[Federal Register Volume 78, Number 221 (Friday, November 15, 2013)]
[Proposed Rules]
[Pages 68784-68809]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-26886]


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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Parts 97 and 160, and 46 CFR Part 97

[Docket No. USCG-2000-7080]
RIN 1625-AA25 [Formerly RIN 2115-AF97]


Cargo Securing Manuals

AGENCY: Coast Guard, DHS.

ACTION: Supplemental notice of proposed rulemaking.

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SUMMARY: The Coast Guard proposes requiring cargo securing manuals 
(CSMs) on vessels of 500 gross tons or more traveling on international 
voyages and carrying cargo that is other than solid or liquid bulk 
cargo. The proposed regulations would authorize recognized 
classification societies or other approval authorities to review and 
approve CSMs on behalf of the Coast Guard. They would also prescribe 
when and how the loss or jettisoning of cargo at sea must be reported. 
The proposed regulations would help fulfill U.S. treaty obligations and 
could help prevent or mitigate the consequences of vessel cargo loss. 
This rulemaking promotes the Coast Guard's maritime safety and 
stewardship missions.

DATES: Comments and related material must either be submitted to the 
Coast Guard's online docket via http://www.regulations.gov on or before 
February 13, 2014 or reach the Docket Management Facility by that date. 
Comments sent to the Office of Management and Budget (OMB) on 
collection of information must reach OMB on or before February 13, 
2014.

ADDRESSES: You may submit comments identified by docket number USCG-
2000-7080 using any one of the following methods:

[[Page 68785]]

    (1) Federal eRulemaking Portal: http://www.regulations.gov.
    (2) Fax: 202-493-2251.
    (3) Mail: Docket Management Facility (M-30), U.S. Department of 
Transportation, West Building Ground Floor, Room W12-140, 1200 New 
Jersey Avenue SE., Washington, DC 20590-0001.
    (4) Hand delivery: Same as mail address above, between 9 a.m. and 5 
p.m., Monday through Friday, except Federal holidays. The telephone 
number is 202-366-9329.
    To avoid duplication, please use only one of these four methods. 
See the ``Public Participation and Request for Comments'' portion of 
the SUPPLEMENTARY INFORMATION section below for instructions on 
submitting comments.
    Collection of Information Comments: If you have comments on the 
collection of information discussed in section VIII.D. of this 
preamble, you must also send comments to the Office of Information and 
Regulatory Affairs (OIRA), Office of Management and Budget. To ensure 
that your comments to OIRA are received on time, the preferred methods 
are by email to [email protected] (include the docket number 
and ``Attention: Desk Officer for Coast Guard, DHS'' in the subject 
line of the email) or fax at 202-395-6566. An alternate, though slower, 
method is by U.S. mail to the Office of Information and Regulatory 
Affairs, Office of Management and Budget, 725 17th Street NW., 
Washington, DC 20503, ATTN: Desk Officer, U.S. Coast Guard.
    Viewing incorporation by reference material: You may inspect the 
material proposed for incorporation by reference at room 1210, U.S. 
Coast Guard Headquarters, 2100 Second Street SW., Stop 7126, 
Washington, DC 20593-7126 between 9 a.m. and 4 p.m., Monday through 
Friday, except Federal holidays. The telephone number is 202-372-1411. 
Copies of the material are available as indicated in the 
``Incorporation by Reference'' section of this preamble.

FOR FURTHER INFORMATION CONTACT: If you have questions on this proposed 
rule, call or email Mr. Ken Smith, Project Manager, U.S. Coast Guard, 
Headquarters, Vessel and Facility Operating Standards Division, 
Commandant (CG-OES-2); telephone 202-372-1411, email 
[email protected]. If you have questions on viewing or submitting 
material to the docket, call Renee V. Wright, Program Manager, Docket 
Operations, telephone 202-366-9826.

SUPPLEMENTARY INFORMATION:

Table of Contents for Preamble

I. Public Participation and Request for Comments
    A. Submitting Comments
    B. Viewing Comments and Documents
    C. Privacy Act
    D. Public Meeting
II. Abbreviations
III. Basis and Purpose
IV. Background and Regulatory History
V. Discussion of Comments and Changes
VI. Discussion of the Proposed Rule
VII. Incorporation by Reference
VIII. Regulatory Analyses
    A. Regulatory Planning and Review
    B. Small Entities
    C. Assistance for Small Entities
    D. Collection of Information
    E. Federalism
    F. Unfunded Mandates Reform Act
    G. Taking of Private Property
    H. Civil Justice Reform
    I. Protection of Children
    J. Indian Tribal Governments
    K. Energy Effects
    L. Technical Standards
    M. Environment

I. Public Participation and Request for Comments

    We encourage you to participate in this rulemaking by submitting 
comments and related materials. All comments received will be posted 
without change to http://www.regulations.gov and will include any 
personal information you have provided.

A. Submitting Comments

    If you submit a comment, please include the docket number for this 
rulemaking (USCG-2000-7080), indicate the specific section of this 
document to which each comment applies, and provide a reason for each 
suggestion or recommendation. You may submit your comments and material 
online or by fax, mail, or hand delivery, but please use only one of 
these means. We recommend that you include your name and a mailing 
address, an email address, or a phone number in the body of your 
document so that we can contact you if we have questions regarding your 
submission.
    To submit your comment online, go to http://www.regulations.gov, 
and follow the instructions on that Web site. If you submit your 
comments by mail or hand delivery, submit them in an unbound format, no 
larger than 8\1/2\ by 11 inches, suitable for copying and electronic 
filing. If you submit comments by mail and would like to know that they 
reached the Facility, please enclose a stamped, self-addressed postcard 
or envelope.
    We will consider all comments and material received during the 
comment period and may change this proposed rule based on your 
comments.

B. Viewing Comments and Documents

    To view comments, as well as documents mentioned in this preamble 
as being available in the docket, go to http://www.regulations.gov, and 
follow the instructions on that Web site. If you do not have access to 
the internet, you may view the docket online by visiting the Docket 
Management Facility in Room W12-140 on the ground floor of the 
Department of Transportation West Building, 1200 New Jersey Avenue SE., 
Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, 
except Federal holidays. We have an agreement with the Department of 
Transportation to use the Docket Management Facility.

C. Privacy Act

    Anyone can search the electronic form of 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 a Privacy Act notice 
regarding our public dockets in the January 17, 2008, issue of the 
Federal Register (73 FR 3316).

D. Public Meeting

    We do not now plan to hold a public meeting. But you may submit a 
request for one to the docket using one of the methods specified under 
ADDRESSES. In your request, explain why you believe a public meeting 
would be beneficial. If we decide to hold a public meeting, we will 
announce its time and place in a later notice in the Federal Register.

II. Abbreviations

BLS U.S. Bureau of Labor Statistics
CFR Code of Federal Regulations
CSAP Cargo safe access plan
CSM Cargo Securing Manual
CSS Code Code of Safe Practice for Cargo Stowage and Securing
E.O. Executive Order
FR Federal Register
IMO International Maritime Organization
MARAD U.S. Department of Transportation's Maritime Administration
MSC Maritime Safety Committee
MISLE Marine Information for Safety and Law Enforcement
NPRM Notice of proposed rulemaking
NVIC Navigation and Vessel Inspection Circular
OMB Office of Management and Budget
OSHA Occupational Safety and Health Administration
Sec.  Section symbol
SANS Ship Arrival Notification System
SNPRM Supplemental notice of proposed rulemaking

[[Page 68786]]

SOLAS International Convention for the Safety of Life at Sea, 1974 
as amended
U.S.C. United States Code

III. Basis and Purpose

    Sections 2103 and 3306 of Title 46, U.S. Code, provide the 
statutory basis for this rulemaking. Section 2103 gives the Secretary 
of the department in which the Coast Guard is operating general 
regulatory authority to implement Subtitle II (Chapters 21 through 147) 
of Title 46, which includes statutory requirements in 46 U.S.C. Chapter 
33 for inspecting the vessels to which this rulemaking applies. Section 
3306 gives the Secretary authority to regulate an inspected vessel's 
operation, fittings, equipment, appliances, and other items in the 
interest of safety. The Secretary's authority under both statutes has 
been delegated to the Coast Guard in Department of Homeland Security 
Delegation No. 0170.1(92)(a) and (b). In addition, the Secretary has 
regulatory authority to implement the International Convention for the 
Safety of Life at Sea, 1974 (SOLAS), under Executive Order (E.O.) 
12234.
    The purpose of this rulemaking is to align Coast Guard regulations 
with SOLAS requirements for cargo securing manuals and apply those 
requirements to U.S. vessels and foreign vessels in U.S. waters, and to 
specify when and how the loss or jettisoning of cargo at sea must be 
reported.

IV. Background and Regulatory History

    Improperly secured maritime cargo threatens the safety of life, 
property, and the environment. Several maritime incidents dating from 
the early 1990s to the recent past underscore the risk of serious 
injury or death, vessel loss, property damage, and environmental damage 
caused by improperly secured cargo aboard vessels. A Coast Guard board 
of inquiry established to review an incident off the coast of New 
Jersey in 1992, which involved the loss of 21 containers, 4 of which 
contained the hazardous material arsenic oxide, revealed that the 
incident was caused by cargo securing failures and poor operational 
planning. The Commandant of the Coast Guard approved the board's 
recommendation that the Coast Guard adopt the International Maritime 
Organization's (IMO) guidelines on cargo securing manuals. With the 
support of other IMO member governments, the U.S. led a proposal to 
include new requirements for CSMs in SOLAS. In 1994, the IMO amended 
SOLAS in response to the growing international concern over maritime 
incidents involving improperly secured cargo. The amendments provided 
that, after 1997, vessels of 500 gross tons or more engaged in 
international trade and carrying cargo other than solid or liquid bulk 
material must carry a flag state-approved CSM and load, stow, and 
secure cargo in compliance with the CSM. Shortly before the SOLAS 
amendments took effect, the Coast Guard issued Navigation and Vessel 
Inspection Circular (NVIC) No. 10-97 to provide guidance concerning the 
SOLAS CSM standards until Coast Guard regulations could be developed. 
Compliance with NVIC 10-97 is voluntary. In 2009, in response to 
questions raised about lost containers during a Congressional hearing, 
the Coast Guard estimated that between 500 and 2,000 containers are 
lost at sea annually. In a recent paper submitted by the International 
Organization for Standardization (ISO) to the IMO, ``Development of 
Measures to Prevent Loss of Containers,'' the ISO notes that 10,000 
containers are damaged during sea transport each year, of which 3,000 
to 4,000 are lost overboard. The number of damaged and lost containers 
has risen and continues to rise partly because of the growth in 
container transports, and partly because of the larger impacts from 
ever-larger containerships. In addition to the dangers that improperly 
secured cargo and containers pose to vessels and crewmembers that 
handle and transport them, they also pose dangers to the environment 
and vessels at sea when lost overboard.
    The SOLAS CSM requirements outline what a CSM must contain and 
establish strength requirements for securing devices and arrangements. 
They also describe how to stow and secure containers and other cargo. 
These SOLAS requirements are not yet mandatory for U.S. vessels or for 
foreign vessels operating in U.S. waters.
    In a notice (64 FR 1648; Jan. 11, 1999) announcing a February 3, 
1999, public meeting to discuss the SOLAS CSM requirements and cargo 
securing issues, we suggested that the SOLAS CSM requirements for 
vessels in international trade might be beneficial for U.S. vessels in 
coastwise (domestic) trade as well. Two written comments were submitted 
at the meeting. You may view them at http://regulations.gov under 
docket number USCG-1998-4951. One commenter offered to review and 
approve CSMs and the other urged Coast Guard to align any Coast Guard 
regulations with those of the Occupational Safety and Health 
Administration (OSHA). Under 29 U.S.C. 653(b)(1), OSHA's authority does 
not extend to shipboard personnel who are subject to Coast Guard 
regulations. Nevertheless, the Coast Guard has coordinated with OSHA to 
ensure alignment of our regulations.
    The first publication in this rulemaking was a notice of proposed 
rulemaking (NPRM) published December 1, 2000 (65 FR 75201) entitled 
``Cargo Securing on Vessels Operating in U.S. Waters.'' The NPRM 
proposed incorporating SOLAS requirements for CSMs into Coast Guard 
regulations and requested comment on five options for regulating cargo 
securing on U.S. vessels in coastwise trade. The Coast Guard received 
17 letters from industry and labor groups in response to the NPRM. We 
address these comments in section V of this preamble.

V. Discussion of Comments and Changes

    The 2000 NPRM drew comments from 15 sources, with two sources 
submitting two letters. Twelve commenters were companies or trade 
associations involved with maritime transportation. Two unions 
commented, as did a Maritime Administration official. In addition, a 
Coast Guard memorandum commemorating a meeting between Coast Guard 
personnel and industry representatives, and the final report of the 
Towing Safety Advisory Committee's (TSAC's) working group on cargo 
securing, are treated in the docket as ``public submissions.''
    TSAC is a committee that advises the Coast Guard under the Federal 
Advisory Committee Act. The TSAC working group found that there are few 
cargo losses from barges, and that the variety of cargo configurations 
and cargo securing practices in the barge industry make it difficult to 
apply a single cargo securing standard for those vessels. The working 
group identified cargo securing best practices used by the barge 
industry, and recommended that barge operators should voluntarily 
develop, document, and periodically update cargo securing plans, train 
personnel in procedures covered by those plans, and audit the results. 
A barge operator agreed with the working group. An organization 
representing barge operators, and one other commenter, agreed that 
cargo loss from barges is extremely rare, and agreed that barge 
operators should voluntarily develop cargo securing plans. Two other 
commenters said they agree with the organization representing barge 
operators. Another commenter said that seagoing barges are generally 
safe from cargo loss. The relatively low rate of cargo loss in U.S. 
coastwise trade is a major reason why we have decided not to extend 
SOLAS-style cargo securing requirements to that trade.

[[Page 68787]]

