[Federal Register Volume 61, Number 48 (Monday, March 11, 1996)]
[Proposed Rules]
[Pages 9670-9671]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5727]
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DEPARTMENT OF TRANSPORTATION
Maritime Administration
46 CFR Part 381
[Docket No. R-165]
RIN 2133-AB25
Cargo Preference--U.S.-Flag Vessels; Available U.S.-Flag
Commercial Vessels
AGENCY: Maritime Administration, Transportation.
ACTION: Proposed rule.
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SUMMARY: This amendment to the cargo preference regulations of the
Maritime Administration (MARAD) would provide that during the five year
period beginning with the 1996 Great Lakes shipping season when the St.
Lawrence Seaway is in use, MARAD will consider the legal requirement
for the carriage of bulk agricultural commodity preference cargoes on
privately-owned ``available'' U.S.-flag commercial vessels to have been
satisfied where the cargo is initially loaded at a Great Lakes port on
one or more U.S.-flag or foreign-flag vessels, transferred to a U.S.-
flag commercial vessel at a Canadian transshipment point outside the
St. Lawrence Seaway, and carried on that U.S.-flag vessel to a foreign
destination. This provision would allow U.S. Great Lakes ports to
compete for certain bulk agricultural commodity preference cargoes
under agricultural assistance programs administered by the U.S.
Department of Agriculture (USDA) and the U.S. Agency for International
Development (USAID). MARAD issued substantially identical rules in 1994
and 1995 related to the Great Lakes Shipping season for each of those
years, respectively. This rule would extend the provision for an
additional five years, after which the Agency would assess the merits
of making the rule permanent.
DATES: Comments must be received on or before April 10, 1996.
ADDRESSES: Send original and two copies of comments to the Secretary,
Maritime Administration, Room 7210, Department of Transportation, 400
7th Street S.W., Washington, D.C. 20590. To expedite review of
comments, MARAD requests, but does not require submission of an
additional ten (10) copies. All comments will be made available for
inspection during normal business hours at the above address.
Commenters wishing MARAD to acknowledge receipt of comments should
enclose a self-addressed envelope or postcard.
FOR FURTHER INFORMATION CONTACT: John E. Graykowski, Deputy Maritime
Administrator for Inland Waterways and Great Lakes, Maritime
Administration, Washington, DC, 20590, Telephone (202) 366-1718.
SUPPLEMENTARY INFORMATION: United States law at sections 901(b) and
901b, Merchant Marine Act, 1936, as amended (the ``Act''), 46 App.
U.S.C. 1241(b) and 1241f, requires that at least 75 percent of certain
agricultural product cargoes ``impelled'' by Federal programs
(preference cargoes), and transported by sea, be carried on privately-
owned United States-flag commercial vessels, to the extent that such
vessels ``are available at fair and reasonable rates.'' The Secretary
of Transportation wishes to administer that program so that all ports
and port ranges, including U.S. Great Lakes ports, may participate in
the carriage of preference cargoes under five programs administered by
the United States Department of Agriculture (USDA) and United States
Agency for International Development (USAID), pursuant to Titles I, II
and III of the Agricultural Trade Development and Assistance Act of
1954, as amended, P.L. 480 (7 U.S.C. 1701-1727), the Agricultural Act
of 1949, as amended (7 U.S.C. 2791(c)) and the Food for Progress Act of
1985, as amended (7 U.S.C. 1736).
Prior Rulemaking
On August 8, 1994, MARAD published a final rule on this subject in
the Federal Register (59 FR 40261). That rule stated that it was
intended to allow U.S. Great Lakes ports to participate with ports in
other U.S. port ranges in the carriage of bulk agricultural commodity
preference cargoes. Dramatic changes in shipping conditions have
occurred since 1960, including the disappearance of any all-U.S.-flag
commercial ocean-going bulk cargo service to foreign countries from
U.S. Great Lakes ports. The static configuration of the St. Lawrence
Seaway system and the evolving greater size of commercial vessels
contributed to the disappearance of any all-U.S.-flag service.
