Rule2022-11995
Uniform Certificate of Title Act for Vessels
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
June 6, 2022
Effective
July 6, 2022
Issuing agencies
Homeland Security DepartmentCoast Guard
Abstract
The Coast Guard is changing its regulations for certifying a State's titling system for undocumented vessels to increase States' participation in the Vessel Identification System (VIS). This final rule allows 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 changes to the certification guidelines relate to the technical requirements of recording and maintaining titling documentation, the most significant change implements a system of "branding" (permanently marking) titles for vessels that have sustained structural damage. This will 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 87 Issue 108 (Monday, June 6, 2022)</title>
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[Federal Register Volume 87, Number 108 (Monday, June 6, 2022)]
[Rules and Regulations]
[Pages 34175-34197]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-11995]
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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: Final rule.
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SUMMARY: The Coast Guard is changing its regulations for certifying a
State's titling system for undocumented vessels to increase States'
participation in the Vessel Identification System (VIS). This final
rule allows 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 changes to the
certification guidelines relate to the technical requirements of
recording and maintaining titling documentation, the most significant
change implements a system of ``branding'' (permanently marking) titles
for vessels that have sustained structural damage. This will help
prevent a process known as ``title washing,'' where severe vessel
damage is concealed by transferring the title to a different State.
DATES: This final rule is effective July 6, 2022.
ADDRESSES: To view documents mentioned in this preamble as being
available in the docket, go to <a href="https://www.regulations.gov">https://www.regulations.gov</a>, type USCG-
2018-0160 in the search box and click ``Search.'' Next, in the Document
Type column, select ``Supporting & Related Material.''
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
[[Page 34176]]
Guard; telephone 202-372-1071, email <a href="/cdn-cgi/l/email-protection#f7809e9b9b9e969ad981d995828590928484b782849490d99a9e9b"><span class="__cf_email__" data-cfemail="56213f3a3a3f373b782078342324313325251623253531783b3f3a">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
Table of Contents for Preamble
I. Abbreviations
II. Basis and Purpose, and Regulatory History
III. Discussion of Comments
IV. Discussion of the Rule
V. Regulatory Analyses
A. Regulatory Planning and Review
B. Small Entities
C. Assistance for Small Entities
D. Collection of Information
E. Federalism
F. Unfunded Mandates
G. Taking of Private Property
H. Civil Justice Reform
I. Protection of Children
J. Indian Tribal Governments
K. Energy Effects
L. Technical Standards
M. Environment
I. Abbreviations
BLA Boating Law Administrator
BLS Bureau of Labor Statistics
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
HIN Hull identification number
MOA Memorandum of Agreements
NASBLA National Association of State Boating Law Administrators
NPRM Notice of proposed rulemaking
OMB Office of Management and Budget
OPM Office of Personnel Management
RA Regulatory analysis
Sec. Section
UCC Uniform Commercial Code
UCOTA-V Uniform Certificate of Title Act for Vessels
ULC Uniform Law Commission
U.S.C. United States Code
VIS Vessel Identification System
II. Basis and Purpose, and Regulatory History
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 will 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 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. 00170.1, Revision No. 01.2, paragraph (II)(92)(a) and
(92)(h). Pursuant to that authority, the Coast Guard has promulgated
regulations in 33 CFR 187 governing the certification of State laws to
determine eligibility for preferred mortgages. Before publishing this
final rule we published a notice of proposed rulemaking (NPRM) in the
Federal Register (86 FR 52792, Sept. 22, 2021). That NPRM was entitled
``Uniform Certificate of Title Act for Vessels,'' and proposed to amend
33 CFR part 187.
III. Discussion of Comments
The Coast Guard received seven comment submissions during the 60-
day comment period for our NPRM, which ended November 22, 2021.
Four of the commenters supported the proposal to adopt the UCOTA-V
model into the Code of Federal Regulations (CFR) at 33 CFR part 187,
subpart D. The Uniform Law Commission (ULC), an organization dedicated
to providing States with carefully conceived and nonpartisan uniform
laws and the original drafters of UCOTA-V, strongly supports this final
rule. The commission commented that the rule is crucial to consumer
protection and will facilitate vessel financing, allowing vessel
purchasers to obtain loans with lower interest rates. The Boat History
Report, a website that helps its clients make informed watercraft
purchasing decisions, noted that this final rule will provide greater
transparency in the boating industry, promote title branding, and
prevent damaged vessels from entering used vessel markets. The Maryland
Department of Natural Resources commented that the adoption of this
final rule will be the catalyst for reorganizing Maryland's disparate
provisions governing vessel titling into a concise and orderly statute,
which will be a notable benefit to the State's boat owners. Finally,
the National Association of State Boating Law Administrators (NASBLA),
a nonprofit organization dedicated to developing public policy for
recreational boating safety, encourages approval of this final rule.
NASBLA indicated that it believes this final rule will provide a
consistent consumer protection measure that identifies vessels that
have been deemed unsafe, preventing them from being sold without
disclosure.
The other three commenters, who represent marine financing
institutions, expressed concerns that there may be an inconsistency in
granting preferred mortgage status on titled watercraft and the
provision of Sec. 187.324 that indicates ``the effect of perfection
and non-perfection 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.''