    Two transportation companies (and a third company that said it 
agreed with one of the two) said that the NPRM's proposed regulatory 
text for 46 CFR 97.210(e) (cargo securing manual contents) and 46 CFR 
97.230 (inspection and maintenance of cargo securing devices) would 
make useful additions to the SOLAS cargo securing requirements. Those 
provisions have been omitted from this supplemental notice of proposed 
rulemaking (SNPRM); the SNPRM addresses their topics by requiring CSMs 
to comply with applicable standards contained in the IMO's 2010 
Maritime Safety Committee Circulars (MSC.1/Circ.) 1352 (``Cargo Stowage 
and Securing (CSS Code) Annex 14 Guidance on Providing Safe Working 
Conditions for Securing of Containers on Deck'') and 1353 (``Revised 
Guidelines for the Preparation of the Cargo Securing Manual''). These 
two commenters also said that following a continuous examination 
program would ensure good equipment maintenance and be less burdensome 
than CSM regulatory requirements. Our SNPRM would allow, but not 
require, operators to follow a continuous examination program. It would 
describe, in proposed 33 CFR 97.205, when an approved CSM must be 
amended and re-approved. The two commenters recommended that fixed and 
portable cargo handling equipment be treated identically for regulatory 
purposes. Our proposed regulations would not require the use of either 
fixed or portable equipment. However, if portable equipment is used, it 
is subject to special provisions set out in the IMO Circulars, and 
incorporated by reference in proposed 33 CFR 97.110.
    Two transportation companies said we needed to ensure that our 
rulemaking does not create confusion between Coast Guard and OSHA 
regulations. This topic was also discussed in the Coast Guard's meeting 
with industry representatives. As discussed in section IV of this 
preamble, we have aligned our regulations with OSHA's, to minimize 
confusion.
    One transportation company said the NPRM should have approached 
safety issues relating to lashing cargo to decks. The same company said 
the NPRM should have addressed vertical tandem loading and cargo 
lifting devices. It said the Coast Guard should provide guidance to 
shoreside personnel on segregating damaged or unserviceable cargo 
equipment, and on dealing with cargo containers on which one of the 
doors has been removed.
    These safety issues were also discussed in the Coast Guard's 
meeting with industry representatives, at which time the Coast Guard 
said the issue was beyond the scope of this rulemaking but could become 
an issue for IMO consideration in the future. Our proposed rule 
addresses many of the safety issues by incorporating by reference IMO 
Circulars MSC.1/Circ. 1352 and 1353, which take into account the IMO's 
2010 Code of Safe Practice for Cargo Stowage and Securing (CSS Code). 
The CSS Code contains new provisions for the safety of personnel 
engaged in lashing operations which includes crew members and dock 
workers alike.
    The same company that raised the safety issues also expressed 
concern that Coast Guard personnel might be inconsistent, in different 
locations, in how they apply cargo securing policy guidance. We 
encourage members of the regulated public who think they are being 
treated unfairly or arbitrarily by Coast Guard personnel to bring the 
matter to our attention. The Coast Guard will not retaliate against 
persons or businesses that question or complain about any policy or 
action of the Coast Guard.
    Another transportation company expressed support for developing 
cargo securing standards that would apply specifically to seagoing 
barges. The commenter said the NPRM did not adequately assess the 
economic impact of applying cargo securing regulations to seagoing 
barges. The NPRM did not propose specific regulations for those vessels 
and thus did not calculate any regulatory economic impact on them. 
Seagoing barges in coastwise trade would not be affected by this SNPRM.
    A third transportation company said that most cargo losses result 
from container structural problems that the vessel operator cannot know 
about or prevent. To guard against such risks, this commenter said that 
hazardous material containers should be stowed as low as possible on 
the deck. We agree that once containers are loaded onto a vessel it is 
very difficult for a vessel operator to know about or prevent 
structural problems which have gone undetected. In this regard, much 
responsibility is placed on personnel associated with activities 
related to the transportation of the container through the supply chain 
before delivery of the container at a terminal, including personnel 
involved in packing the contents and personnel involved in storing and 
loading containers from shore. These personnel routinely conduct 
internal and external inspections to ensure that the container is 
suitable for transporting cargo and being lifted by container handling 
equipment. These routine periodic inspections help reduce the 
likelihood that structurally deficient containers will be loaded aboard 
a vessel. Vessel operators are then responsible for ensuring that the 
containers are stowed and secured in accordance with the CSM. Vessel 
operators who identify a structural deficiency in a container after it 
has been loaded should take whatever action is considered necessary to 
ensure the container is safely secured, handled, or removed as the 
specific situation may dictate. Stowage and transportation of hazardous 
materials on vessels is guided by 49 CFR Part 176 and the IMO Dangerous 
Goods Code which address hazardous materials according to each specific 
type of cargo, recognizing that various types of hazardous materials 
require special levels of handling. Our proposed rule addresses 
container integrity and stowage as it relates to the securing of cargo 
for safe transport by sea and incorporates by reference IMO Circulars 
MSC.1/Circ. 1352 and 1353 concerning that issue.
    A fourth transportation company said that no insured company would 
transport $20 million worth of cargo without first having a qualified 
surveyor approve how it is lashed to the deck. This commenter also said 
that many small entities would be affected by domestic CSM regulations. 
We recognize that the lashing and securing of some types of cargo may 
receive increased scrutiny because of their overall value, and we 
recognize that such cargo poses minimal risk for transport by sea. 
However, since such surveys currently are not required by law, securing 
arrangements are currently evaluated for only a few types of cargo. We 
propose requiring CSMs on vessels of 500 gross tons or more traveling 
on international voyages that are carrying any cargo that is other than 
solid or liquid bulk cargo. Neither the NPRM nor this SNPRM proposes 
specific domestic regulations and thus we have not calculated the small 
entity impact that domestic CSM regulations could have. We request 
additional public input on the topic and may conduct further analysis 
based on that input.
    A fifth transportation company said that regulatory language 
suitable for larger ships would be unsuitable for smaller vessels in 
coastwise trade. This commenter also expressed concern over how much 
time would be needed for CSM approvals. As noted above, we have decided 
not to apply SOLAS-style cargo securing requirements to coastwise 
trade. By facilitating the use of third party organizations to approve 
CSMs, we hope to avoid lengthy delays. If you are preparing a CSM for 
approval,

[[Page 68788]]

we encourage you to consult with your approval authority upfront to 
help eliminate unnecessary delays.
    A cargo gear company cautioned us against incorporating outdated 
industry standards in our regulations. This SNPRM proposes 
incorporating only IMO Circulars MSC.1/Circ. 1352 and 1353, which take 
into account the IMO's 2010 CSS Code. We invite public comment on that 
proposal.
    The Maritime Administration commenter said our regulations should 
not apply to Administration-owned ships in the Ready Reserve Force. We 
provide an exception for those vessels in proposed 33 CFR 97.100(b).
    A seagoing barge operator said it was unclear whether the NPRM 
covers seagoing barges, and whether it relates only to hazardous 
materials or would cover non-hazardous materials as well. The NPRM 
discussed the possible extension of SOLAS-style cargo securing 
requirements to seagoing barges or other vessels in coastwise trade, 
but we have decided against that extension. The NPRM did not 
specifically limit its discussion to coastwise vessels carrying 
hazardous material. This SNPRM proposes regulations that would apply to 
seagoing barges in international trade. The regulations would also 
apply to vessels carrying any cargo that is not solely in liquid or 
solid bulk form.
    The NPRM invited comments on five options for extending SOLAS 
requirements for cargo securing on international voyages to voyages in 
U.S. coastwise trade. We have decided against such an extension because 
the cargo loss record of coastwise trade does not justify the 
regulatory costs that coastwise industry would have to bear. 
Nevertheless, the following discussion summarizes the public comment on 
the five options.
    Nine commenters commented on Option 1. Option 1 proposed extending 
SOLAS requirements to coastwise voyages. Two companies and the two 
unions chose Option 1 as their preferred option. One company said it 
would prefer a ``compromise'' between Options 1 and 2, with vessel-
specific standards that would comply with or exceed SOLAS standards. 
The cargo gear company criticized Option 1 for not requiring regular 
CSM review. One company said Option 1 is too restrictive, and another 
company said it would require too much standardization. A seagoing 
barge operator said Option 1 would not work for seagoing barges, 
because no two barge cargoes are the same.
    Five commenters commented on Option 2. Option 2 proposed allowing 
each coastwise voyage vessel to set and document its own standards, 
subject to Coast Guard approval. The cargo gear company said this 
option should be evaluated in light of the Coast Guard's experience 
with continuous examination programs, and noted similarities between 
Options 2 and 5. One company said Option 2 requires an overly 
burdensome consideration of too many variables. A seagoing barge 
operator said Option 2 would not work for seagoing barges, but did not 
explain the reasons for this statement. Another company said, without 
explanation, that Option 2 would be its second choice of the options 
presented. Another company said it would prefer a ``compromise'' 
between Options 1 and 2, with vessel-specific standards that would 
comply with or exceed SOLAS standards.
    Four commenters commented on Option 3. Option 3 proposed requiring 
a coastwise voyage vessel to obtain a surveyor's certificate of loading 
and securing, prior to departure, if the voyage would also be subject 
to Pipeline and Hazardous Materials Safety Administration regulations 
in 49 CFR part 176. The cargo gear company said its reaction to Option 
3 would depend on the specific standards the Coast Guard would propose 
for incorporation. A transportation company said the use of surveyors 
for multiple voyages would not be feasible due to cost and surveyor 
availability. A seagoing barge operator agreed that it would be 
difficult or impossible to ensure a surveyor's availability. Another 
company opposed Option 3 due to the high cost of hiring surveyors.
    Four commenters commented on Option 4. Option 4 proposed developing 
regulations that would allow each coastwise vessel owner to choose from 
among Options 1, 2, and 3. One commenter opposed Option 4, but did not 
make its reasons clear. The cargo gear company said Option 4 should be 
attractive to those who favor cargo securing regulations for domestic 
voyages, but did not express its own preference or opposition. A 
seagoing barge operator said the ``menu of options'' provided by Option 
4 could cause confusion. A company said it opposes Option 4 because it 
combines the strengths, but also the weaknesses, of Options 1 through 
3.
    Four commenters commented on Option 5. Option 5 proposed 
incorporating yet-to-be-developed coastwise voyage standards that 
industry might draft in cooperation with TSAC. One company expressed 
support but did not explain its preference for Option 5. Two companies 
expressed preference for Option 5 because it would allow for the 
development of standards that would be appropriate for different types 
of vessel and operational needs; one of the two said the exact language 
of Option 5 should be modified. A seagoing barge operator opposed 
Option 5 because it would not ensure the development of appropriate 
standards for different vessel types and operational needs.

VI. Discussion of Proposed Rule

    We are issuing this SNPRM, rather than proceeding directly to a 
final rule, for two reasons. First, much of the NPRM focused on the 
possible extension of SOLAS requirements to coastwise voyages. We wish 
to make it clear that we are no longer considering that extension, and 
that our proposed regulations would apply only to international 
voyages. Second, this SNPRM proposes some regulatory changes that were 
not discussed in the NPRM. For example, we propose additional language 
to help clarify what information needs to be reported when a cargo loss 
or jettisoning event occurs, and what constitutes such an event; and we 
propose new provisions for the use of classification societies or other 
third parties in approving CSMs.
    This SNPRM proposes incorporating by reference IMO Circulars MSC.1/
Circ. 1352 and 1353. These Circulars provide much of the guidance that 
we attempted to provide in our 2000 NPRM, which was based on the more 
limited guidance then available from the IMO's 1996 Circular MSC.1/
Circ. 745 (``Guidelines for the preparation of the Cargo Securing 
Manual''). Table 1 shows where the NPRM's proposed regulatory text is 
paralleled in the SNPRM.

           Table 1--Regulatory Text Comparison, NPRM and SNPRM
      [All references are to proposed sections in 33 CFR, part 97]
------------------------------------------------------------------------
                      NPRM                                SNPRM
------------------------------------------------------------------------
General, 97.100-97.130.........................            97.100-97.115
Cargo Securing Manual, 97.200-97.280...........                   97.120

[[Page 68789]]

 
How will Cargo Securing Manual Requirements be             97.200-97.215
 Approved and Enforced?, 97.300-97.350.........
Authorization of an Organization to Act on                 97.300-97.320
 Behalf of the U.S., 97.400-97.480.............
------------------------------------------------------------------------

    Reporting loss or jettisoning of cargo. We propose prescribing in 
33 CFR parts 97 and 160 when and how the accidental loss or deliberate 
jettisoning of cargo at sea must be reported. Currently, 33 CFR 160.215 
requires a vessel owner or operator to immediately notify the Coast 
Guard whenever there is a hazardous condition caused by a vessel or its 
operation. ``Hazardous condition'' is defined in 33 CFR 160.204 as 
``any condition that may adversely affect the safety of any vessel or 
the environmental quality of any port, harbor, or navigable waterway of 
the United States.'' In our view, any loss or jettisoning of cargo at 
sea must be considered a hazardous condition because, at a minimum, it 
poses a navigational hazard by threatening vessel safety. We propose 
making that explicit in part 97. We would also amend 33 CFR 160.215 by 
prescribing specific information to be included in the notification if 
the hazardous condition involves the loss or jettisoning of cargo. This 
should enhance our ability to identify potential problems with securing 
equipment, locate and warn mariners about drifting debris before it 
endangers safe navigation, and assess and respond to any environmental 
hazard created by the cargo loss.
    An additional concern is containers that sink. Sunken containers 
may no longer be a hazard to navigation, but they may pose long-term 
threats to the environment. Our proposed reporting and recordkeeping 
requirements would facilitate the long-term monitoring of sunken 
containers and any needed salvage or remediation.
    Incorporating SOLAS. We propose adding 33 CFR part 97 to 
incorporate the existing SOLAS requirements for CSMs on vessels of 500 
gross tons or more traveling on international voyages and carrying any 
cargo other than solid or liquid bulk cargo. Smaller vessels would only 
have to follow those requirements if they so choose--but if they choose 
to have a CSM they would be bound by these proposed regulations just as 
if they were vessels of 500 gross tons or more, including the 
requirement that the CSM would need to be approved by an organization 
that we have authorized to do so under proposed 33 CFR part 97. As a 
practical matter, all existing vessels to which proposed 33 CFR part 97 
would apply are already in compliance with SOLAS CSM requirements. Most 
foreign countries are parties to SOLAS and already enforce the SOLAS 
CSM requirements on their vessels. All U.S. vessels are already in 
compliance because they need SOLAS certificates to enter foreign ports 
and, to obtain those certificates, they have voluntarily complied with 
Coast Guard NVIC 10-97.
    NVIC 10-97 was based in part on IMO guidance contained in IMO 
Circular MSC.1/Circ. 745. That MSC Circular was updated on June 30, 
2010, by IMO Circular MSC.1/Circ. 1353, and since that time Coast 
Guard-approved CSMs have had to meet Circular 1353 guidelines at a 
minimum. Our proposed regulations would require vessels to meet the 
Circular 1353 standards. CSMs approved before June 30, 2010 would not 
need to be updated.
    We propose provisions for approving and amending CSMs, and for 
handling disputes over CSM approval. We would cross-reference those 
provisions in the bulk solid cargo operations regulations in 46 CFR 
subpart 97.12.
    We propose that, as required by MSC Circular 1352, ``Amendments to 
the Code of Safe Practice for Cargo Stowage and Securing (CSS Code),'' 
any container vessel, subject to SOLAS, whose keel is laid on or after 
January 1, 2015, will need to include a cargo safe access plan that is 
consistent with chapter 5 of the Annex to IMO Circular MSC.1/Circ. 
1353, which in turn references Annex 14 (``Guidance on Providing Safe 
Working Conditions for the Securing of Containers'') of the IMO 2010 
CSS Code. A cargo safe access plan provides detailed information on 
safe access for persons stowing and securing cargo on container ships 
that are specifically designed and fitted for the purpose of carrying 
containers.
    Classification societies. Finally, proposed 33 CFR part 97 would 
provide for our authorization of recognized classification societies 
and other third party organizations to review and approve CSMs on our 
behalf.

VII. Incorporation by Reference

    Material proposed for incorporation by reference appears in 
proposed 33 CFR 97.110. You may inspect this material at U.S. Coast 
Guard Headquarters where indicated under ADDRESSES. Copies of the 
material are available from the sources listed in Sec.  97.110. Before 
publishing a binding rule, we will submit this material to the Director 
of the Federal Register for approval of the incorporation by reference.

VIII. Regulatory Analyses

    We developed this proposed rule after considering numerous statutes 
and E.O.s related to rulemaking. Below we summarize our analyses based 
on these statutes or E.O.s.

A. Regulatory Planning and Review

    Executive Orders 12866 (``Regulatory Planning and Review'') and 
13563 (``Improving Regulation and Regulatory Review'') direct agencies 
to assess the costs and benefits of available regulatory alternatives 
and, if regulation is necessary, to select regulatory approaches that 
maximize net benefits (including potential economic, environmental, 
public health and safety effects, distributive impacts, and equity). 
Executive Order 13563 emphasizes the importance of quantifying both 
costs and benefits, of reducing costs, of harmonizing rules, and of 
promoting flexibility.
    This proposed rule is not a significant regulatory action under 
section 3(f) of E.O. 12866 (as supplemented by E.O. 13563) and does not 
require an assessment of potential costs and benefits under section 
6(a)(3) of that Order. The Office of Management and Budget (OMB) has 
not reviewed it under that Order. Nonetheless, we developed an analysis 
of the costs and benefits of the proposed rule to ascertain its 
probable impacts on industry. We consider all estimates and analysis in 
this Regulatory Analysis to be preliminary and subject to change in 
consideration of public comments. A preliminary regulatory assessment 
follows.

[[Page 68790]]

1. Summary
    This proposed rule would amend the CFR by adding the following 
provisions:
     Requirements for the reporting of lost or jettisoned 
cargo;
     The CSM requirements of SOLAS and the guidance in NVIC 10-
97; and
     Procedures for authorization of third party organizations 
to review and approve CSMs on the Coast Guard's behalf.
    Please reference Table 2 below for a summary of our analysis.

                                 Table 2--Summary of Regulatory Economic Impacts
----------------------------------------------------------------------------------------------------------------
                                                                         Costs  (7% discount
                                                        Affected                rate)
       Proposed changes            Description         population    --------------------------     Benefits
                                                                       Annualized     Total
----------------------------------------------------------------------------------------------------------------
1. Reporting of lost or         Codify lost or     U.S. and foreign-       $1,420       $9,970  Better tracking
 jettisoned cargo.               jettisoned cargo   flag vessels                                 and response of
                                 as a hazardous     engaged in                                   lost or
                                 condition and      transport to or                              jettisoned
                                 specify data to    from a U.S. port.                            cargo.
                                 be reported.
2. CSM requirements...........  Codify SOLAS       Owners/operators       $45,903     $322,403  Increased
                                 rules and          of 7,163                                     enforcement
                                 guidance from      vessels: 26 U.S.-                            authority.
                                 NVIC 10-97.        flagged, 7,137
                                                    foreign-flagged.
3. Approval of authorized       Codify guidance    6 currently                 $0           $0  Increased
 organizations.                  from NVIC 10-97.   approved                                     enforcement.
                                                    organizations,
                                                    others applying
                                                    for approval
                                                    status.
----------------------------------------------------------------------------------------------------------------

    Table 3 presents a summary of the 10-year cost schedule, showing 
total costs on an undiscounted basis and discounted at 7 percent and 3 
percent rates.

