[Federal Register Volume 81, Number 89 (Monday, May 9, 2016)]
[Rules and Regulations]
[Pages 27992-28018]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-10725]


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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Parts 97 and 160

46 CFR Part 97

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


Cargo Securing Manuals

AGENCY: Coast Guard, DHS.

ACTION: Interim rule and request for comment.

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SUMMARY: The Coast Guard is issuing an interim rule to require U.S. and 
foreign self-propelled cargo vessels of 500 gross tons or more, 
traveling on international voyages and carrying cargo that is other 
than solid or liquid bulk cargo, to have cargo securing manuals (CSMs) 
on board. The rule also requires those vessels to comply with certain 
provisions of the International Convention for the Safety of Life at 
Sea, 1974 as amended (SOLAS), authorizes recognized classification 
societies or other approval authorities to review and approve CSMs on 
behalf of the Coast Guard; and prescribes when and how

[[Page 27993]]

the loss or jettisoning of cargo at sea must be reported.
    The Coast Guard requests public comment on its intention to extend, 
in a subsequent final rule, this interim rule's requirement for vessel 
CSMs to self-propelled cargo vessels under 500 gross tons, if these 
vessels carry dangerous goods in packaged form on international 
voyages. This interim rule promotes the Coast Guard's maritime safety 
and stewardship (environmental protection) missions, helps fulfill U.S. 
treaty obligations, and could help prevent or mitigate the consequences 
of vessel cargo loss.

DATES: This interim rule is effective June 8, 2016. Comments must be 
received by August 8, 2016. The incorporation by reference of certain 
documents in this rule is approved by the Director of the Federal 
Register as of June 8, 2016.

ADDRESSES: You may submit comments identified by docket number USCG-
2000-7080 using the Federal eRulemaking Portal at http://www.regulations.gov. See the ``Public Participation and Request for 
Comments'' portion of the SUPPLEMENTARY INFORMATION section for further 
instructions on submitting comments.

FOR FURTHER INFORMATION CONTACT: For information about this document, 
call or email Mr. Ken Smith, Project Manager, U.S. Coast Guard 
Headquarters, Vessel and Facility Operating Standards Division, 
Commandant (CG-OES-2); telephone 202-372-1413, email 
[email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents for Preamble

I. Public Participation and Comments
II. Abbreviations
III. Basis and Purpose
IV. Background and Regulatory History
V. Summary of the Rule
VI. Discussion of Comments on SNPRM and Changes
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 Comments

    We view public participation as essential to effective rulemaking, 
and will consider all comments and material received during the comment 
period. Your comment can help shape the outcome of this rulemaking. If 
you submit a comment, please include the docket number for this 
rulemaking, indicate the specific section of this document to which 
each comment applies, and provide a reason for each suggestion or 
recommendation.
    We encourage you to submit comments through the Federal eRulemaking 
Portal at http://www.regulations.gov. If your material cannot be 
submitted using http://www.regulations.gov, contact the person in the 
FOR FURTHER INFORMATION CONTACT section of this document for alternate 
instructions. Documents mentioned in this notice, and all public 
comments, are in our online docket at http://www.regulations.gov and 
can be viewed by following that Web site's instructions. Additionally, 
if you go to the online docket and sign up for email alerts, you will 
be notified when comments are posted or a final rule is published.
    We accept anonymous comments. All comments received will be posted 
without change to http://www.regulations.gov and will include any 
personal information you have provided. For more about privacy and the 
docket, you may review a Privacy Act notice regarding the Federal 
Docket Management System in the March 24, 2005, issue of the Federal 
Register (70 FR 15086).
    We are not planning to hold a public meeting but will consider 
doing so if public comments indicate a meeting would be helpful. We 
would issue a separate Federal Register notice to announce the date, 
time, and location of such a meeting.

II. Abbreviations

ABS American Bureau of Shipping
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
FRFA Final Regulatory Flexibility Analysis
IMO International Maritime Organization
IRFA Initial Regulatory Flexibility Analysis
MARAD U.S. Department of Transportation's Maritime Administration
MBARI Monterey Bay Aquarium Research Institute
MSC Maritime Safety Committee
MISLE Marine Information for Safety and Law Enforcement
NAICS North American Industry Classification System
NPRM Notice of Proposed Rulemaking
NVIC Navigation and Vessel Inspection Circular
OMB Office of Management and Budget
RFA Regulatory Flexibility Act of 1980
Sec.  Section Symbol
SANS Ship Arrival Notification System
SBA Small Business Administration
SNPRM Supplemental Notice of Proposed Rulemaking
SOLAS International Convention for the Safety of Life at Sea, 1974 
as amended
U.S.C. United States Code
WSC World Shipping Council

III. Basis and Purpose

    Sections 2103 and 3306 of Title 46, United States Code (U.S.C.), 
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 DHS Delegation 
No. 0170.1, para. II (92.a) and (92.b).
    The purpose of this rule is to align Coast Guard regulations with 
the requirements for cargo securing manuals in the International 
Convention for the Safety of Life at Sea, 1974 as amended (SOLAS), and 
apply those requirements to certain self-propelled U.S. cargo vessels 
operating anywhere in the world, and to certain foreign-flagged self-
propelled cargo vessels operating in U.S. waters. Another purpose of 
this rule is to specify when and how the loss or jettisoning of cargo 
at sea must be reported.

IV. Background and Regulatory History

    This rule aims to help ensure that maritime cargo is properly 
secured. A recent survey by the World Shipping Council (WSC) estimated 
that an average of 1,679 containers are lost overboard annually.\1\ The 
number of damaged and lost containers has risen over the years due to 
the increased traffic in containerized cargo and the increasing size of 
containerships.
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    \1\ Survey report is on WSC Web site: http://www.worldshipping.org/industry-issues/safety/Containers_Lost_at_Sea_-_2014_Update_Final_for_Dist.pdf.
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    Several incidents since the early 1990s demonstrated that 
improperly secured cargo can cause serious injury or death, vessel 
loss, property damage, and environmental damage. For example, a Coast 
Guard board of inquiry

[[Page 27994]]

concluded that the loss of 21 containers--4 of which contained toxic 
arsenic trioxide--off the coast of New Jersey in 1992 was caused by 
cargo-securing failures, bad weather, and human error.\2\ With the 
support of other International Maritime Organization (IMO) member 
governments, the United States led a proposal to include new 
requirements for cargo securing manuals (CSMs) in SOLAS. In 1994, the 
IMO amended SOLAS \3\ to provide 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; load, stow, and secure cargo in compliance with the CSM; and meet 
strength requirements for securing devices and arrangements.
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    \2\ See NVIC 10-97 (Nov. 7, 1997), ``Guidelines for Cargo 
Securing Manual Approval,'' available at http://www.uscg.mil/hq/cg5/nvic/pdf/1997/n10-97.pdf.
    \3\ See SOLAS, Ch. VI/5.6 and Ch. VII/5.
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    The SOLAS CSM requirements are included as an annex to a Coast 
Guard guidance document issued in 1997,\4\ but a vessel owner or 
operator's compliance with that guidance is only voluntary. This 
interim rule makes compliance with the SOLAS standards mandatory for 
self-propelled vessels over 500 gross tons on international voyages 
that are subject to SOLAS.
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    \4\ NVIC 10-97.
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    Previously in this rulemaking, we issued a notice of proposed 
rulemaking (NPRM) \5\ in 2000 and a supplemental notice of proposed 
rulemaking (SNPRM) \6\ in 2013. Although it was not part of this 
rulemaking, in 1999 we held a public meeting on topics related to cargo 
securing.\7\ In the SNPRM, we discussed the comments we received on the 
2000 NPRM and public input from the 1999 meeting. We discuss the 
comments we received on the 2013 SNPRM later in this preamble.
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    \5\ 65 FR 75201 (Dec. 1, 2000).
    \6\ 78 FR 68784 (Nov. 15, 2013). Although not part of this 
rulemaking, in 1999 we announced (64 FR 1648; Jan. 11, 1999, docket 
USCG-1998-4951) and held a public meeting on related topics. 
Comments received at that meeting were discussed in the SNPRM, 78 FR 
at 68786, col. 2.
    \7\ 64 FR 1648 (Jan. 11, 1999); docket USCG-1998-4951.
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V. Summary of the Rule

    This section summarizes the changes made in this interim rule.
    33 CFR part 97--Rules for the Safe Operation of Vessels, Stowage 
and Securing of Cargoes. The interim rule adds this part, which is 
structured to allow for future regulations covering other aspects of 
vessel operation and cargo stowage and securing. At this time, the part 
contains only subpart A, which deals with CSMs.
    Section 97.100 contains the applicability provisions of subpart A 
and provides for electronic submission of any documents required by the 
part. Subpart A applies to self-propelled cargo vessels of 500 gross 
tons or more traveling on international voyages and carrying any cargo 
other than solid or liquid bulk cargo. We expect very few vessels to be 
affected by the new requirements, as most foreign vessels operating in 
U.S. waters are already subject to their flag state's SOLAS CSM-aligned 
requirements, and all U.S. vessels already voluntarily comply with 
those requirements in order to obtain SOLAS certificates that are 
necessary for entering foreign ports. Subpart A also applies to self-
propelled vessels less than 500 gross tons if their owners or operators 
choose voluntarily to have it apply to them and submit CSMs for 
approval.
    We have revised the text of Sec.  97.100 as it appeared in the 
SNPRM by removing seagoing barges and other non-self propelled vessels 
from the applicability of subpart A, which were inadvertently included 
in the proposed regulatory text of the SNPRM. This interim rule applies 
only to self-propelled cargo vessels that are subject to SOLAS Chapter 
VI/5.6 or Chapter VII/5.
    As we discussed in Part V, Discussion of Comments, in our SNPRM, a 
commenter suggested extending the applicability of subpart A to self-
propelled cargo vessels below 500 gross tons carrying dangerous goods 
in packaged form on international voyages. We agree with the 
commenter's assessment that the cargo securing manual requirements of 
Chapter VII/5 of SOLAS apply to all vessels covered by other SOLAS 
provisions and to vessels below 500 gross tons that carry dangerous 
goods in packaged form. As previously stated, one of our intentions in 
this rule is to align our regulations with SOLAS requirements for cargo 
securing manuals, and therefore we propose modifying the final rule to 
more accurately align with SOLAS by applying it to self-propelled cargo 
vessels less than 500 gross tons carrying dangerous goods in packaged 
form on international voyages, as well as to larger vessels. We 
specifically request public comment on that proposed change.
    Section 97.105 defines terms used in subpart A, and Sec.  97.110 
provides for the incorporation in subpart A, by reference, of pertinent 
IMO circulars describing how vessels may comply with the SOLAS CSM 
requirements, as well as an IMO resolution providing guidelines for 
third parties acting on behalf of a government agency like the Coast 
Guard.
    Section 97.115 requires any accidental loss or deliberate 
jettisoning of a container or other cargo at sea to be reported 
immediately under 33 CFR 160.215. This is because any such loss or 
jettisoning creates a ``hazardous condition'' within the meaning of 33 
CFR 160.204. The section also requires the loss or jettisoning of cargo 
containing hazardous material to be reported as soon as possible in 
accordance with the U.S. Department of Transportation's Pipeline and 
Hazardous Materials Safety Administration regulations at 49 CFR 176.48.
    Section 97.120 requires each vessel to which subpart A applies to 
have a flag state-approved CSM that complies with applicable IMO 
resolutions. Coast Guard personnel may board any vessel in U.S. waters 
to verify compliance with this section. Note that any container vessel 
with a keel laid on or after January 1, 2015, needs to include a cargo 
safe access plan. Under the applicable IMO guidance, such a plan must 
provide detailed information on safe access for persons stowing and 
securing cargo on vessels that are specifically designed and fitted for 
carrying containers.
    Section 97.200 describes how a U.S.-flagged vessel owner or 
operator applies for Coast Guard approval of the vessel's CSM. Third-
party approval authorities review and approve CSMs on the Coast Guard's 
behalf. This section also describes the contents of approval 
statements, the procedure to follow when a CSM is disapproved, and 
document retention requirements.
    Section 97.205 describes when a CSM must be resubmitted for 
approval, and Sec.  97.210 contains provisions for appeal from a CSM 
approval authority's decision.
    Section 97.300 designates the organizations that are initially 
authorized to act as CSM approval authorities, and Sec. Sec.  97.305 
through 97.315 discuss who may request that authorization in the 
future, the criteria for authorization, and the requirements for 
approval authorities. We modified this section from what we originally 
published in the SNPRM by removing specific reference to the American 
Bureau of Shipping (ABS) and Lloyd's Register, because they are already 
included on the list of recognized classification societies to which 
the Coast Guard has delegated authority for the issuance of a Cargo 
Ship Safety Equipment Certificate in accordance with 46 CFR 8.320(b)(4) 
and covered

[[Page 27995]]

under the paragraph recognizing those classification societies. Section 
97.320 provides for the revocation of authorization if an approval 
authority fails to maintain standards acceptable to the Coast Guard.
    33 CFR part 160--Ports and Waterways Safety--General. The only 
change made to part 160 is an amendment to Sec.  160.215, to prescribe 
the information to be reported when a hazardous condition is created by 
the loss or jettisoning of cargo.
    46 CFR part 97--[Cargo and Miscellaneous Vessel] Operations. The 
interim rule amends the subpart 97.12 operational rules for vessels 
carrying bulk solid cargoes by adding Sec.  97.12-10, which requires 
such vessels to have on board a CSM that complies with 33 CFR part 97.

