[Federal Register Volume 65, Number 32 (Wednesday, February 16, 2000)]
[Proposed Rules]
[Pages 7926-7939]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-3496]



[[Page 7925]]

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Part II





Department of Transportation





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Coast Guard



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33 CFR Parts 174 and 187



Vessel Identification System; Proposed Rule

  Federal Register / Vol. 65, No. 32 / Wednesday, February 16, 2000 / 
Proposed Rules  

[[Page 7926]]


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DEPARTMENT OF TRANSPORTATION

Coast Guard

33 CFR Parts 174 and 187

[USCG-1999-6420]
RIN 2115-AD35


Vessel Identification System

AGENCY: Coast Guard, DOT.

ACTION: Supplemental notice of proposed rulemaking.

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SUMMARY: The Coast Guard proposes to amend its regulations on the 
voluntary Vessel Identification System (VIS). VIS is a nationwide 
system for collecting information on vessels and vessel ownership to 
help identify and recover stolen vessels, deter vessel theft, and 
assist in deterring and discovering security-interest and insurance 
fraud. These amendments concern the requirements for States electing to 
participate in VIS. The amendments would improve the integrity and 
uniformity of the system and reflect recent statutory changes.

DATES: Comments and related material must reach the Docket Management 
Facility on or before May 16, 2000. Comments sent to the Office of 
Management and Budget (OMB) on collection of information must reach OMB 
on or before April 17, 2000.

ADDRESSES: To make sure your comments and related material are not 
entered more than once in the docket, please submit them by only one of 
the following means:
    (1) By mail to the Docket Management Facility, (USCG-1999-6420), 
U.S. Department of Transportation, room PL-401, 400 Seventh Street SW., 
Washington, DC 20590-0001.
    (2) By hand delivery to room PL-401 on the Plaza level of the 
Nassif Building, 400 Seventh Street SW., Washington, DC, between 9 a.m. 
and 5 p.m., Monday through Friday, except Federal holidays. The 
telephone number is 202-366-9329.
    (3) By fax to the Docket Management Facility at 202-493-2251.
    (4) Electronically through the Web Site for the Docket Management 
System at http://dms.dot.gov.
    You must also mail comments on collection of information to the 
Office of Information and Regulatory Affairs, Office of Management and 
Budget, 725 17th Street NW., Washington, DC 20503, ATTN: Desk Officer, 
U.S. Coast Guard.
    The Docket Management Facility maintains the public docket for this 
rulemaking. Comments and material received from the public, as well as 
documents mentioned in this preamble as being available in the docket, 
will become part of this docket and will be available for inspection or 
copying at room PL-401 on the Plaza level of the Nassif Building at the 
same address between 9 a.m. and 5 p.m., Monday through Friday, except 
Federal holidays. You may also access this docket on the Internet at 
http://dms.dot.gov.

FOR FURTHER INFORMATION CONTACT: For questions on this proposed rule, 
call ENS Christopher Williammee, Office of Information Resources, Coast 
Guard, telephone 202-267-6989, electronic mail 
[email protected]. For questions on viewing or submitting 
material to the docket, call Dorothy Walker, Chief, Dockets, Department 
of Transportation, telephone 202-366-9329.

SUPPLEMENTARY INFORMATION:

Request for Comments

    The Coast Guard encourages you to participate in this rulemaking by 
submitting comments and related material. If you do so, please include 
your name and address, identify the docket number for this rulemaking 
(USCG-1999-6420), indicate the specific section of this document to 
which each comment applies, and give the reason for each comment. You 
may submit your comments and material by mail, hand delivery, fax, or 
electronic means to the Docket Management Facility at the address under 
ADDRESSES; but please submit your comments and material by only one 
means. If you submit them by mail or hand delivery, submit them in an 
unbound format, no larger than 8\1/2\ by 11 inches, suitable for 
copying and electronic filing. If you submit them by mail and would 
like to know when they were received, please enclose a stamped, self-
addressed postcard or envelope. We will consider all comments and 
material received during the comment period. We may change this 
proposed rule in view of the comments.

Public Meeting

    We do not now plan to hold a public meeting. But, you may request 
one by submitting a request to the Docket Management Facility at the 
address under ADDRESSES explaining why one would be beneficial. If we 
determine that one would aid this rulemaking, we will hold a meeting at 
a time and place announced by a later notice in the Federal Register.

Regulatory History

    The following table outlines the regulatory history of this 
rulemaking project:

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            Document type                 Federal Register cite     Date published            Comments
----------------------------------------------------------------------------------------------------------------
Advance Notice of Proposed            54 FR 38358                        9/15/1989  Requested comments and
 Rulemaking.                                                                         information on establishing
                                                                                     a Vessel Identification
                                                                                     System (VIS).
Notice of Proposed Rulemaking.......  58 FR 51920                        10/5/1993  Proposed requirements for
                                                                                     States electing to
                                                                                     participate in VIS, as
                                                                                     required by statute.
Interim Final Rule..................  60 FR 20310                        4/25/1995  Established the requirements
                                                                                     for participating in VIS;
                                                                                     became effective 4/24/1996,
                                                                                     with the exception of 33
                                                                                     CFR part 187, subpart D.
Re-opening of comment period and      60 FR 53727                       10/17/1995  Reopened the comment period
 notice of public hearing.                                                           for the Interim Final Rule
                                                                                     and scheduled two public
                                                                                     hearings.
Change in effective date............  61 FR 6943                         2/23/1996  Delayed the effective date
                                                                                     of 33 CFR part 187 subpart
                                                                                     D until 4/24/1998.
Re-opening of comment period........  62 FR 54385                       10/20/1997  Reopened the comment period
                                                                                     for the Interim Final Rule
                                                                                     (60 FR 20310).
Change in effective date............  63 FR 19657                        4/21/1998  Delayed the effective date
                                                                                     of 33 CFR part 187 subpart
                                                                                     D until 4/24/1999.
Change in effective date............  64 FR 19039                        4/19/1999  Delayed the effective date
                                                                                     of 33 CFR part 187 subpart
                                                                                     D until 10/24/1999.
Final Rule (removing subpart D).....  64 FR 56965                       10/22/1999  Removed 33 CFR part 187
                                                                                     subpart D, which never went
                                                                                     into effect.
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[[Page 7927]]

Background and Purpose

    The Secretary of Transportation is required to establish a Vessel 
Identification System (VIS)(46 U.S.C. 12501). VIS is a nationwide 
system for collecting information on vessels and vessel owners and 
other information that will assist law enforcement officials in their 
investigations of stolen vessels or other crimes, such as fraud. It 
benefits consumers, lenders, insurers, the marine industry, and 
national boating organizations by increasing the probability of 
recovering stolen vessels and by decreasing the probability of a person 
unknowingly purchasing a vessel that is stolen or that has a lien or 
other claim against it. In turn, VIS should decrease the probability of 
theft. The responsibility for establishing VIS was delegated by the 
Secretary of Transportation to the Coast Guard (49 CFR 1.46).
    This Supplemental Notice of Proposed Rulemaking (SNPRM) concerns 
the Coast Guard's regulations in 33 CFR part 187 (Vessel Identification 
System), which--
    (1) Establish minimum requirements for States electing to 
participate in VIS;
    (2) Prescribe guidelines for State vessel titling systems; and
    (3) Explain how States may obtain certification of compliance with 
the vessel titling system guidelines for the purpose of conferring 
preferred status under 46 U.S.C. 31322(d) on mortgages, instruments, or 
agreements for State-titled vessels.
    State participation in VIS is entirely voluntary; however, to 
participate, States must comply with certain requirements to ensure the 
integrity and uniformity of the information provided to VIS.
    Most of the information to be included in VIS is already collected 
by States that number vessels under 33 CFR part 174. This SNPRM 
proposes to amend the requirements in 33 CFR part 187 for States 
electing to participate in VIS and makes corresponding changes to the 
standard numbering system regulations in Secs. 174.17 and 174.19.
    This notice also proposes a new 33 CFR part 187, subpart D, 
Guidelines for State Vessel Titling Systems, and clarifies the 
procedures for obtaining certification of compliance with those 
guidelines. Under 46 U.S.C. 31322(d)(1), a perfected mortgage covering 
the whole of a vessel titled in a State that participates in VIS and 
has a certified vessel titling system will be deemed to be a preferred 
mortgage. Compliance with the State titling guidelines and requests for 
certification are entirely voluntary by a State.

Discussion of Comments and Changes to the Proposed Rule

    We received 120 comments from April 25, 1995, through December 4, 
1997. All comments received, during the two public hearings and in 
writing, were considered in the development of this SNPRM. The issues 
raised by the comments, and the sections that have been revised or 
added since publication of the interim final rule, are discussed. For 
clarity, some sections were revised or reorganized. For example, 
existing Sec. 187.1 (Applicability) would be separated into proposed 
Secs. 187.1, 187.3, and 187.5 addressing both applicability and 
purpose.
    A significant number of the changes, including changes to the 
standard numbering system regulations in Secs. 174.17 and 174.19, are 
the result of comments and recommendations developed jointly by the 
primary stakeholders in VIS. These stakeholders include representatives 
of State numbering and titling agencies, the marine lending industry, 
and the maritime law community. Some additions and deletions to the 
information that must be provided to VIS have been made.

