[Federal Register Volume 67, Number 154 (Friday, August 9, 2002)]
[Proposed Rules]
[Pages 51804-51810]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-20244]


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DEPARTMENT OF TRANSPORTATION

Coast Guard

46 CFR Part 67

[USCG 2001-8825]
RIN 2115-AG08


Vessel Documentation: Lease Financing for Vessels Engaged in the 
Coastwise Trade

AGENCY: Coast Guard, DOT.

ACTION: Supplemental notice of proposed rulemaking.

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SUMMARY: The Coast Guard proposes to amend its regulations on the 
documentation of vessels engaged in the coastwise trade. These 
proposals address statutory amendments eliminating certain barriers to 
seeking foreign financing by lease for U.S.-flag vessels. These 
proposals would clarify the information needed to determine the 
eligibility of a vessel financed in this manner for a coastwise 
endorsement.

DATES: Comments and related material must reach the Docket Management 
Facility on or before October 8, 2002.
    Comments sent to the Office of Management and Budget (OMB) on 
collection of information must reach OMB on or before October 8, 2002.

ADDRESSES: To make sure that 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-2001-8825), 
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: If you have questions on this proposed 
rule, call Patricia Williams, Deputy Director, National Vessel 
Documentation Center, Coast Guard, telephone 304-271-2506. If you have 
questions on viewing or submitting material to the docket, call Dorothy 
Beard, 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-2001-
8825), 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 that 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.

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

[[Page 51805]]

one at a time and place announced by a later notice in the Federal 
Register.

Regulatory History

    On May 2, 2001, we published a notice of proposed rulemaking (NPRM) 
entitled ``Vessel Documentation: Lease-Financing for Vessels Engaged in 
the Coastwise Trade'' in the Federal Register (66 FR 21902). This 
supplemental notice of proposed rulemaking (SNPRM) provides further 
opportunity for public comment. This SNPRM is necessary to better align 
the proposed rule with the applicable statute, its legislative history, 
and the existing vessel documentation regulations and to provide for 
vessels that have already received coastwise endorsements under the 
lease-financing statute. The specific proposed changes to the NPRM are 
discussed later in this preamble.

What Happens to the Comments Already Submitted?

    The proposed changes to the NPRM are technical in nature and are 
intended primarily for alignment and clarification purposes. They are 
not made in response to any of the many comments received to the NPRM. 
All comments on the NPRM and SNPRM that are submitted to the docket 
will be carefully considered before a final rule is published. If the 
changes in this SNPRM do not affect the comments that you have already 
submitted to the docket, there is no need to re-submit them. This will 
help members of the public who read the comments to avoid having to 
review duplicate sets.

Background and Purpose

    In 1996, Congress amended the vessel documentation laws to promote 
lease financing of vessels engaged in the coastwise trade (section 
1113(d) of Public Law 104-324, the Coast Guard Authorization Act of 
1996; 46 U.S.C. 12106(e)) (``the 1996 Act''). Lease financing has 
become a very common way to finance capital assets in the maritime 
industry. Under lease financing, ownership of the vessel is in the name 
of the lessor, with a demise charter to the charterer of the vessel. (A 
``demise charter'' or ``bareboat charter'' is an agreement in which the 
charterer assumes the responsibility for operating, crewing, and 
maintaining the vessel as if the charterer owned it.) Many vessel 
operators choose to acquire or build vessels through lease financing, 
instead of the traditional mortgage financing, because of possible cost 
benefits. But, until the 1996 Act, operators were prevented from 
obtaining this financing from U.S. companies that are less than 75 
percent U.S. owned because the leasing company had to be a U.S. citizen 
under section 2 of the Shipping Act, 1916, (46 U.S.C. app. 802), which 
requires at least 75 percent U.S. ownership. This situation severely 
restricted the source of available capital.
    Under section 1113(d) of the 1996 Act, Congress eliminated this 
technical impediment to vessel financing by adding a new paragraph (e) 
to 46 U.S.C. 12106. Under 46 U.S.C. 12106(e), Congress authorized the 
Secretary of Transportation (since delegated to the Commandant of the 
Coast Guard) to issue coastwise endorsements if (1) the vessel is 
eligible for documentation; (2) the vessel's owner, the parent of the 
owner, or subsidiary of the parent of the owner is primarily engaged in 
leasing or other financing transactions; (3) the vessel is under a 
demise charter to a person certifying that the person is a U.S. citizen 
eligible to engage in coastwise trade under section 2 of the Shipping 
Act, 1916; and (4) the demise charter is for at least 3 years (or less 
under proposed Sec. 67.20(a)(11)).
    According to the legislative history for the 1996 Act (see House 
Conference Report No. 104-854; Public Law 104-324; 1996 U.S. Code 
Congressional and Administrative News, p. 4323)(Conference Report), 
Congress intended to broaden the sources of capital for owners of U.S. 
vessels engaged in the coastwise trade by creating new lease-financing 
options. At the same time, Congress did not intend to undermine the 
basic principle of U.S. maritime law that vessels operated in domestic 
trades must be built in shipyards in the U.S. and be operated and 
controlled by U.S. citizens, which is vital to U.S. military and 
economic security. In that report, Congress directed the Coast Guard to 
establish the necessary regulations to administer 46 U.S.C. 12106(e), 
including the filing of demise charters for vessels issued a coastwise 
endorsement under that provision.

