[Federal Register Volume 61, Number 215 (Tuesday, November 5, 1996)]
[Notices]
[Page 56996]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-28416]


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DEPARTMENT OF TRANSPORTATION
Maritime Administration
[Docket No. P-009]


Title XI Obligation Guarantees Citizenship Requirement

AGENCY: Maritime Administration; Department of Transportation.

ACTION: Conforming Agency Procedures to Statutory Change; request for 
comments.

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SUMMARY: The Maritime Administration (MARAD) is soliciting Public 
comments to provide assistance in adopting a policy, which may 
ultimately be incorporated in amendments to its regulations, governing 
the administration of its obligation guarantees (``Title XI'') program 
with respect to citizenship requirements for program participants. This 
action is intended to harmonize the interpretation of citizenship 
requirements in MARAD's Title XI regulations with amendments to Title 
XI, as effected by the enactment on October 8, 1996, of the Maritime 
Security Act of 1996.

DATE: Comments are requested by January 6, 1997.

ADDRESSES: To be considered, comments must be mailed, delivered in 
person or telefaxed (in which case an original must be received) to the 
Secretary, Maritime Administration, Room 7210, Department of 
Transportation, 400 Seventh Street, SW., Washington, DC 20590. All 
comments will be made available for inspection during normal business 
hours at the above address. Commentors wishing MARAD to acknowledge 
receipt of comments must enclose a stamped self-addressed envelope or 
postcard.

FOR FURTHER INFORMATION CONTACT: Robert J. Patton, Jr., Deputy Chief 
Counsel, Maritime Administration, (202) 366-5712.

SUPPLEMENTARY INFORMATION: Title XI of the Merchant Marine Act, 1936, 
as amended (``Act''), 46 App. U.S.C. 1271 et seq., establishes a 
program which provides for the issuance of U.S. Government guarantees 
of obligations (debt) issued to finance the construction of vessels. 
The term vessel is broadly defined to include many and diverse types, 
as specified. Units the enactment of the National Shipbuilding and 
Shipyard Conversion Act of 1993 (``Shipbuilding Act''), Subtitle D of 
Title XIII, Pub. L. 103-160, a corporation or other entities were not 
eligible for guarantees unless a majority or 75% of its stock was owned 
by U.S. citizens, within the meaning of section 2 of the Shipping Act 
1916, as amended (46 App. U.S.C. 802). The Stock ownership requirement 
was dependent on the trade served; i.e. foreign or coastwise trade.
    To promote U.S. shipbuilding, the Shipbuilding Act expanded the 
Title XI obligation guarantee program to allow participation by vessel 
owners, irrespective of citizenship, for financing of vessels built in 
a U.S. shipyard for export (``eligible export vessels''). At the same 
time, amendments to Title XI in the Shipbuilding Act removed references 
to U.S. citizenship requirements in some provisions of the statute 
while retaining them in other provisions. In issuing a final rule 
amending its regulations for administering the Title XI obligation 
guarantee program, MARAD addressed comments with respect to its 
retention of U.S. citizenship requirements for all vessels, except 
eligible export vessels (61 F.R. 21306; May 9, 1996). Citing the 
statutory requirement and its longstanding interpretation, MARAD 
rejected the view expressed by some commentates on its proposed rule 
(60 F.R. 20592; April 28, 1995) that there are no U.S. citizenship 
requirements under the Act, except where such requirements are made 
applicable to certain specified types of vessels, such as fishing 
vessels, pollution abatement vessels, etc.
    Section 11 of the Maritime Security Act of 1996, PL. 104-239, 110 
Stat. 3118, enacted on October 8, 1996, amended Title XI of the Act by 
striking the words ``citizens of the United States'' in 46 App. U.S.C. 
1271(b), 1274(a) and 1281(a). The effect was to remove the citizenship 
requirements for applicants to MARAD for Title XI obligation 
guarantees, except where specifically provided for by other laws.
    MARAD recognizes the clear intent of the Congress expressed in Pub. 
L. 104-239 to eliminate, prospectively, the eligibility requirement of 
U.S. citizenship for vessel owners applying for obligation guarantees, 
except as otherwise provided by law.
    Accordingly, where MARAD's existing regulations are now in conflict 
with Title XI, as amended by PL. 104-239 with respect to citizenship 
requirements, they are no longer valid. Less certain is the retroactive 
effect, if any, of the new law. MARAD's goal is to minimize the burden 
on applicants of establishing U.S. citizenship without compromising 
MARAD's responsibility to protect the interests of the United States 
for the obligations which it guarantees. MARAD is also considering 
establishing a priority, in the event of a scarcity of funds, for loan 
guarantee applications by U.S. citizens over non-citizens for operation 
under U.S.-flag in the foreign commerce.
    MARAD is soliciting comments on the following issues:
    1. Does MARAD have the legal authority to give retroactive effect 
to the elimination of its general U.S. citizenship test for existing 
participants in its obligation guarantee program?
    2. If MARAD has such authority, to what extent should it exercise 
that authority?
    3. With respect to owners of vessels with obligation guarantees 
that operate in the United States domestic (``coastwise'') trade, for 
which U.S. citizenship requirements remain, can MARAD's security 
interest in these vessels, for which it has issued guarantees, be 
sufficiently protected if it adopts the self-certification process as 
to establishing a vessel owner's citizenship used by the United States 
Coast Guard for purposes of issuing a coastwise trade endorsement?
    4. Should U.S. citizens be given priority for loan guarantees over 
non-U.S. citizens for operation of U.S.-flag vessels in foreign 
commerce in the event of scarcity of funds for approval of Title XI 
obligation guarantees.

    By Order of the Maritime Administrator.

    Dated: October 31, 1996.
Joel C. Richard,
Secretary.
[FR Doc. 96-28416 Filed 11-4-96; 8:45 am]
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