Sections 174.17, Contents of Application for Certificate of Number, and 
174.19, Contents of a Certificate of Number

    Several comments recommended that the information used to identify 
vessels in VIS be consistent with the information required for a 
certificate of number and that it be updated to meet current needs. We 
aligned proposed Secs. 174.17(a) and 174.19(a) with the changes to part 
187, which use the terms in the Boating Accident Report Database (BARD) 
for identifying vessels. The recommendations are discussed in more 
detail under the discussion of Sec. 187.103. The remaining paragraphs 
in Secs. 174.17 and 174.19 have been rewritten in plainer language 
without substantive change.

Section 187.1, Which States Are Affected by This Part?, and Section 
187.3, What Vessels Are Affected by This Part?

    Part 187 applies to all States that choose to participate in VIS 
and covers vessels that are numbered or titled under the laws of those 
States. For vessels documented by the Coast Guard, we will continue to 
collect information pertaining to them under current vessel 
documentation regulations in 46 CFR part 67.
    1. One comment suggested that information concerning any mortgage 
and any notice of a claim of a lien on file with respect to a 
documented vessel should be made available through VIS. The comment 
further noted that this is of critical importance to members of the 
public dealing with documented vessels.
    VIS will provide the same access to information on vessels 
documented by the Coast Guard that is available on State-titled 
vessels. Specifically, we will provide an indicator whether a security 
interest is recorded against the vessel and where additional 
information can be obtained.
    2. One comment suggested that the final rule specifically include 
barges in VIS.
    The Abandoned Barge Act of 1992 amended 46 U.S.C. 12301 to require 
the numbering of undocumented barges greater than 100 gross tons. We 
published a notice on October 18, 1994, (59 FR 52646) seeking comments 
on the development of a numbering system for barges. Currently, barges 
are not numbered and the Coast Guard is considering a mandatory 
numbering system under a separate rulemaking. This proposed rule 
applies only to vessels numbered or titled under the laws of a State. 
Therefore, VIS does not cover barges. However, when we establish a 
barge numbering system, the information will be made available through 
VIS.

Section 187.5, What Are the Purposes of This Part?

    This new section is derived from existing Sec. 187.1(a) and is 
added for clarity without substantive change.

Section 187.7, What Are the Definitions of Terms Used in This Part?

    Based on comments received, some definitions in the current rule 
would be amended for clarification or deleted and new ones added to 
reflect the proposed changes in the regulations. For example, we 
deleted the definition of ``lienholder'' and replaced it with a 
definition of ``secured party'' to reflect the meaning of that term as 
defined in the Uniform Commercial Code (UCC) in effect in the States.

Section 187.9, What Is a Vessel Identifier and How Is One Assigned?

    1. Revisions to this section clarify that the vessel identifier for 
a vessel having a valid hull identification number (HIN) is the HIN and 
further delineate the priority of other possible vessel identifiers for 
vessels without an HIN. Circumstances are specifically enumerated where 
the Official Number assigned to a documented vessel or the State 
certificate of number for

[[Page 7928]]

undocumented vessels would be used as a vessel identifier. If a vessel 
does not have a valid HIN and is transferred to a new owner or moved to 
a new State of principal operation, then the vessel would be assigned 
an HIN by the issuing authority for the State in which the vessel is 
principally operated or by the Coast Guard if the vessel is documented.
    To ensure the unique character of a State number as a vessel 
identifier if there is no HIN, the number issued to a vessel cannot 
later be reissued by the State to a different vessel. This requirement 
is addressed in proposed Secs. 174.23(c) and 187.9.
    2. Several comments suggested that the HIN be submitted with each 
application for documentation of a vessel for which an HIN is required. 
They also suggested that the HIN for all vessels in VIS, including 
documented vessels also identified by their official number, should be 
made available to users of VIS. The comments further stated that having 
the HIN available in both the Federal documented vessel and the State 
vessel registration data banks is essential in making VIS more useful.
    The Coast Guard has determined that this recommendation is outside 
the scope of this rulemaking and should be addressed in amendments to 
the regulations governing the documentation of vessels.

Section 187.11, What Are the Procedures To Participate in VIS?

    Changes in this section clarify the process for State certification 
if it complies with the VIS participation requirements in subpart C of 
part 187. These changes are not substantive in nature.

Section 187.13, What Are the Procedures for Obtaining Certification of 
Compliance With Guidelines for State Vessel Titling Systems?

    Changes in this section clarify the procedures for State 
certification if it complies with the titling guidelines in subpart D 
of part 187. These changes are not substantive in nature.

Section 187.15, When Is a Mortgage a Preferred Mortgage?

    This section has been separated from Sec. 187.13 to define a 
preferred mortgage. This change is not substantive in nature.

Section 187.101, What Information Must Be Collected To Identify a 
Vessel owner?

    Several comments from the marine lending industry stressed their 
need for access to vessel ownership information and suggested that we 
revise our VIS regulations to address ownership concerns, rather than 
just law enforcement concerns. Some comments indicated opposition to 
the availability of this information to the general public.
    According to the Coast Guard's notice under the Privacy Act of 1974 
(5 U.S.C. 552a)(63 FR 2171, January, 14, 1998), we will provide the 
information in VIS only to authorized persons. We will control access 
to specific vessel and vessel owner information in VIS through user 
accounts and passwords established by our Operating Systems Center.
    In identifying who should have access to the information in VIS, we 
must consider the legislative history of the statute requiring 
establishment of VIS. In debate on the floor of the House of 
Representatives during consideration of the legislation, the sponsors 
of the bill clearly stated several times that the purpose for 
collecting the information is not only to allow law enforcement 
officers to track interstate movement of stolen boats, but also to 
allow purchasers to obtain complete information before buying. To meet 
this legislative intent, it is necessary to provide information from 
VIS to potential buyers, lenders, and others in the maritime community 
having business with the vessel in question. Data subject to the 
Privacy Act may be deleted from information to be made available 
publicly, as distinct from information to be made available to State 
agencies, in order to prevent unwarranted invasion of privacy. The 
Coast Guard solicits comments as to what information should be made 
available publicly (e.g., to potential buyers and lenders) and what 
information should not be disclosed to the public.
    To disclose information, other than to participating States that 
provide information to or request information from VIS, we may charge a 
fee under 31 U.S.C. 9701 and 46 U.S.C. 12505. We will establish fees by 
a separate regulatory project; however, comments submitted in response 
to this SNPRM that suggest what fees should be charged to members of 
the public will be considered during development of the project to 
establish such fees.

Section 187.103, What Information Must Be Collected To Identify a 
Vessel?

    1. Several comments suggested that collecting the information 
regarding a vessel's propulsion type, fuel type, type of operation, and 
number previously issued by another issuing authority would be overly 
burdensome to the States.
    We disagree because the States with approved numbering systems 
under 33 CFR part 174 are already required to collect this information. 
The inclusion of this information in VIS should cause no additional 
information collection requirements for the States.
    2. Several comments recommended that information to identify 
vessels in VIS should be consistent with the information required for a 
certificate of number and that some categories of information should be 
updated to meet current needs. The National Association of State 
Boating Law Administrators (NASBLA), the National Marine Bankers 
Association (NMBA), and individual States recommended that the 
information to identify a vessel in various systems should be 
consistent to the greatest extent possible. In particular, it was 
recommended that the information required for a certificate of number 
and for VIS be consistent, to the maximum extent possible, with the 
information used to identify vessels in the Boating Accident Report 
Database (BARD).
    We agree. Not only should the information collected be consistent 
but it also should be updated to reflect changes in the boating 
industry. One example is the inclusion of the term ``personal 
watercraft'' as a type of vessel.
    Over the past several years, we have worked closely with State 
agencies responsible for recreational boating safety programs to 
develop BARD. The data collected for BARD is essential to identify the 
causes of boating accidents and steps that can be taken to reduce the 
number and severity of accidents. Boating safety professionals, after 
careful consideration, defined the terms needed to describe vessels in 
BARD. We agree that the terms for type of vessel, hull material, 
propulsion, engine and fuel used in BARD should be adopted for purposes 
of certificates of number for undocumented vessels and VIS and have 
amended Secs. 174.17, 174.19, and 187.103 accordingly.
    To further update the regulations, we also propose to include 
``charter fishing'' as a new category under ``primary use'' of a 
vessel. The National Marine Fisheries Service (NMFS) has a statutory 
requirement to establish a fishing vessel registration system and 
fisheries information system. To meet that mandate, NMFS proposes to 
get its basic information about fishing vessels and their owners from 
the VIS and has requested that we include the term ``charter fishing'' 
as a category under ``primary use'' of a vessel. The addition of this 
classification of use is similar to adding the term ``personal 
watercraft'' as a type of vessel and is considered a reasonable update 
to the numbering

[[Page 7929]]

system regulations to reflect current needs.
    We realize that States would need to revise their forms for 
applications and certificates of number to comply with the proposed 
changes in the information required to be collected by their vessel 
numbering systems. The maximum period for which a certificate of number 
can be valid is 3 years. Therefore, while recommending that States 
adopt the changes as soon as possible, we propose to allow States a 
maximum of 4 years to come into compliance. During this period, VIS 
will accept vessel information from the States as currently required in 
Secs. 174.17 and 174.19.

Section 187.105, What Information on Titled Vessels Must Be Collected 
and What May Be Collected?