Purpose for this Supplemental Notice of Proposed Rulemaking

    This supplemental notice of proposed rulemaking (SNPRM) is 
necessary for the following reasons:
    1. To more closely align the proposed rule with the 1996 Act, the 
Conference Report, and existing vessel documentation regulations.
    2. To address endorsements issued under the lease-financing section 
of the 1996 Act before the effective date of the final rule.
    3. To align, for clarity, similar provisions within this proposed 
rule.
    The SNPRM is not intended as a response to the comments received on 
the preceding NPRM. All comments on the NPRM and SNPRM that are 
submitted to the docket will be carefully considered before a final 
rule is published.

Discussion of the Proposed Changes to the NPRM

    In this section, we discuss only the changes we have made to the 
notice of proposed rulemaking (NPRM). For a discussion of the unchanged 
provisions, see the ``Discussion of the Proposed Regulations'' section 
in the preamble to the NPRM (66 FR 21903).
    Section 67.3--Definitions. 1. In the definitions for the terms 
``parent'' and ``subsidiary'', the words ``more than 50 per cent'', 
concerning ownership and control, have been changed to read ``at least 
50 percent''. This aligns these definitions with similar definitions 
elsewhere in the Coast Guard's vessel documentation regulations (e.g., 
46 CFR 68.01-1).
    2. The NPRM had separate definitions for the words ``entity'' and 
``person''. ``Person'' was defined as an individual or entity. In the 
SNPRM, the definition of ``entity'' is combined with that for 
``person'', as is currently done in existing 46 CFR 67.3. This avoids 
unintentionally excluding, for example, individuals as possible owners.
    3. In the definition for ``primarily engaged in leasing or other 
financing transactions'', the NPRM used ``banking or similar financing 
transactions''. This is narrower than the wording in the Conference 
Report and the policy being applied by the National Vessel 
Documentation Center (as described on page 21903 of the preamble to the 
NPRM). The SNPRM replaces these words with ``banking, investing, 
leasing, or other financing transactions''.
    Section 67.20--Coastwise endorsement for a vessel under a demise 
charter. 1. The section heading is changed to delete ``and that is 
owned by a lease-financing company and is'' because the element of 
ownership is addressed in paragraph (a)(3) of this section.
    2. In paragraph (a), the ``(e)'' following ``46 U.S.C. 12106'' is 
deleted because there are other criteria for eligibility for a 
coastwise endorsement, such as ``U.S.-built'' in section 12106(a), that 
are not found in section 12106(e).
    3. In paragraph (a)(2), the words ``The vessel is considered built 
in the United States under Sec. 67.97'' are replaced with the words 
``The vessel is eligible for a coastwise endorsement under 
Sec. 67.19(c)''. This change is needed to include the non-U.S.-built 
vessels listed

