[Federal Register Volume 60, Number 43 (Monday, March 6, 1995)]
[Proposed Rules]
[Pages 12188-12192]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-5387]



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DEPARTMENT OF TRANSPORTATION

Coast Guard

46 CFR Part 67
[CGD 94-070]
RIN 2115-AE98

Facsimile Filing of Instruments
AGENCY: Coast Guard, DOT.

ACTION: Notice of proposed rulemaking.
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SUMMARY: The Coast Guard proposes to amend its vessel documentation 
regulations to provide for optional filing of commercial instruments by 
facsimile, and to establish a filing and recording handling fee for 
filing instruments by facsimile. The option of filing commercial 
instruments by facsimile complements the centralization of Coast Guard 
vessel documentation services. Facsimile filing of commercial 
instruments is one way in which a centralized vessel documentation 
center can deliver timely services to distant vessel documentation 
customers and be responsive to time sensitive matters. Filing 
commercial instruments by facsimile should further streamline the 
vessel documentation process.
DATES: Comments must be received on or before May 5, 1995.

ADDRESSES: Comments may be mailed to the Executive Secretary, Marine 
Safety Council (G-LRA/3406) (CGD 94-070), U.S. Coast Guard 
Headquarters, 2100 Second Street SW., Washington, DC 20593-0001, or may 
be delivered to room 3406 at the same address between 8 a.m. and 3 
p.m., Monday through Friday, except Federal holidays. The telephone 
number is (202) 267-1477.
    The Executive Secretary maintains the public docket for this 
rulemaking. Comments will become part of this docket and will be 
available for [[Page 12189]] inspection or copying at room 3406, U.S. 
Coast Guard Headquarters, between 8 a.m. and 3 p.m., Monday through 
Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT:
Lieutenant Commander Don M. Wrye, Vessel Documentation and Tonnage 
Survey Branch; (202) 267-1492.

SUPPLEMENTARY INFORMATION: 

Request for Comments

    The Coast Guard encourages interested persons to participate in 
this rulemaking by submitting written data, views, or arguments. 
Persons submitting comments should include their names and addresses, 
identify this rulemaking (CGD 94-070) and the specific section of this 
proposal to which each comment applies, and give the reason for each 
comment. Please submit two copies of all comments and attachments in an 
unbound format, no larger than 8\1/2\ by 11 inches, suitable for 
copying and electronic filing. Persons wanting acknowledgment of 
receipt of comments should enclose stamped, self-addressed postcards or 
envelopes.
    The Coast Guard will consider all comments received during the 
comment period. It may change this proposal in view of the comments.
    The Coast Guard plans no public hearing. Persons may request a 
public hearing by writing to the Marine Safety Council at the address 
under ADDRESSES. The request should include the reasons why a hearing 
would be beneficial. If it determines that the opportunity for oral 
presentations will aid this rulemaking, the Coast Guard will hold a 
public hearing at a time and place announced by a later notice in the 
Federal Register.

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.

