(b) and (c) of this section, tonnage thresholds expressed in terms of
``gross tonnage,'' ``gross tonnage ITC,'' or ``GT ITC'' are applied
using Convention Measurement System tonnage (if assigned) and
thresholds expressed in terms of ``gross tons,'' ``registered gross
tons,'' or ``GRT'' are applied using the Regulatory Measurement System
tonnage (if assigned). Similarly, in general, and except as under
paragraphs (b) and (c) of this section, tonnage thresholds expressed in
terms of ``net tonnage,'' ``net tonnage ITC,'' or ``NT ITC'' are
applied using Convention Measurement System tonnage (if assigned) and
thresholds expressed in terms of ``net tons,'' ``registered net tons,''
or ``NRT'' are applied using the Regulatory Measurement System tonnage
(if assigned).
    (b) Thresholds found in international conventions. Unless otherwise
provided for by law, apply tonnage thresholds in international
conventions as follows:
    (1) For vessels measured under the Convention Measurement System,
apply all tonnage thresholds using Convention Measurement System
tonnage, except as provided for under the following international
tonnage grandfathering provisions, which may be applied at the option
of the vessel owner:
    (i) Under Article 3(2)(d) of the Convention:
    (A) For a U.S. flag vessel, this Article allows associated tonnage
thresholds in effect on or before July 18, 1994 to be applied, at the
vessel owner's option, using Regulatory Measurement System tonnage to a
vessel whose keel was laid on or before July 18, 1982, and which did
not subsequently undergo alterations resulting in a change in its
tonnage of a magnitude deemed by the Commandant to constitute a
substantial variation in its tonnage.
    (B) For a foreign flag vessel, this Article allows associated
tonnage thresholds in effect on or before July 18, 1994, to be applied,
at the vessel owner's option, using the foreign country's national
measurement system tonnage to a vessel whose keel was laid on or before
July 18, 1982, and which did not subsequently undergo alterations
resulting in a change in its tonnage of a magnitude deemed by that
country to constitute a substantial variation in its tonnage.
    (ii) Under International Maritime Organization (IMO) Resolutions
A.494 (XII) of November 19, 1981 and A.541 (XIII) of November 17, 1983:
    (A) For a U.S. flag vessel, these resolutions allow tonnage
thresholds in effect on July 18, 1994 to be applied using the gross
register tonnage (Regulatory Measurement System), to a vessel whose
keel was laid on or after July 18, 1982 but before July 19, 1994, and
which did not subsequently undergo alterations resulting in a change
substantially affecting its tonnage as deemed by the Commandant.
    (B) For a foreign flag vessel, these resolutions allow tonnage
thresholds in effect on July 18, 1994 to be applied, at the vessel
owner's option, using the foreign country's national measurement system
tonnage, to a vessel whose keel was laid on or after July 18, 1982, but
on or before July 18, 1994, and which did not undergo alterations after
July 18, 1994 of a magnitude deemed by that country to constitute a
substantial variation in its tonnage subject to the provisions of these
resolutions.
    (iii) Any other international grandfathering provisions as
authorized under appropriate International Maritime Organization
instruments to which the United States is a party, or which are
otherwise recognized or accepted by the United States.
    (2) For all other vessels, apply all tonnage thresholds using
Regulatory Measurement System tonnage.
    (c) Thresholds found in Federal statutes and regulations. Unless
otherwise provided for by law, apply tonnage thresholds in Federal
statutes and regulations as follows:
    (1) For vessels measured under the Convention Measurement System
only, apply all thresholds using Convention Measurement System tonnage.
    (2) For vessels measured under the Regulatory Measurement System
only, apply all thresholds using Regulatory Measurement System tonnage.
    (3) For all other vessels, apply thresholds in effect before July
19, 1994 using the vessel's Regulatory Measurement System tonnage, and
all other thresholds using the vessel's Convention Measurement System
tonnage.
    (d) Alternate tonnage thresholds. 46 U.S.C. 14104 authorizes the
Coast Guard to establish tonnage thresholds based on the Convention
Measurement System as an alternative to tonnage thresholds based on the
Regulatory Measurement System. Although 46 U.S.C. 14104 addresses only
thresholds in Federal statutes, it does not preclude establishing
alternate tonnage thresholds for Federal regulations that currently
specify thresholds that were based on the Regulatory Measurement
System, where appropriate.
    (1) If an alternate tonnage threshold is prescribed or authorized
by Federal statute or regulation, apply the alternate tonnage threshold
using the Convention Measurement System tonnage.
    (2) A vessel regulated under paragraph (d) of this section must not
be measured under the Regulatory Measurement System.

Sec.  69.25  [Amended]

0
13. Amend Sec.  69.25 as follows:

0
a. In paragraph (a), remove the words ``The owner'', add, in their
place, the words ``The vessel owner''; and
0
b. In paragraphs (a) and (b), remove the figure ``$20,000'', and add,
in its place, the figure ``$30,000''.

0
14. Amend Sec.  69.27 as follows:
0
a. Revise paragraphs (a), (b) introductory text, and (b)(4) and (5);
and
0
b. In paragraph (c)(3), remove the text ``Convention, Standard, and
Dual Measurement Systems'' and add, in its place, the text ``Convention
Measurement System and Standard and Dual Regulatory Measurement
Systems''; and
0
c. In paragraph (c)(4), remove the text ``Convention, Standard, or Dual
Measurement Systems'' and add, in its place, the text ``Convention
Measurement System or Standard or Dual Regulatory Measurement
Systems''.
    The revisions read as follows:

Sec.  69.27  Delegation of authority to measure vessels.

    (a) Under 46 U.S.C. 14103, the Coast Guard is authorized to
delegate to a ``qualified person'' the authority to measure and certify
U.S. flag vessels under this part.
    (b) Authority to measure and certify U.S. flag vessels under the
Convention Measurement System and Standard and Dual Regulatory
Measurement Systems may be delegated to an organization that--
* * * * *
    (4) Is capable of providing all measurement services under the
Convention Measurement System and Standard and Dual Regulatory
Measurement Systems for vessels domestically and internationally;
    (5) Maintains a tonnage measurement staff that has practical
experience in measuring U.S. flag vessels under the Convention
Measurement System and Standard and Dual Regulatory Measurement
Systems; and
* * * * *

0
15. Add Sec.  69.28 to read as follows:

Sec.  69.28  Acceptance of measurement by a foreign country.

    (a) The Commandant must accept the measurement of a foreign flag
vessel by a foreign country as complying with subpart B of this part
if:
    (1) The vessel was measured under the terms of the Convention and
the foreign country is party to the Convention; or
    (2) The Commandant finds that the laws and regulations of that
country related to measurement are similar to those of subpart B of
this part.
    (b) The Commandant may accept the measurement of a foreign flag
vessel by a foreign country as complying with subpart C, D, or E of
this part if the Commandant finds that the laws and regulations of that
country related to measurement are substantially similar to those of
subpart C, D, or E, respectively, of this part.

Subpart B--Convention Measurement System

0
16. Amend Sec.  69.53 by removing the definitions of ``Gross tonnage''
and ``Net tonnage'' and adding the definition of ``Boundary bulkhead''
in alphabetical order to read as follows:

Sec.  69.53  Definitions.

* * * * *
    Boundary bulkhead means the bulkhead or partition that separates an
enclosed interior space from the surrounding weather. In general, the
exterior bulkhead of a deck structure is the boundary bulkhead.
* * * * *

Sec.  69.55  [Amended]

0
17. Amend Sec.  69.55(d) by:
0
a. Removing the words ``and year''; and
0
b. After the word ``built'', adding the words ``and delivery date (or
scheduled delivery date)''.

Sec.  69.57  [Amended]

0
18. Amend Sec.  69.57 as follows:
0
a. In the section heading, add the text ``ITC'' after the text ``Gross
tonnage'';
0
b. After the text ``Gross tonnage'' and ``(GT'', add the text ``ITC'';
and
0
c. Following the text ``following formula GT'', add the text ``ITC''.

0
19. Amend Sec.  69.59 by adding a sentence at the end of the paragraph
to read as follows:

Sec.  69.59  Enclosed spaces.

    * * * Portable enclosed spaces, regardless of method of attachment
to the vessel, are treated as enclosed spaces as defined in this
paragraph.

0
20. Amend Sec.  69.61 as follows:
0
a. Revise paragraph (a); and
0
b. In paragraph (g), remove the words ``paragraphs (b) through (f)''
and add, in their place, the words ``paragraphs (a) through (f)''.
    The revision reads as follows:

Sec.  69.61  Excluded spaces.

    (a) Excluded space means an enclosed space which is excluded from
the total volume of all enclosed spaces (V) in calculating gross
tonnage ITC. Spaces that are below the upper deck and open to the sea,
as well as those spaces listed in paragraphs (b) through (f) of this
section, are excluded spaces, except as under paragraph (g) of this
section.
* * * * *

0
21. Revise Sec.  69.63 to read as follows:

Sec.  69.63  Net tonnage ITC.

