
[Federal Register Volume 75, Number 78 (Friday, April 23, 2010)]
[Proposed Rules]
[Pages 21212-21219]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-9336]



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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

46 CFR Part 2

[Docket No. USCG-2007-27668]
RIN 1625-AB35


Approval of Classification Societies

AGENCY: Coast Guard, DHS.

ACTION: Notice of proposed rulemaking.

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SUMMARY: Congress requires that classification societies conducting 
certain work in the United States must either be full members of 
International Association of Classification Societies (IACS) or 
approved by the Coast Guard. In this proposed rule, the Coast Guard 
proposes application procedures and performance standards that 
classification societies must meet in order to be approved. Through 
this proposed rule, the Coast Guard seeks to improve marine safety and 
environmental protection by assuring the consistency and quality of 
work conducted by classification societies that review, examine, 
survey, or certify the construction, repair, or alteration of a vessel 
in the United States.

DATES: Comments and related material must either be submitted to our 
online docket via http://www.regulations.gov on or before July 22, 2010 
or reach the Docket Management Facility by that date.

ADDRESSES: You may submit comments identified by docket number USCG-
2007-27668 using any one of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.
     Fax: 202-493-2251.
     Mail: Docket Management Facility (M-30), U.S. Department 
of Transportation, West Building Ground Floor, Room W12-140, 1200 New 
Jersey Avenue, SE., Washington, DC 20590-0001.
     Hand delivery: Same as mail address above, between 9 a.m. 
and 5 p.m., Monday through Friday, except Federal holidays. The 
telephone number is 202-366-9329.
    To avoid duplication, please use only one of these methods. See the 
``Public Participation and Request for Comments'' portion of the 
SUPPLEMENTARY INFORMATION section below for instructions on submitting 
comments.
    Viewing incorporation by reference material: You may inspect the 
material proposed for incorporation by reference at room 1308, U.S. 
Coast Guard Headquarters, 2100 Second Street, SW., Washington, DC 
20593-0001 between 8 a.m. and 4 p.m., Monday through Friday, except 
Federal holidays. The telephone number is 202-372-1371. Copies of the 
material are available as indicated in the ``Incorporation by 
Reference'' section of this preamble.

FOR FURTHER INFORMATION CONTACT: If you have questions on this proposed 
rule, call or e-mail Mr. William Peters, Office of Design and 
Engineering Standards, Coast Guard, telephone 202-372-1371, e-mail 
William.S.Peters@uscg.mil. If you have questions on viewing or 
submitting material to the docket, call Renee V. Wright, Program 
Manager, Docket Operations, telephone 202-366-9826.

SUPPLEMENTARY INFORMATION: 

Table of Contents for the Preamble

I. Public Participation and Request for Comments
    A. Submitting Comments
    B. Viewing Comments and Documents
    C. Privacy Act
    D. Public Meeting
II. Abbreviations
III. Background
IV. Discussion of Comments
V. Discussion of Proposed Rule
VI. Incorporation by Reference
VII. 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

    We encourage you to participate in this rulemaking by submitting 
comments and related materials. All comments received will be posted, 
without change, to http://www.regulations.gov and will include any 
personal information you have provided.

A. Submitting Comments

    If you submit a comment, please include the docket number for this 
rulemaking (USCG-2007-27668), indicate the specific section of this 
document to which each comment applies, and provide a reason for each 
suggestion or recommendation. You may submit your comments and material 
online or by fax, mail, or hand delivery, but please use only one of 
these means. We recommend that you include your name and a mailing 
address, an e-mail address, or a phone number in the body of your 
document so that we can contact you if we have questions regarding your 
submission.
    To submit your comment online, go to http://www.regulations.gov, 
select the Advanced Docket Search option on the right side of the 
screen, insert ``USCG-2007-27668'' in the Keyword box, press Enter, and 
then click on the balloon shape for ``Submit a Comment'' in the Actions 
column. If you submit your comments by mail or hand delivery, submit 
them in an unbound format, no larger than 8\1/2\ by 11 inches, suitable 
for copying and electronic filing. If you submit comments by mail and 
would like to know that they reached the Facility, please enclose a 
stamped, self-addressed postcard or envelope.
    We will consider all comments and material received during the 
comment period and may change this proposed rule based on your 
comments.

B. Viewing Comments and Documents

    To view comments, as well as documents mentioned in this preamble 
as being available in the docket, go to http://www.regulations.gov, 
insert USCG-2007-27668 in the Keyword box and press Enter. Then, choose 
from the resulting list the types of documents you want to view. If you 
do not have access to the Internet, you may view the docket online by 
visiting the Docket Management Facility in Room W12-140 on the ground 
floor of the Department of Transportation West Building, 1200 New 
Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 p.m., 
Monday through Friday, except Federal holidays. We have an agreement 
with the Department of Transportation to use the Docket Management 
Facility.