VI. Discussion of Comments on SNPRM and Changes

    The SNPRM drew public comments from 12 sources: 7 Individuals (one 
of whom submitted 2 comments, which we consider together), 2 barge 
companies, 1 shipping industry organization, 1 trade association, and 1 
environmental advocacy organization. The docket also contains 1 comment 
from another Federal agency.
    General. All three organizations and six individuals expressed 
support for the Coast Guard's proposal.
    The environmental advocacy organization and two individuals said 
that the loss of cargo containers is a serious problem. The 
organization said container loss has an immediate impact by changing 
deep sea habitats, and a long term impact by changing the natural 
distribution of species, including the threat of introducing invasive 
species. One individual said container loss is a major threat to the 
environment, to pleasure craft, and to commercial shipping. This 
commenter suggested that the insurance industry should welcome our 
proposal because of the economic impact of container losses. The other 
individual said we should require containers to be weighed so that 
weight can be distributed for safety.
    We share these commenters' concern for the safety and environmental 
hazards that can be caused by the loss of containers or other cargo at 
sea, and we agree with most of their comments. However, we decline to 
require containers to be weighed, because this information is the 
subject of several existing Federal and International Maritime 
Organization (IMO) requirements. The Occupational Safety and Health 
Administration requires a container to be weighed before it can be 
handled by U.S. workers, and the Department of Transportation has 
stringent notification and certification requirements for intermodal 
containers.\8\ With the Coast Guard's full participation, the IMO 
recently amended an international convention to require shippers to 
verify a container's gross mass to a vessel's master before it is 
loaded on board.\9\ The existence of these requirements makes it 
unnecessary for the Coast Guard to issue separate and potentially 
overlapping provisions on the topic.
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    \8\ See 29 CFR 1918.85 and 49 U.S.C. 5902 for the Occupational 
Safety and Health Administration and Department of Transportation 
requirements, respectively.
    \9\ The International Convention for the Safety of Life at Sea, 
1974, and its Protocol of 1988. See Regulation VI/2, which enters 
into force July 1, 2016. The International Maritime Organization 
previously issued guidance to help ensure accurate pre-loading 
container weighing; see Maritime Safety Committee Circular MSC.1/
Circ. 1475, Guidelines Regarding the Verified Gross Mass of a 
Container Carrying Cargo.
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    The shipping organization said that, whereas the SNPRM based its 
cost analysis on an IMO estimate of 4,000 containers lost at sea per 
year worldwide, the shipping organization's own analysis found that, on 
average, only 1,679 containers are lost at sea each year. We appreciate 
the shipping organization's analysis and are using their most current 
estimate in the regulatory analysis for this interim rule. Please see 
Section VIII, Regulatory Analyses, for details.
    The two towing companies expressed appreciation that we do not 
propose to regulate cargo securing on barges in coastwise trade, but 
opposed our SNPRM's proposed extension \10\ of such regulations to 
seagoing barges in international commerce. The companies said that 
barges have a strong safety record and are not subject to cargo 
securing requirements under SOLAS. Therefore, they should not be 
required to undertake the work of developing unique CSMs for each type 
of cargo. They also pointed out that, if seagoing barges are included, 
the universe of affected vessels will be far greater than the 26 U.S.-
flagged vessels the Coast Guard estimates will be impacted in its 
regulatory analysis. They specifically requested that the Coast Guard 
clarify that ``barges on international voyages will also be exempt from 
this rulemaking.'' We agree with the commenters and the interim rule 
amends the applicability provisions of new 33 CFR 97.100 so that part 
97, subpart A, applies only to self-propelled vessels that are subject 
to SOLAS Chapter VI/5.6 or Chapter VII/5. SOLAS does not apply to non 
self-propelled vessels and the barge industry has demonstrated a strong 
safety record in the past. Therefore, we do not intend to require non-
self-propelled vessels to have CSMs at this time.
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    \10\ 78 FR at 68788, col. 1.
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    Proposed change for final rule. One of the individual commenters 
said that, to conform to Chapter VII/5 of SOLAS, we should regulate 
cargo securing on cargo vessels below 500 gross tons as well as on 
vessels of 500 gross tons and above. We agree with the commenter's 
assessment that the cargo securing manual requirements of Chapter VII/5 
of SOLAS apply to all vessels covered by other SOLAS provisions and to 
vessels below 500 gross tons that carry dangerous goods in packaged 
form. As previously stated, one of our intentions in this rule is to 
align our regulations with SOLAS requirements for cargo securing 
manuals, and, therefore, we propose modifying the final rule to more 
accurately align with SOLAS by extending the applicability provisions 
of 33 CFR 97.100 to self-propelled cargo vessels less than 500 gross 
tons carrying dangerous goods in packaged form on international 
voyages. We specifically request public comment on that proposal.

VII. Incorporation by Reference

    The Director of the Federal Register has approved the material in 
33 CFR 97.110 for incorporation by reference under 5 U.S.C. 552 and 1 
CFR part 51. Copies of the material are available from the sources 
listed in Sec.  97.110. The following paragraphs summarize the material 
incorporated by reference.
    IMO Assembly Resolution A.739(18) (Res.A.739(18)), Guidelines for 
the Authorization of Organizations Acting on Behalf of the 
Administration, November 22, 1993: International guidelines developed 
to establish a uniform program for controlling and assigning authority 
of organizations to act on behalf of administrations in conducting 
surveys, certifications, and determination of tonnages.
    IMO Maritime Safety Committee Circular 1352 (MSC.1/Circ.1352), 
Amendments to the Code of Safe Practice for Cargo Stowage and Securing 
(CSS Code) Annex 14, Guidance on Providing Safe Working Conditions for 
Securing of Containers on Deck, June 30, 2010: International guidance 
developed to ensure persons engaged in carrying out container securing 
operations on deck have safe working conditions including safe access, 
and appropriate securing equipment.
    IMO Maritime Safety Committee Circular 1353 (MSC.1/Circ. 1353/
Rev.1), Revised Guidelines for the Preparation

[[Page 27996]]

of the Cargo Securing Manual, December 15, 2014: International 
guidelines providing information on developing cargo securing manuals, 
including required contents and details for stowing and securing non-
standardized and semi-standardized cargo.

VIII. Regulatory Analyses

    We developed this interim rule after considering numerous statutes 
and Executive Orders (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 rule has not been designated a ``significant regulatory 
action'' under section 3(f) of E.O. 12866, Regulatory Planning and 
Review, as supplemented by E.O. 13563, Improving Regulation and 
Regulatory Review, and does not require an assessment of potential 
costs and benefits under section 6(a)(3) of that E.O. Accordingly, the 
rule has not been reviewed by the Office of Management and Budget 
(OMB). A final Regulatory Assessment for the interim rule follows.
1. Summary
    This interim rule amends the CFR by adding the following 
provisions:
     Requirements for the reporting of lost or jettisoned 
cargo;
     The CSM requirements of SOLAS, for vessels of 500 gross 
tons or more;
     Extending the CSM requirements to self-propelled cargo 
vessels that travel on international voyages and carry cargo other than 
solid or liquid bulk cargo that is designated as a dangerous good 
carried in packaged form; and
     Procedures for authorization of third-party organizations 
to review and approve CSMs on the Coast Guard's behalf.
    Table 1 presents a summary of our analysis.

                           Table 1--Summary of the 10-Year Regulatory Economic Impacts
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                                                                    Costs (7% discount rate)
           Changes               Description        Affected    --------------------------------     Benefits
                                                   population      Annualized         Total
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1. Reporting of lost or        Codify lost or   U.S.- and                  $578          $4,063  Better tracking
 jettisoned cargo.              jettisoned       foreign-                                         and response
                                cargo as a       flagged                                          of lost or
                                hazardous        vessels                                          jettisoned
                                condition and    engaged in                                       cargo.
                                specify data     transport to
                                to be reported.  or from a U.S.
                                                 port.
2. CSM requirements..........  Codify SOLAS     Owners/                 212,226       1,490,587  Increased
                                rules and        operators of                                     enforcement
                                guidance from    6,436 vessels:                                   authority.
                                NVIC 10-97.      83 U.S.-
                                                 flagged, 6,353
                                                 foreign-
                                                 flagged.
3. Approval of authorized      Codify guidance  6 currently                   0               0  Increased
 organizations.                 from NVIC 10-    approved                                         enforcement
                                97.              organizations,                                   authority.
                                                 others
                                                 applying for
                                                 approval
                                                 status.
                                                                --------------------------------
    Total....................  ...............  ...............         212,804       1,494,649
----------------------------------------------------------------------------------------------------------------
Note: Due to independent rounding, the totals may not equal the sum of the components.

    Table 2 presents a summary of the 10-year cost schedule, showing 
total costs on an undiscounted basis and discounted at 7-percent and 3-
percent interest rates.

       Table 2--Summary of the 10-Year Total Cost to the International Cargo Industry and U.S. Government
----------------------------------------------------------------------------------------------------------------
                                                   Undiscounted                             Discounted
              Year               -------------------------------------------------------------------------------
                                     Industry       Government         Total            7%              3%
----------------------------------------------------------------------------------------------------------------
1...............................        $757,015         $90,514        $847,529        $792,083        $822,844
2...............................          99,403          10,013         109,416          95,568         103,135
3...............................          99,417          10,023         109,440          89,336         100,153
4...............................          99,430          10,034         109,464          83,510          97,257
5...............................         107,068          10,044         117,112          83,499         101,022
6...............................         107,081          10,055         117,136          78,053          98,100
7...............................         107,108          10,076         117,184          72,976          95,281
8...............................         107,121          10,086         117,207          68,216          92,524
9...............................         114,759          10,097         124,856          67,913          95,692
10..............................         114,786          10,118         124,904          63,495          92,940
                                 -------------------------------------------------------------------------------
    Total.......................       1,713,188         181,060       1,894,248       1,494,649       1,698,948
                                 -------------------------------------------------------------------------------
Annualized......................  ..............  ..............  ..............         212,804         199,169
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[[Page 27997]]

2. Changes From SNPRM
    Because there are no changes between the requirements proposed in 
the SNPRM and those contained in this interim rule, and because we 
received no public comments that affect the Regulatory Assessment, we 
retained the structure of the economic analyses from the SNPRM, but 
updated our analysis with the most current data. The data elements that 
we revised for this analysis are as follows:
     Affected vessel population, U.S.- and foreign-flagged 
vessels used 2011 through 2013 data.
     Visits to U.S. ports, updated with data from 2011 through 
2013.
     Wage rates for commercial and Coast Guard employees, 
updated with current data.
     Container ship traffic data, updated with current data.
3. Affected Population
    The affected population, those vessels subject to the regulations 
in this interim rule, consists of U.S.- and foreign-flagged self-
propelled vessels that--
     Are engaged in international trade as indicated by 
currently having a SOLAS Cargo Ship Safety Certificate;
     Are 500 gross tons or more; 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. A 2013 extract from the 
Coast Guard's Marine Information for Safety and Law Enforcement (MISLE) 
database identified 83 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 3 years of data available, 2011 through 2013. This 
data produced a list of 6,353 foreign-flagged vessels that had one or 
more visits to a U.S. port and met the tonnage and cargo-type criteria. 
Table 3 presents the affected population of 6,436 vessels categorized 
by flag status, SOLAS status, and tonnage class (less than 500 gross 
tons, 500 gross tons or more).

