Proposed Rule2021-20095
Uniform Certificate of Title Act for Vessels
Primary source
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Published
September 22, 2021
Issuing agencies
Homeland Security DepartmentCoast Guard
Abstract
The Coast Guard proposes changes to its regulations for certifying a State's titling system for undocumented vessels to increase States' participation in the Vessel Identification System (VIS). The proposed changes would allow States that have adopted the recommendations of the model Uniform Certificate of Title Act for Vessels to certify their titling provisions with the Coast Guard. Once certified and participating in the VIS, a State is able to confer preferred mortgage status on financial instruments that apply to undocumented vessels, which benefits the owners of those vessels. While many of the proposed changes to the certification guidelines relate to the technical requirements of recording and maintaining titling documentation, the most significant change would be to implement a system of "branding" (permanently marking) titles for vessels that have sustained structural damage. This would help prevent a process known as "title washing," where severe vessel damage is concealed by transferring the title to a different State.
Full Text
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<title>Federal Register, Volume 86 Issue 181 (Wednesday, September 22, 2021)</title>
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[Federal Register Volume 86, Number 181 (Wednesday, September 22, 2021)]
[Proposed Rules]
[Pages 52792-52815]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-20095]
[[Page 52791]]
Vol. 86
Wednesday,
No. 181
September 22, 2021
Part III
Department of Homeland Security
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Coast Guard
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33 CFR Part 187
Uniform Certificate of Title Act for Vessels; Proposed Rule
Federal Register / Vol. 86 , No. 181 / Wednesday, September 22, 2021
/ Proposed Rules
[[Page 52792]]
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DEPARTMENT OF HOMELAND SECURITY
Coast Guard
33 CFR Part 187
[Docket No. USCG-2018-0160]
RIN 1625-AC28
Uniform Certificate of Title Act for Vessels
AGENCY: Coast Guard, DHS.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Coast Guard proposes changes to its regulations for
certifying a State's titling system for undocumented vessels to
increase States' participation in the Vessel Identification System
(VIS). The proposed changes would allow States that have adopted the
recommendations of the model Uniform Certificate of Title Act for
Vessels to certify their titling provisions with the Coast Guard. Once
certified and participating in the VIS, a State is able to confer
preferred mortgage status on financial instruments that apply to
undocumented vessels, which benefits the owners of those vessels. While
many of the proposed changes to the certification guidelines relate to
the technical requirements of recording and maintaining titling
documentation, the most significant change would be to implement a
system of ``branding'' (permanently marking) titles for vessels that
have sustained structural damage. This would help prevent a process
known as ``title washing,'' where severe vessel damage is concealed by
transferring the title to a different State.
DATES: Comments and related material must be received by the Coast
Guard on or before November 22, 2021. Comments sent to the Office of
Management and Budget (OMB) on collection of information must reach OMB
on or before November 22, 2021.
ADDRESSES: You may submit comments identified by docket number USCG-
2018-0160 using the Federal eRulemaking Portal at <a href="https://www.regulations.gov">https://www.regulations.gov</a>. See the ``Public Participation and Request for
Comments'' portion of the SUPPLEMENTARY INFORMATION section for further
instructions on submitting comments.
Collection of information. Submit comments on the collection of
information discussed in section VI.D of this preamble both to the
Coast Guard's online docket and to the Office of Information and
Regulatory Affairs (OIRA) in the White House Office of Management and
Budget (OMB) using their website <a href="http://www.reginfo.gov/public/do/PRAMain">www.reginfo.gov/public/do/PRAMain</a>.
Comments sent to OIRA on collection of information must reach OMB on or
before the comment due date listed on their website.
FOR FURTHER INFORMATION CONTACT: For information about this document
call or email W. Vann Burgess, Boating Safety Division, Program
Management and Operations Branch (CG-BSX-21), Coast Guard; telephone
202-372-1071, email <a href="/cdn-cgi/l/email-protection#1f68767373767e723169317d6a6d787a6c6c5f6a6c7c7831727673"><span class="__cf_email__" data-cfemail="b8cfd1d4d4d1d9d596ce96dacdcadfddcbcbf8cdcbdbdf96d5d1d4">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
Table of Contents for Preamble
I. Public Participation and Request for Comments
II. Abbreviations
III. Basis and Purpose
IV. Background
A. Current 33 CFR part 187, subpart D
B. UCOTA-V
V. Discussion of Proposed Rule
VI. Regulatory Analyses
A. Regulatory Planning and Review
B. Small Entities
C. Assistance for Small Entities
D. Collection of Information
E. Federalism
F. Unfunded Mandates Reform Act
G. Taking of Private Property
H. Civil Justice Reform
I. Protection of Children
J. Tribal Governments
K. Energy Effects
L. Technical Standards
M. Environment
I. Public Participation and Request for Comments
The Coast Guard views public participation as essential to
effective rulemaking, and will consider all comments and material
received during the comment period. Your comment can help shape the
outcome of this rulemaking. If you submit a comment, please include the
docket number for this rulemaking, indicate the specific section of
this document to which each comment applies, and provide a reason for
each suggestion or recommendation.
We encourage you to submit comments through the Federal eRulemaking
Portal at <a href="https://www.regulations.gov">https://www.regulations.gov</a>. If you cannot submit your
material by using <a href="https://www.regulations.gov">https://www.regulations.gov</a>, contact the person in
the FOR FURTHER INFORMATION CONTACT section of this proposed rule for
alternate instructions. Documents mentioned in this proposed rule, and
all public comments, will be available in our online docket at <a href="https://www.regulations.gov">https://www.regulations.gov</a>, and can be viewed by following that website's
instructions. Additionally, if you visit the online docket and sign up
for email alerts, you will be notified when comments are posted or a
final rule is published.
We accept anonymous comments. All comments received will be posted
without change to <a href="https://www.regulations.gov">https://www.regulations.gov</a> and will include any
personal information you have provided. For more about privacy and
submissions in response to this document, see the Department of
Homeland Security's eRulemaking System of Records notice (85 FR 14226,
March 11, 2020).
We do not plan to hold a public meeting, but will consider doing so
if public comments indicate a meeting would be helpful. We would issue
a separate Federal Register notice to announce the date, time, and
location of such a meeting.
II. Abbreviations
BLA Boating Law Administrator
BSX U.S. Coast Guard's Office of Auxiliary and Boating Safety
CFR Code of Federal Regulations
DHS Department of Homeland Security
DOT Department of Transportation
FR Federal Register
MOA Memorandum of Agreements
NCCUSL National Conference of Commissioners on Uniform State Laws
NBSAC National Boating Safety Advisory Council
NASBLA National Association of State Boating Law Administrators
NPRM Notice of proposed rulemaking
OMB Office of Management and Budget
PRA Paperwork Reduction Act of 1995
RA Regulatory Analysis
RFA Regulatory Flexibility Act of 1980
Sec. Section
UCC Uniform Commercial Code
UCOTA-V Uniform Certificate of Title Act for Vessels
U.S.C. United States Code
VIS Vessel Identification System
III. Basis and Purpose
The purpose of this rulemaking is to revise Coast Guard guidelines
for State vessel titling systems so that they align with the Uniform
Certificate of Title Act for Vessels (UCOTA-V). As discussed in more
detail below, we expect that aligning Coast Guard guidelines with
UCOTA-V would increase States' participation in the Vessel
Identification System (VIS), thereby benefitting the owners of
undocumented vessels by providing them access to preferred mortgages.
The legal basis for this rulemaking is Title 46 of the United
States Code (U.S.C.), sections 2103, 12501(a), and 31322(d). Section
2103 authorizes the Secretary of the department in which the Coast
Guard is operating to issue regulations to carry out the provisions of
Subtitle II, Vessels and Seamen, of Title 46 of the U.S.C., in which
Section 12501(a) appears. Section 12501(a) requires the Secretary to
establish a VIS
[[Page 52793]]
relating to, among other things, the ownership of vessels titled under
the law of a State. Finally, section 31322(d) allows a mortgage that is
filed, or ``perfected'' under State law, to be deemed ``a preferred
mortgage'' if the Secretary certifies that the State titling system
complies with the guidelines set forth in 46 U.S.C. 13107. The
Secretary's authority under these statutes has been delegated to the
Coast Guard in Department of Homeland Security (DHS) Delegation No.
0170.1(II) (92.a) and (92.h). Pursuant to that authority, the Coast
Guard has promulgated regulations governing the certification of State
laws to determine eligibility for preferred mortgages.
IV. Background
A. Current 33 CFR Part 187, Subpart D
A mixture of both Federal and State laws govern the titling of
vessels in the United States.\1\ ``Documented'' vessels are typically
larger commercial vessels documented with the Coast Guard National
Vessel Documentation Center. Over 99 percent of vessels in the United
States are not required to be documented and are considered
``undocumented,'' which the Coast Guard is not required to document.
The registration and titling of these vessels falls under State law.
State law governing the titling of vessels varies considerably from
State to State, and many States do not have a certificate of title law
for vessels.
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\1\ As used throughout this notice of proposed rulemaking
(NPRM), ``State'' means any of the 56 jurisdictions (50 States, the
District of Columbia, American Samoa, Guam, the Northern Mariana
Islands, Puerto Rico, and the U.S. Virgin Islands) that administer
Coast Guard-approved recreational vessel numbering systems.
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While the Federal Government does not title undocumented vessels,
it does have an interest in certain aspects of policy that would
ordinarily be covered by State titling requirements. Specifically, the
Coast Guard has an interest in information about vessels and their
owners for both law enforcement and maritime domain awareness purposes.
For these reasons, pursuant to statute, the Coast Guard created the
VIS, which is a centralized database of information relating to these
subjects.\2\ However, the VIS relies on information generated by States
through their titling and other recordation processes for information
about undocumented vessels. Currently, only 38 States participate in
the information exchange aspects of the VIS. Because participation in
the VIS is voluntary and entirely at the States' discretion, Congress
created an incentive for States to provide the requisite information,
in the form of eligibility for preferred mortgages.
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\2\ See 46 U.S.C. 12501.
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Under maritime law, a preferred mortgage is a mortgage that is
filed--or perfected--in compliance with certain statutory requirements
that are set forth in 46 U.S.C. 31321. A preferred mortgage creates a
lien against the mortgaged vessel in the amount of the mortgage
indebtedness (46 U.S.C. 31322 and 31325). A preferred mortgage is a
perfected lien that has priority over certain other maritime liens and
all non-maritime liens in an in rem admiralty foreclosure (46 U.S.C.
31326).\3\ Acquiring a preferred mortgage is beneficial to the owners
of vessels, because a preferred mortgage generally has a substantially
lower interest rate than a mortgage secured by a non-perfected lien.
While documented vessels are eligible for a preferred mortgage,
undocumented vessels can receive such a mortgage only if the State in
which it is titled satisfies the applicable Federal requirements and
receives approval from the Coast Guard.\4\
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\3\ A perfected lien is generally a lien that has been filed
with the appropriate filing agent in order to make the securing
interest in a collateral asset binding. See 46 U.S.C. 31321.
\4\ See 46 U.S.C. 31322(d).
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To encourage States to participate in and share information with
the VIS, the Coast Guard requires certification before maritime liens
can be perfected. The guidelines that cover what a State must do to
have its titling laws certified by the Coast Guard are located in Title
33 of the Code of Federal Regulations (CFR), part 187, and specifically
in subpart D--State Vessel Titling Systems. In addition to the specific
titling requirements, subpart D contains a requirement that the State
must ``comply with the VIS participation requirements of Sec. 187.11
and subpart C of this part and make vessel information it collects
available to VIS.'' \5\
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\5\ See 33 CFR 187.301 and 33 CFR 187.201.
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Despite the incentive of being able to provide owners of
undocumented vessels access to preferred mortgages, currently no States
have titling laws that comply with the Coast Guard guidelines in
subpart D. This is because of a conflict between the guidelines in
subpart D and provisions of the Uniform Commercial Code (UCC),
specifically Articles 2 and 9, which govern the titling of property.
Because most States rely on compliance with the UCC to facilitate an
array of commercial transactions, they have been unable to modify their
laws to comply with the Coast Guard's certification guidelines in
subpart D.
B. UCOTA-V
The National Conference of Commissioners on Uniform State Laws
(NCCUSL) drafted UCOTA-V \6\ with input from members of the National
Association of State Boating Law Administrators (NASBLA), boat
manufacturers and dealers, banking interests, and the Coast Guard,
which continues to be supportive of it. Unanimously approved by the
NCCUSL in July 2011, UCOTA-V provides a consistent consumer protection
measure that allows the identification of vessels that have been deemed
unsafe, preventing them from being sold without disclosure.
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\6\ A copy of UCOTA-V is located in the docket at <a href="https://www.regulations.gov">https://www.regulations.gov</a>, as indicated in the Public Participation and
Request for Comments portion of this preamble.
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The NASBLA membership adopted UCOTA-V as a model act of the
association at its annual business meeting in September 2011. Through
one of its policy committees, NASBLA has continued to work with NCCUSL
in promoting and supporting UCOTA-V adoption by the States. Currently,
five States have adopted the act and five other States are at various
stages of preparation to do so. The NCCUSL set forth several
``principal objectives'' when writing UCOTA-V. The objectives for
UCOTA-V are to:
(1) Qualify as a State titling law that the Coast Guard will
approve;
(2) Facilitate transfers of ownership of a vessel;
(3) Deter and impede the theft of vessels by making information
about the ownership of vessels available to both government officials
and those interested in acquiring an interest in a vessel;
(4) Accommodate existing financing arrangements for vessels;
(5) Work seamlessly with the UCC;
(6) Manage, to the extent possible, the complications that can
arise from a vessel's transition in or out of Federal documentation;
(7) Provide clear rules on the consequences of compliance or
noncompliance;
(8) Impose minimal or no new burdens or costs on State titling
offices; and
(9) Protect buyers and others acquiring an interest in an
undocumented vessel by requiring that the title for the vessel be
branded if a casualty or sinking has caused significant damage to the
vessel's hull integrity.\7\
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\7\ See 46 U.S.C. 12503, Information available to the system. In
addition to the vessel identification information made available by
States. See NBSAC Resolution 2014-92-01 <a href="https://homeport.uscg.mil/Lists/Content/DispForm.aspx?ID=483&Source=/Lists/Content/DispForm.aspx?ID=483">https://homeport.uscg.mil/Lists/Content/DispForm.aspx?ID=483&Source=/Lists/Content/DispForm.aspx?ID=483</a>.
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[[Page 52794]]
Various maritime interests recommended that the Coast Guard update
its certification guidelines so that States that have adopted laws
compliant with UCOTA-V can meet the certification guidelines. In 2014,
the National Boating Safety Advisory Council (NBSAC), a group
established under the Federal Advisory Committee Act to advise the
Coast Guard, passed Resolution No. 2014-92-01 recommending that the
Coast Guard initiate a rulemaking to revise subpart D based on UCOTA-V,
for the following reasons:
(1) The well-conceived and well-drafted nature of UCOTA-V;
(2) The lack of State support for current subpart D;
(3) The interest in complying with a revised subpart D to obtain
the benefits of preferred mortgages;
(4) Theft deterrence by facilitating interstate recovery of stolen
vessels; and
(5) Facilitation of greater participation in the VIS.\8\
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\8\ See 46 U.S.C. chapter 125, (Vessel Identification System).
Subsection (a) of section 12501 requires the Secretary of DHS to
establish a system of information concerning vessels of the United
States for law enforcement and other purposes. The Secretary is
required to make available information from the system relating to
the ownership of vessels documented under chapter 121 of title 46,
numbered under chapter 123 of that title, and titled under the law
of a State. See <a href="https://cgmix.uscg.mil/VISInformation.aspx">https://cgmix.uscg.mil/VISInformation.aspx</a>?VISOption
for more information regarding VIS.
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In addition, NASBLA recommended the incorporation of UCOTA-V
provisions as well. In response to an agency solicitation for
regulatory reform proposals pursuant to Executive Order 13777
(Enforcing the Regulatory Reform Agenda),\9\ NASBLA recommended that
the Coast Guard revise subpart D to align Coast Guard certification
requirements with the requirements of UCOTA-V. NASBLA noted that the
current subpart D regulations ``have become obsolete, fostered
inefficiencies, and/or have become increasingly difficult to
consistently apply.'' \10\
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\9\ Executive Order 13777 was revoked by Executive Order 13992
(Volume 86 of the Federal Register (FR) at Page 7049 (Jan. 25,
2021)).
\10\ Comment from NASBLA, available at <a href="https://www.regulations.gov">https://www.regulations.gov</a>, docket number USCG-2017-0480-0149.
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Based on the recommendations of these two organizations, as well as
our desire to increase State participation in the VIS, the Coast Guard
is proposing revisions to subpart D to allow for any State adopting
titling laws in accordance with the guidelines in UCOTA-V to meet Coast
Guard certification requirements. We discuss the specific proposed
requirements for subpart D below.
