[Federal Register Volume 62, Number 178 (Monday, September 15, 1997)]
[Rules and Regulations]
[Pages 48178-48181]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-24310]


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PANAMA CANAL COMMISSION

35 CFR Part 104

RIN 3207-AA40


Vessel Transit Reservation System

AGENCY: Panama Canal Commission.

ACTION: Final rule.

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SUMMARY: This document announces the final rule constituting the Panama 
Canal Vessel Transit Reservation System, which allows vessels to 
reserve transit slots in advance of arrival at the Panama Canal and be 
moved through the Canal on pre-assigned dates.

DATES: The effective time and date of the final rule is 12:00 Midnight 
(2400 hrs) (Panama time), September 30, 1997.

FOR FURTHER INFORMATION CONTACT: Chief of the Economic Research and 
Market Development Division, Panama Canal Commission, Unit 2300, APO AA 
34011-2300, Telephone 011-507-272-3586; Fax 011-507-272-1622; E-mail: 
[email protected]

SUPPLEMENTARY INFORMATION: On April 15, 1997, the Panama Canal 
Commission (PCC) published in the Federal Register (Volume 62, Number 
72, Pages 18275-18277), an interim rule to test a revised vessel 
transit reservation system, which test commenced at 2:00 P.M. (1400 
hrs), April 21, 1997. The 120-day test period ended on August 20, 1997. 
The test comment period, however, pursuant to Marine Director's Notice 
To Shipping Nos. N-7-97, Rev. 3 (dtd 8/8/97) and N-7-97, Rev. 4 (dtd 8/
22/97), was extended to close of business, September 5, 1997.
    Throughout the comment period, PCC received both formal and 
informal comments, in writing and orally, from ship agents, owners and 
operators and maritime industry trade groups. These comments included 
proposals that PCC abolish the vessel transit reservation system and 
revert to a first come-first serve system, that PCC delay full 
implementation of the system for cruise line customers, complaints 
about various components of the test system, and suggestions and 
proposals to improve and facilitate implementation of the test system 
on a permanent basis.
    During the test, PCC gained valuable hands-on experience with all 
operational aspects of the test system. The empirical, statistical and 
other data gathered during the test was beneficial in assessing the 
actual impact of the test system on a representative cross-section of 
Canal customers.
    Specifically, the test revealed that overall utilization of the 21 
reserved transit slots available for all three booking periods did not 
appreciably change in the second and third booking periods. The (new) 
first booking period was utilized principally by passenger vessels. The 
test also revealed that, based on current Canal capacity, 21 reserved 
transit slots is the maximum number that the system can accommodate, 
consistent with safe and efficient operation of the Canal. On the other 
hand, allocation of the 21 reserved transit slots among the three 
booking periods is an area in which operational considerations afford 
PCC some flexibility. PCC, therefore, will continue to monitor and, 
where appropriate, may periodically change the number of reserved 
transit slots allocated among the three booking periods, as well as 
allocations among various vessel types. Any such changes will be 
announced in future Marine Director's notices to shipping.
    Changing the number of days that comprise each of the three booking 
periods, as some customers urged, would not have any foreseeable 
adverse impact on Canal operations. Any such changes, however, while no 
doubt benefiting some customers, would negatively impact others. 
Balancing fairness and equity for all Canal customers, the final rule 
does not change the length of any of the three booking periods.
    Missing from the interim rule was criteria for canceling transit 
``condition 3'', which triggers the additional booking fee whenever the 
total number of vessels awaiting transit at both termini of the Canal 
is projected by Canal authorities to be, within 2 days, 90 or more 
vessels for at least 2 consecutive days (hereafter, ``premium booking 
fee''). Seesaw declarations and cancellations of condition 3 in 
response to fluctuating vessel arrivals/departures disrupted orderly 
operation of the system and, on occasion, resulted in hardship for some 
customers required to pay the premium fee. PCC, therefore, will adopt 
an implementation provision (to be announced in a Marine Director's 
notice to shipping), stating that, following invocation, Canal 
authorities will revoke condition 3 whenever the number of vessels 
awaiting transit is projected to be reduced to 80 or fewer vessels.
    Concerning the premium booking fee, this feature of the test, by 
far, generated the most comment and criticism from Canal customers. 
Consideration was given to eliminating or reducing the amount of the 
fee. After careful review and reconsideration, however, PCC reaffirms 
its original assessment, made on the basis of objective economic data, 
that payment of the current premium booking fee to secure expeditious 
transit of the Canal during periods when condition 3 is in effect, 
affords customers who utilize this service tangible economic benefits, 
when compared to the high costs of transit delays of uncertain duration 
during such periods. Nevertheless, PCC is sensitive to customer 
complaints that the factors which cause condition 3 to be invoked are 
largely beyond their control. Consequently, PCC will redouble efforts 
to schedule maintenance, Canal improvement projects and other 
activities that adversely impact transit operations, to the extent 
practicable, so as to minimize

