Uniform Certificate of Title Act for Vessels

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DEPARTMENT OF HOMELAND

SECURITY

Coast Guard

33 CFR Part 187

[Docket No. USCG–2018–0160]

RIN 1625–AC28

Uniform Certificate of Title Act for

Vessels

AGENCY

: Coast Guard, DHS.

ACTION

: Notice of proposed rulemaking.

SUMMARY

: The Coast Guard proposes

changes to its regulations for certifying

a State’s titling system for

undocumented vessels to increase

States’ participation in the Vessel

Identification System (VIS). The

proposed changes would allow States

that have adopted the recommendations

of the model Uniform Certificate of Title

Act for Vessels to certify their titling

provisions with the Coast Guard. Once

certified and participating in the VIS, a

State is able to confer preferred

mortgage status on financial instruments

that apply to undocumented vessels,

which benefits the owners of those

vessels. While many of the proposed

changes to the certification guidelines

relate to the technical requirements of

recording and maintaining titling

documentation, the most significant

change would be to implement a system

of ‘‘branding’’ (permanently marking)

titles for vessels that have sustained

structural damage. This would help

prevent a process known as ‘‘title

washing,’’ where severe vessel damage

is concealed by transferring the title to

a different State.

DATES

: Comments and related material

must be received by the Coast Guard on

or before November 22, 2021. Comments

sent to the Office of Management and

Budget (OMB) on collection of

information must reach OMB on or

before November 22, 2021.

ADDRESSES

: You may submit comments

identified by docket number USCG–

2018–0160 using the Federal

eRulemaking Portal at https://

www.regulations.gov. See the ‘‘Public

Participation and Request for

Comments’’ portion of the

SUPPLEMENTARY INFORMATION

section for

further instructions on submitting

comments.

Collection of information. Submit

comments on the collection of

information discussed in section VI.D of

this preamble both to the Coast Guard’s

online docket and to the Office of

Information and Regulatory Affairs

(OIRA) in the White House Office of

Management and Budget (OMB) using

their website www.reginfo.gov/public/

do/PRAMain. Comments sent to OIRA

on collection of information must reach

OMB on or before the comment due date

listed on their website.

FOR FURTHER INFORMATION CONTACT

: For

information about this document call or

email W. Vann Burgess, Boating Safety

Division, Program Management and

Operations Branch (CG–BSX–21), Coast

Guard; telephone 202–372–1071, email

william.v.burgess@uscg.mil.

SUPPLEMENTARY INFORMATION

:

Table of Contents for Preamble

I. Public Participation and Request for

Comments

II. Abbreviations

III. Basis and Purpose

IV. Background

A. Current 33 CFR part 187, subpart D

B. UCOTA–V

V. Discussion of Proposed Rule

VI. Regulatory Analyses

A. Regulatory Planning and Review

B. Small Entities

C. Assistance for Small Entities

D. Collection of Information

E. Federalism

F. Unfunded Mandates Reform Act

G. Taking of Private Property

H. Civil Justice Reform

I. Protection of Children

J. Tribal Governments

K. Energy Effects

L. Technical Standards

M. Environment

I. Public Participation and Request for

Comments

The Coast Guard views public

participation as essential to effective

rulemaking, and will consider all

comments and material received during

the comment period. Your comment can

help shape the outcome of this

rulemaking. If you submit a comment,

please include the docket number for

this rulemaking, indicate the specific

section of this document to which each

comment applies, and provide a reason

for each suggestion or recommendation.

We encourage you to submit

comments through the Federal

eRulemaking Portal at https://

www.regulations.gov. If you cannot

submit your material by using https://

www.regulations.gov, contact the person

in the

FOR FURTHER INFORMATION

CONTACT

section of this proposed rule

for alternate instructions. Documents

mentioned in this proposed rule, and all

public comments, will be available in

our online docket at https://

www.regulations.gov, and can be viewed

by following that website’s instructions.

Additionally, if you visit the online

docket and sign up for email alerts, you

will be notified when comments are

posted or a final rule is published.

We accept anonymous comments. All

comments received will be posted

without change to https://

www.regulations.gov and will include

any personal information you have

provided. For more about privacy and

submissions in response to this

document, see the Department of

Homeland Security’s eRulemaking

System of Records notice (85 FR 14226,

March 11, 2020).

We do not plan to hold a public

meeting, but will consider doing so if

public comments indicate a meeting

would be helpful. We would issue a

separate Federal Register notice to

announce the date, time, and location of

such a meeting.

II. Abbreviations

BLA Boating Law Administrator

BSX U.S. Coast Guard’s Office of Auxiliary

and Boating Safety

CFR Code of Federal Regulations

DHS Department of Homeland Security

DOT Department of Transportation

FR Federal Register

MOA Memorandum of Agreements

NCCUSL National Conference of

Commissioners on Uniform State Laws

NBSAC National Boating Safety Advisory

Council

NASBLA National Association of State

Boating Law Administrators

NPRM Notice of proposed rulemaking

OMB Office of Management and Budget

PRA Paperwork Reduction Act of 1995

RA Regulatory Analysis

RFA Regulatory Flexibility Act of 1980

§ Section

UCC Uniform Commercial Code

UCOTA–V Uniform Certificate of Title Act

for Vessels

U.S.C. United States Code

VIS Vessel Identification System

III. Basis and Purpose

The purpose of this rulemaking is to

revise Coast Guard guidelines for State

vessel titling systems so that they align

with the Uniform Certificate of Title Act

for Vessels (UCOTA–V). As discussed in

more detail below, we expect that

aligning Coast Guard guidelines with

UCOTA–V would increase States’

participation in the Vessel Identification

System (VIS), thereby benefitting the

owners of undocumented vessels by

providing them access to preferred

mortgages.

The legal basis for this rulemaking is

Title 46 of the United States Code

(U.S.C.), sections 2103, 12501(a), and

31322(d). Section 2103 authorizes the

Secretary of the department in which

the Coast Guard is operating to issue

regulations to carry out the provisions of

Subtitle II, Vessels and Seamen, of Title

46 of the U.S.C., in which Section

12501(a) appears. Section 12501(a)

requires the Secretary to establish a VIS

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1

As used throughout this notice of proposed

rulemaking (NPRM), ‘‘State’’ means any of the 56

jurisdictions (50 States, the District of Columbia,

American Samoa, Guam, the Northern Mariana

Islands, Puerto Rico, and the U.S. Virgin Islands)

that administer Coast Guard-approved recreational

vessel numbering systems.

2

See 46 U.S.C. 12501.

3

A perfected lien is generally a lien that has been

filed with the appropriate filing agent in order to

make the securing interest in a collateral asset

binding. See 46 U.S.C. 31321.

4

See 46 U.S.C. 31322(d).

5

See 33 CFR 187.301 and 33 CFR 187.201.

6

A copy of UCOTA–V is located in the docket at

https://www.regulations.gov, as indicated in the

Public Participation and Request for Comments

portion of this preamble.

7

See 46 U.S.C. 12503, Information available to

the system. In addition to the vessel identification

Continued

relating to, among other things, the

ownership of vessels titled under the

law of a State. Finally, section 31322(d)

allows a mortgage that is filed, or

‘‘perfected’’ under State law, to be

deemed ‘‘a preferred mortgage’’ if the

Secretary certifies that the State titling

system complies with the guidelines set

forth in 46 U.S.C. 13107. The Secretary’s

authority under these statutes has been

delegated to the Coast Guard in

Department of Homeland Security

(DHS) Delegation No. 0170.1(II) (92.a)

and (92.h). Pursuant to that authority,

the Coast Guard has promulgated

regulations governing the certification of

State laws to determine eligibility for

preferred mortgages.

IV. Background

A. Current 33 CFR Part 187, Subpart D

A mixture of both Federal and State

laws govern the titling of vessels in the

United States.

1

‘‘Documented’’ vessels

are typically larger commercial vessels

documented with the Coast Guard

National Vessel Documentation Center.

Over 99 percent of vessels in the United

States are not required to be

documented and are considered

‘‘undocumented,’’ which the Coast

Guard is not required to document. The

registration and titling of these vessels

falls under State law. State law

governing the titling of vessels varies

considerably from State to State, and

many States do not have a certificate of

title law for vessels.

While the Federal Government does

not title undocumented vessels, it does

have an interest in certain aspects of

policy that would ordinarily be covered

by State titling requirements.

Specifically, the Coast Guard has an

interest in information about vessels

and their owners for both law

enforcement and maritime domain

awareness purposes. For these reasons,

pursuant to statute, the Coast Guard

created the VIS, which is a centralized

database of information relating to these

subjects.

2

However, the VIS relies on

information generated by States through

their titling and other recordation

processes for information about

undocumented vessels. Currently, only

38 States participate in the information

exchange aspects of the VIS. Because

participation in the VIS is voluntary and

entirely at the States’ discretion,

Congress created an incentive for States

to provide the requisite information, in

the form of eligibility for preferred

mortgages.

Under maritime law, a preferred

mortgage is a mortgage that is filed—or

perfected—in compliance with certain

statutory requirements that are set forth

in 46 U.S.C. 31321. A preferred

mortgage creates a lien against the

mortgaged vessel in the amount of the

mortgage indebtedness (46 U.S.C. 31322

and 31325). A preferred mortgage is a

perfected lien that has priority over

certain other maritime liens and all non-

maritime liens in an in rem admiralty

foreclosure (46 U.S.C. 31326).

3

Acquiring a preferred mortgage is

beneficial to the owners of vessels,

because a preferred mortgage generally

has a substantially lower interest rate

than a mortgage secured by a non-

perfected lien. While documented

vessels are eligible for a preferred

mortgage, undocumented vessels can

receive such a mortgage only if the State

in which it is titled satisfies the

applicable Federal requirements and

receives approval from the Coast

Guard.

4

To encourage States to participate in

and share information with the VIS, the

Coast Guard requires certification before

maritime liens can be perfected. The

guidelines that cover what a State must

do to have its titling laws certified by

the Coast Guard are located in Title 33

of the Code of Federal Regulations

(CFR), part 187, and specifically in

subpart D—State Vessel Titling Systems.

In addition to the specific titling

requirements, subpart D contains a

requirement that the State must

‘‘comply with the VIS participation

requirements of § 187.11 and subpart C

of this part and make vessel information

it collects available to VIS.’’

5

Despite the incentive of being able to

provide owners of undocumented

vessels access to preferred mortgages,

currently no States have titling laws that

comply with the Coast Guard guidelines

in subpart D. This is because of a

conflict between the guidelines in

subpart D and provisions of the Uniform

Commercial Code (UCC), specifically

Articles 2 and 9, which govern the

titling of property. Because most States

rely on compliance with the UCC to

facilitate an array of commercial

transactions, they have been unable to

modify their laws to comply with the

Coast Guard’s certification guidelines in

subpart D.

B. UCOTA–V

The National Conference of

Commissioners on Uniform State Laws

(NCCUSL) drafted UCOTA–V

6

with

input from members of the National

Association of State Boating Law

Administrators (NASBLA), boat

manufacturers and dealers, banking

interests, and the Coast Guard, which

continues to be supportive of it.

Unanimously approved by the NCCUSL

in July 2011, UCOTA–V provides a

consistent consumer protection measure

that allows the identification of vessels

that have been deemed unsafe,

preventing them from being sold

without disclosure.

The NASBLA membership adopted

UCOTA–V as a model act of the

association at its annual business

meeting in September 2011. Through

one of its policy committees, NASBLA

has continued to work with NCCUSL in

promoting and supporting UCOTA–V

adoption by the States. Currently, five

States have adopted the act and five

other States are at various stages of

preparation to do so. The NCCUSL set

forth several ‘‘principal objectives’’

when writing UCOTA–V. The objectives

for UCOTA–V are to:

(1) Qualify as a State titling law that

the Coast Guard will approve;

(2) Facilitate transfers of ownership of

a vessel;

(3) Deter and impede the theft of

vessels by making information about the

ownership of vessels available to both

government officials and those

interested in acquiring an interest in a

vessel;

(4) Accommodate existing financing

arrangements for vessels;

(5) Work seamlessly with the UCC;

(6) Manage, to the extent possible, the

complications that can arise from a

vessel’s transition in or out of Federal

documentation;

(7) Provide clear rules on the

consequences of compliance or

noncompliance;

(8) Impose minimal or no new

burdens or costs on State titling offices;

and

(9) Protect buyers and others

acquiring an interest in an

undocumented vessel by requiring that

the title for the vessel be branded if a

casualty or sinking has caused

significant damage to the vessel’s hull

integrity.

7

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information made available by States. See NBSAC

Resolution 2014–92–01 https://homeport.uscg.mil/

Lists/Content/DispForm.aspx?ID=483&Source=/

Lists/Content/DispForm.aspx?ID=483.

8

See 46 U.S.C. chapter 125, (Vessel Identification

System). Subsection (a) of section 12501 requires

the Secretary of DHS to establish a system of

information concerning vessels of the United States

for law enforcement and other purposes. The

Secretary is required to make available information

from the system relating to the ownership of vessels

documented under chapter 121 of title 46,

numbered under chapter 123 of that title, and titled

under the law of a State. See https://cgmix.uscg.mil/

VISInformation.aspx?VISOption for more

information regarding VIS.

9

Executive Order 13777 was revoked by

Executive Order 13992 (Volume 86 of the Federal

Register (FR) at Page 7049 (Jan. 25, 2021)).

10

Comment from NASBLA, available at https://

www.regulations.gov, docket number USCG–2017–

0480–0149.

11

See the explanation contained in the table on

page 57 of UCOTA–V which says: ‘‘States will

decide under existing state law how they will treat

vessels that were previously titled under state law

prior to adoption of UCOTA–V.’’ Thus, previously

existing state requirements do not bear on the titling

issues that this proposal seeks to address.

12

UCOTA–V, Section 8, Legislative Note, page

25.

13

See Federal Plain Language Guidelines, Rev. 1,

(May 2011) on p. 25. These can be accessed at

https://www.plainlanguage.gov/guidelines.)

Various maritime interests

recommended that the Coast Guard

update its certification guidelines so

that States that have adopted laws

compliant with UCOTA–V can meet the

certification guidelines. In 2014, the

National Boating Safety Advisory

Council (NBSAC), a group established

under the Federal Advisory Committee

Act to advise the Coast Guard, passed

Resolution No. 2014–92–01

recommending that the Coast Guard

initiate a rulemaking to revise subpart D

based on UCOTA–V, for the following

reasons:

(1) The well-conceived and well-

drafted nature of UCOTA–V;

(2) The lack of State support for

current subpart D;

(3) The interest in complying with a

revised subpart D to obtain the benefits

of preferred mortgages;

(4) Theft deterrence by facilitating

interstate recovery of stolen vessels; and

(5) Facilitation of greater participation

in the VIS.

8

In addition, NASBLA recommended

the incorporation of UCOTA–V

provisions as well. In response to an

agency solicitation for regulatory reform

proposals pursuant to Executive Order

13777 (Enforcing the Regulatory Reform

Agenda),

9

NASBLA recommended that

the Coast Guard revise subpart D to

align Coast Guard certification

requirements with the requirements of

UCOTA–V. NASBLA noted that the

current subpart D regulations ‘‘have

become obsolete, fostered inefficiencies,

and/or have become increasingly

difficult to consistently apply.’’

