard inspection
requirements. When the NPRM was published, these vessels were not
inspected by the Coast Guard and, therefore, were not subject to
inspection user fees. To comport with the statutory change, these
vessels (most of which are now included in the small passenger vessel
category) are subject to Coast Guard inspection and to the
corresponding fees established in this rule.
The language in Table 2.10-101 has been revised so that the
definition for ``all other inspected vessels'' is no longer needed and
has been deleted from the final rule. [[Page 13561]]
Public Vessels of the United States and Other Vessels Owned or Operated
by Federal Agencies
Under 46 U.S.C. 2109, most public vessels of the United States are
excluded from the vessel inspection requirements of Subtitle II of
Title 46 United States Code. The provisions of Subtitle II apply only
to those public vessels of the United States owned or operated by the
Department of Transportation, except for Saint Lawrence Seaway
Development and Coast Guard vessels. That means the Maritime
Administration is the only Federal agency subject to user fees for
subtitle II services provided to their public vessels. Maritime
Administration public vessels include vessels of the Ready Reserve
Fleet and training vessels operated by the U.S. Merchant Marine Academy
and State maritime academies.
Under specific Memorandums of Understanding, the Coast Guard does
inspect public vessels of other agencies such as the Military Sealift
Command. However, these inspections are not required by Subtitle II,
and the cost of providing these services is not recoverable through
user fees; nor can these costs be reallocated to other vessels. In
addition, Federal agencies may own or operate vessels which are not
``public vessels'' because they are engaged in commerce, or are
required for some other reason to be inspected under Subtitle II. The
Coast Guard could charge inspection fees for these vessels; however,
there would be no benefit to charging fees to these agencies for
required inspections. The user fee provisions of the Act are intended
to help reduce the Federal budget deficit and the fees collected by the
Coast Guard are deposited into the general fund of the U.S. Treasury.
Payment of the fees by a Federal agency would result in a payment from
a Federal agency to the U.S. Treasury; it would not increase the
revenues to the U.S. Treasury. Thus, the Coast Guard has decided to
waive collection of annual vessel inspection fees which would be paid
directly using Federal appropriated funds.
Overtime Compensation for Civilian Inspectors
Overtime compensation for civilian inspectors is authorized by 46
U.S.C. 2111 and is currently located in 46 CFR 2.01-60 of the
regulations. The Coast Guard proposed to update Sec. 2.01-60 and
include it with other inspection fees in new Subpart 2.10.
However, the Coast Guard decided not to move this section on
overtime compensation regulations into the user fee regulations.
Although the Coast Guard's intent was to locate requirements for all
inspection fees together, the Coast Guard decided that this action
could cause confusion. The overtime compensation fees are required by a
different statute and are not part of the user fees established in this
rule. Also, since the Coast Guard is authorized to directly recover
these amounts to pay for civilian overtime, different accounting
procedures are in place.
Although the Coast Guard proposed to update the existing
regulations in Sec. 2.01-60, the Coast Guard has decided against doing
so at this time. Instead, these regulations will be revised in a future
rulemaking. Therefore, the regulations in Sec. 2.01-60 have not been
changed in this rulemaking and apply to inspections where civilian
inspector overtime is involved.
Excursion Permit Fee
The NPRM proposed to charge a fee for excursion permits. Vessel
operators desiring to carry passengers in excess of the number listed
on the vessel's COI must apply to the cognizant OCMI for issuance of an
excursion permit. Excursion permits are issued by the OCMI only after
the vessel has been inspected to ensure that the proposed excursion
would meet minimum safety requirements. The MSIS data indicates that
only a limited number of these permits are issued each year (79 in
1989, 56 in 1990, and 85 in 1991), despite verbal comments during the
public hearings which suggested that a substantially greater number of
such permits are issued annually. Because the MSIS data on these permit
inspections is incomplete, proposed section 2.10-106 has been deleted
from this rule. The Coast Guard may, however, propose an excursion
permit fee when more data becomes available in the future.
