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Maintenance and Repair Reimbursement Pilot Program
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[Federal Register: February 8, 2006 (Volume 71, Number 26)]
[Proposed Rules]
[Page 6438-6441]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08fe06-35]
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DEPARTMENT OF TRANSPORTATION
Maritime Administration
46 CFR Part 296
[Docket No. MARAD-2006-23804]
RIN 2133-AB68
Maintenance and Repair Reimbursement Pilot Program
AGENCY: Maritime Administration, Department of Transportation.
ACTION: Notice of proposed rulemaking.
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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
[[Page 6439]]
submitting comments on the DOT electronic docket site.
Fax: 1-202-493-2251.
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: (202) 366-5737;
fax: (202) 366-3511; or e-mail Jean.McKeever@dot.gov.
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
[[Page 6440]]
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 Sec. 296.60 by revising paragraphs (b), (c), (d), (e),
and (f) and adding new paragraph (g) to read as follows.
Sec. 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
[[Page 6441]]
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.
[FR Doc. E6-1691 Filed 2-7-06; 8:45 am]
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