[Federal Register Volume 59, Number 189 (Friday, September 30, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-24155]


[[Page Unknown]]

[Federal Register: September 30, 1994]


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DEPARTMENT OF TRANSPORTATION

Coast Guard

46 CFR Part 67

[CGD 94-008]
RIN 2115-AE83

 

Documentation of Vessels

AGENCY: Coast Guard, DOT.

ACTION: Final rule.

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SUMMARY: The Coast Guard is amending its vessel documentation 
regulations. The amendments clarify the vessel documentation 
regulations by restating the citizenship requirements for trusts to 
reflect the Coast Guard's policy; by correcting an existing cross-
reference error regarding mortgagee consent for exchange of 
Certificates of Documentation; by implementing statutory requirements 
concerning the endorsements on Certificates of Documentation for 
dredges and towing vessels; and by making other minor technical 
amendments.

EFFECTIVE DATE: October 31, 1994.

ADDRESSES: Unless otherwise indicated, documents referred to in this 
preamble are available for inspection or copying at the office of the 
Executive Secretary, Marine Safety Council (G-LRA/3406), U.S. Coast 
Guard Headquarters, 2100 Second Street SW., room 3406, Washington, DC 
20593-0001 between 8 a.m. and 3 p.m., Monday through Friday, except 
Federal holidays. The telephone number is (202) 267-1477.

FOR FURTHER INFORMATION CONTACT:
Lieutenant Commander Don M. Wrye, Vessel Documentation and Tonnage 
Survey Branch, Merchant Vessel Inspection and Documentation Division, 
Office of Marine Safety, Security and Environmental Protection; (202) 
267-1492.

SUPPLEMENTARY INFORMATION:

Drafting Information

    The principal persons involved in drafting this document are 
Lieutenant Commander Don M. Wrye, Project Manager, and C.G. Green, 
Project Counsel, Office of Chief Counsel.

Regulatory History

    On June 20, 1994, the Coast Guard published a notice of proposed 
rulemaking entitled ``Documentation of Vessels'' in the Federal 
Register (59 FR 31580). The Coast Guard received one letter commenting 
on the proposal. No public hearing was requested, and none was held.

Background and Purpose

    On November 15, 1993, the Coast Guard published a final rule in the 
Federal Register (58 FR 60256) which revised 46 CFR Part 67 to 
implement a number of statutory initiatives to simplify and streamline 
the documentation process, to implement user fees for vessel 
documentation services, and to clarify the regulations and present them 
in a more orderly fashion. The final rule was the subject of two 
correction documents which appeared in the Federal Register on December 
13, 1993, at 58 FR 65130 and 58 FR 65243. That final rule became 
effective on January 1, 1994. The present rulemaking, among other 
things, corrects certain errors and omissions in the 1993 final rule. 
It also clarifies the citizenship requirements for a trust arrangement 
as a vessel-owning entity, and states the endorsements required for 
dredges and towing vessels.
    On June 7, 1988, Congress amended 46 U.S.C. app. Sec. 316 (Pub. L. 
100-329) to require towing vessels to be documented with a coastwise or 
Great Lakes endorsement, as appropriate. On November 4, 1992, Congress 
amended 46 U.S.C. app. Sec. 292 (Pub. L. 102-587) to require vessels of 
at least five net tons engaged in dredging in the navigable waters of 
the United States to be documented with a coastwise endorsement. 
Neither of these statutory requirements were included in the revision 
of Part 67. In order to state those requirements and to clarify the 
endorsement requirements for vessels employed in towing or dredging, 
the regulations need to be amended. This rule accomplishes that 
amendment.

