[Federal Register Volume 65, Number 29 (Friday, February 11, 2000)]
[Rules and Regulations]
[Pages 6905-6912]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-3176]


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DEPARTMENT OF TRANSPORTATION

Maritime Administration

46 CFR Part 388

[Docket No. MARAD-1999-5915]
RIN 2133-AB39


Administrative Waivers of the Coastwise Trade Laws for Eligible 
Vessels

AGENCY: Maritime Administration, Department of Transportation.

ACTION: Final rule.

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SUMMARY: The Maritime Administration (MARAD, we, our, or us) is 
publishing this final rule to implement Title V of the Coast Guard 
Authorization Act of 1998. This final rule implements regulations that, 
under certain circumstances, will waive the U.S.-build and other 
requirements of the Passenger Services Act and section 27 of the 
Merchant Marine Act, 1920, for eligible vessels to be documented with 
appropriate endorsement for employment in the coastwise trade as small 
passenger vessels or uninspected passenger vessels authorized to carry 
no more than 12 passengers for hire. This administrative process will 
improve the responsiveness of the Federal Government in meeting the 
needs of many vessel-operating small businesses.

DATES: The effective date of the final rule is February 11, 2000.

FOR FURTHER INFORMATION CONTACT: You may call Michael Hokana, Office of 
Ports and Domestic Shipping, Maritime Administration, at (202) 366-
0760, or you may write to him at the following address: Maritime 
Administration, MAR-832, Room 7201, 400 Seventh Street, SW, Washington, 
DC 20590.

SUPPLEMENTARY INFORMATION: Title V of the Coast Guard Authorization Act 
of 1998 authorizes the Secretary of Transportation to grant waivers of 
certain requirements for the smallest of passenger vessels (those 
carrying 12 or fewer passengers) to operate in the coastwise trade. In 
order to carry out the provisions of the law, MARAD developed a 
procedure (i.e., this rule) for: accepting applications from the 
public, providing public notice of the intent to issue waivers to 
foreign built vessels for use in the coastwise passenger trade, a set 
of criteria to test the merits of the applications, a decision process, 
and a review and revocation process. The application process requires a 
$300 non-refundable fee, an ``adverse affect'' assessment on the U.S.-
flag shipping and vessel building community, and a requirement that the 
vessel must meet U.S. Coast Guard documentation standards. After the 
decision process is completed and the waiver is approved, MARAD will 
issue a waiver document that becomes a permanent part of the vessel's 
coastwise endorsement. The document will set limits on the vessel's 
geographic use and will require MARAD's prior approval for all 
significant changes in the vessel's operation. With regard to overall 
processing, MARAD has also prepared a revocation procedure for use if 
necessary and a review process where the Maritime Administrator may 
review the waiver granting and revocation decisions of the MARAD staff.
    One portion of the law requires public notice prior to rulemaking. 
Accordingly, on July 8, 1999 MARAD published a 60-day notice in the 
Federal Register (64

[[Page 6906]]

FR 36831) soliciting comments on a proposed rule and information 
collection to administer a program implementing the above law. In 
response to our notice, we received three letters expressing opinions 
and recommending changes. MARAD has considered these comments and has 
made changes to the regulation as necessary. The comments and our 
responses follow.
    MARAD, at its own initiative, made several changes to the proposed 
text. None of these changes are substantive. By way of examples: 
definitions of ``Administrator'' and ``MARAD'' are added to reduce the 
length of the regulation (Sec. 388.2); the wording of the Act is 
followed more closely, such as ``certification'' being replaced with 
``certificate of documentation with appropriate endorsement'' (Sec. 
388.2 (c) (2)); corrections are made, as in making singular 
``Applications; fees'' (Sec. 388.3 Title) and ``origins'' (Sec. 388.3 
(a) (4)); changed the organization that the check should be made out to 
(Sec. 388.3 (c)); and the wording ``vessel builders'' has been used 
instead of ``shipbuilders'' in several places.

Comments on the Proposed Rule

``3 Mates' MIMI Connection Inc.''

    The first letter, from ``3 Mates'' MIMI Connection Inc.'', was an 
affirmation that MARAD was serving all interests. No further action on 
the part of MARAD is required with regard to this input.

Classic Sailing Adventures

    The second letter, from the president of Classic Sailing 
Adventures, contained three recommendations. In summary, the 
recommendations were that MARAD: (1) Should not place geographic 
restrictions on where a waived vessel can operate; (2) should eliminate 
the ``adverse assessment'' consideration on U.S.-flag industries, and, 
(3) should not require an application fee. MARAD's response is that 
because of the requirements of the law, and previously enacted 
legislation, we will not implement any of these recommendations. The 
reasons for keeping these provisions in the regulation are threefold. 
The geographic restriction allows MARAD to more closely focus on who 
might be affected by a waiver. To eliminate the ``adverse affect'' 
assessment on U.S. operators and shipbuilders would violate enabling 
legislation, which specifically requires an ``adverse affect'' 
determination. Lastly, the application fee is necessary to recoup 
estimated direct costs incurred in the processing of each application 
as required by law.

