21902 Federal Register / Vol. 66, No. 85 / Wednesday, May 2, 2001 / Proposed Rules

DATES: Comments must be received in

writing by June 1, 2001.

ADDRESSES: Comments must be

submitted in writing to Gerardo Rios at

the Region IX mailing address listed

below. Copies of the rules and EPA’s

evaluation report are available for

public inspection at EPA’s Region IX

office during normal business hours.

Copies of the submitted rules are

available for inspection at the following

locations:

Permits Office (AIR–3), Air Division,

Environmental Protection Agency,

Region IX, 75 Hawthorne Street, San

Francisco, CA 94105.

Environmental Protection Agency, Air

Docket (6102), Ariel Rios Building,

1200 Pennsylvania Avenue, N.W.,

Washington, D.C. 20460.

California Air Resources Board,

Stationary Source Division, Rule

Evaluation Section, 1001 ‘‘I’’ Street,

Sacramento, CA 95814.

Butte County Air Quality Management

District, 2525 Dominic Drive, Suite J,

Chico, CA 95928.

A courtesy copy of the rules may be

available via the Internet at http://

www.arb.ca.gov/drdb/drdbltxt.htm.

However, these versions of the rules

may be different than the versions

submitted to EPA for approval. Readers

are cautioned to verify that the adoption

date of the rule listed is the same as the

rule submitted to EPA for approval. The

official submittal is only available at the

agency addresses listed above.

FOR FURTHER INFORMATION CONTACT:

David Wampler, Permits Office, (AIR–

3), Air Division, U.S. Environmental

Protection Agency, Region IX, 75

Hawthorne Street, San Francisco, CA

94105; (415) 744–1256.

SUPPLEMENTARY INFORMATION: This

proposal addresses the following local

rules: BCAQMD 403, 422, 424, 1105, 4–

3 (recision), 4.5A (recision), 4.5B

(recision), 4–6 (recision), 4–6A

(recision), 4.9 (recision), and 4–11

(recision). In the Rules and Regulations

section of this Federal Register, we are

approving action on these local rules in

a direct final action without prior

proposal because we believe these SIP

revisions are not controversial. If we

receive adverse comments, however, we

will publish a timely withdrawal of the

direct final rule and address the

comments in subsequent action based

on this proposed rule. We do not plan

to open a second comment period, so

anyone interested in commenting

should do so at this time. If we do not

receive adverse comments, no further

activity is planned. For further

information, please see the direct final

action.

Dated: February 9, 2001.

Laura Yoshii,

Acting Regional Administrator, Region IX.

[FR Doc. 01–10650 Filed 5–1–01; 8:45 am]

BILLING CODE 6560–50–P

DEPARTMENT OF TRANSPORTATION

Coast Guard

46 CFR Part 67

[USCG 2001–8825]

RIN 2115–AG08

Vessel Documentation: LeaseFinancing for Vessels Engaged in the

Coastwise Trade

AGENCY: Coast Guard, DOT.

ACTION: Notice of proposed rulemaking.

SUMMARY: The Coast Guard proposes to

amend its regulations on the

documentation of vessels engaged in the

coastwise trade. These proposals

address statutory amendments

eliminating certain barriers to seeking

foreign financing by lease for U.S.-flag

vessels. These proposals would clarify

the information needed to determine the

eligibility of a vessel financed in this

manner for a coastwise endorsement.

DATES: Comments and related material

must reach the Docket Management

Facility on or before July 2, 2001.

Comments sent to the Office of

Management and Budget (OMB) on

collection of information must reach

OMB on or before July 2, 2001.

ADDRESSES: To make sure your

comments and related material are not

entered more than once in the docket,

please submit them by only one of the

following means:

(1) By mail to the Docket Management

Facility (USCG–2001–8825), U.S.

Department of Transportation, room PL–

401, 400 Seventh Street SW.,

Washington, DC 20590–0001.

(2) By delivery to 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.

(3) By fax to the Docket Management

Facility at 202–493–2251.

(4) Electronically through the Web

Site for the Docket Management System

at http://dms.dot.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.

The Docket Management Facility

maintains the public docket for this

rulemaking. Comments and material

received from the public, as well as

documents mentioned in this preamble

as being available in the docket, will

become part of this docket and will be

available for inspection or copying at

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. You may also

find this docket on the Internet at

http://dms.dot.gov.

