[Federal Register Volume 71, Number 26 (Wednesday, February 8, 2006)]
[Proposed Rules]
[Pages 6438-6441]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-1691]


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DEPARTMENT OF TRANSPORTATION

Maritime Administration

46 CFR Part 296

[Docket No. MARAD-2006-23804]
RIN 2133-AB68


Maintenance and Repair Reimbursement Pilot Program

AGENCY: Maritime Administration, Department of Transportation.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This proposed rule will amend the Maritime Administration's 
(MARAD's) regulations governing its pilot program for the reimbursement 
of costs of qualified maintenance and repair (M&R) of Maritime Security 
Program (MSP) vessels performed in United States shipyards. Under 
Public Law 109-163, the Secretary of Transportation, acting through the 
Maritime Administrator, is directed to implement regulations that, 
among other things, replace MARAD's voluntary M&R reimbursement program 
with a mandatory system.

DATES: Comments are due by April 10, 2006.

ADDRESSES: You may submit comments [identified by DOT DMS Docket Number 
MARAD-2006-23804] by any of the following methods:
     Web Site: http://dms.dot.gov. Follow the instructions for 
submitting

[[Page 6439]]

comments on the DOT electronic docket site.
     Fax: 1-202-493-2251.
     Mail: Docket Management Facility; U.S. Department of 
Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, 
Washington, DC 20590-001.
     Hand Delivery: Room PL-401 on the plaza level of the 
Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 
a.m. and 5 p.m., Monday through Friday, except Federal Holidays.
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting 
comments.
    Instructions: All submissions must include the agency name and 
docket number or Regulatory Identification Number (RIN) for this 
rulemaking. Note that all comments received will be posted without 
change to http://dms.dot.gov including any personal information 
provided. Please see the Privacy Act heading under Rulemaking Notices.
    Docket: 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 Street, SW., 
Washington, DC, between 9 a.m. and 5 p.m. (EST or EDT), Monday through 
Friday, except Federal Holidays.

FOR FURTHER INFORMATION CONTACT: Jean E. McKeever, Associate 
Administrator for Marine Asset Development, Maritime Administration, 
400 Seventh Street, SW., Washington, DC 20590; phone: (202) 366-5737; 
fax: (202) 366-3511; or e-mail [email protected].

SUPPLEMENTARY INFORMATION:

Background

    The Maritime Security Program (MSP) was established to maintain a 
modern U.S.-flag fleet of commercially viable, militarily useful, 
privately-owned vessels for national defense needs and to maintain a 
strong U.S. presence in international maritime trade. Under the MSP, 
the U.S. Government contracts with certain operators of U.S.-flag 
commercial vessels to be on call for service when needed in times of 
national emergency or war.
    The original MSP was established by the Maritime Security Act of 
1996 (Pub. L. 104-239, Oct. 8, 1996) for fiscal years 1996 through 
2005. On November 24, 2003, President Bush signed the Maritime Security 
Act of 2003 (MSA 2003) (part of the National Defense Authorization Act 
for Fiscal Year 2004) which reauthorized the MSP for fiscal years 2006 
through 2015.
    In addition to reauthorizing the MSP, section 3517 of the MSA 2003 
established a voluntary pilot program under which the Secretary of 
Transportation could enter into agreement(s) to reimburse MSP vessel 
operators for the costs of qualified maintenance and repairs performed 
in U.S. shipyards instead of foreign shipyards. Reimbursement levels 
under the voluntary program were established at 80% of the difference 
between the fair and reasonable cost of obtaining qualified M&R work in 
U.S. shipyards and the cost of qualified M&R work in foreign shipyards. 
MARAD promulgated implementing regulations for this program at 46 CFR 
section 296.60 (70 FR 55581, Sept. 22, 2005).
    Under Public Law 109-163, enacted on January 6, 2006, the Secretary 
of Transportation is directed to implement regulations to replace the 
voluntary M&R reimbursement program with a mandatory program. Under the 
mandatory program, MARAD must enter into an agreement with one or more 
MSP Contractors, subject to appropriations, for the M&R of one or more 
vessels that are subject to a MSP operating agreement. Under Public Law 
109-163, reimbursement levels are established at 100% of the difference 
between the fair and reasonable cost of obtaining qualified M&R work in 
U.S. shipyards and the cost of qualified M&R work in foreign shipyards.

Public Comment

    MARAD welcomes public comments regarding the M&R pilot program and, 
in particular, suggestions regarding what documentation Contractors 
could provide to assist MARAD in determining the fair and reasonable 
cost of obtaining qualified M&R work in U.S. shipyards as well as in 
the foreign shipyards where Contractors would otherwise undertake such 
work.

