[Federal Register Volume 68, Number 83 (Wednesday, April 30, 2003)]
[Rules and Regulations]
[Pages 23084-23088]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-10578]


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

DEPARTMENT OF TRANSPORTATION

Maritime Administration

46 CFR Part 388

[Docket No. 2003-15030]
RIN 2133-AB49


Administrative Waivers of the Coastwise Trade Laws for Eligible 
Vessels

AGENCY: Maritime Administration, DOT.

ACTION: Interim final rule.

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

SUMMARY: The Maritime Administration (MARAD, or we, our or us) is 
publishing this interim final rule to implement the changes of the 
Maritime Transportation Security Act of 2002. This interim final rule 
implements regulations to waive the U.S.-build requirements of the 
Passenger Vessel 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

[[Page 23085]]

authorized to carry no more than 12 passengers for hire. This interim 
final rule also brings the application procedure into compliance with 
the Government Paperwork Elimination Act, which requires that by 
October 21, 2003, the government must provide ``the option of 
electronic maintenance, submission, or disclosure of information when 
practicable as a substitute for paper.''

DATES: The effective date of this interim final rule is April 30, 2003. 
Comments must be recieved by May 30, 2003.

ADDRESSES: Comments should refer to docket number MARAD 2003-15030. 
Written comments may be submitted by mail to the Docket Clerk, U.S. Dot 
Dockets, Room PL-401, Department of Transportation, 400 7th St., SW., 
Washington, DC 20590-0001. You may also send comments electronically 
via the Internet at http://smses.dot.gov/submit/. All comments will 
become part of this docket and will be available for inspection and 
copying at the above address between 10 a.m. and 5 p.m., e.t., Monday 
through Friday, except Federal holidays. An electronic version of this 
document and all documents entered into this docket is available on the 
World Wide Web at http://dms.dot.gov.

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: MAR-830 Room 
7201, 400 Seventh Street, SW., Washington, DC 20590.

SUPPLEMENTARY INFORMATION: Public Law 105-383, which authorized 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, contained a sunset 
provision effective September 30, 2002. The Maritime Transportation 
Security Act of 2002, section 207(c), Pub. L. 107-295 (the Act), 
removed the sunset provision and added anti-fraud revocation authority.
    Between January 2000 and September 2002, MARAD utilized regulations 
published at 46 CFR part 388 to accept applications from the public and 
provide public notice of the intent to issue waivers to foreign built 
vessels for use in the coastwise passenger trade (see Federal Register 
notice at 65 FR 6905) (February 11, 2001). However, the regulation also 
contains the sunset included in the enabling legislation. The 
application process required a $300 non-refundable fee, an ``adverse 
effect'' assessment on the U.S.-flag shipping and vessel building 
community, and a requirement that the vessel meet U.S. Coast Guard 
documentation standards. Waivers approved by MARAD, which set limits on 
vessel's geographic use and required that all significant changes be 
conducted with MARAD's prior approval, became a permanent part of the 
vessel's coastwise endorsement. As required by the original enabling 
legislation and the implementing regulation, MARAD granted no waivers 
after September 30, 2002.
    The Act signed by President Bush on November 25, 2002, repealed the 
September 30, 2002, sunset provision contained in section 505 of the 
Coast Guard Authorization Act of 1998 (Pub. L. 105-383). The Act also 
substitutes a new section 503 which requires the Secretary to revoke 
``a certificate or an endorsement issued under section 502, after 
notice and opportunity for a hearing, if the Secretary determines that 
the certificate or endorsement was obtained by fraud.'' This section 
changes and supersedes the circumstances under which a waiver can be 
revoked. This interim final rule implements these two legislative 
changes.
    This interim final rule also makes several administrative changes 
designed to simplify the application process. Under the simplified 
process, applicants are encouraged to apply on line. The application 
will be available on the MARAD Web site at http://www.marad.dot.gov and 
will include the ability to charge the application fee to a major 
credit card.
    Program Description: There are two agencies with responsibilities 
related to the coastwise trade laws. The Coast Guard, part of the 
Department of Transportation before moving to the Department of 
Homeland Security, 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 grant 
such waivers if they do not adversely affect United States vessel 
builders or 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 Coast Guard. 
Thereafter, you may register the vessel so waived with the Coast Guard 
under the 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 give notice of applications in the Federal Register and 
provide the appropriate reference to the DOT Docket where the 
application is published and comments may be submitted. 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.
    MARAD does not have the authority to waive citizenship requirements 
for vessel ownership and documentation. The Coast Guard will ascertain 
whether the shipowner is qualified as a citizen to register a vessel. 
In addition, the 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 Coast Guard prior to initiating the waiver application 
process with MARAD.
    Under title V, section 503 previously contained authority to revoke 
coastwise endorsements under the limited circumstances where a foreign-
built or foreign-rebuilt passenger vessel, that had been allowed into 
service, substantially changed that service. The Act amended section 
503 to provide fraud in the application process as the basis to revoke 
an endorsement. MARAD's procedure for revocation of a waiver will not 
change significantly. Procedures will still include the publication of 
a notice in the Federal Register seeking public comments on the 
proposed revocation. A hearing may be provided prior to making 
determination. Secondly, if we determine that the endorsement was 
obtained by fraud we will issue a formal letter of waiver revocation 
with an appropriate grace period. This determination will be sent to 
the Coast

