[Federal Register Volume 79, Number 155 (Tuesday, August 12, 2014)]
[Rules and Regulations]
[Pages 47015-47024]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-18999]



Coast Guard

46 CFR Part 67

[Docket No. USCG-2010-0990]
RIN 1625-AB56

Vessel Documentation Renewal Fees

AGENCY: Coast Guard, DHS.

ACTION: Final rule.


SUMMARY: The Coast Guard is amending its regulations to separately list 
an annual fee for renewals of endorsements upon the Certificate of 
Documentation. We are required to establish user fees for services 
related to the documentation of vessels. This final rule will 

[[Page 47016]]

list a fee of $26 to cover the current costs of the vessel 
documentation services provided by the Coast Guard.

DATES: This final rule is effective November 10, 2014.

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-2010-0990 and are available for inspection or 
copying at the Docket Management Facility (M-30), U.S. Department of 
Transportation, West Building Ground Floor, Room W12-140, 1200 New 
Jersey Avenue SE., Washington, DC 20590, between 9 a.m. and 5 p.m., 
Monday through Friday, except Federal holidays. You may also find this 
docket on the Internet by going to http://www.regulations.gov, 
inserting USCG-2010-0990 in the ``Keyword'' box, and then clicking 

FOR FURTHER INFORMATION CONTACT: For information about this document, 
call or email Ms. Mary Jager, CG-DCO-832, Coast Guard, telephone 202-
372-1331, email Mary.K.Jager@uscg.mil. For information about viewing or 
submitting material to the docket, call Ms. Cheryl Collins, Program 
Manager, Docket Operations, telephone 202-366-9826.


Table of Contents for Preamble

I. Abbreviations
II. Regulatory History
III. Basis and Purpose
IV. Background
V. Discussion of Comments and Changes
    A. General Support
    B. General Non-Support
    C. Fee Components
    D. Alternatives Suggested
    E. Mechanics
    F. Fee Use
    G. Government Benefits
    H. Final Rule
VI. Regulatory Analyses
    A. Regulatory Planning and Review
    B. Small Entities
    C. Assistance for Small Entities
    D. Collection of Information
    E. Federalism
    F. Unfunded Mandates Reform Act
    G. Taking of Private Property
    H. Civil Justice Reform
    I. Protection of Children
    J. Indian Tribal Governments
    K. Energy Effects
    L. Technical Standards
    M. Environment

I. Abbreviations

CFR Code of Federal Regulations
COD Certificate of Documentation
DHS Department of Homeland Security
E.O. Executive Order
FR Federal Register
NVDC National Vessel Documentation Center
NPRM Notice of Proposed Rulemaking
OMB Office of Management and Budget
Sec.  Section symbol
SBA Small Business Administration
U.S.C. United States Code

II. Regulatory History

    On March 4, 2013, the Coast Guard published a notice of proposed 
rulemaking (NPRM) entitled ``Vessel Documentation Renewal Fees'' in the 
Federal Register (78 FR 14053). That NPRM contained the Coast Guard's 
proposed revision of 46 CFR part 67, setting forth proposed fees for 
services provided.
    The Coast Guard received 2,720 comment responses on the proposed 
fees. Comments were received from individuals, law firms, commercial 
vessel documentation services, industry groups, and maritime 
corporations. We considered all comments in promulgating this final 
rule. The comments received in response to the proposed rule are 
discussed below in Section V. Discussion of Comments and Changes.

III. Basis and Purpose

    The legal basis for this rule is found in 46 U.S.C. 2110. That 
section provides that the Secretary of the Department in which the 
Coast Guard is operating (Secretary) shall establish a fee or charge 
for a service or thing of value that is provided to the recipient or 
user of that service. The Secretary is empowered in 46 U.S.C. 2104 to 
delegate the authorities in 46 U.S.C. Subtitle II to the Coast Guard. 
The Secretary exercised that delegation authority for fees in 
Department of Homeland Security Delegation No. 0170.1(92)(a).
    In establishing these fees, we are required to use the criteria 
found in 31 U.S.C. 9701. Under this provision the fees must be fair, 
and must be based on the costs to the government, the value of the 
service or thing to the recipient, and the public policy or interest 
served (see 31 U.S.C. 9701(b)).
    The purpose of this rule is to increase the annual Certificate of 
Documentation (COD) renewal fee collections so that the fees we charge 
more accurately reflect the actual costs to the Coast Guard of 
providing the annual documentation renewal services. By doing so, we 
will comply with the law and continue to provide documentation services 
by charging fair-value user fees.