Background and Purpose

    Significant changes to the vessel documentation program were made 
in 1988 by Public Law 100-710 (the ``statute''). Among other things, 
the statute added chapter 313 to title 46, U.S. Code, to revise, 
consolidate, and codify into positive law the ship mortgage laws 
administered by the Department of Transportation. The statute made 
certain substantive changes to then-existing law to modernize ship 
mortgages and the filing and recording process.
    The legislative history for the statute is contained in House 
Report No. 100-918. That report noted that one of the primary purposes 
of chapter 313 of title 46, U.S. Code, is to provide third parties with 
notice of the existence of mortgages and liens. The report further 
advocates the use of a central computer system to facilitate access to 
data. The report noted that the ``Secretary should also consider 
allowing private vessel documentation services to submit applications 
electronically, with appropriate paper document backup for legal 
purposes * * *'' This proposal would implement some of the suggestions 
the report made concerning office automation and should realize some of 
the benefits expected to flow from modernization.
    On November 15, 1993, the Coast Guard published a final rule 
revising 46 CFR part 67 implementing the substantive changes made by 
the statute. The final rule became effective on January 1, 1994.
    Under subpart O of the current regulations, instruments to be filed 
and recorded with the Coast Guard are first submitted to the 
appropriate port of record. An instrument submitted for filing and 
recording must be a completed, executed instrument at the time it is 
submitted. If the instrument submitted meets the minimal requirements 
for filing, it is filed and stamped with a date and time. If all of the 
necessary elements for recording the instrument are present when it is 
filed, it can be promptly recorded. If an instrument is filed but 
cannot be recorded because of an error or omission, the instrument is 
deemed ``filed subject to termination'' and a 90-day window is provided 
for correction. If corrected within the 90-day period, the instrument 
may then be recorded with the recording date and time ``relating back'' 
to the date and time filed. If the instrument is not corrected within 
the 90-day period, the filing is terminated and the instrument is 
returned. In order to preserve the notice purpose of the statute, any 
instrument filed with the Coast Guard, even if the filing is terminated 
and the instrument not recorded, is indexed on the vessel's General 
Index or Abstract of Title (form CG-1332). Allowing for the submission 
of an instrument by facsimile for filing would not change any of the 
procedural steps provided in the current regulations. However, the 
submission of an instrument by facsimile for filing will start the 
process earlier, resulting in an earlier date and time for filing and 
recording purposes.
    The Coast Guard is proceeding with the consolidation of its 14 
regional vessel documentation offices into one central location. This 
centralization will conclude the effort begun in 1983 when a number of 
field offices were consolidated into regional offices. Although most 
vessel documentation transactions are currently completed by ordinary 
mail, a number of persons have expressed concern with regard to 
centralization for those cases where ``over-the-counter'' service is 
desired. As an example, some lending institutions will not advance 
funds under a ship mortgage until assured that the mortgage has been 
filed and recorded so as to acquire preferred status. In such cases, 
the Coast Guard documentation officer will verify over the telephone 
that the mortgage has been filed and recorded and the lending 
institution will advance funds immediately. The Coast Guard anticipates 
that the desire for such service will continue. Therefore, the Coast 
Guard is contemplating further use of office automation technology as 
part of the centralization effort. One such use of office automation 
technology is the filing of certain forms and instruments by facsimile. 
This document proposes amendments to the Coast Guard's regulations to 
permit optional submission by facsimile of certain forms and 
instruments for filing.