    1. The comments generally agreed on the information on titled 
vessels that must or may be collected by a participating State. We 
propose to revise this section to show that a State that titles vessels 
must provide, in addition to the information required for numbered 
vessels--
    (a) The title number;
    (b) The issuance date of the most recently issued title or 
duplicate; and
    (c) Information on where evidence may be found of a security 
interest or lien against a vessel titled in that State, together with 
the name and address (city and State) of each secured party.
    2. Comments suggested that existing paragraph (b) of this section 
should also be revised to reflect additional information that may be 
made available to VIS if the information is recorded by the titling 
authority in a State. The information provided would be useful for 
purposes of confirming the status of a security interest against the 
vessel, such as information on--
    (a) Any assignment of a security interest;
    (b) The date of discharge of a security interest;
    (c) The surrender of the certificate of title issued by the titling 
authority in that State; and
    (d) Additional mailing addresses and telephone numbers of any 
secured party.
    As currently designed, VIS can only accept information on the date 
of discharge of a security interest and the surrender of a certificate 
of title. Persons seeking other information will need to contact the 
State in which the vessel is titled. The name and telephone number to 
contact are available through VIS.

Section 187.107, What Information Must Be Made Available To Assist Law 
Enforcement Officials and What Information May Be Made Available?

    We propose to amend this section to add ``Date of notice of law 
enforcement status'' and ``National Crime Information Center code'' to 
the list of information that must be made available to law enforcement 
officials. Also, we would add language to allow law enforcement 
officials the option of providing notice that a vessel is being sought 
for law enforcement purposes other than those described by the usual 
terms of ``lost,'' ``stolen,'' ``destroyed,'' ``abandoned,'' or 
``recovered.''

Section 187.201, What Are the Compliance Requirements for a 
Participating State?

    1. This section would require a State to collect previous 
certificates of documentation, number, and title when issuing new 
certificates of number or title. One comment stated that the 
documentation process would encounter a VIS-caused delay by returning a 
surrendered certificate of documentation to the Coast Guard. The 
comment added that retaining and making available the evidence 
establishing the accuracy of data would require another database.
    We understand that most States retain information collected in the 
application process on microfiche, microfilm, or other electronic 
storage. This meets the requirement of the regulation. A State may 
retain or dispose of the previous documents as it sees fit. Because a 
State is free to dispose of the actual documents, we do not agree that 
the provision is overly burdensome and have retained the provision.
    2. One comment stated that retaining a record on line for the 
purpose of marking it inactive or transferred to another State would be 
costly and overly burdensome.
    We modified the requirement to provide that States must notify VIS 
of any transactions that enter, modify, or cancel records in the 
States' vessel files. After notification, VIS will maintain the 
information and States may delete or archive the information if they 
wish to do so.
    3. We changed this section to clarify that a participating State 
may receive a certificate of documentation for a documented vessel, as 
well as a certificate of number or a certificate of title. The State 
must notify the issuing authority or the Coast Guard by mail or 
electronic message of the receipt of the document.
    Additionally, the participating State must update the information 
required to be made available to VIS by providing, within 48 hours, a 
copy of transactions that enter, modify, or cancel records in the 
vessel files of that State. These provisions will ensure that a vessel 
may pass from the Federal documentation system to a VIS participating 
State Vessel Titling System without jeopardizing the accuracy of vessel 
ownership information, the legal perfection of the preferred mortgage, 
or the security interest in the vessel held by a secured party. 
Transactions received by the State must be made available to VIS on a 
prompt basis, affording the secured party an opportunity to learn of 
the change.

Section 187.203, What Are the Voluntary Provisions for a Participating 
State?

    One comment stated that requiring a participating State to provide 
data for a vessel not in its system (i.e., a vessel numbered in another 
State that does not participate in VIS) would be unrealistic. This 
provision is voluntary, and States are not required to do so.

Subpart D, Guidelines for State Vessel Titling Systems

    Based on comments received from the States, the marine lending 
industry, and maritime law interests, subpart D is the most amended 
portion of the proposed part 187. Several comments suggested that we 
should petition Congress to amend the statutes that govern VIS to 
address concerns of the maritime lending and legal communities 
regarding Coast Guard-documented and/or State-titled vessels. The 
marine lending industry requested such amendments be enacted by 
Congress and they were included in the Coast Guard Authorization Act of 
1998 (Pub. L. 105-383). Under those amendments, Federal statute now 
prohibits a vessel being both documented by the Coast Guard and titled 
by a State (46 U.S.C. 12124).

Section 187.301, What Are the Eligibility Requirements for 
Certification of a State Titling System To Confer Preferred Mortgage 
Status?

    One comment questioned how preferred mortgage status can transcend 
to State jurisdiction and how the mechanics of enforcing State laws 
will be handled when there are maritime liens. The comment expressed 
concern that costly litigation may ensue and suggested that admiralty 
and maritime counsel be consulted regarding the practicality of 
enforcing a preferred ship mortgage on a State-titled vessel.
    For preferred mortgage status, 46 U.S.C. 31322(d)(1)(A) and (B) 
state that

[[Page 7930]]

a mortgage perfected under State law, covering the whole of a vessel, 
is deemed to be a preferred mortgage if the State's titling system is 
certified to be in compliance with the titling guidelines issued by the 
Secretary of Transportation and if the information on the vessel 
covered by the mortgage is made available to VIS.

Section 187.303, What Terms Must a State Define?

    We made changes to this section to clarify that a State must define 
the listed terms substantially as we defined them in Sec. 187.7.

Section 187.304, What Vessels Must Be Titled

    We added this section to clarify that a State must require that all 
vessels numbered in that State under 46 U.S.C. chapter 123 be titled 
only by that State's titling authority if the State issues titles to 
vessels of that class. Thus, a State numbering a vessel may not permit 
the vessel to be titled in another State if the numbering State issues 
titles to vessels of that class. If a State issues titles to a certain 
class of vessels, it should be clear that the vessel is principally 
operated and numbered in that State, and also that no other State 
should issue a title for that vessel.

Section 187.305, What Are the Requirements for Applying for a Title?

    1. One comment suggested that VIS must require disclosure that a 
vessel may have been registered in a foreign country immediately prior 
to the application for a title in a State complying with subpart D.
    We agree and changed paragraph (c) of this section to require such 
disclosure.
    2. One comment suggested that VIS must require submission of the 
Certificate of Origin (COO) for a vessel not previously numbered, 
titled, documented or registered under the laws of a foreign country.
    We agree and added a new paragraph (d) to this section to require 
submission of the COO for a vessel not previously numbered, titled, 
documented or registered under the laws of a foreign country. We re-
designated the current paragraph (d) as paragraph (e).
    3. One comment stated that requiring individuals to disclose 
existing indebtedness, or the State or country in which the vessel was 
last numbered or titled, would be overly burdensome.
    We do not agree that capturing this data would be overly 
burdensome. The data is needed to help prevent the fraudulent re-
titling of vessels in a new State without disclosing an unsatisfied 
security interest.
    4. One State commented that the phrase ``under penalty of perjury'' 
is not used on its application form and would like to ensure that the 
States retain latitude with regard to the wording that is used to state 
that false statements carry penalties.
    We agree that States should have such latitude; the requirement 
only ensures that there are legal penalties for false statements on 
applications for title.

Section 187.307, What Are Dealer and Manufacturer Provisions?

    1. We made changes to this section to address the concerns 
applicable to dealers and manufacturers who may own a vessel only for 
resale, or who may own a vessel for use in their businesses. Dealers 
and manufacturers must not be allowed to apply for a certificate of 
title for a vessel not required to be numbered in a State. Dealers and 
manufacturers owning a new or used vessel primarily used in their 
businesses and held for sale or lease and that otherwise is required to 
be numbered in the State, may be either permitted or required to apply 
for a certificate of title for the vessel. The State is free to impose 
other reporting requirements on dealers and manufacturers in the State. 
The changes to this section require that dealers and manufacturers, 
transferring a vessel required to be titled, must transfer any COO for 
the vessel or any certificate of title that has been issued and not 
surrendered.
    2. One comment suggested that, if a dealer applies for a title for 
a new unnumbered vessel in Ohio, the COO must be surrendered to the 
County Clerk issuing the title. Therefore, if the dealer titled the new 
unnumbered vessel, the dealer could not provide a COO to the vessel 
owner to initiate a chain of title. The comment further explained that 
allowing a dealer to title a new vessel and have it remain unnumbered 
would not work in some States. Some States' numbering and titling 
authorities commented that requiring dealers to report the acquisition 
of used numbered vessels for resale would not serve any worthwhile 
purpose for their programs and, further, that it would be 
administratively burdensome. Additionally, the option that dealers must 
apply for a certificate of title would be in direct conflict with most 
States' laws, which now exempt dealers from the titling requirement.
    We changed paragraph (d) of this section to ensure that a dealer or 
manufacturer must not provide a duplicate COO to the vessel owner 
without receipt of information, declared under penalties of perjury, 
concerning the original COO and the circumstances of its loss, theft, 
mutilation or destruction, together with any recovered original COO or 
remains from the vessel owner. The term ``DUPLICATE'' must be clearly 
and permanently marked on the face of any duplicate COO.

Section 187.309, What Are the Requirements for Transfer of Title?

    Amendments to this section are for clarification and are not 
substantive.

Section 187.311, What Are the Application Requirements for a 
Certificate of Title Because of a Transfer by Operation of Law or Order 
of Court?

    Amendments to this section are for clarification and are not 
substantive.

Section 187.313, Must a State Honor a Prior State Title, Coast Guard 
Documentation, and Foreign Registry?

    This section would be amended to address, in separate paragraphs, 
the requirement that a State must honor (1) a current and valid title 
issued by another State, (2) a Certificate of Ownership or a 
Certificate of Deletion issued by the Coast Guard, and (3) an 
authenticated copy of a foreign registry or evidence of deletion from a 
foreign registry.