No bulk grain preference cargo has moved on U.S.-flag vessels out
of the Great Lakes since 1989, with the exception of one trial shipment
in 1993. Under the Food Security Act of 1985, Public Law 99-198,
codified at 46 App. U.S.C. 1241f(c)(2), a certain minimum amount of
Government-impelled cargo was required to be allocated to Great Lakes
ports during the Great Lakes shipping seasons of 1986, 1987, 1988 and
1989. That ``set-aside'' expired in 1989, and was not renewed by the
Congress. The disappearance of Government-impelled agricultural cargo
flowing from the Great Lakes coincided with the expiration of the Great
Lakes ``set aside.''
At the time of the opening of the 1994 Great Lakes shipping season
on April 5, 1994, the Great Lakes did not have any all-U.S.-flag ocean
freight capability for carriage of bulk preference cargo. In contrast,
the total export nationwide by non-liner vessels of USDA and USAID
agricultural assistance program cargoes subject to cargo preference in
the 1994-1995 cargo preference year (the latest program year for which
figures are available) amounted to 6.2 million metric tons, of which
4.9 million (78 percent) was transported on U.S.-flag vessels.
Extension of Trial Period
MARAD initially issued that rule for the purpose of allowing Great
Lakes ports the opportunity to compete for agricultural commodity
preference cargoes for only the 1994 Great Lakes shipping season
cargoes, and to assess the results. As predicted by numerous
commenters, the timing of the final rule, which was not published until
August 18, 1994, did not allow for a true trial period since it
actually extended for less than one-half of the 1994 Great Lakes
Shipping season. Because of the long
[[Page 9671]]
lead time required for arranging shipments of bulk agriculture
commodity preference cargoes, there apparently was no real opportunity
for U.S.-flag vessel operators to make the necessary arrangements and
bid on preference cargoes. Accordingly, MARAD proposed to extend this
policy to the 1995 Great Lakes shipping season and issued a final rule
that was published in the Federal Register on May 9, 1995 (60 FR
24560).
Great Lakes participation in cargo preference shipments under these
five programs administered by the USDA and USAID could be improved if
foreign-flag feeder vessels were authorized to transport bulk grain
commodities from Great Lakes ports to Canadian transshipment points for
export on oceangoing U.S.-flag bulk carriers to the final destination
port. MARAD issued its 1994 and 1995 final rules to authorize the use
of foreign-flag feeder vessels for the transportation of bulk
agricultural commodities cargoes from the Great Lakes ports to Canadian
transshipment ports outside the St. Lawrence Seaway during the 1994-95
Great Lakes shipping season. Outside the St. Lawrence Seaway, the cargo
would be transferred to a U.S.-flag vessel for delivery to its foreign
destination.
Subsequently, USDA indicated that provisions in Pub. L. 480
regulating the payment of freight by USDA for the Title II and Title
III shipments, as well as in the Food For Progress Act of 1985,
negatively impacted on suppliers that bid on Great Lakes cargoes to be
transshipped to Canadian shipping points. USDA indicated that these
provisions prevent them from paying for the foreign-flag Great Lakes
transit leg, even if the freight is billed separately. The Pub. L. 480
Title I program is not affected by this provision. Due to these
statutory provisions, the Great Lakes region has been, in effect,
prohibited from utilizing the rule and participating in 54 percent, or
7.9 millon metric tons, of the bulk cargo shipped during the past two
years under Titles II and III of Pub. L. 480, the Agricultural Act of
1949 and the Food for Progress Act of 1985 programs.
USDA has proposed an amendment to the 1995 Farm Bill which would
allow USDA to pay the cost of the foreign-flag Great Lakes transit leg
for transshipment in Canadian ports. Consistent with the legislation
proposed by the USDA provision in the 1995 Farm Bill, MARAD recommends
that the rule be extended for an additional five years, after which it
would reassess the merits of making the rule permanent.
