Federal Register / Vol. 69, No. 23 / Wednesday, February 4, 2004 / Proposed Rules 5403

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

46 CFR Part 67 

[USCG–2003–14472] 

RIN 1625–AA63 

DEPARTMENT OF TRANSPORTATION 

Maritime Administration 

46 CFR Part 221 

[Docket No. MARAD–2003–15171] 

RIN 2133–AB51 

Vessel Documentation: Lease 

Financing for Vessels Engaged in the 

Coastwise Trade; Second Rulemaking

AGENCIES: Coast Guard, DHS, and 

Maritime Administration, DOT.

ACTION: Joint notice of proposed 

rulemaking. 

SUMMARY: This is a joint notice of 

proposed rulemaking by the Coast 

Guard and the Maritime Administration. 

The Coast Guard proposes to amend 

its regulations on documentation, under 

the lease-financing provisions, of 

vessels engaged in the coastwise trade. 

One proposal addresses the issue of 

whether we should prohibit or restrict 

the chartering back (whether by time 

charter, voyage charter, space charter, 

contract of affreightment, or other 

contract for the use of a vessel) of a 

lease-financed vessel to the parent of the 

vessel owner or to a subsidiary or 

affiliate of the parent. A second 

proposal would establish a limit on the 

length of time that a coastwise 

endorsement issued before February 4, 

2004, would run. The final subject 

concerns the question of whether 

applications for an endorsement under 

the lease-financing provisions should be 

reviewed and approved by an 

independent third party with expertise 

in vessel chartering. Though these 

subjects were discussed in many of the 

comments received to the previous 

Coast Guard rulemaking on lease 

financing, we feel that we need 

additional public input specifically 

focused on these subjects and on our 

proposed changes. These proposals 

would amend the final rule (USCG–

2001–8825) on vessel documentation 

under lease financing found elsewhere 

in this issue of the Federal Register. 

The Maritime Administration 

(MARAD) proposes to amend its 

regulations to require MARAD’s 

approval of all transfers of the use of a 

lease-financed vessel engaged in the 

coastwise trade back to the vessel’s 

foreign owner, the parent of the owner, 

a subsidiary or affiliate of the parent, or 

an officer, director, or shareholder of 

one of them. In 1992, MARAD amended 

its regulations to grant general approval 

for time charters of U.S.-flag vessels to 

charterers that were not U.S. Citizens 

(non-citizens) and to eliminate 

MARAD’s review of these time charters. 

The lease-financing provisions 

potentially allow a non-citizen to exert 

additional control over a vessel operated 

in the coastwise trade by becoming the 

owner of the vessel and time chartering 

the vessel back to itself or to a related 

entity through an intermediate U.S. 

Citizen bareboat charterer. MARAD’s 

review of charter arrangements in the 

limited circumstances where the time 

charterer is related to the non-citizen 

vessel owner will ensure that U.S. 

Citizens maintain control over vessels 

operating in the coastwise trade.

DATES: Comments and related material 

must reach the Docket Management 

Facility on or before May 4, 2004. 

Comments sent to the Office of 

Management and Budget (OMB) on 

collection of information must reach 

OMB on or before May 4, 2004.

ADDRESSES: You may submit comments 

identified by Coast Guard docket 

number USCG–2003–14472 or MARAD 

Docket No. MARAD–2003–15171 to the 

Docket Management Facility at the U.S. 

Department of Transportation. To avoid 

duplication, please use only one of the 

following methods: 

(1) Web site: http://dms.dot.gov.

(2) Mail: Docket Management Facility 

(USCG–2003–14472 or MARAD Docket 

No. MARAD–2003–15171), U.S. 

Department of Transportation, room PL–

401, 400 Seventh Street SW., 

Washington, DC 20590–0001. 

(3) Fax: 202–493–2251. 

(4) Delivery: Room PL–401 on the 

Plaza level of the Nassif Building, 400 

Seventh Street SW., Washington, DC, 

between 9 a.m. and 5 p.m., Monday 

through Friday, except Federal holidays. 

The telephone number is 202–366–

9329. 

(5) Federal eRulemaking Portal:

http://www.regulations.gov.

You must also mail comments on 

collection of information to the Office of 

Information and Regulatory Affairs, 

Office of Management and Budget, 725 

17th Street NW., Washington, DC 20503, 

ATTN: Desk Officer, U.S. Coast Guard.

FOR FURTHER INFORMATION CONTACT: 

Coast Guard: If you have questions on 

the Coast Guard’s proposed rule, call 

Patricia Williams, Deputy Director, 

National Vessel Documentation Center, 

Coast Guard, telephone 304–271–2506.

Maritime Administration: If you have 

questions on the Maritime 

Administration’s proposed rule, call 

John T. Marquez, Jr., Maritime 

Administration, telephone 202–366–

5320. 

Docket Management Facility: If you 

have questions on viewing or submitting 

material to the docket, call Andrea M. 

Jenkins, Program Manager, Docket 

Operations, telephone 202–366–0271.

SUPPLEMENTARY INFORMATION: 

Public Participation and Request for 

Comments 

We (the Coast Guard and the Maritime 

Administration, depending upon the 

context) encourage you to participate in 

this rulemaking by submitting 

comments and related material. All 

comments received will be posted, 

without change, to http://dms.dot.gov

and will include any personal 

information you have provided. The 

Coast Guard has an agreement with the 

Department of Transportation (DOT) to 

use the Docket Management Facility. 

Please see DOT’s ‘‘Privacy Act’’ 

paragraph below. 

Submitting comments: If you submit a 

comment, please include your name and 

address, identify the docket number for 

this rulemaking (either USCG–2003–

14472 or MARAD Docket No. MARAD–

2003–15171), indicate the specific 

section of this document to which each 

comment applies, and give the reason 

for each comment. You may submit 

your comments and material by 

electronic means, mail, fax, or delivery 

to the Docket Management Facility at 

the address under ADDRESSES; but 

please submit your comments and 

material by only one means. If you 

submit them by mail or delivery, submit 

them in an unbound format, no larger 

than 81⁄2 by 11 inches, suitable for 

copying and electronic filing. If you 

submit them by mail and would like to 

know that they reached the Facility, 

please enclose a stamped, self-addressed 

postcard or envelope. We will consider 

all comments and material received 

during the comment period. We may 

change this proposed rule in view of 

them. 

