[Federal Register Volume 87, Number 108 (Monday, June 6, 2022)]
[Rules and Regulations]
[Pages 34175-34197]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-11995]


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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Part 187

[Docket No. USCG-2018-0160]
RIN 1625-AC28


Uniform Certificate of Title Act for Vessels

AGENCY: Coast Guard, DHS.

ACTION: Final rule.

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SUMMARY: The Coast Guard is changing its regulations for certifying a 
State's titling system for undocumented vessels to increase States' 
participation in the Vessel Identification System (VIS). This final 
rule allows States that have adopted the recommendations of the model 
Uniform Certificate of Title Act for Vessels to certify their titling 
provisions with the Coast Guard. Once certified and participating in 
the VIS, a State is able to confer preferred mortgage status on 
financial instruments that apply to undocumented vessels, which 
benefits the owners of those vessels. While many of the changes to the 
certification guidelines relate to the technical requirements of 
recording and maintaining titling documentation, the most significant 
change implements a system of ``branding'' (permanently marking) titles 
for vessels that have sustained structural damage. This will help 
prevent a process known as ``title washing,'' where severe vessel 
damage is concealed by transferring the title to a different State.

DATES: This final rule is effective July 6, 2022.

ADDRESSES: To view documents mentioned in this preamble as being 
available in the docket, go to https://www.regulations.gov, type USCG-
2018-0160 in the search box and click ``Search.'' Next, in the Document 
Type column, select ``Supporting & Related Material.''

FOR FURTHER INFORMATION CONTACT: For information about this document 
call or email W. Vann Burgess, Boating Safety Division, Program 
Management and Operations Branch (CG-BSX-21), Coast

[[Page 34176]]

Guard; telephone 202-372-1071, email [email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents for Preamble

I. Abbreviations
II. Basis and Purpose, and Regulatory History
III. Discussion of Comments
IV. Discussion of the Rule
V. Regulatory Analyses
    A. Regulatory Planning and Review
    B. Small Entities
    C. Assistance for Small Entities
    D. Collection of Information
    E. Federalism
    F. Unfunded Mandates
    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

BLA Boating Law Administrator
BLS Bureau of Labor Statistics
BSX U.S. Coast Guard's Office of Auxiliary and Boating Safety
CFR Code of Federal Regulations
DHS Department of Homeland Security
DOT Department of Transportation
FR Federal Register
HIN Hull identification number
MOA Memorandum of Agreements
NASBLA National Association of State Boating Law Administrators
NPRM Notice of proposed rulemaking
OMB Office of Management and Budget
OPM Office of Personnel Management
RA Regulatory analysis
Sec.  Section
UCC Uniform Commercial Code
UCOTA-V Uniform Certificate of Title Act for Vessels
ULC Uniform Law Commission
U.S.C. United States Code
VIS Vessel Identification System

II. Basis and Purpose, and Regulatory History

    The purpose of this rulemaking is to revise Coast Guard guidelines 
for State vessel titling systems so that they align with the Uniform 
Certificate of Title Act for Vessels (UCOTA-V). As discussed in more 
detail below, we expect that aligning Coast Guard guidelines with 
UCOTA-V will increase States' participation in the Vessel 
Identification System (VIS), thereby benefitting the owners of 
undocumented vessels by providing them access to preferred mortgages.
    The legal basis for this rulemaking is Title 46 of the United 
States Code (U.S.C.), Sections 2103, 12501(a), and 31322(d). Section 
2103 authorizes the Secretary of the department in which the Coast 
Guard is operating to issue regulations to carry out the provisions of 
Subtitle II, Vessels and Seamen, of Title 46 of the U.S.C., in which 
Section 12501(a) appears. Section 12501(a) requires the Secretary to 
establish a VIS relating to, among other things, the ownership of 
vessels titled under the law of a State. Finally, Section 31322(d) 
allows a mortgage that is filed, or ``perfected'' under State law, to 
be deemed ``a preferred mortgage'' if the Secretary certifies that the 
State titling system complies with the guidelines set forth in 46 
U.S.C. 13107. The Secretary's authority under these statutes has been 
delegated to the Coast Guard in Department of Homeland Security (DHS) 
Delegation No. 00170.1, Revision No. 01.2, paragraph (II)(92)(a) and 
(92)(h). Pursuant to that authority, the Coast Guard has promulgated 
regulations in 33 CFR 187 governing the certification of State laws to 
determine eligibility for preferred mortgages. Before publishing this 
final rule we published a notice of proposed rulemaking (NPRM) in the 
Federal Register (86 FR 52792, Sept. 22, 2021). That NPRM was entitled 
``Uniform Certificate of Title Act for Vessels,'' and proposed to amend 
33 CFR part 187.

III. Discussion of Comments

    The Coast Guard received seven comment submissions during the 60-
day comment period for our NPRM, which ended November 22, 2021.
    Four of the commenters supported the proposal to adopt the UCOTA-V 
model into the Code of Federal Regulations (CFR) at 33 CFR part 187, 
subpart D. The Uniform Law Commission (ULC), an organization dedicated 
to providing States with carefully conceived and nonpartisan uniform 
laws and the original drafters of UCOTA-V, strongly supports this final 
rule. The commission commented that the rule is crucial to consumer 
protection and will facilitate vessel financing, allowing vessel 
purchasers to obtain loans with lower interest rates. The Boat History 
Report, a website that helps its clients make informed watercraft 
purchasing decisions, noted that this final rule will provide greater 
transparency in the boating industry, promote title branding, and 
prevent damaged vessels from entering used vessel markets. The Maryland 
Department of Natural Resources commented that the adoption of this 
final rule will be the catalyst for reorganizing Maryland's disparate 
provisions governing vessel titling into a concise and orderly statute, 
which will be a notable benefit to the State's boat owners. Finally, 
the National Association of State Boating Law Administrators (NASBLA), 
a nonprofit organization dedicated to developing public policy for 
recreational boating safety, encourages approval of this final rule. 
NASBLA indicated that it believes this final rule will provide a 
consistent consumer protection measure that identifies vessels that 
have been deemed unsafe, preventing them from being sold without 
disclosure.
    The other three commenters, who represent marine financing 
institutions, expressed concerns that there may be an inconsistency in 
granting preferred mortgage status on titled watercraft and the 
provision of Sec.  187.324 that indicates ``the effect of perfection 
and non-perfection of a security interest and the priority of a 
perfected or unperfected security interest with respect to the rights 
of a purchaser or creditor, including a lien creditor, is governed by 
State law.''
    We do not believe there is any inconsistency. Whether or not a 
State enacts UCOTA-V, lien priority is determined under the Uniform 
Commercial Code (UCC) 9-322(a), which has been adopted in some fashion 
by all 56 States.\1\ This final rule will have no impact on the laws 
governing relative priority of multiple Article 9 security interests, 
which is currently governed by state law and still will be after the 
adoption of this final rule.
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    \1\ As used throughout this final rule, ``State'' means any of 
the 56 jurisdictions (50 States, the District of Columbia, American 
Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the U.S. 
Virgin Islands) that administer Coast Guard-approved recreational 
vessel numbering systems.
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    While there are some maritime liens whose priority status will be 
reduced by a security interest perfected through UCOTA-V, the Coast 
Guard sees this as an acceptable consequence. In 46 U.S.C. 12501(a), 
Congress directed the Secretary for the department in which the Coast 
Guard is operating to establish a VIS for the purposes of aiding law 
enforcement and organizing the owners of vessels. The Coast Guard has 
decided that incentivizing compliance with UCOTA-V through a preferred 
mortgage status best serves the American people, even if certain 
maritime lien holders are affected. Furthermore, the affected 
population had myriad opportunities to comment on the impacts of 
passing such a rule during the more than 2 years the ULC spent drafting 
UCOTA-V.\2\
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    \2\ An archive of the activities and deliberations of the ULC 
committee on UCOTA-V, including transcripts of all meetings, can be 
found at https://www.uniformlaws.org/viewdocument/committee-archive-1?CommunityKey=61fb3255-092e-4e91-982b-6fa1ae66fd82&tab=librarydocuments.
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IV. Discussion of the Rule

    For the reasons described above, this final rule revises subpart D 
of 33 CFR part 187 so that State titling laws modeled on UCOTA-V will 
meet the

[[Page 34177]]

certification requirements of subpart D. In addition, the final rule 
revises the applicable definitions section for part 187 located in 
subpart C. In subpart D, we replace the entire text of the existing 
subpart with new guidelines to accommodate States that adopt variants 
of the model code appropriate for their State commercial legal regimes. 
We are not adopting UCOTA-V in its entirety because some sections of 
UCOTA-V are not applicable to the Federal Government.
    For example, included in UCOTA-V is a ``savings clause'' provision 
(see section 28 of UCOTA-V). Because the execution of the savings 
clause is governed by State law applicable to vessel titling that 
existed prior to the adoption of UCOTA-V,\3\ there is no Federal 
interest or need to apply Federal oversight of the application of a 
savings clause. So long as vessels have been properly registered 
through the State, the savings clause provision found in section 28 of 
UCOTA-V has no bearing on the Coast Guard's regulatory regime. 
Therefore, we are not including UCOTA-V's savings clause provision 
within this final rule.
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    \3\ See the explanation contained in the table on page 57 of 
UCOTA-V which says: ``States will decide under existing state law 
how they will treat vessels that were previously titled under state 
law prior to adoption of UCOTA-V.'' Thus, previously existing State 
requirements do not bear on the titling issues that this final rule 
addresses.
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    Instead, we are adopting certification guidelines that incorporate 
UCOTA-V, but with a number of policy or stylistic changes so that the 
guidelines are flexible enough to allow for the variations in State law 
permitted by UCOTA-V.
    In addition to the savings clause provision in section 28, the 
Coast Guard is omitting the following sections of UCOTA-V that do not 
bear specifically on titling concerns. Because the execution of the 
savings clause would be governed by State law applicable to vessel 
titling that existed prior to the adoption of UCOTA-V, there is no 
Federal interest or need to apply Federal oversight of the application 
of a savings clause.
    Section 1, Short title. We are integrating the requirements of 
UCOTA-V into Coast Guard regulations, so we do not need to adopt the 
act's title.
    Section 4, Supplemental principles of law and equity. This 
provision concerns the interpretation principles of UCOTA-V and, while 
this is a general principle of the UCC, it is not needed for Coast 
Guard certification of a State's titling law.
    Section 8, Creation and cancellation of certificate of title, 
subsection (f). We are not incorporating subsection (f) of section 8 
because it is an optional provision for any State that ``provides a 
procedure for the office to follow before canceling a certificate of 
title. It is intended for those states whose public records or other 
law does not already provide a procedure that ensures all interested 
parties are notified in advance and given an opportunity to be heard.'' 
\4\
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    \4\ UCOTA-V, Section 8, Legislative Note, page 25.
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    Section 26, Uniformity of application and construction. This 
provision also concerns interpretation principles and is not needed for 
Coast Guard certification.
    Section 27, Relation to electronic signatures in global and 
national commerce act. This section describes the relation of a State's 
law to certain Federal statutes concerning electronic signature, which 
is not relevant in the certification of State titling law.
    Section 28, Savings clause. For the reasons discussed earlier in 
this section, the Coast Guard is not incorporating section 28.
    We are making a variety of stylistic changes and adding new 
definitions to clarify maritime nomenclatures. First, we keep the 
general numbering scheme of the text of UCOTA-V in regulatory text, 
replacing references to ``Section X'' with the appropriate citation to 
the equivalent regulatory section or paragraph. We also replace certain 
words such as ``shall'' with ``must,'' as provided by the Federal Plain 
Language Guidelines.\5\ Additionally, we replace references to ``the 
UCC'' or specific sections of the UCC with references to ``State law.''
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    \5\ See Federal Plain Language Guidelines, Rev. 1, (May 2011) on 
p. 25. These can be accessed at https://www.plainlanguage.gov/guidelines.
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    We provide a section-by-section discussion of the certification 
guidelines below.
    Section 187.7, What are the definitions of terms used in this part? 
We rename this section Definitions. We use most of the existing 
definitions within section 187.7 and add new definitions from section 2 
of UCOTA-V. If a definition from UCOTA-V differs from an existing 
regulatory definition (for example, the term ``documented vessel'' in 
UCOTA-V differs from the current definition in Sec.  187.7), we have 
revised the regulations using the definition from UCOTA-V.
    The definitions from UCOTA-V that we are adding are as follows:

     Barge;
     Builder's certificate;
     Buyer;
     Cancel;
     Certificate of title;
     Electronic;
     Electronic certificate of title;
     Foreign-documented vessel;
     Good faith;
     Hull damaged;
     Lien creditor;
     Office;
     Owner of record;
     Purchase;
     Purchaser;
     Record;
     Secured party of record;
     Sign;
     State of principal operation; \6\
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    \6\ In UCOTA-V, this term is ``State of principle [sic] use.''
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     Title brand;
     Transfer of ownership;
     Vessel number; and
     Written certificate of title.

    Subpart D heading and section titles. For clarification, we revise 
the heading for subpart D from Guidelines for State Vessel Titling 
Systems to the more general State Vessel Titling Systems. We also 
change the section titles in revised subpart D to better align with the 
section titles of UCOTA-V.
    Section 187.301. We clarify this section by replacing the language 
that says the Coast Guard ``may certify'' a State vessel titling system 
if it complies with the requirements of the subpart with ``will 
certify.'' We made this change because, if the State's titling system 
meets the requirements of this regulation, the State has met the Coast 
Guard's requirements. Thus, the Coast Guard will certify the State's 
titling system, thereby fulfilling the requirements set forth in 46 
U.S.C. 31322(d)(1) for preferred mortgage status. The purpose of this 
regulation is for States to take advantage of sharing validated vessel 
information that meets the minimum requirements listed in regulations.
    Section 187.302 (new). We move the list of terms States must define 
from Sec.  187.303 to this new section to keep the structure consistent 
with the rest of UCOTA-V. The new Sec.  187.302(a) incorporates the 
current requirement of Sec.  187.303 that States define listed terms 
substantially as they are defined in Sec.  187.7. The terms already 
listed in Sec.  187.7 are not removed or substantively changed, but 
some definitions are rephrased and several new terms are added as 
recommended by UCOTA-V, section 2(a), which includes a list of 
definitions for States to adopt directly. In addition, the new Sec.  
187.302(b) requires States to define the terms listed in UCOTA-V 
section 2(b). These are general terms derived from the UCC, which all 
States have adopted or