Rulemaking Analyses and Notices
Executive Order 12866 (Regulatory Planning and Review)
This rulemaking is not considered to be an economically significant
regulatory action under section 3(f) of Executive Order 12866, or a
significant rule under the Department's Regulatory Policies and
Procedures. Accordingly, it has not been reviewed by the Office of
Management and Budget.
MARAD projects that this rule would allow the annual movement of up
to 300,000 metric tons of agricultural commodities from Great Lakes
ports, with a reduction in the shipping cost to sponsoring Federal
agencies of up to $3 per metric ton ($900,000).
If this rule is finalized, MARAD will evaluate the results over
that trial period before determining whether to issue a rule to make
this provision permanent.
Federalism
The Maritime Administration has analyzed this rulemaking in
accordance with the principles and criteria contained in Executive
Order 12612, and it has been determined that these regulations do not
have sufficient federalism implications to warrant the preparation of a
Federalism Assessment.
Regulatory Flexibility Act
The Maritime Administration certifies that this rulemaking will not
have a significant economic impact on a substantial number of small
entities.
Environmental Assessment
The Maritime Administration has considered the environmental impact
of this rulemaking and has concluded that an environmental impact
statement is not required under the National Environmental Policy Act
of 1969.
Paperwork Reduction Act
This rulemaking contains no reporting requirement that is subject
to OMB approval under 5 CFR Part 1320, pursuant to the Paperwork
Reduction Act of 1980 (44 U.S.C. 3501, et seq.)
List of Subjects in 46 CFR Part 381
Freight, Maritime carriers.
Accordingly, MARAD hereby proposes to amend 46 CFR part 381 as
follows:
PART 381--[AMENDED]
1. The authority citation for Part 381 continues to read as
follows:
Authority: 46 App. U.S.C. 1101, 1114(b), 1122(d) and 1241; 49
CFR 1.66.
2. Section 381.9 would be revised to read as follows:
Sec. 381.9 Available U.S.-flag service.
For purposes of shipping bulk agricultural commodities under
programs administered by sponsoring Federal agencies from U.S. Great
Lakes ports during the 1996-2000 Great Lakes shipping seasons, if
direct U.S.-flag service, at fair and reasonable rates, is not
available at U.S. Great Lakes ports, a joint service involving a
foreign-flag vessel(s) carrying cargo no farther than a Canadian
port(s) or other point(s) on the Gulf of St. Lawrence, with
transshipment via a U.S.-flag privately owned commercial vessel to the
ultimate foreign destination, will be deemed to comply with the
requirement of ``available'' commercial U.S.-flag service under the
Cargo Preference Act of 1954. Shipper agencies considering bids
resulting in the lowest landed cost of transportation based on U.S.-
flag rates and service shall include within the comparison of U.S.-flag
rates and service, for shipments originating in U.S. Great Lakes ports,
through rates (if offered) to a Canadian port or other point on the
Gulf of St. Lawrence and a U.S.-flag leg for the remainder of the
voyage. The ``fair and reasonable'' rate for this mixed service will be
determined by considering the U.S.-flag component under the existing
regulations at 46 CFR Part 382 or 383, as appropriate, and
incorporating the cost for the foreign-flag component into the U.S.-
flag ``fair and reasonable'' rate in the same way as the cost of
foreign-flag vessels used to lighten U.S.-flag vessels in the recipient
country's territorial waters. Alternatively, the supplier of the
commodity may offer the Cargo FOB Canadian transshipment point, and
MARAD will determine fair and reasonable rates accordingly.
Dated: March 6, 1996.
By Order of the Maritime Administrator.
Joel Richard,
Secretary, Maritime Administration.
[FR Doc. 96-5727 Filed 3-8-96; 8:45 am]
BILLING CODE 4910-81-P