    Net tonnage ITC (NT ITC) is determined by the formula:

[GRAPHIC] [TIFF OMITTED] TR31MR16.000

0
22. Revise Sec.  69.65 to read as follows:

Sec.  69.65  Calculation of volumes.

    (a) Volumes V and Vc used in calculating gross tonnage
ITC and net tonnage ITC, respectively, must be measured and calculated
according to accepted naval architectural practices for the spaces
concerned.
    (b) Measurements must be taken, regardless of the fitting of
insulation or the like, to the inner side of the shell or structural
boundary plating in vessels constructed of metal, and to the outer
surface of the shell or to the inner side of structural boundary
surfaces in all other vessels.

0
23. Revise Sec.  69.69 to read as follows:

Sec.  69.69  Tonnage certificates.

    (a) On request of the vessel owner, the authorized measurement
organization must issue an International Tonnage Certificate (1969) as
evidence of the vessel's measurement under this subpart for a vessel
that is 24 meters (79.0 feet) or more in registered length, will engage
on a foreign voyage, and is not a vessel of war. The Certificate is
delivered to the vessel owner or master and must be maintained on board
the vessel when it is engaged on a foreign voyage. For a vessel for
which a remeasurement under Sec.  69.71 resulted in a net tonnage ITC
decrease due to changes other than alterations or modifications to the
vessel deemed by the Commandant to be of a major character, an
International Tonnage Certificate (1969) reflecting the decreased net
tonnage ITC will not be reissued until 12 months have elapsed from the
date of measurement indicated on the current certificate.
    (b) If an International Tonnage Certificate (1969) is not issued
for a vessel measured under this part, the measurement organization
must issue a U.S. Tonnage Certificate as evidence of the vessel's
measurement under this subpart, which must also indicate the vessel's
measurement under any other subpart of this part. There is no
requirement to maintain the U.S. Tonnage Certificate on board the
vessel.
    (c) For a vessel that transfers flag to a foreign country that is
party to the Convention, the International Tonnage Certificate (1969)
remains valid for a period not to exceed 3 months after the flag
transfer, or until an International Tonnage Certificate (1969) is
issued under authority of the foreign country to replace it, whichever
is earlier.

Sec.  69.71  [Amended]

0
24. In Sec.  69.71(c)(2), remove the words ``Coast Guard'' and, in
their place, add the word ``Commandant''.

0
25. In Sec.  69.73, revise the section heading and paragraph (b) to
read as follows:

Sec.  69.73  Treatment of novel type vessels.

* * * * *
    (b) Requests for a determination must be submitted to the
Commandant, explaining the reasons for seeking a determination, and
including a description of the spaces in question, if applicable.

0
26. Revise Sec.  69.75 to read as follows:

Sec.  69.75  Figures.

BILLING CODE 9110-04-P

[GRAPHIC] [TIFF OMITTED] TR31MR16.001

[GRAPHIC] [TIFF OMITTED] TR31MR16.002

BILLING CODE 9110-04-C

0
27. Revise the heading for subpart C to read as follows:

Subpart C--Standard Regulatory Measurement System

Sec.  69.101  [Amended]

0
28. In Sec.  69.101, after the word ``Standard'', add the word
``Regulatory''.

0
29. Amend Sec.  69.103 as follows:
0
a. In the definition of ``Gross tonnage'', after the word ``Gross'',
add the word ``register'';
0
b. Add, in alphabetical order, the definitions of ``Double bottom for
water ballast'', ``Line of the normal frames'', ``Line of the ordinary
frames'', ``Normal

frame'', ``Ordinary frame'', ``Tonnage interval'', ``Tonnage station'',
and ``Zone of influence method'';
0
c. In the definition of ``Net tonnage'', after the word ``Net'', add
the word ``register''; and
0
d. Revise the definitions of ``Superstructure'' and ``Uppermost
complete deck''.
    The additions and revisions read as follows:

Sec.  69.103  Definitions.

* * * * *
    Double bottom for water ballast means a space at the bottom of a
vessel between the inner and outer bottom plating, used solely for
water ballast.
* * * * *
    Line of the normal frames means the imaginary horizontal line that
connects the inboard faces of the smallest normal frames.
    Line of the ordinary frames means the line of intersection of the
imaginary surface or surfaces tangent to the inboard faces of the
ordinary frames (or the inside of the vessel's skin, if there are no
ordinary frames), and the imaginary plane running transversely through
the vessel at the tonnage station of interest.
* * * * *
    Normal frame means a frame, regardless of size, used to stiffen a
structure.
    Ordinary frame means a primary side or bottom frame or floor used
for strengthening the hull.
* * * * *
    Superstructure means all permanently closed-in structures,
including all portable enclosed spaces, on or above the line of the
uppermost complete deck or, if the vessel has a shelter deck, on or
above the line of the shelter deck. Examples of superstructure spaces
include forecastles, bridges, poops, deckhouses, breaks, portable
tanks, and modular quarters units.
* * * * *
    Tonnage interval means the longitudinal distance between transverse
sections of a vessel's under-deck, between-deck, or superstructure when
divided into an even number of equal parts for purposes of volume
integration.
* * * * *
    Tonnage station means the longitudinal location of each transverse
section where breadth and depth measurements are taken when calculating
under-deck volumes under this subpart. Tonnage stations are numbered
consecutively from fore to aft, beginning with the number one.
    Uppermost complete deck is defined in Sec.  69.108.
    Zone of influence method means a Simpson's first rule integration
method for determining volumes of under-deck spaces that limits the
sectional areas associated with these spaces to the sectional areas at
adjacent under-deck tonnage stations, depending on their proximity to
those stations. For stations for which the under-deck sectional areas
are multiplied by four, the zone of influence extends two-thirds of a
tonnage interval on either side of the under-deck station, and for the
remaining stations, the zone of influence extends one-third of a
tonnage interval on either side of the station.

Sec.  69.105  [Amended]

0
30. Amend Sec.  69.105(d) by:
0
a. Removing the words ``and year''; and
0
b. After the word ``built'', adding the words ``and delivery date (or
scheduled delivery date)''.

0
31. Amend Sec.  69.107 as follows:
0
a. Revise the section heading and paragraphs (a) introductory text and
(b); and
0
b. Add paragraph (c).
    The revisions and addition read as follows:

Sec.  69.107  Gross and net register tonnage.

    (a) The vessel's gross register tonnage is the sum of the following
tonnages, less the tonnages of certain spaces exempt under Sec.
69.117:
* * * * *
    (b) The vessel's net register tonnage is the gross register tonnage
less deductions under Sec. Sec.  69.119 and 69.121.
    (c) The authorized measurement organization must issue a U.S.
Tonnage Certificate as evidence of a vessel's measurement under this
subpart, which must also indicate the vessel's measurement under the
Convention Measurement System in subpart B of this part, if applicable.
There is no requirement to maintain the U.S. Tonnage Certificate on
board the vessel.

0
32. Add Sec.  69.108 to read as follows:

Sec.  69.108  Uppermost complete deck.

    (a) Defined. ``Uppermost complete deck'' means the uppermost deck
which extends from stem to stern and from side to side at all points of
its length and is bound by the vessel's hull.
    (b) Restrictions. The uppermost complete deck must not:
    (1) Extend above any space exempted as open space under paragraph
(d) of Sec.  69.117;
    (2) Extend below the design waterline, except in the case of
vessels such as submersibles, where the entire uppermost complete deck
is submerged during normal operations; or
    (3) Rest directly on consecutive or alternating ordinary bottom
frames or floors for a distance of over one-half of the tonnage length.
    (c) Deck discontinuities. Decking athwartships of the following
deck discontinuities is not considered to be part of the uppermost
complete deck:
    (1) Through-deck openings that are not protected from the sea and
the weather, such as would be provided by hatch covers or a surrounding
superstructure that encloses the opening and whose area is more than 10
percent of the total deck area from stem to stern as viewed from above.
    (2) Middle line openings conforming to the requirements of Sec.
69.117(e)(2).
    (3) Deck recesses that are not through-hull for which the depth of
the deck recess at its deepest point is more than five feet below
adjacent portions of the deck, and whose area (as viewed from above) is
more than 10 percent of the total deck area from stem to stern, as
viewed from above.
    (4) Notches bounded by a deck below that wrap around from the ends
to the sides of the vessel for which the depth at the deepest point is
more than five feet below adjacent portions of the deck, the area is
more than one percent of the total deck area from stem to stern as
viewed from above, the length of the notch in the direction of the
vessel's longitudinal axis exceeds 10 feet at any point across its
width, and the width of the notch in the direction of the vessel's
longitudinal axis exceeds two feet at any point along its length.