       Table 3--Summary of the 10-Year Total Cost to the International Cargo Industry and U.S. Government
----------------------------------------------------------------------------------------------------------------
                                                              Undiscounted                  Total, discounted
                      Year                      ----------------------------------------------------------------
                                                   Industry    Government     Total          7%           3%
----------------------------------------------------------------------------------------------------------------
1..............................................      $38,788         $500      $39,288      $36,718      $38,144
2..............................................       38,814          520       39,334       34,356       37,076
3..............................................       38,854          550       39,404       32,165       36,060
4..............................................       46,519          580       47,099       35,932       41,847
5..............................................       46,558          610       47,168       33,630       40,688
6..............................................       46,598          640       47,238       31,477       39,561
7..............................................       54,263          670       54,933       34,210       44,666
8..............................................       54,303          700       55,003       32,012       43,420
9..............................................       54,342          730       55,072       29,956       42,208
10.............................................       62,020          770       62,790       31,919       46,722
                                                ----------------------------------------------------------------
Total..........................................      481,059        6,270      487,329      332,375      410,392
    Annualized.................................  ...........  ...........  ...........       47,323       48,110
----------------------------------------------------------------------------------------------------------------

2. Affected Population
    The applicable population (those vessels subject to the proposed 
regulation) consists of U.S. and foreign-flagged vessels that:
     Measure 500 gross tons or more,
     Are engaged in international trade as indicated by 
currently having a SOLAS Cargo Ship Safety Certificate, and
     Carry any cargo other than solid or liquid bulk 
commodities.
    The United States is a signatory state to SOLAS, and U.S.-flagged 
vessels in international trade must meet SOLAS requirements, including 
the CSM rules, to receive a SOLAS certificate. An extract from the 
Coast Guard's Marine Information for Safety and Law Enforcement (MISLE) 
database identified 26 U.S.-flagged vessels as meeting the above 
tonnage and cargo criteria.
    The applicable foreign-flagged vessels are those that transit U.S. 
waters. The source for data on these vessels was the Coast Guard's Ship 
Arrival Notification System (SANS) database. This database contains 
data on notifications of arrival and departure of vessels to and from 
U.S. ports and is supplemented by data from MISLE. We extracted from 
SANS the most recent three full years of data available, 2009 through 
2011. This produced a list of 7,137 foreign-flagged vessels that had 
one or more visits to a U.S. port and met the tonnage and cargo type 
criteria. Table 4 summarizes the total applicable population data.

Table 4--Total Applicable Population, Non-Bulk Cargo Vessels, 500+ Gross
                                  Tons
------------------------------------------------------------------------
                             Flag                                Vessels
------------------------------------------------------------------------
U.S...........................................................        26
Foreign.......................................................     7,137
                                                               ---------
  Total.......................................................     7,163
------------------------------------------------------------------------
Sources: MISLE & SANS.

3. Economic Analyses
    We include an analysis of the costs, benefits, and alternatives for 
each of the proposed rule's three provisions:
     Requirements for the reporting of lost or jettisoned 
cargo;
     CSM requirements; and
     Approval of authorized organizations.

[[Page 68791]]

    a. Requirements for the Reporting of Lost or Jettisoned Cargo
    i. Current practices, applicable population, and description of 
changes and edits. As noted in section VI of this preamble, the current 
regulations require the Coast Guard to be immediately notified when a 
hazardous condition is caused by a vessel or its operation. Our 
interpretation is that incidents of lost or jettisoned cargo \1\ should 
be considered hazardous conditions and must be reported. However, 
current industry practice does not correspond with that interpretation. 
Captain James J. McNamara, President of the National Cargo Bureau, 
wrote: ``When a container or containers are lost overboard, usually 
there is no news release and seldom is the fact publicized. The loss is 
only revealed to those in a need-to-know situation, i.e., the ship 
owner, shipper, receiver and insurer.'' \2\ As we will discuss in 
detail, our research indicates a significant underreporting of lost or 
jettisoned cargo to the Coast Guard. Coast Guard and other vessels 
cannot respond to these unreported incidents, so they represent a 
residual risk to navigation and the marine environment. The 
underreporting also prevents the Coast Guard and other interested 
parties from accurately tracking the extent and trends of lost cargo 
incidents.
---------------------------------------------------------------------------

    \1\ All data and industry reports refer only to containers when 
describing incidents involving lost or jettisoned cargo. We will 
assume that containers will continue as the only lost cargo in the 
future and refer to containers as the generic description of the 
involved cargo for this analysis.
    \2\ McNamara, James J., ``Containers and Cargoes Lost 
Overboard'', National Cargo Bureau; conference of the International 
Union of Marine Insurers; September 13, 2000, http://www.iumi.com/images/stories/IUMI/Pictures/Conferences/London2000/Wednesday/02%20mcnamara%20cargo.pdf.
---------------------------------------------------------------------------

    In this proposed rule we include requirements for the immediate 
reporting of lost or jettisoned cargo. We anticipate that adoption of 
these requirements will correct this underreporting and lead to some 
increased costs to industry. Table 5 presents the change matrix for 
modifying the reporting of hazardous conditions and summarizes the 
specific edit or change, the affected population, and the economic 
impact.

 Table 5--Change Matrix for Reporting of Hazardous Conditions in 33 CFR
------------------------------------------------------------------------
   Reference & description     Affected population     Economic impact
------------------------------------------------------------------------
                          97.100 Applicability
------------------------------------------------------------------------
. . . (a)(1), U.S. vessels..  U.S. cargo vessels    None, administrative
                               500+ GT, non-U.S.     only.
                               cargo vessels in
                               U.S. waters 500+ GT.
97.105 Definitions..........  All vessels and       None, administrative
                               approval              only.
                               organizations.
97.110 Incorporation by       All affected vessels  None, administrative
 reference, lists IBR          and approval          only.
 references.                   organizations.
97.115 Situation requiring    Vessels subject to    Costs for correction
 report, criteria for          the rule that lose    of noncompliance
 reporting lost cargo.         cargo overboard.      with existing
                                                     requirements.
160.215(a), requirement to    Operators of vessels  No change, new label
 report hazardous condition.   involved in           of existing text.
                               incident resulting
                               in hazardous
                               condition.
160.215(b), data to be        Operators of vessels  This requirement
 reported.                     involved in           references 97.115
                               incident resulting    and all costs are
                               in hazardous          included there.
                               condition.
------------------------------------------------------------------------
Source: Coast Guard analysis.

    ii. Affected population and costs. The proposed rule applies to 
both U.S. and foreign-flagged vessels engaged in transport to or from 
U.S. ports. Therefore, the costs for reporting the lost or jettisoned 
cargo must be accounted for throughout the entire applicable population 
of 7,163 vessels, as reported in Table 4.
    For 2009 through 2011 there were only five incidents of containers 
lost or damaged at sea and reported to the Coast Guard. As previously 
noted, industry experts assert that many incidents of lost or 
jettisoned cargo are not reported to the appropriate authorities. In 
order to test this, we developed an estimate of lost or jettisoned 
cargo incidents that are subject to Coast Guard rules.
    As the base of our estimate we used the annual estimate of 4,000 
containers lost at sea worldwide, as reported in the October 2010 issue 
of the Register Expert, the journal of the Netherlands Institute of 
Registered Insurance Experts, and cited by the IMO.\3\ The report cited 
by IMO only contained a global estimate; there were no break-outs by 
route or flag of the vessel. We derived the U.S. share of global 
container traffic using data reported by the U.S. Department of 
Transportation's Maritime Administration (MARAD), which reported in 
2010 that there were 369,155 container ship visits world-wide \4\ and 
that 22,222 were at U.S. ports.\5\ Thus, the U.S. share of global 
container traffic is 6.0 percent (22,222/369,155).
---------------------------------------------------------------------------

    \3\ IMO Maritime Safety Committee report 89/22/11, p. 1. A copy 
of this report is in the rulemaking docket.
    \4\ See http://www.marad.dot.gov/documents/Vessel_Calls_at_US_Ports_Snapshot.pdf, p. 7, ``Global Vessel Calls by Country, 
2011.''
    \5\ See http://www.marad.dot.gov/documents/Vessel_Calls_at_US_Ports_Snapshot.pdf, p. 3. ``Containership Calls at U.S. Ports 
by Size, 2006-2011.''
---------------------------------------------------------------------------

    We used that 6.0 percent share to estimate that about 240 
containers in U.S. traffic are lost annually (4,000 containers lost 
world-wide * U.S. 6.0 percent share of traffic, rounded). The five 
incidents lost a total of 25 containers, so we estimate on average 
there were five lost containers per incident. Using those data, we 
estimate that there will be 50 reports of lost containers to the Coast 
Guard (240 containers lost/5 containers per incident, rounded to the 
nearest 10) in the first year the rule would become effective.
    The Tioga Group, a freight transportation services consulting 
firm,\6\ in its report \7\ on the container market to the port 
authorities of Los Angeles and Long Beach, presents estimates of 4.9 
percent annual compounded growth rate for the U.S. in container traffic 
from 2010 to 2020. We assume that the number of lost container 
incidents will grow proportionally with the growth in container trade. 
We applied the Tioga Group's estimate of 4.9 percent growth rate to the 
base estimate of 50 lost containers to years 2 through 10 in this

[[Page 68792]]

cost analysis. This yields an estimate of 77 incidents by year 10 (the 
complete series is shown in the ``Estimated Incidents'' column of Table 
7).
---------------------------------------------------------------------------

    \6\ For information on The Tioga Group see www.tiogagroup.com.
    \7\ The Tioga Group, Inc. and IHS Global Insight, ``San Pedro 
Bay Container Forecast Update'', Exhibit 33: Total U.S. Loaded Total 
TEU and CAGRs, p. 33, www.portoflosangeles.org/pdf/spb_container_forecast_update_073109.pdf.
---------------------------------------------------------------------------

    When cargo is lost or jettisoned, the vessel staff already collects 
data for company purposes.\8\ Thus, the only additional cost for 
compliance with the proposed rule is the time to report the data to the 
Coast Guard and for the Coast Guard to record the data. Coast Guard 
staff who are familiar with vessel operations and incident reporting 
estimated that it would take 0.25 hours for a Master or other senior 
ship's officer to compile a report and transmit it to the Coast Guard.
---------------------------------------------------------------------------

    \8\ Captain James J. McNamara, ``Containers and Cargo Lost 
Overboard'', p. 2. National Cargo Bureau; conference of the 
International Union of Marine Insurers; September 13, 2000, http://www.iumi.com/images/stories/IUMI/Pictures/Conferences/London2000/Wednesday/02%20mcnamara%20cargo.pdf.
---------------------------------------------------------------------------

    The wage rate for the Master was obtained from the U.S. Bureau of 
Labor Statistics (BLS), using Occupational Series 53-5021, Captains, 
Masters, and Pilots of Water Vessels. BLS reports that the hourly rate 
for a Master is $34.50 per hour.\9\ To account for benefits, the load 
factor, or ratio between total compensation and wages is calculated at 
1.52,\10\ using BLS data. The fully loaded wage rate for a Master is 
estimated at $53 per hour ($34.50 base wages * 1.52 load factor, 
rounded up to capture the entire cost).
---------------------------------------------------------------------------

    \9\ Mean wage, http://www.bls.gov/oes/2011/may/oes535021.htm.
    \10\ Load Factor calculation, source: ftp://ftp.bls.gov/pub/special.requests/ocwc/ect/ececqrtn.pdf.
---------------------------------------------------------------------------

    Similarly, it would take 0.25 hour for Coast Guard personnel at the 
E-4 level to record the data. The wage rate for an E-4 rating is $40, 
per Commandant Instruction 7310.1M.\11\ The unit cost for the Coast 
Guard is $10.00 ($40 per hour * 0.25 hours).
---------------------------------------------------------------------------

    \11\ http://www.uscg.mil/directives/ci/7000-7999/CI_7310_1M.pdf.
---------------------------------------------------------------------------

    As shown in Table 6, the unit cost for reporting a lost or 
jettisoned cargo is $23.25.

  Table 6--Unit Cost for Reporting a Lost Container or Jettisoned Cargo
------------------------------------------------------------------------
                                              Time      Wage
                   Task                      (hours)    rate      Cost
------------------------------------------------------------------------
Master to report incident.................      0.25       $53    $13.25
Coast Guard data entry (E4)...............      0.25        40     10.00
                                           -----------------------------
    Total.................................  ........  ........     23.25
------------------------------------------------------------------------
Sources: BLS, Coast Guard estimates.

    The baseline estimate of lost or jettisoned cargo incidents, the 
growth rate, and the unit cost data provide the inputs into the 10-year 
cost schedule. Table 7 displays the input data and the resulting cost 
estimates on an undiscounted basis and discounted at 7 percent and 3 
percent interest rates.

                                              Table 7--Cost Schedule for Reporting Lost or Jettisoned Cargo
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    Discounted
                  Year                       Estimated        Rounded      Industry cost      CG Cost       Total cost   -------------------------------
                                             incidents       incidents                                                          7%              3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................           50                 50            $663            $500          $1,163          $1,087          $1,129
2.......................................           52.45              52             689             520           1,209           1,056           1,140
3.......................................           55.02              55             729             550           1,279           1,044           1,170
4.......................................           57.72              58             769             580           1,349           1,029           1,199
5.......................................           60.55              61             808             610           1,418           1,011           1,223
6.......................................           63.52              64             848             640           1,488             992           1,246
7.......................................           66.63              67             888             670           1,558             970           1,267
8.......................................           69.89              70             928             700           1,628             948           1,285
9.......................................           73.31              73             967             730           1,697             923           1,301
10......................................           76.90              77           1,020             770           1,790             910           1,332
                                         ---------------------------------------------------------------------------------------------------------------
    Total...............................  ..............  ..............           8,309           6,270          14,579           9,970          12,292
Annualized..............................  ..............  ..............  ..............  ..............  ..............           1,420           1,441
--------------------------------------------------------------------------------------------------------------------------------------------------------

    To provide a breakout of costs by flag status, we extracted from 
the Coast Guard's SANS database the vessels calling on U.S. ports in 
2011. We divided the vessels into U.S. and foreign-flag status. Table 8 
presents the data and shows that in 2011, U.S. flag-vessels accounted 
for 2.5% of the visits by vessels subject to this rule.

 Table 8--2011 Visits to U.S. Ports by Flag-Status of Vessels 500 Gross
                      Tons or More, Non-Bulk Trade
------------------------------------------------------------------------
                        Flag                           Visits    Percent
------------------------------------------------------------------------
U.S.................................................       514       2.5
Foreign.............................................    20,242      97.5
                                                     -------------------
  Total.............................................    20,756     100.0
------------------------------------------------------------------------
Source: USCG, SANS database.

    We produced a breakout for U.S. costs of lost or jettisoned cargo 
by applying the 2.5 percent of visits by U.S. flag vessels from Table 8 
to the cost estimates from Table 7. Please note that U.S. costs include 
both costs to U.S.-flagged vessels and the Coast Guard. Table 9 
displays the data for the U.S. costs.

[[Page 68793]]



                                         Table 9--Schedule for U.S. Costs for Reporting Lost or Jettisoned Cargo
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    Discounted
                  Year                       Estimated        Rounded     Industry  cost     CG  cost       Total  cost  -------------------------------
                                             incidents       incidents                                                          7%              3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................           50                  1             $13             $10             $23             $21             $22
2.......................................           52.45               1              13              10              23              20              22
3.......................................           55.02               1              13              10              23              19              21
4.......................................           57.72               1              13              10              23              18              20
5.......................................           60.55               1              13              10              23              16              20
6.......................................           63.52               2              27              20              47              31              39
7.......................................           66.63               2              27              20              47              29              38
8.......................................           69.89               2              27              20              47              27              37
9.......................................           73.31               2              27              20              47              26              36
10......................................           76.90               2              27              20              47              24              35
                                         ---------------------------------------------------------------------------------------------------------------
    Total...............................  ..............  ..............             200             150             350             231             290
Annualized..............................  ..............  ..............  ..............  ..............  ..............              33              34
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The costs of reporting lost or jettisoned cargo for non-U.S.-flag 
vessels are obtained by subtracting the U.S. costs, as reported in 
Table 9, from the costs as displayed in Table 7. Table 10 presents the 
results of these calculations.