Section 187.315, What Happens When a Title Is Surrendered for the 
Purposes of Documentation?

    We wish to emphasize that the statutory prohibition in 46 U.S.C. 
12124 against a vessel being documented by the Coast Guard and titled 
by a State applies to all State-titled vessels, whether or not the 
title-issuing State participates in VIS or follows these titling 
guidelines. If a recreational vessel owner has obtained a State title 
for purposes of convenience or as required by State law and also has a 
Certificate of Documentation (COD), then the owner must surrender 
either the State title or the COD.
    For a vessel engaged in a trade for which documentation is required 
under Federal law, the owner cannot choose to relinquish the COD and 
continue to employ the vessel in trade. Three States (Iowa, New Jersey, 
and Vermont) require that a vessel receive a State title if its owner 
resides in the State or if it is principally used in the State, whether 
or not the Coast Guard documents the vessel. Federal documentation laws 
in 46 U.S.C. chapter 121 preempt State titling requirements. The COD of 
a vessel engaged in trade will remain valid and its State title will be 
void, even if State law requires the title.

[[Page 7931]]

    This preemption does not extend to recreational vessels, which are 
not required by Federal law to be documented, unless the vessels are 
covered by a preferred mortgage. A recreational vessel that is 
Federally documented is ineligible for State titling, and the vessel 
owner will have to surrender either the title to the issuing State 
authority or the COD to the Coast Guard. However, an owner cannot 
surrender the COD of a vessel covered by a preferred mortgage. States 
that require titling of Coast Guard-documented vessels may wish to 
review their titling requirements and make statutory or regulatory 
changes.
    If a title issued by a State is surrendered to us for vessel 
documentation purposes, we will notify the State titling authority of 
that fact and the State must administratively process the cancellation 
of the title.

Section 187.317, What Information Must Be on a Certificate of Title?

    One comment argued against including the name and addresses of 
additional lienholders. None of the States that commented collect this 
information. One State commented that when a lien is recorded, it 
electronically enters the date the lien was recorded, not the date of 
the recording by the lienholder. The date the State records the lien is 
part of the batch number and does not appear on the certificate of 
title. Printing the date the State records the lien on the title 
document would entail extensive system and title document changes. 
Another comment stated that satisfaction of lien and transfer of lien 
information is recorded on a separate form (Notice of Recorded Lien, 
MV-901). The comment also noted that to incorporate this information on 
the certificate of title would necessitate extensive changes to forms, 
procedures, and data processing programs with no benefit to a State's 
system.
    Lien information is specifically required to be included in VIS 
under 46 U.S.C. 12501(b)(5). Lien information is very important in the 
development of the integrated vessel information and titling system 
envisioned by Congress. Therefore, we retained in this rulemaking the 
requirement to include lien information on the certificate of title for 
States that elect to seek certification under these regulations.

Section 187.319, What Are the Requirements for Applying for a Duplicate 
Title?

    Amendments to this section are for clarity and are not substantive.

Section 187.321, What Are the Hull Identification Number (HIN) 
Provisions?

    Amendments to this section are for clarity and are not substantive.

Section 187.323, What Are the Procedures for Perfection of Security 
Interests?

    Changes to this section are based on the substantial input of 
marine banking and maritime law interests. Changes to paragraph (a) of 
this section include specific provisions for perfection of a security 
interest in a vessel titled in a State. These provisions must be 
specified by that State and include--

     Delivery of an application for a new or amended 
certificate of title on which the secured party shall be noted;
     Surrender of any outstanding certificate of number and/
or title issued by another State;
     Surrender of a certificate of documentation of any 
documented vessel that is to be numbered and titled by the State;
     Delivery of an authenticated foreign registry of the 
vessel or evidence of deletion from the foreign registry of any 
foreign-registered vessel that is to be numbered and titled by the 
State; and
     Determination of the date of perfection.

    Paragraphs (b), (c), and (d) of this section clarify requirements 
of 46 U.S.C. 31322(d) and (e), which must be recognized by a State. 
Paragraph (e) of this section states that a State must provide that 
certain liens must not be perfected by notation on the title of the 
vessel. These include, but are not limited to, a security interest in a 
vessel created by a dealer or manufacturer who holds the vessel for 
sale, whether or not the vessel is titled, and a security interest 
claimed in a vessel's proceeds, if the security interest does not have 
to be noted on the vessel's title in order to be perfected.

Section 187.325, Is a State Required To Specify Procedures for the 
Assignment of a Security Interest?

    We propose to change this section to show the assumption that a 
security interest may be assigned, in place of the assumption that the 
assignment necessarily must be perfected. The perfection of the 
assignment of security interests in vessels is an issue on which 
States' laws vary.

Section 187.327, What Are a State's Responsibilities Concerning a 
Discharge of Security Interests?

    We propose to change this section to show that a security interest 
may be discharged as a matter of record, notwithstanding that the debt 
secured is necessarily satisfied.

Section 187.329, Who Prescribes and Provides the Forms To Be Used?

    We propose to change this section to show that a State must 
prescribe forms necessary to comply with its titling system provisions, 
without enumeration of those forms.

Section 187.331, What Information Is To Be Retained by a State?

    We removed the 3-year requirement to retain and make available the 
information required for vessel titling purposes. A 3-year time limit 
is inappropriate in circumstances where the security interest deemed to 
be a preferred mortgage in a vessel might continue much longer than 
three years.

Regulatory Evaluation

    This proposed rule 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 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).
    We expect the economic impact of this proposed rule to be so 
minimal that a full Regulatory Evaluation under paragraph 10e of the 
regulatory policies and procedures of DOT is unnecessary. This proposed 
rule would impose zero mandatory costs. For States that choose to 
participate in VIS, it is expected to impose an average one-time cost 
of $55,000 per State and an average recurring cost (for correcting 
inaccurate data entries) equal to $0.75 times 2 percent of the number 
of annual registration changes per State.

I. Costs

    This rulemaking does not impose mandatory costs on States. A State 
may elect to participate in the Standard Numbering System (SNS) or VIS 
but is not compelled to do so. Participation is entirely voluntary. All 
States except Alaska currently participate in the Standard Numbering 
System. In our estimation of hour and cost burdens, we assumed a 100% 
participation rate in VIS by 2009.
    The total cost of this rulemaking to a State participating in VIS 
(and SNS) is the sum of the one-time costs and recurring costs. Over 
the 10-year period of analysis, the present-value total cost of this 
rule to States that elect to participate in VIS is estimated to be 
$2,917,450.
    (a) One-time Costs.

[[Page 7932]]

    There are two one-time costs. The largest one-time cost is the cost 
of developing the VIS/State database interface and update programming 
at the State level. We estimate the average cost of developing VIS at 
the State level would be $55,000 per participant. Assuming a 100% 
participation rate by the year 2009, we estimate that the total one-
time cost of developing VIS, in present-value terms, would be 
$2,366,574 in 1999 dollars.
    The second one-time cost is the cost to comply with the proposed 
data revisions in the Standard Numbering System. The Coast Guard 
expects most States would not incur this cost because the required 
changes to the States' databases would probably be covered under most 
States' service plans. Consequently, we expect the total SNS one-time 
cost would be negligible; and we estimate the present value total one-
time cost of this rule would be $2,366,574.
    (b) Recurring Costs.
    There are two recurring costs. The first is the cost to produce a 
daily summary update of registration changes, which is transmitted to 
VIS. The second is the cost of correcting data entry errors of 
registration changes.
    The daily summary update of registration changes will be generated 
automatically by the computer program that is developed when a State 
initially elects to participate in VIS. Consequently, the Coast Guard 
estimates that the cost to a State of producing approximately 250 
annual summary updates would be zero. If a State improperly enters the 
data for a change of registration, an error report is generated from 
VIS. A State that receives an error report will be required to correct 
the data entry. We estimate 2 per cent of a State's registration 
changes will be improperly entered and generate error reports. In most 
cases, we expect the error will be limited to a particular field in the 
data set, and its correction will be quick.
    We estimate it would cost an average of $0.75 to correct a data 
entry (assuming it takes an average of 3 minutes or 0.05 hours at an 
average of $15 per hour to correct an entry). The corrected data entry 
will then be automatically included in that day's summary update. So, 
if a State has an average of 100,000 registration changes per year, we 
would expect an average of 2,000 data entry mistakes and a recurring 
cost of $1,500 per year (100,000 x 0.02 x $0.75=$1,500).
    The present-value total recurring cost of this rule to States is 
estimated to be $550,876. When added to the estimated present-value 
total start-up cost to States of $2,366,574, the present-value total 
cost of this rule to States over the 10-year period of analysis is 
$2,917,450 ($550,876+$2,366,574=$2,917,450).
    The present-value total cost of this rule to States and to the 
Federal government to support and maintain VIS is estimated to be 
$8,688,439 in 1999 dollars ($2,917,450 to States and $5,770,989 to the 
Federal government).