FOR FURTHER INFORMATION CONTACT: If

you have questions on this proposed

rule, call Patricia Williams, Deputy

Director, National Vessel

Documentation Center, Coast Guard,

telephone 304–271–2506. If you have

questions on viewing or submitting

material to the docket, call Dorothy

Beard, Chief, Dockets, Department of

Transportation, telephone 202–366–

9329.

SUPPLEMENTARY INFORMATION:

Request for Comments

We encourage you to participate in

this rulemaking by submitting

comments and related material. If you

do so, please include your name and

address, identify the docket number for

this rulemaking (USCG–2001–8825)

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 mail, hand

delivery, fax, or electronic means 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 hand 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 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.

Public Meeting

We do not now plan to hold a public

meeting. But you may submit a request

for one to the Docket Management

Facility at the address under ADDRESSES

explaining why one would be

beneficial. If we determine that one

would aid this rulemaking, we will hold

one at a time and place announced by

a later notice in the Federal Register.

Federal Register / Vol. 66, No. 85 / Wednesday, May 2, 2001 / Proposed Rules 21903

Background and Purpose

In 1996, Congress amended the vessel

documentation laws to promote lease

financing of vessels engaged in the

coastwise trade (section 1113(d) of

Public Law 104–324, the Coast Guard

Authorization Act of 1996) (‘‘the 1996

Act’’) (46 U.S.C. 12106(e)). Lease

financing has become 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, with a demise

charter to the charterer of the vessel. (A

demise or 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. But,

until the 1996 Act, operators were

prevented from obtaining this financing

from U.S. companies that are less than

75 per cent U.S. owned because the

leasing company had to be a U.S. citizen

under section 2 of the Shipping Act,

1916, (46 U.S.C. app. 802), which

requires at least 75 per cent U.S.

ownership. This situation severely

restricted the source of available capital.

Under section 1113(d) of the 1996

Act, Congress eliminated this technical

impediment to vessel financing by

adding a new paragraph (e) to 46 U.S.C.

12106. Under 46 U.S.C. 12106(e),

Congress authorized the Secretary of

Transportation (since delegated to the

Commandant of the Coast Guard) to

issue coastwise endorsements if (1) the

vessel is eligible for documentation; (2)

the owner, a parent entity of the owner,

or subsidiary of a parent of the owner

is primarily engaged in leasing or other

financing transactions; (3) the vessel is

under a demise charter to a person

certifying that the person is a U.S.

citizen for engaging in coastwise trade

under section 2 of the Shipping Act,

1916; and (4) the demise charter is for

at least 3 years.

According to the legislative history for

the 1996 Act (see House Conference

Report No. 104–854; Public Law 104–

324, 1996 U.S. Code Congressional and

Administrative News, p. 4323),

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. In that report,

Congress directed the Coast Guard to

establish the necessary regulations to

administer 46 U.S.C. 12106(e),

including the filing of demise charters

for vessels issued a coastwise

endorsement under that provision.

The Coast Guard’s National Vessel

Documentation Center (NVDC) has

received requests by owners and

prospective owners of U.S. vessels

wanting to avail themselves of the leasefinance provisions under 46 U.S.C.

12106(e). The NVDC began

implementing the new statutory

provisions on a case-by-case basis.

Initially, the NVDC based its

determinations of eligibility for a

coastwise endorsement on (1) a letter

submitted by the owner or owner’s

attorney explaining the nature of the

business relationship and how that

relationship satisfied the statutory

provisions and (2) a copy of the demise

charter. However, it became clear to the

NVDC that verification of the leasefinance arrangement and, specifically, of

whether the leasing entity was

‘‘primarily engaged in leasing or other

financing transactions,’’ could not be

readily ascertained. The NVDC

concluded that the term ‘‘leasing or

other financing transactions’’ in 46

U.S.C. 12106(e) was ambiguous.