We do not believe there is any inconsistency. Whether or not a
State enacts UCOTA-V, lien priority is determined under the Uniform
Commercial Code (UCC) 9-322(a), which has been adopted in some fashion
by all 56 States.\1\ This final rule will have no impact on the laws
governing relative priority of multiple Article 9 security interests,
which is currently governed by state law and still will be after the
adoption of this final rule.
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\1\ As used throughout this final rule, ``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 there are some maritime liens whose priority status will be
reduced by a security interest perfected through UCOTA-V, the Coast
Guard sees this as an acceptable consequence. In 46 U.S.C. 12501(a),
Congress directed the Secretary for the department in which the Coast
Guard is operating to establish a VIS for the purposes of aiding law
enforcement and organizing the owners of vessels. The Coast Guard has
decided that incentivizing compliance with UCOTA-V through a preferred
mortgage status best serves the American people, even if certain
maritime lien holders are affected. Furthermore, the affected
population had myriad opportunities to comment on the impacts of
passing such a rule during the more than 2 years the ULC spent drafting
UCOTA-V.\2\
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\2\ An archive of the activities and deliberations of the ULC
committee on UCOTA-V, including transcripts of all meetings, can be
found at <a href="https://www.uniformlaws.org/viewdocument/committee-archive-1?CommunityKey=61fb3255-092e-4e91-982b-6fa1ae66fd82&tab=librarydocuments">https://www.uniformlaws.org/viewdocument/committee-archive-1?CommunityKey=61fb3255-092e-4e91-982b-6fa1ae66fd82&tab=librarydocuments</a>.
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IV. Discussion of the Rule
For the reasons described above, this final rule revises subpart D
of 33 CFR part 187 so that State titling laws modeled on UCOTA-V will
meet the
[[Page 34177]]
certification requirements of subpart D. In addition, the final rule
revises the applicable definitions section for part 187 located in
subpart C. In subpart D, we replace the entire text of the existing
subpart with new guidelines to accommodate States that adopt variants
of the model code appropriate for their State commercial legal regimes.
We are not adopting 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 is governed by State law applicable to vessel titling that
existed prior to the adoption of UCOTA-V,\3\ there is no Federal
interest or need to apply Federal oversight of the application of a
savings clause. 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 final rule.
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\3\ 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 final rule
addresses.
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Instead, we are adopting certification guidelines that incorporate
UCOTA-V, but with a number of policy or stylistic changes so 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 omitting the following sections of UCOTA-V that do not
bear specifically on titling concerns. 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, there is no
Federal interest or need to apply Federal oversight of the application
of a savings clause.
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 any State 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.''
\4\
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\4\ 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 earlier in
this section, the Coast Guard is not incorporating section 28.
We are making a variety of stylistic changes and adding new
definitions to clarify maritime nomenclatures. First, we keep 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 or paragraph. We also replace certain
words such as ``shall'' with ``must,'' as provided by the Federal Plain
Language Guidelines.\5\ Additionally, we replace references to ``the
UCC'' or specific sections of the UCC with references to ``State law.''
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\5\ 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 certification
guidelines below.
Section 187.7, What are the definitions of terms used in this part?
We rename this section Definitions. We 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 have
revised the regulations using the definition from UCOTA-V.
The definitions from UCOTA-V that we are adding are as follows:
<bullet> Barge;
<bullet> Builder's certificate;
<bullet> Buyer;
<bullet> Cancel;
<bullet> Certificate of title;
<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; \6\
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\6\ 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 revise
the heading for subpart D from Guidelines for State Vessel Titling
Systems to the more general State Vessel Titling Systems. We also
change the section titles in revised subpart D to better align with the
section titles of UCOTA-V.
Section 187.301. We 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 made 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 advantage of sharing validated vessel
information that meets the minimum requirements listed in regulations.
Section 187.302 (new). We move 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) incorporates 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 are not removed or substantively changed, but
some definitions are rephrased and several new terms are 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) requires 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
[[Page 34178]]
adopted in modified form. Finally, we 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 revise Sec. 187.303 to incorporate UCOTA-V
section 3 applicability provisions. As described above, the current
list of terms States must define is moved to the new Sec. 187.302.
Section 187.304. We retain this section without change, but rename
it to better match the rest of the subpart.
Section 187.305. This section currently specifies requirements for
title applications. We move the material on this topic to the revised
Sec. 187.307. The revised Sec. 187.305 incorporates UCOTA-V section
5, defining which State's law governs vessels covered by title
certificates.
Section 187.306 (new). This new section incorporates the UCOTA-V
section 6 discussion of when a title certificate is and is not
required.
Section 187.307. The revised Sec. 187.307 incorporates UCOTA-V
section 7 specifications for title application contents. This rule
removes this section's mandate that States must impose certain
conditions on vessel dealers and manufacturers. We will no longer
require these dealer- or manufacturer-specific conditions because they
are covered by the UCOTA-V provisions that we adopt in this rule.
Section 187.308 (new). This new section incorporates 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. This rule revises Sec. 187.309 to exchange the
current contents of this section, which govern requirements for
voluntary title transfers (transfers other than by operation of law),
with those of Sec. 187.317. While we are retaining without change the
existing content of this section, this exchange will make the
organization of provisions within the CFR better align with the
structure of UCOTA-V.
Section 187.310 (new). This new section incorporates UCOTA-V
section 10 title brand provisions. We 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
move this discussion to the new Sec. 187.320. The revised Sec.
187.311 incorporates UCOTA-V section 11 requirements for maintenance of
and access to State title certificate files.