Viewing comments and documents:

To view comments, as well as 

documents mentioned in this preamble 

as being available in the docket, go to 

http://dms.dot.gov at any time and 

conduct a simple search using the 

docket number. You may also visit the 

Docket Management Facility in room 

PL–401 on the Plaza level of the Nassif 

Building, 400 Seventh Street SW., 

Washington, DC, between 9 a.m. and 5 

5404 Federal Register / Vol. 69, No. 23 / Wednesday, February 4, 2004 / Proposed Rules 

p.m., Monday through Friday, except 

Federal holidays. 

Privacy Act: Anyone can search the 

electronic form of all comments 

received into any of our dockets by the 

name of the individual submitting the 

comment (or signing the comment, if 

submitted on behalf of an association, 

business, labor union, etc.). You may 

review the Department of 

Transportation’s Privacy Act Statement 

in the Federal Register published on 

April 11, 2000 (65 FR 19477), or you 

may visit http://dms.dot.gov.

Public Meeting 

The Coast Guard and MARAD plan to 

hold a joint public meeting on this 

rulemaking at a time and place to be 

given in a separate notice published in 

the Federal Register. 

Though the Coast Guard did not 

believe that a public meeting would 

provide sufficient benefit to justify the 

delay in publishing its final rule under 

Coast Guard docket USCG–2001–8825 

(which appears elsewhere in this issue 

of the Federal Register), we do believe 

that a public meeting on the issues 

raised in this notice will benefit the 

present rulemaking. At present, we plan 

only one public meeting, but you may 

submit a request for more than one to 

the Docket Management Facility at the 

address under ADDRESSES explaining 

why more than one would be beneficial. 

If we determine that more than one 

would aid this rulemaking, we will 

publish the dates of the meetings and 

their locations in the separate notice in 

the Federal Register. 

Related Rulemakings 

Coast Guard. A separate but related 

Coast Guard final rule entitled ‘‘Vessel 

Documentation: Lease Financing for 

Vessels Engaged in the Coastwise 

Trade’’ (RIN 1625–AA28 (formerly RIN 

2115–AG08), USCG–2001–8825) 

appears elsewhere in this issue of the 

Federal Register. The changes that the 

Coast Guard is proposing in this notice 

of proposed rulemaking, if adopted, 

would amend that final rule. 

Maritime Administration. MARAD 

published a notice of policy review with 

request for comments entitled ‘‘General 

Approval of Time Charters’’ on August 

2, 2002, in the Federal Register (67 FR 

50406). The notice raises the question of 

whether MARAD’s policy of granting 

general approval of time charters should 

be changed. The docket number for that 

project is Docket No. MARAD–2002–

12842. 

Background and Purpose 

Coast Guard. In 1996, Congress 

amended the vessel documentation laws 

to allow lease financing of vessels 

engaged in the coastwise trade (section 

1113(d) of Pub. L. 104–324, the Coast 

Guard Authorization Act of 1996; 46 

U.S.C. 12106(e)) (‘‘the 1996 Act’’). Lease 

financing is a very common way to 

finance capital assets in the maritime 

industry. Under lease financing, 

ownership of the vessel is in the name 

of the lessor (owner), with a demise 

charter to the charterer of the vessel. (A 

‘‘demise charter,’’ also known as a 

‘‘bareboat charter,’’ is an agreement in 

which the charterer assumes the 

responsibility for operating, crewing, 

and maintaining the vessel as if the 

charterer owned it.) Many vessel 

operators choose to acquire or build 

vessels through lease financing, instead 

of the traditional mortgage financing, 

because of possible cost benefits.

According to the legislative history for 

the 1996 Act (see House Conference 

Report No. 104–854; Pub. L. 104–324; 

1996 U.S. Code Congressional and 

Administrative News, p. 

4323)(Conference Report), Congress 

intended to broaden the sources of 

capital for owners of U.S. vessels 

engaged in the coastwise trade by 

creating new lease-financing options. At 

the same time, Congress did not intend 

to undermine the basic principle of U.S. 

maritime law that vessels operated in 

domestic trades must be built in 

shipyards in the U.S. and be operated 

and controlled by U.S. Citizens, which 

is vital to U.S. military and economic 

security. 

The Coast Guard issued a final rule 

(USCG–2001–8825, published 

elsewhere in this issue of the Federal 

Register), which sets out requirements 

concerning eligibility, under lease 

financing, for a coastwise endorsement 

to a vessel’s Certificate of 

Documentation and the procedure to 

apply for such an endorsement. Several 

of the comments to that rulemaking 

raised important questions which are 

worthy of consideration but ones on 

which we need further assistance from 

industry and the public. It is those 

questions that are the subjects of the 

Coast Guard’s second rulemaking on 

lease financing of vessels in the 

coastwise trade. 

MARAD. Section 9 of the Shipping 

Act of 1916, 46 App. U.S.C. 808, 

requires prior approval of the Secretary 

of Transportation (MARAD) for, among 

other things, the charter to non-citizens 

of documented vessels owned by 

citizens of the United States. Before 

1989, MARAD’s approval was required 

on a case-by-case basis for time charters 

of U.S.-flag vessels to non-citizens. 

However, as a result of substantial 

changes to the Ship Mortgage Act 

(repealed in 46 App. U.S.C. 921) and 

amendments to section 9 of the 

Shipping Act, MARAD began a 

rulemaking in 1989 to amend its 

regulations at 46 CFR part 221, 

Regulated Transactions Involving 

Documented Vessels and other Maritime 

Interests. The rulemaking culminated in 

the publication of a final rule on June 

3, 1992, 57 FR 23470, that liberalized 

the approval process under section 9 for 

certain transfers to non-citizens. 

Part 221 as now written grants general 

approval of the sale, mortgage, lease, 

charter, etc. (but not transfer of registry 

or bareboat charter of vessels operating 

in coastwise trade) of citizen-owned 

vessels to a non-citizen, so long as the 

country is not at war, there is no 

Presidential declaration of national 

emergency invoking section 37 of the 

Shipping Act of 1916, and the noncitizen is not subject to the control of a 

county with whom trade is prohibited. 

The general approval of time charters to 

non-citizens was predicated on the fact 

that a time charterer merely rents cargo 

space on a vessel and does not assume 

substantially all of the benefits and risks 

incident to the ownership of the vessel 

or retain a property interest in the 

vessel. The U.S.-Citizen vessel owner or 

bareboat charterer retains possession of 

the vessel and maintains the vessel, 

employs and pays the crew, and is 

responsible for the expenses of running 

the vessel. 

