[Federal Register Volume 60, Number 151 (Monday, August 7, 1995)]
[Rules and Regulations]
[Pages 40238-40242]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-19345]
[[Page 40237]]
_______________________________________________________________________
Part III
Department of Transportation
_______________________________________________________________________
Coast Guard
_______________________________________________________________________
46 CFR Part 67
Facsimile Filing of Instruments; Final Rule
Federal Register / Vol. 60, No. 151 / Monday, August 7, 1995 / Rules
and Regulations
[[Page 40238]]
DEPARTMENT OF TRANSPORTATION
Coast Guard
46 CFR Part 67
[CGD 94-070]
RIN 2115-AE98
Facsimile Filing of Instruments
AGENCY: Coast Guard, DOT.
ACTION: Final rule.
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SUMMARY: The Coast Guard is amending its vessel documentation
regulations to provide for optional filing of commercial instruments by
facsimile, and to establish a filing and recording handling fee for
filing instruments by facsimile. The option of filing commercial
instruments by facsimile complements the centralization of Coast Guard
vessel documentation services. Facsimile filing of commercial
instruments will assist the centralized vessel documentation center to
deliver timely services to distant vessel documentation customers and
is responsive to time sensitive matters. Filing commercial instruments
by facsimile will further streamline the vessel documentation process.
EFFECTIVE DATE: This rule is effective on October 1, 1995.
ADDRESSES: Unless otherwise indicated, documents referred to in this
preamble are available for inspection or copying at the office of the
Executive Secretary, Marine Safety Council (G-LRA/3406), U.S. Coast
Guard Headquarters, 2100 Second Street SW., room 3406, Washington, DC
20593-0001 between 8 a.m. and 3 p.m., Monday through Friday, except
Federal holidays. The telephone number is (202) 267-1477.
FOR FURTHER INFORMATION CONTACT: Ms. Patricia Williams, National Vessel
Documentation Center; (800) 799-8362.
SUPPLEMENTARY INFORMATION:
Drafting Information
The principal persons involved in drafting this document are
Lieutenant Commander Don M. Wrye, Project Manager, National Vessel
Documentation Center and C. G. Green, Project Counsel, Office of Chief
Counsel.
Regulatory History
On March 6, 1995, the Coast Guard published a notice of proposed
rulemaking titled ``Facsimile Filing of Instruments'' in the Federal
Register (60 FR 12188). The Coast Guard received 11 letters commenting
on the proposal. No public hearing was requested and none was held.
Background and Purpose
Significant changes to the vessel documentation program were made
in 1988 by Pub. L. 100-710 (the ``statute''). Among other things, the
statute added chapter 313 to title 46, U.S. Code, to revise,
consolidate, and codify into positive law the ship mortgage laws
administered by the Department of Transportation. The statute made
certain substantive changes to then-existing law to modernize ship
mortgages and the filing and recording process.
The legislative history for the statute is contained in House
Report No. 100-918. That report noted that one of the primary purposes
of chapter 313 of title 46, U.S. Code, is to provide third parties with
notice of the existence of mortgages and liens. This rule implements
one aspect of the suggestions the report made concerning office
automation.
On November 15, 1993, the Coast Guard published a final rule (58 FR
60266) revising 46 CFR Part 67 implementing the substantive changes
made by the statute. That rule became effective on January 1, 1994. On
June 15, 1995, the Coast Guard published a final rule (60 FR 31602)
consolidating all vessel documentation functions in the National Vessel
Documentation Center (NVDC) in Martinsburg, WV. That rule became
effective on August 1, 1995. In accordance with that final rule, after
August 1, 1995, all documents related to vessel documentation functions
must be submitted to the NVDC. However, to assist the public in
adjusting to the consolidation, all of the previous 14 regional vessel
documentation offices will have someone present to receive documents
relating to vessel documentation functions on behalf of the NVDC until
September 30, 1995. After September 30, 1995, only the office in New
Orleans, LA, will have persons attached to receive such documents.
Under subpart O of 46 CFR part 67, instruments to be filed and
recorded with the Coast Guard are submitted to the National Vessel
Documentation Center. Any instrument submitted for filing and recording
must be a completed, executed instrument at the time it is submitted.