IV. Background

    Section 10401 of the Omnibus Budget Reconciliation Act of 1990 
(Pub. L. 101-508, Nov. 5, 1990, 104 Stat. 1388), codified at 46 U.S.C. 
2110, requires that the Coast Guard establish user fees for Coast Guard 
vessel documentation services. One of the vessel documentation services 
the Coast Guard provides is renewal of endorsements upon a COD. A COD 
is required for the operation of a vessel in certain trades, serves as 
evidence of vessel nationality, and permits owners of vessels to 
benefit from preferred mortgages (46 CFR 67.1). An Endorsement means an 
entry that may be made on a COD, and, except for a recreational 
endorsement, is conclusive evidence that a vessel is entitled to engage 
in a specified trade (46 CFR 67.3).
    The Coast Guard sets fees at an amount calculated to achieve 
recovery of the costs of providing the service, in a manner consistent 
with the general user-charges principles set forth in OMB Circular A-
25. Under that OMB Circular, each recipient should pay a reasonable 
user charge for Federal Government services, resources, or goods from 
which he or she derives a special benefit, at an amount sufficient for 
the Federal Government to recover the full costs of providing the 
service, resource, or good (see OMB Circular A-25, sec. 6(a)(2)(a)).
    We last promulgated our user fees for vessel documentation services 
on November 15, 1993 (58 FR 60256), found at 46 CFR part 67, subpart Y-
Fees. The fees reflect the Coast Guard's program costs for 1993, with 
the cost of providing annual COD renewals included as part of overhead 
costs. Since then, the renewal costs have increased. The existing fees 
do not cover the operating and overhead costs associated with our 
vessel documentation and recording activities under 46 U.S.C. chapters 
121 and 313.
    The COD renewal fee will more accurately reflect the Coast Guard's 
current operating and overhead costs associated with providing this 
discrete set of services. While we previously included the cost of 
providing annual COD renewals as part of its overhead costs, the fees 
collected in relation to these costs do not nearly cover our operating 
and overhead costs associated with providing annual COD renewal 
services. Therefore, we will break out and separately charge an annual-
renewal fee of $26 (shown in Table 67.550--Fees) to cover the cost of 
providing the required annual COD renewal services. The Coast Guard's 
fiscal year 2010 review of vessel documentation user charges, ``Vessel 
Documentation Biennial User Fee Review,'' recommended establishment of 
an annual fee for COD renewals. The Biennial User Fee Review is 
available in the docket as indicated under ADDRESSES. In accordance 
with our statutory obligations and this

[[Page 47017]]

recommendation, we proposed to break out and separately charge an 
annual renewal fee of $26 (shown in Table 67.550--Fees) to cover the 
cost of providing the required annual COD renewal services. After 
reviewing the comments, as discussed below, this rule adopts the 
proposed renewal fee without change.
    The Biennial User Fee Review also recommended establishment of a 
fee for resubmitted requests for services such as applications, 
determinations, waivers, etc. We elected not to pursue the latter 
recommendation at this time, but will consider this fee in future 
studies and possibly in future rulemaking actions. Presently, we charge 
several other fees associated with vessel documentation and we 
anticipate that further review (as required by OMB Circular A-25) of 
these fees and the cost of service will result in additional proposed 
adjustments to reflect changes in cost and provision of services. Any 
of these additional proposed adjustments would be the subject of a 
separate rulemaking.

V. Discussion of Comments and Changes

    Currently, the Coast Guard provides CODs to 265,000 vessels 
registered in the United States, with average annual renewals issued to 
235,000 vessels. The Coast Guard received 2,720 responses to the NPRM, 
with a total of 4,943 discrete comments, ranging in issue from general 
support to alternative ways to impose the fee and questions about the 
fee structure. We grouped the comments into 7 categories of concern, 
which encompass 45 separate issues. Below, we summarize these 
categories and the Coast Guard's response to them. No public meeting 
was requested and none was held.
    Eight comments submitted were unclear or duplicate comments, 
however because they were accompanied by other comments that were 
categorized, we were able to respond to at least part of the 
commenter's concerns. We received one submission where the commenter 
claimed that he already pays the Coast Guard $27.50 for an annual PIN 
fee. We thank the commenter for his submission, but we are not sure 
about the fee to which he refers. He also worded his comment such that 
it does not appear he has documented his vessel. Only one other 
submission couldn't be categorized, where the commenter stated he 
``didn't care'' because his vessel was not documented, but followed up 
with the statement that he still paid an annual fee of about $26 to 
enter the United States from Canada each summer. The Coast Guard thanks 
these commenters for their submissions, but we have no response, as 
these are outside of the scope of this rulemaking.

A. General Support

    Many commenters (536) responded positively to the proposed rule, 
including 459 comments in support of the proposed rule and 77 comments 
that praised the Coast Guard's work. The Coast Guard thanks those 
commenters for their supportive comments.

B. General Non-support

    Nearly 1,500 (1499) comments expressed disapproval of the proposed 
rule. Many (228) wrote that they would no longer document their vessel 
if the rule became final. A further 1,271 referred to the user fee as 
the imposition of a new ``tax'' on the boating community. The Coast 
Guard appreciates this feedback and would like the opportunity to 
clarify the difference between imposing a tax versus a user fee.
    First, a user fee is designed to defray the costs of a regulatory 
activity (or government service), while a tax is designed to raise 
general revenue. Second, a true user fee must be proportionate to the 
necessary costs of the service, whereas a tax may not be. Third, a user 
fee is charged for requested services, whereas a tax is not. The 
discussion in the Regulatory Analysis will expand on the costs of the 
Coast Guard providing the COD service, and demonstrate how the new fee 
will be proportionate to the cost of providing the service.

