[Federal Register Volume 65, Number 145 (Thursday, July 27, 2000)]
[Proposed Rules]
[Pages 46137-46143]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-18941]


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DEPARTMENT OF TRANSPORTATION

Coast Guard

46 CFR Part 67

[USCG-1999-6713]
RIN 2115-AF95


Citizenship Standards for Vessel Ownership and Financing; 
American Fisheries Act

AGENCY: Coast Guard, DOT.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Coast Guard proposes amending citizenship requirements for 
fishing vessels of less than 100 feet in length that are eligible for a 
fishery endorsement, by increasing the percentage of interest in a 
vessel required to be owned and controlled by U.S. citizens in 
corporations. The percentage increased will be from more than 50 
percent to at least 75 percent. We propose adding provisions making 
fishery endorsements of documented fishing vessels chartered or leased 
to a person who is not a citizen or to an entity which is ineligible to 
own a documented fishing vessel invalid. We also propose prohibiting 
fishery a endorsement for a fishing vessel mortgaged to a trustee if 
the mortgage interest is issued, assigned, transferred, or held in 
trust for a person not eligible to own a documented fishing vessel, 
even if the trustee is eligible to own a documented fishing vessel.

DATES: Comments and related material must reach the Docket Management 
Facility on or before October 25, 2000. Comments sent to the Office of 
Management and Budget (OMB) on collection of information must reach OMB 
on or before September 25, 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-1999-6713), 
U.S. Department of Transportation, room PL-401, 400 Seventh Street SW., 
Washington, DC 20590-0001.
    (2) By 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, 400 
Seventh Street SW., Washington, DC, between 9 a.m. and 5 p.m., Monday 
through Friday, except Federal holidays. You may also find this docket 
on the Internet at http://dms.dot.gov.

FOR FURTHER INFORMATION CONTACT: For questions on this proposed rule, 
call Patricia J. Williams, Coast Guard, telephone 304-271-2400. 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

    We encourage 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-
6713), 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 they reached 
the Facility, 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 them.

[[Page 46138]]

Public Meeting

    We do not now plan to hold a public meeting. But you may submit a 
request for one 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 one at a time and place 
announced by a later notice in the Federal Register.

Background and Purpose

    The Americanization of the U.S. fishing industry began in 1976 with 
the passage of the Magnuson Fishery Conservation and Management Act 
which established a 200 mile Exclusive Economic Zone (EEZ) around the 
United States coastlines and prioritized access to fishery resources 
within the EEZ to American citizens. It was an important step in 
securing American control of the vast fishery resources off our 
coastlines.
    Eleven years later another step was taken to further Americanize 
U.S. fisheries. The Commercial Fishing Industry Vessel Anti-Reflagging 
Act of 1987 (Pub. L. 100-239) required U.S. citizens to own and control 
more than 50 percent of any U.S.-flag fishing vessel. As the last of 
the foreign-flag fishing vessels in U.S. fisheries were being replaced 
by U.S.-flag vessels in 1986, federal law did not require U.S. fishing 
vessels to carry U.S. crew members. Federal law also allowed U.S. 
fishing vessels essentially to be built in foreign shipyards under an 
existing regulatory definition of ``rebuild.''
    The goals of the 1987 Anti-Reflagging Act were to (1) require U.S. 
control of fishing vessels that fly the U.S. flag; (2) stop the foreign 
rebuilding of U.S.-flag vessels under the ``rebuild'' loophole; and (3) 
require U.S.-flag fishing vessels to carry U.S. crews. Of these three 
goals, only the U.S. crew requirement was fully achieved. The Anti-
Reflagging Act did not completely stop foreign interest from owning and 
controlling U.S.-flag fishing vessels because it included grandfather 
provisions that exempted any existing U.S.-flag fishing vessel from the 
new ownership standard. The Act also allowed vessels, under contract 
during specified time frames, to be rebuilt into fishing vessels in 
foreign shipyards while retaining their U.S. fishing privileges 
indefinitely. The two grandfather provisions allowed more foreign owned 
and controlled fishing vessels to remain in U.S. fisheries than had 
been intended.
    The American Fisheries Act (AFA), along with the repeal of the 
``grandfather'' provisions of the Commercial Fishing Industry Vessel 
Anti-Reflagging Act of 1987, finally resolves this issue. The AFA 
requires a real, effective, and enforceable U.S. ownership threshold 
for U.S.-flag fishing vessels. Under this Act, U.S. citizens must own 
and control at least 75 percent of the ownership interest in any U.S.-
flag fishing vessel. The Act is intended to ensure that vessels with a 
fishery endorsement are truly controlled by citizens of the U.S. The 
Act also increases the penalties for fishery endorsement violations and 
is intended to discourage willful noncompliance with the new 
requirements.