10

Based on the recommendations of

these two organizations, as well as our

desire to increase State participation in

the VIS, the Coast Guard is proposing

revisions to subpart D to allow for any

State adopting titling laws in

accordance with the guidelines in

UCOTA–V to meet Coast Guard

certification requirements. We discuss

the specific proposed requirements for

subpart D below.

V. Discussion of Proposed Rule

For the reasons described above, this

proposed rulemaking would revise

subpart D of 33 CFR part 187 so that

State titling laws modeled on UCOTA–

V would meet the certification

requirements of subpart D. We propose

to replace the entire text of the existing

subpart D with new guidelines that

would accommodate States that adopt

variants of the model code appropriate

for their State commercial legal regimes.

The Coast Guard is not proposing to

incorporate UCOTA–V in its entirety

because some sections of UCOTA–V are

not applicable to the Federal

Government. For example, included in

UCOTA–V is a ‘‘savings clause’’

provision (see section 28 of UCOTA–V).

Because the execution of the savings

clause would be governed by State law

applicable to vessel titling that existed

prior to the adoption of UCOTA–V,

11

there is no Federal interest or need to

apply Federal oversight of the

application of a savings clause.

In short, so long as vessels have been

properly registered through the State,

the savings clause provision found in

section 28 of UCOTA–V has no bearing

on the Coast Guard’s regulatory regime.

Therefore, we are not including

UCOTA–V’s savings clause provision

within this proposal. Instead, we are

proposing certification guidelines that

incorporate UCOTA–V, but with a

number of policy or stylistic changes,

such that the guidelines are flexible

enough to allow for the variations in

State law permitted by UCOTA–V.

In addition to the savings clause

provision in section 28, the Coast Guard

is proposing to omit the following

sections of UCOTA–V that do not bear

specifically on titling concerns.

Section 1, Short title. We are

integrating the requirements of UCOTA–

V into Coast Guard regulations, so we

do not need to adopt the act’s title.

Section 4, Supplemental principles of

law and equity. This provision concerns

the interpretation principles of UCOTA–

V and, while this is a general principle

of the UCC, it is not needed for Coast

Guard certification of a State’s titling

law.

Section 8, Creation and cancellation

of certificate of title, subsection (f). We

are not incorporating subsection (f) of

section 8 because it is an optional

provision for the States that ‘‘provides a

procedure for the office to follow before

canceling a certificate of title. It is

intended for those states whose public

records or other law does not already

provide a procedure that ensures all

interested parties are notified in

advance and given an opportunity to be

heard.’’

12

Section 26, Uniformity of application

and construction. This provision also

concerns interpretation principles and

is not needed for Coast Guard

certification.

Section 27, Relation to electronic

signatures in global and national

commerce act. This section describes

the relation of a State’s law to certain

Federal statutes concerning electronic

signature, which is not relevant in the

certification of State titling law.

Section 28, Savings clause. For the

reasons discussed above, the Coast

Guard is not incorporating section 28.

The Coast Guard also proposes a

variety of stylistic changes. First, we

propose keeping the general numbering

scheme of the text of UCOTA–V in

regulatory text, replacing references to

‘‘Section X’’ with the appropriate

citation to the equivalent regulatory

section, subsection, or paragraph. We

would also replace certain words such

as ‘‘shall’’ with ‘‘must,’’ as provided by

the Federal Plain Language

Guidelines.

13

Additionally, we would

replace references to ‘‘the UCC’’ or

specific sections of the UCC with

references to ‘‘State law.’’

We provide a section-by-section

discussion of the proposed certification

guidelines below.

Section 187.7, What are the

definitions of terms used in this part?

We propose to rename this section

Definitions. We propose to use most of

the existing definitions within Section

187.7 and add new definitions from

section 2 of UCOTA–V. If a definition

from UCOTA–V differs from an existing

regulatory definition (for example, the

term ‘‘documented vessel’’ in UCOTA–

V differs from the current definition in

§ 187.7), we would use the definition

from UCOTA–V.

The definitions from UCOTA–V that

we propose adding are as follows:

•Barge;

•Builder’s certificate;

•Buyer;

•Cancel;

•Certificate of title;

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In UCOTA–V, this term is ‘‘State of principle

[sic] use.’’

•Electronic;

•Electronic certificate of title;

•Foreign-documented vessel;

•Good faith;

•Hull damaged;

•Lien creditor;

•Office;

•Owner of record;

•Purchase;

•Purchaser;

•Record;

•Secured party of record;

•Sign;

•State of principal operation;

14

•Title brand;

•Transfer of ownership;

•Vessel number; and

•Written certificate of title.

Subpart D heading and section titles.

For clarification, we propose to revise

the heading for subpart D from

‘‘Guidelines for State Vessel Titling

Systems’’ to the more general ‘‘State

Vessel Titling Systems.’’ We would also

change the section titles in revised

subpart D to better align with the

section titles of UCOTA–V.

Section 187.301. We propose to

clarify this section by replacing the

language that says the Coast Guard

‘‘may certify’’ a State vessel titling

system if it complies with the

requirements of the subpart with ‘‘will

certify.’’ We propose this change

because, if the State’s titling system

meets the requirements of this

regulation, the state has met the Coast

Guard’s requirements. Thus, the Coast

Guard will certify the State’s titling

system, thereby fulfilling the

requirements set forth in 46 U.S.C.

31322(d)(1) for preferred mortgage

status. The purpose of this regulation is

for States to take advantages of sharing

validated vessel information that meets

the minimum requirements listed in

regulations.

Section 187.302 (new). We propose

moving the list of terms States must

define from § 187.303 to this new

section to keep the structure consistent

with the rest of UCOTA–V. The new

§ 187.302(a) would incorporate the

current requirement of § 187.303 that

States define listed terms substantially

as they are defined in § 187.7. The terms

already listed in § 187.7 would not be

removed or substantively changed, but

some definitions would be rephrased,

and several new terms would be added

as recommended by UCOTA–V, section

2(a), which includes a list of definitions

for States to adopt directly. In addition,

the new § 187.302(b) would require

States to define the terms listed in

UCOTA–V section 2(b). These are

general terms derived from the UCC,

which all States have adopted, or

adopted in modified form. Finally, we

would add a new § 187.302(c),

incorporating UCOTA–V section 2(c),

stating that subpart D definitions do not

apply to any State or Federal law

governing licensing, numbering, or

registration if the same term is used in

that law.

Section 187.303. We would revise

§ 187.303 to incorporate UCOTA–V

section 3 applicability provisions. As

described above, the current list of

terms States must define would be

moved to the new § 187.302.

Section 187.304. We would retain this

section, without change, but would

rename it to better match the rest of the

subpart.

Section 187.305. This section

currently specifies requirements for title

applications. We would move the

material on this topic to the revised

§ 187.307. The revised §187.305 would

incorporate UCOTA–V section 5,

defining which State’s law governs

vessels covered by title certificates.

Section 187.306 (new). This new

section would incorporate the UCOTA–

V section 6 discussion of when a title

certificate is and is not required.

Section 187.307. The revised

§ 187.307 would incorporate UCOTA–V

section 7 specifications for title

application contents. Currently, this

section mandates certain provisions that

States must impose on vessel dealers

and manufacturers. We would no longer

require these dealer- or manufacturer-

specific conditions because they are

covered by the UCOTA–V provisions

that we propose adopting.

Section 187.308 (new). This new

section would incorporate the UCOTA–

V section 8 provisions for creating and

canceling title certificates, with the

exception of optional paragraph (f), as

detailed above in the discussion of

UCOTA–V section 8.

Section 187.309. Section 187.309

currently covers requirements for

voluntary title transfers (transfers other

than by operation of law). Section

187.317 currently covers title certificate

contents. Under our proposal, we would

exchange these, so the revised § 187.309

would cover title certificate contents (an

adaptation of UCOTA–V section 9) and

the revised § 187.317 would cover

requirements for voluntary title transfers

(an adaptation of UCOTA–V section 17).

We propose this change to better align

with the structure of UCOTA–V.

Section 187.310 (new). This new

section would incorporate UCOTA–V

section 10 title brand provisions. We

would incorporate these provisions to

deter title washing and protect buyers

and others acquiring an interest in an

undocumented vessel.

Section 187.311. This section

currently requires new title certificates

after vessel ownership transfers by

operation of law. We propose moving

this discussion to the new § 187.320.

The revised § 187.311 would

incorporate UCOTA–V section 11

requirements for maintenance of and

access to State title certificate files.

Section 187.312 (new). This new

section would incorporate UCOTA–V

section 12, concerning the duties of the

State and title holder upon creation of

a title certificate.

Section 187.313. This section

currently requires a State to honor

evidence of vessel ownership from

another State, country, or the Coast

Guard. Under this proposal, we would

move this discussion to § 187.328. The

revised § 187.313 would incorporate

UCOTA–V section 13, declaring the

prima facie evidential value of title

certificate contents.

Section 187.314 (new). This new

section would incorporate UCOTA–V

section 14, concerning the possession of

a title certificate and judicial process

against a certificate.

Section 187.315. This section

currently provides that a State title is

invalidated when exchanged for a

certificate of documentation. The

revised § 187.315 would incorporate

UCOTA–V section 15 provisions for

perfecting vessel security interests,

which is currently addressed in

§ 187.323.

Section 187.316 (new). This new

section would incorporate UCOTA–V

section 16, concerning the termination

of a security interest in a vessel.

Currently, § 187.327 requires States to

establish their own termination

procedures. We propose removing and

reserving § 187.327.

Section 187.317. To better align with

UCOTA–V’s structure, we would

exchange the provisions on the topics

covered by § 187.309 with the topics

covered by § 187.317, as discussed

above at Section 187.309.

Section 187.318 (new). This new

section would incorporate UCOTA–V

section 18, concerning the effect of

missing or incorrect title certificate

information.

Section 187.319. This section

currently covers applying for

replacement or ‘‘redundant’’ title

certificates. We propose moving this

topic to the new § 187.322. The revised

§ 187.319 would incorporate UCOTA–V

section 19, concerning the transfer of a

vessel ownership interest by a secured

party’s transfer statement.

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Section 187.320 (new). This new

section would incorporate UCOTA–V

section 20, concerning ownership

interest transfers by operation of law,

which § 187.311 currently contains.

Section 187.321. This section

currently requires a hull identification

number to be assigned and affixed to a

vessel upon proof of its ownership. We

propose replacing the existing language

with a substantively identical

adaptation of UCOTA–V section 21,

concerning applications for transferring

ownership or for canceling a security

interest that is not accompanied by a

certificate of title. UCOTA–V

recommends more specific requirements

for recording hull identification

numbers, which we would include in

revised §§ 187.307, 187.309, 187.311,

187.315, and 187.325. For example,

UCOTA–V requires the State to issue a

hull identification number in cases

where the State did not issue one to the

vessel owner or operator upon original

construction, such as an antique vessel

built prior to November 1972.

Section 187.322 (new). This new

section would incorporate UCOTA–V

section 22, concerning replacement title

certificates, which is currently

addressed in § 187.319.

Section 187.323. This section

currently specifies procedures for

perfecting vessel security interests,

which would be addressed in § 187.315.

The revised § 187.323 would

incorporate UCOTA–V section 23,

concerning the rights of a vessel

purchaser who is not a secured party.

Section 187.324 (new). This new

section would incorporate UCOTA–V

section 24, concerning the rights of

secured parties.

Section 187.325. This section

currently requires States to specify the

procedure for assigning vessel security

interests, which would be addressed in

the revised § 187.315(f). The revised

§ 187.325 would incorporate UCOTA–V

section 25, specifying certain

requirements for the administrative

operation of a State certificating

authority, such as length of record

retention and allowable fees.

Section 187.327. We would remove

this section, which covers the discharge

of a vessel security interest. This topic

would be covered in the new § 187.316.

Sections 187.329. We would remove

this section. It is not necessary to retain

the requirement in § 187.329 for States

to specify titling system forms, as

UCOTA–V requirements for specific

records would appear throughout

revised subpart D. An example of this is

in the title application and certificate

provisions of §§ 187.306 through

187.310.

Section 187.331. We would remove

this section. Section 187.331 requires

States to retain title system information

and make it available to government

authorities. In the revised subpart D,

similar requirements would appear in

§§ 187.311(d) and 187.325(a).

VI. Regulatory Analyses

The Coast Guard developed this

NPRM after considering numerous

statutes and Executive orders related to

rulemaking. Below, we summarize our

analyses based on these statutes or

Executive orders.

A. Regulatory Planning and Review

Executive Orders 12866 (Regulatory

Planning and Review) and 13563

(Improving Regulation and Regulatory

Review) direct agencies to assess the

costs and benefits of available regulatory

alternatives and, if regulation is

necessary, to select regulatory

approaches that maximize net benefits

(including potential economic,

environmental, public health and safety

effects, distributive impacts, and

equity). Executive Order 13563

emphasizes the importance of

quantifying both costs and benefits,

reducing costs, harmonizing rules, and

promoting flexibility.

The Office of Management and Budget

(OMB) has not designated this rule a

significant regulatory action under

section 3(f) of Executive Order 12866.

Accordingly, OMB has not reviewed it.

We developed an analysis of the costs

and benefits of the proposed rule to

ascertain its probable impacts. A

regulatory analysis (RA) follows.

This RA provides an evaluation of the

economic impacts associated with this

proposed rule. Table 1 provides a

summary of the proposed rule’s costs

and benefits. The Coast Guard requests

public comments on all aspects of the

following analysis. In particular, the

Coast Guard requests comments on the

categories of unquantified costs and

benefits and potential costs listed in

Table 1 below.

T

ABLE

1—S

UMMARY OF THE

P

ROPOSED

R

ULE

’

S

I

MPACTS

1

Category Summary

Affected Population ......................... 56 States of which 18 are not currently in compliance with VIS requirements and 47 have not adopted

UCOTA–V (subpart D) or started the process.

Costs (7-percent discount rate) ...... $138,490 (10-year discounted cost).

$19,718 (annualized cost).

Unquantified Costs

2

........................ •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 legisla-

tion is difficult to quantify.

•47 States currently have legislative conflicts that may impact adopting UCOTA–V. While the cost to ne-

gotiate 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

.............................. •Costs to vessel owners, imposed by States without titling programs (7 States), who require vessel own-

ers to obtain a title. Estimated potential cost of obtaining title is $50 (not in cost analysis);

•Costs to vessel owners, imposed by States without titling programs (7 States), who may experience op-

portunity costs for labor expended to obtain a title ( not in cost analysis);

•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);

•Cost to States to update website after reviewing rule (not in cost analysis);

•Cost to States seeking to become VIS compliant to transfer data to the Coast Guard (included in cost

analysis).

Unquantified Benefits ...................... Ability to obtain preferred mortgage status; lower transaction costs; deterrence to ‘‘title washing;’’ recovery

of stolen vessels; identification of abandoned vessels; consumer protection; and security measures for fi-

nancial entities; lower administrative burden and costs to the buyer.

1

Figures are rounded to the nearest one dollar.

2

Unquantified costs are defined as costs that are incurred as a direct or indirect result of the rulemaking, which are not quantified.

3

Potential costs are defined as costs that may potentially be incurred as a direct or indirect result of the rulemaking.

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15

https://cgmix.uscg.mil/VISInformation.

aspx?VISOption. This page was last viewed on

January 22, 2020. On that date the last update was

January 21, 2020.

16

VIS participation is defined by the existence of

a signed MOA.

17

The five States that have adopted UCOTA–V

are Connecticut, the District of Colombia, Florida,

Hawaii, and Virginia. The four States in the process

of adopting UCOTA–V are Alabama, Georgia,

Tennessee and Texas. This data is current as of

January 21, 2020.