Collection Procedures
Since the NPRM was published, a collection system has been
established for the payment of annual vessel inspection fees, foreign
vessel examination fees, and overseas inspection fees. As a result,
specific collection procedures have been added to this rule.
This rule specifies that payments may be made by check or money
order only. Wire transfers and credit cards are not available payment
options at this time. If desired, vessel owners and operators may pay
inspection or examination fees for several different vessels in the
same transaction, provided that the vessel name and vessel
identification number of each vessel for which a payment is being made
accompanies the payment. All inspection and examination fees must be
paid before the inspection or examination service is provided.
Regarding payment of the annual vessel inspection fee, proposed
Sec. 2.10-101(b) indicated that a U.S. vessel owner would pay the
annual vessel inspection fee on the anniversary date of the COI. This
requirement has been changed. The vessel owner must pay the annual
inspection fee on or before the vessel's user fee anniversary date, as
defined in Sec. 2.10-25. Approximately six weeks prior to this date,
the Coast Guard will send a user fee notification letter to the owner
of each U.S. commercial vessel inspected by the Coast Guard. The
notification letter will include the vessel's name, its official
number, the vessel's user fee anniversary date (payment due date), the
amount due, and the address to which the payment must be sent to ensure
that the fee is credited to the proper vessel.
All user fee payments will be processed by NationsBank in Atlanta,
Georgia. Inspection and examination fee payments will not be accepted
at Coast Guard Marine Safety or Marine Inspection Offices. The only
exception to this policy involves payment of overseas inspection and
examination fees, which must accompany the request for an overseas
inspection or examination. Under the computerized payment tracking
system established by the Coast Guard, all payment histories should be
updated within one business day following receipt of the payment by
NationsBank. An 800 number has also been established to handle start-up
user fee inquiries and to provide payment information. The number, 1-
800-941-3337 will remain in effect during initial implementation of the
rule.
Penalties for Failure To Pay
Section 2110 of Title 46 U.S.C. authorizes a civil penalty of up to
$5,000 for failure to pay fees and authorizes the Secretary of the
Treasury to withhold customs clearance for vessels which fail to pay
fees, when so requested by the Secretary of Transportation. Inspection
and examination services will not be provided unless the Coast Guard
can verify that the appropriate fees have been paid. The Coast Guard
will treat checks returned due to insufficient funds, account closed,
or any other such reason, as a delinquent payment and will seek to
recover appropriate collection and enforcement costs from the
appropriate party as permitted by law. [[Page 13562]]
Renumbered Sections
This rule renumbers and reorganizes many of the sections in the
proposed regulations (see Figure 2).
Figure 2.--Changes to Section Numbers in the Regulation
------------------------------------------------------------------------
NPRM Final Rule
------------------------------------------------------------------------
(None).................................................. Sec. 2.10-1
(None).................................................. Sec. 2.10-5
(None).................................................. Sec. 2.10-10
Sec. 2.10-11............................................ (None)
(None).................................................. Sec. 2.10-20
Sec. 2.10-1............................................. Sec. 2.10-25
Sec. 2.10-101........................................... Sec. 2.10-101
Sec. 2.10-103........................................... Sec. 2.10-105
Sec. 2.10-105........................................... Sec. 2.10-115
Sec. 2.10-106........................................... (None)
Sec. 2.10-107........................................... Sec. 2.10-120
Sec. 2.10-109........................................... Sec. 2.10-125
Sec. 2.10-110........................................... Sec. 2.10-130
Sec. 2.10-13............................................ Sec. 2.10-135
------------------------------------------------------------------------
Regulatory Evaluation
This rule is a significant regulatory action under section 3(f) of
Executive Order 12866 but does not require an assessment of potential
costs and benefits under section 6(a)(3) of that order. It has been
reviewed by the Office of Management and Budget under that order. It is
significant under the regulatory policies and procedures of the
Department of Transportation (DOT) (44 FR 11040; February 26, 1979).
Fees are mandated by the Omnibus Budget Reconciliation Act of 1990,
which amended 46 U.S.C. 2110 to remove long-standing prohibitions
against charging fees for Coast Guard commercial vessel inspection and
examination services.