Discussion of Proposed Rule

    As mandated by the 105th U.S. Congress, we propose revising the 
regulations outlining fishery endorsement eligibilty requirements for 
fishing vessels less than 100 feet in length. These revisions would 
remove ``grandfather'' provisions of the Commercial Fishing Industry 
Vessel Anti-reflagging Act of 1987. The rule would increase the percent 
of interest in a fishing vessel that must be owned and controlled by 
U.S. citizens in a corporation from more than 50 percent to at least 75 
percent. It would also add provisions making a fishery endorsement 
invalid for a documented fishing vessel charted or leased to a person 
who is not a citizen or to an entity which is ineligible to own a 
documented fishing vessel. It would restrict fishery endorsements for 
fishing vessels mortgaged through a foreign lender or trustee and 
establish application procedures and requirements for fishery 
endorsement exemptions. It would revise the term ``control'' as it 
relates to citizenship requirements for stock or equity interest in 
fishing vessels. This rule would add penalties for falsifying fishery 
endorsement application materials. Finally this rule would establish 
petition procedures for an exemption from the citizenship requirements 
of this rule if you have a foreign vessel less than 75 percent U.S. 
citizen controlled fishing with a fishery endorsement before October 1, 
2001.

Citizenship Requirements for U.S.-flag Fishing Vessels With a 
Fishery Endorsement

    The American Fisheries Act (AFA) ensures U.S. control of fishery 
resources within the exclusive economic zone (EEZ) and closes the 
loophole for foreign rebuilding of U.S.-flag fishing vessels created 
under the Commercial Fishing Industry Vessel Anti-Reflagging Act of 
1987. Under the AFA, U.S. citizens must own and control at least 75 
percent of the ownership interest in any U.S.-flag fishing vessel. The 
Act is intended to ensure that vessels with a fishery endorsement, and 
thus fishing within our EEZ, are truly controlled by citizens of the 
U.S. The Act also increases the penalties for fishery endorsement 
violations and is intended to discourage willful noncompliance with new 
requirements. To achieve the intent of the Act the following changes to 
46 CFR part 67 are proposed:
    (a) Removing ``grandfather'' provisions of the Commercial Fishing 
Industry Vessel Anti-reflagging Act of 1987. The incorporation of the 
Commercial Fishing Industry Vessel Anti-Reflagging Act of 1987 (Pub. L. 
100-239) was repealed from the AFA, therefore the rulemaking would 
remove Section 67.45 Citizenship savings provision for fishing vessels. 

    (b) Increasing the percent of interest in a fishing vessel required 
to be owned and controlled by U.S. citizens in corporations, 
partnerships, associations, and joint ventures. The eligibility 
requirements for fishery endorsements of vessels that are less than 100 
feet would be revised. 46 CFR 67.35, 67.36, 67.37, 67.39 would be 
revised to reflect an increase in the percentage of the vessel that 
must be owned and controlled by a U.S. citizen from more than 50 
percent to at least 75 percent. A vessel owned and controlled by a 
corporation, partnership (including limited liability), association, 
trust, joint venture, or any other entity, is not eligible for a 
fishery endorsement under section 12108 of 46 U.S.C. unless at least 75 
percent of the vessel's interest is controlled and owned by citizens of 
the United States. This proposed requirement would apply to each tier 
of a vessel's ownership and to the vessel ownership in its aggregate.
    (c) Restricting fishing vessel charters and leases. The proposed 
rule would add an eligibility restriction for non-citizen controlled 
fishing vessel charters and leases to Sec. 67.21. Section 67.11 would 
be amended by removing paragraphs (b)(1) and (3), leaving recreational 
vessels as the only exemption from restrictions on charters and leases 
to non-U.S. citizens. These changes will prevent a vessel chartered or 
leased to an individual who is not a citizen of the United States, or 
any entity not eligible to own a vessel with a fishery endorsement, 
from obtaining a fishery endorsement. These revisions would also 
immediately invalidate fishery endorsements for vessels that do not 
meet the new 75 percent ownership threshold.
    (d) Restricting fishery endorsement of foreign controlled mortgages 
of a fishing vessel. The proposed rule would add

