Federal Register / Vol. 75, No. 213 / Thursday, November 4, 2010 / Notices 68019

DEPARTMENT OF TRANSPORTATION FOR FURTHER INFORMATION CONTACT: limitations for rebuilding, it is Murray A. Bloom, Chief, Division of appropriate for CCF vessels to meet only Maritime Administration Maritime Programs, Office of Chief the single test for Coast Guard and Counsel, Maritime Administration, 1200 MARAD. [Docket No. MARAD–2007–0012] New Jersey Ave., SE., Washington, DC Chapter 553 of title 46, United States 20590; Ph. (202) 366–5320, fax: (202) Code, provides that preference be given RIN 2133–AB69 366–3511; or e-mail in the carriage of U.S. Government- [email protected]. impelled cargoes to privately-owned Determination of Foreign commercial vessels of the United States. SUPPLEMENTARY INFORMATION: Reconstruction or Rebuilding of U.S.- The statute excludes any vessel rebuilt Built Vessels That Participate in the I. Background in a foreign country, unless the vessel Capital Construction Fund and Cargo shall have been documented under U.S. Preference Programs Three maritime promotional statutes mandate use of U.S.-built vessels and registry for at least three years prior to AGENCY: Maritime Administration, generally provide that a U.S.-built vessel seeking preference cargoes. MARAD regulations at 46 CFR part 381 govern Department of Transportation. becomes ineligible to carry preference shipment of preference cargoes. To ACTION: Notice of Withdrawal. cargo if the vessel is determined to have assess rebuilding under cargo preference been reconstructed or rebuilt in a rules, MARAD examines the extent of SUMMARY: The Maritime Administration foreign country. shipyard work and whether vessel type (MARAD) is withdrawing and Section 12132(b) of title 46, United has been or would be changed, and how terminating its notice published in the States Code, provides that a vessel the changes to the vessel would affect Federal Register on November 14, 2007, eligible to engage in the U.S. coastwise trade, U.S. shipyards, and purposes and at 72 FR 64109, which requested trade and later rebuilt outside the policy of the Merchant Marine Act. comments on what standards MARAD United States may no longer engage in MARAD’s authority to apply a standard should apply concerning determinations the coastwise trade. This statute is to rebuilding determinations, different of foreign reconstruction of U.S.-built administered by the U.S. Coast Guard. vessels that participate in the Capital from the Coast Guard’s, was affirmed in The Coast Guard’s regulations that Aquarius Marine Co. v. Pena, 64 F.3d 82 Construction Fund (CCF) program and implement the statute are set forth in 46 foreign rebuilding of U.S.-built vessels (2nd Cir. 1995). This case was followed CFR part 67. In determining whether a by MARAD’s final opinions in Barge that participate in the cargo preference vessel has been rebuilt, the Coast Guard program. Initially, when the notice was Connor, Docket No. A–198 (Oct. 26, examines the amount of steel replaced 2005) and Matson Navigation Company, published, it was considered useful to on a vessel. The Coast Guard’s obtain public comment on whether MARAD Docket No. A–199 (Dec. 9, interpretation of its regulations 2008). MARAD should issue regulations on regarding rebuilding was affirmed in standards applicable to determination of Shipbuilders Council of America, Inc. v. II. Summary of the Notice rebuilding or reconstruction. At the time United States Coast Guard, 578 F.3d On November 14, 2007, MARAD the notice was published, the Coast 234 (4th Cir. 2009) and followed in the published a notice requesting Guard’s approach to rebuilding was an more recent case decided December 3, comments. It was published at 72 FR unsettled area of law and a particular 2009, in Shipbuilders Council of 64109. The notice requested comments issue had arisen with regard to America v. United States Dept. of as to how MARAD should administer MARAD’s method of determination in a Homeland Security, 673 F.Supp.2d 438 the programs assigned to it and sought foreign rebuild context. That matter was (E.D.Va. 2009). answers to four questions. MARAD resolved and in December 2009, the Chapter 535 of title 46, United States received 21 comments from 10 Coast Guard’s method of carrying out Code, established the Capital commenters. Commenters included U.S. rebuilding determinations was affirmed Construction Fund (CCF) program, shippers, individuals, and shipping by the United States Court of Appeals whereby a U.S. citizen owner of an associations. A discussion of the for the Fourth Circuit. Likewise, eligible vessel may defer Federal income comments follows. MARAD’s approach