C. Fee Components

    The Coast Guard received 412 comments related to the components of 
the fee and how the fee was calculated. Many commenters (202) suggested 
that the fee was not reflective of the cost of providing the service. 
Others (140) suggested that the initial fee paid for documentation was 
sufficient for service costs for the life of the vessel. Several 
commenters (55) asked what, if any, new benefits would be provided that 
required an additional fee. Only 13 commenters suggested that the fee 
was too low.
    The Omnibus Budget Reconciliation Act of 1990 (46 U.S.C. 2110) 
requires the Coast Guard to charge a fee for services but limits 
charges to no more than the overall cost of program. The fee 
calculations are based on the full cost of providing the service. The 
cost methodology, including process and overhead costs used in the 
calculation, is available in the docket.
    Each service provided for vessel documentation carries associated 
costs that are considered in that fee. The initial application fee 
covers that service only; the renewal fee covers services incurred 
while issuing the renewal and maintaining the information supporting 
the document.
    The Coast Guard recognizes that Federal vessel documentation 
confers many financial benefits on the vessel owner. However, there are 
no new benefits as a result of the renewal fee. The renewal fee is only 
necessary to cover the costs of providing the service as noted in the 
previous paragraph.
    One commenter suggested that there would be extra costs associated 
with Coast Guard boardings to enforce the fee. The Coast Guard does not 
charge fees for boardings nor conduct boardings to enforce fees. The 
fee discussed in this rule is based on the cost to the Coast Guard for 
issuing the renewal. One commenter suggested the Coast Guard add a lien 
review to the annual renewal. The Coast Guard disagrees with the idea 
of implementing a lien review. A lien review is a separate process not 
connected with annual renewal of endorsements on a COD.

D. Alternatives Suggested

    The Coast Guard received 886 comments recommending alternative ways 
to charge for vessel documentation renewal services. Among those, the 
most frequent (243) comments suggested that the Coast Guard charge for 
vessel documentation renewals only under certain circumstances, such as 
if changes are made to the documentation or if renewals are late (late 
fees). Additional commenters within this grouping proposed making the 
COD a permanent document. By regulation, CODs expire one year after 
issuance, regardless of whether or not there are any changes in 
information. Similar to current motor vehicle registration renewal 
processes, (in that an owner must pay to obtain a valid registration, 
regardless of whether any change to information is necessary), valid 
documents must be obtained in order to legally operate vessels.
    Several commenters also suggested that the Coast Guard add the cost 
of the renewal service to existing fees or pay for the service through 
taxes. For example, we received 84 comments that suggested we increase 
the initial documentation fee, instead of charging the renewal fee. We 
also received seven comments that suggested the Coast Guard combine 
these fees with the United States Customs and Border Protection decal 
fees, but that vessel owners should not have to do both.

[[Page 47018]]

Another seven comments suggested the Coast Guard recoup costs from fuel 
    The Coast Guard is required to charge a cost-based fee for all 
vessel documentation services provided. Renewal of endorsements on a 
COD is a service that incurs ongoing costs. Charging a separate fee for 
renewals allows the Coast Guard to fairly distribute those costs and 
allows flexibility to ensure the costs are recouped over the entire 
period of ownership. As discussed earlier taxes and user fees have 
separate purposes, user fees are charged for specific services, using 
taxes such as a fuel tax to cover COD expenses would create inequities 
by causing some boat owners to pay (via fuel charges) for services (COD 
renewals) that they did not use. Additionally, because the COD renewals 
are a separate and distinct effort from the Customs and Border 
Protection decal issuance, these fees cannot be combined.
    Many commenters (91) suggested that the Coast Guard provide 
discounted rates for senior citizens, Auxiliary members, and non-profit 
organizations. While we understand the desire to provide a reduced 
rate, the current user fee covers the actual cost of processing a 
renewal; reducing fees for any one group would shift the cost to 
another group and this would not meet the fairness requirement of 31 
U.S.C. 9701.
    Other commenters suggested that documentation of recreational 
vessels be conducted by States. For example, 89 commenters suggested 
the Coast Guard do away with Federal COD and instead have States 
perform the service, or commented that they should not have to pay both 
Federal and State fees. One hundred ten commenters suggested that the 
Coast Guard charge States for use of the information the Coast Guard 
collects. We understand some owners do not want to pay both Federal and 
State fees; however, holding a valid Federal COD confers additional 
benefits beyond State registration. Furthermore, it is optional for 
recreational vessel owners. Recreational vessel owners are not required 
to request this service or to hold a Federal COD.
    Forty-eight comments suggested that renewal fees apply only to 
commercial vessel owners. Obtaining a COD is already optional for 
recreational vessel owners. However, when the option to obtain a COD 
renewal is exercised, the cost of processing renewal CODs is the same, 
regardless of whether the vessel is operating with a commercial or 
recreational endorsement.
    The Coast Guard also received a variety of comment submissions 
(197) that decried government size and waste and asserted the need for 
government spending cuts. Another 10 commenters suggested the Coast 
Guard privatize or outsource CODs. We note these comments, however they 
fall outside of the scope of the rulemaking. As noted, the Coast Guard 
provides this service and is required to charge a fee for incurred 
costs. The Coast Guard has and continues to minimize the costs and 
charges to provide this service.