MARAD’s regulation granting general 

approval was based on the assumption 

that the vessel would ultimately be 

operated and controlled by U.S. Citizens 

because only a U.S. Citizen could own 

or bareboat charter a vessel to be 

operated in the coastwise trade. The 

lease-financing provisions potentially 

allow a non-citizen to now become the 

owner of the vessel and, through an 

intermediate U.S.-Citizen bareboat 

charterer, to time charter the vessel back 

to itself or a related entity. This scenario 

was not contemplated by MARAD when 

it promulgated its regulation granting 

general approval of time charters to noncitizens. Because a non-citizen can exert 

greater control over the vessel by 

participating as both the vessel owner 

and time charterer, we believe that 

MARAD review of time charters in this 

limited circumstance is warranted 

under section 9(c)(1) of the Shipping 

Act of 1916, 46 U.S.C. App. 808(c)(1). 

On August 2, 2002, MARAD 

published a request for comments in the 

Federal Register, 67 FR 50406, to 

determine whether our policy of 

granting general approval for time 

charters to non-citizens should be 

amended. The commenters 

overwhelmingly agreed that a return to 

Federal Register / Vol. 69, No. 23 / Wednesday, February 4, 2004 / Proposed Rules 5405

MARAD review of all time charters to 

non-citizens would not be a useful 

change. However, there was significant 

support for MARAD review of time 

charters in the limited circumstances 

where the time charterer is related to the 

non-citizen vessel owner and the vessel 

is to be operated in the coastwise trade. 

We agree with the commenters that 

MARAD review of time charters is 

necessary where the time charterer is 

related to the non-citizen vessel owner 

in order to ensure that non-citizens are 

not able to exercise an excessive level of 

control over vessels operating in the 

coastwise trade. Accordingly, we 

propose to amend our regulations at 46 

CFR 221.13 to require MARAD approval 

of time charters where the vessel has 

been documented pursuant to 46 U.S.C. 

12016(e) and is time chartered back to 

an entity that is related to the noncitizen vessel owner.

Issues Addressed and Discussion of 

Proposed Changes—Coast Guard 

The Coast Guard’s proposed rule 

addresses the following subjects: 

1. To what extent and how should the 

Coast Guard prohibit or restrict the 

chartering back (whether by time 

charter, voyage charter, space charter, 

contract of affreightment, or other 

contract for the use of a vessel) of a 

lease-financed vessel to the owner, the 

parent, or to a subsidiary or affiliate of 

the parent?

The proposed changes on this subject 

are in proposed § 67.20(a)(6) and (a)(9), 

either or both of which are proposed for 

adoption. 

Congress stated that control of the 

lease-financed vessel holding a 

coastwise endorsement must be in the 

demise charterer. Because control of the 

vessel may be affected by a charter-back 

from the demise charterer to the owner, 

the owner’s parent, or to a subsidiary or 

affiliate of the parent, we believe that 

the intent of Congress would be 

frustrated if charter-back arrangements 

were not prohibited or at least 

restricted. We present two amendments 

(§§ 67.20(a)(6) and 67.20(a)(9)) for 

restricting charters-back, either or both 

of which are proposed for adoption. 

Alternative 1 (§ 67.20(a)(6)). The first 

alternative proposal would amend 

§ 67.20(a)(6), which requires that the 

vessel owner not be primarily engaged 

in the direct operation or management 

of vessels. The proposed change would 

extend this limitation not just to the 

owner but also to the overall group of 

which that owner is a member. As 

defined in § 67.3, the word ‘‘group’’

includes the owner, the owner’s parent, 

and all subsidiaries and affiliates of the 

parent. This provision would prohibit 

the demise charterer from subchartering back to a member of the 

owner’s group. We believe that a 

charter-back arrangement could be 

permissible under the statute if the 

charter-back arrangement is merely for 

the purpose of providing the legal 

framework under which the vessel will 

earn revenue for the demise charterer 

and if the demise charterer retains all 

aspects of control of the operation of the 

vessel, other than that which is directly 

involved in generating revenue. We 

recognize, however, that proposed 

§ 67.20(a)(6) does not contain any 

criteria by which the Coast Guard is to 

make a determination as to whether the 

charter-back arrangement is limited to 

providing the legal basis and provisions 

for earning revenue or whether the 

arrangement transfers control over the 

vessel’s operations or management to 

the sub-charterer. We hope that your 

comments to this NPRM and comments 

offered during the public meeting will 

provide us with an informed basis for 

making these determinations. If you 

believe that there is a more effective 

way to ensure that control of the vessel 

is not returned to the owner’s group 

through a charter-back arrangement, 

please tell us. 

Alternative 2 (§ 67.20(a)(9)). The 

second alternative proposal would 

amend § 67.20(a)(9), which requires that 

the demise charterer be a person 

considered to be the owner pro hac vice

during the term of the charter. The 

proposed change would add that a 

demise charterer is not considered to be 

the owner pro hac vice when the vessel 

is subject to a sub-charter to a member 

of the group of which the vessel’s owner 

is a member, except when the vessel is 

engaged in carrying cargo owned by the 

vessel’s owner or by a member of the 

group of which the vessel’s owner is a 

member and is not carrying cargo for 

any other entity. This proposal would 

effectively prevent the chartering-back 

to a member of the owner’s group, 

unless the vessel is used solely for 

carrying proprietary cargo of a member 

of the group. We derived this proposal 

from some of the comments that urged 

such a restriction in order to effectuate 

the intent of Congress that the Jones Act 

not be undermined. Though many other 

comments opposed any restriction on 

chartering-back, we believe that 

Congress intended to adhere as closely 

as possible to Jones Act principles, as 

reflected in the Conference Report. Our 

proposal in § 67.20(a)(9) is similar in 

principle to the Bowaters amendment 

(46 U.S.C. app. 883–1), a limited 

exception to the Jones Act. Thus, in that 

regard, our proposal is consistent with 

what Congress has authorized in the 

past as a limited exception to the Jones 

Act. 

2. Establish limitations on the 

grandfather rights under § 67.20(b) 

through (e).