to such taxes on income derived from the determinations had been affirmed by the operation of an eligible vessel to the III. Discussion of Comments United States Court of Appeals for the extent that income is deposited into a The notice requested comments on Second Circuit. Even though the fund to be used solely for the four topics pertaining to foreign rebuild standards are different as applied acquisition, construction or and reconstruction standards as applied regarding the cargo preference program, reconstruction of qualified vessels. The to the CCF program and cargo the two approaches would only rarely statutory definitions of both eligible and preference. The questions included: produce a different result. Furthermore, qualified vessels, as pertaining to the (1) What substantive standards should because they are generally applied in CCF program, require such vessels, if MARAD apply to determine whether a different circumstances, they even more reconstructed, to be reconstructed in the CCF vessel has been reconstructed or a rarely produce inconsistent results United States. MARAD administers the cargo preference vessel has been rebuilt; regarding the same vessel. MARAD has CCF program (except for the CCF (2) what procedures should the MARAD been requested to make a determination applicable to fishery vessels and adopt to investigate whether a CCF only twice in the last fifteen years. administered by the National Oceanic vessel has been reconstructed or a cargo Therefore, a new rule is not required. and Atmospheric Administration) under preference vessel has been rebuilt; (3) DATES: The notice published at 72 FR regulations located at 46 CFR part 390. what role, if any, should unrelated third 64109 (November 14, 2007) is To evaluate reconstruction under the parties, such as competitors or withdrawn and terminated on CCF program, MARAD follows shipyards, play in developing a record November 4, 2010. determinations made by the Coast of decision on whether a CCF vessel has Docket: For access to the docket to Guard for Jones Act purposes. Under the been reconstructed or a cargo preference read background documents, please go CCF, because most vessels are Jones Act vessel has been rebuilt; and (4) what to http://www.regulations.gov. vessels and must meet Coast Guard public disclosure criteria should apply

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to the record of decision on whether a it pertains to programs administered by Valley Railroad, Inc.; Louisiana CCF vessel has been reconstructed or a MARAD, in the future. Southern Railroad, Inc.; Arkansas cargo preference vessel has been rebuilt. Southern Railroad, Inc.; Alabama IV. Reason for Withdrawal In response to question one as to which Southern Railroad, Inc.; Vicksburg substantive standards MARAD should MARAD’s procedures on foreign Southern Railroad, Inc.; Austin Western apply to determine whether a CCF rebuilding for cargo preference purposes Railroad, Inc.; Baton Rouge Southern vessel has been reconstructed or a cargo were affirmed in Aquarius Marine Co. in Railroad, LLC (BRSR); Pacific Sun preference vessel has been rebuilt, the 1995 and reaffirmed in the Barge Railroad, LLC (PSRR); Grand Elk majority of commenters responded that Connor (2005) and Matson (2008) Railroad; Alabama Warrior Railway, there were already established decisions. This is a settled area of law. LLC (AWR); and , precedents in the Aquarius Marine Co. Also, MARAD received no objections to Inc. case and MARAD’s determinations in its practice that CCF reconstruction Under the proposed transaction, all Golden Monarch and Barge Connor; two follow Coast Guard guidance. MARAD but 4 of the Railroads, SKO, others suggested that MARAD adopt the and the Coast Guard have different PSRR, AWR, and BRSR, will reorganize. Coast Guard’s standard for rebuild/ standards for rebuilding as discussed Holdings, which is a new Kansas reconstruction determinations. MARAD herein, but those standards have a very noncarrier holding company, will will maintain the status quo by adhering slight chance of overlapping or indirectly control all of the Watco to the established precedents. As to producing conflicting results. This is so Railroads. There are several steps to the question number two regarding what because the differing standards address proposed transaction. The existing procedures MARAD should adopt to diverse segments of the vessel market. stockholders of Watco will form inquire into whether a CCF vessel has Thus, there is no need for a new rule or Holdings, and Holdings will become the been reconstructed or a cargo preference to amend the cargo preference parent to Watco and thus