[[Page 48179]]

the number of occasions when condition 3 is actually invoked, 
including, giving notice to Canal customers as far in advance as 
reasonably possible. In addition, PCC will guarantee a vessel booked 
for transit a reserved transit slot at the booking fee rate in effect 
at the time of booking, irrespective of any premium booking fee that 
may be in effect at the time of actual transit.
    The test revealed certain deficiencies in the schedule of 
cancellation fees reflected in section 104.9 of the interim rule. The 
revised cancellation fee schedule set forth in the final rule tracks 
the prescribed booking periods and provides for progressive 
cancellation fees for vessels booked for transit in all three booking 
periods. The restructured cancellation fees, especially those for 
cancellations made upon short notice, are expected to increase booking 
opportunities for Canal customers, particularly in the third booking 
period.
    Based upon historical criteria no longer relevant, commercial 
passenger vessels had previously been afforded a transit preference, 
without being subjected to the terms and costs of the vessel transit 
reservation system. Commencing with the test, passenger vessels were 
required to reserve transit slots, the same as other vessels, in order 
to obtain transit preference. During the test period, however, 
passenger vessels booked for transit were afforded transitional relief 
by not having to pay the prescribed booking and other fees paid by 
other vessels. PCC provided these vessels a statement, however, showing 
what the booking fee for the reserved transit would have been had 
transitional relief not been in effect. Commencing on the effective 
date of the final rule, passenger vessels will be subject to all 
requirements of the system, including payment of the prescribed fees.
    Cruise line customers stated that the test did not afford them 
sufficient time to build the additional costs of the final rule into 
their business plans and fee schedules, thereby justifying an extension 
of transitional relief through the remainder of the 1997 and the 1998 
cruise seasons. It is noted, however, that the standard industry 
practice of cruise lines is to reserve the right to change published 
passenger fee schedules without notice. This protects cruise lines from 
having to absorb unanticipated higher operating costs that might be 
incurred after publication. Moreover, cruise line customers had a full 
6 months to make whatever operational and financial adjustments might 
be necessary by reason of PCC's implementation of the final rule. 
Specifically, throughout the 184-day comment period, that commenced on 
March 5, 1997 and ended on September 5, 1997, cruise line customers 
were provided financial and other data that should have enabled them to 
calculate their higher costs by reason of their being subjected to the 
requirements of the vessel transit reservation system. Given the 
extraordinary length of the comment period, the right of cruise lines 
to adjust fee schedules and the data provided throughout the test, PCC 
believes the test period was sufficient to enable cruise line customers 
to familiarize themselves adequately with all operational and financial 
components of the test system, thus making additional transitional 
relief unnecessary.
    This final rule involves public property, the Panama Canal, and, 
therefore, is excluded from coverage of the Administrative Procedures 
Act (APA). 5 USC 553(a)(2). Nevertheless, in testing the interim rule, 
PCC elected generally to follow the notice-and-comment rule-making 
procedures of section 553. In establishing the effective date of the 
final rule, however, PCC elected not to follow the delayed effective 
date provision of section 553(d). The effective date of this final 
rule, therefore, is 12:00 Midnight (2400 hrs) (Panama time), September 
30, 1997.
    Until the final rule announced in this document takes effect, the 
interim rule published in the Federal Register (Volume 62, Number 72, 
Pages 18275-18277) and implementation provisions announced in Marine 
Director's notices to shipping, will continue to govern vessel transit 
reservations at the Panama Canal.
    The final rule announced in this document constitutes the Panama 
Canal Vessel Transit Reservation System that, based on the subject 
test, PCC believes best serves the needs of PCC, commensurate with 
safety and efficiency, and the world shipping industry.
    PCC is exempt from Executive Order 12866. The provisions of that 
directive, therefore, do not apply to this final rule. Even if the 
Order was applicable, this final rule would not have any significant 
economic impact on any substantial number of small entities under the 
Regulatory Flexibility Act of 1980.
    Additionally, PCC has determined that implementation of this final 
rule will not have an adverse effect on competition, employment, 
investment, productivity, innovation, or the ability of U.S.-based 
enterprises to compete with foreign-based enterprises in domestic or 
foreign markets.
    The Secretary of PCC certifies that these regulatory changes meet 
the applicable standards contained in sections 3(a) and 3(b)(2) of 
Executive Order No. 12988 of February 7, 1996.