To assist in clarifying the phrase

‘‘leasing or other financing

transactions,’’ the NVDC looked to the

Conference Report. On page 4326, the

report states: ‘‘Section 1113(d) of the

Conference substitute adds a new

subsection (e) to section 12106 which

would permit a coastwise endorsement

for non-U.S. citizen vessel ownership

where (1) ownership is primarily a

financial investment in the vessel

without the ability and intent to control

the vessel’s operations by a person not

primarily engaged in the direct

operation or management of vessels and

(2) where the owner has transferred to

a qualified American citizen full

possession, control and command of the

U.S. built vessel in a demise charter and

the demise charterer is considered the

owner pro hac vice during the charter

term. It is intended that banks, leasing

companies, or other financial

institutions qualify as owners of U.S.

flag-vessels under this section even if

they have a vessel owning and operating

affiliate so long as the majority of the

aggregate revenues of any such group

are not derived from the operation or

management of vessels by group

members.’’

In light of the Conference Report, the

NVDC began requiring additional

evidence that the arrangement, and all

parties to it, meet the statutory

requirements as envisioned by Congress.

Specifically, the NVDC began requiring

certifications, in the form of affidavits,

and supporting documentation verifying

the following:

(1) That the entity owning the vessel

and seeking the coastwise endorsement

is a bank, leasing company, or other

financial entity organized under the

laws of the United States or a State.

(2) That ownership of the vessel is

primarily a financial investment

without the ability and intent to control

the vessel’s operations by an entity not

primarily engaged in the direct

operation or management of vessels.

(3) That the owner will transfer, to a

qualified U.S. citizen under 46 U.S.C.

app. 802, full possession, control, and

command of a U.S.-built vessel through

a demise charter for a period of at least

3 years. The owner must verify that, for

the purposes of the charter, the demise

charterer is considered the owner

during the term of the charter. The

owner also must submit, to the NVDC,

a copy of the charter.

(4) That the majority of the aggregate

revenues of the entity, the parent entity,

or a subsidiary of the parent entity is not

derived from the operation or

management of vessels.

(5) That the entity is not primarily

engaged in the operation or management

of commercial foreign-flag vessels used

for the carriage of cargo unrelated to the

vessel’s owner or charterer.

During the year 2000, at least 15

business entities applied for a coastwise

endorsement under the lease-finance

provisions. Only one business entity has

not been able to certify that they meet

the above requirements.

Discussion of the Proposed Regulations

This rulemaking is intended to

implement 46 U.S.C. 12106(e) on leasefinancing. The proposed regulations are

based on the current practice of the

NVDC, as described above.

In § 67.3, Definitions, the definition of

‘‘person’’ would be revised and the

definitions of new terms used in these

amendments (‘‘parent,’’ ‘‘primarily

engaged in leasing or other financing

transactions,’’ and ‘‘subsidiary’’) would

be added.

Proposed § 67.20 is new and would

set out the requirements for qualifying

for a coastwise endorsement under

lease-financing.

Proposed § 67.147 is new and would

list the items, in addition to those in

§ 67.141, that are needed to apply for a

coastwise endorsement involving leasefinancing.

Section 67.167, Requirement for

exchange of Certificate of

21904 Federal Register / Vol. 66, No. 85 / Wednesday, May 2, 2001 / Proposed Rules

Documentation, would be revised to

identify when a Certificate of

Documentation with a coastwise

endorsement under lease-financing

would become invalid.

Proposed § 67.179 is new and would

apply to barges in the coastwise trade,

which are exempt, under § 67.9(c), from

the requirement that they be

documented with a coastwise

endorsement. The purpose for this

requirement is to allow barges that can

qualify to operate under lease-financing

to do so without documentation so that

they are on the same footing with other

coastwise barges. This would reduce a

potential burden, because there would

be no need to obtain documents for

barges at a cost of $113 or more per

vessel, plus the cost of preparing the

applications for documents.

We ask for your comments on these

proposals and specifically on

implementing the phrase ‘‘leasing or

other financing transactions’’ in

proposed § 67.20(a)(2) and 46 U.S.C.

12106(e)(1)(B).

Regulatory Evaluation

This proposed rule 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. The Office

of Management and Budget has not

reviewed it under that Order. It is not

‘‘significant’’ under the regulatory

policies and procedures of the

Department of Transportation (DOT) (44

FR 11040, February 26, l979). A draft

Regulatory Evaluation under paragraph

10e of the regulatory policies and

procedures of DOT is available in the

docket as indicated under ADDRESSES.