[[Page 46139]]

section 67.21(e) reflecting that an individual or entity that is 
otherwise eligible to own a vessel with a fishery endorsement will 
become ineligible when a mortgage of the vessel to a trustee eligible 
to own a fishing vessel with a fishery endorsement is issued, assigned, 
transferred, or held in trust for a person not eligible to own a vessel 
with a fishery endorsement.
    In order for an owner of a vessel of less than 100 feet to be 
eligible to obtain a fishery endorsement to the vessel's documentation, 
it must demonstrate that: (1) At least 75 percent of the interest in 
the entity that owns the vessel is owned by United States citizens; and 
(2) at least 75 percent of the control of the entity that owns the 
vessel is owned by and vested in United States citizens. Evidence of 
United States citizen ownership of a vessel owning entity is 
demonstrated through the filing of an affidavit of United States 
citizenship as provided for in Sec. 356.5. The affidavit of U.S. 
citizenship requires the owner to provide relevant information to 
demonstrate that it qualifies as a citizen of the United States within 
the meaning of 46 App. U.S.C. 12102(c), section 2(c) of the 1916 Act, 
46 App. U.S.C. 802(c), and 46 CFR 356.3. The form of this affidavit is 
substantially the same as the one set forth at 46 CFR part 355.
    (e) Redefining ``control'' as it relates to citizenship 
requirements for stock or equity interest in fishing vessels. The term 
``control'' under Sec. 67.31(b) would be redefined to include having 
the right to direct the business of the entity that owns the vessel. It 
would include having the right to limit the actions of or replace the 
chief executive officer, the majority of the board of directors, any 
general partner, or any person serving in a management capacity of the 
entity that owns the vessel. It also would include having the right to 
direct the transfer, the operation, or the manning of a vessel with a 
fishery endorsement.
    (f) Adding penalties for falsifying fishery endorsement application 
materials. We propose adding Sec. 67.142 establishing penalties for 
knowingly or unknowingly submitting fishery endorsement application 
materials with false information. If the vessel owner or an agent of 
the owner knowingly conceals a material fact or falsely represents the 
vessel's eligibility for endorsement when initially applying for or 
renewing a fishery endorsement, the proposed penalties would make the 
owner of the vessel liable (under 46 U.S.C. 12122(a) through (c)) to 
the United States Government for a civil penalty of up to $100,000 for 
each day in which the vessel has illegally engaged in fishing within 
the EEZ of the United States. If the vessel owner or an agent of the 
owner unknowingly commits the same offense the owner of the vessel is 
liable to the U.S. Government for a civil penalty of up to $10,000 for 
each day in which the vessel has illegally engaged in fishing within 
the EEZ of the United States.
    (g) Providing fishery endorsement application procedures for 
fishing vessels 100 feet and greater in length. We propose to add a 
paragraph to Sec. 67.141 which will direct fishing vessels 100 feet and 
greater in length to meet MARADs requirements, found in 46 CFR 356, and 
to submit materials required by Sec. 67.141(a) to NVDC.
    (h) Establishing application procedures and requirements for 
fishery endorsement exemptions. We propose adding subpart V entitled 
``Exemption from Fishery Endorsement Requirements Due to Conflict with 
International Agreements.'' Establishing this proposed subpart will 
allow owners or mortgagees of fishing vessels, which believe that an 
international agreement or treaty to which the United States is a party 
conflicts with the regulations set out in 46 CFR part 67, to submit the 
proper materials as a petition for an exemption from specific or all 
requirements of this part to the National Vessel Documentation Center 
(NVDC). If you are an owner or mortgagee of a fishing vessel less than 
100 feet in length and believe that there is a conflict between 46 CFR 
part 67 and any international treaty or agreement to which the United 
States is a party, you may petition the National Vessel Documentation 
Center (NVDC) for a ruling that all or sections of part 67 do not apply 
to you. You may file your petition with the NVDC before October 1, 
2001, with respect to international treaties or agreements in effect at 
the time of your petition which are not scheduled to expire before 
October 1, 2001. If you are filing a petition for exemption with the 
NVDC for reasons stated in this paragraph your petition must include:
    (1) Department of Transportation, U.S. Coast Guard, form CG-1258 
entitled ``Application for Initial Issue, Exchange, or Replacement of 
Certificate of Documentation; Redocumentation'' as evidence of the 
ownership structure of the vessel. This form should provide any 
subsequent changes to the ownership structure of the vessel since its 
initial certification,
    (2) A copy of the provisions of the international agreement or 
treaty and a written description of how you believe those provisions 
conflict with the requirements of this rule,
    (3) For all petitions filed after October 1, 2001, a certification 
that no ownership interest was transferred to a non-U.S. citizen after 
September 30, 2001.
    (4) You must file a separate petition for each vessel requiring an 
exemption unless the NVDC authorizes consolidated filing. Petitions 
should include two copies of all required materials and should be sent 
to the following address: National Vessel Documentation Center, 792 
T.J. Jackson Drive, Falling Water, West Virginia, 25419.
    Upon receipt of a complete petition, the NVDC will review the 
petition to determine whether the effective international treaty or 
agreement and the requirements of this part are in conflict. If the 
NVDC determines that this part conflicts with the effective 
international treaty or agreement, then the NVDC will inform you of the 
guidelines and requirements you must meet and maintain to qualify for a 
fisheries endorsement.

