Cargo PreferenceU.S.-Flag Vessels; Available U.S.-Flag Commercial Vessels

DEPARTMENT OF TRANSPORTATION

Maritime Administration

46 CFR Part 381

[Docket No. R-153]

RIN 2133-AB17

Cargo Preference--U.S.-Flag Vessels; Available U.S.-Flag

Commercial Vessels

AGENCY: Maritime Administration, Department of 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 1995

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 amendment would

allow Great Lakes ports to compete for agricultural commodity

preference cargoes during an entire season trial period. MARAD issued a

prior final rule on August 8, 1994, that adopted this policy for the

1994 Great Lakes shipping season that had been in progress since April

1994. This did not allow for a true trial period that MARAD could

evaluate in determining whether to make this a permanent policy.

DATES: Comments must be received on or before March 3, 1995.

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, the Agency 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) (the

``Cargo Preference Act'') 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 may

participate.

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 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 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

calendar years 1986, 1987, 1988, and 1989. That ``set-aside'' expired

in 1989, and was not renewed by the Congress. The disappearance of

Government-impelled 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 1992-1993 cargo preference year (the latest program year for which

figures are available) amounted to 6,297,015 metric tons, of which

4,923,244, or 78.2 percent, was transported on U.S.-flag vessels.

(Source: Maritime Administration database.)

MARAD issued the previous rule to provide Great Lakes ports with

the opportunity to compete for agricultural commodity preference

cargoes for only the 1994 Great Lakes shipping season cargoes, and to

assess the results.

Extension of Trial Period

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 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 proposes to extend the trial

period for applying its modified policy with respect to shipment of

preference cargoes on U.S.-flag vessels through the 1995 Great Lakes

shipping season.

Rulemaking Analyses and Notices

Executive Order 12866 (Regulatory Planning and Review)

This rulemaking has been reviewed under Executive Order 12866 and

Department of Transportation Regulatory Policies and Procedures (44 FR

11034, February 26, 1979). It is not considered to be an economically

significant regulatory action under section 3(f) of E.O. 12866, since

it has been determined that it is not likely to result in a rule that

may have an annual effect on the economy of $100 million or more or

adversely affect in a material way the economy, a sector of the

economy, productivity, competition, jobs, the environment, public

health or safety, or State, local, or tribal governments or

communities. However, since this rule would affect other Federal

agencies, is of great interest to the maritime industry, and has been

determined to be a significant rule under the Department's Regulatory

Policies and Procedures, it is considered to be a significant

regulatory action under E.O. 12866.

MARAD projects that this rule would allow the movement of up to

300,000 metric tons of agricultural commodities from Great Lakes ports,

with a reduction in the shipping cost to sponsoring

[[Page 6068]] Federal agencies up to $3 per metric ton ($900,000).

Since the substance of this rule is identical to that contained in

the May 11, 1994 NPRM, which solicited comments that MARAD addressed in

its final rule issued on August 8, 1994, and since no commenter opposed

a one-season trial period MARAD is allowing a 30-day comment period for

this second proposed rule.

If this rule is finalized, MARAD will evaluate the results of the

one-season trial period before determining whether to issue a rule to

make this arrangement permanent.

This rule has been reviewed by the Office of Management and Budget

under Executive Order 12866.

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 1995.

For purposes of shipping bulk agricultural commodities under

programs administered by sponsoring Federal agencies from U.S. Great

Lakes ports during the 1995 shipping season, 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: January 26, 1995.

By Order of the Maritime Administrator.

Joel Richard,

Secretary, Maritime Administration.

[FR Doc. 95-2410 Filed 1-31-95; 8:45 am]

BILLING CODE 4910-81-P