List of Subjects in 35 CFR Part 104

    Panama Canal, Reporting and recordkeeping requirements, Vessels.

    Accordingly, Part 104 is revised to read as follows:

PART 104--VESSEL TRANSIT RESERVATION SYSTEM

Sec.
104.1  Applicability and scope.
104.2  Definitions.
104.3  Booking periods; allocation of reserved slots.
104.4  Booked transits.
104.5  Passenger vessel preference; priority transits.
104.6  Booking fees.
104.7  Penalties.
104.8  Re-scheduling.
104.9  Cancellations.
104.10  Regular transits.
104.11  Temporary suspension of system.
104.12  Further implementation.

    Authority: 22 U.S.C. 3811.


Sec. 104.1  Applicability and scope.

    Subject to the limitations imposed by Article III of the 1901 
Treaty to Facilitate the Construction of a Ship Canal, entered into by 
the United States and Great Britain, and by Articles II and VI of the 
1977 Treaty concerning the Permanent Neutrality and Operation of the 
Panama Canal, between the United States and the Republic of Panama, and 
subject to compliance with the provisions of this part, the Panama 
Canal Vessel Transit Reservation System allows vessels, including 
certain commercial passenger vessels, desiring transit of the Panama 
Canal, to reserve transit slots in advance of arrival at the Canal and 
be moved through the Canal on pre-assigned dates.


Sec. 104.2  Definitions.

    (a) Booked for transit means that a vessel, in advance of arriving 
at the Canal, has been assigned a specific date by Canal authorities on 
which it will be moved through the Canal and that the vessel has 
otherwise complied with the provisions of this part.
    (b) Commercial passenger vessel means a vessel that principally 
transports passengers, as opposed to cargo, and runs on fixed published 
schedules.
    (c) Regular transit means movement through the Canal of a vessel 
that has not been booked for transit.
    (d) Required arrival time means the date and the hour of the day 
established by Canal authorities as the deadline by

[[Page 48180]]

which a vessel booked for transit must arrive at a terminus of the 
Canal in order to transit on its reserved transit date.
    (e) Vessel agent means a person or entity that has been authorized 
by a vessel owner or operator, in the manner prescribed by Canal 
authorities, to book vessels for transit in accordance with this part.


Sec. 104.3  Booking periods; allocation of reserved slots.

    (a) Vessel agents only may request reserved transit slots for 
vessels during the following booking periods:
    (1) First period--365 to 22 days prior to the requested transit 
date.
    (2) Second period--21 to 4 days prior to the requested transit 
date.
    (3) Third period--3 to 2 days prior to the requested transit date.
    (b) A total of 21 reserved transit slots will be made available for 
all three booking periods, allocation of which among the booking 
periods is to be determined by Canal authorities. Canal authorities, 
from time to time, may adjust the total number of available reserved 
transit slots, commensurate with continued safe and efficient operation 
of the Canal.


Sec. 104.4  Booked transits.

