Vessel Inspection User Fees

DEPARTMENT OF TRANSPORTATION

Coast Guard

46 CFR Part 2

[CGD 96-067]

RIN 2115-AF40

Vessel Inspection User Fees

AGENCY: Coast Guard, DOT.

ACTION: Final rule.

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SUMMARY: The Coast Guard is adopting as final, with changes, the

interim rule it published on April 21, 1997. The interim rule reduced

annual vessel inspection user fees for small passenger vessels and

exempted publicly owned ferries from payment of vessel inspection user

fees as required by the Coast Guard Authorization Act of 1996. The rule

also revised the discretionary exemption criteria for vessels owned or

operated by non-profit organizations.

DATES: This final rule is effective December 4, 1998.

ADDRESSES: Documents, as indicated in this preamble, are available for

inspection or copying at the office of the Executive Secretary, Marine

Safety Council (G-LRA/3406), U.S. Coast Guard Headquarters, 2100 Second

Street SW., room 3406, Washington, DC 20593-0001, between 9:30 a.m. and

2 p.m., Monday through Friday, except Federal holidays. The telephone

number is 1-800-842-8740, extension 7-1477 or 202-267-1477.

FOR FURTHER INFORMATION CONTACT: CDR Mark McEwen, Office of Planning

and Resources, Budget and Resources Division (G-MRP-2), Marine Safety

and Environmental Protection at 202-267-1409.

SUPPLEMENTARY INFORMATION:

Regulatory History

On April 21, 1997, the Coast Guard published an interim rule

entitled Vessel Inspection User Fees in the Federal Register (62 FR

19229). The rule reduced the annual vessel inspection fees for small

passenger vessels to the limits established under the Coast Guard

Authorization Act of 1996 (the Act) (Pub. L. 104-324); exempted

publicly owned ferries from annual vessel inspection fees, as mandated

by Congress; and added definitions for the terms publicly owned, ferry,

political subdivision, State, youth, and non-profit organization. The

Coast Guard also revised the exemption criteria for vessels owned or

operated by a non-profit organization to include some non-profit

organizations that did not previously qualify for exemption from

payment of fees.

The Coast Guard received 26 letters commenting on the interim rule.

Twenty-five comments were from ferry owners or operators (21

``privately owned'' ferries, 1 ``publicly owned'' ferry, and 3

``unspecified ownership'' ferries). The remaining comment was from the

Passenger Vessel Association (PVA). No public hearing was requested,

and none was held.

Discussion of Comments and Changes

Fee Caps

As required by the Act, the interim rule capped the annual vessel

inspection fees for small passenger vessels less than 65 feet in length

at $300 and for small passenger vessels 65 feet or over in length at

$600. The Coast Guard did not receive any comments on this issue and it

has not been changed in the final rule.

Definitions

The interim rule added several definitions to 46 CFR 2.10-25. Only

the definition of ferry was mentioned in the comments. The interim rule

defined ferry as a vessel transporting passengers or vehicles on a

regular run, over the most direct route between a point of embarkation

and a point of debarkation on lands separated by a body of water other

than an ocean, or between a point of embarkation and an island within

the same State.

The Coast Guard received two comments recommending that the rule

use the definition of ferry in subchapter T, 46 CFR 175.10-9 (now 46

CFR 175.400) and subchapter H, 46 CFR 70.10-15. The Coast Guard agrees

that the definition should be consistent with those in subchapters T

and H. The definition has been changed in the final rule to conform

with those in subchapters T and H.

The Coast Guard has also revised the definition of youth by raising

the age limit in the definition from 18 to 21 so the exemption could

apply to vessels owned by colleges and universities providing courses

of marine environmental studies and meeting the other exemption

requirements.

Exemption Criteria

The interim rule revised the exemption criteria in 46 CFR 2.10-5 to

allow some non-profit organizations that did not previously meet the

narrowly drawn criteria to qualify for exemption from payment of fees.

The Coast Guard received no comments on this revision, but we have

changed the language in this section concerning fundraising activities

to clearly give owners and operators flexibility in scheduling these

activities.

Publicly Owned Ferries

Small passenger vessels, passenger ships, and passenger barges

operating as ferries pay the annual vessel inspection fee for the

vessel category to which they belong, since there is no fee category

established specifically for ferries. As required by the Act, the

interim rule amended 46 CFR 2.10-25 to exempt publicly owned ferries

from the user fee requirements of 46 CFR part 2.

All of the written comments discussed the issue of exempting

publicly owned ferries and stated that owners or operators of privately

owned ferries should receive the same exemption as publicly owned

ferries.

Identical Services

Nineteen comments stated that privately owned ferries and publicly

owned ferries provide identical services. Several of the comments

stated that all ferries provide lifeline services, such as serving as

the primary or sole means of transportation for residents and visitors;

providing vital transportation services for passengers, autos, trucks,

and buses

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to islands, riverine, and coastal communities; providing transportation

of mail, packages, ambulances, food, and other things needed to supply

a thriving community; and breaking ice to remote locations when needed.

