[Federal Register Volume 61, Number 78 (Monday, April 22, 1996)]
[Rules and Regulations]
[Pages 17814-17816]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9653]
[[Page 17813]]
_______________________________________________________________________
Part V
Department of Transportation
_______________________________________________________________________
Coast Guard
_______________________________________________________________________
46 CFR Part 67
Vessel Rebuilt Determinations; Final Rule
Federal Register / Vol. 61, No. 78 / Monday, April 22, 1996 / Rules
and Regulations
[[Page 17814]]
DEPARTMENT OF TRANSPORTATION
Coast Guard
46 CFR Part 67
[CGD 94-040]
RIN 2115-AE85
Vessel Rebuilt Determinations
AGENCY: Coast Guard, DOT.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Coast Guard is amending its regulation to clarify the
standard for determining when work on a vessel performed outside of the
U.S. constitutes a foreign rebuilding, which results in a loss of
coastwise privileges. Clarifying this standard will help vessel owners
and operators make better business decisions regarding work to be
performed on their vessels. This rule adopts a notice of proposed
rulemaking (NPRM) titled Vessel Rebuilt Determinations (CGD 94-040; 60
FR 17290) published on April 5, 1995, as final with minor changes.
EFFECTIVE DATE: This final rule is effective on June 21, 1996.
ADDRESSES: Unless otherwise indicated, documents referred to in this
preamble are available for inspection or copying at the office of the
Executive Secretary, Marine Safety Council (G-LRA/3406) (CGD 94-025),
U.S. Coast Guard Headquarters, 2100 Second Street SW., Washington, DC
20593-0001, between 8 a.m. and 3 p.m., Monday through Friday, except
Federal holidays. The telephone number is (202) 267-1477.
FOR FURTHER INFORMATION CONTACT: LTJG Michael Antonellis, National
Maritime Center at (703) 235-8447.
SUPPLEMENTARY INFORMATION:
Regulatory History
Two public meetings were held, both preceded by a notice in the
Federal Register. The first meeting was on November 16, 1993 (58 FR
51298), and the second on February 15, 1994 (59 FR 725). The stated
purpose of the public meetings was to obtain public input concerning
whether the Coast Guard should undertake rulemaking to develop clearer
standards for vessel rebuilt determinations.
On May 10, 1994, the Coast Guard published a policy statement in
the Federal Register (CGD 93-063; 59 FR 24060) announcing that it was
planning to undertake rulemaking regarding vessel rebuilt
determinations.
As indicated above, on April 5, 1995, the Coast Guard published the
NPRM. In the NPRM, the Coast Guard proposed to clarify when a vessel is
deemed to have been rebuilt outside the United States, thereby losing
the privilege of engaging in the coastwise trade.
Background and Purpose
When Congress enacted the Merchant Marine Act, 1920 (46 U.S.C. app.
Sec. 883), popularly referred to as the ``Jones Act,'' it included a
provision to provide for a protected trade. Section 27 of the Jones Act
generally prohibited the transportation of merchandise in the coastwise
trade except in vessels built in and documented under the laws of the
United States and owned by citizens of the United States.
In 1956, Congress amended Section 27 by enacting what is known as
the ``Second Proviso.'' Under the proviso as enacted, a vessel of more
than 500 gross tons entitled to engage in the coastwise trade which is
later rebuilt outside the United States permanently loses the right to
engage in the coastwise trade. Further, the proviso originally required
the owner of a vessel of more than 500 gross tons documented in the
United States which is rebuilt outside the United States to make a
report of the circumstances of the rebuilding to the Secretary of
Transportation.
The Second Proviso was amended numerous times as discussed in the
NPRM and now applies to all vessels engaged in coastwise trade,
regardless of tonnage. It was implemented by the Coast Guard primarily
by regulations at 46 CFR Sec. 67.177. The regulatory standard in
Sec. 67.177 states that a vessel is rebuilt when ``any considerable
part of its hull or superstructure is built upon or substantially
altered.'' While the wording of the regulatory standard has remained
stable over the years, the Coast Guard's administration of the standard
has changed and is fully discussed in the NPRM.
Discussion of Comments and Changes
The Coast Guard received three letters in response to the NPRM. Two
letters specifically complimented the Coast Guard for its efforts in
providing the industry with clearer standards relating to vessel
rebuilt determinations. Generally, the three letters addressed the six
matters discussed below.