C. Privacy Act

    Anyone can search the electronic form of comments received into any 
of our dockets by the name of the individual submitting the comment (or 
signing the comment, if submitted on behalf of an association, 
business, labor union, etc.). You may review a Privacy Act notice 
regarding our public dockets in the January 17, 2008, issue of the 
Federal Register (73 FR 3316).

D. Public Meeting

    We do not now plan to hold a public meeting. But you may submit a 
request for one to the docket using one of the methods specified under 
ADDRESSES. In your request, explain why you believe a public meeting 
would be beneficial. If we determine that one would aid this 
rulemaking, we will hold one at a time

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and place announced by a later notice in the Federal Register.

II. Abbreviations

CFR Code of Federal Regulations
COTP Captain of the Port
DHS Department of Homeland Security
IACS International Association of Classification Societies
ICLL International Convention on Load Lines 1966
IMO International Maritime Organization
ISM International Management Code for the Safe Operation of Ships 
and for Pollution Prevention
ISO International Organization for Standardization
ISPS International Ship and Port Facility Security Code
MARPOL 73/78 International Convention for the Prevention of 
Pollution From Ships, 1973, as modified by the Protocol of 1978
MOU Memorandum of Understanding
NAICS North American Industry Classification System
NARA National Archives and Records Administration
NEPA National Environmental Policy Act of 1969
RO recognized organization
SOLAS International Safety of Life at Sea
U.S.C. United States Code

III. Background

    In section 413 of the Coast Guard and Maritime Transportation Act 
of 2004, Congress amended 46 U.S.C. 3316(c) to require that, after 
December 31, 2004, a classification society, including an employee or 
agent of that society, may not review, examine, survey, or certify the 
construction, repair or alteration of a vessel in the United States 
unless the classification society is either approved by the Coast Guard 
or is a full member of the International Association of Classification 
Societies (IACS). Public Law 108-293, August 9, 2004. (For information 
on IACS see http://www.iacs.org.uk). On November 2, 2004, the Coast 
Guard published a ``Notice of Policy'' (69 FR 63548) in the Federal 
Register to provide guidance on the approval application process for 
classification societies that are not full members of IACS.
    After reviewing applications from classification societies seeking 
approval under the provisions of 46 U.S.C. 3316(c) and the guidance in 
our notice, we decided that the procedures and criteria the Coast Guard 
uses to evaluate classification societies should be made part of Title 
46, Code of Federal Regulations (46 CFR) in order to have a specific, 
consistent, and enforceable basis for approval determinations. We 
consider it prudent to incorporate the requirements of 46 U.S.C. 
3316(c) into 46 CFR part 2 because maritime industry personnel and 
Coast Guard field inspectors are generally more familiar with the Code 
of Federal Regulations than they are with the U.S. Code.
    Inconsistencies in the applications we reviewed since January 2005 
also reveal a need for clear regulations that explain the basis for 
approval. Furthermore, our analysis of the applications we reviewed 
since January 2005 indicates we can simplify the approval process to 
make requests easier to submit and evaluate.
    To incorporate the requirements of 46 U.S.C. 3316(c) into 
regulations, the Coast Guard deems the International Maritime 
Organization (IMO) Resolution A.739(18), ``Guidelines for the 
Authorization of Organizations Acting on Behalf of the 
Administration,'' to provide sound and international recognized 
standard from which to base the Coast Guard's review and approval 
program.
    IMO acknowledges that classification societies often act as 
recognized organizations (ROs) under powers delegated by the flag state 
Administrations \1\ when they perform technical and survey work on 
behalf of a government agency. Recognizing this relationship, IMO 
adopted Resolution A.739(18) that establishes minimum competency 
standards required by the applicable international conventions for ROs 
that act on behalf of Administrations to conduct vessel examinations, 
issue international certificates, perform surveys and certifications, 
and determine vessel tonnage. IMO Resolution A.739(18) is consistent 
with our minimum standards for a recognized classification society in 
46 CFR Part 8, ``Vessel Inspection Alternatives.''
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    \1\ The term ``Administration'' means the government whose flag 
a vessel is entitled to fly.
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    To work on behalf of a flag state Administration, a recognized 
organization must sufficiently demonstrate that its business practices 
meet or exceed the performance standards described in IMO Resolution 
A.739(18). For example, the RO must show that it:
     Publishes and systematically maintains rules for the 
construction and maintenance of vessels;
     Is professionally staffed with strategically placed 
resources for geographic coverage;
     Maintains a high level of professional ethics;
     Is competent;
     Provides timely and quality services; and
     Maintains an internal quality system no less effective 
than the ISO 9000 series certification. (For information on these 
standards or ISO, see http://www.iso.ch.)
    When an RO demonstrates these competencies to the satisfaction of 
the Administration, its authorization is documented in a formal written 
agreement under the requirements of IMO Resolution A.739(18).
    Similarly, a classification society that is not a full member of 
IACS must meet the following requirements for approval under the 
provisions of 46 U.S.C. 3316(c):
    a. Vessels surveyed by the classification society must have an 
adequate safety record;
    b. The classification society must have an adequate program to 
develop and implement safety standards for vessels it surveys;
    c. The classification society must have an adequate program to make 
their safety records available in an electronic format; and
    d. The classification society must have an adequate program to make 
the safety records of a vessel survey available to other classification 
societies, and to request records from other classification societies 
that previously surveyed the vessel for the purpose of a specific 
vessel survey.
    To better assess the classification societies the Coast Guard 
evaluates the classification societies' implementation of safety 
standards for vessels by examining worldwide port state control 
statistics for the classification society and the vessels it surveys. 
This data is found in the annual reports published by the world's 
regional port state control organizations. These include, but are not 
limited to:
     Paris Memorandum of Understanding on Port State Control 
(Paris MOU: http://www.parismou.org);
     Memorandum of Understanding on Port State Control in the 
Asian-Pacific Region (Tokyo MOU: http://www.tokyomou.org);
     Mediterranean Memorandum of Understanding on Port State 
Control (Med MOU: http://www.medmou.org);
     Black Sea Memorandum of Understanding on Port State 
Control (Black Sea MOU: http://www.bsmou.org);
     The Latin American Agreement on Port State Control of 
Vessels (Vina del Mar MOU: http://www.acuerdolatino.int.ar);
     West and Central Africa Memorandum of Understanding on 
Port State Control (ABUJA MOU);
     Riyadh Memorandum of Understanding on Port State Control 
in the Gulf Region (Riyadh MOU: http://www.riyadhmou.org);