[[Page 51806]]

in Sec. 67.19(c) that are also eligible for coastwise endorsement.
    4. In paragraph (a)(3), the words ``and not in vessel operations or 
management'' are deleted from the SNPRM. These words are confusing 
because they make it seem as if the parent or subsidiaries of the 
parent may not be engaged primarily in the direct operation or 
management of vessels. Page 4326 of the Conference Report states that 
it is only the owner that may not primarily engage in the direct 
operation or management of vessels. Therefore, a new paragraph (a)(5) 
is added to require that only the owner must not be primarily engaged 
in the direct operation or management of vessels.
    5. A new paragraph (a)(4) is added to align this section with the 
requirement for applications in Sec. 67.147 (a)(1)(i) of the NPRM that 
the entity that owns the vessel be organized under the laws of the 
United States or of a State.
    6. Paragraph (a)(4) in the NPRM required that the majority of the 
aggregate revenues of an owner, the parent, or a subsidiary of the 
parent not be derived from the operation or management of vessels. 
However, the Conference Report states that it is the majority of the 
aggregate revenues of the whole group (i.e., the owner, the parent, and 
all subsidiaries of the parent), not that of individual members of the 
group, that must not be derived from the operation or management of 
vessels. New paragraph (a)(7) has been aligned with the Conference 
Report.
    7. Under paragraph (a)(5) of the NPRM, on the subject of the 
operation or management of commercial, foreign-flag vessels, the owner, 
parent, or subsidiary of the parent must not be primarily engaged in 
the operation or management of the vessels. However, under the 
Conference Report, it is the group that includes the person, the 
parent, and all subsidiaries of the parent that must not be primarily 
engaged in the operation or management of the vessels. New paragraph 
(a)(8) has been aligned with the Conference Report.
    8. Paragraph (b) is new. It is a ``grandfather'' provision that 
addresses the coastwise endorsements issued under the lease-financing 
provision since the passage of the 1996 Act. It would allow these 
endorsements to continue to be eligible for renewal as long as the 
certificate of documentation is not subject to exchange under 
Sec. 67.167(b)(1) through (b)(3) or to deletion under Sec. 67.171(a)(1) 
through (a)(6) or Sec. 67.173. These provisions deal with substantial 
changes, such as changes in the ownership or flag nation of the vessel. 
If the vessel became subject to these provisions and the owner chose to 
again seek a coastwise endorsement under the lease-financing 
provisions, the owner would no longer be eligible under this 
grandfather provision, but would have to apply under the regulations 
applicable to non-grandfathered endorsements.
    Section 67.147--Application procedure: Coastwise endorsement for a 
vessel under a demise charter. 1. The heading of this section is 
changed for the reasons discussed under Sec. 67.20 in this preamble.
    2. Section 67.147 is reorganized to better align it with 
Sec. 67.20.
    3. Paragraph (a)(1)(i) in the NPRM limited the person that must be 
primarily engaged in leasing or other financing transactions to the 
owner. However, the 1996 Act allows the owner, the parent, or a 
subsidiary of the parent to be so engaged. Paragraph (a)(1)(i) of the 
SNPRM is changed accordingly.
    4. For a complete explanation of the changes to this section, see 
the preceding discussion of the corresponding changes to Sec. 67.20.
    Section 67.167--Requirement for exchange of Certificate of 
Documentation. 1. Paragraph (c) lists situations in which the 
Certificate of Documentation and all endorsements to it become invalid. 
Therefore, these provisions are similar to those discussed above but 
are set out in the negative.
    2. For a discussion of the changes to paragraph (c)(10)(iii), see 
the discussion under Sec. 67.20(a)(3) in this preamble.
    3. For a discussion of the changes to paragraph (c)(10)(iv), see 
the discussion under Sec. 67.20(a)(4) (new (a)(7)) in this preamble.
    4. For a discussion of the changes to paragraph (c)(10)(v), see the 
discussion under Sec. 67.20(a)(5) (new (a)(8)) in this preamble.
    5. Paragraph (c)(11) is a new grandfather provision. For a 
discussion of these provisions, see the discussion under Sec. 67.20(b) 
in this preamble.
    Section 67.179--Application procedure: Coastwise operation of a 
barge under a demise charter. 1. The changes to paragraphs (a)(1)(i) 
through (a)(1)(v) in this section correspond to the changes to similar 
provisions in Secs. 67.20 and 67.147.
    2. This section is reorganized to better align it with Secs. 67.20 
and 67.147.