E. Mechanics

    The Coast Guard received 1,316 comments regarding the 
implementation of the new fee. The majority of these comments suggested 
the Coast Guard institute a multiyear renewal option program (757) and 
establish online payment capabilities (288). Others inquired about 
future adjustments to the fee. In particular, 199 commenters consider 
the proposed $26 fee too high, with many worried that the fee will 
continue to increase. Several commenters (30) queried if the fee could 
be determined by the class, size or value of the vessel. Another 29 
commenters questioned the need to document vessels, indicating they had 
been forced into it.
    The Coast Guard has provided annual renewals of endorsements on 
CODs to reduce the risk of maintaining outdated information and in 
response to vessel owner needs to maintain preferred mortgage status. 
The Coast Guard understands the efficiencies of multiyear renewals and 
will consider this in a future rule making. It cannot be implemented 
currently since this will require changes to processes, information 
systems, budgets, regulations and perhaps laws.
    Currently, the Coast Guard offers online payment options for 
certain services, and, along with other Federal agencies, is looking 
for ways to expand and improve this service. The Coast Guard will 
continue to work to find efficiencies to reduce costs incurred and 
minimize fees charged. As processes, automation, information systems, 
and costs change, future adjustments of this fee will be made through 
regulation and based on the cost of providing the service.
    One commenter requested to know when the fee would start. This 
regulation will become effective 90 days after the date of publication, 
on the date specified in the DATES section of this document. Therefore, 
the fees will start no earlier than 90 days after the date of 
publication of this regulation.
    One commenter requested information on any requirements for renewal 
when the vessel's COD is ``on deposit.'' Currently a COD on deposit 
does not require an annual renewal. This will not change as a result of 
this rulemaking. This fee will apply only to renewals.
    Two commenters requested clarification on endorsements and 
exemptions. These issues are beyond the scope of this rule. The 
respondents may contact the Coast Guard National Vessel Documentation 
Center (NVDC) directly for clarification. Contact and other helpful 
information is available through the NVDC Web site: http://www.uscg.mil/nvdc/default.asp or by calling 1-800-799-8362.
    Two commenters suggested the Coast Guard refund fees when 
relinquishing CODs. This is not possible because the fee is being 
charged for services already performed at the time of renewal.
    Four commenters suggested that all boaters, not just those holding 
a document, pay the fee. This is not possible because the Coast Guard 
may only charge a fee for requested services. The request for service 
is voluntary, not all boaters request the service. Therefore the Coast 
Guard has no authority to charge all boaters.
    Four commenters asked about enforcement of renewing a COD. Renewal 
of a COD is a voluntary request. If a COD is not properly renewed, it 
expires and with it, the benefits conferred also expire.

F. Fee Use

    The Coast Guard received 213 comments with suggestions or questions 
about how the fee should or would be used. Most of these comments (114) 
addressed how the fees would be used and the benefits to the owner. 
Many included suggestions about how the fees should be used for 
waterway maintenance (21), boating services and safety (23), and to 
improve the Great Lakes (1). Thirty seven commenters indicated that 
they would be supportive if the fees go towards the Coast Guard only. 
There were eight comments inquiring whether the fees would go towards 
improving service, and five who viewed the documentation service 
renewal fee as unnecessary. Four commenters questioned whether the 
location of their vessel would influence the fees charged, because 
there is no Coast Guard presence where their boat is kept.
    The Coast Guard is limited by law as to how it may use the fees 
collected. Vessel documentation fees collected from commercial vessel 
owners are deposited in the general fund of the Treasury as offsetting 
receipts of the department in which the Coast Guard is operating and 
ascribed to the Coast

[[Page 47019]]

Guard activities. Vessel documentation fees collected from recreational 
vessel owners are used by the Coast Guard's NVDC to perform vessel 
documentation services for recreational vessel owners. Overall the fee 
collected through implementation of this rule is intended to provide 
additional funds to the NVDC for improvements to documentation service. 
The Coast Guard understands that the current backlog of requests for 
service particularly for recreational vessels is excessive and intends 
to apply the available fees collected from renewals to correct this 
    The fee for renewing a COD will be the same regardless of the 
location of the vessel. There is no difference in cost associated with 
location when renewing a COD because the same documentation services 
are provided regardless of location of the vessel. Although some 
endorsements are requested for specific commercial purposes, the 
locations that a vessel may be used other than for that commercial 
purpose is not limited by the COD issued.

G. Government Benefits

    The Coast Guard received 71 comments regarding the benefits the 
government would gain with the proposed user fee. We received 35 
comments about the expected benefits to the government. A further 26 
comments cited the Federal government's ability to contract with 
documented vessel owners for the use of their vessels during certain 
national emergencies. The respondents suggested that this resulted in a 
benefit to the government and should be considered when setting a fee 
for renewing a COD. Ten commenters suggested public safety would be 
negatively impacted, as some owners would choose not to hold or renew 
Federal documents.
    For the Federal government to use a documented vessel in times of 
emergency the vessel must be acquired under a mutually agreed upon 
contract between the Federal government and the vessel owner. Because 
the vessel owner would be paid for the use of the vessel this was not a 
factor in setting the fee. The Coast Guard based the documentation fee 
on the cost of providing the service, not on benefits received or given 
by either the government or the vessel owner. The purpose of vessel 
documentation is to provide the vessel owner with specific benefits and 
is not intended as a public safety measure.

H. Final Rule

    After considering all comments, the Coast Guard is finalizing the 
user fee as it was proposed. The Coast Guard appreciates all of the 
comments received. The Coast Guard is publishing the final rule without 
changing the requirements stated in the NPRM.

