[Federal Register Volume 61, Number 171 (Tuesday, September 3, 1996)]
[Proposed Rules]
[Pages 46407-46410]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-22398]


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PANAMA CANAL COMMISSION

35 CFR Parts 133 and 135

RIN 3207-AA38


Tolls for Use of Canal; Rules for Measurement of Vessels

AGENCY: Panama Canal Commission.

ACTION: Notice of proposed rulemaking; request for comments; notice of 
hearing.

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SUMMARY: The Panama Canal Commission (PCC) proposes increasing the 
general toll rates for the Canal and applying certain rules of 
measurement for on-deck container capacity.
    Current toll rates will not produce revenues sufficient to cover 
costs of operations and maintenance and PCC's capital program for plant 
replacement, expansion and modernization. For FYs 1996-1998 alone, the 
toll deficiencies projected are $2.2, $34.5 and $69.7 million, 
respectively. To address this, the PCC here proposes a two-phase toll-
rate increase--8.2 percent in FY 1997 and 7.5 percent in FY 1998--
coupled with an amendment to apply rules of measurement to on-deck 
container capacity as well as the volume of the vessel itself. If for 
any reason rules of measurement are not applied as proposed here, the 
general toll-rate increase will be adjusted to 8.7 and 7.9 percent, 
respectively.
    The proposed increases comply with the statutory requirement that 
tolls be set at rates that produce revenues sufficient to cover Canal 
costs of operation and maintenance, including capital for plant 
replacement, expansion and improvements, and working capital.
    PCC anticipates that, in FYs 1996-1998 alone, it will experience, 
in the aggregate, a significant deficit resulting from increased 
traffic demands on capacity and the resultant capital program. To meet 
this challenge, PCC's Board of Directors approved management's 
recommendation to increase and accelerate the capital program to ensure 
a Canal operating capacity that meets future traffic demands and an 
acceptable long-term quality of transit service. More specifically, the 
PCC's capital program for FYs 1996-1998 totals $248 million; an 
additional $228 million is programmed for FYs 1999-2000. This capital 
program will augment and advance the implementation of many 
modernization and improvement programs in response to projected 
customer requirements.
    The maximum general toll rate increases that could result from this 
proposal are 8.7 percent, effective January 1, 1997, and 7.9 percent,

[[Page 46408]]

effective January 1, 1998. However, if Canal measurement rules are 
adopted so as to apply to on-deck container capacity, the general toll 
rate increases will be 8.2 percent and 7.5 percent, respectively.
    In 1994, PCC completely revised the Rules for Measurement of 
Vessels for the Canal in 35 CFR Part 135. This change simplified PCC's 
measurement procedures and brought measurement rules at the Canal in 
line with the worldwide standard of tonnage measurement. These new 
rules are referred to collectively as PC/UMS.
    This proposal will allow PCC to charge its customers more equitably 
for revenue producing capacity. Specifically, the adjustments proposed 
here include in the PC/UMS Net Tonnage a portion of the volume of the 
maximum capacity of containers carried on or above the upper deck 
(VMC). The proposed rule authorizes PCC to determine which ships 
qualify for the assessment and to calculate their VMC. The VMC 
multiplied by an appropriate factor, described below, produces the 
portion to be included in the PC/UMS Net Tonnage.
    This notice also announces the availability from PCC of an analysis 
showing the basis and justification for the proposed changes, solicits 
written data, views, or arguments from interested parties, and sets the 
time and place for two public hearings, one in the United States and 
one in Panama.

DATES: Written comments and requests to present oral testimony must be 
received on or before September 25, 1996; public hearings will be held 
on October 8, 1996, in Washington, DC; and in Panama, Republic of 
Panama on October 10, 1996.

ADDRESSES: Comments and requests to testify at the hearings in Panama 
City, Panama and in Washington, DC may be mailed to: John A. Mills, 
Secretary, Panama Canal Commission, 1825 I Street NW., Suite 1050, 
Washington, DC 20006-5402, Telephone: (202) 634-6441, Fax: (202) 634-
6439, Internet E-Mail: [email protected]; or the Office of Financial 
Management, Panama Canal Commission, Balboa Heights, Republic of Panama 
(Telephone: 011-507-272-3194, Fax: 011-507-272-3040).
    For the first time, the PCC will be holding two hearings on the 
same toll- rate/measurement-rule proposal. Those hearings will be held 
at the ANA HOTEL, Ballroom I, 2401 M Street, NW, Washington, DC, at 
8:00 a.m.; and at MIRAFLORES VISITOR'S PAVILION THEATER, Building 6-A, 
Miraflores Locks, Republic of Panama (accessible from Gaillard 
Highway), at 9:00 a.m. Oral presentations should be limited to 20 
minutes. Regulations governing the content of the notice of appearance 
or intention to present supplementary data at the hearing appear at 35 
CFR 70.8 and 70.10.