Discussion of Comments and Changes

    The Coast Guard received only one comment letter in response to the 
notice of proposed rulemaking. That comment addresses only the proposed 
amendment to redesignated Sec. 67.36 regarding trusts.
    Proposed Sec. 67.36 set forth the citizenship requirements for 
trust arrangements as vessel-owning entities. In addition, the 
citizenship requirements for trust arrangements were described in 
detail, like those for corporations and partnerships, to specify the 
requirements for each endorsement. Paragraph (a) of proposed Sec. 67.36 
set forth the general requirements for a registry or recreational 
endorsement that each trustee and each beneficiary with an enforceable 
interest in the trust be citizens. This paragraph simply restated the 
current regulatory requirements for trusts found in Sec. 67.37. 
Paragraphs (b) and (c) of proposed Sec. 67.36 set forth the citizenship 
requirements for a fishery endorsement and a coastwise or Great Lakes 
endorsement, respectively. These requirements reflect the statutory 
citizenship requirements for these endorsements applicable to any 
business entity owning a documented vessel. The owner citizenship 
requirements for a coastwise or Great Lakes endorsement may be found in 
Sec. 2 of the Shipping Act, 1916 (46 U.S.C. app. Sec. 802) and 46 
U.S.C. Sec. 12107, respectively, and the owner citizenship requirements 
for a fishery endorsement may be found in 46 U.S.C. Sec. 12108. None of 
the current citizenship requirements for trusts would have been changed 
by the proposal.
    The comment raised three points concerning proposed Sec. 67.36. 
First, the comment stated that the term ``trust arrangement'' is not a 
well defined or easily understood concept in law, and questioned how it 
should be distinguished from the term ``trust'', which is a well 
defined and understood concept. The Coast Guard recognizes that there 
are numerous kinds of trusts. Indeed, reference to ``Black's Law 
Dictionary'' (Fifth Edition) reveals some 75 kinds of defined trusts. 
One of the general definitions of a trust is, ``Any arrangement whereby 
property is transferred with intention that it be administered by 
trustee for another's benefit.'' The Coast Guard's intention in using 
the term ``trust arrangement'' is to permit the use of as wide a range 
of trust types as vessel-owning entities as permissible. The Coast 
Guard disagrees that the term is confusing or that it need be 
distinguished from ``trust''. Therefore, the term will not be changed 
in the final rule.
    The second point raised by the comment concerns the requirement 
that each beneficiary with an enforceable interest in the trust be a 
citizen. The comment notes that in some trusts the beneficiaries are 
often unborn persons. The comment noted that while such an unborn 
beneficiary has an enforceable interest in the trust, that same 
beneficiary, by virtue of being unborn, has no citizenship. The comment 
reasons that the effect of the requirement will be to preclude trusts 
with unborn beneficiaries from qualifying as a vessel-owning entity for 
documentation purposes.
    An unborn beneficiary as described in the comment could have a 
vested interest in the trust. However, that interest would also be a 
contingent interest--with live birth being the minimum condition--which 
means that the interest is not a present interest. The Coast Guard's 
position is that the determinants of U.S. citizenship, even under 
circumstances of dual citizenship of infants, are sufficiently well 
settled that the citizenship of beneficiaries who hold present 
enforceable interests can be established. The Coast Guard never 
intended for the requirement of an enforceable interest to apply to 
mere contingent interests. Rather, the intent of the requirement is to 
permit the designation of discretionary or charitable beneficiaries who 
do not have to meet the citizenship requirement. Since the issue of the 
citizenship of beneficiaries holding the kinds of contingent future 
interests mentioned by the comment is not ripe for determination until 
the interest becomes a present interest, the Coast Guard sees no need 
to change the requirement.
    The third point raised by the comment concerns the additional 
requirement in paragraph (c) of Sec. 67.36 to obtain a coastwise or 
Great Lakes endorsement, that at least 75 percent of the equity 
interest in the trust be owned by citizens. The comment concluded that 
since paragraph (a), in effect, requires all beneficiaries to be 
citizens, the additional equity interest requirement is rendered 
absurd. The Coast Guard disagrees with the conclusion of the comment 
that paragraph (a) requires that all beneficiaries be citizens. Since 
those beneficiaries who do not have an enforceable interest do not have 
to meet the citizenship requirement, the additional requirement is 
needed to limit foreign equitable ownership to not more than 25 
percent. The percentage parameters is consistent with all other 
citizen/foreign ownership interest parameters for a vessel qualified to 
engage in the coastwise trade.
    The wording of proposed Sec. 67.36, as well as other proposed 
amendments described in the notice of proposed rulemaking, are 
unchanged in this final rule.