The Act required the Coast Guard to establish fees for services
provided under Subtitle II of Title 46 United States Code. These
services include: Licensing and documentation of merchant marine
personnel; commercial vessel documentation; commercial vessel
inspections and examinations; equipment approval and factory
inspections; and vessel plan review and new vessel construction.
Whereas the total cost of these user fees is expected to be less than
$35 million, this rulemaking deals only with vessel inspection user
fees, which are estimated at $17.2 million annually. Projected receipts
are well below the $100 million threshold which would make this subject
to the provisions of section 6(a)(3) of Executive Order 12866, however
the Coast Guard has prepared a final Regulatory Evaluation. The
Regulatory Evaluation is available in the docket for inspection or
copying where indicated under ADDRESSES. It concluded that the
financial impact on the public, including most of the individuals
subject to the user fees in this rule, is expected to be minimal.
Small Entities
Under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), the
Coast Guard must consider whether this rule will have a significant
economic impact on a substantial number of small entities. ``Small
entities'' include independently owned and operated small businesses
that are not dominant in their field and that otherwise qualify as
``small business concerns'' under section 3 of the Small Business Act
(15 U.S.C. 632).
Based upon a careful review of the public comments and public
testimony, the Coast Guard developed a fee structure which is intended
to help reduce the impact on owners and operators of small business
entities. Based on the establishment of additional vessel
subcategories, which resulted in lower fees in many instances, the
Coast Guard certifies under 5 U.S.C. 605(b) that these fees are not
expected to have a significant economic impact on a substantial number
of small entities.
Collection of Information
This rule contains additional collection of information
requirements under the Paperwork Reduction Act (44 U.S.C. 3501 et
seq.). Existing requirements for applications for inspection are
covered under OMB control number 2115-0007. Additional requirements
under this rule involve the collection of funds, and of such
information as is required to calculate the annual vessel inspection
fee due and to ensure proper collection of fees. This information
includes the name of the vessel, the vessel identification number, and
other identifying information which will permit follow-up action if an
incorrect fee amount is submitted or a payment instrument fails to
clear NationsBank.
A new requirement is established for those owners choosing to pay
annual vessel inspection fees for future years in advance. The owner
must, in a written request to the Coast Guard, indicate the vessel
identification number and the number of years for which the owner
desires to prepay the annual vessel inspection fee. If a vessel is
permanently removed from Coast Guard certification, the owner may seek
a refund of the remaining prepayment amount by submitting a written
request to the Coast Guard.
Another new requirement is established for organizations seeking an
exemption from the annual vessel inspection fee for vessels owned or
operated by their organization. In order to be eligible for an
exemption, organizations must submit a written request to the Coast
Guard and provide evidence that their organization is charitable in
nature, not for profit, and youth-oriented, and that each vessel is
owned or operated by the organization and is used exclusively for
training youths in boating, seamanship, and navigation skills.
Finally, a new requirement is established for Federal agencies
owning or operating inspected vessels for which fees would be paid
directly using Federal appropriated funds. The Coast Guard will waive
collection of the annual vessel inspection fee for these vessels.
However, by October 1 of each year, agencies owning or operating
eligible vessels must provide the Coast Guard with the name and the
vessel identification number of each vessel to which the waiver will
apply.
The additional collection of information burden placed on the
public by this rule is expected to be minimal. These new collection of
information requirements were approved by OMB and are covered under OMB
control number 2115-0617.
Federalism
The Coast Guard has analyzed this rule in accordance with the
principles and criteria contained in Executive Order 12612 and has
determined that the final rule does not have sufficient federalism
implications to warrant the preparation of a Federalism Assessment.
This final rule establishes user fees for vessel inspection and
examination services. This rule will result in the payment of fees by
States, State agencies, and local governments for inspection services
provided to vessels owned by such entities. The impact of these fees on
these entities is expected to be minimal. While some States and local
governments may be required to pay fees, the fees will be solely due to
the fact that the entity owns or operates the vessel, not due to a
mandate imposed on them as a government entity.