Section 187.312 (new). This new section incorporates 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. We are moving this discussion to Sec. 187.328. The revised
Sec. 187.313 incorporates UCOTA-V section 13, declaring the prima
facie evidential value of title certificate contents.
Section 187.314 (new). This new section incorporates 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 incorporates UCOTA-V section 15 provisions for
perfecting vessel security interests, which are currently addressed in
Sec. 187.323. The revised Sec. 187.315 also includes the abbreviation
for a hull identification number (HIN) in an effort to make the meaning
of the section clearer to the regulated public.
Section 187.316 (new). This new section incorporates 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 are removing Sec. 187.327.
Section 187.317. To better align with UCOTA-V's structure, we
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 incorporates 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 move this topic to
the new Sec. 187.322. The revised Sec. 187.319 incorporates UCOTA-V
section 19, concerning the transfer of a vessel ownership interest by a
secured party's transfer statement.
Section 187.320 (new). This new section incorporates 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 HIN to be
assigned and affixed to a vessel upon proof of its ownership. We
replace 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 HINs, which we 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 HIN 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 incorporates 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 will be addressed in Sec.
187.315. The revised Sec. 187.323 incorporates UCOTA-V section 23,
concerning the rights of a vessel purchaser who is not a secured party.
Section 187.324 (new). This new section incorporates 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 this final
rule addresses by revising Sec. 187.315(f). The revised Sec. 187.325
incorporates 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. This final rule removes this section, which
covered the discharge of a vessel security interest. This topic is now
covered in Sec. 187.316.
Sections 187.329. This final rule removes 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 will 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. This final rule removes this section. Section
187.331 required States to retain title system information and make it
available to Government authorities. In the revised subpart D, similar
requirements appear in Sec. Sec. 187.311(d) and 187.325(a).
[[Page 34179]]
V. Regulatory Analyses
The Coast Guard received seven comment submissions during the 60-
day comment period that ended on November 22, 2021. We received no
public comments on the estimated benefits and costs; therefore, the
methodology employed in the regulatory analyses remains unchanged.
We developed this rule 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, of reducing costs, of harmonizing rules, and of 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. A regulatory
analysis (RA) follows.
This final rule has several goals. The Coast Guard intends to
establish minimum requirements for States \7\ 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).
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\7\ As used throughout this final rule, ``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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This RA provides an evaluation of the economic impacts associated
with this final rule. Table 1 provides a summary of the final rule's
costs and benefits.
Table 1--Summary of the Final Rule's Impacts \1\
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Category Summary
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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..................................... <bullet> Ability to obtain preferred mortgage
status.
<bullet> Lower transaction costs.
<bullet> Deterrence to ``title washing.''
<bullet> Recovery of stolen vessels.
<bullet> Identification of abandoned vessels.
<bullet> Consumer protection.
<bullet> Security measures for financial entities.
<bullet> Lower administrative burden and costs to
buyers.
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\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.
The revisions will 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 final rule includes 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 States 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.\8\ To encourage further participation,
participating States have access to all VIS data.
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\8\ <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.
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As described later, the benefits of this final rule include
increased uniformity across States in their titling laws. In turn, this
will lead to reduced transaction costs, increased fraud prevention
(insurance fraud and fraud from illegitimately owned vessels),
increased consumer protection, decreased risk to lenders, improved
opportunities for the recovery and identification of abandoned vessels,
and
[[Page 34180]]
increased efficiencies for interstate commerce. Even through there is
no new requirement in this final rule for vessel owners to report
vessel damage to the VIS directly, the insurance company will 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 will be lower because
consumers may be able to get preferred loans with 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 will 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 final rule potentially affects 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,\9\ 16 States were interested in joining the
VIS but had not signed Memorandum of Agreements (MOA) for VIS
participation, and 2 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.\10\
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\9\ VIS participation is defined by the existence of a signed
MOA.
\10\ 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
This final rule results 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 (final
subpart D compliance) costs. The final rule does not impose direct
costs on vessel owners, as it will 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 this
final rule. For example, this final 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.
This final rule may lead to changes in titling practices in some
States, which may have cost implications for vessel owners and the
States. We describe the potential costs to vessel owners as a direct or
indirect result of this final rule below.
Potential Costs to Vessel Owners
This final rule will 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 will experience no
incremental impact. In States with an existing titling program, vessel
owners may be affected if the State changes or imposes additional fees
through its legislative or regulatory process. States that are
compliant with UCOTA-V (final 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 will not face a cost increase as an indirect effect of these
final changes. Nonetheless, we have not computed a cost for the
requirement to vessel owners in States with a titling system, due to
the uncertainty of a potential cost increase.\11\
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\11\ According to BSX, recreational vehicle owners for the 10
compliant and semi-compliant States did not incur a cost increase.
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In States without a vessel titling program, recreational vessel
owners may experience a cost increase because of this final rule. These
States have not indicated to the Coast Guard how they may 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.\12\ Because the Coast Guard does not have information on how
future titling programs may 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
\13\ for labor expended to obtain the title and actual fees for the
title.
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\12\ 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>.
\13\ 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 Valuation of Travel Time in Economic
Analysis,'' 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>.
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No further action will be required by vessel owners. Vessel owners
do not need to renumber their vessels as a result of this final 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 this final rule. All are
considered indirect costs, as they are costs that may be imposed by the
State on vessel owners as a result of this final 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 final
rule
----------------------------------------------------------------------------------------------------------------
Obtaining a vessel title (cost of Costs to vessel owners, Vessel owners in 7 Potential indirect
title). imposed by States without States. cost of final
titling programs (7 rulemaking.
