[Federal Register Volume 66, Number 54 (Tuesday, March 20, 2001)]
[Rules and Regulations]
[Pages 15625-15635]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-6906]


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DEPARTMENT OF TRANSPORTATION

Coast Guard

33 CFR Part 187

[USCG-1999-6420]
RIN 2115-AD35


Vessel Identification System

AGENCY: Coast Guard, DOT.

ACTION: Final rule.

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SUMMARY: The Coast Guard is amending 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 
changes improve the integrity and uniformity of the system and reflect 
recent statutory changes.

DATES: This final rule is effective April 19, 2001.

[[Page 15626]]


ADDRESSES: Comments and material received from the public, as well as 
documents mentioned in this preamble as being available in the docket, 
are part of docket USCG-1999-6420 and are available for inspection or 
copying at the Docket Management Facility, U.S. Department of 
Transportation, room PL-401, 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 rule, call LCDR 
Nancy Goodridge, Office of Information Resources, Coast Guard, 
telephone 202-267-0254, electronic mail [email protected]. For 
questions on viewing or submitting material to the docket, call Dorothy 
Beard, Chief, Dockets, Department of Transportation, telephone 202-366-
9329.

SUPPLEMENTARY INFORMATION:

Regulatory History

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

----------------------------------------------------------------------------------------------------------------
                                                                            Date
             Document type                  Federal  Register  cite       published            Comments
----------------------------------------------------------------------------------------------------------------
Advance Notice of Proposed Rulemaking..  54 FR 38358                       9/15/1989  Requested comments and
                                                                                       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 notice  60 FR 53727                      10/17/1995  Reopened the comment
 of public hearing.                                                                    period 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.
Supplemental Notice of Proposed          65 FR 7925                       02/16/2000  Revised the proposed
 Rulemaking.                                                                           requirements for States
                                                                                       electing to participate
                                                                                       in VIS, as required by
                                                                                       statute.
----------------------------------------------------------------------------------------------------------------

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 Final Rule 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 rule amends 
the requirements in 33 CFR part 187 for States electing to participate 
in VIS.
    This rule also creates 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 a total of fifteen comments to this rulemaking. In the 
following paragraphs, the Coast Guard discusses the comments received 
and explains any changes made to the regulations. The Coast Guard first 
discusses general comments, and secondly discusses comments regarding 
specific sections of the regulations. A significant number of the 
changes 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.

General Comments

    Many of these comments were in response to our proposed changes to 
the Standard Numbering System (SNS) requirements in 33 CFR part 174. 
Several commentors believed that the changes to the SNS were more 
costly than we originally estimated and would potentially impose 
additional information collection requirements.

[[Page 15627]]

    The Coast Guard agrees that the issues relating to the SNS should 
be studied further, prior to making any permanent changes to the 
regulations in 33 CFR part 174. We have therefore removed this section 
from the rulemaking and will address those comments in a separate 
rulemaking. We believe that while VIS is dependent upon the SNS, 
changes to the SNS can be developed subsequent to this rulemaking 
without a negative effect on VIS. The comments received regarding the 
SNS and changes proposed to 33 CFR part 174 will be taken into account 
and addressed in the SNS rulemaking.
    We additionally received several comments regarding VIS and the 
changes proposed in 33 CFR part 187. All comments received throughout 
the course of this project were considered in the development of this 
Final Rule. The issues raised by the comments, and the sections that 
have been revised or added since the publication of the SNPRM, are 
discussed.
    One comment suggested that the use and acceptance of electronic 
titles and signatures be considered for the future with VIS.
    The Coast Guard believes that the use and acceptance of electronic 
titles and electronic signatures is beyond the scope of this 
rulemaking. However, the Coast Guard is committed to utilizing new 
technology to improve VIS and will consider electronic titles and 
electronic signatures in any future revisions.
    One comment cautioned that there will be redundancy of data created 
between State databases, and the Coast Guard's database. The comment 
asked--
     Which agency would be responsible for contacting boat 
owners with problem certificates of documentation and State titles?
     What will happen to the bank's ship mortgages and/or State 
liens?
     Who will bear the expense to correct the problems?
    VIS will make it easier to detect redundancy across the States' 
databases. To assist in detecting redundancy, VIS will automatically 
contact applicable States whenever any redundant data has been 
detected. This will only happen, however, after a State has submitted 
the data to VIS. The Coast Guard recommends that States check VIS prior 
to the issuance of documents to ensure the vessel is not registered in 
another State and prevent the problems that redundancy can cause. In 
regards to responsibility, the agency that issues the documentation 
will continue to be responsible for contacting vessel owners and 
bearing any expenses incurred with any problems.
    The plan to provide for a consolidated builder's certification and 
certificate of origin is one of the subjects in another rulemaking 
project. The docket number for that project is USCG 1998-4784. We 
anticipate that the availability of a single document acceptable to the 
States for numbering and titling and to the Coast Guard for vessel 
documentation will encourage manufacturers to use only that document. 
However, the Coast Guard cautions the commenter that there is no 
Federal authority to mandate a specific form for the COO. Only the 
individual States may determine what will be acceptable in their 
systems.