Environment
The Coast Guard has considered the environmental impact of this
rule and has concluded that, under section 2.B.2 of Commandant
Instruction M16475.1B, this rule is categorically excluded from further
environmental documentation. Section 2.B.2 of that instruction excludes
``administrative actions and procedural regulations and policies which
clearly do not have any environmental impacts.'' A Categorical
[[Page 13563]] Exclusion Determination is available in the docket for
inspection or copying.
List of Subjects
33 CFR Part 143
Continental shelf, Fees, Marine safety, Occupational safety and
health, Vessels.
46 CFR Part 2
Fees, Marine safety, Reporting and recordkeeping requirements,
Vessels.
For the reasons set out in the preamble, the Coast Guard amends
Title 33, Chapter I, Subchapter N, Part 143 and Title 46, Chapter I,
Subchapter A, Part 2 as follows:
Title 33--[Amended]
SUBCHAPTER N--OUTER CONTINENTAL SHELF ACTIVITIES
PART 143--DESIGN AND EQUIPMENT
1. The authority citation for Part 143 is revised to read as
follows:
Authority: 43 U.S.C. 1333(d)(1), 1348(c), 1356; 49 CFR 1.46;
section 143.210 is also issued under 14 U.S.C. 664 and 31 U.S.C.
9701.
2. Section 143.210 is amended by adding a new paragraph (c) to read
as follows:
Sec. 143.210 Letter of Compliance.
* * * * *
(c) The owner or operator of a foreign mobile offshore drilling
unit requiring a letter of compliance examination must pay the fee
prescribed in 46 CFR 2.10-130.
Title 46--[Amended]
SUBCHAPTER A--PROCEDURES APPLICABLE TO THE PUBLIC
PART 2--VESSEL INSPECTIONS
3. The authority citation for Part 2 is revised to read as follows:
Authority: 14 U.S.C. 664; 31 U.S.C. 9701; 33 U.S.C. 1903; 43
U.S.C. 1333, 1356; 46 U.S.C. 2110, 3306, 3703, 5115, 8105; E.O.
12234, 45 FR 58801, 3 CFR 1980 Comp., p. 277; 49 CFR 1.46; Subpart
2.45 also issued under the authority of Act Dec. 27, 1950, Ch. 1155,
secs 1, 2, 64 Stat 1120 (see 46 U.S.C. App. note prec. 1).
PART 2--VESSEL INSPECTIONS
4. In section 2.01-1 paragraph (b) is revised to read as follows:
Sec. 2.01-1 Applications for inspections.
(a) * * *
(b) To whom submitted. The completed form must be submitted to the
Officer in Charge, Marine Inspection, in the Marine Inspection Zone
within which the inspection is to be conducted.
* * * * *
5. In section 2.01-6 the section heading is revised, paragraph
(a)(2) is redesignated as paragraph (a)(2)(i) and a new paragraph
(a)(2)(ii) is added to read as follows:
Sec. 2.01-6 Certificates issued to foreign vessels.
(a) * * *
(2) (i) * * *
(ii) Letter of Compliance--issued to Foreign Mobile Offshore
Drilling Units engaged in Outer Continental Shelf activities under 33
CFR 143.210.
* * * * *
6. A new Subpart 2.10 is added to read as follows:
Subpart 2.10--Fees
Sec.
2.10-1 Applicability.
2.10-5 Exemptions.
2.10-10 Waivers.
2.10-20 General requirements.
2.10-25 Definitions.
2.10-101 Annual vessel inspection fee.
2.10-105 Prepayment of annual vessel inspection fees.
2.10-115 Changes in vessel service.
2.10-120 Overseas inspection and examination fees.
2.10-125 Fees for examination of foreign tankships.
2.10-130 Fees for examination of foreign mobile offshore drilling
units.
2.10-135 Penalties.
Subpart 2.10--Fees
Sec. 2.10-1 Applicability.
(a) This subpart establishes vessel inspection fees for all vessels
required to have a Certificate of Inspection and vessel examination
fees for all foreign vessels required to have either a Letter of
Compliance or a Tank Vessel Examination Letter.