States), that require
vessel owners to obtain a
title. Potential cost of
obtaining title is $50.
[[Page 34181]]
Obtaining a vessel title Costs to vessel owners, Vessel owners in 7 Potential indirect
(opportunity cost of obtaining imposed by States without States. cost of final
title). titling programs (7 rulemaking.
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
imposed by States with States. cost of final
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 will 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 is needed to
perform these tasks under this final rule.
In order to process an MOA, it is first transmitted from a State to
a Coast Guard compliance officer in BSX and then to the Commandant (or
designee) for approval. A Coast Guard compliance officer will engage
and coordinate with and respond to inquiries from the States. We
estimate that a Coast Guard compliance officer spends 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
spends 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 final rule, we estimate that the Coast Guard
will need to engage and coordinate with, and respond to inquiries from,
States regarding VIS participation and UCOTA-V compliance. Eighteen
States are not in the VIS. We estimate that a Coast Guard compliance
officer will need to coordinate with each of these States for VIS
participation.\14\ To engage with and respond to inquiries from States,
we estimate that the compliance officer will 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 will spend
0.5 hour per State to assist (Cost = 47 States x (0.5 hour x Compliance
officer's wage rate)).
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\14\ 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.
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Lastly, the Coast Guard will need to update its website with
information on this final rule. We estimate that 1 hour will 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 this 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
Task responsible party Cost population cost of final rule
----------------------------------------------------------------------------------------------------------------
Process MOA from States......... 0.25 hours to (0.5 hours x Coast One-time cost to Direct.
process MOA Guard Compliance the Coast Guard
(Coast Guard officer's wage for all 56 States.
Compliance rate) + (0.2 hour
officer). x Commandant or
0.25 hours to designee's wage
transmit for rate) x 56 States.
approval (Coast
Guard Compliance
officer).
0.2 hours for
approval
(Commandant or
designee).
Coordinate with States.......... 0.5 hours for 18 18 States x (0.5 One-time cost to Direct.
States without hour x Coast the Coast Guard
VIS (Coast Guard Guard 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 to hour x Coast
adopt UCOTA-V Guard Compliance
(Coast Guard officer's wage
Compliance rate).
officer).
Update Coast Guard Website...... 1 hour to update 0.25 hour x Coast One-time cost to Direct.
(Federal computer Guard compliance the Coast Guard.
technician). officer's wage
0.25 hours to rate) + (1 hour x
approve (Coast Federal computer
Guard Compliance technician's wage
officer). rate.
----------------------------------------------------------------------------------------------------------------
Costs to the Regulated Public
Compliance with this final rule will require a variety of tasks by
the regulated public. This section documents the Coast Guard's
assessment of this final rule's changes and the steps States need to
take as a result. Not all tasks need to be carried out by all the
States. In this section, we note first the tasks that apply to all
States. Next are the tasks that result from this final 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.
[[Page 34182]]
Below is a list of all costs to the regulated public:
Costs to the Regulated Public--States
All 56 States need to be familiarized with this final rule and to
complete the task of reviewing their State's website for numbering and
titling of vessels. 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 will spend 0.5 hour to become
familiarized with this final rule.\15\ A manager typically will perform
this task. A manager will spend another 0.5 hour to review the State's
procedures and website to make a determination whether anything will
need to change in response to this final 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 will take 1 hour
and be performed by a computer technician at the direction of a
manager.\16\ However, as the Coast Guard does not have an estimate on
how many States will need to update a website, the cost is considered
only a potential cost and is not factored into the cost analysis.
---------------------------------------------------------------------------
\15\ 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, October 22, 2014), the Coast
Guard estimated that the task will 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.
\16\ The Coast Guard estimates a manager will spend 0.25 hour to
provide direction and supervise and approve the work of a computer
technician.
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Although not explicitly required, some States may send email
notifications or a press release to interested parties (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.\17\ We
estimate these as one-time costs to the State.
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\17\ This estimate is based on the Coast Guard's final rule for
Tankers Automatic Pilot Systems (83 FR 55272, November 05, 2018).
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,'' fourth 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
Task responsible party Cost population cost of final 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 in 1 hour, Computer Cost = 1 hour x 56 Potential one-time Potential direct
cost analysis.). technician States x Computer cost to all 56 cost.
Technician's wage States.
rate.
Notification of change.......... 0.5 hours, State Cost = 0.5 hour x One-time cost to Direct.
manager 56 States x State all 56 States.
manager's wage
rate.
----------------------------------------------------------------------------------------------------------------
Costs to the Regulated Public--States (VIS Compliance Costs)
Based on BSX data,\18\ 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.
---------------------------------------------------------------------------
\18\ <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 will need to complete the MOA process.
In order to comply, States will 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 will engage in activities to
upload data to the VIS. However, according to Info-Link
Technologies,\19\ 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 Info-Link Technologies already
bears 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 will not produce
costs to States new to VIS.
---------------------------------------------------------------------------
\19\ 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 ADDRESSES portion of this final
rule).