Passenger Vessel Association

    The third letter, containing 20 specific recommendations, was 
received from the Passenger Vessel Association (PVA), which represents 
U.S.-flag passenger vessel owners, operators and builders. In order to 
present the recommendations and MARAD's decisions in a clear and 
concise manner, we have set up our response in the following format:
    Each recommendation is provided a number, followed by the section 
where the rule has been (or might have been) changed. ``Proposed'' 
means the text as originally proposed in MARAD's notice of proposed 
rulemaking. ``Recommendation'' means the recommendation of the 
Passenger Vessel Association, and ``Decision'' is the action taken by 
MARAD. Specific word changes are underlined in the recommendation for 
clarity.

1. Section 388.2  Definitions

    Proposed: In paragraph (2) of the definition of eligible vessel 
``If rebuilt, was rebuilt outside of the United States at least 3 years 
before the certificate of documentation with appropriate endorsement 
would become effective.''
    Recommendation: The PVA requests the inclusion of ``if granted'' in 
the sentence: ``If rebuilt, was rebuilt outside of the United States at 
least 3 years before the certificate of documentation with appropriate 
endorsement, if granted, would become effective.'' The words ``if 
granted'' ensure applicants know that waivers are not guaranteed.
    Decision: MARAD accepts the requested recommendation.

2. Section 388.3  Application; Fee

    Proposed: In paragraph (a) ``(a) You may apply in writing to the 
Secretary, Maritime Administration* * *''
    Recommendation: Change ``You'' in paragraph (a) to read: ``(a) An 
owner of a vessel may apply in writing to the Secretary, Maritime 
Administration* * *''
    The recommendation would insert the new words ``an owner of a 
vessel'' in place of the word ``you'' in order to ensure only vessel 
owners apply for waivers. The PVA could not see any other rationale for 
a person other than an owner applying for a waiver.
    Decision: MARAD accepts the requested recommendation.

3. Section 388.3  Application; Fee

    Proposed: Paragraph (a), question number (5) on the application: 
``Name, address, and telephone number of the applicant and vessel owner 
if different from the applicant.''
    Recommendation: Change paragraph (a), question number (5) on the 
application to read: ``Name, address, and telephone number of the 
vessel owner.''
    The recommendation would delete the words ``applicant'' and 
``vessel owner if different than applicant'' in order to accept 
applications only from owners.
    Decision: MARAD accepts the recommendation.

4.  Section 388.3 Application; Fee

    Proposed: This requirement was not covered in the proposed rule.
    Recommendation: The PVA recommends a new requirement to the waiver 
application that would read as a new question (8):

    (8) A statement explaining the duration of the applicant's 
ownership of the vessel, his cost of purchasing or otherwise 
obtaining the vessel, the person or source from whom he obtained the 
vessel, and the uses to which he has put the vessel since obtaining 
it.

    The PVA justifies this requirement as better enabling the 
government to determine if the waiver will have an effect on an 
industry.
    Decision: MARAD believes this question to be intrusive and 
unnecessary to carry out MARAD's responsibilities and does not accept 
the change recommendation.

5. Section 388.4  Criteria for Grant of a Waiver

    Proposed: In paragraph (a) General criteria:

    (1) A waiver of the foreign build and/or foreign rebuild 
prohibition in the coastwise trade laws will be granted for an 
eligible vessel if we determine that the employment of the vessel in 
the coastwise trade will not unduly adversely affect--
    (i) United States vessel builders; or
    (ii) The coastwise trade business of any person who employs 
vessels built in the United States in that business.

    Recommendation: It is recommended that the words ``only if'' be 
inserted in paragraph (a) General criteria, (1):

    (1) A waiver of the foreign build and/or foreign rebuild 
prohibition in the coastwise trade laws will be granted for an 
eligible vessel only if we determine that the employment of the 
vessel in the coastwise trade will not unduly adversely affect--
    (i) United States vessel builders; or
    (ii) The coastwise trade business of any person who employs 
vessels built in the United States in that business.

    The PVA would like to ensure that MARAD would interpret the two 
industry areas of consideration for adverse impact separately such that 
an adverse impact on operators or vessel builders would be seen to be 
an adverse impact subject to rejection.

[[Page 6907]]

    Decision: MARAD agrees with this logic and will follow this 
interpretation. The words ``only if'' are added in the final rule.

6. Section 388.4  Criteria for Grant of a Waiver

    Proposed: In paragraph (a) General criteria, (1):

    (1) A waiver of the foreign build and/or foreign rebuild 
prohibition in the coastwise trade laws will be granted for an 
eligible vessel only if we determine that the employment of the 
vessel in the coastwise trade will not unduly adversely affect--
    (i) United States vessel builders; or
    (ii) The coastwise trade business of any person who employs 
vessels built in the United States in that business.

    Recommendation: In paragraph (a) General criteria, (1) The PVA 
recommends the deletion of the word unduly from the phrase as this sets 
too high of a standard for adverse impact.
    Decision: MARAD believes that to remove the word ``unduly'' would 
require the rejection of a waiver request for the smallest and most 
frivolous of adverse conditions. The recommendation is not accepted.