V. Discussion of Proposed Rule
For the reasons described above, this proposed rulemaking would
revise subpart D of 33 CFR part 187 so that State titling laws modeled
on UCOTA-V would meet the certification requirements of subpart D. We
propose to replace the entire text of the existing subpart D with new
guidelines that would accommodate States that adopt variants of the
model code appropriate for their State commercial legal regimes. The
Coast Guard is not proposing to incorporate UCOTA-V in its entirety
because some sections of UCOTA-V are not applicable to the Federal
Government. For example, included in UCOTA-V is a ``savings clause''
provision (see section 28 of UCOTA-V). Because the execution of the
savings clause would be governed by State law applicable to vessel
titling that existed prior to the adoption of UCOTA-V,\11\ there is no
Federal interest or need to apply Federal oversight of the application
of a savings clause.
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\11\ See the explanation contained in the table on page 57 of
UCOTA-V which says: ``States will decide under existing state law
how they will treat vessels that were previously titled under state
law prior to adoption of UCOTA-V.'' Thus, previously existing state
requirements do not bear on the titling issues that this proposal
seeks to address.
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In short, so long as vessels have been properly registered through
the State, the savings clause provision found in section 28 of UCOTA-V
has no bearing on the Coast Guard's regulatory regime. Therefore, we
are not including UCOTA-V's savings clause provision within this
proposal. Instead, we are proposing certification guidelines that
incorporate UCOTA-V, but with a number of policy or stylistic changes,
such that the guidelines are flexible enough to allow for the
variations in State law permitted by UCOTA-V.
In addition to the savings clause provision in section 28, the
Coast Guard is proposing to omit the following sections of UCOTA-V that
do not bear specifically on titling concerns.
Section 1, Short title. We are integrating the requirements of
UCOTA-V into Coast Guard regulations, so we do not need to adopt the
act's title.
Section 4, Supplemental principles of law and equity. This
provision concerns the interpretation principles of UCOTA-V and, while
this is a general principle of the UCC, it is not needed for Coast
Guard certification of a State's titling law.
Section 8, Creation and cancellation of certificate of title,
subsection (f). We are not incorporating subsection (f) of section 8
because it is an optional provision for the States that ``provides a
procedure for the office to follow before canceling a certificate of
title. It is intended for those states whose public records or other
law does not already provide a procedure that ensures all interested
parties are notified in advance and given an opportunity to be heard.''
\12\
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\12\ UCOTA-V, Section 8, Legislative Note, page 25.
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Section 26, Uniformity of application and construction. This
provision also concerns interpretation principles and is not needed for
Coast Guard certification.
Section 27, Relation to electronic signatures in global and
national commerce act. This section describes the relation of a State's
law to certain Federal statutes concerning electronic signature, which
is not relevant in the certification of State titling law.
Section 28, Savings clause. For the reasons discussed above, the
Coast Guard is not incorporating section 28.
The Coast Guard also proposes a variety of stylistic changes.
First, we propose keeping the general numbering scheme of the text of
UCOTA-V in regulatory text, replacing references to ``Section X'' with
the appropriate citation to the equivalent regulatory section,
subsection, or paragraph. We would also replace certain words such as
``shall'' with ``must,'' as provided by the Federal Plain Language
Guidelines.\13\ Additionally, we would replace references to ``the
UCC'' or specific sections of the UCC with references to ``State law.''
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\13\ See Federal Plain Language Guidelines, Rev. 1, (May 2011)
on p. 25. These can be accessed at <a href="https://www.plainlanguage.gov/guidelines">https://www.plainlanguage.gov/guidelines</a>.)
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We provide a section-by-section discussion of the proposed
certification guidelines below.
Section 187.7, What are the definitions of terms used in this part?
We propose to rename this section Definitions. We propose to use most
of the existing definitions within Section 187.7 and add new
definitions from section 2 of UCOTA-V. If a definition from UCOTA-V
differs from an existing regulatory definition (for example, the term
``documented vessel'' in UCOTA-V differs from the current definition in
Sec. 187.7), we would use the definition from UCOTA-V.
The definitions from UCOTA-V that we propose adding are as follows:
<bullet> Barge;
<bullet> Builder's certificate;
<bullet> Buyer;
<bullet> Cancel;
<bullet> Certificate of title;
[[Page 52795]]
<bullet> Electronic;
<bullet> Electronic certificate of title;
<bullet> Foreign-documented vessel;
<bullet> Good faith;
<bullet> Hull damaged;
<bullet> Lien creditor;
<bullet> Office;
<bullet> Owner of record;
<bullet> Purchase;
<bullet> Purchaser;
<bullet> Record;
<bullet> Secured party of record;
<bullet> Sign;
<bullet> State of principal operation; \14\
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\14\ In UCOTA-V, this term is ``State of principle [sic] use.''
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<bullet> Title brand;
<bullet> Transfer of ownership;
<bullet> Vessel number; and
<bullet> Written certificate of title.
Subpart D heading and section titles. For clarification, we propose
to revise the heading for subpart D from ``Guidelines for State Vessel
Titling Systems'' to the more general ``State Vessel Titling Systems.''
We would also change the section titles in revised subpart D to better
align with the section titles of UCOTA-V.
Section 187.301. We propose to clarify this section by replacing
the language that says the Coast Guard ``may certify'' a State vessel
titling system if it complies with the requirements of the subpart with
``will certify.'' We propose this change because, if the State's
titling system meets the requirements of this regulation, the state has
met the Coast Guard's requirements. Thus, the Coast Guard will certify
the State's titling system, thereby fulfilling the requirements set
forth in 46 U.S.C. 31322(d)(1) for preferred mortgage status. The
purpose of this regulation is for States to take advantages of sharing
validated vessel information that meets the minimum requirements listed
in regulations.
Section 187.302 (new). We propose moving the list of terms States
must define from Sec. 187.303 to this new section to keep the
structure consistent with the rest of UCOTA-V. The new Sec. 187.302(a)
would incorporate the current requirement of Sec. 187.303 that States
define listed terms substantially as they are defined in Sec. 187.7.
The terms already listed in Sec. 187.7 would not be removed or
substantively changed, but some definitions would be rephrased, and
several new terms would be added as recommended by UCOTA-V, section
2(a), which includes a list of definitions for States to adopt
directly. In addition, the new Sec. 187.302(b) would require States to
define the terms listed in UCOTA-V section 2(b). These are general
terms derived from the UCC, which all States have adopted, or adopted
in modified form. Finally, we would add a new Sec. 187.302(c),
incorporating UCOTA-V section 2(c), stating that subpart D definitions
do not apply to any State or Federal law governing licensing,
numbering, or registration if the same term is used in that law.
Section 187.303. We would revise Sec. 187.303 to incorporate
UCOTA-V section 3 applicability provisions. As described above, the
current list of terms States must define would be moved to the new
Sec. 187.302.
Section 187.304. We would retain this section, without change, but
would rename it to better match the rest of the subpart.
Section 187.305. This section currently specifies requirements for
title applications. We would move the material on this topic to the
revised Sec. 187.307. The revised Sec. 187.305 would incorporate
UCOTA-V section 5, defining which State's law governs vessels covered
by title certificates.
Section 187.306 (new). This new section would incorporate the
UCOTA-V section 6 discussion of when a title certificate is and is not
required.
Section 187.307. The revised Sec. 187.307 would incorporate UCOTA-
V section 7 specifications for title application contents. Currently,
this section mandates certain provisions that States must impose on
vessel dealers and manufacturers. We would no longer require these
dealer- or manufacturer-specific conditions because they are covered by
the UCOTA-V provisions that we propose adopting.
Section 187.308 (new). This new section would incorporate the
UCOTA-V section 8 provisions for creating and canceling title
certificates, with the exception of optional paragraph (f), as detailed
above in the discussion of UCOTA-V section 8.
Section 187.309. Section 187.309 currently covers requirements for
voluntary title transfers (transfers other than by operation of law).
Section 187.317 currently covers title certificate contents. Under our
proposal, we would exchange these, so the revised Sec. 187.309 would
cover title certificate contents (an adaptation of UCOTA-V section 9)
and the revised Sec. 187.317 would cover requirements for voluntary
title transfers (an adaptation of UCOTA-V section 17). We propose this
change to better align with the structure of UCOTA-V.
Section 187.310 (new). This new section would incorporate UCOTA-V
section 10 title brand provisions. We would incorporate these
provisions to deter title washing and protect buyers and others
acquiring an interest in an undocumented vessel.
Section 187.311. This section currently requires new title
certificates after vessel ownership transfers by operation of law. We
propose moving this discussion to the new Sec. 187.320. The revised
Sec. 187.311 would incorporate UCOTA-V section 11 requirements for
maintenance of and access to State title certificate files.
Section 187.312 (new). This new section would incorporate UCOTA-V
section 12, concerning the duties of the State and title holder upon
creation of a title certificate.
Section 187.313. This section currently requires a State to honor
evidence of vessel ownership from another State, country, or the Coast
Guard. Under this proposal, we would move this discussion to Sec.
187.328. The revised Sec. 187.313 would incorporate UCOTA-V section
13, declaring the prima facie evidential value of title certificate
contents.
Section 187.314 (new). This new section would incorporate UCOTA-V
section 14, concerning the possession of a title certificate and
judicial process against a certificate.
Section 187.315. This section currently provides that a State title
is invalidated when exchanged for a certificate of documentation. The
revised Sec. 187.315 would incorporate UCOTA-V section 15 provisions
for perfecting vessel security interests, which is currently addressed
in Sec. 187.323.
Section 187.316 (new). This new section would incorporate UCOTA-V
section 16, concerning the termination of a security interest in a
vessel. Currently, Sec. 187.327 requires States to establish their own
termination procedures. We propose removing and reserving Sec.
187.327.
Section 187.317. To better align with UCOTA-V's structure, we would
exchange the provisions on the topics covered by Sec. 187.309 with the
topics covered by Sec. 187.317, as discussed above at Section 187.309.
Section 187.318 (new). This new section would incorporate UCOTA-V
section 18, concerning the effect of missing or incorrect title
certificate information.
Section 187.319. This section currently covers applying for
replacement or ``redundant'' title certificates. We propose moving this
topic to the new Sec. 187.322. The revised Sec. 187.319 would
incorporate UCOTA-V section 19, concerning the transfer of a vessel
ownership interest by a secured party's transfer statement.
[[Page 52796]]
Section 187.320 (new). This new section would incorporate UCOTA-V
section 20, concerning ownership interest transfers by operation of
law, which Sec. 187.311 currently contains.
Section 187.321. This section currently requires a hull
identification number to be assigned and affixed to a vessel upon proof
of its ownership. We propose replacing the existing language with a
substantively identical adaptation of UCOTA-V section 21, concerning
applications for transferring ownership or for canceling a security
interest that is not accompanied by a certificate of title. UCOTA-V
recommends more specific requirements for recording hull identification
numbers, which we would include in revised Sec. Sec. 187.307, 187.309,
187.311, 187.315, and 187.325. For example, UCOTA-V requires the State
to issue a hull identification number in cases where the State did not
issue one to the vessel owner or operator upon original construction,
such as an antique vessel built prior to November 1972.
Section 187.322 (new). This new section would incorporate UCOTA-V
section 22, concerning replacement title certificates, which is
currently addressed in Sec. 187.319.
Section 187.323. This section currently specifies procedures for
perfecting vessel security interests, which would be addressed in Sec.
187.315. The revised Sec. 187.323 would incorporate UCOTA-V section
23, concerning the rights of a vessel purchaser who is not a secured
party.
Section 187.324 (new). This new section would incorporate UCOTA-V
section 24, concerning the rights of secured parties.
Section 187.325. This section currently requires States to specify
the procedure for assigning vessel security interests, which would be
addressed in the revised Sec. 187.315(f). The revised Sec. 187.325
would incorporate UCOTA-V section 25, specifying certain requirements
for the administrative operation of a State certificating authority,
such as length of record retention and allowable fees.
Section 187.327. We would remove this section, which covers the
discharge of a vessel security interest. This topic would be covered in
the new Sec. 187.316.
Sections 187.329. We would remove this section. It is not necessary
to retain the requirement in Sec. 187.329 for States to specify
titling system forms, as UCOTA-V requirements for specific records
would appear throughout revised subpart D. An example of this is in the
title application and certificate provisions of Sec. Sec. 187.306
through 187.310.
Section 187.331. We would remove this section. Section 187.331
requires States to retain title system information and make it
available to government authorities. In the revised subpart D, similar
requirements would appear in Sec. Sec. 187.311(d) and 187.325(a).
VI. Regulatory Analyses
The Coast Guard developed this NPRM after considering numerous
statutes and Executive orders related to rulemaking. Below, we
summarize our analyses based on these statutes or Executive orders.
A. Regulatory Planning and Review
Executive Orders 12866 (Regulatory Planning and Review) and 13563
(Improving Regulation and Regulatory Review) direct agencies to assess
the costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, reducing costs, harmonizing rules, and promoting flexibility.
The Office of Management and Budget (OMB) has not designated this
rule a significant regulatory action under section 3(f) of Executive
Order 12866. Accordingly, OMB has not reviewed it. We developed an
analysis of the costs and benefits of the proposed rule to ascertain
its probable impacts. A regulatory analysis (RA) follows.
This RA provides an evaluation of the economic impacts associated
with this proposed rule. Table 1 provides a summary of the proposed
rule's costs and benefits. The Coast Guard requests public comments on
all aspects of the following analysis. In particular, the Coast Guard
requests comments on the categories of unquantified costs and benefits
and potential costs listed in Table 1 below.
Table 1--Summary of the Proposed Rule's Impacts \1\
------------------------------------------------------------------------
Category Summary
------------------------------------------------------------------------
Affected Population............... 56 States of which 18 are not
currently in compliance with VIS
requirements and 47 have not
adopted UCOTA-V (subpart D) or
started the process.
Costs (7-percent discount rate)... $138,490 (10-year discounted cost).
$19,718 (annualized cost).
Unquantified Costs \2\............ <bullet> 2 States currently have
legislative conflicts that may
impact VIS participation. While the
cost to negotiate and amend the
legislation is estimated, the cost
of labor to put forward and vote on
the privacy legislation is
difficult to quantify.
<bullet> 47 States currently have
legislative conflicts that may
impact adopting UCOTA-V. While the
cost to negotiate and amend the
legislation is estimated, the cost
of labor to put forward and vote on
the privacy legislation is
difficult to quantify.
Potential Costs \3\............... <bullet> Costs to vessel owners,
imposed by States without titling
programs (7 States), who require
vessel owners to obtain a title.
Estimated potential cost of
obtaining title is $50 (not in cost
analysis);
<bullet> Costs to vessel owners,
imposed by States without titling
programs (7 States), who may
experience opportunity costs for
labor expended to obtain a title (
not in cost analysis);
<bullet> Costs to vessel owners,
imposed by States with titling
programs (47 States), who may
impose additional costs or fees on
vessel owners (not in cost
analysis);
<bullet> Cost to States to update
website after reviewing rule (not
in cost analysis);
<bullet> Cost to States seeking to
become VIS compliant to transfer
data to the Coast Guard (included
in cost analysis).
Unquantified Benefits............. Ability to obtain preferred mortgage
status; lower transaction costs;
deterrence to ``title washing;''
recovery of stolen vessels;
identification of abandoned
vessels; consumer protection; and
security measures for financial
entities; lower administrative
burden and costs to the buyer.
------------------------------------------------------------------------
\1\ Figures are rounded to the nearest one dollar.
\2\ Unquantified costs are defined as costs that are incurred as a
direct or indirect result of the rulemaking, which are not quantified.
\3\ Potential costs are defined as costs that may potentially be
incurred as a direct or indirect result of the rulemaking.
[[Page 52797]]
This proposed rule has several goals. The Coast Guard intends to
establish minimum requirements for States electing to become subpart D-
compliant and to prescribe guidelines for State vessel titling systems.
We also intend to provide guidance on how to obtain certification of
compliance with State guidelines for vessel titling systems for the
purpose of conferring preferred status on mortgages, instruments, or
agreements under 46 U.S.C. 31322(d).
The proposed revisions would affect States that voluntarily seek to
certify their State titling laws with the Coast Guard, pursuant to
regulations under 33 CFR part 187, and to participate in the VIS. As
such, the affected population for this proposed rule would include the
56 U.S. States.
The Coast Guard has been encouraging States to participate in the
VIS since it has been in place in 2007, but some have chosen not to
participate, primarily because of privacy laws regarding the sharing of
personally identifiable information. The VIS comprises a nationwide
information system for identifying recreational, commercial, and public
vessels that are numbered. As of January 21, 2020, 38 States were
participating in the VIS.\15\ To encourage further participation,
participating States have access to all VIS data.
---------------------------------------------------------------------------
\15\ <a href="https://cgmix.uscg.mil/VISInformation.aspx">https://cgmix.uscg.mil/VISInformation.aspx</a>?VISOption. This
page was last viewed on January 22, 2020. On that date the last
update was January 21, 2020.
