E6-1691. Maintenance and Repair Reimbursement Pilot Program

AGENCY:

Maritime Administration, Department of Transportation.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

This proposed rule will amend the Maritime Administration's (MARAD's) regulations governing its pilot program for the reimbursement of costs of qualified maintenance and repair (M&R) of Maritime Security Program (MSP) vessels performed in United States shipyards. Under Public Law 109-163, the Secretary of Transportation, acting through the Maritime Administrator, is directed to implement regulations that, among other things, replace MARAD's voluntary M&R reimbursement program with a mandatory system.

DATES:

Comments are due by April 10, 2006.

ADDRESSES:

You may submit comments [identified by DOT DMS Docket Number MARAD-2006-23804] by any of the following methods:

• Web Site: http://dms.dot.gov. Follow the instructions for submitting comments on the DOT electronic docket site.
• Fax: [phone].
• Mail: Docket Management Facility; U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, Washington, DC 20590-001.
• Hand Delivery: Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal Holidays.
• Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting comments.

Instructions: All submissions must include the agency name and docket number or Regulatory Identification Number (RIN) for this rulemaking. Note that all comments received will be posted without change to http://dms.dot.gov including any personal information provided. Please see the Privacy Act heading under Rulemaking Notices.

Docket: For access to the docket to read background documents or comments received, go to http://dms.dot.gov at any time or to Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m. (EST or EDT), Monday through Friday, except Federal Holidays.

FOR FURTHER INFORMATION CONTACT:

Jean E. McKeever, Associate Administrator for Marine Asset Development, Maritime Administration, 400 Seventh Street, SW., Washington, DC 20590; phone: [phone]; fax: [phone]; or e-mail [e-mail].

SUPPLEMENTARY INFORMATION:

Background

The Maritime Security Program (MSP) was established to maintain a modern U.S.-flag fleet of commercially viable, militarily useful, privately-owned vessels for national defense needs and to maintain a strong U.S. presence in international maritime trade. Under the MSP, the U.S. Government contracts with certain operators of U.S.-flag commercial vessels to be on call for service when needed in times of national emergency or war.

The original MSP was established by the Maritime Security Act of 1996 (Pub. L. 104-239, Oct. 8, 1996) for fiscal years 1996 through 2005. On November 24, 2003, President Bush signed the Maritime Security Act of 2003 (MSA 2003) (part of the National Defense Authorization Act for Fiscal Year 2004) which reauthorized the MSP for fiscal years 2006 through 2015.

In addition to reauthorizing the MSP, section 3517 of the MSA 2003 established a voluntary pilot program under which the Secretary of Transportation could enter into agreement(s) to reimburse MSP vessel operators for the costs of qualified maintenance and repairs performed in U.S. shipyards instead of foreign shipyards. Reimbursement levels under the voluntary program were established at 80% of the difference between the fair and reasonable cost of obtaining qualified M&R work in U.S. shipyards and the cost of qualified M&R work in foreign shipyards. MARAD promulgated implementing regulations for this program at 46 CFR section 296.60 (70 FR 55581, Sept. 22, 2005).

Under Public Law 109-163, enacted on January 6, 2006, the Secretary of Transportation is directed to implement regulations to replace the voluntary M&R reimbursement program with a mandatory program. Under the mandatory program, MARAD must enter into an agreement with one or more MSP Contractors, subject to appropriations, for the M&R of one or more vessels that are subject to a MSP operating agreement. Under Public Law 109-163, reimbursement levels are established at 100% of the difference between the fair and reasonable cost of obtaining qualified M&R work in U.S. shipyards and the cost of qualified M&R work in foreign shipyards.

Public Comment

MARAD welcomes public comments regarding the M&R pilot program and, in particular, suggestions regarding what documentation Contractors could provide to assist MARAD in determining the fair and reasonable cost of obtaining qualified M&R work in U.S. shipyards as well as in the foreign shipyards where Contractors would otherwise undertake such work.

Rulemaking Analyses and Notices

Executive Order 12866 (Regulatory Planning and Review), and Department of Transportation (DOT) Regulatory Policies; Pub. L. 104-121

This proposed rule is not considered a significant regulatory action under section 3(f) of Executive Order 12866 and, therefore, was not reviewed by the Office of Management and Budget. This proposed rule is not likely to result in an annual effect on the economy of $100 million or more. This proposed rule is also not significant under the Regulatory Policies and Procedures of the Department of Transportation (44 FR 11034, February 26, 1979). The costs and economic impact associated with this rulemaking are considered to be so minimal that no further analysis is necessary.