---------------------------------------------------------------------------
New VIS participants need to complete the new user request form. We
estimate that it takes 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.\20\
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\20\ During the renewal process for the collection of
information request, no public comments were received on the
estimate. In preparing this final rule, 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 will have to address legislative conflicts with
existing privacy laws that complicate or prevent VIS participation. We
estimate that such a task will require that a manager negotiate the
changes with a State legislative committee. An attorney will draft the
legislation. Unlike UCOTA-V, which has uniform legislation to follow
for each State, privacy law amendments may take more time to develop.
We estimate that a manager will spend 40
[[Page 34183]]
hours to negotiate legislative changes to privacy laws, and an attorney
will spend another 40 hours to draft this legislative language.
However, State laws are often voted in blocks and the labor to put the
amended privacy legislation forward and to vote on it is unseverable.
For that reason, we have not estimated a cost for either step.
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 will 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]
----------------------------------------------------------------------------------------------------------------
Time burden and Applicable Direct or indirect
Task responsible party Cost population cost of final rule
----------------------------------------------------------------------------------------------------------------
Prepare and submit an MOA....... 16 hours (State 18 States x (16 One-time cost for Direct.
manager). hours x State 18 States.
Manager wage
rate).
Complete New User request form.. 0.1 Hour (State 18 States x (0.1 One-time cost for Direct.
manager). hour x State 18 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 (Potential).
Manager wage with issues with
rate). the 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 Direct.
amend privacy laws. manager). hours x State 2 States.
40 hours (State Manager wage
attorney). rate) + (40 hours
x State attorney
wage rate)].
----------------------------------------------------------------------------------------------------------------
Costs to the Regulated Public--States in UCOTA-V Adoption (Final
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.\21\
Many of the remaining States have reported that they are waiting for
the Coast Guard to issue 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 requested the
changes. For these reasons, the Coast Guard estimates that all 56
States will adopt UCOTA-V.
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\21\ Email from the ULC to William Burgess, Compliance Officer,
Coast Guard (January 16, 2020) (available in the docket where
indicated under the ADDRESSES portion of this final rule).
---------------------------------------------------------------------------
Currently, 47 States have neither adopted UCOTA-V nor initiated
legislation to do so. The cost analysis of UCOTA-V adoption focuses
solely on these 47 States. In order to comply with this final rule,
States will need to develop legislation and amend their computer
systems to comport with UCOTA-V. As noted earlier, all States will post
information on their websites about this final rule; that task appears
in the Costs to the Regulated Public--States section of this analysis.
In order to develop UCOTA-V legislation,\22\ a State will require
the labor of an attorney \23\ to draft the legislation \24\ for a State
legislative committee to begin the legislative process. The ULC has
developed legislative text for UCOTA-V, which each State may use to
develop its respective State law. For this reason, the labor
requirement for each State is relatively low. We estimate that an
attorney will spend approximately 24 hours \25\ to draft this
legislative language. Given that State laws \26\ 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.
---------------------------------------------------------------------------
\22\ 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 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.
\23\ 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.
\24\ 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.
\25\ 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,
Sept. 22, 2014), the Coast Guard estimated that a legislative change
would take 10 hours. No public comments were received on this
estimate. In this final rule, the Coast Guard adjusted this estimate
to reflect the more complex nature of this change.
\26\ 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 put it forward
for voting would be the same.
---------------------------------------------------------------------------
States adopting UCOTA-V will need to update their procedures and
websites to reflect the resulting changes. We estimate that 5 hours
will 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)).\27\
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\27\ This estimate aligns with other 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 (80 FR 54418, September 10, 2015), the
proposed rule for Revision of Crane Regulation Standards for Mobile
Offshore Drilling Units (MODUs), Offshore Supply Vessels (OSVs), and
Floating Outer Continental Shelf (OCS) Facilities (78 FR 27913, May
13, 2013), and the final rule for Personal Flotation Devices
Labeling and Standards (79 FR 56491, Sept. 22, 2014). Previously
approved collections of information may be found at <a href="https://www.reginfo.gov/public/do/PRAMain">https://www.reginfo.gov/public/do/PRAMain</a>. No public comments were received
on these estimates. The Coast Guard adjusted its estimate to reflect
changes in complexity of the task.
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[[Page 34184]]
The remaining UCOTA-V compliance costs items are--
(1) labor for a manager (30 minutes) 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 (15 minutes) and a
manager (45 minutes) 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 (15 minutes) 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 (756 minutes) 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.\28\
---------------------------------------------------------------------------
\28\ According to BSX, most States use an ``off-the-shelf''
system, so changes are easy and menu driven. Some States have older
systems that will 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 seven States that do not have an existing titling program,
the labor tasks for amending State's computers to comport with UCOTA-V
are greater. We estimate that 24 hours will be spent by a computer
technician in these States to amend the State's computers to comport
with UCOTA-V, and that a manager will spend another 0.5 hour to review
and approve the work.
BSX routinely contacts States regarding their vessel titling
systems. There are currently 45 States titling vessels and 1 State that
makes titling optional.\29\ 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.
---------------------------------------------------------------------------
\29\ Email from NASBLA Vessel Registration, Identification, and
Titling Committee to William Burgess, Compliance Officer, Coast
Guard, February 10, 2010. Available in the docket where indicated
under the ADDRESSES portion of this final rule.
---------------------------------------------------------------------------
Coast Guard personnel attended the National Association of State
Boating Law Administrators Workshop held in Lexington, KY from February
23 to 28, 2020. Approximately 40 boating administrators from the States
were in attendance, and representatives from 4 States (Wisconsin,
Minnesota, Alaska, and South Carolina) indicated they were
contemplating adopting UCOTA-V. None of these 4 States have conducted a
complete cost analysis, but the initial projected cost ranged from $0
to about $8,000.