Regulatory Evaluation

    This rulemaking is not a significant regulatory action under 
section 3(f) of Executive Order 12866 and does not require an 
assessment of potential costs and benefits under section 6(a)(3) of 
that order. It has not been reviewed by the Office of Management and 
Budget under that order. It is not significant under the regulatory 
policies and procedures of the Department of Transportation (DOT) (44 
FR 11040; February 26, 1979).
    The Coast Guard expects the economic impact of this proposal to be 
so minimal that a full Regulatory Evaluation under paragraph 10e of the 
regulatory policies and procedures of DOT is unnecessary. As discussed 
earlier in this preamble, this rulemaking clarifies the citizenship 
requirements of a trust as a vessel-owning entity, corrects certain 
errors and omissions made in the 1993 final rule which revised 46 CFR 
part 67, clarifies a cross-reference with regard to calculation of fees 
for copies of instruments and documents, and addresses the statutorily 
required endorsements for vessels employed in towing and dredging. 
These matters are administrative in nature and do not have any economic 
impacts on the regulated public.

Small Entities

    Under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), the 
Coast Guard must consider whether this rulemaking will have a 
significant economic impact on a substantial number of small entities. 
``Small entities'' may include (1) small businesses and not-for-profit 
organizations that are independently owned and operated and are not 
dominant in their fields and (2) governmental jurisdictions with 
populations of less than 50,000.
    The Coast Guard expects the impact of this proposal to be minimal 
because it only clarifies the structure of a trust as a vessel-owning 
entity, corrects certain errors and omissions made in the 1993 final 
rule which revised 46 CFR part 67, clarifies a cross-reference with 
regard to calculation of fees for copies of instruments and documents, 
and addresses the statutorily required endorsements for vessels 
employed in towing or dredging. This proposal would bring the 
regulations into conformity with current policy and practice. These 
matters are administrative in nature and do not have any economic 
impacts on the regulated public. Therefore, the Coast Guard certifies 
under section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.) that this rule will not have a significant economic impact on a 
substantial number of small entities.

Collection of Information

    This proposal contains no collection-of-information requirements 
under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.).

Federalism

    The Coast Guard has analyzed this rulemaking under the principles 
and criteria contained in Executive Order 12612 and has determined that 
it does not have sufficient federalism implications to warrant the 
preparation of a Federalism Assessment.

Environment

    The Coast Guard considered the environmental impact of this 
rulemaking and concluded that under section 2.B.2. of Commandant 
Instruction M16475.1B, this rule is categorically excluded from further 
environmental documentation. This rule has been determined to be 
categorically excluded because the changes are administrative in nature 
and clearly have no environmental impact. A ``Categorical Exclusion 
Determination'' is available in the docket for inspection or copying 
where indicated under ADDRESSES.

List of Subjects in 46 CFR Part 67

    Fees, Incorporation by reference, Vessels.

    For the reasons set out in the preamble, the Coast Guard amends 46 
CFR part 67 as follows:

PART 67--[AMENDED]

    1. The authority citation for part 67 is revised to read as 
follows:

    Authority: 14 U.S.C. 664; 31 U.S.C. 9701; 42 U.S.C. 9118; 46 
U.S.C. 2103, 2107, 2110; 46 U.S.C. app. 841a, 876; 49 CFR 1.46.

    2. In Sec. 67.19, paragraphs (a) and (b) are revised to read as 
follows:


Sec. 67.19  Coastwise or Great Lakes endorsement.

    (a) A coastwise endorsement entitles a vessel to employment in 
unrestricted coastwise trade, dredging, towing, and any other 
employment for which a registry, fishery, or Great Lakes endorsement is 
not required.
    (b) A Great Lakes endorsement entitles a vessel to employment in 
the Great Lakes trade, towing in the Great Lakes, and any other 
employment for which a registry, fishery, or coastwise endorsement is 
not required.
* * * * *
    3. Section 67.35 is revised to read as follows:


Sec. 67.35  Partnership.