Upon receipt of the instrument at or on behalf of the NVDC, it is
stamped with a date and time received. If the instrument submitted
meets the minimal requirements for filing, it is marked ``Filed'' and
the stamped date and time received is noted as the date and time filed.
If the instrument submitted does not meet the minimal requirements for
filing, it is rejected and returned to the submitter. Under the terms
of 46 U.S.C. 31321(a)(2), filing the instrument with the Coast Guard is
the legally significant act which makes it valid against third parties.
If all of the necessary elements for recording the instrument are
present when it is filed, it can be promptly recorded. Recording the
instrument consists of indexing the filed instrument with a book and
page number, which serves as a locator for the document, and placing it
in the appropriate ``book'' according to its sequential page number(s).
If an instrument is filed but cannot be recorded because of an error or
omission, the instrument is deemed ``filed subject to termination'' and
a 90-day period is provided for correction. If corrected within the 90-
day period, the instrument may then be recorded and will retain the
date and time originally filed. If the instrument is not corrected
within the 90-day period, the filing is terminated and the instrument
is returned. To preserve the notice purpose of the statute, any
instrument filed with the Coast Guard, even if the filing is terminated
and the instrument not recorded, is indexed on the vessel's General
Index or Abstract of Title (form CG-1332). Allowing for the submission
of an instrument by facsimile for filing would not change any of the
procedural steps provided in the regulations. However, the submission
of an instrument by facsimile for filing will start the process earlier
and will result in an earlier date and time of filing.
Discussion of Comments and Changes
Many of the comments addressed concerns beyond the scope of the
proposed rule. For example, some comments wanted information regarding
how to directly access the Coast Guard's vessel documentation data base
and what kind of computer hardware and software were needed for that
purpose. Other comments expressed concerns about the impact that
consolidation of the Coast Guard's vessel documentation field offices
would have on services and suggested that certain functions be
privatized. These concerns will not be addressed in this rulemaking.
Only those comments that pertain to the proposed rule will be addressed
in this document.
One comment requested an extension of the comment period. The
person submitting the comment represented an organization scheduled to
meet late in the comment period to discuss the proposed rule. It is
noted that the individual who requested the extension to the comment
period did submit a comment, on behalf of the organization represented,
within the original
[[Page 40239]]
comment period. The Coast Guard has consolidated its vessel
documentation function to the NVDC in Martinsburg, WV. In order to
better serve its vessel documentation customers, the Coast Guard
decided that it would be in the public interest to make facsimile
submission of instruments for filing available at the earliest feasible
date. Therefore, the comment period was not extended.
Three comments questioned the legal authority of the Coast Guard to
accept instruments submitted by facsimile for filing. The Coast Guard
anticipated this comment in the early stages of this rulemaking and
conducted research into this matter. At issue is language in 46 U.S.C.
31321(b) that to be filed an instrument must ``be signed and
acknowledged.'' The comments opined that this language means that only
the original of an instrument may be accepted for filing. One of the
comments stated that acceptance of a reproduced instrument, whether
reproduced by photocopy or facsimile, would constitute an impermissible
attempt to amend the statute.
The filing and recording system administered by the Coast Guard is
an informational system intended to provide to interested parties
public notice regarding the existence of security interests or maritime
liens on a vessel. In this regard, it is similar to the notice filing
system employed by Article 9 of the Uniform Commercial Code (UCC).
Under both Article 9 of the UCC and 46 U.S.C. 31321, the critical
element in determining whether the filing will be effective against
third parties is the adequacy of the information contained in the
instrument filed to alert potential searchers of the records to
preexisting security interests. Another purpose of the filing and
recording system of 46 U.S.C. 31321 is to establish the priority of a
preferred ship mortgage over various other maritime liens enforceable
in Federal courts under admiralty jurisdiction. For this purpose, it is
important that the instrument filed not only contain adequate
information for a notice filing system, but that the instrument also be
a valid document.
The requirements of 46 U.S.C. 31321 that to be filed the instrument
must contain all of the informational elements necessary for notice and
that it be ``signed and acknowledged'', are designed to meet both
purposes. The purpose of the signature and acknowledgment on the
instrument is to demonstrate that the instrument is genuine, that it is
what it purports to be, and that it is a validly executed and completed
instrument. Further, the statute requires that the parties ``shall use
diligence to ensure that the parts of the instrument * * * for which
they are responsible are in substantial compliance with the filing and
documentation requirements.'' This placement of the burden of accuracy
and completeness on the parties to the instrument was designed to
remove the burden from the Coast Guard to carefully check each element
of an instrument presented for filing to ensure that it was authentic.