[[Page 34178]]

adopted in modified form. Finally, we add a new Sec.  187.302(c), 
incorporating UCOTA-V section 2(c), stating that subpart D definitions 
do not apply to any State or Federal law governing licensing, 
numbering, or registration if the same term is used in that law.
    Section 187.303. We revise Sec.  187.303 to incorporate UCOTA-V 
section 3 applicability provisions. As described above, the current 
list of terms States must define is moved to the new Sec.  187.302.
    Section 187.304. We retain this section without change, but rename 
it to better match the rest of the subpart.
    Section 187.305. This section currently specifies requirements for 
title applications. We move the material on this topic to the revised 
Sec.  187.307. The revised Sec.  187.305 incorporates UCOTA-V section 
5, defining which State's law governs vessels covered by title 
certificates.
    Section 187.306 (new). This new section incorporates the UCOTA-V 
section 6 discussion of when a title certificate is and is not 
required.
    Section 187.307. The revised Sec.  187.307 incorporates UCOTA-V 
section 7 specifications for title application contents. This rule 
removes this section's mandate that States must impose certain 
conditions on vessel dealers and manufacturers. We will no longer 
require these dealer- or manufacturer-specific conditions because they 
are covered by the UCOTA-V provisions that we adopt in this rule.
    Section 187.308 (new). This new section incorporates the UCOTA-V 
section 8 provisions for creating and canceling title certificates, 
with the exception of optional paragraph (f), as detailed above in the 
discussion of UCOTA-V section 8.
    Section 187.309. This rule revises Sec.  187.309 to exchange the 
current contents of this section, which govern requirements for 
voluntary title transfers (transfers other than by operation of law), 
with those of Sec.  187.317. While we are retaining without change the 
existing content of this section, this exchange will make the 
organization of provisions within the CFR better align with the 
structure of UCOTA-V.
    Section 187.310 (new). This new section incorporates UCOTA-V 
section 10 title brand provisions. We incorporate these provisions to 
deter title washing and protect buyers and others acquiring an interest 
in an undocumented vessel.
    Section 187.311. This section currently requires new title 
certificates after vessel ownership transfers by operation of law. We 
move this discussion to the new Sec.  187.320. The revised Sec.  
187.311 incorporates UCOTA-V section 11 requirements for maintenance of 
and access to State title certificate files.
    Section 187.312 (new). This new section incorporates UCOTA-V 
section 12, concerning the duties of the State and title holder upon 
creation of a title certificate.
    Section 187.313. This section currently requires a State to honor 
evidence of vessel ownership from another State, country, or the Coast 
Guard. We are moving this discussion to Sec.  187.328. The revised 
Sec.  187.313 incorporates UCOTA-V section 13, declaring the prima 
facie evidential value of title certificate contents.
    Section 187.314 (new). This new section incorporates UCOTA-V 
section 14, concerning the possession of a title certificate and 
judicial process against a certificate.
    Section 187.315. This section currently provides that a State title 
is invalidated when exchanged for a certificate of documentation. The 
revised Sec.  187.315 incorporates UCOTA-V section 15 provisions for 
perfecting vessel security interests, which are currently addressed in 
Sec.  187.323. The revised Sec.  187.315 also includes the abbreviation 
for a hull identification number (HIN) in an effort to make the meaning 
of the section clearer to the regulated public.
    Section 187.316 (new). This new section incorporates UCOTA-V 
section 16, concerning the termination of a security interest in a 
vessel. Currently, Sec.  187.327 requires States to establish their own 
termination procedures. We are removing Sec.  187.327.
    Section 187.317. To better align with UCOTA-V's structure, we 
exchange the provisions on the topics covered by Sec.  187.309 with the 
topics covered by Sec.  187.317, as discussed above at Section 187.309.
    Section 187.318 (new). This new section incorporates UCOTA-V 
section 18, concerning the effect of missing or incorrect title 
certificate information.
    Section 187.319. This section currently covers applying for 
replacement or ``redundant'' title certificates. We move this topic to 
the new Sec.  187.322. The revised Sec.  187.319 incorporates UCOTA-V 
section 19, concerning the transfer of a vessel ownership interest by a 
secured party's transfer statement.
    Section 187.320 (new). This new section incorporates UCOTA-V 
section 20, concerning ownership interest transfers by operation of 
law, which Sec.  187.311 currently contains.
    Section 187.321. This section currently requires a HIN to be 
assigned and affixed to a vessel upon proof of its ownership. We 
replace the existing language with a substantively identical adaptation 
of UCOTA-V section 21, concerning applications for transferring 
ownership or for canceling a security interest that is not accompanied 
by a certificate of title. UCOTA-V recommends more specific 
requirements for recording HINs, which we include in revised Sec. Sec.  
187.307, 187.309, 187.311, 187.315, and 187.325. For example, UCOTA-V 
requires the State to issue a HIN in cases where the State did not 
issue one to the vessel owner or operator upon original construction, 
such as an antique vessel built prior to November 1972.
    Section 187.322 (new). This new section incorporates UCOTA-V 
section 22, concerning replacement title certificates, which is 
currently addressed in Sec.  187.319.
    Section 187.323. This section currently specifies procedures for 
perfecting vessel security interests, which will be addressed in Sec.  
187.315. The revised Sec.  187.323 incorporates UCOTA-V section 23, 
concerning the rights of a vessel purchaser who is not a secured party.
    Section 187.324 (new). This new section incorporates UCOTA-V 
section 24, concerning the rights of secured parties.
    Section 187.325. This section currently requires States to specify 
the procedure for assigning vessel security interests, which this final 
rule addresses by revising Sec.  187.315(f). The revised Sec.  187.325 
incorporates UCOTA-V section 25, specifying certain requirements for 
the administrative operation of a State certificating authority, such 
as length of record retention and allowable fees.
    Section 187.327. This final rule removes this section, which 
covered the discharge of a vessel security interest. This topic is now 
covered in Sec.  187.316.
    Sections 187.329. This final rule removes this section. It is not 
necessary to retain the requirement in Sec.  187.329 for States to 
specify titling system forms, as UCOTA-V requirements for specific 
records will appear throughout revised subpart D. An example of this is 
in the title application and certificate provisions of Sec. Sec.  
187.306 through 187.310.
    Section 187.331. This final rule removes this section. Section 
187.331 required States to retain title system information and make it 
available to Government authorities. In the revised subpart D, similar 
requirements appear in Sec. Sec.  187.311(d) and 187.325(a).

[[Page 34179]]

V. Regulatory Analyses

    The Coast Guard received seven comment submissions during the 60-
day comment period that ended on November 22, 2021. We received no 
public comments on the estimated benefits and costs; therefore, the 
methodology employed in the regulatory analyses remains unchanged.
    We developed this rule after considering numerous statutes and 
Executive orders related to rulemaking. Below we summarize our analyses 
based on these statutes or Executive orders.

A. Regulatory Planning and Review

    Executive Orders 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). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility.
    The Office of Management and Budget (OMB) has not designated this 
rule a significant regulatory action under section 3(f) of Executive 
Order 12866. Accordingly, OMB has not reviewed it. A regulatory 
analysis (RA) follows.
    This final rule has several goals. The Coast Guard intends to 
establish minimum requirements for States \7\ electing to become 
subpart D-compliant and to prescribe guidelines for State vessel 
titling systems. We also intend to provide guidance on how to obtain 
certification of compliance with State guidelines for vessel titling 
systems for the purpose of conferring preferred status on mortgages, 
instruments, or agreements under 46 U.S.C. 31322(d).
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    \7\ As used throughout this final rule, ``State'' means any of 
the 56 jurisdictions (50 States, the District of Columbia, American 
Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the U.S. 
Virgin Islands) that administer Coast Guard-approved recreational 
vessel numbering systems.
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    This RA provides an evaluation of the economic impacts associated 
with this final rule. Table 1 provides a summary of the final rule's 
costs and benefits.

                                Table 1--Summary of the Final Rule's Impacts \1\
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                         Category                                                  Summary
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Affected Population.......................................  56 States of which 18 are not currently in
                                                             compliance with VIS requirements and 47 have not
                                                             adopted UCOTA-V (subpart D) or started the process.
Costs (7-percent discount rate)...........................  $138,490 (10-year discounted cost).
                                                            $19,718 (annualized cost).
Unquantified Costs \2\....................................   2 States currently have legislative
                                                             conflicts that may impact VIS participation. While
                                                             the cost to negotiate and amend the legislation is
                                                             estimated, the cost of labor to put forward and
                                                             vote on the privacy legislation is difficult to
                                                             quantify.
                                                             47 States currently have legislative
                                                             conflicts that may impact adopting UCOTA-V. While
                                                             the cost to negotiate and amend the legislation is
                                                             estimated, the cost of labor to put forward and
                                                             vote on the privacy legislation is difficult to
                                                             quantify.
Potential Costs \3\.......................................   Costs to vessel owners, imposed by States
                                                             without titling programs (7 States), who require
                                                             vessel owners to obtain a title. Estimated
                                                             potential cost of obtaining title is $50 (not in
                                                             cost analysis).
                                                             Costs to vessel owners, imposed by States
                                                             without titling programs (7 States), who may
                                                             experience opportunity costs for labor expended to
                                                             obtain a title (not in cost analysis).
                                                             Costs to vessel owners, imposed by States
                                                             with titling programs (47 States), who may impose
                                                             additional costs or fees on vessel owners (not in
                                                             cost analysis).
                                                             Cost to States to update website after
                                                             reviewing rule (not in cost analysis).
                                                             Cost to States seeking to become VIS-
                                                             compliant to transfer data to the Coast Guard
                                                             (included in cost analysis).
Unquantified Benefits.....................................   Ability to obtain preferred mortgage
                                                             status.
                                                             Lower transaction costs.
                                                             Deterrence to ``title washing.''
                                                             Recovery of stolen vessels.
                                                             Identification of abandoned vessels.
                                                             Consumer protection.
                                                             Security measures for financial entities.
                                                             Lower administrative burden and costs to
                                                             buyers.
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\1\ Figures are rounded to the nearest one dollar.
\2\ Unquantified costs are defined as costs that are incurred as a direct or indirect result of the rulemaking,
  which are not quantified.
\3\ Potential costs are defined as costs that may potentially be incurred as a direct or indirect result of the
  rulemaking.

    The revisions will affect States that voluntarily seek to certify 
their State titling laws with the Coast Guard, pursuant to regulations 
under 33 CFR part 187, and to participate in the VIS. As such, the 
affected population for this final rule includes the 56 U.S. States.
    The Coast Guard has been encouraging States to participate in the 
VIS since it has been in place in 2007, but some States have chosen not 
to participate, primarily because of privacy laws regarding the sharing 
of personally identifiable information. The VIS comprises a nationwide 
information system for identifying recreational, commercial, and public 
vessels that are numbered. As of January 21, 2020, 38 States were 
participating in the VIS.\8\ To encourage further participation, 
participating States have access to all VIS data.
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    \8\ https://cgmix.uscg.mil/VISInformation.aspx?VISOption. This 
page was last viewed on January 22, 2020. On that date, the last 
update was January 21, 2020.
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    As described later, the benefits of this final rule include 
increased uniformity across States in their titling laws. In turn, this 
will lead to reduced transaction costs, increased fraud prevention 
(insurance fraud and fraud from illegitimately owned vessels), 
increased consumer protection, decreased risk to lenders, improved 
opportunities for the recovery and identification of abandoned vessels, 
and

[[Page 34180]]

increased efficiencies for interstate commerce. Even through there is 
no new requirement in this final rule for vessel owners to report 
vessel damage to the VIS directly, the insurance company will be 
required to provide the information to the State if the owners make 
claims to repair the vessels. Once the States provide the vessel 
information to the VIS, the system can track the vessel information and 
share with other States if the repaired boats are sold as boats with no 
damage outside the State.
    More specifically, transaction costs will be lower because 
consumers may be able to get preferred loans with lower interest rates. 
Also, a buyer's administrative burden and costs when buying a vessel 
from a private party may be lessened because the buyer will not have to 
do extensive research to assure the vessel is being sold by the 
legitimate owner. In addition, some non-titling States require bonds 
when vessels are sold; this transaction cost may be eliminated with the 
adoption of UCOTA-V.
Affected Population
    This final rule potentially affects all 56 States. The affected 
population of the regulated public may be parsed by VIS participation 
and also by UCOTA-V adoption. As of January 21, 2020, 38 States were 
participating in the VIS,\9\ 16 States were interested in joining the 
VIS but had not signed Memorandum of Agreements (MOA) for VIS 
participation, and 2 States were not able to comply with VIS 
requirements due to conflicts with their own State's privacy laws. 
Regarding UCOTA-V adoption, 47 of 56 States have not adopted UCOTA-
V.\10\
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    \9\ VIS participation is defined by the existence of a signed 
MOA.
    \10\ The five States that have adopted UCOTA-V are Connecticut, 
the District of Colombia, Florida, Hawaii, and Virginia. The four 
States in the process of adopting UCOTA-V are Alabama, Georgia, 
Tennessee, and Texas. This data is current as of January 21, 2020.
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Costs
    This final rule results in costs to the regulated public (State and 
territorial governments) and to the Coast Guard. Costs to the States 
may be divided between VIS compliance costs and UCOTA-V adoption (final 
subpart D compliance) costs. The final rule does not impose direct 
costs on vessel owners, as it will deter fraud by introducing penalties 
for providing false information. However, there is potential for 
indirect costs, as noted later.
    Vessel owners are not required to take action as a result of this 
final rule. For example, this final rule does not require additional 
documentation from vessel owners. Transfer of title always requires a 
new title to be issued, which is common practice. There is no 
requirement other than a statement from the current owner declaring the 
vessel is, or has been, damaged. There is no other documentation 
required for proof of damage. There is no requirement for a statement 
from an insurer. This merely provides disclosure to a buyer.
    This final rule may lead to changes in titling practices in some 
States, which may have cost implications for vessel owners and the 
States. We describe the potential costs to vessel owners as a direct or 
indirect result of this final rule below.
Potential Costs to Vessel Owners
    This final rule will affect 56 States, all of which have vessel 
owners. In States that currently have a titling program for vessels and 
that participate in the VIS, vessel owners will experience no 
incremental impact. In States with an existing titling program, vessel 
owners may be affected if the State changes or imposes additional fees 
through its legislative or regulatory process. States that are 
compliant with UCOTA-V (final subpart D) report that they did not 
impose any additional fees after the adoption of UCOTA-V provisions, 
and, according to the Coast Guard's Office of Auxiliary and Boating 
Safety (BSX), no State has signaled the intent to increase titling fees 
if their system becomes certified as UCOTA-V compliant. However, the 
Coast Guard cannot definitively conclude that recreational vessel 
owners will not face a cost increase as an indirect effect of these 
final changes. Nonetheless, we have not computed a cost for the 
requirement to vessel owners in States with a titling system, due to 
the uncertainty of a potential cost increase.\11\
---------------------------------------------------------------------------

    \11\ According to BSX, recreational vehicle owners for the 10 
compliant and semi-compliant States did not incur a cost increase.
---------------------------------------------------------------------------

    In States without a vessel titling program, recreational vessel 
owners may experience a cost increase because of this final rule. These 
States have not indicated to the Coast Guard how they may handle 
existing vessels once they have established a titling system. Existing 
vessels may be grandfathered in and permitted to be titled voluntarily 
by the owner, or States may require all vessel owners to obtain a 
title. A review of websites for States with a titling program 
demonstrated that the cost of vessel titles are generally $50 or 
less.\12\ Because the Coast Guard does not have information on how 
future titling programs may be operated, we have not computed the 
potential costs to obtain titles in these States as a cost in this 
rulemaking. We acknowledge that there may be some opportunity costs 
\13\ for labor expended to obtain the title and actual fees for the 
title.
---------------------------------------------------------------------------

    \12\ This statement is based on the Coast Guard's review of 
website information for 52 States (March 2020). For Virginia state 
fees, see https://dwr.virginia.gov/boating/registration/procedure/. 
For Florida state fees, see https://www.flhsmv.gov/motor-vehicles-tags-titles/vessels/vessel-titling-registrations/.
    \13\ The use of leisure time to obtain the title. The cost of 
this task may be calculated by the formula: one-half of the median 
household income. The Coast Guard followed the Department of 
Transportation's (DOT) guidance for valuing the opportunity cost of 
leisure time. Readers should consult the DOT Memorandum ``Revised 
Departmental Guidance on Valuation of Travel Time in Economic 
Analysis,'' which may be found at https://www.transportation.gov/sites/dot.gov/files/docs/2016%20Revised%20Value%20of%20Travel%20Time%20Guidance.pdf.
---------------------------------------------------------------------------

    No further action will be required by vessel owners. Vessel owners 
do not need to renumber their vessels as a result of this final rule, 
since existing hull numbers are unrelated to titling. No equipment is 
required by vessel owners for compliance. Table 2 below summarizes this 
section detailing potential costs of this final rule. All are 
considered indirect costs, as they are costs that may be imposed by the 
State on vessel owners as a result of this final rule, but not mandated 
by the rule itself. There are other potential costs of the rule 
detailed in future section. For a comprehensive list of all potential 
costs, please refer to table 1.

                                       Table 2--Summary of Potential Costs
----------------------------------------------------------------------------------------------------------------
                                                                                            Potential direct or
                Task                         Description            Party bearing cost    indirect cost of final
                                                                                                   rule
----------------------------------------------------------------------------------------------------------------
Obtaining a vessel title (cost of    Costs to vessel owners,      Vessel owners in 7      Potential indirect
 title).                              imposed by States without    States.                 cost of final
                                      titling programs (7                                  rulemaking.
                                      States), that require
                                      vessel owners to obtain a
                                      title. Potential cost of
                                      obtaining title is $50.

