[Federal Register Volume 59, Number 189 (Friday, September 30, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-24155]
[[Page Unknown]]
[Federal Register: September 30, 1994]
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DEPARTMENT OF TRANSPORTATION
Coast Guard
46 CFR Part 67
[CGD 94-008]
RIN 2115-AE83
Documentation of Vessels
AGENCY: Coast Guard, DOT.
ACTION: Final rule.
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SUMMARY: The Coast Guard is amending its vessel documentation
regulations. The amendments clarify the vessel documentation
regulations by restating the citizenship requirements for trusts to
reflect the Coast Guard's policy; by correcting an existing cross-
reference error regarding mortgagee consent for exchange of
Certificates of Documentation; by implementing statutory requirements
concerning the endorsements on Certificates of Documentation for
dredges and towing vessels; and by making other minor technical
amendments.
EFFECTIVE DATE: October 31, 1994.
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:
Lieutenant Commander Don M. Wrye, Vessel Documentation and Tonnage
Survey Branch, Merchant Vessel Inspection and Documentation Division,
Office of Marine Safety, Security and Environmental Protection; (202)
267-1492.
SUPPLEMENTARY INFORMATION:
Drafting Information
The principal persons involved in drafting this document are
Lieutenant Commander Don M. Wrye, Project Manager, and C.G. Green,
Project Counsel, Office of Chief Counsel.
Regulatory History
On June 20, 1994, the Coast Guard published a notice of proposed
rulemaking entitled ``Documentation of Vessels'' in the Federal
Register (59 FR 31580). The Coast Guard received one letter commenting
on the proposal. No public hearing was requested, and none was held.
Background and Purpose
On November 15, 1993, the Coast Guard published a final rule in the
Federal Register (58 FR 60256) which revised 46 CFR Part 67 to
implement a number of statutory initiatives to simplify and streamline
the documentation process, to implement user fees for vessel
documentation services, and to clarify the regulations and present them
in a more orderly fashion. The final rule was the subject of two
correction documents which appeared in the Federal Register on December
13, 1993, at 58 FR 65130 and 58 FR 65243. That final rule became
effective on January 1, 1994. The present rulemaking, among other
things, corrects certain errors and omissions in the 1993 final rule.
It also clarifies the citizenship requirements for a trust arrangement
as a vessel-owning entity, and states the endorsements required for
dredges and towing vessels.
On June 7, 1988, Congress amended 46 U.S.C. app. Sec. 316 (Pub. L.
100-329) to require towing vessels to be documented with a coastwise or
Great Lakes endorsement, as appropriate. On November 4, 1992, Congress
amended 46 U.S.C. app. Sec. 292 (Pub. L. 102-587) to require vessels of
at least five net tons engaged in dredging in the navigable waters of
the United States to be documented with a coastwise endorsement.
Neither of these statutory requirements were included in the revision
of Part 67. In order to state those requirements and to clarify the
endorsement requirements for vessels employed in towing or dredging,
the regulations need to be amended. This rule accomplishes that
amendment.
Discussion of Comments and Changes
The Coast Guard received only one comment letter in response to the
notice of proposed rulemaking. That comment addresses only the proposed
amendment to redesignated Sec. 67.36 regarding trusts.
Proposed Sec. 67.36 set forth the citizenship requirements for
trust arrangements as vessel-owning entities. In addition, the
citizenship requirements for trust arrangements were described in
detail, like those for corporations and partnerships, to specify the
requirements for each endorsement. Paragraph (a) of proposed Sec. 67.36
set forth the general requirements for a registry or recreational
endorsement that each trustee and each beneficiary with an enforceable
interest in the trust be citizens. This paragraph simply restated the
current regulatory requirements for trusts found in Sec. 67.37.
Paragraphs (b) and (c) of proposed Sec. 67.36 set forth the citizenship
requirements for a fishery endorsement and a coastwise or Great Lakes
endorsement, respectively. These requirements reflect the statutory
citizenship requirements for these endorsements applicable to any
business entity owning a documented vessel. The owner citizenship
requirements for a coastwise or Great Lakes endorsement may be found in
Sec. 2 of the Shipping Act, 1916 (46 U.S.C. app. Sec. 802) and 46
U.S.C. Sec. 12107, respectively, and the owner citizenship requirements
for a fishery endorsement may be found in 46 U.S.C. Sec. 12108. None of
the current citizenship requirements for trusts would have been changed
by the proposal.
The comment raised three points concerning proposed Sec. 67.36.
First, the comment stated that the term ``trust arrangement'' is not a
well defined or easily understood concept in law, and questioned how it
should be distinguished from the term ``trust'', which is a well
defined and understood concept. The Coast Guard recognizes that there
are numerous kinds of trusts. Indeed, reference to ``Black's Law
Dictionary'' (Fifth Edition) reveals some 75 kinds of defined trusts.
