[Federal Register Volume 87, Number 7 (Tuesday, January 11, 2022)]
[Proposed Rules]
[Pages 1378-1390]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-00200]


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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

46 CFR Part 2

[Docket No. USCG-2018-0538]
RIN 1625-AC55


User Fees for Inspected Towing Vessels

AGENCY: Coast Guard, DHS.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Coast Guard is proposing to update its user fees for 
seagoing towing vessels that are 300 gross tons or more and to revise 
user fees for other inspected towing vessels. The Coast Guard is 
proposing these updates because we are required to establish and 
maintain a fair fee for our vessel inspection services and to separate 
the fees for inspection options that involve third-party auditors and 
surveyors from inspection options that do not involve third parties. 
Under this proposed rule, vessels using the Alternate Compliance 
Program, Streamlined Inspection Program, or the Towing Safety 
Management System options would pay a lower fee than vessels that use 
the traditional Coast Guard inspection option.

DATES: Comments and related material must be received by the Coast 
Guard on or before April 11, 2022.

ADDRESSES: You may submit comments identified by docket number USCG-
2018-0538 using the Federal eRulemaking Portal at https://www.regulations.gov. See the ``Public Participation and Request for 
Comments'' portion of the SUPPLEMENTARY INFORMATION section for further 
instructions on submitting comments.

FOR FURTHER INFORMATION CONTACT: For information about this document 
call or email Mr. Scott Kuhaneck, Coast Guard; telephone 202-372-1221, 
email <a href="/cdn-cgi/l/email-protection#eabe8285878b99c4b9c4a19f828b848f8981aa9f99898dc4878386"><span class="__cf_email__" data-cfemail="5004383f3d31237e037e1b2538313e35333b10252333377e3d393c">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

Table of Contents for Preamble

I. Public Participation and Request for Comments
II. Abbreviations
III. Basis and Purpose
    A. The Problem We Seek To Address
    B. Legal Authority To Address This Problem
    C. Recent Legislation
IV. Background
    A. Origins of Annual Vessel Inspection Fees
    B. Current Fees for Subchapter I and Subchapter M Towing Vessels

[[Page 1379]]

V. Discussion of Proposed Rule
    A. Categories of Annual Fees
    B. Amending Annual Inspection Fees for Seagoing Towing Vessels 
Subject to Subchapter I
    C. Establishing Specific Annual Inspection Fees for Towing 
Vessels Subject to Subchapter M
    D. Methodology for Calculating Fees
VI. Regulatory Analyses
    A. Regulatory Planning and Review
    B. Small Entities
    C. Assistance for Small Entities
    D. Collection of Information
    E. Federalism
    F. Unfunded Mandates Reform Act
    G. Taking of Private Property
    H. Civil Justice Reform
    I. Protection of Children
    J. Indian Tribal Governments
    K. Energy Effects
    L. Technical Standards
    M. Environment

I. Public Participation and Request for Comments

    The Coast Guard views public participation as essential to 
effective rulemaking, and will consider all comments and material 
received during the comment period. Your comment can help shape the 
outcome of this rulemaking. If you submit a comment, please include the 
docket number for this rulemaking, indicate the specific section of 
this document to which each comment applies, and provide a reason for 
each suggestion or recommendation.
    We encourage you to submit comments through the Federal eRulemaking 
Portal at https://www.regulations.gov. If you cannot submit your 
material by using https://www.regulations.gov, contact the person in 
the FOR FURTHER INFORMATION CONTACT section of this proposed rule for 
alternate instructions. Documents mentioned in this proposed rule as 
being in the docket, and all public comments, will be available in our 
online docket at https://www.regulations.gov, and can be viewed by 
following that website's instructions. Additionally, if you visit the 
online docket and sign up for email alerts, you will be notified when 
comments are posted or if a final rule is published.
    We accept anonymous comments. All comments received will be posted 
without change to https://www.regulations.gov and will include any 
personal information you have provided. For more about privacy and 
submissions to the docket in response to this document, see DHS's 
eRulemaking System of Records notice (85 FR 14226, March 11, 2020).
    We do not plan to hold a public meeting but we will consider doing 
so if public comments indicate that a meeting would be helpful and we 
determine that a meeting would aid this rulemaking. We would issue a 
separate Federal Register notice to announce the date, time, and 
location of such a meeting.

II. Abbreviations

ACP Alternate Compliance Program
CGAA Frank LoBiondo Coast Guard Authorization Act of 2018
COI Certificate of Inspection
DHS Department of Homeland Security
FR Federal Register
FTE Full-Time Equivalent
IRFA Initial Regulatory Flexibility Analysis
MISLE Marine Information for Safety and Law Enforcement
NAICS North American Industry Classification System
NPRM Notice of proposed rulemaking
OBRA Omnibus Budget Reconciliation Act of 1990
OMB Office of Management and Budget
RFA Regulatory Flexibility Act
SBA Small Business Administration
Sec.  Section
SIP Streamlined Inspection Program
SSM Sector Staffing Model
TSMS Towing Safety Management System
U.S.C. United States Code

III. Basis and Purpose

    In this section, the Coast Guard identifies the problem we intend 
to address, the well-established statutory authority that enables us to 
issue this proposed rule, and the recent legislation that provides 
additional authority for this proposed rulemaking.

A. The Problem We Seek To Address

    The Coast Guard and Maritime Transportation Act of 2004 \1\ added 
towing vessels to the list of vessels subject to inspection in 46 
U.S.C. 3301. As directed by 46 U.S.C. 3307, each vessel subject to 
inspection under part A of Subtitle II must undergo an initial 
inspection for certification, and after receiving a Certificate of 
Inspection (COI) the vessel must undergo periodic inspections.
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    \1\ Public Law 108-293, 118 Stat. 1028 (August 9, 2004), with 
relevant chapters codified in 46 U.S.C. 3301.
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    On June 20, 2016, we published an Inspection of Towing Vessels 
final rule that established safety regulations governing the 
inspection, standards, and safety management systems for towing 
vessels.\2\ We estimated that the rule would apply to more than 5,500 
towing vessels that had previously been uninspected vessels. That rule 
established the 46 CFR subchapter M--Towing Vessels (parts 136 through 
144), which requires vessels subject to subchapter M to obtain a COI. 
The phase-in period for obtaining these COIs under subchapter M runs 
from July 20, 2018 to July 19, 2022.\3\
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    \2\ 81 FR 40004.
    \3\ See 46 CFR 136.202, which calls for 25 percent of the 
vessels of each owner or managing operator of more than one existing 
towing vessel to have COIs by July 22, 2019. It calls for an 
additional 25 percent to obtain COIs for each of the remaining 3 
years of the phase-in period. The final rule was effective July 20, 
2016, but it delayed the implementation of most of its part 140 
Operations, part 141 Lifesaving, part 142 Fire Protection, part 143 
Machinery and Electrical Systems and Equipment, and part 144 
Construction and Arrangement requirements until July 20, 2018. See 
Sec. Sec.  140.105, 141.105, 142.105, 143.200, and 144.105.
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    In the Inspection of Towing Vessels final rule, we stated our plan 
to begin a separate rulemaking for annual inspection fees for towing 
vessels that would reflect the specific program costs associated with 
the two options for documenting compliance to obtain a COI,\4\ the 
Coast Guard option and the Towing Safety Management System (TSMS) 
option.\5\ We also stated that until then we will use the existing fee 
of $1,030 in 46 CFR 2.10-101 that applies to any inspected vessel not 
listed in Table 2.10-101 as the annual inspection fee for towing 
vessels subject to subchapter M.\6\
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    \4\ See 46 CFR 136.130--Options for documenting compliance to 
obtain a Certificate of Inspection.
    \5\ TSMS is a voluntary inspection option that permits qualified 
third-party organizations to conduct certain vessel examinations in 
place of Coast Guard inspections. See 46 CFR 138--Towing Safety 
Management System (TSMS).
    \6\ See 81 FR at 40005.
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    In addition to towing vessels subject to subchapter M that are 
required to obtain COIs, there are towing vessels that qualify as 
seagoing motor vessels (300 gross tons or more) that are subject to 46 
CFR chapter I, subchapter I regulations for cargo and miscellaneous 
vessels.\7\ These vessels are currently required to have COIs. The 
annual inspection fee for these subchapter I towing vessels was 
established in 1995 at $2,915, and has never been updated.\8\
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    \7\ See 46 CFR 2.01-7 and 90.05-1. Under 46 U.S.C. 3301, 
seagoing motor vessels are subject to inspection. Towing vessels are 
motor vessels, (vessels propelled by machinery other than steam) and 
they fall within the definition of ``seagoing motor vessel'' if they 
are at least 300 gross tons and make voyages beyond the Boundary 
Line. See definitions in 46 U.S.C. 2101.
    \8\ See Direct User Fees for Inspection or Examination of U.S. 
and Foreign Commercial Vessels (60 FR 13550 (March 13, 1995); 46 CFR 
2.10-101.
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    The law requires that we establish a fee for our inspection 
services that is fair and based on costs to the Government, value to 
the recipient, and public interest. It further requires that we review 
the costs to the Government of such inspections for towing vessel using 
the Coast Guard option and those using an option involving a third 
party, revise such fees if there is a difference,

[[Page 1380]]

and comply with the same requirements for establishing fees when doing 
so.