will indirectly vessel has been rebuilt, a majority of the regulations or the CCF regulations with control the 22 Watco Railroads. In commenters felt participants in the CCF respect to rebuild or reconstruction addition, Watco will convert from a and cargo preference programs should determination standards. Kansas corporation to a Delaware seek advisory opinions from MARAD By Order of the Maritime Administrator. limited liability company and will prior to having work performed outside Dated: October 25, 2010. continue to control Transportation Services. In turn, Transportation the United States. One commenter Christine Gurland, suggested that MARAD enter into a Services will convert from a Kansas Secretary, Maritime Administration. Memorandum of Understanding with corporation to a Kansas limited liability the Coast Guard to be notified of all [FR Doc. 2010–27812 Filed 11–3–10; 8:45 am] company and will continue to directly applications for rebuild determinations BILLING CODE 4910–81–P control 21 of the Watco Railroads: all and then make an independent but BRSR.1 Further, each of the Watco determination based upon the Railroads except SKO, PSRR, AWR, and DEPARTMENT OF TRANSPORTATION application submitted to the Coast BRSR will be converted to either a Guard. MARAD noted in its decision in Surface Transportation Board limited liability company or a C Barge Connor that it would have corporation, depending on applicable provided an advisory decision to Moby [Docket No. FD 35439] State law. Each of the Watco Railroads Marine Corporation if asked prior to will remain incorporated in the same work having been performed in Watco Holdings, Inc., Watco state of its incorporation today. Colombia. MARAD is willing to provide Companies, Inc., and Watco The transaction is scheduled to be advisory opinions and will do so when Transportation Services, Inc.— consummated on or after November 18, asked. Such advisory opinions will be Corporate Family Transaction 2010, the effective date of the exemption published in the Federal Register. Exemption (30 days after the notice was filed). The As to the third question posed in the Watco Holdings, Inc. (Holdings), purpose of this transaction is to notice regarding what role, if any, that Watco Companies, Inc. (Watco), Watco facilitate Watco’s ability to obtain unrelated third parties should play in Transportation Services, Inc. financing. This is a transaction within a developing a record of decision on (Transportation Services), and the rail corporate family of the type specifically whether a CCF vessel has been carrier subsidiaries have jointly filed a exempted from prior review and reconstructed or a cargo preference verified notice of exemption under 49 approval under 49 CFR 1180.2(d)(3). vessel has been rebuilt, all commenters CFR 1180.2(d)(3) for a corporate family The parties state that the transaction felt third parties should play a transaction. Watco, a noncarrier, is a will not result in adverse changes in substantial role in developing the Kansas corporation that controls service levels, significant operational record. Transportation Services, also a changes, or any change in the A variety of comments were received noncarrier and a Kansas corporation. competitive balance with carriers in response to question four regarding Watco indirectly controls 22 Class III outside the Watco corporate family. public disclosure of records of decision. railroads (the Watco Railroads): South Under 49 U.S.C. 10502(g), the Board There was general consensus that Kansas and Oklahoma Railroad may not use its exemption authority to MARAD should publish its final rulings Company (SKO); Palouse River & Coulee relieve a rail carrier of its statutory in the Federal Register. MARAD City Railroad, Inc.; Timber Rock obligation to protect the interests of its currently does not publish its rulings in Railroad, Inc.; Stillwater Central employees. Section 11326(c), however, the Federal Register. Instead, previous Railroad, Inc.; , does not provide for labor protection for final opinions and orders may be found Inc; Kansas & Oklahoma Railroad, Inc.; transactions under 49 U.S.C. 11324 and on MARAD’s Web site at http:// Pennsylvania Southwestern Railroad, 11325 that involve only Class III rail www.marad.dot.gov in its Electronic Inc.; , Inc.; Reading Room. However, MARAD will , Inc.; Mission 1 The parties state that BRSR will continue to be publish final decisions and orders Mountain Railroad, Inc; Mississippi controlled by separate, wholly owned subsidiaries relating to the rebuilding of vessels, as Southern Railroad, Inc.; Yellowstone of Watco.

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