18

According to BSX, recreational vehicle owners

for the 10 compliant and semi-compliant States did

not incur a cost increase.

19

This statement is based on the Coast Guard’s

review of website information for 52 States (March

2020). For Virginia state fees, see https://

dwr.virginia.gov/boating/registration/procedure/.

For Florida state fees, see https://www.flhsmv.gov/

motor-vehicles-tags-titles/vessels/vessel-titling-

registrations/.

20

The use of leisure time to obtain the title. The

cost of this task may be calculated by the formula:

Continued

This proposed rule has several goals.

The Coast Guard intends to establish

minimum requirements for States

electing to become subpart D-compliant

and to prescribe guidelines for State

vessel titling systems. We also intend to

provide guidance on how to obtain

certification of compliance with State

guidelines for vessel titling systems for

the purpose of conferring preferred

status on mortgages, instruments, or

agreements under 46 U.S.C. 31322(d).

The proposed revisions would affect

States that voluntarily seek to certify

their State titling laws with the Coast

Guard, pursuant to regulations under 33

CFR part 187, and to participate in the

VIS. As such, the affected population for

this proposed rule would include the 56

U.S. States.

The Coast Guard has been

encouraging States to participate in the

VIS since it has been in place in 2007,

but some have chosen not to participate,

primarily because of privacy laws

regarding the sharing of personally

identifiable information. The VIS

comprises a nationwide information

system for identifying recreational,

commercial, and public vessels that are

numbered. As of January 21, 2020, 38

States were participating in the VIS.

15

To encourage further participation,

participating States have access to all

VIS data.

As described later, the benefits of this

proposed rule would include increased

uniformity across States in their titling

laws. In turn, this would lead to a

reduction in transaction costs, increased

fraud prevention (insurance fraud and

fraud from illegitimately owned

vessels), increased consumer protection,

a decrease in risk to lenders, the

recovery and identification of

abandoned vessels, and increased

efficiencies for interstate commerce.

Even through there is no new

requirement in the proposed rule for

vessel owners to report vessel damage to

the VIS directly, the insurance company

would be required to provide the

information to the State if the owners

make claims to repair the vessels. Once

the States provide the vessel

information to the VIS, the system can

track the vessel information and share

with other States if the repaired boats

are sold as boats with no damage

outside the State.

More specifically, transaction costs

would be lower because consumers may

be able to get preferred loans which

have lower interest rates. Also, a buyer’s

administrative burden and costs when

buying a vessel from a private party may

be lessened because the buyer would

not have to do extensive research to

assure the vessel is being sold by the

legitimate owner. In addition, some

non-titling States require bonds when

vessels are sold; this transaction cost

may be eliminated with the adoption of

UCOTA–V.

Affected Population

This proposed rule would potentially

affect all 56 States. The affected

population of the regulated public may

be parsed by VIS participation and also

by UCOTA–V adoption. As of January

21, 2020, 38 States were participating in

the VIS,

16

16 States were interested in

joining the VIS, but had not signed a

Memorandum of Agreements (MOA) on

VIS participation, and two States were

not able to comply with VIS

requirements due to conflicts with their

own state’s privacy laws. Regarding

UCOTA–V adoption, 47 of 56 States

have not adopted UCOTA–V.

17

Costs

The proposed rule would result in

costs to the regulated public (State and

territorial governments) and to the Coast

Guard. Costs to the States may be

divided between VIS compliance costs

and UCOTA–V adoption (proposed

subpart D compliance) costs. The

proposed rule would not impose direct

costs on vessel owners, as it would deter

fraud by introducing penalties for

providing false information. However,

there is potential for indirect costs, as

noted later.

Vessel owners are not required to take

action as a result of the proposal. For

example, this proposed rule does not

require additional documentation from

vessel owners. Transfer of title always

requires a new title to be issued, which

is common practice. There is no

requirement other than a statement from

the current owner declaring the vessel

is, or has been, damaged. There is no

other documentation required for proof

of damage. There is no requirement for

a statement from an insurer. This merely

provides disclosure to a buyer.

The proposed changes of the NPRM

would lead to changes in some States,

which may have cost implications for

vessel owners and the States. Below

describes the potential costs to vessel

owners as a direct or indirect result of

this proposed rule.

Potential Costs to Vessel Owners

The proposed rule would affect 56

States, all of which have vessel owners.

In States that currently have a titling

program for vessels, and that participate

in the VIS, vessel owners would

experience no incremental impact. In

States with an existing titling program,

vessel owners would be affected if the

State changes or imposes additional fees

through their legislative or regulatory

process. States that are compliant with

UCOTA–V (proposed subpart D) report

that they did not impose any additional

fees after the adoption of UCOTA–V

provisions, and, according to the Coast

Guard’s Office of Auxiliary and Boating

Safety (BSX), no State has signaled the

intent to increase titling fees if their

system becomes certified as UCOTA–V

compliant. However, the Coast Guard

cannot definitively conclude that

recreational vessel owners would not

face a cost increase as an indirect effect

of these proposed changes. Nonetheless,

we have not computed a cost due to the

proposal to vessel owners in States with

a titling system, due to the uncertainty

of a potential cost increase.

18

The Coast

Guard will revisit this evaluation further

after reviewing the public comments it

receives during the comment period of

this proposed rule.

In States without a vessel titling

program, recreational vessel owners

may experience a cost increase because

of this proposed rule. These States have

not indicated to the Coast Guard how

they would handle existing vessels once

they have established a titling system.

Existing vessels may be grandfathered in

and permitted to be titled voluntarily by

the owner, or States may require all

vessel owners to obtain a title. A review

of websites for States with a titling

program demonstrated that the cost of

vessel titles are generally $50 or less.

19

Because the Coast Guard does not have

information on how future titling

programs would be operated, we have

not computed the potential costs to

obtain titles in these States as a cost in

this rulemaking. We acknowledge that

there may be some opportunity costs

20

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One-half of the median household income. The

Coast Guard followed the Department of

Transportation’s (DOT) guidance for valuing the

opportunity cost of leisure time. Readers should

consult the DOT Memorandum ‘‘Revised

Departmental Guidance on the Valuation of a

Statistical Life,’’ which may be found at https://

www.transportation.gov/sites/dot.gov/files/docs/

2016%20Revised%20Value%20of%20Travel

%20Time%20Guidance.pdf.

21

Readers may consult Coast Guard data at

https://cgmix.uscg.mil/VISInformation.aspx. 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.

for labor expended to obtain the title

and actual fees for the title.

No further action would be required

by vessel owners. Vessel owners do not

need to renumber their vessels as a

result of the proposed rule, since

existing hull numbers are unrelated to

titling. No equipment is required by

vessel owners for compliance.

Table 2 below summarizes this

section detailing potential costs of the

proposed rule. All are considered

indirect costs, as they are costs that may

be imposed by the State on vessel

owners as a result of the proposed rule,

but not mandated by the rule itself.

There are other potential costs of the

rule detailed in future section. For a

comprehensive list of all potential costs,

please refer to Table 1.

T

ABLE

2—S

UMMARY OF

P

OTENTIAL

C

OSTS

Task Description Party bearing cost Potential direct or indirect cost

of proposed rule

Obtaining a vessel title (Cost of

title). Costs to vessel owners, imposed by States

without titling programs (7 States), that re-

quire vessel owners to obtain a title. Poten-

tial cost of obtaining title is $50.

Vessel owners in 7 States ..... Potential indirect cost of pro-

posed rulemaking.

Obtaining a vessel title (oppor-

tunity cost of obtaining title). Costs to vessel owners, imposed by States

without titling programs (7 States), who

may experience opportunity costs for labor

expended to obtain a title.

Vessel owners in 7 States ..... Potential indirect cost of pro-

posed rulemaking.

N/A ........................................... Costs to vessel owners, imposed by States

with titling programs (47 States) that may

impose additional costs or fees on vessel

owners.

Vessel owners in 47 States ... Potential indirect cost of pro-

posed rulemaking.

Costs to the Coast Guard

We estimate that the Government

costs associated with this regulatory

action would be labor costs for the Coast

Guard to: (1) Process MOAs from the

States; (2) coordinate with States; and

(3) update the Coast Guard website. No

additional equipment would be needed

to perform these tasks under the

proposed rule.

In order to process an MOA, it is first

transmitted from the States to a Coast

Guard compliance officer in BSX and

then to the Commandant (or designee)

for approval. To coordinate with the

States, a Coast Guard compliance officer

would engage with and respond to

inquiries from the States. The Coast

Guard estimates that a Coast Guard

compliance officer would spend 0.25

hour to process an MOA from a State

and another 0.25 hour to transmit it to

the Commandant (or designee) for

approval. The Commandant or designee

would spend 0.2 hour to approve an

MOA (Cost = Count of MOAs × [(0.5

hour × Compliance officer’s wage rate)

+ (0.2 hour × Commandant’s wage

rate)]).

As a result of this proposal, we

estimate that the Coast Guard would

need to engage with, respond to

inquiries, and coordinate with States

regarding VIS participation and

UCOTA–V compliance. Eighteen States

are not in the VIS We estimate that a

Coast Guard compliance officer would

need to coordinate with each of these

States for VIS participation.

21

To engage

with and respond to inquiries from

States, we estimate that the compliance

officer would spend 0.5 hour per State’s

inquiry to coordinate a response (Cost =

18 States × (0.5 hour × Compliance

officer’s wage rate)). For the 47 States

needing to adopt UCOTA–V, we

estimate that a Coast Guard compliance

officer would spend 0.5 hour per State

to assist (Cost = 47 States × (0.5 hour ×

Compliance officer’s wage rate)).

Lastly, the Coast Guard would need to

update its website with information on

this proposed rule. We estimate that 1

hour would be needed by a computer

technician and an additional 0.25 hour

for a compliance officer to supervise

and approve the update. This is a one-

time task that is expected to occur in the

first year of the final rule’s enactment

(Cost = [(0.25 hour × Coast Guard

compliance officer’s wage rate) + (1

hour × Federal computer technician’s

wage rate)]).

T

ABLE

3—S

UMMARY OF

C

OSTS TO THE

C

OAST

G

UARD

Task Time burden and

responsible party Cost Applicable population

Direct or

indirect cost

of proposed rule

Process MOA from States ... 0.25 hours to process MOA

(USCG Compliance offi-

cer).

0.25 hours to transmit for

approval (USCG Compli-

ance officer).

(0.5 hours × USCG Compli-

ance officer’s wage rate) +

(0.2 hour × Commandant

or designee’s wage rate) ×

56 States.

One-time cost to the Coast

Guard for all 56 States. Direct.

0.2 hours for approval (Com-

mandant or designee).

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22

This estimate is based on a previous Coast

Guard rulemaking. In the 2014 final rule for

Personal Flotation Devices Labeling and Standards

(79 FR 56491), the Coast Guard estimated that the

task would take 0.5 hour (https://www.federal

register.gov/documents/2014/09/22/2014-22373/

personal-flotation-devices-labeling-and-standards).

Time estimate can be found under Table 2, ‘‘State

Regulatory Review’’. No public comments were

received on this estimate. This page was last viewed

on May 21, 2021.

23

The Coast Guard estimates a manager would

spend 0.25 hour to provide direction and supervise

and approve the work of a computer technician.

24

This estimate is based on the Coast Guard’s rule

for Tankers Automatic Pilot Systems (83 FR 55272).

Please see https://www.federalregister.gov/

documents/2018/11/05/2018-24127/tankers-

automatic-pilot-systems, Table 3, ‘‘Write

Notification of Regulatory Change’’, 4th Entry (0.5

hours). This estimate is defined as ‘‘Communicate

regulatory change’’, which is an identical task

undertaken by the State manager. This page was last

viewed on May 21, 2021).

T

ABLE

3—S

UMMARY OF

C

OSTS TO THE

C

OAST

G

UARD

—Continued

Task Time burden and

responsible party Cost Applicable population

Direct or

indirect cost

of proposed rule

Coordinate with States ......... 0.5 hours for 18 States with-

out VIS (USCG Compli-

ance officer).

0.5 hours for 47 States

needing to adopt UCOTA–

V (USCG Compliance offi-

cer).

18 States × (0.5 hour ×

USCG Compliance offi-

cer’s wage rate).

47 States × (0.5 hour ×

USCG Compliance offi-

cer’s wage rate).

One-time cost to the Coast

Guard for 18 States.

One-time cost to the Coast

Guard for 47 States.

Direct.

Update Coast Guard

Website. 1 hour to update (Federal

computer technician).

0.25 hours to approve

(USCG Compliance offi-

cer).

0.25 hour × USCG compli-

ance officer’s wage rate) +

(1 hour × Federal com-

puter technician’s wage

rate.

One-time cost to the Coast

Guard. Direct.

Costs to the Regulated Public (States)

Compliance with the proposed rule

would require a variety of tasks by the

regulated public. This section

documents the Coast Guard’s

assessment of the proposed rule’s

changes and the steps States would

need to take as a result. Not all tasks

would need to be carried out by all the

States. In this section, the Coast Guard

notes first the tasks that apply to all

States. Next are the tasks that result

from the proposed rule. We split these

tasks into categories to better calculate

the costs, since some tasks apply to

some States and others apply to other

States, depending on their current level

of compliance with existing rules.

Below is a list of all costs to the

regulated public:

Costs to the Regulated Public—States

All 56 States would need to be

familiarized with the proposed rule and

complete the task of reviewing the

State’s website. Upon review of the

State’s procedures and websites, some

States may need to make updates. These

are discussed in more detail below.

The Coast Guard estimates that States

would spend 0.5 hour to become

familiarized with the proposed rule.

22

A

manager would perform this task. A

manager would spend another 0.5 hour

to review the State’s procedures and

website to make a determination if

anything would need to change in

response to the proposed rule (Cost = 56

States × 0.5 hour × State manager’s wage

rate). All 56 States may potentially need

to update their websites, which would

be accomplished by a computer

technician. The Coast Guard estimates

that this task would take 1 hour and

would be performed by a computer

technician at the direction of a

manager.

23

However, as the Coast Guard

does not have an estimate on how many

States would need to update their

website, the cost is considered only a

potential cost and is not factored into

the cost analysis.

Although not explicitly required,

some States may send email

notifications or a press release to

interested parties (e.g., such as the

media, recreational boaters, boating

associations, the Coast Guard Auxiliary,

etc.) Another 0.5 hour is estimated for

a State manager to write a notification

of regulatory change for the public.

24

We estimate these as one-time costs to

the State.

T

ABLE

4—S

UMMARY OF

C

OSTS TO

S

TATES

Task Time burden and

responsible party Cost Applicable population

Direct or indirect

cost of proposed

rule

Become familiarized with

rule. 0.5 hours State manager ..... Cost = (56 States × 0.5 hour

× State manager’s wage

rate) + (56 States × 0.5

hour × State manager’s

wage rate).

One-time cost to all 56

States. Direct.

Review website .................... 0.5 hours State manager ..... Direct.

Update website (Not in-

cluded in cost analysis).1 hour Computer technician Cost = 1 hour × 56 States ×

Computer Technician’s

wage rate.

Potential one-time cost to all

56 States. Potential direct

cost.

Notification of change .......... 0.5 hours State manager ..... Cost = 0.5 hour × 56 States

× State manager’s wage

rate.

One-time cost to all 56

States. Direct.