II. Benefits

    (a) Benefits of the Standard Numbering System.
    The benefit of the proposed changes to the Standard Numbering 
System is consistency among various systems requiring the collection of 
vessel data--the Standard Numbering System, VIS, and the Boating 
Accident Report Database. The amendments to the Standard Numbering 
System regulations, which have not been updated in many years, reflect 
changes in the boating industry, such as identification of personal 
watercraft as a type of vessel. These changes more accurately reflect 
the current boating environment and include information to better 
identify the recreational boating community and the locations where 
services such as boating safety education, boating law enforcement, or 
search and rescue activities may be needed. This information is 
essential to all facets of the national and State recreational boating 
safety programs.
    (b) Benefits of VIS.
    The primary benefits of VIS would come from its ability to serve as 
a tracking device for vessels, with the vessel identifier serving much 
like the Vehicle Identification Number found in automobiles. As a 
tracking device, the benefits of VIS would be in the--
    (1) Improved odds of recovering a stolen or missing vessel, which 
benefits boat owners and insurers, and local and State law enforcement 
agencies;
    (2) Decreased odds of unknowingly purchasing a stolen vessel, which 
can be a financial disaster if the rightful owner shows up to claim it; 
and
    (3) Decreased odds of unknowingly purchasing a vessel that has a 
lien, unpaid taxes, or other claim(s) lodged against it, which can 
become the responsibility of the new owner.
    VIS establishes penalties for those persons who--
    (1) Intentionally provide false information to the issuing 
authority regarding the identification of a vessel, or
    (2) Tamper with, remove, or falsify a unique vessel identification 
number.
    Combining those penalties with its feature as a tracking device, a 
secondary benefit of VIS would be the reduction in theft of vessels. A 
third benefit of VIS would be the preferred mortgage status of a 
perfected mortgage covering the whole of a vessel titled in a State 
that participates in VIS and has a certified vessel titling system.
    (c) Other benefits.
    We seek public comment on additional benefits of VIS. We estimate 
that 10% of stolen vessels are currently recovered. If VIS were to be 
implemented, how much, if any, would the percentage of recovered 
vessels increase? In addition to potentially increasing the number of 
recovered stolen vessels, what other quantifiable benefits would VIS 
produce?

Collection of Information

    This proposed rule calls for a collection of information under the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). We submitted a 
copy of the rule, as required by 44 U.S.C. 3507(d), to the Office of 
Management and Budget (OMB) for its review of the collection of 
information. OMB approved the collection. The section numbers are 
Secs. 187.11, 187.13, 187.101, 187.103, 187.105, 187.107, 187.201, and 
187.301 and the corresponding approval number is OMB Control Number 
2115-0607. The changes proposed in this SNPRM would have no appreciable 
effect on the collection of information as approved.
    As defined in 5 CFR 1320.3(c), ``collection of information'' 
comprises reporting, recordkeeping, monitoring, posting, labeling, and 
other, similar actions. If you submit comments on the collection of 
information, submit them both to OMB and to the Docket Management 
Facility where indicated under ADDRESSES, by the date under DATES.
    You need not respond to a collection of information unless it 
displays a currently valid control number from OMB.

Small Entities

    Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we 
considered whether this proposed rule, if adopted, 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.
    This rulemaking affects U.S. States. It imposes zero mandatory 
costs. According to the U.S. Bureau of the Census, none of the States 
eligible to participate in VIS has a population less

[[Page 7933]]

than 50,000. Thus, there are no small entities affected and no impact 
upon small entities.
    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 the Docket Management Facility at the 
address under ADDRESSES. In your comment, explain why you think it 
qualifies and how and to what degree this rule would economically 
affect it.

Assistance for Small Entities

    Under section 213(a) of the Small Business Regulatory Enforcement 
Fairness Act of 1996 (Pub. L. 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 consult ENS Christopher 
Williammee, Office of Information Resources, Coast Guard, telephone 
202-267-6989, electronic mail [email protected].
    Small businesses may send comments on the actions of Federal 
employees who enforce, or otherwise determine compliance with, Federal 
regulations to the Small Business and Agriculture Regulatory 
Enforcement Ombudsman and the Regional Small Business Regulatory 
Fairness Boards. The Ombudsman evaluates these actions annually and 
rates each agency's responsiveness to small business. If you wish to 
comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR 
(1-888-734-3247).

Federalism

    We have analyzed this proposed rule under E.O. 13132 and have 
determined that this rule does not have federalism implications to 
warrant the preparation of a Federalism Assessment under that Order.
    This rule is not expected to infringe upon the rights of States to 
regulate, or preempt existing State regulations. State participation is 
entirely voluntary. However, once electing to participate, a State must 
comply with the requirements to ensure integrity and uniformity of 
information in both the Standard Numbering System and VIS. Likewise, 
requesting certification that a State vessel titling system complies 
with the guidelines is also voluntary. Such certification, for 
participating States, confers preferred status on mortgages covering 
the whole of vessels titled in that State.
    However, as stated earlier in the discussion of section 187.315, 
Federal law (46 U.S.C. 12124) prohibits a vessel from being both 
documented by the Coast Guard and titled by a State. This prohibition 
applies to all State-titled vessels, whether or not the title-issuing 
State participates in VIS or follows the titling guidelines. States 
that require documented vessels to be titled should consider amending 
their laws and regulations on this issue.

Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) 
governs the issuance of Federal regulations that require unfunded 
mandates. An unfunded mandate is a regulation that requires a State, 
local, or tribal government or the private sector to incur direct costs 
without the Federal Government's having first provided the funds to pay 
those costs. This proposed rule would not impose an unfunded mandate.

Taking of Private Property

    This proposed rule would not effect a taking of private property or 
otherwise have taking implications under E.O. 12630, Governmental 
Actions and Interference with Constitutionally Protected Property 
Rights.

Civil Justice Reform

    This proposed rule meets applicable standards in sections 3(a) and 
3(b)(2) of E.O. 12988, Civil Justice Reform, to minimize litigation, 
eliminate ambiguity, and reduce burden.

Protection of Children

    We have analyzed this proposed rule under E.O. 13045, Protection of 
Children from Environmental Health Risks and Safety Risks. This rule is 
not an economically significant rule and does not concern an 
environmental risk to health or risk to safety that may 
disproportionately affect children.

Environment

    We considered the environmental impact of this proposed rule and 
concluded that, under figure 2-1, paragraph (34) of Commandant 
Instruction M16475.1C, this rule is categorically excluded from further 
environmental documentation. This rule establishes a nationwide 
information system for identifying vessels and vessel owners, and 
guidelines for State vessel titling systems. This action clearly would 
have no environmental consequences. A ``Categorical Exclusion 
Determination'' is available in the docket where indicated under 
ADDRESSES.

List of Subjects

33 CFR Part 174

    Intergovernmental relations, Marine safety, Reporting and 
recordkeeping requirements.

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 parts 174 and 187 as follows:

PART 174--STATE NUMBERING AND CASUALTY REPORTING SYSTEMS

    1. The authority citation for part 174 continues to read as 
follows:

    Authority: 46 U.S.C. 6101, 12302; 49 CFR 1.46.

    2. Revise Sec. 174.17 to read as follows:


Sec. 174.17  Contents of application for certificate of number.

    (a) An application form for a certificate of number must contain 
the following information:
    (1) Name(s) of owner(s).
    (2) Owner(s)' address.
    (3)-(4) [Reserved]
    (5) State in which the vessel is or will be principally used.
    (6) Number previously issued by an issuing authority.
    (7) Application type--new number, renewal of number, or transfer of 
ownership.
    (8) Primary use. Authorized terms are ``pleasure,'' ``rent or 
lease,'' ``dealer or manufacturer demonstration,'' ``charter fishing,'' 
``commercial fishing,'' ``commercial passenger carrying,'' or ``other 
commercial operation.''
    (9) Manufacturer, builder, or make.
    (10) Model year, manufacture year, or year built.
    (11) Manufacturer's hull identification number, if any.
    (12) Overall length.
    (13) Vessel type. Authorized terms are ``open motorboat,'' ``cabin 
motorboat,'' ``auxiliary sail,'' ``sail only,'' ``personal 
watercraft,'' ``pontoon,'' ``houseboat,'' ``rowboat,'' ``canoe/kayak,'' 
or ``other.''
    (14) Hull material. Authorized terms are ``wood,'' ``aluminum,'' 
``steel,'' ``fiberglass,'' ``rigid hull inflatable,'' ``rubber/vinyl/
canvas,'' or ``other.''
    (15) Propulsion type. Authorized terms are ``propeller,'' ``sail,'' 
``water jet,'' ``air thrust,'' or ``manual.''

[[Page 7934]]

    (16) Engine drive type. Authorized terms are ``outboard,'' 
``inboard,'' or ``inboard/stern drive.''
    (17) Fuel type. Authorized terms are ``gasoline,'' ``diesel,'' or 
``electric.''
    (18) The signature of the owner.
    (b) An application made by a manufacturer or dealer for a number 
that is to be temporarily affixed to a vessel for demonstration or test 
purposes may omit the information under paragraphs (a)(9) through 
(a)(17) of this section.
    (c) An application made by a person who intends to lease or rent 
the vessel without propulsion machinery may omit the information under 
paragraphs (a)(16) and (a)(17) of this section.
    3. Revise Sec. 174.19 to read as follows:


Sec. 174.19  Contents of a certificate of number.