Assessment

    Due to substantial public interest since the NPRM was published, 
this proposed rule has been reclassified as a ``significant regulatory 
action'' under section 3(f) of Executive Order 12866, Regulatory 
Planning and Review. The Office of Management and Budget has reviewed 
it under that Order. It requires an assessment of potential costs and 
benefits under section 6(a)(3) of that Order. It is ``significant'' 
under the regulatory policies and procedures of the Department of 
Transportation (DOT) (44 FR 11040, February 26, l979). A draft 
Assessment is available in the docket as indicated under ADDRESSES. A 
summary of the Assessment follows:
    The changes to the NPRM more closely align the SNPRM with the 1996 
Act, the legislative history, and the existing vessel documentation 
regulations. The lease-finance provisions are intended to broaden the 
sources of capital for owners of vessels engaged in coastwise trade.
    Several changes resulting from alignment with the 1996 Act and the 
Conference Report would increase the universe of owners eligible for 
the lease-financing option due to the increased the number of sources 
for financing. (See Sec. 67.20 (a)(3) through (a)(5) in the NPRM and 
Sec. 67.20 (a)(3) and (a)(5) through (a)(8) in the SNPRM.) For example, 
Sec. 67.20(a)(3) in the NPRM excluded owners with a parent or 
subsidiary of the parent that is primarily engaged in vessel operations 
or management. However, under the Conference Report, the parent or 
subsidiary of the parent may be so engaged (as long as the group also 
meets the restrictions in the Report on aggregate revenues and foreign 
vessel ownership).
    The new Coast Guard estimate for the number of entities opting to 
apply for coastwise endorsements under the amended lease-finance 
provisions is approximately 35 annually.
    There are no mandatory costs associated with this rulemaking. The 
costs imposed on those who choose to take advantage of lease financing 
would include the costs of preparing and submitting the documents 
required in Sec. 67.147 for vessels and Sec. 67.179 for barges. Those 
costs would vary from applicant to applicant and would probably be the 
same for vessels and barges. For further information on those costs, 
see the section on ``Collection of Information'' in this preamble.

Small Entities

    Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have 
considered whether this supplemental notice of proposed rulemaking 
(SNPRM) 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 51807]]

dominant in their fields, and governmental jurisdictions with 
populations of less than 50,000.
    The SNPRM would affect vessel owners and charterers who choose to 
take advantage of the lease-financing option. This option reduces the 
burden on owners by enabling them to obtain the cheapest financing 
available anywhere in the world. Under the SNPRM, to take advantage of 
the lease-financing option, the vessel owner and charterer must submit 
affidavits and a copy of their demise charter to the NVDC. The 
estimated cost of preparing and submitting this material would be 
minimal and is discussed further under ``Collection of Information'' in 
this preamble. Companies would tend to choose lease financing only if 
they expect its costs to be offset by increased profits.
    Therefore, the Coast Guard certifies under 5 U.S.C. 605(b) that 
this proposed rule would not have a significant economic impact on a 
substantial number of small entities. If you think that your business, 
organization, or governmental jurisdiction qualifies as a small entity 
and that this rule would have a significant economic impact on it, 
please submit a comment to the Docket Management Facility at the 
address under ADDRESSES. In your comment, explain why you think it 
qualifies and how and to what degree this rule would economically 
affect it.

Assistance for Small Entities

    Under section 213(a) of the Small Business Regulatory Enforcement 
Fairness Act of 1996 (Public Law 104-121), we want to assist small 
entities in understanding this proposed rule so that they can better 
evaluate its effects on them and participate in the rulemaking. If the 
rule would affect your small business, organization, or governmental 
jurisdiction and you have questions concerning its provisions or 
options for compliance, please consult Patricia Williams, Deputy 
Director, National Vessel Documentation Center (NVDC), Coast Guard, 
telephone 304-271-2506.
    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

