2024-17061. Exemption for Active-Duty Uniformed Service Members From Merchant Mariner Credentialing Fees

Table 1 a —Summary of the Impacts of Policy Letter 02-20 Pre-Policy Baseline

[All figures in 2023 dollars]

Category	Impacts
Applicability	46 U.S.C. 2110, Executive Order 13860, and NDAA 2020.
Affected Population	Members of the uniformed services (Army, Navy, Air Force, Space Force, Marine Corps, Coast Guard, Commissioned Corps of NOAA, Commissioned Corps of USPHS), including reservists and members of the National Guard, who are on active duty at the time of application, or are current members of the reserve forces and were previously on active duty.
Estimated Fee Waivers (annually)	The estimated number of fee waivers in the future is 622 (annually).
Labor costs for applicants to provide documentation of eligibility for an MMC fee waiver	$10.23 per application. The 14-year documentation costs for the 622 yearly applicants are: • $89,105 (in total undiscounted dollars). • $73,948. $6,365 (annualized, discounted at 7%).
Labor costs to the Coast Guard to evaluate applicant's eligibility for MMC fee waiver	$8.50 per application. The 14-year costs to the Coast Guard are: • $74,018 (in total undiscounted dollars). • $60,608 (total, discounted at 7%). $5,287 (annualized, discounted at 7%).
Transfer payments (eliminated applicant's MMC fees paid to the Federal Government)	The mean estimated transfer is $159 per MMC. Over the 14-year period, the transfers are estimated at: • $1,384,572 (in total undiscounted dollars). • $1,133,720 (total, discounted at 7%). $98,898 (annualized, discounted at 7%).
Unquantified benefits	May provide uniformed services members greater flexibility with respect to pursuing careers after leaving the uniformed services.

Table 1 b —Summary of the Impacts of Final Rule

[All figures are in 2023 dollars]

Category	Impacts
Applicability	46 U.S.C. 2110, Executive Order 13860, and NDAA 2020.
Affected Population	This final rule covers only uniformed service members and reservists on active duty, members of the Selected Reserve, and members of the Ready Reserve Corps of the USPHS.
	This final rule involves a narrower population because Policy Letter 02-20 covers all reservists currently on active duty as well as those who were on active duty in the past.
Estimated Fee Exemptions (annually)	The number of fee exemptions in the future is estimated, for purposes of our analysis, at 622 (annually).
	However, because the only change from Policy Letter 02-20 involves a potential decrease in the reservist population, the actual number may be smaller. Due to a lack of data, it is not possible to quantify this number.
Labor costs for applicants to provide documentation of eligibility for an MMC fee exemption	$10.23 per application.
	There are no additional labor costs to the applicants to provide documentation as this rulemaking codifies the already-existing Policy Letter 02-20.
Labor costs to the Coast Guard to evaluate applicant's eligibility for MMC fee exemption	$8.50 per application.
	There are no additional labor costs expected from the implementation of this rulemaking as it codifies the already-existing Policy Letter 02-20.
Transfer payments (eliminated applicant's MMC fees paid to the Federal Government)	Codifies MMC Fee Waiver. The mean estimated transfer is $159 per MMC.
	There are no additional transfer payments expected from the implementation of this final rule as it codifies the already existing Policy Letter 02-20.
Unquantified benefits	May reduce the burden on the affected population by increasing efficiency and transparency, as opposed to remaining a standalone policy letter.
Note: Aggregate total numbers in the table have been rounded to the closest whole dollar.

Part I. CG-MMC Policy Letter 02-20 (Pre-Policy Baseline)

A policy letter was published to immediately implement Executive Order 13860 and section 3511(c)(1) of the NDAA 2020. Implementing the policy letter had three impacts. The first impact was the time that applicants were required to provide documentation to show eligibility for the MMC fee waiver.^[14] The second impact involved the labor costs for the Coast Guard to evaluate documentation for eligibility of the fee waiver. Before the policy letter was implemented, the Coast Guard did not have to evaluate such documentation, so there was no cost to the Government. The third impact of the policy letter was in the form of transfer payments, which are monetary payments from one group to another that do not affect the total resources available to society. Before the Coast Guard implemented the policy letter, the affected population was required to pay the MMC fees. Following publication of the policy letter, the Federal Government incurred the cost of those fees. These three factors comprise the effects of the of Policy Letter 02-20.