The grandfather provisions in 

§ 67.20(b) and (c) of the Coast Guard’s 

final rule (USCG–2001–8825), published 

elsewhere in this issue of the Federal 

Register, allow vessels (other than 

barges) with endorsements issued before 

the date of publication of that final rule 

to continue to operate (with certain 

specified exceptions) under that 

endorsement indefinitely. Paragraphs 

(d) and (e) of that final rule allow barges 

deemed eligible to operate in coastwise 

trade under 46 U.S.C. 12106(e) and 

12110(b) to continue to operate (with 

certain specified exceptions) in the 

coastwise trade indefinitely. In order to 

bring these vessels and barges under the 

regulations within a reasonable time, yet 

be responsive to the economic interests 

of those who have made investments 

relying on the Coast Guard’s initial 

interpretation of the lease-financing 

statute, we propose four changes.

First, § 67.20(b) would be amended to 

limit the term of the grandfather 

provision to 3 years after the publication 

date of the final rule under USCG–

2001–8825 (which is the same date as 

the publication date of this NPRM) and 

allow it to be renewed annually during 

that time. 

Second, § 67.20(c) would be amended 

to address the following situation. If the 

vessel was constructed under a building 

contract that was entered into before the 

date of publication of the final rule 

under USCG–2001–8825 (which is the 

same date as the publication date of this 

NPRM) in reliance on a letter ruling 

from the Coast Guard issued before that 

date, the vessel would be eligible for a 

coastwise endorsement and may 

continue to operate under that 

endorsement for 3 years after the initial 

issuance of that endorsement and may 

renew the document and endorsement 

during that 3-year period (if the 

certificate of documentation is not 

subject to the listed exceptions). 

Third, § 67.20(d) would be amended 

to limit the term of the grandfather 

provision as it applies to undocumented 

barges operating under 46 U.S.C. 

12102(e) and 12110(b) to 3 years after 

the publication date of the final rule 

under USCG–2001–8825 (which is the 

same date as the publication date of this 

NPRM). 

Lastly, § 67.20(e) would be amended 

to limit the term of the grandfather 

provision as it applies to the operation 

of undocumented barges constructed in 

reliance upon a letter ruling from the 

5406 Federal Register / Vol. 69, No. 23 / Wednesday, February 4, 2004 / Proposed Rules 

Coast Guard issued before the 

publication date of the final rule under 

USCG–2001–8825 (which is the same 

date as the publication date of this 

NPRM) to 3 years after initial entry into 

service. 

We chose a 3-year period as a 

reasonable amount of time to provide 

owners with sufficient time to plan and 

effectuate whatever restructuring is 

necessary to comply with the 

regulations. Also, Congress specified, in 

the lease-financing statute, a term of 3 

years (subject to certain exceptions) as 

the minimum duration of a ‘‘long-term’’

demise charter. 

Several comments to the previous 

rulemaking (USCG–2001–8825) argue 

that no vessels should be grandfathered 

and that, once the final rule under 

USCG–2001–8825 is published, all 

vessels must comply with that rule. 

However, we feel that the likely result 

of such a position would be that the 

holders of endorsements received before 

the final rule was published in good 

faith reliance on the policy of the Coast 

Guard at that time would have little 

time to restructure, perhaps at 

considerable financial expense, before 

the document is due for annual renewal. 

Other comments to USCG–2001–8825, 

mainly from those who received 

endorsements between 1996 and 2002, 

argue that the grandfather provision as 

it appears in § 67.20(b) of the final rule 

is too restrictive. They would like us to 

have adopted a rule that would allow 

the continued use of the same type of 

financial transactions or arrangements 

under which their endorsements were 

issued. Thus, an application for an 

endorsement in the future could be 

based on one of these transactions or 

arrangements. In their view, a 

grandfather provision should not just 

cover the particular vessel that received 

the endorsement. They argue that this 

amounts to too little effective relief from 

the requirements of the final rule. 

We believe that to require those vessel 

owners that relied on our prior practice 

and policy to comply with USCG–2001–

8825 upon the effective date would 

unnecessarily penalize them. At the 

same time, we do believe, where USCG–

2001–8825 imposes additional or new 

obligations or restrictions on the 

issuance of endorsements under lease 

financing, that the prior holders should 

not be entitled either to unlimited 

renewals for the particular vessels or to 

continued use of the type of transaction 

or arrangement previously used. 

Instead, we are adopting a reasonable 

approach, providing business with a 

reasonable time to adjust to the new 

requirements consistent with 

Congressional language. 

3. Require that applications to the 

Coast Guard for an endorsement be 

audited by a third party. The Coast 

Guard is considering requiring each 

applicant to provide, in addition to its 

own certifications under §§ 67.147 and 

67.179, a certification from an 

independent auditor with expertise in 

the business of vessel financing and 

operations. That certification would 

provide additional assurance that the 

transaction in fact qualifies under the 

lease-financing statute and regulations. 

We recognize that this additional 

requirement would add time and cost to 

the process of preparing the application. 

We are particularly interested in 

obtaining comment on the following 

questions: 

(a) Should an independent auditor be 

used? 

(b) What are the minimum 

qualifications of an auditor? 

(c) Who should select the auditor, the 

Coast Guard, another government 

agency, or the applicant? 

(d) If the applicant selects the auditor, 

how should the Coast Guard ensure that 

the auditor is truly independent? 

Should the Coast Guard provide a list of 

approved auditors from which the 

applicant may choose?

(e) What standards does the auditor 

apply in deciding whether to examine 

the details of the proposed transaction 

beyond the face of the documents 

submitted? 

(f) Would the added benefit provided 

by the certification by the independent 

auditor justify the extra time and cost of 

obtaining such a certification? 

(g) Would such an audit be an 

inherently governmental function that 

should not be entrusted to an 

independent auditor? 

(h) Should we increase our 

investigation and examination of 

applications for vessel documentation? 

Discussion of Proposed Changes: 

Maritime Administration 

MARAD proposes to amend its 

existing regulations in 46 CFR part 221, 

subpart B, on the approval of the sale, 

lease, charter, delivery, or any manner 

of transfer of an interest in or control of 

a U.S. documented vessel to a non-U.S. 

Citizen. Existing § 221.13(a) grants 

general approval of these transactions. 

The proposed change would require the 

approval of the Maritime Administrator 

when a vessel under 46 U.S.C. 12106(e) 

is involved and when the transfer is 

back to the vessel’s owner, a member of 

the owner’s group (i.e., the owner, the 

parent of the owner, or a subsidiary or 

affiliate of the parent) or to an officer, 

director, or shareholder of the owner or 

a member of the owner’s group. 