First: Two comments suggested that the Coast Guard provide a list
of items, such as furnishings and fittings, that could be excluded from
being considered as part of the hull and superstructure for purposes of
making vessel rebuilt determinations. In the preamble to the NPRM, the
Coast Guard identified a number of items which it has previously
considered to be furnishings and fittings. This list, which is not
exhaustive, may be used for guidance. The Coast Guard believes that
providing a specific list would work to the detriment of vessel owners
and limit the Coast Guard's flexibility to determine whether those
items not included on the list should or should not be excluded.
Second: One comment recommended that the numerical lower and upper
parameters of 5 percent to 10 percent be adjusted to provide greater
flexibility. Paragraph (b) of Sec. 67.177 of the NPRM establishes
numerical parameters for rebuilt determinations for vessels, the hull
and superstructure of which are constructed of steel or aluminum. The
Coast Guard agrees that adjusting the minimum threshold to 7.5 percent
is appropriate because that level reflects the Coast Guard's past
determinations of the percentage of steelweight that does not
constitute a rebuilding. However, the Coast Guard finds that raising
the maximum threshold would not reflect past Coast Guard practices.
Therefore, in order to adopt a standard that is consistent with past
Coast Guard practices, the numerical lower and upper parameters in the
final rule are set at 7.5 percent and 10 percent. The Coast Guard's
National Maritime Center, after consultation with the Maritime
Administration and the maritime industry, will reevaluate these minimum
and maximum threshold levels in the future. Based on the history of
vessel rebuild determinations, the Coast Guard may propose additional
changes to these levels and perhaps other aspects of vessel rebuilt
determinations. A shipowner may still apply for a preliminary rebuilt
determination regardless of the level of work being done.
Third: One comment favored the use of a ``surface area comparison''
as opposed to the ``comparability'' standard proposed for vessels built
of materials other than steel or aluminum. The comparability approach
provided in paragraph (c) of Sec. 67.177 of the NPRM requires that the
applicant for a rebuilt determination calculate to the maximum extent
practicable what the steelweight of the vessel as a whole would be if
it were constructed of steel or aluminum. This standard has been tested
over time and determined to work effectively.
Fourth: One comment indicated a need for the Coast Guard to clarify
that repairs in kind should be exempted from the standards applicable
to vessel rebuilt determinations. The Coast Guard believes that vessels
undergoing repairs overseas should continue to report these repairs and
provide the necessary information to ensure that the Coast Guard can
make an independent
[[Page 17815]]
determination that the vessel has not been rebuilt.
Fifth: One comment requested that the term ``vessel steelweight''
be clarified. Vessel steelweight is the actual weight of the hull and
superstructure without furnishings and outfit, machinery, and fluids.
The term ``vessel steelweight'' is intended to mean the same as
``discounted lightship weight.''
Sixth: One comment expressed concern that if a vessel is determined
to be rebuilt, it may also be considered a new vessel and, as a result,
be subject to the provisions of the Oil Pollution Act of 1990 (OPA)
(Pub. L. 101-380). A rebuilt determination will not result in a vessel
being reclassified as a new vessel. If a vessel is subject to this
regulation and is determined to be rebuilt outside of the U.S. pursuant
to this rule, then that vessel will lose its coastwise privileges.
Whether a vessel is subject to the applicability of OPA requirements is
in no way determined by this rule. That a vessel loses its coastwise
privileges because it has been determined to have been rebuilt outside
of the U.S. does not mean necessarily that the vessel will be
considered essentially a new vessel and subject to OPA requirements.
After reviewing and considering these comments, the Coast Guard is
adopting the NPRM as final with minor modifications. In effect, the
term ``Commandant'' wherever it appeared in the NPRM was replaced with
the term ``National Vessel Documentation Center'' (NVDC). The final
rule raises the lower parameter of a rebuilt determination to from 5
percent to 7.5 percent. The Coast Guard has undergone a significant
reorganization and, as a result, established the NVDC in West Virginia
to streamline the vessel documentation program. The public was informed
of the establishment of NVDC in a Federal Register notice published on
June 15, 1995 (60 FR 31602).