FOR FURTHER INFORMATION CONTACT: John A. Mills at the above address, 
(telephone: (202) 634-6441). Copies of PCC's analysis showing the 
detailed basis and justification for the proposed changes are available 
from PCC (at the above addresses).

SUPPLEMENTARY INFORMATION: Section 1602(b) of the Panama Canal Act of 
1979, as amended, 22 U.S.C. 3792(b), requires that Canal tolls be 
prescribed at rates calculated to produce revenues to cover as nearly 
as practicable all costs of maintaining and operating the Panama Canal 
and the facilities and appurtenances related thereto, as well as to 
provide capital for plant replacement, expansion and improvements, and 
working capital.
    Toll rates were last increased on October 1, 1992. The 1992 rate 
increase was adequate to recover operating costs and capital 
expenditures through FY 1995. However, record-breaking traffic levels 
are rapidly approaching the Canal's existing operating capacity, and 
have caused the PCC to re-evaluate its financial requirements to meet 
its longstanding commitment to quality customer service which includes 
an average 24-hour Canal Waters Time (CWT). Average CWT in FY 1995 rose 
to 28.2 hours and has increased further during the first ten months of 
FY 1996 to 32.6 hours. Unless major improvements to increase Canal 
capacity are completed, CWT cannot be meaningfully improved as Canal 
traffic continues to grow and strain the existing operating capacity.
    PCC will increase Canal capacity by implementing a number of 
modernization and improvement projects, including the acceleration of 
the Gaillard Cut widening project, augmentation of the tugboat fleet, 
design and procurement of additional locomotives, modernization of the 
vessel traffic management system, hydraulic conversion of miter gates 
and rising stem valves moving machinery, and automation of locks 
machinery controls. As a result, at present toll rates, total operating 
expenses and capital expenditure requirements are estimated to exceed 
revenues by $2.2 million in FY 1996, $34.5 million in FY 1997, and 
$69.7 million in FY 1998. This necessitates an increase in the general 
toll rate. As noted above, a detailed written analysis is available 
further explaining the basis and justification for the changes.
    The 1994 revision of the Rules for Measurement of Vessels was 
designed to simplify the measurement procedures in effect at the Canal 
and to bring those rules in line with the worldwide standard of tonnage 
measurement contained in the 1969 International Convention of Tonnage 
Measurement of Ships. Those rules, which are currently in effect and 
which are referred to collectively as the Panama Canal/Universal 
Measurement System (or PC/UMS), presently do not include in the 
calculation of a ship's earning capacity any open spaces available for 
the carriage of containers on or above the main deck.
    The evolution of container ships has resulted in improved design 
and increased capacity to permit far greater use of on-deck space. 
Today, 40 to 60 percent of useable capacity of modern container ships 
is on or above the main deck. Thus, these ships have increased their 
earning capacity in terms of volume, whereas their PC/UMS Net Tonnage 
calculation under current rules does not include this revenue-producing 
space. The same is true with respect to a significant number of other 
ships which, in addition to the bulk and other cargoes they carry below 
deck, also have the capacity to carry containers on and above the main 
deck. In other words, PCC is not currently charging equitably for full 
revenue producing space.
    The costs of PCC's expanded capital program have prompted PCC to 
focus on this practice and conclude that it is inconsistent with the 
basic principle governing all Canal toll assessments, i.e., that tolls 
are to be based on net vessel tons of earning capacity. Containers 
carried on or above the main deck expand the earning capacity. That 
added capacity should therefore be taken into account in setting Canal 
tolls.
    This proposal includes in PC/UMS Net Tonnage a portion of the 
volume of the capacity of containers carried on or above the main deck. 
The rules would authorize the PCC to determine which ships qualify for 
the assessment and to calculate the volume of their on-deck container 
capacity (VMC). The VMC would then be multiplied against an appropriate 
factor (designated in the amendments as ``CF1'') to produce the 
portion to be included in PC/UMS Net Tonnage.
    Section 1604 of the Panama Canal Act of 1979, as amended, 22 U.S.C. 
3794, establishes procedures for proposing toll rate increases and 
changes in the rules for measurement of vessels. Those procedures have 
been supplemented by regulations in 35 CFR Part 70, which