                             Table 3--Applicable Population, Non-Bulk Cargo Vessels
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----------------------------------------------------------------------------------------------------------------
          Flag class                 SOLAS status         Tonnage class in gross              Vessels
                                                                   tons
                              ----------------------------------------------------------------------------------
U.S..........................  SOLAS...................  500 gross tons or more.  ..............              83
Foreign......................  SOLAS...................  500 gross tons or more.           6,314  ..............
                               Non-SOLAS...............  500 gross tons or more.              39  ..............
                               Foreign Total...........  .......................           6,353  ..............
                                                                                 -------------------------------
    Total....................  ........................  .......................  ..............           6,436
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Notes:
(1) All U.S. vessels are SOLAS and in the 500 GT or more class.
(2) Foreign-flagged vessels will follow SOLAS CSM rules.

4. Economic Analyses
    The economic analyses include--
     An analysis of the costs, benefits, and alternatives for 
each of the interim rule's three provisions: (a) Requirements for the 
reporting of lost or jettisoned cargo, (b) CSM requirements, and (c) 
Approval of authorized organizations. A summary of the costs and 
benefits for the entire rule; and
     A preliminary analysis of expanding the affected 
population.
    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 IV, Background and Regulatory 
History, of this preamble, the current regulations require the Coast 
Guard to be notified immediately when a hazardous condition is caused 
by a vessel or its operation. Incidents of lost or jettisoned cargo 
\11\ are considered hazardous conditions and must be reported. However, 
current industry practice does not correspond with that interpretation. 
According to Captain James J. McNamara, President of the National Cargo 
Bureau in 2000, ``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.'' \12\ 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 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.
---------------------------------------------------------------------------

    \11\ 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.
    \12\ 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 interim 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 4 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 4--Change Matrix for Reporting of Hazardous Conditions in 33 CFR
------------------------------------------------------------------------
                                       Affected
    Reference and description         population        Economic impact
------------------------------------------------------------------------
97.100 Applicability:
    . . . (a)(1), U.S. vessels..  U.S. cargo vessels  None,
                                   and non-U.S.        administrative
                                   cargo vessels in    only.
                                   U.S. waters.

[[Page 27998]]

 
97.105 Definitions..............  All vessels and     None,
                                   approval            administrative
                                   organizations.      only.
97.110 Incorporation by           All affected        None,
 reference, lists IBR references.  vessels and         administrative
                                   approval            only.
                                   organizations.
97.115 Situation requiring        Vessels subject to  Costs for
 report, criteria for reporting    the rule that       correction of
 lost cargo.                       lose cargo          noncompliance
                                   overboard.          with existing
                                                       requirements.
160.215(a), requirement to        Operators of        No change, new
 report hazardous condition.       vessels involved    label of existing
                                   in incident         text.
                                   resulting in
                                   hazardous
                                   condition.
160.215(b), data to be reported.  Operators of        This requirement
                                   vessels involved    references 97.115
                                   in incident         and all costs are
                                   resulting in        included there.
                                   hazardous
                                   condition.
------------------------------------------------------------------------
Source: Coast Guard analysis.

    ii. Affected population. This interim 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 6,436 
vessels, as reported in Table 3.
    For the years 2009 through 2013, 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. To 
test this assertion, 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 1,679 
containers lost at sea worldwide, as reported by the World Shipping 
Council (WSC) in its 2014 report \13\ to the IMO's Sub-Committee on 
Carriage of Cargoes and Containers.\14\ The WSC's estimate is based on 
a survey of their membership. The survey respondents accounted for 70 
percent of the world's container-ship capacity. The WSC adjusted the 
survey data to account for the 30 percent non-respondents. They also 
prepared two estimates, one without catastrophic events and the other 
that included the less-frequent catastrophic ones with large numbers of 
lost containers. We reviewed the WSC's methodology and we are satisfied 
that it produced a valid estimate. As we are using a 10-year forecast 
for our analysis, we needed to account for the low frequency-high 
consequence events, and used the higher annual estimate that included 
the catastrophic events.
---------------------------------------------------------------------------

    \13\ The report is on WSC's Web site: http://www.worldshipping.org/industry-issues/safety/Containers_Lost_at_Sea_-_2014_Update_Final_for_Dist.pdf.
    \14\ Report number CCC 1/NF 9, dated June 27, 2014.
---------------------------------------------------------------------------

    However, the WSC report was not categorized 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 2011 that there were 376,389 
container ship visits worldwide,\15\ and that, out of this total, 
22,089 were at U.S. ports.\16\ Thus, the U.S. share of global container 
traffic is 5.9 percent (22,089/376,389).
---------------------------------------------------------------------------

    \15\ See http://www.marad.dot.gov/documents/Vessel_Calls_at_US_Ports_Snapshot.pdf, p. 7, ``Global Vessel Calls 
by Country, 2011.''
    \16\ 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 5.9 percent share to estimate that about 99 containers 
in U.S. traffic are lost annually (1,679 containers lost world-wide x 
5.9 percent U.S. share of traffic, rounded). The 5 incidents resulted 
in a loss of a total of 25 containers, so we estimate on average there 
were 5 lost containers per incident. Using those data, we estimate that 
there will be 20 reports of lost containers to the Coast Guard (99 
containers lost/5 containers per incident, rounded to the nearest 10) 
in the first year the rule becomes effective.
    The Tioga Group, a freight transportation services consulting 
firm,\17\ in its report \18\ 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 United States 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 20 lost containers in Years 2 
through 10 in this cost analysis. This yields an estimate of 31 
incidents by Year 10 (the complete series is shown in the ``Estimated 
Incidents'' column of Table 6).
---------------------------------------------------------------------------

    \17\ For information on The Tioga Group, see www.tiogagroup.com.
    \18\ 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.
---------------------------------------------------------------------------

    iii. Costs. When cargo is lost or jettisoned, the vessel staff 
already collects data for company purposes.\19\ Thus, the only 
additional cost for compliance with this 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 will take 0.25 hours for a Master or other 
senior ship's officer to compile a report and transmit it to the Coast 
Guard.
---------------------------------------------------------------------------

    \19\ 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, 
Mates, and Pilots of Water Vessels. The BLS reports that the hourly 
rate for a Master is $36.34 per hour.\20\ To account for benefits, the 
load factor, or ratio between total compensation and wages is 
calculated at 1.44,\21\ using BLS data. The fully loaded wage rate for 
a Master is estimated at $53 per hour ($36.34 base wages x 1.44 load 
factor, rounded up to capture the entire cost). The cost for the 
additional time to report an incident is $13.25 ($53 x 0.25).
---------------------------------------------------------------------------

    \20\ Mean wage, http://www.bls.gov/oes/2013/may/oes535021.htm.
    \21\ Load Factor calculation, source: http://www.bls.gov/news.releases/archives/ecec_09112013.htm, all Workers Total 
compensation, $31,00/Wages and salaries, $21.44.
---------------------------------------------------------------------------

    Similarly, we estimate that it will take a quarter of an hour for 
Coast Guard personnel at the E-4 level to record the data. The fully 
loaded wage rate for an E-4 rating is $42, per Commandant Instruction 
7310.1N. \22\ The unit cost for the Coast Guard is $10.50 ($42 per hour 
x 0.25 hours).
---------------------------------------------------------------------------

    \22\ http://www.uscg.mil/directives/ci/7000-7999/CI_7310_1N.pdf.

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

[[Page 27999]]

    As shown in Table 5, the unit cost for reporting lost or jettisoned 
cargo is $23.75.

                            Table 5--Unit Cost for Reporting Lost or Jettisoned Cargo
----------------------------------------------------------------------------------------------------------------
                              Task                                 Time (hours)      Wage rate         Cost
----------------------------------------------------------------------------------------------------------------
Master to report................................................            0.25             $53          $13.25
CG data entry (E4)..............................................            0.25              42           10.50
                                                                 -----------------------------------------------
    Total.......................................................  ..............  ..............           23.75
----------------------------------------------------------------------------------------------------------------
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 6 displays the input data and the resulting cost 
estimates on an undiscounted basis and discounted at 7-percent and 3-
percent interest rates.

                                              Table 6--Cost Schedule for Reporting Lost or Jettisoned Cargo
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    Discounted
                  Year                       Estimated        Rounded      Industry cost    Coast Guard     Total cost   -------------------------------
                                             incidents       incidents                         cost                             7%              3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................              20              20            $265            $210            $475            $444            $461
2.......................................           20.98              21             278             221             499             436             470
3.......................................           22.01              22             292             231             523             427             479
4.......................................           23.09              23             305             242             547             417             486
5.......................................           24.22              24             318             252             570             406             492
6.......................................           25.41              25             331             263             594             396             497
7.......................................           26.66              27             358             284             642             400             522
8.......................................           27.97              28             371             294             665             387             525
9.......................................           29.34              29             384             305             689             375             528
10......................................           30.78              31             411             326             737             375             548
                                         ---------------------------------------------------------------------------------------------------------------
    Total...............................  ..............  ..............           3,313           2,628           5,941           4,063           5,008
                                         ---------------------------------------------------------------------------------------------------------------
Annualized..............................  ..............  ..............  ..............  ..............  ..............             578             587
--------------------------------------------------------------------------------------------------------------------------------------------------------

    To provide an estimate of costs by flag status, we extracted from 
the Coast Guard's SANS database the vessels calling on U.S. ports in 
2011.\23\ We divided the vessels into U.S.- and foreign-flagged status. 
Table 7 presents the data and shows that in 2013, U.S.-flagged vessels 
accounted for 11.8 percent of the visits by vessels that would be 
subject to this interim rule.
---------------------------------------------------------------------------

    \23\ 2011 is the most recent year of verified data.

  Table 7--2013 Visits to U.S. Ports by Flag-Status of Vessels Non-Bulk
                                  Trade
------------------------------------------------------------------------
                  Flag                        Visits          Percent
------------------------------------------------------------------------
United States...........................           2,955            11.8
Foreign.................................          22,001            88.2
                                         -------------------------------
    Total...............................          24,956           100.0
------------------------------------------------------------------------

    We produced an estimate for U.S. costs of lost or jettisoned cargo 
by applying the 11.8 percent of visits by U.S.-flagged vessels from 
Table 7 to the cost estimates from Table 6. Note that U.S. costs 
include both costs to U.S.-flagged vessels and the Coast Guard. Table 8 
displays the data for the U.S. costs.

[[Page 28000]]



                                 Table 8--Cost Schedule for U.S.-Flagged Vessels for Reporting Lost or Jettisoned Cargo
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    Discounted
                          Year                                Rounded      Industry cost      CG cost       Total cost   -------------------------------
                                                             incidents                                                          7%              3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................               2             $27             $21             $48             $45             $47
2.......................................................               2              27              21              48              42              45
3.......................................................               3              40              32              72              59              66
4.......................................................               3              40              32              72              55              64
5.......................................................               3              40              32              72              51              62
6.......................................................               3              40              32              72              48              60
7.......................................................               3              40              32              72              45              59
8.......................................................               3              40              32              72              42              57
9.......................................................               3              40              32              72              39              55
10......................................................               4              53              42              95              48              71
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................  ..............             387             308             695             474             586
                                                         -----------------------------------------------------------------------------------------------
Annualized..............................................  ..............  ..............  ..............  ..............              67              69
--------------------------------------------------------------------------------------------------------------------------------------------------------

    We obtained the costs of reporting lost or jettisoned cargo for 
non-U.S.-flagged vessels by subtracting the U.S. costs, as reported in 
Table 8, from the costs as displayed in Table 6. Table 9 presents the 
results of these calculations.