Affected Population for Policy Letter 02-20

In accordance with Executive Order 13860, section 3511 of the NDAA 2020, and the authority under 46 U.S.C. 2110(g), the Coast Guard waived MMC fees for members of the uniformed services (Army, Navy, Air Force, Marine Corps, Space Force, Coast Guard, and the Commissioned Corps of NOAA and the USPHS), including reservists and members of the National Guard, if they were on active duty at the time of application, or a member of the reserve forces and were previously on active duty.^[15] The fee waiver was implemented through Policy Letter 02-20. This policy letter took effect on May 26, 2020. Data is available for all these categories of personnel except the Ready Reserve Corps of the USPHS. The Ready Reserve Corps of the USPHS was authorized and funded by the Coronavirus Aid, Relief and Economic Security Act and signed into law on March 27, 2020. It only began to accept applications in the fall of 2020.^[16]

With respect to the other groups mentioned, the maximum potentially affected population was 2,145,035. That was the total number of personnel who may have been eligible for an MMC fee waiver. A detailed breakdown of this population can be found below in table 2.

Table 2—Maximum Total Potentially Affected Population by Policy Letter 02-20

Service branch	Number	Source	Notes
Members of Uniformed Services
Army Navy Air Force and Space Force	466,172 340,390 329,257	Defense Manpower Data Center DMDC website, https://dwp.dmdc.osd.mil/​dwp/​app/​dod-data-reports/​workforce-reports (last visited 4/9/2024)	This data is as of the quarter ending March 2022.1
Marines	176,259
Coast Guard	40,308
Commissioned Corps of NOAA	327	Information from NOAA, provided May 27, 2021
Commissioned Corps of USPHS	6,100	Department of Health and Human Services website https://uscg.sharepoint-mil.us/​sites/​PWA-DCO-5P/​ActiveRulemakingProjects/​CG-REGActiveRulemakingProjects/​Undocketed-MMCFeeWaiver/​ECON/​NPRM/​Data/​Population/​In-ScopeOldPreMay26,2021/​PopulationSetActiveDuty/​USPHSSize.pdf?​CT=​1712845632479&​OR=​ItemsView (last visited 4/11/24)
Total Active Uniformed Service Members	1,358,813
Members of Selected Reserve of the Ready Reserve
Army Reserve Army National Guard of the U.S. Navy Reserve Air Force Reserve Air National Guard of the U.S.	180,647 333,182 56,017 69,697 106,964	Defense Manpower Data Center website, https://dwp.dmdc.osd.mil/​dwp/​app/​dod-data-reports/​workforce-reports, (last visited 4/9/2024). Downloaded from section “military personal, Military and civilian personnel by service/agency by state/country, March 2022”	This data is as of March 2022.2
Marine Corps Reserves	33,607
Coast Guard Reserves	6,108
Commissioned Corps of USPHS (Ready Reserve)	N.A.3
Space Force Reserve	4  0
Total Members of Selected Reserve of the Ready Reserve	786,222
Total Active Uniformed Service Members + Members of Selected Reserve of the Ready Reserve	2,145,035
1  This table does not include personnel on temporary duty or deployed in support of contingency operations. The data is the latest available as of June 2022.
2  Latest available data as of the search date, September 1, 2022.
3  USPHS Ready Reserve was created in March 2020 and started to take applications in Fall 2020.
4  The Space Force, as of September 1, 2022, does not have a reserve element.

Of the 2,145,035 eligible persons, only a small number applied for an MMC and received a fee waiver. Based on available data, 2020 through 2022 inclusively, an average of 622 eligible persons were granted a waiver of MMC fees per year. The Coast Guard assumes that, in the 10-year period following implementation of Policy Letter 02-20, an average of 622 persons will continue to annually request and receive a waiver of MMC fees.