[[Page 34181]]

 
Obtaining a vessel title             Costs to vessel owners,      Vessel owners in 7      Potential indirect
 (opportunity cost of obtaining       imposed by States without    States.                 cost of final
 title).                              titling programs (7                                  rulemaking.
                                      States), who may
                                      experience opportunity
                                      costs for labor expended
                                      to obtain a title.
N/A................................  Costs to vessel owners,      Vessel owners in 47     Potential indirect
                                      imposed by States with       States.                 cost of final
                                      titling programs (47                                 rulemaking.
                                      States) that may impose
                                      additional costs or fees
                                      on vessel owners.
----------------------------------------------------------------------------------------------------------------

Costs to the Coast Guard
    We estimate that the Government costs associated with this 
regulatory action will be labor costs for the Coast Guard to (1) 
process MOAs from the States; (2) coordinate with States; and (3) 
update the Coast Guard website. No additional equipment is needed to 
perform these tasks under this final rule.
    In order to process an MOA, it is first transmitted from a State to 
a Coast Guard compliance officer in BSX and then to the Commandant (or 
designee) for approval. A Coast Guard compliance officer will engage 
and coordinate with and respond to inquiries from the States. We 
estimate that a Coast Guard compliance officer spends 0.25 hour to 
process an MOA from a State and another 0.25 hour to transmit it to the 
Commandant (or designee) for approval. The Commandant or designee 
spends 0.2 hour to approve an MOA (Cost = Count of MOAs x [(0.5 hour x 
Compliance officer's wage rate) + (0.2 hour x Commandant's wage 
rate)]).
    As a result of this final rule, we estimate that the Coast Guard 
will need to engage and coordinate with, and respond to inquiries from, 
States regarding VIS participation and UCOTA-V compliance. Eighteen 
States are not in the VIS. We estimate that a Coast Guard compliance 
officer will need to coordinate with each of these States for VIS 
participation.\14\ To engage with and respond to inquiries from States, 
we estimate that the compliance officer will spend 0.5 hour per State's 
inquiry to coordinate a response (Cost = 18 States x (0.5 hour x 
Compliance officer's wage rate)). For the 47 States needing to adopt 
UCOTA-V, we estimate that a Coast Guard compliance officer will spend 
0.5 hour per State to assist (Cost = 47 States x (0.5 hour x Compliance 
officer's wage rate)).
---------------------------------------------------------------------------

    \14\ Readers may consult Coast Guard data at https://cgmix.uscg.mil/VISInformation.aspx. This web page was last viewed on 
January 21, 2020. Sixteen States have initiated VIS participation, 
but have not completed an MOA. Two States do not participate.
---------------------------------------------------------------------------

    Lastly, the Coast Guard will need to update its website with 
information on this final rule. We estimate that 1 hour will be needed 
by a computer technician and an additional 0.25 hour for a compliance 
officer to supervise and approve the update. This is a one-time task 
that is expected to occur in the first year of this final rule's 
enactment. (Cost = [(0.25 hour x Coast Guard compliance officer's wage 
rate) + (1 hour x Federal computer technician's wage rate)]).

                                  Table 3--Summary of Costs to the Coast Guard
----------------------------------------------------------------------------------------------------------------
                                    Time burden and                           Applicable      Direct or indirect
              Task                 responsible party         Cost             population      cost of final rule
----------------------------------------------------------------------------------------------------------------
Process MOA from States.........  0.25 hours to       (0.5 hours x Coast  One-time cost to    Direct.
                                   process MOA         Guard Compliance    the Coast Guard
                                   (Coast Guard        officer's wage      for all 56 States.
                                   Compliance          rate) + (0.2 hour
                                   officer).           x Commandant or
                                  0.25 hours to        designee's wage
                                   transmit for        rate) x 56 States.
                                   approval (Coast
                                   Guard Compliance
                                   officer).
                                  0.2 hours for
                                   approval
                                   (Commandant or
                                   designee).
Coordinate with States..........  0.5 hours for 18    18 States x (0.5    One-time cost to    Direct.
                                   States without      hour x Coast        the Coast Guard
                                   VIS (Coast Guard    Guard Compliance    for 18 States.
                                   Compliance          officer's wage     One-time cost to
                                   officer).           rate).              the Coast Guard
                                  0.5 hours for 47    47 States x (0.5     for 47 States.
                                   States needing to   hour x Coast
                                   adopt UCOTA-V       Guard Compliance
                                   (Coast Guard        officer's wage
                                   Compliance          rate).
                                   officer).
Update Coast Guard Website......  1 hour to update    0.25 hour x Coast   One-time cost to    Direct.
                                   (Federal computer   Guard compliance    the Coast Guard.
                                   technician).        officer's wage
                                  0.25 hours to        rate) + (1 hour x
                                   approve (Coast      Federal computer
                                   Guard Compliance    technician's wage
                                   officer).           rate.
----------------------------------------------------------------------------------------------------------------

Costs to the Regulated Public
    Compliance with this final rule will require a variety of tasks by 
the regulated public. This section documents the Coast Guard's 
assessment of this final rule's changes and the steps States need to 
take as a result. Not all tasks need to be carried out by all the 
States. In this section, we note first the tasks that apply to all 
States. Next are the tasks that result from this final rule. We split 
these tasks into categories to better calculate the costs, since some 
tasks apply to some States and others apply to other States, depending 
on their current level of compliance with existing rules.

[[Page 34182]]

    Below is a list of all costs to the regulated public:
Costs to the Regulated Public--States
    All 56 States need to be familiarized with this final rule and to 
complete the task of reviewing their State's website for numbering and 
titling of vessels. Upon review of the State's procedures and websites, 
some States may need to make updates. These are discussed in more 
detail below.
    The Coast Guard estimates that States will spend 0.5 hour to become 
familiarized with this final rule.\15\ A manager typically will perform 
this task. A manager will spend another 0.5 hour to review the State's 
procedures and website to make a determination whether anything will 
need to change in response to this final rule (Cost = 56 States x 0.5 
hour x State manager's wage rate). All 56 States may potentially need 
to update their websites, which would be accomplished by a computer 
technician. The Coast Guard estimates that this task will take 1 hour 
and be performed by a computer technician at the direction of a 
manager.\16\ However, as the Coast Guard does not have an estimate on 
how many States will need to update a website, the cost is considered 
only a potential cost and is not factored into the cost analysis.
---------------------------------------------------------------------------

    \15\ This estimate is based on a previous Coast Guard 
rulemaking. In the 2014 final rule for Personal Flotation Devices 
Labeling and Standards (79 FR 56491, October 22, 2014), the Coast 
Guard estimated that the task will take 0.5 hour (https://www.federalregister.gov/documents/2014/09/22/2014-22373/personal-flotation-devices-labeling-and-standards). Time estimate can be 
found under Table 2, ``State Regulatory Review.'' No public comments 
were received on this estimate. This page was last viewed on May 21, 
2021.
    \16\ The Coast Guard estimates a manager will spend 0.25 hour to 
provide direction and supervise and approve the work of a computer 
technician.
---------------------------------------------------------------------------

    Although not explicitly required, some States may send email 
notifications or a press release to interested parties (such as the 
media, recreational boaters, boating associations, the Coast Guard 
Auxiliary, etc.). Another 0.5 hour is estimated for a State manager to 
write a notification of regulatory change for the public.\17\ We 
estimate these as one-time costs to the State.
---------------------------------------------------------------------------

    \17\ This estimate is based on the Coast Guard's final rule for 
Tankers Automatic Pilot Systems (83 FR 55272, November 05, 2018). 
Please see https://www.federalregister.gov/documents/2018/11/05/2018-24127/tankers-automatic-pilot-systems, Table 3, ``Write 
Notification of Regulatory Change,'' fourth entry (0.5 hours). This 
estimate is defined as ``Communicate regulatory change,'' which is 
an identical task undertaken by the State manager. This page was 
last viewed on May 21, 2021.

                                       Table 4--Summary of Costs to States
----------------------------------------------------------------------------------------------------------------
                                    Time burden and                           Applicable      Direct or indirect
              Task                 responsible party         Cost             population      cost of final rule
----------------------------------------------------------------------------------------------------------------
Become familiarized with rule...  0.5 hours, State    Cost = (56 States   One-time cost to    Direct.
                                   manager             x 0.5 hour x        all 56 States.
                                                       State manager's
                                                       wage rate) + (56
                                                       States x 0.5 hour
                                                       x State manager's
                                                       wage rate).
Review website..................  0.5 hours, State                                            Direct.
                                   manager
Update website (not included in   1 hour, Computer    Cost = 1 hour x 56  Potential one-time  Potential direct
 cost analysis.).                  technician          States x Computer   cost to all 56      cost.
                                                       Technician's wage   States.
                                                       rate.
Notification of change..........  0.5 hours, State    Cost = 0.5 hour x   One-time cost to    Direct.
                                   manager             56 States x State   all 56 States.
                                                       manager's wage
                                                       rate.
----------------------------------------------------------------------------------------------------------------

Costs to the Regulated Public--States (VIS Compliance Costs)
    Based on BSX data,\18\ we estimate that there are two States 
currently not in compliance with any existing VIS requirements. Some 
States are in partial compliance with existing requirements for the 
VIS. Coast Guard data demonstrates that 16 States have initiated VIS 
participation, but are not in compliance because they do not have a 
signed MOA with the Coast Guard. The remaining 38 States have signed 
MOAs, which means they are participating in the VIS.
---------------------------------------------------------------------------

    \18\ https://cgmix.uscg.mil/VISInformation.aspx. This web page 
was last viewed on January 8, 2020.
---------------------------------------------------------------------------

    The 16 States that have initiated VIS activity but do not have a 
signed MOA with the Coast Guard will need to complete the MOA process. 
In order to comply, States will incur costs to--
    (1) coordinate with the Coast Guard for data transfer;
    (2) prepare and submit a completed MOA and participation form; and
    (3) engage in coordination activities to complete a new user 
request form.
    All the VIS-participating States will engage in activities to 
upload data to the VIS. However, according to Info-Link 
Technologies,\19\ the contractor responsible for VIS updates, VIS data 
uploads for each State are often an automated process, where software 
automatically prepares and uploads a data file each month. The economic 
impact of the data submission is zero as Info-Link Technologies already 
bears the cost for the data, which they receive from every State 
regardless of their participation in VIS. Thus, States that do not 
currently participate in VIS still engage in a virtual data submission 
with the contractor and will not incur an additional cost or time 
burden. As a result, we conclude that VIS data uploads will not produce 
costs to States new to VIS.
---------------------------------------------------------------------------

    \19\ Email from Info-Link Technologies, Inc. to William Burgess, 
Compliance Officer, CG-BSX-1 dated February 5, 2020 (available in 
the docket where indicated under the ADDRESSES portion of this final 
rule).
---------------------------------------------------------------------------

    New VIS participants need to complete the new user request form. We 
estimate that it takes 0.1 hour to complete the form. These estimates 
are based on data provided by Info-Link Technologies and the Coast 
Guard's Collection of Information entitled ``Vessel Identification 
System,'' OMB Control Number: 1625-0070.\20\
---------------------------------------------------------------------------

    \20\ During the renewal process for the collection of 
information request, no public comments were received on the 
estimate. In preparing this final rule, the Coast Guard reviewed 
data and revised the estimate for the duration of labor to upload 
VIS data. The revision better reflects the amount of time needed to 
perform periodic uploads of automated data.
---------------------------------------------------------------------------

    Lastly, two States will have to address legislative conflicts with 
existing privacy laws that complicate or prevent VIS participation. We 
estimate that such a task will require that a manager negotiate the 
changes with a State legislative committee. An attorney will draft the 
legislation. Unlike UCOTA-V, which has uniform legislation to follow 
for each State, privacy law amendments may take more time to develop. 
We estimate that a manager will spend 40

[[Page 34183]]

hours to negotiate legislative changes to privacy laws, and an attorney 
will spend another 40 hours to draft this legislative language. 
However, State laws are often voted in blocks and the labor to put the 
amended privacy legislation forward and to vote on it is unseverable. 
For that reason, we have not estimated a cost for either step.
    We computed a cost to transmit VIS data to the Coast Guard for 18 
States on the basis that States may correspond with the Coast Guard to 
initiate the data transfer or may have issues in their computer systems 
preventing automatic data transfer. In the event that this occurs, the 
State may send spreadsheets to the Coast Guard, and a technician 
contracted to the Coast Guard will upload the data. However, we 
acknowledge that this is already a task under existing regulations and, 
in most cases, data is automatically transmitted.

                                            Table 5--Summary of Costs
                                                [VIS Compliance]
----------------------------------------------------------------------------------------------------------------
                                    Time burden and                           Applicable      Direct or indirect
              Task                 responsible party         Cost             population      cost of final rule
----------------------------------------------------------------------------------------------------------------
Prepare and submit an MOA.......  16 hours (State     18 States x (16     One-time cost for   Direct.
                                   manager).           hours x State       18 States.
                                                       Manager wage
                                                       rate).
Complete New User request form..  0.1 Hour (State     18 States x (0.1    One-time cost for   Direct.
                                   manager).           hour x State        18 States.
                                                       Manager wage
                                                       rate).
Coordinate with Coast Guard for   1 hour (State       18 States x (1      Potential one-time  Direct
 data transfer.                    manager).           hour x State        cost for States     (Potential).
                                                       Manager wage        with issues with
                                                       rate).              the automatic
                                                                           data transfer.
                                                                           (Even though
                                                                           considered
                                                                           potential,
                                                                           included in cost
                                                                           analysis due to
                                                                           potential
                                                                           correspondence to
                                                                           initiate data
                                                                           transfer or
                                                                           issues with
                                                                           automatic data
                                                                           transfer.).
Draft legislative language to     40 hours (State     2 States x [(40     One-time cost for   Direct.
 amend privacy laws.               manager).           hours x State       2 States.
                                  40 hours (State      Manager wage
                                   attorney).          rate) + (40 hours
                                                       x State attorney
                                                       wage rate)].
----------------------------------------------------------------------------------------------------------------

Costs to the Regulated Public--States in UCOTA-V Adoption (Final 
Subpart D Compliance)
    We base our cost estimates on all 56 States choosing to adopt 
UCOTA-V. As of January 16, 2020, five States have adopted UCOTA-V, and 
five States are developing legislation to become UCOTA-V-compliant.\21\ 
Many of the remaining States have reported that they are waiting for 
the Coast Guard to issue a rule on UCOTA-V before going through the 
legislative process. In addition, States often wait for their 
neighboring States to adopt legislation that potentially has effects 
across State borders. Insurers and manufacturers have requested the 
changes. For these reasons, the Coast Guard estimates that all 56 
States will adopt UCOTA-V.
---------------------------------------------------------------------------

    \21\ Email from the ULC to William Burgess, Compliance Officer, 
Coast Guard (January 16, 2020) (available in the docket where 
indicated under the ADDRESSES portion of this final rule).
---------------------------------------------------------------------------

    Currently, 47 States have neither adopted UCOTA-V nor initiated 
legislation to do so. The cost analysis of UCOTA-V adoption focuses 
solely on these 47 States. In order to comply with this final rule, 
States will need to develop legislation and amend their computer 
systems to comport with UCOTA-V. As noted earlier, all States will post 
information on their websites about this final rule; that task appears 
in the Costs to the Regulated Public--States section of this analysis.
    In order to develop UCOTA-V legislation,\22\ a State will require 
the labor of an attorney \23\ to draft the legislation \24\ for a State 
legislative committee to begin the legislative process. The ULC has 
developed legislative text for UCOTA-V, which each State may use to 
develop its respective State law. For this reason, the labor 
requirement for each State is relatively low. We estimate that an 
attorney will spend approximately 24 hours \25\ to draft this 
legislative language. Given that State laws \26\ are often voted in 
blocks, the labor to put UCOTA-V legislation forward and to vote on it 
is considered to be unseverable and, for that reason, we have not 
estimated a further cost on developing legislation.
---------------------------------------------------------------------------

    \22\ For all uniform acts, the State's legislative drafting 
office mainly formats the bill to conform to the State's required 
format and fill in bracketed areas of the text. The ULC (https://www.uniformlaws.org/home) also includes italicized legislative notes 
when they format the bill for the particular State. This allows the 
time to draft the bill to be relatively shorter than with other 
regulations.
    \23\ Each State has its own legislative drafting agency 
responsible for drafting legislation. The bill drafters are 
attorneys who draft bills for all the state legislators.
    \24\ As this is part of the State's normal legislative process, 
we do not anticipate any additional fees beyond the normal process 
for these bills.
    \25\ This estimate comports with previous estimated durations of 
making legislative changes at the State level. In the final rule for 
Personal Flotation Devices Labeling and Standards (79 FR 56491, 
Sept. 22, 2014), the Coast Guard estimated that a legislative change 
would take 10 hours. No public comments were received on this 
estimate. In this final rule, the Coast Guard adjusted this estimate 
to reflect the more complex nature of this change.
    \26\ Some States may delegate the approval process of such 
changes to an administrative law committee rather than vote on it in 
the legislature. The process to develop the law and put it forward 
for voting would be the same.
---------------------------------------------------------------------------

    States adopting UCOTA-V will need to update their procedures and 
websites to reflect the resulting changes. We estimate that 5 hours 
will be spent by a State manager to review and edit State procedures, 
manuals, policy documents, and other information (Cost = (47 States x 
(5 hours x State manager's wage rate)).\27\
---------------------------------------------------------------------------

    \27\ This estimate aligns with other estimated durations of 
reviewing and editing manuals and policy documents. The Coast Guard 
reviewed previously approved OMB collections for the final rule for 
Marine Vapor Control Systems (80 FR 54418, September 10, 2015), the 
proposed rule for Revision of Crane Regulation Standards for Mobile 
Offshore Drilling Units (MODUs), Offshore Supply Vessels (OSVs), and 
Floating Outer Continental Shelf (OCS) Facilities (78 FR 27913, May 
13, 2013), and the final rule for Personal Flotation Devices 
Labeling and Standards (79 FR 56491, Sept. 22, 2014). Previously 
approved collections of information may be found at https://www.reginfo.gov/public/do/PRAMain. No public comments were received 
on these estimates. The Coast Guard adjusted its estimate to reflect 
changes in complexity of the task.