7. Section 388.4  Criteria for Grant of a Waiver

    Proposed: This issue was not covered in the proposed rule.
    Recommendation: At the end of paragraph (a) General criteria (1), 
the PVA requests the following statement be inserted to allow larger 
passenger cruise vessel operators to claim adverse affect.

    The determination of unduly adverse affect on a coastwise 
operator or a U.S. shipbuilder should not be limited to operators or 
builders of vessels carrying 12 or fewer passengers.

    Decision: MARAD will use the following sentence instead:

    We may not limit the determination of `unduly adverse affect' on 
a coastwise operator or an U.S. vessel builder to operators or 
builders of vessels carrying 12 or fewer passengers.

    This is a reasonable recommendation, as it will allow MARAD to 
gauge impact on U.S.-flag vessels of all sizes. MARAD accepts the 
recommendation with the changed language.

8. Section 388.4  Criteria for Grant of a Waiver

    Proposed: In paragraph (a) General criteria, (2) ``We may evaluate 
the expected impact of the proposed waiver on the basis of information 
received from all sources, including public comment, internal 
investigation and analysis, and any other sources of information deemed 
appropriate.''
    Recommendation: In paragraph (a) General criteria, (2) The PVA 
recommends that the word ``may'' be replaced with the word ``will'' in 
the sentence; and that the evaluation will take into account ``all'' 
the information received from all sources.

    We will evaluate the expected impact of the proposed waiver on 
the basis of all the information received * * *

    Decision: MARAD accepts the premise and changes the wording from 
``may'' to ``will'' and from ``and'' to ``or'' in order to maintain 
flexibility as to the information needed to make a decision.

    We will evaluate the expected impact of the proposed waiver on 
the basis of all the information received from all sources, 
including public comment, internal investigation and analysis, or 
any other sources of information deemed appropriate.

9. Section 388.4  Criteria for Grant of a Waiver

    Proposed: In paragraph (b) Impact on U.S. vessel builders:

    We may use the following criteria to determine the effect on 
U.S. vessel builders.

    Recommendation: The recommended change is to delete the word 
``may'' and replace it with the word ``will'' in the sentence:

    We will use the following criteria to determine the effect on 
U.S. vessel builders.

    Decision: MARAD prefers to maintain the flexibility that ``may'' 
provides in as much as there may need to be more than one criteria 
weighed in making a decision.

10. Section 388.4  Criteria for Grant of a Waiver

    Proposed: In paragraph (c) Impact on coastwise trade operators:

    We may use the following criteria to determine the effect on 
existing operators of U.S.-built vessels in coastwise trade:
    (1) Whether the proposed vessel of the applicant and the 
vessel(s) of an existing operator(s) (or the vessel(s) of an 
operator that can demonstrate it has taken definite steps to begin 
operation):
    (i) Are of similar size;
    (ii) Are of similar characteristics;
    (iii) Would provide similar commercial service; and
    (iv) Would operate in the same geographic area.

    Recommendation: In paragraph (c) Impact on coastwise trade 
operators, the PVA commented that the original phrasing was too narrow. 
MARAD's original phrasing would not allow a vessel owner to claim 
adverse effect if the U.S.-built vessel was a different size, although 
employed in similar commercial service as a foreign proposed vessel.
    Decision: MARAD agrees with the premise of the comment and has 
changed the final rule to read:

    We may use the following criteria to determine the effect on 
existing operators of U.S.-built vessels in coastwise trade:
    (1) Whether the proposed vessel of the applicant and a vessel of 
an existing operator (or the vessel of an operator that can 
demonstrate it has taken definite steps to begin operation) would 
provide similar commercial service and would operate in the same 
geographic area.

    This new language eliminates the previous criterion that in order 
to be adversely affected, the impacted vessel must be of similar size 
and similar characteristics.

11. Section 388.4  Criteria for Grant of a Waiver

    Proposed: This issue was not covered in the proposed rule.
    Recommendation: PVA proposes a new paragraph (d) as follows:

    (d) Advance notice and approval needed for changes.
    When we approve a waiver application, we will notify the 
applicant that no substantial change in the employment of the vessel 
in the coastwise trade may be made without prior notice to MARAD. 
Failure to provide advance notice of a proposed change in employment 
creates a presumption that the waiver should be revoked under 
section 388.5.

    Decision: MARAD has reviewed this proposal and has added the 
following in the final rule:

    (d) Advance notice and approval needed for changes.
    When we approve a waiver application, we will notify the 
applicant that the applicant may not make substantial changes in the 
employment of the vessel in the coastwise trade without prior notice 
to MARAD. If the applicant fails to provide advance notice of 
substantial changes to MARAD, we may immediately revoke the waiver 
under section 388.5.

    The change is accepted with MARAD's modifications.

12. Section 388.5  Criteria for Revocation of a Waiver

    Proposed: In paragraph (a):

    (a) We may revoke a waiver previously granted under this part if 
we determine that the employment of the vessel in the coastwise 
trade has substantially changed since the issuance of the 
endorsement,
    and--

    Recommendation: In paragraph (a), the PVA recommends changing the 
first sentence to read as follows, deleting the word ``may'' and 
replacing it with ``will''.