B. Legal Authority To Address This Problem

    The Coast Guard is issuing this proposed rule based on authority in 
section 2110 of Title 46 of the United States Code (46 U.S.C. 2110), 
which has been delegated to the Commandant under DHS Delegation No. 
0170.1(II)(92). Section 2110 of Title 46 directs the Secretary of the 
Department in which the Coast Guard is operating to establish a fee or 
charge for a service or thing of value provided by the Secretary under 
Subtitle II of Title 46. Inspections and related services described in 
Subtitle II of Title 46 are considered a service or thing of value 
provided by the Secretary.\9\
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    \9\ 46 U.S.C. 2110(a)(1).
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    Section 2110 also directs that the fee or charge be established in 
accordance with 31 U.S.C. 9701, which specifies that each charge be 
fair and based on the costs to the Government, the value of the service 
or thing to the recipient, public policy or interest served, and other 
relevant facts. Consistent with these objectives, once a fee or charge 
is established, section 2110 allows it to be adjusted to accommodate 
changes in the cost of providing a specific service or thing of value.

C. Recent Legislation

    On December 4, 2018, the Frank LoBiondo Coast Guard Authorization 
Act of 2018 (CGAA) was enacted.\10\ Section 815 of CGAA directs the 
Coast Guard to review and revise the fee for inspections. First, the 
Coast Guard must compare the costs to the Government of towing vessel 
inspections performed by the Coast Guard and towing vessel inspections 
performed by a third party, to determine if they are different. The 
Coast Guard interprets ``costs to the Government'' in section 815(a) to 
mean the cost to the Coast Guard of providing inspection and related 
services to determine whether a vessel meets requirements necessary for 
it to maintain its COI. We have conducted that comparison and 
determined that there is a difference in costs to the Government 
between the inspection options for towing vessels that involve a third 
party and those that do not.
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    \10\ Public Law 115-282, 132 Stat. 4192.
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    If there is a difference in costs, section 815 of CGAA directs us 
to revise the fee we assess for such inspections to conform to 31 
U.S.C. 9701, and to base the fee on the cost to the Government. This is 
the intent of this notice of proposed rulemaking (NPRM).

IV. Background

A. Origins of Annual Vessel Inspection Fees

    The Omnibus Budget Reconciliation Act of 1990 (OBRA) amended 46 
U.S.C. 2110 and removed long-standing prohibitions against imposing 
certain user fees.\11\ As amended by the OBRA, 46 U.S.C. 2110 requires 
the establishment and collection of user fees for Coast Guard services 
provided under Subtitle II of Title 46, United States Code. On March 
13, 1995, the Coast Guard published the final rule on Direct User Fees 
for Inspection or Examination of U.S. and Foreign Commercial 
Vessels.\12\ The fees were intended to recover the costs associated 
with providing Coast Guard vessel inspection services directly or 
through an alternative reinspection program, although alternative 
reinspection program only applied to certain offshore supply vessels. 
The final rule established user fees for services related to commercial 
vessel inspection including annual fees for seagoing towing vessels.
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    \11\ Public Law 101-508, 104 Stat. 1388 with relevant chapters 
codified in 46 U.S.C. 2110.
    \12\ 60 FR 13550.
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    On June 20, 2016, the Coast Guard published the final rule on the 
Inspection of Towing Vessels. The vessels subject to this 2016 rule 
were not considered when the original vessel inspection fees were 
established in 1995, except to the extent that the table of fees 
included a default fee for any inspected vessel not listed. We 
indicated in the 2016 rule that we would establish specific fees, in a 
subsequent rulemaking, that would reflect program costs associated with 
the TSMS and Coast Guard inspection options for obtaining COIs. We 
stated that until those specific fees were established, the annual 
inspection fee for towing vessels subject to subchapter M would be the 
existing fee of $1,030 in 46 CFR 2.10-101 for any inspected vessel not 
listed in Table 2.10-101.\13\
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    \13\ See 81 FR at 40005.
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B. Current Fees for Subchapter I and Subchapter M Towing Vessels

    The Coast Guard currently charges an annual vessel inspection fee 
for U.S. and foreign vessels requiring a COI, following the fee 
schedule set in Sec.  2.10-101.\14\ The current fee for seagoing towing 
vessels inspected under subchapter I is $2,915 for all inspection 
options--the Coast Guard, the Alternate Compliance Program (ACP), and 
the Streamlined Inspection Program (SIP). The current fee for towing 
vessels inspected under subchapter M (all inspection options) is 
$1,030, which is the fee for ``[a]ny vessel not listed in this table.''
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    \14\ Under 46 CFR 2.01-6(b), foreign vessels from countries 
which are non-signatory to the International Convention for the 
Safety of Life at Sea, 1974, are issued a COI, if the inspector 
approves the vessel and its equipment as described in Sec.  2.01-5. 
We have records of COIs issued to foreign vessels in our Marine 
Information for Safety and Law Enforcement (MISLE) database, but no 
records of a COI issued to a foreign towing vessel.
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V. Discussion of Proposed Rule

    This proposed rule would update existing annual inspection fees for 
both seagoing towing vessels (300 gross tons or more) and vessels 
subject to the relatively new towing-vessel regulations in 46 CFR 
subchapter M.
    The annual inspection fees are located in 46 CFR part 2--Vessel 
Inspections. In addition to fees in Sec.  2.10-101, this part contains 
definitions in Sec.  2.10-25. We propose to add the following new 
defined terms to Sec.  2.10-25--
    <bullet> Annual vessel inspection fee;
    <bullet> Alternate Compliance Program option;
    <bullet> Coast Guard option;
    <bullet> Streamlined Inspection Program option;
    <bullet> Towing Safety Management System option; and
    <bullet> Towing vessel.
    To reflect the involvement of third parties in inspection options, 
such as the ACP and TSMS, we propose to define ``annual vessel 
inspection fee'' as the fee charged by the Coast Guard for providing 
inspection and related services to determine whether a vessel meets the 
requirements to maintain its COI. The fee charged by the Coast Guard 
reflects the cost to the Coast Guard. There are several existing 
options for inspection, which we propose to define in revised Sec.  
2.10-25 by reference to the regulations that establish each option. For 
both seagoing and subchapter M towing vessels, there is a Coast Guard 
option in which the Coast Guard performs all of the relevant inspection 
activity. For both types of vessels there is also a third-party option, 
already established in regulation, in which a third party performs some 
of the relevant activity, but the Coast Guard still inspects the vessel 
and examines evidence of compliance provided by third parties.
    For seagoing towing vessels there is an additional option, the SIP. 
The SIP option does not involve a third party. Under the SIP option, a 
vessel is inspected in accordance with an approved Vessel Action Plan 
that the company's SIP agent develops with