---------------------------------------------------------------------------

[[Page 34184]]

    The remaining UCOTA-V compliance costs items are--
    (1) labor for a manager (30 minutes) to coordinate with the Coast 
Guard to ensure the State's program meets UCOTA-V certification 
requirements (Cost = 47 States x (0.5 hour x State manager's wage 
rate));
    (2) labor for an administrative assistant (15 minutes) and a 
manager (45 minutes) to assist with the conversion or update to a 
subpart D-compliant system (Cost = 47 States x [(0.25 hour x 
administrative assistant's wage rate) + (0.75 hour x State manager's 
wage rate)]);
    (3) labor for a manager (15 minutes) to oversee conversion to a 
subpart D-compliant system (Cost = 47 States x (0.25 hour x State 
manager's wage rate)); and
    (4) labor for a software developer (756 minutes) to convert the 
system to a subpart D compliant system (Cost = 47 States x (12.6 hours 
x computer technician's wage rate)).
    These tasks and their calculations are shown in table 6.\28\
---------------------------------------------------------------------------

    \28\ According to BSX, most States use an ``off-the-shelf'' 
system, so changes are easy and menu driven. Some States have older 
systems that will take more time to adjust, but the older systems 
are the exception, not the rule. The Coast Guard estimates the 
average number of hours of labor for a computer technician by using 
the average time spent on design and coding from a University of 
South Carolina study on software developers. Readers can find the 
study at https://cse.sc.edu/job/how-software-developers-really-spend-their-time. The study uses the average number of hours per 
week software developers spend designing and coding software. The 
Coast Guard considers this to be a reasonable rough proxy for the 
purpose of this analysis.
---------------------------------------------------------------------------

    For the seven States that do not have an existing titling program, 
the labor tasks for amending State's computers to comport with UCOTA-V 
are greater. We estimate that 24 hours will be spent by a computer 
technician in these States to amend the State's computers to comport 
with UCOTA-V, and that a manager will spend another 0.5 hour to review 
and approve the work.
    BSX routinely contacts States regarding their vessel titling 
systems. There are currently 45 States titling vessels and 1 State that 
makes titling optional.\29\ Provided that these States become compliant 
with the recent regulatory changes in the Standard Numbering System, 
Boating Accident Report Database, and VIS (33 CFR parts 173, 174, 181, 
and 187) by the required date, any changes made to the current titling 
systems should be minimal.
---------------------------------------------------------------------------

    \29\ Email from NASBLA Vessel Registration, Identification, and 
Titling Committee to William Burgess, Compliance Officer, Coast 
Guard, February 10, 2010. Available in the docket where indicated 
under the ADDRESSES portion of this final rule.
---------------------------------------------------------------------------

    Coast Guard personnel attended the National Association of State 
Boating Law Administrators Workshop held in Lexington, KY from February 
23 to 28, 2020. Approximately 40 boating administrators from the States 
were in attendance, and representatives from 4 States (Wisconsin, 
Minnesota, Alaska, and South Carolina) indicated they were 
contemplating adopting UCOTA-V. None of these 4 States have conducted a 
complete cost analysis, but the initial projected cost ranged from $0 
to about $8,000.
    The primary changes required include the ability to mark a title as 
``branded,'' and to add any numbered vessels that are not currently 
required to be titled. For example, Virginia adopted UCOTA-V and 
reprogrammed their system to accept the branded designation. According 
to the State of Virginia's Boating Law Administrator (BLA),\30\ this 
was accomplished at no cost to the State.\31\
---------------------------------------------------------------------------

    \30\ The governor of each State appoints a single agency to be 
the recipient and administrator of grant funds received from the 
State Recreational Boating Safety Grant Program, which is authorized 
under 46 U.S.C. Chapter 131. These State agencies, in turn, appoint 
a BLA to be the State's single point of contact for the purposes of 
administering the grant program. Although duties can vary from State 
to State, every State has an assigned BLA whose primary function is 
to administer the recreational boating safety program within the 
State. The BLA for Virginia is an employee with the Virginia 
Department of Game and Inland Fisheries.
    \31\ Conversation at the National Association of State Boating 
Law Administrators Workshop (circa February 28, 2018 to March 1, 
2018) with Mr. Thomas Guess, Boating Law Administrator, Virginia, 
and William Burgess, Compliance Officer, Coast Guard. According to 
the Virginia BLA, updates to the system are included as a part of 
routine information technology maintenance. See also https://community.nasbla.org/blogs/thomas-guess/2018/08/23/ucotva-in-virginia. The website is dated August 23, 2018, and was last viewed 
on February 5, 2020.
---------------------------------------------------------------------------

    The remaining 11 States that do not currently title vessels do 
title vehicles, and their vehicle titling systems could add vessels. As 
an example, Connecticut (previously a non-titling State) adopted UCOTA-
V and its Department of Motor Vehicles began issuing titles for 
vessels.\32\ This process is analogous to registering a motor vehicle. 
In other words, at the time a person buys a car, the owner must 
register and title the car with the cognizant state. Likewise, a vessel 
owner will now be able to register and title vessel at the same time 
and in the same place. Connecticut did not incur any new costs 
associated with this transition since it used the existing 
infrastructure, and the change was completed as a part of an 
information technology update as per the State BLA.\33\
---------------------------------------------------------------------------

    \32\ No changes will be required to any State's systems to 
facilitate population of the VIS. Data received from the States for 
inclusion in the VIS will be handled by the Coast Guard contractor 
and reformatted as necessary to populate the VIS database. We do not 
expect States to incur additional costs as the cost is already 
captured under the existing Coast Guard long-term contract for 
management and maintenance of the VIS.
    \33\ Conversation at the National Association of State Boating 
Law Administrators Workshop (circa February 28, 2018 to March 1, 
2018) with Ms. Eleanor Mariani, Boating Law Administrator, 
Connecticut, and William Burgess, Compliance Officer, Coast Guard.
---------------------------------------------------------------------------

    The 10 States that have adopted or have begun adopting the UCOTA-V 
model have engaged in the tasks noted in this text as costs of 
compliance. For example, they have already collaborated with the Coast 
Guard regarding their vessel titling system updates. These States will 
not incur additional costs because they elected to adopt the UCOTA-V 
model prior to this regulation. These States will not require the use 
of a computer technician to upgrade the computer system because the 
conversion has taken place already. No further action is needed by 
States in this situation. As noted earlier, these States are already 
familiar with UCOTA-V and will review their existing procedures as a 
result of this final rule.

                               Table 6--Summary of Costs for Subpart D Compliance
----------------------------------------------------------------------------------------------------------------
                                    Time burden and                           Applicable      Direct or indirect
              Task                 responsible party         Cost             population             cost
----------------------------------------------------------------------------------------------------------------
Draft UCOTA-V legislative         2 hours (State      47 States x [(2     One-time cost for   Direct.
 language.                         manager) 5 hours    hours x State       47 States.
                                   (State attorney).   manager wage
                                                       rate) + (5 hours
                                                       x State attorney
                                                       wage rate)].

[[Page 34185]]

 
Coordinate with Coast Guard for   0.5 hours (State    47 States x (0.5    One-time cost for   Direct.
 compliance and certification.     manager).           hour x State        47 States.
                                                       manager wage
                                                       rate).
Assist with update and convert    0.25 hours (admin   47 States x [(0.25  One-time cost for   Direct.
 to compliant computer system.     assistant) 0.75     hour x admin        47 States.
                                   hours (State        assistant wage
                                   manager).           rate) + (0.75
                                                       hour x State
                                                       manager wage
                                                       rate)].
Oversee update or conversion to   0.25 hours (State   47 States x (0.25   One-time cost for   Direct.
 compliant system.                 manager).           hour x State        47 States.
                                                       manager wage
                                                       rate).
Update or convert to a compliant  12.6 hours          47 States x (12.6   One-time cost for   Direct.
 system.                           (computer           hours x computer    47 States.
                                   technician).        technician wage
                                                       rate).
Amend State's computers to        2 hours (computer   7 States x [(2      One-time cost for   Direct.
 comport with UCOTA-V. (Applies    technician) 0.25    hours x computer    7 States.
 to States without an existing     hours (State        technician wage
 titling program.).                manager).           rate) + (0.25
                                                       hour x State
                                                       manager wage
                                                       rate)].
Update State procedures or        5 hours (State      47 States x (5      One-time cost for   Direct.
 processes.                        manager).           hours x State       47 States.
                                                       manager wage
                                                       rate).
Post updated procedures on        0.25 hours (State   24 States x [(0.25  One-time cost for   Direct.
 website.                          manager) 1 hour     hour x State        24 States.
                                   (computer           manager wage
                                   technician).        rate) + (1 hour x
                                                       computer
                                                       technician wage
                                                       rate)].
----------------------------------------------------------------------------------------------------------------

Cost Calculations for the Final Rule
    We discuss the derivation of cost data in the following paragraphs. 
We estimate the approximate loaded hourly labor rates of State 
employees as follows: Manager ($94.30); administrative assistant 
($33.81); computer technician ($67.98); and lawyer ($124.57). The 
loaded wage factor is 1.74 for non-managerial State workers and 1.56 
for managers at the State level, based on Bureau of Labor Statistics 
(BLS) data. See table 7 for details.

                                     Table 7--Loaded Wage Factor Calculation
                                                     [$2020]
----------------------------------------------------------------------------------------------------------------
                                                                       Total          Wage &        Loaded wage
         Personnel category               Data source(s) \1\       compensation      salaries         factor
----------------------------------------------------------------------------------------------------------------
All Workers, State and Local         BLS Employer Costs for               $51.54          $29.54            1.74
 Government.                          Employee Compensation, all
                                      workers in State and Local
                                      Government.
Managers, State and Local            BLS Employer Costs for                64.02           41.02            1.56
 Government.                          Employee Compensation,
                                      Managers in State and
                                      Local Government.
Coast Guard Uniform Positions......  2020 Military Active &       ..............  ..............  ..............
                                      Reserve Component Pay
                                      Tables \2\.
----------------------------------------------------------------------------------------------------------------
\1\ A loaded wage rate is what a company pays per hour to employ a person, including the hourly wage and the
  cost of benefits (health insurance, vacation, etc.). To calculate the load factor, we used the series IDs
  CMU3019200000000D (for all workers) and CMU3010000100000D (for managers, professional and related occupations)
  using the multi-screen database. To repeat this process, visit https://data.bls.gov/cgi-bin/dsrv?cm and select
  ``State and local government workers.'' Select ``Total Compensation'' and ``Wages and salaries.'' Select ``All
  workers'' or ``Management, professional and related occupations.'' Select ``Public administration.'' Select
  ``All workers.'' Select ``United States.'' Select ``Cost of Compensation.'' Select ``Not seasonally
  adjusted.'' Finally, use values for the fourth quarter of 2020 to calculate the load factor by dividing total
  compensation by wages and salaries.
\2\ https://www.dfas.mil/militarymembers/payentitlements/Pay-Tables.html. Select table named ``2020 Military
  Active & Reserve Component Pay Tables''. Data was posted on December 30, 2019 and web page was last updated
  January 27, 2020. This page was last viewed on January 18, 2022.

    For all provisions with costs to the Government, we use publicly 
available data found on OPM's website under ``Policy, Data, and 
Oversight'' and in the Congressional Budget Office's report, 
``Comparing the Compensation of Federal and Private-Sector Employees, 
2011 to 2015.'' We estimate labor costs attributed to the Government 
Coast Guard compliance officers, GS-14 managers, GS-13 computer 
technicians, and the Commandant. We estimate the fully loaded labor 
costs for a GS-13 and GS-14 compliance officer at $71.03 and $79.48 
respectively.\34\ We use a weighted average of the wage rates ($73.14) 
for calculations. We estimate the wage rate for a GS-14 manager at 
$79.48, the wage rate for a GS-13 computer technician at $71.03, and 
the wage rate for the Commandant (O-10) at $163. This figure represents 
a loaded

[[Page 34186]]

wage rate for uniformed Coast Guard positions.\35\
---------------------------------------------------------------------------

    \34\ https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2020/general-schedule/. Labor costs calculated by (1) 
finding hourly wage rate for GS-level under ``2020 General Schedule 
(Base)''. Choose Step 5 value. (2) To calculate load factor, we go 
to https://www.cbo.gov/system/files/115th-congress-2017-2018/reports/52637-federalprivatepay.pdf. Use tables 2 and 4. Divide the 
total compensation by the wages for a Federal employee. Multiply by 
hourly wage rate obtained from OPM. GS-13 falls under ``Master's 
Degree'' and GS-14 falls under ``Professional/Doctorate Degree''. 
For the Master's Degree we end up with a benefits to wage ratio, 
using this method, of $74.80/$45 = 1.66 and for the Professional/
Doctoral Degree of $81.70/$51.90 = 1.56. Using these to obtain a 
fully burdened rate, we end up, for the GS-13 labor, $42.73 x 1.66 = 
$ $71.03 and, for the GS-14 labor, $50.49 x 1.56 = $79.48.
    \35\ The load factor for uniformed positions is based on the 
Coast Guard's analysis of compensation and benefits of Coast Guard 
enlisted and commissioned personnel based on data found in https://www.dfas.mil/militarymembers/payentitlements/Pay-Tables.html. This 
page was last viewed on December 20, 2019.
---------------------------------------------------------------------------

    For positions outside the Coast Guard, we use publicly available 
data from the BLS Occupational Compensation Survey to estimate wage 
rates for State and local positions that will be impacted by the final 
rule. We present the estimated wage rates and a summary of the data for 
the final rule in table 8.