0
33. Amend Sec.  69.109 as follows:
0
a. In paragraph (c), after the words ``two or less'', ``more than
two'', and ``is the second'', add the word ``enumerated'';
0
b. Revise paragraphs (d), (e)(2), (f)(2), (n), and (o)(1);
0
c. Add paragraphs (f)(4) and (p);
0
d. In paragraph (f)(1), after the words ``inboard face of the'', add
the word ``ordinary'';
0
e. In paragraph (g)(2), after the words ``division of the tonnage
length'' add the words ``, whose location is referred to as a tonnage
station, and assigned sequential tonnage station numbers, beginning at
the stem'';
0
f. In paragraph (h)(1):
0
i. Remove the word ``cellular''; and
0
ii. Add, after the words ``double bottom'', the words ``for water
ballast'';
0
g. In paragraphs (h)(2) and (3), after the words ``double bottom'', add
the words ``for water ballast'';
0
h. In paragraph (i)(3), after the words ``double bottom'', add the
words ``for water ballast''; and

0
i. In the heading of paragraph (m) and paragraph (m)(1), after the
words ``double bottom'', add the words ``for water ballast''.
    The revisions and additions read as follows:

Sec.  69.109  Under-deck tonnage.

* * * * *
    (d) Enumerating the decks to identify the second deck from the
keel. The uppermost complete deck is an enumerated deck. Decks below
the uppermost complete deck that extend from stem to stern and side to
side at all points along their lengths are also enumerated, provided
they are not disqualified by either of the following deck
discontinuities:
    (1) A through-deck opening that is not fitted with a cover (or
equivalent) and whose area is more than 10 percent of the total deck
area, as viewed from above.
    (2) A deck recess that is not through-hull for which the depth at
its deepest point is more than five feet below adjacent portions of the
deck and whose area as viewed from above is more than 10 percent of the
total deck area from stem to stern, as viewed from above.
    (e) * * *
    (2) If the tonnage deck is stepped, the line of the tonnage deck is
the longitudinal line of the underside of the lowest portion of that
deck parallel with the upper portions of that deck. Steps that do not
extend from side to side or are less than three feet in length are
ignored when establishing the line of the tonnage deck. (See Sec.
69.123, figures 1 and 2.) Spaces between the line of the tonnage deck
and the higher portions of that deck are not included in under-deck
tonnage.
    (f) * * *
    (2) For a vessel having a headblock or square end with framing
which extends from the tonnage deck to the bottom of the vessel, the
tonnage length terminates on the inboard face of the headblock or
ordinary end frames. (See Sec.  69.123, figure 4.)
* * * * *
    (4) The forward and after termini of the tonnage length must be a
distance of no more than eight and one-half feet from the associated
inboard surface of the skin of the hull at the bow and stern as
measured at the centerline of the vessel, and the after terminus must
not be forward of the centerline of the rudderstock.
* * * * *
    (n) Spaces open to the sea. In calculating the tonnage of spaces
below the uppermost complete deck, subtract from each breadth
measurement the portion of that measurement that spans a space, or a
portion thereof, that is open to the sea.
    (o) * * *
    (1) An open vessel is a vessel without an uppermost complete deck.
* * * * *
    (p) General requirements on ordinary frames--(1) Construction. An
ordinary frame must not be penetrated by an intersecting frame used to
strengthen the vessel's hull, except in a vessel of wooden
construction. Ordinary frames must be of the same material, or have the
same material properties, as the adjacent hull, and attach to the
adjacent hull to at least the same extent as adjacent ordinary and
normal frames. If comprised of different elements, the elements must be
joined to each other to the same extent that the frame is joined to the
hull. The frame, or portions thereof, not meeting these requirements
must be treated as if not there when establishing the line of the
ordinary frames.
    (2) Frame spacing and extension. Ordinary frames used to establish
the line of the ordinary frames must be spaced on centers that are a
maximum of four feet apart. These frames must extend for a length of at
least one tonnage interval that begins at, ends at, or crosses the
associated tonnage station. For a longitudinally-framed vessel, the
frames must begin and end at a transverse ordinary frame or at the
vessel's hull.
    (3) Different sized framing. When an ordinary frame has a different
depth of frame than an adjacent ordinary frame, the line of the
ordinary frames is established using the set of alternating frames that
yields the smallest sectional area at the associated tonnage station,
with the sectional area based on the frame with the smallest depth of
frame in the chosen alternating set.
    (4) Frame openings. If an opening in an ordinary frame is
oversized, or is penetrated by a frame other than an ordinary frame,
the line of the ordinary frames is established as if the frame material
above and inboard of the opening is not there. Similarly, frame
material separating adjacent openings that are within the longest
linear dimension of either opening must be treated as if not there when
establishing the line of the ordinary frames. An opening is oversized
if the opening is:
    (i) Circular in shape with a diameter exceeding 18 inches;
    (ii) Oval in shape of a size greater than 15 x 23 inches (i.e.,
either the minor axis exceeds 15 inches or the major axis exceeds 23
inches, and the oval's area exceeds 255 square inches (345 square
inches in a fuel tank)); or
    (iii) Any shape other than circular or oval, whose area exceeds 255
square inches (345 square inches in a fuel tank).
    (5) Asymmetrical framing. Where ordinary frames are configured such
that the line of the ordinary frames would be asymmetrical about the
centerline of the vessel, breadth measurements are determined by taking
half-breadths on the side of the vessel that yields the greatest
sectional area at the associated tonnage station, and multiplying those
half-breadths by a factor of two to yield the full breadths.

0
34. Amend Sec.  69.111 as follows:
0
a. Revise paragraph (b)(2);
0
b. In paragraph (c)(1), remove the words ``inboard face of the normal
side frames'' and add, in their place, the words ``normal frames''; and
0
c. In paragraph (c)(3):
0
i. Remove the words ``between the faces of the normal side frames'';
and
0
ii. After the words ``of the space'', add the words ``to the line of
the normal frames''.
    The revision reads as follows:

Sec.  69.111  Between-deck tonnage.

* * * * *
    (b) * * *
    (2) If the uppermost complete deck is stepped, the line of the
uppermost complete deck is the longitudinal line of the underside of
the lowest portion of that deck parallel with the upper portions of
that deck. Steps that do not extend from side to side or are less than
three feet in length are ignored when establishing the line of the
uppermost complete deck. Spaces between the line of the uppermost
complete deck and the higher portions of the deck are included in
superstructure tonnage.
* * * * *

0
35. Amend Sec.  69.113 as follows:
0
a. Revise paragraphs (a) and (b)(1);
0
b. In paragraph (b)(3), after the words ``inside breadth'', add the
words ``to the line of the normal frames''; and
0
c. In paragraph (f), add a sentence at the end of the paragraph.
    The revisions and addition read as follows:

Sec.  69.113  Superstructure tonnage.

    (a) Defined. ``Superstructure tonnage'' means the tonnage of all
superstructure spaces.
    (b) * * *
    (1) Measure the length of each structure along its centerline at
mid-height to the line of the normal frames. (See Sec.  69.123, figure
11.)
* * * * *
    (f) * * * All measurements are terminated at the line of the normal
frames.

0
36. Revise Sec.  69.115(c) to read as follows:

Sec.  69.115  Excess hatchway tonnage.

* * * * *
    (c) From the sum of the tonnage of the hatchways under this
section, subtract one-half of one percent of the vessel's gross
register tonnage exclusive of the hatchway tonnage. The remainder is
added as excess hatchway tonnage in calculating the gross register
tonnage.

0
37. Amend Sec.  69.117 as follows:
0
a. Revise the section heading and paragraphs (c)(2) and (3), (d)(1),
(d)(2) introductory text, and (d)(2)(i);
0
b. In paragraph (a), remove the word ``gross'';
0
c. Remove paragraphs (c)(4) and (f)(4)(iii);
0
d. Redesignate paragraphs (f)(4)(iv) through (ix) as paragraphs
(f)(4)(iii) through (viii), respectively;
0
e. In paragraph (d)(3):
0
i. Remove the text ``through (d)(2)(iii)'' and add, in its place, the
text ``and (iii)''; and
0
ii. Add a sentence at the end of the paragraph;
0
f. Add paragraphs (d)(3)(i) and (ii) and (d)(8);
0
g. In paragraphs (d)(5)(ii) and (d)(6)(iii), after the words ``tightly
against the'', add the words ``weather side of the'';
0
h. In paragraph (d)(7), remove the initial word ``A'' and add, in its
place, the words ``Notwithstanding the opening size requirements of
paragraph (d)(2) of this section, a'';
0
i. In the heading of paragraph (e), remove the words ``next lower
deck'' and add, in their place, the words ``uppermost complete deck'';
0
j. In paragraph (e)(1):
0
i. Remove the words ``next lower deck'' and add, in their place, the
words ``uppermost complete deck''; and
0
ii. After the words ``exempt from'', remove the word ``gross'';
0
k. In paragraph (e)(2)(v), add a sentence at the end of the paragraph;
0
l. In paragraph (f) introductory text, following the words ``be exempt
from'', remove the word ``gross'';
0
m. In paragraph (f)(4):
0
i. After the words ``to be exempted from'', remove the word ``gross'';
and
0
ii. After the words ``percent of the vessel's gross'', add the word
``register'';
0
n. In paragraph (f)(5), add a sentence at the end of the paragraph; and
0
o. In paragraph (g)(3), after the words ``under-deck was divided'', add
the words ``, and the zone of influence method must be applied if the
ordinary frames upon which the under-deck breadth measurements are
based do not have the same depth of frame''.
    The revisions and additions read as follows:

Sec.  69.117  Spaces exempt from inclusion in tonnage.