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 section 6(a)(3) of 
that Order. The Office of Management and Budget has not reviewed it 
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. However, we have included a summary of the analysis 
documentation.
    The Marine Safety Management System (MSMS) shows that about 36,000 
vessels have fishery endorsements. The proposed regulation would impact 
documented vessels with fishery endorsements that are less than 100 
feet. About 35,500 vessels with fishery endorsements are less than 100 
feet. Of these, we researched a random sample of 1,010 vessels in order 
to achieve a 95 percent confidence level. We found that the proposed 
change to minimum U.S. ownership requirements from ``more than 50 
percent'' to ``at least 75 percent'' would affect one of the vessels in 
the random sample. This means that 0.099 percent of the random sample 
do not meet the proposed requirement. The margin of error is plus

[[Page 46140]]

or minus 3.04 percent. Applying this percentage to the population, we 
expect that the owner of 35 vessels would not meet the proposed change 
in owner citizenship requirement if current ownership levels in each 
company remain the same (0.099 percent of 35,500 vessels).
    In the random sample, there are 843 vessels (83 percent of the 
affected population) that are owned by individual persons and 167 
vessels (17 percent of the affected population) that are owned by 
corporations or companies. All individual owners are already required 
to be U.S. citizens in order to document a vessel. Therefore these 
vessels and individuals are considered to meet the citizenship 
requirement, and have 100 percent U.S. ownership. Corporations, 
partnerships or limited liability companies are required to attest to 
the level of ownership by U.S. citizens by checking a box in the 
application for documentation. The ``Application for Initial Issue, 
Exchange, or Replacement of Certificate of Documentation; 
Redocumentation'' (CG-1258 (REV.9-97)) has four choices for reporting 
the level of ownership by U.S. citizens in a corporation. The choices 
are: Less than 50 percent, at least 50 percent, more than 50 percent 
but less than 75 percent, and 75 percent or more. One hundred sixty six 
(166) corporations certified that the ownership level by U.S. citizens 
is 75 percent or more. One certified that its corporation's percentage 
of stock owned by U.S. citizens whom are eligible to document vessels 
was more than 50 percent but less than 75 percent.
    Costs: For further analysis, we assume that the 35 adversely 
affected vessel owners have more than 50 but less than 75 percent of 
stock owned by U.S. citizens. We further assume that each vessel owner 
prefers to continue fishing in the Exclusive Economic Zone of the 
United States. Therefore, we expect each vessel owning company would 
make changes to its U.S. ownership level. The change of U.S. ownership 
level could entail the following: Adding an additional investor, 
selling stock to U.S. citizens, adding a partner, or removing a 
partner.
    Once each vessel owning company has met the proposed ownership 
criteria, the vessel's fishery endorsement would be renewed as it would 
have been in any other year. Thus, the cost of this proposed rulemaking 
would be directly associated with the change of U.S. ownership level 
made by each of the 35 vessel owning companies. We assume that each 
company would hire a law firm to complete the articles of incorporation 
or any other documents needed to reflect the changes to the ownership 
levels, and that the law firm would charge about $600 for its services. 
The one time cost of changing the ownership structure for the 35 
companies would be $21,000.
    We do not expect the proposed restriction to leases and charters by 
non-U.S. citizens to impact any vessel owners. Similarly, we do not 
expect the restriction on foreign controlled mortgages to impact any 
vessels. Therefore, these proposed regulations would cause no 
additional cost to vessel owners, operators, or managers.
    Benefits: The changes in the law necessitate this proposed 
rulemaking. The proposed regulation would give U.S. citizens a higher 
level of ownership in the vessels that harvest fish in the U.S. 
Exclusive Economic Zone. Consequently more of the profits from the 
fishery industry will accrue to U.S. citizens.