    This supplemental notice of proposed rulemaking (SNPRM) 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. This estimate 
applies to the documents to be submitted under Secs. 67.147 and 67.179. 
This collection would change the previously approved burden under 
Control Number OMB 2115-0110.
    Title: Vessel Documentation: Lease Financing for Vessels Engaged in 
the Coastwise Trade.
    Summary of the Collection of Information: This supplemental notice 
of proposed rulemaking (SNPRM) in Secs. 67.147 and 67.179, would amend 
the collection-of-information requirements for vessel owners and 
charterers applying to engage in the coastwise trade under the lease-
financing provisions of 46 U.S.C. 12106(e). These provisions would 
require modifying the burden in the previously approved OMB Collection 
2115-0110.
    Need for Information: The Coast Guard needs this information to 
determine whether an entity meets the statutory requirements.
    Proposed Use of Information: The Coast Guard would use this 
information to determine whether an entity meets the statutory 
requirements.
    Number of Respondents: Approximately 35 entities a year, including 
charter amendments and sub-charters.
    Frequency of Response: Whenever an entity seeks to qualify to 
engage in the coastwise trade under 46 U.S.C. 12106(e), a qualified 
entity amends the charter, or the demise charterer sub-charters the 
vessel by demise charter.
    Burden of Response: The burden resulting from this proposed rule 
would arise from the requirements in Secs. 67.147 and 67.179 that 
affidavits be prepared and submitted, along with a copy of the demise 
charter, to the NVDC. We estimate that it would take a total of 12 
hours to prepare the affidavits and make the submissions. As for the 
per-hour cost to accomplish this administrative task, we estimate that 
it could be as low as $67 per hour. We expect most, if not all, of the 
applicants to use law firms to accomplish these tasks, even though the 
proposed rule would not require their use. Hourly cost for legal 
assistance could be substantially higher. To align our estimates more 
closely with industry practice, we used $167 per hour for a total of 
$2,004 per application.
    Estimate of Total Annual Burden: The annual hour burden for 
industry is 12 hours per application x 35 applications per year for a 
total of 420 hours per year. The annual cost burden for industry is 
$420 hours per year x $167 per hour (the higher of the two figures 
discussed above) for a total of $70,140 per year.
    As required by the Paperwork Reduction Act of 1995 (44 U.S.C. 
3507(d)), we have submitted a copy of this proposed 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

    A rule has implications for federalism under Executive Order 13132, 
Federalism, if it has a substantial direct effect on State or local 
governments and would either preempt State law or impose a substantial 
direct cost of compliance on them. We have analyzed this proposed rule 
under that Order and have determined that it does not have implications 
for federalism.

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

[[Page 51808]]

their discretionary regulatory actions. 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 Executive Order 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 Executive Order 12988, Civil Justice Reform, to minimize 
litigation, eliminate ambiguity, and reduce burden.

Protection of Children

    We have analyzed this proposed 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.

Indian Tribal Governments

    This proposed rule does not have tribal implications under 
Executive Order 13175, Consultation and Coordination with Indian Tribal 
Governments, because it would not have a substantial direct effect on 
one or more Indian tribes, on the relationship between the Federal 
Government and Indian tribes, or on the distribution of power and 
responsibilities between the Federal Government and Indian tribes.
    To help the Coast Guard establish regular and meaningful 
consultation and collaboration with Indian and Alaskan Native tribes, 
we published a notice in the Federal Register (66 FR 36361, July 11, 
2001) requesting comments on how to best carry out the Order. We invite 
your comments on how this proposed rule might impact tribal 
governments, even if that impact may not constitute a ``tribal 
implication'' under the Order.

Energy Effects

    We have analyzed this proposed rule under Executive Order 13211, 
Actions Concerning Regulations That Significantly Affect Energy Supply, 
Distribution, or Use. We have determined that it is not a ``significant 
energy action'' under that order, although it is considered a 
``significant regulatory action'' under Executive Order 12866. We 
expect that this rulemaking will not have any significant adverse 
effect on the supply, distribution, or use of energy, including a 
shortfall in supply, price increases, and increased use of foreign 
supplies. Furthermore, it has not been designated by the Administrator 
of the Office of Information and Regulatory Affairs as a significant 
energy action. Therefore, it does not require a Statement of Energy 
Effects under Executive Order 13211.
    We request your comments to assist us in identifying any likely 
significant adverse effects this proposed rule may have on the supply, 
distribution, or use of energy. Submit your comments to the Docket 
Management Facility at the address under ADDRESSES.

Environment

    We have considered the environmental impact of this proposed rule 
and concluded that, under figure 2-1, paragraph (34)(d), of Commandant 
Instruction M16475.lD, this rule is categorically excluded from further 
environmental documentation. This proposed rulemaking is administrative 
in nature and identifies the information necessary to apply for a 
coastwise endorsement under 46 U.S.C. 12106(e). A ``Categorical 
Exclusion Determination'' is available in the docket where indicated 
under ADDRESSES.

List of Subjects in 46 CFR Part 67

    Reporting and recordkeeping requirements, Vessels.
    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 is revised 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, 12106, 12120, 12122; 46 U.S.C. app. 841a, 
876; 49 CFR 1.45, 1.46.