(b) The fees in this subpart do not apply to:
(1) Vessels being inspected for the initial issuance of a
Certificate of Inspection;
(2) Foreign passenger vessels;
(3) Training vessels operated by State maritime academies; and
(4) Public vessels of the United States, except for Maritime
Administration vessels.
Sec. 2.10-5 Exemptions.
(a) Vessels owned or operated by an organization which is
charitable in nature, not for profit, and youth-oriented may be
exempted from the fees required by this subpart provided that the
vessels are used exclusively for training youths in boating,
seamanship, and navigation skills.
(b) Vessel owners or operators must submit a written request for
exemption to the Officer in Charge, Marine Inspection of the Marine
Inspection Zone in which the vessel normally operates. The exemption
request must provide the vessel name, the vessel identification number,
and evidence that the organization and the vessel meet the criteria set
forth in paragraph (a) of this section.
Sec. 2.10-10 Waivers.
The Commandant (G-MP) will waive collection of vessel inspection
fees in this subpart for a Federally-owned or operated vessel if the
fee would be directly paid by an agency acting as the vessel owner
using Federal appropriated funds. By October 1 of each year, Federal
agencies shall provide Commandant (G-MP) with a list of the names and
vessel identification numbers of vessels for which a fee waiver is
requested.
Sec. 2.10-20 General requirements.
(a) Unless otherwise specified, vessel owners must pay the fees
required by this subpart before inspection or examination services are
provided.
(b) Fees required by this subpart must be paid in U.S. currency by
check or money order, drawn on a U.S. bank, and made payable to the
U.S. Treasury.
(c) All payments must be accompanied by the vessel name and its
vessel identification number.
(d) Unless otherwise specified, fees required by this subpart must
be mailed to the following address: USCG Inspection Fees, PO Box
105663, Atlanta, GA 30348-5663.
(e) For purposes of this subpart, the address for Commandant (G-MP)
is: Commandant (G-MP), United States Coast Guard, 2100 Second Street
S.W., Washington, DC 20593-0001.
(f) Information concerning a vessel's user fee anniversary date may
be obtained from any Coast Guard Marine Safety or Marine Inspection
Office.
Sec. 2.10-25 Definitions.
The following definitions apply to this subpart:
Drill ship MODU means a mobile offshore drilling unit with a ship
shape displacement hull intended for operation in the floating
condition.
Freight barge means a non-self-propelled vessel carrying freight
for hire.
Freight ship means a self-propelled freight vessel.
Freight vessel means a motor vessel of more than 15 gross tons that
carries freight for hire, except an oceanographic research vessel or an
offshore supply vessel. [[Page 13564]]
Industrial vessel means a vessel which, by reason of its special
outfit, purpose, design, or function engages in certain industrial
ventures. For the purposes of this subpart, this classification
includes such vessels as dredges, cable layers, derrick barges, and
construction and wrecking barges, but does not include vessels which
carry passengers or freight for hire, OSVs, oceanographic research
vessels, or vessels engaged in the fisheries.
Liquefied gas tankship means a self-propelled vessel equipped with
cargo tanks primarily designed to carry liquefied or compressed gases
in bulk.
Mobile offshore drilling unit (MODU) means a vessel capable of
engaging in drilling operations for the exploration or exploitation of
subsea resources that is: seagoing and 300 or more gross tons and self-
propelled by machinery; Seagoing and 100 or more gross tons and non-
self-propelled; or more than 65 feet in length and propelled by steam.
Nautical school vessel means a vessel operated by or in connection
with a nautical school or an educational institution under section 13
of the Coast Guard Authorization Act of 1986, Public Law 99-640.
Oceanographic research vessel means a vessel that is being employed
only in instruction in oceanography or limnology, or both, or only in
oceanographic or limnological research, including those studies about
the sea such as seismic, gravity meter, and magnetic exploration and
other marine geophysical or geological surveys, atmospheric research,
and biological research.
Offshore supply vessel means a motor vessel that is of at least 15
gross tons and less than 500 gross tons, and that regularly carries
goods, supplies, individuals in addition to the crew, and equipment in
support of exploration, exploitation, or production of offshore mineral
or energy resources.