---------------------------------------------------------------------------
As described later, the benefits of this proposed rule would
include increased uniformity across States in their titling laws. In
turn, this would lead to a reduction in transaction costs, increased
fraud prevention (insurance fraud and fraud from illegitimately owned
vessels), increased consumer protection, a decrease in risk to lenders,
the recovery and identification of abandoned vessels, and increased
efficiencies for interstate commerce. Even through there is no new
requirement in the proposed rule for vessel owners to report vessel
damage to the VIS directly, the insurance company would be required to
provide the information to the State if the owners make claims to
repair the vessels. Once the States provide the vessel information to
the VIS, the system can track the vessel information and share with
other States if the repaired boats are sold as boats with no damage
outside the State.
More specifically, transaction costs would be lower because
consumers may be able to get preferred loans which have lower interest
rates. Also, a buyer's administrative burden and costs when buying a
vessel from a private party may be lessened because the buyer would not
have to do extensive research to assure the vessel is being sold by the
legitimate owner. In addition, some non-titling States require bonds
when vessels are sold; this transaction cost may be eliminated with the
adoption of UCOTA-V.
Affected Population
This proposed rule would potentially affect all 56 States. The
affected population of the regulated public may be parsed by VIS
participation and also by UCOTA-V adoption. As of January 21, 2020, 38
States were participating in the VIS,\16\ 16 States were interested in
joining the VIS, but had not signed a Memorandum of Agreements (MOA) on
VIS participation, and two States were not able to comply with VIS
requirements due to conflicts with their own state's privacy laws.
Regarding UCOTA-V adoption, 47 of 56 States have not adopted UCOTA-
V.\17\
---------------------------------------------------------------------------
\16\ VIS participation is defined by the existence of a signed
MOA.
\17\ The five States that have adopted UCOTA-V are Connecticut,
the District of Colombia, Florida, Hawaii, and Virginia. The four
States in the process of adopting UCOTA-V are Alabama, Georgia,
Tennessee and Texas. This data is current as of January 21, 2020.
---------------------------------------------------------------------------
Costs
The proposed rule would result in costs to the regulated public
(State and territorial governments) and to the Coast Guard. Costs to
the States may be divided between VIS compliance costs and UCOTA-V
adoption (proposed subpart D compliance) costs. The proposed rule would
not impose direct costs on vessel owners, as it would deter fraud by
introducing penalties for providing false information. However, there
is potential for indirect costs, as noted later.
Vessel owners are not required to take action as a result of the
proposal. For example, this proposed rule does not require additional
documentation from vessel owners. Transfer of title always requires a
new title to be issued, which is common practice. There is no
requirement other than a statement from the current owner declaring the
vessel is, or has been, damaged. There is no other documentation
required for proof of damage. There is no requirement for a statement
from an insurer. This merely provides disclosure to a buyer.
The proposed changes of the NPRM would lead to changes in some
States, which may have cost implications for vessel owners and the
States. Below describes the potential costs to vessel owners as a
direct or indirect result of this proposed rule.
Potential Costs to Vessel Owners
The proposed rule would affect 56 States, all of which have vessel
owners. In States that currently have a titling program for vessels,
and that participate in the VIS, vessel owners would experience no
incremental impact. In States with an existing titling program, vessel
owners would be affected if the State changes or imposes additional
fees through their legislative or regulatory process. States that are
compliant with UCOTA-V (proposed subpart D) report that they did not
impose any additional fees after the adoption of UCOTA-V provisions,
and, according to the Coast Guard's Office of Auxiliary and Boating
Safety (BSX), no State has signaled the intent to increase titling fees
if their system becomes certified as UCOTA-V compliant. However, the
Coast Guard cannot definitively conclude that recreational vessel
owners would not face a cost increase as an indirect effect of these
proposed changes. Nonetheless, we have not computed a cost due to the
proposal to vessel owners in States with a titling system, due to the
uncertainty of a potential cost increase.\18\ The Coast Guard will
revisit this evaluation further after reviewing the public comments it
receives during the comment period of this proposed rule.
---------------------------------------------------------------------------
\18\ According to BSX, recreational vehicle owners for the 10
compliant and semi-compliant States did not incur a cost increase.
---------------------------------------------------------------------------
In States without a vessel titling program, recreational vessel
owners may experience a cost increase because of this proposed rule.
These States have not indicated to the Coast Guard how they would
handle existing vessels once they have established a titling system.
Existing vessels may be grandfathered in and permitted to be titled
voluntarily by the owner, or States may require all vessel owners to
obtain a title. A review of websites for States with a titling program
demonstrated that the cost of vessel titles are generally $50 or
less.\19\ Because the Coast Guard does not have information on how
future titling programs would be operated, we have not computed the
potential costs to obtain titles in these States as a cost in this
rulemaking. We acknowledge that there may be some opportunity costs
\20\
[[Page 52798]]
for labor expended to obtain the title and actual fees for the title.
---------------------------------------------------------------------------
\19\ This statement is based on the Coast Guard's review of
website information for 52 States (March 2020). For Virginia state
fees, see <a href="https://dwr.virginia.gov/boating/registration/procedure/">https://dwr.virginia.gov/boating/registration/procedure/</a>.
For Florida state fees, see <a href="https://www.flhsmv.gov/motor-vehicles-tags-titles/vessels/vessel-titling-registrations/">https://www.flhsmv.gov/motor-vehicles-tags-titles/vessels/vessel-titling-registrations/</a>.
\20\ The use of leisure time to obtain the title. The cost of
this task may be calculated by the formula: One-half of the median
household income. The Coast Guard followed the Department of
Transportation's (DOT) guidance for valuing the opportunity cost of
leisure time. Readers should consult the DOT Memorandum ``Revised
Departmental Guidance on the Valuation of a Statistical Life,''
which may be found at <a href="https://www.transportation.gov/sites/dot.gov/files/docs/2016%20Revised%20Value%20of%20Travel%20Time%20Guidance.pdf">https://www.transportation.gov/sites/dot.gov/files/docs/2016%20Revised%20Value%20of%20Travel%20Time%20Guidance.pdf</a>.
---------------------------------------------------------------------------
No further action would be required by vessel owners. Vessel owners
do not need to renumber their vessels as a result of the proposed rule,
since existing hull numbers are unrelated to titling. No equipment is
required by vessel owners for compliance.
Table 2 below summarizes this section detailing potential costs of
the proposed rule. All are considered indirect costs, as they are costs
that may be imposed by the State on vessel owners as a result of the
proposed rule, but not mandated by the rule itself.
There are other potential costs of the rule detailed in future
section. For a comprehensive list of all potential costs, please refer
to Table 1.
Table 2--Summary of Potential Costs
----------------------------------------------------------------------------------------------------------------
Potential direct or
Task Description Party bearing cost indirect cost of
proposed rule
----------------------------------------------------------------------------------------------------------------
Obtaining a vessel title (Cost of Costs to vessel owners, Vessel owners in 7 Potential indirect cost
title). imposed by States States. of proposed
without titling rulemaking.
programs (7 States),
that require vessel
owners to obtain a
title. Potential cost
of obtaining title is
$50.
Obtaining a vessel title (opportunity Costs to vessel owners, Vessel owners in 7 Potential indirect cost
cost of obtaining title). imposed by States States. of proposed
without titling rulemaking.
programs (7 States),
who may experience
opportunity costs for
labor expended to
obtain a title.
N/A.................................. Costs to vessel owners, Vessel owners in 47 Potential indirect cost
imposed by States with States. of proposed
titling programs (47 rulemaking.
States) that may
impose additional
costs or fees on
vessel owners.
----------------------------------------------------------------------------------------------------------------
Costs to the Coast Guard
We estimate that the Government costs associated with this
regulatory action would be labor costs for the Coast Guard to: (1)
Process MOAs from the States; (2) coordinate with States; and (3)
update the Coast Guard website. No additional equipment would be needed
to perform these tasks under the proposed rule.
In order to process an MOA, it is first transmitted from the States
to a Coast Guard compliance officer in BSX and then to the Commandant
(or designee) for approval. To coordinate with the States, a Coast
Guard compliance officer would engage with and respond to inquiries
from the States. The Coast Guard estimates that a Coast Guard
compliance officer would spend 0.25 hour to process an MOA from a State
and another 0.25 hour to transmit it to the Commandant (or designee)
for approval. The Commandant or designee would spend 0.2 hour to
approve an MOA (Cost = Count of MOAs x [(0.5 hour x Compliance
officer's wage rate) + (0.2 hour x Commandant's wage rate)]).
As a result of this proposal, we estimate that the Coast Guard
would need to engage with, respond to inquiries, and coordinate with
States regarding VIS participation and UCOTA-V compliance. Eighteen
States are not in the VIS We estimate that a Coast Guard compliance
officer would need to coordinate with each of these States for VIS
participation.\21\ To engage with and respond to inquiries from States,
we estimate that the compliance officer would spend 0.5 hour per
State's inquiry to coordinate a response (Cost = 18 States x (0.5 hour
x Compliance officer's wage rate)). For the 47 States needing to adopt
UCOTA-V, we estimate that a Coast Guard compliance officer would spend
0.5 hour per State to assist (Cost = 47 States x (0.5 hour x Compliance
officer's wage rate)).
---------------------------------------------------------------------------
\21\ Readers may consult Coast Guard data at <a href="https://cgmix.uscg.mil/VISInformation.aspx">https://cgmix.uscg.mil/VISInformation.aspx</a>. This web page was last viewed on
January 21, 2020. Sixteen States have initiated VIS participation,
but have not completed an MOA. Two States do not participate.
---------------------------------------------------------------------------
Lastly, the Coast Guard would need to update its website with
information on this proposed rule. We estimate that 1 hour would be
needed by a computer technician and an additional 0.25 hour for a
compliance officer to supervise and approve the update. This is a one-
time task that is expected to occur in the first year of the final
rule's enactment (Cost = [(0.25 hour x Coast Guard compliance officer's
wage rate) + (1 hour x Federal computer technician's wage rate)]).
Table 3--Summary of Costs to the Coast Guard
----------------------------------------------------------------------------------------------------------------
Time burden and Applicable Direct or indirect cost
Task responsible party Cost population of proposed rule
----------------------------------------------------------------------------------------------------------------
Process MOA from States....... 0.25 hours to (0.5 hours x USCG One-time cost to Direct.
process MOA Compliance the Coast Guard
(USCG Compliance officer's wage for all 56
officer). rate) + (0.2 States.
0.25 hours to hour x
transmit for Commandant or
approval (USCG designee's wage
Compliance rate) x 56
officer). States.
0.2 hours for
approval
(Commandant or
designee).
[[Page 52799]]
Coordinate with States........ 0.5 hours for 18 18 States x (0.5 One-time cost to Direct.
States without hour x USCG the Coast Guard
VIS (USCG Compliance for 18 States.
Compliance officer's wage One-time cost to
officer). rate). the Coast Guard
0.5 hours for 47 47 States x (0.5 for 47 States.
States needing hour x USCG
to adopt UCOTA-V Compliance
(USCG Compliance officer's wage
officer). rate).
Update Coast Guard Website.... 1 hour to update 0.25 hour x USCG One-time cost to Direct.
(Federal compliance the Coast Guard.
computer officer's wage
technician). rate) + (1 hour
0.25 hours to x Federal
approve (USCG computer
Compliance technician's
officer). wage rate.
----------------------------------------------------------------------------------------------------------------
Costs to the Regulated Public (States)
Compliance with the proposed rule would require a variety of tasks
by the regulated public. This section documents the Coast Guard's
assessment of the proposed rule's changes and the steps States would
need to take as a result. Not all tasks would need to be carried out by
all the States. In this section, the Coast Guard notes first the tasks
that apply to all States. Next are the tasks that result from the
proposed rule. We split these tasks into categories to better calculate
the costs, since some tasks apply to some States and others apply to
other States, depending on their current level of compliance with
existing rules.
Below is a list of all costs to the regulated public:
Costs to the Regulated Public--States
All 56 States would need to be familiarized with the proposed rule
and complete the task of reviewing the State's website. Upon review of
the State's procedures and websites, some States may need to make
updates. These are discussed in more detail below.
The Coast Guard estimates that States would spend 0.5 hour to
become familiarized with the proposed rule.\22\ A manager would perform
this task. A manager would spend another 0.5 hour to review the State's
procedures and website to make a determination if anything would need
to change in response to the proposed rule (Cost = 56 States x 0.5 hour
x State manager's wage rate). All 56 States may potentially need to
update their websites, which would be accomplished by a computer
technician. The Coast Guard estimates that this task would take 1 hour
and would be performed by a computer technician at the direction of a
manager.\23\ However, as the Coast Guard does not have an estimate on
how many States would need to update their website, the cost is
considered only a potential cost and is not factored into the cost
analysis.
---------------------------------------------------------------------------
\22\ This estimate is based on a previous Coast Guard
rulemaking. In the 2014 final rule for Personal Flotation Devices
Labeling and Standards (79 FR 56491), the Coast Guard estimated that
the task would take 0.5 hour (<a href="https://www.federalregister.gov/documents/2014/09/22/2014-22373/personal-flotation-devices-labeling-and-standards">https://www.federalregister.gov/documents/2014/09/22/2014-22373/personal-flotation-devices-labeling-and-standards</a>). Time estimate can be found under Table 2, ``State
Regulatory Review''. No public comments were received on this
estimate. This page was last viewed on May 21, 2021.
\23\ The Coast Guard estimates a manager would spend 0.25 hour
to provide direction and supervise and approve the work of a
computer technician.
---------------------------------------------------------------------------
Although not explicitly required, some States may send email
notifications or a press release to interested parties (e.g., such as
the media, recreational boaters, boating associations, the Coast Guard
Auxiliary, etc.) Another 0.5 hour is estimated for a State manager to
write a notification of regulatory change for the public.\24\ We
estimate these as one-time costs to the State.
---------------------------------------------------------------------------
\24\ This estimate is based on the Coast Guard's rule for
Tankers Automatic Pilot Systems (83 FR 55272). Please see <a href="https://www.federalregister.gov/documents/2018/11/05/2018-24127/tankers-automatic-pilot-systems">https://www.federalregister.gov/documents/2018/11/05/2018-24127/tankers-automatic-pilot-systems</a>, Table 3, ``Write Notification of Regulatory
Change'', 4th Entry (0.5 hours). This estimate is defined as
``Communicate regulatory change'', which is an identical task
undertaken by the State manager. This page was last viewed on May
21, 2021).
Table 4--Summary of Costs to States
----------------------------------------------------------------------------------------------------------------
Time burden and Applicable Direct or indirect cost
Task responsible party Cost population of proposed rule
----------------------------------------------------------------------------------------------------------------
Become familiarized with rule. 0.5 hours State Cost = (56 States One-time cost to Direct.
manager. x 0.5 hour x all 56 States.
State manager's
wage rate) + (56
States x 0.5
hour x State
manager's wage
rate).
Review website................ 0.5 hours State Direct.
manager.
Update website (Not included 1 hour Computer Cost = 1 hour x Potential one- Potential direct cost.
in cost analysis). technician. 56 States x time cost to
Computer all 56 States.
Technician's
wage rate.
Notification of change........ 0.5 hours State Cost = 0.5 hour x One-time cost to Direct.
manager. 56 States x all 56 States.
State manager's
wage rate.
----------------------------------------------------------------------------------------------------------------
[[Page 52800]]
Costs to the Regulated Public--States (VIS Compliance Costs)
Based on BSX data,\25\ we estimate that there are two States
currently not in compliance with any existing VIS requirements. Some
States are in partial compliance with existing requirements for the
VIS. Coast Guard data demonstrates that 16 States have initiated VIS
participation, but are not in compliance because they do not have a
signed MOA with the Coast Guard. The remaining 38 States have signed
MOAs, which means they are participating in the VIS.
---------------------------------------------------------------------------
\25\ <a href="https://cgmix.uscg.mil/VISInformation.aspx">https://cgmix.uscg.mil/VISInformation.aspx</a>. This web page
was last viewed on January 8, 2020.
---------------------------------------------------------------------------
The 16 States that have initiated VIS activity, but do not have a
signed MOA with the Coast Guard, would need to complete the following
steps for an MOA. In order to comply, States would incur costs to: (1)
Coordinate with the Coast Guard for data transfer; (2) prepare and
submit a completed MOA and participation form; and (3) engage in
coordination activities to complete a new user request form.
All the VIS-participating States would engage in activities to
upload data to the VIS. However, according to Info-Link
Technologies,\26\ the contractor responsible for VIS updates, VIS data
uploads for each State are often an automated process, where software
automatically prepares and uploads a data file each month. The economic
impact of the data submission is zero as a result of Info-Link
Technologies already bearing the cost for the data, which they receive
from every State regardless of their participation in VIS. Thus, States
that do not currently participate in VIS still engage in a virtual data
submission with the contractor and will not incur an additional cost or
time burden. As a result, we conclude that VIS data uploads would not
produce costs to States new to VIS.
---------------------------------------------------------------------------
\26\ Email from Info-Link Technologies, Inc. to William Burgess,
Compliance Officer, CG-BSX-1 dated February 5, 2020 (available in
the docket where indicated under the Public Participation and
Request for Comments portion of this NPRM).