Therefore, the scope of the Coast Guard's responsibility regarding the
acceptance of an instrument for filing is more of a ministerial
function than a quality assurance function.
The primary premise to acceptance of an instrument submitted by
facsimile for filing is that it is a completed and executed instrument
that has been signed and properly acknowledged, and that has been
submitted for filing by use of a reliable medium that accurately
reproduces the original instrument. The safeguard to the system is that
the filing accomplished by initial facsimile submission is temporary;
unless the original is received by the Coast Guard within 10 days of
submission by facsimile, the filing is terminated. In addition, a
comparison between the original instrument and the duplicate received
by facsimile will be made to ensure that the instrument submitted by
facsimile was an accurate reproduction of the original. If the original
instrument bears any alteration from the duplicate received by
facsimile, the filing accomplished by facsimile submission will be
terminated. Therefore, the Coast Guard's position is that acceptance of
an instrument submitted by facsimile for filing fosters the purposes of
the filing and recording system of 46 U.S.C. 31321, and that such
acceptance complies with the requirements of the statute.
The comments further noted that language proposed for inclusion in
the 1995 Coast Guard Authorization Act (H.R. 1361) renders the
rulemaking moot. The Coast Guard disagrees. The proposed language, if
enacted, is not self-effecting; implementing regulations would be
required. In addition, the proposed language would authorize filing
instruments ``electronically.'' Electronic filing is far broader in
scope than the submission of instruments by facsimile. The Coast
Guard's view of the proposed language is that it would authorize a
paperless filing system. This rule permitting the submission of
instruments by facsimile for filing purposes does not authorize
electronic filing.
Two of the comments requested that the time period for receipt of
the original and duplicate of the instrument submitted by facsimile for
filing be increased from 10 days to 15 days. The Coast Guard intends
the primary use of facsimile submission of instruments for filing to be
for those situations where time is of the essence. In such cases, the
original and duplicate of the instrument should be mailed in such a
manner that prompt receipt by the Coast Guard is ensured. Extending the
receipt period could encourage batch processing of routine matters for
facsimile submission. The Coast Guard does not want to encourage such
use of the facsimile submission option. After the Coast Guard and the
public have gained some experience with the facsimile submission
option, the Coast Guard will examine whether expansion is warranted.
Further, it is noted that the proposed language in the 1995 Coast Guard
Authorization Act also requires receipt of the original within 10 days
of facsimile submission. Therefore, the period within which the
original and duplicate of any instrument submitted by facsimile for
filing and the original of any accompanying forms must be received by
the NVDC will remain 10 calendar days.
One comment suggested that the original and duplicate of the
instrument submitted by facsimile for filing should be received by the
NVDC within the 10-day period rather than merely be submitted to the
NVDC within the time period. The Coast Guard agrees with the comment
and the language in paragraph (b) of Sec. 67.219 has been changed
accordingly.
Three comments objected to the paper size limitation of 8\1/2\ by
11 inches for the original instrument which may be submitted by
facsimile. Over the years, the standard paper size for pleadings and
other documents in the Federal Courts has become 8\1/2\ by 11 inches.
The Coast Guard has followed the lead of the Federal Courts in the
vessel documentation program and has reformatted all of its forms,
certificates, and other documents to 8\1/2\ by 11 inches. This effort
has been well received by the courts and attorneys who often submit
vessel documentation related documents as exhibits to pleadings. The
NVDC has acquired plain paper sheet-by-sheet type facsimile machines.
The Coast Guard's experience is that this type of facsimile machine
produces a high quality reproduction that is durable and easy to
maintain. Although the machines have the capability to receive
instruments larger than 8\1/2\ by 11 inches the Coast Guard has decided
to maintain the 8\1/2\
[[Page 40240]]
by 11 inch size limitation. This decision is based on the need to
ensure that the facsimile transmission reproduces the instrument page-
for-page to reduce the risk of error and to facilitate comparison of
the instrument submitted by facsimile with the original instrument.