One of the general definitions of a trust is, ``Any arrangement whereby
property is transferred with intention that it be administered by
trustee for another's benefit.'' The Coast Guard's intention in using
the term ``trust arrangement'' is to permit the use of as wide a range
of trust types as vessel-owning entities as permissible. The Coast
Guard disagrees that the term is confusing or that it need be
distinguished from ``trust''. Therefore, the term will not be changed
in the final rule.
The second point raised by the comment concerns the requirement
that each beneficiary with an enforceable interest in the trust be a
citizen. The comment notes that in some trusts the beneficiaries are
often unborn persons. The comment noted that while such an unborn
beneficiary has an enforceable interest in the trust, that same
beneficiary, by virtue of being unborn, has no citizenship. The comment
reasons that the effect of the requirement will be to preclude trusts
with unborn beneficiaries from qualifying as a vessel-owning entity for
documentation purposes.
An unborn beneficiary as described in the comment could have a
vested interest in the trust. However, that interest would also be a
contingent interest--with live birth being the minimum condition--which
means that the interest is not a present interest. The Coast Guard's
position is that the determinants of U.S. citizenship, even under
circumstances of dual citizenship of infants, are sufficiently well
settled that the citizenship of beneficiaries who hold present
enforceable interests can be established. The Coast Guard never
intended for the requirement of an enforceable interest to apply to
mere contingent interests. Rather, the intent of the requirement is to
permit the designation of discretionary or charitable beneficiaries who
do not have to meet the citizenship requirement. Since the issue of the
citizenship of beneficiaries holding the kinds of contingent future
interests mentioned by the comment is not ripe for determination until
the interest becomes a present interest, the Coast Guard sees no need
to change the requirement.
The third point raised by the comment concerns the additional
requirement in paragraph (c) of Sec. 67.36 to obtain a coastwise or
Great Lakes endorsement, that at least 75 percent of the equity
interest in the trust be owned by citizens. The comment concluded that
since paragraph (a), in effect, requires all beneficiaries to be
citizens, the additional equity interest requirement is rendered
absurd. The Coast Guard disagrees with the conclusion of the comment
that paragraph (a) requires that all beneficiaries be citizens. Since
those beneficiaries who do not have an enforceable interest do not have
to meet the citizenship requirement, the additional requirement is
needed to limit foreign equitable ownership to not more than 25
percent. The percentage parameters is consistent with all other
citizen/foreign ownership interest parameters for a vessel qualified to
engage in the coastwise trade.
The wording of proposed Sec. 67.36, as well as other proposed
amendments described in the notice of proposed rulemaking, are
unchanged in this final rule.
Regulatory Evaluation
This rulemaking 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 proposal to be
so minimal that a full Regulatory Evaluation under paragraph 10e of the
regulatory policies and procedures of DOT is unnecessary. As discussed
earlier in this preamble, this rulemaking clarifies the citizenship
requirements of a trust as a vessel-owning entity, corrects certain
errors and omissions made in the 1993 final rule which revised 46 CFR
part 67, clarifies a cross-reference with regard to calculation of fees
for copies of instruments and documents, and addresses the statutorily
required endorsements for vessels employed in towing and dredging.
These matters are administrative in nature and do not have any economic
impacts on the regulated public.
Small Entities
Under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), the
Coast Guard must consider whether this rulemaking 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.
The Coast Guard expects the impact of this proposal to be minimal
because it only clarifies the structure of a trust as a vessel-owning
entity, corrects certain errors and omissions made in the 1993 final
rule which revised 46 CFR part 67, clarifies a cross-reference with
regard to calculation of fees for copies of instruments and documents,
and addresses the statutorily required endorsements for vessels
employed in towing or dredging. This proposal would bring the
regulations into conformity with current policy and practice. These
matters are administrative in nature and do not have any economic
impacts on the regulated public. Therefore, the Coast Guard certifies
under section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 601 et
seq.) that this rule will not have a significant economic impact on a
substantial number of small entities.
Collection of Information
This proposal contains no collection-of-information requirements
under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.).
Federalism
The Coast Guard has analyzed this rulemaking 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
rulemaking and concluded that under section 2.B.2. of Commandant
Instruction M16475.1B, this rule is categorically excluded from further
environmental documentation. This rule has been determined to be
categorically excluded because the changes are administrative in nature
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 is revised to read as
follows:
Authority: 14 U.S.C. 664; 31 U.S.C. 9701; 42 U.S.C. 9118; 46
U.S.C. 2103, 2107, 2110; 46 U.S.C. app. 841a, 876; 49 CFR 1.46.