[[Page 1381]]

guidance from the Coast Guard. In our definition of SIP, we point to 
subpart E of 46 CFR part 8, which spells out SIP program requirements.
    We propose to define ``towing vessel'' as a commercial vessel 
engaged in or intending to engage in the service of pulling, pushing, 
or hauling alongside, or any combination of pulling, pushing, or 
hauling alongside. This definition matches the definition of towing 
vessel in 46 U.S.C. 2101.
    We are also proposing to modify the definition of an existing term 
in Sec.  2.10-25, Sea-going towing vessel. We would remove the modifier 
``seagoing'' used within the definition itself, and insert a 
description of what seagoing means. The proposed insertion is ``and 
that makes voyages beyond the Boundary Line as defined by 46 U.S.C. 
103.'' \15\ We would further specify that the vessel must be 300 gross 
tons or more, to distinguish seagoing towing vessels from towing 
vessels subject to subchapter M that travel beyond the Boundary Line. 
We would also remove the hyphen from seagoing.
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    \15\ Under 46 U.S.C. 103 and 33 U.S.C. 151(b), boundary lines 
are used for dividing inland waters of the United States from the 
high seas to delineate the application of certain U.S. statutes. For 
a list of boundary lines and the statutes those lines are used to 
delineate, see 46 CFR part 7, which lists boundary lines for the 
Atlantic Coast, Gulf Coast, Pacific Coast, and the states of Alaska 
and Hawaii.
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A. Categories of Annual Fees

    For towing vessels subject to subchapter M, we propose two fee 
categories; the Coast Guard option and the TSMS option. For seagoing 
towing vessels subject to subchapter I, we propose three fee 
categories; the Coast Guard option, the ACP option and the SIP option. 
This would allow the Coast Guard to provide reduced fees for subchapter 
M vessel owners who choose the TSMS option described in 46 CFR part 
138, and for subchapter I vessel owners who choose the ACP or SIP 
option described in 46 CFR part 8. We anticipate this fee structure 
will help to ensure the Coast Guard's ability to recover full costs to 
the Government, and to separate annual inspection fees for options 
involving third-party surveys and audits of towing vessels using safety 
management systems. Several inspection options have lower user fees 
than the Coast Guard option. These inspection alternatives either 
require fewer Coast Guard inspection activities or the Coast Guard 
inspection activities take less time and thus have a lower cost.

B. Amending Annual Inspection Fees for Seagoing Towing Vessels Subject 
to Subchapter I

    We are proposing to charge one of three annual fees for seagoing 
towing vessels that are inspected under subchapter I:
    <bullet> $2,747 for those using the Coast Guard option;
    <bullet> $1,850 for those using the ACP option; and
    <bullet> $2,260 for those using the SIP option.
    The current annual fee for seagoing towing vessels that are 
inspected under subchapter I is $2,915.
    For a detailed discussion of how these fees were derived, see 
Methodology for Calculating Fees in section V.D.

C. Establishing Specific Annual Inspection Fees for Towing Vessels 
Subject to Subchapter M

    We are also proposing to charge one of two fees for towing vessels 
inspected under subchapter M:
    <bullet> $2,184 for those using the Coast Guard option, and
    <bullet> $973 for those using the TSMS option.
    The current annual fee applied to subchapter M towing vessels is 
$1,030.
    For a more detailed discussion of how these fees were derived, see 
Methodology for Calculating Fees in section V.D.

D. Methodology for Calculating Fees

    This section summarizes the methodology for calculating fees. For 
more details, see the Cost Study for Determining User Fees for 
Inspected Towing Vessels in the docket where indicated under the 
section I of this preamble.
    To derive the costs of the various inspection types, we used an 
activity-based costing \16\ approach in conjunction with the Sector 
Staffing Model (SSM). The SSM is an activity-based model designed to 
establish human capital requirements and quantify resources at Shore 
Forces units.\17\ The SSM measures specific activity and frequency to 
determine the Full-Time Equivalent (FTE) workforce needed to meet a 
particular workload. Data in the model is derived from Coast Guard 
enterprise databases and surveys conducted at the Coast Guard field 
unit level. The model also incorporates unit specific travel times for 
conducting missions, collateral duty workload, and mission required 
training. In the spring of 2012, the SSM was accredited in accordance 
with official Coast Guard policy and currently serves as the primary 
decision tool for managing sector enterprise staffing. Table 1 shows 
the cost of activities for providing COI services to each type of 
inspection. These costs are derived using SSM FTE calculations; see the 
Cost Study in the docket for the full derivation of figures.
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    \16\ Activity-based costing is a method for determining the cost 
of a service based on the cost of each individual element of that 
service.
    \17\ Shore Forces units are Coast Guard sector commands and 
their sub-units or field units. See the USCG Strategic Cost Manual, 
M7000.4 (February 2005).

              Table 1--Per Vessel Cost of Activities for Providing COI Services by User Fee Segment
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                                   Subchapter M:   Subchapter M:   Subchapter I:   Subchapter I:   Subchapter I:
                                    Coast Guard        TSMS         Coast Guard         ACP             SIP
----------------------------------------------------------------------------------------------------------------
Inspection Activity Costs.......          $1,183            $408          $1,618            $874          $1,213
Travel Costs....................             317              40             356             356             356
Supervision and Administration               243              84             332             179             249
 Costs..........................
Indirect Costs..................             442             442             442             442             442
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    Total Annual Costs..........           2,184             973           2,747           1,850           2,260
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    The Coast Guard intends to collect one of five different user fees 
from the approximately 5,385 towing vessels that require COIs under 
subchapters I and M.\18\ Table 2 shows the current fee, the proposed 
fee, the incremental fee adjustment and the percent change to the user 
fee. The annual costs of services for each vessel class is the proposed 
user fee for that vessel class.
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    \18\ Vessel population data came from MISLE as of June 2021. See 
the Affected Population section for more details.

[[Page 1382]]



             Table 2--Current Subchapter M and I User Fees and Proposed User Fee Adjustment Amounts
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                                                                                    Incremental
             Fee type/user fee class                Current fee    Proposed fee   fee adjustment  Percent change
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Subchapter M: Coast Guard option................          $1,030          $2,184          $1,154             112
Subchapter M: TSMS..............................           1,030             973             -57              -6
Subchapter I: Coast Guard option................           2,915           2,747            -168              -6
Subchapter I: Alternative Compliance Program               2,915           1,850          -1,065             -37
 option.........................................
Subchapter I: Streamlined Inspection Program               2,915           2,260            -655             -22
 option.........................................
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VI. Regulatory Analyses

    We developed this proposed rule after considering numerous statutes 
and Executive orders related to rulemaking. Our analyses based on these 
statutes or Executive orders follows.