---------------------------------------------------------------------------
New VIS participants would need to complete the new user request
form. We estimate that it would take 0.1 hour to complete the form.
These estimates are based on data provided by Info-Link Technologies
and the Coast Guard's Collection of Information entitled ``Vessel
Identification System,'' OMB Control Number: 1625-0070.\27\
---------------------------------------------------------------------------
\27\ During the renewal process for the collection of
information request, no public comments were received on the
estimate. In preparing this NPRM, the Coast Guard reviewed data and
revised the estimate for the duration of labor to upload VIS data.
The revision better reflects the amount of time needed to perform
periodic uploads of automated data.
---------------------------------------------------------------------------
Lastly, two States would have to address legislative conflicts with
existing privacy laws that complicate or prevent VIS participation. We
estimate that such a task would require that a manager to negotiate the
changes with a State legislative committee. An attorney would draft the
legislation. Unlike UCOTA-V, which has uniform legislation to follow
for each State, privacy law amendments may take more time to develop.
Therefore, we estimate that a manager would spend 40 hours to negotiate
legislative changes. Another 40 hours would be spent by an attorney to
draft the legislative language. State laws are often voted in blocks
and the labor to put the amended privacy legislation forward and to
vote on it is considered to be unseverable. For that reason, we have
not estimated a cost for this step. However, the Coast Guard would like
to request comments from the public on any information regarding the
estimated cost to draft and negotiate legislative changes. Presently,
we use our current estimates for drafting and negotiating these changes
but omit the cost of labor to put forward and vote on the legislation.
We computed a cost to transmit VIS data to the Coast Guard for 18
States on the basis that States may correspond with the Coast Guard to
initiate the data transfer or may have issues in their computer systems
preventing automatic data transfer. In the event that this occurs, the
State may send spreadsheets to the Coast Guard, and a technician
contracted to the Coast Guard would upload the data. However, we
acknowledge that this is already a task under existing regulations and,
in most cases, data is automatically transmitted.
Table 5--Summary of Costs
[VIS compliance]
----------------------------------------------------------------------------------------------------------------
Direct or
Task Time burden and Cost Applicable population indirect cost of
responsible party proposed rule
----------------------------------------------------------------------------------------------------------------
Prepare and submit an MOA...... 16 hours (State 18 States x (16 One-time cost for 18 Direct.
manager). hours x State States.
Manager wage
rate).
Complete New User request form. 0.1 Hour (State 18 States x (0.1 One-time cost for 18 Direct.
manager). hour x State States.
Manager wage
rate).
Coordinate with Coast Guard for 1 hour (State 18 States x (1 Potential one-time Direct
data transfer. manager). hour x State cost for States with (Potential).
Manager wage issues with the
rate). automatic data
transfer. (Even
though considered
potential, included
in cost analysis due
to potential
correspondence to
initiate data
transfer or issues
with automatic data
transfer).
Draft legislative language to 40 hours (State 2 States x [(40 One time cost for 2 Direct.
amend privacy laws. manager) 40 hours x State States.
hours (State Manager wage
attorney). rate) + (40
hours x State
attorney wage
rate)].
----------------------------------------------------------------------------------------------------------------
[[Page 52801]]
Costs to the Regulated Public--States in UCOTA-V Adoption (Proposed
Subpart D Compliance)
We base our cost estimates on all 56 States choosing to adopt
UCOTA-V. As of January 16, 2020, five States have adopted UCOTA-V, and
five States are developing legislation to become UCOTA-V-compliant.\28\
Many of the remaining States have reported that they are waiting for
the Coast Guard to promulgate a rule on UCOTA-V before going through
the legislative process. In addition, States often wait for their
neighboring States to adopt legislation that potentially has effects
across State borders. Insurers and manufacturers have lobbied for the
changes. For these reasons, the Coast Guard estimates that all 56
States would adopt UCOTA-V.
---------------------------------------------------------------------------
\28\ Email from Uniform Law Commission to William Burgess,
Compliance Officer, Coast Guard (January 16, 2020) (available in the
docket where indicated under the Public Participation and Request
for Comments portion of this NPRM).
---------------------------------------------------------------------------
Currently, 47 States have not adopted UCOTA-V nor initiated
legislation to adopt UCOTA-V. The cost analysis of UCOTA-V adoption
focuses solely on these 47 States. In order to comply with the proposed
rule, States would need to develop legislation and amend their computer
systems to comport with UCOTA-V. As noted earlier, all States would
post information on their website about this rulemaking; that task
appears in a preceding section of this analysis.
In order to develop UCOTA-V legislation,\29\ a State would require
the labor of an attorney \30\ to draft the legislation \31\ for a State
legislative committee to begin the legislative process. The Uniform Law
Commission has developed legislative text for UCOTA-V which each State
may use to develop its respective State law. For this reason, the labor
for each State is relatively low. We estimate that an attorney would
spend approximately 24 hours \32\ to draft the legislative language.
Given that State laws \33\ are often voted in blocks, the labor to put
UCOTA-V legislation forward and to vote on it is considered to be
unseverable and, for that reason, we have not estimated a further cost
on developing legislation.
---------------------------------------------------------------------------
\29\ For all uniform acts, the State's legislative drafting
office mainly formats the bill to conform to the State's required
format and fill in bracketed areas of the text. The Uniform Law
Commission (ULC) (<a href="https://www.uniformlaws.org/home">https://www.uniformlaws.org/home</a>) also includes
italicized legislative notes when they format the bill for the
particular State. This allows the time to draft the bill to be
relatively shorter than with other regulations.
\30\ Each State has its own legislative drafting agency
responsible for drafting legislation. The bill drafters are
attorneys who draft bills for all the state legislators.
\31\ As this is part of the State's normal legislative process,
we do not anticipate any additional fees beyond the normal process
for these bills.
\32\ This estimate comports with previous estimated durations of
making legislative changes at the State level. In the final rule for
Personal Flotation Devices Labeling and Standards (79 FR 56491,
USCG-2013-0263, RIN 1625-AC02), Coast Guard estimated that a change
by legislative would take 10 hours. No public comments were received
on this estimate. Please see <a href="https://www.federalregister.gov/documents/2014/09/22/2014-22373/personal-flotation-devices-labeling-and-standards">https://www.federalregister.gov/documents/2014/09/22/2014-22373/personal-flotation-devices-labeling-and-standards</a>). The Coast Guard adjusted this estimate to reflect
the more complex nature of this change.
\33\ Some States may delegate the approval process of such
changes to an administrative law committee rather than vote on it in
the legislature. The process to develop the law and to put it
forward for voting would be the same.
---------------------------------------------------------------------------
States adopting UCOTA-V would need to update their procedures and
websites to reflect the resulting changes. We estimate that 5 hours
would be spent by a State manager to review and edit State procedures,
manuals, policy documents and other information (Cost = (47 States x 5
hours x State manager's wage rate).\34\
---------------------------------------------------------------------------
\34\ This estimate comports with previous estimated durations of
reviewing and editing manuals and policy documents. The Coast Guard
reviewed previously approved OMB collections for the final rule for
Marine Vapor Control Systems (RIN 1625-AB37, USCG-1999-5150, 80 FR
7539), the proposed rule for Revision of Crane Regulation Standards
(RIN 1625-AB78, USCG-2011-0992, 78 FR 27913) and the final rule for
Personal Flotation Devices Labeling and Standards (79 FR 56491,
USCG-2013-0263, RIN 1625-AC02, 78 FR 27913). Previously approved
collections of information may be found at Information Collection
Review (<a href="http://reginfo.gov">reginfo.gov</a>). No public comments were received on these
estimates. The Coast Guard adjusted its estimate to reflect changes
in complexity of the task.
---------------------------------------------------------------------------
The remaining UCOTA-V compliance costs items would be: (1) Labor
for a manager to coordinate with the Coast Guard to ensure the State's
program meets UCOTA-V certification requirements (Cost = 47 States x
(0.5 hour x State manager's wage rate)); (2) labor for an
administrative assistant and a manager to assist with the conversion or
update to a subpart D-compliant system (Cost = 47 States x [(0.25 hour
x administrative assistant's wage rate) + (0.75 hour x State manager's
wage rate)]); (3) labor for a manager to oversee conversion to a
subpart D-compliant system (Cost = 47 States x 0.25 hour x State
manager's wage rate); and (4) labor for a software developer to convert
the system to a subpart D compliant system (Cost = 47 States x (12.6
hours x computer technician's wage rate)). These tasks and their
calculations are shown in table 6.\35\
---------------------------------------------------------------------------
\35\ According to BSX, most States use an ``off the shelf''
system, so changes are easy and menu driven. Some States have older
systems which would take more time to adjust, but the older systems
are the exception, not the rule. The Coast Guard estimates the
average number of hours of labor for a computer technician by using
the average time spent on design and coding from a University of
South Carolina study on software developers. Readers can find the
study at: <a href="https://cse.sc.edu/job/how-software-developers-really-spend-their-time">https://cse.sc.edu/job/how-software-developers-really-spend-their-time</a>. The study uses the average number of hours per
week software developers spend designing and coding software. The
Coast Guard considers this to be a reasonable rough proxy for the
purpose of this analysis.
---------------------------------------------------------------------------
For the 7 States that do not have an existing titling program, the
labor tasks for amending State's computers to comport with UCOTA-V
would be greater. We estimate that 24 hours would be spent by a
computer technician in these States to amend the State's computers to
comport with UCOTA-V, and that a manager would spend another 0.5 hour
to review and approve the work. The Coast Guard requests comments from
States on their assessment of tasks and costs that would result from
the proposed rule.
BSX routinely contacts States regarding their vessel titling
systems. There are currently 45 States titling vessels and 1 State that
makes titling optional.\36\ Provided that these States become compliant
with the recent regulatory changes in the Standard Numbering System,
Boating Accident Report Database, and VIS (33 CFR parts 173, 174, 181,
and 187) by the required date, any changes made to the current titling
systems should be minimal.
---------------------------------------------------------------------------
\36\ Email from NASBLA Vessel Registration, Identification, and
Titling Committee (VIRT) to William Burgess, Compliance Officer,
Coast Guard, February 10, 2010. Available in the docket where
indicated under the Public Participation and Request for Comments
portion of the preamble.
---------------------------------------------------------------------------
Coast Guard personnel attended the National Association of State
Boating Law Administrators Workshop held in Lexington, KY from 23 to 28
February 2020. Approximately 40 boating administrators from the States
were in attendance, and 4 stated they were contemplating adopting
UCOTA-V. The four states are Wisconsin, Minnesota, Alaska, and South
Carolina. None of these 4 states have conducted a complete cost
analysis, but the initial projected cost ranged from minimal to about
$8,000.
The primary changes required would include the ability to mark a
title as ``branded,'' and to add any numbered vessels that are not
currently required to be titled. For example, Virginia adopted UCOTA-V
and reprogrammed their system to accept the ``branded'' designation.
According to the State of Virginia's Boating Law Administrator
[[Page 52802]]
(BLA),\37\ this was accomplished at no cost to the State.\38\
---------------------------------------------------------------------------
\37\ According to the Virginia BLA, updates to the system are
included as a part of routine information technology maintenance.
<a href="https://community.nasbla.org/blogs/thomas-guess/2018/08/23/ucotva-in-virginia">https://community.nasbla.org/blogs/thomas-guess/2018/08/23/ucotva-in-virginia</a>. The website is dated August 23, 2018. This page was
last viewed on February 5, 2020.
\38\ The governor of each State appoints a single agency to be
the recipient and administrator of grant funds received from the
State Recreational Boating Safety Grant Program, which is authorized
under 46 U.S.C. Chapter 131. These State agencies in turn appoint a
BLA to be the State's single point of contact for the purposes of
administering the grant program. Although duties can vary from State
to State, their primary function is to administer the recreational
boating safety program within the State. Every State and territory
of the United States has an assigned BLA. The BLA for Virginia is an
employee with the Virginia Department of Game and Inland Fisheries.
---------------------------------------------------------------------------
The remaining 11 States that do not currently title vessels do
title vehicles, and their vehicle titling systems could add vessels. As
an example, Connecticut (previously a non-titling State) adopted UCOTA-
V and its Department of Motor Vehicles began issuing titles for
vessels.\39\ This process is analogous to registering a motor vehicle.
In other words, at the time a person buys a car, the owner must
register and title the car with the cognizant state. Likewise, a vessel
owner would now be able to register and title vessel at the same time
and in the same place. Connecticut did not incur any new costs
associated with this transition since it used the existing
infrastructure, and the change was completed as a part of an
information technology update as per the State BLA.\40\
---------------------------------------------------------------------------
\39\ No changes would be required to any State's systems to
facilitate population of the VIS. Data received from the States for
inclusion in the VIS would be handled by the Coast Guard contractor
and reformatted as necessary to populate the VIS database. We do not
expect States to incur additional costs as the cost is already
captured under the existing Coast Guard long-term contract for
management and maintenance of the VIS.
\40\ Conversation at the Boating Law Administrators Workshop
(circa February 28, 2018 to March 1, 2018) with Ms. Eleanor Mariani,
Boating Law Administrator, Connecticut, and William Burgess,
Compliance Officer, Coast Guard.
---------------------------------------------------------------------------
The 10 States that have adopted or have begun adopting the UCOTA-V
model have engaged in the tasks noted in this text as costs of
compliance. For example, they have already collaborated with the Coast
Guard regarding their vessel titling system updates. These States would
not incur additional costs because they elected to adopt the UCOTA-V
model prior to this regulation. These States would not require the use
of a computer technician to upgrade the computer system because the
conversion has taken place already. No further actions would be needed
by States in this situation. As noted earlier, these States would
already be familiar with and would have reviewed their existing
procedures as a result of the rulemaking. The Coast Guard invites
comments on any additional costs that would be incurred by States that
are currently (pre-proposal) in the process of adopting UCOTA-V.
Table 6--Summary of Costs for Subpart D Compliance
----------------------------------------------------------------------------------------------------------------
Time burden and Applicable Direct or indirect
Task responsible party Cost population cost
----------------------------------------------------------------------------------------------------------------
Draft UCOTA-V legislative 2 hours (State 47 States x [(2 One-time cost for Direct.
language. manager) 5 hours hours x State 47 States.
(State attorney). manager wage
rate) + (5 hours
x State attorney
wage rate)].
Coordinate with Coast Guard for 0.5 hours (State 47 States x (0.5 One-time cost for Direct.
compliance and certification. manager). hour x State 47 States.
manager wage
rate).
Assist with update and convert 0.25 hours (admin 47 States x [(0.25 One-time cost for Direct.
to compliant computer system. assistant) 0.75 hour x admin 47 States.
hours (State assistant wage
manager). rate) + (0.75
hour x State
manager wage
rate)].
Oversee update or conversion to 0.25 hours (State 47 States x (0.25 One-time cost for Direct.
compliant system. manager). hour x State 47 States.
manager wage
rate).
Update or convert to a compliant 12.6 hours 47 States x (12.6 One-time cost for Direct.
system. (computer hours x computer 47 States.
technician). technician wage
rate).
Amend State's computers to 2 hours (computer 7 States x [(2 One-time cost for Direct.
comport with UCOTA-V. (Applies technician) 0.25 hours x computer 7 States.
to States without an existing hours (State technician wage
titling program.). manager). rate) + (0.25
hour x State
manager wage
rate)].
Update State procedures or 5 hours (State 47 States x (5 One-time cost for Direct.
processes.. manager). hours x State 47 States.
manager wage
rate).
Post updated procedures on 0.25 hours (State 24 States x [(0.25 One-time cost for Direct.
website.. manager) 1 hour hour x State 24 States.
(computer manager wage
technician). rate) + (1 hour x
computer
technician wage
rate)].
----------------------------------------------------------------------------------------------------------------
Cost Calculations for the Proposed Rule
We discuss the derivation of cost data in the following paragraphs.
We estimate the approximate loaded hourly labor rates of State
employees as follows: Manager ($94.30); administrative assistant
($33.81); computer technician ($67.98); and lawyer ($124.57). The
loaded wage factor is 1.74 for non-managerial State workers and 1.56
for managers at the State level, based on Bureau of Labor Statistics
(BLS) data. See table 7 for details.
[[Page 52803]]
Table 7--Loaded Wage Factor Calculation (2020 dollars)
----------------------------------------------------------------------------------------------------------------
Total Wage & Loaded wage
Personnel category Data source(s) \1\ compensation salaries factor
----------------------------------------------------------------------------------------------------------------
All Workers, State and Local BLS Employer Costs for $51.54 $29.546 1.74
Government. Employee Compensation,
all workers in State
and Local Government.
Managers, State and Local Government.. BLS Employer Costs for 64.02 41.02 1.56
Employee Compensation,
Managers in State and
Local Government.
Coast Guard Uniform Positions......... 2020 Military Active & .............. .............. 1.85
Reserve Component Pay
Tables \2\.