Procedures for Certification of Compliance With Guidelines for State 
Vessel Titling Systems Section (Sec. 187.9)

    One comment said that requiring HINs for all recreational vessels 
seems excessive. A review of the recreational vessels with a 
Certificate of Number in Connecticut indicates approximately 27,000 
vessels have HINs. Recreational vessels constructed before 1972 do not 
possess a HIN. The State is able to process about 200 HINs annually. 
The need to process 27,000 is not possible. Therefore, we suggest that 
only vessels constructed on or after 1972 be required to have a HIN.
    The goal is to eventually have a valid HIN on every numbered vessel 
in the United States without regard to when it may have been built. The 
Coast Guard agrees that it is not reasonable to expect States to 
immediately issue HINs to all vessels that currently do not have valid 
ones. The requirement for a State to assign a HIN to a vessel that does 
not have a valid one applies only if the vessel is transferred to a new 
owner (sold within State) or moved into a new State of principal 
operation. In the meantime, section 187.9(b) provides that the State 
number or Coast Guard documentation number will be used as the vessel 
identification number in VIS.
    One comment stated there was an issue regarding the resolution of 
the unique vessel identification number. The National Association of 
State Boating Law Administrators (NASBLA), and the International 
Association of Marine Investigators (IAMI) have both gone on record in 
support of a 17-digit Hull Identification Number (HIN). The rulemaking 
project to establish that number has dragged on since 1992. The Comment 
asked--
     What is the Coast Guard's position on the number;
     What does the Coast Guard want; and
     When will the Coast Guard make a final decision?
    While the Coast Guard recognizes that the issues are related, the 
makeup of the HIN is outside the scope of this project. Because of 
controversy and conflict there is no consensus on the format for an 
expanded HIN and the Coast Guard lacks sufficient data to demonstrate 
that the benefits clearly outweigh the costs and burdens, particularly 
for small entities and builders of high volume, low cost boats. 
Therefore, the proposal to expand the HIN format was withdrawn on June 
29, 2000 (65 FR 40069) and a study was begun to gather data on costs 
and benefits. We will review the results of the study and decide 
whether to issue a new regulatory project.

Information To Identify a Vessel Owner (Sec. 187.101)

    One comment said that this section and Sec. 187.103 would require 
the redesign of Certificate of Number and Certificate of Decal 
applications. This process is complicated and will take several years. 
Another comment stated that building additional computer storage 
capacity, and extensive programming changes would be needed. To build 
additional computer storage capacity as well as implement extensive 
programming changes will also take time.
    The Coast Guard understands that some changes will need to be made, 
however, we reiterate that participation in VIS is voluntary. The SNS 
Rulemaking will address this further with its proposal to give States 
four years to change applicable Certificates and forms. This will 
reduce costs and allow any new forms to be redesigned and purchased as 
supplies of the old forms are depleted.
    One comment stated that the regulation should make clear that the 
information a State must collect to identify a vessel owner in 
Sec. 187.101 and the information to identify a vessel in Sec. 187.103 
must be made available to VIS as is done in Sec. 187.105.
    We agree and have added language to those sections, as well as 
Sec. 187.107, to make clear that this information must be made 
available to VIS.
    Three comments discussed the question of what information should be 
made available publicly. Two comments said there should be a charge for 
this information. One comment proposed the addition of two new sections 
to address this issue.
    The Coast Guard will use these comments in a future project when we 
establish what exactly will be released, to whom, how it will be 
released, and how much it will cost.

[[Page 15628]]

    One comment stated that it would be expensive for them to change 
their system to collect and store residential address information for 
an owner and each lien holder and that mailing address information 
should be sufficient.
    The Coast Guard understands that systems will require some change, 
however the residential address information is required for law 
enforcement purposes.
    One comment stated that using the Social Security Number (SSN) or 
Individual Taxpayer Identification Number (ITIN), as unique vessel 
owner identifiers, would require clear Federal and State authority.
    States have the option to provide another unique owner identifier 
if they are not able, under State law, to collect the SSN or ITIN. The 
ITIN should not be a Privacy Act issue for corporate owners.

