[Federal Register Volume 64, Number 20 (Monday, February 1, 1999)]
[Proposed Rules]
[Pages 4816-4818]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-1986]



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DEPARTMENT OF TRANSPORTATION

Coast Guard

33 CFR Part 173

[USCG 98-3386]
RIN 2115-AF62


Adjustment of Fees for Issuing Numbers to Undocumented Vessels in 
Alaska

AGENCY: Coast Guard, DOT.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Coast Guard proposes to increase the fees it charges for 
issuing numbers to undocumented vessels in Alaska, to a rate enabling 
full-cost recovery. It proposes this measure because the fees it now 
charges fall far short of covering the cost of issuing numbers there. 
This measure should bring it into full compliance with the general 
Federal statute on user fees and, not incidentally, should increase 
convenience to the public by allowing more means of payment.

DATES: Comments must reach the Docket Management Facility on or before 
April 2, 1999.

ADDRESSES: You may mail comments to the Docket Management Facility, 
(USCG 1998-3323), U. S. Department of Transportation, room PL-401, 400 
Seventh Street SW, Washington, DC 20590-0001, or deliver them to room 
PL-401 on the Plaza Level of the Nassif Building at the same address 
between 9 a.m. and 5 p.m., Monday through Friday, except Federal 
holidays. The telephone number is (202) 366-9329.
    The Docket Management Facility maintains the public docket for this 
rulemaking. Comments and documents, as indicated in this preamble, will 
become part of this docket and will be available for inspection or 
copying at room PL-401 on the Plaza level of the Nassif Building at the 
same address between 10 a.m. and 5 p.m., Monday through Friday, except 
Federal holidays. You may also access this docket on the Internet at 
http://dms.dot.gov. You may obtain a copy of this notice by calling the 
U. S. Coast Guard Infoline at 1-800-368-5647, or read it on the 
Internet, at the Web Site for the Office of Boating Safety, at http://
www.uscgboating.org or at http://dms.dot.gov.

FOR FURTHER INFORMATION CONTACT: For questions on this rulemaking, 
contact Mrs. Janice B. Giles, Program Development and Implementation 
Division, Office of Boating Safety, Coast Guard, telephone 202-267-0911 
(email: [email protected]), or Sue Hargis, Seventeenth Coast Guard 
District (Alaska) Boating Safety Specialist, (907) 463-2297 (email: 
[email protected]). For questions on viewing, or submitting 
material to, the docket, contact Dorothy Walker, Chief, Dockets, 
Department of Transportation, telephone 202-366-9329.

SUPPLEMENTARY INFORMATION:

Request for Comments

    The Coast Guard encourages interested persons to participate in 
this rulemaking by submitting written data, views, or arguments. 
Persons submitting comments should include their names and addresses, 
identify this rulemaking [USCG 1998-3386] and the specific section of 
this document to which each comment applies, and give the reason for 
each comment. Please submit all comments and attachments in an unbound 
format, no larger than 8\1/2\ by 11 inches, suitable for copying and 
electronic filing to the Docket Management Facility at the address 
under ADDRESSES. Persons wanting acknowledgment of receipt of comments 
should enclose stamped, self-addressed postcards or envelopes.
    The Coast Guard will consider all comments received during the 
comment period. It may change this proposed rule in view of the 
comments.
    The Coast Guard plans no public meeting. Persons may request a 
public hearing by writing to the Docket Management Facility at the 
address under ADDRESSES. The request should include the reasons why a 
hearing would be beneficial. If it determines that the opportunity for 
oral presentations will aid this rulemaking, the Coast Guard will hold 
a public hearing at a time and place announced by a later notice in the 
Federal Register.