[[Page 46409]]

also provide interested parties with instructions for participating in 
the process governing changes in toll rates and measurement rules.
    PCC will consider and strongly encourages all interested parties to 
present in writing or orally at the hearings, pertinent data, views or 
arguments, along with other relevant information, before PCC publishes 
its final rules in the Federal Register. The final rules, as approved 
and published by the PCC, will be effective no earlier than 30 days 
from the date of their publication in the Federal Register.
    PCC is exempt from Executive Order 12866. Accordingly, provisions 
of that directive do not apply to this rule. Even if the Order were 
applicable, the change would not constitute a ``rule'' as that term is 
defined in the Regulatory Flexibility Act [5 U.S.C. 601(2)] because it 
concerns ``rates'' and ``practices relating'' thereto.
    Further, PCC has determined that implementation of this rule will 
have no adverse effect on competition, employment, investment, 
productivity, innovation, or on the ability of the United States-based 
enterprises to compete with foreign-based enterprises in domestic or 
export markets.
    The Secretary of the PCC certifies that these proposed regulatory 
changes meet the applicable standards in sections 3(a) and 3(b)(2) of 
Executive Order No. 12988 of February 7, 1996.

List of Subjects in 35 CFR Part 133 and 135

    Measurement, Navigation, Panama Canal, Vessels.

    Accordingly, it is proposed that 35 CFR parts 133 and 135 be 
amended as follows:

PART 133--TOLLS FOR USE OF CANAL

    1. The authority citation for part 133 is revised to read as 
follows:

    Authority: 22 U.S.C. 3791.

    2. Section 133.1 is revised to read as follows (Note: Alternative 
versions of toll rates are shown in this proposed rule):


Sec. 133.1  Rates of Toll.

    The following rates of toll shall be paid by vessels using the 
Panama Canal to become effective January 1, 1997 and January 1, 1998:
    (a) On merchant vessels, yachts, army and navy transports, 
colliers, hospital ships, and supply ships, when carrying passengers or 
cargo, per PC/UMS Net Ton that is, the Net Tonnage determined in 
accordance with part 135 of this chapter:

------------------------------------------------------------------------
                                         With amendment      Without    
                                       -----------------    Amendment   
            Effective date                              ----------------
                                        Percent   Toll             Toll 
                                                  rate   Percent   rate 
------------------------------------------------------------------------
1/1/97................................      8.2   $2.39      8.7   $2.40
1/1/98................................      7.5    2.57      7.9   $2.59
------------------------------------------------------------------------

    (b) On vessels in ballast without passengers or cargo, per PC/UMS 
Net Ton.

------------------------------------------------------------------------
                                         With amendment      Without    
                                       -----------------    amendment   
            Effective date                              ----------------
                                        Percent   Toll             Toll 
                                                  rate   Percent   rate 
------------------------------------------------------------------------
1/1/97................................      8.2   $1.90      8.7   $1.91
1/1/98................................      7.5    2.04      7.9    2.06
------------------------------------------------------------------------

    (c) On other floating craft including warships, other than 
transports, colliers, hospital ships, and supply ships, per ton of 
displacement:

------------------------------------------------------------------------
                                         With amendment      Without    
                                       -----------------    amendment   
            Effective date                              ----------------
                                        Percent   Toll             Toll 
                                                  rate   Percent   rate 
------------------------------------------------------------------------
1/1/97................................      8.2   $1.33      8.7   $1.34
1/1/98................................      7.5    1.43      7.9    1.45
------------------------------------------------------------------------

PART 135--RULES FOR MEASUREMENT OF VESSELS

    1. The authority citation for part 135 is revised to read as 
follows:

    Authority: 22 U.S.C. 3791.

    2. Section 135.2 is amended by adding at the end thereof a new 
sentence to read as follows:


Sec. 135.2  Vessels generally to present tonnage certificate or be 
measured.

    * * * In addition, these same vessels shall provide documentation, 
such as plans and classification certificates, with sufficient 
information to determine the volume of the maximum capacity of 
containers that may be carried on or above the upper deck, or VMC as 
defined in Sec. 135.13 (a)(11).
    3. In Sec. 135.3 the heading and paragraph (a) are revised to read 
as follows:


Sec. 135.3  Determination of total volume and VMC.