A. Regulatory Planning and Review

    Executive Orders 12866 (Regulatory Planning and Review) and 13563 
(Improving Regulation and Regulatory Review) direct agencies to assess 
the costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility.
    This proposed rule is a significant regulatory action under section 
3(f) of Executive Order 12866. Accordingly, the rule has been reviewed 
by the Office of Management and Budget (OMB). Section 6(a)(3) of 
Executive Order 12866 requires an assessment of potential costs and 
benefits. The analysis follows.
    Currently, towing vessels are inspected under subchapter I or 
subchapter M, dependent on their size and area of operation. All 
inspected towing vessels are required to pay a user fee. Subchapter I 
towing vessels pay a user fee of $2,915 annually. Subchapter M towing 
vessels pay a user fee of $1,030 annually. The subchapter M user fee is 
not specific to towing vessels, rather it is for all inspected vessels 
that do not have a specific user fee on Table 2.10-101.
    We calculate that in total 42 towing vessels inspected under 
subchapter I are paying $122,430 annually and that in total 5,343 
towing vessels inspected under subchapter M are paying $5,503,290 
annually for inspection services. Towing vessels choose between several 
vessel inspection alternatives. Once selected, the inspection option is 
unlikely to change due to a change in user fees, since there are 
private business costs associated with changing inspection options. 
Coast Guard COI service costs are fully funded through annual 
appropriations.\19\
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    \19\ The user fees collected for these services are offsetting 
receipts and are deposited to the Department of Treasury and 
credited to DHS appropriation as proprietary receipts. See 46 U.S.C. 
2110(h).
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    This proposed rulemaking would establish a user fee specific to 
subchapter M towing vessels, revise the user fee specific to subchapter 
I towing vessels, and establish user fees for vessel inspection 
alternatives that require fewer Coast Guard inspection activities or 
the Coast Guard inspection activities take less time and thus have a 
lower cost to Coast Guard. We anticipate this proposed fee structure 
will help to ensure the Coast Guard's ability to offset costs to the 
government, and to separate annual inspection fees for options 
involving third-party surveys and audits of towing vessels using safety 
management systems. This proposed rule would result in estimated 
transfers from towing vessel operators for the COI services of $1.5 
million to $1.6 million per year to the Federal Government. The 10-year 
transfers, undiscounted, total $15,719,319. The discounted annualized 
figure, at 7 percent, is $1,577,491.
    The Coast Guard proposes to do the following through this 
rulemaking:
    (1) Modify the definition in Sec.  2.10-25 of Sea-going towing 
vessel. We would remove the modifier ``seagoing'' used within the 
definition, and replace it with a description of what ``seagoing'' 
means. The proposed insertion is ``and that makes voyages beyond the 
Boundary Line as defined by 46 U.S.C. 103.'' Also, we would specify 
that the vessel must be 300 gross tons or more to distinguish seagoing 
towing vessels from towing vessels that travel beyond the Boundary 
Line, which may be subject to subchapter M. This is an administrative 
change and it would have no economic impact.
    (2) Amend the user fees for 46 CFR subchapter I towing vessels. The 
current fee for the 42 seagoing towing vessels inspected under 
subchapter I is $2,915 for all inspection options (Coast Guard, ACP, 
and SIP). This proposed rule would make the fees specific to each 
inspection as shown below in table 3. Vessels have already chosen their 
inspection option and are unlikely to change away from their current 
option. This is because there are costs associated with switching 
inspection options and there are private industry transactions and 
business specific costs beyond the inspection cost that make the user 
fee a small portion of the overall cost of inspections.

   Table 3--Current and Proposed Subchapter I Towing Vessel User Fees
------------------------------------------------------------------------
             Inspection type                Current fee    Proposed fee
------------------------------------------------------------------------
Coast Guard option......................          $2,915          $2,747
Alternate Compliance Program option                                1,850
 (ACP)..................................
Streamlined Inspection Program option                              2,260
 (SIP)..................................
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    (3) Create a specific user fee category for the 5,343 towing 
vessels under 46 CFR subchapter M towing vessels in the table of fees 
in Sec.  2.10-101 and update the current user fees for annual 
inspection fees for towing vessels to reflect the specific program 
costs associated with the two subchapter M options: The TSMS option and 
the Coast Guard inspection option. The current fee is $1,030 for the 
annual inspection fee for towing vessels subject to

[[Page 1383]]

subchapter M. This proposed rule would make the fees specific to each 
inspection type as shown below in table 4. Similar to subchapter I 
vessels, subchapter M vessels have already chosen their inspection 
option and are unlikely to change for the same reasons.

   Table 4--Current and Proposed Subchapter M Towing Vessel User Fees
------------------------------------------------------------------------
             Inspection type                Current fee    Proposed fee
------------------------------------------------------------------------
Coast Guard option......................          $1,030          $2,184
TSMS option.............................  ..............             973
------------------------------------------------------------------------

    (4) Define the following new terms that will be added to the table 
of fees in Sec.  2.10-101: Annual vessel inspection fee, Alternative 
Compliance Program option, Coast Guard option, Streamlined Inspection 
Program option, Towing Safety Management System option, and Towing 
Vessel. This is an administrative change and has no economic impact. 
All of these points are described in greater detail in the Cost Study.
    To obtain the affected population for this proposed rule, we used 
the MISLE (Marine Information for Safety and Law Enforcement) database. 
MISLE is the Coast Guard's vessel and marine activity database which 
contains the best and most readily available vessel population data. 
According to MISLE data as of June 2021, the total affected population 
of this rule is 5,385 inspected towing vessels. There are approximately 
5,343 towing vessels that will require inspection under 46 CFR 
subchapter M and 42 towing vessels that are inspected under 46 CFR 
subchapter I. Though the subchapter M population is decreasing by an 
average of 33 vessels per year since 2016, the subchapter I population 
is expected to remain stable, because it historically has done so.
    Rather than a single fee category for all towing vessels covered by 
a subchapter, the Coast Guard is proposing two categories for 
subchapter M and three categories for subchapter I vessels. For 
subchapter M, the inspection types are the Coast Guard option and the 
TSMS option. For subchapter I, the inspection types are the Coast Guard 
option, the ACP option, and the SIP option. Table 5 presents the total 
population of inspected towing vessels that would be impacted by this 
proposed rule. These are the current rates of inspection for the 
subchapters, though not all vessels are currently inspected. Table 6 
presents the projected subchapter M population and their projected 
counts of inspection type. We assume that the subchapter M towing 
vessel population will maintain a 70-percent-TSMS option and 30-
percent-Coast-Guard option split over the duration of the analysis.

                         Table 5--Total Affected Population for Inspected Towing Vessels
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
                                     User fee categories                                              Population
----------------------------------------------------------------------------------------------------------------
Subchapter M                                Coast Guard                                                    Total
                                                 option                  TSMS
----------------------------------------------------------------------------------------------------------------
Population..........................              1,603                  3,740                             5,343
% of Population.....................                 30                   70                                 100
----------------------------------------------------------------------------------------------------------------
Subchapter I                                Coast Guard                                                    Total
                                                 option      Vessel Inspection Alternative
----------------------------------------------------------------------------------------------------------------
                                                                 Alternate        Streamlined
                                                                Compliance         Inspection
                                                                   Program            Program
                                                                     (ACP)              (SIP)
----------------------------------------------------------------------------------------------------------------
Population..........................                 28                 13                  1                 42
% of Population.....................                 67                 31                  2                100
----------------------------------------------------------------------------------------------------------------
    Total Population................  .................  .................  .................              5,385
----------------------------------------------------------------------------------------------------------------


     Table 6--Projected Subchapter M Population by Inspection Option
------------------------------------------------------------------------
       Estimated annual subchapter M population by inspection type
-------------------------------------------------------------------------
                  Year                       CG option      TSMS option
------------------------------------------------------------------------
Year 1..................................           1,603           3,740
Year 2..................................           1,592           3,718
Year 3..................................           1,583           3,694
Year 4..................................           1,574           3,670
Year 5..................................           1,563           3,648
Year 6..................................           1,554           3,624
Year 7..................................           1,543           3,602
Year 8..................................           1,534           3,578
Year 9..................................           1,524           3,555
Year 10.................................           1,514           3,532
------------------------------------------------------------------------


[[Page 1384]]

Costs and Benefits
    This proposed rule would not impose any new societal costs as all 
of the inspection activities are currently being done by the regulated 
entities and Coast Guard. Rather the impacts of this rule would be in 
the form of transfer payments, which are monetary payments from one 
group to another that do not affect total resources available to 
society.
    This rule would not provide any quantitative benefits. However, it 
would have a qualitative benefit. This rule would revise user fees to 
more closely reflect the actual cost to the Coast Guard of providing 
inspection services. The result would be a more fair distribution of 
costs to inspected towing vessels by inspection type. Title 46 U.S.C. 
2110 directs that the fee or charge be established in accordance with 
31 U.S.C. 9701, which specifies that each charge be fair and based on: 
The costs to the Government; the value of the service or thing to the 
recipient, public policy, or interest served; and other relevant facts. 
Consistent with these objectives, once a fee or charge is established, 
section 2110 allows it to be adjusted to accommodate changes in the 
cost of providing a specific service or thing of value. This rulemaking 
aids the Coast Guard in compliance with those statutory requirements.
Transfer Payments
    The Coast Guard proposes to adjust the user fees collected from the 
current entities so that there are now five different fees based on the 
towing vessel subchapter and program utilized for vessel certification. 
The Coast Guard estimates this total is approximately 5,385 towing 
vessels. Table 7 shows the current fee, the proposed fee, the change 
and the percent change to the user fee. The annual costs of services 
for each vessel class is the proposed user fee for that vessel class.