Background and Purpose

    Title 33, Part 173, of the Code of Federal Regulations (CFR) 
governs the issuance of certificates of number to owners of vessels 
that need not be documented (generally, recreational boats). The 
issuing and reporting authority for these certificates is the State 
where the vessel is principally operated, with one exception: Alaska 
does not act as this authority. Under sub-section 12301(a) of Title 46, 
United States Code (U.S.C.), when a State does not act as the issuing 
authority, the Coast Guard must.
    This proposed rule would raise the fees the Coast Guard charges for 
numbering undocumented vessels in Alaska, as well as revise the methods 
of payment of the fees. The current fees, promulgated in 1972 (33 CFR 
173.85, CGD 72-54R, 37 FR 21399, October 7, 1972), fall far short of 
covering costs the Coast Guard incurs on numbering vessels. The Coast 
Guard must set these fees in accordance with the criteria specified in 
section 9701 of Title 31, U.S.C., and Revised OMB Circular A-25, which 
establishes guidelines by which Federal agencies are to assess fees for 
Government services and for the sale or use of Government property or 
resources. The current fees have not affected Coast Guard 
appropriations from year to year. They have gone into the general fund 
of the U. S. Treasury as offsetting receipts of the department in which 
the Coast Guard is operating, and are ascribed to activities of the 
Coast Guard. Under the provisions of 46 U.S.C. 2110, the new fees 
proposed would become available to reimburse the Coast Guard for most, 
if not all, of the costs of collection. The proposed rule should result 
in an increased fee that more nearly approximates the current costs for 
the Coast Guard to issue numbers to vessels in Alaska.

Discussion of Proposed Rule

    The issuance of numbers by the Coast Guard to undocumented vessels 
is unique to the State of Alaska and the 17th Coast Guard District. In 
all other parts of the nation, State or Territorial authorities act as 
the issuing authorities. The Coast Guard retains the responsibility for 
Alaska under 33 CFR part 173, because the government of Alaska has not 
sought Coast Guard approval of a system for numbering vessels.
    This proposed rule would amend 33 CFR 173.85 so that the fees 
charged would cover the costs incurred for the number-issuing service 
the Coast Guard must provide in Alaska. The increased fees would affect 
those people who own vessels to which 33 CFR 173.11 applies 
(undocumented vessels) and which are principally operated in Alaska.
    Discussion of fees. The current fee, set in 1972, is $6.00 for a 
three-year vessel number. Under the general Federal statute on user 
fees (31 U.S.C. 9701), Federal agencies required to charge user fees 
for services must charge fees sufficient to enable recovery of the full 
cost of providing the services. 46 U.S.C. 2110 mandated the 
establishment of a fee or charge for a service or thing of value 
provided by the Secretary under this subtitle, in accordance with 
section 9701 of title 31. Since the issuance of numbers to vessels is a 
labor-intensive service, and since the Coast Guard receives no 
appropriated funds for it, the Coast Guard has diverted resources from 
other programs to provide this service to the Alaskan boating public. 
The fee that the Coast Guard collects