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25

https://cgmix.uscg.mil/VISInformation.aspx.

This web page was last viewed on January 8, 2020.

26

Email from Info-Link Technologies, Inc. to

William Burgess, Compliance Officer, CG–BSX–1

dated February 5, 2020 (available in the docket

where indicated under the Public Participation and

Request for Comments portion of this NPRM).

27

During the renewal process for the collection of

information request, no public comments were

received on the estimate. In preparing this NPRM,

the Coast Guard reviewed data and revised the

estimate for the duration of labor to upload VIS

data. The revision better reflects the amount of time

needed to perform periodic uploads of automated

data.

Costs to the Regulated Public—States

(VIS Compliance Costs)

Based on BSX data,

25

we estimate that

there are two States currently not in

compliance with any existing VIS

requirements. Some States are in partial

compliance with existing requirements

for the VIS. Coast Guard data

demonstrates that 16 States have

initiated VIS participation, but are not

in compliance because they do not have

a signed MOA with the Coast Guard.

The remaining 38 States have signed

MOAs, which means they are

participating in the VIS.

The 16 States that have initiated VIS

activity, but do not have a signed MOA

with the Coast Guard, would need to

complete the following steps for an

MOA. In order to comply, States would

incur costs to: (1) Coordinate with the

Coast Guard for data transfer; (2)

prepare and submit a completed MOA

and participation form; and (3) engage

in coordination activities to complete a

new user request form.

All the VIS-participating States would

engage in activities to upload data to the

VIS. However, according to Info-Link

Technologies,

26

the contractor

responsible for VIS updates, VIS data

uploads for each State are often an

automated process, where software

automatically prepares and uploads a

data file each month. The economic

impact of the data submission is zero as

a result of Info-Link Technologies

already bearing the cost for the data,

which they receive from every State

regardless of their participation in VIS.

Thus, States that do not currently

participate in VIS still engage in a

virtual data submission with the

contractor and will not incur an

additional cost or time burden. As a

result, we conclude that VIS data

uploads would not produce costs to

States new to VIS.

New VIS participants would need to

complete the new user request form. We

estimate that it would take 0.1 hour to

complete the form. These estimates are

based on data provided by Info-Link

Technologies and the Coast Guard’s

Collection of Information entitled

‘‘Vessel Identification System,’’ OMB

Control Number: 1625–0070.

27

Lastly, two States would have to

address legislative conflicts with

existing privacy laws that complicate or

prevent VIS participation. We estimate

that such a task would require that a

manager to negotiate the changes with a

State legislative committee. An attorney

would draft the legislation. Unlike

UCOTA–V, which has uniform

legislation to follow for each State,

privacy law amendments may take more

time to develop. Therefore, we estimate

that a manager would spend 40 hours to

negotiate legislative changes. Another

40 hours would be spent by an attorney

to draft the legislative language. State

laws are often voted in blocks and the

labor to put the amended privacy

legislation forward and to vote on it is

considered to be unseverable. For that

reason, we have not estimated a cost for

this step. However, the Coast Guard

would like to request comments from

the public on any information regarding

the estimated cost to draft and negotiate

legislative changes. Presently, we use

our current estimates for drafting and

negotiating these changes but omit the

cost of labor to put forward and vote on

the legislation.

We computed a cost to transmit VIS

data to the Coast Guard for 18 States on

the basis that States may correspond

with the Coast Guard to initiate the data

transfer or may have issues in their

computer systems preventing automatic

data transfer. In the event that this

occurs, the State may send spreadsheets

to the Coast Guard, and a technician

contracted to the Coast Guard would

upload the data. However, we

acknowledge that this is already a task

under existing regulations and, in most

cases, data is automatically transmitted.

T

ABLE

5—S

UMMARY OF

C

OSTS

[VIS compliance]

Task Time burden and

responsible party Cost Applicable population

Direct or

indirect cost

of proposed

rule

Prepare and submit an

MOA. 16 hours (State man-

ager).18 States × (16 hours ×

State Manager wage

rate).

One-time cost for 18 States ................................. Direct.

Complete New User re-

quest form. 0.1 Hour (State man-

ager).18 States × (0.1 hour ×

State Manager wage

rate).

One-time cost for 18 States ................................. Direct.

Coordinate with Coast

Guard for data transfer. 1 hour (State manager) 18 States × (1 hour ×

State Manager wage

rate).

Potential one-time cost for States with issues

with 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).

Direct (Po-

tential).

Draft legislative lan-

guage to amend pri-

vacy laws.

40 hours (State man-

ager) 40 hours (State

attorney).

2 States × [(40 hours ×

State Manager wage

rate) + (40 hours ×

State attorney wage

rate)].

One time cost for 2 States ................................... Direct.

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28

Email from Uniform Law Commission to

William Burgess, Compliance Officer, Coast Guard

(January 16, 2020) (available in the docket where

indicated under the Public Participation and

Request for Comments portion of this NPRM).

29

For all uniform acts, the State’s legislative

drafting office mainly formats the bill to conform

to the State’s required format and fill in bracketed

areas of the text. The Uniform Law Commission

(ULC) (https://www.uniformlaws.org/home) also

includes italicized legislative notes when they

format the bill for the particular State. This allows

the time to draft the bill to be relatively shorter than

with other regulations.

30

Each State has its own legislative drafting

agency responsible for drafting legislation. The bill

drafters are attorneys who draft bills for all the state

legislators.

31

As this is part of the State’s normal legislative

process, we do not anticipate any additional fees

beyond the normal process for these bills.

32

This estimate comports with previous

estimated durations of making legislative changes at

the State level. In the final rule for Personal

Flotation Devices Labeling and Standards (79 FR

56491, USCG–2013–0263, RIN 1625–AC02), Coast

Guard estimated that a change by legislative would

take 10 hours. No public comments were received

on this estimate. Please see https://www.federal

register.gov/documents/2014/09/22/2014-22373/

personal-flotation-devices-labeling-and-standards).

The Coast Guard adjusted this estimate to reflect the

more complex nature of this change.

33

Some States may delegate the approval process

of such changes to an administrative law committee

rather than vote on it in the legislature. The process

to develop the law and to put it forward for voting

would be the same.

34

This estimate comports with previous

estimated durations of reviewing and editing

manuals and policy documents. The Coast Guard

reviewed previously approved OMB collections for

the final rule for Marine Vapor Control Systems

(RIN 1625–AB37, USCG–1999–5150, 80 FR 7539),

the proposed rule for Revision of Crane Regulation

Standards (RIN 1625–AB78, USCG–2011–0992, 78

FR 27913) and the final rule for Personal Flotation

Devices Labeling and Standards (79 FR 56491,

USCG–2013–0263, RIN 1625–AC02, 78 FR 27913).

Previously approved collections of information may

be found at Information Collection Review

(reginfo.gov). No public comments were received on

these estimates. The Coast Guard adjusted its

estimate to reflect changes in complexity of the

task.

35

According to BSX, most States use an ‘‘off the

shelf’’ system, so changes are easy and menu

driven. Some States have older systems which

would take more time to adjust, but the older

systems are the exception, not the rule. The Coast

Guard estimates the average number of hours of

labor for a computer technician by using the

average time spent on design and coding from a

University of South Carolina study on software

developers. Readers can find the study at: https://

cse.sc.edu/job/how-software-developers-really-

spend-their-time. 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.

36

Email from NASBLA Vessel Registration,

Identification, and Titling Committee (VIRT) to

William Burgess, Compliance Officer, Coast Guard,

February 10, 2010. Available in the docket where

indicated under the Public Participation and

Request for Comments portion of the preamble.

Costs to the Regulated Public—States in

UCOTA–V Adoption (Proposed Subpart

D Compliance)

We base our cost estimates on all 56

States choosing to adopt UCOTA–V. As

of January 16, 2020, five States have

adopted UCOTA–V, and five States are

developing legislation to become

UCOTA–V-compliant.

28

Many of the

remaining States have reported that they

are waiting for the Coast Guard to

promulgate a rule on UCOTA–V before

going through the legislative process. In

addition, States often wait for their

neighboring States to adopt legislation

that potentially has effects across State

borders. Insurers and manufacturers

have lobbied for the changes. For these

reasons, the Coast Guard estimates that

all 56 States would adopt UCOTA–V.

Currently, 47 States have not adopted

UCOTA–V nor initiated legislation to

adopt UCOTA–V. The cost analysis of

UCOTA–V adoption focuses solely on

these 47 States. In order to comply with

the proposed rule, States would need to

develop legislation and amend their

computer systems to comport with

UCOTA–V. As noted earlier, all States

would post information on their website

about this rulemaking; that task appears

in a preceding section of this analysis.

In order to develop UCOTA–V

legislation,

29

a State would require the

labor of an attorney

30

to draft the

legislation

31

for a State legislative

committee to begin the legislative

process. The Uniform Law Commission

has developed legislative text for

UCOTA–V which each State may use to

develop its respective State law. For this

reason, the labor for each State is

relatively low. We estimate that an

attorney would spend approximately 24

hours

32

to draft the legislative language.

Given that State laws

33

are often voted

in blocks, the labor to put UCOTA–V

legislation forward and to vote on it is

considered to be unseverable and, for

that reason, we have not estimated a

further cost on developing legislation.

States adopting UCOTA–V would

need to update their procedures and

websites to reflect the resulting changes.

We estimate that 5 hours would be

spent by a State manager to review and

edit State procedures, manuals, policy

documents and other information (Cost

= (47 States × 5 hours × State manager’s

wage rate).

34

The remaining UCOTA–V compliance

costs items would be: (1) Labor for a

manager to coordinate with the Coast

Guard to ensure the State’s program

meets UCOTA–V certification

requirements (Cost = 47 States × (0.5

hour × State manager’s wage rate)); (2)

labor for an administrative assistant and

a manager to assist with the conversion

or update to a subpart D-compliant

system (Cost = 47 States × [(0.25 hour

× administrative assistant’s wage rate) +

(0.75 hour × State manager’s wage

rate)]); (3) labor for a manager to oversee

conversion to a subpart D-compliant

system (Cost = 47 States × 0.25 hour ×

State manager’s wage rate); and (4) labor

for a software developer to convert the

system to a subpart D compliant system

(Cost = 47 States × (12.6 hours ×

computer technician’s wage rate)).

These tasks and their calculations are

shown in table 6.

35

For the 7 States that do not have an

existing titling program, the labor tasks

for amending State’s computers to

comport with UCOTA–V would be

greater. We estimate that 24 hours

would be spent by a computer

technician in these States to amend the

State’s computers to comport with

UCOTA–V, and that a manager would

spend another 0.5 hour to review and

approve the work. The Coast Guard

requests comments from States on their

assessment of tasks and costs that would

result from the proposed rule.

BSX routinely contacts States

regarding their vessel titling systems.

There are currently 45 States titling

vessels and 1 State that makes titling

optional.

36

Provided that these States

become compliant with the recent

regulatory changes in the Standard

Numbering System, Boating Accident

Report Database, and VIS (33 CFR parts

173, 174, 181, and 187) by the required

date, any changes made to the current

titling systems should be minimal.

Coast Guard personnel attended the

National Association of State Boating

Law Administrators Workshop held in

Lexington, KY from 23 to 28 February

2020. Approximately 40 boating

administrators from the States were in

attendance, and 4 stated they were

contemplating adopting UCOTA–V. The

four states are Wisconsin, Minnesota,

Alaska, and South Carolina. None of

these 4 states have conducted a

complete cost analysis, but the initial

projected cost ranged from minimal to

about $8,000.

The primary changes required would

include the ability to mark a title as

‘‘branded,’’ and to add any numbered

vessels that are not currently required to

be titled. For example, Virginia adopted

UCOTA–V and reprogrammed their

system to accept the ‘‘branded’’

designation. According to the State of

Virginia’s Boating Law Administrator

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37

According to the Virginia BLA, updates to the

system are included as a part of routine information

technology maintenance. https://community.nasbla.

org/blogs/thomas-guess/2018/08/23/ucotva-in-

virginia. The website is dated August 23, 2018. This

page was last viewed on February 5, 2020.

38

The governor of each State appoints a single

agency to be the recipient and administrator of

grant funds received from the State Recreational

Boating Safety Grant Program, which is authorized

under 46 U.S.C. Chapter 131. These State agencies

in turn appoint a BLA to be the State’s single point

of contact for the purposes of administering the

grant program. Although duties can vary from State

to State, their primary function is to administer the

recreational boating safety program within the

State. Every State and territory of the United States

has an assigned BLA. The BLA for Virginia is an

employee with the Virginia Department of Game

and Inland Fisheries.

39

No changes would be required to any State’s

systems to facilitate population of the VIS. Data

received from the States for inclusion in the VIS

would be handled by the Coast Guard contractor

and reformatted as necessary to populate the VIS

database. We do not expect States to incur

additional costs as the cost is already captured

under the existing Coast Guard long-term contract

for management and maintenance of the VIS.

40

Conversation at the Boating Law

Administrators Workshop (circa February 28, 2018

to March 1, 2018) with Ms. Eleanor Mariani,

Boating Law Administrator, Connecticut, and

William Burgess, Compliance Officer, Coast Guard.

(BLA),

37

this was accomplished at no

cost to the State.

38

The remaining 11 States that do not

currently title vessels do title vehicles,

and their vehicle titling systems could

add vessels. As an example, Connecticut

(previously a non-titling State) adopted

UCOTA–V and its Department of Motor

Vehicles began issuing titles for

vessels.

39

This process is analogous to

registering a motor vehicle. In other

words, at the time a person buys a car,

the owner must register and title the car

with the cognizant state. Likewise, a

vessel owner would now be able to

register and title vessel at the same time

and in the same place. Connecticut did

not incur any new costs associated with

this transition since it used the existing

infrastructure, and the change was

completed as a part of an information

technology update as per the State

BLA.

40

The 10 States that have adopted or

have begun adopting the UCOTA–V

model have engaged in the tasks noted

in this text as costs of compliance. For

example, they have already collaborated

with the Coast Guard regarding their

vessel titling system updates. These

States would not incur additional costs

because they elected to adopt the

UCOTA–V model prior to this

regulation. These States would not

require the use of a computer technician

to upgrade the computer system because

the conversion has taken place already.

No further actions would be needed by

States in this situation. As noted earlier,

these States would already be familiar

with and would have reviewed their

existing procedures as a result of the

rulemaking. The Coast Guard invites

comments on any additional costs that

would be incurred by States that are

currently (pre-proposal) in the process

of adopting UCOTA–V.

T

ABLE

6—S

UMMARY OF

C

OSTS FOR

S

UBPART

D C

OMPLIANCE

Task Time burden and respon-

sible party Cost Applicable population Direct or indirect cost

Draft UCOTA–V legislative

language. 2 hours (State manager) 5

hours (State attorney).47 States × [(2 hours ×

State manager wage

rate) + (5 hours × State

attorney wage rate)].

One-time cost for 47

States. Direct.

Coordinate with Coast

Guard for compliance

and certification.

0.5 hours (State manager) 47 States × (0.5 hour ×

State manager wage

rate).

One-time cost for 47

States. Direct.

Assist with update and

convert to compliant

computer system.

0.25 hours (admin assist-

ant) 0.75 hours (State

manager).

47 States × [(0.25 hour ×

admin assistant wage

rate) + (0.75 hour ×

State manager wage

rate)].

One-time cost for 47

States. Direct.

Oversee update or conver-

sion to compliant system. 0.25 hours (State man-

ager). 47 States × (0.25 hour ×

State manager wage

rate).