* * * * *
    (c) * * *
    (2) As used in this section, ``passenger space'' means a space
reserved exclusively for the use of passengers and includes, but is not
limited to, berthing areas, staterooms, bathrooms, toilets, libraries,
writing rooms, lounges, dining rooms, saloons, smoking rooms, and
recreational rooms. The space need not be part of or adjacent to a
berthing area to be considered a passenger space. Spaces used by both
passengers and crew members (e.g., first aid stations), or used for
passenger support but not accessible to passengers at all times (e.g.,
vaults on a gaming vessel) cannot be exempted as passenger space.
    (3) A passenger space located on, or above the first deck above the
uppermost complete deck is exempt from tonnage. To qualify as the first
deck above the uppermost complete deck, the deck must be at least six
inches above the uppermost complete deck at all points along its
length.
    (d) * * *
    (1) Structures that are located on or above the line of the
uppermost complete deck that are under cover (sheltered), but open to
the weather are exempt from tonnage as open space. The following
additional requirements apply:
    (i) If a structure is divided into compartments, only those
compartments which are open to the weather are exempt from tonnage
under the provisions of this section.
    (ii) Open space cannot progress vertically through openings in a
deck within the structure.
    (iii) A space that is outside a structure's boundary bulkhead as
defined in Sec.  69.53 is considered open to the weather provided the
space is eligible to be treated as an excluded space under the
provisions of Sec.  69.61, regardless of whether or not the space is
fitted with means designed for securing cargo or stores.
    (2) A structure is considered open to the weather when an exterior
end bulkhead of the structure is open and, except as provided in
paragraphs (d)(4), (5), and (6) of this section, is not fitted with any
means of closing. To be considered open to the weather, the end
bulkhead must not have a coaming height of more than two feet in way of
any required opening nor any permanent obstruction within two and one-
half feet of the opening, it must be fitted with a deck or platform
that is a minimum of two and one-half feet wide on the exterior side of
the opening, and it must have one of the following:
    (i) Two openings, each at least three feet wide and at least four
feet high in the clear, one on each side of the centerline of the
structure. If the openings lead to two separate interior compartments,
there must be circulation of open space between the two compartments
via a single such opening, or series of such openings, in the
intermediate bulkhead(s).
* * * * *
    (3) * * * The following additional requirements apply:
    (i) For the interior compartment to be considered open to the
weather, any compartment or series of compartments from which the open
space progresses must have an opening or openings meeting the
requirements for end bulkhead openings, except that the opening(s) need
not be located in the forward or after end of the compartment.
    (ii) Open space may not progress from a space that is open under
the provisions of paragraph (d)(1)(iii) of this section unless the
space may also be considered open under another provision of this
section.
* * * * *
    (8) A structure is considered open to the weather if:
    (i) Both sides of the structure are open and not fitted with any
means of closing other than temporary covers meeting the requirements
of paragraphs (d)(4), (5), and (6) of this section;
    (ii) The openings are directly across from each other, are not
separated by a bulkhead or bulkheads, and do not have any permanent
obstruction within two and one-half feet of either opening; and
    (iii) The openings have a continuous height of at least three feet,
or the full height of the structure, whichever is less, and either
extend the full length of the structure or each have an area of 60
square feet.
    (e) * * *
    (2) * * *
    (v) * * * Battening, caulking, seals, or gaskets of any material
may not be used in association with any middle line opening cover.
* * * * *
    (f) * * *
    (5) * * * Changes in vessel service must also be reported if a
water ballast justification was required to be submitted for the
vessel.
* * * * *

0
38. Amend Sec.  69.119 as follows:
0
a. Revise the section heading and paragraph (a); and

0
b. In paragraphs (d) and (m), after the word ``gross'', wherever it
appears, add the word ``register''.
    The revisions read as follows:

Sec.  69.119  Spaces deducted from tonnage.

    (a) Purpose. This section lists the requirements for spaces (other
than propelling machinery spaces under Sec.  69.121) which, though
included in calculating gross register tonnage (i.e., are not exempt
under Sec.  69.117), are deducted from tonnage in deriving net register
tonnage.
* * * * *

0
39. Amend Sec.  69.121 as follows:
0
a. In paragraphs (a), (b)(2)(vii), (d)(3), (e)(1), (e)(2)(i) through
(iii), and (e)(3)(i) through (iii), after the word ``gross'', wherever
it appears, add the word ``register''; and
0
b. In paragraphs (e)(2)(iii) and (e)(3)(iii), remove the words
``vessel's owner'' and add, in their place, the words ``vessel owner'';
0
c. In paragraph (b)(1), following the words ``spaces exempt from'',
remove the word ``gross''; and
0
d. Revise paragraph (d)(1).
    The revision reads as follows:

Sec.  69.121  Engine room deduction.

* * * * *
    (d) * * *
    (1) Under Sec.  69.117(b)(4), framed-in spaces located above the
line of the uppermost complete deck and used for propelling machinery
or for admitting light or air to a propelling machinery space are
exempt from inclusion in tonnage. However, upon written request to a
measurement organization listed in Sec.  69.15, the vessel owner may
elect to have these spaces included in calculating the gross register
tonnage, then deducted from the gross register tonnage as propelling
machinery spaces under paragraph (b)(2)(viii) of this section when
calculating the net register tonnage.
* * * * *

0
40. In Sec.  69.123, revise Figures 1 through 12 to read as follows:

Sec.  69.123  Figures.

BILLING CODE 9110-04-P

[GRAPHIC] [TIFF OMITTED] TR31MR16.003

[GRAPHIC] [TIFF OMITTED] TR31MR16.004

BILLING CODE 9110-04-C
* * * * *

0
41. Revise the heading for subpart D to read as follows:

Subpart D--Dual Regulatory Measurement System

Sec.  69.151  [Amended]

0
42. In Sec.  69.151:
0
a. After the words ``one net'' and ``two net'', add the word
``register''; and
0
b. Remove the words ``the Dual Measurement System'' and add, in their
place, the words ``this subpart''.

Sec.  69.153  [Amended]

0
43. In Sec.  69.153(a), after the words ``two gross'' and ``higher
gross'', add the word ``register''.

Sec.  69.155  [Amended]

0
44. In Sec.  69.155:
0
a. After the word ``Standard'', add the word ``Regulatory''; and
0
b. Remove the words ``the Dual Measurement System'' and add, in their
place, the words ``this subpart''.

Sec.  69.157  [Amended]

0
45. In Sec.  69.157, in the definitions of ``Gross tonnage'' and ``Net
tonnage'', before the word ``tonnage'', add the word ``register''.

Sec.  69.159  [Amended]

0
46. In Sec.  69.159, remove the words ``for the Standard Measurement
System''.

0
47. Amend Sec.  69.161 as follows:
0
a. Revise the section heading;
0
b. In paragraph (a) introductory text, after the word ``Gross'', add
the word ``register'';
0
c. In paragraphs (a)(5) and (b), after the word ``gross'', add the word
``register'';
0
d. In paragraph (b), after the word ``Net'' add the word ``register'';
and
0
e. Add paragraph (c).
    The revision and addition read as follows:

Sec.  69.161  Gross and net register tonnages.

* * * * *
    (c) The authorized measurement organization must issue a U.S.
Tonnage Certificate as evidence of a vessel's measurement under this
subpart, which must also indicate the vessel's measurement under the
Convention Measurement System in subpart B of this part, if applicable.
There is no requirement to maintain the U.S. Tonnage Certificate on
board the vessel.

Sec.  69.163  [Amended]

0
48. In Sec.  69.163, remove the words ``the Dual Measurement System''
and add, in their place, the words ``this subpart''.

Sec.  69.165  [Amended]

0
49. In Sec.  69.165, remove the words ``the Dual Measurement System''
and add, in their place, the words ``this subpart''.

Sec.  69.167  [Amended]

0
50. In Sec.  69.167, remove the words ``the Dual Measurement System''
and add, in their place, the words ``this subpart''.

Sec.  69.169  [Amended]

0
51. In Sec.  69.169, in the section heading and the introductory text,
remove the word ``gross''.

Sec.  69.173  [Amended]

0
52. In Sec.  69.173, before the word ``tonnage'', wherever it appears,
add the word ``register''.