    (a) We will revoke a waiver previously granted under this 
paragraph if we determine

[[Page 6908]]

that the employment of the vessel in the coastwise trade has 
substantially changed since the issuance of the endorsement.

    Decision: This recommendation is not acceptable to MARAD as 
``will'' is mandatory and requires unconditional revocation. Since the 
change in employment of the vessel may be a positive impact on the 
merchant marine with no adverse impact, we do not want to have to 
automatically revoke a waiver.

13. Section 388.5  Criteria for Revocation of a Waiver

    Proposed: In paragraph (a)(3):

    (3) The employment of the vessel unduly adversely affects--
    (i) United States vessel builders; or
    (ii) The coastwise trade business of any person who employs 
vessels built in the United States.''

    Recommendation: In paragraph (a) (3), the change recommendation 
from the PVA is to remove the word ````unduly'''' from the phrase 
``unduly adversely affects'' as it sets too high a standard for adverse 
impact on industry.
    Decision: MARAD believes that to remove ``unduly'' would require 
the revocation of a waiver request for the smallest and most frivolous 
of adverse conditions. MARAD does not accept the recommendation.

14. Section 388.5  Criteria for Revocation of a Waiver

    Proposed: In paragraph (b):

    (b) We may evaluate the effects of the employment of the waived 
vessel in the coastwise trade on the basis of the information 
received from all sources * * *

    Recommendation: In paragraph (b), similar to other recommendations, 
PVA requested that the word ``may'' be changed to ``will'' in the 
following context:

    (b) We will evaluate the effects of the employment of the waived 
vessel in the coastwise trade on the basis of the information 
received from all sources * * *

    Decision: MARAD accepts the premise and changes the wording from 
``may'' to ``will'' and from ``and'' to ``or'' in order to maintain 
flexibility as to the information needed to make a decision. We also 
made the change to indicate that we will evaluate * * * on the basis of 
all the information received * * *

    (b) We will evaluate the effects of the employment of the waived 
vessel in the coastwise trade on the basis of all the information 
received from all sources, including public comment, internal 
investigation and analysis, or any other sources of information 
deemed appropriate.

15. Section 388.6  Process

    Proposed: These issues were not covered in the proposed rule.
    (a) Recommendation: The PVA would like additional public notice of 
federal actions with regard to passenger vessel waivers and recommended 
the following three changes:
    The notice of the waiver application should be printed at least 
once a week for three weeks in one or more newspapers of general 
circulation for the geographic area in which the vessel will be 
operated. The notice should be published by MARAD, and be of one-
quarter page newspaper size.
    Decision: Because MARAD is an agency of the Federal Government, 
MARAD considers the Federal Register the appropriate public forum for 
the announcement of proposed waiver actions and will not require the 
publication of proposed waivers in local newspapers. MARAD does not 
accept this recommendation.
    (b) Recommendation: Notice of federal waiver action should be 
distributed by e-mail to interested parties.
    Decision: MARAD actions will be available publicly on the 
electronic docket provided by DOT. MARAD does not believe that any 
additional electronic notification is necessary.
    (c) Recommendation: MARAD should maintain a proposed waiver listing 
on its website.
    Decision: MARAD will post its notices and all comments received on 
the electronic docket. This activity and the notice in the Federal 
Register will meet our public notice requirements.

16. Section 388.6  Process

    Proposed: In paragraph (a) Initial process:

    In the absence of duly filed objections to an application, and 
in the absence of undue market impact on vessel operators or vessel 
builders otherwise discovered by us, we will assume that there will 
be no adverse effect.

    Recommendation: In paragraph (a) Initial process, the PVA objects 
to the word ``assume'' as it implies favoritism towards an application 
for waiver. No specific rewording was recommended.
    Decision: MARAD has reviewed this section and is changing the word 
``assume'' to ``conclude'' in the final rule as this is how MARAD will 
base its adverse impact decision. The new text will read:

    In the absence of duly filed objections to an application, and 
in the absence of undue market impact on vessel operators or vessel 
builders otherwise discovered by us, we will conclude that there 
will be no adverse effect.

17. In Section 388.6  Process

    Proposed: In paragraph (a):

    The decision will be communicated to the applicant, those who 
have submitted written comments, and the Coast Guard.

    This issue was not covered in paragraph (c).
    Recommendation: In paragraph (c), The PVA recommended in paragraph 
(c) a revision to require notification in writing of MARAD actions, 
such as in the phrase:

    Each decision to grant, deny, or revoke a waiver will be made in 
writing, and a copy of the written decision will be provided to each 
applicant and other parties to the decision.

    Decision: MARAD accepts the recommendation that decisions will be 
in writing and has added that language to both paragraph (a) and (c).

18. Section 388.6  Process

    Proposed: In Paragraph (c): certain parties may ``. . . petition 
the Maritime Administrator to review a waiver, waiver denial, or waiver 
revocation within five (5) days of such determination.''
    Recommendation: In paragraph (c): Review of determinations, PVA 
recommends that the time limits on petitioning should run from the date 
of a person's receipt of the written notice (not the date of 
determination). The PVA believes to do otherwise would frustrate a 
distant party's ability to seek a review or appeal.
    Decision: MARAD understands this condition and changes to the 
following wording:

    Applicants and persons who submitted comments in response to a 
Federal Register may petition the Administrator to review a waiver, 
waiver denial, or waiver revocation within five (5) business days 
after MARAD files the decision in the docket.