2. In Sec. 67.19, paragraphs (a) and (b) are revised to read as
follows:
Sec. 67.19 Coastwise or Great Lakes endorsement.
(a) A coastwise endorsement entitles a vessel to employment in
unrestricted coastwise trade, dredging, towing, and any other
employment for which a registry, fishery, or Great Lakes endorsement is
not required.
(b) A Great Lakes endorsement entitles a vessel to employment in
the Great Lakes trade, towing in the Great Lakes, and any other
employment for which a registry, fishery, or coastwise endorsement is
not required.
* * * * *
3. Section 67.35 is revised to read as follows:
Sec. 67.35 Partnership.
A partnership is a citizen if all its general partners are
citizens, and:
(a) For the purpose of obtaining a registry or recreational
endorsement, at least 50 percent of the equity interest in the
partnership is owned by citizens.
(b) For the purpose of obtaining a fishery endorsement, more than
50 percent of the equity interest in the partnership is owned by
citizens.
(c) For the purpose of obtaining a coastwise or Great Lakes
endorsement or both, at least 75 percent of the equity interest in the
partnership is owned by citizens.
4. Section 67.37 is redesignated as Sec. 67.36 and revised to read
as follows:
Sec. 67.36 Trust.
(a) For the purpose of obtaining a registry or recreational
endorsement, a trust arrangement is a citizen if:
(1) Each of its trustees is a citizen; and
(2) Each beneficiary with an enforceable interest in the trust is a
citizen.
(b) For the purpose of obtaining a fishery endorsement, a trust
arrangement is a citizen if:
(1) It meets all the requirements of paragraph (a) of this section;
and
(2) More than 50 percent of the equity interest in the trust is
owned by citizens.
(c) For the purpose of obtaining a coastwise or Great Lakes
endorsement or both, a trust arrangement is a citizen if:
(1) It meets all the requirements of paragraph (a) of this section;
and
(2) At least 75 percent of the equity interest in the trust is
owned by citizens.
5. Section 67.37 is added to read as follows:
Sec. 67.37 Association or joint venture.
(a) An association is a citizen if each of its members is a
citizen.
(b) A joint venture is a citizen if each of its members is a
citizen.
6. In Sec. 67.39, paragraphs (b), (c), and (d) are revised to read
as follows:
Sec. 67.39 Corporation.
* * * * *
(b) For the purpose of obtaining a fishery endorsement, a
corporation is a citizen if:
(1) It meets all the requirements of paragraph (a) of this section;
and
(2) More than 50 percent of the stock interest in the corporation
including a majority of voting shares in the corporation is owned by
citizens.
(c) For the purpose of obtaining a coastwise or Great Lakes
endorsement or both, a corporation is a citizen if:
(1) It meets all the requirements of paragraph (a) of this section;
and
(2) At least 75 percent of the stock interest in the corporation is
owned by citizens.
(d) A corporation which does not meet the stock interest
requirement of paragraph (c) of this section may qualify for limited
coastwise trading privileges by meeting the requirements of part 68 of
this chapter.
7. In Sec. 67.119, paragraph (e) is revised to read as follows:
Sec. 67.119 Hailing port designation.
* * * * *
(e) Until such time as a port of record assignment is required in
accordance with Sec. 67.115, or the owner elects to designate a new
hailing port, the provisions of paragraph (c) of this section do not
apply to vessels which were issued a Certificate of Documentation
before July 1, 1982.
Sec. 67.145 [Amended]
8. In Sec. 67.145, paragraph (a) is amended by removing the cross-
reference to ``Secs. 67.167(a) or 67.167(b) (1) through (6)'' and
adding, in its place, ``Secs. 67.167(b) (1) through (6) or 67.167(c)
(1) through (8)''.
9. In Sec. 67.171, paragraph (d) is revised to read as follows:
Sec. 67.171 Deletion; requirement and procedure.
* * * * *
(d) A certificate evidencing deletion from U.S. documentation will
be issued upon request of the vessel owner to the vessel's port of
record upon compliance with the applicable requirements of this
subpart.
10. Section 67.321 is revised to read as follows:
Sec. 67.321 Requirement to report change of address of managing owner.
Upon the change of address of the managing owner of a documented
vessel, the managing owner shall report the change of address to the
documentation officer at the port of record of the vessel within 10
days of its occurrence.
11. Section 67.539 is revised to read as follows:
Sec. 67.539 Copies of instruments and documents.
The fee charged for furnishing a copy of any instrument or document
is calculated in the same manner as described in 49 CFR 7.95.
Dated: September 23, 1994.
J.C. Card,
Rear Admiral, U.S. Coast Guard, Chief, Office of Marine Safety,
Security and Environmental Protection.
[FR Doc. 94-24155 Filed 9-29-94; 8:45 am]
BILLING CODE 4910-14-M