                               Table 9--Cost Schedule for Non-U.S.-Flagged Vessels for Reporting Lost or Jettisoned Cargo
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    Discounted
                          Year                                Rounded      Industry cost    Coast Guard     Total cost   -------------------------------
                                                             incidents                         cost                             7%              3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................              18             239             189             428             400             416
2.......................................................              19             252             200             452             395             426
3.......................................................              19             252             200             452             369             414
4.......................................................              20             265             210             475             362             422
5.......................................................              21             278             221             499             356             430
6.......................................................              22             292             231             523             348             438
7.......................................................              24             318             252             570             355             463
8.......................................................              25             331             263             594             346             469
9.......................................................              26             345             273             618             336             474
10......................................................              27             358             284             642             326             478
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................  ..............           2,930           2,323           5,253           3,593           4,430
                                                         -----------------------------------------------------------------------------------------------
Annualized..............................................  ..............  ..............  ..............  ..............             512             519
--------------------------------------------------------------------------------------------------------------------------------------------------------

    iv. Benefits. A 2011 news release from the Monterey Bay Aquarium 
Research Institute (MBARI) \24\ stated that containers that fall from 
ships can ``float at the surface for months'' and that ``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 held 22,500 
pounds of used batteries and another held an unspecified hazardous 
material.
---------------------------------------------------------------------------

    \24\ http://www.mbari.org/news/news_releases/2011/containers/containers-release.html.
---------------------------------------------------------------------------

    The immediate benefit of the reporting provisions is that they will 
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 will enable 
the Coast Guard and other parties to identify industry trends and track 
potential long-term threats to the marine environment from sunken 
containers.
    v. Alternatives. We considered possible alternatives to this rule. 
One possibility, as suggested in the SNPRM, 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. As one commenter noted, the 
containers may not disintegrate for hundreds of years once they reach 
the floor. Thus, the long-term impacts on the environment are extremely 
hard to assess.
    Another alternative we considered was 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 this rule and 
determined that all of it 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 this 
rule will provide the Coast Guard with sufficient

[[Page 28001]]

information to fulfill its missions of maritime safety and marine 
environmental protection 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 preamble, Background 
and Regulatory History, the Coast Guard has developed guidance,\25\ 
based on IMO Circular 1353, for implementing SOLAS provisions for cargo 
securing manuals.
---------------------------------------------------------------------------

    \25\ NVIC 10-97.
---------------------------------------------------------------------------

    Under the Coast Guard's safety and security vessel examinations 
program, the Coast Guard checks that the subject vessels in U.S. ports 
have CSMs and that the crews follow them. MISLE data show that from 
2011 through 2013, the 83 U.S.-flagged vessels that are part of the 
affected population were subject to 646 inspections. In all of these 
inspections there were no citations for a deficient CSM.
    MISLE also recorded that from 2011 through 2013, the Coast Guard 
conducted 14,358 vessel inspections of foreign-flagged vessels and 
found problems relating to CSMs in only 9 instances. These data 
indicate an ongoing compliance process for both U.S.- and foreign-
flagged vessels subject to CSM rules. Therefore, the Coast Guard 
anticipates that the only costs regarding the CSM requirement, once the 
requirements of SOLAS and Coast Guard guidance are moved into the CFR, 
would be those associated with owners or operators of the few deficient 
vessels who are prompted to ensure their CSMs are fully compliant with 
SOLAS prior to entering U.S. waters.
    Tables 10 and 11 present the change matrix for the edits to Titles 
33 and 46 of the CFR, respectively, that relate to the CSM requirements 
of the interim rule. Each matrix summarizes the specific edit or 
change, the affected population, and the economic impact.

      Table 10--Change Matrix for Adding CSM Requirements to 33 CFR
------------------------------------------------------------------------
   Reference & description     Affected population     Economic impact
------------------------------------------------------------------------
97.100 Applicability:
    . . . (a)(1), U.S.        U.S. cargo vessels,   None, administrative
     vessels.                  non-U.S. cargo        only.
                               vessels of 500
                               gross tons or more
                               in U.S. waters.
    . . . (a)(2), voluntary   U.S. vessels          No change, codifies
     compliance.               requesting coverage.  guidance currently
                                                     located in NVIC.
    . . . (b), exemption for  Ready Reserve and     None, these vessels
     Ready Reserve and         public vessels.       currently are
     public vessels.                                 exempted.
    . . . 97.105 Definitions  All vessels and       None, administrative
                               approval              only.
                               organizations.
    . . . 97.110              All affected vessels  None, administrative
     Incorporation by          and approval          only.
     reference (lists IBR      organizations.
     references).
97.120 Cargo Securing
 Manuals:
    . . . (a)(1), CSMs        SOLAS vessels and     Cost of developing
     required.                 non-U.S., non-SOLAS   CSM for
                               vessels noted with    noncompliant
                               deficient CSMs by     vessels.
                               Coast Guard.
    . . . (a)(2), CSAP        Non-SOLAS vessels...  Edit to close
     required after 2015.                            regulatory gap. No
                                                     costs, no current
                                                     vessels affected
                                                     and none expected
                                                     in future.
    . . . (b), authorizes CG  All U.S.- and         No cost, provides
     enforcement.              foreign-flagged       authority for
                               vessels subject to    current CG
                               the rule.             compliance
                                                     activities.
------------------------------------------------------------------------
Source: Coast Guard analysis.


 Table 11--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. As stated earlier, 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 the 83 U.S.-flagged vessels in 
international trade are all in the 500 gross tons or more class and 
that they comply with the SOLAS CSM rules. Under an assumption that 
they will continue with those practices, this establishes a baseline of 
current compliance throughout the 10-year analysis period. In this 
scenario, the U.S.-flagged vessels will incur no additional costs from 
this rule. However, to conduct a thorough regulatory analysis, we 
included the 83 U.S.-flagged vessels in the analysis and assumed that 
they will obtain a SOLAS-compliant CSM in the first year the rule is in 
effect. A review of the year-built data for these vessels shows that 
the most recently built was in 2009. We assume that this trend of no 
new builds will continue and that the population will remain stable at 
83 vessels per year throughout the 10-year analysis period.
    Additionally, the interim rule requires that a CSM must be revised 
if one of these two criteria are met:
    1. The vessel changes its type. As an example, a former break-bulk 
carrier is modified to become a container ship.
    2. An existing vessel changes 15 percent of its cargo securing 
systems or more than 15 percent of its portable securing devices.
    MISLE data indicates that none of the subject U.S.-flagged vessels 
have changed vessel type from 2001 through 2012. We assume that this 
trend will continue and that no vessels will change type during our 
analysis period. From information provided by an approved

[[Page 28002]]

organization,\26\ we estimated that, on an annual basis, 11.3 percent 
of the U.S.-flagged fleet revises it CSM based on the second criterion 
described above. We applied this rate to the subject 83 U.S-flagged 
vessels to estimate that 9 vessels per year will revise their CSMs (83 
x 11.3 percent, rounded) in Years 2 through 10 of the analysis period.
---------------------------------------------------------------------------

    \26\ To protect proprietary information, we cannot provide the 
name of the organization.
---------------------------------------------------------------------------

    Foreign-flagged vessels that are 500 gross tons or more follow 
SOLAS rules and current Coast Guard guidance. We estimated the costs of 
compliance for these vessels based on the following assumptions:
    (1) In the absence of the rule, the current deficiency rate for 
subject foreign-flagged vessels would continue.
    (2) Under the rule, the increased enforceability posture from 
codifying the CSM rules will lead all vessels to comply with the SOLAS 
standards and current Coast Guard guidance prior to entering U.S. 
waters. That is, the deficiency rate will be reduced to zero for 
foreign-flagged vessels.
    We reported above that there were nine deficiencies related to CSMs 
from 2011through 2013. These deficiencies are comprised of five that 
were missing approval from an authorized organization, three that did 
not have a CSM on the vessel, and one that had a CSM with missing 
sections. Table 12 presents the data from 2011 through 2013 for the 
calculation of a deficiency rates by year and an annual average for the 
3 years.

                                      Table 12--Annual CSM Deficiency Rate
----------------------------------------------------------------------------------------------------------------
                                                                      Vessel            CSM         Deficiency
                              Year                                 examinations    deficiencies   rate (percent)
----------------------------------------------------------------------------------------------------------------
2011............................................................           5,135               2            0.04
2012............................................................           4,464               4            0.09
2013............................................................           4,759               3            0.06
                                                                 -----------------------------------------------
    Total.......................................................          14,358               9          * 0.06
----------------------------------------------------------------------------------------------------------------
* Average deficiency rate.

    We used the average deficiency rate of 0.06 percent throughout our 
10-year analysis period. The estimate of the number of deficient CSMs 
in any year equals the estimate of the vessel population for that year 
multiplied by the deficiency rate.
    As reported in Table 3 in the ``SOLAS Class'' subtotal, there are 
6,353 foreign-flagged vessels that are currently subject to the CSM 
requirements. Applying the 0.06 percent deficiency rate from Table 12 
yields an estimate of four vessels that will need to remedy deficient 
CSMs in the first year the rule comes into effect.
    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 United States is expected to increase,\27\ so a flat 
extrapolation of the seven CSMs in the first year through Years 2 
through 10 of the analysis period would result in an underestimate.
---------------------------------------------------------------------------

    \27\ 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.
---------------------------------------------------------------------------

    We used the Tioga Group's estimate of a 4.9 percent rate for our 
estimate for growth in our 10-year analysis period. Currently, 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.
    For Years 2 through 10, the base population is the base population 
from the previous year multiplied by the 4.9 percent growth rate. The 
resulting estimates of the base populations are shown in the ``Base 
Population'' column of Table 14.
    iii. Costs. To obtain a current estimate for the cost of developing 
a CSM, we contacted industry cargo securing subject matter experts in 
2013.\28\ These experts are familiar with the entire development of 
CSMs, including vessel survey, evaluation of cargo securing equipment 
and procedures, preparation of manuals, and training of 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 used the midpoint of this range, $8,750 
(($7,500 + $10,000)/2), as the unit cost of developing a CSM.
---------------------------------------------------------------------------

    \28\ The data obtained contain proprietary information and are 
not available publicly.
---------------------------------------------------------------------------

    We anticipate that a CSM will be revised to either remedy a 
deficiency or because the vessel met the previously discussed criterion 
of new cargo securing systems. We do not have detailed descriptions of 
each deficiency or changes in cargo securing equipment, so for the unit 
cost, we assume that a vessel will revise the CSM using an existing 
survey of the vessel. A 2013 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.\29\ That study 
estimated that the average cost of a survey for a freight ship is 
$1,125. We estimate 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).
---------------------------------------------------------------------------

    \29\ ABS Consulting, Inc, ``Study of Marine Engineering and 
Naval Architecture Costs for Use in Regulatory Analyses,'' Table 5, 
p. 26. A copy of this study can be found in the docket for this 
rulemaking.
---------------------------------------------------------------------------

    The costs to the Federal government are accounted for by the 
oversight actions performed by the authorized approval organizations. 
These actions include reviewing new or revised CSMs, issuing letters of 
approval, and, for CSMs that are not approved, issuing letters that 
explain why the CSMs were not approved. We anticipate that the reviews 
of the CSM will be conducted by a marine engineer or naval architect. 
We estimate that each review will take on average 2 working days and 
another hour will be needed to prepare the appropriate correspondence 
to the vessel's managers. Thus, the attributed burden to the Federal 
government for each review is 17 hours ((2 x 8) + 1 = 17).
    We estimate that the average loaded (including benefits) hourly 
wage for a marine architect or naval engineer is

[[Page 28003]]

$64 per hour.\30\ The unit cost to review one CSM is $1,088 (17 hours x 
$64 per hour). Table 13 shows the undiscounted costs to industry and 
the Federal government for the 10-year analysis period.
---------------------------------------------------------------------------

    \30\ Mean hourly wage of $44.10 for a marine engineer/naval 
architect from the Bureau of Labor Statistics (http://www.bls.gov/oes/2011/may/oes172121.htm) multiplied by load factor of 1.44 to 
account for benefits (ftp://ftp.bls.gov/pub/special.requests/ocwc/ect/ececqrtn.pdf).
---------------------------------------------------------------------------

Costs for Foreign-Flagged Vessels
    As foreign-flagged vessels are obtaining and revising CSMs under 
the auspices of their flag states, their only cost for this interim 
rule is to remedy deficiencies. The cost in each year is the number of 
deficient vessels times the unit cost of $7,625. Table 13 presents the 
undiscounted cost estimate for foreign-flagged vessels over the 10-year 
period.

