[Federal Register Volume 60, Number 199 (Monday, October 16, 1995)]
[Proposed Rules]
[Pages 53572-53573]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-25581]
=======================================================================
-----------------------------------------------------------------------
FEDERAL MARITIME COMMISSION
46 CFR Part 552
[Docket No. 95-15]
Availability of the Annual Financial and Operating Statements
Filed by Domestic Offshore Carriers
AGENCY: Federal Maritime Commission.
ACTION: Notice of Proposed Rulemaking.
-----------------------------------------------------------------------
SUMMARY: The Federal Maritime Commission proposes amending its
regulations governing the availability of the annual financial and
operating statements filed by vessel-operating common carriers by water
in the domestic offshore trades. Comments are sought on a proposal to
allow access to the annual statements by the attorneys general of the
non-contiguous states, territories, and possessions having ports in the
trade served by the carrier. The proposed rule addresses a comment made
in a prior proceeding by the State of Hawaii, and is intended to
improve parties' access to the information while avoiding harm to a
regulated carrier's competitive position.
DATES: Comments due November 15, 1995.
ADDRESSES: Comments (original and fifteen copies) to: Joseph C.
Polking, Secretary, Federal Maritime Commission, 800 North Capitol
Street, N.W., Washington D.C. 20573-0001, 202-523-5725.
FOR FURTHER INFORMATION CONTACT:
Anne M. McAloon, Bureau of Economics and Agreement Analysis, Federal
Maritime Commission, 800 North Capitol Street, N.W., Washington D.C.
20573-0001, 202-523-5790
C. Douglass Miller, Office of the General Counsel, Federal Maritime
Commission, 800 North Capitol Street, N.W., Washington D.C. 20573-0001,
202-523-5740
SUPPLEMENTARY INFORMATION: On September 5, 1995, the Federal Maritime
Commission (``FMC'' or ``Commission'') published a final rule in FMC
Docket No. 94-07, Financial Reporting Requirements and Rate of Return
Methodology in the Domestic Offshore Trades (``Docket 94-07''), which
amended the provisions governing carriers' financial reporting
requirements and rate of return methodology in the domestic offshore
trades (60 FR 46047). Among other things, the rule changed the method
of determining the reasonableness of a carrier's return on rate base
from the comparable earnings test to the before-tax weighted average
cost of capital methodology (``BTWACC'').
In comments on the proposed rule in Docket 94-07, the State of
Hawaii (``Hawaii'') argued that the proposed BTWACC methodology would
require that all interested parties have access to complete and
accurate information regarding a carrier's financing and
capitalization. Hawaii pointed out that the comparable earnings test,
which was previously required to be used, does not rely on company-
specific data because it uses a cost of capital estimate based on the
rate of return of U.S. manufacturing firms in general. However, under
the BTWACC methodology, Hawaii noted that carriers would be using
company-specific data to compute their cost of capital and thus any
meaningful rebuttal would require access to such information. Hawaii
concluded therefore that: ``The Commission's current ruling that a
carrier's annual financial report need not be made available to all
parties, places the parties at a disadvantage because it is impossible
to present meaningful rebuttal testimony without a carrier's cost of
capital data.'' (Hawaii Initial Comments at 5).
The Commission's current regulations require the domestic offshore
carriers to file financial and operating data under two circumstances--
annually within 150 days after the close of the carrier's fiscal year
and in support of any general rate increases. The annual statement of
financial and operating data consists of a rate base exhibit and
supporting schedules, an income account exhibit and supporting
schedules, and a rate of return exhibit and supporting schedules. The
annual statement is to be accompanied by a company wide balance sheet
and income statement. The Commission's regulations, at 46 CFR 552.4(c),
protect the carriers' annual reports from public disclosure and treats
them as confidential information in the files of the Commission.
In support of general rate increases, domestic offshore carriers
are required to file, pursuant to 46 CFR 552.2(f), the following
material: an actual midyear rate base exhibit and supporting schedules
for a twelve-month period commencing not more than fifteen months prior
to the proposed increase; a projected midyear rate base exhibit and
supporting schedules for a twelve-month period commencing on the first
day of the month following the date on which the proposed increase will
become effective; a projected income account exhibit and supporting
schedules for the same period as the projected midyear rate base
exhibit; actual and projected rate of return exhibits; and associated
workpapers. In
[[Page 53573]]
the event the general increase in rates is filed within six months of
the end of the carrier's fiscal year, the regulated carrier may submit
its annual report in lieu of the actual and projected income account
exhibit. In addition, Rule 67 of the Commission's Rules of Practice and
Procedure, 46 CFR 502.67, requires the carrier to file, under oath,
testimony and exhibits constituting its direct case. Both the material
submitted pursuant to 46 CFR 552.2(f) and the testimony and exhibits
submitted pursuant to Rule 67 (which includes the 46 CFR 552.2(f)
material) are public.