                                      Table 10--Schedule for Non-U.S. Costs for Reporting Lost or Jettisoned Cargo
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    Discounted
                  Year                       Estimated        Rounded      Industry cost      CG cost       Total cost   -------------------------------
                                             incidents       incidents                                                          7%              3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................           50                 49            $649            $490          $1,139          $1,064          $1,106
2.......................................           52.45              51             676             510           1,186           1,036           1,118
3.......................................           55.02              54             716             540           1,256           1,025           1,149
4.......................................           57.72              57             755             570           1,325           1,011           1,177
5.......................................           60.55              60             795             600           1,395             995           1,203
6.......................................           63.52              62             822             620           1,442             961           1,208
7.......................................           66.63              65             861             650           1,511             941           1,229
8.......................................           69.89              68             901             680           1,581             920           1,248
9.......................................           73.31              71             941             710           1,651             898           1,265
10......................................           76.90              75             994             750           1,744             887           1,298
                                         ---------------------------------------------------------------------------------------------------------------
    Total...............................  ..............  ..............           8,110           6,120          14,230           9,738          12,001
Annualized..............................  ..............  ..............  ..............  ..............  ..............           1,386           1,407
--------------------------------------------------------------------------------------------------------------------------------------------------------

    iii. Benefits. A 2011 news release from the Monterey Bay Aquarium 
Research Institute (MBARI) \12\ stated that containers that fall from 
ships can ``float at the surface for months, most eventually sink to 
the seafloor.'' While they float they can present a hazard to 
navigation. However, sunken containers may pose immediate and long-term 
threats to the marine environment. The MBARI news release also stated 
that ``[N]o one knows what happens to these containers once they reach 
the deep seafloor'' and that ``[p]erhaps 10 percent of shipping 
containers carry household and industrial chemicals that could be toxic 
to marine life.'' The small number of MISLE incidents provides 
additional information. Of the 25 containers, one container contained 
22,500 pounds of used batteries and another contained an unspecified 
hazardous material.
---------------------------------------------------------------------------

    \12\ http://www.mbari.org/news/news_releases/2011/containers/containers-release.html.
---------------------------------------------------------------------------

    The immediate benefit of the reporting provisions is that they 
would enhance the Coast Guard's ability to identify potential problems 
with securing equipment, locate and warn mariners about drifting 
containers that endanger safe navigation, and assess and respond to any 
potential environmental hazard created by the cargo loss. In the longer 
term, having complete and accurate data on lost cargo incidents would 
enable the Coast Guard and other parties to identify industry trends 
and track potential long-term threats to the marine environment from 
sunken containers.
    iv. Alternatives. We considered possible alternatives to the 
proposed rule. One possibility, as suggested in the NPRM, would be to 
limit the reporting of lost containers to only those containing 
hazardous materials. However, we consider any overboard container to be 
a potential hazard to navigation and, as noted above, the contents may 
pose a long-term threat to the marine environment. To ensure safety of 
navigation and the marine environment, we believe all lost or 
jettisoned cargo should be reported.
    Another option would be to reduce the amount of information to be 
sent to the Coast Guard in order to minimize recordkeeping burden. We 
examined the data specified in the proposed rule and determined that 
all would be needed by the Coast Guard in order to completely evaluate 
the situation and determine the appropriate response. Therefore, we 
believe that the reporting requirements in the proposed rule would 
provide the Coast Guard with sufficient information to fulfill its 
missions of maritime safety and protection of the marine environment 
while minimizing the vessel's recordkeeping and reporting burdens.
b. CSM Requirements
    i. Current practices, applicable population, and description of 
changes and edits. As stated in section IV of this

[[Page 68794]]

preamble, current requirements for CSMs are located in SOLAS, with 
further implementing guidance included in NVIC 10-97. The Coast Guard's 
current reference for the minimum standards of a CSM is IMO's Circular 
1353.
    Enforcement in U.S. ports is carried out by the Coast Guard's 
safety and security vessel examinations program. As part of these 
examinations, the Coast Guard checks that the subject vessels have a 
CSM and that the crew follows it. MISLE data show that from 2009 
through 2011, the 26 U.S.-flag vessels that are part of the affected 
population were subject to 176 inspections. In all of these inspections 
there were no citations for a deficient CSM. MISLE also recorded that 
in 2009 through 2011, the Coast Guard conducted 11,989 vessel 
inspections of foreign-flag vessels and found problems relating to CSMs 
in only 8 instances. These data indicate an ongoing compliance process 
for both U.S.- and foreign-flagged vessels subject to CSM rules. As a 
result, the Coast Guard anticipates that the only costs regarding the 
CSM requirement is that moving the requirements from SOLAS and the 
implementing guidelines from NVIC 10-97 into the CFR could prompt 
owners and operators of the few deficient vessels to ensure their CSMs 
were fully compliant with SOLAS prior to entering U.S. waters.
    Tables 11 and 12 present the change matrix for the edits to Title 
33 and Title 46 of the CFR, respectively, that relate to the CSM 
requirements. Each matrix summarizes the specific edit or change, the 
affected population, and the economic impact.

      Table 11--Change Matrix for Adding CSM Requirements to 33 CFR
------------------------------------------------------------------------
   Reference & description     Affected population     Economic impact
------------------------------------------------------------------------
                          97.100 Applicability
------------------------------------------------------------------------
. . . (a)(1), U.S. vessels..  U.S. cargo vessels    None, administrative
                               500+ GT, non-U.S.     only.
                               cargo vessels in
                               U.S. waters 500+ GT.
. . . (a)(2), voluntary       U.S. vessels less     No change, codifies
 compliance.                   than 500 GT           guidance currently
                               requesting coverage.  located in NVIC.
. . . (b), exemption for      Ready Reserve and     None, these vessels
 Ready Reserve and public      public vessels.       currently exempted.
 vessels.
97.105 Definitions..........  All vessels and       None, administrative
                               approval              only.
                               organizations.
97.110 Incorporation by       All affected vessels  None, administrative
 reference, lists IBR          and approval          only.
 references.                   organizations.
------------------------------------------------------------------------
                      97.120 Cargo Securing Manuals
------------------------------------------------------------------------
. . . (a)(1), CSMs required.  SOLAS vessels and     Cost of developing
                               non-U.S., non-SOLAS   CSM for
                               vessels noted with    noncompliant
                               deficient CSMs by     vessels.
                               Coast Guard.
. . . (a)(2), CSAP required   Non-SOLAS vessels...  Edit to close
 after 2015.                                         regulatory gap. No
                                                     costs, no current
                                                     vessels affected
                                                     and none expected
                                                     in future.
. . . (b), authorizes CG      All U.S. and foreign- No cost, provides
 enforcement.                  flagged vessels       authority for
                               subject to the rule.  current CG
                                                     compliance
                                                     activities.
------------------------------------------------------------------------
Source: Coast Guard analysis.


 Table 12--Change Matrix for Edits to 46 CFR 97 That Apply to U.S. SOLAS
                                 Vessels
------------------------------------------------------------------------
   Reference & description     Affected population     Economic impact
------------------------------------------------------------------------
97.12-10, Cargo securing      Owners and operators  Administrative edit,
 manuals, new section to       of U.S. SOLAS         all costs accounted
 reference new 33 CFR 97.120.  vessels.              for in 33 CFR
                                                     97.120.
------------------------------------------------------------------------
Source: Coast Guard analysis.

    ii. Affected population and costs. As stated in the preceding 
section VIII.A.3.i, the Coast Guard's current safety and security 
examinations include checking to see if a subject vessel has a current 
CSM and that the crew follows it. The inspection results indicate that 
U.S.-flagged vessels in international trade currently comply with the 
SOLAS CSM rules and will continue with those practices. For foreign-
flagged vessels that visit U.S. ports, we estimated the costs of 
compliance based on the following assumptions:
    (1) In the absence of the proposed rule, the current deficiency 
rate for subject foreign-flagged vessels would continue.
    (2) Under the proposed rule, the increased enforceability posture 
from codifying the CSM rules will lead all vessels to comply with the 
SOLAS standards and NVIC guidance prior to entering U.S. waters. That 
is, the deficiency rate will be reduced to zero for foreign-flagged 
vessels.
    In the preceding section VIII.A.3.i, we reported that there were 8 
deficiencies related to CMS from 2009-2011. These deficiencies are 
comprised of 4 that were missing sections or certain technical data, 3 
that were missing approval from an authorized organization, and 1 that 
did not have its CSM on the vessel. Table 13 presents the data from 
2009 through 2011 for the calculation of a deficiency rates by year and 
an annual average for the three years.

[[Page 68795]]



                                      Table 13--Annual CSM Deficiency Rate
----------------------------------------------------------------------------------------------------------------
                                                                                                    Deficiency
                              Year                                    Vessel            CSM            rate
                                                                   examinations    deficiencies      (percent)
----------------------------------------------------------------------------------------------------------------
2009............................................................           3,901               3            0.08
2010............................................................           4,148               3            0.07
2011............................................................           3,930               2            0.05
                                                                 -----------------------------------------------
    Total (Sum for examinations and deficiencies, average for             11,979               8            0.07
     rate)......................................................
----------------------------------------------------------------------------------------------------------------

    The population in year 1 of the estimate period is the foreign-
flagged component of the affected population--7,137 vessels, as 
reported in Table 4. In the analysis of the reporting requirements, we 
cited the Tioga Group's report on the container market that growth in 
container shipments to the U.S. is expected to increase,\13\ so a flat 
extrapolation of the baseline over years 2 through 10 of the analysis 
period would result in an underestimate.
---------------------------------------------------------------------------

    \13\ See. ``U.S. Port and Inland Waterways Preparing for Post 
Panamax Vessels'', p. 10--``Forecast and Containerized Cargo'': 
http://www.iwr.usace.army.mil/docs/portswaterways/rpt/June_20_U.S._Port_and_Inland_Waterways_Preparing_for_Post_Panamax_Vessels.pdf.
---------------------------------------------------------------------------

    We used the Tioga Group's estimate of a 4.9 percent rate for our 
estimate for growth in our ten-year analysis period. The SANS data used 
for an estimate of the affected population showed that each vessel 
averaged 3.5 visits per year to U.S. ports in the three years of data 
collection, 2009 through 2011.
    At this time we do not have detailed information on the current and 
projected capacity utilization of container ships visiting U.S. ports, 
so we posited that the trips per year of the affected vessels would 
remain constant through the analysis period. With that assumption, we 
applied the 4.9 percent annual growth rate to the fleet of foreign-
flagged vessels serving U.S. ports, starting with the baseline 
population of 7,137 vessels. The resulting estimates are shown in the 
``Affected Vessels'' column of Table 14.
    The estimate of the number of deficient CSMs in any year equals the 
estimate of the vessel population that year times the deficiency rate. 
For example, the estimate for Year 1 is CSMs for 5 new foreign-flagged 
vessels (7,137 vessels * 0.07 percent).
    To obtain a current estimate for the cost of developing a cargo 
securing manual we contacted industry cargo securing subject matter 
experts in 2013 \14\. These experts are familiar with the entire 
development of cargo securing manuals, including vessel survey, 
evaluation of the cargo securing equipment and procedures, preparing 
the manuals, and training the crews. From the information they 
provided, we estimate that the cost to develop a CSM will range between 
$7,500 and $10,000, depending on factors such as the size and type of 
vessel. We do not have detailed descriptions of each deficiency, so for 
the unit cost, we will assume that in order to ensure compliance the 
company will revise the CSM using an existing survey of the vessel. A 
recently completed study conducted by ABS Consulting, Inc. for the 
Coast Guard provided estimates on the costs of a suite of marine 
engineering and naval architecture services \15\. That study estimates 
that the average cost of a survey for a freight ship is $1,125. We 
estimated the unit cost to remedy a deficiency as the average cost of 
developing a CSM ($8,750 = ($7,500 + $10,000)/2)) less the average cost 
of a survey. This yields an estimated unit cost of $7,625 ($8,750--
$1,125). The total cost for any year is the number of new CSMs to 
remedy deficiencies, times the unit cost of $7,625. Table 14 presents 
the cost estimate over the ten-year period at both an undiscounted 
value and discounted at 7 percent and 3 percent interest rates. As 
noted, these costs are for noncompliant foreign vessels; all U.S. 
vessels in international trade are assessed as already complying.
---------------------------------------------------------------------------

    \14\ These sources preferred not to be identified in order to 
protect proprietary information.
    \15\ ABS Consulting, Inc, ``Study of Marine Engineering and 
Naval Architecture Costs for Use in Regulatory Analyses,'' Table 5, 
p. 26. A copy is included in the docket.

                                                       Table 14--Cost of Upgrading Deficient CSMs
                                                       [undiscounted and discounted at 7% and 3%]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            (C)  Annual                                             Discounted
                        (A)  Year                          (B)  Affected    deficiency     (D)  New CSMs   (E)  CSM Cost -------------------------------
                                                              vessels     rate (percent)       (B*C)        (D*$7,625)          7%              3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................           7,137            0.07               5         $38,125         $35,631         $37,015
2.......................................................           7,487            0.07               5          38,125          33,300          35,936
3.......................................................           7,854            0.07               5          38,125          31,121          34,890
4.......................................................           8,239            0.07               6          45,750          34,902          40,648
5.......................................................           8,643            0.07               6          45,750          32,619          39,464
6.......................................................           9,067            0.07               6          45,750          30,485          38,315
7.......................................................           9,511            0.07               7          53,375          33,239          43,399
8.......................................................           9,977            0.07               7          53,375          31,065          42,135
9.......................................................          10,466            0.07               7          53,375          29,032          40,907
10......................................................          10,979            0.07               8          61,000          31,009          45,390
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................  ..............  ..............  ..............         472,750         322,403         398,099
Annualized..............................................  ..............  ..............  ..............  ..............         $45,903         $46,669
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As shown in Table 14, the total 10-year cost for upgrading CSMs at 
a 7% discount rate is $45,903. We anticipate that the Coast Guard will 
continue its current inspection regime, so there are no additional 
government costs or

[[Page 68796]]

resource impacts to the Coast Guard for new, upgraded or revised CSMs.
    iii. Benefits. The benefit of adding the SOLAS requirements and the 
NVIC guidance on CSMs to the CFR is increased Coast Guard enforcement 
authority. We previously cited the statistics from the Coast Guard's 
CSM inspection activities from 2009 through 2011 for both U.S. and 
foreign-flagged vessels. However, as noted in section IV of this 
preamble, the only current U.S. implementation of the CSM is via NVIC 
10-97, which is unenforceable. Incorporating these rules into the CFR 
elevates the requirements to regulation status. As described in section 
III of this preamble, the Coast Guard has existing authorities to 
inspect vessels; regulate an inspected vessel's operation, fittings, 
equipment, and appliances; and implement SOLAS. The Coast Guard 
believes that it can enforce the provisions of the proposed rule under 
these authorities.
    iv. Alternatives. Alternatives were considered in this proposed 
rule. Alternatives include various ways to apply the requirements to 
prepare and implement CSMs to U.S.-flagged vessels in coastwise trade. 
As described in section V of this preamble, the 2000 NPRM presented 
five options for applying CSM regulations to U.S. domestic voyages. 
Table 15 presents descriptions of these options and a summary of the 
comments.

  Table 15--Options to Extend CMS Requirements to U.S. Domestic Voyages
------------------------------------------------------------------------
       Option No.              Description          Summary of comments
------------------------------------------------------------------------
1......................  Extend SOLAS             4 supported, 5 opposed
                          requirements to          for these reasons:
                          domestic voyages.        Preferred
                                                   compromise of Options
                                                   1 & 2
                                                   Not requiring
                                                   regular reviews
                                                   Too
                                                   restrictive
                                                   Require too
                                                   much standardization
                                                   Would not
                                                   work for seagoing
                                                   barges as no two
                                                   barge cargoes are
                                                   identical
2......................  Vessel specific          1 supported, 5 opposed
                          standards, Coast Guard   for these reasons:
                          approval.                Evaluate
                                                   against experience
                                                   with continuous
                                                   examination program
                                                   and noted similarity
                                                   with Option 5
                                                   Too many
                                                   variables causing
                                                   unneeded burden
                                                   Would not
                                                   work, but did not
                                                   give specific reasons
                                                   Second choice
                                                   Preferred
                                                   compromise of Options
                                                   1 and 2
3......................  Certificate for          One commenter stated
                          carrying hazardous       its decision would
                          materials.               depend on specific
                                                   requirements and 3
                                                   opposed for these
                                                   reasons:
                                                   Surveyors for
                                                   multiple voyages not
                                                   feasible for cost and
                                                   availability
                                                   Could not
                                                   ensure surveyor
                                                   availability
                                                   High costs of
                                                   surveyors
4......................  Allow each vessel to     One commenter noted
                          choose from among        that companies
                          Options 1, 2, and 3.     supporting domestic
                                                   rules would find this
                                                   attractive, but did
                                                   not state its own
                                                   opinion. Another
                                                   stated that it
                                                   combined the
                                                   strengths and
                                                   weaknesses of the
                                                   other Options. One
                                                   opposed for unstated
                                                   reasons and another
                                                   was opposed because
                                                   the ``menu of
                                                   options'' would cause
                                                   confusion.
5......................  Standards developed      3 supported, 1 for
                          with industry.           unstated reasons and
                                                   2 because of its
                                                   flexibility; and 1
                                                   was opposed because
                                                   it would not ensure
                                                   meeting needs of
                                                   different vessel
                                                   types and operations
------------------------------------------------------------------------

    The options presented in the NPRM were only outlined and did not 
have cost estimates. We developed a cost estimate for Option 1 that 
would extend SOLAS requirements to domestic vessels. We added these 
details to Option 1 to make the calculations:
     The affected population will be U.S.-flagged vessels of 
500 gross tons or more in coastwise trade. The geographic 
identification was vessels with coastwise route certifications. We 
identified 675 vessels from MISLE that met these requirements, which is 
comprised of 215 freight barges, 125 freight ships, and 335 offshore 
supply vessels.
     In general, the vessels in the U.S. affected population 
for this alternative are smaller than the foreign-flagged vessels that 
comprise the affected population of the proposed regulation. Data 
comparisons for the U.S. fleet shows average gross tons of 8,165 and 
average length of 326 feet. The comparable data for the foreign-flagged 
vessels is average gross tonnage of 31,306 and average length of 619 
feet. Therefore, we assigned for the unit cost of the U.S. coastwise 
vessels the low-end value of $7,500 from the range supplied by the 
subject matter experts we contacted. The recent history of new builds 
will continue through the ten-year analysis period. MISLE reported 22 
new vessels per year from 2009-2012 and we used this in our analysis.
     A phase-in period was not in the NPRM, but we added a 
three-year phase-in period, to mitigate the burden on both vessel 
owners and the authorized approval organizations. We assume that vessel 
owners would distribute the certification of the manuals for their 
vessels evenly over the phase-in period. This would enable vessel 
owners and authorized approval organizations to schedule cargo securing 
approvals in conjunction with vessel down-time, such as scheduled 
examinations or times of vessel repairs and upgrades.
    With these parameters, we developed a 10-year cost schedule for 
Option 1. As the costs to foreign-flagged vessels would be the same for 
Option 1 as the preferred alternative, the data presented show the 
marginal costs for Option 1. The annualized cost, using a 7 percent 
discount rate would be $759,524. The cost estimates are displayed in 
Table 16.