VI. Regulatory Analyses

    We developed this final rule after considering numerous statutes 
and Executive Orders (E.O.s) related to rulemaking. Below, we summarize 
our analyses based on these statutes or E.O.s.

A. Regulatory Planning and Review

    E.O.s 12866 (``Regulatory Planning and Review'') and 13563 
(``Improving Regulation and Regulatory Review'') direct agencies to 
assess the costs and benefits of available regulatory alternatives and, 
if regulation is necessary, to select regulatory approaches that 
maximize net benefits (including potential economic, environmental, 
public health and safety effects, distributive impacts, and equity). 
E.O. 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This rule is not a significant regulatory action under 
section 3(f) of E.O. 12866 as supplemented by E.O. 13563, and does not 
require an assessment of potential costs and benefits under section 
6(a)(3) of E.O. 12866. The Office of Management and Budget (OMB) has 
not reviewed it under E.O. 12866. Nonetheless, we developed an analysis 
of the costs and benefits of the rule to ascertain its probable impacts 
on industry.
    We received no comments that would alter our assessment of the 
impacts presented in the NPRM. Further, we have found no additional 
data or information that would change our assessment of the impacts 
presented in the NPRM. As such, we have adopted the analysis in the 
NPRM for this rule as final. A summary of the analysis follows:
    The cost to industry \1\ outlined in this final rule would 
represent a transfer payment from the public to the government to 
offset the costs incurred by the U.S. Coast Guard to provide COD 
renewal services to those that paid. Transfer payments do not affect 
total resources available to society. The total social cost to society 
as a result of this final rule is zero. The following table summarizes 
the costs and benefits of this rule.

    \1\ The term ``industry'' in this context, refers to 
recreational, commercial and government vessel owners.

                 Table 1--Costs and Benefits of the Rule
                 Category                       Estimate  (millions)
                             Industry Costs
Annual Monetized Costs (undiscounted        $6.1
 rounded values).
10-year Present Value Monetized Costs       $42.9
 (rounded values, 7% discount rate,
 discounting begins in first year).
                           Government Benefits
Annual Monetized Benefits (undiscounted     $6.1
 rounded values).
10-year Present Value Monetized Benefits    $42.9
 (rounded values, 7% discount rate,
 discounting begins in first year).
Qualitative Benefits......................  This rule would allow the
                                             Federal Government to
                                             recoup its costs for
                                             administering COD renewals,
                                             enabling the Coast Guard to
                                             continue offering these
                                             services to the public.

    As discussed above, this final rule requires an annual renewal fee 
for endorsement(s) on the CODs. This fee, which is based on the costs 
that the Federal Government currently incurs to process renewals, along 
with additional costs due to increased need in labor and capital costs, 
will cost each vessel owner $26 per renewal.
    The renewal fee that will be charged to the public under this final 
rule is based on the full cost to the Federal Government to provide 
this service. The renewal fee will allow the Federal Government to 
recoup those costs. Specifically, the purpose of the renewal fee is to 
ensure that this service is self-sustaining. As such, the renewal fee 
was determined by dividing the full, annual cost of providing the 
service by the average number of renewals over the past 5 years. The 
full, annual cost of providing this service includes all current costs, 
such as labor, capital, and overhead, plus additional labor and capital 
costs that will be required to process the additional fees collected.
    In 2011, we conducted a comprehensive study to more accurately

[[Page 47020]]

calculate the costs involved with the annual COD renewal process. Our 
``Full Cost Study for Renewal of Endorsements on Certificates of 
Documentation'' focuses on the cost of annual COD renewals, updates the 
cost figures, and includes costs for the additional activities required 
to process collections. The cost study is available in the docket where 
indicated under the ADDRESSES section in the preamble.
    The study indicated that the average number of annual renewals for 
2006-2010 was 235,000. The renewals accounted for a subset of the 
approximately 65,000 commercial and 200,000 recreational vessels 
documented by the Coast Guard in 2010. Under this final rule, we 
anticipate that the cost for processing annual COD renewals and their 
associated fees will be approximately $6 million, as shown in Table 2. 
The full cost to provide the annual renewal service shown in Table 2 
includes directly traced personnel costs calculated from timed 
activities, allocated personnel costs based on costs associated with 
personnel directly involved and in supporting roles, and other costs 
such as operating and administrative costs, facilities, and information 
systems costs.
    The COD renewal and collection services are provided with enough 
frequency that we were able to reliably estimate the average time 
involved. We calculated personnel costs based on an hourly rate that 
represents the cost per hour or part thereof per employee. The employee 
cost is based on hourly rates found in COMDTINST 7310.1M, Coast Guard 
Reimbursable Standard Rates, available in the docket where indicated 
under ADDRESSES. The NVDC anticipates that the method for collecting 
fees will be similar to the current process for late renewals, with 
some additional activities for processing the payment (collections) in 
accordance with U.S. law and Federal guidance.\2\ The total annual cost 
to operate the NVDC annual COD renewal program and collect fees is 
approximately $6 million; the final fee reflects this cost, and should 
close the current gap identified in the Biennial User Fee Review.

    \2\ The Department of Treasury publishes regulations and 
guidance for federal agency management of receipts (31 CFR part 206 
and the Treasury Financial Manual (www.fms.treas.gov/tfm/index.html)).