[[Page 23086]]

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 the 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 interim final rule is not significant under section 3(f) of 
Executive Order 12866, and as a consequence, OMB did not review the 
rule. This interim 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 regulatory 
impact 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 three years 
old. We will not grant waivers in instances where such waiver activity 
will have an unduly adverse effect 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, is deemed to have obtained 
such endorsement through fraud.
    We are publishing this rule as an interim final rule, pursuant to 5 
U.S.C. 553 (b)(3)(B), rather than as a proposed rule, because notice 
and public procedure thereon are unnecessary. Part 388 was originally 
published following proper notice and comment procedures. The Act lifts 
the sunset provision in the statute, thereby extending the program 
indefinitely. This interim final rule likewise lifts the sunset 
provision that was contained in the regulation. The change in 
revocation criteria included in the interim final rule is mandated by 
legislation. The other change effected immediately by this interim 
final rule, the option of filing applications electronically, is 
mandated by the Government Paperwork Elimination Act.

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 
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 
interim final rule, MARAD certifies that this interim 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 owner 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 owners from participating in other economic 
activities such as carrying cargo and commercial fishing.

Environmental Assessment

    This interim 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 interim final rule reactivates a requirement for the 
collection of information that was used before the sunset provision 
contained in the Coast Guard Authorization Act of 1998 ended the 
authority to grant waivers. 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.). The OMB 
approval number is 2133-0529.

Unfunded Mandates Reform Act

    This interim final 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 evolving from this interim final 
rule would 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 recordkeeping requirements.


0
Accordingly, the Maritime Administration amends 46 CFR chapter II, 
subchapter J, by revising part 388 to read as follows:

PART 388--ADMINISTRATIVE WAIVERS OF THE COASTWISE TRADE LAWS

Sec.
388.1 Purpose.
388.2 Definitions.

[[Page 23087]]

388.3 Application and fee.
388.4 Criteria for grant of a waiver.
388.5 Criteria for revocation of a waiver.
388.6 Process.

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


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 authority to review and approve applications for waiver of 
the coastwise trade laws to allow the carriage of no more than twelve 
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 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 section 
2101 of title 46, United States Code.
    (g) Fraud means the intentional misrepresentation of a material 
fact or facts.


Sec.  388.3  Application and fee.

    (a) An owner of a vessel may choose either of two methods to apply 
for an administrative waiver of the coastwise trade laws of the United 
States for an eligible vessel to carry no more than twelve passengers 
for hire.
    (1) The application form contained on MARAD's Web site at http://www.marad.dot.gov may be submitted electronically with credit card or 
Automated Clearinghouse (ACH) payment of the $300 application fee.
    (2) Alternatively, applicants may send written applications to 
Small Vessel Waiver Applications, Office of Ports and Domestic 
Shipping, MAR-830, Room 7201, 400 7th St., SW., Washington, DC 20590. 
Written applications need not be in any particular format, but must be 
signed, be accompanied by a check for $300 made out to the order of 
``Maritime Administration'', and contain the following information:
    (i) Name of vessel and owner for which waiver is requested and the 
vessel's official number.
    (ii) 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).
    (iii) Intended use for vessel, including geographic region of 
intended operation and trade.
    (iv) Date and place of construction and (if applicable) rebuilding. 
(If applicant is unable to document the origin of the vessel, foreign 
construction will be assumed).
    (v) Name, address, and telephone number of the vessel owner.
    (vi) A statement on the impact this waiver will have on other 
commercial passenger vessel operators, including a statement describing 
the operations of existing operators.
    (vii) A statement on the impact this waiver will have on U.S. 
shipyards.
    (viii) A statement that the applicant represents that the foregoing 
information is true to the best of the applicant's knowledge.
    (b) MARAD may ask additional questions of the applicant as part of 
the application review.