[[Page 68797]]



                                    Table 16--Cost Estimate for Option 1, Extend CSM Requirements to Domestic Vessels
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    Discounted
                  Year                       Existing       New vessels    Total vessels     Unit cost      Total cost   -------------------------------
                                              vessels                                                                           7%              3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................             225              22             247          $7,500      $1,852,500      $1,731,308      $1,798,544
2.......................................             225              22             247           7,500       1,852,500       1,618,045       1,746,159
3.......................................             225              22             247           7,500       1,852,500       1,512,192       1,695,300
4.......................................               0              22              22           7,500         165,000         125,878         146,600
5.......................................               0              22              22           7,500         165,000         117,643         142,330
6.......................................               0              22              22           7,500         165,000         109,946         138,185
7.......................................               0              22              22           7,500         165,000         102,754         134,160
8.......................................               0              22              22           7,500         165,000          96,032         130,253
9.......................................               0              22              22           7,500         165,000          89,749         126,459
10......................................               0              22              22           7,500         165,000          83,878         122,775
                                         ---------------------------------------------------------------------------------------------------------------
    Total...............................             675             220             895  ..............       6,712,500       5,587,425       6,180,765
Annualized..............................  ..............  ..............  ..............  ..............  ..............         795,524         724,574
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The goal of this alternative would be to reduce the occurrence and 
impacts of lost containers in U.S. coastwise trade. However, the 
comments to the NPRM indicate that this is not a significant problem. 
One commenter stated that cargo losses from barges are rare, another 
stated that seagoing barges ``are generally safe from cargo loss'', and 
another commenter stated that ``most cargo losses result from container 
structural problems that the vessel owner operator cannot know about or 
prevent.'' Recent data from MISLE supports the commenters. 
Specifically, MISLE has only five incidents from 2009-2011 of lost or 
damaged containers involving U.S. vessels in coastwise voyages. 
Additionally, our initial cost estimates, as presented in Table 16, 
indicate that industry would incur annualized costs, discounted at 7 
percent, of nearly $800,000. Therefore, the focus of this rulemaking is 
exclusively vessels in international trade. However, the Coast Guard 
can reevaluate this position and initiate another rulemaking for the 
U.S. coastwise trade if new information indicates either underreporting 
or upward trend of lost containers.
c. Approval of Authorized Organizations
    The Coast Guard authorizes classification societies and other 
organizations to review and approve CSMs on its behalf. The procedures 
for these organizations are currently found in NVIC 10-97 and cover 
selection criteria, information required by organizations applying for 
authorization status, the Coast Guard's application review procedures, 
authorization termination, and appeals processes.
    Following the procedures in NVIC 10-39, the Coast Guard has 
authorized these six classification societies to review and approve 
CSMs: American Bureau of Shipping, Det Norske Veritas, Lloyd's Register 
of Shipping, Germanischer Lloyd, RINA S.p.A, and ClassNK.\16\ We 
anticipate that no other classification societies will be applying for 
CSM approval authority in the near future.
---------------------------------------------------------------------------

    \16\ List of classification societies authorizations: http://www.uscg.mil/hq/cg5/acp/docs/ClassSocietyAuths29May2013.pdf.
---------------------------------------------------------------------------

    However, the NVIC is a guidance document only, and not legally 
enforceable. The proposed rule would incorporate these procedures from 
the NVIC into the CFR with only some minor editorial changes. 
Therefore, we believe there would be no additional regulatory costs 
associated with the codification of these application procedures. Table 
17 presents the change matrix for the codification of the class society 
approval guidance into the CFR and summarizes the specific edit or 
change, the affected population, and the economic impact.

    Table 17--Change Matrix for Incorporating Class Society Approval
                         Procedures into 46 CFR
------------------------------------------------------------------------
   Reference & description     Affected population     Economic impact
------------------------------------------------------------------------
                          97.100 Applicability
------------------------------------------------------------------------
. . .(a)(3), organizations    New applicants......  No impact, codifies
 applying for CSM approval                           application
 authority.                                          guidance currently
                                                     prescribed by NVIC.
97.115 Situation requiring    Vessels subject to    Costs for correction
 report, criteria for          the rule that lose    of noncompliance
 reporting lost cargo.         cargo overboard.      with existing
                                                     requirements.
------------------------------------------------------------------------
      97.200 CSM Approval for U.S. Vessels on International Voyages
------------------------------------------------------------------------
. . .(a)(1), authorized       Owners, operators,    Administrative
 applicants include owner,     and agents, of new    change, NVIC only
 operator, or agent.           U.S. vessels in       referenced owner.
                               international trade.
. . .(a)(2), CG oversight of  Organizations         No change, codifies
 approval authority            applying for CSM      application
 applications.                 approval authority.   guidance currently
                                                     located in NVIC.
. . .(a)(3), application      U.S. vessels in       No change, codifies
 procedures.                   international trade.  application
                                                     guidance currently
                                                     located in NVIC.
. . .(a)(4), approval         Authorized approval   No change, codifies
 authority retains a copy.     organizations.        NVIC.
. . .(b), approval letter     Authorized approval   No change, codifies
 contents.                     organizations.        NVIC.
. . .(c), disapproval         Authorized approval   No change, codifies
 procedures.                   organizations.        application
                                                     guidance currently
                                                     located in NVIC.

[[Page 68798]]

 
. . .(d), resubmit            Owners and operators  No change, codifies
 procedures.                   resubmitting a CSM.   application
                                                     guidance currently
                                                     located in NVIC.
. . .(e), documents kept on   Owners and operators  No change, codifies
 vessel.                       of U.S. vessels       application
                               subject to the rule.  guidance currently
                                                     located in NVIC.
97.205 Requirements for       Owners and operators  No change, codifies
 amending an approved CSM,     of U.S. vessels       application
 amending procedures.          subject to the rule.  guidance currently
                                                     located in NVIC.
97.210 Appeals, appeals       Owners and operators  No change, codifies
 procedures.                   of U.S. vessels       application
                               subject to the rule   guidance currently
                               and authorized        located in NVIC.
                               approval
                               organizations.
97.300 Authorized CSM         ABS, Lloyds, Nat'l    No change, codifies
 approval authorities, lists   Cargo Bureau.         application
 approved organizations.                             guidance currently
                                                     located in NVIC.
97.305 Requests for           Organizations         No change, codifies
 authorization, application    seeking to become     application
 process.                      approved              guidance currently
                               organizations.        located in NVIC.
97.310 Criteria for           CG and organizations  No change, codifies
 authorization, evaluation     seeking to become     application
 criteria.                     approved              guidance currently
                               organizations.        located in NVIC.
97.315 Requirements for       CG and authorized     No change, rewords
 authorized approval           approval              and codifies
 organizations,                organizations.        application
 responsibilities of CG and                          guidance currently
 authorized approval                                 located in NVIC.
 organizations.
97.320 Revocation of          CG and referenced     No change, revises
 authorization, procedures     organizations.        and codifies
 for CG revoking an                                  application
 authorization.                                      guidance currently
                                                     located in NVIC.
------------------------------------------------------------------------
 Source: Coast Guard analysis.

    We considered alternatives to the proposed changes and edits, 
however, we concluded that there are no viable alternatives. The 
procedures in the NVIC provide a complete description of all processes 
needed for approval and oversight of the subject organizations. 
Reducing or eliminating any of them, such as the one covering appeals, 
would leave a gap in the approval or oversight processes. We did not 
identify any current weaknesses or gaps in the NVIC, other than the 
proposed editorial changes. We also concluded that the recordkeeping 
guidance in the NVIC provides complete documentation for all the 
involved parties--vessel owners, approved organizations. Reducing or 
eliminating any of the proposed recordkeeping rules would run the risk 
of producing a gap in the documentation. Conversely, adding additional 
recordkeeping rules would only increase associated burdens, but not 
provide any additional useful information.
    In summary, the proposed rules governing organizations approved to 
issue CSMs would codify current procedures with no associated costs to 
industry or the government. The benefit of these proposed rules is that 
it would provide a regulatory basis for the Coast Guard's oversight of 
organizations authorized to approve CSMs.
    d. Review of Costs and Benefits. The total cost of the proposed 
rule is for the two cost elements: (1) Lost or Jettisoned Cargo and (2) 
CSM Requirements. Table 18 presents the ten-year cost schedule for 
undiscounted costs and discounted costs at 7 percent and 3 percent 
rates.

                           Table 18--Summary of the 10-Year Total Cost to the International Cargo Industry and U.S. Government
--------------------------------------------------------------------------------------------------------------------------------------------------------
                   (A)                          (B)             (C)             (D)             (E)             (F)             (G)             (H)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                CSM                                       Total industry    Total cost              Discounted
                                           requirements
                                                (1)        Lost or jettisoned cargo (2)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                  Year                       Industry        Industry           CG             (B+C)           (D+E)            7%              3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................         $38,125            $663            $500         $38,788         $39,288         $36,718         $38,144
2.......................................          38,125             689             520          38,814          39,334          34,356          37,076
3.......................................          38,125             729             550          38,854          39,404          32,165          36,060
4.......................................          45,750             769             580          46,519          47,099          35,932          41,847
5.......................................          45,750             808             610          46,558          47,168          33,630          40,688
6.......................................          45,750             848             640          46,598          47,238          31,477          39,561
7.......................................          53,375             888             670          54,263          54,933          34,210          44,666
8.......................................          53,375             928             700          54,303          55,003          32,012          43,420
9.......................................          53,375             967             730          54,342          55,072          29,956          42,208
10......................................          61,000           1,020             770          62,020          62,790          31,919          46,722
                                         ---------------------------------------------------------------------------------------------------------------
    Total...............................         472,750           8,309           6,270         481,059         487,329         332,375         410,392
Annualized..............................  ..............  ..............  ..............  ..............  ..............          47,323          48,110
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Table 19 presents the U.S.-based breakout of the 10-year cost data. 
The CSM plans would affect only foreign-flagged vessels and there are 
no associated U.S. government costs, so the only inputs to U.S. costs 
are those associated with the proposed reporting requirements for lost 
or jettisoned cargo. As described earlier, these requirements would 
accrue costs to both industry and government. The estimates for both 
sectors are in Table 18.

[[Page 68799]]



  Table 19--Costs to U.S.-Flagged Vessels in International Cargo Industry and U.S. Government for Reporting of
                                            Lost or Jettisoned Cargo
----------------------------------------------------------------------------------------------------------------
                                         Undiscounted                                                  Total
             Year              --------------------------------      Total        Discounted   --------------------
                                   Industry       Government                                          7%
-------------------------------------------------------------------------------------------------------------- ----
1.............................             $13            $500            $513            $479            $498
2.............................              13             520             533             466             502
3.............................              13             550             563             460             515
4.............................              13             580             593             452             527
5.............................              13             610             623             444             537
6.............................              27             640             667             444             559
7.............................              27             670             697             434             567
8.............................              27             700             727             423             574
9.............................              27             730             757             412             580
10............................              27             770             797             405             593
                               ---------------------------------------------------------------------------------
    Total.....................             200           6,270           6,470           4,419           5,452
Annualized....................  ..............  ..............  ..............             629             639
----------------------------------------------------------------------------------------------------------------

    Table 20 displays the breakout of the 10-year cost schedule for 
foreign-flagged vessels. These foreign-flagged vessels would incur 
costs involving both proposed requirements: CSM plans and reporting of 
lost and jettisoned cargo. Estimates for both requirements and the 
total cost are included in Table 20.

        Table 20--Costs for Foreign-Flagged Vessels in International Cargo Industry for CSM Requirements
----------------------------------------------------------------------------------------------------------------
                                                   Undiscounted                             Discounted
                                 -------------------------------------------------------------------------------
                                                   Reporting of
              Year                                    lost or
                                     CSM plans      jettisoned         Total            7%              3%
                                                       cargo
----------------------------------------------------------------------------------------------------------------
1...............................         $38,125            $649         $38,774         $36,237         $37,645
2...............................          38,125             676          38,801          33,890          36,574
3...............................          38,125             716          38,841          31,706          35,545
4...............................          45,750             755          46,505          35,478          41,319
5...............................          45,750             795          46,545          33,186          40,150
6...............................          45,750             822          46,572          31,033          39,003
7...............................          53,375             861          54,236          33,775          44,099
8...............................          53,375             901          54,276          31,589          42,846
9...............................          53,375             941          54,316          29,544          41,629
10..............................          61,000             994          61,994          31,515          46,129
                                 -------------------------------------------------------------------------------
    Total.......................         472,750           8,110         480,860         327,953         404,939
Annualized......................  ..............  ..............  ..............          46,693          47,471
----------------------------------------------------------------------------------------------------------------

    The primary benefit of this proposed rule is that it would place 
into the CFR rules and procedures for the cargo securing plans, the 
approval and oversight of organizations authorized to approve CSMs, and 
the reporting of lost or jettisoned cargo. Additionally, the reporting 
requirements for the lost or jettisoned cargo would provide the Coast 
Guard with additional information to monitor the effects on both 
navigation and the environment. Overall, the proposed rule would 
support the Coast Guard's missions of maritime safety and stewardship.

B. Small Entities

1. Summary of Findings
    Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have 
considered whether this proposed rule would have a significant economic 
impact on a substantial number of small entities. The term ``small 
entities'' comprises small businesses, not-for-profit organizations 
that are independently owned and operated and are not dominant in their 
fields, and governmental jurisdictions with populations of less than 
50,000.
    We determined that this proposed rule affects a variety of large 
and small businesses, not-for-profit organizations, and governments 
(see the ``Description of the Potential Number of Small Entities'' 
section below). We have prepared the following initial regulatory 
flexibility analysis assessing the impact on small entities from the 
rule. Based on the information from this analysis, we found:
     There are an estimated 1,217 entities that control the 
7,163 vessels that could be economically impacted by the proposed rule. 
Using size standards from the Small Business Administration, the 26 
U.S-flagged vessels are controlled by 18 companies and none of them are 
small. The 7,137 foreign-flagged vessels are controlled by 1,199 
companies. A review of the entities that control these vessels found 
that one foreign-flagged vessel is controlled by a non-U.S. not-for-
profit entity which is not small, 32 foreign-flagged vessels are 
controlled by government agencies, and the remaining 7,104 foreign-
flagged vessels are controlled by businesses. An analysis of a sample 
of the businesses controlling these vessels indicates that 69 percent 
are considered small.
     Compliance actions would consist of upgrading deficient 
CSMs and reporting lost or jettisoned cargo.
     Of the small entities in our sample with revenue 
information, 60 percent of them had an impact of less than 1 percent 
and 20 percent had an impact within the 1 percent to 3 percent range.