    To calculate the annual renewal fee, we divided the total annual 
costs associated with the renewal program by the average number of 
annual renewals. We included directly traced personnel costs for those 
activities in a timed study. These activities represent a small, mostly 
automated portion of the full process. However, we could not include 
other direct and indirect costs, such as allocated personnel costs, in 
the time study due to the complexity of the activities. Some of these 
costs are based on additional steps necessary to process applications 
with payments, which, at least initially, will be a manual rather than 
automated process. Other costs are non-personnel operating and are also 
allocated costs. The allocated cost is based on a percent of standard 
personnel costs for positions based on relative volume of renewals 
produced. Table 2 shows these costs.

                                      Table 2--Cost Inputs for Renewal Fee
                                                                             Average number of
                                                             Total cost      renewals per year  Cost per renewal
Directly traced Personnel Costs.........................        $2,044,500             235,000             $8.70
Allocated Personnel Costs...............................         1,695,799             235,000              7.21
Other Costs.............................................         2,157,209             235,000              9.17
    Total...............................................         5,898,508             235,000             25.08
Note: These numbers may not total due to rounding.

    This total cost to the Coast Guard is shown by the following 
equation: the total cost divided by the average number of renewals 
($5,898,508/235,000 CODs = $25.08/COD), which results in an annual 
renewal fee of $25.08, which is rounded up to the next dollar, $26. 
This allows us to recover the full cost of providing this service.
    The following figure summarizes the annual cost estimate of the 
final rule.
Figure 1. Total Annual Industry Costs (Undiscounted)
Total Annual Cost = Renewal Fee x Average Number of Annual Renewals = 
$6.1 Million = $26 x 235,000 renewals.\3\

    \3\ Value may not total due to rounding.

    This final rule is estimated to cost industry $42.9 million over 
10-years discounted at a 7 percent rate. Table 3 summarizes the total 
10-year cost to industry.

                 Table 3--Industry Cost From Renewal Fee
                  Year                     Undiscounted         7%
1.......................................      $6,110,000      $5,710,280
2.......................................       6,110,000       5,336,711
3.......................................       6,110,000       4,987,580
4.......................................       6,110,000       4,661,290
5.......................................       6,110,000       4,356,346
6.......................................       6,110,000       4,071,351
7.......................................       6,110,000       3,805,001
8.......................................       6,110,000       3,556,076
9.......................................       6,110,000       3,323,435
10......................................       6,110,000       3,106,014
    Total...............................      61,100,000      42,914,083

[[Page 47021]]

Annualized..............................  ..............       6,110,000

    This final rule provides benefits to both the Federal Government 
and vessel owners. Because the Coast Guard has not collected a fee for 
COD renewal in the past, the estimated $6.1 million in revenue that the 
government will collect from the fee will enable the Coast Guard to 
continue offering these services to the public, which will allow 
private and commercial vessel owners to continue to benefit from the 
program. These benefits include, but are not limited to: obtaining 
documentation for commercial use of vessels, obtaining private 
mortgages from financial lenders, and ability to travel internationally 
with evidence of vessel ownership for both private and commercial 
vessel owners.
    When formulating the proposal, which is now being finalized, we 
also considered an alternate methodology to calculate the annual COD 
renewal fee. We derived this alternative fee by taking the average of 
the fees charged by each State (for vessel registration) on an annual 
basis. The average fee, on an annual basis, for the 50 States and the 
District of Columbia is approximately $42. This average, multiplied by 
the number of annual renewals, yields a value of approximately $10 
million. We rejected this alternative because the annual collections 
under this methodology would exceed the Federal Government cost of 
providing the service, and the full-cost results provided a more 
reasonable fee.

B. Small Entities

    Under the Regulatory Flexibility Act, 5 U.S.C. 601-612, we have 
considered whether this final 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 dominant in their 
fields, and governmental jurisdictions with populations of less than 
    In the NPRM, we reviewed size and ownership data of affected 
entities by using data provided by the NVDC and public and proprietary 
data sources for company revenue and employee size data. We determined 
that there are approximately 18,164 entities owning 65,534 commercial 
vessels that would be impacted by this rule.\4\ These entities include 
businesses and government jurisdictions. Privately-owned recreational 
vessels comprise the remaining vessel population and are not included 
in this regulatory flexibility analysis because these vessels are owned 
by individuals whom are not considered to be small entities for the 
purpose of the Regulatory Flexibility Act.

    \4\ Data provided by the National Vessel Documentation Center.

    We did not receive any public comments following the issuance of 
the NPRM that would alter our analysis of the economic impact that this 
rule would have on small entities. Further, we found no additional data 
or information that would change our findings presented in the NPRM. As 
such, we have adopted our findings from the NPRM for this final rule. A 
summary of the analysis presented in the NPRM follows.
    To conduct our analysis, we chose a random sample of 400 affected 
entities.\5\ We were able to find revenue or employee size data for 88 
of these entities using Web sites, such as MANTA and ReferenceUSA. This 
included 83 businesses and 5 government jurisdictions. We did not find 
any small not-for-profit organizations that are independently owned and 
operated and are not dominant in their fields.

    \5\ A sample size of 400 provides a 95 percent confidence level 
at a confidence interval of 5.