    (a) Except as allowed in paragraphs (b), (c), and (d) of this 
section, each certificate of number must contain the following 
information:
    (1) Number issued to the vessel.
    (2) Expiration date of the certificate.
    (3) State of principal use.
    (4) Name(s) of owner(s).
    (5) Owner(s)' address.
    (6) Primary use. Authorized terms are ``pleasure,'' ``rent or 
lease,'' ``dealer or manufacturer demonstration,'' ``charter fishing,'' 
``commercial fishing,'' ``commercial passenger carrying,'' or ``other 
commercial operation.''
    (7) Manufacturer's hull identification number, if any.
    (8) Manufacturer, builder, or make.
    (9) Model year, manufacture year, or year built.
    (10) Overall length.
    (11) Vessel type. Authorized terms are ``open motorboat,'' ``cabin 
motorboat,'' ``auxiliary sail,'' ``sail only,'' ``personal 
watercraft,'' ``pontoon,'' ``houseboat,'' ``rowboat,'' ``canoe/kayak,'' 
or ``other.''
    (12) Hull material. Authorized terms are ``wood,'' ``aluminum,'' 
``steel,'' ``fiberglass,'' ``rigid hull inflatable,'' ``rubber/vinyl/
canvas,'' or ``other.''
    (13) Propulsion type. Authorized terms are ``propeller,'' ``sail,'' 
``water jet,'' ``air thrust,'' or ``manual.''
    (14) Engine drive type. Authorized terms are ``outboard,'' 
``inboard,'' or ``inboard/stern drive.''
    (15) Fuel type. Authorized terms are ``gasoline,'' ``diesel,'' or 
``electric.''
    (b) A certificate of number issued for a vessel that has a valid 
manufacturer's hull identification number may omit the information 
under paragraphs (a)(8) through (a)(15) of this section if the hull 
identification number is plainly marked on the certificate.
    (c) A certificate of number issued to a manufacturer or dealer for 
use on a vessel for test or demonstration purposes may omit the 
information under paragraphs (a)(7) through (a)(15) of this section if 
the word ``manufacturer'' or ``dealer'' is plainly marked on the 
certificate.
    (d) A certificate of number issued for a vessel that is to be 
rented or leased without propulsion machinery may omit paragraphs 
(a)(14) and (a)(15) of this section if the words ``livery vessel'' are 
plainly marked on the certificate.
    (e) An issuing authority may print on the certificate of number a 
quotation of State boating regulations or other boating safety 
information.
    4. In Sec. 174.23, add a new paragraph (c) to read as follows:


Sec. 174.23  Form of number.

* * * * *
    (c) Once issued, a number assigned by an issuing authority to a 
vessel cannot later be reassigned to a different vessel.
    5. Revise part 187 to read as follows:

PART 187--VESSEL IDENTIFICATION SYSTEM

Subpart A--General

Sec.
187.1  Which States are affected by this part?
187.3  What vessels are affected by this part?
187.5  What are the purposes of this part?
187.7  What are the definitions of terms used in this part?
187.9  What is a vessel identifier and how is one assigned?
187.11  What are the procedures to participate in VIS?
187.13  What are the procedures for obtaining certification of 
compliance with guidelines for State vessel titling systems?
187.15  When is a mortgage a preferred mortgage?

Subpart B--Information To Be Collected by Participating States

187.101  What information must be collected to identify a vessel 
owner?
187.103  What information must be collected to identify a vessel?
187.105  What information on titled vessels must be collected and 
what may be collected?
187.107  What information must be made available to assist law 
enforcement officials and what information may be made available?

Subpart C--Requirements for Participating in VIS

187.201  What are the compliance requirements for a participating 
State?
187.203  What are the voluntary provisions for a participating 
State?

Subpart D--Guidelines for State Vessel Titling Systems

187.301  What are the eligibility requirements for certification of 
a State titling system to confer preferred mortgage status?
187.303  What terms must a State define?
187.304  What vessels must be titled?
187.305  What are the requirements for applying for a title?
187.307  What are dealer and manufacturer provisions?
187.309  What are the requirements for transfer of title?
187.311  What are the application requirements for a certificate of 
title because of a transfer by operation of law or order of court?
187.313  Must a State honor a prior State title, Coast Guard 
documentation, and foreign registry?
187.315  What happens when a title is surrendered for the purposes 
of documentation?
187.317  What information must be on a certificate of title?
187.319  What are the requirements for applying for a duplicate 
title?
187.321  What are the hull identification number (HIN) provisions?
187.323  What are the procedures for perfection of security 
interests?
187.325  Is a State required to specify procedures for the 
assignment of a security interest?
187.327  What are a State's responsibilities concerning a discharge 
of security interests?
187.329  Who prescribes and provides the forms to be used?
187.331  What information is to be retained by a State?

Appendix A to Part 187--Participating Authorities

Appendix B to Part 187--Participating and Certified Vessel Titling 
Authorities

    Authority: 46 U.S.C. 2103, 12501; 49 CFR 1.46.

Subpart A--General


Sec. 187.1  Which States are affected by this part?

    States electing to participate in the Vessel Identification System 
(VIS) are affected by this part.


Sec. 187.3  What vessels are affected by this part?

    Only vessels numbered or titled by a participating State are 
affected by this part. Vessels documented under 46 U.S.C. chapter 121 
and 46 CFR parts 67 and 68 are not affected.


Sec. 187.5  What are the purposes of this part?

    The purposes of this part are to--
    (a) Establish minimum requirements for States electing to 
participate in VIS;
    (b) Prescribe guidelines for State vessel titling systems; and
    (c) Explain 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).

[[Page 7935]]

Sec. 187.7  What are the definitions of terms used in this part?

    As used in this part--
    Approved Numbering System means a numbering system approved by the 
Secretary of Transportation under 46 U.S.C. Chapter 123.
    Certificate of Documentation means the certificate issued by the 
Coast Guard for a documented vessel under 46 U.S.C. 12103 (Form CG-
1270).
    Certificate of Origin or COO means a document establishing the 
initial chain of ownership, such as a manufacturer's certificate of 
origin (MCO) or statement of origin (MSO), an importer's certificate of 
origin (ICO) or statement of origin (ISO), or a builder's certification 
(Form CG-1261; see 46 CFR part 67).
    Certificate of Ownership means the Certificate of Ownership issued 
by the Coast Guard under 46 CFR part 67 (Form CG-1330).
    Commandant means the Commandant of the United States Coast Guard.
    Dealer means any person who engages wholly or in part in the 
business of buying, selling, or exchanging new or used vessels, or 
both, either outright or on conditional sale, bailment, lease, chattel 
mortgage or otherwise. A dealer must have an established place of 
business for the sale, trade, and display of such vessels.
    Documented vessel means a vessel documented under 46 U.S.C. chapter 
121.
    Hull Identification Number or HIN means the number 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.
    Manufacturer means any person engaged in the business of 
manufacturing or importing new vessels for the purpose of sale or 
trade.
    Owner means a person, other than a secured party, having property 
rights in, or title to, a vessel. ``Owner'' includes a person entitled 
to use or possess a vessel subject to a security interest in another 
person, but does not include a lessee under a lease not intended as 
security.
    Participating State means a State certified by the Commandant as 
meeting the requirements of subpart C of this part. States meeting this 
definition are listed in Appendix A to this part.
    Person means an individual, firm, partnership, corporation, 
company, association, joint-stock association, or governmental entity 
and includes a trustee, receiver, assignee, or similar representative 
of any of them.
    Secured party means a lender, seller, or other person in whose 
favor there is a security interest under applicable law.
    Security interest means an interest that is reserved or created by 
an agreement under applicable law and that secures payment or 
performance of an obligation.
    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.
    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. Titling 
authorities participating in VIS are listed in Appendix B to this part.
    Vessel includes every description of watercraft, other than a 
seaplane on the water, used or capable of being used as a means of 
transportation on water.
    Vessel Identification System or VIS means a system for collecting 
information on vessels and vessel ownership as required by 46 U.S.C. 
12501.


Sec. 187.9  What is a vessel identifier and how is one assigned?

    (a) The vessel identifier for a vessel having a valid HIN is the 
HIN.
    (b) If a vessel does not have a valid HIN, a vessel identifier is 
assigned under the following table:

------------------------------------------------------------------------
                               And does not have a     Then the vessel
      If the vessel is:            valid HIN:          identifier is:
------------------------------------------------------------------------
(1) Documented..............  ....................  The official number
                                                     assigned by the
                                                     Coast Guard under
                                                     46 CFR part 67.
(2) Documented..............  And is transferred    The HIN assigned by
                               to a new owner.       the Coast Guard.
(3) Undocumented............  And must be numbered  The number issued on
                               under 33 CFR parts    a certificate of
                               173 and 174.          number by the
                                                     issuing authority
                                                     of the State of
                                                     principal
                                                     operation, provided
                                                     the number will not
                                                     be used in the
                                                     future to identify
                                                     a different vessel.
(4) Undocumented............  And is transferred    The HIN assigned by
                               to a new owner.       the issuing
                                                     authority of the
                                                     State of principal
                                                     operation.
(5) Undocumented............  And the vessel is     The HIN assigned by
                               required to be        the issuing
                               numbered or titled    authority of the
                               in a new State of     State of principal
                               principal operation.  operation.
------------------------------------------------------------------------

Sec. 187.11  What are the procedures to participate in VIS?

    (a) A State must submit a written request to the Commandant (G-OPB) 
certifying that it will comply with the VIS participation requirements 
in subpart C of this part.
    (b) The Commandant will review the request and determine if the 
State is complying with the VIS participation requirements. If so, the 
Commandant will certify compliance by listing the State in Appendix A 
to this part.
    (c) Appendix A to this part lists those States certified by the 
Commandant to participate in VIS. When the Commandant determines that a 
State is not complying with the participation requirements, it will 
lose its certification and will be deleted from Appendix A to this 
part.