MMC Fees To Be Exempted

Table 3 provides the MMC evaluation, examination, and issuance fees waived for qualifying individuals based on Policy Letter 02-20.^[17] The column on the right side shows the aggregated evaluation, examination, and issuance fees for each type of credential transaction. The average fee for an MMC, as can be seen at the bottom of table 3, is $159.38.^[18]

Table 3—Fee for MMCs and Associated Endorsements From Table 1 to § 10.219( a ) in 46 CFR 10.219( a )

If you apply for	Evaluation, then the fee is . . .	Examination, then the fee is . . .	Issuance, then the fee is . . .	Total
MMC with officer endorsement:
Original:
Upper level 1	$100	$110	$45	$255
Lower level 2	100	95	45	240
Renewal	50	45	45	140
Raise of grade	100	45	45	190
Modification or removal of limitation or scope	50	45	45	140
Radio Officer endorsement:
Original	50	45	45	140
Renewal	50	n/a	45	95
Staff officer endorsements:
Original	90	n/a	45	135
Renewal	50	n/a	45	95
MMC with rating endorsement:
Original endorsement for ratings other than qualified ratings	95	n/a	45	140
Original endorsement for qualified rating	95	140	45	280
Upgrade or raise of grade	95	140	45	280
Renewal endorsement for ratings other than qualified ratings	50	n/a	45	95
Renewal endorsement for qualified rating	50	45	45	140
Modification or removal of limitation or scope	50	45	45	140
STCW endorsement:
Original	0	0	0	n/a
Renewal	0	0	0	n/a
Reissue, replacement, and duplicate	n/a	n/a	45	45
			Summary Statistics
			Mean	$159.38
			Lower Bound	$45.00
			Upper Bound	$280.00
			Credential transaction types that require fees	16

Cost and Transfer Impacts of Policy Letter 02-20

As stated previously, there were three impacts of the policy letter. The first was it resulted in a cost to applicants to provide the documentation needed to show eligibility for the MMC fee waiver. The second was the cost to the Coast Guard to process this documentation. The third was the transfer price associated with the costs of the fees being shifted from individual applicants to the Federal Government. The costs to applicants are discussed in detail in section (1), the costs to the Coast Guard are discussed in section (2), the combined costs to applicants and the Coast Guard are discussed in section (3), and the transfer costs are detailed in section (4).

(1) Labor Costs for Applicants Providing Documentation Showing Eligibility for MMC Fee Waiver

Applicants for an MMC fee waiver, under Policy Letter 02-20, provided documentation to show eligibility. Examples of documentation include, but are not limited to, active duty orders citing Titles 10 or 14 of the U.S.C., a letter from the command or personnel office on official letterhead stating that the applicant was serving under Titles 10 or 14 of the U.S.C., or similar documentation. The applicant submitted the documentation with their application for an MMC.^[19]

The National Maritime Center (NMC) estimated that it took applicants 15 minutes to obtain eligibility documentation and include it with an MMC application.^[20 21] The Coast Guard estimates the mean hourly rate of active duty uniformed service members at $40.93 per hour (in 2023 dollars).^[22] To estimate hourly rates, the Coast Guard divides $85,416.12 (the average annual pay of all active duty military personnel, rounded) by 2,087, which the Office of Personnel and Management uses as the number of working hours in a year, per 5 U.S.C. 5504(b)(1).^[23] Therefore, the Coast Guard estimates the average hourly rate of active duty uniformed service members, in 2023 dollar terms, is $40.93 ^[24] ($85,416.12 ÷ 2,087, rounded).

The Coast Guard estimates it takes 15 minutes to provide the documentation showing eligibility for the fee waiver and forecasts 622 applicants per year. We estimate the total cost (in 2023 dollars) for all applicants to be $6,365 per year, rounded (622 applicants × $40.93 per hour × (15 minutes ÷ 60 minutes) ^[25] ).