One-time cost for 47

States. Direct.

Update or convert to a

compliant system. 12.6 hours (computer tech-

nician). 47 States × (12.6 hours ×

computer technician

wage rate).

One-time cost for 47

States. Direct.

Amend State’s computers

to comport with UCOTA–

V. (Applies to States

without an existing titling

program.).

2 hours (computer techni-

cian) 0.25 hours (State

manager).

7 States × [(2 hours ×

computer technician

wage rate) + (0.25 hour

× State manager wage

rate)].

One-time cost for 7 States Direct.

Update State procedures

or processes.. 5 hours (State manager) ... 47 States × (5 hours ×

State manager wage

rate).

One-time cost for 47

States. Direct.

Post updated procedures

on website.. 0.25 hours (State man-

ager) 1 hour (computer

technician).

24 States × [(0.25 hour ×

State manager wage

rate) + (1 hour × com-

puter technician wage

rate)].

One-time cost for 24

States. Direct.

Cost Calculations for the Proposed Rule

We discuss the derivation of cost data

in the following paragraphs. We

estimate the approximate loaded hourly

labor rates of State employees as

follows: Manager ($94.30);

administrative assistant ($33.81);

computer technician ($67.98); and

lawyer ($124.57). The loaded wage

factor is 1.74 for non-managerial State

workers and 1.56 for managers at the

State level, based on Bureau of Labor

Statistics (BLS) data. See table 7 for

details.

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41

General Schedule (Pay & Leave: Salaries &

Wages—OPM.gov). Labor costs calculated by 1)

finding hourly wage rate for GS-level under ‘‘2020

General Schedule (Base)’’. Choose Step 5 value. 2)

To calculate load factor, we go to https://

www.cbo.gov/system/files/115th-congress-2017-

2018/reports/52637-federalprivatepay.pdf. 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 × 1.66 = $

$71.03 and, for the GS–14 labor, $50.49 × 1.56 =

$79.48.

42

The load factor for uniformed positions is

based on the Coast Guard’s analysis of

compensation and benefits of Coast Guard enlisted

and commissioned personnel based on data found

in https://www.dfas.mil/militarymembers/

payentitlements/Pay-Tables.html. This page was

last viewed on December 20, 2019.

T

ABLE

7—L

OADED

W

AGE

F

ACTOR

C

ALCULATION

(2020

DOLLARS

)

Personnel category Data source(s)

1

Total com-

pensation Wage &

salaries Loaded wage

factor

All Workers, State and Local Government ..... BLS Employer Costs for Employee Com-

pensation, all workers in State and Local

Government.

$51.54 $29.546 1.74

Managers, State and Local Government ........ BLS Employer Costs for Employee Com-

pensation, Managers in State and Local

Government.

64.02 41.02 1.56

Coast Guard Uniform Positions ...................... 2020 Military Active & Reserve Component

Pay Tables

2

......................... ........................ 1.85

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 insur-

ance, vacation, etc.). To calculate the load factor, we used the series IDs CMU3019200000000D (for all workers) and CMU3010000100000D (for

managers, professions and related occupations’’) using the multi-screen database. Visit Employer Cost for Employee Compensation: Multi-

Screen Data Search: U.S. Bureau of Labor Statistics (bls.gov)/and select ‘‘State and local government workers’’. Select ‘‘Total Compensation’’

and ‘‘Wages and salaries’’. Select ‘‘All workers’’ or ‘‘Managers, professional, and related occupations’’. Select ‘‘Public Administration’’. Select ‘‘All

workers’’. Select ‘‘United States’’. Select ‘‘Cost of Compensation’’. Select ‘‘Not seasonally adjusted’’. Finally, use values for the 4th Quarter of

2020 to calculate the load factor by dividing total compensation by wages and salaries.

2

https://www.dfas.mil/militarymembers/payentitlements/Pay-Tables.html. Data was posted on December 30, 2019 and web page was last up-

dated January 27, 2020. This page was last viewed on February 20, 2020.

For all provisions with costs to the

Government, we use publicly available

data found on OPM’s website under

‘‘Policy, Data, and Oversight’’ and in the

Congressional Budget Office’s report,

‘‘Comparing the Compensation of

Federal and Private-Sector Employees,

2011 to 2015.’’ We estimate labor costs

attributed to the Government Coast

Guard compliance officers, GS–14

managers, GS–13 computer technicians,

and the Commandant. We estimate the

fully loaded labor costs for a GS–13 and

GS–14 compliance officer at $71.03 and

$79.48 respectively.

41

We use a

weighted average of the wage rates

($73.14) for calculations. We estimate

the wage rate for a GS–14 manager at

$79.48, the wage rate for a GS–13

computer technician at $79.48, and the

wage rate for the Commandant (O–10) at

$163. This figure represents a loaded

wage rate for uniformed Coast Guard

positions.

42

For positions outside the Coast Guard,

we use publicly available data from the

BLS Occupational Compensation

Survey to estimate wage rates for State

and local positions that would be

impacted by the proposed rule. We

present the estimated wage rates and a

summary of the data for the proposed

rule in table 8.

T

ABLE

8—L

OADED

W

AGE

C

ALCULATION

[$2020]

Personnel category Data source(s)

1

Mean hourly

wage Load factor Loaded wage

Computer Developer ............... Software Developers, Applications (OC 15–1256)

2

.............. $54.94 1.74 $95.60

Administrative Support ............ Secretaries and Administrative Assistants, Except Legal,

Medical, and Executive (OC 43–6014)

3

.19.43 1.74 33.81

General Manager .................... General and Operations Managers (OC 11–1021) in Man-

agement Occupations

4

.60.45 1.56 94.30

Lawyer .................................... Lawyers, Judges, and Related Workers (OC 23–1011) in

the Legal Occupations.

5

.

71.59

1.74 124.57

Coast Guard Commandant

(O–10). Military Active & Reserve Component Pay Tables

6

..............

88.11

1.85 163

Civilian Computer Technician

(GS–13). OPM Salary Table (2020) ...................................................... 42.736 1.66 71.03

Civilian Manager (GS–14) ...... OPM Salary Table (2020) ...................................................... 50.49 1.57 79.48

Coast Guard Compliance Offi-

cer (GS–13). OPM Salary Table (2020) ...................................................... 42.73 1.66 71.03

Coast Guard Compliance Offi-

cer (GS–14). OPM Salary Table (2020) ...................................................... 50.49 1.57 79.48

Coast Guard Compliance Offi-

cer (average)

7

.Weighted average by the formula: [(0.75 × $71.03 GS–13

Compliance Officers’ wage rate) + (0.25 × $79.48 GS–14

Compliance Officers’ wage rate)].

........................ ........................ 73.14

1

To calculate the loaded wages, we used Occupational Code 11–1021 (General and Operations Managers) for general managers, Occupa-

tional Code 43–6014 (Secretaries, Except Legal, Medical, and Executive) for clerical, and Occupational Code 15–1256 (Software Developers and

Software Quality Assurance Analysts and Testers) for computer developer. Please see footnotes of Table 7 for instructions on calculating load

factors.

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Software Developers and Software Quality Assurance Analysts and Testers (bls.gov).

3

Secretaries and Administrative Assistants, Except Legal, Medical, and Executive (bls.gov).

4

General and Operations Managers (bls.gov).

5

Lawyers (bls.gov).

6

https://www.dfas.mil/militarymembers/payentitlements/Pay-Tables.html.

7

Coast Guard compliance officers consist of GS–13s and GS–14s. There are four Coast Guard employees who would complete this require-

ment (three GS–13s and one GS–14). To calculate the in-government wage rate, we calculated three-fourths of the GS–13 in-government wage

rate ($71.03) and one-fourth of the GS–14 in-government wage rate ($79.48) and added them together to estimate a more accurate wage rate

for the team that would complete this process.

We estimate the costs in this RA in

2020 dollars based on BLS wage rates.

We estimate the total cost for States to

be $182,607, undiscounted (not

including Government costs). We

estimate the total Government costs

associated with this proposed rule to be

$14,537. We show the summary of

compliance costs in Table 9.

T

ABLE

9—E

STIMATED

C

OST OF

P

ROPOSED

R

ULE

1

CFR citation Task

2

Cost calculation Total costs

Costs to Regulated Public

(States):

General Compliance Costs

(All States) (See Table 3)

(One-time costs for States):

33 CFR 187 .................... Become familiar with NPRM ......................... 56 States × (0.5 hour × $94.30/hour State

manager). $2,640

33 CFR 187 .................... Review procedures and website ................... 56 States × (0.5 hour × 94.30/hour State

manager). 2,640

33 CFR 187 .................... Write press release or email ......................... 56 States × (0.5 hour × 94.30/hour State

manager). 2,640

33 CFR 187 .................... Update website. (Potential cost, not used in

analysis).56 States × (1 hour × 95.60/hour computer

technician). Not in cost

calculations

Subtotal—General

Compliance Costs

(States).

........................................................................ ........................................................................ $7,921

VIS Compliance Costs

(States) (See Table 5)

(One-time costs for States):

33 CFR 187.7 ................. Prepare and submit an MOA ........................ 18 States × (16 hours × 94.30/hour State

manager). 27,158

33 CFR 187.7 ................. Complete New User request form ................ 18 States × (0.1 hour × 94.30/hour State

manager). 170

33 CFR 187.7 ................. Coordinate with Coast Guard for data trans-

fer. (Potential cost, but used in analysis).18 States × (1 hour × 94.30/hour State man-

ager). 1,697

33 CFR 187.7 ................. Draft legislative language to amend privacy

laws. 2 States × [(40 hours × 94.30/hour State

manager) + (40 hours × 124.57/hour State

attorney)].

17,510

33 CFR 187.7 ................. Put forward and vote on the privacy legisla-

tion. Applies to 2 States ........................................ Unquantified

Subtotal—VIS Com-

pliance Costs

(States).

........................................................................ ........................................................................ 46,535

UCOTA–V Adoption (Pro-

posed Subpart D) Compli-

ance Costs (States) (See

Table 6) (One-time costs for

States):

33 CFR 187.306 ............. Draft UCOTA–V legislative language ........... 47 States × [(2 hours × 94.30/hour State

manager) + (5 hours × 124.57/hour State

attorney)].

38,138

33 CFR 187.306 ............. Put forward and vote on the privacy legisla-

tion. Applies to 47 States ...................................... Unquantified

33 CFR 187.306 ............. Coordinate with Coast Guard for compliance

and certification. 47 States × (0.5 hour × 94.30/hour State

manager). 2,216

33 CFR 187.312 ............. Assist with update and convert to compliant

system. 47 States × [(0.25 hour × 33.81/hour admin

assistant) + (0.75 hour × 94.30/hour State

manager)].

3,721

33 CFR 187.312 ............. Oversee update or conversion to compliant

system. 47 States × (0.25 hour × 94.30/hour State

manager). 1,108

33 CFR 187.312 ............. Update or convert to a compliant system ..... 47 States × (12.6 hours × 95.60/hour com-

puter technician). 56,614

33 CFR 187.312 ..................... Amend State’s computers to comport with

UCOTA–V. 7 States × [(2 hours × 95.60/hour computer

technician) + (0.25 hour × 94.30/hour

State manager)].

1,503

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T

ABLE

9—E

STIMATED

C

OST OF

P

ROPOSED

R

ULE

1

—Continued

CFR citation Task

2

Cost calculation Total costs

33 CFR 187 ............................ Update procedures or processes .................. 47 States × (5 hours × 94.30/hour State

manager). 22,161

33 CFR 187 ............................ Post updated procedures on website ........... 24 States × [(0.25 hour × 94.30/hour State

manager) + (1 hour × 95.60/hour com-

puter technician)].

2,860

Subtotal: UCOTA–V (Pro-

posed Subpart D)

Compliance Costs

(States).

........................................................................ ........................................................................ 128,321

Total Cost for Regu-

lated Public

(States).

........................................................................ ........................................................................ 182,607

Federal Government Costs (One-

time cost to Government for

States affected):

33 CFR 187.306 ..................... Process New User request from States ....... 18 States × (0.5 hour × 73.14/hour Compli-

ance Officer). 658

33 CFR 187.306 ..................... Process an MOA from States ....................... 18 States × [(0.2 hour × 163/hour Com-

mandant) + (8.25 hours × 73.14/hour

Compliance Officer)].

11,448

33 CFR 187.306 ..................... Coordinate with 18 States for VIS ................ 18 States × (0.5 hour × 73.14/hour Compli-

ance Officer). 658

33 CFR 187.312 ..................... Coordinate with 47 States on UCOTA–V

certification. 47 States × (0.5 hour × 73.14/hour Compli-

ance Officer). 1,682

33 CFR 187 ............................ Update Coast Guard’s website. (Initial year

cost). (1 hour × 71.03/hour computer technician) +

(0.25 hour × 79.48/hour Federal manager). 91

Total for Federal Govern-

ment (Coast Guard). ........................................................................ ........................................................................ 14,537

Total for Regulated

Public and Gov-

ernment.

........................................................................ ........................................................................ 197,148

1

Totals may not sum due to rounding. Undiscounted costs appear in the table.

2

‘‘Potential indirect costs’’ not included (See Table 2). Unquantified costs included but are not part of cost calculations.

Total Costs

Using a 7-percent discount rate, we

estimate the total discounted cost of the

proposed rule to be $138,490 (rounded).

The total annualized cost at a 7-percent

discount rate is $19,718 (rounded). See

table 10.

For the projected cost to the regulated

public, the Coast Guard expects all

States would comply within 10 years of

this rule. However, we do not have

specific information as to the rate of

compliance. As such, we assume equal

probability for each year; that is, we

estimate 10 percent will comply each

year for the next 10 years. Given this,

the total cost to the regulated public, as

shown in the table 9, is $182,607. This

is $18,261 (rounded) when averaged

across 10 years.

For the cost to the Government, we

assume that the $91 website update will

occur in the first year. Subtracting that,

we calculate the annual cost over the

next 9 years by dividing the total by 10

($1,445). The first year cost to

Government will be $1,445 + $91,

which is $1,536.

T

ABLE

10—T

OTAL

E

STIMATED

C

OST OF THE

P

ROPOSED

R

ULE

[10-year Period of analysis, 7 and 3 percent discount rates $2020]

1

Year Costs to the regulated public (states) Costs to the government Total estimated costs

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.

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https://www.nmma.org/press/article/21678

(‘‘U.S. Boat Sales Strong Heading into 2018, Poised

for Another Year of Growth,’’ January 9, 2018).

Accessed and last viewed on December 26, 2019.

44

As of January 21, 2020.

Benefits

The proposed rule would amend the

Coast Guard’s existing regulations (see

33 CFR 187 subpart D, ‘‘Guidelines for

State Vessel Titling Systems’’) to better

align with UCOTA–V. The proposed

rule would encourage uniformity

amongst the States through the adoption

of the UCOTA–V model, in its entirety

or in part, and, as mentioned in the

Background section of this NPRM,

Section IV, it would follow

recommendations by the NBSAC and

NASBLA. Although the movement to

harmonize State titling laws has existed

for some time, not all States have

pursued legislation. Some States have

chosen to wait for the Coast Guard to

pass the UCOTA–V regulation.

The proposal would also promote

consumer protection against fraud. A

large number of recreational vessels are

resold annually. In 2017, there were

approximately 981,600 pre-owned

vessels sold in the United States.