Therefore, original instruments on other than 8\1/2\-inch by 11-inch
paper may not be submitted by facsimile for filing.
Four comments objected to the 10-point type size requirement for
instruments submitted by facsimile for filing. The principal complaint
was that the application for documentation (CG-1258) is not in 10-point
size and yet for a vessel not currently documented, an application must
accompany the instrument submitted by facsimile. The 10-point type size
limitation applies only to the instrument submitted by facsimile for
filing, not additional documents accompanying the instrument. The
purpose of the 10-point size requirement is to ensure that instruments
submitted by facsimile are easily readable and capable of ready
comparison with the original when received. Therefore, the 10-point
type size limitation is not changed.
Three comments addressed the contents of the facsimile cover sheet.
While the comments agreed with the need for the cover sheet, they
suggested that the cover sheet also contain the name of the vessel,
either the official number or hull identification number of the vessel,
and the name(s) of the vessel owner(s). The Coast Guard agrees with
these comments and the change has been made in Sec. 67.219(e).
One comment requested that some sort of confirmation of receipt of
the facsimile submission be included. The Coast Guard has decided as a
matter of policy that it will provide facsimile confirmation within 24
hours of receipt of an instrument sumbitted for filing by facsimile. No
change to the regulation is required by this policy determination.
One comment suggested that the word ``instrument'' in paragraphs
(e) through (g) of Sec. 67.219 be changed to the word ``document''
since applications for documentation can be submitted in certain
situations. This suggestion appears to be based on the page and type
size limitations previously discussed. These requirements are intended
to assist in the accurate reproduction and readability of instruments
submitted by facsimile for filing. The application form is already on
8\1/2\-inch by 11-inch paper, and the type size limitation does not
apply. Therefore, the suggestion is not accepted. The language in the
rule carefully distinguishes between instruments and other documents
which may also be submitted by facsimile.
Two comments expressed concern about the language in paragraph
(f)(3) of Sec. 67.219 that the filing of an instrument submitted by
facsimile will be terminated if there is ``any variance'' between the
instrument submitted by facsimile and the original. The comments
expressed concern that a transmission error of the instrument by
facsimile could cause the filing to be terminated. The Coast Guard's
intent is to discourage the use of the facsimile submission option to
submit an instrument that is incomplete or subject to change for the
purpose of reserving an early filing date and time. An instrument
submitted by facsimile for filing must be a completed, executed, and
acknowledged instrument to meet the requirements for filing of 46
U.S.C. 31321. However, the Coast Guard understands the concern over the
term ``any variance'' with regard to possible facsimile transmission
errors. Therefore, the term has been changed to read ``any alteration''
to preserve the prohibition against any intentional change of the
original instrument after submission by facsimile. As explained earlier
in this preamble, the Coast Guard will compare the instrument submitted
by facsimile to the original instrument and will terminate the filing
of an instrument submitted by facsimile if the original bears any
alteration. The filing of an instrument submitted by facsimile will not
be terminated for errors that are determined by comparison with the
original to have been caused by transmission problems. If the filing of
an instrument submitted by facsimile is terminated, the person
submitting the original instrument would also be liable for the fees
associated with submission of the instrument by facsimile.
Three comments addressed the proposed fee associated with
submitting an instrument by facsimile for filing. One of the comments
opined that the fee was too low to cover the costs to the Coast Guard.
The Coast Guard has been charging user fees for vessel documentation
services since January 1, 1995, when the revision to Part 67 became
effective. The fee proposed for the submission of instruments by
facsimile was determined by using established personnel costs and
projected equipment costs, and projecting the handling time and costs
for each instrument. The Coast Guard realizes that the $2.00 per page
fee may not reflect the exact cost of the program. However, the Coast
Guard periodically reviews its user fees and the basis for those fees,
and will make necessary adjustments as experience requires. The $2.00
per page fee applies only to the instrument(s) submitted by facsimile
for filing and does not apply to any additional documents submitted
that will not themselves be filed and recorded. Therefore, the $2.00
per page fee does not apply to any application required by paragraph
(a), or to the facsimile cover sheet required by paragraph (d).