                         Table 13--Costs to Foreign-Flagged Vessels for Developing CSMs
----------------------------------------------------------------------------------------------------------------
                                                       Base
                      Year                          population       Remedied        Unit cost      Total cost
----------------------------------------------------------------------------------------------------------------
1...............................................           6,353               4          $7,625         $30,500
2...............................................           6,664               4           7,625          30,500
3...............................................           6,991               4           7,625          30,500
4...............................................           7,334               4           7,625          30,500
5...............................................           7,693               5           7,625          38,125
6...............................................           8,070               5           7,625          38,125
7...............................................           8,465               5           7,625          38,125
8...............................................           8,880               5           7,625          38,125
9...............................................           9,315               6           7,625          45,750
10..............................................           9,771               6           7,625          45,750
                                                 ---------------------------------------------------------------
    Total.......................................  ..............              48  ..............         366,000
----------------------------------------------------------------------------------------------------------------

Costs for U.S.-Flagged Vessels
    As discussed previously, all 83 U.S.-flagged vessels have CSMs and 
have operated under them for over a decade. In addition, current 
business practices, particularly the requirements of insurers, would 
also indicate the use of a CSM. For these reasons, and as presented in 
the Regulatory Analysis of the NPRM, the requirements in this interim 
rule are not expected to result in a change in practice or incur a cost 
for the 83 U.S.-flagged vessels.
    For the purposes of this regulatory analysis, we also compute costs 
assuming a baseline without CSMs for the 83 U.S.-flagged vessels. The 
cost for U.S.-flagged vessels to develop CSMs is presented in Table 14.

           Table 14--Costs of Developing CSMs for U.S. Vessels to Industry and the Federal Government
----------------------------------------------------------------------------------------------------------------
                                                                                      Federal
              Year                     Base        Industry CSM    Industry cost    Government      Total cost
                                    population         cost                            cost
----------------------------------------------------------------------------------------------------------------
1...............................              83          $8,750        $726,250         $90,304        $816,554
2...............................               9           7,625          68,625           9,792          78,417
3...............................               9           7,625          68,625           9,792          78,417
4...............................               9           7,625          68,625           9,792          78,417
5...............................               9           7,625          68,625           9,792          78,417
6...............................               9           7,625          68,625           9,792          78,417
7...............................               9           7,625          68,625           9,792          78,417
8...............................               9           7,625          68,625           9,792          78,417
9...............................               9           7,625          68,625           9,792          78,417
10..............................               9           7,625          68,625           9,792          78,417
                                 -------------------------------------------------------------------------------
    Total.......................             164  ..............       1,343,875         178,432       1,522,307
----------------------------------------------------------------------------------------------------------------

    Table 15 presents the total costs for foreign-flagged vessels and 
U.S.-flagged vessels assuming a pre-CSM baseline on an undiscounted 
basis and the total costs discounted at rates of 7 percent and 3 
percent. As shown in Table 15, the total 10-year cost for upgrading 
CSMs at a 7-percent discount rate is $1,490,587, or $212,226 on an 
annualized basis.

  Table 15--CSMs--Undiscounted Component and Total Costs; and Total Costs at Discount Rates of 7 Percent and 3
                                                     Percent
----------------------------------------------------------------------------------------------------------------
                                                   Undiscounted                             Discounted
                                 -------------------------------------------------------------------------------
              Year                 U.S- flagged      Foreign-
                                       cost        flagged cost     Total cost          7%              3%
----------------------------------------------------------------------------------------------------------------
1...............................        $816,554         $30,500        $847,054        $791,639        $822,383
2...............................          78,417          30,500         108,917          95,132         102,665

[[Page 28004]]

 
3...............................          78,417          30,500         108,917          88,909          99,674
4...............................          78,417          30,500         108,917          83,092          96,771
5...............................          78,417          38,125         116,542          83,093         100,530
6...............................          78,417          38,125         116,542          77,657          97,602
7...............................          78,417          38,125         116,542          72,577          94,759
8...............................          78,417          38,125         116,542          67,829          91,999
9...............................          78,417          45,750         124,167          67,539          95,164
10..............................          78,417          45,750         124,167          63,120          92,392
                                 -------------------------------------------------------------------------------
    Total.......................       1,522,307         366,000       1,888,307       1,490,587       1,693,939
                                 -------------------------------------------------------------------------------
Annualized......................  ..............  ..............  ..............         212,226         198,581
----------------------------------------------------------------------------------------------------------------

    iv. Benefits. The benefit of adding the SOLAS requirements and 
current Coast Guard 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, Background and Regulatory History, of this preamble, the only 
current U.S. implementation of the CSM is via current Coast Guard 
guidance, which is unenforceable. Incorporating these rules into the 
CFR elevates the guidelines and standards to being a Federal 
regulation. As described in Section III, Basis and Purpose, 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 this rule under these authorities.
    v. Alternatives. Alternatives to this provision of the rule that we 
considered include various ways to apply the requirements to prepare 
and implement CSMs to U.S.-flagged vessels in coastwise trade. The NPRM 
published in 2000 presented five options for applying CSM regulations 
to U.S. domestic voyages. Table 16 presents descriptions of these 
options and a summary of the comments.

  Table 16--Options To Extend CSM 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;
                                                   and
                                                   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; and
                                                   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
                                                   commenters opposed
                                                   for these reasons:
                                                   Surveyors for
                                                   multiple voyages not
                                                   feasible for cost and
                                                   availability;
                                                   Could not
                                                   ensure surveyor
                                                   availability; and
                                                   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      Three comments
                          with industry.           supported, 1 for
                                                   unstated reasons and
                                                   2 because of its
                                                   flexibility; and 1
                                                   commenter was opposed
                                                   because it would not
                                                   ensure meeting needs
                                                   of different vessel
                                                   types and operations.
------------------------------------------------------------------------


[[Page 28005]]

    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 in 
coastwise trade. The geographic identification was vessels with 
coastwise route certifications. We identified 688 vessels from MISLE 
that met these requirements, comprised of 195 freight barges, 160 
freight ships, and 333 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 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, for the unit cost of the U.S. coastwise vessels, we assigned 
the low-end value of $7,500, which came from the range supplied by the 
subject matter experts we contacted. The recent history of new builds 
is projected to continue through the 10-year analysis period. MISLE 
reported 22 new vessels per year from 2009 through 2012, and we used 
this in our analysis.
     A phase-in period was not in the NPRM, but we added a 3-
year phase-in period to this interim rule to mitigate the burden on 
both vessel owners and the authorized approval organizations. We assume 
that vessel owners will distribute the certification of the manuals for 
their vessels evenly over the phase-in period. This will 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. Because the costs to foreign-flagged vessels would be the 
same for Option 1 as for the preferred alternative, the data presented 
show the marginal costs for Option 1. The annualized cost, using a 7-
percent discount rate, would be $807,605. The cost estimates are 
displayed in Table 17.

                                    Table 17--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.......................................             229              22             251          $7,500      $1,882,500      $1,759,346      $1,827,670
2.......................................             229              22             251           7,500       1,882,500       1,644,248       1,774,437
3.......................................             230              22             252           7,500       1,890,000       1,542,803       1,729,618
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...............................             688             220             908                       6,810,000       5,672,277       6,272,487
                                         ---------------------------------------------------------------------------------------------------------------
Annualized..............................  ..............  ..............  ..............  ..............  ..............         807,605         735,327
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The goal of Option 1 is 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 or operator cannot know about 
or prevent.'' However, as described above, the reporting of these 
incidents is uncertain. We anticipate that, with the more accurate 
reporting required by this interim rule, we will be able to validate 
this assertion. Additionally, our initial cost estimates, as presented 
in Table 17, indicate that industry would incur annualized costs, 
discounted at 7 percent, of $807,605 beyond what is in this rule. 
Therefore, this interim rule focuses exclusively on 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 an 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 Coast Guard guidance and 
cover selection criteria, information required by organizations 
applying for authorization status, and the Coast Guard's application 
review procedures, termination of authorization procedures, and appeals 
procedures.
    Following the procedures in current Coast Guard guidance, the Coast 
Guard has authorized these six classification societies to review and 
approve CSMs: American Bureau of Shipping (ABS), Det Norske Veritas 
(DNV), Lloyd's Register of Shipping (LR), Germanischer Lloyd (GL), RINA 
S.p.A, and ClassNK (NK).\31\ We anticipate that no other classification 
societies will be applying for CSM approval authority in the near 
future.\32\
---------------------------------------------------------------------------

    \31\ List of classification societies authorizations: http://www.uscg.mil/hq/cg5/acp/docs/ClassSocietyAuths22Dec2013.pdf.
    \32\ For more information see the final rule ``Approval of 
Classification Societies'', VII. A, ``Regulatory Planning and 
Review'', 77 FR 47548, RIN 1625-AB35).
---------------------------------------------------------------------------

    However, current Coast Guard guidance is not legally enforceable. 
This interim rule will incorporate these procedures from guidance into 
the CFR with only some minor editorial changes, such as updating the 
address of Coast Guard Headquarters. Therefore, we believe there will 
be no additional regulatory costs associated with the codification of 
these application procedures. Table 18 presents the change matrix for 
the codification of the class society approval guidance into the CFR 
and summarizes the specific edit or

[[Page 28006]]

change, the affected population, and the economic impact.

    Table 18--Change Matrix for Incorporating Class Society Approval
                         Procedures Into 46 CFR
------------------------------------------------------------------------
   Reference & description     Affected population     Economic impact
------------------------------------------------------------------------
97.100 Applicability:
    . . . (a)(4),             New applicants......  No impact,
     organizations applying                          incorporates
     for CSM approval                                current guidance
     authority.                                      into regulations.
 
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        and agents, of new    change, guidance
     owner, operator, or       U.S. vessels in       only referenced
     agent.                    international trade.  owner.
    . . . (a)(2), CG          Organizations         No change,
     oversight of approval     applying for CSM      incorporates
     authority applications.   approval authority.   current guidance
                                                     into regulations.
    . . . (a)(3),             U.S. vessels in       No change,
     application procedures.   international trade.  incorporates
                                                     current guidance
                                                     into regulations.
    . . . (a)(4), approval    Authorized approval   No change,
     authority retains a       organizations.        incorporates
     copy.                                           current guidance
                                                     into regulations.
    . . . (b), approval       Authorized approval   No change,
     letter contents.          organizations.        incorporates
                                                     current guidance
                                                     into regulations
    . . . (c), disapproval    Authorized approval   No change,
     procedures.               organizations.        incorporates
                                                     current guidance
                                                     into regulations.
    . . . (d), resubmit       Owners or operators   No change,
     procedures.               resubmitting a CSM.   incorporates
                                                     current guidance
                                                     into regulations.
    . . . (e), documents      Owners or operators   No change,
     kept on vessel.           of U.S. vessels       incorporates
                               subject to the rule.  current guidance
                                                     into regulations.
97.205 Requirements for       Owners or operators   No change,
 amending an approved CSM,     of U.S. vessels       incorporates
 amending procedures.          subject to the rule.  current guidance
                                                     into regulations.
97.210 Appeals, appeals       Owners or operators   No change,
 procedures.                   of U.S. vessels       incorporates
                               subject to the rule   current guidance
                               and authorized        into regulations
                               approval
                               organizations.
97.300 Authorized CSM         ABS, DNV, LR, GL,     No change,
 approval authorities, lists   RINA, NK, National    incorporates
 approved organizations.       Cargo Bureau.         current guidance
                                                     into regulations.
97.305 Requests for           Organizations         No change,
 authorization, application    seeking to become     incorporates
 process.                      approved              current guidance
                               organizations.        into regulations.
97.310 Criteria for           CG and organizations  No change,
 authorization, evaluation     seeking to become     incorporates
 criteria.                     approved              current guidance
                               organizations.        into regulations.
97.315 Requirements for       CG and authorized     No change,
 authorized approval           approval              substantively
 organizations,                organizations.        incorporates and
 responsibilities of CG and                          rewords current
 authorized approval                                 guidance into
 organizations.                                      regulations.
97.320 Revocation of          CG and referenced     No change,
 authorization, procedures     organizations.        substantively
 for CG revoking an                                  incorporates and
 authorization.                                      rewords current
                                                     guidance into
                                                     regulations.
------------------------------------------------------------------------
Source: Coast Guard analysis.