Passenger barge means a non-self-propelled passenger vessel,
including a prison barge or a barge which carries occupied recreational
vehicles.
Passenger ship means a self-propelled passenger vessel.
Passenger vessel means a vessel of at least 100 gross tons:
(1) Carrying more than 12 passengers, including at least one
passenger for hire;
(2) That is chartered and carrying more than 12 passengers; or
(3) That is a submersible vessel carrying at least one passenger
for hire.
Sailing school vessel means a vessel of less than 500 gross tons,
carrying more than 6 individuals who are sailing school instructors or
sailing school students, principally equipped for propulsion by sail
even if the vessel has an auxiliary means of propulsion, and owned or
demise chartered and operated by a qualified organization during such
times as the vessel is operated exclusively for the purposes of sailing
instruction.
Sea-going towing vessel means a sea-going commercial vessel engaged
in or intending to engage in the service of pulling, pushing or hauling
alongside, or any combination of pulling, pushing or hauling alongside.
Self-elevating MODU means a mobile offshore drilling unit with
movable legs capable of raising its hull above the surface of the sea.
Semi-submersible MODU means a mobile offshore drilling unit with
the main deck connected to an underwater hull by columns or caissons,
that is intended for drilling operations in the floating condition.
Small passenger vessel means a vessel of less than 100 gross tons:
(1) Carrying more than 6 passengers, including at least one
passenger for hire;
(2) That is chartered with the crew provided or specified by the
owner or the owner's representative and carrying more than 6
passengers;
(3) That is chartered with no crew provided or specified by the
owner or the owner's representative and carrying more than 12
passengers; or
(4) That is a submersible vessel carrying at least one passenger
for hire.
Submersible MODU means a mobile offshore drilling unit intended for
drilling operations in the bottom-bearing condition, having the main
deck connected to an underwater hull or pontoons by way of columns or
caissons.
Submersible vessel means a vessel that is capable of operating
below the surface of the water.
Tank barge means any tank vessel not equipped with means of
propulsion.
Tank vessel means a vessel that is constructed or adapted to carry,
or that carries, oil or hazardous material in bulk as cargo or cargo
residue.
Tankship means any tank vessel propelled by power or sail,
including an integrated tug and barge designed to operate together only
in the pushing mode.
User fee anniversary date means the date on which a vessel's annual
inspection fee is due each year. Once established by the Coast Guard, a
vessel's user fee anniversary date remains fixed for as long as the
vessel remains in service.
Vessel identification number (VIN) means a U.S. official number, a
number assigned by a State, a number assigned by the Coast Guard, or a
Lloyd's Register of Shipping identification number issued to a U.S. or
foreign commercial vessel for purposes of vessel identification. For
U.S. vessels, VIN means the number listed on the Certificate of
Inspection. For foreign vessels, VIN means either the Lloyd's Register
of Shipping identification number or the number assigned by the Coast
Guard.
Sec. 2.10-101 Annual vessel inspection fee.
(a)(1) Unless otherwise provided by this subpart, each vessel
required to have a Certificate of Inspection is subject to the annual
vessel inspection fee listed in Table 2.10-101 for its vessel category.
(2) A vessel certificated for more than one service must pay only
the higher of the two applicable fees in Table 2.10-101 of this
section.
(b) The vessel owner or operator must pay the annual vessel
inspection fee each year on or before the vessel's user fee anniversary
date, unless the fee has been prepaid under Sec. 2.10-103 of this
subpart.
(c) Payment of the annual vessel inspection fee entitles a vessel
to all inspection services related to compliance with its Certificate
of Inspection, including but not limited to the inspection for renewal
of the Certificate of Inspection, reinspections (midperiod
inspections), hull (drydock) inspections, deficiency inspections,
damage surveys, repair and modification inspections, change in vessel
service inspections, permit to proceed inspections, drydock extension
inspections, and all inspections required for the issuance of
international certificates.
(d) Entitlement to inspection services for the current year remains
with the vessel if it is sold. The entitlement to inspection services
may not be transferred to any other vessel.