The primary changes required 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 (BLA),\30\ this
was accomplished at no cost to the State.\31\
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\30\ 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, every State has an assigned BLA whose primary function is
to administer the recreational boating safety program within the
State. The BLA for Virginia is an employee with the Virginia
Department of Game and Inland Fisheries.
\31\ Conversation at the National Association of State Boating
Law Administrators Workshop (circa February 28, 2018 to March 1,
2018) with Mr. Thomas Guess, Boating Law Administrator, Virginia,
and William Burgess, Compliance Officer, Coast Guard. According to
the Virginia BLA, updates to the system are included as a part of
routine information technology maintenance. See also <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, and was last viewed
on February 5, 2020.
---------------------------------------------------------------------------
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.\32\ 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 will 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.\33\
---------------------------------------------------------------------------
\32\ No changes will be required to any State's systems to
facilitate population of the VIS. Data received from the States for
inclusion in the VIS will 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.
\33\ Conversation at the National Association of State 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 will
not incur additional costs because they elected to adopt the UCOTA-V
model prior to this regulation. These States will not require the use
of a computer technician to upgrade the computer system because the
conversion has taken place already. No further action is needed by
States in this situation. As noted earlier, these States are already
familiar with UCOTA-V and will review their existing procedures as a
result of this final rule.
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)].
[[Page 34185]]
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 Final 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.
Table 7--Loaded Wage Factor Calculation
[$2020]
----------------------------------------------------------------------------------------------------------------
Total Wage & Loaded wage
Personnel category Data source(s) \1\ compensation salaries factor
----------------------------------------------------------------------------------------------------------------
All Workers, State and Local BLS Employer Costs for $51.54 $29.54 1.74
Government. Employee Compensation, all
workers in State and Local
Government.
Managers, State and Local BLS Employer Costs for 64.02 41.02 1.56
Government. Employee Compensation,
Managers in State and
Local Government.
Coast Guard Uniform Positions...... 2020 Military Active & .............. .............. ..............
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, professional and related occupations)
using the multi-screen database. To repeat this process, visit <a href="https://data.bls.gov/cgi-bin/dsrv?cm">https://data.bls.gov/cgi-bin/dsrv?cm</a> and select
``State and local government workers.'' Select ``Total Compensation'' and ``Wages and salaries.'' Select ``All
workers'' or ``Management, 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 fourth 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>. Select table named ``2020 Military
Active & Reserve Component Pay Tables''. Data was posted on December 30, 2019 and web page was last updated
January 27, 2020. This page was last viewed on January 18, 2022.
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.\34\ 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 $71.03, and
the wage rate for the Commandant (O-10) at $163. This figure represents
a loaded
[[Page 34186]]
wage rate for uniformed Coast Guard positions.\35\
---------------------------------------------------------------------------
\34\ <a href="https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2020/general-schedule/">https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2020/general-schedule/</a>. 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.
\35\ 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 will be impacted by the final
rule. We present the estimated wage rates and a summary of the data for
the final 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 71.59 1.74 124.57
Related Workers (OC 23-
1011) in the Legal
Occupations \5\.
Coast Guard Commandant (O-10)...... Military Active & Reserve .............. .............. 163
Component Pay Tables \6\.
Civilian Computer Technician (GS- OPM Salary Table (2020).... 42.73 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 developers. Please see the footnotes to table 7 for instructions on calculating load factors.
\2\ <a href="https://www.bls.gov/oes/current/oes151256.htm">https://www.bls.gov/oes/current/oes151256.htm</a>.
\3\ <a href="https://www.bls.gov/oes/2020/may/oes436014.htm">https://www.bls.gov/oes/2020/may/oes436014.htm</a>.
\4\ <a href="https://www.bls.gov/oes/2020/may/oes111021.htm">https://www.bls.gov/oes/2020/may/oes111021.htm</a>.
\5\ <a href="https://www.bls.gov/oes/2020/may/oes231011.htm">https://www.bls.gov/oes/2020/may/oes231011.htm</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 will
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
will 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 final rule to be $14,537. We show
the summary of compliance costs in table 9.
Table 9--Estimated Cost of Final 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 56 States x (0.5 hour x $2,640
Final Rule. $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. 56 States x (1 hour x Not in cost
(Potential cost, not $95.60/hour computer calculations.
used in analysis). technician).
----------------------------------------------------------------------------------------------------------------
Subtotal--General Compliance ....................... ....................... $7,921
Costs (States).
VIS Compliance Costs (States) (See
table 5) (One-time costs for
States):
[[Page 34187]]
33 CFR 187.7..................... Prepare and submit an 18 States x (16 hours x $27,158
MOA. $94.30/hour State
manager).
33 CFR 187.7..................... Complete New User 18 States x (0.1 hour x $170
request form. $94.30/hour State
manager).
33 CFR 187.7..................... Coordinate with Coast 18 States x (1 hour x $1,697
Guard for data $94.30/hour State
transfer. (Potential manager).
cost, but used in
analysis).
33 CFR 187.7..................... Draft legislative 2 States x [(40 hours x $17,510
language to amend $94.30/hour State
privacy laws. 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 Compliance Costs ....................... ....................... $46,535
(States).