    (a) The specific daily order of vessels and mix of vessel types 
transiting the Canal, whether booked or regular transits, shall be 
determined by Canal authorities. Except as provided in this part, a 
vessel booked for transit may not transit prior to its reserved transit 
date, unless Canal authorities determine that assigning the vessel an 
earlier transit slot would not impair safe and efficient operation of 
the Canal.
    (b) Notwithstanding assignment of an earlier reserved transit slot 
by Canal authorities, all vessels booked for transit will be charged 
the prescribed booking fee.
    (c) Substitution of reserved transit slots between or among vessels 
booked for transit will be permitted only on conditions specified by 
Canal authorities.


Sec. 104.5  Passenger vessel preference; priority transits.

    (a) Subject to being booked for transit and to the extent Canal 
authorities determine preference does not impair safe and efficient 
operation of the Canal, commercial passenger vessels running on fixed 
published schedules will be given preference over other vessels in 
transiting.
    (b) Notwithstanding any contrary provision, from time to time, any 
vessel, whether or not subject to the vessel transit reservation system 
(including, but not limited to certain warships), as determined by 
Canal authorities, may be moved through the Canal on a priority basis.


Sec. 104.6  Booking fees.

    (a) The booking fee for reserving a transit slot for a vessel 
measured in accordance with Sec. 135.13(a) of this chapter, shall be 
$0.26 per PC/UMS Net Ton, or $1500, whichever is greater.
    (b) The booking fee for reserving a transit slot for a vessel 
subject to transitional relief measures and measured in accordance with 
Sec. 135.13(b) of this chapter, shall be $0.23 per Panama Canal Gross 
Ton, as specified on the last tonnage certificate issued to the vessel 
by Canal authorities between March 23, 1976 and September 30, 1994, 
inclusive, plus $0.26 per PC/UMS Net Ton of on-deck capacity, or $1500, 
whichever is greater.
    (c) Whenever the total number of vessels awaiting transit at both 
termini of the Canal is projected by Canal authorities to be, within 2 
days, 90 or more vessels for at least 2 consecutive days, any vessel 
booked for transit that transits the Canal while this condition is in 
effect, shall automatically be assessed a booking fee of $0.69 per PC/
UMS Net Ton, or $4000, whichever is greater.
    (d) Notwithstanding the provisions of paragraph (c) of this section 
or any other contrary provision of this part, Canal authorities will 
guarantee a vessel booked for transit, a reserved transit slot at the 
booking fee rate in effect at the time the vessel is booked for 
transit, irrespective of any premium booking fee rate that may be in 
effect at the time the vessel actually transits the Canal.


Sec. 104.7  Penalties.

    (a) The reserved transit slot of a vessel booked for transit will 
be canceled by Canal authorities and a penalty fee assessed in a sum 
equal to the prescribed booking fee, or $1500, whichever is greater, in 
the following situations:
    (1) When a vessel that is subject to transit restrictions (e.g., 
clear cut, clear cut daylight) has been booked for transit and does not 
arrive at a terminus of the Canal by 0200 hours of the day of the 
scheduled transit;
    (2) When a vessel that is not subject to transit restrictions has 
been booked for transit and does not arrive at a terminus of the Canal 
by 1400 hours of the day of the scheduled transit; or
    (3) When a vessel booked for transit arrives on time but cannot or, 
at the vessel operator's election, does not transit as scheduled, 
despite the readiness of Canal authorities to proceed.
    (b) Canal authorities may waive assessment of a penalty fee if the 
vessel agent presents acceptable proof that late arrival of the vessel 
was due to a medical or humanitarian emergency arising during the 
voyage, or a naturally occurring, extraordinary phenomenon or event of 
major proportions that could not have been reasonably predicted in 
advance.
    (c) Failure of the vessel agent to provide complete and accurate 
information required by Canal authorities when requesting transit 
bookings may result in rejection of the booking request or cancellation 
of the vessel's reserved transit slot.
    (d) When a vessel's reserved transit slot is canceled, and unless 
otherwise directed by the vessel agent, upon arrival, Canal authorities 
will re-schedule the vessel for regular transit.