43

Given this large number, the industry is

vulnerable to the types of fraud

UCOTA–V is designed to prevent.

The proposed rule would facilitate the

procurement of secured loans on

vessels. If the Coast Guard does not

certify a State titling system, then a

State cannot confer preferred mortgage

status on a mortgage or security interest

for a vessel, which functions as a

security measure for financial entities.

Many financial institutions require

eligible vessels to be documented and to

have their preferred mortgages recorded.

A preferred mortgage is considered

more secure, with less risk to the lender.

This places the lender in a position to

provide lower interest rates over longer

terms to the consumer. In turn, the

lender earns more over the term of the

loan with less risk. More specifically,

the lender would have a lower risk of

loans defaulting; therefore, the lender’s

loan portfolio would provide better

returns despite the lower interest rates

offered to borrowers.

The consumer would benefit as well.

With preferred loans, the borrower

would have a loan with better terms.

Relative to non-preferred loan, the

consumer would pay less per month

due to the lower interest rate on

preferred loans.

In addition, consistent titling

procedures across States would deter

the practice of ‘‘title washing,’’ whereby

after the sale of a damaged vessel for

salvage, the buyer makes cosmetic

repairs and resells the vessel without

disclosing its previous damage.

Recreational boaters may benefit from

this proposed rule by being able to assist

States and law enforcement in

recovering their lost or stolen vessels.

Additionally, we intend the proposed

rule to promote maritime security by

facilitating State participation in the

VIS. After the September 2001 terrorist

attacks, a Coast Guard gap analysis

showed that law enforcement agencies,

including the Coast Guard, lacked the

ability to easily and verifiably identify

recreational vessels and their owners

and operators, especially when a vessel

is registered in a State other than that in

which the law enforcement agency

operates. This inability deprives law

enforcement agencies of critical tools for

deterring crime and maritime-based

terrorism.

Since its inception in 2007, the VIS

has remedied this inability by collecting

and providing verifiable data for vessels

in VIS-participating States. However, 16

States still do not participate in the

VIS.

44

Facilitating full VIS participation

by these States would enhance maritime

security. Because of the high level of

interest among the States in aligning

their vessel titling systems with

UCOTA–V, aligning our subpart D

regulations with UCOTA–V would make

it easier for States to obtain subpart D

certification.

Alternatives Considered

Alternative 1—Take no action. This

alternative would allow existing

regulations to remain in conflict with

State laws and UCOTA–V. For States

complying with the existing regulations,

this alternative would result in them not

receiving the benefits of deterred ‘‘title

washing,’’ recovery and identification of

abandoned vessels, consumer fraud

protection, and security measures for

financial entities. Participation in the

VIS would continue at its current low

rate. This alternative would result in no

additional costs, as no new regulations

would be implemented, but would also

result in no benefits, as there would be

no changes to current practice.

Therefore, we rejected this alternative.

Alternative 2—This is the preferred

alternative. This alternative would

change the guidelines in subpart D so

that any State that adopts UCOTA–V

and participates in the VIS would be in

compliance. This would encourage

compliance and participation and

provide benefits to States, lenders, and

consumers. The cost implications

associated with this alternative are

specified in the Costs section of this RA

and assume 100 percent participation

from all 56 States. The total 7 percent

discounted cost over 10 years would be

$176,570. The qualitative benefits

would be increased mitigation of

fraudulent ownership, the creation of

uniformity amongst the States, which

will help facilitate transfers of vessel

ownership, to deter theft of vessels and

aid law enforcement agencies by making

recovery of stolen vessels across State

lines easier, promote consumer

protection, and facilitate making

secured loans on vessels. Therefore, this

is the preferred alternative.

Alternative 3—This alternative would

repeal existing guidelines for

certification of State titling requirements

and allow States to regulate vessel

titling with no coordination or

oversight. This would remove the ability

for States to establish separate programs

to enable vessels to gain preferred

mortgage status and discourage

participation in the VIS. In this

scenario, each State would have a

unique vessel titling system; this

alternative would produce varying costs

and benefits, which may be beneficial to

the States as they could customize a

titling program to meet their specific

needs. However, we are unable to

estimate the costs due to the number of

possibilities offered, and they would

occur without coordination or oversight

from the Coast Guard. Harmonization of

regulations across States would be

impossible. As this would not satisfy

the goals of this potential regulatory

action, we rejected this alternative.

B. Small Entities

The Regulatory Flexibility Act of 1980

(5 U.S.C. 601–612) (RFA) and Executive

Order 13272 (Consideration of Small

Entities in Agency Rulemaking) require

a review of proposed and final rules to

assess their impacts on small entities.

An agency must prepare an initial

regulatory flexibility analysis unless it

determines and certifies that a rule, if

promulgated, would not have a

significant impact on a substantial

number of small entities.

Under the RFA, we have considered

whether this proposed rule would have

a significant economic impact on a

substantial number of small entities.

The term ‘‘small entities’’ comprises

small businesses, not-for-profit

organizations that are independently

owned and operated and are not

dominant in their fields, and

governmental jurisdictions with

populations of less than 50,000. Based

on the analysis above, this proposed

rule would affect 56 States and U.S.

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See 46 U.S.C. 123. The only issuing authorities

are the 56 States. Tribal governments are excluded

legally as authorities from numbering and titling

vessels.

46

Small governmental jurisdictions are defined as

governments of cities, counties, towns, townships,

villages, school districts, or special districts with a

population of less than 50,000.

47

Rounded from the actual 31.2 hours.

48

Rounded from the actual 0.2 hour.

49

Rounded from the actual 5,855.3 hours.

territories.

45

All governmental

jurisdictions that would potentially be

directly regulated by this rule have

populations greater than 50,000. These

entities are not considered to be small

entities based on the Small Business

Administration’s definition of what is a

small governmental jurisdiction.

46

Therefore, the Coast Guard certifies

under 5 U.S.C. 605(b) that this proposed

rule would not have a significant

economic impact on a substantial

number of small entities.

If you think that your business,

organization, or governmental

jurisdiction qualifies as a small entity

and that this rule would have a

significant economic impact on it,

please submit a comment to docket at

the address in the

ADDRESSES

section of

this preamble. In your comment,

explain why you think it qualifies and

how and to what degree this rule would

economically affect it.

C. Assistance for Small Entities

Under section 213(a) of the Small

Business Regulatory Enforcement

Fairness Act of 1996, Public Law 104–

121, we want to assist small entities in

understanding this proposed rule so that

they can better evaluate its effects on

them and participate in the rulemaking.

If the proposed rule would affect your

small business, organization, or

governmental jurisdiction and you have

questions concerning its provisions or

options for compliance, please contact

the person in the

FOR FURTHER

INFORMATION CONTACT

section of this

proposed rule. The Coast Guard will not

retaliate against small entities that

question or complain about this

proposed rule or any policy or action of

the Coast Guard.

D. Collection of Information

This proposed rule would require a

modification of an existing collection of

information under the Paperwork

Reduction Act of 1995 (PRA), 44 U.S.C.

3501–3520. As defined in 5 CFR

1320.3(c), ‘‘collection of information’’

comprises reporting, recordkeeping,

monitoring, posting, labeling, and other

similar actions. The title and

description of the information

collection, a description of those who

must collect the information, and an

estimate of the total annual burden

follow. The estimate covers the time for

reviewing instructions, searching

existing sources of data, gathering and

maintaining the data needed, and

completing and reviewing the

collection.

Title: Vessel Identification System.

OMB Control Number: 1625–0070.

Summary of the Collection of

Information: Public Law 100–710 (46

U.S.C. 12501) requires the establishment

of a nationwide vessel identification

system (VIS). The VIS provides

participating States with access to data

of vessels numbered by States. States

voluntarily provide the VIS data. The

States, boating public, and law

enforcement would be the primary

beneficiaries. To become part of the VIS,

States must submit a Memorandum of

Agreement (MOA) to the Coast Guard.

Need for Information: The VIS

collects State-numbered vessel

identification and ownership data and

provides that data to law enforcement

agencies in the States that choose to

participate in the VIS. Participation in

the VIS is entirely voluntary. In order to

participate, States must comply with

certain requirements to ensure the

integrity and uniformity of the

information provided to the VIS.

Proposed Use of Information: The

Coast Guard would use this information

to track vessel information and facilitate

the recovery of stolen or missing

vessels.

Description of the Respondents: The

50 States, District of Columbia, and 5

territories. The Coast Guard describes

these as ‘‘56 States.’’

Number of Respondents: As a result of

the proposal, the Coast Guard

anticipates that there would be two

additional States joining the VIS

annually until all States join. Over a 10

year period, this proposed rule would

increase the number of respondents

from 38 States to 56 States.

Frequency of Response: The number

of responses per year of this proposed

rule would vary by participating States.

New MOA applications, VIS user

requests, and VIS data uploads are

required with the initial MOA

application process. For existing

participants, VIS user requests and VIS

data uploads are required. Based on the

current collection of VIS information

data, the Coast Guard anticipates that

each new participant will submit an

MOA application once, a VIS user

request once a year, and upload VIS

data every 2 weeks.

Burden of Response: The burden of

response includes three components—

MOA applications, VIS data uploads,

and VIS user requests. The burden for

an MOA application, VIS data upload

and VIS new user request form are: 16

hours, 0.6 hour, and 0.1 hour,

respectively. An MOA application and a

VIS new user request form would be

prepared by a manager. A computer

technician would handle the VIS data

upload.

Estimate of Total Annual Burden:

This proposed rule would require

additional hours for VIS data uploads

(32 hours annually),

47

MOAs (32 hours

annually), and VIS user requests (1 hour

annually).

48

The proposed rule would

increase the total burden by 64 hours

(rounded from the actual 63.3 hours),

from 5,792 hours to 5,856 hours.

49

As required by 44 U.S.C. 3507(d), we

will submit a copy of this proposed rule

to OMB for its review of the collection

of information.

We ask for public comment on the

proposed collection of information to

help us determine, among other things:

(1) How useful the information is;

(2) Whether it can help us perform

our functions better;

(3) Whether it is readily available

elsewhere;

(4) How accurate our estimate of the

burden of collection is;

(5) How valid our methods for

determining burden are;

(6) How we can improve the quality,

usefulness, and clarity of the

information; and

(7) How we can minimize the burden

of collection.

If you submit comments on the

collection of information, submit them

to both the OMB and to the docket

where indicated under

ADDRESSES

.

You need not respond to a collection

of information unless it displays a

currently valid control number from

OMB. Before the Coast Guard could

enforce the collection of information

requirements in this proposed rule,

OMB would need to approve the Coast

Guard’s request to collect this

information.

E. Federalism

A rule has implications for federalism

under Executive Order 13132

(Federalism) if it has a substantial direct

effect on the States, on the relationship

between the national government and

the States, or on the distribution of

power and responsibilities among the

various levels of government. We have

analyzed this proposed rule under

Executive Order 13132 and have

determined that it is consistent with the

fundamental federalism principles and

preemption requirements described in

Executive Order 13132. Our analysis

follows.

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The purpose of this rulemaking is to

revise Coast Guard requirements for

State participation in the Coast Guard-

maintained VIS and guidelines for State

vessel titling systems. The Coast Guard

is mandated to establish and maintain

the VIS, but State participation in the

VIS is voluntary. Nothing in this

proposed rule would require States to

participate in the VIS. However, once

electing to participate in the VIS, a State

must comply with the VIS requirements

to ensure integrity and uniformity of

information. Likewise, requesting

certification that a State vessel titling

system complies with the guidelines is

also voluntary, but such a system must

comply with subpart D for voluntary

certification. This proposed rule would

not require States to request

certification, change their existing

titling systems, or otherwise preempt

related State regulations. Therefore, the

proposed rule is consistent with the

principles of federalism and preemption

requirements in Executive Order 13132.

While it is well settled that States may

not regulate in categories in which

Congress intended the Coast Guard to be

the sole source of a vessel’s obligations,

the Coast Guard recognizes the key role

that State and local governments may

have in making regulatory

determinations. Additionally, for rules

with federalism implications and

preemptive effect, Executive Order

13132 specifically directs agencies to

consult with State and local

governments during the rulemaking

process. If you believe this proposed

rule has implications for federalism

under Executive Order 13132, please

contact the person listed in the

FOR

FURTHER INFORMATION

section of this

preamble.

F. Unfunded Mandates Reform Act

The Unfunded Mandates Reform Act

of 1995, 2 U.S.C. 1531–1538, requires

Federal agencies to assess the effects of

their discretionary regulatory actions. In

particular, the Act addresses actions

that may result in the expenditure by a

State, local, or tribal government, in the

aggregate, or by the private sector of

$100,000,000 (adjusted for inflation) or

more in any one year. Although this

proposed rule would not result in such

an expenditure, we do discuss the

effects of this proposed rule elsewhere

in this preamble.

G. Taking of Private Property

This proposed rule would not cause a

taking of private property or otherwise

have taking implications under

Executive Order 12630 (Governmental

Actions and Interference with

Constitutionally Protected Property

Rights).

H. Civil Justice Reform

This proposed rule meets applicable

standards in sections 3(a) and 3(b) (2) of

Executive Order 12988, (Civil Justice

Reform), to minimize litigation,

eliminate ambiguity, and reduce

burden.

I. Protection of Children

We have analyzed this proposed rule

under Executive Order 13045

(Protection of Children from

Environmental Health Risks and Safety

Risks). This proposed rule is not an

economically significant rule and would

not create an environmental risk to

health or risk to safety that might

disproportionately affect children.

J. Indian Tribal Governments

This proposed rule does not have

tribal implications under Executive

Order 13175 (Consultation and

Coordination with Indian Tribal

Governments), because it would not

have a substantial direct effect on one or

more Indian tribes, on the relationship

between the Federal Government and

Indian tribes, or on the distribution of

power and responsibilities between the

Federal Government and Indian tribes.

K. Energy Effects

We have analyzed this proposed rule

under Executive Order 13211 (Actions

Concerning Regulations That

Significantly Affect Energy Supply,

Distribution, or Use). We have

determined that it is not a ‘‘significant

energy action’’ under that order because

it is not a ‘‘significant regulatory action’’

under Executive Order 12866 and is not

likely to have a significant adverse effect

on the supply, distribution, or use of

energy.

L. Technical Standards

The National Technology Transfer

and Advancement Act, codified as a

note to 15 U.S.C. 272, directs agencies

to use voluntary consensus standards in

their regulatory activities unless the

agency provides Congress, through

OMB, with an explanation of why using

these standards would be inconsistent

with applicable law or otherwise

impractical. Voluntary consensus

standards are technical standards (e.g.,

specifications of materials, performance,

design, or operation; test methods;

sampling procedures; and related

management systems practices) that are

developed or adopted by voluntary

consensus standards bodies.

This proposed rule does not use

technical standards. Therefore, we did

not consider the use of voluntary

consensus standards.

M. Environment

We have analyzed this proposed rule

under Department of Homeland

Security Management Directive 023–01,

Rev. 1, associated implementing

instructions, and Environmental

Planning COMDTINST 5090.1 (series),

which guide the Coast Guard in

complying with the National

Environmental Policy Act 1969 (42

U.S.C. 4321–4370f), and have made a

preliminary determination that this

action is one of a category of actions that

do not individually or cumulatively

have a significant effect on the human

environment. A preliminary Record of

Environmental Consideration

supporting this determination is

available in the docket. For instructions

on locating the docket, see the

ADDRESSES

section of this preamble.