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     Indian Ocean Memorandum on Port State Control (Indian 
Ocean MOU: http://www.iomou.org); and
     Caribbean Memorandum of Understanding on Port State 
Control (Caribbean MOU: http://www.caribbeanmou.org).
    These Memoranda of Understanding (MOU) are regional agreements 
among countries to share port state control inspection results with the 
aim of eliminating the operation of sub-standard ships. The MOUs are 
managed by secretariats that maintain databases of inspection 
activities and results and often compile the data into annual reports. 
This data is available to the public and identifies, among other 
things:
     Vessel names and particulars;
     Inspection dates and locations;
     Classification societies;
     Deficiencies noted;
     Detentions imposed;
     Lists of detained vessels; and
     Lists of banned and targeted vessels.
    For information on U.S. port state control results and the regional 
MOUs, see http://www.uscg.mil/hq/g-m/pscweb/index.htm. A copy of the 
most recent annual report from the United States and the regional 
organizations can be found in this docket.
    The Coast Guard can evaluate the performance of a particular 
classification society by scrutinizing the port state control history 
of the vessels it surveys. For example, an annual report from a major 
MOU secretariat typically includes 3 years of data showing the 
performance of all ships listed by Administration and RO. The RO is 
usually the classification society.
    This shared port state control data is indispensable for evaluating 
the safety performance of Administrations and classification societies. 
Not only can the Coast Guard check performance from the data in the 
annual reports, but trends can be tracked from year to year.