Sec.  69.175  [Amended]

0
53. Amend Sec.  69.175 as follows:
0
a. In paragraph (a):
0
i. After the words ``two net'', add the word ``register''; and
0
ii. Remove the words ``one net tonnage'', and add, in their place, the
words ``one net register tonnage corresponding to the lower gross and
net register tonnages'';
0
b. In paragraph (b), after the words ``two net'', add the word
``register''; and
0
c. In paragraph (c):
0
i. After the words ``low net'', add the word ``register''; and
0
ii. After the words ``On these vessels,'' add the words ``a load line
must be assigned at a level below the line of the second deck, and''.

Sec.  69.177  [Amended]

0
54. Amend Sec.  69.177 as follows:
0
a. In paragraph (a)(1), remove the words ``the Dual Measurement
System'' and add, in their place, the words ``this subpart'';
0
b. In paragraph (a)(6)(i), after the words ``one net'', add the word
``register'';
0
c. In paragraph (c), after the word ``two net'', add the word
``register''; and
0
d. In paragraph (d), after the words ``side of the vessel'' add the
words ``, except in the case of a freeboard deck line mark placed at
the location of the second deck if the second deck is the actual
freeboard deck for purposes of a vessel's load line assignment''.

0
55. In Sec.  69.181, revise Examples (1) and (2) to read as follows:

Sec.  69.181  Locating the line of the second deck.

* * * * *

[GRAPHIC] [TIFF OMITTED] TR31MR16.005

0
56. In Sec.  69.183, in paragaphs (a), (b), and (c), revise the images
to read as follows:

Sec.  69.183  Figures.

    (a) * * *
    [GRAPHIC] [TIFF OMITTED] TR31MR16.006

* * * * *
    (b) * * *

[GRAPHIC] [TIFF OMITTED] TR31MR16.007

* * * * *
    (c) * * *
    [GRAPHIC] [TIFF OMITTED] TR31MR16.008

* * * * *

0
57. Revise the heading to subpart E to read as follows:

Subpart E--Simplified Regulatory Measurement System

Sec.  69.201  [Amended]

0
58. In Sec.  69.201, after the word ``Simplified'', add the word
``Regulatory''.

0
59. Revise Sec.  69.205 to read as follows:

Sec.  69.205  Application for measurement services.

    (a) Except as noted under paragraph (c) of this section, to apply
for measurement under this subpart, the vessel owner must complete an

Application for Simplified Measurement (form CG-5397). If the vessel is
documented, or intended to be documented, as a vessel of the United
States under part 67 of this chapter, the vessel owner must submit the
application form to the National Vessel Documentation Center.
Otherwise, the form is not further processed, but may be retained, at
the vessel owner's option, as evidence of the tonnage measurement under
this part.
    (b) The Application for Simplified Measurement (form CG-5397) must
include the following information:
    (1) Vessel's name and number (e.g., official number, International
Maritime Organization (IMO) number, or Coast Guard number).
    (2) Vessel hull identification number or other number assigned by
builder.
    (3) Hull material.
    (4) Hull shape.
    (5) Overall length, breadth, and depth of vessel and each of the
vessel's individual hulls.
    (6) Location of any propelling machinery (e.g., inside or outside
of the hull).
    (7) Dimensions of the principal deck structure, if its volume
exceeds the volume of the hull.
    (c) At the vessel owner's option, a Builder's Certification and
First Transfer of Title (form CG-1261), which includes the same
information specified in paragraph (b) of this section may be submitted
to the National Vessel Documentation Center instead of the Application
for Simplified Measurement for a vessel that is documented, or intended
to be documented, as a vessel of the United States under part 67 of
this chapter.

Sec.  69.207  [Amended]

0
60. In Sec.  69.207(a):
0
a. Remove the word ``half''; and
0
b. Remove the text ``.05'' and add, in its place, the word ``tenth''.

0
61. Amend Sec.  69.209 as follows:
0
a. Revise the section heading;
0
b. In heading of paragraph (a), after the word ``Gross'', add the word
``register'';
0
c. In paragraph (a), after the word ``gross'', wherever it appears, add
the word ``register'';
0
d. In the heading of paragraph (b), after the words ``Net'', add the
word ``register'';
0
e. In paragraphs (b)(1) and (2), after the words ``net'' and ``gross'',
wherever they appear, add the word ``register'';
0
f. Add paragraph (c).
    The revision reads as follows:

Sec.  69.209  Gross and net register tonnages.

* * * * *
    (c) Certification of measurement. For a vessel that is documented
as a vessel of the United States under part 67 of this chapter, the
vessel's Certificate of Documentation serves as evidence of measurement
under this subpart. For all other vessels, a completed Application for
Simplified Measurement (form CG-5397) serves as evidence of the tonnage
measurement under this part.

0
62. Add Sec.  69.211 to read as follows:

Sec.  69.211  Treatment of novel type vessels.

    Refer questions regarding the application of the tonnage
measurement rules under this subpart to novel type vessels to the
Commandant.

    Dated: March 8, 2016.
J.G. Lantz,
Director, Commercial Regulations and Standards, U.S. Coast Guard.
[FR Doc. 2016-05623 Filed 3-30-16; 8:45 am]
 BILLING CODE 9110-04-P


[Federal Register: April 10, 2008 (Volume 73, Number 70)]
[Notices]
[Page 19537-19539]
[DOCID:fr10ap08-101]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57586; File No. SR-FICC-2007-10]

Self-Regulatory Organizations; Fixed Income Clearing Corporation;
Order Approving Proposed Rule Change, as Modified by Amendment No. 1,
To Replace the Mortgage-Backed Securities Division Clearing Fund
Calculation Methodology With a Yield-Driven Value-at-Risk Methodology

March 31, 2008.

I. Introduction

    On August 31, 2007, the Fixed Income Clearing Corporation
(``FICC'') filed with the Securities and Exchange Commission
(``Commission'') and on September 27, 2007, amended proposed rule
change SR-FICC-2007-10 pursuant

to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'').\1\ Notice of the proposal was published in the Federal
Register on November 30, 2007.\2\ The Commission received no comment
letters in response to the proposed rule change. For the reasons
discussed below, the Commission is approving the proposed rule change,
as amended.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 56837 (November 26,
2007), 72 FR 67770 (SR-FICC-2007-10).
---------------------------------------------------------------------------

II. Description

    FICC is replacing the Mortgage-Backed Securities Division
(``MBSD'') margin calculation methodology with a value-at-risk
(``VaR'') methodology.
    Clearing participants of MBSD are required to maintain
participants' fund deposits. Each participant's required deposit is
calculated daily to ensure enough funds are available to cover the
risks associated with that participant's activities.
    The purpose served by the participants fund is to have on deposit
from each participant assets sufficient to satisfy any losses that may
otherwise be incurred by MBSD participants as the result of the default
by another participant and the resultant close out of the defaulting
participant's settlement positions.
    FICC is replacing the current participants' fund methodology, which
uses haircuts and offsets, with a VaR model. FICC expects the VaR model
to better reflect market volatility and to more thoroughly distinguish
levels of risk presented by individual securities.
    Specifically, FICC will replace the existing MBSD margin
calculation with a yield-driven VaR model. VaR is defined to be the
maximum amount of money that may be lost on a portfolio over a given
period of time within a given level of confidence. With respect to
MBSD, FICC will use a 99 percent three-day VaR.
    The changes to the components that comprise the current
participants fund calculation as compared to the VaR calculation in
relation to the risks addressed by the components are summarized below:

------------------------------------------------------------------------
    Existing methodology         Risk addressed        VaR methodology
------------------------------------------------------------------------
 Market Margin Differential,   Adjusting contract    The sum of:
 which is the greater of:      price to market       (i) Mark-to-market
 (i) The P&L Requirement or.   price and post mark-  and
 (ii) The Market Volatility    to-market             (ii) Interest rate
 Requirement..                 fluctuations in       or index-driven
                               security prices.      model, as
                                                     appropriate.\3\
 Final margin requirement      Additional exposure   Margin Requirement
 generated for second          due to portfolio      Differential
 processing cycle\4\.          variation..           (``MRD'') to
                                                     include intraday
                                                     portfolio
                                                     variations and
                                                     protection
                                                     regarding late
                                                     margin deficit
                                                     satisfaction.
 Prefunding of certain debit   Uncertainty of        Prefunding of
 cash obligation items         whether a member      certain debit cash
 through the participants      will satisfy its      obligation items
 fund (no offset for           cash settlement       through the
 credits).                     obligation.           participants fund
                                                     (offset for
                                                     credits)\5\
 N/A........................   Potential loss in     Coverage Component
                               unlikely situations   (if necessary,
                               beyond the model's    applies additional
                               effective range.      charge to bring
                                                     coverage to the
                                                     applicable
                                                     confidence level).
 Minimum Market Margin         Maintenance of a      A minimum charge of
 Differential (currently       minimum amount of     the greater of: (i)
 $250,000).                    collateral to         $100,000 or (ii) a
                               support potential     defined percentage
                               counterparty          of gross portfolio.
                               liquidation losses.
------------------------------------------------------------------------