             Table 7--Current Subchapter M and I User Fees and Proposed User Fee Adjustment Amounts
----------------------------------------------------------------------------------------------------------------
                                                                                    Incremental
            Fee type/ user fee class                Current fee    Proposed fee   fee adjustment  Percent change
----------------------------------------------------------------------------------------------------------------
Subchapter M: Coast Guard option................          $1,030          $2,184          $1,154             112
Subchapter M: TSMS..............................           1,030             973             -57              -6
Subchapter I: Coast Guard option................           2,915           2,747            -168              -6
Subchapter I: Alternative Compliance Program               2,915           1,850          -1,065             -37
 option.........................................
Subchapter I: Streamlined Inspection Program               2,915           2,260            -655             -22
 option.........................................
----------------------------------------------------------------------------------------------------------------
Note: Since there are no distinct categories for TSMS, SIP, or ACP in the current user fee table, all of
  subchapter M vessels pay one fee and all of subchapter I vessels pay one fee. Totals may not sum due to
  rounding.

    In table 8, we show the total annual transfer payments from each 
vessel class to the Government and the total for all vessels. For 
example, Subchapter M vessels that choose the Coast Guard option would 
pay $1,154 additional dollars per vessel in user fees to the Coast 
Guard for their inspection services. Negative numbers represent a 
decrease in user fees. Transfer payments are monetary payments from one 
group to another that do not affect total resources. For this proposed 
rulemaking, a user fee is a transfer payment from the vessel owner or 
operator to the Government to offset the costs to the Coast Guard for 
providing COI services. This is found by multiplying the vessel 
population by the incremental fee change. Because the subchapter M 
vessel population is projected to decrease, table 9 shows annual 
transfer payments for this subchapter, totals are found by multiplying 
the populations in table 6 by the appropriate fees.

                                Table 8--Annual Incremental Fee Amounts--FY 2021
----------------------------------------------------------------------------------------------------------------
                                                                                                  First year fee
                    Fee type/ user fee class                         Estimated      Incremental      transfer
                                                                    population      fee change       payments
----------------------------------------------------------------------------------------------------------------
Subchapter M: Coast Guard option................................           1,603          $1,154      $1,849,862
Subchapter M: TSMS option.......................................           3,740             -57        -213,180
                                                                 -----------------------------------------------
    Subtotal....................................................           5,343  ..............       1,636,682
Subchapter I: Coast Guard option................................              28            -168          -4,704
Subchapter I: ACP option........................................              13          -1,065         -13,845
Subchapter I: SIP option........................................               1            -655            -655
                                                                 -----------------------------------------------
    Subtotal....................................................              42  ..............         -19,204
                                                                 -----------------------------------------------
        Annual Total............................................  ..............  ..............       1,617,478
----------------------------------------------------------------------------------------------------------------


                                 Table 9--Subchapter M Annual Transfer Payments
----------------------------------------------------------------------------------------------------------------
                                                                                                   Subchapter M
                              Year                                   CG option      TSMS option        total
----------------------------------------------------------------------------------------------------------------
Year 1..........................................................      $1,849,862      ($213,180)      $1,636,682
Year 2..........................................................       1,837,168       (211,926)       1,625,242
Year 3..........................................................       1,826,782       (210,558)       1,616,224
Year 4..........................................................       1,816,396       (209,190)       1,607,206
Year 5..........................................................       1,803,702       (207,936)       1,595,766
Year 6..........................................................       1,793,316       (206,568)       1,586,748

[[Page 1385]]

 
Year 7..........................................................       1,780,622       (205,314)       1,575,308
Year 8..........................................................       1,770,236       (203,946)       1,566,290
Year 9..........................................................       1,758,696       (202,635)       1,556,061
Year 10.........................................................       1,747,156       (201,324)       1,545,832
----------------------------------------------------------------------------------------------------------------

    With the reduction in fees to vessels under the subchapter I and 
subchapter M TSMS options, the first year transfers from the government 
to the towing vessel industry is $232,384. The Coast Guard expects to 
have transfers from towing vessel operators for the COI services of 
$1,636,682 in the first year to the Government. The sum of these 
transfers is $1,617,478 in the first year. The 10-year transfers, 
undiscounted, total $15,719,319. The discounted annualized figure, at 7 
percent, is $1,577,491. Table 10 summarizes the total 10-year transfer 
payments from the towing vessel industry to the Government.

             Table 10--Discounted Transfer Payments From Towing Vessel Operators to the Government *
----------------------------------------------------------------------------------------------------------------
                                                                                            Discounted
                              Year                                 Undiscounted  -------------------------------
                                                                                        7%              3%
----------------------------------------------------------------------------------------------------------------
1...............................................................      $1,617,478      $1,511,662      $1,570,367
2...............................................................       1,606,038       1,402,776       1,513,845
3...............................................................       1,597,020       1,303,644       1,461,500
4...............................................................       1,588,002       1,211,479       1,410,919
5...............................................................       1,576,562       1,124,067       1,359,956
6...............................................................       1,567,544       1,044,521       1,312,793
7...............................................................       1,556,104         969,063       1,265,255
8...............................................................       1,547,086         900,418       1,221,284
9...............................................................       1,536,857         835,948       1,177,873
10..............................................................       1,526,628         776,060       1,135,955
                                                                 -----------------------------------------------
    Total.......................................................      15,719,319      11,079,638      13,429,747
                                                                 -----------------------------------------------
Annualized......................................................  ..............       1,577,491       1,574,376
----------------------------------------------------------------------------------------------------------------
* Note: Totals may not sum due to rounding.

Regulatory Alternatives
    A discussion of regulatory alternatives is available in the section 
VI.B(6) of this preamble.

B. Small Entities

    In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.) (RFA), the Coast Guard prepared this Initial Regulatory 
Flexibility Analysis (IRFA) that examines the impacts of the proposed 
rule on small entities. Due to the anticipated impacts on small 
businesses, the Coast Guard is including an analysis of the NPRM 
requirements for informational purposes.
    A small entity may be a small independent business, defined as 
independently owned and operated, that is organized for profit and is 
not dominant in its field per the Small Business Act (5 U.S.C. 632). A 
small entity can also be a small not-for-profit organization (any not-
for-profit enterprise that is independently owned and operated and is 
not dominant in its field) or a small governmental jurisdiction (a 
locality with fewer than 50,000 people) per the RFA. An IRFA addresses 
the following:
    (1) A description of the reasons why action by the agency is being 
considered;
    (2) A succinct statement of the objectives of, and legal basis for, 
the rule;
    (3) A description of and, where feasible, an estimate of the number 
of small entities to which the rule will apply;
    (4) A description of the projected reporting, recordkeeping and 
other compliance requirements of the rule, including an estimate of the 
classes of small entities that will be subject to the requirement and 
the type of professional skills necessary for preparation of the report 
or record;
    (5) An identification, to the extent practicable, of all relevant 
Federal rules that may duplicate, overlap or conflict with the rule; 
and
    (6) A description of any significant alternatives to the rule that 
accomplish the stated objectives of applicable statutes and that 
minimize any significant economic impact of the rule on small 
entities.\20\
---------------------------------------------------------------------------

    \20\ 5 U.S.C. 603.
---------------------------------------------------------------------------

    Below is a discussion of the IRFA analysis for each of these six 
elements.
    1. A description of the reasons why action by the agency is being 
considered.
    The Coast Guard is considering updating the user fees for inspected 
towing vessels because after reviewing the costs to the Government of 
inspections under the Coast Guard option or options using a third 
party, the Coast Guard has determined that updates are necessary to 
ensure that fees for all options are fair and based on costs to the 
Government. User fees for subchapter I inspected towing vessels have 
not been updated since 1995. The proposed changes are also consistent 
with the Coast Guard's statement in the 2016 final rule, Inspection of 
Towing Vessels, that we planned to promulgate a separate rulemaking for 
annual inspection fees for towing vessels that would reflect the 
specific program costs associated with the two subchapter M options--
the TSMS option and the Coast Guard inspection option.
    The purpose of this proposed rule is to redistribute the burden of 
inspection