Table 4 shows the estimated nominal cost over a 14-year period, including discounted and annualized figures. Because the policy letter became effective in 2020, table 4 shows the estimated costs for the 14-year period covering 2020 through 2033.^[26] Table 4 shows the pre-policy letter baseline, which is the 14-year period following the implementation of the policy letter. All dollar figures in table 4, as with all other tables in this Regulatory Analysis, are in 2023 dollars unless otherwise stated.

Table 4—Labor Costs for Applicants Completing MMC Fee Waiver Documentation

[Policy Letter 02-20 impact, pre-policy letter implementation baseline]

Table 4—Labor Costs to In-Scope Applicants of Completing MMC Fee Waiver Documentation (Policy Letter 02-20 Impact) (Pre-policy letter implementation baseline)
Year	Nominal	3%	7%
Year 1 (2020)	$6,365	$6,955	$7,797
Year 2 (2021)	6,365	6,752	7,287
Year 3 (2022)	6,365	6,556	7,797
Year 4 (2023)	6,365	6,365	6,365
Year 5 (2024)	6,365	6,179	5,948
Year 6 (2025)	6,365	5,999	5,559
Year 7 (2026)	6,365	5,825	5,195
Year 8 (2027)	6,365	5,655	4,856
Year 9 (2028)	6,365	5,490	4,538
Year 10 (2029)	6,365	5,330	4,241
Year 11 (2030)	6,365	5,175	3,964
Year 12 (2031)	6,365	5,024	3,704
Year 13 (2032)	6,365	4,878	3,462
Year 14 (2033)	6,365	4,736	3,235
Total	89,105	80,919	73,948
NPV of nominal stream		71,895	55,662
Annualized		6,365	6,365
Please note totals may not sum up exactly due to rounding.

(2) Labor Costs to the Coast Guard To Evaluate and Process Documentation Showing Eligibility for MMC Fee Waivers

Just as there are labor costs for applicants to submit documentation, there are labor costs to the Coast Guard to evaluate and process the documentation showing eligibility for an MMC fee waiver. The NMC estimates that the time to process the typical documentation is 10 minutes, or 0.17 hours (10 ÷ 60). The processing is performed by personnel holding positions at the Government General Schedule (GS) pay scale of GS-07. According to Commandant Instruction 7310.1W,^[27] the hourly loaded rate for a GS-07 Coast Guard employee is $50.00.^[28] This rate is in 2023 dollars. Thus, the labor cost to the Coast Guard to process the eligibility documentation is $8.50 (0.17 hours × $50.00 per hour) per applicant (in 2023 dollars).

As stated previously, the Coast Guard assumes 622 applicants will receive a MMC fee waiver each year. Given this, the Coast Guard predicts it will spend $5,287 per year to evaluate and process documentation provided by applicants showing eligibility for fee waivers (622 × $8.50 = $5,287, rounded to the nearest whole dollar). The Coast Guard estimates the aggregate 14-year cost to the Government is $60,608, with an annualized figure of $5,287, discounted at 7 percent. Table 5 provides the labor costs by year.

Table 5—Labor Costs to Coast Guard To Evaluate Eligibility for MMC Fee Waiver

[Policy Letter 02-20 impact, pre-policy letter implementation baseline]

Year	Nominal	3%	7%
Year 1 (2020)	$5,287	$5,777	$6,477
Year 2 (2021)	5,287	5,609	6,053
Year 3 (2022)	5,287	5,446	5,657
Year 4 (2023)	5,287	5,287	5,287
Year 5 (2024)	5,287	5,133	4,941
Year 6 (2025)	5,287	4,984	4,618
Year 7 (2026)	5,287	4,838	4,316
Year 8 (2027)	5,287	4,697	4,033
Year 9 (2028)	5,287	4,561	3,770
Year 10 (2029)	5,287	4,428	3,523
Year 11 (2030)	5,287	4,299	3,292
Year 12 (2031)	5,287	4,174	3,077
Year 13 (2032)	5,287	4,052	2,876
Year 14 (2033)	5,287	3,934	2,688
Total	74,018	67,218	60,608
Annualized		5,287	5,287
Please note totals may not sum due to rounding.