    In  addition, FICC may include in a participant's participant fund
calculation a ``special charge'' as determined by FICC from time to
time in view of market conditions and the financial and operational
capabilities of the participant. FICC will make any such determination
based on such factors as it determines to be appropriate.
---------------------------------------------------------------------------

    \3\ FICC shall have the discretion to not apply the interest
rate model to classes of securities whose volatility is less
amenable to statistical analysis (e.g., a security that has a lack
of pricing history). In lieu of such a calculation, the required
charge with respect to such positions will be determined based on an
historic index volatility model.
    \4\ MBSD generates a preliminary margin report as part of a
first processing cycle at the close of the business day and
calculates a final margin requirement as part of a second processing
cycle completed at approximately 11:30 am each business day. Upon
the implementation of the new VaR methodology, the MBSD will no
longer generate a margin requirement as part of the second cycle.
Instead, a final margin requirement will be established after the
running of the first cycle at approximately 9:00 pm.
    \5\ Cash obligation item credits are retained by MBSD and are
not passed through to the participant. As a result, MBSD has
correspondingly less risk vis-a-vis a firm with cash obligation
credits and therefore requires less collateral.
---------------------------------------------------------------------------

    Because it will become obsolete upon the implementation of a VaR
based participants fund calculation, FICC is also eliminating the
provision in MBSD rules requiring participants to maintain a Basic
Deposit and Minimum Market Margin Differential Deposit with MBSD
pursuant to Article IV, Rule 1 (Participants Fund), Section 1(a) and
(b).

III. Discussion

    Section 19(b) of the Act directs the Commission to approve a
proposed rule change of a self-regulatory organization if it finds that
such proposed rule change is consistent with the requirements of the
Act and the rules and regulations thereunder applicable to such
organization. Section 17A(b)(3)(F) of the Act requires that the rules
of a clearing agency be designed to assure the safeguarding of
securities and funds in FICC's custody or control or for which it is
responsible.\6\ Because FICC's proposed rule change implements a VaR
methodology that should better reflect market volatility and should
more thoroughly distinguish the levels of risk presented by individual
securities, FICC should be able to more accurately calculate the risk
presented by each of its member's activity and to make participants
fund collections to protect against that risk. As a result, FICC should
be in a better position to assure the safeguarding of securities and
funds in its custody or control or for which it is responsible.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

IV. Conclusion

    On the basis of the foregoing, the Commission finds that the
proposed rule change is consistent with the requirements of the Act and
in particular Section 17A of the Act and the rules and regulations
thereunder. In approving the proposed rule change, the Commission
considered the proposal's impact on efficiency, competition and capital
formation.\7\
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78c(f).

---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-FICC-2007-10), as amended,
be and hereby is approved.
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).

    For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\8\
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-7504 Filed 4-9-08; 8:45 am]

BILLING CODE 8011-01-P


Internal and Deliberative Draft  Do not quote, cite, copy, or distribute August 19, 2003 1 For the reasons set out in the preamble, title 40, chapter I of the Code of Federal Regulations is amended as follows:

PART 51  [ AMENDED]

1. The authority citation for part 51 continues to read as follows:

Authority: 23 U. S. C. 101; 42 U. S. C. 7401 7671q.

Subpart I  [ Amended]

2. Section 51.165 is amended:

a. By revising paragraph ( a)( 1)( v)( C)( 1).

b. By adding paragraphs ( a)( 1)( xliii) through ( xlvi),

and paragraphs ( h) and ( i).

The revision and additions read as follows:

§ 51.165 Permit requirements.

( a) * * *

( 1) * * *

( v) * * *

( C) * * *

( 1) Routine maintenance, repair and replacement.

Routine maintenance, repair and replacement shall include,

but not be limited to, any activity( s) that meets the requirements of the equipment replacement provisions contained in paragraph ( h) of this section.

* * * * * Internal and Deliberative Draft  Do not quote, cite, copy, or distribute August 19, 2003 2 ( xliii)( A) In general, process unit means any collection of structures and/ or equipment that processes,

assembles, applies, blends, or otherwise uses material inputs to produce or store an intermediate or a completed product. A single stationary source may contain more than one process unit, and a process unit may contain more than one emissions unit.

( B) Pollution control equipment is not part of the process unit, unless it serves a dual function as both process and control equipment. Administrative and warehousing facilities are not part of the process unit.

( C) For replacement cost purposes, parts shared between two or more process units are proportionately allocated based on capacity.

( D) The following list identifies the process units at specific categories of stationary sources.

( 1) For a steam electric generating facility, the process unit consists of those portions of the plant that contribute directly to the production of electricity. For example, at a pulverized coal fired facility, the process unit would generally be the combination of those systems from the coal receiving equipment through the emission stack ( excluding post combustion pollution controls), including Internal and Deliberative Draft  Do not quote, cite, copy, or distribute August 19, 2003 3 the coal handling equipment, pulverizers or coal crushers,

feedwater heaters, ash handling, boiler, burners,

turbinegenerator set, air preheaters, and operating control systems. Each separate generating unit is a separate process unit.

( 2) For a petroleum refinery, there are several categories of process units: those that separate and/ or distill petroleum feedstocks; those that change molecular structures; petroleum treating processes; auxiliary facilities, such as steam generators and hydrogen production units; and those that load, unload, blend or store intermediate or completed products.

( 3) For an incinerator, the process unit would consist of components from the feed pit or refuse pit to the stack,

including conveyors, combustion devices, heat exchangers and steam generators, quench tanks, and fans.

( xliv) Functionally equivalent part means a part that serves the same purpose as the replaced part.

( xlv) Fixed capital cost means the capital needed to provide all the depreciable components. " Depreciable components" refers to all components of fixed capital cost and is calculated by subtracting land and working capital from the total capital investment, as defined in paragraph Internal and Deliberative Draft  Do not quote, cite, copy, or distribute August 19, 2003 4 ( a)( 1)( xlvi) of this section.

( xlvi) Total capital investment means the sum of the following: all costs required to purchase needed process equipment ( purchased equipment costs); the costs of labor and materials for installing that equipment ( direct installation costs); the costs of site preparation and buildings; other costs such as engineering, construction and field expenses, fees to contractors, startup and performance tests, and contingencies ( indirect installation costs); land for the process equipment; and working capital for the process equipment.

* * * * *

( h) Equipment Replacement Provision. Routine maintenance, repair and replacement includes, but is not limited to, the replacement of any part of a process unit with an identical or functionally equivalent part( s), and maintenance or repair activity( s) if it is associated with the replacement of a part( s), without regard to other considerations, provided that all of the requirements in paragraphs ( h)( 1) through ( 3) of this section are met.

Repair and maintenance activities are associated with the replacement of a part of the process unit if they are conducted in conjunction with the replacement. Internal and Deliberative Draft  Do not quote, cite, copy, or distribute August 19, 2003 5 ( 1) Capital Cost threshold for Equipment Replacement ( i) For an electric utility steam generating unit, as defined in 51.165( a)( 1)( xx), the fixed capital cost of the replacement part( s) plus the cost of any associated maintenance and repair activities shall not exceed 20 percent of the replacement value of the process unit.

( ii) For a process unit that is not an electric utility steam generating unit the fixed capital cost of the replacement part( s) plus the cost of any associated maintenance and repair activities shall not exceed 20 percent of the replacement value of the process unit.

( iii) At the time the owner or operator commences the replacement activity, the owner or operator shall determine the replacement value of the process unit; and, except as otherwise allowed under paragraph ( h)( 1)( iv) of this section, the replacement value of the process unit shall be based on an estimate of the fixed capital cost of constructing a new process unit, or on the current appraised value of the process unit.

( iv) As an alternative to paragraph ( h)( 1)( iii) of this section for determining the replacement value of a process unit, an owner or operator may choose to use insurance value ( where the insurance value covers only Internal and Deliberative Draft  Do not quote, cite, copy, or distribute August 19, 2003 6 complete replacement), investment value adjusted for inflation, or another accounting procedure if such procedure is based on Generally Accepted Accounting Principles,

provided that the owner or operator sends a notice to the reviewing authority at the beginning of the process unit's fiscal year. Unless the owner or operator submits a notice to the reviewing authority, then paragraph ( h)( 1)( iii) of this section will be used to establish the replacement value of the process unit. Once the owner or operator submits a notice to use an alternative accounting procedure, they must continue to use that procedure for the entire fiscal year for that process unit. In subsequent fiscal years, the owner or operator must continue to use this selected procedure unless an another notice is sent to the reviewing authority selecting another procedure consistent with this paragraph or paragraph ( h)( 1)( iii) of this section at the beginning of such fiscal year.

( 2) Basic Design Parameters. The replacement does not change the basic design parameter( s) of the process unit to which the activity pertains.