[[Page 13565]]
Table 2.10-101.--Annual Vessel Inspection Fees for U.S. and Foreign
Vessels Requiring a Certificate of Inspection
Any inspected vessel not listed in this table.............. $1,030
Freight Barges:
Length not greater than 150 feet....................... 495
More than 150 feet but not more than 300 feet.......... 610
More than 300 feet..................................... 955
Freight Ships:
Length not greater than 100 feet....................... 1,425
More than 100 feet but no more than 300 feet........... 1,870
More than 300 feet..................................... 5,410
Industrial Vessels:
Length not greater than 200 feet....................... 1,435
More than 200 feet..................................... 2,550
Mobile Offshore Drilling Units (MODUs):
Drill ship MODUs....................................... 6,710
Submersible MODUs...................................... 4,695
Self-elevating MODUs................................... 4,695
Semi-submersible MODUs................................. 8,050
Nautical School Vessels:
Length not greater than 100 feet....................... 835
More than 100 feet but not more than 200 feet.......... 1,450
More than 200 feet..................................... 7,205
Oceanographic Research Vessels:
Length not greater than 170 feet....................... 840
More than 170 feet but not more than 240 feet.......... 1,980
More than 240 feet..................................... 3,610
Offshore Supply Vessels:
Length not greater than 140 feet....................... 1,135
More than 140 feet..................................... 1,470
Offshore Supply Vessels: Alternate Reinspection Program*:
Length not greater than 140 feet....................... 940
More than 140 feet..................................... 1,260
Passenger Barges:
Less than 100 gross tons and:
Certified for fewer than 150 passengers............ 825
Certified for 150 or more passengers............... 1,110
100 gross tons or more and:
Certified for fewer than 150 passengers............ 2,215
Certified for 150 or more passengers............... 2,525
Passenger Ships:
Length not greater than 250 feet:
Certified for fewer than 150 passengers............ 3,600
Certified for 150 or more passengers............... 4,050
More than 250 feet but not more than 350 feet.......... 5,330
More than 350 feet but not more than 450 feet.......... 6,835
More than 450 feet..................................... 14,650
Sailing School Vessels:
Length not greater than 30 feet........................ 530
More than 30 feet but not more than 65 feet............ 560
More than 65 feet...................................... 980
Sea-going Towing Vessels................................... 2,915
Small Passenger Vessels:
DUKW vessels........................................... 450
Hydrojet boats......................................... 470
All other small passenger vessels:
Length not greater than 30 feet.................... 545
More than 30 feet but not more than 54 feet........ 670
More than 54 feet but not more than 65 feet........ 750
More than 65 feet but not more than 130 feet....... 975
More than 130 feet but not more than 160 feet:.....
Certified for fewer than 150 passengers........ 1,215
Certified for 150 or more passengers........... 2,585
More than 160 feet................................. 2,585
Tank Barges................................................ 500
Tankships:
Length not greater than 100 feet....................... 1,295
More than 100 feet but not more than 300 feet.......... 2,310
More than 300 feet..................................... 5,805
Liquefied Gas Tankships.................................... 12,120
*Note: Eligibility for the reduced annual vessel inspection fee for
Offshore Supply Vessels is contingent upon the vessel's continued
acceptance in the alternative reinspection program by the cognizant
Officer in Charge, Marine Inspection.
[[Page 13566]]
Sec. 2.10-105 Prepayment of annual vessel inspection fees.
(a) Vessel owners may prepay the annual vessel inspection fee for
any period of not less than three years, and not more than the design
life or remaining expected service life of the vessel.
(b) To prepay the annual vessel inspection fee for a period of
three or more years, the owner must submit a written request to
Commandant (G-MP) specifying the vessel identification number and the
period for which prepayment is to be made.