IV. Discussion of Comments

    Two commenters responded to the November 2, 2004, ``Notice of 
policy'' (69 FR 63548). Both commenters asked several questions about 
the revised 46 U.S.C. 3316 and the Coast Guard's approval policy.
    Two commenters asked if the new requirements would restrict 
classification societies from performing work related to the 
International Ship and Port Facility Security Code (ISPS Code) or the 
International Management Code for the Safe Operation of Ships and for 
Pollution Prevention (ISM Code). The new requirements would only 
prohibit a non-compliant classification society from reviewing, 
examining, surveying, or certifying the construction, alteration, or 
repair of a vessel in the United States. Work other than the 
construction, alteration, or repair of a vessel related to issuing 
certificates would not be affected.
    Two commenters asked whether a vessel that is issued an 
international certificate or examined for classification purposes by a 
non-compliant classification society would be denied entry to U.S. 
ports. These vessels would not be denied entry to U.S. ports, but they 
might be subject to targeted port state control inspections.
    Two commenters asked how an application should be formatted. An 
application can be made in either paper or a common electronic format, 
such as Portable Document Format (PDF).
    One commenter asked if a non-compliant classification society may 
conduct classification surveys of vessels whose construction, repair, 
or alteration had been previously supervised by a compliant 
classification society. A non-compliant classification society may not 
review, examine, survey, or certify the construction, repair, or 
alteration of a vessel in the United States, regardless of who 
previously surveyed the vessel. To the extent practicable, a non-
compliant classification society is not prohibited from surveying 
elements of a vessel that are not associated with that vessel's 
construction, repair, or alteration. Previous survey work performed by 
a compliant classification society would have no bearing on the 
prohibition of certain work by a non-compliant classification society.
    One commenter asked that we define the term ``adequate,'' as used 
extensively in the revised statutes. This term was not defined in the 
November 2004 ``Notice of policy'' (69 FR 63548). In this rulemaking, 
we propose clear, measurable performance standards to avoid vagueness. 
The term ``adequate'' is no longer used. If additional clarification is 
needed for the proposed performance standards, comments and suggestions 
can be submitted for this rulemaking.
    Similarly, another commenter inquired about the meaning of the 
phrase ``safety records.'' This phrase also was not defined in the 
November 2004 ``Notice of policy'' (69 FR 63548). The Coast Guard 
believes that the proposed rule, in detailing the performance standards 
for approval, fully defines the meaning of this phrase. If additional 
clarification is needed, comments and suggestions can be submitted for 
this rulemaking.
    One commenter asked if a vessel with a list of repairs required by 
U.S. port state control officers would be allowed to perform cargo 
operations and leave U.S. waters to make those repairs abroad under the 
review, examination, and survey of an RO. If such a vessel is neither 
detained nor held by the Captain of the Port (COTP), it would be able 
to depart the United States. Because the proposed rule would not apply 
to a vessel outside the United States, a non-compliant classification 
society could perform services permitted by the port state in which the 
repairs are to be made.
    One commenter asked if the prohibition of non-compliant 
classification societies applies specifically to certain flag states. 
The prohibitions that would apply in the proposed rule are not 
associated with any flag state. The proposed requirements would only 
prohibit a non-compliant classification society from reviewing, 
examining, surveying, or certifying the construction, alteration, or 
repair of a vessel in the United States.
    One commenter asked if a flag state inspector would be affected by 
the proposed rule. A flag state inspector who performs statutory work 
directly for a flag state would not be affected by the proposed rule.
    One commenter inquired if the list of vessels surveyed by the 
classification society and included in the approval application should 
be limited to those surveyed for classification purposes. Following 46 
U.S.C. 3316(C)(2), the safety records of all vessels surveyed by the 
classification society, whether or not they are surveyed for 
classification purposes, would be considered in the assessment of the 
safety record of the classification society.
    Both previous commenters also inquired about the type of electronic 
format that would be acceptable to the Coast Guard for providing 
requested safety records. A commonly available electronic word 
processing format or access to a web-based electronic database, in 
which information on vessels surveyed by the classification society is 
available, would be acceptable.

V. Discussion of Proposed Rule

    In this rulemaking, we propose to revise 46 CFR part 2 by adding 
definitions for ``Administration,'' ``classification society,'' 
``recognized organization,'' and ``regional port state control 
secretariat.''
    We also propose to add a new section describing the procedures to 
apply for approval. Under this section, a classification society must 
demonstrate it has an adequate program to develop safety standards for 
vessels. This

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requirement would be met by providing a copy of the written agreement 
that shows it is an RO for at least one Administration signatory to 
the:

--International Safety of Life at Sea (SOLAS);
--International Convention for the Prevention of Pollution From Ships, 
1973, as modified by the Protocol of 1978 (MARPOL 73/78);
--International Convention on Load Lines 1966 (ICLL); and
--Protocol of 1988 relating to the ICLL.

    The written agreement must show that the classification society 
complies with IMO Resolution A.739(18). In addition, the Administration 
recognizing the classification society must not be on a port state 
control target list or equivalent.
    In this rule, we also propose the classification society seeking 
Coast Guard approval must demonstrate it has an adequate program to 
implement safety standards for vessels by meeting the following 
requirements:
     The classification society must not be assigned a Priority 
I Matrix Point Assignment as identified in the most recent publication 
of ``Port State Control in the United States'' and as having more than 
one RO-related detention for the vessels it surveys during the past 3 
years; and
     The classification society must demonstrate that the 
vessels it surveys have a worldwide detention rate of 2 percent or less 
based on the number of detentions related to the classification 
society's activities divided by the number of vessel inspections for at 
least 40 port state control inspections.
    Where sufficient performance records are not available from a 
regional port state control secretariat, the Coast Guard would consider 
applications for approval and vessel safety record data based on fewer 
than 40 inspections on a case-by-case basis.
    In this rule, we also propose to require a classification society 
to demonstrate that it has a program to share information 
electronically with other classification societies and the Coast Guard. 
A description of this capability would be part of the Coast Guard 
approval application.
    In this rule, we also propose to annually reevaluate the records of 
approved classification societies to ensure they continue to meet the 
conditions for approval. An annual review would help the Coast Guard 
identify classification societies with deteriorating safety records and 
decide what action is appropriate.
    The Coast Guard proposes three courses of action that could be 
taken if an approved classification society demonstrates substandard 
performance. A classification society could have its approval placed on 
probation, suspended, or revoked.
    If a classification society approval is placed on probation, the 
classification society would be notified and could continue to conduct 
survey work. The Coast Guard would continue to monitor the 
classification society's performance through port state control 
records. If the Coast Guard finds improved performance, probation could 
be lifted. On the other hand, if performance is still below the 
conditions of approval, the Coast Guard could suspend the approval.
    When a classification society's approval is suspended, it could no 
longer conduct survey work on vessels in the United States. The Coast 
Guard would continue to monitor the classification society's 
performance and could remove the suspension or place the approval on 
probation, depending on the results of the annual review. 
Alternatively, if performance does not improve, the Coast Guard could 
revoke the approval.
    When an approval is revoked, the classification society could no 
longer perform survey work on vessels in the United States and the 
Coast Guard would cease monitoring the society's records. Before 
resuming survey work on vessels in the United States, the 
classification society would be required to obtain approval by 
resubmitting an application as outlined in the above paragraphs.
    In this rulemaking, we also propose to add a new section to Part 2 
referencing the penalty provisions of 46 U.S.C. 3318. We considered 
Coast Guard enforcement actions in the case where a non-approved 
classification society performs a prohibited review, examination, 
survey, or certification. Title 46 U.S.C. 3318 does not authorize the 
Coast Guard to penalize a classification society for violations of 
Sec.  3316. Therefore, to enforce the provisions of Sec.  3316, we 
propose to hold the owner, charterer, managing operator, agent, master, 
or individual in charge of a vessel responsible for ensuring compliant 
classification societies are employed for survey work when the vessel 
is in the United States.