    A partnership is a citizen if all its general partners are 
citizens, and:
    (a) For the purpose of obtaining a registry or recreational 
endorsement, at least 50 percent of the equity interest in the 
partnership is owned by citizens.
    (b) For the purpose of obtaining a fishery endorsement, more than 
50 percent of the equity interest in the partnership is owned by 
citizens.
    (c) For the purpose of obtaining a coastwise or Great Lakes 
endorsement or both, at least 75 percent of the equity interest in the 
partnership is owned by citizens.
    4. Section 67.37 is redesignated as Sec. 67.36 and revised to read 
as follows:


Sec. 67.36  Trust.

    (a) For the purpose of obtaining a registry or recreational 
endorsement, a trust arrangement is a citizen if:
    (1) Each of its trustees is a citizen; and
    (2) Each beneficiary with an enforceable interest in the trust is a 
citizen.
    (b) For the purpose of obtaining a fishery endorsement, a trust 
arrangement is a citizen if:
    (1) It meets all the requirements of paragraph (a) of this section; 
and
    (2) More than 50 percent of the equity interest in the trust is 
owned by citizens.
    (c) For the purpose of obtaining a coastwise or Great Lakes 
endorsement or both, a trust arrangement is a citizen if:
    (1) It meets all the requirements of paragraph (a) of this section; 
and
    (2) At least 75 percent of the equity interest in the trust is 
owned by citizens.
    5. Section 67.37 is added to read as follows:


Sec. 67.37  Association or joint venture.

    (a) An association is a citizen if each of its members is a 
citizen.
    (b) A joint venture is a citizen if each of its members is a 
citizen.
    6. In Sec. 67.39, paragraphs (b), (c), and (d) are revised to read 
as follows:


Sec. 67.39  Corporation.

* * * * *
    (b) For the purpose of obtaining a fishery endorsement, a 
corporation is a citizen if:
    (1) It meets all the requirements of paragraph (a) of this section; 
and
    (2) More than 50 percent of the stock interest in the corporation 
including a majority of voting shares in the corporation is owned by 
citizens.
    (c) For the purpose of obtaining a coastwise or Great Lakes 
endorsement or both, a corporation is a citizen if:
    (1) It meets all the requirements of paragraph (a) of this section; 
and
    (2) At least 75 percent of the stock interest in the corporation is 
owned by citizens.
    (d) A corporation which does not meet the stock interest 
requirement of paragraph (c) of this section may qualify for limited 
coastwise trading privileges by meeting the requirements of part 68 of 
this chapter.
    7. In Sec. 67.119, paragraph (e) is revised to read as follows:


Sec. 67.119  Hailing port designation.

* * * * *
    (e) Until such time as a port of record assignment is required in 
accordance with Sec. 67.115, or the owner elects to designate a new 
hailing port, the provisions of paragraph (c) of this section do not 
apply to vessels which were issued a Certificate of Documentation 
before July 1, 1982.


Sec. 67.145  [Amended]

    8. In Sec. 67.145, paragraph (a) is amended by removing the cross-
reference to ``Secs. 67.167(a) or 67.167(b) (1) through (6)'' and 
adding, in its place, ``Secs. 67.167(b) (1) through (6) or 67.167(c) 
(1) through (8)''.
    9. In Sec. 67.171, paragraph (d) is revised to read as follows:


Sec. 67.171  Deletion; requirement and procedure.

* * * * *
    (d) A certificate evidencing deletion from U.S. documentation will 
be issued upon request of the vessel owner to the vessel's port of 
record upon compliance with the applicable requirements of this 
subpart.
    10. Section 67.321 is revised to read as follows:


Sec. 67.321  Requirement to report change of address of managing owner.

    Upon the change of address of the managing owner of a documented 
vessel, the managing owner shall report the change of address to the 
documentation officer at the port of record of the vessel within 10 
days of its occurrence.
    11. Section 67.539 is revised to read as follows:


Sec. 67.539  Copies of instruments and documents.

    The fee charged for furnishing a copy of any instrument or document 
is calculated in the same manner as described in 49 CFR 7.95.

    Dated: September 23, 1994.
J.C. Card,
Rear Admiral, U.S. Coast Guard, Chief, Office of Marine Safety, 
Security and Environmental Protection.
[FR Doc. 94-24155 Filed 9-29-94; 8:45 am]
BILLING CODE 4910-14-M