Small Entities

    Under the regulatory Flexibility Act (5 U.S.C. 601-612), we 
considered whether this proposed rule would have a significant 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.
    The proposed rule would impact the owners of about 35,500 vessels 
that are documented with fishery endorsements. These vessels are less 
than 100 feet in length, and we considered each one to be owned by a 
small entity. As shown by the sample statistics, we expect 35 entities 
to be adversely affected by the proposed rulemaking. We do not consider 
the number of adversely affected entities to be a substantial number 
for they represent 0.099 percent of all entities that would have to 
comply with the proposed requirements.
    The Small Business Administration has determined that the size 
standard for small businesses involved in the fishing industry is $3 
million in annual revenues (Standard Industry Codes 0912, 0913, 0919, 
and 0921). The imposed burden of $600 would represent 0.02 percent for 
entities with $3 million in annual revenues. For entities with $60,000 
and $30,000 in annual revenues, the burden would represent 1 percent 
and 2 percent of annual revenues, respectively. We do not consider this 
cost to create a significant economic impact on the affected 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

    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).

Collection of Information

    The proposed rule would call for a collection of information under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). As defined 
in 5 CFR 1320.3(c), ``collection of information'' comprises reporting, 
recordkeeping, monitoring, posting, labeling, and other similar 
actions. The title and description of the information collections, a 
description of those who must collect the information, and an estimate 
of the total annual burden follow. The estimate covers the time for 
reviewing instructions, searching existing sources of data, gathering 
and maintaining the data needed, and completing and reviewing the 
collection.
    The information collection requirements of the rule are addressed 
in the previously approved OMB collection titled ``Vessel 
Documentation'' (OMB 2115-0110).
    Title: Vessel Documentation.
    Summary of the Collection of Information: The proposed rulemaking 
would add a new collection of information burden to companies that 
would no longer meet the proposed threshold of at least 75 percent 
ownership by U.S. citizens. The proposed regulation would allow these 
companies to apply for an exemption from the proposed U.S. ownership 
level. The proposed application and related submissions would comprise 
a new collection of information burden.

[[Page 46141]]

    Need for Information: The proposed subpart V (Secs. 67.350 and 
67.352) would specify the application procedure for an exemption from 
the proposed U.S. ownership level to vessel owners that would no longer 
meet this threshold. The information is needed to document the 
international treaties on which the claim for exemption is based, and 
to attest that vessel owners would not change their ownership 
structure.
    Proposed Use of Information: The information requested would be 
used by the Coast Guard's National Vessel Documentation Center to 
determine the validity of the claim for exemption.
    Description of Respondents: This collection of information would 
affect vessel owners who would no longer meet the proposed U.S. 
ownership level, and wish to apply for exemption.
    Number of Respondents: We estimate that none of the 35 adversely 
affected vessel owners would apply for exemption.
    Frequency of Response: The endorsements on each vessel's 
certificate of documentation are renewed every year. Vessel owners 
would have to apply for exemption every time an application for renewal 
of a fishery endorsement is sent into the National Vessel Documentation 
Center.
    Burden of Response: We do not expect the proposed requirement to 
create any additional burden. Therefore, the additional burden of 
response attributed to the collection (OMB 2115-0110)) would be 0 
hours. In the case that a vessel owner applies for exemption, we assume 
that information gathering and response burden would be two (2) hours 
per response.
    Estimate of Total Annual Burden: The additional annual burden 
attributed to the collection (OMB 2115-0110) would be $0 because we do 
not expect any vessel owners to apply for exemption.
    Public Comments on the Collection of Information: As required by 44 
U.S.C. 3507(d), we have submitted a copy of this rule to the Office of 
Management and Budget (OMB) for its review of the collection of 
information.
    We ask for public comment on the proposed collection of information 
to help us determine how useful the information is; whether it can help 
us perform our functions better; whether it is readily available 
elsewhere; how accurate our estimate of the burden of collection is; 
how valid our methods for determining burden are; how we can improve 
the quality, usefulness, and clarity of the information; and how we can 
minimize the burden of collection.
    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. Before the 
requirements for this collection of information become effective, we 
will publish notice in the Federal Register of OMB's decision to 
approve, modify, or disapprove the collection.

