[Federal Register Volume 63, Number 213 (Wednesday, November 4, 1998)]
[Rules and Regulations]
[Pages 59472-59474]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-29497]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Coast Guard

46 CFR Part 2

[CGD 96-067]
RIN 2115-AF40


Vessel Inspection User Fees

AGENCY: Coast Guard, DOT.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Coast Guard is adopting as final, with changes, the 
interim rule it published on April 21, 1997. The interim rule reduced 
annual vessel inspection user fees for small passenger vessels and 
exempted publicly owned ferries from payment of vessel inspection user 
fees as required by the Coast Guard Authorization Act of 1996. The rule 
also revised the discretionary exemption criteria for vessels owned or 
operated by non-profit organizations.

DATES: This final rule is effective December 4, 1998.

ADDRESSES: Documents, as indicated in this preamble, are available for 
inspection or copying at the office of the Executive Secretary, Marine 
Safety Council (G-LRA/3406), U.S. Coast Guard Headquarters, 2100 Second 
Street SW., room 3406, Washington, DC 20593-0001, between 9:30 a.m. and 
2 p.m., Monday through Friday, except Federal holidays. The telephone 
number is 1-800-842-8740, extension 7-1477 or 202-267-1477.

FOR FURTHER INFORMATION CONTACT: CDR Mark McEwen, Office of Planning 
and Resources, Budget and Resources Division (G-MRP-2), Marine Safety 
and Environmental Protection at 202-267-1409.

SUPPLEMENTARY INFORMATION:

Regulatory History

    On April 21, 1997, the Coast Guard published an interim rule 
entitled Vessel Inspection User Fees in the Federal Register (62 FR 
19229). The rule reduced the annual vessel inspection fees for small 
passenger vessels to the limits established under the Coast Guard 
Authorization Act of 1996 (the Act) (Pub. L. 104-324); exempted 
publicly owned ferries from annual vessel inspection fees, as mandated 
by Congress; and added definitions for the terms publicly owned, ferry, 
political subdivision, State, youth, and non-profit organization. The 
Coast Guard also revised the exemption criteria for vessels owned or 
operated by a non-profit organization to include some non-profit 
organizations that did not previously qualify for exemption from 
payment of fees.
    The Coast Guard received 26 letters commenting on the interim rule. 
Twenty-five comments were from ferry owners or operators (21 
``privately owned'' ferries, 1 ``publicly owned'' ferry, and 3 
``unspecified ownership'' ferries). The remaining comment was from the 
Passenger Vessel Association (PVA). No public hearing was requested, 
and none was held.

Discussion of Comments and Changes

Fee Caps

    As required by the Act, the interim rule capped the annual vessel 
inspection fees for small passenger vessels less than 65 feet in length 
at $300 and for small passenger vessels 65 feet or over in length at 
$600. The Coast Guard did not receive any comments on this issue and it 
has not been changed in the final rule.

Definitions

    The interim rule added several definitions to 46 CFR 2.10-25. Only 
the definition of ferry was mentioned in the comments. The interim rule 
defined ferry as a vessel transporting passengers or vehicles on a 
regular run, over the most direct route between a point of embarkation 
and a point of debarkation on lands separated by a body of water other 
than an ocean, or between a point of embarkation and an island within 
the same State.
    The Coast Guard received two comments recommending that the rule 
use the definition of ferry in subchapter T, 46 CFR 175.10-9 (now 46 
CFR 175.400) and subchapter H, 46 CFR 70.10-15. The Coast Guard agrees 
that the definition should be consistent with those in subchapters T 
and H. The definition has been changed in the final rule to conform 
with those in subchapters T and H.
    The Coast Guard has also revised the definition of youth by raising 
the age limit in the definition from 18 to 21 so the exemption could 
apply to vessels owned by colleges and universities providing courses 
of marine environmental studies and meeting the other exemption 
requirements.

Exemption Criteria

    The interim rule revised the exemption criteria in 46 CFR 2.10-5 to 
allow some non-profit organizations that did not previously meet the 
narrowly drawn criteria to qualify for exemption from payment of fees. 
The Coast Guard received no comments on this revision, but we have 
changed the language in this section concerning fundraising activities 
to clearly give owners and operators flexibility in scheduling these 
activities.

Publicly Owned Ferries

    Small passenger vessels, passenger ships, and passenger barges 
operating as ferries pay the annual vessel inspection fee for the 
vessel category to which they belong, since there is no fee category 
established specifically for ferries. As required by the Act, the 
interim rule amended 46 CFR 2.10-25 to exempt publicly owned ferries 
from the user fee requirements of 46 CFR part 2.
    All of the written comments discussed the issue of exempting 
publicly owned ferries and stated that owners or operators of privately 
owned ferries should receive the same exemption as publicly owned 
ferries.