The general approval of certain 

transfers to non-citizens currently 

provided for in 46 CFR 221.13 was 

based on a statutory scheme in which a 

non-citizen could not be the owner and 

time charterer of a vessel. Prior to 1996, 

an owner of a vessel documented with 

a coastwise endorsement generally had 

to be a U.S. citizen. After passage of the 

Coast Guard Authorization Act of 1996, 

a vessel owner could be a non-citizen if 

the vessel was chartered under a demise 

charter to a U.S. citizen. Because 46 CFR 

221.13 was not amended, the U.S.-

citizen demise charterer of the vessel 

could still sub-charter the vessel to a 

non-citizen. If a non-citizen is permitted 

to own a vessel and to time charter the 

vessel back to itself or a related entity, 

it can potentially exert much greater 

control over the operation of the vessel. 

Accordingly, MARAD review of these 

transfers is warranted under 46 App. 

U.S.C. 808(c)(1). 

If you believe that there is a more 

effective way to ensure that control of 

the vessel is not returned to the owner’s 

group, please provide comments. In 

addition, if you believe that the review 

or restriction of charter back 

arrangements in this limited 

circumstance will unduly restrict 

competition in the coastwise trade, we 

request that you provide comments. 

Assessment 

Coast Guard 

Due to substantial public interest, the 

Coast Guard’s proposed rule is a 

‘‘significant regulatory action’’ under 

section 3(f) of Executive Order 12866, 

Regulatory Planning and Review. The 

Office of Management and Budget has 

reviewed it under that Order. It requires 

an assessment of potential costs and 

benefits under section 6(a)(3) of that 

Order. It is ‘‘significant’’ under the 

regulatory policies and procedures of 

the Department of Homeland Security. 

A draft Assessment follows: 

The grandfather provisions in 

§ 67.20(b) through (e) would be revised 

to incorporate an appropriate time 

period after which the provision would 

no longer apply. The proposed rule 

would affect a small number of vessel 

owners and charterers whose coastwise 

endorsements were issued under the 

lease-financing provision since the 

passage of the Act in 1996. 

Currently, there are 87 entities that 

have had their coastwise endorsements 

approved under the lease-financing 

option. We anticipate that at least two 

of these entities could be adversely 

affected by this proposed rule and could 

not, through the lease finance 

mechanism, charter back a vessel to an 

Federal Register / Vol. 69, No. 23 / Wednesday, February 4, 2004 / Proposed Rules 5407

entity related to the foreign owned 

entity that is financing the vessel. Under 

the proposed regulations, a vessel 

operator is not precluded from using 

lease financing as a mechanism for 

financing the vessel. The regulations 

would potentially restrict the operation 

of vessels that are documented under 

the lease-financing provisions to ensure 

that the vessels are properly chartered. 

The affected vessel owners are still free 

to engage in lease financing with an 

entity that qualifies as a U.S. citizen or 

a foreign owned entity that is not related 

to the time charterer of the vessel. 

Nevertheless, the vessel operator is not 

prohibited from using lease financing 

under the proposed regulations. 

Although the proposed rule 

promulgates limitations to the 

grandfather provisions, it would allow 

companies to have a significant amount 

of time for planning and exploring other 

options. Based on this amount of time, 

we estimate the economic impact to be 

minimal. We encourage comments on 

this assessment, particularly those that 

clearly illustrate any specific negative 

economic impact of this proposed 

rulemaking. 

Maritime Administration

Due to substantial public interest, 

MARAD’s proposed rule is a 

‘‘significant regulatory action’’ under 

section 3(f) of Executive Order 12866, 

Regulatory Planning and Review, and 

does require an assessment of potential 

costs and benefits under section 6(a)(3) 

of that Order. The Office of Management 

and Budget has reviewed it under that 

Order. It is ‘‘significant’’ under the 

regulatory policies and procedures of 

the Department of Transportation (DOT) 

(44 FR 11040, February 26, 1979). A 

draft Assessment follows: 

The proposed rule proposes to 

reinstate MARAD’s review of transfers 

of control to non-citizens where the 

vessel has been documented by a noncitizen under the lease-financing 

provisions at 46 U.S.C. 12016(e) and the 

transfer is back to the non-citizen vessel 

owner or a related entity. When 

MARAD amended its regulations in 

1992 to grant general approval for time 

charters of U.S.-flag vessels to charterers 

that were not U.S. Citizens, there was no 

opportunity for a non-citizen to be both 

the owner and charterer of a vessel 

engaged in coastwise trade. However, 

enactment of the lease-financing 

provisions inadvertently created that 

opportunity. Lease-financing provisions 

are intended to provide increased 

sources of capital for qualified owners 

engaged in coastwise trade. These 

provisions are not intended to allow 

increased ownership and control of 

coastwise vessels by non-U.S. citizens. 

MARAD’s review of charter 

arrangements in the limited 

circumstances where the time charterer 

is related to the non-citizen vessel 

owner will ensure that U.S. Citizens 

maintain control over vessels operating 

in the coastwise trade. 

This proposed rulemaking modifies, 

but does not negate, financing 

opportunities available to some 

businesses engaged in coastwise trade. 

The rule continues to provide flexible 

financing structures and increased 

sources of capital to qualified U.S. 

entities that are entitled to engage in 

domestic trade. The corresponding costs 

and benefits of these changes in 

financing opportunities are not 

quantifiable at this time. Nonquantifiable benefits, however, are 

apparent. Effective enforcement of the 

Nation’s cabotage laws has proven 

critical for several reasons. The cabotage 

laws help retain skilled merchant 

mariners, providing a strong U.S. 

merchant marine available to operate 

U.S. vessels in time of national 

emergency. In addition, these laws play 

a key role in preserving domestic 

capacity for shipbuilding and repair. 

Finally, in these days of heightened 

concerns about national security, it is 

evermore important to maintain 

transparency regarding vessel 

ownership and control. 

Since 1996, only 87 entities have 

applied to document a vessel using the 

lease-financing provisions and, of those, 

only 30 have engaged in a charter back 

to the vessel owner or an entity related 

to the vessel owner. Accordingly, we 

expect the requirement for MARAD 

review to impact a very limited number 

of entities seeking to document a vessel 

with a coastwise endorsement. 

Furthermore, we believe that few, if any, 

of the 30 foreign-owned entities that 

own vessels documented under the 

lease-financing provisions that charter 

back to affiliates qualify as small 

businesses as defined by the Small 

Business Administration (see below). 