[[Page 68800]]

2. Initial Regulatory Flexibility Analysis
    The Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.) (RFA) 
establishes ``as a principle of regulatory issuance that agencies shall 
endeavor, consistent with the objectives of the rule and of applicable 
statutes, to fit regulatory and informational requirements to the scale 
of the businesses, organizations, and governmental jurisdictions 
subject to regulation. To achieve this principle, agencies are required 
to solicit and consider flexible regulatory proposals and to explain 
the rationale for their actions to assure that such proposals are given 
serious consideration.''
    Under the RFA, we are required to consider if this rule will have a 
significant economic impact on a substantial number of small entities. 
Agencies must perform a review to determine whether a rule will have 
such an impact. If the agency determines that it will, the agency must 
prepare an initial regulatory flexibility analysis as described in the 
RFA.
    Under Section 603(b) and (c) of the RFA, the initial regulatory 
flexibility analysis must provide and/or address:
     A description of the reasons why action by the agency is 
being considered;
     A succinct statement of the objectives of, and legal basis 
for, the proposed rule;
     A description of and, where feasible, an estimate of the 
number of small entities to which the proposed rule will apply;
     A description of the projected reporting, recordkeeping 
and other compliance requirements of the proposed rule, including an 
estimate of the classes of small entities which will be subject to the 
requirement and the type of professional skills necessary for 
preparation of the report or record;
     An identification, to the extent practicable, of all 
relevant Federal rules which may duplicate, overlap, or conflict with 
the proposed rule; and
     Descriptions of any significant alternatives to the 
proposed rule which accomplish the stated objectives of applicable 
statutes and which minimize any significant economic impact of the 
proposed rule on small entities.
    a. A description of the reasons why action by the agency is being 
considered. Agencies take regulatory action for various reasons. One 
reason is to harmonize the CFR with requirements and guidance located 
in other sources. The primary purpose of this proposed rule is to 
incorporate into the CFR the cargo securing manual rules from SOLAS, as 
the U.S. is a signatory state to that treaty.
    Another of the reasons is the failure of the market to compensate 
for negative externalities caused by commercial activity. A negative 
externality can be the by-product of a transaction between two parties 
that is not accounted for in the transaction. As discussed in the 
regulatory analysis, this proposed rule is addressing a negative 
externality, which is that unreported lost or jettisoned cargo could 
collide with other vessels with hazardous consequences to other 
vessels, human health, or the environment. The proposed rule mandates 
that all occurrences of lost or jettisoned cargo must be reported to 
the Coast Guard.
    b. A statement of the objectives of, and legal basis for, the 
proposed rule. The Coast Guard proposes this rulemaking to align U.S. 
regulations with the CSM requirements of SOLAS. The provisions of this 
rulemaking also authorize recognized classification societies to review 
and approve CSMs on behalf of the Coast Guard, prescribe how other 
organizations can become CSM approval authorities, and prescribe when 
and how the loss or jettisoning of cargo must be reported. Enforcing 
those requirements should help prevent or mitigate the consequences of 
vessel cargo loss, and promote the Coast Guard strategic goals of 
maritime safety and environmental protection.
    Sections 2103 and 3306 of Title 46, U.S. Code, provide the 
statutory basis for this rulemaking. Section 2103 gives the Secretary 
of the department in which the Coast Guard is operating general 
regulatory authority to implement Subtitle II (Chapters 21 through 147) 
of Title 46, which includes statutory requirements in 46 U.S.C. Chapter 
33 for inspecting the vessels to which this rulemaking applies. Section 
3306 gives the Secretary authority to regulate an inspected vessel's 
operation, fittings, equipment, appliances, and other items in the 
interest of safety. The Secretary's authority under both statutes has 
been delegated to the Coast Guard in Department of Homeland Security 
Delegation No. 0170.1(92)(a) and (b). Additionally, the United States 
is a party to SOLAS. Where SOLAS must be enforced through U.S. 
regulations, those regulations are authorized by E.O. 12234.
    c. A description of and, where feasible, an estimate of the number 
of small entities to which the proposed rule will apply.

              Table 21--Non-U.S. Vessels by Type of Entity
------------------------------------------------------------------------
                  Entity type                      Count       Percent
------------------------------------------------------------------------
Business \17\.................................        7,104        99.54
Government....................................           32         0.45
Not-for-Profit................................            1         0.01
                                               -------------------------
  Total.......................................        7,137       100.00
------------------------------------------------------------------------

    All the government entities exceed the threshold for being 
classified as a small entity as they are either agencies of a foreign 
government or exceed the 50,000 population threshold. We excluded these 
government entities from the revenue impact analysis. The single not-
for-profit entity is also deemed not small as it is part of an 
international organization.
---------------------------------------------------------------------------

    \17\ A vessel may have a separate owner, operator, and 
charterer. Operational control may be with any one of these 
companies, depending on type of owner (i.e., a passive ownership by 
a financial institution) or the type of operating or chartering 
contract. Also, the country that the vessel is registered in can be 
different than the country of the owner.
---------------------------------------------------------------------------

    To analyze the potential impact on the businesses, we produced a 
random sample with a 95 percent confidence level and a confidence 
interval of 5 percent.\18\ The resulting sample consisted of 299 
businesses. We researched public and proprietary databases for the 
location of the company, entity type (subsidiary or parent company), 
primary line of business, employee size, revenue, and other 
information.\19\ During the initial research we found 6 duplicated 
businesses and an additional one whose business was out of the scope of 
this rulemaking. Deleting these 7 businesses from our initial sample of 
299 resulted in a working sample consisting of 292 businesses. We found 
that 217 of the companies in our sample are based in countries other 
than the U.S. We therefore excluded these non-U.S. companies from this 
revenue impact analysis.
---------------------------------------------------------------------------

    \18\ We selected a statistical sample so we would not need to 
research and collect employee size and revenue information for the 
entire affected operator population. We selected the operators in 
the sample through a random number generator process available in 
most statistical or spreadsheet software.
    \19\ We used information and data from Manta (http://Manta.com) 
and ReferenceUSA (http://www.referenceusa.com).
---------------------------------------------------------------------------

    The population for the revenue impact analysis consists of the 
remaining 75 businesses from the working sample. Of those 75, we found 
address information that locates 70 of them in the U.S. The remaining 
five are businesses for whom we could find no information; we assumed 
that they are located in the U.S. and are small businesses.

[[Page 68801]]

    We researched and compiled the employee size and revenue data for 
the 70 U.S. businesses and we compared this information to the Small 
Business Administration's (SBA) ``Table of Small Business Size 
Standards'' to determine if an entity is small in its primary line of 
business as classified in the North American Industry Classification 
System (NAICS).\20\ We determined that 23 businesses exceeded the SBA 
small business size standards, and 20 businesses are small by the SBA 
standards. We could not find employee size or revenue data for 27 
businesses that are located in the United States and assumed they are 
small businesses. Thus, 52 businesses, accounting for 69.4% of the 
sample, are considered to be small. The information on location and 
size determination is summarized in Table 22.
---------------------------------------------------------------------------

    \20\ The SBA lists small business size standards for industries 
described in the North American Industry Classification System. See 
http://www.sba.gov/content/table-small-business-size-standards.

                                  Table 22--U.S. Business by Size Determination
----------------------------------------------------------------------------------------------------------------
                                                                      Location
                         Entity type                         --------------------------    Count       Percent
                                                                  U.S.       Unknown
----------------------------------------------------------------------------------------------------------------
Exceed the threshold........................................           23            0           23         30.7
Below the threshold.........................................           20            0           20         26.7
Unknown.....................................................           27            5           32         42.7
                                                             ---------------------------------------------------
    Total...................................................           70            5           75        100.0
----------------------------------------------------------------------------------------------------------------

    The percentage of entities affected by this rule is distributed 
among 14 NAICS classified industries. Table 23 lists the frequency, 
percentage, and size standard, and size threshold of NAICS codes for 
the 20 small businesses found in the sample.

                                                  Table 23--NAICS Codes of Identified Small Businesses
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                             Threshold
                NAICS code                             Industry                   Count          Percent            Size standard          (revenue in $
                                                                                                                                             millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
423860...................................  Transportation Equipment and                   3            15.0  Employees..................             100
                                            Supplies (except Motor Vehicle)
                                            Merchant Wholesalers.
483211...................................  Inland Water Freight                           3            15.0  Employees..................             500
                                            Transportation.
488510...................................  Freight Transportation                         2            10.0  Revenue....................              14
                                            Arrangement.
336611...................................  Ship Building and Repairing.....               1             5.0  Employees..................           1,000
423310...................................  Lumber & Wood Merchant Whls.....               1             5.0  Employees..................             100
423930...................................  Recycling.......................               1             5.0  Employees..................             100
424910...................................  Farm Supplies Merchant Whls.....               1             5.0  Employees..................             100
441222...................................  Boat Dealers....................               1             5.0  Revenue....................              30
483111...................................  Deep Sea transportation.........               1             5.0  Employees..................             500
484230...................................  Other Specialized Trucking Long-               1             5.0  Revenue....................            25.5
                                            Distance.
488210...................................  Support Activities for Rail                    1             5.0  Revenue....................            14.0
                                            Transportation.
488320...................................  Marine Cargo Handling...........               1             5.0  Revenue....................            35.5
541990...................................  All Other Professional &                       1             5.0  Revenue....................              14
                                            Technical Svcs.
561110...................................  Office Administrative Svcs......               1             5.0  Revenue....................               7
561990...................................  All Other Support Svcs..........               1             5.0  Revenue....................               7
                                                                            ----------------
    Total................................  ................................              20
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: http://www.sba.gov/sites/default/files/files/Size_Standards_Table(1).pdf.

    We selected the three industries that appeared most frequently in 
the random sample of entities. Businesses from these three industries 
accounted for approximately 40 percent of the entities in the random 
sample. Therefore, we can assume that approximately 40 percent of all 
entities affected by this regulation will be in one of these 
industries. A brief description of industries affected most by this 
rule is presented below:
     Transportation Equipment and Supplies (except Motor 
Vehicle) Merchant Wholesalers (423860): This industry comprises 
establishments primarily engaged in the merchant wholesale distribution 
of transportation equipment and supplies (except marine pleasure craft 
and motor vehicles).
     Inland Water Freight Transportation (483211): This U.S. 
industry comprises establishments primarily engaged in providing inland 
water transportation of cargo on lakes, rivers, or intracoastal 
waterways (except on the Great Lakes System).
     Freight Transportation Arrangement (488510): This industry 
comprises establishments primarily engaged in arranging transportation 
of freight between shippers and carriers. These establishments are 
usually known as freight forwarders, marine shipping agents, or customs 
brokers and offer a combination of services spanning transportation 
modes.
    d. A description of the projected reporting, recordkeeping and 
other compliance requirements of the proposed rule, including an 
estimate of the classes of small entities which will be subject to the 
requirement and the type of professional skills necessary for 
preparation of the report or record. The compliance requirements of the 
proposed rule consist of upgrading deficient CSMs and reporting lost or

[[Page 68802]]

jettisoned cargo. Therefore, this proposed rule would call for a 
collection of information under the Paperwork Reduction Act of 1995 (44 
U.S.C. 3501-3520). Details on the burden estimate associated with this 
collection is available in section VIII.D of this preamble.
    As discussed in section VIII.A, in 2009 through 2011 the Coast 
Guard conducted 11,989 vessel inspections and found problems relating 
to CSMs in only 7 instances, or about 0.1 percent of the foreign-
flagged vessels were found to have deficient CSMs. We anticipate that 
the owners and operators of these vessels will upgrade their manuals to 
meet standards and comply with this rule. We do not have detailed 
descriptions on each of the deficiency cases. To impute a cost for this 
compliance action, we apply the estimate of $7,625 develop a new CSM, 
as used in the Regulatory Analysis.
    For reporting lost or jettisoned cargo, we noted in section VIII.A 
cost discussions that when one of these incidents occurs, the vessel 
staff already collects the needed information for company purposes. 
Thus, the only additional cost to the vessel is to report this 
information to the Coast Guard. We estimate the additional reporting 
will take 0.25 hours for the vessel's Master or other senior officer to 
compile and transmit the report to the Coast Guard. We estimate that 
the loaded wage rate for the senior officer is $53.00 per hour. The 
cost of reporting is $13.25 (0.25 hours * $53 per hour).
    As discussed in section VIII.A, we adjusted the affected population 
to account for anticipated growth in container traffic. In our ten-year 
analysis, we estimate that the number of vessels that would need to 
upgrade their CSM would be 5 in year one each of and increase to 8 in 
year ten. We also accounted for this growth in container traffic in our 
estimate of lost or jettisoned cargoes. In the section VIII.A cost 
discussions we estimate that in the first year the rule would become 
effective, 50 incidents of lost or jettisoned cargo would occur. We 
estimate that the affected population in that year consists of 7,163 
vessels, yielding an incident rate of 0.7 percent (50 incidents/7,163 
vessels). To execute a revenue impact analysis we posited that in any 
given year each business would have one vessel that would need to 
upgrade its CSM and that one of their vessels would have an incident of 
lost or jettisoned cargo. Given these assumptions, the total annual 
compliance cost for any company is $7,638.25, as shown in Table 24.

                          Table 24--Annual Compliance Cost for Revenue Impact Analysis
----------------------------------------------------------------------------------------------------------------
                                                   Loaded wage                     Hours              Total cost
----------------------------------------------------------------------------------------------------------------
Cost to upgrade 1 CSM....................  N/A........................  N/A........................       $7,625
Cost to report 1 hazardous condition.....  53.........................  0.25.......................        13.25
                                          ----------------------------------------------------------------------
    Total................................                                                               7,638.25
----------------------------------------------------------------------------------------------------------------

    For each business in our sample with revenue data, we calculated 
the impact as the assumed cost of $7,638.25 as a percentage of that 
business's annual revenue. This produced a range of potential revenue 
impacts across the sample. Table 25 presents the impact data in ranges 
of less than 1 percent, 1 to 3 percent, and greater than 3 percent. As 
shown in Table 25, for 60 percent of the companies, the revenue impact 
is less than 1 percent of annual revenue and between 1 percent and 3 
percent of annual revenue for another 20 percent.

         Table 25--Estimated Revenue Impact on Small Businesses
------------------------------------------------------------------------
                 Impact class                      Count       Percent
------------------------------------------------------------------------
<1%...........................................           12         60.0
1%-3%.........................................            4         20.0
>3%...........................................            4         20.0
                                               -------------------------
  Total.......................................           20        100.0
------------------------------------------------------------------------

    As shown in Table 18, the highest cost to industry in any one year 
on an undiscounted basis is $62,790 in year 10. The revenue impact 
analysis indicates that 60 percent of the affected population would 
have an impact of less than 1 percent and the other 20 percent would 
have an impact between 1 percent and 3 percent. If you think that your 
business, organization, or governmental jurisdiction qualifies as a 
small entity and that this rule would have a significant economic 
impact on it, please submit a comment to the Docket Management Facility 
at the address under ADDRESSES. In your comment, explain why you think 
it qualifies and how and to what degree this rule would economically 
affect it.
    e. An identification, to the extent practicable, of all relevant 
Federal rules which may duplicate, overlap or conflict with the 
proposed rule. This proposed rule does not duplicate or conflict with 
other Federal rules. This rulemaking concerns vessel operations and the 
Coast Guard has sole jurisdiction over this area at the Federal level. 
States may not regulate in categories reserved for regulation by the 
Coast Guard, so this proposed rule will not duplicate or conflict with 
any State regulations.
    f. Descriptions of any significant alternatives to the proposed 
rule which accomplish the stated objectives of applicable statutes and 
which minimize any significant economic impact of the proposed rule on 
small entities. Alternatives were considered in this proposed rule and 
are discussed in section VIII.A of this preamble. Alternatives include 
various ways to apply the requirements to prepare and implement CSMs to 
U.S.-flagged vessels in coastwise trade. However, we concluded that 
standards developed for international trade cannot be economically 
justified for vessels operating only domestically at this time. 
Therefore, the focus of this rulemaking is exclusively on vessels in 
international trade.

C. Assistance for Small Entities

    Under section 213(a) of the Small Business Regulatory Enforcement 
Fairness Act of 1996 (Pub. L. 104-121), we want to assist small 
entities in understanding this proposed rule so that they can better 
evaluate its effects on them and participate in the rulemaking. If the 
proposed rule would affect your small business, organization, or 
governmental jurisdiction and you have questions concerning its 
provisions or options for compliance, please consult Mr. Ken Smith 
using the contact information in FOR FURTHER INFORMATION CONTACT. The 
Coast Guard will not retaliate against small entities that question or 
complain about this rule or any policy or action of the Coast Guard.
    Small businesses may send comments on the actions of Federal 
employees who enforce, or otherwise determine compliance with, Federal 
regulations to the Small Business and Agriculture Regulatory 
Enforcement Ombudsman and the Regional Small Business Regulatory 
Fairness Boards. The

[[Page 68803]]

Ombudsman evaluates these actions annually and rates each agency's 
responsiveness to small business. If you wish to comment on actions by 
employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247).