This proposed rule, in §§ 67.147 and

67.179, would require vessel and barge

owners and charterers opting to take

advantage of the lease-financing

provisions in 46 U.S.C. 12106(e) to

submit certain documents to the NVDC.

According to Coast Guard’s data, there

are 87 business entities that have

applied under the lease-finance

provisions since the passage of the 1996

Act. Therefore, we estimate that the

number of entities opting to do the same

in the future will be approximately 30

annually.

There are no mandatory costs

associated with this rulemaking. The

cost imposed on those who choose to

take advantage of lease-financing would

include the cost of preparing and

submitting the required documents.

Those costs would vary from applicant

to applicant and would probably be the

same both for vessels under proposed

§ 67.147 and barges under proposed

§ 67.179. For further information on

those costs, see the section on

‘‘Collection of Information’’ in this

preamble.

Small Entities

Under the Regulatory Flexibility Act

(5 U.S.C. 601–612), we considered

whether this proposed rule would have

a significant economic impact on a

substantial number of small entities.

The term ‘‘small entities’’ comprises

small businesses, not-for-profit

organizations that are independently

owned and operated and are not

dominant in their fields, and

governmental jurisdictions with

populations of less than 50,000.

The proposed rule would affect vessel

owners and charterers who choose to

take advantage of the lease-financing

option. This option reduces the burden

on owners by allowing them to have

access to the cheapest financing

available anywhere in the world. Under

the proposed rule, to take advantage of

the lease-financing option, the vessel

owner and charterer must submit

affidavits and a copy of their demise

charter to the NVDC. The estimated cost

of preparing and submitting this

material would be minimal and is

discussed further under ‘‘Collection of

Information’’ in this preamble.

Companies would tend to choose leasefinancing only if they expect its costs to

be offset by increased profits.

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

Docket Management Facility at the

address under 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), we want to assist small entities in

understanding this proposed rule so that

they can better evaluate its effects on

them and participate in the rulemaking.

If the rule 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.

Small businesses may send comments

on the actions of Federal employees

who enforce, or otherwise determine

compliance with, Federal regulations to

the Small Business and Agriculture

Regulatory Enforcement Ombudsman

and the Regional Small Business

Regulatory Fairness Boards. The

Ombudsman evaluates these actions

annually and rates each agency’s

responsiveness to small business. If you

wish to comment on actions by

employees of the Coast Guard, call 1–

888–REG–FAIR (1–888–734–3247).

Collection of Information

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. This estimate applies to the

documents to be submitted under

proposed §§ 67.147 and 67.179. This

collection would be added to the burden

estimate under OMB Control Number

OMB 2115–0110.

Title: Vessel Documentation: LeaseFinancing for Vessels Engaged in the

Coastwise Trade.

Summary of the Collection of

Information: This proposed rulemaking

would add new collection-ofinformation requirements, in proposed

§§ 67.147 and 67.179, for vessel owners

and charterers applying to engage in the

coastwise trade under the leasefinancing provisions of 46 U.S.C.

12106(e). These new requirements

would require a change in previously

approved OMB Collection 2115–0110.

Need for Information: The Coast

Guard needs this information to

determine whether an entity meets the

statutory requirements.

Proposed Use of Information: The

Coast Guard would use this information

to determine whether an entity meets

the statutory requirements.

Number of Respondents:

Approximately, 30 entities a year,

including charter amendments and subcharters.

Frequency of Response: Whenever an

entity seeks to qualify to engage in the

coastwise trade under 46 U.S.C.

12106(e), a qualified entity amends the

Federal Register / Vol. 66, No. 85 / Wednesday, May 2, 2001 / Proposed Rules 21905

charter, or the demise charterer subcharters the vessel by demise charter.

Burden of Response: The burden

resulting from this proposed rule would

arise from the requirements in proposed

§§ 67.147 and 67.179 that affidavits be

prepared and submitted, along with a

copy of the demise charter, to the

NVDC. We estimate that it would take

a total of 12 hours to prepare the

affidavits and make the submissions. As

for the per-hour cost to accomplish this

administrative task, we estimate that it

could be as low as $67 per hour.

However, most, if not all, of the

applicants so far, chose to use law firms

to accomplish these tasks, even though

the proposed rule would not require

their use. Hourly cost for legal

assistance could be substantially higher.