Small Entities 

Coast Guard 

Under the Regulatory Flexibility Act 

(5 U.S.C. 601–612), the Coast Guard has 

considered whether its proposed rule 

would have a significant economic 

impact on a substantial number of small 

entities. The term ‘‘small entities’’

comprises small businesses, not-forprofit organizations that are 

independently owned and operated and 

are not dominant in their fields, and 

governmental jurisdictions with 

populations of less than 50,000. 

Currently, there are 87 entities that 

have had their coastwise endorsements 

approved under the lease-financing 

option. We anticipate that a minimal 

number of these entities could be 

adversely affected by this rule and 

would have to resort to using mortgage, 

rather than lease, financing. 

Therefore, the Coast Guard certifies 

under 5 U.S.C. 605(b) that this proposed 

rule would not have a significant 

economic impact on a substantial 

number of small entities. If you think 

that your business, organization, or 

governmental jurisdiction qualifies as a 

small entity and that this rule would 

have a significant economic impact on 

it, please submit a comment to the Coast 

Guard’s docket at the Docket 

Management Facility. (See ADDRESSES.) 

In your comment, explain why you 

think it qualifies and how and to what 

degree this rule would economically 

affect it. 

Maritime Administration 

Under the Regulatory Flexibility Act 

(5 U.S.C. 601–612), MARAD has 

considered whether its proposed rule 

would have a significant economic 

impact on a substantial number of small 

entities. The term ‘‘small entities’’

comprises small businesses, not-forprofit organizations that are 

independently owned and operated and 

are not dominant in their fields, and 

governmental jurisdictions with 

populations of less than 50,000.

Currently, there are 87 entities that 

have had their coastwise endorsements 

approved under the lease-financing 

option. We anticipate that a minimal 

number of these entities would be 

required to submit charters and other 

documents to MARAD for review, but 

only a subset of these entities would not 

be allowed to enter into time charters. 

Therefore, MARAD certifies under 5 

U.S.C. 605(b) that this proposed rule 

would not have a significant economic 

impact on a substantial number of small 

entities. If you think that your business, 

organization, or governmental 

jurisdiction qualifies as a small entity 

and that this rule would have a 

significant economic impact on it, 

please submit a comment to the Coast 

Guard’s docket at the Docket 

Management Facility. (See ADDRESSES.) 

In your comment, explain why you 

think it qualifies and how and to what 

degree this rule would economically 

affect it. 

Assistance for Small Entities 

Under section 213(a) of the Small 

Business Regulatory Enforcement 

Fairness Act of 1996 (Public Law 104–

121), the Coast Guard and MARAD want 

5408 Federal Register / Vol. 69, No. 23 / Wednesday, February 4, 2004 / Proposed Rules 

to assist small entities in understanding 

these proposed rules so that they can 

better evaluate their effects on them and 

can participate in these rulemakings. If 

the rules would affect your small 

business, organization, or governmental 

jurisdiction and you have questions 

concerning its provisions or options for 

compliance, please consult Patricia 

Williams, Deputy Director, National 

Vessel Documentation Center (NVDC), 

Coast Guard, telephone 304–271–2506 

or Rita Thomas, Small Business 

Specialist, Maritime Administration, 

telephone 202–366–5757. 

Small businesses may send comments 

on the actions of Federal employees 

who enforce, or otherwise determine 

compliance with, Federal regulations to 

the Small Business and Agriculture 

Regulatory Enforcement Ombudsman 

and the Regional Small Business 

Regulatory Fairness Boards. The 

Ombudsman evaluates these actions 

annually and rates each agency’s 

responsiveness to small business. If you 

wish to comment on actions by 

employees of the Coast Guard or the 

Maritime Administration, call 1–888–

REG–FAIR (1–888–734–3247). 

Collection of Information 

Coast Guard 

This proposed rule would call for no 

new collection of information under the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 3501–3520). 

Maritime Administration 

This proposed rule would call for a 

collection of information under the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 3501–3520). As defined in 5 CFR 

1320.3(c), ‘‘collection of information’’

comprises reporting, recordkeeping, 

monitoring, posting, labeling, and other, 

similar actions. The title and 

description of the information 

collections, a description of those who 

must collect the information, and an 

estimate of the total annual burden 

follow. The estimate covers the time for 

reviewing instructions, searching 

existing sources of data, gathering and 

maintaining the data needed, and 

completing and reviewing the 

collection. 

The information collection 

requirements of the rule are addressed 

in the previously approved OMB 

collection titled ‘‘Request for Transfer of 

Ownership, Registry, and Flag, or 

Charter, Lease, or Mortgage of U.S. 

Citizen Owned Documented Vessels’’

(OMB 2133–0006). 

Title: Request for Transfer of 

Ownership, Registry, and Flag, or 

Charter, Lease, or Mortgage of U.S. 

Citizen Owned Documented Vessels 

Summary of the Collection of 

Information: Persons operating 

documented vessels under a demise 

charter and using lease financing would 

be required to provide the information 

related to the identity of the vessel 

owner, bareboat charterer and time 

charterer as well as copies of the time 

charter. 

Need for Information: The required 

information is needed in order for 

MARAD to make the required approvals 

under section 9 of the Shipping Act, 

1916, 46 App. U.S.C. 802(c), regarding 

transfers of any interest or control of a 

documented vessel to persons that are 

not Citizens of the United States. 

Proposed Use of Information: The 

information related to the identity of the 

vessel owner, bareboat charterer and 

time charterer as well as copies of the 

time charter would be used to ensure 

that there is not an impermissible 

transfer of control to non-citizens of 

U.S.-flag coastwise qualified vessels. 

Description of the Respondents:

Persons operating documented vessels 

under a demise charter and using lease 

financing. 

Number of Respondents: We estimate 

that less than five new respondents/

responses will be added annually to the 

already approved collection. For 

purposes of this rulemaking the estimate 

of five responses is used. 

Frequency of Response: Whenever a 

vessel that is documented pursuant to 

46 U.S.C. 12106(e) for operation in the 

coastwise trade is chartered back to the 

vessel owner or an entity related to the 

vessel owner. We estimate the 

additional response to be less than five 

per year.

Burden of Response: The burden per 

response as previously approved in 

OMB 2133–0006 is estimated to be 

approximately two hours. 

Estimate of Total Annual Burden:

$213.60 annually. 

As required by the Paperwork 

Reduction Act of 1995 (44 U.S.C. 