    We considered alternatives to these changes and edits, and we 
concluded that there were no viable alternatives. The procedures in 
current Coast Guard guidance 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 weaknesses or gaps in the current 
Coast Guard guidance, other than the editorial changes. We also 
concluded that the recordkeeping information in the current Coast Guard 
guidance provides complete documentation for all the involved parties--
vessel owners or operators, and approved organizations. Reducing or 
eliminating any of the 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 rules governing organizations approved to issue 
CSMs will codify current procedures with no associated costs to 
industry or the government. The benefit of these rules is that they 
will 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 this interim 
rule is for the two cost elements: (1) Reporting of lost or Jettisoned 
Cargo; and (2) CSM Requirements. Table 19 presents the 10-year total 
cost schedule assuming a pre-CSM baseline for undiscounted costs, and 
the discounted costs at 7-percent and 3-percent interest rates.

[[Page 28007]]



 Table 19--Summary of the 10-Year Total Cost of Interim Rule, Undiscounted and Discounted at Interest Rates of 7
                                              Percent and 3 Percent
----------------------------------------------------------------------------------------------------------------
                                                   Undiscounted                             Discounted
                                 -------------------------------------------------------------------------------
              Year                    Lost or
                                    jettisoned       CSM plans         Total            7%              3%
                                       cargo
----------------------------------------------------------------------------------------------------------------
1...............................            $475        $847,054        $847,529        $792,083        $822,844
2...............................             499         108,917         109,416          95,568         103,135
3...............................             523         108,917         109,440          89,336         100,153
4...............................             547         108,917         109,464          83,510          97,257
5...............................             570         116,542         117,112          83,499         101,022
6...............................             594         116,542         117,136          78,053          98,100
7...............................             642         116,542         117,184          72,976          95,281
8...............................             665         116,542         117,207          68,216          92,524
9...............................             689         124,167         124,856          67,913          95,692
10..............................             737         124,167         124,904          63,495          92,940
                                 -------------------------------------------------------------------------------
    Total.......................           5,941       1,888,307       1,894,248       1,494,649       1,698,948
                                 -------------------------------------------------------------------------------
Annualized......................  ..............  ..............  ..............         212,804         199,169
----------------------------------------------------------------------------------------------------------------

    Table 20 summarizes the undiscounted costs disaggregated by flag, 
requirement, and sector.

                      Table 20--10-Year Undiscounted Costs by Flag, Requirement, and Sector
----------------------------------------------------------------------------------------------------------------
                                                                                      Federal
                 Flag                          Requirement           Industry       Government         Total
----------------------------------------------------------------------------------------------------------------
United States.........................  Lost Cargo..............            $387            $308            $695
                                        CSM.....................       1,343,875         178,432       1,522,307
                                                                 -----------------------------------------------
                                           U.S. Total...........       1,344,262         178,740       1,523,002
* Foreign.............................  Lost Cargo..............           2,930           2,323         * 5,253
                                        CSM.....................         366,000               0         366,000
                                                                 -----------------------------------------------
                                           Foreign Total........         368,930           2,323         371,253
                                                                 -----------------------------------------------
    Total.............................  ........................       1,713,192         181,063       1,894,255
----------------------------------------------------------------------------------------------------------------
Note: Subtotals and Totals do not match with those in other tables due to independent rounding.

    The primary benefit of this interim rule is that it places 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 will provide the Coast 
Guard with additional information to track and monitor the effects on 
both navigation and the environment, and to take any appropriate 
enforcement actions. Overall, the interim rule will support the Coast 
Guard's missions of maritime safety and stewardship.
    e. Preliminary analysis of expanding the affected population.
    In Section V, Summary of the Rule, and Section VI, Discussion of 
Comments on SNPRM and Changes, we requested comments on our proposal to 
include self-propelled vessels less than 500 gross tons in the affected 
population. We conducted a preliminary analysis of the economic impacts 
of the proposal and summarize our findings below.
    The proposal would add an additional 45 foreign-flagged vessels, 
resulting in a new total of 6,398 foreign-flagged vessels. Combined 
with the 83 U.S.-flagged vessels, the total affected population would 
be 6,481 vessels.
    The only requirement that would be affected is the one requiring a 
subject vessel to have and follow an approved CSM. Of the 45 new 
vessels, 42 currently hold SOLAS cargo safety certificates. For this 
preliminary analysis we assumed that the three vessels without a cargo 
safety certificate would need to obtain an approved CSM. This would add 
an additional 26,250 (3 vessels x 8,750 per new CSM). A revised 10-year 
cost estimate for this requirement based on these assumptions is 
presented in Table 21.

  Table 21--Cost of CSM Plans Under the Proposed Rule (Adding Vessels Under 500 GT to Interim Rule Estimates),
                             Undiscounted and Discounted at 7 Percent and 3 Percent
----------------------------------------------------------------------------------------------------------------
                                   U.S.-flagged      Foreign-
              Year                     cost           flagged       Total cost          7%              3%
----------------------------------------------------------------------------------------------------------------
1...............................        $816,554         $53,375        $869,929        $813,018        $844,591
2...............................          78,417          30,500         108,917          95,132         102,665

[[Page 28008]]

 
3...............................          78,417          30,500         108,917          88,909          99,674
4...............................          78,417          30,500         108,917          83,092          96,771
5...............................          78,417          38,125         116,542          83,093         100,530
6...............................          78,417          38,125         116,542          77,657          97,602
7...............................          78,417          38,125         116,542          72,577          94,759
8...............................          78,417          38,125         116,542          67,829          91,999
9...............................          78,417          45,750         124,167          67,539          95,164
10..............................          78,417          45,750         124,167          63,120          92,392
                                 -------------------------------------------------------------------------------
    Total.......................       1,522,307         388,875       1,911,182       1,511,966       1,716,147
                                 -------------------------------------------------------------------------------
Annualized......................  ..............  ..............  ..............         215,270         201,185
----------------------------------------------------------------------------------------------------------------

    The 7-percent annualized cost for the proposed modification to the 
CSM requirement is 215,270, compared to 212,226 for the interim rule, 
as shown in Table 15. Table 22 presents a revised 10-year schedule. It 
adds the 26,250 cost of new CSMs for the 3 vessels under 500 gross tons 
to the other requirements for reporting lost or jettisoned cargo and 
approval of classification societies.

  Table 22--Summary of the 10-Year Total Cost of the Proposed Rule (Adding Vessels Under 500 GT to Interim Rule
                  Estimates) by Sector, Undiscounted and Discounted at 7 Percent and 3 Percent
----------------------------------------------------------------------------------------------------------------
              Year                   Industry       Government         Total            7%              3%
----------------------------------------------------------------------------------------------------------------
1...............................        $779,890         $90,514        $870,404        $813,462        $845,052
2...............................          99,403          10,013         109,416          95,568         103,135
3...............................          99,417          10,023         109,440          89,336         100,153
4...............................          99,430          10,034         109,464          83,510          97,257
5...............................         107,068          10,044         117,112          83,499         101,022
6...............................         107,081          10,055         117,136          78,053          98,100
7...............................         107,108          10,076         117,184          72,976          95,281
8...............................         107,121          10,086         117,207          68,216          92,524
9...............................         114,759          10,097         124,856          67,913          95,692
10..............................         114,786          10,118         124,904          63,495          92,940
                                 -------------------------------------------------------------------------------
    Total.......................       1,736,063         181,060       1,917,123       1,516,028       1,721,156
                                 -------------------------------------------------------------------------------
Annualized......................  ..............  ..............  ..............         215,848         201,772
----------------------------------------------------------------------------------------------------------------

    With the addition of self-propelled vessels that are less than 500 
gross tons, the annualized cost at a 7-percent discount rate increases 
to 215,848, compared to 212,804 for the interim rule, as shown in Table 
19.

B. Small Entities

1. Summary of Findings
    The Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.) (RFA) 
and Executive Order (E.O.) 13272 require a review of proposed and final 
rules to assess their impacts on small entities. An agency must prepare 
an initial regulatory flexibility analysis (IRFA) unless it determines 
and certifies that a rule, if promulgated, would not have a significant 
impact on a substantial number of small entities. During the SNPRM 
stage, we published an IRFA to aid the public in commenting on the 
potential small business impacts of the proposals in the SNPRM. All 
interested parties were invited to submit data and information 
regarding the potential economic impact that would result from adoption 
of the proposals in the SNPRM.
    Under the RFA, we have considered whether this 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 interim 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). Based on the information from this analysis, we found--
     Using size standards from the Small Business 
Administration (SBA), the 83 U.S-flagged vessels are controlled by 21 
entities, none of which are small. The 6,353 foreign-flagged vessels 
are controlled by 1,023 entities. 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 that is not considered to be small, 7 
foreign-flagged vessels are controlled by government agencies, and the 
remaining 6,345 foreign-flagged vessels are controlled by businesses. 
An analysis of a sample of the businesses controlling these vessels 
indicates that 48 percent are considered small.
     Compliance actions will consist of upgrading deficient 
CSMs and reporting lost or jettisoned cargo.
     Of the small entities in our sample with revenue 
information, 62 percent of them had an impact of less than 1 percent, 
and 28 percent had an impact within the 1 percent to 3 percent range.
    The Regulatory Flexibility Act also requires an agency to conduct a 
final

[[Page 28009]]

regulatory flexibility analysis (FRFA) unless it determines and 
certifies that a rule is not expected to have a significant impact on a 
substantial number of small entities. We are not able to certify that 
the interim rule will not have a significant economic impact on a 
substantial number of small entities. Therefore, we have prepared the 
following FRFA.
2. FRFA
    The 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.''
    This FRFA was developed in accordance with Section 604(a) of the 
RFA. An FRFA must provide and/or address--
    a. A statement of the need for, and objectives of, the rule;
    b. A statement of the significant issues raised by the public 
comments in response to the initial regulatory flexibility analysis, a 
statement of the assessment of the agency of such issues, and a 
statement of any changes made in the rule as a result of such comments;
    c. The response of the agency to any comments filed by the Chief 
Counsel for Advocacy of the SBA in response to the rule, and a detailed 
statement of any change made to the interim rule as a result of the 
comments;
    d. A description of and an estimate of the number of small entities 
to which the rule will apply or an explanation of why no such estimate 
is available;
    e. A description of the projected reporting, recordkeeping, and 
other compliance requirements of the rule, including an estimate of the 
classes of small entities that will be subject to the requirement and 
the type of professional skills necessary for preparation of the report 
or record;
    f. A description of the steps the agency has taken to minimize the 
significant economic impact on small entities consistent with the 
stated objectives of applicable statutes, including a statement of the 
factual, policy, and legal reasons for selecting the alternative 
adopted in the interim rule and why each one of the other significant 
alternatives to the rule considered by the agency which affect the 
impact on small entities was rejected;
    g. For a covered agency, as defined in section 609(d)(2), a 
description of the steps the agency has taken to minimize any 
additional cost of credit for small entities.
    a. A statement of the need for, and objectives of, the rule. The 
Coast Guard undertook this rulemaking to align U.S. regulations with 
the CSM requirements of SOLAS. The provisions of this rule 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 maritime safety and stewardship 
missions.
    Sections 2103 and 3306 of 46 U.S.C. provide the statutory basis for 
this rule. 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 rule 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.
    b. A statement of the significant issues raised by the public 
comments in response to the initial regulatory flexibility analysis, a 
statement of the assessment of the agency of such issues, and a 
statement of any changes made in the proposed rule as a result of such 
comments. We received no specific comments in response to the IRFA. 
However, in response to one commenter's suggestion, when we finalize 
this interim rule we intend to make 33 CFR part 97, subpart A, 
applicable to all self-propelled vessels, regardless of tonnage, and 
not just to vessels of 500 gross tons or more. Also in response to 
comments, we have removed seagoing barges and other non-self-propelled 
vessels from the applicability of subpart A; this subpart now is 
applicable only to self-propelled vessels. In all other respects, the 
interim rule is substantively unchanged from our SNPRM proposals.
    c. The response of the agency to any comments filed by the Chief 
Counsel for Advocacy of the Small Business Administration (SBA) in 
response to the proposed rule, and a detailed statement of any change 
made to the interim rule as a result of the comments. We received no 
comments from the Chief Counsel for Advocacy of the SBA after the 
publication of the SNPRM.
    d. A description of, and an estimate of, the number of small 
entities to which the proposed rule will apply or an explanation of why 
no such estimate is available. The applicable population consists of 
self-propelled vessels that carry any cargo other than solid or liquid 
bulk commodities and are--
     U.S.-flagged vessels engaged in international trade; or
     Foreign-flagged vessels that are in the U.S. trade.
    Section VII.A.3, Affected Population, of this preamble presents an 
estimate of 6,436 vessels that will be subject to the interim rule. As 
described in Section VIII, Regulatory Analyses, of this preamble, we 
found that 83 vessels in the affected population were U.S.-flagged. For 
the cost analysis, we found that these vessels were currently in 
compliance with the CSM requirements. Also for the cost analysis, we 
assumed that compliance would continue throughout the 10-year forecast 
period and we continue with that assumption in this FRFA. The focus of 
this FRFA is on the 4,353 foreign-flagged vessels, which may be under 
the control of U.S. entities or foreign entities. Table 23 displays a 
break-out of this population by the type of entity that owns or 
operates these vessels.

