[Federal Register Volume 61, Number 231 (Friday, November 29, 1996)]
[Rules and Regulations]
[Pages 60610-60613]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-30488]


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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: Final rule.

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SUMMARY: This rule announces a two-phase toll-rate increase--8.2 
percent on January 1, 1997 followed by a 7.5 percent increase on 
January 1, 1998. Record traffic demand on the Canal's transit capacity 
has necessitated an expanded and accelerated capital program. Absent a 
toll increase, the Commission anticipates capital program expenditures 
will contribute to a significant deficit in FY's 1996-1998. The toll 
increase is legally mandated to produce revenues sufficient to cover 
all costs of maintenance and operation of the Panama Canal, including 
capital for plant replacement, expansion and improvements.
    This action increases toll rates for: merchant vessels, yachts, 
army and navy transports, colliers, hospital ships, and supply ships, 
when carrying passengers or cargo, from $2.21 to $2.39 per PC/UMS Net 
Ton in January 1997, and to $2.57 in January 1998; vessels in ballast 
without passengers or cargo, from $1.76 to $1.90 per PC/UMS Net Ton in 
January 1997, and to $2.04 in January 1998; and other floating craft 
including warships, other than transports, colliers, hospital ships, 
and supply ships, from $1.23 to $1.33 per ton of displacement in 
January 1997, and to $1.43 in January 1998.

[[Page 60611]]

    In addition, on July 1, 1997, the Commission will begin applying 
new rules of measurement to on-deck, container carrying capacity for 
inclusion of a portion of that volume in PC/UMS Net Tonnage.

DATES: Effective date: This rule is effective on January 1, 1997. The 
first toll rate increase of 8.2% is applicable January 1, 1997. The on-
deck, container-carrying capacity measurement rule is applicable July 
1, 1997. The second toll rate increase of 7.5% is applicable January 1, 
1998.

FOR FURTHER INFORMATION CONTACT: 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).

SUPPLEMENTARY INFORMATION: On September 3, 1996, a notice of proposed 
rulemaking was published in the Federal Register (61 FR 46407) in which 
the Panama Canal Commission (PCC) proposed a two-phase toll-rate 
increase--8.2 percent in January 1, 1997 and 7.5 percent in January 1, 
1998. This was coupled with an amendment to become effective January 1, 
1997 to apply rules of measurement which would include in PC/UMS Net 
Tonnage a portion of the volume of the container-carrying capacity on 
or above the main deck. The notice of proposed rulemaking also provided 
that, if for any reason, the on-deck measurement provision was not 
adopted as proposed, the general toll-rate increase would be adjusted 
to 8.7 and 7.9 percent, respectively.
    To ensure maximum notice and participation in the rulemaking 
process, PCC issued a press release on August 19, 1996 that was 
distributed to more than 125 publications worldwide, including special 
business and shipping publications as well as all major news services. 
Information on the proposal was also faxed directly to approximately 
400 shipowners and operators, maritime organizations and port 
authorities. Additionally, the press release and the analysis were made 
available in the Internet (http://www.pananet.com/pancanal). The 
Administrator personally sent letters via facsimile on August 21, 1996 
to the 40 top users of the Canal to advise them that they would each be 
called to discuss the proposal to be published in the Federal Register. 
Over 25 of these users were subsequently reached and encouraged to 
comment on the proposal before any decisions were finalized. On August 
28, 1996, in an effort to further disseminate information on the 
proposal, the Administrator and a delegation from the PCC staff met 
with the Camara Maritima de Panama (Panama Maritime Chamber), whose 
members represent Canal users from around the world. On September 25, 
1996 a follow-up letter was faxed to 40 top users of the Canal and 311 
shipowners, operators and maritime organizations encouraging comments 
and attendance at the public hearings. Thereafter, the Administrator 
met or corresponded with various shipping interests explaining the 
proposal and soliciting input from the customers.
    At that time, a written analysis explaining the proposed toll 
increase was made available to interested parties. This analysis stated 
that traffic levels were rapidly approaching the Canal's existing 
operating capacity which, unless addressed, could undermine PCC's 
longstanding commitment to quality customer service, including the 
target average 24-hour Canal Waters Time (CWT). 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 FY's 1996-1998 totals $248 million; an additional $228 
million is programmed for FY's 1999-2000. This capital program will 
augment and advance the implementation of many modernization and 
improvement programs in response to projected customer requirements. 
The toll rate increase was established to meet the projected 
significant deficits in FY's 1996-1998 alone from capital expenditures 
to expand Canal operating capacity. At current 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.
    The proposed rulemaking document explained why costs of PCC's 
expanded capital program prompted PCC to focus on the exclusion of on-
deck earning capacity from its toll base. The analysis noted PCC's 
belief that the increasing use of on-deck spaces for the carriage of 
cargo has resulted in an inequitable distribution of operating costs. 
The Commission proposed to implement measurement rules to more 
accurately reflect the true earning capacity of modern vessels. 
Specifically, the measurement rules here adopted authorize PCC to 
determine which ships qualify for the assessment and to calculate the 
corresponding volume of on-deck container capacity (VMC). The VMC is 
then multiplied by the fraction .031 to establish the portion included 
in PC/UMS Net Tonnage.
    Written comments were solicited and received from the public and 
hearings were held in Washington, DC on October 8, 1996, and in Panama, 
Republic of Panama on October 10, 1996. A complete record of the 
proceedings, including the data and comments submitted by interested 
parties, are included in the Panel Report to the Board of Directors. 
The views presented by interested parties, as well as other relevant 
information, were considered by the Board of Directors during its 
Executive Session on November 22, 1996. Based upon this review, and in 
order to meet previously reviewed traffic forecasts, requirement to 
expand Canal operating capacity, justification for an accelerated 
capital program, impact of that program on future deficits, funding 
alternatives, consequences to the Canal's competitive position and 
international commerce, and other related information, the Board voted 
to approve a two-phase toll-rate increase--8.2 percent on January 1, 
1997 followed by a 7.5 percent in increase on January 1, 1998.
    The Board also approved the on-deck measurement rule, but agreed to 
delay its implementation until July 1, 1997. The Board concluded that 
consistency in all Canal toll assessments required that tolls be based 
on net vessel tons of earning capacity in open spaces on or above the 
main deck as well as in enclosed spaces below deck. The system adopted 
captures most of this earning capacity in an easily-administered 
process by including a fraction of on-deck container-carrying capacity 
in PC/UMS Net Tonnage. The six-month implementation delay responds to 
Canal customers who have expressed concerns about the specific impact 
of the measurement rule change on individual vessels. Postponing 
implementation of the measurement rule for six months will allow 
customers to calculate the actual impact of the change based on new 
tonnage certificates PCC will issue before July 1, 1997.
    The Panel Report more fully addresses the comments submitted by 
interested parties, either in writing or in testimony at one of the 
public hearings. In the Report, the Panel has attempted to respond to 
the most significant comments. On or after December 2,

