Document ID: USCG-2011-0619-0001
Agency: uscg
Document Type: Notice
Title: Mechanisms of Compliance with United States Citizenship Requirements for the Ownership of Vessels Eligible to Engage in Restricted Trades by Publicly Traded Companies (Federal Register Publication)
Posted Date: 2011-11-03T04:00Z

[Federal Register Volume 76, Number 213 (Thursday, November 3, 2011)]
[Notices]
[Pages 68203-68205]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-28447]

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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

[Docket No. USCG-2011-0619]

Mechanisms of Compliance with United States Citizenship 
Requirements for the Ownership of Vessels Eligible To Engage in 
Restricted Trades by Publicly Traded Companies

AGENCY: Coast Guard, DHS.

ACTION: Notice and request for comments.

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SUMMARY: Under existing statutes, at least 75% of the ownership of 
vessels eligible to engage in the coastwise or fisheries trades must be 
vested in United States citizens. The Coast Guard is seeking comments 
and information on the various mechanisms that publicly traded 
companies have chosen to employ in order to assure compliance with 
those citizenship requirements. Although the Coast Guard may use 
information obtained in response to this notice to inform future 
rulemakings, we are not presently developing a new or revised 
regulation on this subject.

DATES: Comments and related material must either be submitted to our 
online docket via http://www.regulations.gov on or before February 1, 
2012 or reach the Docket Management Facility by that date.

ADDRESSES: You may submit comments identified by docket number USCG-
2011-0619 using any one of the following methods:
    (1) Federal eRulemaking Portal: http://www.regulations.gov.
    (2) Fax: (202) 493-2251.
    (3) Mail: Docket Management Facility (M-30), U.S. Department of 
Transportation, West Building Ground Floor, Room W12-140, 1200 New 
Jersey Avenue SE., Washington, DC 20590-0001.
    (4) Hand delivery: Same as mail address above, between 9 a.m. and 5 
p.m., Monday through Friday, except Federal holidays. The telephone 
number is (202) 366-9329.
    (5) For comments containing confidential information, business 
information or sensitive security information, please mail 
appropriately marked comments to Commandant (CG-0943) (RM 1417), U.S. 
Coast Guard, 2100 2nd Street SW., STOP 7121, Washington, DC, 20593, 
Attention USCG-2011-0619.
    To avoid duplication, please use only one of these four methods. 
See the ``Public Participation and Request for

[[Page 68204]]

Comments'' portion of the SUPPLEMENTARY INFORMATION section below for 
instructions on submitting comments.

FOR FURTHER INFORMATION CONTACT: If you have questions on this proposed 
rule, call or email Mr. Douglas Cameron, United States Coast Guard, 
National Vessel Documentation Center; telephone 304-271-2506, email 
Douglas.G.Cameron@uscg.mil. If you have questions on viewing or 
submitting material to the docket, call Renee V. Wright, Program 
Manager, Docket Operations, telephone (202) 366-9826.

SUPPLEMENTARY INFORMATION:

I. Public Participation and Request for Comments

    We encourage you to respond to this notice by submitting comments 
and related materials. All comments received will be posted, without 
change, to http://www.regulations.gov and will include any personal 
information you have provided. We will consider all comments and 
material received during the comment period regardless of whether you 
include identifying information.

A. Submitting Comments

    If you submit a comment, please include the docket number for this 
rulemaking (USCG-2011-0619) and provide a reason for each suggestion or 
recommendation. You may submit your comments and material online, or by 
fax, mail or hand delivery, but please use only one of these means. We 
recommend that you include your name and a mailing address, an email 
address, or a phone number in the body of your document so that we can 
contact you if we have questions regarding your submission.
    To submit your comment online, go to http://www.regulations.gov, 
click on the ``submit a comment'' box, which will then become 
highlighted in blue. In the ``Document Type'' drop down menu select 
``Notices'' and insert ``USCG-2011-0619'' in the ``Keyword'' box. Click 
``Search'' then click on the balloon shape in the ``Actions'' column. 
If you submit your comments by mail or hand delivery, submit them in an 
unbound format, no larger than 8\1/2\ 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.

B. Handling Confidential Information, Proprietary Information and 
Sensitive Security Information (SSI) Submitted in Public Comments

    Do not submit comments that include trade secrets, confidential 
commercial or financial information, or sensitive security information 
(SSI) \1\ to the public regulatory docket. Please submit such comments 
separately from other comments on the rulemaking. Comments containing 
this type of information should be appropriately marked as containing 
such information and submitted by mail to the Coast Guard point of 
contact listed in the FOR FURTHER INFORMATION CONTACT section.
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    \1\ ``Sensitive Security Information'' or ``SSI'' is information 
obtained or developed in the conduct of security activities, the 
disclosure of which would constitute an unwarranted invasion of 
privacy, reveal trade secrets or privileged or confidential 
information, or be detrimental to the security of transportation. 
The protection of SSI is governed by 49 CFR part 1520.
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    Upon receipt of such comments, the Coast Guard will not place the 
comments in the public docket and will handle them in accordance with 
applicable safeguards and restrictions on access. The Coast Guard will 
hold them in a separate file to which the public does not have access, 
and place a note in the public docket that Coast Guard has received 
such materials from the commenter. If the Coast Guard receives a 
request to examine or copy this information, we will treat it as any 
other request under the Freedom of Information Act (FOIA) (5 U.S.C. 
552).