VI. Incorporation by Reference

    Material proposed for incorporation by reference appears in Sec.  
2.45-5. You may inspect this material at U.S. Coast Guard Headquarters 
where indicated under ADDRESSES. Copies of the material are available 
from the sources listed in Sec.  2.45-5.
    Before publishing a binding rule, we will submit this material to 
the Director of the Federal Register for approval of the incorporation 
by reference.

VII. Regulatory Analyses

    We developed this proposed rule after considering numerous statutes 
and executive orders related to rulemaking. Below we summarize our 
analyses based on 13 of these statutes or executive orders.

A. Regulatory Planning and Review

    This proposed rule is not a significant regulatory action under 
section 3(f) of Executive Order 12866, Regulatory Planning and Review, 
and does not require an assessment of potential costs and benefits 
under section 6(a)(3) of that Order. The Office of Management and 
Budget has not reviewed it under that Order.
    This proposed rule amends regulations to require Coast Guard 
approval of classification societies that are not full members of the 
IACS. This rulemaking would not affect classification societies that 
are current members of the IACS. This proposed rule comprises 
application procedures and the performance standards classification 
societies must meet for approval. This rulemaking would incorporate 
provisions based on the statutory requirements in 46 U.S.C. 3316(c). 
These statutory requirements have been enforced since January 2005. We 
expect minimal costs to industry as a result of this rulemaking.
    The Coast Guard has been receiving applications since January 2005. 
Approved classification societies would not need to take additional 
action to comply with this rulemaking and would not incur additional 
cost if they comply with existing requirements. The provisions of this 
rulemaking that would require periodic review also do not impose 
changes that would result in additional costs since the Coast Guard 
currently performs these reviews of approved classification societies.
    We do not expect additional applications at this time. 
Classification societies have had more than four years to submit 
applications and we estimate that most affected classification 
societies have submitted applications.\2\ Additionally, we are not 
aware of the formation of any new classification societies and none of 
the approved classification societies have currently been placed on 
suspension or

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revocation. There are currently 6 classification societies approved 
under the provisions of 46 U.S.C. 3316(c).\3\
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    \2\ We expect only those classification societies with potential 
vessel activity in U.S. waters would consider submitting an 
application and need approval under current requirements, which are 
the requirements of this rulemaking.
    \3\ Approvals as of 11/27/09 based on applicants since January 
2005 that are not full members of the IACS. The current list 
includes Bulgarski Koraben Register, China Corporation Register of 
Shipping, Hellenic Register of Shipping, Indian Register of 
Shipping, International Naval Surveys Bureau, and Polski Rejestr 
Statkow. The current list of classification society approvals can be 
accessed at https://homeport.uscg.mil/. This site requires 
registration.
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    We estimate the costs of preparing and reviewing one application 
below for illustration, even though we expect this rulemaking would not 
result in additional costs. Classification societies would incur the 
burden to prepare and submit applications for approval or re-approval. 
Based on information from the Coast Guard's Naval Architecture 
Division, we estimate that it would take a junior manager 8 hours to 
prepare an application and a senior manager 2 hours to review and 
approve it. We estimate the information used to prepare an application 
would be available as a result of existing classification society 
operations and require no additional data collection. Using wage rates 
of $67 for the junior manager and $88 for the senior manager, we 
estimate that the total industry cost for an application would be $712 
((8 hours x $67/hour) + (2 hours x $88/hour)).\4\
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    \4\ For the purpose of estimating preliminary costs to industry 
and government, we used standard loaded hourly rates used in Coast 
Guard Information Collection Requests. These hourly rates include 
wages, benefits, overhead, and other expenses. These rates are found 
at http://www.uscg.mil/directives/ci/7000-7999/CI_7310_1L.PDF 
(link as of 11/27/2009).
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    The costs to government would be the time for the Coast Guard to 
review and reply to the application for approval. From our experience 
with earlier approvals, we estimate that it would take a junior officer 
2 hours to review the application and draft a reply and a senior 
officer 0.5 hours to review and approve the reply. Using wage rates of 
$67 for the junior officer and $88 for the senior officer, we estimate 
the total government cost for an application to be $178 ((2 hours x 
$67/hour) + (0.5 hour x $88/hour)). The estimated total cost for one 
application would be $890 ($712 + $178). As discussed above, we expect 
no new classification societies to apply and the costs of this 
rulemaking to be minimal.
    The benefits of this rulemaking derive from incorporating the 
approval information of 46 U.S.C. 3316(c) into 46 CFR part 2. We 
consider the maritime industry and Coast Guard field offices, in 
general, to be more familiar with the Code of Federal Regulations (CFR) 
than with the U.S. Code. By adding the statutory requirements to the 
CFR we anticipate improved administrative clarity and efficiency.
    At this time, based on available information since January 2005, we 
expect that this rulemaking would not be economically significant under 
Executive Order 12866 (i.e., have an annual effect on the economy of 
$100 million or more). The Coast Guard urges interested parties to 
submit comments that specifically address the economic impacts of this 
rulemaking. Comments can be made as indicated in the ADDRESSES section.

