[Federal Register Volume 70, Number 29 (Monday, February 14, 2005)]
[Proposed Rules]
[Pages 7458-7459]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-2753]


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DEPARTMENT OF TRANSPORTATION

Maritime Administration

46 CFR Part 381

[Docket No. MARAD-99-5038]
RIN 2133-AB37


Regulations To Be Followed by All Departments and Agencies Having 
Responsibility To Provide a Preference for U.S.-Flag Vessels in the 
Shipment of Cargoes on Ocean Vessels

AGENCY: Maritime Administration, Department of Transportation.

ACTION: Withdrawal of advance notice of proposed rulemaking.

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SUMMARY: The Maritime Administration (MARAD, we, our) is withdrawing an 
advance notice of proposed rulemaking (ANPRM) published in the Federal 
Register on January 28, 1999, which requested comments on proposed 
amendments to MARAD's cargo preference regulations. Based on comments 
received and on continuing discussions with other Federal agencies, 
there are several issues on which MARAD and other Federal agencies have 
yet to reach agreement. MARAD is involved in a negotiation process with 
other agencies in order to resolve these issues. Once discussions and 
negotiations with other agencies are complete, MARAD will initiate a 
new rulemaking action.

DATES: The ANPRM is withdrawn February 14, 2005.

ADDRESSES: For access to the docket to read background documents or 
comments received, go to http://dms.dot.gov at any time or to Room PL-
401 on the plaza level of the Nassif Building, 400 Seventh St., SW., 
Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, 
except Federal holidays.

FOR FURTHER INFORMATION CONTACT: For non-legal issues you may call 
Thomas W. Harrelson, Director, Office of Cargo Preference at (202) 366-
5515. For legal issues you may call Murray Bloom, Chief, Division of 
Maritime Programs of the Office of the Chief Counsel at (202) 366-5320. 
You may send mail to both of these officials at Maritime 
Administration, 400 Seventh St., SW., Washington, DC 20590.

SUPPLEMENTARY INFORMATION:

I. Background

    The Cargo Preference Act of 1954, Pub. L. 83-664, 68 Stat. 832 
(1954), amended the Merchant Marine Act, 1936, by adding Section 
901(b), codified at 46 App. U.S.C. 1241(b) (`54 Act). The `54 Act 
applies: ``[w]henever the United States shall procure, contract for, or 
otherwise obtain for its own account, or shall furnish to or for the 
account of any foreign nation without provision for reimbursement, any 
equipment, materials, or commodities, within or without the United 
States, or shall advance funds or credits or guarantee the 
convertibility of foreign currencies in connection with the furnishing 
of such equipment, materials, or commodities. * * *''
    Government agencies are required to take such steps as may be 
necessary and practicable to assure that at least 50 percent of the 
gross tonnage of certain government-sponsored cargoes--
    ``* * * (computed separately for dry bulk carriers, dry cargo 
liners, and tankers), which may be transported on ocean vessels shall 
be transported on privately-owned United States-flag commercial 
vessels, to the extent such vessels are available at fair and 
reasonable rates for United States-flag commercial vessels, in such 
manner as will insure a fair and reasonable participation of United 
States-flag commercial vessels in such cargoes by geographic areas.* * 
*''
    The Food Security Act of 1985, Pub. L. 99-198, exempted certain 
agricultural export enhancement programs from cargo preference, but 
increased the U.S.-flag share of humanitarian food aid programs from 50 
to 75 percent.
    MARAD's oversight role in administration of cargo preference is 
founded on section 27 of the Merchant Marine Act of 1970, Pub. L. 91-
469, which added the following subsection to section 901(b) of the 
Merchant Marine Act, 1936:
    ``Every department or agency having responsibility under this 
subsection shall administer its programs with respect to this 
subsection under regulations issued by the Secretary of Transportation. 
The Secretary of Transportation shall review such administration and 
shall annually report to the Congress with respect thereto.'' 46 App. 
U.S.C. 1241(b).
    The Secretary of Transportation has delegated the authority under 
this provision to the Maritime Administrator. (49 CFR 1.66(e)). MARAD's 
regulations governing administration of cargo preference are located at 
46 CFR part 381. Parts 381.4, 381.5 and 381.7 of 46 CFR implement the 
substantive requirements of U.S.-flag carriage authorized by the `54 
Act. The Secretary of Transportation does not intend to allow any 
diminution of adherence to these regulatory requirements. Guidance as 
to the priority of a completely U.S.-flag service over a mixed U.S./
foreign-flag service is contained in a policy letter issued on June 16, 
1986.