UCOTA-V Adoption (Subpart D)
Compliance Costs (States) (See table
6) (One-time costs for States):
33 CFR 187.306................... Draft UCOTA-V 47 States x [(2 hours x $38,138
legislative 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 $94.30/hour State
and certification. manager).
33 CFR 187.312................... Assist with update and 47 States x [(0.25 hour $3,721
convert to compliant x $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 $1,108
conversion to x $94.30/hour State
compliant system. manager).
33 CFR 187.312................... Update or convert to a 47 States x (12.6 hours $56,614
compliant system. x $95.60/hour computer
technician).
33 CFR 187.312................... Amend State's computers 7 States x [(2 hours x $1,503
to comport with UCOTA- $95.60/hour computer
V. technician) + (0.25
hour x $94.30/hour
State manager)].
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 24 States x [(0.25 hour $2,860
on website. x $94.30/hour State
manager) + (1 hour x
$95.60/hour computer
technician)].
----------------------------------------------------------------------------------------------------------------
Subtotal: UCOTA-V (Subpart D) ....................... ....................... $128,321
Compliance Costs (States).
Total Cost for Regulated Public ....................... ....................... $182,607
(States).
----------------------------------------------------------------------------------------------------------------
Federal Government Costs (One-time cost to Government for States affected)
----------------------------------------------------------------------------------------------------------------
33 CFR 187.306....................... Process New User 18 States x (0.5 hour x $658
request from States. $73.14/hour Compliance
Officer).
33 CFR 187.306....................... Process an MOA from 18 States x [(0.2 hour $11,448
States. x $163/hour
Commandant) + (8.25
hours x $73.14/hour
Compliance Officer)].
33 CFR 187.306....................... Coordinate with 18 18 States x (0.5 hour x $658
States for VIS. $73.14/hour Compliance
Officer).
33 CFR 187.312....................... Coordinate with 47 47 States x (0.5 hour x $1,682
States on UCOTA-V $73.14/hour Compliance
certification. 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 Government ....................... ....................... $14,537
(Coast Guard).
Total for Regulated Public and ....................... ....................... $197,148
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.
[[Page 34188]]
Total Costs
Using a 7-percent discount rate, we estimate the total discounted
cost of the final 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 estimated cost to the regulated public, the Coast Guard
expects all States will 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 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 Final Rule
[10-year period of analysis, 7- and 3-percent discount rates ($2020)] \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs to the regulated public Costs to the government Total estimated costs
(states) -------------------------------------------------------------------------
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.
Benefits
This final rule amends 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 final rule encourages uniformity
amongst the States through the adoption of the UCOTA-V model, in its
entirety or in part, and follows recommendations by the National
Boating Safety Advisory Council 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.
This final rule also promotes consumer protection against fraud. A
large number of recreational vessels are resold annually. In 2017,
there were approximately 1.1 million pre-owned vessels sold in the
United States.\36\ Given this large number, the industry is vulnerable
to the types of fraud UCOTA-V is designed to prevent.
---------------------------------------------------------------------------
\36\ <a href="https://boatingindustry.com/news/2021/11/09/pre-owned-boat-sales-exceeded-one-million-units-in-2020-for-the-first-time-since-2006/">https://boatingindustry.com/news/2021/11/09/pre-owned-boat-sales-exceeded-one-million-units-in-2020-for-the-first-time-since-2006/</a> (``Pre-owned boat sales exceeded one million units in 2020 for
the first time since 2006,'' November 9, 2021). Accessed and last
viewed on May 12, 2022.
---------------------------------------------------------------------------
The final rule facilitates 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 may earn more over the term of the loan with less risk. More
specifically, the lender faces a lower risk of loans defaulting;
therefore, the lender's loan portfolio may provide better returns
despite the lower interest rates offered to borrowers.
The consumer benefits as well. With preferred loans, the borrower
has a loan with better terms. Relative to a non-preferred loan, the
consumer pays less per month due to the lower interest rate on
preferred loans.
In addition, consistent titling procedures across States will deter
the practice of ``title washing,'' which occurs after the sale of a
damaged vessel for salvage when the buyer makes cosmetic repairs and
resells the vessel without disclosing its previous damage. Recreational
boaters may benefit from this final rule by being able to assist States
and law enforcement in recovering their lost or stolen vessels.
Furthermore, we intend this final 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, as of May 10, 2022, 16 States still do
not participate in the VIS.\37\ Facilitating full VIS participation by
these States will 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 will make
it easier for States to obtain subpart D certification.
---------------------------------------------------------------------------
\37\ <a href="https://cgmix.uscg.mil/VISInformation.aspx">https://cgmix.uscg.mil/VISInformation.aspx</a>?VISOption=.
---------------------------------------------------------------------------
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
[[Page 34189]]
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
will change the guidelines in subpart D so that any State that adopts
UCOTA-V and participates in the VIS would be in compliance. This will
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 will 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 regulatory action, we
rejected this alternative.
B. Small Entities
Under the Regulatory Flexibility Act, 5 U.S.C. 601-612, we have
considered whether this final rule will 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 final rule will affect 56 States
and U.S. territories.\38\ All governmental jurisdictions that will
potentially be directly regulated by this final 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.\39\ Therefore, the Coast
Guard certifies under 5 U.S.C. 605(b) that this final rule will not
have a significant economic impact on a substantial number of small
entities.