To align our estimates more closely with

industry practice, we used $167 per

hour for a total of $2004 per application.

Estimate of Total Annual Burden: The

total annual hour burden for industry is

12 hours per application × $167 per

hour (the higher of the two figures

discussed above) × 30 applications per

year for a total of $60,120 per year.

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

We have analyzed this proposed rule

under Executive Order 13132 and have

determined that it does not have

implications for federalism under that

order.

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 regulatory actions not specifically

required by law. 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 this proposed

rule would not result in such an

expenditure, we do discuss the effects of

this rule elsewhere in this preamble.

Taking of Private Property

This proposed rule 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

This proposed rule meets applicable

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

Executive Order 12988, Civil Justice

Reform, to minimize litigation,

eliminate ambiguity, and reduce

burden.

Protection of Children

We have analyzed this proposed rule

under Executive Order 13045,

Protection of Children from

Environmental Health Risks and Safety

Risks. This rule is not an economically

significant rule and does not concern an

environmental risk to health or risk to

safety that may disproportionately affect

children.

Environment

We have considered the

environmental impact of this proposed

rule and concluded that, under figure 2–

1, paragraph (34)(d), of Commandant

Instruction M16475.lC, this rule is

categorically excluded from further

environmental documentation. This

proposed rulemaking is administrative

in nature and identifies the information

necessary to apply for a coastwise

endorsement under 46 U.S.C. 12106(e).

A ‘‘Categorical Exclusion

Determination’’ is available in the

docket where indicated under

ADDRESSES.

List of Subjects in 46 CFR Part 67

Reporting and recordkeeping

requirements, Vessels.

For the reasons discussed in the

preamble, the Coast Guard proposes to

amend 46 CFR part 67 as follows:

PART 67—DOCUMENTATION OF

VESSELS

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,

12106, 12120, 12122; 46 U.S.C. app. 841a,

876; 49 CFR 1.45, 1.46.

2. In § 67.3, revise the definition for

the term ‘‘person;’’ and add, in

alphabetical order, definitions for the

terms ‘‘entity,’’ ‘‘parent,’’ ‘‘primarily

engaged in leasing or financing,’’ and

‘‘subsidiary’’ to read as follows:

§ 67.3 Definitions.

* * * * *

Entity means a corporation;

partnership; limited liability

partnership; limited liability company;

association; joint venture; trust

arrangement; and the government of the

United States, a State, or a political

subdivision of the United States or a

State; and includes a trustee,

beneficiary, receiver, or similar

representative of any of them.

* * * * *

Parent means a person that owns or

controls more than 50 per cent of

another entity.

Person means an individual or an

entity.

Primarily engaged in leasing or other

financing transactions means that more

than 50% of the aggregate revenue of an

entity is derived from banking or similar

financial transactions.

* * * * *

Subsidiary means any entity more

than 50 per cent of which is directly or

indirectly owned or controlled by

another person.

* * * * *

3. Add § 67.20 to read as follows:

§ 67.20 Coastwise endorsement for a

vessel that is owned by a lease-financing

company and is under a demise charter.

(a) A vessel under a demise charter

that is eligible for a coastwise

endorsement under 46 U.S.C. 12106(e)

may receive that endorsement if it meets

the following:

(1) The vessel is eligible for

documentation under 46 U.S.C. 12102.

(2) The vessel is considered built in

the United States under § 67.97 and has

not lost coastwise privileges under

§ 67.19(d).

(3) The entity that owns the vessel, a

parent of that entity, or a subsidiary of

a parent of that entity is primarily

engaged in leasing or other financing

transactions and not in vessel

operations or management.

(4) The majority of the aggregate

revenues of the entity that owns the

21906 Federal Register / Vol. 66, No. 85 / Wednesday, May 2, 2001 / Proposed Rules

vessel, a parent of that entity, or a

subsidiary of a parent of that entity is

not derived from the operation or

management of one or more vessels.

(5) The entity that owns the vessel, a

parent of that entity, or a subsidiary of

a parent of that entity is not primarily

engaged in the operation or management

of commercial, foreign-flag vessels used

for the carriage of cargo for parties

unrelated to the vessel’s owner or

charterer.