3507(d)), we have submitted a copy of 

this proposed rule to the Office of 

Management and Budget (OMB) for its 

review of the collection of information. 

We ask for public comment on the 

proposed collection of information to 

help us determine how useful the 

information is; whether it can help us 

perform our functions better; whether it 

is readily available elsewhere; how 

accurate our estimate of the burden of 

collection is; how valid our methods for 

determining burden are; how we can 

improve the quality, usefulness, and 

clarity of the information; and how we 

can minimize the burden of collection. 

If you submit comments on the 

collection of information, submit them 

both to OMB and to the Docket 

Management Facility where indicated 

under ADDRESSES, by the date under 

DATES.

You need not respond to a collection 

of information unless it displays a 

currently valid control number from 

OMB. Before the requirements for this 

collection of information become 

effective, we will publish notice in the 

Federal Register of OMB’s decision to 

approve, modify, or disapprove the 

collection. 

Federalism 

A rule has implications for federalism 

under Executive Order 13132, 

Federalism, if it has a substantial direct 

effect on State or local governments and 

would either preempt State law or 

impose a substantial direct cost of 

compliance on them. The Coast Guard 

and the Maritime Administration have 

analyzed these proposed rules under 

that Order and have determined that 

they do not have implications for 

federalism. 

Unfunded Mandates Reform Act 

The Unfunded Mandates Reform Act 

of 1995 (2 U.S.C. 1531–1538) requires 

Federal agencies to assess the effects of 

their discretionary regulatory actions. In 

particular, the Act addresses actions 

that may result in the expenditure by a 

State, local, or tribal government, in the 

aggregate, or by the private sector of 

$100,000,000 or more in any one year. 

Though these proposed rules would not 

result in such expenditures, both 

agencies do discuss the effects of their 

rules elsewhere in this preamble. 

Taking of Private Property 

These proposed rules would not effect 

a taking of private property or otherwise 

have taking implications under 

Executive Order 12630, Governmental 

Actions and Interference with 

Constitutionally Protected Property 

Rights. 

Civil Justice Reform 

These proposed rules meet applicable 

standards in sections 3(a) and 3(b)(2) of 

Executive Order 12988, Civil Justice 

Reform, to minimize litigation, 

eliminate ambiguity, and reduce 

burden. 

Protection of Children 

Both agencies have analyzed these 

proposed rules under Executive Order 

13045, Protection of Children from 

Environmental Health Risks and Safety 

Risks. These rules are not economically 

significant rules and would not create 

Federal Register / Vol. 69, No. 23 / Wednesday, February 4, 2004 / Proposed Rules 5409

an environmental risk to health or risk 

to safety that may disproportionately 

affect children. 

Indian Tribal Governments 

These proposed rules do not have 

tribal implications under Executive 

Order 13175, Consultation and 

Coordination with Indian Tribal 

Governments, because they would not 

have a substantial direct effect on one or 

more Indian tribes, on the relationship 

between the Federal Government and 

Indian tribes, or on the distribution of 

power and responsibilities between the 

Federal Government and Indian tribes. 

Energy Effects 

The Coast Guard and the Maritime 

Administration have analyzed these 

proposed rules under Executive Order 

13211, Actions Concerning Regulations 

That Significantly Affect Energy Supply, 

Distribution, or Use. We have 

determined that they are not 

‘‘significant energy actions’’ under that 

order, although the Coast Guard’s 

proposed rule is considered a 

‘‘significant regulatory action’’ under 

Executive Order 12866. We expect that 

these rulemakings will not have any 

significant adverse effect on the supply, 

distribution, or use of energy, including 

a shortfall in supply, price increases, 

and increased use of foreign supplies. 

The Administrator of the Office of 

Information and Regulatory Affairs has 

not designated these rulemakings as 

significant energy actions. Therefore, 

they do not require a Statement of 

Energy Effects under Executive Order 

13211. 

We request your comments to assist 

us in identifying any likely significant 

adverse effects that these proposed rules 

may have on the supply, distribution, or 

use of energy. Submit your comments to 

the Docket Management Facility at the 

address under ADDRESSES.

Environment 

Coast Guard 

The Coast Guard analyzed its 

proposed rule under Commandant 

Instruction M16475.lD, which guides 

the Coast Guard in complying with the 

National Environmental Policy Act of 

1969 (NEPA) (42 U.S.C. 4321–4370f), 

and has concluded that there are no 

factors in this case that would limit the 

use of a categorical exclusion under 

section 2.B.2 of the Instruction. 

Therefore, this rule is categorically 

excluded, under figure 2–1, paragraph 

(34)(d), of the Instruction, from further 

environmental documentation. This 

proposed rulemaking is administrative 

in nature and concerns requirements for 

application for a coastwise endorsement 

under 46 U.S.C. 12106(e). A draft 

‘‘Environmental Analysis Check List’’

and a draft ‘‘Categorical Exclusion 

Determination’’ are available in the 

docket where indicated under 

ADDRESSES. Comments on this section 

will be considered before we make the 

final decision on whether this rule 

should be categorically excluded from 

further environmental review. 

Maritime Administration 

MARAD has analyzed this proposed 

rule for purposes of compliance with 

the National Environmental Policy Act 

of 1969 (42 U.S.C. 4321 et seq.) and has 

concluded that under the categorical 

exclusions provision in section 4.05 of 

Maritime Administrative Order 600–1, 

‘‘Procedures for Considering 

Environmental Impacts,’’ (50 FR 11606, 

March 22, 1985), the preparation of an 

Environmental Assessment and an 

Environmental Impact Statement, or a 

Finding of No Significant Impact for this 

rulemaking is not required. This 

rulemaking involves administrative and 

procedural regulations that clearly have 

no environmental impact.

List of Subjects 

46 CFR Part 67 

Reporting and recordkeeping 

requirements, Vessels. 

46 CFR Part 221 

Maritime carriers, Reporting and 

recordkeeping requirements, Vessels.

Coast Guard 

46 CFR Chapter I 

For the reasons discussed in the 

preamble, the Coast Guard proposes to 

amend 46 CFR part 67 as follows:

PART 67—DOCUMENTATION OF 

VESSELS 

1. The authority citation for part 67 is 

revised to read as follows:

Authority: 14 U.S.C. 664; 31 U.S.C. 9701; 

42 U.S.C. 9118; 46 U.S.C. 2103, 2107, 2110, 

12106, 12120, 12122; 46 U.S.C. app. 876; 

Department of Homeland Security Delegation 

No. 0170.1.