This proposed rule would be

categorically excluded under paragraphs

L54 and L57 of Appendix A, Table 1 of

DHS Instruction Manual 023–01–001–

01, Rev. 01. Paragraph L54 pertains to

regulations which are editorial or

procedural and L57 pertains to

regulations concerning documentation

of vessels. This proposed rule involves

changes to regulations for certifying a

State’s titling system for undocumented

vessels. We seek any comments or

information that may lead to the

discovery of a significant environmental

impact from this proposed rule.

List of Subjects in 33 CFR Part 187

Administrative practice and

procedure, Marine safety, Reporting and

recordkeeping requirements.

For the reasons discussed in the

preamble, the Coast Guard proposes to

amend 33 CFR part 187 as follows:

PART 187—VESSEL IDENTIFICATION

SYSTEM

■1. Revise the authority citation for part

187 to read as follows:

Authority: 46 U.S.C. 2103, 12501, 31322;

Department of Homeland Security Delegation

No. 0170.1(92).

■2. Revise § 187.7 to read as follows:

§ 187.7 Definitions.

As used in this part—

Approved numbering system means a

numbering system approved by the

Secretary of Homeland Security under

46 U.S.C. Chapter 123.

Barge means a vessel that is not self-

propelled or fitted for propulsion by

sail, paddle, oar, or similar device.

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Builder’s certificate means a

certificate of the facts of build of a

vessel described in 46 CFR 67.99.

Buyer means a person who buys or

contracts to buy a vessel.

Cancel, with respect to a certificate of

title, means to make the certificate

ineffective.

Certificate of documentation means

Coast Guard Form CG–1270.

Certificate of origin means a record

created by a manufacturer or importer as

the manufacturer’s or importer’s proof

of identity of a vessel, and includes a

manufacturer’s certificate or statement

of origin and an importer’s certificate or

statement of origin, but excludes a

builder’s certificate.

Certificate of ownership means Coast

Guard Form CG–1330.

Certificate of title means a record,

created by the office or by a

governmental agency of another State

under the law of that State, which is

designated as a certificate of title by the

office or agency and is evidence of

ownership of a vessel.

Commandant means the Commandant

of the U.S. Coast Guard or an authorized

representative of the Commandant of

the U.S. Coast Guard.

Dealer means a person, including a

manufacturer, in the business of selling

vessels.

Documented vessel means a vessel

covered by a certificate of

documentation issued pursuant to 46

U.S.C. Section 12105, and excludes a

foreign-documented vessel.

Electronic means relating to

technology having electrical, digital,

magnetic, wireless, optical,

electromagnetic, or similar capabilities.

Electronic certificate of title means a

certificate of title consisting of

information that is stored solely in an

electronic medium and is retrievable in

perceivable form.

Foreign-documented vessel means a

vessel the ownership of which is

recorded in a registry maintained by a

country other than the United States,

identifying each person having an

ownership interest in a vessel, and

includes a unique alphanumeric

designation for the vessel.

Good faith means honesty in fact and

the observance of reasonable

commercial standards of fair dealing.

Hull damaged means compromised

with respect to the integrity of a vessel’s

hull by a collision, allision, lightning

strike, fire, explosion, running aground,

or similar occurrence, or the sinking of

a vessel in a manner that creates a

significant risk to the integrity of the

vessel’s hull.

Hull identification number or HIN

means the alphanumeric designation

assigned to a vessel under subpart C of

33 CFR part 181.

Issuing authority means either a State

that has an approved numbering system

or the Coast Guard in a State that does

not have an approved numbering

system.

Lien creditor, with respect to a vessel,

means—

(1) A creditor that has acquired a lien

on the vessel by attachment, levy, or the

like;

(2) An assignee for benefit of creditors

from the time of assignment;

(3) A trustee in bankruptcy from the

date of the filing of the petition; or

(4) A receiver in equity from the time

of appointment.

Manufacturer means any person

engaged in the business of

manufacturing or importing new vessels

for the purpose of sale or trade.

Office means the State department or

agency that creates certificates of title.

Owner means a person having legal

title to a vessel.

Owner of record means the owner

indicated in the files of the Office or, if

the files indicate more than one owner,

the one first indicated.

Participating State means a State

certified by the Commandant as meeting

the requirements of subpart C of this

part.

Person means an individual or any

form of legal or commercial entity.

Purchase means to take by any

voluntary transaction that creates an

interest in a vessel.

Purchaser means a person taking by

purchase.

Record means information inscribed

on a tangible medium or stored in an

electronic or other medium and is

retrievable in perceivable form.

Secured party, with respect to a

vessel, means a person—

(1) In whose favor a security interest

is created or provided for under a

security agreement, whether or not any

obligation to be secured is outstanding;

(2) Who is a consignor under State

law as prescribed by State law related to

security interests in goods; or

(3) Who holds a security interest

arising under State law related to

security interests in goods.

Secured party of record means the

secured party whose name is indicated

as the name of the secured party in the

files of the office or, if the files indicate

more than one secured party, the one

first indicated.

Security interest means an interest in

a vessel that secures payment or

performance of an obligation if the

interest is created by contract or

otherwise as prescribed by state law

related to security interests in goods.

Sign means, with present intent to

authenticate or adopt a record, to—

(1) Make or adopt a tangible symbol;

or

(2) Attach to or logically associate

with the record an electronic symbol,

sound, or process.

State means a State of the United

States, the District of Columbia,

American Samoa, Guam, Northern

Mariana Islands, Puerto Rico, U.S.

Virgin Islands, and any other territory or

possession of the United States.

State of principal operation means the

State on whose waters a vessel is or will

be used, operated, navigated, or

employed more than on the waters of

any other State during a calendar year.

Title brand means a designation of

previous damage, use, or condition that

must be indicated on a certificate of

title.

Titled vessel means a vessel titled by

a State.

Titling authority means a State whose

vessel titling system has been certified

by the Commandant under subpart D of

this part.

Transfer of ownership means a

voluntary or involuntary conveyance of

an interest in a vessel.

Vessel means every description of

watercraft used or capable of being used

as a means of transportation on water,

except—

(1) A seaplane;

(2) An amphibious vehicle for which

a certificate of title is issued pursuant to

a state’s motor vehicle certificate of title

act or a similar statute of another state;

(3) Watercraft that operate only on a

permanently fixed, manufactured course

and the movement of which is restricted

to or guided by means of a mechanical

device to which the watercraft is

attached or by which the watercraft is

controlled;

(4) A stationary floating structure

that—

(i) Does not have and is not designed

to have a mode of propulsion of its own;

(ii) Is dependent for utilities upon a

continuous utility hookup to a source

originating on shore; and

(iii) Has a permanent, continuous

hookup to a shore side sewage system.

(5) Watercraft owned by the United

States, a State, or a foreign government

or a political subdivision of any of them;

and

(6) Watercraft used solely as a lifeboat

on another watercraft.

Vessel Identification System or VIS

means a system for collecting

information on vessels and vessel

ownership as required by 46 U.S.C.

12501.

Vessel number means the

alphanumeric designation for a vessel

issued pursuant to 46 U.S.C. 12301.

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Written certificate of title means a

certificate of title consisting of

information inscribed on a tangible

medium.

■3. Revise subpart D, consisting of

§§ 187.301 through 187.325, to read as

follows:

Subpart D—State Vessel Titling Systems

Sec.

187.301 Certification for preferred mortgage

status—Eligibility requirements.

187.302 Terms States must define.

187.303 Applicability.

187.304 Titling exclusively in one State.

187.305 Law governing vessel covered by

certificate of title.

187.306 Certificate of title required.

187.307 Application for certificate of title.

187.308 Creation and cancellation of

certificate of title.

187.309 Content of certificate of title.

187.310 Title brand.

187.311 Maintenance of and access to files.

187.312 Action required on creation of

certificate of title.

187.313 Effect of certificate of title.

187.314 Effect of possession of certificate of

title; judicial process.

187.315 Perfection of security interest.

187.316 Termination statement.

187.317 Transfer of ownership.

187.318 Effect of missing or incorrect

information.

187.319 Transfer of ownership by secured

party’s transfer statement.

187.320 Transfer by operation of law.

187.321 Application for transfer of

ownership or termination of security

interest without certificate of title.

187.322 Replacement certificate of title.

187.323 Rights of purchaser other than

secured party.

187.324 Rights of secured party.

187.325 Duties and operation of office.

Subpart D—State Vessel Titling

Systems

§ 187.301 Certification for preferred

mortgage status—Eligibility requirements.

The Commandant, under 46 U.S.C.

31322(d)(1)(A) and 33 CFR 187.13, will

certify a State whose vessel titling

system meets the requirements of this

subpart as eligible to have security

interests that are perfected under its law

deemed preferred mortgages under 46

U.S.C. 31322. The State must also

comply with the VIS participation

requirements of 33 CFR 187.11 and

subpart C of this part and make vessel

information it collects available to the

VIS.

§ 187.302 Terms States must define.

(a) A State must define the terms

‘‘certificate of origin’’, ‘‘dealer’’,

‘‘documented vessel’’, ‘‘issuing

authority’’, ‘‘manufacturer’’, ‘‘owner’’,

‘‘person’’, ‘‘secured party’’, ‘‘security

interest’’, ‘‘titling authority’’, and

‘‘vessel’’ substantially as defined in 33

CFR 187.7.

(b) In addition to the definitions in 33

CFR 187.7, a State must also define the

following terms as prescribed by State

law related to security interests in

goods:

(1) Agreement;

(2) Buyer in ordinary course of

business;

(3) Conspicuous;

(4) Consumer goods;

(5) Debtor;

(6) Knowledge;

(7) Lease;

(8) Lessor;

(9) Notice;

(10) Representative;

(11) Sale;

(12) Security agreement;

(13) Seller;

(14) Send; and

(15) Value.

(c) The definitions in 33 CFR 187.7

and paragraph (b) of this section do not

apply to any State or Federal law

governing licensing, numbering, or

registration if the same term is used in

that law.

§ 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.

§ 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.

§ 187.305 Law governing vessel covered

by certificate of title.

(a) The local law of the State under

whose certificate of title a vessel is

covered governs all issues relating to the

certificate from the time the vessel

becomes covered by the certificate until

the vessel becomes covered by another

certificate or becomes a documented

vessel, even if no other relationship

exists between the State and the vessel

or its owner.

(b) A vessel becomes covered by a

certificate of title when an application

for the certificate and the applicable fee

are delivered to the office in accordance

with this subpart or to the governmental

agency that creates a certificate in

another jurisdiction in accordance with

the law of that jurisdiction.

§ 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.

§ 187.307 Application for certificate of title.

(a) Except as otherwise provided in

§§ 187.310, 187.315, 187.319, 187.320,

187.321, and 187.322, only an owner

may apply for a certificate of title.

(b) An application for a certificate of

title must be signed by the applicant

and contain—

(1) The applicant’s name, the street

address of the applicant’s principal

residence, and, if different, the

applicant’s mailing address;

(2) The name and mailing address of

each other owner of the vessel;

(3) The social security number or

taxpayer identification number of each

owner;

(4) The hull identification number

(HIN) for the vessel or, if none, an

application for the issuance of a HIN for

the vessel;

(5) The vessel number for the vessel

or, if none issued by the office, an

application for a vessel number;

(6) A description of the vessel as

required by the office, which must

include—

(i) The official number for the vessel,

if any, assigned by the Coast Guard;

(ii) The name of the manufacturer,

builder, or maker;

(iii) The model year or the year in

which the manufacture or build of the

vessel was completed;

(iv) The overall length of the vessel;

(v) The vessel type, as described in 33

CFR 174.19;

(vi) The hull material, as described in

33 CFR 174.19;

(vii) The propulsion type, as

described in 33 CFR 174.19;

(viii) The engine drive type, as

described in 33 CFR 174.19, if any; and

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(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

§§ 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.

§ 187.308 Creation and cancellation of

certificate of title.

(a) Unless an application for a

certificate of title is rejected under

paragraph (c) or (d) of this section, the

office must create a certificate for the

vessel in accordance with paragraph (b)

of this section not later than 20 days

after delivery to it of an application that

complies with 33 CFR 187.307.

(b) If the office creates electronic

certificates of title, it must create an

electronic certificate unless in the

application the secured party of record

or, if none, the owner of record, requests

that the office create a written

certificate.

(c) Except as otherwise provided in

paragraph (d) of this section, the office

may reject an application for a

certificate of title only if—

(1) The application does not comply

with 33 CFR 187.307;

(2) The application does not contain

documentation sufficient for the office

to determine whether the applicant is

entitled to a certificate;

(3) There is a reasonable basis for

concluding that the application is

fraudulent or issuance of a certificate

would facilitate a fraudulent or illegal

act; or

(4) The application does not comply

with State law.

(d) The office must reject an

application for a certificate of title for a

vessel that is a documented vessel or a

foreign-documented vessel.

(e) The office may cancel a certificate

of title created by it only if the office—

(1) Could have rejected the

application for the certificate under

paragraph (c) of this section;

(2) Is required to cancel the certificate

under another provision of this subpart;

or

(3) Receives satisfactory evidence that

the vessel is a documented vessel or a

foreign-documented vessel.

§ 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

§ 187.307(b)(6);

(6) Except as otherwise provided in

§ 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.

§ 187.310 Title brand.

(a) Unless paragraph (c) of this section

applies, at or before the time the owner

of record transfers an ownership interest

in a hull-damaged vessel that is covered

by a certificate of title created by the

office, if the damage occurred while that

person was an owner of the vessel and

the person has notice of the damage at

the time of the transfer, the owner

must—

(1) Deliver to the office an application

for a new certificate that complies with

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§ 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

§ 187.306 and includes the title brand

designation ‘‘Hull Damaged’’. Not later

than 20 days after delivery of the

application to the office, the office must

create a new certificate that indicates

that the vessel is branded ‘‘Hull

Damaged’’.

(d) An owner of record who fails to

comply with paragraph (a) of this

section, a person who solicits or

colludes in a failure by an owner of

record to comply with paragraph (a), or

an insurer that fails to comply with

paragraph (c) of this section is subject to

penalty as prescribed by state law.

§ 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 § 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 § 187.309 is a public

record, but the information provided

under § 187.307(b)(3) is not a public

record.

§ 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.

§ 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.

§ 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.

§ 187.315 Perfection of security interest.

(a) Except as otherwise provided in

this section or a savings clause provided

under state law, a security interest in a

vessel may be perfected only by delivery

to the office of an application for a

certificate of title that identifies the

secured party and otherwise complies

with 33 CFR 187.307. The security

interest is perfected on the later of

delivery to the office of the application

and the applicable fee or attachment of

the security interest as prescribed by

State law related to security interests in

goods.

(b) If the interest of a person named

as owner, lessor, consignor, or bailor in

an application for a certificate of title

delivered to the office is a security

interest, the application sufficiently

identifies the person as a secured party.

Identification on the application for a

certificate of a person as owner, lessor,

consignor, or bailor is not by itself a

factor in determining whether the

person’s interest is a security interest.

(c) If the office has created a

certificate of title for a vessel, a security

interest in the vessel may be perfected

by delivery to the office of an

application, on a form the office may

require, to have the security interest

added to the certificate. The application

must be signed by an owner of the

vessel or by the secured party and must

include—

(1) The name of the owner of record;

(2) The name and mailing address of

the secured party;

(3) The hull identification number for

the vessel; and

(4) If the office has created a written

certificate of title for the vessel, the

certificate.