    2. In Sec. 67.3, revise the definition for the term ``person''; and 
add, in alphabetical order, definitions for the terms ``parent'', 
``primarily engaged in leasing or other financing transactions'', and 
``subsidiary'' to read as follows:


Sec. 67.3  Definitions.

* * * * *
    Parent means any person that directly or indirectly owns or 
controls at least 50 percent of another person.
    Person means an individual; corporation; partnership; limited 
liability partnership; limited liability company; association; joint 
venture; trust arrangement; and the government of the United States, a 
State, or a political subdivision of the United States or a State; and 
includes a trustee, beneficiary, receiver, or similar representative of 
any of them.
    Primarily engaged in leasing or other financing transactions means 
that more than 50 percent of the aggregate revenue of a person is 
derived from banking, investing, leasing, or other financing 
transactions.
* * * * *
    Subsidiary means a person at least 50 percent of which is directly 
or indirectly owned or controlled by another person.
* * * * *
    3. Add Sec. 67.20 to read as follows:


Sec. 67.20  Coastwise endorsement for a vessel under a demise charter.

    (a) Except as under paragraph (b) of this section, to be eligible 
for a coastwise endorsement under 46 U.S.C. 12106, a vessel under a 
demise charter must meet the following:
    (1) The vessel is eligible for documentation under 46 U.S.C. 12102.
    (2) The vessel is eligible for a coastwise endorsement under 
Sec. 67.19(c) and has not lost coastwise eligibility under 
Sec. 67.19(d).
    (3) The person that owns the vessel, a parent of that person, or a 
subsidiary of a parent of that person is primarily engaged in leasing 
or other financing transactions.
    (4) The person that owns the vessel is organized under the laws of 
the United States or of a State.
    (5) The person that owns the vessel is not primarily engaged in the 
direct operation or management of vessels.
    (6) The ownership of the vessel is primarily a financial investment 
without the ability and intent to control the vessel's operations by a 
person not primarily engaged in the direct operation or management of 
vessels.
    (7) The majority of the combined aggregate revenues of the person 
that owns the vessel, the parent of that person, and all subsidiaries 
of the parent of that person is not derived from the operation or 
management of one or more vessels.
    (8) The group that includes the person that owns the vessel, the 
parent of that person, and all subsidiaries of the parent of that 
person is not primarily engaged in the operation or management of 
commercial, foreign-flag vessels used for the carriage of cargo for 
parties unrelated to the vessel's owner or charterer.

[[Page 51809]]

    (9) The person that owns the vessel has transferred to a qualified 
United States citizen under 46 U.S.C. app. 802 full possession, 
control, and command of a U.S.-built vessel through a demise charter in 
which the demise charterer is considered the owner pro hac vice during 
the term of the charter.
    (10) The charterer must certify to the Director, National Vessel 
Documentation Center, that the charterer is a citizen of the United 
States for engaging in the coastwise trade under 46 U.S.C. app. 802.
    (11) The demise charter is for a period of at least 3 years, unless 
a shorter period is authorized by the Director, National Vessel 
Documentation Center, under circumstances such as--
    (i) When the vessel's remaining life would not support a charter of 
3 years; or
    (ii) To preserve the use or possession of the vessel.
    (b) A vessel under a demise charter that was eligible for, and 
received, a document with a coastwise endorsement under Sec. 67.19 and 
46 U.S.C. 12106(e) before [The effective date of the final rule.] may 
continue to operate under that endorsement on and after that date and 
may renew the document and endorsement if the certificate of 
documentation is not subject to--
    (1) Exchange under Sec. 67.167(b)(1) through (b)(3); or
    (2) Deletion under Secs. 67.171(a)(1) through (a)(6) or 67.173.
    (c) To apply for a coastwise endorsement for a vessel under a 
demise charter, see Sec. 67.147.


Sec. 67.35  [Amended]

    4. In Sec. 67.35, at the end of paragraph (c), add the words ``or 
the vessel qualifies under Sec. 67.20''.
    5. In Sec. 67.36, revise paragraphs (c)(1) and (c)(2) to read as 
follows:


Sec. 67.36  Trust.