(6) The vessel is under a demise

charter to a person that certifies to the

Director, National Vessel

Documentation Center, that the person

is a citizen of the United States for

engaging in the coastwise trade under

46 U.S.C. app. 802.

(7) The demise charter is for a period

of at least 3 years, unless a shorter

period is authorized by the Director,

National Vessel Documentation Center,

under circumstances such as—

(i) When the vessel’s remaining life

would not support a charter of 3 years;

or

(ii) To preserve the use or possession

of the vessel.

(b) To apply for a coastwise

endorsement for a vessel under a demise

charter, see § 67.147.

§ 67.35 [Amended]

4. In § 67.35, at the end of paragraph

(c), add the words ‘‘or the vessel

qualifies under § 67.20’’.

5. In § 67.36, revise paragraphs (c)(1)

and (c)(2) to read as follows:

§ 67.36 Trust.

* * * * *

(c) * * *

(1) It meets the requirements of

paragraph (a) of this section and at least

75 per cent of the equity interest in the

trust is owned by citizens; or

(2) It meets the requirements of

§ 67.20.

6. In § 67.39, revise paragraphs (c)(1)

and (c)(2) to read as follows:

§ 67.39 Corporation.

* * * * *

(c) * * *

(1) It meets the requirements of

paragraph (a) of this section and at least

75 per cent of the stock interest in the

corporation is owned by citizens; or

(2) It meets the requirements of

§ 67.20.

* * * * *

7. Add § 67.147 to read as follows:

§ 67.147 Application procedure: Coastwise

endorsement for a vessel that is owned by

a lease-financing company and is under a

demise charter.

(a) In addition to the items under

§ 67.141, the entity owning the vessel

(other than a barge under § 67.179) and

seeking a coastwise endorsement under

§ 67.20 must submit the following to the

National Vessel Documentation Center:

(1) A certification, in the form of an

affidavit, and supporting documentation

from an officer of the entity owning the

vessel certifying the following:

(i) That the entity owning the vessel

is a bank, leasing company, or other

financial entity organized under the

laws of the United States or a State.

(ii) That ownership of the vessel is

primarily a financial investment

without the ability and intent to control

the vessel’s operations and that the

entity owning the vessel is not primarily

engaged in the direct operation or

management of the vessel.

(iii) That the entity owning the vessel

will transfer to a qualified United States

citizen under 46 U.S.C. app. 802 the full

possession, control, and command of

the vessel through a demise charter for

a period of at least 3 years, unless a

shorter period is authorized under

§ 67.20(a)(7). The certification must

include a statement that the charterer

will be deemed to be the owner pro hac

vice for the term of the charter.

(iv) That the majority of the aggregate

revenues of the entity that owns the

vessel, a parent of that entity, or a

subsidiary of a parent of that entity is

not derived from the operation or

management of one or more vessels.

(v) That the entity that owns the

vessel, a parent of that entity, or a

subsidiary of a parent of that entity is

not primarily engaged in the operation

or management of commercial, foreignflag vessels used for the carriage of cargo

unrelated to the vessel’s owner or

charterer.

(2) A copy of the charter, which must

provide that the charterer is deemed to

be the owner pro hac vice for the term

of the charter.

(b) The charterer of a vessel under

paragraph (a) of this section must

provide detailed citizenship information

in the format of form CG–1258,

Application for Documentation, section

G, citizenship. The citizenship

information may be attached to the form

CG–1258 that is submitted under

§ 67.141 and must be signed by, or on

behalf of, the charterer.

(c) Whenever a charter under

paragraph (a) of this section is amended,

the vessel owner must file a copy of the

amendment with the Director, National

Vessel Documentation Center, within 10

days after the effective date of the

amendment.

(d) Whenever the charterer of a vessel

under paragraph (a) of this section

demise charters the vessel to a subcharterer—

(1) The charterer must file a copy of

the sub-charter with the Director,

National Vessel Documentation Center,

within 10 days after the effective date of

the sub-charter; and

(2) The sub-charterer must provide

detailed citizenship information in the

format of form CG–1258, Application for

Documentation, section G, citizenship.

(e) A person that submits a false

certification under this section is subject

to penalty under 46 U.S.C. 12122.