Sec. 187.13  What are the procedures for obtaining certification of 
compliance with guidelines for State vessel titling systems?

    (a) A State must submit a written request to the Commandant (G-
OPB). The request must include a copy of the State's titling laws, 
regulations and administrative procedures, and certify that the State 
will comply with the VIS participation requirements in subpart C of 
this part.
    (b) The Commandant will review the request and determine if the 
State is complying with the Guidelines for State Vessel Titling Systems 
in subpart D of this part. If the state is complying with the 
guidelines, the Commandant will certify compliance and list the State 
in Appendix B to this part.
    (c) Appendix B to this part lists States certified by the 
Commandant. When the Commandant determines that a State is not 
complying with the vessel titling guidelines, it will lose its 
certification

[[Page 7936]]

and be deleted from Appendix B to this part.


Sec. 187.15  When is a mortgage a preferred mortgage?

    A mortgage, instrument, or agreement granting a security interest 
perfected under State law covering the whole of a vessel titled under 
the law of a participating State is a preferred mortgage if the State 
is certified under Sec. 187.13.

Subpart B--Information To Be Collected by Participating States


Sec. 187.101  What information must be collected to identify a vessel 
owner?

    (a) A participating State must collect the following information 
for a vessel it has numbered or titled when an individual owns the 
vessel:
    (1) Names of all owners.
    (2) Principal residence of one owner.
    (3) Mailing Address, if different from the address in paragraph 
(a)(2) of this section.
    (4) One of the following unique identifiers for each owner:
    (i) Social Security Number (SSN) or Individual Taxpayer 
Identification Number (ITIN).
    (ii) If the SSN or ITIN is not available, birth date and driver's 
license number.
    (iii) If the SSN, ITIN, and driver's license number are not 
available, birth date and other unique identifier prescribed by the 
State.
    (b) A participating State must collect the following information 
for a vessel that it has numbered or titled when the vessel's owner is 
not an individual, but a business or other type of organization:
    (1) Names of all businesses or organizations that own the vessel.
    (2) Principal address of one business or organization.
    (3) Mailing address, if different from the address in paragraph 
(b)(2) of this section.
    (4) Taxpayer Identification Number (TIN) for the principal business 
or organization.
    (5) If the TIN for the principal business or organization is not 
available, one of the following unique identifiers for a corporate 
officer, a partner, or the individual who signed the application for 
numbering:
    (i) Social Security Number (SSN) or Individual Taxpayer 
Identification Number (ITIN).
    (ii) If the SSN or ITIN is not available, birth date and driver's 
license number.
    (iii) If the SSN, ITIN, and driver's license number are not 
available, birth date and other unique identifier prescribed by the 
State.


Sec. 187.103  What information must be collected to identify a vessel?

    A participating State must collect the following information on a 
vessel it has numbered or titled:
    (a) Manufacturer's hull identification number (HIN), if any.
    (b) Official number, if any, assigned by the Coast Guard or its 
predecessor.
    (c) Number on certificate number assigned by the issuing authority 
of the State.
    (d) Expiration date of certificate of number.
    (e) Number previously issued by an issuing authority.
    (f) Name of manufacturer, builder, or make.
    (g) Model year, manufacture year, or year built.
    (h) Overall length.
    (i) Vessel type. Authorized terms are ``open motorboat,'' ``cabin 
motorboat,'' ``auxiliary sail,'' ``sail only,'' ``personal 
watercraft,'' ``pontoon,'' ``houseboat,'' ``rowboat,'' ``canoe/kayak,'' 
or ``other.''
    (j) Hull material. Authorized terms are ``wood,'' ``aluminum,'' 
``steel,'' ``fiberglass,'' ``rigid hull inflatable,'' ``rubber/vinyl/
canvas,'' or ``other.''
    (k) Propulsion type. Authorized terms are ``propeller,'' ``sail,'' 
``water jet,'' ``air thrust,'' or ``manual.''
    (l) Engine drive type. Authorized terms are ``outboard,'' 
``inboard,'' or ``inboard/stern drive.''
    (m) Fuel. Authorized terms are ``gasoline,'' ``diesel,'' or 
``electric.''
    (n) Primary use. Authorized terms are ``pleasure,'' ``rent or 
lease,'' ``dealer or manufacturer demonstration,'' ``charter fishing,'' 
``commercial fishing,'' ``commercial passenger carrying,'' or ``other 
commercial operation.''


Sec. 187.105  What information on titled vessels must be collected and 
what may be collected?

    (a) A participating State must collect the following information on 
a vessel it has titled and make it available to VIS:
    (1) Information required under Sec. 187.103.
    (2) Title number.
    (3) Issuance date of the most recently issued title or duplicate.
    (4) Where evidence may be found on the security interest or lien 
against the vessel.
    (5) Name of each secured party.
    (6) Address (city and State) of each secured party.
    (b) A participating State may collect the following information on 
a vessel it has titled and make it available to VIS:
    (1) Information concerning the discharge of the security interest.
    (2) Information concerning the surrender of the certificate of 
title.


Sec. 187.107  What information must be made available to assist law 
enforcement officials and what information may be made available?

    (a) A participating State must make the following information 
available to law enforcement officials:
    (1) Vessel identifier(s), as required by Sec. 187.9.
    (2) Notice of law enforcement status. Authorized terms are 
``lost,'' ``stolen,'' ``destroyed,'' ``abandoned,'' or ``recovered.''
    (3) Date of notice of law enforcement status.
    (4) Point of contact for the agency or official reporting the 
status.
    (5) National Crime Information Center code for the reporting agency 
or official.
    (b) A participating State may make the following information 
available to law enforcement officials:
    (1) Notice that the vessel is being sought for a law enforcement 
purpose other than a purpose listed in paragraph (a)(2) of this 
section.
    (2) Location of vessel when reported lost, stolen, destroyed, 
abandoned, or recovered.
    (3) Vessel insurance policy number.
    (4) Name of insurance company.
    (5) Address of insurance company.
    (6) Mailing address of insurance company, if different from the 
address in paragraph (b)(5) of this section.
    (7) Telephone number of insurance company.
    (8) Date the vessel was recovered.
    (9) Location of the vessel when recovered.
    (10) Names and telephone numbers of contacts not listed under 
paragraph (a)(4) of this section.
    (11) Request to be notified if vessel is sighted.
    (12) Purpose of sighting notification request.
    (13) Date and time vessel last sighted.
    (14) Location of vessel when last sighted.

Subpart C--Requirements for Participating in VIS


Sec. 187.201  What are the compliance requirements for a participating 
State?

    A participating State must comply with the following requirements:
    (a) Collect the required information listed in subpart B of this 
part and provide that information to VIS under the applicable Coast 
Guard-State Memorandum of Agreement.
    (b) Obtain specific evidence of ownership, such as the COO or 
current certificate of title and/or number, to identify a vessel's 
owner.
    (c) Retain previously issued evidence of ownership, such as 
certificate of

[[Page 7937]]

number, title, or Certificate of Documentation, and notify the issuing 
authority or the Coast Guard by mail or electronic message.
    (d) Retain information identifying the type of evidence used to 
establish the accuracy of the information required to be made available 
to VIS and make it available to the Commandant upon request.
    (e) Update the information required to be made available to VIS by 
providing, within 48 hours, a copy of transactions that enter, modify, 
or cancel records in the vessel files.


Sec. 187.203  What are the voluntary provisions for a participating 
State?

    A participating State may--
    (a) Provide VIS with the optional information listed in subpart B 
of this part;
    (b) Make available to VIS updated information provided by the 
vessel owner, government agency, or secured party about a vessel that 
has been moved to a non-participating State of principal operation; and
    (c) Interact with non-participating States to make information 
available to, or request information from, VIS concerning a vessel or 
nationwide statistics.

Subpart D--Guidelines for State Vessel Titling Systems


Sec. 187.301  What are the eligibility requirements for certification 
of a State titling system to confer preferred mortgage status?

    The Commandant, under 46 U.S.C. 31322(d)(1)(A) and Sec. 187.13, may 
certify a State vessel titling system that meets the requirements of 
this subpart as complying with the guidelines for vessel titling 
systems. This certification is for the purpose of conferring preferred 
mortgage status on a mortgage, instrument, or agreement granting a 
security interest perfected under State law, covering the whole of a 
vessel titled in that State. The State must also comply with the VIS 
participation requirements of Sec. 187.11 and subpart C of this part 
and make vessel information it collects available to VIS.


Sec. 187.303  What terms must a State define?

    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 Sec. 187.7.


Sec. 187.304  What vessels must be titled?

    A State must require that all vessels required to be numbered in 
the State under 46 U.S.C. chapter 123 be titled only in that State, if 
that State issues titles to that class of vessels.


Sec. 187.305  What are the requirements for applying for a title?

    (a) A State must require application for a title within a specified 
period of time, not to exceed 60 days, after a vessel required to be 
titled is first purchased, ownership is transferred, or there is a 
change in vessel data listed on the certificate of title.
    (b) A State must require disclosure in its titling application form 
of any secured party holding an unsatisfied security interest in the 
vessel.
    (c) The application must include an entry for identification of the 
State or country in which the vessel was last numbered, titled, 
documented, or registered under the laws of a foreign country.
    (d) A State must require that a COO for a vessel be submitted 
together with the application for any new vessel not previously 
numbered, titled, documented, or registered under the laws of a foreign 
country.
    (e) A State must require that the application include a signed 
certification that the statements made are true and correct to the best 
of the applicant's knowledge, information, and belief, under penalty of 
perjury or similar penalties as prescribed by State law.