[[Page 60612]]

1996, upon request, the Panel Report will be provided to any interested 
party.
    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 nearly as practicable, all 
costs of maintaining and operating the Panama Canal as well as to 
provide capital for plant replacement, expansion and improvements. It 
is evident from all the information that for the Canal to remain self-
sufficient, the two-phase toll increase and the adoption of measurement 
rules applicable to on-deck, container carrying capacity are required.

List of Subjects in 35 CFR Part 133 and 135

    Measurement, Navigation, Panama Canal, Vessels.

    Accordingly, 35 CFR parts 133 and 135 are 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. 3791-3792, 3794.

    2. Section 133.1 is revised to read as follows:


Sec. 133.1  Rates of Toll.

    The following rates of toll shall be paid by vessels using the 
Panama Canal:
    (a) On merchant vessels, yachts, army and navy transports, 
colliers, hospital ships, and supply ships, when carrying passengers or 
cargo, $2.39 per PC/UMS Net Ton--that is, the Net Tonnage determined in 
accordance with part 135 of this chapter, effective January 1, 1997, 
and $2.57 per PC/UMS Net Ton, effective January 1, 1998.
    (b) On vessels in ballast without passengers or cargo, $1.90 per 
PC/UMS Net Ton, effective January 1, 1997, and $2.04 per PC/UMS Net 
Ton, effective January 1, 1998.
    (c) On other floating craft including warships, other than 
transports, colliers, hospital ships, and supply ships, $1.33 per ton 
of displacement, effective January 1, 1997, and $1.43 per ton of 
displacement, effective January 1, 1998.

PART 135--RULES FOR MEASUREMENT OF VESSELS

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

    Authority: 22 U.S.C. 3791-3792, 3794.

    4. 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 section 135.13(a)(11).
    5. 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.
* * * * *
    6. 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 m3, 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).
    7. 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.
    8. Section 135.15 is amended by adding new paragraphs (d) and (e), 
to read as follows:


Sec. 135.15  Calculation of volumes.

* * * * *
    (d) VMC may be calculated by multiplying the maximum number of 
containers by 29.2 m3, 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 m3. These parameters will be 
used for determining the maximum above-deck container capacity.
    9. 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.
    10. 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. * * *
    11. 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.

* * * * *

[[Page 60613]]

    (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 m3, or other standard 
mathematical formula. The on-deck container capacity of a vessel for 
VMC purposes will be determined by the Commission.

    Dated: November 25, 1996.
John A. Mills,
Secretary, Panama Canal Commission.
[FR Doc. 96-30488 Filed 11-27-96; 8:45 am]
BILLING CODE 3640-04-P