* * * * *
    (c) * * *
    (1) It meets the requirements of paragraph (a) of this section and 
at least 75 percent of the equity interest in the trust is owned by 
citizens; or
    (2) It meets the requirements of Sec. 67.20.
    6. In Sec. 67.39, revise paragraphs (c)(1) and (c)(2) to read as 
follows:


Sec. 67.39  Corporation.

* * * * *
    (c) * * *
    (1) It meets the requirements of paragraph (a) of this section and 
at least 75 percent of the stock interest in the corporation is owned 
by citizens; or
    (2) It meets the requirements of Sec. 67.20.
* * * * *
    7. Add Sec. 67.147 to read as follows:


Sec. 67.147  Application procedure: Coastwise endorsement for a vessel 
under a demise charter.

    (a) In addition to the items under Sec. 67.141, the person that 
owns the vessel (other than a barge under Sec. 67.179) and that seeks a 
coastwise endorsement under Sec. 67.20 must submit the following to the 
National Vessel Documentation Center:
    (1) A certification, in the form of an affidavit and supported with 
documentation, from an officer of the person that owns the vessel 
certifying the following:
    (i) That the person that owns the vessel, the parent of that 
person, or a subsidiary of a parent of that person is primarily engaged 
in leasing or other financing transactions.
    (ii) That the person that owns the vessel is organized under the 
laws of the United States or a State.
    (iii) That the person that owns the vessel is not primarily engaged 
in the direct operation or management of vessels.
    (iv) That ownership of the vessel is primarily a financial 
investment without the ability and intent to control the vessel's 
operations by a person not primarily engaged in the direct operation or 
management of vessels.
    (v) That the majority of the combined aggregate revenues of the 
person that owns the vessel, the parent of that person, and all 
subsidiaries of the parent of that person is not derived from the 
operation or management of one or more vessels.
    (vi) That the group that includes the person that owns the vessel, 
the parent of that person, and all subsidiaries of the parent of that 
person is not primarily engaged in the operation or management of 
commercial, foreign-flag vessels used for the carriage of cargo for 
parties unrelated to the vessel's owner or charterer.
    (vii) That the person that owns the vessel has transferred to a 
qualified United States citizen under 46 U.S.C. app. 802 full 
possession, control, and command of the U.S.-built vessel through a 
demise charter in which the demise charterer is considered the owner 
pro hac vice during the term of the charter.
    (2) A copy of the charter.
    (b) The charterer must submit the following to the National Vessel 
Documentation Center:
    (1) A certificate certifying that the charterer is a citizen of the 
United States for the purpose of engaging in the coastwise trade under 
46 U.S.C. app. 802.
    (2) Detailed citizenship information in the format of form CG-1258, 
Application for Documentation, section G, citizenship. The citizenship 
information may be attached to the form CG-1258 that is submitted under 
Sec. 67.141 and must be signed by, or on behalf of, the charterer.
    (c) Whenever a charter under paragraph (a) of this section is 
amended, the vessel owner must file a copy of the amendment with the 
Director, National Vessel Documentation Center, within 10 days after 
the effective date of the amendment.
    (d) Whenever the charterer of a vessel under paragraph (a) of this 
section demise charters the vessel to a sub-charterer--
    (1) The charterer must file a copy of the sub-charter with the 
Director, National Vessel Documentation Center, within 10 days after 
the effective date of the sub-charter; and
    (2) The sub-charterer must provide detailed citizenship information 
in the format of form CG-1258, Application for Documentation, section 
G, citizenship.
    (e) A person that submits a false certification under this section 
is subject to penalty under 46 U.S.C. 12122.
    8. In Sec. 67.167, in paragraph (c)(8), remove the last ``or''; in 
paragraph (c)(9), remove the period and add, in its place, a semicolon; 
and add paragraphs (c)(10) and (c)(11) to read as follows:


Sec. 67.167  Requirement for exchange of Certificate of Documentation.

