Maritime Security Program

AGENCY:

Maritime Administration, Department of Transportation.

ACTION:

Final rule.

SUMMARY:

The Maritime Administration (“MARAD”) is amending its regulations to implement amendments to the Maritime Security Act of 2003 by the National Defense Authorization Act for Fiscal Year 2013 (“NDAA 2013”), the Consolidated Appropriations Act, 2016 (“CAA 2016”), and the National Defense Authorization Act for Fiscal Year 2016 (“NDAA 2016”). The revisions to the regulations, among other things, make changes to vessel eligibility for participation in the Maritime Security Program (“MSP”), authorize the extension of current MSP Operating Agreements, amend the procedures for the award of new MSP Operating Agreements, extend the MSP through 2025, update the MSP Operating Agreement payments and schedule of payments, and eliminate the Maintenance and Repair Pilot Program.

DATES:

This final rule becomes effective on January 2, 2018.

FOR FURTHER INFORMATION CONTACT:

William G. McDonald, Director, Office of Sealift Support, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE., Washington, DC 20590. Telephone (202) 366-0688; Fax (202) 366-5904, electronic mail to William.G.McDonald@dot.gov.

SUPPLEMENTARY INFORMATION:

Background

Section 3508 of the NDAA 2013 authorized the extension of the Maritime Security Program through fiscal year 2025. Under section 3508, the Secretary of Transportation, acting through the Maritime Administrator, is authorized to offer to extend the existing 60 MSP Operating Agreements through fiscal year 2025. Section 3508 authorized a new payment schedule of increasing MSP Operating Agreement payments through fiscal year 2025. These payment amounts were subsequently updated by the CAA 2016 and the NDAA 2016. Section 3508 of the NDAA 2013 also provided a new procedure for awarding MSP Operating Agreements, including a new priority system for the award of operating agreements. Under the new priority, award will be first based on vessel type as determined by military requirements and then based on the citizenship status of the applicant. Section 3508 revised the procedure for the transfer of MSP Operating Agreements by eliminating the requirement to first offer an MSP Operating Agreement to a U.S. Citizen under 46 U.S.C. 50501. In addition, Section 3508 eliminated the procedure for early termination of MSP Operating Agreements based on the availability of replacement vessels. Section 3508 also eliminated the eligibility of Lighter Aboard Ship (LASH) vessels to participate in the MSP Fleet as a stand-alone category of vessel. The rule eliminates the Maintenance and Repair Pilot Program, which has sunset and was not extended by the NDAA 2013. The rule also updates MARAD's address for the purposes of submitting required reports and vouchers.

Rulemaking Analysis and Notices

Executive Orders 12866 (Regulatory Planning and Review), 13563 (Improving Regulation and Regulatory Review) and DOT Regulatory Policies and Procedures. Under E.O. 12866 (58 FR 51735, October 4, 1993), supplemented by E.O. 13563 (76 FR 3821, January 18, 2011) and DOT policies and procedures, MARAD must determine whether a regulatory action is “significant” and, therefore, subject to Office of Management and Budget (OMB) review and the requirements of the E.O.s. The Orders define “significant regulatory action” as one likely to result in a rule that may: (1) 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 government or communities; (2) create a serious inconsistency or otherwise interfere with an action taken or planned by another Agency; (3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; and (4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the E.O.s.

A determination has been made that this rulemaking is not considered a significant regulatory action under section 3(f) of Executive Order 12866. This rulemaking will not result in an annual effect on the economy of $100 million or more. It is also not considered a major rule for purposes of Congressional review under Public Law 104-121. This rulemaking is also not significant under the Regulatory Policies and Procedures of the Department of Transportation (44 FR 11034, February 26, 1979). The costs and overall economic impact of this rulemaking do not require further analysis because the rulemaking will create no additional costs or new substantive burdens to participants in or applicants to the existing program as it addresses only new processing procedures.

Executive Order 13771 (Reducing Regulation and Controlling Regulatory Costs)

This rule is not an E.O. 13771 regulatory action because this rule is not significant under E.O. 12866.

Executive Order 13132 (Federalism)

This rulemaking was analyzed in accordance with the principles and criteria contained in Executive Order 13132 (“Federalism”), and it has been determined that it does not have sufficient Federalism implications to warrant the preparation of a Federalism summary impact statement. The revisions to the regulations, among other things, make changes to vessel eligibility for participation in the MSP, authorize the extension of current MSP Operating Agreements, amend the procedures for the award of new MSP Operating Agreements, update the MSP Operating Agreement payments and schedule of payments, and eliminate the Maintenance and Repair Pilot Program. This rulemaking has no substantial effect on the States, or on the current Federal-State relationship, or on the current distribution of power and responsibilities among the various local officials. Nothing in this document preempts any State law or regulation. Therefore, MARAD did not consult with State and local officials because it was not necessary.

Regulatory Flexibility Act

The Regulatory Flexibility Act of 1980 requires MARAD to assess whether this rulemaking would have a significant economic impact on a substantial number of small entities and to minimize any adverse impact. MARAD certifies that this rulemaking will not have a significant economic impact on a substantial number of small entities because MSP participants (13 in total) and applicants (11 in the most recent solicitation for applications) do not constitute a substantial number of small entities.

Executive Order 13211 (Energy Supply, Distribution, or Use)

MARAD has determined that this rulemaking will not significantly affect energy supply, distribution, or use. Therefore, no Statement of Energy Effects is required.

Executive Order 12630 (Taking of Private Property)

This rulemaking will not effect a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.