                                        Table 8--Loaded Wage Calculation
                                                     [$2020]
----------------------------------------------------------------------------------------------------------------
                                                                    Mean hourly
         Personnel category               Data source(s) \1\           wage         Load factor     Loaded wage
----------------------------------------------------------------------------------------------------------------
Computer Developer.................  Software Developers,                 $54.94            1.74          $95.60
                                      Applications (OC 15-1256)
                                      \2\.
Administrative Support.............  Secretaries and                       19.43            1.74           33.81
                                      Administrative Assistants,
                                      Except Legal, Medical, and
                                      Executive (OC 43-6014) \3\.
General Manager....................  General and Operations                60.45            1.56           94.30
                                      Managers (OC 11-1021) in
                                      Management Occupations \4\.
Lawyer.............................  Lawyers, Judges, and                  71.59            1.74          124.57
                                      Related Workers (OC 23-
                                      1011) in the Legal
                                      Occupations \5\.
Coast Guard Commandant (O-10)......  Military Active & Reserve    ..............  ..............             163
                                      Component Pay Tables \6\.
Civilian Computer Technician (GS-    OPM Salary Table (2020)....           42.73            1.66           71.03
 13).
Civilian Manager (GS-14)...........  OPM Salary Table (2020)....           50.49            1.57           79.48
Coast Guard Compliance Officer (GS-  OPM Salary Table (2020)....           42.73            1.66           71.03
 13).
Coast Guard Compliance Officer (GS-  OPM Salary Table (2020)....           50.49            1.57           79.48
 14).
Coast Guard Compliance Officer       Weighted average by the      ..............  ..............           73.14
 (average) \7\.                       formula: [(0.75 x $71.03
                                      GS-13 Compliance Officers'
                                      wage rate) + (0.25 x
                                      $79.48 GS-14 Compliance
                                      Officers' wage rate)].
----------------------------------------------------------------------------------------------------------------
\1\ To calculate the loaded wages, we used Occupational Code 11-1021 (General and Operations Managers) for
  general managers, Occupational Code 43-6014 (Secretaries, Except Legal, Medical, and Executive) for clerical,
  and Occupational Code 15-1256 (Software Developers and Software Quality Assurance Analysts and Testers) for
  computer developers. Please see the footnotes to table 7 for instructions on calculating load factors.
\2\ https://www.bls.gov/oes/current/oes151256.htm.
\3\ https://www.bls.gov/oes/2020/may/oes436014.htm.
\4\ https://www.bls.gov/oes/2020/may/oes111021.htm.
\5\ https://www.bls.gov/oes/2020/may/oes231011.htm.
\6\ https://www.dfas.mil/militarymembers/payentitlements/Pay-Tables.html.
\7\ Coast Guard compliance officers consist of GS-13s and GS-14s. There are four Coast Guard employees who will
  complete this requirement (three GS-13s and one GS-14). To calculate the in-government wage rate, we
  calculated three-fourths of the GS-13 in-government wage rate ($71.03) and one-fourth of the GS-14 in-
  government wage rate ($79.48) and added them together to estimate a more accurate wage rate for the team that
  will complete this process.

    We estimate the costs in this RA in 2020 dollars based on BLS wage 
rates. We estimate the total cost for States to be $182,607, 
undiscounted (not including Government costs). We estimate the total 
Government costs associated with this final rule to be $14,537. We show 
the summary of compliance costs in table 9.

                                    Table 9--Estimated Cost of Final Rule \1\
----------------------------------------------------------------------------------------------------------------
             CFR citation                      Task \2\             Cost calculation           Total costs
----------------------------------------------------------------------------------------------------------------
                                       Costs to Regulated Public (States)
----------------------------------------------------------------------------------------------------------------
General Compliance Costs (All States)
 (See table 3) (One-time costs for
 States):
    33 CFR 187.......................  Become familiar with     56 States x (0.5 hour x  $2,640
                                        Final Rule.              $94.30/hour State
                                                                 manager).
    33 CFR 187.......................  Review procedures and    56 States x (0.5 hour x  $2,640
                                        website.                 $94.30/hour State
                                                                 manager).
    33 CFR 187.......................  Write press release or   56 States x (0.5 hour x  $2,640
                                        email.                   $94.30/hour State
                                                                 manager).
    33 CFR 187.......................  Update website.          56 States x (1 hour x    Not in cost
                                        (Potential cost, not     $95.60/hour computer     calculations.
                                        used in analysis).       technician).
----------------------------------------------------------------------------------------------------------------
    Subtotal--General Compliance       .......................  .......................  $7,921
     Costs (States).
VIS Compliance Costs (States) (See
 table 5) (One-time costs for
 States):

[[Page 34187]]

 
    33 CFR 187.7.....................  Prepare and submit an    18 States x (16 hours x  $27,158
                                        MOA.                     $94.30/hour State
                                                                 manager).
    33 CFR 187.7.....................  Complete New User        18 States x (0.1 hour x  $170
                                        request form.            $94.30/hour State
                                                                 manager).
    33 CFR 187.7.....................  Coordinate with Coast    18 States x (1 hour x    $1,697
                                        Guard for data           $94.30/hour State
                                        transfer. (Potential     manager).
                                        cost, but used in
                                        analysis).
    33 CFR 187.7.....................  Draft legislative        2 States x [(40 hours x  $17,510
                                        language to amend        $94.30/hour State
                                        privacy laws.            manager) + (40 hours x
                                                                 $124.57/hour State
                                                                 attorney)].
    33 CFR 187.7.....................  Put forward and vote on  Applies to 2 States....  Unquantified.
                                        the privacy
                                        legislation.
----------------------------------------------------------------------------------------------------------------
    Subtotal--VIS Compliance Costs     .......................  .......................  $46,535
     (States).
UCOTA-V Adoption (Subpart D)
 Compliance Costs (States) (See table
 6) (One-time costs for States):
    33 CFR 187.306...................  Draft UCOTA-V            47 States x [(2 hours x  $38,138
                                        legislative language.    $94.30/hour State
                                                                 manager) + (5 hours x
                                                                 $124.57/hour State
                                                                 attorney)].
    33 CFR 187.306...................  Put forward and vote on  Applies to 47 States...  Unquantified.
                                        the privacy
                                        legislation.
    33 CFR 187.306...................  Coordinate with Coast    47 States x (0.5 hour x  $2,216
                                        Guard for compliance     $94.30/hour State
                                        and certification.       manager).
    33 CFR 187.312...................  Assist with update and   47 States x [(0.25 hour  $3,721
                                        convert to compliant     x $33.81/hour admin
                                        system.                  assistant) + (0.75
                                                                 hour x $94.30/hour
                                                                 State manager)].
    33 CFR 187.312...................  Oversee update or        47 States x (0.25 hour   $1,108
                                        conversion to            x $94.30/hour State
                                        compliant system.        manager).
    33 CFR 187.312...................  Update or convert to a   47 States x (12.6 hours  $56,614
                                        compliant system.        x $95.60/hour computer
                                                                 technician).
    33 CFR 187.312...................  Amend State's computers  7 States x [(2 hours x   $1,503
                                        to comport with UCOTA-   $95.60/hour computer
                                        V.                       technician) + (0.25
                                                                 hour x $94.30/hour
                                                                 State manager)].
    33 CFR 187.......................  Update procedures or     47 States x (5 hours x   $22,161
                                        processes.               $94.30/hour State
                                                                 manager).
    33 CFR 187.......................  Post updated procedures  24 States x [(0.25 hour  $2,860
                                        on website.              x $94.30/hour State
                                                                 manager) + (1 hour x
                                                                 $95.60/hour computer
                                                                 technician)].
----------------------------------------------------------------------------------------------------------------
    Subtotal: UCOTA-V (Subpart D)      .......................  .......................  $128,321
     Compliance Costs (States).
      Total Cost for Regulated Public  .......................  .......................  $182,607
       (States).
----------------------------------------------------------------------------------------------------------------
                   Federal Government Costs (One-time cost to Government for States affected)
----------------------------------------------------------------------------------------------------------------
33 CFR 187.306.......................  Process New User         18 States x (0.5 hour x  $658
                                        request from States.     $73.14/hour Compliance
                                                                 Officer).
33 CFR 187.306.......................  Process an MOA from      18 States x [(0.2 hour   $11,448
                                        States.                  x $163/hour
                                                                 Commandant) + (8.25
                                                                 hours x $73.14/hour
                                                                 Compliance Officer)].
33 CFR 187.306.......................  Coordinate with 18       18 States x (0.5 hour x  $658
                                        States for VIS.          $73.14/hour Compliance
                                                                 Officer).
33 CFR 187.312.......................  Coordinate with 47       47 States x (0.5 hour x  $1,682
                                        States on UCOTA-V        $73.14/hour Compliance
                                        certification.           Officer).
33 CFR 187...........................  Update Coast Guard's     (1 hour x $71.03/hour    $91
                                        website. (Initial year   computer technician) +
                                        cost).                   (0.25 hour x $79.48/
                                                                 hour Federal manager).
----------------------------------------------------------------------------------------------------------------
    Total for Federal Government       .......................  .......................  $14,537
     (Coast Guard).
    Total for Regulated Public and     .......................  .......................  $197,148
     Government.
----------------------------------------------------------------------------------------------------------------
\1\ Totals may not sum due to rounding. Undiscounted costs appear in the table.
\2\ ``Potential indirect costs'' not included (See table 2). Unquantified costs included but are not part of
  cost calculations.


[[Page 34188]]

Total Costs
    Using a 7-percent discount rate, we estimate the total discounted 
cost of the final rule to be $138,490 (rounded). The total annualized 
cost at a 7-percent discount rate is $19,718 (rounded). See table 10.
    For the estimated cost to the regulated public, the Coast Guard 
expects all States will comply within 10 years of this rule. However, 
we do not have specific information as to the rate of compliance. As 
such, we assume equal probability for each year; that is, we estimate 
10 percent will comply each year for the next 10 years. Given this, the 
total cost to the regulated public, as shown in table 9, is $182,607. 
This is $18,261 (rounded) when averaged across 10 years.
    For the cost to the Government, we assume that the $91 website 
update will occur in the first year. Subtracting that, we calculate the 
annual cost over the next 9 years by dividing the total by 10 ($1,445). 
The first year cost to Government will be $1,445 + $91, which is 
$1,536.

                                                    Table 10--Total Estimated Cost of the Final Rule
                                        [10-year period of analysis, 7- and 3-percent discount rates ($2020)] \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              Costs to the regulated public           Costs to the government               Total estimated costs
                                                        (states)               -------------------------------------------------------------------------
                  Year                   --------------------------------------
                                          Undiscounted      7%          3%      Undiscounted      7%         3%     Undiscounted      7%          3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................       $18,261  $17,066.07  $17,728.83        $1,536  $1,435.51  $1,491.26       $19,797  $18,501.59  $19,220.10
2.......................................        18,261   15,949.60   17,212.46         1,445   1,262.12   1,362.05        19,706   17,211.72   18,574.51
3.......................................        18,261   14,906.17   16,711.13         1,445   1,179.55   1,322.38        19,706   16,085.72   18,033.51
4.......................................        18,261   13,931.00   16,224.40         1,445   1,102.38   1,283.86        19,706   15,033.38   17,508.26
5.......................................        18,261   13,019.63   15,751.84         1,445   1,030.27   1,246.47        19,706   14,049.89   16,998.31
6.......................................        18,261   12,167.88   15,293.05         1,445     962.86   1,210.16        19,706   13,130.74   16,503.21
7.......................................        18,261   11,371.85   14,847.62         1,445     899.87   1,174.92        19,706   12,271.72   16,022.54
8.......................................        18,261   10,627.89   14,415.17         1,445     841.00   1,140.70        19,706   11,468.90   15,555.86
9.......................................        18,261    9,932.61   13,995.31         1,445     785.98   1,107.47        19,706   10,718.60   15,102.78
10......................................        18,261    9,282.81   13,587.68         1,445     734.56   1,075.22        19,706   10,017.38   14,662.89
                                         ---------------------------------------------------------------------------------------------------------------
    Total...............................    182,607.00  128,255.52  155,767.47     14,537.00  10,234.12  12,414.49    197,148.00  138,489.64  168,181.97
        Annualized......................  ............   18,260.70   18,260.70  ............   1,457.11   1,455.36  ............   19,717.81   19,716.06
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Totals may not sum due to independent rounding.

Benefits
    This final rule amends the Coast Guard's existing regulations (see 
33 CFR 187 subpart D, ``Guidelines for State Vessel Titling Systems'') 
to better align with UCOTA-V. The final rule encourages uniformity 
amongst the States through the adoption of the UCOTA-V model, in its 
entirety or in part, and follows recommendations by the National 
Boating Safety Advisory Council and NASBLA. Although the movement to 
harmonize State titling laws has existed for some time, not all States 
have pursued legislation. Some States have chosen to wait for the Coast 
Guard to pass the UCOTA-V regulation.
    This final rule also promotes consumer protection against fraud. A 
large number of recreational vessels are resold annually. In 2017, 
there were approximately 1.1 million pre-owned vessels sold in the 
United States.\36\ Given this large number, the industry is vulnerable 
to the types of fraud UCOTA-V is designed to prevent.
---------------------------------------------------------------------------

    \36\ https://boatingindustry.com/news/2021/11/09/pre-owned-boat-sales-exceeded-one-million-units-in-2020-for-the-first-time-since-2006/ (``Pre-owned boat sales exceeded one million units in 2020 for 
the first time since 2006,'' November 9, 2021). Accessed and last 
viewed on May 12, 2022.
---------------------------------------------------------------------------

    The final rule facilitates the procurement of secured loans on 
vessels. If the Coast Guard does not certify a State titling system, 
then a State cannot confer preferred mortgage status on a mortgage or 
security interest for a vessel, which functions as a security measure 
for financial entities. Many financial institutions require eligible 
vessels to be documented and to have their preferred mortgages 
recorded. A preferred mortgage is considered more secure, with less 
risk to the lender. This places the lender in a position to provide 
lower interest rates over longer terms to the consumer. In turn, the 
lender may earn more over the term of the loan with less risk. More 
specifically, the lender faces a lower risk of loans defaulting; 
therefore, the lender's loan portfolio may provide better returns 
despite the lower interest rates offered to borrowers.
    The consumer benefits as well. With preferred loans, the borrower 
has a loan with better terms. Relative to a non-preferred loan, the 
consumer pays less per month due to the lower interest rate on 
preferred loans.
    In addition, consistent titling procedures across States will deter 
the practice of ``title washing,'' which occurs after the sale of a 
damaged vessel for salvage when the buyer makes cosmetic repairs and 
resells the vessel without disclosing its previous damage. Recreational 
boaters may benefit from this final rule by being able to assist States 
and law enforcement in recovering their lost or stolen vessels.
    Furthermore, we intend this final rule to promote maritime security 
by facilitating State participation in the VIS. After the September 
2001 terrorist attacks, a Coast Guard gap analysis showed that law 
enforcement agencies, including the Coast Guard, lacked the ability to 
easily and verifiably identify recreational vessels and their owners 
and operators, especially when a vessel is registered in a State other 
than that in which the law enforcement agency operates. This inability 
deprives law enforcement agencies of critical tools for deterring crime 
and maritime-based terrorism.
    Since its inception in 2007, the VIS has remedied this inability by 
collecting and providing verifiable data for vessels in VIS-
participating States. However, as of May 10, 2022, 16 States still do 
not participate in the VIS.\37\ Facilitating full VIS participation by 
these States will enhance maritime security. Because of the high level 
of interest among the States in aligning their vessel titling systems 
with UCOTA-V, aligning our subpart D regulations with UCOTA-V will make 
it easier for States to obtain subpart D certification.
---------------------------------------------------------------------------

    \37\ https://cgmix.uscg.mil/VISInformation.aspx?VISOption=.
---------------------------------------------------------------------------

Alternatives Considered
    Alternative 1--Take no action. This alternative would allow 
existing regulations to remain in conflict with State laws and UCOTA-V. 
For States complying with the existing regulations, this alternative 
would result in them not receiving the benefits of deterred ``title 
washing,'' recovery and identification of

[[Page 34189]]

abandoned vessels, consumer fraud protection, and security measures for 
financial entities. Participation in the VIS would continue at its 
current low rate. This alternative would result in no additional costs, 
as no new regulations would be implemented, but would also result in no 
benefits, as there would be no changes to current practice. Therefore, 
we rejected this alternative.
    Alternative 2--This is the preferred alternative. This alternative 
will change the guidelines in subpart D so that any State that adopts 
UCOTA-V and participates in the VIS would be in compliance. This will 
encourage compliance and participation and provide benefits to States, 
lenders, and consumers. The cost implications associated with this 
alternative are specified in the Costs section of this RA and assume 
100 percent participation from all 56 States. The total 7 percent 
discounted cost over 10 years will be $176,570. The qualitative 
benefits would be increased mitigation of fraudulent ownership, the 
creation of uniformity amongst the States, which will help facilitate 
transfers of vessel ownership, to deter theft of vessels and aid law 
enforcement agencies by making recovery of stolen vessels across State 
lines easier, promote consumer protection, and facilitate making 
secured loans on vessels. Therefore, this is the preferred alternative.
    Alternative 3--This alternative would repeal existing guidelines 
for certification of State titling requirements and allow States to 
regulate vessel titling with no coordination or oversight. This would 
remove the ability for States to establish separate programs to enable 
vessels to gain preferred mortgage status and discourage participation 
in the VIS. In this scenario, each State would have a unique vessel 
titling system; this alternative would produce varying costs and 
benefits, which may be beneficial to the States as they could customize 
a titling program to meet their specific needs. However, we are unable 
to estimate the costs due to the number of possibilities offered, and 
they would occur without coordination or oversight from the Coast 
Guard. Harmonization of regulations across States would be impossible. 
As this would not satisfy the goals of this regulatory action, we 
rejected this alternative.