    To determine the size of the 83 businesses with available revenue 
or employee size data, we used the North American Industry 
Classification System (NAICS) codes to identify the line of business 
for the entities in our sample and compared the data found to the small 
business size standards determined by the Small Business Administration 
(SBA).\6\ Of the entities with data, 70 are considered small by SBA 
size standards and 13 exceeded SBA size standards for small businesses. 
We also assume that those entities without data available are small.

    \6\ SBA has established a Table of Small Business Size 
Standards, which is matched to the North American Industry 
Classification System (NAICS) industries. A size standard, which is 
usually stated in number of employees or average annual receipts 
(``revenues''), represents the largest size that a business 
(including its subsidiaries and affiliates) may be to remain 
classified as a small business for SBA and Federal contracting 
programs. See http://www.sba.gov/size.

    To determine the size of the 5 affected government jurisdictions, 
we used the definition from the Regulatory Flexibility Act section 
601(5), which classifies small government jurisdictions as 
jurisdictions with a population of less than 50,000. Of the 5 
government jurisdictions, one has a population of less than 50,000, and 
would therefore be considered small.
    As such, we estimate that more than 95 percent of all entities that 
would be affected by this final rule are small entities. We do not 
anticipate a significant economic impact to these small entities as a 
result of this final rule. This rule would require that all entities 
renewing the endorsements on their COD pay an annual renewal fee of $26 
per documented vessel. This final rule impacts a diverse set of 
industry sectors with a wide range of fleet sizes and revenues. Table 4 
provides example data for three affected small businesses that 
represent the upper, lower, and median values for revenue, fleet size, 
and cost found within the sample population. Our research shows that 
those entities with the largest fleets, and thus a greater incurred 
cost, also have the highest reported revenue in our sample.

               Table 4--Example Revenue, Vessel Count, and Cost for Three Affected Small Entities
                                                                 Small entity     Small entity     Small entity
                           Category                              representing     representing     representing
                                                                 lower bound         median        upper bound
Revenue per Entity...........................................          $15,000         $336,000    $12,000,000 *
Vessel Count.................................................                1                2                6

[[Page 47022]]

Costs per Entity.............................................              $26              $52             $156
Percent Impact of Renewal Fees on Revenues...................        Less than        Less than    Approximately
                                                                          0.2%            0.02%          0.0013%
* Note: The small entity with this revenue is classified under NAICS 336611, Ship Building and Repairing, and
  has an SBA size standard of 1,000 employees. This means entities in this industry with 1,000 or fewer
  employees would be considered small. This entity has 54 employees and was determined small even though its
  annual revenues are $12 million.

    By multiplying the renewal fee by the number of documented vessels 
owned by each entity analyzed from our sample, we were able to 
calculate the cost per entity of this final rule. We then used that 
cost to determine a percentage of revenue impact on the entity by 
dividing the total cost per entity by the revenue. This analysis showed 
that the impact from this final rule would be less than 1 percent of 
annual revenue for small businesses in the sample.
    The one small government jurisdiction in our sample operated three 
vessels that would require COD renewals for a total of $78 in annual 
COD renewal fees. Given that the cost to this small government 
jurisdiction is only $78, we expect this final rule would not cause a 
significant economic impact.
    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.

C. Assistance for Small Entities

    Under section 213(a) of the Small Business Regulatory Enforcement 
Fairness Act of 1996, Public Law 104-121, we offered to assist small 
entities in understanding the rule so that they could better evaluate 
its effects on them and participate in the rulemaking. If the final 
rule will affect your small business, organization, or governmental 
jurisdiction, and you have questions concerning its provisions or 
options for compliance, please consult Ms. Mary Jager, CG-DCO-832, 
Coast Guard; telephone 202-372-1331, email Mary.K.Jager@uscg.mil. The 
Coast Guard will not retaliate against small entities that question or 
complain about this final rule or any policy or action of the Coast 
    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 

D. Collection of Information

    This final rule calls for no new collection of information under 
the Paperwork Reduction Act of 1995, 44 U.S.C. 3501-3520.

E. Federalism

    A rule has implications for federalism under Executive Order 13132, 
Federalism, if it has a substantial direct effect on the States, or on 
the relationship between the national government and the States, or on 
the distribution of power and responsibilities among the various levels 
of government. We have analyzed this final rule under that Order and 
have determined that it is consistent with the fundamental federalism 
principles and preemption requirements described in Executive Order 
13132. Our analysis is explained below.
    As explained above, 46 U.S.C. 2110 states that ``the Secretary 
shall establish a fee or charge for a service or thing of value 
provided by the Secretary under this subtitle.'' In doing so, it was 
the intent of Congress to grant the Coast Guard, via delegation from 
the Secretary, the exclusive authority to establish user fees for Coast 
Guard vessel documentation services. The Coast Guard has exercised its 
authority in this rulemaking by establishing annual fees for renewals 
of endorsements upon the Certificate of Documentation. Therefore, the 
establishment of user fees for Coast Guard vessel documentation 
services is within a field foreclosed from state or local regulation. 
In light of the analyses above, this final rule is consistent with the 
principles of federalism and preemption requirements in Executive Order 

F. 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 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 (adjusted for 
inflation) or more in any 1 year. Though this final rule will not 
result in such an expenditure, we do discuss the effects of this final 
rule elsewhere in this preamble.