Discussion of Proposed Rules

    The Coast Guard proposes to add to 46 CFR part 67 a new Sec. 67.219 
to provide for filing commercial instruments by facsimile submission. 
Paragraph (a) of proposed Sec. 67.219 would limit the instruments that 
could be filed by facsimile submission to those identified as eligible 
for filing and recording in Sec. 67.200. Those instruments are: bills 
of sale and similar instruments; deeds of gift; mortgages and 
assignments, assumptions, supplements, amendments, subordinations, 
satisfactions, and releases thereof; preferred mortgages and 
assignments, assumptions, supplements, amendments, subordinations, 
satisfactions, and releases thereof; interlender agreements affecting 
mortgages, preferred mortgages, and related instruments; and notices of 
claim of lien and assignments, amendments, and satisfactions and 
releases thereof. Paragraph (a) of proposed Sec. 67.219 would also list 
the facsimile telephone number for the National Vessel Documentation 
Command to which facsimile submissions may be made. Finally, paragraph 
(a) of proposed Sec. 67.219 would require that the vessel to which the 
instrument relates either be currently documented or be the subject of 
an application for documentation. [[Page 12190]] 
    In accordance with Sec. 67.203, no instrument will be accepted for 
filing unless it pertains to a documented vessel or a vessel for which 
a properly completed application for documentation, redocumentation, or 
deletion from documentation is filed. The Coast Guard deems an 
instrument filed contemporaneously with a properly completed 
application for documentation, redocumentation, or deletion from 
documentation of the related vessel to meet the requirements of the 
regulation. Therefore, if the vessel related to the instrument being 
submitted by facsimile for filing is not a currently documented vessel, 
a completed application would also have to be submitted by facsimile 
with the instrument.
    Paragraph (b) of proposed Sec. 67.219 would require that the person 
submitting an instrument by facsimile for filing within 10 days submit 
the original instrument in duplicate to the National Vessel 
Documentation Command. One of the duplicate instruments submitted would 
have to bear original signatures. The 10-day period would begin to run 
at the time the instrument is received by facsimile at the National 
Vessel Documentation Command. Since the instrument being submitted by 
facsimile must be a completed and executed document, the submitter 
should be able to take it from the facsimile machine, place it in an 
envelope with the original of any required application and the 
appropriate fee, and mail the original and a copy to the National 
Vessel Documentation Command without delay. Thus, the 10-day period is 
considered a sufficient mailing window. The duplicate submission 
requirement proposed in paragraph (b) would meet the submission 
requirement for the filing of all instruments in Sec. 67.209, while 
obtaining the earlier filing date for those instruments submitted by 
facsimile. In addition, paragraph (b) of proposed Sec. 67.219 would 
require that the original of any application required to be submitted 
by paragraph (a) of this section, which is not already on file, also be 
submitted to the National Vessel Documentation Command.
    Paragraph (c) of proposed Sec. 67.219 would provide that upon 
receipt of the duplicate instruments and the original of any required 
application, the date and time of recording of the instrument ``relates 
back'' to the date and time that the instrument submitted by facsimile 
was filed. Provided that the instrument submitted by facsimile for 
filing meets the minimal requirements for filing, it would be filed at 
the date and time received by facsimile. The objective of submitting an 
instrument by facsimile for filing is to obtain an earlier filing date 
than could otherwise be acquired. Because the instrument submitted by 
facsimile is itself filed, the process should work well to meet that 
objective, even during weekends. For example, if an instrument were 
submitted by facsimile for filing late Friday evening, it would not be 
reviewed to ensure that it met the filing requirements until the next 
regular workday. On a regular weekend that would be the following 
Monday. On most holiday weekends, that would be the following Tuesday. 
Therefore, it is possible that an instrument submitted by facsimile for 
filing would not be reviewed to determine whether it met the minimal 
filing requirements until as many as four days after it was submitted. 
However, if the instrument submitted by facsimile does meet the filing 
requirements, then it would be stamped filed and the date and time of 
filing would be the date and time received by facsimile. The filing of 
the instrument would then be indexed on the vessel's General Index or 
Abstract of Title (form CG-1332). Of course, the 10-day period for 
submitting the duplicate instruments would also start running on the 
date the instrument is submitted by facsimile. Therefore, persons 
submitting an instrument by facsimile for filing must exercise due 
diligence to ensure that the duplicate instruments required by 
paragraph (b) arrive within the 10-day period. When the duplicate 
instruments arrive, they would be compared with the instrument filed by 
facsimile and, if not subject to termination under paragraph (f) of 
this section, the instrument would be recorded.
    Paragraph (d) of proposed Sec. 67.219 would require that all 
instruments filed by facsimile be clearly legible as received, that 
they be originally submitted from 8\1/2\-inch by 11-inch paper in not 
less than 10-point type size, and that they be accompanied by a cover 
sheet. This requirement would provide for minimum quality control of 
the instruments submitted by facsimile for filing. In addition, clear 
legibility of the instrument as received will assist Coast Guard 
personnel to ensure that the instrument meets minimum requirements for 
filing and recording pending receipt of the duplicate instruments in 
accordance with paragraph (b).
    Paragraph (e) of proposed Sec. 67.219 would indicate that the 
facsimile cover sheet required by paragraph (d) should contain the 
name, address, telephone number and facsimile telephone number of the 
person submitting the instrument by facsimile, and the number of pages 
submitted. This information will assist Coast Guard personnel to verify 
receipt of the complete instrument and will provide a point of contact 
should a difficulty arise in facsimile transmission.
    Paragraph (f) of proposed Sec. 67.219 would state the conditions 
upon which the filing of an instrument submitted by facsimile would be 
terminated. First, if the duplicate instruments required by paragraph 
(b) are not received within the 10-day period following submission of 
the instrument by facsimile, the filing is terminated and the 
instrument submitted by facsimile is returned to the submitter. Second, 
if there is any variance between the instrument submitted by facsimile 
and the duplicate instruments required by paragraph (b), the filing is 
terminated and the instrument submitted by facsimile is returned to the 
submitter. The provision for termination because of a variance would 
ensure that the instrument being submitted by facsimile for filing is 
not being submitted for the purpose of reserving an earlier filing date 
for a different or amended instrument submitted as the duplicate 
instruments required by paragraph (b). The instrument being submitted 
by facsimile for filing must be a complete and executed instrument at 
the time it is submitted, as is the case for any instrument submitted 
for filing under Subpart O of the current regulations.
    Paragraph (g) of proposed Sec. 67.219 would provide that where the 
filing of an instrument submitted by facsimile is terminated pursuant 
to paragraph (f)(3) because of a variance with the duplicate 
instruments submitted in accordance with paragraph (b), the duplicate 
instruments would be treated as an original submission for filing. 
Provided this instrument meets the minimal requirements for filing, it 
would be filed but would be subject to termination under 
Sec. 67.217(a)(1). This instrument would be subject to termination 
because of the variance with the earlier instrument submitted by 
facsimile. The termination of filing and distribution of instruments 
procedures described in Sec. 67.217 (b) and (c) would apply. The reason 
for treating this instrument as subject to termination is that the same 
transaction has been addressed by two different instruments with a 
variance between them. Therefore, the veracity of the facts of the 
transaction as reflected in the two instruments is in question. The 
instrument submitted as the duplicate instruments would be subject to 
the 90-day termination period in which the variance may be explained, 
thereby curing the defect and allowing for recording of the instrument. 
In this [[Page 12191]] instance, the recording date and time would 
relate back to the date and time that the ``duplicate instruments'' 
were filed subject to termination. A letter from the person who 
submitted the instrument by facsimile for filing explaining that the 
instrument submitted by facsimile has been superseded by the duplicate 
instruments would be sufficient.
    Paragraph (a) of Sec. 67.500 would be revised to clarify the Coast 
Guard's current practice to not perform any vessel documentation 
service which is subject to a fee until the required fee is paid. As is 
current practice, the person requesting the documentation service would 
submit the fee at the time the service is requested. As applied to the 
submission by facsimile of instruments for filing, the payment of the 
fee would accompany the submission of the duplicate instruments 
submitted in accordance with paragraph (b) of this section.
    A new Sec. 67.540 would be added to clearly state that a handling 
fee would be charged for processing an instrument submitted by 
facsimile for filing. This fee would not alter the current per page fee 
charged for filing and recording services, but would be an additional 
per page fee.
    An appropriate entry in Table 67.550--FEES in Sec. 67.550 would be 
added to reflect the amount of the fee added to address the handling 
fee. This additional fee is justified because of the additional time 
Coast Guard personnel would have to expend in processing the facsimile 
submission, and to cover the added expense of facsimile machines. For 
example, Coast Guard personnel would have to receive and sort the 
facsimile submission, review it to ensure that it met minimal filing 
requirements, assign a filing date and time, store the facsimile 
submission, retrieve it when the duplicate instruments were received, 
and compare the facsimile with the duplicate instruments. Based on the 
additional personnel handling required for an instrument submitted by 
facsimile for filing, and additional equipment costs, a fee of $2.00 
per page is proposed.