The Commission has traditionally recognized that disclosing the
information contained in the domestic offshore carriers' annual reports
(FMC Forms 377 and 378) to third parties may cause harm to the
regulated carrier's competitive position. However, given the changes to
the rate of return methodology made in Docket 94-07, the Commission
believes that Hawaii's statement merits further consideration. For
example, the BTWACC methodology prescribes the use of a proxy group to
determine the cost of common-stock equity for a company that does not
issue its own common-stock equity, and requires selection criteria for
proxy group members which are based on information that may be
available only from the annual reports (e.g., annual income in the
trade). Further, proxy group selection would most probably require
historical information beyond that accompanying a general rate increase
filing. Even if a carrier were to include all historical information it
used in choosing a proxy group, other historical annual report
information might suggest a different proxy group selection.
The Commission has found that most federal and state regulatory
agencies do not consider the regulated companies' annual reports to be
confidential. On the federal level, both the Federal Energy Regulatory
Commission and the Federal Communications Commission consider the
annual financial and operating reports of the regulated companies as
public information. Likewise, of those state regulatory agencies
requiring public utilities to file annual financial reports, the
majority regard the contents of those reports to be public
information.\1\
\1\ See ``Table 59, Annual Accounting Report Forms,'' in Utility
Regulatory Policy in the United States and Canada Compilation 1992-
1993, National Association of Utility Regulatory Commissioners
(``NAURC''), Washington, D.C., 1993, pp. 126-7.
---------------------------------------------------------------------------
The Commission, therefore, is proposing to amend its rules to allow
access to the annual reports by the attorneys general of noncontiguous
states, commonwealths, possessions or territories having ports in the
relevant trade served by the regulated carrier. The government officers
and employees given access to the annual statements would be required
to certify to the Commission that the information will not be disclosed
to the public and will only be used in connection with analyzing the
allowable rate of return for the regulated carrier in FMC proceedings.
This should allow entities charged with protecting consumer welfare
access to complete financial information concerning the carrier, while
at the same time avoiding harm to the regulated carrier.
Commenters on this proposal are directed to specifically address
the necessity of obtaining the information contained in the carriers'
annual reports and whether that information may be obtained from other
sources.
The Federal Maritime Commission certifies pursuant to section
605(b) of the Regulatory Flexibility Act, 5 U.S.C. 605(n), that this
rule will not have a significant economic impact on a substantial
number of small entities, including small businesses, small
organizational units and small government jurisdictions. The rule is
procedural only and will provide certain parties with more complete
information upon which to base a protest under section 3 of the
Intercoastal Shipping Act, 1933, 46 U.S.C. app. 845. This proposed rule
does not contain a collection of information within the meaning of the
Paperwork Reduction Act of 1995, 44 U.S.C. 3501, et seq., as
implemented by regulations prescribed within 5 CFR Part 1320.
Accordingly, OMB review is not required.
List of Subjects in 46 CFR Part 552
Maritime carriers, Reporting and recordkeeping requirements,
Uniform system of accounts.
Therefore, pursuant to 5 U.S.C. 553, sections 18 and 43 of the
Shipping Act, 1916, 46 U.S.C. app. 817 and 841a, and sections 2 and 3
of the Intercoastal Shipping Act, 1933, 46 U.S.C. app. 844 and 845,
Part 552 of Title 46, Code of Federal Regulations, is proposed to be
amended as follows:
PART 552--FINANCIAL REPORTS OF VESSEL OPERATING COMMON CARRIERS BY
WATER IN THE DOMESTIC OFFSHORE TRADES
1. The authority citation for Part 552 continues to read as
follows:
Authority: 5 U.S.C. 553; 46 U.S.C. app. 817(a), 820, 841(a),
843, 844, 845, 845a and 847.
2. In Sec. 552.4 a new paragraph (d) is added to read as follows.
Sec. 552.4 Access to and audit of records
* * * * *
(d). The annual statements filed by the carriers with the
Commission may be obtained from the Commission by the attorneys general
of every noncontiguous State, Commonwealth, possession or territory
having ports in the relevant trade that are served by the carrier, and
the employees of such attorneys general, upon the submission of the
following certification, under oath, to the Commission:
CERTIFICATION
I, (Name and title if applicable), of (Full name of entity),
having been duly sworn, certify that the annual statements of (Name
of Carrier) will be used solely in order to prepare protests to the
Federal Maritime Commission (``FMC'') or to participate in FMC
proceedings relating to (Name of Carrier) and that their contents
will not be disclosed to any person who has not signed, under oath,
a certification in the form prescribed, which has been filed with
the Federal Maritime Commission, unless public disclosure is
specifically authorized by an order of the Commission or the
presiding officer in an FMC proceeding.
Signature:-------------------------------------------------------------
Date:------------------------------------------------------------------
Signed and sworn before me this ________ day of __________,
19______.
Notary Public:---------------------------------------------------------
My Commission expires:-------------------------------------------------
By the Commission.
Joseph C. Polking,
Secretary.
[FR Doc. 95-25581 Filed 10-13-95; 8:45 am]
BILLING CODE 6730-01-M