B. Small Entities

    Under the Regulatory Flexibility Act, 5 U.S.C. 601-612, we have 
considered whether this final rule will 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 
50,000.
    Based on the analysis above, this final rule will affect 56 States 
and U.S. territories.\38\ All governmental jurisdictions that will 
potentially be directly regulated by this final rule have populations 
greater than 50,000. These entities are not considered to be small 
entities based on the Small Business Administration's definition of 
what is a small governmental jurisdiction.\39\ 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.
---------------------------------------------------------------------------

    \38\ See 46 U.S.C. 123. The only issuing authorities are the 56 
States. Tribal governments are excluded legally as authorities from 
numbering and titling vessels.
    \39\ Small governmental jurisdictions are defined as governments 
of cities, counties, towns, townships, villages, school districts, 
or special districts with a population of less than 50,000.
---------------------------------------------------------------------------

C. Assistance for Small Entities

    Under section 213(a) of the Small Business Regulatory Enforcement 
Fairness Act of 1996, Public Law 104-121, we offer to assist small 
entities in understanding this rule so that they can better evaluate 
its effects on them and participate in the rulemaking. The Coast Guard 
will not retaliate against small entities that question or complain 
about this rule or any policy or action of the Coast Guard.

D. Collection of Information

    This final rule calls for the modification of an existing 
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.
    Title: Vessel Identification System.
    OMB Control Number: 1625-0070.
    Summary of the Collection of Information: Public Law 100-710 (46 
U.S.C. 12501) requires the establishment of the VIS, which provides 
participating States with access to data of vessels numbered by States. 
States voluntarily provide the VIS data. The States, boating public, 
and law enforcement are the primary beneficiaries. To become part of 
the VIS, States must submit an MOA to the Coast Guard.
    Need for Information: The VIS collects State-numbered vessel 
identification and ownership data and provides that data to law 
enforcement agencies in the States that choose to participate in the 
VIS. Participation in the VIS is entirely voluntary. In order to 
participate, States must comply with certain requirements to ensure the 
integrity and uniformity of the information provided to the VIS.
    Proposed Use of Information: The Coast Guard will use this 
information to track vessel information and facilitate the recovery of 
stolen or missing vessels.
    Description of the Respondents: The 50 States, District of 
Columbia, and 5 territories. The Coast Guard describes these as ``56 
States.''
    Number of Respondents: As a result of the proposal, the Coast Guard 
anticipates that there will be two additional States joining the VIS 
annually until all States join. Over a 10 year period, this final rule 
will increase the number of respondents from 38 States to 56 States.
    Frequency of Response: The number of responses per year of this 
final rule will vary by participating States. New MOA applications, VIS 
user requests, and VIS data uploads are required with the initial MOA 
application process. For existing participants, VIS user requests and 
VIS data uploads are required. Based on the current collection of VIS 
information data, the Coast Guard anticipates that each new participant 
will submit an MOA application once, a VIS user request once a year, 
and upload VIS data every 2 weeks.
    Burden of Response: The burden of response includes three 
components--MOA applications, VIS data uploads, and VIS user requests. 
The burden for an MOA application, VIS data upload and VIS new user 
request form are 16 hours, 0.6 hour, and 0.1 hour, respectively. An MOA 
application and a VIS new user request form will be prepared by a 
manager. A computer technician will handle the VIS data upload
    Estimate of Total Annual Burden: This final rule will require 
additional hours for VIS data uploads (32 hours annually),\40\ MOAs (32 
hours annually), and VIS user requests (1 hour

[[Page 34190]]

annually).\41\ The final rule will increase the total burden by 64 
hours (rounded from the actual 63.3 hours), from 5,792 hours to 5,856 
hours.\42\
---------------------------------------------------------------------------

    \40\ Rounded from the actual 31.2 hours.
    \41\ Rounded from the actual 0.2 hour.
    \42\ Rounded from the actual 5,855.3 hours.
---------------------------------------------------------------------------

    As required by 44 U.S.C. 3507(d), we will submit a copy of this 
rule to OMB for its review of the collection of information. You are 
not required to respond to a collection of information unless it 
displays a currently valid OMB control number. OMB has not yet 
completed its review of this collection.

E. Federalism

    A rule has implications for federalism under Executive Order 13132 
(Federalism) if it has a substantial direct effect on States, 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 Executive Order 
13132 and have determined that it is consistent with the fundamental 
federalism principles and preemption requirements described in 
Executive Order 13132. Our analysis follows.
    The purpose of this final rule is to revise Coast Guard 
requirements for State participation in the Coast Guard-maintained VIS 
and guidelines for State vessel titling systems. The Coast Guard is 
mandated to establish and maintain the VIS, but State participation in 
the VIS is voluntary. Nothing in this final rule requires States to 
participate in the VIS. However, once electing to participate in the 
VIS, a State must comply with the VIS requirements to ensure integrity 
and uniformity of information. Likewise, requesting certification that 
a State vessel titling system complies with the guidelines is also 
voluntary, but such a system must comply with subpart D for voluntary 
certification. This final rule will not require States to request 
certification, change their existing titling systems, or otherwise 
preempt related State regulations. Therefore, the final rule is 
consistent with the principles of federalism and preemption 
requirements in Executive Order 13132.

F. Unfunded Mandates

    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 one year. Although this final rule will not 
result in such expenditure, we do discuss the effects of this 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 Executive Order 12630 
(Governmental Actions and Interference with Constitutionally Protected 
Property Rights).

H. Civil Justice Reform

    This final 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.

I. Protection of Children

    We have analyzed this final rule under Executive Order 13045 
(Protection of Children from Environmental Health Risks and Safety 
Risks). This final rule is not an economically significant rule and 
will not create an environmental risk to health or risk to safety that 
might disproportionately affect children.

J. Indian Tribal Governments

    This final rule does not have tribal implications under Executive 
Order 13175 (Consultation and Coordination with Indian Tribal 
Governments), because it will 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 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 because it is not a 
``significant regulatory action'' under Executive Order 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 final rule under Department of Homeland 
Security Management Directive 023-01, Rev. 1, associated implementing 
instructions, and Environmental Planning COMDTINST 5090.1 (series), 
which guide the Coast Guard in complying with the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made 
a determination that this action is one of a category of actions that 
do not individually or cumulatively have a significant effect on the 
human environment. A Record of Environmental Consideration supporting 
this determination is available in the docket. For instructions on 
locating the docket, see the ADDRESSES section of this preamble. This 
final rule is categorically excluded under paragraphs L54 and L57 of 
Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev 1. 
Paragraph L54 pertains to regulations which are editorial or procedural 
and paragraph L57 pertains to regulations concerning documentation of 
vessels. This final rule involves changes to regulations for certifying 
a State's titling system for undocumented vessels.

List of Subjects in 33 CFR Part 187

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

    For the reasons discussed in the preamble, the Coast Guard amends 
33 CFR part 187 as follows:

PART 187--VESSEL IDENTIFICATION SYSTEM

0
1. Revise the authority citation for part 187 to read as follows:

    Authority: 46 U.S.C. 2103, 12501, 31322; DHS Delegation No. 
00170.1, Revision No. 01.2, paragraph (II)(92).


0
2. Revise Sec.  187.7 to read as follows:


Sec.  187.7   Definitions.

    As used in this part--
    Approved numbering system means a numbering system approved by the 
Secretary of the Department of

[[Page 34191]]

Homeland Security under 46 U.S.C. Chapter 123.
    Barge means a vessel that is not self-propelled or fitted for 
propulsion by sail, paddle, oar, or similar device.
    Builder's certificate means a certificate of the facts of build of 
a vessel described in 46 CFR 67.99.
    Buyer means a person who buys or contracts to buy a vessel.
    Cancel, with respect to a certificate of title, means to make the 
certificate ineffective.
    Certificate of documentation means Coast Guard Form CG-1270.
    Certificate of origin means a record created by a manufacturer or 
importer as the manufacturer's or importer's proof of identity of a 
vessel, and includes a manufacturer's certificate or statement of 
origin and an importer's certificate or statement of origin, but 
excludes a builder's certificate.
    Certificate of ownership means Coast Guard Form CG-1330.
    Certificate of title means a record, created by the office or by a 
governmental agency of another State under the law of that State, which 
is designated as a certificate of title by the office or agency and is 
evidence of ownership of a vessel.
    Commandant means the Commandant of the U.S. Coast Guard or an 
authorized representative of the Commandant of the U.S. Coast Guard.
    Dealer means a person, including a manufacturer, in the business of 
selling vessels.
    Documented vessel means a vessel covered by a certificate of 
documentation issued pursuant to 46 U.S.C. Section 12105, and excludes 
a foreign-documented vessel.
    Electronic means relating to technology having electrical, digital, 
magnetic, wireless, optical, electromagnetic, or similar capabilities.
    Electronic certificate of title means a certificate of title 
consisting of information that is stored solely in an electronic medium 
and is retrievable in perceivable form.
    Foreign-documented vessel means a vessel the ownership of which is 
recorded in a registry maintained by a country other than the United 
States, identifying each person having an ownership interest in a 
vessel, and includes a unique alphanumeric designation for the vessel.
    Good faith means honesty in fact and the observance of reasonable 
commercial standards of fair dealing.
    Hull damaged means compromised with respect to the integrity of a 
vessel's hull by a collision, allision, lightning strike, fire, 
explosion, running aground, or similar occurrence, or the sinking of a 
vessel in a manner that creates a significant risk to the integrity of 
the vessel's hull.
    Hull identification number or HIN means the alphanumeric 
designation assigned to a vessel under subpart C of 33 CFR part 181.
    Issuing authority means either a State that has an approved 
numbering system or the Coast Guard in a State that does not have an 
approved numbering system.
    Lien creditor, with respect to a vessel, means--
    (1) A creditor that has acquired a lien on the vessel by 
attachment, levy, or the like;
    (2) An assignee for benefit of creditors from the time of 
assignment;
    (3) A trustee in bankruptcy from the date of the filing of the 
petition; or
    (4) A receiver in equity from the time of appointment.
    Manufacturer means any person engaged in the business of 
manufacturing or importing new vessels for the purpose of sale or 
trade.
    Office means the State department or agency that creates 
certificates of title.
    Owner means a person having legal title to a vessel.
    Owner of record means the owner indicated in the files of the 
Office or, if the files indicate more than one owner, the one first 
indicated.
    Participating State means a State certified by the Commandant as 
meeting the requirements of subpart C of this part.
    Person means an individual or any form of legal or commercial 
entity.
    Purchase means to take by any voluntary transaction that creates an 
interest in a vessel.
    Purchaser means a person taking by purchase.
    Record means information inscribed on a tangible medium or stored 
in an electronic or other medium and is retrievable in perceivable 
form.
    Secured party, with respect to a vessel, means a person--
    (1) In whose favor a security interest is created or provided for 
under a security agreement, whether or not any obligation to be secured 
is outstanding;
    (2) Who is a consignor under State law as prescribed by State law 
related to security interests in goods; or
    (3) Who holds a security interest arising under State law related 
to security interests in goods.
    Secured party of record means the secured party whose name is 
indicated as the name of the secured party in the files of the office 
or, if the files indicate more than one secured party, the one first 
indicated.
    Security interest means an interest in a vessel that secures 
payment or performance of an obligation if the interest is created by 
contract or otherwise as prescribed by state law related to security 
interests in goods.
    Sign means, with present intent to authenticate or adopt a record, 
to--
    (1) Make or adopt a tangible symbol; or
    (2) Attach to or logically associate with the record an electronic 
symbol, sound, or process.
    State means a State of the United States, the District of Columbia, 
American Samoa, Guam, Northern Mariana Islands, Puerto Rico, U.S. 
Virgin Islands, and any other territory or possession of the United 
States.
    State of principal operation means the State on whose waters a 
vessel is or will be used, operated, navigated, or employed more than 
on the waters of any other State during a calendar year.
    Title brand means a designation of previous damage, use, or 
condition that must be indicated on a certificate of title.
    Titled vessel means a vessel titled by a State.
    Titling authority means a State whose vessel titling system has 
been certified by the Commandant under subpart D of this part.
    Transfer of ownership means a voluntary or involuntary conveyance 
of an interest in a vessel.
    Vessel means every description of watercraft used or capable of 
being used as a means of transportation on water, except--
    (1) A seaplane;
    (2) An amphibious vehicle for which a certificate of title is 
issued pursuant to a state's motor vehicle certificate of title act or 
a similar statute of another state;
    (3) Watercraft that operate only on a permanently fixed, 
manufactured course and the movement of which is restricted to or 
guided by means of a mechanical device to which the watercraft is 
attached or by which the watercraft is controlled;
    (4) A stationary floating structure that--
    (i) Does not have and is not designed to have a mode of propulsion 
of its own;
    (ii) Is dependent for utilities upon a continuous utility hookup to 
a source originating on shore; and
    (iii) Has a permanent, continuous hookup to a shore side sewage 
system.
    (5) Watercraft owned by the United States, a State, or a foreign 
government or a political subdivision of any of them; and
    (6) Watercraft used solely as a lifeboat on another watercraft.
    Vessel Identification System or VIS means a system for collecting 
information on vessels and vessel

[[Page 34192]]

ownership as required by 46 U.S.C. 12501.
    Vessel number means the alphanumeric designation for a vessel 
issued pursuant to 46 U.S.C. 12301.
    Written certificate of title means a certificate of title 
consisting of information inscribed on a tangible medium.

0
3. Revise subpart D to read as follows:
Subpart D--State Vessel Titling Systems
Sec.
187.301 Certification for preferred mortgage status--Eligibility 
requirements.
187.302 Terms States must define.
187.303 Applicability.
187.304 Titling exclusively in one State.
187.305 Law governing vessel covered by certificate of title.
187.306 Certificate of title required.
187.307 Application for certificate of title.
187.308 Creation and cancellation of certificate of title.
187.309 Content of certificate of title.
187.310 Title brand.
187.311 Maintenance of and access to files.
187.312 Action required on creation of certificate of title.
187.313 Effect of certificate of title.
187.314 Effect of possession of certificate of title; judicial 
process.
187.315 Perfection of security interest.
187.316 Termination statement.
187.317 Transfer of ownership.
187.318 Effect of missing or incorrect information.
187.319 Transfer of ownership by secured party's transfer statement.
187.320 Transfer by operation of law.
187.321 Application for transfer of ownership or termination of 
security interest without certificate of title.
187.322 Replacement certificate of title.
187.323 Rights of purchaser other than secured party.
187.324 Rights of secured party.
187.325 Duties and operation of office.