Information To Identify a Vessel (Sec. 187.103)

    One comment suggested that the Coast Guard develop a realistic and 
uniform definition for the term ``charter boat'' as it relates to the 
needs of the National Marine Fisheries Service (NMFS).
    The Coast Guard agrees. According to the Magnuson-Stevens Fishery 
Conservation and Management Act (16 U.S.C. 1802), ``charter fishing'' 
is defined as ``fishing from a vessel carrying a passenger for hire (as 
defined in section 2101(21a) of Title 46 who is engaged in recreational 
fishing.'' The Coast Guard will work closely with stakeholders to 
develop clear guidance defining the categories and commercial 
activities identified in VIS.
    Another comment stated that the original proposal from NMFS would 
require several changes to State registration systems. This is 
unacceptable because it would cost too much.
    The only change that is being implemented at the request of NMFS is 
the addition of ``charter fishing'' as a category of primary use. Other 
data requests from NMFS were outside the scope of this rulemaking.
    One comment stated that they use the term ``homemade'' to 
distinguish between privately constructed vessels from commercially 
constructed vessels. The commentor requested that they continue to have 
the ability to use this term.
    There is no regulation that defines terms to be used in the 
manufacture/make field, therefore the term ``homemade'' is an 
acceptable term to use.

Information on Titled Vessels (Sec. 187.105)

    One comment recommended requiring that a participating State 
collect and make available to VIS information concerning the discharge 
of a security interest or the surrender of a certificate of title.
    This issue was discussed in previous notices. Again, we disagree 
because it would impose an additional burden on the States.

Information To Assist Law Enforcement Officials (Sec. 187.107)

    One comment asked since their respective State does not require 
non-mechanical vessels to be registered, will this information be 
required in VIS? The Coast Guard understands that all vessels may not 
be registered in a State. Therefore if a vessel is not registered, it 
does not need to be reported in VIS.
    One comment stated that it was understood that much of the 
information listed in Sec. 187.107(b) is noted in the police report, 
and could be available by requesting it from the reporting enforcement 
agency.
    This information is strictly optional and not required to be 
reported to VIS.

Participating State Requirements (Sec. 187.201)

    One comment stated that a reference was made to States utilizing 
microfiche or microfilm or other electronic storage to retain 
information. However, this is limited to a number of years. The States' 
data storage cannot compare to what is retained by the Coast Guard, in 
detail and in length of time. The life of a boat is many more years 
than most State storage systems. The lack of this information being 
available greatly jeopardizes the history of a boat. VIS should 
accommodate keeping essential boat information and not depend on States 
for this. Another comment also expressed concern about the retention of 
information for a history of transactions involving a vessel.
    We believe there is some confusion as to exactly what information 
VIS will archive. VIS will archive information on a particular vessel 
only if the vessel's registration has been inactive for ten years. And 
archived information will be retained for an additional 50 years. Past 
transactions, including change of vessel ownership as well as change of 
State of registration, will be recorded and stored with a particular 
vessel to track and build its history. The reference to microfiche and 
microfilm in Part 187.201(d) refers specifically to certificates and 
other evidence that establish the accuracy of the information, not the 
information itself.
    One comment stated that during the months of February, March, and 
April hundreds of vessel registrations with changes arrive daily. The 
DMV will not be able to provide to VIS changes in registration 
information during these three months.
    State personnel will process vessel registrations just as they 
currently do in the normal course of business. The daily summary of 
registration changes will be generated automatically by the computer 
program that is developed when a State initially elects to participate 
in VIS. Personnel processing daily transactions, require no additional 
effort. If a State falls behind in processing transactions, that would 
not affect the viability of VIS.

Dealer and Manufacturer Provisions (Sec. 187.307)

    Two comments stated that States were concerned with whether dealers 
and manufacturers would support the change to regulate boat dealers.
    This requirement applies only to States that choose to seek 
certification to obtain preferred mortgage status for State-titled 
vessels. The principal stakeholders in this rulemaking process 
recommended application of this regulation and we agree. The Coast 
Guard will consider an amendment if, at a later date, it is determined 
that the State restrictions on boat dealers and manufacturers 
participation can be deleted without adversely impacting the 
effectiveness of VIS.