International Trade Impact Assessment

This rulemaking does not contain standards-related activities that create unnecessary obstacles to the foreign commerce of the United States.

Privacy Impact Assessment

Section 522(a)(5) of the Transportation, Treasury, Independent Agencies, and General Government Appropriations Act, 2005 (Pub. L. 108-447, div. H, 118 Stat. 2809 at 3268) requires the Department of Transportation and certain other Federal agencies to conduct a privacy impact assessment of each proposed rule that will affect the privacy of individuals. Claims submitted under this rule will be treated the same as all legal claims received by MARAD. The processing and treatment of any claim within the scope of this rulemaking by MARAD shall comply with all legal, regulatory and policy requirements regarding privacy.

Unfunded Mandates Reform Act of 1995

The Unfunded Mandates Reform Act of 1995 requires Agencies to evaluate whether an Agency action would result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $156 million or more (as adjusted for inflation) in any 1 year, and if so, to take steps to minimize these unfunded mandates. This rulemaking will not impose unfunded mandates under the Unfunded Mandates Reform Act of 1995. It will not result in costs of $156 million or more to either State, local, or tribal governments, in the aggregate, or to the private sector, and is the least burdensome alternative that achieves the objectives of the rule.

Regulation Identifier Number (RIN)

A regulation identifier number (RIN) is assigned to each regulatory action listed in the Unified Agenda of Federal Regulations. The Regulatory Information Service Center publishes the Unified Agenda in April and October of each year. The RIN contained in the heading of this document can be used to cross-reference this action with the Unified Agenda.

Paperwork Reduction Act

Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq.), Federal agencies must obtain approval from OMB for each collection of information they conduct, sponsor, or require through regulations. This rulemaking updates the regulations due to amendments to the Maritime Security Act. This rulemaking contains no new or amended information collection or recordkeeping requirements that have been approved or require approval by OMB.

Comments on the Proposed Rule

In response to the agency's Federal Register document published on August 5, 2015 (80 FR 46527) seeking public comment on its proposed revisions to 46 CFR part 296, a total of five separate comment submissions were made by or on behalf of the following entities: APL Marine Services, Ltd. and its affiliated companies (“APL”), American Roll-on Roll-off Carrier Group Inc. (“ARC Group”), Schuyler Line Navigation Company, LLC, Liberty Global Logistics LLC, and the Transportation Trades Department, AFL-CIO (“TTD”). The agency responds below to all comments.

One commenter noted that 46 CFR 296.30(h)(2) of the existing regulations was omitted from the proposed rulemaking and should be retained in a final rule. We agree. The NDAA 2013 did not eliminate the provision permitting an owner or operator of an MSP vessel to transfer and register such a vessel under an acceptable foreign registry in the event sufficient funds are not appropriated for any fiscal year by the 60th day of that fiscal year. The text of 46 CFR 296.30(h)(2) is retained in the final rule.

The commenter also noted that the definition of Foreign Commerce unduly omitted certain services that were not affected by the NDAA 2013. We agree. While excluding from the definition of Foreign Commerce certain bulk carrying services, the NDAA 2013 did not otherwise substantively change the definition of Foreign Commerce. The proposed definition unnecessarily eliminated currently MSP-eligible services. Therefore, these existing services are retained in the final rule. The commenter also recommended amending 46 CFR 296.31(d)(2), to make that section more consistent with the text of 46 U.S.C. 53105(a) and the regulatory definition of Foreign Commerce of 46 CFR 296.2. We agree that 46 CFR 296.31(d)(2), as currently drafted, is inconsistent with 46 U.S.C. 53105(a) with its use of “foreign trade,” an undefined term, instead of “foreign commerce” and thus may invite confusion. Accordingly, we are amending 46 CFR 296.31(d)(2) by replacing “foreign trade” with “foreign commerce” and retaining reference to the registry endorsement requirement.

Three commenters recommended increasing annual payments under the MSP. Two recommended an annual payment of $5 million per vessel starting in fiscal year 2017. MSP payment amounts are established by statute. MARAD cannot adjust annual payment amounts without a corresponding legislative authorization. Nevertheless, the increased payments authorized by the NDAA 2016 and CAA 2016 are included in the final rule.

Two commenters critiqued MARAD's administration of the MSP and made recommendations that would require significant amendments to our regulations. These recommendations are beyond the scope of the current rulemaking implementing the NDAA 2013, but will be considered in the event of a future rulemaking.

List of Subjects in 46 CFR Part 296

• Assistance payments
• Maritime carriers
• Reporting and recordkeeping requirements

For the reasons set out in the preamble, the Maritime Administration amends 46 CFR part 296 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, Pub. L. 112-239; 49 U.S.C. 322(a), 46 U.S.C. chapter 531, 49 CFR 1.93.

2. Amend § 296.2 by:

a. Revising the definitions of Foreign Commerce, MSA 2003, Participating Fleet Vessel, and Section 2 Citizen; and

b. Removing the definition of Lash Vessel.

The revisions to read as follows:

3. Amend § 296.11 by revising paragraph (a)(3) to read as follows:

4. Remove and reserve §§ 296.21 through 296.23.

5. Revise § 296.24 to read as follows:

6. Revise § 296.30 to read as follows:

7. Amend § 296.31 by revising paragraphs (a) and (d)(2) to read as follows:

8. Amend § 296.32 by revising the introductory text to read as follows:

9. Revise § 296.40 to read as follows:

10. Amend § 296.41 by revising paragraph (a) to read as follows:

Subpart G—[Removed]

11. Remove Subpart G, consisting of § 296.60.