Subpart D--State Vessel Titling Systems


Sec.  187.301   Certification for preferred mortgage status--
Eligibility requirements.

    The Commandant, under 46 U.S.C. 31322(d)(1)(A) and Sec.  187.13, 
will certify a State whose vessel titling system meets the requirements 
of this subpart as eligible to have security interests that are 
perfected under its law deemed preferred mortgages under 46 U.S.C. 
31322. The State must also comply with the VIS participation 
requirements of Sec.  187.11 and subpart C of this part and make vessel 
information it collects available to the VIS.


Sec.  187.302   Terms States must define.

    (a) A State must define the terms ``certificate of origin'', 
``dealer'', ``documented vessel'', ``issuing authority'', 
``manufacturer'', ``owner'', ``person'', ``secured party'', ``security 
interest'', ``titling authority'', and ``vessel'' substantially as 
defined in 33 CFR 187.7.
    (b) In addition to the definitions in Sec.  187.7, a State must 
also define the following terms as prescribed by State law related to 
security interests in goods:
    (1) Agreement;
    (2) Buyer in ordinary course of business;
    (3) Conspicuous;
    (4) Consumer goods;
    (5) Debtor;
    (6) Knowledge;
    (7) Lease;
    (8) Lessor;
    (9) Notice;
    (10) Representative;
    (11) Sale;
    (12) Security agreement;
    (13) Seller;
    (14) Send; and
    (15) Value.
    (c) The definitions in Sec.  187.7 and the terms in paragraph (b) 
of this section do not apply to any State or Federal law governing 
licensing, numbering, or registration if the same term is used in that 
law.


Sec.  187.303   Applicability.

    Subject to a savings clause provided under state law, this subpart 
applies to any transaction, certificate of title, or record relating to 
a vessel, even if the transaction, certificate of title, or record was 
entered into or created before the effective date of the State law.


Sec.  187.304   Titling exclusively in one State.

    A State must require that all vessels required to be numbered in 
the State under 46 U.S.C. Chapter 123 be titled only in that State, if 
that State issues titles to that class of vessels.


Sec.  187.305   Law governing vessels covered by certificate of title.

    (a) The local law of the State under whose certificate of title a 
vessel is covered governs all issues relating to the certificate from 
the time the vessel becomes covered by the certificate until the vessel 
becomes covered by another certificate or becomes a documented vessel, 
even if no other relationship exists between the State and the vessel 
or its owner.
    (b) A vessel becomes covered by a certificate of title when an 
application for the certificate and the applicable fee are delivered to 
the office in accordance with this subpart or to the governmental 
agency that creates a certificate in another jurisdiction in accordance 
with the law of that jurisdiction.


Sec.  187.306   Certificate of title required.

    (a) Except as otherwise provided in paragraphs (b) and (c) of this 
section, the owner of a vessel must deliver to the office of the State 
in which the vessel is principally used an application for a 
certificate of title for the vessel, with the applicable fee, not later 
than 20 days after the later of--
    (1) The date of a transfer of ownership; or
    (2) The date the State becomes the State of principal use.
    (b) An application for a certificate of title is not required for--
    (1) A documented vessel;
    (2) A foreign-documented vessel;
    (3) A barge;
    (4) A vessel before delivery if the vessel is under construction or 
completed pursuant to contract; or
    (5) A vessel held by a dealer for sale or lease.
    (c) The office may not issue, transfer, or renew a certificate of 
number for a vessel issued pursuant to 46 U.S.C. 12301 unless it has 
created a certificate of title for the vessel or an application for a 
certificate for the vessel and the applicable fee have been delivered 
to the office.


Sec.  187.307   Application for certificate of title.

    (a) Except as otherwise provided in Sec. Sec.  187.310, 187.315, 
187.319, 187.320, 187.321, and 187.322, only an owner may apply for a 
certificate of title.
    (b) An application for a certificate of title must be signed by the 
applicant and contain--
    (1) The applicant's name, the street address of the applicant's 
principal residence, and, if different, the applicant's mailing 
address;
    (2) The name and mailing address of each other owner of the vessel;
    (3) The social security number or taxpayer identification number of 
each owner;
    (4) The hull identification number (HIN) for the vessel or, if 
none, an application for the issuance of a HIN for the vessel;
    (5) The vessel number for the vessel or, if none issued by the 
office, an application for a vessel number;
    (6) A description of the vessel as required by the office, which 
must include--
    (i) The official number for the vessel, if any, assigned by the 
Coast Guard;
    (ii) The name of the manufacturer, builder, or maker;
    (iii) The model year or the year in which the manufacture or build 
of the vessel was completed;
    (iv) The overall length of the vessel;
    (v) The vessel type, as described in 33 CFR 174.19;
    (vi) The hull material, as described in 33 CFR 174.19;
    (vii) The propulsion type, as described in 33 CFR 174.19;

[[Page 34193]]

    (viii) The engine drive type, as described in 33 CFR 174.19, if 
any; and
    (ix) The fuel type, as described in 33 CFR 174.19, if any;
    (7) An indication of all security interests in the vessel known to 
the applicant and the name and mailing address of each secured party;
    (8) A statement that the vessel is not a documented vessel or a 
foreign-documented vessel;
    (9) Any title brand known to the applicant and, if known, the 
jurisdiction under whose law the title brand was created;
    (10) If the applicant knows that the vessel is hull damaged, a 
statement that the vessel is hull damaged;
    (11) If the application is made in connection with a transfer of 
ownership, the transferor's name, street address, and, if different, 
mailing address, the sales price, if any, and the date of the transfer; 
and
    (12) If the vessel was previously registered or titled in another 
jurisdiction, a statement identifying each jurisdiction known to the 
applicant in which the vessel was registered or titled.
    (c) In addition to the information required by paragraph (b) of 
this section, an application for a certificate of title may contain an 
electronic communication address of the owner, transferor, or secured 
party.
    (d) Except as otherwise provided in Sec. Sec.  187.319, 187.320, 
187.321, and 187.322, an application for a certificate of title must be 
accompanied by a certificate of title signed by the owner shown on the 
certificate which identifies the applicant as the owner of the vessel, 
or is accompanied by a record that identifies the applicant as the 
owner.
    (e) If there is no certificate of title as discussed in paragraph 
(d) of this section, an application for a certificate of title must be 
accompanied by--
    (1) If the vessel was a documented vessel, a record issued by the 
Coast Guard that shows the vessel is no longer a documented vessel and 
identifies the applicant as the owner;
    (2) If the vessel was a foreign-documented vessel, a record issued 
by the foreign country which shows the vessel is no longer a foreign-
documented vessel and identifies the applicant as the owner; or
    (3) In all other cases, a certificate of origin, bill of sale, or 
other record that to the satisfaction of the office identifies the 
applicant as the owner.
    (f) A record submitted in connection with an application is part of 
the application and the office must maintain it in its files.
    (g) The office may require an application for a certificate of 
title to be accompanied by payment or evidence of payment of all fees 
and taxes payable by the applicant under State law if in connection 
with the application or the acquisition or use of the vessel.


Sec.  187.308   Creation and cancellation of certificate of title.

    (a) Unless an application for a certificate of title is rejected 
under paragraph (c) or (d) of this section, the office must create a 
certificate for the vessel in accordance with paragraph (b) of this 
section not later than 20 days after delivery to it of an application 
that complies with Sec.  187.307.
    (b) If the office creates electronic certificates of title, it must 
create an electronic certificate unless in the application the secured 
party of record or, if none, the owner of record, requests that the 
office create a written certificate.
    (c) Except as otherwise provided in paragraph (d) of this section, 
the office may reject an application for a certificate of title only 
if--
    (1) The application does not comply with Sec.  187.307;
    (2) The application does not contain documentation sufficient for 
the office to determine whether the applicant is entitled to a 
certificate;
    (3) There is a reasonable basis for concluding that the application 
is fraudulent or issuance of a certificate would facilitate a 
fraudulent or illegal act; or
    (4) The application does not comply with State law.
    (d) The office must reject an application for a certificate of 
title for a vessel that is a documented vessel or a foreign-documented 
vessel.
    (e) The office may cancel a certificate of title created by it only 
if the office--
    (1) Could have rejected the application for the certificate under 
paragraph (c) of this section;
    (2) Is required to cancel the certificate under another provision 
of this subpart; or
    (3) Receives satisfactory evidence that the vessel is a documented 
vessel or a foreign-documented vessel.


Sec.  187.309   Content of certificate of title.

    (a) A certificate of title must contain--
    (1) The date the certificate was created;
    (2) The name of the owner of record and, if not all owners are 
listed, an indication that there are additional owners indicated in the 
files of the office;
    (3) The mailing address of the owner of record;
    (4) The hull identification number (HIN);
    (5) The information listed in Sec.  187.307(b)(6);
    (6) Except as otherwise provided in Sec.  187.315(b), the name and 
mailing address of the secured party of record, if any, and if not all 
secured parties are listed, an indication that there are other security 
interests indicated in the files of the office; and
    (7) All title brands indicated in the files of the office covering 
the vessel, including brands indicated on a certificate created by a 
governmental agency of another jurisdiction and delivered to the 
office.
    (b) This subpart does not preclude the office from noting on a 
certificate of title the name and mailing address of a secured party 
that is not a secured party of record.
    (c) For each title brand indicated on a certificate of title, the 
certificate must identify the jurisdiction under whose law the title 
brand was created or the jurisdiction that created the certificate on 
which the title brand was indicated. If the meaning of a title brand is 
not easily ascertainable or cannot be accommodated on the certificate, 
the certificate may state: ``Previously branded in (insert the 
jurisdiction under whose law the title brand was created or whose 
certificate of title previously indicated the title brand).''
    (d) If the files of the office indicate that a vessel was 
previously registered or titled in a foreign country, the office must 
indicate on the certificate of title that the vessel was registered or 
titled in that country.
    (e) A written certificate of title must contain a form that all 
owners indicated on the certificate may sign to evidence consent to a 
transfer of an ownership interest to another person. The form must 
include a certification, signed under penalty of perjury, that the 
statements made are true and correct to the best of each owner's 
knowledge, information, and belief.
    (f) A written certificate of title must contain a form for the 
owner of record to indicate, in connection with a transfer of an 
ownership interest, that the vessel is hull damaged.


Sec.  187.310   Title brand.

    (a) Unless paragraph (c) of this section applies, at or before the 
time the owner of record transfers an ownership interest in a hull-
damaged vessel that is covered by a certificate of title created by the 
office, if the damage occurred while that person was an owner of the 
vessel and the person has notice of the damage at the time of the 
transfer, the owner must--

[[Page 34194]]

    (1) Deliver to the office an application for a new certificate that 
complies with Sec.  187.307 of this part and includes the title brand 
designation ``Hull Damaged''; or
    (2) Indicate on the certificate in the place designated for that 
purpose that the vessel is hull damaged and deliver the certificate to 
the transferee.
    (b) Not later than 20 days after delivery to the office of the 
application under paragraph (a)(1) of this section or the certificate 
of title under paragraph (a)(2) of this section, the office must create 
a new certificate that indicates that the vessel is branded ``Hull 
Damaged''.
    (c) Before an insurer transfers an ownership interest in a hull-
damaged vessel that is covered by a certificate of title created by the 
office, the insurer must deliver to the office an application for a new 
certificate that complies with Sec.  187.306 and includes the title 
brand designation ``Hull Damaged''. Not later than 20 days after 
delivery of the application to the office, the office must create a new 
certificate that indicates that the vessel is branded ``Hull Damaged''.
    (d) An owner of record who fails to comply with paragraph (a) of 
this section, a person who solicits or colludes in a failure by an 
owner of record to comply with paragraph (a) of this section, or an 
insurer that fails to comply with paragraph (c) of this section is 
subject to penalty as prescribed by state law.


Sec.  187.311   Maintenance of and access to files.

    (a) For each record relating to a certificate of title submitted to 
the office, the office must--
    (1) Ascertain or assign the hull identification number (HIN) for 
the vessel in accordance with 33 CFR part 181;
    (2) Maintain the HIN and all the information submitted with the 
application pursuant to Sec.  187.307(b) to which the record relates, 
including the date and time the record was delivered to the office;
    (3) Maintain the files for public inspection subject to paragraph 
(e) of this section; and
    (4) Index the files of the office as required by paragraph (b) of 
this section.
    (b) The office must maintain in its files the information contained 
in all certificates of title created under this subpart. The 
information in the files of the office must be searchable by the HIN of 
the vessel, the vessel number, the name of the owner of record, and any 
other method used by the office.
    (c) The office must maintain in its files, for each vessel for 
which it has created a certificate of title, all title brands known to 
the office, the name of each secured party known to the office, the 
name of each person known to the office to be claiming an ownership 
interest, and all stolen-property reports the office has received.
    (d) Upon request, for safety, security, or law-enforcement 
purposes, the office must provide to Federal, State, or local 
government the information in its files relating to any vessel for 
which the office has issued a certificate of title.
    (e) Except as otherwise provided by laws of the titling State, the 
information required under Sec.  187.309 is a public record, but the 
information provided under Sec.  187.307(b)(3) is not a public record.


Sec.  187.312   Action required on creation of certificate of title.

    (a) On creation of a written certificate of title, the office must 
promptly send the certificate to the secured party of record or, if 
none, to the owner of record, at the address indicated for that person 
in the files of the office. On creation of an electronic certificate of 
title, the office must promptly send a record evidencing the 
certificate to the owner of record and, if there is one, to the secured 
party of record, at the address indicated for that person in the files 
of the office. The office may send the record to the person's mailing 
address or, if indicated in the files of the office, an electronic 
address.
    (b) If the office creates a written certificate of title, any 
electronic certificate of title for the vessel is canceled and replaced 
by the written certificate. The office must maintain in the files of 
the office the date and time of cancellation.
    (c) Before the office creates an electronic certificate of title, 
any written certificate for the vessel must be surrendered to the 
office. If the office creates an electronic certificate, the office 
must destroy or otherwise cancel the written certificate for the vessel 
that has been surrendered to the office and maintain in the files of 
the office the date and time of destruction or other cancellation. If a 
written certificate being canceled is not destroyed, the office must 
indicate on the face of the certificate that it has been canceled.


Sec.  187.313   Effect of certificate of title.

    A certificate of title is prima facie evidence of the accuracy of 
the information in the record that constitutes the certificate.


Sec.  187.314   Effect of possession of certificate of title; judicial 
process.

    Possession of a certificate of title does not by itself provide a 
right to obtain possession of a vessel. Garnishment, attachment, levy, 
replevin, or other judicial process against the certificate is not 
effective to determine possessory rights to the vessel. This subpart 
does not prohibit enforcement under State law, other than this subpart 
(33 CFR part 187 subpart D), of a security interest in, levy on, or 
foreclosure of a statutory or common-law lien on a vessel. Absence of 
an indication of a statutory or common-law lien on a certificate does 
not invalidate the lien.


Sec.  187.315   Perfection of security interest.

    (a) Except as otherwise provided in this section or a savings 
clause provided under state law, a security interest in a vessel may be 
perfected only by delivery to the office of an application for a 
certificate of title that identifies the secured party and otherwise 
complies with Sec.  187.307. The security interest is perfected on the 
later of delivery to the office of the application and the applicable 
fee or attachment of the security interest as prescribed by State law 
related to security interests in goods.
    (b) If the interest of a person named as owner, lessor, consignor, 
or bailor in an application for a certificate of title delivered to the 
office is a security interest, the application sufficiently identifies 
the person as a secured party. Identification on the application for a 
certificate of a person as owner, lessor, consignor, or bailor is not 
by itself a factor in determining whether the person's interest is a 
security interest.
    (c) If the office has created a certificate of title for a vessel, 
a security interest in the vessel may be perfected by delivery to the 
office of an application, on a form the office may require, to have the 
security interest added to the certificate. The application must be 
signed by an owner of the vessel or by the secured party and must 
include--
    (1) The name of the owner of record;
    (2) The name and mailing address of the secured party;
    (3) The hull identification number (HIN) for the vessel; and
    (4) If the office has created a written certificate of title for 
the vessel, the certificate.
    (d) A security interest perfected under paragraph (c) of this 
section is perfected on the later of delivery to the office of the 
application and all applicable fees or attachment of the security 
interest as prescribed by State law related to security interests in 
goods.