Regulatory Evaluation

    This proposal 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. The Coast Guard anticipates that optional filing by 
facsimile will be used only in a limited number of cases. For example, 
when additional financing is being negotiated; when an assignment or 
assumption of an existing mortgage is pending; when financing at 
favorable rates is time critical; or when a vessel owner desires to 
meet a specific sailing date and filing an instrument is critical to 
that date, are situations when filing by facsimile could be 
advantageous. Nevertheless, submission by facsimile is proposed as an 
optional method of presenting documents for filing. A party may always 
use regular mail or personal delivery if desired. Therefore, any 
additional costs to the public associated with this proposal would be 
due to an election to use the optional method.
    In order to more fully anticipate the costs and benefits associated 
with this proposal, the Coast Guard specifically solicits information 
from the public concerning potential use of the option of filing by 
facsimile.

Small Entities

    Under the Regulatory Flexibility Act (5 U.S.C. et seq.), the Coast 
Guard must consider whether this proposal, if adopted, 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.
    As explained earlier in this preamble, this proposal, if adopted, 
would merely add an optional method of submitting certain forms and 
instruments to the Coast Guard for filing. Since filing by facsimile 
would be optional, any additional costs borne by any users would be at 
their election. Current methods of submitting instruments for filing, 
at no increase in costs, would remain available. In addition, it is 
anticipated that the option of filing by facsimile would be used only 
in limited situations where time is of the essence. Therefore, the 
Coast Guard expects the impact of this proposal to be minimal.
    Because it expects the impact of this proposal to be minimal, the 
Coast Guard certifies under 5 U.S.C. 605(b) that this proposal, if 
adopted, 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.). This 
proposal merely describes an optional method of submitting instruments 
for filing and recording.

Federalism

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

Environment

    The Coast Guard considered the environmental impact of this 
proposal and concluded that under paragraph 2.B.2 of Commandant 
Instruction M16475.1B, this proposal is categorically excluded from 
further environmental documentation. This proposal has been determined 
to be categorically excluded because the changes proposed are 
administrative and procedural in nature, relate solely to the 
documentation of vessels, 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 proposes 
to amend 46 CFR part 67 as follows:

PART 67--[AMENDED]

    1. The authority citation for part 67 continues 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. Section 67.219 is added to read as follows:


Sec. 67.219  Optional filing of instruments by facsimile.