Federalism

    We have analyzed this proposed rule under E.O. 13132 and have 
determined that it does not have implications for federalism under that 
Order.

Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) 
requires Federal agencies to assess the effects of their regulatory 
actions not specifically required by law. In particular, the Act 
addresses actions that may result in the expenditure by a State, local, 
or tribal government, in the aggregate, or by the private sector of 
$100,000,000 or more in any one year. Though this proposed rule would 
not result in such an expenditure, we do discuss the effects of this 
rule elsewhere in this preamble.

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 preparation of an Environmental Impact Statement is not 
necessary. An Environmental Assessment and a draft Finding of No 
Significant Impact are available in the docket where indicated under 
ADDRESSES.

List of Subjects in 46 CFR Part 67

    Citizenship; Fishery endorsements, Fishing vessels, Mortgages, 
Penalties, Vessel Documentation.

    For the reasons discussed in the preamble, the Coast Guard proposes 
to amend 46 CFR part 67 as follows:

PART 67--DOCUMENTATION OF VESSELS

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

    Authority: 14 U.S.C. 664; 31 U.S.C. 9701; 42 U.S.C 9118; 46 
U.S.C. 2103, 2107, 2110; 46 U.S.C. app. 841a, 876; 49 CFR 1.45, 
1.46.

    2. Amend Sec. 67.11 by revising paragraph (b) and the Note to read 
as follows:


Sec. 67.11  Restriction on transfer of an interest in documented 
vessels to foreign persons; foreign registry or operation.

* * * * *
    (b) The restrictions in paragraph (a)(2) of this section do not 
apply to a vessel that has operated only as a recreational vessel.

    Note: For purposes of carrying out its responsibilities under 
the provisions of this part only, the Coast Guard will deem a vessel 
documented exclusively with a recreational endorsement from the time 
it was first documented, or for a period of not less than one year 
prior to foreign transfer or registry, to qualify for the exemption 
granted in paragraph (b) of this section.

    3. Amend Sec. 67.21 by revising paragraph (d) and adding paragraph 
(e) to read as follows:


Sec. 67.21  Fishery Endorsement.

* * * * *
    (d) A vessel otherwise eligible for a fishery endorsement under 
paragraph (b) of this section loses that eligibility during any period 
in which it is:
    (1) Owned by a partnership which does not meet the requisite 
citizenship requirements of Sec. 67.35(b);
    (2) Owned by a corporation which does not meet the citizenship 
requirements of Sec. 67.39(b); or
    (3) Chartered or leased to an individual who is not a citizen of 
the United States or to an entity that is not eligible to own a vessel 
with a fishery endorsement.
    (e) An individual or entity that is otherwise eligible to own a 
vessel with a fishery endorsement shall be ineligible if an instrument 
or evidence of indebtedness, secured by a mortgage of the vessel, to a 
trustee eligible to own a vessel with a fishery endorsement is issued, 
assigned, transferred, or held in trust for a person not eligible to 
own a vessel with a fishery endorsement, unless the Commandant 
determines that

[[Page 46142]]

the issuance, assignment, transfer, or trust arrangement does not 
result in an impermissible transfer of control of the vessel and that 
the trustee:
    (1) Is organized as a corporation that meets Sec. 67.39(b) of this 
part, and is doing business under the laws of the United States or of a 
State;
    (2) Is authorized under those laws to exercise corporate trust 
powers which meet Sec. 67.36(b) of this part;
    (3) Is subject to supervision or examination by an official of the 
United States Government or a State;
    (4) Has a combined capital and surplus (as stated in its most 
recent published report of condition) of at least $3,000,000; and
    (5) Meets any other requirements prescribed by the Commandant.
    4. Revise Sec. 67.31(b) to read as follows:


Sec. 67.31  Stock or equity interest requirements.

* * * * *
    (b) For the purpose of stock or equity interest requirements for 
citizenship under this subpart, control means having:
    (1) The right to direct the business of the entity that owns the 
vessel;
    (2) The right to limit the actions of or to replace the chief 
executive officer, the majority of the board of directors, any general 
partner, or any person serving in a management capacity of the entity 
that owns the vessel; or
    (3) The right to direct the transfer, the operation, or the manning 
of a vessel with a fishery endorsement.
* * * * *
    5. In Sec. 67.35, revise the introductory text and paragraph (b) to 
read as follows:


Sec. 67.35  Partnership.