Sec. 104.8  Re-scheduling.

    (a) Except as otherwise provided and without the vessel booked for 
transit being assessed a penalty fee, the vessel agent may request 
cancellation of a vessel's reserved transit slot and rescheduling of 
the vessel for regular transit or, alternatively, may request 
assignment of an alternate reserved transit slot, in the following 
situations:
    (1) If for whatever reason Canal authorities cancel the transit of 
a vessel booked for transit that is otherwise ready to proceed as 
scheduled; or
    (2) If for whatever reason Canal authorities delay the transit of a 
vessel booked for transit to such a degree that the delay is likely to 
cause the vessel to be unable to meet its required arrival time for a 
later, second reserved transit, booked before the delay of the first 
reserved transit occurred.
    (b) A vessel booked for transit will be deemed to have transited 
the Canal on its reserved transit date if the vessel arrives at the 
first set of locks at either terminus of the Canal prior to 2400 hours 
that day and its in-transit time (ITT) is 18 hours or less. ITT begins 
when the vessel enters the first set of locks at either Canal terminus 
and ends when the vessel departs the last set of locks at the opposite 
terminus. No booking fee will be charged if, due to events that are 
beyond the control of the vessel booked for transit, as determined by 
Canal authorities, ITT exceeds 18 hours; except that this provision 
shall not apply in the case of a turn-around transit, where the vessel 
enters and exits the same set of locks at either Canal terminus.

[[Page 48181]]

Sec. 104.9  Cancellations.

    (a) A vessel agent may cancel the transit reservation of a vessel 
by giving notice prescribed by Canal authorities. In such event, and 
except as otherwise provided, a cancellation fee will be charged. The 
amount of the fee will depend on the amount of notice (days or hours) 
received by Canal authorities in advance of the vessel's required 
arrival time, according to the following schedule:

------------------------------------------------------------------------
  Notice periods  (in advance of required      Cancellation fee  (the   
               arrival time)                         greater of)        
------------------------------------------------------------------------
31 to 364 days............................  10% of booking fee or $500. 
22 to 30 days.............................  40% of booking fee or $750. 
4 to 21 days..............................  60% of booking fee or $1000.
3 days to 8 hours.........................  80% of booking fee or       
                                             $1,250.                    
Less than 8 hours.........................  100% of booking fee.        
------------------------------------------------------------------------

    (b) Receipt of notice of cancellation of a transit reservation by 
Canal authorities after the vessel's required arrival time will result 
in levy of a cancellation fee equal to the entire prescribed booking 
fee.


Sec. 104.10  Regular transits.

    Vessels that are not booked for transit will be scheduled for 
movement through the Canal on the date and in the order determined by 
Canal authorities. In establishing the daily schedule of vessels to be 
moved through the Canal, the order in which vessels arrive is only one 
of several considerations. In general, regular transits will equal or 
exceed in number, one-half the total number of daily vessel transits.


Sec. 104.11  Temporary suspension of system.

    (a) Canal authorities may temporarily suspend, in whole or in part, 
for whatever period of time deemed necessary, the vessel transit 
reservation system established by this part, whenever Canal authorities 
determine that such action is necessary to ensure continued safe and 
efficient operation of the Canal.
    (b) No penalty or fee will be levied against any vessel booked for 
transit whose reserved transit slot is canceled by reason of a 
temporary suspension of the system pursuant to this section.


Sec. 104.12  Further implementation.

    (a) To facilitate safe and efficient operation of the system, Canal 
authorities may establish additional policies and procedures, define 
additional terms and issue clarifications and interpretations not 
inconsistent with the provisions of this part. Such further 
implementation will be published and distributed to Canal customers 
through notices to shipping or other appropriate means determined by 
Canal authorities.
    (b) In the event any provision of this part conflicts with any 
implementation provision issued pursuant to this section, the 
provisions of this part shall govern.

    Dated: September 9, 1997.
John A. Mills,
Secretary, Panama Canal Commission.
[FR Doc. 97-24310 Filed 9-12-97; 8:45 am]
BILLING CODE 3640-04-U