B. Small Entities

    Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we 
considered whether this proposed rule would have a significant economic 
impact on a substantial number of small entities. The term ``small 
entities'' comprises small businesses, not-for-profit organizations 
that are independently owned and operated and are not dominant in their 
fields, and governmental jurisdictions with populations of less than 
50,000.
    Classification societies affected by this proposed rule are 
classified under one of the following North American Industry 
Classification System (NAICS) 6-digit codes for water transportation: 
488330--Navigation Services to Shipping or 488390--Other Support 
Activities for Water Transportation. According to the Small Business 
Administration's (SBA) size standards, a U.S. company classified under 
these NAICS codes with annual revenues less than $7 million is 
considered a small entity.
    The classification societies affected by this rulemaking are all 
foreign owned and operated. The affected classification societies are 
currently incurring the cost of the statutory requirements and this 
rulemaking would not require additional costs. In addition, we consider 
the costs of these requirements to not be substantial. See the 
``Regulatory Planning and Review'' section for additional detail on 
cost impacts.
    Therefore, the Coast Guard certifies under 5 U.S.C. 605(b) that 
this proposed rule would not have a significant economic impact on a 
substantial number of small entities. If you think that your business, 
organization, or governmental jurisdiction qualifies as a small entity 
and that this rulemaking would have a significant economic impact on 
it, please submit a comment to the Docket Management Facility at the 
address under ADDRESSES. In your comment, explain why you think it 
qualifies and how and to what degree this rulemaking would economically 
affect it.

C. Assistance for Small Entities

    Under section 213(a) of the Small Business Regulatory Enforcement 
Fairness Act of 1996 (Pub. L. 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 consult Mr. William 
Peters, Office of Design and Engineering Standards, Coast Guard, via 
phone at 202-372-1372 or e-mail at William.S.Peters@uscg.mil. 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 rule calls for no new collection of information under the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). Under OMB 
regulations implementing the PRA, ``Controlling Paperwork Burdens on 
the Public'' (5 CFR 1320), collection of information means the 
obtaining, soliciting, or requiring the disclosure to an agency of 
information by or for an agency by means of identical questions posed 
to, or identical reporting, recordkeeping, or disclosure requirements 
imposed on, ten or more persons. ``Ten or more persons'' refers to the 
number of respondents to whom a collection of information is addressed 
by the agency within any 12-month period and does not include employees 
of the respondent acting within the scope of their employment, 
contractors engaged by a respondent for the purpose of complying with 
the collection of information, or current employees of the Federal 
government. Collections of information affecting ten or more 
respondents within any 12-month period require OMB review and approval.

[[Page 21217]]

    This proposed rule comprises application procedures classification 
societies must meet for approval. We expect fewer than ten entities 
(potentially none) would be affected by this requirement within any 12-
month period. As such, the number of respondents is less than the 
threshold of ten respondents per 12-month period for collection of 
information requirements under the PRA.

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 $100,000,000 (adjusted for 
inflation) or more in any one year. Though this proposed rule would not 
result in such an expenditure, we do discuss the effects of this 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 rule is not an economically significant rule and would not 
create an environmental risk to health or risk to safety that may 
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 that order because it is not a ``significant 
regulatory action'' under Executive Order 12866 and is not likely to 
have a significant adverse effect on the supply, distribution, or use 
of energy. The Administrator of the Office of Information and 
Regulatory Affairs has not designated it as a significant energy 
action. Therefore, it does not require a Statement of Energy Effects 
under Executive Order 13211.