2. In § 67.20, revise paragraphs (a)(6), 

(a)(9), (b), (c), (d), and (e) to read as 

follows:

§ 67.20 Coastwise endorsement for a 

vessel under a demise charter. 

(a) * * * 

(6) The ownership of the vessel is 

primarily a financial investment 

without the ability and intent to directly 

or indirectly control the vessel’s 

operations by a person not primarily 

engaged in the direct operation or 

management of vessels or by a member 

of the group of which the owner is a 

member.

* * * * *

(9) The person that owns the vessel 

has transferred to a qualified United 

States citizen under 46 U.S.C. app. 802 

full possession, control, and command 

of a U.S.-built vessel through a demise 

charter in which the demise charterer is 

considered the owner pro hac vice

during the term of the charter. For 

purposes of this section, a demise 

charterer is not considered to be the 

owner pro hac vice when the vessel is 

subject to a sub-charter to a member of 

the group of which the vessel’s owner 

is a member, except when the vessel is 

engaged in carrying cargo owned by the 

vessel’s owner or by a member of the 

group of which the vessel’s owner is a 

member.

* * * * *

(b) A vessel under a demise charter 

that was eligible for, and received, a 

document with a coastwise 

endorsement under § 67.19 and 46 

U.S.C. 12106(e) before February 4, 2004, 

may continue to operate under that 

endorsement for 3 years after that date 

and may renew the document and 

endorsement during that period if the 

certificate of documentation is not 

subject to—

(1) Exchange under § 67.167(b)(1) 

through (b)(3); 

(2) Deletion under § 67.171(a)(1) 

through (a)(6); or 

(3) Cancellation under § 67.173. 

(c) A vessel under a demise charter 

that was constructed under a building 

contract that was entered into before 

February 4, 2004, in reliance on a letter 

ruling from the Coast Guard issued 

before February 4, 2004, is eligible for 

documentation with a coastwise 

endorsement under § 67.19 and 46 

U.S.C. 12106(e). The vessel may 

continue to operate under that 

endorsement for 3 years after the initial 

issuance of that endorsement and may 

renew the document and endorsement 

during that period if the certificate of 

documentation is not subject to—

(1) Exchange under § 67.167(b)(1) 

through (b)(3); 

(2) Deletion under § 67.171(a)(1) 

through (a)(6); or 

(3) Cancellation under § 67.173. 

(d) A barge deemed eligible under 46 

U.S.C. 12106(e) and 12110(b) to operate 

in the coastwise trade before February 4, 

2004, may continue to operate in that 

trade for 3 years after that date unless—

(1) The ownership of the barge 

changes in whole or in part; 

(2) The general partners of a 

partnership owning the barge change by 

addition, deletion, or substitution; 

5410 Federal Register / Vol. 69, No. 23 / Wednesday, February 4, 2004 / Proposed Rules 

(3) The State of incorporation of any 

corporate owner of the barge changes; 

(4) The barge is placed under foreign 

flag; 

(5) Any owner of the barge ceases to 

be a citizen within the meaning of 

subpart C of this part; or 

(6) The barge ceases to be capable of 

transportation by water. 

(e) A barge under a demise charter 

that was constructed under a building 

contract that was entered into before 

February 4, 2004, in reliance on a letter 

ruling from the Coast Guard issued 

before February 4, 2004, is eligible to 

operate in the coastwise trade under 46 

U.S.C. 12106(e) and 12110(b). The barge 

may continue to operate in the 

coastwise trade for 3 years after its 

initial entry into service unless—

(1) The ownership of the barge 

changes in whole or in part; 

(2) The general partners of a 

partnership owning the barge change by 

addition, deletion, or substitution; 

(3) The State of incorporation of any 

corporate owner of the barge changes; 

(4) The barge is placed under foreign 

flag; 

(5) Any owner of the barge ceases to 

be a citizen within the meaning of 

subpart C of this part; or 

(6) The barge ceases to be capable of 

transportation by water.

* * * * *

Dated: January 29, 2004. 

Thomas H. Collins, 

Admiral, Coast Guard Commandant.

Maritime Administration 

46 CFR Chapter II 

For the reasons discussed in the 

preamble, the Maritime Administration 

proposes to amend 46 CFR part 221 as 

follows:

PART 221–REGULATED 

TRANSACTIONS INVOLVING 

DOCUMENTED VESSELS AND OTHER 

MARITIME INTERESTS 

1. The authority citation for part 221 

continues to read as follows:

Authority: 46 App. U.S.C. 802, 803, 808, 

835, 839, 841a, 1114(b), 1195, 46 U.S.C. 

chs.301 and 313; 49 U.S.C. 336; 49 CFR 1.66.

§ 221.11 [Amended] 

2. In § 221.11(a) introductory text, 

after the words ‘‘United States Code,’’

add the words ‘‘as limited by 

§ 221.13(c),’’. 

3. In § 221.13, in paragraph (a)(1)(iii), 

remove the period and add, in its place, 

‘‘; and’’; and add new paragraphs 

(a)(1)(iv) and (c) to read as follows:

§ 221.13 General approval. 

(a) * * * 

(1) * * * 

(iv) As limited by paragraph (c) of this 

section for vessels documented with a 

coastwise endorsement pursuant to 46 

U.S.C. 12106(e).

* * * * *

(c) Lease financing. A Person 

operating, under a demise charter, a 

Vessel that is documented pursuant to 

46 U.S.C. 12016(e) must obtain the 

approval of the Maritime Administrator 

required by 46 App. U.S.C. 808(c)(1) for 

the sale, lease, Charter, delivery, or any 

other manner of Transfer back to the 

vessel owner, a member of the owner’s 

group (as the word ‘‘group’’ is defined 

in 46 CFR 67.3), or an officer, director, 

or shareholder of the owner or a 

member of the owner’s group. As 

defined in 46 CFR 67.3, the word 

‘‘group’’ includes the owner, the 

owner’s parent, and all subsidiaries and 

affiliates of the parent; and the word 

‘‘affiliate’’ means a Person that is less 

than 50 percent owned or controlled by 

another Person.

By Order of the Maritime Administrator.

Dated: January 22, 2004. 

Joel C. Richard, 

Secretary, Maritime Administration.

[FR Doc. 04–2231 Filed 1–30–04; 11:34 am] 

BILLING CODE 4910–15–P