D. Collection of Information

    This rule would call for a new collection of information under the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). As defined in 5 
CFR 1320.3(c), ``collection of information'' comprises reporting, 
recordkeeping, monitoring, posting, labeling, and other similar 
actions. The title and description of the information collection, a 
description of those who must collect the information, and an estimate 
of the total annual burden follow. The estimate covers the time for 
preparing and reporting for the development of a CSM, revising a CSM, 
notification of other hazardous conditions, and notification of lost or 
jettisoned cargo.
    This collection of information applies to rulemaking procedures 
regarding cargo securing manuals. Specific areas covered in this 
information collection include 33 CFR Part 97, ``Cargo Securing 
Manuals;'' 33 CFR Part 160, ``Ports and Waterways Safety-General;'' and 
46 CFR Part 97, ``Operations.'' This rule would align the CFR with 
SOLAS.
    Title: Cargo Securing Manuals.
    OMB Control Number: 1625-NEW
    Summary of Collection of Information: The rule would add a new part 
97, ``Cargo Securing Manuals'' to chapter 33 of the CFR. The collection 
of information burden for CSMs derives from one of these three events:
     A SOLAS container vessel built after the rule becomes 
effective would need to develop and implement a CSM. The new vessel 
will need an approved CSM.
     If a vessel changes its type, the CSM must be revised. An 
example of a type change is when a general break-bulk carrier is 
modified to become a containership.
     If an existing vessel either changes 15 percent of its 
cargo securing systems or more than 15 percent of its portable securing 
devices, then the CSM must be revised.
    Additionally, the rule would impose burdens for the notification of 
hazardous conditions. Currently, these notifications are made via VHS 
radio, satellite radio, cell phones, and other forms of electronic 
communication. The proposed rule specifically allows for electronic 
communications and we anticipate this will continue to be how the 
notifications are transmitted.
    Need for Information: Vessel owners and operators need to develop 
and implement CSMs to fulfill international safety standards 
established by SOLAS. The Coast Guard needs timely information on 
hazardous conditions to carry out its missions relating to protecting 
vessels, their crews and passengers, and the environment.
    Proposed Use of Information: For new and modified CSMs, Coast 
Guard-authorized third party organizations would review these manuals 
and if found acceptable, approve them. The Coast Guard would use the 
information from the notification of hazardous conditions to inform 
other vessel operators/waterway users of the situation and initiate any 
needed measures to reduce or eliminate the hazard. These actions would 
lead to a reduction of vessel casualties and pollution.
    Description of Respondents: There are two groups of respondents 
impacted by this rule. The first group consists of owners and operators 
of U.S.-flagged vessels that need to submit new or revised CSMs to the 
recognized classification societies. The second group consists of the 
operators of vessels that would be required to report hazardous 
conditions.
    Number of Respondents: We estimate that there would be 149 
respondents affected annually by the proposed CSM requirements. The 
total is divided into these two classes: (1) 6 related to CSM plans, 
and (2) 143 for notifications of hazardous conditions, which include 
lost or jettisoned cargo and other incidents. Table 26 describes the 
calculations for developing the estimates of each requirement relating 
to the CSM plans.

                                  Table 26--Estimates of Number of Respondents
----------------------------------------------------------------------------------------------------------------
              Class                       Requirement                Description           Count        Total
----------------------------------------------------------------------------------------------------------------
CSM Plans........................  Develop CSM--new vessel..  From U.S. vessel                    3  ...........
                                                               population data of 26
                                                               vessels (Table 4),
                                                               average new builds 2009-
                                                               2011.
                                   Revise CSM--change in      MISLE data shows none of            0  ...........
                                    vessel type.               the affected vessels
                                                               have changed vessel
                                                               type from 2001-2012.
                                   Revise CSM--replace CSM    Annual rate of 11.3%                3  ...........
                                    systems or equipment.      from information
                                                               supplied by an approved
                                                               organization. Applied
                                                               to U.S. population (see
                                                               Table 4), (26 * 11.3%).
                                   CSM Total................  ........................  ...........            6
Notifications....................  Notifications of           From MISLE, average of            141  ...........
                                    hazardous condition.       2009-2011 notifications.
                                   Notifications of lost or   U.S. notifications,                 2  ...........
                                    jettisoned cargo.          Table 9, year 10.
                                   Notifications Total......  ........................  ...........          143
                                                                                       -------------------------
    Grand Total..................  .........................  ........................  ...........          149
----------------------------------------------------------------------------------------------------------------

    Frequency of Response: A CSM is valid indefinitely, as long as it 
does not meet any of the conditions for a revision. The reporting of 
hazardous conditions occurs as needed. In the subsequent ``Number of 
Respondents'' section, we present annual estimates of the reports.
    Burden of Response: The burden hours per requirement is estimated 
and shown below in Table 27.

[[Page 68804]]



                Table 27--Annual Burden Hours Per Request
------------------------------------------------------------------------
           Requirement                Hours               Notes
------------------------------------------------------------------------
Develop new CSM..................           48  8 hours to survey the
                                                 vessel and 40 hours to
                                                 draft the CSM.
Revise CSM--change in vessel type           48  8 hours to survey the
                                                 vessel and 40 hours to
                                                 draft the CSM.
Revise CSM--change in cargo                 20  20 hours to revise the
 securing systems or equipment.                  existing CSM.
Notification of hazardous                 0.25  0.25 hours for vessel
 condition.                                      crew to prepare and
                                                 transmit the notice.
Notification of lost of                   0.25  0.25 hours for vessel
 jettisoned cargo.                               crew to prepare and
                                                 transmit the notice.
------------------------------------------------------------------------

    Estimated Total Annual Burden: We estimate that the total annual 
burden to industry will be 240 hours (rounded). Table 28 displays the 
total burden hours for each request:

                   Table 28--Total Annual Burden Hours
------------------------------------------------------------------------
                          Requirement                             Hours
------------------------------------------------------------------------
Develop new CSM................................................      144
Revise CSM--change in vessel type..............................        0
Revise CSM--change in cargo securing systems or equipment......       60
Notification of hazardous condition............................    35.25
Notification of lost of jettisoned cargo.......................      0.5
------------------------------------------------------------------------

    Reason For Proposed Change: The rule would require collections of 
information regarding these two activities: (1) development or revision 
of a CSM, and 2) notification of hazardous conditions, including lost 
or jettisoned cargo.
    As required by the Paperwork Reduction Act of 1995 (44 U.S.C. 
3507(d)), we will submit a copy of this SNPRM to OMB for its review of 
the collection of information.
    We ask for public comment on the proposed collection of information 
to help us determine how useful the information is; whether it can help 
us perform our functions better; whether it is readily available 
elsewhere; how accurate our estimate of the burden of collection is; 
how valid our methods for determining burden are; how we can improve 
the quality, usefulness, and clarity of the information; and how we can 
minimize the burden of collection.
    If you submit comments on the collection of information, submit 
them both to OMB and to the Docket Management Facility where indicated 
under ADDRESSES, by the date under DATES.
    You need not respond to a collection of information unless it 
displays a currently valid control number from OMB. Before the 
collection requirements in this final rule can be enforced, OMB must 
approve Coast Guard's request to collect this information.

E. Federalism

    A rule has implications for federalism under E.O. 13132, 
Federalism, if it has substantial direct effects on the States, on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government. We have analyzed this proposed rule under E.O. 13132 and 
have determined that it does not have implications for federalism. Our 
analysis follows.
    It is well settled that States may not regulate in categories 
reserved for regulation by the Coast Guard. It is also well settled, 
now, that all of the categories covered in 46 U.S.C. 3306, 3703, 7101, 
and 8101 (design, construction, alteration, repair, maintenance, 
operation, equipping, personnel qualification, and manning of vessels), 
as well as the reporting of casualties and any other category in which 
Congress intended the Coast Guard to be the sole source of a vessel's 
obligations, are within the field foreclosed from regulation by the 
States. (See the decision of the Supreme Court in the consolidated 
cases of United States v. Locke and Intertanko v. Locke, 529 U.S. 89, 
120 S.Ct. 1135 (March 6, 2000).
    This proposed rule on cargo securing falls into the category of 
vessel operation. Because the States may not regulate within this 
category, preemption under E.O. 13132 is not an issue.

F. Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) 
requires Federal agencies to assess the effects of their discretionary 
regulatory actions. In particular, the Act addresses actions that may 
result in the expenditure by a State, local, or tribal government, in 
the aggregate, or by the private sector of $100,000,000 (adjusted for 
inflation) or more in any one year. Though this proposed rule would not 
result in such an expenditure, we do discuss the effects of this rule 
elsewhere in this preamble.

G. Taking of Private Property

    This proposed rule would not cause a taking of private property or 
otherwise have taking implications under E.O. 12630, Governmental 
Actions and Interference with Constitutionally Protected Property 
Rights.

H. Civil Justice Reform

    This proposed rule meets applicable standards in sections 3(a) and 
3(b)(2) of E. O. 12988, Civil Justice Reform, to minimize litigation, 
eliminate ambiguity, and reduce burden.

I. Protection of Children

    We have analyzed this proposed rule under E.O. 13045, Protection of 
Children from Environmental Health Risks and Safety Risks. This rule is 
not an economically significant rule and would not create an 
environmental risk to health or risk to safety that might 
disproportionately affect children.

J. Indian Tribal Governments

    This proposed rule does not have tribal implications under E.O. 
13175, Consultation and Coordination with Indian Tribal Governments, 
because it would not have a substantial direct effect on one or more 
Indian tribes, on the relationship between the Federal Government and 
Indian tribes, or on the distribution of power and responsibilities 
between the Federal Government and Indian tribes.

K. Energy Effects

    We have analyzed this proposed rule under E.O. 13211, Actions 
Concerning Regulations That Significantly Affect Energy Supply, 
Distribution, or Use. We have determined that it is not a ``significant 
energy action'' under that order because it is not a ``significant 
regulatory action'' under E.O. 12866 and is not likely to have a 
significant adverse effect on the supply, distribution, or use of 
energy. The Administrator of the Office of Information and Regulatory 
Affairs has not designated it as a significant energy action. 
Therefore, it does not require a Statement of Energy Effects under E.O. 
13211.

[[Page 68805]]

L. Technical Standards

    The National Technology Transfer and Advancement Act (15 U.S.C. 272 
note) directs agencies to use voluntary consensus standards in their 
regulatory activities unless the agency provides Congress, through the 
OMB, with an explanation of why using these standards would be 
inconsistent with applicable law or otherwise impractical. Voluntary 
consensus standards are technical standards (e.g., specifications of 
materials, performance, design, or operation; test methods; sampling 
procedures; and related management systems practices) that are 
developed or adopted by voluntary consensus standards bodies.
    This proposed rule uses technical standards other than voluntary 
consensus standards. It incorporates guidance developed by the IMO, an 
international organization under United Nations auspices. We are not 
aware of any voluntary consensus standards that are pertinent to this 
rule. If you are aware of voluntary consensus standards that might 
apply, please identify them by sending a comment to the docket using 
one of the methods under ADDRESSES. In your comment, please explain why 
you think the standards might apply.

M. Environment

    We have analyzed this proposed rule under Department of Homeland 
Security Management Directive 023-01 and Commandant Instruction 
M16475.lD, which guide the Coast Guard in complying with the National 
Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and 
have made a preliminary determination that this action is one of a 
category of actions that do not individually or cumulatively have a 
significant effect on the human environment. A preliminary 
environmental analysis checklist supporting this determination is 
available in the docket where indicated under the ``Public 
Participation and Request for Comments'' section of this preamble. This 
action falls under section 2.B.2, figure 2-1, paragraph (34)(a) and 
involves regulations which are editorial or procedural. We seek any 
comments or information that may lead to the discovery of a significant 
environmental impact from this proposed rule.

List of Subjects

33 CFR Part 97

    Cargo stowage and securing, Cargo vessels, Hazardous materials, 
Reporting and recordkeeping requirements, Incorporation by reference.

33 CFR Part 160

    Administrative practice and procedure, Harbors, Hazardous materials 
transportation, Marine safety, Navigation (water), Reporting and 
recordkeeping requirements, Vessels, Waterways.

46 CFR Part 97

    Cargo vessels, Marine safety, Navigation (water), Reporting and 
recordkeeping requirements.

    For the reasons discussed in the preamble, the Coast Guard proposes 
to add 33 CFR part 97 and amend 33 CFR Part 160 and 46 CFR Part 97 as 
follows:

TITLE 33--NAVIGATION AND NAVIGABLE WATERS

0
1. Add part 97 to read as follows:

PART 97--RULES FOR THE SAFE OPERATION OF VESSELS, STOWAGE AND 
SECURING OF CARGOES

Subpart A--CARGO SECURING MANUALS
97.100 Applicability--Electronic documentation.
97.105 Definitions.
97.110 Incorporation by reference.
97.115 Reporting lost or jettisoned cargo.
97.120 Cargo securing manuals.
97.121-97.199 [Reserved]
97.200 Cargo securing manual (CSM) approval for U.S.-flagged vessels 
on international voyages.
97.205 Requirements for amending an approved cargo securing manual 
(CSM).
97.210 Appeals.
97.211-97.299 [Reserved]
97.300 Authorized cargo securing manual (CSM) approval authorities.
97.305 Requests for authorization to act as cargo securing manual 
(CSM) approval authority.
97.310 Criteria for authorization.
97.320 Requirements for authorized approval organizations.
97.320 Revocation of authorization.
Subpart B--[Reserved]

    Authority: 46 U.S.C. 2103, 3306; E.O. 12234; Department of 
Homeland Security Delegation No. 0170.1(92)(a) and (b).

PART 97--RULES FOR THE SAFE OPERATION OF VESSELS, STOWAGE AND 
SECURING OF CARGOES

Subpart A--Cargo Securing Manuals


Sec.  97.100  Applicability--Electronic documentation.

    (a) This part applies to--
    (1) A vessel of 500 gross tons or more on an international voyage 
that must comply with Chapter VI/5.6 or Chapter VII/5 of the 
International Convention for the Safety of Life at Sea, 1974 as amended 
(SOLAS) and that does not solely carry liquid or solid cargoes in bulk, 
and that is either a U.S.-flagged cargo vessel, or a foreign-flagged 
cargo vessel that is operating in waters subject to the jurisdiction of 
the United States;
    (2) A U.S.-flagged cargo vessel that is less than 500 gross tons 
but that chooses to have this part applied to it by submitting a cargo 
securing manual for approval in accordance with Sec.  97.200(a)(3);
    (3) A foreign-flagged cargo vessel of 500 gross tons or more on an 
international voyage from a country not signatory to SOLAS that would 
otherwise be required to comply with Chapter VI/5.6 or Chapter VII/5 of 
SOLAS and that does not solely carry liquid or solid cargoes in bulk 
and is operating in waters subject to the jurisdiction of the United 
States; and
    (4) Any organization applying to be selected as a cargo securing 
manual approval authority.
    (b) This part does not apply to a vessel owned by the Maritime 
Administration that is part of the Ready Reserve Force or the title of 
which is vested in the United States and which is used for public 
purposes only.
    (c) Any manual, letter, request, appeal, or ruling required by this 
part may be provided or submitted in electronic form as well as in 
printed form.


Sec.  97.105  Definitions.

    As used in this part--
    Approval authority means a CSM approval authority, as that term is 
defined in this section.
    Cargo means the goods or merchandise conveyed in a vessel, and 
includes but is not limited to cargo that can be measured as a ``cargo 
unit'' as that term is used in the International Maritime 
Organization's Code of Safe Practice for Cargo Stowage and Securing, 
2003 edition: ``a vehicle, container, flat, pallet, portable tank, 
packaged unit, or any other entity, etc., and loading equipment, or any 
part thereof, which belongs to the ship but is not fixed to the ship . 
. .''; but it does not include other vessel equipment or the incidental 
personal possessions of persons on board the vessel.
    Cargo safe access plan (CSAP) means a plan included in the cargo 
securing manual that provides detailed information on safe access for 
persons engaged in work connected with cargo stowage and securing on 
ships that are specifically designed and fitted for the purpose of 
carrying containers.
    Cargo securing manual (CSM) means an electronic or printed manual 
developed to meet the requirements of SOLAS and this part that is used 
by the master of a vessel to properly stow and

[[Page 68806]]

secure cargoes on the vessel for which it is developed.
    Cargo securing manual approval authority or CSM approval authority 
means an organization that meets the requirements of this part, and 
that the Commandant has authorized to conduct certain actions and issue 
electronic or printed approval letters on behalf of the United States.
    Captain of the Port (COTP) means the U.S. Coast Guard officer as 
described in 33 CFR 6.01-3.
    Commandant, except as otherwise specified, means the Chief, Office 
of Operating and Environmental Standards, whose address is COMDT (CG-
OES) 2100 2nd Street SW., Stop 7126, Washington, DC 20593-7126 and 
whose telephone number is 202-372-1404.
    Container means an article of transport equipment described in 49 
CFR 450.3.
    Container vessel means a vessel specifically designed and fitted 
for the purpose of carrying containers.
    International voyage means a voyage between a port or place in one 
country (or its possessions) and a port or place in another country.


Sec.  97.110  Incorporation by reference.

    (a) Certain material is incorporated by reference into this part 
with the approval of the Director of the Federal Register under 5 
U.S.C. 552(a) and 1 CFR part 51. To enforce any edition other than that 
specified in this section, the Coast Guard must publish notice of 
change in the Federal Register and the material must be available to 
the public. All approved material is available for inspection at the 
U.S. Coast Guard, Headquarters, Office of Operating and Environmental 
Standards (CG-OES), 2100 Second Street SW., Stop 7126, Washington, DC 
20593-7126, and is available from the sources listed below. It is also 
available for inspection at the National Archives and Records 
Administration (NARA). For information on the availability of this 
material at NARA, call 202-741-6030 or go to http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.
    (b) International Maritime Organization (IMO), Publications 
Section, 4 Albert Embankment, London, SE1 7SR, United Kingdom, +44(0)20 
7735 7611, http://www.imo.org.
    (1) Maritime Safety Committee Circular 1353 (MSC.1/Circ. 1353), 
Guidelines for the Preparation of the Cargo Securing Manual, June 30, 
2010-97, IBR approved for Sec.  97.120.
    (2) Maritime Safety Committee Circular 1352 (MSC.1/Circ.1352), 
Cargo Stowage and Securing (CSS Code) Annex 14 Guidance on Providing 
Safe Working Conditions for Securing of Containers on Deck, June 30, 
2010-97, IBR approved for Sec.  97.120.
    (3) Assembly Resolution 739(18) (Res.A.739(18)), Guidelines for the 
Authorization of Organizations Acting on Behalf of the Administration, 
November 4, 1993-97, IBR approved for Sec.  97.310.