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does not accrue to the Coast Guard; it goes into miscellaneous receipts 
of the Federal Treasury. But even if it did accrue to the Coast Guard 
it would cover barely 25 percent of the cost of providing the service. 
It has remained unchanged for 26 years.
    The Coast Guard recently employed KPMG Peat Marwick LLP, through a 
contract with Computer Sciences Corporation of Falls Church, Virginia, 
to analyze the processes associated with all user fees collected by the 
Coast Guard, including the issuance of certificates of number in 
Alaska, and to develop a methodology for determining user fees that 
would enable the Coast Guard to fully recover its costs for providing 
these services. A copy of the analysis is in the docket for this 
rulemaking.
    The analysis concluded that the Coast Guard was not applying the 
resources needed to efficiently provide the Alaskan boating public with 
this service and that, at the 26-year-old rate, it could never recover 
the cost of providing the service. Based on that analysis, the report 
proposed a rationale and methodology for calculating the appropriate 
user fees that would allow it to fully recover its cost for providing 
this unique service in Alaska.
    Cost methodology. Acting on the recommendations of KPMG, the Coast 
Guard adopted a costing methodology that is based in part on Activity-
Based Costing (ABC). ABC differs from traditional cost accounting in 
that it assigns costs according to the activities required to produce 
an output, rather than according to categories of expenses. In 
addition, the staff of the 17th Coast Guard District conducted a study 
of its costs for issuing certificates of number: direct labor hours for 
providing these services, plus costs of material such as forms, 
validation stickers (decals), mailing, office equipment, and other 
supplies.
    Fee calculations. No automated system of the Coast Guard distinctly 
records direct hours of labor spent on issuance of certificates of 
number. The Coast Guard calculated its indirect costs for general and 
administrative (G&A) expenses and allocated these costs based on 
resource labor hours used to process the four types of transactions 
comprising undocumented vessel numbering (certificates issued or 
transferred, certificates renewed, certificates duplicated; and decals 
replaced). District staff reconstructed the numbers of each of these 
types of transactions, using data consistently recorded in worksheets.
    The steps employed to calculate the user fees for numbering 
undocumented vessels are as follows:
    1. Determine the annual hours of labor spent on numbering 
undocumented vessels. Staff determined these by using the Personnel 
Allowance List (PAL) for the District and conducting interviews with 
personnel of the District.
    2. Determine the percentage of annual hours of labor spent 
providing each of the four types of transactions comprising this 
numbering. Staff multiplied the annual number of each of the 
transactions by the average time required to perform each of those 
transactions to determine the total annual time spent performing each 
transaction. Staff determined the annual time to perform each of the 
four transactions by the percentage of the total annual time 
attributable to each transaction type.
    3. Determine the annual labor cost for each of the four types of 
transactions by prorating the annual salary of the numbers and grades 
of personnel of the Coast Guard employed in direct support of vessel 
numbering. Staff prorated salaries using the factors developed in steps 
1 and 2.
    4. Determine the total direct costs of undocumented vessel 
numbering. Again, staff provided detailed information on direct costs 
incurred for numbering undocumented vessels that no system of the Coast 
Guard distinctly records. These direct costs comprise labor (as 
determined in steps 1-3, above), the cost for vessel numbering 
materials used, and mailing expenses.
    5. Determine the general and administrative (G&A) costs 
attributable to issuing undocumented vessels numbers. These indirect 
costs comprise the Coast Guard's general and administrative expenses 
for administering the services, and were allocated based upon labor 
hours.
    6. Determine the amount for each user fee by dividing the annual 
cost for each of the four types of transactions by the number of 
transactions accomplished. Figure 1 outlines the number of 
transactions, and the direct and indirect costs associated with each of 
the four types of transactions comprising undocumented vessels' 
numbering, provided in Alaska during fiscal year 1997, as well as the 
user fee derived with this methodology.

                                Figure 1.--Derived User Fees for Vessel Numbering
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             Service               Transactions    Direct costs      G&A costs      Total cost     Computed fee
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Certificates issued or
 transferred....................           6,377         129,066          28,774         157,840           24.75
Certificates renewed............           5,053          68,087          15,179          83,266           16.48
Certificates duplicated or
 decals replaced................             602           4,766           1,062           5,828            9.68
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    We have rounded the fees proposed down to the nearest whole dollar 
amount to simplify collection and accounting and to conform with 46 
U.S.C. 2110(a)(3).

Changes to 33 CFR 173.85

    The three-year fee for original and transferred certificates of 
number would increase from $6.00 to $24.00. The fee for renewal of a 
certificate of number would increase from $6.00 to $16.00. The fee for 
a duplicate certificate of number would increase from $1.00 to $9.00. 
The fee for replacement of a lost or destroyed Validation Sticker would 
increase from $0.25 to $9.00. The Coast Guard would accept payment of 
fees by check, money-order, major credit card (MasterCard or Visa), or 
cash.

Regulatory Evaluation

    This proposed 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. It has not been reviewed by the Office of Management and 
Budget under that Order. It is not significant under the regulatory 
policies and procedures of the Department of Transportation (DOT) (44 
FR 11040, February 26, l979). The Coast Guard expects the economic 
impact of this proposed rule to be so minimal that a full Regulatory 
Evaluation under paragraph 10e of the regulatory policies and 
procedures of DOT is unnecessary. The prospective increase in number-
issuing fees (which are paid by owners of recreational boats only once 
every three years) would be less than $25.00, and would affect a 
minority of the State's population.