II. Summary of the ANPRM

    On January 28, 1999, MARAD published an ANPRM (64 FR 4382) 
requesting comments on several proposed changes to the regulations 
governing the `54 Act. MARAD received 15 comments on the ANPRM. 
Respondents included U.S. shipper agencies, vessel operators, unions, 
industry associations, a freight forwarder, and a non-vessel operating 
common carrier. A discussion of the comments follows.

III. Discussion of Comments

    The ANPRM requested comments on six specific questions and on one 
general question inviting suggestions for other potential amendments to 
the cargo preference regulations. The questions included: (1) Whether 
MARAD should clarify 46 CFR sections 381.4 and 381.5 to best insure 
that the legislatively required percentage of cargo is actually shipped 
on U.S.-flag vessels; (2) whether the Vessel Priority Rule should be 
changed; (3) whether MARAD should change the basis for compliance 
measurement; (4) whether MARAD should formally define ``liner vessel,'' 
``transshipment,'' or ``relay''; (5) whether MARAD should require the 
use of commercial terms for cargo preference transactions; (6) whether 
MARAD should require the use of commercial practices in the 
transportation of preference cargos; and (7) whether MARAD should 
implement other amendments to its regulations.
    In response to question one, all commenters agreed that 
clarifications and revisions to sections 381.4 and 381.5 would be 
beneficial. Thus,

[[Page 7459]]

MARAD will seek to revise and update the sections, keeping the 
commenters' suggestions in mind, in a future rulemaking.
    Turning to question two, nine of the ten respondents strongly 
opposed changing the current Vessel Priority Rule. One respondent, the 
USDA, favored changing the rule. MARAD is working with the USDA and 
other agencies to reach a consensus regarding this and other issues and 
will revisit this issue in a future rulemaking.
    The third question posed in the ANPRM regarding possible changes to 
the basis for compliance measurement is closely linked to the first 
question. In turn, the views expressed in the comments submitted in 
response to question three were essentially identical to those 
submitted in response to question one. MARAD will address this issue 
and seek further public comments in a future rulemaking.
    In response to question four, in which MARAD asked if we should 
formally define ``liner vessel,'' ``transshipment,'' or ``relay,'' 
there was no general consensus from the commenting parties. Thus, MARAD 
may solicit further comments regarding this issue in a future 
rulemaking.
    In response to question five, the majority of commenters favored 
the use of standardized commercial terms. Thus, MARAD will revisit this 
issue in a future rulemaking.
    In response to question six, the commenters generally supported the 
idea that MARAD require the use of commercial practices. Thus, MARAD 
will also revisit this issue in a future rulemaking.
    Finally, in response to question seven, the commenters offered 
several suggestions to assure compliance by shipper agencies. MARAD 
will revisit these topics and seek further public input in a future 
rulemaking.

IV. Reason for Withdrawal

    Since cargo preference requirements apply to government shipper 
agencies as well as to the private shipping industry, issues arise from 
the differing goals and activities of government agencies versus 
private industry. Because MARAD and other government agencies have yet 
to agree on several important issues, we are in the process of 
discussing and negotiating our differences with other agencies in an 
effort to accommodate other agencies' needs while still applying cargo 
preference in the manner intended by Congress. Once discussions and 
negotiations with other agencies are complete, MARAD will initiate a 
new rulemaking action.

(Authority: 49 CFR 1.66)

    Dated: February 8, 2005.

    By Order of the Maritime Administrator
Joel C. Richard,
Secretary, Maritime Administration.
[FR Doc. 05-2753 Filed 2-11-05; 8:45 am]
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