Surrender of Title for Purposes of Documentation (Sec. 187.315)

    One comment stated that in Subpart D of this section, the 
amendments included in the Coast Guard Authorization Act of 1998 
clearly state that Federal statute now prohibits a vessel from being 
both documented by the Coast Guard and titled by a State (46 U.S.C. 
12124). In the section on Federalism, this Federal Law is referred to 
concluding that States should consider amending their laws and 
regulations on this issue. The comment asked whether a State would be 
accepted into VIS if they do not conform to this Federal law.
    The answer is no. At the present time there are several States 
which require titling of documented vessels. Since those laws are in 
conflict with Federal law, the Coast Guard strongly recommends that 
States amend their laws and regulations on this issue to alleviate the 
conflict. The National Vessel Documentation Center is undertaking a 
separate rulemaking project to provide for the surrender of

[[Page 15629]]

State titles when a vessel is documented under Federal law.

Procedures for Perfection of Security Interests (Sec. 187.323)

    We received two comments pointing out that States employ different 
procedures for security interest perfection on State boat titles. Some 
States deem the perfection to have occurred when the State boat title 
application and necessary fees are delivered to the proper State filing 
office; other States deem legal perfection to occur when the secured 
party is actually noted on the certificate of title. A State may make 
its own choice as to determination of the date and time of perfection. 
One comment suggested that this issue could be clarified by replacing 
the word ``Delivery'' at the beginning of Sec. 187.323(a)(1) with the 
word ``Submission.''
    We agree and have made the recommended change in both 
Sec. 187.323(a)(1) and in Sec. 187.323(a)(4).

Regulatory Evaluation

    This 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. The Office of 
Management and Budget under that Order has not reviewed it. 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 rule 
imposes zero mandatory costs. For States that choose to participate in 
VIS, we expect 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 rule does not impose mandatory costs on States. A State may 
elect to participate in VIS but is not compelled to do so. 
Participation is entirely voluntary. 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 
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
    The only 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.
(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 percent 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

    The primary benefits of VIS will 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 will 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 will be the reduction in theft of vessels. A 
third benefit of VIS will 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.

Collection of Information

    This 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. 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 rule would have a significant economic impact 
on a substantial number of small entities. The term ``small entities'' 
comprises small businesses, not-for-profit organizations that are 
independently owned and operated and are not

[[Page 15630]]

dominant in their fields, and governmental jurisdictions with 
populations of less than 50,000.
    This rule 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 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 final rule will not have a significant economic impact on a 
substantial number of small entities.

Assistance for Small Entities

    Under section 213(a) of the Small Business Regulatory Enforcement 
Fairness Act of 1996 (Pub. L. 104-121), we offered to assist small 
entities in understanding the rule so that they can better evaluate its 
effects on them and participate in the rulemaking.
    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 rule under Executive Order 13132 and have 
determined that it 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, 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) 
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 rule will not result 
in such expenditure, we do discuss the effects of this rule elsewhere 
in this preamble.

Taking of Private Property

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

Protection of Children

    We have analyzed this rule under Executive Order 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 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 will 
have no environmental consequences. A ``Categorical Exclusion 
Determination'' is available in the docket where indicated under 
ADDRESSES.

List of Subjects in 33 CFR Part 187

    Administrative practice and procedure, Marine safety, Reporting and 
recordkeeping requirements.


    For the reasons discussed in the preamble, the Coast Guard revises 
33 CFR 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 redundant 
title?
187.321   What are the hull identification number (HIN) provisions?

[[Page 15631]]

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; 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).


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 will be 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 will be 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:

              Table 187.9(b)--Vessel Identifier Assignments
------------------------------------------------------------------------
                               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.
------------------------------------------------------------------------


[[Page 15632]]

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 will list 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 will list 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 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 and make it available to VIS:
    (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 and make it available to VIS:
    (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 redundant.
    (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 VIS for use by 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

[[Page 15633]]

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 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 
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 
redundant COO if VIS contains information concerning the vessel.
    (d) Dealers or manufacturers must be permitted to provide a 
redundant 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 ``REDUNDANT'' must be clearly and permanently marked on 
the face of a redundant 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.

[[Page 15634]]

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.


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 redundant 
title?

    (a) A State must require the holder (owner or secured party) of an 
original title to apply for a redundant 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 
redundant certificate of title with the term ``REDUNDANT.''


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) Submission 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) Submission 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;

[[Page 15635]]

    (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.

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: November 14, 2000.
R.C. North,
Assistant Commandant for Marine Safety and Environmental Protection.
[FR Doc. 01-6906 Filed 3-19-01; 8:45 am]
BILLING CODE 4910-15-P