----------------------------------------------------------------------------------------------------------------
\1\ A loaded wage rate is what a company pays per hour to employ a person, including the hourly wage and the
cost of benefits (health insurance, vacation, etc.). To calculate the load factor, we used the series IDs
CMU3019200000000D (for all workers) and CMU3010000100000D (for managers, professions and related
occupations'') using the multi-screen database. Visit Employer Cost for Employee Compensation: Multi-Screen
Data Search: U.S. Bureau of Labor Statistics (<a href="http://bls.gov">bls.gov</a>)/and select ``State and local government workers''.
Select ``Total Compensation'' and ``Wages and salaries''. Select ``All workers'' or ``Managers, professional,
and related occupations''. Select ``Public Administration''. Select ``All workers''. Select ``United States''.
Select ``Cost of Compensation''. Select ``Not seasonally adjusted''. Finally, use values for the 4th Quarter
of 2020 to calculate the load factor by dividing total compensation by wages and salaries.
\2\ <a href="https://www.dfas.mil/militarymembers/payentitlements/Pay-Tables.html">https://www.dfas.mil/militarymembers/payentitlements/Pay-Tables.html</a>. Data was posted on December 30, 2019
and web page was last updated January 27, 2020. This page was last viewed on February 20, 2020.
For all provisions with costs to the Government, we use publicly
available data found on OPM's website under ``Policy, Data, and
Oversight'' and in the Congressional Budget Office's report,
``Comparing the Compensation of Federal and Private-Sector Employees,
2011 to 2015.'' We estimate labor costs attributed to the Government
Coast Guard compliance officers, GS-14 managers, GS-13 computer
technicians, and the Commandant. We estimate the fully loaded labor
costs for a GS-13 and GS-14 compliance officer at $71.03 and $79.48
respectively.\41\ We use a weighted average of the wage rates ($73.14)
for calculations. We estimate the wage rate for a GS-14 manager at
$79.48, the wage rate for a GS-13 computer technician at $79.48, and
the wage rate for the Commandant (O-10) at $163. This figure represents
a loaded wage rate for uniformed Coast Guard positions.\42\
---------------------------------------------------------------------------
\41\ General Schedule (Pay & Leave: Salaries & Wages--OPM.gov).
Labor costs calculated by 1) finding hourly wage rate for GS-level
under ``2020 General Schedule (Base)''. Choose Step 5 value. 2) To
calculate load factor, we go to <a href="https://www.cbo.gov/system/files/115th-congress-2017-2018/reports/52637-federalprivatepay.pdf">https://www.cbo.gov/system/files/115th-congress-2017-2018/reports/52637-federalprivatepay.pdf</a>. Use
tables 2 and 4. Divide the total compensation by the wages for a
Federal employee. Multiply by hourly wage rate obtained from OPM.
GS-13 falls under ``Master's Degree'' and GS-14 falls under
``Professional/Doctorate Degree''. For the Master's Degree we end up
with a benefits to wage ratio, using this method, of $74.80/$45 =
1.66 and for the Professional/Doctoral Degree of $81.70/$51.90 =
1.56. Using these to obtain a fully burdened rate, we end up, for
the GS-13 labor, $42.73 x 1.66 = $ $71.03 and, for the GS-14 labor,
$50.49 x 1.56 = $79.48.
\42\ The load factor for uniformed positions is based on the
Coast Guard's analysis of compensation and benefits of Coast Guard
enlisted and commissioned personnel based on data found in <a href="https://www.dfas.mil/militarymembers/payentitlements/Pay-Tables.html">https://www.dfas.mil/militarymembers/payentitlements/Pay-Tables.html</a>. This
page was last viewed on December 20, 2019.
---------------------------------------------------------------------------
For positions outside the Coast Guard, we use publicly available
data from the BLS Occupational Compensation Survey to estimate wage
rates for State and local positions that would be impacted by the
proposed rule. We present the estimated wage rates and a summary of the
data for the proposed rule in table 8.
Table 8--Loaded Wage Calculation
[$2020]
----------------------------------------------------------------------------------------------------------------
Mean hourly
Personnel category Data source(s) \1\ wage Load factor Loaded wage
----------------------------------------------------------------------------------------------------------------
Computer Developer................. Software Developers, $54.94 1.74 $95.60
Applications (OC 15-1256)
\2\.
Administrative Support............. Secretaries and 19.43 1.74 33.81
Administrative Assistants,
Except Legal, Medical, and
Executive (OC 43-6014) \3\.
General Manager.................... General and Operations 60.45 1.56 94.30
Managers (OC 11-1021) in
Management Occupations \4\.
Lawyer............................. Lawyers, Judges, and 1.74 124.57
Related Workers (OC 23-
1011) in the Legal
Occupations.\5\.
Coast Guard Commandant (O-10)...... Military Active & Reserve 1.85 163
Component Pay Tables \6\.
Civilian Computer Technician (GS- OPM Salary Table (2020).... 42.736 1.66 71.03
13).
Civilian Manager (GS-14)........... OPM Salary Table (2020).... 50.49 1.57 79.48
Coast Guard Compliance Officer (GS- OPM Salary Table (2020).... 42.73 1.66 71.03
13).
Coast Guard Compliance Officer (GS- OPM Salary Table (2020).... 50.49 1.57 79.48
14).
Coast Guard Compliance Officer Weighted average by the .............. .............. 73.14
(average) \7\. formula: [(0.75 x $71.03
GS-13 Compliance Officers'
wage rate) + (0.25 x
$79.48 GS-14 Compliance
Officers' wage rate)].
----------------------------------------------------------------------------------------------------------------
\1\ To calculate the loaded wages, we used Occupational Code 11-1021 (General and Operations Managers) for
general managers, Occupational Code 43-6014 (Secretaries, Except Legal, Medical, and Executive) for clerical,
and Occupational Code 15-1256 (Software Developers and Software Quality Assurance Analysts and Testers) for
computer developer. Please see footnotes of Table 7 for instructions on calculating load factors.
[[Page 52804]]
\2\ Software Developers and Software Quality Assurance Analysts and Testers (<a href="http://bls.gov">bls.gov</a>).
\3\ Secretaries and Administrative Assistants, Except Legal, Medical, and Executive (<a href="http://bls.gov">bls.gov</a>).
\4\ General and Operations Managers (<a href="http://bls.gov">bls.gov</a>).
\5\ Lawyers (<a href="http://bls.gov">bls.gov</a>).
\6\ <a href="https://www.dfas.mil/militarymembers/payentitlements/Pay-Tables.html">https://www.dfas.mil/militarymembers/payentitlements/Pay-Tables.html</a>.
\7\ Coast Guard compliance officers consist of GS-13s and GS-14s. There are four Coast Guard employees who would
complete this requirement (three GS-13s and one GS-14). To calculate the in-government wage rate, we
calculated three-fourths of the GS-13 in-government wage rate ($71.03) and one-fourth of the GS-14 in-
government wage rate ($79.48) and added them together to estimate a more accurate wage rate for the team that
would complete this process.
We estimate the costs in this RA in 2020 dollars based on BLS wage
rates. We estimate the total cost for States to be $182,607,
undiscounted (not including Government costs). We estimate the total
Government costs associated with this proposed rule to be $14,537. We
show the summary of compliance costs in Table 9.
Table 9--Estimated Cost of Proposed Rule \1\
----------------------------------------------------------------------------------------------------------------
CFR citation Task \2\ Cost calculation Total costs
----------------------------------------------------------------------------------------------------------------
Costs to Regulated Public
(States):
General Compliance Costs (All
States) (See Table 3) (One-
time costs for States):
33 CFR 187................ Become familiar with NPRM. 56 States x (0.5 hour x $2,640
$94.30/hour State
manager).
33 CFR 187................ Review procedures and 56 States x (0.5 hour x 2,640
website. 94.30/hour State
manager).
33 CFR 187................ Write press release or 56 States x (0.5 hour x 2,640
email. 94.30/hour State
manager).
33 CFR 187................ Update website. (Potential 56 States x (1 hour x Not in cost
cost, not used in 95.60/hour computer calculations
analysis). technician).
----------------------
Subtotal--General .......................... ......................... $7,921
Compliance Costs
(States).
VIS Compliance Costs (States)
(See Table 5) (One-time costs
for States):
33 CFR 187.7.............. Prepare and submit an MOA. 18 States x (16 hours x 27,158
94.30/hour State
manager).
33 CFR 187.7.............. Complete New User request 18 States x (0.1 hour x 170
form. 94.30/hour State
manager).
33 CFR 187.7.............. Coordinate with Coast 18 States x (1 hour x 1,697
Guard for data transfer. 94.30/hour State
(Potential cost, but used manager).
in analysis).
33 CFR 187.7.............. Draft legislative language 2 States x [(40 hours x 17,510
to amend privacy laws. 94.30/hour State
manager) + (40 hours x
124.57/hour State
attorney)].
33 CFR 187.7.............. Put forward and vote on Applies to 2 States...... Unquantified
the privacy legislation.
----------------------
Subtotal--VIS .......................... ......................... 46,535
Compliance Costs
(States).
UCOTA-V Adoption (Proposed
Subpart D) Compliance Costs
(States) (See Table 6) (One-
time costs for States):
33 CFR 187.306............ Draft UCOTA-V legislative 47 States x [(2 hours x 38,138
language. 94.30/hour State
manager) + (5 hours x
124.57/hour State
attorney)].
33 CFR 187.306............ Put forward and vote on Applies to 47 States..... Unquantified
the privacy legislation.
33 CFR 187.306............ Coordinate with Coast 47 States x (0.5 hour x 2,216
Guard for compliance and 94.30/hour State
certification. manager).
33 CFR 187.312............ Assist with update and 47 States x [(0.25 hour x 3,721
convert to compliant 33.81/hour admin
system. assistant) + (0.75 hour
x 94.30/hour State
manager)].
33 CFR 187.312............ Oversee update or 47 States x (0.25 hour x 1,108
conversion to compliant 94.30/hour State
system. manager).
33 CFR 187.312............ Update or convert to a 47 States x (12.6 hours x 56,614
compliant system. 95.60/hour computer
technician).
33 CFR 187.312................ Amend State's computers to 7 States x [(2 hours x 1,503
comport with UCOTA-V. 95.60/hour computer
technician) + (0.25 hour
x 94.30/hour State
manager)].
[[Page 52805]]
33 CFR 187.................... Update procedures or 47 States x (5 hours x 22,161
processes. 94.30/hour State
manager).
33 CFR 187.................... Post updated procedures on 24 States x [(0.25 hour x 2,860
website. 94.30/hour State
manager) + (1 hour x
95.60/hour computer
technician)].
----------------------
Subtotal: UCOTA-V .......................... ......................... 128,321
(Proposed Subpart D)
Compliance Costs (States).
Total Cost for .......................... ......................... 182,607
Regulated Public
(States).
Federal Government Costs (One-time
cost to Government for States
affected):
33 CFR 187.306................ Process New User request 18 States x (0.5 hour x 658
from States. 73.14/hour Compliance
Officer).
33 CFR 187.306................ Process an MOA from States 18 States x [(0.2 hour x 11,448
163/hour Commandant) +
(8.25 hours x 73.14/hour
Compliance Officer)].
33 CFR 187.306................ Coordinate with 18 States 18 States x (0.5 hour x 658
for VIS. 73.14/hour Compliance
Officer).
33 CFR 187.312................ Coordinate with 47 States 47 States x (0.5 hour x 1,682
on UCOTA-V certification. 73.14/hour Compliance
Officer).
33 CFR 187.................... Update Coast Guard's (1 hour x 71.03/hour 91
website. (Initial year computer technician) +
cost). (0.25 hour x 79.48/hour
Federal manager).
Total for Federal .......................... ......................... 14,537
Government (Coast Guard).
Total for Regulated .......................... ......................... 197,148
Public and Government.
----------------------------------------------------------------------------------------------------------------
\1\ Totals may not sum due to rounding. Undiscounted costs appear in the table.
\2\ ``Potential indirect costs'' not included (See Table 2). Unquantified costs included but are not part of
cost calculations.
Total Costs
Using a 7-percent discount rate, we estimate the total discounted
cost of the proposed rule to be $138,490 (rounded). The total
annualized cost at a 7-percent discount rate is $19,718 (rounded). See
table 10.
For the projected cost to the regulated public, the Coast Guard
expects all States would comply within 10 years of this rule. However,
we do not have specific information as to the rate of compliance. As
such, we assume equal probability for each year; that is, we estimate
10 percent will comply each year for the next 10 years. Given this, the
total cost to the regulated public, as shown in the table 9, is
$182,607. This is $18,261 (rounded) when averaged across 10 years.
For the cost to the Government, we assume that the $91 website
update will occur in the first year. Subtracting that, we calculate the
annual cost over the next 9 years by dividing the total by 10 ($1,445).
The first year cost to Government will be $1,445 + $91, which is
$1,536.
Table 10--Total Estimated Cost of the Proposed Rule
[10-year Period of analysis, 7 and 3 percent discount rates $2020] \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs to the regulated public (states) Costs to the government Total estimated costs
Year -----------------------------------------------------------------------------------------------------------------------------
Undiscounted 7% 3% Undiscounted 7% 3% Undiscounted 7% 3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
1......................... $18,261 $17,066.07 $17,728.83 $1,536 $1,435.51 $1,491.26 $19,797 $18,501.59 $19,220.10
2......................... 18,261 15,949.60 17,212.46 1,445 1,262.12 1,362.05 19,706 17,211.72 18,574.51
3......................... 18,261 14,906.17 16,711.13 1,445 1,179.55 1,322.38 19,706 16,085.72 18,033.51
4......................... 18,261 13,931.00 16,224.40 1,445 1,102.38 1,283.86 19,706 15,033.38 17,508.26
5......................... 18,261 13,019.63 15,751.84 1,445 1,030.27 1,246.47 19,706 14,049.89 16,998.31
6......................... 18,261 12,167.88 15,293.05 1,445 962.86 1,210.16 19,706 13,130.74 16,503.21
7......................... 18,261 11,371.85 14,847.62 1,445 899.87 1,174.92 19,706 12,271.72 16,022.54
8......................... 18,261 10,627.89 14,415.17 1,445 841.00 1,140.70 19,706 11,468.90 15,555.86
9......................... 18,261 9,932.61 13,995.31 1,445 785.98 1,107.47 19,706 10,718.60 15,102.78
10........................ 18,261 9,282.81 13,587.68 1,445 734.56 1,075.22 19,706 10,017.38 14,662.89
Total................. 182,607.00 128,255.52 155,767.47 14,537.00 10,234.12 12,414.49 197,148.00 138,489.64 168,181.97
Annualized........ .............. 18,260.70 18,260.70 .............. 1,457.11 1,455.36 .............. 19,717.81 19,716.06
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Totals may not sum due to independent rounding.
[[Page 52806]]
Benefits
The proposed rule would amend the Coast Guard's existing
regulations (see 33 CFR 187 subpart D, ``Guidelines for State Vessel
Titling Systems'') to better align with UCOTA-V. The proposed rule
would encourage uniformity amongst the States through the adoption of
the UCOTA-V model, in its entirety or in part, and, as mentioned in the
Background section of this NPRM, Section IV, it would follow
recommendations by the NBSAC and NASBLA. Although the movement to
harmonize State titling laws has existed for some time, not all States
have pursued legislation. Some States have chosen to wait for the Coast
Guard to pass the UCOTA-V regulation.
The proposal would also promote consumer protection against fraud.
A large number of recreational vessels are resold annually. In 2017,
there were approximately 981,600 pre-owned vessels sold in the United
States.\43\ Given this large number, the industry is vulnerable to the
types of fraud UCOTA-V is designed to prevent.
---------------------------------------------------------------------------
\43\ <a href="https://www.nmma.org/press/article/21678">https://www.nmma.org/press/article/21678</a> (``U.S. Boat Sales
Strong Heading into 2018, Poised for Another Year of Growth,''
January 9, 2018). Accessed and last viewed on December 26, 2019.
---------------------------------------------------------------------------
The proposed rule would facilitate the procurement of secured loans
on vessels. If the Coast Guard does not certify a State titling system,
then a State cannot confer preferred mortgage status on a mortgage or
security interest for a vessel, which functions as a security measure
for financial entities. Many financial institutions require eligible
vessels to be documented and to have their preferred mortgages
recorded. A preferred mortgage is considered more secure, with less
risk to the lender. This places the lender in a position to provide
lower interest rates over longer terms to the consumer. In turn, the
lender earns more over the term of the loan with less risk. More
specifically, the lender would have a lower risk of loans defaulting;
therefore, the lender's loan portfolio would provide better returns
despite the lower interest rates offered to borrowers.
The consumer would benefit as well. With preferred loans, the
borrower would have a loan with better terms. Relative to non-preferred
loan, the consumer would pay less per month due to the lower interest
rate on preferred loans.
In addition, consistent titling procedures across States would
deter the practice of ``title washing,'' whereby after the sale of a
damaged vessel for salvage, the buyer makes cosmetic repairs and
resells the vessel without disclosing its previous damage. Recreational
boaters may benefit from this proposed rule by being able to assist
States and law enforcement in recovering their lost or stolen vessels.