    A partnership meets citizenship requirements if all its general 
partners are citizens, and:
* * * * *
    (b) For the purpose of obtaining a fishery endorsement, at least 75 
percent of the equity interest in the partnership, at each tier of the 
partnership and in the aggregate, is owned by citizens.
* * * * *
    6. Amend Sec. 67.36 by revising the introductory text of paragraphs 
(a), (b), and (c) and by revising paragraph (b)(2) to read as follows:


Sec. 67.36  Trust.

    (a) For the purpose of obtaining a registry or recreational 
endorsement, a trust arrangement meets citizenship requirements if:
* * * * *
    (b) For the purpose of obtaining a fishery endorsement, a trust 
arrangement meets citizenship requirements if:
* * * * *
    (2) At least 75 percent of the equity interest in the trust, at 
each tier of the trust and in the aggregate, is owned by citizens.
    (c) For the purpose of obtaining a coastwise or Great Lake 
endorsement or both, a trust arrangement meets citizenship requirements 
if:
* * * * *
    7. Revise Sec. 67.37 to read as follows:


Sec. 67.37  Association or joint venture.

    (a) An association meets citizenship requirements if each of its 
members is a citizen.
    (b) A joint venture meets citizenship requirements if each of its 
members is a citizen.
    8. Amend Sec. 67.39 by revising the introductory text of paragraphs 
(a), (b), and (c) and by revising paragraph (b)(2) to read as follows:


Sec. 67.39  Corporation.

    (a) For the purpose of obtaining a registry or a recreational 
endorsement, a corporation meets citizenship requirements if:
* * * * *
    (b) For the purpose of obtaining a fishery endorsement, a 
corporation meets citizenship requirements if:
* * * * *
    (2) At least 75 percent of the stock interest in the corporation, 
at each tier of the corporation and in the aggregate, is owned by 
citizens.
    (c) For the purpose of obtaining a coastwise or Great Lakes 
endorsement or both, a corporation meets citizenship requirements if:
* * * * *


Sec. 67.45  [Removed]

    9. Remove Sec. 67.45.
    10. Amend Sec. 67.141 by revising paragraph (b) and adding 
paragraph (c) to read as follows:


Sec. 67.141  Application procedure; all cases.

* * * * *
    (b) Each vessel 100 feet and greater in length applying for a 
fishery endorsement must meet the requirements of 46 CFR part 356 and 
must submit materials required in paragraph (a) of this section.
    (c) Upon receipt of the Certification of Documentation and prior to 
operation of the vessel, ensure that the vessel is marked in accordance 
with the requirements set forth in subpart I of this part.
    11. Add Sec. 67.142 to read as follows:


Sec. 67.142  Penalties.

    (a) An owner or operator of a vessel with a fishery endorsement who 
violates Chapter 121 of Title 46, U.S. Code or any regulation issued 
thereunder is liable to the United States Government for a civil 
penalty of not more than $10,000. Each day of a continuing violation is 
a separate violation.
    (b) A fishing vessel and its equipment are liable to seizure and 
forfeiture to the United States Government--
    (i) When the owner of the fishing vessel, or the representative or 
agent of the owner, knowingly falsifies applicable information or 
knowingly conceals a material fact during the application process for 
or application process to renew a fishery endorsement of the vessel;
    (ii) When the owner of the fishing vessel, or the representative or 
agent of the owner, knowingly and fraudulently uses a vessel's 
certificate of documentation;
    (iii) When the fishing vessel engages in fishing (as such term is 
defined in section 3 of the Magnuson-Stevens Fishery Conservation and 
Management Act (16 U.S.C. 1802)) within the Exclusive Economic Zone 
around the United States coastlines after its fishery endorsement has 
been denied or revoked;
    (iv) When a vessel is employed in a trade without an appropriate 
trade endorsement;
    (v) When a documented vessel with only a recreational endorsement 
operates as a fishing vessel; or
    (vi) When a vessel with a fishery endorsement is commanded by a 
person who is not a citizen of the United States.
    (c) In addition to penalties under paragraphs (a) and (b) of this 
section, the owner of a vessel with a fishery endorsement is liable to 
the United States Government for a civil penalty of up to $100,000 for 
each day in which the vessel has engaged in fishing within the 
exclusive economic zone of the United States, if the owner of the 
fishing vessel, or the representative or agent of the owner, knowingly 
falsifies applicable information or knowingly conceals a material fact 
during the application process for or application process to renew a 
fishery endorsement of the vessel.
    12. Revise Sec. 67.233(b) to read as follows:


Sec. 67.233  Restrictions on recording mortgages, preferred mortgages, 
and related instruments.