Sec.  388.4  Criteria for grant of a waiver.

    (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 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) The determination of ``unduly adverse affect'' on a coastwise 
operator or a U.S. vessel builder may not be limited to operators or 
builders of vessels carrying 12 or fewer passengers.
    (3) We may evaluate the expected impact of the proposed waiver on 
the basis of the information received from all sources, including 
public comment, internal investigation and analysis, and any other 
sources of 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 and 
the fact it has taken definite steps to offer 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 business. 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. For example, a single vessel may have a small 
impact on a large market.
    (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. In general a substantial change in 
operating area will require a new waiver application.


Sec.  388.5  Criteria for revocation of a waiver.

    We may revoke a waiver previously granted under this Part if we 
determine, after notice and opportunity for a hearing, that fraud was 
involved in any part of the waiver application.


Sec.  388.6  Process.

    (a) Initial process. (1) 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 waiver. All applications will be 
available for public inspection electronically in the Department of 
Transportation Docket at http://dot.dms.gov.
    (2) Applications being processed on the merits will be noticed in 
the Federal Register. Interested parties will be given an opportunity 
to comment on whether introduction of any proposed vessel

[[Page 23088]]

would adversely affect them. In the absence of duly filed objections to 
an application, and in the absence of unduly adverse impact on vessel 
builders or businesses employing U.S.-built vessels 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 and make a 
decision based on the hearing record. The decision will be communicated 
to the applicant, commenters and the United States Coast Guard in 
writing and placed in the docket. If MARAD grants a waiver, the 
applicant must thereafter contact the Coast Guard to obtain the 
necessary documentation for domestic operation. MARAD's waiver does not 
satisfy other requirements of the Coast Guard for documentation. The 
waiver, if approved, will be assigned to the vessel.
    (b) Revocation. We may, upon the request of a U.S. builder or a 
coastwise trade business of a person who employs U.S. built vessels or 
upon our own initiative propose to revoke a waiver granted under this 
part, on the basis that the waiver was obtained through fraud. The 
grantee of the waiver in question will be notified directly by mail, 
and a notice will be published in the Federal Register. The original 
docket of the application will be reopened. We may request additional 
information from the applicant granted the waiver or 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 all available information or, as a matter of discretion 
hold a hearing on the proposed revocation and make a decision based on 
the hearing record. The decision will be communicated in writing to: 
the applicant granted the waiver, the requestor (if any), each 
respondent to the proposed revocation notice, the Coast Guard; and 
placed in the docket. If MARAD revokes a waiver, the Coast Guard, 
automatically and without further proceedings, 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 time for 
discretionary review by the Administrator has expired. 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. Applicants, persons who requested revocation 
of a waiver, and persons who submitted comments in response to a 
Federal Register notice may petition the Administrator to review a 
decision by the Director, Office of Ports and Domestic Shipping to 
grant a waiver, deny a waiver, or revoke a waiver within five (5) 
business days after such decision is filed in the docket. Each petition 
for review should state the petitioner's standing and the reasons 
review is being sought, clearly pointing out alleged errors of fact or 
misapplied points of law. Within five (5) business days of submission 
of a petition for review, the applicant, and other persons with 
standing, may request the Administrator not review a waiver, waiver 
denial or waiver revocation decision.
    (2) Such petitions and responses must either be sent by facsimile 
to the Secretary, Maritime Administration, at (202) 366-9206 or filed 
electronically in the appropriate DOT docket at http://dms.dot.gov. The 
Administrator will decide whether to review within five (5) business 
days following the last day for submission of a request that the 
Administrator not take review. If the Administrator takes review, the 
decision by the Director, Office of Ports and Domestic Shipping, is 
stayed until final disposition. In the event the Administrator decides 
to take review, a decision will be made based on the written 
submissions and all available information. As a matter of discretion, 
the Administrator or designated representative may hold a hearing on 
the proposed action and make a decision based on the hearing record. 
The decision will be communicated in writing to the interested parties 
and the Coast Guard. In the review process, the decision of the 
Maritime Administrator is the final disposition. In the absence of any 
petition for review, the determination by the Director, Office of Ports 
and Domestic Shipping becomes final on the sixth business day after the 
decision. The Secretary, MARAD, may extend any of the time limits, but 
only for good cause shown.

    Dated: April 24, 2003.

    By Order of the Maritime Administrator.
Joel C. Richard,
Secretary.
[FR Doc. 03-10578 Filed 4-29-03; 8:45 am]
BILLING CODE 4910-81-P