Additionally, we intend the proposed rule to promote maritime
security by facilitating State participation in the VIS. After the
September 2001 terrorist attacks, a Coast Guard gap analysis showed
that law enforcement agencies, including the Coast Guard, lacked the
ability to easily and verifiably identify recreational vessels and
their owners and operators, especially when a vessel is registered in a
State other than that in which the law enforcement agency operates.
This inability deprives law enforcement agencies of critical tools for
deterring crime and maritime-based terrorism.
Since its inception in 2007, the VIS has remedied this inability by
collecting and providing verifiable data for vessels in VIS-
participating States. However, 16 States still do not participate in
the VIS.\44\ Facilitating full VIS participation by these States would
enhance maritime security. Because of the high level of interest among
the States in aligning their vessel titling systems with UCOTA-V,
aligning our subpart D regulations with UCOTA-V would make it easier
for States to obtain subpart D certification.
---------------------------------------------------------------------------
\44\ As of January 21, 2020.
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Alternatives Considered
Alternative 1--Take no action. This alternative would allow
existing regulations to remain in conflict with State laws and UCOTA-V.
For States complying with the existing regulations, this alternative
would result in them not receiving the benefits of deterred ``title
washing,'' recovery and identification of abandoned vessels, consumer
fraud protection, and security measures for financial entities.
Participation in the VIS would continue at its current low rate. This
alternative would result in no additional costs, as no new regulations
would be implemented, but would also result in no benefits, as there
would be no changes to current practice. Therefore, we rejected this
alternative.
Alternative 2--This is the preferred alternative. This alternative
would change the guidelines in subpart D so that any State that adopts
UCOTA-V and participates in the VIS would be in compliance. This would
encourage compliance and participation and provide benefits to States,
lenders, and consumers. The cost implications associated with this
alternative are specified in the Costs section of this RA and assume
100 percent participation from all 56 States. The total 7 percent
discounted cost over 10 years would be $176,570. The qualitative
benefits would be increased mitigation of fraudulent ownership, the
creation of uniformity amongst the States, which will help facilitate
transfers of vessel ownership, to deter theft of vessels and aid law
enforcement agencies by making recovery of stolen vessels across State
lines easier, promote consumer protection, and facilitate making
secured loans on vessels. Therefore, this is the preferred alternative.
Alternative 3--This alternative would repeal existing guidelines
for certification of State titling requirements and allow States to
regulate vessel titling with no coordination or oversight. This would
remove the ability for States to establish separate programs to enable
vessels to gain preferred mortgage status and discourage participation
in the VIS. In this scenario, each State would have a unique vessel
titling system; this alternative would produce varying costs and
benefits, which may be beneficial to the States as they could customize
a titling program to meet their specific needs. However, we are unable
to estimate the costs due to the number of possibilities offered, and
they would occur without coordination or oversight from the Coast
Guard. Harmonization of regulations across States would be impossible.
As this would not satisfy the goals of this potential regulatory
action, we rejected this alternative.
B. Small Entities
The Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612) (RFA) and
Executive Order 13272 (Consideration of Small Entities in Agency
Rulemaking) require a review of proposed and final rules to assess
their impacts on small entities. An agency must prepare an initial
regulatory flexibility analysis unless it determines and certifies that
a rule, if promulgated, would not have a significant impact on a
substantial number of small entities.
Under the RFA, we have 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. Based on the analysis above, this
proposed rule would affect 56 States and U.S.
[[Page 52807]]
territories.\45\ All governmental jurisdictions that would potentially
be directly regulated by this rule have populations greater than
50,000. These entities are not considered to be small entities based on
the Small Business Administration's definition of what is a small
governmental jurisdiction.\46\ 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.
---------------------------------------------------------------------------
\45\ See 46 U.S.C. 123. The only issuing authorities are the 56
States. Tribal governments are excluded legally as authorities from
numbering and titling vessels.
\46\ Small governmental jurisdictions are defined as governments
of cities, counties, towns, townships, villages, school districts,
or special districts with a population of less than 50,000.
---------------------------------------------------------------------------
If you think that your business, organization, or governmental
jurisdiction qualifies as a small entity and that this rule would have
a significant economic impact on it, please submit a comment to docket
at the address in the ADDRESSES section of this preamble. In your
comment, explain why you think it qualifies and how and to what degree
this rule would economically affect it.
C. Assistance for Small Entities
Under section 213(a) of the Small Business Regulatory Enforcement
Fairness Act of 1996, Public Law 104-121, we want to assist small
entities in understanding this proposed rule so that they can better
evaluate its effects on them and participate in the rulemaking. If the
proposed rule would affect your small business, organization, or
governmental jurisdiction and you have questions concerning its
provisions or options for compliance, please contact the person in the
FOR FURTHER INFORMATION CONTACT section of this proposed rule. The
Coast Guard will not retaliate against small entities that question or
complain about this proposed rule or any policy or action of the Coast
Guard.
D. Collection of Information
This proposed rule would require a modification of an existing
collection of information under the Paperwork Reduction Act of 1995
(PRA), 44 U.S.C. 3501-3520. As defined in 5 CFR 1320.3(c), ``collection
of information'' comprises reporting, recordkeeping, monitoring,
posting, labeling, and other similar actions. The title and description
of the information collection, a description of those who must collect
the information, and an estimate of the total annual burden follow. The
estimate covers the time for reviewing instructions, searching existing
sources of data, gathering and maintaining the data needed, and
completing and reviewing the collection.
Title: Vessel Identification System.
OMB Control Number: 1625-0070.
Summary of the Collection of Information: Public Law 100-710 (46
U.S.C. 12501) requires the establishment of a nationwide vessel
identification system (VIS). The VIS provides participating States with
access to data of vessels numbered by States. States voluntarily
provide the VIS data. The States, boating public, and law enforcement
would be the primary beneficiaries. To become part of the VIS, States
must submit a Memorandum of Agreement (MOA) to the Coast Guard.
Need for Information: The VIS collects State-numbered vessel
identification and ownership data and provides that data to law
enforcement agencies in the States that choose to participate in the
VIS. Participation in the VIS is entirely voluntary. In order to
participate, States must comply with certain requirements to ensure the
integrity and uniformity of the information provided to the VIS.
Proposed Use of Information: The Coast Guard would use this
information to track vessel information and facilitate the recovery of
stolen or missing vessels.
Description of the Respondents: The 50 States, District of
Columbia, and 5 territories. The Coast Guard describes these as ``56
States.''
Number of Respondents: As a result of the proposal, the Coast Guard
anticipates that there would be two additional States joining the VIS
annually until all States join. Over a 10 year period, this proposed
rule would increase the number of respondents from 38 States to 56
States.
Frequency of Response: The number of responses per year of this
proposed rule would vary by participating States. New MOA applications,
VIS user requests, and VIS data uploads are required with the initial
MOA application process. For existing participants, VIS user requests
and VIS data uploads are required. Based on the current collection of
VIS information data, the Coast Guard anticipates that each new
participant will submit an MOA application once, a VIS user request
once a year, and upload VIS data every 2 weeks.
Burden of Response: The burden of response includes three
components--MOA applications, VIS data uploads, and VIS user requests.
The burden for an MOA application, VIS data upload and VIS new user
request form are: 16 hours, 0.6 hour, and 0.1 hour, respectively. An
MOA application and a VIS new user request form would be prepared by a
manager. A computer technician would handle the VIS data upload.
Estimate of Total Annual Burden: This proposed rule would require
additional hours for VIS data uploads (32 hours annually),\47\ MOAs (32
hours annually), and VIS user requests (1 hour annually).\48\ The
proposed rule would increase the total burden by 64 hours (rounded from
the actual 63.3 hours), from 5,792 hours to 5,856 hours.\49\
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\47\ Rounded from the actual 31.2 hours.
\48\ Rounded from the actual 0.2 hour.
\49\ Rounded from the actual 5,855.3 hours.
---------------------------------------------------------------------------
As required by 44 U.S.C. 3507(d), we will submit a copy of this
proposed rule to OMB for its review of the collection of information.
We ask for public comment on the proposed collection of information
to help us determine, among other things:
(1) How useful the information is;
(2) Whether it can help us perform our functions better;
(3) Whether it is readily available elsewhere;
(4) How accurate our estimate of the burden of collection is;
(5) How valid our methods for determining burden are;
(6) How we can improve the quality, usefulness, and clarity of the
information; and
(7) How we can minimize the burden of collection.
If you submit comments on the collection of information, submit
them to both the OMB and to the docket where indicated under ADDRESSES.
You need not respond to a collection of information unless it
displays a currently valid control number from OMB. Before the Coast
Guard could enforce the collection of information requirements in this
proposed rule, OMB would need to approve the Coast Guard's request to
collect this information.
E. Federalism
A rule has implications for federalism under Executive Order 13132
(Federalism) if it has a substantial direct effect on the States, on
the relationship between the national government and the States, or on
the distribution of power and responsibilities among the various levels
of government. We have analyzed this proposed rule under Executive
Order 13132 and have determined that it is consistent with the
fundamental federalism principles and preemption requirements described
in Executive Order 13132. Our analysis follows.
[[Page 52808]]
The purpose of this rulemaking is to revise Coast Guard
requirements for State participation in the Coast Guard-maintained VIS
and guidelines for State vessel titling systems. The Coast Guard is
mandated to establish and maintain the VIS, but State participation in
the VIS is voluntary. Nothing in this proposed rule would require
States to participate in the VIS. However, once electing to participate
in the VIS, a State must comply with the VIS requirements to ensure
integrity and uniformity of information. Likewise, requesting
certification that a State vessel titling system complies with the
guidelines is also voluntary, but such a system must comply with
subpart D for voluntary certification. This proposed rule would not
require States to request certification, change their existing titling
systems, or otherwise preempt related State regulations. Therefore, the
proposed rule is consistent with the principles of federalism and
preemption requirements in Executive Order 13132.
While it is well settled that States may not regulate in categories
in which Congress intended the Coast Guard to be the sole source of a
vessel's obligations, the Coast Guard recognizes the key role that
State and local governments may have in making regulatory
determinations. Additionally, for rules with federalism implications
and preemptive effect, Executive Order 13132 specifically directs
agencies to consult with State and local governments during the
rulemaking process. If you believe this proposed rule has implications
for federalism under Executive Order 13132, please contact the person
listed in the FOR FURTHER INFORMATION section of this preamble.
F. Unfunded Mandates Reform Act
The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1531-1538,
requires Federal agencies to assess the effects of their discretionary
regulatory actions. In particular, the Act addresses actions that may
result in the expenditure by a State, local, or tribal government, in
the aggregate, or by the private sector of $100,000,000 (adjusted for
inflation) or more in any one year. Although this proposed rule would
not result in such an expenditure, we do discuss the effects of this
proposed rule elsewhere in this preamble.
G. Taking of Private Property
This proposed rule would not cause a taking of private property or
otherwise have taking implications under Executive Order 12630
(Governmental Actions and Interference with Constitutionally Protected
Property Rights).
H. Civil Justice Reform
This proposed rule meets applicable standards in sections 3(a) and
3(b) (2) of Executive Order 12988, (Civil Justice Reform), to minimize
litigation, eliminate ambiguity, and reduce burden.
I. Protection of Children
We have analyzed this proposed rule under Executive Order 13045
(Protection of Children from Environmental Health Risks and Safety
Risks). This proposed rule is not an economically significant rule and
would not create an environmental risk to health or risk to safety that
might disproportionately affect children.
J. Indian Tribal Governments
This proposed rule does not have tribal implications under
Executive Order 13175 (Consultation and Coordination with Indian Tribal
Governments), because it would not have a substantial direct effect on
one or more Indian tribes, on the relationship between the Federal
Government and Indian tribes, or on the distribution of power and
responsibilities between the Federal Government and Indian tribes.
K. Energy Effects
We have analyzed this proposed rule under Executive Order 13211
(Actions Concerning Regulations That Significantly Affect Energy
Supply, Distribution, or Use). We have determined that it is not a
``significant energy action'' under 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.
L. Technical Standards
The National Technology Transfer and Advancement Act, codified as a
note to 15 U.S.C. 272, directs agencies to use voluntary consensus
standards in their regulatory activities unless the agency provides
Congress, through OMB, with an explanation of why using these standards
would be inconsistent with applicable law or otherwise impractical.
Voluntary consensus standards are technical standards (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 does not use technical standards. Therefore, we
did not consider the use of voluntary consensus standards.
M. Environment
We have analyzed this proposed rule under Department of Homeland
Security Management Directive 023-01, Rev. 1, associated implementing
instructions, and Environmental Planning COMDTINST 5090.1 (series),
which guide the Coast Guard in complying with the National
Environmental Policy Act 1969 (42 U.S.C. 4321-4370f), and have made a
preliminary determination that this action is one of a category of
actions that do not individually or cumulatively have a significant
effect on the human environment. A preliminary Record of Environmental
Consideration supporting this determination is available in the docket.
For instructions on locating the docket, see the ADDRESSES section of
this preamble.
This proposed rule would be categorically excluded under paragraphs
L54 and L57 of Appendix A, Table 1 of DHS Instruction Manual 023-01-
001-01, Rev. 01. Paragraph L54 pertains to regulations which are
editorial or procedural and L57 pertains to regulations concerning
documentation of vessels. This proposed rule involves changes to
regulations for certifying a State's titling system for undocumented
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 33 CFR Part 187
Administrative practice and procedure, Marine safety, Reporting and
recordkeeping requirements.
For the reasons discussed in the preamble, the Coast Guard proposes
to amend 33 CFR part 187 as follows:
PART 187--VESSEL IDENTIFICATION SYSTEM
0
1. Revise the authority citation for part 187 to read as follows:
Authority: 46 U.S.C. 2103, 12501, 31322; Department of Homeland
Security Delegation No. 0170.1(92).
0
2. Revise Sec. 187.7 to read as follows:
Sec. 187.7 Definitions.
As used in this part--
Approved numbering system means a numbering system approved by the
Secretary of Homeland Security under 46 U.S.C. Chapter 123.
Barge means a vessel that is not self-propelled or fitted for
propulsion by sail, paddle, oar, or similar device.
[[Page 52809]]
Builder's certificate means a certificate of the facts of build of
a vessel described in 46 CFR 67.99.
Buyer means a person who buys or contracts to buy a vessel.
Cancel, with respect to a certificate of title, means to make the
certificate ineffective.
Certificate of documentation means Coast Guard Form CG-1270.
Certificate of origin means a record created by a manufacturer or
importer as the manufacturer's or importer's proof of identity of a
vessel, and includes a manufacturer's certificate or statement of
origin and an importer's certificate or statement of origin, but
excludes a builder's certificate.
Certificate of ownership means Coast Guard Form CG-1330.
Certificate of title means a record, created by the office or by a
governmental agency of another State under the law of that State, which
is designated as a certificate of title by the office or agency and is
evidence of ownership of a vessel.
Commandant means the Commandant of the U.S. Coast Guard or an
authorized representative of the Commandant of the U.S. Coast Guard.
Dealer means a person, including a manufacturer, in the business of
selling vessels.
Documented vessel means a vessel covered by a certificate of
documentation issued pursuant to 46 U.S.C. Section 12105, and excludes
a foreign-documented vessel.
Electronic means relating to technology having electrical, digital,
magnetic, wireless, optical, electromagnetic, or similar capabilities.
Electronic certificate of title means a certificate of title
consisting of information that is stored solely in an electronic medium
and is retrievable in perceivable form.
Foreign-documented vessel means a vessel the ownership of which is
recorded in a registry maintained by a country other than the United
States, identifying each person having an ownership interest in a
vessel, and includes a unique alphanumeric designation for the vessel.
Good faith means honesty in fact and the observance of reasonable
commercial standards of fair dealing.
Hull damaged means compromised with respect to the integrity of a
vessel's hull by a collision, allision, lightning strike, fire,
explosion, running aground, or similar occurrence, or the sinking of a
vessel in a manner that creates a significant risk to the integrity of
the vessel's hull.
Hull identification number or HIN means the alphanumeric
designation assigned to a vessel under subpart C of 33 CFR part 181.
Issuing authority means either a State that has an approved
numbering system or the Coast Guard in a State that does not have an
approved numbering system.
Lien creditor, with respect to a vessel, means--
(1) A creditor that has acquired a lien on the vessel by
attachment, levy, or the like;
(2) An assignee for benefit of creditors from the time of
assignment;
(3) A trustee in bankruptcy from the date of the filing of the
petition; or
(4) A receiver in equity from the time of appointment.
Manufacturer means any person engaged in the business of
manufacturing or importing new vessels for the purpose of sale or
trade.
Office means the State department or agency that creates
certificates of title.
Owner means a person having legal title to a vessel.
Owner of record means the owner indicated in the files of the
Office or, if the files indicate more than one owner, the one first
indicated.
Participating State means a State certified by the Commandant as
meeting the requirements of subpart C of this part.
Person means an individual or any form of legal or commercial
entity.
Purchase means to take by any voluntary transaction that creates an
interest in a vessel.
Purchaser means a person taking by purchase.
Record means information inscribed on a tangible medium or stored
in an electronic or other medium and is retrievable in perceivable
form.