8. In § 67.167, in paragraph (c)(8),

remove the last ‘‘or’’; in paragraph (c)(9),

remove the period and add, in its place,

‘‘; or’’; and add paragraph (c)(10) to read

as follows:

§ 67.167 Requirement for exchange of

Certificate of Documentation.

* * * * *

(c) * * *

(10) For a vessel under 46 U.S.C.

12106(e)—

(i) The demise charter expires or is

transferred to another charterer;

(ii) The citizenship of the charterer or

sub-charterer changes to the extent that

they are no longer qualified for a

coastwise endorsement;

(iii) The entity that owns the vessel,

a parent of that entity, or a subsidiary

of a parent of that entity is no longer

primarily engaged in leasing or other

financing transactions;

(iv) The majority of the aggregate

revenues of the entity that owns the

vessel, a parent of that entity, or a

subsidiary of a parent of that entity is

derived from operation or management

of vessels; or

(v) The entity that owns the vessel, a

parent of that entity, or a subsidiary of

a parent of that entity becomes

primarily engaged in operation or

management of foreign-flag vessels used

for the carriage of cargo unrelated to the

vessel’s owner or charterer.

* * * * *

9. Add § 67.179 to subpart M to read

as follows:

§ 67.179 Application procedure: Coastwise

operation of a barge that is owned by a

lease-financing company and is under a

demise charter.

(a) The entity owning a barge

qualified to engage in coastwise trade

under the lease-financing provisions of

46 U.S.C. 12106(e) must submit the

following to the National Vessel

Documentation Center:

(1) A certification, in the form of an

affidavit, and supporting documentation

from an officer of the entity owning the

barge certifying the following:

(i) That the entity owning the barge is

a bank, leasing company, or other

financial entity organized under the

laws of the United States or a State.

Federal Register / Vol. 66, No. 85 / Wednesday, May 2, 2001 / Proposed Rules 21907

(ii) That ownership of the barge is

primarily a financial investment

without the ability and intent to control

the barge’s operations by a person not

primarily engaged in the direct

operation or management of the barge.

(iii) That the entity owning the barge

will transfer to a qualified United States

citizen under 46 U.S.C. app. 802 the full

possession, control, and command of

the U.S.-built barge through a demise

charter for a period of at least 3 years,

unless a shorter period is authorized

under § 67.20(a)(7). The certification

must include a statement that the

charterer will be deemed to be the

owner pro hac vice for term of the

charter.

(iv) That the majority of the aggregate

revenues of the entity that owns the

barge, a parent of that entity, or a

subsidiary of a parent of that entity is

not derived from the operation or

management of one or more vessels.

(v) That the entity that owns the

barge, a parent of that entity, or a

subsidiary of a parent of that entity is

not primarily engaged in the operation

or management of commercial, foreignflag vessels used for the carriage of cargo

for unrelated to the barge’s owner or

charterer.

(vi) That the barge is qualified to

engage in the coastwise trade and that

it is owned by an entity eligible to own

vessels documented with a registry

endorsement.

(2) A copy of the charter agreement,

which must provide that the charterer

will be deemed to be the owner pro hac

vice.

(b) The charterer of the barge under

paragraph (a) of this section must

provide detailed citizenship information

in the format of form CG–1258,

Application for Documentation, section

G, citizenship. The citizenship

information must be signed by, or on

behalf of, the charterer.

(c) Whenever a charter under

paragraph (a) of this section is amended,

the barge owner must file a copy of the

amendment with the Director, National

Vessel Documentation Center, within 10

days after the effective date of the

amendment.

(d) Whenever the charterer of a barge

under paragraph (a) of this section

demise charters the barge to a subcharterer—

(1) The charterer must file a copy of

the sub-charter with the Director,

National Vessel Documentation Center,

within 10 days after the effective date of

the sub-charter; and

(2) The sub-charterer must provide

detailed citizenship information in the

format of form CG–1258, Application for

Documentation, section G, citizenship.

(e) A person that submits a false

certification under this section is subject

to penalty under 46 U.S.C. 12122.

Dated: February 13, 2001.

R.C. North,

Rear Admiral, U.S. Coast Guard, Assistant

Commandant for Marine Safety and

Environmental Protection.

[FR Doc. 01–11021 Filed 5–1–01; 8:45 am]

BILLING CODE 4910–15–U