(c) The total of the annual fees for the requested prepayment
period will be discounted to its net present value using the following
formula:
[GRAPHIC][TIFF OMITTED]TR13MR95.000
Where:
PV is the Present Value of the series of annual user fees to be prepaid
(the net amount to be prepaid)
RO is the published user fee of the vessel
i is the interest rate for 10-year Treasury notes at the time of
prepayment calculation
is the rate of inflation (based on projected military
personnel costs at the time of prepayment calculation)
n is the total number of years to be prepaid
t is the number of years after prepayment of the fee, for each annual
increment (t=0, 1, 2, 3 ... n)
(d) When the annual vessel inspection fee has been prepaid, the
entitlement to inspection services for the prepayment period attaches
to the vessel and remains with the vessel if it is sold. The
entitlement to inspection services may not be transferred to any other
vessel.
(e) If a vessel is removed from Coast Guard certification and the
vessel owner surrenders the vessel's Certificate of Inspection, the
owner may request a refund of the remaining prepayment amount. The
annual vessel inspection fee will not be refunded for the year in which
the Certificate of Inspection is surrendered. The request for refund
must be submitted to the Officer in Charge, Marine Inspection to whom
the Certificate of Inspection is surrendered.
Sec. 2.10-115 Changes in vessel service.
(a) If a vessel certificated for a single service changes service,
the annual vessel inspection fee is not adjusted during the year in
which a change in service occurs. The annual vessel inspection fee for
the new vessel category is payable on the vessel's user fee anniversary
date immediately following the date of the change in service.
(b) If a change in service occurs and the annual vessel inspection
fee has been prepaid, Commandant (G-MP) will recalculate the prepayment
amount based on the new vessel category and advise the owner of
available prepayment options.
Sec. 2.10-120 Overseas inspection and examination fees.
(a) In addition to any other fee required by this subpart, an
overseas inspection and examination fee of $4,585 must be paid for each
vessel inspection and examination conducted outside the United States
and its territories. This fee does not apply to vessel inspections and
examinations conducted in Canada, Mexico, or the British Virgin
Islands.
(b) The overseas inspection and examination fee for each vessel
must accompany each request to the cognizant Officer in Charge, Marine
Inspection for an overseas inspection or examination.
Sec. 2.10-125 Fees for examination of foreign tankships.
Each foreign tankship of a country party to the International
Convention for the Safety of Life at Sea, 1974 as amended, must pay:
(a) For examination for the issuance of a Letter of Compliance
under Sec. 2.01-6(a)(2)(i) of this part, or examination for the annual
endorsement to a Letter of Compliance, a fee of $1,100.
(b) For examination for the issuance of a Tank Vessel Examination
Letter under Sec. 2.01-6(a)(3) of this part, a fee of $1,100.
Sec. 2.10-130 Fees for examination of foreign mobile offshore drilling
units.
Each foreign mobile offshore drilling unit must pay:
(a) For examination for the issuance of a Letter of Compliance
indicating compliance with the design and equipment standards of either
the documenting nation or the International Maritime Organization Code
for Construction and Equipment of Mobile Offshore Drilling Units, a fee
of $1,830.
(b) For examination for the issuance of a Letter of Compliance
indicating compliance with the design and equipment standards of 46 CFR
part 108, the inspection fee listed in Table 2.10-101 of this subpart
for the same type of mobile offshore drilling unit.
Sec. 2.10-135 Penalties.
(a) A vessel owner or operator who fails to pay a fee or charge
established under this subpart is liable to the United States
Government for a civil penalty of not more than $5,000 for each
violation.
(b) In addition to the fees established in this subpart, the Coast
Guard may recover collection and enforcement costs associated with
delinquent payments of, or failure to pay, a fee. Coast Guard
inspection and examination services may also be withheld pending
payment of outstanding fees owed to the Coast Guard for inspection and
examination services provided.
(c) Each District Commander or Officer in Charge Marine Inspection
may request the Secretary of the Treasury, or the authorized
representative thereof, to withhold or revoke the clearance required by
46 U.S.C. app. 91 of a vessel for which a fee or charge established
under this part has not been paid or until a bond is posted for the
payment.
Dated: March 2, 1995.
A.E. Henn,
Vice Admiral, U.S. Coast Guard Acting Commandant.
[FR Doc. 95-6034 Filed 3-10-95; 8:45 am]
BILLING CODE 4910-14-P