Executive Order 13132

We have analyzed this rulemaking in accordance with the principles and criteria contained in Executive Order 13132 (“Federalism”) and have determined that it does not have sufficient Federalism implications to warrant the preparation of a Federalism summary impact statement. The regulations have no substantial effects on the States, the current Federal-State relationship, or on the current distribution of power and responsibilities among local officials. Therefore, consultation with State and local officials was not necessary.

Executive Order 13175

MARAD does not believe that this proposed rule will significantly or uniquely affect the communities of Indian tribal governments when analyzed under the principles and criteria contained in Executive Order 13175 (Consultation and Coordination with Indian Tribal Governments). Therefore, the funding and consultation requirements of this Executive Order do not apply.

Regulatory Flexibility

The Maritime Administrator certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities. We anticipate that no small entities will participate in this program.

Unfunded Mandates Reform Act of 1995

This proposed rule will not impose an unfunded mandate under the Unfunded Mandates Reform Act of 1995. It will not result in costs of $100 million or more, in the aggregate, to any of the following: State, local, or Native American tribal governments, or the private sector. This proposed rule is the least burdensome alternative that achieves this objective of U.S. policy.

Environmental Assessment

We have analyzed this proposed rule for purposes of compliance with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321 et seq.) and have concluded that, under the categorical exclusions provision in section 4.05 of Maritime Administrative Order (MAO) 600-1, “Procedures for Considering Environmental Impacts,” 50 FR 11606 (March 22, 1985), neither the preparation of an Environmental Assessment, an Environmental Impact Statement, nor a Finding of No Significant Impact for this rulemaking is required. This proposed rule does not change the environmental effects of the current M&R Pilot program and thus no further analysis under NEPA is required.

Paperwork Reduction

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507 et seq.), this rulemaking contains no new information collection and record keeping requirements that require OMB approval.

Privacy Act

Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (Volume 65, Number 70; Pages 19477-78) or you may visit http://dms.dot.gov.

List of Subjects in 46 CFR Part 296

• Assistance payments
• Maritime carriers
• Reporting and recordkeeping requirements

Accordingly, 46 CFR Chapter II, Subchapter C, Part 296 is proposed to be amended as follows:

PART 296—MARITIME SECURITY PROGRAM (MSP)

1. The authority citation for part 296 is revised to read as follows:

Authority: Pub. L. 108-136, Pub. L. 109-163, 117 Stat. 1392; 46 App. U.S.C. 1114(b), 49 CFR 1.66.

2. Amend § 296.60 by revising paragraphs (b), (c), (d), (e), and (f) and adding new paragraph (g) to read as follows.

§ 296.60

Applications.

* * * * *

(b) Every Contractor shall agree as a condition of participation in MSP that it will accept when offered an agreement under 46 U.S.C. 3517, to perform qualified M&R of one or more MSP vessels that normally make port calls in the United States, in United States shipyards, subject to terms set forth below. In this section the term “qualified M&R” means:

(1) Except as provided in paragraph (b)(2) of this section:

(i) Any inspection of a vessel that is—

(A) Required under chapter 33 of title 46, United States Code; and

(B) Performed in the period in which the vessel is subject to an agreement under this section;

(ii) Any M&R of a vessel that is determined, in the course of an inspection referred to in paragraph (b)(1)(i) of this section, to be necessary; and

(iii) Any additional M&R the Contractor intends to undertake at the same time as the work described in paragraph (b)(1)(ii) of this section; and

(2) Does not include:

(i) M&R not agreed to by the Contractor to be undertaken at the same time as the work described in paragraph (b)(1) of this section; or

(ii) Routine M&R or any emergency work that is necessary to enable a vessel to return to a port in the United States.

(c) The Administrator will offer M&R agreements only to the extent that funding for the M&R program is provided for by appropriations legislation. Following the enactment of any such appropriations legislation, the Administrator will canvass the Contractors to determine which Contractors desire to volunteer for the M&R program. If no MSP Contractor volunteers for the M&R program, the Administrator will select the participants in the M&R program on the basis of available funds and a review of the Contractors' vessels and ocean freight service. The Administrator will establish with the Contractors specific M&R programs that provide the greatest assistance to United States shipyards within the available funding, while minimizing any disruption to the Contractors' ocean freight service.