    This revision by MARAD provides added flexibility for interested 
parties by making the time limit five business days instead of calendar 
days. Similarly, making the time limits effective based on when the 
decision is filed in the docket provides further flexibility. Further, 
all time references have been changed to business days in the final 
rule.

19. Under Section 338.7  Sunset Provision

    Proposed: In the first sentence: ``We will grant no waivers after 
September 30, 2002 unless the statutory authority to grant waivers is 
extended beyond that date.''
    Recommendation: The PVA recommends the deletion of the phrase 
``unless the statutory authority to grant

[[Page 6909]]

waivers is extended beyond that date'' as it implies a prediction of 
Congressional action.
    Decision: MARAD accepts the recommendation and has deleted this 
phrase in the final rule.

20. Section 338.7  Sunset Provision

    Proposed: The second sentence reads: ``Any waiver granted prior to 
September 30, 2002 will continue in effect until otherwise invalidated 
or revoked under chapter 121 of title 46, United States Code.''
    Recommendation: The PVA claims that this sentence may not have a 
legal basis.
    Decision: MARAD has conducted a legal review of this remark and has 
decided to rephrase the statement as follows: ``We will grant no 
waivers on or after September 30, 2002.''
    Therefore, with the public comments having been considered, and the 
appropriate changes made to the regulation a program description 
follows:
    Program Description: Within the Department of Transportation there 
are two agencies with responsibilities related to the coastwise trade 
laws. The U.S. Coast Guard issues the vessel documents and endorsements 
that authorize vessels to engage in the coastwise trade. However, the 
Secretary of Transportation has delegated to MARAD the authority to 
process applications for waivers of the coastwise laws and to determine 
the effect of waivers of the coastwise trade laws on United States 
vessel builders and United States-built vessel coastwise trade 
businesses. We are outlining the procedures to be followed in 
processing applications for waivers, or revoking waivers previously 
granted. Upon grant of a waiver, MARAD will notify the applicant and 
the U.S. Coast Guard. Thereafter, you may register the vessel so waived 
with the U.S. Coast Guard under the U.S. Coast Guard's normal 
procedures, provided the vessel is otherwise eligible.
    Vessels eligible for a waiver of the coastwise trade laws will be 
limited to foreign-built or foreign rebuilt small passenger vessels and 
uninspected passenger vessels as defined by section 2101 of Title 46, 
United States Code. Vessels of unknown origin will be considered 
foreign built. Additionally, vessels requested for consideration must 
be greater than three (3) years old. We will not grant waivers in 
instances where such waiver activity will have an unduly harmful impact 
on U.S. shipyards or U.S.-flag ship operators. Specifically, and in 
order to meet the public comment provisions of Title V, it is our 
intention to publish waiver requests for comment in the Federal 
Register. After a period of time to evaluate comments and assess the 
impact that the proposed waivers will have on the U.S.-flag shipping 
and shipbuilding industry, we will issue a determination.
    In assessing the adverse effect of grant of a particular waiver, we 
may consider sales of vessels of the same type and size and for the 
same trade by domestic shipbuilders. As an example, the grant of a 
waiver for a motor vessel might not have an adverse effect on sales by 
a builder of sailboats. As for adverse affects on coastwise trade 
businesses, we may look at the type of service and geographic location 
of the applicant and the objector. An intended service providing day 
trips for whale watching might not affect a service providing weeklong 
trips on a sailing ship. A charter service in Maine might not affect a 
charter service in California. Each decision will be made on the facts 
of the individual circumstances, including the degree of competition in 
a proposed market.
    We do not have the authority to waive citizenship requirements for 
vessel ownership and documentation. The U.S. Coast Guard will ascertain 
whether the shipowner is qualified as a citizen to register a vessel. 
In addition, the U.S. Coast Guard, not MARAD, will determine whether a 
particular vessel will be considered a small passenger vessel or an 
uninspected passenger vessel. However, we may refuse to process an 
application if the vessel is not the type eligible for a waiver. 
Prospective applicants for a coastwise trade law waiver may wish to 
consult with the U.S. Coast Guard prior to initiating the waiver 
application process with MARAD.
    Under Title V, MARAD also has the authority to revoke coastwise 
endorsements under the limited circumstances where a foreign-built or 
foreign-rebuilt passenger vessel, previously allowed into service, 
substantially changes that service and the vessel is employed other 
than as a small passenger vessel or an uninspected passenger vessel or 
the vessel is having an unduly harmful impact on U.S.-vessel builders 
or persons who employ U.S.-built vessels in the domestic trade. The 
procedure for revocation of a MARAD waiver will include the publication 
of a notice in the Federal Register seeking public comments on the 
proposed revocation. Secondly, we will determine the extent of the 
allegedly detrimental activity and, if an undue impact is found, we 
will issue a formal letter of waiver revocation with an appropriate 
grace period. This determination will be sent to the U.S. Coast Guard 
for revocation of the vessel's coastwise endorsement.
    MARAD's decisions to grant or deny a waiver and to revoke or not 
revoke a waiver will not be final until after time for review has 
expired. Applicants and persons who submitted comments in response to a 
Federal Register notice may petition the Maritime Administrator to 
review a waiver determination, or request the Maritime Administrator 
not to review a waiver determination. Relatively short time periods are 
provided for this review process.