[[Page 34195]]

    (e) On delivery of an application that complies with paragraph (c) 
of this section and payment of all applicable fees, the office must 
create a new certificate of title pursuant to Sec.  187.308 and deliver 
the new certificate or a record evidencing an electronic certificate 
pursuant to Sec.  187.312(a). The office must maintain in the files of 
the office the date and time of delivery of the application to the 
office.
    (f) If a secured party assigns a perfected security interest in a 
vessel, the receipt by the office of a statement providing the name of 
the assignee as secured party is not required to continue the perfected 
status of the security interest against creditors of and transferees 
from the original debtor. Upon obtaining a release from the secured 
party indicated in the files of the office or on the certificate, a 
purchaser of a vessel subject to a security interest takes free of the 
security interest and of the rights of a transferee unless the transfer 
is indicated in the files of the office or on the certificate.
    (g) This section does not apply to a security interest--
    (1) Created in a vessel by a person during any period in which the 
vessel is inventory held for sale or lease by the person or is leased 
by the person as lessor if the person is in the business of selling 
vessels;
    (2) In a barge for which no application for a certificate of title 
has been delivered to the office; or
    (3) In a vessel before delivery if the vessel is under 
construction, or completed, pursuant to contract and for which no 
application for a certificate has been delivered to the office.
    (h) This paragraph applies if a certificate of documentation for a 
documented vessel is deleted or canceled. If a security interest in the 
vessel was valid immediately before deletion or cancellation against a 
third party as a result of compliance with 42 U.S.C. 31321, the 
security interest is and remains perfected until the earlier of 4 
months after cancellation of the certificate or the time the security 
interest becomes perfected under this subpart.
    (i) A security interest in a vessel arising under State law related 
to security interests in goods is perfected when it attaches but 
becomes unperfected when the debtor obtains possession of the vessel, 
unless before the debtor obtains possession the security interest is 
perfected pursuant to paragraphs (a) or (c) of this section.
    (j) A security interest in a vessel as proceeds of other collateral 
is perfected to the extent provided in State law.
    (k) A security interest in a vessel perfected under the law of 
another jurisdiction is perfected to the extent provided in State law.


Sec.  187.316   Termination statement.

    (a) A secured party indicated in the files of the office as having 
a security interest in a vessel must deliver a termination statement to 
the office and, on the debtor's request, to the debtor, by the earlier 
of--
    (1) Twenty days after the secured party receives a signed demand 
from an owner for a termination statement and there is no obligation 
secured by the vessel subject to the security interest and no 
commitment to make an advance, incur an obligation, or otherwise give 
value secured by the vessel; or
    (2) If the vessel is consumer goods, 30 days after there is no 
obligation secured by the vessel and no commitment to make an advance, 
incur an obligation, or otherwise give value secured by the vessel.
    (b) If a written certificate of title has been created and 
delivered to a secured party and a termination statement is required 
under paragraph (a) of this section, the secured party, not later than 
the date required by paragraph (a), must deliver the certificate to the 
debtor or to the office with the statement. If the certificate is lost, 
stolen, mutilated, destroyed, or is otherwise unavailable or illegible, 
the secured party must deliver with the statement, not later than the 
date required by paragraph (a), an application for a replacement 
certificate meeting the requirements of Sec.  187.322.
    (c) On delivery to the office of a termination statement authorized 
by the secured party, the security interest to which the statement 
relates ceases to be perfected. If the security interest to which the 
statement relates was indicated on the certificate of title, the office 
must create a new certificate and deliver the new certificate or a 
record evidencing an electronic certificate. The office must maintain 
in its files the date and time of delivery to the office of the 
statement.
    (d) A secured party that fails to comply with this section is 
liable for any loss that the secured party had reason to know might 
result from its failure to comply and which could not reasonably have 
been prevented and for the cost of an application for a certificate of 
title under Sec.  187.307 or Sec.  187.322.


Sec.  187.317   Transfer of ownership.

    (a) On voluntary transfer of an ownership interest in a vessel 
covered by a certificate of title, the following rules apply:
    (1) If the certificate is a written certificate of title and the 
transferor's interest is noted on the certificate, the transferor must 
promptly sign the certificate and deliver it to the transferee. If the 
transferor does not have possession of the certificate, the person in 
possession of the certificate has a duty to facilitate the transferor's 
compliance with this paragraph. A secured party does not have a duty to 
facilitate the transferor's compliance with this paragraph if the 
proposed transfer is prohibited by the security agreement.
    (2) If the certificate of title is an electronic certificate of 
title, the transferor must promptly sign and deliver to the transferee 
a record evidencing the transfer of ownership to the transferee.
    (3) The transferee has a right enforceable by specific performance 
to require the transferor comply with paragraph (a)(1) or (2) of this 
section.
    (b) The creation of a certificate of title identifying the 
transferee as owner of record satisfies paragraph (a) of this section.
    (c) A failure to comply with paragraph (a) or to apply for a new 
certificate of title does not render a transfer of ownership of a 
vessel ineffective between the parties. Except as otherwise provided in 
Sec.  187.318, Sec.  187.319, Sec.  187.323(a), or Sec.  187.324, a 
transfer of ownership without compliance with paragraph (a) of this 
section is not effective against another person claiming an interest in 
the vessel.
    (d) A transferor that complies with paragraph (a) of this section 
is not liable as owner of the vessel for an event occurring after the 
transfer, regardless of whether the transferee applies for a new 
certificate of title.


Sec.  187.318   Effect of missing or incorrect information.

    Except as otherwise provided as prescribed by State law related to 
security interests in goods, a certificate of title or other record 
required or authorized by this subpart is effective even if it contains 
incorrect information or does not contain required information.


Sec.  187.319   Transfer of ownership by secured party's transfer 
statement.

    (a) In this section, ``secured party's transfer statement'' means a 
record signed by the secured party of record stating--
    (1) That there has been a default on an obligation secured by the 
vessel;

[[Page 34196]]

    (2) The secured party of record is exercising or has exercised 
post-default remedies with respect to the vessel;
    (3) By reason of the exercise, the secured party of record has the 
right to transfer the ownership interest of an owner, and the name of 
the owner;
    (4) The name and last known mailing address of the owner of record 
and the secured party of record;
    (5) The name of the transferee;
    (6) Other information required by Sec.  187.307(b); and
    (7) One of the following:
    (i) The certificate of title is an electronic certificate;
    (ii) The secured party does not have possession of the written 
certificate of title created in the name of the owner of record; or
    (iii) The secured party is delivering the written certificate of 
title to the office with the secured party's transfer statement.
    (b) Unless the office rejects a secured party's transfer statement 
for a reason stated in Sec.  187.308(c), not later than 20 days after 
delivery to the office of the statement and payment of fees and taxes 
payable under State law in connection with the statement or the 
acquisition or use of the vessel, the office must--
    (1) Accept the statement;
    (2) Amend the files of the office to reflect the transfer; and
    (3) If the name of the owner whose ownership interest is being 
transferred is indicated on the certificate of title--
    (i) Cancel the certificate even if the certificate has not been 
delivered to the office;
    (ii) Create a new certificate indicating the transferee as owner; 
and
    (iii) Deliver the new certificate or a record evidencing an 
electronic certificate.
    (c) An application under paragraph (a) of this section or the 
creation of a certificate of title under paragraph (b) of this section 
is not by itself a disposition of the vessel and does not by itself 
relieve the secured party of its duties under State law.


Sec.  187.320   Transfer by operation of law.

    (a) In this section--
    (1) ``By operation of law'' means pursuant to a law or judicial 
order affecting ownership of a vessel--
    (i) Because of death, divorce or other family law proceeding, 
merger, consolidation, dissolution, or bankruptcy;
    (ii) Through the exercise of the rights of a lien creditor or a 
person having a lien created by statute or rule of law; or
    (iii) Through other legal process.
    (2) ``Transfer-by-law statement'' means a record signed by a 
transferee stating that by operation of law the transferee has acquired 
or has the right to acquire an ownership interest in a vessel.
    (b) A transfer-by-law statement must contain--
    (1) The name and last known mailing address of the owner of record 
and the transferee and the other information required by Sec.  
187.307(b);
    (2) Documentation sufficient to establish the transferee's 
ownership interest or right to acquire the ownership interest;
    (3) A statement that--
    (i) The certificate of title is an electronic certificate of title;
    (ii) The transferee does not have possession of the written 
certificate of title created in the name of the owner of record; or
    (ii) The transferee is delivering the written certificate to the 
office with the transfer-by-law statement; and
    (4) Except for a transfer described in paragraph (a)(1)(i) of this 
section, evidence that notification of the transfer and the intent to 
file the transfer-by-law statement has been sent to all persons 
indicated in the files of the office as having an interest, including a 
security interest, in the vessel.
    (c) Unless the office rejects a transfer-by-law statement for a 
reason stated in Sec.  187.308(c) or because the statement does not 
include documentation satisfactory to the office as to the transferee's 
ownership interest or right to acquire the ownership interest, not 
later than 20 days after delivery to the office of the statement and 
payment of fees and taxes payable under State law in connection with 
the statement or with the acquisition or use of the vessel, the office 
must--
    (1) Accept the statement;
    (2) Amend the files of the office to reflect the transfer; and
    (3) If the name of the owner whose ownership interest is being 
transferred is indicated on the certificate of title--
    (i) Cancel the certificate even if the certificate has not been 
delivered to the office;
    (ii) Create a new certificate indicating the transferee as owner;
    (iii) Indicate on the new certificate any security interest 
indicated on the canceled certificate, unless a court order provides 
otherwise; and
    (iv) Deliver the new certificate or a record evidencing an 
electronic certificate.
    (d) This section does not apply to a transfer of an interest in a 
vessel by a secured party as prescribed by State law related to 
security interests in goods.


Sec.  187.321   Application for transfer of ownership or termination of 
security interest without certificate of title.

    (a) Except as otherwise provided in Sec. Sec.  187.319 and 187.320, 
if the office receives, unaccompanied by a signed certificate of title, 
an application for a new certificate that includes an indication of a 
transfer of ownership or a termination statement, the office may create 
a new certificate under this section only if--
    (1) All other requirements under Sec. Sec.  187.307 and 187.308 are 
met;
    (2) The applicant provides an affidavit stating facts showing that 
the applicant is entitled to a transfer of ownership or termination 
statement;
    (3) The applicant provides the office with satisfactory evidence 
that notification of the application has been sent to the owner of 
record and all persons indicated in the files of the office as having 
an interest, including a security interest, in the vessel, at least 45 
days have passed since the notification was sent, and the office has 
not received an objection from any of those persons; and
    (4) The applicant submits any other information required by the 
office as evidence of the applicant's ownership or right to terminate 
the security interest, and the office has no credible information 
indicating theft, fraud, or an undisclosed or unsatisfied security 
interest, lien, or other claim to an interest in the vessel.
    (b) The office may indicate in a certificate of title created under 
paragraph (a) of this section that the certificate was created without 
submission of a signed certificate or termination statement. Unless 
credible information indicating theft, fraud, or an undisclosed or 
unsatisfied security interest, lien, or other claim to an interest in 
the vessel is delivered to the office not later than 1 year after 
creation of the certificate, on request in a form and manner required 
by the office, the office must remove the indication from the 
certificate.


Sec.  187.322   Replacement certificate of title.

    (a) If a written certificate of title is lost, stolen, mutilated, 
destroyed, or otherwise becomes unavailable or illegible, the secured 
party of record or, if no secured party is indicated in the files of 
the office, the owner of record may apply for and, by furnishing 
information satisfactory to the office, obtain a replacement 
certificate in the name of the owner of record.
    (b) An applicant for a replacement certificate of title must sign 
the application, and, except as otherwise permitted by the office, the 
application

[[Page 34197]]

must comply with Sec.  187.307. The application must include the 
existing certificate unless the certificate is lost, stolen, mutilated, 
destroyed, or otherwise unavailable.
    (c) A replacement certificate of title created by the office must 
comply with Sec.  187.309 and indicate on the face of the certificate 
that it is a replacement certificate.
    (d) If a person receiving a replacement certificate of title 
subsequently obtains possession of the original written certificate, 
the person must promptly destroy the original certificate of title.


Sec.  187.323   Rights of purchaser other than secured party.

    (a) A buyer in ordinary course of business has the protections 
afforded by State law even if an existing certificate of title was not 
signed and delivered to the buyer or a new certificate listing the 
buyer as owner of record was not created.
    (b) Except as otherwise provided in Sec. Sec.  187.317 and 187.324, 
the rights of a purchaser of a vessel who is not a buyer in ordinary 
course of business or a lien creditor are governed by State law.


Sec.  187.324   Rights of secured party.

    (a) Subject to paragraph (b) of this section, the effect of 
perfection and non-perfection of a security interest and the priority 
of a perfected or unperfected security interest with respect to the 
rights of a purchaser or creditor, including a lien creditor, is 
governed by State law.
    (b) If, while a security interest in a vessel is perfected by any 
method under this subpart, the office creates a certificate of title 
that does not indicate that the vessel is subject to the security 
interest or contain a statement that it may be subject to security 
interests not indicated on the certificate--
    (1) A buyer of the vessel, other than a person in the business of 
selling or leasing vessels of that kind, takes free of the security 
interest if the buyer, acting in good faith and without knowledge of 
the security interest, gives value and receives possession of the 
vessel; and
    (2) The security interest is subordinate to a conflicting security 
interest in the vessel that is perfected under Sec.  187.315 after 
creation of the certificate and without the conflicting secured party's 
knowledge of the security interest.


Sec.  187.325   Duties and operation of office.

    (a) The office must retain the evidence used to establish the 
accuracy of the information in its files relating to the current 
ownership of a vessel and the information on the certificate of title.
    (b) The office must retain in its files all information regarding a 
security interest in a vessel for at least 10 years after the office 
receives a termination statement regarding the security interest. The 
information must be accessible by the hull identification number (HIN) 
for the vessel and any other methods provided by the office.
    (c) If a person submits a record to the office, or submits 
information that is accepted by the office, and requests an 
acknowledgment of the filing or submission, the office must send to the 
person an acknowledgment showing the HIN of the vessel to which the 
record or submission relates, the information in the filed record or 
submission, and the date and time the record was received or the 
submission accepted. A request under this section must contain the HIN 
and be delivered by means authorized by the office.
    (d) The office must send or otherwise make available in a record 
the following information to any person that requests it and pays the 
applicable fee:
    (1) Whether the files of the office indicate, as of a date and time 
specified by the office, but not a date earlier than 3 days before the 
office received the request, any certificate of title, security 
interest, termination statement, or title brand that relates to a 
vessel--
    (i) Identified by a HIN designated in the request;
    (ii) Identified by a vessel number designated in the request; or
    (iii) Owned by a person designated in the request.
    (2) With respect to the vessel--
    (i) The name and address of any owner as indicated in the files of 
the office or on the certificate of title;
    (ii) The name and address of any secured party as indicated in the 
files of the office or on the certificate, and the effective date of 
the information; and
    (iii) A copy of any termination statement indicated in the files of 
the office and the effective date of the termination statement.
    (3) With respect to the vessel, a copy of any certificate of 
origin, secured party transfer statement, transfer-by-law statement 
under Sec.  187.320, and other evidence of previous or current 
transfers of ownership.
    (e) In responding to a request under this section, the office may 
provide the requested information in any medium. On request, the office 
must send the requested information in a record that is in keeping with 
State rules of evidence.

    Dated: May 31, 2022.
W.R. Arguin,
Rear Admiral, U.S. Coast Guard, Assistant Commandant for Prevention 
Policy.
[FR Doc. 2022-11995 Filed 6-3-22; 8:45 am]
BILLING CODE 9110-04-P