L. Technical Standards

    The National Technology Transfer and Advancement Act (NTTAA) (15 
U.S.C. 272 note) directs agencies to use voluntary consensus standards 
in their regulatory activities unless the agency provides Congress, 
through the Office of Management and Budget, with an explanation of why 
using these standards would be inconsistent with applicable law or 
otherwise impractical. Voluntary consensus standards are technical 
standards (e.g., 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 uses the following voluntary consensus 
standards: IMO Resolution A.739(18) ``Guidelines for the Authorization 
of Organizations Acting on Behalf of the Administration.'' The proposed 
section that references this standard and the location where this 
standard is available is listed in 46 CFR 2.45-5.

M. Environment

    We have analyzed this proposed rule under Department of Homeland 
Security Management Directive 023-01 and Commandant Instruction 
M16475.lD, which guide the Coast Guard in complying with the National 
Environmental Policy Act of 1969 (NEPA) (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 
environmental analysis checklist supporting this determination is 
available in the docket where indicated under the ``Public 
Participation and Request for Comments'' section of this preamble. This 
rule involves the approval of classification societies that examine, 
survey, or certify the construction, repair, or alteration of a vessel. 
This rule falls under paragraphs 34(b) and (d) of Commandant 
Instruction M16475.1D, which refer to the delegation of authority and 
the inspection of vessels. 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

    Incorporation by reference, Marine safety, Reporting and 
recordkeeping requirements, Vessels.

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

PART 2--VESSEL INSPECTIONS

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

    Authority:  33 U.S.C. 1903; 43 U.S.C. 1333; 46 U.S.C. 2110, 
3103, 3205, 3306, 3307, 3703; 46 U.S.C. Chapter 701; E.O. 12234, 45 
FR 58801, 3 CFR, 1980 Comp., p. 277; Department of Homeland Security 
Delegation No. 0170.1. Subpart 2.45 also issued under the Act Dec. 
27, 1950, Ch. 1155, secs. 1, 2, 64 Stat. 1120 (see 46 U.S.C. App. 
Note prec. 1).

    2. Add subpart 2.45 to read as follows:
Subpart 2.45--Classification Society Activities
Sec.
2.45-1 Definitions.
2.45-5 Incorporation by reference.
2.45-10 General.
2.45-15 Approval requirements.
2.45-20 Probation, suspension and revocation.
2.45-25 Application for approval.
2.45-30 Penalties.

Subpart 2.45--Classification Society Activities


Sec.  2.45-1  Definitions.

    Administration means the Government of the State whose flag the 
ship is entitled to fly.
    Classification society means an organization that, at a minimum, 
verifies that a vessel meets requirements embodying the technical 
rules, regulations, standards, guidelines and associated surveys, and 
inspections covering the design, construction, and/or through-life 
compliance of a ship's structure and essential engineering and 
electrical systems.
    Recognized organization (RO) means an organization authorized to 
act on behalf of an Administration.
    Regional port state control secretariat means an organization 
established to collect and maintain port state control

[[Page 21218]]

inspection data in addition to other functions under a regional 
agreement among countries.


Sec.  2.45-5  Incorporation by reference.

    Certain material is incorporated by reference into this part with 
the approval of the Director of the Federal Register under 5 U.S.C. 
552(a) and 1 CFR part 51. To enforce any edition other than that 
specified in this section, the Coast Guard must publish notice of 
change in the Federal Register and the material must be available to 
the public. All approved material is available for inspection at the 
National Archives and Records Administration (NARA). For information on 
the availability of this material at NARA, call 202-741-6030 or go to 
http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html. Also, it is available for inspection 
at the Coast Guard's Office of Design and Engineering Systems (CG-521), 
2100 Second Street, SW., Washington, DC 20593-0001, and is available 
from the sources indicated in this section.
    (a) International Maritime Organization, 4 Albert Embankment, 
London SE1 7SR, U.K. +44 (0)20 7735 7611, http://www.imo.org/.
    (b) IMO Resolution A.739(18), Guidelines for the Authorization of 
Organizations Acting on Behalf of the Administration, adopted 4 
November 1993.


Sec.  2.45-10  General.

    (a) A classification society (including an employee or agent of 
that society) must not review, examine, survey, or certify the 
construction, repair, or alteration of a vessel in the United States 
unless it is either a full member of the International Association of 
Classification Societies (IACS) or is approved under the provisions of 
this subpart.
    (b) This subpart applies to a recognized organization that meets 
the definition of a classification society provided in Sec.  2.45-1 of 
this subpart.


Sec.  2.45-15  Approval requirements.