Sec. 187.307  What are dealer and manufacturer provisions?

    A State must include the following provisions applicable to any 
dealer or manufacturer building, buying, acquiring, selling, or 
transferring a vessel in that State:
    (a) Dealers or manufacturers must not be allowed to apply for a 
certificate of title for a vessel not required to be numbered. Dealers 
or manufacturers owning a new or used vessel primarily used in their 
business, held for sale or lease, and required to be numbered may be 
either permitted or required to apply for a certificate of title for 
the vessel. The State may impose other reporting requirements on 
dealers or manufacturers.
    (b) Dealers or manufacturers transferring a vessel required to be 
titled in the name of the dealer or manufacturer must be required to 
assign the title to the new owner or, for a new vessel, assign a COO 
for a new vessel. Dealers or manufacturers transferring a vessel 
permitted to be titled in their name must be required to assign to the 
new owner any certificate of title which has been issued and not 
surrendered.
    (c) Dealers or manufacturers must not be permitted to provide a 
duplicate COO if VIS contains information concerning the vessel.
    (d) Dealers or manufacturers must be permitted to provide a 
duplicate COO to the vessel owner only upon receipt of information 
concerning the original certificate and the circumstances of its loss, 
theft, mutilation, or destruction and receipt of any recovered original 
COO or remains from the vessel owner. This information must be declared 
under penalty of perjury or similar penalties as prescribed by State 
law. The term ``DUPLICATE'' must be clearly and permanently marked on 
the face of a duplicate COO.
    (e) Dealers or manufacturers must be required to maintain for at 
least 3 years a record of any vessel bought, sold, exchanged, or 
received for sale or exchange, and open such records for inspection by 
the State.


Sec. 187.309  What are the requirements for transfer of title?

    To complete the sale, assignment, or transfer of a titled vessel, a 
State must require that a manufacturer, dealer, or individual must 
deliver the vessel's certificate of title to the new owner or new 
owner's designee, except for transfers by operation of law or order of 
court.


Sec. 187.311  What are the application requirements for a certificate 
of title because of a transfer by operation of law or order of court?

    A State must require a new owner to apply for a certificate of 
title within a specified period of time, not to exceed 60 days, after 
ownership of a vessel is transferred by operation of law or order of 
court. This application must include an original or authenticated copy 
of the legal transfer document.


Sec. 187.313  Must a State honor a prior State title, Coast Guard 
documentation, and foreign registry?

    (a) A State must honor a title issued by another State as proof of 
ownership for transfer or sale of a vessel and for applying for a 
certificate of number or title in the new State of principal operation.
    (b) A State must honor a Coast Guard-issued Certificate of 
Ownership or a Certificate of Deletion as proof of ownership and 
deletion from documentation.
    (c) A State must honor an authenticated copy of a foreign registry, 
or evidence of deletion from the foreign registry, as proof of 
ownership and deletion from the foreign registry.

[[Page 7938]]

Sec. 187.315  What happens when a title is surrendered for the purposes 
of documentation?

    A State title is invalid when it is surrendered to the Coast Guard 
in exchange for a Certificate of Documentation. Upon notification from 
the Coast Guard of the surrender of a title, a State must process the 
cancellation of the title.


Sec. 187.317  What information must be on a certificate of title?

    (a) A certificate of title must contain the following information 
concerning the vessel:
    (1) Names of all owners (individuals, businesses, and 
organizations).
    (2) Address of one individual, business, or organization owning the 
vessel.
    (3) Title number.
    (4) Date of issuance of title.
    (5) Vessel identifier under Sec. 187.9.
    (6) Name of manufacturer, builder, or make.
    (7) Model year, manufacture year, or year built.
    (8) Overall length.
    (9) Vessel type. Authorized terms are ``open motorboat,'' ``cabin 
motorboat,'' ``auxiliary sail,'' ``sail only,'' ``personal 
watercraft,'' ``pontoon,'' ``houseboat,'' ``rowboat,'' ``canoe/kayak,'' 
or ``other.''
    (10) Hull material. Authorized terms are ``wood,'' ``aluminum,'' 
``steel,'' ``fiberglass,'' ``rigid hull inflatable,'' ``rubber/vinyl/
canvas,'' or ``other.''
    (11) Propulsion type. Authorized terms are ``propeller,'' ``sail,'' 
``water jet,'' ``air thrust,'' or ``manual.''
    (12) Engine drive type. Authorized terms are ``outboard,'' 
``inboard,'' or ``inboard/stern drive.''
    (13) Name of each secured party.
    (14) Address (city and State) of each secured party.
    (15) Recording or perfection date of new security interest and 
original recording or perfection date of any security interest 
outstanding.
    (b) Space must be provided on the title form for assignment of 
interests in the vessel, with a signed certification that the 
statements made are true and correct to the best of the owner's 
knowledge, information, and belief, under penalty of perjury or similar 
penalties as prescribed by State law.


Sec. 187.319  What are the requirements for applying for a duplicate 
title?

    (a) A State must require the holder (owner or secured party) of an 
original title to apply for a duplicate title after the discovery of 
the loss, theft, mutilation, or destruction of the original.
    (b) The holder must provide information, declared under penalty of 
perjury or similar penalties as prescribed by State law, concerning the 
original certificate and the circumstances of its loss, theft, 
mutilation, or destruction.
    (c) The holder must surrender to the State any recovered original 
title or remains.
    (d) The State must clearly and permanently mark the face of a 
duplicate certificate of title with the term ``Duplicate.''


Sec. 187.321  What are the hull identification number (HIN) provisions?

    A State must--
    (a) Upon proof of ownership, assign an HIN and require that it be 
affixed to a vessel that does not have an HIN at the time of 
application for certificate of number or title; and
    (b) Prohibit removal or alteration of an HIN without authorization 
from the Commandant.


Sec. 187.323  What are the procedures for perfection of security 
interests?

    (a) A State must specify, at a minimum, the following procedures 
for perfection of a security interest in a vessel titled in that State:
    (1) Delivery of an application for new or amended certificate of 
title on which the secured party must be noted.
    (2) Surrender of any outstanding certificate of number and any 
outstanding title issued by another State.
    (3) Surrender of the Certificate of Documentation of any documented 
vessel that is to be numbered and titled by the State.
    (4) Delivery of an authenticated copy of any foreign registry of 
the vessel and evidence of deletion from the foreign registry of the 
vessel that is to be numbered and titled by the State.
    (5) Determination of the date of perfection.
    (b) A State must recognize, under 46 U.S.C. 31322(e)(1), that, if a 
vessel is covered by a preferred mortgage when an application for a 
certificate of title is filed in that State, then the status of the 
preferred mortgage covering the vessel is determined by the law of the 
jurisdiction in which the vessel is currently titled or documented.
    (c) A State must recognize, under 46 U.S.C. 31322(d)(2), that, if a 
vessel titled in a State is covered by a preferred mortgage, that 
mortgage will continue to be a preferred mortgage even if the vessel is 
no longer titled in the State where the mortgage, instrument, or 
agreement granting a security interest perfected under State law became 
a preferred mortgage.
    (d) A State must recognize, under 46 U.S.C. 31322(d)(1), the 
preferred status of a mortgage, instrument, or agreement granting a 
security interest perfected under State law covering the whole of a 
vessel titled in a State after the Commandant has certified that 
State's titling system and the State participates in VIS with respect 
to the vessel.
    (e) The State must provide that the perfection procedures required 
to be established under this section do not apply to--
    (1) A lien given by statute or rule of law to a supplier of 
services or materials for the vessel;
    (2) A lien given by statute to the United States, a State, or a 
political subdivision thereof;
    (3) A lien arising out of an attachment of a vessel;
    (4) A security interest in a vessel created by a dealer or 
manufacturer who holds the vessel for sale, irrespective of whether the 
vessel is titled;
    (5) A security interest claimed in a vessel's proceeds, as defined 
in the Uniform Commercial Code in effect in the State, if the security 
interest in the vessel did not have to be noted on a vessel's title in 
order to be perfected; or
    (6) Any vessel for which a certificate of title is not required in 
the State.


Sec. 187.325  Is a State required to specify procedures for the 
assignment of a security interest?

    Yes, a State must specify the procedures that apply to the 
assignment of a security interest in a vessel titled in that State.


Sec. 187.327  What are a State's responsibilities concerning a 
discharge of security interests?

    A State must specify the evidence and information that a secured 
party is required to submit regarding discharge of a security interest 
and establish procedures for its submission.


Sec. 187.329  Who prescribes and provides the forms to be used?

    A State must prescribe and provide the forms needed to comply with 
the titling system.


Sec. 187.331  What information is to be retained by a State?

    A State must retain the evidence used to establish the accuracy of 
the information required for vessel titling purposes and make it 
available on request to the Coast Guard, participating States, and law 
enforcement authorities.

[[Page 7939]]

Appendix A to Part 187--Participating Authorities

    The following States comply with the requirements for participating 
in VIS:
    [Reserved].

Appendix B to Part 187--Participating and Certified Titling 
Authorities

    The following States comply with the requirements for participating 
in VIS and have a certified titling system:
    [Reserved].

    Dated: February 9, 2000.
R.C. North,
Rear Admiral, U.S. Coast Guard, Assistant Commandant for Marine Safety 
and Environmental Protection.
[FR Doc. 00-3496 Filed 2-15-00; 8:45 am]
BILLING CODE 4910-15-U