G. Taking of Private Property

    This final rule will not cause a taking of private property or 
otherwise have taking implications under E.O. 12630 (``Governmental 
Actions and Interference with Constitutionally Protected Property 

H. Civil Justice Reform

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

I. Protection of Children

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

J. Indian Tribal Governments

    This final rule does not have tribal implications under E.O. 13175 
(``Consultation and Coordination with Indian Tribal Governments''), 
because it does 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.

K. Energy Effects

    We have analyzed this final rule under E.O. 13211 (``Actions 
Concerning Regulations That Significantly Affect Energy Supply, 
Distribution, or Use''). We have determined that it is not a

[[Page 47023]]

``significant energy action'' under that E.O. because it is not a 
``significant regulatory action'' under E.O. 12866 and is not likely to 
have a significant adverse effect on the supply, distribution, or use 
of energy.

L. Technical Standards

    The National Technology Transfer and Advancement Act, codified as a 
note to 15 U.S.C. 272, directs agencies to use voluntary consensus 
standards in their regulatory activities unless the agency provides 
Congress, through OMB, with an explanation of why using these standards 
would be inconsistent with applicable law or otherwise impractical. 
Voluntary consensus standards are technical standards (e.g., 
specifications of materials, performance, design, or operation; test 
methods; sampling procedures; and related management systems practices) 
that are developed or adopted by voluntary consensus standards bodies.
    This final rule does not use technical standards. Therefore, we did 
not consider the use of voluntary consensus standards.

M. Environment

    We have analyzed this rule under Department of Homeland Security 
Management Directive 023-01 and Commandant Instruction M16475.lD, which 
guide the Coast Guard in complying with the National Environmental 
Policy Act of 1969 (42 U.S.C. 4321-4370f), and have concluded that this 
action is one of a category of actions that do not individually or 
cumulatively have a significant effect on the human environment. This 
rule is categorically excluded under section 2.B.2, figure 2-1, 
paragraph 34(a) of the Instruction. This rule involves regulations that 
are editorial or procedural. An environmental analysis checklist and a 
categorical exclusion determination are 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 amends 
46 CFR part 67 as follows:


1. The authority citation for 46 CFR part 67 continues to read as 

    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; Department of Homeland Security Delegation No. 0170.1.

Sec.  67.500  [Amended]

2. In Sec.  67.500, remove paragraph (b) and redesignate paragraphs (c) 
through (e) as paragraphs (b) through (d).

3. Add Sec.  67.515 to read as follows:

Sec.  67.515  Application for renewal of endorsements.

    An application fee is charged for annual renewal of endorsements on 
Certificates of Documentation in accordance with subpart L of this 

4. Revise Sec.  67.517 to read as follows:

Sec.  67.517  Application for late renewal.

    In addition to any other fees required by this subpart, including a 
renewal fee, a fee is charged for a late renewal in accordance with 
subpart L of this part.

5. In Sec.  67.550, revise Table 67.550 to read as follows:

Sec.  67.550  Fee table.

* * * * *

                           Table 67.550--Fees
           Activity                  Reference                Fee
    Initial Certificate of     Subpart K............             $133.00
    Exchange of Certificate    ......do.............               84.00
     of Documentation.
    Return of vessel to        ......do.............               84.00
    Replacement of lost or     ......do.............               50.00
     mutilated Certificate of
    Approval of exchange of    ......do.............               24.00
     Certificate of
     Documentation requiring
     mortgagee consent.
    Trade endorsement(s):
        Coastwise endorsement  Subpart B............               29.00
        Coastwise Boaters      46 CFR part 68.......               29.00
        Fishery endorsement..  ......do.............               12.00
        Registry endorsement.  ......do.............                none
        Recreational           ......do.............                none
Note: When multiple trade endorsements are requested on the same
 application, the single highest applicable endorsement fee will be
 charged, resulting in a maximum endorsement fee of $29.00.
    Evidence of deletion from  Subpart L............               15.00
    Renewal fee..............  ......do.............               26.00
    Late renewal fee.........  ......do.............            \1\ 5.00
    Original build evidence..  Subpart F............               15.00
    Bill of sale eligible for  Subpart E............               15.00
     filing and recording.
Miscellaneous applications:
    Wrecked vessel             Subpart J............              555.00
    New vessel determination.  Subpart M............              166.00
    Rebuild determination--    ......do.............              450.00
     preliminary or final.
Filing and recording:
    Bills of sale and          Subpart P............            \2\ 8.00
     instruments in nature of
     bills of sale.
    Mortgages and related      Subpart Q............            \2\ 4.00
    Notice of claim of lien    Subpart R............            \2\ 8.00
     and related instruments.
Certificate of compliance:
    Certificate of compliance  46 CFR part 68.......               55.00
    Abstract of Title........  Subpart T............               25.00
    Certificate of ownership.  ......do.............              125.00

[[Page 47024]]

        Attachment for each    ......do.............               10.00
         additional vessel
         with same ownership
         and encumbrance data.
    Copy of instrument or      (\3\)                               (\3\)
\1\ Late renewal fee is in addition to the $26.00 renewal fee.
\2\ Per page.
\3\ Fees will be calculated in accordance with 6 CFR Part 5, Subpart A.

    Dated: August 6, 2014.
J.C. Burton,
Captain, U.S. Coast Guard, Director of Inspections and Compliance.
[FR Doc. 2014-18999 Filed 8-11-14; 8:45 am]