Secured party, with respect to a vessel, means a person--
(1) In whose favor a security interest is created or provided for
under a security agreement, whether or not any obligation to be secured
is outstanding;
(2) Who is a consignor under State law as prescribed by State law
related to security interests in goods; or
(3) Who holds a security interest arising under State law related
to security interests in goods.
Secured party of record means the secured party whose name is
indicated as the name of the secured party in the files of the office
or, if the files indicate more than one secured party, the one first
indicated.
Security interest means an interest in a vessel that secures
payment or performance of an obligation if the interest is created by
contract or otherwise as prescribed by state law related to security
interests in goods.
Sign means, with present intent to authenticate or adopt a record,
to--
(1) Make or adopt a tangible symbol; or
(2) Attach to or logically associate with the record an electronic
symbol, sound, or process.
State means a State of the United States, the District of Columbia,
American Samoa, Guam, Northern Mariana Islands, Puerto Rico, U.S.
Virgin Islands, and any other territory or possession of the United
States.
State of principal operation means the State on whose waters a
vessel is or will be used, operated, navigated, or employed more than
on the waters of any other State during a calendar year.
Title brand means a designation of previous damage, use, or
condition that must be indicated on a certificate of title.
Titled vessel means a vessel titled by a State.
Titling authority means a State whose vessel titling system has
been certified by the Commandant under subpart D of this part.
Transfer of ownership means a voluntary or involuntary conveyance
of an interest in a vessel.
Vessel means every description of watercraft used or capable of
being used as a means of transportation on water, except--
(1) A seaplane;
(2) An amphibious vehicle for which a certificate of title is
issued pursuant to a state's motor vehicle certificate of title act or
a similar statute of another state;
(3) Watercraft that operate only on a permanently fixed,
manufactured course and the movement of which is restricted to or
guided by means of a mechanical device to which the watercraft is
attached or by which the watercraft is controlled;
(4) A stationary floating structure that--
(i) Does not have and is not designed to have a mode of propulsion
of its own;
(ii) Is dependent for utilities upon a continuous utility hookup to
a source originating on shore; and
(iii) Has a permanent, continuous hookup to a shore side sewage
system.
(5) Watercraft owned by the United States, a State, or a foreign
government or a political subdivision of any of them; and
(6) Watercraft used solely as a lifeboat on another watercraft.
Vessel Identification System or VIS means a system for collecting
information on vessels and vessel ownership as required by 46 U.S.C.
12501.
Vessel number means the alphanumeric designation for a vessel
issued pursuant to 46 U.S.C. 12301.
[[Page 52810]]
Written certificate of title means a certificate of title
consisting of information inscribed on a tangible medium.
0
3. Revise subpart D, consisting of Sec. Sec. 187.301 through 187.325,
to read as follows:
Subpart D--State Vessel Titling Systems
Sec.
187.301 Certification for preferred mortgage status--Eligibility
requirements.
187.302 Terms States must define.
187.303 Applicability.
187.304 Titling exclusively in one State.
187.305 Law governing vessel covered by certificate of title.
187.306 Certificate of title required.
187.307 Application for certificate of title.
187.308 Creation and cancellation of certificate of title.
187.309 Content of certificate of title.
187.310 Title brand.
187.311 Maintenance of and access to files.
187.312 Action required on creation of certificate of title.
187.313 Effect of certificate of title.
187.314 Effect of possession of certificate of title; judicial
process.
187.315 Perfection of security interest.
187.316 Termination statement.
187.317 Transfer of ownership.
187.318 Effect of missing or incorrect information.
187.319 Transfer of ownership by secured party's transfer statement.
187.320 Transfer by operation of law.
187.321 Application for transfer of ownership or termination of
security interest without certificate of title.
187.322 Replacement certificate of title.
187.323 Rights of purchaser other than secured party.
187.324 Rights of secured party.
187.325 Duties and operation of office.
Subpart D--State Vessel Titling Systems
Sec. 187.301 Certification for preferred mortgage status--
Eligibility requirements.
The Commandant, under 46 U.S.C. 31322(d)(1)(A) and 33 CFR 187.13,
will certify a State whose vessel titling system meets the requirements
of this subpart as eligible to have security interests that are
perfected under its law deemed preferred mortgages under 46 U.S.C.
31322. The State must also comply with the VIS participation
requirements of 33 CFR 187.11 and subpart C of this part and make
vessel information it collects available to the VIS.
Sec. 187.302 Terms States must define.
(a) A State must define the terms ``certificate of origin'',
``dealer'', ``documented vessel'', ``issuing authority'',
``manufacturer'', ``owner'', ``person'', ``secured party'', ``security
interest'', ``titling authority'', and ``vessel'' substantially as
defined in 33 CFR 187.7.
(b) In addition to the definitions in 33 CFR 187.7, a State must
also define the following terms as prescribed by State law related to
security interests in goods:
(1) Agreement;
(2) Buyer in ordinary course of business;
(3) Conspicuous;
(4) Consumer goods;
(5) Debtor;
(6) Knowledge;
(7) Lease;
(8) Lessor;
(9) Notice;
(10) Representative;
(11) Sale;
(12) Security agreement;
(13) Seller;
(14) Send; and
(15) Value.
(c) The definitions in 33 CFR 187.7 and paragraph (b) of this
section do not apply to any State or Federal law governing licensing,
numbering, or registration if the same term is used in that law.
Sec. 187.303 Applicability.
Subject to a savings clause provided under state law, this subpart
applies to any transaction, certificate of title, or record relating to
a vessel, even if the transaction, certificate of title, or record was
entered into or created before the effective date of the state law.
Sec. 187.304 Titling exclusively in one State.
A State must require that all vessels required to be numbered in
the State under 46 U.S.C. Chapter 123 be titled only in that State, if
that State issues titles to that class of vessels.
Sec. 187.305 Law governing vessel covered by certificate of title.
(a) The local law of the State under whose certificate of title a
vessel is covered governs all issues relating to the certificate from
the time the vessel becomes covered by the certificate until the vessel
becomes covered by another certificate or becomes a documented vessel,
even if no other relationship exists between the State and the vessel
or its owner.
(b) A vessel becomes covered by a certificate of title when an
application for the certificate and the applicable fee are delivered to
the office in accordance with this subpart or to the governmental
agency that creates a certificate in another jurisdiction in accordance
with the law of that jurisdiction.
Sec. 187.306 Certificate of title required.
(a) Except as otherwise provided in paragraphs (b) and (c) of this
section, the owner of a vessel must deliver to the office of the State
in which the vessel is principally used an application for a
certificate of title for the vessel, with the applicable fee, not later
than 20 days after the later of--
(1) The date of a transfer of ownership; or
(2) The date the State becomes the State of principal use.
(b) An application for a certificate of title is not required for--
(1) A documented vessel;
(2) A foreign-documented vessel;
(3) A barge;
(4) A vessel before delivery if the vessel is under construction or
completed pursuant to contract; or
(5) A vessel held by a dealer for sale or lease.
(c) The office may not issue, transfer, or renew a certificate of
number for a vessel issued pursuant to 46 U.S.C. 12301 unless it has
created a certificate of title for the vessel or an application for a
certificate for the vessel and the applicable fee have been delivered
to the office.
Sec. 187.307 Application for certificate of title.
(a) Except as otherwise provided in Sec. Sec. 187.310, 187.315,
187.319, 187.320, 187.321, and 187.322, only an owner may apply for a
certificate of title.
(b) An application for a certificate of title must be signed by the
applicant and contain--
(1) The applicant's name, the street address of the applicant's
principal residence, and, if different, the applicant's mailing
address;
(2) The name and mailing address of each other owner of the vessel;
(3) The social security number or taxpayer identification number of
each owner;
(4) The hull identification number (HIN) for the vessel or, if
none, an application for the issuance of a HIN for the vessel;
(5) The vessel number for the vessel or, if none issued by the
office, an application for a vessel number;
(6) A description of the vessel as required by the office, which
must include--
(i) The official number for the vessel, if any, assigned by the
Coast Guard;
(ii) The name of the manufacturer, builder, or maker;
(iii) The model year or the year in which the manufacture or build
of the vessel was completed;
(iv) The overall length of the vessel;
(v) The vessel type, as described in 33 CFR 174.19;
(vi) The hull material, as described in 33 CFR 174.19;
(vii) The propulsion type, as described in 33 CFR 174.19;
(viii) The engine drive type, as described in 33 CFR 174.19, if
any; and
[[Page 52811]]
(ix) The fuel type, as described in 33 CFR 174.19, if any;
(7) An indication of all security interests in the vessel known to
the applicant and the name and mailing address of each secured party;
(8) A statement that the vessel is not a documented vessel or a
foreign-documented vessel;
(9) Any title brand known to the applicant and, if known, the
jurisdiction under whose law the title brand was created;
(10) If the applicant knows that the vessel is hull damaged, a
statement that the vessel is hull damaged;
(11) If the application is made in connection with a transfer of
ownership, the transferor's name, street address, and, if different,
mailing address, the sales price, if any, and the date of the transfer;
and
(12) If the vessel was previously registered or titled in another
jurisdiction, a statement identifying each jurisdiction known to the
applicant in which the vessel was registered or titled.
(c) In addition to the information required by paragraph (b) of
this section, an application for a certificate of title may contain an
electronic communication address of the owner, transferor, or secured
party.
(d) Except as otherwise provided in Sec. Sec. 187.319, 187.320,
187.321, and 187.322, an application for a certificate of title must be
accompanied by a certificate of title signed by the owner shown on the
certificate which identifies the applicant as the owner of the vessel,
or is accompanied by a record that identifies the applicant as the
owner.
(e) If there is no certificate of title as discussed in paragraph
(d) of this section, an application for a certificate of title must be
accompanied by--
(1) If the vessel was a documented vessel, a record issued by the
Coast Guard that shows the vessel is no longer a documented vessel and
identifies the applicant as the owner;
(2) If the vessel was a foreign-documented vessel, a record issued
by the foreign country which shows the vessel is no longer a foreign-
documented vessel and identifies the applicant as the owner; or
(3) In all other cases, a certificate of origin, bill of sale, or
other record that to the satisfaction of the office identifies the
applicant as the owner.
(f) A record submitted in connection with an application is part of
the application and the office must maintain it in its files.
(g) The office may require an application for a certificate of
title to be accompanied by payment or evidence of payment of all fees
and taxes payable by the applicant under State law if in connection
with the application or the acquisition or use of the vessel.
Sec. 187.308 Creation and cancellation of certificate of title.
(a) Unless an application for a certificate of title is rejected
under paragraph (c) or (d) of this section, the office must create a
certificate for the vessel in accordance with paragraph (b) of this
section not later than 20 days after delivery to it of an application
that complies with 33 CFR 187.307.
(b) If the office creates electronic certificates of title, it must
create an electronic certificate unless in the application the secured
party of record or, if none, the owner of record, requests that the
office create a written certificate.
(c) Except as otherwise provided in paragraph (d) of this section,
the office may reject an application for a certificate of title only
if--
(1) The application does not comply with 33 CFR 187.307;
(2) The application does not contain documentation sufficient for
the office to determine whether the applicant is entitled to a
certificate;
(3) There is a reasonable basis for concluding that the application
is fraudulent or issuance of a certificate would facilitate a
fraudulent or illegal act; or
(4) The application does not comply with State law.
(d) The office must reject an application for a certificate of
title for a vessel that is a documented vessel or a foreign-documented
vessel.
(e) The office may cancel a certificate of title created by it only
if the office--
(1) Could have rejected the application for the certificate under
paragraph (c) of this section;
(2) Is required to cancel the certificate under another provision
of this subpart; or
(3) Receives satisfactory evidence that the vessel is a documented
vessel or a foreign-documented vessel.
Sec. 187.309 Content of certificate of title.
(a) A certificate of title must contain--
(1) The date the certificate was created;
(2) The name of the owner of record and, if not all owners are
listed, an indication that there are additional owners indicated in the
files of the office;
(3) The mailing address of the owner of record;
(4) The hull identification number (HIN);
(5) The information listed in Sec. 187.307(b)(6);
(6) Except as otherwise provided in Sec. 187.315(b), the name and
mailing address of the secured party of record, if any, and if not all
secured parties are listed, an indication that there are other security
interests indicated in the files of the office; and
(7) All title brands indicated in the files of the office covering
the vessel, including brands indicated on a certificate created by a
governmental agency of another jurisdiction and delivered to the
office.
(b) This subpart does not preclude the office from noting on a
certificate of title the name and mailing address of a secured party
that is not a secured party of record.
(c) For each title brand indicated on a certificate of title, the
certificate must identify the jurisdiction under whose law the title
brand was created or the jurisdiction that created the certificate on
which the title brand was indicated. If the meaning of a title brand is
not easily ascertainable or cannot be accommodated on the certificate,
the certificate may state: ``Previously branded in (insert the
jurisdiction under whose law the title brand was created or whose
certificate of title previously indicated the title brand).''
(d) If the files of the office indicate that a vessel was
previously registered or titled in a foreign country, the office must
indicate on the certificate of title that the vessel was registered or
titled in that country.
(e) A written certificate of title must contain a form that all
owners indicated on the certificate may sign to evidence consent to a
transfer of an ownership interest to another person. The form must
include a certification, signed under penalty of perjury, that the
statements made are true and correct to the best of each owner's
knowledge, information, and belief.
(f) A written certificate of title must contain a form for the
owner of record to indicate, in connection with a transfer of an
ownership interest, that the vessel is hull damaged.
Sec. 187.310 Title brand.
(a) Unless paragraph (c) of this section applies, at or before the
time the owner of record transfers an ownership interest in a hull-
damaged vessel that is covered by a certificate of title created by the
office, if the damage occurred while that person was an owner of the
vessel and the person has notice of the damage at the time of the
transfer, the owner must--
(1) Deliver to the office an application for a new certificate that
complies with
[[Page 52812]]
Sec. 187.307 of this part and includes the title brand designation
``Hull Damaged''; or
(2) Indicate on the certificate in the place designated for that
purpose that the vessel is hull damaged and deliver the certificate to
the transferee.
(b) Not later than 20 days after delivery to the office of the
application under paragraph (a)(1) of this section or the certificate
of title under paragraph (a)(2) of this section, the office must create
a new certificate that indicates that the vessel is branded ``Hull
Damaged''.
(c) Before an insurer transfers an ownership interest in a hull-
damaged vessel that is covered by a certificate of title created by the
office, the insurer must deliver to the office an application for a new
certificate that complies with Sec. 187.306 and includes the title
brand designation ``Hull Damaged''. Not later than 20 days after
delivery of the application to the office, the office must create a new
certificate that indicates that the vessel is branded ``Hull Damaged''.
(d) An owner of record who fails to comply with paragraph (a) of
this section, a person who solicits or colludes in a failure by an
owner of record to comply with paragraph (a), or an insurer that fails
to comply with paragraph (c) of this section is subject to penalty as
prescribed by state law.
Sec. 187.311 Maintenance of and access to files.
(a) For each record relating to a certificate of title submitted to
the office, the office must--
(1) Ascertain or assign the hull identification number (HIN) for
the vessel in accordance with 33 CFR part 181;
(2) Maintain the HIN and all the information submitted with the
application pursuant to Sec. 187.307(b) to which the record relates,
including the date and time the record was delivered to the office;
(3) Maintain the files for public inspection subject to paragraph
(e) of this section; and
(4) Index the files of the office as required by paragraph (b) of
this section.
(b) The office must maintain in its files the information contained
in all certificates of title created under this subpart. The
information in the files of the office must be searchable by the HIN of
the vessel, the vessel number, the name of the owner of record, and any
other method used by the office.
(c) The office must maintain in its files, for each vessel for
which it has created a certificate of title, all title brands known to
the office, the name of each secured party known to the office, the
name of each person known to the office to be claiming an ownership
interest, and all stolen-property reports the office has received.
(d) Upon request, for safety, security, or law-enforcement
purposes, the office must provide to Federal, State, or local
government the information in its files relating to any vessel for
which the office has issued a certificate of title.
(e) Except as otherwise provided by laws of the titling State, the
information required under Sec. 187.309 is a public record, but the
information provided under Sec. 187.307(b)(3) is not a public record.
Sec. 187.312 Action required on creation of certificate of title.
(a) On creation of a written certificate of title, the office must
promptly send the certificate to the secured party of record or, if
none, to the owner of record, at the address indicated for that person
in the files of the office. On creation of an electronic certificate of
title, the office must promptly send a record evidencing the
certificate to the owner of record and, if there is one, to the secured
party of record, at the address indicated for that person in the files
of the office. The office may send the record to the person's mailing
address or, if indicated in the files of the office, an electronic
address.
(b) If the office creates a written certificate of title, any
electronic certificate of title for the vessel is canceled and replaced
by the written certificate. The office must maintain in the files of
the office the date and time of cancellation.
(c) Before the office creates an electronic certificate of title,
any written certificate for the vessel must be surrendered to the
office. If the office creates an electronic certificate, the office
must destroy or otherwise cancel the written certificate for the vessel
that has been surrendered to the office and maintain in the files of
the office the date and time of destruction or other cancellation. If a
written certificate being canceled is not destroyed, the office must
indicate on the face of the certificate that it has been canceled.