Regulatory Evaluation
These regulations are not a significant regulatory action under
section 3(f) of Executive Order 12866 and do not require an assessment
of potential costs and benefits under section 6(a)(3) of that order.
They have not been reviewed by the Office of Management and Budget
under that order. However, they are considered significant under the
regulatory policies and procedures of the Department of Transportation
(DOT) (44 FR 11040; February 26, 1979) due to the interests expressed
by a segment of the maritime industry and the Government of Canada.
The Coast Guard expects the economic impact of these regulations to
be so minimal that a full Regulatory Evaluation under paragraph 10e of
the regulatory policies and procedures of DOT is unnecessary. These
regulations merely clarify existing policies and practices followed in
evaluating rebuilt determinations. As such, the changes are
administrative in nature and provide better guidance to vessel owners
planning for work to be performed on their vessels.
Small Entities
Under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), the
Coast Guard must consider whether these regulations will have a
significant economic impact on a substantial number of small entities.
``Small entities'' may include: (1) small businesses and not-for-profit
organizations that are independently owned and operated and are not
dominant in their fields; and (2) governmental jurisdictions with
populations of less than 50,000.
The Coast Guard expects the economic impact of these regulations to
be minimal because they clarify existing policy and practices. The
changes to the existing regulations are administrative in nature and
are designed to provide better guidance to vessel owners planning to
perform work on their vessels. Because it expects the impact of this
rule to be minimal, the Coast Guard certifies under 5 U.S.C. 605(b)
that these regulations will not have a significant economic impact on a
substantial number of small entities.
Collection of Information
Under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.), the
Office of Management and Budget (OMB) reviews each rule that contains a
collection-of-information requirement to determine whether the
practical value of the information is worth the burden imposed by its
collection. Collection-of-information requirements include reporting,
recordkeeping, notification, and other similar requirements.
This regulation contains collection-of-information requirements in
46 CFR 67.177. However, these collection-of-information requirements
are the same as those contained in the existing regulations which have
been previously approved by OMB and assigned Control No. 2115-0110.
This regulation adds no new or additional collection-of-information
requirements. The regulations will reduce paperwork submissions by
providing sufficiently clear guidance that many of the applications for
preliminary rebuilt determinations may become unnecessary.
Federalism
This rulemaking has been analyzed in accordance with the principles
and criteria contained in Executive Order 12612 and it has been
determined that this rulemaking does not have sufficient federalism
implications to warrant the preparation of a Federalism Assessment.
Environment
The Coast Guard considered the environmental impact of this
rulemaking and concluded that, under paragraph 2.B.2 of Commandant
Instruction M16475.1B, this rule is categorically excluded from further
environmental documentation. This rule is administrative in nature and
will have no significant effect on the environment. A ``Categorical
Exclusion Determination'' is available in the docket for inspection or
copying where indicated under ADDRESSES.
List of Subjects in 46 CFR Part 67
Fees, Incorporation by reference, Vessels.
For the reasons set out in the preamble, the Coast Guard amends 46
CFR part 67 as follows:
PART 67--[AMENDED]
1. The authority citation for part 67 is revised to read as
follows:
Authority: 14 U.S.C. 664; 31 U.S.C. 9701; 42 U.S.C. 9118; 46
U.S.C. 2103, 2107, 2110; 46 U.S.C. app. 841a, 876; 49 CFR 1.45,
1.46.
Sec. 67.19 [Amended]
2. In Sec. 67.19(d)(3), remove ``67.177(a)'' and add, in its place,
``67.177''.
Sec. 67.21 [Amended]
3. In Sec. 67.21(c), remove ``67.177(a)'' and add, in its place,
``67.177''.
4. Section 67.177 is revised to read as follows:
Sec. 67.177 Application for foreign rebuilding determination.
A vessel is deemed rebuilt foreign when any considerable part of
its hull or superstructure is built upon or substantially altered
outside of the United States. In determining whether a vessel is
rebuilt foreign, the following parameters apply:
(a) Regardless of its material of construction, a vessel is deemed
rebuilt when a major component of the hull or superstructure not built
in the United States is added to the vessel.
(b) For a vessel of which the hull and superstructure is
constructed of steel or aluminum--
(1) A vessel is deemed rebuilt when work performed on its hull or
superstructure constitutes more than 10
[[Page 17816]]
percent of the vessel's steelweight, prior to the work, also known as
discounted lightship weight.