The majority of comments stated that all privately owned ferries

contribute to local economies by paying taxes; providing commuter

services; transporting a large number of tourists; or providing service

for commercial vehicles. One comment from a privately owned ferry

stated it enhanced commerce by providing an important link between two

major interstates.

Many comments stated that ferries in general are important to the

overall infrastructure of mass transit because they provide such

services as an efficient and popular mode of transit; reduce the costs

of constructing and maintaining costly infrastructure; meet the

increasing interest of government and the DOT transportation goals to

reduce energy use and air pollution, as well as provide safe,

comfortable, cost-effective transportation; and reduce vehicular

traffic. Many comments also stated that privately owned ferry companies

provide at least half of the waterborne passenger transportation

service in this nation.

Seventeen comments discussed the economic burden of vessel

inspection user fees on privately owned ferries. Several of the

comments stated that continuing user fees for privately owned ferries

exaggerates an uneven playing field, particularly when their exempted,

publicly owned counterparts operate in direct competition. Fourteen of

the comments stated the fees are yet another cost to an industry

already operating without any financial assistance or subsidies.

Additionally, several comments stated that fares, schedules, routes,

and insurance requirements of some privately owned ferries are

regulated by other rules and regulations. The comments did not describe

in detail how this affected them, other than as a limitation on their

ability to pass these costs on to their passengers.

Congress did not include privately owned ferries in the exclusion

provision of the Act and the legislative history of the Act does not

explain why Congress exempted only publicly owned ferries. The Coast

Guard is implementing the requirements in the Act and has not changed

the final rule.

A comment from one owner of a privately owned ferry stated that he

was one of eight ferry operations required to pay the annual vessel

inspection user fee for a Passenger Ship. Currently, his fee is

$6,835.00. The comment requested the Coast Guard ``eliminate these user

fees or at least provide this operation with the same break afforded to

the other [small] passenger vessels'' under the Act, reducing his user

fee from $6,835.00 to $600.00.

The legislative history of the Act is silent on why Congress only

capped the fees of small passenger vessels and not other types of

passenger vessels. With no relief provided in the Act to reduce any

other passenger vessel user fees, the Coast Guard has not changed the

vessel inspection user fees for passenger ships or other types of

passenger vessels that were not covered by the Act.

Regulatory Evaluation

This rule is not a significant regulatory action under section 3(f)

of Executive Order 12866 and does not require an assessment of

potential costs and benefits under section 6(a)(3) of that order. The

Office of Management and Budget has not reviewed it under that order.

It is not significant under the regulatory policies and procedures of

the Department of Transportation (DOT)(44 FR 11040; February 26, 1979).

The Coast Guard expects the economic impact of this rule to be so

minimal that a full Regulatory Evaluation under paragraph 10e of the

regulatory policies and procedures of DOT is unnecessary. The Act

placed a cap on fees charged for the inspection of small passenger

vessels which reduced the economic burden imposed on small businesses.

The Act also provided an exemption for publicly owned ferries from the

payment of user fees, which eliminated costs to States, State agencies,

and local governments. Implementation of these provisions began on

November 1, 1996.

The exemption criteria in 46 CFR 2.10-5 allow additional exemptions

from payments of fees for vessels owned or operated by non-profit

organizations because the Coast Guard determined it is clearly within

the public interest to do so.

User fee revenues will be reduced by approximately $2.8 million

dollars as a result of the Congressional cap on small passenger vessels

and its exemption of the publicly owned ferries, and the Coast Guard's

broadening of the exemption eligibility criteria for vessel owners or

operators of non-profit organizations. The cap on small passenger

vessels will affect 5,880 vessels; it reduces revenues to the

government and provides savings to the small passenger vessel industry

in the amount of $2.25 million dollars. The exemption of publicly owned

ferries affects 170 vessels; it reduces revenues to the government and

provides a savings to the industry in the amount of $428,200 dollars.

Broadening the exemption eligibility for non-profit organizations is

estimated to affect 100 vessels; it will reduce revenues to the

government and will provide savings to industry in the amount of

$67,000 dollars.

Small Entities

Under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), the

Coast Guard considered whether this rule would have a significant

economic impact on a substantial number of small entities. ``Small

entities'' include small businesses, not-for-profit organizations that

are independently owned and operated and are not dominant in their

fields, governmental jurisdictions with populations of less than

50,000.

The Coast Guard has reviewed this rule for potential impact on

small entities under the Regulatory Flexibility Act. This rule reduces

an existing economic burden on small businesses owning inspected small

passenger vessels or ferrries specified by the Act, or that qualify for

the revised exemption status by lowering or eliminating fees required

for Coast Guard vessel inspection services. Therefore, the Coast Guard

certifies under section 605(b) of the Regulatory Flexibility Act that

this final rule will not have a significant economic impact on a

substantial number of small entities.