* * * * *
    (c) * * *
    (10) Except for a vessel with a coastwise endorsement under 46 
U.S.C. 12106(e) that was in effect before [the effective date of the 
final rule.]--
    (i) The demise charter expires or is transferred to another 
charterer;
    (ii) The citizenship of the charterer or sub-charterer changes to 
the extent that they are no longer qualified for a coastwise 
endorsement;
    (iii) Neither the person that owns the vessel, nor the parent of 
that person, nor any subsidiary of the parent of that person is 
primarily engaged in leasing or other financing transactions;
    (iv) The majority of the combined aggregate revenues of the person 
that owns the vessel, the parent of that person, and all subsidiaries 
of the parent of that person is derived from the operation or 
management of one or more vessels; or
    (v) The group that includes the person that owns the vessel, the 
parent of that person, and all subsidiaries of the

[[Page 51810]]

parent of that person becomes primarily engaged in the operation or 
management of foreign-flag vessels used for the carriage of cargo 
unrelated to the vessel's owner or charterer; or
    (11) For a vessel with a coastwise endorsement under 46 U.S.C. 
12106(e) that was in effect before [the effective date of the final 
rule.]--
    (i) The demise charter expires or is transferred to another 
charterer;
    (ii) The citizenship of the charterer or sub-charterer changes to 
the extent that they are no longer qualified for a coastwise 
endorsement;
    (iii) Neither the person that owns the vessel, nor the parent of 
that person, nor a subsidiary of the parent of that person is primarily 
engaged in leasing or other financing transactions;
* * * * *
    9. Add Sec. 67.179 to subpart M to read as follows:


Sec. 67.179  Application procedure: Coastwise operation of a barge 
under a demise charter.

    (a) The person that owns a barge qualified to engage in coastwise 
trade under the lease-financing provisions of 46 U.S.C. 12106(e) must 
submit the following to the National Vessel Documentation Center:
    (1) A certification, in the form of an affidavit and supported with 
documentation, from an officer of the person that owns the barge 
certifying the following:
    (i) That the person that owns the barge, the parent of that person, 
or a subsidiary of the parent of that person is primarily engaged in 
leasing or other financing transactions.
    (ii) That the person that owns the barge is organized under the 
laws of the United States or a State.
    (iii) That the person that owns the barge is not primarily engaged 
in the direct operation or management of vessels.
    (iv) That ownership of the barge is primarily a financial 
investment without the ability and intent to control the barge's 
operations by a person not primarily engaged in the direct operation or 
management of the barge.
    (v) That the majority of the combined aggregate revenues of the 
person that owns the barge, the parent of that person, and all 
subsidiaries of the parent of that person is not derived from the 
operation or management of one or more vessels.
    (vi) That the group that includes the person that owns the barge, 
the parent of that person, and all subsidiaries of the parent of that 
person is not primarily engaged in the operation or management of 
commercial, foreign-flag vessels used for the carriage of cargo for 
parties unrelated to the barge's owner or charterer.
    (vii) That the person that owns the barge has transferred to a 
qualified United States citizen under 46 U.S.C. app. 802 full 
possession, control, and command of the U.S.-built barge through a 
demise charter in which the demise charterer is considered the owner 
pro hac vice for the term of the charter.
    (viii) That the barge is qualified to engage in the coastwise trade 
and that it is owned by a person eligible to own vessels documented 
under 46 U.S.C. 12106(e).
    (2) A copy of the charter.
    (b) The charterer must submit the following to the National Vessel 
Documentation Center:
    (1) A certificate certifying that the charterer is a citizen of the 
United States for engaging in the coastwise trade under 46 U.S.C. app. 
802.
    (2) Detailed citizenship information in the format of form CG-1258, 
Application for Documentation, section G, citizenship. The citizenship 
information must be signed by, or on behalf of, the charterer.
    (c) Whenever a charter under paragraph (a) of this section is 
amended, the barge owner must file a copy of the amendment with the 
Director, National Vessel Documentation Center, within 10 days after 
the effective date of the amendment.
    (d) Whenever the charterer of a barge under paragraph (a) of this 
section demise charters the barge to a sub-charterer--
    (1) The charterer must file a copy of the sub-charter with the 
Director, National Vessel Documentation Center, within 10 days after 
the effective date of the sub-charter; and
    (2) The sub-charterer must provide detailed citizenship information 
in the format of form CG-1258, Application for Documentation, section 
G, citizenship.
    (e) A person that submits a false certification under this section 
is subject to penalty under 46 U.S.C. 12122.

    Dated: March 28, 2002.
Paul J. Pluta,
Rear Admiral, U.S. Coast Guard, Assistant Commandant for Marine Safety, 
Security and Environmental Protection.
[FR Doc. 02-20244 Filed 8-8-02; 8:45 am]
BILLING CODE 4910-15-P