[Federal Register Volume 66, Number 177 (Wednesday, September 12, 2001)]
[Proposed Rules]
[Pages 47431-47432]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-22815]


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DEPARTMENT OF TRANSPORTATION

Coast Guard

46 CFR Parts 67 and 68

[USCG 2001-10048]


Vessel Documentation: ``Sold Foreign''

AGENCY: Coast Guard, DOT.

ACTION: Request for comments.

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SUMMARY: The Coast Guard seeks comments from the public on its 
interpretation of the term ``sold foreign''. Its current interpretation 
may disqualify from eligibility for coastwise trade certain vessels 
whose ownership has become ``foreign'' in technical ways. Some affected 
parties feel that this interpretation imposes a harsh penalty for 
slight, often unintended foreign involvement while others feel that it 
just preserves the privilege of coastwise trade for the domestic fleet.

DATES: Comments and related material must reach the Docket Management 
Facility on or before December 11, 2001.

ADDRESSES: To make sure your comments and related material do not enter 
the docket (USCG 2001-10048) more than once, please refer them to the 
docket and submit them by only one of the following means:
    (1) By mail to the Docket Management Facility, U.S. Department of 
Transportation, room PL-401, 400 Seventh Street SW., Washington, DC 
20590-0001.
    (2) By hand delivery to room PL-401 on the Plaza level of the 
Nassif Building, 400 Seventh Street SW., Washington, DC, between 9 a.m. 
and 5 p.m., Monday through Friday, except Federal holidays. The 
telephone number is 202-366-9329.
    (3) By fax to the Facility at 202-493-2251.
    (4) Electronically through the Web Site for the Docket Management 
System at http://dms.dot.gov.
    The Docket Management Facility maintains the public docket for this 
notice. Comments and material received from the public, as well as 
documents mentioned in this preamble as being available in the docket, 
will become part of this docket and will be available for inspection or 
copying at room PL-401 on the Plaza level of the Nassif Building at the 
same address, 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 Request for 
Comments, call LCDR Don Darcy, Project Manager, Office of Standards 
Evaluation and Development Division, Coast Guard Headquarters, 202-267-
1200. For questions on viewing or submitting material to the docket, 
call Dorothy Beard, Chief, Dockets, Department of Transportation, 202-
366-5149.

SUPPLEMENTARY INFORMATION:

Request for Comments

    We encourage you to submit comments and related material. If you do 
so, please include your name and address, identify the docket number of 
this Request for Comments (USCG 2001-10048), indicate the specific 
question(s) listed under Questions 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 them by only one means. If you submit them by mail or 
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. Your comments 
and materials may influence the interpretation that we propose. We will 
consider all of them received during the comment period.
    The Coast Guard may hold a public meeting. Whether it does will 
depend on the response to this notice. You may seek a meeting by 
submitting a request to the address under ADDRESSES. The request should 
include the reasons why a meeting would be beneficial. If the Coast 
Guard determines that it should hold a public meeting, it will hold one 
at a time and place announced by a later notice in the Federal 
Register.

Background and Purpose

    The first proviso of section 27 of the Merchant Marine Act, 1920 
(46 App. U.S.C. 883), as amended, provides, among other things, that a 
vessel of more than 200 gross tons as measured under chapter 143 of 
Title 46, United States Code (46 U.S.C. 14301 et seq.), and otherwise 
qualified for coastwise trade, may not be documented for coastwise 
trade if it has been ``* * * sold foreign in whole or in part * * *''. 
The Coast Guard has interpreted the term ``sold foreign'' to mean that 
the vessel has transferred from one business entity, to a newly 
restructured business entity, to (1) an owner who is no longer a U.S. 
citizen or (2) an owner who is no longer eligible to document a vessel 
under the laws of the U.S. If the owner is a business entity, it must 
meet the requirements for documentation under Sec. 12102 of Title 46 
U.S.C., and for a coastwise-trade endorsement under Sec. 12106. (There 
are limited exceptions under the Oil Pollution Act of 1990 (33 U.S.C. 
1321) and under the Act of September 2, 1958 (46 App. U.S.C. 883-1).) 
The Coast Guard has held that, once a business entity no longer meets 
these statutory requirements, its vessels have ``sold foreign.'' In the 
case of a corporation, any vessel transferred to a business entity that 
does not meet the quorum requirements for a board of directors or that 
has a noncitizen chairman of the board is permanently barred from 
coastwise trade. The Coast Guard has held that no business entity can 
reverse or cure the loss of the privilege of coastwise trade by 
reorganizing so as to satisfy 46 U.S.C. 12102. The only way a vessel 
which has run afoul of the strictures of the first proviso has regained 
the privilege has been through enactment of special legislation.

Questions

    We especially need the public's assistance in answering the 
following questions, and welcome any added information on this topic. 
In responding to each question, please explain your reasons for each 
answer as specifically as possible so that we can carefully weigh the 
consequences and impacts of any actions we may take.
    At this time the Coast Guard is reconsidering its interpretation of 
the effect of the first proviso. For it to do so, it invites comments 
on the following questions:
    1. Should the Coast Guard issue a formal letter-ruling addressing 
the proposed reorganization of a business entity before the entity 
undertakes the reorganization?
    2.a. If a qualified owner sells a vessel to an owner unqualified 
because foreign, should the unqualified owner be able to cure the 
defect through its own reorganization?
    b. Should the Coast Guard count as accomplishing a ``sale'' the

[[Page 47432]]

reorganization of an owner that, until the reorganization, qualified to 
document vessels in accordance with 46 U.S.C. 12102? If so, should the 
owner be able to cure the defect through a second reorganization?
    c. If a business entity can reorganize to satisfy 46 U.S.C. 12102, 
so as to avoid a permanent loss of the privilege of coastwise trade, 
should a vessel sold to a natural person other than a citizen be able 
to regain the privilege upon the naturalization of that person?
    3. Should there be a time by which the reorganization posited in 
paragraph 2.a, the second reorganization posited in paragraph 2.b, or 
the naturalization posited in paragraph 2.c must either start or 
finish?

    Dated: June 27, 2001.
Joseph J. Angelo,
Acting Assistant Commandant for Marine, Safety and Environmental 
Protection.
[FR Doc. 01-22815 Filed 9-11-01; 8:45 am]
BILLING CODE 4910-15-U