[Federal Register Volume 61, Number 209 (Monday, October 28, 1996)]
[Proposed Rules]
[Pages 55614-55615]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-27597]


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DEPARTMENT OF TRANSPORTATION

Maritime Administration

46 CFR Part 384

[Docket No. R-166]
RIN 2133-AB26


Criteria for Granting Waivers of Requirement for Exclusive U.S.-
Flag Vessel Carriage of Certain Export Cargoes

AGENCY: Maritime Administration, Department of Transportation.

ACTION: Advance notice of proposed rulemaking.

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SUMMARY: The Maritime Administration (MARAD) is soliciting public 
comment concerning whether MARAD should amend its existing criteria and 
methodologies for granting waivers of the requirement for U.S.-flag 
vessel carriage of cargo covered by Public Resolution 17, 33rd 
Congress, 46 App. U.S.C. 1241-1 (PR 17), and if so, what the new 
procedures should be.

DATES: Comments must be received on or before December 27, 1996.

ADDRESSES: Comments should be sent to the Secretary, Maritime 
Administration, Room 7210, 400 7th St., S.W., Washington, DC 20590. 
Comments will become part of this docket and will be available for 
inspection or copying at the above address during normal business 
hours.

FOR FURTHER INFORMATION CONTACT: James J. Zok, Associate Administrator 
for Ship Financial Assistance and Cargo Preference, Maritime 
Administration, Washington, DC 20590. Telephone (202) 366-0364.

SUPPLEMENTARY INFORMATION: PR 17 reads:

    Resolved by the Senate and the House of Representatives of the 
United States of America in Congress assembled, That it is the sense 
of Congress that in any loans made by any instrumentality of the 
Government to foster the exporting of agricultural or other 
products, provision shall be made that such products shall be 
carried exclusively in vessels of the United States, unless, as to 
any or all of such products, the Secretary of Transportation, after 
investigation, shall certify to the instrumentality of the 
Government that vessels of the United States are not available in 
sufficient numbers, or in sufficient tonnage capacity, or on 
necessary sailing schedule or at reasonable rates.

    The reservation of such cargoes for the U.S.-flag merchant marine 
helps support a vital national asset which is necessary in times of war 
or national emergency, and in peacetime provides essential service to 
ensure the continued flow of foreign water-borne commerce.
    In 1934 (37 Op. A.G. 546), and again in 1965 (42 Op. A.G. 301), the 
Attorney General concluded that PR 17 does not impose a mandatory 
requirement and is therefore not violated by the granting of waivers. 
MARAD's current policy on granting waivers was first published in Pike 
& Fischer's Shipping Regulation Report (at para. 501) in 1959. The 
Export-Import Bank (Exim Bank) is the principal agency generating 
export cargo subject to PR 17.
    Under MARAD's existing policy, two types of waivers are granted. 
The first, called a ``general'' waiver, is granted to allow the 
national flag vessels of the recipient country to carry 50 percent of 
the cargo. The condition for receiving a general waiver is that the 
recipient country not maintain discriminatory policies detrimental to 
U.S.-flag vessels.
    MARAD has long held that the Cargo Preference Act of 1954, 46 App. 
U.S.C. 1241(b) ('54 Act), is applicable to Exim Bank financed cargoes 
and must be read together with PR 17. The '54 Act applies ``whenever 
the United States * * * shall advance funds or credits.'' (See 152 Gen. 
Counsel Op. 107 (May 15, 1970)). The '54 Act requires that 50 percent 
of the gross tonnage of all cargoes subject to the Act shall be 
transported on privately-owned U.S.-flag commercial vessels, to the 
extent such vessels are available at fair and reasonable rates for 
U.S.-flag commercial vessels. Thus, general waivers under PR 17 may not 
be granted in excess of 50 percent.
    The second type of waiver is called a ``statutory'' or ``non-
availability'' waiver. MARAD's policy provides that Exim Bank loan 
recipients may apply for a non-availability waiver ``(w)hen it appears 
that U.S. vessels will not be available from the port or area of 
shipment to the foreign destinations within a reasonable time or at 
reasonable rates.'' The policy further states that ``(s)uch waivers 
shall apply to the specific movements occurring during the period of 
U.S.-flag non-