              Table 23--Non-U.S. Vessels by Type of Entity
------------------------------------------------------------------------
                   Entity type                      Count      Percent
------------------------------------------------------------------------
Business........................................      6,345        99.87
Government......................................          7         0.11
Not-for-Profit..................................          1         0.02
                                                 -----------------------
  Total.........................................      6,353       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.
    To analyze the potential impact on these businesses, we produced a

[[Page 28010]]

random sample with a 95-percent confidence level and a confidence 
interval of 5 percent.\33\ The resulting sample consisted of 288 
businesses. We researched public and proprietary databases and company 
Web sites for the location of the company, entity type (subsidiary or 
parent company), primary line of business, employee size, revenue, and 
other information.\34\ During the initial research, we found 1 entity 
that is now out of business and excluded it from the analysis. We found 
that 142 of the companies in our sample are based in countries other 
than the United States. There are another 78 entities for which we 
could not locate address information. Since they operate foreign-
flagged vessels and we could not find location information in the Coast 
Guard databases and other sources, we inferred that they are operated 
by firms outside of the United States. Combining this information, we 
identified a total of 221 non-U.S. companies and excluded them from 
this revenue impact analysis. The population for the revenue impact 
analysis consists of the remaining 67 businesses from the working 
sample, and we found address information that locates all 67 of them in 
the United States.
---------------------------------------------------------------------------

    \33\ 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.
    \34\ We used information and data from Cortera 
(www.cortera.com), Manta (http://Manta.com), and ReferenceUSA 
(http://www.referenceusa.com).
---------------------------------------------------------------------------

    We researched and compiled the employee size and revenue data for 
the 67 U.S. businesses and we compared this information to the 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).\35\ We determined that 
35 businesses exceeded the SBA small business size standards, and 32 
businesses, or 48 percent of the sample, are small by the SBA 
standards. The information on location and size determination is 
summarized in Table 24.
---------------------------------------------------------------------------

    \35\ 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 24--U.S. Business by Size Determination
------------------------------------------------------------------------
                    Entity type                      Entities   Percent
------------------------------------------------------------------------
Exceed the threshold...............................        35       52.2
Below the threshold................................        32       47.8
                                                    --------------------
  Total............................................        67      100.0
------------------------------------------------------------------------

    These 32 businesses that are below the SBA size thresholds are 
distributed among 16 NAICS classified industries. Table 25 lists the 
frequency, percentage, size standard, and size threshold of NAICS codes 
for the 32 small businesses found in the sample.

                                                  Table 25--NAICS Codes of Identified Small Businesses
--------------------------------------------------------------------------------------------------------------------------------------------------------
           NAICS code                       Industry                Count          Percent                   Size standard                Size threshold
--------------------------------------------------------------------------------------------------------------------------------------------------------
483111..........................  Deep Sea Freight                         12            37.5  Number of employees......................             500
                                   Transportation.
488510..........................  Freight Transportation                    5            15.6  Revenue..................................     $14,000,000
                                   Arrangement.
487210..........................  Scenic & Sightseeing                      2             6.3  Revenue..................................      $7,000,000
                                   Transportation, Water.
423310..........................  Lumber & Wood Merchant Whls               1             3.1  Number of employees......................             100
423860..........................  Transportation Equipment                  1             3.1  Number of employees......................             100
                                   and Supplies, Except Motor
                                   Vehicles.
424420..........................  Packaged Frozen Food                      1             3.1  Number of employees......................             100
                                   Merchant Wholesalers.
424910..........................  Farm Supplies Merchant Whls               1             3.1  Number of employees......................             100
424990..........................  Other Miscellaneous                       1             3.1  Number of employees......................             100
                                   Nondurable Goods Merchant
                                   Wholesalers.
441222..........................  Boat Dealers...............               1             3.1  Revenue..................................     $25,500,000
483113..........................  Coastal and Great Lakes                   1             3.1  Number of employees......................             500
                                   Freight Transportation.
484230..........................  Specialized Freight                       1             3.1  Revenue..................................     $14,000,000
                                   Tracking Long Distance.
488210..........................  Support Activities for Rail               1             3.1  Revenue..................................             500
                                   Transportation.
488320..........................  Marine Cargo Handling......               1             3.1  Revenue..................................     $25,500,000
493130..........................  Farm Product Warehousing &                1             3.1  Revenue..................................     $14,000,000
                                   Storage.
532411..........................  Commercial Air, Rail, and                 1             3.1  Revenue..................................     $32,500,000
                                   Water Transportation
                                   Equipment Rental and
                                   Leasing.
541618..........................  Other Management Consulting               1             3.1  Revenue..................................     $15,000,000
                                   Services.
                                                              ------------------------------------------------------------------------------------------
    Total.......................  ...........................              32            99.7  .........................................  ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------

    We selected the two industries that appeared most frequently in the 
random sample of entities. Businesses from these two industries 
accounted for 17 entities, or 53 percent of the entities in the random 
sample. Therefore, we assume that approximately 53 percent of all 
entities affected by this regulation will be in one of these 
industries. A brief description of the two industries affected most by 
this rule follows.
     Deep Water Freight Transportation (483111): This industry 
comprises establishments primarily engaged in providing deep sea 
transportation of cargo to or from foreign ports.
     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.
    e. A description of the projected reporting, recordkeeping, and 
other compliance requirements of the rule, including an estimate of the 
classes of small entities that 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 rule consist of upgrading 
deficient CSMs and reporting lost or jettisoned cargo. Therefore, this 
rule calls 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

[[Page 28011]]

collection are available in Section VIII.D of this preamble.
    As discussed in Section VIII.A, Regulatory Planning and Review, 
from 2011 through 2013, the Coast Guard conducted 14,358 vessel 
inspections and found problems relating to CSMs in only 9 instances, 
which amounts to approximately 0.1 percent of the foreign-flagged 
vessels whose CSMs were deficient. We anticipate that the owners or 
operators of these vessels will upgrade their CSMs to meet standards 
and comply with this rule. We do not have detailed descriptions on each 
of the deficiency cases. To estimate a cost for this compliance action, 
we apply the estimate of $7,625 to remedy a 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 Master or senior officer is $53.00 per 
hour. The cost of reporting is $13.25 (0.25 hours x $53 per hour).
    As discussed in Section VIII.A, Regulatory Planning and Review, we 
adjusted the affected population to account for anticipated growth in 
container traffic. In our 10-year analysis, we estimate that the number 
of vessels that will need to upgrade their CSMs will be 4 in Years 1 
through 5, and will increase to 6 in Year 10. We also accounted for 
this growth in container traffic in our estimate of lost or jettisoned 
cargoes. In Section VIII.A, Cost Discussions, we estimate that in the 
first year the rule becomes effective, 20 incidents of lost or 
jettisoned cargo will occur. We estimate that the affected population 
in that year consists of 6,436 U.S.- and foreign-flagged vessels, 
yielding an incident rate of 0.3 percent (20 incidents/6,436 vessels). 
To execute a revenue impact analysis, we posited that in any given 
year, each business would have one vessel that will need to upgrade its 
CSM and one vessel that will experienc 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 26.

                          Table 26--Annual Compliance Cost for Revenue Impact Analysis
----------------------------------------------------------------------------------------------------------------
                              Cost                                  Loaded wage        Hours        Total cost
----------------------------------------------------------------------------------------------------------------
Upgrading 1 CSM.................................................             N/A             N/A          $7,625
Reporting 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 27 presents the impact data in ranges 
of less than 1 percent, 1 to 3 percent, 3 to 5 percent, and greater 
than 5 percent. As shown in this table, for approximately 62 percent of 
the companies, the revenue impact is less than 1 percent of annual 
revenue, and for approximately 28 percent of the companies, the revenue 
impact is between 1 percent and 3 percent.

         Table 27--Estimated Revenue Impact on Small Businesses
------------------------------------------------------------------------
                                                              Percentage
              Revenue impact class                  Count         of
                                                              companies
------------------------------------------------------------------------
Less than 1%....................................         20         62.5
1% to 3%........................................          9         28.1
3% to 5%........................................          1          3.1
Less than 5%....................................          2          6.3
                                                 -----------------------
  Total.........................................         32        100.0
------------------------------------------------------------------------

    As shown in Table 22, the highest cost to industry in any one year 
on an undiscounted basis is $114,786, which occurs in Year 10.
    The revenue impact analysis indicates that 62 percent of the 
affected population will have an impact of less than 1 percent and the 
other 28 percent will have an impact between 1 percent and 3 percent.
    f. A description of the steps the agency has taken to minimize the 
significant economic impact on small entities consistent with the 
stated objectives of applicable statutes, including a statement of the 
factual, policy, and legal reasons for selecting the alternative 
adopted in the interim rule. Also, include a description explaining why 
each one of the other significant alternatives to the rule considered 
by the agency which affect the impact on small entities was rejected. 
Our cost estimate for the reporting of the lost or jettisoned cargo was 
based on information indicating that the vessel's crew already collects 
the needed information for business reasons. The only additional step 
required by this interim rule is to prepare the message to the Coast 
Guard, and that message can be delivered by a variety of electronic 
media. Thus, this interim rule minimizes the burden to a vessel's crew 
in order to provide additional information to the Coast Guard to 
enhance its execution of its maritime environmental protection mission.
    For CSMs, this interim rule is based solely on current requirements 
contained in SOLAS and current Coast Guard guidance. Our regulatory 
analysis indicates that 99 percent of the subject vessels currently 
comply with these requirements. This rule enhances the Coast Guard's 
maritime safety mission without adding any new requirements to vessel 
owners and operators.
    Alternatives were considered in this interim rule and are discussed 
in section VIII.A, Cost Discussions, 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 interim rule is exclusively on vessels in 
international trade.
    g. For a covered agency, as defined in section 609(d)(2), a 
description of the steps the agency has taken to minimize any 
additional cost of credit for small entities. The Coast Guard is not a 
covered agency.

C. Assistance for Small Entities

    Under section 213(a) of the Small Business Regulatory Enforcement 
Fairness Act of 1996, Public Law 104-121, we offered to assist small 
entities in understanding this rule so that they could better evaluate 
its effects on them and participate in the rulemaking. The

[[Page 28012]]

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 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 calls 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 CSMs. 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 will align the CFR with SOLAS.
    TITLE: Cargo Securing Manuals.
    OMB CONTROL NUMBER: 1625-0122.
    SUMMARY OF COLLECTION OF INFORMATION: The rule will 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 will 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, the CSM must be revised.
    Additionally, this interim rule will 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 rule specifically allows for 
electronic communications, and we anticipate this will continue to be 
how the notifications are transmitted.
    Need for Information: Vessel owners or 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 will review these CSMs and, 
if they are found to be acceptable, approve them. The Coast Guard will 
use the information from the notification of hazardous conditions to 
inform other vessel operators or waterway users of the situation and 
initiate any needed measures to reduce or eliminate the hazard. These 
actions will lead to a reduction of vessel casualties and pollution.
    Description of Respondents: There are three groups of respondents 
impacted by this interim rule:
     Owners or operators of U.S.-flagged vessels that will need 
to submit new or revised CSMs to the recognized classification 
societies.
     Recognized classification societies and other approved 
third-party organizations that will review the CSMs on behalf of the 
Coast Guard.
     The operators of vessels that will be required to report 
hazardous conditions.
    Number of Respondents: We estimate that there will be 276 
respondents affected annually by the CSM requirements. The total is 
divided into these three classes: (1) 83 for new CSMs; (2) 9 for 
revisions to existing CSMs; and (3) 184 notifications of hazardous 
conditions, which include lost or jettisoned cargo and other incidents. 
Table 28 describes the calculations for developing the estimates of 
each requirement relating to the CSM plans.