(d) Terms of Agreement. An agreement under this section:

(1) Will require that except as provided in paragraph (e) of this section, all qualified M&R on the vessel will be performed in the United States;

(2) Will require that the Administrator will reimburse the Contractor in accordance with paragraph (f) of this section for the costs of qualified M&R performed in the United States; and

(3) Will apply to qualified M&R performed during the 5-year period beginning on the date the vessel begins operating under the operating agreement under chapter 531 of title 46, United States Code.

(e) Exception to requirement to perform work in the United States. A Contractor will not be required to have qualified M&R work performed in the United States under this section if:

(1) The Administrator determines that there is no facility capable of meeting all technical requirements of the qualified M&R in the United States located in the geographic area in which the vessel normally operates available to perform the work in the time required by the Contractor to maintain its regularly scheduled service;

(2) The Administrator determines that there are insufficient funds to pay reimbursement under paragraph (f) of this section with respect to the work; or

(3) The Administrator fails to make the certification described in paragraph (g)(2) of this section.

(f) Reimbursement. (1) In general. The Administrator will, subject to the availability of appropriations, reimburse a Contractor for costs incurred by the Contractor for qualified M&R performed in the United States under this section.

(2) Amount. The amount of reimbursement will be equal to the difference between—

(i) The fair and reasonable cost of obtaining the qualified M&R in the United States; and

(ii) The fair and reasonable cost of obtaining the qualified M&R outside the United States, in the country in which the Contractor would otherwise undertake the qualified M&R.

(3) Determination of fair and reasonable costs. The Administrator will determine fair and reasonable costs for purposes of paragraph (f)(2) of this section.

(i) In order to determine the fair and reasonable cost of obtaining qualified M&R work in the United States, the Maritime Administrator will require, and Contractors will provide, supporting documentation outlining such costs, including shipyard contracts, etc.

(ii) In order to determine the fair and reasonable cost of obtaining qualified M&R work in the foreign country where the Contractor would otherwise undertake the qualified M&R work, the Maritime Administrator will require, and Contractors will provide, supporting documentation outlining such costs.

(g) Notification Requirements. (1) Notification by contractor. The Administrator is not required to pay reimbursement to a Contractor under this section for qualified M&R, unless the Contractor—

(i) Notifies the Administrator of the intent of the Contractor to obtain the qualified M&R, by not later than 90 days before the date of the performance of the qualified M&R; and

(ii) Includes in such notification:

(A) A description of all qualified M&R that the Contractor should reasonably expect may be performed;

(B) A description of the vessel's normal route and port calls in the United States;

(C) An estimate of the cost, with supporting documentation, of obtaining the qualified M&R described under paragraph (g)(1)(ii)(A) of this section in the United States; and

(D) An estimate of the cost, with supporting documentation, of obtaining the qualified M&R described under paragraph (g)(1)(ii)(A) of this section outside the United States, in the country in which the Contractor otherwise would undertake the qualified M&R.

(2) Certification by Administrator. (i) Not later than 30 days after the date of receipt of notification under paragraph (g)(1)(ii)(A) of this section, the Administrator will certify to the Contractor—

(A) Whether the cost estimates provided by the Contractor are fair and reasonable;

(B) If the Administrator determines that such cost estimates are not fair and reasonable, the Administrator's estimate of fair and reasonable costs for such work;

(C) Whether there are available to the Administrator sufficient funds to pay reimbursement under paragraph (d) of this section with respect to such work; and

(D) That the Administrator commits such funds to the Contractor for such reimbursement, if such funds are available for that purpose.

(ii) If the Contractor notification described in paragraph (g)(1) of this section does not include an estimate of the cost of obtaining qualified M&R in the United States, then not later than 30 days after the date of receipt of such notification, the Administrator will:

(A) Certify to the Contractor whether there is a facility capable of meeting all technical requirements of the qualified M&R in the United States located in the geographic area in which the vessel normally operates available to perform the qualified M&R described in the notification by the Contractor under paragraph (g)(1) of this section in the time period required by the Contractor to maintain its regularly scheduled service; and

(B) If there is such a facility, require the Contractor to resubmit such notification with the required cost estimate for such facility.

(Authority: 49 CFR 1.66)

By Order of the Maritime Administrator.

Dated: February 3, 2006.

Joel C. Richard,

Secretary, Maritime Administration.