(2) A vessel may be considered rebuilt when work performed on its
hull or superstructure constitutes more than 7.5 percent but not more
than 10 percent of the vessel's steelweight prior to the work.
(3) A vessel is not considered rebuilt when work performed on its
hull or superstructure constitutes 7.5 percent or less of the vessel's
steelweight prior to the work.
(c) For a vessel of which the hull and superstructure is
constructed of material other than steel or aluminum--
(1) A vessel is deemed rebuilt when work performed on its hull or
superstructure constitutes a quantum of work determined, to the maximum
extent practicable, to be comparable to more than 10 percent of the
vessel's steelweight prior to the work, calculated as if the vessel
were wholly constructed of steel or aluminum.
(2) A vessel may be considered rebuilt when work performed on its
hull or superstructure constitutes a quantum of work determined, to the
maximum extent practicable, to be comparable to more than 7.5 percent
but not more than 10 percent of the vessel's steelweight prior to the
work, calculated as if the vessel were wholly constructed of steel or
aluminum.
(3) A vessel is not considered rebuilt when work performed on its
hull or superstructure constitutes a quantum of work determined, to the
maximum extent practicable, to be comparable to 7.5 percent or less of
the vessel's steelweight prior to the work, calculated as if the vessel
were wholly constructed of steel or aluminum.
(d) For a vessel of mixed construction, such as a vessel the hull
of which is constructed of steel or aluminum and the superstructure of
which is constructed of fibrous reinforced plastic, the steelweight of
the work performed on the portion of the vessel constructed of a
material other than steel or aluminum will be determined, to the
maximum extent practicable, and aggregated with the work performed on
the portion of the vessel constructed of steel or aluminum. The
numerical parameters described in paragraph (b) of this section will
then be applied to the aggregate of the work performed on the vessel
compared to the vessel's steelweight prior to the work, calculated as
if the vessel were wholly constructed of steel or aluminum, to
determine whether the vessel has been rebuilt.
(e) The owner of a vessel currently entitled to coastwise, Great
Lakes, or fisheries endorsements which is altered outside the United
States and the work performed is determined to constitute or be
comparable to more than 7.5 percent of the vessel's steelweight prior
to the work, or which has a major component of the hull or
superstructure not built in the United States added, must file the
following information with the National Vessel Documentation Center
within 30 days following the earlier of completion of the work or
redelivery of the vessel to the owner or owner's representative:
(1) A written statement applying for a rebuilt determination,
outlining in detail the work performed and naming the place(s) where
the work was performed;
(2) Calculations showing the actual or comparable steelweight of
the work performed on the vessel, the actual or comparable steelweight
of the vessel, and comparing the actual or comparable steelweight of
the work performed to the actual or comparable steelweight of the
vessel;
(3) Accurate sketches or blueprints describing the work performed;
and
(4) Any further submissions requested by the National Vessel
Documentation Center.
(f) Regardless of the extent of actual work performed, the owner of
a vessel currently entitled to coastwise, Great Lakes, or fisheries
endorsements may, as an alternative to filing the items listed in
paragraph (e) of this section, submit a written statement to the
National Vessel Documentation Center declaring the vessel rebuilt
outside the United States. The vessel will then be deemed to have been
rebuilt outside the United States with loss of trading privileges.
(g) A vessel owner may apply for a preliminary rebuilt
determination by submitting:
(1) A written statement applying for a preliminary rebuilt
determination, outlining in detail the work planned and naming the
place(s) where the work is to be performed;
(2) Calculations showing the actual or comparable steelweight of
work to be performed on the vessel, the actual or comparable
steelweight of the vessel, and comparing the actual or comparable
steelweight of the planned work to the actual or comparable steelweight
of the vessel;
(3) Accurate sketches or blueprints describing the planned work;
and
(4) Any further submissions requested by the National Vessel
Documentation Center.
Note: A statement submitted in accordance with paragraph (f) of
this section does not constitute an application for a rebuilt
determination and does not require payment of a fee.
Dated: March 18, 1996.
A.E. Henn,
Vice Admiral, U.S. Coast Guard, Acting Commandant.
[FR Doc. 96-9653 Filed 4-19-96; 8:45 am]
BILLING CODE 4910-14-M