Two of the comments regarding fees stated that the Coast Guard
should provide for payment of fees by credit card and should establish
payment accounts for frequent customers. While the Coast Guard does not
currently permit payment of vessel documentation user fees by charge or
credit card or the use of credit/debit accounts, it is exploring those
options. Any change to fee payment procedures would be published in the
Federal Register.
An amendment to the definition of the NVDC in Sec. 67.3 has been
included in this rule. This amendment adds a telephone number for the
NVDC.
An amendment to Sec. 67.13 has been included in this rule. That
amendment merely changes the address of the location in the Coast Guard
where material incorporated by reference in part 67 may be inspected.
Regulatory Evaluation
This regulation is not a significant regulatory action under
section 3(f) of Executive Order 12866 and does not require an
assessment of potential costs and benefits under section 6(a)(3) of
that order. It has not been reviewed by the Office of Management and
Budget under that order. It is not significant under the regulatory
policies and procedures of the Department of Transportation (DOT) (44
FR 11040, February 26, 1979).
The Coast Guard expects the economic impact of this regulation to
be so minimal that a full Regulatory Evaluation under paragraph 10e of
the regulatory policies and procedures of DOT is unnecessary. The Coast
Guard anticipates that optional filing by facsimile will be used only
in a limited number of cases. For example, when additional financing is
being negotiated; when an assignment or assumption of an existing
mortgage is pending; when financing at favorable rates is time
critical; or when a vessel owner desires to meet a specific sailing
date and filing an instrument is critical to that date, are situations
when filing by facsimile could be advantageous. Nevertheless,
submission by facsimile is an optional method of presenting instruments
for filing. A party may always use regular mail or personal delivery if
desired. Therefore, any additional costs to the
[[Page 40241]]
public associated with this regulation would be due to an election to
use the optional method.
Small Entities
Under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), the
Coast Guard must consider whether this regulation will have a
significant economic impact on a substantial number of small entities.
``Small entities'' may include (1) small businesses and not-for-profit
organizations that are independently owned and operated and are not
dominant in their fields and (2) governmental jurisdictions with
populations of less than 50,000.
As explained earlier in this preamble, this regulation merely adds
an optional method of submitting certain forms and instruments to the
Coast Guard for filing and recording. Since filing by facsimile is
optional, any additional costs borne by any users would be at their
election. Current methods of submitting instruments for filing, at no
increase in costs, remain available. In addition, it is anticipated
that the option of filing by facsimile would be used only in limited
situations where time is of the essence. Therefore, the Coast Guard
certifies under section 605(b) of the Regulatory Flexibility Act (5
U.S.C. 601 et seq.) that this regulation will not have a significant
economic impact on a substantial number of small entities.
Collection of Information
This regulation contains no collection-of-information requirements
under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.). This
regulation merely describes an additional method which may be used as
an option to submit vessel documentation related instruments to the
Coast Guard for filing and recording.
Federalism
The Coast Guard has analyzed this regulation under the principles
and criteria contained in Executive Order 12612 and has determined that
it does not have sufficient federalism implications to warrant the
preparation of a Federalism Assessment.
Environment
The Coast Guard considered the environmental impact of this
regulation and concluded that under paragraph 2.B.2 of Commandant
Instruction M16475.lB, it is categorically excluded from further
environmental documentation. This regulation has been determined to be
categorically excluded because the changes made are administrative and
procedural in nature, relate solely to the documentation of vessels,
and clearly have no environmental impact. A ``Categorical Exclusion
Determination'' is available in the docket for inspection or copying
where indicated under ADDRESSES.
List of Subjects in 46 CFR Part 67
Fees, Incorporation by reference, Vessels.
For the reasons set out in the preamble, the Coast Guard amends 46
CFR part 67 as follows:
PART 67--[AMENDED]
1. The authority citation for part 67 continues to read as follows:
Authority: 14 U.S.C. 664; 31 U.S.C. 9701; 42 U.S.C. 9118; 46
U.S.C. 2103, 2107, 2110; 46 U.S.C. app. 841a, 876; 49 CFR 1.46.
Sec. 67.3 [Amended]
2. In Sec. 67.3, the definition of ``National Vessel Documentation
Center'' is amended by adding at the end the words ``Telephone: (800)
799-VDOC (8362)''.