    (a) Determination of total volume and VMC used to calculate PC/UMS 
Net Tonnage shall be carried out by the Panama Canal Commission. In so 
doing, however, the Commission may rely upon total volume and VMC 
information provided by such officials as are authorized by national 
governments to undertake surveys and issue national tonnage 
certificates. Total volume and VMC information presented to the 
Commission shall be subject to verification, and if necessary, 
correction as necessary to ensure accuracy to a degree acceptable to 
the Commission.
* * * * *
    4. Section 135.13 is amended by revising the formula for 
determining PC/UMS Net Tonnage in paragraph (a), by adding new 
paragraphs (a)(10) and (a)(11), and by revising paragraph (b) to read 
as follows:


Sec. 135.13  Determination of PC/UMS Net Tonnage.

* * * * *
    (a) * * *

PC/UMS Net Tonnage = K4(V)+K5(V)+CF1(VMC)
* * * * *
    (10) ``CF1'' = .031 for ships which the Commission determines 
are designed to carry containers on or above the upper deck; otherwise 
``CF1'' = 0. In making the foregoing determination, the Commission 
may consider documentation provided by such officials as are authorized 
by national governments to undertake surveys and issue national tonnage 
certificates.
    (11) ``VMC'' = the volume (in cubic meters) of maximum capacity of 
the containers that can be carried on or above the upper deck. This 
volume may be calculated by multiplying the maximum number of 
containers by 29.2 m\3\, or by other generally accepted methods that 
meet the Commission's accuracy standards. VMC will not include any 
container capacity that is included in ``V''.
    (b) For vessels subject to transitional relief measures, the 
existing Panama Canal Net Tonnage as specified on the certificate 
issued by the Commission plus CF1 (VMC) shall be the PC/UMS Net 
Tonnage. In such case, the formula for determining PC/UMS Net Tonnage 
is: PC/UMS Net Tonnage=Panama Canal Net Tonnage+CF1(VMC).
    5. Section 135.14, is amended by adding a new paragraph (d) to read 
as follows:


Sec. 135.14  Change of PC/UMS Net Tonnage.

* * * * *
    (d) If the VMC of a vessel is changed due to any physical 
modification after the vessel's PC/UMS Net Tonnage has been determined 
at the Canal, the PC/UMS Net Tonnage may be revised by the Commission.
    6. Section 135.15 is amended by adding new paragraphs (d) and (e), 
to read as follows:


Sec. 135.15  Calculation of volumes.

* * * * *

[[Page 46410]]

    (d) VMC may be calculated by multiplying the maximum number of 
containers by 29.2 m\3\, or by other generally accepted methods that 
meet the Commission's accuracy standards.
    (e) For purposes of this part, the outside dimension of a container 
is 8 ft.  x  8 ft.  x  20 ft, or 36.25 m\3\. These parameters will be 
used for determining the maximum above-deck container capacity.
    7. Section 135.31 is amended by adding at the end thereof a new 
sentence to read as follows:


Sec. 135.31  Transitional relief measures.

    * * * Vessels subject to relief measures shall provide Canal 
authorities with sufficient documentation, such as plans and 
classification certificates, for the Commission to determine the VMC.
    8. Section 135.41 is amended by revising the first sentence to read 
as follows:


Sec. 135.41  Measurement of vessels when volume information is not 
available.

    When an ITC 69 or suitable substitute and documentation for the 
calculation of the VMC are not presented, or when the certificate, 
substitute or VMC documentation presented does not meet accuracy 
standards acceptable to the Commission, vessels will be measured in a 
manner that will include the entire cubical contents of V and VMC as 
defined in this part. * * *
    9. Section 135.42 is amended by adding a new paragraph (c) to read 
as follows:


Sec. 135.42  Measurement of vessels when tonnage cannot be otherwise 
ascertained.

* * * * *
    (c) VMC may be determined by any accepted method or combination of 
methods, including but not limited to, simple geometric formulas, 
multiplication of a container by 29.2 m\3\, or other standard 
mathematical formula. The on-deck container capacity of a vessel for 
VMC purposes will be determined by the Commission.

    Dated: August 28, 1996.
John A. Mills,
Secretary, Panama Canal Commission.
[FR Doc. 96-22398 Filed 8-30-96; 8:45 am]
BILLING CODE 3640-04-P