    (a) Any instrument identified as eligible for filing and recording 
under Sec. 67.200 may be submitted by facsimile for filing to the 
National Vessel Documentation Command at [telephone number to be 
inserted in final rule]. If the instrument submitted by facsimile for 
filing pertains to a vessel that is not a currently documented vessel, 
a properly completed Application for Initial Issue, Exchange, or 
Replacement Certificate of Documentation; or Redocumentation (form CG-
1258) or an [[Page 12192]] application for deletion from documentation 
must already be on file with the National Vessel Documentation Command 
or must be submitted by facsimile with the instrument being submitted 
by facsimile for filing.
    (b) Within 10 days of submitting an instrument by facsimile for 
filing, the person submitting the instrument by facsimile must submit 
the instrument in duplicate to the National Vessel Documentation 
Command, [address to be inserted in final rule]; at least one copy must 
bear original signatures. If not already on file, the original of any 
application required by paragraph (a) of this section must also be 
submitted with the original instrument to the National Vessel 
Documentation Command.
    (c) Upon receipt of the instrument in duplicate in accordance with 
paragraph (b) of this section, the date and time of recording of the 
instrument is the date and time the instrument submitted by facsimile 
was filed.
    (d) All instruments submitted by facsimile for filing must be 
clearly legible, submitted from 8\1/2\-inch by 11-inch paper in not 
less than 10-point type size, and accompanied by a cover sheet.
    (e) The facsimile cover sheet required by paragraph (d) of this 
section should indicate the name, address, telephone number and 
facsimile telephone number of the person submitting the instrument by 
facsimile, and the number of pages submitted by facsimile.
    (f) The filing of any instrument submitted by facsimile is 
terminated and the instrument will be returned to the submitter if:
    (1) The instrument is subject to termination for any cause under 
Sec. 67.217(a);
    (2) The instrument required to be submitted in duplicate in 
accordance with paragraph (b) of this section is not received within 
the 10-day period; or
    (3) There is any variance between the instrument submitted by 
facsimile for filing and the instrument submitted in duplicate in 
accordance with paragraph (b) of this section.
    (g) When the filing of an instrument submitted by facsimile is 
terminated for a variance in accordance with paragraph (f)(3) of this 
section, the instrument submitted in duplicate in accordance with 
paragraph (b) of this section will be deemed to be an original filing 
under this subpart subject to termination under Sec. 67.217(a)(1). The 
instrument submitted in duplicate will be deemed not in substantial 
compliance with the applicable regulations in this part because of the 
variance between it and the instrument submitted by facsimile. The 
procedures for termination of filing and disposition of instruments 
described in paragraphs (b) and (c) of Sec. 67.217 will apply.

    3. In Sec. 67.500, paragraph (a) is revised to read as follows:


Sec. 67.500  Applicability.

    (a) This subpart specifies documentation services provided for 
vessels for which fees are applicable. No documentation service for 
which a fee is applicable will be performed until the appropriate fee 
has been paid. Fees are contained in Table 67.550.
* * * * *
    4. Section 67.540 is added to read as follows:


Sec. 67.540  Facsimile handling fee.

    A handling fee is charged for processing an instrument submitted by 
facsimile for filing in accordance with subpart O of this part.

    5. In Sec. 67.550, Table 67.550 is amended by adding ``Facsimile 
submission handling'' as an entry following the entry ``Notice of claim 
of lien and related instruments'' under the category ``Filing and 
recording:'' to read as follows:


Sec. 67.550  Fee table.

* * * * *

                           Table 67.550.--Fees                          
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            Activity                        Reference              Fee  
------------------------------------------------------------------------
                                                                        
       *                  *                  *                  *       
                  *                  *                  *               
Facsimile submission handling...  Subpart O...................   \1\2.00
                                                                        
       *                  *                  *                  *       
                  *                  *                  *               
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\1\Per page.                                                            

* * * * *
    Dated: February 28, 1995.
N.W. Lemley,
Acting Chief, Office of Marine Safety, Security and Environmental 
Protection.
[FR Doc. 95-5387 Filed 3-3-95; 8:45 am]
BILLING CODE 4910-14-M