Sec. 67.13 [Amended]
3. In Sec. 67.13, paragraph (a) is amended by removing the words
``Merchant Vessel Inspection and Documentation Division, 2100 Second
Street SW., Washington, DC 20593-0001'' and adding in their place the
words ``National Vessel Documentation Center, 2039 Stonewall Jackson
Drive, Falling Waters, WV 25419''.
4. Section 67.219 is added to read as follows:
Sec. 67.219 Optional filing of instruments by facsimile.
(a) Any instrument identified as eligible for filing and recording
under Sec. 67.200 may be submitted by facsimile for filing to the
National Vessel Documentation Center at (304) 271-2400. If the
instrument submitted by facsimile for filing pertains to a vessel that
is not a currently documented vessel, a properly completed Application
for Initial Issue, Exchange, or Replacement Certificate of
Documentation; or Redocumentation (form CG-1258); or a letter
application for deletion from documentation must already be on file
with the National Vessel Documentation Center or must be submitted by
facsimile with the instrument being submitted by facsimile for filing.
(b) Within 10 days of submission by facsimile for filing, the
original and one copy of any instrument submitted by facsimile for
filing must be received by the National Vessel Documentation Center. If
not already on file, the original of any application required by
paragraph (a) of this section must also be received by the National
Vessel Documentation Center within 10 days of submission of the
instrument by facsimile for filing.
(c) Upon receipt of the original instrument and copy in accordance
with paragraph (b) of this section, the instrument may be recorded
provided it complies with the requirements of this part.
(d) All instruments submitted by facsimile for filing must be
clearly legible, be submitted from 8\1/2\-inch by 11-inch paper in not
less than 10-point type size, and be accompanied by a cover sheet.
(e) The facsimile cover sheet required by paragraph (d) of this
section should indicate:
(1) The name, address, telephone number, and facsimile telephone
number of the person submitting the instrument by facsimile;
(2) The number of pages submitted by facsimile; and
(3) The name of the vessel, official number or hull identification
number of the vessel, and the name(s) of the owner(s) of the vessel to
which the instrument relates.
(f) The filing of any instrument submitted by facsimile is
terminated and the instrument will be returned to the submitter if:
(1) The instrument is subject to termination for any cause under
Sec. 67.217(a);
(2) The original instrument and copy required to be submitted in
accordance with paragraph (b) of this section is not received within
the 10-day period; or
(3) There is any alteration between the instrument submitted by
facsimile for filing and the original instrument and copy received in
accordance with paragraph (b) of this section.
(g) When the filing of an instrument submitted by facsimile is
terminated for an alteration in accordance with paragraph (f)(3) of
this section, the original instrument and copy received in accordance
with paragraph (b) of this section will be deemed to be an original
filing under this subpart subject to termination. The procedures for
written notification of the termination of the filing and for the
disposition of instruments described in paragraphs (b) and (c) of
Sec. 67.217 will apply.
5. In Sec. 67.500, paragraph (a) is revised to read as follows:
Sec. 67.500 Applicability.
(a) This subpart specifies documentation services provided for
vessels for which fees are applicable. No documentation service for
which a fee is applicable will be performed until the
[[Page 40242]]
appropriate fee has been paid. Fees are contained in Table 67.550.
* * * * *
6. Section 67.540 is added to read as follows:
Sec. 67.540 Facsimile handling fee.
A handling fee is charged for processing an instrument submitted by
facsimile for filing in accordance with subpart O of this part.
7. In Sec. 67.550, Table 67.550 is amended by adding ``Facsimile
submission handling'' as an entry following the entry ``Notice of claim
of lien and related instruments'' under the category ``Filing and
recording:'' to read as follows:
Sec. 67.550 Fee table.
* * * * *
Table 67.550.--Fees
------------------------------------------------------------------------
Activity Reference Fee
------------------------------------------------------------------------
* * * *
* * *
Facsimile submission handling.. Subpart O................. \1\ 2.00
* * * *
* * *
------------------------------------------------------------------------
\1\ Per page.
* * * * *
Dated: July 27, 1995.
J.D. Card,
Rear Admiral, U.S. Coast Guard, Chief, Office of Marine Safety,
Security and Environmental Protection.
[FR Doc. 95-19345 Filed 8-4-95; 8:45 am]
BILLING CODE 4910-14-P