Rulemaking Analyses and Notices

Executive Order 12866 and DOT Regulatory Policies and Procedures

    This final rule is not significant under section 3(f) of Executive 
Order 12866, and as a consequence, OMB did not review the rule. This 
final rule is not significant under the Regulatory Policies and 
Procedures of the Department of Transportation (44 FR 11034; February 
26, 1979). The costs and benefits associated with this rulemaking are 
considered to be so minimal that no further analysis is necessary. 
Vessels eligible for a waiver of the coastwise trade laws will be 
limited to foreign built or foreign re-built small passenger vessels 
and uninspected passenger vessels as defined by section 2101 of Title 
46, United States Code. Additionally, vessels requested for 
consideration must be greater than (3) years old. We will not grant 
waivers in instances where such waiver activity will have an unduly 
adverse affect on U.S. vessel builders or U.S. businesses that use U.S. 
flag vessels. Under Title V, MARAD also has the authority to revoke 
coastwise endorsements under the limited circumstances where a foreign-
built or foreign-rebuilt passenger vessel, previously allowed into 
service, substantially changes that service and the vessel is employed 
other than as a small passenger vessel or an uninspected passenger 
vessel or the vessel is having an unduly adverse affect on U.S. vessel 
builders or persons who employ U.S.-built vessels in the domestic 
trade.

Executive Order 13132

    We analyzed this rulemaking in accordance with the principles and 
criteria contained in E.O. 13132 (``Federalism'') and have determined 
that it does not have sufficient Federalism implications to warrant the 
preparation of a Federalism summary impact statement. The regulations

[[Page 6910]]

herein have no substantial effects on the States, or on the current 
Federal-State relationship, or on the current distribution of power and 
responsibilities among the various local officials. Therefore, MARAD 
did not consult with State and local officials because it was not 
necessary.

Regulatory Flexibility Act

    The Regulatory Flexibility Act requires MARAD to assess the impact 
that regulations will have on small entities. After analysis of this 
final rule MARAD certifies that this final rule will not have a 
significant economic impact on a substantial number of small 
businesses. Although we expect many applicants for vessel waivers to be 
small businesses, we do not believe that the economic impact will be 
significant. This regulation allows MARAD to waive the U.S.-build and 
other requirements for eligible vessels and adds a small economic 
benefit to applicants. This regulation will only allow vessels to carry 
the statutory maximum of 12 passengers. As a consequence, MARAD 
estimates that a vessel applicant who receives a waiver may earn a few 
hundred dollars per year for localized operations (geographic 
restrictions apply) such as whale watching and personalized fishing 
expeditions. Also, the economic impact of this rule is limited because 
it precludes vessel operators from participating in other economic 
activities such as carrying cargo and commercial fishing.

Environmental Assessment

    This rule would not significantly affect the environment because 
the small number and small size of vessels admitted to U.S. registry 
under this waiver program would have little or no effect on the 
environment. Accordingly, an Environmental Impact Statement is not 
required under the National Environmental Policy Act of 1969.

Paperwork Reduction Act

    This rulemaking establishes a new requirement for the collection of 
information. The Office of Management and Budget (OMB) has reviewed and 
approved the information collection requirements under the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501, et seq.) Comments received on 
this information collection are discussed in the ``Comments on the 
Proposed Rule'' section of this notice of final rule. The OMB approval 
number is 2133-0529.

Unfunded Mandates Reform Act

    This rule does not impose unfunded mandates under the Unfunded 
Mandates Reform Act of 1995. It does not result in costs of $100 
million or more to either State, local, or tribal governments, in the 
aggregate, or to the private sector, and is the least burdensome 
alternative that achieves the objectives of the rule.

Consultation and Coordination With Indian Tribal Governments

    MARAD believes that regulations in this final rule will have no 
significant or unique effect on the communities of Indian tribal 
governments when analyzed under the principles and criteria contained 
in Executive Order 13084 (Consultation and Coordination with Indian 
Tribal Governments). Therefore, the funding and consultation 
requirements of this Executive Order would not apply.

Regulation Identifier Number (RIN)

    A regulation identifier number (RIN) is assigned to each regulatory 
action listed in the Unified Agenda of Federal Regulations. The 
Regulatory Information Service Center publishes the Unified Agenda in 
April and October of each year. The RIN number contained in the heading 
of this document can be used to cross-reference this action with the 
Unified Agenda.

List of Subjects in 46 CFR Part 388

    Administrative practice and procedure, Maritime carriers, Passenger 
vessels, Reporting and record keeping requirements.

    Accordingly, the Maritime Administration adds a new part 388 to 46 
CFR chapter II, subchapter J, to read as follows:

PART 388--ADMINISTRATIVE WAIVERS OF THE COASTWISE TRADE LAWS FOR 
ELIGIBLE VESSELS

Sec.
388.1   Purpose.
388.2   Definitions.
388.3   Application; fee.
388.4   Criteria for grant of a waiver.
388.5   Criteria for revocation of a waiver.
388.6   Process.
388.7   Sunset provision.