( i) Except as provided in paragraph ( h)( 2)( iii) of this section, for a process unit at a steam electric generating facility, one basic design parameter is maximum Internal and Deliberative Draft  Do not quote, cite, copy, or distribute August 19, 2003 7 hourly heat input and the owner or operator may select any one of the following for the other basic design parameter:

maximum hourly electric output rate, maximum steam flow rate, or maximum hourly fuel consumption rate. When establishing fuel consumption specifications in terms of rate or volume, the minimum fuel quality based on British Thermal Units content shall be used for determining the basic design parameter( s) for a coal fired electric utility steam generating unit.

( ii) Except as provided in paragraph ( h)( 2)( iii) of this section, the basic design parameter( s) for any process unit that is not at a steam electric generating facility are maximum rate of fuel input, maximum rate of material input,

or maximum rate of product output. Combustion process units will typically use maximum rate of fuel input. For sources having multiple end products and raw materials, the owner or operator must select the appropriate parameter for the dominant emission source of the process unit.

( iii) If the owner or operator believes the basic design parameter( s) in paragraphs ( h)( 2)( i) and ( ii) of this section is not appropriate for a specific industry or type of process unit, the owner or operator may propose to the reviewing authority an alternative basic design parameter( s) Internal and Deliberative Draft  Do not quote, cite, copy, or distribute August 19, 2003 8 for the source's process unit( s). If the reviewing authority approves of the use of an alternative basic design parameter( s), the reviewing authority shall issue a permit that is legally enforceable that records such basic design parameter( s) and requires the owner or operator to comply with such parameter( s).

( iv) The magnitude of the basic design parameter( s)

specified in paragraphs ( h)( 2)( i) and ( ii) of this section shall be established by the owner or operator using credible information, such as results of historic maximum capability tests, design information from the manufacturer, or engineering calculations.

( v) If design information is not available for a process unit, then the owner or operator shall determine the process unit's basic design parameter( s) using the maximum value achieved by the process unit in the five year period immediately preceding the planned activity.

( vi) Efficiency of a process unit is not a basic design parameter.

( 3) The replacement activity shall not cause the process unit to exceed any emission limitation or operational limitation ( that has the effect of constraining emissions) that applies to any part of the process unit and Internal and Deliberative Draft  Do not quote, cite, copy, or distribute August 19, 2003 9 that is legally enforceable. Internal and Deliberative Draft  Do not quote, cite, copy, or distribute August 19, 2003 10 3. Section 51.166 is amended:

a. By revising paragraph ( b)( 2)( iii)( a).

b. By adding paragraphs ( b)( 53) through ( 56), and paragraphs ( y) and ( z).

The revision and additions read as follows:

§ 51.166 Prevention of significant deterioration of air quality.

( b) * * *

( 2) * * *

( iii) * * *

( a) Routine maintenance, repair and replacement.

Routine maintenance, repair and replacement shall include,

but not be limited to, any activity( s) that meets the requirements of the equipment replacement provisions contained in paragraph ( y) of this section.

* * * * *

( 53)( i) In general, process unit means any collection of structures and/ or equipment that processes, assembles,

applies, blends, or otherwise uses material inputs to produce or store an intermediate or a completed product. A single stationary source may contain more than one process unit, and a process unit may contain more than one emissions unit. Internal and Deliberative Draft  Do not quote, cite, copy, or distribute August 19, 2003 11 ( ii) Pollution control equipment is not part of the process unit, unless it serves a dual function as both process and control equipment. Administrative and warehousing facilities are not part of the process unit.

( iii) For replacement cost purposes, parts shared between two or more process units are proportionately allocated based on capacity.

( iv) The following list identifies the process units at specific categories of stationary sources.

( a) For a steam electric generating facility, the process unit consists of those portions of the plant that contribute directly to the production of electricity. For example, at a pulverized coal fired facility, the process unit would generally be the combination of those systems from the coal receiving equipment through the emission stack ( excluding post combustion pollution controls), including the coal handling equipment, pulverizers or coal crushers,

feedwater heaters, ash handling, boiler, burners,

turbinegenerator set, air preheaters, and operating control systems. Each separate generating unit is a separate process unit.

( b) For a petroleum refinery, there are several categories of process units: those that separate and/ or Internal and Deliberative Draft  Do not quote, cite, copy, or distribute August 19, 2003 12 distill petroleum feedstocks; those that change molecular structures; petroleum treating processes; auxiliary facilities, such as steam generators and hydrogen production units; and those that load, unload, blend or store intermediate or completed products.

( c) For an incinerator, the process unit would consist of components from the feed pit or refuse pit to the stack,

including conveyors, combustion devices, heat exchangers and steam generators, quench tanks, and fans.

( 54) Functionally equivalent part means a part that serves the same purpose as the replaced part.

( 55) Fixed capital cost means the capital needed to provide all the depreciable components. " Depreciable components" refers to all components of fixed capital cost and is calculated by subtracting land and working capital from the total capital investment, as defined in paragraph ( b)( 56) of this section.

( 56) Total capital investment means the sum of the following: all costs required to purchase needed process equipment ( purchased equipment costs); the costs of labor and materials for installing that equipment ( direct installation costs); the costs of site preparation and buildings; other costs such as engineering, construction and Internal and Deliberative Draft  Do not quote, cite, copy, or distribute August 19, 2003 13 field expenses, fees to contractors, startup and performance tests, and contingencies ( indirect installation costs); land for the process equipment; and working capital for the process equipment.

* * * * *

( y) Equipment Replacement Provision. Routine maintenance, repair and replacement includes, but is not limited to, the replacement of any part of a process unit with an identical or functionally equivalent part( s), and maintenance or repair activity( s) if it is associated with the replacement of a part( s), without regard to other considerations, provided that all of the requirements in paragraphs ( y)( 1) through ( 3) of this section are met.

Repair and maintenance activities are associated with the replacement of a part of the process unit if they are conducted in conjunction with the replacement.

( 1) Capital Cost threshold for Equipment Replacement ( i) For an electric utility steam generating unit, as defined in 51.166( b)( 30), the fixed capital cost of the replacement part( s) plus the cost of any associated maintenance and repair activities shall not exceed 20 percent of the replacement value of the process unit.

( ii) For a process unit that is not an electric Internal and Deliberative Draft  Do not quote, cite, copy, or distribute August 19, 2003 14 utility steam generating unit the fixed capital cost of the replacement part( s) plus the cost of any associated maintenance and repair activities shall not exceed 20 percent of the replacement value of the process unit.

( iii) At the time the owner or operator commences the replacement activity, the owner or operator shall determine the replacement value of the process unit; and, except as otherwise allowed under paragraph ( y)( 1)( iv) of this section, the replacement value of the process unit shall be based on an estimate of the fixed capital cost of constructing a new process unit, or on the current appraised value of the process unit.

( iv) As an alternative to paragraph ( y)( 1)( iii) of this section for determining the replacement value of a process unit, an owner or operator may choose to use insurance value ( where the insurance value covers only complete replacement), investment value adjusted for inflation, or another accounting procedure if such procedure is based on Generally Accepted Accounting Principles,

provided that the owner or operator sends a notice to the reviewing authority at the beginning of the process unit's fiscal year. Unless the owner or operator submits a notice to the reviewing authority, then paragraph ( y)( 1)( iii) of Internal and Deliberative Draft  Do not quote, cite, copy, or distribute August 19, 2003 15 this section will be used to establish the replacement value of the process unit. Once the owner or operator submits a notice to use an alternative accounting procedure, they must continue to use that procedure for the entire fiscal year for that process unit. In subsequent fiscal years, the owner or operator must continue to use this selected procedure unless an another notice is sent to the reviewing authority selecting another procedure consistent with this paragraph or paragraph ( y)( 1)( iii) of this section at the beginning of such fiscal year.

( 2) Basic Design Parameters. The replacement does not change the basic design parameter( s) of the process unit to which the activity pertains.

( i) Except as provided in paragraph ( y)( 2)( iii) of this section, for a process unit at a steam electric generating facility, one basic design parameter is maximum hourly heat input and the owner or operator may select any one of the following for the other basic design parameter:

maximum hourly electric output rate, maximum steam flow rate, or maximum hourly fuel consumption rate. When establishing fuel consumption specifications in terms of rate or volume, the minimum fuel quality based on British Thermal Units content shall be used for determining the Internal and Deliberative Draft  Do not quote, cite, copy, or distribute August 19, 2003 16 basic design parameter( s) for a coal fired electric utility steam generating unit.

( ii) Except as provided in paragraph ( y)( 2)( iii) of this section, the basic design parameter( s) for any process unit that is not at a steam electric generating facility are maximum rate of fuel input, maximum rate of material input,

or maximum rate of product output. Combustion process units will typically use maximum rate of fuel input. For sources having multiple end products and raw materials, the owner or operator must select the appropriate parameter for the dominant emission source of the process unit.

( iii) If the owner or operator believes the basic design parameter( s) in paragraphs ( y)( 2)( i) and ( ii) of this section is not appropriate for a specific industry or type of process unit, the owner or operator may propose to the reviewing authority an alternative basic design parameter( s)

for the source's process unit( s). If the reviewing authority approves of the use of an alternative basic design parameter( s), the reviewing authority shall issue a permit that is legally enforceable that records such basic design parameter( s) and requires the owner or operator to comply with such parameter( s).