(3) Aggregated Labor Costs for Applicants and the Coast Guard Associated With Documentation of Eligibility for an MMC Fee Waiver

The Coast Guard estimates the total costs related to the documentation of eligibility for applicants and the Coast Guard shown in tables 4 and 5 for the 14-year period following the implementation of the policy letter in table 6. The estimated total costs to evaluate and process the documentation for applicants and the Coast Guard for the 14-year period is $133,569, with an annualized cost of $11,652, discounted at 7 percent.

Table 6—Total Costs to Applicants and Coast Guard To Evaluate and Process Documentation of Eligibility for MMC Fee Waiver

[Policy Letter 02-20 impact, pre-policy letter implementation baseline]

Year	Nominal	3%	7%
Year 1 (2020)	$11,652	$12,732	$14,274
Year 2 (2021)	11,652	12,361	13,340
Year 3 (2022)	11,652	12,001	12,467
Year 4 (2023)	11,652	11,652	11,652
Year 5 (2024)	11,652	11,312	10,889
Year 6 (2025)	11,652	10,983	10,177
Year 7 (2026)	11,652	10,663	9,511
Year 8 (2027)	11,652	10,352	8,889
Year 9 (2028)	11,652	10,051	8,307
Year 10 (2029)	11,652	9,758	7,764
Year 11 (2030)	11,652	9,474	7,256
Year 12 (2031)	11,652	9,198	6,781
Year 13 (2032)	11,652	8,930	6,338
Year 14 (2033)	11,652	8,670	5,923
Total	163,123	148,137	133,569
NPV of nominal stream		131,617	101,899
Annualized		11,652	11,652
Please note totals may not sum due to rounding.

(4) Eliminating Transfer Payments to Federal Government of Providing MMC Fee Waivers

Before the Coast Guard implemented Policy Letter 02-20, applicants had to pay evaluation, examination, and issuance fees to obtain an MMC.^[29] Implementing the policy letter eliminated this requirement for applicants eligible for a fee waiver. No longer requiring applicants to pay MMC fees represents a loss of revenue to the Federal Government and an equal gain to eligible MMC applicants. This is referred to as a transfer payment. For those MMC fees that were eliminated by the policy letter, the Federal Government will face a shortfall in revenues. The revenues from those fees will need to be made up through alternative means (for example, increased taxes, new or increased fees for other services, or similar sources of revenue or in some other manner). Thus, there will be no net social benefit or cost with respect to transfer payments.

As stated previously, the average annual number of uniformed service members who received a waiver of MMC fees between 2020 and 2022 (inclusively) was 622. The estimated average fee associated with the applications for these MMCs was $159 each (in 2023 dollars).^[30]

For this population, the cost was $98,898 per year in nominal terms (622 × $159.00 = $98,898). Thus, for the 14 years after the implementation of the policy letter, the Coast Guard estimates transfer payments will total $1,133,720, with an annualized amount of $98,898, discounted at 7 percent. These estimates can be seen in table 7.

Table 7—Transfer Payments—Eliminated

[Policy Letter 02-20 impact, pre-policy letter implementation baseline]

Year	Nominal	3%	7%
Year 1 (2020)	$98,898	$108,069	$121,154
Year 2 (2021)	98,898	104,921	113,228
Year 3 (2022)	98,898	101,865	105,821
Year 4 (2023)	98,898	98,898	98,898
Year 5 (2024)	98,898	96,017	92,428
Year 6 (2025)	98,898	93,221	86,381
Year 7 (2026)	98,898	90,506	80,730
Year 8 (2027)	98,898	87,870	75,449
Year 9 (2028)	98,898	85,310	70,513
Year 10 (2029)	98,898	82,826	65,900
Year 11 (2030)	98,898	80,413	61,589
Year 12 (2031)	98,898	78,071	57,560
Year 13 (2032)	98,898	75,797	53,794
Year 14 (2033)	98,898	73,589	50,275
Total	1,384,572	1,257,372	1,133,720
NPV of nominal stream		1,117,159	864,909
Annualized		98,898	98,898
Please note totals may not sum due to rounding.