    Authority: 46 App. U.S.C. 1114(b); 49 U.S.C. 322; Public Law 
105-383, 112 Stat. 3445 (46 U.S.C. 12106 note); 49 CFR 1.66(cc).


Sec. 388.1  Purpose.

    This part prescribes regulations implementing the provisions of 
Title V of Public Law 105-383,112 Stat. 3445, which grants the 
Secretary of Transportation authority to review and approve 
applications for waiver of the coastwise trade laws to allow the 
carriage of no more than 12 passengers for hire on vessels, which are 
three years old or more, built or rebuilt outside the United States, 
and grants authority for revocation of those waivers.


Sec. 388.2  Definitions.

    For the purposes of this part:
    (a) Administrator means the Maritime Administrator.
    (b) Coastwise Trade Laws include:
    (1) The Coastwise Endorsement Provision of the Vessel Documentation 
Laws, (46 U.S.C. 12106);
    (2) The Passenger Services Act, section 8 of the Act of June 
19,1886 (46 App. U.S.C. 289); and
    (3) The Jones Act, section 27 of the Merchant Marine Act, 1920 (46 
App. U.S.C. 883).
    (c) Eligible Vessel means a vessel otherwise eligible for a U.S. 
Coast Guard certificate of documentation (i.e. of five or more tons) 
that is either a small passenger vessel or an uninspected passenger 
vessel that--
    (1) Was not built in the United States and is at least 3 years of 
age; or
    (2) If rebuilt, was rebuilt outside the United States at least 3 
years before the certificate of documentation with appropriate 
endorsement, if granted, would become effective.
    (d) MARAD means the Maritime Administration, U.S. Department of 
Transportation.
    (e) Secretary means the Secretary of Transportation.
    (f) The terms, small passenger vessel, uninspected passenger 
vessel, and passenger for hire have the meaning given such terms by 46 
2102 U.S.C.


Sec. 388.3  Application; fee.

    (a) An owner of the vessel may apply in writing to the Secretary, 
MARAD, MAR-120, Room 7210, 400 7th St., SW., Washington, DC 20590, for 
an administrative waiver of the coastwise trade laws of the United 
States for an eligible vessel to carry no more than 12 passengers for 
hire. The application need not be in any particular format, but must be 
signed and contain the following information:
    (1) Name of vessel and owner for which waiver is requested.
    (2) Size, capacity and tonnage of vessel (state whether tonnage is 
measured pursuant to 46 U.S.C. 14502, or otherwise, and if otherwise, 
how measured).
    (3) Intended use for vessel, including geographic region of 
intended operation and trade.
    (4) Date and place of construction and (if applicable) rebuilding. 
(If applicant is unable to determine the origin of the vessel, foreign 
construction will be assumed).
    (5) Name, address, and telephone number of vessel owner.

[[Page 6911]]

    (6) A statement on the impact this waiver will have on other 
commercial passenger vessel operators, including a statement describing 
the operations of existing operators.
    (7) A statement on the impact this waiver will have on U.S. 
shipyards.
    (b) MARAD may ask additional questions of the applicant as part of 
the application review.
    (c) You must enclose a non-refundable application fee for each 
waiver requested, in the form of a check or money order for $300, made 
out to the order of ``Maritime Administration--Transportation.''


Sec. 388.4  Criteria for grant of a waiver.

    (a) General criteria. (1) We will waive the foreign build and/or 
foreign rebuild prohibition in the coastwise trade laws for an eligible 
vessel only if we determine that the employment of the vessel in the 
coastwise trade will not unduly adversely affect--
    (i) United States vessel builders; or
    (ii) The coastwise trade business of any person who employs vessels 
built in the United States in that business.
    (2) We may not limit the determination of ``unduly adverse affect'' 
on a coastwise operator or an U.S. vessel builder to operators or 
builders of vessels carrying 12 or fewer passengers.
    (3) We will evaluate the expected impact of the proposed waiver on 
the basis of all the information received from all sources, including 
public comment, internal investigation and analysis, or any other 
sources or information deemed appropriate.
    (b) Impact on U.S. vessel builders. We may use the following 
criteria to determine the effect on U.S. vessel builders: Whether a 
potentially impacted U.S. vessel builder has a history of construction 
of similar vessels, or can demonstrate the capability and capacity to 
build a similar vessel, for use in the same geographic region of the 
United States, as the proposed vessel of the applicant.
    (c) Impact on coastwise trade operators. We may use the following 
criteria to determine the effect on existing operators of U.S.-built 
vessels in coastwise trade:
    (1) Whether the proposed vessel of the applicant and a vessel of an 
existing operator (or the vessel of an operator that can demonstrate it 
has taken definite steps to begin operation) would provide similar 
commercial service and would operate in the same geographic area.
    (2) The number of similar vessels operating or proposed to operate 
in the same market with the same or similar itinerary, relative to the 
size of the market.
    (d) Advance notice and approval needed for changes. When we approve 
a waiver application, we will notify the applicant that the applicant 
may not make substantial changes in the employment of the vessel in the 
coastwise trade without prior notice to MARAD. If the applicant fails 
to provide advance notice of substantial changes to MARAD, we may 
immediately revoke the waiver under Sec. 388.5.