Sec. 187.313 Effect of certificate of title.
A certificate of title is prima facie evidence of the accuracy of
the information in the record that constitutes the certificate.
Sec. 187.314 Effect of possession of certificate of title; judicial
process.
Possession of a certificate of title does not by itself provide a
right to obtain possession of a vessel. Garnishment, attachment, levy,
replevin, or other judicial process against the certificate is not
effective to determine possessory rights to the vessel. This subpart
does not prohibit enforcement under State law, other than this subpart
(33 CFR part 187 subpart D), of a security interest in, levy on, or
foreclosure of a statutory or common-law lien on a vessel. Absence of
an indication of a statutory or common-law lien on a certificate does
not invalidate the lien.
Sec. 187.315 Perfection of security interest.
(a) Except as otherwise provided in this section or a savings
clause provided under state law, a security interest in a vessel may be
perfected only by delivery to the office of an application for a
certificate of title that identifies the secured party and otherwise
complies with 33 CFR 187.307. The security interest is perfected on the
later of delivery to the office of the application and the applicable
fee or attachment of the security interest as prescribed by State law
related to security interests in goods.
(b) If the interest of a person named as owner, lessor, consignor,
or bailor in an application for a certificate of title delivered to the
office is a security interest, the application sufficiently identifies
the person as a secured party. Identification on the application for a
certificate of a person as owner, lessor, consignor, or bailor is not
by itself a factor in determining whether the person's interest is a
security interest.
(c) If the office has created a certificate of title for a vessel,
a security interest in the vessel may be perfected by delivery to the
office of an application, on a form the office may require, to have the
security interest added to the certificate. The application must be
signed by an owner of the vessel or by the secured party and must
include--
(1) The name of the owner of record;
(2) The name and mailing address of the secured party;
(3) The hull identification number for the vessel; and
(4) If the office has created a written certificate of title for
the vessel, the certificate.
(d) A security interest perfected under paragraph (c) of this
section is perfected on the later of delivery to the office of the
application and all applicable fees or attachment of the security
interest as prescribed by State law related to security interests in
goods.
(e) On delivery of an application that complies with paragraph (c)
of this section and payment of all applicable fees, the office must
create a new certificate of title pursuant to 33 CFR
[[Page 52813]]
187.308 and deliver the new certificate or a record evidencing an
electronic certificate pursuant to 33 CFR 187.312(a). The office must
maintain in the files of the office the date and time of delivery of
the application to the office.
(f) If a secured party assigns a perfected security interest in a
vessel, the receipt by the office of a statement providing the name of
the assignee as secured party is not required to continue the perfected
status of the security interest against creditors of and transferees
from the original debtor. Upon obtaining a release from the secured
party indicated in the files of the office or on the certificate, a
purchaser of a vessel subject to a security interest takes free of the
security interest and of the rights of a transferee unless the transfer
is indicated in the files of the office or on the certificate.
(g) This section does not apply to a security interest--
(1) Created in a vessel by a person during any period in which the
vessel is inventory held for sale or lease by the person or is leased
by the person as lessor if the person is in the business of selling
vessels;
(2) In a barge for which no application for a certificate of title
has been delivered to the office; or
(3) In a vessel before delivery if the vessel is under
construction, or completed, pursuant to contract and for which no
application for a certificate has been delivered to the office.
(h) This paragraph applies if a certificate of documentation for a
documented vessel is deleted or canceled. If a security interest in the
vessel was valid immediately before deletion or cancellation against a
third party as a result of compliance with 42 U.S.C. 31321, the
security interest is and remains perfected until the earlier of 4
months after cancellation of the certificate or the time the security
interest becomes perfected under this subpart.
(i) A security interest in a vessel arising under State law related
to security interests in goods is perfected when it attaches but
becomes unperfected when the debtor obtains possession of the vessel,
unless before the debtor obtains possession the security interest is
perfected pursuant to paragraph (a) or (c) of this section.
(j) A security interest in a vessel as proceeds of other collateral
is perfected to the extent provided in State law.
(k) A security interest in a vessel perfected under the law of
another jurisdiction is perfected to the extent provided in State law.
Sec. 187.316 Termination statement.
(a) A secured party indicated in the files of the office as having
a security interest in a vessel must deliver a termination statement to
the office and, on the debtor's request, to the debtor, by the earlier
of--
(1) Twenty days after the secured party receives a signed demand
from an owner for a termination statement and there is no obligation
secured by the vessel subject to the security interest and no
commitment to make an advance, incur an obligation, or otherwise give
value secured by the vessel; or
(2) If the vessel is consumer goods, 30 days after there is no
obligation secured by the vessel and no commitment to make an advance,
incur an obligation, or otherwise give value secured by the vessel.
(b) If a written certificate of title has been created and
delivered to a secured party and a termination statement is required
under paragraph (a) of this section, the secured party, not later than
the date required by paragraph (a), must deliver the certificate to the
debtor or to the office with the statement. If the certificate is lost,
stolen, mutilated, destroyed, or is otherwise unavailable or illegible,
the secured party must deliver with the statement, not later than the
date required by paragraph (a), an application for a replacement
certificate meeting the requirements of 33 CFR 187.322.
(c) On delivery to the office of a termination statement authorized
by the secured party, the security interest to which the statement
relates ceases to be perfected. If the security interest to which the
statement relates was indicated on the certificate of title, the office
must create a new certificate and deliver the new certificate or a
record evidencing an electronic certificate. The office must maintain
in its files the date and time of delivery to the office of the
statement.
(d) A secured party that fails to comply with this section is
liable for any loss that the secured party had reason to know might
result from its failure to comply and which could not reasonably have
been prevented and for the cost of an application for a certificate of
title under 33 CFR 187.307 or 187.322.
Sec. 187.317 Transfer of ownership.
(a) On voluntary transfer of an ownership interest in a vessel
covered by a certificate of title, the following rules apply:
(1) If the certificate is a written certificate of title and the
transferor's interest is noted on the certificate, the transferor must
promptly sign the certificate and deliver it to the transferee. If the
transferor does not have possession of the certificate, the person in
possession of the certificate has a duty to facilitate the transferor's
compliance with this paragraph. A secured party does not have a duty to
facilitate the transferor's compliance with this paragraph if the
proposed transfer is prohibited by the security agreement.
(2) If the certificate of title is an electronic certificate of
title, the transferor must promptly sign and deliver to the transferee
a record evidencing the transfer of ownership to the transferee.
(3) The transferee has a right enforceable by specific performance
to require the transferor comply with paragraph (a)(1) or (2) of this
section.
(b) The creation of a certificate of title identifying the
transferee as owner of record satisfies paragraph (a) of this section.
(c) A failure to comply with paragraph (a) of this section or to
apply for a new certificate of title does not render a transfer of
ownership of a vessel ineffective between the parties. Except as
otherwise provided in 33 CFR 187.318, 187.319, 187.323(a), or 187.324,
a transfer of ownership without compliance with paragraph (a) of this
section is not effective against another person claiming an interest in
the vessel.
(d) A transferor that complies with paragraph (a) of this section
is not liable as owner of the vessel for an event occurring after the
transfer, regardless of whether the transferee applies for a new
certificate of title.
Sec. 187.318 Effect of missing or incorrect information.
Except as otherwise provided as prescribed by State law related to
security interests in goods, a certificate of title or other record
required or authorized by this subpart is effective even if it contains
incorrect information or does not contain required information.
Sec. 187.319 Transfer of ownership by secured party's transfer
statement.
(a) In this section, ``secured party's transfer statement'' means a
record signed by the secured party of record stating--
(1) That there has been a default on an obligation secured by the
vessel;
(2) The secured party of record is exercising or has exercised
post-default remedies with respect to the vessel;
(3) By reason of the exercise, the secured party of record has the
right to
[[Page 52814]]
transfer the ownership interest of an owner, and the name of the owner;
(4) The name and last known mailing address of the owner of record
and the secured party of record;
(5) The name of the transferee;
(6) Other information required by 33 CFR 187.307(b); and
(7) One of the following:
(i) The certificate of title is an electronic certificate;
(ii) The secured party does not have possession of the written
certificate of title created in the name of the owner of record; or
(iii) The secured party is delivering the written certificate of
title to the office with the secured party's transfer statement.
(b) Unless the office rejects a secured party's transfer statement
for a reason stated in 33 CFR 187.308(c), not later than 20 days after
delivery to the office of the statement and payment of fees and taxes
payable under State law in connection with the statement or the
acquisition or use of the vessel, the office must--
(1) Accept the statement;
(2) Amend the files of the office to reflect the transfer; and
(3) If the name of the owner whose ownership interest is being
transferred is indicated on the certificate of title--
(i) Cancel the certificate even if the certificate has not been
delivered to the office;
(ii) Create a new certificate indicating the transferee as owner;
and
(iii) Deliver the new certificate or a record evidencing an
electronic certificate.
(c) An application under paragraph (a) of this section or the
creation of a certificate of title under paragraph (b) of this section
is not by itself a disposition of the vessel and does not by itself
relieve the secured party of its duties under State law.
Sec. 187.320 Transfer by operation of law.
(a) In this section--
(1) ``By operation of law'' means pursuant to a law or judicial
order affecting ownership of a vessel--
(i) Because of death, divorce or other family law proceeding,
merger, consolidation, dissolution, or bankruptcy;
(ii) Through the exercise of the rights of a lien creditor or a
person having a lien created by statute or rule of law; or
(iii) Through other legal process.
(2) ``Transfer-by-law statement'' means a record signed by a
transferee stating that by operation of law the transferee has acquired
or has the right to acquire an ownership interest in a vessel.
(b) A transfer-by-law statement must contain--
(1) The name and last known mailing address of the owner of record
and the transferee and the other information required by 33 CFR
187.307(b);
(2) Documentation sufficient to establish the transferee's
ownership interest or right to acquire the ownership interest;
(3) A statement that--
(i) The certificate of title is an electronic certificate of title;
(ii) The transferee does not have possession of the written
certificate of title created in the name of the owner of record; or
(iii) The transferee is delivering the written certificate to the
office with the transfer-by-law statement; and
(4) Except for a transfer described in paragraph (a)(1)(i) of this
section, evidence that notification of the transfer and the intent to
file the transfer-by-law statement has been sent to all persons
indicated in the files of the office as having an interest, including a
security interest, in the vessel.
(c) Unless the office rejects a transfer-by-law statement for a
reason stated in 33 CFR 187.308(c) or because the statement does not
include documentation satisfactory to the office as to the transferee's
ownership interest or right to acquire the ownership interest, not
later than 20 days after delivery to the office of the statement and
payment of fees and taxes payable under State law in connection with
the statement or with the acquisition or use of the vessel, the office
must--
(1) Accept the statement;
(2) Amend the files of the office to reflect the transfer; and
(3) If the name of the owner whose ownership interest is being
transferred is indicated on the certificate of title--
(i) Cancel the certificate even if the certificate has not been
delivered to the office;
(ii) Create a new certificate indicating the transferee as owner;
(iii) Indicate on the new certificate any security interest
indicated on the canceled certificate, unless a court order provides
otherwise; and
(iv) Deliver the new certificate or a record evidencing an
electronic certificate.
(d) This section does not apply to a transfer of an interest in a
vessel by a secured party as prescribed by State law related to
security interests in goods.
Sec. 187.321 Application for transfer of ownership or termination of
security interest without certificate of title.
(a) Except as otherwise provided in 33 CFR 187.319 and 187.320, if
the office receives, unaccompanied by a signed certificate of title, an
application for a new certificate that includes an indication of a
transfer of ownership or a termination statement, the office may create
a new certificate under this section only if--
(1) All other requirements under 33 CFR 187.307 and 187.308 are
met;
(2) The applicant provides an affidavit stating facts showing that
the applicant is entitled to a transfer of ownership or termination
statement;
(3) The applicant provides the office with satisfactory evidence
that notification of the application has been sent to the owner of
record and all persons indicated in the files of the office as having
an interest, including a security interest, in the vessel, at least 45
days have passed since the notification was sent, and the office has
not received an objection from any of those persons; and
(4) The applicant submits any other information required by the
office as evidence of the applicant's ownership or right to terminate
the security interest, and the office has no credible information
indicating theft, fraud, or an undisclosed or unsatisfied security
interest, lien, or other claim to an interest in the vessel.
(b) The office may indicate in a certificate of title created under
paragraph (a) of this section that the certificate was created without
submission of a signed certificate or termination statement. Unless
credible information indicating theft, fraud, or an undisclosed or
unsatisfied security interest, lien, or other claim to an interest in
the vessel is delivered to the office not later than 1 year after
creation of the certificate, on request in a form and manner required
by the office, the office must remove the indication from the
certificate.
Sec. 187.322 Replacement certificate of title.
(a) If a written certificate of title is lost, stolen, mutilated,
destroyed, or otherwise becomes unavailable or illegible, the secured
party of record or, if no secured party is indicated in the files of
the office, the owner of record may apply for and, by furnishing
information satisfactory to the office, obtain a replacement
certificate in the name of the owner of record.
(b) An applicant for a replacement certificate of title must sign
the application, and, except as otherwise permitted by the office, the
application must comply with 33 CFR 187.307. The application must
include the existing certificate unless the certificate is lost,
stolen, mutilated, destroyed, or otherwise unavailable.
[[Page 52815]]
(c) A replacement certificate of title created by the office must
comply with 33 CFR 187.309 and indicate on the face of the certificate
that it is a replacement certificate.
(d) If a person receiving a replacement certificate of title
subsequently obtains possession of the original written certificate,
the person must promptly destroy the original certificate of title.
Sec. 187.323 Rights of purchaser other than secured party.
(a) A buyer in ordinary course of business has the protections
afforded by State law even if an existing certificate of title was not
signed and delivered to the buyer or a new certificate listing the
buyer as owner of record was not created.
(b) Except as otherwise provided in 33 CFR 187.317 and 187.324, the
rights of a purchaser of a vessel who is not a buyer in ordinary course
of business or a lien creditor are governed by State law.
Sec. 187.324 Rights of secured party.
(a) Subject to paragraph (b) of this section, the effect of
perfection and nonperfection of a security interest and the priority of
a perfected or unperfected security interest with respect to the rights
of a purchaser or creditor, including a lien creditor, is governed by
State law.
(b) If, while a security interest in a vessel is perfected by any
method under this subpart, the office creates a certificate of title
that does not indicate that the vessel is subject to the security
interest or contain a statement that it may be subject to security
interests not indicated on the certificate--
(1) A buyer of the vessel, other than a person in the business of
selling or leasing vessels of that kind, takes free of the security
interest if the buyer, acting in good faith and without knowledge of
the security interest, gives value and receives possession of the
vessel; and
(2) The security interest is subordinate to a conflicting security
interest in the vessel that is perfected under 33 CFR 187.315 after
creation of the certificate and without the conflicting secured party's
knowledge of the security interest.
Sec. 187.325 Duties and operation of office.
(a) The office must retain the evidence used to establish the
accuracy of the information in its files relating to the current
ownership of a vessel and the information on the certificate of title.
(b) The office must retain in its files all information regarding a
security interest in a vessel for at least 10 years after the office
receives a termination statement regarding the security interest. The
information must be accessible by the hull identification number (HIN)
for the vessel and any other methods provided by the office.
(c) If a person submits a record to the office, or submits
information that is accepted by the office, and requests an
acknowledgment of the filing or submission, the office must send to the
person an acknowledgment showing the HIN of the vessel to which the
record or submission relates, the information in the filed record or
submission, and the date and time the record was received or the
submission accepted. A request under this section must contain the HIN
and be delivered by means authorized by the office.
(d) The office must send or otherwise make available in a record
the following information to any person that requests it and pays the
applicable fee:
(1) Whether the files of the office indicate, as of a date and time
specified by the office, but not a date earlier than 3 days before the
office received the request, any certificate of title, security
interest, termination statement, or title brand that relates to a
vessel--
(i) Identified by a HIN designated in the request;
(ii) Identified by a vessel number designated in the request; or
(iii) Owned by a person designated in the request.
(2) With respect to the vessel--
(i) The name and address of any owner as indicated in the files of
the office or on the certificate of title;
(ii) The name and address of any secured party as indicated in the
files of the office or on the certificate, and the effective date of
the information; and
(iii) A copy of any termination statement indicated in the files of
the office and the effective date of the termination statement.
(3) With respect to the vessel, a copy of any certificate of
origin, secured party transfer statement, transfer-by-law statement
under 33 CFR 187.320, and other evidence of previous or current
transfers of ownership.
(e) In responding to a request under this section, the office may
provide the requested information in any medium. On request, the office
must send the requested information in a record that is in keeping with
State rules of evidence.
Dated: September 10, 2021.
J.W. Mauger,
Rear Admiral, U.S. Coast Guard, Assistant Commandant for Prevention
Policy.
[FR Doc. 2021-20095 Filed 9-21-21; 8:45 am]
BILLING CODE 9110-04-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on September 22, 2021.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.