[[Page 1386]]

activities from the Coast Guard to the towing vessel industry.
    2. A succinct statement of the objective of, and legal basis for, 
the rule.
    This proposed regulatory action is necessary to adjust the user fee 
schedule to better reflect the cost of COI services to the government, 
for subchapters I and M towing vessels. The Coast Guard is issuing this 
proposed rule based on authority in 46 U.S.C. 2110, which has been 
delegated to the Commandant under DHS Delegation No. 0170.1(II)(92). 
Title 46 U.S.C. 2110 directs the Coast Guard to establish a fee, or 
charge, for a service or thing of value it provides in accordance with 
31 U.S.C. 9701. Inspections and related services described in Subtitle 
II of Title 46 United States Code are considered a service of value 
provided by the Coast Guard. Section 31 U.S.C. 9701 specifies that each 
fee or charge be fair and based on the costs to the government, the 
value of the service to the recipient, public policy or interest 
served, and other relevant facts. Once a fee or charge is established, 
46 U.S.C. 2110 allows it to be adjusted to accommodate changes in the 
cost of providing a specific service or thing of value.
    In addition, section 815 of CGAA directs the Coast Guard to review 
and revise the fee for inspections if necessary to comply with 31 
U.S.C. 9701. The Coast Guard interprets ``costs to the Government'' in 
section 815(a) to mean the cost to the Coast Guard of providing 
inspection and related services to determine whether a vessel meets 
requirements necessary for it to maintain its COI.
    3. A description of and, where feasible, an estimate of the number 
of small entities to which the rule will apply.
    The proposed rule would affect the owners and operators of certain 
towing vessels under subchapters I and M. We constructed this towing 
vessel population from the Coast Guard's MISLE system. From this 
database, we identified 5,385 vessels affected by this proposed rule--
5,343 subchapter M towing vessels and 42 subchapter I towing vessels. 
There are 1,236 unique companies that own or operate these vessels. 
Five companies own vessels under both subchapters I and M.
    We used available operator name and address information to research 
public and proprietary databases for entity type (subsidiary or parent 
company), primary line of business, employee size, revenue, and other 
information.\21\ We found vessels owned by 21 government entities and 4 
non-profit entities. The remaining 1,211 are business entities. For 
governmental jurisdictions, we determined whether the jurisdiction had 
populations of less than 50,000 as per the criteria in the RFA. For 
nonprofits, we evaluated whether the nonprofit was independently owned 
and operated and was not dominant in its field.\22\ For the business 
entities, we matched their information with the latest Small Business 
Administration (SBA) Table of Small Business Size Standards to 
determine if a business entity is small in its primary line of business 
as classified in the North American Industry Classification System 
(NAICS).\23\
---------------------------------------------------------------------------

    \21\ https://www.cortera.com/ and https://www.manta.com/.
    \22\ https://www.guidestar.org.
    \23\ https://www.sba.gov/document/support--table-size-standards.
---------------------------------------------------------------------------

    We broke the population down into subchapters I and M. For 
subchapter M, we randomly selected a sample size from the 1,222 unique 
towing vessel companies to reach the 95 percent confidence level. Using 
Cochran's Formula, Coast Guard chose a statistically valid random 
sample of 385 businesses that own and operate towing vessels.\24\
---------------------------------------------------------------------------

    \24\ A statistically valid random sample size of 292 businesses 
would be required to achieve a 95-percent confidence level out of 
the 1,222 unique towing vessel companies. In this analysis, Coast 
Guard oversampled to analyze 385 businesses to ensure enough data 
and information was available on the businesses to meet the sampling 
requirements.
---------------------------------------------------------------------------

    There are a total of 97 NAICS-coded industries in this proposed 
rule's sample affected population. Table 11 displays the 10 industries 
that appear most frequently in the affected population of owners or 
operators of towing vessels in subchapters I and M.

                                        Table 11--Most Common NAICS Codes
----------------------------------------------------------------------------------------------------------------
                                                                                     Count of
                                                                                   towing vessel    Percent of
       NAICS code               Description           Small entity definition        owners or        total *
                                                                                     operators
----------------------------------------------------------------------------------------------------------------
488330.................  Navigational Services to  <$41,500,000.................              40              10
                          Shipping.
713930.................  Marinas.................  <$8,000,000..................              34               9
237990.................  Other Heavy and Civil     <$39,500,000.................              31               8
                          Engineering
                          Construction.
238910.................  Site Preparation          <$16,500,000.................              31               8
                          Contractors.
441222.................  Boat Dealers............  <$35,000,000.................              28               7
483211.................  Inland Water Freight      <750 Employees...............              23               6
                          Transportation.
488320.................  Marine Cargo Handling...  <$41,500,000.................              12               3
336611.................  Ship Building and         <1,250 Employees.............              10               3
                          Repairing.
488210.................  Support Activities for    <$16,500,000.................               5               1
                          Rail Transportation.
483212.................  Inland Water Passenger    <500 Employees...............               5               1
                          Transportation.
----------------------------------------------------------------------------------------------------------------
* Note: Total does not sum to 100 percent, since these percentages reflect only the top 10 most common NAICS
  codes of the sample. The remaining 44 percent of NAICS codes were not within the 10 most commonly occurring.

    Coast Guard chose a subchapter M sample of 385 businesses that own 
and operate the towing vessels. Of the 385 businesses, 37 exceeded the 
SBA small business size standards, 265 companies were considered to be 
small businesses by the SBA size standards, and 83 companies had no 
information available. Consistent with DHS practice, entities with no 
information available will be considered as small entities. Thus, there 
are 348 businesses in our sample that we consider to be small entities. 
Based on our random sample, 90.4 percent of subchapter M entities are 
considered small and therefore when applied to the population of unique 
towing vessel companies, 1,105 subchapter M entities would be 
considered small.
    For subchapter I, we searched all 14 unique towing vessel companies 
in the available databases. Of the 14 unique towing vessel companies in 
the

[[Page 1387]]

subchapter I population, 13 had available revenue and employee data. Of 
these 13 unique towing vessel companies, 6 exceeded the SBA small 
business size standards and 7 were considered small businesses by the 
SBA size standards. Consistent with DHS practice, we consider entities 
for which information was not available to be small. Thus, there are 
eight businesses in our population that we consider to be small 
entities.
    For this analysis, we considered the annual weighted average 
transfer from industry to the Coast Guard by subchapter. For subchapter 
M vessels, we found the average fleet size for small entities is two 
vessels and multiplied it by the weighted average of incremental 
changes in user fees. According to our analysis of small subchapter M 
vessels, 97 percent of them choose the Coast Guard option for their 
inspection option and 3 percent choose the TSMS option. Thus, we 
multiplied the rates for vessels choosing their inspection option by 
the incremental change in user fees and the average fleet size for 
small subchapter M entities, which yielded an average impact of $1,117 
per subchapter M vessel and $2,234 per small subchapter M entity. We 
repeated this process for subchapter I entities. We found the average 
fleet size for small entities, which is 1, and multiplied it by the 
weighted average of incremental changes in user fees. According to our 
analysis of small subchapter I vessels, 50 percent of them choose the 
ACP option for their inspection option, 37.5 percent choose the Coast 
Guard option, and the remaining 12.5 percent choose the SIP option. 
This proposed rule would save subchapter I entities an average of $799. 
Tables 12 and 13 show the impact on small company revenue for each 
subchapter that we had revenue data for.