Sec.  97.115  Reporting lost or jettisoned cargo.

    (a) In the event a vessel loses or jettisons at sea any cargo 
described in paragraph (b)(1) of this section, it must comply with the 
immediate notification requirements of 33 CFR 160.215, and if the cargo 
contains hazardous material as defined in paragraph (b)(2) of this 
section the vessel must also report as soon as possible in accordance 
with 49 CFR 176.48.
    (b)(1) The cargo to which this section applies includes any 
container, and any other cargo the loss or jettisoning of which could 
adversely affect the safety of any vessel, bridge, structure, or shore 
area or the environmental quality of any port, harbor, or navigable 
waterway of the United States.
    (2) As used in this section, ``hazardous material'' means a 
substance or material designated by the Secretary of Transportation as 
capable of posing an unreasonable risk to health, safety, and property 
when transported in commerce. The term includes hazardous substances, 
hazardous wastes, marine pollutants, and elevated temperature materials 
as defined in 49 CFR 171.8, materials designated as hazardous under the 
provisions of 49 CFR 172.101, and materials that meet the defining 
criteria for hazard classes and divisions in 49 CFR part 173.


Sec.  97.120  Cargo securing manuals.

    (a)(1) Any vessel to which this part applies must have a cargo 
securing manual (CSM) on board that has been approved by the government 
of the country whose flag the vessel is entitled to fly; and a CSM 
approved after June 30, 2010 must at a minimum meet the guidelines in 
Maritime Safety Committee Circular 1353 (MSC.1/Circ. 1353), Guidelines 
for the Preparation of the Cargo Securing Manual (incorporated by 
reference, see 33 CFR 97.110).
    (2) A container vessel with a keel laid on or after January 1, 2015 
must include a cargo safe access plan that at a minimum meets the 
guidelines in Maritime Safety Committee Circular 1352 (MSC.1/
Circ.1352), Cargo Stowage and Securing (CSS Code) Annex 14 Guidance on 
Providing Safe Working Conditions for Securing of Containers on Deck 
(incorporated by reference, see 33 CFR 97.110).
    (b) While operating in waters under the jurisdiction of the United 
States, the Coast Guard may board any vessel to which this part applies 
to determine that the vessel has the document(s) required by paragraph 
(a) of this section onboard. Any foreign-flagged vessel found not to be 
in compliance with paragraph (a) may be detained by order of the COTP 
at the port or terminal where the noncompliance is found until the COTP 
determines that the vessel can go to sea without presenting an 
unreasonable threat of harm to the port, the marine environment, the 
vessel, or its crew.


Sec. Sec.  97.121-97.199  [Reserved]


Sec.  97.200  Cargo securing manual (CSM) approval for U.S.-flagged 
vessels on international voyages.

    (a)(1) An applicant for CSM approval may be the owner or operator 
of the vessel, or a person acting on the owner or operator's behalf.
    (2) The Commandant is responsible for overseeing and managing the 
review and approval of approval authority applications and provides an 
up-to-date list of organizations authorized to act under this subpart, 
which is available at http://www.uscg.mil/hq/cg5/cg522/cg5222 or by 
requesting it in writing from the Commandant and enclosing a self-
addressed, stamped envelope.
    (3) The applicant must submit two dated copies of a CSM that meets 
the requirements of this part to a CSM approval authority for review 
and approval. If any amendments are submitted they must be dated. The 
CSM must include a ``change page'' document to ensure continuous 
documentation of amendments made and the dates they were completed.
    (4) The approval authority will retain one copy of the CSM for its 
records.
    (b) If the approval authority completes the review process and 
approves the CSM, the approval authority will provide a CSM approval 
letter on its letterhead, containing--
    (1) Date of CSM approval;
    (2) A subject line reading: ``APPROVAL OF CARGO SECURING MANUAL 
(AMENDMENT--if applicable) FOR THE M/V --------, OFFICIAL NUMBER ------
--'';
    (3) The following statement: ``This is to certify that the Cargo 
Securing Manual (Amendment--if applicable) dated -------- for the M/V 
--------, Official Number --------, has been approved on behalf of the 
United States. The Cargo

[[Page 68807]]

Securing Manual (Amendment--if applicable) was reviewed for compliance 
with Maritime Safety Committee Circular 1353 (MSC.1/Circ. 1353) for 
content, and correctness of the calculations on which the approval is 
based. This approval letter is to be kept with the Cargo Securing 
Manual, as proof of compliance with regulations VI/5.6 and VII5 of the 
2004 amendments to the International Convention for the Safety of Life 
at Sea (SOLAS) 1974.'';
    (4) Signature of the approval authority official responsible for 
review and approval of the CSM; and
    (5) The approval authority's seal or stamp.
    (c) If the approval authority completes the review process and 
disapproves the CSM, the approval authority will provide a letter on 
its letterhead, containing--
    (1) Date of CSM disapproval; and
    (2) Explanation of why the CSM was disapproved and what the 
submitter must do to correct deficiencies.
    (d) The submitter of a disapproved CSM may resubmit the CSM with 
amendments for further review, either to correct deficiencies noted by 
the approval authority, or to expand the CSM to fully meet the 
requirements of this part.
    (e) The original copy of the CSM approval letter must be kept with 
the approved CSM and its amendments, together with supporting documents 
and calculations used in granting the approval, onboard the vessel for 
review by Coast Guard personnel upon request.


Sec.  97.205  Requirements for amending an approved cargo securing 
manual (CSM).

    Resubmission and re-approval by a CSM approval authority are 
required after any event listed in this section.
    (a) Reconfiguration of a vessel from one type of cargo carriage to 
another (e.g., a general break-bulk cargo vessel reconfigured to a 
container or a roll-on/roll-off vessel).
    (b) Reconfiguration or replacement of 15 percent or more of the 
vessel's fixed cargo securing or tie down systems with different types 
of devices or systems.
    (c) Replacement of 15 percent or more of the vessel's portable 
cargo securing devices, with different types of devices for securing 
the cargo not already used aboard the vessel (e.g., wire lashings 
replaced with turnbuckles or chains).


Sec.  97.210  Appeals.

    (a) A vessel owner or operator, or person acting on their behalf, 
who disagrees with a decision of a cargo securing manual approval 
authority may submit a written appeal to the approval authority 
requesting reconsideration of information in dispute. Within 30 days of 
receiving the appeal, the approval authority must provide the vessel 
owner with a final written ruling on the request, with a copy to the 
Commandant.
    (b) A vessel owner who is dissatisfied with the approval 
authority's final written ruling may appeal directly to the Commandant. 
The appeal must be made in writing and include the documentation and 
supporting evidence the owner wants to be considered, and may ask the 
Commandant to stay the effect of the appealed decision while it is 
under review by the Commandant.
    (c) The Commandant will make a decision on the appeal and send a 
formal response to the vessel owner and a copy to the approval 
authority. The Commandant's decision will constitute final agency 
action on the appeal request.


Sec. Sec.  97.211-97.299  [Reserved]


Sec.  97.300  Authorized cargo securing manual (CSM) approval 
authorities.

    (a) The following organizations are authorized to act on behalf of 
the U.S. for the review and approval of CSMs:
    (1) The American Bureau of Shipping, ABS Plaza, 16855 Northchase 
Drive, Houston, TX 77060, 281-977-5800, http://www.eagle.org.
    (2) Lloyd's Register of Shipping, 71 Fenchurch Street, London EC3M 
4BS, United Kingdom, +44(0)20 7709 9166, http://www.lr.org.
    (3) Any recognized classification society to which the Coast Guard 
has delegated issuance of a Cargo Ship Safety Equipment Certificate in 
accordance with 46 CFR 8.320(b)(4). A list of these organizations can 
be found at www.uscg.mil/hq/cg5/cg522/cg5222 in the Alternate 
Compliance Program site under ``Programs & Services''.
    (4) The National Cargo Bureau, Inc., 17 Battery Place, Suite 1232, 
New York, NY 10004-1110, 212-785-8300, http://www.natcargo.org.
    (b) Reserved.


Sec.  97.305  Requests for authorization to act as cargo securing 
manual (CSM) approval authority.

    An organization seeking authorization as a CSM approval authority 
must make a request to the Commandant for authorization. The request 
must include, in writing, the items listed in this section or as 
otherwise specified by the Commandant.
    (a) A certified copy of the organization's certificate of 
incorporation or partnership on file with a U.S. State, including the 
name and address of the organization, with written statements or 
documents which show that--
    (1) The organization's owners, managers, and employees are free 
from influence or control by vessel shipbuilders, owners, operators, 
lessors, or other related commercial interests as evidenced by past and 
present business practices;
    (2) The organization has demonstrated, through other related work, 
the capability to competently evaluate CSMs for completeness and 
sufficiency according to the requirements of SOLAS and this part;
    (3) The organization has an acceptable degree of financial 
security, based on recent audits by certified public accountants over 
the last 5 years; and
    (4) The organization maintains a corporate office in the United 
States that has adequate resources and staff to support all aspects of 
CSM review, approval, and recordkeeping.
    (b) A listing of the names of the organization's principal 
executives, with titles, telephone and telefax numbers.
    (c) A written general description of the organization, covering the 
ownership, managerial structure, and organization components, including 
any directly affiliated organizations, and their functions utilized for 
supporting technical services.
    (d) A written list of technical services the organization offers.
    (e) A written general description of the geographical area the 
organization serves.
    (f) A written general description of the clients the organization 
is serving, or intends to serve.
    (g) A written general description of similar work performed by the 
organization in the past, noting the amount and extent of such work 
performed within the previous 3 years.
    (h) A written listing of the names of full-time professional staff 
employed by the organization and available for technical review and 
approval of CSMs including:
    (1) Naval architects and naval engineers, with copies of their 
professional credentials, college degrees, and specialized training 
certificates.
    (2) Merchant mariners with Coast Guard-issued credentials, with a 
summary of their working experience on board cargo vessels (including 
vessel tonnage and types of cargo).
    (3) Written proof of staff competence to perform CSM review and 
approval, evidenced by detailed summaries of each individual's 
experience (measured in months) during the past 5 years of evaluating 
maritime cargo securing

[[Page 68808]]

systems. Experience summaries must be documented on company letterhead 
and endorsed by a company executive who has had direct observation of 
the individual and quality of his or her work product.
    (j) A complete description of the organization's internal quality 
control processes including written standards used by the organization 
to ensure consistency in CSM review and approval procedures by 
qualified professionals.
    (k) A description of the organization's training program for 
assuring continued competency of professional employees performing CSM 
review and approval who are identified in the application.
    (l) Evidence of financial stability over the past 5-year period, 
such as financial reports completed independently by certified public 
accountants.
    (m) A list of five or more business references, including names, 
addresses, and telephone numbers of principal executives, who can 
attest to the organization's competence within the past 2 years.
    (n) A statement to the Coast Guard that gives its officials 
permission to inspect the organization's facilities and records of CSM 
review and approval on behalf of the U.S. at any time with reasonable 
advance notice.
    (o) Any additional information the organization deems to be 
pertinent.


Sec.  97.310  Criteria for authorization.

    (a) The Commandant will evaluate the organization's request for 
authorization and supporting written materials, looking for evidence 
of--
    (1) The organization's clear assignment of management duties;
    (2) Ethical standards for managers and cargo securing manual (CSM) 
reviewers;
    (3) Procedures for personnel training, qualification, 
certification, and re-qualification that are consistent with recognized 
industry standards;
    (4) Acceptable standards available for the organization's internal 
auditing and management review;
    (5) Recordkeeping standards for CSM review and approval;
    (6) Methods used to review and certify CSMs;
    (7) Experience and knowledge demonstrating competency to evaluate 
CSMs for completeness and sufficiency according to the requirements of 
SOLAS;
    (8) Methods for handling appeals; and
    (9) Overall procedures consistent with IMO Resolution A.739(18), 
``Guidelines for the Authorization of Organizations Acting on Behalf of 
the Administration'' (incorporated by reference, see Sec.  97.110).
    (b) After a favorable evaluation of the organization's request, the 
Commandant may arrange to visit the organization's corporate and port 
offices for an on-site evaluation of operations.
    (c) When a request is approved, the organization and the Coast 
Guard will enter into the written agreement provided for by 33 CFR 
97.315. If the request is not approved, the Commandant will give the 
organization a written explanation, and the organization may resubmit 
its request if it corrects any noted deficiencies.


Sec.  97.315  Requirements for authorized approval organizations.

    Approved organizations will enter into a written agreement with the 
Coast Guard that specifies:
    (a) The period the authorization is valid;
    (b) Which duties and responsibilities the organization may perform 
and what approval letters it may issue on behalf of the U.S.;
    (c) Reports and information the organization must send to the 
Commandant;
    (d) Actions the organization must take to renew the agreement when 
it expires; and
    (e) Actions the organization must take if the Commandant revokes 
authorization pursuant to 33 CFR 97.320.


Sec.  97.320  Revocation of authorization.

    The Commandant may revoke a cargo securing manual (CSM) approval 
authority's authorization and remove it from the list of CSM approval 
authorities if it fails to maintain acceptable standards. For the 
purposes of 46 CFR subpart 1.03, such a revocation would be treated as 
involving the recognition of a classification society and could be 
appealed pursuant to 46 CFR 1.03-15(h)(4). Upon revocation, the former 
approval authority must send written notice to each vessel owner whose 
CSM it approved. The notice must include the current list of CSM 
approval authorities and state:
    (a) That its authorization as a CSM approval authority has been 
revoked;
    (b) The Coast Guard's explanation for the revocation; and
    (c) That the vessel's CSM remains valid as long as amendments have 
not been completed which require it to be re-approved pursuant to 33 
CFR 97.200 or 97.205.

Subpart B--[Reserved]

PART 160--PORTS AND WATERWAYS SAFETY--GENERAL

0
2. The authority citation for part 160 continues to read as follows:

    Authority: 33 U.S.C. 1223, 1231; 46 U.S.C. Chapter 701; 
Department of Homeland Security Delegation No. 0170.1. Subpart C is 
also issued under the authority of 33 U.S.C. 11225 and 46 U.S.C. 
3715.

0
3. Revise Sec.  160.215 to read as follows:


Sec.  160.215  Notice of hazardous conditions.

    (a) Whenever there is a hazardous condition either onboard a vessel 
or caused by a vessel or its operation, the owner, agent, master, 
operator, or person in charge must immediately notify the nearest Coast 
Guard Sector Office or Group Office, and in addition submit any report 
required by 46 CFR 4.05-10.
    (b) When the hazardous condition involves cargo loss or jettisoning 
as described in 33 CFR 97.115, the notification required by paragraph 
(a) of this section must include--
    (1) What was lost, including a description of cargo, substances 
involved, and types of packages;
    (2) How many were lost, including the number of packages and 
quantity of substances they represent;
    (3) When the incident occurred, including the time of the incident 
or period of time over which the incident occurred;
    (4) Where the incident occurred, including the exact or estimated 
location of the incident, the route the ship was taking, and the 
weather (wind and sea) conditions at the time or approximate time of 
the incident; and
    (5) How the incident occurred, including the circumstances of the 
incident, the type of securing equipment that was used, and any other 
material failures that may have contributed to the incident.

TITLE 46--SHIPPING

PART 97--OPERATIONS

0
4. The authority citation for part 97 continues to read as follows:

    Authority: 33 U.S.C. 1321(j); 46 U.S.C. 2103, 3306, 6101; 49 
U.S.C. 5103, 5106; E.O. 12234, 45 FR 58801, 3 CFR, 1980 Comp., p. 
277; E.O. 12777, 56 FR 54757; 3 CFR, 1991 Comp., p. 351; Department 
of Homeland Security Delegation No. 0170.1.

0
5. Add Sec.  97.12-10 to read as follows:


Sec.  97.12-10  Cargo securing manuals.

    Each U.S.-flagged vessel that must comply with Chapter VI/5.6 or 
Chapter VII/5 of the International Convention for

[[Page 68809]]

the Safety of Life at Sea, 1974 as amended must have on board a cargo 
securing manual that meets the requirements of 33 CFR part 97.

    Dated: November 1, 2013,
J.G. Lantz,
Director of Commercial Regulations and Standards, U.S. Coast Guard.
[FR Doc. 2013-26886 Filed 11-14-13; 8:45 am]
BILLING CODE 9110-04-P