Identical Services

    Nineteen comments stated that privately owned ferries and publicly 
owned ferries provide identical services. Several of the comments 
stated that all ferries provide lifeline services, such as serving as 
the primary or sole means of transportation for residents and visitors; 
providing vital transportation services for passengers, autos, trucks, 
and buses

[[Page 59473]]

to islands, riverine, and coastal communities; providing transportation 
of mail, packages, ambulances, food, and other things needed to supply 
a thriving community; and breaking ice to remote locations when needed.
    The majority of comments stated that all privately owned ferries 
contribute to local economies by paying taxes; providing commuter 
services; transporting a large number of tourists; or providing service 
for commercial vehicles. One comment from a privately owned ferry 
stated it enhanced commerce by providing an important link between two 
major interstates.
    Many comments stated that ferries in general are important to the 
overall infrastructure of mass transit because they provide such 
services as an efficient and popular mode of transit; reduce the costs 
of constructing and maintaining costly infrastructure; meet the 
increasing interest of government and the DOT transportation goals to 
reduce energy use and air pollution, as well as provide safe, 
comfortable, cost-effective transportation; and reduce vehicular 
traffic. Many comments also stated that privately owned ferry companies 
provide at least half of the waterborne passenger transportation 
service in this nation.
    Seventeen comments discussed the economic burden of vessel 
inspection user fees on privately owned ferries. Several of the 
comments stated that continuing user fees for privately owned ferries 
exaggerates an uneven playing field, particularly when their exempted, 
publicly owned counterparts operate in direct competition. Fourteen of 
the comments stated the fees are yet another cost to an industry 
already operating without any financial assistance or subsidies. 
Additionally, several comments stated that fares, schedules, routes, 
and insurance requirements of some privately owned ferries are 
regulated by other rules and regulations. The comments did not describe 
in detail how this affected them, other than as a limitation on their 
ability to pass these costs on to their passengers.
    Congress did not include privately owned ferries in the exclusion 
provision of the Act and the legislative history of the Act does not 
explain why Congress exempted only publicly owned ferries. The Coast 
Guard is implementing the requirements in the Act and has not changed 
the final rule.
    A comment from one owner of a privately owned ferry stated that he 
was one of eight ferry operations required to pay the annual vessel 
inspection user fee for a Passenger Ship. Currently, his fee is 
$6,835.00. The comment requested the Coast Guard ``eliminate these user 
fees or at least provide this operation with the same break afforded to 
the other [small] passenger vessels'' under the Act, reducing his user 
fee from $6,835.00 to $600.00.
    The legislative history of the Act is silent on why Congress only 
capped the fees of small passenger vessels and not other types of 
passenger vessels. With no relief provided in the Act to reduce any 
other passenger vessel user fees, the Coast Guard has not changed the 
vessel inspection user fees for passenger ships or other types of 
passenger vessels that were not covered by the Act.

Regulatory Evaluation

    This rule is not a significant regulatory action under section 3(f) 
of Executive Order 12866 and does not require an assessment of 
potential costs and benefits under section 6(a)(3) of that order. The 
Office of Management and Budget has not reviewed it under that order. 
It is not significant under the regulatory policies and procedures of 
the Department of Transportation (DOT)(44 FR 11040; February 26, 1979).
    The Coast Guard expects the economic impact of this rule to be so 
minimal that a full Regulatory Evaluation under paragraph 10e of the 
regulatory policies and procedures of DOT is unnecessary. The Act 
placed a cap on fees charged for the inspection of small passenger 
vessels which reduced the economic burden imposed on small businesses. 
The Act also provided an exemption for publicly owned ferries from the 
payment of user fees, which eliminated costs to States, State agencies, 
and local governments. Implementation of these provisions began on 
November 1, 1996.
    The exemption criteria in 46 CFR 2.10-5 allow additional exemptions 
from payments of fees for vessels owned or operated by non-profit 
organizations because the Coast Guard determined it is clearly within 
the public interest to do so.
    User fee revenues will be reduced by approximately $2.8 million 
dollars as a result of the Congressional cap on small passenger vessels 
and its exemption of the publicly owned ferries, and the Coast Guard's 
broadening of the exemption eligibility criteria for vessel owners or 
operators of non-profit organizations. The cap on small passenger 
vessels will affect 5,880 vessels; it reduces revenues to the 
government and provides savings to the small passenger vessel industry 
in the amount of $2.25 million dollars. The exemption of publicly owned 
ferries affects 170 vessels; it reduces revenues to the government and 
provides a savings to the industry in the amount of $428,200 dollars. 
Broadening the exemption eligibility for non-profit organizations is 
estimated to affect 100 vessels; it will reduce revenues to the 
government and will provide savings to industry in the amount of 
$67,000 dollars.

Small Entities

    Under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), the 
Coast Guard considered whether this rule would have a significant 
economic impact on a substantial number of small entities. ``Small 
entities'' include small businesses, not-for-profit organizations that 
are independently owned and operated and are not dominant in their 
fields, governmental jurisdictions with populations of less than 
50,000.
    The Coast Guard has reviewed this rule for potential impact on 
small entities under the Regulatory Flexibility Act. This rule reduces 
an existing economic burden on small businesses owning inspected small 
passenger vessels or ferrries specified by the Act, or that qualify for 
the revised exemption status by lowering or eliminating fees required 
for Coast Guard vessel inspection services. Therefore, the Coast Guard 
certifies under section 605(b) of the Regulatory Flexibility Act that 
this final rule will not have a significant economic impact on a 
substantial number of small entities.