[[Page 55615]]

availability as approved (by MARAD) * * * ''
    U.S.-flag vessels are usually available to carry containerized 
cargo to most destinations. In the past, MARAD has granted non-
availability waivers sparingly, and only for specific voyages. Much of 
the Exim Bank financed cargo is project cargo, comprising oversized 
pieces of equipment. Breakbulk ships are more suitable for this cargo 
than are containerships.
    In the past year or so, MARAD has received an increased number of 
complaints from shippers of Exim Bank cargo about MARAD's 
implementation of PR 17. The shippers are particularly concerned that 
when they bid on an Exim Bank-financed project, a reasonable projection 
of transportation costs is required. Project cargoes consist of many 
shipments over an extended period of time. Frequently, the shipments 
are planned so that delivery must be made in proper sequence and in 
critical time frames. Consequently, the shippers take issue with 
MARAD's present policy of granting waivers for only one voyage at a 
time, because this policy does not facilitate their long-range 
transportation planning. On the other hand, the assurance of a stream 
of PR 17 cargo could enhance the availability of U.S.-flag vessels and 
reduce the necessity for waivers.
    MARAD is seeking comments on whether it should adopt a new policy 
on the granting of PR 17 waivers by promulgating a new regulation. 
Among the goals sought to be achieved by any new proposal are: (1) The 
preservation of a cargo base for carriage by U.S.-flag vessels 
generated by Exim Bank financing; and (2) maximizing the export of U.S. 
manufactured goods.
    MARAD asks the public to comment on the following options and 
proposals.
    Should MARAD grant a non-availability waiver for periods in excess 
of one voyage? If so, should the waiver be granted for a period not to 
exceed six months? for a period coextensive with the life of the 
project?
    Should MARAD allow the U.S.-flag carrier to quote on the entire 
transportation costs related to a specific project (including 
containerized and bulk cargo) with the option of chartering foreign-
flag vessels to carry oversized cargo if no suitable U.S.-flag vessels 
are available?
    What conditions, if any, should apply to non-availability waivers?
    Should any or all of the following criteria be met prior to 
granting a non-availability waiver?

--There is no present U.S.-flag service available?
--U.S.-flag vessels are not presently serving the proposed destination 
ports for the project?
--There are draft restrictions on destination ports that may not be 
able to accommodate U.S.-flag vessels?
--Others?

    Should a project-long waiver be granted only when the shipper is 
required to include an estimate of transportation costs as part of its 
overall bid to furnish the export project?
    Should the shipper be required to provide the carriers with a 
complete packing list and a proposed transportation schedule of the 
project for the carriers to evaluate prior to bidding to ship the 
cargo?
    Once MARAD grants a non-availability waiver, what rights do owners 
and operators of U.S.-flag vessels have to offer U.S.-flag service 
during the pendency of a specific project should U.S.-flag service 
later become available?
    Under what criteria would U.S.-flag vessels be able to provide 
service during a specific project once it has commenced?
    What incentives, if any, should be provided U.S. companies to 
encourage the carriage of oversized Exim Bank cargo?
    Interested persons, corporations, or any other entities, are 
invited to submit written comments on the above mentioned options, or 
to offer alternatives. After consideration of the comments received, 
MARAD will decide whether to proceed with a specific proposed change to 
MARAD's existing policy.

Rulemaking Analysis and Notices

Executive Order 12866 (Regulatory Planning and Review)

    If a rule is actually promulgated, it would not be considered an 
economically significant regulatory action under section 3(f) of E.O. 
12866. In the event that MARAD decides to proceed with a rulemaking, a 
preliminary regulatory evaluation would be prepared that reflects the 
comments to this advance notice of proposed rulemaking.

Federalism

    MARAD has analyzed this advance notice of proposed rulemaking in 
accordance with the principles and criteria contained in Executive 
Order 12612 and has determined that any rule that might be subsequently 
promulgated would not have sufficient federalism implications to 
warrant the preparation of a Federalism Assessment.

Regulatory Flexibility Act

    The Maritime Administration has evaluated this rule under the 
Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, and certifies 
that any rule that might be promulgated subsequent to this advance 
notice of proposed rulemaking would not have a significant economic 
impact on a substantial number of small entities. Companies providing 
the carriage of preference cargoes are not small entities.
    Any rule that might be subsequently promulgated would not be 
expected to significantly affect the environment. Accordingly, an 
Environmental Impact Statement would not be required under the National 
Environmental Policy Act of 1969.

Paperwork Reduction Act

    Any rule that might be promulgated would not be expected to 
significantly change the current requirement for the collection of 
information.

    Dated: October 23, 1996.
    By order of the Maritime Administrator.
Joel C. Richard,
Secretary.
[FR Doc. 96-27597 Filed 10-25-96; 8:45 am]
BILLING CODE 4910-81-P