Rulemaking Analyses and Notices

Executive Order 12866 (Regulatory Planning and Review), and Department 
of Transportation (DOT) Regulatory Policies; Pub. L. 104-121

    This proposed rule is not considered a significant regulatory 
action under section 3(f) of Executive Order 12866 and, therefore, was 
not reviewed by the Office of Management and Budget. This proposed rule 
is not likely to result in an annual effect on the economy of $100 
million or more. This proposed rule is also not significant under the 
Regulatory Policies and Procedures of the Department of Transportation 
(44 FR 11034, February 26, 1979). The costs and economic impact 
associated with this rulemaking are considered to be so minimal that no 
further analysis is necessary.

Executive Order 13132

    We have analyzed this rulemaking in accordance with the principles 
and criteria contained in Executive Order 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 have no substantial effects on the States, 
the current Federal-State relationship, or on the current distribution 
of power and responsibilities among local officials. Therefore, 
consultation with State and local officials was not necessary.

Executive Order 13175

    MARAD does not believe that this proposed rule will significantly 
or uniquely affect the communities of Indian tribal governments when 
analyzed under the principles and criteria contained in Executive Order 
13175 (Consultation and Coordination with Indian Tribal Governments). 
Therefore, the funding and consultation requirements of this Executive 
Order do not apply.

Regulatory Flexibility

    The Maritime Administrator certifies that this proposed rule will 
not have a significant economic impact on a substantial number of small 
entities. We anticipate that no small entities will participate in this 
program.

Unfunded Mandates Reform Act of 1995

    This proposed rule will not impose an unfunded mandate under the 
Unfunded Mandates Reform Act of 1995. It will not result in costs of 
$100 million or more, in the aggregate, to any of the following: State, 
local, or Native American tribal governments, or the private sector. 
This proposed rule is the least burdensome alternative that achieves 
this objective of U.S. policy.

Environmental Assessment

    We have analyzed this proposed rule for purposes of compliance with 
the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321 et 
seq.) and have concluded that, under the categorical exclusions 
provision in section 4.05 of Maritime Administrative Order (MAO) 600-1, 
``Procedures for Considering Environmental Impacts,'' 50 FR 11606 
(March 22, 1985), neither the preparation of an Environmental 
Assessment, an Environmental Impact Statement, nor a Finding of No 
Significant Impact for this rulemaking is

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required. This proposed rule does not change the environmental effects 
of the current M&R Pilot program and thus no further analysis under 
NEPA is required.

Paperwork Reduction

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3507 et seq.), this rulemaking contains no new information collection 
and record keeping requirements that require OMB approval.

Privacy Act

    Anyone is able to search the electronic form of all comments 
received into any of our dockets by the name of the individual 
submitting the comment (or signing the comment, if submitted on behalf 
of an association, business, labor union, etc.). You may review DOT's 
complete Privacy Act Statement in the Federal Register published on 
April 11, 2000 (Volume 65, Number 70; Pages 19477-78) or you may visit 
http://dms.dot.gov.

List of Subjects in 46 CFR Part 296

    Assistance payments, Maritime carriers, Reporting and recordkeeping 
requirements.

    Accordingly, 46 CFR Chapter II, Subchapter C, Part 296 is proposed 
to be amended as follows:

PART 296--MARITIME SECURITY PROGRAM (MSP)

    1. The authority citation for part 296 is revised to read as 
follows:

    Authority: Pub. L. 108-136, Pub. L. 109-163, 117 Stat. 1392; 46 
App. U.S.C. 1114(b), 49 CFR 1.66.

    2. Amend Sec.  296.60 by revising paragraphs (b), (c), (d), (e), 
and (f) and adding new paragraph (g) to read as follows.


Sec.  296.60  Applications.