* * * * *
    (b) A mortgage of a vessel 100 feet or greater in length applying 
for a fishery endorsement is eligible for filing and

[[Page 46143]]

recording as a preferred mortgage only if it meets the requirements of 
this part and the requirements of 46 CFR 356.19.
* * * * *
    13. Add subpart V to read as follows:
Subpart V--Exemption from Fishery Endorsement Requirements Due to 
Conflict With International Agreements
Sec.
67.350   Conflicts with international agreements.
67.352   Applicability.

Subpart V--Exemption from Fishery Endorsement Requirements Due to 
Conflict With International Agreements


Sec. 67.350  Conflicts with international agreements.

    (a) If you are an owner or mortgagee of a fishing vessel less than 
100 feet in length and believe that there is a conflict between this 
part 67 and any international treaty or agreement to which the United 
States is a party on October 1, 2001, and to which the United States is 
currently a party, you may petition the National Vessel Documentation 
Center (NVDC) for a ruling that all or sections of this part 67 do not 
apply to you with respect to a particular vessel, provided that you had 
an ownership interest in the vessel or a mortgage on the vessel on 
October 1, 2001. You may file your petition with the NVDC before 
October 1, 2001, with respect to international treaties or agreements 
in effect at the time of your petition which are not scheduled to 
expire before October 1, 2001.
    (b) If you are filing a petition for exemption with the NVDC for 
reasons stated in paragraph (a) of this section, your petition must 
include:
    (1) Evidence of the ownership structure of the vessel petitioning 
for an exemption as of October 1, 2001, and any subsequent changes to 
the ownership structure of the vessel;
    (2) A copy of the provisions of the international agreement or 
treaty that you believe is in conflict with this part;
    (3) A detailed description of how the provisions of the 
international agreement or treaty conflict with this part;
    (4) For all petitions filed before October 1, 2001, a certification 
that the owner intends to transfer no ownership interest in the vessel 
to a non-U.S. citizen for the following year.
    (5) For all petitions filed after October 1, 2001, a certification 
that no ownership interest was transferred to a non-U.S. citizen after 
September 30, 2001.
    (c) You must file a separate petition for each vessel requiring an 
exemption unless the NVDC authorizes consolidated filing. Petitions 
should include two copies of all required materials and should be sent 
to the following address: National Vessel Documentation Center, 792 TJ 
Jackson Drive, Falling Water, West Virginia, 25419.
    (d) Upon receipt of a complete petition, the NVDC will review the 
petition to determine whether the effective international treaty or 
agreement and the requirements of this part are in conflict. If the 
NVDC determines that this part conflicts with the effective 
international treaty or agreement, then the NVDC will inform you of the 
guidelines and requirements you must meet and maintain to qualify for a 
fisheries endorsement.
    (e) If the vessel is determined through the petition process to be 
exempt from all or sections of the requirements of this part, then you 
must annually, from the date of exemption, submit the following 
evidence of its ownership structure to the NVDC:
    (1) The vessel's current ownership structure;
    (2) The identity of all non-citizen owners and the percentages of 
their ownership interest in the vessel;
    (3) Any changes in the ownership structure that have occurred since 
you last submitted evidence of the vessel's ownership structure to the 
NVDC; and
    (4) A statement ensuring that no interest in the vessel was 
transferred to a non-citizen during the previous year.


Sec. 67.352  Applicability.

    The exemption in this subpart shall not be available to:
    (a) Owners and mortgagees of a fishing vessel less than 100 feet in 
length who acquired an interest in the vessel after October 1, 2001; or
    (b) Owners of a fishing vessel less than 100 feet in length, if any 
ownership interest in that vessel is transferred to or otherwise 
acquired by a non-U.S. citizen after October 1, 2001.

    Dated: July 19, 2000.
Joseph J. Angelo,
Acting Assistant Commandant for Marine Safety and Environmental 
Protection.
[FR Doc. 00-18941 Filed 7-26-00; 8:45 am]
BILLING CODE 4910-15-U