Small Entities

    Under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), the 
Coast Guard

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considers whether this proposed rule, if adopted, will 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, and governmental jurisdictions with 
populations of less than 50,000.
    Records of the Coast Guard indicate that as of December 31, 1997, 
there were 32,414 undocumented vessels numbered by the Coast Guard in 
Alaska. Of those, 7,107 vessels (23 percent) are owned by commercial 
entities (4,945 commercial fishing vessels, 1,656 commercial passenger-
carrying vessels, and 506 rental or livery vessels), some of which may 
qualify as ``small entities.'' Also, in 1997, the Coast Guard issued 
6,377 original certificates of number, 5,053 renewal certificates of 
number, and 601 duplicate certificates of number or replacement 
validation stickers. The proposed fees would increase the cost of 
three-year original and renewal certificates of number by $18.00 and 
$10.00, respectively, for an annual rise in cost of about $6.00 and 
$3.33, respectively, where the fees applied at all. The fees would 
increase the cost of duplicate certificates of number and replacement 
validation stickers by $8.00 and $8.75, respectively, when needed. The 
Coast Guard estimates that the fees could increase costs about $36,000, 
or about $12,000 annually, for the entire fleet of currently numbered 
commercial-use vessels in Alaska. Again, however, under the general 
Federal statute on user fees, the Coast Guard is bound to recover its 
costs. But, under 5 U.S.C. 610 and Circular A-25, the Coast Guard is 
bound to review these fees every two years.
    Therefore, the Coast Guard certifies under 5 U.S.C. 605(b) that 
this proposed rule, if adopted, will not have a significant economic 
impact on a substantial number of small entities. If, however, you 
think that your business or organization qualifies as a small entity 
and that this rule would have a significant economic impact on your 
business or organization, please submit a comment to the Docket 
Management Facility explaining why you think it qualifies and in what 
way and to what degree this rule would economically affect it.

Collection of Information

    This proposed rule does not provide for a collection of information 
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).

Federalism

    The Coast Guard has analyzed this proposed rule under the 
principles and criteria contained in Executive Order 12612 and has 
determined that this proposed rule does not have sufficient 
implications for federalism to warrant the preparation of a Federalism 
Assessment. The Coast Guard is complying with the general Federal 
statute on user fees, and the specific Federal statute for services 
provided under subtitle II of title 46.

Environment

    The Coast Guard considered the environmental impact of this 
proposed rule and concluded that under figure 2-1, paragraph (34)(a), 
of Commandant Instruction M16475.lC, this proposed rule is 
categorically excluded from further environmental documentation. The 
rulemaking merely adjusts the fee amounts charged to owners of 
undocumented vessels for issuing vessel numbers and validation 
stickers. A ``Categorical Exclusion Determination'' is available in the 
docket for inspection or copying where indicated under ADDRESSES.

List of Subjects in 33 CFR Part 173

    Marine Safety, Reporting and Recordkeeping Requirements.

    For the reasons discussed in the preamble, the Coast Guard proposes 
to amend 33 CFR part 173 as follows:

PART 173--VESSEL NUMBERING AND CASUALTY AND ACCIDENT REPORTING

    1. Revise the authority citation for Part 173 to read as follows:

    Authority: 5 U.S.C. 610; 31 U.S.C. 9701; 46 U.S.C. 2110, 6101, 
12301, 12302; OMB Circular A-25; 49 CFR 1.46.

    2. Revise Sec. 173.85 to read as follows:


Sec. 173.85  Fees levied by the Coast Guard.

    (a) In a State where the Coast Guard is the issuing authority, the 
fees for issuing certificates of number are:
    (1) Original or transferred certificate of number and two 
validation stickers--$24.00;
    (2) Renewal of certificate of number and two validation stickers--
$16.00;
    (3) Duplicate certificate of number--$9.00; and
    (4) Replacement of lost or destroyed validation stickers--$9.00.
    (b) Fees are payable by check or money-order made payable to the 
``U.S. Coast Guard''; by major credit card (MasterCard or Visa); or, 
when the owner applies in person, in cash.

    Dated: January 13, 1999.
Ernest R. Riutta,
Rear Admiral, U.S. Coast Guard, Assistant Commandant for Operations.
[FR Doc. 99-1986 Filed 1-29-99; 8:45 am]
BILLING CODE 4910-15-P