* * * * *
    (b) Every Contractor shall agree as a condition of participation in 
MSP that it will accept when offered an agreement under 46 U.S.C. 3517, 
to perform qualified M&R of one or more MSP vessels that normally make 
port calls in the United States, in United States shipyards, subject to 
terms set forth below. In this section the term ``qualified M&R'' 
means:
    (1) Except as provided in paragraph (b)(2) of this section:
    (i) Any inspection of a vessel that is--
    (A) Required under chapter 33 of title 46, United States Code; and
    (B) Performed in the period in which the vessel is subject to an 
agreement under this section;
    (ii) Any M&R of a vessel that is determined, in the course of an 
inspection referred to in paragraph (b)(1)(i) of this section, to be 
necessary; and
    (iii) Any additional M&R the Contractor intends to undertake at the 
same time as the work described in paragraph (b)(1)(ii) of this 
section; and
    (2) Does not include:
    (i) M&R not agreed to by the Contractor to be undertaken at the 
same time as the work described in paragraph (b)(1) of this section; or
    (ii) Routine M&R or any emergency work that is necessary to enable 
a vessel to return to a port in the United States.
    (c) The Administrator will offer M&R agreements only to the extent 
that funding for the M&R program is provided for by appropriations 
legislation. Following the enactment of any such appropriations 
legislation, the Administrator will canvass the Contractors to 
determine which Contractors desire to volunteer for the M&R program. If 
no MSP Contractor volunteers for the M&R program, the Administrator 
will select the participants in the M&R program on the basis of 
available funds and a review of the Contractors' vessels and ocean 
freight service. The Administrator will establish with the Contractors 
specific M&R programs that provide the greatest assistance to United 
States shipyards within the available funding, while minimizing any 
disruption to the Contractors' ocean freight service.
    (d) Terms of Agreement. An agreement under this section:
    (1) Will require that except as provided in paragraph (e) of this 
section, all qualified M&R on the vessel will be performed in the 
United States;
    (2) Will require that the Administrator will reimburse the 
Contractor in accordance with paragraph (f) of this section for the 
costs of qualified M&R performed in the United States; and
    (3) Will apply to qualified M&R performed during the 5-year period 
beginning on the date the vessel begins operating under the operating 
agreement under chapter 531 of title 46, United States Code.
    (e) Exception to requirement to perform work in the United States. 
A Contractor will not be required to have qualified M&R work performed 
in the United States under this section if:
    (1) The Administrator determines that there is no facility capable 
of meeting all technical requirements of the qualified M&R in the 
United States located in the geographic area in which the vessel 
normally operates available to perform the work in the time required by 
the Contractor to maintain its regularly scheduled service;
    (2) The Administrator determines that there are insufficient funds 
to pay reimbursement under paragraph (f) of this section with respect 
to the work; or
    (3) The Administrator fails to make the certification described in 
paragraph (g)(2) of this section.
    (f) Reimbursement. (1) In general. The Administrator will, subject 
to the availability of appropriations, reimburse a Contractor for costs 
incurred by the Contractor for qualified M&R performed in the United 
States under this section.
    (2) Amount. The amount of reimbursement will be equal to the 
difference between--
    (i) The fair and reasonable cost of obtaining the qualified M&R in 
the United States; and
    (ii) The fair and reasonable cost of obtaining the qualified M&R 
outside the United States, in the country in which the Contractor would 
otherwise undertake the qualified M&R.
    (3) Determination of fair and reasonable costs. The Administrator 
will determine fair and reasonable costs for purposes of paragraph 
(f)(2) of this section.
    (i) In order to determine the fair and reasonable cost of obtaining 
qualified M&R work in the United States, the Maritime Administrator 
will require, and Contractors will provide, supporting documentation 
outlining such costs, including shipyard contracts, etc.
    (ii) In order to determine the fair and reasonable cost of 
obtaining qualified M&R work in the foreign country where the 
Contractor would otherwise undertake the qualified M&R work, the 
Maritime Administrator will require, and Contractors will provide, 
supporting documentation outlining such costs.
    (g) Notification Requirements. (1) Notification by contractor. The 
Administrator is not required to pay reimbursement to a Contractor 
under this section for qualified M&R, unless the Contractor--
    (i) Notifies the Administrator of the intent of the Contractor to 
obtain the qualified M&R, by not later than 90 days before the date of 
the performance of the qualified M&R and
    (ii) Includes in such notification:
    (A) A description of all qualified M&R that the Contractor should 
reasonably expect may be performed;
    (B) A description of the vessel's normal route and port calls in 
the United States;
    (C) An estimate of the cost, with supporting documentation, of 
obtaining the qualified M&R described under

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paragraph (g)(1)(ii)(A) of this section in the United States; and
    (D) An estimate of the cost, with supporting documentation, of 
obtaining the qualified M&R described under paragraph (g)(1)(ii)(A) of 
this section outside the United States, in the country in which the 
Contractor otherwise would undertake the qualified M&R.
    (2) Certification by Administrator. (i) Not later than 30 days 
after the date of receipt of notification under paragraph (g)(1)(ii)(A) 
of this section, the Administrator will certify to the Contractor--
    (A) Whether the cost estimates provided by the Contractor are fair 
and reasonable;
    (B) If the Administrator determines that such cost estimates are 
not fair and reasonable, the Administrator's estimate of fair and 
reasonable costs for such work;
    (C) Whether there are available to the Administrator sufficient 
funds to pay reimbursement under paragraph (d) of this section with 
respect to such work; and
    (D) That the Administrator commits such funds to the Contractor for 
such reimbursement, if such funds are available for that purpose.
    (ii) If the Contractor notification described in paragraph (g)(1) 
of this section does not include an estimate of the cost of obtaining 
qualified M&R in the United States, then not later than 30 days after 
the date of receipt of such notification, the Administrator will:
    (A) Certify to the Contractor whether there is a facility capable 
of meeting all technical requirements of the qualified M&R in the 
United States located in the geographic area in which the vessel 
normally operates available to perform the qualified M&R described in 
the notification by the Contractor under paragraph (g)(1) of this 
section in the time period required by the Contractor to maintain its 
regularly scheduled service; and
    (B) If there is such a facility, require the Contractor to resubmit 
such notification with the required cost estimate for such facility.

(Authority: 49 CFR 1.66)

By Order of the Maritime Administrator.

    Dated: February 3, 2006.
Joel C. Richard,
Secretary, Maritime Administration.
[FR Doc. E6-1691 Filed 2-7-06; 8:45 am]
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