( iv) The magnitude of the basic design parameter( s) Internal and Deliberative Draft  Do not quote, cite, copy, or distribute August 19, 2003 17 specified in paragraphs ( y)( 2)( i) and ( ii) of this section shall be established by the owner or operator using credible information, such as results of historic maximum capability tests, design information from the manufacturer, or engineering calculations.

( v) If design information is not available for a process unit, then the owner or operator shall determine the process unit's basic design parameter( s) using the maximum value achieved by the process unit in the five year period immediately preceding the planned activity.

( vi) Efficiency of a process unit is not a basic design parameter.

( 3) The replacement activity shall not cause the process unit to exceed any emission limitation or operational limitation ( that has the effect of constraining emissions) that applies to any part of the process unit and that is legally enforceable. Internal and Deliberative Draft  Do not quote, cite, copy, or distribute August 19, 2003 18 PART 52  [ Amended]

1. The authority citation for part 52 continues to read as follows:

Authority: 42 U. S. C. 7401, et seq.

Subpart A  [ Amended]

2. Section 52.21 is amended:

a. By revising paragraph ( b)( 2)( iii)( a).

b. By adding paragraphs ( b)( 55) through ( 58), and paragraphs ( cc) and ( dd).

The revision and additions read as follows:

§ 52.21 Prevention of significant deterioration of air quality.

( b) * * *

( 2) * * *

( iii) * * *

( a) Routine maintenance, repair and replacement.

Routine maintenance, repair and replacement shall include,

but not be limited to, any activity( s) that meets the requirements of the equipment replacement provisions contained in paragraph ( cc) of this section.

* * * * *

( 55)( i) In general, process unit means any collection of structures and/ or equipment that processes, assembles, Internal and Deliberative Draft  Do not quote, cite, copy, or distribute August 19, 2003 19 applies, blends, or otherwise uses material inputs to produce or store an intermediate or a completed product. A single stationary source may contain more than one process unit, and a process unit may contain more than one emissions unit.

( ii) Pollution control equipment is not part of the process unit, unless it serves a dual function as both process and control equipment. Administrative and warehousing facilities are not part of the process unit.

( iii) For replacement cost purposes, parts shared between two or more process units are proportionately allocated based on capacity.

( iv) The following list identifies the process units at specific categories of stationary sources.

( a) For a steam electric generating facility, the process unit consists of those portions of the plant that contribute directly to the production of electricity. For example, at a pulverized coal fired facility, the process unit would generally be the combination of those systems from the coal receiving equipment through the emission stack ( excluding post combustion pollution controls), including the coal handling equipment, pulverizers or coal crushers,

feedwater heaters, ash handling, boiler, burners, turbine Internal and Deliberative Draft  Do not quote, cite, copy, or distribute August 19, 2003 20 generator set, air preheaters, and operating control systems. Each separate generating unit is a separate process unit.

( b) For a petroleum refinery, there are several categories of process units: those that separate and/ or distill petroleum feedstocks; those that change molecular structures; petroleum treating processes; auxiliary facilities, such as steam generators and hydrogen production units; and those that load, unload, blend or store intermediate or completed products.

( c) For an incinerator, the process unit would consist of components from the feed pit or refuse pit to the stack,

including conveyors, combustion devices, heat exchangers and steam generators, quench tanks, and fans.

( 56) Functionally equivalent part means a part that serves the same purpose as the replaced part.

( 57) Fixed capital cost means the capital needed to provide all the depreciable components. " Depreciable components" refers to all components of fixed capital cost and is calculated by subtracting land and working capital from the total capital investment, as defined in paragraph ( b)( 58) of this section.

( 58) Total capital investment means the sum of the Internal and Deliberative Draft  Do not quote, cite, copy, or distribute August 19, 2003 21 following: all costs required to purchase needed process equipment ( purchased equipment costs); the costs of labor and materials for installing that equipment ( direct installation costs); the costs of site preparation and buildings; other costs such as engineering, construction and field expenses, fees to contractors, startup and performance tests, and contingencies ( indirect installation costs); land for the process equipment; and working capital for the process equipment.

* * * * *

( cc) Equipment Replacement Provision. Routine maintenance, repair and replacement includes, but is not limited to, the replacement of any part of a process unit with an identical or functionally equivalent part( s), and maintenance or repair activity( s) if it is associated with the replacement of a part( s), without regard to other considerations, provided that all of the requirements in paragraphs ( cc)( 1) through ( 3) of this section are met.

Repair and maintenance activities are associated with the replacement of a part of the process unit if they are conducted in conjunction with the replacement.

( 1) Capital Cost threshold for Equipment Replacement ( i) For an electric utility steam generating unit, as Internal and Deliberative Draft  Do not quote, cite, copy, or distribute August 19, 2003 22 defined in 52.21( b)( 31), the fixed capital cost of the replacement part( s) plus the cost of any associated maintenance and repair activities shall not exceed 20 percent of the replacement value of the process unit.

( ii) For a process unit that is not an electric utility steam generating unit the fixed capital cost of the replacement part( s) plus the cost of any associated maintenance and repair activities shall not exceed 20 percent of the replacement value of the process unit.

( iii) At the time the owner or operator commences the replacement activity, the owner or operator shall determine the replacement value of the process unit; and, except as otherwise allowed under paragraph ( cc)( 1)( iv) of this section, the replacement value of the process unit shall be based on an estimate of the fixed capital cost of constructing a new process unit, or on the current appraised value of the process unit.

( iv) As an alternative to paragraph ( cc)( 1)( iii) of this section for determining the replacement value of a process unit, an owner or operator may choose to use insurance value ( where the insurance value covers only complete replacement), investment value adjusted for inflation, or another accounting procedure if such procedure Internal and Deliberative Draft  Do not quote, cite, copy, or distribute August 19, 2003 23 is based on Generally Accepted Accounting Principles,

provided that the owner or operator sends a notice to the reviewing authority at the beginning of the process unit's fiscal year. Unless the owner or operator submits a notice to the reviewing authority, then paragraph ( cc)( 1)( iii) of this section will be used to establish the replacement value of the process unit. Once the owner or operator submits a notice to use an alternative accounting procedure, they must continue to use that procedure for the entire fiscal year for that process unit. In subsequent fiscal years, the owner or operator must continue to use this selected procedure unless an another notice is sent to the reviewing authority selecting another procedure consistent with this paragraph or paragraph ( cc)( 1)( iii) of this section at the beginning of such fiscal year.

( 2) Basic Design Parameters. The replacement does not change the basic design parameter( s) of the process unit to which the activity pertains.

( i) Except as provided in paragraph ( cc)( 2)( iii) of this section, for a process unit at a steam electric generating facility, one basic design parameter is maximum hourly heat input and the owner or operator may select any one of the following for the other basic design parameter: Internal and Deliberative Draft  Do not quote, cite, copy, or distribute August 19, 2003 24 maximum hourly electric output rate, maximum steam flow rate, or maximum hourly fuel consumption rate. When establishing fuel consumption specifications in terms of rate or volume, the minimum fuel quality based on British Thermal Units content shall be used for determining the basic design parameter( s) for a coal fired electric utility steam generating unit.

( ii) Except as provided in paragraph ( cc)( 2)( iii) of this section, the basic design parameter( s) for any process unit that is not at a steam electric generating facility are maximum rate of fuel input, maximum rate of material input,

or maximum rate of product output. Combustion process units will typically use maximum rate of fuel input. For sources having multiple end products and raw materials, the owner or operator must select the appropriate parameter for the dominant emission source of the process unit.

( iii) If the owner or operator believes the basic design parameter( s) in paragraphs ( cc)( 2)( i) and ( ii) of this section is not appropriate for a specific industry or type of process unit, the owner or operator may propose to the reviewing authority an alternative basic design parameter( s) for the source's process unit( s). If the reviewing authority approves of the use of an alternative Internal and Deliberative Draft  Do not quote, cite, copy, or distribute August 19, 2003 25 basic design parameter( s), the reviewing authority shall issue a permit that is legally enforceable that records such basic design parameter( s) and requires the owner or operator to comply with such parameter( s).

( iv) The magnitude of the basic design parameter( s)

specified in paragraphs ( cc)( 2)( i) and ( ii) of this section shall be established by the owner or operator using credible information, such as results of historic maximum capability tests, design information from the manufacturer, or engineering calculations.

( v) If design information is not available for a process unit, then the owner or operator shall determine the process unit's basic design parameter( s) using the maximum value achieved by the process unit in the five year period immediately preceding the planned activity.

( vi) Efficiency of a process unit is not a basic design parameter.

( 3) The replacement activity shall not cause the process unit to exceed any emission limitation or operational limitation ( that has the effect of constraining emissions) that applies to any part of the process unit and that is legally enforceable.