(d) A security interest perfected under

paragraph (c) of this section is perfected

on the later of delivery to the office of

the application and all applicable fees

or attachment of the security interest as

prescribed by State law related to

security interests in goods.

(e) On delivery of an application that

complies with paragraph (c) of this

section and payment of all applicable

fees, the office must create a new

certificate of title pursuant to 33 CFR

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187.308 and deliver the new certificate

or a record evidencing an electronic

certificate pursuant to 33 CFR

187.312(a). The office must maintain in

the files of the office the date and time

of delivery of the application to the

office.

(f) If a secured party assigns a

perfected security interest in a vessel,

the receipt by the office of a statement

providing the name of the assignee as

secured party is not required to

continue the perfected status of the

security interest against creditors of and

transferees from the original debtor.

Upon obtaining a release from the

secured party indicated in the files of

the office or on the certificate, a

purchaser of a vessel subject to a

security interest takes free of the

security interest and of the rights of a

transferee unless the transfer is

indicated in the files of the office or on

the certificate.

(g) This section does not apply to a

security interest—

(1) Created in a vessel by a person

during any period in which the vessel

is inventory held for sale or lease by the

person or is leased by the person as

lessor if the person is in the business of

selling vessels;

(2) In a barge for which no application

for a certificate of title has been

delivered to the office; or

(3) In a vessel before delivery if the

vessel is under construction, or

completed, pursuant to contract and for

which no application for a certificate

has been delivered to the office.

(h) This paragraph applies if a

certificate of documentation for a

documented vessel is deleted or

canceled. If a security interest in the

vessel was valid immediately before

deletion or cancellation against a third

party as a result of compliance with 42

U.S.C. 31321, the security interest is and

remains perfected until the earlier of 4

months after cancellation of the

certificate or the time the security

interest becomes perfected under this

subpart.

(i) A security interest in a vessel

arising under State law related to

security interests in goods is perfected

when it attaches but becomes

unperfected when the debtor obtains

possession of the vessel, unless before

the debtor obtains possession the

security interest is perfected pursuant to

paragraph (a) or (c) of this section.

(j) A security interest in a vessel as

proceeds of other collateral is perfected

to the extent provided in State law.

(k) A security interest in a vessel

perfected under the law of another

jurisdiction is perfected to the extent

provided in State law.

§ 187.316 Termination statement.

(a) A secured party indicated in the

files of the office as having a security

interest in a vessel must deliver a

termination statement to the office and,

on the debtor’s request, to the debtor, by

the earlier of—

(1) Twenty days after the secured

party receives a signed demand from an

owner for a termination statement and

there is no obligation secured by the

vessel subject to the security interest

and no commitment to make an

advance, incur an obligation, or

otherwise give value secured by the

vessel; or

(2) If the vessel is consumer goods, 30

days after there is no obligation secured

by the vessel and no commitment to

make an advance, incur an obligation, or

otherwise give value secured by the

vessel.

(b) If a written certificate of title has

been created and delivered to a secured

party and a termination statement is

required under paragraph (a) of this

section, the secured party, not later than

the date required by paragraph (a), must

deliver the certificate to the debtor or to

the office with the statement. If the

certificate is lost, stolen, mutilated,

destroyed, or is otherwise unavailable or

illegible, the secured party must deliver

with the statement, not later than the

date required by paragraph (a), an

application for a replacement certificate

meeting the requirements of 33 CFR

187.322.

(c) On delivery to the office of a

termination statement authorized by the

secured party, the security interest to

which the statement relates ceases to be

perfected. If the security interest to

which the statement relates was

indicated on the certificate of title, the

office must create a new certificate and

deliver the new certificate or a record

evidencing an electronic certificate. The

office must maintain in its files the date

and time of delivery to the office of the

statement.

(d) A secured party that fails to

comply with this section is liable for

any loss that the secured party had

reason to know might result from its

failure to comply and which could not

reasonably have been prevented and for

the cost of an application for a

certificate of title under 33 CFR 187.307

or 187.322.

§ 187.317 Transfer of ownership.

(a) On voluntary transfer of an

ownership interest in a vessel covered

by a certificate of title, the following

rules apply:

(1) If the certificate is a written

certificate of title and the transferor’s

interest is noted on the certificate, the

transferor must promptly sign the

certificate and deliver it to the

transferee. If the transferor does not

have possession of the certificate, the

person in possession of the certificate

has a duty to facilitate the transferor’s

compliance with this paragraph. A

secured party does not have a duty to

facilitate the transferor’s compliance

with this paragraph if the proposed

transfer is prohibited by the security

agreement.

(2) If the certificate of title is an

electronic certificate of title, the

transferor must promptly sign and

deliver to the transferee a record

evidencing the transfer of ownership to

the transferee.

(3) The transferee has a right

enforceable by specific performance to

require the transferor comply with

paragraph (a)(1) or (2) of this section.

(b) The creation of a certificate of title

identifying the transferee as owner of

record satisfies paragraph (a) of this

section.

(c) A failure to comply with paragraph

(a) of this section or to apply for a new

certificate of title does not render a

transfer of ownership of a vessel

ineffective between the parties. Except

as otherwise provided in 33 CFR

187.318, 187.319, 187.323(a), or

187.324, a transfer of ownership without

compliance with paragraph (a) of this

section is not effective against another

person claiming an interest in the

vessel.

(d) A transferor that complies with

paragraph (a) of this section is not liable

as owner of the vessel for an event

occurring after the transfer, regardless of

whether the transferee applies for a new

certificate of title.

§ 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.

§ 187.319 Transfer of ownership by

secured party’s transfer statement.

(a) In this section, ‘‘secured party’s

transfer statement’’ means a record

signed by the secured party of record

stating—

(1) That there has been a default on

an obligation secured by the vessel;

(2) The secured party of record is

exercising or has exercised post-default

remedies with respect to the vessel;

(3) By reason of the exercise, the

secured party of record has the right to

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transfer the ownership interest of an

owner, and the name of the owner;

(4) The name and last known mailing

address of the owner of record and the

secured party of record;

(5) The name of the transferee;

(6) Other information required by 33

CFR 187.307(b); and

(7) One of the following:

(i) The certificate of title is an

electronic certificate;

(ii) The secured party does not have

possession of the written certificate of

title created in the name of the owner

of record; or

(iii) The secured party is delivering

the written certificate of title to the

office with the secured party’s transfer

statement.

(b) Unless the office rejects a secured

party’s transfer statement for a reason

stated in 33 CFR 187.308(c), not later

than 20 days after delivery to the office

of the statement and payment of fees

and taxes payable under State law in

connection with the statement or the

acquisition or use of the vessel, the

office must—

(1) Accept the statement;

(2) Amend the files of the office to

reflect the transfer; and

(3) If the name of the owner whose

ownership interest is being transferred

is indicated on the certificate of title—

(i) Cancel the certificate even if the

certificate has not been delivered to the

office;

(ii) Create a new certificate indicating

the transferee as owner; and

(iii) Deliver the new certificate or a

record evidencing an electronic

certificate.

(c) An application under paragraph (a)

of this section or the creation of a

certificate of title under paragraph (b) of

this section is not by itself a disposition

of the vessel and does not by itself

relieve the secured party of its duties

under State law.

§ 187.320 Transfer by operation of law.

(a) In this section—

(1) ‘‘By operation of law’’ means

pursuant to a law or judicial order

affecting ownership of a vessel—

(i) Because of death, divorce or other

family law proceeding, merger,

consolidation, dissolution, or

bankruptcy;

(ii) Through the exercise of the rights

of a lien creditor or a person having a

lien created by statute or rule of law; or

(iii) Through other legal process.

(2) ‘‘Transfer-by-law statement’’

means a record signed by a transferee

stating that by operation of law the

transferee has acquired or has the right

to acquire an ownership interest in a

vessel.

(b) A transfer-by-law statement must

contain—

(1) The name and last known mailing

address of the owner of record and the

transferee and the other information

required by 33 CFR 187.307(b);

(2) Documentation sufficient to

establish the transferee’s ownership

interest or right to acquire the

ownership interest;

(3) A statement that—

(i) The certificate of title is an

electronic certificate of title;

(ii) The transferee does not have

possession of the written certificate of

title created in the name of the owner

of record; or

(iii) The transferee is delivering the

written certificate to the office with the

transfer-by-law statement; and

(4) Except for a transfer described in

paragraph (a)(1)(i) of this section,

evidence that notification of the transfer

and the intent to file the transfer-by-law

statement has been sent to all persons

indicated in the files of the office as

having an interest, including a security

interest, in the vessel.

(c) Unless the office rejects a transfer-

by-law statement for a reason stated in

33 CFR 187.308(c) or because the

statement does not include

documentation satisfactory to the office

as to the transferee’s ownership interest

or right to acquire the ownership

interest, not later than 20 days after

delivery to the office of the statement

and payment of fees and taxes payable

under State law in connection with the

statement or with the acquisition or use

of the vessel, the office must—

(1) Accept the statement;

(2) Amend the files of the office to

reflect the transfer; and

(3) If the name of the owner whose

ownership interest is being transferred

is indicated on the certificate of title—

(i) Cancel the certificate even if the

certificate has not been delivered to the

office;

(ii) Create a new certificate indicating

the transferee as owner;

(iii) Indicate on the new certificate

any security interest indicated on the

canceled certificate, unless a court order

provides otherwise; and

(iv) Deliver the new certificate or a

record evidencing an electronic

certificate.

(d) This section does not apply to a

transfer of an interest in a vessel by a

secured party as prescribed by State law

related to security interests in goods.

§ 187.321 Application for transfer of

ownership or termination of security

interest without certificate of title.

(a) Except as otherwise provided in 33

CFR 187.319 and 187.320, if the office

receives, unaccompanied by a signed

certificate of title, an application for a

new certificate that includes an

indication of a transfer of ownership or

a termination statement, the office may

create a new certificate under this

section only if—

(1) All other requirements under 33

CFR 187.307 and 187.308 are met;

(2) The applicant provides an affidavit

stating facts showing that the applicant

is entitled to a transfer of ownership or

termination statement;

(3) The applicant provides the office

with satisfactory evidence that

notification of the application has been

sent to the owner of record and all

persons indicated in the files of the

office as having an interest, including a

security interest, in the vessel, at least

45 days have passed since the

notification was sent, and the office has

not received an objection from any of

those persons; and

(4) The applicant submits any other

information required by the office as

evidence of the applicant’s ownership

or right to terminate the security

interest, and the office has no credible

information indicating theft, fraud, or an

undisclosed or unsatisfied security

interest, lien, or other claim to an

interest in the vessel.

(b) The office may indicate in a

certificate of title created under

paragraph (a) of this section that the

certificate was created without

submission of a signed certificate or

termination statement. Unless credible

information indicating theft, fraud, or an

undisclosed or unsatisfied security

interest, lien, or other claim to an

interest in the vessel is delivered to the

office not later than 1 year after creation

of the certificate, on request in a form

and manner required by the office, the

office must remove the indication from

the certificate.

§ 187.322 Replacement certificate of title.

(a) If a written certificate of title is

lost, stolen, mutilated, destroyed, or

otherwise becomes unavailable or

illegible, the secured party of record or,

if no secured party is indicated in the

files of the office, the owner of record

may apply for and, by furnishing

information satisfactory to the office,

obtain a replacement certificate in the

name of the owner of record.

(b) An applicant for a replacement

certificate of title must sign the

application, and, except as otherwise

permitted by the office, the application

must comply with 33 CFR 187.307. The

application must include the existing

certificate unless the certificate is lost,

stolen, mutilated, destroyed, or

otherwise unavailable.

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(c) A replacement certificate of title

created by the office must comply with

33 CFR 187.309 and indicate on the face

of the certificate that it is a replacement

certificate.

(d) If a person receiving a replacement

certificate of title subsequently obtains

possession of the original written

certificate, the person must promptly

destroy the original certificate of title.

§ 187.323 Rights of purchaser other than

secured party.

(a) A buyer in ordinary course of

business has the protections afforded by

State law even if an existing certificate

of title was not signed and delivered to

the buyer or a new certificate listing the

buyer as owner of record was not

created.

(b) Except as otherwise provided in 33

CFR 187.317 and 187.324, the rights of

a purchaser of a vessel who is not a

buyer in ordinary course of business or

a lien creditor are governed by State

law.

§ 187.324 Rights of secured party.

(a) Subject to paragraph (b) of this

section, the effect of perfection and

nonperfection of a security interest and

the priority of a perfected or

unperfected security interest with

respect to the rights of a purchaser or

creditor, including a lien creditor, is

governed by State law.

(b) If, while a security interest in a

vessel is perfected by any method under

this subpart, the office creates a

certificate of title that does not indicate

that the vessel is subject to the security

interest or contain a statement that it

may be subject to security interests not

indicated on the certificate—

(1) A buyer of the vessel, other than

a person in the business of selling or

leasing vessels of that kind, takes free of

the security interest if the buyer, acting

in good faith and without knowledge of

the security interest, gives value and

receives possession of the vessel; and

(2) The security interest is

subordinate to a conflicting security

interest in the vessel that is perfected

under 33 CFR 187.315 after creation of

the certificate and without the

conflicting secured party’s knowledge of

the security interest.

§ 187.325 Duties and operation of office.

(a) The office must retain the evidence

used to establish the accuracy of the

information in its files relating to the

current ownership of a vessel and the

information on the certificate of title.

(b) The office must retain in its files

all information regarding a security

interest in a vessel for at least 10 years

after the office receives a termination

statement regarding the security

interest. The information must be

accessible by the hull identification

number (HIN) for the vessel and any

other methods provided by the office.

(c) If a person submits a record to the

office, or submits information that is

accepted by the office, and requests an

acknowledgment of the filing or

submission, the office must send to the

person an acknowledgment showing the

HIN of the vessel to which the record or

submission relates, the information in

the filed record or submission, and the

date and time the record was received

or the submission accepted. A request

under this section must contain the HIN

and be delivered by means authorized

by the office.

(d) The office must send or otherwise

make available in a record the following

information to any person that requests

it and pays the applicable fee:

(1) Whether the files of the office

indicate, as of a date and time specified

by the office, but not a date earlier than

3 days before the office received the

request, any certificate of title, security

interest, termination statement, or title

brand that relates to a vessel—

(i) Identified by a HIN designated in

the request;

(ii) Identified by a vessel number

designated in the request; or

(iii) Owned by a person designated in

the request.

(2) With respect to the vessel—

(i) The name and address of any

owner as indicated in the files of the

office or on the certificate of title;

(ii) The name and address of any

secured party as indicated in the files of

the office or on the certificate, and the

effective date of the information; and

(iii) A copy of any termination

statement indicated in the files of the

office and the effective date of the

termination statement.

(3) With respect to the vessel, a copy

of any certificate of origin, secured party

transfer statement, transfer-by-law

statement under 33 CFR 187.320, and

other evidence of previous or current

transfers of ownership.

(e) In responding to a request under

this section, the office may provide the

requested information in any medium.

On request, the office must send the

requested information in a record that is

in keeping with State rules of evidence.

Dated: September 10, 2021.

J.W. Mauger,

Rear Admiral, U.S. Coast Guard, Assistant

Commandant for Prevention Policy.

[FR Doc. 2021–20095 Filed 9–21–21; 8:45 am]

BILLING CODE 9110–04–P

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Published date	22 September 2021
Record Number	2021-20095
Section	Proposed rules
Court	Coast Guard

Uniform Certificate of Title Act for Vessels

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