Sec. 388.5  Criteria for revocation of a waiver.

    (a) We may revoke a waiver previously granted under this part if we 
determine that the employment of the vessel in the coastwise trade has 
substantially changed since the issuance of the endorsement, and--
    (1) The vessel is employed other than as a small passenger vessel 
or an uninspected passenger vessel; or
    (2) The employment of the vessel unduly adversely affects--
    (i) United States vessel builders; or
    (ii) The coastwise trade business of any person who employs vessels 
built in the United States.
    (b) We will evaluate the effects of the employment of the waived 
vessel in the coastwise trade on the basis of the information received 
from all sources, including public comment, internal investigation and 
analysis, or any other sources of information deemed appropriate.


Sec. 388.6  Process.

    (a) Initial process. We will review each application for 
completeness as received. We will notify the applicant if additional 
information is necessary or if the application does not meet the 
initial eligibility requirements for a waiver. All applications that 
pass the initial screening will be available for public inspection in 
the Department of Transportation Docket Room following publication in 
the Federal Register. We will publish a notice of such applications in 
the Federal Register. Interested parties will be given an opportunity 
to comment on whether introduction of any of the proposed vessels would 
adversely affect them. In the absence of duly filed objections to an 
application, and in the absence of undue market impact on vessel 
operators or vessel builders otherwise discovered by us, we will 
conclude that there will be no adverse effect. If an objection to an 
application is received, additional information may be sought from the 
objector. The applicant will be given a sufficient amount of time to 
respond. The Director, Office of Ports and Domestic Shipping, will then 
either make a decision based on the written submissions and all 
available information or may, as a matter of discretion, hold a hearing 
on the application. The decision will be communicated in writing to the 
applicant, those who have submitted written comments, and the Coast 
Guard. If MARAD grants a waiver, the applicant must thereafter contact 
the Coast Guard to obtain the necessary documentation for domestic 
operation, provided the vessel and its owner, otherwise qualify.
    (b) Revocation. We may, upon the motion of an interested party, or 
upon our own motion, publish a notice in the Federal Register, 
proposing to revoke a waiver granted under this part. We may request 
additional information from any respondent to the notice. The Director, 
Office of Ports and Domestic Shipping, will then either make a decision 
based on the written submissions and additional publicly available 
information or may, as a matter of discretion, refer the request for 
the revocation to a hearing. MARAD will communicate its decision in 
writing to the waiver recipient, the requestor (if any), each 
respondent to the proposed revocation notice; and the Coast Guard. If 
MARAD revokes a waiver, the Coast Guard shall revoke the vessel's 
coastwise endorsement.
    (c) Review of determinations. (1) The decisions by the Director, 
Office of Ports and Domestic Shipping, to grant a waiver, deny a 
waiver, or revoke a waiver will not be final until after time for 
discretionary review by the Administrator has expired. Applicants and 
persons who submitted comments in response to a Federal Register notice 
may petition the Administrator to review a waiver, waiver denial, or 
waiver revocation within five (5) business days after MARAD files the 
decision in the docket. Each petition for review should state the 
petitioner's interest and the reasons review is being sought, clearly 
pointing out any alleged errors of fact or misapplied points of law. 
Within three (3) business days of submission of a petition for review, 
applicants for a waiver and persons who submitted comments in response 
to a Federal Register notice may request the Administrator not to 
review a waiver, waiver denial, or waiver revocation.
    (2) Such petitions and responses may be sent by facsimile to the 
Secretary, Maritime Administration, at (202) 366-9206. To the extent 
possible, each petitioner or respondent should send a copy of their 
petition or response to other interested parties by facsimile at the 
same time the submission is made to MARAD. The Administrator will 
decide whether to take review within

[[Page 6912]]

two (2) business days following the time for submission of a request 
that the Administrator not take review. If the Administrator takes 
review, the determination by the Director, Office of Ports and Domestic 
Shipping, will be stayed until final disposition. If review is not 
taken, the determination by the Director, Office of Ports and Domestic 
Shipping, will become final two (2) business days after the time for 
submission of requests that the Administrator not take review. If the 
last day of a time limit falls on a Saturday, Sunday, or Federal 
holiday, the time is extended to the next business day. In the absence 
of any petition for review, the determination by the Director, Office 
of Ports and Domestic Shipping will become final within ten (10) 
business days. Each decision to grant, deny, or revoke a waiver will be 
made in writing, and a copy of the written decision will be provided to 
each applicant and other parties to the decision. The Secretary, MARAD, 
may extend any of the time limits for good cause shown.


Sec. 388.7  Sunset provision.

    We will grant no waivers on or after September 30, 2002.

    Dated: February 7, 2000.

    By Order of the Maritime Administrator.
Joel C. Richard,
Secretary.
[FR Doc. 00-3176 Filed 2-10-00; 8:45 am]
BILLING CODE 4910-81-P