C. Viewing Comments and Documents

    To view comments, as well as documents mentioned in this preamble 
as being available in the docket, go to http://www.regulations.gov, 
click on the ``read comments'' box, which will then become highlighted 
in blue. In the ``Keyword'' box insert ``USCG-2011-0619'' and click 
``Search.'' Click the ``Open Docket Folder'' in the ``Actions'' column. 
If you do not have access to the internet, you may view the docket 
online by visiting the Docket Management Facility in Room W12-140 on 
the ground floor of the Department of Transportation West Building, 
1200 New Jersey Avenue SE., Washington, DC 20590, between 9 a.m. and 5 
p.m., Monday through Friday, except Federal holidays. We have an 
agreement with the Department of Transportation to use the Docket 
Management Facility.

D. Privacy Act

    Anyone can search the electronic form of 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 a Privacy Act notice 
regarding our public dockets in the January 17, 2008, issue of the 
Federal Register (73 FR 3316).

II. Background

    The United States citizenship requirements for ownership of vessels 
eligible to engage in the coastwise or fisheries trades are established 
by 46 U.S.C. 50501. Among other things, they require that 75% of the 
ownership interest in qualified vessel-owning entities, as evidenced by 
title and voting power, must be vested in United States citizens. In 
addition, in accordance with 46 CFR 67.31(d), where title to a vessel 
is held by an entity comprised, in whole or in part, of other entities, 
each entity contributing to the stock or equity interest qualifications 
of the entity holding title must be a citizen eligible to document 
vessels in its own right with a coastwise or fisheries trade 
endorsement.\2\ Thus, for publicly traded companies, as with other 
entities holding title to coastwise or fisheries eligible vessels, each 
entity whose ownership interest in the stock or equity of that company 
contributes to the 75% ownership requirement for that company must 
itself be eligible to document vessels in its own right with a 
coastwise or fisheries trade endorsement. Moreover, for those entities 
to be so eligible themselves, they must also satisfy the requirements 
of 46 U.S.C. 50501 and 46 CFR 67.31(d), as would, consequently, any 
entities whose stock or equity ownership contributes in turn to their 
75% United States citizen ownership requirement.
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    \2\ See, 46 CFR part 67, subpart C, ``Citizenship Requirements 
for Vessel Documentation.''
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    In addition to the stock or equity ownership interest requirement 
discussed above, there are other requirements that entities must 
satisfy in order to be qualified, in their own right, to document 
vessels, including to document vessels with coastwise or fisheries 
trade endorsements. As set forth at 46 CFR 67.39(a), in the case of 
entities that are corporations, any such entity (1) must be 
incorporated under the laws of the United States or of a state; (2) its 
chief executive officer, by whatever title, must be a citizen of the 
United States; (3) the chairman of its board of directors must be a 
United States citizen; and (4) no more of its directors than a minority 
of the number necessary to constitute a quorum may be non-citizens of 
the United States.
    The process for determining the citizenship of applicants for

[[Page 68205]]

documentation of vessels, including for documentation with coastwise or 
fisheries trade endorsements, relies on self-certification. Because of 
that, it has long been the position of the Coast Guard that, when 
evidence of possible non-compliance is found, the burden is upon the 
applicant, or recipient of such privilege, to establish its 
qualifications. A clear statement of that obligation, offered in the 
context of publicly traded companies, was published at 58 FR 60256 
(November 15, 1993) where it was stated at page 60259 as follows:

    The documentation laws are meant to be restrictive and are 
intended to limit the persons who are eligible to document vessels 
under U.S. law and acquire trading privileges. Corporations can make 
proof of citizenship less difficult, for instance by restricting 
sale of their stock to U.S. citizens, or using a transfer agent to 
administer a dual stock certificate system. Of course, any U.S. 
corporation that is unwilling to subject itself to the possibility 
of having to prove that it qualifies for coastwise or fisheries 
privileges can choose not to seek them. The Coast Guard will not be 
bound by any presumptions or inferences in making eligibility 
determinations for documentation purposes.

    Against the background of this statement by the Coast Guard of the 
burden upon corporations to be able to prove their qualifications, as a 
necessary requirement of a self-certifying system for determining that 
U.S. citizenship standards have been met, the Coast Guard recently 
completed an investigation of a publicly-traded company owning vessels 
documented with coastwise endorsements and found that its U.S. 
citizenship could not be established. The report of that investigation, 
dated January 12, 2011, contains the Coast Guard's findings, opinions 
and recommendations with respect to this issue, as pertinent to the 
company investigated, and can be found at http://www.uscg.mil/hq/cg5/nvdc/nvdcreport.asp or go to the National Vessel Documentation Center 
home page at http://www.uscg.mil/hq/cg5/nvdc/, click on ``Latest News'' 
on the left side of the page, then click on ``Trico Investigation'' 
under the drop-down menu.

III. Information Requested

    This notice solicits information, for the benefit of the Coast 
Guard but also for the mutual benefit of industry, as to the mechanisms 
that publicly traded companies have employed, including but not limited 
to those mentioned in the quoted language above, to assure compliance 
with United States citizenship requirements. We are also requesting 
information on the manner in which those mechanisms function to provide 
that assurance and, when called upon to do so, to offer proof of 
compliance. The Coast Guard will not retaliate against commenters that 
question or complain about citizenship requirements or any policy or 
action of the Coast Guard.
    This document is issued under authority of 5 U.S.C. 552(a) and 33 
CFR 1.05-1.

    Dated: October 25, 2011.
Timothy V. Skuby,
Director, National Vessel Documentation Center, U.S. Coast Guard.
[FR Doc. 2011-28447 Filed 11-2-11; 8:45 am]
BILLING CODE 9110-04-P