Assistance for Small Entities

In accordance with section 213(a) of the Small Business Regulatory

Enforcement Fairness Act of 1996 (Pub. L. 104-121), the Coast Guard

offered to assist small entities in understanding the rule so that they

could better evaluate its effects on them and participate in the

rulemaking process. The interim rule informed individuals applying for

an exemption under this rule that their local Officer in Charge, Marine

Inspection (OCMI) could provide assistance, or they could call, toll

free, 1-800-941-3337. Individuals seeking further assistance may still

call, toll free, 1-800-941-3337.

During the interim rule comment period, assistance was provided to

small entities by explaining the reasons for the annual user fee cap

reduction for small passenger vessels and the revision of the

discretionary exemption criteria for vessels owned or operated by non-

profit organizations.

Collection of Information

This final rule contains no new collection-of-information

requirements under the Paperwork Reduction Act (44 U.S.C. 3501 et

seq.).

[[Page 59474]]

Federalism

The Coast Guard analyzed this rule under the principles and

criteria contained in Executive Order 12612 and determined that this

rule does not have sufficient federalism implications to warrant the

preparation of a Federalism Assessment. This rule amends user fees for

vessel inspection and examination services to cap fees paid for

services related to small passenger vessels, and exempts publicly owned

ferries from payment of the fees.

Unfunded Mandates

Under the Unfunded Mandates Reform Act (Pub. L. 104-4), the Coast

Guard considered whether this final rule will result in an annual

expenditure by State, local, and tribal governments, in the aggregate,

or by the private sector, of $100 million (adjusted annually for

inflation). Section 205 of the Unfunded Mandates Reform Act requires

the Coast Guard to identify and to consider a reasonable number of

regulatory alternates, and from those alternatives, select the least

costly, most cost-effective, or least burdensome alternative that

achieves the objective of this final rule. This rule does not impose

additional costs upon any State, local, and tribal governments as a

result of a mandate imposed upon them as a government agency. The

completed analysis estimates that this final rule will provide a total

savings to vessel owners and operators of approximately $2.8 million

dollars. Publicly owned ferries will no longer have to pay a total of

$428,200 in annual inspection user fees. This rule will, therefore,

result in the reduction or elimination of fees paid by State, local,

and tribal governments for inspection services provided to the

applicable vessels owned by such entities.

Environment

The Coast Guard considered the environmental impact of this rule

and concluded that under figure 2-1, paragraph (34)(a) of Commandant

Instruction M16475.lC, this rule is categorically excluded from further

environmental documentation. Paragraph (34)(a) of that instruction

excludes editorial or procedural regulations that clearly do not have

any environmental impacts. ``Categorical Exclusion Determination'' is

available in the docket for inspection or copying where indicated under

ADDRESSES.

List of Subjects in 46 CFR Part 2

Fees, Marine safety, Vessels.

Accordingly, the interim rule amending 46 CFR part 2 which was

published in 62 FR 19229 on April 21, 1997, is adopted as a final rule

with the following changes and amendments:

PART 2--VESSELS INSPECTIONS

1. The authority citation for part 2 continues to read as follows:

Authority: 14 U.S.C 664; 31 U.S.C. 9701; 33 U.S.C. 1903; 43

U.S.C. 1333, 1356; 46 U.S.C. 2110, 3306, 3703; E.O. 12234, 45 FR

58801, 3 CFR 1980 Comp., p. 277; 49 CFR 1.46; Subpart 2.45 also

issued under the authority of Act Dec 27, 1950, Ch 1155, sections 1,

2, 64 Stat. 1120 [see 46 U.S.C. App. Note prec. 1].

2. In Sec. 2.10-5, revise paragraph (c)(2) to read as follows:

Sec. 2.10-5 Exemptions.

* * * * *

(c) * * *

(2) The vessel's use for fundraising activities without regard to

the age of the participants aboard the vessel, provided revenues raised

are for the operation and maintenance of the vessel and that such

fundraising activities do not exceed one day of fundraising for each

month of the vessel's operating season.

* * * * *

3. In Sec. 2.10-25, revise the definitions of ferry and youth to

read as follows:

Sec. 2.10-25 Definitions.

* * * * *

Ferry means a vessel that:

(1) Operates in other than ocean or coastwise service;

(2) Has provisions only for deck passengers or vehicles, or both;

(3) Operates on a short run on a frequent schedule between two

points over the most direct water route; and

(4) Offers a public service of a type normally attributed to a

bridge or tunnel.

* * * * *

Youth means an individual 21 years of age or younger.

Dated: September 28, 1998.

R.C. North,

Rear Admiral, U.S. Coast Guard, Assistant Commandant for Marine Safety

and Environmental Protection.

[FR Doc. 98-29497 Filed 11-3-98; 8:45 am]

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