---------------------------------------------------------------------------
\38\ 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.
\39\ 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.
---------------------------------------------------------------------------
C. Assistance for Small Entities
Under section 213(a) of the Small Business Regulatory Enforcement
Fairness Act of 1996, Public Law 104-121, we offer to assist small
entities in understanding this rule so that they can better evaluate
its effects on them and participate in the rulemaking. The Coast Guard
will not retaliate against small entities that question or complain
about this rule or any policy or action of the Coast Guard.
D. Collection of Information
This final rule calls for the modification of an existing
collection of information under the Paperwork Reduction Act of 1995, 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 collections, 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 the VIS, which 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 are the primary beneficiaries. To become part of
the VIS, States must submit an 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 will 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 will be two additional States joining the VIS
annually until all States join. Over a 10 year period, this final rule
will increase the number of respondents from 38 States to 56 States.
Frequency of Response: The number of responses per year of this
final rule will 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 will be prepared by a
manager. A computer technician will handle the VIS data upload
Estimate of Total Annual Burden: This final rule will require
additional hours for VIS data uploads (32 hours annually),\40\ MOAs (32
hours annually), and VIS user requests (1 hour
[[Page 34190]]
annually).\41\ The final rule will increase the total burden by 64
hours (rounded from the actual 63.3 hours), from 5,792 hours to 5,856
hours.\42\
---------------------------------------------------------------------------
\40\ Rounded from the actual 31.2 hours.
\41\ Rounded from the actual 0.2 hour.
\42\ Rounded from the actual 5,855.3 hours.
---------------------------------------------------------------------------
As required by 44 U.S.C. 3507(d), we will submit a copy of this
rule to OMB for its review of the collection of information. You are
not required to respond to a collection of information unless it
displays a currently valid OMB control number. OMB has not yet
completed its review of this collection.
E. Federalism
A rule has implications for federalism under Executive Order 13132
(Federalism) if it has a substantial direct effect on States, on the
relationship between the National Government and the States, or on the
distribution of power and responsibilities among the various levels of
government. We have analyzed this final 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.
The purpose of this final rule 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 final rule requires 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 final rule will not require States to request
certification, change their existing titling systems, or otherwise
preempt related State regulations. Therefore, the final rule is
consistent with the principles of federalism and preemption
requirements in Executive Order 13132.
F. Unfunded Mandates
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 final rule will not
result in such expenditure, we do discuss the effects of this rule
elsewhere in this preamble.
G. Taking of Private Property
This final rule will 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 final 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 final rule under Executive Order 13045
(Protection of Children from Environmental Health Risks and Safety
Risks). This final rule is not an economically significant rule and
will not create an environmental risk to health or risk to safety that
might disproportionately affect children.
J. Indian Tribal Governments
This final rule does not have tribal implications under Executive
Order 13175 (Consultation and Coordination with Indian Tribal
Governments), because it will 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 final 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 final rule does not use technical standards. Therefore, we did
not consider the use of voluntary consensus standards.
M. Environment
We have analyzed this final rule under Department of Homeland
Security Management Directive 023-01, Rev. 1, associated implementing
instructions, and Environmental Planning COMDTINST 5090.1 (series),
which guide the Coast Guard in complying with the National
Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made
a 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 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
final rule is categorically excluded under paragraphs L54 and L57 of
Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev 1.
Paragraph L54 pertains to regulations which are editorial or procedural
and paragraph L57 pertains to regulations concerning documentation of
vessels. This final rule involves changes to regulations for certifying
a State's titling system for undocumented vessels.
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 amends
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; DHS Delegation No.
00170.1, Revision No. 01.2, paragraph (II)(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 the Department of
[[Page 34191]]
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.
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
[[Page 34192]]
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.
Written certificate of title means a certificate of title
consisting of information inscribed on a tangible medium.
0
3. Revise subpart D 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 Sec. 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 Sec. 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 Sec. 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 Sec. 187.7 and the terms in 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 vessels 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;
[[Page 34193]]
(viii) The engine drive type, as described in 33 CFR 174.19, if
any; and
(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 Sec. 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 Sec. 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--
[[Page 34194]]
(1) Deliver to the office an application for a new certificate that
complies with 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) of this section, 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 Sec. 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 (HIN) 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.
[[Page 34195]]
(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 Sec. 187.308 and deliver
the new certificate or a record evidencing an electronic certificate
pursuant to Sec. 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 paragraphs (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 Sec. 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 Sec. 187.307 or Sec. 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) 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
Sec. 187.318, Sec. 187.319, Sec. 187.323(a), or Sec. 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;
[[Page 34196]]
(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 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 Sec. 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 Sec. 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 Sec.
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
(ii) 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 Sec. 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 Sec. Sec. 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 Sec. Sec. 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
[[Page 34197]]
must comply with Sec. 187.307. The application must include the
existing certificate unless the certificate is lost, stolen, mutilated,
destroyed, or otherwise unavailable.
(c) A replacement certificate of title created by the office must
comply with Sec. 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 Sec. Sec. 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 non-perfection 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 Sec. 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 Sec. 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: May 31, 2022.
W.R. Arguin,
Rear Admiral, U.S. Coast Guard, Assistant Commandant for Prevention
Policy.
[FR Doc. 2022-11995 Filed 6-3-22; 8:45 am]
BILLING CODE 9110-04-P
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</html>Indexed from Federal Register on June 6, 2022.
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.