Assistance for Small Entities

    In accordance with section 213(a) of the Small Business Regulatory 
Enforcement Fairness Act of 1996 (Pub. L. 104-121), the Coast Guard 
offered to assist small entities in understanding the rule so that they 
could better evaluate its effects on them and participate in the 
rulemaking process. The interim rule informed individuals applying for 
an exemption under this rule that their local Officer in Charge, Marine 
Inspection (OCMI) could provide assistance, or they could call, toll 
free, 1-800-941-3337. Individuals seeking further assistance may still 
call, toll free, 1-800-941-3337.
    During the interim rule comment period, assistance was provided to 
small entities by explaining the reasons for the annual user fee cap 
reduction for small passenger vessels and the revision of the 
discretionary exemption criteria for vessels owned or operated by non-
profit organizations.

Collection of Information

    This final rule contains no new collection-of-information 
requirements under the Paperwork Reduction Act (44 U.S.C. 3501 et 
seq.).

[[Page 59474]]

Federalism

    The Coast Guard analyzed this rule under the principles and 
criteria contained in Executive Order 12612 and determined that this 
rule does not have sufficient federalism implications to warrant the 
preparation of a Federalism Assessment. This rule amends user fees for 
vessel inspection and examination services to cap fees paid for 
services related to small passenger vessels, and exempts publicly owned 
ferries from payment of the fees.

Unfunded Mandates

    Under the Unfunded Mandates Reform Act (Pub. L. 104-4), the Coast 
Guard considered whether this final rule will result in an annual 
expenditure by State, local, and tribal governments, in the aggregate, 
or by the private sector, of $100 million (adjusted annually for 
inflation). Section 205 of the Unfunded Mandates Reform Act requires 
the Coast Guard to identify and to consider a reasonable number of 
regulatory alternates, and from those alternatives, select the least 
costly, most cost-effective, or least burdensome alternative that 
achieves the objective of this final rule. This rule does not impose 
additional costs upon any State, local, and tribal governments as a 
result of a mandate imposed upon them as a government agency. The 
completed analysis estimates that this final rule will provide a total 
savings to vessel owners and operators of approximately $2.8 million 
dollars. Publicly owned ferries will no longer have to pay a total of 
$428,200 in annual inspection user fees. This rule will, therefore, 
result in the reduction or elimination of fees paid by State, local, 
and tribal governments for inspection services provided to the 
applicable vessels owned by such entities.

Environment

    The Coast Guard considered the environmental impact of this rule 
and concluded that under figure 2-1, paragraph (34)(a) of Commandant 
Instruction M16475.lC, this rule is categorically excluded from further 
environmental documentation. Paragraph (34)(a) of that instruction 
excludes editorial or procedural regulations that clearly do not have 
any environmental impacts. ``Categorical Exclusion Determination'' is 
available in the docket for inspection or copying where indicated under 
ADDRESSES.

List of Subjects in 46 CFR Part 2

    Fees, Marine safety, Vessels.

    Accordingly, the interim rule amending 46 CFR part 2 which was 
published in 62 FR 19229 on April 21, 1997, is adopted as a final rule 
with the following changes and amendments:

PART 2--VESSELS INSPECTIONS

    1. The authority citation for part 2 continues to read as follows:

    Authority: 14 U.S.C 664; 31 U.S.C. 9701; 33 U.S.C. 1903; 43 
U.S.C. 1333, 1356; 46 U.S.C. 2110, 3306, 3703; E.O. 12234, 45 FR 
58801, 3 CFR 1980 Comp., p. 277; 49 CFR 1.46; Subpart 2.45 also 
issued under the authority of Act Dec 27, 1950, Ch 1155, sections 1, 
2, 64 Stat. 1120 [see 46 U.S.C. App. Note prec. 1].

    2. In Sec. 2.10-5, revise paragraph (c)(2) to read as follows:


Sec. 2.10-5  Exemptions.

* * * * *
    (c) * * *
    (2) The vessel's use for fundraising activities without regard to 
the age of the participants aboard the vessel, provided revenues raised 
are for the operation and maintenance of the vessel and that such 
fundraising activities do not exceed one day of fundraising for each 
month of the vessel's operating season.
* * * * *
    3. In Sec. 2.10-25, revise the definitions of ferry and youth to 
read as follows:


Sec. 2.10-25  Definitions.

* * * * *
    Ferry means a vessel that:
    (1) Operates in other than ocean or coastwise service;
    (2) Has provisions only for deck passengers or vehicles, or both;
    (3) Operates on a short run on a frequent schedule between two 
points over the most direct water route; and
    (4) Offers a public service of a type normally attributed to a 
bridge or tunnel.
* * * * *
    Youth means an individual 21 years of age or younger.

    Dated: September 28, 1998.
R.C. North,
Rear Admiral, U.S. Coast Guard, Assistant Commandant for Marine Safety 
and Environmental Protection.
[FR Doc. 98-29497 Filed 11-3-98; 8:45 am]
BILLING CODE 4910-15-U