    (a) This section applies to a classification society that is not a 
full member of IACS.
    (b) A classification society may be approved for purpose of Sec.  
2.45-10 if the following conditions are met:
    (1) Vessels surveyed by the classification society must have a 
world-wide port state control detention rate of less than 2 percent 
based on the number of detentions related to the classification 
society's activities divided by the number of vessel inspections for at 
least 40 port state control inspection;
    (2) The classification society must not be identified in the most 
recent publication of ``Port State Control in the United States'' as a 
Priority I and as having more than one Recognized Organization (RO)-
related detention for the past 3 years;
    (3) The classification society must comply with the minimum 
standards for a recognized organization recommended in IMO Resolution 
A.739(18), Appendix 1 (incorporated by reference, see Sec.  2.45-5);
    (4) The classification society must be an RO for at least one 
country under a formal written agreement that includes all of the 
elements described in IMO Resolution A.739(18), Appendix 2 
(incorporated by reference, see Sec.  2.45-5);
    (5) The country for which the classification society is an RO:
    (i) Must be signatory to each of the following: the International 
Safety of Life at Sea Convention (SOLAS), the International Convention 
on the Prevention of Pollution from Ships (MARPOL 73/78), the 
International Convention on Load Lines (ICLL), 1966, and the Protocol 
of 1988 relating to the ICLL, 1966; and
    (ii) Must not be identified as a flag state targeted by the Coast 
Guard or equivalent by any regional port state control secretariat for 
additional port state control examinations; and
    (6) The classification society must use a system to:
    (i) Make its safety records and those of persons acting on behalf 
of the classification society available to the Coast Guard in 
electronic format;
    (ii) Provide its safety records and those of persons acting on 
behalf of the classification society to another classification society 
that requests those records for the purpose of conducting surveys of 
vessels; and
    (iii) Request the safety records of a vessel to be surveyed from 
any other classification society that previously surveyed that vessel.
    (c) Where sufficient performance records are not available from a 
regional port state control secretariat, the Coast Guard may consider 
an equivalent safety performance indicator proposed by the 
classification society seeking approval.


Sec.  2.45-20  Probation, suspension and revocation.

    (a) A classification society approved for the purpose of this 
subpart must maintain the minimum requirements for approval set forth 
in Sec.  2.45-15.
    (b) If an approved classification society fails to maintain 
compliance with paragraph (a) of this section, the Coast Guard may 
place the classification society approval on probation, or suspend or 
revoke the classification society's approval, as appropriate.
    (c) A classification society on probation is approved for the 
purpose of this subpart. The probation continues until the next review 
of the classification society's compliance with paragraph (a) of this 
section.
    (1) If the review shows that compliance with paragraph (a) of this 
section is achieved, the probation may end.
    (2) If the review shows significant improvement but compliance with 
paragraph (a) of this section is not achieved, the probation may be 
extended.
    (3) If the review does not show significant improvement, and 
compliance with paragraph (a) of this section is not achieved, the 
approval may be suspended.
    (d) A classification society whose approval is suspended is not 
approved for the purpose of this subpart. Suspension will continue 
until the next review of the classification society's compliance with 
paragraph (a) of this section.
    (1) If the review shows compliance with paragraph (a) of this 
section, the classification society's approval may be restored.
    (2) If the review shows significant improvement toward compliance 
with paragraph (a) of this section, the suspension may be extended.
    (3) If the review does not show significant improvement and 
compliance with paragraph (a) of this section, the classification 
society's approval may be revoked.
    (e) A classification society whose approval is revoked is not 
approved for the purpose of this subpart. The classification society 
may reapply for approval when the requirements of Sec.  2.45-15 are 
met.
    (f) The Coast Guard's Office of Design and Engineering Standards 
(CG-521) administers probations, suspensions, and revocations and makes 
all related notifications to affected classification societies.


Sec.  2.45-25  Application for approval.

    An application for approval must be made in writing and in the 
English language to U.S. Coast Guard, Commandant (CG-521), Office of 
Design and Engineering Standards, 2100 Second Street, SW. STOP 7126, 
Washington, DC 20593-7126. The application must:
    (a) Indicate the type of work the classification society intends to 
perform on vessels in the United States;

[[Page 21219]]

    (b) Include documentation demonstrating that the classification 
society complies with Sec.  2.45-15 of this subpart;
    (c) Contain a list of the vessels surveyed by the classification 
society over the previous 3 calendar years. The list must include 
vessel names, flags, and IMO numbers, as well as initial vessel 
inspections and detentions; and
    (d) Provide a summary of the safety records of vessels the 
classification society surveys for each of the previous 3 calendar 
years, including initial vessel inspections and detentions for all data 
contained in regional port state control Memoranda of Understanding and 
other port state control data sources, including the U.S. Coast Guard.


Sec.  2.45-30  Penalties.

    The owner, charterer, managing operator, agent, master, or 
individual in charge of a vessel that employs a classification society 
to review, examine, survey or certify the construction, repair, or 
alteration of a vessel in the United States is subject to civil 
penalties in accordance with Title 46 U.S.C. 3318 if the classification 
society is not a full member of IACS or not approved by the Coast Guard 
under this subpart.

    Dated: April 16, 2010.
F.J. Sturm,
Acting Director of Commercial Regulations and Standards, U.S. Coast 
Guard.
[FR Doc. 2010-9336 Filed 4-22-10; 8:45 am]
BILLING CODE 9110-04-P