                                  Table 28--Estimates of Number of Respondents
----------------------------------------------------------------------------------------------------------------
               Class                     Requirement            Description            Count           Total
----------------------------------------------------------------------------------------------------------------
CSM...............................  Develop CSM, new       83 in Year 1.........              83  ..............
                                     vessel.
                                    Revise CSM, change in  MISLE data shows none               0  ..............
                                     vessel type.           of the affected
                                                            vessels have changed
                                                            vessel type from
                                                            2001-2012.
                                    Revise CSM, replace    Annual rate of 11.3%                9  ..............
                                     CSM systems or         from information
                                     equipment.             supplied by an
                                                            approved
                                                            organization.
                                                            Applied to U.S.
                                                            population (see
                                                            Table 3), (83 x
                                                            11.3%).
                                                                                 -------------------------------
    CSM Total.....................  .....................  .....................  ..............              92
Notifications.....................  Notifications of       From MISLE, average               180  ..............
                                     hazardous condition.   of 2009-2011
                                                            notifications.
                                    Notifications of lost  U.S. notifications,                 4  ..............
                                     or jettisoned cargo.   Table 8, year 10.
                                                                                 -------------------------------
    Notifications Total...........  .....................  .....................  ..............             184
                                                                                 -------------------------------
        Grand Total...............  .....................  .....................  ..............             276
----------------------------------------------------------------------------------------------------------------

    Frequency of Response: A CSM is valid indefinitely, provided 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 29.

[[Page 28013]]



                Table 29--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
 securing systems or equipment.                      the existing CSM.
Notification of hazardous                     0.25  0.25 hours for
 condition.                                          vessel crew to
                                                     prepare and
                                                     transmit the
                                                     notice.
Notification of lost of jettisoned            0.25  0.25 hours for
 cargo.                                              vessel crew to
                                                     prepare and
                                                     transmit the
                                                     notice.
------------------------------------------------------------------------

    Estimated Total Annual Burden: We estimate that the total annual 
burden to industry will be 4,210 hours. Table 30 displays the total 
burden hours for each request:

                   Table 30--Total Annual Burden Hours
------------------------------------------------------------------------
                         Requirement                             Hours
------------------------------------------------------------------------
Develop new CSM..............................................      3,984
Revise CSM, change in vessel type............................          0
Revise CSM, change in cargo securing systems or equipment....        180
Notification of hazardous condition..........................         45
Notification of lost or jettisoned cargo.....................          1
                                                              ----------
  Total......................................................      4,210
------------------------------------------------------------------------
Note: Total does not exactly sum due to independent rounding.

    Reason For Change: This interim rule will 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.
    The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires 
that we consider the impact of paperwork and other information 
collection burdens imposed on the public. According to the 1995 
amendments to the Paperwork Reduction Act (5 CFR 1320.8(b)(2)(vi), an 
agency may not collect or sponsor the collection of information, nor 
may it impose an information collection requirement unless it displays 
a currently valid OMB control number.
    This interim rule will impose new information collection 
requirements. As required by the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507(d)), we will submit these new information collection 
requirements to OMB for its review. Notice of OMB information 
collection will be published in a future Federal Register notice.

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 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.) \36\
---------------------------------------------------------------------------

    \36\ 529 U.S. 89, 120 S.Ct. 1135 (March 6, 2000).
---------------------------------------------------------------------------

    This rule on cargo securing falls into the category of vessel 
operation. Because the States may not regulate within this category, 
the rule is consistent with the principles of federalism and preemption 
requirements in E.O. 13132.
    Additionally, 33 CFR 160.215 is promulgated under the authority of 
the Ports and Waterways Safety Act, Title I, and therefore, under the 
principles of Locke, preempts any conflicting or similar State 
regulations.\37\ The Locke court also held that Congress preempted the 
field of marine casualty reporting. The Coast Guard does not believe 
that this proposed amendment to an existing reporting requirement would 
be preemptive of any existing State or local regulations or 
requirements. However, any prospective State requirement for 
information reporting that conflicts with or is similar to the one 
proposed in this interim rule would be inconsistent with the federalism 
principles enunciated in Locke and therefore would be preempted.
---------------------------------------------------------------------------

    \37\ See our statement to this effect, 68 FR 9537 at 9543 (Feb. 
28, 2003).
---------------------------------------------------------------------------

    The Coast Guard recognizes the key role that State and local 
governments may have in making regulatory determinations. Additionally, 
for rules with federalism implications and preemptive effect, E.O. 
13132 specifically directs agencies to consult with State and local 
governments during the rulemaking process. If you believe this interim 
rule has implications for federalism under E.O. 13132, please contact 
the person listed in the FOR FURTHER INFORMATION CONTACT section of 
this preamble.

F. Unfunded Mandates Reform Act

    Section 201 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-4, 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 rule will not result in such an expenditure, we do discuss 
the effects of this rule elsewhere in this preamble.

G. Taking of Private Property

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

J. Indian Tribal Governments

    This rule does not have tribal implications under E.O. 13175, 
Consultation and Coordination with Indian Tribal Governments, because 
it

[[Page 28014]]

will 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 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.

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 rule uses technical standards other than voluntary consensus 
standards. It incorporates two circulars and one resolution adopted by 
arms of the International Maritime Organization, an international 
organization under United Nations auspices, of which the United States 
is a member state. The two circulars describe in detail how a vessel's 
owner or operator may comply with CSM requirements contained in the 
International Convention for the Safety of Life at Sea. The resolution 
provides guidelines for third parties acting on behalf of a government 
agency like the Coast Guard.
    All three documents may be obtained from the IMO using the address 
given in the regulatory text for new 33 CFR 97.110.

M. Environment

    We have analyzed this 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 (42 U.S.C. 4321-4370f), and have concluded that this 
action is one of a category of actions that do not individually or 
cumulatively have a significant effect on the human environment. This 
rule is categorically excluded under section 2.B.2, figure 2-1, 
paragraph (34)(d) and under section 6(a) of the ``Appendix to National 
Environmental Policy Act: Coast Guard Procedures for Categorical 
Exclusions, Notice of Final Agency Policy'' (67 FR 48244, July 23, 
2002). This rule involves regulations which concern documentation and 
equipping of vessels, as well as regulations concerning vessel 
operation safety standards. An environmental analysis checklist and a 
categorical exclusion are available in the docket where indicated under 
ADDRESSES.

List of Subjects

33 CFR Part 97

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

33 CFR Part 160

    Administrative practice and procedure, Harbors, Hazardous materials 
transportation, Marine safety, Navigation (water), Personally 
identifiable information, Reporting and recordkeeping requirements, 
Seamen, 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 amends 
33 CFR chapter I and 46 CFR part 97 as follows:

Title 33--Navigation and Navigable Waters

0
1. Add part 97 to subchapter F to read as follows:

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.
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.
97.315 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 subpart applies to--
    (1) A self-propelled cargo 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), that does not solely carry liquid or solid 
cargoes in bulk, and that is either a U.S.-flagged self-propelled cargo 
vessel, or a foreign-flagged self-propelled cargo vessel that is 
operating in waters subject to the jurisdiction of the United States;
    (2) A U.S.-flagged self-propelled cargo vessel that chooses to have 
this subpart applied to it by submitting a cargo securing manual for 
approval in accordance with Sec.  97.200(a)(3);
    (3) A foreign-flagged self-propelled cargo vessel of 500 gross tons 
or more on an international voyage from a country that is not a 
signatory to SOLAS, that would otherwise be required to comply with 
Chapter VI/5.6 or Chapter VII/5 of SOLAS, that does not solely carry 
liquid or solid cargoes in bulk, and that 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 subpart 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

[[Page 28015]]

subpart may be provided or submitted in electronic form or in printed 
form.


Sec.  97.105  Definitions.

    As used in this subpart--
    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 subpart and that 
is used by the master of a vessel to properly stow and 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 subpart, 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 Commandant 
(CG-OES), 2703 Martin Luther King, Jr. Avenue SE., Stop 7509, 
Washington, DC 20593-7509 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 subpart 
with the approval of the Director of the Federal Register under 5 
U.S.C. 552(a) and 1 CFR part 51. All approved material is available for 
inspection by contacting Mr. Ken Smith of the Coast Guard's Vessel and 
Facility Operating Standards Division, Commandant (CG-OES-2); telephone 
202-372-1413, email [email protected], 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) MSC.1/Circ.1352, Amendments to the Code of Safe Practice for 
Cargo Stowage and Securing (CSS Code), June 30, 2010 (Maritime Safety 
Committee Circular), IBR approved for Sec.  97.120(b).
    (2) MSC.1/Circ. 1353/Rev.1, Revised Guidelines for the Preparation 
of the Cargo Securing Manual, December 15, 2014 (Maritime Safety 
Committee Circular), IBR approved for Sec.  97.120(a).
    (3) Resolution A.739(18) (Res.A.739(18)), Guidelines for the 
Authorization of Organizations Acting on Behalf of the Administration, 
November 22, 1993 (Assembly Resolution), IBR approved for Sec.  
97.310(a).


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) 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 (c) of this 
section, the vessel must also report it as soon as possible in 
accordance with 49 CFR 176.48.
    (b) 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.
    (c) 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) Any vessel to which this subpart 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 MSC.1/Circ. 1353/Rev.1, (incorporated by reference, see 33 CFR 
97.110).
    (b) 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 MSC.1/Circ.1352, Annex 14, Guidance on Providing Safe 
Working Conditions for Securing of Containers on Deck (incorporated by 
reference, see 33 CFR 97.110).
    (c) While operating in waters under the jurisdiction of the United 
States, the Coast Guard may board any vessel to which this subpart 
applies to determine that the vessel has the document(s) required by 
paragraph (a) of this section on board. Any foreign-flagged vessel 
found not to be in compliance with paragraph (a) of this section may be 
detained by order of the Captain of the Port 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) Owners of U.S.-flagged vessels on international voyages must 
have Cargo Securing Manuals (CSMs) approved in accordance with this 
part.
    (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 CSM approval authority applications and 
providing 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

[[Page 28016]]

enclosing a self-addressed, stamped envelope.
    (3) The applicant must submit two dated copies of a CSM that meets 
the requirements of this subpart 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 Securing Manual (Amendment--if applicable) was reviewed for 
compliance with Maritime Safety Committee Circular 1353 (MSC.1/Circ. 
1353/Rev.1) 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, on board 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 of the following events occurs:
    (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 CSM 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 submitter with a final written 
ruling on the request, with a copy to the Commandant.
    (b) A submitter 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 submitter 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 submitter 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.

    The following organizations are authorized to act on behalf of the 
United States for the review and approval of CSMs:
    (a) 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 ``Summary of 
Authorizations'' link.
    (b) The National Cargo Bureau, Inc., 17 Battery Place, Suite 1232, 
New York, NY 10004-1110, 212-785-8300, http://www.natcargo.org.


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

[[Page 28017]]

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); and
    (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 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 United States 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 Res.A.739(18), (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. 1225 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 on board 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.

[[Page 28018]]

Title 46--Shipping

PART 97--OPERATIONS

0
3. 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
4. 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 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: April 28, 2016.
J.G. Lantz,
Director of Commercial Regulations and Standards, U.S. Coast Guard.
[FR Doc. 2016-10725 Filed 5-6-16; 8:45 am]
BILLING CODE 9110-04-P