         Table 12--Subchapter M Estimated Annual Revenue Impact
------------------------------------------------------------------------
                                             Number of      Percent of
          Revenue impact range               entities        entities
------------------------------------------------------------------------
0% <= 1%................................             233            87.9
1% <= 3%................................              27            10.2
3% <= 5%................................               3             1.1
Above 5%................................               2             0.8
                                         -------------------------------
    Total...............................             265             100
------------------------------------------------------------------------


         Table 13--Subchapter I Estimated Annual Revenue Impact
------------------------------------------------------------------------
                                             Number of      Percent of
          Revenue impact range               entities        entities
------------------------------------------------------------------------
0% <= 1%................................               7             100
1% <= 3%................................               0               0
3% <= 5%................................               0               0
5% <= 10%...............................               0               0
Above 10%...............................               0               0
                                         -------------------------------
    Total...............................               7             100
------------------------------------------------------------------------

    According to our analysis, 87.9 percent of subchapter M entities 
will have an annual impact to revenue of 1 percent or less. 
Approximately, 10.2 percent will have an annual impact to revenue 
between 1 and 3 percent. The remaining 1.9 percent will have an annual 
impact to revenue greater than 3 percent. For subchapter I entities, 
our analysis shows a less than 1 percent impact to annual revenue for 
all small entities.
    4. A description of the projected reporting, recordkeeping, and 
other compliance requirements of the rule, including an estimate of the 
classes of small entities which will be subject to the requirements and 
the type of professional skills necessary for preparation of the report 
or record.
    This proposed rule calls for no new reporting, recordkeeping or 
other compliance requirements.
    5. An identification, to the extent practicable, of all relevant 
Federal rules which may duplicate, overlap or conflict with the rule.
    There are no relevant Federal rules that may duplicate, overlap, or 
conflict with this proposed rule.
    6. A description of any significant alternatives to the rule which 
accomplish the stated objectives of applicable statutes and which 
minimize any significant economic impact of the rule on small entities.
    Alternatives considered include adjusting our current user fees for 
inflation, updating only the Coast Guard option user fees or continuing 
with the current user fees. Each of these options will be considered in 
the following discussion.
    Under the first alternative, Coast Guard considered to adjust the 
current user fees for inflation from 1995 dollars to 2020 dollars. To 
adjust for inflation, we use an inflation factor from the annual GDP 
deflator data. We calculate the inflation factor of 1.58 by dividing 
the annual 2020 index number (113.623) by the annual 1995 index number 
(71.864). We then multiply the current fees for subchapters I and M by 
the inflation factor and round it to the nearest dollar. Subchapters I 
and M would experience a 58-percent increase in fees and incur annual 
fees of $597 and $1,691, respectively. The fees, when multiplied by the 
number of annual COI renewals, yield an annual revenue of approximately 
$8.9 million and transfer payments of $3.2 million. We rejected this 
alternative because the annual revenue collected under this methodology 
does not reflect the full cost to the Coast Guard of providing the COI-
related services. Table 14 shows the inflation adjusted user fees for 
subchapter I and M vessels.

[[Page 1388]]



                                           Table 14--Comparison of User Fees in 1995 Dollars and 2020 Dollars
                                                                    [Alternative 1] *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Annual fee    Annual revenue
              Fee category                    1995 $         Inflation        2020 $        Population      Incremental      transfer     collected from
                                           (current fee)      factor                                      fee adjustment     payments        user fees
--------------------------------------------------------------------------------------------------------------------------------------------------------
Subchapter I vessels....................          $2,915            1.58          $4,606              42          $1,691         $71,009        $193,439
Subchapter M vessels....................           1,030            1.58           1,627           5,343             597       3,191,908       8,695,198
                                         ---------------------------------------------------------------------------------------------------------------
    Total...............................  ..............  ..............  ..............  ..............  ..............       3,262,918       8,888,638
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Note: All dollar figures rounded to the closest whole dollar.

    In our second alternative, we considered updating only the Coast 
Guard option user fees. We rejected this alternative because it would 
not comply with section 815 of CGAA. That section directs the Coast 
Guard to review and, based on our findings, revise the fee for towing 
vessel inspections. First, the Coast Guard must compare the costs to 
the Government of towing vessel inspections performed by the Coast 
Guard and towing vessel inspections performed by a third party, to 
determine if they are different. We have conducted that comparison and 
determined that there is a difference in costs to the Government 
between the inspection options for towing vessels that involve a third 
party and those that do not. If there is a difference in costs, section 
815 of CGAA directs us to revise the fees we assess for towing vessel 
inspections to conform to 31 U.S.C. 9701, and to base the fee on the 
cost to the Government.
    In our third alternative, we considered maintaining the current 
user fee without an adjustment. We rejected this alternative because 
the annual revenue collected under this methodology would not cover the 
full cost to the Coast Guard of providing the COI-related services.
Conclusion
    In conclusion, we estimate that 87.9 percent of subchapter M 
entities with revenue data will have an annual impact to revenue of 1 
percent or less. Approximately, 10.2 percent will have an annual impact 
to revenue between 1 and 3 percent. The remaining 1.9 percent will have 
an annual impact to revenue greater than 3 percent. For subchapter I 
entities, our analysis shows a less than 1 percent impact to annual 
revenue for all small entities that had revenue data. We also discussed 
several regulatory alternatives including our preferred alternative. 
Our preferred alternative is to: (1) Update the user fee for seagoing 
towing vessels; (2) revise the user fee for other inspected towing 
vessels; and (3) establish fees for towing vessels using the ACP, SIP, 
or the TSMS options. Vessels using the ACP, SIP or TSMS option would 
pay a lower fee than vessels that use the traditional Coast Guard 
inspection option.
    We are interested in the potential impacts from this rule on small 
entities and we request public comment on these potential impacts. If 
you think that this rule will have a significant economic impact on 
you, your business, or your organization, please submit a comment to 
the docket at the address under ADDRESSES in the rule. In your comment, 
explain why, how, and to what degree you think this rule will have an 
economic impact on you.

C. Assistance for Small Entities

    Under section 213(a) of the Small Business Regulatory Enforcement 
Fairness Act of 1996, Public Law 104-121, we want to assist small 
entities in understanding this proposed rule so that they can better 
evaluate its effects on them and participate in the rulemaking. If the 
proposed rule would affect your small business, organization, or 
governmental jurisdiction and you have questions concerning its 
provisions or options for compliance, please contact the person in the 
FOR FURTHER INFORMATION CONTACT section of this proposed rule. The 
Coast Guard will not retaliate against small entities that question or 
complain about this proposed rule or any policy or action of the Coast 
Guard.
    Small businesses may send comments on the actions of Federal 
employees who enforce, or otherwise determine compliance with, Federal 
regulations to the Small Business and Agriculture Regulatory 
Enforcement Ombudsman and the Regional Small Business Regulatory 
Fairness Boards. The Ombudsman evaluates these actions annually and 
rates each agency's responsiveness to small business. If you wish to 
comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR 
(1-888-734-3247).

D. Collection of Information

    This proposed rule would call for no new collection of information 
under the Paperwork Reduction Act of 1995, 44 U.S.C. 3501-3520.
    The Coast Guard has a collection of information for the collection 
of user fees from inspected vessels. This collection is 1625-0074 
titled ``Direct User Fees for Inspection or Examination of U.S. and 
Foreign Commercial Vessels.'' The collection of information hour burden 
for collecting user fees is independent of the amount collected. Towing 
vessels inspected under 46 CFR subchapters I and M must currently pay 
$1,030 and $2,915 respectively. This proposed rulemaking would simply 
adjust the user fee amount to more accurately reflect the current cost 
of the Coast Guard for performing inspections--and would not change the 
number of towing vessels that must pay a user fee or the time it takes 
to pay the user fee.

E. Federalism

    A rule has implications for federalism under Executive Order 13132 
(Federalism) if it has a substantial direct effect on States, on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government. We have analyzed this proposed rule under Executive Order 
13132 and have determined that it is consistent with the fundamental 
federalism principles and preemption requirements described in 
Executive Order 13132. Our analysis follows.
    This NPRM proposes to establish and revise user fees for services 
provided by the Coast Guard pursuant to the Congressional mandate 
contained in 46 U.S.C. 2110. Congress has not granted the authority to 
the States to establish user fees for Coast Guard-provided services. 
This NPRM would not impact a State's general ability to render services 
or assess or collect fees for State-rendered services. Therefore, this

[[Page 1389]]

rule does not have federalism implications as described in Executive 
Order 13132.
    While it is well settled that States may not regulate in categories 
in which Congress intended the Coast Guard to be the sole source of a 
vessel's obligations, the Coast Guard recognizes the key role that 
State and local governments may have in making regulatory 
determinations. Additionally, for rules with federalism implications 
and preemptive effect, Executive Order 13132 specifically directs 
agencies to consult with State and local governments during the 
rulemaking process. If you believe this proposed rule would have 
implications for federalism under Executive Order 13132, please contact 
the person listed in the FOR FURTHER INFORMATION CONTACT section of 
this preamble.

F. Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1531-1538, 
requires Federal agencies to assess the effects of their discretionary 
regulatory actions. In particular, the Act addresses actions that may 
result in the expenditure by a State, local, or tribal government, in 
the aggregate, or by the private sector of $100 million (adjusted for 
inflation) or more in any one year. Although this proposed rule would 
not result in such an expenditure, we do discuss the effects of this 
proposed rule elsewhere in this preamble.

G. Taking of Private Property

    This proposed rule would not cause a taking of private property or 
otherwise have taking implications under Executive Order 12630 
(Governmental Actions and Interference with Constitutionally Protected 
Property Rights).

H. Civil Justice Reform

    This proposed rule meets applicable standards in sections 3(a) and 
3(b)(2) of Executive Order 12988 (Civil Justice Reform) to minimize 
litigation, eliminate ambiguity, and reduce burden.

I. Protection of Children

    We have analyzed this proposed rule under Executive Order 13045 
(Protection of Children from Environmental Health Risks and Safety 
Risks). This proposed rule is not an economically significant rule and 
would not create an environmental risk to health or risk to safety that 
might disproportionately affect children.

J. Indian Tribal Governments

    This proposed rule does not have tribal implications under 
Executive Order 13175 (Consultation and Coordination with Indian Tribal 
Governments), because it would not have a substantial direct effect on 
one or more Indian tribes, on the relationship between the Federal 
Government and Indian tribes, or on the distribution of power and 
responsibilities between the Federal Government and Indian tribes.

K. Energy Effects

    We have analyzed this proposed rule under Executive Order 13211 
(Actions Concerning Regulations That Significantly Affect Energy 
Supply, Distribution, or Use). We have determined that it is not a 
``significant energy action'' under Executive Order 13211, because 
although it is a ``significant regulatory action'' under Executive 
Order 12866, it is not likely to have a significant adverse effect on 
the supply, distribution, or use of energy, and the Administrator of 
OMB's Office of Information and Regulatory Affairs has not designated 
it as a significant energy action.

L. Technical Standards

    The National Technology Transfer and Advancement Act, codified as a 
note to 15 U.S.C. 272, directs agencies to use voluntary consensus 
standards in their regulatory activities unless the agency provides 
Congress, through OMB, with an explanation of why using these standards 
would be inconsistent with applicable law or otherwise impractical. 
Voluntary consensus standards are technical standards (for example, 
specifications of materials, performance, design, or operation; test 
methods; sampling procedures; and related management systems practices) 
that are developed or adopted by voluntary consensus standards bodies.
    This proposed rule does not use technical standards. Therefore, we 
did not consider the use of voluntary consensus standards.

M. Environment

    We have analyzed this proposed rule under Department of Homeland 
Security Management Directive 023-01, Rev. 1, associated implementing 
instructions, and Environmental Planning COMDTINST 5090.1 (series), 
which guide the Coast Guard in complying with the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made 
a preliminary determination that this action is one of a category of 
actions that do not individually or cumulatively have a significant 
effect on the human environment. A preliminary Record of Environmental 
Consideration supporting this determination is available in the docket. 
For instructions on locating the docket, see the ADDRESSES section of 
this preamble. This proposed rule would be categorically excluded under 
paragraphs L54 and L57 of Appendix A, Table 1 of DHS Instruction Manual 
023-01, Rev. 1.\25\ Paragraph L54 pertains to regulations which are 
editorial or procedural. Paragraph L57 pertains to regulations 
concerning manning, documentation, admeasurement, inspection, and 
equipping of vessels.
---------------------------------------------------------------------------

    \25\ https://www.dhs.gov/sites/default/files/publications/DHS_Instruction%20Manual%20023-01-001-01%20Rev%2001_508%20Admin%20Rev.pdf.
---------------------------------------------------------------------------

    This proposed rule would update the existing user fee for seagoing 
towing vessels that are 300 gross tons or more and establish specific 
user fees for other towing vessels that have more recently become 
subject to inspection. We seek any comments or information that may 
lead to the discovery of a significant environmental impact from this 
proposed rule.

List of Subjects in 46 CFR Part 2

    Marine safety, Reporting and recordkeeping requirements, Vessels.

    For the reasons discussed in the preamble, the Coast Guard proposes 
to amend 46 CFR part 2 as follows:

PART 2--VESSEL INSPECTIONS

0
1. The authority citation for part 2 is revised to read as follows:

    Authority: Sec. 622, Pub. L. 111-281; 33 U.S.C. 1903; 43 U.S.C. 
1333; 46 U.S.C. 2103, 2110, 3306, 3316, 3703, 70034; Department of 
Homeland Security Delegation No. 0170.1(II)(77), (90), (92)(a), 
(92)(b); E.O. 12234, 45 FR 58801, 3 CFR, 1980 Comp., p. 277, sec. 1-
105.

0
2. Amend Sec.  2.10-25 by:
0
a. Revising the definition of ``Sea-going towing vessel''; and
0
b. Adding the definitions in alphabetical order for ``Alternative 
Compliance Program option'', ``Annual vessel inspection fee'', ``Coast 
Guard option'', ``Streamlined Inspection Program option'', ``Towing 
Safety Management System option'', and ``Towing vessel''.
    The additions and revision read as follows:


Sec.  2.10-25  Definitions.

* * * * *
    Alternative Compliance Program option means the option described in 
46 CFR part 8, subpart D.

[[Page 1390]]

    Annual vessel inspection fee means the fee charged for inspection 
and related services provided by the Coast Guard to determine whether a 
vessel meets the requirements to maintain its Certificate of 
Inspection.
    Coast Guard option means an option used by--
    (1) A vessel inspected under a 46 CFR subchapter that is not 
participating in the Alternative Compliance Program described in 46 CFR 
part 8, subpart D;
    (2) A vessel inspected under a 46 CFR subchapter that is not 
participating in the Streamlined Inspection Program described in 46 CFR 
part 8, subpart E; or
    (3) A vessel inspected under 46 CFR subchapter M that is not 
participating in the Towing Safety Management System option described 
in 46 CFR part 138.
* * * * *
    Seagoing towing vessel means a commercial vessel 300 gross tons or 
more engaged in or intending to engage in the service of pulling, 
pushing or hauling alongside, or any combination of pulling, pushing or 
hauling alongside, and that makes voyages beyond the Boundary Line as 
defined by 46 U.S.C. 103, and has been issued a Certificate of 
Inspection under the provisions of subchapter I of this chapter.
* * * * *
    Streamlined Inspection Program option means the option described in 
46 CFR part 8, subpart E.
* * * * *
    Towing Safety Management System option means the option described 
in 46 CFR part 138 for towing vessels subject to 46 CFR subchapter M.
    Towing vessel means a commercial vessel engaged in or intending to 
engage in the service of pulling, pushing, or hauling alongside, or any 
combination of pulling, pushing, or hauling alongside.
* * * * *
0
3. Amend Sec.  2.10-101, in Table 2.10-101, by:
0
a. Revising the ``Sea-going Towing Vessels'' entry; and
0
b. Adding an entry for ``Towing Vessels (Inspected under 46 CFR 
Subchapter M)''.
    The addition and revision read as follows:


Sec.  2.10-101  Annual vessel inspection fee.

* * * * *

   Table 2.10-101--Annual Vessel Inspection Fees for U.S. and Foreign
              Vessels Requiring a Certificate of Inspection
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
                              * * * * * * *
Seagoing Towing Vessels (Inspected under 46 CFR
 Subchapter I):
    Coast Guard option..................................          $2,747
    Alternative Compliance Program option...............           1,850
    Streamlined Inspection Program option...............           2,260
 
                              * * * * * * *
Towing Vessels (Inspected under 46 CFR Subchapter M):
    Coast Guard option..................................           2,184
    Towing Safety Management System option..............             973
------------------------------------------------------------------------

* * * * *

    Dated: December 23, 2021.
Karl L. Schultz,
Admiral, U.S. Coast Guard, Commandant.
[FR Doc. 2022-00200 Filed 1-10-22; 8:45 am]
BILLING CODE 9110-04-P


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